Al Khaleej Sugar Refinery Working Below Capacity

DUBAI - The capacity utilisation at Al Khaleej Sugar Refinery in Dubai, the world’s largest sugar refinery, is down to 60 per cent on slack demand, said top official of the company.

By Aneela Batool

Published: Mon 16 Feb 2009, 12:55 AM

Last updated: Sun 5 Apr 2015, 9:35 PM

Speaking to Khaleej Times, on the sidelines of the Dubai Kingsman Sugar Conference, held this week, Jamal Al Ghurair, managing director of the plant, said that global financial crisis has affected the company. “Our buyers are short of cash so they are not buying.”

The company has stored 500,000 tonnes of sugar — half of its full storage capacity due to lack of demand.

“The last three month of 2008, Al Khaleej’s business growth remained negative, however, its too early to predict about 2009,” he said.

The fact that the Dubai refinery was operating at below full capacity signalled that regional demand for refined sugar was slow. Al Khaleej sells refined sugar to regional markets including Iraq, Gulf countries and Pakistan.

Ghurair said the Dubai refinery had gone back to using Brazil as a main supplier of its raw sugar since India was no longer exporting sugar.

Al Khaleej had used India as a supplier when the country was a net exporter, but now India had shifted back to being a net importer. Brazil is the world’s biggest producer and exporter of sugar.

Al Khaleej Sugar Refinery GM Cyrus Raja said, “Decline in demand will not affect prices of sugar as despite decline in demand the sugar consumption is still increasing” he said this trend also applies to the UAE and Middle East region. In fact, per capita sugar consumption is very highest in the UAE than the other part of the world.”

He said since demand is low in the market right now, due to global financial crisis, people have stop stocking; but the consumption is still growing in most parts of the world.”

Industrialists are calling for the government to pay more attention for the financial aspects of this promising sector, given the strategic target of diversifying the economy away from relying on hydrocarbon products, and taking into consideration the soaring prices of commodities that is estimated in the sugar industry alone to shoot up by 27 to 48 per cent by the year 2011.

Decline in EU Sugar Exports

Sugar exporters in the UAE and other countries in the region will benefit from the impending reduction in European Union (EU) sugar exports.

The World Trade Organisation (WTO) ruled in June last year that the EU has been producing and exporting too much subsidised sugar in violation of global trade laws.

The EU has pledged to reform its sugar industry, which has received support through import protection, high producer support prices and export subsidies.

The promised reforms, to be implemented over a four-year period until 2010, will bring down EU sugar exports to the WTO ceiling of 1.27 million tonnes a year from 5.2 million tonnes now.

According to a UAE Ministry of Economy report, sugar companies in the country can gain from the changed global market. It wants them to make new investments in raw sugar refining capacity both for regional market and for exports. The WTO’s decision on the EU is expected to result in a sharp rise in world sugar prices as the European bloc enjoys a 15 per cent share of the global sugar trade. New investments will be required to bring down these prices.

World Sugar Prices

World sugar prices may increase by about 27 per cent by 2012 with the imposition of free trade and by 48 per cent when all trade and production barriers are removed.

Top sugar exporting countries such as Brazil, India and Australia are likely to increase their investments to meet the sugar demand and reduce high global prices. “The Middle East and the GCC in particular have several factories for refining sugar. This industry will definitely expand, if colossal investments are pumped into it,” the ministry report said.

Middle East Sugar Consumption

Industry estimates put per capita sugar consumption in the Middle East at 34 kilogramme per year, higher than the world average of 24 kilogramme.

The region consumes 12 million tonnes of sugar annually, of which 8.5 million are imported. Some 45 per cent of the imports are raw sugar and 55 per cent are refined white sugar.

Industry estimates put the UAE’s sugar consumption at nearly 140,000 tonnes per year, calculated based on the annual per capita sugar consumption is 34 kilogrammes per year, higher than the world average of 24 kilogrammes. European suppliers last year dumped a lot of sugar in the UAE market, pushing prices down. But Europe does not have a surplus at present.

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