Duty-free import of raw sugar till June is unlikely to bring down retail prices in the near-term, says a report.
Recently government allowed duty-free import of raw sugar to the tune of 0.5 million tonne till June 12.
"Duty-free import is unlikely to have any significant negative impact on the prices or profitability of sugar mills in the near-term. While raw sugar imports are unlikely to negatively impact domestic sugar prices, this may dampen prospects of a further price rise," Icra said in a report.
But import beyond June may lead to pressure on stock position and may lead to a price correction in the forthcoming sugar year, it added.
With the 0.5 mt of imported sugar, the closing stock for the current season is estimated to be 4.5-5 mt, which would be sufficient to meet the requirement of around two months of domestic consumption. This is still lower than the normative stock level of three months or around 6 mt and also the previous year's closing stock level of 7.7 mt.
Currently, global raw sugar prices are around 16 cents/lb. At the current prices, total conversion cost into refined sugar is likely to be at around Rs 32,000/mt. Thus, the importers are likely to benefit around Rs 4,000-5,000/mt at a domestic price of Rs 36,000-37,000/mt.
The imports will benefit mills in the West and the South, which are currently facing profitability pressures due to low cane availability, the report noted.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)