Bangladesh Sugar and Food Industries Corporation (BSFIC) has cancelled a tender to export 25,000 tonnes of sugar to the European Union, due low price offer, an official said on Sunday.
The tender that closed on Wednesday drew only a single bid of $295 a tone from London-based ED&F Man Sugar.
With the cancellation of the tender all hopes of the BSFIC for selling a huge stock at an acceptable price seemed to have shattered as the BSFIC was unable to sell the stocks of some 190,000 tonnes at reasonable prices due to stiff competition from local sugar refiners.
The price offer is too low, even lower than local selling price and it could not be accepted. Hence the tender was cancelled on Thursday, said the official of the state-owned BSFIC, which floated the tender early this month for the fisrt time since 2012.
BSFIC generally imports white sugar to build its reserves. However, strong output and high stocks allowed it to come up with a global tender in 2012 to export to the EU, under a preferential quota, sugar refined from locally-produced cane.
White sugar from the government stockpile is being sold at mill gates at Tk 40 taka a kg, almost half of the production cost. But BSFIC still could not to sell the item, as private refiners are offering the same price but with more incentives, such as free delivery.
Private refiners in the country imported around 2 million tonnes of raw sugar in the fiscal year that ended in June, up from 1.37 million tonnes in the previous fiscal year.
In April, Bangladesh raised the import duty on raw and refined sugar to discourage overseas buying amid a drop in local prices due to ample supplies.
The duty on raw sugar imports is Tk 2,000 a tonne, up from Tk 1,500 earlier, while that on refined sugar is Tk 4,500, from Tk 3,000 earlier.
The country needs to maintain enough reserves to keep prices stable in domestic prices, which have been stable over the past year due to huge raw sugar imports by local refiners.
Global sugar prices have been kept under pressure by ample supplies. As a result of four straight years of surpluses, benchmark New York prices on Sept. 17 dropped to their lowest in more than four years.
Bangladesh depends on imported raw sugar to meet annual demand of 1.4-1.5 million tonnes of refined sugar. In late 2012, the government allowed exports of sugar by private refiners who had been calling for overseas sales as they have more than 3 million tonnes of refining capacity.
Private refiners mostly import raw sugar from Brazil, India and Thailand while they export refined sugar to East African and Middle Eastern countries.