Huaxi Securities released a research report stating that the imposition of anti-dumping duties is expected to partially alleviate domestic supply pressure. Coupled with active capacity reduction driven by losses and policy-guided passive reduction, the firm remains optimistic about price recovery from capacity contraction and continues to recommend the hog farming sector. For specific stock picks, the report highlights low-cost, low-debt companies with growth potential, with top recommendation being Lihua股份 (300761.SH). Additionally, Muyuan股份 (002714.SH) and Shuanghui Development (000985.SH) are also expected to benefit.
Key points from Huaxi Securities: 1. **Anti-Dumping Ruling**: On December 16, 2025, China’s Ministry of Commerce announced the final ruling on anti-dumping investigations against pork and related products imported from the EU. The ruling confirmed dumping practices, prompting the Customs Tariff Commission to impose anti-dumping duties ranging from 4.9% to 19.8%, effective December 17, 2025.
2. **EU’s Role in Pork Imports**: The EU is a major pork supplier to China, accounting for over 50% of imports in the first three quarters of 2025. From January to October, China imported 1.93 million tons of pork and related products, with 990,000 tons (51%) sourced from the EU. Spain was the largest supplier, contributing 460,000 tons (24%). Domestic pork production stood at 43.68 million tons, while imports (1.76 million tons) represented 4% of total supply. EU imports (910,000 tons) made up 51.49% of total imports and 2.08% of domestic production. The anti-dumping measures are expected to ease domestic supply pressure.
3. **Capacity Reduction Accelerates**: - **Active Reduction**: Persistent low hog prices have deepened losses in the farming sector. Wind data shows that self-breeding farms have been unprofitable for 13 consecutive weeks as of mid-December, with losses exceeding ¥160 per head. Purchased piglet farms faced even longer and deeper losses, averaging over ¥100 per head in 2025. - **Passive Reduction**: Policy-driven capacity adjustments have shown results, with the breeding sow inventory dropping below 40 million heads to 39.9 million in October, a 1.1% monthly decline. - **Winter Challenges**: Disease risks and reduced farmer investment in herd management due to financial strain may further accelerate capacity reduction.
4. **Risks**: Potential delays in breeding sow inventory adjustments, disease outbreaks, weaker-than-expected consumption, changes in environmental policies, and raw material price volatility.
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