* Beijing proposal sent to big sugar users -sources
* Follows anti-dumping probe; ruling due May 22
* 3-yr tariff hike on top of current 50 pct duty -sources
* Potential boost for China suppliers vs cheap imports
By Hallie Gu and Josephine Mason
BEIJING, April 26 China is considering special
import duties on sugar as part of an anti-dumping probe,
according to two people familiar with the matter, in what would
be a win for domestic producers seeking help battling cheap
imports from Brazil and other major growers.
China's Dairy Industry Association sent a document late last
week to members asking them to comment on the Beijing proposal
on duties, according to two people who reviewed it. They
declined to be named since the document, addressed to some of
the biggest industrial sugar users in China, wasn't public.
Beijing is set to make its first ruling on the anti-dumping
probe on May 22, having launched an investigation last September
following complaints from domestic mills about rising farm costs
and cheaper overseas arrivals.
If approved, the proposal would introduce a 45-percent duty
this fiscal year, followed by an extra 40 percent in the
following year and 35 percent in the year after that, according
to the Dairy Industry Association document. That would be on top
of the 50-percent duty now imposed on out-of-quota shipments.
The dairy group represents some of China's biggest
agribusinesses, including Inner Mongolia Yili Industrial Group
, China Mengniu Dairy Co, and Bright Dairy
and Food Co Ltd.
It's not clear if the government is considering other
options, nor whether the proposal, first reported by Bloomberg
on Tuesday, will be implemented.
The Ministry of Commerce did not reply to a fax seeking
The potential hike in duties comes amid growing trade
tensions between major commodity-producing nations from steel to
aluminium and grains.
Based on current prices, it would cost at least 1,000 yuan
($145.11) more per tonne to import out-of-quota sugar this
fiscal year, according to industry insiders, lifting the cost to
around 6,700-7,000 per tonne.
That would put imports on par with physical prices in
Guangxi, China's top sugar-producing region, although it would
still be profitable to import in Shandong, where spot prices are
7,060 yuan, according to trade website Guangxi Sugar Network.
Still, the proposal is lower than many major sugar-consuming
food producers had feared, said Zhan Xiao, an analyst with
Shanghai Buyun Investment Management. China's sugar futures
hit two-week lows on Tuesday of 6,655 yuan per tonne on
the first report of the proposal.
Analysts also cautioned that penalties might increase
smuggling and may not be as effective as intended in protecting
Currently, Beijing has set out-of-quota imports at about 1.9
million tonnes in the previous two years.
Beijing also allows 1.94 million tonnes of sugar imports
annually at a tariff of 15 percent as part of China's
commitments to the World Trade Organization.
China bought 3 million tonnes of sugar last year, down 37
percent from 2015, the lowest level since 2011.
($1 = 6.8911 Chinese yuan renminbi)
(Reporting by Hallie Gu and Josephine Mason; Editing by Kenneth