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Sugar Prices Indifferent To Raw Sugar Imports In Near Term: ICRA

According to ICRA, this move is unlikely to have any significant impact on sugar prices or profitability of the sugar mills in the near term, given that the quantum of import permitted is very small

Photo Credit : Reuters

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Indian government has recently permitted raw sugar import of 0.30 million MT at a concessional duty of 25 per cent (as against the existing import duty of 50 per cent) with an aim to check the rise in domestic sugar prices by maintaining adequate domestic sugar supplies, ahead of the forthcoming festive season.

According to ICRA, this move is unlikely to have any significant impact on sugar prices or profitability of the sugar mills in the near term, given that the quantum of import permitted is very small.

Says Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA Ratings, “This move could supplement sugar supplies in the sugar deficit southern and western states and also benefit consumers from possible price shocks in the festive season. However, the small quantum of additional supplies, it is unlikely to have any significant negative impact on the prices or profitability of sugar mills in the near-term.”

“This is because including the 0.3 million MT of imported sugar, the closing stocks for current season are estimated to be around 4.7 million MT, which would just be sufficient to meet the requirement of around two months of domestic consumption.”

After announcing a hike in the import duty during July 2017 from 40 per cent to 50 per cent in order to curb dumping of sugar in India as international prices fell, the central government, through a notification issued in August 2017, has imposed a stock limit on sugar mills for September and October 2017 to keep prices in check during the festive season.

Majumdar added “Currently, global raw sugar prices are around 14 cents/lb. At the current prices, the total conversion cost into refined sugar is likely to be around Rs 31,000/MT. Thus, the importers are likely to benefit around Rs 5000-6000/MT while considering the current domestic sugar price at Rs 37,000/MT.”


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