European producers of citric acid and monosodium glutamate have this week received long-term assurance that their prices will be supported against cheaper Chinese imports, but China is expected to remain a significant player in a more level field.
On Monday regulation imposing definitive duties on Chinese citric acid were published in the Official Journal of the European Union, as continuing investigations by-and-large confirmed the initial view that industry within the EU has suffered.
This followed interim duties of 50 per cent put in place in June for a six month period, after investigators found that Chinese citric acid was being sold at an average rate of 15 to 21 per cent of the Europe price.
The definitive duties are lower than the interim levels, however, at 42.7 per cent for most companies (but lower levels for some of the firms involved in the inquiry). The European Council has said that money secured in excess of the definitive duties should be released.
No exit for China
The anti-dumping issue was brought to the European Commission’s attention by Jungbunzlauer, one of two firms making the chemical in the EU. The other is Belgium's SA Citrique Belge, owned by DSM.
The European Council noted concerns by interested parties that the anti-dumping measures would create a duopolistic market in the EU – but it disagreed with that vision.
“In view of the strong market position that the Chinese exporting producers obtained over the last years, the imposition of measures would not drive them out of the Community market, but merely restore a level playing field to the Community industry and the Chinese exporting producers to compete on equal terms,” it said.
Indeed, in the 12 months following the investigation period, Chinese imports were seen to have increased by 17 per cent. After the provisional measures they still remained at “a substantial level”.
Citric acid imports are said to cover more than 50 per cent of the European market needs.
According to Leatherhead International, global volume of citric acid was 920,000 tonnes in 2007. European demand accounted for 38 per cent of the total market, the US 27 per cent, Asia Pacific 20per cent, and Latin America 10 per cent.
The investigators also saw some overcapacity amongst exporting Chinese producers, which would make it unlikely they would withdraw from Europe – especially as anti-dumping measures are also being put in place against Chinese citric acid in the United States.
Another possible impact of the duties flagged by the Council is that the duties against China could encourage other countries to export citric acid to Europe, such as Israel and South America.
Exporting producers in these countries were likely less interested in targeting Europe in the past, because of depressed prices.
Ronny Hacham of Gadot Biochemical Industries told FoodNavigator.com that, in his view, “EU will continue to import from China since local capacity covers less than 50 per cent of the annual consumption.”
However in the US market, where anti-dumping measures against Chinese citric acid are also anticipated, Hacham expects imports from China to be reduced. But Chinese producers will not see a reduction in market share or in overall production, as they will shift their export focus to less protected regions, such as Brazil.
A sales manager at one of the Chinese companies involved in the investigation, who did not want to be named, said in the summer that the tariffs would not have a significant effect on the firm's business. "Overall demand in the world is rising so we will adjust our international sales to focus more on other regions."
The company exported 20 per cent of its product to Europe last year, or 20,000 tons, but it also counts Asia and US as key markets.