Singapore — The resurgence of COVID-19 cases in India highlights the ongoing concerns about the logistical challenges dampening the demand for sugar of Indian origin.
아직 가입하지 않으셨나요?
일일 이메일 알림과 구독자 노트를 받고 이용 경험을 내게 맞게 설정하세요.지금 가입하세요
India is currently experiencing a second wave of COVID-19 infections, with 403,738 new cases and 4,092 deaths reported on May 9, according to data from the World Health Organization.
Many state governments have announced the imposition of lockdown restrictions, including Maharashtra, Uttar Pradesh and Karnataka which are key production regions of sugar.
Although the agricultural sector is classified as an essential service permitted to continue with operations, there are growing concerns about the potential implications of labor shortages and logistical challenges.
Several sources familiar with the matter said that although exports from India are currently unaffected as ports are still operating, concerns of supply chain bottlenecks are brewing as there is a lack of truck availability caused by movement restrictions and labor shortages.
With the rising COVID-19 infections in India, the global shipping industry has taken a hit not only commercially but also operationally, such as crew replacement and potential quarantine requirement for ships where the last port of call was from Indian ports.
"Currently India is in the red category of high risk. Whole system here is on the brink of collapse," said an India-based shipbroker.
"We are also avoiding India at the moment, not only because of the crew infections risks but also the potential restrictions after calling Indian ports," said a ship-owner source, adding that they expect more port authorities to limit permitted activities [to vessels where the last port of call was from an Indian port] to prevent the spread of COVID-19 to other ports.
Transnet National Ports Authority of South Africa issued some new measures on May 5, to prevent any variants of COVID-19 entering the country, which applies to all vessels where the last port of call was from any Indian port.
Meanwhile, some Port Authorities, like Singapore, have prohibited ships from changing crews with recent travel history to India, Bangladesh, Nepal, Pakistan and Sri Lanka.
Market participants noted that with the lockdown and increasing severity of the pandemic situation in India, there is growing hesitancy amongst buyers about purchasing sugar of Indian origins for fear of escalating logistical constraints.
"Although India shipments are still ongoing right now and there is not a lot of delays, you never know, so it is quite risky to book something there. Especially because it looks like the COVID situation is getting worse," said a Singapore-based trader.
Switching to alternative ASEAN origins
Market participants noted that the situation surrounding India's logistical issues are causing buyers to remain cautious and take on a more conservative approach when it comes to making the decision to buy from India.
This prevailing market sentiment could pave the way for buyers to consider importing other ASEAN origin sugar, including those of Thai origins.
Despite the weak demand experienced recently due to Vietnam's anti-dumping duties, Thai sugar prices have been held relatively steady as sellers are not keen to reduce offer levels as there is still a window of time before August futures expire.
S&P Global Platts assessed Thai 45 ICUMSA sugar in containers for June loading cargoes at $51/mt over London No. 5 August futures on May 7. which is around $90/mt higher than Indian LQW on a FOB basis.
"In case India's situation is going to get tougher, there is a chance where people might swap over to purchase Thais. Then again, it is crucial to look at the freight rates to see if it makes sense at that point of time," a Singapore-based trader said.