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

• (153) The Commission found that the totality of the Union producers' production was destined for the free market, and thus subject to direct competition with imports from the country concerned. On those grounds, the Commission examined all economic indicators relating to the Union industry in their totality.

4.3.   Union consumption

• (154) The Commission established the Union consumption on the basis of the sampled Union producers’ replies to the anti-dumping questionnaire, the macro questionnaire as well as the imports based on the Eurostat data.

• (155) Union consumption developed as follows:

Table 1

Union consumption (tonnes)

	2017	2018	2019	IP
Total Union consumption	[630 000 - 665 000 ]	[630 000 - 665 000 ]	[630 000 - 665 000 ]	[630 000 - 665 000 ]
Index	100	100	100	100
Source: sampled and non-sampled Union producers as well as Eurostat	Source: sampled and non-sampled Union producers as well as Eurostat	Source: sampled and non-sampled Union producers as well as Eurostat	Source: sampled and non-sampled Union producers as well as Eurostat	Source: sampled and non-sampled Union producers as well as Eurostat

• (156) During the period considered, the total free market consumption stayed stable with minimal fluctuations clearly below 1%..

4.4.   Imports from the country concerned

4.4.1.   Volume and market share of the imports from the country concerned

• (157) The Commission established the volume of imports on the basis of the CN code ¹¹ extracted from the Eurostat database, adjusted by information from TRASS provided in the complaint, in order to single out imports of the product concerned. That adjustment was necessary as the Eurostat data for the CN code included a proportion of other products, which would distort both quantities and prices. The adjustment was not contested by any interested parties. The market share of the imports was established on the basis of import volume from the country concerned as compared to the volume of total Union consumption as shown in Table 2.

• (158) Following final disclosure, LG Chem requested additional disclosure on the methodology used to determine import volumes and values, as well as a disclosure of the detailed data extraction from TRASS. The Commission provided the following additional information:

• (159) As explained in paragraph 18 of the complaint, CN code 3906 90 90 is not exclusively dedicated to SAP. The complainant has provided an estimation of the proportion of SAP contained in all volume cleared under CN code 3906 90 90 based on the TRASS data. As visible from the open version of Annex 5-1 “Imports of SAP to the EU” to the complaint, during the period considered, the volume of SAP exports to the EU corresponded to 84% of the total imports customs cleared under CN code 3906 90 90. The Annex further indicates that this information was used by the complainant to make adjustments to the Eurostat data.

• (160) The Commission used the same methodology as the complainant, which was found appropriate and not contested, as mentioned in recital (119) of the General Disclosure Document (‘GDD’) of the final disclosure.

• (161) The Commission further clarified that the TRASS database allows the denomination of the products to be selected. Thus, TRASS export volume and value from Korea to the EU made under HS code 3906 90 90 were filtered in order to only include product denominations corresponding to SAP. 15 products were selected.

• (162) TRASS however only allows data extraction when data of at least 3 companies is available. For 2018 this was not the case. Since the ratio of SAP exports in TRASS to the Eurostat data under CN code 3906 90 90 was stable for the other years, the Commission calculated a value for 2018 using the average ratio of the other years.

• (163) The underlying TRASS data is subject to copyright protection and cannot be disclosed by the Commission, but is available for purchase.

• (164) Imports from the country concerned developed as follows over the period considered:

Table 2

Import volume (tonnes) and market share

	2017	2018	2019	IP
Volume of imports from the country concerned (tonnes)	83 499	94 343	114 896	110 903
Index	100	113	138	133
Market share	[12 %-14 %]	[13 %-15 %]	[16 %-18 %]	[16 %-18 %]
Index	100	114	138	133
Source: Eurostat and TRASS data	Source: Eurostat and TRASS data	Source: Eurostat and TRASS data	Source: Eurostat and TRASS data	Source: Eurostat and TRASS data

• (165) Imports from the Republic of Korea increased from around 83 500 tonnes to around 110 900 tonnes over the period considered, representing an overall increase of 33% between 2017 and the IP. That increase was significantly higher than the increase in consumption.

• (166) The most significant increase in volume of imports from the Republic of Korea was registered between 2018 and 2019, with a year-on-year increase of 22%, followed by a decrease of 3.5% between 2019 and the IP.

• (167) As a result, the market share of imports of South Korean products increased from [12%-14%] to [16%-18%] over the period considered, representing an increase of 33% between 2017 and the investigation period. It should be noted that both volumes of imports and market share of the Republic of Korea showed an overall rapid increase during the period considered.

4.4.2.   Prices of the imports from the country concerned and price undercutting

• (168) The Commission established the prices of imports on the basis of Eurostat data, using the TARIC code indicated in recital (157) adjusted by the data from TRASS, as explained in recitals (157) to (162).

• (169) Following final disclosure, LG Chem pointed out that Eurostat data contained prices on CIF basis. The Commission took this into account and thus converted the FOB import prices from the TRASS database to CIF by using the ratio between FOB to CIF value from the verified data of LG Chem. The adjusted figures are shown below in Table 3.

• (170) The average price of imports from the country concerned developed as follows:

Table 3

Import prices (EUR/ tonnes)

	2017	2018	2019	IP
Import price	1 191	1 252	1 169	1 074
Index	100	105	98	90
Source: TRASS data provided in the complaint.	Source: TRASS data provided in the complaint.	Source: TRASS data provided in the complaint.	Source: TRASS data provided in the complaint.	Source: TRASS data provided in the complaint.

• (171) Average import prices from the Republic of Korea decreased by 10% over the period considered from 1 191 EUR/tonne to 1 074 EUR/tonne. Those prices remained significantly below the sampled Union producers’ sales prices and cost of production during the period considered, as shown in Table 7.

• (172) Price undercutting of the imports was established on the basis of data of the cooperating exporting producer in the country concerned and domestic sales data provided by the Union industry for the period of investigation. The Commission determined the price undercutting during the investigation period by comparing:

• — the weighted average sales prices per product type of the sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level; and

• — the corresponding weighted average prices per product type of the imports from the cooperating South Korean producer to the first independent customer on the Union market, established on a CIF basis, with appropriate adjustments for post-importation costs.

• (173) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ theoretical turnover during the investigation period. The weighted average undercutting found was 14.7%.

• (174) Following final disclosure, LG Chem argued that it had not been provided with its own detailed data in Annex 3b to the final disclosure, and that the magnitude of the ranges for confidential data was inadequate. The Commission acknowledged LG Chem’s comments. Therefore, LG Chem was provided with its own confidential data, and ranges were narrowed. These changes were included in the additional sensitive disclosure provided to LG Chem and to the Union industry on 8 February 2022.

• (175) LG Chem also claimed that information at PCN-specific level should be disclosed. However, in line with Article 19 of the basic Regulation, the Commission could not reveal the requested data per product type. Indeed, in the case at hand, there were only two Union producers and three PCNs. Therefore, a disclosure of such level of detail would make it possible to, either directly or with addition of market intelligence, reconstruct confidential sales or production data of individual Union producers LG Chem reiterated its argument after the additional final disclosure

• (176) The Commission cannot disclose detailed data accumulated from two companies only, as this creates the risk that other interested parties may reconstruct confidential data of individual producers with the help of market intelligence. This is an objective risk existing in any market where there are only a few known producers active on the market or involved in the Commission’s investigation. The Commission therefore rejected this claim.

• (177) LG Chem further argued that the figures used for undercutting and underselling have no basis in the record of the investigation and that these discrepancies should be explained. In detail, LG Chem found that it could not exactly reconcile the CIF EU border export value disclosed in Annex 3b, as well as the detailed undercutting and injury calculations disclosed to LG Chem, with the figures reported in LGC’s sales listings in tables EUSALUR and RLSALUR. Also LG Chem argued that the CIF EU border export value displayed in Korean won in Annex 2.1 to the final disclosure would result in a different value in EUR than the one used in Annex 3b.

• (178) The Commission clarified that for the conversion of Korean won into Euro it converted the CIF values of each transaction by the respective monthly ECB exchange rate, whereas LG Chem indicated in its comments to have applied the annual ECB exchange rate. Due to monthly fluctuations in quantities, LG Chem’s conversion based on the annual rate necessarily showed different values. The Commission therefore rejected the claim that the figures used for undercutting and underselling purposes show discrepancies compared to the data on file.

• (179) LG Chem also claimed that the Commission did not explain how it determined the constructed CIF value, which was used for undercutting purposes.

• (180) The Commission clarified that the constructed CIF for the sales made via LG Chem Europe was constructed deducting from the net invoice value the SG&A and profit established as explained above in recitals (118) to (125), and the allowances for all the costs incurred after importation. Moreover, contrary to what LG Chem alleges, Annex 3a of the final disclosure explains how the CIF price was determined as regards the adjustment for post-importation costs. The Commission therefore rejected this claim.

• (181) LG Chem further argued that the Commission used a PCN for comparing prices of imports by LG Chem to prices of the sampled Union producers which was too simple and did not take into account all characteristics mentioned in LG Chem’s submission of 28 April 2021, i.e. raw material, shape, CRC, odour control, foamed, anti-caking, anti-discoloration and use. In particular differences in CRC might explain, on its own, the undercutting margin of 14,7%.

• (182) The Commission refers to section 2.3.5, which demonstrates that the Commission collected the data in a detailed form to be in the position to analyse the cost and price effect of the different characteristics proposed by LG Chem, including CRC. However, these data, together with the information collected and verified from users, did not confirm the alleged cost and price influence of the characteristics, other than the ones applied by the Commission. The Commission therefore rejected the claim that a more detailed PCN should have been used.

• (183) LG Chem finally argued that adjusting the actual price charged by LG Chem Europe by a theoretical amount of SGA and profit for undercutting purposes constitutes a manifest error of assessment and is inconsistent with Articles 3(2) and 3(3) of the basic Regulation, since for an undercutting comparison, prices must be compared at the same level of trade following the Jindal judgement ¹². The General court in Hansol ¹³ has confirmed that for undercutting purposes it is the prices negotiated between an undertaking and the customers and not prices at an intermediate stage which could determine the customer’s acquisition decision.

• (184) This claim had to be rejected. Firstly, Article 3(2) of the basic Regulation refers to the effect of dumped imports that may cause injury to the Union industry and not to the resale price of a company (related importer) within the Union to another customer.

• (185) Secondly, as far as undercutting margins are concerned, the basic Regulation does not provide any specific methodology of that concept. The Commission therefore has a margin of discretion in assessing this injury factor. That discretion is limited by the need to base conclusions on positive evidence and to make an objective examination, as required by Article 3(2) of the basic Regulation.

• (186) When it comes to the elements taken into account for calculation of undercutting margins (in particular the export price), the Commission has to identify the first point at which competition takes (or may take) place with Union industry in the Union market. This point is in fact the purchasing price of the first unrelated importer because that company has in principle the choice to source either from the Union industry or from overseas customers. By contrast, resale prices of related importers do not reflect the point where real competition takes place. This is only the point where the established sales structure of the exporter tries to find customers but it is already after the point where the decision to import had been taken. Indeed, once the exporting producer has established its system of related companies in the Union, they have already decided that the source of their merchandise will be from overseas. Hence, the point of comparison should be right after the goods crosses the Union border, and not at a later stage in the distribution chain, e.g. when selling to the final user.

• (187) This approach also ensures coherence in cases where an exporting producer is selling the goods directly to an unrelated customer (whether importer or final user) because under this scenario, resale prices would not be used by definition. A different approach would lead to a discrimination between exporting producers based solely on the sales channel that they use.

• (188) In this case, the import price cannot be taken at its face value because the exporting producer and the importer are related. Therefore, in order to establish a reliable import price at arm’s length, such price has to be reconstructed by using the resale price of the related importer as a starting point. In order to carry out this reconstruction, the rules on the construction of the export price as contained in Article 2(9) of the basic Regulation are pertinent, just as they are pertinent for the determination of the export price for dumping purposes. The application of Article 2(9) of the basic Regulation allows for the arrival at a price that is fully comparable to the CIF price (Union border) that is used when examining sales made to unrelated customers.

• (189) The Commission also noted that this approach had been endorsed by the General Court in Severstal. ¹⁴

• (190) Finally, LG Chem did not provide any evidence showing any systematic price difference in sales to distributors and direct sales to users for similar product types. The Commission could also not find any evidence of differences in price setting between sales to distributors and sales to users on the side of the Union industry.

4.4.3.   Claim of no undercutting in 2018 due to price increases

• (191) Concerning price depreciation effects in 2018, LG Chem claimed that both prices of South Korean imports and of the Union industry increased as compared to 2017 levels. Therefore, no undercutting could have occurred.

• (192) However, the analysis of the evolution of import prices on the Union industry prices is established with regard the period concerned as a whole, i.e. between 2017 and the investigation period. While price trends are assessed for the whole period considered, undercutting calculations are performed only for the investigation period (2020). Therefore, the increase of South Korean prices as well as Union industry prices in 2018 compared to their 2017 levels are not relevant for the calculation of the undercutting during the IP in this case. In addition, that fact alone does not suggest the absence of undercutting on the prices of the Union industry from the South Korean imports during the period concerned since that conclusion could only be reached on the basis of a detailed comparison between the actual export price and EU prices.

• (193) Indeed, the undercutting margin is defined as the amount by which the actual import price from the country concerned is lower than the actual price of the Union industry. The difference between both prices, after necessary adjustments have been made, is expressed as a percentage of the Union industry's price.

• (194) In 2018, the average price of South Korean imports was still set at a lower level compared to the average prices of the Union industry. As a consequence, although both South Korean and Union industry prices increased during that period, the statistics suggest that undercutting would also have happened in 2018.

• (195) Therefore, this claim was rejected.

• (196) Following the Final Disclosure LG Chem claimed that it never argued that no undercutting could have occurred in 2018. This interpretation of LG Chem’s claim was alleged to have violated LG Chem’s right to sound administration.

• (197) The Commission took note of LG Chem’s clarification that it had not sought to make the above claim. Given that LG Chem did not point to any argument that the Commission had failed to address, the Commission did not consider that the Commission had violated the right to sound administration.

4.5.   Economic situation of the Union industry

4.5.1.   General remarks

• (198) In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

• (199) As mentioned in recital (41), sampling was used for the determination of possible injury suffered by the Union industry.

• (200) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data provided by the sampled producers and non-sampled producers, crosschecked with the data in the complaint. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. The data related to the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

• (201) The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping. Following the Final disclosure, interested parties highlighted some discrepancies in the macro-indicators for production and sales between the complaint and the disclosure. After analysis, the Commission accepted these claims and corrected the figures. The Commission has thuds updated the macroeconomic figures with the figures of one company. For that reason, the absolute values were displayed as ranges in order to ensure confidentiality.

• (202) The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.

4.5.2.   Macroeconomic indicators

4.5.2.1.   Production, production capacity and capacity utilisation

• (203) The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 4

Production, production capacity and capacity utilisation

	2017	2018	2019	IP
Production volume (tonnes)	[525 000 – 560 000 ]	[530 000 – 565 000 ]	[540 000 – 575 000 ]	[520 000 - 555 000 ]
Index	100	102	105	98
Production capacity (tonnes)	[540 000 – 580 000 ]	[600 000 – 640 000 ]	[650 000 – 690 000 ]	[650 000 – 690 000 ]
Index	100	109	117	117
Capacity utilisation	[93 %-95 %]	[88 %-90 %]	[84 %-86 %]	[78 %-80 %]
Index	100	94	90	83
Source: sampled and non-sampled Union producers	Source: sampled and non-sampled Union producers	Source: sampled and non-sampled Union producers	Source: sampled and non-sampled Union producers	Source: sampled and non-sampled Union producers

• (204) The Union industry production volume increased by 5 percentage points between 2017 and 2019, then it went down by 7 percentage points between 2019 and the IP. The overall production volume decreased over the period considered by 2%.

• (205) The production capacity increased steadily during the period considered, passing from [540 000 – 580 000] tonnes in 2017 to [650 000 – 690 000]tonnes in 2019 and stayed at that level in the investigation period, for an overall increase of 17%. The capacity increase of the EU SAP industry resulted from a major investment made by one Union producer during the period considered.

• (206) As shown above in Table 4, while the Union production capacity increased significantly during the period considered, the Union capacity utilization significantly deteriorated, passing from a capacity utilisation of [93%-95%]in 2017 to [78%-80%]in the IP. That trend resulted in a total decrease of 17% of the Union capacity utilisation during the period considered.

4.5.2.2.   Drop in capacity utilisation caused by increase of capacity

• (207) LG Chem commented on the decline in capacity utilisation from the Union industry during the period considered, with particular reference to the investment project by one Union producer that increased production capacity in 2018. According to LG Chem, the additional capacities were never intended to supply the Union market, as the existing capacities in 2017 were already in excess of the demand in the Union market. Therefore, overcapacity of the Union producers could not have been caused by the South Korean imports.

• (208) The Commission agreed that the drop in capacity utilisation over the period considered, while maintaining a relatively stable overall volume produced, was connected to the capacity increase by the Union producers. However, contrary to the statements of LG Chem, those additional capacities were not in excess of demand on the Union market. In 2017, the total production capacity of the Union industry only amounted to [86%-88%]% of Union consumption. After the increases in production capacity, it remained in line with the Union consumption with only an overcapacity of [1%-2%]. There is thus no evidence showing that additional capacities were not intended for the Union market.

• (209) Following the 2^nd additional final disclosure LG chem argued that the figures do not support the conclusion that the additional capacities of the Union industry built during the period considered were designed to serve the Union market.

• (210) The Commission has concluded that the increases of capacity only lead to a minimal overcapacity. Since users as well LG Chem have pointed out in their arguments regarding the Union interest that not all capacity is automatically designed for the production of each type of SAP, the minimal overcapacity of [1%-2%] is no indication that it is not destined for the Union market, but rather to create enough capacity for a flexible production of different kinds of SAP to keep up with the demand for different kinds of SAP. In addition, even after the capacity increase, actual production remained well below Union consumption. The Commission therefore rejected this argument.

4.5.2.3.   Capacity of Sumitomo Seika not considered

• (211) Moreover, LG Chem claimed that the overcapacity situation of the Union industry declared in the complaint was underestimated as it did not take into consideration the production capacity of the Union producer Sumitomo Seika. LG Chem asked the Commission to clarify why the capacities and injury indicators of the Union producer Sumitomo Seika were disregarded, as they could have influenced and distorted the injury picture depicted in the complaint.

• (212) The Commission recalled that the company in question did not cooperate in the investigation. However, contrary to the assertions of LG Chem, this does not mean that the Commission disregarded the capacities and injury indicators of the company. The figure of 47 000 tonnes put forward by LG Chem was also used in the Commission’s macro data for the production capacity, and estimations were made for the remaining injury indicators of that company

• (213) Therefore, this claim was dismissed.

4.5.2.4.   Sales volume and market share

• (214) The Union industry’s sales volume and market share developed over the period considered as follows:

Table 5

Sales volume and market share

	2017	2018	2019	IP
Total sales volume in the Union market (tonnes)	[350 000 – 380 000 ]	[370 000 – 400 000 ]	[370 000 – 400 000 ]	[320 000 – 350 000 ]
Index	100	104	103	89
Market share	[56 %-58 %]	[58 %-60 %]	[57 %-59 %]	[49 %-51 %]
Index	100	105	103	88
Source: sampled and non-sampled Union producers	Source: sampled and non-sampled Union producers	Source: sampled and non-sampled Union producers	Source: sampled and non-sampled Union producers	Source: sampled and non-sampled Union producers

• (215) Total sales in the Union market overall decreased over the period considered, recording a 11% fall between 2017 and the IP. Between 2017 and 2018 the total volume of sales to the Union increased by 4%, and then steadily dropped until the IP. The most significant drop was registered between 2019 and the IP, when the total sales volume on the Union market decreased by 14%.

• (216) Despite the stable Union consumption as shown in Table 1, the Union industry sales volume decreased steadily during the period considered and, thus, the market share consequently dropped by 12% between 2017 and the IP. Similarly for the trend of Union sales volume, the most significant drop in market share was registered between 2019 and the IP with a year-on-year decrease of 15%.

• (217) Following the final disclosure LG Chem argued that the Commission cannot analyse the evolution of sales volumes on the Union market in isolation from sales on exports markets. Sales have been re-directed from the Union market to export markets rather than being “lost”.

• (218) The Commission necessarily must analyse the development on the Union market in order to determine an injury on the Union market. The increase in exports has been analysed in the section 5.2.4 to determine, if this was a cause for the injury incurred. The Commission therefore rejected the argument that it had analysed the evolution in isolation disregarding the exports of the Union industry.

4.5.2.5.   Growth

• (219) The Union consumption stayed stable during the period considered, while the sales volume of the Union industry in the Union market decreased by 12%.. The Union industry thus lost market share, by contrast with the market share of the imports from the country concerned which increased significantly during the same period.

4.5.2.6.   Employment and productivity

• (220) Employment and productivity developed over the period considered as follows:

Table 6

Employment and productivity

	2017	2018	2019	IP
Number of employees	[1 000 – 1 150 ]	[1 000 – 1 150 ]	[950 – 1 100 ]	[950 – 1 100 ]
Index	100	98	92	91
Productivity (tonnes/FTE)	492	510	564	529
Index	100	104	115	108
Source: sampled and non-sampled Union producers	Source: sampled and non-sampled Union producers	Source: sampled and non-sampled Union producers	Source: sampled and non-sampled Union producers	Source: sampled and non-sampled Union producers

• (221) The level of the Union industry employment decreased over the period considered. This resulted in a reduction of workforce by 9 %, without taking into consideration any indirect employment.

• (222) The productivity trend followed that of the Union production volumes, which increased until 2019, and then dropped between 2019 and the IP. Productivity increased by 15% between 2017 and 2019, before decreasing following the reduction of the production volume. Overall productivity thus increased by 8%. This is because, while the production volumes increased until 2019 and then dropped during the IP, the number of employees steadily and significantly decreased during the period considered. From 2019 to the end of the IP, however, production dropped faster than employment due to the lower sales, which resulted in a corresponding decrease in productivity (-6% from 2019 to the IP).

• (223) Following the final disclosure LG Chem argued that the employment decreased due to modernization and that this does not illustrate injury. Despite the investment by NSE being expected to provide 70 extra jobs, these extra jobs have likely been compensated by the technical retrofitting completed by BASF an its Antwerp site in 2017 and its intention to pursue a strategy of digitization of its SAP business.

• (224) While it cannot be excluded that modernisation may have contributed to the decrease in employment, even absent the decreases in employment, other indicators still indicated clear signs of injury. Moreover, in the absence of injury, modernization would have been expected to lead to an increase in productivity. This was not the case. The Commission therefore rejected this claim.

4.5.2.7.   Magnitude of the dumping margin and recovery from past dumping

• (225) LG Chem’s dumping margin was significantly above the de minimis level. The impact of the magnitude of the actual margins of dumping on the Union industry was substantial, given the volume and prices of imports from the country concerned.

• (226) This is the first anti-dumping investigation regarding the product concerned. Therefore, no data were available to assess the effects of possible past dumping.

4.5.3.   Microeconomic indicators

4.5.3.1.   Prices and factors affecting prices

• (227) The weighted average unit sales prices of the sampled Union producers to unrelated customers in the Union developed over the period considered as follows:

Table 7

Sales prices in the Union

	2017	2018	2019	IP
Average unit sales price in the Union (EUR/tonne)	[1 200 – 1 500 ]	[1 250 – 1 550 ]	[1 250 – 1 550 ]	[1 000 – 1 300 ]
Index	100	104	103	85
Unit cost of production (EUR/tonne)	[1 200 – 1 500 ]	[1 400 – 1 700 ]	[1 400 – 1 700 ]	[1 200 – 1 500 ]
Index	100	121	118	105
Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers

• (228) Sales prices on the Union market first increased by 4% in 2018. Subsequently, they decreased by 1%, before dropping further by 17% in the investigation period. Therefore, the average unit sales price in the Union registered an overall decrease of 15% during the period considered.

• (229) The unit cost of production of the sampled producers increased by 5% during the period considered. It increased by 21% between 2017 and 2018. It subsequently dropped by 3% in 2019, and further by 11% in the IP. That trend can be explained by a sudden increase of raw materials’ prices in 2018, which subsequently decreased until the IP.

• (230) As shown in the Table7, average unit sales prices of the sampled Union producers partially adjusted to the fluctuations of the cost of production, but at a much slower pace. Therefore, sales prices remained well below the level of the unit cost of production from 2018 to the end of the IP.

• (231) Following the Final Disclosure LG Chem argued that the analysis of imports from Korea breached LG Chem’s rights of defence, since the ranges provided in Table 7, showing prices between 1 000 and 1 300 EUR/tonne during the investigation period (‘IP’), i.e. 2020, were excessive and imports from Korea could equally be above, at comparable level or below the prices of sampled Union producers.

• (232) The ranges shown in Table 7 do not violate LG Chem’s rights of defence. Since the Commission disclosed in Recital (171) that the Korean prices remained significantly below the Union industry prices, it was clear to LG Chem for its defence that the Korean prices for 2020 were neither above nor equal or very close to the Union industry prices. The actual Union producer’s price is sensitive business information and needed to be protected. However, even a narrower range would still necessarily not allow LG Chem to see the actual price difference and argue how high it is. A different range would therefore not have improved LG Chem’s ability to comment. In addition, the ranges provided in Table7 for the cost of production allowed LG Chem to see that the Korean price was clearly below the Union industry’s cost of production. The Commission therefore rejected this claim.

• (233) LG Chem further argued that Table 7 includes all products of sampled Union producers, including Bio SAP and SAVIVA products, which do not compete with Korean imports.

• (234) Table 7 should include all imports of the product concerned. As the Commission rejected LG Chem’s request to exclude BIO SAP and SAVIVA from the product scope (see recital (73)) these products are rightly included in the figures. The Commission therefore rejected this claim.

4.5.3.2.   Labour costs

• (235) The average labour costs of the sampled Union producers developed over the period considered as follows:

Table 8

Average labour costs per employee

	2017	2018	2019	IP
Average labour costs per employee (EUR)	[110 000 – 125 000 ]	[110 000 – 125 000 ]	[110 000 – 125 000 ]	[110 000 – 125 000 ]
Index	100	107	103	102
Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers

• (236) The average labour costs per employee increased by 7% in 2018 and then decreased by 3.5% in 2019 and further by 1% in the IP, for an overall increase of 2% during the period considered.

4.5.3.3.   Inventories

• (237) Stock levels of the sampled Union producers developed over the period considered as follows:

Table 9

Inventories

	2017	2018	2019	IP
Closing stocks (tonnes)	[50 000 – 60 000 ]	[50 000 – 60 000 ]	[70 000 – 80 000 ]	[75 000 – 85 000 ]
Index	100	92	124	142
Closing stocks as a percentage of production	[20 % -25 %]	[15 % -18 %]	[20 % -25 %]	[20 % -25 %]
Index	100	87	105	121
Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers

• (238) Closing stock levels decreased by 8% in 2018, before increasing steadily and significantly between 2018 and the end of the investigation period. They overall increased by 42% during the period considered.

• (239) The totality of Union consumption is represented by free market consumption and thus Union industry sales on the Union market suffered direct competition from the imports originating in the Republic of Korea. The constant pressure of South Korean imports on the Union market, together with the decline of Union industry’s sales and market share, can partially explain the growing trend for closing stocks represented in Table 9.

• (240) Closing stocks as a percentage of production of the sampled Union producers decreased by 13% in 2018, before increasing above 2017 levels both in 2019 and the IP, with respective growth rates of 5% and 21% in relation to 2017.

4.5.3.4.   Profitability, cash flow, investments, return on investments and ability to raise capital

• (241) Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

Table 10

Profitability, cash flow, investments and return on investments

	2017	2018	2019	IP
Profitability of sales in the Union to unrelated customers (% of sales turnover)	[-2 % to -7 %]	[-10 % to -15 %]	[-5 % to -10 %]	[-15 % to -20 %]
Index	(- 100 )	(- 469 )	(- 324 )	(- 756 )
Cash flow (EUR)	[-5 000 to -15 000 ]	[5 000 to 15 000 ]	[10 000 to 20 000 ]	[5 000 to 15 000 ]
Index	(- 100 )	126	182	73
Investments (EUR)	[15 000 000 – 25 000 000 ]	[300 000 000 – 400 000 000 ]	[5 000 000 – 15 000 000 ]	[1 000 000 – 10 000 000 ]
Index	100	1 749	37	19
Return on investments	[-1 % to -6 %]	[-5 % to -10 %]	[-5 % to -10 %]	[-10 % to -15 %]
Index	(- 100 )	(- 630 )	(- 508 )	(-1 281 )
Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers

• (242) The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales.

• (243) The sales of the Union industry to unrelated customers turned from loss making in 2017 to significantly loss making both in 2018 and 2019 and even more loss making in the IP. Despite the slight improvement in profitability between 2018 and 2019, the sampled Union producers saw their profitability deteriorate significantly during the period considered, reaching a drop of more than seven times higher than 2017 levels.

• (244) Net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow varied a lot during the period considered, mainly due to increased production costs and negative profitability.

• (245) The return on investments is the profit in percentage of the net book value of investments. It developed negatively during the period considered following a decreasing trend similar to that on profitability. Over the same period, the Union industry reduced the level of its investments by 81% overall, with an increase in 2018 due to a major investment made by one Union producer, as stated in recital (205). The ability of the Union industry to raise capital has nevertheless been affected by the losses incurred over the period considered, as can be seen from the decrease in investments.

• (246) Following the final disclosure, LG Chem argued that the Commission should have factored in that different trends are shown by the two sampled producers in terms of profitability. LG Chem commented that only NSE was loss-making in 2017, whereas BASF was still profitable and the profitability of NSE has improved over the period from 2018 to the IP.

• (247) The Commission analysed the injury picture of the Union industry as a whole, and not at the level of individual producers. To get a balanced picture the Commission used a representative sample of the Union industry. However, in addition the Commission also analysed if individual facts like investments distorted the injury picture. Such factors were taken out of the injury analysis to the extent that they were not part of the ordinary course of business. Finally, not all companies forming part of a sample must incur the same trend for every indicator.. The claim was therefore rejected.

4.5.4.   Conclusion on injury

• (248) All main injury indicators showed a negative trend during the period considered. The production volume of the Union industry decreased by around 2% and its sales volume in the Union market decreased by 11%. Considering the stable consumption in the Union market, this translated into a decrease of market share on the Union market from [56%-58%] in 2017 to [49%-51%] in the IP, which corresponds to a drop of 7% during the period considered.

• (249) Imports from the Republic of Korea increased by 33% between 2017 and the investigation period and gained considerably in market share, although the Union market consumption remained stable. Imports from the country concerned substantially increased their market share from [12%-14%] to [16%-18%]. In addition, South Korean import prices dropped by 10% throughout the period considered and were consistently below Union industry prices. During the investigation period, the import prices of the cooperating exporting producer undercut Union industry prices by 14.7% on average. Moreover, and regardless of any undercutting, the Commission further noted, on the basis of the trends contained in tables 2, 3, 5 and 7, that the dumped imports supressed the prices of the Union industry. Indeed, the Union industry was unable to raise prices to the same extent as its costs of production.

• (250) The average prices of the Union industry dropped by 15% during the period considered and, since 2018, average sales prices in the Union market were set well below the correspondent unitary costs of production. The profitability of the Union industry went from [-2% -7%] in 2017 to [-15% -20%] during the IP. Moreover, Union industry’s closing stocks increased overall by 42% during the period considered and represented 25% of production during the investigation period.

• (251) Only the production capacity of the Union industry showed a positive trend during the period considered. As shown in Table 4, production capacity went from [540 000 – 580 000] tonnes in 2017 to [650 000 – 690 000] tonnes in the IP, for an overall increase of 17%. The capacity increase resulted from a major investment made by one Union producer in 2018, given the significantly high capacity utilisation rate of 2017 ([93%-95%]). However, the capacity utilisation went down by 17% during the period considered, passing from [93%-95%]in 2017 to [78%-80%] in the IP.

• (252) In summary, although consumption on the Union market remained stable, the Union industry was not able to maintain its market share. Imports from the Republic of Korea were substantial throughout the period considered, at prices which were lower than the Union industry prices. Since 2018, the Union industry was selling at prices which no longer covered its costs and consequently the industry reduced its sales levels and prices.

• (253) On the basis of the above, the Commission concluded that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation.

• (254) Following the final disclosure, LG Chem argued that the conclusion that all injury indicators showed a negative trend during the period considered is partial, since there was a stable production, increased capacity, re-direction of part of sales to export markets, significant investments, employment was affected by modernisation and profitability simply reflects the massive investments made in 2017-2018. Contrary to LG Chem’s allegation, the Commission analysed each of the factors and responded to LG Chem’s arguments. The fact that the Commission did not agree with LG Chem’s arguments did not render the analysis partial. The Commission therefore rejected the claim.

• (255) Following the 2^nd ADD, LG Chem argued that all revised indicators showed improved trends as compared to the indicators initially disclosed. In particular, the sales and employment figures showed a considerably more limited decline throughout the period considered and no longer support the conclusion of injury.

• (256) The Commission demonstrated above that for each indicator, disclosed in the 2^nd ADD, that the figures support or at least do not contradict the Commission’s initial assessment of the existence of injury. The Commission therefore rejected the claim that these figures do not support the conclusion of injury.

• (257) In its comments after final disclosure, the Coalition for an Open and Competitive SAP market ¹⁵ (‘Coalition H’) argued that, since the end of the investigation period, the prices for SAP increased. The Coalition H claimed, and provided evidence in support, that currently SAP prices are substantially higher than those registered in the investigation period due to higher transport costs, and that Korean prices have increased above those of the Union producers.

• (258) The Commission noted that the Coalition H did not contest the Commission’s analysis on SAP prices during the period considered. These claims refer to a period after the period considered and therefore do not contribute to the analysis of this period. Furthermore, as the Coalition H itself has stated, the price increase following the IP is caused by higher transport prices. These transport prices are linked to the current situation of the Covid19-pandemic. It cannot be confirmed that this is a long-term change in the prices and that thereby a further injury in the future could be excluded. The Commission therefore did not consider that this could alter its findings with respect to the injury found during the investigation period and rejected the claim.

5. CAUSATION

• (259) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the country concerned caused material injury to the Union industry. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the dumped imports from the country concerned was not attributed to the dumped imports. Those factors are: imports from third countries, spec-in contracts, the export performance of the Union industry, the COVID-19 pandemic, the price formula in raw material supply contracts, the price formula in SAP supply contracts, costs of capacity increases and cost for R&D.

5.1.   Effects of the dumped imports

• (260) The volume of imports from the Republic of Korea increased (as shown in Table 2) by 33% from 2017 to the investigation period and, consequently, their market share increased by 33%, i.e. from [12%-14%] to [16%-18%]. This was at the detriment of the Union industry. Indeed, over the same period (as shown in Table 5), the Union industry sales decreased by 11% and its market share in the Union market decreased by 12%. In particular, the market share of the Union industry fell from [56%-58%] in 2017 to [49%-51%] in the IP.

• (261) The prices of the dumped imports decreased by 10% over the period considered (as shown in Table 3). In parallel, the Union industry prices in the Union market fell by 15% over the same period. The South Korean imports, ever more present in the Union market throughout the period considered, were made at prices that continuously lower than those of the Union industry.

• (262) The pressure exerted by the dumped imports also caused significant price suppression as evidenced by the fact that the Union industry was unable to raise prices at the same rate as costs. Indeed, as shown in Table 7, over the period considered, the costs of production increased by 5% whereas the Union industry’s sales prices decreased by 15%. During the period considered, that inability to increase prices caused the profitability of the Union industry to significantly fall from [-2% - -7%] to [-15% -20%], which is clearly an unsustainable level.

• (263) In parallel, imports from the Republic of Korea significantly increased in volume by 33% and their market share increased by 33%, while the market share of the Union industry dropped by 12%. Indeed, despite a stable Union market consumption between 2017 and the IP, South Korean imports continued to gain market share from the Union industry. In the same period, South Korean import prices decreased by 10% (Table 3), while the Union industry prices decreased more, by 15%, contrary to the cost of production, that increased by 5%. Therefore, already by 2018, the Union industry was suffering from material injury caused by the dumped imports.

• (264) On the basis of the above, the Commission concluded that the imports from the Republic of Korea caused material injury to the Union industry. Such injury had both volume and price effects.

• (265) Following the Final Disclosure LG Chem argued that the allegations of price pressure are not supported by facts, as recent specialized press reports state that at least two Union producers have implemented steep price increases for SAP.

• (266) These reports refer to a period after the period considered and therefore did not contribute to the analysis of this period. In addition, such price increases could be connected to multiple short-term factors, including supply shortages caused by the international container shortage, as highlighted by the Coalition H. The Commission therefore did not consider that this could alter its findings with respect to the injury found during the investigation period and rejected this claim.

• (267) LG Chem further claimed that most injury indicators started to decline between 2019 and the IP, whereas Korean imports only increased from 2017 to 2019, a period in which the Union industry incurred no injury volume-wise. A depreciation in sales and market shares took place in the IP, when the Union industry decided to increasingly focus on export markets, and when Japanese imports increased.

• (268) In this claim LG Chem mixes two claims also made separately. The Commission addresses the claim that the Union industry decided to focus on export markets in section 5.2.4 and the claim that the Japanese import increase in the IP could have contributed to the injury in section 5.2.3LG Chem further claimed that there is no link between the evolution of the market share of Korean exports and the evoluation of the market share of the Union industry, as the Union industry lost most market shares in 2020, the year in which imports from Korea were also losing market share.

• (269) This argument is closely linked to LG Chem’s argument that the Japanese imports and not Korean imports were responsible for the loss of market shares in 2020 and was discussed and rejected in recitals (299) to (306).

• (270) LG Chem further claimed that the imports from Korea never had any impact on investments, as shown by the continuous developments of new products by Union producers.

• (271) While Union producers investments indeed increased from 2017 to 2019, they sharply decreased in the IP, due to the pricing pressure caused by the Korean imports. LG Chem did not include the IP in its analysis of a continuous development of new products. The Commission therefore rejected this claim.

5.2.   Effects of other factors

• (272) In its comments on initiation LG Chem requested the Commission to analyse whether the decline in sales and market shares of the Union industry was caused by imports from Japan, the worldwide allocation of spec-in contracts as well as capacity increase investments. LG Chem referred to the complaint, where the complainants stated that the Union producers’ sales followed a fluctuating trend similar to that of the consumption until 2019 and that the Union industry’s market share only declined against the Union consumptions trend during the IP. LG Chem argued that the major increase of imports from Japan caused the decline in market share of the Union industry, whereas the minor increase of imports from the Republic of Korea were caused by spec-in contracts.

• (273) The Commission analysed if and how far those factors contributed to the injury.

5.2.1.   Increased demand of spec-in products

• (274) LG Chem argued that an increased demand of spec-in products, which were sourced from Korea has caused the increase in exports from Korea.

• (275) Spec-in products are produced and sold in the Union by both Union and South Korean producers. The Commission did not find an increased demand for in-spec products as such. However, it found a shift between suppliers on a global basis, with more orders for spec-in products being awarded to the Korean producer over time.

• (276) Furthermore, the Commission analysed the development of the contracted volumes supplied by Union producers over the period considered and found that although there were shifts in volumes among Union suppliers, the overall changes in volume supply over the period considered did not affect the trend of the injury indicators, and more particularly the profitability of the Union industry as a whole, over the period considered.

• (277) Therefore, the Commission concluded that this factor did not contribute to the observed injury of the Union industry.

• (278) Following the Final disclosure LG Chem argued that since SAP is not a commodity product, negotiations are not based on prices, but on quality. Users require specific SAP grades for specific applications. Contracts are therefore simply concluded with the producers that can best satisfy the customers’ requirements.

• (279) The Commission noted that SAP producers are normally able to produce a wide range of grades for specific applications, and that both Union and Korean producers produce such spec-in products. This is also reflected by the fact that many users, especially large users, apply a multi-sourcing strategy. This demonstrates that regularly there is not only one SAP producer with a specific grade that best satisfies the customers requirement, but various. Logically, users, as profit-oriented companies, will in this case balance the characteristic benefits of a certain SAP offered by several suppliers, with the most cost-efficient sourcing. This is different from a situation where users would be restricted from choosing the cheapest supplier due to quality or technical issues. The Commission therefore rejected the argument that negotiations would not be based on prices, but solely on quality.

5.2.2.   Price formula in raw material supply contracts

• (280) The Coalition of users argued that the Union industry suffered injury due to the price formula adopted in their supply contracts and thus the imposition of anti-dumping measures would not avoid price declines for the Union producers. They suggested that SAP prices of the Union industry follow an indexation mechanism towards raw material prices and, thus, fluctuate in line with the fluctuation of raw material prices, regardless of the volume of imports from the country concerned.

• (281) Furthermore, both the Coalition of users and LG Chem claimed that the price formula mechanism adopted in supply contracts was sufficient for SAP suppliers to achieve sufficient profitability levels, since upward and downward movements in raw material costs were automatically reflected in the final price of SAP products.

• (282) Therefore, the alleged profitability losses described in the complaint could not be caused by the decline of sales prices of the Union industry following the price cuts of South Korean imports, but rather by the increase in the costs of production structures of the Union producers.

• (283) The Commission analysed the effect of the price formula on the profitability. It is a global standard that SAP sales contracts are concluded for a year or multiple years. In those contracts the price of SAP for a specific month is regularly linked to the price of the main raw materials in the preceding quarter. That delayed influence of the raw material price causes a lower or higher profit margin in the month in question. When the raw material price in the previous quarter was lower than in a current month, it influences the margin negatively. While over time generally positive effects can offset negative effects, the Commission found for the IP an overall negative effect. However, that effect was so small that it could only explain a very minor part of the losses incurred by the Union industry. Therefore, the Commission concluded that this factor could not contribute to the observed injury of the Union industry.

• (284) Following the final disclosure, LG Chem argued that there was no price depression or suppression. LG Chem claimed that the price formulas for SAP, which reflect the evolution of raw material prices, rather than the Korean imports, had explanatory force for the downward trend in prices and therefore had a depressive or suppressive effect on domestic prices. The Commission was therefore faced with elements other than imports that may explain the significant depression or suppression of domestic prices. Furthermore, prices of Korean imports and prices of the Union industry followed the same trends.

• (285) The Commission has taken into account the fact that price formulas for SAP reflect the price evolution of raw material prices. These formulas ensure that the profits of SAP producers in existing sales contracts made for a certain period, are not affected by increasing raw material prices. If the price formulas were the only explanatory force for the downward trend in prices, it should have resulted in a more stable profit margin for the European producers and only caused a minor price effect, as described in Recital (283), because prices are linked to raw material prices of the previous quarter. However, these price formulas cannot alone be responsible for price trends in re-negotiations or newly negotiated contracts, compared to existing older contracts.

• (286) The Commission therefore analysed the pricing variations that occurred over the period considered in addition to the price trends linked to raw material prices. Over the period considered, the Union industry prices decreased more than the raw material prices. It is this additional decrease in sales prices that caused the injury, as this additional decrease was not profit-neutral. The fact that prices of Korean imports and prices of the Union industry followed trends in the same direction, at different rates, does not contradict the fact that on top of the profit-neutral trend caused by the raw material prices, there was an overlaying trend. The Commission therefore rejected the argument that it disregarded a factor with explanatory force for the price depression.

• (287) LG Chem further argued that the decline in domestic prices does not result from a decline in the fixed element in the SAP sales contracts, but rather in the variable element reflecting the price changes of the raw materials C3 and NaOH. LG Chem argued that the majority of the price decrease of Union industry prices between 2017 and 2020 was caused by the C3 and NaOH prices, which decreased by 18% in the same period, whereas the fixed price element, according to LG Chem’s calculations, only decreased by 12% in the same period. LG Chem also argued that the profitability of the Union producers on the Union market correlated with the profitability on the Union producers’ export markets, which would be a further indication that external elements affecting the global SAP markets, namely the SAP price formula and cost constraints, were responsible.

• (288) As mentioned above, the Commission took into account the fact that changes in raw materials influence the sales price. However, the price formulas connect the sales price exactly for the purpose of maintaining a stable profit level and keeping changes in raw material neutral regarding the profit margin. Therefore, the changes in the fixed amount of the price formula with regard to new contracts or renegotiations are the element that affects the profitability of the Union industry. If only the changes caused by raw material prices would have occurred, then the profitability level over the period considered would have been more stable. This demonstrates that the pricing pressure of the Korean imports on the negotiations of the price element of the contract is the causation for the decline in profitability and not the changing raw material prices. The fact that pricing pressure also occurs in parallel on export markets does not contradict the analysis conducted with respect to the Union market. The Commission therefore rejected the claim.

5.2.3.   Imports from third countries

• (289) The volume of imports from other third countries developed over the period considered as follows:

Table 11

Imports from third countries

Country		2017	2018	2019	IP
Japan	Volume (tonnes)	[85 000 – 95 000 ]	[60 000 – 70 000 ]	[45 000 – 55 000 ]	[105 000 – 115 000 ]
Japan	Index	100	72	47	122
Japan	Market share	[11 % - 15 %]	[8 % - 11 %]	[5 % - 8 %]	[14 % - 18 %]
Japan	Index	100	73	54	122
Japan	Average price (EUR/tonne)	[1 200 – 1 500 ]	[1 200 – 1 500 ]	[1 200 – 1 500 ]	[1 000 – 1 300 ]
Japan	Index	100	101	105	87
Turkey	Volume (tonnes)	43 571	46 929	52 626	54 537
Turkey	Index	100	108	121	125
Turkey	Market share	[6 %-8 %]	[6 %-8 %]	[7 %-9 %]	[7 %-9 %]
Turkey	Index	100	108	121	125
Turkey	Average price (EUR/tonne)	1 140	1 155	1 088	981
Turkey	Index	100	101	96	86
USA	Volume (tonnes)	40 494	34 952	30 911	30 952
USA	Index	100	87	77	76
USA	Market share	[5 %-7 %]	[4 %-6 %]	[4 %-6 %]	[4 %-6 %}
USA	Index	100	88	75	75
USA	Average price (EUR/tonne)	3 646	3 936	4 522	4 431
USA	Index	100	108	124	122
Other third countries	Volume (tonnes)	32 587	29 109	29 046	28 594
Other third countries	Index	100	89	89	88
Other third countries	Market share	[4 %-6 %]	[3 %-5 %]	[3 %-5 %]	[3 %-5 %]
Other third countries	Index	100	90	89	88
Other third countries	Average price (EUR/tonne)	3 407	3 176	3 070	3 149
Other third countries	Index	100	93	90	92
Source: Eurostat, Japanese figures adjusted by confidential market information.	Source: Eurostat, Japanese figures adjusted by confidential market information.	Source: Eurostat, Japanese figures adjusted by confidential market information.	Source: Eurostat, Japanese figures adjusted by confidential market information.	Source: Eurostat, Japanese figures adjusted by confidential market information.	Source: Eurostat, Japanese figures adjusted by confidential market information.

• (290) While imports from Japan have first decreased by 28% between 2017 and 2018 and by 25% between 2018 and 2019, they substantially increased by 75% in the IP. The imports from Japan were carried out by one of the sampled Union producers, Nippon Shokubai Europe, which in addition to its own production resells SAP produced by its mother company Nippon Shokubai Japan (‘Nippon Shokubai’). Until 2019, Nippon Shokubai followed a strategy of decreasing Japanese imports in favour of its European production, which is reflected in higher production volume and investments, resulting in a significant European capacity increase in 2018. However, over time, Nippon Shokubai Europe was confronted more and more by customers demanding lower prices due to the pressure of low-priced South Korean imports. Therefore, as of the IP, Nippon Shokubai adapted its strategy.

• (291) In order to remain competitive with the South Korean imports and not to lose sales volumes in Europe, Nippon Shokubai Europe increased its resales of SAP produced in Japan.

• (292) While prices of Japanese and South Korean imports overall followed a largely similar trend (like those of the Union industry), there is one notable exception: South Korean import prices showed a significant drop in 2019 while Japanese prices still increased and Union industry prices remained nearly stable. This was not sustainable and as a consequence, both the Japanese and Union industry had to follow and drop their prices significantly in the IP.

• (293) The development of market shares is also significant. The Republic of Korea increased its market share by 4 percentage points over the entire period considered. By contrast, Japanese imports first decreased significantly in the years 2018 and 2019 and only increased in the IP as a consequence of the pricing pressure from the South Korean imports, which rendered the European production unprofitable. As result, the quantities imported from Japan during the IP were higher than those imported at the beginning of the injury investigation period, and the market share held by Japan increased by 20% over the whole injury period.

• (294) There is no evidence on file to suggest that Japanese imports were dumped. As a consequence, regardless of whether or not imports from Japan may have contributed to the injury of other Union producers, the effect of the South Korean exports was substantially higher over the period considered due to the lower price and higher volume increase throughout that period.

• (295) In addition, Nippon Shokubai Europe also continued to suffer losses on the sales of its SAP produced in Europe.

• (296) Imports from Turkey increased by 25% over the period considered. Their market share increased from [6%-8%] to [7%-9%] in that period. The average price of those imports followed the same trend of those from the Republic of Korea, despite being set at a lower level as of 2018 until the IP. During the investigation period, they undercut South Korean and the Union industry prices by 3% and 14% respectively. Turkish imports should therefore be considered as a contributing factor to the injury suffered by the Union industry.

• (297) However, as the volume of such imports represented always less than half of those from the Republic of Korea, it is clear that imports from the Republic of Korea were a more important causation factor.

• (298) The volume of imports and the market share of the USA both decreased by 24% during the period considered. In parallel, their average price increased by 22%. Thus, American imports could not have contributed to the injury suffered by the Union industry during this period.

• (299) Following the final disclosure, LG Chem requested additional disclosures concerning the methodology used to determine import volumes and values from Korea and Japan. The Commission clarified in the additional disclosure of 8 February 2022 that Eurostat import data based on CN codes has been relied on for imports from third countries. For Japan, Eurostat information for the CN code 3906 90 90 regarding Japan was checked with the confidential information in the case file. As explained in recital 195 of the GDD, the imports from Japan were carried out by one of the sampled Union producers. Due to the fact that the figures stem from one producer, they are confidential. For Korea, the Commission provided adjusted figures as discussed in recitals (159) to (163).

• (300) With regard to LG Chem’s comment that the ranges provided for Japanese imports do not allow any proper comparison with either Korean imports or prices of the Union industry, the Commission referred to the fact that the data is confidential and narrower ranges would not ensure the confidentiality of the data.

• (301) LG Chem also claimed that injury was mainly caused by Japanese imports. In support of its claim, LG Chem stated that at their peak in 2019, the Korean imports did not prevent the Union industry from increasing the fixed element of their price. The fixed element only declined in 2020, when Korean imports declined but the prices of the Union industry declined more to follow the decline in prices of imports from Japan.