In Washington, in a letter to President Donald Trump this week, the U.S. Grains Council (USGC), Renewable Fuels Association and Growth Energy are asking for help “in urgently addressing China’s recent implementation of protectionist trade barriers that are shutting out U.S. exports of ethanol and distillers dried grains (DDGS).” Specifically, the three groups are asking the incoming U.S. Trade Representative to put China’s recent actions near the top of the administration’s China trade agenda.
In September 2016, after a nine-month investigation, China imposed a preliminary anti-dumping duty of 33.8 percent against U.S. DDGS and a countervailing duty of 10 – 10.7 percent. In a final ruling last month, China increased its DDGS anti-dumping duty to 42.2 – 53.7 percent and its DDGS countervailing duty to 11.2 – 12 percent. Additionally, the tariffs on U.S. ethanol have increased from 5 percent to 30 – 40 percent.
China has grown to be a top export market for U.S. DDGS. In 2015, the country imported 6.5 million metric tons of the ethanol co-product, worth $1.6 billion and accounting for 51 percent of total U.S. DDGS exports. By the end of 2016, China had become the U.S. ethanol industry’s third-largest export market, receiving nearly 20 percent of total exports. Nearly 200 million gallons of ethanol worth more than $300 million were shipped to China last year.
As the letter explained, China’s recent actions have contributed to lower prices for ethanol and DDGS. Ethanol prices have fallen 15 percent since mid-December 2016 while DDGS prices have fallen steadily since the summer of 2016. DDGS prices are currently approximately 40 percent lower than in June 2016.