Commission Implementing Regulation (EU) 2024/1064 of 9 April 2024 imposing a provisional anti-dumping duty on imports of certain alkyl phosphate esters originating in the People’s Republic of China

• (372) After 2021, following the easing of the logistic constraints, the import volume from China increased rapidly. The most significant increase was registered between 2021 and 2022, with a year-on-year increase of 56 %. The Chinese import volume remained on a high level also in the investigation period, despite the decrease of the Union consumption.

• (373) As a result, the market share of Chinese imports increased from 60 % to 80 % over the period considered, representing an increase of 32 % between 2019 and the investigation period.

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

• (374) The Commission established the prices of imports on the basis of Eurostat and ThinkReal data. Price undercutting of the imports was established on the basis of data of the cooperating exporting producers in the country concerned and domestic sales data provided by the Union industry for the period of investigation.

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

Table 4

Import prices (EUR/ tonne)

	2019	2020	2021	2022	Investigation period
China	1 463	1 506	2 531	2 122	1 621
Index	100	103	173	145	111
Source: Eurostat and ThinkReal.	Source: Eurostat and ThinkReal.	Source: Eurostat and ThinkReal.	Source: Eurostat and ThinkReal.	Source: Eurostat and ThinkReal.	Source: Eurostat and ThinkReal.

• (376) Average import prices from China first increased considerably. This increase coincided with the reduced volume of imports in connection with logistic constraints resulting from the COVID-19 crisis. This trend reversed after 2021. In parallel to the increase of volume, the price of imports of the product concerned from China considerably dropped in comparison to 2021. With exception of 2020 and 2021, the import prices remained below the sampled Union producers’ sales prices and cost of production during the period considered, as shown in Table 8.

• (377) The import price of TCPP was lower than the import price of TEP throughout the period considered. The price of both product types followed the same trend: a considerable increase in 2021 and 2022 and a decrease in the IP. The import price of TEP increased overall by 28 % during the period considered while the import price of TCPP increased by 5 %.

• (378) The Commission determined the price undercutting during the investigation period by comparing the weighted average sales prices per product type of the Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level; and the corresponding weighted average prices per product type of the imports from the 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.

• (379) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the Union producers’ theoretical turnover during the investigation period. It showed a weighted average undercutting margin of between 32,0 % and 35,5 % by the imports from the cooperating producers in the country concerned on the Union market.

4.5.   Economic situation of the Union industry

4.5.1.   General remarks

• (380) 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.

• (381) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data provided by the Union producers, crosschecked with the data in the complaint. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the Union producers. As the three investigated Union producers represented the totality of the Union industry, both macroeconomic and microeconomic data related to all Union producers and were found to be representative of the economic situation of the Union industry.

• (382) 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.

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

4.5.2.   Macroeconomic indicators

4.5.2.1.   Production, production capacity and capacity utilisation

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

Table 5

Production, production capacity and capacity utilisation

	2019	2020	2021	2022	Investigation period
Production volume in tonnes	41 519	44 574	48 301	21 643	18 274
Index	100	107	116	52	44
Production capacity in tonnes	60 200	60 600	60 600	60 600	60 600
Index	100	101	101	101	101
Capacity utilisation	69 %	74 %	80 %	36 %	30 %
Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.

• (385) During the period considered, the Union industry production volume decreased by 56 %. This decrease in production affected all Union producers. The evolution of the production volumes showed an opposite picture to the Chinese import volumes, initially the Union industry was able to increase its production from 2019 to 2021 when the Chinese imports contracted due to logistic constraints resulting from the COVID-19 crisis. After 2021 the Chinese imports increased again and the Union production volumes dropped by 64 % from 2021 to 2022, even when the Union consumption increased. In the investigation period, when the Union consumption contracted, the Union industry’s production volumes decreased further.

• (386) The production capacity stayed practically the same over the period considered with only a minor increase from 2020 due to small investments in de-bottlenecking. Due to the decrease of production volumes, the capacity utilisation rate decreased from 69 % in 2019 to only 30 % in the investigation period. The decrease of the capacity utilisation followed the same trend as the decrease of production volume and the period considered noted an overall decrease of 56 % in capacity utilisation.

4.5.2.2.   Sales volume and market share

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

Table 6

Sales volume and market share

	2019	2020	2021	2022	Investigation period
Total sales volume on the Union free market in tonnes	31 000 – 38 000	30 000 – 37 000	31 000 – 38 000	18 000 – 22 000	14 000 – 17 000
Index	100	97	100	50	42
Market share of free market sales	39 %	42 %	46 %	22 %	20 %
Index	100	106	116	55	51
Source: Union producers, Eurostat and ThinkReal.	Source: Union producers, Eurostat and ThinkReal.	Source: Union producers, Eurostat and ThinkReal.	Source: Union producers, Eurostat and ThinkReal.	Source: Union producers, Eurostat and ThinkReal.	Source: Union producers, Eurostat and ThinkReal.

• (388) The Union industry sales volume decreased by 58 % over the period considered. This decrease of Union industry sales volume was far greater than the 21 % decrease of Union consumption during the same time period.

• (389) As a consequence, this translated in a decrease of market share of the Union industry on the free market from 39 % in 2019 to 20 % during the investigation period.

4.5.2.3.   Growth

• (390) The Union free market consumption decreased during the period considered around 21 % following the slowdown of construction activity. At the same time the sales volume of the Union industry on the Union free market decreased by 58 %. The Union industry thus lost a significant part of its market share, contrary to the market share of the imports from the country concerned which increased significantly during the same period.

4.5.2.4.   Employment and productivity

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

Table 7

Employment and productivity

	2019	2020	2021	2022	Investigation period
Number of employees (Full time equivalent – FTE)	67	71	74	62	58
Index	100	107	110	93	86
Productivity (tonnes/FTE)	623	627	657	348	317
Index	100	101	106	56	51
Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.

• (392) The level of the Union industry employment first increased following the increase of sales and production. Following the drop in production and sales after 2021, also the employment decreased reversing the trend from 2019 to 2021. Over the entire period considered, the employment decreased due to the reduction in production by the Union producers. This resulted in a reduction of workforce by 14 %, without taking into consideration any indirect employment.

• (393) Between 2019 to 2021, the productivity also increased. The productivity however dropped drastically after 2021 in line with the decrease of production volumes. Due to the specific characteristics of chemical processing industry, where a certain number of employees is needed to keep the production processes running regardless of the level of production volumes, the employment could not be fully adapted to the declining production levels. This resulted in a decrease of productivity by 49 % over the entire period considered.

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

• (394) 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 substantial, given the volume and prices of imports from the country concerned.

• (395) This is the first anti-dumping investigation regarding the product concerned. A part of the product concerned (TCPP) has been investigated in 2010 but the investigation was terminated without measures. Therefore, no data were available to assess the effects of possible past dumping.

4.5.3.   Microeconomic indicators

4.5.3.1.   Prices and factors affecting prices

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

Table 8

Sales prices in the Union

	2019	2020	2021	2022	Investigation period
Average unit sales price in the Union on the free market (EUR/tonne)	1 569	1 490	2 170	2 651	2 136
Index	100	95	138	169	136
Unit cost of production (EUR/ tonne)	1 552	1 409	1 570	2 207	2 207
Index	100	91	101	142	142
Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.

• (397) Sales prices of the Union industry on the Union free market first decreased from 2019 to 2020 and then increased following the decrease of Chinese imports and the price pressure from these imports on the Union market. In the investigation period the prices decreased again, following the increase of import volumes and decrease of import prices from the country concerned. The average unit sales price in the Union registered an overall increase of 36 % during the period considered.

• (398) The unit cost of production of the Union industry increased by 42 % over the period considered. The increase in cost was driven mainly by higher costs for the principal raw materials, yellow phosphorus and propylene oxide, which represent over 50 % of the total cost of production. Over the same period sales prices increased by 36 %, but this was not sufficient to offset the increase in the raw material prices due to the price suppression caused by the Chinese imports.

4.5.3.2.   Labour costs

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

Table 9

Average labour costs per employee

	2019	2020	2021	2022	Investigation period
Average labour costs per employee (EUR)	71 458	66 226	71 898	73 530	74 735
Index	100	93	101	103	105
Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.

• (400) The average labour costs per employee decreased by 7 % in 2020 and then increased by 8 % in 2021, 2 % in 2022 and further by 2 % in the IP, for an overall increase of 5 % during the period considered.

4.5.3.3.   Stock

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

Table 10

Stock

	2019	2020	2021	2022	Investigation period
Closing stock (tonnes)	2 263	1 176	2 504	1 797	1 513
Index	100	52	111	79	67
Closing stock as a percentage of production	5 %	3 %	5 %	8 %	8 %
Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.

• (402) The stock levels were rather moderate during the period considered and represented less than 10 % of the production volumes. Overall, the closing stock levels decreased by 33 % during the period considered in line with the decrease of the production volume. The investigation did not observe any abnormal stock levels during the period considered, but rather normal fluctuations especially when compared with the production levels. This reflects the Union producers’ ability to react flexibly on changing demand.

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

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

Table 11

Profitability, cash flow, investments and return on investments

	2019	2020	2021	2022	Investigation period
Profitability of sales in the Union to unrelated customers (% of sales turnover)	3 %	6,4  %	29 %	15 %	-6  %
Index	100	245	1 097	584	- 249
Cash flow (EUR)	2 634 215	8 557 172	28 639 276	10 202 562	- 489 877
Index	100	325	1 087	387	-19
Investments (EUR)	385 245	133 959	251 651	507 477	279 101
Index	100	35	65	132	72
Return on investments	9 %	36 %	212 %	71 %	-12  %
Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.

• (404) The Commission established the profitability of the 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.

• (405) Over the period considered the profitability first improved from 3 % in 2019 to 29 % in 2021 when the Chinse imports contracted, and the price levels increased due to logistic constraints resulting from the COVID-19 crisis. After 2021 the Chinese import volumes increased significantly and the import prices plummeted. At the same time, the unit cost of production of the Union industry increased. Due to the price pressure exerted by the Chinese imports the Union producers were unable to increase prices in response to cost increases. As a result, the profitability of the Union industry fell from 29 % in 2021 to – 6 % during the investigation period.

• (406) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow during the period considered followed the trend in profitability, which in turn was affected by increased production costs and negative development of sales quantities and Union industry’s inability to match prices with increased production cost.

• (407) The investments of the Union industry first decreased from 2019 to 2020 and then, in line with the increased production volumes and performance, increased from 2020 to 2022. Along with the deteriorating results, the investments decreased during the investigation period. Overall, the investments registered a decrease of 28 % during the period considered.

• (408) The return on investments is the profit in percentage of the net book value of investments. It developed along a trend similar to that on profitability, first improving from 2019 to 2021, then declining rapidly and becoming negative during the investigation period.

• (409) The Union producers were part of relatively large groups producing a variety of chemical products. The product under investigation did not represent a major part of these groups’ total revenue. Therefore, in the short term, the ability to raise capital on group level was not significantly affected by the declining profits related to the product under investigation during the period considered.

4.5.4.   Conclusion on injury

• (410) All main injury indicators showed a negative trend during the period considered. The production volume of the Union industry decreased by 56 % and its sales volume on the free market decreased by 58 %. This decrease significantly surpassed the 21 % decrease in consumption during the period considered, and translated into a decrease of market share on the free market from 39 % in 2019 to 20 % during the investigation period, i.e. a decrease by 19 percentage points.

• (411) Imports from China increased by 5 % between 2019 and the investigation period and, while the Union market consumption contracted by 21 %, the Chinese imports gained considerably in market share. Imports from the country concerned substantially increased their market share from 60 % to 80 % between 2019 and the investigation period.

• (412) In addition, Chinese import prices only increased by 11 % throughout the period considered when the Union cost of production increased by 42 % due to increased cost of raw materials.

• (413) The Chinese import prices were also below Union industry prices, except in 2020 and 2021 when the imports were supressed due to the logistic constraints during the COVID-19 crisis.

• (414) During the investigation period, the import prices of the cooperating exporting producers undercut Union industry prices by 34,6 % on average.

• (415) Moreover, and regardless of any undercutting, the Commission further noted, on the basis of the trends contained in Tables 3, 4, 6 and 8, that the dumped imports supressed the prices of the Union industry. Indeed, the Union industry was unable to raise its prices to match the increase of cost of production, in particular during the IP, where the dumped imports increased their market share and the Union industry incurred in losses.

• (416) The COVID-19 crisis caused a temporary decrease in the volume of Chinese imports in 2020 and 2021 and during this period the indicators for Union industry showed a positive development. These positive trends however quickly reversed after 2021 when the import volumes from China surged and import prices plummeted. Even if the Union industry’s sales prices increased over the period considered, this increase was lower than the increase of its cost of production. Due to the price pressure from the Chinese imports the Union industry was unable to increase its prices to reflect its increased production cost. As a result, the Union industry became lossmaking in the investigation period.

• (417) In summary, the Union industry’s sales volumes dropped dramatically, by almost 60 % over the period considered, which is far more than the decrease of consumption on the Union market and thus the Union industry lost half of its market share. Imports from China were substantial throughout the period considered with a temporary drop in 2020 and 2021, at prices which were lower than the Union industry prices except temporarily in 2020 and 2021. Under the pressure of the Chinese imports and price suppression the Union industry sales levels fell more than 50 % in a short time between 2021 and the investigation period. During the investigation period, the Union industry was selling at prices which no longer covered its costs and consequently became loss making.

• (418) On the basis of the above, the Commission concluded at this stage that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation.

5. CAUSATION

• (419) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the country concerned caused material injury to the Union industry. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the dumped imports from the country concerned was not attributed to the dumped imports. These factors are: imports from other countries, the export performance of the Union industry, self-inflicted injury by high investment cost, exceptional market conditions during and after the COVID-19 pandemic and the decrease of Union consumption, imports by the Union industry, increased costs of raw materials and energy in the Union and inflation and lack of substitutability.

5.1.   Effects of the dumped imports

• (420) The volume of imports from the country concerned increased (as shown in Table 3) by 5 % from 2019 to the investigation period and, consequently, its market share increased by 20 percentage points, i.e. from 60 % to 80 %. This increase exceeded substantially the evolution of consumption in the Union market over the same period, which decreased by 21 %. At the same time, the Union industry lost 58 % of sales volume and 19 % of market share. Furthermore, the prices of imports from the country concerned, even if increased temporarily between 2020 and 2022 before falling sharply after 2022, undercut the Union industry prices by between 32,0 % and 35,5 % and by 34,6 % on average.

• (421) The pressure exerted by the dumped imports also caused significant price suppression as evidenced by the fact that the Union industry was unable to raise prices at the same rate as its costs. Indeed, as shown in Table 8, over the period considered, the Union industry’s costs of production increased by 42 % whereas the Union industry’s sales prices increased by 36 %. This insufficient price increase resulted in significant loss of sales volumes and market share. Consequently, due to the inability to increase prices and the loss of sales volumes, the profitability of the Union industry was sharply declining after the exceptional year 2021 and reached – 6 % losses during the investigation period.

• (422) The analysis of the injury indicators in recitals 353 to 418 shows that the economic situation of the Union industry worsened especially towards the end of the period considered and this coincided with a significant increase of dumped imports from the country concerned, which were found to undercut the Union industry prices during the investigation period and, in any event, caused significant price suppression, as the Union industry was not able to increase its prices in line with the increase of cost of production, in particular during the IP.

• (423) In view of the above considerations, the Commission provisionally established that the material injury suffered by the Union industry was caused by the dumped imports from China within the meaning of Article 3(6) of the basic Regulation. Such injury had both volume and price effects.

5.2.   Effects of other factors

• (424) In its comments on initiation CPCIF claimed that any injury to the Union industry during the period considered would not be caused by the Chinese exports but by other factors such as imports from third countries, imports by the Union industry, a decrease in exports of the Union industry, the Union industry’s exceptionally high investments costs, market rebalancing effects, increased costs of raw materials in the Union, a surge of energy prices in the Union, inflation in the Union and a lack of substitutability.

• (425) The Commission analysed if and how far those factors contributed to the injury.

5.2.1.   Imports from third countries

• (426) Imports from other third countries were at most of 2 861 tonnes during the period considered and of only 185 tonnes in the IP.

• (427) Therefore, imports from other third countries could not be the source of injury.

5.2.2.   Export performance of the Union industry

• (428) In its comments to initiation CPCIF claimed that the Union industry displayed a weak performance in the export market in the investigation period and that poor export performance of the Union industry is the main cause of the injury suffered by the Union industry.

• (429) The volume of exports of the Union producers developed over the period considered as follows:

Table 12

Export performance of the sampled Union producers

	2019	2020	2021	2022	Investigation period
Export volume (tonnes)	3 789	8 787	9 049	3 196	2 332
Index	100	232	239	84	62
Average price (unit of measurement)	1 689	1 699	2 351	3 043	2 359
Index	100	101	139	180	140
Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.	Source: Union producers.

• (430) During the period considered the export volumes represented less than 20 % of the total sales volumes of the Union industry. The average price of those exports first increased by 80 % in between 2019 and 2022. That level then decreased in the investigation period, remaining however 40 % higher than the 2019 level. The average price of those exports was higher than that of the Union industry in the Union market and remained also higher than the cost of production throughout the period considered.

• (431) The export sales prices therefore provided a positive profit margin over the whole period considered. In addition, given that the export sales volumes represented less than 20 % of the total sales volume of the Union producers, the Commission concluded that the export performance did not contribute to the material injury suffered by the Union industry.

• (432) The Commission therefore rejected the argument of CPCIF that the export performance of the Union industry has contributed to the injury.

5.2.3.   Union industry’s investment costs

• (433) In its comments to initiation CPCIF claimed that Union producers undertook large investments in 2022 and suggested that these investments could have had a significant weight in the total cost of production, thereby causing injury.

• (434) The investigation found that albeit the investments, in relative terms, doubled from 2021 to 2022 their level in absolute terms remained modest (representing less than 1 % of the Union industry’s sales value) during the whole period considered. Neither the investments nor the increase in depreciation resulting therefrom did have a substantial impact on the injury indicators such as cost of production, profitability or cash flow.

• (435) The Commission therefore rejected the argument that the investments of the Union industry have contributed to the injury.

5.2.4.   Consumption and market rebalancing effect

• (436) In its comments to initiation CPCIF claimed that the injury was due to market conditions. It claimed that the surge in terms of profitability and market share experienced by the Union industry during 2021 was due to the special economic conditions and market situation caused by COVID-19 and that with the return of the market to normal conditions, the prices of the product concerned from China dropped, remaining however above the price level of 2019. As such, a decrease in terms of profitability of the complainants was to be expected, as a result of normal market dynamics.

• (437) The Commission disagreed with this analysis. While the situation caused by COVID-19 indeed contributed to the increase of the Union industry’s market share and profitability during 2020 and 2021, the subsequent decrease cannot be described as return of the market to normal conditions. As explained in the recitals 360 to 373 the Chinese imports increased during the period considered while the Union consumption decreased. This, as explained in recitals 387 to 389 resulted in a decrease of Union industry’s market share from 39 % to 20 %. The decrease of profitability during the period considered was not the result of the changes in absolute price levels but rather due to the mismatch between the Union industry’s sales prices and cost of production. As explained in the recitals 396 to 398 the increase of sales prices during the period considered by 36 % was not sufficient to offset the increase in the raw material prices due to the significant price pressure operated by the Chinese imports.

• (438) The Commission therefore rejected the argument that the injury was due to normal market conditions.

5.2.5.   Increased costs of raw materials and energy in the Union and inflation in the Union

• (439) In its comments to initiation CPCIF claimed that the injury was due to an increased cost of raw materials and energy in the Union, and inflation in general. It claimed that in particular the prices of the main raw materials, namely phosphorus oxychloride and propylene oxide experienced a substantial increase in the Union while the prices in China did not experience such increases. Similarly, the CPCIF claimed that the decrease of the Union industry’s profitability coincided with an increase of electricity and gas prices and the acceleration of inflation rates in the Union.

• (440) The investigation found that phosphorus oxychloride and propylene oxide indeed represent a significant share of the cost of production of the product under investigation whereas the share of other factors of production is less pronounced. As explained in recitals 396 to 398 average unit sales price in the Union registered an overall increase of 36 % during the period considered while the unit cost of production of the Union industry increased by 42 % over the period considered. As the main factor of profitability for Union producers is the ability to pass on the cost increases on the selling price, the disparity between cost and selling prices indeed caused the deterioration of the profitability of the Union producers.

• (441) As explained in recital 440 the inability of the Union industry to pass on the cost increases was due to the low prices of the dumped imports from the country concerned, undercutting the Union industry prices and, in any event, causing significant price suppression. As shown in Table 8, from 2022 to the investigation period, the Union industry’s cost of production remained stable, but at the same time the Union industry was forced to reduce its selling prices by 20 % under the pressure of dumped Chinese exports, causing the profitability to drop from 15 % profits to – 6 % losses.

• (442) Finally, the investigation found that the share of the other factors of production was not significant and therefore also the impact of inflation on these factors of production could not cause the deterioration of the profitability of the Union industry.

• (443) The Commission therefore rejected the argument that the injury was caused by increased cost of raw materials and energy in the Union or inflation.

5.2.6.   Lack of substitutability

• (444) In its comments to initiation CPCIF claimed that TCPP and TEP are not substitutable and therefore the imports of TEP from China could not have caused material injury to the Union industry which only produced and sold TCPP.

• (445) As explained in recital 48, TEP and TCPP share the similar essential physical and chemical characteristics and are substitutable for rigid foams applications which represent the majority of the total Union consumption. As the two product types are in direct competition with each other on the Union market, the injury was not only caused by the imports of TCPP but also those of TEP.

• (446) The Commission therefore rejected this argument.

5.3.   Conclusion on causation

• (447) The Commission distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports. The effect of all other factors on the Union industry’s negative developments in terms of loss of market share, falling profitability, return on investment and cash flow was only limited.

• (448) On the basis of the above, the Commission concluded at this stage that the dumped imports from the country concerned caused material injury to the Union industry and that the other factors, considered individually or collectively, did not attenuate the causal link between the dumped imports and the material injury. The injury consists mainly of a loss of market share, price undercutting and suppression and falling profitability, return on investment and cash flow.

6. LEVEL OF MEASURES

• (449) The complainants claimed the existence of raw material distortions within the meaning of Article 7(2a) of the basic Regulation in the complaint.

• (450) Thus, in order to conduct the assessment on the appropriate level of measures, the Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry in the absence of distortions under Article 7(2a) of the basic Regulation.

• (451) Then it examined whether the dumping margin of sampled exporting producers would be higher than their injury margin.

6.1.   Injury margin

• (452) The injury would be removed if the Union Industry were able to obtain a target profit by selling at a target price in the sense of Articles 7(2c) and 7(2d) of the basic regulation.

• (453) In accordance with Article 7(2c) of the basic Regulation, for establishing the target profit, the Commission took into account the following factors: the level of profitability before the increase of imports from the country under investigation, the level of profitability needed to cover full costs and investments, research and development (R&D) and innovation, and the level of profitability to be expected under normal conditions of competition. Such profit margin should not be lower than 6 %.

• (454) The market share of Chinese imports was 60 % in the first year of the period considered and remained high during the entire period. Under these circumstances a profitability before the increase of Chinese imports could not be established in the period considered.

• (455) The complainant claimed that normal conditions of competition prevailed during year 2021 and that the Commission should use this year to establish the basic profit. However, the profitability of 29 % achieved in 2021 is explained by lockdowns in China and the reduced international trade flows during the COVID-19 crisis. The Commission therefore concluded that the level of profitability achieved in this year was not representative of normal conditions of competition.

• (456) In 2020 and 2022, the Union industry also achieved a 6 % or higher profitability as shown in recital 403. However, these years were also affected, at least partially, by the COVID-19 crisis turbulences and do not qualify as years with normal conditions of competition.

• (457) In search of a period where normal conditions of competition would prevail, the Commission intended to examine the profitability achieved during the last ten years. Only one complainant provided that information. It was therefore impossible to establish a profitability that would be representative of the Union industry as a whole during the 10-year period. In addition, Chinese imports were significant (at least 47 000 tonnes) during the entire 10-year period so that not a single year in this period could be considered anterior to the increase of Chinese imports.

• (458) In order to assess the normal basic profit, the complainants proposed an alternative methodology consisting in measuring the profitability achieved by products purportedly similar to the product concerned but not subject to dumped Chinese imports.

• (459) One complainant presented the profit margin achieved by the business unit encompassing the product concerned, other phosphorus derivatives and certain plasticisers.

• (460) A second complainant presented the profit margin achieved for all phosphorus derivatives excluding the product concerned.

• (461) A third complainant presented the profit margin achieved by a distinct phosphorus-based flame retardant.

• (462) The complainants however failed to demonstrate that the allegedly similar products were subject to the same competitive environment, market size, customer structure and other factors having an impact on profitability.

• (463) Therefore, the profitability achieved for these related products could not be considered equivalent to a normal basic profit for the product concerned and the Commission discarded the alternative methodology.

• (464) Since there is no evidence that a profitability higher than 6 % could be achieved under normal conditions of competition, the Commission set the basic profit to 6 %.

• (465) No complainant provided evidence that its level of investments, research and development (R&D) and innovation during the period considered would have been higher under normal conditions of competition.

• (466) On this basis, the non-injurious price falls withing the range ⁹⁷ of 2 325 to 2 355 EUR/t, resulting from applying the abovementioned profit margin of 6 % to the cost of production of the Union producers during the investigation period.

• (467) In accordance with Article 7(2d) of the basic Regulation, as a final step, the Commission assessed the future costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia that the Union industry will incur during the period of the application of the measure pursuant to Article 11(2).

• (468) One complainant provided a certified carbon footprint of the product concerned and evidence of the level of direct and indirect CO2 emissions that trigger the purchase of Emission Trading System (ETS) certificates. On the basis of that evidence and the forecasted increasing prices of ETS certificates according to Bloomberg, the Commission calculated that compliance would add an average cost of 3,3 EUR/t in each of the next five years. This difference was added to the non-injurious price mentioned in recital 466.

• (469) On this basis, the Commission calculated a non-injurious price falling within the range of 2 330 to 2 360 EUR/t for the like product of the Union industry.

• (470) The Commission then determined the injury margin level on the basis of a comparison of the weighted average import price of the cooperating exporting producers in China, as established for the price undercutting calculations, with the weighted average non-injurious constructed price of the like product sold by the Union producers on the Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average import CIF value.

• (471) The injury elimination level for ‘other cooperating companies’ and for ‘all other companies’ is defined in the same manner as the dumping margin for these companies:

Company	Dumping margin	Injury margin
Anhui RunYue Technology Co., Ltd.	45,1  %	65,4  %
Nantong Jiangshan Agrochemical & Chemicals Limited Liability Co.	68,4  %	74,2  %
Shandong Yarong Chemical Co., Ltd.	63,0  %	74,8  %
Other cooperating companies not sampled in Annex	59,1  %	72,2  %
All other companies	68,4  %	74,8  %

6.2.   Examination of the margin adequate to remove the injury to the Union industry

• (472) As explained in the Notice of Initiation, the complainant provided the Commission sufficient evidence that there are raw material distortions in the country concerned regarding the product under investigation. Therefore, in accordance with Article 7(2a) of the basic Regulation, this investigation examined the alleged distortions to assess whether, if relevant, a duty lower than the margin of dumping would be sufficient to remove injury.

• (473) However, as the margins adequate to remove injury are higher than the dumping margins, the Commission considered that at this stage it was not necessary to address this aspect.

• (474) Following the above assessment, the Commission concluded that it is appropriate to determine the amount of provisional duties in accordance with Article 7(2) of the basic Regulation.

6.3.   Conclusion on the level of measures

• (475) Following the above assessment, provisional anti-dumping duties should be set as below in accordance with Article 7(2) of the basic Regulation:

Company	Provisional anti-dumping duty
Anhui RunYue Technology Co., Ltd.	45,1  %
Nantong Jiangshan Agrochemical & Chemicals Limited Liability Co.	68,4  %
Shandong Yarong Chemical Co., Ltd.	63,0  %
Other cooperating companies not sampled in Annex	59,1  %
All other companies	68,4  %

7. UNION INTEREST

• (476) Having decided to apply Article 7(2) of the basic Regulation, the Commission examined whether it could clearly conclude that it is not in the Union interest to adopt measures in this case, despite the determination of injurious dumping, in accordance with Article 21 of the basic Regulation.

• (477) The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, and users.

7.1.   Interest of the Union industry

• (478) All producers of the product under investigation in the Union cooperated in the investigation and expressed their support to the imposition of the measures.

• (479) The investigation has shown that the Union industry is suffering material injury caused by the dumped imports from the country concerned. These imports significantly undercut the Union industry’s prices, in any event, exercised significant price suppression as shown by the underselling margins found, and caused significant loss of market share and profits towards the end of the period considered, and during the investigation period, as elaborated in recitals 380 to 448 above.

• (480) The imposition of measures would likely prevent a further surge of imports from China at very low prices. Without measures, Chinese producers will continue to dump the product concerned on the Union market preventing the Union industry from selling at an adequate price and from generating a sufficient profit and thus causing further material injury to the Union industry.

• (481) It was therefore concluded that imposing measures against China would be in the interest of the Union industry.

7.2.   Interest of unrelated importers and traders

• (482) Two unrelated importers submitted the sampling form. However only one of them provided a questionnaire reply. Additionally, one importer provided a partial questionnaire reply without narrative comments, and one importer and one trader submitted comments.

• (483) The cooperating importer who provided a questionnaire reply represented between 25 % and 30 % of imports from China. It opposed the imposition of measures claiming that it would be against the interests of users of the product concerned in the Union. It also considered that even if the importers and traders could lose some market share in benefit of the Union producers, they would still keep part of the market share since the Union industry has not enough capacity to cover the Union demand.

• (484) For the cooperating importer who provided a questionnaire reply, the weight represented by the product concerned compared to its total turnover was between 2 % and 5 %. The jobs allocated to the product concerned were estimated at around 15 employees.

• (485) Overall, the cooperating importer was profitable. Taking into account the limited weight of the product concerned of his total turnover, and the fact that the importers would in any event keep some of the market share, the Commission considered that the imposition of measures would not have a considerable negative effect on importers.

• (486) The importer who only submitted comments also opposed the imposition of measures claiming that it would be against the interests of users of the product concerned in the Union.

• (487) Therefore, from the information available, it is clear that the imposition of measures would have only a limited impact on importers, and such impact would be clearly outweighed by the benefits that the measures could bring to the Union industry.

7.3.   Interest of users

• (488) Several users came forward in the investigation, and ten of them provided at least a partial reply to the questionnaire. One of the companies that came forward had used only a negligible amount of the product under investigation for laboratory testing purposes and did not provide any further comments or submissions. Three other users, although they sent a questionnaire reply, did not provide any narrative comments. The users which provided a questionnaire reply purchased around 25 % of the total imports of the product from China in the investigation period.

• (489) Although some of the responses were deficient, the Commission was able to estimate the impact of the measures on the users. The product under investigation represented less than 5 % of the cost of production of final products incorporating it, such as polyurethane and polyisocyanurate insulation materials. The Commission therefore concluded that the cost of the measures was of limited importance in the final price of the downstream products and could be absorbed or at least passed on to consumers.

• (490) Six users who provided narrative comments were against the measures. None of the users was in favour.

• (491) Kingspan argued that the Union production capacity is insufficient to meet the Union demand and that for both TCPP and TEP there are no other sources of supply than China. Therefore, according to Kingspan, any measures would only increase the cost of insulation and fire safety.

• (492) Arkema argued that substitution of the product concerned is not a viable solution and that Union industry has regularly been unable to supply the product under investigation in sufficient quantities. Arkema also brought forward that the price of the product under investigation produced in the Union is higher than imported one.

• (493) Recticel brought forward that the substitution of the product concerned is not viable and that Union demand is higher than the capacity of the Union industry.

• (494) Stepan (both Stepan Deutschland GmbH and Stepan Netherlands B.V) brought forward that measures on the product concerned would drive up the price of the downstream products and erode the competitiveness of polyurethane and polyisocyanurate foam against other insulation technologies and they would also have negative impact on the Union’s objectives for insulation and reducing the carbon emissions.

• (495) Additionally, Stepan argued that Union industry has declined to enter into long term contracts that would have protected them from market price fluctuations.

• (496) Polinvent argued that there are no alternative products available on the market at the moment. Substitution of the product concerned would be time consuming and not economically viable. It argued that imposition of the measures would lead to shortage of supply and would increase the cost of wholesalers, manufacturers and end users.

• (497) The Commission considered the arguments brought forward by the users.

• (498) As regards the claim that substitution of the product concerned could be impractical or economically not viable in certain applications, it should be recalled the objective of any anti-dumping duties is not to prohibit imports, but to restore fair conditions of trade and competition. Therefore, the question whether the product under investigation could be substituted with other products is irrelevant.

• (499) The imports from China remain a necessary source for users of the product concerned. However, under the pressure of dumped imports from China there is a risk of further scaling down or stopping of the production in the Union. This would have an adverse effect on the users’ supply security, especially because the global production is already very much concentrated in China. On the other hand, if fair competition could be re-established by imposing anti-dumping measures, the Union could have more favourable conditions to increase its production capacity and the supply security risk could be mitigated.

• (500) With reference to the claim that the Union industry refused to enter into long term contracts that would have protected users from price fluctuation, the investigation did not find evidence of any of the market operators, including Chinese exporters or importers, would have been offering contracts where selling prices would have been fixed for a long term. This is also a rational choice in a situation where the prices of main raw materials fluctuate on the market.

• (501) Based on the replies by the users, it was found that, while the impact on the cost of intermediate downstream products could be higher, the product under investigation represented less than 5 % of the final products’ cost. Therefore, the impact of any anti-dumping duties on customers would be limited.

• (502) The Commission concluded that the measures will likely increase the production costs of the users. However, on medium/long term the improved supply security of the Union is likely to benefit also the users. Taking into account that the intended amount of duties will not have a prohibitive effect on the imports and only represents less than 5 % of the final products’ cost, the Commission concluded that the impact on the users will be limited and does not outweigh the positive effect on the Union industry.

• (503) Also, as the product under investigation represented less than 5 % of cost of the insulation materials, the Commission concluded that the measures would not have any significant adverse impact on the Union’s objectives for insulation and reducing the carbon emissions.

7.4.   Conclusion on Union interest

• (504) On the basis of the above, the Commission concluded that there were no compelling reasons that it was not in the Union interest to impose measures on imports of APE originating in China at this stage of the investigation.

8. PROVISIONAL ANTI-DUMPING MEASURES

• (505) On the basis of the conclusions reached by the Commission on dumping, injury, causation, level of measures and Union interest, provisional measures should be imposed to prevent further injury being caused to the Union industry by the dumped imports.

• (506) Provisional anti-dumping measures should be imposed on imports of certain alkyl phosphate esters originating in the People’s Republic of China in accordance with Article 7(2) of the basic Regulation. The Commission concluded that the appropriate level to remove injury should be the dumping margin.

• (507) On the basis of the above, the provisional anti-dumping duty rates, expressed on the CIF Union border price, customs duty unpaid, should be as follows:

Company	Provisional anti-dumping duty
Anhui RunYue Technology Co., Ltd.	45,1  %
Nantong Jiangshan Agrochemical & Chemicals Limited Liability Co.	68,4  %
Shandong Yarong Chemical Co., Ltd.	63,0  %
Other cooperating companies not sampled listed in Annex	59,1  %
All other companies	68,4  %

• (508) The individual company anti-dumping duty rates specified in this Regulation were established on the basis of the findings of this investigation. Therefore, they reflect the situation found during this investigation with respect to these companies. These duty rates are exclusively applicable to imports of the product concerned originating in the country concerned and produced by the named legal entities.

• (509) Imports of the product concerned produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, should be subject to the duty rate applicable to ‘all other companies’. They should not be subject to any of the individual anti-dumping duty rates.

• (510) To minimise the risks of circumvention due to the difference in duty rates, special measures are needed to ensure the application of the individual anti-dumping duties. The companies with individual anti-dumping duties must present a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(3) of this regulation. Imports not accompanied by that invoice should be subject to the anti-dumping duty applicable to ‘all other companies’.

• (511) While presentation of this invoice is necessary for the customs authorities of the Member States to apply the individual rates of anti-dumping duty to imports, it is not the only element to be taken into account by the customs authorities. Indeed, even if presented with an invoice meeting all the requirements set out in Article 1(3) of this regulation, the customs authorities of Member States must carry out their usual checks and may, like in all other cases, require additional documents (shipping documents, etc.) for the purpose of verifying the accuracy of the particulars contained in the declaration and ensure that the subsequent application of the lower rate of duty is justified, in compliance with customs law.

9. INFORMATION AT PROVISIONAL STAGE

• (512) In accordance with Article 19(a) of the basic Regulation, the Commission informed interested parties about the planned imposition of provisional duties. This information was also made available to the general public via DG TRADE’s website. Interested parties were given three working days to provide comments on the accuracy of the calculations specifically disclosed to them.

• (513) The exporting producer Nantong Jiangshan responded to the predisclosure and made four comments. First they notified the Commission about a change in the English spelling of their company’s name from what they previously used in their correspondence. The English name of the company was therefore updated in the Regulation.

• (514) Secondly they commented on the calculation of the normal value using the benchmarks from Brazilian import statistics, which are disclosed at the frontier level. However the Commission uses these import prices adjusted to account for transport costs to the factory and therefore would not use the benchmarks directly to calculate normal value.

• (515) Thirdly they commented on whether the SG&A added to the cost of manufacturing would result in the normal value including freight costs which had been removed from the export price. The Commission considered that the normal value does not include freight costs and therefore the normal value and export price were being compared at the same ex-works level.

• (516) Finally they noted that their dumping margin was higher than another sampled Chinese exporting producer, which does not fall under the scope of comments to be addressed at predisclosure.

• (517) No change to the dumping margin was necessary following analysis of their comments to the predisclosure.

• (518) The exporting producer Shandong Yarong asked the Commission to check their conversion of the price of ethyl alcohol per litre to the price per tonne.

• (519) The Commission confirms that it calculated the price per tonne as follows:

• — ethyl alcohol has a density less than 1, and therefore one cubic metre of ethyl alcohol weighs less than 1 tonne,

• — the price per cubic metre is therefore lower than the price per tonne, which is calculated by taking the price per cubic metre and dividing it by the density ⁹⁸.

• (520) No change to the dumping margin was necessary following analysis of their comments to the predisclosure.

• (521) The non-sampled Chinese exporting producer Zhejiang Wansheng requested a clerical change to their English name in the Annex to this Regulation and the change was made.

• (522) Several users responded to the predisclosure expressing their opposition against the imposition of measures and submitting comments on Union interest and on the product definition.

• (523) Since none of the comments raised any concerns regarding the accuracy of the calculations, the Commission will address these comments in the definitive stage.

10. FINAL PROVISION

• (524) In the interests of sound administration, the Commission will invite the interested parties to submit written comments and/or to request a hearing with the Commission and/or the Hearing Officer in trade proceedings within a fixed deadline.

• (525) The findings concerning the imposition of provisional duties are provisional and may be amended at the definitive stage of the investigation,

HAS ADOPTED THIS REGULATION:

Article 1

Company	Provisional anti-dumping duty	TARIC additional code
Anhui RunYue Technology Co., Ltd.	45,1  %	89AL
Nantong Jiangshan Agrochemical & Chemicals Limited Liability Co.	68,4  %	89AM
Shandong Yarong Chemical Co., Ltd.	63,0  %	89AN
Other cooperating companies not sampled listed in Annex	59,1  %
All other companies	68,4  %	8999

Article 2

Article 3

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

Article 1 shall apply for a period of six months.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 9 April 2024.

For the Commission

The President

Ursula VON DER LEYEN

http://jscc.sinopec.com/jscc/about_us/teammanagement/ (accessed on 29 January 2024).