Sugar Refiner Says Container Shortage Limiting India Exports

(Bloomberg) -- Supply Lines is a daily newsletter that tracks Covid-19's impact on trade. Sign up here, and subscribe to our Covid-19 podcast for the latest news and analysis on the pandemic.

A shortage of shipping containers in India, the world's second-biggest sugar producer, is hurting shipments even as overseas demand stays robust, according to an industry official.

The nation has exported only 70,000 tons of white sugar in containers this month, compared with about 370,000 tons in January 2020, said Ravi Gupta, president of Shree Renuka Sugars Ltd, the country's top refiner.

Shipping rates have risen globally as demand for goods rebounded more strongly than expected in the second half of 2020, creating a container shortage. Geopolitical tensions with China have also reined in imports into India, meaning fewer incoming containers.

“The shortage is hurting low-quality white sugar exports in a big way,” Gupta said. There is good demand from destinations such as Afghanistan, Sri Lanka and East Africa, but the movement from India is very slow due to poor availability of containers, he said. Indian mills are estimated to export about 200,000 tons, including raw sugar, this month, Gupta said.

Weaker shipments from India may underpin global white sugar prices, which climbed to their highest level in more than three years earlier this month. Futures in London climbed as much as 1.5% to $434.90 a ton on Friday.

Sugar traders will need to compete with other Indian exporters for shipping-related services as world demand for farm commodities such as wheat, rice and soybean meal are soaring on firm global prices, Gupta said.

READ: India Approves $475 Million Subsidy to Help Record Sugar Exports

Domestic production is expected to surge 10% to 30.2 million tons in 2020-21 due to bountiful monsoon rains, according to the Indian Sugar Mills Association. At the start of the season on Oct. 1, India had 10.7 million tons of sugar reserves, enough to meet local demand for about five months. The country aims to export about 6 million tons this year with the help of government subsidies, which would help trim the bulging stockpile.

©2021 Bloomberg L.P.