Lagos - Sugar-refining capacity across Africa and the Middle East will probably jump by a third in the next five years as a growing population drives demand, according to Wilmar International, one of the world’s top producers.
Refining capacity may reach 20million metric tons, compared with about 15million tons now, Karim Salamon, Wilmar’s head of market analysis, said.
The region consumes double the amount it produces, which means it has to rely on imports, according to a presentation he gave last week at the International Sugar Conference in Marrakesh, Morocco.
“There are some new projects, and a lot of countries or importers are investing to increase their own capacity,” Salamon said in an interview.
While sub-Saharan Africa doesn’t have enough refineries to cope with demand, there is already excess capacity across the north of the continent and the Middle East. That has boosted supplies and eroded a premium for physical sales in the region, prompting deliveries of white sugar to the ICE Futures Europe exchange in London.
Morocco is one country investing is expanding refining, Salamon said.
Read also: Coke supports WHO's sugar guidelines
Cosumar, the nation’s sole producer and which is owned partly by Wilmar, was targeting capacity of 850000 tons at its Durrah refinery in Saudi Arabia, chief executive Mohammed Fikrat said last week. Etihad Food Industries, the owner of Iraq’s sugar refinery, may double capacity at the plant by early 2019, the company’s commercial director of sugar said this month.
Africa and the Middle East consume 29.4 million tons of sugar a year, almost double the amount they produce, according to Wilmar. Demand may grow by 10 million tons in a decade, Salamon said at the conference.
The planned extra refining comes as the global market is on the cusp of moving into a surplus. Supply will exceed usage by 2.5 million tons in the season that starts in October, Salamon said.
“We are probably at the beginning of the turning point between two years of deficit and surplus,” Salamon said. “But the surplus ahead of us is quite thin. The next determining factor will be the crop in Brazil.”