Commission Implementing Regulation (EU) 2022/1305 of 25 July 2022 imposing a definitive anti-dumping duty on imports of molybdenum wire originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

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) (‘the basic Regulation’), and in particular Article 11(2) thereof,

Whereas:

(1) Anti-dumping measures on imports of molybdenum wire from the People’s Republic of China (the ‘PRC’ or ‘China’ or ‘the country concerned’) were originally imposed in 2010 by Council Implementing Regulation (EU) No 511/2010 (2) (‘the original measures‘). The investigation leading to the original measures is referred to as ‘the original investigation’. The original measures took the form of an ad valorem duty rate of 64,3 %.

(2) In 2012 and 2013, following two anti-circumvention investigations, the original measures were first extended to imports of molybdenum wire consigned from Malaysia (3) and, secondly, to imports of molybdenum wire from the PRC containing by weight at least 97 % of molybdenum, of which the maximum cross-sectional dimension exceeds 1,35 mm but does not exceed 4,0 mm (4). On 30 October 2015, following a third anti-circumvention investigation, the measures were extended to molybdenum wire containing by weight at least 97 % of molybdenum, with a maximum cross-sectional dimension that exceeds 4,0 mm but does not exceed 11,0 mm (5).

(3) The measures currently in force were imposed on 30 June 2016, by Commission Implementing Regulation (EU) 2016/1046 (6) following an expiry review (‘previous expiry review’).

(4) Following the publication of a notice of impending expiry (7), the European Commission (‘the Commission’) received a request for a review pursuant to Article 11(2) of the basic Regulation.

(5) The request was submitted on 23 March 2021 by Plansee SE (‘the applicant’), that represents more than 25 % of the total Union production of certain molybdenum wires, on behalf of the Union industry of molybdenum wire, in the sense of Article 5(4) of the basic Regulation. The request for review was based on the grounds that the expiry of the measures would be likely to result in continuation or recurrence of dumping and recurrence of injury to the Union industry.

(6) Having determined, after consulting the Committee established by Article 15(1) of the basic Regulation, that sufficient evidence existed for the initiation of an expiry review, on 28 June 2021 the Commission initiated an expiry review with regard to imports into the Union of molybdenum wire originating in the PRC on the basis of Article 11(2) of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (8) (‘the Notice of Initiation’).

(7) The investigation of continuation or recurrence of dumping covered the period from 1 January 2020 to 31 December 2020 (‘review investigation period’). The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2017 to the end of the review investigation period (‘the period considered’).

(8) In the Notice of Initiation, interested parties were invited to contact the Commission in order to participate in the investigation. In addition, the Commission specifically informed the applicant as well as the second known Union producer, known users and the authorities of the PRC, about the initiation of the expiry review and invited them to participate.

(9) Interested parties had an opportunity to comment on the initiation of the expiry review and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

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

(11) In the Notice of Initiation, the Commission did not apply sampling but invited the two known Union producers, namely Plansee SE and Osram GmbH, to provide questionnaire replies within the specified period.

(12) 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.

(13) No importers came forward to provide the information requested in the Notice of Initiation.

(14) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known producers of molybdenum wire in the PRC to provide the information specified in the Notice of Initiation. In addition, it asked the Mission of the People’s Republic of China to the European Union to identify other producers, if any, that could be interested in participating in the investigation. However, no response was provided.

(15) Consequently, the Commission informed the authorities of the PRC that absent cooperation it intended to resort to the use of facts available under Article 18 of the basic Regulation when examining the continuation or recurrence of dumping. The authorities of the PRC did not respond.

(16) Questionnaires for Union producers, as well as those for importers, users and producers in the PRC were made available online on the day of the initiation.

(17) 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’).

(18) A questionnaire reply was received from one Union producer, Plansee SE, which is also the applicant and represents [86-94 %] of the total sales of the Union industry on the Union market.

(19) On 24 June 2021, the sole other Union producer expressed the wish to remain neutral in the investigation and did not provide a reply to the questionnaire.

(20) Neither the GOC nor any producer in the PRC provided a questionnaire reply.

(21) A macroeconomic questionnaire was also sent to Plansee SE on 15 November 2021, to which the reply was received by the Commission on 29 November 2021.

(22) The Commission sought and verified all the information deemed necessary for the determination of likelihood of continuation or recurrence of dumping and injury and of the Union interest. One verification visit pursuant to Article 16 of the basic Regulation was carried out at the premises of the Union producer Plansee SE, Austria.

(23) On 9 June 2022, the Commission disclosed the essential facts and considerations on the basis of which it intended to maintain the anti-dumping duties in force.

(24) All parties were granted a period within which they could make comments on the disclosure. No comments were received.

(25) The product under review is the same as in in the original investigation and previous expiry review, namely molybdenum wire, containing by weight at least 99,95 % of molybdenum, of which the maximum cross-sectional dimension exceeds 1,35 mm but does not exceed 4,0 mm, falling under CN code ex 8102 96 00 (‘product under review’).

(26) The product under review originating in the PRC, not consigned from Malaysia, currently falls under TARIC code 8102960019. The product under review consigned from Malaysia, whether declared as originating in Malaysia or not, currently falling under TARIC code 8102960011, was not investigated as it was not part of the product definition in the original investigation.

(27) Molybdenum wire is mainly used in the automotive industry, for example in synchronising rings of cars with manual gearboxes.

(29) These products are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation.

(30) During the review investigation period, imports of molybdenum wires from the PRC continued albeit at lower levels than in the review investigation period of the previous expiry review.

(31) As mentioned in recital (20), no producer from the PRC cooperated in the investigation.

(32) Therefore, on 16 July 2021 the Commission informed the authorities of the PRC that due to the absence of cooperation, the Commission may apply Article 18 of the basic Regulation concerning the findings with regard to the PRC. The Commission did not receive any comments concerning its intention to resort to the use of facts available under Article 18 of the basic Regulation.

(33) Consequently, in accordance with Article 18(1) of the basic Regulation, the findings in relation to the likelihood of continuation or recurrence of dumping were based on facts available, in particular the information contained in the request for the expiry review combined with other sources of information, such as statistics on imports and exports (Comext (Eurostat)), Dun & Bradstreet (9), Global Trade Atlas (‘GTA’) (10).

(34) Given the sufficient evidence available at the initiation of the investigation tending to show with regard to the PRC the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation, the Commission initiated the investigation on the basis of Article 2(6a) of the basic Regulation.

(35) In order to obtain information, it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, 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.

(36) 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. Subsequently, on 16 July 2021 the Commission informed the GOC that it would use facts available in accordance with Article 18 of the basic Regulation for the determination of the existence of the significant distortions in the PRC.

(37) In point 5.3.2 of the Notice of Initiation, the Commission specified that, in view of evidence available at the time of initiation, a possible representative country for the purpose of determining the normal value based on undistorted prices or benchmarks pursuant to Article 2(6a)(a) of the basic Regulation for the PRC was Turkey. The Commission further stated that it would examine other possibly appropriate representative countries in accordance with the criteria set out in Article 2(6a)(a) fist indent of the basic Regulation.

(38) On 10 March 2021, the Commission issued the first note for the file (‘the First Note’) and informed interested parties 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 molybdenum wires. With regard to the choice of a representative country the Commission noted that the product under review was only produced in a handful of countries worldwide (11) and that only Thailand was identified as a country with the same level of economic development as the PRC. However, with regard to Thailand, sufficient information on company level necessary to establish selling, general and administrative expenses (SG&A) and profit was not readily available.

(39) Given that neither the Commission, nor the applicant, could identify a representative country with the same level of economic development as the PRC where the product under review was produced and for which all necessary information was readily available, the Commission attempted to find a suitable representative country with the same level of economic development as the PRC where there was production of a similar product, in the same general category or sector, but was unable to identify any such product. In addition, no interested party had suggested a suitable representative country with the same level of economic development as the PRC where there was production of the product under review, or production of a similar product. The Commission therefore exceptionally suggested in the First Note, in addition to Thailand, also India as a possible source to establish undistorted prices and costs and invited interested parties to comment. Only the applicant commented on this note.

(40) On 29 October 2021, by a second note (‘the Second Note’), the Commission informed the interested parties on the relevant sources it intended to use for the determination of the normal value, with India as an appropriate source and invited interested parties to comment. No comments were received.

(41) 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”.

(42) 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”

(43) As further explained below, the Commission concluded in the present investigation that, based on the evidence available, and in view of the lack of cooperation of the GOC and the producers, the application of Article 2(6a) of the basic Regulation was appropriate.

(44) In recent investigations concerning the tungsten sector in the PRC (12), the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present. Most producers of molybdenum products also process tungsten in their plants. Moreover, tungsten and molybdenum have similar chemical properties and industrial uses. As further discussed below, in addition to the systemic significant distortions affecting all factors of production in the PRC, the investigation revealed that in the Chinese planning and guidance documents tungsten and molybdenum are usually mentioned together. The Commission concluded in this investigation that, based on the evidence available, the application of Article 2(6a) of the basic Regulation was appropriate.

(45) In those recent investigations on tungsten, 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. (13) In particular, in addition to the systemic distortions affecting the Chinese economy, the Commission concluded that in the tungsten sector, not only does a substantial degree of ownership by the GOC persists in the sense of Article 2(6a)(b), first indent of the basic Regulation (14) 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. (15) 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 (16). 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. (17) In the same vein, the Commission found distortions of wage costs in the tungsten sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation, (18) 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. (19)

(46) Like in the previous investigation concerning the tungsten sector in the PRC, the Commission examined in the present investigation on molybdenum whether it was appropriate or not to use domestic prices and costs in the PRC, in view of 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 request, as well as in the Commission’s report on significant distortions in China (20) (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 review. 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 as also found by its previous investigations in this respect.

(47) The request in this case referred to the Report, in particular to the influence of the Chinese state into the non-ferrous metals including the molybdenum industry via the 13th 5-Year Plan for the Economic and Social Development of the People’s Republic of China (13th 5-Year General Plan) and the 13th 5-Year Plan for the Non-Ferrous Metals Industry (13th 5-Year Non-Ferrous Plan). Moreover, the request mentions that based on the Made in China 2025 initiative, the molybdenum industry is eligible to receive considerable state funding. The request mentions specific financial funds created by the Chinese state to support the molybdenum industry (China Development Bank, the National Integrated Circuit Fund, the Advanced Manufacturing Fund, different local funds established by the local governments and funding to support and restructure manufacturers provided by China Reform Holdings). The request further lists as an example two companies in the molybdenum industry that benefitted from state funding: Jiduicheng Molybdenum and Xiamen Tungsten, the mother company of Xiamen Honglu Tungsten.

(48) In the molybdenum sector, a substantial degree of ownership and control by the GOC persists in the sense of Article 2(6a)(b), second indent of the basic Regulation. Many of the largest producers are owned by the State. Since there was no cooperation from Chinese producers of the product under review, the exact ratio of the private to state-owned molybdenum wire producers could not be determined. However, the investigation revealed that in the molybdenum wire sector a number of large producers are state owned enterprises (‘SOEs’). These include Jinduicheng Molybdenum, Xiamen Honglu Tungsten. Chengdu Hongbo Industrial and Luoyang Hi-tech Molybdenum & Tungsten Material.