Commission Implementing Regulation (EU) 2017/1444 of 9 August 2017 imposing a provisional anti-dumping duty on imports of certain corrosion resistant steels 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), and in particular Article 7 thereof,

After consulting the Member States,

Whereas:

(1) On 9 December 2016, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports into the Union of certain corrosion resistant steels (‘CRS’) originating in the People's Republic of China (‘PRC’ or ‘the country concerned’) on the basis of Article 5 of Regulation (EU) 2016/1036 (‘the basic Regulation’). It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 25 October 2016 by the European Steel Association (‘Eurofer’ or ‘the complainant’) on behalf of producers representing more than 53 % of the total Union production of CRS. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) Following the request of 24 May 2017 by the complainant, supported by the required evidence, the Commission published on 8 July 2017 Implementing Regulation (EU) 2017/1238 (3) making imports of certain corrosion resistant steels products originating in the PRC subject to registration as of 9 July 2017.

(4) The Commission had sufficient prima facie evidence justifying the need to register imports as imports and market shares from the country concerned had sharply increased after the investigation was initiated and concluded that the conditions pursuant to Article 14(5) of the basic Regulation had been met.

(5) In the Notice of Initiation, the Commission invited interested parties to come forward in order to participate in the investigation. In addition, the Commission specifically informed the complainants, other known Union producers, the known exporting producers, the Chinese authorities, known importers, suppliers and users, traders and associations known to be concerned about the initiation of the investigation and invited them to participate.

(6) Interested parties were given the opportunity to make their views known in writing and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. All interested parties who so requested and showed that there were particular reasons why they should be heard were granted a hearing.

(7) For the purpose of selecting an analogue country, the Commission contacted producers in Brazil, Canada, India, Japan, South Korea, Taiwan, Turkey, Ukraine and the USA, informed them about the initiation and invited them to participate.

(8) In the Notice of Initiation, the Commission informed interested parties that it provisionally chose Canada as a third market economy country (‘analogue country’) within the meaning of Article 2(7)(a) of the basic Regulation.

(9) In its Notice of Initiation, the Commission stated that it might sample the interested parties in accordance with Article 17 of the basic Regulation.

(10) In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of the highest representative production and sales volumes whilst ensuring a geographical spread. This provisional sample consisted of four Union producers located in four different Member States and accounted for over 30 % of Union production of corrosion resistant steels. The Commission invited interested parties to comment on the provisional sample.

(11) Two companies wrote to explain that they were unable to complete the necessary questionnaire. Whilst maintaining their support for the complaint they withdrew from the preliminary sample.

(12) The Commission assessed the impact of the exclusion of these two companies in the sample and concluded that, with the inclusion of two other companies, the sample was still representative of the situation of the Union industry.

(13) The largest of the two companies which asked not to be sampled submitted in its request that it was under government control and for sale by public offering under a tender procedure. Considering these facts, the Commission concluded that the company's inclusion would influence the financial micro-indicators of the sample in a significant negative manner, particularly in the light of the considerable production and sales quantities involved.

(14) The other company explained that it was actively cooperating in other antidumping proceedings and cited a lack of resources for managing also the current case. Taking into consideration the fact that the company could be replaced without prejudice to the representativity of the sample, the Commission concluded it was reasonable and proportional to accept the company's request not to be part of the sample.

(15) The Commission therefore notified parties that two other companies were selected to the sample and again asked for comments from interested parties.

(16) Eurofer submitted comments and suggested adding a fifth company in order to improve the sample's geographical representativity. However, after analysing these comments, the Commission concluded that the revised sample was sufficiently representative because it accounted for 29 % of Union production of corrosion resistant steels and was located in four different Member States. Moreover, the proposed company did not diversify in terms of sampled groups of companies. Additionally, the proposed fifth company did not add sufficient volumes of production and sales in order to justify its inclusion. The Commission therefore confirmed the revised sample of four companies. Nevertheless, the company was visited in the interest of obtaining more insight in the highly competitive and changing situation of the Italian market, both in terms of competition from other Union producers and from Chinese imports.

(17) The Commission asked unrelated importers to provide the information specified in the Notice of Initiation in order to decide whether sampling was necessary and, if so, to select a sample.

(18) Only two importers provided the requested information and agreed to be included in the sample. Therefore, it was decided to abandon the sampling exercise and both companies were sent an importers questionnaire. Only one of them submitted a questionnaire reply.

(19) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all exporting producers in the PRC 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.

(20) Sixteen (groups of) exporting producers in the country concerned provided the requested information within the time limits provided for 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 groups 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.

(21) Three groups of exporting producers in the PRC, composed of several individual undertakings, requested individual treatment under Article 17(3) of the basic Regulation.

(22) The examination of these individual treatment requests during the provisional stage of the investigation was not possible in light of the large number of companies to be examined, the number of different locations to be visited, the timeline of the investigation and the resources available on the Commission's side. Indeed, as indicated in section 1.9 below, the Commission has already verified a total of 17 individual companies which form part of the three groups selected for the sample. Due to the resulting workload, the questionnaire replies of important importers related to one of the sampled parties could also not be verified at the provisional stage and these verifications will need to be carried out at a later stage. Carrying out the assessment of three additional groups of companies at this stage would have been unduly burdensome and prevented the completion of the investigation within the strict time limits imposed by the basic Regulation.

(23) One of the group companies requesting individual treatment claimed that their product range was not reflected in the sample selected by the Commission. However it should be noted that product range covered in the sample is representative of the imports concerned.

(24) The Commission will decide whether to grant individual treatment at the definitive stage of the investigation.

(25) For the purposes of Article 2(7)(b) of the basic Regulation, the Commission sent MET claim forms to all the exporting producers in the PRC selected to be in the sample and to non-sampled cooperating exporting producers that wished to apply for an individual dumping margin. None of the three sampled groups of exporting producers returned MET claim forms. Although the requests for individual examination have been provisionally rejected, the Commission will assess the MET claim forms submitted by two groups of non-sampled cooperating exporting producers in case it decides it is possible to accept their request for an individual examination at definitive stage.

(26) The Commission sent questionnaires to the complainant, the sampled Union producers and the importers/users that came forward, the sampled exporting producers and the exporting producers that requested individual examination, as well as the potential analogue country producers.

(27) Questionnaire replies were received from Eurofer, four Union producers, and one importer/user, three groups of exporting producers in the PRC, three non-sampled groups of cooperating exporting producers that requested individual examination and one group of producers in an analogue country.

(29) The Commission did not visit the premises of the three related exporters of the cooperating Chinese companies located in Hong Kong and Singapore, namely Xinsha International PTE, Ltd and Shagang South-Asia (Hong Kong) Trading Co., Ltd (related exporters of Shagang Group) and Shougang Holding Trade (Hong Kong) Ltd (related exporter of Shougang Group). Their files and accounts, to the extent requested by the Commission, were however made available for inspection during on spot visits at the premises of their respective related producers in the PRC.

(30) The investigation of dumping and injury covered the period from 1 October 2015 to 30 September 2016 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 2013 to the end of the investigation period (‘the period considered’).

(32) CRS is produced by coating flat rolled steel coils, sheets and strips by immersion in a bath of molten metal or metal alloy of zinc. The coating metal combines with the steel substrate in a metallurgical reaction to form a multiple layered structure of alloys, resulting in a coating which is metallurgically bonded to the steel. The surface of the product is further treated with chemical passivation to protect the surface against humidity and to reduce the risk of formation of corrosion products during storage and transportation.

(33) CRS is mainly used in the construction sector for various cladding building materials but also for manufacturing domestic appliances, deep-drawing and stamping processes and small welded pipes.

(34) Numerous clarification questions were received regarding the characteristic that the product concerned should be chemically passivated, the main consideration being that CRS that is only oiled for surface protection does not fall under the investigation and therefore cannot be subject to the measures. Certain parties indicate that this constitutes an invitation for the ‘circumvention’ of the measures.

(35) The Commission confirms that oiled CRS does not fall under the scope of the investigation, in case it is merely oiled (and not chemically passivated and oiled at the same time).

(36) With regard to the claim that the exclusion of oiled CRS would be a potential risk for circumvention, the investigation did not conclude on this assertion. Some parties state that users must de-coil CRS coils and remove the oily film before the product can be used, a process that requires specific installations, and that, if Chinese exporting producers outsourced this task, the process would become even more complicated, as the third party contractor would have to re-coil the cleaned CRS as well in order to ship it to the user. Other parties state that users can easily remove the oil while slitting the coils by using specific absorbing material.

(37) At this stage of the investigation, the Commission assessed that, in the light of the extra logistics and costs involved, there was no risk of avoiding the payment of anti-dumping duties by omitting the chemical passivation of the CRS coils and oiling them instead. The claim is therefore provisionally rejected.

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

(40) Since none of the sampled exporting producers applied for market economy treatment, normal value was determined on the basis of the prices or constructed normal value in an appropriate third market economy country (the ‘analogue country’) in accordance with Article 2(7)(a) of the basic Regulation.

(41) In the Notice of Initiation, the Commission informed interested parties that it envisaged Canada as a third market economy country within the meaning of Article 2(7)(a) of the basic Regulation. Two parties contested the choice of Canada because of the alleged price difference of the like product and because of the relationship between the possible cooperating producer in Canada and one of the complainants.

(42) The Commission sent questionnaires to all known producers in the countries mentioned in the Notice of Initiation and to other countries where there were indications of production and sales of the like product. In addition, the Commission contacted the relevant authorities in those countries. Out of the 25 producers and four associations from Canada, Australia, Brazil, India, Republic of Korea, Norway, Turkey and Taiwan that were approached, three producers from three different countries (Australia, Brazil and Canada) expressed their willingness to cooperate.

(43) In light of the competitive situation and the size of the three markets in question, as well as the comments received from interested parties, the Commission decided to provisionally choose Brazil as the analogue country. Brazil is an open market with three producers, significant import volumes, import duties ranging from 12 % to 14 % and no anti-dumping or countervailing duties was in place on imports of CRS during the IP.

(44) On 14 March 2017, the Commission informed interested parties that it had provisionally selected Brazil as analogue country. Interested parties were invited to comment on this selection. No party contested that Brazil was the most suitable option amongst the three countries from which cooperation could be obtained, however, both an exporting producer and the China Iron & Steel Association (‘CISA’) made some comments. They both pinpointed the relationship between the Brazilian cooperating producer and one of the complainants and CISA also referred to a representation dated 23 June 2008 made by another party in the context of a similar investigation (4), according to which Brazilian producers of hot-dipped galvanised sheets had followed anti-competitive behaviours. With regard to these issues, there is no evidence of anti-competitive behaviour by Brazilian producers of CRS during the IP (e.g. import volumes of CRS are significant). As to the relationship between the analogue country producer and a Union producer, the parties failed to explain how the link in question could have affected the reliability of data. In the Commission's view, the relationship does not invalidate or affect the determination of the normal value which is based on duly verified data.

(45) The Brazilian cooperating producer sent a questionnaire response in due form and time.

(46) In accordance with Article 2(2) of the basic Regulation, the Commission first examined whether the sales of the like product in Brazil to independent customers were representative. The sales of the cooperating producer of the like product were found to be sold in representative quantities on the domestic market compared to the product concerned exported to the Union by the Chinese exporting producers included in the sample.

(47) The Commission subsequently examined whether those sales could be considered as made in the ordinary course of trade pursuant to Article 2(4) of the basic Regulation. This was done by establishing the proportion of profitable sales to independent customers. The sales transactions were considered profitable where the unit price was equal or above the cost of production of the Brazilian producer during the investigation period.

(48) For those product types where more than 80 % by volume of sales on the domestic market of the type in question were above cost and the weighted average sales price of that type was equal to or above the unit cost of production, normal value, by product type, was calculated as the weighted average of the actual domestic prices of all sales of the type in question, irrespectively of whether those sales were profitable or not.

(49) Where the volume of profitable sales of a product type represented 80 % or less of the total sales volume of that type, or where the weighted average price of that type was below the unit cost of production, normal value was based on the actual domestic price, which was calculated as a weighted average price of only the profitable domestic sales of that type made during the investigation period.

(50) As regards the product types that were not profitable or not sold on domestic market in sufficient quantities, normal value was constructed pursuant to Article 2(3) of the basic Regulation using the cost of manufacturing of the Brazilian producer plus SG&A (10 %-20 %) and profit (10 %-20 %) for product types of the Brazilian producer that are profitable. The constructed normal value, was applied in the calculations for 77 %-99,6 % of sales to the Union in terms of volume, depending on the Chinese exporting producer.