UPDATE: Quartz Countertops are Now Officially a Commodity.

 

Quartz countertops have become the “must have” countertops, but with that demand comes a price.  And that price is commoditization.

 

Quartz is so readily available that stone shops are buying them by the container load from China, India and other countries at massively discounted prices.  This has been going on for years and includes prefabricated quartz countertops for high-rise and high-volume builders, who are getting cheap quartz tops installed in lieu of granite, which has started to wane.

 

A Crack in the Quartz Craze

Then, WHAM. Cambria Quartz, the leader in the US Quartz market, cried foul. They accused the International Chinese and Indian quartz markets of selling below market value, with the help of government subsidizing. Also known as “dumping,” this practice is frowned upon for obvious reasons (and not to mention illegal) as it makes the prospect of competitive trade next-to-impossible.

 

So they filed a Countervailing and Antidumping lawsuit on April 17, 2018, seeking Countervailing Duties (CVD) and Anti-Dumping Duties (AD). They claimed that Chinese quartz industry displaced 1.2B dollars of US Quartz in 2017.   

 

The US Commerce Department (International Trade Administration or ITA) investigated and agreed that the Chinese quartz manufacturers were unfairly subsidized.  They found that the government had supplied raw materials for the quartz, primarily resin, but also quartz sand, and had given favorable tax rates, reduced utility rates, preferable bank loan terms, and other grants.  So the US Commerce Department has levied preliminary duties - CVD (remember, countervailing duties) - of 34.38% to 178.45% on quartz imports.  

 

Most of the factories will see the 34.38% duty, but two factories (Foshan and Fasa) will see the higher duty of 178.45%.

 

Those duties must be paid in cash at customs to border agents.  And what does that mean for consumers? The value of the imported materials gets multiplied by the duty and that amount is due before you can pick up your goods.

 

And that is not the end of it.  Comments are being accepted to the preliminary assessment, and there will be plenty of feedback from the industry.  In the meantime, many of the importers have proactively found alternative sources to Chinese quartz (India, Brazil, Turkey, even African countries are getting into the game).

 

The final countervailing determination is scheduled for January 2019.  The anti-dumping duties have not been determined yet.  Those preliminary findings are due to be released in November 2018.  The injury determination will be completed by March 14, 2019.

 

Oh, and this does not take into account any additional tariffs that our Commander in Chief decides to layer on top of this.  Those are additive.

 

Our Take

When a product is being dumped in the market, it has clearly become so commercially available that it has no real exclusive or differentiating factor.  Quartz hit this wall really quickly, just as it started to take substantial market share from granite. There are a lot of fabricators who bid jobs counting on cheap quartz that they were getting cheaply.  Now that price is going up, they either have to pass it on or eat it. There is a lot of apathy in the fabrication space about this, passing it off as no big deal since importers have secured the same cheap material from other countries.  But those countries will likely be next on Cambria’s hit list. Since they had success the first go-round, why would they not try again? This has segmented the quartz world and even the organizations that represent quartz, stone and solid surface are finding themselves stuck in the middle.  

 

We have long thought that the time was coming for modern surfaces:  products that are true to their aesthetic, offer something different and are not engaged in a race to the bottom.  Sintered stones, porcelains, recycled countertops, and wood are all emerging as unique, healthier, non-commoditized options that can keep the savvy consumer above the fray.

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