The European Union said it may end a tariff on a chemical substance from China used to make lubricating oils and foundry molds two months after renewing the levy to help Austria’s Lenzing AG (LNZ) compete with cheaper imports.

The EU said it would review the need for the 16-year-old duty on furfuraldehyde because the prices of imports from China have increased. The levy of 352 euros ($509) a metric ton is meant to punish Chinese exporters for selling furfuraldehyde in Europe below cost, a practice known as dumping.

The EU, which re-imposed the anti-dumping duty in May for five years because of the threat of a recurrence of “injury” to the European furfuraldehyde industry from dumping, today also left open the possibility of lowering the import tax after a review that will last as long as 15 months.

“The investigation will assess whether there is a need for the continuation, removal or amendment of the existing measures,” the European Commission, the 27-nation EU’s trade authority in Brussels, said in the Official Journal. “The continued imposition of measures at the existing level appears to be no longer necessary.”

Furfuraldehyde, which comes from agricultural waste, is used as a selective solvent in petroleum refining for the production of lubricating oils and as a raw material for processing into furfuryl alcohol, used to make synthetic resin for foundry molds.
Lenzing and Slovenia-based Tanin Sevnica dd, which together account for more than half the EU’s production of furfuraldehyde, asked in January 2010 for extended trade protection. Three months later, the EU opened a probe that led to the five-year renewal in May.

The EU introduced the duty against China in January 1995, reimposed the levy for four years in December 1999, kept it in place after December 2003 while conducting a review of the expiration and then prolonged the measure for five years in April 2005.
To contact the reporter on this story: Jonathan Stearns in Strasbourg, France at jstearns2@bloomberg.net