Commission Implementing Regulation (EU) 2022/1394 of 11 August 2022 imposing a definitive anti-dumping duty on imports of silicon originating in the People’s Republic of China, as extended to imports of silicon consigned from the Republic of Korea and from Taiwan, whether declared as originating in the Republic of Korea or Taiwan or not, following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and the Council

12.8.2022	EN	Official Journal of the European Union	L 211/86

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. PROCEDURE

1.1.   Measures in force

• (1) The measures currently in force are a definitive anti-dumping duty on imports of silicon originating in the People’s Republic of China imposed by Commission Implementing Regulation (EU) 2016/1077 ² following an expiry review pursuant to Article 11(2) and a partial interim review pursuant to Article 11(3) of Council Regulation (EC) No 1225/2009 ³ (‘the previous review investigation’). The measures are in the form of duties ranging between 16,3 % and 16,8 % of the value of the imported goods.

• (2) The measures were extended to imports consigned from the Republic of Korea whether declared as originating in the Republic of Korea or not by Council Regulation (EC) No 42/2007 ⁴.

• (3) The measures were further extended to imports consigned from Taiwan, whether declared as originating in Taiwan or not by Council Implementing Regulation (EU) No 311/2013 ⁵.

1.2.   Request for an expiry review

• (4) Following the publication of a notice of impending expiry ⁶ the European Commission (‘the Commission’) received a request for a review pursuant to Article 11(2) of the basic Regulation.

• (5) The request for review was submitted on 30 March 2021 by Euroalliages (‘the applicant’), an association that represents all three of the Union producers, which therefore represents more than 25 % of the total Union production of silicon, 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 of dumping and continuation of injury to the Union industry.

1.3.   Initiation of an expiry review

• (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 2 July 2021 the Commission initiated an expiry review with regard to imports into the Union of silicon originating in People’s Republic of China (‘China’ or ‘the country concerned’) 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 ⁷ (‘the Notice of Initiation’).

1.4.   Review investigation period and period considered

• (7) The investigation of continuation or recurrence of dumping covered the period from 1 July 2020 to 30 June 2021 (‘the review investigation period’ or ‘RIP’). The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2018 to the end of the review investigation period (‘the period considered’).

1.5.   Interested parties

• (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 informed the three Union producers representing 100 % of the Union industry, the known producers in China and the authorities of the country concerned, the known importers, users, as well as associations known to be concerned about the initiation of the investigation 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.

1.6.   Comments on initiation

• (10) Comments were received from EUSMET regarding the initiation of the expiry review.

• (11) EUSMET claimed that the state of the non-confidential request for review did not comply with the requirements of Article 19(1) and 19(2) of the basic Regulation.

• (12) This argument was rejected. Following the relevant comments from EUSMET, the applicant provided additional information to further facilitate the understanding of the facts presented in the request. This additional information has been included in the file for inspection by interested parties, thereby making it possible for EUSMET to have a reasonable understanding of the confidential information in accordance with Article 19(2) of the basic Regulation.

• (13) The Commission therefore considered the information provided in the non-confidential version of the request to be sufficiently detailed for the interested parties to exercise their rights of defence throughout the proceeding.

• (14) In their comments on initiation EUSMET requested that at disclosure stage the Commission should disclose information concerning the quantities of factors of production used to calculate the normal value; and the Commission should also disclose the AlloyConsult report referred to in the request for review.

• (15) EUSMET reiterated these two requests in their comments after disclosure. As set out in recitals 178 to 181 and recital 191, both claims have been rejected.

1.6.1.   Comments on substance

• (16) EUSMET claimed that the request for review did not contain sufficient evidence to initiate an expiry review and that it contained incorrect allegations concerning dumping, the continuation of dumping, injury, and the continuation of injury. EUSMET supported its allegations by the following arguments.

• (17) First, EUSMET alleged there was a six-month gap between the end of the period used to present the data and the filing of the review request.

• (18) With regard to this argument, the Commission pointed out that considering the time until the data from various sources become available and the time needed to compile them in a request, there is inherently a time gap, typically of several months until the request is lodged. In this case, acceptance of a 6-month difference is compliant with the established guidance the Commission provides to the complainants.

• (19) Second, EUSMET claimed that the applicant excluded the imports made under the inward processing from China from the dumping and injury margin calculations.

• (20) Before initiation, the Commission analysed both imports with and without inward processing and in both cases it made the necessary adjustments to compare the normal value and the export prices. The Commission noted that the methodology used by the applicant, as well as the methodology where the inward processing would be included, both result in findings of significant dumping. The methodology chosen by the applicant thus could not render the initiation of this expiry review unlawful. Consequently, the argument must be rejected.

• (21) Third, EUSMET claimed that the use of Article 2(6a) of the basic Regulation and the selection of a representative country is WTO-inconsistent, as country-wide distortions are incompatible with the concept of dumping, which applies to individual companies. Furthermore, EUSMET submitted that distortion of the domestic input costs is not one of the factors that permits the construction of normal value under Article 2.2 of the WTO Anti-dumping Agreement (‘ADA’). Moreover, by imposing an obligation to use only undistorted input costs reflecting costs/prices from ‘sources’ not affected by any distortions, Article 2(6a) precludes the calculation of the cost of production for an exporter or producer based on its records even if they are GAAP-consistent and reflect the recorded input costs. Finally, EUSMET claimed that the applicant did not provide sufficient evidence of the existence of distortions in the silicon metal sector.

• (22) EUSMET’s arguments concerning the application of Article 2(6a) of the basic Regulation could not be accepted. With respect to the argument that the existence of distortions should not be assessed on a country-wide basis but individually for each exporting producer, the Commission recalls that once it is determined that, due to the existence of significant distortions for the exporting country in accordance with Article 2(6a)(b) of the basic Regulation, it is not appropriate to use domestic prices and costs in the exporting country, the normal value may be constructed using undistorted prices or benchmarks in an appropriate representative country, for each exporting producer, according to Article 2(6a)(a) of the basic Regulation. In this context, and also in response to EUSMET’s argument on the use of only undistorted input costs reflecting costs/prices from a representative country not affected by any distortions, the Commission notes that Article 2(6a)(a) of the basic Regulation explicitly allows the use of domestic costs, if they are positively established not to be distorted. The Commission examined this during the investigation. However, since none of the exporting producers cooperated, the costs of production and sale of silicon could not be established as undistorted considering the evidence available.

• (23) As to EUSMET’s argument on the concept of distortions not being among the factors that permit the construction of normal value under Article 2.2 of the WTO Anti-dumping Agreement, the Commission points out that domestic law does not need to use the exact same terms as the covered Agreements in order to be compliant with those Agreements. Consequently, the Commission considers Article 2(6a) of the basic Regulation to be fully compliant with the relevant rules of the ADA, including the possibilities to construct normal value provided in Article 2.2 of the ADA. Moreover, the Commission recalls that the WTO law, as interpreted by WTO panels and the Appellate Body, allows 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) of the basic Regulation envisages the construction of costs of production and sale based on undistorted prices or benchmarks, including those in an appropriate representative country with a similar level of development as the exporting country.

• (24) As for the argument on evidence of the existence of distortions in the silicon metal sector, the Commission found that the applicant provided sufficient evidence of distortions in the silicon metal sector, based on the Commission’s Report on distortions in China ⁸, as well as on a more specific independent study of 2018 commissioned by Euroalliages. Although the applicant referred specifically to distortions on raw materials and on electricity in the narrative of the request, they also provided the more detailed reports as an annex. These reports contain ample evidence on all aspects of significant distortions in the sense of Article 2(6a)(b) of the basic Regulation.

• (25) Fourth, EUSMET alleged that the dumping margin calculation was inflated, since the applicant ‘cherry-picked’ the time periods to calculate the constructed normal value.

• (26) The methodology proposed by the applicant is reasonable, as it was based on data available to the applicant and covering the period used for the dumping calculation (i.e. October 2019 to June 2020). This claim was thus rejected.

• (27) Fifth, concerning the likelihood of continuation of dumping, EUSMET noted that the evidence provided by the applicant was based solely on the analysis of Chinese export prices to India, South Korea and Japan, which were in any case inaccurate.

• (28) The Commission noted that the applicant did not only take into consideration Chinese export prices to other countries, but also referred to the more detailed analysis in chapter VI of the expiry review request, concerning the likelihood of recurrence of injury. This chapter concerns spare capacities in China, as well as Chinese export volumes to the EU and to third countries, which is also relevant for the likelihood of continuation of dumping. Therefore, the Commission considered that the information provided by the applicant was sufficient to satisfy the legal standard for initiation under Article 11(2) of the basic Regulation in respect to the likelihood of continuation of dumping. The applicant also provided a reasonable comparison between the normal value and the export prices to third counties. The adjustments proposed by EUSMET would not have led to a different conclusion, as the Chinese export prices would still have been significantly lower than the normal value. This claim was therefore dismissed.

• (29) Sixth, as concerns the volume of Chinese imports of silicon into the Union, EUSMET claimed that between 2017 and 2020 these have decreased faster than the Union consumption of silicon. In other words, the Chinese exporters could not have taken sales or market share from the Union producers.

• (30) The Commission considered the evidence present in the request as sufficient evidence reasonably available to the applicant. According to the evidence provided in the request and analysed by the Commission, the import volumes from China that would penetrate the Union market in the absence of measures would be likely to increase due to the existence of unused capacity in the country concerned. The effect of such volumes at prices that would in all likelihood continue to undercut the Union industry’s prices would be likely to result in continuation of injury to the Union industry. Furthermore, the existence of other factors which may have an impact on the situation of the Union industry does not necessarily imply that the effect of dumped Chinese imports on the Union industry would not be material, in particular in the case of a prospective analysis where the focus lies on what would happen should measures be repealed. Therefore, EUSMET’s argument must be rejected.

• (31) Seventh, EUSMET claimed that the price effects analysis and the price undercutting and underselling calculations in the review requests were unrepresentative as they did not take into account the prices of the imports under inward processing. Moreover, EUSMET claimed that the undercutting calculations were wrong because (i) the Chinese import prices of aluminium grade silicon were compared to the EU sales of all silicon metal, which also include the chemical grade, (ii) the post-importation costs have not been added to the Chinese import prices, (iii) no level of trade adjustment was made to the Chinese imports, although these are made via traders to the EU, whereas EU sales are normally made from the Union producers to the end users. Finally, EUSMET claimed that the price underselling calculations were wrong for the same reasons as in the case of the undercutting calculation, in addition to which they were also based on artificially high production costs linked to, inter alia, a 15 % target profit, without any legal basis.

• (32) The analysis presented by the applicant was based on the basis of the best evidence available to the applicant at the time and the Commission considered it sufficiently representative and reliable and containing sufficient evidence which justified initiation of the investigation.

• (33) Eighth, EUSMET claimed that the Union industry did not face any negative effects on account of the Chinese imports. EUSMET alleged that chemical and aluminium grade silicon are different and that whilst the Union industry’s sales are mostly related to chemical grade silicon, imports from China under the normal regime are rather low-quality imports for the secondary aluminium market. Therefore, EUSMET requested the Commission to carry out a segmented injury analysis for the chemical and aluminium silicon grades. Such a request was reiterated in EUSMET’s comments after disclosure, but this argument must be rejected. The Commission refers in this respect to section 2.3 below which analyses product homogeneity.

• (34) Ninth, EUSMET submitted that the Union consumption declined between 2018 and 2020, for both cyclical reasons and due to the COVID-19 pandemic outbreak. EUSMET therefore claimed that Chinese imports had no impact on the decrease of the Union consumption.

• (35) Even if the Commission agreed with EUSMET’s analysis on the development of the Union consumption, it did not consider that the decrease of the consumption linked to other markets invalidated the allegation in the request, which covered both continuation and recurrence of injury, leading to the initiation of this expiry review. Nevertheless, even if the Union consumption decreased for reasons that are independent from the Chinese imports, the Commission shall still analyse in an expiry review what would be the consequences if measures were allowed to lapse, in terms of sales and market shares.

• (36) Tenth, EUSMET claimed that the fall in the Union Industry’s production volumes and capacity cannot be attributed to the Chinese imports but rather to the decision of one Union producer to temporarily shut down production in certain plants. In the same vein, EUSMET claimed that the decline in the Union industry’s sale volumes is not linked to the Chinese imports, which declined between 2017 and Q3 of 2020, but rather to a decline in the demand and an increase of imports from third countries. EUSMET claimed further in this context that, despite Chinese imports, Union sales prices remained stable over the 2017-2019 period and fell in the first three quarters of 2020, in coincidence with a global fall of silicon demand. In other words, in a context of falling demand, the Union producers would not be able to increase prices, irrespective of the Chinese silicon imports. For the same reasons, profitability fall cannot be imputable to Chinese imports.

• (37) These arguments cannot be accepted. The Commission recalls that the existence of measures is often associated with a reduction of imports from the country concerned and that existing anti-dumping measures often have a positive effect on the state of the Union industry. In an expiry review investigation the Commission carries out an analysis on what would happen should measures be allowed to lapse. The fact that Chinese imports might not the main cause of the negative development of certain injury indicators cannot therefore impede the initiation of the investigation.

• (38) Eleventh, EUSMET listed some allegedly key factors affecting the Union industry which, in EUSMET’s view, were overlooked or misinterpreted in the review. Those factors include the production strategy of the Union industry and its costs, development in the silicon demand, increase in third country imports and the impact of Brexit. EUSMET required the Commission to consider them in the review.

• (39) The Commission considered the way the applicant interpreted the factors in the request sufficient to initiate the expiry review. In any event the Commission considered all those factors in the framework of its analysis in the Injury and Union interest sections of this Regulation.

• (40) Twelfth, EUSMET claimed that the applicant underestimated the silicon demand outlook, overestimated the Chinese production and capacity and exaggerated the price effects of Chinese imports.

• (41) However, EUSMET did not bring any information that would call into question the estimates presented in the review request. Therefore, the argument could not be accepted.

• (42) In view of the above, the Commission considered that the request provided sufficient evidence to initiate the review investigation.

• (43) In their comments on the disclosure, EUSMET reiterated its claim that the use of Article 2(6a) of the basic Regulation was incompatible with the Anti-Dumping Agreement, without adding any new argument or evidence. The Commission therefore rejected this claim for the same reasons as set out in recitals 22 to 24 above.

1.7.   Sampling

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

1.7.1.   Sampling of importers

• (45) 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.

• (46) No unrelated importers came forward.

1.7.2.   Sampling of producers in China

• (47) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all producers in China to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the People’s Republic of China to identify and/or contact other producers, if any, that could be interested in participating in the investigation.

• (48) No replies were received.

1.8.   Replies to the questionnaire

• (49) The Commission sent a questionnaire concerning the existence of significant distortions in China within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of China (‘GOC’).

• (50) The Commission sent questionnaires to the Union industry. Moreover, the questionnaires for Union industry, for unrelated importers and for users were made available on DG Trade’s website ⁹.

• (51) Questionnaire replies were received from three Union producers and from three users.

1.9.   Verification

• (52) 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. Verification visits pursuant to Article 16 of the basic Regulation were carried out at the premises of the following cooperating companies:

Union producers

• — RW Silicium GmbH, Pocking, Germany

• — FerroAtlántica S.L., Madrid, Spain

• — Ferropem, Chambéry, France

Users

• — Wacker Chemie AG, Munich, Germany

• — Raffmetal SpA, Casto, Italy

• — Evonik Industries AG, Essen, Germany

1.10.   Subsequent procedure

• (53) On 17 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. All parties were granted a period within which they could make comments on the disclosure.

• (54) The comments made by interested parties were considered by the Commission where appropriate.

2. PRODUCT UNDER REVIEW AND LIKE PRODUCT

2.1.   Product under review

• (55) The product under review is the same as in the original investigation and previous expiry reviews namely silicon (‘the product under review’), currently falling under CN code 2804 69 00.

2.2.   Like product

• (56) As established in the original investigation as well as in the previous expiry review, this expiry review investigation confirmed that the following products have the same basic physical, chemical and technical characteristics as well as the same basic uses:

• — the product under review originating in the PRC;

• — the product produced and sold on the domestic market of the country concerned; and

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

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

2.3.   Claims regarding product homogeneity

• (58) EUSMET claimed that silicon for chemical and aluminium uses is not a homogenous product and that silicon for the two end uses is not interchangeable.

• (59) First, EUSMET highlighted the different composition, technical and chemical characteristics of silicon, stating that silicon consists of elemental silicon and other by-elements in different concentrations and levels. Moreover, EUSMET explained that each of the by-elements has a source in the basic raw materials or production process of silicon, therefore, based on the different raw material used, the silicon has a certain chemical composition which is specific to a certain use.

• (60) EUSMET argued that different silicon purity levels are required for different uses in both the chemical and the aluminium sectors. Chemical and aluminium grade silicon users cannot use the same material as such and do not compete for the same material from suppliers. Therefore, the fungibility and competitive overlap between the chemical grade silicon and silicon suitable for the aluminium industry is extremely limited.

• (61) EUSMET emphasised that the price of silicon used in different products is impacted by the chemical composition of the silicon requested. More specifically, silicon used to manufacture silicones polymers is generally the highest priced and secondary aluminium grade silicon is the lowest priced. EUSMET claimed that the rationale for such price difference is that specific high-quality raw materials, which are also more expensive, are required for producing higher purity silicon.

• (62) EUSMET further pointed to the differences in distribution channels for the different types of silicon. Since chemical users purchase customised silicon pursuant to rigorous qualification processes of their suppliers, they buy directly from silicon producers. Additionally, chemical users buy silicon based on short/long term contracts and do not buy on the spot market. On the other hand, aluminium users, and generally secondary aluminium users buy silicon from traders or distributors or importers. Furthermore, except for some large users of silicon in the primary aluminium user segment, most aluminium-related sales are spot sales.

• (63) Silicon has always been considered as a homogenous product since the original investigation on imports of silicon from China and in all subsequent expiry review investigations. According to Article 11(9) of the basic Regulation, in all review investigations, the Commission shall apply the same methodology as in the investigation which led to the duty, provided that circumstances have not changed. In the present case, EUSMET did not present any evidence showing that circumstances with regards to the homogenous nature of the product concerned have changed since the last expiry review.

• (64) In their comments on the disclosure, EUSMET noted that, in the past investigations, the Commission only took into account aluminium-grade silicon metal imports to establish injury and that it thus already deployed a segmented analysis. EUSMET also added that the Commission recognised that chemical-grade silicon was mostly imported via the inward processing regime (IPP) and, therefore the imports related to this market segment were exempted from the duties.

• (65) The Commission first notes that, according to Article 11(9) of the basic Regulation, since there is no change in circumstances, the methodology used should be the one used in the investigation that led to the duty ¹⁰. No segment-based analysis was conducted in the previous interim review ¹¹. The Commission merely distinguished between two import regimes for the purpose of establishing undercutting and the injury elimination level.

• (66) As noted in recital 48 above, no exporting producer cooperated with the investigation. Furthermore, imports by EUSMET’s members constitute only a small proportion of the total imports of the product concerned. Consequently, the Commission was unable to establish a proportion of aluminium- and chemical-grade silicon in the total import of the product concerned or any link between import regime used and silicon grade imported. This claim was therefore rejected.

3. DUMPING

3.1.   Preliminary remarks

• (67) During the review investigation period, imports of silicon into the Union from China continued but at a lower market share than during the review investigation period of the previous review investigation.

• (68) No producers from China cooperated with the investigation. Therefore, the Commission informed the authorities of the country concerned that due to the absence of cooperation, the Commission might apply Article 18 of the basic Regulation concerning the findings with regard to them. The Commission did not receive any comments on this information, or requests for an intervention of the Hearing Officer.

• (69) Consequently, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of continuation or recurrence of dumping were based on facts available, in particular information contained in the request for review, information obtained from cooperating Union producers and users in the course of the review investigation, as well as Eurostat trade statistics on imports and exports.

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

• (70) Given the sufficient evidence available at the initiation of the investigation tending to show with regard to China 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.

• (71) 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.

• (72) 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, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in China. The Commission did not receive any comments on this information, or requests for an intervention of the Hearing Officer.

• (73) In point 5.3.2 of the Notice of Initiation, the Commission also specified that, in view of the evidence available, it had provisionally selected Brazil as 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. The Commission further stated that it would examine other possibly appropriate countries in accordance with the criteria set out in first indent of Article 2(6a)(a) of the basic Regulation.

• (74) On 23 February 2022, the Commission informed interested parties by a note (‘Note 1’) 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 silicon.

• (75) In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified an additional possible appropriate representative country, namely Malaysia. The Commission received comments on Note 1 from the applicant and EUSMET.

• (76) On 5 April 2022, the Commission informed interested parties by a second note (‘Note 2’) on the relevant sources it intended to use for the determination of the normal value, keeping Malaysia as the representative country. It also informed interested parties that it would establish selling, general and administrative costs (‘SG&A’) and profits based on available information for the company PMB Silicon Bhd, a producer of the product in the representative country.

• (77) The Commission received comments on Note 2 from the applicant and EUSMET. EUSMET also submitted comments in reply to those from the applicant.

3.2.1.   Normal value

• (78) 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’.

• (79) However, according to Article 2(6a)(a) of the basic Regulation, if 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 referred to as ‘SG&A’).

• (80) 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.

3.2.2.   Existence of significant distortions in China

• (81) In recent investigations concerning ferro-silicon ¹² and calcium silicon ¹³ originating in China, the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present in the metallurgical sector in China. The Commission concluded in these investigations that, based on the evidence available, the application of Article 2(6a) of the basic Regulation was appropriate.

• (82) The Commission found that there is substantial government intervention in China resulting in a distortion of the effective allocation of resources in line with market principles ¹⁴.

• (83) The Commission also concluded that a substantial degree of ownership by the GOC persisted in the sense of Article 2(6a)(b), first indent of the basic Regulation ¹⁵.

• (84) The Commission also established that the GOC was 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 ¹⁶.

• (85) The Commission also 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. The system of planning in China also 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 ¹⁷.

• (86) The Commission also 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 China ¹⁸.

• (87) The Commission also found distortions of wage costs in the metallurgical sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation ¹⁹, 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 companies in China ²⁰.

• (88) As in previous investigations concerning the metallurgical sector in China, the Commission examined in the present investigation whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation.

• (89) The Commission did so based on 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 ²¹ (‘Report’), which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in China’s economy in general, but also the specific market situation in the relevant sector including the product under review.

• (90) The Commission further supplemented these elements with its own research on the various criteria relevant to confirm the existence of significant distortions in China as also found by its previous investigations in this respect.

• (91) The request in this case referred to the Report, in particular to section 12.4.2 regarding export restrictions on silicon and the sections referring to the electricity market. The applicant also referred to a copyrighted study from AlloyConsult in the request for review regarding State-induced market distortions in the Chinese ferro-alloys and silicon industries.

• (92) In the silicon sector, a certain degree of ownership and control by the GOC persists in the sense of Article 2(6a)(b), first indent of the basic Regulation. Since there was no cooperation from any Chinese exporters of the product under review, the exact ratio of private and State-owned silicon producers could not be further determined.

• (93) However, the Commission established that a number of Chinese silicon producers are state owned. One of them is Yunnan Nujiang International Silicon Trade Co, a subsidiary of Xiamen ITG Group Corp., Ltd ²². The ultimate controlling shareholder of Xiamen ITG Group is the City of Xiamen State-owned Assets Supervision and Administration Commission ²³.

• (94) Similarly, the Shanghai Puyuan Foreign Economic and Trading Company ²⁴ (‘SPFC’) is a wholly owned subsidiary of the Shanghai National Nuclear Puyuan Group which in turn is wholly owned by China National Nuclear Corporation (‘CNNC’), one of the Chinese central level State-Owned Enterprises (‘SOEs’).

• (95) The investigation found further that in the electricity sector, which is the main factor of production in the manufacturing of the product under review, a substantial degree of ownership by the GOC persists. As found by the Commission in the Report, the electricity market in China is characterised by strong involvement of SOEs in various stages of the supply chain, with the entire transmission grid being owned by two SOEs and significant State ownership existing also at the generation stage.

• (96) 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, during the investigation the Commission established the existence of personal connections between the Chinese Communist Party (‘CCP’) and companies manufacturing the product under review, as well as organisational corporate features placing the CCP in position allowing it to interfere with the companies’ conduct of business.

• (97) In the ITG Xiamen Group, the CCP Party committee occupies the highest level of the company’s organisational level, at par with the Board of Directors and the Board of Supervisors and above the Senior Management ²⁵.

• (98) Moreover, in SPFC, the Chairman of the Board of Shanghai National Nuclear Puyuan Group holds at the same time the position of the Secretary of the Party Committee while the company’s General Manager serves simultaneously as Deputy Secretary of the Party Committee ²⁶.

• (99) The investigation revealed further that both public and privately owned enterprises in the silicon sector are also subject to policy supervision and guidance. As in any other sector in China, these producers are constrained to host Party-building activities and maintain a close affiliation to the CCP and its ideology. The following examples illustrate the trend of an increasing level of intervention by the GOC also in the silicon sector.

• (100) The ITG Xiamen Group describes on its website extensive Party-building activities. Referring to a February 2022 meeting of the CCP study group, the company emphasizes that it is necessary to ‘firmly ensure the correct direction of the construction of the special economic zone, implement the Party’s comprehensive leadership over the China International Trade Holding Group, continue to deepen the comprehensive and strict governance of the Party, adhere to the path of socialism with Chinese characteristics, and unswervingly follow General Secretary Xi Jinping’s direction forward’ ²⁷.

• (101) Claiming allegiance to the CCP leadership is not limited only to the most recent period of time but extends also to the review investigation period, as apparent for instance from the website of SPFC which describes the conclusions of the group’s Party Committee meeting which took place on 17 November 2020: ‘[W]e must strengthen ideological content, raise profile, active thinking, self-discipline and self-examination, attach importance to learning, strengthen understanding, deepen study and implementation of the spirit of the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China […] The Fifth Plenary Session of the 19th Central Committee of the Communist Party of China required that the focus of economic development should be placed on the real economy, and efforts should be made to improve the modernization level of the industry chain and supply chain, accelerate the development of a modern industrial system […] [I]t is necessary to study and implement the spirit of General Secretary Xi Jinping’s important speeches and the spirit of the Fifth Plenary Session of the 19th CPC Central Committee,(…)with a high degree of political consciousness, ideological and action consciousness,;in accordance with the integrated deployment of the Party Central Committee, the group company, and CNNC Puyuan to ensure implementation on the ground, it is necessary to fully integrate the spirit of the Fifth Plenary Session of the 19th Central Committee of the Party […] Members of the CNNC supply chain leadership team, middle-level cadres, and members of various branches participated in this enlarged study meeting. ²⁸’

• (102) Moreover, according to the working rules of the Silicon industry association ²⁹, a branch of the China non-ferrous metal industry association, the association takes the basic line of the CCP as its own guideline ³⁰. Further, adhering to the Party’s line, principles and policies, and possessing good political quality are listed among eligibility requirements for serving as the association’s president, vice-president or secretary general ³¹.

• (103) Further, it was established that 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 silicon sector. Silicon plays a significant role in the production of aluminium, as well as semiconductors (for which the product under review is an input) which in turn qualifies the silicon sector to be considered part of the strategic emerging industries ³² which benefit from a wide range of support policies in place.

• (104) The State interferes also in markets of inputs used for the production of silicon, in particular the electricity markets. While electricity is one of the main inputs in the manufacture of silicon, the prices of electricity are not market-based in China and are also affected by significant distortions (through central price-setting, price differentiation and in direct power purchase practices), as established in the Report ³³.

• (105) While the energy market in China has undergone a number of changes and reforms, some prices relevant for the energy system are still not market-based. The government recognises that the prices are still largely controlled by the State: ‘The current electricity price management is still based on government prices. Price adjustments often lag behind changes in costs and it is difficult to timely and reasonably reflect the electricity usage costs […] An effective competitive mechanism for the sale of electricity has not yet been established, market transactions between electricity generation enterprises and users are limited and it is difficult to involve the decisive role of the market in the allocation of resources’ ³⁴.

• (106) This State-induced market weakness is at the origin of further attempts to manage the market, which is reflected in a number of subsequent administrative documents. For example, in November 2020, the NDRC released the Notice on promoting the signing of mid to long-term 2021 electricity contracts ³⁵.

• (107) The document instructs ‘the competent departments of local governments […] to strive to ensure that the contracted electricity volume is not lower than 80 % of the average volume over the past three years’, and with regard to pricing to ‘establish a deviation settlement mechanism […] in the local market regulations to deal with deviations between the contracted power volume and the actual implementation’ and to ‘[i]mprove the medium and long-term transaction price mechanism. All localities shall strictly implement the power transmission and distribution prices as approved by the government.’

• (108) The Notice contains also specific provisions on implementation, notably through the establishment of a tracking mechanism for the contract signing progress, or by strengthening contracts monitoring, disclosure and enforcement ³⁶.

• (109) Furthermore, in January 2021, the State Council released the ‘NDRC Opinion on standardising urban water, electricity and heating supplies fees to foster a high quality development of the sector’ ³⁷. The Notice contains specific provisions with regard to government pricing ‘[…] For projects subject to government pricing or government-guided prices, reasonably determine the cost composition, strengthen cost supervision and review, improve the price formation mechanism and scientifically determine the price level. […]’

• (110) Among the main goals of the Notice, specific reference is made to the government input mechanism in relation to pricing, as well as the sectoral differentiation of pricing methods: ‘By 2025, clear results shall be achieved in cleaning up and standardizing the charges in the water supply, power supply, gas and heating sector. A basis for a scientific, standardized and transparent price formation mechanism shall be established, and the government input mechanism shall be further improved. Pricing methods applicable to related sectors, cost supervision and review methods, price behaviour and standard comprehensive coverage of services, as well as the quality and efficiency of the supply of water, electricity, heating and other products and services shall be significantly improved’.

• (111) Coal is another raw material used to manufacture the product under review. As found in the Report, the coal market in China is subject to distortions, notably because of subsidisation ³⁸ and through the management and control over the exploitation of coal resources ³⁹.

• (112) The recent calcium silicon investigation established further elements of State interference in the coal market. In May 2021, the National Energy Administration (NEA) and NDRC jointly released the Notice on Management measures for coal mine production capacity and approval criteria, with the aim of regulating coal mine capacities and enforcing relevant limits, calculated based on the notice ⁴⁰.In December 2020, the NDRC issued the Notice on ensuring the signature and performance of medium and long-term coal contracts in 2021 ⁴¹.

• (113) The Notice expressly emphasizes the goal of increasing the State’s influence and supervision in the contractual process: ‘Give better play to the role of the government, focus on strengthening system construction, improve transaction rules, strengthen credit supervision, and guide relevant parties to raise awareness of the overall situation, take social responsibilities, standardize contract performance, and ensure the smooth functioning of the coal market.’

• (114) The notice also instructs to ‘[s]trengthen industry self-discipline. All relevant industry associations shall guide enterprises to strengthen self-discipline, to duly implement the requirements of medium and long-term contracts, and not to use the market supply and demand situation and the advantageous position of the industry to sign unbalanced contracts. Large-scale enterprises shall play an exemplary role, self-regulate contract signatures, enhance their awareness of fulfilling commitments, take the initiative to take social responsibility of ensuring supply and stable prices, and promote the smooth operation of coal market at national level.’

• (115) Particularly worth noting is the clear directive not to use the demand and supply situation in the market when signing contracts. In April 2021, the NDRC issued a further ‘Notice on ensuring supervision and management of 2021 coal medium and long-term contracts’, which aims at better overseeing sale contracts compliance and to ensure the supply of coal (notably based on the provisions of the pre-cited Notice No 902). On that basis, relevant parties should notably ensure that the monthly compliance rate should not be less than 80 %, and the quarterly and annual compliance rate should not be less than 90 % ⁴².

• (116) State interventionism in the coal market is also visible in the recent decision on extending for another year the trial operation time for shuttered coal mines with the aim to increase output and supply, to counter the commodity’s price increases (after the mines production was previously suspended) ⁴³.

• (117) As can be seen from the above examples, the GOC manages the development of the silicon sector in accordance with a broad range of policy tools and directives and controls virtually every aspect in the functioning of the sector. This governmental guidance and intervention concerns also the main inputs used in the manufacturing of the product under review.

• (118) 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 metallurgical sector would not affect the manufacturers of the product under review.

• (119) The metallurgical sector is also affected by the distortions of wage costs in the sense of Article 2(6a)(b), fifth indent of the basic Regulation. Those distortions affect the sector both directly (when producing the product under review or the main inputs), as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in China).

• (120) Moreover, no evidence was submitted in the present investigation demonstrating that the metallurgical 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. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

• (121) Finally, the Commission recalls that in order to produce the product under review, a number of inputs is needed. When the producers of the product under review purchase or contract for these inputs, the prices paid (and which are recorded as their costs) are exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the 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.

• (122) As a consequence, not only the domestic sales prices of the product under review are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the Report.

• (123) Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout China. This means, for instance, that an input that in itself was produced in China by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth.

• (124) No evidence or argument to the contrary has been submitted by the GOC or the producers in the present investigation.

• (125) In sum, the evidence available showed that prices or costs of the product under review, 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.

• (126) 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.

• (127) 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, as discussed in the following section.

3.2.3.   Representative country

3.2.3.1.   General remarks

• (128) 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 China. For this purpose, the Commission used countries with a gross national income per capita similar to China on the basis of the database of the World Bank ⁴⁴;

• — Production of the like product in that country ⁴⁵;

• — Availability of relevant public data in the representative country.

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

• (129) 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 addressed the comments received by the parties on these elements and on the relevant sources.

3.2.3.2.   A level of economic development similar to China

• (130) In Note 1, the Commission identified Brazil and Malaysia as countries with a similar level of economic development as China according to the World Bank where silicon is being produced. These countries are both classified by the World Bank as ‘upper-middle income’ countries on a gross national income basis where production of the like product was known to take place.

• (131) No further possible representative countries were identified by any interested party.

3.2.3.3.   Availability of relevant public data in the representative country

• (132) In Note 1 the Commission indicated that the producer of silicon in Brazil identified by the applicant, RIMA Industrial, was not profitable during calendar year 2020, and that no other Brazilian producers had been identified at this stage.

• (133) The producer of silicon in Malaysia identified by EUSMET, PMB Silicon Bhd, was profitable during calendar year 2020. On this basis the Commission considered in Note 1 that Malaysia could be an appropriate representative country.

• (134) Following the publication of Note 1 the applicant submitted a list of silicon producers in Brazil, indicating the availability of public financial data for each of those producers.

• (135) The list supplied by the applicant identified one silicon producer in Brazil, the company MinasLigas, that was profitable in 2020.

• (136) The Commission therefore had two profitable producers of silicon, one in Malaysia and one in Brazil.

• (137) In Note 2, the Commission further compared the data available from Malaysia and Brazil concerning factors of production. The Commission concluded that Malaysia had a more representative dataset for the factors of production, since there were no imports of medium ash coal into Brazil, and only limited quantities of imports of quartz and wood chips which were also at unrepresentative prices.

• (138) The Commission thus informed the interested parties with Note 2 that it intended to use Malaysia as an appropriate representative country and the company PMB Silicon Bhd, in accordance with Article 2(6a)(a), first ident of the basic Regulation in order to source undistorted prices or benchmarks for the calculation of normal value.

• (139) Interested parties were invited to comment on the appropriateness of Malaysia as a representative country and of PMB Silicon Bhd as producer in the representative country.

• (140) Comments on Note 2 were received from EUSMET, who supported the Commission’s decision to use Malaysia, and from the applicant, who maintained that Brazil should be considered an appropriate representative country.

• (141) The applicant disputed the use of Malaysia as representative country, based on the financial data of the company PMB Silicon Bhd. The applicant asserted that the company was loss making in 2020, but without providing any evidence.

• (142) In their submission of 1 April 2022, EUSMET provided locally published accounts for PMB Silicon Bhd showing that they were profitable during 2020. This argument from Euroalliages is therefore rejected.

• (143) The applicant also disputed the representativity of some of the publicly available data from Malaysia regarding by-products and requested again that the Commission uses Brazilian data for those factors where it was appropriate to do so and use data from other countries where it was not.

• (144) The Commission therefore re-examined the data from Malaysia, considering the comments from both the applicant and EUSMET regarding this data. The Commission concluded that Malaysian data concerning the factors of production are reliable. The Commission also noted that as the normal value calculations would be using a percentage to calculate by-product income, the benchmarks in Note 2 for by-products would no longer be used.

• (145) Moreover, the Commission notes that with respect to Brazil, the applicant admitted that some data are not appropriate and that other sources would have to be used. The Commission therefore rejected this argument of the applicant.

• (146) After issuing Note 2, the Commission noted that there was an error in the extraction of data from GTA regarding imports of wood chips into Malaysia. The extraction had been done in EUR rather than in CNY and therefore the price per tonne was incorrect. On analysis however, the actual price in CNY per tonne was far in excess of that paid by the Union industry, and far in excess of the average export price per tonne in GTA for all countries.

• (147) As prices of wood chips were considered to be non-representative, and in the absence of an undistorted international price for wood chips, the Commission found that the average import price into the European Union in CNY per tonne to be a suitable benchmark for this raw material.

• (148) The applicant also disputed the sources of data for electricity and labour costs, deeming them to be ‘obsolete’ ⁴⁶.

• (149) The Commission verified these sources again and, concerning electricity, noted that the tariffs indicated in Note 2 are still in force. However, concerning labour costs, the source indicated in Note 2 covers the year 2016. The Commission therefore sought more recent data and identified labour cost statistics from the Department of Statistics of Malaysia, ‘Salaries and Wages Survey Report 2020’ ⁴⁷ published in July 2021 as a suitable source of data.

3.2.3.4.   Level of social and environmental protection

• (150) Having established that Malaysia was the only available 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.

3.2.3.5.   Conclusion

• (151) In view of the above analysis, Malaysia 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.

3.2.4.   Sources used to establish undistorted costs

• (152) In Note 1, the Commission listed the factors of production such as raw materials, energy and labour used in the production of the product under review and invited the interested parties to comment and propose publicly available information on undistorted values for each of the factors of production mentioned in that note.

• (153) Subsequently, in Note 2, the Commission stated that, in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, it would use GTA to establish the undistorted cost of most of the factors of production, notably the raw materials. In addition, the Commission stated that it would use Malaysian official data for establishing undistorted costs of labour ⁴⁸ and energy ⁴⁹.

3.2.5.   Factors of production

• (154) Considering all the information in the request for review and subsequent information submitted by the applicant and interested parties, the following factors of production and their sources have been identified in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:

Table 1

Factors of production of silicon

Factor of Production	Commodity Code in Malaysia	Undistorted value in CNY	Unit of measurement
Raw materials	Raw materials	Raw materials	Raw materials
Quartz	2506 10	468,20	Tonne
Medium Ash Coal	2701 19	437,23	Tonne
Wood chips	4401 21	412,50	Tonne
	4401 22	412,50	Tonne
Electrodes	8545 11	39 692,39	Tonne
Labour	Labour	Labour	Labour
Labour		21,92	Labour hour
Energy	Energy	Energy	Energy
Electricity		0,53	kWh

3.2.6.   Raw materials

• (155) Silicon is produced in electric submerged arc furnaces with carbothermic reduction of quartz (silica) in the presence of various types of carbon reductants such as coal and wood chips.

• (156) 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 GTA.

• (157) An import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding China 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 ⁵⁰.

• (158) The Commission decided to exclude imports from China into the representative country as it concluded that it is not appropriate to use domestic prices and costs in China 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.

• (159) The remaining import data from other countries excluding China was considered representative for all inputs except wood chips. As noted in recital 146, the import price for wood chips into Malaysia was not considered representative and therefore data from imports into the European Union was used instead.

• (160) For a number of factors of production, the actual costs incurred by the Union producers represented a negligible share of total raw material costs in the review investigation period.

• (161) As the value used for these had no appreciable impact on the dumping margin calculations, regardless of the source used, and in the absence of data from cooperating exporting producers, the Commission decided to include those costs into 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 benchmarks in the appropriate representative country.

• (162) For by-products, the Commission calculated the percentage of the income from the by-products reported by the Union industry in relation to the total cost of production and deducted this percentage from the recalculated cost of production when using the established undistorted benchmarks in the appropriate representative country.

• (163) Normally, domestic transport prices should also be added to these import prices. However, considering the nature of this expiry review investigation, which is focused on finding whether dumping continued during the review investigation period or could reoccur, rather than finding its exact magnitude, the Commission decided that adjustments for domestic transport were unnecessary. Such adjustments would only result in increasing the normal value and hence the dumping margin.

3.2.7.   Labour

• (164) Labour costs in Malaysia are published by the Department of Statistics of the Government of Malaysia ⁵¹ and this source was used to determine the wages in Malaysia by using the information published for average mean labour cost per employee in the manufacturing sector for 2020. According to the Department of Statistics this is 2 542 MYR per month. On an average of 186 working hours per month, the Commission calculated a mean average wage of 13,67 MYR per hour.

3.2.8.   Electricity

• (165) Prices for electricity for companies (industrial users) in Malaysia are published by the electricity company Tenaga Nasional Berhad (TNB) ⁵². The most recent rates were published on 1 January 2014 and were still applicable in the RIP. The Commission used the rates of the industrial electricity prices in the consumption band ‘Tariff E2 – Medium Voltage Peak/Off-Peak Industrial Tariff’ from TNB to establish the electricity cost per kWh.

3.2.9.   Manufacturing overhead costs, SG&A, profit and depreciation

• (166) 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’. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above.

• (167) In order to establish an undistorted value of the manufacturing overheads and given the absence of cooperation from the Chinese producers, the Commission used facts available in accordance with Article 18 of the basic Regulation. Therefore, based on the data provided by the applicant, the Commission established the ratio of manufacturing overheads to the total manufacturing and labour costs. This percentage was then applied to the undistorted value of the cost of manufacturing to obtain the undistorted value of manufacturing overheads.

3.2.10.   Calculation of the normal value

• (168) 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.

• (169) First, the Commission established the undistorted manufacturing costs. In the absence of cooperation by the exporting producers, the Commission relied on the information provided by the applicant in the review request on the usage of each factor (materials and labour) for the production of silicon. The Commission multiplied the consumption ratios by the undistorted costs per unit observed in Malaysia as described above.