Commission Implementing Regulation (EU) 2023/2659 of 27 November 2023 imposing a provisional anti-dumping duty on imports of certain polyethylene terephthalate originating in People’s Republic of China

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

• — availability of relevant public data in the representative country;

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

• (106) As explained in recitals (44) to (48), the Commission issued two notes for the file on the sources for the determination of the normal value. These notes described the facts and evidence underlying the relevant criteria and addressed the comments received by the parties on these elements and on the relevant sources. In the Second Note, the Commission informed interested parties of its intention to consider Malaysia as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed.

3.2.2.2.   A level of economic development similar to the PRC

• (107) In the investigation period, the World Bank classified countries with a similar level of economic development as the PRC as ‘upper-middle income’ countries on a gross national income basis. In the First Note, a sizeable production of the product under investigation was found to exist only in seven of those countries, namely Argentina, Brazil, Malaysia, Mexico, Thailand, Türkiye, and South Africa.

• (108) Svepol, CPCIF and Wankai Group proposed Vietnam to be considered as the most suitable representative country despite the latter not classifying as an upper middle-income country but argued that due to a recent growth in GNI per capita, Vietnam is close to the lower threshold to qualify as an upper middle-income country.

• (109) The basic Regulation requires the representative country to have a similar level of development as the exporting country. In applying this provision, the Commission decided that the World Bank database was the most appropriate source to comply with this requirement. This database allowed the Commission to have a sufficient number of potentially appropriate representative countries to choose from and find the most suitable source of undistorted costs and prices in each case. Furthermore, it is a ranking based on an objective criterion and used consistently in all anti-dumping cases where the determination of the normal value is based on the provisions of Article 2(6a) of the basic Regulation. The Commission did not see grounds in this case to deviate from its practice to only consider countries inside the World Bank’s definition of an upper middle-income economy. The Commission thus did not consider Vietnam an appropriate representative country.

3.2.2.3.   Availability of relevant public data in the representative country

• (110) For the countries considered and mentioned above, the Commission further verified the availability of the public data, including the data on imports of factors of production as well as of financial data from the producers of the product under investigation in the potential representative countries.

• (111) The analysis of imports of the main factors of production showed that only for Malaysia data on representative undistorted volumes of the key inputs for production of PET (namely purified terephthalic acid or ‘PTA’) as well as representative company data for the investigation period was available as opposed to Argentina, Brazil, Mexico, Thailand, Türkiye, and South Africa.

• (112) The analysis further showed that Malaysian imports were not materially affected by imports from the PRC or any of the countries listed in Annex I to Regulation (EU) 2015/755 of the European Parliament and of the Council ⁶⁰. Furthermore, the PET production and production capacity is significant in Malaysia and no particular trade distortions on the factors of production nor on PET exist in the country.

• (113) Regarding the producers in representative countries and availability of their data, the Commission identified a PET producer, MPI, for which financial results were available for the financial year from Q3 2021 until Q2 2022, thus covering two quarters with the investigation period.

• (114) It is observed that MPI does not produce solely PET, but its main business is PET production. Therefore, the consolidated SG&A and profit identified for MPI were deemed representative to be applied for the purposes of the present investigation.

• (115) The Commission received comments on the Second Note from one unrelated importer (Svepol JSC), a Chinese producers’ association (CPCIF) and two sampled exporting producers (Wankai Group and Sanfame Group).

• (116) Svepol JSC agreed with the choice of Malaysia as the representative country but requested the Commission to determine a reasonable amount of profit and S&GA on the basis of Recron Malaysia SDN (‘Recron’). Svepol JSC and Sanfame Group argued that Recron’s economic scale is closer to that is realised by the PET producers in the PRC than MPI as a smaller PET producer with less export activities. Also, Recron’s data was more representative as it covered the entire IP, whereas MPIs data only covered the first half of the IP. In addition. Sanfame Group argued that Recron, like the Sanfame group, starts its production from paraxylene (‘PX’). CPCIF and Wankai Group expressed their agreement that Malaysia constituted an appropriate representative country also in terms of availability of relevant company data such as the data of MPI.

• (117) The Commission noted that no party argued against the use of Malaysia as a representative country. Regarding the Malaysian company data to be used, the Commission has analysed the data of Recron and MPI. However, this data showed that the SG&A of Recron was only 1,4 % which cannot be considered to be a reasonable amount within the meaning of Article 2(6a)(a) of the basic Regulation. As Sanfame Group admitted in its submission, Recron’s publicly available information does not allow to precisely determine the relevance of PET compared to the total company turnover. As indicated above in recital (114), the Commission seeks the closest readily available proxy, including consolidated information of producer(s) active among others in the business covering the product under investigation. While Recron is indeed a large-scale company, it indicates on its website to be amongst the world’s largest integrated polyester and textile companies with a focus on complex derivative polyester products. Contrary to that MPI has its main focus on PET resin manufacturing. The Commission therefore concluded that MPI is the closest readily available proxy and decided not to use the data of Recron. The Commission therefore confirmed its decision to use the data of MPI.

3.2.2.4.   Conclusion

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

3.2.3.   Sources used to establish undistorted costs

• (119) In the First Note, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under investigation by the exporting producers and invited the interested parties to comment and propose publicly available information on undistorted values for each of the factors of production mentioned in that note.

• (120) Subsequently, in the Second Note, the Commission stated that in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, it would use Global Trade Atlas ⁶¹ (‘GTA’) to establish the undistorted cost of most of the factors of production, notably the raw materials. In addition, the Commission stated that it would use the Department of Statistics of the Ministry of Economy of the Government of Malaysia for establishing undistorted costs of labour ⁶² and data of the electricity provider Tenaga Nasional Berhad and the Malaysian Energy Commission for energy ⁶³.

• (121) In the Second 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 would 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.

3.2.4.   Undistorted costs and benchmarks

3.2.4.1.   Factors of production

• (122) Considering all the information submitted by the interested parties and collected during the verification visits, the following factors of production (‘FOP’) 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 2

Factors of production of PET

Factor of Production	Malaysian Commodity Code	Source of data	Value (CNY)	Unit of measurement
Raw Materials	Raw Materials	Raw Materials	Raw Materials	Raw Materials
Purified terephthalic acid (PTA)	2917_36_00	Global Trade Atlas (GTA)64	5,81	kg
Mono-ethylene glycol (MEG)	2905_31_00	GTA	5,74	kg
Isophthalic acid (PIA)	2917_39_20	GTA	10,28	kg
Para-xylene (PX)	2902_43_00	GTA	7,50	kg
Labour	Labour	Labour	Labour	Labour
Labour	[N/A]	Department of Statistics of the Ministry of Economy of the Government of Malaysia65	39,64	Labour Hour
Energy	Energy	Energy	Energy	Energy
Electricity	[N/A]	Tenaga Nasional Berhad (TNB)66	[0,50 -0,60 ]	kWh
Natural Gas	[N/A]	Suruhanjaya Tenaga67	1,64	m3

3.2.4.2.   Raw materials

• (123) 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 at 8-digit code level to which import duties and transport costs were added. An import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding the PRC and countries which are not members of the WTO, listed in Annex 1 of Regulation (EU) 2015/755 ⁶⁸. The Commission decided to exclude imports from the PRC into the representative country as it concluded in recitals (103) and (104) that in this case it was 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. The remaining volumes were considered to be representative.

• (124) The Commission expressed the transport cost incurred by the cooperating exporting producers for the supply of raw materials as a percentage of the actual cost of such raw materials and then applied the same percentage to the undistorted cost of the same raw materials in order to obtain the undistorted transport cost. The Commission considered that, in the context of this investigation, the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory.

• (125) For a small number of FOPs, due to their insignificant share in the total raw material costs in the IP, the Commission treated those FOPs as consumables. The Commission calculated the percentage of consumables including a negligible amount of raw materials over the costs of manufacturing for each sampled exporting producer. That percentage ranged from around 1 % to around 7 % depending on the exporting producer. The Commission applied this percentage to the calculation of the normal value of the sampled exporting producers accordingly.

3.2.4.3.   Labour

• (126) The source that the Commission used to establish the benchmark for labour costs is based on the most recent statistics published by the Department of Statistics of the Ministry of Economy of the Government of Malaysia ⁶⁹. This source was used to determine the wage received by employees ⁷⁰, including the social benefits and social security contributions on the employee side in the sector of petroleum, chemical rubber and plastic in Malaysia for the investigation period. It was divided by the average hours per week per employed person in 2022 ⁷¹, then divided per 52 ⁷² working weeks in Malaysia to calculate an average wage received by employees per hour. The employer’s part for the applicable social contributions ⁷³ was added to calculate the labour cost per hour.

3.2.4.4.   Electricity

• (127) The Commission established the benchmark price for electricity using the quotation for companies (industrial users) in Malaysia published by the electricity company Tenaga Nasional Berhad ⁷⁴. The electricity benchmark was established based on the price for electricity published for the billing month of January 2014 and adjusted to the IP with the applicable energy inflation rate for Malaysia, published by the Word Bank ⁷⁵. To establish the electricity cost per kWh:

• — the rate of tariff E1 applicable to medium voltage general industrial tariff, was used for producers that reported electricity consumption as ‘general’;

• — the rate of tariff E2 applicable to medium voltage peak/off-peak industrial tariff, was used for producers that reported peak/off-peak electricity consumption.

The benchmark was established for each company based on respective peak and off-peak consumption of the sampled exporting producers when available. The resulting percentage was allocated to the peak and off-peak rates. If a sampled exporting producer did not distinguish peak and off-peak consumption, general tariffs were applied to their whole consumption.

3.2.4.5.   Natural gas

• (128) The Commission established the benchmark for gas by using the prices of gas for companies (industrial users) in Malaysia published by the Malaysian Energy Commission (Suruhanjaya Tenaga) ⁷⁶.

• (129) The monthly averages for the year 2021 available from the source ⁷⁷ were adjusted by the yearly energy CPI inflation rate ⁷⁸ for Malaysia for the investigation period.

3.2.4.6.   Manufacturing overhead costs, SG&A, profit and depreciation

• (130) 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. In addition, a percentage factor of consumables including a number of raw materials, which represent only an insignificant share in the total raw material costs, was calculated over the costs of manufacturing for each producer.

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

• (132) For establishing an undistorted and reasonable amount for manufacturing overheads, SG&A, profit and depreciation, the Commission relied on the financial data for the financial year Q3 2021 to Q2 2022 for MPI as extracted from Orbis ⁷⁹.

3.2.4.7.   Calculation

• (133) Based on the above, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

• (134) First, the Commission established the undistorted manufacturing costs. The Commission applied the undistorted unit costs to the actual consumption of the individual factors of production of the cooperating exporting producer. These consumption rates provided by the applicant were verified during the verification. The Commission multiplied the usage factors by the undistorted costs per unit observed in the representative country, as described in Section 3.2.4.1.

• (135) Once the undistorted manufacturing cost established, the Commission applied the manufacturing overheads, SG&A, profit and depreciation as noted in recitals (130) to (132). They were determined based on the financial statements of MPI as explained in recital (132).

• (136) Manufacturing overheads were not separately identified in the available Profit and Loss account figures of MPI, so they are deemed to be included in is the costs of goods sold.

• (137) To the costs of production established as described in the previous recital, the Commission applied SG&A and profit of MPI. SG&A expressed as a percentage of the costs of goods sold and applied to the undistorted costs of production, amounted to 2,51 %. The profit expressed as a percentage of the costs of goods sold and applied to the undistorted costs of production, amounted to 14,84 %.

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

3.3.   Export price

• (139) The sampled exporting producers exported to the Union directly to independent customers.

• (140) All the sampled exporting producers exported the product concerned directly to independent customers in the Union, so the export price was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

3.4.   Comparison

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

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

3.5.   Dumping margins

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

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

Company	Provisional weighted average dumping margin
Sanfame Group: — Jiangsu Hailun Petrochemical Co., Ltd — Jiangsu Xingye Plastics Co., Ltd. — Jiangyin Xingu New Material Co., Ltd. — Jiangyin Xingtai New Material Co., Ltd.	16,0 %
China Resources Chemical Innovative Materials Group: — China Resources Chemical Innovative Materials CO., LTD — Zhuhai China Resources Chemical Innovative Materials Co., Ltd.	17,2 %
Wankai New Materials Group: — Wankai New Materials Co., Ltd. — Chongqing Wankai New Materials Technology Co. Ltd.	22,6 %

• (145) For the cooperating exporting producers outside the sample, the Commission calculated the weighted average dumping margin, in accordance with Article 9(6) of the basic Regulation. Therefore, that margin was established based on the margins of the sampled exporting producers.

• (146) On this basis, the provisional dumping margin of the cooperating exporting producers outside the sample is 19,7 %.

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

• (148) The level of cooperation in this case is low because the imports of the cooperating exporting producers constituted around 76 % of the total exports to the Union during the IP, according to Eurostat statistics. On this basis, the Commission considered it appropriate to establish the residual dumping margin at the level of the highest margin found among the entities of the sampled exporting producers.

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

Company	Provisional dumping margin
Sanfame Group: — Jiangsu Hailun Petrochemical Co., Ltd — Jiangsu Xingye Plastics Co., Ltd. — Jiangyin Xingu New Material Co., Ltd. — Jiangyin Xingtai New Material Co., Ltd.	16,0 %
China Resources Chemical Innovative Materials Group: — China Resources Chemical Innovative Materials CO., LTD — Zhuhai China Resources Chemical Innovative Materials Co., Ltd.	17,2 %
Wankai Group — Wankai New Materials Co., Ltd. — Chongqing Wankai New Materials Technology Co. Ltd.	22,6 %
Other cooperating companies	19,7 %
All other companies	24,2 %

4. INJURY

4.1.   Definition of the Union industry and Union production

• (150) The like product was manufactured by around 60 producers in the Union during the investigation period. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

• (151) The total Union production during the investigation period was established at around 3 250 thousand tonnes. The Commission established the figure on the basis of all the available information concerning the Union industry from the complainant, the producers’ association Plastic Recyclers Europe (‘PRE’) and Wood Mackenzie (Woodmac) industry experts. As indicated in recital (19), the sampled Union producers represented 35 % of the total Union production of the like product.

4.2.   Union consumption

• (152) The Commission established the Union consumption on the basis of:

• — the verified sales of the sampled Union producers;

• — the sales of non-sampled cooperating Union PET producers, obtained from the complainant;

• — the sales of non-sampled Union rPET producers, obtained from the complainant, extrapolated on the basis of the proportion of rPET production (obtained on the basis of Woodmac data on flake consumption for (i) production of PET bottles (food/non-food grade) and (ii) PET production resulting from chemical recycling on the total Union vPET and rPET production);

• — the imports from the country concerned and from all other third countries, as recorded in the Comext database of Eurostat.

• (153) The Commission also found that around 2 % of the total Union producers’ production (not reflected in the Union consumption and other economic indicators outlined in this Regulation) was destined for captive use in the period considered.

• (154) Union consumption developed as follows:

Table 3

Union consumption (tonnes)

	2019	2020	2021	Investigation period
Total Union consumption	3 765 652	3 815 572	3 629 938	3 893 890
Index	100	101	96	103
Source: questionnaire replies of sampled Union producers, complaint, information provided by the complainant, Woodmac and Eurostat	Source: questionnaire replies of sampled Union producers, complaint, information provided by the complainant, Woodmac and Eurostat	Source: questionnaire replies of sampled Union producers, complaint, information provided by the complainant, Woodmac and Eurostat	Source: questionnaire replies of sampled Union producers, complaint, information provided by the complainant, Woodmac and Eurostat	Source: questionnaire replies of sampled Union producers, complaint, information provided by the complainant, Woodmac and Eurostat

• (155) On this basis, Union consumption increased slightly over the period considered.

4.3.   Imports from the country concerned

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

• (156) The Commission established the volume of imports on the basis of the Eurostat database. The market share of the Chinese imports was established by comparing import volumes with the Union market consumption (see Table 3 above).

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

Table 4

Import volume (tonnes) and market share

	2019	2020	2021	Investigation period
Volume of imports from the PRC (tonnes)	192 941	88 041	102 865	305 055
Index	100	46	53	158
Market share	5,1 %	2,3 %	2,8 %	7,8 %
Index	100	45	55	153
Source: Eurostat, replies of sampled Union producers	Source: Eurostat, replies of sampled Union producers	Source: Eurostat, replies of sampled Union producers	Source: Eurostat, replies of sampled Union producers	Source: Eurostat, replies of sampled Union producers

• (158) The above table shows that in absolute figures the imports from the PRC increased during the period considered by 112 115 tonnes. In parallel, the total market share of the Chinese imports into the Union increased by 2,7 percentage points (or by 53 %) during the period considered. In 2020, Chinese imports were severely affected by the COVID-19 pandemic but recovered in 2021 and almost tripled during the IP compared to the previous year. The majority of these imports was vPET, however four of the eight cooperating exporting producers indicated in their sampling reply that they had the capacity to produce rPET. Some of the cooperating exporting producers indicated that they exported rPET to the Union during the IP, however those represented less than 1 % of the Union exports by the cooperating exporting producers.

• (159) One of the Union producersresold on the Union market PET that it imported from the PRC in the period considered (‘UI imports’). The table below indicates the size of these imports during the period considered and the market share of the Chinese imports without these imports. This shows that even when excluding the Chinese imports by the Union industry, the market share of the Chinese imports increased by 1,0 – 1,5 % percentage points during the period considered.

Table 5

UI imports (tonnes) and Chinese market share without UI imports

	2019	2020	2021	Investigation period
Volume of UI imports from the PRC (tonnes)	[0 – 3 000 ]	[4 000 – 6 000 ]	[7 000 – 9 000 ]	[50 000 – 70 000 ]
Market share of Chinese imports without UI imports	[5,0 – 5,5 %]	[2,0 – 2,5 %]	[2,5 – 3,0 %]	[6,0 – 6,5 %]
Source: Eurostat, replies of sampled Union producers	Source: Eurostat, replies of sampled Union producers	Source: Eurostat, replies of sampled Union producers	Source: Eurostat, replies of sampled Union producers	Source: Eurostat, replies of sampled Union producers

4.3.2.   Prices of the imports from the country concerned and price undercutting

• (160) The Commission established the prices of imports on the basis of Eurostat data.

• (161) The weighted average price of imports into the Union from the country concerned developed as follows:

Table 6

Import prices (EUR/ tonne)

	2019	2020	2021	Investigation period
Price of imports from the PRC	1 013	778	884	1 276
Index	100	77	87	126
Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat

• (162) The average price of the Chinese imports first decreased in 2020, reaching 778 EUR/tonne (from 1 013 EUR/tonne in 2019) and then increased to 884 EUR/tonne in 2021 and to 1 276 EUR/tonne during the investigation period. During the period considered, the increase of the average unit price of the dumped imports was 26 %. In 2021 and the IP, import prices were around 9 % and 13 % lower compared to Union prices, as shown in Table 10.

• (163) The Commission determined the price undercutting during the investigation period by comparing:

• (a) the weighted average sales prices per product type of the sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level; and

• (b) the corresponding weighted average prices per product type of the imports from the sampled cooperating Chinese producers to the first independent customer on the Union market, established on a Cost, insurance, freight (CIF) basis, with appropriate adjustments for customs duties and post-importation costs.

• (164) The price comparison was made for the same product type (in this case solely vPET) for transactions at the same level of trade. The result of the comparison was expressed as a percentage of the sampled Union producers’ theoretical turnover during the investigation period. On the basis of the above, the dumped Chinese imports were found to undercut the Union industry prices by 9,5 %.

4.4.   Economic situation of the Union industry

4.4.1.   General remarks

• (165) In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

• (166) As mentioned in recital (19), sampling was used for the determination of possible injury suffered by the Union industry.

• (167) 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 complaint and the complainant’s reply to a specific questionnaire. The data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

• (168) 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.

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

4.4.2.   Macroeconomic indicators

4.4.2.1.   Production, production capacity and capacity utilisation

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

Table 7

Production, production capacity and capacity utilisation

	2019	2020	2021	Investigation period
Production volume (tonnes)	3 173 696	3 321 519	3 365 795	3 248 786
Index	100	105	106	102
Production capacity (tonnes)	3 718 259	3 880 522	3 956 555	4 043 716
Index	100	104	106	109
Capacity utilisation	85 %	86 %	85 %	80 %
Index	100	100	100	94
Source: PET Europe questionnaire reply	Source: PET Europe questionnaire reply	Source: PET Europe questionnaire reply	Source: PET Europe questionnaire reply	Source: PET Europe questionnaire reply

• (171) During the period considered, the Union industry’s production volume increased by 2 %, despite the fact that several Union producers of (predominantly) vPET reduced their operating rate towards the end of the period considered. Such reduction of vPET output was offset by an increasing trend in production of rPET which reached 63 % (632 000 tonnes in the IP up from 388 000 tonnes in 2019) over the period considered, representing around 20 % of PET capacity and production of the Union industry in the IP.

• (172) The reported capacity figures refer to installed capacity, which increased by 9 % during the period considered. This trend was due to a steady increase in production capacity at rPET production facilities, while the production capacity at vPET producers remained stable.

• (173) The decrease in capacity utilisation rate by 6 % over the period considered was driven mainly by sharp drop in utilisation rate levels in the last quarter of the IP.

• (174) CPCIF claimed that the Union PET production capacity was increasing, as a number of Union producers have expanded their facilities or were planning to do so.

• (175) An increase in production capacity does not inevitably imply equivalent rise in production. As evidenced in Table 7, the production increase did not match the rate of capacity increase, and capacity utilisation figures even showed a downward trend over the period considered.

4.4.2.2.   Sales volume and market share

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

Table 8

Sales volume and market share

	2019	2020	2021	Investigation period
Sales volume on the Union market (tonnes)	2 768 907	2 951 147	2 850 509	2 755 783
Index	100	107	103	100
Market share	73,5 %	77,3 %	78,5 %	70,8 %
Index	100	105	107	96
Source: PET Europe questionnaire reply	Source: PET Europe questionnaire reply	Source: PET Europe questionnaire reply	Source: PET Europe questionnaire reply	Source: PET Europe questionnaire reply

• (177) The Union industry sales volume on the Union market remained relatively stable during the period considered, i.e. between 2 750 and 2 950 thousand tonnes. The Union sales volume in 2019 was comparable to that in the investigation period.

• (178) During the period considered, the Union industry’s market share in terms of Union consumption went down with 2,7 percentage points, i.e. from 73,5 % to 70,8 %, with a significant drop between 2021 and the IP of 7,7 percentage points.

4.4.2.3.   Growth

• (179) The Union consumption slightly increased during the period considered, while the sales volume of the Union industry in the Union market remained stable. The Union industry thus lost market share, contrary to the market share of the imports from the country concerned which increased by 2,7 percentage points during the period considered.

4.4.2.4.   Employment and productivity

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

Table 9

Employment and productivity

	2019	2020	2021	Investigation period
Number of employees	1 365	1 410	1 453	1 529
Index	100	103	106	112
Productivity (tonne/FTE)	2 325	2 356	2 317	2 125
Index	100	101	100	91
Source: PET Europe questionnaire reply	Source: PET Europe questionnaire reply	Source: PET Europe questionnaire reply	Source: PET Europe questionnaire reply	Source: PET Europe questionnaire reply

• (181) During the period considered, employment in the Union increased by 12 %, while the productivity dropped by 9 % over the period considered, given that the employment increase was not matched by the rate of increase in production.

4.4.2.5.   Magnitude of the dumping margin and recovery from past dumping

• (182) All dumping margins were significantly above the de minimis level. The impact of the magnitude of the actual margins of dumping on the Union industry was not negligible, given the volume and prices of imports from the country concerned.

4.4.3.   Microeconomic indicators

4.4.3.1.   Prices and factors affecting prices

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

Table 10

Sales prices in the Union

	2019	2020	2021	Investigation period
Average unit sales price in the Union on the total market (EUR/ tonne)	972	716	956	1 444
Index	100	74	98	149
Unit cost of production (EUR/ tonne)	930	721	916	1 353
Index	100	78	98	146
Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers

• (184) The table above shows the evolution of the unit sales price on the Union market as compared to the corresponding cost of production. Sales prices have on average been higher than the unit cost of production.

• (185) The Union industry’s average unit sales price to unrelated customers in the Union ⁸⁰ increased by 49 % from 2019 to the IP, which is due mainly to the tight PET supply and successful passing-on of increase in raw material prices in the course of 2022.

• (186) The average cost of production of the Union industry increased over the period considered, although to a lower extent than the sales prices (by 46 %). However, in general the evolution of the cost of production followed the same trend as the sales prices. The major factor having influenced the increase in the unit cost of production was the increase in the raw material price ⁸¹ over the period considered.

4.4.3.2.   Labour costs

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

Table 11

Average labour costs per employee

	2019	2020	2021	Investigation period
Average labour costs per employee (EUR)	57 253	61 824	64 372	67 727
Index	100	108	112	118
Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers

• (188) During the period considered, the average wage per employee went up by 18 %.

4.4.3.3.   Inventories

• (189) Stock levels of the sampled Union producers developed over the period considered as follows:

Table 12

Inventories

	2019	2020	2021	Investigation period
Closing stocks (tonnes)	67 824	51 189	58 133	83 236
Index	100	75	86	123
Closing stocks as a percentage of production	6,09 %	4,67 %	5,12 %	8,05 %
Index	100	77	84	132
Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers

• (190) There was an increase in stock levels over the period considered of 23 %. While the stock levels in 2020 and 2021 were below the 2019 levels, the increase in inventories in 2022 is largely due to accumulation of stock by the producers in the second half of 2022, when the demand for PET dropped.

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

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

Table 13

Profitability, cash flow, investments and return on investments

	2019	2020	2021	Investigation period
Profitability of sales in the Union to unrelated customers (% of sales turnover)	4 %	1 %	8 %	7 %
Index	100	20	208	193
Cash flow (EUR)	63 713 072	57 496 364	96 321 869	91 341 517
Index	100	90	151	143
Investments (EUR)	2 667 066	8 305 772	15 937 339	14 756 777
Index	100	311	598	553
Return on investments	18 %	6 %	41 %	48 %
Index	100	32	225	266
Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers

• (192) 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 as a percentage of the turnover of those sales. Profitability was positive throughout the entire period considered, with the highest profits recorded in 2021 and 2022, with 8 % and 7 % profitability respectively. However, as mentioned in recital (197), the Union industry incurred in losses (-12 %) during the last quarter of the IP, in view of the continued increase in the dumped imports at lower prices, leading to price suppression.

• (193) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow remained overall largely positive, following similar trend as profitability throughout the period considered.

• (194) Investments, while being relatively low at the beginning of the period considered increased by 453 % over the period considered. Most of the investment concerned production line maintenance aiming at increasing the longevity of the plants. There was no investment in new PET capacity at the sampled Union producers during the period considered.

• (195) The return on investments is the profit in percentage of the net book value of investments. Consistent with the profitability, the return on investment was positive over the period considered, increasing by 166 % in the investigation period.

• (196) The sampled Union producers’ ability to raise capital has not been affected over the period considered.

4.4.3.5.   Developments in the investigation period and post-IP

• (197) During the period considered the injury indicators showed a stable trend. However, when assessing the indicators at a more granular level for the IP and in Q1 2023, a negative trend is visible. Validation of this trend, taking into account the developments in 2023 is subject to further investigation at the definitive stage of the proceedings.

• (198) As outlined in Table 14 below, Union consumption, production and sales of the Union industry showed a decline in the last two quarters of the IP. Moreover, after an increase in market share in 2020 and 2021, the Union industry lost 4 percentage points of market share in the course of the IP and another 7 percentage points between the end of 2022 and the first quarter 2023 alone. This deterioration is also reflected in the profitability of the Union industry, which became lossmaking in the last quarter of the IP, while this trend continued also into the first quarter of 2023.

Table 14

2022 and Q1 2023 Union consumption / production / sales / market share / profitability / Chinese imports

	Union consumption (tonnes)	Union production (tonnes)	Union sales volume (tonnes)	Union industry market share (%)	Profitability (%)	Chinese imports (tonnes)	Chinese import prices including common customs duty of 6,5 % (EUR)
Q1 2022	1 005 290	918 123	744 321	74 %	15 %	54 765 (including [0 – 4 000 ] tonnes of UI imports)	1 212
Q2 2022	1 075 432	886 642	773 099	72 %	12 %	84 906 (including [20 000 – 25 000 ] tonnes of UI imports)	1 306
Q3 2022	979 842	814 673	656 453	67 %	13 %	112 658 (including [20 000 – 25 000 ] tonnes of UI imports)	1 426
Q4 2022	833 326	629 348	581 910	70 %	-12 %	52 726 (including [13 000 – 18 000 ] tonnes of UI imports)	1 455
Q1 2023	1 036 561	685 594	654 045	63 %	-11 %	134 604 (including [20 000 – 25 000 tonnes of UI imports)	1 146
Source: Questionnaire reply of sampled Union producers, PET Europe questionnaire reply, Eurostat	Source: Questionnaire reply of sampled Union producers, PET Europe questionnaire reply, Eurostat	Source: Questionnaire reply of sampled Union producers, PET Europe questionnaire reply, Eurostat	Source: Questionnaire reply of sampled Union producers, PET Europe questionnaire reply, Eurostat	Source: Questionnaire reply of sampled Union producers, PET Europe questionnaire reply, Eurostat	Source: Questionnaire reply of sampled Union producers, PET Europe questionnaire reply, Eurostat	Source: Questionnaire reply of sampled Union producers, PET Europe questionnaire reply, Eurostat	Source: Questionnaire reply of sampled Union producers, PET Europe questionnaire reply, Eurostat

4.4.4.   Conclusion on injury

• (199) The Union industry performed well during the period considered, with the injury indicators and trends largely stable or positive, in particular at microeconomic level.

• (200) However, towards the end of the investigation period, a number of injury indicators (in particular, market share and profitability) showed a sharp deterioration of the situation on the market for the Union industry, beyond what could be expected as a return to normal market conditions as seen in 2019 and 2020. Losses were incurred in the last quarter of 2022, which were at unsustainable levels (-12 %). The Union industry, faced with undercutting during the IP and increased costs, had to reduce operating rates in the light of the reduced demand and started losing sales volumes towards the end of 2022, which was reflected also in loss of market share in 2022.

• (201) Imports from the PRC were affected in 2020 and 2021 because of the high transport shipping costs and economic conditions during and after the COVID-19 pandemic. However, when comparing the start of the period considered with the IP, an increase of 58 % is visible. Especially during the IP, when returning to normal market conditions after the COVID-19 pandemic, the dumped imports showed an increasing trend. At the end of the IP as well as in Q1 2023, Union industry prices were suppressed by the dumped imports. Indeed, in view of the low prices of the Chinese imports, the Union industry could not sell above its cost of production, incurring losses also in Q1 2023 (-11 %). Compared to the period concerned, there is a change in circumstances resulting from the recovery of normal market conditions in the Union market now affected by the increase in Chinese imports leading to a vulnerable situation of the Union industry up to the first quarter of 2023.

• (202) On the basis of the above, it is concluded at this stage that the Union industry was negatively affected by imports from the PRC, especially at the end of the investigation period, but not to the extent that the Union industry has suffered material injury during the period considered within the meaning of Article 3(5) of the basic Regulation. The Commission therefore proceeded with the analysis of a threat of material injury in accordance with Article 3(9) of the basic Regulation.

• (203) CPCIF claimed that considering the evolution of indicators such as profitability, sales, market share, Union production and Union production capacity, investments and employment over the period considered, the Union industry did not suffer material injury in the said period. Svepol equally argued with reference to the long-term trends in the injury indicators over the period considered that the Union industry is not suffering material injury.

• (204) For the Commission to impose anti-dumping duties, it is sufficient that the investigation concludes that there is a threat of material injury. While no material injury was found over the period considered, it is noted that the facts of the case are assessed against Article 3(9) basic Regulation for establishment of threat of injury.

5. THREAT OF INJURY

5.1.   Introduction

• (205) In the analysis of a threat of material injury to the Union industry, in accordance with Article 3(9), second subparagraph, of the basic Regulation, consideration is given below to such factors as:

• (a) a significant rate of increase of dumped imports into the Union market indicating the likelihood of substantially increased imports;

• (b) sufficient freely disposable capacity of the exporting producer on the part of the exporter or an imminent and substantial increase in such capacity indicating the likelihood of substantially increased dumped exports to the Union, account being taken of the availability of other export markets to absorb any additional exports;

• (c) whether imports are entering at prices that would, to a significant degree, depress prices or prevent price increases which otherwise would have occurred, and would probably increase demand for further imports, and;

• (d) the level of inventories.

• (206) As the wording ‘such as’ in Article 3(9), second subparagraph, indicates, next to these four factors other factors may be analysed as well for the determination of a threat of injury. In particular, the Commission further analysed factors like recent evolution in profitability, for which it had investigation period and post-investigation period data available.

• (207) With respect to the period considered, the Commission reviewed again the data collected for 2019 until the IP, as an understanding of the present situation of the Union industry is necessary in order to be able to determine whether there is a threat of injury to the Union industry ⁸². It then conducted a prospective analysis for all factors. In addition, it collected data on dumped import volumes and import prices for the first two quarters of 2023 in order to confirm or invalidate the forecasts, as required by the Court ⁸³. For the level of inventories and profitability, comprehensive data was collected up to the end of March 2023. This data will be updated for a definitive determination and, where possible, also other factors will be analysed. At this stage, the data for spare capacity in the PRC and the level of inventories were the best available data.

• (208) Finally, Article 3(9) first subparagraph, second sentence of the basic Regulation requires that the change in circumstances must have been clearly foreseen and must be imminent.

• (209) All those elements and the data collected are analysed in the next sections.

5.2.   Significant rate of increase of dumped imports into the Union market indicating the likelihood of substantially increased imports

• (210) Imports from the country concerned significantly increased from 192 941 to 305 055 tonnes between 2019 and the investigation period, as shown in Table 4. Such an increase was significant between 2021 and the IP. The same trend was observed in Q1 2023. During 2021 and the IP these imports have taken place at a price lower than that of the Union industry. The market share held by these Chinese dumped imports (+53 %) confirms the substantial increase of imports while demand remained stable (+3 %). The Chinese exporting producers have gained market share with low-priced imports at the expense of the Union producers. The volume of Chinese imports further increased (by 60 %) in the first half of 2023 (223 558 tonnes) (source: Eurostat), compared to the first half of 2022 (139 672 tonnes). The available data show that not only the Chinese dumped imports have shown a substantial increase during the period considered, but also that this trend was not stopped or reversed during the post-investigation period.

• (211) Moreover, as indicated below, the Chinese overcapacity and attractiveness of the Union market for the Chinese imports, due to the absence of trade defence measures in the Union, coupled with the existence of measures against the Chinese PET imports in numerous other countries, indicate that there is a likelihood of substantial increase of Chinese imports into the Union.

5.3.   Sufficient freely disposable capacity

• (212) Concerning Chinese PET capacity, the available information (Woodmac) indicates that the production capacity of PET in the PRC has increased from [11,3 – 12,3] million tonnes in 2020 to [11,6 – 12,6] million tonnes in the IP, while the spare capacity in the IP was [1,5 – 2,5] million tonnes, accounting for no less than [40 – 60] % of the Union consumption. Both the production capacity as well as freely disposable capacity are expected to grow significantly to [21,0 – 23,0] million tonnes and [10,5 – 11,5] million tonnes respectively in 2026.

• (213) Chinese domestic demand has grown in the period considered in line with the increase in capacity and made up around [50 – 60] % of Chinese capacity. However, in the coming years the growth in capacity is expected to significantly overtake the increase in domestic demand, which is expected to drop below [35 – 45] % of capacity in 2026. This would thus increase Chinese export capacities from a level of [5 – 6] million tonnes in 2022 to [7,5 – 8,5] million tonnes in 2023 and more than [13 – 15] million tonnes in 2026, while the Union consumption has been stable around 3,8 million tonnes during the period considered.

• (214) CPCIF claimed that demand for PET in the Chinese market has significantly increased, which led to a corresponding increase in production capacity in order to satisfy the needs of the Chinese consumers. As noted above, the growth in capacity is expected to significantly overtake the increase in domestic demand. Therefore, CPCIF’s claim had to be rejected.

• (215) UNESDA argued that the production in the PRC is not expected to grow in line with the estimated increase in installed capacity. According to UNESDA, production estimates are more realistic than the future installed capacity forecasts, as the former is based on operating plants and utilisation rates adjusted according to the demand. Moreover, UNESDA maintained that the production/demand ratio for the years 2023 to 2026 is similar to the ratio existing in the period considered, when the excess capacity of the PRC did not create injury to Union producers.

• (216) As mentioned in recital (212), PET capacity in the PRC is expected to increase significantly in the coming years, while domestic consumption in the PRC is not expected to increase at the same rate as capacity. The increase in production capacity inevitably implies pressure on the Chinese PET facilities to raise production levels and will incentivize them to look for market opportunities outside of the PRC given the limitations to the domestic demand. Given the Chinese export record and the attractiveness of the Union market (see recitals (217)-(220)), it is likely that a sizeable part of Chinese production would be directed at the Union market. Therefore, UNESDA’s claim was rejected.

• (217) In line with Article 3(9), 2nd subparagraph, lit (b) of the basic Regulation, the Commission analysed the availability of other export markets for the Chinese exporting producers to absorb any additional exports and found that some (major) exporting markets are increasingly difficult to access for the Chinese exporting producers because of trade defence measures, including Argentina, Türkiye, Brazil, Indonesia, the United States, Japan, India, and South Africa. Mexico imposed in August 2023 tariffs on imports of PET originating in the PRC. Furthermore, it is observed that in the first quarter of 2023, Chinese exports to the Union rose at a pace higher than the overall worldwide Chinese exports of PET.

• (218) UNESDA claimed that any trade deviation that could have occurred from the adoption of trade defence measures by third countries has already taken place, since these measures have been in force for several years. It is considered that the existence of the trade defence measures must be read in light of the recent surge in Chinese PET capacity. With trade defence measures in place in other export markets, Chinese export capacity will likely be directed to those countries without any trade defence measures, such as the Union.

• (219) CPCIF argued that Russia was the largest destination for Chinese PET exports during the IP and that Latin American countries continued to be key destinations for Chinese exports. UNESDA also submitted that there is a wide spread of countries without any particular concentration that may be abnormal and that proportionally to population, the PRC’s exports to the Union are smaller than exports to Russia, Philippines, Türkiye and Algeria, the next four largest Chinese importers.

• (220) The Commission found that exports to the Union during the IP were larger than those to Russia, i.e. 305 000 tonnes and 274 000 tonnes respectively, showing the attractiveness of the Union market for Chinese exporting producers. None of the other Chinese export destinations for PET came close to the export volume made during the IP to the Union. Furthermore, this trend continued even in the post-IP period. The import statistics show that the Union is the PRC’s primary PET export destination and a large proportion of the Chinese overcapacity is very likely to be directed for export to the Union.

• (221) In conclusion, it is likely that significant volumes of the existing excess capacity on PET will continue to be directed to the Union market. The present overcapacities and the insufficient absorption capacity of third states or the PRC itself indicate the likelihood of further substantial increase of Chinese exports to the Union, where an increase in market share has proven relatively easy during the period considered and notably during the IP and the first quarter of 2023.

5.4.   Price level of imports

• (222) During the period considered, the average import price of the country concerned showed a 26 % increase over the full period considered. As explained in recital (164), the Commission established for the investigation period that Chinese prices undercut the Union industry’s prices. The Chinese prices started to decrease in the last quarter of the investigation period and this trend continued in the two quarters following the investigation period.

Table 15

Import price of Chinese imports after the investigation period

Average import price of Chinese imports (euro/tonne)	January 2023	February 2023	March 2023	April 2023	May 2023	June 2023
	1 158	1 067	1 030	1 011	993	1 006
Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat	Source: Eurostat

• (223) The sales price of the Union industry increased over the period considered by 49 %, while the cost of production increased by 46 %. This resulted in increasing profit margins for 2021 and the investigation period. However, due to the large influx of dumped Chinese imports in the investigation period at prices undercutting the Union industry’s prices, the Union industry was forced to lower its prices in the last quarter of the investigation period and the first quarter after the investigation period, resulting in a lossmaking situation in those two quarters.

• (224) The continuing large volume of Chinese imports at decreasing prices after the investigation period show a further shift towards these dumped imports at prices that suppress the prices offered by the Union producers.

• (225) An unrelated trader claimed that import prices from the PRC have increased in the second half of the IP, while the Union industry price has shown a decrease in the same period. This resulted in Chinese import prices above Union industry’s prices in the last quarter of the IP.

• (226) The Commission found that over the investigation period the Chinese import price was undercutting the Union industry’s price and that the Chinese import price increased less than the overall increase in the cost of production. With regard to the last quarter of the IP, the increasing Chinese imports in the quarters before pushed the Union industry to decrease its prices to an unsustainable lossmaking level to remain competitive, as set out in recital (223).

• (227) CPCIF claimed that the transport costs have stabilised since the beginning of the investigation period after historical highs.

• (228) The Commission assessment showed that an extreme surge in the shipping costs provided an impediment to Chinese exports to the Union from 2021 until mid-2022. Now that the costs have dropped to previous levels, this impediment no longer exists allowing for Chinese dumped imports to flood the European market. It is this return to the usual level of transport costs, and the disappearance of the previous surge, that contributes to the threat of injury.

5.5.   Level of inventories

• (229) The evolution of the level of inventories of the sampled Union producers has been described in detail in recitals (189) and (190). The Commission considered that this factor is not of any particular significance for the analysis because producers are able to respond to changes in demand relatively rapidly, hence keeping stocks at sustainable levels. No evidence could be found that stockpiling activities might have taken place by the Union industry or the Chinese exporting producers to an extent which may significantly influence the Union market in the near future.

5.6.   Other elements: profitability and other economic indicators

• (230) While the Union industry showed an increase in profitability during the period considered, there was a significant deterioration in the last quarter of the IP due to depressing sales prices on the Union market caused by the dumped Chinese imports. Also other injury indicators showed a deterioration of the Union industry situation. The Union sales volume, the Union production, and capacity utilisation all dropped significantly in the course of the IP, causing a drop in the Union industry’s market share. This situation caused the Union industry to reduce its sales prices in the last quarter of the IP while the cost of production kept increasing, resulting in a lossmaking situation. This negative trend continued in the first quarter of 2023 (see Table 14 for more details).

• (231) Furthermore, the Commission established the existence of price suppression. Indeed, the Union industry was selling below the cost of production in the last quarter of the IP and the first quarter post-IP. Due to the significant price pressure caused by the low-priced dumped imports from the PRC, the Union industry was prevented from increasing its sales prices to achieve a profitable situation, resulting in a loss at the end of the IP, which continued after the IP.

5.7.   Foreseeability and imminence of the change in circumstances

• (232) Article 3(9) of the basic Regulation provides that ‘[…] the change in circumstances which would create a situation in which the dumping would cause injury must have been clearly foreseen and must be imminent.’.

• (233) All the above-mentioned factors have been analysed and verified with respect to the investigation period. In particular, the profitability of the sampled Union producers reached an unsustainable level of -12 % in the fourth quarter of 2022 when Chinese price pressure was felt most after the continuous increase in undercutting Chinese imports during the first three quarters of the IP. Furthermore, the post-investigation period data revealed that this negative situation was still present during the first quarter of 2023. If this trend continues, the fragile situation of the Union industry will be turned into a material injury immediately. Moreover, the fact that the Chinese capacity is expected to almost double in the period 2020 – 2026 which cannot be absorbed by domestic Chinese demand or by other Chinese export markets, makes the Union market increasingly attractive to low-priced Chinese imports. Based on the data for the investigation period, the Commission thus concluded that there was a clearly foreseeable and imminent change in circumstances at the end of the investigation period, which will create a situation in which the dumping will cause injury. When the market conditions changed after the COVID-19 pandemic, the Chinese imports started to come back to the Union market, displacing the sales of the Union industry, which had to start reducing prices and incurred in losses towards the end of the IP and Q1 2023, having to sell at loss to compete with the dumped imports.

• (234) Svepol argued that the complainant could not be considered to be in a vulnerable situation on the basis of the data submitted in the complaint, but that this data showed a return to normal market conditions following the post-COVID-19 pandemic boom. Svepol further submitted that the Union producers’ profit margins in fact showed signs of a stabilising industry after a period with exceptionally high profitability, when the Union producers have been able to increase prices above unit costs, made high investments and maintained a dominant market share.

• (235) The Commission acknowledged that profit level of the Union industry during the period considered, especially in 2021 and the first three quarter of the IP, was much higher than seen in the years before. However, a multitude of injury indicators, such as production, sales, and profitability, show a massive and extraordinary drop at the end of the IP to unsustainable levels. Therefore, the Commission concluded that the situation at the end of the IP could not simply be considered a return to normal market conditions.

• (236) CPCIF and Svepol argued that the Chinese imports did not indicate foreseen or imminent injury, since they dropped by more than half during the last quarter of the investigation period and the increased imports in the third quarter of the investigation period were an exception. Svepol moreover claimed that there was no coincidence in time between the decline in the Union industry’s sales and the Chinese import volume trend.

• (237) The Commission found that the Chinese imports had significantly increased over the full period considered. Moreover, the drop in imports in the last quarter of the investigation period succeeded a continuous and steep increase in dumped imports in the quarters before and was followed by a further increase in the first quarter after the investigation period. Contrary to the claim of Svepol, this coincided with a continuous decrease in sales by the Union industry during the investigation period. Therefore, the Commission concluded that there was a significant rate of increase of dumped imports indicating the likelihood of substantially increased imports.

5.8.   Conclusion on threat of injury

• (238) While the Union industry was doing well until the third quarter of 2022, almost all injury indicators started to fall dramatically during the last quarter of 2022. The investigation provisionally revealed that this negative situation continued during the first quarter of 2023.

• (239) Whereas the average cost of Union producers and Union producer sales prices were highly correlated during the period considered, with an increase of 46 % in costs matched by an increase of 49 % in the average sales price in the IP compared to 2019, the Chinese prices had only risen by about 26 %. In 2019 and 2020, average Chinese import prices had been above Union industry prices, whereas in the IP, Chinese imports were undercutting.

• (240) Although imports from other countries also exhibited a slight increase in the IP, notably from Türkiye, Egypt, and Vietnam, the average prices of those imports were on average 1,2 % lower to 2,0 % higher than Union average sales prices. When assessed cumulatively, these imports were slightly higher than Union prices.

• (241) The Union industry’s forecast concerning future profitability and future sales is negative. Decreasing sales and negative margins are most likely to lead to heavy losses, lost orders and reduced jobs. As a result, all factors assessed in the framework of Article 3(9) of the basic Regulation, in particular the significant rate of increase of dumped imports in 2022 which continued in the first half of 2023 at further decreasing prices, the excess capacity in the PRC, and the negative developments in profitability of the Union industry point to the same direction.

• (242) In the view of this analysis, at this stage the Commission concluded that there was a threat of a clearly foreseeable and imminent injury to the Union industry at the end of the investigation period.

6. CAUSATION