Commission Implementing Regulation (EU) 2020/1428 of 12 October 2020 imposing a provisional anti-dumping duty on imports of aluminium extrusions originating in the People’s Republic of China

	2016	2017	2018	Investigation period
Production volume (tonnes)	2 760 000	2 890 000	2 960 000	2 810 000
Index	100	105	107	102
Production capacity (tonnes)	4 135 000	4 140 000	4 261 000	4 284 000
Index	100	100	103	104
Capacity utilisation (%)	66,7	69,8	69,5	65,6
Index	100	105	104	98
Source: European Aluminium	Source: European Aluminium	Source: European Aluminium	Source: European Aluminium	Source: European Aluminium

• (241) Throughout the period considered, the production volume of the Union industry increased by 2 %. A detailed analysis shows that from 2016 to 2018 Union production increased by 7 %, while in the investigation period Union production fell by 5 percentage points.

• (242) The overall increase over the period considered was due to the growth in demand described in Table 1. However, the Union industry only managed to increase their production by 2 % during the period considered, in a market growing by 7 %. The Union industry was therefore unable to fully benefit from the market growth.

• (243) During the period considered, Union production capacity increased by 4 %. This moderate increase in capacity reflects the attempts made by some Union producers’ to increase capacity to match the growth potential of aluminium extrusions.

• (244) During the period considered, Union capacity utilisation fell by 2 % because the Union producers were unable to increase production in line with market growth.

4.6.2.   Sales volume and market share

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

Table 5

Sales volume and market share

	2016	2017	2018	Investigation period
Total Sales volume on the Union market - both free and captive (tonnes)	2 629 338	2 751 455	2 817 143	2 675 640
Index	100	105	107	102
Captive market sales	61 338	60 455	60 143	56 640
Index	100	99	98	92
Captive market sales as a % of total market sales	2,0	1,8	1,8	1,7
Index	100	92	89	87
Free market sales	2 568 000	2 691 000	2 757 000	2 619 000
Index	100	105	107	102
Market share of free market sales (%)	85,1	82,7	82,3	81,1
Index	100	97	97	95
Source: European Aluminium and Eurostat	Source: European Aluminium and Eurostat	Source: European Aluminium and Eurostat	Source: European Aluminium and Eurostat	Source: European Aluminium and Eurostat

• (246) Throughout the period considered, the total Union sales volume of the Union industry increased by 2 %.

• (247) Union sales volume on the free market also increased by 2 % over the period considered. From 2016 to the 2018 Union sales volume on the free market increased by 7 % and fell by 5 % in the investigation period. Union sales followed the trend of Union production very closely because the industry largely operates a production to order system

• (248) The Union’s industry captive market (expressed as a percentage over total Union sales) was around 2 % throughout the period considered. The small captive market suffered a fall of 8 % over the period considered, but this had a marginal impact due to the limited size of this market.

4.6.3.   Growth

• (249) Consequently, it results from the fall in market share of Union sales volumes that the Union industry was not able to keep up with the growth on the Union market over the period considered.

4.6.4.   Employment and productivity

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

Table 6

Employment and productivity

	2016	2017	2018	Investigation period
Number of employees (FTE)	39 326	41 449	42 551	39 836
Index	100	105	108	101
Productivity (tonnes/FTE)	70,18	69,72	69,56	70,54
Index	100	99	99	101
Source: European Aluminium	Source: European Aluminium	Source: European Aluminium	Source: European Aluminium	Source: European Aluminium

• (251) The Union industry employment rose by 8 % from 2016 to 2018 on an FTE basis. This rise was followed by a fall of 7 % in the investigation period. Again, this development largely follows the trend in production volume shown in Table 4.

• (252) European Aluminium explained that they carried out periodical employment surveys which were usually based on around 40 % of Union production. The figures quoted above are an extrapolation of the data so that it covers the entire industry. The results of these surveys are therefore considered representative for the Union industry as a whole.

• (253) As the figures for production and employment mirrored each other closely, productivity in terms of tonnes per employee remained largely stable.

4.6.5.   Magnitude of the dumping margin and recovery from past dumping

• (254) All dumping margins were significantly above the de minimis level. The impact of the magnitude of the actual margins of dumping on the Union industry was substantial, given the volume and prices of imports from the country concerned.

• (255) This is the first anti-dumping investigation regarding the product concerned. Therefore, no data were available to assess the effects of possible past dumping.

4.7.   Microeconomic indicators

4.7.1.   Prices and factors affecting prices

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

Table 7

Sales prices in the Union

	2016	2017	2018	Investigation period
Average unit sales price on the free market (EUR/tonne)	3 053	3 372	3 508	3 619
Index	100	110	115	119
Unit cost of production (EUR/ tonne)	2 960	3 245	3 448	3 541
Index	100	110	116	120
LME 3 month aluminium billet delivered (Rotterdam, Germany and Italy average in EUR/ tonne)	1 766	2 066	2 163	1 950
Index	100	117	122	110
Source: Sampled Union producers and LME	Source: Sampled Union producers and LME	Source: Sampled Union producers and LME	Source: Sampled Union producers and LME	Source: Sampled Union producers and LME

• (257) Sales prices on the Union market to unrelated parties (the free market) increased from 3 053 EUR/tonne to 3 619 EUR/tonne over the period considered, an increase of 19 %.

• (258) This increasing trend should be seen in the light of important developments in the industry. Firstly, over the period considered all four sampled Union producers changed their product mix. In particular, the Union producers increased their sales of high value-added products, which have higher prices. Also, market prices increased because of increases in the price of aluminium billets as demonstrated by the LME 3 month delivered price.

• (259) The unit cost of production of the sampled producers was also heavily impacted by the LME price development and contained the additional costs incurred by the sampled producers in moving to higher value added products.

• (260) The unit cost of production increased by (20 %), i.e. at a greater rate than average prices in the free Union market (19 %).

4.7.2.   Labour costs

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

Table 8

Average labour costs per employee

	2016	2017	2018	Investigation period
Average labour costs per employee (EUR)	33 971	33 002	33 734	34 584
Index	100	97	99	102
Source: Sampled Union producers	Source: Sampled Union producers	Source: Sampled Union producers	Source: Sampled Union producers	Source: Sampled Union producers

• (262) The average labour costs per employee increased by 2 % over the period considered.

4.7.3.   Inventories

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

Table 9

Inventories

	2016	2017	2018	Investigation period
Closing stocks (tonnes)	8 583	8 930	11 056	10 845
Index	100	104	129	126
Closing stocks as a percentage of production (%)	3,4	3,4	4,1	4,4
Index	100	98	119	128
Source: Sampled Union producers	Source: Sampled Union producers	Source: Sampled Union producers	Source: Sampled Union producers	Source: Sampled Union producers

• (264) The stocks of the sampled Union producers increased by 26 % over the period considered. However, closing stocks as a percentage of production were low throughout the period. This is because the aluminium extrusions industry generally operates on a production to order basis. This indicator is therefore of a lesser importance in the overall injury analysis.

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

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

Table 10

Profitability, cash flow, investments and return on investments

	2016	2017	2018	Investigation period
Profitability of sales in the Union to unrelated customers (% of sales turnover)	4,9	4,3	3,0	2,0
Index	100	88	61	42
Cash flow (EUR)	37 678 269	43 401 626	8 594 466	35 807 285
Index	100	115	23	95
Investments (EUR)	27 645 569	46 341 778	28 774 003	47 614 938
Index	100	168	104	172
Return on investments (%)	34,8	25,4	16,7	10,0
Index	100	73	48	29
Source: Sampled Union producers	Source: Sampled Union producers	Source: Sampled Union producers	Source: Sampled Union producers	Source: Sampled Union producers

• (266) 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. Extraordinary costs and unrealised hedging gains and losses were not included in the figures in Table 10. The profitability of the sampled producers was positive but low throughout the period considered and declined from 4,9 % in 2016 to 2,0 % in the investigation period. This development shows significant price suppression. As explained in recital (272), the costs of the Union producers increased more than their prices. The Union industry was unable to raise prices at the same extent as costs were increasing because of the downward pressure caused by imports from China (both in terms of volumes and low prices). Indeed, throughout the period, Chinese prices were consistently low and significantly below Union industry prices, limiting price increases which would have been expected in a context of inter alia increasing raw material costs, and also growing demand. Chinese imports were significant during the period concerned. This resulted in depressed and decreasing profitability.

• (267) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow fluctuated. The sampled Union producers had positive but low levels of cash flow throughout the period considered. Cash flow fell by 77 % from 2016 to 2018 but recovered significantly in the investigation period. This recovery was largely based on one of the sampled producers which converted large quantities of work in progress at the beginning of 2019 to sales of finished goods in the investigation period.

• (268) The Union producers continued to invest in the period considered as demonstrated by the investment figures above. Investments were between 27 and 47 million EUR per year. The investments were mainly made in order to make efficiency gains and to move the businesses towards high value added products and customer focus. This was seen as essential for the sampled producers to maintain competitiveness in the market.

• (269) The return on investments is the profit in percentage of the net book value of investments. It developed negatively over the period considered and in fact fell by 71 %. This negative development shows that, although investments have continued to be made, in order to maintain competitiveness, the returns on those investments have fallen substantially over the period considered.

• (270) All four sampled producers are part of large groups of companies and they have continued to raise capital for investments during the period considered. However, with returns on investments falling so quickly, the sampled producing entities ability to raise capital in the future is clearly in jeopardy.

4.7.5.   Conclusion on injury

• (271) Several indicators showed a positive trend such as production, capacity, sales volume on the Union market and employment. However, the positive development of these indicators related to the increase in consumption and, in fact, such indicators should have increased more strongly, if the Union industry would have been able to fully benefit from the growing market. Indeed, despite the increase in sales volume, the Union industry lost market share in the free market.

• (272) The prices of sales on the free market increased by 19 %. However, these price increases did not keep up with increases in costs (20 %). This development was caused by price suppression. The Union industry was unable to raise prices at the same extent as costs were increasing because of the downward pressure caused by imports from China which undercut the prices of the Union industry. Bearing in mind that profitability levels were below the target profit level throughout the period considered, and the volumes and low prices of the Chinese imports, the Commission concluded that price increases had been suppressed throughout the period considered. As a consequence, all financial performance indicators, namely profitability, return on investment and cash flow showed a declining trend, and profits made were below the target profit level throughout the period considered. This is particularly damaging because the market for the product under investigation was growing in the period considered, but the Union industry still suffered low and falling profits. Despite keeping investments as high as possible in order to remain competitive, the Union industry was clearly not delivering sufficiently high profit levels to encourage future investment. Furthermore, the decline of the Union industry was taking place in a period of growth on the Union market. The Union industry lost 5 % in market share in a growing market, and was visibly not able to take advantage from the growth of the Union market.

• (273) Furthermore, it should be recalled that the Union industry is serving a diverse customer base, which has continuously developing requirements. It is essential that the Union industry continues to invest in R&D and customer focus solutions. The rapidly deteriorating development of return on investments (‒ 71 %) in itself is, therefore, a serious threat to the continuing viability of the industry.

• (274) On the basis of the above, the Commission concluded at this stage that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation.

5. CAUSATION

• (275) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the country concerned caused material injury to the Union industry. In accordance with Article 3(7) 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 dumped imports from the country concerned was not attributed to the dumped imports. These factors are: imports from third countries, the export performance of the Union industry, captive sales, raw material prices and the evolution in consumption.

5.1.   Effects of the dumped imports

• (276) The deterioration in the situation of the Union industry coincides with significant penetration by imports from China, which consistently undercut the Union industry’s prices and in any event suppressed EU market price levels, establishing a causal nexus between the two.

• (277) The volume of imports from China increased (as shown in Table 2) from around 209 000 tonnes in 2016 to around 310 000 tonnes in the investigation period, an increase of 48 %. In terms of market share the increase over the same period was from 6,9 % to 9,6 %, an increase of 39 %. Over the same period (as shown in Table 5), the Union industry sales on the free market increased by only 2 % and its market share fell from 85,1 % to 81,1 %, a fall of 5 %. The sales on the smaller captive market fell by 8 %. The dumped imports have increased steadily on a year-on-year basis in terms of both absolute and relative terms. As shown by Table 1, consumption on the Union market has increased by 7 % over the period considered. However, it is evident that it has been mainly imports from China that took advantage from this growth.

• (278) The prices of the dumped imports increased by 4 % over the period considered (as shown in Table 3) from 2 812 EUR/tonne in 2016 to 2 912 EUR/tonne in the investigation period. Over the same period world aluminium prices increased by around 10 % (as shown by the LME index at Table 7). Furthermore, the Union industry prices increased by 19 % over the period considered as shown in Table 7. However, this Table also shows that the Union industry’s average costs increased by 20 % over the same period. Finally, the undercutting margin calculated for the exporting producers is over 25 % on average.

• (279) As explained above the increase in the Union industry’s prices and costs need to be analysed in the light of changes in the Union industry’s product mix and increases in aluminium prices. However, the increases in prices of the Union industry and its attempts to move into more high value added products (as required by customers), were not sufficient to prevent a further decrease of the profitability of its sales, which continued to fall throughout the period considered. This was because of the downward pressure imposed on market prices by the rising volume of dumped imports from China at low prices. It was therefore, concluded that the imports from China also caused price suppression and prevented price increases.

• (280) One interested party (Airoldi) questioned how Chinese imports comprising a limited market share in the investigation period could have such a significant impact. In this respect it is noted that the product under investigation is usually sold on a contract basis, where price is an important element, often the most important one. The existence on the market of low-priced offers from Chinese exporting producers explains why these sales were able to exert such a significant influence on market prices overall. The Chinese producers in the investigation period sold both to traders in the Union and to end users. This meant that their negative influence on market prices was felt in all sales channels of the market and not just those prices for sales of simple products to distributors.

• (281) The Union market for aluminium extrusions is progressively becoming more focused on providing bespoke solutions for customers in various industries such as automotive, engineering, transport, and building and construction. This development means that producers supplying the Union market need to invest in R&D for new products and to provide complex solutions to meet the needs of customers. However, despite this investment the Union industry has seen a progressive loss of profitability and market share. This development is caused by the price pressure exerted by the Chinese exporting producers at significant volumes.

• (282) Furthermore, the penetration of Chinese imports over the period considered has been achieved not only in the parts of the market which purchase simple, commodity type products. There is clear evidence that the Chinese are progressively penetrating the market by increasing their presence in the contract sales part of the market. Price is not the only important element in such contracts but it is clear that the undercutting margins mentioned above (over 25 %) play a key role in the decision making of customers.

• (283) It was, therefore, concluded that the imports from China caused material injury to the Union industry. Such injury had mainly price effects, but also volume effects.

5.2.   Effects of other factors

5.2.1.   Imports from third countries

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

Table 11

Imports from third countries

Country		2016	2017	2018	Investigation period
Turkey	Volume (tonnes)	77 136	87 706	107 393	110 463
Turkey	Index	100	114	139	143
Turkey	Market share on the free market (%)	2,6	2,7	3,2	3,4
Turkey	Average price	3 520	3 601	3 569	3 448
Turkey	Index	100	102	101	98
Other third countries	Volume (tonnes)	163 434	221 028	201 350	188 809
Other third countries	Index	100	135	123	116
Other third countries	Market share on the free market (%)	5,4	6,6	6,0	5,8
Other third countries	Average price	3 629	3 513	3 841	3 879
Other third countries	Index	100	97	106	107
Total of all imports except the country concerned	Volume (tonnes)	240 570	308 734	308 743	299 273
Total of all imports except the country concerned	Index	100	128	128	124
Total of all imports except the country concerned	Market share on the free market (%)	8,0	9,5	9,2	9,3
Total of all imports except the country concerned	Average price	3 594	3 538	3 747	3 720
Total of all imports except the country concerned	Index	100	98	104	104
Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat

• (285) Imports from Turkey increased by 43 % over the period considered from around 77 000 tonnes in 2016 to around 110 000 in the investigation period. The market share of these imports increased from 2,6 % in 2016 to 3,4 % in the investigation period.

• (286) An overall examination of the imports of the product under investigation shows an average price of 3 448 EUR/tonne for Turkey during the investigation period, which is 18 % higher than the overall average price of Chinese imports of 2 912 EUR/tonne. A more detailed examination of the various CN codes shows that most of these imports (89 %) related to CN codes 7604 21 00 and 7604 29 90 which are hollow and solid profiles respectively. Due to the overwhelming importance of these product types, a separate price comparison was made. The average price of these profiles was 3 458 EUR/tonne during the investigation period. This is 19 % higher than the average price of the Chinese imports under the same two CN codes for the same period.

• (287) Imports from other third countries (mainly Russia, Switzerland, Norway and Bosnia and Herzegovina) also consisted mainly of solid and hollow profiles (69 %). Imports from other third countries increased by 16 % over the period considered from around 163 000 tonnes in 2016 to around 189 000 in the investigation period. The market share of these imports slightly increased from 5,4 % in 2016 to 5,8 % in the investigation period. The average price of such imports was 3 720 EUR/tonne, which is even higher than prices from Turkey.

• (288) Bearing in mind the volume, price and market share of imports from Turkey and other third countries, their impact on the Union industry is not such as to cause its deterioration.

5.3.   Export performance of the Union industry

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

Table 12

Export performance of the Union producers

	2016	2017	2018	Investigation period
Export volume (tonnes)	201 697	212 634	218 680	208 144
Index	100	105	108	103
Average price (EUR/tonne)	5 213	5 436	5 623	5 797
Index	100	104	108	111
Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat

• (290) Exports of the Union industry increased by 3 % over the period considered from around 202 000 tonnes in 2016 to around 208 000 in the investigation period.

• (291) The average price of these exports increased by 11 % over the period considered from 5 213 EUR/tonne in 2016 to 5 797 EUR/tonne in the investigation period.

• (292) Against the backdrop of their contribution to total production and sales of the Union industry, and bearing in mind the high price of these exports and their stable volume it is clear that these exports would not have caused injury to the Union industry.

5.4.   Consumption

• (293) As shown at Table 1, from 2016 to 2018 the free Union market increased by 11 % from around 3 to 3,35 million tonnes and in the investigation period it fell by 4 percentage points to around 3,2 million tonnes. The overall increase over the period considered demonstrates that there was no contraction in demand.

• (294) Bearing in mind that consumption increased over the period considered, it could be concluded that developments in consumption would not have caused injury to the Union industry.

5.5.   Captive use

• (295) As shown at Table 5, during the period considered the Union industry’s sales to the captive market fell by 8 %. However, the volumes involved in each year were 2 % or less of total Union industry sales.

• (296) Bearing in mind the very limited size of the captive market, its developments would not have caused injury to the Union industry.

5.6.   The Price of Raw Materials

• (297) The main raw material used by the Union industry is aluminium alloy billets, although some producers are more integrated and they also manufacture the aluminium alloys used in the production of aluminium extrusions.

• (298) Aluminium prices are set by the LME and represent around two thirds of the cost of typical aluminium extrusions, although this percentage is variable depending on the complexity of the final product sold.

• (299) As shown at Table 7, from 2016 to the investigation period the LME billet delivered indices increased by 10 % over the period considered. This would represent an increase in the cost of production of around 6 %–7 % for the product under investigation.

• (300) However, the Union industry usually sells using contracts whereby the most recent LME price is quoted, together with conversion and delivery costs. Union producers then use hedging facilities to cover them against the difference between the aluminium price quoted in the contract and the actual purchase price of the aluminium.

• (301) Bearing in mind the way that aluminium prices are set using contracts, and the fact that the Union industry protects itself against raw material fluctuations, it was clear that increases in raw material prices would not have caused injury to the Union industry.

5.7.   Conclusion on causation

• (302) 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. The effect of all other factors, on the Union industry’s negative developments in terms of loss of market share, price undercutting and falling profitability, return on investment and cash flow was practically non-existent.

• (303) On the basis of the above, the Commission concluded at this stage that the dumped imports from the country concerned caused material injury to the Union industry and that the other factors, considered individually or collectively, did not attenuate the causal link between the dumped imports and the material injury. The injury consists mainly of a loss of market share, price undercutting and suppression and falling profitability, return on investment and cash flow.

6. UNION INTEREST

• (304) In accordance with Article 21 of the basic Regulation, the Commission examined whether it could conclude that it was not in the Union interest to adopt measures in this case in respect of imports from China 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, users and other relevant economic operators.

6.1.   Interest of the Union industry and suppliers

• (305) There are some 200 companies producing aluminium extrusions in the Union. The imposition of measures would allow the Union industry to recover lost market share, while improving their low profitability towards levels considered sustainable.

• (306) The Union industry employs around 40 000 workers directly with many more relying on it on an indirect basis. The producers are widely spread throughout the Union.

• (307) The absence of measures is likely to have a significant negative effect on the Union industry in terms of further price suppression and lower sales and, thus lowering profitability and investments. The measures will allow the Union industry to exploit its potential on a Union market, recover lost market share, and improve profitability to levels to be expected under normal conditions of competition.

• (308) Aluminium is much lighter than steel and is regarded in the Union as a key raw material for making progress towards the meeting of emissions targets set by the Paris Agreement (2015). An example being the increased use of aluminium extrusions in the automobile industry and they are key in the establishment of the electric vehicle industry in the Union.

• (309) In addition to representing the Union industry, European Aluminium also represents a large part of the primary aluminium sector in the Union. Aluminium extrusions consume around 20 % of the primary aluminium produced in the Union. The primary aluminium sector is also a large employer in the Union and it relies on the health of its downstream customers. The main output of this sector for the aluminium extrusions industry are billets. The viability of these upstream suppliers will also be put at risk if the aluminium extruding industry contracts further.

6.2.   Interest of importers

• (310) Very little cooperation was received from the importing sector. 6 unrelated importers submitted a sampling form representing only around 2 % of Chinese imports.

• (311) The sampled importers of aluminium extrusions are specialists in the aluminium business and around 50 % of their turnover derived from aluminium extrusions. The importers purchased around 50 % of their aluminium extrusions from the country concerned, the other 50 % being sourced from the Union industry and other third countries. Although, aluminium extrusions from China usually incurred a customs duty of 6 %–7,5 %, this business was significantly more profitable than the other products imported and more profitable than the Union industry despite the fact that less risks apply to the importing sector than the production sector.

• (312) The importers claimed that they cannot source all their aluminium extrusions from the Union industry because the industry cannot supply the full range required. More specifically, one importer (Airoldi) stated that they mainly import aluminium extrusions made from hard alloys, for which they claim longer lead times are applicable for the Union industry. They claim that further evidence of shortages of supply is that certain products are exempted from customs duties under autonomous tariff quotas. The Union industry rebutted this claim of supply issues, stating that the industry has spare capacity, and can supply the full range of products demanded by importers and the Union user industries, including aluminium extrusions made from hard alloys.

• (313) According to the information on the file, there does not seem to exist a shortage in the Union of any specific product or alloy. Two of the sampled Union producers manufacture large quantities of aluminium extrusions made from hard alloys and have significant spare capacity. The Union industry provided evidence that many more Union producers have capacity to produce aluminium extrusions from hard alloys. Furthermore, alternative sources of supply exist in third countries.

• (314) In terms of the import duty exemptions, indeed, autonomous tariff quotas totalling 3 000 tonnes of the product concerned are currently exempted from customs duty by Council Regulation (EU) 2019/2220 ⁹⁷. The Union industry explained that they have challenged these exemptions on the grounds that the Union industry is able to supply the specific products exempted. A decision on the continuing need for the exemptions is scheduled to be published before the end of 2020. Bearing in mind that the quantity involved is marginal (around 1 % of all imports in the investigation period), it is not considered that this issue represents a significant supply issue. Should additional information emerge, this matter will be reviewed at the definitive stage of the investigation.

• (315) One importer (Airoldi) argued that the COVID-19 pandemic is a case of force majeure and it would be against the Union’s interests to impose anti-dumping duties on imports of the product concerned. They further argued that it would not be appropriate to apply duties in 2020 based on the 2019 situation, since 2020 is impacted by the COVID-19 epidemic. However, the period considered in this investigation is 2016 to 2019. Events in 2020 should not normally be taken into account in respect of imposition of measures, unless there has been a lasting change of circumstances. The evidence contained in the Regulation imposing registration of imports suggests that the pressure imposed by imports during the period March to May 2020 increased on the Union industry. No evidence has been submitted to justify termination of the investigation without measures on Union interest grounds. This claim was therefore, rejected. Airoldi has already received a letter explaining that there is no legal basis to terminate the current investigation because of the COVID-19 pandemic on force-majeure grounds.

• (316) Airoldi also made claims that the Union industry is using the anti-dumping instrument to reinforce an alleged oligopoly, which is an abuse of rights under the Union Courts case law. European Aluminium strongly rejected such claims. However, there are no indications that there are anti-competitive behaviour or an abusive oligopoly by the Union industry, and Airoldi has not provided any evidence concerning findings in this respect or any analysis to explain its relevance in the context of the basic Regulation.

• (317) The anti-dumping measures are likely to have a certain negative impact for importers in the Union because measures on Chinese imports may reduce the turnover and profitability of their aluminium extrusions business. However, the importers will be able to pass on the duty to their customers given their significant profit margins of around 7 % to 13 %. They also have also the possibility to find alternative sources of supply, including suppliers from other third countries and the Union industry. Indeed, both sampled importers have a balanced supply structure and do not only rely on Chinese imports. Also, both sampled importers have significant activities which are not related to the product under investigation, and which are not affected by the imposition of the duties. Therefore, the combination of other activities, other sources of supply for the product under investigation and the ability to partially pass on the effect of the duties to their customers would mean that the unrelated importers are not disproportionally affected by the imposition of the measures.

6.3.   Interest of users

• (318) The product under investigation is sourced by several user industries, mainly building, transport, engineering and others including consumer products. Some aluminium extrusions are sold to distributors prior to being resold to the end users.

• (319) Although some users and their associations registered as interested parties, most user industries did not cooperate with the investigation by completing questionnaire responses.

• (320) Only one questionnaire response was received, from the Alstom Group, which purchases aluminium extrusions for its rail transport business. Alstom and The European Rail Supply Industry Association (UNIFE) also made submissions relevant to issues of Union Interest.

Rail transport industry

• (321) Aluminium extrusions are important to the rail transport industry because they are key to the modernisation of rolling stock in order to meet with standards relating to the safety of passengers, crash resistance and in helping the industry to reduce its carbon footprint by reducing the weight of rolling stock and increasing fuel efficiency. The industry explained that it builds up relationships with its suppliers, in both the Union and China, to produce bespoke aluminium extrusions, which means that switching suppliers becomes undesirable and entails extra costs. Furthermore, the industry claimed that a limited number of producers in the Union were able to meet its specialised requirements. Alstom pointed out that some of its products could only be supplied by 3 producers in China and one in the Union. European Aluminium has argued that its members have both the capacity and the technical knowledge needed to supply the rail transport industry.

• (322) The Commission concluded that it was inevitable that switching suppliers would have cost implications for Alstom and other companies in this industry. However, the purchases of the product under investigation by Alstom represent an insignificant percentage of the company turnover, and the company purchases from several sources of supply, including China and other countries. Thus, where it would decide to source from China and pay anti-dumping duties at importation, the amount of such duties would be a marginal extra cost below 1 % of the corresponding turnover.

• (323) Alstom and UNIFE also argued that the imposition of anti-dumping measures on aluminium extrusions used in the rail transport industry would not be in the Union interest because:

• (a) these product types form a negligible share of imports from China, account for only around 1,3 % of the Union market for aluminium extrusions and, as such, are not a cause of injury to the Union producers; and

• (b) the imposition of measures would seriously undermine the competitiveness of the Union’s rail transport industry sector as they compete with imports of railway stock from third countries that are not subject to anti-dumping duties on their raw materials.

• (324) However, the fact that the products for the rail transport industry account for a minor part of imports in the Union market is not specific to the rail transport industry. No evidence was provided that the price depression caused by Chinese imports is not present for aluminium extrusions for the rail transport industry, or only present to a lesser extent. To the contrary, based on the information provided by the sole cooperating user in the rail transport industry, Chinese imports had a much higher market penetration in this industry during the investigation period than overall, and this market penetration progressed at a much more rapid pace. Thus, the injurious effect of imports of aluminium extrusions to the rail transport industry is not different from the injury caused by other product types covered by the investigation.

Automotive industry

• (325) As regards the automotive industry, which is one of the most important downstream industries, no cooperation was received from users in this sector. European Aluminium and the sampled Union producers have indicated that aluminium extrusions play an increasingly important role, especially in respect of the growing electric vehicle market where aluminium extrusions are important to reduce the weight of the vehicle and increase its range. This information was confirmed by reference to the sales data of the Union industry, and by publically available information published by the automotive industry association. However, it is assumed that similar mitigating factors would apply to the automotive industry as in the rail industry:

• — extrusion purchases were around 3 billion EUR but still represent less than 1 % of the turnover of the automotive industry,

• — most purchases are not sourced from China, and

• — exports of vehicles from the Union were around 25 % of production in the investigation period ⁹⁸ which means that anti-dumping duties on imported aluminium extrusions would not always be applicable due to possible inward processing arrangements for vehicles subsequently exported.

Construction industry

• (326) As far as the construction industry is concerned, which is the most important downstream industry, no cooperation was received from users in this sector. European Aluminium and the sampled Union producers have confirmed that aluminium extrusions play an important role, accounting for around 50 % of the Union consumption. This information was confirmed by reference to the sales data of the Union industry. While aluminium extrusion sales to the construction industry accounted for around 5 billion EUR, this has to be seen in relation to the huge size of the construction sector in the Union. According to the latest information published by Eurostat, in 2018 the purchases of goods and services by the construction industry accounted for 1 277 billion EUR, while the turnover accounted for 1 874 billion EUR ⁹⁹. The purchases of aluminium extrusions therefore account for an insignificant share of costs and turnover of the construction industry.

• (327) As a result, the impact of any measures on this industry are considered minimal as a whole. However, it is recognised that the importance of aluminium extrusions on the various market players in the construction industry may be different. In the absence of cooperation, no detailed information is available.

Other industries

• (328) No verifiable data was received for the other main user sectors, which are engineering and consumer industries. There are many industries within these sectors, and the degree of importance of aluminium extrusions and mitigating factors for each industry are not known. It cannot be excluded, therefore, that some users, which have not cooperated with the investigation, may have certain detrimental effects resulting from the measures. However, there is no information on the case file to substantiate or quantify these effects.

6.4.   Conclusion on Union interest

• (329) On the basis of the above, the Commission provisionally concluded that there were no compelling reasons to conclude it is not in the Union interest to impose provisional measures on imports of aluminium extrusions originating in China.

7. LEVEL OF MEASURES

7.1.   Calculation of the non-injurious price

• (330) To determine the level of the measures, the Commission examined whether a duty lower than the margin of dumping would be sufficient to remove the injury caused by dumped imports to the Union industry.

• (331) The Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry in the absence of distortions in the sense of Article 7(2a) of the basic Regulation. In this case, the injury would be eliminated if the Union industry was able to cover its costs of production, including those costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia of the basic Regulation, and to obtain a reasonable profit (‘target profit’).

• (332) In accordance with Article 7(2c) of the basic Regulation, for establishing the target profit, the Commission took into account the following factors:

• — the level of profitability before the increase of imports from the country concerned,

• — the level of profitability needed to cover full costs and investments, research and development (R&D) and innovation, and

• — the level of profitability to be expected under normal conditions of competition.

• (333) European Aluminium and one of the Union producers claimed that a target profit level of at least 16 % was necessary because the aluminium extrusions industry requires a great deal of investment in both manufacturing equipment and in developing products with customers. A second Union producer claimed that normal profit should be above 8 %. These claims were supported by the fact that customer focus is becoming more and more important in this industry and additional investment of this nature is essential for the future survival of the industry. This investment is needed to provide bespoke solutions for customers in the main customer industries (automotive, engineering, transport and building and construction).

• (334) The Commission examined these claims together with the data available on the case file relevant to the requirements of Article 7(2c) of the basic Regulation in order to set the target profit.

• (335) Bearing in mind that Union industry’s prices were suppressed throughout the period considered due to the dumped imports, as explained in recital (272) above, the profits during this period were not considered a suitable basis for establishing the target profit. The Commission therefore examined the profitability of the Union Industry before the period considered, also in light of the EU industry’s claims concerning the high level of investment necessary in this business.

• (336) With regard to the profit expected during the normal conditions of competition, the Commission noted that prior to 2014 the financial crisis had a negative impact on profitability, and from 2014 onwards Chinese import levels increased sharply and became injurious. Therefore, 2014 is considered to be the most representative year for the profitability under the normal conditions of competition in this industry. Two of the four sampled producers, Constellium Decin and Impol, reached profitability levels of at least 10 % in 2014. The third producer, Hydro Hungary, was undergoing structural changes at this time, and therefore its level of profitability was not fully representative. No data is available for the fourth sampled producer STEP G, which was only founded in 2015. On that basis, the Commission considered that a target profit of 10 %, based on the profitability levels achieved in year 2014, would reflect the level of profitability before the increase of imports from the country concerned, and the level of profitability to be expected under normal conditions of competition.

• (337) In view of the claims of the EU industry as explained in recital (333) above, the Commission then examined whether such level would cover full costs and investments, research and development (R&D) and innovation, as required by Article 7(2c).

• (338) The verified data regarding investment support the claim that the aluminium extrusions industry requires a great deal of investment in both manufacturing equipment and in developing products with customers. Indeed, despite the decreasing profitability, investments increased over the period considered by 72 % for the sampled Union producers, representing over 4,4 % of turnover for the sampled companies throughout the period considered and 5,4 % in the investigation period. This supports the claims of the EU industry that a significant level of investment is consistently necessary in order to stay competitive and be able to keep customer focus regardless of the business and economic situation. Therefore, in the presence of injurious dumping that affects the normal conditions of competition and ultimately has an impact on the industry profitability, this level of investment must be considered when establishing the relevant target profit. On this basis, the Commission concluded that a target profit of 10 % would cover the investments, research and development (R&D) and innovation of the aluminium extrusions industry and still leave margin for profits to compensate for the other factors of production.

• (339) While such target profit of 10 % is largely in line with the level claimed by one of the EU producers (a profit level above 8 %), European Aluminium and one other Union producer claimed that a target profit level of at least 16 % was necessary to cover investments. While such level was indeed obtained by one of the sampled companies in the 2014–2016 period, it would reflect only the most successful company with the most sophisticated product mix and thus higher investment needs. On the contrary, the level of 10 % fully reflects the product mix and investment of all the sampled EU producers and ultimately of the industry as a whole. The claim relating to the higher target profit level was therefore rejected.

• (340) Given all of the above, the Commission considers that provisionally setting the target profit level at 10 % meets all the requirements of Article 7(2c) of the basic Regulation.

• (341) In accordance with Article 7(2d) of the basic Regulation, the Commission assessed the future costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia of the basic Regulation, that the Union industry will incur during the period of the application of the measure pursuant to Article 11(2). The Commission established an additional cost of 0,04 % which was added to the non-injurious price. A note to the file on how the Commission established this additional cost is available in the file for inspection by interested parties.

• (342) These costs comprised the additional future costs to ensure compliance with the EU Emissions Trading System (EU ETS). The EU ETS is a cornerstone of the EU's policy to comply with Multilateral Environmental Agreements. Such additional costs were calculated on the basis of the average estimated additional EU Allowances (EUA) which will have to be purchased during the period of the application of the measures (2020 to 2024). The EUAs used in the calculation were net of free allowances receivable and were adjusted to ensure they related solely to the product under investigation. The costs of the EUAs were extrapolated to account for the expected price variation during the lifespan of the measures. The source for these projected prices is a Bloomberg New Energy Finance extraction dated 7 July 2020. The average projected price for EUAs for this period is 36,4 EUR/tonne of CO2 emitted.

• (343) On the basis described above, the Commission calculated a non-injurious price of the like product for the Union industry.

• (344) The Commission then determined the injury elimination level on the basis of a comparison of the weighted average import price of the cooperating exporting producers, 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.

• (345) In terms of the residual margin, bearing in mind that co-operation of the Chinese exporters was not high, and other considerations explained in recital (206) above, the residual margin was set the Commission decided to base the residual underselling margin at the level of 65,6 %. This margin was set at the level of the highest underselling margin established for a product type sold in representative quantities, on the basis of the data of the cooperating exporting producers.

• (346) The result of these calculations is shown in the table below.

Company	Dumping margin	Underselling margin
Haomei Group	30,4  %	30,5  %
PMI Group	38,2  %	56,4  %
Other co-operators	34,9  %	45,5  %
All other companies	48,0  %	65,6  %

7.2.   Examination of the margin adequate to remove the injury to the Union industry

• (347) As explained in the Notice of Initiation, the complainant provided the Commission sufficient evidence that there are raw material distortions in the country concerned regarding the product under investigation. Those distortions appear to result in prices that are lower than those quoted on international markets of the same product. Therefore, in accordance with Article 7(2a) of the basic Regulation, this investigation examined the alleged distortions to assess whether, if relevant, a duty lower than the margin of dumping would be sufficient to remove injury.

• (348) However, as the margins adequate to remove injury are higher than the dumping margins, the Commission considered that, at this stage, it was not necessary to address this aspect.

7.3.   Conclusion

• (349) Following the above assessment the Commission concluded that it is in the Union interest to determine the amount of provisional duties in accordance with Article 7(2) of the basic Regulation.

8. PROVISIONAL ANTI-DUMPING MEASURES

• (350) 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 imports.

• (351) 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:

Company	Dumping margin	Injury margin	Provisional anti-dumping rate
Guangdong Haomei New Materials Co., Ltd.,	30,4  %	30,5  %	30,4  %
Guangdong King Metal Light Alloy Technology Co., Ltd.	30,4  %	30,5  %	30,4  %
Press Metal International Ltd.,	38,2  %	56,4  %	38,2  %
Press Metal International Technology Ltd.	38,2  %	56,4  %	38,2  %
Other co-operators	34,9  %	45,5 %	34,9  %
All other companies	48,0  %	65,6  %	48,0  %

• (352) 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 country concerned 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.

• (353) 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 ¹⁰⁰. 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.

• (354) To minimise the risks of circumvention due to the high difference in duty rates, special measures are needed to ensure the application of the individual anti-dumping duties. The companies with individual anti-dumping duties must present a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(3) of this Regulation. Imports not accompanied by that invoice should be subject to the anti-dumping duty applicable to ‘all other companies’.

• (355) While presentation of this invoice is necessary for the customs authorities of the Member States to apply the individual rates of anti-dumping duty to imports, it is not the only element to be taken into account by the customs authorities. Indeed, even if presented with an invoice meeting all the requirements set out in Article 1(3) of this Regulation, the customs authorities of Member States must carry out their usual checks and may, like in all other cases, require additional documents (shipping documents, etc.) for the purpose of verifying the accuracy of the particulars contained in the declaration and ensure that the subsequent application of the lower rate of duty is justified, in compliance with customs law.

• (356) Should the exports by one of the companies benefiting from lower individual duty rates increase significantly in volume after the imposition of the measures concerned, such an increase in volume could be considered as constituting in itself a change in the pattern of trade due to the imposition of measures within the meaning of Article 13(1) of the basic Regulation. In such circumstances and provided the conditions are met an anti-circumvention investigation may be initiated. This investigation may, inter alia, examine the need for the removal of individual duty rate(s) and the consequent imposition of a country-wide duty.

• (357) 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.

9. REGISTRATION

• (358) As mentioned in recital (4), the Commission made imports of aluminium extrusions originating in the People's Republic of China subject to registration. Registration took place with a view to possibly collecting duties retroactively under Article 10(4) of the basic Regulation. Registration was thus on-going during the pre-disclosure phase.

• (359) In view of the findings at provisional stage, the registration of imports should cease.

• (360) No decision on a possible retroactive application of anti-dumping measures has been taken at this stage of the proceeding. Such a decision will be taken at definitive stage.

10. INFORMATION AT PROVISIONAL STAGE

• (361) In accordance with Article 19a of the basic Regulation, the Commission informed interested parties about the planned imposition of provisional duties. This information was also made available to the general public via DG TRADE’s website. Interested parties were given three working days to provide comments on the accuracy of the calculations specifically disclosed to them.

• (362) Two sampled exporting producers in China and other interested parties including one sampled importer, submitted their comments. The comments did not concern clerical errors of calculations and will be addressed during the definitive stage, if necessary.

11. FINAL PROVISIONS

• (363) In the interests of sound administration, the Commission invites 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.

• (364) 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

• (1) products attached (e.g. by welding or fasteners) to form subassemblies;

• (2) welded tubes and pipes;

• (3) products in a packaged kit with the necessary parts to assemble a finished product without further finishing or fabrication of the parts (‘finished goods kit’);

currently falling under CN codes ex 7604 10 10, ex 7604 10 90, 7604 21 00, 7604 29 10, 7604 29 90, ex 7608 10 00, 7608 20 81, 7608 20 89 and ex 7610 90 90 (TARIC codes 7604101011, 7604109011, 7604109025, 7604109080, 7608100011, 7608100080, 7610909010) and originating in the People’s Republic of China.

Company	Provisional anti-dumping duty	TARIC additional code
Guangdong Haomei New Materials Co., Ltd.	30,4  %	C562
Guangdong King Metal Light Alloy Technology Co., Ltd.	30,4  %	C563
Press Metal International Ltd.	38,2  %	C564
Press Metal International Technology Ltd.	38,2  %	C565
Other cooperating companies listed in Annex	34,9  %
All other companies	48,0  %	C999

Article 2

Article 3

Article 4

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 six months.

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

Done at Brussels, 12 October 2020.

For the Commission

The President

Ursula VON DER LEYEN

http://pdf.dfcfw.com/pdf/H2_AN201904121318887721_1.pdf (accessed on 11 July 2020).