Commission Implementing Regulation (EU) 2024/2661 of 14 October 2024 imposing a definitive anti-dumping duty on imports of aluminium radiators originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

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 (‘the basic Regulation’) (1), and in particular Article 11(2) thereof,

Whereas:

(1) By Regulation (EU) No 1039/2012 (2), the Council imposed anti-dumping duties on imports of aluminium radiators, originating in the People’s Republic of China (‘the original measures’). The investigation that led to the imposition of the original measures will hereinafter be referred to as ‘the original investigation’.

(2) By Regulation (EU) 2019/59 (3) the European Commission (‘the Commission’) prolonged the definitive anti-dumping measures on imports of aluminium radiators originating in the People’s Republic of China (‘China’) following an expiry review (the ‘previous expiry review’).

(3) The anti-dumping duties currently in force are at rates ranging between 12,6 % and 56,2 % on imports from the sampled exporting producers, 21,2 % on the non-sampled cooperating companies and 61,4 % on all other companies in China.

(4) Following the publication of a notice of impending expiry (4) the Commission received a request for a review pursuant to Article 11(2) of the basic Regulation.

(5) The request for review was lodged on 17 October 2023 by the International Association of Aluminium Radiator Manufacturers (‘the applicant’) on behalf of the Union industry of aluminium radiators in the sense of Article 5(4) of the basic Regulation. The request for review was based on the grounds that the expiry of the measures would be likely to result in recurrence of dumping and recurrence of injury to the Union industry.

(6) Having determined, after consulting the Committee established by Article 15(1) of the basic Regulation, that sufficient evidence existed for the initiation of an expiry review, on 12 January 2024 the Commission initiated an expiry review with regard to imports into the Union of aluminium radiators originating in China on the basis of Article 11(2) of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (‘the Notice of Initiation’) (5).

(7) The investigation of continuation or recurrence of dumping covered the period from 1 January 2023 to 31 December 2023 (‘review investigation period’). The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2020 to the end of the review investigation period (‘the period considered’).

(8) In the Notice of Initiation, interested parties were invited to contact the Commission in order to participate in the investigation. In addition, the Commission specifically informed the applicant, other known Union producers, the known producers in China, the authorities of China and known importers about the initiation of the expiry and invited them to participate.

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

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

(11) The Commission stated in the Notice of Initiation that it had provisionally selected a sample of Union producers.

(12) Pursuant to Article 17(1) of the basic anti-dumping Regulation, the criterion used for the selection of the sample was the representativity in terms of volume of production and sales of the like product in the Union between 1 October 2022 and 30 September 2023.

(13) This sample consisted of three Union producers, all located in Italy, and accounted for more than 65 % of estimated total production of the like product in the Union.

(14) The Commission invited interested parties to comment on the provisional sample. Since no comments were received, the Commission confirmed the provisionally selected sample as the definitive sample.

(15) To decide whether sampling was necessary and, if so, to select a sample, the Commission invited unrelated importers and their representative associations to make themselves known and provide the information specified in the Notice of Initiation. No unrelated importer came forward.

(16) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all producers in China to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the People’s Republic of China to identify and/or contact other producers, if any, that could be interested in participating in the investigation. No replies were received.

(17) Consequently, the Commission informed the authorities of China that in the absence of cooperation it intended to resort to the use of facts available under Article 18 of the basic Regulation when examining the continuation or recurrence of dumping. No response was received.

(18) Questionnaires for Union producers, as well as those for importers, users and producers in China were made available online on the day of the initiation. (6)

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

(20) Questionnaire replies were received from the three sampled Union producers.

(21) Neither the GOC nor any producer in China provided a questionnaire reply.

(22) The Commission sought and verified all the information deemed necessary for the determination of likelihood of continuation or recurrence of dumping and injury and of the Union interest.

(24) On 8 August 2024, the Commission disclosed the essential facts and considerations on the basis of which it intended to maintain the anti-dumping duties in force. All parties were granted a period within which they could make comments on the disclosure.

(25) The comments made by interested parties were considered by the Commission and taken into account, where appropriate. No parties requested a hearing.

(26) The product under review is the same as in in the original investigation and in the previous expiry review, namely aluminium radiators and elements or sections of which such radiator is composed, whether or not such elements are assembled in blocks, excluding radiators and elements and sections thereof of the electrical type, currently falling under CN codes ex 7615 10 10 , ex 7615 10 80 , ex 7616 99 10 and ex 7616 99 90 (TARIC codes 7615 10 10 10, 7615 10 80 10, 7616 99 10 91, 7616 99 90 01 and 7616 99 90 91) (‘the product under review’).

(28) These products are therefore considered all to be like products within the meaning of Article 1(4) of the basic Regulation.

(29) In accordance with Article 11(2) of the basic Regulation, the Commission examined whether dumping was taking place during the review investigation period and whether dumping was likely to continue or recur upon a possible expiry of the measures in force.

(30) As mentioned in recital (16), none of the producers from China cooperated in the investigation. Therefore, on 21 February 2024 the Commission informed the Chinese authorities and all interested parties that due to the absence of cooperation, the Commission intended to apply Article 18 of the basic Regulation concerning the findings with regard to China. The Commission did not receive any comments nor requests for an intervention of the Hearing Officer in this regard.

(31) Consequently, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of continuation or recurrence of dumping were based on facts available, in particular information in the request for review, and information obtained from cooperating parties in the course of the review investigation (namely, the applicant) and information from other publicly available sources, in particular the Global Trade Atlas (‘GTA’) (7).

(32) According to Article 2(1) of the basic Regulation, ‘the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country’.

(33) However, according to Article 2(6a)(a) of the basic Regulation, ‘in case it is determined […] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks’, and ‘shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits’ (‘administrative, selling and general costs’ is refereed hereinafter as ‘SG & A’).

(34) As further explained below, the Commission concluded in the present investigation that, based on the evidence available, and in view of the lack of cooperation of the GOC and the exporting producers, the application of Article 2(6a) of the basic Regulation was appropriate.

(35) In recent investigations concerning the aluminium sector in China (8), the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present.

(36) In those investigations, the Commission found that there is substantial government intervention in China resulting in a distortion of the effective allocation of resources in line with market principles (9). In particular, the Commission concluded that in the aluminium sector, not only does a substantial degree of ownership by the GOC persist in the sense of Article 2(6a)(b), first indent of the basic Regulation (10), but the GOC is also in a position to interfere with prices and costs through State presence in firms within the meaning of Article 2(6a)(b), second indent of the basic Regulation (11). The Commission further found that the State’s presence and intervention in the financial markets, as well as in the provision of raw materials and inputs have an additional distorting effect on the market. Indeed, overall, the system of planning in China results in resources being concentrated in sectors designated as strategic or otherwise politically important by the GOC, rather than being allocated in line with market forces (12). Moreover, the Commission concluded that the Chinese bankruptcy and property laws do not work properly in the sense of Article 2(6a)(b), fourth indent of the basic Regulation, thus generating distortions in particular when maintaining insolvent firms afloat and when allocating land use rights in China (13). In the same vein, the Commission found distortions of wage costs in the steel sector according to Article 2(6a)(b), fifth indent of the basic Regulation (14), as well as distortions in the financial markets in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, in particular concerning access to capital for corporate actors in China (15).

(37) Like in previous investigations concerning the aluminium sector in China, the Commission examined in the present investigation whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the request, and in the Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defence Investigations (16) (‘Report’) as well as in its updated version (‘updated Report’) (17), which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in China’s economy in general, but also the specific market situation in the relevant sector including the product under review.

(38) The request alleged that due to the existence of significant distortions in China, domestic prices and costs of the Chinese aluminium industry cannot be used in the present case. To support its position, the applicant referred to the Report, especially the sections concerning the aluminium sector (18), to previous Commission investigations of aluminium and downstream products (19), to Chinese legislation, as well as to additional studies.

(39) In particular, the applicant commissioned a study, ‘China Household Aluminum Radiators Industry Market Research Report’ (‘the Study’), updated as of October 2023. The Study showed that China is not only the world’s largest producer of bauxite, the main source of aluminium, but also the world’s largest producer of aluminium, and ‘[a]ccording to the data released by the International Aluminum Association and the International Energy Deployment, in 2020, China’s aluminum production increased by 5 % year-on-year, while the rest of the world only increased by 0,3 %, and even the production of aluminum in some regions declined. China accounts for 57,2 percent of global aluminium production. Overall, China’s aluminum production has shown an upward trend. China’s 2022 aluminum production reached 40 million tons, once again accounting for more than half of global aluminum production. China is also one of the world’s largest consumers of aluminum’.

(40) The applicant furthermore sustained that the boom that the aluminium industry experienced in China was led by favorable government policies encouraging SOEs to enter the primary aluminum production sector and private owned enterprises to enter the aluminum manufacturing sectors.

(42) In conclusion, the request took the position that prices or costs 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. On that basis, according to the request, it is not appropriate to use domestic prices and costs to establish normal value in this case.

(43) The GOC did not comment or provide evidence supporting or rebutting the existing evidence on the case file, including the Report and the additional evidence provided by the applicant, on the existence of significant distortions and/or appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand.

(44) Consequently, when examining in the present investigation whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation, the Commission did so on the basis of the evidence available on the file, including the evidence contained in the request, as well as in the updated Report. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in China, as established also in its previous investigations in this respect.

(45) In the sector of the product under review, a substantial degree of ownership, control, policy supervision or guidance by the GOC persists in the sense of Article 2(6a)(b), first indent of the basic Regulation. In China, enterprises operating under the ownership, control and/or policy supervision or guidance by the state represent an essential part of the economy. The GOC and the Chinese Communist Party (‘CCP’) maintain structures that ensure their continued influence over enterprises, and in particular SOEs (20). However, CCP interventions into operational decision making have become the norm not only in SOEs, but also in private companies (21), with CCP claiming leadership over virtually every aspect of the country’s economy.

(46) Since there was no cooperation from Chinese exporters of the product under review, the exact ratio of the private and state-owned producers could not be determined. However, the investigation established that the sector of the product under review is served both by SOEs and private companies (22). For instance, several producers are private, including the Unbeatable Group (‘Unbeatable’) (23), Zhejiang Navas Industry and Trade, formerly known as Yongkang Sanghe Radiator (24) (‘Zhejiang Navas’), China Botai (25) and China Flyhigh (26), while China’s largest aluminium producer, China Aluminum Corporation (‘Chinalco’) (27), is a SOE, with more than 35 % of public ownership (28).

(47) Furthermore, the GOC exerts guidance on enterprises also by setting specific objectives and policies for the sector, which all industry participants, regardless of their private or public nature, are obliged to comply with.

(48) To give an example, the Standard Conditions Applicable to the Aluminium Industry (‘Standard Conditions) (29), issued by the Ministry of Industry and Information Technology (‘MIIT’) in 2020, set the overall framework for the operation of the aluminium industry at the central level. Nominally, the Standard Conditions pursue the objective to: ‘[p]romote the supply-side structural reform of the aluminium industry, promote the technological development of the industry, and promote the high-quality development of the industry’ and provide that: ‘[b]auxite mining, alumina, electrolytic aluminium and secondary aluminium production must comply with national and local industrial policies, mineral resource plans, environmental protection and energy conservation laws, regulations and policies, mining laws, regulations and policies, safety production laws, regulations and policies, industry development plans and other requirements’ (30).

(49) The Shandong Province 14th Five Year Plan (‘FYP’) on Aluminium Industry Development (‘Shandong Plan’) (31) lists the following targets: ‘[b]y 2025, the value of aluminium industry output will reach RMB 800 billion, the end-products’ market size shall continue to expand, with high value-added products accounting for over 60 %, and the ratio of aluminium material production volume/electrolytic aluminium production volume will exceed the national average […]. The province will evolve into a major aluminium industrial cluster with significant domestic and overseas influence’ (32).