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Snippets from all over this month :
The world price has been in the doldrums for the last few months, trading in the 23 to 25 ¢/lb range. That is probably a good thing for several reasons, not least that it didn’t carry on down to the mid-teens that we last saw 18 months ago. The flat bottom also implies that, just maybe, the price is becoming more stable?
Although the current year is expected to be similar to last year with a surplus of production over demand in the 5 to 6 million ton range [not much in a 170 million ton per annum market but quite a bit in the much smaller traded market] the expectation for 2013 is very different with the March 2013 price already at a premium to the July 2012 one.
Many European countries continue to oppose the ending of the sugar regime which the Commission wants to happen in 2015. Eight of the now 27 countries of the union demanded extensions, four of whom specifically demanded until 2020, at a meeting in January. In addition the big companies [arguably the biggest beneficiaries of the regime] are now wading in with France’s Tereos implying it won’t invest any more in Europe if the regime doesn’t continue and Germany’s Suedzucker claiming that the regime ensures a ‘high degree of supply security for processors and consumers’.
We told you that Hellenic Sugar was for sale 6 months ago and in December reported that most buyers were walking away. Now it now looks as if it will go to the Germans, it is just a question of which ones. On the one side is reported to be Suedzucker and the other is Sunoko, a Serbian company apparently owned by Nordzucker. Not that the Sunoko/Nordzucker is looking good : the government of Serbia has said that it would not allow the purchase under its competition rules because of Hellenic’s Serbian activities even if the company sold one of its other factories.
India has taken a step closer to deregulating its sugar industry by setting up an ‘expert committee’ to explore the possibilities and implications. A long way to go then!
At least one analyst is predicting that China could become the largest importer of sugar by the end of the decade as the economy continues to grow and urbanisation proceeds. Because the population is so large and the per capita consumption so low, most other analysts would, no doubt, agree,
Australia is planning to shrink its sugarcane agriculture research efforts in a rationalisation which will see something called Sugar Research Australia emerge from the ashes of BSES, SRDC and something called Sugar Research Ltd. BSES is already making people redundant.
Mitr Phol will probably have secured full ownership of MSF / Maryborough when the offer closes on February 10. It was announced last month that all of the directors had sold their shares to the Thai company so it now controls 26.6% of the company. The offer, at Aus$4.45 per share, will cost Mitr Phol $313 million.
In the meantime the company has been sweet talking shareholders with promises of major investment in the four mills owned by MSF, mainly in electrical export and other value added from surplus bagasse. Perhaps it needs to think that the shareholders are the cane suppliers so they will want the company to invest then demand their bagasse back or to be paid for it too?
The American Crystal lockout is still ongoing with the latest arbitration talks again collapsing in acrimonious circumstances. The company has also released its quarterly resuklts which show a sharp decline in turnover and profit but as last year was an exceptional year it is difficult to work out what impact the lockout might be having even though the union side it is responsible for all of it.
US ETHANOL TARIFF ENDS
The USA has not renewed the legislation which granted a 54 ¢/gallon tariff on ethanol imports to the country, a tariff which protected the grain farmers of the mid-west. The free market applies from January 1 this year but the long terms implications are unclear as last year Brazil, the most likely beneficiary of the move, had to import ethanol to satisfy its own demands.
Brazil is one of the first to complain when other countries ‘unfairly’ subsidise their sugar industries. However, BNDES – the Brazilian government’s development bank – has just announced that it will lend $2.2 billion in 2012 alone for renovation and expansion of the industry. BNDES expects the move to result in a 17% increase in the size of the crop – and hence in the production of ethanol. The announcement came within a week of the USA’s decision to end the tariff on ethanol imports, timing which the Brazilians dismiss as ‘coincidental’.
Following two years of refurbishment, the now privately owned Long Pond factory is now reported to be ready for the 2012 crop. The owners say they have spent US$ 10 million on the place and expect to produce 8 000 tons of raws from crushing 90 000 tons of cane. That is $1,250 per ton of sugar produced per year so let’s hope the price stays high into the future.
The EU is giving GuySuCo another $39.5 million to boost sugar production and renovate factories. Production last year dropped below 200 000 tons for the first time in a decade as bad weather and the Chinese-built Skeldon II factory continued to cause problems.
The Cevital refinery in Bejaia, Algeria is one of the largest in the world, if not the largest, with a daily capacity of 5 000 t or more. It is planning to reach 2.6 million t/a by the end of 2012 and is reported to be thinking of building a refinery in Iraq [although so are a lot of others!].
Karaturi Global, an Indian company and the largest producer of roses in the world, has announced plans to develop a 15 000 ha sugar estate in Ethiopia’s far western province of Gambella [it borders what is now Southern Sudan]. The company says that it hadn’t even seen the land when it agreed to lease 250 000 ha from the Ethiopian government but then if you were offered that amount of land for $12,500 per annum for 50 years [plus tax breaks], wouldn’t you? To save you the effort : US 5¢ per hectare per annum.
There is talk of another new sugar project in Angola, this time in Kwanza Sul province to the east of the town of Gabela. The capital cost is reported to be ~$82 million but it is not clear if that is just the factory or the total cost.
Everybody thought that the poor last crop in South Africa [sub 2 million tons of production] was a blip in the steady production figures but SASA is now predicted the 2011/12 production to be nearly 5% lower than last year’s at 1.82 million tons, The drought is still being blamed for the poor performance but one starts to wonder.
In November we told you about the US company Renmatix and its ‘Plantrose’ process that can ‘easily’ hydrolyse biomass using supercritical water. It would seem that the giant German chemical company BASF believes in the process : it is investing $30 million which will allow Renmatix to build a 100 000 t/a plant by 2014.