On 12 Jan., 2016, the MOC initiated anti-subsidy and anti-dumping investigations into American DDGS.
On 12 Jan., 2016, the Ministry of Commerce of the People's Republic of China (MOC) initiated the Announcement on Anti-subsidy and Anti-dumping Investigations into Imported American DDGS. The subsidy investigation involves the subsidies from 1 Oct., 2014 to 30 Sept., 2015 and involves the industry injury from 1 Jan., 2012 to 30 Sept., 2015. The HS code of the involved products is 23033000.
The US is the world's largest DDGS exporter. From 2013 to 2015, over 90% of China's imported DDGS was from the US. This means that the US is an important import origin of China's DDGS market.
On 28 Dec., 2010, the MOC launched an anti-dumping investigation into American DDGS. This time, Chinese manufacturers are more united in launching the "double-anti investigations" than in 2010, which can be seen from the number of initiators.
2010
l Initiators: COFCO Bio-chemical (Anhui) Co., Ltd., Jilin Fuel Ethanol Company Limited, Meihekou Fukang Alcohol Co., Ltd. and Jilin Province New Tian Long Wine Co., Ltd. and so on
2016
l Initiators: China Alcoholic Drinks Industry Association (members: 37 DDGS manufacturers; DDGS output in Q1-Q3 2015 reached 2.11 million tonnes, accounting for 93.78% of China's total)
According to the investigation announcement, China's import volume of DDGS from the US has significantly risen in the past 4 years. American DDGS has a dominant share of the DDGS market in China. Data from the announcement shows that from 2012 to 2014, the market share of American DDGS has risen from 41.60% to 62.01% in China. The market share skyrocketed to 70.21% in Q1-Q3 2015.
What's worse, the import price of American DDGS is continually falling, which forces down the prices of domestic related products. For corn alcohol manufacturers, the sale price of DDGS (byproduct of corn alcohol) directly impacted the production cost of corn alcohol. According to CCM, in Dec. 2015, the average price of DDGS dropped to USD182.89/t (RMB1,170/t), down 50.03% year on year. This is detrimental to the performances of Chinese corn alcohol manufacturers and suppresses productivity. In 2015, the average operating rate of the Chinese corn alcohol industry was less than 50%. Nevertheless, the end-of-quarter inventory of DDGS has been rising fast. In Jan.-Sept. 2015, China's DDGS inventory was 211,040 tonnes, up 27.49% year on year.
Market data of China's DDGS in 2012-Sept. 2015, tonne
|
Time
|
Total output
|
Import volume
|
Export volume
|
Domestic apparent consumption
|
Import market share
|
|
2012
|
3,400,000
|
2,382,070
|
56,418.98
|
5,725,651
|
41.60%
|
|
2013
|
3,500,000
|
4,001,531
|
54,431.01
|
7,447,100
|
53.73%
|
|
2014
|
3,350,000
|
5,413,123
|
33,361.19
|
8,729,762
|
62.01%
|
|
Jan.-Sept. 2015
|
2,250,000
|
5,275,853
|
11,270.91
|
7,514,582
|
70.21%
|
Note: Domestic apparent consumption = total output + import volume - export volume;
Import market share = import volume / domestic apparent consumption.
Source: China Alcoholic Drinks Association
End-of-quarter inventory of DDGS manufacturers in China, Jan. 2012-Sept. 2015
Source: China Alcoholic Drinks Association
The anti-dumping investigation on American DDGS will greatly affect China's DDGS market. In 2010, China's import volume of DDGS sharply reduced during the investigation period. In 2011, the volume was 1.69 million tonnes, slumping by 46.72% year on year. Therefore, it is estimated that the investigation this time will reduce the DDGS import volume by 50% in China - about 3 million tonnes of DDGS will be supplied by China itself.
Since there will be a 60-day grace period after the "double-anti investigations" was initiated, some importers may grasp this opportunity to import a large amount of DDGS. As a result, in Jan.-Feb. 2016, China's import volume of DDGS is going to embrace a small peak. However, the market price of DDGS has not been boosted significantly by the "double-anti investigations" due to the huge inventory levels and the multiple sources of goods. On 13 Jan., 2016, the average market price was USD195.29/t (RMB1,270/t), a small rise of 2.41% over 4 Jan.
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Tag: DDGS