KARACHI, July 10: Pakistan is believed to have exported about 100,000 tons of molasses to India. This is for the first time that molasses are exported in such a huge quantity. The reason is said to be a surge in demand from Indian distilleries following a short sugarcane crop there.
According to exporters, during the last four months around 55,000 tons of molasses had been exported directly to India and another 45,000 tons through European traders.
A sudden surge in demand from Indian distilleries pushed molasses prices higher in the world market by more than 100 per cent and are presently being quoted at around $60 to $65 per ton from $30 per tons about four months back.
Ever since the start of new crushing season (Dec 2003) of sugarcane around one million tons of molasses had been exported out of an exportable surplus of 1.7 million tons and total production of 2.2 million tons.
"Many Indian distilleries producing alcohol are approaching local exporters for molasses but could not meet the minimum shipment quantity of 25,000 tons as they are faced with storage problem on their end," a leading molasses exporter said.
India had been mostly consuming its molasses because a large number of distilleries are operating to meet the local demand. However, its last sugarcane crop fell short of target and as a result molasses production also declined considerably.
Contrary to this, Pakistan had been exporting most of its molasses production because there were very few distilleries operating in the country and some problem arising out of central excise duty.
On an average 1.5 million tons of molasses is exported annually. Owing to an all time record production of over four million tons of white refined sugar the country has a larger exportable surplus of molasses this season (2003-04), the exporter said.
Mohammad Kasim Hasham, chairman of Terminal Association of Pakistan (TAP), the representative body of molasses exporters, told Dawn: "We have adequate capacity to store up to one million tons of liquid but India lacks this facility which is the main hurdle for the distilleries who have to depend on small quantities of imported molasses."
"Most of the Indians book small quantity but in our case exporters can not meet the economies of scale if they do not export between 25,000 to 50,000 tons per shipment to meet the freight and other costs".
Another factor, which inhibited much larger exports to India, is the Europeans who are more aggressive in marketing and are long time associates in molasses trade and as such no exporter would like to lose them, he said.
Mr Hasham said at present around 450,000 tons of molasses was stored in tanks at Keamari and another 350,000 tons was in the pipeline, adding exporters would stay busy in the export trade till next crushing season, which might start in the middle of November or early December.
However, the TAP chief pointed out that the sudden surge in molasses prices had made local distilleries activity unviable because increased price of molasses coupled with five times higher cost of conversion from molasses to alcohol would result in losses to distilleries.
Mr Hasham says only those distilleries who are attached with sugar mills would benefit from this situation because they have their own raw material and enjoy an edge over others who have to lift or purchase molasses to run their units.