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Singapore — White sugar demand from Taiwan over the past two weeks has boosted the Thai cash premium to the highest seen so far this year, setting the island on course to replace Myanmar as the dominant smuggling route into China.

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S&P Global Platts assessed the premium of Thai 45ic sugar in containers at $39/mt over the front-month Sugar London No. 5 futures contract on Monday, the highest since September last year. While the carry between the London October and December contracts played a role, physical demand underpinned the surge.

Platts white sugar containers Thai 45ic premium

"I have sold some 40,000 mt of [refined] sugar over the past 10 days. Aside from those within the inter-trade, the only destination was Taiwan," a trader said.



According to Platts data, at least 44,500 mt of Thai refined sugar were booked over the past two weeks with a destination of Taiwan. This compared with just over 6,000 mt in the preceding two weeks.

A second trader said most of the sugar going to Taiwan would be smuggled on into China.

On the other hand, "the route to Myanmar has just been very quiet, almost dying," a third trader said.

The Myanmar-to-China route picked up strongly in the last quarter of 2015, but doubts about the feasibility of moving sugar across the border crept in around three months ago as an overhang of sugar and stricter border controls resulted in a significant drop in smuggling.

Taiwan's Thai white sugar imports surpassing Myanmar's

In the first six months of this year, Thailand shipped 220,864 mt of white sugar, including 45ic and 100ic whites, to Taiwan, according to export data released by the Thai Sugar Millers Corporation. This is over four times the 53,761 mt shipped a year earlier.

Myanmar, in contrast, took 280,060 mt of white sugar from Thailand during January to June this year, down 25% on the year.

Export data for May and June showed that Taiwan will continue to grab the spotlight as Thai white sugar finds its way to China, where structural deficit persists.

A total of 148,416 mt of refined sugar went to Taiwan in May and June combined, while only 67,425 mt of whites went to Myanmar over the same period. The latest line-up data for July also showed 24,510 mt of refined sugar destined for Taiwan and none for Myanmar.

--Daisy Tseng, daisy.tseng@spglobal.com
--Edited by Jonathan Dart, jonathan.dart@spglobal.com