Commission Implementing Regulation (EU) 2021/1811 of 14 October 2021 imposing a provisional anti-dumping duty on imports of calcium silicon originating in the People’s Republic of China

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) (‘the basic Regulation’), and in particular Article 7 thereof,

After consulting the Member States,

Whereas:

(1) On 18 February 2021, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of calcium silicon originating in the People’s Republic of China (‘the country concerned’ or ‘PRC’ or ‘China’) on the basis of Article 5 of 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 4 January 2021 by Euroalliages (‘the complainant’). The complaint was made on behalf of the Union industry of calcium silicon 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 volume of imports from China decreased by 86 % in the first 4 months (i.e. March to June 2021) after the initiation of the investigation as compared to the same months during the investigation period. On a monthly basis, the average imports from China during the first 4 months after the initiation of the investigation decreased by 74 % as compared to the average monthly imports during the investigation period. 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, known Union producers, the known exporting producers and the authorities of the PRC, known importers, suppliers and users, as well as associations known to be concerned about the initiation of the investigation 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) No hearings were requested at this stage of the investigation.

(8) The Commission received comments on initiation from Eurofer and the German Steel Federation (Wirtschaftsvereinigung Stahl) requesting the termination of the investigation.

(9) Eurofer claimed that the main reason for the weak performance of the Union industry was the downturn in steel production and not Chinese imports and, therefore, the complaint failed to establish a causal link between Chinese imports and the situation of the Union industry. Eurofer also argued that the complainant did not give any information regarding to what extent calcium silicon producers can produce other ferroalloys on the same machinery. Furthermore, Eurofer claimed that the complainant failed to properly analyse factors other than dumped imports that might have led to the situation of the calcium silicon industry in the Union, such as the Covid-19 pandemic and the link with steel excess capacity. Moreover, Eurofer submitted that the alleged Chinese import surges could not be reconciled based on Eurostat/Comext import data for CN code 7202 99 80. According to these data, import increases from China were not visible during the IP, whereas import increases from Brazil were much stronger. Moreover, concerning profitability, Eurofer and the German Steel Federation claimed that its reduction was the logical consequence of the worst economic crisis in more than 10 years. According to Eurofer, the overall economic situation led to the bad performance of the complainant, rather than imports. In particular, as regards costs, Eurofer pointed out that, contrary to the complainant’s allegation, energy costs decreased during the investigation period, and therefore could not have contributed to the cost increase. Also, according to Eurofer, fixed costs have not increased, due to lower steel demand. The German Steel Federation added that it must also be considered that the Chinese alloying elements producers have noticeable comparative cost advantages in the production of alloys due to lower energy and labour costs and own raw material sources. All this allegedly showed that the reduction in profitability was not the consequence of Chinese imports, but the logical consequence of the overall economic situation and the Covid-19 pandemic.

(10) In the complaint, undercutting was established based on certain transactions which were the best information available to the complainant at that stage. Eurofer criticised this method and also pointed out that undercutting should take into account whether sales were made in bulk or as cored wire.

(11) The Commission’s analysis confirmed that none of the elements mentioned, whether factually correct or not, were sufficient to call into question the conclusion that the complaint contained sufficient evidence tending to show that imports of the product concerned were entering the Union at dumped prices and appeared to be causing material injury to the Union producers. These aspects had been established on the basis of the best evidence available to the complainant at the time, and were sufficiently representative and reliable. Furthermore, the claims put forward by Eurofer and the German Steel Federation were examined in detail in the course of the investigation, and are further addressed below.

(12) On the basis of the above, the Commission confirmed that the complainant provided sufficient evidence of dumping, injury and a causal link, thereby satisfying the requirements set out in Article 5(2) of the basic Regulation.

(13) In the Notice of initiation, the Commission stated that it might sample certain types of interested parties in accordance with Article 17 of the basic Regulation.

(14) In the Notice of initiation, the Commission stated that it would make questionnaires available to the only two known Union producers, namely OFZ, a.s. and Ferropem. Nevertheless, the Commission invited also other Union producers, if any, to make themselves known to the Commission and to request a questionnaire no later than 7 days after the publication of the Notice of initiation.

(15) No other Union producers made themselves known to the Commission. The two Union producers mentioned are therefore considered to constitute 100 % of the Union industry.

(16) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of initiation.

(17) Four unrelated importers (Affival SAS, Coftech GmbH, Sider Trading SpA, SKW Stahl-Metallurgie GmbH) provided the requested information and agreed to be included in the sample. In view of the low number of replies, the Commission decided that sampling was not necessary. The Commission invited the four companies indicated to complete the questionnaire for importers.

(18) In order to decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known exporting producers in the PRC to provide the information specified in the Notice of initiation. In addition, the Commission asked the Mission of the People’s Republic of China to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(19) Three exporting producers in the PRC provided the requested information and agreed to be included in the sample. In view of the low number of replies, the Commission decided that sampling was not necessary.

(20) The Commission sent a questionnaire concerning the existence of significant distortions in the PRC within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of the PRC (‘GOC’).

(21) Furthermore, the complainant provided in the complaint sufficient evidence of raw material distortions in the PRC regarding the product concerned. Therefore, as announced in the Notice of initiation, the investigation covered those raw material distortions to determine whether to apply the provisions of Article 7(2a) and 7(2b) of the basic Regulation with regard to the PRC. For this reason, the Commission sent an additional questionnaire in this regard to the Government of the PRC.

(22) The questionnaires for Union producers, unrelated importers, users and exporting producers were made available online (3) on the day of initiation.

(23) The Commission received questionnaire replies from the two Union producers, two Union importers (Affival and Coftech), two users (AFV Acciaierie Beltrame S.p.A. and Filo d.o.o.) and the three cooperating exporting producers (Ningxia Ketong New Material Technology Co., Ltd, Ningxia Shun Tai Smelting Co., Ltd and its related trader Overseas Metallurgy Co., Ltd and Shaanxi Shenghua Metallurgy-Chemical Co., Ltd).

(24) The Commission sought and cross-checked all the information it deemed necessary for a provisional determination of dumping, resulting injury and Union interest. Due to the outbreak of the COVID-19 pandemic and the consequent measures taken to deal with the outbreak (‘the COVID-19 Notice’) (4) the Commission was unable to carry out verification visits at the premises of the cooperating companies. Instead, the Commission performed remote cross-checks (‘RCCs’) of the information provided by the following companies via videoconference:

Union producers

— OFZ, a.s., Istebné, Slovakia

— Ferropem, Chambéry, France

Importers

— Affival SAS, Solesmes, France

Exporting producers in the PRC

— Ningxia Ketong New Material Technology Co., Ltd (‘Ketong’)

— Ningxia Shun Tai Smelting Co., Ltd and its related trader Overseas Metallurgy Co., Ltd (‘Shun Tai’)

— Shaanxi Shenghua Metallurgy-Chemical Co., Ltd (‘Shenghua’).

(25) The investigation of dumping and injury covered the period from 1 January 2020 to 31 December 2020 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2017 to the end of the investigation period (‘the period considered’).

(26) The product concerned is an alloy or a chemical compound that contains by weight 16 % or more of calcium, 45 % or more of silicon, less than 14 % of iron and not more than 10 % of any other element; whether or not presented in bulk, packaged in bags or in steel drums, enclosed in steel sheets (or cored wire), or otherwise presented, originating in the PRC, currently falling under CN codes ex 7202 99 80 and ex 2850 00 60 (TARIC codes 7202998030 and 2850006091) (‘the product concerned’). It is commonly referred to as calcium silicon or ‘CaSi’.

(27) Calcium silicon is used in the manufacture of special metal alloys. CaSi alloys are used as a deoxidiser and desulfuriser in the manufacturing of high-grade steel.

(29) The Commission decided at this stage that those products are therefore like products within the meaning of Article 1(4) of the basic Regulation.

(30) The Commission did not receive claims regarding the product scope.

(31) In view of the sufficient evidence available at the initiation of the investigation pointing to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation with regard to the PRC, the Commission considered it appropriate to initiate the investigation with regard to the exporting producers from this country having regard to Article 2(6a) of the basic Regulation.

(32) Consequently, in order to collect the necessary data for the eventual application of Article 2(6a) of the basic Regulation, in the Notice of initiation the Commission invited all Chinese exporting producers to provide information regarding the inputs used for producing calcium silicon. Three Chinese exporting producers submitted the relevant information.

(33) In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in point 5.3.2 of the Notice of initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of initiation in the Official Journal of the European Union. No reply to the requested information was provided by the GOC. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in the PRC.

(34) In point 5.3.2 of the Notice of initiation the Commission identified Brazil as a potential representative country pursuant to Article 2(6a)(a) of the basic Regulation for the purpose of determining the normal value based on undistorted prices or benchmarks. The Commission further stated that it would examine other possibly appropriate representative countries in accordance with the criteria set out in 2(6a)(a) first indent of the basic Regulation.

(35) On 7 May 2021, the Commission informed by a note (‘the First Note’) interested parties on the relevant sources it intended to use for the determination of the normal value. In that note, the Commission provided a list of all factors of production such as raw materials, labour and energy used in the production of calcium silicon. In addition, the Commission identified Brazil and Argentina as possible representative countries. The Commission received comments from the complainant and the exporting producers Ketong and Shenghua. These comments are analysed in detail in recitals (93) to (119).

(36) On 14 June 2021, the Commission informed by a second note (‘the Second Note’) interested parties on the relevant sources it intended to use for the determination of the normal value, with Brazil as the representative country. It also informed interested parties that it would establish selling, general and administrative costs (‘SG&A’) and profits based on available information for the relevant company Rima Industrial S.A. (‘Rima Industrial’) in the representative country. The Second Note also addressed the comments received to the First Note. Comments to the Second Note were received from the complainant and the exporting producers Ketong and Shenghua. These comments are analysed in detail in recitals (122) to (136).

(37) According to Article 2(1) of the basic Regulation, ‘the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country’.

(38) However, according to Article 2(6a)(a) of the basic Regulation, ‘in case it is determined […] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks’, and ‘shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits’.

(39) As further explained below, the Commission concluded in the present investigation that, based on the evidence available, and in view of the lack of cooperation of the GOC, as stated in recital (33), the application of Article 2(6a) of the basic Regulation was appropriate.

(40) In the recent investigation concerning ferro-silicon originating in the PRC, the producers of which belong to the ferro-alloys sector, similarly to producers of calcium silicon (5), the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present in the said sector. The Commission concluded in that investigation that, based on the evidence available, the application of Article 2(6a) of the basic Regulation was also appropriate.

(41) In that investigation, the Commission found that there is substantial government intervention in the PRC resulting in a distortion of the effective allocation of resources in line with market principles (6). In particular, the Commission concluded that in the ferro-silicon sector, not only does a substantial degree of ownership by the GOC persists in the sense of Article 2(6a)(b), first indent of the basic Regulation (7) but the GOC is also in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation (8). The Commission found further that the State’s presence and intervention in the financial markets, as well as in the provision of raw materials and inputs have an additional distorting effect on the market. Indeed, overall, the system of planning in the PRC results in resources being allocated to sectors designated as strategic or otherwise politically important by the GOC, rather than being allocated in line with market forces (9). Moreover, the Commission concluded that the Chinese bankruptcy and property laws do not work properly in the sense of Article 2(6a)(b), fourth indent of the basic Regulation, thus generating distortions in particular when maintaining insolvent firms afloat and when allocating land use rights in the PRC (10). In the same vein, the Commission found distortions of wage costs in the ferro-silicon sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation (11), as well as distortions in the financial markets in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, in particular concerning access to capital for corporate actors in the PRC (12). Due to the close similarity of inputs used and of the production process, these findings largely apply also to the calcium-silicon sector, the latter also forming part of the ferro-alloys sector.