Australia is braced for a rising flood of Indian sugar exports to Indonesia and China in the next two months as the South Asian giant gears up to move the bulk of its sugar surplus at bargain prices.
Australian competitors see a forecast by India's sugar export guru SL Janis, of the Indian Sugar Exam Corp, for a doubling of exports to 3.5 million tonnes for the new crop year as too low, with 4-5 million tonnes possible. "We haven't yet faced the reality of the Indian exports. There hasn't been a lot of pressure on the market from Indian raw.
There's a lot of sugar in India. It will be tested out in the next two to three months," one Australian trade source said. Indian exports to East Asia began to run hot in the year to October, overcoming high freight rates to land 205,000 tonnes of raw sugar in Indonesia, its second-largest export market, according to figures quoted by sugar broker and analyst Kinsman.
Indonesia is also one of Australia's best new markets, increasing its imports to nearly 500,000 tonnes in 2006 from virtually nil in 2000. India also exported 109,000 tonnes to China, from its total exports of 1.7 million tonnes, as well as smaller amounts to Singapore.
India's focus on East Asia is in addition to new sales to Dubai and, most recently Russia, according to traders. But in East Asia, greater Indian exports this year will put severe pressure on Australian operators, who are already in a survival battle against low prices and a strong Australian dollar now at 23-year highs.
This has heightened Australian industry reactions to what they have described as an "extraordinary" statement by Jain this week of an intention to cut prices to move big shipments.
"I am prepared to sell with a very small margin of profit or no margin at all. The idea is to ship out as much as possible without losing money," Jain was quoted by Reuters in New Delhi as saying on Tuesday. One Australian source said: "If you're a buyer out there you would be licking your lips after a statement like that. Here's a guy who doesn't really care what he gets."
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