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A bitter downturn is sweeping Europe’s sugar trade as tumbling costs, hovering prices and regulatory pressures power factories to shut and earnings to soften away.
European sugar costs have slumped to their lowest degree in three years due to surplus inventory from elevated Ukrainian exports, greater sugar beet manufacturing and decrease sugar consumption.
“At present value ranges, the market is solely not sustainable,” mentioned Pierre-Henri Dietz, normal supervisor of Cristalco, the business arm of main producer Cristal Union. “If costs don’t right, we’ll see much more sugar factories closing throughout Europe.”
David Souriau, business director at France’s largest sugar group Tereos, mentioned decrease costs and rising prices associated to local weather, illness and regulation had been “endangering the long-term viability of European sugar manufacturing”.
Sugar costs in Europe have dropped greater than a 3rd since final summer time to €536 a tonne in June, based on the newest information from the European Fee.
Speculative merchants have amassed their largest web brief place in New York sugar futures since 2019 — the largest collective wager in years that costs will fall, based on Commodity Futures Buying and selling Fee information.
Tereos reported in August that revenues within the three months to the tip of June had been down 25 per cent year-on-year earlier to €1.2bn, whereas earnings earlier than curiosity, tax, depreciation and amortisation dropped 79 per cent to €56mn.
It reported a recurring working lack of €22mn and web debt rose to €2.265bn however the group maintained its full-year steering.
Germany’s Südzucker, Europe’s largest sugar producer, reported in July an 85 per cent fall in working revenue to €22mn for its first quarter to the tip of Could, with its sugar division swinging to a €56mn working loss.
The group expects a full-year lack of as much as €200mn in its sugar division, though it’s forecasting a value rebound within the second half of the yr.
Cristal Union, France’s second-largest producer this summer time reported a 62 per cent drop in web revenue to €117mn for the 2024-25 monetary yr and warned of “way more unfavourable market situations” forward.
The downturn has already compelled the closure of 5 sugar factories in Europe this yr, including to the 14 closures within the UK between 2010 and 2025 and chopping the variety of working vegetation to 83.
As farmers going through decrease costs weigh the danger of promoting at a loss, the variety of acres planted with beet is predicted to lower by practically 10 per cent this season.
“We’re already seeing beet areas shrink sharply,” mentioned Stanislas Bouchard, deputy normal supervisor of Cristal Union. “That’s going to have penalties for manufacturing.”
Whereas Tereos has saved its planting secure, the group mentioned manufacturing prices had surged. The typical value of creating sugar in Europe has elevated by €200 per tonne since 2017, based on the corporate, pushed by rising farm inputs, power costs and climate-related dangers.
Souriau additionally blamed a number of the sector’s struggles on European insurance policies that “maintain the bloc’s producers to harder environmental requirements than overseas opponents” who profit from tariff-free entry. This has “severely undermined European competitiveness”, he mentioned.
“At the moment there’s a very sturdy misalignment between the EU’s environmental insurance policies and its commerce coverage, which constantly will increase imports of sugar, alcohol, and ethanol with out tariffs from nations that don’t apply the identical environmental rules.”
Ukrainian imports have been significantly damaging, based on Dietz.
Greater than 1mn tonnes of sugar from the war-torn nation entered the EU in 2023 and 2024, pushing up inventory ranges and dragging down costs. Brussels agreed to slash Ukrainian import quotas by 80 per cent from July.
Regardless of a current stoop in sugar demand, Dietz performed down considerations about long-term dangers linked to altering consumption patterns because of the brand new wave of weight reduction medicine comparable to Ozempic and Mounjaro. “Ten years in the past, the large fear was glucose substitutes — and that hasn’t come to fruition,” he mentioned.
“The larger issue for us is cocoa. About 30 per cent of our gross sales are tied to the cocoa market, so a downturn in chocolate demand can hit sugar gross sales.”
