Commission Implementing Regulation (EU) 2021/854 of 27 May 2021 imposing a provisional anti-dumping duty on imports of stainless steel cold-rolled flat products originating in India and Indonesia

• (154) On that basis, the Commission provisionally concluded that the impact of the export performance of the Union industry on the injury suffered was, if any, marginal.

5.2.4.   Impact of raw material prices

• (155) Unrelated importers pointed at the issue of increasing costs of raw materials (nickel, ferrochrome) as a reason of the injurious situation of the Union industry.

• (156) An increase in raw material prices is not per se a source of injury because it is generally accompanied by a subsequent price increase in selling prices. However, the decrease in the Union producers’ profitability and all their financial indicators is more than just a reflection of the increasing costs of production. Low-priced imports surpressed prices in the Union market and not only did not allow Union producers to increase prices to cover the increase in costs, but forced them to even lower their prices, to avoid an imminent loss of market share. This resulted in a steep decrease in their profitability figures, declining to break even during the investigation period.

• (157) On that basis, it is provisionally concluded that the increase in prices of certain raw materials as such did not cause injury to the Union industry.

5.2.5.   Price behaviour of the Union producers

• (158) One of the unrelated importers claimed that internal competition and price behaviour of the Union producers caused their deteriorating financial situation.

• (159) However, the investigation did not confirm this claim. The imports from the countries concerned were consistenly sold at prices undercutting the Union industry and thus the main reason why the Union producers are not able to raise their prices and cover their increasing costs is the price pressure from dumped imports. Therefore, this claim was rejected.

5.3.   Conclusion on causation

• (160) A causal link was established between the dumped imports from India and Indonesia on the one hand and the injury suffered by the Union industry on the other hand. There was a coincidence in time between the increase in the volume of the dumped imports from the countries concerned and the worsening of the Union's performance during the period considered. The Union industry had no other choice but to follow the price level set by the dumped imports in order to avoid losing market share. This resulted in a situation where the Union industry made an unsustainable level of profit.

• (161) The Commission has found that other factors that may have had an impact on the situation of the Union industry were: imports from third countries, the decrease in consumption, the export performance of the Union industry, the impact of raw material prices, and the price behaviour of the Union producers.

• (162) 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 imports from third countries, the decrease in consumption, the export performance of the Union industry, the impact of raw material prices, and the price behaviour of the Union producers on the Union industry's negative developments in terms of especially profitability and financial indicators was only limited.

• (163) In light of the above considerations, the Commission provisionally established a causal link between the injury suffered by the Union industry and the dumped imports from the countries concerned. The dumped imports from the countries concerned have had a major determining impact on the material injury suffered by the Union industry. Other factors, individually or collectively, did not attenuate the causal link.

6. LEVEL OF MEASURES

• (164) 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.

6.1.   Underselling margin

• (165) The Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry in the absence of distortions under 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 International Labour Organisation (‘ILO’) Conventions listed in Annex Ia, and was able to obtain a reasonable profit (‘target profit’).

• (166) 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. Such profit margin should not be lower than 6 %.

• (167) The complainant considered that a reasonable target profit should be 8,7 %, as used in a previous investigation into the imports of the same product from the People’s Republic of China and Taiwan ¹².

• (168) In accordance with Article 7(2c) of the basic Regulation, the Commission assessed a claim made by 3 sampled Union producers on planned investments which were not implemented during the period considered. Based on the documentary evidence received, which could be reconciled with the companies’ accounting systems, the Commission provisionally accepted these claims and added the corresponding amounts to the profit of those Union producers. The final target profit margins consequently ranged between 8,82 % and 9,12 %.

• (169) In accordance with Article 7(2d) of the basic Regulation, as a final step, the Commission assessed the future costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, that the Union industry will incur during the period of the application of the measure pursuant to Article 11(2). Based on the submitted information, which was supported by the companies’ reporting tools and forecasts, the Commission established a cost in a range between 14,53 EUR /tonne and 28,90 EUR/tonne, in addition to the actual cost of compliance with such conventions during the investigation period. This difference was added to the non-injurious price.

• (170) On this basis, the Commission calculated a non-injurious price of the like product for the Union industry by applying the above-mentioned target profit margin to the cost of production of the sampled Union producers during the investigation period and then adding the adjustments under Article 7(2d) on a type-by- type basis.

• (171) The Commission then determined the injury elimination level on the basis of a comparison of the weighted average export price of the sampled exporting producers in the countries concerned on a type-by-type basis, 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 free Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average import CIF value.

• (172) In view of the high level of cooperation in India and Indonesia (100 % and above 90 % respectively), the residual underselling margin for countries concerned was established at the level of the highest individual underselling margin of the Indian or Indonesian exporting producer, i.e. 34,6 % and 32,3 % respectively.

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

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

• (174) As explained in the Notice of Initiation, the complainant provided the Commission sufficient evidence that there are raw material distortions in India and Indonesia regarding the product under investigation. 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.

• (175) The existence of raw material distortions in both India and Indonesia was confirmed by the information provided in the questionnaire reply by and during the RCC with the GOI and GOIS respectively.

• (176) Since the underselling margin calculated for the Indian exporting producer Chromeni was lower than the dumping margin, the Commission considered whether there were distortions on raw materials with regard to the product concerned pursuant to Article 7(2a) of the basic Regulation. The investigation established that Chromeni did not use the raw material subject to the distortion. Therefore, a further analysis as to the application of Article 7(2a) and 7(2b) of the basic regulation was not required. The duty level for Chromeni will thus be established on the basis of Article 7(2) of the basic Regulation.

• (177) With regard also to India, for the Jindal Group, the margin adequate to remove injury is higher than the dumping margin and the examination according to Article 7(2a) is therefore not further addressed.

• (178) With regard to Indonesia, 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.

6.3.   Conclusion

• (179) Following the above assessment the Commission concluded that it is appropriate to determine the amount of provisional duties in accordance with Article 7(2) of the basic Regulation. As a consequence, provisional anti-dumping duties should be set as below:

7. UNION INTEREST

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

7.1.   Interest of the Union industry

• (181) The Union industry consists of 13 producers located in several Member States and it employs directly 13 660 employees in relation to the product under investigation. None of the Union producers opposed the initiation of the investigation. As shown in section 4 above when analysing the injury indicators, the whole Union industry experienced a deterioration of its situation and was negatively affected by the dumped imports.

• (182) It is expected that the imposition of provisional anti-dumping duties will restore fair trading conditions on the Union market, end the price suppression and enable the Union industry to cover their increasing costs of production and improve their financial situation despite lost sales due to a shrinking market. This would result in an improvement of the Union industry's profitability towards levels considered necessary for this capital intensive industry. The Union industry has suffered material injury caused by imports at dumped prices from the countries concerned. It is recalled that a number of key injury indicators showed a negative trend during the period considered. In particular, indicators pertaining to the financial performance of Union producers were seriously affected. It is therefore important to restore prices to a non-dumped or at least a non-injurious level in order to allow all producers to operate on the Union market under fair trading conditions.

• (183) It is therefore provisionally concluded that the imposition of anti-dumping duties would be in the interest of the Union industry as it would allow it to recover from the effects of injurious dumping found.

7.2.   Interest of unrelated importers and users

• (184) Three parties made themselves known as unrelated importers. However, only two of them replied to the relevant questionnaire and further cooperated in the procedure.

• (185) Subsequently, the complainant claimed that one of the two parties mentioned above should not have been considered as unrelated importer as it works as an agent for some of the exporting producers of the product under investigation.

• (186) In this regard, the Commission established that the company in question indeed worked partially in the capacity of an agent for the Jindal Group. However, it was also involved in regular import purchases of the product under investigation which it later re-sold to the customers in the Union. Therefore, Eurofer’s claim was provisionally rejected.

• (187) Both cooperating importers pointed out potential negative impacts of having anti-dumping measures in place, such as a lack of supply, worse service, increasing prices, and a worse quality of material which in their opinion would result from limited competition on the Union market.

• (188) Additionally, one of the importers claimed that Jindal products have a superior quality which cannot be replaced or matched by Union producers.

• (189) Notwithstanding potential anti-dumping measures the Commission provisionally concluded that there will remain a healthy level of competition in the Union given that there are 13 Union producers of the product under investigation, some of them not taking part in the complaint. Furthermore, imports from third countries still account for more than 20 % of the market. Therefore, the potential negative impacts indicated by the importers are not likely to occur.

• (190) Anti-dumping measures are not aimed at closing the Union market for the countries concerned, but are aimed at raising the prices to a fair level. Therefore, it is expected that access to allegedly superior-quality products remains in place.

• (191) Measures would also allow importers to pass-on prices to their customers and therefore the profitability of importers is not expected to be adversely affected. The product range and service quality is not expected to be reduced – to the contrary, protection against dumped imports allows the Union industry to have new investments and improve its quality.

• (192) The importers also claimed that anti-dumping measures would overprotect Union producers as the product under investigation is already subject to safeguard measures.

• (193) However, the safeguard measures on steel ¹³ are temporary and provide a different type of protection than anti-dumping measures, the latter being aimed at unfair pricing. The Commission’s provisional findings confirmed that the main cause of injury to the Union industry is not a massive increase of imports volumes but their undercutting prices, resulting in price suppression on the Union market.

• (194) The only user which came forward in the procedure did not comment on the Union interest. The company had only claims concerning the product scope of the measures as described in section 2 above.

• (195) At the provisional stage, the Commission therefore concluded that the effects of a potential imposition of duties on importers and users do not outweigh the positive effects of measures on the Union industry.

7.3.   Conclusion on Union interest

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

8. PROVISIONAL ANTI-DUMPING MEASURES

• (197) On the basis of the conclusions reached by the Commission on dumping, injury, causation and Union interest, provisional measures should be imposed on imports of flat-rolled products of stainless steel, not further worked than cold-rolled (cold- reduced) originating in India and Indonesia, to prevent further injury being caused to the Union industry by the dumped imports.

• (198) Provisional anti-dumping measures should be imposed on imports of stainless steel cold-rolled flat products originating in India and Indonesia, in accordance with the lesser duty rule in Article 7(2) of the basic Regulation. The Commission compared the injury margins and the dumping margins (recital (173) above). The amount of the duties was set at the level of the lower of the dumping and the injury margins.

• (199) 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:

• (200) The individual company anti-dumping duty rates specified in this Regulation were established on the basis of the provisional 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 countries 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.

• (201) 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 ¹⁴. The request must contain all the relevant information 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 regulation about the change of name will be published in the Official Journal of the European Union.

• (202) 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.

• (203) To minimise the risks of circumvention due to the high difference in duty rates, special measures are needed to ensure the proper 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’.

• (204) 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 should 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 rate of duty is justified, in compliance with customs law.

• (205) Should the exports by one of the companies benefiting from lower individual duty rates increase significantly in volume, in particular 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, an anti-circumvention investigation may be initiated, provided the conditions for so doing are met. 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.

9. REGISTRATION

• (206) As mentioned in recital (3), the Commission made imports of stainless steel cold-rolled flat products originating in India and Indonesia subject to registration. Registration took place with a view to possibly collecting duties retroactively under Article 10(4) of the basic Regulation.

• (207) In view of the findings at provisional stage, the registration of imports should be discontinued.

• (208) 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

• (209) 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.

• (210) The Government of India, one exporting producer in India and two exporting producers in Indonesia submitted comments. The Commission took into account comments that were considered of a clerical nature and, if necessary, corrected the margins accordingly.

11. FINAL PROVISIONS

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

• (212) 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

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, 27 May 2021.

For the Commission

The President

Ursula VON DER LEYEN