By Panarat Thepgumpanat
BANGKOK (Reuters) – Chinese authorities have asked Thailand to inspect dozens of factories before opening negotiations to lift a ban imposed last month on sugar syrup and premixed powder exports from the Southeast Asia nation, Thai officials said.
Thailand, the world’s second-largest sugar exporter, was China’s main supplier of liquid sugar last year with shipments of more than 1.2 million metric tons, according to supply chain services company Czarnikow.
In December, China suspended imports of Thai syrup and premixed powder, a mixture of sugar and other food ingredients, because of concerns over factory hygiene, said Arada Fuangtong, a senior official at Thailand’s Commerce Ministry.
“Thai authorities want to negotiate ending the suspension,” she said.
The ban has left Thai syrup and premixes worth about 400 million baht ($11.6 million) stranded on ships, said Citi analyst Arkady Gevorkyan.
“This suspension could strain sugar and sugarcane prices this year if not resolved as China is the largest importer of Thailand’s sugar syrup,” he said.
China had asked for a review of 78 sugar factories in Thailand before negotiations can begin, Thai Deputy Permanent Secretary of Industry Virit Viseshsindh said, adding that inspections were being carried out.
“The GACC wants our inspections of standards to be more rigorous,” he said, referring to the General Administration of Customs of China.
White sugar futures fell to their lowest level in three years on Tuesday, as above-normal rainfall in Brazil improved crop prospects, amid possibilities of exports from India and increased shipments from Thailand.
“We think these factories, as well as importers in China, will actively respond to the new regulatory requirements, but it remains to be seen how long this process will last,” Czarnikow Senior Analyst Rosa Li said in a note.
(Reporting by Panarat Thepgumpanat, Additional reporting by Marcelo Teixeira; Writing by Chayut Setboonsarng, Editing by Devjyot Ghoshal, Martin Petty)
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