Commission Regulation (EU) 2016/1977 of 11 November 2016 imposing a provisional anti-dumping duty on imports of certain seamless pipes and tubes of iron (other than cast iron) or steel (other than stainless steel), of circular cross-section, of an external diameter exceeding 406,4 mm, originating in the People's Republic of China

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Article 7 thereof,

After consulting the Member States,

Whereas:

(1) On 13 February 2016, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports into the Union of certain seamless pipes and tubes of iron (other than cast iron) or steel (other than stainless steel), of circular cross-section, of an external diameter exceeding 406,4 mm originating in the People's Republic of China (‘the country concerned’) on the basis of Article 5 of Council Regulation (EC) No 1225/2009 (2). It published a Notice of Initiation in the Official Journal of the European Union (3) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 4 January 2016 by the Defence Committee of the seamless steel tubes industry of the European Union (‘the complainants’). The complainants represent more than 25 % of the total Union production of seamless pipes and tubes of iron (other than cast iron) or steel (other than stainless steel), of circular cross section, of an external diameter exceeding 406,4 mm. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainants, other known Union producers, the known exporting producers and the People's Republic of China authorities, known importers, suppliers and users, traders, as well as associations known to be concerned about the initiation of the investigation and invited them to participate.

(4) Interested parties had an opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(5) In the Notice of Initiation, the Commission informed interested parties that it envisaged Japan, Russia, South Korea and the USA as possible third market economy countries (‘analogue countries’) within the meaning of Article 2(7)(a) of the basic Regulation. The Commission contacted producers of these countries and also producers in Canada, India, Mexico and Venezuela and invited them to participate.

(6) In the Notice of Initiation, the Commission stated that it might apply sampling in accordance with Article 17 of the basic Regulation.

(7) In the Notice of Initiation of the investigation, the Commission stated that it had provisionally selected a sample of Union producers on the basis of the production of the product concerned. This provisional sample consisted of four Union producers. They accounted for 51 % of the total production of the Union industry. The Commission invited interested parties to comment on the provisional sample but no comments were received.

(8) The investigation has revealed that the economic situation and the structure of the largest sampled company may not be representative of the Union industry. It has a different business model, because it relies for more than 60 % of its sales on the oil and gas business, and because it produces many more tailor-made and high-end products. Furthermore, as explained in recitals 107 to 108, its profitability has deteriorated consistently over the entire period considered, which is another important difference from the other Union producers. Hence, the Commission will investigate further whether the company is representative for the state of the Union industry. If appropriate, the Commission will consider further steps including a weighing of the relevant companies.

(9) At provisional stage, the Commission has decided to keep this company in the sample, but it will revisit the question in the light of the comments it will receive from interested parties.

(10) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation.

(11) Five unrelated importers provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of three importers on the basis of the largest volume of imports into the Union. In accordance with Article 17(2) of the basic Regulation, all known importers concerned were consulted on the selection of the sample. No comments were made.

(12) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all exporting producers in the People's Republic of China to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the People's Republic of China to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(13) Twelve exporting producers in the country concerned provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of four on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned, and the authorities of the country concerned, were consulted on the selection of the sample. No comments were received from interested parties in this respect.

(14) Six exporting producers in the People's Republic of China requested individual examination under Article 17(3) of the basic Regulation. Three of them are included in the sample and hence examined individually. The examination of the remaining three requests during the provisional stage of the investigation would have been unduly burdensome due to the tight deadlines of the investigation, limited resources, and current workload of the Commission services. The Commission will decide whether to grant any individual examination requests, following the provisional stage of the investigation.

(15) For the purposes of Article 2(7)(b) of the basic Regulation, the Commission sent MET claim forms to all the cooperating exporting producers in the People's Republic of China selected to be in the sample, to the known associations of exporting producers, and to the authorities of the People's Republic of China. No MET claim forms were submitted by any of the exporting producers.

(16) The Commission sent questionnaires to all sampled companies within the deadlines set out in the Notice of Initiation. Questionnaire replies were received from the four sampled cooperating (groups of) exporting producers in the People's Republic of China, the four sampled Union producers, and three unrelated importers. No users came forward.

(18) The investigation of dumping and injury covered the period from 1 January 2015 to 31 December 2015 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2012 to the end of the investigation period (‘the period considered’).

(19) The product concerned is certain seamless pipes and tubes of iron (other than cast iron) or steel (other than stainless steel), of circular cross section, of an external diameter exceeding 406,4 mm originating in the People's Republic of China, currently falling within CN codes 7304 19 90, ex 7304 29 90, 7304 39 98 and 7304 59 99 (‘the product concerned’).

(20) The product concerned is used in a wide range of applications, for example in the oil & gas industry, in power plants, and in construction.

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

(23) No claims regarding the product scope were made.

(24) According to Article 2(7)(a) of the basic Regulation normal value was determined on the basis of the price or constructed value in a market economy third country since no sampled exporting producer was granted MET. For this purpose, a market economy third country had to be selected (‘the analogue country’).

(25) In the Notice of Initiation, the Commission informed interested parties that it envisaged Japan, Russia, South Korea and the USA as possible appropriate analogue country and invited interested parties to comment. No comments were received.

(26) The Commission requested thirteen producers of the like product in Canada, India, Japan, Russia, South Korea, Mexico, the USA and Venezuela to provide information. Cooperation was received from only one company located in Mexico. This company responded to the analogue country questionnaire and agreed to the on-spot verification of its reply.

(27) The domestic market in Mexico has adequate competition and its size is considered suitable and ranges around 20 000 tonnes annually. A customs duty of 5 % is applicable on imports of most seamless pipes and tube products originating in all countries. The cooperating company represents more than 60 % of the market share of the domestic market. Nevertheless imports have also a substantial market share, representing more than 22 % in the Mexican domestic market demonstrating that there is competition in that market.

(28) The Commission concluded at this stage that Mexico is an appropriate analogue country under Article 2(7)(a) of the basic Regulation.

(29) The information received from the cooperating producer in the analogue country was used as a basis for the determination of the normal value for the exporting producers not granted MET, pursuant to Article 2(7)(a) of the basic Regulation.

(30) The Commission first examined whether the total volume of domestic sales in the analogue country of the cooperating producer was representative, in accordance with Article 2(2) of the basic Regulation. The domestic sales are representative if the total domestic sales volume of the like product to independent customers on the domestic market represented at least 5 % of the total export sales volume to the Union of the product concerned by the exporting producers in the country concerned, during the investigation period. On this basis, the total sales of the cooperating producer of the like product on the domestic market were representative.

(31) The Commission subsequently identified the product types sold domestically in the analogue country that were identical or comparable with the product types sold for export to the Union by the exporting producers in the country concerned with representative domestic sales.

(32) The Commission then examined whether the domestic sales of the cooperating producer in the analogue country for each product type identical or comparable to product type sold for export to the Union were representative, in accordance with Article 2(2) of the basic Regulation. On this basis, the Commission established that domestic sales of some product types in the analogue country accounted for less than 5 % of the total volume of export sales of the identical or comparable product type to the Union, and were therefore not representative.

(33) The Commission next defined the proportion of profitable sales to independent customers on the domestic market in the analogue country for each product type during the investigation period in order to decide whether to use actual domestic sales for the calculation of the normal value, in accordance with Article 2(4) of the basic Regulation.

(34) The analysis of domestic sales showed that all domestic sales were profitable and that the weighted average sales price was higher than the cost of production. Accordingly, the normal value was calculated as a weighted average of the prices of all domestic sales during the IP.

(35) As there were no or insufficient sales of some product types of the like product in the ordinary course of trade in the analogue country, the Commission constructed the normal value in accordance with Article 2(3) and (6) of the basic Regulation.

(36) For the product types not sold in representative quantities on the domestic market in the analogue country, the average selling, general and administrative costs (‘SG&A’) expenses and profit of transactions made in the ordinary course of trade on the domestic market for those types were used. For the product types not sold at all on the domestic market in the analogue country, the weighted average SG&A expenses and profit of all transactions made in the ordinary course of trade on the domestic market were used.

(37) A significant number of product types exported from the country concerned to the Union could not be directly matched with the product types produced in the analogue country. Therefore, the normal value for the non-matching product types had to be constructed pursuant to Article 2(3) of the basic Regulation on the basis of the analogue country's producer's manufacturing costs plus a reasonable amount for SG&A and for profit. The normal value was thus constructed in line with Article 2(3) and (6) of the basic Regulation by adding to the average cost of manufacturing of the relevant product type the weighted average SG&A expenses (4) [1 %-10 %] incurred and the weighted average profit (4) [9 %-19 %] realised by the producer in the analogue country on domestic sales, in the ordinary course of trade, during the investigation period.

(38) The sampled exporting producers exported to the Union either directly to independent customers or through related exporting companies located in country concerned. No exports were made through related importers located in the Union.

(39) As exporting producers exported the product concerned directly to independent customers in the Union, the export price was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

(40) The Commission compared the normal value and the export price of the sampled exporting producers on an ex-works basis.

(41) Where justified by the need to ensure a fair comparison, the Commission adjusted the normal value and/or the export price for differences affecting prices and price comparability, in accordance with Article 2(10) of the basic Regulation.

(42) Adjustments were made for transport, ocean freight and insurance costs, handling, loading and ancillary costs ranging from 2 % to 12 %, credit costs ranging from 0,01 % to 0,3 %, commissions ranging from 0,1 % to 2 % and bank charges ranging from 0,02 % to 0,3 % where demonstrated to affect price comparability.

(43) China applies a policy of reimbursing VAT only partially upon export and in this case 8 % VAT is not reimbursed. To ensure that the normal value was expressed at the same level of taxation as the export price, the normal value was adjusted upward by that part of the VAT charged on exports of large diameter seamless pipes and tubes that was not refunded to the Chinese exporting producers (5).

(44) For the sampled exporting producers, the Commission compared the weighted average normal value of each type of the like product in the analogue country (see recitals 29 to 37 above) with the weighted average export price of the corresponding type of the product concerned, in accordance with Article 2(11) and (12) of the basic Regulation.

(45) For the cooperating exporting producers outside the sample, the Commission calculated the weighted average dumping margin, in accordance with Article 9(6) of the basic Regulation. Therefore, that margin was established on the basis of the margins of the sampled exporting producers, disregarding the margins of the exporting producers with zero and de minimis dumping margins, as well as margins established in the circumstances referred to in Article 18 of the basic Regulation.

(46) For all other exporting producers in the country concerned, the Commission established the dumping margins on the basis of the facts available in accordance with Article 18 of the basic Regulation. To this end, the Commission determined the level of cooperation of the exporting producers. The level of cooperation is the volume of exports of the cooperating exporting producers to the Union expressed as a proportion of the total export volume — as reported in Eurostat import statistics — from the country concerned to the Union

(47) The level of cooperation in this case is high because the imports of the cooperating exporting producers constituted around 85 % of the total exports to the Union during the IP. On this basis, the Commission decided to base the residual dumping margin at the level of the sampled company with the highest dumping margin.

(49) The like product was manufactured by seven producers in the Union during the investigation period. They are deemed to constitute the Union industry within the meaning of Article 4(1) and Article 5(4) of the basic Regulation and will hereinafter be referred to as the ‘Union industry’.

(50) All available information concerning the Union industry, such as information provided in the complaint, data collected from Union producers before and after initiation of the investigation and the questionnaire responses of the sampled Union producers, was used in order to establish the total Union production for the investigation period.

(51) On this basis, the total Union production was estimated to be around 227 000 tonnes during the IP. This figure includes the production of all Union producers, both the sampled producers and an estimation of the production of the non-sampled producers.

(52) As indicated in recital 7, four Union producers were included in the sample, representing 51 % of the estimated total Union production of the like product.

(55) After a decrease in 2013, the import volumes from China steeply increased in 2014 and remained stable in 2015. Overall, the imports increased by 9 % over the period considered, from 39 000 tonnes to 42 500 tonnes in the IP, in a context of decreasing Union consumption. The market share of imports from China increased from 22,2 % to 26,8 % during the period considered.

(57) The average import prices were established on the basis of the Eurostat import statistics. The average import prices from China remained fairly stable during the period considered. The import prices were slightly higher in the year 2014 than in the previous years, but in 2015 the prices decreased back to their initial levels.

(58) However, the average import prices depend on the product mix, in particular of the steel grade, which is not visible in the trade statistics. While the average export sales price of all the Chinese exporting producers was 910 EUR/tonne in the IP, the average export sales price of the sampled Chinese exporting producers was 1 102 EUR/tonne, ranging from 946 EUR/tonne to 1 444 EUR/tonne.

(59) As can be seen in recital 79, the import prices from China remained significantly below the sales prices of the Union industry during the entire period.