INDIA: Bulk buyers seeking more imports
Published: 03/03/2010, 9:04:52 AM
A stringent stock limit rule by the Indian government is prompting bulk consumers of sugar to source some of their requirement from overseas markets to build inventory as a shield from any sudden spurt in domestic prices, according to Reuters.
The federal government last month prevented bulk consumers from stocking sugar equivalent to more than 10 days of consumption. In August, it had put the limit at 15 days as part of its efforts to soften the prices.
However, to promote imports, the government has allowed them to stack up imported sugar for as many days they want.
"Few large companies are importing white sugar as they want to build inventory. New stock limit will prompt them to secure more sugar from global market," said Ashok Jain, president of Bombay Sugar Merchants Association (BSMA).
Most of the bulk buyers such as large beverage and confectionary makers, declined to provide data about imports, but confirmed they are procuring from overseas.
"Since the government has allowed import of sugar we have been importing it," said Himanshu Manglik, spokesperson for Nestle India, a unit of Swiss-based Nestle, maker of dairy products and other packaged foods. Bulk consumer's account for more than 60% of India's annual demand of 23 million tonnes, while the rest is consumed by households.
"Cold-drink and confectionary makers are interested in imports, but many are avoiding entering into deals due to price volatility in the domestic and international market," said a Pune-based broker.
"After a sharper correction in overseas market there is parity in domestic and global market. These companies may start signing deals for white sugar," said an India head of international sugar brokerage, who declined to be named.