The Hindu Business Line : ISEC bags 50,000 t Pak sugar tender — Consignments to be sent from Mumbai, southern ports

The Indian Sugar Exim Corporation (ISEC) has bagged the tender floated by the Trade Corporation of Pakistan (TCP) to buy 50,000 tonnes white sugar. (TCP will be buying the sugar for $478 a tonne as reported briefly in these columns on Monday).

"We have won the bid to supply the 50,000 tonnes of sugar to TCP," said Mr S.L. Jain, Director-General, Indian Sugar Mills Association (ISMA).

ISEC is an export body of private and co-operative sugar mills in the country.

The quantity to be shipped will be pooled from various sugar mills in the country.

TCP is expected to float another tender to buy an additional 50,000 tonnes from India. "We hope we will be able to get that too," said Mr Jain.

First big deal

Pakistan lifted a four-year ban on imports of Indian sugar after its domestic prices began to gallop. Though sugar is being bought in small parcels by the private trade, this is the first big deal that has been struck in an organised manner.

According to trade sources, Pakistan could require 7-8 lakh tonnes (ltthis year to meet its demand.

"Officials themselves there are putting the demand for imports at 5-6 lt," the sources said.

One of the reasons for Pakistan to look to India is that it is the only destination where sugar is now available. With sugar prices rising sharply in the global market and freight rates playing a crucial role, India is Pakistan's best bet to meet sugar demand.

Rising prices

One of the reasons for sugar prices to rise in the global market is due to sugarcane being diverted, particularly by Brazil, to produce ethanol to counter rising crude oil prices.

At present, spot sugar in the global market is quoted at $450.50 (approximately Rs 20,050) a tonne f.o.b, up frm $445 during the weekend. In the domestic market, prices are ruling at around Rs 19,250 a tonne.

Mr Jain said it could take up to a week for TCP to open a letter of credit. ISEC has six weeks' time to deliver the consignment.

Shipments

According to the ISMA Director-General, the consignment would be shipped from Mumbai and southern ports.

Normally, it takes two days for a consignment to reach Karachi, the port of delivery, from western ports such as Mumbai.

The consignments are likely to be sent in parcels of 12,000 tonnes and probably, one single ship could be hired. This ship would sail back and forth to deliver the entire 50,000 tonnes.

"TCP has had a good experience with ISEC earlier. That's one of the reasons why we have got this order," Mr Jain said.

The industry expects to export at least five lakh tonnes this season (October2005 -September 2006). Most of the shipments would go towards meeting the export obligations of mills that had imported raw sugar at zero customs duty during the last two years, when sugarcane production was low in the country.