Commission Implementing Regulation (EU) 2023/100 of 11 January 2023 imposing a provisional anti-dumping duty on imports of stainless steel refillable kegs originating in the People’s Republic of China

12.1.2023	EN	Official Journal of the European Union	L 10/36

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 7 thereof,

After consulting the Member States,

Whereas:

1. PROCEDURE

1.1.   Initiation

• (1) On 13 May 2022, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of stainless steel refillable kegs originating in the People’s Republic of China (‘China’ or ‘the country 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 31 March 2022 by the European Kegs Committee (‘the complainant’). The complaint was made on behalf of the Union industry of stainless steel refillable kegs 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.

1.2.   Registration

• (3) Pursuant to Article 14(5a) of the basic Regulation, the Commission should register imports subject to an anti-dumping investigation during the period of pre-disclosure unless it has sufficient evidence within the meaning of Article 5 that the requirements either under point (c) or (d) of Article 10(4) are not met. Given that the evidence on the file did show that the requirement under point (d) was not met, the Commission did not make imports of the product concerned subject to registration under Article 14(5a) of the basic Regulation.

1.3.   Interested parties

• (4) 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 Union producers represented by the complainant; other known Union producers; known importers, traders, and users; known exporting producers; and the authorities of the country concerned about the initiation of the investigation and invited them to participate.

• (5) Interested parties had an 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. No hearing was requested.

1.4.   Sampling

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

Sampling of Union producers

• (7) 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 sales volumes, taking into account their geographical location. This sample consisted of three Union producers. The sampled Union producers accounted for 73 % of the estimated total Union production and 74 % of sales in the Union. The Commission invited interested parties to comment on the provisional sample. No comments were received in that regard. The sample is representative of the Union industry.

1.4.1.   Sampling of importers

• (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) Only one unrelated importer provided the requested information and agreed to be included in the sample. The Commission thus decided that sampling of unrelated importers was not necessary.

1.4.2.   Sampling of exporting producers in China

• (10) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting 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 the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

• (11) Six producers in the country concerned that exported kegs to the Union during the IP, 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 exporting producers 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.

1.5.   Questionnaire replies and verification visits

• (12) 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 the People’s Republic of China (‘GOC’). No reply was received.

• (13) The Commission published online ³ the questionnaires for the sampled exporting producers, the unrelated importers and the Union producers and sent the macro data questionnaire to the Complainant on 20 May 2022.

• (14) The Commission sought and verified all the information deemed necessary for a provisional determination of dumping, resulting injury and Union interest. Verification visits pursuant to Article 16 of the basic Regulation were carried out at the premises of the following companies:

• (15) In view of the outbreak of COVID-19 and the confinement measures put in place the Commission carried out remote crosschecks (‘RCC’) in line with its Notice on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations of the following Chinese exporting producers:

• — Penglai Jinfu Stainless Steel Products Co., Ltd, Shandong, China

• — Ningbo Major Draft Beer Equipment Co., Ltd, Ningbo, Zhejiang, China

1.6.   Investigation period and period considered

• (16) The investigation of dumping and injury covered the period from 1 January 2021 to 31 December 2021 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2018 to the end of the investigation period (‘the period considered’).

2. PRODUCT UNDER INVESTIGATION, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under investigation

• (17) The product under investigation is kegs, vessels, drums, tanks, casks and similar containers, refillable, of stainless steel, commonly known as ‘stainless steel refillable kegs’, with bodies approximately cylindrical in shape, with a wall thickness of 0,5 mm or more, of a kind used for material other than liquefied gas, crude oil, and petroleum products, of a capacity of 4,5 litres or more, regardless of the type of finish, gauge, or stainless steel grade, whether or not with additional components (extractors, necks, chimes or any other component), whether or not painted or coated with other materials (‘kegs’ or ‘the product under investigation’).

• (18) The following products do not fall under the scope of this investigation when imported separately from the product under investigation: necks, spears, couplers or taps, collars, valves and other components of the product under investigation (extractors, necks, chimes or any other component).

2.2.   Product concerned

• (19) The product concerned is the product under investigation originating in China, currently falling under CN codes ex 7310 10 00 and ex 7310 29 90 (TARIC codes 7310100010 and 7310299010) (‘the product concerned’).

2.3.   Like product

• (20) The investigation showed that the following products have the same basic physical and technical characteristics as well as the same basic uses:

• — the product concerned when exported to the Union;

• — the product under investigation produced and sold on the domestic market of China; and

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

• (21) The Commission decided at this stage that those products are therefore like products within the meaning of Article 1(4) of the basic Regulation.

3. DUMPING

3.1.   China

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

• (22) In view of the sufficient evidence available at the initiation of the investigation pointing to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation with regard to China the Commission considered it appropriate to initiate the investigation with regard to the exporting producers from this country having regard to Article 2(6a) of the basic Regulation.

• (23) Consequently, in order to collect the necessary data for the eventual application of Article 2(6a) of the basic Regulation, in the Notice of Initiation the Commission invited all exporting producers in China to provide information regarding the inputs used for producing kegs. Six exporting producers submitted the relevant information.

• (24) 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, 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 invited the GOC to submit its comment on the application of Article 18. No comments were received.

• (25) In point 5.3.2 of the Notice of Initiation, the Commission also specified that, in view of the evidence available, possible appropriate representative third countries were Mexico and Türkiye 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 representative countries in accordance with the criteria set out in 2(6a)(a) first indent of the basic Regulation.

• (26) On 20 July 2022, 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 kegs. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified possible representative countries, namely Mexico, Brazil and Russia as appropriate representative countries. The Commission received no comments on the First Note.

• (27) On 19 September 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. It also informed interested parties that it would establish selling, general and administrative costs ('SG&A') and profits based on producer KHS Industria de Maquinas LTDA in Brazil. The Commission invited interested parties to comment. Comments were received from the two sampled exporting producers.

• (28) After having analysed the comments and information received on the Second Note, the Commission concluded that Brazil was an appropriate choice as representative country from which undistorted prices and costs would be sourced for the determination of the normal value at the provisional stage. The underlying reasons for that choice are further described in detail in Section 3.2.1.1 and following.

3.2.   Normal value

• (29) 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’.

• (30) 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 referred hereinafter as ‘SG&A’).

• (31) 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, the application of Article 2(6a) of the basic Regulation was appropriate.

3.2.1.   Existence of significant distortions

• (32) In recent investigations concerning the steel sector in China ⁴, which is the main raw material to produce kegs, the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present.

• (33) In those investigations, 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 ⁵. In particular, the Commission concluded that in the steel sector 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 ⁶, 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 ⁷. 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 China 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 ⁸. 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 China ⁹. 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 ¹⁰, 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 China ¹¹.

• (34) Like in previous investigations concerning the steel 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. 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 including the Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defence Investigations ¹² (‘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 investigation. The Commission further supplemented these evidentiary 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.

• (35) The request alleged that the Chinese State engages in an interventionist economic policy in pursuance of goals, which coincide with the political agenda set by the Chinese Communist Party (‘CCP’) rather than reflecting the prevailing economic conditions in a free market. The request pointed out in this connection not only to the distortions in the stainless steel market (stainless steel accounting for between 40 % and 60 % of the cost of kegs production) but it claimed that all other factors of production – land, capital, labour - are equally distorted. As a consequence, the request concluded that not only the domestic sales prices of stainless steel 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 or labour, are also affected because their price formation is affected by substantial government intervention.

• (36) To support its position, the request referred to a number of publicly available information sources, such as the Report, the conclusions reached by the EUCCC ¹³, the Commission’s recent investigations of the Chinese steel sector ¹⁴ as well as the conclusions of the G20 Global Forum on Steel Excess Capacity ¹⁵.

• (37) As indicated in recital (24), 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 complainant, 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.

• (38) Specifically in the sector of the product under investigation, i.e. the steel sector, a substantial degree of ownership by the GOC persists. While the nominal split between the number of state-owned enterprises (‘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 ¹⁶. 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 to around ten large-scale enterprises by 2025 ¹⁷. This intention has been repeated by the GOC in April 2019, announcing a release of guidelines on steel industry consolidation ¹⁸. Such consolidation may entail forced mergers of profitable private companies with underperforming SOEs ¹⁹. Since there was no cooperation by the GOC, given the presence of a number of SMEs active in the sector, the exact ratio of the private and state-owned steel producers could not be determined. In any event, the investigation revealed that at least one producer of kegs is an SOE, namely Penglai Jinfu Stainless Steel Products Co., Ltd.

• (39) However, while specific information may not be available for the product under investigation, 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 investigation. 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 ²⁰ or by the 14th 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 ²¹’. 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 ²²’.

• (40) 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 by the GOC, and since most kegs producers are SMEs, it was impossible to systematically establish existence of personal connections between producers of the product under investigation and the CCP. However, the investigation has shown that the management of Shandong Gold Group, an SOE and controlling shareholder of Penglai Jinfu Stainless Steel Products, is closely linked to the CCP: the Chairman of the Board of Directors of Shandong Gold Group is also Secretary of the Party Committee and was a representative at the 20^th National Congress of the CCP and the Director and Executive Manager of Shandong Gold Group is also Deputy Secretary of the Party Committee.

• (41) Given that the product under investigation represents a subsector of the steel sector, information available with respect to steel producers is relevant also to the product under investigation. In the broader category of the steel sector, there is ample evidence of personal connections between the steel producers and the CCP. 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 ²³. 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 ²⁴. 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 with relation to the product under investigation compared to the steel sector in general.

• (42) Both public and privately owned enterprises in the steel sector are subject to policy supervision and guidance. Since there was no cooperation by the GOC in this investigation and the kegs producers are mostly SMEs, it was difficult to establish the exact scale of party building in the enterprises from the kegs industry. However, the investigation has shown that Shandong Gold Group (controlling shareholder of Penglai Jinfu Stainless Steel Products) actively supports Party building activities. The role of the company’s party committee was described as follows: ‘We must firmly seize the great opportunity of the central government, the Shandong Provincial Party Committee and the Provincial Government supporting state-owned enterprises to speed up the construction of world-class enterprises, keep an eye on strategic goals, maintain strategic focus, strengthen strategic implementation, and adhere to the overall arrangement of overall targets, intermediate targets, and annual targets, adhere to the combination of strategic planning and tactical promotion’ and further ‘unswervingly and comprehensively run the party, fully implement the general requirements of party building in the new era, and provide a strong guarantee for high-quality development. It is necessary to comprehensively strengthen the party's political construction, strictly comply with the political discipline and political rules, to effectively improve the political judgment, political comprehension and political implementation of party organizations at all levels and party members and cadres, and to always maintain a high degree of consistency with the Party Central Committee with Comrade Xi Jinping at its core , establish “four consciousness”, enhance “four self-confidence”, and achieve “two maintenance”’ ²⁵.

• (43) 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 sector of the product under investigation. Even though no policy documents guiding specifically the development of the kegs industry as such could be identified during the investigation, the industry benefits from governmental guidance and intervention into the steel sector, given that the product under investigation represents one of its subsectors.

• (44) The steel industry keeps being regarded as a key industry by the GOC ²⁶. This is confirmed in the numerous plans, directives and other documents focused on steel, which are issued at national, regional and municipal level. Under the 14^th Five Years Plan adopted in March 2021, the GOC earmarked the steel industry for transformation and upgrade, as well as optimization and structural adjustment ²⁷.

• (45) Furthermore, the 14th Five Years Plan on Developing the Raw Materials Industry, applicable also to the steel industry, lists the sector as the ‘bedrock of the real economy’ and ‘a key field that shapes China’s international competitive edge’ and sets a number of objectives and working methods which would drive the development of the steel sector in the time period 2021-2025, such as technological upgrade, improving the structure of the sector (not least by means of further corporate concentrations) or digital transformation ²⁸.

• (46) The 14^th FYP on Developing the Raw Materials Industry also includes some specific targets for the development of the steel sector. Section IV Point 3 of the document includes the following provisions: ‘Optimizing the organizational structure: make leading enterprises bigger and stronger. Adhere to the combination of market leadership and government promotion, remove obstacles to cross-regional mergers and reorganizations, remove restrictions such as market segmentation and regional blockades, coordinate and solve major problems encountered in enterprises' cross-regional mergers and reorganizations, support enterprises to speed up cross-regional and cross-ownership mergers and reorganizations, and increase the industry’s concentration level, develop international business. In …, steel, … and other industries, cultivate a group of leading enterprises in the industrial chain with ecological leadership and core competitiveness’.

• (47) The above mentioned FYPs on the central level are there echoed in the provincial and/or municipal FYPs or FYP implementation plans. As an example, the Henan Implementation plan for the transformation and upgrade of the steel industry during the 14^th FYP includes the provisions regarding: point 2(1): strict control of the total production capacity; point 2(2): acceleration and promotion of mergers and acquisitions; point 2(3): construction of characteristic steel production bases ²⁹.

• (48) Apart from the 14^th FYP, the steel industry is also strictly regulated in other policy documents. As an example, Hebei, the largest steel producing province in China, issued a Three-Year Action Plan on Cluster Development in the Steel Industry Chain 2020 - 2022 (applicable during the IP). This document regulates the steel industry in the following way: ‘Adhere to structural adjustment and highlight product diversification. Unswervingly promote the structural adjustment and layout optimization of the iron and steel industry, promote the joint reorganization, transformation and upgrade of enterprises, and comprehensively promote the development of the iron and steel industry towards large-scale enterprises, modernization of technical equipment, diversification of production processes, and diversification of downstream products.’ Furthermore, the plan sets specific targets for the structure of steel enterprises in the province: ‘Steadily foster the development of groups. Accelerate the reform of mixed ownership of state-owned enterprises, focus on promoting the cross-regional merger and reorganization of private iron and steel enterprises, and strive to establish 1-2 world-class large groups, 3-5 large groups with some domestic influence as pillars, and 8-10 new, outstanding and specific enterprise groups’.

• (49) Finally, the plan envisages state support to improve the global competitiveness of the steel enterprises located in Hebei: ‘Appropriately ensure a relevant and diversified development. Support iron and steel enterprises to develop strategic emerging industries such as new generation of information technology, high-end equipment and new materials, and accelerate the development of modern service industries such as modern logistics, financial services, e-commerce etc. Encourage eligible iron and steel enterprises to develop towards deep processing such as automobiles and mechanical parts, steel wire ropes, steel strands welding electrodes etc. Strengthen international production capacity cooperation, encourage iron and steel enterprises to participate in mergers and reorganization of foreign iron and steel enterprises through multiple channels, and guide competitive iron and steel enterprises in the province to invest and build factories abroad’ ³⁰.

• (50) Moreover, the Guiding Catalogue for Industry Restructuring (2019 Version) ³¹ lists steel as an encouraged industry.

• (51) 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 the product under investigation. Such measures impede market forces from operating freely.

• (52) 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 kegs sector referred to above in recital (33) would not affect the manufacturers of the product under investigation.

• (53) The kegs 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 (33). Those distortions affect the sector both directly (when producing the product under investigation or the main inputs), as well as indirectly (when having access to inputs from companies subject to the same labour system in China) ³².

• (54) Moreover, no evidence was submitted in the present investigation demonstrating that the sector of the product under investigation 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 (33). Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

• (55) Finally, the Commission recalled that in order to produce the product under investigation, a number of inputs is needed. When the producers of kegs 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.

• (56) As a consequence, not only the domestic sales prices of kegs 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 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.

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

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

3.2.1.1.   Representative country

General remarks

• (59) 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 ³³;

• — Production of the product under investigation in that country;

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

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

• (60) As explained in recitals (26) - (27), the Commission issued two notes for the file on the sources for the determination of the normal value: the First Note on production factors of 20 July 2022 and the Second Note on the production factors of 19 September 2022. These notes described the facts and evidence underlying the relevant criteria. In the Second Note on production factors, 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 were confirmed.

A level of economic development similar to China and production of the product under investigation

• (61) In the First Note on production factors, the Commission identified Brazil, Mexico and Russia as countries with a similar level of economic development as China according to the World Bank, i.e. they were all classified by the World Bank as ‘upper-middle income’ countries on a gross national income basis, and where production of the product under investigation was known to take place. No comments were received concerning the countries identified in that note.

• (62) In the Second Note the Commission indicated that for one of the countries identified as countries where product under investigation is being produced, i.e. Mexico, the producer of kegs stopped production before the investigation period and no financial data were available after 2017 in Orbis database ³⁴. Mexico was therefore no longer considered a possible representative country for this investigation.

Availability of relevant public data in the representative country

• (63) In the Second Note the Commission indicated that the sole producer of kegs in Russia identified in the First Note did not have a reasonable amount of profit, neither in 2021, nor in 2020.

• (64) In the Second Note, the Commission indicated that it had at its disposal data showing a reasonable amount of profits within the meaning of Article 2(6a)(a) of the basic Regulation only for one producer in Brazil, KHS Industria de Maquinas LTDA and only for the year 2020. No updated financial data were available yet for 2021.

• (65) In 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 the company KHS Industria de Maquinas LTDA, in accordance with Article 2(6a)(a), first indent of the basic Regulation in order to source undistorted prices or benchmarks for the calculation of normal value. Interested parties were invited to comment on the appropriateness of Brazil as a representative country and of KHS Industria de Maquinas LTDA as producer in the representative country.

• (66) Following the Second Note, comments were received from the two sampled exporting producers, that argued the following:

• (a) The producer KHS Industria de Maquinas LTDA in Brazil suggested in the Second Note on the sources for the determination of the normal value was not appropriate, because it was specialised in engineering and production of refilling or accessory equipment, rather than manufacturing of kegs.

• (b) The existence of market distortions in Brazil (anti-dumping duties on stainless steel flat rolled products originating in China, export quotas on stainless steel flat rolled products towards the United States and import tariffs in imports of stainless steel flat rolled products originating in Indonesia, Belgium, Finland, South Africa, China and Germany) made the Brazilian market of stainless steel flat rolled products (HS721933) distorted and thus, the value of this most important factor of production in Brazil was unreliable.

• (c) Brazil applied higher import tariff than many other countries on the three main raw materials (steel, spears and neck). The Brazilian local market was thus more protective than other markets.

• (d) A part of imports of the major factors of production of kegs to Brazil were imported from China (37 % of steel flat rolled products, 50 % of spears and 54 % of neck), thus the market prices of these factors of production in Brazil were also tainted by the distortive prices.

• (67) As a result, the parties claimed that the reliability of the market data in Brazil for the purpose of establishing undistorted market value for these factors of production was questionable.

• (68) The two sampled exporting producers proposed Malaysia as an appropriate representative country, because it had a level of economic development similar to China, even if there was no keg producer in Malaysia.

• (69) However, Malaysia could not be considered as a potential representative country, since, as acknowledged by the parties themselves, there was no production of kegs in Malaysia.

• (70) The Commission further reviewed the evidence ³⁵ on likely market distortions of stainless steel flat rolled products (HS721933) in Brazil. The existence of market anti-dumping duties on stainless steel flat rolled products originating in China is not relevant, since imports from China are excluded when establishing a benchmark price of the raw material. The export quotas on stainless steel flat rolled products towards the United States do not seem to limit the imports from the United States, since it is still the third largest exporter for this product to Brazil (after China and Indonesia). Furthermore, imports of stainless steel flat rolled products to Brazil from the United States are slightly higher priced than the imports from the ten largest importing countries excluding China (16,3 EUR/kg and 14,5 EUR/kg of stainless steel flat rolled products, respectively). In the light of these facts, the Commission rejected the argument that the Brazilian market of stainless steel flat rolled products (HS721933) was distorted due to the anti-dumping duties towards China and the export quotas towards the United States.

• (71) Regarding the import tariff level on the three main raw materials, the Commission noted that the undistorted values used for the calculation of normal value do take into account import duties as they constitute a proxy for a price in the domestic market of the possible representative countries. Therefore, an abstract comparison of the respective levels of import duties for the raw materials is in principle not a relevant factor to compare the appropriateness of the representative countries. In any event, the Commission noted that the level of the import duties is only one of the elements to assess whether a certain market is open or protected, and the party submitted no other specific evidence to show that this was the case for Brazil for the raw materials concerned. Therefore the Commission rejected this argument.

• (72) Regarding the imports from China of the main raw materials, the Commission also compared Brazil and Russia, the two potential representative countries, where production of kegs was confirmed. The analysis of import data showed that the imports from China into Russia of the major factor of production, stainless steel coil (HS721933), representing above 50 % of the cost of production of kegs, were higher than to Brazil (60 % of stainless steel coil to Russia was imported from China, while for Brazil the proportion was much lower (37 %)). Furthermore, the imports from China into Russia of spears, representing above 20 % of the cost of production of kegs, were also higher than to Brazil (68 % and 50 %, respectively). Considering the weight of these two main raw materials (stainless steel coil and spear) in the cost of production of kegs, these differences in import volume from China alone would undermine the quality of data for undistorted values in Russia more than in Brazil. In the light of this, Russia was not considered an appropriate representative country within the meaning of Article 2(6a)(a) of the basic Regulation.

• (73) The Commission also reviewed the evidence on KHS Industria de Maquinas LTDA in Brazil and confirmed that the company was specialised in engineering and production of the filling technology and system for racking beer in kegs, refilling or accessory equipment, rather than manufacture of kegs. It could thus not be considered anymore as a producer of kegs.

• (74) In fact, the Commission had identified two additional producers of kegs in the First Note. Nonetheless, the Commission could not find appropriate financial data for any of the remaining identified kegs producers in Brazil. In the absence of an appropriate benchmark to establish a reasonable SG&A and profit for the product under investigation in Brazil, the sole remaining representative country where production of kegs and hence the availability of the main raw materials was confirmed, the Commission provisionally considered that data of companies in a sector producing a similar product could be appropriate in these circumstances. Therefore, it searched for data on producers of a similar range of products to kegs, namely, products that were similar in terms of the raw material used, the form and the purpose of the final product. The research was based on the NACE codes ³⁶. The data from five companies with NACE code 2592 (light metal packing), producing metal cans, packing products, containers for the food industry, was available in the Orbis database ³⁷ and the products manufactured by those companies could be considered similar to kegs in terms of the raw material used, the form and the purpose of the final product. In addition, in the Orbis database, the two sampled exporting producers in China were also registered under the same NACE code 2592, as the producers of the metal cans, packing products, containers for the food industry. Finally, out of these five producers of metal cans, packing products, containers in Brazil, only one of them, Metalurgica Mococa SA ³⁸, had financial data for the IP.

• (75) Based on the analysis of the available data, the Commission decided to use Brazil as the appropriate representative country at the provisional stage of the investigation and use the financial data of one company, Metalurgica Mococa SA, for the constructed normal value in accordance with the Article 2(6a)(a) of the basic Regulation.

Level of social and environmental protection

• (76) Having established that Brazil 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.

Conclusion

• (77) 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.

Sources used to establish undistorted costs

• (78) 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 investigation 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.

• (79) 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 the Global Trade Atlas (‘GTA’) database 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 ILO for establishing undistorted costs of labour ³⁹ and the Global Electricity Prices research for electricity ⁴⁰.

• (80) In the Second Note, the Commission also informed the interested parties that due to the negligible weight of some of the raw materials in the total cost of production of the sampled exporting producers, these negligible items were grouped under ‘consumables’. The Commission calculated the percentage of the consumables on the total cost of the raw materials and applied this percentage to the recalculated cost of raw materials when using the established undistorted benchmarks in the appropriate representative country.

Undistorted costs and benchmarks

3.2.1.2.   Factors of production

• (81) Considering all the information submitted by the interested parties and collected during the RCC, 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 kegs

Factor of Production	Commodity Code	Undistorted value
Raw materials	Raw materials	Raw materials
Stainless Steel Coil	721933	16,73 CNY/Kg
Spear	84819090	387,18 CNY/Kg
Neck	73269090	100,27 CNY/Kg
Scrap	720421	8,86 CNY/Kg
Labour	Labour	Labour
Labour wages in manufacturing sector	N/A	29,20 CNY/hour
Energy	Energy	Energy
Electricity	N/A	0,7475 CNY/kWh

Raw materials

• (82) 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, 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 China 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 ⁴¹. The Commission decided to exclude imports from China into the representative country as it concluded in recital (58) 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. After excluding the imports into the representative country from China and non-market economy countries, the Commission found that imports of the main raw materials from other third countries remained representative.

• (83) After the Second Note, the sampled exporting producers claimed that the right HS code for spears which should be used in order to establish the undistorted value of this raw material is HS848180 and not HS848190. The exporting producers argued that the code HS848180 stands for taps, cocks, valves and similar appliances for pipes, boiler shells, tanks, vats or the like, whereas the code HS848190 refers to parts of them. The sampled exporters claimed that a spear is a kind of valve in itself, rather than parts of the latter. As the unit measurement for this code is piece/item in the Brazilian nomenclature, it appropriately reflects the reality of the way this material is procured and pricing is made. Additionally, this is the code also used by the suppliers of spears when they export from the EU. Thus, the code HS848180 is the right classification for spears.

• (84) The Commission clarified that the HS heading 8481, among others, also includes ‘gas operated beer dispensing units for bar counters, consisting essentially of one or more hand operated cocks fed by the pressure of carbon dioxide piped into the casks of beer’. The spear of a keg is designed for the maintenance of the pressurized gas (carbon dioxide) within the keg and for the dispense of the carbonized liquid ensuring its conditioned flow. This function is mainly performed by the mechanism included in the body of the keg spear incorporating a valve (or two valves depending on the model). Therefore, a spear can be considered part of the gas operated beer dispensing units covered by the scope of the HS heading 8481 and should be classified under CN code 848190. Furthermore, one of the sampled exporting producers submitted its import documentation of spears, which indicated import of spears under the HS848190. Overall, half of the cooperating exporting producers stated that the code HS848190 is to be used for spears. The claim of the parties to use HS848180 code was therefore rejected.

• (85) Data on imports of spears to Brazil was classified under the two relevant extended codes: 84819010 (parts of aerosol valves, appliances used for bathrooms, etc. and 84819090 (parts of taps, other appliances for canalizations, etc.). The 84819090 was selected, since spears were not parts of aerosol valves.

• (86) For a number of factors of production, the actual costs incurred by the cooperating exporting producers represented individually a negligible share of total raw material costs in the 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 the recital (80).

• (87) In order to establish the undistorted price of raw materials, as provided by Article 2(6a)(a), first indent of the basic Regulation, the Commission applied the relevant import duties of the representative country.

• (88) The Commission expressed the transport cost incurred by the cooperating exporting producer 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, in the context of this investigation, 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 gate.

Labour

• (89) The Commission used the ILO ⁴² statistics to determine the wages in Brazil. The ILO statistics provided information on monthly wages of workers in the manufacturing sector and average weekly hours worked ⁴³ in Brazil in 2021. Additional labour related costs borne by the employer, based on publicly available sources ⁴⁴, were added to the monthly wage.

• (90) During the RCC of one sampled exporting producer the Commission did not find a record for the actual labour hours, only the standard labour hours. The exporting producer reported that actual labour hours were on average 10 minutes higher before and after the shift/day worked to arrive and to leave the production facilities. The Commission therefore increased the standard labour hours of this sampled exporting producer by 20 minutes per shift/day.

Electricity

• (91) In the Second Note, the Commission indicated that it will use the Global Electricity Prices research for electricity ⁴⁵ benchmark. The sampled exporting producers claimed that the Commission should use the data from the EDP Brasil ⁴⁶, the major electricity supplier in the local market of Brazil, taking into account the different tariffs for peak and off-peak periods and relevant prices charged to the category of industrial consumers, which was reliable for the electricity benchmark.

• (92) The Ministry of Mining and Energy in Brazil (Ministério de Minas e Energia) publishes a yearly report on the energy sector in Brazil ⁴⁷. The report of 2021 includes the average electricity tariff ⁴⁸ from all major electricity suppliers applied for the industrial users in Brazil ⁴⁹. The Commission considered this source as the most reliable to establish the electricity benchmark, since it included the average tariffs applied by all major electricity suppliers in Brazil contrary to the data source proposed by the exporting producers, which referred to only one supplier. It therefore used the average electricity tariff for the industrial users published in the report from The Ministry of Mining and Energy in Brazil in 2021.

Manufacturing overhead costs, SG&A and profits

• (93) 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.

• (94) The manufacturing overheads incurred by the cooperating exporting producers were expressed as a share of the costs of manufacturing actually incurred by the exporting producers. This percentage was applied to the undistorted costs of manufacturing.

• (95) For establishing an undistorted and reasonable amount for SG&A and profit the Commission relied on the financial data of Metalurgica Mococa SA in 2021, as extracted from the Orbis database.

Calculation

• (96) 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.

• (97) First, the Commission established the undistorted manufacturing costs. The Commission applied the undistorted unit costs to the actual consumption of each individual factor of production of the cooperating exporting producers. These consumption rates provided by the exporting producers were verified during the remote cross-check. The Commission multiplied the usage factors by the undistorted costs per unit observed in the representative country, as described in recitals (82) - (88).

• (98) Once the undistorted manufacturing cost was established, the Commission applied the manufacturing overheads, as noted in recital (94).

• (99) To the costs of production established as described in the previous recital, the Commission applied the SG&A and profit of Metalurgica Mococa SA in Brazil. SG&A expressed as a percentage of the Costs of Goods Sold (‘COGS’) and applied to the undistorted costs of production, amounted to 8,5 %. The profit expressed as a percentage of the COGS and applied to the undistorted costs of production, amounted to 24,4 %.

• (100) On that basis, 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.

3.2.2.   Export price

• (101) One sampled exporting producer exported to the Union directly to independent customers. The other one exported directly to independent customers or through an unrelated trading company in Hong Kong. In this case, goods were shipped from the exporting producer directly to the independent customer in the Union, while the invoice was issued to the trading company in Hong Kong.

• (102) For the export sales of the product concerned made directly to independent customers in the Union, the export price was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

• (103) For the export sales that were made through an unrelated trading company in Hong Kong, the export price was established on the basis of the price at which the exported product was first sold to that trading company. Although the Commission had evidence (shipping bills etc) that these goods were shipped from the exporting producer directly to the independent customer in the Union, the sales price to the end-customer could not be established. The Commission reached out to the trading company in Hong Kong, however there was no cooperation from that company. The European end-user buying the kegs in question also did not cooperate in the investigation. Therefore, the sales price to the end-customer in the Union was not available at the provisional stage of the investigation.

3.2.3.   Comparison

• (104) The Commission compared the normal value and the export price of the sampled exporting producers on an ex-works basis per product type.

• (105) Where justified by the need to ensure a fair comparison, the Commission adjusted the normal value and/or the export price for differences affecting prices and price comparability, in accordance with Article 2(10) of the basic Regulation. Adjustments were made for transport, insurance, handling, loading costs, customs duty, credit costs and bank charges.

3.2.4.   Dumping margins

• (106) For the sampled cooperating exporting producers, the Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned, in accordance with Article 2(11) and (12) of the basic Regulation.

• (107) On this basis, the provisional weighted average dumping margins expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:

Company	Provisional dumping margin
Penglai Jinfu Stainless Steel Products Co., Ltd	77,1 %
Ningbo Major Draft Beer Equipment Co., Ltd	65,3 %

• (108) For the cooperating exporting producers outside the sample, the Commission calculated the weighted average dumping margin, in accordance with Article 9(6) of the basic Regulation. Therefore, that margin was established on the basis of the margins of the sampled exporting producers, disregarding the margins of the exporting producers with zero and de minimis dumping margins, as well as margins established in the circumstances referred to in Article 18 of the basic Regulation.

• (109) On this basis, the provisional dumping margin of the cooperating exporting producers outside the sample is 72,1 %.

• (110) For all other exporting producers in China, the Commission established the dumping margin on the basis of the facts available, in accordance with Article 18 of the basic Regulation. To this end, the Commission determined the level of cooperation of the exporting producers.

• (111) The Commission considered that the level of cooperation in this case was low since the cooperating exporting producers represented only about 32 % of the estimated total import quantities from China in the IP. Therefore, for all other exporting producers in China, the Commission considered it appropriate to establish the dumping margin on the basis of the representative product type with the highest margin of the sampled exporting producers. Therefore, the country-wide dumping margin applicable to all other non-cooperating exporting producers was set at the level of 91,0 %.

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

Company	Provisional dumping margin
Penglai Jinfu Stainless Steel Products Co., Ltd	77,1 %
Ningbo Major Draft Beer Equipment Co., Ltd	65,3 %
Other cooperating companies	72,1 %
All other companies	91,0 %

4. INJURY

4.1.   Definition of the Union industry and Union production

• (113) According to the information available to the Commission, like product was manufactured by eight producers in the Union during the investigation period. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

• (114) The total Union production during the investigation period was established at around 1 926 200 kegs. The Commission established this figure on the basis of all the available information concerning the Union industry, such as the reply to the macroeconomic questionnaire provided by the complainant. As indicated in recital (7), sampled Union producers represented around 73 % of the estimated total Union production of the like product.

4.2.   Union consumption

• (115) Union consumption developed as follows:

Table 2

Union consumption (pieces)

	2018	2019	2020	Investigation period
Total Union consumption	3 477 583	2 554 726	1 861 260	1 192 884
Index	100	73	54	34
Source: Questionnaire replies of Union producers and customs statistics (see Section 4.3.1).	Source: Questionnaire replies of Union producers and customs statistics (see Section 4.3.1).	Source: Questionnaire replies of Union producers and customs statistics (see Section 4.3.1).	Source: Questionnaire replies of Union producers and customs statistics (see Section 4.3.1).	Source: Questionnaire replies of Union producers and customs statistics (see Section 4.3.1).

• (116) The Commission established the Union consumption of kegs on the basis of total Union industry’s sales in the Union, plus total imports from China. The methodology for determining imports from China is explained in detail in Section 4.3.1 below. Imports from other third countries to the Union were not taken into account as they were considered negligible (see recital (119)).

• (117) Sales of the Union industry on the Union market were obtained from the reply to the questionnaire supplied by the complainant, cross checked with the information provided by the sampled Union producers in their questionnaire replies.

• (118) The product concerned is imported into the Union under two CN codes (ex 7310 10 00 and ex 7310 29 90), depending on the capacity of the keg. Kegs with the capacity of >= 50 litres but <= 300 litres fall under the CN code 7310 10 00, while those with the capacity of < 50 l fall under the CN code 7310 29 90. These two CN codes include also a broad range of other products besides the product under investigation (e.g., cans, tin boxes, feedthroughs for livestock, buckets, fire extinguishers, canisters, containers and tanks for various uses, water bottles, steel barrels, etc.), thus establishing imports based on CN codes alone was not possible.

• (119) As regards imports from other third countries, the Complaint claimed that the Union market is supplied with kegs predominantly by the Union producers and exporters from China. The Commission’s examination of data on suppliers, provided by three major users (see further below at recital (130)) indicated that there are no other suppliers on the market. Thus, the Commission concluded that imports into the Union from other third countries, if any, are negligible and would not have any appreciable impact on the Union consumption.

• (120) Union consumption decreased by 66 % during the period considered. After the initial drop of 27 % in 2019, a more pronounced drop followed in 2020 and the IP (2021). This drop coincided with the years when the Union was hit the hardest by the Covid-19 pandemic and can be attributed to the corresponding so-called ‘lockdowns’, namely, measures introduced by the governments throughout the Union to combat the Covid-19 pandemic.

• (121) Covid-19 measures affected particularly hotels, restaurants, and cafes (‘HORECA sector’). HORECA sector buys beer and other beverages from users, which are most often beer breweries. The beer is delivered to them in kegs which are attached to draught installations through which the beverage is then poured into glasses and served to HORECA sector’s customers.

• (122) During 2020 and the IP, a vast majority of the HORECA sector in the Union was obliged to either shorten its working hours, and/or limit its capacity or remain completely closed for extended periods of time, pursuant to government measures introduced to supress the spread of the Covid-19 pandemic. Such decrease in HORECA sector activity and, consequently, decrease in demand for draught beer, had a logical consequence of decreasing the users’ demand for kegs in which they supply the beer to their HORECA sector customers.

4.3.   Imports from the country concerned

4.3.1.   Methodology used to quantify imports from the country concerned

• (123) In the complaint, the Complainant put forward a methodology to establish imports from the country concerned. This methodology relied on the Complainant’s market knowledge and estimated a notable increase of imports into the Union, 188 % over the period considered, demonstrated in Table 3 below.

Table 3

Sales of Chinese kegs in the Union – Complaint’s estimate (units)

	2018	2019	2020	IP
Via tenders	107 148	482 315	898 664	630 438
Via distributors	182 000	198 000	118 000	202 000
Total	289 148	680 315	1 016 664	832 438
Index	100	235	352	288
Source: Section 201 of the complaint.	Source: Section 201 of the complaint.	Source: Section 201 of the complaint.	Source: Section 201 of the complaint.	Source: Section 201 of the complaint.