Commission Implementing Regulation (EU) 2024/2415 of 12 September 2024 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of certain alkyl phosphate esters 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 9(4) thereof,

Whereas:

(1) On 11 August 2023, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of certain alkyl phosphate esters originating in the People’s Republic of China (‘China’ or ‘the country concerned’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 30 June 2023 by ICL Europe U.A., Lanxess Deutschland GmbH and PCC Rokita S.A. (‘the complainants’). The complaint was made by the Union industry of certain alkyl phosphate esters (‘APE’) 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) On 21 December 2023, the Commission initiated a separate anti-subsidy investigation regarding imports of APE originating in China by publishing a Notice of Initiation in the Official Journal of the European Union (3).

(4) In accordance with Article 19a of the basic Regulation, on 13 March 2024, the Commission provided parties with a summary of the proposed duties and details about the calculation of the dumping margins and the margins adequate to remove the injury to the Union industry (‘pre-disclosure’). Interested parties were invited to comment on the accuracy of the calculations within three working days.

(5) The exporting producers Nantong Jiangshan Agrochemical & Chemicals Co., Ltd., Shandong Yarong Chemical Co., Ltd., Zhejiang Wansheng Co., Ltd., the traders Impag AG and ProChema GmbH, and the users Purinova Sp. z o.o., Rytm-L Sp. z o.o., and Stepan Deutschland and Netherlands sent comments on the pre-disclosure. The comments regarding the accuracy of the calculations following pre-disclosure were summarised in recitals (513) to (521) of Commission Implementing Regulation (EU) 2024/1064 (4) (‘the provisional Regulation’). The other comments submitted at pre-disclosure are summarised and responded to below.

(6) On 11 April 2024, the Commission imposed provisional anti-dumping duties on imports of certain alkyl phosphate esters originating in the People’s Republic of China by the provisional Regulation.

(8) Some additional comments from the complainants as well as from Quimidroga and Kingspan on the information provided by other interested parties in reaction to the disclosure of the provisional findings were submitted after the deadline for such comments. However, the Commission considered these comments for the definitive findings of the investigation.

(9) The parties who so requested were granted an opportunity to be heard. Hearings took place with the importer Shekoy Chemicals Europe; the Chinese sampled exporting producer Shandong Yarong and the unrelated importer Quimidroga.

(10) The Commission continued to seek and verify all the information it deemed necessary for its final findings. When reaching its definitive findings, the Commission considered the comments submitted by interested parties and revised its provisional conclusions when appropriate.

(11) The Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive anti-dumping duty on imports of APE originating in the People’s Republic of China (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure.

(12) Parties who so requested were also granted an opportunity to be heard. Hearings took place with Anhui RunYue and Quimidroga.

(13) No comments were received concerning sampling. Therefore, the conclusions in recitals (9) to (20) of the provisional Regulation, and the sample of the three largest cooperating exporting producers in terms of export quantity, were confirmed.

(14) In recital (21) of the provisional Regulation the Commission noted that two exporting producers, Zhejiang Wansheng Co. (‘Zhejiang Wansheng’), and Futong Chemical Co. (‘Futong Chemical’), had requested individual examination by returning a questionnaire in due time.

(15) In recitals (22) and (23) of the provisional Regulation the Commission stated that its decision regarding these requests would be made at this definitive stage.

(16) In its comments following the provisional measures Zhejiang Wansheng again requested individual examination under Article 17(3) of the basic Regulation.

(17) The company set out its reasons why it is different to the three sampled exporting producers based on its customers, its history of export to the Union, and its purchase of raw materials from outside China.

(18) The company also made the claim that the Commission is entitled to accept its request for individual examination and not accept the claim of the other exporting producer, Futong Chemical.

(19) The Commission decided to reject both requests for individual examination as this would have been unduly burdensome in this investigation and would prevent completion of the investigation in good time given that the sample contains already three Chinese exporting producers and represents the largest quantity of exports to the Union that could be investigated within the time available. Zhejiang Wansheng was a large group of companies, and adding it to the sample would effectively double the number of companies to be inspected.

(20) Nothing in the comments from Zhejiang Wansheng would change this conclusion and as set out in recital (19) of the provisional Regulation, the company was not added to the sample as this would have been unduly burdensome.

(21) The Commission received no comments from Futong Chemical following provisional disclosure.

(22) Following provisional disclosure, a verification visit pursuant to Article 16 of the basic Regulation was carried out at the premises of the user Kingspan based in Girona, Spain.

(23) After the publication of the provisional Regulation, two other users came forward and sent a questionnaire reply, Nestaan Holland BV and Purinova. Since these questionnaire replies came in more than 7 months after the deadline set out in section 5.5 of the Notice of initiation, the Commission did not have sufficient time to verify these replies.

(24) Recital (30) of the provisional Regulation set out the definition of the product concerned. The product under investigation is certain alkyl phosphate esters (‘APE’), currently classified under CN code ex 2919 90 00 (TARIC codes 2919 90 00 50 and 2919 90 00 65) and CN code ex 3824 99 92 (TARIC code 3824 99 92 38).

(25) APE is defined as certain alkyl phosphate esters based exclusively on side chains with a length of two or three carbon atoms (also includes chlorinated alkyl chains) and with a phosphorus content of at least 9 % (per weight) and a viscosity between 1 and 100 mPa·s (at 20-25 °C) falling under Chemical Abstracts Service (‘CAS’) numbers 13674-84-5, 1244733-77-4 and 78-40-0.

(26) APE covers two product types, tris (2-chloro-1-methylethyl) phosphate (‘TCPP’) and triethyl phosphate (‘TEP’). APE is commonly used as a flame retardant in rigid and flexible foams.

(27) With respect to the product scope, in response to the provisional disclosure, the exporting producer Shandong Yarong, the Chinese association CPCIF, empowered to represent six Chinese exporting producers of APE including the three sampled exporting producers, the two importers Quimidroga and Shekoy Europe, and the two users Kingspan and Purinova reiterated their request to exclude TEP from the product scope of the investigation, as set out in recitals (36) to (49) of the provisional Regulation. These parties repeated their claim that TCPP and TEP are different in the production process and physical, technical, and chemical characteristics and have different uses and are not interchangeable.

(28) The complainants, on their part, acknowledged that TCPP and TEP are not identical, but that they are the only two product types that fit within the objective definition of the product under investigation, which was based on sharing of the same basic physical, chemical and technical characteristics, using similar raw materials that undergo a similar production process, having the same uses and the same distribution channels and competing in the same market.

(29) Shandong Yarong, CPCIF, Quimidroga, Shekoy Europe, Kingspan, and Purinova argued that TCPP and TEP are different in molecular structure, chemical characteristics and thus do not share similar essential physical, technical, and chemical characteristics. CPCIF, Shandong Yarong, Quimidroga, and Purinova set out that the two product types are part of distinct groups of esters, since TCPP is a chlorinated/halogenated organophosphate, while TEP is a non-chlorinated/halogen-free organophosphate. The presence of chlorine affects the overall characteristics of the product, including its boiling point, viscosity, density, and environmental impact.

(30) Shandong Yarong and Quimidroga considered the product definition was drafted in a formalistic way to include both TCPP and TEP, while aside the phosphorus content the chlorine content of TCPP is a constituent component as a flame retardant and should have been included in the product definition. Kingspan argued that the product definition was arbitrary and phrased in such a way to only cover TCPP and TEP, excluding other flame retardants and phosphates that could be used in polyurethane (‘PUR’) or polyisocyanurate (‘PIR’) foams for no objective reasons.

(31) The complainants argued that the above claims disregard the reality and dynamics of the market and that no other flame retardants or phosphates would be able to substitute TCPP like TEP for its major uses. While acknowledging that using TEP instead of TCPP is not automatic in all cases, the complainants argued that PUR and PIR foam producers are already using TEP as a substitute to TCPP, as indicated to them by users such as BASF and Kingspan.

(32) As set out in recitals (31), (32) and (44) of the provisional Regulation, the Commission acknowledged that TCPP and TEP are not identical product types because the molecule structure and certain chemical characteristics of TCPP and TEP differ, but that they both share similar essential physical, technical, and chemical characteristics. Therefore, they are considered to be like products within the meaning of Article 1(4) of the basic Regulation. Pursuant to the said provision a like product can be an identical product or a product having characteristics closely resembling those of the product under investigation. TCPP and TEP have closely resembling characteristics, since they are both alkyl phosphate esters based exclusively on side chains with a length of two or three carbon atoms (also includes chlorinated alkyl chains) and with a phosphorus content of at least 9 % (per weight) and a viscosity between 1 and 100 mPa·s (at 20-25 °C), and they both can be used as flame retardants in rigid foams.

(33) The Commission has a margin of discretion on defining the product scope and has found in this investigation that both product types can and are used as flame retardants. The fact that TCPP is a chlorinated organophosphate and TEP is a non-chlorinated organophosphate does not alter this finding. The similar use was confirmed during the on-spot verification visit of Kingspan, which uses both TCPP and TEP as a flame retardant in rigid foam applications and is a significant importer of APE originating in China. Even though it might be possible that TEP has other applications than being a flame retardant, the Commission found that the two product types are in direct competition with each other for an important part of their use, i.e. for making rigid foams flame-retardant. Moreover, the data on the basis of which findings with regard to dumping, injury and the causal link between the two in this investigation were reached covered both products.

(34) Following definitive disclosure, Kingspan, Quimidroga, CPCIF, and Shandong Yarong reiterated claims regarding dissimilarity in molecular structure and differences in chemical and physical characteristics that were already addressed in recital (27) to (33).

(35) Following definitive disclosure, Kingspan referred to an ongoing anti-dumping and anti-subsidy investigation regarding flame retardants in the United States of America (‘USA’) where the product scope comprises a third flame retardant, tris (1,3-dichloroisopropyl) phosphate (‘TDCP’), in addition to TCPP and TEP. In the course of this USA investigation, ICL who is one of the complainants, admitted that the inclusion of TDCP had also been envisaged in the present investigation. Kingspan claimed that this illustrated the arbitrary nature of the product scope used in the present investigation. It is however reminded that the Commission is not bound by decisions taken in investigations conducted in other jurisdictions. Furthermore, as explained in recital (33), the Commission has a margin of discretion in defining the product scope and therefore the claim was rejected.

(36) Following definitive disclosure, Kingspan and Quimidroga claimed that the reclassification of TCPP in Carcinogen Category 2 (products with suspicion of carcinogenicity) by Lanxess on its own initiative and the impending reclassification by the European Chemicals Agency (‘ECHA’) should have been mentioned in the disclosure as it constitutes a further reason why TEP is not like to TCPP. However, the fact that chlorinated TCPP and halogen-free TEP differ in various aspects including in particular the environmental impact has already been addressed in recitals (29) to (33). The differentiation in terms of carcinogenicity, if confirmed by ECHA, would not undermine the conclusion in recital (33) and therefore the claim was disregarded.

(37) According to CPCIF and Shandong Yarong the production process of the two product types is different and the two products use different production lines. The production cannot be shifted between TCPP and TEP on the same production line and therefore the product types are not interchangeable. Shandong Yarong argued that the Commission concluded in the anti-dumping investigation concerning certain seamless pipes and tubes of iron or steel (5) that products which were not directly interchangeable could fall within the same product scope on the grounds that producers could shift their production between the different product types on the same production line, which is not the case for TCPP and TEP. Moreover, according to Quimidroga and Purinova the Commission failed to address the fact that TEP is not produced in the Union. To start producing TEP, the Union industry would have to set up the necessary equipment which would require large investments.

(38) The Commission found that the two product types were produced by the same exporting producers and were sold to the same importers and users for the same end use. There was therefore a significant degree of demand-side interchangeability between the two. Being a chemical substance, a shift in production on the same product line is not a decisive element to be considered a similar product. Pursuant to Article 1(4) of the basic Regulation, the Commission concluded that the Union industry does not have to produce identical products to all the product types falling within the product scope imported from the country concerned. The fact that the Union industry would have to make significant investments if it decided to restart the production of TEP was therefore not found to be a decisive element to consider TEP a like product to TCPP.

(39) Following definitive disclosure, Quimidroga claimed that the demand-side interchangeability referred to in recital (38) does not prove substitutability. The notion of demand-side interchangeability is based on the finding that exporting producers are producing and selling both product types to the same clients. The Commission however considered demand-side interchangeability as a mere indication that there might be substitutability of the product types for some end-use applications. In order to prove substitutability, the Commission examined data provided by users as explained in recital (49). Therefore, the claim was disregarded.

(40) Following definitive disclosure, CPCIF and Shandong Yarong claimed that the fact that the Union industry cannot resume TEP production without significant investment indicates that TCPP and TEP are not interchangeable. Shandong Yarong further disputed the finding by the Commission in recital (38) that the possibility to shift production from TCPP to TEP (or vice versa) on the same production line was not a decisive element when assessing the similarity of the product types because APE is a chemical product. The Commission acknowledged that there is a difference in the production process of TCPP and TEP however this does not change the fact that there is a significant level of substitutability between the two. The fact that the Union industry would need to make investments to produce another product type is therefore not a valid argument to conclude that product types are not similar, interchangeable, or substitutable. Therefore, the claim was rejected.

(41) Quimidroga further argued that the flame-retardant efficiency set in recital (46) of the provisional Regulation only refers to the phosphorus content, while all flame-retardant components and elements should be considered requiring 2,47 times more TEP than TCPP to reach the same flame-retardant efficiency. However, adding this amount of TEP would cause a change in the viscosity of the end-product negatively affecting the quality and performance. Quimidroga, Kingspan, and Purinova indicated that different equipment and reformulation of the chemical components is needed to come to a similar end-product, entailing significant costs and delays.

(42) The complainants indicated that the efficiency of flame retardants cannot be based on any calculation referring to the content of chemical elements like phosphorous and chlorine only, as the users of APE may formulate their products differently.

(43) The Commission found that a reformulation of the chemical components was indeed necessary to switch between TCPP and TEP. However, it learned from the verified user that these costs were limited compared to the turnover of the products incorporating APE.