SunSirs: Market Fluctuations, China Sugar Prices Fluctuate in the First Quarter of 2024

According to the monitoring of SunSirs, the average price of first grade white sugar was 6,704 RMB/ton on January 1st, and 6,748 RMB/ton on March 25th, with a price increase of 0.66% and a price increase of 10.01% compared to the same period last year.

January (first falling and then rising): At the beginning of the year, the downstream food industry in the sugar market mainly needed replenishment. Due to the slowing pace of market sales and the expectation of new sugar listing during the handover of the new and old squeezing seasons, in order to avoid the risk of price decline, traders generally maintained a low inventory state, with low stocking intentions. In the later half of the year, with the arrival of the stocking period, sugar transactions increased in volume and prices rose.

February (sideways+downward): During the Spring Festival, the market came to a halt, sugar consumption entered the traditional off-season, and sugar prices stabilized horizontally. In late February, the market recovered slowly, with weak transactions and weak prices falling.

March (volatile rise): Due to a good sales rhythm, domestic sugar factories have low inventory levels in the same period, leading to a decline in supply and an increase in raw material prices. In addition, the rebound in external markets has led to an increase in sugar prices.

Domestic production and demand situation

Supply increase: January is the peak season for production. As of the end of January 2024, a total of 5.8676 million tons of sugar were produced nationwide during the 2023/2024 squeezing season, an increase of 200,000 tons year-on-year. At the end of February, the 2023/2024 crushing season had produced a total of 7.95 million tons of sugar, an increase of 30,000 tons year-on-year. Overall, the market supply side has been relatively abundant in the first quarter. In terms of demand, due to pre holiday stocking demand in January, the overall price of white sugar showed an upward trend. However, with the weakening of demand in February, the price of white sugar decreased.

Inventory changes: The sugar industry's inventory in January was 2.7505 million tons, a year-on-year decrease of 550,000 tons, at the lowest level in nearly five crushing seasons, which is also the main reason supporting the rise in sugar prices in January. As of the end of February, industrial inventory was 4.17 million tons, a year-on-year decrease of 380,000 tons. In February, the inventory of the sugar industry was also at a low level compared to the same period, with some support in the fundamentals. However, due to the impact of the Spring Festival market closure, there were few transactions, and sugar prices fell.

Import situation: From January to February, China imported 1.1925 million tons of white sugar, an increase of 311,700 tons compared to the same period last year, an increase of 35.39%, and an increase of 340,300 tons compared to the average of the same period in the past five years, which is the highest level in the same period in five years. The domestic import volume from January to February met market expectations, and the import volume in March may significantly decrease, mainly due to Brazil's low export volume to China in February.

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