Indian government to stop sunflower oil imports under tariff quota
From April 1, 2023, the country's import duty on sunflower oil will increase from zero to 5.5%
The Indian government on Wednesday, March 1, announced that it would increase the import duty applicable to up to 2 million tonnes tariff quota (TRQ) sunflower oil allowance for the 2023-24 season.
From April 1, 2023, the import duty will increase from zero to 5.5%, at the same level as soybean oil, in a move that is likely to halt imports under the current TRQ allowance.
Paradoxically, the decision is likely to support prices for spot volumes of sunflower oil across major origin countries as traders look to push volume in ahead of the change, market sources said.
“Sunflower oil prices at origins, up to at least the first half of March, may find some support as importers still have unutilized TRQ quota for 2022-23 and would try to get the benefit of it,” Anilkumar Bagani, research head at Mumbai -based vegetable oil broker Sunvin Group, told Fastmarkets Agriculture.
“This may lead to an increase in spot sunflower oil loading demand but could also put more pressure on FOB Black Sea loading for April-June. Imports with a BL date prior to March 31 can still take advantage of the benefits, which could lead to a faster depletion of local oil stocks. Restrictions on vessel age lower than 25 years may also increase freight rates, thus placing additional pressure on origins,” Vivek Pathak, director of Athena Tradewinds Pvt told us.
At the same time, the decision will put pressure on the sunflower oil market with shipments in later months and reduce its competitiveness in terms of soybean and palm oils.
As a result, the sunflower oil market in the Black Sea region, with shipments in the second quarter, which has been in a downward trend for the past few weeks, will be under even greater pressure.
“The sunflower oil prices for April onward shipments shall be seen under pressure due to lack of fresh demand then as the February-March India arrivals shall be substantially huge,” added Bagani.
Veg oil demand and imports trend
In January, India set a monthly record for the import of 459,000 tonnes of sunflower oil, more than twice the volume of imports in December, trading sources said.
India is the largest importer of vegetable oils, in particular sunflower, in the world.
According to Sunvin Group estimates, India’s imports of vegetable oils from November 2022 to October 2023 will be 15 million tonnes, up 6.4% from a year earlier for the same period, while imports of sunflower oil will increase by 33% to 2.55 million tonnes.
India’s demand for sunflower oil is about 2.5 million tonnes per year, or around 200,000 tonnes per month, according to The Solvent Extractors’ Association of India (SEA).
According to February USDA estimates, India is expected to increase palm oil imports by 12.5% to 9 million tonnes in 2022-23, sunflower oil by 5% to 2 million tonnes, while imports of soybean oil will decrease by 25.5% to 3.15 million tonnes.