London:Al Khaleej refinery of Dubai, UAE, bought at least 300,000 tonnes of Indian sugars so far in calendar 2012, displacing traditional origin Brazil due to India’s cost advantages, European traders said on Thursday..

The Al Khaleej Dubai refinery was not immediately available for comment.

India, the world’s No.2 sugar producer after Brazil, has an exportable surplus this year, and a big freight advantage over Brazil for the Dubai refinery, which can potentially process up to around two million tonnes of raw sugar a year.

The Dubai refinery has in the past sourced its raw sugar primarily from Brazil. However India’s current sizeable exportable surplus combined with its freight advantage over Brazil, have led the refinery to source from India.

A weak rupee has bolstered incentives for Indian exporters. India can swing from being a net exporter to importer from year to year, depending on world prices and local weather.

“The refinery is in ‘India-mode’,” one senior European trader said.

“The refinery would prefer to take Indian sugars.”

Another European trader said: “The Indian sugars that we sold recently resulted in the displacement of Brazilian raws. This shift to supplies from India is all about Dubai optimising its book and its geographical advantage.”

The trader added: “This trading refinery has to remain nimble to optimise its performance.”

But India’s lower freight rates to Dubai outweigh Brazil’s cheaper sugar prices. Traders quoted freight from India to Dubai at around $30 per tonne, compared to around $50 per tonne for sugars from centre-south Brazil to Dubai.

European traders said they had not seen evidence of Brazilian cargoes moving to the Dubai refinery in recent months. The Dubai refinery, one of the biggest in the world, can refine low quality Indian whites as well as raws, traders said.

The ample availability of Indian sugars this year, has enabled Indian white exports to undercut the Dubai refinery in some of the refinery’s traditional regional markets such as Sudan, European traders said.

The Dubai refinery typically sends white sugar to markets across the Middle East, Africa and Asia.