Substantial new refining capacity for sugar coming onstream in the Middle East in the next few years is far in excess of forecast consumption, the head of Bahrain's Arabian Sugar Refinery said on Wednesday. "It is difficult to understand the logic behind two new refining facilities with combined capacity of 1.75 million tonnes in Saudi Arabia, for example," Yves el-Mallat, chief executive of the refinery, told a sugar conference in Dubai.
In Saudi Arabia, white sugar consumption is around 1.2 million tonnes annually, which is equivalent to the refining capacity of Savola's United Sugar Co. Two new refineries are set to come onstream in 2018 in the kingdom. The Al Reef sugar plant has a planned refining capacity of 1 million tonnes annually and the Durrah refinery has 750,000 tonnes. United Sugar Co also plans to expand its annual capacity by 500,000 tonnes by 2017. "Can this swarm of refineries coming to the area be justified? I don't think so," he said.
The region's refining capacity stands at 13.5 million tonnes, while actual production is around 8.5 million tonnes, according to Mallat. Between 2016 and 2018, around 4.7 million tonnes of refining capacity will be added in the region. Mallat said another new project in Oman with a planned annual capacity of 700,000 tonnes also seemed out of place in a country that consumes only 100,000 tonnes a year. "Exports to East Africa are hindered by tight regulations, while Yemen has its own refining facilities," Mallat said. Consumption in the region is around 11.3 million tonnes, with growth of around 4 percent a year. Mallat's views echo those of Jamal al-Ghurair, the Dubai-based managing director of the world's largest standalone refinery, Al Khaleej.
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