Commission Implementing Regulation (EU) 2022/547 of 5 April 2022 imposing a definitive anti-dumping duty on imports of superabsorbent polymers originating in the Republic of Korea

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1), and in particular Article 9(4) thereof,

Whereas:

(1) On 18 February 2021, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of superabsorbent polymers (‘SAP’ or ‘the product under investigation’) originating in the Republic of Korea (‘the country concerned’) on the basis of Article 5 of Regulation (EU) 2016/1036 of the European Parliament and of the Council (‘the basic Regulation’). It published a Notice of initiation in the Official Journal of the European Union (2) (‘the Notice of initiation’).

(2) The Commission initiated the investigation following a complaint lodged by the European Superabsorbent Polymer Coalition, hereafter ‘ESPC’ (‘the complainant’). The complaint was made on behalf of two Union producers, which together account for 65% of the total Union production of superabsorbent polymer, 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) After the initiation, the Coalition of users (3) claimed that the complaint ignored the interests of importers and users to conclude that it is in the interest of the Union to open an anti-dumping investigation on imports of SAP originating in the Republic of Korea, in breach of Article 21 of the basic Regulation.

(4) Similar claims were advanced by the cooperating exporting producer, LG Chem Ltd. (‘LG Chem’).

(5) The Commission recalls that in accordance with Articles 5(2) and 5(9) of the basic Regulation, the initiation of a proceeding is justified when sufficient evidence of dumping, injury and a causal link between the allegedly dumped imports and the alleged injury is provided in the complaint. The complainant is not required under those provisions to conduct a Union interest analysis in the complaint. Therefore the complaint was not deficient in this aspect.

(6) In this regard, the Commission examined the accuracy and adequacy of the evidence provided and determined that there was sufficient evidence to justify the initiation of the present investigation, in accordance with Article 5(3) of the basic Regulation.

(7) Therefore, the claims were rejected.

(8) LG Chem claimed that the complainant, by considering SAP a homogeneous product, artificially inflated the dumping and undercutting margins presented in the complaint. In this regard, LG Chem mostly reiterated the comments already provided on the product scope addressed in Section 2.3.

(9) LG Chem further claimed that the export price provided in the Complaint was incorrectly computed. According to the source used in the complaint for the calculation of the export price – i.e. the Korean Trade Statistics Service – the export price should have been within 13% to 18% higher than the one submitted by the complainant. Therefore, the Commission erred when it accepted the evidence on export price submitted in the complaint.

(10) At the stage of the complaint it is sufficient to present dumping and undercutting margins on the basis of the information reasonably available to the complainant and for the product as a whole. The fact that LG Chem considers the product under investigation not to be homogeneous did not render the comparison as made by the complainants faulty for the purpose of the initiation. It is rather a part of the Commission’s investigation to analyse if a claim for a more detailed analysis is justified.

(11) Concerning the export price used in the complaint, the Commission noted that the higher prices highlighted by LG Chem in exhibit 8 of the complaint actually included the total exports under commodity code 3906 90 90, including products which were not product concerned, whereas the export prices used for the dumping estimation in paragraph 46 of the complaint solely included the product concerned, as filtered out based on an additional extraction query in the TRASS system (4).

(12) The Commission therefore rejected the claims by LG Chem.

(13) LG Chem also claimed that the complainant failed to adjust the export price for differences in level of trade, as their export sales to the Union market are generally channelled through a related company. Therefore, both the dumping and undercutting margins presented in the complaint were artificially inflated.

(14) The Commission recalls that for deductions made to export prices, only transport costs were adjusted by the complainant. This is arguably a conservative approach because adjustment to export prices pursuant to Article 2(9) or additional deductions of sales commissions by related traders involved in the importation of the goods would only lower the export price and increase the dumping margin. Furthermore, even if no deductions were made for transport, dumping would still be significant, as is clear from the non-confidential version of the complaint. As regards the alleged inflated undercutting margin, the Commission considered that using an export price on the basis of import statistics amounts to evidence reasonably available at initiation stage for the complainants to show undercutting. Moreover, there are two other exporting producers in the Republic of Korea, selling directly in the Union market and LG Chem itself sells also directly part of its export sales. In any event, LG Chem failed to show how taking a different export price would result in a significant reduction of the undercutting mentioned in the complaint [10-30%].

(15) Therefore this claim was rejected.

(16) LG Chem argued that the evidence submitted in the open version of the complaint to allege the price-depressive effects of the South Korean imports, i.e. ‘Market Intelligence reports’ Exhibits, did not permit a proper understanding of the information on price undercutting.

(17) First, the Commission recalled that the purpose of the non-confidential version of the complaint is to provide a meaningful summary of the information contained in the confidential version. When examining whether the summary is meaningful or not, one needs to consider the totality of the information contained in the non-confidential version on any given topic. In relation to the allegations on price undercutting and price underselling practised by Korean exporters, the Commission noted that section 5.3 of the non-confidential version of the complaint contains a comprehensive summary of the price comparisons underlying the allegations of undercutting and underselling, supported by meaningful summaries of the key information contained in Exhibits 5-1 to 5-3-3 to the complaint. The Commission considered that the narrative in the body of the complaint and the data summarised in the said annexes give a sufficient understanding of the allegations made in relation to price pressure. The Market reports are presented in the complaint as confirming the validity of the allegations. Furthermore, the Commission considered that the market intelligence reports on SAP imported to Europe contained a detailed analysis of potential strategies of market players. Even sharing a summary of the content would create an adverse effect against the service provider that collected the confidential information.

(18) It is recalled that Article 19 of the basic Regulation and Article 6.5 of the WTO Anti-Dumping Agreement (5) allow for the safeguarding of confidential information in circumstances where disclosure would be of significant competitive advantage to a competitor or would have a significantly adverse effect upon a person supplying the information, or upon a person from whom that person has acquired the information.

(19) The information provided in the confidential version of the complaint falls under those categories. Moreover, the complainant has provided sufficient summaries of the contents of the confidential segments of the complaint.

(20) Therefore, this claim was rejected.

(21) Concerning price depreciation effects in 2019, LG Chem commented on Exhibit 5-3-1-C of the complaint, which referred vaguely to “aggressive price from Far East Asian imports". LG Chem argued that the wording could have equally referred to imports from Japan or China.

(22) The Commission agrees that the wording “Far East Asian imports” does not exclusively refer to imports from the Republic of Korea. However, the wording clearly covers also South Korean imports. While that document alone would not relate to price pressure from the Republic of Korea specifically, it supports the other evidence provided as regards Korean imports.

(23) Therefore, the claim that that evidence did not support the complaint was rejected.

(24) On price underselling, LG Chem claimed that there is no justification for the use of a target profit of 10% in the complaint.

(25) As a threshold matter, the Commission recalled that the complaint provided sufficient evidence that the imports from the Republic of Korea were undercutting the Union industry prices by a significant margin of [10% - 30%]. This in itself constitutes already sufficient evidence of the effect of the dumped imports on prices in the Union. This is clear from the wording of Article 3(3) of the basic Regulation which presents price undercutting and price depression as possible alternative effects that dumped imports can have on prices in the Union. The allegation in the complaint that prices were depressed by [30% - 60%] was therefore not necessary in order for there to have been sufficient evidence that SAP from the Republic of Korea are being imported at injurious prices. In any event, the target profit chosen by the complainant is not binding for the analysis of the Commission regarding its analysis of price underselling. Article 7(2c) of the basic Regulation indicates that the target profit shall not be lower than 6%. Even adjusted to a 6% target profit the calculation of the complainant still showed a high underselling margin. It is therefore not relevant that the complainant did not substantiate the chosen target profit of 10%.

(26) The Commission therefore rejected the claim that a missing justification for the chosen target profit constituted a fault in the complaint.

(27) With regards to the investments declared in the complaint, LG Chem argued that there is no rationale as to why such data was treated as confidential by the complainants.

(28) As already recalled in recital (18), Article 19 of the basic Regulation and Article 6.5 of the WTO Anti-Dumping Agreement allow for the safeguarding of confidential information in circumstances where disclosure would be of significant competitive advantage to a competitor.

(29) The information provided in the confidential version of the complaint falls under this category. Moreover, the complainant provided a range for the index development for the IP compared to 2017 for investments in the open version. It demonstrates how investments declined substantially over the period considered and is sufficient to understand that injury indicator. In any event, the relevant trends are disclosed in Table 10 below.

(30) The Commission therefore rejected the claim that it was necessary to include the detailed investment data in the open version of the complaint.

(31) LG Chem claimed that the complaint, in breach of Article 3(6) of the basic Regulation, failed in providing any demonstration of the causation link between the alleged dumped imports from the Republic of Korea and the injury of the Union industry. According to LG Chem, the Union industry solely alleged that “the dumped imports from Korea exerted a downward price pressure on the EU sales prices (…) forcing the EU SAP industry to reduce their prices, thus resulting in dramatical loss”.

(32) Contrary to what LG Chem alleges, the complainant provided sufficient evidence of a causal link between imports from the country concerned and injury. The complainant’s analysis of the injury indicators showed a coincidence in time between the increased volumes of low-priced South Korean imports and the deterioration in the Union industry performance, and thus how the South Korean imports in the Union market exerted a downward price pressure on the Union industry sales prices.

(33) Therefore, this claim was rejected.

(34) On 17 September 2021, in accordance with Article 19a(2) of the basic Regulation, the Commission informed Member States and all interested parties of its intention not to impose provisional duties on imports of superabsorbent polymers originating in the Republic of Korea and to continue the investigation.

(35) Since no provisional anti-dumping measures were imposed, the Commission did not register imports under Article 14(5a) of the basic Regulation. The Commission continued seeking and checking all information it deemed necessary for its definitive findings.

(36) Following the disclosure of the Commission’s intention not to impose provisional measures, hearings took place with the two sampled Union producers (BASF Antwerpen NV (‘BASF’) and Nippon Shokubai Europe NV (BE) (‘Nippon Shokubai Europe’ or ‘NSE’), a known Union producer (Evonik Operations GmbH (‘Evonik’)), , as well as with the exporting producer LG Chem, in which those parties commented on the non-imposition of provisional measures. The parties provided their presentations and additional post-hearing comments to the file.

(37) The investigation of dumping and injury covered the period from 1 January 2020 to 31 December 2020 (‘the investigation period’ or ‘IP’). 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’).

(38) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainant, other known Union producers, the known exporting producers, the authorities of the Republic of Korea, known importers, known traders and users, as well as associations known to be concerned about the initiation of the investigation, and invited them to participate.

(39) 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. Hearings took place with one sampled Union producer (BASF), a known Union producer (Evonik), the cooperating exporting producer LG Chem, and two known Union users (Procter & Gamble International Operations SA (‘P&G’) and FATER SpA (‘Fater’)).

(40) In the Notice of Initiation, the Commission stated that it might sample the interested parties in accordance with Article 17 of the basic Regulation.

(41) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of the volume of production and sales of the like product, as well as the geographical location. That sample consisted of two Union producers. The sampled Union producers accounted for more than 50% of estimated Union production and sales in the investigated period, while ensuring a good geographical spread, and was considered representative of the Union industry. The Commission invited interested parties to comment on the provisional sample. No comments were received and therefore the sample was confirmed.

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

(43) One unrelated importer provided the requested information. In view of the low number of replies, the Commission decided that sampling was not necessary and asked the cooperating importer to submit replies to the questionnaires.

(44) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in the Republic of Korea to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the Republic of Korea to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(45) One exporting producer in the country concerned provided the requested information and agreed to be included in the sample, consequently, sampling was deemed not necessary.

(46) The Commission sent questionnaires to the cooperating exporting producer, the cooperating unrelated importer and the two sampled Union producers. The same questionnaires were made available online (6) on the day of initiation.

(47) The Commission received questionnaire replies from the two sampled Union producers, one non-sampled Union producers (macro questionnaire), two users and the cooperating exporting producer. The sole unrelated importer which provided a sampling reply did not provide a questionnaire reply.

(48) The Commission sought and verified all the information deemed necessary for the 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’) (7), the Commission was unable to carry out verification visits at the premises of the cooperating and sampled companies pursuant to Article 16 of the basic Regulation. Instead, the Commission performed remote crosschecks (‘RCCs’) of the information provided by the following companies via videoconference:

Union producers

— BASF Antwerpen N.V. (BE)

— Nippon Shokubai Europe NV (BE)

Users

— Company B, whose identity will remain confidential for the purpose of the investigation (8).

Related importers and traders

— LG Chem Europe GmbH (‘LG Chem Europe’)

Exporting producers in the Republic of Korea

— LG Chem, Ltd.

(49) On 24 January 2022, the Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive anti-dumping duty on imports of superabsorbent polymers originating in the Republic of Korea (‘final disclosure’). In addition, the Commission sent two additional final disclosures on 4 February 2022 and 21 February 2022. All parties were granted a period within which they could make comments on the final disclosure, as well as on the additional final disclosures. The Commission received comments from the exporting producer LG Chem, from the Union industry, and from several users.

(50) Following final disclosure, interested parties were granted an opportunity to be heard according to the provisions stipulated under point 5.7 of the Notice of initiation. Hearings took place with LG Chem, with the Coalition for an Open and Competitive EU SAP Market, and with Evonik.

(51) Following the 2nd additional disclosure document (‘2nd ADD’) LG Chem argued that the granting of only one day to comment on substantial changes to the Commission’s findings, constitutes a breach of LG Chem’s rights of defence, especially since the source of the error had not been disclosed.