The fuel market in Brazil is going through a moment of transition. After the disclosure of Petrobras' 2017-2021 Business and Management Plan in 2016, the company modified its strategic positioning and changed the way it operates along the chain, placing greater emphasis on partnerships in exploration, production and refining and carrying out divestments in areas areas where the company judged them to be less profitable.
One of the results of this management shock at the state-owned company is its new pricing policy, which has profoundly altered competitiveness in the sector. Before, it was common to maintain prices for political purposes, with the aim of curbing the growth of inflation. Currently, Petrobras adopts a market policy, which allows it to review prices at refineries on a daily basis, in line with industry trends. This action strengthens competition between different agents in the domestic market, since the adoption of market policies allows for more frank competition, which, in turn, generates greater security for private investments.
In this context, we observe that imports of derivatives have grown considerably. According to data from the Ministry of Industry, Foreign Trade and Services, if we consider only Diesel and Gasoline, between the first half of 2016 and the same period of 2017 there was a 43% growth in imported volume. According to the National Petroleum Agency (ANP), the causes of this increase are the parity of international oil prices and the strategic repositioning of Petrobras. In addition, according to the ANP, the number of import/export agents increased by 4,5% between the first quarters of 2016 and 2017, totaling 391 in May 17.
Figure 1 - Gasoline and Diesel import data in Brazil
Source: Aliceweb/ILOS
As a result of the greater need for storage space in ports for fuel, there is a strong trend towards private investment in tankage in port areas. According to research carried out by ILOS, more than ten expansions or openings of terminals by third parties were identified in the ports of Itacoatiara, Itaqui, Santos and Paranaguá. This is not counting the expansions of own terminals or pools of large distributors, such as Ipiranga and Raízen, in addition to expansions in other important ports in the country, such as Itaguaí, Rio Grande or Suape, for example.
To highlight some cases, Vopak intends to complete the expansion of its terminal in Santos by March 2019, adding 107 m³ to the current 132 in operation. Another relevant case is that of the Simões Group, in Itacoatiara. The company is mainly known for its beverage division, as it is part of the Coca-Cola System and is one of the main bottlers of the brand in Brazil. Simões, with its New Business division, has already announced that it will start, between 2017 and 2018, the construction of the Novo Remanso Port Terminal in Itacoatiara, a port condominium that will have three piers and four terminals, one of which is dedicated to liquid bulk, such as fuels. Figure 2 shows the expansions identified in the ports of Paranaguá and Santos.
Figure 2 – Port terminal expansions for fuel storage in the ports of Santos and Paranaguá
Source: ILOS
These private ventures may point to a new dynamic in the fuel market, with less massive dominance by Petrobras. What is expected for the future is the improvement of services and market growth, mainly imports.
References:
<https://www.ibp.org.br/personalizado/uploads/2017/07/IBP_AGENDA-DA-INDUSTRIA-2017.pdf>
<http://aliceweb.mdic.gov.br/>
<http://www.gruposimoes.com.br/Arquivos/Institucional/Relatorio-de-Atividades.pdf>
Henry Alvarenga
He has been working in consultancy for 7 years, with experience in more than 20 Demand Planning and S&OP projects, Logistics Network Design, Logistics Master Plan, Inventory Policies, Operations Strategy and Market Intelligence
