Commission Implementing Regulation (EU) 2024/844 of 13 March 2024 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of electrolytic manganese dioxides originating in the People’s Republic of China

Image omitted; see official source	Official Journal of the European Union	EN Series L
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	2024/844	14.3.2024

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. PROCEDURE

1.1.   Initiation

• (1) On 16 February 2023, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of electrolytic manganese dioxides (‘EMD’) originating in the People’s Republic of China (‘China’, or ‘the country concerned’) on the basis of Article 5 of the basic Regulation. It 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 3 January 2023 by Autlan EMD SL (‘the complainant’ or ‘Autlan’). The complaint was supported by Tosoh Hellas Single Member S.A. (‘Tosoh’). The Commission found that the complaint was made by the Union industry of EMD 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.

1.2.   Raw material distortions

• (3) On 7 September 2023, the complainant made a request in accordance with Article 7(2a) of the basic Regulation to include the examination of alleged raw material distortions in the country concerned regarding the product under investigation to assess whether, if relevant, a duty lower than the margin of dumping would be sufficient to remove injury. The complainant provided sufficient evidence that there are no value added tax (‘VAT’) refunds on exports of manganese ore in the country concerned. VAT refund reduction or withdrawal is explicitly mentioned in Article 7(2a), second subparagraph, as a distortion on raw materials.

• (4) To examine the raw material distortions and to assess whether a duty lower than the margin of dumping would be sufficient to remove injury at the definitive stage, the Commission amended the Notice of Initiation of 16 February 2023 pursuant to Article 7(2a) of the basic Regulation in order to examine the raw material distortions and to assess whether, if relevant, a duty lower than the margin of dumping would be sufficient to remove injury. The Notice amending the Notice of initiation was published on 13 September 2023 ³ (‘amending Notice’).

• (5) Further to the amendment, the Commission invited the interested parties and, where relevant, sent questionnaires to them, requesting the parties to provide information about spare capacities in the country concerned, competition for raw materials and the effect on supply chains for companies in the Union. The Commission also sent to the Government of the People's Republic of China (‘GOC’) a questionnaire concerning raw material distortions within the meaning of Articles 7(2a) and 7(2b) of the basic Regulation.

• (6) Two cooperating users (Duracell International Operations Sàrl (‘Duracell’) and VARTA Consumer Batteries GmbH & Co. KGaA (‘Varta’)) replied to the relevant parts of the questionnaire. The two Union producers (Tosoh and Autlan), sampled exporting producers (Guangxi Guiliu New Material Co., Ltd (‘Guiliu’), Xiangtan Electrochemical Scientific Ltd (‘Xiangtan’) and Guangxi Daxin Huiyuan New Energy Technology Co., Ltd (‘Daxin’)), and the associations China Chamber of Commerce for Metals, Minerals and Chemicals Importers and Exporters (‘CCCMC’) and the Guanxi Manganese Industry Association (‘GMIA’) provided their comments. The Commission considered the information and comments submitted by interested parties and revised its provisional conclusions where appropriate, as explained in the relevant sections below.

1.3.   Registration

• (7) In the absence of any comments, recitals (3) to (4) of the provisional Regulation are confirmed.

1.4.   Provisional measures

• (8) In accordance with Article 19a of the basic Regulation, on 15 September 2023, the Commission provided parties with a summary of the proposed duties and details about the calculation of the dumping margins and the margins adequate to remove the injury to the Union industry. Interested parties were invited to comment on the accuracy of the calculations within three working days. Comments from one of the sampled exporting producers and from the two Union producers were received on 20 September 2023.

• (9) The exporting producer Daxin claimed that the dumping margin should be calculated by using export sale prices and normal value without VAT. Tosoh, a Union producer, raised a point concerning the calculation of the target profit. Autlan, the complainant, requested to review and confirm the accuracy of the Daxin’s dumping margin calculation and requested the disclosure of the three exporters’ data marked as sensitive in the disclosure. As the comments did not concern the accuracy of the calculations, the Commission concluded that it would examine them with all other submissions after the publication of the provisional measures.

• (10) On 13 October 2023, the Commission imposed provisional anti-dumping duties on imports of EMD originating in China by Commission Implementing Regulation (EU) 2023/2120 ⁴ (‘the provisional Regulation’).

1.5.   Subsequent procedure

• (11) Following the disclosure of the essential facts and considerations, on the basis of which a provisional anti-dumping duty was imposed (‘provisional disclosure’), the three sampled exporting producers and the associations, CCCMC and GMIA, the two Union producers and one of the users, Duracell, filed written submissions making their views known on the provisional findings within the deadline provided by Article 2(1) of the provisional Regulation.

• (12) Parties who so requested were also granted an opportunity to be heard. The following hearings took place: with Duracell on 23 June and 28 November 2023; with Autlan on 30 June 2023; with Varta on 4 July 2023; with Xiangtan on 25 October 2023; with CCCMC on 16 November 2023; and a jointly with Autlan and Tosoh on 15 November 2023.

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

• (14) 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 EMD originating in China (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure. Autlan, Tosoh, CCCMC and GMIA (jointly), Xiangtan, and Daxin submitted comments within the deadline.

1.6.   Claims on initiation

• (15) In the absence of any comments, recitals (1) to (2) of the provisional Regulation are confirmed.

1.7.   Claims on raw material distortions under Article 7(2a)

• (16) CCCMC and GMIA objected to the stated 15 days deadline for all parties to submit comments on the assessment of the Union interest in the amending Notice ⁵, since the economic and supply chain issues raised by the new investigations were complex and required research and exchanges of information with the companies concerned. Both requested the Commission to again amend the Notice of initiation and grant interested parties at least 30 days to submit comments.

• (17) The Commission noted that all parties requesting extension of deadlines and providing specific reasons for it were granted such extensions. It also highlighted that the Notice of initiation ⁶ of 16 February 2023 still gave parties a possibility to comment on the information provided by the other interested parties within 7 days from the deadline to comment, thus all parties could use this option, when necessary. In view of this, the Commission considered that the time allotted to interested parties to make comments and provide their views on this matter was appropriate.

• (18) Guiliu claimed that a new allegation brought by the complainant seven months after the initiation of investigation (and not ‘at initiation’) derogated interested parties’ right of defence. Guiliu further claimed that the Commission should follow its past practice ⁷, where the complainant’s claim of applying Article 7(2a) of the basic Regulation was rejected, because the complaint had failed to provide evidence of the existence of any of the measures listed in the second subparagraph of Article 7(2a) of the basic Regulation at initiation, and no such evidence had been found to exist by the Commission at the stage of initiation either. In addition, Guiliu mentioned that the complainant impeded the investigation by filing the new allegations late in the proceeding.

• (19) The Commission first observed that in the case referred to by Guiliu the request was made after definitive disclosure. In the case at hand the request containing sufficient evidence on the alleged raw material distortions was made in a timely manner, before the imposition of provisional measures, thereby allowing the Commission sufficient time to effectively investigate the matter in the course of the investigation. Furthermore, the Commission considered that the rights of defence of the parties were fully respected. Indeed, Section 5.5.1 of the Notice of Initiation, as modified by the amending Notice, informed all the economic operators concerned of their procedural rights and obligations and described the process that the Commission intended to follow to collect the information necessary for its findings and to reach its conclusions on the matter of alleged raw material distortions. Interested parties had the opportunity to comment on the evidence provided in the request submitted by complainant regarding the alleged existence of raw material distortions and on any other aspects regarding the investigation on the raw material distortions allegations. Guiliu’s claims were therefore dismissed. Finally, in view of the foregoing, it is unclear how the investigation was allegedly impeded by the complaint. Guiliu failed to explain this. The Commission considered that the request in accordance with Article 7(2a) of the basic Regulation to include the examination of alleged raw material distortions was timely and did not prevent the Commission to conduct a proper examination on this matter.

• (20) Duracell claimed that the Commission cannot introduce a new legal basis in the framework of ongoing investigation and to amend the methodological scope of such investigation, as there is nothing in the basic Regulation entitling it to consider supplemental evidence, which did not exist at the time of initiation. The party referred by analogy to the Court ruling in T-126/21, Azot v Commission ⁸, where the Court held that the condition relating to the sufficiency of the evidence contained in a request for a review made by or on behalf of Union producers, within the meaning of the second subparagraph of Article 11(2) of the basic Regulation, is satisfied where such evidence is submitted within the time limit. In addition, Duracell claimed that the Commission rejected similar requests in its own practice and the same reasoning should be applied by analogy ⁹.

• (21) The Commission initiated the investigation in accordance with Article 7(2a) of the basic Regulation to include the examination of alleged raw material distortions in accordance with the legal standard applicable to the request made by or on behalf of Union producers, on the basis of Article 5 of the basic Regulation. The complainant provided sufficient evidence pursuant to Article 5 of the existence of raw material distortions as defined in Article 7(2a) of the basic Regulation and therefore the Commission amended the original Notice of initiation so that, as required by the basic Regulation, the investigation covered also those raw material distortions. Therefore, the Commission did not breach any identified legal standards when initiating the investigation. Furthermore, concerning the reference to the Court ruling in T-126/21 mentioned by Duracell, the Commission observed that that ruling is not final as it was under appeal. In any case, the ruling relates to an expiry review pursuant to Article 11(2) of the basic Regulation, and the information necessary to initiate it. The ruling does not cover the use of Article 7(2a) of the basic Regulation, which concerns an element of an investigation rather than its raison d’être. Moreover, even following the reasoning in T-126/21, unlike Article 11(2), Article 5 does not contain any particular limitation as to when the Union producers can request the initiation of an investigation. Thus, the analogy raised by Duracell does not arise. Duracell’s claims were therefore rejected.

1.8.   Sampling

• (22) In the absence of any comments, recital (8) to (15) of the provisional Regulation are confirmed.

1.9.   Individual examination

• (23) As envisaged in recital (16) of the provisional Regulation, the Commission considered the request to grant individual examination for one exporting producer in China. The request for individual examination was highly deficient. It follows that the requestor did not ‘submit the necessary information within the time limits provided for in the [basic Regulation]’ within the meaning of Article 17(3) of that Regulation. In any event, the information provided revealed that several additional companies would have to be investigated which ‘would be unduly burdensome and taken into account the complexity of the case at hand would prevent completion of the investigation in good time’ ¹⁰. Therefore, the request was rejected.

1.10.   Questionnaire replies and verification visits

• (24) In the absence of any comments, recitals (17) to (21) of the provisional Regulation are confirmed.

1.11.   Investigation period and period considered

• (25) In the absence of any comments, recital (22) of the provisional Regulation is confirmed.

2. PRODUCT CONCERNED AND LIKE PRODUCT

• (26) In the absence of any comments, the Commission confirmed its conclusions set out in recitals (23) to (36) of the provisional Regulation.

3. DUMPING

• (27) Following provisional disclosure, CCCMC, the cooperating exporting producers and the cooperating Union producers commented on the provisional dumping findings.

3.1.   Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation

• (28) In the absence of any comments, recitals (37) to (43) of the provisional Regulation are confirmed.

3.2.   Normal value

3.2.1.   Existence of significant distortions

• (29) After provisional disclosure, Daxin, Xiangtan CCCMC, and GMIA submitted a number of comments concerning the existence of significant distortions.

• (30) First, Daxin, CCCMC and GMIA, claimed that that the Report is no longer up to date, in particular given the substantial economic developments both in the EU and in China since its publication, including the provision of subsidies to EU industries to promote their adherence to new EU industrial policy objectives or intervention in corporate investment and decision-making. Moreover, Daxin, CCCMC and GMIA claimed that the Commission replaces investigations with reports and that by relying on the Report, the Commission continued arguing in a circular manner where exporters need to disprove allegations made in the Report. Daxin, CCCMC and GMIA therefore recalled that the burden of proof rests with the investigating authority.

• (31) The argument concerning the Report being allegedly outdated was rejected. The Commission noted that the Report is a comprehensive document based on extensive objective evidence, including legislation, regulations and other official policy documents published by the Chinese authorities, third party reports from international organisations, academic studies and articles by scholars, and other reliable independent sources. Even though the Report was made publicly available in December 2017, the Report’s findings remain largely valid and they were in any event complemented by additional evidence collected in the present investigation as laid out in Section 3.2.1 of the provisional Regulation. Moreover, any interested party had ample opportunity to rebut, supplement or comment on the Report and the evidence on which it is based, and no parties have submitted arguments or evidence rebutting the sources and information included in the Report. As to the arguments concerning EU industrial policies and subsidies, the Commission noted that pursuant to Article 2(6a)(b) of the basic Regulation, the potential impact of one or more of the distortive elements listed in that provision is analysed with regard to prices and costs in the exporting country. The cost structure and price formation mechanisms in other markets, such as in the EU, do not bear any relevance whatsoever in the context of the determination of the normal value. Therefore, also this argument was rejected.

• (32) Regarding the argument suggesting that issuing a country report replaced the actual investigation, the Commission recalled that, according to Article 2(6a)(e) of the basic Regulation, if the Commission deems the evidence submitted by the complainant on the significant distortions sufficient, it can initiate the investigation on this basis. However, the determination on the actual existence and impact of significant distortions and the consequent use of the methodology prescribed by Article 2(6a)(a) of the basic Regulation occurs at the time of the provisional and/or definitive disclosure as result of an investigation. In this investigation, the Report, including the evidence contained therein, is part of the evidence on file justifying the application of Article 2(6a) of the basic Regulation. The Commission recalled that Section 3.2.1 of the provisional Regulation contains the Commission’s full assessment concerning the existence of significant distortions. The Commission has used substantial additional evidence specific to the investigation and the claims put forward by the parties not included in the Report. What counts for the application of the methodology under Article 2(6a) of the basic Regulation are the findings that the significant distortions are relevant in the case at hand, as is the case in this investigation ¹¹. Therefore, this claim was rejected.

• (33) Second, Daxin, CCCMC and GMIA argued that the Commission wrongly interpreted the nature of China’s socialist market economy doctrine, failing also to conduct a comprehensive analysis concerning the structure of the Chinese economy, as well as the relationship between the free market and the Chinese Communist Party (‘CCP’) leadership. Daxin, CCCMC and GMIA backed their argument by claiming that the May 2020 Opinion of the CCP Central Committee and the State Council on Accelerating the Improvement of the Socialist Market Economy System in the New Era reiterated, inter alia, that the reform of the socialist market economy should show great respect for the general rule of market economy, minimize governmental direct allocation of market resources as well as direct intervention in microeconomic activities, fully leverage the decisive role of the market in resource allocation and enhance government’s role in effectively addressing the market failure.

• (34) This argument had to be rejected. The concept of socialist market economy permeates the entire legislative and economic structure of the PRC and effectively confers on the CCP leadership in all material economic questions, including control of the financial system and capital resources, designating sectors of the economy as a function of their strategic importance, controlling personnel issues including all essential appointments, coordinating economic policies through a formal network of Party entities/committees across state authorities and the economy etc. Out-of-context quotes from selected policy documents cannot alter the conclusion that the Party/State fully dominates the country’s economy, as is apparent not only from the evidence shown in Section 3.2.1 of the provisional Regulation, but also from the very policy documents which refer to respect for market forces while subordinating them to the strategic objectives of the CCP ¹².

• (35) Third, Daxin, CCCMC and GMIA contested the Commission’s finding that the Chinese economy is subject to an overall administrative control by means of an industrial plannings system. The exporting producers submitted that the plans are just guidelines and have no binding effects on Chinese companies. In this context, Daxin, CCCMC and GMIA added that there were also development initiatives within the EU and Member States that are similar to China’s five-year plans (‘FYPs’), such as new intra-EU industrial alliances and huge State subsidy programmes.

• (36) In response to the argument on the nature of the Chinese planning documents, the Commission pointed out that the Chinese economy is indeed covered by a complex web of FYPs, driving decisions by public authorities at all levels. Contrary to the argument put forward by the exporting producers, the Commission considers FYPs binding documents. This transpires from the applicable legislation referred to in Section 4.3 of the Report, as well from the planning documents themselves. The 14th national FYP, for example, contains a dedicated section on improving the planning implementation mechanism stating that: ‘As regards the binding indicators, major engineering projects, and tasks in public services, environmental protection, safety, and other fields set out in this Plan, it is necessary to clarify the responsibilities parties and schedule requirements, to allocate public resources, guide and control social resources, and ensure completion as scheduled. As regards the expected indicators and tasks in the fields of industrial development and structural adjustment set out in this Plan, it is necessary to mainly rely on the role of market players to achieve them. Governments at all levels must create a favourable policy environment, institutional environment, and legal environment’ ¹³.

• (37) As to Daxin, CCCMC and GMIA’s reference to similar support schemes allegedly existing in the EU and Member States, the Commission noted, as also already mentioned Section 3.2.1 of the provisional Regulation in recitals (47) and (121), that according to Article 2(6a)(b) of the basic Regulation, the potential impact of one or more of the distortive elements listed in that provision is analysed with regard to prices and costs in the exporting country, with the cost structure and price formation mechanisms in other markets not being relevant in the context of this proceeding ¹⁴. Therefore, this claim was rejected.

• (38) Fourth, Daxin, CCCMC and GMIA argued that not all the producers of EMD are state-owned enterprises (‘SOEs’) and that even if there are some companies owned or invested by the State, this does not prove government intervention in the operations of those companies. The exporting producers further added, referring to Article 11 of the Chinese Company Law, that connections between the CCP and the companies concerned do not necessarily serve as an indication for the government’s control over the operations of a company.

• (39) The Commission recalled that pursuant to Article 2(6a)(b) of the basic Regulation, the fact that the market in question is being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country is one of the elements the impact of which is to be taken into account when assessing the existence of significant distortions. At the same time, even if there is no predominance of SOEs in a given sector, State ownership is only one of the indicators of significant distortions. Government intervention may well take other forms – in line with the indicators listed in Article 2(6a)(b) of the basic Regulation – which have been described in Section 3.2.1 of the provisional Regulation. While the relevance of Article 11 of the Chinese Company Law is not entirely clear in the present context, the Commission pointed out that even Article 1 of the said Company Law refers to the objective of safeguarding the social and economic order and promoting the development of the socialist market economy. Therefore, this argument was rejected.

• (40) Fifth, Daxin, CCCMC and GMIA alleged that the Commission provided insufficient evidence to justify any findings of inadequate implementation of corporate, property and bankruptcy laws in China. In particular, the exporting producers claimed that China has conducted a regular supervision on the implementation of the Bankruptcy Law, including the trial of bankruptcy cases and suggestions on amendments, therefore not failing to properly apply and enforce law. Moreover, Daxin, CCCMC and GMIA claimed that no instances have been named that would prove biased access to capital and investment. Similarly, Daxin, CCCMC and GMIA disputed the Commission’s conclusion with respect to significant distortions concerning wages. They further argued in this respect that the Commission failed to conduct a sector-specific analysis proving that workers in the EMD sector would be put at a vulnerable employment position and receive distorted wages.

• (41) These arguments could not be accepted. As for the implementation of the bankruptcy laws, the Commission pointed out that even if China may have undertaken certain reforms of the insolvency proceedings, available information suggests persisting state intervention and other issues pointing to inadequate application of the bankruptcy laws. While the comparatively low number of insolvency cases is in itself indicative of the market forces not being allowed to eliminate the non-viable economic operators, the ongoing state intervention is particularly well exemplified by various interpretative actions of the Supreme People’s Court which emphasise economic continuity and social stability as priorities which the lower-level courts should take into account in the context of bankruptcy proceedings.

• (42) As to wage distortions, the Commission recalled that, as found in Section 3.2.1 of the provisional Regulation in recital (105), the wages in China are distorted inter alia by the restrictions of mobility due to the household registration system (hukou), as well as due to the lack of the presence of independent trade unions and lack of collective bargaining. There are no elements on file on whose basis it could be positively established that the domestic wage costs of EMD producers, such as Daxin as well as the producers represented by CCCMC or GMIA were not affected by those distortions and Daxin as well as the producers represented by CCCMC or GMIA did not adduce any evidence showing that the distortions referred to in Section 3.2.1 of the provisional Regulation would not affect its labour costs.

• (43) Similar observations apply also with regard to the Chinese financial system. As found in Section 3.2.1 of the provisional Regulation in recital (108), Chinese banks are guided by public policies when granting access to finance, including with respect to risk assessment of borrowers. Since neither Daxin nor CCCMC/GMIA have not provided additional information demonstrating that the distortions described in Section 3.2.1 of the provisional Regulation would not affect access to capital for EMD producers, this argument had to be rejected.

• (44) Sixth, Daxin, CCCMC and GMIA submitted that the Commission’s investigation methodology and reasoning needs to meet the standards set by the principles and practices crystallised in the WTO. The exporting producers argued that Commission needs to bear greater burden of proof when relating the determination of distortive market, in particular when it comes to explaining how governmental powers or mandate translate into actual and demonstrable distortions of cost of production.

• (45) The arguments raised by Daxin, CCCMC and GMIA was rejected. The Commission considers that the methodology pursuant to Article 2(6a) of the basic Regulation is fully consistent with the European Union’s WTO obligations and the exporting producers did not substantiate which principles and practices have allegedly not been met by the Commission. In any event, Section 3.2.1 of the provisional Regulation contained a detailed explanation how various types of distortions – whether cross-cutting and therefore affecting the entire Chinese economy or present specifically in the EMD sector – affect the functioning of the market and therefore also the costs of production of the product under investigation.

• (46) Consequently, the Commission rejected Daxin, CCCMC and GMIA’s arguments.

• (47) Xiangtan, first, submitted that the Commission still failed to provide any further elaboration concerning the exact legal basis to underpin its reasoning in relation to the compatibility of Article 2(6a) of the basic Regulation with the WTO agreements – including China’s WTO Accession Protocol and the WTO Anti-dumping Agreement (‘ADA’) – as well as with the DSB rulings, in particular DS473. According to Xiangtan, the Commission’s mere reiteration that Article 2(6a) of the basic Regulation is fully in line with the EU’s obligations under the WTO law did not provide any additional clarity on the issue. Moreover, referring to DS473, Xiangtan submitted that the Commission was not entitled to discard its costs or prices on the basis of the alleged existence of significant distortions, given that the existence of such distortions is in any event not a sufficient basis for concluding that the producer’s records do not reasonably reflect the costs of the raw material associated with the production and sale of the product concerned. Finally, Xiangtan claimed that the Commission has not sufficiently justified the application of Article 2(6a) of the basic Regulation in the present investigation.

• (48) The Commission disagreed. Concerning Xiangtan’s arguments on the alleged incompatibility of Article 2(6a) of the basic Regulation with WTO law, in particular the provisions of Article 2.2 and 2.2.1.1 ADA, as well as the findings in DS473, the Commission reiterated its view expressed in the First Note that Article 2(6a) of the basic Regulation is fully in line with the EU’s obligations under the WTO law, in particular the provisions of the ADA. In addition, with respect to DS473, the Commission recalled that this case did not concern the application of Article 2(6a) of the basic Regulation, but of a specific provision of Article 2(5) of the basic Regulation. Concerning Xiangtan’s argument on the burden of proof resting with the Commission, the claim is misplaced. The Commission recalled that WTO law as interpreted by the Appellate Body in DS473, allows the use of data from a third country, duly adjusted when such adjustment is necessary and substantiated. The Commission noted that the existence of significant distortions giving rise to the application of Article 2(6a) of the basic Regulation is established on a country-wide level and, if established, it renders costs and prices in the exporting country inappropriate for the construction of normal value. In these circumstances, Article 2(6a) of the basic Regulation provides for the construction of costs of production and sale on the basis of undistorted prices or benchmarks, including those in an appropriate representative country with a similar level of development as the exporting country. Moreover, the same provision of the basic Regulation provides for the use of domestic costs which are positively established not to be affected by significant distortions. In the present investigation, the Commission demonstrated the existence of distortions in the EMD industry in Section 3.2.1 of the provisional Regulation whereas no domestic costs have been established to be undistorted based on accurate and appropriate evidence in the case of Xiangtan.

• (49) Second, Xiangtan claimed that no significant distortion exists in the EMD sector in China given that: (i) even though Xiangtan is a 40 % State-owned company, the government’s holding ownership does not necessarily result in the government intervening into the company’s business operations; nor does the fact of the Chairman of the company and the secretary to the Board of Directors holding simultaneously positions within the CCP; (ii) the company is publicly listed on the stock exchange and thus subject to market-oriented modern corporate governance rules and stock exchange listing requirements; (iii) the Commission failed to demonstrate that the alleged cross-cutting interventions by Chinese government lead to significant distortions of the factors of production and, consequently, affect the cost and price of Xiangtan’s operation.

• (50) These arguments could not be accepted. First, as to government intervention, the Commission recalled that pursuant to Article 2(6a)(b) of the basic Regulation, the fact that the market in question is being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the authorities of the exporting country is one of the elements the impact of which is to be taken into account when assessing the existence of significant distortions. At the same time, even if there is no predominance of SOEs in a given sector, State ownership is only one of the indicators of significant distortions. Government interventions may well take other forms - in line with the indicators listed in Article 2(6a)(b) of the basic Regulation – which have been described in Section 3.2.1 of the provisional Regulation. Notably, according to Article 2(6a)(b) second indent, one element relevant for assessing the existence of significant distortions in a country is the State presence in firms allowing the State to interfere with respect to prices or costs. The involvement of party members in Xiangtan management structures is a clear indicator that the company is not independent from the State and is liable to be acting in accordance with CCP policy rather than market forces, irrespective of whether the State sets directly the prices of the goods sold or whether the links between the company and the CCP may impact its costs and prices more indirectly, such as through more favourable treatment and support from the authorities.

• (51) Second, as to the alleged lack of significant distortions despite existing government interventions, Xiangtan’s arguments could not be accepted. Xiangtan did not provide any information which would put in question the Commission’s observations (see recitals (87) to (100) of the provisional Regulation) on the EMD being considered an encouraged industry and therefore subject to distortive government support. The same applies to the distortions concerning inputs necessary for the manufacturing of the product under investigation (see in particular recitals (83), (85) and (106) of the provisional Regulation). Third, as to Xiangtan’s claim that it is a privately-owned company with modern corporate governance, the Commission has described in Section 3.2.1. of the provisional Regulation the substantial government interventions in the PRC resulting in a distortion of the effective allocation of resources in line with market principles. Those distortions affect the commercial operators irrespective of the ownership structure or managerial setup.

• (52) In view of the above, Xiangtan’s arguments were rejected.

3.2.2.   Representative country

• (53) In the provisional Regulation, the Commission selected Colombia as the representative country and used the financial data of the company Quimpac de Colombia for the constructed normal value in accordance with Article 2(6a)(a) of the basic Regulation. The details on the methodology used for the selection were set out in the First and Second Note made available to parties in the open file on 12 June 2023 and 4 July 2023 respectively (‘First Note’ and ‘Second Note’).

• (54) Following the publication of the provisional Regulation, Xiangtan reiterated the claim that Colombia was not an appropriate representative country, based on the same arguments already presented in recitals (144) and (145) of the provisional Regulation.

• (55) The Commission already addressed the comments in recitals (147) and (148) of the provisional Regulation. In addition, Xiangtan did not bring any new information or proposed any alternative representative country. The claim was therefore rejected.

• (56) Daxin, CCCMC and GMIA reiterated again that the price of energy in Colombia was influenced by several factors and differed significantly even between different countries with a similar level of economic development as China. As an alternative, CCCMC, GMIA and Daxin claimed that the Commission should use the Chinese exporters’ own data. The claim was already addressed and dismissed in recitals (151) and (152) of the provisional Regulation.

3.2.3.   Sources to establish undistorted costs for factors of production

Manganese ore

• (57) Xiangtan claimed that the Commission should use the actual cost of both self-mined and imported manganese ore instead of applying the benchmark prices. Xiangtan backed this claim by the lower manganese content of the locally mined ores which allegedly causes that those local ores are not affected by the distortions. Regarding imported ores Xiangtan claimed that as the manganese concentration, the inspection reports and information of the origin were available, the benchmark should not have been applied.

• (58) The Commission rejected both claims. Xiangtan did not explain in what way the distortions would not apply also for the domestic manganese ores of lower concentrations, which are used together with the imported ores of higher concentration in EMD production process.

• (59) The reason why the Commission applied benchmarks for the imported ores was that none of the producers provided accurate and appropriate evidence demonstrating the absence of distortions. This was primarily because all the ore purchases were made through a Chinese intermediary, whether located in China or elsewhere.

• (60) Xiangtan reiterated the claim that the methodology used for the calculation of the benchmark of manganese ore used by the Commission was not appropriate and suggested again using one of two alternative methodologies submitted in its comments to the Second FOP note. The Commission already addressed this claim in recitals (170) and (171) of the provisional Regulation. Xiangtan did not bring any new facts, reasoning or any viable alternative methodology how to reliably establish any price difference stemming from the different concentration of the manganese in the ore.

• (61) Also Daxin, CCCMC and GMIA contested again that the benchmark adopted by the Commission referred to an ore with a significantly higher concentration of manganese as compared with the locally sourced manganese ore and that it should adjust the benchmark in order to reflect the costs of Chinese exporters.

• (62) The Commission thoroughly analysed all sources provided by the interested parties including the data from the Chinese platforms Asian Metal and ferroalloynet.com This analysis revealed that no consistent price difference based on the manganese content could be determined. On the contrary, data from Fastmarkets.com showed that two ore concentrations of 37 % and 44 % showed inconsistent price differences, as in some months the tonne unit price for the higher concentration was even lower than for the lower concentration. The same applied for the Asian Metal data, which showed that the tonne unit price for an ore with 13 % concentration was higher in certain months than for an ore with 37 % concentration. These findings clearly demonstrated the absence of any consistent correlation between manganese content and pricing. Consequently, the provisional benchmark for manganese ore was confirmed and the claim was rejected.

• (63) Following final disclosure, Xiangtan reiterated their two claims regarding the manganese ore. First, they claimed that actual cost of self-mined manganese ore should have been used instead of the benchmark price. Second, they reiterated that the Commission incorrectly calculated the manganese ore benchmark prices.

• (64) Concerning the first claim, the Commission already explained in the provisional Regulation the reasons why it replaced the actual cost of the Chinese sourced manganese ore with the benchmarks. In the absence of any new fact this claim was therefore dismissed.

• (65) In the second claim regarding the manganese ore benchmark, Xiangtan argued that there is a consistent pattern of metric tonne unit price difference between the higher and lower ore concentration benchmarks, without providing any details or evidence concerning what this allegedly consistent price difference would be, neither to how this price difference would be applicable to the other (lower) concentration manganese ores used by the Chinese producers. The Commission rejected this claim.

• (66) Xiangtan further suggested, that the Commission’s presentation of the fact that, in some cases the tonne unit price for the higher concentration ore was lower than that for the lower concentration ore was factually wrong. The Commission disagreed with this claim, as for example in almost full period of May 2020 the USD per metric tonne unit price of MB-MNO-0003 37 % CIF Tianjin was higher than that of MB-MNO-0001 44 % CIF Tianjin ¹⁵. As was already explained in recital (62), there is no consistent price difference between the price of the manganese ore and its manganese concentration. In any event, even in case a consistent difference would be found, the difference between the 37 % and 44 % concentrations could not be applied to the local Chinese ores with significantly lower concentrations and for which no benchmark was available. The Commission therefore confirmed the approach to the calculation of the manganese benchmark and rejected this claim. Xiangtan identified a clerical error in the formula used with regard to the calculation of the price for one of the manganese ores used. An incorrect manganese concentration of the ore was applied to the benchmark price. The Commission accepted this claim and corrected this error.

• (67) Xiangtan claimed that the Commission’s adjustment factor used with regard to the manganese valence 2+ content was wrongly applied. The Commission accepted the claim and corrected this adjustment.

• (68) Xiangtan disputed the adjustment the Commission applied to one type of manganese powder. The Commission accepted this claim and corrected the amount of the adjustment.

Other raw materials and consumables

• (69) Tosoh argued that the Commission should have used Malaysia rather than Türkiye as a source of import prices for the five factors of production other than manganese ore because the import prices into Türkiye of coal products were abnormally low during the investigation period, due to substantial imports from Russia. The Commission already addressed this claim in recital (143) of the provisional Regulation and selected Brazil to establish the undistorted cost for bituminous coal and anthracite coal.

• (70) Autlan requested the Commission to use import price data of Malaysia to calculate undistorted benchmarks for the five inputs. The Commission noted that only for one out of five factors of production, the lignite coal, the average aggregate import volumes were higher than in Türkiye or Brazil, therefore the choice of Malaysia was not justifiable. The claim was rejected.

• (71) Xiangtan contested the method used to determine the prices for two coal types. It urged the Commission to use the Colombian export statistics for bituminous coal. In developing its argument Xiangtan speculated, that the reason for low imports into Colombia might be the abundant supply in the country. It further urged the Commission to use the import statistics into Türkiye without excluding the imports from Russia on the grounds that the Commission insufficiently demonstrated that there were any distortions in Russia that would cause the abnormally low prices and also brought examples of some products which from some countries were imported at lower prices than from Russia.

• (72) The Commission explained the approach taken in recitals (142) and (143) of the provisional Regulation. In establishing the benchmarks, the Commission does not rely on the export prices as they are by definition less reliable than the import statistics. This is generally accepted view, based on various reasons such as that customs authorities typically have more resources and methods to assess and control the import data compared to export data. Import documentation required is generally more thorough and goods at importation are subject to customs checks and verifications. Also, the export data are typically reported as FOB (compared to CIF on imports), which the Commission uses as representative level to use as a benchmark. Therefore this claim was rejected.

• (73) Following final disclosure, Xiangtan repeated the claim made at provisional stage that the Commission should use Colombian export statistics to establish the benchmark price of bituminous coal. No new arguments were provided. The Commission already explained why it considered import prices more reliable than export prices in the previous recital and therefore rejected the claim.

• (74) Regarding the distortions in Russia, the Commission noted that the evidence documenting that the Russian coal producers were selling at deep discounts following the Union sanctions on imports which came into force in August 2022 was well available on the open file and Xiangtan did not contest it. The Commission therefore rejected this claim and confirmed its method for determining the coal prices.

• (75) Guiliu requested the Commission to modify the HS code for one of their factors of production, from HS Code 2701 12 (Bituminous coal) to HS Code 2702 10 (Lignite) and to modify the benchmark accordingly. Guiliu argued that, according to the Harmonised System nomenclature, HS Code 2701 12 referred to bituminous coal, need to have a calorific value equal to or greater than 5 833 kcal/kg, whereas the coal they used was below this limit. In support of their request, Guiliu provided testing results for batches of coal showing a calorific value below the limit indicated above. The classification under HS Code 2701 12 was provided by Guiliu in their questionnaire replies and was not questioned during the verification process. The Commission considered that the request was not acceptable as it only came after provisional measures, and the Commission was not in the position to verify the new evidence submitted in relation to the caloric value of the coal allegedly used by Guiliu.

• (76) In the First and Second note and in the provisional Regulation, one of the factors of production, the iron pyrite, was indicated under HS Code 2601 11. After further investigation, the Commission ascertained that the iron pyrite used by the exporting producers was unroasted iron pyrite and should be classified under a different code, HS Code 2502 00. The Commission received confirmation from the exporting producers on the type of raw material used, whether roasted or unroasted iron pyrite, and on the classification code to be used. The Commission consequently modified the benchmark to establish the undistorted price for iron pyrite. As none of the countries used for other factors in this case (Colombia, Türkiye and Brazil) had representative quantities of pyrite imports (the total imports to those countries vary from 0 to 3 % of the pyrite consumption of the sampled Chinese exporting producers), the Commission searched for an alternative country on the list of countries with a level of economic development similar to China and concluded that Thailand was an appropriate alternative source of import prices for unroasted pyrite as the import quantities were significantly higher (representing 23 % of the total pyrite consumption of the sampled Chinese exporting producers).

• (77) Following final disclosure, Xiangtan claimed that the Commission should rely on the Turkish export price for the unroasted pyrite to establish the benchmark, as Türkiye was the biggest exporting country for this raw material. The Commission rejected the claims for the reasons explained in recital (72) of this Regulation.

• (78) Daxin argued that establishing the steam benchmark using the other sampled exporting producers would be inconsistent with previous practice and that the Commission should use the benchmark for water instead. The Commission considered that it would not be appropriate to use the benchmark for water, since other factors with significantly higher impact on the final price such as energy and labour costs were needed in the production of steam. The Commission calculated an average of the consumptions of the inputs used by the other sampled exporting producers producing steam in-house and applied benchmarks to the average consumption of each input to determine the price of steam. No alternative methodology for the calculation of the price of steam was presented by Daxin and the claim was therefore dismissed.

• (79) Daxin contested as well that the decision by the Commission to use the grinding/milling cost of other sampled exporting producers to adjust the benchmark for manganese ore was not justified, as the cost was unreasonably high. Daxin provided no evidence in support of this claim nor proposed an alternative option. The claim was therefore dismissed.

Electricity

• (80) Xiangtan contested the Commission’s decision to change the source of data for the determination of the benchmark for electricity from ENEL S.A., originally proposed in the First and Second note, to EMCALI, the energy supplier in the Cali region, where the company Quimpac is located. First, they argued that, as Quimpac was not an EMD producer, their location was irrelevant. Second, they argued the tariffs of EMCALI did not include a tariff applicable for industrial use. The Commission rejected both arguments. Quimpac was selected as a benchmark company because it utilises the same electrolysis process as an EMD producer, making it a suitable representative for understanding the cost structure of an EMD producer in terms of energy supply. Regarding the energy tariffs applied, the prices published in EMCALI’s price list accessible to all interested parties, are applicable to both commercial and industrial users. This approach is further supported by the use of very high voltage levels (category 3), which are beyond the scope of typical residential or general commercial activities and are indicative of substantial industrial electricity consumption. The Commission's decision to apply the highest available voltage level category is based on the rationale that it serves as an accurate representation of an industrial user who consumes large amounts of electricity in their production processes.

Manufacturing overhead costs, SG&A and profits

• (81) Xiangtan contested the use Quimpac de Colombia’s SG&A and profit in constructing the normal value on three grounds. First, it claimed that Quimpac’s financial result did not offer a good proxy for the EMD production. Second, it alleged that the profit level was higher than what could normally be achieved by an EMD producer and proposed to use the profits of Union producers or Tosoh Japan. Third, it claimed that no detailed financial data was available for the company and therefore the items such as freight expenses, packing expenses, other costs or R&D expenses cannot be checked and therefore it cannot be ensured that there is no double counting when doing the price comparison.

• (82) The Commission rejected the presented arguments for the following reasons. First, Xiangtan failed to show why the products produced by Quimpac (chlorine-soda products) would not render them as a good proxy for the EMD producers. Xiangtan does not contest that Quimpac uses comparable fixed assets (Electrolysis facility) and features high consumption of electricity. Second, the reasoning for the choice of Quimpac together with the description of the process was duly described in the provisional Regulation (Section 3.2.2.4). The Commission therefore cannot use the financial results of the Union industry and Japanese company neither to calculate the normal value, nor to benchmark it with the financial results of the selected companies. Third, despite the limitations of the data available for Quimpac, the Commission considers that in the absence of any more detailed financial statements, those data provide reasonably accurate representation of the company’s SG&A and profit. Finally, Xiangtan failed to provide any alternative. The claims were therefore rejected.

3.2.4.   Other comments

• (83) Xiangtan, Daxin, CCCMC and GMIA argued that the dumping margin should be calculated by using the export sales price and the normal value without VAT. The investigation showed that, on the basis of the Chinese VAT export refund policy, exporting producers exporting EMD were not eligible for the VAT refund. This implied that producers of EMD incurred an additional cost when exporting. Therefore, the Commission made an adjustment to the normal value, pursuant to Article 2(10)(b) of the basic Regulation, to reflect the total cost incurred as a result of the adopted VAT scheme.

• (84) Following final disclosure, Daxin reiterated the claim made at provisional stage that there was no need to make any VAT adjustment to the normal value since Daxin made export sales to the Union through domestic traders and therefore did not incur any additional cost when exporting. The Commission noted that, for the purpose of applying the provision of Article 2(10)(b), it was not relevant if Daxin exported directly to the Union or via a trader located in China. The adjustment to the normal value as per Article 2(10)(b) remained justified based on the non-applicability of VAT refund on export sales of EMD. The claim was therefore dismissed. Xiangtan disagreed with the methodology applied by the Commission to extrapolate the cost of consumables and manufacturing overheads as a percentage of the cost for raw materials and of direct cost respectively. The same comment was provided as regards the extrapolation of cost of transports as a percentage of the cost of raw materials. Xiangtan asserted that they were stand-alone cost items, in no way connected to the value of the inputs, and that the Commission should either identify proper benchmarks separately from other inputs or use the exporting producers’ actual cost.

• (85) The Commission noted that, once the existence of significant distortion was established in accordance with Article 2(6a)(b) of the basic Regulation, it would not be appropriate to use actual costs, unless these were established not to be distorted on the basis of accurate and appropriate evidence. This was not the case, as no such evidence was submitted. Since these were considered by the Commission as distorted, appropriate benchmarks had to be found. When appropriate benchmarks cannot be found for a cost, the Commission will establish them as a ratio to the cost group they relate to (be it cost of all raw materials or the manufacturing costs). Once the undistorted costs of raw materials or manufacturing costs are established, the Commission will apply the benchmark to estimate the undistorted cost in question, thereby preserving the exporting producer’s cost structure. Xiangtan failed to provide a more reasonable alternative to this method.

• (86) Xiangtan contested that the Commission used for the dumping margin calculation a COM PCN table based on yearly average, instead of the originally submitted COM PCN table based on monthly cost accounting records, without explaining the reason for its decision. In Xiangtan’s view, this was not compliant with Article 2(5) of the basic Regulation, whereby costs should normally be calculated on the basis of records kept by the party under investigation. As the Commission employs a yearly average normal value in its investigations, it considered appropriate to use yearly generated costs, enabling direct verification against the company’s annually audited financial statements, which enhances the reliability and transparency of the data used. Moreover the annual average value was calculated based on the records kept by Xiangtan and thus Article 2(5) was not violated. The Commission therefore dismissed this claim.

• (87) Autlan requested the Commission to adopt in its final determination appropriate actions regarding an EMD producer owned by the South Manganese Group, the same group to which Daxin belonged to prevent potential company channelling. The Commission noted that only producers that exported during the investigation period are listed in the operative part of this regulation, if they made themselves known during the investigation. The company in question did not export to the Union during the investigation period and therefore cannot be listed in the regulation. Consequently, the request was rejected.

3.3.   Export price

• (88) Xiangtan disagreed with the method used by the Commission to correct the ocean freight cost used for constructing the CIF value. The Commission used the rates of five months when Xiangtan actually paid freight cost for CIF and DAP sales and quotes from other sampled exporters for the remaining seven months. Then, the Commission calculated a yearly average rate to construct the CIF value of sales where no ocean freight occurred. Xiangtan claimed that it was not appropriate to use the yearly average of ocean freight rates as this did not take into account the significant fluctuation of ocean freight in 2022 which had a substantial impact on the CIF value from month to month. The Commission accepted the claim and applied monthly ocean freight rates in constructing the CIF value.

• (89) Xiangtan further claimed that the Commission calculated the ocean insurance based on a percentage on the invoice value whereas it should have calculated it based on the insurance cost actually paid by the company during the investigation period. The Commission accepted this claim and corrected the calculation accordingly.

• (90) Following final disclosure, Xiangtan noted that the Commission, while accepting to calculate the ocean insurance premium based on the insurance cost actually paid by the company, applied a wrong formula in the calculation as it did not incorporate the typical 1.1 spread used by insurance companies for determining the ocean insurance fee. The Commission concluded that implementing this non-material correction would not affect either the injury or the dumping margin. As a result, this claim was rejected.

• (91) After the publication of the provisional measures, Daxin submitted additional information regarding the export prices of the unrelated trader selling EMD to their Union customer and requested the Commission to use these export data to calculate the CIF Union border price.

• (92) Autlan reacted to the submission of the questionnaire by Daxin’s unrelated trader claiming that it was received several months after the deadline set out in Section 5.3 of the Notice of Initiation.

• (93) Daxin rebutted that, according to the Notice of Initiation, interested parties could submit new factual information before the deadline to comment on the disclosure of the provisional findings and therefore it considered this new evidence acceptable.

• (94) The Commission noted that the unrelated trader had not cooperated in the investigation and the Commission was therefore not in the position to verify any of its data within the time limit of the investigation. The claim was therefore dismissed.

• (95) Following final disclosure, Daxin repeated their claim made at provisional stage that the Commission should use the export price of the unrelated trader to calculate the injury margin without presenting any additional argument. The claim was rejected for the reasons explained in recital (94) above.

3.4.   Comparison

• (96) Autlan argued that the Chinese exporting producers are using targeted dumping and requested the Commission to address this matter. The Commission analysed the situation and concluded that there is no evidence of the targeted dumping on the file. The change of prices over the investigation period was in line with the market development and the movements in the prices of raw materials and prices. The analysis of the sales of particular exporting producers to the different regions also did not show any significant price differences and therefore did not point out to any targeted dumping practice. The claim was therefore rejected.

3.5.   Dumping margins

• (97) Following claims from interested parties as described above, the Commission revised the dumping margins.

• (98) The definitive dumping margins expressed as a percentage of the cost, insurance and freight (CIF) Union frontier price, duty unpaid, are as follows:

Company	Definitive dumping margin (%)
Xiangtan	47,2
Guiliu	62,9
Daxin	18,3
Other cooperating companies	47,4
All other companies	100,9

4. INJURY

4.1.   Definition of the Union industry and Union production

• (99) In the absence of comments on the determination of the Union industry and Union production, the Commission confirmed its conclusions set out in recitals (204) to (206) of the provisional Regulation.

4.2.   Union consumption

• (100) In the absence of comments on the Union consumption, the Commission confirmed its conclusions set out in recitals (207) to (209) of the provisional Regulation.

4.3.   Imports from the country concerned

• (101) In the absence of comments on the imports from the country concerned, the Commission confirmed its conclusions set out in recitals (210) to (214) of the provisional Regulation.

4.3.1.   Prices of the imports from the country concerned, price undercutting and price suppression

• (102) In the absence of comments on the price of the imports from the country concerned, price undercutting and price suppression, the Commission confirmed its conclusions set out in recitals (215) to (221) of the provisional Regulation.

4.4.   Economic situation of the Union industry

4.4.1.   General remarks

• (103) In the absence of any comments, the Commission confirmed its conclusions set out in recitals (222) to (225) of the provisional Regulation.

4.4.2.   Macroeconomic indicators

4.4.2.1.   Production, production capacity and capacity utilisation

• (104) In the absence of comments on the production, production capacity and capacity utilisation, the Commission confirmed its conclusions set out in recitals (226) to (228) of the provisional Regulation.

4.4.2.2.   Sales volume and market share

• (105) In the absence of comments on the sales volume and market share, the Commission confirmed its conclusions set out in recitals (229) to (231) of the provisional Regulation.

4.4.2.3.   Growth

• (106) In the absence of comments on the growth, the Commission confirmed its conclusions set out in recital (232) of the provisional Regulation.

4.4.2.4.   Employment and productivity

• (107) In the absence of comments on the employment and productivity, the Commission confirmed its conclusions set out in recitals (233) to (235) of the provisional Regulation.

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

• (108) In the absence of comments on the magnitude of the dumping margin and recovery from past dumping, the Commission confirmed its conclusions set out in recitals (236) to (237) of the provisional Regulation.

4.4.3.   Microeconomic indicators

4.4.3.1.   Prices and factors affecting prices

• (109) In the absence of comments on the prices and factors affecting prices, the Commission confirmed its conclusions set out in recitals (238) to (241) of the provisional Regulation.

4.4.3.2.   Labour costs

• (110) In the absence of comments on the labour cost, the Commission confirmed its conclusions set out in recitals (242) to (243) of the provisional Regulation.

4.4.3.3.   Inventories

• (111) In the absence of comments on the inventories, the Commission confirmed its conclusions set out in recitals (244) to (245) of the provisional Regulation.

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

• (112) In the absence of comments on the profitability, cash flow, investments, return on investments and ability to raise capital, the Commission confirmed its conclusions set out in recitals (246) to (251) of the provisional Regulation.

4.4.4.   Conclusion on injury

• (113) Following provisional disclosure, the sampled Chinese exporting producers as well as CCCMC and GMIA contested the concluded injury to the Union industry demonstrated by price suppression caused by the significant quantities of low-priced imports from China, especially during the second half of the period considered (2021–the investigation period) for the following reasons:

• — the average Chinese price increased more than the Union industry’s price in the investigation period,

• — the price difference between the imports from China and Union industry’s price was smaller in the investigation period than in 2019 ¹⁶, when the Union industry’s profitability was healthy ¹⁷,

• — the cost of production increases faced by the Union producers were caused by the energy crisis of 2021 and by the supply chain and production disruptions arising from the restrictive measures put in place by governments across Europe due to the COVID-19 pandemic (2020 to mid-2022), having impact on financial results of companies in most European industries.

• (114) The investigation showed that the sales of the Union industry dropped by [7-8,5] million kg from 2019 to the investigation period. These lost sales volumes together with suppressed prices were detrimental for the capital intensive EMD industry, having high fixed costs. The difference between the average import price from China and Union industry’s price, despite being higher in 2019, had much lower effect on profitability, since the Union industry sold [7-8,5] million kg more of EMD in 2019 compared to the investigation period.

• (115) As provided in the provisional Regulation, decreased sales volumes at the suppressed prices resulted in deterioration of all of the Union industry’s financial performance indicators. A minor profit level achieved by the Union industry in the investigation period was at the cost of negative cash flow and therefore was not sustainable.

• (116) As further acknowledged in the provisional findings, the increase in the cost of production was due to the sharp increase in energy and certain raw material pricing in the second half of the period considered. However, the inability of the Union producers to increase their sales prices combined with significant loss of sales volumes in line with increasing cost was the result of the price suppression exerted by the peaking Chinese imports. Besides, the price pressure on the cost of the Union industry was most prominent in the second part of the period considered ¹⁸.

• (117) Finally, COVID-19 restrictions did not affect the production levels of the Union industry, since the Union’s production was increasing in 2020 and 2021 and the production plants did not experience any temporary closures. The financial results of the Union industry could not therefore have been affected by these restrictions. On this basis the claims were rejected.