Insight Focus
Raw sugar arrivals in July finally surged after months of low imports. How much raw sugar will China import in 2024?
Strong July Raw Sugar Imports
After the 2024 Raw Sugar Refiner Meeting in May, Automatic Import Licences (AILs) for out of quota raw sugar imports were issued.
Raw sugar imports were low from March to June, but the volume in July finally increased, reaching 398,000 tonnes. We also tracked three other vessels to China which have not yet been recorded in the customs data.
With this arrival of raw sugar, most of the sugar refineries have resumed work and returned to the market, except for a few refineries that are scheduled to start production in early September.
During the January-July 2024 period, China’s raw sugar imports reached 1.57 million tonnes, of which 1.13 million tonnes were managed by State Owned Enterprises. This means that most of this sugar was imported under quota, including the demand for the national sugar reserve.
Import costs have fallen, with the average arrival price of raw sugar in July at USD 513/tonne or RMB 3,650/tonne, 16% lower than the same period last year. It’s possible that these import costs move lower in the coming months, assuming more out of quota sugar was contracted before the recent world market futures price rally.
New Refinery Comes Online
With the commissioning of COFCO’s 500,000-tonne sugar refinery in Zhangzhou city in July, there are plans to process until the 2025 New Year. COFCO now has five sugar refineries with more than 2 million tonnes of raw sugar processing capacity.
As for AIL demand, we estimate that about 250,000 tonnes of the volume imported in July was out of quota. We expect this volume to further increase in August and in the coming months. The recent raw sugar price collapse below 18c/lb allowed Chinese refiners to cover some of their AIL demand.
As a result, we believe that AIL demand should pick up this year. Total raw sugar imports in 2024 may be close to 4 million tonnes.
Note: 2024 imports are updated until end of July.
