Sugar Technology
On-line News

March 2014

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A reasonable amount of news :


WORLD PRICE

Well at least the price didn’t keep falling last month, perhaps we are heading for a stable period around the 18 /lb mark :

World Price

In general the mood is not optimistic with India continuing to talk about 25 million tons and no really significant weather events.

GERMANY

Germany’s monopoly commission has fined the country’s three sugar producers a total of €280 million for operating a cartel up to 2009. Suedzucker has confirmed that it was fined 195.5 million and Nordzucker has announced that it has accepted a fine of less than 10 million. Pfeifer & Langen have not yet commented but if the other figures are accurate … you can do the maths.

The day after the announcement, the EU announced that it would be closing its own investigations into the cartel.

ETHIOPIA

Yet another new sugar estate announced in Ethiopia, this time in the country’s far north : Tigrey province on the border with Eritrea. The estate is said to be 45 000 ha and the factory will reportedly have a capacity of 24 000 tcd, producing 484 000 t/a of sugar and nearly 21 million litres of ethanol. What is interesting is that the project is said to be financed by Israel although the supposed Israeli contractor, Natifa, is untraceable.

KENYA

It is difficult to remember how many extensions to the COMESA sugar protocol that Kenya has already had but last month it asked for another one. At least this time it was only for a year until March 2015. Amazingly it was granted that extension although its claim to have progressed the privatisation of the four factories still owned by the government is hardly credible.

PAKISTAN

Where have we heard this before? Pakistan’s Minister for Water and Power has announced that 1.5 to 2 GW of capacity will be added to the national grid by the end of 2014 by creating export electricity projects at 25 sugar mills. He described the current situation as an energy crisis with the government on a ‘war footing’ to overcome it – perhaps not the best way of expressing the approach on the subcontinent.

INDIA

The Indian government has said that it will subsidise raw sugar exports to the tune of IR 3,333 [about US$ 55] per ton. The target is to subsidise up to 4 million tons of exports over the next two years. The Brazilians, among others, were quick to point out that any form of export subsidy is against the WTO rules. Ironically, India was one of three countries which took the EU to the WTO about 10 years ago.

SHREE RENUKA

As we hinted in our December news, Wilmar has confirmed that it is buying 50% of India’s Shree Renuka, valuing the company at $300 million. When you consider that Shree Renuka paid more than that for the Brazilian company Equipav in 2010 [having already paid another $ ~80 million for Vale Do Ivai the year before] and that it also owns and operates 7 factories and two port refineries in India, it seems like a bargain. But is it?

FIJI

The government of Fiji has announced that it is looking for a $150 million loan from India’s EXIM bank to set up electrical stations at two of its factories : Labasa and Rarawai. No indication of capacity was given and it is unclear how much of the cost will be in steam consumption improvements as distinct from new power station equipment.

At the same time the government announced that it is considering building a 30 000 t RSO per annum refinery, at a cost of $56 million!

QUEENSLAND SUGAR LIMITED

Last May we brought you the news that a group of Tableland farmers had switched their cane from that local factory to Mossman, a factory owned by Mackay Sugar, in protest at Tableland’s parent company threatening to by-pass QSL and sell its sugar direct to market. We now hear that Mackay itself has contracted to sell about one third of its sugar through Brazil’s Copersucar. Is this the beginning of the end for QSL?

US FARM BILL

President Obama signed the latest Farm Bill into law last month and it still contains the usual protection for the sugar industry despite the fighting that went on to get it removed.

CUBA

Following last month’s comments by Alfie Fanjul about the possibility of [re-]investing in Cuba, the rest of Florida’s Cuban community has been up in arms, railing against any such thoughts until the island returns to democracy, presumably after the demise of the Castro’s.

On the island, it looks as if the current crop is also in trouble with talk of being behind the crushing budget in February as a result of the weather but also, as usual, as a result of equipment failures.

BRAZIL

The comments seen in the past about ‘some companies’ collapsing due to the reduced sugar price are becoming more definitive with certain groups being named. Names that have been put forward include Aralco, Tonon and USJ, all of them with three factories and a combined annual crush between 6.5 and 8 million tons for each group. Watch this space!

Interestingly, LDC is pointing out that the currencies in both Brazil and India have devalued in the last 12 months which has reduced the impact of the lower prices. The question that raises is whether the world price is having an impact on exchange rates for these two major producers.