China Seen Importing Sugar For Tolling

Chinas purchase this week of 22,000 tonnes of Thai raw sugar was for tolling, and while China was likely to buy more, any purchase before the second half of 1997 would be small, sugar traders said on Wednesday.

The sugar was for tolling, said a Hong Kong-based trader. Tolling involves importing raw sugar duty-free and exporting the processed product.

Japan-based traders said Chinas buying had not affected Asias sugar markets.

The purchases are unlikely to lead to substantial buying by China, said a source at a major trading house in Japan.

Yes, China will continue to import small amounts of sugar, said a Chinese trader based in Beijing. China bought 22,000 tonnes of Thai raw sugar for March shipment, sugar traders in Thailand said on Monday.

 

That purchase had been concluded earlier, Hong Kong sugar sources said, and no fresh negotiations were heard in the market on Wednesday.

Some traders said tolling had to continue in order to keep Chinese sugar factories running. Others said tolling remained profitable despite the slow rise in domestic sugar prices.

Domestic sugar prices edged up in Chinas major producing province of Guangxi after the Chinese Lunar New Year and in some areas were above 3,900 yuan ($469.8) per tonne, compared with 3,800 yuan ($457.8) per tonne a few weeks ago, traders said . The Chinese government continued to closely monitor sugar imports to control smuggling and tolling licences were extremely hard to obtain, the Chinese trader said by telephone.

The government is still trying to protect the domestic market, said a Hong Kong-based trader. In Japan, several traders said 12,000 tonnes of raw sugar deals for May/July shipments were down at premiums of 0.30 cents this week, but the buyer and the seller were unknown. Asian sugar markets remained quiet due to a lack of large-scale physical buying, traders said.

Thai raw sugar premiums have been mostly steady, with Thai premiums for March/May delivery quoted at 0.25/0.35 cents (bid/offer) per pound over New Yorks Coffee, Sugar and Cocoa Exchange on an free on board (FOB) basis, compared with 0.20/0.30 a week ago, they said. May/July deliveries were quoted at 0.23/0.35 cents, against 0.30/0.40 a week ago. July/September deliveries were at 0.50/0.60 cents, compared with 0.50 cents a week ago.

Traders also said loading activity in Thailand had been delayed reflecting in part the slow physical demand.

Demand for Thai raw sugar remains weak, although we heard some Indonesian buying of Thai white sugar, another trading house trader said.