Commission Implementing Regulation (EU) 2023/968 of 16 May 2023 imposing a definitive anti-dumping duty on imports of certain heavy plate of non-alloy or other alloy steel originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Article 11(2) thereof,

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) By Implementing Regulation (EU) 2017/336 (3), the European Commission (‘the Commission’) imposed anti-dumping duties on imports of certain heavy plates of non-alloy or other alloy steel, originating in the People’s Republic of China, (‘the PRC’ or ‘China’ or ‘the country concerned’), (‘the original measures’). The investigation that led to the imposition of the original measures will be referred to hereinafter as ‘the original investigation’.

(2) By Implementing Regulation (EU) 2019/1382 (4) (‘the safeguard Regulation’), the Commission amended certain Regulations imposing anti-dumping or anti-subsidy measures on certain steel products subject to safeguard measures.

(3) The anti-dumping duties currently in force are at rates ranging between 65,1 % and 73,7 % on imports from the sampled exporting producers; at the rate of 70,6 % on imports from the non-sampled cooperating companies; and at the rate of 73,7 % on imports from all other companies from China.

(4) Following the publication of a notice of impending expiry (5) the Commission ('the Commission') received a request for a review pursuant to Article 11(2) of the basic Regulation.

(5) The request for review was submitted on 26 November 2021 by the European Steel Association EUROFER (‘the applicant’) on behalf of the Union industry of certain heavy plates of non-alloy or other alloy steel in the sense of Article 5(4) of the basic Regulation.

(6) The request for review was based on the grounds that the expiry of the measures would be likely to result in continuation or recurrence of dumping and of injury to the Union industry.

(7) 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 25 February 2022, an expiry review with regard to imports into the Union of certain heavy plates of non-alloy or other alloy steel originating in China 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 (6) (‘the Notice of Initiation’).

(8) The investigation of continuation or recurrence of dumping covered the period from 1 January 2021 to 31 December 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 2018 to the end of the review investigation period (‘the period considered’).

(9) 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 and other known Union producers, the known producers in the PRC and the authorities of the PRC, known importers, users, traders, as well as associations known to be concerned, about the initiation of the expiry review and invited them to participate.

(10) 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.

(11) No parties requested to be heard.

(12) The Commission received comments on initiation from China Iron and Steel Association (‘CISA’) and Primex Steel Trading GmbH (‘Primex’). The applicant also provided comments in this regard.

(13) Primex claimed that the request did not contain sufficient evidence of likelihood of recurrence or continuation of dumping. In particular, Primex claimed that the level of imports in the Union in case the measures are terminated will depend not only on the spare capacity in the PRC but also on the demand in the Union, price and cost relations as well as the intensity of competition on the world market, the existence of trade barriers on the world market and the development of exchange rates. Primex also claimed that the different sources for the spare capacity used by the applicant in the request raised doubt about the validity of this data. Primex stated that due to the change of the steel policy in China, including a reduction in certain export VAT refunds, there will be a moderate increase of imports into the Union in case measures were terminated. Primex also claimed that the Union market was not as attractive for the Chinese exporters as the applicant argued in the request for review.

(14) The analysis of the request has shown that there was sufficient evidence at initiation stage pointing to a likelihood of continuation or recurrence of dumping should the anti-dumping measures applicable to imports from the PRC be allowed to lapse. The applicant based its analysis not only on the spare capacity in the PRC, but also on the attractiveness of the Union market due to its size and the established network of trading companies that the large Chinese heavy plate producers have in the Union, the trade defence measures imposed by third countries, and the unfair pricing behaviour of the PRC on third country markets. The legal standard of evidence required for an initiation (“sufficient evidence of dumping, injury and a causal link”) is lower than that required to reach a final determination (7). The requirement to provide sufficient evidence is limited to information which may be “reasonably available” to the requesting party (8). The information provided in the request is not required to constitute irrefutable evidence of the existence of the facts alleged (9). Therefore these claims were rejected.

(15) Primex disagreed with the applicant’s selection for the representative country, i.e. Brazil. In particular, Primex claimed that: the Brazilian market was smaller than the Chinese market: the Brazilian company Usinas Siderúrgicas de Minas Gerais SA (‘Usiminas’), used by the applicant for the calculation of the selling, general and administrative (‘SG&A’) costs and the profit margin, was not appropriate as this company has a dominant market position on the domestic market; the Brazilian market is protected from international import competition by anti-dumping duties against imports from Ukraine, China, South Africa and South Korea (10); and there are minor imports from Brazil into the Union.

(16) Based on the information provided by the applicant, the Commission analysed the proposed representative country and considered that Brazil met the statutory requirements to be used as a representative country for the purpose of initiation of the expiry review. In particular, Brazil has a level of economic development similar to China according to the World Bank, it is a significant producer of heavy plate, and it has readily available data for the corresponding costs of production and sale. Therefore, the Commission considered that Brazil was an appropriate choice as a representative country at the initiation stage.

(17) Primex also argued that the methodology for the dumping calculation in the request for review was not correct. In particular, Primex claimed that the investigation period (i.e. 1 January 2021 to 31 December 2021) was too short to establish a representative normal value and it was different than the period in the request for review. Primex also claimed that the prices of the main raw materials (iron ore, coking coal and scrap) were subject to strong fluctuations, especially the price of iron ore in 2021 and therefore 2021 could not be considered a representative year. Furthermore, Primex claimed that it was questionable whether the data of Union producer used by the applicant in the request for the consumption factors was representative for the whole market. Moreover, Primex claimed that the methodology used by the applicant in the request for review for the calculation of normal value for the PRC was not suitable as the applicant used only the data for labour costs, SG&A and profit from the Brazilian company Usiminas. Primex also claimed that the request for the review did not include evidence that the cost structure of the Union, Brazilian and Chinese producers were comparable with one another. Furthermore, Primex claimed that the request for review did not explain whether the price for the individual factors of production in Brazil are representative. Primex also argued that the applicant wrongly calculated the percentage of profit as a percentage of cost of sales when it should have been as a percentage of sales. Moreover Primex claimed that the representative profit margin should be calculated for a longer period of time and should include 2019 as well, as this year was not affected by the Covid-19 pandemic. Finally Primex claimed that the profit margin of 14 % used by the applicant in the request for review was not achievable under normal market conditions. Primex also claimed that the two methods used by the Applicant to calculate the export price in the request for review were not appropriate.

(18) An expiry review shall be initiated where the request contains sufficient evidence that the expiry of the measures would likely result in a continuation or recurrence of dumping and injury. The applicant has provided sufficient evidence on the export price and normal value showing that the dumping margins would be significant if measures were allowed to lapse. The figures on which normal value and export price were based were supported by sufficient evidence as confirmed by the Commission services’ own analysis. In practice, the calculation of normal value as well as the export price were in accordance with the principles of Article 2 of the basic Regulation and showed that the request contained sufficient evidence of dumping of the product concerned in the Union market. In its statutory analysis, the Commission took into account only those elements for which evidence was adequate and accurate.

(19) The Commission noted that there is no legal requirement in the basic Regulation regarding the period chosen by the applicant, nor any that the period chosen for the investigation had to be the same as the one chosen by the applicant. Pursuant to Article 6(1) of the basic Regulation, an investigation period shall be selected which in the case of dumping shall, normally, cover a period of no less than six months immediately prior to the initiation of proceeding. The period chosen by the applicant, i.e. 1 July 2020 until 30 June 2021, ended shortly before the submission of the expiry review request on 26 November 2021 and was therefore considered to be representative for the likelihood of continuation or recurrence of dumping and injury at the initiation stage.

(20) In the original investigation, the Commission found that the product concerned and the product produced and sold in the Union by the Union industry are like products within the meaning of Article 1(4) of the basic Regulation. The expiry review request sets out that the production process of the Union industry, used by the applicant for the consumption factors, was similar to the production process in the PRC and in the representative country. The cost structure and the consumption factors used in the request were therefore considered representative. Pursuant to Article 2(6a) of the basic Regulation, the applicant constructed the normal value using the corresponding costs of production and sale in a representative country, i.e. Brazil. The costs in this country were applied to the consumption rates of the factors of production in order to calculate the costs of manufacturing, whereas SG&A and profit derived from publicly available financial statements of a producer in the representative country. It should be noted that even the comparison of the constructed costs of production, without any SG&A and profit of the producer in the representative country with Chinese export prices of the product under review to third countries showed dumping. Therefore, the claims of Primex on the profitability level are moot.

(21) For the export price, the expiry review request used three methods, i.e. the average Chinese import price to the Union on a TARIC (11) level, the published average Chinese export FOB price for one of the main product types to all third countries, and the average Chinese export price to all third countries. These three methods were found to be sufficiently substantiated to comply with the legal standard at the initiation stage.

(22) CISA submitted that the request for review had an excessive use of confidentiality which precluded them from assessing the economic situation of the Union industry, as well as addressing the applicant’s claims in the request for review. This allegedly resulted in a breach of CISA’s rights of defence. For example, CISA referred particularly to Annex F1 (Capacity), Annex F2 (Exports), more specifically concerning Chinese exports of heavy plate from August 2020 until July 2021, and Annex N (undercutting and underselling calculations), more specifically in relation to Union industry sales and cost data to EU27 of the request for review.

(23) The Commission notes that the non-confidential Annex F1 contained ranged data for Chinese heavy plate consumption, capacity and production. The non-confidential Annex F2 contained a comprehensive summary of the average Chinese export price and the Chinese total volume of exports to the rest of the world, as well as to the top five export destinations. The non-confidential Annex N contained the full undercutting and underselling calculations, as well as the aggregated data on the average price and cost of the Union Industry. The non-confidential Annex M contained all applicants’ injury indicators indexed per company and non-confidential Annex K contained aggregated values of all data required for the calculation of EU consumption, including sales, as well as indexed per company. The information provided in the non-confidential version of the request for review was therefore considered to have sufficient detail to permit a reasonable understanding of the substance of the information submitted in confidence.

(24) Article 19 of the basic Regulation allows for the safeguarding of confidential information in circumstances where disclosure would be of significant competitive advantage to a competitor or would have a significant adverse effect upon a person providing the information or upon a person from whom that person has acquired the information. The information provided in the limited annexes to the request fell under these categories. The Commission considered that the version open for inspection by interested parties of the request contained all the essential evidence. The non-confidential summaries of data provided under confidential cover were sufficiently detailed to permit a reasonable understanding of the substance of information submitted in confidence in order for interested parties to exercise their rights of defense throughout the proceeding. Therefore, the claim was rejected.

(25) CISA claimed that the request for review included contradictory information, in particular as regards the export price from the PRC to the Union which had an impact on the findings of dumping.

(26) The request for review did not contain contradictory information. The applicant constructed the normal value of two product types (S235 and S355) and used the Chinese import price at TARIC level for grade S235, and the published average Chinese export price for grade S355. Therefore, the applicant calculated the dumping margins by comparing similar product types. Moreover, the applicant found dumping when comparing the average Chinese sales price of the product under review to all third countries with both constructed normal values. Therefore, the claim had to be rejected.

(27) CISA claimed that the request did not contain sufficient evidence of likelihood of continuation or recurrence of injury. In particular, CISA claimed that there was no evidence in the request that demonstrated that the expiry of measures could lead to the continuation of injury. CISA also doubted the alleged fragile state of the Union Industry and claimed that if this state was valid, it could be attributed entirely to the decline of consumption and the contraction of demand. CISA also claimed that there was no indication of recurrence of injury because of the EU safeguard measures on certain steel products, among which heavy plate, and the fact that Chinese heavy plate exports were no longer eligible for VAT export refunds.

(28) The Commission considered the evidence present in the request as sufficient for dumping, injury and a causal link, which was reasonably available to the applicant. The main injury indicators included in the request showed a negative trend for the reference period chosen by the applicant and the applicant therefore claimed that it continued to suffer material injury.

(29) However, the applicant also acknowledged in its request for review that imports from the PRC had essentially stopped since the imposition of the original measures and the injurious situation of the Union industry as well as the decline of consumption was caused by other factors, such as the state of the general economy, especially in construction and pipeline projects, and the negative effect of the COVID-19 pandemic. It therefore also claimed the likelihood of recurrence of injury if measures were to lapse and provided sufficient evidence in this regard, showing that in the absence of measures imports from the PRC would likely increase at undercutting prices. The claim of CISA thus has to be rejected.

(30) Primex claimed that the CIF import price as well as the Union sales price that the applicant used for undercutting and underselling calculations in the request for review were wrong, and no undercutting or underselling margins should be found. In addition, Primex claimed that the profit margin used for the underselling calculation has not been achieved, even with measures in force during the past years.