High stocks of refined sugar in Taiwan resulting from overbuying in recent years have sharply cut imports in the first half of this year, but industry executives say the market may pick up again mid-year.
Annual imports of raw sugar for Taiwan are seen holding steady or dipping slightly from last year's 570,000 tonnes, after an excess of an estimated 70,000-80,000 tonnes of refined sugar is fed into the market, traders said.
Taiwan relies on imports to meet roughly 85 percent of its needs and sources the bulk of its raw sugar from number one supplier Australia, followed by Thailand.
State-run Taiwan Sugar Corp, the island's only refiner and principle importer, is seen with particularly high inventories, said Tony Chen, an international trade manager at Vedas Enterprise Corp, one of the largest private sugar importers on the island.
"There were too many imports in the last few years and Taiwan Sugar has high stocks pushing prices lower leaving no room for margins," said Chen. "We will wait until Taisugar's stocks of refined product are lowered and then we will import," he said, adding that by June the stocks would have been run down enough to spark interest.
Falling international sugar prices, which hit a 17-month low last week on a global supply glut, have also dampened interest among private sugar importers. Imports of sugar in the first two months of this year have slid over 73 percent from the same period in 2006 to 19,505 tonnes, according to the latest customs data.
Taiwan in 2005 liberated its sugar market permitting private firms to import the sweetener for the first time, leading to a wave of buying on expectations of rising global prices. "There's always a period of overbuying when a market is first liberalised," said a Singapore-based trader who declined to be identified. "Now they still need to draw down their stocks."
The rush to import the sweetener was fuelled among new market entrants by expectations of rising global prices, which in 2006 hit a 25-year peak of over 19 US cents per pound.