Commission Implementing Regulation (EU) 2024/1896 of 11 July 2024 imposing a provisional anti-dumping duty on imports of certain polyvinyl chloride (PVC) originating in Egypt and the United States of America

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 7 thereof,

After consulting the Member States,

Whereas:

(1) On 15 November 2023, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of polyvinyl chloride (‘PVC’) originating in Egypt and the United States of America (‘the countries 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 2 October 2023 by the Polyvinyl Chloride Trade Committee (‘the complainants’). The complaint was made on behalf of the Union industry of PVC in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) Pursuant to Article 14(5a) of the basic Regulation, the Commission should register imports subject to an anti-dumping investigation during the period of pre-disclosure unless it has sufficient evidence within the meaning of Article 5 that the requirements either under point (c) or (d) of Article 10(4) are not met.

(4) The complainants did not request registration and the Commission found that the requirements under point (d) of Article 10(4) of the basic Regulation were not met. In addition to the level of imports which caused injury during the investigation period (‘IP’, see recital 32), there was no further substantial rise in imports thereafter.

(5) For the reasons set out in Section 4.4.1 below, the Commission decided to cumulate the imports from the countries concerned for the purpose of the analysis described in the recitals above. An analysis of the data extracted from the Comext Database of Eurostat and the data supplied by the cooperating exporting producers in the countries concerned showed that the cumulative volume of imports from the countries concerned decreased by 41 % in the first three full months (i.e. December 2023 to February 2024) after the initiation of the investigation as compared to the same months during the investigation period. Similarly, the average monthly imports from the countries concerned during the first three months after the initiation of the investigation were 19 148 tonnes compared to the average monthly imports of 27 450 tonnes during the investigation period. Therefore, the Commission did not make the imports of PVC subject to registration under Article 14(5a) of the basic Regulation during the period of pre-disclosure.

(6) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainants, other known Union producers, the known exporting producers, the authorities of Egypt and the United States of America (‘the USA’), known importers, suppliers and users, and traders about the initiation of the investigation and invited them to participate.

(7) Interested parties had an opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(8) In the Notice of Initiation, the Commission stated that it might sample the interested parties in accordance with Article 17 of the basic Regulation.

(9) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of production and sales. This sample consisted of three Union producers. The sampled Union producers accounted for 25 % of estimated production and 26 % of estimated EU sales volume of the like product. The Commission invited interested parties to comment on the provisional sample. The Commission did not receive any comment and the provisional sample was confirmed. The sample is representative of the Union industry.

(10) No unrelated importers provided the requested information or agreed to be included in the sample. The Commission therefore did not select any sample of importers.

(11) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in Egypt to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the Arab Republic of Egypt to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(12) Only one exporting producer in Egypt, TCI Sanmar Chemicals S.A.E. (‘TCI Sanmar’), provided the requested information and agreed to be included in the sample. Accordingly, the Commission decided that sampling was not necessary.

(13) On 7 December 2023, 15 days after the deadline for providing sampling information had expired, a second Egyptian exporting producer, Egyptian Petrochemical Company (‘EPC’), came forward and requested the Commission to participate in the proceeding as an interested party. Since it found that the participation of a second exporting producer was not likely to impede the timely completion of the investigation, the Commission responded favourably to the request of EPC.

(14) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in the United States of America to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the United States of America to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(15) Four exporting producers in the United States of America provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of two exporting producers on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of the country concerned were consulted on the selection of the sample. No comments were received on the selection of the sample.

(16) The two American non-sampled cooperating exporting producers signalled their intention to request individual examination under Article 17(3) of the basic Regulation. However, none of them provided a questionnaire reply and thus actual requests.

(17) The Commission received a number of comments from interested parties on initiation and reacting to other parties’ submissions.

(18) Following initiation, comments were received from the Government of Egypt, the Egyptian producer TCI Sanmar, the US producers Oxy Vinyls, LP and Westlake Corporation (‘Westlake’), a non-sampled Union producer Ercros, and two users, Rehau and Foamalite Ltd. (‘Foamalite’). The complainants also submitted comments rebutting the interested parties’ submissions.

(19) The Government of Egypt (‘the GoE’) and TCI Sanmar claimed that the complainants failed to provide a fair comparison between export price and the normal value and that the complaint did not contain sufficient evidence of dumping.

(20) The Commission disagreed. With regard to dumping, the Commission considered that the complaint included sufficient relevant evidence to initiate its investigation as the prima facie evidence pointed at dumping margins of 45,2 % for Egypt and 40,6 % to 59,4 % for the USA. Specifically, the complainants had based the export price on reasonable available information such as the Eurostat CIF average price of imports originating in Egypt into the EU and adjusted this to ex-works level, using reasonable estimates. By the same token, the normal value was established by the complainants on the basis of local prices reported by the market monitoring system ChemOrbis on the Egypt Local Price Index. Therefore, this claim was rejected.

(21) The Government of Egypt, Oxy Vinyls, LP, TCI Sanmar and Westlake questioned the injury analysis in the complaint as the Egyptian and US imports were not entering the Union at injurious volumes or prices and Union industry was healthy and performing well. The parties also considered that the concerns about a threat of injury was baseless.

(22) The complaint contained the evolution of the imports from the countries concerned in terms of quantities prices. The basic Regulation provides that the injury analysis shall take into account both the absolute level and the evolution of market share and prices during the period considered. The Commission considered that whereas the Union industry could have been healthy in the early part of the period considered, the complaint presented arguments why the situation deteriorated from end of 2022 and that no sufficient evidence was provided against the arguments presented in support of a possible threat of injury, in particular considering the structural overcapacity of exporters from the countries concerned.

(23) The Government of Egypt, Oxy Vinyls, LP and TCI Sanmar claimed that the causal link was not demonstrated and that there were other alternative causes of injury. Among other causes of injury, parties mentioned energy costs, force majeure, non-subject imports from Mexico and Norway, inflation, and the export performance of the Union industry. Rehau and Foamalite claimed that Union producers may have been responsible for their own injury due to the declaration of force majeure events that restricted the supply of the product to Union users below contracted volumes and that resulted in the search of other sources of PVC outside the Union by affected users.

(24) Ercros claimed that the causal link was demonstrated and highlighted that the price depression which affected the Union market and industry was largely and undoubtedly driven by the prices of Egyptian and US PVC, signalling 2021 as a turning point.

(25) The Commission considered that the complaint included sufficient elements to assess the causal link at that stage and that no substantive evidence had been provided to contradict the argumentation included in the complaint.

(26) Oxy Vinyls, LP claimed that Union producers have higher costs related to the high cost of compliance associated with numerous Union environmental and social endeavours.

(27) The Commission considered that this allegation could have some merits if the injury was observed during the whole period concerned, but the arguments failed to explain the sudden emergence of injury during the investigation period when the alleged dumped imports surged.

(28) Oxy Vinyls, LP and Westlake claimed that the complainants did not substantiate why the profit margin for the calculation of the underselling should be 15 %. Ercros by its part, argued that a healthy PVC Union industry requires a profit margin of 15 %. While the complainants, supported by Ercros, defended that a profit margin of 15 % was a normal profitability margin for the chemical sector, the Commission did not get evidence from other parties about which would be a reasonable profit margin that can be expected over the medium term in a cyclical industry such as PVC. The same US exporters also argued that the initiation may have been flawed because the complainants mistakenly used the EBITDA instead of the profit margin. The Commission noted that the 15 % profit margin was used in the calculations and that the complaint merely stated that this was the same percentage as the target% of EBITDA for the complainants. The Commission considered that from the comparison between different ratios in the complaint, it cannot be inferred that the complainants mistakenly used the EBITDA rather than the profit margin (3).

(29) Foamalite complained about the possible impact over its competitiveness if the Commission imposes anti-dumping duties as it competes with an entity located in Northern Ireland that would not have to pay these in its imports from the USA. The Commission found that the United Kingdom initiated an anti-dumping investigation on S-PVC from the USA on 8 January 2024 and dismissed the claim.

(30) The Commission sent questionnaires to the sampled Union producers, the two Egyptian exporting producers that had come forward and the sampled exporting producers in the USA. The Commission published a questionnaire for importers and users in the Notice of Initiation. Questionnaires were also made available to unrelated traders outside the Union (see recitals 48 and 73). The same questionnaires were made available online (4) on the day of initiation.

(32) The investigation of dumping and injury covered the period from 1 October 2022 to 30 September 2023 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2020 to the end of the investigation period (‘the period considered’).

(33) The product under investigation is the suspension polyvinylchloride (‘S-PVC’), not mixed with any other substance. The product concerned includes S-PVC only, it does not include emulsion polyvinylchloride (‘E-PVC’) (‘the product under investigation’).

(34) PVC is a manmade thermoplastic polymer. The primary raw material used in the production of PVC resins is Vinyl Chlorine Monomer (VCM) which is produced by the reaction of ethylene and chlorine to produce ethylene dichloride (EDC) and then transformed into VCM by thermal cracking. S-PVC is produced through suspension technology.

(35) PVC in its suspension form (S-PVC) is an industrial product used in a wide range of applications, for example in the manufacturing of pipes and fittings, films and foils, injection moulding and blow moulding.

(36) The product concerned is the product under investigation originating in Egypt and in the United States of America (‘USA’) (‘the countries concerned’), currently classified under CN code ex 3904 10 00 (TARIC codes 3904100015 and 3904100080). (‘the product concerned’).

(38) The Commission decided at this stage that those products are therefore like products within the meaning of Article 1(4) of the basic Regulation.

(39) As set out in recitals 12 and 13 above, two Egyptian exporting producers, TCI Sanmar and EPC, came forward in the investigation and provided questionnaire replies. EPC filed an incomplete questionnaire reply with essential parts missing. The Commission therefore informed EPC by letter of 16 January 2024 of its intention to apply Article 18 and base its findings on facts available for the missing information. In the same letter, it invited EPC to submit the missing information. However, EPC failed to do so, also after the Commission reiterated its request on 6 February 2024.

(40) During the on-spot verification at the premises of EPC, which took place from 3 to 6 March 2024, the Commission found further elements that led to the application of Article 18(1) of the basic Regulation.

(41) As EPC had failed to submit necessary information for the assessment of domestic prices, export prices and cost of production, and in accordance with Article 18(4) of the basic Regulation, by letter of 12 April 2024, EPC was informed of the reasons of the Commission’s intention to disregard the information provided and it was granted the opportunity to provide further explanations. For confidentiality reasons, the underlying details were sent only to EPC.

(42) On 17 April 2024, EPC opposed to the application of Article 18. EPC argued it was unaware of the antidumping case until 12 December 2023, that subsequently a deadline extension request was rejected by the Commission and that it was hence hindered to participate effectively in the verification process.

(43) EPC added that the Commission should (at least) consider the information related to export prices for the sake of determining dumping, as the Commission team verified the accuracy of all required documents (in relation to export prices) during the on-spot verification.

(44) Moreover, EPC felt that it provided full cooperation within its available capabilities and referred to Article 15 of the WTO Anti-Dumping Agreement, according to which special regard must be given by developed country Members to the special situation of developing country Members.

(45) The Commission disagreed with the comments made by EPC. As to EPC’s allegation of having been unaware of the investigation until 12 December 2023, the Commission recalls that the present investigation was initiated on 15 November 2023 by means of publishing a Notice of Initiation in the Official Journal of the European Union. On the same day, the Commission notified EPC and the Mission of the Arab Republic of Egypt directly on the initiation of the present investigation and invited EPC to take part in the sampling process.

(46) As regards EPC’s allegation it had provided full cooperation within its available capabilities and its reference to Article 15 of the WTO Anti-Dumping Agreement, the Commission noted that limited capabilities of any party cannot justify the absence of information necessary for the purpose of an accurate dumping margin calculation or the impossibility to cross-check the submitted data. Moreover, the Commission recalled that it had exceptionally accepted the participation of EPC in the investigation despite the facts that EPC had not completed the sampling form (see recital 13) and that it initially came forward outside the regular deadline to do so.

(47) Accordingly, the Commission provisionally disregarded the information provided by EPC and confirmed the use of facts available with regard to this exporting producer on the basis of Article 18(1) of the basic Regulation.

(48) According to information in the complaint, exports to the Union were made via unrelated traders, and the exporting producers were aware of the final destination of sales through these traders. The Commission requested and obtained from the two exporting producers the names and contact details of these traders. Seven unrelated traders, altogether accounting for more than 70 % of the total imports from Egypt during the investigation period, completed at least partly the questionnaire. According to the information provided, these traders re-sold the product concerned either to customers in the Union or to customers in third countries. None of them resold the product concerned to customers in Egypt.

(49) Except to confirm that no resales of the unrelated traders entered the domestic market in Egypt, the information provided by these traders was not necessary for the determination of dumping with regard to Egypt. TCI Sanmar demonstrated the final destination of these exports in their records, in particular based on available shipping documents.