Thai companies are facing losses of around $60 million due to China’s ban on sugar syrup, according to a Reuters report.
This may result in shutdowns as early as next month. Negotiations by Thai officials to lift the ban have been unsuccessful.
China had halted imports of syrup and premixed powder from the world’s second-largest sugar exporter in December due to concerns over factory sanitation.
No response from China’s drug association
Thai officials had requested that Thailand inspect dozens of factories before starting talks to lift the ban.
“No factories are purchasing raw sugar, and operations have been halted for over two months,” Todsaporn Ruangpattananont of the Thai Sugar Product Association was quoted in the report
The association typically buys a million tons of the sweetener each year.
If there’s no way out by March, they’ll shut down.
Two Thai government officials told Reuters that Thailand sent a list of factories licensed by China’s Food and Drug Administration, along with details of food safety regulations, to China on January 14.
As of Tuesday, they have not yet received a response.
Approximately 40,000 metric tons of syrup and premixed powder, destined for Chinese ports, were returned to Thailand.
This information was disclosed by Todsaporn, whose association represents 42 sugar mills that predominantly supply their products to China.
Thailand’s sugar industry: financial strain
The financial repercussions for Thai companies due to these disruptions have been substantial, surpassing initial estimates.
The total losses have now exceeded 2 billion baht ($59.51 million), which is double the amount previously projected.
These heightened losses encompass a broader range of financial burdens, including not only the direct costs associated with shipping and transportation but also the penalties incurred at Chinese ports and the reduced prices that goods were able to command in the market.
Thailand emerged as the primary source of liquid sugar for China in the previous year, exporting over 1.2 million metric tons of the product.
This significant trade volume highlights Thailand’s dominance in the liquid sugar market and its crucial role in meeting China’s substantial demand for this sweetener.
The data, provided by Czarnikow, a reputable supply chain services company, underscores the strong trade relationship between the two countries in the sugar sector.
Thammasorn Nawilaijaroen, a high-ranking executive at SMC Food Thailand and Hefty Food Thailand, expressed his concerns about the significant financial impact of the recent ban on his companies.
Both SMC Food Thailand and Hefty Food Thailand specialize in exporting syrup and premixed powder to major international markets like China and Japan.
Due to the ban, both companies have experienced substantial losses, amounting to approximately 100 million baht.
This financial setback highlights the challenges faced by exporters in navigating regulatory changes and restrictions in their target markets.
Hefty Food, which exported 120,000 tons of syrup exclusively to China last year, has halted production, according to Thammasorn.
There are 300 containers that have been brought back. We still don’t know who to sell them to.
The post Thailand’s sugar industry facing $60 million in losses: here’s why appeared first on Invezz