Commission Implementing Regulation (EU) 2025/670 of 4 April 2025 imposing a provisional anti-dumping duty on imports of certain hot-rolled flat products of iron, non-alloy or other alloy steel originating in Egypt, Japan and Vietnam

• (159) For all other exporting producers in Vietnam, the Commission established the dumping margin on the basis of the facts available, in accordance with Article 18 of the basic Regulation. To this end, the Commission determined the level of cooperation of the exporting producers. The level of cooperation is the volume of exports of the cooperating exporting producers to the Union expressed as proportion of the total imports from the country concerned to the Union in the investigation period, that were established on the basis of the complaint and the information provided by the Government of Vietnam.

• (160) The level of cooperation in this case is high because the exports of the cooperating exporting producers constituted almost 100 % of the total imports during the investigation period. On this basis, the Commission decided to establish the dumping margin of all other imports at the level of Formosa.

• (161) The provisional dumping margins, expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:

Company	Provisional dumping margin
Formosa Ha Tinh Steel Corporation	12,1 %
Hoa Phat Dung Quat Steel Joint Company	0 %
All other imports originating in Vietnam	12,1 %

4. INJURY

4.1.   Definition of the Union industry and Union production

• (162) Within the Union, 15 companies provided production and sales data in the standing exercise and indicated that they produced the like product during the investigation period. Based on the information available in the complaint, these 15 companies were representing around 86 % of the production of the like product in the Union.

• (163) Apart from these 15 companies, there were 7 other companies producing the like product during the investigation period.

• (164) The total Union production during the investigation period was established at around 59,1 million tonnes. The Commission established the figure on the basis of all the available information concerning the Union industry, such as information from the complainant and from all known producers in the Union.

• (165) As indicated in recital (28), three Union producers were selected in the sample representing 34 % of the total Union production of the like product and 35 % of estimated total EU sales quantity of the like product.

• (166) The Union producers accounting for the total Union production constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation and are referred to as the ‘Union industry’.

• (167) The business model of the Union producers and their degree of vertical integration varies. Nevertheless, the Union industry can overall be characterised as an industry with a high degree of vertical integration, as Union producers were found to be at the same time suppliers of the like product to importers and users and themselves competitors of the same independent importers, users and Steel Service Centres (‘SSC’) as mentioned in recital (302).

4.2.   Union consumption

• (168) As mentioned in recital (46), the product under investigation falls within a number of CN codes including certain ex codes. In order not to underestimate Union consumption, and in view of the apparent marginal impact of such codes on total consumption, import volumes of CN ex codes have been fully accounted for the purpose of calculating Union consumption.

• (169) As the Union industry is mostly vertically integrated and the product under investigation is regarded as a primary material for the production of various value added downstream products, such as cold-rolled products, hot dip galvanised coils, hot rolled steel sheets, strips and cut-to-length or coated hot rolled sheets, the captive and free market consumptions were analysed separately.

• (170) The distinction between captive and free market is relevant for the injury analysis because products destined for captive use are not exposed to direct competition from imports, and transfer prices are set within the groups according to various price policies. By contrast, production destined for the free market is in direct competition with imports of the product under investigation, and prices are free market prices.

• (171) To provide a picture of the Union industry that is as complete as possible, the Commission obtained data for the entire activity of the like product and determined whether the production was destined for captive use or for the free market.

4.2.1.   Captive consumption on the Union market (tonnes)

• (172) The Commission established the Union captive consumption on the basis of the captive use and captive sales on the Union market of all known producers in the Union. On this basis, the Union captive consumption developed as follows:

Table 3

Captive consumption on the Union market (tonnes)

	2021	2022	2023	Investigation period
Captive Consumption	39 224 645	33 094 190	33 000 256	33 143 141
Index (2021=100)	100	84	84	84
Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.

• (173) It was established that 56,1 % of the Union production of HRF is dedicated to the captive market whilst the remaining 43,9 % is sold under free market conditions.

• (174) During the period considered the Union captive consumption on the Union market decreased by around 16 %. This decrease is mainly due to a reduction of the demand in captive markets, including manufacturing parts such as for the automotive and construction industries.

• (175) One exporting producer argued that the share of captive consumption (i.e. internal transfers for further processing of the product under investigation without invoicing and entering into free market, and ‘captive sales at non-arm’s length transactions with related companies for further processing) in the overall production of hot-rolled flat steel products should be considered. In the view of this exporting producer this would have strong impact on the final injury determination, particularly since a different approach has been applied to the employment trends or profitability margins.

• (176) One user argued that several Union producers of hot-rolled flat steel products being vertically integrated and their captive use and sales of the like product accounting for some 50 % of the total production, in fact, the Union producers' share in terms of EU (free) consumption accounted for more than 70 %.

• (177) The Commission has closely examined the question of ‘captive use’ and ‘captive sales’ which is highly relevant in the investigation at hand. It has considered sales in the open market and captive sales separately in its injury assessment.

• (178) The Commission notes that while some of the Union producers have related companies either trading or processing the like product, also their sales to these related entities are done at arm’s length and that these related entities are allowed to purchase from all suppliers, including those from the countries concerned and not just from a related primary steel makers and all these purchases are done at market price. Thus, not all sales between related parties were considered captive sales and included in the volume or value thereof.

4.2.2.   Free market consumption on the Union market (tonnes)

• (179) The Commission established the Union free market consumption on the basis of (a) the sales on the Union market of all known producers in the Union; and (b) the imports into the Union from all third countries as reported by Eurostat ⁸, thereby also considering the data submitted by the cooperating exporting producers in the countries concerned. On this basis, the Union free market consumption developed as follows:

Table 4

Union free market consumption (tonnes)

	2021	2022	2023	Investigation period
Free market Consumption	[33 097 951 – 39 993 358 ]	[28 245 156 – 34 452 883 ]	[30 127 073 – 36 275 456 ]	[31 192 346 – 37 690 752 ]
Index (2021=100)	100	90	89	94
Source: Eurofer questionnaire reply, sampled Union producers, Eurostat.	Source: Eurofer questionnaire reply, sampled Union producers, Eurostat.	Source: Eurofer questionnaire reply, sampled Union producers, Eurostat.	Source: Eurofer questionnaire reply, sampled Union producers, Eurostat.	Source: Eurofer questionnaire reply, sampled Union producers, Eurostat.

• (180) According to information provided by the Union industry, during the period considered, the Union free market consumption decreased in the investigation period by around 6 %.

4.2.3.   Overall consumption

• (181) Overall consumption – the sum of captive and free market consumption – evolved as follows during the period considered:

Table 5

Union overall consumption (free and captive market) (tonnes)

	2021	2022	2023	Investigation period
Overall Union Consumption	[75 785 251 – 91 095 403 ]	[60 606 914 – 73 927 115 ]	[62 726 141 – 75 931 644 ]	[62 426 794 – 75 709 091 ]
Index (2021=100)	100	87	86	87
Source: Eurofer questionnaire reply, sampled Union producers.	Source: Eurofer questionnaire reply, sampled Union producers.	Source: Eurofer questionnaire reply, sampled Union producers.	Source: Eurofer questionnaire reply, sampled Union producers.	Source: Eurofer questionnaire reply, sampled Union producers.

• (182) The above table shows that the overall consumption in 2022 dropped by 13 % as compared to 2021. Captive consumption represented almost 56,1 % of overall consumption in the investigation period.

4.3.   Imports from the countries concerned

4.3.1.   Cumulative assessment of the effects of imports from the countries concerned and import volumes and import prices from the countries concerned

• (183) After initiation three exporting producers from Egypt and Japan, as well as users, contested the Commission’s initial decision to cumulatively assess imports from the four countries concerned arguing that:

• (a) The volume exported from Egypt were negligible and followed a different pattern of imports in the EU. These exports remained stable during the period considered increasing by only 5 % during the period considered when comparing with combined hot rolled flat steel products imports of the countries concerned. In addition, as mentioned in recital (6) above, the Egyptian producers argued that it had a very low production capacity compared to other exporting countries, including the countries concerned and has already reached its maximum production capacity.

• (b) The hot rolled flat steel products manufactured and exported from Japan to the EU were readily distinguishable by their high-quality from the products produced in the other countries concerned, as well as the like Union product, and were not subject to the same, or even similar conditions of distribution/sale.

• (c) The total production capacity available in Japan was declining and was lower than the EU total production capacity. Furthermore, Japanese exports of hot rolled flat steel products to the EU did not follow the same trend as the trend of cumulative exports.

• (184) On the basis of the above, these interested parties alleged that the cumulative conditions set out in Article 3(4) of the basic Regulation were not met with regard to exports from Egypt and Japan.

• (185) The Commission examined whether imports of the product concerned originating in the countries concerned should be assessed cumulatively, in accordance with Article 3(4) of the basic Regulation.

• (186) That provision stipulates that the imports from more than one country shall be cumulatively assessed only if it is determined that:

• (a) the margin of dumping established in relation to the imports from each country is more than de minimis as defined in Article 9(3) and that the volume of imports from each country is not negligible; and

• (b) a cumulative assessment of the effects of the imports is appropriate in light of the conditions of competition between imported products and the like Union product.

• (187) The Commission rejected the arguments put forward by the three exporting producers on the following grounds:

• (a) Article 3(4) of the basic Regulation refers to the negligibility, without setting a threshold. While Article 3(4) does not incorporate by reference those thresholds, Article 5(7) of the basic Regulation may serve as guidance for defining negligible import volumes, in a case-by-case analysis under Article 3(4). In this particular case, imports of the product under investigation originating in the countries concerned accounted individually for at least 2,5 % of market share in the investigation period and for more than 8 % when considered together in the investigation, as reported in Table 6. Therefore, the Commission concluded they were not negligible under Article 3(4) of the basic Regulation.

• (b) The applicant did not produce evidence that those products had different physical characteristics or that they were not interchangeable. The differences between the countries concerned stemmed from variations in production processes between the producers in the countries concerned, not from the quality of the products. Also, the investigation revealed that users were buying significant volumes of the product under investigation of the same quality of steel from multiple countries concerned. The quality of the imports originating in Japan was also similar to that of some EU producers.

• (c) The margin of dumping established in relation to the imports from Egypt, Japan and Vietnam was above the de minimis threshold laid down in Article 9(3) of the basic Regulation. The volume of imports from each of the countries concerned was not negligible within the meaning of Article 5(7) of the basic Regulation. Market shares in the investigation period were [2,2 – 2,7] %, [1,7 – 2,3] % and [1,1 – 1,4] %, respectively. The volumes of imports from Egypt, Japan and Vietnam were assessed to be not negligible within the meaning of Article 3(4) of the basic Regulation. Egypt, Japan and Vietnam held, in the investigation period with a total market share of [8,0 – 8,5] %.

• (d) The Commission also noted that the basic Regulation does not foresee any condition related to production capacity or capacity utilisation.

• (188) The Commission therefore concluded that all criteria set out in Article 3(4) were met for the two countries concerned and provisionally confirmed that Egypt, Japan and Vietnam should be examined cumulatively for the purposes of the injury determination.

4.3.2.   Volume and market share of the imports from the countries concerned

• (189) The Commission established the volume of imports on the basis of data provided by Eurostat, and, in the case of Vietnam, on the basis of the export volumes reported by the exporting producers (see Table 6). Market shares were established by comparing import volumes with the Union free market consumption as reported in Table 4.

• (190) Imports into the Union from the countries concerned developed as follows:

Table 6

Import volume (tonnes) and market share

	2021	2022	2023	Investigation period
EGYPT	EGYPT	EGYPT	EGYPT	EGYPT
Volume of imports from Egypt	[757 029 – 914 743 ]	[508 554 – 614 503 ]	[738 891 – 888 162 ]	[741 336 - 906 077 ]
Market share Egypt	[2,2 – 2,7 ]%	[1,3 – 1,8 ]%	[2,0 – 2,5 ]%	[2,3 – 2,8 ]%
JAPAN	JAPAN	JAPAN	JAPAN	JAPAN
Volume of imports from Japan	592 624	1 049 208	1 072 332	1 080 049
Market share Japan	[1,7 – 2,3 ]%	[3,2 – 3,7 ]%	[3,0 – 3,5 ]%	[2,9 – 3,4 ]%
VIETNAM	VIETNAM	VIETNAM	VIETNAM	VIETNAM
Volume of imports from Vietnam (excluding Hoa Phat)	[376 064 – 452 812 ]	[391 091 – 475 197 ]	[791 275 – 956 124 ]	[791 008 – 957 536 ]
Market share Vietnam (excluding Hoa Phat)	[1,1 – 1,4 ]%	[1,3 – 1,6 ]%	[2,5 – 3,1 ]%	[2,4 – 2,9 ]%
COUNTRIES CONCERNED	COUNTRIES CONCERNED	COUNTRIES CONCERNED	COUNTRIES CONCERNED	COUNTRIES CONCERNED
Volume of imports from the countries concerned	[1 676 689 – 2 029 676 ]	[1 801 528 – 2 219 425 ]	[2 457 927 – 2 988 514 ]	[2 654 306 – 3 201 585 ]
Market share countries concerned	[4,9 – 5,4 ]%	[6,0 % –6,5 ]%	[8,4 – 8,9 ]%	[8,0 – 8,5 ]%
Index (2021=100)	100	119	159	156
Source: Eurostat and verified questionnaire replies Formosa and Hoa Phat. Market shares were established by comparing import volumes with the Union free market consumption as reported in Table 2.	Source: Eurostat and verified questionnaire replies Formosa and Hoa Phat. Market shares were established by comparing import volumes with the Union free market consumption as reported in Table 2.	Source: Eurostat and verified questionnaire replies Formosa and Hoa Phat. Market shares were established by comparing import volumes with the Union free market consumption as reported in Table 2.	Source: Eurostat and verified questionnaire replies Formosa and Hoa Phat. Market shares were established by comparing import volumes with the Union free market consumption as reported in Table 2.	Source: Eurostat and verified questionnaire replies Formosa and Hoa Phat. Market shares were established by comparing import volumes with the Union free market consumption as reported in Table 2.

• (191) The above table shows that, in absolute figures, imports from the countries concerned increased during the period considered. In parallel, the total market share of their imports into the Union went up by almost 3 percentage points (from [4,9 – 5,4] % in 2021 to [8,0 – 8,5] %, or an increase by 56 %) during the period considered.

4.3.3.   Prices of the imports from the countries concerned and price undercutting

• (192) The Commission established the prices of imports on the basis of Eurostat data.

• (193) The weighted average price of imports into the Union from the countries concerned developed as follows:

Table 7

Import prices (EUR/tonne)

	2021	2022	2023	Investigation period
EGYPT	EGYPT	EGYPT	EGYPT	EGYPT
Average price of Egyptian dumped imports	826	916	706	696
Index (2021=100)	100	111	85	84
JAPAN	JAPAN	JAPAN	JAPAN	JAPAN
Average price of Japanese dumped imports	854	891	688	678
Index (2021=100)	100	104	81	79
VIETNAM	VIETNAM	VIETNAM	VIETNAM	VIETNAM
Average price of Vietnamese dumped imports (excluding Hoa Phat)	[785 – 943 ]	[727 – 885 ]	[644 – 776 ]	[622 – 754 ]
Index (2021=100)	100	100	84	83
COUNTRIES CONCERNED	COUNTRIES CONCERNED	COUNTRIES CONCERNED	COUNTRIES CONCERNED	COUNTRIES CONCERNED
Average price of the dumped imports from the countries concerned	[819 – 985 ]	[798 – 973 ]	[630 – 763 ]	[645 – 780 ]
Index (2021=100)	100	106	83	82
Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.

• (194) The Commission assessed the price undercutting during the investigation period by comparing: the weighted average sales prices per product type of the three Union producers charged to unrelated customers on the free Union market, adjusted to an ex-works level; and the corresponding weighted average prices at CIF Union frontier level per product type of the imports from the cooperating producers of the countries concerned to the first independent customer on the Union market, established on a Cost, Insurance, Freight (CIF) basis, with appropriate adjustments for post-importation costs.

• (195) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ theoretical turnover during the investigation period.

• (196) On the basis of the above, the dumped imports from the majority of the sampled exporting producers concerned were found to undercut the Union industry prices in a range between – 0,0 % and 10,1 % as can be seen in the table below.

Table 8

Undercutting margins

Country	Company	Undercutting margins
EGYPT	EGYPT	EGYPT
	EFS&EZDK group	0 %
JAPAN	JAPAN	JAPAN
	Nippon Steel Corporation	10,1 %
	Tokyo Steel Co. Ltd.	10,4 %
VIETNAM	VIETNAM	VIETNAM
	Formosa Ha Tinh Steel Corporation	3,3 %

• (197) The bulk of the product concerned is very price-sensitive and competition is largely based on price. In addition, prices are known in the market through various specialised websites. The investigation revealed that only a portion of the orders are based on fixed duration contracts, customers having always the possibility to switch from one supplier to another in a quite volatile market. In such context, with exception of Egypt, the undercutting margins are considered significant. The investigation also revealed that the Union industry’s prices were suppressed by the low priced imports originating in Egypt, which followed similar trends and trade patterns.

4.4.   Economic situation of the Union industry

4.4.1.   General remarks

• (198) In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

• (199) As mentioned in recital (28), sampling was used for the determination of possible injury suffered by the Union industry.

• (200) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The macroeconomic indicators were assessed at the level of the whole Union industry. The assessment was based on the information provided by the complainant, which was then cross-checked with data provided by Union producers, available official statistics (Eurostat) and exporting producers’ data as far as Vietnam is concerned. The analysis of microeconomic indicators was carried out at the level of the sampled Union producers. The assessment was based on their information, duly verified. The data related to the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

• (a) The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.

• (b) The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.

• (201) To provide a picture of the Union industry that is as complete as possible, the Commission obtained data for the entire production of the like product under investigation and determined whether the production was destined for captive use or for the free market. For some injury indicators relating to the Union industry, the Commission analysed separately data related to the free and the captive market and made a comparative analysis.

• (202) These factors are on the one hand: sales, market share, unit prices, unit cost, profitability, and cash flow. However, other economic indicators could meaningfully be examined only by referring to the whole activity, including the captive use of the Union industry.

• (203) These factors are: production, capacity, capacity utilisation, investments, return on investments, employment, productivity, stocks and labour costs. For these factors, the Commission can only conduct a meaningful assessment by referring to the whole activity of the Union industry. This analysis is in line with case-law of the Union courts and the WTO ⁹.

• (204) The Consortium claimed that the Union industry of hot-rolled flat steel products was already over protected by anti-dumping and safeguard measures. In the last eight years, anti-dumping and anti-subsidy measures have been taken against imports of the product under investigation from several exporting countries such as China, Russia, Brazil, Iran, Ukraine and Türkiye. The measures against Ukraine were allowed to expire in 2023. Furthermore, the safeguard regime was recently modified with the setting of a cap limiting at 15 % imports of countries covered by the Tariff-Rate-Quotas (TRQs), such as, e.g. Vietnam, Egypt and Japan.

• (205) It should be noted that anti-dumping and safeguard measures pursue different purposes. Anti-dumping and anti-subsidy measures address unfair pricing situation, whilst safeguard measures cover import volumes (i.e. threat of serious injury due to rapid increase of import volumes). Moreover, the Commission addressed these claims of double remedy in the so-called ‘double remedy regulation’ ¹⁰. The Commission previously rejected similar arguments on double remedies based on the fact that the safeguard regulations ensure that when imports exceed the volume of free-of-duty Tariff-Rate-Quotas, then only those imports may be subject to the applicable anti-dumping and/or countervailing duty so that it does not lead to an effect on trade greater than desirable.

4.4.2.   Macroeconomic indicators

4.4.2.1.   Production, production capacity and capacity utilisation

• (206) The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 9

Production, production capacity and capacity utilisation

	2021	2022	2023	Investigation period
Production volume (tonnes)	70 393 719	60 844 987	59 352 805	59 119 252
Index (2021=100)	100	86	84	84
Production capacity (tonnes)	93 650 041	93 399 984	93 292 683	93 419 713
Index (2021=100)	100	100	100	100
Capacity utilisation	75 %	65 %	64 %	63 %
Index (2021=100)	100	87	85	84
Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.

• (207) During the period considered, the Union industry's production volume decreased about 11,274 million tonnes (– 16 %) as a consequence of the combined decrease in sales in the free and captive markets

• (208) The reported capacity figures refer to technical capacity, which implies that adjustments, considered as standards by the industry, for set-up time, maintenance, bottle necks and other normal stoppages have been taken into consideration The production capacity remained stable during the period considered

• (209) The capacity utilisation rate decreased during the period considered, ranging between 63 % and 75 % in line with the decrease in production volume.

4.4.2.2.   Sales volume and market share

• (210) The Union industry’s sales volume and market share developed over the period considered as follows:

Table 10

Sales volume and market share of the Union industry on the free market

	2021	2022	2023	Investigation period
Sales volume in the Union free market (tonnes)	27 729 413	25 319 395	24 045 946	23 570 313
Index (2021=100)	100	91	87	85
Market share	72,2  %	73,6  %	70,8  %	70,2  %
Index (2021=100)	100	102	98	97
Source: Eurofer questionnaire reply and Eurostat.	Source: Eurofer questionnaire reply and Eurostat.	Source: Eurofer questionnaire reply and Eurostat.	Source: Eurofer questionnaire reply and Eurostat.	Source: Eurofer questionnaire reply and Eurostat.

• (211) The Union industry sales volume in the Union free market (excluding captive sales) decreased by 15% during the period considered from 27,729 million tonnes to 23,570 million tonnes.

• (212) During the period considered, the Union industry’s market share in terms of Union consumption went down by 2 percentage points, from 72,2 % to 70,2 %. The decrease in sales volume in the Union free market and the loss of Union industry's market share significantly exceeded the decrease of consumption in the Union free market, which is an indicator of the deterioration of the competitive position of the Union steel producers.

• (213) As far as the captive market in the Union is concerned, the captive volume and market share developed over the period considered as follows:

Table 11

Captive volume on the Union market and market share

	2021	2022	2023	Investigation period
Captive volume in the Union market (tonnes)	39 224 645	33 094 190	33 000 256	33 143 141
Index (2021=100)	100	84	84	84
Total production of Union industry (tonnes)	70 393 719	60 844 987	59 352 805	59 119 252
Index (2021=100)	100	86	84	84
% of captive volume compared to total production	55,7 %	54,4 %	55,6 %	56,1 %
Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.

• (214) The Union industry captive volume (composed of captive transfers and captive sales in the Union market) in the Union market in absolute figures went down by more than 16 %, from 39,224 million tonnes to 33,143 million tonnes during the period considered.

• (215) The share of the captive use (expressed as a percentage of total production) of the Union industry remained stable over the period considered, ranging between 55,7 % to 56,1 %.

4.4.2.3.   Employment and productivity

• (216) The employment was calculated by taking only the employees directly working for the like product in the different primary steel makers of the Union producers This method provided accurate data.

• (217) Employment and productivity developed over the period considered as follows:

Table 12

Employment and productivity

	2021	2022	2023	Investigation period
Number of employees	42 145	40 632	36 856	38 047
Index (2021=100)	100	96	87	90
Productivity (tonne/employee)	1 670,2	1 497,4	1 610,3	1 553,8
Index (2021=100)	100	90	96	93
Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.	Source: Eurofer questionnaire reply.

• (218) The level of the Union industry employment decreased during the period considered in order to reduce production costs and gain efficiency in view of the increasing competition from the imports from the countries concerned and from other imports on the market. This resulted in a reduction of workforce by 9,7 % during the period considered, without taking into consideration any indirect employment. As a consequence, and in view of the decrease of production volume (– 16,0 %) over the period considered, the productivity of the Union industry’s workforce, measured as output per person employed per year, decreased less (– 7,0 %) than the decrease in actual production. This shows that the Union industry was willing to adapt to the changing market conditions in order to remain competitive.

4.4.2.4.   Magnitude of the dumping margin and recovery from past dumping

• (219) With the exception of one exporting producer in Vietnam, all dumping margins were significantly above the de minimis level. The impact of the magnitude of the actual margins of dumping on the Union industry was not negligible, given the volume and prices of imports from the countries concerned.

4.4.2.5.   Growth

• (220) The Union consumption (free market) decreased by 6 % during the period considered, however the sales volume of the Union industry on the Union market decreased even more by 15 %. The Union industry thus lost market share, contrary to the market share of the imports from the countries concerned which increased during the period considered.

4.4.3.   Microeconomic indicators

4.4.3.1.   Prices and factors affecting prices

• (221) The weighted average unit sales prices of the Union producers to unrelated customers in the Union developed over the period considered as follows:

Table 13

Sales prices on the free market in the Union

	2021	2022	2023	Investigation period
Average unit sales price in the Union on the total market (EUR/ tonnes)	759	990	778	769
Index (2021=100)	100	130	102	101
Unit cost of production (EUR/tonnes)	687	886	839	814
Index (2021=100)	100	129	122	118
Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.

• (222) The table above shows the evolution of the unit sales price on the Union free market as compared to the corresponding unit cost of production. Average sales prices were first higher than the average unit costs of production in 2021 and 2022. The situation reversed in 2023 and the IP where the unit costs of production became higher than the average sales prices.

• (223) The extraordinary situation of one of the sampled producers whereby its production was substantially reduced during the IP due to a longer period of maintenance of one its furnace than originally planned is explained in recitals (254) to (256). The additional costs generated by this situation, were not considered in the determination of the evolution of the costs of production.

• (224) The COVID-19 crisis affected the market demand and prices to a lesser extent in 2021 and 2022, when comparing with 2023 and the investigation period which showed a negative trend illustrated by a sharp decrease in prices resulting from a decrease in steel demand.

• (225) Despite the efforts of the Union industry to reduce cost (see recital (218)), the cost of production remained significantly higher than the decreasing sales prices in 2023 and the investigation period. In order to limit the loss in market share, the Union producers followed the downward price spiral and reduced their sales price significantly, in particular during 2023 and the investigation period. As the product under investigation is a commodity, Union producers had to follow the decreasing price spiral.

• (226) Among the sampled producers, certain hot-rolled flat products of iron, non-alloy or other alloy steel for captive use steel were transferred or delivered at transfer prices for further downstream processing into different products using different pricing / costing policies (cost and/or cost plus) which could not be considered as falling under free market conditions. Therefore, no meaningful conclusion can be drawn from captive use price or from cost evolution. When sales between related parties were made at arm’s length as described in recital (177), they were taken into account in the calculation of the average unit sales price on the free Union market reported in Table 13.

4.4.3.2.   Labour costs

• (227) The average labour costs of the sampled Union producers developed over the period considered as follows:

Table 14

Average labour costs per employee

	2021	2022	2023	Investigation period
Average labour costs per employee (EUR)	82 734	77 979	92 410	86 923
Index (2021=100)	100	94	112	105
Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.

• (228) During the period considered, the average wage per employee went up by 5 % mostly to due external factors such as the high rate of inflation. The increase in 2023 was due to the severance payments that had to be booked following the reduction in headcount.

4.4.3.3.   Inventories

• (229) Stock levels of the sampled Union producers developed over the period considered as follows:

Table 15

Inventories

	2021	2022	2023	Investigation period
Closing stocks (tonnes)	537 978	591 841	645 521	669 764
Index	100	110	120	124
Closing stocks as a percentage of production	3,8 %	4,7 %	5,2 %	5,4 %
Index (2021=100)	100	124	136	141
Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.

• (230) The level of inventories increased during the period considered, following an opposite trend to that of the production volume. Although such inventories represent an important amount of financial resources in absolute terms, they remained at a reasonable level when expressed as a percentage of the production volume.

4.4.3.4.   Profitability, cash flow, investments, return on investments and ability to raise capital

• (231) Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

Table 16

Profitability, cash flow, investments and return on investments

	2021	2022	2023	Investigation period
Profitability of sales in the Union free market (% of sales turnover)	12,4 %	14,1 %	–5,1 %	–3,0 %
Index (2021=100)	100	113	-41	-24
Cash flow (EUR)	763 849 964	860 448 884	- 313 097 226	- 307 289 972
Index (2021=100)	100	113	-41	-40
Investments (EUR)	374 726 305	351 764 473	558 256 760	527 217 213
Index (2021=100)	100	94	149	141
Return on investments	39,2 %	40,2 %	–19,4 %	–18,4 %
Index (2021=100)	100	102	-49	-47
Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.

• (232) The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. In 2021 and 2022, due to the aftermath of the COVID-19 crisis, the Union industry could achieve some profit. However, during the second half of the investigation period, the profitability developed negatively. Losses were incurred in 2023 and in the investigation period.

• (233) As shown in Table 13, after sales prices increased significantly in 2022, the unit sales price decreased sharply going back to the level achieved in 2021. Unit costs of production did not follow a similar trend and remained at a much higher level leading to a loss of – 5,1 % in 2023 and – 3,0 % during the investigation period.

• (234) Despite the deteriorating situation, the Union industry continued to invest significant amounts. Such investments were made mainly to replace existing equipment, which pertains to the normal activity of a company active in a capital intensive industry, where such investments are required. The Union industry also invested in green transition, in order to reduce its CO2 footprint.

• (235) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow deteriorated a lot during the period considered going down from positive to negative unsustainable levels, as a consequence of the deteriorating profitability and increased level of inventories.

• (236) The return on investments is the profit in percentage of the net book value of investments. Return on investment deteriorated and reached negative levels in 2023 and the investigation period following the negative profitability trend. The sampled Union producers’ ability to raise capital was affected by the losses incurred during the period considered as can be seen from the investments that had to be postponed (see recital (277) addressing the issue of foregone investments).

4.5.   Conclusion on injury

• (237) The Union industry as a whole could not maintain its production and sales volumes and improve its capacity utilisation rate due to the reduction in captive and free consumption. The production and sales volumes actually decreased more than the consumption on the Union market. In view of the decreasing production, the Union industry took concrete actions to improve efficiency by keeping a tight grip on cost of production (mainly raw materials and labour costs) and by increasing the production per employee when the situation of the Union industry started to deteriorate. Nonetheless, the cost of production increased by 18 % when the unit sales price remained stable, with the exception of the year 2022, during the period considered. Consequently, the profitability of the Union industry deteriorated significantly going from 12 % in 2021 and 2022, when the Union industry benefitted from the recovery of the economy after the COVID-19 crisis, to a loss-making situation in 2023 and the IP. The sampled Union producers could still make investments throughout the period considered showing its dynamism against a deteriorating financial situation.

• (238) In the light of the foregoing, it is concluded at this stage that the above data show that the Union industry has suffered material injury during the period considered within the meaning of Article 3(5) of the basic Regulation.

5. CAUSATION

• (239) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the countries concerned caused material injury to the Union industry. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the dumped imports from the countries concerned was not attributed to the dumped imports. Finally, the import volumes concerning India and the Vietnamese exporter Ha Tinh Steel Corporation, for which no dumping was found, were not considered in the analysis of the causal link between the imports from the countries concerned and the Union industry, but when analysing other potential causes of injury.

• (240) The factors considered by the Commission were:

• — Effects of the dumped imports from Egypt, Japan and Vietnam,

• — Low capacity utilisation,

• — Export sales performance of the Union producers,

• — Imports from other third countries than the countries concerned,

• — Imports from the countries concerned by the Union industry,

• — The impact of the situation of a sampled Union producer on the injury picture,

• — Increase in the cost of the main raw materials, energy costs and environmental investments,

• — Reduced demand.

5.1.   Effects of the dumped imports from Egypt, Japan and Vietnam

• (241) Sales prices of the exporting producers decreased significantly during the period considered from 828 EUR/tonne on average in 2021 to 679 EUR/tonne during the investigation period. By continuously lowering their unit sales price during the period considered, exporting producers from Egypt, Japan and Vietnam were able to increase their market share from [4,9 – 5,4] % in 2021 to [8,0 – 8,5] % in the investigation period, as shown in Table 6. There was also a substantial increase in the volume of imports from the countries concerned in 2023 when compared to the previous year: from [1 676 689 – 2 029 676] to [2 654 306 – 3 201 585] tonnes in 2023.

• (242) The Commission found that the increasing volumes and the sharp decrease in the prices of imports from the countries concerned during the period considered caused injury to the Union industry. This is because, faced with the aggressive pricing strategy of the exporting producer of the countries concerned, Union producers had no choice but to also decrease prices and to sell at a loss in order to maintain a certain level of sales volume and market share. Moreover, the current measures against imports of hot-rolled flat steel products from China and Russia in particular have allowed the countries concerned to, while lowering their unit sales price during the period considered, increase their market share previously taken by the Chinese exporting producers. This had, consequently, a negative impact on the industry's profitability, which reached the unsustainable level of – 3,0 % during the investigation period. Furthermore, the Commission also noted that the sharp increase in imports from countries concerned combined with dumped prices that were either undercutting and/or suppressing the Union industry prices, which coincided with the significant deterioration of the situation of the Union industry in 2023 and continued in the investigation period.

5.2.   Low capacity utilisation

• (243) While alleging that there was no causal link between the injury and the imports from the countries concerned, Hoa Phat Group argued that the capacity utilisation of the Union industry was already low at the beginning of the period considered, although the market share of the countries concerned was between [4,9 – 5,4] %.

• (244) In fact, the production capacity utilisation rates was much higher in 2021 (75%) than in 2023 or the investigation period when it dropped to less than 65 % as a consequence of the increase in imports from the countries concerned and decrease in demand. Whether the EU industry’s capacity utilisation would have been higher in 2021 in the absence of any imports from the countries concerned is irrelevant and in no way denotes that injury would have not been caused by their dumped imports. On the contrary, the coincidence in time between the increase of dumped imports and the decrease in capacity utilisation suggests that the dumped imports were the cause of the decrease in capacity. This claim was therefore rejected.

5.3.   Export sales performance of the Union producers

• (245) The volume of exports of the sampled Union producers developed over the period considered as follows:

Table 17

Export sales of the Union producers

Total exports to unrelated customers	2021	2022	2023	Investigation period
Total exports (EUR)	650 898 419	633 788 344	473 973 825	477 671 676
Index (2021=100)	100	97	73	73
Total exports (tonnes)	736 702	659 023	577 824	590 812
Index (2021=100)	100	89	78	80
Average unit price (EUR/tonnes)	883	961	820	808
Index (2021=100)	100	109	93	92
Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.	Source: Questionnaire reply of sampled Union producers.

• (246) The complainant argued that its export performance could not be the cause of the injury suffered by the Union industry. The investigation revealed that, export sales of the sampled Union producers accounted for only about 15,4 % of their total sales in the free market during the investigation period and an even smaller proportion of total production (4,7%) in the same period. Second, whilst the exports of the Union industry to unrelated customers decreased significantly, they followed a similar pattern as the overall Union consumption which decreased by 11 % between 2022 and 2023 as shown in recital (179). Third, the export prices were mostly at a higher level than its prices on the Union free market (+ 38 EUR/tonne in the investigation period) and followed the same trend.

• (247) The Commission concluded that the export sales performance of the Union producers contributed to the injury of the Union industry. However, it found that this factor did not attenuate the causal link due to the limited volumes involved and the parallel trend followed by export sales.

5.4.   Imports from countries other than the countries concerned

• (248) Marcegaglia, Al Ezz Dekheila Steel Company S.A.E , Hoa Phat Group argued that the complainant failed to examine appropriately the impact of imports of the product under investigation from South Korea and Taiwan in its complaint. In their views, a proper examination of volume and value trends confirmed that these imports should have been necessarily taken into account in both the injury and in the dumping analysis contained in the complaint.

• (249) Nippon and JFE Steel Corporation claimed that, first, the lower market share of the Complainant was directly linked to an increase in imports from Taiwan and South Korea, which have collectively increased their market share by over 5,5 %. Second, the poor export performance by the complainant could explain the steepest and most significant decline in terms of injury indicators provided in the Complaint. The Union industry’s export sales volume fell by 31 % over the period considered.

• (250) Considering the above and the provisional conclusions drawn in Sections 3.2 and 3.4, the Commission analysed the evolution of imports from third countries including India and Vietnam, as far as Hoa Phat is concerned. The volume of imports from other third countries developed over the period considered as follows:

Table 18

Volumes, unit prices and market shares from third countries

Country	2021	2022	2023	Investigation period
India	India	India	India	India
Volume of imports from India	1 376 560	658 720	1 063 077	1 376 471
Index (2021=100)	100	48	77	100
Unit import prices from India	678	966	698	685
Index (2021=100)	100	143	103	101
Market share in total Union import volume	4,0 %	2,1 %	3,5 %	4,2 %
South Korea	South Korea	South Korea	South Korea	South Korea
Volume of imports from South Korea	471 645	728 997	810 335	745 900
Index (2021=100)	100	155	172	158
Unit import prices from South Korea	773	957	729	723
Index (2021=100)	100	124	94	93
Market share in total Union import volume	1,4 %	2,3 %	2,6 %	2,3 %
Taiwan	Taiwan	Taiwan	Taiwan	Taiwan
Volume of imports from Taiwan	702 961	845 353	1 045 768	1 038 571
Index (2021=100)	100	120	149	148
Unit import prices from Taiwan	773	922	716	702
Index (2021=100)	100	119	93	91
Market share in total Union import volume	2,0 %	2,7 %	3,4 %	3,2 %
Vietnam (Hoa Phat)	Vietnam (Hoa Phat)	Vietnam (Hoa Phat)	Vietnam (Hoa Phat)	Vietnam (Hoa Phat)
Volume of imports from Vietnam (Hoa Phat)	0	[33 856 – 36 489 ]	[645 812 – 660 826 ]	[763 125 – 789 249 ]
Index (2021=100)	-	100	1 852	2 189
Unit import prices from Vietnam (Hoa Phat)	-	[680 – 690 ]	[601 - 625 ]	[586 – 614 ]
Index (2021=100)	-	100	89	87
Market share in total Union import volume	-	[0,1 % – 0,2 %]	[1,9 % – 2,3 %]	[2,2 % – 2,5 %]
Total of all third countries except the countries concerned	Total of all third countries except the countries concerned	Total of all third countries except the countries concerned	Total of all third countries except the countries concerned	Total of all third countries except the countries concerned
Volume of imports from all other countries	7 831 765	[6 186 523 – 6 189 156 ]	[6 334 027 – 6 346 041 ]	[6 952 714 - 6 978 838 ]
Index (2021=100)	100	79	81	89
Average unit import prices from all other countries	755	915	702	687
Index (2021=100)	100	121	93	91
Market share of all third countries except the countries concerned	Market share of all third countries except the countries concerned	Market share of all third countries except the countries concerned	Market share of all third countries except the countries concerned	Market share of all third countries except the countries concerned
Market share in total Union import volume	[21,7 – 23,1 ]%	[19,9 - 20,0 ]%	[20,4 – 20,7 ]%	[21,2 - 21,5 ]%
Market share of all third countries including the countries concerned	Market share of all third countries including the countries concerned	Market share of all third countries including the countries concerned	Market share of all third countries including the countries concerned	Market share of all third countries including the countries concerned
Market share in total Union import volume	[27,8 - 28,0 ]%	[26,2 - 26,5 ]%	[29,1 - 29,6 ]%	[29,7 - 30,2 ]%
Source: Eurostat, Formosa, Hoa Phat.	Source: Eurostat, Formosa, Hoa Phat.	Source: Eurostat, Formosa, Hoa Phat.	Source: Eurostat, Formosa, Hoa Phat.	Source: Eurostat, Formosa, Hoa Phat.

• (251) The investigation revealed that imports from India, South Korea, Taiwan and Vietnam (Hoa Phat) increased over the period considered both in absolute and relative terms On the contrary, the Commission observed that the imports from other third countries not concerned by this investigation decreased even more over the same period so that imports from all third countries not covered by this investigation overall decreased. In parallel, imports from the countries concerned increased significantly.

• (252) The Commission also analysed the evolution of import prices from third countries. Except for the year 2021, the average import prices from third countries were on average higher than the import prices from the countries concerned. On this basis, the Commission considered that the evolution of imports from third countries did not attenuate the causal link.

5.5.   Imports from the countries concerned by the Union industry

• (253) Nippon and JFE Steel Corporation alleged that the complainant did not address the issue of the Union industry’s own imports of HRF into the EU and simply stated, without further evidence, that this factor was not such as to impact the causal link. With regard to purchases of the product concerned done by Union producers’ related entities from the countries concerned, the investigation revealed that since these entities act on an arm’s length basis and that such imports concerned very limited quantities, these imports cannot break the causal link.

5.6.   Impact of the situation of a sampled Union producer on the injury picture

• (254) One sampled company was faced with an extraordinary situation in the investigation period, which reduced temporarily its production capacity due to a longer period of maintenance of one its furnaces than originally planned. This exceptional situation aggravated the reduction of the production of this company during the period considered. This event, however, does not explain the reduction in the overall production levels of the Union industry (– 11,3 million tonnes) during the period considered. Indeed, this producer had anticipated the maintenance with higher production volume to compensate for the period of maintenance to come. Hence, also considering the large number of other Union producers with spare capacity which were able to produce and sell relatively more to ‘fill the gap’, such extraordinary situation did not have a bearing on the production level of the Union industry in the period considered.

• (255) The Commission also ensured that the costs reported by the sampled Union producer concerned were adjusted not to be impacted by such extraordinary situation.

• (256) The Commission therefore concluded that this extraordinary situation did not contribute to the injury caused to the Union industry.

5.7.   Increase in cost of the main raw materials, energy prices and environmental investments

• (257) Nippon Steel, JFE Steel Corporation, Marcegaglia, Al Ezz Dekheila Steel Company S.A.E and Hoa Phat Group alleged that the Union producers were not sufficiently competitive due to comparatively higher manufacturing costs stemming from higher raw material costs, higher energy costs and also referred to inflation and to investments in decarbonisation efforts made by the Union industry to comply with more stringent environmental standards.

• (258) With regard to energy, they argued that the cost increases were exacerbated by the consequences of Russia’s unjustified and unprovoked war of aggression against Ukraine. Alternatively, they argued that the structurally high energy costs in the EU compared to virtually all other major steel producing countries was putting the EU steel industry at a serious competitive disadvantage in comparison to many other steel producers.

• (259) The investigation revealed that the cost of the main raw material as shown in table 19 increased substantially in 2022 before going down in 2023 and the IP. The Union industry could transfer the increase in cost of production to its customers in 2021 and 2022, leading to a sudden and significant rise in the unit sales price. In 2023, the cost of raw material per ton of finished product decreased significantly. However, the level of prices on the Union market decreased even more so that the Union industry had to absorb the cost differential. The year 2023 and the IP coincide with the increase in import volume from the countries concerned, which was exacerbated by the accompanying sharp decrease in prices.

Table 19

Cost of raw materials (iron ore, coking coal and certain alloys)

	2021	2022	2023	Investigation period
Total costs (EUR)	5 286 595 383	6 050 962 798	5 195 661 057	5 089 341 440
Index (2021=100)	100	114	98	96
Average unit price (EUR/tonnes)	372	482	416	406
Index (2021=100)	100	129	112	109
Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers	Source: Questionnaire reply of sampled Union producers

• (260) The Commission therefore concluded that under fair market conditions, the Union industry could have maintained its sales price levels so as to reap the benefits of a reduction in costs as from 2023 and remain profitable. Therefore, the Commission rejected the claim that the worldwide increase in the raw material prices contributed to the injury suffered by the Union industry.

• (261) The impact of the cost of energy was closely examined. Although important, energy is not the main cost component for producing the product under investigation. Also, the arguments on energy costs could not be reconciled with the fact that the sampled Union producers were still able to achieve profits of more than 10 % in 2022, when this alleged comparative disadvantage in cost terms would also have existed. Considering the limited share of energy costs in the total cost of production (on average 8 % for the sampled producers in the investigation period), the Commission concluded that the increase in energy costs did not contribute to the material injury found during the investigation period.

• (262) The impact of investments driven by environmental compliance was also examined and the Commission provisionally found that R&D and innovation investments related to environmental compliance remained broadly stable during the period considered. The Commission thus concluded that the costs incurred by the EU industry to comply with environmental regulation did not contribute to the material injury found.

5.8.   Reduced demand

• (263) Marcegaglia, Formosa, Al Ezz Dekheila Steel Company S.A.E and Hoa Phat Group claimed that the considerable decline in demand in the EU market was not considered by the complainant in its causality analysis.

• (264) The investigation revealed that although market demand decreased over the period considered, imports from the countries concerned followed an opposite trend and increased in absolute terms by close to 1 million tonnes, consequently gaining significant market share to the detriment of the Union industry. The Commission also noted that the Union industry’s situation was better in 2022 than in the investigation period although consumption was at a lower level than in the investigation period. Thus, the Commission concluded that the decrease in demand for HRF did not contribute to the injury suffered by the Union industry.

5.9.   Conclusion on causation

• (265) A causal link was established between the dumped imports from Egypt, Japan and Vietnam on the one hand and the injury suffered by the Union industry on the other hand. There was a coincidence in time between the sharp increase in the volume of dumped imports at continuously decreasing sales prices from Egypt, Japan and Vietnam and the worsening of the Union's performance, which became obvious in 2023. The Union industry had no other choice but to follow the price level set by the dumped imports in order to avoid losing further market share. This resulted in a deterioration of the situation of the Union industry as showed by various macro and micro indicators such as profitability, sales volume, market share, employment and cash flow. In parallel, the Union industry was unable to benefit from anti-dumping and countervailing measures applicable to imports from various countries and also imposed during the period considered (see recital (53)).

• (266) The Commission has found that other factors that may have had an impact on the situation of the Union industry were the export sales performance of the Union producers and the imports from countries other than the countries concerned.

• (267) On the basis of the above, the Commission concluded that the dumped imports from the countries concerned caused material injury to the Union industry and that the other factors, considered individually or collectively, did not attenuate the causal link between the dumped imports and the material injury.

6. LEVEL OF MEASURES

• (268) As stated in the Notice of Initiation, the complainant provided the Commission sufficient evidence that there are raw material distortions in India and Vietnam regarding the product under investigation. In the course of the investigation, the complainant requested the Commission to extend the application of Article 7(2a) to Egypt and Japan as well.

• (269) However, the additional request did not contain sufficient evidence of the distortions listed in Article 7(2a) of the basic Regulation and therefore did not justify an amendment to the Notice of Initiation and subsequent investigation regarding potential raw material distortions for Egypt and Japan.

• (270) Due to the finding of de minimis levels of dumping for India and the Commission’s intention to terminate this proceeding against India in accordance with Article 9(3) of the basic Regulation, the claim concerning raw material distortions in India became moot.

• (271) Thus, the Commission assessed the injury elimination measure under 7(2a) for Vietnam, and under 7(2) for Egypt and Japan.

6.1.   Vietnam

• (272) In order to conduct the assessment on the appropriate level of measures for Vietnam, the Commission first established the underselling (that is, what would be the injury margin in the absence of distortions under Article 7(2a) of the basic Regulation) for the Vietnamese exporting producer found to be dumping. Then it examined whether its dumping margin was higher than its injury margin.

• (273) In the absence of raw material distortions, the injury would be removed if the Union Industry was able to obtain a target profit by selling at a target price in the sense of Articles 7(2c) and 7(2d) of the basic regulation.

• (274) In this regard, the complainant considered that a reasonable target profit should range between 10 % and 15 %, whilst several interested parties argued that it should range between 6 and 8 %.

• (275) In accordance with Article 7(2c) of the basic Regulation, for establishing the target profit, the Commission took into account the following factors: the level of profitability before the increase of imports from the country concerned, the level of profitability needed to cover full costs and investments, research and development (R&D) and innovation, and the level of profitability to be expected under normal conditions of competition. Such profit margin should not be lower than 6%. With regard to the level of profitability before the increase of imports from the countries concerned, it was not possible to establish a profit margin on the basis of any of the years prior to the increase thereof, as in those years the Union industry suffered an influx of dumped imports from other origins. Also, the years 2021 and 2022 were found to be heavily influenced by the post COVID-19 economic recovery and did not appear appropriate to set the target profit. Therefore, none of these years could qualify as a year with a normal competitive situation on the Union market.

• (276) Thus, the Commission considered more appropriate to use the profitability level of 6,8 % reached in 2017 as found in the HRF case against Türkiye ¹¹.

• (277) The EU Industry provided evidence that its level of investments, research and development (R&D) and innovation during the period considered would have been higher under normal conditions of competition. The Commission verified this information during the on-spot verification visits by checking the company’s internal records relating to investment plans, management decisions and financial statements. Indeed, the claims of the EU Industry were found to be warranted. To reflect this in the target profit, the Commission calculated the difference between investments, R&D and innovation (‘IRI’) expenses under normal conditions of competition as provided by the EU Industry and verified by the Commission with actual IRI expenses over the period considered. Based on verified information regarding investments which could not be implemented during the period considered, the target profit margins were increased by up to 1,05 % depending on the sampled producers.

• (278) Hence, the target profit which was established in this investigation and in accordance with Article 7(2c) of the basic Regulation ranged between 6,8 % and 7,85 % according to the situation found in each of the sampled companies.

• (279) On this basis, the Commission calculated a non-injurious price of the like product for the Union industry by applying the respective target profit margins to the cost of production of the sampled Union producers during the investigation period.

• (280) In accordance with Article 7(2d) of the basic Regulation, as a final step, the Commission assessed the future costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, that the Union industry will incur during the period of the application of the measure pursuant to Article 11(2). Based on the submitted information, which was supported by the companies’ reporting tools and forecasts, the Commission established an additional cost in a range between EUR 15,28/tonne and EUR 41,12/tonne, in comparison with the cost of compliance with such conventions during the investigation period. This additional cost was added to the non-injurious price.

• (281) The Commission then determined the injury elimination level on the basis of a comparison of the import price of the exporting producer in Vietnam on a type-by-type basis (landed price) with the weighted average non-injurious price of the like product sold by the sampled Union producers on the free Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average import CIF value. The result of this calculation is shown in the table below.