China imported 656,000 tons of sugar in September, the highest volume since 2013. Year-on-year, imports were up 80%. In the first nine months of 2015, imports rose by 55%. High guaranteed sugar cane prices are pressuring margins of refiners, while the fact that domestic prices are around twice as high as world market prices gives sugar consumers an incentive to import.
Therefore, sugar imports to China are strictly regulated, so not all the sugar that is imported always finds its way straight onto the domestic market. Instead, a not inconsiderable proportion of the imported sugar probably ends up initially in bonded warehouses, only being shipped out as permits for sale on the domestic market are gradually issued. This may not happen until 2016, and may then lead to lower imports, especially if economic growth continues to cool.
"On the other hand, Chinese sugar production in 2015/16 is likely to decline for the second time in a row because of reduced planting and dry conditions. Production is estimated at between 9.5 and 10.5 million tons. Even though China only accounts for less than 10% of global sugar imports and as such does not play such a prominent role when it comes to sugar demand, it is nonetheless the world's largest sugar importer", says Commerzbank.
