SunSirs: Analysis of China Sugar Trends in 2024 and Outlook for 2025

According to the monitoring of SunSirs, the average price of first grade white sugar at the beginning of the year was 6,704 RMB/ton, and at the end of the year, the average price of first grade white sugar was 6,250 RMB/ton, a price drop of 6.77%. The highest price of white sugar during the year was 6,802 RMB/ton, and the lowest price during the year was 6,260 RMB/ton.

Phase One

During the period of high volatility (January June) in the first and second quarters, seasonal restocking before the Spring Festival boosted demand and created a clear bullish sentiment for funds. With the increase of domestic planting area and the continuous decline of raw sugar, import profits have been well restored, and there has been a long-term opportunity for price adjustment.

Shaking downward stage (July December) in the third and fourth quarters (shaking downward): The import volume increased significantly year-on-year, driving the domestic spot prices to continue to decline. Starting from October, the main sugar producing countries in the northern hemisphere began to produce high yields of sugar, and the new crushing season in China began one after another, resulting in a continuous decline in sugar prices.

Phase Two

Domestic supply and demand situation

Supply increase: The main production area in Guangxi produced 6 million tons of sugar during the 2023/24 crushing season, and it is expected to produce around 6.85 million tons of sugar during the 2024/25 crushing season, an increase of 800,000 to 1 million tons compared to the previous season. The sugar production in Yunnan during the 2023/24 crushing season is 2.15 million tons, and it is expected to be around 2.3 million tons during the 2024/25 crushing season, an increase of 100,000 to 200,000 tons year-on-year. Due to the clear increase in production in Guangxi and Yunnan, the estimated national sugar production for the 2024/25 crushing season is about 11.2 million tons, a year-on-year increase of 1.4-1.5 million tons or 12.5%.

Consumption remains stable with a slight increase: From the chart, we can see that the consumption of white sugar in China has remained between 15 million and 15.8 million tons in the past four years, showing a slight increase trend. It is expected that China's sugar consumption in the year 2024/25 will be 15.8 million tons, an increase of 300,000 tons from the previous year. In the short term, China's sugar consumption may remain stable. Due to the insufficient sugar production in China for many years, the supply-demand gap still relies on imported sugar as a supplement.

Import situation: 4.75 million tons of white sugar were imported during the 2023/24 crushing season, an increase of 860,000 tons year-on-year. Due to the stronger trend of international sugar prices compared to domestic prices, the profit from imports outside the quota will be inverted for a long time. Some processing enterprises will still use quota licenses to import in order to continue production and operation. It is expected that the sugar import volume in 2025 will remain at the same level as in 2024.

The import volume of three types of syrup in China during the 2023/24 crushing season is 2.1 million tons, with a sugar conversion of about 1.4 million tons. The large-scale import of syrup has impacted the demand for domestic sugar. In November of this year, there were reports in the market that China will impose restrictions on the import of syrup by some Thai companies, which will help increase the demand for domestic sugar. The final amount of restrictions on imports still needs to be continuously monitored. The import of syrup for the 2024/25 crushing season is expected to reach 2.4 million tons, with room for further increase.

Basic situation abroad:

On the global supply side: Overall, the 2024/25 harvest season may continue to maintain a tight balance, and the magnitude of global surplus or shortage mainly depends on Brazil's sugar production during the next harvest season.

Brazil reduces production: During the 2023/24 crushing season, Brazil's sugar production reached 46.88 million tons. The sugar production in the central and southern regions during the 2024/25 crushing season is expected to be 39.5 million tons, a reduction of 2.8 million tons. The total sugar production in Brazil is 43-43.5 million tons, a reduction of 2.5 million tons.

Decreased export volume: Brazil will only have new sugar supply in April, and the amount of sugar waiting to be transported at ports is currently low. Brazil's sugar sources will be limited in the first quarter. The export volume of white sugar during the 2023/24 crushing season was 36.274 million tons. The export volume of Brazil during the 2024/25 crushing season is expected to be 34.8 million tons, a decrease of 1.474 million tons from the previous year.

Thailand increases production: Due to the expansion of planting area during the 2024/25 crushing season, yield has increased, sugar content has increased, and sugar production has also increased. Thailand's sugar production during the 2023/24 crushing season was 8.8 million tons. The estimated sugar production in Thailand during the 2024/25 crushing season is 11.5 million tons, an increase of 2.7 million tons from the previous year.

Export increase: Thailand exported 5 million tons during the 2023/24 crushing season. The export volume of Thailand during the 2024/25 crushing season is expected to be 10 million tons, an increase of 5 million tons from the previous year. The tension in international sugar market trade flows needs to be eased in the northern hemisphere, and Thailand's production and exports are particularly crucial before India exports.

Internationally, due to the short-term difficulty in lifting India's export restrictions, global sugar exports mainly rely on Brazil and Thailand. The Brazilian sugar season is coming to an end, and the expectation of low inventory in Brazil before the start of the new season in April 2025 will provide some support for market prices. On the Thai side, it will take some time for production to translate into supply pressure for exports. It is expected that the international market raw sugar prices will continue to fluctuate at a high level in the first quarter.

Domestically, China is in a cycle of increasing production, with prices mainly fluctuating downwards. The pressure on the domestic supply side comes from the increase in domestic sugar production and the maintenance of import volume. Supplementing sugar imports will become a disturbance item in 2025, and the implementation and implementation of new policies need to be observed. It is expected that the operating range of white sugar will be between 5,600-6,300 RMB/ton by 2025.

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