Roxas Holdings exporting sugar due to local oversupply

Listed Roxas Holdings Inc. (RHI) is exporting sugar to the world market for the first time in five years to reduce its excess inventory.

RHI chairman Pedro Roxas said in a recent phone interview that about 28,000 tons of raw sugar would be exported to South Korea and Japan. Of the total, about 6,000 tons will go to Korea and 22,000 tons to Japan.

Earlier, RHI disclosed to the Philippine Stock Exchange that it does the exportation through its unit Central Azucarera Don Pedro Inc. (CADPI).

CADPI recently concluded the first round of shipments to South Korea via the Batangas International Port. The next shipment is expected to be made by the end of the month, RHI said in the disclosure.

RHI group caters to the local industrial market but the company said its shipments to South Korea and Japan were being made in accordance with the Sugar Regulatory Administration’s (SRA) direction to convert domestic sugar (Class B) into world sugar (Class D) market. The SRA recently allowed sugar companies and traders to dispose of their excess supply through exports.

“This will be the first time in five years that we are back into the export market outside the US,” Roxas said in the disclosure.

Philippine sugar production will likely be about 2.4 million tons for crop year ending August 31, according to data from sugar millers. This is well above the projected 1.965 million tons for the 2010-2011 crop year.

As for CADP, production was “within target” at 125,000 tons, Roxas said.

RHI also noted a slowdown in demand from some local industrial users who shifted to high fructose corn syrup and premixes for blending in their own products, contributing to the oversupply.

Roxas said that in late 2010 and early 2011, industrial users found it cheaper to buy high fructose corn syrup and premixes, which are imported at 5 percent tariff, than local sugar.—Riza T. Olchondra