Falling domestic sugar prices weaken India’s 1 mt import push
India’s falling domestic sugar prices have weakened the commercial appeal of raw sugar imports, challenging the Centre’s plan to import 1 million tonnes. Refiners face higher imported costs, though recent domestic price recovery could gradually improve import parity.
Pune: Recent decline in domestic sugar prices in the country has made raw sugar imports less attractive, creating a challenge for the Centre’s plan to bring in 1 million tonnes of the sweetener to ease local supplies, The Economic Times reported.
Ex-mill sugar prices have dropped to around Rs 44-50 per kg across major producing states from nearly Rs 65 per kg in recent weeks. The sharp correction has reduced the price advantage for refiners importing raw sugar, with imported supplies now costing more than locally available sugar.
Port-based refineries have committed to import around 260,000 tonnes so far, but only a few thousand tonnes have actually entered the domestic market, according to industry officials.
With international sugar prices firming up while domestic prices remain low, refiners are likely to delay further imports until local prices improve sufficiently to match the cost of imported sugar.
“The challenges for imported sugar have increased as international prices have firmed up while domestic prices have fallen,” a leading sugar importer said.
According to another importer, the cost of producing white sugar from imported raw sugar is already above Rs 55 per kg, even before adding inland logistics costs. This compares with ex-mill prices of around Rs 45-46 per kg in Maharashtra and Rs 48-50 per kg in Uttar Pradesh.
“Imported sugar can be sold only when there is parity,” the importer said.
The Centre held discussions with sugar importers on Monday and urged them to increase imports.
The move follows the government’s decision last week to extend the application window for sugar imports under the Advance Authorisation Scheme to a one-time Tariff Rate Quota mechanism.
The arrangement allows port-based refineries that traditionally import raw sugar, process it and re-export the refined product to sell part of the processed sugar in the domestic market within the specified quota.
However, the sharp fall in domestic prices has weakened the commercial incentive to bring in more imported sugar.
Industry officials said sugar that has already been sold and stocks currently lying at ports are expected to gradually move into the domestic market.
Meanwhile, ex-mill sugar prices began recovering on Monday, rising by around 2-3% in some markets amid tighter availability.
An industry leader attributed the movement partly to disruptions in the supply chain following government action against traders and stockists.
“The fear of action under the Essential Commodities Act and raids on shops has disturbed the supply chain, affecting sugar prices,” the industry representative said.
The recent recovery in factory-level prices could improve import parity if it continues. However, unless domestic prices rise sufficiently to cover the cost of imported sugar, refiners are likely to remain cautious about bringing additional quantities into the country.
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Source : ChiniMandi
