Cosan SA Industria & Comercio, the co-controller of the world’s largest sugar-cane processor, rose to a four-month high on speculation that rising gasoline prices will push drivers to switch to ethanol.
Cosan gained 2.1 percent to 44.25 reais at 12:40 p.m. in Sao Paulo, poised for the highest closing price since June 13. It was the fourth-biggest gain on the 73-member benchmark Ibovespa equity gauge, which fell 0.4 percent.
With international oil prices up 15 percent from a year earlier, investors are betting Brazil’s government will lift gasoline prices by the end of this year to reduce the cost of its subsidy, according to Luis Gustavo Pereira, an analyst at the brokerage firm Futura Corretora. Brazil’s so-called flex-fuel cars can run on either a mix of ethanol and gasoline or pure ethanol, allowing drivers to choose the cheapest alternative.
“Every time such rumors circulate in the market we see Cosan’s shares benefiting,” Pereira said in a telephone interview from Sao Paulo.
Brazil needs to “look at” the gap between domestic and international fuel prices, Energy Minister Edison Lobao told reporters in Rio de Janeiro on Aug. 28.
State-controlled oil producer Petroleo Brasileiro SA (PETR3) has already raised fuel prices twice this year. The 7 percent weakening of the Brazilian real in 2013 is intensifying losses from fuel imports sold at a discount to distributors as part of a policy to keep inflation in check.
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