China bought some quantities of Thai white sugar this week and was seen releasing new import licences to rebuild inventory, while raw premiums rallied to their highest in nine months at 190 points as millers held back stocks, dealers said on Tuesday. 

China has been issuing licences for the import of 300,000 tonnes of sugar in the last two weeks, according to dealers, but there were no other details.

China is likely to import 3 million tonnes of sugar in the current crop year, according to the International Sugar Organisation.

"At the current price level, China is buying both raw and white sugar.

But for raw sugar, they are buying Brazilians," said a dealer in Singapore, who trades Thai sugar.

"Vietnam has bought a few thousand tonnes of Thai white sugar, and so has China." Two other dealers said China was issuing new import licences, having purchased 499,254 tonnes of sugar in the first quarter of 2012, up around 529 percent from a year earlier as it replenishes its sugar reserves. 

New York sugar, which set the tone for global pries, has fallen around 14 percent since early January due to rising supplies from key producers such as Brazil, Thailand and India.

Thai high-polarisation, or hi-pol, raws stood at premiums of between 160 and 190 points to the July contract, up from 150 points last week after millers held back stocks, waiting for New York futures to rebound further. 

Thailand is the world's second largest exporter after Brazil, where sugar was offered at a small discount or on par with New York futures.

From the current 2011/12 crop, Thailand is forecast to produce a record 10 million tonnes of sugar, according to the Office of Cane and Sugar Board.

The crushing season is due to end in May.

"We heard China may have been buying again.

It's probably not surprising given prices have fallen, that Chinese buyers may take the opportunity to purchase," said Tom McNeill, director of Green Pool, a commodities analyst based in Brisbane.

"However, sugar production in China is a little better than expected at over 11.5 mln tonnes, so it may be a case of buyers taking the opportunities when they arise."

Thai J-spec, or raw sugar favoured by Japanese consumers, was quoted at premiums of 150 points to New York futures, up from 120 points last week as millers jacked up the value to compensate for declines in New York.

Premiums for Thai white sugar were steady at $40 to London's August contract, having been offered at between $25 and $40 last week.

But Indian whites, which compete with Thai sugar, slipped to $560 a tonne this week from $580 to $600 last week because of more offers.

India might export only another 1 million tonnes of sugar now New Delhi has freed up overseas sales given unattractive prices, bringing total shipments to 4 million tonnes this year in an over supplied global market, trade and government sources said.