Rod Young, Chief Economic Advisor, RISI
Feb. 25, 2013
The Chinese government announced that an anti-dumping investigation was begun on February 6, 2013, against imports of dissolving pulp from Brazil, Canada and the USA. The investigation will extend for one year and could be further extended to August 2014, depending on the initial findings. The period to be investigated is from January 1, 2012, to December 31, 2012, for anti-dumping and January 1, 2010, to December 31, 2012, for injury to the domestic industry. Seven domestic producers of dissolving pulp are the applicants and another eight producers are supporting the petition. Together, these companies accounted for nearly 80% of total Chinese production of dissolving pulp in 2012.
All of the major producers of dissolving pulp in Brazil, Canada and the USA have been named in the anti-dumping application, along with two US companies that are relatively minor producers of grades that are near substitutes for dissolving pulp. In addition, five big importers of dissolving pulp into China have been named in the application, all of whom are producers of viscose staple fiber.
The applicants allege that companies in the named countries priced their products in 2012 well under "constructed" prices that represent what could be termed "fair" pricing. These constructed prices were built up from estimated production costs plus reasonable expenses plus a profit margin. The constructed prices were then compared to CIF prices less adjustments for freight, insurance and sales expenses. Dumping margins were then calculated by taking the difference between the constructed price and the adjusted CIF price and dividing it by the CIF price. The dumping margins calculated through this approach are 49.45% for Brazil, 50.94% for Canada, and 29.86% for the USA.
Examining the data supplied by the applicants, it would appear that there are a number of concerns that could be raised by the alleged dumping companies. The first concern would be that the petitioners are using total dissolving pulp import data, which is an amalgamation of viscose and hi-alpha pulps. Pricing of viscose and hi-alpha pulps were radically different in 2012, with our data showing a differential of somewhere around $800/tonne developing by the end of the year. Each of the three countries named in the suit exported viscose and hi-alpha pulps to China in 2012, with the shares virtually impossible to ascertain, so the unit import prices are some weighted average of the prices of these two distinct grades. The higher average price from the USA was undoubtedly due to a higher share of hi-alpha pulps in the mix, which then reduced the calculated dumping margin.
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Rod Young, Chief Economic Advisor, works out of RISI's Bedford, MA, USA, and can be reached at email@example.com.