Insight Focus

  • Domestic sugar prices have strengthened.
  • Producers are still being incentivised to use C-molasses for ethanol production.
  • General elections are starting later this month.

Introduction

India, the world’s second-largest producer of sugar, aims blend 20% ethanol in gasoline by 2025.

This ethanol will be made from sugar cane and various grain feedstocks, which means many Indian mills now have a choice about how they use the sucrose in the cane. We will show the choices they are making in this report.

Maharashtra Sugar Imports/Exports

Domestic sugar prices have strengthened to 36k INR/kg. Religious holidays, such as Holi and Eid ul-Fitr, have caused a spike in sugar consumption, and this has been reflected in the increased domestic sugar price. 

Imports continue to be unviable at 54k INR/kg, that said, production is better than initially expected making imports unnecessary.

Not much has changed since our last update, and with the elections coming up later this month, the country’s food security concerns remain in the spotlight. 

Ethanol vs Sugar

Many mills/distilleries have a choice over which feedstocks they use to make sugar or ethanol based on the relative prices of ethanol paid by the oil marketing companies. 

Although, the sugar diversion to ethanol continues to be capped at 1.7m, the government is considering increasing the diversion in the near future. Expect to hear more after the elections.

Mills are still being incentivised to use C-molasses instead of B-molasses and cane juice. The amount of sugar produced from C-molasses vastly outweighs ethanol production compared to using B-molasses and cane juice, resulting in less revenue generated by the mills as seen in the chart below: 

Here are the current prices paid for ethanol by feedstock: 

Appendix

If you have any questions, please get in touch with us at Jack@czapp.com.

Samia Ohiduzzaman

Samia joined CZ in September 2023 as a Consulting Intern, shortly after graduating from SOAS University of London with a BSc in Economics. She is now a Market Analyst, responsible for delivering the sugar premium package on Czapp.

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