Balrampur Chini, Shree Renuka, other sugar stocks rise up to 9% despite market sell-off: Here's why

Balrampur Chini, Shree Renuka, other sugar stocks rise up to 9% despite market sell-off: Here's why

• Sugar stocks rose up to 9% despite weak market indices
• Higher crude prices boost ethanol profits for sugar mills
• India mandates petrol with up to 20% ethanol from April 1

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Sugar stocks rose up to 9% on March 4 despite benchmark indices being lower by 2% as Street expects higher crude prices, triggered by Middle East tensions, would make ethanol production more profitable for sugar mills.

On March 4, shares of Balrampur Chini, Shree Renuka Sugars, Bajaj Hindusthan Sugar were trading 6.3%, 7% and 9% higher, respectively.

Share prices of Dalmia Bharat, Dhampur Sugar, Dwarikesh Sugar climbed 6%, 3.5% and 9.5%, respectively.

US sugar is at its highest level in almost a week due to geopolitical tensions. Higher crude prices make ethanol production more profitable for sugar mills.

Sugar futures in the US rose to near 14 cents per pound, their highest level in nearly a week, as surging oil prices linked to the Middle East conflict raised fears of lower sugar output.

Higher oil prices makes ethanol production more profitable, encouraging producers to allocate more sugarcane to biofuel.

This shift could lead Brazil, the top global sugar producer, to prioritise ethanol over sugar, reducing international supply of the sweetener.

Oil prices rose 3% on Wednesday as the U.S.-Israeli war on Iran disrupted Middle East supplies, but the pace of gains slowed from past sessions after President Donald Trump suggested the U.S. Navy could escort vessels through the Strait of Hormuz.

Brent rose $2.67, or 3.3%, to $84.07 a barrel by 0659 GMT, after closing on Tuesday at its highest since January 2025.

U.S. West Texas Intermediate crude rose $2.24, or 3%, to $76.8, after settling at its highest since June. Both benchmarks have risen about 5% or more in the past two sessions.

The Centre has recently asked oil marketing companies to sell petrol blended with up to 20% ethanol, meeting a minimum Research Octane Number of 95 across the country from April 1, according to a notification by the Ministry of Petroleum and Natural Gas. RON, or Research Octane Number, is a measure of a fuel's resistance to engine knocking (pre-ignition). Knocking happens when fuel burns unevenly inside the engine, causing pinging sound, loss of power and possible engine damage over time.

"The Central Government hereby directs that the oil companies shall sell Ethanol Blended Motor Spirit with percentage of Ethanol up to twenty per cent as per the Bureau of Indian Standards specifications and having a minimum Research Octane Number (RON) of 95, in the States and the Union territories," according to the notification dated February 17.

Ethanol is made from sugarcane, maize, or grain. It is renewable, domestically produced and has cleaner burning than pure petrol.

The government has mandated ethanol blending in petrol to help cut oil imports as also reduce emissions. Such a mandate also supports farmers as it boosts demand for sugarcane, maize and agricultural surplus.