Dubai's Al Khaleej Sugar Co refinery plans to offer sugar in Iraq's latest refined sugar buying tender, Cyrus Raja, Khaleej's corporate affairs general manager, said on Tuesday. "We will definitely be bidding," Raja told Reuters in a telephone interview from Dubai.
Iraq's state-run Food Stuff Company last week announced a tender to buy an unspecified quantity of sugar and other foodstuffs, according to its website. Iraq is a key buyer of high-quality 45-ICUMSA refined (white) sugar. Physical buying of refined sugar has picked up after a slide in benchmark futures prices to 17-month lows of $298.00 per tonne last week.
Traders said it was hard to see sugar prices marching much higher because of a huge global supply glut in the 2007/08 season, largely from top producers Brazil and India. Raja said the Al Khaleej refinery was currently running at full capacity due to buoyant demand for refined sugar, especially in Middle East markets.
He said he expected the benchmark whites-over-raws premium, a measure of the profitability of refining, would remain at a healthy level of around $100 per tonne in the near term.
Raja hoped the refinery would be able to shut for a limited period later this year in order to expand capacity from 5,000 tonnes per day to 7,000 tonnes, but the timing of the shutdowwn would depend on the market "With a $100 premium, the market does not want to switch off the refinery," he said.
Raja said the strength in the whites-over-raws premium was in part due to the decline in EU 45-ICUMSA white sugar exports following price-slashing EU sugar regime reforms. Raja also said he expected a record new centre-south Brazilian cane crop of around 410-420 million tonnes, in line with the consensus of market estimates. The refinery receives raw sugar from Brazil, the world's top producer, which is now harvesting its new cane crop in the main centre-south producing region.
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