China sugar imports drop for a second month in a row in February

(Reuters) – China’s sugar imports fell in February for the second month in a row after posting a record year in 2015, customs data showed on Monday.

China, the world’s top sugar buyer, imported 110,000 tonnes of raw sugar in February, down 13.5 percent compared to the same month last year.

Imports in January were also down 25.1 percent on year, data showed last month, after reaching a record 4.85 million tonnes for full-year 2015, up 39 percent.

Analysts and traders expected the drop because of rising prices, restrictions on import permits, and growing stockpiles have reduced the appetite for imports.

Demand for imports has dropped as global sugar prices have risen more than domestic prices, said Zhan Xiao, an analyst at Shanghai Buyun Investment Management, adding that imported sugar now costs roughly 1,000 yuan more per tonne than previously.

Domestic white sugar on the Zhengzhou commodity exchange traded at an average of 5,303 yuan ($818) a tonne during February. Imports were an average of $379.55 a tonne, customs data showed.

The country allows 1.94 million tonnes of sugar imports annually at a tariff of 15 percent as part of its commitments to the World Trade Organisation, while imports outside this quota incur a 50 percent duty.

“The quota limit impacts the willingness of buyers to import,” said Han Xu, vice-president of futures research at COFCO Futures.