Raw Sugar Trade
The impetus for raw sugar refining was set by Russia in the mid-1990s, in response to a declining beet sugar production, and it was accelerated by the mushrooming of new, large autonomous refineries at destination.
On the supply side, Brazil has increased its market share tremendously – from 5% in 1986 to almost 75% in 2011 –at the expense of the other major exporters, Australia, Thailand. On the demand side, three regions – the Former Soviet Union (FSU), the Middle East (major autonomous refineries at destination in U.A.E, Saudi Arabia, Nigeria ) and the Far East (with China as the major importer) – account for the 70% of world’s import demand.
The reasons why raw refining at destination, a capital-intensive industry, has grown are many: commercial advantages, low variable costs (energy and labour), economies of scale, political/regulatory, logistical factors – the substantial decrease of the bulk freight rates compared to bagged rates in the 1990s, combined with efficient sugar terminals in South Brazil, Thailand and Guatemala.
The EU has been the big loser as raw refining has displaced its traditional homes. South Brazil has been the clear winner of the raw sugar boom, as it is able to ship all year round. Its Very High Pol (VHP) and Very Very High Pol (VVHP) raw sugars, produced along its special two-strike boiling system used to produce crystal white sugar, have been a large commercial success. VHP and VVHP nowadays represent two-thirds of raw sugar flows.