* Importers of Brazilian chicken to pay deposit from June 9
* China says Brazilian imports caused substantial damage
* Brazil embassy source says move is “very disappointing”
* Comes amid heightened tensions on global trade
* BRF shares down 6 pct (Adds comment by Brazilian government, paragraph 8)
By Dominique Patton
BEIJING, June 8 (Reuters) - China will impose temporary anti-dumping measures on imports of Brazilian chicken meat, it said on Friday, at the same time as the United States pressures Beijing to reopen its market to American poultry products.
Chinese importers of Brazilian chicken will be required to pay deposits ranging from 18.8 percent to 38.4 percent of the value of their shipments from June 9, the commerce ministry said in a statement.
A preliminary ruling from the ministry found that Chinese producers had been “substantially damaged” by shipments from Brazil between 2013 and 2016, when the country supplied more than half of China’s imports of chicken meat.
The anti-dumping measures are another blow to Brazilian meatpackers, who are still recovering from a food safety scandal last year and a May truckers’ protest that forced farms to cull some 70 million chickens due to a lack of feed.
They also show how third-party countries like Brazil, the world’s largest chicken exporter, could become collateral damage as the United States and China look for ways to head off a trade war.
Although the Chinese government calls the measures “deposits”, which in theory could be returned in the future, a source in the Brazilian meat industry, who asked for anonymity due to the sensitivity of the issue, said that in practice nobody ever manages to get them back.
The Brazilian government said it regretted the measures, adding it had followed the anti-dumping investigation all along and found no basis for the Chinese move. In a statement, it said it hopes China will scrap the provisional punitive measures once the probe is finished.
Shares of Brazil’s BRF SA, the world’s biggest chicken exporter, closed 7.5 percent lower at 21.50 reais.
Rival JBS SA, whose U.S. poultry unit Pilgrims Pride Corp is larger than its Brazilian division Seara, rose 4.1 percent.
BRF and JBS declined to comment immediately on the matter.
Brazilian protein industry group ABPA denied any causal link between the chicken shipments and any harm to Chinese producers, calling the anti-dumping measures a step backwards in the countries’ strong bilateral trade relations.
The measure comes one year after China had implemented anti-dumping measures against another leading Brazilian commodity. In May last year the Chinese government imposed hefty penalties on sugar imports.
Brazil used to be the largest exporter of sugar to China, but after the measure shipments were expected to fall by as much as 800,000 tonnes per year.
While the initial result of a probe on poultry imports that started last August had been expected this month, China’s move on Brazilian chicken appears as the United States pushes to recover access to the Chinese poultry market amid ongoing trade talks.
China has agreed to increase its imports of American farm goods in recent negotiations aimed at averting a trade war between the top two trading countries.
About 9 percent of Brazil’s chicken exports went to China last year, according to ABPA, which said the flows were likely to be maintained due to strong Chinese demand.
The Brazilian industry source said the Chinese commerce ministry had proposed further negotiations with exporters, including the possibility of setting a floor price for exports to China. It is not yet clear if the industry would accept such a proposal, the source said.
Brazilian exporters should be able to absorb the impact of the deposits, particularly for chicken feet, which would otherwise have no value, said Pan Chenjun, senior analyst at Rabobank.
“China is not the most important market (for Brazil), but in value it’s quite important as it takes all the byproducts,” Pan said, adding that importers are likely to negotiate with suppliers to share the deposit fees.
Of the 29 Brazilian companies named by the ministry, deposit rates on products from JBS and Seara Comercio de Alimentos Ltda are 18.8 percent, BRF products have a deposit rate of 25.3 percent, and shipments from C.Vale - Cooperativa Agroindustrial will be charged at 38.4 percent. Imports from all other unspecified producers will also be hit with the highest rate.
Li Jinghui, managing director of the China Poultry Association, declined to comment on the news. An official at the China Animal Agriculture Association also declined to comment.
It is not clear what will happen to shipments in transit on the way to China.
An anti-dumping deposit levied on sorghum from the United States in April caused chaos in the grains trade, with dozens of cargoes stranded as importers tried to resell to other markets to avoid paying the tariffs. ($1 = 6.4015 Chinese yuan) (Reporting by Dominique Patton; Additional reporting by Beijing Newsroom and Roberto Samora, Marcelo Teixeira in Sao Paulo; Editing by Chizu Nomiyama and Matthew Lewis)