Sugar Industry News : April 2016
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WORLD PRICE
The world price stayed in positive territory in March and closed the month above 15 ¢/lb :
It is becoming clear that we are moving into a period of deficit with most estimates being in the region of 5 to 7 million tons shortfall. The real [red] continues to follow the world price.
BRAZIL TO TAKE THAILAND TO WTO
Well over ten years ago Brazil and Thailand won their case against the EU sugar regime before the WTO. Now Brazil is taking Thailand to the WTO for subsiding its own sugar producers – something which Thailand vigorously denies. There is also talk of Brazil taking India to the WTO. Brazil could well read John 8:7.
EU CONCERNED ABOUT DOMESTIC SUPPLIES
The European Commission is reported to be concerned about sugar supplies within the region as domestic production declines at the same time as imports. Certainly the local sugar price is very buoyant but that does not pass through to the ACP countries which supply most of the imports so perhaps the end of imports will come sooner than 2017?
TEREOS PLANS A 20% INCREASE IN SLICE POST-2017
Tereos, the French cooperative, has announced that it intends to increase beet production from 15 to 18 million t/a by 2018. It is planning on a 15% increase in land area sown and a 5% increase in yield. On the factory side, the increased capacity will come from extending the campaign to 130 days.
HELLENIC SUGAR CONTINUES TO STRUGGLE
HSI is in the news again – and for all the wrong reasons. The € 30 million cash injection given to the company last year by the Greek government is reported to have all been used and Piraeus Bank is holding out for some repayment of its € 150 million debt which is not allowing a much needed restructuring. In March the government announced that it expected to make € 50 million from selling HIS's Serbian operation 'and other assets' and that Piraeus Bank had agreed to a € 50 million 'haircut'. It looks like the government will have to give a further € 50 million loan to the company but does it have the resources itself?
EBRD CONVERTS USC EGYPT LOAN TO EQUITY
The European Bank for Reconstruction and Development announced last month that it was converting its $50 million loan to the Sokhna refinery project into capital and that it was also investing a further $50 million as capital. The move seems to be more to do with strengthening the balance sheet than planning for a capital project.
TPC TO EXPAND CAPACITY
TPC in Tanzania – close to Moshi so tucked under the southern skirts of Mount Kilimanjaro – is reported to be expanding capacity from 95 000 t/a sugar to 110 000 t/a. It seems to be a factory de-bottlenecking project though as the budget is reported to be US$ 4.6 million. The company, controlled by Tereos and Alteo [think Flacq United], only uses half of its land for sugar so it presumably doesn't have to spend a lot on the agricultural side.
INDIAN CROP PETERS OUT EARLY
The Indian factories are closing early year due to the shortage of cane caused by two poor monsoons in a row. By mid-March only 325 factories were operational compared to the 473 operational on the same date last year. Maharashtra seems to be particularly badly affected with sugar production down 700 000 tons so far, year on year.
BURIRAM SUGAR TO ADD TWO MORE FACTORIES
Buriram sugar, based in the Thai province of that name which is sandwiched between Nakhon Ratchasima and Surin provinces to the east of Bangkok, seems to have acquired two new factory licences. It is reported to be seeking international partners to build the factories which will each be 20 000 tcd capacity. Total investment is estimated to be about $280 million.
NEW INDONESIAN FACTORY DUE TO START CRUSHING
The 5000 tcd Tambora factory on West Nusa Tenggara [second island east of Bali] is scheduled to be inaugurated on April 15th. The project is reported to have cost $120 million and the factory is reported to be designed for expansion to 10 000 tcd. The company says that it has 6000 ha of cane land but it is not clear whether it is outgrower land, estate land or a mixture.
FIJI RECOVERY PLAN
The estimate of US$ 83 million of damage by Tropical Cyclone Winston still seems to be correct in Fiji. FSC is reporting that about half the cane on Viti Levu, the largest island, was destroyed but most of that on Vanua Levu survived. Labasa, the factory on Vanua Levu also seems to be alright and is reported to be on target for a normal opening in about three months' time. Of the three factories on Viti Levu, Lautoka is also reported to be on track for the start of crop. However, Rarawai has 'some substantial damage' and the company is trying to decide whether to scrap what is left of Penang or not, the damage being so severe.
Meanwhile, despite EU bilateral support to Fiji still being suspended because of the military dictatorship, the EU has announced loans to the industry to help it recover from Winston. Figures from as low as $22 million to as high as $47 million have been reported.
GOVERNMENT TO SUPPORT MONYMUSK FINANCIALLY?
Monymusk is one of three Jamaican factories now owned by the Chinese company COMPLANT, the government having divested. It is losing money and the owners have announced redundancies. However, despite the divestment, the Jamaican Minister of Agriculture is reported to have assured the workers that the government will keep the factory 'afloat' to secure their jobs.
CUBAN CROP IN TROUBLE AGAIN
AZCUBA, the government owned sugar company that controls Cuba's industry, has warned of a significant shortfall in the current crop. Apparently last year's growing season was affected by drought and then it rained in January when the crop should have been at its peak. Unfortunately, the company is not releasing any statistical data at this stage.
SOLAZYME FOCUSES ON FOOD AND BECOMES TERRAVIA
Solazyme, Bunge's partner at Moema, has always seemed uncertain as to what its market was. The technology is clear : use algae to make oils and biomass but was that bulk oils or speciality chemicals? It seems that the answer – almost certainly driven by economics – lies in foodstuffs. To go with this firming up of focus, the company has also changed its name to TerraVia.
SYNGENTA TO BE BOUGHT BY CHEMCHINA?
Syngenta, one of the world's most important sugarbeet seed companies and inventor of a novel technique for short setts in cane planting, has been wooed by Monsanto for some time but there was no marriage. The company has now announced – and supports – an offer from ChemChina to acquire all of the outstanding share capital. The offer price means that ChemChina would have to pay about US$ 43 billion and it seems to be a cash offer.