Sugar import squeeze seen to affect Asia<\/p>\n
LONDON (Reuters): Asia's financial crisis has slowed the
\ngrowth of emerging Far Eastern sugar markets, but the full impact
\nof an uneven import squeeze has still be felt, sugar analysts and
\ntraders said.<\/p>\n
Starting in Thailand last July, a sharp depreciation of Asian
\ncurrencies against the U.S. dollar, amounting to some 70 percent
\nfor the Indonesian rupiah, escalated the cost of importing sugar
\nand other dollar-denominated products.<\/p>\n
"For Indonesia it's serious and this has direct consequences
\nfor Thai millers who developed the Indonesian market in recent
\nyears," said Christoph Berg of German sugar analyst F.O. Licht.<\/p>\n
"For other countries, such as South Korea and Malaysia, I
\nthink the downturn will be rather limited," he added.<\/p>\n
The variable impact of the squeeze reflects differing economic
\nprofiles of Southeast Asian countries, which include high income
\nimporters such as Japan and South Korea, low income importers,
\nnotably Indonesia, and one major exporter -- Thailand.<\/p>\n
In more mature markets such as Japan and South Korea, where
\nsoft drinks and food industries are substantial users, the impact
\nis indirect.<\/p>\n
But in Indonesia the effects are more immediate as 80 percent
\nof sugar is consumed directly and forms a much higher share of
\ndisposable income.<\/p>\n
Consumption of sugar substitutes such as high fructose corn
\nsyrup and artificial sweeteners is also greater in higher income
\ncountries, including Hong Kong and Singapore.<\/p>\n
In Indonesia western analysts expect sugar imports to fall by
\nup to 15 percent in 1998, from an estimated 1.1 million tons in
\n1997 and 1.2 million in 1996.<\/p>\n
Indonesia is the most important Far Eastern market and one of
\nthe world's largest white sugar importers, even though it is a
\nsignificant sugar producer with annual output of more than two
\nmillion tons.<\/p>\n
"I think that the 1998 figures will show a marked downturn,"
\nBerg said. "The 1997 figures were more or less unaffected because
\ncontracts were honored, but in 1998 shipments will be much lower
\nbecause of payments problems."<\/p>\n
Thailand, which supplies nearly two-thirds of Indonesia's
\nsugar imports, would be worst affected.<\/p>\n
South Korea, where sugar consumption doubled to around 1.1
\nmillion tons between 1985 and 1996, is expected to cut imports by
\nup to five percent.<\/p>\n
"Their export toll refining industry won't see much growth in
\n1997 or 1998. We shall see some stagnation and possibly a
\ndownturn," Berg said.<\/p>\n
South Korean raw sugar imports last year seemed to be largely
\nunscathed as existing contracts were fulfilled.<\/p>\n
Between January and November South Korea imported 1.35 million
\ntons, up 5.5 per cent from the 1.278 million imported in the same
\nperiod in 1996. Imports were nearly all from Thailand and
\nAustralia.<\/p>\n
In Japan imports totaled 1,068,623 tons in the first eight
\nmonths of 1997, down from 1,081,877 tons in the same 1996 period.<\/p>\n
The decline is seen as part of a long term trend, from 2.7
\nmillion tons in the mid-1970s to an expected 1.7 million in
\n1997\/98, as wealthy and health-conscious consumers switch to
\nsugar substitutes.<\/p>\n
In Malaysia, where imports have been growing strongly,
\nshipments will probably fall below 1 million tons in 1998 for the
\nfirst time in four years, analysts said .<\/p>\n
Low, government-controlled sugar prices have boosted
\nconsumption to an annual average of 40 kg per capita, which is
\nvery high by western standards.<\/p>\n
When the cash-strapped government recently announced a price
\nincrease to curb consumption, panic buying and widespread
\nshortages ensued.<\/p>\n
Sugar imports into Singapore and Hong Kong, two relatively
\nsmall higher-income countries, have so far been little affected,
\naccording to the latest trade data.<\/p>\n
Hong Kong's sugar imports in the first 11 months of 1997 rose
\nto 289,482 tons from 237,916 in the same 1996 period.<\/p>\n
Singapore's imports totaled 240,997 tons raw value in the
\nfirst 10 months of 1997, down from 254,051 in the same period in
\n1996.<\/p>\n
China's sugar imports fell by 37.5 percent to 780,000 tons in
\n1997, and will remain depressed in 1998, but this was due to a
\nlarge crop and the running down of stocks, analysts said.<\/p>\n
China will continue to be a substantial net importer, but its
\nimports will be below 800,000 tons, against 1.1 to 1.2 million
\ntons in 1996\/97, they added.<\/p>\n
In Taiwan, state monopoly Taiwan Sugar Corp. said earlier this
\nmonth it expected to import up to 180,000 tons<\/p>",
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