Proposal to Increase Ethanol in Brazil’s Gasoline Boosts Raizen Shares

by Warren Seah

Raizen shares experienced a substantial increase of 1.8% following the Brazilian government’s proposal to Congress to enhance the ethanol blend in the country’s gasoline. This significant development led the shares to reach 4.04 reais (equivalent to 83 cents), reflecting an impressive 6.2% increase since the end of last year until Thursday’s closing. In contrast, Brazil’s benchmark Ibovespa stocks index showed a minor decline of 0.3% on Friday.

President Luiz Inácio Lula da Silva’s administration presented a new law to Congress, aimed at raising the maximum level of ethanol blended into the gasoline sold at Brazilian pumps. If approved, the proposed law would increase the limit from the current maximum of 27.5% to 30%. This initiative indicates a growing demand for ethanol, which would undoubtedly bring about a surge in sales for Raizen. As Brazil’s leading producer of alternative fuel derived from sugar cane, Raizen stands to benefit significantly from this increased demand. Moreover, given that Brazil boasts the world’s largest fleet of cars capable of running on either gasoline or ethanol, the potential for further growth is promising.

In conclusion, the recently proposed legislation to amplify ethanol content in Brazilian gasoline has garnered positive market response, as evidenced by the rise in Raizen shares. As the country’s top producer of ethanol, Raizen is well-positioned to capitalize on the growing demand for this alternative fuel.

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