China sugar imports triple to 520,000 tonnes in May

China, one of the world's top sugar buyers, imported 520,000 tonnes of sugar in May, triple the amount a year earlier, as refiners sought to benefit from cheap global prices. The jump in volumes, which was widely expected after similar imports in April, has been spurred by tumbling global prices that hit their lowest levels in 6-1/2 years earlier this month.
China's domestic sugar prices have also recently eased on demand concerns, but remain supported by forecasts of lower output this year and government restrictions on imports aimed at protecting domestic sugar mills. Domestic sugar currently trades at premiums of about $250 per tonne over imports, the highest level on record, traders said. "There's no connection at all between global and local prices," said a Chinese trader, who was not allowed to be quoted in media.
Sugar imports are set to remain strong in coming months, with the industry eyeing summer weather to gauge demand in the peak consumption season, with hotter weather boosting beverage consumption. "We're still seeing raw sugar vessels coming in, and in Thailand there's a very strong line-up of white sugar going to China, with arrival in June," said a second trader.
Government restrictions, however, will keep a lid on imports. China allows 1.94 million tonnes of sugar imports annually at a tariff of 15 percent as part of its commitments to the World Trade Organisation. Imports outside of this quota incur a 50 percent duty and must be registered through a government-controlled licensing system. Beijing has been rejecting applications for such permits to help protect domestic sugar mills.
China's sugar association has also called on importers to keep total imports this year to within 3.5 million tonnes, which may push shipments down in coming months. Imports in the first five months of the year are already over 2 million tonnes, a 58 percent increase year on year, trade website Guangxi Sugar Network said, citing government data. But trade sources said the 3.5 million tonne figure may be flexible, depending on Chinese demand. A widening production deficit could increase government tolerance for higher imports. China is expected to produce about 10.5 million tonnes of sugar in 2014/15, down from 13.3 million tonnes in the prior year. Output is set to fall further in the coming season.