Insight Focus
- China is one of the largest sugar importers in the world.
- Liquid sugar and premix imports have been growing in import share.
- Will this continue in 2023?
China is one of the largest sugar importers in the world. It imported 6m tonnes of sugar-related products (in sugar content) in 2022, via 5 legitimate channels. These sugars pay zero to 50% import duties.
The traditional ways are raws and whites imports, accounted for 87% of sugar imports in 2022, 5% lower than 92% in 2021. These sugars pay either 15% duty under quota system or 50% duty under AILs system. We think these imports should continue in 2023 with current policy unchanged.
The balance 13% goes to liquid sugar and premix powder, mostly paying zero duty into China.
Serendipity or Sword of Damocles: Liquid Sugar and Premix Powder
Liquid sugar (syrups) and premix powders are taxed at 30%, or 12% if they are flavored or colored. But the duty will drop to zero if they come from Asean Origins under CAFTA (China-Asean Free Trade Agreement). In 2022, most of the liquid sugar and premix were from Asean and 85% from Thailand.
The average cost of liquid sugar imports in 2022 was 4749 RMB/mt in dry weight, making it the cheapest sugar in the domestic market, following with premix powder – 4957 RMB/mt.
One risk to watch is the customs reclassification of the product and therefore change of import duty. Since Sept 1 last year, the customs has issued a notice classifying premix powder with 90% or more white sugar as white sugar imports. The result did not meet the expectations of the domestic sugar industry, because most premix powder contains 88% or less white sugar.
Sweet Cake Flour for Animal Feeding
The customs notice also mentioned another product – sweet cake flour for animal feeding with sugar content up to 88%. But the import volume of this product is difficult to track, estimated at 50k to 100k tonnes.
Besides these legitimate imports, smuggling used to be a key route, with over 3m tonnes sugar smuggled into China during 2015/16 season. However, now sugar smuggling has waned to minimum because of tighter border controls and falling profits.
