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

• (115) In their comments on the final disclosure, CISA once again reiterated its comments submitted in reaction to initiation and in reply to the Note (see recitals (32) to (39)). Specifically, while stating that the Commission had addressed its previous comments, CISA expressed its disappointment that the Commission had dismissed the arguments raised. Consequently, CISA insisted on (i) the Report being of doubtful probative value and failing to meet the standards of impartial and objective evidence, (ii) the various FYPs being only general policy documents without binding legal effects – which is in CISA’s view also apparent from the lack of explicit sanctions in case of violation - and the EU having in place similar types of policy documents.

• (116) The arguments brought by CISA have already been addressed above in recital (33) concerning the Report and in recital (39) concerning the FYPs. As to CISA’s remark on the EU having in place policy documents similar to the Chinese FYPs, the Commission noted that these are completely irrelevant for the assessment of significant distortions in China pursuant to Article 2(6a) of the basic Regulation. Similarly, the reference to absence of sanctions in the FYPs cannot alter the assessment in recital (39), which on the basis of specific provisions from the relevant FYPs, in combination with the facts discussed in the Report, demonstrates the unambiguous obligation of the Chinese authorities concerned to implement the FYPs in question. Consequently, CISA’s arguments cannot alter the Commission’s conclusions reached in recitals (32) to (39).

• (117) 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 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.

4.2.2.2.   Representative country

4.2.2.2.1.   General remarks

• (118) 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 the PRC. For this purpose, the Commission used countries with a gross national income per capita similar to the PRC on the basis of the database of the World Bank ⁵⁶;

• — Production of the product under review in that country ⁵⁷;

• — 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.

• (119) As explained in recital (86), the Commission issued a Note on relevant sources to use for the determination of the normal value. This Note described the facts and evidence underlying the relevant criteria. The Note informed interested parties of the Commission’s intention to consider Brazil as the appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation were confirmed.

• (120) In line with the criteria listed under Article 2(6a) of the basic Regulation, the Commission identified Brazil as a country with a similar level of economic development as the PRC as it was suggested by the applicant in the request for review. Brazil is classified by the World Bank as ‘upper-middle income’ country on a gross national income basis. It is thus considered to have a similar level of economic development as the PRC.

• (121) The Commission has found that Brazil is a significant producer of heavy plates (installed capacity of about 3,1 million tonnes per year ⁵⁸). The Commission has also established that Brazil meets all of the criteria set out in article 2(6a) of the basic Regulation and that all relevant public data are readily available and accessible, including import statistics, as well as data on costs of raw materials and such factors of production as natural gas, electricity and labour.

• (122) The main Brazilian producer of heavy plates is Usinas Siderúrgicas de Minas Gerais (‘Usiminas’). According to the applicant, Usiminas is a large integrated steel producer, manufacturing steel using the same process as the Chinese producers (i.e. from coal and iron ore, to pig iron through blast furnace reduction, to crude steel through the basic oxygen furnace method (“BOF”) and then continuous casting and rolling). The Commission noted that financial statements for Usiminas for the financial years ending 31 December 2020 and 31 December 2021 are available in the Orbis Bureau van Dijk database (‘Orbis database’). Gerdau S/A (‘Gerdau’) is another Brazilian producer of heavy plates. The financial statements of Gerdau for the financial years ending 31 December 2020 and 31 December 2021 are also available in the Orbis database. Therefore, the Commission intends to use the financial data of both Brazilian producers of heavy plates.

• (123) Comments regarding the proposed representative country in the request for review were received from the importer Primex.

• (124) As stated in recital (15), Primex disagreed with the selection of Brazil as a representative country in the request for review. In particular, Primex claimed that (1) the Brazilian market was smaller than the Chinese market, (2) the Brazilian company Usiminas, used by the applicant for the calculation of the SG&A and profit margins, was not appropriate as this company had a dominant market position on the domestic market, (3) the Brazilian market was protected from international import competition by anti-dumping duties against imports of heavy plates from Ukraine, China, South Africa and South Korea and (4) there were minor imports of heavy plates from Brazil into the Union.

• (125) The Commission noted that the fact that a country has a smaller market than the Chinese markets does not disqualify it for being a representative country. The requirement of ‘appropriateness’ in the basic Regulation refers to the similar level of economic development, while there is no reference to the size of the market as such. It was also noted that, as the applicant mentioned in the request, Brazil is one of the three largest producers of heavy plates in the World Bank group of “upper-middle income” countries, together with Russia and the PRC (which is subject to this proceeding). As explained above, there are two suitable producers of heavy plates in Brazil with reasonable data on SG&A and profits.

• (126) Furthermore, the claim that Usiminas has a dominant position on the Brazilian market is not substantiated by evidence showing if and how this circumstance would render this company unsuitable to establish undistorted sources. In any event, as explained above, for the calculation of SG&A and profit margins the Commission used the financial data of both Brazilian producers of heavy plates as the financial data of both companies is readily available.

• (127) Moreover, Primex did not substantiate how the imposition of anti-dumping measures on imports of heavy plates from the PRC, South Africa and South Korea affected the appropriateness of SG&A of Usiminas as undistorted source. As regards the profit, while the existence of the anti-dumping measures in Brazil could indeed have an impact on the profit margin of Usiminas, the result of anti-dumping measures is to restore fair competition including the achievement of a regular profit level for the domestic producers. In any event, the Commission noted that the financial statements of both Usiminas and Gerdau are not limited to heavy plates only, but reflect an aggregation of the steel products manufactured by these companies. The Commission also noted that Primex did not suggest an alternative representative country at this stage.

• (128) Interested parties were invited to comment on the appropriateness of Brazil as a representative country and of Usiminas and Gerdau as producers in the representative country.

• (129) Following the Note on the appropriate representative country, no interested party made any comments regarding the selection of Brazil as a representative country.

• (130) In their comments to the Note, CISA argued that for establishing the unit price of the main factors of production, the Commission should use domestic prices and not the GTA import data as the imports prices are affected by several factors such as the quantity of imports of a particular product, the availability of such product and the distance between the exporting and importing countries.

• (131) The Commission noted that Article 2(6a)(a) of the basic Regulation prescribes the use of corresponding data in an appropriate representative country “provided that the relevant data are readily available.” The Commission does not have at its disposal data on domestic prices of the relevant factors of production in the possible representative countries, and such data are not readily available. By contrast, data on import prices in the possible appropriate representative countries are readily available. If, based on the evidence, the application of Article 2(6a)(a) of the basic Regulation is warranted, the Commission further adjusts these import prices (e.g. by adding the relevant customs duties) to arrive at a reasonable proxy representing an undistorted domestic price in these countries. The Commission also verifies that there be sufficient representative undistorted quantities of these import data so that the resulting final average automatically reduces the impact of the potential abnormal prices at the lower and higher end of the range, thereby reflecting a mix of the different qualities and availabilities of a certain input. Moreover, the Commission excludes data on imports into the representative country from China and non-WTO members ⁵⁹ to determine the relevant benchmarks. As long as the import quantities of the factors of production are sufficiently representative and there are no other specific circumstances rendering them unsuitable, there is no objective reason to exclude them. CISA also did not submit any evidence in support of their claim. Therefore, in the absence of evidence to the contrary, the Commission rejected this claim.

• (132) Finally, given the absence of cooperation and having established that Brazil was an 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.

4.2.2.2.2.   Conclusion

• (133) In the absence of cooperation and comments on the Note on the appropriate representative country, as proposed in the expiry review request and given that Brazil met all the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation, the Commission selected Brazil as the appropriate representative country.

4.2.2.3.   Sources used to establish undistorted costs

• (134) In the Note the Commission listed the factors of production such as materials, natural gas, energy and labour used in the production of the product under review by the exporting producers. The Commission also 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 information from: the International Labour Organization (‘ILO’) for establishing undistorted costs of labour and public tariffs from electricity suppliers in Brazil.

• (135) Finally, the Commission stated that to establish SG&A costs and profit, it would use the financial data from Brazilian producers of the product under review.

• (136) In the Note, the Commission also informed the interested parties that due to the large number of factors of production of the sampled exporting producers that provided complete information and the negligible weight of some of the raw materials in the total cost of production, these negligible items were grouped under ‘consumables’. Further, the Commission informed that it will calculate the percentage of the ‘consumables’ on the total cost of raw materials and apply this percentage to the recalculated cost of raw materials when using the established undistorted benchmarks in the appropriate representative country.

4.2.2.3.1.   Undistorted costs and benchmarks

4.2.2.3.1.1.   Factors of production

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

Table 1

Factors of production of heavy plate

Factor of production	Commodity code in Brazil	Undistorted value (CNY)	Unit of measurement
Raw materials 60	Raw materials 60	Raw materials 60	Raw materials 60
Quicklime	252210	0,86	kg
Iron ore	260112110	1,50	kg
Coking Coal	270112	0,92	kg
Coke	27040011 27040012	2,42	kg
Ferro-silico-manganese	720230	10,85	kg
Steel scrap	720449	2,5	kg
Unwrought aluminium alloys	760120	17,93	kg
Fine Limestone	252100	0,19	kg
Ferro-manganese, not more than 2 % carbon	720219	14,87	kg
Labour	Labour	Labour	Labour
Labour	NA	46,69	hour
Energy	Energy	Energy	Energy
Electricity	NA	0,79	kWh
Natural Gas	NA	7,46	M3

Raw materials

• (138) 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 the GTA to which import duties 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 ⁶¹. The Commission decided to exclude imports from the PRC into the representative country as it concluded in section 4.2.2.1 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 into the representative country from the PRC, and from countries which are not members of the WTO, the volume of imports from other third countries remained representative.

• (139) For a number of factors of production the actual costs incurred by the applicant 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 all other raw materials. In order to establish an undistorted value of all other raw materials, and given the absence of cooperation from the exporting producers, the Commission used facts available in accordance with Article 18 of the basic Regulation. Therefore, based on the data provided by the applicant, the Commission established the ratio of all other raw materials to the total raw material costs, at 7,5 %. This percentage was then applied to the undistorted value of the raw materials to obtain the undistorted value of other raw materials.

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

Labour

• (141) The Commission used ILO statistics to determine the wages in Brazil ⁶². These provide information on monthly wages of employees in the manufacturing sector and average weekly hours worked in Brazil for the investigation period (year 2021).

Electricity

• (142) For electricity, the Commission used the readily available prices from Cemig Distribuição S.A, one of major electricity suppliers in Brazil ⁶³. This source allows to determine the price of average industrial tariff for the investigation period (year 2021).

Natural gas

• (143) For natural gas, the Commission used the price of gas in Brazil for the review investigation period as published by Companhia de Gás de Minas Gerais (GASMIG) ⁶⁴ that enables to determine the price of natural gas supplied to industrial users.

• (144) In their comments to the Note, CISA stated that Brazil was used as a representative country in other two investigation such as AD683 - Electrolytic Chromium Coated Steel products ⁶⁵ (‘ECCS’) and R728 - Certain grain-oriented flat-rolled products of silicon-electrical steel ⁶⁶. CISA stated that while the periods of investigation in each proceeding was not exactly the same, since the two above-mentioned proceedings are recent, the Commission should have extracted data from similar sources in relation to energy and costs, and as a result, found similar unit cost for each factor. CISA argued that in the current investigation the benchmark for the natural gas was established based on the price of gas in Brazil published by GASMIG and it was calculated at 7.46 CNY/M3. In the ECCS investigation, the benchmark for gas was established based on the statistics from the Brazilian Ministry of Energy and it was calculated at 2.257 CNY/M3. In the GOES investigation, the benchmark for gas was established based on the prices reported by GASMIG and it was calculated at 3.42 to 3.72 CNY/M3. CISA stated that, despite the fact that the investigation periods of ECCS and GOES investigations are very close to the investigation period of the current investigation, the difference in prices between the current investigation and the ECCS and GOES investigation are more than double and therefore it exceeded a reasonable range. CISA requests the Commission to compare the prices from those different sources and therefore determine a reasonable price.

• (145) Furthermore, CISA made a similar comment for the labour cost. CISA highlighted that in the current investigation the benchmark for labour was established based on the data from the ILO Statistics and Sustainability Report published by Usiminas and it was calculated at 46.69 CNY/hour. In the ECCS investigation, used only the statistics from ILO and calculated at average labour cost of 27.112 CNY/hour. CISA argued that the labour cost in Brazil could not have increased that much within a short period of time and asked the Commission to use in the current investigation the same methodology as in the ECCS investigation for establishing the benchmark for labour.

• (146) The Commission noted that the investigation period of the current investigation is different than in the two investigations mentioned by CISA. As stated in recital (8), the investigation period on the current investigation is from 1 January 2021 to 31 December 2021, while the investigation period of the ECCS investigation was from 1 July 2020 to 30 June 2021 and for the GOES investigation was from 1 July 2019 to 30 June 2020. Therefore, the value of the benchmarks could be different as it relates to different periods. Furthermore, CISA did not specify whether any of the methodologies used by the Commission to calculate the benchmarks were wrong. CISA seemed to focus only on the value of the benchmark. CISA did not specify what a reasonable value of the benchmark was. CISA seemed to imply that a lower benchmark would be a reasonable benchmark. The Commission also noted that while for gas CISA referred to both ECCS and GOES investigations, for labour CISA referred only to the ECCS investigation. It is noted that in the GOES investigation the benchmark for labour was calculated at 84.59 CNY/hour, double than in the current investigation. Furthermore, the Commission noted that CISA does not comment on the value of the benchmark for electricity in relation to the ECCS and GOES investigations. In the current investigation, the benchmark for electricity was significantly lower as compared to the other two investigation. In the current investigation, the benchmark for electricity was calculated at 0,79 kWh while in the ECCS investigation to 5,034 kWh and in the GOES investigation to 8,251 kWh.

• (147) In each investigation the Commission calculates the benchmarks based on the information readily available as well as the information specific to the investigation and the Chinese exporting producers. It is recalled that in the current investigation, the Chinese exporting producers did not cooperate, while in the ECCS and GOES investigations the Chinese exporting producers cooperated. Whether in one investigation the value of a benchmark is lower than in another investigation, it is not relevant. Therefore, the claim was rejected.

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

• (148) 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.

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

• (150) For establishing an undistorted and reasonable amount for SG&A and profit, the Commission relied on the most recent available financial data of the companies in Brazil that had been identified in the Note as active and profitable producers of the product under review. Financial data for the following companies as extracted from Orbis Bureau van Dijk was used for the financial year 2021 and 2020: Usiminas and Gerdau.

• (151) Following the Note, CISA argued that both Usiminas and Gerdau have recorded exceptionally high revenues and profits in 2020 as compared to 2021. In view of this, CISA asked the Commission not to use the financial data from 2021 but an average of the financial data for 2020 and 2021 to reasonably reflect a normal financial situation of the two Brazilian producers.

• (152) The Commission found this claim reasonable. In fact both Usiminas and Gerdau have registered very high profits in 2021. Therefore, the Commission considered that would be more reasonable to use the financial data of both Brazilian producers for 2020 instead of 2021 which seemed to be an exceptional year for both companies.

• (153) In its comments following final disclosure, CISA claimed that the SG&A and profit margins used by the Commission were still high. It claimed that in an industry like iron and steel, it was very rare, if not impossible, to achieve a double-digit profit. CISA claimed that the Commission should not use the financial information from Orbis for the two Brazilian companies which did not cover only the product concerned, but should rely instead on the findings of the expiry review investigation published by the Ministry of Economic of Brazil ⁶⁷ concerning imports of heavy plates originating in South Africa, China, South Korea and Ukraine. CISA asked the Commission to take into account the findings of this investigation when adjusting the SG&A and profit margins.

• (154) The Commission noted that in its comments to the First Note CISA asked the Commission not to use the financial data from 2021 but an average of the financial data for 2020 and 2021 to reasonably reflect a normal financial situation of the two Brazilian producers as stated in recital (151). The Commission accepted this claim and, to remain even more conservative, used the SG&A and profit margins only for 2020, which were lower than the average SG&A and profit margins for 2020 and 2021 that CISA’s suggested. As concerns the investigation mentioned by CISA, the Commission noted that this investigation was completed in October 2019 and it was based on data covering 2013 and 2017, while the investigation period of the current investigation is 2021. Furthermore, CISA did not specify how the Commission should adjust the SG&A and profit margins based on the findings of the Brazilian investigation. Moreover, Article 2(6a)(a) of the basic Regulation requires that the amounts for SG&A and for profit used in the construction of the normal value are undistorted and reasonable. CISA failed to demonstrate that these values were either distorted or unreasonable. Therefore, the claim was rejected.

4.2.2.3.2.   Calculation of the normal value

• (155) On the basis of the above, the Commission constructed the normal value on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

• (156) First, the Commission established the undistorted manufacturing costs. In the absence of cooperation by the exporting producers, the Commission relied on the information provided by the applicant in the review request on the usage of each factor (materials and labour) for the production of the product under review.

• (157) Once the undistorted manufacturing cost was established, the Commission added the manufacturing overheads, SG&A and profit as noted in recitals (149) to (152). Manufacturing overheads were determined based on data provided by the applicant. SG&A and profit were determined based on the financial statements of Usiminas and Gerdau for 2020 as reported in the companies’ financial statements. The Commission added the following items to the undistorted costs of manufacturing:

• — Manufacturing overheads, which, on average, accounted for 8,30 % of the direct costs of manufacturing,

• — SG&A and other costs, which, on average, accounted for 33,51 % of the Costs of Goods Sold (‘COGS’) of Usiminas and Gerdau, and

• — Profits, which, on average, amounted to 14,44 % of the COGS as achieved by Usiminas and Gerdau

• (158) 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.

4.2.3.   Export price

• (159) In the absence of cooperation by exporting producers from the PRC, the export price was determined based on FOB GTA data for exports from China to third countries, adjusted to ex-works.

• (160) In this regard the Commission used the export statistics from the GTA of the following Chinese commodity codes: 7208 51 10, 7208 51 20, 7208 51 90, 7208 52 00, 7208 90 00, 7225 40 91, 7225 40 99 and 7225 99 90. The Commission notes that these commodity codes do not cover only the product concerned but also include also other types of products. However, given the non-cooperation of producers from China, the information in the file does not allow the identification of the volume of the product concerned in the total volume of exports of these Chinese commodity codes. The average export prices range between EUR 619 per tonne and EUR 1 163 per tonne depending on the commodity code. The average export price for all eight Chinese commodity codes was EUR 749 per tonne. The biggest volume of exports to third countries were made via the Chinese commodity code 7225 40 99 which has the lowest export price EUR 619 per tonne out of the eight Chinese commodity codes.

• (161) The FOB GTA data was adjusted to ex works level. Thus the FOB price was reduced by the domestic transport cost based on information provided by the applicant in the request for review.

4.2.4.   Comparison

• (162) The Commission compared the normal value established in accordance with Article 2(6a)(a) of the basic Regulation and the Chinese export price to third countries on an ex-works basis as established above.

• (163) On this basis, the price differences between the normal value and the export prices to third countries established as a percentage of the CIF frontier price, range between 9 % and 97 %, depending on the Chinese commodity code. On average, the price difference found as a percentage of the CIF frontier price was 65 %.

• (164) This suggests that if the measures were to expire, and the prices at which the Chinese exporting producers would export the product concerned to the Union are in line with prices to other third countries observed during the review, the dumping margins would likely be significant, similar to the levels found in the original investigation.

• (165) In addition, as indicated in recitals (13) and (27), CISA and Primex claimed that in order to curb exports and redirect Chinese steel production to the Chinese domestic industry, the Chinese Ministry of Finance announced that as of 1 August 2021, certain steel products, including heavy plate, were no longer eligible for VAT export refund ⁶⁸. CISA argued that the GOC’s intention behind this change in policy was to decrease exports and redirect Chinese production to the domestic industry. CISA argued that, as a result of this change in policy, a significant decrease of exports of heavy plate from China can be expected in the immediate future, while Primex argued that there would be a moderate increase in imports from China.

• (166) While indeed the Chinese exporting producers lost this export incentive as of 2021, in view of: the (1) decrease in demand on the Chinese market as stated in recital (69); (2) the existence of anti-dumping measures in several other major markets as explained in recital (169); and (3) significant spare capacity as stated in recitals (66) and (69), the loss of this incentive would not preclude the Chinese producers from exporting to the Union market heavy plates in high volumes at dumped prices in case the measures are terminated in order to use their spare capacity. Furthermore, CISA and Primex did not quantify the likely impact the removal of the VAT refund may have on the export price. They also have conflicting views on the impact on import volumes if measures were allowed to lapse. The Commission therefore, rejected these arguments.

4.3.   Relation between export prices to third countries and the price level in the Union

• (167) The Commission examined the price levels which the Union producers would be able to attain on the Union market as compared to the Chinese exporting producers’ price levels to other third country markets.

• (168) In the absence of cooperation from the Chinese producers, the Commission used GTA. The Commission found that during the review investigation period the average sales price of the Union industry on the free market (749 EUR/tonne) during the review investigation period as stated in Table 9 was the same as the average FOB price to third countries (EUR 749 per tonne) but higher than the average price of the Chinese commodity code with the biggest volume of exports. Therefore, Chinese exporting producers would find it advantageous to shift exports from third countries to the Union, should the measures lapse, thereby taking the opportunity to expand their exports to the Union market.

4.4.   Possible absorption capacity of third country markets

• (169) According to information provided by the applicant in the request for review, internet research and examination of the WTO database, the Commission found that anti-dumping measures are imposed on heavy plate imports from the PRC to Brazil, Canada, Indonesia, Thailand, the United States of America ⁶⁹ and the United Kingdom ⁷⁰. Given the Chinese exporters’ difficulties to sell to all of these markets, if the current measures were allowed to expire, the Union market would become very attractive to Chinese exporters seeking to export their excess production and use spare capacity.

4.5.   Conclusion

• (170) In view of the assessment made in recitals (66) to (169), in particular the significant spare capacity of Chinese exporters, the attractiveness of the Union market and the low absorption capacity of third country markets, the Commission concluded that dumped imports from the PRC are likely to recur if the measures in force were allowed to lapse.

• (171) Primex claimed that the level of imports in the Union in case the measures were terminated will not depend solely on the production capacity in China but on many factors of which the most important one was the consumer demand in the Union. Other factors were 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 stated that how these factors will develop in the future cannot be predicted.

• (172) As stated in recital (170) the Commission’s conclusion that dumped imports from the PRC are likely to recur in high volumes if the measures in force were allowed to lapse is not solely based on the spare capacity in China, but also on the attractiveness of the Union market and the low absorption capacity of third country markets. Primex did not substantiate its claim regarding the other factors and therefore it was rejected.

5. INJURY

5.1.   Definition of the Union industry and Union production

• (173) The like product was manufactured by more than 25 producers in the Union during the period considered. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

• (174) The total Union production during the review investigation period was established at around 9,4 million tonnes. The Commission established the figure on the basis of all the available information concerning the Union industry, such as the request for the expiry review, verified questionnaire replies of the sampled Union producers and the verified submission of EUROFER.

• (175) As indicated in recital (41) above, three Union producers were selected in the sample. They represent more than 25 % of the total Union production of the like product and more than 31 % of the estimated total Union sales volume of the like product during the review investigation period.

5.2.   Union consumption

• (176) The Commission established the Union consumption on the basis of Eurostat import statistics and verified sales data from the Union industry.

• (177) The Union consumption of the product under review developed as follows:

Table 2

Union consumption (tonnes)

	2018	2019	2020	Review investigation period (2021)
Total Union consumption	9 311 229	8 437 312	7 450 606	8 380 262
Index	100	91	80	90
Captive market	866 715	530 957	492 545	665 731
Index	100	61	57	77
Free market	8 444 514	7 906 355	6 958 061	7 714 531
Index	100	94	82	91
Source: Eurostat and verified data provided by EUROFER.	Source: Eurostat and verified data provided by EUROFER.	Source: Eurostat and verified data provided by EUROFER.	Source: Eurostat and verified data provided by EUROFER.	Source: Eurostat and verified data provided by EUROFER.

• (178) Total Union consumption first declined by 9 % in 2019 when the GDP growth of the Union slowed down significantly, hitting sectors with strong cyclical characteristics, such as the steel industry. Then, the decline was exacerbated by the economic downturn caused by the COVID-19 pandemic, consumption decreased further in 2020. During the review investigation period, consumption finally recovered but was 10 % below the level of 2018.

• (179) The Captive market includes both captive sales and captive use. Overall, the heavy plates destined to the captive market declined by 23 % during the period considered. Captive market accounted only for a marginal part of the heavy plate business, representing less than 10 % of total consumption throughout the period. The share of these sales in total consumption was even lower in 2019 and in 2020 in the context of the slowdown of the economy and the COVID-19 pandemic, it was around 6 % of consumption. This was mainly due to a lower demand by related companies active in the pipe sector.

• (180) Union consumption in the free market followed a trend similar to that of total consumption. It steadily decreased by 18 % up to 2020 for the reasons mentioned in recital (178) and started to recover in the review investigation period. However, it did not reach the level of 2018. The investigation showed that certain sale segments, such as the automotive and wind turbines, were growing, in particular during the review investigation period. By contrast, some of the most important sales segments, such as the steel tube industry and shipbuilding, were severely affected by the economic slowdown and did not recover in the review investigation period. This led to a 9 % decrease of total Union consumption in the free market during the period considered.

5.3.   Imports from China

5.3.1.   Volume and market share of the imports from China

• (181) The Commission established the volume of imports from China on the basis of Eurostat import statistics. The market share of the imports was then established by comparing import volumes destined to the free market with the total Union consumption in that market as shown in Table 2 of recital (177) above.

• (182) Imports into the Union from China developed as follows:

Table 3

Import volume and market share

	2018	2019	2020	Review investigation period (2021)
Volume of imports from China (tonnes)	13 092	9 515	2 657	1 778
Index	100	73	20	14
Market share (%)	0,16	0,12	0,04	0,02
Index	100	78	25	15
Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.

• (183) The import volume from China was as high as 1,4 million tonnes and the market share over 14 % in the original investigation.

• (184) Chinese imports to the Union became negligible during the period considered. Their volume was already at a very low level in 2018 and dropped by 86 % over the period considered.

• (185) The market share of Chinese imports remained negligible during the period considered, namely below 1 % of Union consumption.

5.3.2.   Prices of the imports from China

• (186) In the absence of cooperation from Chinese exporting producers, the Commission established the average import price from China on the basis of Eurostat import statistics.

• (187) The average price of imports into the Union from China developed as follows:

Table 4

Import price (EUR/tonne)

	2018	2019	2020	Review investigation period (2021)
Average import price from China	459	728	651	925
Index	100	159	142	201
Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.

• (188) The average import prices from China fluctuated significantly in the period considered. As shown in Table 3 in recital (182) above, the import volume remained negligible during the period considered. Hence, the Commission considered that no meaningful or relevant conclusions could be drawn on such a limited volume of imports.

• (189) In addition, throughout the period considered, it is noteworthy that whilst Union producers were selling their heavy plates based on medium term contracts, basically one / two-year contracts, with prices fixed for the contractual period, information available suggests that Chinese exporters were selling their heavy plates on spot basis, namely based on very short term contracts. This has allowed these exporters to adapt their prices relatively quickly to market conditions and rapidly follow the price trend. Nevertheless, as mentioned in recital (185), the market share of Chinese products systematically remained below the de minimis level during the period considered, hence, no meaningful conclusions can be drawn on the pricing for such limited quantities.

5.4.   Imports from third countries other than China

• (190) The imports of heavy plates from third countries other than China were mainly from Ukraine, India, the Russian Federation and the Republic of Korea.

• (191) The (aggregated) volume of imports into the Union as well as the share in the free market and price trends for imports of heavy plates from other third countries developed as follows:

Table 5

Imports from third countries and market shares

Country		2018	2019	2020	Review investigation period (2021)
Ukraine	Volume (tonnes)	342 512	307 463	381 846	457 959
	Index	100	90	111	134
	Market share (%)	4,1	3,9	5,5	5,9
	Index	100	96	135	146
	Average price (EUR/tonne)	582	582	494	758
	Index	100	100	85	130
India	Volume (tonnes)	294 240	113 830	145 573	182 440
	Index	100	39	49	62
	Market share (%)	3,5	1,4	2,1	2,4
	Index	100	41	60	68
	Average price (EUR/tonne)	576	579	470	675
	Index	100	100	82	117
The Russian Federation	Volume (tonnes)	174 828	169 196	162 334	179 341
	Index	100	97	93	103
	Market share (%)	2,1	2,1	2,3	2,3
	Index	100	103	113	112
	Average price (EUR/tonne)	538	519	433	661
	Index	100	96	80	123
The Republic of Korea	Volume (tonnes)	200 522	220 171	214 634	127 688
	Index	100	110	107	64
	Market share (%)	2,4	2,8	3,1	1,7
	Index	100	117	130	70
	Average price (EUR/tonne)	592	578	529	726
	Index	100	98	89	123
Total of all third countries except China	Volume (tonnes)	1 226 693	1 001 795	1 069 141	1 190 755
	Index	100	82	87	97
	Market share (%)	14,5	12,7	15,4	15,4
	Index	100	87	106	106
	Average price (EUR/tonne)	579	581	497	731
	Index	100	100	86	126
Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.

• (192) Total imports of the product under review from third countries other than China decreased by 3 % over the period considered.

• (193) Given that the volume of imports from other third countries overall decreased to a lesser extent than the Union consumption over the period considered as described in recital (178), the market share of imports from other third countries increased by 6 % (or 0,9 percentage point) over the period considered.

• (194) In order to calculate imports of heavy plates made of non-alloy steel, the applicant used Eurostat data covering the full CN codes which correspond to these products, rather than only the respective TARIC codes. This is because, in the applicant’s view, all products imported under these CN codes should be product under review. As regards in particular tool steel, which is excluded from the product scope, the applicant argued that according to the definition in the Combined Nomenclature ⁷¹, tool steel can only be made of alloy steel, and therefore, there can be no tool steel products falling under CN codes corresponding to non-alloy steel. In any event, the applicant claimed that the complaint in the original investigation excluded only tool steel made of alloy steel. The applicant considered that the Commission should not have established 10-digit TARIC codes for the main non-alloy heavy plate CN codes 7208 51 20, 7208 51 91, 7208 51 98 and 7208 52 91 and that a calculation using these TARIC codes would significantly underestimate imports due to misclassification. In turn, such underestimation would lead to errors in the calculation of other injury factors, such as consumption and market share, and possibly to a distorted picture of the situation of the Union industry in the injury analysis.

• (195) The Commission found that tool steel products can be made also of non-alloy steel (i.e. carbon steel) ⁷² and that at least some quantities of such products have been imported into the Union during the period considered. The existence of tool steel made of non-alloy steel does not contradict the definition of tool steel in the Combined Nomenclature, as that definition is provided only for the purposes of specific subheadings (CN codes), which correspond to alloy steel products. Moreover, the applicant has not provided any evidence of misclassification of imports of the product under review. In view of the above, the Commission confirmed that the basis, which is relevant to calculate import data, should be the respective TARIC codes, where such codes had been created. Finally, the Commission noted that even if there was evidence that a higher estimate resulting from the use of full CN codes would be more accurate, the conclusions on injury would not change.

5.5.   Economic situation of the Union industry

5.5.1.   General remarks

• (196) The assessment of the economic situation of the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

• (197) As mentioned in recital (41), sampling was used for the assessment of the economic situation of the Union industry.

• (198) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data contained in the request for review and the verified submission from the applicant, namely the data related to all Union producers. The Commission established the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers, namely the data related to the sampled Union producers. Both sets of data were found to be representative for establishing the economic situation of the Union industry.

• (199) The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.

• (200) The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.

5.5.2.   Macroeconomic indicators

5.5.2.1.   Production, production capacity and capacity utilisation

• (201) The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 6 A

Production, production capacity and capacity utilisation

	2018	2019	2020	Review investigation period (2021)
Production volume (tonnes)	10 261 491	9 382 766	8 684 523	9 441 069
Index	100	91	85	92
Production capacity (tonnes)	14 172 600	14 479 668	14 645 251	13 445 956
Index	100	102	103	95
Capacity utilisation (%)	72	65	59	70
Index	100	89	82	97
Source: Request for review and verified data provided by EUROFER.	Source: Request for review and verified data provided by EUROFER.	Source: Request for review and verified data provided by EUROFER.	Source: Request for review and verified data provided by EUROFER.	Source: Request for review and verified data provided by EUROFER.

• (202) The investigation showed that the trends in Union industry production closely followed the trends in consumption in the free market. Overall, production declined by 8 % during the period considered. The situation was particularly difficult in 2020 when production was reduced by 15 % because of a low demand caused by the surge of the Covid-19 pandemic that year. Production recovered in the review investigation period, in line with the increases of consumption in the free market and captive use, but did not reach its 2018 level.

• (203) The production capacity dedicated to heavy plates was maintained and even slightly increased in the period 2018 to 2020. However, the investigation showed that the Union industry had to shut down some of its capacity or transferred it to other products in the review investigation period. Overall capacity was reduced by 5 % or by 727 thousand tonnes during the period considered.

• (204) Given the reduction in production capacity by 5 %, the utilization rate at the beginning and at the end of the review investigation period was maintained at around 70 %. However, the utilisation rate was particularly low in 2019 and 2020 when it was as low as 59 %. This low rate was caused by the economic downturn resulting from the Covid-19 crisis which led to a significant reduction in consumption in the free market and in the production intended for captive use and captive sales.

Table 6 B

Union production intended for captive use and captive sales

	2018	2019	2020	Review investigation period (2021)
Production volume (tonnes)	866 715	530 957	492 545	665 731
Index	100	61	57	77
Source: Verified data provided by EUROFER.	Source: Verified data provided by EUROFER.	Source: Verified data provided by EUROFER.	Source: Verified data provided by EUROFER.	Source: Verified data provided by EUROFER.

• (205) As mentioned under point 5.2 ‘Union consumption’, the consumption for heavy plates declined over the period considered. The effect of the downturn was particularly marked for the production intended for captive use and the captive sales, which dropped by 39 % in 2019 and by a further 4 percentage points in 2020. The recovery observed in the review investigation period was not sufficient to regain the production volume lost in the previous years.

5.5.2.2.   Sales volume and market share

• (206) The Union industry’s sales volume and market share developed over the period considered as follows:

Table 7

Sales volume and market share

	2018	2019	2020	Review investigation period (2021)
Total sales volume on the Union market (tonnes)	7 977 991	7 317 413	6 233 894	7 006 890
Index	100	92	78	88
Market share (%)	85,7	86,7	83,7	83,6
Index	100	101	98	98
Captive sales	773 262	422 368	347 631	484 892
Index	100	55	45	63
Market share of captive sales (%)	8,3	5,0	4,7	5,8
Index	100	60	56	70
Free market sales	7 204 729	6 895 045	5 886 263	6 521 998
Index	100	96	82	91
Market share of free market sales (%)	77,4	81,7	79,0	77,8
Index	100	106	102	101
Source: Verified data provided by EUROFER.	Source: Verified data provided by EUROFER.	Source: Verified data provided by EUROFER.	Source: Verified data provided by EUROFER.	Source: Verified data provided by EUROFER.

• (207) The development of the total sales volume of the Union industry by and large followed the trend in consumption during the period considered. It decreased by 8 % in 2019 and even further in 2020, the year when the Covid-19 pandemic occurred. Even if demand recovered in the review investigation period, it did not allow the industry to reach the sales level of 2018. Overall, almost one million tonnes of sales were lost in the period considered.

• (208) The investigation showed that the captive sales were more severely affected than the sales in the free market. The decrease between 2018 and the end of 2020 was as high as 55 % (or around 425 000 tonnes). The recovery in captive sales during the review investigation period was relatively weak and these sales were still 37 % below the 2018 level.

• (209) The sales in the free market were also hit by the general downturn in the market and trends in sales also followed the trends in consumption in that market. The apparent recovery in the review investigation period was weak and not sufficient to recover the sales volume lost in the previous years.

• (210) As the trends in sales volume closely followed the trends in consumption in the free market, the Union Industry did not suffer a loss in market share in that market. This cannot hide the fact that the loss in sales volume in the free market (- 683 000 tonnes) was considerable during the period considered.

5.5.2.3.   Growth

• (211) As mentioned in recital (178), the period considered covered the year 2019, when an economic growth slowdown occurred, and 2020 which exacerbated the downturn due to the Covid-19 pandemic. Hence, the market and other volume indicators did not grow in that period even if there were encouraging signs of recovery in the market in the review investigation period.

5.5.2.4.   Employment and productivity

• (212) Employment and productivity developed over the period considered as follows:

Table 8

Employment and productivity

	2018	2019	2020	Review investigation period (2021)
Number of employees	18 722	18 979	18 795	16 032
Index	100	101	100	86
Productivity (tonnes/FTE)	548	494	462	589
Index	100	90	84	107
Source: Verified data provided by EUROFER.	Source: Verified data provided by EUROFER.	Source: Verified data provided by EUROFER.	Source: Verified data provided by EUROFER.	Source: Verified data provided by EUROFER.

• (213) The Union industry kept its employment until the end of 2020 but had to lay-off 14 % of its workforce in the review investigation period due to the severity of the downturn in the market. This included the workforce lost by the closing down of one of the Union’s producers’ (ThyssenKrupp) heavy plate operations in 2021.

• (214) The Productivity of the Union industry’s employees was very low in 2019 and 2020 because production decreased significantly (up to -15 %) and employment was maintained these years. The recovery in productivity in the review investigation period was due to a lower number of employees and the recovery in production (+7 %) compared to 2020.

5.5.2.5.   Recovery from past dumping

• (215) Given that the volume of imports from China was negligible during the review investigation period, the Commission did not carry out a dumping calculation for that period. However, it is recalled that such calculations were done in the context of the likelihood of recurrence of dumping in chapter 4 above.

• (216) In the context of recovery from past dumping, it is noteworthy that the current investigation is the first review of the original measures, the level of which ranges from 65,1 % to 73,7 %. In view of the 14,4 % market share then held by the Chinese exporters, the negative impact past dumping had on the Union market and on the Union industry in the long term cannot be underestimated, in particular in a context of economic downturn.

• (217) Given the unfavourable economic situation during the period considered, the Union industry did not recover sufficiently from the effects of past dumping.

5.5.3.   Microeconomic indicators

5.5.3.1.   Prices and factors affecting prices

• (218) The weighted average unit sales prices to unrelated customers in the Union and the unit cost of production of the sampled Union producers developed over the period considered as follows:

Table 9

Sales prices in the Union and unit cost of production (EUR/tonne)

	2018	2019	2020	Review investigation period (2021)
Unit sales price in the Union on the total market	680	713	674	762
Index	100	105	99	112
Unit sales price on the captive market	[613 - 742 ]	[744 - 900 ]	[757 - 917 ]	[848 - 1 027 ]
Index	100	121	124	138
Unit sales price on the free market	687	708	671	749
Index	100	103	98	109
Unit cost of production	746	794	776	839
Index	100	106	104	112
Source: Questionnaire replies from the sampled Union producers. Data on the unit sales price on the captive market were ranged for reasons of confidentiality.	Source: Questionnaire replies from the sampled Union producers. Data on the unit sales price on the captive market were ranged for reasons of confidentiality.	Source: Questionnaire replies from the sampled Union producers. Data on the unit sales price on the captive market were ranged for reasons of confidentiality.	Source: Questionnaire replies from the sampled Union producers. Data on the unit sales price on the captive market were ranged for reasons of confidentiality.	Source: Questionnaire replies from the sampled Union producers. Data on the unit sales price on the captive market were ranged for reasons of confidentiality.

• (219) The Union industry could increase the sales price in the free market by 9 % over the period considered. However, the price increase was not sufficient to cover for the parallel cost increase in the period. As explained in recital (189) the Union industry sells on the basis of yearly or two-year contracts where prices are fixed during the contractual term. Besides, there is the effect of the Covid-19 pandemic and its impact on the market that could not be foreseen.

• (220) The investigation showed that prices could be adapted, to a certain extent, in line with the evolution of costs. The unit sales price in the free market was, nevertheless, 12 % below the unit cost of production during the review investigation period.

5.5.3.2.   Labour costs

• (221) The average labour costs of the sampled Union producers developed over the period considered as follows:

Table 10

Average labour costs per employee

	2018	2019	2020	Review investigation period (2021)
Average labour costs per employee (EUR/FTE)	73 799	75 871	69 631	77 009
Index	100	103	94	104
Source: Questionnaire replies from the sampled Union producers.	Source: Questionnaire replies from the sampled Union producers.	Source: Questionnaire replies from the sampled Union producers.	Source: Questionnaire replies from the sampled Union producers.	Source: Questionnaire replies from the sampled Union producers.

• (222) During the period considered average labour costs slightly fluctuated and showed an overall increase by 4 %.

5.5.3.3.   Inventories

• (223) The stock levels of the sampled Union producers developed over the period considered as follows:

Table 11

Inventories

	2018	2019	2020	Review investigation period (2021)
Closing stocks (tonnes)	288 326	234 287	236 113	294 404
Index	100	81	82	102
Closing stocks as a percentage of production	11,8	10,0	11,7	12,6
Index	100	85	99	107

Source: Questionnaire replies from the sampled Union producers.

• (224) Table 11 shows that the stocks of heavy plates dropped by almost 20 % from 2018 to 2019, remained stable in 2020, and increased back to 2018 levels in 2021, at around 12 % of total production. Stocks are not considered an important injury indicator for the industry since the like product is normally produced by the Union industry based on specific orders of the users.

5.5.3.4.   Profitability, cash flow, investments, return on investments and ability to raise capital

• (225) Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

Table 12

Profitability, cash flow, investments and return on investments

	2018	2019	2020	Review investigation period (2021)
Profitability of sales in the Union to unrelated customers (% of sales turnover)	-5,7	-7,6	-11,0	-3,4
Index	- 100	- 134	- 194	-59
Cash flow (EUR)	-49 630 826	-39 006 682	- 117 031 312	-66 865 341
Index	- 100	-79	- 236	- 135
Investments (EUR)	96 993 957	107 862 764	81 821 894	41 298 553
Index	100	111	84	43
Return on investments (%)	-10,5	-15,9	-20,0	-5,4
Index	- 100	- 151	- 190	-51
Source: Questionnaire replies from the sampled Union producers.	Source: Questionnaire replies from the sampled Union producers.	Source: Questionnaire replies from the sampled Union producers.	Source: Questionnaire replies from the sampled Union producers.	Source: Questionnaire replies from the sampled Union producers.

• (226) The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union, namely the sales in the free market, as a percentage of the turnover of those sales. As expected, profitability reached its lowest level, namely –11 %, in 2020 in the core of the pandemic. It recovered in the review investigation period but remained negative. This result could be achieved because prices were increased by up to 9 %, compared to 2018 and certain costs, such as total labour costs, could be reduced in that period.

• (227) The net cash flow is the ability of the Union producers to self-finance their activities. Cash flow remained negative during the period considered and significantly deteriorated in particular in 2020. It slightly recovered in the review investigation period but remained largely negative.

• (228) The economic downturn, the increases in most costs of production and the losses incurred by the Union industry during the period considered had severe consequences on the level of investments, which had to be consistently and drastically reduced as from 2020. The level of investments in the review investigation period was less than half the level of 2018.

• (229) The return on investments is the profit in percentage of the net book value of investments. As the other performance indicators, it remained negative during the period considered. It is not surprising to note that its lowest level (-20 %) was reached in 2020. The recovery of the market, the reduction of the loss but also a lower level of investments in the review investigation period led to a slightly improved result, albeit negative.

5.6.   Conclusion on injury

• (230) The investigation showed that imports from China decreased and remained below the de minimis level during the period considered. Hence, no meaningful conclusions could be drawn based on the volume or the price of such limited imported quantities.

• (231) The volume imported from other third countries also decreased in the period considered in a context of decreasing demand. The average import price of heavy plates imported from all other third countries was around 2,5 % below the average Union industry price level. Their market share remained by and large stable in that period.

• (232) The period considered includes the year 2020 which was the trigger for the Covid-19 pandemic which led to a significant general downturn in economies worldwide. In this context, the investigation showed that in a shrinking market all injury indicators of the Union industry developed negatively and / or remained negative during the period considered. Production was reduced and sales on the free market declined by 9 %, the Union Industry had to cut 14 % of its employment. Sales prices could be increased but not sufficiently to cover for the increases in costs of production, hence profitability, cash flow, investments and return on investments remained consistently negative in that period.

• (233) On the basis of the above, the Commission concluded that the Union industry is in a very vulnerable state and suffered material injury within the meaning of Article 3(5) of the basic Regulation during the review investigation period. At the same time, the Commission concluded that given the negligible volume of imports of the product concerned from China, the material injury suffered by the Union industry during the review investigation period could not have been caused by imports from China.

• (234) Primex claimed that the drop in demand was the cause of the Union industry’s fragile state and that there was no evidence of a causal link between imports from China and the state of the Union producers. Hence, Chinese exporters could not be considered responsible for any injury suffered by the Union industry on the Union market.

• (235) The drop in consumption likely played a role in the economic situation of the Union industry during the period considered. It is however recalled that other criteria, in particular the likelihood of recurrence of dumping and injury caused by dumped imports from China, is to be taken into account in an expiry review investigation initiated under article 11(2) of the basic Regulation. In this regard, the Commission further examined the likelihood of recurrence of injury originally caused by imports from China.

Comments following final disclosure

• (236) In its comments following final disclosure, the applicant agreed with the Commission’s conclusions, stating that the imposition of the anti-dumping measures has led to a general improvement in the economic situation of the Union industry as compared to the original investigation period, but noted that the Union industry remains in an economically fragile and injurious situation.

• (237) In its comments, CISA considered that the fact acknowledged by the Commission that the alleged continued injury suffered by the Union industry was not caused by Chinese imports is crucial in this case.

• (238) However, CISA also questioned the Commission’s determination of injury, claiming that it did not meet the standard of objective examination and positive evidence set out in Article 3.1 of the WTO Anti-dumping Agreement. To corroborate this claim, CISA elaborated on the choice of period considered, the interpretation of the major macroeconomic indicators of the Union industry, and the import pricing trends.