Commission Implementing Regulation (EU) 2023/1123 of 7 June 2023 imposing a definitive countervailing duty on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in People’s Republic of China following an expiry review pursuant to Article 18 of Regulation (EU) 2016/1037 of the European Parliament and of the Council

8.6.2023	EN	Official Journal of the European Union	L 148/84

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union ¹ (‘the basic Regulation’), and in particular Article 18 thereof,

Whereas:

1. PROCEDURE

1.1.   Previous investigations and measures in force

• (1) By Commission Implementing Regulation (EU) 2017/969 ², the European Commission (‘the Commission’), imposed a countervailing duty on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel, originating in People’s Republic of China (PRC or ‘the country concerned’ or ‘China’) (‘the original regulation’). The countervailing duties currently in force range from 4,6 % to 35,9 % (‘the original measures’). The investigation that led to the imposition of the original measures will hereinafter be referred to as ‘the original investigation’.

• (2) By Commission Implementing Regulation (EU) 2017/649 ³, the Commission, imposed definitive anti-dumping measures on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel, originating in People’s Republic of China (PRC). The anti-dumping duties currently in force range from 0 % to 31,3 %.

1.2.   Request for an expiry review

• (3) Following the publication of a notice of impending expiry ⁴, the Commission received a request for the initiation of an expiry review of the countervailing measures pursuant to Article 18 of the basic Regulation.

• (4) The request for review (‘the request’) was submitted on 9 March 2022 by EUROFER, the European Steel Association, (‘the applicant’) on behalf of the Union industry of certain hot-rolled flat products of iron, non-alloy or other alloy steel in the sense of Article 10(6) of the basic Regulation.

• (5) The applicant claimed that the expiry of the countervailing measures would likely result in continuation or recurrence of subsidisation and recurrence of injury to the Union industry.

1.3.   Initiation of an expiry review

• (6) Having determined that sufficient evidence existed for the initiation of an expiry review, the Commission initiated, on 8 June 2022, an expiry review with regard to imports to the Union of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in the PRC on the basis of Article 18(2) of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union ⁵ (‘the Notice of Initiation’).

• (7) Prior to the initiation of the review, the Commission notified the Government of China (‘GOC’) ⁶ on 12 May 2022 that it had received a properly documented request, and invited the GOC for consultations in accordance with Article 10(7) of the basic Regulation. The same day GOC also submitted comments in writing arguing that in general the request does not contain sufficient evidence to initiate an expiry review, especially with regard to the specificity of the alleged subsidies to the HRF producers. The Commission took note of the comments raised by the GOC and have paid particular attention to these elements during the expiry review investigation.

1.4.   Separate investigation relating to the same product concerned

• (8) By a notice published in the Official Journal of the European Union on 5 April 2022 ⁷, the Commission also announced the initiation of an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council ⁸ of the definitive anti-dumping measures in force with regard to imports into the Union of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in the PRC.

1.5.   Review investigation period and period considered

• (9) The investigation of continuation or recurrence of subsidisation covered the period from 1 January 2021 to 31 December 2021 (‘review investigation period’). The examination of the trends relevant for the assessment of the likelihood of continuation or recurrence of injury covered the period from 1 January 2018 to the end of the review investigation period (‘the period considered’).

1.6.   Interested parties

• (10) In the Notice of Initiation, interested parties were invited to contact the Commission in order to participate in the investigation. The Commission specifically informed the applicant, all known Union producers, the known producers in the PRC and the authorities of the People’s Republic of China as well as known importers, users and traders of the initiation of the expiry review and invited them to participate.

• (11) 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.

1.7.   Sampling

• (12) In its Notice of Initiation, the Commission stated that it might sample the interested parties in accordance with Article 27 of the basic Regulation.

1.7.1.   Sampling of Union producers

• (13) In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. In accordance with Article 27 of the basic Regulation, the Commission selected the sample on the basis of the largest volume of production of the like product in the Union during the review investigation period that could reasonably be investigated within the time available. This sample consisted of three Union producers. The sampled Union producers accounted for around 29 % of estimated total production in the Union. The Commission invited interested parties to comment on the provisional sample. No comments were received and the Commission confirmed the provisionally selected sample. The sample is representative of the Union industry.

1.7.2.   Sampling of importers

• (14) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked known unrelated importers to provide the information specified in the Notice of Initiation. No unrelated importer came forward and provided the requested information.

1.7.3.   Sampling of exporting producers in the PRC

• (15) To decide whether sampling was necessary with regard to the exporting producers and, if so, to select a sample, the Commission asked all known producers in the PRC to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the PRC to the European Union to identify and/or contact other producers, if any, that could be interested in participating in the investigation. None of the producers in the PRC provided the requested information.

• (16) Consequently, the Commission informed the authorities of the PRC by Note Verbale of 2 September 2022, that it might resort to the use of facts available under Article 28(1) of the basic Regulation when examining the continuation or recurrence of subsidisation. The authorities of the PRC did not react to the Note.

1.8.   Questionnaire and verification

• (17) The Commission sent questionnaires to the three sampled Union producers, the applicant and the GOC. Replies to the questionnaires were received from the three sampled Union producers and the applicant.

• (18) The Commission verified all the information it deemed necessary for a determination of the likelihood of a continuation or recurrence of subsidisation and injury, and of the Union interest test. Verification visits were carried out at the premises of the following interested parties:

Union producers:

• — Arcelor Mittal Poland (Dąbrowa Górnicza, Poland)

• — Tata Steel Ijmuiden (IJmuiden, The Netherlands)

• — ThyssenKrupp Steel Europe AG (Duisburg, Germany) and its related company ThyssenKrupp Material Processing (Krefeld, Germany).

1.9.   Disclosure

• (19) On 4 April 2023, the Commission disclosed the essential facts and considerations on which basis it intended to impose countervailing duties. All parties were granted a period within which they could make comments on that disclosure.

• (20) The comments made by interested parties were considered by the Commission and taken into account, where appropriate. The parties who so requested were granted a hearing. CISA requested and was granted a hearing with the Commission services on 12 April 2023.

2. PRODUCT UNDER REVIEW, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under review

• (21) The product subject to this review is the same as the one in the original investigation, i.e. certain flat-rolled products of iron, non-alloy steel or other alloy steel, whether or not in coils (including ‘cut-to-length’ and ‘narrow strip’ products), not further worked than hot-rolled, not clad, plated or coated (‘HRF‘ or ‘product under review‘).

The following products are not covered by this review:

• (a) products of stainless steel and grain-oriented silicon electrical steel,

• (b) products of tool steel and high-speed steel,

• (c) products, not in coils, without patterns in relief, of a thickness exceeding 10 mm and of a width of 600 mm or more, and

• (d) products, not in coils, without patterns in relief, of a thickness of 4,75 mm or more but not exceeding 10 mm and of a width of 2 050 mm or more.

The product concerned is currently falling under CN codes 7208 10 00, 7208 25 00, 7208 26 00, 7208 27 00, 7208 36 00, 7208 37 00, 7208 38 00, 7208 39 00, 7208 40 00, 7208 52 10, 7208 52 99, 7208 53 10, 7208 53 90, 7208 54 00, 7211 13 00, 7211 14 00, 7211 19 00, ex 7225 19 10 (TARIC code 7225191090), 7225 30 90, ex 7225 40 60 (TARIC code 7225406090), 7225 40 90, ex 7226 19 10 (TARIC codes 7226191091, 7226191095), 7226 91 91 and 7226 91 99. The CN and TARIC codes are given for information only, without prejudice to a subsequent change in the tariff classification.

• (22) Hot-rolled flat steel products are produced through hot-rolling. This is a metal forming process in which hot metal is passed through one or more pairs of hot rolls to reduce the thickness and to make the thickness uniform, whereby the temperature of the metal is above its recrystallization temperature. They can be delivered in various forms; in coils (oiled or not oiled, pickled or not pickled), in cut lengths (sheet) or in narrow strips.

• (23) There are two main uses for hot-rolled flat steel products. First, they are the primary material for the production of various value-added downstream steel products, starting with cold-rolled flat and coated steel products. Second, they are used as an industrial input purchased by end users for a variety of applications, including in construction (production of steel tubes), shipbuilding, gas containers, cars, pressure vessels and energy pipelines.

2.2.   Product concerned

• (24) The product concerned by this investigation is the product under review originating in the People’s Republic of China.

2.3.   Like product

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

• — the product concerned, exported to the Union;

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

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

• (26) These products are therefore considered to be like products within the meaning of Article 2(c) of the basic Regulation.

3. LIKELIHOOD OF CONTINUATION OF SUBSIDISATION

• (27) In accordance with Article 18 of the basic Regulation, and as stated in the Notice of Initiation, the Commission examined first whether the expiry of the existing measures would be likely to lead to a continuation of subsidisation.

3.1.   Non-cooperation and the use of facts available in accordance with Article 28(1) of the basic Regulation

• (28) On 12 July 2022 the Commission sent a questionnaire to the GOC. The GOC was asked to forward a questionnaire for banks and other financial institutions known by the GOC to have provided loans to the industry concerned as well as to the producers and distributors of the hot-rolled and cold-rolled steel providing inputs for the production of the product under review.

• (29) The Commission received no reply.

• (30) By Note Verbale of 2 September 2022, the Commission informed the Chinese authorities that following non-cooperation from the GOC and the producers of the product under review the Commission intended to make its findings on the basis of the facts available, in accordance with Article 28(1) of the basic Regulation. They were also informed that a finding based on facts available may be less favourable than if the GOC and producers cooperated.

• (31) No comments in this regard were received. The Commission, in accordance with Article 28 of the basic Regulation, considered the use of facts available necessary in order to establish the continuation of subsidy practices of China in the hot-rolled flat steel industry.

• (32) Accordingly, the Commission used for its analysis all facts available to it, in particular:

• (a) the request;

• (b) findings of the original investigation carried out by the Commission against the same product in China, such as hot-rolled flat products ⁹;

• (c) findings of the most recent anti-subsidy investigations carried out by the Commission concerning encouraged industries in China, such as, pneumatic tyres ¹⁰ (‘the tyres investigation’), electric bicycles ¹¹ (‘the e-bike investigation’), organic coated steel products ¹² (‘the OCS investigation’), optical fibre cables ¹³ (‘fibre glass investigation’) and aluminium converter foil ¹⁴ (‘aluminium foil investigation’) where similar subsidies were examined;

• (d) Commission Staff Working Document on significant distortions in the economy of the PRC for the purpose of trade defence investigation (‘the Report on China’) ¹⁵.

3.2.   General remarks on the steel sector in China

• (33) Before analysing the alleged subsidisation in the form of specific subsidies or subsidy programmes (sections 3.3 and following below) the Commission assessed government plans, projects and other documents, which were relevant for more than one of the subsidies or subsidy programmes. It found that all subsidies or subsidy programmes under assessment form part of the implementation of the GOC’s central planning for the following reasons.

3.2.1.   14^th Five-Year-Plan

• (34) The Commission in the current investigation established that the main document of relevance during the review investigation period was the 14^th Five-Year-Plan on developing the raw materials industry, such as the steel one. Steel industry being an important part of the raw materials industry, it represents a key field that shapes China’s international competitive edges, and the ‘main battlefield’ for the restructuring of the industrial foundation and green industrial development. The Plan carries an emphasis on cultivating a group of leading enterprises in the industrial chain with ecological leadership and core competitiveness.

• (35) Hebei Province’s Three year action plan on cluster development in the steel industry chain (2020 – 2022) elaborates the reform of mixed ownership of state-owned enterprises, focuses on promoting the cross-regional merger and reorganization of private steel enterprises.

• (36) Shangdong Province’s 14^th Five-Year-Plan on the steel industry development emphasizes competitiveness of the steel industry as the goal, as strict control of production capacity is brought forward. Furthermore, it carries objectives of optimizing industrial layout, strengthening innovation drive, promoting green development and building an advanced steel manufacturing industrial base with domestic first-class competitiveness and international influence.

• (37) After disclosure, CISA claimed that the Commission relied heavily on the ‘14th Five-Year Plan’ in order to prove the strategic importance of the relevant industry and in doing so it evidences the existence of subsidies in relation to this specific sector. CISA emphasised that ‘five-year plans’ are merely guiding documents expressing policy views for the future and as such do not have binding force because there is no violation or penalty clause in such plans. In addition to that, CISA referred in this regard to equivalent documents and reports on the side of the EU Commission such as the Commission’s own publication titled ‘A New Industrial Strategy’ in which the Commission itself identifies various priorities in terms of public investments in a clear attempt to steer future development of the EU’s key industries.

• (38) This argument could not be accepted. First of all, the FYPs published by the GOC are not merely general guidance documents, but are of a legally binding nature. The 14^th FYP explicitly reminds all authorities to diligently implement the plans: ‘We will strengthen planning management systems such as catalogues and lists, compilation and archival, and alignment and coordination, develop lists and catalogues such as the “14th Five-Year” National-Level Special Plans, promote plan archival relying on the national planning integrated management information platform, and bring various plans under unified management. We will establish and improve planning alignment and coordination mechanisms, align plans approved by the CCP Central Committee and the State Council and provincial development plans with this plan before submission for approval, ensure that national-level spatial planning, special planning, regional planning, and other levels of planning are coordinated with this plan in terms of main goals, development directions, overall layout, major policies, major projects, and risk prevention and control.’ ¹⁶ Furthermore, the 14^th FYP on Developing the Raw Materials Industry stipulates that ‘all localities need to better themselves with this Plan, and include the main contents and major projects herein in their primary local tasks’, while ‘steel and other key sectors shall formulate specific implementation opinions based on the objectives and tasks of this Plan.’ Therefore, the claim was rejected.

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

3.2.2.   Order No 35

• (40) Order No 35 of the National Development and Reform Commission – Policies for the development of Iron and Steel Industry (2005) (‘Order No 35’) is another policy document that governs the Chinese steel sector. Adopted by the State Council, it covers various aspects of GOC’s control over the industry, including:

• — The prohibition of majority foreign ownership of steelmakers in China (Article 1);

• — The setting up of goals in terms of output for the biggest steel producers (Article 3);

• — The provision of rules for the changes in the corporate structure of steel companies (Article 20);

• — The setting up of GOC’s approval procedures for investment in steel producers (Article 22);

• — The provision of loans and land-use rights only to steel producers that comply with the national development policies for the sector (Articles 24 and 25); and

• — State intervention aimed at supporting large backbone enterprise groups to establish overseas production and supplying bases of raw materials (Article 30).

3.2.3.   Decision No 40

• (41) Decision No 40 is a State Council Order that classifies, for investment purposes, the industrial sectors into different categories, namely ‘encouraged, restrictive and eliminated projects’. This Decision states that the ‘Guidance Catalogue for the Industrial Structure Adjustment’, which is an implementing measure of Decision No 40, is an important basis for guiding investment directions. It also guides the GOC to administer investment projects, and to formulate and enforce policies on public finance, taxation, credit, land, import and export ¹⁷. The steel industry is indicated as an encouraged industry in Chapter VIII of this Guidance Catalogue. As to its legal nature, the Commission noted that Decision No 40 is an Order from the State Council, which is the highest administrative body in the PRC. In that regard, the decision is legally binding for other public bodies and the economic operators ¹⁸.

3.2.4.   The Revitalization Plan

• (42) The Blueprint for the Adjustment and Revitalisation of the Steel Industry (2009) is an action plan for the steel industry. The plan aims to deal with the international financial crisis and addresses the overall policy requirements of the GOC to maintain growth. It also seeks to ‘guarantee the stable operation of the industry’ as it is ‘regarded as an important pillar industry of the national economy’. The document provides the following:

• — an increase in the financial support for ‘key backbone’ steel producers;

• — an acceleration of the structural adjustments and the promotion of industrial upgrading;

• — the support of the key companies that go abroad in their development, technical cooperation and Merger and Acquisitions;

• — the increase in the scale of the export credit for metallurgical equipment.

3.2.5.   Guiding Catalogue of industrial structure adjustment

• (43) According to its chapter VIII, the Guiding Catalogue of industrial structure adjustment (2019), the steel sector is an encouraged sector.

3.2.6.   Overall conclusions on the GOC’s intervention in the steel sector

• (44) Taking into account the above-listed documents and their provisions, on which there is no evidence that they are no longer in place, the Commission reiterated its conclusion from the original investigation that the Chinese steel industry continued to be a key/strategic industry during the review investigation period, the development of which continues to be actively pursued and directed by the GOC as a policy strategic objective.

3.3.   Subsidies and subsidy programmes examined in the current expiry review

• (45) In view of the lack of cooperation by the GOC and the Chinese producers specified in recitals (27) and (30), the Commission decided to examine whether there was continuation of subsidisation as follows. First, the Commission examined whether the subsidies countervailed in the original investigation continued to confer benefit to the hot rolled flat steel industry. Subsequently, the Commission analysed whether that industry benefitted from subsidies which were not countervailed in the original investigation (‘additional subsidies’ or ‘new subsidies’) as alleged in the request.

• (46) The Commission has decided that, in view of the findings confirming the existence of continued subsidisation with respect to most of the subsidies countervailed in the original investigation, as well as some of the additional subsidies, there is no need to investigate all the other subsidies alleged to exist by the applicant.

• (47) After disclosure, CISA claimed that findings reached in past anti-subsidy investigations cannot merely be transposed on to the Commission’s current investigation as such reversals of the burden of proof deviates from the accepted rights of defence by any defendant in such investigations. According to CISA, the Commission used past findings in other separate and unrelated investigations to paint economic practices in China as examples of subsidisation. However, this approach does not prove the existence of subsidisation in relation to the product under review.

• (48) The Commission considered that the applicant provided sufficient evidence of the existence, amount, nature, benefit and specificity as was reasonably available to it. Furthermore, the Commission also considered that in the absence of cooperation, the recent EU anti-subsidy investigations related to the same subsidy programmes alleged in the request had also examined benefit, specificity and the amounts of subsidisation of the same programmes. These previous findings of subsidisation, coupled with the wealth of information contained in the request and confirmed by the Commission in the course of this investigation, constituted facts available with regards to continuation of subsidisation in accordance with Article 28 of the basic Regulation. Consequently, the claim was rejected.

3.4.   Subsidies countervailed in the original investigation

3.4.1.   Preferential lending

3.4.1.1.   Findings of the original investigation

• (49) In the original investigation ¹⁹, the Commission established that State-owned banks (‘SOBs’) were public bodies as they performed governmental functions and, in doing so, they exercised government authority.

• (50) With respect to the banks that provided loans to the producers who cooperated in the original investigation, the great majority was State-owned. The available information in the original investigation showed that at least 35 out of the 45 reported banks were State-owned banks, including the major commercial banks in China, like the Bank of China, the China Construction Bank and the Industrial and Commercial Bank of China. Furthermore, it was also found that these State-owned commercial banks held a predominant place in the market and in their capacity as public bodies were engaged in offering lending at below-market interest rates. Accordingly, it was concluded that the GOC had a policy to provide preferential lending to the HRF sector.

• (51) The Commission also established, on the basis of, inter alia, Articles 34 and 38 of the Commercial Banking Law and Articles 17 and 18 of Order No 40, that privately owned commercial banks in China were entrusted and directed by the GOC to provide preferential loans to the producers in line with Article 3(1)(a)(iv) of the basic Regulation.

• (52) Therefore, the Commission concluded that: there was a financial contribution to the HRF producers in the form of a direct transfer of funds from the government within the meaning of Article 3(1)(a)(i) of the basic Regulation; and privately owned banks were also entrusted or directed by the government to provide financial contributions to the same producers within the meaning of Article 3(1)(a)(iv) of the basic Regulation.

• (53) A benefit within the meaning of Articles 3(2) and 6(b) of the basic Regulation was found to exist to the extent that the government loans were granted on terms more favourable than the recipient could actually obtain on the market. Since it was established that non-government loans in China do not provide an appropriate market benchmark (privately owned banks being entrusted and directed by the GOC), such a benchmark was constructed on the basis of standard lending rate of the People’s Bank of China. This rate was adjusted to reflect normal market risk by adding the appropriate premium expected on bonds issued by firms with rating of ‘non-investment grade’ bonds (at BB rate).

• (54) This subsidy programme was found to be specific within the meaning of Article 4(2)(a) of the basic Regulation, as the steel industry belonged to the encouraged category according to the Decision No 40 and the provisions of loans were limited only to steel enterprises which fully complied with the development policies for the iron and steel industry (Order No 35).

• (55) Furthermore, the programme was found to be specific under Article 4(2)(b) of the basic Regulation, as certain government plans and documents were encouraging and instructing to provide financial support to steel industry, also in specific geographical regions of China.

• (56) The subsidy rate established in the original investigation for the sampled exporting producers varied from 1,99 % to 27,91 %.

3.4.1.2.   Continuation of the subsidy programme

• (57) In the request and corresponding annexes ²⁰, the applicant provided evidence that Chinese HRF producers continued to benefit from preferential lending and below-market interest rates from domestic banks in China.

• (58) The applicant provided evidence of the significant presence and continued market dominance of SOBs in the Chinese banking sector. In point (67), the request listed the major SOBs which have provided lending on preferential terms to the HRF producers in China.

• (59) Finally, the applicant indicated that private banks continued to be entrusted and directed by the GOC to provide subsidized loans, in line with Article 3.1(a)(iv) of the basic Regulation. Hence, the Commission findings in the original investigation are still valid in this regard.

• (60) In the absence of cooperation from the GOC, no arguments were presented which would challenge the evidence presented by the applicant with regard to the current situation of the Chinese banking system.

• (61) Furthermore, the critical facts relevant for the establishment of this subsidisation programme and its continuation, namely acting of SOBs as public bodies, their dominance in the banking sector, entrustment and direction of private banks, were confirmed by the Report on China ²¹ and the findings of the most recent tyres ²², e-bikes ²³, OCS ²⁴, fibre glass ²⁵ and aluminium foil ²⁶ investigations.

3.4.1.3.   Benefit

• (62) In the absence of cooperation from the Chinese producers, the Commission had no company-specific information on which the amount of subsidy conferred during the review investigation period could be calculated. While the amount of subsidisation during the review investigation period could not be precisely established due to the lack of cooperation, based on the request, the findings in previous investigations referred in recital (61), and absent any indication to the contrary, it could be concluded that Chinese HRF producers continued to be subsidized.

3.4.1.4.   Specificity

• (63) The subsidy programme in question was still specific within the meaning of Articles 4(2)(a) and 4(2)(b) of the basic Regulation, given that the legal situation described in recital (54) had not changed and in the light of the new 14th Five-Year plan for the steel sector, confirming the steel industry as an encouraged industry.

3.4.1.5.   Conclusion

• (64) Accordingly, the Commission concluded that there is sufficient evidence showing that the preferential lending as a countervailable subsidy continued during the review investigation period.

3.4.2.   The provision of land-use rights for less than adequate remuneration

3.4.2.1.   Findings of the original investigation

• (65) In the original investigation ²⁷, the Commission established that the provision of land-use rights by the GOC should be considered a subsidy measure within the meaning of Article 3(1)(a)(iii) and Article 3(2) of the basic Regulation. As there was no functioning market for land in China, the GOC provides land-use rights for less than adequate remuneration, thereby conferring a benefit upon the recipient companies. The use of an external benchmark demonstrated that the amount paid for land-use rights by the HRF producers is well below the normal market rate.

• (66) The Commission also established that the subsidy is specific under Article 4(2)(a) and 4(2)(c) of the basic Regulation, because the access to industrial land is by law limited only to companies respecting the industrial policies set by the State. Furthermore, only certain transactions were subject to a bidding process, prices were often being set by the authorities, and government practices in this area are unclear and non-transparent.

• (67) Using the benchmark of prices of land in Taiwan, the subsidy rate with regard to this measure was established in the original investigation for the sampled producers in the range of 1,20 % to 7,63 %.

3.4.2.2.   Continuation of the subsidy programme

• (68) In the request and corresponding annexes ²⁸, the applicant provided evidence that Chinese HRF producers continued to benefit from land-use rights for less than adequate remuneration.

• (69) The applicant indicated that the law governing this matter has not changed since the original investigation. Private ownership of land is prohibited in China. The Land Administration Law, and Article 2 in particular, still provides that all land in China is ultimately owned by the GOC as it belongs collectively to China. The Property Law (Articles 45-48) specifies that land in China is either ‘collectively owned’ or ‘state owned’. No land can be sold but land-use rights can be assigned through public bidding, quotation or auction.

• (70) Neither the GOC nor the producers provided evidence suggesting the HRF industry stopped benefiting from the provision of land-use rights for less than adequate remuneration.

• (71) On the basis of available information, including the evidence contained in the Report on China ²⁹ in this regard and the findings of the most recent countervailing duty investigations concerning the PRC on tyres ³⁰, e-bikes ³¹ and optical fibre cables ³², the Commission concluded that the rates paid for land use continued to be subsidised because the system imposed by the GOC does not adhere to market principles.

3.4.2.3.   Benefit

• (72) In the absence of cooperation from the GOC and the Chinese producers, the Commission had no company-specific information on the basis of which to calculate the amount of subsidy conferred during the review investigation period. While the amount of subsidisation could not be precisely established due to the lack of cooperation, based on the request, the findings in the previous investigations referred in recital (71), and absent any indication to the contrary, it could be concluded that Chinese HRF producers continued to be subsidized.

3.4.2.4.   Specificity

• (73) The subsidy is specific within the meaning of Articles 4(2)(a) and 4(2)(c) of the basic Regulation. Land-use rights are only granted to a limited group of companies. Furthermore, the steel sector, which is part of the encouraged category within the framework of Decision No 40 of the State Council, falls within the sectors that benefit from land-use rights.

3.4.2.5.   Conclusion

• (74) Accordingly, the Commission concluded that there is sufficient evidence showing that the provision of land-use rights for less than adequate remuneration as a countervailable subsidy continued during the review investigation period.

3.4.3.   Direct tax exemption and reduction programmes

3.4.3.1.   Findings of the original investigation

• (75) In the original investigation ³³, the Commission established that HRF producers were receiving countervailable subsidies related with preferential treatment under income and other direct tax programmes and policies.

• (76) With regard to three specific programmes: Enterprise Income Tax (EIT) privileges for Resource Products from Synergistic Utilisation, EIT offset for research and development expenses and Land use tax exemption, the Commission based its findings as to the legal basis, eligibility, nature of the subsidy and its specificity on the verified questionnaire replies and was able to calculate individual subsidy rates for the sampled companies.

• (77) The income and other direct tax programmes were found to be subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation in the form of government revenue foregone which confers a benefit upon the recipient companies.

• (78) The subsidy schemes were also found to be specific within the meaning of Article 4(2)(a) of the basic Regulation, given that the legislations pursuant to which the granting authority operated, limited the access to the schemes only to certain enterprises and industries classified as encouraged, such as those belonging to HRF industry.

• (79) The subsidy rate established in the original investigation for the sampled exporting producers varied from 0,00 % to 0,66 %.

3.4.3.2.   Continuation of the subsidy programme

• (80) In the expiry review request ³⁴, the applicant provided evidence that many Chinese HRF producers continue to benefit from several Enterprise Income Tax (EIT) privileges’ programmes countervailed in the original investigation. The legal basis of the EIT privileges’ programme is Article 28 of the EIT Law and Article 93 of the Implementation Rules for the Enterprise Income Tax Law of the PRC. Furthermore, the applicant provided evidence on the EIT offset for research and development subsidy with legal basis in Article 30(1) of the EIT law, along with the Implementation Rules for the Enterprise Income Tax Law of the PRC.

• (81) Optical fiber cables ³⁵ and aluminium foil ³⁶ investigations confirmed that the schemes were still in use and their nature had not changed.

• (82) In the absence of cooperation from the GOC, no arguments were presented which would challenge the evidence presented by the applicant with regard to the continued benefits of the HRF producers from income and other direct tax programmes and policies.

• (83) The schemes in question are considered to be subsidies within the meaning of Articles 3(1)(a)(ii) and 3(2) of the basic Regulation, in the form of foregone government revenue which confers a benefit upon the recipient companies.

3.4.3.3.   Benefit

• (84) In the absence of cooperation from the GOC and the Chinese producers, the Commission had no company-specific information on the basis of which to calculate the amount of subsidy conferred during the review investigation period. While the amount of subsidisation could not be precisely established due to the lack of cooperation, based on the request, the findings in previous investigations referred in recital (81), and absent any indication to the contrary, it could be concluded that Chinese HRF producers continued to be subsidized.

3.4.3.4.   Specificity

• (85) The schemes are specific within the meaning of Article 4(2)(a) of the basic Regulation given that the legislations pursuant to which the granting authority operated, limited the access to the schemes only to certain enterprises and industries.

3.4.3.5.   Conclusion

• (86) Accordingly, the Commission concluded that there is sufficient evidence showing that some of the tax programmes continued being countervailable subsidies during the review investigation period.

3.4.4.   Indirect tax and import tariff programmes and policies

3.4.4.1.   Findings of the original investigation

• (87) In the original investigation ³⁷, the Commission established that HRF producers were receiving countervailable subsidies related with preferential treatment under two indirect tax and import tariff programmes:

• (a) VAT exemptions and import tariff rebates for the use of imported equipment and technology

• (b) Tax exemption for policy-based relocation

• (88) The indirect tax and import tariff programmes were found to be subsidies within the meaning of Articles 3(1)(a)(ii) and 3(2) of the basic Regulation in the form of foregone government revenue which confers a benefit upon the recipient companies.

• (89) The subsidy schemes were also found to be specific within the meaning of Article 4(2)(a) of the basic Regulation, given that the legislations pursuant to which the granting authority operated, limited the access to the schemes only to certain enterprises and industries. In addition, the lack of cooperation from the GOC did not permit the Commission to reach the conclusion to whether objective criteria of eligibility to certain schemes existed which made them also specific under Article 4(2)(b) of the basic Regulation.

• (90) The subsidy rate established in the original investigation for the sampled exporting producers was 1,01 %.

3.4.4.2.   Continuation of the subsidy programme

• (91) The request as well as the findings of the most recent anti-subsidy investigations carried out by the Commission concerning encouraged industries in China such as tyres ³⁸, OCS ³⁹ and aluminium foil ⁴⁰ investigations confirmed that the schemes were still in use and their nature had not changed.

• (92) In the absence of cooperation from the GOC and the Chinese HRF producers, no arguments were presented which would challenge the evidence presented by the applicant with regard to the continued benefits of the HRF producers from indirect tax and import tariff programmes and policies.

• (93) The schemes in question are considered to be subsidies within the meaning of Articles 3(1)(a)(ii) and 3(2) of the basic Regulation, in the form of foregone government revenue which confers a benefit upon the recipient companies.

3.4.4.3.   Benefit

• (94) In the absence of cooperation from the GOC and the Chinese HRF producers, the Commission had no company-specific information on the basis of which to calculate the amount of subsidy conferred during the review investigation period. While the amount of subsidisation could not be precisely established due to the lack of cooperation, based on the request, the findings in previous investigations referred in recital (91), and absent any indication to the contrary, it could be concluded that HRF producers continued to be subsidized.

3.4.4.4.   Specificity

• (95) The schemes are specific within the meaning of Article 4(2)(a) of the basic Regulation, as the access to the schemes is limited only to certain enterprises and industries.

3.4.4.5.   Conclusion

• (96) Accordingly, the Commission concludes that there is sufficient evidence showing that the indirect tax and import tariff programmes continued being countervailable subsidies during the review investigation period.

3.4.5.   Grant programmes

3.4.5.1.   Findings of the original investigation

• (97) In the original investigation ⁴¹, the Commission concluded that all the sampled companies benefited from a variety of grants related to environmental protection and reduction of emissions and from grants related to R & D, technological upgrading and innovation.

• (98) The original investigation also positively concluded on the existence of a number of ad hoc subsidies granted to certain HRF producers from different levels of government authorities, i.e. local, regional and national. Examples of such grants were patent funds, science and technology funds and awards, business development funds, grants for basic infrastructure, support funds provided at district or provincial level, funds for the import of iron ore, funds for the company’s relocation, overseas advanced technology introduction special fund, interest discounts on loans for imported equipment.

• (99) These grants and other ad hoc subsidies were found to constitute a subsidy in the meaning of Article 3(1)(a)(i) and Article 3(2) of the basic Regulation i.e. a transfer of funds from the GOC in the form of grants to the producers of the product concerned.

• (100) They were also found to be specific either under Article 4(2)(a) of the basic Regulation, given that they appear to be limited to certain companies or specific projects in specific regions and/or the steel industry, or under Article 4(2)(b), given that the eligibility conditions and the actual selection criteria for enterprises to be eligible are not transparent, not objective and do not apply automatically.

• (101) The subsidy rate established in the original investigation for the sampled exporting producers varied from 0,09 % to 1,45 %.

3.4.5.2.   Continuation of the subsidy programmes

• (102) In the expiry review request ⁴², the applicant provided evidence that many HRF producers continue to benefit from grant programmes.

• (103) Findings of the most recent anti-subsidy investigations carried out by the Commission concerning encouraged industries in China such as OCS ⁴³ and aluminium foil ⁴⁴ investigations confirmed that the schemes were still in use and their nature had not changed.

• (104) Most of the grants were provided in order to finance particular projects or assets, reward energy conservation or environmental protection, and modernise steel mills.

• (105) The applicant also provided evidence, based on analysis of annual accounts of specific companies, that at least 12 HRF producers received subsidies between 2018 and 2021.

• (106) All grants and other ad hoc subsidies analysed during expiry review investigation constituted a subsidy in the meaning of Article 3(1)(a)(i) of the basic Regulation, in the form of a direct transfer of funds with regard to the grants and similar transfers of resources.

• (107) In the absence of cooperation from the GOC and HRF producers, no arguments were presented which would challenge the evidence presented by the applicant with regard to the continued benefits of the HRF producers from grants or awarded ad hoc.

3.4.5.3.   Benefit

• (108) In the absence of cooperation from the GOC and the Chinese producers, the Commission had no company-specific information on the basis of which to calculate the amount of subsidy conferred during the review investigation period. While the amount of subsidisation could not be precisely established due to the lack of cooperation, based on the request, the findings in the previous investigations referred in recital (103), and absent of the any indication to the contrary, it could be concluded that HRF producers continued to be subsidized.

3.4.5.4.   Specificity

• (109) These subsidies were considered to be specific in law or in fact, within the terms of Article 4(2) of the basic Regulation. In the absence of cooperation from the GOC and Chinese producers of HRF, they are deemed to be granted to a limited number of HRF producers, and/or because of the manner in which discretion of the granting authorities has been exercised for their granting.

3.4.5.5.   Conclusion

• (110) Accordingly, the Commission concluded that there is sufficient evidence showing that the producers continued receiving grants as countervailable subsidies during the review investigation period.

3.5.   Additional subsidies

3.5.1.   Debt for equity swaps

3.5.1.1.   Introduction

• (111) The expiry review request ⁴⁵ contained extensive evidence that several Chinese HRF producers were involved in the second generation of the debt for equity instruments carried out from 2016 to 2019, for a combined total of 237 billion RMB of debts. It is alleged that outstanding debt due by State-owned steelmakers to State-owned commercial banks (‘SOCBs’) was cancelled in exchange for equity through the involvement of various types of Implementation Agencies (IAs) which are non-bank financial institutions under the jurisdiction of the China Banking and Insurance Regulatory Commission. The most common form of debt for equity swaps (DES) IAs are financial asset investment companies (FAIC) which are spun off from banks or insurance companies. The request further asserted that IAs were specifically created to dispose of massive non-performing loans in key industries, including the steel sector and to restructure the debts of SOEs through, inter alia, debt to equity swaps.

• (112) Given that the GOC failed to provide any information on this programme, the Commission made its findings on this programme based on the information contained in the request and on the information from the anti-subsidy investigation carried out by the Commission concerning the steel sector in China, that is OCS ⁴⁶.

• (113) As examined recital (91) above, the Commission established that HRF is an encouraged industry and in section 3.4.1 it found that the HRF producers avail themselves of preferential financing thanks to the fact that the GOC had a policy to provide preferential lending to the HRF sector via State-owned banks and also privately owned banks were entrusted and directed by the GOC to provide such preferential loans to the HRF producers. Furthermore, the Commission established that the GOC has built an entire regulatory ecosystem around the DES concept which covers a growing number and variety of creditors, target companies, implementation agencies, investors, service platforms and supervisory institutions. And while GOC documents consistently highlight the market-orientation of this system, they also remind participants that they are expected serve the greater good and further national economic policy goals.

• (114) According to the ‘Guiding Opinions on Regulating the Asset Management Business of Financial Institutions’, document referenced in the request, financial institutions are encouraged to raise funds through the issuance of asset management products to invest in areas that meet the requirements of national strategies and industrial policies and meet the requirements of national supply-side structural reform policies under the premise of compliance with laws and regulations and business sustainability. Furthermore, the financial institutions are also encouraged to raise funds through the issuance of asset management products to support the transformation of the economic structure, support market oriented, legalised debt-to-equity swaps, and reduce corporate leverage.

• (115) The request also referred to ‘Opinions on Resolving Excess Capacity in the Steel Industry and Realizing a Recovery’ which emphasised the need to increase financing support for steel enterprises and the need to attract investment capital from sources other than the state budget and financial institutions, like wealth management products, pension funds etc. Furthermore, this document urges to develop market-based approaches in processing corporate debt and support banks in disposing of distressed debt by transferring troubled loan positions to asset management corporations.

• (116) ‘Opinions on Supporting the Steel and Coal Industries in Resolving Excess Capacity and Realizing a Recovery’, published in 2016 by the People’s Bank of China and the regulatory commissions overseeing the banking, insurance and securities sectors, gives instructions on how to help steel and coal industries resolve overcapacity and insolvency problems. This is achieved through the ‘guiding role of financial services’ enterprises which would enable the coal and steel industries improve their financial, technological and environmental performance. Furthermore, enterprises that comply with national industrial policies and can meet several vaguely defined conditions pertaining to restructuring, solvency and environmental protection may benefit from the readjustment of credit periods.

• (117) In the expiry review request, there is an information on establishment of the joint conference system under the leadership of State Council which reviewed and approved regulatory and support policies, including implementation of a new round of debt-equity-swaps. At the same time, it worked out joint punishment mechanisms to sanction rule violations. Furthermore, the joint conference has called for DES transactions to benefit enterprises and industries with great significance for economic transformation and as well as for national security.

• (118) At the 2017 Financial Work Conference of the Communist Party of China Central Committee (CPCCC), General Secretary Xi Jinping confirmed long-held positions that financial institutions must understand their role first and foremost as serving the real economy and must do their utmost to strengthen its weak points. In his statement he elaborated on the duty of financial sector to serve the real economy by guarding it from financial risks. By doing so financial sector should improve service efficiency and quality and channel more resources into major and weak areas of economic and social development. In addition to that, the government is engaged in deleveraging of the economy by firmly taking a prudent monetary policy and prioritizing leverage reduction in state-owned enterprises.

• (119) The meeting of the China State Council’s (SC) Standing Committee in 2017 placed the deleveraging of SOE at the very centre of the general corporate deleveraging task. The Standing Committee proposed the development of relevant fiscal support measures for over-leveraged state-owned assets in the steel and coal industries. It also discussed establishing a state-owned capital complementary mechanism and making available the capital needed for transformation and upgrading.

• (120) In view of the considerations above, the Commission concluded that the debt for equity swaps constitute a financial contribution in the form of equity infusion and/or loan within the meaning of Article 3(1)(a)(i) of the basic Regulation or in the form of revenue forgone resulting from debt cancelled or not repaid within the meaning of Article 3(1)(a)(ii). The government provided this financial contribution through public bodies involved in these transactions, i.e. the four IAs and various SOCBs. In the absence of any cooperation from the GOC during the expiry review investigation, the Commission concluded that the evidence on the record sufficiently demonstrated that IAs were public bodies, as they were specifically created by the GOC to dispose of massive non-performing loans in key industries, including the steel sector, and to restructure the debts of SOEs. Consequently, it was considered that their behaviour corresponded to the exercise of government authority.

• (121) Furthermore, the request contained evidence that the large amount of debt cancellations was not subject to normal commercial considerations, as the GOC did not carry out an assessment whether a normal private investor would have carried out these debts to equity swaps in the expectation that a reasonable rate of return would be generated over time. The request contained information that the GOC exchanged massive amounts of debt for equity with the objective to reduce the liabilities-to-assets ratio of HRF producers to increase their competitiveness aside from commercial considerations that a private investor would make. The Commission, after careful analysis of the information provided in the request and in the absence of any other information on the file, concluded that the measures conferred a benefit within the meaning of Article 6(a) of the basic Regulation.

3.5.1.2.   Benefit

• (122) Debt for equity swaps constitute a financial contribution in the form of equity infusion and/or loan within the meaning of Article 3(1)(a)(i) of the basic Regulation or in the form of revenue forgone resulting from debt cancelled or not repaid within the meaning of Article 3(1)(a)(ii) of the basic Regulation.

• (123) In the absence of any cooperation from the GOC and Chinese producers of HRF during this review, the Commission, after careful analysis of the information provided in the request and in the absence of any other information on the file, concluded that the measures therefore conferred a benefit within the meaning of Article 6(a) of the basic Regulation.

3.5.1.3.   Specificity

• (124) The subsidy was specific in accordance with Articles 4(2)(b) of the basic Regulation, as there were no objective criteria for the provision of the subsidies and it has been unclear under which conditions HRF producers may or may not be involved into this programme. The swaps were also specific in line with Article 4(2)(c) of the basic Regulation, given major discretion of the public authorities to grant the subsidy and only certain sectors have benefitted from the subsidy such as those suffering overcapacity.

3.5.1.4.   Conclusion

• (125) Accordingly, the Commission concluded that there is sufficient evidence showing that HRF producers in the PRC benefited from the debt for equity swaps as a countervailable subsidy during the review investigation period in the form of financial assistance to reduce corporate debt of heavily indebted companies.

3.6.   Overall conclusion regarding the continuation of the subsidisation

• (126) In the light of the above, the Commission concluded that the HRF producers in China continued to benefit from countervailable subsidies during the review investigation period.

4. DEVELOPMENT OF IMPORTS SHOULD THE MEASURES BE REPEALED

• (127) Further to the finding of the existence of subsidisation during the review investigation period, the Commission investigated the likelihood of continuation of subsidised imports from the country concerned, should the measures be repealed. The following additional elements were analysed: the production capacity and spare capacity in the PRC and the attractiveness of the Union market.

4.1.   Production capacity and spare capacity in the PRC

• (128) In the absence of cooperation by the producers in the PRC, the Commission based its findings with regard to the capacity of the other producers on facts available and relied on the information contained in the expiry review request, as well as other available sources.

• (129) In 2020, China accounted for 56,5 % of the world’s crude steel output, against 53,3 % in 2019 ⁴⁷. In September 2020, a statement by the 88th Session of the OECD Steel Committee noted that ‘despite the global negative demand shock, production and inventories have significantly increased from year-ago levels in China’. Moreover, the Steel Committee noted ‘with concern the divergence from [the] global trend in China, where steel production reached record volumes in the first semester of 2020, and where inventories have reached historically high levels. These developments pose a risk of oversupply in China exacerbating global imbalances resulting from the COVID-19 demand shocks.’ The trend of ever-expanding steel production capacity in China has been further supported by a ‘huge loosening of credit conditions’, combined with increasing investment by large steel producers, while smaller players are still outside of the capacity control system. Also, an OECD Report of February 2021 noted an increasing steel making overcapacity worldwide and particularly driven by Asian countries including China ⁴⁸.

• (130) The Chinese government has ambitious plans for its steel industry ⁴⁹ as it aims to remove obsolete plants and uncompetitive companies with excessive costs while focusing on boosting and promoting steel producers which are in line with government policies and priorities. The idea is to clean-up the industry, strengthening leading players and clearing underperformers and those who do not comply (or align) with government priorities. The goal is to nurture ‘a new generation of industry leaders’. This is achieved through policies such as capacity swap system, debt-equity swaps, which allow for a very substantial state discretion over the operations of individual firms. The underlying purpose is to increase capacities of ‘selected’ players, which are high-performer producers that comply with the government’s current objectives to the steel industry.

• (131) The information contained in the expiry review request estimated the total Chinese capacity of certain hot-rolled flat products of iron, non-alloy or other alloy steel at more than 345 million tonnes, while production and Chinese consumption were both estimated at 314 million tonnes in 2020. On this basis, the spare capacity in China was estimated at 31 million tonnes in 2020, which is indicative for the spare capacity in the review investigation period and is almost equal to the total Union consumption on the free market (about 35 million tonnes) in the review investigation period.

• (132) The deceleration in Chinese steel demand in the beginning in 2021 is and will be a key driver of increasing exports. The resulting imbalance between capacity and demand is likely to increase pressure on producers to export. Chinese capacities are too big compared to the actual needs of the Chinese economy.

• (133) On this basis, it is likely that Chinese producers will direct their spare capacities to the Union market in large quantities at subsidised prices should the measures lapse.

4.2.   Attractiveness of the Union market

• (134) The Union market is among the largest markets of certain hot-rolled flat steel products worldwide. The Chinese market cannot absorb the excess steel capacity and major third countries markets are closed for Chinese exports as they have anti-dumping, safeguards or other protective measures in place against the PRC ⁵⁰. In addition, price levels in the Union (the average price charged by the Union industry was EUR/tonne 734 during the review investigation period) are above the average price charged by Chinese exporting producers to the rest of the world (EUR/tonne 714 at CIF level). Since, as explained in recital (206) below, HRF is a highly price sensitive commodity product, the Chinese exporters would have a strong incentive to direct their exports to the Union should the measures lapse.

• (135) The applicant claimed in its request that the Union steel safeguard measures alone, which apply to the product under review, would not be sufficient to protect the Union market against imports in significant quantities at subsidised prices. As China did not receive any country-specific quota for the product under review, Chinese producers have access to a large amount of residual quota volumes under which they could direct their exports to the Union market if the countervailing measures were to lapse. As a result, if the countervailing measures were to be repealed, Chinese export volumes are likely to increase significantly within the residual quota and thus flood the Union market before any out-of-quota duty under the safeguard measure would become applicable.

4.3.   Conclusion on the likelihood of continuation of subsidisation

• (136) The Commission, on the basis of facts available, concluded that there is sufficient evidence that subsidisation of the HRF industry in the PRC continued during the review investigation period and is likely to continue in the future. No evidence showed that the subsidies and subsidy programmes at issue will be terminated in the near future.

• (137) The subsidisation of the HRF industry allows the Chinese producers to maintain their production capacities at a level by far exceeding domestic demand and could possibly cover the entire Union consumption.

• (138) Therefore, the Commission found that the repeal of the countervailing measures is likely to result in a redirection of significant volumes of subsidised imports of the product under review to the Union market. Various subsidy programmes continue to be offered by the GOC to the HRF industry and the Commission determined that the HRF industry benefited from a number of them during the review investigation period.

5. INJURY

5.1.   Definition of the Union industry and Union production

• (139) The like product was manufactured by 21 producers in the Union during the period considered. They constitute the ‘Union industry’ within the meaning of Article 9(1) of the basic Regulation.

• (140) The total Union production of the product under review during the review investigation period was established at around 70 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, the verified questionnaire replies and the macro questionnaire reply submitted by EUROFER. As indicated in recital (13), the Union producers selected in the sample represented 29 % of the total Union production of the like product during the review investigation period.

5.2.   Union consumption

• (141) The product under review is regarded as a primary material for the production of various value-added downstream products, starting with cold-rolled products. Given that the Union industry is mostly vertically integrated and produces both the product under review and downstream products, both the captive and free market were analysed separately, where appropriate.

• (142) The distinction between captive and free market is relevant for the injury analysis because products destined for the captive market are not exposed to direct competition from imports, and transfer prices, if any, are set within the groups according to various price policies. By contrast, production destined for the free market is in direct competition with imports of the product concerned, and prices are set according to market conditions.

• (143) To provide a picture of the Union industry that is as complete as possible, the Commission obtained data for the entire activity of the like product and determined whether the production was destined for the captive or the free market. The Commission found that around 60 % of the total Union production of the like product was destined for the captive market during the review investigation period.

• (144) The Commission established the Union free market consumption on the basis of (a) the sales on the Union market of all known producers in the Union, as reported in the macro questionnaire reply from EUROFER and (b) the imports to the Union from all third countries as reported by Eurostat. The Union captive market consumption was established on the basis of the captive use and captive sales on the Union market of all known producers in the Union, as reported in the macro questionnaire reply from EUROFER.

• (145) Union consumption developed as follows:

Table 1

Union consumption (000 tonnes)

	2018	2019	2020	Review investigation period
Free market consumption	34 533	32 411	27 899	34 869
Index	100	94	81	101
Captive consumption	45 289	42 011	36 989	40 424
Index	100	93	82	89
Total Union consumption	79 822	74 422	64 888	75 293
Index	100	93	81	94
Source: Eurostat, Macro questionnaire reply from EUROFER.	Source: Eurostat, Macro questionnaire reply from EUROFER.	Source: Eurostat, Macro questionnaire reply from EUROFER.	Source: Eurostat, Macro questionnaire reply from EUROFER.	Source: Eurostat, Macro questionnaire reply from EUROFER.

• (146) Total Union consumption declined by 7 % in 2019 and sharply dropped further by another 12 % in 2020 due to a slump in demand caused by the COVID-19 pandemic. This decrease was however followed by a good recovery driven by the rebound in steel demand during the review investigation period but was still 6 % below the level of 2018.

• (147) Free market consumption followed a similar trend to that of total Union consumption. It decreased sharply by 19 % up to 2020 and recovered strongly during the review investigation period, reaching even a level 1 % above that of 2018.

• (148) The captive market consumption trend was nearly identical to the total Union consumption trend, declining sharply until 2020 by 18 % followed by a recovery reaching however only 89 % of the 2018 level.

• (149) Overall, total Union consumption decreased 6 % during the period considered.

5.3.   Imports from the country concerned

5.3.1.   Volume and market share of the imports from the country concerned

• (150) The Commission established the volume of imports on the basis of Eurostat data. The market share of the imports was established on the basis of a comparison between import volumes and the Union free market consumption, as reported in Table 2 above.

• (151) Imports into the Union from the country concerned developed as follows:

Table 2

Import volume (000 tonnes), market share and prices (EUR/tonne)

	2018	2019	2020	Review investigation period
Volume of imports from the PRC	1,7	0,5	0,3	28,7
Market share (%)	0,0	0,0	0,0	0,1
PRC import prices	1 674	3 177	2 482	664
Index	100	190	148	40
Source: Eurostat, Macro Questionnaire reply from EUROFER.	Source: Eurostat, Macro Questionnaire reply from EUROFER.	Source: Eurostat, Macro Questionnaire reply from EUROFER.	Source: Eurostat, Macro Questionnaire reply from EUROFER.	Source: Eurostat, Macro Questionnaire reply from EUROFER.