Commission Implementing Regulation (EU) 2015/1361 of 6 August 2015 repealing the definitive anti-dumping duty imposed on imports of certain candles, tapers and the like originating in the People's Republic of China, following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No 1225/2009

THE EUROPEAN COMMISSION,

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

Having regard to Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (1) (‘the basic Regulation’), and in particular Article 11(2) thereof,

Whereas:

(1) The Council, following an anti-dumping investigation (‘the original investigation’), imposed, by means of Council Regulation (EC) No 393/2009 (2), a definitive anti-dumping duty on imports of certain candles, tapers and the like currently falling within CN code ex 3406 00 00 (TARIC code 3406 00 00 90) and originating in the People's Republic of China (‘the PRC’) (‘the definitive anti-dumping measures’).

(2) The measures took the form of a fixed amount of EUR per tonne of fuel content (usually but not necessarily in the form of tallow, stearin, paraffin wax or other waxes, including the wick) established at 549,33 EUR per tonne of fuel.

(3) Individual fixed duties were established for the following exporting producers: Aroma Consumer Products (Hangzhou) Co., Ltd (321,83 EUR/tonne), Dalian Bright Wax Co., Ltd (171,98 EUR/tonne), Dalian Talent Gift Co., Ltd (367,09 EUR/tonne). The following companies were subject to a zero duty rate: Gala-Candles (Dalian) Co., Ltd, M.X. Candles and Gifts (Taicang) Co., Ltd, Ningbo Kwung's Home Interior & Gift Co., Ltd, Ningbo Kwung's Wisdom Art & Design Co., Ltd, and its related company Shaoxing Koman Home Interior Co., Ltd and Qingdao Kingking Applied Chemistry Co., Ltd.

(4) As sampling was applied in the original investigation, an average duty for the cooperating producers not included in the sample at 345,86 EUR per tonne of fuel content was thus established according to the provisions of Article 9(6) of the basic Regulation. The duty for all other companies was established at 549,33 EUR per tonne of fuel content.

(5) Following the publication of a notice of impending expiry (3) of the definitive anti-dumping measures in force, the Commission received on 14 February 2014 a request for the initiation of an expiry review of those measures pursuant to Article 11(2) of the basic Regulation.

(6) The request was lodged by 16 candles producers in the Union (‘the applicants’) representing more than 25 % of the total Union production of certain candles, tapers and the like.

(7) The request was based on the grounds that the expiry of the measures would be likely to result in a continuation of dumping and recurrence of injury to the Union industry.

(8) Having determined, after consulting the Advisory Committee, that sufficient evidence existed for the initiation of an expiry review, the Commission announced, on 14 May 2014, by a notice published in the Official Journal of the European Union (4) (‘the notice of initiation’), the initiation of an expiry review pursuant to Article 11(2) of the basic Regulation.

(9) The investigation of a continuation of dumping covered the period from 1 April 2013 to 31 March 2014 (‘the review investigation period’ or ‘RIP’). The examination of the trends relevant for the assessment of the likelihood of a recurrence of injury covered the period from 1 January 2011 to the end of the RIP (‘the period considered’).

(10) The Commission officially advised the applicants, the other known Union producers, the known exporting producers in the PRC subject to the anti-dumping measures, the unrelated importers, the users known to be concerned, and the authorities of the PRC of the initiation of the expiry review investigation. All 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.

(11) In accordance with Article 17 of the basic Regulation, in view of the apparent large number of exporting producers in the PRC and of unrelated importers in the Union involved, it was considered appropriate to examine whether sampling should be applied. In order to enable the Commission to decide whether sampling would be necessary and, if so, to select a sample, those parties were requested to make themselves known to the Commission within 15 days of the initiation of the review and to provide, as specified in the notice of initiation, basic information on their activities related to the product under review during the period from 1 April 2013 to 31 March 2014.

(12) 25 exporting producers in the PRC submitted valid information in the framework of the sampling exercise and agreed to cooperate in the investigation. They accounted for 36 % of the total volume of imports made into the Union by Chinese companies subject to anti-dumping duties during the review investigation period. Given the relatively large number of exporting producers in the PRC that agreed to cooperate in the investigation, it was decided to limit the number of parties to be investigated to a sample on the basis of the largest representative volume of production and export sales which can be reasonably investigated within the time available in accordance with Article 17(1) of the basic Regulation. The sample selected consisted of four exporting producers which accounted for 21 % of the total volume of exports made by companies subject to duties. Their data were verified during on-spot verification visits.

(13) In accordance with Article 17(2) of the basic Regulation, the parties concerned and the Chinese authorities were consulted on the selection of the sample. One exporting producer included in the initial proposal decided to withdraw its cooperation. One exporting producer requested to be included into the sample on the basis of the weight of its exports. Therefore, the final sample was established accordingly.

(14) Replies to the questionnaires were received from one Union importer. Therefore no sampling was necessary to examine the situation of the unrelated importers.

(15) As further explained in recital 73 below, at the preliminary stage of the investigation, 26 Union producers or group of producers agreed to cooperate in the investigation. In view of the large number of cooperating producers, the Commission decided to apply sampling. The Commission selected the sample on the basis of the largest representative volume of production which could reasonably be investigated within the time available, considering also the geographical spread and sufficient coverage of different product types. The selected sampled consisted of seven companies. The sample was considered to be representative and covered 37 % of the estimated total Union production of candles during the RIP.

(16) With regard to the users, none of them made itself known or offered to cooperate in the investigation within the deadline provided in the notice of initiation or later in the investigation.

(18) All interested parties were informed of the essential facts and considerations leading to the findings and the conclusions of this expiry review investigation and were invited to comment. They were also granted a time period to submit comments subsequent to disclosure. The representative of the applicants requested clarifications and additional information regarding the behaviour of exporting producers subject to zero duty, the methodology used to establish Chinese the export prices to other third country markets, the source of public information mentioned in recital 29 below and the assessment of Union consumption during the original investigation. The Commission provided the clarifications and the information requested in writing on 27 May 2015 or in the disclosure document.

(19) All interested parties had an opportunity to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(20) At the request of the representative of the applicants, a hearing chaired by the Hearing Officer took place on 27 May 2015. At the hearing, the representative of the applicants claimed that the findings of the Commission were based on inadequate analysis and/or that there was no evidence regarding the future behaviour of the exporting producers subject to zero duty. He also put into question the results of the undercutting calculations, the findings of the Commission on the production capacity in the PRC and on the attractiveness of the Union market. Moreover, it was claimed that the non-confidential file was not complete and was displaying some shortcomings. These shortcomings were swiftly rectified accordingly.

(21) Comments to the disclosure and to the additional clarifications were received on 2 June 2015. Such comments were considered and taken into account where deemed appropriate.

(22) The product subject to this review is candles, tapers and the like, other than memory lights and other outdoor burners (‘the product under review’), currently falling within CN code ex 3406 00 00 (TARIC code 3406 00 00 90) and originating in the People's Republic of China.

(24) The product under review comes in a great variety of sizes, shapes and weight, they can be plain white or coloured, either entirely or only at the outside; scented or unscented, and decorated or undecorated. The surface can be smooth or rough. Candles can be contained in a glass/jar, ceramics/aluminium containers. Labelling and packaging may be provided at the request of the purchasers. However, despite these differences all these types of the product under review share the same basic chemical and technical characteristics and uses and they are to a large extent interchangeable. Therefore, it is considered that all candles covered by the present investigation are part of the same product.

(25) These characteristics described above have an effect on the price of an individual candle but the available imports statistics cannot catch this great variety.

(26) The investigation showed that the product produced and sold on the Chinese domestic market and/or exported to the Union and the product produced and sold in the Union by the Union industry have the same basic physical, technical and chemical characteristics and the same basic uses.

(27) The Commission decided that those products are therefore like products within the meaning of Article 1(4) of the basic Regulation.

(28) In accordance with Article 11(2) of the basic Regulation, it was examined whether the expiry of the existing measures would be likely to lead to a continuation of dumping from the PRC.

(29) The assessment concerning the likelihood of a continuation of dumping was based on the data provided by interested parties and duly verified, on data contained in the expiry review request combined with data collected from other sources such as trade statistics on imports and exports (Eurostat and Chinese export databases) and other information publicly available such as the web sites of the US International Trade Commission and of producers and resellers of candles. The Commission also used the confidential information reported by Member States in accordance with Article 14(6) of the basic Regulation for cross-checking information provided by parties and to analyse the evolution of the imports originating from Chinese exporting producers subject to an individual dumping margin.

(30) In the original investigation, the Commission used the Union industry data to establish normal value due to the absence of cooperation from any producer located in an analogue country. For the current investigation, a producer located in the United States of America (‘USA’) agreed to cooperate and provide all the necessary information to establish the normal value in the current investigation, as explained in recitals 31 to 35 below.

(31) In the notice of initiation, Brazil was proposed as an appropriate analogue country for establishing normal value for the PRC. The Commission invited all interested parties to comment on this proposal but no comments were received. The Commission thus sent questionnaires to known Brazilian producers. However, no cooperation was received from producers in Brazil.

(32) In addition, cooperation of producers located in market economy countries such as Argentina, Canada, Chile, India, Indonesia, Israel, Malaysia, New Zealand, Taiwan and Thailand was also explored. However, no cooperation was received from producers located in the mentioned countries.

(33) The Commission investigated other available sources of information in order to find a potential analogue country, namely Eurostat and public database provided by the United States International Trade Commission. It was found that the Union and the US markets are the main worldwide markets for candles and that US production was also exported to the Union market.

(34) Based on the US National Candle Association (‘the NCA’) web site it emerged that there are around 400 candles producers established in the USA, the total production volume is significant and that this country is importing large amounts for its own consumption. Thus, the USA was considered to be a suitable analogue country for the purpose of the current investigation.

(35) The Commission requested the support of the NCA and one US producer reacted and agreed to cooperate with the investigation. The information provided by the said producer was considered to be sufficient and valid to establish normal value in the current investigation.

(36) The normal value was established under Article 2(7)(a) of the basic Regulation. As mentioned in recital 30 above, the normal value was established on the basis of the data provided and verified at the premises of the cooperating US producer.

(37) The investigation showed that the candle business in the USA differs from that in the PRC. For example, the cooperating US producer is a large company with a complex sales network selling a limited range of product types, exclusively scented/perfumed jars candles, at relatively high prices (so-called ‘fragrance market’). In terms of volume, the US producer is comparable with the biggest Chinese producers, but the product mix is different. Chinese companies mainly produce and sell a wide range of tea-lights, pillar candles but also artistic and unscented candles. The investigation also showed that whilst Chinese producers mainly sell to wholesalers, the US producer mainly sells through its network of retail shops.

(38) Based on the above, it was considered appropriate to construct the normal value as explained below.

(39) The product types sold by the analogue country producer on its domestic market were compared with the product types produced in the PRC and sold for export to the Union. For those models which were found identical or directly comparable normal value was constructed as follows. A reasonable amount for selling, general and administrative (SG&A) expenses incurred on domestic sales of the like product at the same level of trade and a reasonable amount of profit, namely 6,5 % (this margin was used in the original investigation when establishing the normal value) were added to the cost of production of the cooperating analogue country producer during the RIP.

(40) For the other product types, not comparable, the normal value was established by adjusting the cost of production by removing the cost of jars/glass and fragrance costs in the US. Subsequently, a reasonable amount for SG&A and profit were added as explained in recital 39 above.

(41) The export sales of the sampled exporting producers to the Union were made directly to independent customers located in the Union. The sales price was thus established in accordance with Article 2(8) of the basic Regulation, on the basis of the price paid or payable reported in Eurostat import statistics.

(42) This average export price at CIF level was duly adjusted by deducting in particular the transportation costs to arrive at the ex-works value.

(43) The comparison between the normal value and the export price was made on an ex-works basis.

(44) 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 transport costs, insurance costs, terminal and handling costs, credit costs, and commissions, where applicable and justified, in accordance with Article 2(10) of the basic Regulation.

(45) On the basis of above, it was found that one sampled exporting producer was not dumping its products to the Union market. The average dumping margin of three remaining sampled exporting producers, expressed as a percentage of the free-at-Union-frontier price, before duty, was found to be around 60 %.

(46) During the hearing chaired by the Hearing Officer, one party claimed that the exporting producers not subject to measures which were found to be dumping during the original investigation, namely Ningbo Kwung's Home Interior & Gift Co., Ltd and Qingdao Kingking Applied Chemistry Co., Ltd should have been included in the current expiry review investigation.

(47) The Commission sent the Notice of Initiation to all interested parties of the original investigation including exporting producers who were found to be dumping during the original investigation, but who are subject to zero duty rate because they were not injuring the Union industry. None of these exporting producers submitted a sampling form. Therefore, they were not included in the sample.

(48) Moreover, interested parties were informed by the Commission of the proposal for a sample of Chinese exporting producers and had thus the opportunity to submit their comments. However, none of them came forward and the representativeness of the sample of Chinese exporting producers was not questioned. The Commission therefore considers that there was a consent on the sample proposed and that the sample is representative of the candles industry in the PRC.

(49) Precise information on the country-wide production capacity and domestic consumption of candles in the PRC is not publicly available. None of the investigated Chinese exporting producers was in the position to provide such information. In fact, according to the CEO of one of the sampled companies, the vice-president of the China Chemical Industry Candles Branch Association, the Association does not collect information from its members about the production and consumption in the PRC.

(50) The applicants claimed in the expiry review request, though without providing any evidence in this regard, that there is idle production capacity in the PRC. They noted that candles are still a niche market in the PRC and the Chinese candle industry is mainly export oriented. The applicants considered that the idle production facilities remained mostly in place unused and that they could be reactivated easily as the pre-requisite is mainly limited to access to unskilled labour and paraffin. Finally, they supported these claims by referring to the conclusions of the 2010 US sunset review investigation (6) concerning the US measures on Chinese candles imports.