Cash premiums for Thai HiPol raw sugar prompt loading cargoes have found support in recent weeks, due to an improvement in buying interest from key destination buyers such as Indonesia and Vietnam, market sources said.
Thai HiPol spot February loading cargoes were assessed at 179 points premium over the New York No. 11 March futures on Jan. 29, compared to the lowest at 173 points over March futures during the first half of the month.
In comparison, Platts forward month shipment window for March-May 15 cargoes was assessed 11 points lower at 168 points premium over the March futures.
Several trade sources said that Vietnamese buyers could possibly be stepping up their purchase of spot Thai sugar, as the Vietnamese government had launched an antidumping investigation on Thai sugar imports in late 2020.
Vietnam had initially removed import quotas on ASEAN sugar under the ASEAN Trade in Goods Agreement, or ATIGA. However, the surge in Thai sugar imports had put pressure on the country's domestic prices and sugar production.
According to a shipment report seen by Platts, 55,911 mt of Thai raw sugar and 21,100 mt of refined sugar had been shipped to Vietnam from Jan. 1-19.
A trader said that some of the Vietnamese buyers have also been seeking Thai sugar cargoes for shipment after Vietnamese Lunar New Year, which falls on Feb. 12.
"We are surprised by the movement of sugar in bulk vessel to Vietnam. If there is [possibility of an] antidumping duty then buyers should be holding back on their purchase," a Thai producer source told Platts.
A trader added that the prolonged wait on the Vietnamese government's decision to launch an antidumping duty on Thai sugar have kept many buyers at bay, resulting in an uptick in domestic prices.
Domestic refined sugar prices reached as high as Vietnamese Dong 15,000-16,000/kg ($650-$690/mt), compared with Dong 13,300/kg ($580/mt) in Q4 last year.
Furthermore, Indonesian Bureau of Logistics, or Bulog, had issued a tender to import 53,000 mt of raw sugar split equally between February and March arrival -- with acceptable origins from Australia, Thailand, Brazil and India.
Although Indian sugar is $10-$15/mt lower than Thai sugar on an import parity basis into Indonesia, traders noted that February arrival cargoes into Indonesia would likely be logistically tight for India due to the longer voyage time required. Trade sources shared that the February arrival cargoes could likely be covered with Thai sugar due to the proximity.
"Thailand has a location advantage in the region as sugar can arrive promptly to destination markets. When buyers need to cover prompt [shipment], it will support Thai premiums," a Hong Kong-based trader said.
