S&P Global Platts proposes to launch CFR Indonesia import raw sugar parity matrix on Aug 4

S&P Global Platts proposes to launch a daily calculated CFR Indonesia raw sugar import parity matrix, effective Aug. 4.

The calculation will compare the landed price into Indonesia of Platts Thai Raw HiPol sugar and Brazil VHP sugar for prompt shipment cargoes, comprising cash premiums from both origins, freight and import taxes.

Thailand had traditionally been a key exporter to Indonesia, one of Asia's largest raw sugar buyers, making up almost 70% of total imports into Indonesia. However, a change in Indonesian government policy allowing for the importation of raw sugar with a minimum 600 ICUMSA level, coupled with two consecutive seasons of poor Thai crops, has led to a significant drop in Thai sugar imports into Indonesia.

Traders and Indonesian refineries have since begun to switch their requirements to alternative origins including Brazil and India. According to Platts Analytics, Indonesian raw sugar imports from Brazil rose to 1.388 million mt in 2020 from zero in 2019.

The CFR Indonesia import parity price for Thai HiPol will be published at the 4:30 pm (0830 GMT) Singapore close and will follow Singapore's publishing schedule, while the Brazilian VHP will reflect the 4:30 pm (1530 GMT) London close and follow Brazil's publishing schedule.

The import parity will be published in dollars per metric ton.

The import parity calculation would be as follows:

Based on the Intercontinental Exchange (ICE) contract terms, the FOB Thailand assessment will include the quality or polarization premium for Thailand at 3.75% to the premium assessment, while a 4.2% pol premium will apply for Brazilian VHP.

The freight for Brazil to Indonesia will be basis a cargo size of 50,000 mt sugar from Santos, Brazil to Ciwandan, Indonesia, loading 15-30 days forward from the date of the assessment. The freight for Thailand to Indonesia will be basis 25,000 mt cargo size from Laem Chabang in Thailand to Ciwandan, loading 7-20 days forward from the date of the assessment.

The import levy on Thai sugar is 5% and a flat duty of Indonesian Rupiah 550,000/mt for Brazilian raws. The levy on Brazilian raws into Indonesia will be calculated in dollars per metric ton using the relevant daily exchange rate published by the Indonesian central bank https://www.bi.go.id/id/default.aspx. The exchange rate will follow the Indonesia holiday schedule, and on days when there is no daily exchange rate Platts will reference the previous day's exchange rate. Thailand to Indonesia's import parity will follow the Singapore holiday schedule, while the Brazil to Indonesia parity will follow Brazil's holiday schedule.

Please send all feedback and questions by July 6 to asia_ags@spglobal.com and pricegroup@spglobal.com.

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