No proposal to reduce ethanol production yet, say government sources: Report | Mint
Active Stocks
Tue Feb 20 2024 15:54:00
  1. Power Grid Corporation Of India share price
  2. 287.95 4.16%
  1. HDFC Bank share price
  2. 1,453.75 2.59%
  1. Tata Steel share price
  2. 141.05 -0.60%
  1. NTPC share price
  2. 345.65 2.01%
  1. ITC share price
  2. 406.05 -0.77%
Business News/ Economy / No proposal to reduce ethanol production yet, say government sources: Report
BackBack

No proposal to reduce ethanol production yet, say government sources: Report

Earlier today Bloomberg cited sources saying that India is considering curbing ethanol production adding that authorities are studying a proposal to limit the use of sugarcane juice to produce ethanol for the current season.

The clarification came following media reports that ethanol production from sugarcane would be reduced to combat India's sugar shortage. (File Image)Premium
The clarification came following media reports that ethanol production from sugarcane would be reduced to combat India's sugar shortage. (File Image)

Government sources said that they don't yet have a proposal to reduce ethanol production under consideration, CNBC-TV18 reported.

The clarification came following media reports that ethanol production from sugarcane would be reduced to combat India's sugar shortage.

Mint could not independently verify the development.

Cuts possible?

Earlier today Bloomberg cited sources saying that India is considering curbing ethanol production adding that authorities are studying a proposal to limit the use of sugarcane juice to produce ethanol for the current season. No final decision has been made, and plans could still change, they added.

The proposal, which would help ease local sugar shortages if approved, sent futures plunging as much as 7.9% in New York on Wednesday, the biggest decline in 10 months. It would also crush any potential for India to import the sweetener.

Poor rainfall harmed sugarcane crops in India, prompting the world’s second-biggest sugar producer to extend restrictions on exports beyond Oct. 31. Limiting ethanol production would keep sugar inventories in India from falling further, said Michael McDougall, managing director at Paragon Global Markets.

Sugar stocks take a hit

Sugar stocks have been under pressure since early morning deals on Thursday. During the opening bell today in the Indian stock market, sugar major Balrampur Chini's share price witnessed a nearly 6 percent decline, Dwarikesh Sugar's share price went down 4.50 percent, Sakthi Sugars shares dipped around 4 percent, Mawana Sugar stock price dashed around 3 percent while Ugar Sugar crashed to the tune of 6 percent. Shares of Bajaj Hindusthan Sugar Ltd and Avadh Sugar & Energy Ltd crashed over 6 percent during the morning session on Thursday.

According to stock market experts, sugar stocks are under pressure due to the ethanol price reduction buzz. Experts said that due to a dip in crude oil prices, ethanol prices have gone down in global merchandise and the Indian market is expecting this price reduction in the near term. As the ethanol business is one of the major themes that has driven sugar stocks in the recent few quarters, this news has triggered profit booking in the sugar segment. However, they said that sugar stock may rebound strongly if there is no rate cut in India in the near term.

Stock market experts maintained that declines in sugar prices are completely speculative and hence one should not take any position or square off one's position on such speculations. They should wait for an official statement from the Government of India (GoI) in this regard.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates.
More Less
Published: 07 Dec 2023, 11:10 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App