- Indonesia should import 4.9m tonnes of raw sugar in 2022.
- If it does, it’ll be the world’s largest raw sugar buyer for the second year running.
- It’ll also be the first time its raw sugar demand has increased since COVID hit.
Indonesia: The World’s Largest Raw Sugar Importer in 2022?
- We think Indonesia will import 4.9m tonnes of raw sugar next year, making it the world’s largest raws buyer for the second year running.
- With this, its raw sugar demand will rebound slightly from a COVID-induced drop.
Why is the Refineries’ Demand Strengthening?
- COVID restrictions hit out-of-home sugar consumption in Indonesia, meaning demand from the country’s food and beverage producers dropped.
- Things are now picking up slightly, as restrictions slowly ease, meaning demand should show slight growth in 2022.
- The refineries should receive 3.5m tonnes of raws import permits this year and the next.
- However, it’s unlikely we’ll see the Government release these permits early in December, as was the case last year, as stocks are higher.
- To add to this, Indonesia’s refined sugar consumption isn’t set to grow by very much in 2022.
- It should consume 3.67m tonnes of refined sugar this year, down 40k tonnes from our 2022 estimate.
- This is because COVID’s impact on the economy has been significant, meaning the rebound in household food and beverage consumption could be slower.
The Mills Continue to Import Raw Sugar
- The mills’ raws demand should be unchanged as the Government must ensure the domestic sugar price remains supported.
- We therefore think they’ll import between 700 and 800k tonnes of raw sugar in 2022, as they did this year.
- They’ll only produce around 2.2m tonnes of sugar from the harvested cane, whilst demand is at 3.6m tonnes.
- So, these imports should also enable them to keep their low-quality white sugar stocks at a healthy level.
- Moving on, the Monosodium Glutamate (MSG) sector could import 500k tonnes of raw sugar.
- Due to a stagnant growth in sales, the MSG producers’ raws demand has seen a small decline since 2019.
Where Will Indonesia’s Sugar Come From?
- Thailand should be the world’s largest raw sugar supplier next year, with its cane crop set to rebound.
- · It should also be Indonesia’s primary raw sugar supplier, exporting 2.5m tonnes there in total.
- · If it does, it’ll occupy 50% of Indonesia’s raws imports versus 17% this year.
- The next largest suppliers, on a global basis, will be India (3mmt) and Australia (3.4mt).
- 1.5m tonnes of India’s raw sugar will go to Indonesia, and 776k tonnes Australian raws will go there.
- In spite of all this, the increasing No.11 and higher freight rates mean the domestic price hasn’t been rising in tandem and the refineries’ import margins have taken a hit.
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