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Insight | Time: Jan 13 2021 2:52PM
India imposes anti-dumping duty on rayon yarn imports for five years
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India has made an affirmative final calculations of anti-dumping on imports of rayon yarn from China, Indonesia and Vietnam, and proposed to impose an additional anti-dumping duty ranging from $0.25/kg to $0.8/kg for five years (from 2021 to 2025). The amount of the duty imposed on imports originating in China is USD 0.41-0.8 per kilogram.

For exporters, the amount of the imposed on imports originating in Vietnam is as large as that in Indonesia, reaching USD 0.41 per kilogram and USD 0.44 per kilogram respectively, at the exception of three Indonesian company whose exports are subject to a duty of USD 0.25-0.35 per kilogram, meaning that their competitive advantage has increased significantly. In China, the duty burden is the biggest and Grace, the lowest taxed company in China, exports are also subject to a duty of USD 0.41 per kilogram, which is almost double that of Vietnam and other manufacturers, and 2-3 times that of Indonesia.

Extra cost of nearly 5,200yuan/mt makes the factory hopelessly uncompetitive. Although the output of Indonesia and Vietnam can hardly cover all the demand of India, it is not hard to imagine the impact of share and the shrinking of profit margin (assuming that it is on the same starting line with other origins, other local yarn mills still have to absorb a $0.4/kg rise). In addition, VSF returns to a strong cycle, even if feedstock purchasing node can be accurately grasped, it is not easy for China local yarn mills to make profits.

India's demand for rayon grey fabric increased evidently in 2020 (mainly for women's clothing), but the production capacity of local yarn mills cannot meet the demand. Rayon single yarn, rayon/cotton yarn and other blended varieties need to be imported. The price of rayon yarn increased from $1.45/kg to $2.2/kg due to the news of anti-dumping duty, and the purchase cost increased greatly.

From India's import data, China rayon yarn accounted for 30-50% of its import volume before the trade surge in the second half of the year. In addition, imports of rayon yarn in Indian are mainly from Indonesia and Vietnam. The survey started in January and released the results on December 30, which lasted for one year. It seems to explain why India's imports of rayon single yarn exceeded 10,000tons in the second half. In addition to the attraction of demand and low price, it is also to stocking in advance.

For China, India was still a small market before 2019. However, in 2020, India's demand for rayon yarn soared, and it has become China's largest importers of rayon yarn, with its share expected to rise to 43%. The implementation of the tariff has dealt a big blow to the export market. The corresponding origins are Fujian and Jiangsu, accounting for about 70%-90% of the total. The corresponding processes are ring-spun and vortex-spun rayon yarns.

China local production capacity of rayon yarn, especially vortex-spun production scale, is still expanding, and the yarn mills are sure to win the overseas market. This is might be a slap. Indian market is facing the problem of too high cost and difficulty in conducting to downstream market. It is possible to be the end of the campaign ahead of time or seek alternative products.

In current bull domestic market and good orders, the market still has a certain buffer period, both upstream and downstream need time to work through what's happened and adapt to new circumstances for seeking countermeasures. VFY and other products have encountered a similar situation, but as long as demand exists, measures are always more than difficulties.

[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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