Brazil’s Anti-Dumping Investigation into China-Made Lysine Increases Market Complications

effamall.com 8 January, 2025

Brazil Initiates Anti-Dumping Investigation Against Lysine from China

On December 27, 2024, the Department of Trade Remedies (DECOM), under Brazil’s Ministry of Development, Industry, Trade, and Services issued an anti-dumping announcement regarding feed-grade Lysine products (liquid Lysine, L-Lysine HCL, and L-Lysine Sulfate) imported from China. The investigation will assess the potential damage to Brazil’s Lysine industry (No. DE81, December 26, 2024). Its aim is to determine whether the export prices of China’s Lysine products reflect fair market value and to estimates the impact on Brazil’s Lysine industry. (Source: https://www.legisweb.com.br/legislacao/?id=471155).

Starting from December 27, 2024, this anti-dumping investigation will analyze evidence of dumping that occured from April 2023 to March 2024, with the investigation phase for industrial infringement covering the period from April 2019 to March 2024.

The investigation was initiated following complaints and evidence submitted to DECOM by the Brazilian branches of CJ and EVONIK. After validating the production data provided by the Brazilian Chemical Industry Association (ABIQUIM) and EVONIK, DECOM confirmed that this case is sufficiently representative to justify the continuation of the investigation.

Representative samples of producers/exporters will be selected, and they will be required to submit responses to the investigation questionnaire within 30 days of notification and provide additional evidence as needed. Within five months of the initiation of the anti-dumping investigation, major Chinese producers listed officially can request a public hearing.

According to official documents, the price analysis has employed US Lysine prices as an “alternative method”. DECOM asserts that market economy conditions are absent in China’s Lysine production sector. To “prove” this conclusion, the documents elaborate on and “demonstrate” various news reports regarding government-related activities in the areas of three major Chinese manufacturers, along with China’s industrial development policy papers. This reflects a continuation of the practice adopted by Western countries of not recognizing China’s market economy status during anti-dumping processes against Chinese products. Brazil has taken this approach to the extreme in its anti-dumping investigation against Chinese Lysine imports, indicating that a team with a deep understanding of China’s national conditions and economy played a significant role in preparing the materials.?

The official documents also mention that other “alternative methods” can be proposed to assess prices within 70 days of the investigation’s commencement, provided these options are supported by evidence. In this regard, Chinese feed companies involved should devote more efforts to seeking breakthroughs in “alternative methods” through extensive operational and market data.

By applying the current alternative method (i.e., referencing U.S. Lysine prices), preliminary results indicate a dumping margin of USD 842.04/ton, calculated based on L-Lysine HCL equivalent, with the reference value per ton of the “alternative method” being 69.7% higher than the Lysine prices from China. The Brazilian government has released initial results, declaring that dumping was identified during the period from April 2023 to March 2024.

Market Uncertainty Escalates in 2025

As we mentioned last week, the EU’s anti-dumping cases involving Lysine and Choline Chloride might just be the beginning. It now appears that not only will the product categories subject to anti-dumping investigations grow, but BRIC nations—including Brazil—may also join this trend.

There is a latent connection between China’s recent anti-dumping investigation into beef imports and Brazil’s series of anti-dumping procedures concerning phosphoric acid and nylon products originating from China.

Following the EU, Brazil quickly launched its anti-dumping investigation into Lysine imports from China. This process began in July 2024 and was clearly well-prepared, with the announcement made at the end of December 2024, ?naturally reminding one of the EU’s disclosure of initial anti-dumping findings concerning China-made Lysine and preliminary ruling results on December 17.

Behind the anti-dumping applications from EVONIK and CJ, we can reasonably anticipate that other amino acids, besides Lysine and Valine, may also be investigated for anti-dumping, possibly already in progress.

Notably, three prominent multinational companies in the animal nutrition sector are selling their animal nutrition business segments. One of them raised its asking price by 2 billion yuan over the past two weeks. This will introduce significant uncertainties regarding market changes in 2025.

Chinese amino acid companies must pursue industrial development with a higher global strategic perspective. In the near future, we will seek opportunities to analyze changes in the supply-demand pattern of Lysine over the past decade and the trends for subsequent development.

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