Commission Implementing Regulation (EU) 2024/1923 of 10 July 2024 imposing a provisional anti-dumping duty on imports of titanium dioxide originating in the People’s Republic of China

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 13 November 2023, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of titanium dioxide (‘TiO2’), originating in the People’s Republic of China (‘the country concerned’, ‘China’ or ‘the PRC’) 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 29 September 2023 by the European Titanium Dioxide Ad Hoc Coalition (‘the complainant’). The complaint was made on behalf of the European Union (‘the Union’) industry of TiO2 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) The Commission made imports of the product concerned subject to registration by Commission Implementing Regulation (EU) 2024/1617 (3) (‘the registration Regulation’).

(4) In the Notice of Initiation, the Commission invited interested parties to participate in the investigation. In addition, the Commission specifically informed the complainant, Union producers, the known exporting producers and their representative associations, the authorities of the People’s Republic of China, known importers, traders and users about the initiation of the investigation and invited them to participate.

(5) 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.

(6) Several parties submitted comments on initiation. These concerned the product scope, alleged injury suffered by the Union industry, target profit used in injury calculations, causal link, union interest. All of those comments are addressed below in the relevant sections of this Regulation.

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

Sampling of Union producers

(8) 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 volumes taking it account the geographical location of the companies. This sample consisted of three Union producers. The sampled Union producers accounted for 50 % of the total production in the Union and 65 % of the sales volume to unrelated customers in the Union. The Commission invited interested parties to comment on the provisional sample. No comments were received on the sample of Union producers The sample is representative of the Union industry.

Sampling of unrelated importers

(9) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation.

(10) One unrelated importer provided the requested information and agreed to be included in the sample. In view of the low number of replies, the Commission decided that sampling was not necessary.

Sampling of exporting producers in the PRC

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

(12) Twenty-nine exporting producers in the PRC 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 seven companies belonging to two separate corporate groups on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available.

(13) In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned, and the authorities of the PRC were consulted on the selection of the sample. No comments were received on the sample.

(14) Two exporting producers in the PRC indicated their interest in requesting individual examination under Article 17(3) of the basic Regulation. However, the requesting producers did not fill out the dedicated questionnaire for the exporting producers within the deadline specified in the Notice of initiation. Therefore, no requests for individual examination were ultimately received.

(15) The Commission sent questionnaires to the sampled Union producers, the sampled exporting producers in China, the known importers and users. The same questionnaires were made available online (4) on the day of initiation.

(16) The Commission sent also a questionnaire concerning the existence of significant distortions in the PRC within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of the People’s Republic of China (‘GOC’).

(17) Furthermore, the complainant provided in the complaint sufficient prima facie evidence of raw material distortions in the PRC regarding the product concerned. Therefore, as announced in the Notice of Initiation, the investigation covered those raw material distortions to determine whether to apply the provisions of Article 7(2a) and 7(2b) of the basic Regulation with regard to the PRC. For this reason, the Commission sent additional questionnaires in this regard to the GOC.

(18) The Commission received questionnaire replies from the three sampled Union producers, the two sampled groups of Chinese exporting producers and six users. The Commission did not receive the questionnaire reply from the GOC.

(20) 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’).

(21) The product subject to this investigation is titanium dioxide, having the chemical formula TiO2, in all forms, as titanium oxides or in pigments and preparations based on titanium dioxide, containing a minimum of 80 % by weight of titanium dioxide calculated on the dry matter, having all types of particle sizes, currently falling under CN codes ex 2823 00 00 and 3206 11 00 (TARIC codes 2823000010 and 2823000030) (‘the product under investigation’).

(22) TiO2 is classified under the Chemical Abstracts Service Registry Number (CAS RN) 12065-65-5 and 13463-67-7 (‘the product under investigation’)

(23) Titanium dioxide is a chemical product in the form of fine white powder. It is used in a range of industrial and consumer products such as paints, coatings, paper, plastics, rubber, textiles, pharmaceutical products etc. Titanium dioxide has excellent light-scattering properties therefore applied where white opacity and brightness is required.

(24) The product concerned is the product under investigation originating in the PRC.

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

(27) Several parties submitted claims regarding product scope within the deadline to submit product scope claims.

(28) First, one user, Schulman Plastics SAS (‘Schulman Plastics’), requested that product scope be extended to cover the product known as ‘Masterbatch White’.

(29) Second, one user, Akzo Nobel Sourcing B.V. (‘AkzoNobel’), contended that the product control number (‘PCN’) structure should be amended.

(30) Third, one user, Munksjö Paper AB (‘Munksjö’), claimed that the product definition is unclear and requested the Commission to clarify that so called laminate-grade TiO2, a particular type of TiO2 which is used in laminate paper production (‘laminate-grade TiO2’), does not fall within the product scope. Munksjö subsequently supplanted this request, asking the Commission to exclude laminate-grade TiO2 from the product scope of the investigation, or, alternatively, to exempt it from anti-dumping duties under the end-use procedure, provided for in Article 254 of the Union Customs Code (‘UCC’) (5). Munksjö made the latter request together with another user, Felix Schoeller GmbH & Co. KG (‘Felix’).

(31) Fourth, one user, Treibacher Industrie AG (‘Treibacher’) requested that TiO2 of a purity of 99,9 % or more be excluded from the product scope.

(32) Finally, two users, Flint Group GmbH (‘Flint’) and Sun Chemical Ltd. (‘Sun Chemical’) separately requested that a special type of TiO2 that is only used as a pigment in the production of inks in the graphic industry (‘graphic TiO2’) be excluded from the product scope. Flint additionally requested to, alternatively, exempt graphic TiO2 from anti-dumping duties under the end-use procedure provided for in Article 254 of the UCC.

(33) In addition, the Commission did not consider the requests submitted by several parties regarding product exclusion because those requests were made after the deadline to submit product scope claims had passed. Those requests related to uncoated TiO2 for non-white pigments and food grade TiO2. The Confederation of European Paper Industries (‘CEPI’) also requested to exclude laminate-grade TiO2 from the product scope once the deadline to submit claims had passed. In addition, AkzoNobel introduced a product exclusion request for TiO2 produced via chloride process in their questionnaire reply after the deadline to submit product scope claims.

(34) Schulman Plastics claimed that the product scope should be extended to include ‘Masterbatch White’ (‘MW’) (currently classified under TARIC code 3206190090). MW is a concentrated mixture of basic elements, such as pigments, dyes, carriers, dispersants, and additives. These are encapsulated in a thermosetting resin, then cooled and cut into granules, which are used to colour or enhance the properties of plastic. TiO2 is an important white pigment constituent of MW, it is the substance which allows MW to colour the plastics white. Thus, Schulman Plastics claimed that the increase in costs of importing TiO2 to the Union, resulting from anti-dumping duties, will lead to the diversion of Chinese TiO2 into the production of MW in China. This would, in turn, further increase the volume of cheaper MW from China being imported/dumped into the Union, making the Union MW producers unable to compete effectively.

(35) According to the evidence collected during the investigation, as well as Schulman Plastics’ own description of MW, the Commission noted that the product under investigation, as defined in the Notice of Initiation and reiterated in recital (21) above, is used as raw material in production of MW, making MW a downstream product of the product under investigation. This is further corroborated by the fact that Schulman Plastic submitted to the Commission the questionnaire for users, which additionally made clear that the product under investigation is one of the main raw materials that they use in their production of MW.

(36) For that reason, the complaint could also not contain any evidence which would allow the Commission to assess if there is indication of dumping and associated injury caused by imports of MW originating in China, since the construction of normal value for MW would require benchmarks for different raw materials than the ones used for the product under investigation as is currently defined. The scope of this investigation could not thus be extended to MW, and any alleged dumping practices and the resulting injury inflicted on the MW producers in the Union would have to be determined in a separate anti-dumping investigation.

(37) Therefore, the Commission rejected the request to extend the scope of this investigation to include MW.

(38) AkzoNobel claimed that the PCN structure which the Commission established for this investigation should be extended by an additional field to account for surface treatment of different types of TiO2, since: (i) most types of commercially available TiO2 contain some form of surface treatment, (ii) such surface treatment affects the performance of TiO2 in different applications, and (iii) surface treatment features on producers’ data sheets for types of TiO2 they produce and sell. In addition, AkzoNobel claimed that the PCN field for ‘TiO2 content per weight’ is not sufficiently granular to reflect market realities. Specifically, AkzoNobel suggested that the PCN section covering the range of TiO2 content per weight between 80 % and up to but not including 98,5 % should be broken down into three further sections: 80 % up to but not including 90 %, 90 % up to but not including 95 %, and 95 % and up to but not including 98,5 %.

(39) The complainant opposed these claims on the grounds that surface treatment is a minimal component of the cost of manufacturing and thus does not need to be reflected in the PCN structure. The complainant further commented that the current ‘TiO2 content by weight’ categorization is granular enough to reflect market realities and ensure ‘like for like’ comparison, while adding two additional sections to this field would only be adding unnecessary complexity to the investigation.

(40) AkzoNobel replied to the complainant’s above comments. AkzoNobel claimed that the PCN structure is not only about making fair comparisons between costs of production for different types of TiO2, but also about making fair comparisons between the selling prices, implying that different types of surface coating will have an impact on the selling price, since it has an impact on which applications certain type of TiO2 should be used for. In addition, examining the datasheets of TiO2 types from the portfolio of the Union producer Kronos, AkzoNobel showed how adding two more PCNs to the ‘TiO2 content per weight’ field would spread the types of TiO2 which Kronos produces more evenly into different PCNs, claiming that such more granular PCN would be more instructive.

(41) During the investigation, the Commission found that most types of TiO2 marketed by both the Union producers and the exporting producers do contain surface treatment. Such surface treatment consists of different combinations of one or more chemicals, which are relevant for the product’s performance in different applications, and thus do feature on the producers’ data sheets and/or sales brochures.

(42) The Commission recalls in this respect that the purpose of the PCN is to ensure a fair price comparison between the normal value and the export price under Article 2(10) of the basic Regulation. No evidence demonstrating corelation between the specific chemicals found in the coating and prices of the exporting producers was provided to the Commission, however.

(43) Furthermore, none of the exporting producers participating in this investigation raised an objection about the proposed PCN structure on the grounds that it would result in unfair price comparison.

(44) The Commission thus found no reason to amend the PCN structure to reflect these factors and rejected the request by AkzoNobel.

(45) As explained above in recitals (27) to (33), several parties introduced requests concerning product exclusion. To assess the product exclusion requests, the Commission examined (i) the basic physical, chemical and technical characteristics of those product types, (ii) their end-use and interchangeability, (iii) end-customer perception, (iv) impact of duties on the user, (v) alternative sources of supply, and (vi) impact of exemption on duties.

(46) Felix and Munksjö jointly requested the exclusion from the product scope, (or, alternatively, and end-use exemption under Article 254 of the UCC) of laminate-grade TiO2, alleging that this is a special type of TiO2 used only in laminate paper production. In its submission of 21 January 2024, CEPI also independently requested that laminate-grade TiO2 be excluded from the product scope. CEPI’s request was made after the deadline to submit product scope claims of 23 November 2023 as explained in recital (33). The analysis in this section is thus based only on the information provided by Felix and Munksjö.

(47) The complainant submitted an additional set of comments on this request on 2 May 2024, to which Felix and Munksjö replied in a submission from 22 May 2024. Since the complainant’s comments were made after the deadline for comments on information submitted by other interested parties of 29 January 2024, neither of these additional comments were taken into account. Felix and Munksjö also submitted new factual information in another submission on 30 May 2024. Due to the late stage that the investigation was already in, that information could not be taken into account for the provisional findings.

(48) Laminate paper (also known as décor paper) is a speciality paper used as the surface of various types of furniture and a wide range of other decorative applications. The two users claimed that the TiO2 used to colour that paper is a special type of TiO2 which is not suitable for other applications, as it has to be covered with a thick coating containing phosphorus. This special coating allows the TiO2 to be properly absorbed into the paper fibres and gives it superior lightfastness which prevents greying of the TiO2 molecules (and thus the final product), which otherwise occur since the molecules are isolated from the air in the melamine resin.

(49) The two users pointed to the Commission Decision of 4 July 2018 in the merger case Tronox/Cristal (6) where the Commission concluded that there was limited demand-side substitutability between titanium dioxide pigment for use in paper laminate and titanium dioxide pigment for use in other end-applications.

(50) The complainant commented that the application of the type of surface coating designed for laminate-grade TiO2 does not affect the weight of TiO2 particles nor their surface size compared to other types of TiO2, such as plastics or coating applications, nor is the coating in general a significant component of the manufacturing costs. Furthermore, the complainant claimed that the three types of chemicals used in surface treatment are widely applied by all TiO2 producers in their formulations for an array of TiO2 product types (also for paints, coatings, plastic, and other uses), which demonstrates that none of those chemicals are exclusive to laminate-grade types of products.