Commission Implementing Regulation (EU) 2017/1480 of 16 August 2017 imposing a provisional anti-dumping duty on imports of certain cast iron articles originating in the People's Republic of China

• (176) Import volumes from other countries than the PRC decreased by 27 % over the period considered from 102 759 tonnes in 2013 to 75 471 tonnes in the investigation period. Their market share decreased by 20 %. Most of these imports originate in India (61 % in the investigation period). Third country imports account for around 34 % of all imports in the Union in the investigation period, with imports from India being around 21 % in the investigation period.

• (177) When considering the import volumes from India, those increased by 19 % over the period considered from 37 917 tonnes in 2013 to around 46 004 tonnes in the investigation period. The Indian market share increased by 30 % from 6,5 % in 2013 to 8,5 % in the investigation period.

• (178) Over the period considered, the PRC gained market share partly from the Union industry and partly from third countries other than India, whilst it cannot be ruled out that India increased its market share also at least partly to the detriment of the Union industry.

• (179) Moreover, import prices from India undercut Union industry prices during the investigation period at similar levels as Chinese import prices (from 40 % to 50 %). Based on the volume in tonnes, the Chinese import prices were on average higher than Indian prices over the period considered. However, this price difference is not indicative since the product mix differs between the Indian and Chinese exports. Indeed, the Indian exports to the EU were mainly of grey iron while the Chinese exports were mainly of ductile iron. Because of the relatively higher brittleness of grey iron, a higher volume of material is required for a grey iron product than for a product made of ductile iron to reach a comparable performance. Therefore products made of grey iron are heavier, resulting in a similar price level per piece of the product concerned.

• (180) As Indian imports undercut Union industry prices, they have contributed to the material injury to the Union industry. However, they have much lower volumes and market share (8,5 % market share in the investigation period, compared to 27,3 % for the PRC). In particular, the level of imports during the investigation period from the PRC (147 186 tonnes during the investigation period) is much more significant and more than three times higher than the level of Indian imports during the investigation period (46 004 tonnes during the investigation period). Consequently, the Indian imports did not break the causal link between the dumped imports from the PRC and the injury suffered by the Union industry, and could not have had more than a marginal impact on the injury of the Union industry.

• (181) An analysis of Eurostat data showed that import prices from other than countries India and the PRC increased over the period considered thereby reaching levels that are higher than Union industry prices during the investigation period whilst import volumes decreased by 55 % over the period considered (from 64 843 tonnes to 29 468 tonnes) ⁶. Therefore, these imports cannot have caused injury to the Union industry.

• (182) The Commission also analysed cumulatively imports from countries other than the PRC. The volume of imports decreased by 27 %, the average price increased by 39 % and it was significantly higher than import prices from the PRC. Consequently, the imports from all counties other the PRC did not break the causal link between the dumped imports from the PRC and the injury suffered by the Union industry, and could not have more than a marginal impact on injury.

5.2.2.   Export performance of the Union industry

• (183) The volume of exports of the three sampled Union producers developed over the period considered as follows:

Table 14

Export performance of the sampled Union producers

• (184) In volume and value, exports of the Union producers to related and unrelated customers increased over the period considered. The average unit price of exports to unrelated customers remains far above the average unit price of Chinese imports. The export sales of the Union industry therefore have not contributed to the weak profitability and low capacity utilisation of the Union industry. On this basis, the Commission concluded that the export performance of the Union industry did not contribute to the injury suffered.

• (185) The association of importers argued that any alleged material injury suffered by the Union industry is mainly caused by a substantial decrease of Union exports over the period considered.

• (186) The Commission noted that the association of importers uses Eurostat for its reasoning. As explained in recital 36, the product concerned is an ex code in Eurostat and therefore Eurostat does not give data up to the definition of the product concerned.

• (187) The verified data from the Union producers showed an increase in exported volume of the product under investigation, as shown in table 14 in recital 183.

• (188) The association of importers has not provided any reasoning to rebut the verified data as provided by the sampled companies and therefore the claim was rejected.

5.2.3.   Contraction in demand

• (189) The association of importers argued that the injury suffered by the Union industry is related to the construction, buildings and civil engineering markets which have not yet fully recovered from the economic crisis. Furthermore, the uncertain outlook of the withdrawal of the UK from the Union has created problems to the Union industry. However, the association of importers did not give conclusive evidence for these claims.

• (190) In addition, the Indian industry argued that the complainants initially did not show evidence of a direct link between the closure of foundries of the Union producers Aco, Dois Portos and EJ Access Systems and pressure from allegedly dumped imports from the PRC and India. However, these closures coincided with the increase in dumped imports from the PRC, the loss of market share and the decline in prices and profitability of the Union industry.

• (191) The Commission noted that during the period considered, the consumption in the Union decreased by 8 %, whilst Union industry's sales declined by 11 % and Chinese dumped imports increased by 16 %. The Commission therefore concludes that, even if the contraction in demand could have had an effect on the injurious situation of the Union industry in the investigation period, it could not break the causal link between the Chinese dumped imports and the material injury suffered by the Union industry. Therefore, the Commission rejected these claims.

5.2.4.   Competition between Union producers

• (192) The association of importers argued that the injury suffered by the Union industry is related to intra-Union competition from producers based in Eastern Member States which has resulted in injury to producers based in Western Member States.

• (193) The complainants contradicted the above and argued that Central and Eastern European producers have not tended to compete very much in Western Member States, because the market in the Western Member States was not so attractive in view of the dumped imports from the PRC.

• (194) The Commission noted that there is intra-Union trade in cast iron articles, also between Central/Eastern and Western Member States. The intra-Union trade shows a stable trend over the period considered and can therefore not have contributed to the injury suffered over the period considered. Therefore, this claim was rejected.

5.2.5.   Management of the Union industry

• (195) The association of importers argued that the weaker position of the Union industry is attributable to non-efficient decisions adopted by the management and a lack of investments in research and development.

• (196) The association of importers did not provide any evidence for these claims. The Commission therefore rejected these claims.

5.2.6.   Segmentation in the Union market

• (197) The CCCME argued that there are significant differences in the product types sold depending on the geographical location of Member States, mainly related to the split between grey iron and ductile iron products. Customers per Member State appear to consistently use one of the two products. The Union industry is split between the production of grey iron and ductile iron and the imports from the PRC are mainly made of ductile iron, while imports from India are mainly made of grey iron. The Indian industry also raised this issue.

• (198) The CCCME claimed that the injury suffered in a Member State with pre-dominantly grey iron sales cannot be attributed to Chinese imports of the product concerned, as they are not in competition with each other.

• (199) The Commission noted that the Union market is a single market, with a pan-European norm and also national standards, with intra-Union trade and penetration by imports. Although a potential preference between grey iron and ductile iron products may exist, sales and production are not exclusively based on the type of cast iron. Both types have the same end use and can be substituted for one another. The Commission therefore considered grey iron and ductile iron products as interchangeable products.

• (200) The CCCME further claimed that a part of the Union industry is specialised in the production and sales of non-standard products. The imports do not concern non-standard products and injury related to such products cannot be attributed to imports from the PRC or India.

• (201) The Commission used a system of product categorisation which allowed for a comparison of imported products with like products produced by the Union industry. Therefore, differences between products are taken into account in the determination of the level of injury. Therefore, this claim was rejected.

5.3.   Conclusion on causation

• (202) The Commission provisionally established a causal link between the injury suffered by the Union producers and the dumped imports from the PRC.

• (203) The Commission distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports.

• (204) The other identified factors such as imports from other third countries, export sales performance of the Union producers, the contraction in demand, the competition between Union producers, the management of the Union industry, and an alleged segmentation in the Union market were provisionally not found to break the causal link, even considering their possible combined effect.

• (205) On the basis of the above, the Commission concluded at this stage that the material injury to the Union industry was caused by the dumped imports from the PRC and the other factors, considered individually or collectively, did not break the causal link.

6. UNION INTEREST

• (206) In accordance with Article 21 of the basic Regulation, the Commission examined whether it could clearly conclude that it was not in the Union interest to adopt measures in this case, despite the determination of injurious dumping. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers and users.

6.1.   Interest of the Union industry

• (207) The Union industry is composed of large as well as small and medium-sized companies and employs directly around 3 000 employees in relation to the like product during the period considered. The industry is located mainly in Belgium, France, Germany, Spain and the UK with minor production in Croatia, the Czech Republic, Finland, Italy, the Netherlands, Poland, Slovenia, and Sweden.

• (208) Eight Union producers (of which two are related to each other) cooperated during the investigation. None of the known producers opposed the initiation of the investigation. As demonstrated in section 4.4.4 above, when analysing the development of the injury indicators since the beginning of the period considered, the whole Union industry experienced a deterioration of its situation and was negatively affected by the dumped imports.

• (209) The Commission expects that the imposition of a provisional anti-dumping duty will restore fair trade conditions on the Union market, putting an end to the price depression and enabling the Union industry to recover its lost market share. This would result in an improvement of the Union industry's profitability towards levels considered necessary for this capital intensive industry.

• (210) The Union industry has suffered material injury caused by the dumped imports. The Commission recalls that most of the injury indicators showed a negative trend since the beginning of the period considered. In particular, injury indicators related to the financial performance of the sampled Union producers, such as profitability, cash flow and return on investment were seriously affected.

• (211) It is therefore important that prices be restored to a level allowing all producers to operate under conditions of fair trade on the Union market. In the absence of measures, a further deterioration of the Union industry's economic and financial situation appears very likely.

• (212) The Commission therefore provisionally concluded that the imposition of an anti-dumping duty would be in the interest of the Union industry. Any imposition of anti-dumping measures would allow the Union industry to recover from the effects of injurious dumping found.

6.2.   Interest of unrelated importers

• (213) As indicated in recital 21, 28 importers, of which 19 are members of the association of importers referred to in recital 7, cooperate in the investigation and three of them were sampled. The cooperating importers account for 62 % of the imports from the PRC and India. The three sampled importers represent 42 % of the volume imported by all cooperating importers. All three sampled importers together with the other members of the association of importers oppose the imposition of measures.

• (214) The association of importers argued that the adoption of anti-dumping measures would not be in the Union interest as it would generate a competition distortion in the Union market and would prevent imports of the product concerned into the Union, as imports from the PRC and India represent almost the totality of all Union imports.

• (215) The complainants opposed this argument and noted that the imposition of anti-dumping measures would restore the Union prices to a level that allows fair competition, without closing the market to imports from the PRC or India or causing any Union producer to gain a dominant position in the Union market.

• (216) The association of importers argued that unrelated importers already face serious difficulties to obtain adequate supplies of the product under investigation on the Union market, because of vertical integration of the Union producers, which will deteriorate if anti-dumping measures are imposed.

• (217) The Commission found that the Union industry sells to independent distributors and is not vertically integrated, as the association of unrelated importers claimed. The Union industry is currently running on a low level of capacity utilisation and around 10 % of the imports originate from countries other than the PRC and India, so importers could shift to Union production or other imports. Therefore, the Commission considers that the complainants could assert the security of supply to meet any extra demand.

• (218) According to the association of importers most unrelated importers are SMEs and have limited capacity to adapt their business to the imposition of anti-dumping measures.

• (219) The Commission assessed the claims of both importers and complainants and concluded that on the basis of current data importers add some value in the Union and an anti-dumping duty could not be absorbed by them without price increases. The Commission compared average sales prices of importers and the Union industry and concluded that there is space for price increases.

• (220) Although importers claimed that it is difficult for them to switch to alternative sources of supply because of the cost of moulds and certification, the Commission considered that this is possible for the following reason. The Union industry runs at 54 % capacity utilisation and it appears that India, which provisionally was not found dumping, increasingly produces ductile iron, and is therefore a possible source of supply, in addition to other countries like Turkey and Norway.

• (221) The Commission found that in terms of employment importers play a minor role. Whilst the three sampled Union producers employ around 1 200 persons, for the two sampled importers that import from the PRC below 100 persons could be assigned to the product concerned.

• (222) The Commission concluded that based on the information available at this stage, which it still will verify after the imposition of provisional measures, the likely impact of measures on unrelated importers is not substantive and does not outweigh the positive effect of measures on the Union industry.

6.3.   Interest of users

• (223) The main end-users for the product concerned are public services. For users, the product concerned accounts for only a small part of their costs in often larger infrastructure projects.

• (224) The association of importers expressed fear that anti-dumping measures will lead to increased prices to the detriment of the end users, which are mainly public entities. However, end users cannot rely on prices that are below cost at the expense of the Union industry.

• (225) No user or consumer associations made themselves known. Given the non-cooperation of these parties, the Commission concluded that the provisional imposition of measures would not unduly affect their situation.

6.4.   Conclusion on Union interest

• (226) On the basis of the above, the Commission concluded that there were no compelling reasons that it was not in the Union interest to impose provisional measures on imports of the product concerned originating in the PRC at this stage of the investigation.

7. PROVISIONAL ANTI-DUMPING MEASURES

• (227) On the basis of the conclusions reached by the Commission on dumping, injury, causation and Union interest, provisional measures should be imposed to prevent further injury being caused to the Union industry by the dumped Chinese imports. With regard to India, since no dumping was found, no provisional measures will be imposed, but the investigation will continue until definitive findings are made.

7.1.   Injury elimination level

• (228) To determine the level of the measures, the Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry.

• (229) The injury would be eliminated if the Union industry was able to cover its costs of production and to obtain a profit before tax on sales of the like product in the Union market that could be reasonably achieved under normal conditions of competition by an industry of this type in the sector, namely in the absence of dumped imports.

• (230) To establish this profit that could be reasonably achieved under normal conditions of competition, the Commission considered the profits made on the unrelated sales which are used for the purpose of determining the injury elimination level.

• (231) The target profit was provisionally set at 5,3 %, in line with the 2013 profits from the unrelated sales. As the dumped imports saw a large increase in 2014, after which they stabilised, it is considered that the 2013 level of profits reflects what could be reasonably achieved under normal conditions of competition, i.e. in the absence of dumped imports. The Commission then determined the injury elimination level on the basis of a comparison of the weighted average import price of the cooperating sampled exporting producers in the PRC, duly adjusted for importation costs and customs duties, as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the sampled Union producers on the Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average import CIF value.

• (232) The injury elimination level for ‘other cooperating companies’ and for ‘all other companies’ is defined in the same manner as the dumping margin for these companies (see recitals 94 to 98).

7.2.   Provisional measures

• (233) Provisional anti-dumping measures should be imposed on imports of cast iron products originating in the PRC in accordance with the lesser duty rule in Article 7(2) of the basic Regulation. The Commission compared the injury elimination levels and the dumping margins. The amount of the duty should be set at the level of the lower of the dumping margin and the injury elimination levels.

• (234) On the basis of the above, the provisional anti-dumping duty rates, expressed on the CIF Union border price, customs duty unpaid, should be as follows:

• (235) The individual company anti-dumping duty rates specified in this Regulation were established on the basis of the findings of this investigation. Therefore, they reflected the situation found during this investigation with respect to these companies. These duty rates are exclusively applicable to imports of the product concerned originating in the PRC and produced by the named legal entities. Imports of product concerned produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, should be subject to the duty rate applicable to ‘all other companies’. They should not be subject to any of the individual anti-dumping duty rates.

• (236) A company may request the application of these individual anti-dumping duty rates if it changes subsequently the name of its entity. The request must be addressed to the Commission ⁷. The request must contain all the relevant information enabling to demonstrate that the change does not affect the right of the company to benefit from the duty rate which applies to it. If the change of name of the company does not affect its right to benefit from the duty rate which applies to it, a notice informing about the change of name will be published in the Official Journal of the European Union.

• (237) To ensure a proper enforcement of the anti-dumping duties, the anti-dumping duty for all other companies should apply not only to the non-cooperating exporting producers in this investigation, but to the producers which did not have exports to the Union during the investigation period.

8. FINAL PROVISIONS

• (238) In the interests of sound administration, the Commission will invite the interested parties to submit written comments and/or to request a hearing with the Commission and/or the Hearing Officer in trade proceedings within a fixed deadline.

• (239) The findings concerning the imposition of provisional duties are provisional and may be amended at the definitive stage of the investigation,

HAS ADOPTED THIS REGULATION:

Article 1

These articles are of a kind used to:

• — cover ground or sub-surfaces systems, and/or openings to ground or sub-surface systems, and also

• — give access to ground or sub-surface systems and/or provide view to ground or sub-surface systems.

The articles may be machined, coated, painted and/or fitted with other materials such as but not limited to concrete, paving slabs, or tiles.

The following product types are excluded from the definition of the product concerned:

• — channel gratings subject to the EN 1433 norm, to be fitted as a component on channels in polymer, plastic or concrete allowing surface water to flow into the channel;

• — fire hydrants.

Article 2

• (a) Request disclosure of the essential facts and considerations on the basis of which this Regulation was adopted;

• (b) Submit their written comments to the Commission; and

• (c) Request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

Article 3

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

Article 1 shall apply for a period of 6 months.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 16 August 2017.

For the Commission

The President

Jean-Claude JUNCKER

ANNEX

Chinese cooperating exporting producers not sampled: