China buys Indian white sugar despite heavy home harvest

China buys Indian white sugar despite heavy home harvest
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First Published: Mon, Sep 17 2007. 03 29 PM IST
Updated: Mon, Sep 17 2007. 03 29 PM IST
Beijing, 17 September For the first time, Chinese importers have braved maximum tariffs to buy cheap Indian sugar, even though the home harvest is expected to hit a record high.
Chinese buyers have bought some 100,000 tonnes of Indian sugar at a tariff rate of 50%, assessed on imports that do not fall within the tariff rate quotas (TRQ) system agreed when China joined the World Trade Organisation.
“India offers very attractive prices, so much so that some of the imports were conducted without quotas,” said one trader with an international trading house.
The shipment was mainly for September and October.
India is expected to overtake Brazil as the world’s top sugar producer in the year beginning in October. A lack of storage may force it to export at lower prices later this year.
Normally, Chinese mills and traders do not import unless they hold the quotas for the lower tariff rate of 15%. This year, Beijing only granted 30% of its 1.945 million tonnes of TRQs to private companies.
Many of the remaining quotas, granted to state-owned firms, have yet to be issued.
Two cargoes of Indian white sugar totalling 60,000 tonnes were imported under the higher tariff and were offered at 3,950 yuan ($525) per tonne in the northern port city of Tianjin.
The price was cheaper than sugar from the top producing region, Guangxi, offered at 4,040 yuan per tonne, said one industry official.
India, the world’s top sugar consumer, has exported 1.5 million tonnes of white sugar since January 2007, when a ban on overseas sales ended, the International Sugar Organisation said last week.
New high harvest
China is expected to produce 16.7% more sugar in the year starting in October, after a record 12 million tonnes this year.
But consumption will also rise, as high corn prices force the food and beverage industry back to natural sugar instead of corn sweetener, which had captured market share in previous years.
“Sugar consumption just grew rapidly this year, particularly from the food and soft-drinks industries,” said an official with the Guangxi Sugar Exchange.
Traders estimated corn sweetener has lost between 600,000 tonnes to 700,000 tonnes of sales to natural sugar.
Chinese sugar consumption grew 36% in the current year to about 12 million tonnes, compared with 8.8 million tonnes for last year, said Yan Weimin, secretary general of the China Sugar Association.
Chinese sugar mills would slow imports in coming months as they started to crush domestic sugar crops, traders said.
($1=7.523 Yuan) REUTERS
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First Published: Mon, Sep 17 2007. 03 29 PM IST