Commission Implementing Regulation (EU) 2024/209 of 10 January 2024 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of steel bulb flats originating in the People’s Republic of China and Türkiye

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’) and in particular Article 9(4) thereof,

Whereas:

(1) On 14 November 2022, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of steel bulb flats originating in the People’s Republic of China (‘China’ or ‘the PRC’) and Türkiye (‘the countries concerned’) on the basis of Article 5 of the basic Regulation. The Commission published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 30 September 2022 by Laminados Losal S.A.U. (‘the complainant’ or ‘Losal’). The complaint was made on behalf of the Union industry of steel bulb flats in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) On 12 July 2023 the Commission published in the Official Journal of the European Union Commission Implementing Regulation (EU) 2023/1444 (3) imposing provisional anti-dumping duties on imports of steel bulb flats originating in China and Türkiye (‘the provisional Regulation’).

(4) Following the disclosure of the essential facts and considerations on the basis of which a provisional anti-dumping duty was imposed (‘provisional disclosure’), the Government of Türkiye, the Turkish exporting producer Özkan Demir, the Chinese exporting producer Longteng, and the Union user Fincantieri S.p.A (‘Fincantieri’) filed written submissions making their views known on the provisional findings within the deadline provided by Article 2(1) of the provisional Regulation. In addition, Losal provided a comment on Özkan Demir’s submission after the deadline foreseen in point 8 of the Notice of Initiation.

(5) The parties who so requested were granted an opportunity to be heard. Hearings took place with the Government of Türkiye, Özkan Demir and Fincantieri.

(6) The Commission continued to seek and verify all the information it deemed necessary for its final findings. When reaching its definitive findings, the Commission considered the comments submitted by interested parties and revised its provisional conclusions when appropriate.

(7) The Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive anti-dumping duty on imports of steel bulb flats originating in the PRC and Türkiye (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure.

(8) Parties who so requested were also granted an opportunity to be heard. Hearings took place with Longteng and Özkan Demir.

(9) Following provisional disclosure, no interested party submitted any further claims or comments on initiation than those referred to in Section 1.4 of the provisional Regulation. The Commission therefore confirmed its findings and conclusions as set out in recitals (8) to (15) of the provisional Regulation.

(10) In the absence of comments regarding the sampling of Union producers, importers and exporting producers, the Commission confirmed recitals (16) to (23) of the provisional Regulation.

(11) As stated in recital (28) of the provisional Regulation, the investigation of dumping and injury covered the period from 1 October 2021 to 30 September 2022 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2019 to the end of the investigation period (‘the period considered’).

(12) The Commission recalled that, as set out in recital (30) of the provisional Regulation, the product concerned is non-alloy steel bulb flats in the range up to 204 mm width (‘steel bulb flats’), originating in the PRC and Türkiye, currently falling under CN code ex 7216 50 91 (TARIC code 7216509110) (‘the product concerned’).

(13) Steel bulb flats are mainly used in the shipbuilding industry for the construction of the steel framework of passengers’ cruises, ferries, military vessels, and merchant vessels. Steel bulb flats can also be used in the construction of offshore platforms and tram rails, but in the Union this application of steel bulb flats concerns only marginal quantities.

(14) In the absence of any related claim or comment, the conclusions in recitals (31) and (32) of the provisional Regulation are hereby confirmed.

(15) Following provisional disclosures, the Commission received comments from Longteng on the provisional dumping findings.

(16) In the absence of any related claim or comment, the conclusions in recital (43) of the provisional Regulation are hereby confirmed.

(17) The details of the existence of significant distortions were set out in Section 3.1.2.1 of the provisional Regulation. In the absence of any comments with respect to this section, the Commission confirmed its provisional conclusions.

(18) In the absence of any related claim or comment, the conclusions in recital (84) of the provisional Regulation were confirmed.

(19) Following provisional disclosure, Longteng submitted comments related to the benchmarks used for certain factors of production and to the selling general and administrative (‘SG&A’) costs used to construct the normal value.

(20) Longteng reiterated its claims submitted on the Second Note to the file without submitting new elements. These were summarised and rebutted in recitals (92) to (94) of the provisional Regulation. It also claimed that the benchmarks used for oxygen and nitrogen should not be based on the import prices into Malaysia as these imports were mainly based on imports from Singapore, which, allegedly, have a limited industrial production, and those benchmarks could not reflect cost associated to mass production of these products. Longteng also pointed to much lower benchmarks of the ‘undistorted value’ for oxygen and nitrogen established in other proceedings, where Mexico was selected as an appropriate representative country. Longteng proposed to use cost values of oxygen and nitrogen of the cooperating Turkish exporting producer, Özkan Demir.

(21) The Commission established that Singapore belonged to the world top-10 countries for these factors of production in terms of export quantities (4). Therefore, its exports to Malaysia could be used as a reasonable basis for setting these benchmarks. Moreover, import values into Malaysia, due to competition forces, are meant to reflect the value of the relevant factors of production in Malaysia. General statement with regards to the costs of production in the exporting country are therefore of limited relevance. As for the lower benchmarks used in other proceeding, as explained in recital (90) of the provisional Regulation, Mexico was not considered eligible to establish benchmarks for these inputs as it did not have imports in representative quantities for all three inputs (5). Also, these values did not relate to the same investigation period. Finally, as Özkan Demir did not purchase oxygen and nitrogen due to a different production process, such information was not available.

(22) Longteng claimed that the average import price of argon in Türkiye was artificially high and proposed to use the actual cost of argon reported by Özkan Demir or to move this factor of production to ‘consumables’. However, as for oxygen and nitrogen, such information from Özkan Demir was not available. Also, given the representative volumes of imports of argon in Türkiye, there was no objective reason to consider these prices as not representative or to treat argon as consumables.

(23) On this basis, the claims relating to factors of production were rejected.

(24) Following the final disclosure, Longteng claimed that the benchmarks used in the construction of normal value for limestone, nitrogen and oxygen differed significantly from their own unit costs. Furthermore, Longteng proposed to use the import price in Brazil as benchmark for limestone while for nitrogen and oxygen it referred to prices from the largest exporting country as benchmarks.

(25) The Commission rejected these claims on the grounds that Longteng did not provide evidence allowing to positively establish that their values for the factors of production in question were undistorted, within the meaning of the second subparagraph of Article 2(6a) of the basic Regulation. Any argument based on a comparison to values that are distorted is inoperative. In addition, as far as the alternative benchmarks proposed by Longteng are concerned, the Commission noted that Brazil did not have imports of nitrogen and oxygen in sufficiently representative quantities while, as explained in recital (90) of the provisional Regulation and in recital (22) above, the Commission chose Malaysia as the only representative country which had representative quantities for all three factors in production in question. Hence such source was not considered appropriate. On this basis, this claim was rejected.

(26) Longteng claimed that certain cost elements of the ‘Marketing Sales and Distribution Expenses’, such as freight, export, transportation and sales commission, should not be included when calculating the SG&A costs of the representative company because the normal value needed to be calculated on an ex-works basis.

(27) The Commission re-examined the financial statements of the Turkish producer, accepted Longteng’s claim and removed such expenses from the calculation of the SG&A. Contrary to what was claimed in recital (109) of the provisional Regulation the financial data was extracted from the financial statements of the company which are publicly available on the company website.

(28) In parallel, the Commission, however, also established that the provisional SG&A and profit margins of the Turkish producer had not been calculated properly as certain items had been included/excluded for the calculation of the SG&A margin but not in the calculation of the profit margin leading to a mismatch in the calculation of the margins. Detailed corrections were disclosed to the cooperating exporting producer in the PRC. The SG&A and profits percentages were consequently recalculated and resulted in percentages of respectively 13,3 % and 16,9 % of the undistorted total cost of manufacturing.

(29) Following final disclosure, Longteng claimed that the Commission when calculating profit margin of the representative company it mistakenly included the transportation expenses, which were removed from the SG&A, into the profit calculus. Furthermore, Longteng claimed that the established SG&A and profit ratio cannot be considered realistic in the steel industry.

(30) The Commission rejected this claim as there were no reasons for disregarding the lines ‘other revenues/expenses from main operations’ and the ‘financing revenues/expenses’ when calculating profit ratio as these items were factored in when calculating the total amount of SG&A. Considering these items or not in the calculation of profit and SG&A as no impact on the final dumping determination as any increase/decrease in SG&A will see a corresponding decrease/increase in the profit margin.

(31) Following the final disclosure, Longteng claimed that the Commission should have removed the foreign exchange income and expenses from the SG&A margin calculation as they stem from high fluctuations in Turkish lira valuation during the investigation period.

(32) In this regard, the Commission considered that foreign exchange income and expenses are normally taken into account when calculating SG&A expenses provided that such expenses are related to the product under investigation. Furthermore, had such expenses been excluded, they would have increased the applicable profit margin accordingly, thereby having no effect on the combined level of SG&A and profit. This claim was therefore rejected.

(33) Longteng also claimed that the Commission should not have adapted the profit percentage after deducting transportation expenses as requested by Longteng and noted in recital (29). It also argued that the SG&A and profit percentages used could not be considered realistic for the steel industry.

(34) The Commission considered that the calculations were made in line with the Commission’s standard practice and the arguments mentioned by Longteng did not provide any valid reason to proceed otherwise. The Commisson considered that the figures presented by Longteng did not relate to the representative country and could therefore not be considered for this investigation. On this basis, this claim was rejected.

(35) After provisional disclosure, the Commission found that the increase in prices of electricity and natural gas in Türkiye outpaced the inflation rate in Türkiye. In addition, the information on prices of electricity and natural gas in the second half of 2022 were not published by the Turkish Statistical Institute. Therefore, the Commission decided to use the undistorted cost of electricity and natural gas in Malaysia. Indeed, Malaysia is a country with a level of economic development similar to the PRC and it was also used to calculate the benchmark for oxygen, nitrogen and limestone. In addition, it was also used as representative country in other similar investigations.

(37) With the exception of the changes described in recitals (26) to (36), the Commission constructed the normal value as set out in recitals (110) to (114) of the provisional Regulation.

(38) The details of the calculation of the export price were set out in recitals (115) and (116) of the provisional Regulation. In the absence of any comments with respect to this section, the Commission confirmed its provisional conclusions.

(39) The details concerning the comparison of the normal value and the export price were set out in recitals (117) and (118) of the provisional Regulation. In the absence of any comments with respect to this section, the Commission confirmed its provisional conclusions.

(40) Following the conclusions upon claims from Longteng described in recitals (23) and (27), and the findings described in recital (28) and (36) the Commission revised the dumping margins.

(42) Following provisional disclosure, the Commission received written comments from the Government of Türkiye and Özkan Demir on the provisional dumping findings. Following final disclosure, the Commission received written comments from the Government of Türkiye and Özkan Demir.

(43) The details of the calculation of the normal value were set out in recitals (122) to (133) of the provisional Regulation.

(44) Following provisional disclosure, Özkan Demir, in the context of its subsidiary claims detailed in recital (74) below, alleged that the ‘ordinary course of trade test’ (‘OCOT test’) should have been performed on a quarterly basis. Özkan Demir justified this claim on the basis of the substantial increase in the cost of production, which more than doubled in the investigation period. Özkan Demir explained that this led to some transactions being treated as loss-making whereas, in fact, they were profitable on a quarterly basis. Özkan Demir also claimed that the Commission in the past, when faced with substantial variations in the cost of production, had performed a monthly or quarterly dumping calculation. In support of its allegations, during the hearing, Özkan Demir referred to the panel report in Dominican Republic – AD on Steel Bars (Costa Rica) (8).

(45) At the outset, the Commission noted that nothing in the text of Article 2(4) of the basic Regulation mandates for the use of quarterly cost of production data. In fact, Article 2(4) refers to the ‘weighted average costs for the period of investigation’ as a reasonable period to determine whether prices provide for the recovery of costs. The Commission considered that the use of annual costs of production is generally accepted and appears appropriate in most cases, since it takes out extremes and short-term fluctuations of both costs and prices. It is even the norm in the practice of many investigation authorities. A departure from the use of yearly average costs is only made in very exceptional circumstances. The Commission carefully considered this claim in order to assess if there would be reasons to deviate from the method of performing the OCOT test on the basis of yearly average cost of production. However, it concluded that no exceptional circumstances were present in this case.

(46) First, as explained by Özkan Demir, the company does not produce the product under investigation continuously. Indeed, there were months during the investigation period in which there was no production at all. Using relatively short time intervals (three months in case of quarters) in such a situation would not lead to an average result that accurately represents the costs for the period it covers. In other words, since in some quarters there would be no production data for at least a third of the relevant period, the average obtained would not accurately reflect the relevant costs throughout the quarter. In such a case ‘zooming out’ the focus to a longer period of one year is more appropriate as the annual average more accurately represents the costs of production in that period.