China is likely to overtake Indonesia to become the world's top raw sugar importer in 2015/16, due to buoyant Chinese demand, Paulo Roberto Souza, president of Brazilian supplier Copersucar, said.
Souza said expectations of strong Chinese demand at a time of constrained domestic production eroded by drought, was likely to push the country's raw sugar imports up to 4-5 million tonnes in 2015/16.
Speaking on the sidelines of a one-day sugar and ethanol conference organised by Brazil-based analyst Datagro, Souza added in an interview that he did not expect a weak rupiah currency to constrain raw sugar imports by Indonesia. Asked which country was the world's top raw sugar importer, Souza said, "It's still Indonesia, but China will take this seat probably in 2015/16."
Referring to weak sugar prices, he added, "The Chinese react very fast to sugar price changes." Plinio Nastari, president of Datagro, told Reuters later he agreed with Souza that China was likely to overtake Indonesia and become the world's biggest raw sugar importer in 2015/16, due to China's growing appetite. He said Indonesia was unlikely to import less dollar-based sugar despite its weak currency against the US dollar, because sugar is a staple and demand is inelastic.
Souza also said he expected ethanol demand to rise in Brazil due to increasing competitiveness with gasoline at the pump, and called for policies to encourage ethanol production. Both Souza and Nastari expected Brazil to raise gasoline prices in the next few months, which would further increase the competitiveness of ethanol for "flex-fuel" vehicles. Souza said new sugar and ethanol production capacity in Brazil was expected to be driven mainly by increases in ethanol demand.
"The demand is there, but it depends on a very stable regulation," he said. Souza said he expected 59 percent of sugarcane in centre-south Brazil to be allocated to ethanol in 2015/16, up from 57 percent a year earlier. Brazilian ethanol production and imports would need to increase by 27 billion litres between 2015 and 2030 to meet the expected increase in demand. Souza said that whereas in previous years increasing cane availability had met the rise in ethanol demand, bottlenecks could arise due to a stagnation in production capacity after the closure of some mills in recent years due to high debts. Weak sugar prices have eroded mills' margins, triggering some bankruptcies and a lack of new investment.
Source: www.brecorder.com