Korea’s biggest sugar supplier, may cut raw sugar imports

CheilJedang Said to Cut Sugar Imports on Demand by almost 10 percent as people dine out less because of the economic slump.

Imports by the nation’s biggest food processor are likely to drop to about 500,000 metric tons this year, said the executive with knowledge of the trade, who declined to be identified because he is not authorized to talk to the media.

Rising unemployment and wage cuts are damping consumer spending in the nation as the fourth-biggest economy in Asia enters its first recession in a decade. Goldman Sachs Group Inc. on March 10 forecast a contraction of 4.5 percent for the South Korean economy this year.

“Demand for processed food may fall because restaurant owners are closing shops and people are spending less on buying snacks or ice creams because of the recession,” said Ji Gi Chang, a food analyst with Tong Yang Securities Inc. in Seoul. “The drop may not be that big because food consumption remains relatively steady compared with other goods.”

The number of South Koreans operating their own businesses declined to less than 6 million last year for the first time since 2000 as the economy faltered, the Korea Economic Daily reported, citing data from the statistics office.

The Seoul-based processor, which supplies about half the country’s refined sugar market, sources most of its raw import requirements from Australia, the executive said. Australia is the world’s second-largest net exporter after Brazil, according to data from the London-based International Sugar Organization (ISO).

‘Economic Hardship’
CJ CheilJedang today suspended a plan to raise sugar prices to help ease the “economic hardship of ordinary people” in the recession even as the company is affected by rising costs and weakening demand, CJ said in an e-mailed statement.

The company said last week it will raise the prices by 16 percent from March 9 after a decline in the nation’s currency boosted import costs for raw sugar. CJ’s white sugar was to rise to 1,180 won ($0.80) per kilogram.

“Given the suspension, CJ CheilJedang will continue to be burdened by rising costs unless the Korean won rebounds significantly,” it said.

The Korean won declined 36 percent against the dollar in the past year, becoming the worst-performing currency in Asia and reducing South Koreans’ purchasing power for overseas goods. Raw-sugar futures in New York fell 5.8 percent in the past year.

Price Increase
Samyang Corp., the second-biggest sugar supplier in South Korea, may also increase its white sugar prices because of rising costs, said spokeswoman Lee Myung Joo. Samyang’s import of the raw material may remain largely unchanged this year, Lee said.

South Korea, which relies on imports for all its raw sugar requirements, imported 1.52 million tons of the commodity in 2007, making it Asia’s fourth-biggest net importer after Indonesia, Malaysia and Japan, ISO data showed.

CJ CheilJedang, Samyang and TS Corp. supply all of the nation’s sugar.

source: bloomberg