VietNamNet Bridge – Slow sale, high inventories, low sale prices all have put sugar manufacturers on tenterhooks. They have been burning to get the nod from competent agencies to export sugar to clear the stocks.

According to the Vietnam Sugar and Sugar Cane Association, the sugar output has been increasing rapidly, while the sales have been slowing down, which has led to the big inventories.

Two more sugar refineries, Tuy Hoa and Khanh Hoa, entered the new production season in the week from January 15 to January 21. As such, to date, only one refinery still has not kicked off its production plan.

Sugar plants last week pressed 697,137 tons of sugar cane, made 67,152 tons of sugar, raising the total output of 578,167 tons of sugar so far. This does not include the raw sugar imports and domestic raw sugar provided to refineries.

The inventories at sugar refineries by January 21 had reportedly reached 249,742 tons, including raw sugar, while the inventories at trade companies which are the members of the sugar association, had reached 11,043 tons.

Nguyen Hai, Secretary General of the sugar association, has blamed the weak demand for the big inventories. The demand increased in January, the month just before Tet, but the increase is modest, just tens of thousands of tons. Meanwhile, sugar refineries continue making out sugar, since January and February are the high production season, during which the output may reach 300,000 tons a month.

The daily inventory increase has put a hard pressure on the sugar sale prices. The factory prices have been lowered to less than VND14,000 per kilo. The Pho Phong refinery, for example, offers to sell sugar at VND13,800 dong per kilo, including VAT, while An Khe offers VND13,820 dong per kilo.

As such, Vietnamese sugar refineries have been keeping the wholesale price at less than VND14,000 per kilo since 2009. The prices are nearly the same with the illegal imports form Thailand.

On January 21, illegal imports were sold at VND13,600-14,200 per kilo in HCM City, while it was VND13,400 per kilo only in the border area and VND13,500 at Lao Bao border gate.

Experts say they cannot see any possibility of the sugar price recovering, since the prices in the world have also been on the decrease. The white sugar in London was traded at $492 per ton on January 21 with the delivery in March 2013. The price represents a $37.5 per ton decrease in comparison with the March deliveries’ price fixed on November 16, 2012.

Sugar refineries all have lowered the sugar cane collection price. In the north, Tale&Lyle collected sugar cane at VND870,000 per ton instead of VND900,000 on January 9.

The Hoa Binh and Lam Son refineries now pay VND950 per kilo for 10ccs sugar cane.

Sugar manufacturers want export quotas as soon as possible

Hai from the sugar association said the Ministries of Agriculture and Rural Development, and Industry and Trade have agreed to allow importing sugar. However, they have not reached any agreement about the volume of sugar to be exported.

The agriculture ministry and the sugar association both have proposed to export 300,000 tons, but the trade ministry thinks that in the first phase, it would grant the quota to export 100,000 tons only.

The Ministry of Industry and Trade has asked the Prime Minister to set up the mechanism on sugar export in order to clear the big stocks. While waiting for the final decision, sugar refineries have been put on tenterhooks. They want to have quotas as soon as possible, especially when they hear that China has a very high demand for sugar imports.

Nong Nghiep