Source:
Baidu
"Double
anti-investigation" Restart
As
early as Dec. 2010, China had once launched "double
anti-investigation" (anti-dumping and anti-subsidy investigations) into
American DDGS. But due to some constraints, the investigation was terminated in
June 2012. And there was no clear conclusion about whether American DDGS are
dumped into the Chinese market.
This
year, China had launched another "double anti-investigation" into
American DDGS (HS code: 23033000). On 12 Jan., 2016, the MOC officially
announced the "double anti-investigation" on it. The industrial
injury investigation period lasted from 1 Jan., 2012 to 30 Sept., 2015 and the
dumping and subsidy investigation period was from 1 Oct., 2014 to 30 Sept., 2015.
Generally
speaking, import volume of DDGS will substantially decline during the
investigation period, just like the case in 2011. In Jan.-May 2016, merely 1.30
million tonnes of DDGS were imported into China, down by 11.97% YoY, according
to China Customs. If the anti-dumping action is launched and anti-dumping duty
is levied, its import volume will further decline.
China's import volume of DDGS, Jan. 2012-June
2016
Source:
China Customs
Counterattack of
China’s DDGS
Chinese
DDGS market has been long dominated by imported DDGS, due to its high quality
and not high price. In 2015, a 70%+ market share was occupied by imported DDGS.
Specifically, the US is the major import origin.
Compared
to domestic ones, American DDGS has richer fat and less mycete: 10% of fat on
average, vs. 4-10% in domestic ones (percentage varies between different
manufacturers), according to CCM's research. What’s more, the level of
aflatoxin in China’s DDGS has long been a main restriction for its promotion.
With higher quality under similar price, imported DDGS is more popular in
China, especially in feed industry.
According
to CCM's price monitoring, as of August, the ex-work price of domestic DDGS
(24% protein, 10% fat) is at about USD271 .59/t while the price of imported
DDGS (26% protein, 1 0% fat) at around USD301 .76/t (RMB2,000/t). If China
officially launches anti-dumping actions on imported DDGS, domestic DDGS is
very likely to take over the market.
Severe threat from
corn
Apart
from China’s DDGS, other substitutes like corn
also will make a threat to the imported DDGS.
Around
last August, the news about the cancellation of the policy of temporary
purchase and storage of corn in China was inundated with market. This April,
China officially cancelled this eight-year-old policy in order to ease the
enormous stock of 250 million tonnes of corn. Subsequently, the price of corn
dropped quickly. Take the FOB corn price in Dalian port as example, its price
fell from USD405/t in June 2015 to USD300/t recently.
Since
corn is an important feed ingredient, the large fall of its price challenges a
lot on other feed substitutes. At present, China’s main imported feed
ingredients (the substitute of corn) include DDGS, Sorghum and Barley.
According to the data in H1 2016, the import volume of them experienced a
drastic fall compared with that in H1 2015.
China's
import volume of DDGS, Sorghum and Barley in H1 2015 and H1 2016
What’s
more, CCM thinks that the price of corn is supposed to drop further thanks to
more stock corn being auctioned and the supply of new corn, thus making bigger
impact on other import feed ingredients, including import DDGS.
More related
information.