No plans to purchase sugar from Thailand, the world’s second-largest exporter.

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World’s Largest Sugar Refinery Will Buy More Sweetener From India in 2012
By Isis Almeida - Feb 4, 2012
Al Khaleej Sugar Co., the world’s largest sugar refinery based in Dubai, will expand purchases of sugar from India in the first half of this year, according to Jamal Al Ghurair, managing director of the company.

The refinery has already bought 80,000 metric tons of the sweetener from India, the world’s second-largest producer, and that number may climb to as much as 100,000 tons in the next two weeks, Al Ghurair said in an interview in Dubai before the opening of an annual conference organized by Kingsman SA, a Lausanne, Switzerland-based broker and researcher. Al Khaleej last tapped Indian supplies three to four years ago, he said.

“Normally we buy sugar from Brazil and we continue to buy sugar from Brazil, but from time to time, when India comes out with raw sugar, we buy it,” Al Ghurair said in the interview. “We get a better deal and this is a product that is available in the market so we try to make use of it because of the proximity of the logistics between India and the Emirate.”

India is exporting sugar for a second year this season as domestic supplies exceed demand. Production there will rise 6.2 percent to 28.3 million tons in the season ending Sept. 30, data from the U.S. Department of Agriculture show. A panel of ministers may consider permits for shipment of another 1 million tons on Feb. 7 after clearing a similar quantity in November, according to an official with direct knowledge of the talks, who declined to be identified because the plan hasn’t been announced.

$20 a Ton

Buying Indian sugar is about $20 a ton cheaper than purchasing the sweetener from Brazil, according to Al Ghurair. The Indian sugar, which is different from the traditional raw- sugar, will be used to make the white, or refined, variety, he said. The refinery has no plans to purchase sugar from Thailand, the world’s second-largest exporter.

“Thai sugar is not competitive to bring to us,” he said. The quality of the sugar produced in Thailand is “not fit to use in the refinery.”

Al Khaleej has installed capacity to produce 6,000 tons a day and plans to purchase 2 million tons of raw sugar this year, Al Ghurair said. About 80 percent to 85 percent will come from Brazil, he said. The recent switch to Indian sugar is a “small dent” to the share of Brazilian sweetener the refinery buys annually.

EU Supplies

The Dubai-based refinery is operating at about 60 percent of the total capacity as large supplies of white sugar from the European Union are readily available in the market, he said. For refiners in general, profitability is limited even as the white sugar’s premium over the raw is near $100 a ton, up from $88 a ton at the end of last year, according to Al Ghurair. That is because sugar for March delivery is more expensive than May- delivered sweetener, he said.

“You are buying the March and you are selling the May. You lose $40 on that, so in reality it’s not $100 but $60,” he said referring to the white premium. “Right now we are having a lot of European white sugar hitting the world market and as soon as this disappears the dynamics will change.”

European Union sugar production is forecast to jump 18 percent to 18.26 million tons in the 2011-12 season, more than a previous forecast of 17.83 million tons, data from the European Commission published on Jan. 13 show.

To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net

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