China hits $957mn US sorghum trade with fresh duty

Bloomberg

China will impose temporary anti-dumping deposits on US sorghum imports from Wednesday, adding to trade tensions between the world’s biggest economies. Soybean meal futures climbed on concerns the oilseed could be targeted next.
Imports will incur a 178.6 percent duty, China’s Ministry of Commerce said in a preliminary ruling.
That’s in compliance with domestic law and World Trade Organization rules, Wang Hejun, chief of the trade remedy and investigation bureau at the ministry, said in a statement. China began a probe into sorghum imports from the US in early February, just weeks after US President Donald Trump slapped tariffs on imported solar panels and washing machines. Tensions between the countries have since escalated after Trump ordered levies on steel and aluminum, with plans for more on products from China.
The Asian nation, the largest buyer of American sorghum, has responded with tariffs of its own and potentially more to come.
“The rate is quite high and some buyers may have to cancel shipments,” said Li Qiang, chief analyst with Shanghai JC Intelligence Co.
A rally in domestic corn prices since late last year has prompted domestic feed mills to increase purchases of the grain from the US, he said.
China imported about 4.8 million metric tons of sorghum from the US last year, worth about $957 million, according to customs data.
Purchases in the first two months of 2018 were 11 percent lower than a year earlier.
Soybean meal for September delivery on the Dalian Commodity Exchange climbed 2 percent to close at 3,265 yuan ($520) a ton. The most-active contract climbed more than 2.5 percent in the final 20 minutes of trading. The sudden spike reflects tensions in the market about the state of China-US trade relations, said Cao Yanhui, an analyst at Guosen Futures Co. “Market participants might translate the temporary deposit of sorghum as the start of a new round of trade disputes between China and the US, triggering concerns over soybeans,” said Monica Tu, an analyst at Shanghai JC Intelligence. China is the biggest buyer of US soybeans.
China said earlier this month that it planned to levy an additional 25 percent tariff on about $50 billion of US imports including soybeans. The move matched the scale of proposed US tariffs announced a day earlier. The US is allowing 60 days for public feedback and hasn’t specified when the tariffs would take effect, leaving a window open for talks.

China to open auto market as trade tensions simmer
BEIJING / SHANGHAI / Reuters

China is scrapping a limit on foreign ownership of automotive ventures, representing a major shift from policy in place for more than two decades, even as trade tensions simmer between Washington and Beijing.
The country will remove foreign ownership caps on companies making fully electric and plug-in hybrid vehicles in 2018, for makers of commercial vehicles in 2020 and the wider car market by 2022, China’s state planner said in a statement.
The move marks the latest twist in a see-saw week for Chinese trade. The country slapped a temporary fee on US sorghum after the US banned American companies from selling parts to Chinese phone maker ZTE Corp.
It also signals the end of a rule put in place in 1994, in which the world’s largest auto market limited foreign carmakers to owning no more than a 50 percent share of any local venture.
The policy was implemented to help domestic carmakers to compete against more advanced international rivals.
Analysts said the main beneficiaries, at least in the short term, would be manufacturers focused on new-energy vehicles, including US electric carmaker Tesla, which has been seeking to set up its own plant in Shanghai.
Tesla chief Elon Musk last month that China’s tough auto rules for foreign businesses created an uneven playing field as scores of local and international companies compete for a slice of China’s fast-growing market for “green” cars.
Tesla was not immediately available to comment on Tuesday.
The looser rules are likely to raise pressure on domestic carmakers, potentially hitting the likes of Warren Buffett-backed BYD Co.
Traditional automakers will need to wait longer for any direct impact and could face more risks than opportunities in ditching their joint venture structures, said James Chao, Asia-Pacific chief at consultancy IHS Markit.
“Foreign companies may already be in a box (in China),” said Chao.