Probe results into Thai sugar's evasion of trade remedies may hit trade flows: sources
Asian sugar traders are anticipating a change in trade flows as the conclusion of an investigation by Vietnam's Ministry of Industry and Trade into the evasion of trade remedies for Thai-origin sugar draws near, sources said July 19.
The ministry released a final draft of the investigation July 14, with the final report likely to be released July 21.
In the wake of this announcement, several Asian sugar traders expect increased hesitation about trading activity into Vietnam until the final report is released.
The Vietnamese government has imposed a 47.64% duty on imported cane sugar from Thailand since June 16, 2021, to protect domestic sugar prices and production. However, Vietnam continues to see a huge import of Thai sugar. Data from the General Department of Vietnam Customs showed that five ASEAN countries -- Cambodia, Indonesia, Laos, Malaysia, and Myanmar -- exported significantly larger volumes of sugar to Vietnam after the anti-dumping duties went into effect.
Consequently, the Vietnam Sugar Association urged the Ministry of Industry and Trade to launch a duty evasion investigation on Thai sugar, which commenced in September 2021. The association alleged that Thai sugar was being brought into the country via neighboring ASEAN countries, thereby evading anti-dumping duties.
The Ministry of Industry and Trade confirmed these allegations in its final draft conclusion. Additionally, it proposed applying anti-circumvention measures on refineries, sugar factories, and export shipments from the five investigated countries that fail to prove the absence of Thai-origin sugar in their raw materials.
Beyond the anti-circumvention measures brought up in the draft conclusion, some market sources also pointed to the possibility of anti-dumping tariffs being extended to other ASEAN countries.
"According to my Vietnam sources, it is likely that on July 21 trade restrictions will be placed on sugar from Indonesia, Malaysia, and Cambodia only. The trade flows to Myanmar and Laos are still very strong," said a Singapore-based trade analyst.
A Thailand-based sugar trader said, "I believe they will try to protect their sugar industry, so more trade restrictions will not be a surprise."
While domestic prices in Vietnam have dropped, they remain within a historically high range. According to market participants, the average domestic price of sugar was 18,300 VND/kg ($750-$800/mt) in June. This is about 50% higher than prices in 2020, which were reported at around 11,000 -13,000 VND/kg ($470-$550/ mt) before Vietnam removed import taxes on ASEAN countries.
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