Commission Implementing Regulation (EU) 2022/1395 of 11 August 2022 imposing a definitive anti-dumping duty on imports of certain corrosion resistant steels originating in Russia and Turkey

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 9(4) thereof,

Whereas:

(1) On 24 June 2021, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of certain corrosion resistant steels originating in Russia and Turkey (‘the countries concerned’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 12 May 2021 by the European Steel Association (‘Eurofer’ or ‘the complainant’). The complaint was made on behalf of the Union industry of certain corrosion resistant steels in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainant, other known Union producers, the known exporting producers and the authorities of Russia and Turkey, known importers and users, as well as associations known to be concerned about the initiation of the investigation and invited them to participate.

(4) Interested parties had the opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. The Commission held a hearing with a Turkish exporting producer on 17 September 2021.

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

(6) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of production and Union sales volumes reported by the Union producers in the context of the pre-initiation standing assessment analysis, taking also into account their geographical location. This provisional sample consisted of three Union producers, located in three different Member States. The sample accounted for more than 23 % of production and sales in the Union of like product. The Commission invited interested parties to comment on the provisional sample (3). No parties made any comments within the given deadline.

(7) During the verification visit at the premises of one of the sampled Union producers, it was found that the company had wrongly included in its reply to the standing questionnaire as well as in its reply to the anti-dumping questionnaire a significant share of data concerning products falling outside the scope of the investigation. To ensure that such situation did not affect the representativeness of the sample, the Commission decided to maintain the company concerned in the sample and to include an additional company to the sample. The final sample thus established consisted of four Union producers, located in three different Member States, which accounted for ca. 25 % of the estimated total volume of production and sales of the like product in the Union. The Commission invited interested parties to comment on the final sample (4). No parties made any comments within the given deadline.

(8) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation.

(9) None of the companies that submitted an Annex to the Notice of Initiation within the deadline reported imports of the product concerned. The Commission decided to abandon sampling. No comments were received to this decision.

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

(11) Three exporting producers/groups of exporting producers in Russia, accounting for around 98 % of the total Russian export volume of the product concerned to the Union, provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of two companies on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the Russian authorities were consulted on the selection of the sample.

(12) The Commission received comments on the sample from PJSC Novolipetsk Steel. The company pointed out that there were sound legal reasons to conduct the investigation on three, rather than two, exporting producers, especially if one of the originally sampled companies would withdraw its cooperation. Such withdrawal would complicate the determination of the dumping margin for non-sampled cooperating exporting producers.

(13) In addition, the company emphasized that the Commission sampled the exporting producer PJSC Magnitogorsk Iron and Steel Works in Russia and its subsidiary MMK Metalurji Sanayi Ticaret ve Liman İşletmeciliği A.Ş. in Turkey. The company asserted that the two related exporting producers shared part of their sales channels. That would reduce the workload of the Commission, thus allowing for investigation of NLMK.

(14) After analysing the comments of NLMK, the Commission found in particular the claims described in recital (12) justified and decided to abandon sampling with regard to the exporting producers in Russia. The Commission informed the company in question as well as Russian authorities of this decision.

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

(16) Eight exporting producers/groups of exporting producers in Turkey, accounting for around 100 % of the total Turkish export volume of the product concerned to the Union, provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of three companies on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of the country concerned were consulted on the selection of the sample. No comments were received to the sampling proposal. The final sample thus established accounted for 62,6 % of the total Turkish export volume of the product concerned to the Union.

(17) One exporting producer in Turkey requested individual examination under Article 17(3) of the basic Regulation. The Commission decided that the examination of this request would have been unduly burdensome and would have prevented the completion of the investigation in good time. This is due to the complex corporate structure of the company in question. Therefore, the individual examination request was rejected.

(18) The Commission sent a questionnaire to the complainant and requested the four sampled Union producers (5), the three exporting producers in Russia and the three sampled exporting producers in Turkey to fill in the relevant questionnaires made available online (6) on the day of initiation.

(19) Questionnaire replies were received from the four sampled Union producers, the complainant, the three exporting producers from Russia, the three sampled exporting producers from Turkey and the exporting producer from Turkey that requested individual examination.

(22) The investigation of dumping and injury covered the period from 1 January 2020 to 31 December 2020 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2017 to the end of the investigation period (‘the period considered’).

(23) The Turkish association CIB and several exporting producers found the chosen investigation period and period considered biased. They deemed them inappropriate, as 2017 was a relatively good year for the steel business while 2020 was negatively affected by the COVID-19 pandemic. They alleged that the comparison of both endpoints would not be representative of the performance and situation of the Union industry. Some requested quarterly analysis for a better comparison.

(24) The Commission dismissed the claims as both the period considered and the investigation period were appropriate bearing in mind the date of the lodging of the complaint and the applicable rules. In any event, the Commission’s analysis is not made on a comparison of the base year with the investigation period but on trends throughout the period concerned and includes factors possibly affecting the corrosion resistant steel (‘CRS’) market in the Union and factored them in in the investigation, as shown, inter alia, in Section 5 below.

(25) After final disclosure CIB and several exporting producers disagreed with the Commission’s position. They argued that the Commission should have considered developments subsequent to the investigation period, as during the first 8 months of 2021 prices of hot dipped galvanized products, which include CRS, as well as the average margin of hot dipped galvanized steel products over hot rolled coils would have increased strongly in the Union. At the same time, in 2021 the production levels of the Union industry would have been restored to the 2019 levels. With reference to the judgement of the General Court in Rusal Armenal ZAO v Council (7), they therefore claimed that these developments constitute new facts which make the proposed anti-dumping duty manifestly inappropriate and these facts have to be considered by the Commission including by expanding the period of investigation to capture 2021 and the first quarter of 2022.

(26) The Commission analysed the claim. It found that the rise in sales prices in 2021 as such is not indicative for an improvement, of whatever magnitude, of the Union industry’s profitability. Indeed, the Commission noted that a rise in prices can only have a positive effect on the situation of the industry as compared to the previous year if it is significantly higher than the rise in costs over the same period. For this, no evidence was submitted. As concerns production, the Commission acknowledged that in 2021 certain producers experienced difficulties to satisfy the strong market demand of CRS at certain moments in time, in particular in the beginning of that year. However, it underlined that this was a temporary phenomenon and did not have any information at its disposal indicating that this would relate to the industry as a whole. The Commission therefore found that none of the claims invoked by the parties concerned demonstrated that the new developments after the investigation period would make the proposed anti-dumping duty manifestly inappropriate. The Commission thus rejected the claim.

(27) Pursuant to Article 7(1) of the basic Regulation, the deadline for the imposition of provisional measures was 23 February 2022. On 26 January 2022, in accordance with Article 19a(2) of the basic Regulation, the Commission informed the interested parties of its intention not to impose provisional measures and gave the interested parties the opportunity to submit additional information and/or to be heard. No party submitted comments or asked to be heard.

(28) After final disclosure, Government of Russia (‘GOR’) submitted that the fact that no provisional measures had been imposed meant that the Union industry was stable and did not need intervention from the Commission to prevent injury. The Commission rejected this claim. According to Article 7(1) of the basic Regulation, provisional measures may be imposed. There is no obligation upon the Commission to impose provisional measures if the Union industry is suffering injury. Therefore, no conclusions can be drawn as regards the state of the Union industry if the Commission decides not to impose provisional measures but to continue the investigation instead, as it had done in this case.

(29) Since no provisional anti-dumping measures were imposed, no registration of imports was performed.

(30) The Commission continued to seek and verify all the information it deemed necessary for its final findings.

(31) Following the analysis of the collected and verified data, the Commission informed MMK and PAOS of its intention to apply facts available to certain parts of their questionnaire replies in accordance with Article 18 of the basic Regulation. The Commission gave the companies the opportunity to comment. The reasons for the application of facts available and the comments submitted by the companies are addressed in Section 3.1.2 of this Regulation.

(32) When reaching its definitive findings, the Commission considered the comments submitted by interested parties.

(33) The Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive anti-dumping duty on imports CRS originating in Russia and Turkey (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure.

(34) Following the final disclosure, comments were received from the complainant, the GOR, all three Russian cooperating exporting producers, the Government of Turkey (‘GOT’), all three Turkish cooperating exporting producers and the Turkish Steel Exporters Association. Hearings were requested by and held with MMK, NLMK, the GOT, Tezcan and the Turkish Steel Exporters Association. The comments submitted by the parties and/or presented during the hearings are addressed in the respective parts of this Regulation.

(35) Furthermore, following the individual additional definitive disclosures, Tezcan and MMK requested the intervention of the Hearing Officer.

(36) Following final disclosure, CIB argued that the anti-dumping measures should be suspended pursuant to Article 14(4) of the basic Regulation due to market changes occurring after the end of the investigation period. In particular, CIB referred to sharp CRS price increases since the end of the investigation period, strongly improved profitability of certain Union producers since then, and the sanctions against Russia which would guarantee that injury would be unlikely to resume as a result of suspension.

(37) Article 14(4) states that measures may only be suspended where injury to the Union industry would be unlikely to resume as a result of the suspension. The Commission has no information on file supporting that the Union industry improved after the end of the investigation period so that injury would be unlikely to resume. The fact that CRS prices might have increased after the investigation period alone cannot be the basis for a conclusion that the Union industry is no longer injured even if CIB claim that the profitability of ‘certain Union producers’ would have increased was accepted. Indeed, the opening of the investigation may itself have had such effects and those effects would thus quickly dissipate if definitive measures are suspended. The Commission can only suspend measures after a careful analysis of the situation of the Union industry after the investigation period, and of the alleged changes in market conditions, which requires the collection of detailed information. This assessment is normally done outside the investigation proceedings, in particular when such claims are submitted at a late stage and without the necessary supporting evidence, as was the case in this instance.

(38) Following final disclosure, GOR argued that the application of Article 18 of the basic Regulation with regard to two Russian exporting producers was not justified as the companies showed cooperative behaviour, provided extensive responses to the questionnaire and the request for additional information including intermediate calculations and made the requested corrections. In addition, GOR pointed out that the letters on the application of Article 18 were sent more than a month after the verifications and remote cross-checks were concluded.

(39) The Commission noted that the reasons for the application of Article 18 of the basic Regulation were duly communicated and explained to the respective companies after all information collected from the questionnaire and deficiency replies and during the verifications and remote cross-checks was properly analysed. With regard to PAOS, the issue is addressed in recitals (93) to (109) in detail. With regard to MMK, the reasons are explained in recitals (75) to (90) in general and, for confidentiality reasons, in the company specific disclosure in detail. Therefore, the Commission rejected GOR’s claims concerning the application of Article 18 of the basic Regulation.

(41) CRS is produced by coating flat rolled steel coils, sheets and strips by immersion in a bath of molten metal or metal alloy of zinc. The coating metal combines with the steel substrate in a metallurgical reaction to form a multiple layered structure of alloys, resulting in a coating which is metallurgically bonded to the steel. The surface of the product is further treated with chemical passivation to protect the surface against humidity and to reduce the risk of formation of corrosion products during storage and transportation.

(42) CRS is mainly used in the construction sector for various cladding building materials but also for manufacturing domestic appliances, deep-drawing and stamping processes and small welded pipes.

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

(45) An importer requested CRS with a thickness below 0,40 mm (‘thin sizes’) to be excluded from the scope of the investigation. The party argued that thin sizes, more labour-intensive and expensive, form a distinct segment which is produced in insufficient quantities by the Union industry. The party added that the exclusion of thin sizes would not diminish the corrective effect of the measures sought by the complainants, whereas the imposition of anti-dumping measures on thin sizes would hurt users (as they will have no access to such products at competitive prices).