India molasses inventory piles up on weak ethanol demand

13 March 2013 09:14  [Source: ICIS news]

KOLKATA (ICIS)--India is currently saddled with a huge inventory of molasses, with government-owned petroleum companies not purchasing ethanol for fuel blending since the start of the year, a top industry official said on Wednesday.

“Sugar mills were facing serious problems of storage of molasses,” said Abinash Verma, director general of the Indian Sugar Mills Association (ISMA).

“With current sugar crushing season coming to an end, over 80% of molasses production or about 8.9m tonnes have been completed by the mills and not even one litre of ethanol has been sold,” he said.

The country’s sugar millers sought help from the Ministry of Petroleum to ease the build-up of molasses stocks and hasten procurement of ethanol by the domestic oil companies, Verma said.

Every 100kg of sugar produced generates 45kg of by-product molasses – each tonne of which can yield 250 litres of ethanol.

Sugar production during the  current crushing season so far – from October 2012 to February 2013 – totaled 19.5m tonnes, representing 80% of the forecast output for the season ending April, and yielded  9m tonnes of molasses, according to official data.

India has mandated a 5% ethanol blending on petrol for all government-owned oil and petroleum marketing companies this year, in a bid to promote the user of environment friendly or green fuel.

The country’s petroleum marketing companies were  directed to commence blending immediately and ensure sales of blended petrol at all retail outlets across India by end-June.

But while the companies issued tenders to procure ethanol in January, no actual orders have been placed to date, the ISMA official said.

A few sugar millers are being forced to export small volumes of molasses to EU for use as cattle feed, in the absence of ethanol takers among the Indian oil firms, according to Verma, citing that shipping out molasses is not commercial attractive.

The Indian government estimated that its petrol blending program will require 1.05bn litres of ethanol, while ISMA is projecting about half that volume at 550m litres.

By: Ajoy K Das
+65 6780 4359

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