Transport issues: Imports of sugar from Pakistan low: ISMA

India has contracted to import 920,000 tonnes of raw sugar since the season began in October, turning into a net importer for the first time in two years despite surplus stocks at home, the chief of Indian Sugar Mills Association (ISMA) said on Friday. 

Rattled by the rising imports, two leading bodies for the sugar milling industry have petitioned the government to raise the current 10 percent import tax to 60 percent. Huge global sugar stocks have dragged down benchmark prices in New York. Mills that process domestic-grown sugar would have to export at a loss, despite the surplus at home. 

An increase in the import tax, the world”s top consumer and the biggest producer behind Brazil, would keep local sugar competitive in the Indian market. Exports have been negligible so far in the 2012/13 season, and global trends suggest Indian players might not be able to sell sugar anytime soon, Abinash Verma, director general of the Indian Sugar Mills Association (ISMA), said in an interview. India was a net exporter of sugar in the last two years. Benchmark sugar prices in New York dropped for a third straight day on Thursday to flirt with a 2-1/2-year low. 

Recent rains in Brazil have raised prospects for higher output. That has led to expectations of a third straight global sugar surplus in 2013/14. “Since there”s a global surplus and prices are lower, there is a need to raise import duty to 60 percent to improve sentiment, despite the fact that only a small quantity has been imported for the local market,” Verma said. 

The 920,000 tonnes of raws contracted by India so far this year includes 190,000 tonnes for the domestic market, he said. Mills can import raw sugar tax-free if they process it and then export the refined product. But refineries need to pay a 10 percent tax if they decide to sell the processed whites from imported raws in the local market. Of the 920,000 tonnes of raws contracted since October 1, 650,000 tonnes have already arrived and 250,000 would be delivered soon, Verma said. 

Prices for raw imports are currently around $450 per tonne on a cost, insurance and freight (CIF) basis, traders said. Despite a nearly 3.5 percent fall in the past two months, domestic futures prices are still about $600 a tonne for refined, making it attractive for sugar companies to import raw and sell the refined variety in the local market. 

Indians consume about 22 million tonnes of sugar a year. The latest figures show output rose 3 percent to 10.8 million tonnes between October 1 and December 15. The crushing season peaks in March. Higher output and lack of export prospects would lead to carryover stocks of 7.5 million tonnes of sugar on October 1, 2013, Verma said, 1 million tonnes more than the previous year. 

While raw sugar imports have been significantly higher, white sugar imports have been tiny. “Imports from Pakistan are very little. It didn”t pick up as it”s not attractive for them to export to India through the sea route, while land routes have severe constraints in terms of logistics,” Verma said. Pakistan allowed exports of 500,000 tonnes of sugar in 2012, and Indian traders immediately sealed some deals for small amounts despite a domestic surplus, seeking to capitalise on lower prices in Pakistan and higher rates in India. 

Copyright Reuters, 2013

Muhammad Ramzan Rafique
Muhammad Ramzan Rafique

I am from a small town Chichawatni, Sahiwal, Punjab , Pakistan, studied from University of Agriculture Faisalabad, on my mission to explore world I am in Denmark these days..

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