Dubai refinery shifts to cheaper Brazillian sugar

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London: The world’s largest sugar refinery, the 1.5-million-tonne-a-year Al Khaleej plant in Dubai, is shifting to imports of raw sugar from Brazil taking advantage of falling freight rates, and is likely to shun Indian imports in 2009, Al Khaleej general manager Cyrus Raja told Reuters.

“Yes, we are back to shipping raw sugar from Brazil. The Indian story as raw sugar exporter has ended,” Raja said in an interview by email late on Sunday. “In fact, India is currently importing raw sugar.” The Dubai refinery had previously imported raw sugar from India.

Raja said that he believed the current trend for low freight rates, accentuated by the global economic slowdown, would bolster the Dubai refinery’s demand for Brazilian rather than Indian raw sugar supplies. “My view is that freight rates will remain low in 2009,” Raja said. “This will result in more Brazilian sugar flowing into the region compared to last year.”

Brazil is located further away than India from Dubai, but the South American country’s costs of production are much lower. Brazil is the world’s largest producer and exporter of sugar. India is the world’s biggest consumer of the sweetener and second biggest producer. India swings from being a net exporter to importer depending on the size of its harvests.Asked whether it was likely that the Dubai refinery would import raw sugar from India in 2009, Raja said: “Unlikely.”

Raja, who will be a moderator at Dubai Kingsman sugar conference next week (February 8-10), said that the Dubai refinery was currently operating at below full capacity. But he declined to give the current rate of production of the refinery. Raja said that the refinery had plans to expand its full production capacity, subject to market conditions, to 7,000 tonne per day from 5,000 tonne per day currently. He said the storage capacity of the refinery was 1 million tonne of sugar, but declined to say how much sugar was currently in store.

Raja said that he expected the Dubai refinery to increase exports of refined sugar to the European Union in 2009, compared with 2008, but he gave no tonnage figures.

Asked if the Dubai refinery planned to acquire or lease more ships in the near future, Raja said, “Not for the moment, but we will go for a BIBO (Bulk In Bag Out) type of vessel later.”