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China slashes out-of-quota sugar import permits - sources

BEIJING, May 24 (Reuters) - China has slashed its out-of-quota sugar import permits this year to almost half of last year's allowance, according to two sources familiar with the matter, the latest step by the world's top sugar importer to curb shipments from abroad.

China will grant permits for 1 million tonnes of sugar imports, down from 1.9 million tonnes last year, the sources said.

The permit reductions follow Beijing's decision on Monday to impose extra tariffs on out-of-quota imports for the next three years, saying the imports had "seriously damaged" the domestic industry.

China 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. Imports brought in outside of that quota are charged a higher tariff and subject to permitting.

Some 600,000 tonnes of out-of-quota imports permits have been issued for the first five months of 2017, the sources who were briefed on the matter said. They declined to be named because they are not authorized to speak to the press.

The Ministry of Commerce did not respond to a request for comment.

Under the new plan, about 50,000 permits will be issued each month for the rest of this year, according to one of the sources.

With lower permits and higher tariffs, it would be almost impossible to bring imports outside of the annual quota into China and still make a profit, two sugars traders told Reuters. Stocks of sugar piled up at bonded warehouses are estimated to be as high as 700,000 tonnes.

In the first year of the new duty system announced on Monday, import duties for out-of-quota tariff sugar would increase to 95 percent.

That means it would cost about 7,047 yuan ($1,022) per tonne to import refined sugar from Brazil, almost 400 yuan higher than sugar from Guangxi province, a major producing region in China, according to calculations by www.gsmn.com, a trade website.

Buying refined sugar from Thailand would cost 7,300 yuan per tonne under the new tariff, according to the calculations. ($1 = 6.8899 Chinese yuan renminbi) (Reporting by Hallie Gu and Josephine Mason; Editing by Christian Schmollinger)