Legalize
Legalize / European Union / Implementing Regulation

Commission Implementing Regulation (EU) 2024/1959 of 17 July 2024 imposing a provisional anti-dumping duty on imports of erythritol originating in the People’s Republic of China

Type Implementing Regulation
Publication 2024-07-19
State In force
Text As published
Department European Commission, TRADE
Source EUR-Lex
articles 5

This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.

Reform history JSON API
  • (154) The Commission recalls that in order to produce the product concerned, certain inputs are needed. When the producers of the product concerned purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors. These distortions were described in detail in particular in section 3.2.2. above. The Commission pointed out that the regulatory setup underpinning those distortions is generally applicable, erythritol producers being subject to those rules as any other economic operator in the PRC. The distortions have therefore a direct bearing on the cost structure of the product concerned.
  • (155) As a consequence, not only the domestic sales prices of the product concerned are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the updated Report.
  • (156) Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout the PRC. This means, for instance, that an input that in itself was produced in the PRC by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth.
  • (157) No evidence or argument to the contrary has been adduced by the GOC or the exporting producers in the present investigation.
3.2.10.   Arguments from the interested parties
  • (158) CCCMC submitted comments, in particular regarding the application of Article 2(6a) of the basic Regulation. CCCMC claimed that for a number of reasons the application of Article 2(6a) of the basic Regulation is incompatible with Article 2.2. of the WTO Anti-Dumping Agreement.
  • (159) The Commission reiterated its view that Article 2(6a) of the basic Regulation is fully in line with the EU’s obligations under the WTO law, in particular the provisions of the ADA. The Commission noted that the existence of significant distortions giving rise to the application of Article 2(6a) of the basic Regulation is established on a country-wide level and, if established, it renders costs and prices in the exporting country inappropriate for the construction of normal value. In these circumstances, Article 2(6a) of the basic Regulation provides for the construction of costs of production and sale on the basis of undistorted prices or benchmarks, including those in an appropriate representative country with a similar level of development as the exporting country.
3.2.11.   Conclusion
  • (160) The analysis set out in this section, which includes an examination of all the available evidence relating to China’s intervention in its economy in general as well as in the sector of the product concerned showed that prices and costs of the product concerned, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation as shown by the actual or potential impact of one or more of the relevant elements listed therein.
  • (161) On that basis, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case.
  • (162) Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as discussed in the following section.

3.3.   Representative country

3.3.1.   General remarks
  • (163) The choice of the representative country was based on the following criteria pursuant to Article 2(6a) of the basic Regulation:
  • — A level of economic development similar to the PRC. For this purpose, the Commission used countries with a gross national income per capita similar to the PRC on the basis of the database of the World Bank 83;
  • — Production of the product under investigation in that country;
  • — Availability of relevant public data in the representative country; and
  • — Where there is more than one possible representative country, preference was given, where appropriate, to the country with an adequate level of social and environmental protection.
  • (164) As explained in recitals (40) to (56), the Commission issued two notes for the file on the sources for the determination of the normal value. These notes described the facts and evidence underlying the relevant criteria, and also addressed the comments received by the parties on these elements and on the relevant sources.
  • (165) In the Second Note on production factors, the Commission informed interested parties of its intention to consider Colombia as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed.
3.3.2.   A level of economic development similar to the PRC
  • (166) In the First Note on production factors, the Commission identified Colombia, Brazil, Thailand, Argentina, Ecuador, Mexico, Peru, South Africa and Türkiye as countries with a similar level of economic development as the PRC according to the World Bank, i.e. they are all classified by the World Bank as ‘upper-middle income’ countries on a gross national income basis.
  • (167) However, as explained in recitals (40) to (52) above, the product under investigation appears to be produced only in countries none of which is a country with a level of economic development similar to the PRC in accordance with the criteria mentioned in recital (163) above.
3.3.3.   Production of products in the same general category and/or sector
  • (168) In the First Note, the Commission concluded that citric acid was an appropriate proxy product in the same general category and/or sector as the product under investigation with a view to identify an undistorted value in a representative country with a similar level of economic development as the PRC for the same factors of production used in the production of erythritol. No interested party contested this conclusion.
  • (169) In line with Article 2(6a)(a) of the basic Regulation, it was considered that financial data for citric acid producers could be regarded as representative also for exporting producers of the product concerned.
3.3.4.   The relevant readily available data in the potential representative countries
  • (170) In the First Note, the Commission investigated which financial data are readily available for the countries referred to in recital (166). The Commission found such data in Orbis for one company in Ecuador, one company in Colombia, one company in Mexico, one company in Peru, one company in South Africa, one company in Argentina, eight companies in Türkiye, four companies in Brazil and six companies in Thailand. The financial statements available to the Commission concerning all companies in Argentina, Ecuador, Mexico, Peru, South Africa and Türkiye and a few companies in Brazil and Thailand were not suitable because they were either incomplete and/or too old, or they revealed that the company concerned was lossmaking.
  • (171) The Commission then analysed the following three possible representative countries with a similar level of economic development to the PRC in which citric acid is produced and for which financial statements showing profits were available: Brazil, Colombia and Thailand. The Commission noted the existence, at that point in time, of readily available financial data from Orbis for the year 2022 for one citric acid manufacturer in Brazil (Cargill Agricola S.A.), one citric acid manufacturer in Colombia (Sucroal S.A.) and three citric acid manufacturers in Thailand (Sunshine Biotech International Co Ltd.; Cofco Biochemical (Thailand) Co Ltd.; Thai Industrial Citric Co Ltd.), plus, for the year 2020, of one citric acid manufacturer in Brazil (Primary Products Ingredients Brasil S.A.).
  • (172) In comments on the First Note no party proposed possible representative countries with a similar level of economic development to the PRC in which citric acid is produced other than those three.
  • (173) In its comments on the First Note, Dongxiao Biotechnology Co., Ltd. called for the use of Brazil while proposing to use Thailand to find an undistorted value for glucose only. The company argued that this was in line with the Commission’s practice in R728 – Expiry Review on Grain-oriented Flat-rolled Silicon-electrical Steel, where the Commission used Brazil as the representative country but found the undistorted value for hydrogen by using data of the largest exporting country of hydrogen worldwide (Canada).
  • (174) The Commission first noted that its past administrative practice is not binding for the purpose of assessing compliance with the provisions of the basic Regulation 84. Moreover, glucose imports into Thailand originate almost exclusively from the PRC, which disqualifies the use of these data.
  • (175) In its comments on the First Note, Dongxiao Biotechnology Co. Ltd. called for the use of Brazil as a representative country on the grounds that Brazil had production of products similar to products under investigation i.e. citric acid; that the Brazilian company Cargill Agricola S.A. was profitable for the year 2022, which covers part of the investigation period (from 1 October 2022 to 30 September 2023); that Brazilian import data (for surrogating purpose) of almost all known Factors of Production could be found in the attachment to the First note, and that the Commission’s First Note indicated no trade distortions in Brazil affecting inputs for the production of the product under investigation.
  • (176) The complainant put into question the appropriateness of financial data from the two Brazilian companies in the First Note (i.e. Cargill Agricola S.A. and Primary Products Ingredients Brasil S.A.) on the grounds that both belong to groups and that the influence of the group on the financial data was difficult to assess. It also noted that both manufacture and/ or sell a diverse range of products. With regard to Cargill Agricola S.A., the complainant added that Cargill Agricola S.A.’s turnover was about 150 times the turnover of the Colombian company Sucroal S.A. (for a similar production capacity) and that Cargill Agricola S.A had the financial profile of a trading company. Concerning Primary Products Ingredients Brasil S.A., the complainant noted a change of ownership and the absence of 2022 financial data published.
  • (177) The complainant also put into question the appropriateness of financial data from the three Thai companies in the First Note (i.e. Sunshine Biotech International Co. Ltd.; Cofco Biochemical (Thailand) Co. Ltd. and Thai Industrial Citric Co. Ltd.). For the complainant, without more detailed and independently audited data, the data of the first two, Chinese-owned companies in Thailand was hardly reliable for the determination of undistorted values. Moreover, in its view the influence of the groups to which Sunshine Biotech International Co. Ltd. and Cofco Biochemical (Thailand) Co. Ltd. belong would have an impact on the company data and performance that is uncertain without detailed independent audit reports on the companies and the groups. In addition, the complainant stated that the two companies would be export-oriented with the main objective of supplying citric acid to the USA to the extent Chinese-origin citric acid shipments are subject to high duties when imported in the USA. The complainant added that production volumes in Thailand were small in comparison to production in the PRC and estimated citric acid consumption in Thailand at 30 000-40 000 tonnes per year.
  • (178) In view of the above, the complainant called for the use of Colombia rather than Brazil and Thailand.
  • (179) The Commission agreed with the complainant that the financial data of the Brazilian company Primary Products Ingredients Brasil S.A.was not the most appropriate to the extent that it is outdated. The data in question covered the financial year 2020 whereas the investigation period covers the period from 1 October 2022 to 30 September 2023.
  • (180) In the Second Note, the Commission further investigated which financial data is available for the countries identified in the Note of 21 December 2023, namely Brazil, Colombia and Thailand. The information available to the Commission at that stage was the same as the one described in the First Note (see recital (171)), except for the fact that the Commission obtained more detailed and publicly available information for 2022 for the Colombian citric acid producer Sucroal S.A (from Supersociedades, as explained in recital (222)). No such level of detail was available for the other companies in the other potential representative countries.
  • (181) In view of the above, the Commission considered that the financial information available for the Colombian company Sucroal S.A. was the most appropriate to be used. Moreover, the turnover of Sucroal S.A. is between the turnover of the biggest and the smallest Chinese producers of erythritol in the sample. No party contested these three facts nor put forward financial information from any alternative companies.
  • (182) In its comments on the Second note Dongxiao Biotechnology Co. Ltd. questioned the use of SG&A and profit from Sucroal S.A. Those comments are addressed in section 3.4.9. below and do not alter the conclusion in the recital above.
3.3.5.   Level of social and environmental protection
  • (183) Having established that Colombia was the only available appropriate representative country, based on all of the above elements, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of Article 2(6a)(a) first indent of the basic Regulation.
3.3.6.   Conclusion
  • (184) In view of the above analysis, Colombia met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country.

3.4.   Sources used to establish undistorted costs and benchmarks

  • (185) In the First Note, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under investigation by the exporting producers and invited the interested parties to comment and propose publicly available information on undistorted values for each of the factors of production mentioned in that note.
  • (186) Subsequently, in the Second Note, the Commission stated that in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, it would use Global Trade Atlas 85 (‘GTA’) to establish the undistorted cost of raw materials. The Commission also stated that it would use publicly available electricity prices from Colombia 86 for determining prices of electricity as well as for gas and steam (using conversion tables between m2/tonne and kWh), and ILO Statistics 87 for determining labour costs.
  • (187) In the Second Note, the Commission also informed the interested parties that due to the large number of factors of production of the sampled exporting producers that provided complete information and the negligible weight of some of the raw materials in the total cost of production, these negligible items were grouped under ‘consumables’. Further, the Commission informed that it would calculate the percentage of the consumables on the total cost of raw materials and apply this percentage to the recalculated cost of raw materials when using the established undistorted benchmarks in the appropriate representative country.
3.4.1.   Factors of Production
  • (188) Considering all the information submitted by the interested parties and collected during the verification visits, the following factors of production (‘FOP’) and their sources have been identified in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:

Table 1

Factor of Production Commodity Code Source of data Value (CNY) Unit of measurement
Main Raw Materials Main Raw Materials Main Raw Materials Main Raw Materials
Corn/maize 1005 90 11/1005 90 0090 GTA 2,138 kg
Corn/maize, Organic 1005 90 11/1005 90 0090 GTA Value + 20 %88 2,565 kg
Corn starch 1108 12 0000 GTA 6,294 kg
Corn starch, organic 1108 12 0000 GTA Value + 20 %89 7,553 kg
Glucose/Glucose monohydrate 1702 30 10/ 1702 30 0000 GTA 7,448 kg
Ancillary materials Ancillary materials Ancillary materials Ancillary materials
Active yeast 2102 10 0000 GTA 22,889 kg
Inactive yeast90 2102 20 11 GTA 49,569 kg
Ammonium citrate 2918 15 0000 GTA 17,525 kg
Ammonium liquor91 2814 1000 GTA 4,798 kg
Ammonium Sulphate92 3102 2100 GTA 1,65 kg
Amylase/α-amylase/ Saccharifying enzyme/Cellulase 3507 90 9000 GTA 97,257 kg
Activated carbon in any form 3802 10 0000 GTA 25,351 kg
Polydimethylsiloxane (Defoamer) 3910 0000 GTA 72,375 kg
Magnesium Carbonate 2519 1000 GTA 14,757 kg
Magnesium sulphate 2833 21 00 GTA 9,751 kg
Citric acid 2918 14 0000 GTA 15,282 kg
Salt93 2501 0000 GTA 0,474 kg
Monk Fruit sweetener 2938 90 9090 GTA 500,721 kg
Stevia 2938 90 9090 GTA 500,721 kg
Labour Labour Labour Labour Labour
Labour [N/A] ILO 18 Labour Hour
Labour [N/A] ILO
Energy Energy Energy Energy Energy
Natural gas [N/A] https://www.globalpetrolprices.com/natural_gas_prices/ RMB 3,85/m3 (on the basis of 0,3658 per kWh and it takes 10,55 kWh per m3 of gas) (or 5,364,43 per MT) Cubic meter
Electricity [N/A] https://www.enel.com.co/es/personas/tarifas-energia-enel-distribucion.html. / RMB 1,3646 per kWh kWh
Steam [N/A] https://www.globalpetrolprices.com/natural_gas_prices/ RMB 263,55 (based on price of 1 m3 of gas to produce 1 tonnes of steam) Cubic meter of gas required to produce steam
Water [N/A] https://www.acueducto.com.co RMB 16,93 Cubic meter
By-product/Waste By-product/Waste By-product/Waste By-product/Waste By-product/Waste
Yeast 2102 10 0000 GTA 1-494 kg
Filtration residue (protein) aimed at animal feed 2308 0000 GTA 1,363 kg
Erythritol mother liquor 2905 4900 GTA 0,1 kg
Corn steep Water/Corn germ/Corn fibre 2303 1000 GTA 5,049 kg
Liquid protein/Protein powder 2308 0000 GTA 1,363 Kg
  • (189) After the issuing of the Second Note, the list of FOPs was further shortened due to absence of import prices into Colombia from GTA. The values thereof were therefore added to the value of consumables:
  • — Phosphates of potassium, i.e. potassium dihydrogen phosphate or dipotassium phosphate
  • — Anti-scale agents
  • (190) The Commission has included a value for manufacturing overhead costs in order to cover costs not included in the factors of production referred to above. To establish this amount, the Commission used the sampled exporting producers’ reported costs of manufacturing that had not been included in the individual FOP above, such as depreciation and costs for maintenance.
  • (191) Moreover, in addition to the manufacturing overheads reported, the Commission also included costs incurred for research & development to the extent they had not been included in the manufacturing costs.
  • (192) The amounts thereof were taken from the exporting producers questionnaire replies. The new amount for manufacturing overheads was expressed as a percentage and has been applied to the recalculated manufacturing costs.
3.4.2.   Raw materials
  • (193) In order to establish the undistorted price of raw materials as delivered at the gate of a representative country producer, the Commission used as a basis the weighted average import price to Colombia as reported in the GTA which include applicable import duties in Colombia for the respective HS Code.
  • (194) The Commission expressed the transport costs incurred by the cooperating exporting producers for the supply of raw materials as a percentage of the actual cost of such raw materials and then applied the same percentage to the undistorted cost of the same raw materials in order to obtain the undistorted transport cost. The Commission considered that, in the context of this investigation, the ratio between the exporting producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory.
  • (195) The import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding the PRC and countries which are not members of the WTO, listed in Annex 1 of Regulation (EU) 2015/755 of the European Parliament and the Council 95. The remaining quantities were considered representative.
  • (196) The Commission decided to exclude imports from the PRC into the representative country as it concluded in recitals (60) to (157) above that it is not appropriate to use domestic prices and costs in the PRC due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. Given that there is no evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected export prices.
  • (197) For a number of factors of production the actual costs incurred by the cooperating exporting producers represented a negligible share of total raw material costs in the investigation period. As the value used for these had no appreciable impact on the dumping margin calculations, regardless of the source used, the Commission decided to include those costs into consumables, as also explained in recital (187).
  • (198) Annex I of the First Note listed the various raw materials reported by the cooperating exporting producers at a 6-digit HS code level or more detailed level if available.
  • (199) In its comments on the First Note, Dongxiao Biotechnology Co. Ltd. submitted that import prices of a third country reflect neither the actual domestic prices in that country, nor the purchase prices in the country concerned and that, therefore, the Commission should also be open to accept other publicly available sources of data, such as the domestic sales price in a third country or other international prices. Dongxiao Biotechnology Co., Ltd. added that the price of a domestically purchased input should be replaced by an import price on an FOB basis.
  • (200) The Commission noted that Article 2(6a)(a) of the basic Regulation prescribes the use of corresponding data in an appropriate representative country ‘provided that the relevant data are readily available.’
  • (201) The Commission did not have at its disposal data on domestic prices in the potential representative countries. By contrast, data on import prices in the potential appropriate representative countries are readily available and the Commission has therefore used GTA as the source of this data. Furthermore, the Commission considers that, through forces of competition, the import prices into the potential representative countries were an accurate reflection of the relevant domestic prices.
  • (202) Moreover, the Commission has also excluded data on imports into the representative country from the PRC to determine the relevant benchmark prices. As long as the import quantities of the factors of production are sufficiently representative and there are no other specific circumstances rendering them unsuitable, there is no objective reason to exclude them.
  • (203) Therefore, in the absence of evidence to the contrary, the Commission rejected the party’s claims while noting that it is the Commission’s practice to adjust import prices for import taxes to reflect the market price of the factor of production in question in the representative country.
  • (204) During the on-the-spot verification of the exporting producers’ questionnaire replies, the Commission cross-checked the correspondence between the Chinese and the Colombian nomenclatures. The result of the refined correspondence was presented in the Second Note.
  • (205) In response to the Second Note, Dongxiao Biotechnology Co. Ltd. argued that the price for the FOP Glucose represents glucose in its solid form and that the price must reflect the percentage of solid glucose in the glucose syrup used. The Commission agreed and has made a correction of the benchmark price for the company thereto.
  • (206) With regard to import duties applicable to the imports of the FOPs, these have been included in the benchmark price used.
3.4.3.   By-products
  • (207) The Commission analysed the accounting practices of the sampled Chinese exporting producers pertaining to by-products and waste. As a result, the Commission has used the quantities of waste products sold and reduced the Cost of Manufacturing, using Colombian prices of the HS code if available.
  • (208) For those waste products for which only a price for the primary product was available, in the absence of any other data available, the Commission has provisionally taken the ratio between the price in the PRC for the waste product compared to the price in the PRC for the primary product reported by the exporting producers. The ratio there between has thereafter been applied to the price for the primary product in Colombia, as derived from the GTA.
3.4.4.   Labour
  • (209) The Commission used the last publicly available data from ILO statistics 96 to determine the wages in the industry sector in Colombia. The average monthly value in the investigation period has been duly adjusted for other contributions by adding the social security paid by the employer including pension and professional risk tax: 12 percent as employer contribution to the pension fund, 8,5 percent for health insurance, 1-2 percent for the Solidarity Pension Fund and 4-9 percent for payroll taxes 97 98. The average hourly labour cost per FTE amounts to 18 CNY/man-hour.
  • (210) The number of hours reported in the questionnaire reply has been adjusted when warranted as the number of hours worked during a day at the factory was 12 rather the 8 hours.
3.4.5.   Electricity
  • (211) The Commission used relevant electricity price rates for industrial users as published by major electricity provider in Colombia Enel 99 in its website. The Commission used the industrial electricity prices in the investigation period and then added 10 % 100 in order to account for other bill elements such as distribution charges.
  • (212) The price per kWh taken from this source amounted to USD 0,18/kWh, or CNY 1,24 + 10 % for distribution charges.
  • (213) In its response to the Second Note Dongxiao Biotechnology Co., Ltd. questioned the use of electricity prices from Colombia as allegedly being inflated, partly due to the use of renewable energy sources rather than coal. Also, in the company’s view, the source of electricity in Colombia is not comparable with and unrepresentative of the type of electricity that Dongxiao Biotechnology Co., Ltd. actually uses.
  • (214) The Commission dismissed this argument as unsubstantiated. No publicly available source allowed the Commission to establish to what extent Colombia electricity prices would be inflated, neither was there a reliable benchmark to compare them. Moreover, the fact that the sources of electricity generation in Colombia and PRC do not mirror each other is not a reason to reject electricity prices in Colombia.
3.4.6.   Natural gas
  • (215) The Commission used the price of gas for businesses in Colombia as published by GlobalPetroPrices 101 on its website. The Commission used the average of the data available in the complaint (i.e. the average for a large gas consumer for the period second half of 2022 plus first half of 2023 the price amounting to 44,29 EUR per MWh) and the price of natural gas for businesses in Colombia in June 2023 (i.e. 0,053 Euro per kWh). These rates include all taxes, fees and other components of the gas bill. It is noted that 1 m3 of natural gas ≈ 10,55 kWh and the cost of 1 kWh had been estimated to CNY 1,24 + distribution charges above.
3.4.7.   Steam
  • (216) The cost of steam has been determined by using the cost of natural gas and the the quantity of gas needed to produce steam. Taking account of generally recognized energy conversion rates and conversion rates from heat to steam, the Commission calculated that 68,29 m3 of natural gas are required to produce 1 tonne of steam.
3.4.8.   Water
  • (217) The cost of water was determined on the basis of cost of water from a Colombian water supplier 102, taking into account variable costs per m3 and a fixed costs distributed between the quantities of consumption of water.
3.4.9.   Manufacturing overhead costs, SG&A and profits
  • (218) According to Article 2(6a)(a) of the basic Regulation, the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs (‘SG&A’) and for profits. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above.
  • (219) The Commission used the Colombian company Sucroal S.A. as a basis for the establishment of the SG&A and profit rates to construct normal value. The Commission considered that the rates so established would lead to reasonable amounts for SG&A costs and for profit within the meaning of Article 2(6a) of the basic Regulation at the ex-works level.
  • (220) Manufacturing overheads were not separately identified in the available Profit and Loss account figures and were found to be included in the cost of goods sold. The value for manufacturing overheads was based on the company specific data as explained in recital (190) and applied on the undistorted cost of manufacturing, with the addition of Cost incurred for Research & Development as allocated to the company in its Profit and Loss account figures.
  • (221) In its response to the Second Note Dongxiao Biotechnology Co. Ltd. questioned the use of SG&A and profit from Sucroal S.A. arguing that the company’s figures were not solid, that publicly available sources 103 showed an abnormal growth in terms of Sucroal S.A.’s operating profit (EBIT) and net profit; and it requested confirmation of whether SG&A of that company was affected by donations of OAL, Sucroal S.A’s main shareholder, to political parties.
  • (222) The Commission had based its findings on readily available information. Since the full financial report for Sucroal S.A. is not publicly or readily available the Commission could only disclose the profit and loss data as provided by Supersociedades 104. Moreover, Dongxiao Biotechnology Co. Ltd. did not present any alternative source for detailed readily available financial data for Sucroal S.A. The press release submitted by Dongxiao Biotechnology Co. Ltd. displays OAL’s companies donating to political parties 105; that list did not include Sucroal S.A. The arguments against the use of readily available financial data from Sucroal S.A. as presented in the Second Note were therefore dismissed.

3.5.   Calculation

  • (223) On the basis of the above, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.
  • (224) First, the Commission established the undistorted manufacturing costs. The Commission applied the undistorted unit costs to the actual consumption of the individual factors of production of the cooperating exporting producer. These consumption rates provided by the applicant were verified during the verification. The Commission multiplied the usage factors by the undistorted costs per unit observed in Colombia, as listed under Recital (188).
  • (225) Once the undistorted manufacturing cost were established, the Commission applied rates for the manufacturing overheads, SG&A cost, and profit as noted in recitals (218) to (220). They were determined on the basis of the financial statements of Sucroal S.A.
  • (226) Then the Commission added manufacturing overheads and depreciation to the undistorted cost of manufacturing in order to arrive at the undistorted costs of production.
  • (227) To the costs of production established as described in the previous recital, the Commission applied SG&A costs and profit of Sucroal S.A.. SG&A costs expressed as a percentage of the Costs of Goods Sold (‘COGS’) and applied to the undistorted costs of production, amounted to 15,4 %. The profit expressed as a percentage of the COGS and applied to the undistorted costs of production, amounted to 18,3 %.

3.6.   Export price

  • (228) The sampled exporting producers exported the product concerned directly to independent customers in the Union. Therefore, the export price was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

3.7.   Comparison

  • (229) The Commission compared the normal value and the export price of the sampled exporting producers on an ex-works basis.
  • (230) Where justified by the need to ensure a fair comparison, the Commission adjusted the normal value and/or the export price for differences affecting prices and price comparability, in accordance with Article 2(10) of the basic Regulation. Adjustments were made for transport, insurance, handling and loading, bank charges and credit costs.

3.8.   Dumping margins

  • (231) For the sampled cooperating exporting producers, the Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned, in accordance with Article 2(11) and (12) of the basic Regulation. For the cooperating exporting producers outside the sample, the Commission calculated the weighted average dumping margin, in accordance with Article 9(6) of the basic Regulation.
  • (232) For all other exporting producers in the PRC, first determined the level of cooperation of the exporting producers. The level of cooperation is calculated as the volume of exports of the cooperating exporting producers to the Union expressed as proportion of the total imports from the country concerned to the Union in the investigation period.
  • (233) The export volumes were established on the basis of data in the sampling form as reported by the non-sampled exporting producers, and verified data in the questionnaire replies by the sampled exporting producers.
  • (234) The level of cooperation in this case was not considered high because the total exports of the cooperating exporting producers, sampled and non-sampled, constituted 74,9 % of the total imports during the investigation period.
  • (235) On this basis, the Commission considered it appropriate to establish the dumping margin for all non-cooperating exporting producers on the basis of the representative sales transactions of the sampled exporting producer with the highest dumping margin found. The provisional dumping margins, expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:
Company Provisional dumping margin
Baolingbao Biology Co., Ltd. 31,9  %
Dongxiao Biotechnology Co., Ltd. 76,9  %
Sanyuan Biotechnology Co., Ltd. 187,5  %
Other cooperating companies 162,0  %
All other companies 235,6  %

4. INJURY

4.1.   Definition of the Union industry and Union production

  • (236) The like product was manufactured by one producer in the Union during the investigation period. It constitutes the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.
  • (237) As the data relating to the injury assessment was derived from only one Union producer, the figures for the injury analysis are given in ranges for reasons of confidentiality. However, the indexes are based on actual data and not on the ranges.
  • (238) The total Union production during the investigation period was in the range of 1 940 to 2 340 tonnes. The Commission established the actual figure on the basis of a verification of the audited reports of the only known Union producer, namely Jungbunzlauer S.A. As indicated in recital (20), given the existence of only one known Union producer, the Commission did not have to resort to sampling.

4.2.   Union consumption

  • (239) The Commission established the Union consumption on the basis of: (i)the verified sales of the only known Union producer; and (ii) the imports from the country concerned and from all other third countries, notably the United States.
  • (240) Union consumption developed as follows:

Table 2

Union consumption (tonnes)
2020 2021 2022 Investigation period
Total Union consumption [14 000 -16 800 ] [19 460 -23 350 ] [16 240 -19 500 ] [15 400 -18 480 ]
Index 100 139 116 110
Source: Questionnaire reply of the known Union producer, information provided by the complainant. Source: Questionnaire reply of the known Union producer, information provided by the complainant. Source: Questionnaire reply of the known Union producer, information provided by the complainant. Source: Questionnaire reply of the known Union producer, information provided by the complainant. Source: Questionnaire reply of the known Union producer, information provided by the complainant.
  • (241) On this basis, following strong growth in 2021 and a subsequent drop which may have been caused by stockpiling due to feared supply shortages in the context of COVID-19 or unexpected consumer behaviour, Union consumption increased by 10 % over the period considered.

4.3.   Imports from the country concerned

4.3.1.   Volume and market share of the imports from the country concerned
  • (242) As erythritol currently falls under ‘basket’ CN code 2905 49 00 for erythritol in its pure form and CN codes 2106 90 92 and 2106 90 98 for blended products, it was not possible to assess import statistics from Eurostat. Instead, import statistics were based on data of specialised market intelligence providers of Chinese and USA trade statistics to which the complainant has a subscription.
  • (243) The source of the data concerning the Chinese imports could not be disclosed at the request of the data provider. However, the Commission cross-checked the data provided by the complainant with other available statistical sources (Eurostat and Surveillance) and with the sampling and questionnaire replies of the cooperating Chinese exporting producers.
  • (244) CCCMC claimed that the only acceptable approach for the Commission’s analysis of import data (volume, value) from China would be that based on official Eurostat statistics with a TARIC breakdown for the trade in erythritol.
  • (245) In this respect it is noted that the TARIC codes for erythritol were created only on the date of initiation of the proceeding. Consequently, import data for the period considered could not be derived directly from Eurostat, as indicated in recital (242). The claim was dismissed.
  • (246) The market share of the Chinese imports was established by comparing import volumes with the Union market consumption (see Table 2 above).
  • (247) Imports into the Union from the country concerned developed as follows:

Table 3

Import volume (tonnes) and market share
2020 2021 2022 Investigation period
Volume of imports from the PRC (tonnes) 9 660 14 546 11 922 13 168
Index 100 151 123 136
Market share (%) [62 -70 ] [67 -76 ] [66 -74 ] [77 -87 ]
Index 100 108 106 124
Source: Specialised market intelligence, Sampling and Questionnaire replies of cooperating exporting producers. Source: Specialised market intelligence, Sampling and Questionnaire replies of cooperating exporting producers. Source: Specialised market intelligence, Sampling and Questionnaire replies of cooperating exporting producers. Source: Specialised market intelligence, Sampling and Questionnaire replies of cooperating exporting producers. Source: Specialised market intelligence, Sampling and Questionnaire replies of cooperating exporting producers.
  • (248) Table 3 shows that during the period considered imports from the PRC increased in absolute terms by 3 508 tonnes, or 36 %. This translated into an increase of 17 percentage points in the total market share of the Chinese imports into the Union during the same period.
4.3.2.   Prices of the imports from the country concerned and price undercutting
  • (249) The Commission established the prices of imports on the basis of the specialised market intelligence indicated in recital (242). Price undercutting of the imports was established on the basis of verified questionnaire replies of the sampled exporting producers in the PRC.
  • (250) The average price of imports into the Union from the country concerned developed as follows:

Table 4

Import prices (EUR/tonne)
2020 2021 2022 Investigation period
Price of imports from the PRC 1 856 2 453 1 938 1 572
Index 100 132 104 85
Source: Specialised market intelligence, Sampling and Questionnaire replies of cooperating exporting producers. Source: Specialised market intelligence, Sampling and Questionnaire replies of cooperating exporting producers. Source: Specialised market intelligence, Sampling and Questionnaire replies of cooperating exporting producers. Source: Specialised market intelligence, Sampling and Questionnaire replies of cooperating exporting producers. Source: Specialised market intelligence, Sampling and Questionnaire replies of cooperating exporting producers.
  • (251) The average price of the Chinese imports first increased in 2021, reaching 2 453 EUR/tonne (from 1 856 EUR/tonne in 2020) and then decreased to 1 938 EUR/tonne in 2022 and further to 1 572 EUR/tonne during the investigation period. During the period considered, the decrease of the average unit price of the Chinese imports amounted to 15 %. Chinese import prices were constantly below the Union industry’s sales prices, as shown in Table 8.
  • (252) The Commission determined the price undercutting during the investigation period by comparing:
  • — the weighted average sales prices per product type of the known Union producer charged to unrelated customers on the Union market and the prices charged by the related entity, both adjusted to an ex-works level; and
  • — the corresponding weighted average prices per product type of the imports from the sampled cooperating Chinese producers to the first independent customer on the Union market, established on a Cost, insurance, freight (CIF) basis, with appropriate adjustments for customs duties and post-importation costs.
  • (253) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the known Union producer’s theoretical turnover during the investigation period. It showed a weighted average undercutting margin of between [40,0 % and 60,0 %] by the imports from the country concerned on the Union market. Undercutting was found for 100 % of the imported volumes of the sampled companies.
  • (254) The Commission further considered other price effects, in particular the existence of significant price suppression. As mentioned in recital (277), from 2022 onwards the Union industry saw a marked increase in its unit production costs, driven both by indirect costs on a per unit basis and the prices of energy and raw materials. Given that in the same period the price of imports from the PRC decreased significantly, the Union industry was unable to increase its selling price to cover its cost of production. This price suppression further confirms that the dumped imports from the PRC resulted in loss of profitability to the Union industry.
  • (255) CCCMC in its comments relating to material injury claimed that the Union market is segmented into two distinctive parts, i.e. erythritol market for the use in food production and erythritol market for the use in cosmetics and pharmaceutical production. It further claimed that the Union and US industries have exclusive access to the most lucrative cosmetic/pharmaceutical segments and that they should be distinguished and analysed separately and that the sales of the Union industry to cosmetic/pharmaceutical industries to be deducted from the overall injury analysis.
  • (256) The investigation has found that the Union industry did not enjoy any exclusivity in supplying cosmetic and pharmaceutical customers. Any company that wishes to place a substance on the EU market may submit a registration of that substance with the European Chemicals Agency (ECHA).
  • (257) The investigation also found that erythritol for the cosmetic/pharmaceutical segment is the same product as the one for the food segment, with the former only required to pass certain additional tests as compared to the latter. If these additional tests are performed on food grade erythritol, it becomes fully interchangeable with the cosmetic/pharmaceutical grade erythritol. It should also be noted that the importance of the cosmetic/pharmaceutical segment is marginal, accounting for less than 4 % of the sales of the Union industry, and less than 1 % of Union consumption. Consequently, this claim was rejected.

4.4.   Economic situation of the Union industry

4.4.1.   General remarks
  • (258) In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.
  • (259) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic and the microeconomic indicators on the basis of data contained in the complaint and the questionnaire reply of the known Union producer. As no other Union producers are known to the Commission, both sets of data were found to be representative of the economic situation of the Union industry.
  • (260) The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.
  • (261) The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.
4.4.2.   Macroeconomic indicators
4.4.2.1.   Production, production capacity and capacity utilisation
  • (262) The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 5

Production, production capacity and capacity utilisation
2020 2021 2022 Investigation period
Production volume (tonnes) [9 700 -11 700 ] [13 500 -16 300 ] [11 060 -13 340 ] [1 940 -2 340 ]
Index 100 139 114 20
Production capacity (tonnes) [11 700 -14 100 ] [13 500 -16 300 ] [18 430 -22 230 ] [18 430 -22 230 ]
Index 100 116 160 160
Capacity utilisation 83 % 100 % 60 % 10 %
Index 100 120 75 12
Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply.
  • (263) During the period considered, despite a slight increase in Union consumption as shown in Table 2, the Union industry’s production volume decreased dramatically. Although Union production increased in 2021, and remained also in 2022 above the level of 2020, it then fell to only 20 % of the 2020 level in the investigation period. The Union industry was not able to compete against dumped imports from the PRC, which as from 2022 came in at prices significantly below the Union industry’s cost of production. The Union industry therefore had to adjust the production to a very low sales volume, resulting in an almost complete suspension of production.
  • (264) The reported production capacity figures refer to installed capacity, which increased by 60 % during the period considered. This expansion reflected an expectation by the Union industry of continued growth in the Union consumption, and production at full capacity in 2021.
  • (265) During the period considered, capacity utilisation first grew in 2021, reaching 100 % given strong growth in the Union consumption, but then dropped sharply to reach only 10 % in the investigation period. This was driven by an almost complete suspension of production in the investigation period.
4.4.2.2.   Sales volume and market share
  • (266) The Union industry’s sales volume and market share developed over the period considered as follows:

Table 6

Sales volume and market share
2020 2021 2022 Investigation period
Sales volume on the Union market (tonnes) [4 200 -5 200 ] [5 000 -6 200 ] [4 115 -5 095 ] [2 440 -3 020 ]
Index 100 119 98 58
Market share (%) [28 -36 ] [24 -31 ] [24 -31 ] [15 -20 ]
Index 100 85 84 55
Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply.
  • (267) The Union industry sales volume on the Union market first grew in 2021, and then returned in 2022 to a level comparable with 2020. In the investigation period the sales volume contracted significantly, translating in a total decrease of 42 % during the period considered.
  • (268) During the period considered, the Union industry’s market share in terms of Union consumption was on a constantly decreasing trend, which accelerated in the investigation period, decreasing by 45 % over the period considered.
4.4.2.3.   Growth
  • (269) The Union consumption slightly increased during the period considered, while the sales volume of the Union industry in the Union market decreased sharply. The Union industry thus experienced a significant 13-16 percentage point loss of market share. At the same time, the market share of the imports from the country concerned increased by 15-17 percentage points during the same period.
4.4.2.4.   Employment and productivity
  • (270) Employment and productivity developed over the period considered as follows:

Table 7

Employment and productivity
2020 2021 2022 Investigation period
Number of employees (FTE) [28 -36 ] [26 -34 ] [27 -35 ] [25 -32 ]
Index 100 94 98 88
Productivity (tonne/FTE) [340 -410 ] [500 -610 ] [400 -480 ] [75 -90 ]
Index 100 149 117 22
Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply.
  • (271) During the period considered, employment in the Union decreased by 12 %. It should be noted though that while it almost completely suspended production in the investigation period as a result of very low sales volume caused by dumped imports, the known Union producer decided to keep employees temporarily on stand-by instead of laying them off. If the Union industry would have reduced the number of employees to reflect the decrease in production, the decrease in employment would have been much greater.
  • (272) Productivity during the period considered follows closely the trend observed for production: after an increase in 2021, a decrease takes place in 2022, followed by a collapse in the investigation period. The decision of the known Union producer not to lay off employees despite an almost complete suspension of production, impacts the indicator observed during the investigation period.
4.4.2.5.   Magnitude of the dumping margin and recovery from past dumping
  • (273) All dumping margins were significantly above the de minimis level. The impact of the magnitude of the actual margins of dumping on the Union industry was substantial, given the volume and prices of imports from the country concerned.
  • (274) This is the first anti-dumping investigation regarding the product concerned. Therefore, no data were available to assess the effects of possible past dumping.
4.4.3.   Microeconomic indicators
4.4.3.1.   Prices and factors affecting prices
  • (275) The weighted average unit sales prices of the Union producer to unrelated customers in the Union developed over the period considered as follows:

Table 8

Sales prices in the Union
2020 2021 2022 Investigation period
Average unit sales price in the Union on the total market (EUR/tonne) [2 650 -3 180 ] [2 700 -3 240 ] [3 260 -3 910 ] [3 310 -3 980 ]
Index 100 102 123 125
Unit cost of production (EUR/tonne) [1 800 -2 160 ] [1 730 -2 070 ] [2 750 -3 300 ] [6 300 -7 560 ]
Index 100 96 153 350
Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply.
  • (276) Sales prices were rather stable between 2020 and 2021, saw a roughly 20 % increase in 2022 and then again remained fairly stable in the investigation period in comparison to 2022. With the exception of the investigation period, sales prices remained higher than the unit cost of production during the period considered.
  • (277) The unit production cost also remained rather stable between 2020 and 2021 but saw in 2022 a much greater increase (53 %) than that of sales prices. A further very high increase was observed in the investigation period, reflecting a big increase in indirect costs (manufacturing overhead costs) on a per unit basis following the decision of the known Union producer to keep employees temporarily on stand-by instead of laying them off when it almost completely suspended production, as mentioned in recital (271). Other fundamental drivers of the increase in the unit cost of production in the last two periods of the period considered, was an increase in the prices of energy and raw materials such as glucose and chemicals.
4.4.3.2.   Labour costs
  • (278) The labour costs of the known Union producer developed over the period considered as follows:

Table 9

Average labour costs per employee
2020 2021 2022 Investigation period
Average labour costs per employee (EUR) [77 000 -87 000 ] [76 200 -86 100 ] [83 900 -94 800 ] [81 600 -92 200 ]
Index 100 99 109 106
Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply.
  • (279) During the period considered, the average wage per employee increased by 6 %. The increase had been somewhat more marked until 2022, but in the investigation period wages decreased slightly, presumably reflecting lower remunerations in the context of almost completely suspended production.
4.4.3.3.   Inventories
  • (280) Stock levels of the known Union producer developed over the period considered as follows:

Table 10

Inventories
2020 2021 2022 Investigation period
Closing stocks (tonnes) [970 -1 170 ] [1 300 -1 570 ] [1 700 -2 050 ] [850 -1 030 ]
Index 100 134 175 88
Closing stocks as a percentage of production (%) 10 -12 10 -12 15 -18 45 -54
Index 100 96 153 449
Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply.
  • (281) The level of stocks was substantially higher in 2021 (by 34 %) and 2022 (by 75 %) than in 2020. As mentioned in recital (263), the known Union producer almost completely suspended production in the investigation period and supplied the very low sales volume by decreasing stock levels, which halved compared to 2022, reaching a level 12 % lower than that in 2020.
4.4.3.4.   Profitability, cash flow, investments, return on investments and ability to raise capital
  • (282) Profitability, cash flow, investments and return on investments of the known Union producer developed over the period considered as follows:

Table 11

Profitability, cash flow, investments and return on investments
2020 2021 2022 Investigation period
Profitability of sales in the Union to unrelated customers (% of sales turnover) [12 -15 ] [15 -18 ] [7 -10 ] [-38 to -45 ]
Index 100 120 64 - 304
Cash flow (EUR 000) [9 500 -10 000 ] [9 800 -10 300 ] [2 300 -2 600 ] [-4 100 to-4 600 ]
Index 100 103 26 -46
Investments (EUR 000) [4 800 -5 800 ] [480 -580 ] [21 500 -26 000 ] [2 400 -2 900 ]
Index 100 10 449 51
Return on investments (%) 50 -60 70 -80 6 -7 [-30 to -35 ]
Index 100 134 12 -55
Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply. Source: Jungbunzlauer S.A. questionnaire reply.
  • (283) The Commission established the profitability of the known Union producer 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. Profitability was at a very healthy level for the first two years of the period considered, but decreased significantly as of 2022, and turned into very high losses in the investigation period in view of the continued increase in the dumped imports and lower prices, leading to lost sales and an almost complete suspension of production.
  • (284) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow followed a similar pattern to that of profitability throughout the period considered, notably a sharp decrease in 2022 and a significant negative value in the investigation period.
  • (285) While investments decreased in 2021 from the previous year, Union consumption increased by 39 % (see Table 2). This strong growth in demand prompted the Union industry to take a decision to invest in expanding production capacity, which translated into a very high level of investments in 2022. However, by the time the expanded production capacity became available, the dumped imports had already started negatively affecting the sales and production of the Union industry, meaning those investments were never fully put into use. In the investigation period investment again decreased significantly.
  • (286) The return on investments is the profit in percentage of the net book value of investments. Consistent with the profitability, it was at a healthy level and growing trajectory in 2020 and 2021 but took a sharp downward turn in 2022 and reached a significant negative level in the investigation period.
  • (287) The known Union producer’s ability to raise capital was severely hampered as its cash flow and profitability reached significant negative levels in the investigation period following an almost complete suspension of production.
4.4.4.   Conclusion on injury
  • (288) The Union industry performed well at the beginning of the period considered, with injury indicators generally at healthy levels and on an upward trend during 2020 and 2021. It enjoyed a high level of profitability in the context of growing demand, to which it responded with significant investments to expand production capacity.
  • (289) However, 2022 saw a sharp deterioration of the situation on the market for the Union industry, with a marked reversal of the previously positive trend across practically all injury indicators. This reversal further accentuated in the investigation period, when several injury indicators (in particular profitability, cash flow and return on investments) reached significant negative levels.
  • (290) The Union industry faced increasing costs of production that it was unable to pass on in the form of price increases given undercutting by imports from the PRC. It started losing sales volumes towards the end of 2022, which was reflected also in loss of market share of 45 % during the period considered. In reaction, it had to reduce and ultimately almost completely suspend production.
  • (291) The volume of imports from the PRC grew by 36 % during the period considered, gaining 17 percentage points in market share. Prices of imports from the PRC initially increased by 32 % in 2021, presumably driven by supply and transport bottlenecks during and shortly following the COVID-19 pandemic. However, in 2022 prices of imports from the PRC returned to a level close to that of 2020, and further decreased in the investigation period to a level 15 % lower than in 2020. In view of the low prices of the Chinese imports, the Union industry could not sell above its cost of production (which increased due to higher raw material and energy prices), leading to losses and an almost complete suspension of production in the investigation period.
  • (292) The only injury indicators which did not see significant deterioration during the period considered are production capacity, sales prices of the Union industry and labour costs. However, this reflects underlying factors that in fact further underscore the dramatic injury picture, notably the completion of previously started capacity expansion at a moment when production was almost completely suspended, a significant increase in the cost of production and a decision to keep employees temporarily on stand-by instead of laying them off, respectively.
  • (293) In summary, a 36 % increase in imports from PRC at prices that decreased by 15 % during the period considered and significantly undercut Union sales prices coincided with the Union industry seeing a dramatic reversal of its performance across the injury indicators, culminating in significant losses and an almost complete suspension of production in the investigation period.
  • (294) 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

  • (295) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the country concerned caused material injury to the Union industry. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the dumped imports from the country concerned was not attributed to the dumped imports. These factors are: imports from other third countries, export performance of the Union industry and cost increases in raw materials and energy prices.

5.1.   Effects of the dumped imports

  • (296) As set out in recital (248), the import volume of the product concerned from the PRC increased by 36 %, translating into an increase of 17 percentage points in the market share of the Chinese imports into the Union during the period considered. During the same period, as set out in recitals (267) and (268), the Union industry saw its sales volume decrease by 42 % and its market share by 45 %. This happened in a context where Union consumption fluctuated and increased overall by 10 % during the period considered.
  • (297) As shown in recital (253), the Chinese imports were significantly undercutting the Union industry prices, and the undercutting increased throughout the period considered, leading to an increasing deterioration of the situation of the Union industry. Chinese imports also led to price suppression during the IP, when the Union industry was incapable of selling above its costs in view of the pressure derived from the dumped imports.
  • (298) Therefore, the Commission concluded that a significant increase in dumped imports from the PRC at prices that were significantly undercutting Union prices, caused material injury to the Union industry.

5.2.   Effects of other factors

  • (299) The Commission also examined whether other known factors, individually or collectively, are capable of attenuating the causal link established between the dumped imports and the material injury provisionally found to exist to the effect that such link would no longer be genuine and substantial.
5.2.1.   Imports from third countries
  • (300) The only other third country from which the product concerned is imported is the United States of America (USA). The volume of imports from the USA developed over the period considered as follows:

Table 12

Imports from third countries
Country 2020 2021 2022 Investigation period
USA Volume (tonnes) [375 -470 ] [360 -450 ] [505 -635 ] [170 -210 ]
Index 100 96 135 45
Market share (%) [3 -4 ] [2 -3 ] [4 -5 ] [1 -2 ]
Average price (EUR/tonne) [2 600 -3 100 ] [3 460 -4 120 ] [3 900 -4 650 ] [3 460 -4 120 ]
Index 100 133 150 133
Source: Specialised market intelligence. Source: Specialised market intelligence. Source: Specialised market intelligence. Source: Specialised market intelligence. Source: Specialised market intelligence. Source: Specialised market intelligence.
  • (301) As set out in recital (248), the import volume from the PRC increased 36 %, during the period considered. By contrast, the import volume from the USA decreased by 55 %, with its market share reaching only 1 % to 2 % in the investigation period.
  • (302) Moreover, the prices of imports from the USA were significantly higher than the prices of imports from the PRC, and also somewhat higher than the price of the Union industry.

Reading this document does not replace reading the official text published in the Official Journal of the European Union. We assume no responsibility for any inaccuracies arising from the conversion of the original to this format.

This text is published under EUR-Lex's own terms of reuse, not a Legalize or public-domain licence. EUR-Lex
Creative Commons Attribution 4.0 International (CC BY 4.0)
© European Union, https://eur-lex.europa.eu — Source: EUR-Lex (Publications Office of the European Union). Reused under the Creative Commons Attribution 4.0 International (CC BY 4.0) licence. Only EU legislation published in the printed Official Journal of the European Union is deemed authentic; consolidated texts are reproduced here for documentation purposes and have been reformatted to Markdown.