[Photo/CFP]

China has initiated anti-dumping duties against imports of toluidine originating from the European Union (EU) as of June 28. This is the second recent case of China initiating anti-dumping duties against EU products. After the EU levied provisional anti-dumping duties against Chinese solar panels, China responded with anti-dumping and countervailing duties against imports of EU wine.

According to the Ministry of Commerce (MOFCOM), the anti-dumping duty rates for toluidine will remain 19.6 percent for the German firm Lanxess Deutschland GmbH and 36.9 percent from all other EU companies. The duties will be in effect for five years.

Toluidine is an organic chemical widely used in dyes, pharmaceuticals and pesticides. In 2011, China imported 13,589.55 tons of toluidine from the EU, accounting for 16.07 percent of the total market volume in the country.

Industrial insiders believe this latest move is a clear indication that the trade spat between China and the EU is seeing little progress. They say the duties on toluidine are undoubtedly another response to the EU's anti-dumping investigation against Chinese solar panels in order to increase its bargaining power during trade negotiations.

Not retaliatory

The MOFCOM says that the toluidine duties are not reactionary in nature but came at the behest of Chinese companies. Because the investigation was made at the request of Jiangsu Huaihe Chemicals Co. Ltd. back on May 2, 2012, there is no causal relationship with the EU's duties against Chinese solar panels.

In February, investigators released a preliminary report stating that toluidine was being dumped in the Chinese market, substantially damaging China's domestic industries.

According to the MOFCOM statement, during the investigation period, the apparent consumption volume of toluidine in the Chinese market kept growing, and the production capacity of Chinese producers remained unchanged. However, the sharp increase of toluidine imports from the EU forced Chinese products that use the chemical to lower their prices. Investigators found that the average selling price of EU-produced toluidine in the home market was $1,977.5 per ton, while in China it was significantly lower at $1,548.99 per ton.

In 2010 and 2011, toluidine prices in the Chinese market rose by 3.8 percent and 6.31 percent respectively, but Chinese toluidine producers suffered a decline in profits and investment returns during those two years because of cheaper imported EU toluidine. In 2011 in particular, Chinese toluidine producers suffered tremendous losses, resulting in a decline of the average worker's salary in the industry.