UK Launches Dumping Investigation

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UK Launches Dumping Investigation
Barrels of motor oil with pumps attached. © daniilphotos / shutterstock.com

The United Kingdom’s British Trade Remedy Authority has initiated an investigation into alleged dumping of low-priced lubricant products originating from Lithuania and the United Arab Emirates.

The investigation follows a complaint by U.K. lube marketer Aztec Oil against a Lithuanian company, UAB SCT Lubricants, and two associated businesses – SCT’s subsidiary in the U.A.E. and Mannol, a sister German company who supplies finished lubes to the U.K. The authority will work to determine if those businesses have supplied products at below-market prices to the detriment of domestic companies.

“We will be investigating whether imports of engine oils and hydraulic fluids from the United Arab Emirates and [the European Union member] Lithuania are being dumped in the U.K. and whether they are causing injury to the U.K.’s engine and hydraulic fluids industry,” the authority told Lube Report in an emailed statement on Monday. The authority decided June 17 to undertake the probe after receiving Aztec’s complaint in late April.

Mannol denied acting improperly, saying it only took action to remain competitive with other suppliers in the market. Specifically, it claimed that Aztec had imposed price cuts of its own.

“As an importer and distributor, we couldn’t take a passive approach,” Mannol said in a statement to Lube Report last week. “Immediate action was necessary due to our advanced product purchases and limited storage space.

“While competitors’ aggressive pricing led to overall price reductions, our suppliers’ support enabled us to remain [in the market].”

The TRA is a three-year-old agency responsible for recommending trade remedy measures to the U.K. government.

The investigation will review trading activity from April 1, 2023, to March 23, 2024 as it assesses whether fair trade practices were violated, though it could review further back in time to assess any damages.

Aztec, which is based in Chesterfield, U.K., received assistance from the United Kingdom Lubricants Association in preparing its complaint, formally referred to as an anti-dumping application. The application alleges since 2022, large quantities of lubricants from the U.A.E. and Lithuania have been sold at prices significantly below both manufacturing and import costs.

The application claims that originally SCT manufactured those lubricants at its heritage headquarters in Klaipeda, Lithuania, but that in December 2021 the company opened a subsdiary, SCT Chemicals, that makes lubes in Dubai, U.A.E. The application says Mannol ships products from both sites to the U.K., where they are distributed by Mannol’s contracted distributor, Lubriage Ltd. The application claims Mannol and SCT are owned by the same German national, although the individual’s name is redacted from document copy posted on TRA’s website.

The application states that Mannol imports numerous types and grades of lubricants, that it declares values on customs documents that are similar to expected market prices but that they are being dumped at roughly half those levels, based on values and prices for light- and heavy-duty engine oils and hydraulic fluids. It also stated that Mannol’s sales prices in the U.K. are more than 25% below levels that SCT sells them for in Lithuania.

In its statement to Lube Report, Mannol said that low-priced products being sold by British competitors led it to reduce its own U.K. prices and to renegotiating rates with its supplier in the U.A.E.

“Recently a competitor’s further price drop forced us to urgently renegotiate with SCT Chemicals FZE,” Mannol said. “We secured an additional support agreement effective March 4, 2024 which will help us maintain margins and continue growing our business.”

It however, admitted that “during this period we may need to sell some products at a loss due to extended lead times and stock constraints caused by the Red Sea [geopolitical] situation.” Attacks on commercial ships by Houthi rebels in Yemen have caused many shipping operators transporting between Asia and Europe or the Americas to detour around the southern tip of Africa rather than chance the Red Sea and the Suez Canal.

Aztec claimed that lubricant imports from Lithuania have risen roughly 10-fold since 2020, and it said it believes that all of those imports come from SCT. Lube imports from the U.A.E. have risen roughly 20-fold over that same period, the application claims, and Aztec estimated that 90% of those imports are produced by SCT Chemicals.

The application contends that imports from Lithuania and the U.A.E. combined to account for approximately 13% of the U.K.’s lubricant market in 2023, and that the volume is growing.

The UKLA explained that the TRA can investigate suspected dumping cases and, if they find that dumped imports are causing injury to the U.K. industry, will recommend anti-dumping measures to counteract the effects of this unfair trade practice. The data provided by its members will be aggregated and anonymously summarized to support the application to the TRA, ensuring individual companies’ sales data will not be disclosed to Aztec.

According to Aztec’s estimates, Lubriage imported around £100 million worth of lubricants into the U.K. in 2023 and sold them for about £60 million. Additionally, Aztec is trying to prove that the distributor’s online sales of these imported products are priced 30% below their import costs.

“The importer currently presents a huge threat to the U.K. lubricant industry with 21,500 tons of production taken from U.K. producers this year,” the application states. “They are currently selling to our customers at 15%-20% below our costs. We firmly believe SCT in Lithuania and in Dubai are deliberately destabilizing the UK market.”

Aztec called the situation a threat to all U.K. lube suppliers.

“The universal view from the U.K. lubricant industry is one of great concern that this operation is a serious threat to jobs,” the application said. “In the [period of investigation], the business taken from U.K. manufacturers represents 10% of the market and shows every indication of continuing to grow as UK manufacturers are powerless to compete with the prices offered.

Related Topics

Automotive Lubricants    Finished Lubricants