A Chinese delegation plans to travel to India next month to review infrastructure assets and negotiate sugar prices, said Liu Hande, deputy chairman of the China Sugar Association, to Bloomberg .
Indian sugar production is said to have set another record this year and increased inventories in the country. According to the latest data from the US Department of Agriculture, for the first time in 16 years, India could even surpass Brazil as the world’s largest sugar producer.
Earlier, the Indian Ministry of Commerce said it had signed sugar supply agreements with China and non-Basmati rice. Zhan Xiao, a fund manager with Shanghai Buyun Investment, told the news agency:
„Considering the trade war with the US, China must show its open attitude towards trading partners. It will probably buy a symbolic amount as a sign of goodwill“
According to the analyst, the volume will not be as large as New Delhi expects as China’s own state-owned inventory totals around seven million tons.
The Chinese government may oppose Indian sugar as stocks are „still quite high“ and Beijing is trying to reduce rather than increase it, Liu Hande said.
The Bombay Stock Exchange (BSE) building is reflected in a stained glass window displaying the Indian Stock Index on the facade of the Mumbai building on July 2, 2008.
In the past year, China introduced high import tariffs to protect the domestic industry. Sugar imports exceeding the annual quotas are currently taxed at 90 percent.
„We do not know how much the import quota will be set, or whether China and India will sign a deal on low import tariffs,“ Liu said.
According to the Indian Sugar Mills Association, the country’s sugar stocks reached 10.7 million tonnes at the beginning of the crop year in October, the highest level in ten years. According to the Indian Ministry of Commerce, New Delhi plans to sell up to two million tonnes in the Chinese market. Prakash Naiknavare, Managing Director of the National Federation of Cooperative Sugar Factories, said:
„We want China to grant import licenses to its refineries without delay“