Wednesday 29 May 2024

Arab unrest boosts Egypt white sugar exports

Cairo, August 9, 2012


Civil unrest in the Middle East is providing opportunities for Egypt, a major importer of raw sugar, to export refined sugar to markets such as Libya, Sudan and potentially Syria, trade sources said.
Egypt, which imports raws primarily from Brazil, has increased its refining capacity and also has the advantage of lower freight costs in supplying rising demand for high-quality refined sugar in nearby countries.
"Egypt is ... arguably the cultural hub of the Arab world and can double up as an excellent gateway to the wider North African and Sub-Saharan African regions," said Ophelie Buchet, an analyst with Business Monitor International.
Violence in countries such as Libya and Syria has hampered domestic trading and increased the need for imports of refined sugar, a traditional consumer staple.
In Syria, for example, the two main sugar refineries appear to be shut, trade sources said, creating opportunities for Egyptian shipments via the Syrian port of Tartous.
"It is not surprising that Egypt is re-exporting whites to destinations like Sudan and Libya as it makes sense on the commercial side," a European trader said.
"Re-exporting to Sudan makes sense as the country has a growing demand for imports. Libya has been a target market for Egypt, and they will not hesitate to export there if the price is right."
North Africa and the Middle East also are seen as growth markets for sugar because of their young and rising populations.
The global premium for benchmark white sugar futures on Liffe over raw sugar futures on ICE, a measure of refining profitability, stands at around $128 per tonne and has been above $100 for months, levels that provide a strong incentive for refining operations.
Some sugar is shipped in containers and some in smaller dry bulk vessels, especially handysize, handymax and supramax ships.
In recent days, handysize rates have slid to their lowest levels in over four months and supramax rates to over three-month lows as the dry bulk sector struggles with a glut of ships ordered when times were good.
Meanwhile, Egypt has increased raw sugar imports significantly this year, dealers said, as the government aims to boost stocks and reduce food price inflation in volatile times and privately owned refiners seek to increase business in the region.
A European analyst estimated that Egypt had imported 1.4 million tonnes of raw sugar between April 2011 and March 2012, a sharp increase from 1 million tonnes in the previous year.
"Egyptian raw sugar imports have been higher than we expected," one analyst with a trade house said. "The Egyptians have logistical advantages with markets that are difficult to trade with, such as Libya and Sudan." - Reuters

Tags: Egypt | Sugar | Brazil |

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