On May 19, 2024, the Ministry of Commerce of China announced the initiation of an anti-dumping investigation on imports of polyformaldehyde from the European Union, the United States, Taiwan and Japan.

The investigation is based on the application of the copolymerization of POM industry in mainland China. The companies involved include Yunnan Yuntianhua Co., Ltd., National Energy Group Ningxia Coal Industry Co., Ltd., Kaifeng Longyu Chemical Co., Ltd., Yanzhou Mining Lunan Chemical Co., Ltd., Tangshan Zhonghao Chemical Co., Ltd., PetroChina Inner Mongolia New Materials Co., Ltd. (hereinafter referred to as the applicant).

The survey will start on May 19, 2024 and should normally be completed by May 19, 2025, with an extension of six months under special circumstances.

It is worth mentioning that as early as 2017, China imposed anti-dumping duties on polyformaldehyde imported from South Korea, Thailand and Malaysia, which were reviewed after the expiration of the five-year measures, and ruled that anti-dumping duties would continue to be levied for five years from October 24, 2023.

In 2024, the Ministry of Commerce of China's anti-dumping investigations and measures in the chemical industry are as follows:

April 19, 2024: A final anti-dumping ruling was made on imports of polycarbonate originating in Taiwan, which determined that there was dumping and decided to impose anti-dumping duties from April 20 for a period of 5 years, with the tax rate ranging from 9.0 to 22.4 percent depending on the company. April 19, 2024: Announces a preliminary anti-dumping ruling on imports of propionic acid originating in the United States, determines the existence of dumping and decides to levy a margin from April 20, with a margin ratio of 43.5 per cent. March 22, 2024: Announced a final review investigation on the anti-dumping measures applicable to imports of resorcinol originating in Japan and the United States, and the questionnaire was distributed to relevant parties. The anti-dumping measures were implemented on March 22, 2013, at 40.5 percent in Japan and 30.1 percent in the United States, and were decided to continue on March 22, 2019 for a period of five years. Announcement on March 19, 2024: Decided to conduct a final review investigation on the anti-dumping measures imposed on imports of methyl isobutyl (methyl) ketone originating in South Korea, Japan and South Africa, and continue to impose anti-dumping duties for a period of 5 years. The measures will be implemented on March 19, 2018. January 22, 2024 Announcement: Anti-dumping duties will be imposed on imports of ortho-dichlorobenzene originating in Japan and India on January 22, 2019, with the tax rates of 70.4 and 31.9 respectively, and the implementation period is five years. The Ministry of Commerce decided to conduct a final review investigation and continue to impose anti-dumping duties from January 23, 2024.

What is the impact of import anti-dumping measures on China's chemical industry?

The implementation of anti-dumping measures for the country and enterprises will have a series of effects. First of all, anti-dumping measures help to protect domestic industries, maintain market order, and enhance the competitiveness of domestic industries. On the above polyoxymethylene as an example:

Copolymer POM is synthesized by formaldehyde, with high mechanical strength, excellent fatigue resistance, excellent creep resistance and other excellent mechanical properties, can be used as a substitute for copper, zinc, tin, lead and other metal materials.

From the perspective of POM manufacturers, in the international market, except for DuPont's full production of POM and Asahi Kasei's partial production of POM, the products of other domestic and foreign suppliers are basically POM.

Application for anti-dumping investigation enterprise polyoxymethylene profile:

Yuntianhua: It has large-scale domestic production technology in POM. It is one of the earliest 10,000-ton POM manufacturers and currently has 90000 tons/year POM production capacity.

State Energy Group Ningxia Coal Industry Company: 60000 tons/year polyformaldehyde plant ranked third in domestic production capacity, accounting for 18% of the production capacity, the largest single set of domestic production capacity.

Longyu Chemical: There are two production lines for polyoxymethylene plants with a production capacity of 40000 tons/year. It is one of the drafting units of the national polyoxymethylene industry standard. Shares in Hebi Longyu New Materials Co., Ltd., Kaifeng, Hebi two factories with a total production capacity of 100000 tons/year, ranking first in the country.

Yanzhou Mining Lunan Chemical: the existing annual output of 40000 tons of formaldehyde device two sets.

Zhonghao Chemical: There is a 40000-ton/year polyformaldehyde plant and a 60000-ton/year polyformaldehyde plant is planned. In addition, the company also plans to build 300000 tons/year nylon 66 new material phase I 40000 tons/year project.

PetroChina (Inner Mongolia) New Materials Co., Ltd.: In February 2023, PetroChina acquired 67% of the shares from CNOOC Amano Chemical Company to establish the company. The company's existing 60000 tons/year polyoxymethylene and other 5 sets of chemical plant.

According to the statistics of Sinicized Letter Consulting, the total global production capacity of POM reached 1.785 million tons/year in 2023, of which the production capacity in mainland China was 590000 tons/year. In 2022, there will be 8 polyoxymethylene manufacturers in China, with a total production capacity of 450000 tons/year. By the end of 2023, the number will increase to 11, and the total production capacity will be increased to 590000 tons/year. Although the production capacity and output of China's polyoxymethylene industry have shown steady growth, in the application of high-end products, such as high value-added auto parts and high-end electronic and electrical industries, the market share of domestic polyoxymethylene is still low. Due to the high industry threshold in these fields, it is difficult for domestic products to enter. In 2023, China's imports of POM were 330000 tons, showing strong demand for high-end POM products. The anti-dumping investigation filed by the Ministry of Commerce is expected to safeguard the interests of the polyformaldehyde industry in mainland China, curb unfair competition, and promote the healthy development of the industry. Domestic enterprises should seize this opportunity to strengthen product quality and technological innovation to enhance market competitiveness. It is expected that under the protection of the policy, the domestic market environment will be improved, and the market share and profitability of enterprises will also be improved. Secondly, anti-dumping measures may also bring about price increases. Anti-dumping measures may increase the price of imported goods, increase the purchase cost of consumers, and may lead to an increase in the cost of raw materials for enterprises that rely on imports, affecting their profits.

For example, Baoli Co., Ltd. announced in early May that it would increase the ex-factory price of POM products by US $0.10 per kilogram, equivalent to about 0.75 yuan, or 750 yuan per ton.

In addition, Asahi Chemical Plastics (Shanghai) Co., Ltd. also recently issued a price adjustment notice, announcing that the price of its polyoxymethylene (POM) products has increased by 3 yuan/kg, equivalent to about 3000 yuan/ton.

There are also rumors in the market that Celanese also has a price increase plan, and the cost of imports of POM will increase across the board in May.

In addition, anti-dumping measures may also lead to international trade disputes and cooperation issues.

Today, with the encirclement and interception of my country's trade by Europe, the United States and Japan, and trade frictions continue to heat up, the trade tensions between my country and Europe, the United States and Japan may evolve into a comprehensive trade war, or it may depend on who is the first to compromise., Reached a consensus after negotiation.

This is also the biggest uncertainty we face today. If differences exist and cannot be run-in, then the remaining choice is either to continue to impose tariffs or sit down and negotiate to reach a consensus. No matter which one we choose, it is not good news for us. In short, the impact of anti-dumping measures is twofold. Anti-dumping both protects domestic industries and boosts the economy and can also lead to rising costs and trade frictions. The implementation needs to balance the interests of all parties to ensure fair trade and sustainable development.

How should China deal with anti-dumping?

In addition to co-formaldehyde, in April, my country also imposed anti-dumping measures on imported chemical products such as propionic acid and polycarbonate. Imported products have dumping behaviors. Then, in addition to anti-dumping measures, what should my country do to avoid such behaviors?

The first is to ensure that the prices and quality of imported products conform to market rules by strengthening market supervision and prevent low-price dumping from causing unfair competition in the domestic market.

The second is to increase investment in research and development, through the joint efforts of the government and enterprises, increase financial support for research and development in the chemical industry, and encourage innovation, especially in the research and development of high-end chemical products. This can not only enhance the technical content of domestic products, but also enhance the competitiveness of enterprises in the international market. The third is to meet the needs of the high-end market by improving product quality. It is necessary for enterprises to continuously optimize the production process, adopt advanced production technology and management methods, ensure stable and reliable product quality, develop in the direction of high added value and high technology content, and reduce the problem of low-end overcapacity. The last is to strengthen international cooperation, establish good trade relations and cooperation mechanisms with other countries, and jointly combat dumping through international cooperation and maintain a fair international trade order.