Chinese sugar imports to drop amid smuggling crackdown

Chinese sugar imports are forecast to fall to a five-year low next season, as production rises and the government clamps down on smuggling and other imports, US officials said.

Chinese sugar production is expected to rise by 1 million tonne in 2017-18, to 10.5 million tonnes, helped by a government drive to increase cane production, and rising prices, the US Department of Agriculture’s bureau in Beijing said.

“Increased domestic sugar production and an expected easing of prices next year are forecast to result in steady growth in sugar consumption, as well as a decrease in imports,” the bureau said.

However, a great deal of uncertainty remains over Chinese government policy, and its impact on the market, with the potential for imports to fall faster if further restrictions are increased.

2016 saw the launch of the Chinese government’s latest five-year plan, which included a programme to boost sugar production to 15.0m tonnes by 2020. Given consumption is forecast to rise to 18.0m tonnes over the same period, this would suggest a gradual shrinking of imports.

Chinese sugar imports are forecast to fall by 1.0m tonnes year-on-year, to 4.2m tonnes, the lowest level in five years. “Higher domestic production and tighter expected government control over imports will likely result in a reduction in imports,” the bureau said.

The bureau noted that illegal sugar imports into China have also fallen. “The Chinese government has reportedly increased monitoring and combating of sugar smuggling,” the bureau said, also noting that availability of Indian sugar for smuggling has been restricted this year. The bureau noted that imports could drop even faster, if the Chinese government enacts further restrictions.

The Chinese Ministry of Commerce is currently conducting a “safeguard investigation,” which has the potential to find that the domestic industry is threatened by imports, opening the way for further restrictions.  The results of this investigation are expected on May 22.

“If safeguard measures are implemented, it would likely result in an even further decline in imports,” the bureau said, noting potentially effects on stocks and prices as well.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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