Over the past few years there have been a number of anti-dumping cases within our industry. In fact, there are a few cases open right now that are expected to come to conclusion in the next few months. Most of these cases focus on Chinese product that is being subsidized by the Chinese government and brought into the United States at unfair market prices. This dumping practice prevents the companies who are manufacturing within the United States from competing with the cheaper mass imported Chinese refrigerant.
In most cases within our industry these anti-dumping suits are approved by the Trade Commission. When a ruling is made in favor the Trade Commission initiates a tariff on the goods in question. The tariff itself can have a number of conditions and amounts associated to it, but the idea is to artificially raise the price of the imported product so that US companies can compete. Over recent years we have seen anti-dumping tariffs installed on R-134a, R-410A, R-404A, R-407C, R-507A, and many other refrigerates. There is also a pending anti-dumping suit on the popular HFC R-32 refrigerant and another one on the actual blending components used to create popular HFC refrigerants.
The one that was filed most recently though was something I had not seen before. Yesterday, March 27th, Worthington Industries filed an anti-dumping and countervailing duties case with the International Trade Commission. Their target was not refrigerants but instead the cylinders that they come in. These are the cylinders that all of our refrigerants come in. (Harmonized codes 7311.00.0060, 7311.00.0090, and 7310.29.0025.) More information on what types of cylinders:
“The merchandise covered by these petitions is certain non-refillable steel cylinders meeting the requirements of, or produced to meet the requirements of, U.S. Department of Transportation (“USDOT”) Specifications 39, TransportCanada Specification 39M, or United Nations pressure receptacle standard ISO 11118 and otherwise meeting the description provided below (“non- refillable steel cylinders”). The subject non-refillable steel cylinders are portable and range from 300-cubic inch (4.9 liter) water capacity to 1,526-cubic inch (25 liter) water capacity. Subject non-refillable steel cylinders may be imported with or without a valve and/or pressure release device and may be filled or unfilled at the time of importation.”
Worthington Industries is the last remaining United States company manufacturing non-refillable steel cylinders. Yes, they are it folks. If they stop producing cylinders then ALL of it is imported in. They are asking for a sixty-one percent duty to be imposed on the Chinese imports. I am sure most of you within the industry have heard of Worthington Industries before. They are a Columbus, Ohio based metals manufacturing company that had revenues exceeding three billion dollars last year. While three billion dollars is a lot of money… this is a business and if a certain product line is no longer profitable they will no longer pursue it. If this anti-dumping duty is not passed then Worthington may have to give up their cylinder manufacturing.
In yesterday’s filing there is a list of ALL nineteen companies that are importing these Chinese cylinders as well as the fifteen Chinese companies that are supplying them. The country of China would be targeted on these anti-dumping duties but we could also see the specific companies listed treated more harshly. This is pure speculation my part as the Trade Commission still needs time to review and even determine if they will be accepting the case.
This initial review on rather or not the Commission will begin an investigation is expected to conclude on April 16th, 2020. If they agree to move forward during this review they will then make a preliminary determination if damages were incurred on Worthington by May 11th, 2020. If the investigation moves forward it is expected to take around a year with a final decision to be made around April 21st, 2021.
I am quite curious on how this case will move forward. With the other refrigerant anti-dumping filings I had a pretty good idea on where the Trade Commission would settle. There has been a track record over the years that indicates that they will be voting in favor of refrigerant anti-dumping tariffs. But, this is the first time I have seen such a filing on the actual cylinders. The good news here is that the cylinders themselves are relatively cheap when compared to the actual cost of refrigerant. So, if a tariff does get put on the Chinese cylinders I do not believe it will raise the overall cost of refrigerants by very much.
Thanks for reading,