London, Dec. 10 - Brazilian raw sugar may become more competitive than Indian supplies because of heavy discounting and falling freight costs, the general manager of Dubai's Al Khaleej Sugar Co. said on Monday.
Cyrus Raja quoted offers of Brazilian very high polarisation (VHP) raw sugar at a deep discount of 80 points or $18 to ICE March futures, and offers of Indian raw sugar at around $260 per tonne FOB.
He said freight to Dubai from India was about $30-35 per tonne cheaper than from Brazil, compared with around $40 per tonne cheaper a month ago.
"Today Indian sugar is more attractive (to buy)," Raja told Reuters in a phone interview.
"You could have a situation in which Brazilian sugar could become more attractive."
Al Khaleej has contracted to buy more than one million tonnes of Indian raw sugar so far, and will likely need additional raw sugar supplies to arrive around April 2008, Raja said.
He reported no new deals to buy Indian sugar in recent weeks.
India, which used to be a net importer of sugar, has emerged as a major exporter on the world market this year and is competing as an origin against Brazilian supplies for the Dubai refinery, which traditionally took Brazilian sugar.
Raja said freight rates could rise again next year as China steps up its imports of hard commodities such as iron ore to power its rampant economic growth.
"There is talk of freight going up in the first quarter of the new year," he said.
Raja said the quality of Indian supplies was very good -- and better than Brazilian VHPs.
He said Thai raw sugar did not meet the stringent quality standards of Indian and Brazilian sugar, and was a less attractive feedstock for the Dubai refinery.