Vietnam: Sugar industry faces crisis amid price crash and smuggling surge
Vietnam’s sugar industry is facing a crisis as smuggled sugar floods the market, slashing prices and profits. Major firms like QNS, Lam Son, and SLS reported sharp profit declines, while inventories hit record highs. The Vietnam Sugarcane and Sugar Association warns of unsustainable conditions, urging stricter anti-smuggling enforcement and long-term reforms to stabilize the sector.
The local sugar industry is under severe pressure due to a flood of smuggled sugar entering the market. This surge in illicit imports has pushed inventories to record levels, leading to a steep fall in prices and leaving domestic producers struggling to cope, reports Saigon News.
Financial results from the first quarter of 2025 reveal a bleak picture for listed sugar companies. Quang Ngai Sugar Joint Stock Company (QNS) reported a net profit of VND392 billion (US$15 million), marking a 26 percent drop compared to the same period in 2024. This is the company’s lowest quarterly profit since mid-2023. QNS’s sugar division was hit hardest, with revenue down 35 percent and gross profit down 45 percent.
The company’s future earnings outlook remains dim as it continues to invest heavily in three major projects. These include raising the daily processing capacity of the An Khe Sugar Factory to 25,000 tons, expanding the An Khe Biomass Power Plant to 135MW, and building a new ethanol plant.
Lam Son Sugar Joint Stock Company also faced disappointing results. From July 2024 to June 2025, the company posted net revenue of VND576.1 billion from sales and services, down 15.54 percent from the previous year. Its gross profit dropped from VND72.6 billion to VND52.9 billion, while net profit fell by nearly half to VND16.7 billion.
Son La Sugarcane Joint Stock Company (SLS) fared slightly better but still saw a 13 percent dip in net profit in the third fiscal quarter, falling to VND89 billion. Although revenue rose 20 percent to VND290 billion, a 40 percent increase in production costs slashed the company’s profit margin to 30.8 percent — its lowest in two years.
Amid the downturn, Thanh Thanh Cong – Bien Hoa Joint Stock Company (TTC) stood out. In the third quarter of the 2024–2025 fiscal year, TTC recorded net revenue of VND7,289 billion, an 18 percent increase from the same period last year. However, costs grew faster than revenue, cutting the gross profit margin to 10.2 percent. Still, over the first nine months of the fiscal year, TTC (listed as SBT on the HOSE) posted an 11 percent rise in revenue to VND21,648 billion and an 18 percent increase in net profit to VND652 billion.
The financial difficulties facing these companies reflect a deeper crisis in the industry. According to the Vietnam Sugarcane and Sugar Association (VSSA), demand in the domestic sugar market dropped sharply in May 2025, even as supply remained high due to new production and leftover stock from the previous crop year.
From the start of the 2024–2025 crop season to the end of May 2025, the industry processed over 12.68 million tons of sugarcane, producing more than 1.25 million tons of sugar. Over 70 percent of this output remains in factory storage — an unprecedented level.
Nguyen Van Loc, Chairman of VSSA, acknowledged that the market is saturated and sugar prices have collapsed. “Some factories have been forced to sell sugar below production costs just to pay farmers, but even that’s proving difficult,” he said.
The primary cause, he explained, is the influx of smuggled sugar, sold at prices far lower than domestic products. This price gap has made it nearly impossible for local producers to compete.
Vo Thanh Dang, General Director of QNS, warned that the smuggled sugar market shows no signs of slowing down. “Sugar with unclear origins continues to spread across the market, putting serious strain on legitimate businesses,” he said. He urged authorities to take stronger action to protect the local industry.
Cao Anh Duong, Director of the Vietnam Sugarcane Research Institute, emphasized the need for long-term strategies. “The sugarcane industry can only survive if we build a stable production chain and guarantee farmers a fair income,” he said. He also called for investments in new technology to cut costs and improve yields.
To support the sector, Duong stressed the importance of enforcing stricter regulations on imported sugar and cracking down on smuggling and trade fraud. “Without a solid legal framework, the domestic sugar industry will continue to suffer,” he warned.
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Source : Chinimandi
