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

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

Table 8

Average labour costs per employee

	2020	2021	2022	IP
Average labour costs per employee (EUR)	115 266	117 134	119 662	120 571
Index	100	102	104	105
Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.

• (145) The above table shows that average labour costs were relatively stable during the period considered. The sampled Union producers explained that labour costs are rigid and that most of their labour costs are not controlled by them as they are established by law, labour agreements, or contracts. For example, indexation of salaries is compulsory under Belgian law and the employers do not have the discretion to index or not the salaries or the timing of this indexation. Also, as regards the relatively high level of these costs, the Commission noted that the chemical industry is intrinsically dangerous, subject to shift work cycles and demanding work patterns, all factors that contribute to relatively high labour costs.

• (146) The Commission does not consider that the observed limited increase in average labour cost per employee questions the alleged injury stated in the complaint.

4.5.3.3.   Inventories

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

Table 9

Inventories

	2020	2021	2022	IP
Closing stocks (tonnes)	61 181	68 986	74 985	58 304
Index	100	113	123	95
Closing stocks as a percentage of production	5,20  %	5,92  %	6,77  %	6,06  %
Index	100	114	130	117
Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.

• (148) The sales of the like product present some seasonal effects common in the construction sector, its main user. Sales during the month of December are generally relatively low and producers commonly prioritise carrying out maintenance during this month. As a result of the seasonal effect in the month of December, the comparison of the level of stocks at the end of the investigation period in September 2023 with the closing stocks in December of the previous three years is not pertinent. The evolution of the closing stocks at year-end from 2020 to 2022 increased by 30 % in two years.

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

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

Table 10

Profitability, cash flow, investments and return on investments

	2020	2021	2022	IP
Profitability of sales in the Union to unrelated customers (% of sales turnover)	3,5	17,7	13,1	–2,6
Index	100	506	374	–74
Cash flow (EUR)	63 543 946	267 522 792	241 989 149	–13 993 872
Index	100	421	381	–22
Investments (EUR)	64 616 015	61 243 727	82 005 921	141 483 932
Index	100	95	127	219
Return on investments (%)	10	120	93	–26
Index	100	1 193	927	– 258
Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.

• (150) The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. The profitability during the first two years of the period considered is influenced by the economic circumstances created by the emergence of the COVID-19 pandemic in early 2020 and a subsequent non-ordinary recovery following vaccines rollout in the Union as well as fiscal stimulus. The Commission considers that the profitability levels obtained by 2020 and 2021 are affected by this overall economic context. The profitability obtained in 2022 was also affected by an energy crisis that emerged after the start of Russia’s war of aggression against Ukraine. However, in 2022 the sampled Union producers managed to pass the increase in costs to users in the Union, as the observed average EU industry sales price increased by 390 EUR/tonne, an amount even higher than the increase in costs of 387 EUR/tonne. Consequently, the profit in 2021 and 2022 in EUR/tonne was relatively stable (209 and 212 EUR per tonne respectively). The sampled producers experienced a downward trend during 2022 and became loss-making (– 2,6 %) in the investigation period. As indicated in recital 142, the impact of the surged dumped imports meant that the Union producers lost power over the pricing of the product which was influenced by the availability of S-PVC from the countries concerned at very low prices, leading to a situation of price suppression during the investigation period.

• (151) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow shows a downward trend from 2021 and a significant break point during the investigation period, when the cash flow is negative for the first time during the period considered. The sampled producers delayed some investments or postpone some non-essential maintenance during the investigation period, but these measures were not sufficient to avoid a negative cash flow.

• (152) Investments were relatively stable during 2020 and 2021 and experienced an upward break in 2022. There are different reasons why investments increased from 2022. The investments from 2022 were not triggered by any capacity expansion but rather by the need to reduce the carbon footprint and comply with other environmental and safety regulations, as well as a catching up effect as the sampled producers experienced obstacles to implement planned investments in 2020 due to the pandemic and in 2021 due to the demand that followed a strong economic recovery that stretched the operations. The three sampled producers operate from legacy sites that were designed at a time of laxer regulations and that require significant investments to keep up with new environmental and safety regulations. Also, the investments in operational chemical plants require long planning to the extent that the investments observed from 2022 were largely investments planned before 2020. Finally, the level of investment cannot be adjusted to actual production levels instead of theorical ones. The sampled producers have limited influence to align the investments to the actual capacity utilisation rates.

• (153) The return on investments is the profit in percentage of the net book value of investments. It developed negatively from 2021 and it shows a significant return of – 26 % in the investigation period. The sampled producers, as any producer of the like product, require large investments to operate. The sampled producers have legacy sites and the initial plants have been fully depreciated but regularly add new assets due to maintenance and turnover costs in addition to purely new investments. The sampled producers do have limited flexibility to operate with a lower level of assets.

• (154) The sampled Union producers’ ability to raise capital in the current economic context is doubtful due to the low profitability and regulatory uncertainty. However, this ability in any case would be hypothetical as the sampled producers are part of larger groups and rely more on internal sources rather than on external ones. Thus, the Commission looked into the possibility of attracting resources from their groups. All sampled Union producers confirmed similar difficulties to benefit from reallocation of resources at group level. The three producers explained different impacts of this trend such prioritising investments in other regions of the world, not addressing bottlenecks in the production process, extraordinary ongoing budgetary cuts, and others. The Commission considers that this situation may be associated also with other factors, but noted that the alleged dumped imports from the countries concerned have contributed to this negative investment climate environment and added uncertainty about the future prospects of the industry.

4.5.4.   Conclusion on injury

• (155) The main macro-indicators showed a negative trend during the period considered: Union production volume dropped by 22 %, capacity utilisation by 24 %, Union sales volume by 28 % and productivity by 20 %.

• (156) A similar picture can be drawn as the regards the micro-indicators. Profitability of sales in the Union was positive from 2020 to 2022 but the industry became loss-making in the investigation period. Similarly, cash flow that has been positive from 2020 to 2022, became negative in the investigation period. Year-end closing stocks as a percentage of production increased from 2020 to 2022, when the impact from high imports from the countries concerned was already evident.

• (157) Egyptian and US exporters’ import volumes multiplied eight times over the period considered. In a context of a decrease in annual consumption by 729 110 tonnes in the period considered, annual imports from the countries concerned increased by 288 405 tonnes, which resulted in Egyptian and US exporters increasing their combined market share from 1 % in 2020 to 10 % in the investigation period as their prices significantly undercut the Union industry’s prices from 2022 and specially during the investigation period. During the investigation period, the undercutting margin was on average 31,7 % for imports from the USA and 28,9 % for imports from Egypt, as set out above in Section 4.4.3).

• (158) The low-priced Egyptian and US dumped imports also caused significant price suppression for the Union industry. As a result, the Union industry was unable to sell at prices covering their cost of production and became loss-making in the investigation period.

• (159) While net investments increased by 119 %, the return on investment became negative during the period considered, from 10,1 % in 2020 to – 26,1 % in the investigation period. The cash flow also became negative, which affected the ability of the Union industry to self-finance its operations. Even though the number of employees decreased during the same period by 3 %, the productivity decreased by 20 %, resulting in a higher labour cost per tonne of PVC.

• (160) As set out above, financial indicators such as profitability, cash flow and return on investment deteriorated significantly during the period considered. This negatively affected the ability of the Union industry to self-finance operations, to make necessary investments and to raise capital, thus impeding its growth and even threatening its survival.

• (161) 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

• (162) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the countries 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 countries concerned was not attributed to the dumped imports. These factors are: economic contraction and the weak market dynamics, impact of force majeure events and unprofitable export sales.

5.1.   Effects of the dumped imports

• (163) The import quantities from the countries concerned during the period considered increased by 8 times, from 40 989 tonnes in 2020 to 329 904 tonnes in the investigation period. This steep increase, as explained in recital 157, coincided with a relatively weak domestic market that had difficulties to absorb the dumped imports.

• (164) As a result, in the period considered, the combined market share of the countries concerned increased from 1 % to 10 %. Meanwhile, the market share of the Union industry decreased continuously from 91 % for 2020 to 80 % for the investigation period.

• (165) While 2020 was impacted by the COVID pandemic and 2021 was influenced by a strong economic recovery, the effects of the dumped imports became more noticeable as from 2022 when the imports from the countries concerned increased by 161 % and their market share by 220 % in comparison with 2021.

• (166) In 2022, the year when imports from the countries concerned surged, they were prices much below the average sale price of the sampled Union producers.

• (167) The increased quantity of imports from the countries concerned combined with their low average sales prices had a negative impact on the Union industry’s financial situation.

• (168) The impact of the increased quantities of dumped imports from the countries concerned was fully visible during the investigation period when the Union industry’s financial situation deteriorated significantly. The Union industry was unable to increase its sales prices in order to pass on to customers the increasing cost of raw materials (in particular energy costs) because it faced unfair competition from imports of the product concerned. The Union industry’s strategy was to mitigate losses in production volumes and market share by reducing prices in detriment of its profitability. Indeed, from being profitable in the previous years, the Union industry became loss-making (– 3 %) in the investigation period. Therefore, the low-priced imports from the countries concerned prevented price increases by the Union industry within the meaning of Article 3(3) of the basic Regulation and thus caused price suppression.

• (169) Moreover, cash flow and return on investment also became negative. In the investigation period, the sampled Union producers had a negative cash flow of EUR 14 million and a return on investment of – 26,1 %.

• (170) 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 the countries concerned 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

5.2.1.   Imports from third countries

• (171) The volume of imports from other third countries developed over the period considered as follows:

Table 11

Imports from third countries

Country		2020	2021	2022	IP
Mexico	Volume (tonnes)	142 867	161 713	160 261	129 496
	Index	100	113	112	91
	Market share	4 %	4 %	4 %	4 %
	Average price (EUR/tonne)	703	1 214	1 538	954
	Index	100	173	219	136
Norway	Volume (tonnes)	67 067	92 360	54 769	46 300
	Index	100	138	82	69
	Market share	2 %	2 %	2 %	1 %
	Average price (EUR/tonne)	839	1 313	1 719	1 356
	Index	100	156	205	162
South Korea	Volume (tonnes)	2 335	11 792	23 891	50 703
	Index	100	505	1 023	2 171
	Market share	0 %	0 %	1 %	2 %
	Average price (EUR/tonne)	1 278	1 534	1 686	969
	Index	100	120	132	76
United Kingdom	Volume (tonnes)	47 801	17 212	14 314	16 309
	Index	100	36	30	34
	Market share	1 %	0 %	0 %	1 %
	Average price (EUR/tonne)	836	1 088	1 449	1 224
	Index	100	130	173	146
Other third countries	Volume (tonnes)	57 711	122 261	90 254	79 397
	Index	100	212	156	138
	Market share	1 %	3 %	2 %	2 %
	Average price (EUR/tonne)	721	1 493	1 452	959
	Index	100	207	201	133
Total of all third countries except the countries concerned	Volume (tonnes)	317 781	405 338	343 489	322 205
	Index	100	128	108	101
	Market share	8 %	9 %	9 %	10 %
	Average price (EUR/tonne)	759	1 324	1 551	1 029
	Index	100	174	204	136
Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.

• (172) During the period considered, the only other third countries from which significant volumes of PVC were imported into the Union were Mexico, Norway, South Korea and the United Kingdom.

• (173) Overall, all third countries except the countries concerned presented in the investigation period a stable volume with a market share that has remained between 8 % and 10 % over the period considered. In addition, their prices are also more aligned with the prices of the sampled Union producers with an average import price for 2022 of 1 551 EUR/tonne which is practically identical to the one of the sampled Union producers of 1 566 EUR/tonne. In the investigation period, the average import price of 1 029 EUR/tonne is lower than the price per tonne for the sampled Union producers, EUR 1 134. Nevertheless, the volumes imported in the Union decreased by 6 % in the investigation period, which suggests that importers were trying to preserve market share in a contracting market rather than expanding it.

• (174) The Commission notes that there has been no surge in imports and that the market share of third countries other than the countries concerned remained relatively stable. The major changes observed have been a reshuffle of the origin of these other imports, with some countries reducing their exports to the Union due to structural or strategic reasons such as Norway, Russia and the United Kingdom, while others such as South Korea occupying the space left.

• (175) In light of the above and in view of the large import volumes at low prices from the countries concerned as compared with those from other third countries, the Commission provisionally concluded that imports from other third countries did not attenuate the causal link between the injury suffered by the Union industry and the dumped imports from the countries concerned.

5.2.2.   Export performance of the Union industry

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

Table 12

Export performance of the Union producers

	2020	2021	2022	IP
Export volume of Union producers (tonnes)	1 494 677	1 227 548	1 120 519	1 101 408
Index	100	82	75	74
Average price of Union producers (EUR/tonne)	822	1 414	1 509	1 075
Index	100	172	184	131
Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.

• (177) The exports of the Union producers in 2020 were at the highest level of the period considered with 1 494 288 tonnes and decreased by 18 % in 2021. In 2022 exports continue to decrease but at a lower rate and then remained relatively stable in the investigation period.

• (178) The average export price of the Union’s producers was also very volatile with a strong increase in 2021, a limited increase in 2022 and finally a sudden drop in the export price in the investigation period. As a result, in the investigation period the Union industry was exporting at prices that the Commission considered to be below the estimated cost of production.

• (179) Following the claims made by Westlake, Oxy Vinyls, LP and TCI Sanmar, the Commission examined the export performance of the sampled Union producers by comparing the price gap between the export price and their domestic price (both with unrelated customers).

• (180) During the period considered the Union industry had spare capacity and exported S-PVC but there was no redirection of sales from the Union to export markets. In this regard, during the investigation period, the average export price of the sampled producers was slightly higher than the average export price of the countries concerned to the Union, an indication of some degree of competitiveness. In addition, the sampled Union producers were exporting at prices below full manufacturing cost (due to overheads) but above the variable cost (mainly energy and raw materials). Thus, maintaining exports during the investigation period contributed to the overall margin and helped the Union producers to keep the safety and smooth running of the lines by producing above the technical minimum level.

• (181) The Commission noted that the producers from the countries concerned normally make use of traders to sell their product in foreign markets. The same traders that sell dumped S-PVC in the Union are active in the largest Union export markets. In this regard, the traders that are selling the dumped PVC in the Union are also operational in the Union’s traditional export markets which also explains the challenges faced by the Union industry from 2022 to maintain export markets.

• (182) Union exports to the United Kingdom were down by 106 528 tonnes in the investigation period (from 2022), that is a reduction of 37 %. The comparison of the investigation period with the prior 12-month period shows a reduction of 120 668 tonnes, or 40 %. The United Kingdom announced the opening of an anti-dumping investigation on S-PVC originating in the USA on 8 January 2024 which is a strong indication of a unfair trade practices in the second largest Union exports market. Exports to Switzerland were down by 10 027 tonnes in the investigation period (from 2022), that is a reduction of 22 % (the comparison of the investigation period with the prior 12-month period shows a reduction of 17 460 tonnes or 33 %). The Commission also found that traders have exported US produced S-PVC to Switzerland at a price below normal value.

• (183) Notwithstanding the impact of competing in the same markets with dumped imports, the Commission does not consider that the performance in exports markets had an isolated impact per se capable of attenuating the causal link between the dumping practices by the countries concerned and the material injury suffered by the Union industry. The Commission found that exports as a percentage of domestic sales were similar in 2020 and in the investigation period at around 42-43 %. Also, exports as a percentage of Union production were also very similar in 2020 and in the investigation period at around 30 %.

• (184) The Commission concludes that the decline in exports had an effect on the performance of the Union producers which, however, cannot be isolated from the aggressive pricing to third countries set by traders working with the producers from the countries concerned. Union producers reduced their exports in the period considered, although the main decrease happened in 2021, well before the investigation period. Thus, the export performance of Union producers during the investigation period cannot be explained only by volumes, but rather by prices. This pressure on export prices cannot be isolated from the dumped exports originating in Egypt and the USA which were also competing on those markets.

5.2.3.   Overcapacity in the PVC industry

• (185) PVC is a cyclical industry as recognised by the complainants, sampled Union producers and Egyptian and US exporters in their submissions and comments. The worldwide PVC industry has a significant overcapacity as its capacity has systematically exceeded global demand during the last years on the basis of estimates provided by the complainants and market intelligence.

• (186) This overcapacity is structural and explained by the difficulties of escalating capacity to cope with surged demands. Thus, the industry is prepared to absorb demand peaks over the economic cycle with a long-term perspective.

• (187) The PVC Union industry has not increased its capacity over the period considered, except for a limited expansion by one Union producer that activated one line of production that had been transferred from a site with three lines that it had closed before the period considered. The Commission concluded that this apparent capacity increase is therefore explained by a timing impact, as the closure was executed before the period considered. The Commission concluded that this Union producer had demonstrated the rationale of such decision that aimed at ensuring greater efficiency by reducing the number of production sites, adjusting downwards its overall capacity and optimising its operations.

• (188) The capacity utilisation rate of the Union industry in 2020 and 2021 was above 90 %, and it was only when the dumped imports surged that the capacity utilisation rate dropped to 74 % in 2022 and 69 % in the investigation period.

• (189) The Commission concluded that the possible structural overcapacity of the PVC industry, globally and in the Union, may have an influence in the market dynamics and may underline the rationale of dumped exports, but it does not consider that this is a factor that breaks or attenuates the causal link. This is because, during the period concerned, the Union producers have not increased capacity at any meaningful extent. Certainly, overcapacity seems to be the norm in the chemical industry and the Union PVC industry does not deviate from the dynamics existing in other markets, including the ones of the countries concerned. Also, the relatively high level of overcapacity of the Union industry in the investigation period was the direct result of the surge in dumped imports and the temporary economic contraction that is considered separately.

• (190) In light of the above, the Commission considered that the current relatively high level of overcapacity of the Union industry was the result of the recent market circumstances and the dumped imports and therefore was not, in itself, an element capable of attenuating the causal link. The recent market circumstances were examined separately.

5.2.4.   Energy crisis in the Union

• (191) A number of interested parties alleged that the Union industry had suffered because of the high energy prices that have eroded the competitiveness of the Union industry. According to these comments, there appeared to be a correlation between the costs of raw materials and energy prices in Europe and the performance of the Union producers, claiming that other countries avoided them as they were explained by conflicts in close proximity to the Union.

• (192) The complainants acknowledged that between the period beginning mid-2021 and ending late-2022, Europe experienced an acute energy crisis, but reiterated that this crisis does not attenuate or break the causal link between the dumped imports originating in Egypt and the USA and the injury suffered by the Union industry. The complainants stated that the energy crisis ended in late-2022 and that the fact that despite the significant drop in energy prices, the state of Union industry has not improved since, is a strong indication that the energy crisis did not have a major effect over the injury.

• (193) The Commission noted that when the energy prices were at the highest levels in 2021 and 2022 the sampled Union producers were obtaining the largest profits over the period considered. Moreover, the Union industry injury became visible when the energy crisis had already subdued, and the energy prices had decreased. Actually, before the imports at low prices from the countries concerned increased in the investigation period (multiplying by three the quantities of the prior 12 months), the industry was still able to pass on the increased energy costs in its prices. This was no longer possible when the surge of low-priced imports causing price suppression to take place.

• (194) Therefore, the Commission concluded that the energy crisis experienced in the Union did not explain the evolution observed in the investigation period and therefore do not break or attenuate the causal link.

5.2.5.   Economic contraction, market dynamics

• (195) The demand on the Union market over the period considered reached its highest level in 2021 and suffered a correction immediately after with the demand dropping 18 % in 2022. Compared with 2020, the demand in 2022 was 8 % lower.

• (196) The demand continued to drop during the investigation period, when the estimated demand reached 3 223 316 tonnes, or 18 % less than the demand in 2020.

• (197) The main reason for the weak demand of PVC in the Union was neither its price nor the existence of alternative products. Instead, the relatively low demand is explained by the combination of high inflation and borrowing costs which had an impact on the economy in general and constrained the demand of the construction sector, that is, the main market for PVC. This was recognised by complainants but also by exporters from the countries concerned.

• (198) The impact of higher inflation and interest rates was transmitted upstream to the PVC industry with some delay due to the long lead times traditionally associated with the construction sector. That meant that it took some time before the effects of higher borrowing costs and construction costs were reflected in construction output volumes, even more in building material production such as the manufacturing of pipes, doors and windows made of PVC. The cyclicality of the construction sector is widely known, and the current low demand is unlikely to continue once inflation and interest rates do down and demand for investment goods go up.

• (199) Westlake claimed that this low demand reflected shifting consumption. The Commission considered that this is mere speculation, as there is no evidence that the low demand resulted from shifting consumption and that is not a temporary impact of the high interest rates and inflation. On the contrary, European Green Deal related policies to support energy renovation of existing buildings such as the reviewed Energy Performance of Buildings and Energy Efficiency directives, shall increase the demand for PVC-made windows and doors as PVC is a natural insulator.

• (200) Therefore, the Commission concluded that the economic contraction and the associated low market demand experienced in the Union during the investigation period had a limited impact that does not break or attenuate the causal link.

5.2.6.   Force majeure

• (201) The Commission had received comments from certain interested parties on the effect of force majeure events over the situation of the Union industry.

• (202) The Commission enquired all force majeure events declared during the period considered by sampled Union producers and examined the responsibility and the actions taken by the producers.

• (203) The Commission found that most of the force majeure events took place early in the period considered, that is 2020 and 2021, and thus, cannot explain the injury shown in the investigation period after the surge of dumped imports from the second half of 2022. In this regard, the Commission did not find arguments to sustain that without the relatively high number of force majeure events in 2020 and 2021, the industry would be in a better position during the investigation period. It was only when the prices of the imports from the countries concerned significantly undercut Union prices starting in mid-2022 that the Union industry suffered the injury.

• (204) The Commission also found evidence that the declaration of force majeure events was not coordinated in a systematic manner, as alleged by interested parties. For example, in the year one sampled Union producer declared force majeure, its related Union producer increased its production to a level above its theoretical capacity. This instance contradicts the allegation that the declaration sought to avoid serving some customers.

• (205) The Commission also found that during the year that Rehau was affected by a force majeure event from one of the sampled Union producers, the producer nevertheless managed to serve Rehau more than 100 % of the contracted amount, even though it did not manage to serve all additional quantities demanded. Even if this is anecdotal evidence, the Commission reiterates that it did not find any evidence of the sampled Union producers deliberately using force majeure events for avoiding serving the committed amounts or to restrict production seeking to higher domestic prices.

• (206) Thus, the Commission concluded that the declaration of force majeure events did not have an impact over the injury.

5.3.   Conclusion on causation

• (207) A causal link was established between the dumped imports from Egypt and the USA on one hand and the injury suffered by the Union industry on the other. There was a coincidence in time between the sharp increase in volume and market share of the dumped imports at lower prices and the worsening of the Union’s performance. In a relatively weak market, the increased volume of dumped imports eroded the capacity of the Union industry to set prices that would recover its costs of production, thereby clearly pointing to the existence of price suppression. This resulted in a loss-making situation during the investigation period.

• (208) The Commission examined other possible factors that may have had an impact on the situation of the Union industry: export performance, the alleged overcapacity of the Union industry, the energy crisis in the Union, the declaration of force majeure events, the economic contraction in the Union and the relatively weak market. The Commission distinguished and separated the effects of these factors on the situation of the Union industry from the injurious effects of the dumped imports.

• (209) The export performance of the Union industry cannot explain the observed injury suffered by the Union industry in the investigation period. Firstly, in volumes, the Union exports during the investigation period were equivalent to 29 % of the Union production, virtually the same percentage, 30 %, observed in 2020. Secondly, the main decrease in exports was observed in 2021, when export quantities decreased by 18 %, and 2022 when export quantities further decreased by 9 %. However, the profitability of the Union industry was at the highest level in 2021 and 2022.

• (210) The effect of the overcapacity of the PVC industry in the Union was found not to have caused injury during the investigation period as the capacity has remained stable during the period considered. Similarly, the effect of the energy crisis and the associated higher energy prices have not been found to have caused the observed injury in the investigation period as at that time the energy crisis had subdued.

• (211) The claim made by interested parties that the injury had also been caused by the declaration of force majeure events by the Union industry was not supported by the facts found by the Commission.

• (212) Finally, the economic contraction and the resulting weak market demand has affected the Union industry in a limited way but without breaking the causal link. On the contrary, the weak market demand has aggravated the injury caused by the dumped imports as the Union industry did not have margin to absorb larger volumes of dumped imports without reducing prices to preserve some market share.

• (213) In summary, the Commission concluded that only the economic contraction and the resulting weak demand during the investigation period had a limited impact on the Union industry. However, this factor could not break the causal link between dumped imports and the material injury found to the Union industry. The dumped imports remained the main cause of injury for the following reasons: as set out in recital 110, the market share of imports from the countries concerned increased by ten times during the period considered, while imports from other countries remained stable.

• (214) On the basis of the above, the Commission concluded at this stage that the dumped imports from the countries 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 of reduced market share, production, production capacity utilisation, productivity, profitability, closing stocks, cash flow and return on investments. Furthermore, as explained above in recital 117, the Union industry suffered price suppression caused by imports from the countries concerned,

6. LEVEL OF MEASURES

• (215) To determine the level of the measures, the Commission examined whether a duty lower than the margin of dumping would be sufficient to remove the injury caused by dumped imports to the Union industry.

6.1.   Injury margin

• (216) 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.

• (217) 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 countries 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 %.

• (218) As a first step, the Commission established a basic profit covering full costs under normal conditions of competition. The Commission found that the profitability of unrelated sales in the Union in 2021, the year that preceded the surge in imports from the countries concerned, was 17,7 %. This profitability was above the profitability observed in 2020 of 3,5 %. The Commission considers that neither 2020 nor 2021 were ordinary years for the purpose of finding a reference profit margin. 2020 was a year affected by the emergence of the COVID pandemic in the Union which had a strong negative effect over the Union industry. In the same manner, 2021 cannot be considered as an ordinary reference year as the Union benefitted from a strong economic recovery.

• (219) For that reason, the Commission found that the best possible reference period would be 2022. Year 2022 was partly affected by the surge of dumped imports at the end of the year, but the effects are relatively small and using it as a reference is therefore a conservative approach. Thus, the Commission considered that a profit margin of 13,1 % should be used for its calculations.

• (220) In this basis, the non-injurious price falls within the range of 1 350 to 1 450 EUR/tonne, resulting from applying the above-mentioned profit margin of 13,1 % to the cost of production during the investigation period of the sampled Union producers.

• (221) 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). Based on the evidence available from sampled Union producers, estimations on expected production utilisation rates and forecasted prices of emission trading allowances, the Commission calculated an additional cost of 16,44 EUR/tonne which was established in addition to the observed costs of compliance during the investigation period. This difference was added to the non-injurious price mentioned in recital 220.

• (222) On this basis, the Commission calculated a non-injurious price of 1 405,48 EUR/tonne for the like product of the Union industry by applying the above-mentioned target profit margin (see recital 219) to the cost of production of the sampled Union producers during the investigation period and then adding the adjustments under Article 7(2d) on a type-by-type basis.

• (223) The Commission then determined the injury margin level on the basis of a comparison of the weighted average import price of the sampled cooperating exporting producers in the countries concerned, as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the sampled 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. For EPC, the Commission made use of the facts available and established the injury margin on the basis of the same transactions for TCI Sanmar that it used to determine its dumping margin (similarly to the way the dumping margin was established, see recital 70).

• (224) 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 (see recital 71).

6.2.   Conclusion on the level of measures

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

Country	Company	Dumping margin (%)	Injury margin (%)	Provisional anti-dumping duty (%)
Egypt	Egyptian Petrochemical Company	109,5	100,1	100,1
	TCI Sanmar Chemicals S.A.E.	86,1	74,2	74,2
	All other companies	109,5	100,1	100,1
USA	Formosa Plastics Corporation	70,3	90,6	70,3
	Westlake Chemicals	58,0	87,2	58,0
	Other cooperating companies	62,1	88,3	62,1
	All other companies	77,0	90,6	77,0

7. UNION INTEREST

• (226) Having decided to apply Article 7(2) of the basic Regulation, the Commission examined whether it could clearly conclude that it was 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. 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

• (227) PVC is a basic industrial product that offers many possible applications. Having a healthy PVC industry is essential for the Union due to its linkages with several downstream industries. PVC is used in a wide range of products, from water pipes, windows, credit cards and electric cables.

• (228) Imports of PVC cannot replace the Union industry production without collateral effects. As indicated in the complaint, the PVC industry is very important within the wider chemical industry. If the Union industry reduces its production, this would imply less demand for key feedstock such as ethylene and chlorine. PVC represents about 30 % of chlorine use in the Union, any reduction in the production of PVC will thus be translated to the ‘Chlor-Alkali process’ and may impact the availability of chlorine, caustic soda and hydrogen.

• (229) While the Commission dismissed the claim made by Westlake to consider the revenues and profits made from sales of caustic soda in the injury assessment as the two are two stand-alone industries, the Commission recognised the importance of PVC in the wider chemical industry and in particular in the ‘Chlor-Alkali process’.

• (230) Imposing anti-dumping duties on S-PVC imports from Egypt and the USA would provide certainty to the Union industry that will translate into stable sale volumes in the Union. This certainty would also benefit the wider chemical industry for the reasons stated above. Moreover, it would eliminate the impact in terms of price depression so not only the Union industry would benefit from more stable volumes but it would also have less uncertainty about the chances of covering its costs.

• (231) The PVC Union industry provides well-remunerated, qualified jobs in the Union, imposing anti-dumping duties would protect about 4 000 direct jobs and a multiple of indirect jobs in the wider chemical industry.

• (232) The Commission concluded that it was in the interest of the Union industry to impose anti-dumping duties.

7.2.   Importers

• (233) The Commission did not receive responses from Union importers with the dedicated questionnaire. There were a number of importers that provided partial information in support of exporters from Egypt and the USA, but this information was not sufficient to assess the interest of these importers.

• (234) The Commission nevertheless recognised that by imposing anti-dumping duties in S-PVC originating in Egypt and the USA, importers of this material may be confronted with lower sales of S-PVC at an early stage. However, importers would still be able to trade with other chemical products and with S-PVC produced in other countries which may became more competitive once the dumped imports from the countries concerned stop.

• (235) The Commission concluded that it is likely that the imposition of anti-dumping duties on S-PVC originating in Egypt and the USA will not have a permanent impact over the profitability of traders.

7.3.   Users

• (236) Three users of S-PVC in the Union contacted the Commission and provided the required questionnaire reply, Rehau Industries SE & Co (Rehau), Foamalite and Granzplast. Rehau and Foamalite claimed that it was not in the interest of users in the Union to impose anti-dumping duties due to the likely impact in terms of higher prices and greater power for the Union industry.

• (237) Granzplast, provided information about its purchases of S-PVC which permitted the Commission to estimate the eventual impact of duties over its full costs.

• (238) Rehau requested a hearing with the Commission that was held on 24 April 2024. The hearing was done jointly with the related Swiss trader Meraxis AG.

• (239) As regards users’ concerns, the Commission noted that the PVC industry in the Union includes twelve producers and that the characteristics of the product make the market extremely competitive. In the same manner that users were able to benefit from the supply at dumped prices of S-PVC from Egypt and the USA, users would still be able to replace one Union supplier by others in order to seek more competitive prices, notably due to the large number of Union producers.

• (240) The Commission also estimated that the overall impact over the costs of users would be reasonably limited as their purchases of S-PVC from the countries concerned represent a percentage over their total costs of 5 % to 10 %. This limited impact over their costs should be considered together with the benefits that a healthy Union PVC industry with several suppliers would provide.

• (241) Finally, the Commission recognised that the availability of S-PVC from the countries concerned had benefited users due to the price depression effect in the market from 2022. However, this has resulted in a situation in which the Union industry is loss-making which is not in the long-term interest of users as this may curtail competition in the Union market by reducing the number of producers which can continue to operate in these circumstances.

7.4.   Conclusion on Union interest

• (242) 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 S-PVC originating in the Egypt and the USA at this stage of the investigation.

8. PROVISIONAL ANTI-DUMPING MEASURES

• (243) 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.

• (244) Provisional anti-dumping measures should be imposed on imports of S-PVC originating in Egypt and the USA, in accordance with the lesser duty rule in Article 7(2) of the basic Regulation. The Commission compared the injury margins and the dumping margins (see recital 225). The amount of the duties was set at the level of the lower of the dumping and the injury margins.

• (245) 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:

Country	Company	Provisional anti-dumping duty (%)
Egypt	Egyptian Petrochemical Company	100,1
	TCI Sanmar Chemicals S.A.E.	74,2
	All other companies	100,1
USA	Formosa Plastics Corporation	70,3
	Westlake Chemicals	58,0
	Other cooperating companies	62,1
	All other companies	77,0

• (246) 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 countries concerned and produced by the named legal entities. 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.

• (247) 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’.

• (248) 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.

• (249) Should the exports by one of the companies benefiting from lower individual duty rates increase significantly in volume after the imposition of the measures concerned, such an increase in volume could be considered as constituting in itself a change in the pattern of trade due to the imposition of measures within the meaning of Article 13(1) of the basic Regulation. In such circumstances and provided the conditions are met an anti-circumvention investigation may be initiated. This investigation may, inter alia, examine the need for the removal of individual duty rate(s) and the consequent imposition of a country-wide duty.

9. INFORMATION AT PROVISIONAL STAGE

• (250) In accordance with Article 19a 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.

• (251) The Egyptian exporting producer TCI Sanmar claimed that the Commission should use in the relevant calculations a higher CIF EU border price, which would result in a lower underselling margin. In the same context, a trader margin should be added to the ex-works export price to arrive at a correct CIF EU border price.

• (252) The Commission examined the claim but considered that it did not concern the accuracy of the calculations. Therefore, the Commission will consider it, together with all other submissions, after the publication of provisional measures.

• (253) The US exporting producer Formosa Plastics Corporation submitted comments on the pre-disclosure, where it requested the Commission to revise the methodology to determine the SG&A expenses.

• (254) The Commission examined the comments in detail. One of the comments concerned the accuracy of the calculation and the SG&A calculation was therefore amended, whereas the other comments did not relate to the accuracy of the calculation. Those comments will therefore be considered, together with all other submissions, after the publication of provisional measures.

10. FINAL PROVISION

• (255) 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 within a fixed deadline.

• (256) 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

Country of origin	Company	Provisional anti-dumping duty	TARIC additional code
Egypt	Egyptian Petrochemical Company	100,1  %	89BA
	TCI Sanmar Chemicals S.A.E.	74,2  %	89BB
	All other imports originating in Egypt	100,1  %	8999
USA	Formosa Plastics Corporation	70,3  %	89BC
	Westlake Chemicals	58,0  %	89BD
	Oxy Vinyls, LP	62,1  %	89BE
	Shintech Incorporated	62,1  %	89BF
	All other imports originating in the United States of America	77,0  %	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, 11 July 2024.

For the Commission

The President

Ursula VON DER LEYEN

ELI: http://data.europa.eu/eli/reg_impl/2024/1896/oj

ISSN 1977-0677 (electronic edition)