Dubai refinery imports Brazil sugar
Dubai, February 2, 2009
The world's largest sugar refinery, the 1.5-million-tonne-a-year Al Khaleej plant in Dubai, is shifting to imports of raw sugar from Brazil taking advantage of falling freight rates, and is likely to shun Indian imports in 2009, said its general manager.
'Yes, we are back to shipping raw sugar from Brazil. The Indian story as raw sugar exporter has ended,' Al Khaleej general manager Cyrus Raja told Reuters in an interview by email late on Sunday.
'In fact, India is currently importing raw sugar,' he noted. The Dubai refinery had previously imported raw sugar from India.
Raja said he believed the current trend for low freight rates, accentuated by the global economic slowdown, would bolster the Dubai refinery's demand for Brazilian rather than Indian raw sugar supplies.
'My view is that freight rates will remain low in 2009,' Raja said. 'This will result in more Brazilian sugar flowing into the region compared to last year.'
Brazil is located further away than India from Dubai, but the South American country's costs of production are much lower.
Brazil is the world's largest producer and exporter of sugar. India is the world's biggest consumer of the sweetener and second biggest producer.
India swings from being a net exporter to importer depending on the size of its harvests. Asked whether it was likely that the Dubai refinery would import raw sugar from India in 2009, Raja said: 'Unlikely.'
Raja, who will be a moderator at next week's February 8-10 Dubai Kingsman sugar conference, said the Dubai refinery was currently operating at below full capacity. But he declined to give the current rate of production of the refinery.
Raja said the refinery had plans to expand its full production capacity, subject to market conditions, to 7,000 tonnes per day from 5,000 tonnes per day at present.
He said the storage capacity of the refinery was one million tonnes of sugar, but he declined to say how much sugar was currently in store.
Raja said he expected the Dubai refinery to increase exports of refined sugar to the European Union in 2009, compared with 2008, but he gave no tonnage figures.
Asked if the Dubai refinery planned to acquire or lease more ships in the near future, Raja said, 'Not for the moment, but we will go for a BIBO (Bulk In Bag Out) type of vessel later.'
Raja said expectations for a widening global sugar deficit to 2009/10 would help buoy sugar prices going forward, but the impact on prices would be diluted by a slowdown in the rate of growth of demand for sugar in light of the economic downturn.
'We believe that the global sugar deficit will support prices, with the caveat that the impact will be relatively less (compared to the past) due to the other factors,' he said.-Reuters