Sugar refineries across the Middle East are operating below capacity as declining profit margins force companies to scale back production.
The region is experiencing financial strain due to a lower white premium—the difference between the price of raw and refined sugar.
Jamal Al Ghurair, Managing Director of Dubai’s Al Khaleej Sugar Co., the owner of the world’s largest port-based sugar refinery, confirmed that several refiners have reduced output as refining profits dwindle.
“A lower white premium has pushed some refiners to cut production,” Al Ghurair said in an interview on the sidelines of the Dubai Sugar Conference.
Until recently, the premium hovered around or below $90 per ton, falling short of the $100 threshold required for profitable refining.
The decline in the white premium has been attributed to a surge in global white sugar output, particularly from Thailand, Europe and India, which has helped maintain ample supply in the market.
However, in recent days, the premium for March contracts has climbed above $100, raising cautious optimism that refiners may regain some profitability in the months ahead.
Overcapacity in the region has further exacerbated the situation as increased investments in new refineries have intensified competition.
Refiners are now focused on reducing operational costs and closely monitoring price swings to sustain profitability, Al Ghurair explained.
Last year, Al Khaleej Sugar operated at 70% capacity while some refineries in the region functioned at even lower levels.
The Dubai-based refinery produced 1.6 million tons of sugar in 2024, benefiting from export restrictions in India that drove up refined sugar premiums.
However, Al Ghurair does not expect the same production levels in 2025, as market conditions remain uncertain.
“After the March expiration, we will have a better indication,” he stated, referring to the London white sugar futures contract for March. He added that a price increase or a wider spread between contracts before the contract’s expiration on Thursday would be a positive signal for the industry.
As Middle Eastern refineries navigate volatile market conditions, industry players remain cautious, adjusting production strategies to align with shifting demand and global price trends.
The coming months will be crucial in determining whether the recent uptick in white premiums is sustainable enough to reverse the current decline in output across the region.
