This study updates the breadth of the destination sugar refining industry in key countries. Whilst expansion in refining capacity has slowed over the past decade, there has been ongoing investment in new and expanding existing capacity in strategically important regions over the past decade to 2020. The Middle East and North Africa (MENA), the Far East, the Indian Subcontinent and North America (Canada + the US) experienced the biggest increases in sugar refining capacity, due to expansion of existing refineries and the launch of new autonomous refinery plants. Meanwhile, the EU-27+UK and Eastern Europe & CIS, both experienced a reduction in raw sugar processing capacity, not only with the closure of stand-alone refining plants but also with the decline in the incentive for refining in the inter-crop period at beet sugar factories with policy change and, in the CIS, with Russia’s march towards self-sufficiency in sugar. In MENA, the study notes expanded and new stand-alone refining capacity of 6 mln tonnes between 2010 and 2020; in the Far East +4.4 mln tonnes; the Indian Subcontinent +4.2 mln tonnes; and in North America, refining capacity increased by 1.1 mln tonnes. In total, 16.6 mln tonnes of new refining capacity has been added since 2010 - representing a slight slowing from the estimated 18 mln tonnes added in the previous 10 years (2000-2009) - whilst 1.6 mln tonnes of existing refining capacity was idled between 2010 and 2020.
Part 1 of the paper takes stock of current refining capacity, quantifying capacity at a country level by owner/operator. Investments in refining capacity over the past decade are also quantified, highlighting key drivers incentivising investment where possible. Announced plans to expand or invest in new refining capacity are also collated. Part 2 examines how continued investment in destination refining has impacted sugar trade. This is first considered at the aggregate level before moving to a regional and country level. The focus is on growth in raw sugar imports and a growing demand by destination refiners for Brazilian VHP raw sugar. White sugar re-exports are particularly relevant to the MENA region (and India), so this burgeoning trade is also captured in the analysis. In part 3, the primary importance of the white sugar premium is examined for re-export refiners. In part 4, specific attention is given to the underlying cost profiles for re-export refiners as against destination refiners primarily selling into their (typically high-priced) domestic market. The final part presents the conclusions.
Introduction 1. Current Capacities, Planned Additions and New Capacity 1.1 Middle East and North Africa (MENA) Algeria Bahrain Egypt Iran Iraq Israel Morocco Oman Saudi Arabia Syria Sudan Tunisia United Arab Emirates Yemen 1.2 Far East Big Five China Indonesia Japan Malaysia South Korea 1.3 Oceania 1.4 Indian Subcontinent Bangladesh India Sri Lanka 1.5 Sub Sahara Africa Nigeria 1.6 EU27+UK 1.7 Eastern Europe and CIS 1.8 Canada + US 2. Destination Refiners – Trade Impacts 2.1 MENA 2.2 Far East “Big Five” China Indonesia Japan Malaysia South Korea 2.3 Indian Subcontinent 2.4 Nigeria 2.5 EU27+UK 2.6 Eastern Europe + CIS 2.7 Canada + US 3. The White Sugar Premium 4. Destination Refiners – Underlying Cost Profile 4.1 Refining Costs, Polarisation Premium and Processing Loss 4.2 Ocean Freight 4.3 Cost Estimates 4.4 China: The Cost of Refined Brazilian Sugar Vs Domestic Price Conclusions Annex: Selected Information Sources