• Wednesday, October 22, 2014

Sugar mills stuck in huge losses

Raw sugar imports rise 31pc year-on-year

Sohel Parvez

Falling sugar prices on the global market and increased imports have lowered the prices of the sweetener in the domestic market, putting state-owned and private mills in a tight spot.

Raw sugar imports surged 31 percent year-on-year to 19.83 lakh tonnes last fiscal year amid the refiners' rush to capitalise on the lower international prices to build up stocks for export and the domestic market.

But the International Sugar Organisation on Tuesday said the global sugar consumption needs to outstrip supply by at least three million tonnes before prices recover significantly. In other words, the organisation forecasts extended weakness in prices.

Raw sugar price, which traded at $467.9 a tonne at the end of last year, stood at $426.3 per tonne on Wednesday, according to Sugaronline. A month ago, it traded at $444.8 a tonne.

Bishwajit Saha, general manager of City Group of Industries that run the biggest sugar refinery, linked the local refineries' increased processing capacity to the increased imports.

The desire to export may be another reason, he said, adding that the volume of exports though was low.

Regardless, the increased availability of the sweetener in the local market has put a downward pressure on the prices, said Abul Hashem, vice-president of the Bangladesh Sugar Merchants Association at Moulvibazar, a wholesale market for sugar and cooking oil.

Sugar traded between Tk 43 and Tk 46 per kilogram at the retail level yesterday, down from Tk 45-48 a month ago, according to Trading Corporation of Bangladesh.

At the wholesale level, each kilogram of sugar traded at Tk 39 yesterday, down from Tk 39.50 a week ago, Hashem said.

The Bangladesh Sugar and Food Industries Corporation, which operates 15 state mills, is selling sugar at Tk 40 per kilogram in a bid to exhaust its stockpile of 1.56 lakh tonnes.

The present offer price, its officials say, is half BSFIC's production cost.

The current production cost, including costs of imports, is Tk 41.5 a kilogram, said Saha.

“It is simply a demand and supply mismatch. It appears consumption is falling. Sluggish economy may be a reason as consumer confidence is not growing. All are making losses,” said Golam Mostafa, chairman of Deshbandhu Sugar Mills.

Some 12 lakh tonnes of raw sugar have been imported since January this year, he said, while touting the whole year's imports to come to 17-19 lakh tonnes.

The country consumes 14-15 lakh tonnes of sugar annually, according to industry estimates. However, the import and local production numbers reflect a surplus in comparison to demand, said industry insiders.

Currently, private refineries and state mills have stock of nearly five lakh tonnes of sugar, said Saha.

Published: 12:00 am Friday, August 29, 2014

TAGS: sugar price fall domestic market Raw sugar imports

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