The US decision to slap additional duties on wire decking products from China is likely to hit domestic manufacturers hard, forcing them look for greener pastures in other overseas markets, said industry sources.
Additional duties of 43 to 289 percent on imports of more than $300 million worth of wire decking from China were imposed on Tuesday by the US Commerce Department on grounds that the product is being sold at unfairly low prices. Wire decking products are mainly used in industrial and other commercial storage rack systems.
Two US manufacturers - AWP Industries of Kentucky and J&L Wire Cloth of Minnesota, along with three other firms had asked for duties last year after imports from China surged to $317 million in 2008 from almost $213 million in 2006. It was also one of the 12 trade complaints filed by US businesses against Chinese importers last year.
"For us, it is not a big deal, compared to other firms. But for the whole industry, the impact is devastating," said Fan Huisheng, general manager of the sales department at Dalian Eastfound Metal Products, a major wire decking exporter.
Dalian Huameilong and Dalian Eastfound Metal Products will have to pay 50.95 percent and 42.61 percent preliminary duties, while three other exporters will incur 46.78 percent levies. The remaining companies in the sector would have to cough up nearly 289 percent as preliminary duties.
"It's impossible for us to export to the US if the preliminary duties are retained till the final arbitration. It leaves us with no other option but to search for other markets," said Fan.
The final decision on wire decking duties is likely to be announced later this year. Chinese companies will have to deposit the duties while the case is pending, the US Commerce Department said.
Last June, the five players that incurred lower duties had actively responded to the investigation and submitted their responses while the others did not.
Responding to the US claims that imports of wire decking from China have increased, Fan said, "on the contrary, exports have declined in margin terms last year".
The US is the largest export market for Eastfound, as it accounts for nearly 90 percent of its overseas sales.
"We will continue our parleys with the US side and hope for a better decision in the final ruling. At the same time we are also prepared for the worst and will rethink our strategy should the decision go against us," said Fan.
Ever since US President Barack Obama cleared the duties on tire imports from China, more and more companies are facing the heat in the American markets. The most recent case involved Chinese steel pipes used by the US oil industry, estimated at around $2.8 billion.
"The US is finding excuses to protect their own industries to keep the Chinese away from their markets," said He Weiwen, an expert on World Trade Organization issues and Sino-US relations.
