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

15.10.2021	EN	Official Journal of the European Union	L 366/17

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. PROCEDURE

1.1.   Initiation

• (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.

1.2.   Interested parties

• (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.

1.3.   Comments on initiation

• (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.

1.4.   Sampling

• (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.

1.4.1.   Union producers

• (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.

1.4.2.   Sampling of importers

• (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.

1.4.3.   Sampling of exporting producers in the PRC

• (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.

1.5.   Questionnaire replies and verification visits

• (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’).

1.6.   Investigation period and period considered

• (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’).

2. PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product concerned

• (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.

2.2.   Like product

• (28) The investigation showed that the following products have the same basic physical, chemical and technical characteristics as well as the same basic uses:

• — the product concerned;

• — the product produced and sold on the domestic market of the PRC, and

• — the product produced and sold in the Union by the Union industry.

• (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.

2.3.   Claims regarding product scope

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

3. DUMPING

3.1.   Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation

• (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).

3.2.   Normal Value

• (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.

3.2.1.   Existence of significant distortions

• (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.

• (42) Like in the investigation concerning the ferro-silicon sector in the PRC, the Commission examined in the present investigation whether it was appropriate or not to use domestic prices and costs in the PRC, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the complaint, as well as in the Report, which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in the PRC’s economy in general, but also the specific market situation in the relevant sector including the product under investigation. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in the PRC as also found by its previous investigations in this respect.

• (43) The complaint in this case referred to the Report, in particular to distortions in the energy sector and with regard to certain mineral inputs. Moreover, the complainant also provided a study on State-induced market distortions the Chinese ferro-alloys and silicon industries. This study documented that the Chinese ferro-alloy industry is subject to heavy government guidance and discretionary interference and concluded that the Chinese companies in this industry ‘are operating in a distorted market environment in which competitive forces are not permitted to structure the domestic market and align it with the global markets.’ This study was placed in the investigation file at the initiation stage. No comment on this study was provided by any interested party, including the GOC and the exporting producers. The complaint also contained references to the OECD Inventory on Export restrictions on Industrial Raw Materials.

• (44) In the calcium silicon sector, a certain degree of ownership and control by the GOC persists in the sense of Article 2(6a)(b), first indent of the basic Regulation. The investigation established that one of the cooperating exporting producers – Shenghua – is owned 65 % by Shaanxi Metallurgical & Mining Group Co., which in turn is a subsidiary of State-owned Shaanxi Non-ferrous Metals Holding Group Co. ¹³. The company acknowledges it remains under the influence of the SOE and benefits from the strong backing of the government ¹⁴. Additionally, while the two other cooperating exporting producers appear to be privately owned, one of them – Ningxia Shun Tai Smelting – also appears to entertain a close relationship with the local authorities: it is located in Zhongwei Industrial Park, which grants numerous preferential policies to established companies, such as reduced taxes or electricity prices ¹⁵. The Park’s website states also that ‘The silicon-calcium alloy submerged arc furnace and waste heat power generation project of Ningxia Shuntai Smelting Company is a key investment promotion project of Zhongwei Municipal Government.’.

• (45) Since there was no cooperation from any other Chinese exporters of the product under investigation, the exact ratio of private and State-owned calcium silicon producers could not be further determined.

• (46) Additionally, the investigation confirmed under Article 2(6a)(b), first indent of the basic Regulation that in the electricity sector, which is the main factor of production in the manufacturing of calcium silicon, a substantial degree of ownership by the GOC persists. As found by the Commission in its Report, the electricity market in China is characterised by strong involvement of SOEs in various stages of the supply chain, and around 50 % of the generation capacity was State-owned in 2017, whereas the entire transmission grid is owned by two SOEs ¹⁶.

• (47) As to the GOC being 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, during the investigation the Commission established the existence of personal connections between the Chinese Communist Party (‘CCP’) and at least one company manufacturing the product under investigation. Shenghua’s CEO and owner of 35 % of the company’s stake holds at the same time the position of Party Secretary ¹⁷.

• (48) Both public and privately owned enterprises in the calcium silicon sector are also subject to policy supervision and guidance. As in any other sector in the PRC, these producers are constrained to host party-building activities and maintain a close affiliation to the CCP and its ideology. The following example illustrates the above trend of an increasing level of intervention by the GOC also in the calcium silicon sector. The investigation revealed extensive party-building activities in the company Shenghua. The producer’s website is particularly explicit about the enterprise’s CCP party-building and its role within the company: ‘On July 17, the CCP Shaanxi Shenghua Metallurgical Chemical Co., Ltd committee held the fourth Party committee centre group study session. Party Secretary and Executive Director Wei Xinhua presided over the meeting. Party committee members, others members of the non-party committees as well as branch secretaries attended the meeting. At the meeting, Yang Hui, deputy secretary of the Party committee, introduced the study material on “The Fundamental Law of the Communist Party of China-The Party Constitution of the 19th National Congress of the Communist Party of China”, and ensured collective study of the speech of the Chairman of the Metallurgical Group at the July 1st Praise Conference “Let’s align with the advanced and unite and forge ahead the smelting force.” Participants exchanged and discussed how to fulfil party members’ obligations and fulfil their missions. […] [Wei Xinhua] put forward several requirements for the leadership team and Party members comrades: 1. To continuously improve oneself by seriously reading the Party Constitution, […] 2. Strengthen ideology and belief, unswervingly adhere to the leadership of the company’s Party committee, carry forward the “Yan’an Spirit” and “Nail Spirit”, and focus one’s energy on tasks to fulfil one’s duties and ensure a good job for the company. […] 4. Investigate and correct one’s own work style-related problem in accordance with the Party’s constitution and discipline. All branches must do a good job in ideological education of Party members and cadres and enhance their Party spirit; […] The company’s discipline inspection committee and the discipline inspection and supervision office must strictly perform their supervisory duties’ ¹⁸.

• (49) Further, it was established that policies discriminating in favour of domestic producers or otherwise influencing the market in the sense of Article 2(6a)(b), third indent of the basic Regulation are in place in the calcium silicon sector.

• (50) That industry, together with other ferro-alloys sub-sectors which play a significant role in steel production, is an important sector for the GOC. Notably, the Commission found that the sector is considered an encouraged industry in the Ningxia province, in accordance with the 2020 National Development and Reform Commission (‘NDRC’) Catalogue of encouraged industries in the Western provinces ¹⁹.

• (51) Also with regard to inputs needed for the production of calcium silicon, numerous plans, directives and other documents have been issued at various levels. The latter display the level of State interference in the markets of these inputs.

• (52) Concerning electricity, which accounts for the largest share of input costs, as established by the Commission in the Report, the prices of electricity are not market-based in the PRC and are also affected by significant distortions (through central price-setting, price differentiation and in direct power purchase practices) ²⁰. While the energy market in China has undergone a number of changes and reforms ²¹, some prices relevant for the energy system are still not market-based. The government recognises that the prices are still largely controlled by the State: ‘The current electricity price management is still based on government prices. Price adjustments often lag behind changes in costs and it is difficult to timely and reasonably reflect the electricity usage costs […] An effective competitive mechanism for the sale of electricity has not yet been established, market transactions between electricity generation enterprises and users are limited and it is difficult to involve the decisive role of the market in the allocation of resources’ ²². This State-induced market weakness is at the origin of further attempts to manage the market, which is reflected in a number of subsequent administrative documents. For example, in November 2020, the NDRC released the Notice on promoting the signing of mid to long-term 2021 electricity contracts ²³. The document notably instructs to ‘strive to ensure that the contracted electricity volume is not lower than 80 % of the average volume over the past three years’, and with regard to pricing to ‘establish a deviation settlement mechanism […] in the local market regulations to deal with deviations between the contracted power volume and the actual implementation’ and to ‘[i]mprove the medium and long-term transaction price mechanism. All localities shall strictly implement the power transmission and distribution prices as approved by the government.’ The Notice contains also specific provisions on implementation, notably through the establishment of a tracking mechanism for the contract signing progress, or by strengthening contracts monitoring, disclosure and enforcement ²⁴. Furthermore, in January 2021, the State Council released the NDRC Opinion on standardising urban water, electricity and heating supplies fees to foster a high quality development of the sector. The Notice contains specific provisions with regard to government pricing ‘[…] For projects subject to government pricing or government-guided prices, reasonably determine the cost composition, strengthen cost supervision and review, improve the price formation mechanism and scientifically determine the price level. […]’ Among the ‘main goals’ of the Notice, specific reference is made to the government input mechanism in relation to pricing, as well as the sectoral differentiation of pricing methods: ‘By 2025, clear results shall be achieved in cleaning up and standardizing the charges in the water supply, power supply, gas and heating sector. A basis for a scientific, standardized and transparent price formation mechanism shall be established, and the government input mechanism shall be further improved. Pricing methods applicable to related sectors, cost supervision and review methods, price behaviour and standard comprehensive coverage of services, as well as the quality and efficiency of the supply of water, electricity, heating and other products and services shall be significantly improved.’ ²⁵.

• (53) Coal is another raw material used to manufacture calcium silicon. As found by the Commission in its Report, the coal market in the PRC is subject to distortions, notably as a result of subsidisation ²⁶ and through the management and control over the exploitation of coal resources ²⁷. Additionally, in the investigation concerning Monosodium Glutamate originating in the PRC and Indonesia, the Commission made findings on the State’s interference with market forces in the Chinese coal sector at provincial level, notably in Shandong Province, by means of planning documents regulating the supply, localisation and industrial patterns ²⁸. In the current investigation, the Commission established further elements of State interference. In May 2021, the National Energy Administration (NEA) and NDRC jointly released the Notice on Management measures for coal mine production capacity and approval criteria, with the aim of regulating coal mine capacities and enforcing relevant limits, calculated on the basis of the notice ²⁹. As another example of far-reaching State regulating activity in the coal market, in December 2020, the NDRC issued the Notice on ensuring the signature and performance of medium and long-term coal contracts in 2021 ³⁰. The Notice expressly emphasizes the goal of increasing the State’s influence and supervision in the contractual process: ‘Give better play to the role of the government, focus on strengthening system construction, improve transaction rules, strengthen credit supervision, and guide relevant parties to raise awareness of the overall situation, take social responsibilities, standardize contract performance, and ensure the smooth functioning of the coal market.’ The notice also instructs to ‘[s]trengthen industry self-discipline. All relevant industry associations shall guide enterprises to strengthen self-discipline, to duly implement the requirements of medium and long-term contracts, and not to use the market supply and demand situation and the advantageous position of the industry to sign unbalanced contracts. Large-scale enterprises shall play an exemplary role, self-regulate contract signatures, enhance their awareness of fulfilling commitments, take the initiative to take social responsibility of ensuring supply and stable prices, and promote the smooth operation of coal market at national level.’ Particularly worth noting is the clear directive not to use the demand and supply situation in the market when signing contracts. In April 2021, the NDRC issued a further Notice on ensuring supervision and management of 2021 coal medium and long-term contracts, which aims at better overseeing sale contracts compliance and to ensure the supply of coal (notably based on the provisions of the pre-cited Notice No 902). On that basis, relevant parties should notably ensure that the monthly compliance rate should not be less than 80 %, and the quarterly and annual compliance rate should not be less than 90 % ³¹.

• (54) State interventionism in the coal market is also visible in the recent decision on extending for another year the trial operation time for shuttered coal mines with the aim to increase output and supply, in order to counter the commodity’s price increases (after the mines production was previously suspended) ³².

• (55) Furthermore, two other important raw materials used to manufacture calcium silicon – quartzite and limestone – are covered by the 13th Five-Year Plan for Mineral Resources, which allows the State to manage the key mineral resources markets in the PRC in virtually all areas ³³. Moreover, the investigation confirmed that as per the 2020 edition of the OECD Inventory of Export Restrictions on Industrial Raw Materials, quartzite (HS code 250590) was subject in 2019 in the PRC to a non-automatic export-licensing requirement ³⁴, which has the capacity to restrain export activity and thereby to distort the market.

• (56) As can be seen from the above examples, the GOC manages the development of the calcium silicon sector in accordance with a broad range of policy tools and directives and controls virtually every aspect in the functioning of the sector. This governmental guidance and intervention concerns also the main inputs used in the manufacturing of the product under investigation. As an example, Shenghua acknowledges it aligns its business operations on central planning documents and key State policies, as described in its corporate objectives: ‘Strive to build and put into operation projects such as high-purity metal calcium, chemical-grade industrial silicon, and microwave metallurgical production lines and other projects by the end of the “13th Five-Year Plan”’. The company claims also it ‘actively adapts to the new normal of the national economic development, accurately grasps the new direction of supply-side reform policies, earnestly implements the responsibility of safe and environmentally friendly production, and, on the basis of the stable leadership it exerts on the calcium silicon alloy industry, it relies on the Shaanxi Nonferrous Group’s management, talents, and scientific research’ ³⁵.

• (57) In addition to the above, calcium silicon producers are also beneficiaries of various forms of State support, which clearly points to the interest of the authorities in this sector. During the investigation, the Commission established that Ningxia Shun Tai Smelting benefited from support due to its establishment in Zhongwei Industrial Park (see recital (44)), whereas the company Ketong was recognized as ‘2020 Autonomous Region Enterprise Technology Center’. In relation to this local media reported that: ‘According to relevant regulations, the autonomous region-level enterprise technology centre recognized as such for the first time will receive a financial support of RMB 1 million.’ ³⁶ Other local media reports have confirmed the province’s support to the company: ‘The relevant person in charge at the Autonomous Region’s Department of Industry and Information Technology indicated that our district is vigorously promoting the structural transformation, the green transformation, the smart transformation and the technological transformation of industry enterprises, through the extension of the industry chain, considered as a priority, as well as through green transformation, smart transformation and technological transformation, considered as the key tools, and that it is also promoting the structural adjustment and the product upgrades in the raw material industry. […] As regards special alloy materials, our region supports the development of high-temperature alloys, corrosion-resistant alloys, ultra-high-strength alloys and other materials with special properties and special functions. Relying on enterprises such as Shengyan Industrial, Ketong New Materials, and Jun Magnetic New Materials, breakthroughs in core technologies will be made to develop alloy materials with special requirements such as high temperature resistance, high strength and high corrosion resistance, which are widely used in the field of stainless steel and special steel.’ ³⁷.

• (58) In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production of calcium silicon as well as of the main raw materials used in the manufacturing of that product. Such measures impede market forces from operating freely.

• (59) The present investigation has not revealed any evidence that the discriminatory application or inadequate enforcement of bankruptcy and property laws according to Article 2(6a)(b), fourth indent of the basic Regulation in the calcium silicon sector referred to above in recital (41) would not affect the manufacturers of the product under investigation.

• (60) The calcium silicon sector is also affected by the distortions of wage costs in the sense of Article 2(6a)(b), fifth indent of the basic Regulation, as also referred to above in recital (41). Those distortions affect the sector both directly (when making the product under investigation or the main raw materials used in its production), as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in the PRC).

• (61) Moreover, no evidence was submitted in the present investigation to the effect that the calcium silicon sector would be exempted from the government intervention in the financial system in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, as also referred to above in recital (41). Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

• (62) Finally, the Commission recalls that in order to produce the product under investigation, a number of inputs is needed. When the producers of the calcium silicon purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors.

• (63) As a consequence, not only the domestic sales prices of calcium silicon are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts A and B of the Report. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout the PRC. This means, for instance, that an input that in itself was produced in the PRC by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth.

• (64) No evidence or argument to the contrary has been adduced by the GOC. However, the exporting producers Ketong and Shenghua submitted a number of comments.

• (65) Ketong argued that the methodology prescribed by Article 2(6a) of the basic Regulation for the purpose of establishing the normal value is incompatible with China’s Protocol of Accession to the WTO, the WTO Anti-Dumping Agreement (‘ADA’), and WTO Dispute Settlement Body (‘DSB’) ruling, and should thus not be applied.

• (66) First, Ketong recalled that Section 15 of the China’s Protocol of Accession to the WTO allowed derogations from the standard methodology in determining normal value and price comparability under Article VI of the GATT 1994 and the ADA, but these derogations were time-limited, as they expired on 11 December 2016. According to Ketong, as of 12 December 2016, the Union should not deviate from the standard methodology in establishing the normal value of the exporting country producers and from using only domestic prices and costs of the exporting country, unless other provisions of the WTO agreements, including the ADA, permit otherwise. Ketong claimed that Article 2(6a) of the basic Regulation, in so far as it allows the Union to use data of an appropriate representative country, goes against the Union’s commitment under the WTO agreements, in particular its commitment under Section 15 of China’s Protocol of Accession to the WTO.

• (67) Ketong also argued that Article 2 of the ADA does not permit the use of information other than that in the exporting country in order to establish the normal value. Also in exceptional circumstances, where the normal value needs to be constructed, the data relating to the cost of production and SGA and profits have to be obtained from the sources in the country of export. According to Ketong, the notion of significant distortions does not even exist in the ADA.

• (68) Second, Ketong recalled that the WTO Appellate Body in European Union – Anti-dumping measures on biodiesel from Argentina ³⁸ found that the Union acted inconsistently with Article 2.2.1.1 of the ADA by not using the records kept by the investigated producers as a basis to calculate the cost of production of the product under investigation. Ketong notably stated that in light of that ruling, distortions in Argentina which were causing a difference between the domestic and international prices of the main raw material of the product concerned were not in itself a sufficient basis under Article 2.2.1.1 for concluding that producer’s records did not reasonably reflect the costs of the raw material associated with the production and sale of the product concerned, or for disregarding those costs when constructing the normal value of the product concerned.

• (69) Similarly, Shenghua argued that Article 2(6a) of the basic Regulation is inconsistent with WTO law.

• (70) First, Shenghua claimed that the ADA does not recognise the concept of significant distortions in Article 2.2, which only allows for the construction of the normal value if there are no sales in the ordinary course of trade. Shenghua observed that there is no article in the ADA allowing data from a third country, which cannot reflect the prices or cost level of the exporting country to be used for determining the normal value. The ADA thus requires that the normal value must be determined based on the sales prices or costs that reflect the price or cost level in the country of origin. Hence, the constructed price based on prices in the representative country cannot reflect the price and cost level in the exporting country.

• (71) Second, Shenghua claimed that even if the concept of significant distortions accorded with WTO law, the constructed value would need to be calculated in accordance with Article 2.2.1.1 of the ADA and its interpretation by the WTO Appellate Body in EU – Biodiesel (DS473). The significant distortions in the exporting country would need to fall under the definition of either sales not in the ‘ordinary course of trade’ or a ‘particular market situation’. Shenghua submitted that even though the concept of ‘ordinary course of trade’ is not explicitly defined in the ADA, Article 2.2.1 provides that sales of a product can be treated as not being in the ordinary course of trade and disregarded ‘only if […] such sales are made within an extended period of time in substantial quantities and are at prices which do not provide for the recovery of all costs […]’. Against this background, Shenghua claimed that the Complainant had not proved that the alleged significant distortions fall under either of the category of sales ‘not in the ordinary course of trade’ or of a ‘particular market situation.’

• (72) The Commission considered that the provisions of Article 2(6a) are fully consistent with the Union’s WTO obligations and the jurisprudence cited by both Ketong and Shenghua. With regard to commitments under Section 15 of China’s Protocol of Accession to the WTO, the Commission recalls that in anti-dumping proceedings concerning products from China, the parts of Section 15 of the Protocol that have not expired continue to apply when determining normal value, both with respect to the market economy standard and with respect to the use of a methodology that is not based on a strict comparison with Chinese prices or costs.

• (73) With regard to the EU – Biodiesel case, the relevant ruling did not concern the application of Article 2(6a) of the basic Regulation, but of a specific provision of Article 2(5) of the basic Regulation. It is the Commission’s view that WTO law as interpreted by the WTO Panel and the Appellate Body in EU – Biodiesel permits the use of data from a third country, duly adjusted when such adjustment is necessary and substantiated. The existence of significant distortions renders costs and prices in the exporting country inappropriate for the construction of normal value. In these circumstances, Article 2(6a) of the basic Regulation envisages the construction of costs of production and sale on the basis of undistorted prices or benchmarks, including those in an appropriate representative country with a similar level of development as the exporting country.

• (74) With regard to the claim concerning insufficient proof by the Complainant, the legal basis and underlying evidence in the complaint concerned the conditions of application of Article 2(6a) of the basic Regulation. As specified in Point 3 of the Notice of initiation, the Commission considered that the complaint provided sufficient evidence of significant distortions as required by Article 2(6a)(e) of the basic Regulation to initiate the investigation. There are no further evidentiary requirements of the type alleged by this party in Article 2(6a) of the basic Regulation.

• (75) Therefore, the Commission rejected the claims of Ketong and Shenghua.

• (76) Ketong submitted that its cost or price elements, which are not proven by the Commission to be distorted, should not be adjusted or established on a different basis.

• (77) Shenghua submitted that, if the Commission decides to apply Article 2(6a) of the basic Regulation, it would be unreasonable to replace all factors of costs with data from other sources as, according to the wording of this provision, only those costs of production and sales which have been proven to be distorted will be replaced by undistorted prices and benchmarks. Specifically, Shenghua commented that the complainant failed to prove that the labour costs in China’s calcium silicon industry were distorted, hence the Commission should have used the effective labour costs as reported by the exporting producers. Shenghua stated that it was unreasonable to replace the labour costs with those in a third country, because they were influenced by several factors, such as the supply and demand relationship in the market concerned, the degree of automation in the production and the commodity price level in the region where the producers were located. Shenghua added that the labour costs varied not only between different countries but also between different Chinese producers. Shenghua stated that the same is true also for energy, SG&A and profit.

• (78) In response to the claim concerning the lack of evidence about distortions in labour costs at initiation stage, the Commission refers to its reasoning in recitals (41) and (63). The determination on the actual existence of significant distortions and the consequent use of the methodology prescribed by Article 2(6a)(a) only occurs at the time of the provisional and/or definitive disclosure. In this case, the Commission deemed the evidence submitted by the complainant on the significant distortions sufficient to initiate the investigation on this basis. While the Commission acknowledges that wage costs can differ from country to country or even between sectors, the Commission, as a result of its investigation found that the labour market in the PRC was affected by distortions at a country-wide level. The issues inherent to the Chinese labour market, including the lack of labour unions independent from the government and the workforce mobility restrictions due to the household registration system have a distortive impact on the wage creation in the PRC for all economic operators. The fact that wage costs could be different in other countries or could vary within the PRC does not alter this finding.

• (79) In the course of the investigation, the Commission further established, as described in detail in recitals (51) to (55) that markets for inputs used by calcium silicon producers in the PRC were subject to numerous significant distortions, not only specific ones but also ones of a cross-cutting nature. The same situation applied to the producers of more basic inputs used to manufacture calcium silicon as well as its raw materials. Therefore, the Commission found that all costs of inputs used in the manufacturing of the product under investigation, including energy, were distorted in the PRC. The fact that, as claimed by Shenghua, there are differences in the costs of energy between different countries does not alter the Commission’s assessment with regard to the energy prices being distorted in the PRC.

• (80) In this respect, while Article 2(6a)(a) of the basic Regulation allows the use of domestic costs, including labour or energy costs, if they are positively established not to be distorted, there is no evidence on the file establishing that the country-wide distortions are not applicable to calcium silicon producers. Accordingly, no such domestic costs could be used in the construction of the normal value.

• (81) With regard to SG&A and profits, the Commission noted that once it is determined that due to the existence of significant distortions for the exporting country in accordance with Article 2(6a)(b) of the basic Regulation it is not appropriate to use domestic prices and costs in the exporting country, the Commission may construct the normal value by reference to undistorted prices or benchmarks in an appropriate representative country for each exporting producer according to Article 2(6a)(a). The Commission underlines that the latter also specifically requires that the constructed normal value includes a reasonable amount of undistorted administrative, selling and general costs, and profits. If in the course of its investigation based on all evidence on the file the Commission proves the existence of the significant distortions affecting the product concerned in the exporting country, it follows that the SG&A costs of the exporting producers are also affected by those distortions.

• (82) The claims of both Ketong and Shenghua were therefore rejected.

• (83) Shenghua also claimed that, even if data from other sources were used, it would be unreasonable to use data of a third country as the undistorted price. Shenghua referred to the intention by the Commission to refer to the Global Trade Atlas (‘GTA’) database for import prices of the representative country and considered that, during the investigation period, it purchased all the raw materials for the production of the product under investigation domestically. Therefore, the Commission should use a more reliable and reasonable data source and, whatever source of data is used, due adjustments (such as for delivery expenses) should be made to ensure that the alleged undistorted price is set under the same purchase terms with raw materials purchased by Shenghua.

• (84) Concerning this argument, the Commission noted that, for the reasons set out in recitals (41) to (63), it applies Article 2(6a) of the basic Regulation in the present investigation. Therefore, the Commission is bound to use undistorted costs in an appropriate representative country to ensure that the applied costs are not affected by distortions and are based on readily available data, such as the import data contained in the GTA database. In the absence of data provided by Shenghua to substantiate its claim concerning due adjustments (such as for higher delivery expenses), the import values of the representative country are considered to fulfil the criteria of Article 2(6a) of the basic Regulation and to provide a reasonable estimate of the price in the representative country, including the delivery expenses. Additionally, because the imported inputs compete on the domestic market of the representative country in terms of prices, the Commission considered them a reliable proxy. If not all delivery expenses in the case of import would be taken into account, the resulting price would not reflect the undistorted price on the representative country market. This would be contrary to Article 2(6a)(a) of the basic Regulation and thus this claim was dismissed.

• (85) In view of the above, the evidence available showed that prices or costs of the product under investigation, including the costs of raw materials, energy and labour, are not the result of the free interaction of market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation, as shown by the impact of one or more of the relevant elements listed therein. On that basis, and in the absence of any cooperation from the GOC, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case. Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as discussed in the following section.

3.3.   Representative country

3.3.1.   General remarks

• (86) The choice of the representative country was based on the following criteria pursuant to Article 2(6a) of the basic Regulation:

• — A level of economic development similar to China. For this purpose, the Commission used countries with a gross national income per capita similar to China on the basis of the database of the World Bank ³⁹;

• — Production of the product concerned in that country;

• — Availability of relevant public data in the representative country;

• — Where there is more than one possible representative country, preference should be given, where appropriate, to the country with an adequate level of social and environmental protection.

• (87) As explained in recitals (35) and (36), the Commission issued two notes to the file on the sources for the determination of the normal value. These notes described the facts and evidence underlying the relevant criteria, and also addressed the comments received by the parties on these elements and on the relevant sources. In the Second Note on production factors, the Commission informed interested parties of its intention to use Brazil as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed.

3.3.2.   A level of economic development similar to the PRC

• (88) In the First Note on production factors, the Commission identified Argentina, Brazil, Kazakhstan, Malaysia and Mexico as countries with a similar level of economic development as China according to the World Bank, i.e. they are all classified by the World Bank as ‘upper-middle income’ countries on a gross national income basis.

• (89) No comments were received from interested parties regarding the similarity to the PRC of the level of economic development of the countries that the Commission identified.

• (90) Ketong noted that Russia was also classified by the World Bank as an ‘upper-middle income’ country, similar to the PRC and asked the Commission to consider this country also as a potential representative country. However, the Commission has not found any producer of calcium silicon in Russia with publically available financial information representative for the purpose of constructing the normal value of the product under investigation and therefore it did not assess this country further.

3.3.3.   Availability of relevant public data in the representative country

• (91) In the First Note, the Commission identified Brazil and Argentina as countries where production of calcium silicon was known to take place. In this note, the Commission identified further Kazakhstan, Malaysia and Mexico as countries producing ferro-alloys, an industry most similar to the calcium silicon industry in terms of production process and factors of production, which it might use in case of lack of appropriate data from the countries producing calcium silicon. Comments were received from Ketong, Shenghua and the complainant.

• (92) The Commission identified two producers of calcium silicon in Brazil and one in Argentina for which publicly financial information was available. However, recent financial data (i.e. 2019) was available only for the Argentinian producer and one of the two Brazilian producers (Rima Industrial S.A.).

• (93) The complainant took note that Brazil remained one of the possible representative countries and supported its potential selection as a representative country as it had initially proposed in the complaint.

• (94) Both Shenghua and Ketong claimed with their comments on the First Note that Brazil cannot be an appropriate representative country because the import volumes of several raw materials (such as electrode paste and silica rock/quartzite) were low and, therefore, not representative.

• (95) However, for electrode paste, the imports into Brazil covered at least 10 % of the reported consumption in China and are, therefore, considered representative. For quartzite, the Commission considered the low import volume into Brazil not representative and reverted to the average purchase price paid by the Union producers as an appropriate benchmark.

• (96) Shenghua claimed that the price of electricity in Brazil was too high and asked the Commission to reject Brazil as a representative country on this ground.

• (97) The Commission noted that nowhere in the criteria for selection of the representative country set out in the basic Regulation is mentioned that the prices of utilities have to be within a certain range. This argument was, therefore, rejected.

• (98) With their comments on the First Note, Ketong claimed that the electricity market in Brazil was distorted because (1) the Brazilian government was the majority shareholder in the electricity producer Eletrobrás, and (2) the Brazilian government regulated the electricity price through the regulatory agency Agência Nacional de Energia Elétrica (‘ANEEL’). Therefore, for this reason Brazil would not be an appropriate representative country.

• (99) The Commission noted that Ketong did not provide any evidence that the government ownership of Eletrobrás led to a distortion of the electricity market in Brazil, and in particular that it impacted producers of calcium silicon regarding the price they paid for electricity during the investigation period. For instance, although 52 % of Eletrobrás shares are government-owned, the remainder of the shares are publicly traded. The issue is further considered in recital (133) below based on additional evidence received by interested parties, and in recital (152).

• (100) Shenghua claimed that Brazil was a highly protected market and a country that resorted to a ‘high number of potentially trade-restrictive measures’, which the Commission confirmed in its evaluation of Brazil’s import restrictions ⁴⁰.

• (101) In the First Note, the Commission stated that it had not identified any trade distortions in Brazil affecting the main inputs for the production of calcium silicon. Shenghua did not show evidence that such distortions existed either with regard to calcium silicon and/or the main factors of production. The claim was considered unsubstantiated and, therefore, it was rejected.

• (102) Ketong claimed further that the Brazilian producers identified by the Commission were active in a diverse range of economic activities and therefore their costs, revenues and profits did not reflect those of a calcium silicon producer.

• (103) The Commission acknowledged in the First Note that the Brazilian producers had activities other than the manufacture and sale of calcium silicon and that their financial reporting did not allow for an allocation of the financial results on a product-by-product basis. The Commission clarified that this did not per se undermine the representativity of companies and thus it could use the financial results at the level of companies for establishing the benchmarks for SG&A and profit. Therefore, the claim was rejected.

• (104) Shenghua claimed that a sole company’s SG&A and profit was not reliable or representative for the purpose of constructing normal value.

• (105) The Commission noted that Shenghua did not substantiate why a sole producer’s SG&A and profit would not be reliable or representative for constructing normal value. Shenghua further did not identify other producers in Brazil with readily available public financial information that could be added to the dataset. The claim was therefore rejected.

• (106) Ketong claimed further that it was not appropriate to use financial data from Dun & Bradstreet as it was not sufficiently detailed to give the necessary information to accurately calculate a dumping margin.

• (107) The Commission noted that the Global Financials database from Dun & Bradstreet is the tool that it uses in order to obtain company-specific financial statements and ratios from companies in possible representative countries. In this respect, the Commission clarified that the terms ‘direct costs’ and ‘indirect costs’ used in the Dun & Bradstreet database refer to the ‘Cost of Goods Sold’ (‘COGS’) and ‘operating expenses’ respectively. Contrary to what Ketong claimed, the Commission therefore has data that are sufficiently detailed to allow it to find the relevant information to construct the normal value as per Article 2(6a) of the basic Regulation. The claim was therefore rejected.

• (108) Both Shenghua and Ketong claimed that Argentina was not an appropriate representative country because of the trade distortions on semi-coke, one of the most important factors of production, which the Commission mentioned already in the First Note.

• (109) The Commission agreed that the trade distortions (in this case the export licencing and tax), may explain the low import volume of semi-coke into Argentina and, consequently, render the use of the import price not suitable as a benchmark price.

• (110) Ketong claimed further that if the Commission concluded that the market for many of the inputs in China was distorted, then it must also consider the Argentinian market to be distorted, as many of the key inputs into Argentina originate in China.

• (111) The Commission rejected this claim as, contrary to what Ketong claimed, the vast majority of the inputs, except for semi-coke, were imported into Argentina from countries other than China. In the First Note, the Commission stated that there were very limited imports of semi-coke into Argentina that were not imported from China. Therefore, the Commission considered at that stage that the volume of imports of semi-coke into Argentina was not representative. Semi-coke represents around 10 % of the cost of production for the product concerned.

• (112) The complainant further claimed that Argentina could not meet the criteria for the selection as a representative country at this stage, taking into account the publically available information for the sole producer of the product concerned in that country, which showed a loss-making situation.

• (113) The Commission agreed that the sole Argentinian producer of CaSi whose financial data is publicly available could not be used as a benchmark for a profit margin as the company was loss making in 2019. In case the financial data for 2020 becomes available at a later stage, the Commission may reconsider Argentina as a representative country.

• (114) Ketong asked the Commission to use Russia as a representative country as it was classified by the World Bank as an ‘upper-middle income’ country, similar to the PRC, it had production of calcium silicon and at least one producer, Kluchevsky Ferroalloy Plant PJSC.

• (115) The Commission analysed the claim from Ketong as regards the use of Russia as an appropriate representative country. It examined the most recent financial data submitted by Ketong in respect of the Russian producer of ferroalloys, Kluchevsky Ferroalloy Plant PJSC, which, according to its website, allegedly produces also calcium silicon. The data concerned the year preceding the investigation period. As these data showed an almost zero profit and very low SG&A expenses, the Commission considered these data not to be representative for the purpose of constructing the normal value of the product under investigation according to Article 2(6a)(a) of the basic Regulation.

• (116) As the Commission was not able to find representative financial data for other possible producers of calcium silicon in Russia and Ketong did not provide such data either, the Commission concluded that Russia was not an appropriate representative country at this stage.

• (117) Shenghua and Ketong claimed that neither Brazil nor Argentina are appropriate representative countries because of the reasons mentioned in recitals (94), (96), (98), (100), (102), (104), (106), (108), (110) and (112) and suggested that because global production of calcium silicon is limited, the Commission should use data from manufacturers of ferroalloys and/or silicon metal producers instead, as those products have a similar cost structure to calcium silicon. They suggested that Kazakhstan be used, as it is one of the largest ferroalloys producers with several manufacturers whose SG&A and profit data can be used.