Dubai refinery Al Khaleej buys Indian sugar

Dubai refinery Al Khaleej buys Indian sugar

Recent downward pressure on FOB Indian price; White sugar premium is comfortable for refiners; Refinery's capacity is around 6,000 tonnes per day

February 1, 2012 1:04 by Reuters

The Dubai Al Khaleej sugar refinery, typically supplied by raw sugar from top producer Brazil, has recently bought more than 100,000 tonnes of Indian sugar, general manager Cyrus Raja said on Tuesday.

“The Indian raw sugar is refined and sold to the regular customers of Al Khaleej Sugar in the Middle East and North Africa region and other parts of the world,” Raja told Reuters in an emailed interview before the Feb. 4-7 Kingsman Dubai sugar conference.

“In addition to the main countries that Al Khaleej Sugar purchases its sugar from, India is included in the current purchased-from countries,” he added.

Al Khaleej Sugar, one of the biggest sugar refineries in the world with a production capacity of around 6,000 tonnes a day, exports to some 40 countries.

India swings from a net sugar importer to an exporter depending on the size of its harvests which vary greatly from year to year. This year India has exported the sweetener, and dealers anticipate more sales in the coming months.

Al Khaleej Sugar is last believed to have bought sugar from India at least two years ago, trade sources said, when favourable weather and prices last allowed Indian growers to build a sizeable exportable surplus.

Raja said that due to export selling pressure, from India the local or free on board price of low-quality white sugar had dropped recently by around $50 per tonne to ICE raw sugar futures plus $20 per tonne.

Raja said that the white sugar premium, a measure of refining profitability, had returned to comfortable levels.

“On expectations of surplus sugar availability in the first quarter of 2012, the premium had gone down from $100-plus levels, and was trading around $90 in the last three months,” he said.

“But now, as we are in the first quarter of 2012, the demand-supply situation is balanced, and hence the premium is again back to levels comfortable to the refiners,” said Raja, who will be a panelist at the Kingsman Dubai conference.

The white sugar premium measures the difference between white and raw sugar prices.

The Al Khaleej refinery is currently operating at its usual seasonal capacity, Raja said.

“In the period from December until February, there is usually a low demand season on sugar as we have noticed in previous years,” he said.

Raja said he expected demand to increase again with the regular stockings starting from April onwards, especially as Ramadan festivities get closer. (Created by David Brough; editing by Keiron Henderson)