Commission Implementing Regulation (EU) 2020/776 of 12 June 2020 imposing definitive countervailing duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People's Republic of China and Egypt and amending Commission Implementing Regulation (EU) 2020/492 imposing definitive anti-dumping duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People's Republic of China and Egypt

• (952) In their comments to the final disclosure, the GOC claimed further that, in the current investigation, Egyptian imports to the Union did not exist until 2017 and therefore for most of the investigation period did not compete with Chinese imports. Furthermore, the GOC argued that between 2015 and 2018 Egyptian and Chinese import volumes and market shares followed opposite trends. Finally, the GOC argued that Egyptian import prices were consistently lower than Chinese import prices. Therefore, the GOC concluded there were no similar conditions of competition between imports from China on the one hand and imports from Egypt on the other hand which should consequently not be cumulated.

• (953) The Commission recalls that the analysis concerning the facts whether the conditions for a cumulative assessment are met in a specific case is taken on a case-by-case basis, taking into account the specificities and facts of each case.

• (954) Contrary to what the GOC claimed, Art 8(3) of the basic Regulation does not stipulate a requirement for similarity of imports in terms of volume, market share and price but sets out that a cumulative assessment of the effects of imports is appropriate in the light of the conditions of competition between imported products and the condition of competition between imported products and the like product in the Union. This analysis may include elements such as the import volume, market share and import price, which does however not mean that those elements need to be similar in absolute terms.

• (955) In the present case, and as already outlined in recital (33), between 2015 and 2017, China and Egypt showed both increasing import trends, while this increase was more pronounced for imports from Egypt, in particular between 2016 and 2017. However, this does not devaluate the conclusion that imports from both countries were competing with each other and with the sales of the Union industry on the Union market. The fact the Chinese imports were partly overtaken by Egyptian imports also showed that there were under similar conditions of competition. In addition, despite the decrease in import volume from China in the IP, the overall import levels remained significant throughout the period considered, and showed an overall increasing trend throughout the same period.

• (956) Regarding import prices, likewise as already outlined in recital (950), in contrast to what is claimed by the GOC, despite the on average lower import prices from Egypt, the overall trends for both, China and Egypt were similar, i.e. they decreased during the entire period considered and consistently undercut the Union industry sales prices on the Union market.

• (957) The Commission therefore rejected the GOC’s arguments against a cumulative assessment of the effects of the subsidised imports from the PRC and Egypt. Consequently, the argument raised by the GOC that Chinese imports on their own would not have caused injury is irrelevant.

• (958) Taking into consideration the above, it was concluded that the criteria set out in Article 8(3) of the basic Regulation were met and imports from the PRC and Egypt were examined cumulatively for the purposes of the injury determination.

5.3.2.   Volume and market share of the imports from the countries concerned

• (959) As explained in recitals (937) and (938) above the Commission established import volumes and prices on the basis of adjusted Eurostat data. The market share of the imports was established by comparing the volume of imports with the Union consumption. In their comments to the final disclosure, and as mentioned in recital (944), the GOC submitted that the methodology to determine import volumes from China was biased. For the reasons set out in recital (945), the arguments provided in this regard were rejected.

• (960) Imports into the Union from the PRC and Egypt developed as follows.

Table 3

Import volume and market share

	2015	2016	2017	Investigation Period
Imports from the PRC in tonnes	34 470	42 507	44 278	37 558
Index	100	123	129	109
Imports from Egypt in tonnes	108	417	6 092	15 334
Index	100	386	5 641	14 198
Imports from countries concerned in tonnes	34 578	42 924	50 370	52 892
Index	100	124	145	153
Market share the PRC	22,5  %	24,2  %	24,4  %	22,3  %
Index	100	108	109	99
Market share Egypt	0,1  %	0,2  %	3,4  %	9,1  %
Index	100	337	4 765	12 934
Market share countries concerned	22,6  %	24,4  %	27,8  %	31,4  %
Index	100	108	123	139
Source: Comext, sampling form replies of the exporting producers from countries concerned.	Source: Comext, sampling form replies of the exporting producers from countries concerned.	Source: Comext, sampling form replies of the exporting producers from countries concerned.	Source: Comext, sampling form replies of the exporting producers from countries concerned.	Source: Comext, sampling form replies of the exporting producers from countries concerned.

• (961) Imports of the countries concerned increased by 53 % during the period considered from nearly 35 000 tonnes in 2015 to almost 53 000 tonnes in the investigation period. The market share of the countries concerned increased thus from 22,6 % in 2015 to 31,4 % in the investigation period by nearly 9 percentage points. This increase was continuous throughout the period considered, both in absolute terms and in relative terms.

5.3.3.   Prices of the imports from the countries concerned and price undercutting

• (962) As explained in recital (937), the Commission established the trends of import prices based on Eurostat data.

• (963) On that basis, the average price of imports into the Union from the countries concerned developed as follows:

Table 4

Import prices (EUR/kg)

	2015	2016	2017	Investigation Period
Import price PRC	1,78	1,75	1,69	1,63
Index	100	99	95	91
Import price Egypt	1,36	1,40	1,32	1,32
Index	100	103	98	97
Import price countries concerned	1,78	1,75	1,64	1,54
Index	100	99	92	86
Source: Comext.	Source: Comext.	Source: Comext.	Source: Comext.	Source: Comext.

• (964) Import prices of the countries concerned were always below the average sales price of the sampled Union producers, as shown in Table 8. The average import prices from the countries concerned decreased from 1,78 EUR/kg to 1,54 EUR/kg in the period considered, namely by nearly 14 %.

• (965) The Commission also determined the price undercutting during the investigation period by comparing:

• — the weighted average prices per product type of the imports from the sampled cooperating Chinese and Egypt producers to the first independent customer on the Union market ²⁰⁴, established on a cost, insurance, freight (CIF) basis, with appropriate adjustments for customs duties for the PRC only and post-importation costs for both countries; and

• — the corresponding weighted average sales prices per product type of the sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level.

• (966) The price comparison was made on a product type-by-type basis, duly adjusted where necessary, and after deduction of rebates and discounts. The Commission found it reasonable not to include the kits in the quantification of the undercutting. Given the unique combination of kits, a comparison would most likely result in comparing different kits. The result of the comparison was expressed as a percentage of the hypothetical turnover during the investigation period. It is obtained by multiplying the average Union industry sales price per product type by the quantities of the comparable product type exported to the Union. It showed significant undercutting ranging from 15,4 % to 55,8 % for the PRC and from 30,5 % to 54,9 % for Egypt, resulting in a weighted average margin of 32,3 % for the sampled co-operating exporting producers in the PRC and of 31,5 % for the cooperating exporting producers in Egypt.

• (967) In their comments to the final disclosure, one of the CNBM Group (China) exporting producers made a general reference to their comments regarding the calculation of undercutting and underselling margins provided to the final disclosure in the separate anti-dumping investigation. They re-iterated those same comments in the present anti-subsidy investigation. These comments were, however, tailored to the specific aspects of an anti-dumping investigation and were referring to specific Articles in Regulation (EU) 2016/1036 of the European Parliament and of the Council on protection against dumped imports from countries not members of the European Union ²⁰⁵, and CNBM Group (China) did not further specify which comments precisely would be applicable to the current anti-subsidy investigation. The Commission addressed all comments provided in this regard in Commission Implementing Regulation (EU) 2020/492 imposing definitive anti-dumping duties on imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt ²⁰⁶ (‘Regulation (EU) 2020/492’). Therefore, only those comments that were specifically linked to the calculation of the undercutting margins are addressed in this Regulation.

• (968) When it comes to the elements taken into account for calculation of undercutting (in particular the export price), the Commission has to identify the first point at which competition takes (or may take) place with Union industry in the Union market. This point is in fact the purchasing price of the first unrelated importer because that company has in principle the choice to source either from the Union industry or from overseas customers. By contrast, resale prices of related importers do not reflect the point where real competition takes place. This is only the point where the established sales structure of the exporter tries to find customers but it is already after the point where the decision to import had been taken. Indeed, once the exporting producer has established its system of related companies in the Union, they have already decided that the source of their merchandise will be from overseas. Hence, the point of comparison should be right after the good crosses the Union border, and not at a later stage in the distribution chain, e.g. when selling to the final user of the good.

• (969) This approach also ensures coherence in cases where an exporting producer is selling the goods directly to an unrelated customer (whether importer or final user) because under this scenario, resale prices would not be used by definition. A different approach would lead to a discrimination between exporting producers based solely on the sales channel that they use.

• (970) In this case, the import price cannot be taken at its face value because the exporting producer and the importer are related. Therefore, in order to establish a reliable import price at arm's length, such price has to be reconstructed by using the resale price of the related importer as a starting point.

• (971) The Commission also notes that in this particular case the majority of sales on both the Union industry side and the exporting producers’ side are done directly (i.e. without traders or importers). These direct sales represent [more than 95 %] of sales of the Union industry and [more than 95 %] of sales of the exporting producers.

• (972) Whilst the Commission stands by the reasoning outlined above, for the sake of completeness additional undercutting calculations were undertaken.

• (973) The Commission took into consideration only the direct sales made by the Union industry and the exporting producers, which, as mentioned above, represent the vast majority of sales on both sides. Based on this calculation, the prices of the CNBM Group (China), CNBM Group (Egypt) and Yuntianhua Group were found to undercut Union industry’s prices by 45,4 %, 30,8 % and 14,7 %, respectively.

• (974) In conclusion, undercutting margins do not differ significantly regardless of the way it is calculated. All claims in this regard were therefore rejected.

• (975) Following the final disclosure, Yuntianhua Group requested additional disclosure concerning the detailed undercutting per product type, referring to their comments provided in the separate anti-dumping investigation in reply to the additional final disclosure provided in that latter investigation mentioned in recital (121). In this submission, Yuntianhua Group requested that sales quantities and prices of all product types sold by the Union industry should be disclosed to them, regardless how many sampled Union producers were selling a specific product type. They dismissed the Commission’s view that if sales data related to a certain product type pertained to only two or less Union producers, a third party would be able to track the data back to the individual Union producer. Since Yuntianhua Group would not have the relevant market knowledge to do so, they further claimed, there would be no reason to keep this data confidential. Alternatively, Yuntianhua Group argued that the Commission should at least provide a meaningful non-confidential summary of the calculations by providing ranges for sales data pertaining to product types tat were produced by two or less Union producers.

• (976) Data pertaining to only one or two Union producers cannot be disclosed for confidentiality reasons. The same treatment is afforded to exporting producers, which do not have their individual information make available, even on an anonymous basis. The investigation has shown that the GFF market is relatively transparent with large quantity users sourcing from a limited number of certified producers in the Union and China. It is therefore reasonable to assume that GFF producers in the Union and in the countries concerned often know who is providing a particular product type. Thus, by disclosing a data range would bear the high risk of disclosing business confidential data that the Commission seeks to protect. In any event, the Commission disclosed detailed calculations for all product types that were produced by three or more Union producers that covered around 70 % of the volume sold by Yuntianhua Group to the Union and more than 70 % of the volume of corresponding product types sold by the Union industry. Yuntianhua Group raised no issues with regard to these calculations. This claim was therefore rejected.

• (977) In their comments to the final disclosure, Yuntianhua Group, claimed that undercutting calculations would not have been based on a price comparison at the same level of trade, referring in general terms to their submissions made in the separate anti-dumping investigation following the final and additional final disclosure in that investigation without, however specifying any further to which specific claims reference was made. A similar claim was also made by the GOC following the final disclosure.

• (978) As mentioned in recital (971), [more than 95 %] of sales of the Union industry were direct sales. Furthermore, as noted in recitals (973), undercutting margins calculations based on sales to end users and only on direct sales all show undercutting margins for all exporting producers including Yuntianhua Group. This comment was therefore rejected.

• (979) In their comments to the final disclosure, Yuntianhua Group also re-iterated its claim that a segment specific injury alanysis should have been performed. To substantiate this claim Yuntianhua Group referred as above, only in very general terms to the submissions provided in the separate anti-dumping investigation following the final and additional final disclosure in that investigation without, however specifying any further to which specific claims or arguments reference was made. Yuntianhua Group claimed in particular, that the sampled Union producers were specialising and producing GFF types specifically for a given user. They argued that these were OEM customer specific products for which no price undercutting was calculated. No measures should be imposed on those products.

• (980) The exporting producer’s assumption is factually wrong. The investigation has shown that GFF was not produced on OEM basis. The Commission found that for most applications GFF are produced to order according to customers’ specifications and, as a result, the vast majority of sales (both of Union producers and exporting producers) are made directly to independent end-customers. Thus, sales according to customers’ specifications is a characteristic of the GFF market and in no way suggest the existence of a separate OEM segment. This is also visible from the data disclosed to Yuntianhua Group. Around 70 % of the product types exported by Yuntianhua Group to the Union were produced by 3 or 4 of the sampled Union producers. The Commission further notes that during the investigation period there was a 92 % matching between the sales of the Union industry and Yuntianhua Group. This also contradicts that there would be a particular specialisation in the market and that Union producers would produce one or several types for a given user. Furthermore, the statement that sales prices of those product types produced by only one or two Union producers were not undercutting the Union industry sales prices is incorrect. The Commission found undercutting for four out of the seven product types for which detailed calculation could not be disclosed because of confidentiality issues. That means that, out of the 18 matching product types, only four (accounting for a low percentage of Yuntianhua Group exports volumes) were found not to undercut the sales of the Union industry. Needless to say, the establishment of price undercutting at the level of product types is only an intermediary and preparatory step of the price comparison required by Article 8(2) of the basic Regulation, that is, the determination of the price undercutting in relation to the product concerned as a whole. On the basis of the above, the claim that a separate analysis based on different segments should have been carried out was rejected.

• (981) In their comments to the final disclosure, Yuntianhua Group argued that the Commission included in the injury findings products that are not product concerned claiming that one of their product types was imported under a CN code that was not part of this investigation.

• (982) As stated by the Commission in the Notice initiating this proceeding ‘[t]he CN and TARIC codes are given for information only’. They do not constitute the description of the product under investigation. Indeed, in this particular case it was already noted in Commission Implementing Regulation (EU) 2020/44 of 20 January 2020 making imports of certain woven and/or stitched glass fibre fabrics originating in the People’s Republic of China and Egypt subject to registration ²⁰⁷, that imports of the product under investigation, even after the initiation of the proceeding were widely misdeclared.

• (983) Furthermore, during the investigation the sampled exporting producers were asked to report their exports to the Union of the product matching the description given in the Notice initiating the proceeding. In this framework, Yuntianhua Group reported the specific product type in question as a product concerned. In any case, it was verified and confirmed during on-site verification that all product types reported in the questionnaire were falling under the scope of the investigation. This claim was therefore rejected.

5.4.   Economic situation of the Union Industry

5.4.1.   General remarks

• (984) In accordance with Article 8(5) of the basic Regulation, the examination of the impact of the subsidised imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

• (985) As mentioned in recital (83), sampling was used for the determination of possible injury suffered by the Union industry.

• (986) The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity and magnitude of the amount of the countervailable subsidies and recovery from past subsidisation.

• (987) The microeconomic indicators are: average unit prices, unit cost, average labour costs, profitability, cash flow, investments and return on investments, and ability to raise capital.

5.4.2.   Macroeconomic indicators

5.4.2.1.   Production, production capacity and capacity utilisation

• (988) The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 5

Production, production capacity and capacity utilisation

	2015	2016	2017	Investigation Period
Production volume (kg)	124 892 518	134 134 913	130 312 563	114 509 129
Index	100	107	104	92
Production capacity (kg)	196 926 458	200 135 505	199 124 465	193 699 831
Index	100	102	101	98
Capacity utilisation	63 %	67 %	65 %	59 %
Index	100	106	103	93
Source: Complaint, verified questionnaire replies of the sampled Union producers.	Source: Complaint, verified questionnaire replies of the sampled Union producers.	Source: Complaint, verified questionnaire replies of the sampled Union producers.	Source: Complaint, verified questionnaire replies of the sampled Union producers.	Source: Complaint, verified questionnaire replies of the sampled Union producers.

• (989) The total Union industry’s production fluctuated but decreased by 8 % over the period considered. As the production capacity was kept almost at the same level throughout the period considered, capacity utilisation went down from 63 % to 59 %.

• (990) In their comments on the final disclosure, the GOC argued that the downturn in production and production capacity only occurred in the last year of the period considered and cannot be considered as an overall trend. A negative trend would thus only visible in the investigation period on the basis of which it cannot be concluded that the Union industry suffered material injury. The Commission’s analysis would thus undermine the purpose of selecting a three-year-period for the analysis of the injury trends.

• (991) In contrast to what was claimed by the GOC, from 2016 until the investigation period, namely for three consecutive years, production, production capacity and capacity utilisation have consistently decreased, and therefore the decrease was not only observed in the last year of the period considered. The Commission considered that the fact that there has been an increase of production volume and production capacity between 2015 and 2016 does not put into question this overall downward trend. In any event, the periods prior to the investigation period serve as reference to which the investigation period is compared in order to assess whether or not the Union industry is materially injured in the present. There is no requirement that there is a consistent downward trend covering the whole period considered. In fact, it is usual that negative factors are more acute and concentrated, and therefore showing material injury, in the investigation period.

• (992) This argument was therefore rejected.

5.4.2.2.   Sales volume and market share

• (993) The Union industry’s sales volume and market share developed over the period considered as follows:

Table 6

Sales volume and market share

	2015	2016	2017	Investigation Period
Total sales volume on the Union market (tonnes)	112 925	125 056	123 108	106 723
Index	100	111	109	95
Market share	73,7  %	71,1  %	67,8  %	63,4  %
Index	100	97	92	86
Source: Complaint, verified questionnaire replies of the sampled Union producers.	Source: Complaint, verified questionnaire replies of the sampled Union producers.	Source: Complaint, verified questionnaire replies of the sampled Union producers.	Source: Complaint, verified questionnaire replies of the sampled Union producers.	Source: Complaint, verified questionnaire replies of the sampled Union producers.

• (994) The sales volume of the Union industry decreased by 5 % over the period considered, while the imports from the PRC and Egypt accumulated increased by 53 %. Considering the increase in consumption, this translated in a decrease of market share from 73,7 % in 2015 to 63,4 % during the investigation period, namely a decrease of over 10 percentage points for the Union industry, while the PRC and Egypt increased their market share from 22,6 % in 2015 to 31,4 % during the investigation period, namely an increase of nearly 9 percentage points.

• (995) In their comments on final disclosure, the GOC argued that the Union industry’s sales volumes on the Union market did not show a clear downward trend as it increased by 9 % between 2015 and 2017 and only decreased between 2017 and 2018. Additionally, the GOC argued that overall, the sales volumes of the Union industry decreased by only 5 % between 2015 and 2018, a decrease that mostly occurred in 2018, which did therefore not show a clear downward trend over the period considered.

• (996) In contrast to the GOC’s claim, the Union industry’s sales volumes decreased consistently between 2016 to the investigation period, namely for three consecutive years. This is a clear downward trend despite the initial increase between 2015 and 2016. Furthermore, this trend should also be seen in the context of the overall increasing consumption over the period considered, as shown in recital (940) that translated in an even higher loss in the market share of the Union industry during the period considered.

• (997) This claim was therefore rejected.

• (998) In their comments on final disclosure, the GOC argued that the Union industry’s imports of GFF from its related companies India and Russia should be included in the Union industry’s sales and market share as these imports would reflect the Union industry’s deliberate decision to move production out of the Union.

• (999) Sales volume of the Union industry on the Union market only includes products produced by the Union producers for sales on the Union market. Market share of the Union industry is based on the Union industry’s sales of its own produced like product on the Union market. Therefore, imports from the Union industry even if from companies related to Union producers should not be considered as sales by Union industry, but as imports from other third countries. Imports from other third countries are considered under the causation analysis, specifically in recitals (1044) to (1050).

• (1000) This argument was therefore rejected.

5.4.2.3.   Growth

• (1001) The above figures in respect of production, sales, volume and market share demonstrate that the Union industry was not able to grow in a growing market, neither in absolute terms nor in relation to the consumption, over the period considered.

5.4.2.4.   Employment and productivity

• (1002) Employment and productivity developed over the period considered as follows:

Table 7

Employment and productivity

	2015	2016	2017	Investigation Period
Number of employees	1 184	1 221	1 207	1 197
Index	100	103	102	101
Productivity (kg/employee)	105 504	109 839	108 001	95 665
Index	100	104	102	91
Source: Complaint, verified questionnaire replies of the sampled Union producers.	Source: Complaint, verified questionnaire replies of the sampled Union producers.	Source: Complaint, verified questionnaire replies of the sampled Union producers.	Source: Complaint, verified questionnaire replies of the sampled Union producers.	Source: Complaint, verified questionnaire replies of the sampled Union producers.

• (1003) During the period considered, employment in the Union remained relatively stable with only a minor increase of 1 %. Indeed, the growth in consumption could not be matched with a similar growth in employment as sales and production volumes decreased. As production fell by 8 %, productivity of the Union industry fell by 9 % over the period considered.

• (1004) In their comments to the final disclosure, the GOC argued that the stable employment showed that the Union industry would be confident that the decrease in production and sales volume from 2018 to the investigation period would be only temporary and did therefore not call for a decrease in the workforce. The GOC concluded that this would show that the Union industry did not suffer any material injury.

• (1005) The statement of the GOC was not supported by any supporting evidence. The alleged strategy of the Union industry with regard to its employment figures was therefore considered as purely speculative. In addition, the facts of the investigation did not support such assumption as the Union industry suffered material injury as explained throughout this section. This argument was therefore rejected.

5.4.2.5.   Magnitude of the amount of countervailable subsidies and recovery from past subsidisation

• (1006) The subsidy amounts found were significantly above the de minimis level. The impact of the magnitude of the actual amounts of subsidisation on the Union industry was substantial, given the volume and prices of imports from the PRC and Egypt.

5.4.3.   Microeconomic indicators

5.4.3.1.   Prices and factors affecting prices

• (1007) The weighted average unit sales prices of the sampled Union producers to customers in the Union developed over the period considered as follows:

Table 8

Average sales prices in the Union (EUR/kg)

	2015	2016	2017	Investigation Period
Average ex-works sales price per kg in the Union to unrelated customers	2,20	2,11	2,10	2,05
Index	100	96	96	93
Cost of production per kg	2,18	2,15	2,15	2,25
Index	100	99	99	103
Source: verified questionnaire replies of the sampled Union producers.	Source: verified questionnaire replies of the sampled Union producers.	Source: verified questionnaire replies of the sampled Union producers.	Source: verified questionnaire replies of the sampled Union producers.	Source: verified questionnaire replies of the sampled Union producers.

• (1008) Whereas the Union industry’s cost of production increased by 3 % over the period considered, mainly due to the loss of high volume contracts from the wind turbine industry, the Union industry's average unit sales price to unrelated customers in the Union decreased by 7 % during the investigation period. This demonstrates the severe price suppression caused by the significantly increasing volume of imports of the product concerned. As explained in recitals (1016) and (1030), this had a significant impact on the financial situation of the Union industry, which became loss making during the investigation period.

• (1009) In their comment to the final disclosure, the GOC argued that there was no relation between the imports from the countries concerned and the increase in production cost as these would only reflect an increase in labour costs.

• (1010) While the increase in labour costs contributed to the increased production costs, the increase in the production cost was to a large part due to the loss of production and sales volume of the Union industry as a consequence of the subsidised low priced imports. The reduction in production volume led to an increase in the unit cost of production as fixed costs were distributed to less production volume. In addition, smaller orders are more work intensive for machine adjustments and require more man-hours, which had an impact on the unit labour cost.

• (1011) This argument was therefore rejected.

5.4.3.2.   Labour costs

• (1012) The average labour costs of the sampled Union producers developed over the period considered as follows:

Table 9

Average labour costs per employee (EUR)

	2015	2016	2017	Investigation Period
Average labour costs per employee	50 005	51 591	52 483	53 092
Index	100	103	105	106
Source: Questionnaire replies of the sampled Union producers.	Source: Questionnaire replies of the sampled Union producers.	Source: Questionnaire replies of the sampled Union producers.	Source: Questionnaire replies of the sampled Union producers.	Source: Questionnaire replies of the sampled Union producers.

• (1013) Between 2015 and the investigation period, the average labour costs per employee of the sampled Union producers increased by 6 %.

5.4.3.3.   Inventories

• (1014) Stock levels of the Union producers developed over the period considered as follows:

Table 10

Inventories

	2015	2016	2017	Investigation Period
Closing stocks (kg)	5 426 656	6 841 685	6 941 733	6 822 739
Index	100	126	128	126
Closing stocks as a percentage of production	4,3  %	5,1  %	5,3  %	6,0  %
Index	100	117	122	137
Source: Verified questionnaire replies of the sampled Union producers.	Source: Verified questionnaire replies of the sampled Union producers.	Source: Verified questionnaire replies of the sampled Union producers.	Source: Verified questionnaire replies of the sampled Union producers.	Source: Verified questionnaire replies of the sampled Union producers.

• (1015) Despite the fact that under normal market conditions, GFF is produced mostly to order and not on stock, there was a sharp increase in stock over the period considered of 26 %. This is explained by the fact that the Union industry was forced to compensate for the loss of high volume orders to its competitors from the countries concerned. In an attempt to maintain average unit cost at lower levels, the Union industry kept downtimes for machines at a minimum and produced GFF that could not be sold immediately to the customers.

5.4.3.4.   Profitability, cash flow, investments, return on investments and ability to raise capital

• (1016) Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

Table 11

Profitability, cash flow, investments and return on investments

	2015	2016	2017	Investigation Period
Profitability of sales in the Union to unrelated customers (% of sales turnover)	2,5  %	2,2  %	2,0  %	–3,4  %
Index	100	88	80	– 139
Cash flow (EUR)	8 928 397	5 507 539	8 100 306	1 257 171
Index	100	62	91	14
Investments (EUR)	4 572 837	5 164 214	3 963 173	5 050 438
Index	100	113	87	110
Return on investments	15 %	14 %	13 %	–17  %
Index	100	93	89	– 118
Source: Verified questionnaire replies of the sampled Union producers.	Source: Verified questionnaire replies of the sampled Union producers.	Source: Verified questionnaire replies of the sampled Union producers.	Source: Verified questionnaire replies of the sampled Union producers.	Source: Verified questionnaire replies of the sampled Union producers.

• (1017) The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. Profitability followed a decreasing trend over the period considered and became negative during the investigation period.

• (1018) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow developed negatively over the period considered. It shows a constant deterioration, in particular at the end of the investigation period.

• (1019) Investments increased slightly by 10 % over the period considered, but show changing trends within the period considered. Most of the investment concerned production line maintenance. There was no investment in new GFF capacity, which reflects the decreasing market share.

• (1020) The return on investments is the profit expressed as a percentage of the net book value of investments. It developed negatively over the period considered resulting in a negative value in the investigation period.

• (1021) In their comments to the final disclosure, CNBM Group (China) asked the Commission to explain the discrepancy between profitability and sales prices of the Union industry in the complaint and in the final disclosure.

• (1022) The findings of the Commission, which were disclosed to the parties, are based on precise micro-economic data of the sampled Union producers, verified on spot by the Commission. The complaint, on the other hand, as noted by the exporting producer in the comments on the final disclosure, indeed “does not cover the [investigation period] nor is it subject to the same level of evidentiary and disclosure obligations”. Other elements that likely lead to the difference are revisions of the sales data following the verification visits, and the inclusion into the sample of Union producers of a company that did not participate in the preparation of the complaint.

• (1023) In their comments on the final disclosure, the GOC noted that, while profitability, cash flow, and return on investments have diminished between 2015 and 2018, this decrease is mostly due to the decline in 2018.

• (1024) As explained in recital (1017), profitability showed a clearly decreasing trend over the entire period considered. This trend was particularly pronounced from 2018 to the investigation period. The observation of the GOC do not put into question this analysis. The same is true for return on investments. The observation of the GOC does not put into question the analysis of the Commission set out in recital (1020).

• (1025) Regarding cash flow, the statement of the GOC is, however, factually incorrect. Cash flow showed already a significant decrease between 2015 and 2016 and not only between 2018 and the investigation period. This statement was therefore rejected.

• (1026) Finally, the GOC argued that investments have increased between 2018 and the investigation period, while at the same time profitability, cash flow, and return on investment decreased. The GOC argued, considering the stable employment during the same period, this would indicate that the Union industry has not suffered material injury, but is confident in the future.

• (1027) As above in recitals (1004) and (1005), this statement was not supported by any evidence and it was therefore considered purely speculative. As mentioned in recital (1019) most of the investment concerned production line maintenance and there was no investment in new GFF capacity, which reflects the decreasing market share.

• (1028) On the basis of the above, all arguments related to profitability, cash flow, investments and return on investments were therefore rejected.

5.5.   Conclusion on injury

• (1029) All main injury indicators showed a negative trend during the period considered. Production volume and sales volume decreased by some 8 % and 5 %, respectively. Considering the increase in consumption, the loss in sales volume translated in a decrease of market share from 73,7 % in 2015 to 63,4 % during the investigation period, namely a decrease of over 10 percentage points.

• (1030) Likewise, the main financial indicators also showed a negative trend which reflects the significant price suppression on the Union market as reflected in Table 8. Thus, over the period considered, unit sales prices decreased by 7 %, while at the same time the unit cost of production of the Union industry increased by 3 %. The increase in the average unit cost was due to the decrease in production volume as especially high volume purchases from the wind turbine industry were lost to Chinese and Egyptian producers. As a result, the profitability of the Union industry turned from a profit of 2,5 % in 2015 to a loss of -3,4 % in the investigation period. Similar negative effects are seen in cash flow and return on investment.

• (1031) Following the final disclosure the GOC argued that the acquisition of the glass fibre enforcement business (i.e. the GFF production) of one of the sampled Union producers, namely Ahlstrom-Munksjö by the Vitrulan Group in November 2019, would require a revaluation of that Union producer’s submissions made during the investigation. The GOC argued that that the new owner’s apparent intentions would be to use the GFF production for captive use only and that these products will therefore not compete anymore with the production of the remaining Union producers on the Union market. The GOC also argued that the new owner has reported the acquisition as being expected to bring significant growth to its group, which would be in contradiction to the Commission’s findings of the Union industry having suffered material injury.

• (1032) The acquisition of the GFF business of one of the sampled Union producers in question occurred after the investigation period and therefore, as such, did not have an impact of the data provided by this Union producer (and verified by the Commission) which pertained to the investigation period and the period considered. Since the scope of the investigation is limited to the analysis of the development of the situation of the Union industry is during the period considered, any development after the investigation period cannot be taken into consideration and this argument was rejected.

• (1033) The public statement of the purchaser that the acquisition is expected to bring significant growth to its company that was not further substantiated with any evidence, cannot put into question the detailed analysis of the Commission of all injury indicators for the entire Union industry during the period considered. This analysis has clearly shown that the Union industry suffered material injury and this conclusion cannot be put into question by such unsubstantiated comment. This argument was therefore rejected.

• (1034) In their comments on the final disclosure, the GOC argued that the Commission mainly based its findings on injury on the last year of the period considered (i.e. trends from 2018 to the investigation period), ignoring the previous years of the period considered that showed either positive or stable trends and in some cases less pronounced negative trends. The GOC claimed that on this basis, the Commission erred in concluding that the Union industry suffered material injury.

• (1035) These comments were addressed in recitals (991), (996) and (1023) to (1028). As outlines in these recitals, this claim was unfounded and therefore rejected.

• (1036) Finally, in its comments on the final disclosure the GOC claimed that it is unlikely that the Union industry will suffer material injury in the future.

• (1037) Trends of the injury indicators mentioned in Article 8(4) of the basic Regulation were established during the period considered of the current investigation. Data of the Union industry were collected and verified pertaining to this period and clear downward trends showing material injury were established on that basis. There is no requirement to extend the investigation beyond this fixed period. In fact, Article 11(1) of the basic Regulation (last paragraph) provides that as a rule information relating to a period subsequent to the investigation period should not be taken into account. The GOC did not provide any information or any other evidence that would put into question the Commission’s findings or justify a departure from the general rule of Article 11(1). The claim was therefore considered speculative and rejected.

• (1038) On that basis, the Commission concluded that the Union industry clearly suffered material injury.

6. CAUSATION

• (1039) In accordance with Article 8(5) of the basic Regulation, the Commission examined whether the subsidised imports from the PRC and Egypt caused material injury to the Union industry. In accordance with Article 8(6) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the subsidised imports from the PRC and Egypt was not attributed to the subsidised imports. These factors were imports from other third countries, decrease in demand of GFF in the period 2017 to 2018, the development of raw material costs, a self-inflicted injury due to a lack of supply flexibility, and a decrease in installation of wind turbines between 2017 and 2018.

6.1.   Effects of the subsidised imports

• (1040) Volume of imports from the PRC and Egypt and their accumulated market share increased by 53 % and 39 %, respectively, over the period considered. This increase exceeds substantially the increase of consumption during the same period, which was nearly 9 %. At the same time, the Union industry lost over 5 % of their sales volume and over 10 percentage points of market share. Furthermore, the prices of imports from the PRC and Egypt fell on average by nearly 14 % during the period considered, and undercut Union industry prices, during the investigation period, by between 15,4 % and 55,8 % and by 32,3 % on average. These low prices of imports from the PRC and Egypt exercised significant price pressure during the investigation period, which did not allow the Union industry to increase their prices above the average cost of production. To the contrary, prices of the Union industry decreased by nearly 7 % during the period considered. Consequently, the profitability of the Union industry was constantly declining and reached -3,4 % losses during the investigation period.

• (1041) The analysis of the injury indicators in recitals (935) to (1038) shows that the economic situation of the Union industry worsened during the period considered and this coincided with an increase of subsidised imports from the PRC and Egypt, which were found to undercut Union industry prices during the investigation period.

• (1042) One user claimed that there is no coincidence in time between the material injury suffered by the Union industry and the increase of imports from the countries concerned. That user argued that when the situation of the Union industry worsened between 2017 and the investigation period, the volume of imports from the countries concerned and their market share had in fact decreased.

• (1043) However, as shown in Table 3 in recital (960), imports from the countries concerned increased from 50 370 tonnes to 52 892 tonnes and their market share from 27,8 % to 31,4 % from 2017 to the investigation period. That claim was therefore rejected.

6.2.   Effects of other factors

6.2.1.   Imports from other third countries

• (1044) The volume of imports from other third countries developed over the period considered as follows:

Table 12

Imports from third countries

Country		2015	2016	2017	Investigation Period
India	Import volume (in tonnes)	1 057	2 495	3 290	3 095
India	Index	100	236	311	293
India	Market share	0,7  %	1,4  %	1,8  %	1,8  %
India	Index	100	206	263	267
India	Import price (EUR/kg)	1,45	1,46	1,42	1,34
India	Index	100	101	98	93
Russia	Import volume (in tonnes)	2 071	2 013	2 047	2 352
Russia	Index	100	97	99	114
Russia	Market share	1,4  %	1,1  %	1,1  %	1,4  %
Russia	Index	100	85	84	103
Russia	Import price (EUR/kg)	1,47	1,41	1,39	1,31
Russia	Index	100	96	94	89
Other third countries (excl. India and Russia)	Import volume (in tonnes)	2 657	3 339	2 649	3 208
Other third countries (excl. India and Russia)	Index	100	126	100	121
Other third countries (excl. India and Russia)	Market share	1,7  %	1,9  %	1,5  %	1,9  %
Other third countries (excl. India and Russia)	Index	100	110	84	110
Other third countries (excl. India and Russia)	Import price (EUR/kg)	2,39	2,20	2,16	2,12
Other third countries (excl. India and Russia)	Index	100	92	90	89
Source: Comext, Questionaire replies Union producers, market intelligence provided by the Complainant.	Source: Comext, Questionaire replies Union producers, market intelligence provided by the Complainant.	Source: Comext, Questionaire replies Union producers, market intelligence provided by the Complainant.	Source: Comext, Questionaire replies Union producers, market intelligence provided by the Complainant.	Source: Comext, Questionaire replies Union producers, market intelligence provided by the Complainant.	Source: Comext, Questionaire replies Union producers, market intelligence provided by the Complainant.

• (1045) Imports from other third countries were mainly from two countries, namely India and Russia. These two countries had individually a market share above 1 % during the investigation period, while the imports of the remaining third countries each represented less than 1 % market share and together accounted for 1,9 %.

• (1046) The Indian exporters are related to the Union industry. The market share of Indian imports gradually increased throughout the period considered from 0,7 % to 1,8 %; however, these intra-company sales did not put any pressure on Union prices as they were made at transfer price level. The imports in question are semi-finished products that are used in the manufacturing of the final product, based on a technology of a specific European producer and are not sold in the open market. Therefore, the Commission concluded that these imports have not contributed to the injury suffered by the Union industry.

• (1047) The market share of Russian imports stayed stable over the period considered and even decreased between 2015 and 2017, before reaching similar levels in the investigation period as in 2015. Even though the prices of the imports from Russia were on average undercutting the Union producers’ prices, considering the overall market share and the trend, it is unlikely that they had any impact on the injury suffered. Rather, the prices were a reaction to the price pressure from the PRC and Egypt. Therefore, Russian imports have not contributed to the loss of market shares by the Union industry throughout the period considered. In addition, the investigation found that the Russian exporters are Union industry's related companies and, therefore, these imports put no pressure on Union prices, as these were intra-company sales made at transfer prices.

• (1048) Therefore, the Commission concluded that imports from other third countries were not the source of injury described in recitals (984) to (1038) above.

• (1049) In their comments on the final disclosure, the GOC argued that by outsourcing production to Russia and India the Union industry would self-inflict the injury. However, the GOC did not address the Commission’s analysis in recitals (1046) and (1047) of this regulation, which clearly concluded that imports from India and Russia were not a cause of injury to the Union industry.

• (1050) The Commission found that imports from India were in fact of a semi-finished product, which were used for the production of the like product by a Union producer. Likewise, imports from Russia, although on average cheaper than the Union industry product, have been stable during the period considered and found not to be a cause of injury to the Union industry. As a result, imports from these two countries cannot be considered self-inflicted injury. Therefore, this claim was rejected.

6.2.2.   Decrease of GFF demand in the Union between 2017 and the investigation period

• (1051) One user claimed that the injury of the Union industry was caused by the decrease in consumption between 2017 and the investigation period and another user claimed that the injury was caused by the decrease of the installations of wind turbines during this same period. The decrease of consumption from 2017 to 2018 of -7,3 % does not explain the sales volume loss of the Union producers of -13,3 % in the same period, especially taking into account that imports from the countries concerned increased by 5 % from 50 370 tonnes to 52 892 tonnes and their market share went from 27,8 % to 31,4 % in the same period between 2017 and the investigation period.

• (1052) That the injury was not caused by a decrease of consumption in 2018 gets even clearer looking at the entire period considered and not just comparing the last two years. The consumption in the Union increased during the period considered, while the market share of the Union industry continuously decreased during the same period and market shares of the countries concerned continuously increased. The Union industry could not benefit from the overall increase in consumption because of the subsidised imports from the countries concerned that were consistently and substantially undercutting the Union industry’s sales prices. While the Union industry became lossmaking only in the investigation period, the other years already showed a continuous decrease in their profits over the years from 2015-2017 as shown in recital (1016).

• (1053) Those claims were therefore rejected.

• (1054) In their comments on the final disclosure, the GOC argued that the situation of the Union industry depended on the development of the Union consumption rather than imports from third countries. The GOC argued that this would be demonstrated by the fact that during the increase of consumption between 2015 and 2016 the Union industry benefited most by increasing their sales volume by roughly 12 000 tonnes. Furthermore, the GOC argued that the Commission disregarded the correlation between the decrease in the Union industry’s sales volume and the decrease in demand in the Union by concluding that the decrease in the Union industry’s sales volumes exceeded the decrease in the Union consumption between 2017 and 2018.

• (1055) While a decrease in consumption should have an equal effect on the Union industry and the imports from the countries concerned, the investigation has shown that despite the decrease in consumption between 2018 and the investigation period, imports from the countries concerned managed to increase their import volume by 8 % and their market share by 3,6 percentage points from 27,8 % to 31,4 %, while the Union industry lost sales volume and market share. It is recalled that the investigation established that imports from the countries concerned were subsidised and entering the Union market at prices that were significantly undercutting the Union industry sales prices on the Union market. Likewise, between 2015 and 2016, when consumption increased, imports from the countries concerned increased by 24 % and market share 1,8 percentage points, while the Union industry’s sales volume increased by only 11 % in comparison and market share even decreased by by 2,6 percentage points. The assertion that the Union industry mostly benefitted from such increase in consumption is therefore incorrect.

• (1056) In their comments on the final disclosure, the GOC also argued that there has been a significant increase in wind turbine installations in 2019, an increase that is to be expected to continue in future. Since the wind industry is the main driver of the GFF consumption, that would have a positive impact on the Union industry. In support of its claim, the GOC referred to a publication of Wind Europe showing statistics concerning the development of wind turbine installations up to 2019 and including some prognosis for the future development of wind turbine installations.

• (1057) As mentioned above, a positive development of the Union consumption of GFF does not necessarily have a positive impact on the Union industry’s situation. As shown in recital (1055), the increase in consumption between 2015 and 2016 lead to an increase in import volume and market share from the countries concerned, while the Union industry could not fully benefit from such increase and even lost market share during this period. While the statistics of Wind Europa indeed showed a positive trend in wind turbine installations in 2019, they also revealed that the installations in 2019 remained still lower than those in 2017. In 2017, consumption showed already a decreasing trend and the situation of the Union industry deteriorated. In conclusion, the mere fact that wind turbine installations increased in 2019 does not allow any conclusion as to the development of the import volume of the countries concerned and the situation of the Union industry during that year.

• (1058) All above arguments had therefore to be rejected.

6.2.3.   Increase of raw material cost

• (1059) Both cooperating users argued that the increase of the cost of the main raw material (GFR) imported from the PRC by imposing definitive countervailing duties on these products as well as the increase in energy cost was the cause for the injury. Average unit cost of the Union industry increased only slightly by 3 % over the period considered, while import prices from the countries concerned decreased by nearly 14 % and undercut the Union prices by 32,3 %. Therefore, the injury suffered cannot be attributed to the increase in cost but to the pressure exercised by the subsidised imports, which prevented the Union industry from increasing its prices in view of the increased costs.

• (1060) Those claims were therefore rejected.

6.2.4.   Lack of flexibility of the Union industry

• (1061) Users argued that the Union industry has a lack of flexibility and would only provide large quantities upon long-term commitments, which bear, however, significant financial risks to the users (wind industry) that chose other suppliers instead. However, the investigation found that the wind industry has a policy of diversifying its supply and always integrates Union GFF producers in its supply chain. The investigation has also shown that it is possible for a wind energy producer to have a multi-sourcing strategy only with Union GFF producers. This demonstrates that there are Union GFF producers that provide the wind industry with the product quality under the condition the wind industry requires as further elaborated in recital (1081).

• (1062) These arguments were therefore rejected.

• (1063) In their comments on the final disclosure, the GOC argued that the Chinese producers have a legitimate competitive advantage by providing the integrated kitting service, whereas the Union industry failed to adequately change their business strategy to meet this demand.

• (1064) As demonstrated in recital (1107) the Union industry has specialized kitting companies, which fulfil this function. Thereby the users are able to receive the same kind of kits from Union sourcing than from Chinese producers. While the Chinese producers might have a logistic advantage of one less transport between GFF production and kitting, the GOC has not demonstrated how this could have a major effect in a market, which is driven by price competition and product quality.

• (1065) This claim was therefore rejected.

• (1066) In their comments on the final disclosure, the GOC argued that the Union industry failed to adequately adjust their business strategy to their reduced sales by reducing employment levels and that the Union industry even increased investments.

• (1067) The Commission noted that letting employees go might result in higher costs in short term and the fact that the Union industry would have to focus on smaller orders, which are more labour intensive due to more frequent machine adjustments. With regards to the investments, as mentioned in recital (1019), the verifications have shown that these were related mainly to necessary maintenance and replacements and not to production capacity increase.

• (1068) This claim is therefore rejected.

6.3.   Conclusion on causation

• (1069) The Commission concluded that there was a clear coincidence in time between the substantial increase of imports from the countries concerned and the deterioration of the situation of the Union industry.

• (1070) The Commission has also investigated other factors of injury and has not found at this stage of the proceedings any other factors, which contributed to the material injury suffered by the Union industry. In fact, none of the other factors, either individually or collectively, put into question that there is a genuine and substantial relationship between the subsidised imports from the PRC and Egypt and the material injury suffered by the Union industry.

• (1071) In their comments to the final disclosure, the GOC claimed that the Commission failed to take into consideration that other factors such as the decrease in consumption had contributed to the material injury. In this context, the GOC referred to the WTO Appellate Body Ruling in US – Hot Rolled Steel claiming that the Commission should have separated and distinguished the injurious effect from other factors from the injurious effect of the subsidised imports. As set out in recitals (1044) to (1068), and in view of the conclusions reached in recital (1070) that none of the other factors was found to have contributed to the injury suffered by the Union industry, this claim was rejected.

7. UNION INTEREST

• (1072) In accordance with Article 31 of the basic Regulation, the Commission examined whether it could clearly conclude that it was not in the Union interest to adopt countervailing measures corresponding to the total amount of countervailable subsidies in this case, despite the determination of injurious subsidisation. The determination of the Union interest was based on an appreciation of all various interests involved, including those of the Union industry, importers, users, suppliers and ancillary industry namely cutters/kitters.

7.1.   Interest of the Union industry

• (1073) The investigation has shown that the Union industry is suffering material injury because of the effects of subsidised imports, which undercut Union’s prices and exercise price pressure causing significant loss of market share and leading to losses during the investigation period, as elaborated in recitals (984) to (1069) above.

• (1074) The Union industry will benefit from measures, which would likely prevent a further surge of imports from the PRC and Egypt at very low prices. Without measures, Chinese and Egyptian producers will continue to export GFF on the Union market at subsidised levels and exert further price pressure, preventing the Union industry from selling GFF at an adequate profit and thus causing further material injury to the Union industry.

7.2.   Interest of the users

• (1075) Wind turbine producers are the biggest users of GFF accounting for around 60-70 % of the GFF demand in the Union. The other users include boat (around 11 %), truck (around 8 %) and sport equipment (around 2 %) producers, as well as pipe rehabilitation system providers (around 8 %).

• (1076) Upon initiation, 25 known users in the Union were contacted and invited to cooperate. Two wind turbine producers came forward opposing potential measures on GFF. Three wind turbine producers came forward but did not express their views, despite being invited to do so in the notice of investigation and in the users’ questionnaires, they replied to. The two wind turbine producers opposing measures were supported by an association representing the European wind energy industry However, one of its members, a French wind energy association explicitly expressed to remain neutral about potential duties. Five wind turbine producers, including Vestas and SGRE, provided a questionnaire reply. One wind turbine producer declared to source GFF exclusively from various Union producers. Various ski equipment producers and various kitting companies came forward in support of the potential measures.

7.2.1.   Wind turbine producers

• (1077) Two main types of wind turbines are (i) off-shore, which are generally bigger and meant to operate off coastal lines, and (ii) on-shore, which are meant to operate on land.

• (1078) Wind park projects in the Union are traditionally carried out by project developers, who are either energy companies or investors, and not by the wind turbine producers themselves. Whereas originally Member States guaranteed a feed-in price for the produced energy from wind parks, as of 2014 the support has moved to tender based projects, in which various project developers compete, most recently on energy-neutral basis (namely wind can compete with solar energy).

• (1079) Vestas and SGRE are among the biggest wind turbine producers in the Union, together consuming above 20 % of the entire Union demand of GFF. They together import above 30 % of all imports from the countries concerned. Both companies put forward several claims, namely (i) the loss of supply stability; (ii) the loss competitiveness of the wind energy industry; (iii) risk of relocation part of their production, and (iv) the compatibility with the Union renewable energy goals, in case measures are imposed.

(i) Supply stability

• (1080) Vestas and SGRE argued that the GFF used in turbine blades undergo a sophisticated certification process, with intense and lengthy testing phases. They further argued that only the Chinese GFF producers can supply high volumes of homogeneous quality on short notice due to their vertical integration. They also argued that the production volume of the Union producers is insufficient as it is below total Union consumption. According to the users, for these reasons, the wind turbine industry cannot quickly switch suppliers and even if it could, there is not enough GFF being produced in the Union.

• (1081) Whilst the majority of Union producers are not vertically integrated, the investigation has shown that, to prevent supply difficulties, the wind turbine producers usually have a multi-sourcing strategy, regularly purchasing the same kind of GFF from a Union producer and a Chinese or Egyptian producer. However, the Commission also received data from a third wind turbine producer, which multi-sources exclusively from Union producers. The fact that the multi-sourcing of a specific GFF includes regularly Union producers, both vertically integrated and non-integrated, demonstrates that non-integrated producers can equally provide the required GFF for the wind turbine production.

• (1082) With regard to the production capacity in the Union, as shown in Table 5, whilst the Union production is currently lower than consumption as shown in Table 2, the total Union production capacity exceeds it. The investigation has shown that there is currently a high spare capacity available of over 40 %, which is due to the increase of subsidised and low priced imports from the PRC and Egypt that have taken over market share from the Union industry. That spare capacity is spread between 16 Union producers, rendering the Union a competitive market with varied internal sources of supply. Furthermore, additional capacity can be easily built, as only low investments would be required. The Union industry is already suppling the wind turbine industry and is therefore already a certified supplier; it can therefore easily increase its supply under fair market conditions.

• (1083) Moreover, in medium to long term, wind turbine producers would be able to certify additional GFF producers either from the Union or from other non-subsidised sources. As mentioned in recital (1076) one of the wind turbine producers developed a multi-sourcing strategy based on several Union producers. Furthermore, there is sufficient spare capacity in the Union to do so at a scale needed by large wind turbine producers.

• (1084) Those claims were therefore rejected.

(ii) Competitiveness of the wind energy industry