06 November 2009 07:01 [Source: ICIS news]
By Ng Hun Wei
SINGAPORE (ICIS news)--Thai sugar millers may need more caustic soda as they boost production to benefit from record-high global sugar prices, industry sources said on Friday.
Caustic soda is used as an agent to clean production components at sugar factories.
Intercontinental Exchange's (ICE) sugar benchmarks in ?xml:namespace>
Reduced sugar output in
The country’s sugar output could increase by 7% in the upcoming production season that would start in end November and probably last through the first quarter of 2010, said Thikha Khunnawat, director general of the Thai Sugar Millers Corp.
“It’s too early to say for sure. But looking at the estimates so far, it is reasonable to expect Thailand to produce around 7.6m tonnes of sugar this season compared to the 7.1m produced previously,” said Thikha.
“Based on the (sugar output) forecasts, sugar mills in
Following the sharp spikes in sugar prices,
A 7% increase in sugar output could raise Thai mill’s caustic soda usage by 50% to 1,500 tonnes/month, based on some market players’ estimates.
"Sugar production is not a very efficient process, especially for mills using old technology. Each additional tonne of sugar the mill produces will require increasing amount of caustic soda because contaminants build up more quickly," said a trader.
But the food industry only accounts for small fraction of global caustic soda demand that strong usage by Thai sugar millers would hardly dent prices of the chemical, industry sources said.
"Caustic soda prices in
The paper and aluminium industries each accounts for 10-15% of the total global demand for the chemical, market sources said.
Prices in Asia started rising for the first time this year in August and had since gained more than 50% to $200-210/dry metric tonne (dmt) FOB (free on board) NE (northeast) Asia seen last week, according to global chemical market intelligence service ICIS pricing.
While the sugar industry’s impact on caustic soda prices might not be the primary influence, traders were optimistic that the industry’s demand would remain strong in the coming months.
Sugar production creates molasses a by-product, which is in turn is used to produce ethanol. Ethanol’s production process also requires caustic soda, market players said.
The high sugar prices also encouraged Thai sugar mills to expand capacity.
According to local reports, the Thai government had approved five such expansion plans in September, which could raise the country’s sugar output to 8m tonnes for the 2010-11 season.
If these forecasts proved accurate, caustic soda usage in the Thai sugar industry could reach over 2,000 liquid tonnes/month next year, traders and producers said.
However, this may not mean that overall caustic soda imports by Thailand could see a substantial rise, traders said.
In January to August 2009, the country imported 44,330 tonnes of caustic soda, down 10.6% year on year, based on data from Thai Customs. Last year, Thailand took in a total of 66,728 tonnes of caustic soda.
($1 = €0.67)
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