Commission Implementing Regulation (EU) 2024/2673 of 11 October 2024 imposing a provisional anti-dumping duty on imports of glass fibre yarns originating in the People’s Republic of China

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	2024/2673	14.10.2024

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union ¹ (‘the basic Regulation’), and in particular Article 7 thereof,

After consulting the Member States,

Whereas:

1. PROCEDURE

1.1.   Initiation

• (1) On 16 February 2024, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of glass fibre yarns (‘GFY’) originating in the People’s Republic of China (‘China’ or ‘the PRC’ 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 3 January 2024 by Glass Fibre Europe (‘the complainant’). The complaint was made on behalf of the Union industry of GFY in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of threat of material injury to the Union industry that was sufficient to justify the initiation of the investigation.

1.2.   Registration of imports

• (3) Pursuant to Article 14(5a) of the basic Regulation, the Commission should register imports subject to an antidumping investigation during the period of pre-disclosure unless it has sufficient evidence within the meaning of Article 5 that the requirements either under point (c) or (d) of Article 10(4) are not met.

• (4) The Commission did not register imports during the period of pre-disclosure as there was no increase in import quantities after the initiation of the investigation and therefore the conditions in Article 10(4) were not met.

1.3.   Interested parties

• (5) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainant, other known Union producers, the known exporting producers and the Chinese authorities, known importers, suppliers and users, traders about the initiation of the investigation and invited them to participate.

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

1.4.   Sampling

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

Sampling of Union producers

• (8) In a Note to the File of 16 February 2024, the Commission stated that based on the information available, the two companies Saint-Gobain Vertex s.r.o and Valmiera Stikla Skieddra AS represent the totality of the Union industry and that therefore sampling was not necessary. The Commission invited interested parties to comment on this provisional decision. No comments were received. The Commission therefore confirmed its decision not to sample in the Note to File of 12 March 2024.

Sampling of importers

• (9) No importers came forward and provided information for the selection of the sample.

Sampling of exporting producers in China

• (10) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting 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 the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation. Five exporting producers in China provided the requested information and agreed to be included in the sample.

• (11) In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of two exporting producers, Shandong Fiberglass Group Corp (‘Shandong Fiberglass’) and Henan Guangyuan New Material Co. Ltd (‘Henan Guangyuan’), on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. The two initially sampled exporting producers represented in total [11 – 15 %] of the total volume of Chinese exports to the Union.

• (12) In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the Chinese authorities were consulted on the selection of the sample.

• (13) One exporting producer, Jiangsu Jiuding Special Fiber Co., Ltd., claimed that it should have been included in the sample. However, in its sampling form, it reported exports of chopped strands which, after the product definition was clarified as explained in recitals (26) and (28), is not in the product scope. Based on the remaining volume of its exports of the product concerned to the Union, this exporting producer did not qualify to be part of the sample.

• (14) On 26 March 2024 (7 days before the deadline to submit the response to the exporting producer questionnaire), Shandong Fiberglass, the company representing the largest exports to the Union in the sample, announced that it will not cooperate with the investigation.

• (15) The three other exporting producers who responded to the sampling form represented in total [2 – 5,5 %] of the Chinese export volume. They indicated intentions to request an individual examination but none of them submitted responses to the exporting producer questionnaire and thus a valid request. Given the low level of exports to the Union of the exporting producers that provided sampling replies, any additions to the sample, even had the replies to the anti-dumping questionnaire been submitted, would not have resulted in a representative sample ³.

• (16) Overall, the level of cooperation in this case is low because the imports of the producers that provided replies to the sampling questionnaire, following the decision of Shandong Fiberglass to cease cooperation, represented [4,5 % to 9 %] of the total Chinese exports to the Union expressed as proportion of the total imports from the country concerned to the Union in the IP, that were established on the basis of Eurostat as detailed in recital (159).

• (17) Due to low cooperation leading to a situation where a representative sample could not be selected, the Commission decided to abandon sampling altogether and apply Article 18 for the determination of dumping, in accordance with Article 17(4), second paragraph of the basic Regulation.

• (18) On 5 August 2024 the Commission issued a note to the file and informed the Chinese authorities about its decision to abandon sampling (see recital (17) above). The interested parties were invited to comment but no comments were received.

1.5.   Individual examination and individual margin

• (19) As explained in recital (15), three other Chinese exporting producers in their respective sampling forms indicated their interest in individual examination under Article 17(3) of the basic Regulation. However, these exporting producers did not submit valid requests as they did not submit responses to the questionnaire for the exporting producers within the deadline specified in the Notice of Initiation. Therefore, the Commission considers that no individual examination requests were received from these companies.

• (20) As the only company from the original sample that provided a proper and timely questionnaire response that could be verified in accordance with Article 16(1) of the basic Regulation, the Commission decided to calculate an individual margin for Henan Guangyuan.

1.6.   Questionnaire replies and verification visits

• (21) The Commission sent also 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’).

• (22) The Commission made questionnaires for the Union producers, the exporting producers, the known importers and users available online ⁴ on the day of initiation.

• (23) The Commission received questionnaire replies from the two Union producers, one Chinese exporting producer, one unrelated importer and three users. The Commission did not receive the questionnaire reply from the GOC.

• (24) The Commission sought and verified all the information deemed necessary for a provisional determination of dumping, resulting injury and Union interest. Verification visits pursuant to Article 16 of the basic Regulation were carried out at the premises of the following companies:

Union producers

• — Saint-Gobain Adfors s.r.o, Litomysl, Czechia (‘Saint-Gobain‘)

• — Valmieras Stikla Skiedra AS, Valmier, Latvia (‘Valmiera‘)

Exporting producers in China

• — Henan Guangyuan New Material Co., Ltd. (‘Henan Guangyuan‘)

1.7.   Investigation period and period considered

• (25) The investigation of dumping and injury covered the period from 1 January 2023 to 31 December 2023 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2020 to the end of the investigation period (‘the period considered’).

2. PRODUCT UNDER INVESTIGATION, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under investigation

• (26) The product under investigation is glass fibre yarns, whether or not twisted, excluding glass fibre slivers, glass fibre cords and chopped strands, currently falling under CN codes ex 7019 13 00 and ex 7019 19 00 (TARIC Codes 7019 13 00 10, 7019 13 00 15, 7019 13 00 20, 7019 13 00 25, 7019 13 00 30, 7019 13 00 50, 7019 13 00 87, 7019 13 00 94, 7019 19 00 30, 7019 19 00 85).

• (27) GFY is used in a wide range of applications, for example in woven, knit, braided or non-crimp fabrics, which are then used to reinforce cementitious material such as mortar or elastomeric, thermoplastic, and thermoset resins in the composites industry. Examples of use include cars, electric vehicle batteries, trucks, buses, trains, windmill blades, aircrafts, building insulation, smoke and fire protection, acoustic insulation, filtration (air, metal, dust and liquid), electrical insulation, etc.

• (28) On 25 March 2024, in response to an inquiry of a Chinese exporting producer, the Commission issued a note to the file clarifying the product definition. The note clarified that high silica continuous yarns were included in the definition of the product under investigation whereas chopped strands, irrespective of the glass type and irrespective of the length, were excluded from the definition of the product under investigation. The interested parties were invited to comment but no comment was received.

2.2.   Product concerned

• (29) The product concerned is the product under investigation originating in China.

2.3.   Like product

• (30) The investigation showed that the following products have the same basic physical, chemical and technical characteristics as well as the same basic uses:

• — the product concerned when exported to the Union;

• — the product under investigation produced and sold on the domestic market of China; and

• — the product under investigation produced and sold in the Union by the Union industry.

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

3. DUMPING

3.1.   Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation

• (32) In view of the sufficient evidence available at the initiation of the investigation pointing to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation with regard to China, the Commission considered it appropriate to initiate the investigation with regard to the exporting producers from this country having regard to Article 2(6a) of the basic Regulation.

• (33) Consequently, in order to collect the necessary data for the eventual application of Article 2(6a) of the basic Regulation, in the Notice of Initiation the Commission invited all exporting producers in China to provide information regarding the inputs used for producing GFY. Two exporting producers (Jiangsu Jiuding Special Fiber Co., Ltd and Chongqing Tianze New Material Corp) submitted the relevant information.

• (34) To obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in point 5.3.2 of the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union.

• (35) No questionnaire reply was received from the GOC and no submission on the application of Article 2(6a) of the basic Regulation was received from the GOC within the deadline. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in China.

• (36) In the Notice of Initiation, the Commission also specified that, in view of the evidence available, it may need to select an appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation for the purpose of determining the normal value based on undistorted prices or benchmarks.

• (37) On 19 April 2024, the Commission informed by a note (‘the First Note’) the interested parties on the relevant sources it intended to use for the determination of the normal value. In that note, the Commission provided a list of all factors of production such as raw materials, labour and energy used in the production of GFY. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified Brazil, Malaysia, Mexico, Thailand and Türkiye as possible appropriate representative countries.

• (38) The Commission received comments on the First Note from the complainant and Henan Guangyuan. These comments are addressed in section 3.2.

• (39) On 27 June 2024, the Commission informed by a second note (‘the Second Note’) the interested parties on the relevant sources it intended to use for the determination of the normal value, with Türkiye as the representative country. It also informed interested parties that it would establish selling, general and administrative costs (‘SG&A’) and profits based on the 2023 financial data available for the Turkish group, Türkiye Şişe ve Cam Fabrikaları A.Ş (‘the Sisecam group’), a producer of GFY in the representative country.

• (40) The Commission received comments on the Second Note from the complainant. These comments are addressed in detail in section 3.2.

• (41) After having analysed the comments and information received, the Commission concluded that Türkiye was an appropriate representative country from which undistorted prices and costs would be sourced for the determination of the normal value. The underlying reasons for that choice are further described in detail in Section 3.2.2 below.

3.2.   Normal value

• (42) 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’.

• (43) 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 referred hereinafter as ‘SG&A’).

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 low cooperation of the exporting producers, the application of Article 2(6a) of the basic Regulation was appropriate.

3.2.1.   Existence of significant distortions

• (44) In its recent investigations concerning the glass fibre sector in China ⁵, the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present.

• (45) In those investigations, the Commission found that there was substantial government intervention in China resulting in a distortion of the effective allocation of resources in line with market principles ⁶. In particular, the Commission concluded that in the glass fibre sector, not only does a substantial degree of ownership by the GOC persists in the sense of Article 2(6a)(b), first indent of the basic Regulation ⁷ but the GOC is also in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation ⁸. 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 ⁹. 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 ¹⁰. In the same vein, the Commission found distortions of wage costs in the glass fibre sector, in the sense of Article 2(6a)(b), fifth indent of the basic Regulation ¹¹, 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 ¹².

• (46) Like in its previous investigation concerning the glass fibre 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, as well as 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 (‘Report’) ¹³, which relies on publicly available sources and which the Commission placed on the file. 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 investigation. 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 also found by its previous investigations in this respect.

• (47) The complainant submitted that there is ample compelling prima facie evidence that the Chinese GFY industry is subject to interventions by the GOC that have led to significant distortions in the sector, which in turn justifies establishing the normal value according to Article 2(6a) of the basic Regulation.

• (48) To support its position, the complainant highlighted the below elements which result in significantly distorting the GFY sector in China.

• (49) First, State ownership, control or policy supervision is prevalent in the sector:

• — the GFY industry is characterised by a high level of State ownership, with several Chinese yarns producers being state-owned companies or part of state-owned conglomerates (Jushi and Taishan Fiberglass are both owned by the same state-owned parent company, CNBM; CPIC is ultimately owned by the state-owned Yuntianhua Group; Shandong Fiberglass is part of the state-owned Shandong Energy Group);

• — the GOC also owns several upstream suppliers, in particular mining and chemical companies;

• — the GOC exerts influence through personal connections, given the overlapping positions of numerous individuals within CCP and/or government structures and within leading companies in the GFY sector, such as Jushi China, Taishan Fiberglass and CPIC;

• — the GOC also keeps close links with Chinese GFY producers via representative industry associations. For instance, the China Building Materials Federation is approved by the Chinese Ministry of Civil Affairs and operates under the guidance and supervision of the State-owned Assets Supervision and Administration Commission of the State Council;

• — as a result, Chinese yarns producers explicitly adhere to the CCP guidance and these close ties to the CCP/government make it in turn easy for Chinese (state-owned) GFY producers to receive ample funding from various government agencies at different levels as well as from national financial institutions.

• (50) Second, Chinese policies and measures applicable to the GFY sector discriminate in favour of domestic suppliers or otherwise influence free market forces:

• — the direction of the Chinese economy is to a significant degree determined by the planning system which sets out priorities and prescribes the goals on which the central and local governments must focus. The latest Chinese policy documents concerning the ‘new materials’ and ‘glass fibre’ sectors confirm the continued importance which the GOC attributes to the sector, including the intention to intervene in the sector to shape it in line with government policies. Enterprises in this sector benefit from numerous support mechanisms, including financial support policies, fiscal and taxation preferential policies, R & D support etc.;

• — numerous benefits to the GFY sector are enshrined in the following policy documents: the national 14^th Five-Year Plan (‘FYP’); the Made in China 2025 Roadmap; the Catalogue of Industries Encouraging Foreign Investment (2022 Edition); the 2019 Guiding Catalogue for Industry Structural Adjustment, as well as in the 2021 Guiding Catalogue of Key New Materials; the China High-Tech Export Products Catalogue; Law of the PRC on Science and Technology Progress; 14^th FYP for the Glass Fibre Industry Development; 14^th FYP on Developing the Raw Material Industry; 14^th FYP for Building Materials Industry Development; 14^th FYP on Intelligent Manufacturing Development; 14^th FYP on Developing New Materials Industry in Zhejiang; 14^th FYP of Shandong’s Building Materials Industry; 14^th FYP for High Quality Development of Manufacturing Industry in Chongqing; Jiujiang City 14^th FYP;

• (51) Third, the costs of essentially all production factors of GFY are distorted in China:

• — important raw materials, such as kaolin or dolomite, are subject to systemic distortions, with the former covered by the relevant Plans for Mineral Resources and the Building Materials Industry and the latter being one of the encouraged industries for the Inner Mongolia Autonomous Region in the Central and Western China Foreign Investment Catalogue;

• — concerning energy, the GOC intervenes significantly and systematically in the Chinese power market. Electricity and gas prices are regulated and under several State policies, large key users of electricity are allowed to purchase a certain quantity of electricity directly from power generators at prices that are lower than those offered by the grid providers. Such support schemes are in place also in Jiangsu (where the producers Jiangsu Changhai and Taichia Glass Fiber are located) and in Shandong (where Taishan Fiberglass has its seat);

• — all land in China is owned by the state which also decides on its allocation;

• — wage costs in the glass fibre sector, including also the GFY sector, are distorted, as a system of market wages cannot fully develop in China since workers and employers are impeded in their rights to collective organisation. Moreover, the mobility of the Chinese workforce is restricted by the household registration system, which limits access to the full range of social security and other benefits to local residents of a given administrative area.

• (52) Fourth, access to finance and capital in the glass fibre sector is granted by institutions which implement public policy objectives or otherwise do not act independently of the state:

• — Chinese financial system is characterised by the strong position of state-owned banks, which, when granting access to finance, take into consideration criteria other than the economic viability of a project. Accordingly, direct financing is directed into sectors designated by the government as encouraged or otherwise important;

• — due to their status, Chinese GFY producers appear to have easy access to preferential lending, including credits, loans and money market instruments from Chinese (state-owned) banks.

• (53) The GOC did not comment or provide evidence supporting or rebutting the existing evidence on the case file and 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.

• (54) In the GFY sector, a substantial degree of ownership and control by the GOC persists in the sense of Article 2(6a)(b), first indent of the basic Regulation. Since there was low cooperation from Chinese exporters of the product under investigation, the exact ratio of the private and state-owned producers could not be determined. However, the investigation confirmed that the three largest producers in the glass fibre sector, namely Jushi, Taishan Fiberglass and CPIC, are either fully state-owned or the state holds a controlling stake. These three producers represent around 60 % of Chinese glass fibre producers, with Jushi having the largest share accounting for 33 % of the Chinese market ¹⁴.

• (55) Both public and privately owned enterprises in the GFY sector are subject to policy supervision and guidance. The latest Chinese policy documents concerning the GFY sector confirm continued importance which GOC attributes to the sector, including the intention to intervene in the sector in order to shape it in line the government policies. This is exemplified by the 14^th FYP on Developing the Raw Material Industry which list the sector, in particular special-purposes glass fibres, among materials for which technological innovation will be supported by policies under the Plan ¹⁵. Glass fibres are also listed among the encouraged sectors under the 2024 edition of the Guiding catalogue for industry structural adjustment ¹⁶, as well as in the 2024 Guiding Catalogue ​of key new materials eligible to first use/demonstration schemes ^{17 .}

• (56) Similar examples of the intention by the Chinese authorities to supervise and guide the developments of the sector can be seen at the provincial level, such as in Shandong which, with respect to specifically the glass fibre and composite material industry plans to ‘actively cultivate leading and backbone enterprises with strong brand influence and market appeal, strong integration capabilities and driving effects on industrial chains and industrial clusters, and support cross-industry, cross-regional, and cross-ownership mergers and reorganization of enterprises’ and to ‘develop high-performance glass fibers and products [and to e]ncourage the development of ultra-fine, high-strength, high-modulus, alkali-resistant, low-dielectric, low-expansion, high-silica, degradable, special-shaped cross-section and other high-performance glass fiber and glass fiber products. Focusing on the needs of electronic information, aerospace, new energy, large-scale breeding farms, agricultural greenhouses and other fields, research and develop and promote glass fiber reinforced thermoplastic and thermosetting composite products, and glass fiber composite grilles for infrastructure projects.’ ¹⁸ Similarly, the Chongqing 14^th FYP on developing strategic and emerging industries foresees ‘expanding the scale of high-performance fiber and composite materials industry’ as well as ‘accelerating the construction of projects such as the […] high-performance glass fiber production line with an annual output of 150 000 tons, and the production base of ultra-fine glass fiber and composite materials, so as to increase the production capacity of high-performance glass fiber and composite materials’ ¹⁹. Emphasis on glass fibres can be seen in planning documents also in other provinces, such as Guangxi ²⁰, Hubei ²¹ or Zhejiang ²².

• (57) As to the GOC being in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation, many producers of the product under investigation explicitly emphasise Party building activities on their websites or have Party members in the company management and underline their affiliation to the CCP.

• (58) For instance, Jushi group’s Chairman of the Board serves at the same time as the Deputy Secretary of the Party Committee at the CNMB ²³. Similarly, the Chairman of Sinoma Science and Technology, which is the holding company of Taishan Fiberglass, occupies the position of the Party Committee’s Secretary while the President of Sinoma Science and Technology is the Deputy Secretary of the Party Committee ²⁴. In the case of CPIC, the Deputy Chairman of the Board and the Executive Manager holds at the same time the position of the Deputy Secretary of the Party Committee, whereas the Group Chairman of CPIC’s parent company serves also as the Secretary of the Party Committee and the Group Vice-Chairman serves as the Deputy Secretary of the Party Committee ²⁵.

• (59) Moreover, Jushi’s Articles of Association explicitly provide for direct Party oversight over essential corporate affairs in their Article 195, according to which ‘the party committee of the enterprise shall discuss and decide the major matters of the enterprise in accordance with the regulations’, with the Party committee’s main responsibilities entailing the tasks to ‘study and discuss major business management issues of the company, and support the shareholders’ meeting, the board of directors, the board of supervisors and the management to exercise their powers according to law’, as well as to ‘strengthen the leadership and control of the selection and employment of the enterprise, and do a good job in the construction of the enterprise leadership team, cadre team and talent team’ ²⁶.

• (60) Furthermore, Taishan Fiberglass held the celebration of the 100^th anniversary of the CCP founding and the secretary of the company’s Party committee delivered a speech: ‘The 30 years of reform, innovation and development of Taishan Fiberglass are 30 years of adhering to and strengthening the leadership of the Party, 30 years of inheriting and carrying forward the great spirit of the Party, and 30 years of fruitful results in Party building, reform and development, production and operation.’ ²⁷. Moreover, the Jushi group’s enterprise’s articles of association stated that one their main responsibilities is ‘implementation of Xi Jinping thoughts on Socialism with Chinese Characteristics for a New Era, study and publicize the Party’s theory, implement the Party’s line, principles and policies, supervise and ensure the implementation of major decisions and arrangements of the Party Central Committee and the resolutions of higher-level Party organizations in the enterprise; study and discuss major business management issues of the company, and support the shareholder’s meeting, the board of directors, the board of supervisors and the management to exercise their powers according to law’ ²⁸ .

• (61) Furthermore, policies discriminating in favour of domestic producers or otherwise influencing the market in the sense of Article 2(6a)(b), third indent of the basic Regulation are in place in the GFY sector. While industrial policies typically relate to several sectors, the GFY sector is subject to numerous plans, guidelines, directives and other policy documents issued at national, regional and municipal level (see also recitals (56) and (57)). Those policies are at times squarely at odds with market forces, such as, for example, the Guangxi three-year action plan on strategic and emerging industries which administratively sets future target output volumes and growth rates: ‘by 2023, the output value of the new material industry will reach 133 billion yuan, and the added value will reach 44 billion yuan’ ²⁹.

• (62) In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production of the main inputs used in the manufacturing of the product under investigation. Such measures impede market forces from operating freely.

• (63) The present investigation has not revealed any evidence that the discriminatory application or inadequate enforcement of bankruptcy and property laws according to Article 2(6a)(b), fourth indent of the basic Regulation in the GFY sector referred to above in recital (45) would not affect the manufacturers of the product under investigation.

• (64) The GFY sector is also affected by the distortions of wage costs in the sense of Article 2(6a)(b), fifth indent of the basic Regulation, as also referred to above in recital (45). Those distortion affect the sector both directly (when producing the product under investigation or the main inputs), as well as indirectly (when having access to capital or inputs from companies subject to the same labour system in China).

• (65) Moreover, no evidence was submitted in the present investigation demonstrating that the GFY sector is not affected by the government intervention in the financial system in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, as also referred to above in recital (45). Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

• (66) Finally, the Commission recalls that in order to produce the product under investigation, a number of inputs is needed. When the producers of the product under investigation purchase or contract for these inputs, the prices paid (and which are recorded as their costs) are 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.

• (67) As a consequence, not only the domestic sales prices of the product under investigation 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 Report. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout China. This means, for instance, that an input that in itself was produced in China 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.

• (68) On 29 April 2024, Henan Guangyuan submitted a set of comments, noting that Article 2(6a)(a) of the basic Regulation calls for the significant distortions assessment done for each exporter and producer separately. In that respect, Henan Guangyuan claimed that there should be no significant distortions regarding its cost of production.

• (69) The Commission noted that, other than referring back to its questionnaire reply (which in turn does not contain any claims concerning significant distortions pursuant to Article 2(6a) of the basic Regulation, except a statement that the company purchases various raw materials at international prices), Henan Guangyuan did not present any arguments which would call into question the analysis concerning significant distortions. 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. If the existence of significant distortions is established, then the provisions of Article 2(6a) of the basic Regulation apply, a priori, to all exporting producers in China and concern all costs relating to their factors of production. The same provision of the basic Regulation provides for the use of domestic costs which are positively established not to be affected by significant distortions. However, while Henan Guangyuan did not submit accurate and appropriate evidence on undistorted prices and costs, the calculations concerning Henan Guangyuan in any event reflect the data submitted by the company itself, including the factors of production and amounts as reported by the company in the questionnaire reply, but duly taking into account the existence and impact of significant distortions in China, in accordance with the provisions of the basic Regulation, in particular Article 2(6a) thereof.

• (70) In sum, the evidence available showed that prices or costs of the product under investigation, 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. On that basis, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case. Consequently, the Commission proceeded to construct the normal value for Henan Guangyuan 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.

3.2.2.   Representative country

General remarks

• (71) 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 China. For this purpose, the Commission used countries with a gross national income per capita similar to the China on the basis of the database of the World Bank ³⁰;

• — Production of the product under investigation in that country;

• — Availability of relevant public data in the representative country;

• — 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.

• (72) As explained in recitals (37) to (41), the Commission issued two notes for the file on the sources for the determination of the normal value: the first note of 19 April 2024 (hereinafter the ‘First Note’) ³¹ and the second note of 27 June 2024 (hereinafter the ‘Second Note’) ³².

• (73) 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.

• (74) In the Second Note on production factors, the Commission informed interested parties of its intention to consider Türkiye 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.

A level of economic development similar to China

• (75) In the First Note, the Commission identified Brazil, Malaysia, Mexico, Thailand and Türkiye as countries with a similar level of economic development as China according to the World Bank (i.e. ‘upper-middle income’ countries on a gross national income basis) where production of the product under investigation was known to take place.

• (76) In its comments to the First Note, Henan Guangyuan argued that none of the five countries produced the product under investigation but did not rebut the Commission’s data in substance. Henan Guangyuan further proposed Taiwan and Hong Kong as alternative representative countries.

• (77) The First Note provides evidence of production of GFY, or at least production of a product in the same general category and/or sector as the product of investigation in all five proposed potential representative countries. There was therefore no grounds to exclude any country from the list provided in recital (75).

• (78) Furthermore, neither Taiwan nor Hong Kong falls into the category of ‘upper-middle income’ according to the classification of the World Bank. Therefore, the proposal to consider Taiwan and Hong Kong as representative countries was rejected.

Relevant readily available data in the representative country

• (79) In the First Note the Commission indicated that for the countries identified as countries where the product under investigation is being produced, i.e. Brazil, Malaysia, Mexico, Thailand and Türkiye, the availability of readily available data needed to be further verified in particular with regard to the public financial data from producers of the product under investigation.

• (80) With regard to Brazil, detailed financial statements for the two companies producing GFY or a product in the same general category and/or sector as GFY, i.e. CPCI Brasil Fibras de Vidro Ltda and Owens Corning Fiberglass A.S. Ltda, as certified by the auditors, were not readily available. As a result, the Commission concluded that Brazil could not be considered as an appropriate representative country for this investigation.

• (81) With regard to Malaysia, the readily available financial data for the only company producing GFY or a product in the same general same general category and/or sector as GFY, Nippon Electric Glass (Malaysia) SDN BHD, dated back from 2022 and, as a consequence, could not be considered appropriate for the investigation period since more recent data was available for a producer in Türkiye as explained below. Financial data for 2023 is available for the group Nippon Electric Glass Co., Ltd but it lacks detailed information specific to GFY or a similar product within the same general category and/or sector. In addition, Nippon Electric Glass Co., Ltd is a global group whose financial data is not representative of the situation in Malaysia. In contrast, as explained in recitals (84)-(86) and (119)-(124), Türkiye provides more granular financial data since the SG&A costs are available for the industrial glass sector in Türkiye and profit is available for a subsidiary producing only GFY and products in the same general category/sector in Türkiye. Therefore, the Commission concluded that Malaysia could not be considered as an appropriate representative country for this investigation.

• (82) With regard to Mexico, the financial statements of the two companies producing GFY or a product in the same general category and/or sector as GFY, Ferguson Fibers de Mexico SA DE CF and Saint-Gobain Mexico were not readily available. As a result, the Commission concluded that Mexico could not be considered as an appropriate representative country for this investigation.

• (83) With regard to Thailand, the readily available financial data of the only company that appears to be producing GFY or a similar product within the same general category and/or sector, Asia Composite Material (Thailand) Co Ltd, dated back from 2022 and, as a consequence, could not be considered appropriate for the investigation period since more recent financial information was available in Türkiye as explained below. Furthermore, the 2022 data covers all company operations, lacking detailed financial information specific to GFY or a similar product within the same general category and/or sector. In contrast, Türkiye provides more granular financial data. For another Thai company, Thai United Glass Fiber Co Ltd, which produces glass fibre mats, which can be considered product within the same general category or sector as GFY, the publicly available also dated back from 2022 and also lacked the granularity available for Türkiye. Therefore, the Commission concluded that Thailand could not be considered as an appropriate representative country for this investigation.

• (84) In respect of Türkiye, consolidated financial statements are available for the IP regarding Türkiye Şişe ve Cam Fabrikaları A.Ş group (‘the Sisecam group’) ³³. The Sisecam group is active in various glass-related sectors: architectural glass, industrial glass, glassware, glass packaging. In respect of glass fibre, the group claimed to have a production capacity of 70 000 tonnes and a production of 62 000 tonnes in 2022 ³⁴.

• (85) The Sisecam group has a subsidiary specialising in glass fibre: Şişecam Balıkesir Cam Elyaf Fabrikası (‘Sisecam Elyaf’) ³⁵. Sisecam Elyaf produces e-glass rovings, chopped strands and chopped strands mats. Rovings, chopped strands, chopped strands mats are not the product under investigation but share essential production process steps with rovings: raw material preparation, melting in the furnace, extrusion of the molten glass through the holes of bushings ³⁶ to form the glass filaments, application of sizing ³⁷, gathering and winding of the filaments on spools. Thus, they are considered in the same general category as the product under investigation. The Commission therefore concludes that Sisecam Elyaf produces either the product under investigation or products in the same general category as the product under investigation. In terms of turnover, Sisecam Elyaf represents 13 % of Sisecam group’s industrial glass segment to which it belongs.

• (86) The consolidated financial statements of the Sisecam group provide the profit of Sisecam Elyaf and the SG&A costs of the industrial glass segment.

• (87) The Commission also analysed the imports of the main factors of production into Türkiye. The analysis of imports of the main factors of production showed that Türkiye imported overall significant and representative volumes of most key raw materials at undistorted prices. However, Türkiye, as the largest world producer of one of the raw materials (ground colemanite), does not import that raw material. Imports of another raw material (silica flour) were also found to be small in Türkiye, putting in question the reliability of the import prices. For these two raw materials, the Commission used import data of Malaysia since this country was the sole potential representative country to have large imports of both products and it was discarded as representative country only for lack of recent and sufficiently granular financial data on its producer. The Second Note also showed that the volume of imports from China, and the countries listed in Annex I to Regulation (EU) 2015/755 of the European Parliament and of the Council ³⁸ into Malaysia (for ground colemanite and silica flour) and in Türkiye (for the other raw materials) did not disqualify the use of these countries as sources for the undistorted prices.

• (88) In light of the above considerations, the Commission informed the interested parties with the Second Note that it intended to use Türkiye as an appropriate representative country, the Sisecam group as producer in the representative country and imports in Malaysia of ground colemanite and silica flour in accordance with Article 2(6a)(a), first ident of the basic Regulation to source undistorted prices and benchmarks for the calculation of normal value.

• (89) Interested parties were invited to comments on the on the appropriateness of Türkiye as a representative country, of Sisecam group as producer in the representative country and of Malaysia regarding imports of ground colemanite and silica flour. No comments were received.

• (90) The initial selection of potential representative countries and of suitable companies with publicly available data does not prevent the Commission from the possibility to supplement or refine such selection and its research at a later stage, including by putting forward new suggestions in terms of potential representative country and similar product. Indeed, it is the very purpose of the Notes on factors of production, to invite interested parties to comment on the Commission services’ preliminary research and, if warranted, to receive alternatives for the Commission services’ further consideration. The Notes even contain a specific annex to guide parties in submitting information on possible additional representative countries and/or companies for the purpose of Article 2(6a)(a) of the basic Regulation.

Level of social and environmental protection

• (91) Having established that Türkiye 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.

3.2.3.   Conclusion

• (92) In view of the above analysis, Türkiye 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.

3.2.4.   Sources used to establish undistorted costs

• (93) In the First Note, the Commission listed the factors of production such as materials, energy and labour used in the production of the product concerned 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.

• (94) 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 (‘GTA’) ³⁹ to establish the undistorted cost of most of the factors of production, notably the raw materials. In addition, the Commission stated that it would use the statistics provided by the Turkish Statistical Institute ⁴⁰ for establishing undistorted costs of labour, natural gas, liquefied natural gas (‘LNG’) and steam, the statistics provided by the Energy Market Regulatory Authority ⁴¹ for establishing undistorted cost of electricity and the statistics provided by the Presidency of the Republic of Türkiye Investment Office ⁴² for establishing undistorted cost of water.

• (95) In the Second Note, the Commission also informed the interested parties that due to the large number of factors of production of the 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.

3.2.4.1.   Factors of production

• (96) Considering all the information submitted by the interested parties and collected during the verification visits, the following factors of production 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

Factors of production of GFY

Factor of Production	Commodity Code	Undistorted value	Source of data
Raw materials	Raw materials	Raw materials	Raw materials
Silica flour	2506 10	0,566 CNY/kg	Global Trade Atlas (‘GTA’)43 / MacMap44 for Malaysia
Kaolin clay	250700800012	1,87 CNY/kg	GTA / MacMap for Türkiye
Ground colemanite	2528 00	4,02 CNY/kg	GTA / MacMap for Malaysia
Fluorite (Fluorspar)	2529 22	5,23 CNY/kg	GTA / MacMap for Türkiye
Epoxy lotion	3907 30	26,808 CNY/kg	GTA / MacMap for Türkiye
Platinum	7110 11	224 880 CNY/kg	GTA / MacMap for Türkiye
Rhodium	7110 31	1 105 006 CNY/kg	GTA / MacMap for Türkiye
Consumables	Consumables	Consumables	Consumables
Labour	Labour	Labour	Labour
Labour	N/A	59,96 CNY/hour	The Turkish Statistical Institute
Energy	Energy	Energy	Energy
Electricity	N/A	0,89 CNY/kWh	The Turkish Statistical Institute
Natural gas	N/A	4,11 CNY/m3	The Turkish Statistical Institute
Liquefied Natural Gas (LNG)	N/A	6,02 CNY/kg	The Turkish Statistical Institute
Steam	N/A	124,25 CNY/GJ	The Turkish Statistical Institute
Water	N/A	4,96 CNY/m3	Presidency of the Republic of Türkiye Investment Office

• (97) The Commission included a value for manufacturing overhead costs in order to cover costs not included in the factors of production referred to above. The methodology is duly explained in section 3.2.4.9.

3.2.4.2.   Raw materials

• (98) 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 (CIF) to the representative country as reported in GTA to which import duties and transport costs were added.

• (99) An import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding China and countries which are not members of the WTO, listed in Annex 1 of Regulation (EU) 2015/755 ⁴⁵.

• (100) The Commission decided to exclude imports from China into the representative country as it concluded in section 3.2.2 that it is not appropriate to use domestic prices and costs in China 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. The remaining volumes were deemed to be representative.

• (101) For a number of factors of production the actual costs incurred by the cooperating exporting producer represented a negligible share of total raw material costs in the review 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 explained in the recital (95).

• (102) In order to establish the undistorted price of raw materials, as provided by Article 2(6a)(a), first indent of the basic Regulation, the Commission applied the relevant import duties in the representative country, or Malaysia regarding ground colemanite and silica flour.

• (103) The Commission expressed the transport cost incurred by the cooperating exporting producer 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 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.

• (104) In response to the Second Note, the complainant claimed that the Commission should include boron as a raw material. The Commission clarified that the supply of boron is provided by ground colemanite which is listed as a factor of production in the Second Note and in Table 1 above. Therefore, the claim was rejected.

• (105) In response to the Second Note, the complainant claimed that oxygen should be added as an energy input and included in the normal value calculation. In this respect, the complainant referred to an investigation concerning certain continuous filament glass fibre products (‘GFR’) in which oxygen was explicitly considered a factor of production. However, in the present investigation like in the GFR investigation, the Commission only considers all verified factors of production, either identifying them individually or aggregating them in the consumables. Therefore, the claim was disregarded.

• (106) In response to the Second Note, the complainant argued that the Commission should disclose at least an indication of the consumption rates of the factors of production, including the percentage it intends to consider for consumables. The Commission clarifies that the factors of production identified in the First Note that were grouped under consumables represent in total around 7 % of the total cost of manufacturing.

• (107) The complainant further commented that the factors of production identified in Annex I of the Second Note (which are the same as those in Table 1 above) differed significantly from the factors of production presented by the Union industry in its complaint. First, the complainant did not provide any evidence that these alleged discrepancies would be abnormal. Second, a comparison of the raw materials listed in the First and Second notes with those mentioned in the complaint (for example in the calculation of the normal value in Annex 32 of the complaint), reveals that the cooperating exporting producer uses all raw materials used by the Union industry: colemanite, kaolin, silica, limestone, maize starch, rhodium and platinum. It was also clarified in the Second Note that the exporting producer is using maize oil which represents a negligible proportion of the cost of manufacturing. Thus, it can then be concluded that the cooperating exporting producer consumes all the raw materials listed in the complaint. Therefore, the comment was rejected.

3.2.4.3.   Labour

• (108) The Turkish Statistical Institute publishes detailed information on wages in different economic sectors in Türkiye ⁴⁶. The Commission established the benchmark based on the latest available statistics covering 2022 for average hourly labour costs for the economic activity ‘Manufacture of other non-metallic mineral products’ NACE code C.23 according to NACE Rev.2 classification and a headcount category of more than 1 000 employees. The values were further adjusted for inflation using the labour cost index published by the Turkish Statistical Institute ⁴⁷ to reflect the costs in the investigation period.

3.2.4.4.   Electricity

• (109) The price of electricity for companies (industrial users) in Türkiye is published by the Energy Market Regulatory Authority (EMRA) ⁴⁸ in Türkiye. The Commission used the data on the industrial electricity prices that EMRA mandated to be applied as of 1 January 2023, net of VAT.

3.2.4.5.   Natural gas

• (110) The price of natural gas for industrial users in Türkiye is published by the Turkish Statistical Institute. The Commission used the price available for the second semester of 2021 and the first semester of 2022 corresponding to the consumption band of 2 610 000 – 26 100 000 m^3 49. This price was further adjusted for inflation using the Producer Price Index published by the Turkish Statistical Institute ⁵⁰ and the VAT, which is included in the published price, was deducted.

3.2.4.6.   Liquefied Natural Gas (‘LNG’)

• (111) Henan Guangyuan uses kilogram as unit for the consumption of LNG.

• (112) To obtain the benchmark price for LNG in CNY/kg, the price of natural gas, available in CNY/m³ in Table 1 above, was converted into CNY per millions of British thermal units (CNY/MMBtu). This involved determining the energy content of the gas and expressing it in MMBtu using a generally accepted conversion factor ⁵¹.

• (113) Next, this converted price in CNY/MMBtu was applied to the generally accepted energy content of one kilogram of LNG expressed in MMBtu ⁵² to derive the price of LNG in CNY per kilogram.

3.2.4.7.   Steam

• (114) Henan Guanyuan uses gigajoule (GJ) as unit for the consumption of steam.

• (115) To obtain the benchmark for steam expressed in CNY/GJ, the Commission first converted the price of natural gas from CNY/m³, as presented in Table 1 above, to CNY/MMBtu using a generally accepted conversion factor ⁵³ providing the energy content (in MMBtu) of 1 cubic meter of gas. Second, it factored in the combustion efficiency to determine the proportion of the gas’s energy content that can be recovered as the energy content of the steam. This step followed the methodology suggested by the US Department of Energy ⁵⁴. Third, the energy unit was converted from MMBtu to GJ using the physical conversion constant.

3.2.4.8.   Water

• (116) The Presidency of the Republic of Türkiye Investment Office ⁵⁵ published the cost of water for industrial use. The Commission used the price valid in 2023 for the Balikesir region where Sisecam Elyaf is located, net of VAT.

3.2.4.9.   Manufacturing overhead costs, SG&A, profits

• (117) 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 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.

• (118) The manufacturing overheads incurred by the cooperating exporting producer were expressed as a share of the costs of manufacturing actually incurred by the cooperating exporting producer. The percentage was applied to the undistorted costs of manufacturing.

• (119) For establishing an undistorted and reasonable amount for SG&A and profit at the ex-works level, the Commission relied on the financial data for 2023 for the Sisecam group which are publicly available and described in recitals (84) to (86).

• (120) In respect of Sisecam Elyaf, the company that produces only GFY and products in the same general category/sector, the publicly available financial statements for 2023 provide the net sales and the profit but do not include the information about the cost of goods sold (‘COGS’) nor the SG&A.

• (121) The COGS is available at the level of the industrial glass segment of the Sisecam group.

• (122) All elements of the SG&A costs, except for the net financial expenses, are directly available at the level of the industrial glass segment. In order to obtain the SG&A for the industrial glass segment, the Commission allocated the net financial expenses of the Sisecam group to the segment using turnover as allocation key.

• (123) The Commission used the SG&A costs of the industrial glass segment as calculated in recital (122) and the COGS of the industrial segment and obtained a SG&A expressed as a percentage of the COGS of 22,67 %. The Commission considered that this rate, when applied to the undistorted costs of production, would result in an amount for SG&A costs that would be reasonable, within the meaning of Article 2(6a)(a) of the basic Regulation, for the ex-works level of trade.

• (124) To calculate the profit expressed as a percentage of the COGS, the Commission divided the profit of Sisecam Elyaf by the COGS of the industrial segment allocated to Sisecam Elyaf using turnover as allocation key. This amounted to 22,44 %. The Commission considered that this rate, when applied to the undistorted costs of production, would result in an amount for profit that would be reasonable, within the meaning of Article 2(6a)(a) of the basic Regulation, for the ex-works level of trade.

• (125) In response to the Second Note, the complainant requested that the Commission include overhead costs in the calculation of the normal value. The Commission confirms that, as explained in section 3.2.3.9, the overhead costs are indeed accounted for in the calculation of the normal value.

3.2.5.   Calculation of the normal value

• (126) 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.

• (127) 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 were verified during the verification visit. The Commission multiplied the usage factors by the undistorted costs per unit observed in the representative country, as described in Section 3.2.4.1.

• (128) Then the Commission added manufacturing overheads, as explained in recital (118) to the undistorted cost of manufacturing in order to arrive at the undistorted costs of production.

• (129) To the costs of production established as described in the previous recital, the Commission applied the SG&A and profit percentages calculated in recitals (123)-(124).

• (130) On that basis, 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.

3.2.6.   Export price

• (131) As explained in recital (17), the Commission decided to apply Article 18 for the determination of dumping, using the best facts available.

• (132) Specifically, the Commission based its assessment of export prices for all other exporting producers on the average export price provided by Eurostat and on sales data from Henan Guangyuan, as explained in recital (145).

• (133) Henan Guangyuan sold about half of its export volume directly to the Union market and the other half via an unrelated Hong-Kong based trader. The Commission verified that the goods sold to the trader were shipped directly from China to a port in the Union and therefore considered the corresponding sales as exports to the Union.

• (134) 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.

3.2.7.   Comparison

• (135) Article 2(10) of the basic Regulation requires the Commission to make a fair comparison between the normal value and the export price at the same level of trade and to make allowances for differences in factors which affect prices and price comparability. In the case at hand the Commission chose to compare the normal value and the export price of Henan Guangyuan at the ex-works level of trade. As further explained below, where appropriate, the normal value and the export price were adjusted in order to: (i) net them back to the ex-works level; and (ii) make allowances for differences in factors which were claimed, and demonstrated, to affect prices and price comparability.