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
This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.
Volume of imports from the countries concerned (tonnes)
481 466
574 965
703 348
663 835
Index
100
119
146
138
Market share (%)
31,6
35,9
43,6
44,1
Index
100
114
138
139
Volume of imports from the United States of America (tonnes)
57 919
73 681
209 013
270 508
Index
100
127
361
467
Market share (%)
3,8
4,6
12,9
18,0
Index
100
121
340
473
Volume of imports from the Kingdom of Saudi Arabia (tonnes)
423 547
501 284
494 335
393 327
Index
100
118
117
93
Market share (%)
27,8
31,3
30,6
26,1
Index
100
112
110
94
Source: Eurostat
Source: Eurostat
Source: Eurostat
Source: Eurostat
Source: Eurostat
(161) Imports from the countries concerned increased by 38 % during the period considered. The increase in market share was even more pronounced as the market share of the imports concerned increased by 12,5 percentage points, from 31.6 % in 2017 to 44,1 % in the investigation period. As consumption was rather stable in the investigation period as compared to 2017, the sharp increase in market share by the countries concerned was clearly to the detriment of other market participants, especially the Union industry.
4.4.3. Prices of the imports from the countries concerned and price undercutting
(162) The Commission established the prices of imports on the basis of Eurostat data. It is important to clarify that the level of these statistical prices might differ from verified prices for co-operating exporting producers as such, as most of the imports from the countries concerned, in particular for the KSA, are made through related importers/traders. Information on the latter confirm the trends and general levels mentioned below.
(163) The weighted average price of imports into the Union from the countries concerned developed as follows:
Table 3Import prices (EUR/tonne)
Table 3Import prices (EUR/tonne)
Table 3Import prices (EUR/tonne)
Table 3Import prices (EUR/tonne)
Table 3Import prices (EUR/tonne)
2017
2018
2019
Investigation period
United States of America
747
775
508
441
Index
100
104
68
59
Kingdom of Saudi Arabia
704
746
545
470
Index
100
106
77
67
Countries concerned
709
749
534
458
Index
100
106
75
65
Source: Eurostat
Source: Eurostat
Source: Eurostat
Source: Eurostat
Source: Eurostat
(164) The average import price from the countries concerned fell by 35 % during the period considered. In fact, the prices of imports from both countries concerned fell, i.e. by 41 % from the US and by 33 % from the KSA during the period considered. This fall was particular evident from 2018 to 2019 when the US exporting producers increased their market share by 8,3 percentage points to the detriment on the Union industry while the Saudi exporting producers maintained their market share by decreasing the prices as well, also in a very significant fashion.
(165) The Commission determined price undercutting during the investigation period by comparing:
— the weighted average sales prices per product type of the sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level, and
— the corresponding weighted average prices per product type of the imports from the sampled Saudi and US producers to the first independent customer on the Union market, established on a cost, insurance, freight (CIF) basis, with appropriate adjustments for customs duties and post-importation costs.
(166) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ theoretical turnover during the investigation period. It showed a weighted average undercutting margin of [10,7 – 13,0] % for the imports from the KSA, while on a weighted average basis of all transactions of the two American companies concerned there was no undercutting by the US imports.
(167) In the investigation period, comparing the sales prices on a type-by-type basis for transactions as the same level of trade, imports from the countries concerned undercut the prices of the Union industry by [7,6 – 9,3] % on average.
(168) Bearing in mind that the product concerned is a commodity and that competition is largely based on price alone and that its prices are very transparent (i.e. known in the market), such margins are considered significant. A low price difference will make the buyer switch suppliers. This was also confirmed by the replies of the users. Furthermore, as showed in Tables 3 and 7, the import price from both countries concerned was below the cost of production of the Union industry during the investigation period.
4.5. Economic situation of the Union industry
4.5.1. General remarks
(169) In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.
(170) As mentioned in recital (58), sampling was used for the determination of possible injury suffered by the Union industry.
(171) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data contained in the response to the questionnaire submitted by the complainant. The data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.
(172) The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.
(173) The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.
4.5.2. Macroeconomic indicators
4.5.2.1. Production, production capacity and capacity utilisation
(174) The total Union production, production capacity and capacity utilisation developed over the period considered as follows:
Table 4Production, production capacity and capacity utilisation
Table 4Production, production capacity and capacity utilisation
Table 4Production, production capacity and capacity utilisation
Table 4Production, production capacity and capacity utilisation
Table 4Production, production capacity and capacity utilisation
2017
2018
2019
Investigation period
Production volume (tonnes)
1 165 543
1 171 349
997 626
942 911
Index
100
100
86
81
Production capacity (tonnes)
1 521 000
1 521 000
1 521 000
1 478 500
Index
100
100
100
97
Capacity utilisation (%)
76,6
77,0
65,6
63,8
Index
100
100
86
83
Source: verified questionnaire reply of the complainant
Source: verified questionnaire reply of the complainant
Source: verified questionnaire reply of the complainant
Source: verified questionnaire reply of the complainant
Source: verified questionnaire reply of the complainant
(175) The Union industry’s production volume was rather stable until 2018, then decreased by 14,4 % in 2019 as compared to 2018, and by 5,4 % in the investigation period as compared to 2019. This decrease in production volume coincided with the sharp increase in import volume and decrease of import prices observed in 2019, as shown in Tables 2 and 3 above. Overall, the production volume decreased by 19 % during the period considered.
(176) The production capacity was almost constant during the period considered. It slightly decreased in the investigation period, also due to an accident in the plant of one of the Union producers in January 2020 8.
(177) The capacity utilisation reflected the trend of production volume and decreased by 13 percentage points over the period considered.
4.5.2.2. Sales volume and market share
(178) The Union industry’s sales volume and market share developed over the period considered as follows:
Table 5Sales volume and market share
Table 5Sales volume and market share
Table 5Sales volume and market share
Table 5Sales volume and market share
Table 5Sales volume and market share
2017
2018
2019
Investigation period
Total sales volume on the Union market – both free and captive sales (tonnes)
1 106 652
1 105 241
972 515
889 779
Index
100
100
88
80
Market share (%)
65,6
62,6
55,4
54,8
Index
100
95
84
84
Captive market sales (tonnes)
164 452
163 791
140 637
119 102
Index
100
100
86
72
Market share of captive market sales (%)
9,7
9,3
8,0
7,3
Index
100
95
82
75
Free market sales (tonnes)
942 200
941 449
831 878
770 677
Index
100
100
88
82
Market share of free market sales (%)
61,9
58,8
51,5
51,2
Index
83
83
Source: Eurostat, verified questionnaire reply of the complainant
Source: Eurostat, verified questionnaire reply of the complainant
Source: Eurostat, verified questionnaire reply of the complainant
Source: Eurostat, verified questionnaire reply of the complainant
Source: Eurostat, verified questionnaire reply of the complainant
(179) Total sales in the Union decreased by 20 % during the period considered. This decrease, which began in 2019, occurred against a background of the concurrent significant increase in import volume from the countries concerned.
(180) The sales for the captive market decreased by 28 % as well during the period considered.
(181) Throughout the period considered the total sales on the free market by the Union industry decreased by 18 %. The trend in total Union industry’s sales translated into a loss in market share of the Union industry of 8,3 percentage points, from 55,8 % in 2017 to 47,5 % in the investigation period. During the same period, the countries concerned increased their market share from 31,6 % in 2017 to 44,1 % in the investigation period, namely an increase by more than 12,5 percentage points as stated in recital (161).
4.5.2.3. Growth
(182) The above figures in respect of production, sales volume and marker share demonstrate that the Union industry was not able to grow, either in absolute terms or in relation to the consumption, over the period considered.
4.5.2.4. Employment and productivity
(183) Employment and productivity developed over the period considered as follows:
Table 6Employment and productivity
Table 6Employment and productivity
Table 6Employment and productivity
Table 6Employment and productivity
Table 6Employment and productivity
2017
2018
2019
Investigation period
Number of employees
91
91
88
84
Index
100
100
97
92
Productivity (tonnes/employee)
12 868
12 907
11 372
11 159
Index
100
100
88
87
Source: verified questionnaire reply of the complainant
Source: verified questionnaire reply of the complainant
Source: verified questionnaire reply of the complainant
Source: verified questionnaire reply of the complainant
Source: verified questionnaire reply of the complainant
(184) In view of the deteriorating market circumstances, the number of employees of the Union industry fell by 8 % over the period considered. Furthermore, as production decreased even more, the productivity fell by 13 % over the period considered.
4.5.2.5. Magnitude of the dumping margin and recovery from past dumping
(185) All dumping margins were 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 countries concerned and high price sensitivity of the product concerned.
(186) This is the first anti-dumping investigation regarding the product concerned. Therefore, no data were available to assess the effects of possible past dumping.
(187) The weighted average unit sales prices of the sampled Union producers to unrelated customers in the Union developed over the period considered as follows:
Table 7Sales prices in the Union
Table 7Sales prices in the Union
Table 7Sales prices in the Union
Table 7Sales prices in the Union
Table 7Sales prices in the Union
2017
2018
2019
Investigation period
Average unit sales price in the Union on the total market (EUR/tonne)
[688 - 841]
[722 - 882]
[509 - 622]
[418 - 511]
Index
100
105
74
61
Average unit sales price on the captive market (EUR/tonne)
[652 - 796]
[706 - 862]
[509 - 623]
[446 - 545]
Index
100
108
78
68
Average unit sales price on the free market (EUR/tonne)
[688 - 841]
[722 - 883]
[508 - 620]
[415 - 507]
Index
100
105
74
60
Unit cost of production (EUR/tonne)
[552 - 675]
[568 - 694]
[557 - 681]
[478 - 584]
Index
100
103
101
87
Source: Sampled Union producers
Source: Sampled Union producers
Source: Sampled Union producers
Source: Sampled Union producers
Source: Sampled Union producers
(188) The Union producers’ average unit sales prices to unrelated parties on the free market decreased by 40 % over the period considered. The largest fall in prices year-on-year was in 2019, when the low-priced imports from the countries concerned increased by 38 % and the consumption was rather constant.
(189) The unit cost of production of the sampled producers was fairly stable in the period 2017-2019, and then decreased in the investigation period, albeit at a lower rate than the sales price, mainly due to lower cost of ethylene, the main raw material to manufacture MEG.
(190) This demonstrates the significant price pressure caused by the sharp increase in volume of imports at dumped prices from the countries concerned.
4.5.3.2. Labour costs
(191) The average labour costs of the sampled Union producers developed over the period considered as follows:
Table 8Average labour costs per employee
Table 8Average labour costs per employee
Table 8Average labour costs per employee
Table 8Average labour costs per employee
Table 8Average labour costs per employee
2017
2018
2019
Investigation period
Average labour costs per employee (EUR)
[94 277 - 115 227 ]
[95 581 - 116 821 ]
[100 232 - 122 506 ]
[98 732 - 120 672 ]
Index
100
101
106
105
Source: Sampled Union producers
Source: Sampled Union producers
Source: Sampled Union producers
Source: Sampled Union producers
Source: Sampled Union producers
(192) The average labour costs per employee of the sampled Union producers increased by 5 % over the period considered. This increase is mainly due to inflation and a small yearly increase in salaries of employees working in the chemical industry.
4.5.3.3. Inventories
(193) Stock levels of the sampled Union producers developed over the period considered as follows:
Table 9Inventories
Table 9Inventories
Table 9Inventories
Table 9Inventories
Table 9Inventories
2017
2018
2019
Investigation period
Closing stocks (tonnes)
[12 167 – 14 871 ]
[29 408 – 35 944 ]
[16 833 – 20 573 ]
[17 231 – 21 060 ]
Index
100
242
138
142
Closing stocks as a percentage of production (%)
[1,7 – 2,0]
[4,0 – 4,9]
[2,6 – 3,2]
[2,7 – 3,3]
Index
100
239
155
162
Source: Sampled Union producers
Source: Sampled Union producers
Source: Sampled Union producers
Source: Sampled Union producers
Source: Sampled Union producers
(194) The closing stocks of the sampled Union producers increased by 42 % over the period considered.
(195) The stocks as a percentage of production increased as well over the period considered by 62 %.
4.5.3.4. Profitability, cash flow, investments, return on investments and ability to raise capital
(196) Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:
Table 10Profitability, cash flow, investments and return on investments
Table 10Profitability, cash flow, investments and return on investments
Table 10Profitability, cash flow, investments and return on investments
Table 10Profitability, cash flow, investments and return on investments
Table 10Profitability, cash flow, investments and return on investments
2017
2018
2019
Investigation period
Profitability of sales in the Union to unrelated customers (% of sales turnover)
[16,7 – 20,5]
[18,6 – 22,7]
[- 8,3 – -10,2]
[ -10,8 – - 13,2]
Index
100
111
-50
-64
Cash flow (thousand EUR)
[60 866 – 74 392 ]
[60 197 – 73 574 ]
[-7 005 – -8 562 ]
[-16 409 – -20 056 ]
Index
100
99
-12
-27
Investments (thousand EUR)
[5 613 – 6 860 ]
[1 316 – 1 609 ]
[1 926 – 2 354 ]
[2 055 – 2 512 ]
Index
100
23
34
37
Return on investments (%)
[177 – 216]
[194 – 237]
[-34 – -41]
[-27 – -34]
Index
100
110
-19
-16
Source: Sampled Union producers
Source: Sampled Union producers
Source: Sampled Union producers
Source: Sampled Union producers
Source: Sampled Union producers
(197) The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. Profitability deteriorated dramatically during the period considered starting as of 2019 because of the development in the average sales prices and cost of production described in recitals (188) and (189). Under the pressure of the significant volumes of imports from the countries concerned, the Union industry had to decrease the sales prices significantly below the cost of production, thus registering major losses of between 10,8 % and 13,2 % during the investigation period.
(198) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow developed broadly in line with the trend in profitability. Until 2018, the sampled Union producers generated positive cash flow, while from 2019 onwards they reported increasingly negative cash balance. Overall, the cash flow decreased by 127 % during the period considered. This seriously jeopardises the Union industry’s ability to finance its operations.
(199) Investments decreased as well by 67 % during the period considered. Almost all investments were made to replace obsolete fixed assets. Investments aimed at increasing capacity or increasing efficiency were marginal, reflecting deteriorating market prospects in view of the decreasing market share and profitability.
(200) The return on investments is the profit in percentage of the net book value of investments. It increased slightly in 2018 and then fell sharply to negative values over the remaining period considered, reflecting the trend in profitability.
(201) The three sampled Union producers’ are part of large groups of companies, hence their ability to raise capital is better than stand-alone companies in a similar financial situation. However, with their financial situation deteriorating so significantly, their ability to raise capital in the future is clearly in jeopardy.
4.5.4. Conclusion on injury
(202) The volume of imports from the countries concerned grew by 38 % over the period considered. Given a fairly stable Union consumption, the imports from the countries concerned increased their market share from 31,6 % in 2017 to 44,1 % in the investigation period. This increase in market share came at the detriment of the Union industry who lost 10,7 percentage points of their market share on the free market.
(203) The increase in market share of the countries concerned on the Union market was possible through significant price pressure, as in the investigation period, imports from the countries concerned were on average [12-15] % lower than Union industry costs. Thus, the import price from the countries concerned decreased by 35 % during the period considered. In order to maintain a reasonable market share and production volumes at economical levels, the Union industry had no choice but to decrease the prices as well. Although the cost of production decreased as well due to the decrease in the price of ethylene, the price pressure exerted by the imports was of such magnitude that it forced the Union industry to decrease prices below the cost of production, thus registering significant losses by the end of the investigation period.
(204) Due to this situation of the market, all main macroeconomic injury indicators showed a negative trend during the period considered. Production volume and sales volume on the free market decreased by 19 % and 18 % respectively. Employment and productivity decreased by 7 % and 13 % respectively.
(205) Similarly, the main microeconomic indicators deteriorated as well. The Union producers’ average unit sales prices to unrelated parties on the free market decreased by 40 % over the period considered while their costs only decreased by 13 %, leading to a pronounced deterioration of their profitability, from profits between 16,7 and 20,5 % in 2017 to losses between 10,8 % and 13,2 % during the investigation period. The closing stocks increased by 42 %. Cash flow and the investments decreased by 127 % and 63 % respectively.
(206) 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.
(207) CPME claimed that the post-IP data showed that the Union industry was recovering from the alleged injury suffered in the first half of 2020 as the prices of MEG increased in the period July – November 2020.
(208) Such information falls outside the investigation period and is in any event too fragmentary to draw any conclusions regarding injurious dumping. Therefore, it was rejected.
5. CAUSATION
(209) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the countries 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 countries concerned was not attributed to the dumped imports. These factors are: imports from third countries, export performance of the Union industry, captive sales, other more profitable products than MEG, depreciation expenses, cost of raw materials/lack of competitiveness, COVID-19 pandemic, MEG as a globally traded commodity, price of oil, US-China ‘trade war’, global depression in prices during the period considered, self-inflicted injury, and imports of PET into the Union.
5.1. Effects of the dumped imports
(210) The volume of imports from the countries concerned grew by 38 % over the period considered, increasing their market share from 31,6 % in 2017 to 44,1 % by the investigation period. This development took place despite a rather stable consumption during the period considered.
(211) Import prices from the countries concerned fell on average by 35 % during the period considered, by 41 % from the US and by 33 % from the KSA. This fall in sales prices was particularly apparent in 2019 when, at the same time, the volume of imports from the countries concerned increased by 46 % as compared to 2017. In the investigation period, imports from the countries concerned undercut the prices of the Union industry by [7,6 – 9,3] % on average, and were on average [12-15] % lower than Union industry costs.
(212) It is clear that the large increase in imports at falling prices played a substantial role in the rapid deterioration of the Union industry's economic indicators. MEG is a homogenous commodity sold to customers based almost exclusively on price. Therefore, only a small difference in price has significant consequences.
(213) In any event, regardless of any price undercutting, the Commission found that the dumped imports depressed the prices of the Union producers to a level where Union producers incurred significant losses. Although the Union industry’s average unit costs decreased by 13 % over the period considered, this was not enough to counterbalance the effects of severe price depression caused by the dumped imports. Indeed, the Union producers’ average unit sales prices to unrelated parties on the free market decreased by 40 % over the period considered, a much more pronounced decrease that that of their costs. As a result, the Union industry, which registered profits before the influx of dumped imports, turned heavily unprofitable from 2019 onwards, recording losses between 8,3 % and 10,2 % in 2019 and between 10,8 % and 13,2 % in the investigation period. These significant losses question the business case for continuation of Union industry activity altogether.
5.2. Effects of other factors
5.2.1. Imports from third countries
(214) The volume of imports from other third countries developed over the period considered as follows:
Table 11Imports from third countries
Table 11Imports from third countries
Table 11Imports from third countries
Table 11Imports from third countries
Table 11Imports from third countries
Table 11Imports from third countries
Country
2017
2018
2019
Investigation period
Russia
Volume (tonnes)
20 295
10 113
14 494
20 126
Index
100
50
71
99
Market share (%)
1,3
0,6
0,9
1,3
Average price (EUR/tonne)
727
810
527
394
Index
100
111
72
54
Kuwait
Volume (tonnes)
0
11 820
15 767
9 319
Index
100
133
79
Market share (%)
0,0
0,7
1,0
0,6
Average price (EUR/tonne)
492
358
320
Index
100
73
65
Other third countries
Volume (tonnes)
78 707
63 725
49 400
41 110
Index
100
81
63
52
Market share (%)
5,2
4,0
3,1
2,7
Average price (EUR/tonne)
778
878
670
571
Index
100
113
86
73
Total of all third countries except the countries concerned
Volume (tonnes)
99 002
85 658
79 661
70 556
Index
100
87
80
71
Market share (%)
6,5
5,3
4,9
4,7
Average price (EUR/tonne)
768
817
582
487
Index
100
106
76
63
Source: Eurostat
Source: Eurostat
Source: Eurostat
Source: Eurostat
Source: Eurostat
Source: Eurostat
(215) Imports from the countries concerned accounted for around 90 % of total imports in the Union in 2019 and in the investigation period. The imports from Russia and Kuwait represented 2,7 % and 1,3 % respectively of total Union imports in the investigation period.
(216) Imports from Russia decreased by 1 % over the period considered and its market share declined in 2018 and 2019 before increasing in the investigation period to the same level as in 2017, namely 1,2 %. The average import price from Russia was higher in 2017 and 2018 and lower in 2019 and in the investigation period than import prices from the countries concerned.
(217) Imports from Kuwait decreased by 21 % between 2018 and the investigation period (there were no imports from Kuwait in 2017) and its market share declined from 0,7 % to 0,6 % during the same period. The average import prices from Kuwait were lower than import prices from the countries concerned.
(218) Imports from other third countries and their market share decreased by almost half during the period considered reaching a market share of 2,7 % in the investigation period. The import prices from other third countries were higher than the import prices from the countries concerned throughout the whole period considered.
(219) On this basis, the Commission provisionally concluded that the evolution of imports from other countries could only have a marginal impact on the situation of the Union industry, if any.
5.2.2. Export performance of the Union industry
(220) The volume of exports of the Union producers developed over the period considered as follows:
Table 12Export performance of the Union industry
Table 12Export performance of the Union industry
Table 12Export performance of the Union industry
Table 12Export performance of the Union industry
Table 12Export performance of the Union industry
2017
2018
2019
Investigation period
Total export volume (tonnes)
46 427
29 730
23 329
23 743
Index
100
66
48
53
Average price of the sampled Union producers (EUR/tonne)
[681 - 833]
[734 - 898]
[483 - 590]
[343 - 419]
Index
100
108
71
50
Source: Sampled Union producers and verified questionnaire reply of the complainant
Source: Sampled Union producers and verified questionnaire reply of the complainant
Source: Sampled Union producers and verified questionnaire reply of the complainant
Source: Sampled Union producers and verified questionnaire reply of the complainant
Source: Sampled Union producers and verified questionnaire reply of the complainant
(221) Their exports represented on average around 3 % of total production during the period considered as well as in the investigation period.
(222) Overall, the exports of the Union industry and their prices decreased by 47 % and 50 % respectively.
(223) Given the limited and decreasing share of the export sales in the total production of the Union industry, the Commission provisionally concluded that the export performance did not contribute to the material injury suffered by the Union industry.
(224) Mitsubishi Corporation claimed that the Union industry poor export performance was the cause of injury for the Union industry.
(225) The Commission disagrees with this claim. The Union industry is not export-oriented as the demand on the Union market is higher than the production capacity of the Union industry. The Union industry was also not export-oriented in 2017 and 2018 when it registered positive profits.
5.2.3. Captive sales
(226) As shown at Table 1, during the period considered the Union industry’s sales to the captive market fell by 28 %. However, it represented a relatively small part of total Union industry production, i.e. 12,6 %.
(227) Bearing in mind the limited size of the captive market, its developments do not contribute in any significant manner to nor explain the deterioration of the Union industry.
5.2.4. Other more profitable products than MEG
(228) Several interested parties (CPME, Arteco, HELM, Oxyde) claimed that the injury suffered by the Union industry was due to its decision to focus on more profitable products other than MEG as the MEG producers could switch their production from MEG to other ethylene oxide derivatives. It was further argued that this decision led to an increase of fixed costs per unit for the MEG production. In addition, Arteco claimed that the MEG production capacity and capacity utilization cannot be seen separately from the increase in production of ethylene oxide derivatives on the same production lines. Furthermore, it argued that MEG profitability can also not be seen separately from the profitability of ethylene oxide derivatives.
(229) The investigation did not confirm these allegations. The Union industry remains committed to manufacturing MEG in the Union. In fact, the sampled Union producers are manufacturing ethylene within the group and, in addition to using it internally for the production of MEG and other products, they also sell it to other parties. Thus, the MEG producers have access to enough ethylene oxide to manufacture enough MEG as well as other ethylene oxide derivatives in line with their production capacity. The Union industry is also planning to increase the production capacity of ethylene oxide as was also highlighted by several interested parties such as HELM. The Union industry was forced to reduce the production of MEG as its selling price was significant below the cost of production due to the price pressure exercised by the imports from the countries concerned. Once the level playing field is re-established on the Union market, the Union industry will continue to manufacture MEG in higher volumes as it did before the surge of imports from the countries concerned.
(230) As a result, any impact on fixed costs emanates directly from the negative impact of dumped imports, not ethylene oxide derivatives production.
(231) In addition, the Union industry is not manufacturing other products such as ethylene oxide derivatives on the same production line as MEG. The injury indicators assessed in recitals (174) to (201) are limited to the production and sales of MEG only. Therefore, the profitability of MEG cannot be linked to the profitability of other products such as ethylene oxide derivatives as these products are not covered by the investigation. Therefore, these claims were rejected.
5.2.5. Depreciation expenses
(232) Several interested parties (Arteco, HELM, Oxyde) argued that the performance of the Union industry deteriorated because of the high levels of depreciation expenses.
(233) The investigation found that depreciation expenses are not high, representing between 1 % and 3 % in the cost of production. They thus did not have a noteworthy impact on the financial performance of the Union industry. Therefore, the claim was rejected.
5.2.6. Cost of raw materials/lack of competitiveness
(234) Several interested parties, (Mitsubishi Corporation, Arteco, Oxyde), claimed that Union industry’s deteriorated performance was due to higher cost of production compared to producers in the countries concerned as Union producers use more expensive raw materials (naphtha) than their US and Saudi competitors (shale gas and ethane) to manufacture ethylene and therefore they lacked competitiveness. Arteco also claimed that the production process in the US and the KSA was producing less by-products making the plants cheaper to construct and less complicated to operate. Furthermore, it argued that the profitability of the Union industry was depressed because of the high energy costs.
(235) The Commission disagreed with this allegation. While it is true that the US and Saudi producers may have had some cost advantage in certain raw materials, it did not prevent the Union industry from registering high profit margins in 2017 and 2018 as showed in Table 10, that is to say before the high increase in imports at sharply decreasing prices from the countries concerned. It is thus the dumped imports, and not the different raw materials used, that contributed to the dire financial situation of the Union industry.
(236) Regarding the claim concerning by-products, Arteco did not substantiate its claim with any evidence and did not specify exactly to which by-products it referred. The Commission can only assume that Arteco was referring to the other glycols that are generated in the manufacturing process of MEG such as Diethylene Glycol (DEG) and triethylene glycol (TEG). However, these products are generated in the manufacturing process of MEG irrespective of the feedstock used to manufacture ethylene. While there might be some variations in volume terms for TEG and DEG from one producer to the other, these variations are narrow and therefore cannot have a major impact on the performance of a producer. Nevertheless, there is a market for DEG and TEG and therefore these products generate revenues for the companies. Regarding the construction and the operation of these plants, Arteco again does not substantiate its claim. MEG plants are fully automated in the Union, requiring minimum involvement of labour as the manufacturing process of MEG is fairly simple. Finally, regarding energy costs, the investigation revealed that they represent about 3 % in the cost of production of the Union industry and therefore it could not have a major impact on the competitiveness of the Union industry. Therefore, these claims were rejected.
5.2.7. COVID-19 pandemic
(237) Several interested parties (CPME, Arteco, HELM, Oxyde) claimed that the COVID-19 pandemic had an impact of the Union MEG industry in the first quarter of 2020 and even more so in the second quarter of 2020. CPME claimed that the decrease in the MEG production and sales in the Union followed a drop in the Union demand for MEG due to the COVID-19 pandemic. In particular, it argued that the stop to car sales (and car manufacture) and to flights during the lockdown led to a drop in the EU demand for MEG used to produce anti-freezing and de-icing fluids.
(238) The investigation revealed that the situation of the Union industry started to deteriorate significantly already in 2019, well before the COVID-19 pandemic started in the Union in early 2020. None of the Union producers closed their production sites during the pandemic, except for maintenance operations. Furthermore, the effects of the pandemic on Union consumption were mixed, with less demand for car engine coolants being compensated by increasing demand for PET for essential protective packaging for water, food and hand sanitizer during the outbreak, which was also highlighted by SABIC.
(239) While consumption thus dropped by a moderate 1 % during the investigation period as compared to 2017, production by the Union industry dropped by 19 %, capacity utilisation by almost 14 percentage points, free market sales by 20 %, and market share by 10,7 percentage points.
(240) In sum, while it is not excluded that the COVID-19 pandemic had a certain impact on the situation of the Union industry at the end of the investigation period, it was not the major cause of material injury suffered by the Union industry.
5.2.8. MEG as a globally traded commodity
(241) Arteco and Oxyde claimed that the imports from the US and the KSA into the Union did not influence the price-setting mechanism for MEG, as it was a globally traded product and that the complainant set the European Contract Price (‘ECP’). Furthermore, it was argued that (i) these prices reflect the prices on the Asian market, as China is the largest MEG market globally; and (ii) the prices for MEG closely follow the trend of the prices for its essential feedstock, i.e., ethylene. Furthermore, it was claimed that the gap between the ethylene prices and MEG prices widened from March 2019 through March 2020, allegedly following the impact of the China-driven global supply/demand situation for MEG, and that the profitability of the Union producers was negatively affected as a result of the increasing spread.
(242) This claim is factually incorrect. The Union MEG producers do not set the European Contract Price (‘ECP’). The ECP is an indication of a price in the EU at a given time, an index. In a market with multiple buyers and sellers, a price is the equilibrium between supply and demand on the market, and can therefore not be set by one or several parties independently from the others. A seller alone cannot set the price of a transaction. As the complainant is on the sales side only, it cannot manipulate this index. In practice, several data providers report the ECP. These reports are established and published by independent market consultants. We count four main providers: ICIS 10, IHS 11, Wood Mackenzie Chemicals 12 and Tecnon 13. These market consultants rely on anonymous surveys collecting prices agreed between buyers and sellers. Broadly speaking, the ECPs reported by these firms are generally aligned. Participation in the ECP surveys is also open to any party selling or buying MEG in a material way in the marketplace including the importers. Indeed, the ECP follows to a certain extent the MEG price in Asia and the evolution of the price of ethylene, as the main raw material, has an influence on the selling price of MEG.
(243) On the Union market, MEG is sold under a long-term contract or one-time delivery sales (‘spot sales’). It is estimated that the sales made under contractual terms represent around 80 % of total sales in the Union and the spot sales account for the remaining 20 %. In the contract sales, the price formula is based on the ECP minus a discount. While ECP is a monthly index published by market intelligence as explained in recital (242), the discount is confidential. The competition between sellers is on the discount. The contractual price is negotiated on a monthly basis and it is influenced by the spot prices as MEG is a commodity traded in a very transparent market where market players quickly adapt to the situation created by the dumped imports. The US and the Saudi exporters, even if they link their selling price on the Union market to ECP, depressed the selling price of MEG by increasing the discount offered to the buyers. Therefore, the injurious effects on the Union market cannot be attributable to the ECP index as such. Injury was caused by the influx of low priced imports on the Union market which depressed spot and contract prices to the benefit of buyers. Therefore, these claims were rejected.
5.2.9. Price of oil
(244) CPME and CIRFS claimed that the drop in the price of oil which occurred in the second part of the investigation period was the cause for a decrease in the price for MEG in the Union and not the dumped imports from the countries concerned.
(245) As stated in recital (234), in the Union, the ethylene production is based on naphtha, a product obtained through the refining of crude oil. Therefore, the evolution of the price of oil influences the cost and price of ethylene as well as the cost and price of MEG. As explained in recital (205), the cost of production of the Union industry decreased by 13 % during the period considered, while the selling price of MEG decreased much more, i.e. by 40 %. Therefore, the claim was rejected.
5.2.10. US-China ‘trade war’
(246) In August 2018, China imposed additional import duties of 25 % on US MEG, which allegedly led the US producers to divert exports from China to the Union. Thus, several interested parties (Mitsubishi Corporation, Arteco, Oxyde) claimed that the deterioration of the trade relations between China and the US was the main cause of injury. The parties argued that, after the 2020 introduction of temporary waivers of these tariffs, the situation on the Union market would return to the status quo ante.
(247) These considerations are irrelevant, as the legal standard set by basic Regulation and the WTO ADA is the existence of injury caused by dumped imports—not the political or other extraneous considerations which may be linked to such practices. In any event, the Commission observes that although the restrictions were indeed relaxed, the additional tariffs continue to apply as a rule and it is unclear how the situation will evolve. Furthermore, the US MEG industry is export-oriented with an increasing production capacity. Moreover, the Chinese MEG industry is also increasing production capacity with the aim of becoming self-sufficient. Therefore, US producers are likely to continue their keen interest in the Union market, irrespective of any dispute between the US and China.
5.2.11. Global depression in prices during the period considered
(248) Several interested parties (Mitsubishi, CIRFS) claimed that the injury suffered by the Union industry coincided with one of the deepest depressions in global prices of MEG over the past ten years, which was not exclusive to the Union market but was in line with prices in the global market. It was claimed that the significant increase in global MEG capacity and lack of corresponding global demand – in late 2018 alone, an additional [1,5-2,5] million tonnes per year capacity was added in China. As of November 2019, total global MEG capacity was around [37,5-38,5] million tonnes per year representing an excess in supply of around [10-20] %, while significant additional capacity was added during 2020. Therefore, the injury was allegedly being caused by the historic low prices on the global markets rather than any dumping.
(249) These considerations may well provide an ultimate explanation why imports were sold at dumped prices in the Union. But the fact remains that those dumped imports generated via the aforementioned price and volume effects material injury to the Union industry – the applicable legal standard set by basic Regulation and the WTO ADA, which do not foresee an analysis of the reasons underlying the decision to dump. The investigation revealed that indeed there is a global overcapacity of MEG production. The Saudi and the US producers have significantly increased their production capacity and it is estimated that the US exporters are going to increase the production capacity to reach around 6 million tonnes per year. Because of this overcapacity the US and the Saudi exporting producers were in search for markets and therefore they sold significant volumes of MEG on the Union market at dumped prices during the investigation period. Therefore, the claim was rejected.
5.2.12. Self-inflicted injury
(250) SABIC claimed that one Union producer contacted SABIC to market MEG on the Union market and that several companies related to Union producers (as stated in recital (40)) imported MEG from the KSA causing self-inflicted injury.
(251) Regarding the claim that one Union producer contacted SABIC to market Saudi MEG on the Union market, the investigation revealed that the contract had not been finalised between SABIC and the Union producer concerned. Furthermore, the Union producer itself contacted SABIC in this regard, as due to the price depression on the Union market causing significant losses, this producer was looking for other options to continue operations in the MEG Union market. This is another indication of the difficult situation on the Union industry. Therefore, the claim was rejected.
5.2.13. Imports of PET into the Union
(252) Several interested parties, Arteco, HELM, and Oxyde claimed, without any supporting evidence, that the increase in imports of PET into the Union affected the MEG consumption.
(253) This claim is factually wrong. The imports of PET in the Union fluctuated over the period considered. Furthermore, as stated in recital (150), the consumption on free market was fairly stable by the end of the investigation period. The claim is thus rejected.
Table 13Total PET imports
Table 13Total PET imports
Table 13Total PET imports
Table 13Total PET imports
Table 13Total PET imports
2017
2018
2019
Investigation period
Volume
706 254 645
704 017 403
877 616 849
797 676 108
Index
100
100
124
113
Source: Eurostat
Source: Eurostat
Source: Eurostat
Source: Eurostat
Source: Eurostat
5.3. Conclusion on causation
(254) There was a clear coincidence in time between the substantial increase of imports at dumped prices and market share of the countries concerned and the significant decrease in sales and market share of the Union producers, coupled with the price depression, and the deteriorated financial situation of the Union industry.
(255) 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 declining production and sales, loss of market share, price depression, negative profitability, return on investment and cash flow was only limited.
(256) On the basis of the above, the Commission concluded at this stage that the dumped imports from the countries 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 of declining production and sales, loss of market share, price depression, negative profitability, return on investment and cash flow.
6. LEVEL OF MEASURES
(257) 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. Injury margin
(258) The injury would be removed if the Union industry were able to obtain a target profit by selling at a target price in the sense of Articles 7(2c) and 7(2d) of the basic regulation.
(259) 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 in imports from the countries 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 %.
(260) Import volume from the countries concerned increased significantly and import prices fell abruptly from 2019 onwards (as shown in Tables 2 and 3) turning the Union producers unprofitable. Given that, the Commission established a basic profit covering full costs under normal conditions of competition on the basis of the profitability of the Union producers before the surge of dumped imports, namely as a weighted average of profit margins recorded by the Union producers for years 2017 and 2018. The basic profit thus calculated amounts to [17,5 – 19,5] %.
(261) None of the sampled producers made a claim under Article 7(2c) of the basic Regulation for investments foregone or R&D and innovation costs.
(262) On this basis, the non-injurious price is [610 - 746] EUR/tonne, resulting from applying the above-mentioned profit margin of [17,5 – 19,5] % to the cost of production during the IP of the sampled Union producers
(263) 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 that the Union industry will incur during the period of the application of the measure pursuant to Article 11(2).
(264) These costs comprised the additional future costs (i.e. after deduction of actual costs incurred in the IP) to ensure compliance with the EU Emissions Trading System (‘EU ETS’) and the EU Industrial Emissions Directive (‘IED’). The EU ETS is a cornerstone of the EU's policy to comply with Multilateral Environmental Agreements. Likewise, the IED is the main EU instrument regulating pollutant emissions from industrial installations and, as such, also ensures compliance with Multilateral Environmental Agreements.
(265) The costs of compliance with the EU ETS 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 (2021 to 2025). The EUAs used in the calculation were net of free allowances receivable and related solely to the product concerned. The costs of the EUAs were established based on data from Bloomberg New Energy Finance (extraction dated 7 February 2021). The average projected price for EUAs for the period 2021-2025 is 36,24 EUR/tonne of CO2 emitted. The costs of compliance with the IED were calculated based on data reported by the sampled Union producers and cross-checked by the Commission. A note to the file on how the Commission established these additional future compliance costs is available in the file for inspection by interested parties.
(266) The Commission established that these future compliance costs amounted to [0,7 – 0,9] % of the cost of production in the investigation period and added them to the non-injurious price mentioned in recital (262) to obtain a total non-injurious price of the like product for the Union industry, that is to say [616 - 752] EUR/tonne.
(267) The Commission then determined the underselling margin level on the basis of a comparison of the weighted average import price of the sampled cooperating exporting producers in the countries concerned, 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.
(268) The injury elimination level for ‘other cooperating companies’ and for ‘all other companies’ is defined in the same manner as the dumping margin for these companies (see recitals (127) to (130)).
Country
Company
Provisional dumping margin (%)
Provisional injury margin (%)
United States of America
Lotte Chemical Lousiana LLC
8,5 %
38,5 %
United States of America
MEGlobal Americas Inc
38,3 %
84,9 %
United States of America
Other cooperating companies
13,5 %
46,9 %
United States of America
All other companies
52,0 %
115,0 %
Kingdom of Saudi Arabia
Saudi Kayan petrochemical company (Saudi Kayan)
11,1 %
61,4 %
Kingdom of Saudi Arabia
Yanbu National Petrochemical Company (Yansab)
11,1 %
61,4 %
Kingdom of Saudi Arabia
Eastern Petrochemical Company (Sharq)
11,1 %
61,4 %
Kingdom of Saudi Arabia
Saudi Yanbu Petrochemical Company (Yanpet)
11,1 %
61,4 %
Kingdom of Saudi Arabia
Arabian Petrochemical Company (Petrokemya)
11,1 %
61,4 %
Kingdom of Saudi Arabia
Jubail United Petrochemical Company (United)
11,1 %
61,4 %
Kingdom of Saudi Arabia
All other companies
11,1 %
61,4 %
6.2. Conclusion on the level of measures
(269) Following the above assessment, provisional anti-dumping duties should be set as below in accordance with Article 7(2) of the basic Regulation:
Country
Company
Provisional anti-dumping duty
United States of America
Lotte Chemical Lousiana LLC
8,5 %
United States of America
MEGlobal Americas Inc
38,3 %
United States of America
Other cooperating companies
13,5 %
United States of America
All other companies
52,0 %
Kingdom of Saudi Arabia
Saudi Kayan petrochemical company (Saudi Kayan)
11,1 %
Kingdom of Saudi Arabia
Yanbu National Petrochemical Company (Yansab)
11,1 %
Kingdom of Saudi Arabia
Eastern Petrochemical Company (Sharq)
11,1 %
Kingdom of Saudi Arabia
Saudi Yanbu Petrochemical Company (Yanpet)
11,1 %
Kingdom of Saudi Arabia
Arabian Petrochemical Company (Petrokemya)
11,1 %
Kingdom of Saudi Arabia
Jubail United Petrochemical Company (United)
11,1 %
Kingdom of Saudi Arabia
All other companies
11,1 %
7. UNION INTEREST
(270) 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, in accordance with Article 21 of the basic Regulation. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers/traders, users and suppliers.
(271) The Commission sent questionnaires to known interested parties. It received questionnaire replies from two unrelated importers (Helm and Oxyde) and seven users (Arteco, Indorama Group, Neo Group, Novapet, PlastiVerd, Selenis, SIR Industriale).
7.1. Interest of the Union industry
(272) There are 12 producers in nine groups of producers of MEG in the Union. The imposition of measures would allow the Union industry to recover lost market share, while improving their profitability towards levels considered sustainable.
(273) The magnitude of the injury suffered by the Union industry renders its situation untenable, given the high level of losses (-10,8 % – -13,2 % in the IP), resulting from the simultaneous effect of abnormally low prices (a decrease by 40 % on the free market) and dropping sales (-18 % on the free market) and production (-19 %), which put pressure on costs.
(274) The imposition of measures is essential to keep the massive impact of dumped imports in check and maintain MEG production in the Union. Indeed, without measures, the twin pressure of depressed prices and the erosion of sales and production would prevent the Union industry from making any profits, leaving it little choice but to discontinue production for the open market—with the virtual disappearance of Union industry producers not linked to Saudi or US interests.
(275) This pressure is due to increase, as global excess capacity rises, according to specialised consultants following closely the market such as Wood Mackenzie and ISIC. Driven by China and the US, capacity increases will outstrip demand by several million tonnes in 2021-2022. Important Chinese increases in capacity will progressively reduce opportunities for US exports there, enhancing incentives for the latter to find outlets elsewhere. This will be mainly in the export front, including the Union, as US demand is slated to increase only marginally. Coupled with Saudi Arabia’s approach to follow prices downwards (the key manner to secure presence in this price-driven market), constant price pressure appears likely. The combined US and Saudi presence is thus likely to cause further injury to the already deteriorated Union industry.
(276) Measures would release a good part of the twin pressure caused by dumped imports, allowing industry to increase both prices and volumes (sales, production, and capacity utilisation). The level of measures would allow for the elimination of the financial losses which jeopardise the Union industry’s immediate future.
(277) It is therefore concluded that the imposition of provisional measures would be in the interest of the Union industry.
7.2. Interest of unrelated importers/traders, users and suppliers
7.2.1. General
(278) The investigation has found that around 55 % of Union consumption of organic chemical MEG serves as input for polyethylene terephthalate (‘PET’ for plastic bottle manufacture); just under 25 % of MEG is used to produce automotive engine coolants; and the remaining quarter is a raw material in other industrial products.
(279) Three points are important for the analysis of the interests of Union importers/trades and users.
(280) First, non-imposition of measures would lead complainants to discontinue production for the open market, thus reducing the available sources of supply on the Union market. The Union would be dependent on imports from third countries – primarily from the KSA and the US. This would be undesirable for users not only in terms of competition, but of security of supply of importers/traders and users.
(281) Second, Taiwan, Singapore and Korea are available sources of alternative supply, whose unused capacity can, according to specialised consultants, fully cover the volume of imports from the KSA and US, in the unlikely case that these should disappear. Nevertheless, it is recalled that the purpose of the imposition of the anti-dumping measures is not to stop the imports but to restore the level playing field on the Union market.
(282) Third, proposed measures are mostly in the 8,5 % to 13,5 % range – a level which is significant yet not prohibitive.
7.3. Interest of unrelated importers/traders
(283) The level of cooperation of unrelated importers/traders was high, with the two main companies in this highly concentrated sector participating. They account for the large majority of imports from the US. These companies also import from the KSA, even though much less as at is the related SABIC importers that channel most of the volume from the KSA on the Union market.
(284) While both unrelated importers/traders are against measures, the impact thereof would not be disproportionate. Part of these duties can be passed on to users (particularly in the coolant and other industrial use segments – see below). In the case of one importer, its Union MEG activity does not represent a significant part of its turnover, so even full duties would have a marginal impact on its business. For the other, the MEG activity on the Union market is more significant, so a larger impact may occur. This will depend on the ability to target the segment where price increases can be passed on more readily, in part or in full. At any rate, the investigation revealed that the financial situation of the company is not necessarily determined by reasons linked to MEG.
(285) In any event, other sources of supply are available for all importers/traders, mitigating the impact of measures.
(286) For these reasons, it is determined that the impact of measures would not be disproportionate for importers/traders.
7.4. Interest of users
(287) Replies were received from users covering all three segments of downstream production using MEG, expressing their opposition to measures.
(288) The coolant business, where MEG is a key input, is split in two main sub-segments. Automobile companies (up to half of the coolant business) require specific, certified product formulas as well as a guaranteed, stable stream of supply. As explained above in recital (274), measures would, by maintaining domestic production, contribute to guarantee a stable stream of supply. Also, given the marginal impact of coolants on automobile costs, duties in this sub-segment can in all likelihood be largely passed on. Therefore, the impact on users in this segment would not be disproportionate in case of measures.
(289) On the other hand, the aftermarket sub-segment entails basic products where it is more difficult to pass prices on. The situation of the cooperating user in this segment does not indicate that the impact of measures would be disproportionate. At any rate, other sources of supply are available for all importers/traders, mitigating the impact of measures.
(290) Three users from the other industrial products segment (fibres, films, resins) cooperated. There is no clear pattern for the impact of measures, ranging from the marginal to the significant. This mixed picture points to the existence of company-specific situations that are not related to the level of MEG prices, but to other factors. Measures would thus not be decisive on the future activity of these companies. This would not point to a disproportionate impact on such users, particularly when balanced against the longer-term benefits of the diversity and stability of supply that the Union industry brings, and that would not exist in the absence of measures.
(291) The PET segment accounts for almost 55 % of total MEG use. MEG contributes around one fifth of full costs of PET, a product under large price pressure where profits are typically slim. Therefore, the impact of between one to two percentage points in terms of profitability can be significant.
(292) Seven companies belonging to four groups have participated in the investigation. The situation varies on a company-by-company basis. For some companies, profits would decrease but still be positive; others with low profitability would be brought to breakeven levels; for worst performers already heavy losses would be increased, even though by proportionally moderate amounts.
(293) The situation of the worst performers is structurally determined by other factors, and its activity and the hundreds of jobs it supports are thus not ultimately determined by the proposed measures, the impact of which would thus not be disproportionate.
(294) As regards the companies whose profits would oscillate around breakeven, measures would not lead to a fundamental variation in their situation. This could well call for exogenous actions (e.g. trade defence measures in case of injurious unfair trade) or endogenous adjustments of their business model to cement competitiveness. While the impact of measures may not be decisive, a few hundred jobs may be at stake.
(295) Companies with continuing profits could be somewhat affected by measures, but not disproportionately so.
(296) At any rate, the aforementioned possible impacts in the short term would have to be balanced against three risks in the medium term associated with non-imposition of measures (and the likely discontinuation of Union industry activity as the current situation is not sustainable): less sources of supply, lower stability of supply, and higher MEG prices. The latter can easily reach the moderate level of proposed measures—with negative impacts which may well equal, if not exceed, those generated by the proposed measures themselves.
(297) On balance, the potential negative impacts that could unfortunately occur in the short term for PET producers are not considered overall as sufficient to halt the imposition of measures.
(298) The aggregated picture of all user segments shows some negative impacts, but not disproportionate to the benefits the measure would bring. This matter will be the subject of continuing attention by the investigation for definitive stage.
7.5. Interest of suppliers
(299) ExxonMobil, as a manufacturer of paraxylene (raw material to manufacture PTA which is then used to manufacture PET), was the sole supplier to make comments. It claimed that the adverse impact of the anti-dumping measures on PET producers will also have an adverse effect on the Union paraxylene suppliers which would lose sales on the Union market as the Union PET producers would not be able to compete with PET imports from other regions. It was further claimed that the Union paraxylene producers already faced challenges due to excess global capacity and increased imports. Furthermore, it was argued that paraxylene producers were integrated with refineries and therefore any adverse impact on paraxylene would impact the Union refinery industries as well, which already face challenges due to excess global capacity, shifting fuel demand patterns and high costs.
(300) These claims were unsubstantiated and cannot be accepted at this stage. In addition, reference is made to the analysis regarding users making PET, whose outcome indicates that potential negative impacts may affect only some producers whose situation does not fundamentally depend on the absence of measures on MEG. As a result, it cannot be concluded that the impacts of such measures would be disproportionate for suppliers.
7.6. Comments received
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