By Panarat Thepgumpanat
BANGKOK (Reuters) -Chinese authorities have asked Thailand to inspect dozens of factories before opening negotiations to lift a ban imposed last month on sugar syrup and premixed powder exports from the Southeast Asian nation, Thai officials said.
Thailand, the world’s second-largest sugar exporter, was China’s main supplier of liquid sugar last year with shipments of more than 1.2 million metric tons, according to supply chain services company Czarnikow.
In December, China suspended imports of Thai syrup and premixed powder, a mixture of sugar and other food ingredients, because of concerns over factory hygiene, said Arada Fuangtong, a senior official at Thailand’s Commerce Ministry.
“Thai authorities want to negotiate ending the suspension,” she said.
An industry source said authorities in Thailand have grown concerned about the ban as they realise it could weigh on the price that cane farmers in Thailand, a significant voting bloc, receive for their produce.
He added the amount of sugar that might need to be redirected is significant and the issue is therefore weighing heavily on global prices, with white sugar futures on the ICE exchange at their lowest in three years.
According to Citi analyst Arkady Gevorkyan, the China ban has left Thai syrup and premixes worth about 400 million baht ($11.6 million) stranded on ships at present.
“China is the largest importer of Thailand’s sugar syrup,” he noted.
China had asked for a review of 78 sugar factories in Thailand before negotiations can begin, Thai Deputy Permanent Secretary of Industry Virit Viseshsindh said, adding that inspections were being carried out.
“The GACC wants our inspections of standards to be more rigorous,” he said, referring to the General Administration of Customs of China.
Czarnikow analyst Rosa Li said she expects Thai factories and Chinese importers will eventually work to resolve the matter and get the ban lifted, “but it remains to be seen how long this process will last”.
(Reporting by Panarat Thepgumpanat, Additional reporting by Marcelo Teixeira and Maytaal Angel; Writing by Chayut Setboonsarng, Editing by Devjyot Ghoshal, Martin Petty and Sharon Singleton)
