VietNamNet Bridge – Vietnamese sugar refineries  have been trying to export sugar as much as possible to avoid the direct confrontation with the smuggled imports from Thailand. Meanwhile, Vietnam plans to import 700,000 tons of sugar this year.

According to the Vietnam Sugar and Sugar Cane Association (VSSA), the total amount of inventory sugar had reached 514,000 tons by the end of February 2014, or 100,000 tons higher than the same period of 2013.

Vietnamese sugar refineries yielding to the smuggled imports

The world market is witnessing two important tendencies – the sugar output increases and the price decreases in Thailand, while the sugar demand would be increasing sharply in China.

Thailand has predicted the record output of 11.3 million tons of sugar in the 2013/2014 crop, which makes VSSA believe that a big amount of sugar from Thailand would cross the border gates to enter Vietnam

Domestic sugar refineries now sell white sugar at VND12,500 per kilo, while Thai sugar in the border provinces was VND11,500 in early March. Sugar has been exported to China at VND13,100 per kilo.

In 2013, some 400,000 tons of Thai sugar was imported across the border gates to Vietnam, while the figure is expected to be higher this year because the price is on the decrease.

Experts believe that with the expected output of 14.2 million tons in the 2013/2014 crop and the domestic demand of 16.3 million tons, China would have to import 2 million tons this year.

Therefore, VSSA, after getting the nod from the Ministry of Industry and Trade to export 200,000 tons of sugar, has insisted on the additional export volume of 300,000-400,000 tons to exploit the high demand in the Chinese market.

Things getting more and more intricate

Though the sugar output far exceeds the demand and the local sugar production has been protected in free trade agreements, Vietnam still has to import sugar every year.

In general, the Ministry of Industry and Trade would determine the amount of sugar to be imported for the year in August, the time when the annual crop finishes. The ministry grants import quota at that time in case the domestic sugar users (sweets or dairy manufacturers) refuse to buy sugar from domestic refineries.

However, the import volume of 77,200 tons for 2014 was determined by the ministry in February already. The imports could be raw and refined sugar, but the raw sugar must be refined before it is sold in the market.

However, things have got intricate when Hoang Anh Gia Lai, a Vietnamese sugar manufacturer in Laos, has got the permission to bring the sugar it makes in Laos to Vietnam. A question has been raised that if the quota of 77,200 tons of sugar includes the imports from Hoang Anh Gia Lai?

In 2013, Hoang Anh Gia Lai intended to sell to Bien Hoa Sugar JSC in Vietnam 40,000 tons of raw sugar which would be refined by Bien Hoa to export to China. However, the plan was not approved by the Ministry of Industry and Trade, because the sugar import quota had been granted to other enterprises before.

TBKTSG