Islamabad, June 2 - Pakistan may not need to import more sugar this year after a sharp fall in consumption, traders said on Tuesday.
The state-run Trading Corporation of Pakistan (TCP) cancelled a tender to import 50,000 tonnes of sugar at the weekend and an agency official said the government was likely to cancel another sugar import tender closing on June 6.
Sugar traders and industry officials had earlier projected shortages to be in the range of 600,000-700,000 tonnes in the last quarter of 2009, after an expected fall in 2008/09.
But they have revised estimates because of falling demand.
"From 358,000 tonnes average consumption per month last year, the level has gone down to 294,000 tonnes," said Iskandar Khan, chairman of the Pakistan Sugar Mills Association (PSMA).
"Even if we take a consumption level of 300,000 tonnes (a month), we will be consuming 600,000 tonnes less sugar this year."
Khan said millers and the state-owned Trading Corporation of Pakistan (TCP) together held more than 2 million tonnes of sugar in stocks which should be sufficient to meet needs until December when new crop output starts to reach the market.
Mills had a projected stock of 1.8 million tonnes, while the state-owned Trading Corporation of Pakistan (TCP) had 245,000 tonnes with another 100,000 tonnes bought in recent tenders for June shipment, according to industry officials.
While Khan attributed falling consumption to the global recession and thus less demand from industries such as drink makers, others blamed high domestic sugar prices for low offtake.
"There has been a pretty dramatic decline in consumption in direct correlation to prices here ... this has led to local off-take being capped at 295,00 to 300,000 tonnes," said a trader in the port city of Karachi.
Pakistan authorised the TCP to import 200,000 tonnes of white sugar in February to meet domestic needs and keep prices in check, after estimated output fell to 3.2 million tonnes compared with 4.7 million tonnes last year.
The TCP has bought 125,000 tonnes since then but it cancelled a tender last week to import another 50,000 tonnes. It gave no reason but some traders said that was done because of pressure from millers.
"Yes, the PSMA forced the government not to buy because consumption has gone down," Khan said while adding that his association asked authorities to buy millers' stocks instead of importing at higher prices.
The landed cost of sugar at Pakistani port is 50 rupees/kg ($0.62) as against its retail price of 47 rupees in the domestic market, he said.
While the government cancelled the tender that was to have closed on May 30, Khan said there was no need to import any more sugar when asked about a TCP tender for 25,000 tonnes that is to close on June 6.
That tender now appears unlikely to happen as a senior TCP official, who declined to be identified, said the government had "communicated to us ... to withhold all sugar tenders".
"It has almost been decided," he said, referring to the cancellation of the June 6 tender.
Some industry officials say the TCP may eventually complete its total quota of importing 200,000 tonnes of sugar.