The US ceramic tile market and the new duties on Chinese imports

With the adoption of countervailing and antidumping duties on Chinese tile imports in the US, the race is on for both US tile manufacturers and all the other supplying countries to win a slice of the 64.3 million sq.m of Chinese products.

Joe Lundgren (Joseph Lundgren Consulting, USA) [email protected]

After the adoption of countervailing duties (from 103.77% to 222.24%) on Chinese tile imports in September, the U.S. Department of Commerce also introduced new antidumping duties of between 114.49% and 356.02% on November 7. The investigations followed the petition filed by the Coalition for Fair Trade in Ceramic Tile, which is made up of the 8 US ceramic tile manufacturers.

With China’s exit from the US market now all but certain, the race is on to win a slice of the 64.3 million square metres (approximately US $483.1 million) of Chinese products imported in 2018.

The most logical thing would be for the current US manufacturers and existing importers to gain the vast majority of this potential share. If things remained as they are, the 22% of the US ceramic market covered by Chinese tiles would be divided up between the other competitors.

But this is only theoretical.

Since US manufacturers are currently utilizing only 76% of their 107 million sqm capacity (of which Dal-Tile accounts for 49%), in theory they have the opportunity to increase their annual output by a further 24 million square metres. In actual fact it is extremely difficult even for US manufacturers to compete with such a large number of importers who already have an extensive presence across the country.

To understand how the importers are able to continue to hold on to such a large share of the US market, it is useful to analyse the key ingredients for success in the US market. These are: established relationships (in some cases dating back decades); low price; favourable payment terms (90-120 days); a wide range of products to meet all the needs of US distributors; the possibility of operating off stable currencies (e.g. the Euro); and the low cost of ocean shipment rates, in many cases lower than the steadily rising costs of road transportation within the United States.

Given these considerations, there are many existing countries winning new market share in the short term: Spain, Brazil, Italy, Turkey (depending on the geopolitical situation between the US and Turkish governments) and Mexico (if the Mexican manufacturers succeed in lowering the transportation costs for their porcelain production to the US).

In the long term new countries will be able to provide all the “cake ingredients” and gain share in the USA, particularly India, Vietnam, Colombia and Peru.

Watch Joe Lundgren’s video-interview and read the full article in Ceramic World Review 134