Shanghai/Canberra | China has launched an anti-dumping investigation into Australian barley imports in what analysts say is a warning from Beijing that Canberra should not side with the United States over trade or regional security.
China’s Commerce Ministry said on Monday it had launched an anti-dumping investigation into imports of barley originating from Australia. The investigation would cover alleged dumping from October 1, 2017 to September 30, 2018, the ministry said in a statement on its website.
Australia is China’s biggest customer for barley, which is used to brew beer and in livestock feed. China imported US$1.28 billion ($1.8 billion) worth of Australian barley in 2017, according to the Commerce Ministry.
The surprise move came after the United States agreed to partner with Australia to redevelop Papua New Guinea’s naval base at Manus Island. Australia, US, Japan and New Zealand also signed a $2.3 billion deal over the weekend to improve access to electricity and the internet in Papua New Guinea.
Analysts said the anti-dumping probe, in response to complaints from the China Chamber of International Commerce that Australian exporters were selling barley at artificially lower prices, was a warning to Australia.
“It is not a retaliation, it is a warning. China is Australia’s biggest agricultural and mining product importer,” Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness, said.
The last time Australian exports to China came under pressure for alleged anti-dumping was in 2016, when the Chinese mining industry called on authorities to investigate iron ore imports from the world’s biggest miners.
However, some China watchers noted the anti-dumping investigation was likely to have been in the pipeline for some time.
“Global grain prices are at a very high level and the market is tight. It’s not the point in the market cycle where you would expect dumping,” Jeffrey Wilson, Perth USAsia Centre head of research said.
“We will have to wait to see what the allegations are but when you have half the country crying out for feed grain, I’m sceptical.”
Grain Producers Australia chairman Andrew Weidemenn said local growers were concerned there might be collateral damage from political tensions between Beijing and Canberra.
“Frankly, Australia wouldn’t be dumping barley in China because it’s being sold at the world market price,” he said.
“China is a highly politically driven country and there is no doubt when you mix business and politics there is a cocktail of disaster.”
The share price of one of Australia’s biggest grain producers, GrainCorp, had fallen 2.6 per cent as of 2:30pm on Monday.
China named 10 Australian companies in the anti-dumping investigation: CBH Grain, Plum Grove, Premium Grain Handlers, WA Grains, Independent Grain Handlers, ADM Trading Australia, Australia Grain Export, Australian Growers Direct, Woodlands Hill Grain, and Australian Natural Foodstuffs.
Plum Grove managing director Andrew Young said Chinese actions were confusing.
Mr Young said Plum Grove had never made bulk shipments of barley to China and nor had several other of the exporters named.
The anti-dumping action had an immediate effect on farmers with major exporter CBH dropping its grower bid price for barley by almost $20 to under $300 a tonne and other traders staying out of the market.
The application letter for the anti-dumping investigation said the volume of barley imports from Australia jumped 67 per cent from 2014 to 2017 and prices fell by around a third during that time.
Chinese demand for barley o make malt for Chinese beer and for farm animal feed has surged in recent years.
China accounted for 60 to 70 per cent of Australia’s barley exports and it bought a record of more than 6 million tonnes, worth about $1.5 billion, in 2017.
Sales have fallen significantly this year due to the local drought.
Grains Industry Market Access Forum executive manager Tony Russell said he was “very perplexed” by China’s announcement.
“It’s certainly a very important market for Australian barley and there is certainly no grounds to think that any exporter would be selling barley to China at prices below other markets,” he said.
“China has been very, very keen to buy high quality Australian barley.”
The industry heard rumours over the past two weeks that Beijing could convert an anti-dumping application by a Chinese firm into an investigation.
The domestic Chinese industry has shrunk, with China’s annual barley production falling from 4 million tonnes annually to about 2 million tonnes over the last decade.
Barley is grown in Victoria, NSW, South Australia and Western Australia.