Sugar stocks turn sweet on reports of possible hike in ethanol prices

Business Standard – 24 August 2017: Shares of seven sugar companies rose 0.29% to 3.3% at 14:30 IST on BSE after reports suggested that the food minister has asked for Rs 2 per litre hike in ethanol prices sold to Oil Marketing Companies.
Meanwhile, the S&P BSE Sensex was up 56.39 points, or 0.18% to 31,620.21.

Bajaj Hindusthan (up 2.41%), Balrampur Chini Mills (up 1.18%), Shree Renuka Sugars (up 0.29%), Sakthi Sugars (up 0.57%), Rana Sugars (up 1.14%), Triveni Engineering & Industries (up 3.3%) and Dwarikesh Sugar Industries (up 0.88%) rose.

Ethanol, a byproduct of sugar manufacturing, is obtained by processing molasses to form rectified spirit (RS), with around 95% purity. On further processing, ethanol is obtained for direct blending with petrol.

Meanwhile, due to a normal south-west monsoon, decent Kharif harvest and the upcoming festive season rural incomes may rise and result in increased demand for essential food commodities, including sugar thus perking up its prices.