Chinese companies are expected to cancel most of the remaining soybeans that they have committed to buy from the US in the year ending Aug. 31, once the extra tariff on US imports takes effect from Friday.
China is the world’s top soybean buyer and has yet to take delivery of about 1.14 million tonnes of US soybeans booked for the current marketing year, US Department of Agriculture data showed.
The USDA last week said China had resold some 123,000 tonnes of committed deliveries to Bangladesh and Iran.
Soybeans are a key flashpoint in the worsening trade relations between the US and China after Beijing said that it would levy tariffs on imports starting on Friday in retaliation against a raft of duties imposed by US President Donald Trump’s administration.
By focusing on US agricultural produce, as well as raw materials such as coal, China is targeting the rural communities in states that voted for Trump in 2016.
“These shipments will be either canceled or resold if extra tariffs are imposed,” said Gao Yanbin, an investment manager with agriculture investment firm Shanghai Shenkai Investment Co (上海申凱投資). “The tariff rate is too high, which will make crushers lose money.”
Tariff-free cargoes destined for state reserves would get through, Gao said.
China holds unspecified volumes of state reserves of domestic and imported soybeans. China had been forecast to buy 97 million tonnes of soybeans this marketing year.
Analysts do not expect many soy cargoes from the US to arrive after the Friday deadline, as buyers have already stopped shipments.
The Peak Pegasus bulk carrier is to arrive before the deadline, while the Aeolian Fortune and the Kea have already arrived, Shanghai JC Intelligence Co (上海匯易諮詢) analyst Monica Tu said.
Chinese companies have since April contracted to increase purchases from Brazil and soy inventories at major crushers are currently at the highest in years, the China National Grain and Oils Information Center (CNGOIC) said.
That is likely to change later in the year.
“There will be a supply deficit from the fourth quarter as crushers won’t have enough supplies if they don’t take US soybeans,” Gao said.
Brazilian supplies fall to seasonal lows in the first and fourth quarters — a period when China’s imports are normally dominated by the US.
The CNGOIC said Chinese firms might need to import 10 million tonnes from the US when South American supplies run down.
“If China intends to keep their crushing plant operating in the fourth quarter and early in the first quarter, they will need to import US soybeans, even with a 25 percent tariff,” as there are no other options to cover the shortage, US Soybean Export Council North Asia regional director Paul Burke said.
China imported about 25 million tonnes from the US in the fourth quarter of last year and the first quarter of this year, customs data showed.
China would have the “world’s most expensive soybeans,” which might increase domestic prices of soybean meal and soybean oil, Luzheng Futures Co (魯證期貨) analyst Jiang Boheng said.
EXTRATERRITORIAL REACH: China extended its legal jurisdiction to ban some dual-use goods of Chinese origin from being sold to the US, even by third countries Beijing has set out to extend its domestic laws across international borders with a ban on selling some goods to the US that applies to companies both inside and outside China. The new export control rules are China’s first attempt to replicate the extraterritorial reach of US and European sanctions by covering Chinese products or goods with Chinese parts in them. In an announcement this week, China declared it is banning the sale of dual-use items to the US military and also the export to the US of materials such as gallium and germanium. Companies and people overseas would be subject to
TECH COMPETITION: The US restricted sales of two dozen types of manufacturing equipment and three software tools, and blacklisted 140 more Chinese entities US President Joe Biden’s administration unveiled new restrictions on China’s access to vital components for chips and artificial intelligence (AI), escalating a campaign to contain Beijing’s technological ambitions. The US Department of Commerce slapped additional curbs on the sale of high-bandwidth memory (HBM) and chipmaking gear, including that produced by US firms at foreign facilities. It also blacklisted 140 more Chinese entities that it accused of acting on Beijing’s behalf, although it did not name them in an initial statement. Full details on the new sanctions and Entity List additions were to be published later yesterday, a US official said. The US “will
TENSE TIMES: Formosa Plastics sees uncertainty surrounding the incoming Trump administration in the US, geopolitical tensions and China’s faltering economy Formosa Plastics Group (台塑集團), Taiwan’s largest industrial conglomerate, yesterday posted overall revenue of NT$118.61 billion (US$3.66 billion) for last month, marking a 7.2 percent rise from October, but a 2.5 percent fall from one year earlier. The group has mixed views about its business outlook for the current quarter and beyond, as uncertainty builds over the US power transition and geopolitical tensions. Formosa Plastics Corp (台灣塑膠), a vertically integrated supplier of plastic resins and petrochemicals, reported a monthly uptick of 15.3 percent in its revenue to NT$18.15 billion, as Typhoon Kong-rey postponed partial shipments slated for October and last month, it said. The
COLLABORATION: The operations center shows the close partnership between Taiwan and Japan in the field of semiconductors, Minister of Economic Affairs J.W. Kuo said Tokyo Electron Ltd, Asia’s biggest semiconductor equipment supplier, yesterday launched a NT$2 billion (US$61.5 million) operations center in Tainan as it aims to expand capacity and meet growing demand. Its new Taiwan Operations Center is expected to help customers release their products faster, boost production efficiency and shorten equipment repair time in a cost-effective way, the company said. The center is about a five-minute drive from the factories of its major customers such as Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) advanced 3-nanometer and 2-nanometer fabs. The operations center would have about 1,000 employees when it is fully utilized, the company
RSS