7 de enero de 2015 / 20:54 / en 3 años

Brazil's fuel prices seen facing little pressure from cheap imports

RIO DE JANEIRO, Jan 7 (Reuters) - Brazil’s gasoline and diesel prices, which are well above international levels thanks to plunging world crude costs, face little pressure from imports thanks to limited storage and transport capacity and state-run Petrobras’ dominance of the local market, industry sources said.

Brazilian gasoline is now 60 percent and diesel 49 percent above world levels before taxes, according to Luiz Carvalho, HSBC analyst in Sao Paulo, a stark reversal from only months ago.

Still, Brazil’s distributors, which are free to buy as much imported fuel as they wish, are unlikely to boost the country’s current imports by more than 1 or 2 percent, a senior fuel market official told Reuters.

“Not only is there limited infrastructure for imports, the 50 or 60 biggest distributors are unlikely to want to import too much for fear of losing access to Petrobras fuel,” said the source, who requested anonymity due to concern the comments might antagonize Petroleo Brasileiro SA, Brazil’s only refiner, which is known as Petrobras.

Under multi-year contracts with Petrobras, the source said, distributors place monthly orders and Petrobras fills them based on each distributor’s “reference volume,” a number based on volumes for the previous month and the year-earlier month.

“If it suddenly becomes less profitable to import, you risk not being able to buy enough from Petrobras,” the source said. “If Brazil cuts fuel prices it will almost certainly be to control inflation or for some crazy political or ideological reason.”

Stock analysts agree, in part because Petrobras lost more than 60 billion reais ($22.3 billion) since the end of 2010. The losses came after the government forced Petrobras to keep fuel prices below world levels at home while it had to import gasoline and diesel to meet a domestic refining shortfall.

The situation is now reversed, said Paula Kovarsky, oil and gas company analyst with Banco Itau BBA in Sao Paulo.

“The company incurred major losses over the last two or three years and it is now time to recover,” she said.

The government, however, might force Petrobras to cut its wholesale fuel price only to eat up the cut with a higher CIDE social security tax. The result would be less revenue for Petrobras, more taxes for the government and the same pump price for consumers, analysts at HSBC and Banco Pactual said.

$1 = 2.6829 Brazilian reais Writing by Jeb Blount; Editing by Leslie Adler

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