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It seems to be Africa's month but little else of note :
MAJOR FIRE AT SANTOS PORT
Friday October 18 : A serious fire broke out this morning at the Copersucar sugar terminal at Santos port in Brazil. The world price reacted almost instantly and briefly touched 20 ¢/lb before calming back down again to around 19.5 ¢/lb. There is talk of three storage sheds being burned out and 300 000 tons lost although other information reports that Copersucar can only store 200 000 tons at the port. There is, at this stage, only one image available on the internet. We will try to bring you more on this.
Voice of America is now carrying an article with a horrendous picture of one of the sheds.
So have we come off the bottom? The October delivery closed at the end of last month with a lot of physical sugar being accepted [instead of the traders just liquidating their positions] and the price was back over 18 ¢/lb :
However there don’t appear to be any fundamental reasons for the climb so perhaps it is producers re-affirming that 18 ¢/lb is the new floor? Having said that, Kingsman continues to predict that the surplus next year [that is to say the year now just started] will only be about 4.5 million tons compared to its 10.7 million ton estimate for 2012/13.
EGYPT SCRAPS DUTIES
Egypt has told the WTO that it has scrapped the duties that it imposed on imported raws at the end of 2012, saying that the problems of the domestic sugar industry were not related to increased imports of sugar.
Dangote is making some interesting claims : it says that it will invest another $100 million in its Lagos refinery to take its annual capacity from 1.4 to 2.5 million tons by the end of 2014 and that it will invest $1.5 billion in cane projects over the next five years.
Trouble seems to be looming for the new generation of sugar mills in eastern Uganda : President Museveni is demanding the closure of factories built within a 25 km radius of the original two factories and those that ‘had disregarded their obligation to guarantee food security while carrying out their activities’, a rather all embracing description. Most people seem to believe it is politically motivated and the Madhvanis, owners of Kakira, are frequently mentioned.
Illovo’s Kilombero Sugar in Tanzania has just commissioned a new 40 000 ℓ/d molasses distillery at one or other of its two factories [the two of them are within 3 km of each other, one north of the river and one south]. The capital cost is reported to be about $50 million.
The lowveld province where Triangle and Hippo are has ordered Tongaat Hulett to hand over 6 000 ha of land to be allocated to ‘landless people across the province’. The basis of the order is that TH has consistently reported estates of 29 000 ha when the province has proved them to be 35 000 ha, presumably the difference between gross and net productive areas.
We also see that the refurbishment of the Harare refinery is reported to be ‘on track’.
Talking to somebody just two weeks ago, your correspondent stated that production would never resume at Luabo : how wrong he was, it seems. Sena, in Moçambique and now controlled by France’s Terreos, ran two factories before the civil war : Marromeu on the south bank of the Zambezi and Luabo on the north bank. Both were damaged in the war but Luabo was so badly damaged it could not be economically refurbished. However, Sena has announced that it will be a new $300 million factory at Luabo with the intent of it being operational in 2015.
Despite a serious drop of planted area in Maharashtra [down 40%], it looks as if India will have a similar crop to the last one with production somewhere between 24.5 and 25 million tons. Consumption is estimated to be about 23 million tons so the government, for a change, seems to be actively encouraging exports. As we have seen production plunge by 10 million tons year on year, too much export might not be a good thing.
It seems that the proposed new sugar factory at Ingham will be built with Chinese equity and equipment. We cannot imagine that Australian factory people, used to high quality local systems, will be queuing up to work at the new factory.
The domestic price is back in the doldrums in the USA so there have been more agreed defaults on loans with producers handing over sugar in lieu but now we are seeing industrial buyers defaulting on longer term contracts and being taken to court by producers. LDC, now owner’s of Savannah and hence the Dixie Crystal brand among others, is suing U.S. Sugar Co [not to be confused with Clewiston’s US Sugar] for several million.
One default in particular is worthy of note : American Crystal has given in sugar in lieu of paying back a government loan of $71 million.