Commission Implementing Regulation (EU) 2025/1151 of 11 June 2025 imposing a definitive anti-dumping duty on imports of vanillin originating in the People’s Republic of China

• (111) In the First Note, the Commission noted that the product under investigation is not produced in any country with the same level of economic development as China. Then, in absence of a product in the same general category and/or sector as vanillin as described under point 3.3.3 below, the Commission identified Brazil, Indonesia, Mexico and Türkiye as countries where production of products under the same NACE code ⁶⁸ of the product under investigation was known to take place and with a similar level of economic development as the PRC according to the World Bank, i.e. they are all classified by the World Bank as ‘upper-middle income’ countries on a gross national income basis.

• (112) Comments were received from Thrive. It submitted that the chosen countries are not suitable due to the high transportation costs because of the absence of availability of basic raw materials at local level. Transportation costs of those raw materials to these countries would amount to 50 %-100 % of these products costs or even exceed these. Thrive also claimed that the complexity of the taxation system in Brazil would unduly increase the cost of production of vanillin, further disqualifying it. Thrive suggested that only the United States of America, China, India and Europe possess the prerequisites for the production of synthetic and ethylvanillin.

• (113) However, the above countries including EU Member States, apart from China itself which, obviously, could not be considered, do not have a similar level of economic development as the PRC according to the World Bank. As explained in the First Note, the Commission could not identify any country within the same level of economic development as China where vanillin is produced, therefore focused its analysis on countries where products with the same NACE code of product under investigation are produced. The Commission noted that the presence of raw materials in the representative country is not a criterion to be considered, and that the claim that the taxation system in Brazil would be a major factor for increased cost was neither accompanied by any underlying evidence. Thrive also failed to explain why a country other than an ‘upper-middle income’ country should be selected. The Commission therefore rejected the claims of Thrive.

3.3.3.   Production of products in the same general category and/or sector

• (114) In the First Note, the Commission explained that, despite extensive research, it could not identify production of the product under investigation or of a product in the same general category and/or sector as vanillin in countries with a similar level of economic development as the PRC, in combination with readily available financial data for the producers concerned, as explained in recital (118). The Commission had therefore indicated that it would enlarge the scope of its research to products under the same NACE code as the product under investigation, namely manufacturing of organic chemicals, in order to establish an appropriate representative country for the application of Article 2(6a) of the basic Regulation and it identified Brazil, Indonesia, Mexico and Türkiye as such countries.

• (115) No interested party submitted comments on the intention of the Commission to use companies active in the production of products falling within the same NACE code of the product under investigation. No interested party came up with a proposal for an alternative product.

3.3.4.   Existence of relevant readily available data in the representative country

• (116) In the First Note the Commission indicated that for the countries identified as countries where products with the same NACE code as the product under investigation are being produced, i.e. Brazil, Indonesia, Mexico and Türkiye, it would continue to look for readily available reliable financial data from producers active in the sector with the same NACE code of the product under investigation.

• (117) With regard to Indonesia, the Commission analysed the imports of the main factors of production. For four out of the eight main factors of production which represent altogether 33 %-52 % of the total cost of manufacturing of vanillin, there were high volumes of imports (43 %, 53 %, 80 % and 90 %), from the PRC. In addition, three other main factors of production are imported from China in material volumes, ranging from 6 % to 11 %. In addition, the Commission found that Indonesia imports steam coal from Russia at distorted prices. In light of these observations, the Commission considered that the main factors of production imported to Indonesia are affected by price distortions. Therefore, the Commission considered that Indonesia could not be considered as a suitable representative country.

• (118) With regard to Mexico, in the First Note the Commission sought for companies active in the production of natural vanillin with readily available financial statements and no such producers could be identified. As a result, the Commission concluded that Mexico could not be considered as an appropriate representative country for this investigation.

• (119) In the First Note, the Commission noted that it had found readily available financial data related to two Brazilian companies, Dexxos Participações S.A. and Prox do Brasil, and to seven Turkish companies ⁶⁹ manufacturing other organic basic chemicals products.

• (120) In its comments to the First Note, Thrive commented that they did not consider the Brazilian and Turkish companies identified by the Commission as comparable to their industry. The Commission clarified that due to the absence of production of a product in the same general category and/or sector as vanillin in the countries that could be considered as potential appropriate representative countries it had enlarged the scope of its research to products under the same NACE code as the product under investigation. Thrive did not submit any evidence that such approach would be erroneous, neither did it substantiate why these companies would be unsuitable. The Commission therefore rejected the claim.

• (121) Jiangxi Brother commented that the two Brazilian producers manufacture products which are different from flavour and fragrance or aroma chemicals and therefore should not be used for the calculation of the normal value. With regard to the Turkish manufacturers, Jiangxi Brother submitted that the company Mercan Kimya has publicly available financial statements which provide better financial details than the other six companies, in particular SG&A costs are explicitly disclosed. In support of this claim Jiangxi Brother referred to the General Court Case T-762/20 Sinopec Chongqing SVW Chemical and Others v Commission ⁷⁰, which stipulates that SG&A costs of a company in the representative country incurred beyond the EXW level should not be considered in the construction of the normal value under the application of Article 2(6a) of the basic Regulation. According to Jiangxi Brother, the financial data not disclosing such level of details should not be considered because they do not allow for the exclusion of SG&A costs. In addition, Jiangxi Brother also noted that Türkiye appears to have the lowest percentage of imports from China and non-WTO countries, and on this basis it suggested Türkiye to be the most suitable representative country.

• (122) In the Second Note, the Commission addressed the above claims. In particular, the Commission noted that Jiangxi Brother had not contested the use of company financial data at NACE code, where the two Brazilian manufacturers belong to. Furthermore, the Commission found that the fact that some of their products are not similar to the aroma chemicals used in the flavour or fragrance sector – the more specific category to which the product under investigation belongs – does not constitute a relevant consideration to the assessment of the Commission. It is noted that it is almost always the case that the companies considered suitable in the context of Article 2(6a)(a) of the basic Regulation are producing several products. The Commission further clarified that it is also very common that the level of detail of readily available financial data of suitable companies in the representative country usually does not allow a more granular analysis of the SG&A and profit at the level of individual products.

• (123) With regard to the claim from Jiangxi Brother about the details available in the financial data of Turkish manufacturers, the Commission explained that, while agreeing that the level of detail available in the financial statements is a relevant factor, it does not constitute a sufficient criterion to exclude available financial data from other companies. Furthermore, as explained in recital (125), Türkiye was excluded due to distortions in prices of one of the key FOPs. For the reasons presented above, the Commission rejected the claims of Jiangxi Brother regarding certain financial data.

• (124) With regard to Jiangxi Brother’s claim that Türkiye would have a lower share of imports from the PRC or any of the countries listed in Annex I to Regulation (EU) 2015/755 of the European Parliament and of the Council ⁷¹ of the main factors of production than Brazil, in the First Note the Commission considered that both countries could be used as an appropriate representative country as such import volumes were overall relatively limited for each of these countries.

• (125) After having analysed the comments to the First Note, the Commission further analysed the import data of the factors of production in Brazil and Türkiye. The Commission found that there was a major distortion in the imports of phenol into Türkiye, one of the most important FOPs ⁷². In particular, it found that Türkiye imports large volumes of phenol from Russia (40 % during the investigation period), while imports of this raw material from Russia are currently under EU sanctions ⁷³. The downwards evolution of prices of imports from Russia following the imposition of EU sanctions and increased volumes of phenol from Russia into Türkiye suggests that a distortion is present. On this basis, the Commission rejected the claim of Jiangxi Brother that Türkiye would be more suitable than Brazil as representative country.

• (126) A further analysis of import data of the factors of production in Brazil showed that the imports in Brazil from China and the countries listed in Annex I to Regulation (EU) 2015/755 did not have an impact on the determination of price of the factors of production, with the exception of glyoxylic acid. Regarding glyoxylic acid, the Commission did not use import prices into Brazil as benchmark for the reasons explained in recital (141) below.

• (127) The Commission found that there were no imports from China into Brazil of methanol, sulphuric acid, ethyl vanillin crude and ethanol. The Commission established for the following inputs that there were imports from China and, where relevant, imports from the countries listed in Annex I to Regulation (EU) 2015/755:

• — 14 % of phenol imports into Brazil were from China and 4 % from the countries listed in Annex I to Regulation (EU) 2015/755,

• — 25 % of mono-chloroethane imports into Brazil were from China,

• — 6 % of caustic soda imports into Brazil were from China.

• (128) For all of the above inputs the Commission concluded that import prices into Brazil from all other countries were not distorted as they were not in line with the prices of imports from the PRC or from countries listed in Annex I to Regulation (EU) 2015/755. For all other factors of production, including glyoxylic acid, the Commission did not use import prices into Brazil as benchmark, as duly explained in recital (141).

• (129) Interested parties were informed thereof in the Second Note. In that Note, the Commission also informed parties that it had revised the list of factors of production, as it had established that two factors of production were not actually used by the sampled exporting producers.

• (130) In light of the above considerations, notably the distortion with regard to imports of phenol in Türkiye whereas no such distortion exists in Brazil, and in light of the overall quantities of imports in the two countries considered, the Commission informed the interested parties in the Second Note that it intended to use Brazil as representative country and the companies Dexxos Participações S.A. and Prox do Brasil, in accordance with Article 2(6a)(a), first ident of the basic Regulation in order to source undistorted prices or benchmarks for the calculation of normal value.

• (131) Interested parties were invited to comment on the appropriateness of Brazil as a representative country and of Dexxos Participações S.A. and Prox do Brasil as producers in the representative country.

• (132) The complainant agreed to the Commission’s proposal. Jiangxi Brother did not submit comments on the appropriateness of Brazil as representative country, however it submitted comments on certain financial data of one of the two producers identified by the Commission, as reported in recitals (165) below. The Commission addressed these comments in the same recital.

3.3.5.   Level of social and environmental protection

• (133) Having established that Brazil was the only available appropriate representative country, based on all of the above elements, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of Article 2(6a)(a) first indent of the basic Regulation.

3.3.6.   Conclusion

• (134) In view of the above analysis, Brazil met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country.

3.4.   Sources used to establish undistorted costs

• (135) In the First Note, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under investigation by the exporting producers and invited the interested parties to comment and propose readily available information on undistorted values for each of the factors of production mentioned in that note.

• (136) Subsequently, in the Second Note, the Commission stated that, in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, it would use GTA ⁷⁴ and undistorted international benchmarks ⁷⁵ to establish the undistorted cost of the raw materials. In addition, the Commission stated that it would use the statistics published by the Instituto Brasileiro de Geografia e Estatística (IBGE) for establishing undistorted costs of labour ⁷⁶ and the statistics published by the Ministry of Mines and Energy of Brazil for electricity ⁷⁷.

3.4.1.   Factors of production

• (137) Considering all the information submitted by the interested parties and collected during the verification visits, the following factors of production and their sources have been identified in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:

Table 2

Factors of production of vanillin

Factor of Production	Commodity Code	Undistorted value	Source of data
Raw materials	Raw materials	Raw materials	Raw materials
Phenol	2907 11	9,42 CNY/kg	GTA
Guaiacol (Guetol)	2909 50 10 , 2909 50 10 00	30,18 CNY/kg	GTA
Hydrogen Peroxide	2847 00 00	3,56 CNY/kg	GTA
Methanol	2905 11	2,77 CNY/kg	GTA
Mono-chloroethane	2903 11 10 , 2903 11 20	9,74 CNY/kg	GTA
Glyoxylic Acid	2918 30 00	51,48 CNY/kg	GTA
Caustic soda	2815 12	2,98 CNY/kg	GTA
Sulfuric Acid	2807 00 10, 2807 00 20	0,75 CNY/kg	GTA
Toluene	2902 30 00	5,93 CNY/kg	GTA
Ethanol	2207 10 10 , 2207 10 90	4,68 CNY/L	GTA
Copper Sulphate	2833 25 10 , 2833 25 20	15,46 CNY/kg	GTA
Ethyl vanillin crude	2912 42	119,24 CNY/kg	GTA
Consumables	Consumables	Consumables	Consumables
By/Co products	By/Co products	By/Co products	By/Co products
Ortho vanillin	2912 49 xx78	61,98 CNY/kg	GTA
Ethoxysalicylaldehyde	2912 49 xx78	61,98 CNY/kg	GTA
Hydroquinone	2907 22	77,64 CNY/kg	GTA
O-Diethoxy benzene	2909 30 xx78	79,06 CNY/kg	GTA
Energy	Energy	Energy	Energy
Electricity	Not applicable	0,93 CNY/ kWh	Ministério de Minas e Energia
Coal	Not applicable	1,22 CNY/kg	World Bank Commodities Price Data (The Pink Sheet)
Steam	Not applicable	132,08 CNY/ton	World Bank Commodities Price Data (The Pink Sheet)
Labour	Labour	Labour	Labour
Labour	Not applicable	97,98 CNY/hour	IBGE

• (138) The Commission included a value for manufacturing overhead costs in order to cover costs not included in the factors of production referred to above. To establish this amount, the Commission used the percentage of manufacturing overheads over the costs of manufacturing actually incurred by the exporting producers. The methodology is duly explained in Section 3.4.8.

• (139) The amounts thereof were taken from the exporting producers questionnaire replies. The new amount for manufacturing overheads was expressed as a percentage of the reported manufacturing costs and has been applied to the recalculated manufacturing costs.

3.4.2.   Raw materials

• (140) In order to establish the undistorted price of raw materials as delivered at the gate of a representative country producer, the Commission used as a basis the weighted average import price to Brazil as reported in the GTA to which import duties and transport costs were added. The import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding the PRC and third countries listed in Annex 1 to Regulation (EU) 2015/755. The remaining quantities were considered representative. The Commission decided to exclude imports from the PRC into the representative country as it concluded in Section 3.2 above that it is not appropriate to use domestic prices and costs in the PRC due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. Given that there is no evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected export prices.

• (141) For glyoxylic acid, guaiacol/guetol, toluene, copper sulphate and hydrogen peroxide, the GTA import data for Brazil were not considered appropriate, due to the absence of significant imports and/or inclusion of several product labels within the same GTA product. For those raw materials the Commission has identified as best alternative an undistorted international price according to the availability of data for each of these FOPs. For toluene, copper sulphate and hydrogen peroxide the Commission noted Brazil is a net exporter of significant quantities ⁷⁹ at a reasonable price. For these three raw materials the Commission established the international prices based on Free on Board prices sourced from GTA Brazilian export data to all trade partners.

• (142) For glyoxylic acid, the commodity coded 2918 30 00 used in Brazil to import the product includes a mix of multiple products (i.e. Tariff description in GTA: ‘carboxylic acids with aldehyde or ketone function but without other oxygen function, their anhydrides, halides, peroxides, peroxyacids and their halogenated, sulphonated, nitrated or nitrosated derivatives’) and the Commission was not in a position to relay on the GTA imports statistics. The Commission found that, such product is only produced in France and the PRC and in order to limit the risk of selecting a non-correct price benchmark, it used the GTA exports statistics from France to all countries (China and non-WTO countries excluded). For guaiacol/guetol, which have limited trade globally, including exports/imports from/to Brazil, the Commission established the benchmark on the basis of imports from all countries (China and non-WTO countries excluded).

• (143) In its comments to the Second Note, Jiaxing Zhonghua contested the GTA data proposed by the Commission for guaiacol/guetol, arguing that the products covered by the extraction included other products such as triclosan, eugenol, isoeugenol, other ether-phenols, ether-alcohol-phenols and their halogenated derivatives. The company claimed that this methodology was inaccurate for valuing guaiacol or guetol. The Commission analysed the claim and considered that the issue could be addressed by narrowing down the selection of the raw material by identifying, through the tariff line description, only the transactions with the guaiacol (and/or guetol) name reported. The Commission considered that the revised approach would address the company’s claim.

• (144) In its comments to the Second Note, Jiaxing Zhonghua also claimed that the Commission should, in its normal value calculation, not use a benchmark price for guaiacol/guetol, but start the normal value calculation at a more upstream FOP level using the information provided by the related supplier. In support of its claim, Jiaxing Zhonghua submitted a newly consolidated COP table ⁸⁰. The Commission rejected the claim on three grounds: (i) Jiaxing Zhonghua submitted the consolidated COP table in support of its claim at an excessively late stage of the proceeding, rendering it impossible for the Commission to reasonably verify its accuracy; (ii) the Commission found the consolidated COP table to be inaccurate (i.e. the overhead costs incurred by the related supplier to manufacture the guaiacol/guetol from catechol were missing); (iii) the Commission also found unsubstantiated and without merit the suggestion to value the catechol not on the basis of an international price but by using the same price of phenol, which is the raw material used to produce guaiacol/guetol, and the company failed to provide evidence to justify the lack of any upward price adjustment to account for the processing of phenol into catechol.

• (145) Jiaxing Zhonghua and Jiangxi Brother submitted comments on the Second Note in relation to the undistorted value of glyoxylic acid. Jiaxing Zhonghua submitted that the HTS code 2918 30 00 is covering a basket of various products and thus does not accurately reflect the international price of the glyoxylic acid. For this reason, it claimed that the Commission should source the glyoxylic acid benchmark from other sources such as data provided by Procurement Resource ⁸¹. Jiangxi Brother claimed that the Commission's methodology should be further improved. In particular, it explained that glyoxylic acid is utilised in both the vanillin and pharmaceutical industries, with variations in purity and concentration tailored to each application’s specific requirements. The purity level and the concentration have a significant impact on the final price and are therefore crucial factors that should be taken into account. Jiangxi Brother explained that France (where the sole EU producer is located) exports a large quantity of glyoxylic acid to various countries and among those countries only a limited number of countries produce vanillin. Jiangxi Brother suggested that the Commission should refine its methodology by using only the French exports to USA, as in terms of volumes these exports are representative and there is a producer of vanillin in the USA, whereas that is not the case in other countries. The prices of glyoxylic acid sold on the US market would therefore be more representative for the prices of glyoxylic acid used in the production of vanillin than prices of glyoxylic acid to countries that do not produce vanillin. Furthermore, Jiangxi Brother also claimed that the Commission should adjust Eurostat prices to reflect the price differences resulting from differences in purity.

• (146) The Commission analysed Jiangxi Brother’s claim to determine the price of glyoxylic acid based on France export to USA. First, the claim was not substantiated by any evidence that price of glyoxylic acid used for vanillin production differs from that used for other purposes such as pharmaceuticals. Second, the available statistics did not allow either for distinguishing glyoxylic acid used for vanillin from any other uses. Third, while vanillin production is indeed present in the USA, nothing submitted by the exporting producer or available on the file suggested that, given the huge size of the USA market for the use of glyoxylic acid, that the export statistics to the USA would better reflect glyoxylic acid used for vanillin than the total exports from France to all other countries. The Commission therefore rejected the claim of Jiangxi Brother.

• (147) The Commission also rejected Jiaxing Zhonghua’s request to use an alternative source, such as Procurement Resource, instead of GTA to determine the benchmark. The data provided by Jiaxing Zhonghua from Procurement Resource were not cleared for use in terms of copyrights and therefore could not be disclosed in the open file.

• (148) Following the disclosure of definitive findings, Jiangxi Brother reiterated its claim that the Commission should establish the price benchmark for glyoxylic acid solely on the basis of exports from France to the USA. Jiangxi Brother argued that French exports to other countries are more likely to be destined for production in the pharmaceutical industry. Furthermore, Jiangxi Brother claimed that the Commission should use Eurostat export prices at the 10-digit code level, to which it has access, as that would be more precise and thus give a more accurate glyoxylic acid price.

• (149) The Commission as explained above in recital (146) reaffirmed its position and rejected the claim due to the lack of evidence provided by Jiangxi Brother. Jiangxi Brother failed to demonstrate that exports from France to other countries are primarily intended for production in the pharmaceutical industry contrary to the export to USA which are intended for chemical industries. Furthermore, regarding the second claim, the Commission noted that the 10-digit Taric code is only available for imports into the EU, whereas all statistical data for EU exports to third countries are collected at the 8-digit CN level ⁸².

• (150) Jiangxi Brother also submitted comments on the Second Note in relation to caustic soda. It emphasised that purity is an important element in terms of this product, finding the benchmark identified by the Commission significantly higher than their purchase price of this raw material. Jiangxi Brother suggested the Commission to verify the purity reported in the GTA import data and to assess whether the related price could be linked to the purity level.

• (151) The Commission noted, first, that the purchase price that Jiangxi Brother paid on its domestic market is irrelevant, in view of the established existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. The Commission further noted that the claim was not substantiated, neither did Jiangxi Brother provide a method for possible adjustment. The claim was therefore rejected.

• (152) The Commission expressed the transport cost incurred by the cooperating exporting producer for the supply of raw materials as a percentage of the actual cost of such raw materials and then applied the same percentage to the undistorted cost of the same raw materials in order to obtain the undistorted transport cost. The Commission considered that, in the context of this investigation, the ratio between the exporting producers’ raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory.

3.4.3.   Consumables

• (153) In the Second Note, the Commission also informed the interested parties that due to the large number of factors of production used by the sampled exporting producers that provided complete information, also for the auxiliary materials ⁸³, and the negligible weight of some of these materials in the total cost of production, all auxiliary materials identified were grouped under ‘consumables’. Further, the Commission informed that it would calculate the percentage of the consumables on the total cost of raw materials and apply this percentage to the recalculated cost of raw materials when using the established undistorted benchmarks in the appropriate representative country.

3.4.4.   Labour

• (154) The IBGE publishes detailed information on wages in different economic sectors in Brazil. The Commission used the latest available statistics covering 2022 for average labour cost in Sector of manufacturing of organic chemicals according to the Brazilian Classification CNAE 2.0 ⁸⁴. The values were further indexed for inflation using the labour cost index published by the ‘Brazilian institute of Geography and Statistics’ ⁸⁵ to reflect the costs in the investigation period.

• (155) Jiangxi Brother submitted that the hourly rate calculated by the Commission is overly high compared with the hourly rate in another dumping case ⁸⁶. Furthermore, Jiangxi Brother claimed that the Commission should further check whether the hourly rate includes any additional taxes and charges.

• (156) The Commission recalled, first, that each case has to be assessed on its own merits. Secondly, Jiangxi Brother has not contested the methodology applied by the Commission nor identified methodological mistakes. Thirdly, while in previous dumping cases, like the case quoted by Jiangxi Brother, the Commission used ILO statistics to calculate the labour hourly rate, it moved away therefrom because ILO statistics do not distinguish salary based on specific business categories and because there is no distinction based on the size of companies. The Commission considered the IBGE statistics thus more accurate. For the reasons explained in the recital above, the claim of Jiangxi Brother regarding labour cost is rejected. Regarding the second part of the claim, the Commission confirms that the hourly rate calculated includes only social charges, labour indemnities and benefits and not additional taxes and charges.

3.4.5.   Electricity

• (157) The price of electricity for industrial users in Brazil is published by the Government of Brazil in the Monthly Energy Bulletin ⁸⁷. The Commission used the data on the industrial electricity prices in the corresponding consumption band in CNY/MWh as published for the investigation period.

3.4.6.   Coal

• (158) As explained in the First Note, the Commission found that significant quantities of coal imported into Brazil are from Russia, which is currently under EU sanctions ⁸⁸. The Commission found that imports of coal from Russia increased by 52 % in 2022, the year that the sanctions were imposed, and imports of coal from Russia remained at comparable high levels thereafter, representing 39 % of imports in the investigation period. The Commission also observed a sharp decrease of the import price of coal from Russia during the investigation period by 29 % compared to the previous year and found that the decrease in price of Russian imports triggered a drop in prices of coal imports from other countries to similar low levels. In light of the above, the Commission considered the prices of imported coal in Brazil distorted.

• (159) Regarding coal, Russia holds the second largest coal reserves in the world and has been expanding its production in the last decade because of growing exports ⁸⁹. Combined with the sanctions, this circumstance has lowered the price of Russian exports and Turkish imports of Russian coal have increased significantly in the recent years ⁹⁰.

• (160) Jiangxi Brother commented on the First Note claiming that the Commission should use as a benchmark the Australian export price of coal sourced from the World Bank Commodities Price ⁹¹, making reference to a previous investigation ⁹² where the Commission had applied the same approach. The Commission assessed the claim of Jiangxi Brother. It found the benchmark proposed reasonable and consistent with the methodology applied in other cases. The Commission therefore accepted Jiangxi Brother’s claim and decided to use the price of Australian coal published by the World Bank as benchmark price.

3.4.7.   Steam

• (161) In the Second Note, the Commission indicated that it intended to calculate the price of steam in Brazil using the methodology suggested by the U.S. Department for Energy ⁹³. This methodology provides a cost for steam based on the heat input required to produce it. To this end, the Commission used coal as heat input and used the price of coal calculated as explained in the previous recital.

3.4.8.   Manufacturing overhead costs, SG&A costs, profits

• (162) According to Article 2(6a)(a) of the basic Regulation, ‘the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits’.

• (163) The manufacturing overheads incurred by each sampled exporting producer were expressed as a share of the costs of manufacturing actually incurred by the exporting producer. This percentage was used to determine the undistorted value of manufacturing overheads.

• (164) As proposed in the Second Note, for establishing an undistorted and reasonable amount for SG&A costs and for profit, the Commission relied on the financial data for the year 2023 from the Brazilian companies Dexxos Participacoes S.A. and Prox do Brasil, as extracted from Orbis and the company’s internet websites, when available. With regard to the SG&A calculation of Dexxos Participações S.A., the Commission had in the Second Note identified transport costs linked to sales which had been reported under the company’s total cost of goods sold (‘COGS’), and deducted a representative share of these transport costs from the COGS in calculating ex-works SG&A.

• (165) In response to the Second Note, Jiangxi Brother requested a clarification with regard to the calculation of SG&A, as it suspected that the Commission’s calculation, as described above, resulted in an understated COGS amount and, consequently, overstated SG&A rate.

• (166) The Commission assessed the claim. It acknowledged that in the financial statements of the two Brazilian companies it was not possible to identify whether the amount of transport and related costs was reported under COGS or SG&A costs. Consequently, without this piece of information, the Commission found that it was not in a position to revise the SG&A costs or COGS amount in order to calculate the respective values at ex-works level. The Commission therefore revised its calculations of the SG&A rate, limited to Dexxos Participações S.A., by accepting Jiangxi Brother’s claim that the freight, commission and royalties costs should not be deducted from the COGS.

• (167) The undistorted SG&A costs and profit were determined as a percentage of the costs of goods sold at the rates of 6,76 % and 14,22 % respectively. Those rates were considered by the Commission to be reasonable, within the meaning of the last subparagraph of Article 2(6a)(a) of the basic Regulation, for the ex-works level of trade.

3.5.   Calculation

• (168) On the basis of the above, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

• (169) First, the Commission established the undistorted manufacturing costs. The Commission multiplied the verified actual consumption quantity of the individual factors of production of the cooperating exporting producers by the undistorted unit costs of those factors of production observed in the representative country, as described in Section 3.4.

• (170) Second, the portion of the undistorted cost of manufacturing reflecting the undistorted value of consumables was established by multiplying the undistorted value of raw materials determined as described in recital (169) by the percentage of consumables determined as described in recital (153).

• (171) Third, the Commission established the undistorted value of manufacturing overheads by multiplying the undistorted value of cost of manufacturing by the percentage of manufacturing overheads determined as described in recital (163).

• (172) By adding the undistorted value of the manufacturing overheads to the undistorted value of the cost of manufacturing, the Commission established the undistorted cost of production.

• (173) Finally, the Commission established the undistorted amounts for SG&A and for profit by multiplying the undistorted value of cost of production by the rates of S&GA and of profit determined as explained in recitals (164) to (167). The undistorted amounts for SG&A and for profit, which were considered by the Commission to be reasonable for the ex-works level of trade, were added to the undistorted cost of production.

• (174) On that basis, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

3.6.   Export price

• (175) The sampled exporting producers exported to the Union either directly to independent customers or through related companies located outside the Union.

• (176) In case of direct sales, the export price was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

• (177) For indirect sales, the export price was established on the basis of the price at which the imported product was first resold to independent customers in the Union, in accordance with Article 2(9) of the basic Regulation. Established case-law clarifies that adjustments pursuant to Article 2(9) of the basic Regulation include costs incurred by an entity located outside the European Union, provided that such an entity appears to be associated with the importer or exporter and that the costs in question would normally be borne by an importer ⁹⁴. In this context, case-law equates these costs with those related to sales activities performed by subsidiaries as they reduce the amount received by the exporting producer, in as much as they are typically borne by the importer ⁹⁵. As noted by the Court of Justice, this approach is in line with the objective of Article 2(9) of the basic Regulation. According to the Court, that objective would not be achieved if an exporting producer could simply structure its sales in such a way as to ensure the involvement, prior to the importation of the product concerned into the European Union, of an intermediary associated with it which would assume responsibility for the costs normally borne by an importer, so as to increase the export price actually paid by the importer ⁹⁶.

• (178) In light of the above, the Commission noted that traders related to the exporting producers located in third countries were performing functions similar to those of importers. Costs associated with these functions would normally be borne by a related importer and therefore an adjustment under Article 2(9) of the basic Regulation for these costs (SG&A costs) and a nominal profit is warranted.

• (179) The SG&A costs were based on the data provided by the related party. With regard to the adjustment for profit, considering that only one independent importer cooperated during the investigation and for confidentiality reason its profit margin could not be disclosed, the Commission relied on the profit realised by unrelated importers involved in the trade of chemical products in a previous investigation. Thus, the level of profit of 6,89 % found in Polyvinyl alcohols ⁹⁷ was considered reasonable, as it was realised by unrelated importers in the chemical industrial sector.

3.7.   Comparison

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

3.7.1.   Adjustments made to the normal value

• (181) As explained in recital (174), the normal value was established at the ex-works level of trade by using costs of production together with amounts for SG&A costs and for profit, which were considered to be reasonable for that level of trade. Therefore, no adjustments were necessary to net the normal value back to the ex-works level.

• (182) The Commission found therefore no reasons for making any allowances to the normal value, nor were such allowances claimed by any of the sampled exporting producers.

3.7.2.   Adjustments made to the export price

• (183) In order to net the export price back to the ex-works level of trade, adjustments were made on the account of handling, loading and ancillary expenses, freight in country concerned, ocean freight, ocean insurance, customs duty, other import charges and freight in the Union.

• (184) Allowances were made for the following factors affecting prices and price comparability: credit cost and bank charges.

3.8.   Dumping margins

• (185) For the sampled exporting producers, the Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned, in accordance with Article 2(11) and (12) of the basic Regulation.

• (186) The Commission, in view of the evidence collected during the verification visits, considered the two sampled exporting producers as related companies in accordance with Article 2(1) of the basic Regulation. Therefore, the Commission calculated a weighted average of the dumping margins established for each of them and made both entities subject to the single dumping margin thus calculated.

• (187) For the cooperating exporting producers outside the sample, the Commission calculated the weighted average dumping margin, in accordance with Article 9(6) of the basic Regulation. Therefore, that margin was established on the basis of the margins of the sampled exporting producers. Since the cooperating companies covered almost all imports from the country concerned, the Commission considered it appropriate that the duty determined for the sampled exporting producers will apply to all exporting producers from the country concerned.

• (188) On this basis, the definitive weighted average dumping margins expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:

Company	Definitive dumping margin (%)
Brother Corporation Group: — Jiangxi Brother Pharmaceuticals Co., Ltd — Jiaxing Zhonghua Chemicals Co., Ltd	186,9
Non sampled cooperating exporting producers	186,9
All other companies originating in the country concerned	186,9

4. INJURY

4.1.   Definition of the Union industry and Union production

• (189) The like product was manufactured by two producers in the Union during the investigation period. One of them, Syensqo, the complainant, represented 98 % of the total Union production, and constituted the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

• (190) As the data relating to the injury assessment was derived from only one Union producer, the figures for the injury analysis are given in ranges for reasons of confidentiality. However, the indexes are based on actual data and not on the ranges.

• (191) The total Union production during the investigation period was in the range of 1 500 to 1 900 tonnes. The Commission established the actual figure on the basis of a verification of the questionnaire reply of the sole Union producer that cooperated, namely Syensqo.

• (192) The user Frey & Lau, which is also an importer, claimed that the complainant did not have sufficient standing pursuant to Article 4(1) of the basic Regulation, since it closed down its production of synthetic vanillin and the remaining production of natural vanillin constituted very limited volumes. Moreover, Frey & Lau also referred to Syensqo’s relationship to a Chinese exporting producer – Solvay Zhenjiang Chemicals Co Ltd – as a reason for not meeting the requirement of a genuine Union producer within the meaning of the basic Regulation.

• (193) The complainant recalled that its decision to temporarily close its manufacturing of synthetic vanillin was directly related to price competition by dumped imports from the PRC. Moreover, the mothballing of this manufacturing process was done after the end of the investigation period, and since it is a temporary action in response to price competition, its production during the investigation period should be included in the calculation of standing pursuant to Article 5(4 ) of the basic Regulation.

• (194) The complainant recalled that the basic Regulation sets a threshold for a complaint to be considered to have been made by, or on behalf of, the Union industry. This is the case if the complaint is supported by those Union producers whose collective output represents more than 50 % of total production of the like product produced by that portion of the Union industry expressing either support for or opposition to the complaint. Given that the complainant’s production represented 98 % of Union production during the investigation period, the complainant qualified to constitute the Union industry as per the basic Regulation.

• (195) With regard to its common ownership with a Chinese exporting producer, the complainant claimed that this relationship did not influence its long-term business model in the Union, which had been exemplified by its decision to lodge the anti-dumping proceeding against the PRC, which would also cover its own related entity.

• (196) The Commission considers that the complainant constituted the ‘Union industry’ within the meaning of the basic Regulation since its production of vanillin constituted 98 % of total Union production of the like product within the Union. While the Union Industry indeed closed down some production operations, this took place after the end of the investigation period and was a temporary action in response to the prevailing market situation and should not impact its standing in this proceeding.

• (197) The Commission considers that the mere fact that a part of the Union industry has an economic relationship with a Chinese exporting producer does not per se disqualify a Union producer to be treated as such under the basic Regulation. The Chinese exporting producer related to the Union industry only supplied limited quantities of the product concerned to the Union market, which could be regarded as a temporary act in order to keep its Union customers without further economic effects.

• (198) Set against the claim by Frey & Lau that the injury picture in the complaint is flawed, given that the Commission considers all types of vanillin as like product (see recital (49)), the Union industry is correctly defined as including the complainant and consequently, the injury analysis to be carried out in this investigation also involves an assessment of the situation of the complainant.

4.2.   Union consumption

• (199) The Commission established the Union consumption on the basis of: (i) the verified sales of the Union industry; and (ii) all the imports from third countries into the Union.

• (200) Union consumption developed as follows:

Table 3

Union consumption (tonnes)

	2020	2021	2022	Investigation period
Total Union consumption	7 496	7 688	8 404	6 444
Index	100	103	112	86
Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.

• (201) While EU consumption was stable during the first two years of the period considered, it was volatile during 2022 and the investigation period. The supply chain of many goods was disrupted due to lack of workforce in many exporting countries (such as in the country concerned) and exacerbated by a shortage of shipping possibilities and sudden events such as the blockage in the Suez Canal (which triggered shipping prices to increase) and later on by the Russian war of aggression against Ukraine (resulting in energy price increases notably in the Union) ⁹⁸.

• (202) The Union demand at the level of the users increased in 2022, but then reversed during the investigation period, resulting in a drop by 23 % between 2022 and the investigation period.

4.3.   Imports from the country concerned

4.3.1.   Volume and market share of the imports from the country concerned

• (203) As explained in recital (43) the product concerned falls under two separate CN codes:

• — ex 2912 41 00 for Synthetic Vanillin, Natural Vanillin and Bio- sourced Synthetic Vanillin, and

• — ex 2912 42 00 for Ethylvanillin.

• (204) The market share of the Chinese exports to the Union was established by comparing export volumes with the Union market consumption (see Table 3 above).

• (205) Imports into the Union from the country concerned developed as follows:

Table 4

Import volume and market share

	2020	2021	2022	Investigation period
Volume of imports from the PRC (tonnes)	3 138	3 667	4 564	4 220
Index	100	117	145	134
Market share (%)	42	48	54	65
Index	100	114	130	156
Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.

• (206) Table 4 shows that during the period considered imports from the PRC increased in absolute terms by 34 %. In terms of market share, imports from the PRC increased from 42 % to 65 % during the period considered, or by around seven percentage points annually.

4.3.2.   Prices of the imports from the country concerned and price undercutting

• (207) The Commission established the prices of imports on the basis of import data from Eurostat. Price undercutting of the imports was established based on verified questionnaire replies of the sampled exporting producers in the PRC.

• (208) The average price of imports into the Union from the country concerned developed as follows:

Table 5

Import prices (EUR/tonne)

	2020	2021	2022	Investigation period
Price of imports from the PRC	16 365	16 141	22 589	11 870
Index	100	99	138	73
Source: Eurostat and questionnaire replies of the sampled exporting producers in the PRC.	Source: Eurostat and questionnaire replies of the sampled exporting producers in the PRC.	Source: Eurostat and questionnaire replies of the sampled exporting producers in the PRC.	Source: Eurostat and questionnaire replies of the sampled exporting producers in the PRC.	Source: Eurostat and questionnaire replies of the sampled exporting producers in the PRC.

• (209) While prices were stable during the first two years of the period considered, this price stability was replaced by a period of high volatility during 2022 and 2023, where there was a sudden increase in prices in 2022, during which prices increased by 40 % when compared to the previous year.

• (210) This trend was reversed during the investigation period, when prices were almost halved when compared to 2022, with prices during the investigation period being 27 % lower than they were in 2020.

• (211) The Commission determined the price undercutting during the investigation period by comparing:

• — the weighted average sales prices per product type of the known Union producer charged to unrelated customers on the Union market, adjusted to an ex-works level, and

• — the corresponding weighted average prices per product type of the imports from the sampled cooperating Chinese producers to the first independent customer on the Union market, established on a cost, insurance, freight (CIF) basis, with appropriate adjustments for customs duties and post-importation costs.

• (212) 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.

• (213) The result of the comparison was expressed as a percentage of the known Union producer’s theoretical turnover during the investigation period. It showed a weighted average undercutting margin of between 45 % to 55 % by the imports from the country concerned on the Union market. Undercutting was found for all of the imported volumes of the sampled companies.

4.4.   Economic situation of the Union industry

4.4.1.   General remarks

• (214) 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.

• (215) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic and the microeconomic indicators on the basis of data contained in the complaint and the questionnaire reply of the only Union producer cooperating (the complainant). As the complainant represents 98 % of the total Union production and the other Union producer is small, both sets of data were found to be representative of the economic situation of the Union industry.

• (216) As mentioned in recital (190), while the actual figures are in ranges, the indexes are based on the real figures.

• (217) 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.

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

4.4.2.   Macroeconomic indicators

4.4.2.1.   Production, production capacity and capacity utilisation

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

Table 6

Production, production capacity and capacity utilisation

	2020	2021	2022	Investigation period
Production volume (tonnes)	[4 100 – 4 700 ]	[4 100 – 4 700 ]	[3 700 – 4 300 ]	[1 600 – 2 100 ]
Index	100	101	91	39
Production capacity (tonnes)	[3 900 – 4 500 ]	[3 900 – 4 500 ]	[4 300 – 4 900 ]	[4 300 – 4 900 ]
Index	100	100	110	111
Capacity utilisation	98 %	99 %	81 %	35 %
Index	100	101	82	36
Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.

• (220) Total production encompasses both the production volumes of Synthetic Vanillin and of Natural Vanillin, each having separate production lines.

• (221) In line with Union consumption (see Table 3 above), the Union industry’s production volumes were stable during the first two years of the period considered.

• (222) In 2022, despite the increased EU consumption, an increase in the cost of production (as explained in recital (239) below), forced the Union industry to cut back on production volumes in order to keep a sustainable price level.

• (223) In 2023, when EU consumption decreased, and with import prices from the PRC cut in half (see Table 5 above), the Union industry was forced to cut back even further on production, with production volumes during the investigation period at only 39 % of those in 2020 and 2021.

• (224) Production capacity was stable over the period considered. The slightly higher capacity in 2022 and 2023 is due to shorter periods of planned regular maintenance.

• (225) The production capacity utilisation rate mirrors the development of production. While the utilisation rate was satisfactory during 2020 and 2021, during the cut down of production volumes as mentioned above, the utilisation rate of the production equipment decreased to a very low level, a level which is not financially sustainable in the longer term.

4.4.2.2.   Sales volume and market share

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

Table 7

Sales volume and market share

	2020	2021	2022	Investigation period
Sales volume on the Union market (tonnes)	[2 000 – 2 400 ]	[1 850 – 2 250 ]	[1 750 – 2 150 ]	[650 – 1 050 ]
Index	100	93	87	41
Market share (%)	[27 – 30 ]	[24 – 27 ]	[20 – 23 ]	[12 – 15 ]
Index	100	91	78	48
Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.

• (227) Reflecting the evolution of EU Consumption (see Table 3), sales volumes on the Union market were kept stable during the first two years of the period considered.

• (228) Following the supply-chain disruption referred to in recital (201) that inter alia increased the cost of certain raw materials and energy for the Union industry, as mentioned in recital (222), the Union industry had to selected orders on the basis of what was financially sustainable. Hence, sales volumes decreased by 6 % between 2021 and 2022.

• (229) When the supply chain disruption ended in 2023, the trend reversed and prices of imports from the PRC on the market fell drastically (see Table 5 above). The Union industry had to cut back even more on sales volumes since the prevailing price level did not cover the full cost of manufacturing. Hence, sales volumes during the investigation period fell by more than half compared to the volumes sold during 2020 and 2021.

4.4.2.3.   Growth

• (230) The Union Industry has suffered negative growth during the period considered. While the situation was stable in 2020 and 2021, this changed in 2022, a year when while sales volumes fell further, price increases compensated for the lost volumes and total turnover increased.

• (231) In the investigation period, as Chinese import prices halved, the Union industry could no longer compete, and it lost significant sales volumes and hence sales revenues.

4.4.2.4.   Employment and productivity

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

Table 8

Employment and productivity

	2020	2021	2022	Investigation period
Number of employees (FTE)	[60 – 70 ]	[60 – 70 ]	[70 – 80 ]	[60 – 70 ]
Index	100	100	120	106
Productivity (tonne/FTE)	[60 – 70 ]	[60 – 70 ]	[40 – 50 ]	[20 – 30 ]
Index	100	101	75	37
Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.

• (233) During the period considered, employment in the Union increased by 6 %. Despite lower production volumes during 2022 and the investigation period, the complainant did not furlough or dismissed the highly trained and qualified staff in the expectation that the market situation would normalise, and higher production volumes could resume.

• (234) It follows from the previous recital and recital (222) that productivity dropped significantly during the period considered, as staff was used for maintenance and other expected tasks while production volumes decreased.

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

• (235) 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 substantial, given the volume and prices of imports from the country concerned.

• (236) This is the first anti-dumping investigation regarding the product concerned. Therefore, no data were available to assess the effects of possible past dumping.

4.4.3.   Microeconomic indicators

4.4.3.1.   Prices and factors affecting prices

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

Table 9

Sales prices in the Union

	2020	2021	2022	Investigation period
Average unit sales price in the Union on the total market (EUR/tonne)	[17 500 – 19 500 ]	[17 000 – 19 000 ]	[21 900 – 23 900 ]	[21 900 – 23 900 ]
Index	100	97	125	126
Unit cost of production (EUR/tonne)	[16 000 – 18 000 ]	[13 700 – 15 500 ]	[17 600 – 20 000 ]	[23 800 – 27 000 ]
Index	100	81	110	144
Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.

• (238) The Union industry’s average sales prices on the Union market were rather stable between 2020 and 2021 and increased as from 2022 onwards including the investigation period. The higher average sales prices partly reflected the increase in demand on the European market in 2022 (see recital (201)), but partly also to cover the increased costs of production.

• (239) Reflecting increased costs for inter alia energy and higher fixed costs per unit due to lower production capacity utilisation rate, the average cost of production increased by 44 % during the period considered.

• (240) It should be noted that the portion of fixed manufacturing costs (manufacturing overheads) out of the total manufacturing costs is rather small, between 9 % and 15 % of unit cost of production during the investigation period.

• (241) Moreover, Union industry also incurred costs associated with the production process interruption, less efficient production/start-up costs, due to the lower production volumes. These amounted to between 5 %–10 % of unit cost of production during the investigation period.

• (242) Hence, the lower production volumes in 2022 and 2023, including production interruptions and higher fixed costs (manufacturing overheads and SG&A), impacted the unit cost of production by some 15 %–25 %.

4.4.3.2.   Labour costs

• (243) The labour costs of the Union industry developed over the period considered as follows:

Table 10

Average labour costs per employee

	2020	2021	2022	Investigation period
Average labour costs per employee (EUR/FTE)	[67 000 – 73 000 ]	[67 000 – 73 000 ]	[80 000 – 86 000 ]	[63 000 – 69 000 ]
Index	100	100	119	94
Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.

• (244) During the period considered, and apart from 2022, the average labour cost per employee was rather stable, with a small decrease in the investigation period. The increase in salary that occurred in 2022 was due to accrued bonuses paid for certain staff pertinent to financial performance of previous years.

4.4.3.3.   Inventories

• (245) Stock levels of the complainant developed over the period considered as follows:

Table 11

Inventories

	2020	2021	2022	Investigation period
Closing stocks (tonnes)	[390 – 490 ]	[350 – 450 ]	[580 – 680 ]	[780 – 890 ]
Index	100	90	134	177
Closing stocks as a percentage of production (%)	[10 – 15 ]	[10 – 15 ]	[13 – 17 ]	[47 – 57 ]
Index	100	89	147	448
Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.

• (246) The level of stocks increased during the period considered by 77 % in absolute terms, mainly in 2022 and 2023 when the volatility of the market took place.

• (247) In relation to production, the level of stocks increased as from 2022 onwards. As a percentage of production volumes, the level of stocks increased from 13 %–17 % in 2022 to 47 % to 57 % in 2023. Indeed, in 2023, the level of stocks represented approximately half of the production volumes during that year.

• (248) The reason for this increase in stocks in relation of production is twofold.

• (249) Due to the expectation of reduced production volumes ahead (the mothballing of the synthetic vanillin production line as from May 2024, as mentioned in recital (193), was planned and communicated well ahead of that month), and in order to avoid a shortage of synthetic vanillin to its customers, the complainant started to build up stocks as to enable it to also continuously serve its customers with synthetic vanillin.

• (250) The increase of stock in relation to production is also due to the much lower levels of production of synthetic vanillin.

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

• (251) Profitability, cash flow, investments and return on investments of the complainant developed over the period considered as follows:

Table 12

Profitability, cash flow, investments and return on investments

	2020	2021	2022	Investigation period
Profitability of sales in the Union to unrelated customers (% of sales turnover)	[0 – 4 ]	[10 – 14 ]	[15 – 18 ]	[–15 to –18 ]
Index	100	558	721	– 759
Cash flow (EUR 000)	[– 800 to –1 000 ]	[10 000 to –12 000 ]	[9 000 to –10 000 ]	[–1 200 to –2 000 ]
Index	- 100	+1 259	+1 052	– 175
Investments (EUR 000)	[2 500 – 3 500 ]	[8 000 – 9 000 ]	[6 000 – 7 000 ]	[4 000 – 5 000 ]
Index	100	287	220	163
Return on investments (%)	[14 – 18 ]	[40 – 50 ]	[60 – 70 ]	[–45 to –60 ]
Index	100	284	448	– 397
Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.	Source: Syensqo questionnaire reply.

• (252) The profitability on Union sales increased during the first three years of the period considered. During 2020 and 2021, as noted in Table 9, average sales prices were stable, while unit cost of production was decreasing.

• (253) This situation changed in 2022, when both average Union sales prices but also unit cost of production increased. In the investigation period, there was increased price competition. The Chinese import prices dropped significantly while the Union industry’s unit cost of production increased on a yearly basis, resulting in a considerable loss for the Union industry.

• (254) The loss was to a limited degree caused by lower production volumes, resulting in higher unit cost (as noted in recitals (239) to (242), the portion of fixed costs out of total unit cost is limited to between 10 %–20 %). However, the main factor causing the loss was fierce price competition by dumped imports. During the investigation period the Union industry sold the product under investigation below its cost of production in order to avoid losing even more market share.

• (255) The evolution of cash flow mirrors the evolution of profit during the period considered, with a negative cash flow during the investigation period.

• (256) The return on investments (fixed assets) also reflects the profitability development, with a clear negative return on investments in the investigation period.