Bloomberg News

Chinese Sugar Smuggling Seen Declining by Two-Thirds in Q2

May 29, 2012

A crackdown by Chinese Customs and rising premiums for Thai sugar have reduced sugar smuggling into China, Deng Yi, secretary-general of the Yunnan Sugar Association, said in an interview from Guangzhou.

Smuggling may have reached 500,000 metric tons in the first quarter, the most in 17 years, the Guangxi Sugar Association said in April. Contraband might drop by two thirds in the second quarter, Deng said today. Guangxi and Yunnan are the biggest producing provinces.

Domestic sugar gained 0.8 percent this year, reaching the highest since October last month, as a government stockpiling program mopped up supplies, while prices in New York tumbled 16 percent on rising output from Brazil and India. China may import 2.2 million tons in 2011-2012, the most since 1994-1995, according to the U.S. Department of Agriculture.

“China’s sugar market is expected to stabilize with the reduced smuggling and the coming peak consumption season in the summer,” Deng said.

The price gap between Thai sugar and local Chinese sugar has narrowed to below $300-$400 a ton from more than $500 a ton a month ago, according to Deng. “Such a price gap is not sufficient enough to encourage smugglers.”

The country has imported a total of 810,000 tons of sugar in the first four months, up 242 percent from a year ago, the customs data showed.

Refined sugar futures traded in Zhengzhou Commodity Exchange gained 0.4 percent to trade at 6,004 yuan ($946) a ton at 2:24 p.m. local time.

To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at +86-10-6649-7563 or frong2@bloomberg.net

To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at frong2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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