ID :
202019
Thu, 08/18/2011 - 06:02
Auther :
Shortlink :
https://oananews.org//node/202019
The shortlink copeid
Rising raw sugar prices take toll on sugar makers
SEOUL, Aug. 18 (Yonhap) -- South Korea's major sugar companies are hemorrhaging as they are under government pressure to refrain from raising product prices despite soaring raw sugar costs, industry sources said Thursday.
The cumulative net loss of the country's top three sugar manufacturers totaled 130 billion won (US$121.4 million) between January of last year and June, according to the sources. In the first half of this year alone, they incurred a combined loss of 60 billion won.
The three companies -- CJ Cheiljedang Corp., Samyang Corp. and TS Corp. -- dominate the domestic sugar market with a market share close to 100 percent.
The companies are forecast to post up to 40 billion won in losses for the second half of the year, raising the two-year cumulative loss to 170 billion won, said the sources.
The sugar makers' snowballing losses are attributable to the fact that domestic prices of refined sugar have failed to reflect rising costs of raw sugar, they said.
Prices of raw sugar hovered at $0.10 per pound in the global market in 2009 but soared to $0.28 in August this year after peaking at $0.36 in February.
However, domestic sugar rose 40 percent from 1,019 won per kilogram in 2009 to 1,436 won over the cited period, making the sugar companies fail to fully reflect raw material costs in product prices, said the sources.
"Costs of raw sugar account for more than 70 percent of refined sugar prices," said an official at one of the companies. "We understand that local companies should contribute to price stabilization, but we want to get out of the red, at least."
The government has demanded the companies refrain from raising sugar prices, citing its efforts to tame inflation. The country's consumer prices rose 4.7 percent on-year in July, much higher than its yearly target of 4 percent.
The cumulative net loss of the country's top three sugar manufacturers totaled 130 billion won (US$121.4 million) between January of last year and June, according to the sources. In the first half of this year alone, they incurred a combined loss of 60 billion won.
The three companies -- CJ Cheiljedang Corp., Samyang Corp. and TS Corp. -- dominate the domestic sugar market with a market share close to 100 percent.
The companies are forecast to post up to 40 billion won in losses for the second half of the year, raising the two-year cumulative loss to 170 billion won, said the sources.
The sugar makers' snowballing losses are attributable to the fact that domestic prices of refined sugar have failed to reflect rising costs of raw sugar, they said.
Prices of raw sugar hovered at $0.10 per pound in the global market in 2009 but soared to $0.28 in August this year after peaking at $0.36 in February.
However, domestic sugar rose 40 percent from 1,019 won per kilogram in 2009 to 1,436 won over the cited period, making the sugar companies fail to fully reflect raw material costs in product prices, said the sources.
"Costs of raw sugar account for more than 70 percent of refined sugar prices," said an official at one of the companies. "We understand that local companies should contribute to price stabilization, but we want to get out of the red, at least."
The government has demanded the companies refrain from raising sugar prices, citing its efforts to tame inflation. The country's consumer prices rose 4.7 percent on-year in July, much higher than its yearly target of 4 percent.
