Sugar prices surge amid gas crisis, India’s return to imports

Sugar prices are rising as the ongoing gas crisis is curbing production at local refineries, which had stepped up output after three major suppliers exited the market.

The latest squeeze also comes amid a fresh increase in global demand as India, a long-time sugar exporter, has returned to the international market as a buyer recently, adding pressure on international prices.

Tap here to add The Daily Star as a trusted source

Over the past week, sugar prices have increased by Tk 230-240 to Tk 3,780 a maund (37.32kg), according to traders at Chattogram’s Khatunganj-Chaktai market, the country’s largest wholesale market for essential commodities.

Retail prices have also followed suit, rising to Tk 110-120 per kg after remaining steady at Tk 105-110 for at least a month until a week ago, according to Trading Corporation of Bangladesh (TCB) data.

The latest squeeze comes after three major suppliers, S Alam Group, Bashundhara Group and City Group, fell out of the market.

S Alam’s refinery has remained largely out of production since late 2024 amid financial and operational troubles.

Bashundhara has also ceased to be a major active supplier since 2024, while City Group stopped sugar production after operating until June.

The shutdowns prompted Meghna Group of Industries, Abdul Monem Group, Deshbandhu, Delta Food and other refiners to increase production to help fill the supply gap. But their ability to make up the shortfall has recently been constrained by the country’s worsening energy crisis.

“Our dependence on Meghna Group of Industries and other refiners has increased as major suppliers such as S Alam and City Group are no longer supplying the market. But they are also unable to meet demand due to gas shortages. As a result, we have to buy sugar from the mills at higher prices,” said Anam Saudagar, a wholesaler at Khatunganj.

SM Muzibur Rahman, head of accounts at Meghna Group of Industries, told The Daily Star that inadequate gas supply was preventing the company from operating its mills properly.

“Due to the recent gas crisis, one of our two mills was shut down for several days because of low gas pressure, while the other was operating at only around 20-30 percent of capacity,” he said.

“As a result, we were unable to supply the market according to demand for several days, which was one of the reasons behind the increase in prices,” he added.

“Both mills are currently operating, but we still cannot run them at full capacity due to the gas shortage,” Muzibur said. “Under normal circumstances, we used to supply around 3,200-3,500 tonnes of sugar to the market daily. Now, we can supply only around 2,000-2,600 tonnes.”

The reduced supply has already reached retailers.

Tanvir Hossain, manager of Ridoy Enterprise at Oxygen Kitchen Market in Chattogram, said retail prices of sugar had increased by around Tk 10 a kg over the past week.

“We are now selling it at Tk 120-125 a kg. We have no option but to raise retail prices when our purchase costs increase,” he added.

Meanwhile, global market conditions are adding to the pressure.

India, traditionally a major sugar producer and exporter, is turning to the international market after domestic sugar prices rose nearly 40 percent in two months amid lower production and tightening supplies, according to Reuters

The Indian government has allowed duty-free imports of 1 million tonnes of raw sugar until October 31, marking the country’s first sugar imports in nearly a decade.

Benchmark white sugar futures in London and raw sugar futures in New York ​jumped by as much as 4 percent after India announced plans to allow duty-free imports on August 20, Reuters added.

Wholesaler Anam said the shift in India’s position was adding to concerns among Bangladeshi traders.

“Prices are also rising in the international market. India, which has traditionally been a sugar exporter, is now importing sugar, creating additional demand in the global market. We fear prices could rise further if the situation continues,” he said.