Sugar mills bullish on 10 per cent ethanol blending

The domestic sugar industry is bullish on achieving the target of 10 per cent ethanol blending in the current year 2021-22. Against a total requirement of 4.59 BL of ethanol for 10 per cent blending, oil marketing companies have so far allocated 3.66 BL after the first two cycles of expression of interest.

Sugar mills bullish on 10 per cent ethanol blending

Lucknow

The domestic sugar industry is bullish on achieving the target of 10 per cent ethanol blending in the current year 2021-22.

Against a total requirement of 4.59 billion litres (BL) of ethanol for 10 per cent blending, oil marketing companies (OMCs) have so far allocated 3.66 BL after the first two cycles of expression of interest (EOI).

“We hope to achieve 10 per cent blending in the current year as the remaining requirement is expected to be allocated in subsequent EOI,” Indian Sugar Mills Association (ISMA) said on December 20.

In the 2020-21 ethanol supply year (ESY) ending November 30, 2021, about 3.02 BL has been supplied by distilleries in India, thereby achieving an all-India average blending of 8.1 per cent.

“This is a record considering only about 5 per cent ethanol blending was achieved in 2019-20 ESY,” ISMA said.

Meanwhile, sugar mills in India, till December 15, had produced 7.8 million tonnes (MT) of sugar compared to 7.33 MT output achieved during the corresponding period of 2020-21 sugar season (Oct-Sep). The current year production is higher due to the early start of sugarcane crushing in the Western region.

In Uttar Pradesh, the country’s top sugar producer, 117 mills are in operation and have produced 2 MT of sugar. In Maharashtra, 186 sugar mills have produced 3.2 MT. The third-largest producer Karnataka has produced 1.84 MT of sugar.

Citing market reports and data collected from trading houses, ISMA informed 650,000 tonnes of sugar are reported to have been physically exported by the end of November 2021 in the current season vis-à-vis 300,000 tonnes exported last year.

Moreover, contracts for sugar exports for 3.7 MT have been contracted in the current sugar season. Most of these contracts were signed when the global sugar prices were in the range of 20-21 cents per pound of raw sugar.

The signing of further export contracts has slowed due to a fall in global prices of raw sugar to around 19 cents/pound. Although, global prices have recovered to some extent, hovering around 19.5 cents/pound, yet exports seem unviable for Indian sugar.

According to ISMA, there is an opinion that since over nine months are left in the current season, there is still time for the mills to await an opportune moment when they could enter into export contracts once the raw sugar prices move northward.