GuangzhouChina Jan. 21, 2011 – On Dec. 28, 2010, Ministry of Commerce of the People's Republic of China (MCPRC) published a note that China has decided to run an anti-dumping investigation into Distillers Dried Grains with Solubles (DDGS) originated from the US since Dec. 28th 2010. It's believed that this action might help domestic DDGS industry to some extent.
According to the note published by MCPRC, the investigation period was from Jul. 1, 2009 to Jun. 30, 2010, and the investigation period of industry injury was from Jan. 1, 2007 to Jun. 30th, 2010. Normally, the investigation will be finished on Dec. 28th 2011.
This investigation can be dated back to Nov. 16, 2010, when Anhui BBCA Biochemical Co., Ltd., Jilin Fuel Alcohol Co., Ltd., Fukang Alcohol Co., Ltd., Jilin New Tianlong Wine Co., Ltd. and other large domestic DDGS manufacturers submitted the application to MCPRC, regarding running anti-dumping investigation into DDGS from the US. MCPRC has decided to carry out the investigation, as DDGS output of the applicants accounts for more than 50% of the total output in China, and it's believed that the imported DDGS hinders the development of the domestic DDGS industry to some extent.
With high superior quality, DDGS from the US is more popular than that in domestic market in spite of its high price. Price of imported DDGS in Guangdong Province was USD306/t on Dec. 31st 2010, while ex-factory price of the product in Shandong Province was USD226/t. And an insider from a DDGS trading company says that the color of domestic DDGS is not as good as imported one, and its protein content may be insufficient.
However, as the price differential becomes wider, many feed manufacturers may prefer to buy the domestic products. Thus, if China does levy anti-dumping duty on imported DDGS from the US, domestic DDGS manufacturers may have more opportunity for the related lower price. "It's hard to estimate the impact on the industry for now, because it depends on the rate of anti-dumping duty to be imposed. But it is sure that the import volume of DDGS will reduce if anti-dumping duty is levied." said the insider.
Some experts view that domestic DDGS manufacturers can grab more profit as the import price will be upraised after the anti-dumping duty to be levied. It's predicted that domestic supply of DDGS can't satisfy its demand in 2011, and China still needs to import DDGS. Thus, aided by both the undersupply situation and the anti-dumping duty to be levied, market price of DDGS may be pushed up. However, the undersupply situation may make Chinese government not levy the anti-dumping duty finally, or the duty may not be so high, as the government must guarantee the healthy development of feed industry.
Source: CCM International