Ethanol Blog

China Decides U.S. Guilty of Dumping DDG

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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(DTN photo by Cheryl Anderson)

China's Ministry of Commerce (MOFCOM), in a preliminary ruling September 23, said the U.S. was dumping distillers dried grains in China, damaging the domestic industry and will require them to pay a duty. Starting immediately, importers are expected to provide a deposit to the customs in accordance to each company's dumping profit margin, which stands at 33.8%.

U.S. Grains Council (USGC), the Renewable Fuels Association (RFA) and Growth Energy issued the following statement shortly after the announcement:

"We are deeply disappointed that China's Ministry of Commerce has issued a preliminary determination claiming that U.S. dried distiller's grains with or without solubles (DDGS) are being dumped and have caused injury to China's DDGS industry.

"As part of our three-decade long partnership with China, we have worked closely with government agencies, industry associations, and the feed and livestock industries in China to educate stakeholders about the benefits of both imported and domestic DDGS as an alternative feed ingredient.

"We are proud of the role that U.S. and Chinese DDGS have played in helping China's animal feed industry to produce high-quality animal feed products to supply China's rapidly growing meat industry, and in ensuring that Chinese consumers continue to have access to safe, affordable and nutritious protein products.

"As the council asserted at MOFCOM's hearing, U.S. DDGS have not caused any injury to China's DDGS producers. Instead, DDGS play an important role in protecting Chinese feed producers and households against unpredictable swings in global commodity prices.

"We welcome opportunities to work together with the Chinese government, Chinese feed producers and consumers to continue to meet China's growing feed demand in a mutually beneficial way for all parties as China implements market-oriented agricultural pricing reforms.

China announced its first anti-dumping probe against the U.S. on December28, 2010 and Chinese importers immediately suspended all purchases of U.S. DDG, creating havoc in the market at the time. In June of 2012, eighteen months after it was initiated, the investigation was terminated by Chinese officials. As for the most recent ruling, the ministry didn't say when it would issue a final decision on this latest case.

As of late Friday, September 23, U.S. DDG prices had been slow to react to the announcement, likely due to expectations that there would be a duty imposed with some DDG traders expecting it to be as high as 40%. Also, since this case had been in the works since January 2016, many exporters had already slowed or stopped their DDG shipments to China since the start of the investigation, expecting a duty that would be retroactive to shipments in route when decided. U.S. DDG exporters have found alternative markets since the first case in 2010, which could prevent the large drop in DDG prices seen back in 2010.

USGC added, "Our industry deeply appreciated the support that we received at the recent hearing in China from our Chinese customers, and we remain hopeful that MOFCOM will find in its final determination that continued access for U.S. DDGS is in China's interest."

"We are confident that U.S. DDGS are not being dumped and are not causing or threatening injury to Chinese producers."



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