The Department of Chemicals and Petrochemicals (DCPC) has recommended initiation of investigation in the case of imports of carbon black used in rubber applications from China, following a petition from the domestic manufacturers seeking imposition of the safeguard duty.

Earlier, the Association of Carbon Black Manufacturers (ACBM) on behalf of two of its member companies Phillips Carbon Black Limited and Hi-Tech Carbon have filed an application to the government requesting for imposition of safeguard duty on the imports of carbon black from China.

After examining the views voiced by various interested parties and issues raised by them, the DCPC held that the subject goods have been exported to India from the subject countries below associated normal values, resulting in dumping of the product. This has caused material injury to the domestic industry, it said adding that hence the Authority deems it necessary to initiate the investigation on imports of subjects.

Due to the excess import of carbon black from China, the capacity utlisation of domestic manufacturers have declined. “Increased imports have led to increase in market share of imports from China and reduction in market share of the domestic industry,” the DCPC opined adding that the decline in the market share of the domestic industry has adversely impacted the production and capacity utilization of the domestic industry.

According to DGCIS import data, the imports from China have increased phenomenally from 13,994 MT in 2008-09 to 70,193 MT in 2011-12, which shown an increase of 429%. Imports have also increased in relation to domestic production in India. It is noticed that the import from China with respect to domestic production was 3% in 2008-09, which has increased significantly now to 11% in 2011-12.

The rate of anti-dumping duties (US$ 0.078 to 0.190) already imposed by the finance ministry in January 2010 to contain the surge in imports. However, the ACBM claimed that the increased imports of carbon black are threatening to cause market disruption to the domestic producers of carbon black. The domestic production increased up to FY 2010-11, but declined drastically in the most recent period. The domestic production has fallen steadily from 163,458 MT in Q1 (2011-12), to 148,188 MT in Q2 (2011-12) and further to 139,746 MT in Q3 (2011-12).

Hence, the capacity utilization of the domestic industry has declined significantly in the most recent period from 90% in Q1 of 2011-12 to 77% in Q3 of 2011-12. it has also declined from 89% in 2009-10 to 85% in 2011-12.

This also led to decline in market share of applicants, Phillips Carbon Black and Hi-Tech Carbon. Applicants had a market share of 71% in 2010-11 which fell to 56% during Q3 of 2011-12; i.e a decline of about 15%. During the same period, share of import from China jumped from 3% in 2010-11 to 19% in Q3 2011-12.

Hence, the domestic industry has requested in their application for immediate imposition of safeguard duty on imports of carbon black from China for a period of four years. ‘They have also requested for imposition of provisional safeguard duty in view of the steep deterioration in performance of the domestic industry due to market disruption and the threat of market disruption as a result of increased imports of the production under consideration from China,” the DCPC said.

Carbon black is an inorganic chemical used in production/processing of rubber, including tyres as reinforcing filler. The subject goods are also known as acetylene black, channel black, furnace, black, lamp black and thermal black.