Commission Implementing Regulation (EU) 2022/802 of 20 May 2022 imposing a provisional anti-dumping duty on imports of electrolytic chromium coated steel products originating in the People’s Republic of China and Brazil

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 7 thereof,

After consulting the Member States,

Whereas:

(1) On 24 September 2021, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of electrolytic chromium coated steel (‘ECCS’) originating in the People’s Republic of China (‘the PRC’ or ‘China’) and Brazil (together ‘the countries 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 on 13 August 2021 by the European Steel Association (‘EUROFER’) (‘the complainant’). The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) The complaint was made on behalf of the following Union producers: ArcelorMittal Atlantique et Lorraine (France), ArcelorMittal Etxebarri S.A. (Spain) and ThyssenKrupp Rasselstein GmbH (Germany), allegedly representing 100 % of the Union industry. In the course of the investigation, it came to the Commission’s attention the existence of an additional Union producer of ECCS, namely Acciaierie d’Italia. Since the complainants nonetheless represented [85-95] % of the production and sales of the Union industry, the complaint was considered to have been made by the Union industry in accordance with Article 5(4) of the basic Regulation.

(4) 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 and Brazil, known importers, suppliers and users, traders, as well as associations known to be concerned about the initiation of the investigation and invited them to participate.

(5) 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.

(6) China Iron and Steel Association (‘CISA’) submitted comments following initiation on 5 November 2021. In addition, CISA together with Baoshan Iron & Steel Co., Ltd., China and GDH Zhongyue (Zhongshan) Tinplate Industry Co., Ltd. requested a hearing with the Commission services. They made such requests within the stipulated deadlines and the hearing took place on 24 January 2022.

(7) In their submission and during the hearing, they claimed, amongst others, that the complaint relied too much on confidential information, especially with respect to costs relied on, and that the non-confidential version was therefore insufficient to allow a proper understanding of the evidence underlying the complaint.

(8) The Commission considered that the non-confidential version of the complaint available in the file for inspection by interested parties contained all the essential evidence and non-confidential summaries of the confidential data allowing interested parties to properly exercise their rights of defence. Therefore, this claim was rejected.

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

(10) In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. However, given the small number of producers in the Union, the Commission decided to send questionnaires to all Union producers known at that time.

(12) As explained in recital (3) above, in the course of the investigation, the existence of a third Union producer was brought to the Commission’s attention. As the cooperating Union producers accounted for [85-95] % of total production and sales of the product under investigation in the investigation period, on 16 March 2022, the Commission issued a note to the file informing interested parties that it had decided to limit the investigation to these producers in accordance with Article 17(1) of the basic Regulation and invited parties to comment. No comments were received.

(13) 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.

(14) Only one unrelated importer provided such information. Therefore, no sampling of unrelated importers was necessary. However, this unrelated importer decided not to provide a questionnaire reply. Accordingly, no unrelated importer cooperated in this investigation.

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

(16) With regard to the PRC, four exporting producers provided the requested information and agreed to be sampled. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of two exporting producers on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of the country concerned were consulted on the selection of the sample. No comments on the sample were received.

(17) With regard to Brazil, only one exporting producer, accounting virtually for all imports from Brazil, provided the requested information and agreed to be included in the sample. The Commission therefore decided that sampling was not necessary.

(18) An exporting producer in China (GDH Zhongyue (Zhongshan) Tinplate Industry Co., Ltd.) requested individual examination under Article 17(3) of the basic Regulation and provided a questionnaire within the deadline. The Commission considered that an examination of this request during the provisional stage of the investigation would have been unduly burdensome, especially as there were remote crosschecks (‘RCCs’) to be organised for two countries and one of the sampled exporting producers had several subsidiaries located in the European Union. The Commission will decide whether to grant individual examination or not at the definitive stage of the investigation.

(19) 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 People’s Republic of China (‘GOC’).

(20) Furthermore, the complainant provided in the complaint sufficient evidence of raw material distortions in China regarding the product under investigation. 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 China. For this reason, the Commission sent an additional questionnaire in this regard to the GOC.

(21) The Commission sent questionnaires to three Union producers, the complainant, one unrelated importer and known users, and three exporting producers in the countries concerned. The same questionnaires were made available online (3) on the day of initiation.

(22) In view of the outbreak of COVID-19 and the confinement measures put in place by various Member States as well as by various third countries, the Commission could not carry out verification visits pursuant to Article 16 of the basic Regulation. The Commission instead cross-checked remotely all the information deemed necessary for its provisional determinations in line with its Notice on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations. (4)

(24) The investigation of dumping and injury covered the period from 1 July 2020 to 30 June 2021 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2018 to the end of the investigation period (‘the period considered’).

(25) The product concerned is flat-rolled products of iron or non-alloy steel, plated or coated with chromium oxides or with chromium and chromium oxides originating in the PRC and Brazil, currently falling under CN codes 7210 50 00 and 7212 50 20 (‘the product concerned’).

(26) ECCS is used in a wide range of applications, typically for consumer and industrial packaging. It is most frequently used for food packaging, for example in can tops and bottoms, screw and lug caps, tabs, etcetera. Other types of uses include external parts for home appliances, photographic film cases, protective material for optical fibre protection or other electrical and electronic parts.

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

(29) 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.

(30) One of these requirements, as indicated in Article 10(4)(d) of the basic Regulation, is that there is a further substantial rise in imports in addition to the level of imports which caused injury during the investigation period. As can be seen in Table 1, the imports of ECCS originating in the countries concerned showed a decrease by 8 % in the four months following initiation as compared to the investigation period (‘IP’), which was the period 1 July 2020 to 30 June 2021.

(32) As there were no indications on the file that imports of ECCS products as defined in recital (25) above are subject to seasonal fluctuations, the Commission did not consider it necessary to also compare the level of imports during the period October 2021 to January 2022 with the level of imports during the same months in the preceding year. The import data following initiation was compared to the monthly average imports from the countries concerned for four months in the investigation period.

(33) For the reasons set out in recital (140) below, the Commission decided to cumulate the imports from the countries concerned for the purpose of the analysis described in the recitals above. As the above table shows, the cumulated imports from the countries concerned did not show a further substantial rise after the IP.

(34) Consequently, the Commission concluded that the requirements for registration under Article 14(5a) of the basic Regulation were not met.

(35) In view of the 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 having regard to Article 2(6a) of the basic Regulation.

(36) Consequently, in order to collect the necessary data for the eventual application of Article 2(6a) of the basic Regulation, the Commission invited in the Notice of Initiation all exporting producers in the PRC to provide information regarding the inputs used for producing ECCS. Two exporting producers submitted the relevant information.

(37) In addition, the Commission sent a questionnaire to the GOC. Moreover, 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 questionnaire reply was received from the GOC and no submission on the application of Article 2(6a) of the basic Regulation was received within the deadline.

(38) In the Notice of Initiation, the Commission also specified that, in view of the evidence available, it might need to select an appropriate 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.

(39) On 12 November 2021, the Commission informed interested parties by a note to the file (hereinafter ‘the First Note’) 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 ECCS. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified Brazil, Colombia, Mexico, Thailand and Turkey as possible appropriate representative countries. The Commission received comments on the First Note from CISA and Baosteel. These comments confirmed Brazil or Turkey as possible appropriate representative countries.

(40) On 6 January 2022, the Commission informed interested parties by a second note to the file (hereinafter ‘the Second Note’) 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 readily available information for the company CSN, the only known producer of ECCS in Brazil.

(41) The Commission received comments on the Second Note from CISA and Baosteel. Both disagreed that the Brazilian domestic prices of hot rolled steel and cold rolled steel could be selected as representative prices as they were abnormally high. This claim is addressed in recitals (91) and (92).

(42) 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”.

(43) 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” (“administrative, selling and general costs” is refereed hereinafter as ‘SG&A’).

(44) As further explained below, the Commission concluded in the present investigation that, based on the evidence available, the application of Article 2(6a) of the basic Regulation was appropriate.

(45) In recent investigations concerning the steel sector in the PRC (5) – steel being the main factor of production for ECCS – the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present. The Commission concluded in this investigation that, based on the evidence available, the application of Article 2(6a) of the basic Regulation was also appropriate.

(46) In those investigations, 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 steel sector, which is the main raw material to produce the product under investigation not only does a substantial degree of ownership by the GOC persist 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 further found 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 concentrated in 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 steel 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).

(47) The complaint in this case referred to the Report, in particular to the findings regarding the steel sector in general; to the large number of SOEs in the steel sector; guidance of the industry development by the state (for example the decision of China to consolidate the steel industry by 2025); presence of CCP cells in enterprises producing steel; and various planning and guidance documents concerning the steel sector. Moreover, the complaint listed specific distortions in the raw materials used to produce ECCS: flat hot rolled steel (‘HRFS’), chromium, iron ore and coke. Those references included, with regard to HRFS, the findings in a recent anti-subsidy investigation into the sector (13), and the findings in the G20 Ministerial Report by the Global Forum on Steel Excess Capacity. On chromium, the complaint specified that the 13th Five-Year-Plan (‘FYP’) (2016-2020) for Mineral Resources regulates chromium, which is listed as a ‘strategic’ element. Furthermore, the complaint explains that the Catalogue of Goods under Export Licences by the Ministry of Commerce of the People’s Republic of China (‘MOFCOM’) include ferrochrome, unwrought chromium, powder chromium, chromium scrap and other chromium and its products in the list for products subject to export licences. Furthermore, the complaint included information on export duties on chromium, iron ore and coke which have a distorting effect on prices.