Definitive duties on Chinese MSG will not affect users much

By Jess Halliday

- Last updated on GMT

Related tags: European union

The European Commission has imposed definitive anti-dumping duties on the additive from China, stating that the impact on firms using the additive will not be great.

Preliminary duties were imposed in June, following an investigation by competition authorities of market activity between July 2006 and June 2007. The action was triggered by Ajinomoto, the only MSG producer in the EU, which said it hadsuffered material injury as a result of dumping of material on the EU market by Chinese firms.

Last week the Official Journal of the EU carried the definitive decision, that the duty applicable to the net, free-at-Community frontier price, before duty, will be 39.7 per cent for most companies. For Hebei Meihua MSG Group Co Ltd and Tongliao Meihua Bio-Tech Co Ltd it will be 33.8 per cent; and for Fujian Province Jianyang Wuyi MSG Co Ltd 39.7 per cent.

In reaching its decision, it considered the potential impact of the move on the main users of MSG in the EU, manufacturing giants Nestle and Unilever.

“The investigation showed that MSG represents less than 3 per cent of the cost of production of all products containing MSG produced by both companies,”​ it said.

The impact on their overall costs would “not be significant”​, it said, given the relatively high average profit rates that both companies had seen on MSG-containing products during the investigation period.

MSG is an additive that is mainly used as a flavour enhancer for foods such as soups, fish and meat dishes, and ready meals. It is also used in the personal care industries.

During the investigation period, 34613 tonnes of MSG were imported to the EU from China, according to Eurostat. The price per tonne fluctuated, with a slight decrease of two per cent, but it worked out to be an average of €773 per tonne.

This was found to undercut Ajinomoto's price by between 21 and 24 per cent.

The investigation concluded that Ajinomoto had suffered injury as a result of this. Production and capacity utilisation fell by 6 per cent and 14 per cent respectively.

While use of MSG in the EU fell by 4 per cent during the investigation period, Ajinomoto's sales volumes fell by 24 per cent, which led to a 12.5 per cent loss in market share.

In fact, the investigators said that this drop in sales volumes was a consequence of a 19 per cent increase in the selling price of European-produced MSG, due to cost increases.

"Hence, the other financial injury indicators, including return on investments, cash flow and profitability also developed negatively during the period considered."

Price increases

In October Ajinomoto communicated a 15 per cent increase in its aspartame, which is produced in Europe at its plant in Gravelines, France.

The price hike was said to be due to higher costs,​including energy, carbohydrates used in the fermentation process, wages and transportation.

Related topics: Policy, East Asia, Supply chain, China

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