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(Icon) Chin Well (3) - EU Renews Anti Dumping Duties on China Producers ?

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Publish date: Thu, 09 Apr 2015, 10:45 AM
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Chin Well exports almost 75% of its products. Out of that, more than 50% are exported to the EU.

 

More than a decade ago, China producers had seized significant market share. To protect its own manufacturers, EU imposed anti dumping duties on China producers in 2009. Chin Well benefited from the duties as its products will also become cheaper compared to those from China (after duties).  As a result, Chin Well saw a surge in exports to EU, which contributed to majority of its profitability in recent years.

 

The duties expires in 2014. According to the article below, the EU has extended it for another 5 years until 2019.

 

In the absence of an announcement from Chin Well, I strongly advise that you undertake your own checking (with Chin Well, if possible) to make sure that the duties described in the article is indeed applicable to Chin Well's industry segment. 

 

Please don't blame me if the info turns out to be inaccurate or not relevant to Chin Well's products. 

-------------------

 

27 March 2015

China Faces Renewal of EU Fastener Duties It Challenged

(Bloomberg) -- The European Union renewed for another five years tariffs on screws and bolts from China, extending protection that the Chinese government challenged at the World Trade Organization. 

The EU reimposed the duties as high as 74.1 percent on imports from China of iron or steel fasteners, used for everything from automotive parts to furniture. The levies target Chinese exporters such as Gem-Year Industrial Co. for allegedly having sold the fasteners in Europe below cost, a practice known as dumping. 

“There is a likelihood that, if measures were to lapse, dumping would recur,” the European Commission, the 28-nation EU’s trade authority in Brussels, said on Friday in the Official Journal. The five-year renewal will take effect on Saturday. 

The EU imposed the anti-dumping protection for five years in January 2009 to curb competition for European fastener manufacturers such as Italy’s Fontana Luigi SpA, prompting the Chinese government to file its first complaint against the bloc at the WTO. In December 2010, the Geneva-based global trade arbiter ruled against aspects of the European measures and gave the EU specific remedies. 

As a response, the EU in October 2012 reduced the levies to a maximum 74.1 percent from as high as 85 percent. The revised duties range from 22.9 percent to 74.1 percent, depending on the Chinese company. 

Chinese Exporters 

In mid-2011, amid the dispute with China at the WTO, the EU concluded that Chinese exporters of fasteners had shipped them to Europe via Malaysia to evade the trade protection. As a result, the bloc extended the maximum levy to Malaysia -- a move that’s also covered by the five-year renewal. 

Chinese exports of fasteners to the EU have almost evaporated since the anti-dumping duties were introduced. Chinese producers’ share of the EU market has been no more than 0.6 percent since 2010 compared with 26 percent in the 12 months through September 2007, the commission said on Friday. 

The measures don’t apply to stainless-steel screws and bolts from China. The EU applies a separate set of anti-dumping duties on those goods.

 
CHINWEL (5007)
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Discussions
2 people like this. Showing 9 of 9 comments

pingdan

Extended anti dumping policy does not mean profit will increase. Just profit will not dropping only. Euro dollar not performing well plus the Greece crisis. Sorry to say. I did not see any potential profit improvement in this share based on last quarter result

2015-04-09 13:18

Icon8888

Pingdan u r right, that is to ensure profit will not drop, instead of increase

I think they will be affected by Euro decline if their sales is in Euro

But it could be in USD, I am not able to find out

Uchi sells primarily to Europe but their sales are almost entirely USD denominated

2015-04-09 13:30

pingdan

You can see from annual report page 59 (latest) on trade receivables, as most of the trade receivables are denominated in US dollar (RM43 million vs RM15million). Most likely they are trading in USD if using trade receivables assumption. Probabily the US dollar will be improving the result but euro dollar loss will also drag down the profit a little bit. Most probably 4sen eps for next quarter and 16sen per year. As today price 1.54 with PE10 only will reach around 1.60. The dividend about 10sen probably will increase PE a little bit. I only foresee the upside for this share is about 10 to 15 percent as the share price already almost fully value. Just my cents.

2015-04-09 13:47

Icon8888

Thanks for your view, it sure helps

Let's wait until next quarter result to find out

2015-04-09 13:49

CCCL

Strong USD generate less sales. More expansive for developed EU members to import in dollar. They will buy more from less developed EU members countries like Poland.

2015-04-09 21:27

matakuda

In the Edge Weekly, Edition of 13/4/2015, the matters regarding the dumping things were reported as follows:

1. EU's 5-year regulation against the dumping of China's steel products has on February 2015 expired.

2. This matter is still being reviewed, and during this period (review), the anti-dumping duties imposed on China's steel products remain in force.

3. A decision by the EU will be made known by end of April 2015.

4. Chin Well's ED Tsai Chi Yun was upbeat about such renewal/extension, which will be a boost to the company if this gets materialised.

It was also reported that Chin Well benefits from GST. The ED told the Edge that orders from its threaded rods have surged 6-fold, from 100tonnes to 600 tonnes since the implementation of GST. Reasons given were that industrial users are deterred from sourcing threaded rods from smugglers as they will not be able to claim the tax rebates if they do so.

If I understand the GST correctly, it is not so much about the tax rebates. It is about doing business in a more transparent way. The industrial users who are GST compliance shall report to the government where they have sourced the products from and who they have sold to, meaning, the users(GST compliance) can no longer source from black market.

Good luck guys!

2015-04-14 07:17

matakuda

Should the EU approve the extension, its peer Tongher is also set to benefit. At present, Tongher's 25% revenue is derived from Germany and Italy.

2015-04-14 07:37

kakashit

Chinamen for sure will fight for the deregulation, not easy for malaysia players to enjoy longer honey moon period

2015-04-14 10:23

matakuda

Kakashit, if you are aware, both Chinwel & Tongher are belonged to Taiwan-man. These Taiwan man also originated from China mainland.

2015-04-14 14:47

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