The State Economic and Trade Commission of PRC Preliminary Determination in the Antidumping Duty Investigation on Certain L-Lysine Monohydrochloride Feed Grade
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2005-11-8
]g@ Judy Chang



The State Economic and Trade Commission of People
fs Republic of China
Preliminary Determination in the Antidumping Duty Investigation on Certain L-Lysine Monohydrochloride Feed Grade
From the United States of America, the Public of Korea and Indonesia


On June 19 2001, the Ministry of Foreign Trade and Economic Cooperation (
gMOFTECh) decided to initiate an anti-dumping investigation on imports of certain L-Lysine Monohydrochloride Feed Grade (gLM producth) from the United States of America, the Public of Korea and Indonesia after consultation with the State Economic and Trade Commission (gSETCh). The MOFTEC conducted an investigation on dumping and dumping margin, and the SETC together with relevant authority of the State Council carried out an investigation on domestic industryfs injury and injury degree. Pursuant to the Anti-dumping Regulation of Peoplefs Republic of China (the Regulation), the SETC hereby made its preliminary determination as follows:

I. Investigation proceedings

On May 17 2001, Sichuan Chuanhua Ajinomoto Co., Ltd., Guangxi Guiyuan L-Lysine Co., Ltd. and Quanzhou Daquan L-Lysine Co., Ltd. filed an anti-dumping petition against imported LM product from the United States of America, the Public of Korea and Indonesia with MOFTEC. After examination of the petition, the MOFTEC found that the three petitioners had the standing to represent Chinese LM industry to apply for an anti-dumping investigation and the petition met the requirements set out in the article 11 and article 12 of the Regulation. On June 19 2001, the MOFTEC announced to initiate the anti-dumping investigation after consultation with the SETC. The dumping investigation period determined by the MOFTEC was from April 1 2000 till March 31 2001. And the injury investigation period determined by the SETC was from January 1 1998 to March 31 2001. Meanwhile, the injury investigation panel (
gPanelh) was established.

On July 17, 18 and 19 2001, the SETC sent questionnaires to domestic producers and importers. On July 18 2001, the SETC sent questionnaires to foreign producers/exporters. The SETC received questionnaire responses from 3 domestic producers, 7 importers and 3 foreign producers within time limit. In August 2001, the Panel carried out a verification visit to petitioners.

On July 11 and July 26, 27 2001, the SETC held a hearing for petitioners and for foreign producers/exporters respectively and heard their opinions on this investigation. After the hearings, petitioners and other interested parties submitted written opinions or presentations several times.

On January 15 2002, the SETC held a hearing for up-stream and down-stream enterprises and heard opinions of domestic producers, up-stream enterprises and down-stream users. On January 22 2001, the SETC held a hearing for determination of industry injury and heard opinions of all known interested parties.

The SETC analyzed the petition, received questionnaires and information collected in verification visit. And the SETC took full consideration of opinions and presentations submitted by interested parties.

II. Investigated product and domestic like product

Product description:

The investigated product (
gIPh) in this investigation was certain L-Lysine Monohydrochloride Feed Grade imported from the United States of America, the Public of Korea and Indonesia. Its chemical molecular formula is C6H14N2O2.HCL.

The HS codes of IP under China Custom were 29224110
A29224190. The scope of investigation was limited to the L-Lysine Monohydrochloride Feed Grade under the two HS codes. And the L-Lysine Monohydrochloride for medical use under the codes was not included.

Production technology:
c

Physical forms , physical and chemical characteristics:
c

Main uses:
c

After examination, the SETC found that L-Lysine Monohydrochloride Feed Grade produced by domestic producers was identical to the IP in physical and chemical characteristics, main productive technical factors, production process and product uses, etc. and they were substitutive. Therefore, they were like products.

The SETC found that the competition conditions between the IP and the competition conditions between the IP and the domestic like product were same; furthermore, the volume of imports from each country was not negligible. Therefore, the SETC decided to cumulatively assess the effects on the domestic industry of the imports from the three countries.

III. The injury of domestic injury and injury degree

The SETC conducted the investigation on the alleged injury and injury degree suffered by the domestic industry. The essential facts and evidences were as follows:

1. The import volume and market share of the IP

The import volume of the IP from the United States of America, the Public of Korea and Indonesia was increasing in injury investigation period. According to China Custom
fs statistics, the total volume of the IP in 1998, 1999 and 2000 was 9570 ton, 31285 ton and 44781 ton respectively, increased by 226.9 percent and 43.1 percent in 1999 and 2000 respectively. The volume of the IP in the first quarter in 2001 was 10155 ton, increased by 9.8 percent compared with that in corresponding period of 2002.

Meanwhile, the market share of the IP in China market was increasing in the investigation period. The market share of the total IP accounted for 34.21 percent, 62.98 percent and 64.45 percent in 1998, 1999 and 2000 respectively.

The SETC noted that, prior to 1999, the import volume of the IP shown in the statistics of China Custom was less than the likely actual import volume resulted from the various unidentified HS codes being applicable to the IP and from other factors. The SETC took consideration of the effect on the relevant import volume of the condition. Since 1999, the statistics of the import volume of the IP became accurate as a consequence of the enforcement of the Administration Regulation of the Feed and Feed Additive and the identification of the classification of the IP in HS codes of China Custom.

2. The price of the IP

The price of the IP increased then declined throughout the investigation period. According to the import statistics of China Custom, the weighted average prices of the total IP were US$ 1450, 1133, and 1244 per ton in 1998, 1999 and 2000 respectively. The price declined by 21.9 percent in 1999 and increased by 9.8 percent in 2000. The price of the IP in the first quarter of 2001 was US$ 1520 per ton, increased by 22.2 percent compared with that of the IP in the corresponding period of 2000 and constituted the summit in the investigation period.

3. Impact of the IP on the domestic industry

(1) The output of the domestic industry

The total output of the like product of the three petitioners declined then increased throughout the investigation period and the trend was increasing. The output of three petitioners declined by 36.67 percent in 1999 and increased by 58.3 percent in 2000. The output in the first quarter of 2001 increased by 14.9 percent compared with that in the corresponding period of 2000.

(2) Selling quantity

The total selling quantity of the like product of the three petitioners declined then increased throughout the investigation period and the trend was increasing. The selling quantity of three petitioners declined by 16.69 percent in 1999 and increased by 77.41 percent in 2000. The selling quantity in the first quarter of 2001 increased by 6.6 percent compared with that in the corresponding period of 2000.

(3) Selling price

The weighted average selling prices of the like product of the three petitioners declined then increased throughout the period of investigation and the trend was increasing. The weighted average prices declined by 23.49 percent in 1999 and increased by 4.9 percent in 2000. The price in the first quarter of 2001 increased by 32.64 percent compared with the price in the corresponding period of 2000 and constituted the highest price in the period examined.

(4) Sales revenue

The total sales revenue of the like product of the three petitioners declined then increased throughout the investigation period and the trend was increasing. The sales revenue declined by 36.26 percent in 1999 and increased by 86.09 percent in 2000. The sales revenue in the first quarter of 2001 increased by 41.5 percent compared with that of the corresponding period of the previous year and became the summit throughout the period examined.

(5) Net income before income taxes

The sum of net income before income taxes of the three petitioners was negative between 1998 and 2000. In the first quarter of 2001, the total net income before income taxes of the petitioners became positive. The net income before income taxes declined by 143.86 percent in 1999 and increased by 15.65 percent in 2000.
@In the first quarter of 2001, the net income before income taxes increased by 297 percent compared with that in the corresponding period of 2000. Throughout the period examined, some of the petitioners were profitable, however, others sustained a loss, which showing the great difference in operation conditions between the petitioners. The great loss of certain petitioner contributed to the negative sum of net income before income taxes of the three petitioners.

(6) Market share

The total market share of the like product of the three petitioners between 1998 and 2000 declined sharply, however, in the first quarter of 2001, the market share rose. The market share in 1998, 1999 and 2000 was 42.23 percent, 19.81 percent and 25.13 percent respectively. The SETC noted that the apparent consumption
fs variation as a consequence of the difference in the statistics of import volume of the IP prior to 1999 and took the consideration of the condition in making the determination.

(7) Inventories

The inventories of the three petitioners fell sharply throughout the investigation period. In 1999 and 2000, the inventories fell by 21.55 percent and 94.3 percent respectively. The inventories in the first quarter of 2001 fell compared with those in the corresponding period of 2000.

(8) Average wages

The average wages of the employees of the three petitioners rose by 0.96 percent averagely from 1998 to 2001.

(9) Unemployment ratio

There is not great change in unemployment ratio of the three petitioners. The unemployment ration in 1998 was 5.39 percent and it decreased by 0.17 percent and 1.35 percent respectively in 1999 and 2000.

(10) Utilization of capacity

The average utilization of capacity of the three petitioners was low and was less than 60 percent throughout the investigation period. It was lowest in 1999 and rose in 2000 and the first quarter of 2001.

(11) Return on investments

The averaged return on investments of the three petitioners was negative throughout the period examined. It fell by 6.84 percent in 1999 and rose by 2.83 percent in 2000.

(12) Net cash flow

Net cash flow of the three petitioners rose between 1998 and 2000. It increased by 110 percent and 603 percent in 1999 and 2000 respectively.

(13) Development conditions of the domestic industry

The development of the domestic industry was not suppressed by the IP. In May 2000, Changchun Dacheng Biology & Chemical Engineering Co., Ltd., which contained the greatest production capacity of L-Lysine Monohydrochloride Feed Grade in China, was established. In 2001, Sichuan Chuanhua Ajinomoto Co., Ltd., one of the petitioners, enhanced its L-Lysine Monohydrochloride Feed Grade production capacity.

4. Production capacity, export capacity and inventories of the IP in the United States of America, the Public of Korea and Indonesia

According to questionnaires submitted by three respondents located separately in the United States of America, the Public of Korea and Indonesia, the total production capacity, output, export volume and inventories of the three respondents in 2000 was 348759 ton, 300552 ton, 254559 ton and 9529 ton respectively. 84.7 percent of the total output was destined for export. The export volume to China accounted for 23.5 percent of the total export volume. Notwithstanding the great production capacity and export capacity, the inventories of the respondents were little. Meanwhile, their export markets dispersed and were not concentrated on China. Furthermore, their utilization of capacity was great. Therefore, it was not likely for them to increase their exports to China in a large scale.

5. Conclusion

The preceding economic factors of the petitioners in 1999 fell sharply and rose gradually in 2000. And they rose to a higher level in the first quarter of 2001. The SETC noted that L-Lysine Monohydrochloride Feed Grade industry in the world experience a historical stagnation in 1999 and the prices fell to the lowest in the last five years. The condition became better since 2000. The variation of operation conditions of the petitioners was consistent with that of the industry in the world.

For the foregoing facts and evidences, after the analysis of the import volume and price of the IP and the trend of the relevant economic factors of the domestic industry, the SETC found that notwithstanding the increase of the volume of the IP, the significant economic factors of the domestic industry, such as output, selling quantity, selling price, sales revenue, net income before income taxes and utilization capacity rose during the latter investigated period except that certain factors changed a little or were at a lower level. Furthermore, the development of the domestic industry had not been suppressed by the IP. Therefore, the IP did not cause a material injury or the threat of a material injury of the domestic industry.
@

IV. Preliminary determination

Pursuant to article 27 of the Regulation, by reason that the IP did not cause a material injury or the threat of a material injury of the domestic industry, the SETC and MOFTEC determined to terminate this investigation.