From Bajaj Hindustan to Shree Renuka, Chinese shares slipped by 7%, understand what is the government’s announcement on ethanol.

Sugar Stocks Crash: Amidst the turmoil in the domestic markets, sugar sector companies are in focus. Because the government has directed to reduce the use of sugar to make ethanol to zero in the supply year of 2026-27. As a result, Chinese stocks are registering weakness as soon as the market opens on Monday (October 19). These shares include Balrampur Chini Mills, EID Parry, Triveni Engineering, Bajaj Hindustan Sugar, Shree Renuka and Dhampur Sugar.

How much did Chinese shares fall?

After the government’s announcement, there is sharp selling in the shares of sugar companies. Weakness of more than 2 to 7 percent is being recorded in the shares during the session.

Note: Figures are as of 12:15 pm.

What is the government’s instruction?

The government has directed to reduce the use of sugar to make ethanol to zero in the supply year of 2026–27. Under this, the new tender of oil companies does not include the purchase of ethanol made from sugarcane juice, sugar syrup and B-heavy molasses. Its objective is to increase the availability of sugar in the domestic market and reduce pressure on prices.

This decision of the government will limit the scope for companies to increase the production of sugar or ethanol according to the market conditions. As a result, this could impact companies’ margins and returns on investments in ethanol production capacity.

Keep in mind that this decision of the government does not at all mean that ethanol will not be mixed in petrol. Because the ban is not on all types of ethanol. 20 percent ethanol will continue to be mixed in petrol. For this, other raw materials like maize, broken rice and surplus rice of Food Corporation of India will be used. Procurement of ethanol made from C-heavy molasses will also continue.