China’s
sugar price remains high in 2017 despite the opposite international trend. The
government is going to protect the domestic industry with higher tariffs and
increasing efforts in fighting the large sugar smuggling.
Source: Pixabay
China’s
sugar price underwent a significant growth from 2016 to 2017. The main reasons
have been a decrease in the planting area of sugarcane as well as heavy weather
occurrences, which damaged the quality of sugarcane, decreasing the supply and
hence boosting the price for sugar from China.
The
production in the 2016/2017 extracting season revealed a growth by 6.8%
compared to the last season, but the result stays behind estimations. Since
also the import volume of sugar did not reach the estimated numbers and the
demand for sugar remains the same, China will face a larger sugar supply
shortage in this extracting season than it was the case in the previous one.
This
greater sugar supply shortage is the main reason for the sugar price to stay
high in the second half of 2017. According to market intelligence firm CCM.the
price for sugar in June was in average USD8 per tonne higher than in the same
month 2016. The sugar price is likely to remain on this high level and not
going up again since China is following a price stabilisation policy in this
season, which would result in higher sugar reserves to push the price down once
it is getting up.
China’s
sugar price in Jan. 2015 – May 2017
Source:
CCM
China’s
sugar industry is also looking forward to proposed heavy import tariffs on sugar,
charging up to a 95% duty for out-of-quota imports, which will benefit the
domestic manufacturers enormously. The new tariff would especially relieve the
large amount of China’s small farmers, which are constantly getting faced by
the pressure of cheap sugar imports from top producers from Brazil or Thailand.
After all, China’s sugar industry has a low concentration with a large number
if enterprises.
Furthermore,
China is strengthening the effort to cut down the illegal sugar smuggling,
which especially occurs to the borders of southern neighbours like Myanmar.
According to experts’ estimation, the yearly sugar smuggling to China reaches
up to 2 million tonnes. The smuggling is mainly caused by the huge difference
of China’s and international sugar price. The international price is even
further dropping down to 13.5 cents per pound recently, while China’s domestic
sugar is remaining on a high price level.
In
the meanwhile, the largest sugar exporter globally, Brazil, has revealed a
declined sugar production compared to previous years. The sugar price in the
country fell down by 30% in 2016, which discouraged manufacturers to produce a
large amount of sugar. Especially small producers are suffering under the low
sugar price.
China
is the largest importer of sugar worldwide. The annual growth rate of sugar in
China has been 1.9% from 2011 to 2016. The boosting demand is caused by rising
consumer incomes in China’s growing middle class. Despite some price
fluctuations for sugar in China, the demand is growing steadily.
About CCM
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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