Commission Regulation (EU) No 1247/2009 of 17 December 2009 imposing a provisional anti-dumping duty on imports of certain molybdenum wires originating in the People's Republic of China

THE EUROPEAN COMMISSION,

Having regard to the Treaty on European Union and to the Treaty on the Functioning of the European Union,

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 Article 7 thereof,

After consulting the Advisory Committee,

Whereas:

(1) On 23 February 2009, the European Commission (Commission) received a complaint concerning imports of certain molybdenum wires, originating in the People’s Republic of China (‘the PRC’ or ‘the country concerned’).

(2) The complaint was lodged pursuant to Article 5 of the basic Regulation by the European Association of Metals (EUROMETAUX) (‘the complainant’) on behalf of a producer representing a major proportion, in this case more than 25 %, of the total Community production of molybdenum wires.

(3) The complaint contained prima facie evidence of dumping and of material injury caused by such dumping which was considered sufficient to justify the opening of a proceeding.

(4) On 8 April 2009, a proceeding was initiated by the publication of a notice of initiation in the Official Journal of the European Union (2).

(5) The Commission officially advised the exporting producers in the PRC, importers, traders, users and associations in the Community known to be concerned, the authorities of the PRC, the complainant Community producer and other Community producers known to be concerned by the initiation of the proceeding. Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set in the notice of initiation. All interested parties who so requested and showed that there were particular reasons why they should be heard were granted a hearing.

(6) In order to allow exporting producers to submit a claim for market economy treatment (‘MET’) or individual treatment (‘IT’), if they so wished, the Commission sent claim forms to the Chinese exporting producers known to be concerned and to the authorities of the PRC. Only one group of companies, consisting of Jinduicheng Molybdenum Co., Ltd. and its related company Jinduicheng Molybdenum Mining Guangming Co., Ltd. (‘Jinduicheng group’), came forward and requested IT.

(7) In view of the apparent high number of exporting producers in the PRC and importers in the Community, the Commission indicated in the notice of initiation that sampling might be applied in accordance with Article 17 of the basic Regulation.

(8) In order to enable the Commission to decide whether sampling would be necessary and, if so, to select a sample, all known exporting producers in the PRC and importers in the Community were asked to make themselves known to the Commission and to provide, as specified in the notice of initiation, basic information on their activities related to the product concerned.

(9) Given the limited number of responses to the sampling exercise, it was decided that sampling was not necessary for the Chinese exporting producers or for the Community importers.

(10) Specific questionnaires were sent to all parties known to be concerned, namely the known exporting producers in the PRC, the Community producers, importers, traders and users in the Community. Replies were received from one group of exporting producers in the PRC, the complainant Community producer, one importer/trader and one user.

(13) The investigation of dumping and injury covered the period from 1 April 2008 to 31 March 2009 (‘investigation period’ or ‘IP’). The examination of the trends relevant for the assessment of injury covered the period from March 2005 to the end of the investigation period (‘period considered’).

(14) The product concerned is molybdenum wire, containing by weight at least 99,95 % of molybdenum, of which the maximum cross-sectional dimension exceeds 1,35 mm but does not exceed 4,0 mm, originating in the PRC (‘the product concerned’ or ‘molybdenum wire’), currently falling within CN code ex 8102 96 00 .

(15) Molybdenum wire is mainly used in the automotive sector for metal coating by thermal spraying of motor parts that are subject to heavy wear, such as piston rings, synchroniser rings or transmission components, to increase their abrasion resistance.

(16) No differences were found between the product concerned and the molybdenum wire produced by the Community industry and sold on the Community market. Given that the PRC is an economy in transition and that no exporter requested MET, as mentioned in recital (6), normal value had to be established on the basis of information obtained in a market economy third country, the USA. According to the information available, molybdenum wire produced and sold on the US domestic market as well as molybdenum wire exported from the USA to other markets, has the same basic physical and chemical characteristics as the molybdenum wire produced in the PRC and exported to the Community.

(17) It is therefore provisionally concluded that all types of molybdenum wire are alike within the meaning of Article 1(4) of the basic Regulation.

(18) Pursuant to Article 2(7)(b) of the basic Regulation, in anti-dumping investigations concerning imports originating in the PRC, normal value shall be determined in accordance with paragraphs 1 to 6 of the said Article for those exporting producers which were found to meet the criteria laid down in Article 2(7)(c) of the basic Regulation.

(19) However, as explained in recital (6) above, the Jinduicheng group only requested Individual Treatment (‘IT’). These criteria were therefore not investigated.

(20) As a general rule, 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 and therefore qualify to be granted IT.

(22) As regards criterion (c), it was found that the mother company, Jingduicheng Molybdenum Co., Ltd, was state-owned. Indeed, it emerged that during the IP only 20 % of the shares belonged to private persons and that these shares only represented 2,4 % of the voting rights. The remaining 80 % of the shares, with 97,6 % of the voting rights, belonged to state-owned enterprises.

(23) On the basis of the above findings, it was provisionally established that the Jinduicheng group could not be granted IT as set forth in Article 9(5) of the basic Regulation.

(24) It was envisaged in the notice of initiation using the USA as an analogue country. A US producer, Global Tungsten & Powders Corp (‘Global Tungsten’), agreed to co-operate and provided all the necessary information for the purpose of establishing normal value for the PRC. The Jinduicheng group contested this choice and proposed producers located in Mexico and India. However, the companies which were contacted in these countries either denied to cooperate, as in the case of India, or indicated that they did not produce the like product. Hence, the USA was confirmed as a suitable analogue country for the purpose of establishing normal value for the PRC.

(25) Pursuant to Article 2(7)(a) of the basic Regulation, it should be noted since that the analogue country producer made only marginal sales on the domestic US market, it was found unreasonable to use such sales data for the purposes of determining or constructing normal value. Consequently, the normal value for the PRC was provisionally established on the basis of export prices from the USA to other third countries, including the Community.

(26) As explained in recital (9), only one group of companies, the Jinduicheng group, representing between 60 to 75 % (3) of imports from the PRC to the Community, co-operated with the investigation. On this basis, the level of co-operation was deemed to be low. As a consequence, export prices for all Chinese exporters were provisionally established on the basis of the figures reported by the cooperating group, complemented with Eurostat import data, duly adjusted as explained in recital (34) below.

(27) The comparison between normal value and export price was made on an ex-works basis. For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance in the form of adjustments was made for differences affecting prices and price comparability in accordance with Article 2(10) of the basic Regulation. On this basis, allowances for transport costs, ocean freight and insurance costs, handling, loading and ancillary costs and indirect taxation have been made where applicable and justified.

(28) As explained in recital (23) above, the Jinduicheng group did not fulfil the requirements for IT as set forth in Article 9(5) of the basic Regulation. As a consequence, a country-wide dumping margin was established for the PRC.

(29) The country-wide level of dumping for the PRC was provisionally established at 68,4 % of the CIF Community frontier price, duty unpaid.

(30) The investigation established that there are two producers in the Community which manufacture the like product for the non-captive market. One producer expressed its neutral position regarding this proceeding and supplied general data on its production and sales. The other producer, on whose behalf the complaint was lodged, co-operated fully with the investigation and submitted a full questionnaire reply. Therefore, in order to protect the business confidential information of that producer, all the figures related to sensitive data provided below have been indexed or given in a range. Bracketed figures relate to negative figures.

(31) In view of the above, the volume of Community production for the purpose of Article 4(1) of the basic Regulation was calculated by adding to the production of the fully cooperating Community producer the production volume provided by the other Community producer.

(32) The investigation showed that the production of the Community producer that fully co-operated in the investigation represented more than 80 % of the molybdenum wire produced in the Community during the IP. It was therefore considered that this company qualified to constitute the Community industry within the meaning of Articles 4(1) and 5(4) of the basic Regulation.

(33) Since that Community producer uses a fiscal year from 1 March to 28 February of the following year, all the data below are presented for fiscal years (‘FY’) rather than for calendar years (e.g. FY2005 covers the period from 1 March 2004 to 28 February 2005). However, data used for the IP, as stated in recital (13), covers the period from 1 April 2008 to 31 March 2009. The data concerning imports has been established on the same basis.

(34) Community consumption was established by adding to the sales volume of the known producers in the Community all imports from third countries extracted from Eurostat. It is recalled that the CN code under which the product concerned is declared includes also products other than the product concerned. In the absence of specific import statistics for the product concerned, Eurostat data was adjusted in accordance with the method suggested in the complaint. This method was found to be reliable to obtain data relating to the product concerned.

(37) The dumped imports from the PRC increased significantly from 36 tonnes in 2005 to 116 tonnes in 2008, i.e. more than three times. Following a peak in 2008, these imports decreased in the IP in line with the evolution of Community consumption. Nevertheless, the market share of the dumped imports in the Community market almost tripled between 2005 and the IP.

(38) The average import price from the PRC was at its lowest level in 2005. It peaked in 2006 and then progressively decreased by 19 % between 2006 and the IP.

(39) For the purposes of analysing price undercutting, the weighted average sales prices of the Community industry to unrelated customers on the Community market, adjusted to ex-works level, were compared to the weighted average prices of the imports from the PRC to the first independent customer, established on a CIF basis, with an appropriate adjustment for post-importation costs and customs duties.

(40) The comparison showed that during the IP import prices from the PRC undercut the Community industry’s prices, when expressed as a percentage of the latter, by 30 to 35 %.

(41) In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Community industry included an evaluation of all economic indicators for an assessment of the state of the Community industry from 2005 to the end of the IP.

(42) As shown in the above table, the production of the Community industry progressively decreased by 33 % over the period considered in line with a significant increase of Chinese imports by more than three times during the same period. In a first step, between 2005 and 2008 production of the Community industry was reduced by 27 %. This declining trend was confirmed between 2008 and the IP when production went down by an additional 8 %.

(43) Since production capacity remained stable, capacity utilisation followed the same declining trend as production during the period considered.

(45) The sales volume of the Community industry to independent customers on the Community market decreased significantly by 32 % during the period considered. This decrease was far higher than the decrease in consumption (– 10 %) during the same period. As a consequence the Community industry also lost significant market share in the same period.

(46) Average ex-works sales price of the Community industry to unrelated customers on the Community followed a declining trend over the period considered. During this period, a slight increase was observed in 2007 compared to 2006, in line with the increase in the raw material prices in that particular year, after which the sales prices decreased again. Overall, the Community industry had to decrease its average sales prices on the Community market by 8 %.

(48) Stocks increased significantly by 133 % during the period considered, reflecting the industry's increasing difficulty in selling its products in the Community market. The observed decrease in stocks between 2006 and 2007 followed the trend of the Community consumption during the same period.

(50) The Community industry sharply decreased its number of employees between 2005 and the IP. This was the result of both a decline in output and the efforts carried out by the Community industry to rationalise production and boost productivity. The results of this rationalisation process within the Community industry was thus reflected in the productivity which was rather stable during the period considered.

(51) Average wage levels showed an increase in the beginning of the period considered but then decreased between 2007 and the IP.

(53) Profitability deteriorated significantly over the period considered, in particular between 2007 and the IP, when it reached its lowest level. The investigation indicated that the improved profitability in 2007 was linked to the positive development in Community consumption, the rationalisation efforts of the Community industry and the fact that the Community industry managed to increase its sales prices in that year.

(54) The trend of the cash flow, which is the ability of the industry to self-finance its activities, reflected to a large extent the evolution of profitability. Overall, the investigation showed that cash flow deteriorated over the period considered.

(55) At the beginning of the period considered, the Community industry invested significantly in the product concerned sector. However, starting in 2006, investments had to be reduced.

(57) The dumping margin found, indicated above in recital (32), was significantly above the de minimis level. Furthermore, given the volume and the price of the dumped imports in particular during the IP, the impact of the actual margin of dumping on the Community market could not be considered to be negligible.

(58) Between 2005 and the IP, the volume of dumped imports of the product concerned from the PRC increased by over 150 %, reaching a market share of 27,0 % by the end of the period considered. During IP, the low-priced dumped imports from the PRC were substantially undercutting the sales prices of the Community. The weighted average price undercutting was as high ranging between 30 and 35 % during the IP.

(59) During the same period while the Community consumption decreased by 10 %, the sales volume of the Community industry decreased by 32 %. Its market share fell by 17 percentage points and its sales prices had to be reduced by 8 % to limit the erosion in sales and market share.

(60) As a consequence, the situation of the Community industry substantially deteriorated during the period considered. Production decreased by 33 %, as did capacity utilisation, reaching a very low level in the IP and the level of stock more than doubled. The deteriorating situation of the Community industry in the period considered was also confirmed by the negative development in profitability, cash flow, employment and investments.

(61) In the light of the foregoing, it was provisionally concluded that the Community industry suffered material injury within the meaning of Article 3 of the basic Regulation.

(62) In accordance with Articles 3(6) and 3(7) of the basic Regulation, it was examined whether the dumped imports of the product concerned originating in the PRC caused injury to the Community industry to a degree that enabled it to be classified as material. Known factors other than the dumped imports, which could at the same time be injuring the Community industry, were also examined to ensure that possible injury caused by these other factors was not attributed to the dumped imports.

(63) The deterioration in the economic situation of the Community industry coincided with the surge of the dumped imports from the PRC. Their volume increased by over 150 % between 2005 and the IP and their market share almost tripled during the period considered. In that period, sales volumes of the Community industry decreased considerably by 32 %. At the same time a significant part of market share was lost and almost all the other injury indicators, such as production, capacity utilisation, investments, profitability, cash flow, employment showed significant declining trends during the period considered.

(64) Even if the prices of the dumped imports increased at the beginning of the period considered, they continuously and significantly decreased by 19 % in the remainder of the period. Despite the fact that the Community industry decreased its prices by 8 %, dumped imports from the PRC remained constantly below the prices of the Community industry, undercutting them by 30 to 35 % during the IP.