Commission Implementing Regulation (EU) 2022/2068 of 26 October 2022 imposing a definitive anti-dumping duty on imports of certain cold-rolled flat steel products originating in the People’s Republic of China and the Russian Federation following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

27.10.2022	EN	Official Journal of the European Union	L 277/149

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,

Having regard to Regulation (EU) 2015/477 of the European Parliament and of the Council of 11 March 2015 on measures that the European Union may take in relation to the combined effect of anti-dumping or anti-subsidy measures with safeguard measures ², and in particular Article 1 thereof,

Whereas:

1. PROCEDURE

1.1.   Previous investigations and measures in force

• (1) By Regulation (EU) 2016/1328 ³ the European Commission imposed anti-dumping duties on imports of certain cold-rolled flat steel products (‘CRF’) originating in the People’s Republic of China (‘the PRC’ or ‘China’) and the Russian Federation (‘Russia’) (‘the original measures’). The investigation that led to the imposition of the original measures will hereinafter be referred to as ‘the original investigation’.

• (2) The anti-dumping duties currently in force for the PRC are 19,7 % on imports from the sampled exporting producers, 20,5 % on the non-sampled cooperating companies and 22,1 % on all other companies, and for Russia range between 18,7 % and 34 % for the sampled exporting producers with a duty rate of 36,1 % for all other companies.

1.2.   Request for an expiry review

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

• (4) The request for review was lodged on 3 May 2021 by the European Steel Association (‘EUROFER’) (‘the applicant’) on behalf of the Union industry of CRF 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 likely result in recurrence of dumping and continuation or recurrence of injury to the Union industry.

1.3.   Initiation of an expiry review

• (5) 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 the Commission initiated, on 3 August 2021, an expiry review with regard to imports to the Union of CRF originating in the PRC and Russia (‘the countries 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 ⁵ (‘the Notice of Initiation’).

1.4.   Review investigation period and period considered

• (6) The investigation of a continuation or recurrence of dumping covered the period from 1 July 2020 to 30 June 2021 (‘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’).

1.5.   Interested parties

• (7) 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, all known Union producers, the known producers in the PRC and Russia and the authorities of the PRC and Russia, known importers, users and traders about the initiation of the expiry review and invited them to participate.

1.6.   Comments on initiation

• (8) 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. The Commission received comments from three exporting producers in Russia, the Russian government, one unrelated importer and one user.

• (9) In their comments on initiation, the three Russian exporting producers claimed that the applicant had failed to present sufficient and reliable evidence that there was a likelihood of continuation or recurrence of injurious dumping from imports from Russia. In addition, the Russian government, the Russian exporting producers, the unrelated importer and a user claimed there was no causal link between the Union industry’s injury situation and imports of CRF from China and Russia. The reasoning of the different parties was that the injury to the Union industry, if it existed, was caused by other factors than injurious imports from Russia and China due to the negligible imports volumes of CRF from the countries concerned.

• (10) However, as also stated in the Notice of Initiation, the applicant alleged that ‘the removal of injury as originally established has been mainly due to the existence of measures and that any recurrence of substantial imports at dumped prices from the countries concerned would likely lead to a recurrence of injury to the Union industry should measures be allowed to lapse’ ⁶. The purpose of the review investigation was to establish whether the expiry of measures is likely to result in continuation or recurrence of injury caused by dumped imports from the countries concerned. The information provided by the applicant at the initiation stage was sufficient to show that injury caused by dumped imports would recur if dumped imports were to resume at higher volumes. Therefore, the Commission rejected the parties’ claims on causality.

• (11) The Russian government claimed that the applicant did not present sufficient evidence of the increased dumping, as stated in Article 5.2 of the Anti-dumping Agreement, while calculating normal value. Furthermore, it argued that the information provided in the open version of the request for expiry review was not detailed enough and showed no exact figures used for calculating the margin, because transport costs, export costs as well as prices on the Russian CRF market and the calculations themselves had been provided in approximate figures. The Russian government requested the Commission to examine the calculations provided in the request and to provide the evidence that these calculations are trustworthy. Moreover, the Russian government referred to Article 6.2 of the Anti-dumping Agreement stating that without an opportunity for a reasonable understanding of the substance of information submitted in confidence, the applicant prevented both the Russian government and the Russian producers, as well as other interested parties from an opportunity to defend their interests in full and asked the Commission and Eurofer to provide more detailed data on dumping margin calculations.

• (12) Concerning the claim on the sufficiency of evidence, the request for review acknowledged that Russian exports of the product concerned to the Union decreased sharply in comparison to the investigation period of the original investigation. Therefore, the request assessed the likelihood of recurrence of dumping by reference to export prices to third countries other than the Union. The analysis of the evidence showed that the request contained sufficient evidence of likelihood of recurrence of dumping.

• (13) The dumping margin calculated in the request reflected the pricing behaviour of the Russian exporting producers on third country markets and did not necessarily reflect the exact degree of dumping which was calculated in the investigation. However, the applicant provided sufficient evidence in the request on export price and normal value showing likelihood of recurrence of dumping. The applicant also provided a sufficiently detailed description of the methodology used in its dumping calculation to permit a reasonable understanding of the substance of the information submitted in confidence.

• (14) In order to assess the normal value of CRF for the Russian exporting producers, the applicant had collected publicly available and subscription-based information on the domestic selling prices of 1 tonne of CRF by the main exporters on their domestic market for the period of reference. The Commission verified and confirmed the export price with the Global Trade Atlas (‘GTA’) database.

• (15) Since imports of the product under review from Russia to the Union have been negligible following the imposition of the anti-dumping duties in 2016, the applicant based the export price on several sources of price information on export sales of Russian CRF to any third countries in 2020. These export prices for 1 tonne of CRF were established on the basis of market intelligence on export prices from Russia. The export price was verified and confirmed with the average GTA price of the three main Russian export destinations.

• (16) The applicant had thus compared, the average ex-works export price of CRF steel products from Russia with a normal value based on Russian domestic prices.

• (17) In its statutory analysis, the Commission took into account only those elements for which evidence was sufficiently adequate and accurate.

• (18) Therefore, the claims of the Russian government were rejected.

• (19) The Commission considered that the non-confidential version of the request available in the file for inspection by interested parties contained all the essential evidence and non-confidential summaries of the confidential data allowing interested parties to properly exercise their rights of defence. Therefore, this claim was rejected.

1.7.   Sampling

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

1.7.1.   Sampling of Union producers

• (21) In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of three Union producers. The Commission selected the sample on the basis of the production and sales volumes of the like product. The sample consisted of three Union producers that accounted for more than 30 % of the estimated total volume of production of the like product in the Union and more than 20 % of the estimated total volume of sales.

• (22) In accordance with Article 17(2) of the basic Regulation, the Commission invited interested parties to comment on the provisional sample. No comments were received and the provisional sample was thus confirmed and was considered representative of the Union industry.

1.7.2.   Sampling of importers

• (23) 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 Annex to the Notice of Initiation.

• (24) No unrelated importer replied to the sampling form. Consequently, the Commission decided that sampling was not necessary.

1.7.3.   Sampling of exporting producers in Russia and China

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

• (26) At the initiation, the Commission made available a copy of the questionnaires in the file for inspection by interested parties and on DG TRADE’s website.

• (27) No Chinese exporting producers provided the requested information and/or agreed to be included in the sample. The Commission informed the Mission of the People’s Republic of China to the European Union about its intention to apply facts available in accordance with Article 18 of the basic Regulation. No comments were received.

• (28) Therefore, since there was no cooperation from the Chinese producers, the findings with regard to the imports from the PRC were made on the basis of the facts available pursuant to Article 18 of the basic Regulation, in particular using trade statistics on imports and exports (Eurostat, the Global Trade Atlas (‘GTA’) ⁷ and OECD ⁸).

• (29) Three Russian exporting producers, namely PJSC Magnitogorsk Iron and Steel Works (MMK) and its related companies (MMK Group), PJSG Novolipetsk Steel (NLMK) and its related companies (NLMK Group) and PJSC Severstal (Severstal) and its related companies (SEVERSTAL Group), provided the requested information and agreed to be included in the sample. However, on 6 September 2021, these three exporting producers informed the Commission that they had decided not to submit individual anti-dumping questionnaire replies but would cooperate with the Commission on all other aspects of the expiry review, such as comments on the review request, likelihood of continuation or recurrence of injury and Union interest. Subsequently, on 13 September 2021, the three Russian exporting producers submitted comments on the request for expiry review, the alleged continuation and likelihood of recurrence of injurious dumping and Union interest. They invited the Commission to conduct selective verification of relevant company-specific data, such as production, capacity and capacity utilisation submitted together with the comments.

• (30) Following this communication, on 21 September and 19 November 2021 the Commission informed the afore-mentioned exporting producers that it considered them as non-cooperating parties and informed them about its intention to apply Article 18 of the basic Regulation and make use of facts available to determine its findings in the investigation. The Commission also informed the authorities of Russia about its intention to apply facts available in accordance with Article 18 of the basic Regulation.

• (31) On 30 September and 29 November 2021, the Commission received comments from the three Russian exporting producers regarding the application of Article 18 of the basic Regulation. They disagreed with the Commission’s assessment of their cooperation status and reiterated their intention to cooperate on other aspects of the review such as continuation or recurrence of injury, likelihood of further injurious dumping and Union interest. They invited again the Commission to verify the data on production, capacity and capacity utilisation they had submitted.

• (32) In this respect, the Russian exporting producers did not submit the requested necessary information in their questionnaire replies. The Commission considered that the Russian exporting producers provided only fragmented information limited to production, capacity and production volume, without supporting evidence. Consequently, since the exporting producers did not provide sufficient and reliable information for the Commission to arrive at a reasonable accurate finding, the Commission used the information available on the file as explained in recital 30. In any event, the Commission used the information provided by the three Russian producers to the extent possible in this regard.

• (33) 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’).

• (34) The Commission also sent questionnaires to the sampled Union producers. The same questionnaires had also been made available online ⁹ on the day of initiation. In addition, the Commission sent a questionnaire to the Union producers association, EUROFER.

• (35) Questionnaire replies were received from the three sampled Union producers and EUROFER.

1.7.4.   Verification

• (36) 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. Due to the outbreak of the COVID-19 pandemic and the consequent measures taken to deal with the outbreak (‘the COVID-19 Notice’) ¹⁰, the Commission was unable to carry out verification visits at the premises of the sampled companies. Instead, the Commission performed Remote cross-checks (‘RCCs’) of the information provided by the following companies via videoconference:

Union producers

• — Voestalpine Stahl GmbH, Austria

• — ThyssenKrupp Steel Europe AG, Germany

• — ArcelorMittal Belgium, Belgium

1.8.   Subsequent procedure

• (37) On 19 August 2022, the Commission disclosed the essential facts and considerations on the basis of which it intended to maintain the anti-dumping duties in force regarding imports from the PRC and Russia. All parties were granted the opportunity to make comments on the disclosure.

• (38) The comments made by interested parties were considered by the Commission and taken into account, where appropriate. The parties who so requested were granted a hearing.

2. PRODUCT UNDER REVIEW, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under review

• (39) The product under review is the same as in in the original investigation namely flat-rolled products of iron or non-alloy steel, or other alloy steel but excluding of stainless steel, of all widths, cold-rolled (cold-reduced), not clad, plated or coated and not further worked than cold-rolled (cold-reduced), currently falling under CN codes ex 7209 15 00 (TARIC code 7209150090), 7209 16 90, 7209 17 90, 7209 18 91, ex 7209 18 99 (TARIC code 7209189990), ex 7209 25 00 (TARIC code 7209250090), 7209 26 90, 7209 27 90, 7209 28 90, 7211 23 30, ex 7211 23 80 (TARIC codes 7211238019, 7211238095 and 7211238099), ex 7211 29 00 (TARIC codes 7211290019 and 7211290099), 7225 50 80 and 7226 92 00 (‘the product under review’).

• (40) The following product types are excluded from the definition of the product under review:

• — flat-rolled products of iron or non-alloy steel, of all widths, cold-rolled (cold-reduced), not clad, plated or coated, not further worked than cold-rolled, whether or not in coils, of all thickness, electrical,

• — flat-rolled products of iron or non-alloy steel, of all widths, cold-rolled (cold-reduced), not clad, plated or coated, in coils, of a thickness of less than 0,35 mm, annealed (known as ‘black plates’),

• — flat-rolled products of other alloy steel, of all widths, of silicon-electrical steel, and

• — flat-rolled products of alloy steel, not further worked than cold-rolled (cold-reduced), of high-speed steel.

• (41) Cold-rolled flat steel products are produced from hot-rolled coils. The cold-rolling process is defined by passing a sheet or strip that has previously been hot rolled and pickled – through cold rolls, i.e. below the softening temperature of the metal. Cold-rolled flat steel products are manufactured to meet certain specifications or proprietary end-user specifications. They can be delivered in various forms: in coils (oiled or not oiled), in cut lengths (sheet) or narrow strips. Cold-rolled flat steel products are an industrial input purchased by end-users for a variety of applications, mainly in manufacturing (general industry, packaging, automotive, etc.) but also in construction.

2.2.   Product concerned

• (42) The product concerned by this investigation is the product under review originating in the PRC and Russia.

2.3.   Like product

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

• — the product concerned when exported to the Union;

• — the product under review sold on the domestic market of the PRC and Russia; and

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

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

3. DUMPING

3.1.   People’s Republic of China

3.1.1.   Preliminary remarks

• (45) During the review investigation period, imports of certain cold-rolled flat steel products from China continued, albeit at lower levels than in the investigation period of the original investigation (i.e. from 1 April 2014 to 31 March 2015). According to Eurostat data, imports of certain cold-rolled flat steel products from China accounted for less than 1 % of the Union market in the review investigation period compared to 10,3 % ¹¹ market share during the original investigation. In absolute terms, China exported about 32 000 tonnes to the Union during the review investigation period, which is a significant decrease compared to about 732 000 tonnes ¹² that it exported to the Union during the investigation period of the original investigation.

• (46) During the original investigation, the Commission found that exports of the product concerned from China were dumped at a significant level on the Union market. The dumping margins of the cooperating Chinese exporters ranged from 52,7 % to 59,2 %. Due to the application of the lesser duty rule, the anti-dumping duties imposed on Chinese imports were set at a much lower level, ranging from 19,7 % to 22,1 %.

• (47) As mentioned in recital 27, none of the Chinese exporters/producers cooperated in the investigation. Therefore, the Commission informed the authorities of the PRC that due to the absence of cooperation, the Commission might apply Article 18 of the basic Regulation concerning the findings with regard to the PRC. The Commission did not receive any comments or requests for an intervention of the Hearing Officer in this regard.

• (48) Consequently, in accordance with Article 18(1) of the basic Regulation, the findings in relation to the likelihood of continuation or recurrence of dumping with regard to the PRC were based on facts available, in particular the information contained in the request for the expiry review and in the submissions by the interested parties, combined with other sources of information, such as trade statistics on imports and exports (Eurostat, the GTA ¹³, and OECD ¹⁴), and independent providers of financial data, such as Global Financials published by Dunn & Bradstreet ¹⁵.

3.1.2.   Dumping

3.1.2.1.   Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation for the imports of certain cold-rolled flat steel products originating in the PRC

• (49) 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.

• (50) 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. 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, by Note Verbale dated 13 September 2021, 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 the PRC.

• (51) In point 5.3.2. of the Notice of Initiation, the Commission also specified that, in view of the evidence available, a possible representative third country for China was in this case Brazil, 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) of the Basic regulation.

• (52) On 24 November 2020, the Commission informed by a note (‘the First Note’) 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 certain cold-rolled flat steel products. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified possible representative countries, namely Brazil, Mexico, Russia and Turkey. The Commission received no comments on the First Note.

• (53) On 17 March 2022, the Commission informed by a second note (‘the Second Note’) interested parties on the relevant sources it intended to use for the determination of the normal value, with Brazil as the representative country. No comments were received.

3.1.2.2.   Normal value

• (54) 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’.

• (55) However, according to Article 2(6a)(a) of the basic Regulation, ‘in case it is determined […] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks’, and ‘shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits’ (‘administrative, selling and general costs’ is refereed hereinafter as ‘SG&A’).

• (56) As further explained in the following subsections, 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 Chinese exporting producers, the application of Article 2(6a) of the basic Regulation was appropriate.

3.1.3.   Existence of significant distortions

• (57) In recent investigations concerning the steel sector in the PRC ¹⁶, the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present.

• (58) In those investigations, the Commission found that there is substantial government intervention in the PRC resulting in a distortion of the effective allocation of resources in line with market principles ¹⁷. In particular, the Commission concluded that in the steel sector, which is the main raw material to produce the product under review, not only does a substantial degree of ownership by the GOC persist in the sense of Article 2(6a)(b), first indent of the basic Regulation ¹⁸, 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 ¹⁹. 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 ²⁰. 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 ²¹. In the same vein, the Commission found distortions of wage costs in the steel sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation ²², 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 ²³.

• (59) Like in previous investigations concerning the steel sector in the PRC, the Commission examined in the present investigation whether it was appropriate or not to use domestic prices and costs in the PRC, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the request, as well as in the Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defense Investigations ²⁴ (‘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.

• (60) The request alleged that the Chinese economy as a whole is widely influenced and affected by various all-encompassing interventions by the GOC or other public authorities on various levels of government, in view of which domestic prices and costs of the Chinese steel industry cannot be used in the present investigation. To support its position, the request referred to the Commission’s recent investigations of the Chinese steel sector ²⁵ or the conclusions of the G20 Global Forum on Steel Excess Capacity ²⁶.

• (61) More specifically, the request pointed out that against the background of the ‘socialist market economy’ doctrine enshrined in the PRC Constitution, the omnipresence of the Chinese Communist Party (‘CCP’) and the government influence over the economy by means of strategic planning initiatives – such as the 13^th and 14^th Five-Years Plans – the GOC’s interventionism takes various forms, namely administrative, financial and regulatory.

• (62) The request provided examples of elements pointing to existence of distortions, as listed in the first to sixth dash of Article 2(6a)(b) of the basic Regulation. In particular, referring to previous Commission investigations in the steel sector, to the Report, to reports by third countries authorities (USTR) and by other institutions (IMF) the applicant submitted that:

• — The market of CRF is served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the PRC authorities, given in particular the CCP’s influence over both private and state-owned companies by means of CCP nominations in companies, as well as in view of the systematic intermingling of State and CCP offices. The applicant further submitted that while the steel sector consists approximately half of state-owned and half of private companies in terms of production and production capacity, four out of the five biggest steel producers are SOEs, including Baowu, the second largest crude steel producer worldwide which is fully state-owned and closely aligned with the GOC’s steel policy. The applicant pointed out in this connection that the GOC has been pursuing the plan to consolidate 70 % of iron and steel production in ten champion companies by 2025, a strategy which affects also the CRF industry, e.g. by the Baowu acquisition of the CRF producer Maanshan Iron & Steel in 2019;

• — State presence in firms allows the state to interfere with respect to prices or costs, notably by exercising regulatory and managerial control over SOEs, as well as through an increasing role of CCP in both state-owned and private companies which have been urged in recent years to leave major decisions to the CCP. The applicant further referred to personal overlaps between the state-controlled CISA association and the largest private steel producer, the Shagang group, as well as to State presence in upstream sector companies for which targets are set which result in abnormally low costs for the steel industry.

• — Public policies or measures discriminate in favour of domestic suppliers or otherwise influence free market forces, given in particular the system of planning which funnels resources to selected industries, such as the steel sector. The applicant illustrated this by quoting the draft 14th Five-Years Plan for the steel industry which reiterates its importance for the Chinese economy, as well as by referring to other planning and strategic documents which foresee support to the steel sector, such as Made in China 2025. The applicant further referred to other public policies affecting free market forces, such as the GOC steering the prices of raw materials through numerous measures, such as export quotas, export licensing requirements, export duties or VAT rebates, through energy price differentiation. In addition, the request describes the incentives provided by the Chinese authorities to steel producers which participate in the Belt and Road Initiative, aimed at fostering the presence of Chinese companies on foreign markets;

• — The lack, discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws results in the survival of large numbers of ‘zombie companies’ which contribute to the persistence of unused capacities, an issue particularly felt in the steel sector and reverberating in the Chinese financial and borrowing markets. The applicant also pointed out that given the absence of private land ownership in China, the Chinese state intervenes in the land use by the steel sector, as also already found by the Commission in previous investigations ²⁷;

• — Wage costs are distorted, insofar as no free bargaining exists and the only legally recognised trade union, the ACFTU is subject to CCP leadership. The applicant also pointed out that China has still not ratified several fundamental ILO convention and that the Chinese workforce is impacted by the household registration system;

• — Access to finance is granted by institutions which implement public policy objectives, or otherwise do not act independently of the state, due to the dominant presence of State-owned and controlled banks in which the State and CCP have influence over personnel and business decisions and which align themselves with the country’s industrial policy objectives. According to the request, Chinese CRF producers massively benefit from preferential lending by those banks. The applicant pointed out that also private banks must take national policy into account when conducting their business. Similarly to the distortions in the banking sector, the request describes the dominant role of government-related players in the bond market and the distortive role of the State-owned credit rating agencies or private agencies strongly influenced by the State, which opens the way to financing at more favourable rates to encouraged industries than those that would have been available on financial markets operating according to market principles.

• (63) As indicated in recital 50, the GOC did not comment or provide evidence supporting or rebutting the existing evidence on the case file, including the Report and the additional evidence provided by the applicant, on the existence of significant distortions and/or on the appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand.

• (64) Specifically in the sector of the product under review, i.e. the steel sector, a substantial degree of ownership by the GOC persists. Many of the largest CRF producers are owned by the State, such as, for example, Hebei Iron and Steel, Handan Iron and Steel, Baoshan Iron and Steel, Shanghai Meishan Iron and Steel, BX Steel Posco Cold Rolled Sheet, WISCO International Economic and Trading, Maanshan Iron and Steel, Tianjin Rolling One Steel or Inner Mongolia Baotu Steel Union. Baosteel, another major Chinese enterprise that engages in steel manufacturing, is part of the China Baowu Steel Group Co. Ltd. (formerly Baosteel Group and Wuhan Iron & Steel), the world’s largest steel producer ²⁸ which is ultimately 100 % owned by the central SASAC ²⁹. While the nominal split between the number of SOEs and privately owned companies is estimated to be almost even, from the five Chinese steel producers ranked in the top 10 of the world’s largest steel producers, four are SOEs ³⁰. At the same time, while the top ten producers only took up some 36 % of total industry output in 2016, the GOC set the target in the same year to consolidate 60 % to 70 % of steel production in around ten large-scale enterprises by 2025 ³¹. This intention has been repeated by the GOC in April 2019, announcing a release of guidelines on steel industry consolidation ³². Such consolidation may entail forced mergers of profitable private companies with underperforming SOEs ³³. Since there was no cooperation from Chinese exporters of the product under review, the exact ratio of the private and state owned cold-rolled flat steel producers could not be determined. However, while specific information may not be available for the CRF sector, the sector represents a sub-sector of the steel industry and the findings concerning the steel sector are therefore deemed indicative also for the product under review.

• (65) The latest Chinese policy documents concerning the steel sector confirm the continued importance which GOC attributes to the sector, including the intention to intervene in the sector in order to shape it in line with the government policies. This is exemplified by the Ministry of Industry and Information Technology’s draft Guiding Opinion on Fostering a High Quality Development of Steel Industry which calls for further consolidation of the industrial foundation and significant improvement in the modernization level of the industrial chain ³⁴ or by the 14^th Five Years Plan on Developing the Raw Material Industry according to which the sector will ‘adhere to the combination of market leadership and government promotion’ and will ‘cultivate a group of leading companies with ecological leadership and core competitiveness’ ³⁵. Similar examples of the intention by the Chinese authorities to supervise and guide the developments of the sector can be seen at the provincial level, such as in Shandong which not only foresees ‘building a steel industry ecology […], establish manufacturing parks, extend the industrial chain and create industrial clusters’ but want the steel industry to ‘provide a demonstration for the transformation and upgrading […] in our province and even the whole country’ ³⁶.

• (66) 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, due to the lack of cooperation from the side of the CRF producers, it was impossible to systematically establish existence of personal connections between producers of the product under review and the CCP. However, given that CRF represents a subsector of the steel sector, information available with respect to steel producers is relevant also to CRF. To provide an example, Baowu’s Chairman of the Board of Directors serves at the same time as the Party Committee Secretary with the General Manager being the Deputy Secretary of the Party Committee ³⁷. Similarly, the Chairman of Baosteel’s Board of Directors occupies the position of the Party Committee’s secretary, while the Executive Manager is the Deputy Secretary of the Party Committee ³⁸. More generally, in view of the general applicability of the legislation on CCP presence in companies, it cannot be assumed that the ability of the GOC to interfere with prices and costs through State presence in firms would be different compared to the steel sector in general.

• (67) Both public and privately owned enterprises in the CRF sector are subject to policy supervision and guidance. The following examples illustrate the above trend of an increasing level of intervention by the GOC in the CRF sector. Many CRF producers explicitly emphasise Party building activities on their websites, have party members in the company management and underline their affiliation to the CCP. For instance, Baowu indicates that 301 Party Committees exist within the group, with the number of CCP members among Baowu’s staff amounting to 84 571 ³⁹. Moreover, the group indicates the following concerning Party building in the enterprise: ‘Strengthen the leadership of the party and improve corporate governance, improve the modern enterprise system. China Baowu fully implements the requirements of the ‘Opinions on Strengthening the Party’s Leadership in the Improvement of Corporate Governance by Central Enterprises’, […] The revised and improved decision-making system for major matters further improved the decision-making authority of the party committee, the board of directors, managers and other governance bodies, the decision-making matters and forms authorized by the board of directors […]. […] Baowu adheres to and implements the simultaneous planning of party building and enterprise reform, the simultaneous establishment of party organizations and working institutions, the simultaneous allocation of party organization leaders and party affairs staff ⁴⁰’.

• (68) Further, policies discriminating in favour of domestic producers or otherwise influencing the market in the sense of Article 2(6a)(b), third indent of the basic Regulation are in place in the CRF sector. Even though CRF is a specialised industry and no specific policy documents guiding specifically the development of the CRF industry as such could be identified during the investigation, the CRF industry benefits from governmental guidance and intervention into the steel sector, given that CRF represents one of its subsectors.

• (69) The steel industry is regarded as a key industry by the GOC ⁴¹. This is confirmed in the numerous plans, directives and other documents focused on steel, which are issued at national, regional and municipal level such as the ‘Steel Industry Adjustment and Upgrading plan for 2016-2020’, valid during a significant part of the review investigation period. This Plan stated that the steel industry is ‘an important, fundamental sector of the Chinese economy, a national cornerstone’ ⁴². The main tasks and objectives set out in this Plan cover all aspects of the development of the industry ⁴³. The 13^th Five-Year Plan on Economic and Social Development ⁴⁴, applicable during the review investigation period, envisaged support to enterprises producing high-end steel product types ⁴⁵. It also focused on achieving product quality, durability and reliability by supporting companies using technologies related to clean steel production, precision rolling and quality improvement ⁴⁶. Similarly, under the 14^th Five Years Plan adopted in March 2021, the GOC has earmarked the steel industry for transformation and upgrade, as well as optimization and structural adjustment ⁴⁷.

• (70) The Guiding Catalogue for Industry Restructuring (2019 Version) ⁴⁸ (‘the Catalogue’) lists steel as an encouraged industry. The other important raw material used for the production of CRF is iron ore. Iron ore was covered by the National Mineral Resource Plan 2016-2020 during a significant portion of the review investigation period. The plan envisaged, among others, to ‘ensure enterprise concentration and develop large and medium sized mines competitive on the market’, ‘ensure guidance of local resources so as to concentrate them towards large-sized mining groups’, ‘reduce the burden on iron ore enterprises, raise the competitiveness of domestic iron ore enterprises’, ‘adequately control the development of 1 000 meter-deep mines and small-scale low-grade iron ore mines’.

• (71) Iron ore is also mentioned in the 13^th Five-Years Plan on Steel 2016-2020, which was in force during a significant portion of the review investigation period. The plan envisaged for iron ore: ‘keep on supporting exploration works in domestic key mineral areas, […], support a number of existing and strongly competitive domestic iron ore enterprises, thanks to a wider and intensified development, […], and to strengthen the role of domestic mineral resources bases as regards security (of supplies)’.

• (72) Iron ore is classified as a Strategic Emerging Industry (‘SEI’) and therefore covered by the 13th Five-Years Plan on SEIs. Iron ore and ferro alloys are also all listed in the Catalogue. Ferro alloys are further mentioned in the 2018 MIIT Guiding Catalogue for Industry Development and Transfer. The examples above concerning the steel sector in general and the iron ore business in particular, the latter being an important raw material to produce CRF, demonstrate the importance the GOC is paying to these sectors. As such, the GOC guides also the further development of the CRF sector in accordance with a broad range of policy tools and directives and controls virtually every aspect in the development and functioning of the sector. Thus, the CRF industry benefits from governmental guidance and intervention concerning the main raw materials to manufacture CRF, namely iron.

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

• (74) 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 CRF sector referred to above in recital 55 would not affect the manufacturers of the product under review.

• (75) The CRF sector is also affected by the distortions of wage costs in the sense of Article 2(6a)(b), fifth indent of the basic Regulation, as also referred to above in recital 55. 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 the PRC) ⁴⁹.

• (76) Moreover, no evidence was submitted in the present investigation demonstrating that the CRF sector is not affected by the government intervention in the financial system in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, as also referred to above in recital 55. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

• (77) Finally, the Commission recalls that in order to produce CRF, a number of inputs is needed. When the producers of CRF purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly 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. In addition, they are subject to the planning system that applies across all levels of government and sectors.

• (78) As a consequence, not only the domestic sales prices of CRF 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. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout the PRC. This means, for instance, that an input that in itself was produced in the PRC by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth.

• (79) No evidence or argument to the contrary has been adduced by the GOC or the exporting producers in the present investigation.

• (80) 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 therein. On that basis, and in the absence of any cooperation from the GOC, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case. Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as described in the following section.

3.1.4.   Representative country

3.1.4.1.   General remarks

• (81) 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 ⁵⁰;

• — Production of the product under review in that country ⁵¹;

• — 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.

• (82) As explained in recitals 52 and 53, 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. No comments were received by the parties on these elements and on the relevant sources as laid down in the two above-mentioned notes. In the Second Note, the Commission informed interested parties of its intention to consider Brazil as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed.

3.1.4.2.   A level of economic development similar to the PRC

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

• (84) The applicant had proposed Brazil as an allegedly appropriate representative country in its request, since Brazil was home to several integrated steel producers and was a prime example of a competitive domestic market for the main steel products, including the product under review. The applicant also indicated in its request that all the inputs used in the production of the product under investigation in Brazil are commonly imported from multiple origins, and to a large extent from non-distorted sources.

• (85) No comments were received concerning the countries identified in that note.

3.1.4.3.   Availability of relevant public data in the representative country

• (86) In the First Note the Commission indicated that for the countries identified as countries where the product under review is being produced, i.e. Brazil, Mexico, Russia and Turkey, the availability of public data needed to be further verified, in particular with regard to the public financial data from producers of the product under review.

• (87) With regard to Mexico, the Commission identified two companies that were identified in the First Note as producers. However, one of these two companies was loss making from 2016 onwards, and including 2020. For the other company, it turned out that its financial statements for the year 2020 were not consistent with its financial statements for the year before (2019): for instance, the net sales were found to be about 7 times lower in 2020 than in 2019. No information was found substantiating such difference in net sales (also impacting the net profits) between the years 2020 and 2019. Therefore, both companies were considered not to be suitable candidates for the determination of manufacturing overhead, SG&A and profit. In the absence of other information on file available to the Commission on the presence of other companies producing the product under review in Mexico with readily available financial data, the Commission concluded that Mexico could no longer be considered an appropriate representative country.

• (88) With regard to Russia, the Commission identified two companies that were identified in the First Note as producers and which had publicly available financial data. Both companies were profitable in 2020 and in the years before. However, as indicated in recital 91, the Commission identified a number of issues with the data available for Russia, as it did not import a number of important raw materials, such as liquefied natural gas, used for the production of the product under investigation. Moreover, natural gas prices appeared to be distorted in Russia. Therefore, the Commission concluded that Russia was not suitable to be considered as an appropriate representative country for this investigation.

• (89) With regard to Turkey, the Commission identified two companies in the First Note as producers. However, for one of them, no recent readily available financial statements were available. For the other company, despite the fact that it was profitable in 2020 and the years before, the Commission considered the level of selling and general costs (‘SG&A’) of this company not reasonable because its SG&A expressed as a percentage of its cost of manufacturing was low (less than 2 % in 2020) or even negative. The Commission therefore concluded that it could not use the data of these companies as an undistorted and reasonable amount for SG&A for establishing the undistorted normal value. As a result, the Commission concluded that Turkey could not be considered as an appropriate representative country for this investigation.

• (90) Finally, with respect to Brazil, the Commission identified five companies producing CRF in the First Note. However, two out of these five companies had a negative selling and general costs (‘SG&A’) expressed as a percentage of their cost of manufacturing, therefore their data could not be used for the purpose of establishing undistorted normal value. The other three Brazilian companies had recent public financial data showing profits and reasonable amount for SG&A for the year 2020.

• (91) The Commission also analysed the imports of the main factors of production into Brazil, Mexico, Russia and Turkey. The analysis of import data showed that Russia did not import some important factors of production. Moreover, natural gas prices appeared to be distorted in Russia. In addition, the analysis of import data showed that Turkey did not import liquefied natural gas (HS 2711 11 natural gas, liquefied) and only imported a limited quantity of oxygen (HS 2804 40 oxygen). Therefore neither Russia nor Turkey could be considered as a suitable representative country.

• (92) In the light of the above considerations, the Commission informed the interested parties with the Second Note that it intended to use Brazil as an appropriate representative country and three Brazilian companies (ArcelorMittal Brazil, CSN, and Usiminas), 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.

• (93) Interested parties were invited to comment on the appropriateness of Brazil as a representative country and of the three companies (ArcelorMittal Brazil, CSN, and Usiminas) as producers in the representative country. Following the Second Note, no comments were received.

3.1.4.4.   Level of social and environmental protection

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

3.1.4.5.   Conclusion

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

3.1.5.   Sources used to establish undistorted costs

• (96) In the First Note, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under review by the exporting producers 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.

• (97) Subsequently, in the Second Note, 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 the following sources for establishing undistorted costs of energy: the electricity price as charged by one of the largest electricity suppliers in Brazil, the company EDP Brasil ⁵², whereas it would use the data – as further explained in recital 109 – for the price of natural gas in Brazil. Moreover, the Commission stated that for establishing undistorted costs of labour it would use the ILO statistics to determine the wages in Brazil. The ILO statistics ⁵³ provide information on monthly wages of employees ⁵⁴ and average weekly hours worked in Brazil, in the manufacturing sector ⁵⁵, in 2020.

• (98) In the Second Note, the Commission also informed the interested parties that given the absence of cooperation from Chinese exporting producers it would group together the negligible weight of some of the raw materials in the total cost of production under ‘consumables’, based on the information submitted in the request by the applicant. Further, the Commission informed that it would apply the percentage to the recalculated cost of raw materials based on the information provided by the applicant in its request for determining the consumables when using the established undistorted benchmarks in the appropriate representative country.

• (99) No comments were received.

3.1.6.   Undistorted costs and benchmarks

3.1.6.1.   Factors of production

• (100) The Commission asked the applicant to provide clarifications on the relevant factors of production used for the production processes starting from semi-finished hot-rolled products and to submit an update on the level of transport costs covering the entire review investigation period. The applicant provided the requested information on 17 February 2022.

• (101) Considering all the information based on the request and subsequent information submitted by the applicant, 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 certain cold-rolled flat products

Factor of Production	Commodity Code	Undistorted value in CNY	Unit of measurement
Raw materials	Raw materials	Raw materials	Raw materials
Dolomite	251810 , 251820 and 251830	169,9	Tonne
Limestone	252100	160,8	Tonne
Quicklime	252210	852,8	Tonne
Iron ores and concentrates	260111 and 260112	1 206,8	Tonne
Ferrous products	720310 and 720390	453 671	Tonne
Anthracite and Bituminous coal	270111 and 270112	662	Tonne
Coke and semi-coke of coal	270400	2 027,6	Tonne
Oxygen	280440	8 796,3	Cubic meter
Ferro-manganese	720211 and 720219	9 388,2	Tonne
Ferro-chromium	720241 and 720249	9 470,6	Tonne
Semi-finished products of iron or non-alloy steel	7207	4 256,3	Tonne
Flat-rolled products of iron or non-alloy steel	72081000 , 72082500 , 72082610 , 72082690 , 72082710 , 72082790 , 72083610 , 72083690 , 72083700 , 72083810 , 72083890 , 72083910 , 72083990 , 72084000 , 72085100 , 72085200 , 72085300 , 72085400 , 72089000 , 72111300 , 72111400 , 72111900	4 637,9	Tonne
Flat-rolled products of other alloy steel, of a width of 600 mm or more	72253000 , 72254010 , 72254090	8 539,6	Tonne
Flat-rolled products of other alloy steel, of a width of less than 600 mm	72269100	9 081,8	Tonne
Byproduct: Waste	Byproduct: Waste	Byproduct: Waste	Byproduct: Waste
Waste and scrap of iron or steel	720430 and 720449	2 383,3	Tonne
Turnings, shavings, chips, milling waste, sawdust, filings, trimmings and stampings of iron or steel	720441	3 269,1	Tonne
Labour	Labour	Labour	Labour
Labour		24,8	per man hour
Energy	Energy	Energy	Energy
Electricity		547,7	KWH
Natural gas	271111 and 271112	1 638	Tonne

3.1.6.2.   Raw materials

• (102) Based on the information provided by the applicant in its request, there are two main production processes to produce certain cold-rolled flat steel products:

• — The first production process, starting from raw materials with use of a blast oxygen furnace (BOF): In this production process, the first step is the production of the ‘Full-hard cold rolled flat’ (‘FH CRF’) from raw materials (mainly iron ore and coking coal), i.e. the product obtained right after the hot-rolled material is passed through the cold rolling mill for thickness reduction. The second step is the annealing, the re-heating of the FH CRF to restore the properties of steel.

• — The second production process, starting from the semi-finished products, i.e. the hot rolled flat steel products: The production of CRF starts with the purchased hot-rolled flat steel (‘HRF’) coils (‘pickled coils’) which will constitute the overwhelming cost share of the inputs.

• (103) In order to establish the undistorted price of raw materials (in case of the first production process) and of the hot rolled flat steel products (in case of the second production process) as delivered at the gate of a representative country producer, the Commission used as a basis the weighted average import price to the representative country as reported in the GTA, to which import duties and transport costs were added. An import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding the PRC and countries which are not members of the WTO, listed in Annex 1 of Regulation (EU) 2015/755 of the European Parliament and the Council ⁵⁶. The Commission decided to exclude imports from the PRC into the representative country as it concluded in recital 80 that it is not appropriate to use domestic prices and costs in the PRC due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. Given that there is no evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected export prices. After excluding imports from the PRC into the representative country, the volume of imports from other third countries remained representative.

• (104) A number of factors of production represented a negligible share of total raw material costs in the review investigation period. As the value used for these had no appreciable impact on the dumping margin calculations, regardless of the source used, the Commission decided to include those costs into consumables. As explained in recital 98, the Commission applied the percentage provided by the applicant in its request for determining the amount of consumables when using the established undistorted benchmarks in the appropriate representative country.

• (105) With regard to import duties, the Commission noted that Brazil imported its most relevant raw materials (iron ore from more than 5 countries, and coal and coke from more than 10 countries). Given that in an expiry review it is not necessary to calculate an exact margin of dumping, but rather to establish the likelihood of continuation or recurrence of dumping, the Commission calculated import duties for each raw material on the basis of representative volumes of imports from a limited number of countries, accounting for at least 80 % of total imports of the most relevant raw materials (iron ore, coal and coke).

• (106) With regard to transport costs, absent any cooperation, the Commission asked the applicant to submit an update on the level of domestic transport costs covering the entire review investigation period. On respectively 4 and 17 February 2022, the applicant submitted the requested information. The Commission expressed the domestic transport cost for the supply of raw materials as a percentage of the actual cost of such raw materials and then applied the same percentage to the undistorted cost of the same raw materials in order to obtain the undistorted transport cost. The Commission considered that the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory.

3.1.6.3.   Labour

• (107) The Commission used the ILO statistics to determine the wages in Brazil. The ILO statistics ⁵⁷ provide information on monthly wages of employees ⁵⁸ and average weekly hours worked in Brazil, in the manufacturing sector ⁵⁹, in 2020.

3.1.6.4.   Electricity

• (108) The Commission used the electricity price tariff reported by one of the largest electricity suppliers in Brazil, the company EDP Brasil ⁶⁰ to establish the undistorted value for electricity cost.

3.1.6.5.   Natural gas

• (109) The price of natural gas in Brazil was based on data which provides duty-paid import prices for the imported gas by combining the import quantities and values extracted from GTA with tariff data obtained from MacMap ⁶¹.

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

• (110) 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.

• (111) The Commission used the financial data of three Brazilian companies (ArcelorMittal Brazil, CSN, and Usiminas), producers in the representative country, as referred to in recital 90.