HZ info,On the evening of December 21, Shandong Head Group Co., Ltd. announced that the U.S. Department of Commerce has issued its final determinations in the countervailing duty (CVD) and anti-dumping (AD) investigations on hard empty capsules originating from four countries, including China. As a mandatory respondent in the investigation, Head Group saw its anti-dumping duty rate slashed to 18.71% from the preliminary rate of 172.24%, marking a staggering decrease of 153.53 percentage points.

According to the announcement, the company received a countervailing duty rate of 6.90%. Other Chinese producers/exporters were assigned anti-dumping duty rates ranging from 0% to 18.71%.

The "dual anti" investigations were formally initiated by the U.S. Department of Commerce on November 13, 2024, targeting hard empty capsules from Brazil, China, India, and Vietnam.

The United States is the world's largest consumer of plant-based capsules, a market of critical importance to Head Group's export business. During the anti-dumping investigation period from April to September 2024, the company's sales of hard empty capsules to the U.S. accounted for 62.38% of the product's total revenue for that period. This proportion reached 44.22% during the countervailing duty investigation period, which covered the full calendar year of 2023. The preliminary anti-dumping determination on May 22, 2025, had imposed a 172.24% duty rate on a subsidiary of Shandong Head Group.

The substantial reduction in the final duty rates delivers a direct positive impact on Head Group's finances and operations. The company stated that the final results will reduce the amount of duty deposits required, and the difference from previously paid deposits will be refunded.

The preliminary anti-dumping rate of 172.24% had effectively represented a temporary blockade on exporting its plant-based capsule products to the U.S. market. The reduction to 18.71%, while still constitute a cost, brings the rate back to a commercially operable range, ensuring the continuity of the company's export business to this key market.

Despite the favorable outcome from the Commerce Department, the investigative process is not yet complete. Following procedure, the U.S. International Trade Commission is expected to make its final injury determination in February 2026.

Plant-based capsules offer advantages in safety, stability, and environmental friendliness compared to traditional gelatin capsules. Currently primarily used in the health supplements sector, their market penetration is expected to increase further with the growing emphasis on health consciousness.

Head Group operates its plant-based capsule business through its subsidiary, Hulesh Capsule. By the end of 2022, the company had an annual production capacity of 30 billion capsules, which is projected to reach 50 billion capsules upon completion of ongoing projects. Its second-generation HPMC plant-based capsules completed registration with China's National Medical Products Administration at the end of 2023, paving the way for broader future application in pharmaceutical preparations.

To navigate international trade barriers, Head Group has initiated a "U.S. plant construction" plan, listed as a key task for 2025. The company plans to build a production base in the United States with a designed annual capacity of 20 billion plant-based capsules. The construction is expected to take approximately 20 months, targeting full operation in 2026.

According to data compiled by iBuychemical Research Institute, current U.S. domestic plant-based capsule capacity stands at 25 billion capsules (Lonza: 15 billion, Capsugel: 10 billion), against a demand-supply gap of approximately 55 billion capsules. The scheduled launch of Head Group's U.S. plant in the second half of 2026 is poised to significantly address this supply shortfall. The facility is strategically located in North Carolina, merely 200 kilometers from the "Capsule Corridor" in South Carolina, the world's largest health supplements hub. This proximity cuts transportation radius by 80%, reduces container shipping costs by $1,200, and shortens delivery cycles from 45 days to just 7 days.

This localization of production capacity is viewed as an effective strategy to mitigate trade friction and move closer to the core market.

Furthermore, Head Group is actively expanding into global markets beyond the United States. It has signed an exclusive agency agreement with global chemical distribution giant IMCD to promote its core product, Headcel construction-grade cellulose ether, in strategic emerging markets including the Middle East, East Africa, and Brazil.

The company's products are already sold in over 100 countries and regions worldwide. This global diversification strategy enhances the company's overall resilience to risks. In its 2024 annual report, Head Group stated, "Building a plant in the U.S. can address dual anti-dumping and countervailing measures and additional tariffs, and can further deepen our presence in the U.S. and surrounding markets."