ISO Special Study: Destination Refineries:Over Capacity on the Horizon?

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Sugaronline Exclusive: A swathe of generally large and low-cost destination refineries built in the Middle East, West Africa, and several countries in Asia since 1995 have boosted global refining capacity and raw sugar trade.

By end-2005 13 destination refineries had been commissioned with a total annual capacity of 6.75 mln tonnes. The huge investment in destination refineries continued during 2006 and 2007 with another 10 commencing operation bringing global destination refinery capacity to 10.5 mln tonnes/year. The significant gap left by the elimination of EU sugar from the world market is obviously a key driver for further investment in refinery capacity. In fact, significant further investment is taking place. Planned capacity expansions at existing refineries by the end of 2009 amount to another 2.3 mln tonnes/year. More importantly, there are as many as 17 refineries planned to commence operation between mid-2007 and end 2010 (with a total additional capacity of 11.5 mln tonnes). This brings the threat of over-capacity despite the gap left by the EU and healthy consumption growth rates in key deficit areas such as the Middle East. In this article a stock taking of the number and capacity of destination refineries is undertaken and some of the key drivers explaining the surge in refining investments around the globe are explored.

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