Commission Implementing Regulation (EU) 2025/4 of 17 December 2024 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of titanium dioxide originating in the People’s Republic of China

COMMISSION IMPLEMENTING REGULATION (EU) 2025/4 of 17 December 2024 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of titanium dioxide originating in the People’s Republic of China

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Article 9(4) thereof,

Whereas:

(1) On 13 November 2023, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of titanium dioxide (‘TiO2’), originating in the People’s Republic of China (‘the country concerned’, ‘China’ or ‘the PRC’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 29 September 2023 by the European Titanium Dioxide Ad Hoc Coalition (‘the complainant’). The complaint was made on behalf of the European Union (‘the Union’ or ‘the EU’) industry of TiO2 in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) The Commission made imports of the product concerned subject to registration by Commission Implementing Regulation (EU) 2024/1617 (3) of 6 June 2024 (‘the registration Regulation’).

(4) In accordance with Article 19a of the basic Regulation, on 13 June 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. Interested parties were invited to comment on the accuracy of the calculations within three working days.

(5) Three users, namely Plastika Kritis SA (‘Plastika Kritis’), Munksjö Paper AB (‘Munksjö’) and Felix Schoeller GmbH & Co. KG (‘Felix’), made comments which did not pertain to the accuracy of the calculations.

(6) Plastika Kritis, a producer of masterbatch white, claimed that no dumping is taking place according to their knowledge. They further reiterated previous claims that the proposed anti-dumping duties will have catastrophic consequences for the Union masterbatch industry.

(7) In particular, Plastika Kritis claimed that masterbatches from other third countries will become much more competitive in both the Union and export markets since they will continue to have access to cheap TiO2 from China. In addition, they argued that due to limited capacity of the Union industry, there will be insufficient supply of TiO2 if the measures are imposed. Finally, in case of retroactive application of the duties, users will suffer even bigger losses since the lead time on deliveries from China increased due to the attacks on commercial vessels in the Red Sea in the first half of 2024.

(8) These comments are addressed in the relevant sections of this Regulation in the context of analysis of the Union interest and retroactive collection of duties (see Sections 7.3.2 and 8.3).

(9) Munksjö and Felix, producers of decor paper, submitted comments, disagreeing with the Commission’s decision not to grant end-use exemption to imports of laminate-grade TiO2 and reiterating their earlier claims on why the conditions to grant it are met.

(10) They further claimed that without such end-use exemption their situation will continue to worsen even despite the Commission initiating an anti-dumping investigation against Chinese imports of decor paper on 14 June 2024. (4) The reason being that the imposition of anti-dumping duties in the present investigation will both increase their cost of production and decrease the price of TiO2 on Chinese domestic market, thus further decreasing the cost of production for Chinese decor paper producers. Neither of these developments will, however, be taken into account when reaching the conclusions in the decor paper case, since the investigation period of that case ends prior to imposition of duties in the present investigation.

(11) These comments are addressed in Section 7.3.4.

(12) On 11 July 2024, the Commission imposed provisional anti-dumping duties on imports of TiO2 originating in China by Commission Implementing Regulation (EU) 2024/1923 (5) (‘the provisional Regulation’).

(14) The parties who so requested were granted an opportunity to be heard. Hearings took place with Munksjö, Felix, Plastika Kritis, Flint, ASEFAPI, Kleverkem SRL, CEPE, LB, Mauvilac and the complainant. No hearings with the Hearing Officer in trade proceedings were held.

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

(16) 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 titanium dioxide originating in China (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure.

(17) Parties who so requested were also granted an opportunity to be heard. Hearings took place with CEPE and LB. No parties requested the intervention of the Hearing Officer.

(18) In the absence of any comments, the Commission confirmed recital (6) of the provisional Regulation.

(19) In the absence of any comments, the Commission confirmed its conclusions set out in recitals (7) to (13) of the provisional Regulation.

(20) In the absence of any comments, the Commission confirmed its conclusions set out in recital (14) of the provisional Regulation.

(21) In the absence of any comments, the Commission confirmed its conclusions set out in recitals (15) to (19) of the provisional Regulation.

(22) In the absence of any comments, the Commission confirmed its conclusions set out in recital (20) of the provisional Regulation.

(23) The Commission described the product under investigation, the product concerned and the like product in recitals (21) to (26) of the provisional Regulation. In the absence of any comments, the Commission confirmed its conclusions set out in those recitals of the Provisional Regulation.

(24) Following provisional findings, several parties contested the Commission’s conclusions on requests related to the product scope. Some parties also brought forward new claims on product scope.

(25) In addition, as stated in recital (33) of the provisional Regulation, since several product scope claims were made after the deadline to submit those claims, the Commission was not able to consider them at provisional stage. These claims have now been assessed and are addressed in the appropriate subsections below.

(26) In the absence of any comments on extending the product scope to Masterbatch White (‘MW’), recitals (34) to (37) of the provisional regulation are confirmed.

(27) In its comments on the provisional Regulation, AkzoNobel claimed that the Commission failed to address AkzoNobel’s proposal to amend the PCN structure, and that the Commission should consider refining the PCN by adding more categories to the ‘TiO2 content per weight’ field of the PCN.

(28) The Commission analysed all claims concerning the amendment of the PCN structure and stated in recital (42) of the provisional Regulation that no evidence had been provided to demonstrate that the chemicals in the coating would affect prices. The same conclusion applies to AkzoNobel’s claim summarized in recital (27). No evidence had been submitted that refining the PCN by adding more categories to the TiO2 content by weight would be necessary to ensure a fair price comparison.

(29) Furthermore, as stated in recital (43) of the provisional Regulation, none of the exporting producers objected to the proposed PCN structure on the ground that it would result in an unfair price comparison, either because the PCNs do not differentiate products based on the chemicals that go into the coating or that they are insufficiently granular in the ‘TiO2 content per weight’ field. The Commission thus had no basis to conclude that it would be necessary to make this field more granular in order to ensure a fair price comparison under Article 2(10) of the basic Regulation.

(30) The Commission therefore considered this claim unfounded and rejected AkzoNobel’s proposal.

(31) In the absence of any new arguments and evidence to the above, the Commission confirmed the findings from recitals (38) to (44) of the provisional Regulation.

(32) At the outset the Commission recalled that it follows from the Court’s settled case-law that the purpose of the definition of the product concerned in an anti-dumping investigation is to aid in drawing up the list of the products which will, if necessary, be subject to the imposition of anti-dumping duties. For the purposes of that process, the Commission may take account of a number of factors, such as, inter alia, the physical, technical, and chemical characteristics of the products, their use, interchangeability, consumer perception, distribution channels, manufacturing process, costs of production and quality. (6) It is also settled case-law that in defining the product concerned the Commission enjoys a broad discretion. (7)

(33) The examination of whether a specific product has been validly included in the list of products which will, if necessary, be subject to the imposition of anti-dumping duties must be carried out in the light of the characteristics of the product concerned as defined by the Commission, not in the light of the characteristics of the products comprising the product concerned or its subcategories. (8) Products which are not identical in all respects may, because they correspond to the factors which the Commission took into account in defining the product concerned, come within the definition of that product and, in that context, be the subject of an anti-dumping investigation. (9)

(34) According to the case-law, a claim that the product concerned is ill defined must be based on arguments which show that either the Commission erred in its assessment with regard to the factors it held to be relevant or that the application of other more relevant factors required that the definition of the product concerned be restricted. (10)

(35) As explained in recitals (24) and (25), several parties introduced requests for product exclusion after the deadline to submit product scope claims or contested the provisional conclusion of the Commission concerning their request. To examine these product exclusion requests, as stated in recital (45) of the provisional Regulation, the Commission examined (i) the basic physical, chemical and technical characteristics of those product types, (ii) their end-use and interchangeability, (iii) end-customer perception. For the sake of completeness, the Commission also considered other elements which could potentially justify a product exclusion based on Union interest considerations such as: (iv) impact of duties on the user, (v) alternative sources of supply, and (vi) impact of exemption on duties. No parties contested the elements which the Commission examined to assess product exclusion request.

(36) Sun Chemical Ltd. (‘Sun Chemical’) made its product exclusion request in a submission late at the provisional stage of the investigation. In the same submission, they requested an end-use exemption for uncoated TiO2 grades if and when used as an intermediate to produce other non-white pigments that contain the conversion of the crystalline structure. This request was thus, as explained in recital (62) of the provisional Regulation and indicated in recital (25) above, not considered at the provisional stage of the investigation.

(37) Sun Chemical provided only some information on the basic physical, chemical, and technical characteristics of this product, end-use and interchangeability, impact that the duties would have on their business, and the impact of potential exemption on duties, but not on end-customer perception of changes to the product or alternative sources of supply.

(38) In addition, Sun Chemical did not provide a questionnaire reply nor submitted the relevant and verifiable data, which would allow the Commission to properly assess the claim, in an alternative format. It follows that Sun Chemical failed to substantiate their request even on the first three elements listed in recital (32) above, nor was the Commission able to verify any of the information presented.

(39) For example, the Commission had no information on the share of imports from China in Sun Chemical’s supply mix. Furthermore, due to absence of evidence, the Commission could not verify the claimed share of TiO2 in Sun Chemical’s cost of production and was thus not able to draw an accurate conclusion on what impact the duties may have on them.

(40) Equally, the Commission did not have verified information on which types of TiO2 Sun Chemical purchases and which products they use them in. The Commission was therefore unable to verify either the interchangeability, specificity of use, or the potential undermining of effectiveness of the duties if the product exclusion or end-use exemptions would be granted.

(41) Furthermore, Sun Chemical claimed that the distinguishing chemical and physical characteristics of the TiO2 that it purchases for the production of non-white pigments are that it has no coating and must have a low value of heavy metals. They did not, however, specify what threshold of heavy metals that is and how could it be measured by the customs, to ensure traceability in case of granting a product exclusion. On top of this, information on the file show that uncoated TiO2 is used in other industries too, such as ceramics production and for use in food, pharma, and cosmetic products.

(42) In view of the foregoing, Sun Chemical failed to demonstrate that the application of other more relevant factors than those considered by the Commission when defining the product concerned required that the definition of the product concerned be restricted by excluding uncoated TiO2 for non-white pigments or that an end-use exemption was warranted. Moreover, uncoated TiO2 falls within the product definition provided in recital (21) of the provisional Regulation and interested parties provided no evidence demonstrating that this subcategory TiO2 imported from the PRC is not in competition with any other product available on the Union market. The request was therefore rejected.

(43) CEPI made this product exclusion request after the deadline to make product scope claims has passed. This request could thus, as explained in recital (64) of the provisional Regulation and indicated in recital (25) above, not be considered at the provisional stage of the investigation. CEPI did not make additional claims on this request in its submission on the provisional Regulation. The complainant opposed this product exclusion request.

(44) CEPI provided only some information on the basic physical, chemical, and technical characteristics of this product, end-use and interchangeability, end-customer perception of changes to the product, and alternative sources of supply, but not on the impact of potential exemption on duties or what impact the duties would have on users.

(45) CEPI has shown that food-grade TiO2 has a special chemical characteristic, insofar that it has to meet the low heavy metal content and other requirements for E-171 food additives, set out by the Commission Regulation (EU) No 231/2012. (11) These thresholds, furthermore, could be easily checked by the customs authorities by the standard methods used to test food additives.

(46) While CEPI did not specifically address the issue of end-use and interchangeability, the Commission noted in this respect that the heavy metals threshold for food-grade TiO2 is stipulated by law. (12) No other grade of TiO2 which exceeds those thresholds could legally be used as food additive (E-171).

(47) CEPI further claimed that only two or three Union producers are able to provide food grade TiO2, and only in limited volumes.

(48) The complainant contested the notion that food-grade TiO2 could be distinguished from other types of TiO2 based on the presence of phosphorus in the coating or based on differences in production processes. The Commission noted that CEPI never made such claims and thus dismissed the complainant’s arguments as moot.

(49) On the basis of the available evidence, the Commission found that, even if the food-grade TiO2 has to meet specific requirements for E-171 additives, it cannot be concluded that it does not share the basic physical, chemical, and technical characteristics with other types of TiO2. It is merely a sub-type of the latter. According to the information available to the Commission, it is a product which requires the same main raw materials as other applications, only of higher purity, and a production line better protected from introducing contaminants during the production process in order to achieve the required regulatory thresholds.

(50) The Commission also noted that CEPI did not provide any estimate of what the share of food-grade TiO2 in the total TiO2 demand could be. The Commission could thus not assess the impact that this product exclusion could have on the effectiveness of the duties.

(51) Furthermore, in absence of such estimates, it remains unclear whether or not the two or three Union producers, which CEPI claims are able to produce food-grade TiO2, would be in a position to supply the Union demand for this grade. No additional evidence was provided in that regard, whereas the investigation has shown that sources of food-grade TiO2 also exist in other third countries, such as Canada.

(52) The Commission therefore found no ground to argue that there are not sufficient sources of supply available for this type of product.

(53) Finally, no other users of food-grade TiO2 came forward in the investigation with any data on how anti-dumping duties would impact their business, nor was such evidence provided by CEPI or other sources. The Commission thus did not have any reliable information on the nature of an impact the duties could have on users of this type of TiO2.

(54) In view of the foregoing, CEPI failed to demonstrate that the application of other more relevant factors than those considered by the Commission when defining the product concerned required that the definition of the product concerned be restricted by excluding food-grade TiO2. Moreover, food-grade TiO2 falls within the product definition provided in recital (21) of the provisional Regulation and interested parties provided no evidence demonstrating that this subcategory of TiO2 imported from the PRC is not in competition with any other product available on the Union market.

(55) The Commission could thus not conclude that the elements for product exclusion were met for food-grade TiO2 and rejected this request.

(56) AkzoNobel made a request that TiO2 produced by applying the chloride process (‘chloride process TiO2’) should be excluded from the scope of the investigation after the deadline to make product scope claims has already passed. As indicated in recital (66) of the provisional Regulation and in recital (25) above, the request could thus not be considered at the provisional stage of the investigation.

(57) First, AkzoNobel claimed, at the outset, that the chloride process TiO2 and TiO2 produced using the sulphate process (‘sulphate process TiO2’) are not substitutable.

(58) To substantiate this claim, AkzoNobel described how chloride process TiO2 in paints offers better weather resistance, a deeper colour perceived as whiter due to its blueish hue (compared to yellowish hue of sulphate process TiO2), and the resulting differences in applications between the two (chloride process TiO2 is only used for outdoor applications, while for indoor applications both chloride and sulphate process TiO2 are used).

(59) AkzoNobel further argued that, if chloride process TiO2 and sulphate process TiO2 were substitutable, paints and coatings industry would have already made the switch to sulphate TiO2 to reduce production costs. The fact that demand for chloride TiO2 remains strong, shows that they are not substitutable.

(60) Second, AkzoNobel claimed that chloride process TiO2 should be excluded from the scope of the investigation, considering that the majority of production in (and also imports from) China are of sulphate process, while the majority of production and consumption in the Union is of chloride process TiO2.

(61) Third, AkzoNobel claimed, based on its own purchase data, that there are differences in price between Chinese chloride process TiO2 and Chinese sulphate process TiO2, as well as chloride process TiO2 from other sources.

(62) AkzoNobel claimed that, due to the above two elements, the injury and causation analysis must be distorted.

(63) In its comments on the provisional Regulation, AkzoNobel essentially reiterated the above arguments.

(64) AkzoNobel challenged the Commission’s conclusion that the main distinction on the market is between anatase and rutile TiO2. To that end, AkzoNobel pointed to several market intelligence reports which it previously provided, which allegedly show that the main distinction is actually on chloride and sulphate process TiO2.

(65) Finally, AkzoNobel did not contest the Commission’s conclusion from recitals (68) and (69) of the provisional Regulation but claimed that even with Chinese imports being 66 % sulphate process TiO2, they are not competing with 90 % of EU production which is chloride process based. Thus, injury and causation analyses are inevitably distorted (except for calculations done at PCN level) to the detriment of Chinese TiO2 imports.

(66) In analysing AkzoNobel’s request, the Commission noted that its request for product exclusion essentially rests on the claim that a) chloride and sulphate process TiO2 are not substitutable, b) there is a difference in price between the TiO2 types derived from each of the processes, and c) that majority of TiO2 produced and coming from China is of sulphate process, while the majority of production and consumption in the Union is of chloride process TiO2.

(67) The Commission examined the evidence described in recital (64) above and noted that those reports merely show how much capacity under each of the two production processes individual producers are estimated to have. The fact that two different production processes exist, and their respective capacities are tracked, is not pertinent to the question whether the market players make a key distinction on that basis or not.

(68) Therefore, no new evidence was brought forward to contest Commission’s conclusion that the market generally differentiates TiO2 as anatase or rutile. To the contrary, a non-sampled exporting producer Guanxi Jinmao Titanium Co., Ltd., even made a product exclusion request for anatase TiO2, claiming significant differences and lack of substitutability between anatase and rutile TiO2.

(69) As concerns AkzoNobel’s claim that chloride and sulphate process TiO2 have different applications, the Commission first noted that AkzoNobel made that claim on the basis of the indoor vs. outdoor applications of its own products, relevant only in the paints and coatings industry. Other industries could buy both chloride and sulphate process TiO2 to use interchangeably in the same applications (as is the case, e.g., in production of decor paper or masterbatches). On top of that, even AkzoNobel itself stated in its questionnaire reply that for some applications of their products, they use both chloride and sulphate process TiO2.

(70) Therefore, even if there would be a clear-cut split between using only chloride process TiO2 in some applications of paints and coatings and only sulphate in others (quod non), this was claimed for a single type of use and is not necessarily the case for all the other industries. The Commission thus rejected this argument.

(71) Indeed, the investigation has shown that there are multiple downstream industries using TiO2 products which have been tailored to perform well in a specific application or even several applications.

(72) Within each user industry there are multiple products for different applications: architectural paints, industrial coatings (within paints and coatings industries), laminate papers for different surfaces of the furniture or flooring (decor paper industry), graphic inks for narrow web labels, for flexible packaging, and for paper and board applications (graphic ink industry), to list only some.

(73) Within each of the listed segments of the market, and even individual applications, users will often have multiple formulations of their products, depending on the specific end-use and customer needs.

(74) The investigation has also shown that users will often test specific TiO2 grades offered by TiO2 producers for performance in the formulations they use and accordingly create one or more recipes/formulas which for their products will perform in a specific way. Such product will thus be sold for a specific use within an application.

(75) The performance of those products will depend, among other things, on the type of TiO2 they use, including TiO2 particle size, crystal morphology (anatase or rutile), whether the TiO2 molecules are coated or uncoated and whether the TiO2 was produced via chloride process or the sulphate process.

(76) The interplay of all these elements will, among other factors, also naturally have an impact on the price.

(77) The Commission thus concluded that there is no convincing evidence to justify that chloride process TiO2 should be removed from the product scope on the basis of basic physical, chemical, and technical characteristics sufficiently different from sulphate process TiO2. Both chloride and sulphate process TiO2 are used in the same industries, sometimes even in the same applications.

(78) Further, there are ample alternative sources of supply since, as AkzoNobel itself stated, the majority of the Union industry production capacity is based on chloride process, as is the case in North America.

(79) As the Commission already concluded in recital (433) of the provisional Regulation and confirmed in the section 7.3.3 below, AkzoNobel would not be significantly affected by the duties and could absorb them. On the other hand, excluding more than a third of imports of the product under investigation from the product scope is likely to have a significant impact on the effectiveness of the measures.

(80) In view of the foregoing, AkzoNobel failed to demonstrate that the application of other more relevant factors than those considered by the Commission when defining the product concerned required that the definition of the product concerned be restricted by excluding chloride process TiO2. Moreover, chloride process TiO2 falls within the product definition provided in recital (21) of the provisional Regulation and interested parties provided no evidence demonstrating that this subcategory of TiO2 imported from the PRC is not in competition with any other product available on the Union market. The Commission thus rejected the request to exclude chloride process TiO2 from the product scope.

(81) AkzoNobel also reiterated its claims that the Commission should conduct separate injury and causation analyses for chloride and sulphate process TiO2, on the grounds of the arguments presented in recitals (60), (61), and (65) above.

(82) AkzoNobel did not, however, bring forward new arguments or evidence in support of that assertion.

(83) The Commission also confirmed its conclusion in recital (69) of the provisional Regulation that, only because the Chinese producers currently produce more TiO2 using the sulphate process does not mean that this will remain the case in the future. Furthermore, as explained in recital (90) of the provisional Regulation, the investigation has shown that the Chinese industry is committed to accelerate the transition from the sulphate process to the chloride process to produce TiO2.

(84) The Commission thus maintained its conclusion in recitals (70) and (71) of the provisional Regulation and rejected this request.

(85) A non-sampled exporting producer Guanxi Jinmao Titanium Co., Ltd. (‘Jinmao Titanium’) made a request to exclude anatase TiO2 from the scope of the investigation. This request was made at a very late stage of the investigation, after the provisional Regulation was already published. No parties commented on this request.

(86) As the Commission already highlighted in recital (62) of the provisional Regulation, the comments on product scope should have been submitted in the early stages of the investigation, in order to allow sufficient time to assess their merit and to give the opportunity to other interested parties to react to them.

(87) The Commission nonetheless examined the request in light of the information available at this stage.

(88) Anatase TiO2 can only be produced via the sulphate process, as Jinmao Titanium pointed out. Jinmao Titanium submitted that the Union producers’ sulphate process production capacity is much lower than the chloride process and is insufficient to meet the Union demand for anatase products, while market dynamics and Union regulations incentivise Union producers to invest in chloride production facilities.

(89) Jinmao Titanium further claimed that anatase products differ significantly from other products (i.e., rutile) across the following metrics: hardness, relative density, refractive index, scattering power, chemical stability, band gap energy, and photocatalytic activity, citing several academic sources to that end. Jinmao Titanium claimed that these properties shape end-users’ perceptions and determine their suitability for various applications.

(90) In addition, Jinmao Titanium noted that the market participants commonly distinguish between whether a product is anatase or rutile and that this has an effect on the price.

(91) Furthermore, they claimed that there is limited substitutability between anatase and rutile products. While in some fields, rutile can replace anatase, this substitution is rarely practised for economic feasibility.

(92) Jinmao Titanium thus concluded that the Union users and applications which rely more on anatase products would avoid increased costs and higher consumer prices if anatase TiO2 was excluded from the product scope. At the same time, there is limited risk of circumvention since anatase does not directly compete with Union production of rutile grades.

(93) The Commission first noted that the claim on insufficient capacities in the Union to satisfy demand for anatase TiO2 was not corroborated by any evidence. While in the investigation period (‘IP’) the Union capacity was indeed marginally lower than the total Union demand for TiO2 overall, it was not shown that there would be a particular lack of capacity as regards anatase TiO2 products. The Commission thus rejected this argument as unsubstantiated.

(94) Concerning the arguments on alleged differences between anatase and rutile products, their substitutability, end-uses, pricing, and customer perceptions, the Commission already concluded in recitals (71) to (76) above that all of those elements are affected by a number of factors in each individual application of products containing TiO2. Depending on the application, distinction between rutile and anatase TiO2 can be relevant to a larger or a lesser degree.

(95) Furthermore, Jinmao Titanium itself admits that there is indeed a degree of substitutability of rutile and anatase products even in the same applications.

(96) The Commission thus could not conclude that the potential specificities of anatase TiO2 in any of those elements would warrant a product exclusion.

(97) Finally, no evidence was submitted to show that volume of imports of anatase TiO2 to the Union was not significant. On the basis of the information available to the Commission, up to 30 % of total imports in the investigation period could potentially be anatase TiO2. Given that the Union industry also sells anatase products, such exclusion could thus have a significant impact on the effectiveness of the duties.

(98) In view of the foregoing Jinmao Titanium failed to demonstrate that the application of other more relevant factors than those considered by the Commission when defining the product concerned required that the definition of the product concerned be restricted by excluding anatase TiO2. Moreover, anatase TiO2 falls within the product definition provided in recital (21) of the provisional Regulation and interested parties provided no evidence demonstrating that this subcategory TiO2 imported from the PRC is not in competition with any other product available on the Union market. The Commission rejected this request.

(99) After the provisional measures were imposed, AAKO B.V. (‘AAKO’), a small importer of coated TiO2 used in sunscreens asked for a product exclusion for this type of TiO2.

(100) AAKO claimed that this type of TiO2 had special physical, chemical and technical characteristics, insofar that only specific grades of TiO2 can be used in sunscreens. The chemicals that can be contained in the coating of those grades and their level are defined by Annex VI to the Cosmetic Products Regulation. (13)

(101) This requires suppliers’ grades to be tested and approved for specific formulas, and they cannot be freely replaced by other suppliers.

(102) Furthermore, AAKO claimed that the price of the types of TiO2 they import is around eight times higher than standard uncoated TiO2 grades, making the markets for coated and uncoated TiO2 practically incomparable.

(103) The Commission noted that the above request contained limited information and it was submitted at a very late stage in the proceeding.

(104) The Commission also noted on the outset that the TiO2 which AAKO describes is not the only coated TiO2 on the market. To the contrary, majority of TiO2 types available on the Union market contain some form of chemical coating.

(105) Furthermore, the Commission acknowledged that the composition of TiO2 used in sunscreens is regulated by law, and it thus stands to reason that switching suppliers requires extensive testing.

(106) However, as the investigation has shown, testing TiO2 before being used in any of the users’ formulas/applications is not unique to this sector. Many other users have shown that reformulations of their products require prior testing. Therefore, the Commission could not conclude that TiO2 used in sunscreens had special physical, chemical and technical characteristics which would warrant a product exclusion.

(107) In addition, AAKO did not provide any information or evidence on potential lack of supply within the Union or alternative sources of supply.

(108) Finally, no producers of sunscreen came forward in this investigation opposing the measures indicating that the duties would not have a major impact on their business.

(109) In view of the foregoing AAKO failed to demonstrate that the application of other more relevant factors than those considered by the Commission when defining the product concerned required that the definition of the product concerned be restricted by excluding TiO2 used in sunscreens. Moreover, TiO2 used in sunscreens falls within the product definition provided in recital (21) of the provisional Regulation and interested parties provided no evidence demonstrating that this subcategory TiO2 imported from the PRC is not in competition with any other product available on the Union market. The Commission rejected AAKO’s request for product exclusion.

(110) After the publication of the provisional Regulation, a hearing was held with Munksjö and Felix. They jointly submitted comments on the Commission’s findings in the provisional Regulation. CEPI also submitted comments, requesting the Commission to reassess its conclusions on the exclusion of laminate-grade TiO2.

(111) Munksjö and Felix reiterated their claims on product exclusion or alternatively end-use exemption, providing new additional evidence and argued that all criteria which the Commission considered for these requests in previous cases were met. The Commission thus reassessed its conclusions in light of new evidence.

(112) First, the two users claimed that the Commission breached the obligation to examine with due care all information available to it, infringing the principle of equality of arms. They argued that the Commission selectively considered elements from the complainant’s submissions while disregarding the two users’ responses to these claims.

(113) As indicated in recital (47) of the provisional Regulation, the Commission did not take into account the comments on product scope submitted by the complainant on 2 May 2024, nor those jointly submitted by Munksjö and Felix on 22 May 2024 and on 30 May 2024.

(114) The Commission found that certain exporting producers advertised laminate-grade TiO2 for use in PVC and durable plastics. (14) However, Munksjö and Felix claimed that the Commission was in fact influenced by the comments the complainant made on 2 May 2024 in this respect, while disregarding the users’ counterclaims on the same subject.

(115) The Commission pointed out in that regard that the data referred to in recital (114) is publicly available online and the Commission was able to retrieve it without considering the comments made by the parties, including the comments submitted late by the complainant. In fact, in their answers to the questionnaire replies the users stated the exact product types that they purchased from individual suppliers, which the Commission checked against the information publicly available online.

(116) Nonetheless, the Commission has in the definitive stage considered all the submissions, including those which arrived too late to be considered in the provisional phase and reassessed its findings in the light of any new facts and evidence presented therein.

(117) Second, the users claimed that several conclusions that the Commission reached in the provisional Regulation were not supported by available evidence.

(118) In that context, the two users first disputed the Commission’s findings that laminate-grade TiO2 shares the same basic physical, chemical, and technical characteristics with other TiO2 types. (15)

(119) They reiterated their claim that laminate-grade TiO2 had specific physical characteristics, responding to the unique needs of decor paper industry, namely, ensuring superior lightfastness after saturation of the paper with a melamine-based resin and ensuring that the paper maintains its colour after impregnation. This element is of paramount importance to the use of decor paper in the decorative and furniture industries.

(120) The users supplemented their claim setting out the specific chemical characteristics that laminate-grade TiO2 possesses, which allow for such performance. It is the thick surface coating on the TiO2 molecule, consisting primarily of the chemical elements phosphorus pentoxide (P2O5), aluminium oxide (Al2O3) and silicon dioxide (SiO2), particularly high levels of P2O5, which exceeds 0,5 % as ratio in the dry product compared to other TiO2 grades.

(121) CEPI put forward a similar argument, claiming that the fact that laminate-grade TiO2 contains much higher concentration of phosphorus is what makes it uniquely suited for use in laminate-paper application, as well as clearly distinguishable from other TiO2 types.

(122) The users also pointed out a specific technical characteristic by which laminate-grade TiO2 behaves differently from other types: it has electrical surface charge resulting from its thick surface coating, which helps the molecule attach to the wood pulp fibres. This same surface charge as well as particle size makes it unsuitable for other applications, such as architectural paint, as it results in “chalking” of the paint on the walls.

(123) Finally, the users pointed out that there are simple, widely available methods to detect the presence and concentration of phosphorus in the coating, notably via an x-ray fluorescence (XRF) or inductively coupled plasma (ICP) test.

(124) In its submission of 2 May 2024 referred to in recital (114), the complainant claimed and provided evidence that the presence of phosphorus in the coating cannot be a distinguishing feature because almost all TiO2 products contain some level of phosphorus.

(125) The complainant furthermore claimed that customs authorities would not be able to accurately identify the presence of phosphorus in TiO2 imports and, even if they could, they would not be able to accurately distinguish between laminate-grade TiO2 and other types.

(126) The complainant added that different type of surface treatments that TiO2 grades undergo do not require unique additional equipment or specialised technology, reinforcing further the argument that laminate-grade TiO2 should not considered a separate product.

(127) The Commission analysed the additional information submitted by interested parties concerning the basic characteristics of laminate-grade TiO2. The evidence submitted confirms the Commission’s finding set out in recital (51) of the provisional Regulation that the presence of phosphorus is more significant in laminate-grade TiO2 than in other types and that the distinguished nature of that coating makes laminate-grade TiO2 suitable for decor paper production.

(128) In their submission after the publication of the provisional Regulation, the users disagreed with the Commission’s conclusion that several exporting producers advertise the same type of TiO2 for use in decor paper production, but also PVC and durable plastics, indicating that it can be used for several purposes.

(129) In that regard, in its submission of 2 May 2024, the complainant claimed that many TiO2 producers offer products which are versatile in their use, i.e., can be qualified by different users for several distinct applications (coatings, plastic, laminate paper, etc.). To that end, they provided product data sheets for three different TiO2 products manufactured by the Union producers and three more manufactured by producers in China.

(130) In their submission on 22 May 2024, Felix and Munksjö contested this claim and provided evidence showing that several of the above TiO2 grades could not, in fact, be used in decor paper production, while claiming that other grades are not even present on the Union market and is thus unknown whether they reach the standards required to be used in decor paper production.

(131) Some of the products mentioned in recital (130) above were also the ones which users reported to have bought in their questionnaire replies, which the Commission cross-checked with the publicly available data. Specifically, on LR-952, a laminate-grade TiO2 product produced by Lomon Billions, the users provided evidence that, contrary to the claim of the complainant and the Commission’s conclusion in the provisional Regulation, it is not suitable for use in PVC and durable plastics. Lomon Billions website has since been updated in that regard.

(132) Following the imposition of provisional duties, CEPI made a similar claim, arguing that laminate-grade TiO2 would be unusable in other applications, as it would not properly disperse in plastic materials.

(133) With all the newly submitted evidence, the Commission could not conclude that any of the TiO2 product types claimed by the complainant are actually being sold in the Union market both for decor paper production and some other uses at the same time. Although some other TiO2 product types are advertised (and, as the investigation has shown, indeed sold) for multiple purposes, the same was not demonstrated for the laminate-grade TiO2.

(134) While the Commission acknowledges that a few online sources advertise certain TiO2 products for use in both decor paper production and in other types of downstream products, it has not been demonstrated that the grades which are known to be used for decor paper production are sold for other uses too.

(135) To the contrary, the available evidence proves that, while there might be interchangeability for other product types, there is indeed a (limited) number of TiO2 product types produced and marketed as laminate-grade TiO2 only.

(136) As the Commission has concluded in recitals (71) to (75) above, the application of the product under investigation (such as it being used in production of decor paper) in a given end-use plays a role in defining the chemical composition and/or other characteristics of TiO2, so that it would be properly tailored for that specific application.

(137) Munksjö and Felix claimed that this is also true for laminate-grade TiO2. As the Commission already confirmed in the provisional Regulation, distinguishing chemical feature in laminate-grade TiO2 is that it contains a high concentration of phosphorus in the coating. New evidence has shown that the phosphorus content would have to be at least 0,5 % on the dry mass of the product for it to be useful in decor paper applications.

(138) At the same time, the specific technical characteristic of laminate-grade TiO2 which the two users claimed for it to possess (see in recital (122) above) were not confirmed by the investigation to be exclusive to laminate-grade TiO2 or to a particular application.

(139) Namely, even if laminate-grade TiO2 has electrical surface charge resulting from its thick surface coating, which helps the molecule attach to the wood pulp fibres, it was not demonstrated that other types of TiO2 would not have similar technical characteristics. While such surface charge might indeed make laminate-grade TiO2 unsuitable for paints and coatings applications, the Commission could not exclude that TiO2 used in production of other products (such as other types of paper) would not require a similar characteristic.

(140) Nonetheless, the Commission assessed whether phosphorus content in the coating would suffice to justify product exclusion.

(141) Having analysed all the evidence on file, the Commission could not conclude that laminate-grade TiO2 would have sufficiently different basic physical, chemical, and technical characteristics compared to other types of TiO2 to be excluded from the product scope.

(142) Indeed, as the Commission analysed above, multiple types of TiO2 have specific requirements for certain elements of their chemical composition depending on their application (such as food-grade TiO2 or TiO2 used in sunscreens).

(143) Thus, while the requirement that the phosphorus content has to be at least 0,5 % on the dry mass of the product for it to be useful in decor paper applications might be unique to the application of TiO2 in decor paper production (or, in other words, unique to laminate-grade TiO2), laminate-grade TiO2 is not unique in requiring somewhat adjusted chemical composition in order to be usable in its designated application. In other words, this particular characteristic is not sufficient to distinguish laminate-grade TiO2 from other types of TiO2 nor is it unique from other particular characteristics other specific applications may require meriting an exclusion.

(144) The Commission thus maintained its conclusion in the provisional Regulation that the interested parties failed to demonstrate that the application of other more relevant factors than those considered by the Commission when defining the product concerned required that the definition of the product concerned be restricted by excluding laminate-grade TiO2. Moreover, laminate-grade TiO2 falls within the product definition provided in recital (21) of the provisional Regulation and interested parties provided no evidence demonstrating that this subcategory TiO2 imported from the PRC is not in competition with any other product available on the Union market. The Commission rejected this request for product exclusion.

(145) After final disclosure, Felix, Munksjö, and LB made comments disagreeing with the refusal by the Commission of the product exclusion request.

(146) First, the two users claimed that the Commission misapplied the test for analysing the specificity of the characteristics of the product. In recitals (140) to (142) above, the Commission considered that specific characteristics would only suffice to differentiate a product if that product would be the only one requiring a particular chemical formula to be functional in its intended application. The users claimed that the question is not whether the product is exclusive in that regard, but rather whether the distinct chemical properties are unique to the relevant product.

(147) Second, the two users reiterated their claims about the uniqueness of physical, chemical, and technical characteristics of laminate-grade TiO2, stating that, taken together, they distinguish laminate-grade TiO2 from other products. LB similarly reiterated previous claims on the chemical uniqueness and other characteristics of laminate-grade TiO2. Namely, it is the only TiO2 type where phosphorus compounds are added to its coating, while the fact that it must have a good retention in the paper pulp mandated a large particle size and carefully controlled isoelectric point.

(148) The two users highlighted that the Commission itself recognised that its chemical characteristics make laminate-grade TiO2 unsuitable for use in other general applications, such as paints and coatings (recital (400) below). The users claimed in that respect that the Commission has considered in previous cases (Farmed Salmon from Norway (16) and Certain aluminium foil from China and Russia (17)) that differences in the use or application of a product are an immediate consequence of the different essential characteristics of the product.

(149) The Commission reiterated in that regard that the product exclusion analysis is an exercise done on a case-by-case basis, whereby the Commission evaluates all the available elements holistically to determine whether a type of product is within the product scope, as defined, or not. In some cases the fact that there are unique distinct chemical properties will indeed suffice to exclude the product from the scope.

(150) In this case, however, there are several types of TiO2 with distinct chemical formulas present in the market. As already elaborated in recitals (71) to (76) above, many of these types/formulas are tailored and marketed for specific uses (given how they perform in those uses thanks to such characteristics compared to others). All of those types are covered by the product description in recital (21) of the provisional Regulation.

(151) Therefore, the distinctiveness of chemical characteristic is a feature of TiO2 products. In that context the Commission could not conclude that laminate grade TiO2's chemical formula's distinctiveness would be sufficient to consider it as outside of the product description provided in recital (21) of the provisional Regulation.

(152) Thus, when the nature of the product is such as is for TiO2, namely, that the chemical characteristics of TiO2 are modified precisely for it to perform better in certain applications than in other, the question of exclusiveness of a certain chemical formula intended for a specific use has to be at least a part of the product exclusion test. Moreover, the Commission reminded that laminate-grade TiO2 falls within the product definition provided in recital (21) of the provisional Regulation and this subcategory of TiO2 imported from China is indeed in direct competition with products available on the Union market. No additional evidence was provided to the contrary.

(153) This is a diametrically opposite situation to the Farmed salmon and Certain aluminium foil cases, which the users drew parallels to. In both of those cases it was clear that the excluded products were not covered by the product description.

(154) The Commission thus maintained its position and rejected this request for product exclusion.

(155) The Commission assessed the new claims and evidence on the end-use exemption of laminate-grade TiO2 in section 7.3.4 below.

(156) In the absence of any comments, the Commission confirmed its conclusions set out in recital (54) of the provisional Regulation.

(157) In its submission on the provisional Regulation and during the hearing, Flint contested Commission’s conclusions on its request for an end-use exemption for the type of TiO2 that is only used as a pigment in the production of white inks in the graphic ink industry (‘graphic TiO2’).

(158) Flint did not contest, however, the Commission’s conclusion on rejecting its request for product exclusion. At the same time, neither Siegwerk nor Sun Chemical provided additional evidence to that already provided by Flint which would necessitate the re-evaluation of the Commission’s decision to reject the product exclusion request.

(159) The Commission thus maintained its position that graphic TiO2 does not have different basic physical, chemical, and technical characteristics compared to other types of TiO2 to be excluded from the product scope. Moreover, the interested parties failed to demonstrate that the application of other more relevant factors than those considered by the Commission when defining the product concerned required that the definition of the product concerned be restricted by excluding graphic TiO2 Moreover, graphic TiO2 falls within the product definition provided in recital (21) of the provisional Regulation and interested parties provided no evidence demonstrating that this subcategory TiO2 imported from the PRC is not in competition with any other product available on the Union market.

(160) The Commission assessed the new claims and evidence on the end-use exemption of graphic TiO2 in section 7.3.5 below.

(161) Following the provisional disclosure, one sampled exporting producer, LB Group, the complainant and one of the users, Akzo Nobel, commented on the provisional dumping findings.

(162) The details of the calculation of the normal value were set out in recitals (80) to (242) of the provisional Regulation.

(163) Following the provisional disclosure, LB raised comments on the benchmarks used for ilmenite, iron powder, labour, and SG&A costs.

(164) Regarding ilmenite, LB noted that the sulphate process ilmenite (‘SP ilmenite’) benchmark was the average CIF price as established by Fastmarkets. LB considered that while Fastmarkets refers to the price of the SP ilmenite with a TiO2 content between 47-49 %, the SP ilmenite that LB sourced domestically had a lower TiO2 content. Consequently, LB argued that it would not be reasonable to use Fastmarkets benchmark for LB’s SP ilmenite consumption.

(165) First, and as set out in recital (228) of the provisional Regulation, the Commission used prices reported in TZMI (and not Fastmarkets) as a basis for the undistorted prices of titanium ores and concentrates, including SP ilmenite. TZMI is a widely recognized international titanium industry platform (a fact undisputed by interested parties in the course of the present proceedings) including sufficiently precise and fragmented data allowing the Commission to find appropriate benchmarks for titanium ores and concentrates used in the various production processes used by the TiO2 producing exporters. The SP ilmenite benchmark as reflected in TZMI covered the SP ilmenite with extensive range of the TiO2 content. LB producing entities using SP ilmenite invariably used in the production process SP ilmenite with the TiO2 content below 47 % hence at the low-end of the TiO2 concentration range set for SP ilmenite. Similar considerations applied to the SP ilmenite sourced domestically by the Anhui Gold Star group. Given that SP ilmenite with a lower TiO2 content is generally less expensive than chloride process ilmenite (‘CP ilmenite’) with a higher TiO2 content, it was reasonable to adjust the SP ilmenite benchmark for Chinese exporting producers using the low-end of the price range set out in Fastmarkets for the IP. As a result, the adjusted benchmark used for SP ilmenite was 2 467 CNY/tonne.

(166) Concerning the use of the benchmark for iron powder, LB submitted that Brazilian imports of at least iron powder of one of the commodity codes should be excluded for being overstated compared to the actual cost incurred by the LB producing entities and for covering special (and therefore more expensive) type of iron powder not used in LB’s production process.

(167) As outlined in the Second Note on sources and recital (225) of the provisional Regulation, to establish the undistorted price of raw materials (including the iron powder), the weighted average import price to Brazil as reported in the GTA at the national tariff level data, to which import duties and transport costs were added, was used as a basis. To arrive at an appropriate iron powder benchmark, weighted average price of imports classified under the various commodity codes covering iron powder was determined to reduce the impact of any potentially abnormal prices at the lower and higher end of the iron powder range and to ensure the price of this input reflects a mix of different qualities, in particular in the absence of any more nuanced information on composition of the input in question. In this case, the Commission has not observed any specific circumstances that would render the iron powder benchmark as used for the provisional Regulation unrepresentative or unsuitable. It is further noted that while the benchmark used for iron powder might be higher compared to the actual domestic cost in China, given the existence of significant distortions in accordance with Article 2(6a) of the basic Regulation, such domestic price cannot be regarded as reliable and illustrative of what the benchmark values should be. Moreover, LB did not put forward any specific evidence (neither in response to the Second Note, nor in response to the provisional disclosure) regarding the iron powder used by the LB group, or the specific commodity codes that that product would fall when considering Brazilian imports, as reflected in GTA. Therefore, the Commission rejected this claim.

(168) In response to the provisional disclosure, LB claimed that the benchmark for labour was inflated on account of wrong calculation of social charges and the Commission’s use of the exchange rate in force during the IP rather than the rates applicable in 2021, period to which the data for labour benchmark relate. Additionally, LB argued that the labour cost benchmark should take into account the regional differences in salaries across China. These arguments were reiterated following final disclosure. First, it is recalled that, in accordance with recitals (231)-(232) of the provisional Regulation, while the statistics on wages in the relevant sector of activity for 2021 were used as a basis for calculation, the values were indexed to the IP. Accordingly, the conversion rate for the IP was applied to the labour cost established for the IP. Second, the regional differences in China as regards the labour cost have no bearing on determination of labour cost benchmark in cases, where Article 2(6a) of the basic Regulation applies and where existence of significant distortions has been found, among others, in relation to the labour cost. Lastly, the Commission proceeded in accordance with the methodology consistently used in its decisional practice. In view of the above, LB’s argument was rejected.

(169) Following the provisional disclosure, Akzo Nobel reiterated its argument already raised following the First and Second Note, that the GTA price for sulfuric acid cannot be considered representative. The user’s claim was rejected for the reasons outlined in recitals (220) to (223) of the provisional Regulation. Furthermore, it is recalled that none of the exporting producers challenged the representativeness of the sulfuric acid benchmark in this proceeding.

(170) Further to the SG&A costs of the representative producer (Tronox Brazil) in the representative country, LB submitted that the selling expenses of Tronox Brazil, considered for the construction of normal value should be reduced by the amount of transport expenses, identifiable from the audited annual report of Tronox Brazil. According to LB, this adjustment would ensure that ex-works export price is compared to the ex-works normal value. Upon detailed examination of the Tronox Brazil’s annual report and the breakdown of the individual SG&A cost items in the report, the Commission acknowledged that it would be reasonable to conclude that the transport costs (Fretes / Transportes de cargas), as listed in the report, constituted part of the selling expenses.

(171) In conclusion, the SG&A of Tronox Brazil, used in the construction of the normal value was adjusted from 5,9 % to 4,24 %.

(172) The details of the calculation of the export price were set out in recitals (243) to (246) of the provisional Regulation.

(173) In response to LB comments, the Commission accepted a claim on changing the basis for making SG&A costs and notional profit adjustments under Article 2(9) of the basic Regulation for the UK trader (‘BEL UK’) when incurring costs normally born by an importer.

(174) The Commission recalls that 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 the sampled exporting producers at the ex-works level of trade. As recalled 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.

(175) As explained in recitals (239)-(242) of the provisional Regulation, the normal value was established at the ex-works level of trade by using costs of production together with amounts for SG&A and for profit, which were considered to be reasonable for that level of trade. As explained in recitals (170)-(171), in view of positive evidence that SG&A cost rate used to establish a reasonable SG&A cost amount at the ex-works level of trade contained elements that do not belong to that level of trade, the SG&A rate was adjusted for the relevant elements. No further adjustments were deemed to be necessary to net the normal value back to the ex-works level.

(176) The Commission found no reasons for making any allowances to the normal value (except for the VAT adjustment explained in recital (249) of the provisional Regulation), nor were such allowances claimed by any of the sampled exporting producers.

(177) In order to net the export price back to the ex-works level of trade, adjustments were made on the account of transport, warehousing costs, insurance, handling and loading as well as custom duties. Allowances were made for the following factors affecting prices and price comparability: commission, credit costs and bank charges.

(178) Regarding the adjustment for commissions under article 2(10)(i) of the basic Regulation, LB argued that a downward adjustment to the export price of LB HK (when selling to unrelated Union customers) and a double downward adjustment to the export price of the related United Kingdom (‘UK’) trader (‘BEL UK’) (also when selling to unrelated customers) is unlawful and in any event excessive.

(179) In more detail, LB submitted that the Commission must show that the adjustments made are necessary to make the normal value and the export price comparable (referring in this context to a deduction of certain SG&A costs of the related traders which are not deducted from the normal value). According to LB, the Commission did not explain why bearing the responsibility for the selling process, bearing commercial risks, or receiving markup as set out in the provisional Regulation render the functions of LB traders similar to those of an agent working on a commission basis in line with Article 2(10)(i) of the basic Regulation. Following the final disclosure, LB submitted that the Commission did not examine whether the LB traders form a single economic entity with the Chinese production entities or are internal export trade departments..

(180) First, as set out in recital (252) of the provisional Regulation, the adjustment under Article 2(10)(i) is warranted, as the traders bore the responsibility for the selling process and commercial risks associated therewith and received a markup for the sales.

(181) It is apparent from the information supplied by LB and verified by the Commission that the related traders perform functions similar to those of an agent working on a commission basis. Indeed, LB itself concedes that its related traders do perform export sales functions. They market the products, facilitate contracts, ensure currency exchange and risk management, take care of contacts with existing and potential customers, arrange logistics, manage legal documentation, solicit, and receive the orders and negotiate the sales, issue invoices, and assume corresponding commercial risks. LB itself conceded that its related traders do perform export sales functions. In exchange for performing these functions both traders received a mark-up. LB failed to explain why these functions would be different to those functions would not be similar to those of an agent working on a commission basis. Therefore, contrary to the claim made by LB following definitive disclosure, the Commission provided consistent indicia demonstrating that LB traders performed functions comparable to those of an agent working on a commission basis. Furthermore, the above assessment indicates that the Commission does not consider the LB traders a single economic entity with the production entities. In any event, LB did not bring forward any evidence to substantiate such claim nor has formally requested prior to the adoption of the provisional measures the single economic entity treatment for any of the LB traders. The Commission recalled that in terms of the burden of proof, “where the EU institutions have adduced consistent indicia to establish that a trader affiliated to a producer carries out functions comparable to those of an agent working on a commission basis, it will be for that trader or that producer to adduce evidence that an adjustment under Article 2(10)(i) of the basic regulation is not justified”. (18) In other words it is for LB to argue and substantiate that they form a single economic entity. LB failed to do so.

(182) In line with the case-law of the European Court of Justice (19), Article 2(10)(i) of the basic Regulation does not cover only commercial agency relationships in their strict sense. On the contrary, adjustment under the said provision is foreseen also in respect of the mark-up received even if the parties do not act on the basis of a principal-agent relationship but achieve the same result by acting as seller and buyer (which is the case here). LB producing entities and their related traders act as seller and buyer. The traders purchase the product concerned and subsequently resell it, receiving a mark-up. Such mark-up is explicitly recognised by Article 2(10)(i) of the Basic Regulation as a form of “commission”. This transfer of ownership to the related traders necessarily implies transfer of commercial risks, however it does not preclude the application of Article 2(10)(i) of the basic Regulation.

(183) With reference to the notional profit of 6,89 % as generated by unrelated importers for another chemical product (PVA) and used in the present investigation to establish a reliable export price (see recitals (246) and (252) of the provisional Regulation), LB claimed following the provisional and final disclosure that LB HK does not carry out functions that are typical for an importer. Therefore, LB does not consider that a benchmark of an importer reflects a profit margin that LB HK can be expected to achieve. According to LB, at most an adjustment for the actual profit of LB HK can be made for LB HK involvement in the sales to the Union.

(184) Akzo Nobel equally argued that the deducted profit margin of 6,89 % per trading entity is excessive and should be limited to a total of 6,89 % regardless of how many traders are involved or at the very least, the Commission should use 5 % profit margin previously used in Commission Regulations from 2007 and 2014 and concerning the chemicals industry. (20)

(185) First, Article 2(9) of the basic Regulation gives the Commission the choice between using the actual profit margin of the related importer and using a notional profit margin, the sole obligation being that the margin must be reasonable. Applying Article 2(9) of the basic Regulation by analogy to Article 2(10)(i), it was considered appropriate to use a reasonable profit margin as a basis for deduction under the said provision, to avoid any distorting effects that may arise from internal arrangements between the exporting producer and the related traders.

(186) LB does not contest that both LB HK and BEL UK: (i) act as traders; (ii) incur relevant costs as such; (iii) receive a mark-up on the account of the functions they perform; and (iv) generate profit. It is also uncontested that both traders are related to the producer. Therefore, in line with its consistent practice confirmed by the General Court, (21) the Commission applied Article 2(9) of the basic Regulation by analogy and used the SG&A costs and a notional profit margin based on the profit achieved by an unrelated trader/importer.

(187) Regarding the quantification of the adjustment, what matters is the impact of the related trader’s role on the export price. The issue is what the actual export price would be based on an arm’s length relationship between the exporter and the trader. (22) It is uncontested that both LB HK and BEL UK acted as traders for LB. It follows that a profit margin of an unrelated trader/importer is a reasonable benchmark for the adjustments. In other words, had LB HK and BEL UK been independent from LB, and the transactions between them and LB were at arm’s length, it is reasonable to assume that, in addition to covering their SG&A costs, they would have charged LB an amount equivalent to the nominal profit a trader/importer acting in this industry would expect to generate. LB failed to explain why this would not be the case for LB HK, especially since LB does not contest that LB HK acts as a trader, is remunerated for that in the form of a mark-up and generates profit. Using the actual profit of LB HK, as advocated by LB, is inappropriate due to the relationship between the producer and the trader, which affects that profit amount. Moreover, the profit margin used relates to a relatively recent investigation, rather than to information that is outdated and originates from 2014 or even 2007 (as put forward by Akzo Nobel). Furthermore, nothing in Article 2(10)(i) of the basic Regulation precludes the Commission from applying successive adjustments if successive traders are involved, whose involvement, had it been based on arm’s length transactions, would have affected the export price accordingly. It is therefore necessary to make the adjustments in order to remove factors affecting price comparability between normal value and export price. Consequently, LB’s and Akzo Nobel’s argument had to be rejected.

(188) In response to the provisional disclosure as well as the final disclosure, LB argued that for BEL UK’s involvement in sales to the EU, instead of a profit margin of an unrelated importer established in the PVA investigation (6,89 %) a different basis should be used. Namely, LB argued that the adjustment for the “reasonable profit” of BEL UK regarding sales to the EU, should be based on the median profit margin established by a third-party professional firm in a benchmarking study analysing profit margins over several years for several companies performing similar functions as BEL UK. According to the LB’s submission following the final disclosure, what matters is the functions performed and not the products that are being sold. LB further argued that the failure by the Commission to compare BEL’s activities with those of the PVA importer and the fact that only data from a single source and from more than 4 years ago was used rendered the Commission’s benchmark unreasonable.

(189) As set out in recital (185) above, when making adjustments under Article 2(9) and Article 2(10)(i) of the basic Regulation respectively, the Commission enjoys wide discretion between choosing the actual profit margin of the related importer and a notional profit margin, the sole obligation being that the margin must be reasonable for a trader / importer trading the product concerned or similar products. Furthermore, it is a consistent practice of the Commission to use a profit margin based on the profit achieved by an unrelated importer, be it for the purposes of Article 2(9) or 2(10)(i) of the basic Regulation. While the functions performed (i.e. importing business) are a key consideration in choosing the benchmark for reasonable profit, it is equally important for the Commission to identify importers active in the same industry (if not the same product). Moreover, the data on profit for the PVA sampled unrelated importers was produced for the purposes of a trade defence investigation and was duly checked and verified by the Commission. Even if the profit used is from 4 years ago this does nor render the benchmark unreasonable. In any event LB failed to explain why it would be so. The document referred to by LB Group is an internal report, issued specifically for LB, covering also companies from sectors other than chemical sector and considering companies also with negative profits, all of which undermines the reasonableness principle applied by the Commission in choosing the notional profit. Moreover, whilst seeking to lower the profit margin and thereby its dumping margin, at no point did LB explain in a substantiated manner why the profit margin found in a recent investigation and actually generated by a trader of chemical products should be deemed as unreasonable. LB Group’s argument was therefore rejected.

(190) Further to the final disclosure, LB argued that, before the Commission can adjust the mark-up under Article 2(10)(i) of the basic Regulation, it is under the obligation to show that the mark-up is affected (i.e. not at arm’s length) by the relationship between the LB traders on one hand and the LB production entities on the other hand. In addition to that, according to LB, any adjustment for mark-up should be tailored to the functions carried out by these entities and, therefore, be linked to the expenses they incurred. LB further claimed by reference to the methodology used in OECD Transfer Pricing Guidelines that LB HK’s and BEL’s mark-up is at arm’s length.

(191) As set out in recital (187), the actual profit generated by the LB traders is affected by the relationship with the LB producing entities. Indeed, as confirmed in Çolakoğlu, the principle set out in Article 2(9) of the basic Regulation, according to which ‘where it appears that the export price is unreliable because of an association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported products are first resold to an independent buyer’ must also be capable of applying when quantifying the amount of commission to be deducted from the export price in order not to deprive Article 2(10)(i) of the basic Regulation of its practical effect. (23) Hence, the actual profit generated does not reflect the proper remuneration for the service rendered on an arm’s length basis. Reference is further made to the Commission assessment set out in recitals (185)-(189). Regarding the correlation between the number of functions performed and the mark-up adjustment to be made, the basic Regulation does not preclude the Commission from applying the same adjustment under Article 2(10)(i) for traders performing services to varying degrees. The LB traders do not need to perform the same functions or range of functions. The fact that the role of LB HK is in certain cases (for example when reselling to BEL, rather than directly to the unrelated customers) more limited does not invalidate the application of the same notional profit for both, LB HK and BEL, provided that both traders perform functions similar to those of an agent working on a commission basis (which is the case). Lastly, it is noted that the Commission assessment in this case is not based on any OECD guidelines, used for taxation purposes, rather than in the trade defence investigations. The claim was therefore rejected.

(192) In relation to the VAT adjustment in constructing the normal value, LB argued that the Commission omitted the legal basis for the adjustment and failed to provide evidence or explanation as to why it was necessary to ensure price comparability. LB restated following the final disclosure that the Commission failed to show evidence in support of the adjustment made. First, as it follows from the provisional Regulation, namely Section 3.6, the VAT adjustment is made under Article 2(10) of the basic Regulation (more specifically Article 2(10)(k)). The Commission further elaborated on the adjustment and provided its reasoning in Section 4.3.6 of Annex 2 (entitled ‘Dumping calculations and information on the methodology used’) of the pre-disclosure document. The adjustment is made for a difference in VAT reimbursement between the domestic and export sales (zero refund of the VAT payable on the export sales is in place). Therefore, LB’s argument was rejected.

(193) As described in recitals (164), (171) and (173), following claims from interested parties, the Commission revised the dumping margins.

(194) The complainant submitted following the provisional Regulation that by finding a lower provisional dumping margin for Anhui Gold Star, it showed that Anhui sold TiO2 at considerably higher prices in the domestic market compared to LB.

(195) It is noted that Article 2(6a) of the basic Regulation applies in this case and that correspondingly normal value for the sampled exporting producers is not calculated with reference to the domestic prices in China, but rather on the basis of replacement costs in a representative country (in this case Brazil) pursuant to Article 2(6a) of the basic Regulation.

(196) Furthermore, the complainant questioned the involvement of all related companies in the investigation and whether the relationship between companies may have had an impact on the dumping margin calculation.

(197) It is a consistent practice of the Commission to consider and duly reflect the cost structure of the individual sampled exporting companies in determining the basis for normal value, including whether and to what extent raw materials are sourced from third or related parties or manufactured internally or which initial inputs are used in making the product concerned.

(198) Finally, the complainant sought clarification as to whether the duties set for the Anhui Gold Star Group will be extended to other TiO2 producers of a larger CNNC group, to which Anhui pertains. As set out in recital (199) of this Regulation, the individual duty of 11,4 % is set for the two exporting producers within the Anhui Gold Star group (which is indeed part of a wider corporate group owned by CNNC HUA YUAN TITANIUM DIOXIDE CO., LTD), namely Anhui Gold Star Titanium Dioxide (Group) Co., Ltd. and ANHUI GOLD STAR TITANIUM DIOXIDE TRADING COMPANY LIMITED and does not extend to other exporting producers, related or not to the said Anhui Gold Star group companies.

(200) In absence of any comments, recitals (261) and (262) of the provisional Regulation are confirmed.

(201) In absence of any comments, recitals (263) through (268) of the provisional Regulation are confirmed.

(202) In absence of any comments, recitals (266) through (272) of the provisional Regulation are confirmed.

(203) In absence of any comments, recitals (273) through (275) of the provisional Regulation are confirmed.

(204) CNCIA objected to the Commission’s findings that the drop in import volumes observed in 2021 was due to extraordinary circumstances related to international shipping, claiming that the Commission provided no evidence in that regard. CNCIA reiterated this claim in its comments on the final disclosure adding that in some recent investigations (24) import volumes from China to the EU rose sharply in 2021 and that the Union industry’s export volumes also increased in 2021.

(205) The Commission reminded that the year 2021 was affected by large disruptions in international supply chains due to port closures and subsequent shortage of shipping containers, which also drove the ocean shipping costs up by several orders of magnitude into 2022, while import volumes of many products went down.

(206) The Commission already reached such conclusions in recent cases, (25) while the complainant and Siegwerk also expressed the same position in this case. On the other hand, CNCIA offered no alternative explanation for this drop in volume of imports, compared to all the other years when they have been on constant rise.

(207) The Commission thus rejected this claim and confirmed its conclusions from recitals (276) and (277) of the provisional Regulation.

(208) In the absence of any comments, recitals (278) through (281) of the provisional Regulation are confirmed.

(209) In its comments on the provisional Regulation, AkzoNobel stated that it is unclear from the provisional Regulation whether the Commission complied with the case-law of the Court of Justice, requiring the Commission to calculate undercutting and underselling at the same level of trade. (26)

(210) The Commission pointed in that regard to recital (283) of the provisional Regulation, where it specified that the calculations were done on the same level of trade as explained in the recitals (247), (248) and (249) of the provisional Regulation. The Commission also performed an alternative set of calculations, without the adjustment of SG&A and profit for exporting producers under Article 2(9), and these also showed significant undercutting and underselling margins.

(211) The Commission therefore confirmed its conclusions set out in recitals (282) and (283) of the provisional Regulation.

(212) AkzoNobel further disagreed with the Commission’s conclusions on price suppression and depression, claiming that the Commission should find that there is no price suppression or depression.

(213) AkzoNobel first claimed that the Commission concluded that there is price depression “only because prices decreased by 4 % from 2022 to the [investigation period],” while the Commission “ignored that prices increased 35 % from 2020 to 2022, and by 31 % from 2020 to the [investigation period].”

(214) Second, AkzoNobel believes that the fact that the complaint did not allege the existence of price suppression casts doubt on the Commission's conclusion that there was price suppression.

(215) Finally, AkzoNobel claimed that the Commission in any case failed to assess the explanatory force of Chinese imports for any price suppression, required under WTO rules. (27)

(216) The Commission considered the above claims by AkzoNobel unfounded.

(218) The Commission thus found the existence of price suppression and assessed the causal link between Chinese imports and price suppression.

(219) Second, contrary to AkzoNobel’s claims, the Commission did not conclude that there was price depression in the investigation period only because the Union industry’s prices decreased between 2022 and the investigation period.

(221) The Commission thus rejected AkzoNobel’s comments as unfounded and confirmed recitals (284) through (286) of the provisional Regulation.

(222) In absence of any comments, recitals (287) through (291) of the provisional Regulation are confirmed.

(223) In absence of any comments, recitals (292) through (296) of the provisional Regulation are confirmed.

(224) In absence of any comments, recitals (297) through (299) of the provisional Regulation are confirmed.

(225) In absence of any comments, recital (300) of the provisional Regulation is confirmed.

(226) In absence of any comments, recitals (301) through (303) of the provisional Regulation are confirmed.

(227) In absence of any comments, recitals (304) and (305) of the provisional Regulation are confirmed.

(228) In absence of any comments, recitals (306) and (307) of the provisional Regulation are confirmed. After addressing the comments by AkzoNobel on price suppression and depression in section 4.4.2 above, the Commission confirmed recitals (308) and (309) of the provisional Regulation.

(229) In absence of any comments, recitals (310) and (311) of the provisional Regulation are confirmed.

(230) In absence of any comments, recitals (312) and (313) of the provisional Regulation are confirmed.

(231) The Commission corrected a clerical error in the data reported in Table 11 in the provisional Regulation regarding the cash flow of the Union industry during the IP. In fact, the cash flow in the IP was minus 42,3 million EUR instead of minus 4,3 million EUR. However, the indexed figures showing the trend of cash flow over the period considered were accurate in Table 11 of the provisional Regulation.

(233) This clerical error does not impact the conclusions in section 4.5.3.4. of the provisional Regulation.

(234) With the above modification to the table 11, the Commission confirmed its findings in recitals (314) through (322) of the provisional regulation.

(235) CNCIA argued in its comments that the Union industry was not suffering material injury and that the injury indicators set out in the provisional Regulation did not paint a negative picture of the Union industry. CNCIA reiterated this claim in its comments on the final disclosure.

(236) In this respect CNCIA argued that despite the drop in certain injury indicators such as production, the Union industry was able to maintain its strong position on the Union market and lost only a few percentage points in market share.

(237) CNCIA also maintained that the drop in profitability of the Union producers in the IP was only temporary as it was due to the sharp increase in production costs combined with a strong drop in demand which prevented the Union industry from passing on its increased costs to consumers.

(238) CNCIA also pointed to some of the injury indicators and analysed them separately claiming that the decrease was either limited or due to other factors than the Chinese imports.

(239) The Commission recalls that it analysed all injury indicators separately and as a whole in its injury analysis. In particular, the Commission found price undercutting ranging between 14 % and 15,3 % as set out in recital (283) of the provisional Regulation. The Commission also found that Chinese landed prices were even below Union industry’s average cost of production both in 2020 and the investigation period (recital (342) of the provisional Regulation).

(240) In addition, all main injury indicators followed a negative trend: profit, cash flow, return on investment plummeted in the IP. Over the period considered, production volume decreased by 31 %, sales volume dropped by 25 % and market share, employment and productivity also decreased. On the basis of the assessment carried out and described in the provisional Regulation, the Commission concluded that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation.

(241) None of the arguments of CNCIA put into question the above conclusion. The Commission therefore confirms its findings in recitals (323) – (337) of the provisional Regulation.

(242) Interested parties claimed that it was not possible to make a valid finding on the causal link between the presence of allegedly dumped imports of TiO2 from China and injury caused to the Union industry because several factors, which do not reflect normal market reality, influenced the investigation period and the period concerned.

(243) Siegwerk argued in that regard that, first, China greatly reduced its overall exports during the Covid-19 pandemic and thus the increase in imports of Chinese TiO2 observed after the end of the pandemic actually represented a normalisation of trade volumes. Second, demand in the Union was above average during the pandemic. Third, Siegwerk claimed that, as a result of the prior two factors, the Union producers were operating in “near-monopolistic position” and were able to achieve extraordinary profits during the pandemic.

(244) The Commission noted that it analysed these elements in its analysis of the injury indicators and the causal link in the provisional Regulation.

(245) In Section 4.4.1, recital (276) of the provisional Regulation, the Commission observed that during 2021 there was indeed a drop in volumes of imports from China. The Commission concluded that this was due to general disruptions of sea trade from China which was present in that year as a consequence of the Covid-19 pandemic.

(246) Likewise, the Commission concluded in recital (271) of the provisional Regulation that demand was above average in 2020 and 2021.

(247) The Commission recalled that, precisely because of those two factors together, the Union industry managed to temporarily increase its market share and profitability in 2021, while volumes of Chines imports and market shares both went down in that year. (28)

(248) The Commission thus established in the provisional Regulation, in the context of the overall analysis of all the injury indicators taken together, that these two elements do not invalidate the conclusions on injury and the causal link. The Commission thus rejected the above claims.

(249) CNCIA also noted that the Chinese import prices in 2022 were only 1,5 % lower than the Union industry sales prices, which cannot be considered to represent “significant price undercutting.” On the other hand, prices of imports from Mexico were 65 % lower in that year.

(250) At the outset the Commission noted that simple price comparison cannot be considered as undercutting as it fails to account for product types. The Commission noted that, even if 1,5 % lower prices in 2022 could not be considered as significant price undercutting (quod non), the difference in price was much higher in other years: 6,4 % in 2020, and 24,2 % in the investigation period. Significant price difference was therefore present in the period concerned.

(251) Several parties contested the Commission’s causality analysis after the provisional Regulation.

(252) CNCIA argued that Chinese imports were not the cause for the state of the Union industry and claimed that the Commission did not examine the other factors which affected the Union industry: third country imports, rising cost of production, contraction in demand and intra-Union industry competition.

(253) Other interested parties similarly claimed that a contraction in demand and the rising cost of production were the cause of injury to the Union industry.

(254) Felix, Munksjö, and AkzoNobel claimed that the Commission made a manifest error in assessment by not acknowledging cyclicality in the TiO2 market as a cause of injury to the Union industry.

(255) Siegwerk further listed other factors that influenced the market from the end of 2023 onwards. Since these occurred after the investigation period, they are not pertinent for the Commission’s backward-looking analysis. At the same time, they were not such to make the imposition of anti-dumping duties manifestly inappropriate. They mainly concern the evolution of market demand, which the Commission assessed in section 5.2.1 below.

(256) In addition, AkzoNobel claimed that complainant’s investment decisions actually caused negative profitability. AkzoNobel pointed to the investment and cashflow figures in the investigation period, concluding that the 10 million EUR investment split over 2022 and the investigation period (29) was directly responsible for the –4,3 million EUR negative cash flow in the investigation period.

(257) However, as the Commission explained in recitals (231) and (232) above, the –4,3 million negative cashflow figure in the investigation period was a clerical error in the provisional Regulation. The actual drop in cashflow was much more significant: 50 percentage points and the cashflow of the Union industry was –42,3 million EUR, as shown in the corrected Table 11 above.

(258) This drop in cash flow cannot thus be attributed solely to the above investment.

(259) The Commission addressed the other comments, outlined in recitals (252) to (254), in relevant subsections below.

(260) Several interested parties made comments in relation to Commission’s findings set out in recitals (349) to (358) of the provisional Regulation. Felix and Munksjö claimed that the Commission failed to sufficiently consider cyclicality, being one of the crucial characteristics of the TiO2 market, thus breaching its obligation under Article 3(7) of the basic Regulation.

(261) While the users acknowledge that cyclicality is not exclusive to the TiO2 market, they claim that it is its vital attribute which affects the dynamics in this market (pricing and availability of TiO2 and negotiating power of various parties) and thus has an impact on the Union producers’ performance. Any downturn in financial performance experienced during periods of lower demand, they can recover during the periods of market growth.

(262) AkzoNobel submitted comments along similar lines. They claimed that the Commission’s conclusions that “cyclicality is not unique to the TiO2 market and thus “merits” no “special consideration” (30) and that it is not possible to “draw a pattern showing with utter certainty when an upturn or a downturn will take place” (31) to conclude that “contraction was bound to happen in 2023” are not valid reasons to reject the claim that the injury to the Union producers were caused by a bottom of the cycle.

(263) AkzoNobel submitted that while cyclicality indeed was not unique to the TiO2 industry, it was a known factor in the industry and the Commission was required to assess the extent to which it caused the injury to the Union industry. It is irrelevant that one cannot accurately predict when a downturn would happen, but, as the Commission itself concluded, after the “big demand uptick” in 2020 and 2021, “any drop in consumption that follows would naturally also be pronounced.”

(264) AkzoNobel stressed that this confirmed its point that the performance of the Union industry followed a cyclical pattern. Thus, the selected period concerned, and the investigation period would have shown negative trends even in the absence of any imports. AkzoNobel reiterated that the complainant had selected the investigation period shrewdly with this in mind, so that it would coincide with the bottom of a cycle.

(265) Many parties claimed, essentially, that the Union industry was bound to perform poorly in the investigation period, pointing to the cyclical nature of the market and the market intelligence forecasts, and that therefore there was no injury caused to the Union industry by the Chinese imports.

(266) The complainant contested these claims. While they acknowledged the existence of cyclicality, they pointed to the fact that Chinese import volumes and market shares have consistently increased over time, starting to significantly rise since 2017.

(267) The complainant thus concluded that the impact of cyclicality was negligible, since even despite cyclical trends, Chinese imports into the Union kept rising, both in the previous period of contraction in demand in 2017-2018, and in the investigation period.