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

(268) The Commission noted that it analysed in detail whether and to what extent cyclicality could have affected the Union industry, and concluded that, due to all the considerations laid out in the provisional Regulation, it cannot be claimed that it is the cyclicality in the market which is the sole reason for injury.

(269) In its provisional findings, the Commission acknowledged that the TiO2 market is indeed cyclical on the global level (see for instance recital (355) of the provisional Regulation). The Commission noted, however, that cyclicality is not specific to the TiO2 market, but that many markets go through regular cycles of contraction and expansion in demand. (32) It could not thus be concluded that the fact of cyclicality alone suffices to attenuate the causal link.

(270) Furthermore, the Commission found that, compared to the global predictions of TiO2 market behaviour by the market intelligence forecasts which the interested parties relied on to claim that cyclicality is the main cause of injury to the Union industry, (33) the Union (and also global) market was actually affected by several extraordinary circumstances. (34) These circumstances led to the Union market deviating from said predictions, (35) making it unrealistic that the predicted downturn would have, as alleged, happened in 2023 in exactly the kind of way which would have resulted in the level of injury that the Union industry experienced in the investigation period. (36)

(271) Instead, these circumstances affected the behaviour of the market cycle in the Union. Thus, while the Commission acknowledged that a downturn may have been bound to happen, the injury suffered by the Union industry was much too pronounced to be attributed squarely to the cyclicality, and the situation in the Union market had to be considered more broadly than just through the prism of cyclicality.

(272) As the Commission acknowledged in recital (388) of the provisional Regulation, the drop in demand in 2022 and the investigation period (whether due to an expected downturn in the cycle or not) indeed made the Union industry’s situation challenging. Nonetheless, this (either on its own or taken together with other factors such as increase in cost of production) did not attenuate the causal link between dumped Chinese imports and injury.

(273) As explained in recital (389) of the provisional Regulation, imports from China were increasing throughout the period considered. What is more, even in the contracting market of 2022 and the investigation period, when import volumes from virtually all other third countries were decreasing, alongside the Union industry’s sales volumes, the volumes of Chinese imports kept going up and gaining market share. As already concluded in recital (361) of the provisional Regulation, this is not to be expected in a shrinking market.

(274) To reinforce the claim that the injury was caused by a bottom of a cycle which coincided with the investigation period, and out of which the Union industry was now exiting, AkzoNobel submitted public global earning reports from Tronox Holdings plc (‘Tronox Holdings’) (37)and Kronos Worldwide, Inc. (‘Kronos Worldwide’) (38) from Q1 2024.

(275) These reports show Kronos Worldwide reporting USD 23,4 million profit in Q1 2024 and an increase in capacity utilization and sales volumes of 11 percentage points and 15 %, respectively, in Q1 2024 compared to Q1 2023. The Tronox Holdings report showed an increase in sales volumes of 18 % in Q1 2024 compared to Q4 2023, stressing good performance in Europe, and an EBITDA margin (39) of 16,9 % at the global level. AkzoNobel further cited Tronox Holdings’ report itself stating that such increase in demand is indicative of a front end of a recovery.

(276) The Commission noted on the outset that it does not collect post-investigation period data on the Union industry in a material injury analysis, while non-verified financial data which includes activities other than TiO2 (40) and related companies outside the Union cannot be considered relevant for Commission’s analysis.

(277) In light of AkzoNobel’s claims, however, the Commission nevertheless examined the publicly available financial reports for the first half of 2024 for Tronox Holdings and Kronos Worldwide at the global level. The Commission also examined the reports for the first half of 2024 of Grupa Azoty Zakłady Chemiczne “Police” S.A. (‘Police’) and Cinkarna metalurško kemična industrija Celje, d.d. (‘Cinkarna’), considering that these Union producers operate TiO2 facilities in the Union only and had publicly available financial reports.

(278) In that regard the Commission noted that, while EBITDA margin may have indeed been high for Tronox Holdings in Q1 2024, the Commission’s analysis in Table 11 looks at income before tax to determine the net profit margin, making EBITDA an improper comparison. Nonetheless, examining even Tronox Holdings’ EBITDA margin evolution year-over-year between 2023 and 2024, there is a decrease both in Q1 and Q2. This is not indicative of a recovery in 2024 compared to the investigation period, contrary to AkzoNobel’s claims.

(279) Furthermore, Tronox Holdings’ income before taxes was USD 2 million in Q1 2024 (41), compared to USD 34 million in Q1 2023, showing a significant decrease year-over-year. On the other hand, in Q2 it somewhat increased, from 53 million in Q2 2023, to 55 million in Q2 2024. Nonetheless, as percentage of net sales, this translates into a pre-tax profit of 0,2 % in Q1 2024 and 6,7 % in Q2 2024, compared to 4,8 % in Q1 2023, 6,7 % in Q2 2023. This shows that profitability situation remained at best the same for Tronox Holdings at the global level.

(280) Kronos Worldwide did show better performance. Half year figures (42) show that Kronos Worldwide posted 39,6 million USD income before taxes in first half of 2024, compared to 34,4 million USD losses in first half of 2023. This translates into a pre-tax profit margin of 4 % in first half 2024 compared to -4 % loss in first half of 2023.

(281) Police, on the other hand, reported pre-tax loss of –10,12 % as percentage of turnover in H1 2024 (43) (even bigger losses than -5 % from first half of 2023), while Cinkarna reported net profit as percentage of turnover of 7,38 % (44) (compared to almost the same level of 7,30 % the year before). Neither of these are indicative of a recovery, as AkzoNobel argued.

(282) In their financial reports, Police reported 20 % increase in sales volumes, and Cinkarna 5 % increase. Both of those producers are among the smaller ones in the Union, however, representing around [3-8] % of Union production capacity each. Tronox Holdings and Kronos Global (parent companies of two of the Union producers that were sampled, among other reasons, due to their size) claimed their global sales volume increase of 11 % and 15 %, respectively. However, the Commission has no specific information on the evolution of Tronox and Kronos sales volumes in the Union.

(283) The Commission thus concluded that the available post-investigation period data does not indicate that the Union producers stopped suffering injury in 2024, even if the TiO2 market might see an increase in demand, and Kronos Worldwide was performing better on the global level than it did in the investigation period. Moreover, it does not render the imposition of the proposed anti-dumping duties manifestly inappropriate. (45)

(284) As the contraction in demand was already addressed in section 5.2.1 above, in light of those considerations and absence of additional comments to the contrary, the Commission confirmed its conclusions set out in recitals (359) through (365).

(285) Siegwerk further claimed that the Russian invasion of Ukraine in February 2022 caused a sharp increase in energy costs in the Union, while resulting inflation caused a decrease in demand for TiO2. The same factors also led to a spike in costs of production which made Union TiO2 more expensive compared to Chinese TiO2.

(286) The Commission took those elements into account in its analysis of injury and causal link. (46) The Commission thus rejected those claims.

(287) CNCIA contested the Commission’s conclusion in recital (383) of the provisional Regulation, that, the increase in cost of production was global and affected all the market players to a similar extent as evidenced by the rising prices of imports from other third countries than China.

(288) CNCIA argued that the Commission therein failed to adequately separate and distinguish the effect of increasing cost of production on the Union industry from the effects of Chinese imports, while, in any case, the Commission should have considered the different degrees to which such increases in costs may have affected different market players.

(289) The Commission clarified in that regard that the global increase in cost of production, and notably the main raw material, ilmenite ore, would have affected all the market players. In other words, such an increase in costs was not an element that was unique to the Union industry only and thus capable of attenuating the causal link.

(290) At the same time, neither the exporting producers nor CNCIA present evidence that would indicate that other market players, such as Chinese exporting producers, were affected differently.

(291) In its comments on definitive disclosure, CNCIA argued that the Commission was incorrect to conclude that the cyclicality of demand and the increase in production costs, which were factors not specific to the TiO2 market, did not attenuate the causal link. In this respect, the CNCIA claimed that a factor did not need to be unique to the Union industry to influence the casual link. The Commission recalls that it analysed in detail all claims relating to the cyclicality of the TiO2 market in recitals (349) to (358) of the provisional Regulation and in recitals (260) to (283) of the present Regulation. The Commission also analysed in detail all claims relating to the rising production costs in recitals (381) to (384) of the provisional Regulation and in recitals (285) to (290) in the present Regulation. The Commission recalls its conclusion in recital (383) that the increase in cost of production, notably the price of the main raw material, ilmenite ore, was global and affected all the market players and was therefore not specific to the Union industry. However, contrary to CNCIA’s claim, this finding cannot be interpreted as a general conclusion on whether a factor needs to be unique to the Union industry to influence the casual link.

(292) The Commission thus rejected the above arguments and confirmed its conclusion that the rising costs of production did not attenuate the causal link.

(293) In relation to Commission’s conclusion set out in recitals (366) and (367) of the provisional Regulation, Felix and Munksjö claimed that the fact that TiO2 production plants in the UK are owned by Tronox and Venator, does not mean that they are not in competition with other Union producers.

(294) In relation to the same recitals, the CNCIA argued that, if UK producers are not in competition with the Union industry on the Union market, imports from the UK to the Union should be considered ‘self-imports’ by the Union industry and therefore be included in the market share of the Union industry.

(295) Felix and Munksjö further claimed that the Commission is under obligation to examine whether “restrictive trade practices of, and competition between, third country and Union producers” could have been the cause of injury to the Union industry.

(296) The Commission clarified that recitals (366) to (373) of the provisional Regulation concerned the analysis whether imports from third countries, including imports from the UK might have contributed to the injury of the Union industry. In this respect, the Commission concluded that the average price of imports from the UK to the Union were the highest of all imports from third countries to the Union, considerably higher than Chinese prices and even higher than Union sales prices between 2021 and the investigation period and therefore they did not contribute to the injury of the Union industry.

(297) As concerns the arguments referred to in recital (294), the Commission notes that the concept of “self-import” is unknown under the basic Regulation and products produced in a third country cannot be considered as produced by the Union producers. Therefore, the Commission rejected the argument that imports from the UK should be added to the market share of the Union industry.

(298) In that regard, the Commission recalled that it had already established in recital (367) of the provisional Regulation that import prices from the UK were higher than the Chinese import prices. For that matter, UK import prices were the highest from all third country imports, and higher even than the Union industry prices throughout the period considered, except in 2020.

(299) In its comments on the final disclosure, CNCIA reiterated its claim that imports from the UK were conducted by the Union producers themselves and should be taken into account for the assessment of the injury indicators. CNCIA also repeated its argument that the Union industry might have shifted its production to their non-EU production sites in the UK and in other non-EU countries and that this shift could potentially impact the injury indicators for their EU-based operation and explain the decline in production volume and capacity utilization. CNCIA did not provide any evidence to support this hypothesis.

(300) In addition, CNCIA stated that the Commission took into account ‘self-imports’ in the investigation into battery electric vehicles (47) differentiating between imports by ‘Chinese brands’ and those by Union producers and also in the investigation regarding polyethylene terephthalate (PET) from China (48) adjusting the market share of the Union industry to take into account imports made by a Union producer. Moreover, CNCIA claimed that the European Court of Justice also recognized the relevance of considering the imports by the Union industry when defining the Union industry. (49)

(301) In this respect, the Commission first recalls that it assessed the effect of imports from the UK and other third countries in recitals (367) to (373) of the provisional Regulation and concluded that they did not attenuate the causal link between the dumped Chinese imports and the injury suffered by the Union industry. Concerning past investigations and the judgement of the Court of Justice relied on by CNCIA and referred to in recital (300), in those cases the imports made by the Union producers were from the country concerned by the investigation and not from other third countries and were taken into account in order to assess the impact and the market share of imports from the country concerned. In the present investigation that is not the case, the Union industry does not import TiO2 from China and therefore there is no need to differentiate between the imports made by the Union industry and the rest of the imports.

(302) Concerning CNCIA’s hypothesis on the strategic shift of production by the Union industry whereby they allegedly lowered the production at their EU facilities and enhanced production in the UK in order to import these volumes to the EU, the Commission notes that the volume imports from the UK to the EU dropped by almost half during the period considered and their market share also decreased while their average price was the highest of all imports and therefore this claim is not substantiated. Moreover the hypothesis itself was not supported by any evidence.

(303) The Commission thus maintained its conclusion that imports from the UK did not attenuate the causal link established between the dumped Chinese imports and the injury suffered by the Union industry.

(304) CNCIA argued the Commission did not sufficiently assess the impact of imports from Mexico on the state of the Union industry. In this respect, CNCIA pointed out that the prices of Mexican imports were significantly lower than Chinese, except prices in the investigation period, and they were also considerably lower than the prices of the Union industry throughout the period considered and that imports from Mexico (and from the USA) did not lose market share in the investigation period compared to 2020. CNCIA repeated the same claims in its comments on the final disclosure, without providing new evidence to contest Commission’s conclusions.

(305) The Commission recalled that the volume of imports from Mexico and the USA decreased over the period considered as set out in recital (369) of the provisional Regulation and their market share has remained stable during the period considered. The fact that Mexican imports did not increase in volume, and they maintained their market share at 8 % despite their low prices throughout the period considered while Chinese imports increased both in terms of volume and market share, show that Mexican imports are not susceptible of attenuating the causal link between dumped imports from China and the injury suffered by the Union industry.

(306) Without further claims or evidence to the contrary, the Commission thus confirmed its conclusion from recital (373) of the provisional Regulation, that imports of TiO2 from third countries did not cause injury to the Union industry.

(307) CNCIA objected to the Commission’s conclusions in recital (378) of the provisional Regulation. CNCIA noted that by relying on the initiation of an investigation by the Brazilian investigating authority, for which evidentiary threshold is much lower than for definitive finding of injurious dumping, the Commission is obstructing the right of defence of the exporting producers.

(308) In addition, CNCIA claimed that the Commission’s conclusion that China’s geographical proximity to Japan and Taiwan means that Chinese TiO2 exports could have played a role in closure of the latter’s TiO2 plants is logically flawed. Geographic proximity between the countries is not a relevant criterion in anti-dumping investigations.

(309) The Commission underlined that the relevant recital was a summary of the complainant’s claims that unfair trade practices of the Chinese exporting producers in all markets were making it hard for them to compete also in the export markets without a conclusion on those claims.

(310) In fact, the Commission concluded in recital (90) of the provisional Regulation that, driven by 13th and 14th Five Years plans, large increases in Chinese TiO2 production capacities took place already between 2016and 2020 with a further capacity expansion expected, which is difficult to absorb on the Chinese domestic market and which will encourage Chinese producers to export.

(311) Finally, the present investigation has found that Chinese exporting producers are engaging in injurious dumping in the EU.

(312) In any case, even if there were no indications that Chinese exporters could be practicing dumping in other markets, this assessment of the complainant’s claims was ancillary to the conclusion that the export performance of the Union industry is not the cause of its injury.

(313) Therefore, in absence of any comments to recitals (374) to (377) and (379), the Commission confirmed those recitals and, taking them together with the above, maintained its conclusion from recital (380).

(314) CNCIA brought forward new arguments at the definitive stage, claiming that the Commission should have examined the effects of intra-Union industry competition on the injury it may have suffered. CNICIA pointed to the public statements of Union producers’ executives and published annual reports which show that the other Union producers are their main competitors.

(315) The Commission pointed out in that regard that it is only natural and expected that in the free-market Union industry members would compete with each other. However, such competition is not something that would have driven down the performance of the entire Union industry – some would perform better while others would perform worse.

(316) The Commission also reminded that it always investigates a representative sample of Union producers precisely to get a reasonable understanding of how the industry as a whole was performing in the period concerned, to level out any outliers. No party objected to the selection of the sample on the grounds that it would not be representative for the situation of the Union industry.

(317) The Commission thus rejected these claims as unfounded.

(318) In its comments on the final disclosure CNCIA argued that the Commission failed to address its claims on the lack of causation. In this respect CNCIA reiterated its claims that the Union industry was not suffering material injury, and even if material injury was found, this was not caused by Chinese imports of TiO2 but by the cumulative impact of the contraction in demand and the parallel increase in production costs which would have prevented the Union industry from increasing its prices even in the absence Chinese imports. The CNCIA also reiterated its reference to the Commission decision regarding imports of certain soy protein products originating in China (50). CNCIA also reiterated its comment that the Chinese imports do not have explanatory force for the suppression of domestic prices as required by WTO Appellate Body in HP-STT (Japan) (51).

(319) The Commission assessed the above claims in recitals (363) and (381) to (384) of the provisional Regulation. Concerning price suppression, the Commission confirmed its findings in recitals (284), (285) and (316) of the provisional Regulation and in recital (217) of this Regulation.

(320) In light of the above considerations, and in absence of further comments to the contrary, the Commission confirmed its conclusions from recitals (388) through (394) of the provisional Regulation.

(321) In absence of any comments, the Commission confirmed its conclusions from recitals (398) through (415) of the provisional Regulation.

(322) In absence of any comments, recitals (416) through (418) of the provisional Regulation are confirmed.

(323) Following the above assessment, definitive anti-dumping duties should be set in accordance with Article 7(2) of the basic Regulation. The amount of the definitive duty is set out in recital (541) below.

(324) Following the publication of the provisional Regulation, several new interested parties came forward opposing the measures. As indicated in recital (13) above, ten users and four user associations submitted comments opposing the measures. Hearings were held with six of those users and two users’ associations. Multiple new evidence was submitted to show that duties would have undue impact on the users.

(325) In total, users employing an estimated 30 000 people came forward in the investigation opposing the duties. Furthermore, CEPE, a European level association of paints, printing inks and artists’ colours producers in Europe claimed that the members it represents employ up to 150 000 people, with most of them being SMEs.

(326) AkzoNobel in that regard pointed out that the fact that there are so many interested parties underscores how big of an impact, duties will have on users and that more attention should be paid to their interests.

(327) The Commission took all their claims into account and assessed them in detailed in this section.

(328) Siegwerk claimed that the imposition of anti-dumping duties would result in a relocation of production capacities of large multinational users of TiO2 outside the Union, while SMEs, which do not have such flexibility in relocating assets, would be forced to shut down or curtail production. This would result in Union producers losing a large chunk of their customers, ultimately adversely affecting their performance too.

(329) While such risk may exist, the Commission considered that the more imminent risk from price and volume pressure of Chinese dumped imports vastly outweighed any potential risk to the Union industry compared to the potential decreased demand further down the line.

(330) In light of the above, and in absence of further claims, recitals (422) to (424) of the provisional Regulation are confirmed.

(331) AAKO claimed that the duties at the level proposed in the provisional Regulation would have a huge impact on prices of the TiO2 they import and the sunscreens industry, since that type of TiO2 can cost up to eight times more than the more common grades.

(332) The Commission addressed the effect of definitive duties on AAKO and similar importers, as well as their customers in recital (539).

(333) As no other importers or traders came forward and contested Commission’s conclusions on the interest of importers and traders, the Commission maintains its conclusion in recital (426) of the provisional Regulation that the imposition of anti-dumping measures is not likely to have a negative effect on the situation of importers and traders in the Union.

(334) Several users and user associations in addition to those mentioned in recital (427) of the provisional Regulation came forward to oppose the duties.

(335) No comments were received concerning the assessed size of TiO2 downstream market segments. Recital (428) of the provisional Regulation is thus confirmed.

(336) Schulman Plastics, a Union producer of plastics and related materials which cooperated with the Commission in the provisional stage of the investigation, did not provide any comments in the definitive stage of the investigation. With the new, lower, recalculated dumping margins (see recital (199) above), however, the impact on its plant which mainly produces MW will be even less pronounced than estimated in the provisional Regulation.

(337) The Commission thus maintained its conclusion in recital (434) of the provisional regulation, that Schulman Plastics would be able to absorb the duties and remain profitable, even if it would not be able to pass cost increase onto customers.

(338) Plastika Kritis claimed that the imposition of duties against Chinese TiO2 would be detrimental to the MW industry in the Union. Plastika Kritis claimed that there are over 300 producers of MW in the Union, mostly SMEs, employing in total over 15 000 people. With MW being a light and inexpensive material, orders are won or lost on a few cents difference. Thus, any increase in the price of the main raw material (TiO2) resulting from the imposition of the anti-dumping duties will make the Union MW producers uncompetitive compared to competitors from abroad.

(339) As a result, large masterbatch producers will be forced to relocate their production outside Europe while smaller ones will stop producing and will become importers. Plastika Kritis thus claimed that there is clearly a prevailing interest of the MW industry that duties are not imposed, even if that would lead to a demise of the Union producers of TiO2, since MW industry employs far more people and producers higher added value products.

(340) No data was presented to the Commission, however, which would show that MW producers are exposed to heavy competition from abroad or what are the market shares between Union and foreign MW producers.

(341) On the other hand, the complainant provided their own estimates, according to which Union MW producers hold 95 % of the Union market.

(342) The actual impact is hard to quantify as none of the smaller users submitted a questionnaire reply. It could not be excluded, however, that, due to the very high incidence of TiO2 cost in the total cost of production of MW, producers of this product could be heavily impacted by the imposition of duties if they source non-negligible quantities of TiO2 from China.

(343) In fact, the analysis of impact of duties on a MW producer’s profitability (based on Schulman Plastic’s data) has shown that, with currently proposed duties, profitability of a MW producer decreases by around 1 percentage points for each additional 5 percentage points of TiO2 sourced from China in their supply mix. It remained unclear, however, to which extent the Union MW producers are exposed to competition from abroad.

(344) In their comments on final disclosure, Plastika Kritis reiterated its previous claims on the effect of duties on producers of MW and requested an exemption from anti-dumping duties for TiO2 destined for the production of masterbatches. While the legal basis for the exemption request was not specified, and after having rejected at provisional stage Schulman Plastic’s request to expand the product scope in this investigation to also cover MW to which no comments were received (see recital (26) above) from the nature and the phrasing of the request, the Commission treated it as a request for an end-use exemption under Article 254 of the Union Customs Code (52).

(345) The Commission noted on the outset that this end-use exemption came extremely late in the investigation. As already stressed in recital (86) above, such claims 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.

(346) Nonetheless, even if the Commission was thus not able to assess the request to a sufficient extent, the Commission examined the request in light of the evidence it had available. In that regard, the Commission reminded that only one TiO2 user that produced MW, Schulman Plastic, submitted a questionnaire reply which was verified.

(347) First, no evidence was provided to the Commission that TiO2 used in production of masterbatches is in some way unique when compared to other grades. To the contrary, it appears that several TiO2 grades can be used in the production of masterbatches.

(348) Second, no evidence was provided to the Commission that would prove a shortage of supply of TiO2 for MW producers. Given the relatively broad range of TiO2 grades advertised for use in masterbatches, which also appear to be of relatively standard specifications, as well as the size of the plastics market segment, it appears unlikely that there would be a shortage of supply of TiO2 for this use.

(349) Third, as concerns the share of the product concerned in the cost structure and the ability of the user(s) to absorb the duties, as already stated in recitals (342) and (343) above, the Commission acknowledged that MW producers might be the most affected by the duties, due to the high incidence of TiO2 in their overall cost structure. (53)

(350) At the same time, the Commission again highlighted that it could verify the profit levels and the share of Chinese TiO2 in the supply mix only for Schulman Plastics, on the basis of its questionnaire reply. The Commission could adequately estimate Schulman Plastics’ exposure to imports from China and the impact the duties would have on its profitability. The Commission was thus able to conclude, as laid out in recitals (434) of the provisional Regulation and (336) and (337) above, that Schulman Plastics could absorb the duties and remain profitable, even if it would be assumed that it would not be able to pass on cost increases to consumers.

(351) Plastika Kritis did not submit a questionnaire reply or other verifiable data on their profitability or sources of supply. The Commission was thus not able to assess and conclude how seriously they would individually be impacted by the imposition of duties on TiO2 imports from China and whether this condition for the end-use exemption could be met.

(352) Plastika Kritis again reiterated its claim that importers of masterbatch into the Union from nearby markets will become even more competitive against the Union masterbatch producers, since the former will still have access to cheaper Chinese TiO2.

(353) The Commission noted that Plastika Kritis provided no new evidence in that regard. The Commission pointed out, however, that a potential remedy exists for such practices if they were to occur: any industry experiencing such practices could request the initiation of a dedicated anti-dumping or anti-circumvention case, provided that all the conditions in the basic Regulation are met.

(354) In light of this and in the absence of new evidence, the Commission maintained its conclusions on this point from recitals (339) - (343) above.

(355) On the basis of the above, the Commission could not conclude that any of the elements for an end-use exemption of TiO2 used in production of masterbatches are met and thus rejected this request.

(356) Multiple users from the paint and coatings industries expressed opposition to the duties on the grounds of Union interest after the imposition of the provisional duties.

(357) Sherwin-Williams, one of the users who submitted a questionnaire reply, did not provide any comments on the provisional Regulation. Given the new, lower, dumping margins, the Commission concluded that the impact on Sherwin-Williams will be even less pronounced than estimated in the provisional Regulation.

(358) AkzoNobel and PPG claimed that duties at the proposed level will have a major impact on their cost of production and margin erosion, not only on account of more expensive TiO2 from China, but also that that Union producers will raise their prices too.

(359) ASEFAPI, PPG, Teknos and AkzoNobel claimed that there was no possibility to pass on cost increases to customers. Such cost increases will make paint and coating producers uncompetitive and promote the importation of the finished products (paints) into the Union. AkzoNobel claimed that imports of paints and varnishes into the Union were already increasing.

(360) PPG claimed that, with the current level of duties, imports from China will become unviable, even if crucial due to lack of capacity in the Union and the need to diversify sources of supply. PPG thus pleaded that the Commission revises the duties downwards to strike a fairer balance.

(361) The Commission noted that it had already concluded that TiO2 represents a minor amount in the cost of production of paints and estimated that profitability of paint producers would not be seriously affected. No new evidence was brought forward to contest that conclusion.

(362) Similarly, while limited evidence was provided to show that paint producers operate under longer contracts, making it difficult to implement instant price increase, no evidence was provided to show that they could not increase prices in negotiation with their customers, nor that that competition from abroad is increasing and jeopardising their position on the market.

(363) Smaller producers such as Teknos further claimed that the interest of paint and coating industry was not sufficiently considered, a claim also echoed by CEPE. CEPE claimed that SMEs in the coating industry will become less competitive and might have to shut down production, while larger producers could relocate their production outside the Union. CEPE thus pleaded to mitigate the impact on the SMEs active in this sector.

(364) ASEFAPI similarly claimed that the price increase associated with anti-dumping duties endanger the viability of many SMEs which are ASEFAPI members, particularly since the TiO2 users’ market is highly fragmented, so their market power is constrained. Some of ASEFAPI’s members particularly have large clients in the automotive sector, reducing their bargaining power when trying to pass on price increases.

(365) ASEFAPI furthermore provided a table showing by how much an increase in price of TiO2 as the main raw material would increase the cost of production of ten different paints, enamels, and printing inks formulations.

(366) The Commission noted that this table provided limited insight into several elements needed to appropriately assess the impact on proposed duties on users. These include: the share of revenues generated from the products using TiO2 in total revenue of those companies; the share of TiO2 bought from China compared to other sources; the share of TiO2 costs in total manufacturing costs of the product; profitability on sales of products using TiO2; and profitability of the total company.

(367) The Commission also pointed out that none of the SMEs members of ASEFAPI or CEPE submitted a questionnaire reply which would give insight into those elements to the Commission.

(368) Nonetheless, the Commission acknowledged that many of the members of CEPE and ASEFAPI are SMEs which might not necessarily have the resources to fill in the questionnaire replies and instead rely on their industry associations to represent their interest.

(369) Thus, while it remained unclear to what extent paint and coating producers are actually exposed to competitive pressures from imports into the Union and what effect the duties might have on profits of smaller producers, it could not be excluded that competitiveness of numerous SMEs could be affected. However, on the basis of the cost structure of paint producers that the Commission observed in AkzoNobel’s and Sherwin-Williams questionnaires, this impact will likely be the least pronounced of all the categories of users analysed in this section.

(370) In their comments on final disclosure, one user, Teknos and four associations of paints and coatings manufacturers - ASEFAPI, CEPE, HCA, and Fédération des Industries des Peintures, Encres, Couleurs, Colles et adhésifs, Résines (‘FIPEC’) - contested the Commission’s conclusions on the Union interest analysis with regard to this sector.

(371) First, CEPE, FIPEC and Teknos submitted that the Commission should have given more attention to the construction sector in its analysis. They further claimed that construction projects are declining in the Union, and that even a small increase in the price of a raw material (in this case, paints and coatings) could put the sector’s survival at risk, since it does not have the margins to absorb price increases.

(372) Second, all four associations disagreed with the Commission’s conclusion from recital (369) above, that impact on the paint and coating segment of the downstream industry will be the least pronounced of all the categories of users examined in this section.

(373) To that end, all four associations provided their own calculations of cost increases, based on assumptions that TiO2 represents 30 % - 50 % in raw material costs of a paint producer. ASEFAPI specifically highlighted that it had brought forward data specifying more significant cost increases.

(374) Furthermore, they claimed that the Commission’s findings were based on two large companies (AkzoNobel and Sherwin Williams) and therefore they were not representative for the broader industry, particularly SMEs. They reiterated their claims that SMEs can absorb the duties to a lesser extent, and they cannot pass them on to their clients as they have limited bargaining power.

(375) Third, the associations claimed that countries near the Union borders, such as the UK, Türkiye, and others, will be able to import TiO2 from China without the burden of the additional anti-dumping duties, which will make local paints and coatings producers more competitive against Union paint producers. HCA requested for a protection mechanism from such imports. Similarly, they claimed that paints and coatings imported from China could undercut Union painting manufacturers due to lower production costs.

(376) Fourth, the associations also claimed that Union exports of paints and coatings will also suffer from increased prices, making the Union users of TiO2 less competitive on foreign markets as well.

(377) Finally, the associations stressed that it is imperative to maintain the users’ competitiveness, since these companies are more numerous and employ many more people that the Union industry producing TiO2. The associations further claimed that duties mainly benefit non-Union companies, since majority of Union producers are subsidiaries of companies headquartered abroad. ASEFAPI also argued that the duties would not favourably impact the Union producers of TiO2 as they lack production capacity, therefore users would buy TiO2 from other third countries and thus the duties would ultimately benefit non-EU producers of TiO2.

(378) HCA further suggested several measures to soften the impact on competitiveness of the Union industries in form of tax breaks and financial support for domestic industries. None of these, however, are within the ambit of trade defence investigations.

(379) The Commission analysed these claims and reached the following conclusions:

(380) First, as the Commission already stated in the provisional Regulation, no companies active in the construction sector came forward in the investigation to oppose the duties. Similarly, no parties provided sufficient evidence on the situation in the construction sector other than a few broad claims, nor did they meaningfully substantiate the impacts of the anti-dumping duties with regard to it. Compared with the volume of submissions, evidence, and data on all the other claims submitted and examined in this investigation, those on construction sector were very limited. The Commission thus took the construction sector into account to the extent that the Commission and the parties considered relevant and as far as information was available.

(381) While CEPE and Teknos, in their submission on final disclosure, provided certain reports outlining the situation and future prospects of the Union, and in particular the German, construction sector, they did not provide evidence to substantiate the claims mentioned in recital (371) above. In particular, they did not substantiate or quantify to what extent the costs of paint would increase, nor to what extent could the construction sector even be impacted by any increase.

(382) On the other hand, the fact that no companies from the construction sector registered as interested parties to oppose the duties suggests that they do not expect to be significantly impacted by the duties on TiO2.

(383) Second, the Commission acknowledged that ASEFAPI, its comments on the provisional Regulation, provided some data showing the share of the cost TiO2 can have in certain paint formulas and what could be the increase in costs for those formulas with different levels of duties. The Commission duly analysed that data and took it into account for final disclosure, as explained in recitals (365) to (366) above.

(384) The Commission repeated that this data only showed an estimate of how much a certain increase in the price of TiO2 would increase the cost of production of ten different paints, enamels, and printing inks formulations. However, this data did not show which users it came from, how profitable these users were, how many other types of products they produced and sold and at what cost, what were their sources of supply, etc.

(385) The Commission could thus not draw from this data any meaningful conclusion on the share of Chinese TiO2 in the supply mix of any users, nor their performance and profit levels. Therefore, the Commission could not adequately estimate what is their exposure to imports from China and, consequently, what impact the duties would have on such users. While this data was, in addition, not verified, the only conclusion that could be drawn from this data is that some paints contain higher than average share of TiO2 in their costs of production.

(386) On the other hand, as already stressed above, AkzoNobel and Sherwin Williams provided questionnaire replies, which were verified. These replies were, by the nature of the questionnaire, comprehensive and contained all the above elements that the Commission would need to assess, thus showing a full picture of the performance of each of those producers: their costs of production and share of TiO2 in them were averaged across all paints that each company produces, while the share of Chinese imports in their total cost structure was isolated. Such questionnaire data, completed and verified, allow for a more accurate insight into how a paints and coating producer could be affected.

(387) On the basis of such data the Commission could conclude that TiO2 represents a much lower share in total raw material costs of a paint producer, when averaged across all paint formulations, than what ASEFAPI, CEPE, FIPEC, and HCA present on the basis of certain individual formulations. The share of TiO2 in total cost of production was even lower.

(388) Even in Sherwin Williams’ case, which filled out the questionnaire only at the level of its two most affected plants, the share of TiO2 in total raw material costs was much lower than suggested 40 % – 50 %, and lower than for all other categories of users which submitted questionnaire replies (i.e., decor paper, graphic white inks, and MW producers).

(389) On that basis, as explained above in recital (369), the Commission concluded that a paint producer, even an SME, would be, on average, less impacted by duties on TiO2 due to a relatively low share that TiO2 represents in a paint producer’s cost structure. With no new evidence brought forward to contest it, the Commission maintained this conclusion.

(390) No new evidence was brought forward in regard to the third claim either. The Commission pointed out, however, that for any alleged dumping practices on paints and coatings coming from China, a legal remedy existed in the form of a dedicated anti-dumping investigation. If the users have evidence of such practices, they have the possibility to bring their own complaint to the Commission.

(391) Similarly, a protection mechanism exists for circumvention of duties alleged by HCA. An industry experiencing circumvention practices can request the initiation of a dedicated anti-circumvention case, provided that all the conditions in the basic Regulation are met.

(392) Likewise, no new evidence was brought forward in regard to the fourth claim. While the overall cost structure of downstream users might be affected, no comprehensive evidence was presented to show to what extent paints and coatings industry relies on exports, to which destinations, and what would be the overall effect on their performance in those markets. The Commission thus did not have a comprehensive picture and could not verify the veracity of this claim.

(393) Finally, the Commission pointed out that, even if some of the Union producers are a part of multinational conglomerates headquartered abroad, that does not exclude them from the definition of Union industry within the meaning of Article 4 of the basic Regulation. Indeed, the companies themselves are established according to relevant Member States’ laws and they are not related to any exporter or importer from the country concerned.

(394) Teknos and the four associations made additional claims that paints industry is particularly sensitive to price changes, that reduction in Union TiO2 production over the past years has already made them more dependent on imports, and that the imposition of duties will negatively affect the EU Green Deal goals, since duties will lead to increased imports of paints into the Union, which will result in additional emissions associated with their transport. They further claimed that the duties will negatively affect jobs in downstream industries and investment in the Union, as higher costs of production will lead to layoffs and make paints and coatings sector less appealing for new investment. These claims were not supported by meaningful verifiable evidence, however, and were thus rejected by the Commission.

(395) At definitive stage, Felix and Munksjö maintained their position that, even if the Commission did not exclude laminate-grade TiO2 from the product scope, it should grant end-use exemption for its use in decor paper production, providing new claims and evidence in that regard.

(396) The users reiterated their claims that all the criteria which the Commission took into account in previous cases of end-use exemptions were met. These include: the particularity of the downstream product, availability of supply, share of the product concerned in the cost structure, the ability of the user to absorb the duties, and the impact of the exemption on the effectiveness of the measures.

(397) The users stressed again how laminate-grade TiO2 is specifically designed to serve the purposes of the decor paper production, echoing the arguments laid out in recitals (119) to (122) above. The users also claimed that the qualification process for new grades takes about one year on average.

(398) Following the analysis from section 2.1.3.2 above and in light of all the evidence available, the Commission maintained its conclusion that, even if laminate-grade TiO2 does not have sufficiently different basic physical, chemical, and technical characteristics compared to other types of TiO2 to be excluded from the product scope, there is a particularity to this product, given that it is tailored and mainly suitable for use in a specific application – production of decor paper.

(399) This particularity is evidenced by significant presence of phosphorus in the coating of TiO2 molecule. New evidence that Felix and Munksjö submitted showed that it has to be at the level of at least 0,5 % on the dry mass of the product for it to be useful in decor paper applications. At the same time, as was already claimed before, the electrical surface charge resulting from its thick surface coating helps the molecule attach to the wood pulp fibres.

(400) The Commission concluded in recital (139) above, that the latter characteristic might be also relevant for use of TiO2 in production of other products based on wood pulp fibres (such as ordinary paper). This prevented the Commission from concluding that this is a basic technical characteristic different from other types of TiO2, or at least TiO2 used in other applications. However, this characteristic is indeed one of the elements making laminate-grade TiO2 particular, insofar that it makes laminate-grade TiO2 unsuitable for use in other general applications, such as paints and coatings.

(401) On availability of supply, Felix, Munksjö and CEPI also disagreed with the conclusion that, even in the total absence of TiO2 imports from China, there would be sufficient alternative sources of supply available to decor paper producers, both within the Union and from other third countries (like UK or Mexico).

(402) The two users submitted that it is unrealistic to expect that Union producers would significantly increase the supply of laminate-grade TiO2, which is furthermore more expensive to produce than most other grades. Since laminate-grade TiO2 only accounts for around 12 % of total TiO2 market (compared to 60 % for coatings and 25 % for plastics), focussing on larger market segments allows for economies of scale and a larger customer base, making those grades more profitable.

(403) As they did at provisional stage, the two users submitted new evidence in the form of multiple, more recent, exchanges with the Union producers, which showed that the latter were able to offer only limited quantities of laminate-grade TiO2.

(404) The two users have furthermore made a new claim on estimated the supply gap for laminate-grade TiO2 in the Union, on the basis of the figures in the provisional Regulation and the share of the plants which regularly produce laminate-grade TiO2 in the total Union production capacity.

(405) Due to the spread of their portfolio across many types of TiO2 which is in demand in the Union market, the two users estimated that the Union producers could satisfy only around one third of total Union demand for laminate-grade TiO2. This is in line with the estimates that the two users made in their previous submissions addressed in recital (53) of the provisional Regulation.

(406) On availability of supply from other sources, the two users made a new claim that just because they sourced significant volumes from other countries in the investigation period, that does not mean that those sources could supply additional volumes which would cover for the volumes currently sourced from China.

(407) In addition, in their submission of 30 May 2024, Felix and Munksjö demonstrated that weather events in Mexico caused significant production disruptions, jeopardising stability of supply. The two users claimed that this underscores the importance of diversified sources of supply. CEPI reiterated this argument in its comments on the provisional Regulation.

(408) Felix and Munksjö also provided a TZMI report from April 2023, which forecasts an increase in demand in the Americas in 2024. Users claimed that this increase in demand will reduce Chemours’ ability to supply the decor paper market in the Union. This same claim was also echoed by CEPI.

(409) As concerns the UK as a potential alternative source of supply, Felix and Munksjö have provided new evidence to show that local suppliers have limited capacity to supply adequate quantities of laminate-grade TiO2 to the Union.

(410) The two users further argued that both the UK and Mexico produces only chloride process TiO2, while their Chinese suppliers mostly produce via sulphate process. Although switch between the two is technically possible, this would incur additional costs to reformulate the parts of their portfolios which uses sulphate process TiO2.

(411) The two users also brought new evidence claiming that only some of eleven Union producers regularly produce laminate-grade TiO2.

(412) The complainant claimed that Felix and Munksjö provided no evidence to support that Union producers could not satisfy the demand of the laminate paper industry, and that the only thing preventing the Union producers from producing sufficient quantities of laminate-grade TiO2 is unfair competition from China.

(413) The complainant on the other hand claimed that there is no reason why Chemours plant in Mexico would not be able to export sufficient quantities to the Union, submitting TZMI market intelligence data to corroborate that claim. According to this data and nameplate capacity in Mexico, there was a total of [140 000 – 180 000] tonnes of spare capacity in Mexico during the investigation period. (54)

(414) First, the Commission notes that, in line with Article 6 of the basic Regulation, it based its assessment on the verified information submitted by the cooperating users for the investigation period. Information relating to a period subsequent to the investigation period was not collected or verified. Concerning the sourcing of the cooperating users, the verified questionnaire replies showed that they sourced the predominant part of their laminate-grade TiO2 from other third countries during the investigation period, while they sourced a much lower share (10 to 40 %) of their laminate-grade TiO2 from China and the Union producers represented the lowest share of their source of laminate-grade TiO2. This analysis showed that the cooperating users had an established and well-functioning supply channels with other third countries.

(415) In light of all the new evidence presented, the Commission concluded that Felix and Munksjö might indeed face difficulties in buying the required volumes from available sources in the Union and the UK, due to producers choosing to prioritise other, bigger, market segments.

(416) The Commission could not exclude, however, that this is due to the Chinese dumped imports keeping prices of laminate-grade TiO2 uncompetitively low, unattractive to the Union producers. There is evidence on the file to corroborate that assertion.

(417) On the basis of verified macro questionnaire data on nameplate production capacity for those five Union producers, and under the assumptions that (i) laminate-grade TiO2 makes up 12 % of total Union demand for TiO2, and that (ii) the remaining 50 % of the decor paper market players have the same share of the suppliers in their supply mix as Felix and Munksjö taken together, the Commission assessed the available spare capacities for production of laminate-grade TiO2 in the Union.

(418) As was established in recital (270) of the provisional Regulation the Commission estimated that the average consumption in the Union during the period considered was 1,14 million tonnes. The Commission thus based its estimations on the demand for laminate-grade TiO2 on the average yearly consumption during the period considered.

(419) The Commission’s estimation has thus shown that the above five Union producers, if they would be producing at 90 % nameplate capacity and dedicating 12 % of that production to laminate-grade TiO2, they could indeed satisfy just above 1/3 of total Union laminate-grade TiO2 demand.

(420) However, even such limited supply would be enough to cover around 90 % of total supply of laminate-grade TiO2 which decor paper producers would source from China, should those imports disappear completely. This is an extreme scenario as the purpose of the measures is not to stop imports altogether but to ensure that they enter the Union market at fair prices.

(421) Notwithstanding the conclusion in recital (414) above, the Commission also examined the information submitted by interested parties on the availability of additional supply from Mexico for the period following the IP.

(422) Examining the data submitted by the complainant and mentioned in recital (413), the Commission noted that the spare capacity figures might be overstated, since they seem to assume that no capacity was dedicated to domestic Mexican demand. In addition, there is evidence on the file that global demand was low during the investigation period.

(423) Therefore, it could be expected that the actual available capacity in Mexico in a normal year would be less. This conclusion is reinforced with other estimates from TZMI, which show that actual spare capacity in 2024 in the whole Central and South American region will be half of the figure in recital (413) above.

(424) Nonetheless, the Commission estimated that even in a more conservative scenario, if Mexican producers would also allocate 12 % of production to laminate-grades TiO2, there would be around four times as much available capacity for laminate-grade TiO2 production than what is needed to account for the remaining 10 % of supply of laminate-grade TiO2 coming in from China (see recital (419) above), in the unlikely scenario that the latter disappear completely. (55)

(425) At the same time, the weather events which disrupted supply from Mexico in summer 2024 can be considered as exceptional circumstances which cannot lead to the conclusion that Mexico would not be an adequate source of supply in the future.

(426) The Commission thus concluded that there exist available spare capacities in the Union and Mexico alone (not even considering the UK) to replace the total volumes of laminate-grade TiO2 purchased by the cooperating users from China, provided that level playing field is re-established and producers can commit 12 % of their production capacity to laminate-grade TiO2. Therefore, it rejected the claims made by the users in question.

(427) Felix and Munksjö also contested the Commission’s conclusion on the impact of duties on their business. Specifically, they pointed out that the Commission’s estimate in recital (430) of the provisional Regulation that their profitability would decrease by [2–3] percentage points fail to take into account the indirect effects of the duties.

(428) They argued that the first of those effects was that the users would need to switch from grades produced via the sulphate process to the more expensive grades produced via the chloride process and would have to bear additional costs associated with the reformulation of existing recipes.

(429) Users further claimed that, as a result of the anti-dumping duties, Union producers were expected to significantly increase their prices for existing volumes too. After the provisional measures came into force, the two users provided evidence on negotiations with their Union suppliers, indicating that these suppliers would indeed be increasing prices in the near future. The users additionally provided a TZMI estimate on TiO2 price evolution in the near future, published in June 2024, similarly predicting price increases of TiO2 in the Union.

(430) Furthermore, the users claimed that these cost increases will make Chinese producers of decor paper comparatively even more competitive, incentivising further increase in dumped imports of decor paper. This would also further stifle the users’ ability to increase prices to their customers.

(431) The users furthermore stressed that, since TiO2 costs make up such a large share in their total costs of production, they will not be able to absorb the duties, resulting in a dire impact on their business. At the same time, the unwarranted switches from sulphate grades (currently sourced from China) to chloride grades (which are mostly available in the Union and from other third countries), will result in additional imminent costs.

(432) In addition, using TZMI and TTO data, the users provided calculations on the estimated cost advantage that the Chinese decor paper producers would have compared to the Union ones. These showed that, as a result of an increase in TiO2 prices, the cost advantage of Chinese decor paper producers would increase from 24 % in the investigation period to 31 % in 2025.

(433) The users claimed that this will not only result in loss of sales volumes to Chinese competition, but also in their inability to adjust the pricing and thus prevent them from staying profitable in the market.

(434) Finally, the two users claimed that the end-use exemption would not have an impact on the effectiveness of the measures.

(435) In this respect, the users maintained that majority of the TiO2 imports from China would not be affected by the potential exemption, referring to the Commission’s conclusion from recital (428) of the provisional Regulation, that laminate-grade TiO2 accounts for around 12 % of total demand. Furthermore, as the Union producers mainly focus on other TiO2 applications, the impact of the exemption on the Union industry will also be limited.

(436) Furthermore, the two users presented that the end-use exemption is both a burdensome procedure for companies that want to benefit from it, and that customs authorities have continuous supervision over the goods under the procedure and can retroactively collect duties if they consider that the goods are not used for the designated end-use, while no users other that decor paper producers could thus benefit from the exemption.

(437) Concerning these claims, the Commission first clarified that its analysis rested on simulating the increased costs of TiO2 which these users currently source from China, with all other things (including the volumes, types, and sources of supply) remaining equal. This resulted in the estimated [2–3] percentage points decrease in profitability. (56) At the same time, the costs associated with reformulation which the users estimated, although not insignificant, would be a one-off cost which would be furthermore minor compared to their usual total costs of production. In light of the above analysis, the Commission maintained its finding in recital (430) of the provisional Regulation, that the duties would likely have a negative impact on Felix and Munksjö’s profitability.

(438) However, the Commission noted that the dumping margin found in the definitive stage of the investigation is lower than the dumping margin established in the provisional Regulation. Therefore, the Commission did a new assessment of the impact of the definitive duties on the profit margins of the two users. The analysis showed that the impact of the definitive duty at the level of the lower dumping margin on those two users’ profitability would be by around 1 percentage point less than the impact found in the provisional Regulation.

(439) The Commission thus concluded that, even if the Union industry raised its prices which were, in fact, found to be supressed by the dumped imports from China as explained in recital (217), the impact of definitive duties on these two users would likely not be more significant than as determined in the provisional Regulation, given the low share of Union supply in their supply mix.

(440) At the same time, however, laminate-grade TiO2 represents around 12 % of total Union TiO2 demand and [15 – 17] % of total sales volumes of sampled exporting producers in the investigation period. The Commission therefore considered the potential impact on the effectiveness of the duties to be disproportionally high if this end-use exemption was granted.

(441) In addition, as established above, evidence on the file show that at least some of the Union producers were not producing sufficient quantities of TiO2 due to uncompetitive prices on the Union market.

(442) The Commission thus concluded that, absent Chinese dumped imports, production is expected to shift back to the Union producers if prices adequately increase.

(443) Moreover, even if laminate-grade TiO2 is particular, there are five producers in the Union which are able to produce it, as well as alternative sources of supply both in Mexico and the UK. As indicated above, the Commission’s estimates provide that there is sufficient capacity available to cover even for the, extremely unlikely, total disappearance of Chinese imports, showing sufficient availability of supply.

(444) Finally, with regard to the claim mentioned in recital (430) above, the Commission reiterated that any allegation of dumping practices in the decor paper industry and of the consequent injury of the Union industry are investigated in the separate anti-dumping investigation concerning imports of decor paper originating in China (57) and are outside the scope of this proceeding.

(445) After final disclosure, Felix, Munksjö, and LB made comments disagreeing with the above findings on end-use exemption. The two users claimed that Commission’s assessments of availability of supply are based on overly optimistic assumptions.

(446) First, the users claimed that the Commission’s estimates failed to consider the cyclicality of the TiO2 market, as those calculations were based on consumption figures and capacities in a period of low demand.

(447) Second, the users claimed that the TiO2 market segment which comprises 12 % actually consists of decor paper and normal type of paper. While decor paper indeed takes up the majority of that share, it is unrealistic to expect that the producers will increase the share of laminate-grade TiO2 in their product mix to 12 %, i.e., the level higher than is market share of it.

(448) Third, the users claimed that it would be unrealistic to expect that Union producers would allocate a larger share of their production capacity to laminate grade TiO2, since they benefit from economies of scale in the other segments.

(449) Fourth, the users claimed that such hypothetical potential increase of supply is invalidated by the fact that numerous Union producers were not willing to increase their supplied quantities even after the imposition of provisional measures.

(450) Finally, LB Group similarly claimed that there is a very limited number of suppliers of laminate-grade TiO2 globally. They disputed the Commission’s conclusion that there are 5 plants in the union capable of producing laminate-grade TiO2 while production capacity expansion is unlikely since production of this type of TiO2 requires dedicated production lines to avoid contamination of other grades with phosphorus compounds.

(451) In addition, LB Group pointed to the provisional conclusions in the anti-dumping investigation currently ongoing in Brazil, (58) where the authorities decided to grant the end-use exemption for TiO2 used in production of decor paper.

(452) Concerning the users’ first argument, as the Commission already explained in recital (418) above, the Commission made its assessments on the availability of supply on the basis of the demand in an average year, and not the investigation period, which was a time of low demand. Likewise, in recital (419) above, the Commission based its estimates on production levels at 90 % of nameplate capacity of Union producers. The Commission’s estimates of the supply gap in the (already unlikely) scenario of complete disappearance of Chinese supply were thus, by design, conservative, rather than optimistic.

(453) As concerns the second argument of the users, the Commission noted that in previous submissions the users also operated under the assumption that decor paper alone accounts for 12 % of the total TiO2 demand (59) and did not previously dispute this assessment. Nevertheless, even if the actual share of demand for laminate-grade TiO2 would be lower, this means that TiO2 producers would have to dedicate even lesser share of their total capacity to this market segment, making the Commission’s estimates even more conservative and further reinforcing the Commission’s conclusion on available capacities.

(454) Third, the Commission considered that the assertion that Union producers would not increase the share of laminate-grade TiO2 in their portfolio does not have merit. First, Union producers already produce other, more niche, types of products, even if these benefit from economies of scale to a lesser extent. Second, producers already produce laminate-grade TiO2 even in the current quantities. It is then safe to assume that, if they start producing more, they will benefit from economies of scale in that segment even further, making it economically enticing to increase production quantities.

(455) As concerns the users’ fourth claim, the Commission already addressed this argument in recitals (415) and (416) above. While the Union producers may not have immediately committed higher volumes to laminate grade TiO2 production, it is reasonable to expect that they would, once level-playing field is definitively restored.

(456) Finally, the claim raised by LB Group about the number of Union producers capable of producing laminate-grade TiO2 is not supported by any evidence. Furthermore, the Commission took Felix’s and Munksjö’s own claims on the number of Union (and also other) producers which could produce laminate-grade TiO2 as the starting point in its assessment.

(457) Finally, as concerns the fact that Brazilian authorities granted an end-use exemption in that case, the Commission pointed out that this decision by another investigating authority has no relevance or bearing on the case at hand as it is taken under different legal framework and under different factual and economic circumstances. In any event, by contrast to the case in Brazil, a large part of the Union industry produces this product and has opposed the exemption. Consequently, the claim was rejected.

(458) On the basis of the above, the Commission rejected the end-use exemption request for laminate-grade TiO2.

(459) Three users requested a product exclusion or end-use exemption for graphic TiO2 for the production of white inks: Sun Chemical, Flint Group GmbH (‘Flint’), and Siegwerk.

(460) Flint contested the Commission’s findings concerning its request for an end-use exemption for graphic TiO2 and claimed five factual and legal errors in Commission’s provisional findings.

(461) First, although this has no bearing on its request for an end-use exemption, Flint claimed that it is incorrect that it purchases a limited amount of TiO2 for purposes other than producing white inks, as concluded in recital (57) of the provisional Regulation.

(462) Second, Flint disagreed with the conclusion that graphic TiO2 does not have particular physical, chemical, and technical characteristics compared to other types of TiO2. To that end, Flint reiterated its claim from its first submission, citing Kronos’ promotional claims on graphic TiO2, which state that “that this type of TiO2 has exceptionally high gloss resulting from optimized, very intensive milling process, maximum opacity, and very low abrasion.” In addition, “[g]raphic TiO2 has unique whiteness, and chemical resistance, which are critical for ink applications.”

(463) Flint referred to the Commission’s findings from recitals (57) and (58) of the provisional Regulation, that there is “a specific know-how to producing [graphic TiO2,] mastered by only a limited number of [TiO2] producers” and that “Flint has […] provided evidence demonstrating that [TiO2 types which Flint has been testing from different producers] generally do not reach satisfactory quality levels.”

(464) Flint concluded that it follows that graphic TiO2 must have particular physical, chemical, and technical characteristics that distinguish it from other types of TiO2.

(465) Third, contrary to the Commission’s finding that graphic TiO2 does not have a well-defined end-use due to a large number of inks recipes that Flint has for their products, Flint claimed that, while they do use TiO2 in many recipes, all of those products are white inks. There is thus a single end-use for graphic TiO2 defined as: material used to manufacture white inks.

(466) Fourth, Flint claimed that it is irrelevant for an end-use exemption whether customs authorities can verify that it is indeed graphic TiO2 used for production of white inks. What matters in granting the end-use exemption is the specific use of the product in question, which does not have to differ from other types of products subject to anti-dumping duties.

(467) Fifth, Flint argued that its profits in fact will be significantly affected by the proposed anti-dumping duties. Flint provided calculations on the impact on its profitability in the white inks segment of its business, which showed that the duties would, contrary to the Commission’s provisional findings, decrease its profitability by around 9 percentage points, turning it loss-making.

(468) Flint further stressed that the impact of the duties on Flint’s total business cannot be determinative for end-use exemption request, since Flint is a diversified group with numerous products. This would unjustifiably discriminate between single-product and diversified businesses. Instead, impact on the business segment at hand should be assessed.

(469) Flint reiterated that all the other requirements for granting an end-use exemption were met.

(470) First, Flint claimed that end-use exemption for graphic TiO2 would not reduce the effectiveness of the duties, since graphic TiO2 makes up for around 3 % of total TiO2 demand. Flint further noted that the complainant did not mention graphic TiO2 in the complaint, nor did they engage with Flint’s end-use exemption request at the provisional stage of this investigation. This would mean that not even the complainant is concerned about possible effects this exemption might have on the effectiveness of the duties.

(471) Second, Flint reiterated that graphic TiO2 makes up a very significant share of cost of production of white inks and pointed to the Commission practice in the PVA case, where this was one of the grounds for granting an end-use exemption request. (60)

(472) Finally, Flint reiterated that graphic TiO2 is a highly specific product for which users could not switch suppliers, which was a ground for granting the end-use exemption in previous Commission practice. (61) Flint claimed that, since the anti-dumping duties will make it economically unfeasible to source graphic TiO2 from China, duties would in essence leave Flint with only one major supplier as a source for bulk of its TiO2.

(473) Another producer of white inks, Siegwerk, provided calculations showing that the production of white inks would no longer be viable in the Union if measures are imposed, due to competitive pressure from imports from third markets like Türkiye. It is thus likely that the Union white inks capacity closes down or relocates outside the Union.

(474) Siegwerk claimed that the relocation would likely have further negative effects: producers of packaging which rely on white inks producers would likely follow suit in relocating their production outside the EU, since it is cheaper and simpler to import coloured packaging to their customers in the Union, rather than importing white inks (as the transport of inks is less cost efficient and requires more care due to its hazardous nature).

(475) Furthermore, Siegwerk provided evidence showing that over the last decade, 10 percentage points of solvent-based inks volume has relocated from the Union to Türkiye. This trend is thus likely to accelerate if the anti-dumping measures are applied.

(476) Claims were also made that certain TiO2 grades required for use in inks applied to packing in speciality uses (medicinal, food packaging, cosmetics, etc., all of which require higher safety standards as they come in contact with products for human consumption) are not available on the Union market. Therefore, the users have no choice but to supply such grades from China, and the cost increase resulting from the imposition of anti-dumping duties would make this production unprofitable.

(477) In response, the complainant did not give detailed data on the graphic TiO2 production by the Union industry, but claimed that it had, in general, sufficient capacity to supply the market if level playing field is restored.

(478) In light of the new evidence and claims presented above, the Commission reassessed its conclusions from the provisional Regulation.

(479) As concerns Flint’s arguments presented in recitals (461) and (462) above, the Commission noted that these are only pertinent in relation to product exclusion analysis. Since Flint did not make a request for the Commission to reassess its analysis of its product exclusion request at the definitive stage, the Commission considered those arguments as moot.

(480) Concerning the argument mentioned in recital (476), the comments did not specify which grades of TiO2 these concerns, so the Commission could not verify the veracity of those claims.

(481) Concerning the particularity of graphic TiO2, the Commission has already concluded in recital (57) of the provisional regulation that there is indeed a specific know-how to producing it, mastered by only a limited number of producers in the Union and in China. As was also confirmed in the merger case Huntsman/Rockwood, (62) due to specific nature of this product, white inks producers have limited possibilities to switch to other producers.

(482) As Flint has shown, using other types of TiO2 in its applications would result in much poorer performance of inks on the packaging, affecting customers’ perception.

(483) As concerns Flint’s argument from recital (466) above, the Commission noted that Flint clarified in the definitive stage that, while it uses other TiO2 grades in two specific applications, these were neither white inks nor was it using graphic TiO2 grade for those applications. In any case, these represented less than 1 % of Flint’s total use of TiO2. On the other hand, Flint has shown that over 99 % of its TiO2 consumption is in formulations for white inks.

(484) Regarding the availability of supply, Flint has shown that it can only purchase graphic TiO2 from one supplier in the Union and two suppliers in China. There are no available suppliers in other third countries. Siegwerk claimed that they purchase their TiO2 form a few other Union and Chinese suppliers too, but for over 50 % of their formulations they have only one certified supplier.

(485) On the basis of all the evidence available, the Commission maintained its conclusion from recital (58) of the provisional Regulation that there is a very limited number of suppliers worldwide who can produce graphic TiO2 at the adequate quality level, and, to the Commission’s knowledge, they are present only in the Union and China.

(486) As concerns the complainant’s claims that it could supply the market if level playing field is restored, the Commission considered this unlikely for the graphic TiO2 market. Namely, the total Union production capacity is only around 80 % of Union consumption in a normal year. With the new information available at the definitive stage, the Commission estimated that the demand for graphic TiO2 is around 2,5 % of the total TiO2 market. The only Union supplier known to be producing graphic TiO2 at the satisfactory quality level would have to dedicate around 7 % of its total capacity to supply the graphic TiO2 demands in the Union and that producer did not claim that it intended to make this commitment.

(487) The Commission thus concluded that available sources of supply for the graphic TiO2 are very limited both globally and within the Union.

(488) As concerns Flint’s estimates on the impact of the measures on its profitability, the Commission accepted their estimate and reversed its conclusions. Using the same methodology to estimate the impact of the duties at the new, lower dumping margin level, the Commission still found that measures would make Flint loss-making in the white inks segment of business.

(489) Due to the similar cost structure, similar impact could be expected on Sun Chemical and Siegwerk, although the Commission does not know their level of exposure to Chinese suppliers as they did not submit a questionnaire reply.

(490) In light of the above and new evidence submitted by Siegwerk on competitiveness of the Union white inks business, the Commission concluded that measures would have a significant impact on white ink producers and on the employment they generate. On top of this, further potential knock-on effects on downstream packaging industry could have further negative consequences on employment in the Union.

(491) At the same time, the Commission estimated that white ink producers represent around 2,5 % of the total EU TiO2 market and this type of TiO2 is not produced by the vast majority of Union producers. Based on the data available to the Commission, Union industry’s sales of Graphic TiO2 represented around 0,5 % of their total sales in the investigation period and around 5 % of total imports from China.

(492) Furthermore, the complainant did not directly oppose the end-use exemption request for the graphic TiO2. In addition, white inks producers have to rely on a very limited number of producers worldwide which are able to supply graphic TiO2 at the adequate quality level, with only one such producer being in the Union, and the others in China.

(493) Based on the above, the Commission concluded that granting an end-use exemption to white inks producers would not have a significant impact on the effectiveness of the measures.

(494) Furthermore, the Commission concluded that it is in the interest of the Union, to grant an end-use exemption to imports of graphic TiO2 originating in China for use in the production of white inks for printing.

(495) In their comments on final disclosure, the complainant disagreed with this decision. The complainant also opposed the use of the term “graphic TiO2” which, according to their claim, had been unknown to the TiO2 industry. Flint made a subsequent submission disputing complainant’s claims.

(496) In its comments on final disclosure, Siegwerk also requested clarification on the term “end-use” throughout this Regulation, noting also that the term “graphic TiO2” is not defined in customs law.

(497) Thus, as a preliminary point, the Commission pointed to the original request for end-use exemption made by Flint and described in recital (32). The request for the end-use exemption was made and assessed in the context of Article 254 of the Union Customs Code.

(498) As interested parties have rightly noted, “graphic TiO2” is not defined in the customs legislation nor is it necessarily a term uniformly used throughout the TiO2 industry. “Graphic TiO2,” instead, is just an abbreviation which was used in numerous documents in this investigation (including submissions from the complainant) to easily refer to the types of TiO2 that are used as a pigment in the production of white inks in the graphic ink industry. (63)

(499) As explained in this Regulation, the Commission decided to exempt from anti-dumping duties TiO2 if it is imported for use in the production of white inks for printing, under the procedures and conditions laid out in the Union Customs Code. No definition of “graphic TiO2” is thus neither required nor implied for the purpose of effecting this end-use exemption, since it operates on the basis of the intended use of the product.

(500) The Commission then proceeded to analyse the remainder of complainants’ comments on the final disclosure, and Flint’s counterclaims.

(501) First, the complainant asserted that the Commission’s conclusion is based on the data of one single user (Flint), and that the Commission should have conducted an assessment of the impact of duties on the white inks industry on a more representative number of graphic TiO2 users.

(502) Second, the complainant claimed that it was incorrect that users could only purchase graphic TiO2 from one supplier in the Union and two suppliers in China, as the Commission purportedly concluded in recital (484) above.

(503) The complainant went on to argue that there is a large capacity of one Union producer available that can be dedicated to the Union ink market, if a level playing field is restored. At the same time, there are several suppliers in the Union which sell TiO2 to the white inks industry.

(504) The complainant furthermore disagreed with the Commission’s conclusion that the one Union user known to be producing graphic TiO2 would not dedicate 7 % of its total production capacity to satisfy demand in the Union.

(505) In addition, the complainant claimed that the Commission did not request any information from the non-sampled Union producers on their production of graphic TiO2. The Commission cannot thus reasonably allege that there is only one Union supplier known to be producing graphic TiO2 at satisfactory quality level.

(506) Third, the complainant contested the methodology that the Commission used to assess the impact that anti-dumping measures might have on users, white ink producers, compared to the impact that the end-use exemption could have on the Union producers.

(507) The complainant pointed out that in the 2021 anti-subsidy investigation on imports of aluminium converter foil (‘ACF’) from China, (64) the Commission did not grant the end-use exemption because, while ACF was relevant for only a part of total production of the user in question, the Commission could not determine what impact the duties would have had on the user’s total profitability. (65) The complainant contended that in this case, since white inks represent only a part of Flint’s portfolio, the Commission should reach the same conclusion as in the above referred ACF case.

(508) By contrast, the complainant claimed, that this end-use exemption would have a severe negative impact on Union producers which produce TiO2, and this should have been specifically analysed. They argued that should the end-use exemption be granted, the Union producers would no longer be able to sell graphic TiO2 in the Union market.

(509) Finally, the complainant claimed that there was high risk of circumvention associated with this exemption. It would introduce significant challenges in verifying the nature of this product, and graphic TiO2 could thus be misdeclared or diverted to other end-uses.

(510) Flint, on the other hand, claimed that complainant’s comments on this end-use exemption were not bona fide, since they only made comments opposing Flint’s request after the final disclosure, almost a full year after Flint originally made the request.

(511) Furthermore, Flint argued that the Commission should reject complainant’s arguments on how end-use exemption could be used to undermine the effectiveness of the duties. The very nature of this customs procedure does not permit for any misdeclaration while the procedure precisely ensures that TiO2 is not diverted to other end uses.

(512) Flint further claimed that it is irrelevant that only Flint submitted a questionnaire response, as the Commission has previously granted end-use exemptions at the request of just one cooperating user. (66)

(513) As regard the first argument made by the complainant, the Commission noted that among the three users that requested the end-use exemption, only Flint submitted a questionnaire reply which was verified. However, Sun Chemicals and Siegwerk both made written submissions and hearings were held with them and the Commission was thus able to complement Flint’s verified data with additional insights.

(514) The Commission pointed out that, on the other hand, complainant made only one submission regarding this end-use exemption request in the course of the investigation, where it furthermore contested only the arguments made by Sun Chemical. At the same time, while Flint submitted its request for end-use exemption in the first ten days of the investigation and made several subsequent submissions in support of its claims, as Flint correctly pointed out, the complainant never contested those arguments..

(515) On the basis of the information available to the Commission, it was estimated that these three users represent around 70 % of Union production of white inks. Thus, the Commission considered that their situation is representative of the white inks industry and made its conclusions on the information that it had available.

(516) Second, contrary to the complainant’s assertion, the Commission did not conclude in recital (484) that the entire white inks industry can buy graphic TiO2from one supplier in the Union and two suppliers in China, but rather that this the case for Flint. Indeed, as the remainder of this recital shows, other users might also buy graphic TiO2 from other suppliers too, in limited quantities.

(517) As concerns the assertion that the Commission did not request any information from the non-sampled Union producers on their production of graphic TiO2, the Commission had information from the users’ side that some of the users are buying limited quantities from non-sampled Union producers. The Commission again reminded that the arguments made by the white inks producers on availability of supply were never meaningfully contested.

(518) This particularly pertains to Flint’s arguments on the specific know-how necessary to product TiO2 that works well in white inks, the existence of which and the fact that it was only mastered by a small number of producers was already established in merger case Huntsman/Rockwood. Following this merger, furthermore, the know-how of one of the two Union market leaders in graphic TiO2 had to be divested, and it was purchased by what is now LB Group which continued supplying that TiO2 grade to the Union.

(519) The complainant brought no evidence throughout the investigation that would contest this and thus negate the conclusion that the availability of graphic TiO2 grades which are of satisfactory quality is very limited globally to only a handful of producers in the Union and in China. Nothing in verified questionnaire replies from sampled Union producers brought that conclusion into question either. The Commission thus found no reason to reach out to the non-sampled Union producers.

(520) As concerns the available capacity of the one Union producer to supply the market, while they might have theoretical capacity, the Commission already concluded it unlikely that they would dedicate 7 % of this capacity to supply what is only 2,5 % of the market.

(521) The complainant did not bring any evidence that would suggest otherwise. To the contrary, its own claims from the comments on final disclosure suggest that there is no economic incentive to do so.

(522) Third, the Commission disagreed with the complainant’s assertion that the Commission applied different methodology that in ACF case. The Commission assesses each request on a case-by-case basis and in light of all the facts and information available. Thus, the fact that in ACF case the impact on total profitability of the user could not be estimated does not make the factual situation comparable to this case. At any rate, it is clear from the case-law that the lawfulness of a regulation imposing anti-dumping duties must be assessed in the light of legal rules and, in particular, the provisions of the basic regulation, not on the basis of the alleged previous practice of the EU institutions in taking decisions. (67)

(523) Indeed, as the Commission elaborated in recitals (488) to (490), when analysing the overall picture, including the high incidence of TiO2 in cost structure of white inks and new evidence brought on volatility of white inks business, as well as potential knock-on effects downstream packaging industry, the Commission concluded that measures would have a significant impact on white ink producers.

(524) At the same time, the Commission expressed doubt about complainant’s assertions that this end-use exemption will have a severe negative impact on Union producers. As already stated, graphic TiO2 represents a very small share, 2,5 %, of the total market, and even less in terms of the share of sales of the one Union producer which is most competitive in this market.

(525) Furthermore, the complainant did not substantiate why any of the Union producers, which are and have been selling graphic TiO2 to the Union in the previous years, in spite of Chinese competition, would now suddenly not be able to do so.

(526) Finally, the complainant did not meaningfully substantiate its claims on risk of circumvention. End-use exemption is a customs procedure through which customs authorities verify whether the imported products were indeed subject to a specific use. The Commission thus found no reason to believe that TiO2 could be misdeclared or diverted to other end-uses as a result of this exemption.

(527) The Commission therefore rejected the complainants claims regarding the end-use exemption for the production of white inks for printing.

(528) Multiple interested parties also made claims on the insufficient supply of TiO2 in the Union. They stated that they have faced many supply shortages in the past and when the economy picks up again, prices will rise and there will not even be sufficient quantities of TiO2 available from Union producers.

(529) The complainant contested those claims, stating that they are ready to meet the Union demand once level playing field is restored. Furthermore, the complainant also argued that multiple capacity expansions are planned in other countries such as the UK, Saudi Arabia and USA.

(530) The Commission acknowledged that the total Union capacity is insufficient to meet the total Union demand. In addition, the capacity expansions claimed by the complainant could not be verified against reliable evidence.

(531) Nonetheless, on the basis of the information and evidence available to the Commission, there are ample capacities of TiO2 available worldwide, and at least indications that capacity expansion will continue in the coming years in regions other than China. Even if imports from China would disappear completely, these could compensate for potential supply gap.

(532) Based on the above, the Commission concluded that there were no compelling reasons against the imposition of definitive anti-dumping duties on titanium dioxide originating in China.

(533) However, to limit any possible serious impact on the users that are heavily dependent on TiO2 in their production and in order to mitigate the possible serious adverse effects that anti-dumping duties might have on a large number of such users, while at the same time ensuring protection to the Union industry exposed to the injurious effects of dumped imports from China, the Commission considered modulation of duties.

(534) In their comments on the final disclosure, several interested parties reiterated their comments that the anti-dumping rate of 32,3 % is too high and will make their businesses uncompetitive, and that the Commission should reduce the duty rates.

(535) All individual and specific comments on Union interest have been addressed. Moreover, as explained in section 8.2 below, the Commission changed the form of the measures. The duties will not be collected as a percentage of a declared invoice value, but rather as a fixed amount per kilogram, regardless of the value of the invoice. As explained in recital (533) above and section 8.2 below, this is expected to soften the impact of duties on the users.

(536) In view of the conclusions reached with regard to dumping, injury, causation, level of measures and Union interest, and in accordance with Article 9(4) of the basic Regulation, definitive anti-dumping measures should be imposed in order to prevent further injury being caused to the Union industry by the dumped imports of the product concerned.

(537) As explained in recital (533) above, the Commission considered appropriate to modify the form of the measures. As multiple parties have claimed, the investigation period coincided with a downturn in the demand cycle for TiO2. According to the market intelligence available to the Commission, it is expected that both demand and prices keep increasing in the foreseeable future, at least until the end of 2025.