Brazil’s imports of cheaper diesel from Russia are expected to soar in April, accounting for 53% of the total diesel shipped to the country, compared to 0.2% a year ago, commodity price reporting agency Argus said on Tuesday.

The estimate took into account expected shipments of Russian diesel brought in by 10 to 15 ships, which typically carry about 50,000 cubic meters, Argus diesel market specialist Gabrielle Moreira told Reuters at an event in Sao Paulo.

“It is difficult to compete, Russian diesel arrives below the sale price of domestic refineries and below the value of the product imported from other origins,” she said.

The data gathered by Argus also point out that the Russian product is gaining market share from U.S. diesel, which traditionally accounts for most of the product imported by Brazil, which buys about 30% of its needs abroad.

Russian diesel arrives in Brazil at some $0.20 to $0.30 cheaper per gallon than imports from other countries, according to the head of the Brazilian association of Fuel Importers (Abicom), Sergio Araujo.

He said Russia has been expanding diesel exports to Brazil in the face of bans on the Russian product by Europe, a major buyer before Moscow launched its invasion of Ukraine last year.

Brazil has no import restrictions on Russian diesel, despite widespread international sanctions. Some companies, however, still avoid buying Russian fuel for fear of financial sanctions linked to compliance rules.

According to seminar participants, Brazil’s regional fuel distributors, many of them smaller, have taken advantage of the good prices of the Russian product to expand imports.

In 2022, Brazil’s diesel imports were still dominated by the U.S. product, which represented 57.2% of the market, while Russia had just 1%, according to government data compiled by Argus.

In the first quarter of this year, Russia’s share increased to 13.2%, while the U.S. accounted for 33.1% of Brazil’s diesel imports.

Source: Reuters