China adds further duties to US DDGs

Dried distillers grains, a by-product of ethanol production used as feed for livestock, sit in a storage area outside the Great River Energy Blue Flint Ethanol plant in Underwood, North Dakota, U.S., on Thursday, Feb. 9, 2012. North Dakota will hold its Republican presidential caucus on March 6. Photographer: Daniel Acker/Bloomberg via Getty Images

China’s contention that US exporters of distiller’s dried grains are selling the animal feed product at unfairly low prices could have a chilling effect on export volumes and freight rates in the westbound trans-Pacific trade.
Therefore, the announcement in late September that China’s Ministry of Commerce issued a preliminary determination claiming DDGs are being dumped there, causing injury to China’s DDG industry, comes at a bad time for exporters and liners alike. The ruling could adversely affect US exports just as the peak-shipping season in the westbound Pacific is beginning.
Exports of all kinds have been lackluster the past year because of the strong dollar, which makes US products and commodities more costly overseas, and also because of weak economic conditions in China and Europe.
DDGs, a byproduct of ethanol production, are a high-protein feed product for livestock and poultry. Shipping lines in the westbound Pacific value the commodity because it is a high-volume export in trade lanes where containerized imports exceed exports by at least a two-to-one ratio.
DDG exports to all markets have increased exponentially over the past decade, from 1 million metric tons in 2006 to 12 million tons last year, according to IHS Markit Economist Mario Moreno. However, DDG exports have been falling year to date, subtracting 17.3 percent from total US export growth, he added.
China will impose an anti-subsidy duty on imports of distillers’ dried grains (DDGs) with or without solubles from the U.S., adding to antidumping duties of 33.8 percent introduced recently.
The provisional anti-subsidy duties range from 10% to 10.7% and will be implemented from Sept. 30, China’s Ministry of Commerce said in a statement. Imports from suppliers including Poet LLC, Big River Resources LLC and Marquis Energy LLC will incur duties between 10% and 10.5%, the ministry said.
A preliminary decision from authorities was that imports of subsidized U.S. DDGs has hurt China’s domestic industry, according to the ministry. Chinese buyers will have to pay deposits on the after-tax imported price to customs. China imported a record 6.8 million metric tons of DDGs in 2015, worth about $2 billion, according to official customs data. The nation is the world’s biggest buyer and almost all of its imports come from the United States.
Source: DTN Washington Insider