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

• (121) The Commission then examined whether CSN’s domestic sales in its domestic market for each product type that is identical or comparable with a product type sold for export to the Union were representative, in accordance with Article 2(2) of the basic Regulation. The domestic sales of a product type are representative if the total volume of domestic sales of that product type to independent customers during the investigation period represents at least 5 % of the total volume of export sales of the identical or comparable product type to the Union. The Commission established that for a small number of product types that were exported to the Union during the investigation period, there were either no domestic sales at all, or the domestic sales of that product type were below 5 % in volume and thus not representative.

• (122) The Commission next defined the proportion of profitable sales to independent customers on the domestic market for each product type during the investigation period in order to decide whether to use actual domestic sales for the calculation of the normal value, in accordance with Article 2(4) of the basic Regulation.

• (123) The normal value is based on the actual domestic price per product type, irrespective of whether those sales are profitable or not, if:

• (a) the sales volume of the product type, sold at a net sales price equal to or above the calculated cost of production, represented more than 80 % of the total sales volume of this product type; and

• (b) the weighted average sales price of that product type is equal to or higher than the unit cost of production.

• (124) In this case, the normal value is the weighted average of the prices of all domestic sales of that product type during the investigation period.

• (125) The normal value is the actual domestic price per product type of only the profitable domestic sales of the product types during the investigation period, if:

• (a) the volume of profitable sales of the product type represents 80 % or less of the total sales volume of this type: or

• (b) the weighted average price of this product type is below the unit cost of production.

• (126) The analysis of domestic sales showed that 91 % of all domestic sales were profitable and that the weighted average sales price was higher than the cost of production.

• (127) For the product types not sold in representative quantities on the domestic market, the average SG&A expenses and profit of transactions made in the ordinary course of trade on the domestic market for those types were added to the cost of manufacturing. For the product types not sold at all on the domestic market, the weighted average SG&A expenses and profit of all transactions made in the ordinary course of trade on the domestic market were added to the cost of manufacturing.

3.2.2.   Export price

• (128) The cooperating exporting producer exported the product under investigation to the Union directly to independent customers. The export price was thus 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.

3.2.3.   Comparison

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

• (130) 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, packing expenses, credits costs and bank charges, rebates and other allowances.

3.2.4.   Dumping margin

• (131) For the cooperating exporting producer, 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.

• (132) The level of cooperation in this case is high because the exports of the cooperating exporting producer constituted almost 100 % of the total imports during the investigation period. On this basis, the Commission considered it appropriate to establish the dumping margin for non-cooperating exporting producers at the level of the cooperating company.

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

Company	Provisional dumping margin
Companhia Siderúrgica Nacional	66,8 %
All other companies	66,8 %

4. INJURY

4.1.   Definition of the Union industry and Union production

• (134) The like product was manufactured by four producers in the Union during the investigation period. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

• (135) As explained in recital (31) above, as data relating to the injury assessment was primarily derived from the three sampled Union producers, two of which belong to the same group, all figures are given in an indexed form or as ranges to protect the confidentiality of the data provided.

• (136) The total Union production during the investigation period was established at [439 000-513 000] tonnes. The Commission established the figure on the basis of all the available information concerning the Union industry, such as the reply to the macro-economic questionnaire. As indicated in recital (12), the three cooperating Union producers represented [85-95] % of the total Union production of the like product.

4.2.   Union consumption

• (137) The Commission established the Union consumption on the basis of the volume of the total Union industry’s sales in the Union, plus imports from third countries to the Union. The Commission established the total Union industry's sales on the basis of the data collected from the sampled Union producers and the information provided by Eurofer for the non-sampled producer. Import volumes were extracted from Eurostat data.

• (138) Union consumption developed as follows:

Table 3

Union consumption (in tonnes)

	2018	2019	2020	Investigation period
Total Union consumption	[522 000 -611 000 ]	[508 000 -595 000 ]	[506 000 -593 000 ]	[505 000 -591 000 ]
Index	100	97	97	97
Source: Eurostat, Eurofer and verified questionnaire replies	Source: Eurostat, Eurofer and verified questionnaire replies	Source: Eurostat, Eurofer and verified questionnaire replies	Source: Eurostat, Eurofer and verified questionnaire replies	Source: Eurostat, Eurofer and verified questionnaire replies

• (139) The Union consumption decreased by 3 % between 2018 and 2019 and thereafter remained stable until the end of the IP. The demand in the Union market fluctuated marginally during the period considered and could be considered as overall stable.

4.3.   Imports from the countries concerned

4.3.1.   Cumulative assessment of the effects of imports from the countries concerned

• (140) The Commission examined whether imports of ECCS originating in the countries concerned should be assessed cumulatively in accordance with Article 3(4) of the basic Regulation.

• (141) The margin of dumping established in relation to the imports from the PRC and Brazil was above the de minimis threshold laid down in Article 9(3) of the basic Regulation. The volume of imports from each of the countries concerned was not negligible within the meaning of Article 5(7) of the basic Regulation. Market shares in the investigation period were [12-13] % and [2-3] %, respectively.

• (142) The conditions of competition between the dumped imports from the PRC and Brazil and between the dumped imports from the countries concerned and the like product were similar. More specifically, the imported products competed with each other and with ECCS produced in the Union because they were sold through the same sales channels and to similar categories of customers.

• (143) Therefore, all the criteria set out in Article 3(4) of the basic Regulation were met and imports from the PRC and Brazil were examined cumulatively for the purposes of the injury determination.

4.3.2.   Volume and market share of the imports from the countries concerned

• (144) The Commission established the volume of imports on the basis of Eurostat data. The market share of the imports was established on the basis of share these imports represented of the total Union consumption.

• (145) Imports from the countries concerned developed as follows:

Table 4

Import volume (in tonnes) and market share (in %)

	2018	2019	2020	Investigation period
Volume of imports from the PRC	[56 000 -66 000 ]	[66 000 -77 000 ]	[80 000 -94 000 ]	[64 000 -75 000 ]
Index	100	118	143	114
Volume of imports from Brazil	[12 000 -14 000 ]	[3 000 -4 600 ]	[8 000 -10 000 ]	[14 000 -16 000 ]
Index	100	32	70	113
Volume of imports from countries concerned	[68 000 -80 000 ]	[69 000 -82 000 ]	[88 000 -104 000 ]	[78 000 -91 000 ]
Index	100	102	129	113
Market share the PRC (%)	[10 -11 ]	[12,5 -13,5 ]	[15 -16 ]	[12 -13 ]
Index	100	121	147	117
Market share Brazil (%)	[2 -3 ]	[0,5 -1,5 ]	[1 -2 ]	[2 -3 ]
Index	100	33	72	117
Market share countries concerned (%)	[12 -14 ]	[13 -15 ]	[16 -18 ]	[14 -16 ]
Index	100	105	133	117
Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat

• (146) The volume of imports from the countries concerned increased between 2018 and the IP by 13 % and their market share increased by 17 % in the same period. The volume of imports was constantly increasing until 2020 and then it decreased in the IP mainly due to the transport and logistic issues related to imports from China in the second half of the IP. In any event, the volume of imports from the countries concerned in the IP was higher compared to both 2018 and 2019.

4.3.3.   Prices of the imports from the countries concerned and price undercutting

• (147) The Commission established the prices of imports on the basis of Eurostat data. Price undercutting of the imports was established on the basis of data from the cooperating exporting producers and the cooperating Union producers.

• (148) The weighted average price of imports from the countries concerned developed as follows:

Table 5

Import prices (EUR/tonne)

	2018	2019	2020	Investigation period
Import price the PRC	771	761	701	721
Index	100	99	91	93
Import price Brazil	701	654	619	690
Index	100	93	88	98
Import price countries concerned	759	755	693	715
Index	100	99	91	94
Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat

• (149) The average import price of the imports from the countries concerned decreased by 6 % during the period considered although the price of the main raw materials (iron ore and hot-rolled strips) increased in the same period. Import prices were lower than the Union industry’s prices as reflected in Table 9.

• (150) The Commission determined the price undercutting during the investigation period by comparing:

• (1) 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

• (2) the corresponding weighted average prices per product type of the imports from the sampled cooperating PRC producers and the cooperating Brazilian producer to the first independent customer in the Union market, established on a cost, insurance, freight (CIF) basis, with appropriate adjustments for customs duties and post-importation costs.

• (151) 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. It showed a weighted average undercutting margin of between 1,9 % and 13,7 % for China and 21,8 % for Brazil.

• (152) The user Eviosys claimed that prices of the product concerned from the PRC were not directly comparable with the ones of the Union industry due to quality issues. However, this claim was not supported with evidence. Therefore, this claim was provisionally rejected.

4.4.   Economic situation of the Union industry

4.4.1.   General remarks

• (153) 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.

• (154) As mentioned in recital (12), sampling was used for the determination of possible injury suffered by the Union industry.

• (155) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data contained in the reply to the macroeconomic questionnaire. The data related to all Union producers. 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.

• (156) 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.

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

4.4.2.   Macroeconomic indicators

4.4.2.1.   Production, production capacity and capacity utilisation

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

Table 6

Production, production capacity and capacity utilisation

	2018	2019	2020	Investigation period
Production volume (tonnes)	[480 000 -562 000 ]	[464 000 -544 000 ]	[428 000 -501 000 ]	[439 000 -513 000 ]
Index	100	97	89	91
Production capacity (tonnes)	[581 000 -680 000 ]	[581 000 -680 000 ]	[581 000 -680 000 ]	[581 000 -680 000 ]
Index	100	100	100	100
Capacity utilisation (%)	[82 -89 ]	[80 -86 ]	[73 -79 ]	[75 -81 ]
Index	100	97	89	91
Source: Eurofer and sampled Union producers	Source: Eurofer and sampled Union producers	Source: Eurofer and sampled Union producers	Source: Eurofer and sampled Union producers	Source: Eurofer and sampled Union producers

• (159) The production volume of Union industry decreased during the period considered.

• (160) While the production capacity of Union industry remained stable during the period considered, the capacity utilisation followed the same negative trend as production and decreased by 9 % between 2018 and the IP.

4.4.2.2.   Sales volume and market share

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

Table 7

Sales volume and market share

	2018	2019	2020	Investigation period
Sales volume on the Union market (tonnes)	[336 000 -394 000 ]	[336 000 -394 000 ]	[317 000 -371 000 ]	[337 000 -394 000 ]
Index	100	100	94	100
Market share (%)	[61 -66 ]	[63 -68 ]	[60 -64 ]	[64 -68 ]
Index	100	103	97	104
Source: Eurofer and sampled Union producers	Source: Eurofer and sampled Union producers	Source: Eurofer and sampled Union producers	Source: Eurofer and sampled Union producers	Source: Eurofer and sampled Union producers

• (162) The sales volume of the Union industry on the Union market remained overall stable during the period considered, with a decline by 6 % observed in 2020. The market share of Union industry slightly increased during that period by 4 %.

4.4.2.3.   Employment and productivity

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

Table 8

Employment and productivity

	2018	2019	2020	Investigation period
Number of employees	[680 -790 ]	[820 -960 ]	[840 -980 ]	[770 -900 ]
Index	100	122	124	113
Productivity (tonnes/employee)	[658 -770 ]	[523 -612 ]	[473 -553 ]	[530 -621 ]
Index	100	79	72	81
Source: Eurofer and sampled Union producers	Source: Eurofer and sampled Union producers	Source: Eurofer and sampled Union producers	Source: Eurofer and sampled Union producers	Source: Eurofer and sampled Union producers

• (164) While the number of employees increased by 13 % between 2018 and the IP, productivity decreased by 19 %. The decline in productivity is mainly due to the decrease of the production volume over the period considered. A declining productivity points to an increased labour cost per tonne of ECCS produced.

4.4.2.4.   Growth

• (165) As explained in Sections 4.4.2.1 to 4.4.2.3 above, the production volume and the capacity utilisation of the Union industry decreased by 9 % during the period considered, which resulted in higher fixed costs per unit of production and in lower productivity. This decrease exceeded the decrease of the Union consumption, as mentioned in recital (139).

• (166) Even though the sales volume on the Union market remained stable and the market share increased by 4 % between 2018 and the IP, the Union industry experienced a deterioration of its financial performance. As explained in Section 4.4.3 below, it faced higher cost of production while being unable to adjust its sales prices accordingly.

• (167) Therefore, the growth perspectives of the Union industry have been jeopardised.

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

• (168) All dumping margins were 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 countries concerned.

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

4.4.3.   Microeconomic indicators

4.4.3.1.   Prices and factors affecting prices

• (170) 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 9

Sales prices in the Union (EUR/tonne)

	2018	2019	2020	Investigation period
Average unit sales price in the Union on the total market	[780 -910 ]	[800 -930 ]	[760 -890 ]	[780 -910 ]
Index	100	102	97	100
Unit cost of production	[770 -900 ]	[810 -950 ]	[810 -940 ]	[840 -980 ]
Index	100	106	105	109
Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers

• (171) The average Union industry’s sales prices remained overall stable during the period considered although the average cost of production increased by 9 % between 2018 and the IP. Union industry was not able to increase sales prices to cover the increased cost of production.

• (172) The sales of the Union industry of the like product in the Union market were based on yearly contracts with customers that fixed the quantities and prices for the following year. While the Union industry has a minimal margin to increase sales prices in the context of increasing raw material prices during the application of the yearly contract, in principle it should be able to increase its sales prices when it negotiates the contracts for the following year. However, the Union industry did not manage to do so during the period considered because of price pressure by imports. This led to a decrease of the profitability of Union industry, as explained in Section 4.4.3.4 below.

4.4.3.2.   Labour costs

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

Table 10

Average labour costs per employee (EUR)

	2018	2019	2020	Investigation period
Average labour costs per employee	[71 000 -83 000 ]	[72 000 -85 000 ]	[68 000 -80 000 ]	[71 000 -83 000 ]
Index	100	102	96	100
Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers

• (174) The average labour cost per employee of the Union industry remained overall stable during the period considered with a small increase in 2019 and a decrease of 4 % in 2020, mainly because of production shutdowns due to the COVID-19 pandemic. In the IP, the average labour cost went back to its level of 2018.

4.4.3.3.   Inventories

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

Table 11

Inventories

	2018	2019	2020	Investigation period
Closing stocks (tonnes)	[37 900 -44 400 ]	[41 800 -48 900 ]	[22 700 -26 600 ]	[33 700 -39 500 ]
Index	100	110	60	89
Closing stocks as a percentage of production (%)	[7 -9 ]	[9 -11 ]	[5 -7 ]	[7 -9 ]
Index	100	115	68	98
Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers

• (176) The inventories first increased by 10 % in 2019 before drastically falling down in 2020. Overall, they decreased by 11 % between 2018 and the IP. As explained in recital (172), the ECCS industry in the Union is characterised by yearly framework contracts between producers and customers that fix the quantities and prices. These framework contracts are implemented through purchasing orders according to customer’s needs. As a result, the Union industry can plan its production and inventories. Therefore, inventories are not a main indicator for the assessment of the Union industry’s performance.

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

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

Table 12

Profitability, cash flow, investments and return on investments

	2018	2019	2020	Investigation period
Profitability of sales in the Union to unrelated customers (% of sales turnover)	[1 -3 ]	[(-1 )-(-3 )]	[(-7 )-(-9 )]	[(-8 )-(-10 )]
Index	100	- 137	- 414	- 505
Cash flow (EUR)	[10 000 000 - 11 700 000 ]	[1 000 000 - 2 000 000 ]	[(-5 400 000 ) - (-6 300 000 )]	[(-9 500 000 ) - (-11 150 000 )]
Index	100	9	-54	-95
Investments (EUR)	[16 820 000 - 19 690 000 ]	[22 750 000 - 26 630 000 ]	[28 400 000 - 33 250 000 ]	[30 000 000 - 35 130 000 ]
Index	100	135	169	178
Return on investments (%)	[1 -2 ]	[(-1 )-(-2 )]	[(-3 )-(-4 )]	[(-4 )-(-5 )]
Index	100	- 137	- 373	- 461
Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers	Source: sampled Union producers

• (178) 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.

• (179) The profitability of the Union industry decreased and turned to losses as from 2019, which further increased in the IP. Indeed, although the Union industry maintained its production volumes in order to cover the high fixed costs, it was not able to increase sales prices to cover the increased cost of production and therefore became loss making.

• (180) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow developed downwards with a decrease of approx. 200 % over the period considered and was negative in the IP. Therefore, the Union industry experienced difficulties to self-finance its activities, which is a further indication of its deteriorated financial situation.

• (181) The return on investments is the profit in percentage of the net book value of investments. It followed a similar negative trend as profitability and net cash flow. The return on investment decreased significantly between 2018 and the IP and turned negative in the IP. Therefore, the Union industry was not able to generate enough profits in order to cover its investments. Indeed, the Union industry progressively increased its investments during the period considered, mostly due to the necessity to comply with legal requirements and it was not able to have a return on these investments. The negative development of the return on investment during the period considered further indicated that the overall financial situation of the Union industry worsened to a significant extent.

• (182) The sampled Union producers’ ability to raise capital was affected by their deteriorated financial situation. The considerable decrease of the profitability and the net cash flow pointed to serious concerns as regards the liquidity situation of Union industry and its ability to raise capital to finance its operating activity and needed investments.

4.4.4.   Conclusion on injury

• (183) Economic indicators at both macro and micro level deteriorated during the period considered.

• (184) While the Union industry’s production capacity remained stable, the capacity utilisation decreased by 9 % between 2018 and the IP, which resulted in higher fixed cost per tonne of ECCS. Although the Union industry sales volume remained overall stable and it gained some market share in the period considered, mainly due to the decrease of imports from other third countries (by 21 % in terms of market share), its production volume decreased by 9 % in the same period.

• (185) Despite the fact that the Union industry maintained overall its market position during the period considered, its financial situation deteriorated mainly due to the increased cost of production, which could not be covered by a corresponding increase of its sales prices.

• (186) The average Union industry’s sales prices remained stable during the period considered although the average cost of production increased by 9 % in the same period. The significant price suppression exercised by the dumped imports led to losses as from 2019, which further increased in the IP. The profitability of the Union industry turned negative from [1-3] % in 2018 to [(-8)-(-10)] % in the IP, which means that it decreased by a factor of six. While net investments increased by 78 %, the return on investment became negative during the period considered, from [1-2] % in 2018 to [(-4)-(-5)] % in the IP, which means that it decreased five times. The cash flow also became negative, which affected the ability of the Union industry to self-finance its operations. The number of employees increased during the same period by 13 %; however the productivity decreased by 19 %, resulting in a higher labour cost per tonne of ECCS.

• (187) As set out above, economic indicators such as profitability, cash flow and return on investment deteriorated significantly during the period considered. This negatively affected the ability of the Union industry to self-finance operations, to make necessary investments and to raise capital, thus impeding its growth and even threatening its survival.

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

5. CAUSATION

• (189) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the countries 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 countries concerned was not attributed to the dumped imports. These factors are: imports from other third countries, the COVID-19 pandemic, the evolution of the cost of production, the export performance of the Union industry and effect of yearly contracts.

5.1.   Effects of the dumped imports

5.1.1.   Volume and market share of the dumped imports from the countries concerned

• (190) The Commission examined the evolution of the volume of imports from the countries concerned and their impact on the Union industry as required by Article 3(2) of the basic Regulation.

• (191) The import quantity from the countries concerned continued to increase during the period considered although a decrease in the investigation period was observed, mainly due to the disruption of international transport and therefore, supply of ECCS in 2021. The cumulated import volumes from the countries concerned increased from [68 000-80 000] tonnes in 2018 to [78 000-91 000] tonnes in the investigation period, which represented an increase of 13,5 %.

• (192) The market share of imports from the countries concerned increased from 13,1 % in 2018 to 15,4 % in the IP, i.e. an increase of 17,5 %. Consequently, there has been a significant increase in dumped imports within the meaning of Article 3(3) of the basic Regulation.

5.1.2.   Price of the dumped imports from the countries concerned and price effects

• (193) The average import price of the imports from the countries concerned decreased by 6 % during the period considered although the price of the main raw material (iron ore or hot-rolled strips) increased in the same period. The average import prices were significantly below the average sales prices of the Union industry in the Union market (EUR/tonne 715 v EUR/tonne 780-910 in the IP). As explained in recital (151) above, the imports from the countries concerned undercut the Union industry’s prices by 1,9 % – 13,7 % for China and 21,8 % for Brazil. Regardless of the price undercutting, the significant import volumes at low prices depressed the Union industry’s prices, which could not cover the costs of production, thereyby incurring losses.

5.1.3.   Causal link between the dumped imports from the countries concerned and the material injury of the Union industry

• (194) The increased quantity of imports from the countries concerned combined with their low average sales prices had a negative impact on the Union industry’s financial situation. The Union industry was not able to increase their sales prices in order to pass on to customers the increasing cost of raw materials because it faced unfair competition from imports of the product concerned. The Union industry’s strategy was to maintain production volumes and market share to cover the high fixed costs to the detriment of its profitability. Therefore, the low priced imports from the countries concerned prevented price increases by the Union industry within the meaning of Article 3(3) of the basic Regulation and thus caused price suppression.

• (195) The user Eviosys claimed that imports exert very limited, if any, competitive pressure on the Union industry by referring to a merger Commission decision ⁴⁶. Based on the same decision, the user and CISA argued that imports, in particular from China, were used mostly for low-end applications because of their lower quality, and that Union customers preferred to source their products locally because imports had longer lead times, higher transport cost, as well as lower quality levels and longer lead times.

• (196) The Commission’s decisions in merger cases have different objectives and are based on a different types of assessments. In any event, the decision referred to by the user had a much wider product scope than ECCS and encompassed a number of other steel products, some of them already subject to anti-dumping duties. In addition, in the parts of the merger decision referred to by the user, the Commission made a joint market analysis of tinplate and ECCS. Furthermore, the analysis of imports made in this decision concerned a period prior to the period considered. Finally, the claim regarding longer lead times, lower quality levels and higher transport cost was not supported by evidence. Consequently, the Commission provisionally rejected the claim.

• (197) In view of the above considerations, the Commission provisionally established the material injury suffered by the Union industry was caused by the dumped imports from the countries concerned within the meaning of Article 3(6) of the basic Regulation.

5.2.   Effects of other factors

5.2.1.   Imports from third countries

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

Table 13

Imports from third countries

Country		2018	2019	2020	Investigation period
United. Kingdom	Volume (in tonnes)	[67 000 -78 000 ]	[68 000 -78 000 ]	[73 000 -80 000 ]	[60 000 -85 000 ]
	Index	100	102	109	91
	Market share (%)	[11 -14 ]	[12 -15 ]	[13 -16 ]	[11 -14 ]
	Index	100	105	112	94
	Average price (EUR/tonne)	850	854	837	839
	Index	100	100	98	98
Japan	Volume (in tonnes)	[8 900 -10 500 ]	[11 800 -13 900 ]	[14 400 -17 000 ]	[13 400 -15 800 ]
	Index	100	132	161	150
	Market share (%)	[1 -2 ]	[2 -3 ]	[2,5 -3,5 ]	[2 -3 ]
	Index	100	135	166	155
	Average price (EUR/tonne)	850	848	777	776
	Index	100	100	91	91
South Korea	Volume (in tonnes)	[11 600 -13 600 ]	[4 300 -5 100 ]	[3 900 -4 500 ]	[4 700 -5 500 ]
	Index	100	36	33	40
	Market share (%)	[2 -3 ]	[0,5 -1,5 ]	[0,5 -1,5 ]	[0,5 -1,5 ]
	Index	100	38	34	42
	Average price (EUR/tonne)	802	855	771	763
	Index	100	107	96	95
Other third countries	Volume (in tonnes)	[29 000 -34 000 ]	[17 000 -20 000 ]	[8 000 -9 000 ]	[11 000 -13 000 ]
	Index	100	59	29	37
	Market share (%)	[5 -7 ]	[3 -5 ]	[1 -3 ]	[2 -4 ]
	Index	100	60	29	38
	Average price (EUR/tonne)	869	805	732	812
	Index	100	93	84	93
Total of all third countries except the countries concerned	Volume (in tonnes)	[117 000 - 137 000 ]	[101 000 - 119 000 ]	[100 000 - 117 000 ]	[90 000 - 105 000 ]
	Index	100	87	85	77
	Market share (%)	[21 -24 ]	[18 -21 ]	[18 -21 ]	[16 -19 ]
	Index	100	89	88	79
	Average price (EUR/tonne)	850	845	817	822
	Index	100	99	96	97
Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat

• (199) Import volumes from other third countries held a market share of 22,4 % in 2018 and 17,8 % in the IP. The volume of these imports decreased during the period considered by 23 % and their market share followed the same trend with a decrease of 21 %. The average import price of these imports slightly decreased during the period considered by 3 %. However, its price levels remained close to the average sales price of the Union industry (EUR/tonne 822 v EUR/tonne 780-910 in the IP) and were significantly higher than the average import price of imports from the countries concerned (EUR/tonne 822 v EUR/tonne 715 in the IP). The sole country that increased its imports into the Union in the period considered was Japan. However, its imports decreased in the IP compared to 2020 and its price levels remained significantly higher than the prices of imports of the countries concerned.

• (200) CISA claimed that imports from the United Kingdom (‘UK’) break the causal link between the imports from the PRC and the injury found given the quantities imported from that country. However, imports from the UK were at much higher prices than the ones from the PRC or from Brazil and decreased by 6 % during the period considered. Therefore, the Commission provisionally rejected the claim.

• (201) Therefore, the Commission provisionally concluded imports from other third countries have not contributed to the injury suffered by the Union industry.

5.2.2.   The COVID-19 pandemic

• (202) The user Eviosys and CISA claimed that the crisis caused by the COVID-19 pandemic, which resulted in a natural increase in costs combined with a contraction of the demand, has been the cause of the mismatch between the evolution of costs and prices during that period. CISA also claimed that the COVID-19 pandemic should be considered as a “causality-breaking” factor.

• (203) In this respect, indeed, the COVID-19 pandemic had a negative impact on Union industry, especially in 2020 when production sites of the Union industry had to close temporarily. Therefore, it is possible that the COVID-19 pandemic might have contributed to the injury suffered by the Union industry.

• (204) However, the deterioration of the situation of the Union industry had already started before the pandemic and continued after the production of the Union industry resumed in the IP. In fact, the financial situation of the Union industry further deteriorated in the IP. The profitability was [(-7)-(-9)] % in 2020 while in the IP it decreased to [(-8)-(-10)] %. Cash flow and return on investments followed the same trend.

• (205) Therefore, the Commission provisionally concluded that the COVID-19 pandemic was not sufficient to attenuate the causal link between the dumped imports from the countries concerned and the material injury suffered by the Union industry.

5.2.3.   The evolution of the cost of production

• (206) As explained in Section 4.4.3.1 above, while the average cost of production of the Union industry increased by 9 % between 2018 and the IP the average sales price of the Union industry on the Union market remained stable.

• (207) Eviosys and CISA claimed that the increase of raw material cost, as well as of the transport expenses, contributed to the deterioration of the Union industry performance. Eviosys pointed to negative “price-cost effects” that are characteristic for the steel industry due to the time lag between the increase of raw material costs and the increase of sales prices.

• (208) In this respect, as explained in recitals (172) and (194) above, the Union industry was unable to adjust its sales prices during the entire period considered. This pattern was observed during a long period of time and therefore, it could not be explained only by the increase of raw materials cost. This impossibility to adjust sales prices coincides in time with the increase of the imports of the dumped imports from the countries concerned, at significant levels of undercutting, suppressed the Union industry’s sales price and brought the profitability downwards.

• (209) Therefore, the Commission provisionally concluded that the costs evolution by itself could not be a cause of the injury suffered by the Union industry.

5.2.4.   Export performance of the Union industry

• (210) The volume of exports of the sampled Union producers developed over the period considered as follows:

Table 14

Export performance of the sampled Union producers

	2018	2019	2020	Investigation period
Export volume (tonnes)	[105 000 -123 000 ]	[110 000 -128 000 ]	[109 000 -127 000 ]	[98 000 -115 000 ]
Index	100	104	103	93
Average price (EUR/tonne)	[750 -880 ]	[760 -890 ]	[710 -840 ]	[720 -840 ]
Index	100	101	95	94
Source: Eurofer for export volumes and average price from sampled Union producers	Source: Eurofer for export volumes and average price from sampled Union producers	Source: Eurofer for export volumes and average price from sampled Union producers	Source: Eurofer for export volumes and average price from sampled Union producers	Source: Eurofer for export volumes and average price from sampled Union producers

• (211) Export sales to unrelated customers represented 22,5 % of the total Union industry production the IP. During the period considered, the export volumes fluctuated – they first increased between 2018 and 2019 by 4 % and then decreased in 2020 and again in the IP. Overall, export sales decreased in the period considered by 7 %.

• (212) According to the Union industry, export sales represent the volumes that could not have been sold on the Union market. Indeed, as mentioned above in recital (194), the Union industry needs to keep production volumes and capacity utilisation high and stable to cover the high fixed costs.

• (213) In the IP, the Union industry sold more than 75 % of its production in the Union market. Therefore, although the decline in export performance could have contributed to the injury suffered by the Union industry, the Commission provisionally concluded that, considering the high share of Union sales compared to export sales, it is not enough to attenuate the causal link between the dumped imports from the countries concerned and the injury suffered by the Union industry.

5.2.5.   Effect of yearly contracts

• (214) Sales of the Union industry of the like product in the Union market were based on yearly contracts with customers that fix the quantities and prices for the following year. The Union industry has a minimal margin to increase sales prices in the context of increasing raw material prices during the application of the yearly contract. In principle, the Union industry should be able to increase its sales prices when it negotiates the contracts for the following year. However, as explained in recital (208), the Union industry was unable to increase its sales prices during the entire period considered. This pattern was observed during a long period of time and, therefore, it could not be explained only by the increase of raw materials cost.

• (215) Therefore, the time lag between the increase of raw materials cost and the increase of the sales prices due to the yearly contracts did not appear to prevent the Union industry from adapting its sales prices to the increasing cost of production over the period considered. As a result, the Commission provisionally concluded that fixing the sales prices in yearly contracts did not attenuate the causal link between the dumped imports and the injury found.

5.2.6.   Consumption

• (216) Eviosys and CISA claimed that the contraction of the Union ECCS market caused injury to the Union industry.

• (217) As mentioned in recital (139), the Union consumption decreased by [17 000 – 20 000] tonnes, i.e. 3 %, in the period considered. Nevertheless, Union sales figures remained constant. It was thus the price suppression exerted by the low-priced dumped imports rather than a loss of volumes due to falling consumption that was the cause of injury to the Union industry.

• (218) Therefore, the Commission provisionally concluded that the contraction of the market demand by 3 % could not be considered as a cause of injury attenuating the causal link between the dumped imports and the injury found. Consequently, the claims were provisionally rejected.

5.2.7.   Conclusion on causation

• (219) The deterioration of the Union industry’s financial situation coincided in time with increasing volumes of imports of ECCS from the countries concerned, which were made at dumped prices that even decreased during the period considered, as mentioned in Section 5.1 above.

• (220) The Commission distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports. The effect of imports from other third countries, the COVID-19 pandemic, the evolution of the cost of production, the export performance of the Union industry and effect of long-term contracts on the Union industry’s negative developments in terms of production volumes, sales prices and profitability was only limited.

• (221) On the basis of the above, the Commission provisionally concluded that the dumped imports from the countries concerned caused material injury to the Union industry and that the other factors, either individually or collectively, were not sufficient to attenuate the causal link between the dumped imports and the material injury.

6. LEVEL OF MEASURES

• (222) To determine the level of the measures, the Commission examined whether a duty lower than the margin of dumping would be sufficient to remove the injury caused by dumped imports to the Union industry.

• (223) The complainant claimed the existence of raw material distortions within the meaning of Article 7(2a) of the basic Regulation. Thus, in order to carry out an assessment regarding the appropriate level of measures, the Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry in the absence of distortions under Article 7(2a) of the basic Regulation. Then it examined whether the dumping margin of the sampled exporting producer, whose main raw material was found to be subject to the distortion, would be higher than its underselling margin (see Section 6.2 below).

6.1.   Underselling margin calculation

• (224) The Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry in the absence of distortions under Article 7(2a) of the basic Regulation. In this case, the injury would be eliminated if the Union industry was able to cover its costs of production, including those costs resulting from multilateral environmental agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia, and was able to obtain a reasonable profit (‘target profit’).

• (225) In accordance with Article 7(2c) of the basic Regulation, for establishing the target profit, the Commission took into account the following factors: the level of profitability before the increase of imports from the countries under investigation and the level of profitability needed to cover full costs and investments, research and development (R&D) and innovation. Such profit margin should not be lower than 6 %.

• (226) As a first step, the Commission established a basic profit covering full costs under normal conditions of competition. In this respect, the Commission took into account the profit that the Union industry had before the increase of imports from the countries concerned, which was [1-3] %. As this profit was below 6 %, the Commission provisionally used the profit of 6 % in accordance with Article 7(2c) of the basic Regulation.

• (227) On this basis, the non-injurious price is EUR/tonne [850-990], resulting from applying the above-mentioned profit margin of 6 % to the cost of production of the sampled Union producers during the IP.

• (228) As a second step, in accordance with Article 7(2d) of the basic Regulation, the Commission assessed the future costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia to the basic Regulation that the Union industry will incur during the period of the application of the measures pursuant to Article 11(2). Based on the evidence available, the Commission provisionally established an additional future cost of EUR/tonne [10-20]. This additional cost was added to the non-injurious price mentioned in recital (227).

• (229) These costs comprised the following elements:

• (a) the additional future costs to ensure compliance with the Union Emissions Trading System (‘ETS’) both in terms of cost of purchase of the emission permits and indirect future costs linked to the ETS related to the purchase of the electricity

• (230) ETS policy is a cornerstone of the Union policy to meet the environmental obligations of the Paris Agreement ⁴⁷ and a key tool for reducing greenhouse gas emissions. The additional costs related to the purchase of permits were calculated on the basis of the average estimated additional EU Allowances (EUA) which will have to be purchased during the life of the measures. The EUAs used in the calculation were net of free allowances receivable and, like all costs of production, were verified to ensure they were correctly allocated to the product under investigation. The costs of the EUAs were extrapolated to account for the expected price variation during the lifespan of the measures. Commission established projected ETS allowance prices using an extraction from Bloomberg New Energy Finance dated 10 February 2022. The average projected price for EUAs for this period is EUR/tonne 71,3 of CO2 produced.

• (231) For the future costs related to the purchase of electricity, the Commission took into account the future evolution of the CO2 emissions cost related to the consumption of electricity. When calculating the future cost the Commission duly considered any compensation received by the Union producers. To determine the future CO2 cost, the Commission used the projected prices in the extraction from Bloomberg New Energy Finance mentioned in recital (231).

• (b) future cost resulting from investments to reduce CO2 emissions

• (232) The Union policy to reduce CO2 emissions is also in line with the Union commitments under the Paris Agreement. In order to calculate the future costs, the Commission took into account additional future cost in terms of depreciation of such investments.

• (233) On this basis, the Commission calculated a non-injurious price of the like product for the Union industry by applying the above-mentioned target profit margin to the cost of production of the sampled Union producers during the investigation period and then adding the adjustments under Article 7(2d) on a type-by-type basis. The Commission is still analysing information on file in relation to investments that might be relevant under Articles 7(2c) and/or 7(2d) of the basic Regulation.

• (234) The Commission then determined the underselling margin on the basis of a comparison of the weighted average import price of the sampled cooperating exporting producers in the countries concerned, as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the sampled Union producers in the Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average import CIF value. For other cooperating companies outside the sampled as regards the PRC, the Commission used the weighted average margins of the two sampled exporting producers.

Country	Company	Provisional dumping margin	Provisional underselling margin
The People’s Republic of China	Baoshan Iron & Steel Co., Ltd	43,3 %	33,2 %
	Handan Jintai Packing Material Co., Ltd.	53,9 %	23,7 %
	Other cooperating companies	45,1 %	31,6 %
Brazil	Companhia Siderúrgica Nacional	66,8 %	52,0 %

6.2.   Examination of the margin adequate to remove the injury to the Union industry in relation to the PRC

• (235) On the basis of the above, the Commission concluded that it was necessary to assess whether there are distortions with regard to the product under investigation within the meaning of Article 7(2a) of the basic Regulation, which would render a duty lower than the margin of dumping insufficient to remove the injury caused by dumped imports of the product under investigation.

• (236) As explained in the Notice of Initiation, the complainant provided sufficient evidence that there may be raw material distortions in the PRC regarding the product under investigation. Therefore, in accordance with Article 7(2a) of the basic Regulation, the Commission examined the alleged distortions to assess whether a duty lower than the margin of dumping would be sufficient to remove injury.

• (237) According to the evidence in the complaint, hot-rolled flat steel, accounting for a significant part of the cost of production of the product under investigation, was subject to VAT refund withdrawal in China.

• (238) Therefore, as announced in the Notice of Initiation, in accordance with Article 7(2a) of the basic Regulation, the Commission examined the impact of the raw material distortions on the production of ECCS in China.

• (239) The Commission noted that one of the sampled Chinese producers, Jintai, purchased hot-rolled coils (‘HRC’), while the other, Baosteel, did not have any such purchases. The Commission assessment at the provisional stage focused on HRC in accordance with the raw material distortions put forward in the complaint, but will continue the investigation, also with regard to other possible raw material distortions under Article 7(2a) of the basic Regulation.

• (240) The Commission confirmed that HRC represented more than 17 % of the cost of production for Jintai. For the purposes of this calculation, at the provisional stage, an undistorted price of the raw material as established in Brazil was used.

• (241) The Commission then examined whether the price of HRC was distorted by one of the measures listed in Article 7(2a) of the basic Regulation. For this purpose the Commission used the databases on export VAT and refund rates of the People’s Republic of China and the related announcement of the Chinese Ministry of Finance and the State Administration of Taxation. The Commission established that HRC has been subject to a VAT refund withdrawal since at least 2019.

• (242) Subsequently, the Commission compared the prices of HRC in China to prices in representative international markets. At provisional stage, the Commission compared the prices paid by the company Jintai with the Metal Bulletin prices for HRC for different markets, including ex-works in Brazil, as these were provisionally considered to be in line with prices in representative international markets. On that basis, the Commission found that prices in representative international markets were [10-30] – [30-50] % higher than in the country concerned, which was considered significant.

• (243) Therefore, the Commission provisionally concluded that HRC was subject to a significant distortion within the meaning of Article 7(2a) of the basic Regulation.

7. UNION INTEREST

7.1.   Union interest under Article 7(2b) of the basic Regulation

• (244) In accordance with Article 7(2b) of the basic Regulation, the Commission examined whether it could clearly conclude that it was in the Union interest to determine the amount of provisional duties in accordance with Article 7(2a) of the basic Regulation with regard to Jintai only. The determination of the Union interest was based on an appreciation of all pertinent information to this investigation, including the spare capacities in the exporting country, competition for raw materials and the effect on supply chains for Union companies.

7.1.1.   Spare capacities in the exporting country

• (245) The complainants estimated the Chinese domestic capacity for ECCS at around 990 000 tonnes and the output of ECCS around 650 000 tonnes in 2018 ⁴⁸. This means an estimated capacity utilisation of 66 %. Besides, for the two sampled exporting producers, the capacity utilisation was on average [70-90] %. That is higher than the estimation of the complainants for the whole country. Even if the average spare capacity of the two sampled companies (that is [10-30] %) would be extrapolated to the country concerned, the spare capacity in China would amount to around [100 000-300 000] tonnes, which represent a significant share of the Union consumption during the IP.

• (246) The Commission therefore concluded that a significant spare capacity exist in China and that, if used, this spare capacity had the potentiality to increase the global supply of the product under investigation, depress prices and consequently undermine the effectiveness of the measure if not set at the level of dumping.

7.1.2.   Competition for raw materials

• (247) Generally, the global steel sector is a sector with significant excess capacity, largely due to the industrial policy of China. Steel products are widely available on the market both in the EU and in China.

• (248) The Commission established that the price of HRC in China was significantly lower than the price of HRC in representative international markets (see recital (242)). This creates a comparative disadvantage for the Union industry compared to the exporting producers in China. The Commission therefore concluded that, while HRC is available to the Union industry, it is available at a higher price than for its competitors in China. The Union industry is therefore at a disadvantageous position vis-à-vis Chinese exporting producers.

7.1.3.   Effect on supply chains for Union companies

• (249) As explained in recitals (262) and (263) below, the Union industry has enough capacity to cover total Union demand of the product under investigation.

• (250) Finally, Union users could source the product under investigation from other third countries. The total volume of imports from other third countries decreased by 23 % over the period considered while their market share decreased by 21 %. In particular, sales from South Korea decreased from [11 600-13 600] tonnes in 2018 to [4 700-5 500] tonnes in the IP, i.e. by 60 %. In the absence of dumped imports from the countries concerned, imports from other third countries would increase, as the sales prices on the Union market would be more attractive.

• (251) Therefore, users would have sufficient access to ECCS even in case the imports from China decrease due to the higher duty. Consequently, disruptions of the value chains of Union users are not expected.

7.1.4.   Conclusion on Union interest under Article 7(2b) of the basic Regulation

• (252) Having assessed all pertinent information to this investigation, the Commission concluded that it is in the Union interest to determine the amount of provisional duties in relation to Handan Jintai Packing Material Co., Ltd in accordance with Article 7(2a) of the basic Regulation.

• (253) In view of the analysis set out above, the Commission concluded that, in accordance with Article 7(2a) of the basic Regulation, it is in the interest of the Union to set the level of the provisional duties on the basis of the level of dumping, subject to the further considerations in the context of Article 21 set out in Section 7.2 below.

7.2.   Union interest under Article 21 of the basic Regulation

• (254) Having assessed the Union interest pursuant to Article 7(2b) of the basic Regulation, the Commission then examined whether it could clearly conclude that it was not in the Union interest to adopt measures in this case, despite the determination of injurious dumping, in accordance with Article 21 of the basic Regulation. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, and users.

7.2.1.   Interest of the Union industry

• (255) The effect of anti-dumping measures will be positive for the Union producers, as measures will allow the Union industry to adapt its sales prices to cover the increased cost of production. Therefore, the Union industry would return to a sustainable situation, allowing it to make future investments, in particular to comply with environmental and social requirements.

• (256) In the absence of measures, the Union industry will continue suffering from material injury and its financial situation, in particular in terms of profitability, return on investments and cash flow, is expected to worsen further, thus threatening its viability.

7.2.2.   Interest of users and unrelated importers and traders

• (257) ECCS is mainly used in the production of food packaging such as food cans.

• (258) Only one user, namely Eviosys, provided a questionnaire reply. It is the largest producer of food packaging in the Union and therefore, the most important user of the product under investigation.

• (259) In addition, a Consortium of six traders and users as well as two other users did not provide questionnaire replies but made submissions on injury and Union interest, and opposed the adoption of anti-dumping measures.

• (260) The users and traders invoked the following arguments.

• (261) First, they claimed that the Union producers have difficulties to ensure sufficient quantities of ECCS, especially after Brexit that excluded Tata Steel from the Union industry. They further claimed that the Union industry tends to export most of its production (around 50 %) to third countries, alleging that export sales are more profitable than Union sales. Therefore, the imposition of measures against imports from the countries concerned, which account for half of the total imports, would disturb Union users’ supply chain and that new sources of supply may not be reliable.

• (262) In the IP, the total Union consumption of ECCS was [505 000-591 000] tonnes. The total Union industry capacity was [581 000-680 000] tonnes. The total Union industry production was [439 000-513 000] tonnes and the export sales of the Union industry in the IP were [98 000-115 000] tonnes while the imports volume from the countries concerned was [78 000-91 000] tonnes. These figures show that the Union industry has sufficient production capacity to cover the total Union demand of ECCS.

• (263) Consequently, the claims of Union users as to the shortages of ECCS on the Union market due to insufficient capacity of Union industry, or that half of the Union production was exported, did not appear to be well founded.

• (264) Second, some users argued that the imposition of duties would significantly increase their production cost, and that they could not pass on to their customers such price increases. They argued that price is a predominant factor on the downstream market, and that measures would thus have a serious impact on their competitive position. Competition from users located in third countries that could source cheaper ECCS not subject to anti-dumping duties would further affect Union users. In addition, according to Eviosys, the increase of prices of food packaging would have the effect of further increasing food prices, in particular affecting lower income households who rely more on canned food.

• (265) Union users and traders already source approximately 70 % of their ECCS needs from Union industry. Imports from the countries concerned had [14-16] % market share on the Union market in the IP and imports from other third countries have a very similar price to the sales price of the Union industry. Based on the data of Eviosys, the sole user which provided a questionnaire reply, it appeared that it would be able to absorb a possible cost increase considering its current profitability from sales of products using ECCS and the share of imports from the countries concerned in its sourcing portfolio. Therefore, the claim was provisionally rejected.

• (266) Concerning possible effect on food prices, Eviosys did not substantiate its claim to demonstrate that the increase of ECCS’s prices would result in an increase of food packaging prices and ultimately in an increase of foodstuff prices, or that such potential increase would be in the same proportion as the increase of ECCS prices. Furthermore, ECCS is only used for food cans’ endings, while tinplate, which is more expensive, is used for the cans’ body. Finally, as explained in recital (265) above, the user will be able to absorb the possible cost increase due to the measures. Therefore, any potential increase of ECCS prices alone is not likely to affect, and if so only to a very minor extent, food packaging prices. Consequently, the Commission provisionally rejected this argument.

• (267) Third, Eviosys and CISA claimed that the Union ECCS market was characterised by a duopoly where the product choice and bargaining power of downstream users would be threatened by the imposition of anti-dumping measures and referred to the merger Commission decision mentioned in recital (195).

• (268) In this respect, as explained in recital (196), the Commission’s assessment in merger cases pursues different objectives. In any event, the decision cited had a much wider product scope than ECCS and encompassed a number of other steel products, such as tinplate, and the analysis of imports made in this decision concerned a period prior to the period considered. Therefore, the claim was rejected.

• (269) Finally, two other users and CISA pointed to the existing safeguard measures on imports of steel products, including ECCS, already sufficiently protect the Union industry and that the quotas for imports from China have not been used to the maximum. They further claimed that in 2020 and 2021 prices of Chinese imports were very similar to the prices of Union producers after an increase due to the higher transport cost and the abolition of the 13 % VAT rebate of ECCS exports in China.

• (270) In this respect, safeguard measures do not have as a purpose and cannot protect against dumped imports. Although import prices from China increased by 2,8 % in the IP compared to 2020, they were still lower by [7,5-20,7] % compared to the Union sales prices on the Union market in the IP. Therefore, the increase of transport cost and the abolition of the 13 % VAT rebate of ECCS exports in China claimed by users did not appear to have removed dumping. Therefore, the claims were provisionally rejected.

• (271) CISA also requested the Commission to look into post-IP developments. In this respect, CISA submitted on 31 March 2022 comments on post-IP developments and on the consequence of possible measures for the EU downstream industries.

• (272) The comments were received after the deadline for comments set out in the notice of initiation and will be dealt with at definitive stage.

7.2.3.   Conclusion on Union interest

• (273) The effects of the measures on the Union producers would be positive. The risks of a potential negative impact on users and unrelated importers/traders, in particular with respect to supply, would be mitigated by the free available capacity of the Union industry as well as the imports from other countries. The restoration of fair competition and of a level playing field, in the absence of dumped imports, would benefit the healthy development of the overall market and will allow the Union industry to comply with the costs arising from Union and Member State obligations under international agreements.

• (274) On the basis of the above, the Commission provisionally concluded that there were no compelling reasons that it was not in the Union interest to impose measures on imports of ECCS originating in the countries concerned at this stage of the investigation.

8. PROVISIONAL ANTI-DUMPING MEASURES

• (275) On the basis of the conclusions reached by the Commission on dumping, injury, causation, level of measures and Union interest, provisional measures should be imposed to prevent further injury being caused to the Union industry by the dumped imports.

• (276) As per the assessment above, provisional anti-dumping duties are set at the level of the injury margin for Baoshan Iron & Steel Co., Ltd. and Companhia Siderúrgica Nacional, in accordance with Article 7(2) of the basic Regulation,