This is a good time for buyers of refined sugar, but for refiners in India, the world’s biggest consumer of the sweetener and the second largest producer, not so much.
Global sugar prices have fallen to their lowest levels in nearly three years, and surplus production of cane in India isn’t helping the situation, with share prices of listed sugar companies in the country getting crushed.
Benchmark ICE sugar traded in New York has fallen from a high above 35 cents a pound in February 2011 to around 16 cents a pound recently. In the year to date, it has fallen a relatively subdued 16%, but stock prices for Indian refiners have fared much worse.Shree Renuka Sugars Ltd.India’s biggest sugar refiner, is the worst performer, having lost around 48% of its stock value in 2013 Bajaj Hindhustan Ltd. India’s top sugar producer by volume, has lost 40%, while other significant players Balrampur Chini Mill Ltd. and Simbhaoli Sugars Ltd. have shed 19% and 36%, respectively. All of the companies’ share prices are around three-year-low levels.
Analysts say they expect sugar share prices to stay at depressed levels at least for the next several months, potentially hitting four-year lows given the limited scope refiners have to eke out profits.
From WSJ
