Singapore—Asian sugar traders are facing growing uncertainty ahead of Vietnam's antidumping policy announcement in June, with market sources noting a rise in domestic prices amid depleting sugar inventory.
Vietnam's Ministry of Industry and Trade had conducted a public consultation on May 12 over antidumping investigations on Thai sugar imports, with the current duty structure on Thai raw and refined sugar imports at 33.88% and 48.88%, respectively.The development came following a surge in Thai sugar imports, which impacted the country's domestic sugar industry. Although there are market rumors that the duties imposed on Thai refined sugar might be halved to about 20%, the information could not be verified at the time of writing.
The antidumping duty will be in effect for 120 days after the date of announcement.
Need for imported sugarVietnam's domestic wholesale sugar price rose to Vietnamese Dong 16,500-16,700/kg ($720-$730/mt) in May, up by almost 10-12% from a month ago.
Trade sources noted that the rise in domestic prices could suggest Vietnam is running low on sugar stocks and have limited access to Thai-origin sugar.
Vietnam faces a net shortage of sugar, resulting in the need for Vietnamese buyers to import sugar from other origins or from Thailand. Platts Analytics estimates Vietnam's production unchanged at 700,000 mt in the current 2020-21 season and consumption at 1.7 million mt.
As of May 20, total imports of Thai raws into Vietnam during January-May was at 122,052 mt, compared to 228,929 mt in the previous year. Thai white and refined sugar imports into Vietnam during the same period was at 135,953 mt, down from 281,032 mt a year ago.
The relative competitiveness of Thai sugar imports has diminished, as Vietnamese buyers pivot towards importing sugar of other ASEAN origin, including Indonesian and Malaysian origins.
Concerns over cross-border flowsSeveral sources familiar with the matter said that Thai raw sugar is still entering into Vietnam via traditional sea routes where buyers are paying the duties, while most Thai refined sugar has been entering Vietnam through cross-border trucking activities.
"Many countries such as Laos and Cambodia are selling sugar to Vietnam by trucks, so it is not the usual sea route," a Singapore-based white sugar trader said.
Despite the unfavorable circumstances prevailing for Thai-origin sugar, the cash premiums for Thai sugar have remained relatively supported. S&P Global Platts assessed Thai HiPol prompt shipment raw sugar at 190 points over the New York No. 11 July futures, hovering at 185-190 points in the month of May.
A trader in Singapore said cross-border activities have significantly slowed since May, as rising COVID-19 resulted in stricter border controls.
"Vietnam's demand is down a lot and buyers are just buying slowly because of COVID-19. Another factor is due to container freight as importers cannot get good freight rates," a Singapore-based trader said.
On the subject of antidumping duties, traders said that it will be of no benefit to the local industry, should cross-border inflow of sugar replaces imported sugar with antidumping duties.
"I don't think antidumping measure is good because a lot of sugar will then go through the unofficial route. Their local sugar industry and the government will not benefit [from such flows]," a Hong Kong-based trader said.
