2 New Sugar Factories amidst Worldwide Fluctuating Sugar Price

Office of the Cane and Sugar Board (OCSB), with no fear of world economic recession after excessive sugarcane production, is allowing Mitr Phol Group and Thai Rung Reung to establish 2 new sugar factories and issuing a license to GGC-KTIS for construction of a biocomplex in Nakhon Sawan.

The Director General of OCSB Mrs. Worawan Chit-arun, revealed that, currently, 2 private companies were submitting a request for opening new sugar factories. The first is Mitr Phol Group that would like to launch a new factory in Amnart Charoen; the second, Thai Rung Teung Industry Co. Ltd., is planning to open a new factory in Sakon Nakhon. As a result, Thailand will have a total of 56 sugar factories this year.

Mrs. Worawan Chit-arun, The Director General of OCSB

Besides, the OCSB will issue a factory-establishment license to a biocomplex project in Nakhon Sawan of Global Green Chemical Public Company Limited (GGC), a company under supervision of PTT and Kaset Thai International Sugar Corporation Public Company Limited (KTIS). All of them would like to invest 7,500 million Thai Baht to construct a sugarcane extraction factory with production capacity of 24,000 tons per day as well as an ethanol factory with production capacity of 600,000 tons per day or around 186 million liters per year and a steam and electricity generating plant with electricity production capacity of 85 megawatts.

Nevertheless, there are two sugar factories of which the factory-establishment license is expiring, making them unable to found the factories in Nakhon Sawan and Phayao or Chiang Rai conforming business conditions within 2020. Since the current market situation is not worth an investment, if the new factories are established, a license needs to be reapplied.

In terms of late amendment of the new Act of Sugar and Sugarcane, this will not affect establishment of an ethanol factory or others producing sugarcane-based goods. The Ministry of Industry already issued an announcement on behalf of the Department of Industrial Factories about permission to establish a factory that uses sugarcane as a raw material to produce non-sugar products throughout the country. The factory is required to be located within 50 kilometers from the existing one. There is one condition, though, that a consent of the existing sugar factory must be made. Such is a part of permission for factory establishment under the plan to promote bioeconomy industries.

Mrs. Worawan also talked about the present sugar industry situation, stating that it was critical because the sugar price fell dramatically to 11 cents per pound and might drop more. Last year, the weather was not dry, so sugar products in Thailand India were higher than expected. Only in Thailand, extracted sugarcane weighed 130 million tons along with high degree of sweetness. Moreover, sugar factories in the country developed more capacity, resulting in over 14 million tons of sugar, 12 million tons of which were exported while 2.6 million tons were for local consumption.

Analysis expected that from 2019 to 2020 production capacity of sugar would decrease to release the remaining stocks. This year’s drought and higher prices of other crops will force farm owners to grow other crops, particularly cassava, because sugar price has declined for a couple of years – from 1,000 Thai Baht per Rai to 800 or even 700 Thai Baht.

“On 16 May, the OCSB had a meeting with the selling policy commission to bid premium sugar before May and July with an aim to maintain the price as high as the initially speculated one. However, China and Indonesia are lacking sugar and Thailand is now reducing its production capacity. The market will come back to normal in 2020. Besides, there is another factor on the world raw petroleum oil’s rising price. This encourages Brazil to use sugarcane for ethanol production instead of sugar of as high as 55%, the price of which is possibly equal to 15 cents per pound. It is the reasonable price of worldwide manufacturers,” concluded Mrs. Worawan.