Opinion

Vietnam set to place anti-dumping duty on Thai sugar

Sugar
Thailand
Vietnam
Published Feb 15, 2021
According to the Vietnamese Ministry of Industry and Trade, the Vietnamese government intends to place an anti-dumping duty on Thai-origin raw and refined sugar. Imports of Thai raw sugar into Vietnam would incur a 33.88% duty and Thai refined sugar a levy of 48.88%. However, a specific date for the implementation of the anti-dumping duty is yet to be determined.

The surge in Thai sugar imports derails the Vietnamese sugar industry

Sugar import taxes had previously been removed by the Vietnamese government in January 2020 from the Association of Southeast Asian Nations (ASEAN) and from countries under the ASEAN Trade in Goods Agreement (ATIGA). Provisions within the agreement, however, still allowed ASEAN countries to impose import duties to protect the rights and interests of their local industries in the face of anti-competitive behavior.

However, following the removal of the tariff quota from the ASEAN, the quantity of imported sugarcane from Thailand into Vietnam increased considerably, reaching 500K tons in the first five months of 2020. During 2020, The increase in imports crippled Vietnamese sugar prices and subsequently production. According to the Thai Sugar Millers Corporation, shipments from Thailand to Vietnam between January 2020 and November 2020 amounted to 1.22 million MT, of which 41% were raw sugar and 59% were white and refined sugar, a rise of over 438% from the 226.5 billion MT that were imported during the same period in 2019.

In the crop year 2019/20, Vietnamese sugar production reached approximately 800K tons, about 34% less than the production figures that were recorded for the crop year 2018/19 which reached nearly 1.2 million tons. The increase in Thai sugar imports has been cited as the main cause of damage to the local Vietnamese sugar industry, pushing Vietnamese enterprises to lose market share and reduce production, and therefore, meeting the criteria to start to implement trade defense investigations.

Complaints received from the Vietnamese sugar industry regarding the surge in imports led to the Vietnamese government initiating an anti-dumping investigation on Thai sugar imports during the third quarter of 2020. According to a statement from the Vietnamese Ministry of Industry and Trade, the investigation led to preliminary results that showed that subsidized sugar from Thailand surged to 1.3 million tonnes in 2020, up 330.4% from 2019.

Furthermore, a significant number of Vietnamese sugar factories have closed down, leading to the loss of 3,300 jobs and affecting the livelihoods of nearly 10K farmer households. As a result of the anti-dumping investigation, an anti-dumping tax of 33.88% is set to be placed on raw sugar originating from Thailand and will be reviewed regularly. The Ministry’s investigation is set to continue till the end of the second quarter of 2021, as it aims to collaborate with relevant agencies until a final decision regarding the date of implementation can be made.

Thai Sugar Imports into Vietnam

Source: Tridge, S&P Global Platts

Market implications of the anti-dumping duty

The anti-dumping duty is expected to allow Vietnamese buyers to purchase from other sugar suppliers within the ASEAN, including Singapore, Malaysia, and Indonesia. As of Q4 last year, suppliers of Thai sugar began to reduce their sales to Vietnam in anticipation of anti-dumping levies and certain Vietnamese buyers have been purchasing fewer quantities. This has resulted in an increase in Vietnamese domestic sugar prices. Domestic refined sugar prices have risen to USD 650 - USD 690/MT (VND 15,000-16,000/kg) in February 2021, a sharp increase from the USD 580/MT (VND 13,300/kg) in Q4 last year. Thai cash premiums of sugar are also expected to be negatively impacted as trade activity decreases, as a result of Vietnamese buyers switching to alternative origins. On February 9th, S&P Global Platts assessed Thai 45ICUMSA sugar in containers for prompt loading at USD 51/MT according to London Sugar Futures (LSU) for March, which is the lowest cash premium level since Oct. 1, 2020.

Sources

S&P Global Platts. “Vietnam announces plans to impose antidumping duty on Thai sugar.”

Reuters. “UPDATE 1-Vietnam to impose 34% anti-dumping tax on sugar imports from Thailand.

Sharenet. “VIETNAM TO IMPOSE 34% ANTI-DUMPING TAX ON SUGAR IMPORTS FROM THAILAND.

Bangkok Post. “Vietnam to impose 34% anti-dumping tax on sugar imports from Thailand.

Nasdaq. “Vietnam to impose 34% anti-dumping tax on sugar imports from Thailand.”

Lexology. “Vietnam: New antidumping and countervailing investigation against cane sugar from Thailand.

S&P Global Platts. “Regional sugar buying extends support for Thai HiPol cash premiums.

Ministerie van Landbouw, Natuur en Voedselkwaliteit. “Vietnam initiates anti-dumping investigation on sugar imported from Thailand.

Customs News. “Thai Sugar imported to Vietnam will face anti-dumping investigation.

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