Falling freight rates and premiums will likely encourage Chinese sugar mills to strike more import deals as long as further government reserve sales appear unlikely, traders said on Tuesday. China sold the third lot of 114,102 tonnes of raw sugar from state reserves in an auction on Tuesday, the last of three sales totalling just over 400,000 tonnes this year to help cover a shortage for the year ending September 2005.
Traders said Beijing has no plan so far to sell more of its reserves, which still exceed more than one million tonnes. Drought in major southern areas in late 2004 cut the country's sugar production to 9.17 million tonnes.
"If mills can get quotas, they are likely to import because freight rate and premiums
had fallen to the level which will make their imports profitable," said a trader at a leading state-owned trading firm. He did not elaborate.
Traders said they had heard domestic sugar mills had bought some raw sugar from Brazil, but they could not confirm the talk.
Chinese sugar mills have bought some 200,000 tonnes of sugar mainly from Guatemala, Honduras, Australia and South Korea in the first five months of the year.
China has also imported 130,289 tonnes from Cuba under a long-term bilateral agreement.
On Tuesday, raw sugar held in six state warehouses including in east province of Jiangsu
and capital Beijing was sold at prices of between 2,850 yuan ($344.40) to 2,890 yuan per tonne.
Domestic refined white sugar continued to rise slightly on Tuesday with prices quoted at between 3,270-3,470 yuan per tonne, a rise of 30 to 10 yuan from producing to consuming areas.
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