Biodiesel Probe Moves

US Producers Claim Injury from Biodiesel Imports from Argentina, Indonesia

Todd Neeley , DTN Staff Reporter
Biodiesel producers in Argentina and Indonesia are at the center of a trade investigation launched last week. (DTN file photo)

OMAHA (DTN) -- The U.S. Department of Commerce initiated antidumping and countervailing duty investigations aimed at biodiesel imports from Argentina and Indonesia, the department has announced in response to a petition filed by biodiesel industry interests in the United States.

As part of the investigation, biodiesel industry representatives gave testimony to the department's International Trade Commission last week, making a case that biodiesel produced in Argentina and Indonesia has been flooding the United States market since 2014.

The allegations are the countries' subsidized biodiesel essentially nudged U.S. producers out of their home market.

In its notice of initiation released last week, the Commerce Department stated that based on information provided by the U.S. biodiesel industry, there is reason to believe that Argentine and Indonesian biodiesel companies were selling into the U.S. "at less-than-fair value." The Commerce Department estimates Argentina's dumping margin could be as high as nearly 27% and Indonesia's at about 28% from 2014-2016.

In written comments to the commission, the Argentine government said the petition was based on "extremely limited" information and actually shows the U.S. industry was hardly harmed. Argentina makes the case that U.S. producers never make a claim that imported biodiesel actually hurt profits. In addition, the government argues U.S. producers alone were unable to fulfill Renewable Fuel Standard volume requirements from 2014-2016.

IMPORTS INCREASED

The National Biodiesel Board said imports from Argentina and Indonesia increased by more than 460% from 2014 to 2016, gaining about 18% in U.S. market share during that time.

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U.S. producers claim the two nations gained the market share illegally when the market expanded more than 58% in 2014-2016.

In testimony to the commission, Renewable Energy Group Chief Financial Officer Chad Stone said Argentine and Indonesian imports have prevented his company from expanding. REG is the nation's largest biodiesel producer, based in Ames, Iowa.

"Low-priced Argentine and Indonesian biodiesel has had a major negative impact on REG," he said.

Stone added that REG often has to choose between selling at low prices to meet cheap import prices or face losing sale volume. Stone said his company currently owns four "partially completed" plants for which REG has not been able to acquire financing to complete.

John Cummings, director of biodiesel for Wilmar Oleo North America, a U.S.-based importer of palm-oil biodiesel from Indonesia, testified that the investigation may be unwarranted. Cummings argued there are only two Indonesian producers who are allowed to sell palm-based biodiesel, or PME, into the U.S. That's because they were grandfathered into the Renewable Fuel Standard in 2011 after EPA concluded palm-based biodiesel does not meet the 20% lifecycle greenhouse gas emissions reduction target compared to fossil diesel.

"While the NBB coalition describes a large and growing Indonesian industry that supposedly harms their profitability in the U.S. market, in fact there are only two producers in Indonesia -- Wilmar and Musim Mas -- with the legal and physical ability to supply PME to the U.S. market," Cummings said.

GROWTH STUNTED

Anne Steckel, vice president of regulatory affairs for the National Biodiesel Board, told the commission the past year should have been a great opportunity for U.S. biodiesel producers with higher demand, lower costs and some regulatory certainty. Profits should have been better.

"But, unfortunately, this did not happen. Instead, dumped and subsidized biodiesel from Argentina and Indonesia entered the United States in record volumes, capturing greater market share at the expense of our producers. The loss of market share has left the domestic industry with substantial unused capacity," Steckel said.

The U.S. industry also faces a federal policy headwind as the $1 biodiesel blenders tax credit expired at the end of 2016, and industry officials told the commerce department the credit may not be renewed in 2017. This means biodiesel producers essentially receive $1 less per gallon for their product.

It isn't the first time Argentina and Indonesia have been challenged on their fuel export practices.

In May 2013, the European Commission announced provisional anti-dumping duties against the countries. Peru imposed both antidumping and countervailing duties on biodiesel from Argentina last year.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

(CC/AG)

Todd Neeley