Sugar Industry News : April 2015
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Just when everyone thought that things couldn't get any worse, the price carried on falling and even went below 12 ¢/lb towards the end of March before recovering to 12.32 on April 1 :
The general talk is gloomy for the foreseeable future with the weak Brazilian currency taking a fair share of the blame.
CRISTAL UNION REJECTS TEREOS
In a move widely seen as preparing for the end of the EU sugar regime in 2017, the French sugar company Tereos proposed a merger with Cristal Union, another French sugar company, last month. The board of Cristal Union firmly rejected the proposal.
Meanwhile Cristal Union is making its own moves to position itself for the end of the sugar regime : in February it took an unknown stake in the Brindisi refinery of SFIR and ASR. As part of that arrangement it seems that ASR will somehow be providing raws to the Cristal Union refinery currently being built near Algiers. We are told that that is a 350 t/a refinery scheduled to start commissioning this summer.
KENYA GRANTED YET ANOTHER COMESA EXTENSION
COMESA granted Kenya yet another one year extension to its sugar safeguard within the common market at its recent summit in Addis Ababa. This time, the summit has insisted that quotas be allocated to other member states to make up any shortfall between domestic demand and domestic supply. This is to be done on a ‘simple, quick, transparent, and efficient’ basis. There is a full communiqué on the subject on the COMESA web domain.
One of the arguments put forward in support of the extension was that the country had made progress on privatisation because Parliament had voted in favour. However, what was not discussed was that between the five state owned factories there are debts of over US$ 1 billion – about 1.8% of the country’s GDP. Nzoia alone has debts of $400 million according to a government report.
MUMIAS CALLS EGM TO APPROVE RIGHTS ISSUE
In February we reported that Mumias – always portrayed as the one successful privatisation in Kenya’s industry – had actually been receiving US$10 million of government support over the previous 18 months. Last month it reported the loss for the past year as $22.5 million so the Government stepped in and offered $11 million of further support provided that the company was re-structured with new directors and management. The company will seek approval for a $43 million rights issue at an AGM called for April 10 : watch this space!
NEW ESTATE FOR ZAMBIA
It is reported that a new company called Mansa Sugar will establish a relatively small sugar estate in Zambia’s Luapula Province. That places it on the border with DR Congo [what those of a certain age know as the Belgian Congo] where a spur of DR Congo thrusts deep into Zambia so it is only 130 km from the Congoan town of Lubumbashi and 110 km from Zambia’s Ndola and Kitwe – albeit 10 km of Zambia and 100 km of DR Congo. The budget is $54 million and the initial land allocation is 2 500 ha.
PAKISTAN EXPORTS 250 000 TONS
Supported by a government subsidy of $100 per ton, Pakistani sugar companies have contracted to export 250 000 tons of sugar for prompt delivery. They have apparently been getting $370 to 400 per ton.
FACTORIES SHUT EARLY IN INDIA
It is reported that 29 of UP’s and 12 of Maharashtra’s sugar factories have shut – well before the end of crop – as a result of the low sugar price and the high state-set purchase price of cane.
BRIGHT FOOD FLEXES ITS MUSCLES
It didn’t take long : in January we reported that China’s Bright Food had finally acquired some sugar production, in China as it happens. Last month a senior executive was quoted as asking for import controls, stating that the industry as a whole lost $1.56 billion last year because of state-set cane purchase prices and state-set sugar selling prices.
AUSTRALIA SHIPS FIRST HIGH PURITY SUGAR TO JAPAN
Historically, Japan has always imported low pol sugar because of its tariff barrier designed to protect the local industry. But, thanks to the new Japan-Australia Economic Partnership, last month saw the first two shipments of high pol Australian sugar loading for Japan.
CHALLENGE TO US MEXICO TRADE DEAL DEFEATED
The US International Trade Commission has rejected the challenges to the new Mexico / USA arrangements for sugar that were raised by Imperial Sugar and AmCane Sugar so they have been ratified.
FINAL MEXICAN SELL-OFF
Mexico has announced that it wants to sell the last 9 of the 27 factories that it nationalised in 2001. It has parcelled them up into 2 lots of four mills each and a single mill. It is asking for bids by mid-2015 and want to raise nearly US$ 540 million, claiming that the factories are ‘among the most productive in the country’. However, there is a reason that it has been unable to offload these before : most people view them as the unfortunates of the industry.
BSI WANTS TO SHAKE UP THE BELIZEAN INDUSTRY
BSI has issued a report warning of the dangers of the EU regime change in 2017 and calling for major reforms in the industry. It reports that Belizean farmers only obtain 42 tons of cane per hectare on average compared to over 70 t/ha in Mexico and 100 t/ha in Guatemala. Whether the country responds to the challenges is another matter.
BARBADOS CHALLENGED AT WTO REVIEW
The US challenged Barbados to justify its proposed spending of $270 million [it was reported as $250 million three months ago] on the new factory it wants to build at Andrews, pointing out that agriculture only contributed $104 million to the whole economy in 2012 when data was last published. The GDP was then $4.2 billion so the factory would cost 6% of GDP. The Bajan reply was very subjective.
COLOMBIAN CROP DATA 2014
The full year data for 2014 is now available from Asocana, the association that represents all 13 of the country’s factories. The crush was just over 24 million tons and the production was just short of .24 million tons with 406 million litres of ethanol produced together with 285 000 tons of molasses.
The association also reports that installed generating capacity should increase from 215 MW to 269 MW this year, thanks to two expansion projects. That is expected to boost export capability by about 20 MW.