Indian refiners to divert 350,000 tonnes of sugar exports to domestic market
Indian sugar refiners will divert around 350,000 tonnes of export-bound sugar to the domestic market to ease festival-season supply pressure. Combined with a 1 million-tonne duty-free import quota, the move has helped ex-mill prices fall from ₹67 to around ₹54-55 per kg.
Indian sugar refiners are set to divert around 350,000 tonnes of sugar originally intended for export to the domestic market, after authorities cleared the move to ease a supply crunch ahead of the peak festival consumption season, people familiar with the matter said, The Economic Times reported.
The processors could make the stocks available to domestic buyers within a week, the people said, requesting anonymity because of the commercial sensitivity of the matter. The quantity would be sufficient to cover India’s total sugar demand for almost five days and could help ease prices that reached a record high last week.
India, the world’s second largest sugar producer, is facing tighter sugar supplies after this year’s crop fell below expectations due to uneven rainfall and diseases in key producing areas. The situation has become more significant as sugar consumption typically rises during the festival season, which begins in late August and continues through January.
Under the measures approved by the government, refiners and processors will be allowed to sell domestically some refined sugar that had been earmarked for export. The government has also permitted duty free imports of 1 million tonnes of sugar to strengthen domestic availability.
The diversion of export bound stocks is expected to provide immediate relief without relying on imported sugar, the people said. Imports are still likely to be required later, but the additional domestic supplies could help contain prices until sugar shipments from Brazil arrive.
Average Indian ex mill sugar prices climbed to Rs 67 per kg last week, according to Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd. Prices have since eased to around Rs 54-55 per kg following the government’s August 20 announcement allowing duty free imports.
“Prices will cool down further due to timely and effective intervention by the government,” Naiknavare said, adding that the measures would provide relief to consumers during the festival season.
India’s festival period is a key demand window for sugar, with higher consumption of traditional sweets and processed food products supporting the seasonal increase in demand. The government’s decision to allow imports had also contributed to upward pressure on international sugar prices, although that pressure has eased in recent sessions amid expectations that India may not need to utilise the full import quota.
Duty free sugar imports could total between 300,000 and 600,000 tonnes by the end of October, according to estimates from five traders, analysts and millers surveyed by Bloomberg. The projected volume is below the 1 million tonne quota approved by the government, as softer domestic prices have reduced the incentive for mills and refiners to step up imports.
Indian sugar refiners can import raw sugar duty free under advance authorisations, provided the processed sugar is subsequently exported under tolling arrangements.
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Source : ChiniMandi
