Shree Renuka to buy 5 lakh tonne raw sugar

Shree Renuka Sugars Ltd, India's biggest refiner, may import up to 5,00,000 tonne of raws by the end of the season in September after rules were relaxed, its managing director said on Friday.

"In the next eight months, we have the capacity for refining 5,00,000 tonne at our refinery in Haldia," Narendra Murkumbi told Reuters. "Refining raw sugar and exporting refined sugar is a very attractive business for us."

Shree Renuka Sugars has a refinery at Haldia, a port city in eastern India, and has been importing duty-free raws from Brazil to refine and export whites, mostly to Asian countries.

On Tuesday India eased sugar import rules, allowing mills to import raws at zero duty for domestic sale with a condition that sugar makers export a similar quantity of refined sugar within 24 months.

But Murkumbi said imports of raw sugar for domestic sales might not be attractive for most Indian mills.

"Margins in importing raw sugar and selling refined sugar within the country are not very encouraging as they have fallen," he said.

The decision to loosen the import regime had been widely expected as India, the world's biggest sugar consumer and the largest producer after Brazil, expects to see output fall by about a third to 18 million tonne in the year to September.

The benchmark March raw sugar contract in New York rallied 13.07 cents per lb after the move, its strongest gain since early October.

On Thursday the contract climbed 0.39 cent or 3.1% to close at 12.98 cents per lb, after trading as low as 12.39 cents.

Traders are believed to have factored in likely imports by India, but some analysts believe purchases by mills such as as Shree Renuka will further push up global prices.

Earlier, mills were allowed to source raw sugar from overseas markets at zero duty but they had to export the same consignment. Forecasts of lower output have pushed up domestic prices by 30% in last three months, traders say, to about Rs 2,200 ($45.16) per 100 kg.