China Asks Thailand To Check Dozens Of Factories Before Negotiations Of Ban On Sirup Exports

JAKARTA - Chinese authorities asked Thailand to inspect dozens of factories before opening negotiations to lift the ban imposed last month on exports of sugar plus mixed powder from Southeast Asian countries.

Thailand's second-largest sugar exporter in the world was the main supplier of liquid sugar to China last year with shipments of more than 1.2 million metric tons, according to supply chain service company Czarnikow.

In December, China suspended imports of Thai warranty and premic powder, sugar mixtures and other foodstuffs, due to concerns over factory cleanliness, said Arada Fuangtong, senior official at Thailand's Ministry of Commerce.

Thai authorities want to negotiate to end the suspension, he said.

Industry sources said authorities in Thailand were increasingly concerned about the ban as they realized it could cost sugarcane farmers in Thailand the price of their products.

Arada said the amount of sugar that may need to be diverted is huge and therefore this problem seriously burdens global prices, with the price of white sugar futures on the ICE exchange at its lowest point in three years.

According to Citi analyst Arkady Gerverkyan, China's ban has caused Thai sirens and premiums worth around 400 million baht (USD 11.6 million) to be 'stacked' on the ship at this time.

"Chinese is the largest sugar miller importer from Thailand," he said.

Thailand's Deputy Minister of Industry, Virit Viseshsindh, said China had asked for a review of 78 sugar factories in Thailand before negotiations could begin.

"GACC wants our standard check to be stricter," he said, referring to the General Administration of Chinese Customs and Excise.

Czarnikow analyst Rosa Li estimates that Chinese factories and importers will eventually try to resolve the issue and lift the ban.

"But we still have to see how long this process will last," he said.