China launches anti-dumping probe against US DDGS imports

China’s Ministry of Commerce (MoC) launched on Tuesday anti-dumping and countervailing duties investigations on US dried distillers grains with solubles (DDGS) imports.

The move comes after complaints from Chinese producers that DDGS from the US were sold at prices “below normal value” which hurts domestic industry, according to China’s state news agency Xinhua.

Further claims that US DDGS exports are subsidised by the US government by up to 42 subsidy schemes prompted the launch of the countervailing, or anti-subsidy, duties investigation.

China is the largest buyer in the world of DDGS, a high-protein by-product of ethanol production, which is often used to replace components in animal feed fit for human consumption.

The Asian economic giant is almost entirely dependent on foreign exports to feed its DDGS needs, with most of its supply sourced from the US, the world’s top exporter of the grain product.

In the first ten months of 2015, China imported nearly 6 million tonnes of DDGS, up 14% from the same period year on year.

But imports slowed and DDGS prices dropped after the MoC’s December announcement that it had formally accepted the Chinese producers’ petition to begin the investigation.

Under Chinese law, the MoC must decide within 60 days whether or not it will act after accepting an investigation request.

China has performed anti-dumping investigations of US DDGS imports once earlier in 2010, but this probe was dropped in mid-2012.

According to the MoC, the current investigation should last no longer than a year under “normal conditions”, but it could be extended to one and half years should “special circumstances” arise.

‘Negative effects potentially over many years’

Thomas N. Slight, president and CEO of the US Grains Council (USGC), said the grains export advocacy group is “disappointed” to see China launch the investigations.

“We believe the allegations by the Chinese petitioners are unwarranted and unhelpful. They could have negative effects on US ethanol and DDGS producers, as well as on Chinese consumers, potentially over a period of many years,” said Slight.

He added that USGC is confident that its members’ trading practices for DDGS, ethanol, and related products are “fair throughout the world” and it is ready to “cooperate fully” with China on the investigations.

USGC has been working in China since 1981 to find solutions to food security challenges through development and trade.

 

This article was written by Ilari Kauppila, deputy editor at Biofuels International.