India has sealed deals to export 176,000 tonnes of sugar to sanctions-hit Iran so far this year and a vessel with 32,000 tonnes of that, the last consignment, is being loaded at a southern port, trade sources said on Thursday. "Of the 176,000 tonnes, about 146,000 tonnes have already been moved out of the country. Most of these deals have been through Dubai-based traders," one of the sources said.
Although western sanctions aimed at curbing Iran's nuclear ambitions do not prohibit food imports, they have made payments by and to Tehran more difficult. India is Iran's second-largest crude oil buyer and has struggled to find ways to pay for the oil. The two countries agreed in January to settle 45 percent of the oil trade in rupees and are also making some payments through a Turkish bank. But some Iranian buyers are channelling import payments through unofficial routes involving several layers of middlemen based in Dubai.
India, the world's top sugar consumer and the biggest producer behind Brazil, kicked off exports to the Islamic Republic in March. Iran's Trading Corporation has been floating tenders to buy sugar and has also bought from Brazil. India's sugar exports would total 3.3 million tonnes this year, including stocks at ports, but a surge in local prices and a steep drop in global rates have dissuaded traders from signing fresh contracts since July, the second source said.
"Some of the last export contracts were signed at $550-$600 a tonne," he said. India's benchmark sugar prices have risen 20 percent to $650 a tonne since July 1, while international prices in New York have slumped more than 9 percent in the past two months.
"With the rise in prices here and a fall in prices internationally, exports have become unviable and some Indian sugar traders have washed out their contracts," the second source said. Local traders have cancelled - or "washed out" - on about 200,000 tonnes of sugar, traders said.
The washouts - in which buyers give up the obligation to take delivery by paying a penalty - have been confined to local millers and traders, the trader said, adding dealers have not reneged on global export deals. But traders could go back on their global contracts. Indian sugar exporters are in talks to cancel sales of more than 500,000 tonnes of white sugar currently.
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