Global Marketing and Logistics Trends, Opportunities and Challenges

1. Global Ethanol Market
National Ethanol Conference
New Orleans, LA | February, 15th – 17th 2016
Alexandre Z. Ades

2. Our Company
Eco-Energy - leading midstream company
centered on the marketing, trading,
transportation, and distribution of
biofuels in the United States.
Copersucar S.A. – our partner – is the
largest marketer of ethanol and sugar in
Brazil.
Together, the two companies form the
largest marketing, trading and logistics
ethanol company in the world, with
more than $8 billion in annual revenue
from biofuels activities alone.
15%
[VAL
UE]
Eco-Energy
US Exports Share
Eco-Energy
US Total Share
2

3. Agenda
1 2015
2 Brazil
3 US Imports Parity
4 Global Exports Parity
5 2016
6 Conclusions

4. Source: ITC, SECEX, Green Pool and Eco-energy
2015
30 billion gallon global market
PRODUCTION CONSUMPTION
Unit: million gallons
4

5. 2015
3 billion gallon international trade
OUT
IN
Source: ITC, SECEX, Green Pool and Eco-energy
1.4
0.2
Europe
North Africa /
Arabian Gulf
Asia
West Africa
Brazil
Latin
America
North America
5

6. 2015
6
1.2 billion gallons traded overseas
4 routes accounted for 70% of all overseas flows
Source: ITC, SECEX, Green Pool and Eco-energy

7. 2015
7
Mexico
Jamaica
Peru
Brazil
West Africa
North Africa
Europe
Arabian Gulf
India
China South Korea,
Japan and
Singapore
Philippines
US ETBE
Puerto Rico
1.1 billion gallons from US and BR
US RFS / LCFS
Source: ITC, SECEX, Green Pool and Eco-energy
Unit: million gallons

8. 2015
8
Asia accounts for 43% of 2015
overseas demand, or 460 million
gallons
US/Brazil overseas supply ratio
continues to trend towards the US with
56% of the supply in 2015
Destination
Source: ITC, SECEX, Green Pool and Eco-energy
1.1 billion gallons from US and BR
Origin

9. Agenda
1 2015
2 Brazil
3 US Imports Parity
4 Global Exports Parity
5 2016
6 Conclusions

10. 10
Brazil
Sugarcane Crush
 Uneventful weather forecast and
cane availability supporting the
increase on sugarcane crush to 630
million tons versus 603 million tons
at 15/16 crop
 135kg/t TRS versus 131kg/t at 15/16
Sugar Production
 Sugar Mix increase due to a global
deficit based on India’s anticipated
reduced supply
 Record high sugar production
threatened by industry capacity in
Brazil
Ethanol Production
 Hydrous production sustained on
the back of cash flow necessity
 Anhydrous production on-demand
to meet ANP legislation and
potential exports
16/17 Center-south supply
Source: UNICA and Copersucar

11. 11
Brazil
Gasoline
 Government controlled gasoline
prices remain high despite
international downfall
Otto Cycle (Total Gasoline +
Ethanol)
 Otto Cycle consumption to decrease
by 1.6% ‘16 versus ’15 on
deteriorating economical situation
Ethanol Demand
 Hydrous (E100) demand remains
strong in spite of parity exceeding
70%
16/17 Center-south demand
Source: ANP, ANFAVEA and Copersucar

12. 12
Brazil
Supply: 7.2b gal
Demand: 6.7b gal
Carry-out: 0.5b gal
16/17 Ethanol prices ex-mill
Supply: 7.9b gal
Demand: 7.7b gal
Carry out: 0.2b gal
Source: BMF, ESALQ and Copersucar
Supply: 7.7b gal
Demand: 7.3b gal
Carry out: 0.4b gal
BRL/cbm
Trades as of Feb, 5th

13. 13
Brazil
Growing disparity between total fuel production and demand
Source: MME and ANP

14. Agenda
1 2015
2 Brazil
3 US Imports Parity
4 Global Exports Parity
5 2016
6 Conclusions

15. 15
US Imports Parity
Import arb is based on flat price, basis, forex, RFS and LCFS
Source: OPIS, ESALQ, CME and BMF
Trades as of Feb, 5th

16. 16
Global Exports Parity
FOB prices seasonal, trending lower with future pointing towards US
Source: OPIS, ESALQ, CME and BMF
‘12 ‘13 ‘14 ‘15 ‘16
Trades as of Feb, 5th

17. Agenda
1 2015
2 Brazil
3 US Imports Parity
4 Global Exports Parity
5 2016
6 Conclusions

18. 18
2016
Total overseas demand flat year over year
Bullish
 China increases imports based on economics
 India increases its mandate fulfillment
 California imports based on LCFS and potential FX move
Bearish
 Discretionary Blend reduced on plunging oil prices
 Brazil imports limited by offload storage capacity
 Risk of China policy change (i.e. reducing corn prices)

19. 19
2016
BR/US supply ratio still points towards US
BR
 Keeps its captive
markets in Far East
 Exports to California as
LCFS premiums sustain
and crushing season
coincides to US driving
season
 Supplies part of India
and China import
demand increase
US
 Most competitive
prices
 Supplier of fuel grade
markets and
discretionary blend, if
any
 Increased ability to
supply industrial
grades

20. 20
2016
RFS/LCFS
Sugar
Unit: million gallons
Sugar prices
below 12.5
cts/lbp
BRL/USD
Exchange Rate
above 4.50
China and India
import programs
Crude Oil prices
above $50/bbl
Corn Prices below
$3.50/bu
Main variables to consider
Bullish
Bearish
USBR
China policy
change
Crude Oil prices kept
below $30/bbl

21. 21
Conclusions
Take-aways
 Overseas demand flat year over year with China and India potentially
replacing discretionary blend
 Brazil/US ratio continuously pointing towards US
 US imports to be opportunistic and limited in 2016
 US remains significant net exporter
 Brazil ethanol domestic consumption increasing versus its ethanol
production in 16/17
 Brazil short fuel mid and long term

22. Thank you