February 9, 2020 / 6:22 AM / 13 days ago

Dubai's Al Khaleej Sugar says operating full capacity after 'bad' year

DUBAI (Reuters) - Dubai’s Al Khaleej Sugar, which operates the world’s largest port-based refinery of the sweetener, said on Sunday it had been operating at full capacity since late December after a “bad” 2019.

FILE PHOTO: General view of the Al Khaleej Sugar Refinery in Jebel Ali in Dubai, UAE, February 12, 2019. REUTERS/Satish Kumar/File photo

“The changes came only after Christmas, prior to Christmas we were status quo and all what we are seeing today is a reflection of the Thai shortage of raws,” Jamal al-Ghurair, managing director of Al Khaleej, told reporters at a briefing ahead of a three-day industry conference in Dubai.

Thailand’s sugar production in the 2019/20 crop year is likely to fall 28% from a year earlier to a nine-year low of 10.5 million tonnes, as drought curtails cane supplies.

The lower production is expected to limit exports from the world’s second-biggest exporter and support global prices.

Ghurair said though the shortage in the Thai crop helped white sugar premiums pick up, he saw global demand as largely unchanged, adding that it was difficult to predict how long white premiums would stay favourable.

“I don’t see any trigger from demand side.”

Al Khaleej is exporting its white sugar to “all the usual markets” with demand from East Africa and the Red Sea staying the same, Ghurair said.

The refinery is also continuing to export to Saudi Arabia, with close to a third of sales going to the kingdom.

Competition from India created an unfair situation in the sugar market for 2019 because of government incentives, Ghurair said.

India, the world’s biggest sugar producer, approved a subsidy last year to help cash-strapped mills export a surplus.

“India is strong competition and because of the subsidy it is not a fair market,” he said.

The view for 2020 depends on the Indian subsidy decision, he said.

Al Khaleej’s Egyptian unit Canal Sugar’s plans for a sugar beet plant were on track with construction “in full swing”, Ghurair said.

Canal Sugar’s beet factory, designed to be the world’s biggest, is being built in Egypt’s west Minya and production is expected to reach full capacity in 2022, with half production starting in 2021.

The west Minya project aims to produce 900,000 tonnes of beet sugar a year at an estimated cost of $1 billion.

Ghurair said he saw beet being more competitive to cane for sugar production, with a more favourable cost of production, especially in countries with short water supply.

“The next 5 million tonnes of extra capacity (globally) will come from beet not from cane,” he said.

Reporting By Maha El Dahan and Nafisa Eltahir; Editing by Christian Schmollinger and Alex Richardson

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