Philippines may ease sugar import restrictions in 2019

The Philippine government wants to ease sugar import restrictions this year, on the back of record inflation in 2018, the country’s Budget Secretary, Benjamin Diokno said.

The raw sugar mill-site composite price in the Philippines surged by about 49% from January 2018 to hit a record high of Philippine Pesos 1,952.67/kg or $745/mt in July 2018, before ending the year at Pesos 1,548.16/kg, Sugar Regulatory Administration data showed.

Meanwhile, the Metro Manila retail price of white sugar increased by 21% from the beginning of last year to peak at Pesos 66.56/kg or $1,270/mt in September 2018, before settling at Pesos 65.41/kg in December 2018, SRA data showed.

To quell the tightness in the domestic market, the Philippine government in June last year allowed 200,000 mt of sugar imports for the first time in two years. The first tranche of imports did not ease prices domestically so the SRA in late September, announced another 150,000 mt tranche of sugar imports to be imported before the year end.

The Philippines imported 526,747 mt of sugar from Thailand in 2018, of which 67,897 mt was raw sugar and the rest refined sugar, Thai Sugar Millers Corporation data showed.

If the Philippine government eases the import restrictions, it would come as a relief for Thai producers who are competing with sugar exports from India in the region.

“Philippines mainly import [sugar] from Thailand and a big part of Philippines’ demand is for the bottle grade sugar,” a trader said.

Thai white sugar cash premiums are under pressure due to lack of demand, with the re-export license from Myanmar and the out-of-quota sugar import license from China yet to be issued.

Thai 45i white sugar cash premiums for February loading breakbulk cargoes were assessed at $5/mt over the London No.5 March (H) futures contract, S&P Global Platts data showed.

In January 2018, the TRAIN bill in the Philippines imposed a Pesos 6/liter ($0.12/liter) tax on drinks containing calorific or non-calorific sweeteners, and Pesos 12/liter tax on drinks containing high-fructose corn syrup, or a combination of both.

As a result the demand for sugar increased, with major beverage companies opting to switch HFCS with sugar in their production process after the bill was implemented.
Source: Platts