India is expected to import about 4.5 million tonnes of raw sugar in the next 12 months, a senior official at producer Simbhaoli Sugars Ltd said on Tuesday, further tightening falling global supplies. Simbhaoli, one of India's top seven producers, aims to import up to 25,000 tonnes of raw sugar to make up a shortfall in domestic supply, Finance Director Sanjay Tapriya said.
"We are waiting for a government notification on raw sugar import rules and then plan to import 20,000-25,000 tonnes from Brazil," he told Reuters in an interview. An analyst with the Mumbai-based Indian arm of a global trading firm agreed with Tapriya's expectation.
India would scale up imports to 3 million tonnes in the first couple of months of the season beginning in October 2009, up from an estimated 1.5 million tonnes in 2008/09, the analyst, who did not wish to be identified, said. India exported a record 4.9 million tonnes in 2007/08 but expects output to fall by a third, to 18 million tonnes, in the current crop year to September, and some officials say production may drop to 16 million tonnes from 26.5 million last year.
The South Asian nation, which is the world's biggest sugar producer after Brazil, said this month that mills could import raws duty free for domestic sale on condition a similar quantity of refined sugar was exported within 24 months. However, the government has not yet changed the trade rules and Tapriya said imports would accelerate after formal orders were issued by the federal government.
Last month Reuters reported Indian sugar mills, expecting the government to allow duty free imports, had struck deals to buy 200,000 tonnes of raws from Brazil at $265-$285 per tonne and some of the contracted quantities were already on the high seas. Tapriya said benchmark raw sugar prices in New York had already gone up on India's imports and prices might rise further as the country was bracing for bigger purchases.
PRICE SURGE: New York's March raw sugar contract rose 0.16 cent to 13.28 cents per lb on Monday, the highest close for the spot contract since it hit nearly 14 cents at the start of October.
"When India exported five million tonnes of sugar last season, it had a major impact on world prices. Now when we are going to import heavily, it will again put massive upward pressure on prices," Tapriya said. He said rising prices would discourage mills from importing raw sugar and selling it in the domestic market.
"Also, with international white sugar prices going up, we think it makes sense for standalone refineries to import raws and export whites," he said. On Monday, the London March white sugar contract added $6.70 to close at a four-month high of $393.20 per tonne.
Tapriya said most Indian mills were running at half their capacities, in line with the world's largest sugar refinery, Dubai's Al Khaleej, which was operating at 60 percent capacity. He said his firm's output was expected to fall by 10-15 percent in the year to September from 230,000 tonnes a year ago. Trade officials say excessive use of pesticides has trimmed sugar recovery from cane.
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