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

23.5.2022	EN	Official Journal of the European Union	L 143/11

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. PROCEDURE

1.1.   Initiation

• (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.

1.2.   Interested parties

• (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.

1.3.   Comments on initiation

• (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.

1.4.   Sampling

• (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.

1.4.1.   Sampling of Union producers

• (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.

• (11) The following Union producers were requested to complete the questionnaire for Union producers and participated in the investigation:

• — ArcelorMittal Atlantique et Lorraine, France

• — ArcelorMittal Etxebarri S.A., Spain

• — ThyssenKrupp Rasselstein GmbH, Germany.

• (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.

1.4.2.   Sampling of importers

• (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.

1.4.3.   Sampling of exporting producers in the PRC and Brazil

• (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.

1.5.   Individual examination

• (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.

1.6.   Questionnaire replies and verification visits

• (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

• (23) The Commission carried out RCCs of the following companies / parties:

• (a) Union producers

• — ArcelorMittal Atlantique et Lorraine, France

• — ArcelorMittal Etxebarri S.A., Spain

• — ThyssenKrupp Rasselstein GmbH, Germany

• (b) Exporting producers

In the PRC:

• — Baoshan Iron & Steel Co., Ltd., China (‘Baosteel’)

• — Handan Jintai Packing Material Co., Ltd, China (‘Jintai’)

In Brazil:

• — Companhia Siderúrgica Nacional, Brazil (‘CSN’).

1.7.   Investigation period and period considered

• (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’).

2. PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product concerned

• (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.

2.2.   Like product

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

• — the product concerned;

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

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

• (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.

2.3.   Registration

• (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.

• (31) All figures are presented in an indexed form or given as ranges to protect the confidential data provided by the three sampled Union producers, out of which two belong to the same group.

Table 1

	Investigation period	Investigation period monthly average	October 2021-January 2022	October 2021-January 2022 monthly average
Imports from Brazil into the EU	[13 000 -16 000 ]	[1 200 -1 300 ]	[8 000 -9 000 ]	[2 000 -3 000 ]
Imports from China into the EU	[64 000 -75 000 ]	[5 500 -6 500 ]	[15 000 -18 000 ]	[4 000 -5 000 ]
Imports from countries concerned into the EU	[77 000 -91 000 ]	[6 500 -7 500 ]	[23 000 -27 000 ]	[6 000 -7 000 ]
Source: Eurostat and Surveillance database	Source: Eurostat and Surveillance database	Source: Eurostat and Surveillance database	Source: Eurostat and Surveillance database	Source: Eurostat and Surveillance database

• (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.

3. DUMPING

3.1.   The People’s Republic of China

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

• (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).

3.1.2.   Normal value

• (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.

3.1.3.   Existence of significant distortions

• (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.

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

• (49) Specifically in the steel sector, which is the main raw material to produce the product under investigation, a substantial degree of ownership by the GOC persists. Many of the largest steel producers are owned by the State. For instance, the sampled exporting producer Baosteel is a major Chinese State-owned enterprise that engages in steel manufacturing and is part of the recently consolidated China Baowu Steel Group Co. Ltd. (formerly Baosteel Group and Wuhan Iron & Steel), ultimately 100 % owned by the central SASAC ¹⁴. Baowu currently also holds 62,7 % of the shares in the other large steel SOEs Shanxi Taiyuan Iron & Steel Co. Ltd. (‘Tisco’), resulting in the Central SASAC being its controlling shareholder, as a result of the gratuitous transfer of 51 % shareholding in TISCO by the Shanxi Province SASAC to Baowu in August 2020 ¹⁵. While the nominal split between the number of SOEs and privately owned companies is estimated to be almost even, from the five Chinese steel producers ranked in the top 10 of the world's largest steel producers, four are SOEs ¹⁶. At the same time, while the top ten producers only took up some 36 % of total industry output in 2016, the GOC set the target in the same year to consolidate 60 % to 70 % of steel production to around ten large-scale enterprises by 2025 ¹⁷. This intention has been repeated by the GOC in April 2019, announcing a release of guidelines on steel industry consolidation ¹⁸. Such consolidation may entail forced mergers of profitable private companies with underperforming SOEs ¹⁹.

• (50) In addition, in the steel sector, many of the largest producers are specifically referred to in the ‘Steel Industry Adjustment and Upgrading plan for 2016-2020’. For instance, Tisco mentions on its website that it is “a super iron and steel giant”, which “developed into an extraordinary large-scale iron and steel complex, which is integrated with business of iron mining, iron and steel production, processing, delivery and trading” ²⁰.

• (51) As to the GOC being in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation, the investigation revealed the existence of personal connections between producers of the product concerned and the CCP, such as CCP members among the senior management or members of the board of directors in the main ECCS manufacturers, namely Baosteel and Jintai. Existence of personal connections to CCP among management could be also established for CISA (Executive Chairman is at the same time Party Secretary). To provide a specific example, Baowu’s Chairman of the Board of Directors serves at the same time as the Party Committee Secretary with the General Manager being the Deputy Secretary of the Party Committee ²¹. Similarly, the Chairman of Baosteel’s Board of Directors occupies the position of the Party Committee’s secretary while the Executive Manager is the Deputy Secretary of the Party Committee. ²² This trend is also applicable for private enterprises. In Jintai, the Chairman of the board serves at the same time as a Member of the Hebei’s province People’s Congress. More generally, in view of the general applicability of the legislation on CCP presence in companies, it can be safely concluded that the ability of the GOC to interfere with prices and costs through State presence in firms is significant in the steel sector in general, as well as specifically for the exporting producers covered in this investigation.

• (52) Both public and privately owned enterprises in the ECCS sector are subject to policy supervision and guidance. The following examples illustrate the above trend of an increasing level of intervention by the GOC in the ECCS sector. The producers of the product under investigation explicitly emphasise party building activities on their websites, have party members in the company management and underline their affiliation to the CCP. The investigation revealed party building activities in Baosteel. The official website mentions that there are 301 CCP committees and 85 437 CCP members in China Baowu Group ²³ (the holding company of Baosteel). Moreover, the group indicates the following concerning the CCP building in the enterprise: “Strengthen the integration of the Party’s leadership with the improvement of corporate governance, improve the modern enterprise system. China Baowu fully implements the requirements of the “Opinions on Strengthening the Party's Leadership in the Improvement of Corporate Governance of Central Enterprises”, [...] The revised and improved decision-making system for major matters further improved the decision-making authority of the Party committee, the board of directors, managers and other governance bodies, the decision-making matters and forms authorized by the board of directors [...]. [...] Baowu adheres to and implements the simultaneous planning of Party building and enterprise reform, the simultaneous establishment of Party organizations and operational entities, the simultaneous allocation of persons in charge Party organizations and Party affairs staff”. ²⁴ The Baosteel company describes the CCP building activities as follows: “Undertake the main responsibility of administering the party strictly and comprehensively; Lead the company’s ideological and political work, united front work, building of a spiritual civilisation, building of a corporate culture and mass work such as trade unions and the Communist Youth League; Lead the construction of party-style and honest government, support discipline committees to effectively fulfil their supervisory responsibilities ²⁵”.

• (53) Further, policies discriminating in favour of domestic producers or otherwise influencing the market in the sense of Article 2(6a)(b), third indent of the basic Regulation are in place in the ECCS sector.

• (54) The steel industry, which is the main component for the production of ECCS, is regarded as a key industry by the GOC ²⁶. This is confirmed in the numerous plans, directives and other documents focused on steel, which are issued at national, regional and municipal level such as the ‘Steel Industry Adjustment and Upgrading plan for 2016-2020’. This Plan states that the steel industry is “an important, fundamental sector of the Chinese economy, a national cornerstone” ²⁷. The main tasks and objectives set out in this Plan cover all aspects of the development of the industry ²⁸.

• (55) The 13th Five-Year Plan on Economic and Social Development ²⁹ envisages support to enterprises producing high-end steel product types ³⁰. It also focuses on achieving product quality, durability and reliability by supporting companies using technologies related to clean steel production, precision rolling and quality improvement ³¹.

• (56) The ‘Guiding Catalogue for Industry Restructuring (2019 Version)’ ³² approved by Decree of the National Development and Reform Commission of the People's Republic of China No 29 of 27 August 2019, which entered into force on 1 January 2020 (‘the Catalogue’) lists steel as encouraged industry.

• (57) The GOC further guides the development of the sector in accordance with a broad range of policy tools and directives related to, inter alia market composition and restructuring, raw materials, investment, capacity elimination, product range, relocation, upgrading, etc. Through these and other means, the GOC directs and controls virtually every aspect in the development and functioning of the sector ³³. The current problem of overcapacity is arguably the clearest illustration of the implications of the GOC’s policies and the resulting distortions.

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

• (59) The present investigation has not revealed any evidence that the discriminatory application or inadequate enforcement of bankruptcy and property laws according to Article 2(6a)(b), fourth indent of the basic Regulation in the ECCS sector referred to above in recital (46), would not affect the manufacturers of the product under investigation.

• (60) The ECCS sector is also affected by the distortions of wage costs in the sense of Article 2(6a)(b), fifth indent of the basic Regulation, as also referred to above in recital (46). Those distortions affect the sector both directly (when producing the product under investigation or the main inputs), as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in the PRC) ³⁴.

• (61) Moreover, no evidence was submitted in the present investigation demonstrating that the ECCS sector is not affected by the government intervention in the financial system in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, as also referred to above in recital (46). Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels. In addition, the investigation revealed that both sampled exporting producers had significant amounts of outstanding loans from Chinese lenders during the investigation period.

• (62) In fact, it was revealed during the investigation that the ECCS producers benefit from additional support by the government. For example, one of the sampled companies, Jintai, is on the list of the Hebei Province 2020 High Tech Enterprises (second batch). Specifically, this company is number 4 on the list ³⁵, meaning it is granted special treatment and support by the government. In addition, Hebei province’s 13th FYP 2016-2020 had a number of provisions supporting the steel sector: “Foster development and innovation pillars: [Hebei shall] create a series of innovative flagship enterprises in the field of industry, [Hebei shall] focus on a hundred of leading enterprises and make the most of their innovative driving force in competitive industries, support their efforts to increase R&D input, […]. [Hebei shall] support leading enterprises in industries such as steel, equipment, construction materials, pharmaceuticals, chemicals, food products”. The 14th FYP 2021-2025 (Jintai Packaging is located in Hebei) provides the following: “Strengthen the leading position of competitive industries: steel industry: […] promote the transformation and upgrading of steel plants in the main urban area. […] strengthen international production capacity cooperation, focus on the construction of Tangshan , Handan high-quality steel industry clusters,” Additionally, the Hebei 14th FYP on strategic and emerging industries 2021-2025 also includes provisions supporting steel: “Vigorously develop advanced steel materials for high quality products such as steel for basic parts, steel for tools and molds, high-performance marine steel, steel for bearings, advanced pipeline steel, metal powder for additive manufacturing”.

• (63) Finally, the Commission recalled that in order to produce the product under investigation, a number of inputs in addition to steel are needed. When the producers of the product under investigation purchase or contract for these inputs, including steel, the prices paid (and which are recorded as the producers’ costs) are exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the aforementioned distortions; they may borrow money that is subject to the distortions on the financial sector/capital allocation; and they are subject to the planning system that applies across all levels of government and sectors.

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

• (65) In its comments on the First Note, CISA submitted a number of comments, which were also supported and endorsed by a submission by Baosteel. First, CISA submitted that the WTO Anti-Dumping Agreement (‘ADA’) does not recognise the concept of significant distortions in Article 2.2 of ADA, which only allows the construction of the normal value if there are no sales in the ordinary course of trade. CISA observed that this Article does not mention significant distortions allowing for the construction of normal value. Second, CISA claimed that any constructed value would need to be calculated in accordance with Article 2.2.1.1 of ADA and with the WTO Appellate Body's interpretation given in the EU – Biodiesel case, as well as by the WTO panel in the EU – Cost Adjustment Methodologies II (Russia) (DS494) case, which do not mention the concept of significant distortions nor the possibility to disregard the exporting company’s data.

• (66) The Commission considered that the provisions of Article 2(6a) are fully consistent with the European Union's WTO obligations and the jurisprudence cited by CISA. First, there is no need for WTO Members to use the exact terms of the WTO Agreements in their implementing legislation. Therefore, the fact that the concept of 'significant distortions’ as such is not present in the WTO ADA does not restrict the Union’s use of that term. Furthermore, it is the Commission’s view that, in accordance with the decision of the WTO Panel and the Appellate Body in EU – Biodiesel (DS473), the provisions of the basic Regulation that apply generally with respect to all WTO Members, such as Article 2(5), second sub-paragraph, permit the use of data from a third country, duly adjusted when such adjustment is necessary and substantiated. The existence of significant distortions renders costs and prices in the exporting country inappropriate for the construction of normal value. In these circumstances, Article 2(6a) envisages the construction of costs of production and sale on the basis of undistorted prices or benchmarks, including those in an appropriate representative country with a similar level of development as the exporting country. Therefore, the Commission rejected this claim.

• (67) In relation to the case EU – Cost Adjustment Methodologies II (Russia) (DS 494), the Commission recalled that both the EU and the Russian Federation appealed the findings of the Panel, which are not final and therefore, according to standing WTO case-law, have no legal status in the WTO system, since they have not been endorsed by the Dispute Settlement Body through a decision by the WTO Members. In any event, the Panel Report in this dispute specifically considered the provisions in Article 2(6a) of the basic Regulation to be outside the scope of the dispute. The claim was therefore rejected.

• (68) Second, CISA claimed that there is a lack of evidence with regard to the alleged “significant distortions” in relation to the Chinese ECCS industry. According to CISA, the China report relied on by the Commission failed to meet the standards of impartial and objective evidence and evidence of sufficient probative value. Furthermore, CISA claimed that since the China report was published in 2017, it could not be applicable for the investigation period covering July 2020 – June 2021. Last, CISA observed that the China report does not address the Chinese ECCS industry per se, but only the Chinese steel industry in general.

• (69) The Commission noted that the China Report is a comprehensive document based on extensive objective evidence, including legislation, regulations and other official policy documents published by the GOC, third party reports from international organisations, academic studies and articles by scholars, and other reliable independent sources. It was made publicly available since December 2017 so that any interested party would have had ample opportunity to rebut, supplement or comment on it and the evidence on which it is based, and neither the GOC nor other parties have submitted arguments or evidence rebutting the sources included in the China Report. Likewise, regarding the argument that the Report was outdated, the Commission noted in particular that the main policy documents and evidence contained in the Report, including the relevant five-year plans and legislation applicable to the product under investigation were mostly still relevant during the IP, and that neither China Chamber of Commerce of Metals, Minerals and Chemical (CCCMC) nor other parties have proven that this was no longer the case. China only started publishing new five-year plans throughout year 2021 and a lot of those plans were only made public in the second half of the year, hence after the investigation period. This was further confirmed through the case-specific research undertaken by the Commission, as summarised above.

• (70) With regard to the argument that the China Report does not include a specific chapter on ECCS, the Commission noted that the existence of the significant distortions giving rise to the application of Article 2(6a) of the basic Regulation is not linked to the existence of a specific sectoral chapter covering the product concerned. The Report describes different types of distortions present in the PRC which are cross-cutting and applicable throughout the Chinese economy and affect the prices and/or the raw materials and costs of production of the product concerned. Furthermore, the Report is not the only source of evidence used by the Commission for its determination, as the current section of this Regulation discusses additional recent evidence of distortions concerning the steel sector, including the production of ECCS, the raw materials used to produce ECCS, as well as the ECCS exporting producers covered in this investigation. Therefore, these claims were rejected.

• (71) Third, CISA commented that according to Article 2(6a)(a) of the basic Regulation, the assessment concerning the existence of significant distortions should be done for each exporting producer separately. Therefore, the Commission had the obligation to analyse the situation of each sampled Chinese producer and decide whether any of the factors of costs of production and sales are distorted for each of them. CISA claimed that “country-wide” or “industry-wide” findings should not be allowed and since there was sampling in this case, it was at least necessary to establish distortions for every sampled producer and each factor of production used by them separately.

• (72) The Commission noted that the existence of significant distortions giving rise to the application of Article 2(6a) of the basic Regulation were established on a country-wide level. Nevertheless, as evidenced in this section the Commission also analysed the specific situation of the exporting producers, and found that each of the sampled producers were indeed affected by these significant distortions. Moreover, Article 2(6a) of the basic Regulation provides that domestic costs of each producer can be used if they are established not to be affected by significant distortions, but this was not the case in the present investigation. Therefore this claim was dismissed.

• (73) In reply to the Second Note on factors of production, CISA reiterated the comments it had in reaction to the publication of the first Note on factors of production. Furthermore, it added that the concept of significant distortions should not be predetermined in an investigation. CISA submitted that the Commission should not start the procedure based on Article 2(6a) of the basic Regulation before actually positively determining the existence of significant distortions. Therefore, according to CISA, the Commission should not undertake steps such as sending Article 2(6a) questionnaires, and start looking for normal value data from alternative sources until the existence of significant distortions is positively established. CISA’s claims were also supported in the submission by Baosteel in reply to the Second Note on factors of production.

• (74) The Commission clarified that while the determination on the actual existence of significant distortions and the consequent use of the methodology prescribed by Article 2(6a)(a) only occurs at the time of the provisional and/or definitive disclosure and subsequent adoption of the relevant legal act, Article 2(6a)(e) lays down an obligation to collect the data necessary for the application of this methodology when the investigation has been initiated on this basis. In this case the Commission deemed the evidence submitted by the complainant on the significant distortions amply sufficient to initiate the investigation on this basis. The Notice of Initiation clearly specified this at Point 3 in accordance with this obligation in Article 2(6a)(e) of the basic Regulation. Therefore, the Commission took the steps necessary to enable it to apply the methodology under Article 2(6a) of the basic Regulation in case the existence of significant distortions would be confirmed during the investigation. This procedure includes sending out questionnaires to exporting producers as well as the GOC, as well as searching for possible appropriate representative countries. Furthermore, the second subparagraph of Article 2(6a)(e) imposes a further obligation on the Commission to inform parties promptly after the initiation about the relevant sources it intends to use in this respect. This constitutes the legal basis for the information requested in the questionnaires on the notes on factors of production as detailed above. On the basis of all these elements the Commission dismissed this claim.

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

3.1.4.   Representative country

3.1.4.1.   General remarks

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

• — A level of economic development similar to the PRC. For this purpose, the Commission analysed countries with a gross national income per capita similar to the PRC on the basis of the database of the World Bank ³⁶;

• — Production of the product under investigation in that country;

• — Availability of relevant readily available data in the representative country.

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

• (77) As explained in recitals (39)-(40), the Commission issued two notes for the file on the sources for the determination of the normal value. These notes described the facts and evidence underlying the relevant criteria, and also addressed the comments received by the parties on these elements and on the relevant sources. In the second note on production factors, the Commission informed interested parties of its intention to consider Brazil as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation were confirmed.

3.1.4.2.   A level of economic development similar to the PRC

• (78) In the First Note on production factors, the Commission identified Brazil, Colombia, Mexico, Thailand and Turkey as countries with a similar level of economic development as China according to the World Bank, i.e. they are all classified by the World Bank as ‘upper-middle income’ countries on a gross national income basis where production of the product under investigation was known to take place.

• (79) The comments received on the First Note confirmed Brazil or Turkey as possible appropriate representative countries.

3.1.4.3.   Availability of relevant readily available data in the representative country

• (80) In the First note, for the countries identified as countries where product under investigation was being produced, i.e. Brazil, Colombia, Mexico, Thailand and Turkey, the Commission verified the availability of the data needed, in particular with regard to financial data of producers of the like product.

• (81) The Commission identified two companies that appeared to be producers of the product under investigation and that were profitable in 2020 (a period partially overlapping with the IP): Companhia Siderúrgica Nacional (CSN) from Brazil and Ereğli Demir ve Çelik Fabrikaları (Erdemir) from Turkey. The Commission found that for these two companies there were readily available consolidated financial data at group level for the year 2020.

• (82) In their comments on the First note, interested parties pointed out that, for Companhia Siderúrgica Nacional (CSN), financial data were available not only at group level but also specifically for the “steel making” sector. On the contrary, for the Turkish ECCS producer Ereğli Demir ve Çelik Fabrikaları (Erdemir), financial data at sectorial level could not be found. Accordingly, the Commission considered that the readily available financial data from Brazil constituted the most relevant data concerning SG&A and profit.

• (83) In light of the above considerations, the Commission informed the interested parties with the Second note that it intended to use Brazil as an appropriate representative country and the company CSN, in accordance with Article 2(6a)(a), first indent of the basic Regulation in order to source undistorted prices or benchmarks for the calculation of normal value.

• (84) Interested parties were invited to comment on the appropriateness of Brazil as a representative country and of CSN as a producer in the representative country.

• (85) No comment were received from interested parties refuting the appropriateness of Brazil as a representative country and of CSN as a producer in the representative country

3.1.4.4.   Level of social and environmental protection

• (86) Having established that Brazil was an appropriate representative country, based on all of the above elements, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of Article 2(6a)(a) first indent of the basic Regulation.

3.1.4.5.   Conclusion

• (87) In view of the above analysis, Brazil met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country.

3.1.5.   Sources used to establish undistorted costs

• (88) In the First Note, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under investigation by the exporting producers and invited the interested parties to comment and propose readily available information on undistorted values for each of the factors of production mentioned in that note.

• (89) Subsequently, in the Second Note, the Commission informed interested parties that it would use the Global Trade Atlas (‘GTA’) to establish the undistorted cost for most of the factors of production. However, for hot rolled steel and cold rolled steel, China was at the origin of more than 90 % of imports of these products into Brazil. The Commission looked into the matter and noted that the quantities of these products imported from other third countries into Brazil were small and would not be sufficiently representative. Therefore the Commission looked at another possible benchmark for the price of these raw materials in Brazil and provisionally used the Metal Bulletin’s Brazilian domestic steel price assessments (Fastmarkets' prices).

• (90) In addition, the Commission stated that it would use the International Labour Organization (‘ILO’) statistics for establishing undistorted costs of labour ³⁷, the prices of the company EDP Brasil, one of the largest electricity suppliers in Brazil, for establishing undistorted costs of electricity ³⁸, the prices of natural gas as charged by the biggest gas distributor in Brazil, the company Comgas, for establishing undistorted costs of gas ³⁹, the prices of the company Sabesp, responsible for water supply, sewage collection and treatment in the State of Sao Paulo, for establishing undistorted costs of water ⁴⁰.

• (91) Following the Second note, CISA claimed that the Brazil domestic prices of flat steel products should not be used as a benchmark price as they were significantly higher than prices in other markets such as Europe, India or Turkey. Instead, the Commission should use either the GTA import prices or an international benchmark as reported in SSB / S&P Platts.

• (92) The Commission reiterated that – as mentioned in the Second note on production factors (see recital (89)) - GTA import prices could not be used. The Commission also noted that the Metal Bulletin’s prices used were similar to the SBB / S&P Platts data (variation of less than 5 %). In view of this, the Commission decided to reject the claim of CISA and to confirm the use of the Brazilian domestic steel prices as reported in Metal Bulletin.

3.1.6.   Undistorted costs and benchmarks

3.1.6.1.   Factors of production

• (93) Considering all the information available to the Commission the following factors of production and their sources were been identified in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:

Table 2

Factors of production of ECCS

Factor of Production (‘FOP’)	Common Mercosur Nomenclature (NCM)	Undistorted value in Chinese yuan (‘CNY’)	Unit of measurement	Source of information
Iron Ore Powder For Sintering	260111	1,112	kg	GTA
Chromium Oxide	281910	18,319	kg	GTA
Hot-Rolled Steel	720827	5,774	kg	Metal Bulletin
Iron ore pellets	26011210	1,209	kg	GTA
Gas Coal	270112	1,230	kg	Metal Bulletin
Steel Scrap/By-Co-products	720449	2,392	kg	GTA
Pulverized Coal	270111	0,706	kg	GTA
Ferro-molybdenum	720270	113,684	kg	GTA
Manganese	81110010 , 81110020 , 81110090	13,210	kg	GTA
Coke	27040011 , 27040012	2,027	kg	GTA
Coking Coal	270112	1,230	kg	Metal bulletin
Iron Ore Powder	260111	1,112	kg	GTA
Gas-Fat Coal	270112	1,230	kg	Metal bulletin
Fat Coal	270112	1,230	kg	Metal Bulletin
Steam Coal	270111	0,706	kg	GTA
Mixed Steel Scrap	720449	2,392	kg	GTA
Heavy Steel Scrap	720449	2,392	kg	GTA
Quicklime	252210	0,850	kg	GTA
Continuous Casting Slab	720719	3,126	kg	GTA
Cold-Rolled Continuous Annealed Coils	720918	6,597	kg	Metal Bulletin
Hot Pressed Iron Block	732690 , 73269010 , 73269090	94,693	kg	GTA
Minus Sieve	27040011 , 27040012 , 27040090	2,030	kg	GTA
Iron ore pellets	26011210	1,209	kg	GTA
Lump Ore	260111	1,112	kg	GTA
Iron Ore Powder	260111	1,112	kg	GTA
High Purity Slag Iron	261900	0,747	kg	GTA
Silicon Steel Scrap	720449	2,392	kg	GTA
Corner Scrap Packing Block	720449	2,392	kg	GTA
Leftovers	720449	2,392	kg	GTA
Aluminium Extrusion	760429	51,287	kg	GTA
Recycled Iron Powder	260111	0,961	kg	GTA
Recycled Mill Scale	261900	0,750	kg	GTA
Recycled Water Granulated Slag	261800	0,785	kg	GTA
Recycled High-Purity Iron Slag	261900	0,750	kg	GTA
Recycled Heavy Steel Scrap	720449	2,392	kg	GTA
Recycled Mixed Steel Scrap	720449	2,392	kg	GTA
Gas		2,257	m3	Boletim Mensal de Acompanhamento da Industria de Gas Natural (Brazil)
Electricity		5,034	kWh	EDP Brasil
Labour		51 600 27,112	year hour	ILO statistics

3.1.6.2.   Raw materials

• (94) In order to establish the undistorted price of raw materials as delivered at the gate of a representative country producer, the Commission used as a basis the weighted average import price to the representative country as reported in the GTA to which import duties and transport costs were added. An import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding the PRC and countries which are not members of the WTO, listed in Annex I of Regulation (EU) 2015/755 of the European Parliament and the Council. ⁴¹ The Commission decided to exclude imports from the PRC into the representative country as it concluded that it is not appropriate to use domestic prices and costs in the PRC due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. Given that there is no evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected export prices. After excluding the imports into the representative country from China and non-market economy countries, the Commission found that imports of the main raw materials from other third countries remained representative.

• (95) The Commission deviated from the above described methodology for a limited number of raw materials.

• (96) For iron ore, the Commission relied on the GTA export prices from Brazil. The Commission noted that GTA import prices of iron ore were significantly below prices generally observed for iron ore used for steelmaking. For this reason, the Commission analysed these prices against export prices also found in GTA for Brazil (which is one of the largest producers of iron ore in the world). This analysis confirmed that import prices were not in line with the ones observed for exports, suggesting they were abnormally low to be representative of prices in Brazil. The Commission also compared those import prices to prices paid by the sampled exporting producers as well as to the prices reported in Metal Bulletin, which led to the same conclusion. Therefore, the Commission found that import prices into Brazil of iron ore could not be considered as a representative benchmark.

• (97) For several coal products reported by the exporting producer in China (gas coal, coking coal, gas fat coal, fat coal) the Commission considered that, similarly to its findings in Commission Implementing Regulation (EU) 2022/58 ⁴², import prices into Brazil as reported by GTA were not representative. Indeed, these import prices were out of the range of the prices observed for such products in commodity price reports such as the ones of Bloomberg or Metal Bulletin and the prices paid by the exporting producer in China. The Commission considered that the price of the premium hard coking coal as reported by Metal Bulletin was an appropriate benchmark price. It correspond to the type of metallurgical coal, which is used for iron and steel production. This benchmark was used in previous investigations related to steel products, such as the one mentioned above.

• (98) For a large number of factors of production the actual costs incurred by the cooperating exporting producers represented individually a negligible share of the cost of manufacturing of the product under investigation in the investigation period. The Commission therefore decided at provisional stage to consider those factors, which aggregated accounted for less than 4 % of the cost of manufacturing, as consumables.

• (99) Self-produced factors of production that only had a negligible weight in the total cost of production of the exporting producers as well as on a product type level, were grouped under consumables. The Commission calculated the percentage of the consumables on the total cost of raw materials and applied this percentage to the recalculated cost of raw materials when using the established undistorted prices.

3.1.6.3.   Labour

• (100) The ILO publishes detailed information on wages in different economic sectors in Brazil ⁴³. The Commission used the ILO statistics on monthly wages of employees in the manufacturing sector and average weekly hours worked in Brazil for 2020. Additional labour related costs ⁴⁴ (social security and unemployment contributions born by the employer) were added. On this basis, an hourly rate was calculated.

3.1.6.4.   Electricity

• (101) The price of electricity for companies (industrial users) in Brazil is published by EDP Brasil for 2020 and 2021. The Commission used the data on the industrial electricity prices in the corresponding consumption band in CNY/kWh as published on July 2020 until June 2021.

3.1.6.5.   Natural gas

• (102) To establish the benchmark for gas costs the Commission used the statistics from the Brazilian Ministry of energy. The prices used are the average gas unit price for industrial users, provided by the monthly bulletin from the Ministry of energy. Those bulletins indicated the historical data from 2018 until April 2021. The Commission used the average for the period July 2020 to April 2021.

3.1.6.6.   Manufacturing overhead costs, SG&A, profits and depreciation

• (103) A value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above. The manufacturing overheads incurred by the cooperating exporting producers were expressed as a share of the costs of manufacturing actually incurred by the exporting producers. This percentage was applied to the undistorted costs of manufacturing.

• (104) According to Article 2(6a)(a) of the basic Regulation, “the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits”. For establishing an undistorted and reasonable amount for SG&A and profit, the Commission relied on the financial data for 2020 for CSN contained in the CSN 2020 Integrated Report ⁴⁵.

3.1.6.7.   Calculation

• (105) On the basis of the above, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

• (106) First, the Commission established the undistorted manufacturing costs. The Commission applied the undistorted unit costs to the actual consumption of the individual factors of production of the cooperating exporting producer. These consumption rates were verified through desk work and remote cross-checkings. The Commission multiplied the usage factors by the undistorted costs per unit observed in the representative country (Table 2 above).

• (107) Then the Commission added manufacturing overheads, as explained in recital (103) which accounted in total for less than 10 % of the costs of manufacturing to the undistorted cost of manufacturing in order to arrive at the undistorted costs of production.

• (108) To the costs of production established as described in the previous recital, the Commission applied SG&A and profit of CSN as noted in recital (104). SG&A expressed as a percentage of the Costs of Goods Sold (‘COGS’) and applied to the undistorted costs of production, amounted to 6,51 %. The profit expressed as a percentage of the COGS and applied to the undistorted costs of production, amounted to 10,65 %.

• (109) On that basis, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

3.1.6.8.   Export price

• (110) One sampled cooperating exporting producer, Jintai, exported the product under investigation directly to independent customers in the Union. For these sales, the export price was the price actually paid or payable for the product under investigation when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

• (111) The other sampled cooperating exporting producer, Baosteel, exported the product under investigation via related companies in the Union acting as importers and sales subsidiaries. For these sales, the export price was constructed based on the price at which the imported product was first resold to independent customers in the Union in accordance with Article 2(9) of the basic Regulation. The adjustments made related to all costs incurred between importation and resale, including SG&A expenses, and for profits accruing.

3.1.6.9.   Comparison

• (112) The Commission compared the normal value and the export price of the cooperating exporting producer on an ex-works basis.

• (113) Where justified by the need to ensure a fair comparison, the Commission adjusted the normal value and/or the export price for differences affecting prices and price comparability, in accordance with Article 2(10) of the basic Regulation. Adjustments were made for transport, insurance, handling and loading, credits costs, and other allowances (export credit insurance).

3.1.6.10.   Dumping margins

• (114) For the sampled cooperating exporting producers, the Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product under investigation, in accordance with Article 2(11) and (12) of the basic Regulation.

• (115) On this basis, the provisional weighted average dumping margins expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:

Company	Provisional dumping margin
Baoshan Iron & Steel Co., Ltd.	43,3 %
Handan Jintai Packing Material Co., Ltd	53,9 %

• (116) For the cooperating companies outside the sample, the Commission calculated the weighted average of the dumping margins of the two sampled exporting producers. For all other exporting producers in China, the Commission established the dumping margin on the basis of the facts available, in accordance with Article 18 of the basic Regulation. To this end, the Commission determined the level of cooperation of the exporting producers. The level of cooperation is the volume of exports of the cooperating exporting producers to the Union expressed as proportion of the total imports from the country concerned to the Union in the IP, that were established on the basis of Comext trade data and the verified questionnaire replies of the cooperating exporting producers.

• (117) The level of cooperation in this case is low because the imports of the cooperating exporting producers constituted only around half of the total exports to the Union during the IP. On this basis, the Commission decided that it was appropriate to establish the residual dumping margin at the level of the highest dumping margin found for product types sold in representative quantities by the sampled cooperating exporting producer with the highest dumping margin.

• (118) The provisional dumping margins, expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:

Company	Provisional dumping margin
Baoshan Iron & Steel Co., Ltd.	43,3 %
Handan Jintai Packing Material Co., Ltd	53,9 %
Other cooperating companies	45,1 %
All other companies	77,9 %

3.2.   Brazil

3.2.1.   Normal Value

• (119) The Commission first examined whether CSN’s total volume of domestic sales was representative, in accordance with Article 2(2) of the basic Regulation. The domestic sales are representative if the total domestic sales volume of the like product to independent customers in the domestic market represented at least 5 % of its total export sales volume of the product under investigation during the investigation period. On this basis, CSN’s total sales in the domestic market were representative.

• (120) The Commission subsequently identified the product types sold domestically that were identical or comparable with the product types sold for export to the Union with representative domestic sales.