Oil Report

Chinese buyers suspend DDGS imports amid anti-dumping probe fears-traders

BEIJING, Oct 28 (Reuters) - Chinese customers have temporarily stopped buying distiller’s dried grains (DDGS) from the United States amid worries that Beijing may launch another anti-dumping probe into imports of the feed ingredient, industry sources said.

China is the world’s top buyer of DDGS, a by-product of corn ethanol that is used by feed mills as a substitute for corn and soymeal. China imports almost all of its needs from the United States, the largest exporter, with the total value reaching $1.6 billion so far this year.

“Buyers have stopped ordering new shipments. They are worried about the anti-dumping probe,” said one trader with an international trading house, who did not want to be identified.

Another big Chinese buyer also confirmed that it would not make any new orders until the situation became clear.

Two industry sources said Chinese ethanol companies submitted an anti-dumping request to China’s commerce ministry last week. The ministry did not respond to Reuters’ request for confirmation.

The ministry in late 2010 launched an anti-dumping investigation into U.S. DDGS imports and later extended the probe before dropping it in mid-2012. The investigation led to a slowdown in imports from China.

Cheap imports of U.S. DDGS have hurt the domestic ethanol industry, which has been suffering losses since June 2013, Zhang Guohong, a senior official with China’s Alcohol Industry Association, wrote in an article published by the official Farmers Daily on Tuesday.

“We advise authorities to take measures to control imports of dried distiller’s grains from the United States,” the article said, proposing measures such as higher import duties, import quotas or more vigorous checks into unapproved GMO corn content in DDGS shipments.

Zhang said the 5.41 million tonnes that China imported from the United States last year was the equivalent of about 18 million tonnes of corn, adding to the country’s corn supply surplus.

Analysts have estimated that China’s corn stocks, which currently stand at 150 million tonnes or 8 months worth of consumption, are expected to climb to more than a year’s worth of consumption after the 2015/16 stockpile scheme which ends in April..

China’s imports of U.S. DDGS remained at a record high level from July to September, recovering from an interruption beginning in the second half of last year amid investigations into unapproved genetically-modified content. (Reporting by Niu Shuping and David Stanway; Editing by Richard Pullin)