Council Regulation (EC) No 83/2008 of 21 January 2008 repealing the anti-dumping duty on imports of ferro molybdenum originating in the People’s Republic of China and terminating the proceeding in respect of such imports, following review pursuant to Article 11(3) of Regulation (EC) No 384/96

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (1) (the basic Regulation), and in particular Articles 11(2), 11(3) and 11(7) thereof,

Having regard to the proposal submitted by the Commission after consulting the Advisory Committee,

Whereas:

(1) In January 2002, the Council, by Regulation (EC) No 215/2002 (2), imposed a definitive anti-dumping duty on imports of ferro molybdenum (FeMo) originating in the People’s Republic of China (PRC), falling under CN code 7202 70 00 (the product concerned). The investigation period that led to these measures was 1 October 1999 to 30 September 2000 and will be referred to as ‘the original investigation’. The measures imposed by Regulation (EC) No 215/2002 consisted of an ad valorem duty of 22,5 %.

(2) In October 2006, the Commission, by Decision 2006/714/EC (3), suspended for a period of nine months the definitive anti-dumping duty imposed by Regulation (EC) No 215/2002 on imports of the product concerned originating in the PRC. The decision to suspend the definitive anti-dumping duty imposed by Regulation (EC) No 215/2002 was taken in line with the provisions of Article 14(4) of the basic Regulation.

(3) The Commission concluded, in its Decision 2006/714/EC, that the injury linked to the imports of the product concerned originating in the PRC was unlikely to resume as a result of the suspension because of the temporary change in market conditions, in particular the high level of prices of the product concerned on the Community market, which was far above the injurious level found in the original investigation, together with the alleged demand-supply imbalance for the product concerned.

(4) In July 2007, the Council, by Regulation (EC) No 856/2007 (4), extended until 31 January 2008 the suspension of the definitive anti-dumping duty imposed by Regulation (EC) No 215/2002 on imports of the product concerned originating in the PRC.

(5) The Council concluded, in Regulation (EC) No 856/2007, that the situation in the Community market with respect to the product concerned has remained unchanged following the suspension of the anti-dumping duty in October 2006 and decided, pending the outcome of the review (see recitals (6) to (8)), to extent the suspension of the measures in force in accordance with the provisions of Article 14(4) of the basic Regulation.

(6) On 31 October 2006 an ex officio full interim review of the anti-dumping measures applicable to imports of FeMo originating in the PRC was initiated, in line with the provisions of Article 11(3) of the basic Regulation, by a notice published in the Official Journal of the European Union (5) since the corpus of evidence at the Commission’s disposal indicated prima facie that the circumstances on the basis of which the existing measures were established have changed to the extent that the existing measures might no longer be adequate and that certain of these changes appeared to be of a lasting nature.

(7) It is recalled that in line with the provisions of Article 11(7) of the basic Regulation where an interim review of anti-dumping measures pursuant to Article 11(3) of the basic Regulation is in progress at the end of the period of application of anti-dumping measures as defined in Article 11(2) of the basic Regulation, the interim review shall also cover the circumstances set out for expiry reviews in Article 11(2) of the basic Regulation.

(8) Account taken of the above, and given that the measures imposed by Regulation (EC) No 215/2002 were due to expire in January 2007, the ex officio full interim review referred under recital (6) covered the circumstances set out for expiry reviews. Therefore, the ex officio full interim review had to reach conclusions on whether the expiry of measures would be likely or unlikely to lead to the continuation or recurrence of dumping and injury.

(9) The Commission officially advised the producers in the PRC and their association, users and their associations in the Community known to be concerned, the representatives of the PRC and known Community producers and their association, of the initiation of the ex officio full interim review. Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set out in the notice of initiation.

(10) In view of the large number of Chinese exporters/producers expected to be involved, it was considered appropriate, in conformity with Article 17 of the basic Regulation, to examine whether sampling should be used. In order to enable the Commission to decide whether sampling would be necessary and, if so, to select a sample, the abovementioned parties were requested to make themselves known within 15 days of the initiation of the review and to provide the Commission with the information requested in the notice of initiation. However only one Chinese producer came forward and provided the requested information for sampling. Therefore, it was decided that sampling was not necessary.

(11) In order to allow exporters/producers in the PRC to submit a claim for market economy treatment (MET) or individual treatment (IT), if they so wished, the Commission sent claim forms to the exporters/producers known to be concerned, to the authorities of the PRC and to the China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters (CCCMC).

(12) The Commission sent questionnaires to the sole cooperating Chinese producer, to users and unrelated importers known to be concerned, to the Community producers known to be concerned and to known producers of FeMo in the United States of America (USA), which was chosen as analogue country in the original investigation.

(13) Replies to the questionnaires were received from three Community producers (representing 100 % of production in the Community), one producer in the PRC, two users and one USA producer. The Commission also received comments and information from two users, the European Foundries Association, the Cast Metals Federation, the European Confederation of Iron and Steel Industries (EUROFER), the Association of European Ferro Alloys Producers (EUROALLIAGES), the CCCMC, one Chinese producer and one USA producer.

(15) The investigation on the circumstances with regard to dumping and injury and on the continuation and/or recurrence of dumping and injury covered the period from 1 October 2005 to 30 September 2006 (review investigation period or RIP). The examination of the trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2003 up to the end of the RIP (period considered).

(16) The definition of the product concerned corresponds to that used in the original investigation mentioned under recital (1) above.

(17) The product concerned is ferro molybdenum originating in the PRC, currently classifiable within CN code 7202 70 00 .

(18) FeMo is a ferro-alloy containing usually between 45 % and 80 % of molybdenum, the remaining part being iron and small quantities of impurities. The actual molybdenum (Mo) content of FeMo is variable and it is expressed as a percentage of the total weight of FeMo. The two main types of production process used in the production of FeMo are the thermic and the electrolytic processes. In both cases, technical grade molybdenum trioxide (MoO3) is reduced in the presence of iron. However, because of practical reasons and higher costs the electrolytic method is practically not used. In the thermic production process aluminium and silicon metals are used for the reduction of a charge consisting of a mixture of MoO3 and iron oxide.

(19) FeMo is used in the melts during the production of alloyed steel and cast iron because of the ability of molybdenum to enhance the resistance to corrosion and to heat of the alloyed steel and cast iron.

(20) The product is sold in different product grades according to the proportion of molybdenum content and the proportion of impurities. The investigation has shown that all product grades have the same basic physical and chemical characteristics and the same uses. Therefore, and for the purposes of the current review, all types of the product concerned are considered as one product.

(21) The current review has shown that the product concerned and the FeMo produced and sold on the domestic markets of the PRC and the USA as well as the FeMo manufactured and sold in the Community by the Community producers have the same basic physical and chemical characteristics and the same uses. Therefore, these products are considered to be a like product within the meaning of Article 1(4) of the basic Regulation.

(22) In accordance with Articles 11(2), 11(3) and 11(7) of the basic Regulation, it was examined whether dumping was currently taking place and whether the expiry of the measures would be likely to lead to a continuation or a recurrence of dumping.

(23) During the RIP, there were practically no imports to the Community of FeMo originating in the PRC (the country concerned). According to Eurostat, imports from the country concerned amounted to only 13,8 tonnes in EU 27 during the RIP (practically representing some 0,04 % of Community consumption), whilst they were more than 13 200 tonnes in EU 15 during the original investigation. It is noted that all FeMo data in the Regulation are adapted as to correspond to the Mo content.

(24) The sole Chinese cooperating producer did not have export sales of FeMo either to the Community or to anywhere else during the RIP and, thus, no representative dumping calculations on the basis of its own data could be made in order to determine the likelihood of recurrence of dumped exports.

(25) Consequently, the likelihood of recurrence of dumping analysis had to take account of information relating to the period after the RIP, i.e. when the anti-dumping duty was suspended.

(27) The sole cooperating Chinese producer of FeMo requested MET pursuant to Article 2(7)(b) of the basic Regulation and replied to the MET claim form for exporting producers within the given deadlines. Although this Chinese producer did not have any export sales of FeMo, it was considered appropriate to examine its MET claim in view of the very low level of Chinese cooperation.

(28) For the sole cooperating producer the Commission sought all information deemed necessary and verified the information submitted in the MET claim at the premises of the company in question.

(29) The sole Chinese producer, Nanjing Metalink International Co. Ltd, Nanjing, did not show that it fulfils all the criteria set out in Article 2(7)(c) of the basic Regulation. The company did not fulfil criteria 1, 2 and 3.

(30) The cooperating Chinese exporting producer, the CCCMC and the Community industry were given an opportunity to comment on the above findings but no comments were made.

(31) As far as criterion 1 is concerned it was established on spot that the company did not pay the applicable social contributions for the vast majority of its workers disregarding without any consequence the relevant Chinese legislation. Furthermore, the company was not able to provide any evidence on the transfer of shares between the previous and the new Chinese shareholder. It was also revealed on spot that new State-imposed export restrictions were introduced recently in the Chinese FeMo industrial sector. In particular, the Chinese authorities have introduced, following the RIP, an export licensing system for the exports of FeMo. Producers wishing to obtain an export license are requested to meet a clear and restrictive set of conditions referring, among other things, to past minimum production and export performance volumes. According to the relevant legislation the provincial commerce authorities and the CCCMC examine all applications and the Chinese Ministry of Commerce decides and publishes the list of enterprises that qualify for obtaining an export license. The aforesaid minimum production and export sales requirements could be unilaterally modified by the relevant authorities. It is obvious that any producer which does not meet the production and export sales performance volumes will not be entitled to export FeMo. The same applies for any new producer since the allocation of licenses is based on a past production and export record. Although the aforesaid development concerning export sales restrictions took place after the RIP it was regarded necessary to take it into consideration when assessing the company’s MET claim since failure to take it into account would lead to manifestly inappropriate conclusions. Consequently, it was concluded that the company has not shown that it fulfils criterion 1.

(32) As far as criterion 2 is concerned it was established on spot that fundamental International Accounting Standards principles were disregarded (i.e. accrual principle, offsetting, inconsistencies between the amounts reported in the accounts and the actual source accounting material, lack of faithful representations of transactions) both in the accounts and in their audit which put into question the reliability of the company’s accounts. Consequently, it was concluded that the company has not shown that it fulfils criterion 2.

(33) As far as criterion 3 is concerned the existence of significant distortions carried over from the non-market economy system was established on spot. The company enjoyed significant income tax exemptions. As far as land use rights are concerned it was revealed on spot that: (i) the allocation of land was linked to investment undertakings and (ii) the payments for land use rights were either missing from the accounting records or did not exist as an obligation in the land use rights contracts. Furthermore, assets were evaluated only by State-owned companies and the supporting material on conditions applied to short-term loans was not available. Consequently, it was concluded that the company has not shown that it fulfils criterion 3.

(34) On the basis of the above, it was concluded that the sole cooperating Chinese producer has not shown that it fulfils all the criteria set out in Article 2(7)(c) of the basic Regulation and, thus, could not be granted MET.

(35) Pursuant to Article 2(7)(a) of the basic Regulation, a country-wide duty, if any, is established for countries falling under that Article, except in those cases where companies are able to demonstrate that they meet all criteria set out in Article 9(5) of the basic Regulation.

(36) The sole Chinese producer who requested MET also claimed IT in the event that it would not be granted MET.

(37) On the basis of the information available, it was established that the company did not export FeMo during the RIP either to the Community or to any other country. Thus, it was not possible to establish whether the requirements foreseen in Article 9(5) of the basic Regulation are fulfilled. It was therefore concluded that the company could not be granted IT.

(38) According to Article 2(7) of the basic Regulation, in case of imports from non-market-economy countries and to the extent that MET could not be granted, for countries specified in Article 2(7)(b) of the basic Regulation, normal value has to be established on the basis of the price or constructed value in an analogue country.

(39) In the notice of initiation the Commission indicated its intention to use the USA as an appropriate analogue country for the purpose of establishing normal value for the PRC and invited the interested parties to comment thereon. No comments were received on this matter. In view of the above, it is concluded that the USA constitutes an appropriate analogue country in accordance with Article 2(7)(a) of the basic Regulation as it was also the case in the original investigation.

(40) As described under recital (23) above, there were practically no imports of the product concerned to the Community during the RIP. These did not allow for a meaningful dumping calculation.

(41) Account taken of the above and for the sake of transparency of the investigation the country-wide dumping margin, based on a weighted average-to-average comparison and expressed as a percentage of the CIF Community frontier price duty unpaid, was calculated and found to be 18,5 %.

PRC’s industrial policy with regard to FeMO

The situation of the cooperating PRC producer

(43) It is recalled that only one Chinese producer cooperated with the investigation who did not export during the RIP, but only made some limited sales of FeMo in the domestic market. The situation of this small company does not allow for any extrapolations for Chinese producers.

(44) The company’s capacity utilisation ratio was less than 1 %. However, account being taken of the new policy on the FeMo industrial sector as applied by the Chinese authorities (see recitals (31) and (42)), it is highly unlikely that the company will be able to use any significant part of this capacity. Indeed, the company produced limited and decreasing quantities of FeMo during the last three years before the RIP and had no export sales. In fact, the company could be regarded as an occasional producer of FeMo performing sporadic sales of the product concerned. It would be therefore difficult for the company to acquire an export license and be allocated an export quota since all these are based on past export performance and production activity figures. Thus, this Chinese producer would probably have no right to export FeMo to the Community in the future. Given these sporadic production activities over the last couple of years and in view of the new Chinese policies applied to the FeMo industry, i.e. that the Chinese authorities want to regulate the FeMo exports as described above, there is no likelihood of recurrence of any significant volumes of exports to the Community in the near future for this company. In any event, the findings with regard to this company are not considered as representative.

Spare capacity and stocks of other PRC producers

(45) No reliable information as to the production capacity and volumes, stocks and sales was available for the non-cooperating companies. In this respect, EUROALLIAGES has argued that there is significant idle and available capacity in the PRC as well as information on Chinese companies resuming mining operations in one of the most important mining areas in the PRC. EUROFER on the other hand has argued that the Chinese FeMo sector is under a consolidation and restructuring process and companies that do not comply with the new Chinese regulatory framework are threatened with closure thus undermining any possible increase in capacities and production volumes. In other words, the information on file as to current and future spare production capacity, stocks, etc. is not entirely conclusive.