China's move to start an anti-dumping investigation into imports of U.S.-originating propionic acid serves the dual purpose of safeguarding the interests of Chinese companies and maintaining a level playing field in the global market, analysts said on Monday.
On Friday, China's Ministry of Commerce decided to initiate the probe on a request from the Jiangsu Chemical Industry Association. The investigation started on Friday and is expected to last up to one year and will cover the period from April 1, 2022 to March 31,2023, according to a public notice issued by the ministry's Trade Remedy and Investigation Bureau.
The association said the price of propionic acid in China fell by 28.2 percent in the first quarter of this year compared with the same period last year, according to an attachment provided by the ministry.
Propionic acid is an essential fine chemical product and organic synthesis raw material, primarily used in the production of preservatives, anti-fungal agents, herbicides and pharmaceutical intermediates. It finds extensive applications in industries like pharmaceuticals, food, feed and pesticides.
The request targets U.S. sales of propionic acid in China from 2019 through the first three months of 2023, the ministry said.
China is a major consumer of propionic acid, with its total consumption in 2022 increasing by 26.7 percent from 2019, said the ministry in the attachment. The U.S. has been a main provider of propionic acid, with China's share of imports from the U.S. rising from 97.41 percent in 2020 to 100 percent in the first quarter of this year.
"Driven by the rapid growth of downstream applications, demand for propionic acid products rose in China in recent years," said Ding Rijia, a professor of industrial supply chain operations at the China University of Mining and Technology in Beijing.
"Due to insufficient domestic production capacity, China relied heavily on imports of propionic acid to meet market needs," Ding said, adding that the ministry's decision reflects China's commitment to ensuring a healthy trading environment for all market participants and addressing potential trade imbalances.
From 2021 onward, the import volume of propionic acid began to fall, according to an industry report released by Beijing ZhiyanKexin Consulting Co Ltd, indicating less reliance on the import of the chemical.
China's propionic acid imports declined to 16,700 metric tons in 2022, with the annual domestic demand standing at 77,600 tons in 2022, data from the report showed.
Citing a recent approval by the U.S. Senate of an amendment to the yearly defense bill on Thursday, which aims to prohibit the export of oil from the strategic petroleum reserve to China, Zhang Xiaoqiang, executive vice-chairman of the China Center for International Economic Exchanges in Beijing, said such a move has further exacerbated the challenges in current China-U.S. economic and trade relations.
China-U.S. trade amounted to 2.25 trillion yuan ($313 billion) in the first half, dropping 8.4 percent year-on-year, data from China's General Administration of Customs showed.
"Also, the tightening of U.S. monetary policy has notably restrained its domestic demand," Zhang said.
Chen Wenling, the CCIEE's chief economist, said the United States must halt its strategy of "decoupling" and "de-risking" in the high-tech sector, as it poses a threat to the global industrial chain system. While this policy currently targets China, it is poised to have a significant adverse impact on the entire world next.
Chen said, "Mutually beneficial economic ties between the world's two largest economies would be in the interests of both countries and their consumers, fostering stability and assurance in an ever-changing and turbulent global landscape."
China's Ministry of Commerce also announced earlier this month that it has conducted a final review on the anti-dumping measures applicable to optical fiber preforms imported from the U.S. and Japan. The review commenced on July 11 and is scheduled to finish by July 11,2024.
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