MAGNESIUM ANTI DUMPING DUTIES

The U.S. Commerce Department is considering raising antidumping duties on magnesium from two Russian producers. Commerce issued a preliminary ruling on May 3rd, 2008, that VSMPO-Avisma Corp. and Solikamsk Magnesium Works exported magnesium to the United States at less than fair value from April 1, 2006, through March 31, 2007. The government agency has proposed anti-dumping duties of 17.7 percent for VSMPO-Avisma and 21.7 percent for Solikamsk. The products covered by the investigation include primary and secondary pure and alloy magnesium metal, regardless of chemistry, raw material source, form, shape or size.Leading the anti-dumping charge has been Salt Lake City-based U.S. Magnesium Corp., the only domestic producer of primary metal. The company, along with two unions, first requested an investigation into imports from Russia and China in 2004, and in April the following year Commerce imposed anti-dumping duties of 21.71 percent on VSMPO- Avisma and 18.65 percent on Solikamsk. If imposed, the duties could have an impact on U.S. magnesium prices and its one of the reasons why the U.S. has some of the highest magnesium costs in the world, but currently there is little of magnesium coming out of Russia and the situation is expected to be same especially if higher anti-dumping duties go into effect in September. In 2007, VSMPO-Avisma petitioned to revise its method for reporting the cost of production. As a result of those arguments and market conditions, the anti-dumping duties were slashed to 0.41 percent for VSMPO-Avisma and 3.77 percent for Solikamsk.
Now, U.S. Magnesium has requested that the duties be reviewed for a third time. And based on its preliminary investigation, the Commerce Department is recommending that the duties be bumped back up to 17.7 percent and 21.7 percent

One of the reasons for the increase is that, with respect to VSMPO-Avisma, Commerce determined that it attempted to calculate its cost of production by treating magnesium as a by-product, distorting the true cost of producing magnesium. Commerce recalculated its cost of production by treating magnesium and chlorine as co-products.
U.S. Magnesium supports Commerce’s preliminary rejection of VSMPO-Avisma’s attempt to treat magnesium as a by-product and it also believes that Commerce properly determined that VSMPO-Avisma is selling in the U.S. market at prices below VSMPO-Avisma’s cost of production, in violation of U.S. trade law. U.S. Magnesium will continue participating fully in the review to ensure that Commerce reaches a correct final determination. Over the next several months all parties will have an opportunity to make arguments before the Commerce Department. A final ruling is expected by Sept. 2nd, 2008 if the preliminary results are adopted than U.S. Customs and Border Protection would be instructed to assess the new anti-dumping duties.