The world’s biggest sugar consumer last week allowed duty-free imports until October 31 to ease record-high prices ahead of the festival season, when demand for traditional sweets typically peaks.
But domestic ex-mill prices have fallen nearly 20% from the record high hit last week.
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“Imports looked attractive last week, when prices were firm and rising. But the sharp price drop since the announcement has taken the shine off imports for millers,” said Rahil Shaikh, managing director of Mumbai-based trader MEIR Commodities India.
The import margin is thin, and there is no guarantee it will hold when shipments arrive in nearly two months, Shaikh said.
Shaikh and four other dealers at global trading houses said imports are unlikely to exceed 500,000 tons, with most of the volume likely to be taken up by refineries.Domestic supplies expected to rise from mid-October
India has a handful of port-based sugar refineries that import raw sugar duty-free for refining and export the resulting white sugar.
The government last week allowed these refiners to apply for the import quota, enabling them to sell refined sugar made from already-imported raw sugar in the domestic market until the end of October.
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These refineries could quickly sell around 300,000 tons of stocks they are holding in the domestic market, said a Mumbai-based dealer at a global trading house, who declined to be named in line with company policy.
But mills are not interested in imports as domestic supplies are expected to rise from mid-October with the start of the new crushing season, potentially putting further pressure on local prices, he said.
India has asked mills to bring forward the start of sugarcane crushing to October 15 to boost supplies.
New Delhi has allowed imports of only raw sugar, which is likely to be sourced mainly from top producer Brazil and must be processed before being sold in the domestic market.
There is a need to allow duty-free imports of white sugar along with raw sugar to quickly boost supplies, said the Mumbai-based dealer.