Government Regulation

April 7, 2020

Mattress Wars

On March 31, 2020, a group of U.S. mattress producers, Brooklyn Bedding, Corsican Mattress Company, Elite Comfort Solutions, FXI, Inc., Innocor, Inc., Kolcraft Enterprises, Inc., Leggett & Platt, Inc., and union workers (Petitioners) filed antidumping (AD) and countervailing duty (CVD) petitions against Mattresses from Cambodia, China, Indonesia, Malaysia, Serbia, Thailand, and Vietnam.

Under U.S. trade laws, a domestic industry can petition the U.S. Department of Commerce (“DOC”) and U.S. International Trade Commission (“ITC”) to investigate whether the named subject imports are being sold to the United States at less than fair value (“dumping”) or benefit from unfair government subsidies.  For AD/CVD duties to be imposed, the U.S. government must determine not only that dumping or subsidization is occurring, but also that the subject imports are causing “material injury” or “threat of material injury” to the domestic industry.

The U.S. mattress producers recently petitioned and successfully argued for imposing an antidumping order on mattresses from China. This order went into effect in December 2019. Many of the Chinese imported mattresses were coming in through on-line bed-in-a-box suppliers offering ridiculously low prices.  Based on the Petitioners’ petition information on such low price quotes from Chinese suppliers, the DOC calculated AD margins as high as 1,731.75%.  Though it seems commercially impossible for anyone to be selling at a price well over a thousand times below the “fair” value, that AD rate was accepted by DOC as a valid AD margin  using their standard non-market economy calculation methodology for products from China.

Although imports from China decreased after the filing of the first mattresses AD petition, a significant volume of mattresses are still being exported from China. So now Petitioners are seeking additional CVD duties to be imposed to counter the Chinese government subsidies that benefit the exported Chinese mattresses.

Also, after the first AD petition was filed, many of the Chinese producers moved quickly to set up new factories in neighboring countries.  Petitioners therefore have filed these new petitions to try to stop the transplanted Chinese mattress operations that continue to crank out mattresses to the United States.  Most of these other countries (except Vietnam) will be considered market economy countries, which means DOC’s dumping margin calculation theoretically should be lower than the margins calculated for China in the prior case.  Because China is considered a non-market economy (NME), DOC does not accept the Chinese companies’ actual costs, and instead uses surrogate values from some other comparable market economy country.  This NME methodology often leads to very high AD margins for Chinese products.  Because these cases are filed on mattresses mostly from market economy countries, DOC will use the company’s actual costs and prices. So, the dumping margin calculations for this round should (at least theoretically) result in lower margins than those calculated for China. But the producers from these new subject countries will still have to report a ton of sales and cost data and comply with DOC’s detailed and exhaustive information requests. If they cannot satisfy all of DOC’s questionnaire requirements, they will likely be hit with the highest rates alleged in the petitions.

Scope

The petition identifies the merchandise to be covered by this AD/CVD investigation as all types of adult and youth mattresses.  A “mattress” denotes an assembly of materials that at a minimum includes a “core” which provides the main support of the mattress, and may consist of innersprings,  foam, other resilient filling, or a combination of these materials.  Mattresses may also contain “upholstery,” the material between the core and the top/bottom panel of the ticking, and/or “ticking,” the outermost layer of fabric or other material  (e.g., vinyl) that encloses the core and any upholstery, also know as a cover.

See here for the complete proposed scope definition from the petition.

Named Exporters/ Producers

Petitioner included a list of companies that it believes are producers and exporters of the subject merchandise.  See attached mattress exporter/producer list.

Named U.S. Importers

Petitioner included a list of companies it believes are U.S. importers of the subject merchandise.  See attached US Mattress Importer list.

Estimated Schedule of Investigations.

March 31, 2020 – Petitions filed

April 20, 2020 – DOC initiates investigation

April 21, 2020 – ITC Staff Conference

May 15, 2020 – ITC preliminary determination

August 28, 2020 – DOC CVD preliminary determination (assuming extended deadline) (6/24/20 – unextended)

October 27, 2020 – DOC AD preliminary determination (assuming extended deadline) (9/7/20 – unextended)

March 11, 2021 – DOC final determination (extended and AD/CVD aligned)

April 25, 2021 – ITC final determination (extended)

May 2, 2021 – DOC AD/CVD orders issued (extended)

https://www.chinalawblog.com/2020/04/new-ad-cvd-petitions-mattresses-from-cambodia-china-indonesia-malaysia-serbia-thailand-turkey-vietnam.html

April 3, 2020

European Flex Foam Update

COVID-19 News / Europur: Impact of epidemic on flexible PU foam industry

According to a survey by Europur, the European Association of Flexible Polyurethane Foam Blocks Manufacturers, based on about 30 interviews with foam producers and suppliers, the production of flexible PU foam is as of 30 March 2020 heavily impacted by the present Covid-19 epidemic. The situation is expected to further worsen in April with a reduced production of between 30 % – 80 % of normal.

The association said the production of polyurethane flexible foam in Europe quickly weakened by mid-March 2020 due to a lack of demand, reduced workforce availability or government decisions. Now, at the end of March, all European foam plants that produce for the automotive industry have been closed. Foam plants which supply mainly the bedding and furniture industry have been largely closed down in Southern Europe and production has been heavily reduced in other regions. The greatest demand is still for online sales articles or medical mattresses, but is far from closing the gap for all other lost production volumes. This production stream, however, is also clogged due to shortages along the supply chain. These disruptions are anticipated to grow in the coming weeks, due to border closures, reduced workforce availability and tighter controls at border crossings, leading to delays in deliveries.

Europur also said that the situation for companies that are still producing is expected to further worsen in April. This reduction in activity might force more plants to temporarily close voluntarily even without a government order. In most countries companies can obtain some sort of support from national governments for temporary unemployment.

Europur obtained information from member companies across Europe to assess the situation in more detail. The following summarizes their findings for each region:

Impact of Covid-19 epidemic on flexible foam production in Europur member countries as of 30 March 2020. (Source: Europur)

Impact of Covid-19 epidemic on flexible foam production in Europur member countries as of 30 March 2020. (Source: Europur)

  • Austria, Germany and Switzerland: PU foam plants are allowed to remain open but operate at much reduced capacity. Most of the PU foam produced is for special orders (e.g. medical mattresses) or online sales.
  • Benelux: Production was strongly reduced since mid-March and all plants are operating at a much reduced capacity. PU foam plants can remain open provided additional precautions are taken. Most PU foam produced is for special orders or online sales.
  • France: Even though there is no formal government order to do so, nearly all foam plants are currently closed due to lack of demand. However, some production for medical foams still exists.
  • Greece, Balkans and Cyprus: All companies are currently operating at reduced capacity due to lack of demand. However, there is no formal government order imposing this closure. All expect the situation to worsen in April. They also currently have major logistical problems due to increased border controls and quarantine measures for incoming transport.
  • Hungary, Czech Republic, Croatia, Slovakia, Slovenia: There is no formal government order imposing the closure of industries. However due to lack of demand, all companies are currently operating at much reduced capacity.
  • Spain: Most foam plants are closed until 11 April 2020 following a government order to close all non-essential businesses. Some production for medical foams and online-sales still exists. Some companies, however, will remain closed through mid-May.
  • Portugal: All foam plants are voluntarily closed, some plan to re-open in the second week of April.
  • Italy: Foam plants are closed to protect their workers, from lack of demand and from supply chain disruptions. Some companies provide support to local initiatives to produce medical equipment.
  • Poland: There is no formal government order imposing the closure of industries. However due to lower demand, especially from other European countries that usually import foam from Poland, all companies are currently operating at much reduced capacity. All expect the situation to worsen in April with some companies expecting to produce only 20 % of what they usually produce in April.
  • Romania and Bulgaria: There is no formal government order for industry closure. However, due to lack of demand all companies are currently operating at very low levels.
  • Turkey: Most foam plants are closed until 6 April 2020, but whether they re-open after that date is unclear.
  • Scandinavia and the Baltics: There is no formal government restriction. PU foam plants remain open but operate at reduced capacity.
  • United Kingdom: All plants are still open but are producing at reduced levels.
  • Ireland: Foam plants are producing at reduced capacity to make foams for medical equipment.
  • Russia: All plants have been closed since 28 March 2020, when the country went on a one week national paid holiday.
  • Ukraine, Belarus, Kazakhstan: All plants are still open but are producing at reduced volumes.

www.europur.org

https://www.gupta-verlag.com/news/industry/23999/covid-19-news-europur-impact-of-epidemic-on-flexible-pu-foam-industry

April 3, 2020

European Flex Foam Update

COVID-19 News / Europur: Impact of epidemic on flexible PU foam industry

According to a survey by Europur, the European Association of Flexible Polyurethane Foam Blocks Manufacturers, based on about 30 interviews with foam producers and suppliers, the production of flexible PU foam is as of 30 March 2020 heavily impacted by the present Covid-19 epidemic. The situation is expected to further worsen in April with a reduced production of between 30 % – 80 % of normal.

The association said the production of polyurethane flexible foam in Europe quickly weakened by mid-March 2020 due to a lack of demand, reduced workforce availability or government decisions. Now, at the end of March, all European foam plants that produce for the automotive industry have been closed. Foam plants which supply mainly the bedding and furniture industry have been largely closed down in Southern Europe and production has been heavily reduced in other regions. The greatest demand is still for online sales articles or medical mattresses, but is far from closing the gap for all other lost production volumes. This production stream, however, is also clogged due to shortages along the supply chain. These disruptions are anticipated to grow in the coming weeks, due to border closures, reduced workforce availability and tighter controls at border crossings, leading to delays in deliveries.

Europur also said that the situation for companies that are still producing is expected to further worsen in April. This reduction in activity might force more plants to temporarily close voluntarily even without a government order. In most countries companies can obtain some sort of support from national governments for temporary unemployment.

Europur obtained information from member companies across Europe to assess the situation in more detail. The following summarizes their findings for each region:

Impact of Covid-19 epidemic on flexible foam production in Europur member countries as of 30 March 2020. (Source: Europur)

Impact of Covid-19 epidemic on flexible foam production in Europur member countries as of 30 March 2020. (Source: Europur)

  • Austria, Germany and Switzerland: PU foam plants are allowed to remain open but operate at much reduced capacity. Most of the PU foam produced is for special orders (e.g. medical mattresses) or online sales.
  • Benelux: Production was strongly reduced since mid-March and all plants are operating at a much reduced capacity. PU foam plants can remain open provided additional precautions are taken. Most PU foam produced is for special orders or online sales.
  • France: Even though there is no formal government order to do so, nearly all foam plants are currently closed due to lack of demand. However, some production for medical foams still exists.
  • Greece, Balkans and Cyprus: All companies are currently operating at reduced capacity due to lack of demand. However, there is no formal government order imposing this closure. All expect the situation to worsen in April. They also currently have major logistical problems due to increased border controls and quarantine measures for incoming transport.
  • Hungary, Czech Republic, Croatia, Slovakia, Slovenia: There is no formal government order imposing the closure of industries. However due to lack of demand, all companies are currently operating at much reduced capacity.
  • Spain: Most foam plants are closed until 11 April 2020 following a government order to close all non-essential businesses. Some production for medical foams and online-sales still exists. Some companies, however, will remain closed through mid-May.
  • Portugal: All foam plants are voluntarily closed, some plan to re-open in the second week of April.
  • Italy: Foam plants are closed to protect their workers, from lack of demand and from supply chain disruptions. Some companies provide support to local initiatives to produce medical equipment.
  • Poland: There is no formal government order imposing the closure of industries. However due to lower demand, especially from other European countries that usually import foam from Poland, all companies are currently operating at much reduced capacity. All expect the situation to worsen in April with some companies expecting to produce only 20 % of what they usually produce in April.
  • Romania and Bulgaria: There is no formal government order for industry closure. However, due to lack of demand all companies are currently operating at very low levels.
  • Turkey: Most foam plants are closed until 6 April 2020, but whether they re-open after that date is unclear.
  • Scandinavia and the Baltics: There is no formal government restriction. PU foam plants remain open but operate at reduced capacity.
  • United Kingdom: All plants are still open but are producing at reduced levels.
  • Ireland: Foam plants are producing at reduced capacity to make foams for medical equipment.
  • Russia: All plants have been closed since 28 March 2020, when the country went on a one week national paid holiday.
  • Ukraine, Belarus, Kazakhstan: All plants are still open but are producing at reduced volumes.

www.europur.org

https://www.gupta-verlag.com/news/industry/23999/covid-19-news-europur-impact-of-epidemic-on-flexible-pu-foam-industry

March 31, 2020

India TDI Plant Update

GNFC undertakes unscheduled shutdown at TDI plant in India

MOSCOW (MRC) — Gujarat Narmada Valley Fertilizers & Chemicals Ltd (GNFC), has shut its toluene diisocyanate (TDI) units at Bharuch & Dahej, according to Apic-online.

A Polymerupdate source in India informed that, the company has halted operations at the units last week owing to a nation-wide lockdown caused by the COVID-19 outbreak. Further details on duration of the shutdown could not be ascertained.

Located in Gujarat, India, the Bharuch unit has a production capacity of 50,000 mt/year and the Dahej unit has a production capacity of 17,000 mt/year.

TDI is a chemical used in the production of polyurethanes, primarily for flexible foam applications including furniture, bedding and carpet underlay, as well as packaging applications. TDI is also used in the manufacture of coatings, sealants, adhesives and elastomers.

As MRC wrote previously, India lockdown adds uncertainty for polyvinyl chloride (PVC) exports. Last week India’s Prime Minister Narendra Modi announced a nationwide lockdown from Wednesday for 21 days in an effort to slow the spread of the coronavirus in the world’s second-most populous country, which has 1.3 billion people. The lockdown applies to ports, which will slow imports of all kinds of goods, including PVC, to a country that was dependent on PVC imports to meet demand before the pandemic gripped the globe.

According to MRC’s ScanPlast report, contrary to seasonal factors, Russian producers of unmixed PVC have maintained a high level of capacity utilisation. Russia’s overal PVC output totalled 91,700 tonnes in January 2020, up by 4% year on year. January production of unmixed PVC was 91,700 tonnes versus 87,760 tonnes in January 2019 and 81,400 tonnes in December 2019. Thus, despite relatively weak demand for resin from the domestic market, the average capacity utilisation exceeded 95% last month. Russia’s overall PVC production reached 975,000 tonnes in 2019, compared to 958,600 tonnes a year earlier.

Author:Margaret Volkova

http://www.mrcplast.com/news-news_open-368449.html

March 31, 2020

India TDI Plant Update

GNFC undertakes unscheduled shutdown at TDI plant in India

MOSCOW (MRC) — Gujarat Narmada Valley Fertilizers & Chemicals Ltd (GNFC), has shut its toluene diisocyanate (TDI) units at Bharuch & Dahej, according to Apic-online.

A Polymerupdate source in India informed that, the company has halted operations at the units last week owing to a nation-wide lockdown caused by the COVID-19 outbreak. Further details on duration of the shutdown could not be ascertained.

Located in Gujarat, India, the Bharuch unit has a production capacity of 50,000 mt/year and the Dahej unit has a production capacity of 17,000 mt/year.

TDI is a chemical used in the production of polyurethanes, primarily for flexible foam applications including furniture, bedding and carpet underlay, as well as packaging applications. TDI is also used in the manufacture of coatings, sealants, adhesives and elastomers.

As MRC wrote previously, India lockdown adds uncertainty for polyvinyl chloride (PVC) exports. Last week India’s Prime Minister Narendra Modi announced a nationwide lockdown from Wednesday for 21 days in an effort to slow the spread of the coronavirus in the world’s second-most populous country, which has 1.3 billion people. The lockdown applies to ports, which will slow imports of all kinds of goods, including PVC, to a country that was dependent on PVC imports to meet demand before the pandemic gripped the globe.

According to MRC’s ScanPlast report, contrary to seasonal factors, Russian producers of unmixed PVC have maintained a high level of capacity utilisation. Russia’s overal PVC output totalled 91,700 tonnes in January 2020, up by 4% year on year. January production of unmixed PVC was 91,700 tonnes versus 87,760 tonnes in January 2019 and 81,400 tonnes in December 2019. Thus, despite relatively weak demand for resin from the domestic market, the average capacity utilisation exceeded 95% last month. Russia’s overall PVC production reached 975,000 tonnes in 2019, compared to 958,600 tonnes a year earlier.

Author:Margaret Volkova

http://www.mrcplast.com/news-news_open-368449.html