Gasoline price cut at refineries causes lag to skyrocket – 03/07/2023 – Market

With the rise in international prices and the cut promoted by Petrobras last week, the price of gasoline in Brazilian refineries started the week with a high lag in relation to the import parity.

According to Abicom (Brazilian Association of Fuel Importers), the difference was 11%, or R$ 0.39 per liter, at the beginning of trading this Tuesday (7). For the CBIE (Centro Brasileiro de Infraestrutura), the lag is 15%, or R$ 0.57 per liter.

It is the highest level since the days leading up to the last increase in Petrobras prices, at the end of January, even before the inauguration of Jean Paul Prates, appointed by President Luiz Inácio Lula da Silva (PT) to command the state-owned company.

The two entities understand that Petrobras has been operating with prices lower than those estimated by the association since the cut in refineries came into force last Wednesday (1st).

“This week, we continue to see an increase in most international price fundamentals, which leads Petrobras to operate with discounts”, commented in a report this Tuesday (7) analysts from Itaú BBA.

“This context of rising import parity, combined with the recent discussion about possible changes in Petrobras’ pricing policy, should put pressure on the company over the coming weeks”, conclude Monique Greco, Bruna Amorim and Eric de Mello.

The tendency, however, is for the lag to fall in the next few days, as futures contracts point to a reduction in international prices.

On the eve of the price reduction, industry executives warned that the international market had an upward trend and that they did not see much room for cuts. The pressure on prices is natural at this time of the year, with the beginning of the formation of inventories for the summer in the United States.

Even so, after meetings with the government, Petrobras announced a reduction of R$0.13 per liter, which would partially offset the new PIS/Cofins rate of R$0.47 per liter.

Petrobras justified the price reduction by saying that it seeks balance “to the national and international markets, through a gradual convergence, contemplating the main supply alternatives for our customers and the necessary market share for the optimization of assets”.

Last week, in his first press conference as president of the state company, Prates said that the idea is to stop using the concept of import parity, which he considers an “abstraction”, which “only serves to make the competitor comfortable”.

The company’s new pricing policy, he said, will continue to be linked to international quotations, but without necessarily considering the costs of importing products. In his opinion, the current model was implemented to benefit importers and open up the market.

“Petrobras will charge competitive prices for the national market, for its market, as it sees fit to guarantee its market share”, said the executive.

The change, however, still depends on the appointment of the new board of directors and the new board of directors of the state-owned company, which should be concluded by the beginning of May. Until then, according to Prates, the determination is to follow the rules in force at the company.

When contacted, Petrobras has not yet commented on the matter. In previous notes on the subject, the company has responded that “the import parity price is not an absolute value, unique and perceived in the same way by all agents”.

“Real import values ​​vary from agent to agent, depending on characteristics, such as, for example, commercial relations in the international and domestic market, access to logistics infrastructure and the scale of action.”