August 6, 2014 / 8:02 AM / 3 years ago

UPDATE 1-Indonesian importers cancel up to 400,000 tonnes Australian sugar

* Sugar refiners cancel deals due to lack of govt import permits

* “Washouts” said to involve sugar sold by Queensland Sugar (Adds details, quotes from industry)

By Lewa Pardomuan and Yayat Supriatna

SINGAPORE/JAKARTA, Aug 6 (Reuters) - A number of Indonesian sugar refiners have had to cancel import deals for up to 400,000 tonnes of the sweetener from Australia after Jakarta issued fewer permits than expected this year, industry sources said on Wednesday.

The world’s top raw sugar buyer plans to import 2.8 million tonnes in 2014, lower than the roughly 3.1 million tonnes expected earlier. Refiners in Indonesia usually strike deals with their suppliers months before the permits are issued.

Estimates for the so-called washouts, under which buyers pay a penalty if they do not take delivery, ranged from as low as 200,000 tonnes to as high as 400,000 tonnes and affected Queensland Sugar Ltd (QSL), Australia’s biggest raw sugar exporter, the sources said.

A spokesman for QSL declined comment, other than to say that contracts were confidential.

“There are washouts involving Australian sugar, especially because this year the government has cut the import permits,” said Andre Vincent Wenas, director of refiner PT Makassar Tene.

“I would say the amount is 300,000 to 400,000 tonnes,” said Wenas, who is also a chairman at the Indonesian Sugar Refineries Association.

He declined to reveal what penalty the refiners had to pay Queensland Sugar.

Indonesia’s total sugar consumption is expected to reach 5.9 million tonnes in 2014/15, up from 5.7 million tonnes in 2013/14, according to a U.S. Department of Agriculture report.

Indonesia imports raw sugar from Thailand, Brazil and Australia.

A source at an international trading house in Jakarta said some refiners had bought too much sugar, adding that Indonesia was well covered for the whole year.

“My estimate is that 200,000 to 250,000 tonnes of shipments have been cancelled. The penalty depends on the pricing,” said the source, adding it would be determined by movements in New York futures.

Indonesia splits its sugar industry into two. Household, retail and small-medium firms rely on domestic white sugar supplied through a network of older mills, while modern refineries import raws for large-scale food and beverage industries. (Reporting by Lewa Pardomuan and Yayat Supriatna; Editing by Alan Raybould)

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