Commission Implementing Regulation (EU) 2021/939 of 10 June 2021 imposing a provisional anti-dumping duty on imports of mono ethylene glycol originating in the United States of America and the Kingdom of Saudi Arabia

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1), and in particular Article 7 thereof,

Whereas:

(1) On 14 October 2020, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of mono ethylene glycol (‘MEG’) originating in the United States of America (‘US’) and the Kingdom of Saudi Arabia (‘KSA’) (‘the countries concerned’) on the basis of Article 5 of Regulation (EU) 2016/1036 of the European Parliament and of the Council (‘the basic Regulation’). It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 31 August 2020 by the Defence Committee of European MEG Producers (‘the complainant’). The complaint was made on behalf of the Union industry of MEG in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) Pursuant to Article 14(5a) of the basic Regulation, the Commission should register imports subject to an anti-dumping investigation during the period of pre-disclosure unless it has sufficient evidence within the meaning of Article 5 that the requirements either under point (c) or (d) of Article 10(4) are not met.

(4) In the case at hand, the complainant did not request registration and the Commission found that the requirements under point (d) were not met, as there was not, in addition to the level of imports which caused injury during the investigation period, a further substantial rise in imports thereafter. According to Eurostat data, the average monthly volume of imports of MEG from the countries concerned in the first five months following the initiation of the investigation (i.e. from November 2020 to March 2021) decreased by 15 % when compared to the average monthly volume of imports during the investigation period. Individually on the same basis, imports from the US decreased by 30 % and imports from KSA by 4 %. This was linked to the temporary disruptions (1) in US companies caused by extreme weather events; and (2) in the Union due to slowing demand due to COVID. Therefore, the Commission did not register imports during the period of pre-disclosure.

(5) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainant, other known Union producers, the known exporting producers, the authorities in the countries concerned, known importers, traders and users, and invited them to participate.

(6) Interested parties had an opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(7) A hearing took place with Saudi Basic Industries Corporation (‘SABIC’), which took part in the hearing together with Arabian Petrochemical Company (‘Petrokemya’), Eastern Petrochemical Company (‘SHARQ’), Jubail United Petrochemical Company (‘United’), SABIC Italia S.r.l, SABIC Petrochemicals B.V., Saudi Kayan Petrochemical Company (‘Saudi Kayan’), Saudi Yanbu Petrochemical Company (‘Yanpet’) and Yanbu National Petrochemical Company (‘Yansab’).

(8) Hearings also took place with Arteco NV (‘Arteco’), Indorama group, Oxyde Belgium BV (‘Oxyde’), Mitsubishi Corporation (‘Mitsubishi’), the Committee of PET Manufacturers in Europe (‘CPME’) and HELM AG (‘Helm’).

(10) As regards the assessment of dumping, Mitsubishi submitted that, given that price indexes play a significant role in how MEG is sold in the Union, the Commission should investigate whether the alleged dumping could not be attributable to a conscious commercial policy, but it could rather be simply caused by the differences in trends in the Union and non-Union indexes over time. Contract prices are agreed by negotiating discounts against various indexes and contracts are typically of 1 or 2 years duration. Producers agreeing prices in a 1- or 2-year contract will not know whether there will ultimately be a price difference between their Union and non-Union contracts until after the moment when the contract is settled and prices are determined and paid.

(11) The complainant replied that the role of the Union price indicator employed is overstated and misinterpreted. This index is the indication of a price in the Union at a given time, which is the result of the equilibrium between supply and demand based on multiple buyers and sellers. The complaining Union producers, since they are on the sales side only, cannot control or manipulate this index.

(12) The complainant replied recalling that a finding of dumping is a purely objective comparison between the normal value and the export price. The concept of intent is alien to the rules to determine dumping.

(13) The analysis of the evidence provided by the complainants, in accordance with the principles of Article 2 of the Basic Regulation, has yielded the result that the complaint contained sufficient evidence of dumping in the EU market.

(14) In particular, the complainant has provided sufficient evidence on export price and normal value showing that the dumping margins are significant. The figures on which the normal value was based were supported by sufficient evidence as confirmed by the Commission services’ analysis. The necessary adjustments were taken into account in the Commission’s analysis of dumping. In conclusion, it was found that, based on a fair comparison of normal value and export price, dumping margins were significant.

(15) In this sense, the Commission agrees with the complainant that the issue of intent is alien to the statutory analysis just described.

(16) The KSA submitted that the complainant incorrectly constructed the normal value for MEG produced in Saudi Arabia based on cost elements that do not relate to Saudi Arabia and failed to establish a fair comparison between the normal value and the export price.

(17) The KSA also submitted that, in constructing the normal value, the complainant erred in its assessment of the facts, as (i) SABIC does not produce MEG – the MEG producers are listed in the Complaint; (ii) SABIC and Saudi Aramco were not related during the period considered in the Complaint; and (iii) Saudi producers of MEG do not purchase ethylene from Saudi Aramco.

(18) Moreover, the complainant made no attempt to adapt the surrogate value for ethylene used to construct normal value such that it relates to the actual cost of production in Saudi Arabia.

(19) Furthermore, the complainant reported an average electricity of 0,067 EUR/kWh, whereas the published electricity tariff corresponds to 0,043 EUR/kWh.

(20) All this first set of remarks has been reiterated in SABIC’s comments.

(21) It is recalled that, according to Article 5(2) of the Basic Regulation, a complaint shall contain such information as is reasonably available to the complainant. In this respect, it must be recalled that the legal standard of evidence required for a complaint (‘sufficient prima facie’ evidence) makes it clear that the quantity and quality of information in the complaint is not the same as the one available at the end of an investigation. At the stage of the complaint, it is not necessary that the investigating authority (in this case, the Commission) has before it the same evidence of dumping and injury (within the meaning of Articles 2 and 3) that would be necessary to support the imposition of provisional or definitive anti-dumping (hereinafter: ‘AD’) duties. An AD investigation is a process where certainty on the existence of the elements necessary to adopt a measure or to terminate a proceeding is reached gradually as the investigation moves forward. It is not excluded that changes will occur between the stage of the complaint and the conclusion of the investigation. However, it is not considered that such changes have an impact on the overall conclusion that the file merits investigation since there is sufficient evidence of injurious dumping.

(22) In this sense, the information provided on costs was considered to be sufficiently adequate and accurate to establish normal value, in the prima facie context applicable at initiation, against the backdrop of the evidence available to the applicant.

(23) As for the claims by KSA on the factual elements of the complaint, the Commission underlines that ethylene is the main feedstock for the production of MEG and that the complainant correctly pointed out that the ethylene supply chain in Saudi Arabia was vertically integrated, even before the acquisition of SABIC by Saudi Aramco.

(24) Secondly, concerning the comparison between the normal value and the export price in the complaint, according to the KSA and SABIC this was not fair because the complainant did not make it at ex-works level. In fact, according to Saudi Arabia, it compared the FOB export price, because it only deducted estimated freight charges from the CIF statistical value, with a constructed normal value, which certainly included direct selling costs.

(25) Regarding the comparison between the normal value and the export price, the Commission recalls that the dumping margin calculated in the complaint does not necessarily reflect the exact degree of dumping which will be calculated in the investigation on a transaction by transaction and type per type basis.

(26) However, in light of the information available, the complainant has provided sufficient evidence on export price and normal value showing the existence of dumping. The figures on which the normal value was based were supported by sufficient evidence, as confirmed by the Commission services’ analysis and the necessary adjustments were taken into account in the Commission’s analysis of dumping.

(27) On the same line as Saudi Arabia and SABIC, ExxonMobil objected to the calculation of the cost of production of mono ethylene glycol in Saudi Arabia, in particular for the raw material ethylene, described in the complaint.

(28) It underlined that the cost to produce ethylene is primarily determined by the type of feedstock used in the steam cracker, and the costs of such feedstocks can differ significantly.

(29) ExxonMobil’s joint venture with SABIC, called Saudi Yanbu Petrochemical Company (‘Yanpet’), purchases the feedstock from Saudi Aramco. Instead, the complainant referred to the ethylene price in the Asian market, which is not suitable to determine the ethylene price in Saudi Arabia, where ethylene production costs are much lower than in Asia.

(30) Indeed, Yanpet’s steam cracker uses ethane as a primary feedstock to produce ethylene, whereas steam crackers in Asia and the Union generally use naphtha.

(31) Therefore, the assertion by the complainant that production processes are similar in all countries is misleading according to ExxonMobil.

(32) In particular, ethylene production from naphtha is generally more expensive than that from ethane, thus the Union cost of production is higher compared to Saudi Arabia and the United States of America, as both are primarily based on ethane feedstock.

(33) Moreover, the use of the Asian price does not take into account the different situation of an integrated producer which produces both the ethylene and the mono ethylene glycol, such as Yanpet.

(34) The Commission acknowledged the existence of differences in the production of ethylene but it did not consider that such difference in costs of raw materials made the situation of Union and KSA’s industry radically different and incomparable.

(35) Therefore, the Commission considered that the complainant, given the information available to it, brought sufficient evidence of the existence of dumping justifying the initiation of an investigation.

(36) SABIC and the Mission of the Kingdom of Saudi Arabia submitted that the requests for confidential treatment in the complaint were unwarranted such as the total consumption of MEG in the Union and the macroeconomic indicators which was based on the data of 12 Union MEG producers. Furthermore, SABIC and the Mission of the Kingdom of Saudi Arabia claimed that the complainant failed to provide non-confidential summaries of the information provided on a confidential basis such as for captive market. It was further argued that the limited disclosure of information by the complainant and the absence of enforcement by the Commission of clear rules regarding the treatment of confidential information impairs the rights of defence of the KSA.

(37) The Commission considered that the version open for inspection by interested parties of the complaint contained all the essential evidence and meaningful non-confidential summaries of data provided under confidential cover in order for interested parties to exercise their right of defence throughout the proceeding. Article 19 of the basic Regulation and Article 6(5) of the WTO ADA allow for the safeguarding of confidential information in circumstances where disclosure would be of significant competitive advantage to a competitor or would have a significantly adverse effect upon a person supplying the information or upon a person from whom that person has acquired the information. The information provided under confidential cover and in the limited annexes to the complaint falls under these categories. At any rate, the complainant disclosed additional information in this regard.

(38) The Mission of the Kingdom of Saudi Arabia contested the inclusion of imports into the United Kingdom in the complaint and in the scope of investigation.

(39) On 31 January 2020 the United Kingdom withdrew from the Union. The Union and the United Kingdom jointly agreed on a transition period during which the UK remained subject to Union law, which ended on 31 December 2020 (3). The complaint was based on EU-28 data as it was lodged before the end of the transition period. As of 1 January 2021, companies and associations from the United Kingdom no longer qualified as interested parties in trade defence proceedings. Therefore, the investigation was carried out on an EU-27 basis.

(40) SABIC believed that there were a number of open questions concerning the reliability of the standing calculation and the overall representativeness of the complainants. In this regard, SABIC claimed that one of the complainants consistently imported MEG from the KSA and therefore it should not have been part of the complaint. Furthermore, a related company to a supporting Union producer also imported MEG from the KSA and, therefore, if these companies were suffering injury then it was self-inflicted injury. SABIC also claimed that another MEG producer approached SABIC to market MEG from the KSA into the Union. Furthermore, SABIC claimed that BASF SE and Ineos Lavera are not complainants and that the limited number of Union producers that were part of the Complainant raised questions as to their representativeness. SABIC also claimed that the Commission should investigate the reason that led to the non-inclusion of IQOXE in the complaint so as to ensure that the exclusion of IQOXE was not made on grounds other than the incident that took place in January 2020. Oxyde also raised the question of the non-cooperation of the other Union producers.

(41) The Commission recalls that all Union producers mentioned in the complaint and otherwise known to the Commission before initiation have been contacted in the framework of the examination as to the degree of support for, or opposition to, the complaint. This calculation was based on the quantities of MEG produced as outlined by individual declarations by such producers and associations of producers and on information contained in the complaint which also includes information on the total Union production. Therefore, at initiation stage, it was concluded that the conditions of Article 5(4) of the basic Regulation were met.

(42) In line with Article 4(1) and 4(2) of the basic Regulation, producers which are related to exporters or importers and/or are themselves importers of the allegedly dumped product may be excluded from the Union industry if their relationship with the exporters or importers of the dumped product and/or their imports is such as to cause them to behave differently from non-related producers. In the pre-initiation analysis no reason to exclude any of the complainant producers from the definition of the Union industry was found. Furthermore, the Commission assessed this aspect during the investigation as stated in recitals (135) to (140). Regarding the claim that BASF SE and Ineos Lavera were not part of the complaint, this claim is factually wrong. These two producers are part of the complaint as indicated in Annex A-1 of the non-confidential version of the complaint.

(43) SABIC and the Mission of the Kingdom of Saudi Arabia claimed that there were no factual or legal grounds for cumulating the imports from the KSA and the US and these imports were influenced by different dynamics, had different trends in the Union and the import price from the KSA did not undercut the Union prices while the imports from the US did.

(44) After performing the relevant analysis, the Commission found that the conditions for cumulation of the countries concerned at the stage of the complaint were met on the basis of the available information and statistics. The dumping margins were found to be above de minimis. As shown by available official import statistics, dumped imports were not negligible (above de minimis) in terms of volumes for all countries concerned. Furthermore, MEG is a commodity and the competition between products imported from the KSA and the US and the Union industry products is identical and strictly based on price, irrespective of sales channels. The absence of price undercutting in the complaint for the imports from the KSA does not mean that there is no effect on prices. Therefore, at initiation stage, it was concluded that the conditions of Article 3(4) of the basic Regulation were met.