SLOW CUBAN SUGAR DELIVERIES TURN EX-SOVIET STATES TO CHINA

SLOW CUBAN SUGAR DELIVERIES TURN EX-SOVIET STATES TO CHINA

Slow raw sugar shipments from Cuba to the Commonwealth of Independent States are heightening efforts by the republics to get white and raw sugar from China.

Signs that China will have an exportable sugar surplus this year have led to speculation in Asia that a total of 500,000 tons could end up in the commonwealth this year. Sales to date have been very small.Traders here say only about 100,000 tons of Cuban raw sugar have arrived in the commonwealth so far, out of a total of roughly 2 million tons that has been bartered for with Cuba by all commonwealth states.

"Loadings at Cuban ports are slower than expected," said one Japanese trade-house dealer. He said that after loading, there often are further delays as ships struggle to fuel up for their trips.

So several republics, including Russia, are showing more interest in buying Chinese white sugar, but Hong Kong traders say the purchases so far this year total only 2,000 to 5,000 tons.

"I've seen one or two cargoes from China going to (the Russian Far East port of) Nakhodka, and one from Thailand," said a trader with a large U.S. trade house in Hong Kong.

"But they can't buy big shipments, because they just don't have the money," he said.

Traders in Bangkok said commonwealth countries have inquired in Thailand, but that few traders there have expressed any interest in selling. "I wouldn't dare sell to them unless somebody guaranteed to give me the payment," a trader said.

Other Southeast Asian traders say Russia is inquiring about Thai sugar, but Russian responses to offers take about three days, and by then, the market has already moved.

What Chinese-sugar purchases have come out of the commonwealth have mostly been made through individual trade-company representatives that come to Hong Kong to meet Chinese suppliers, traders say.

"They don't seem to know much about sugar, and they often contact outside normal sugar-trading channels, going to provincial organizations that deal in textiles or other commodities," said the U.S. trade house dealer.

Traders say that due to the low quantities ordered, commonwealth buyers are paying rates of up to $40 a ton to ship the sugar. This compares with $20 to $21 a ton usually paid for shipments of 12,000 tons and more.

Such rates still compare favorably with overland transport through China, which is more expensive and difficult to arrange because the Chinese rail network is already working at capacity.

"The surplus Chinese sugar is in south China, which means you first have to move it to the north, then switch track gauges to get it across the border to Russia. It can get quite expensive," said the U.S. trade house dealer.

Traders point out, however, that South Korean sugar offers a better value to potential commonwealth buyers as the quality is higher and shipping costs lower, due to South Korea's proximity to Nakhodka and other Far East Russian ports.

"I tried to sell Chinese sugar to the CIS one month ago, but in vain," said a dealer at a large Japanese trading house in Hong Kong. "The price for both (Chinese and South Korean) is around $300 a ton free on board, but the freight cost is a major factor."

But demand in the republics is likely to keep up interest in Chinese sugar. The only refinery in Siberia, near Vladivostock, closed last year, helping China's exports of refined sugar to Russia. The refinery's annual capacity was about 100,000 tons.

"So we could be seeing monthly demand for white sugar of around 10,000 tons," said the Hong Kong dealer.

That demand would come on top of a government-to-government agreement for 200,000 tons of white sugar between China and Belarus, reported in February. So far, that sugar is not believed to have been shipped.

While most republics are seeking white sugar, Ukraine, with its more- developed industrial base, is interested in tolling raw sugar, traders say. One trader, who spoke on condition of anonymity, said his company has reached agreements with a Ukrainian refinery to have sugar tolled at prices of $38 to $39 a ton.

"I have even heard of prices as low as $30 a ton, but I wonder if it's possible," he said.

Nicko Goncharoff in Hong Kong, Mark Timm in Bangkok and Barry Hing in Singapore contributed to this report.