India curbs ethanol production from cane juice to boost sugar supplies

E I D-Parry (India)

07/12/2023 11:56

By Mayank Bhardwaj and Rajendra Jadhav
       NEW DELHI/MUMBAI, Dec 7 (Reuters) - India directed sugar
mills not to use cane juice or syrup to produce ethanol, the
government said in a notification on Thursday, as New Delhi
tries to increase sugar supplies by curtailing ethanol
production.
    Reuters had reported on Wednesday that the government was
planning to discourage the diversion of sugar for ethanol
production as part of efforts to ensure sufficient supplies of
the sweetener in the local market.
    Fuel retailers, under current contracts, are permitted to
keep their procurement of ethanol derived from B-heavy molasses,
a byproduct with higher sucrose levels, the government said.
    It would also allow the diversion of 1.04 million metric
tons of B-heavy molasses for ethanol production under existing
contracts, government officials said.
    The moves will help to reduce diversion of around 2.14
million tons of sugar for ethanol-making from cane juice, they 
said.
    An industry official had said on Wednesday the government
would allow mills to produce ethanol only from C-heavy molasses,
a cane by-product that has hardly any sugar content left in it.
    Shares of Indian sugar and ethanol makers such as 
E.I.D.-Parry  EIDP.NS , Balrampur Chini Mills  BACH.NS , Shree
Renuka  SRES.NS  , Bajaj Hindusthan  BJHN.NS , and Dwarikesh
Sugar  DWAR.NS  closed up to 6% lower on Thursday.
    India's fuel retailers buy ethanol from sugar mills to blend
with gasoline and pay a higher price for ethanol produced from
juice and B-heavy molasses. 
    Patchy rains in the top sugar cane-growing western state of
Maharashtra and southern Karnataka state have raised concerns
about this year's sugar output.
    The Indian Sugar Mills Association, a producers' body, last
month said sugar production is likely to fall 8% to 33.7 million
metric tons in the 2023/24 marketing year.
    The likely production drop has lifted local sugar prices
 SUG-MMZR-NCX  to their highest levels in nearly 14 years.

 (Reporting by Rajendra Jadhav and Mayank Bhardwaj ; Editing by
Emelia Sithole-Matarise)
 ((rajendra.jadhav@thomsonreuters.com; +91-22-68414378 ; Reuters
Messaging: rajendra.jadhav.thomsonreuters.com@reuters.net))