The Vietnamese government announced Feb. 9 its plans to impose an anti-dumpting duty on Thai-origin raw and refined sugar, according to a statement issued by the Vietnamese Industry and Trade Ministry seen by S&P Global Platts.

According to the statement, a 33.88% duty would be charged on imports of Thai raw sugar into Vietnam, while imported Thai refined sugar will be levied at 48.88%.

However, the actual date for the antidumping duty to come into effect has yet to be finalized.

Market sources said it was possible that a retrospective tax be imposed on Thai sugar cargoes that arrive in Vietnam within the last 90 days.

PRESSURE ON VIETNAM'S DOMESTIC INDUSTRY

The Vietnamese government had launched an antidumping investigation on Thai sugar imports in the third quarter of 2020 after complains from Vietnam's sugar industry about the surge in imports.

In January 2020, the country had removed import taxes on ASEAN, or the Association of Southeast Asian Nations, sugar under the ASEAN Trade in Goods Agreement, or ATIGA. However, the strong surge in Thai sugar imports had put pressure on Vietnamese domestic sugar prices and production.

Sugar shipments from Thailand to Vietnam between January 2020 and November 2020 stood at 1.22 million mt, of which 41% were raw sugar and 59% were white and refined sugar, the Thai Sugar Millers Corporation data showed.

This overall shipment volume was in stark contrast to the same period in 2019 when sugar imports were only 226,515 million mt.

PIVOT TO ALTERNATIVE ASEAN ORIGINS

Market participants noted that the implication of this antidumping duty could pave the way for Vietnamese buyers to import other ASEAN origin sugar, including Malaysia and Indonesia.

"Vietnam is net short so they still have to import sugar from other ASEAN countries. This will change our trade flows compared to last year," a Singapore-based white sugar trader told Platts.

Moreover, this would also signal a bearish outlook for Thai cash premiums once trade activity dwindles when Vietnamese buyers switch to alternative origins.

S&P Global Platts assessed Thai 45ICUMSA sugar in containers for prompt loading at $51/mt over London No. 5 March futures on Feb. 9, the lowest level since Oct. 1, 2020.

In anticipation of this antidumping levy, some traders had started reducing their sale of Thai sugar to Vietnam from Q4 last year.

"We have been selling less [Thai] sugar into Vietnam because we are concerned about the [implementation of the] duties. Our buyers are also buying much less," a Hong Kong sugar trader said.

Source: S&P Global Platts