On April 26, 2022, cooking oil made from Canadian canola seeds was sold at a grocery store in Chicago, Illinois.
Scott Olson | Getty Images
China said on Tuesday it planned to launch an anti-dumping investigation into canola imports from Canada after Ottawa imposed tariffs on Chinese electric vehicles, sending domestic canola futures prices to a one-month high.
Canadian Agriculture Minister Lawrence Macaulay said the move was “deeply concerning.” He posted on the X social media network that Ottawa is paying close attention to the case and will defend and support the agricultural sector.
Following the United States and the European Union, Canada last week announced a 100% tariff on Chinese electric vehicle imports and a 25% tariff on steel and aluminum imports from China.
A spokesman for the Ministry of Commerce said in a statement that China has adopted discriminatory unilateral restrictive measures on Canadian products imported from China, despite opposition and dissuasion from many parties, and expresses strong dissatisfaction and firm opposition.
The Ministry of Commerce stated that China will also launch an anti-dumping investigation into some Canadian chemical products.
More than half of the canola produced in Canada is sold to China, the world’s largest importer of oilseeds. Canola, some varieties also called rapeseed, is used as cooking oil and in a variety of products, including renewable fuel.
The Canadian Canola Council said it believes China’s investigation will show Canadian producers are complying with the rules. Canadian canola exports to China totaled C$5 billion ($3.7 billion) last year, the company said in a statement.
After the news was announced, Chinese rapeseed meal futures prices on the Zhengzhou Commodity Exchange rose 6% to 2,375 yuan ($333.56) per ton, the highest level since August 6.
The ICE rapeseed contract for November delivery fell to the daily limit of US$45, a decrease of 7% to US$569.7 per ton.
“Canada’s rapeseed exports to China have increased significantly, suspected of dumping, reaching US$3.47 billion in 2023, with an annual increase of 170% in volume and continuing decline in prices,” the ministry said.
Affected by Canada’s unfair competition, China’s domestic rapeseed-related industries continue to suffer losses.
Chinese rapeseed meal prices have fallen 22% so far this year due to abundant oilseed supplies and rising domestic production.
“Currently domestic consumption (of edible oils) is not strong and domestic inventory supply is sufficient,” said Ma Wenfeng, senior analyst at Beijing Oriental Agricultural Consulting Company.
China mainly imports rapeseed from Canada, followed by Russia and Mongolia.
“The number of arrivals from Canada has been growing rapidly,” Ma said.
The world’s second largest economy will import 5.5 million tons of rapeseed in 2023, valued at US$3.72 billion. Imports from Canada accounted for 94% of the total.
In contrast, most of China’s electric vehicles exported to Canada come from Tesla’s Shanghai factory, and local Chinese companies have not yet done much business in this export market.
In 2023, when Tesla begins shipping electric vehicles made in Shanghai to Canada, Canada’s car imports from China to Vancouver, the largest port, will increase by 460% year-on-year to 44,356 vehicles.
A Chinese spokesperson said that in response to Canada’s relevant practices, China plans to resort to the WTO dispute settlement mechanism.
China has also launched trade investigations into imports of pork, brandy and dairy products from the EU in response to restrictions on its electric vehicle exports.
China has targeted Canadian canola in previous trade tensions. In 2019, the government suspended the qualifications of two Canadian canola exporters, then lifted the restrictions three years later.
Analysts said China may seek alternative supplies from Australia and Ukraine, especially if Australia has sufficient rapeseed production.
Rapeseed production in Europe has been affected by bad weather, while agricultural trade between China and Ukraine has also been restricted.
Ole Houe, director of consulting services at IKON Commodities in Sydney, said: “If restrictions on Australian rapeseed are relaxed, we expect China to purchase larger quantities of rapeseed from Australia.”
“So far, Australia’s rapeseed exports to China have been negligible, with exports only around 500 tonnes since the beginning of 2024,” Houe said.
China’s imports of Australian rapeseed have been restricted due to concerns about black shank.
