Commission Implementing Regulation (EU) 2025/1456 of 17 July 2025 imposing a provisional anti-dumping duty on imports of fused alumina originating in the People’s Republic of China

COMMISSION IMPLEMENTING REGULATION (EU) 2025/1456 of 17 July 2025 imposing a provisional anti-dumping duty on imports of fused alumina originating in the People’s Republic of China

THE EUROPEAN COMMISSION,

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

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

After consulting the Member States,

Whereas:

(1) On 21 November 2024, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of fused alumina originating in the People’s Republic of China (‘the country concerned’ or ‘PRC’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 9 October 2024 by Imerys S.A. (‘the complainant’). The complaint was made on behalf of the Union industry of fused alumina in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) The Commission made imports of the product concerned subject to registration by Commission Implementing Regulation (EU) 2025/260 (3) (‘the registration Regulation’).

(4) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainant, the known exporting producers, the authorities of the PRC, known importers, suppliers and users, traders, as well as associations known to be concerned about the initiation of the investigation and invited them to participate.

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

(6) A related importer, Reckel GmbH (‘Reckel’), contested the appropriateness of Mexico, which was used in the complaint as a representative country, asserting that it lacks sufficient competitive production of the investigated products and appropriate production conditions similar to those in China. They suggest Brazil as a more suitable alternative, given its more comparable raw material conditions to China’s.

(7) A Union user, RHI Magnesita GmbH, commented on the initiation of the anti-dumping investigation, criticizing the selection of Mexico as the benchmark country for determining the normal value of fused alumina. They argued that Mexico lacks sufficient competitive production with only two producers indicating a non-competitive market. Additionally, they pointed out that Mexico does not share similar raw material conditions with China, which has significant mineral reserves, suggesting that Brazil would be a more suitable alternative due to its comparable production conditions.

(8) The Union users association, Verband Deutscher Schleifmittelwerke e.V. (‘VDS’), commented on the initiation of the anti-dumping investigation, objecting to the selection of Mexico as a representative third country for determining the normal value of fused alumina. VDS argued that Mexico is inappropriate for this role because it lacks significant production of the product under investigation, with only a small presence of producers using different grades and more expensive raw materials. They expressed concerns that this choice would lead to distorted results and emphasized the importance of ensuring that dumping and injury calculations are based on an objective, fair basis. VDS suggested using India instead as the representative third country, pointing out that India has a more relevant production landscape and more appropriate cost structures comparable to those in China, ensuring more accurate and reliable calculations.

(9) A Union user, Wester Mineralien GmbH (‘Wester’), argued that the complaint does not convincingly demonstrate that dumping is taking place, as the choice of Mexico as a representative country for calculating normal value is inappropriate. Wester highlighted that the methodology used, based on the constructed normal value from Mexican data, fails to accurately reflect the situation because Mexico lacks a substantial and competitive production base for fused alumina. Therefore, they advocated for the termination of the anti-dumping proceedings.

(10) At the initiation stage of the investigation, Mexico was considered a potential representative country as it was deemed to have production of the product under investigation. However, it is important to acknowledge that the initial consideration was just the beginning of a thorough investigative process. As the investigation progressed, the Commission's choice of a representative country was refined and evaluated against specific criteria pursuant to Article 2(6a) of the basic Regulation. These criteria, which include the availability and quality of data and the economic environment's comparability to that of China, were meticulously applied to ensure a fair and accurate determination of the normal value. This process and the rationale behind the final selection are explained in depth in Section 3.2.2, highlighting the Commission's commitment to maintaining transparency and methodological rigor throughout the investigation.

(11) Some parties provided comments on the product control number (‘PCN’) construction regarding certain technical issues and missing characteristics. Some users claimed that the distinction between first and second grade brown fused alumina reflected in the PCN is unnecessary because it is connected to the contents of aluminum oxide (Al2O3) and iron (III) oxide (Fe2O3), which are already taken into account separately. The Commission took note of all the technical comments submitted. The investigation established that the distinction between first and second quality brown fused alumina in the PCN is artificial, does not reflect industry-recognised standards and is subject to interpretation. Thus, an adjustment in the PCN was necessary regarding brown fused alumina. The Commission considered that when comparing products, the critical elements are the contents of Al2O3 and Fe2O3, which are reflected in values A1/A2 and F1/F2 within the PCN. PCNs B2GA2F1 and B1GA2F1 were thus compared to establish the injury margin, as detailed in Section 6.1. Regarding the additional technical characteristics proposed for inclusion, the Commission noted that the existing PCN structure sufficiently captured all relevant characteristics for the purposes of the investigation.

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

(13) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of representativity in terms of size of the production and sales quantity of the product under investigation from 1 October 2023 to 30 September 2024 and geographic location. This sample consisted of two Union producers located in two different Member States. The sampled Union producers, based on the information available at that stage, accounted for almost 50 % of the estimated total production and more than 40 % of estimated total Union sales volume of the like product in the Union. The Commission invited interested parties to comment on the provisional sample.

(14) Due to the absence of a questionnaire reply from one of the sampled companies, MOTIM Electrocorundum Ltd. (Hungary), the Commission proposed to replace the company by another Union producer, Alteo Fused Alumina (France), which also expressed its interest in participating in the sample. Based on the information available at that stage, the sample accounted for more than 44 % of the estimated total Union production and more than 38 % of estimated total Union sales quantity of the like product, and it also ensured a good geographical spread.

(15) The sample was confirmed and is representative of the Union industry.

(16) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation.

(17) Ten unrelated importers provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of two unrelated importers on the basis of the largest volume of imports and sales of the product concerned in the Union. In accordance with Article 17(2) of the basic Regulation, all known importers concerned were consulted on the selection of the sample.

(18) One Union user, Tyrolit, one Union users association, VDS, and one related importer, Reckel, commented on the sample of unrelated importers indicating that only traders of raw materials and not manufacturers who process the raw materials have been sampled. Additionally, both parties argued that the sampled importers mainly focus on the imports of commodities, such as brown and white fused alumina (‘BFA’ and ‘WFA’), with limited involvement in the import of speciality grades. Therefore, they argued that the sample was not representative. The Commission noted that several parties participating in the sampling exercise were more accurately classified as users rather than unrelated importers. The Commission clarified that any company, regardless of whether it is purchasing directly from the country concerned or through a supplier or trader, is considered a ‘Union user’ if it subsequently incorporates the product under investigation into its own production process. The inclusion of direct users in the sampling exercise of importers does not serve the purpose of investigating importers. Instead, the interests of users are assessed separately. Concerning the claim on the speciality grades, the Commission noted that all types of fused alumina share similar basic physical, technical and chemical characteristics. As the two sampled importers represented more than 63 % of the volume of imports of the product under investigation from China and 71 % of the imports of the product under investigation from all origins, based on the submissions of the parties participating in the sampling exercise, the Commission confirmed the sample selected on 17 December 2024.

(19) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in PRC to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the People’s Republic of China to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(20) Twenty-two exporting producers in the country concerned representing 16,7 % of the total export volume of fused alumina from China to the Union provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a provisional sample of three exporting producers on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of the country concerned were consulted on the selection of the sample. The comments received are summarized and addressed below.

(21) Dengfeng Wudu Abrasives Co. Ltd. (‘Wudu’), a company selected in the provisional sample, resubmitted the data pertaining to its exports of the product under investigation to the Union and reported lower export volumes. The Commission requested additional information from Dengfeng Wudu Abrasives Co. Ltd. to be considered as a cooperating exporting producer in this proceeding. However, Dengfeng Wudu Abrasives Co. Ltd. did not provide the requested information within the deadline set.

(22) In view of the updated lower export volume reported by Wudu and in the absence of reply to the Commission’s request for additional information, the Commission considered that this company was no longer cooperating with the investigation and therefore was no longer part of the sample or a cooperating exporting producer.

(23) Shanxi Lvliangshan Minerals Co. Ltd (‘Lvliangshan’) claimed that the provisional sample of three exporting producers was not representative as it represented only 6,2 % of the total export volume of fused alumina from China to the Union. Furthermore, it submitted that the sampled exporters must be genuine exporting producers capable of providing reliable data on production costs and export sales. Shanxi Lvliangshan Minerals Co., Ltd proposed that the sample selection be based on the largest production volume.

(24) Art Abrasives (Guizhou) Co., Ltd. requested to be included in the final sample as it is the sole producer in the PRC utilising both alumina and bauxite as raw materials to manufacture semi-friable fused alumina while relying on a comprehensive series of advanced treatments for this product type.

(25) Tyrolit claimed that additional factors such as quality levels of the product concerned and the treatment specifications should also be considered to select the sample. Tyrolit and VDS also requested the inclusion of at least one additional exporting producer to increase the representativeness of the sample. Alternatively, Tyrolit considered that the investigation should be limited to commodities (in particular brown and white fused alumina), which allegedly account for 75-80 % of the total volume of fused alumina.

(26) With regard to the representativity of the sample and request for addition of exporting producer(s), the Commission considered that the overall low level of cooperation by Chinese exporting producers, the fragmentation of the Chinese domestic industry and the relative size of the companies that came forward did not warrant the inclusion of an additional exporting producer to the sample and that the selected sample was sufficiently representative as it accounted for 6,1 % of total imports. When it comes to the claims relating to quality aspects and the use of different production processes or raw materials, the Commission recalled that these are not legal criteria in the sample selection under Article 17 of the basic Regulation. The Commission also considered that a sample based on the export volume to the EU was more representative than when based on the production volume given that the investigation is focussed on the exporting practices of the Chinese operators. Furthermore, Lvliangshan did not provide evidence that the provisionally sampled companies were not genuine exporting producers. In parallel, the Commission also considered that the current investigation was initiated following a complaint which scope is not limited to fused alumina commodities. On this basis, the claims related to these issues were rejected.

(27) Furthermore, it appeared that the use of alumina and bauxite by Art Abrasives (Guizhou) Co. related to one product type only (semi-friable alumina) whereas it manufactures a much wider range of product types falling within the scope of this investigation. In addition, such claim was not confirmed by the ‘Information on inputs’ submitted by this party, which contained contradictory information. Furthermore, adding a company that has ‘unique’ manufacturing techniques would not make the sample more representative of the Chinese operators as a whole, to the contrary. On this basis, the above claims were rejected.

(28) Based on the above, following the comments received on the selection of the sample, and due to the non-cooperation by Wudu as explained in recital 21, the Commission decided to limit the definitive sample to two exporting producers. On this new basis, the definitive sample accounts for 4,5 % of total imports of the product concerned and 26,6 % of the imports of the product concerned in the Union as reported by the cooperating exporting producers.

(29) The Commission sent a questionnaire concerning the existence of significant distortions in the PRC within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of the People’s Republic of China (‘GOC’).

(30) Furthermore, the complaint contained sufficient prima facie evidence of raw material distortions in the PRC regarding the product concerned. Therefore, as announced in the Notice of Initiation, the investigation covered those raw material distortions to determine whether to apply the provisions of Article 7(2) and 7(2a) of the basic Regulation with regard to the PRC. For this reason, the Commission sent additional questionnaires in this regard to the Government of the PRC.

(31) The Commission published online (4) the questionnaires for the exporting producers, users, unrelated importers and the Union producers.

(33) The investigation of dumping and injury covered the period from 1 October 2023 to 30 September 2024 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2021 to the end of the investigation period (‘the period considered’).

(34) The product under investigation is artificial corundum, whether or not chemically defined, also known as fused alumina (‘the product under investigation’).

(35) The types of artificial corundum are also known as white fused alumina (‘WFA’), pink fused alumina, ruby fused alumina, brown fused alumina (‘BFA’), sol-gel, etc. They are all included, regardless of their commercial naming, provided they meet the properties or specifications set out in the relevant TARIC codes descriptions.

(36) Fused alumina is produced by melting bauxite or aluminium oxide at very high temperatures (around 2 000 °C) in an electric arc furnace, and then cooling and crushing the resulting material.

(37) Due to its hardness and thermal resistance, fused alumina is primarily used in two industrial sectors, abrasives and refractories. In the abrasives industry, it is used in a wide range of applications, including grinding, polishing, cutting and blasting. In the refractories industry, it functions as a refractory material in high-temperature settings, such as furnace linings, crucibles, and refractory bricks. Beyond these principal uses, fused alumina is also used in the manufacture of technical ceramics and as a wear-resistant additive in surface coatings within the laminated products industry.

(38) The product concerned is the product under investigation originating in the PRC, currently falling under CN code 2818 10 11 , 2818 10 19 , ex 2818 10 91 , and 2818 10 99 (TARIC codes 2818 10 91 20, 2818 10 91 90) (‘the product concerned’).

(39) However, artificial corundum currently classified under TARIC code 2818 10 91 30 (i.e., sintered corundum with a micro crystalline structure consisting of aluminium oxide (CAS RN 1344-28-1) and magnesium aluminate (CAS RN 12068-51-8) with a content by weight (calculated as oxides) of 92 % or more, but not more than 94 % of aluminium oxide, and 7 % (± 1 %) of magnesium oxide) is not part of the product under investigation. Mechanical mixtures of artificial corundum and other substances, currently classified under heading 3824 , are also not part of the product under investigation

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

(42) Several parties, particularly Union users from the refractory industry, claimed that there was lack of substitution between abrasive-grade and refractory-grade fused alumina, based on their different physical characteristics, properties, applications and consumer perception. Many users pointed to the difference of the particle size distribution between abrasive-grade and refractory-grade fused alumina, claiming that abrasive-grade fused alumina must adhere to certain standards issued by the Federation Européenne des Fabricants de Produits Abrasifs (‘FEPA’) which are based on the grit size. To the contrary, refractory-grade alumina employs broader particle size ranges and less stringent requirements for particle size uniformity. Additionally, several users claimed that both grades are not interchangeable from a cost and end-use perspective, as the use of abrasive-grade fused alumina in the refractories industry would be too costly, while refractory-grade fused alumina is technically unsuitable for use in abrasive products.

(43) Users from the refractory industry also claimed that the Union industry was mainly focused on the production of abrasive-grade fused alumina, with only 20 to 30 % of the Union’s production being dedicated to refractory-grade fused alumina. Therefore, they argued that there was insufficient capacity in the Union to meet the demand of the refractory-grade fused alumina. Additionally, they argued that since refractory-grade fused alumina was such a small part of the production of the Union industry, excluding this grade from the product scope would not compromise the effects of the duties contemplated.

(44) The Commission noted that abrasive and refractory grades of fused alumina share the same basic physical, chemical and technical characteristics. Both grades consist of 90-99 % aluminium oxide, possess high hardness, high density and a high melting point, are characterised by a low level of impurities, strong thermal shock resistance and substantial wear resistance. Concerning particle size distribution, the Commission observed that the variation in particle size results from post-fusion classification processes, such as sieving, and does not reflect any inherent distinction in the nature of the product. Furthermore, the Commission noted that there is a significant overlap in particle sizes which would allow both grades to be used interchangeably for certain applications. The investigation established that, users from the refractory industry, while predominantly purchasing broader particle size ranges, also purchased narrower grit ranges that sufficiently overlap with the particle size distribution typically associated with abrasive-grade fused alumina. Also, users in the abrasive industry could, from a technical perspective, and as confirmed by the German Abrasives Association, VDS, utilise grain sizes that are generally employed in the refractory industry, even where such use does not conform to FEPA standards, particularly in the context of less demanding abrasive applications. The investigation established that compliance with FEPA standards is not a legal obligation and is not always applied across all uses. Regarding the difference in cost, the Commission noted that pricing differences are not considered a sufficient basis for product exclusion absent clear evidence of material differences in physical, chemical or technical characteristics. The Commission considered that the absence of full interchangeability across all grades of fused alumina, which is often attributable to cost considerations on the part of refractory users or to quality requirements in certain high-end applications on the part of abrasive users, does not negate the conclusion that the different grades of fused alumina fall within the scope of the same product. The claim was therefore rejected.

(45) The Commission addresses the arguments concerning the Union’s production of refractory-grade fused alumina in Section 7 below.

(46) Some parties claimed that sol-gel corundum and fused alumina have very limited substitutability and that, while fused alumina is produced from bauxite and alumina, sol-gel corundum is produced from high-purity boehmite. Tyrolit noted that sol-gel corundum is not produced by a fusion process like fused alumina but instead follows a different production process, which includes the formation of a sol-gel by dispersing boehmite and additives in acidified water. Additionally, in view of the high price of its raw material, boehmite, Tyrolit claimed that sol-gel corundum was approximately ten times more expensive than fused alumina, and that, its substitution in a formulation with another type of fused alumina, while in theory possible, would have significant impact in the quality of the resulting bonded or coated abrasives. Therefore, some parties requested that sol-gel corundum be excluded from the scope of the investigation.

(47) The Commission noted that sol-gel corundum shares similar basic physical, technical and chemical characteristics as other types of fused alumina. Both sol-gel and other product types of fused alumina, including white fused alumina and brown fused alumina, consist primarily of aluminum oxide (Al2O3) and demonstrate comparable levels of hardness, thermal resistance, and chemical stability, which render them suitable for similar industrial applications. Although sol-gel alumina is manufactured through a distinct chemical synthesis process rather than conventional fusion, and originates from a different raw material, the differences in production process and input are not per se relevant in determining whether a product type is a distinct product when this divergence in production methodology does not materially affect the functional properties of the end product. By the same token, differences in costs and prices do not, in themselves, justify the conclusion that sol-gel should be considered as a different product. The fact that Tyrolit acknowledges that white fused alumina could theoretically replace sol-gel, albeit with reduced performance in more demanding applications, demonstrates that the various types of fused alumina share core functional characteristics to a sufficient degree. The Commission considered that for the majority of abrasive applications, there exists a meaningful level of interchangeability between sol-gel alumina and other types of fused alumina.

(48) Accordingly, the Commission concluded that the comments regarding the product scope did not provide sufficient justification for the product exclusions. Consequently, these claims were rejected.

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

(50) Consequently, in order to collect the necessary data for the eventual application of Article 2(6a) of the basic Regulation, in the Notice of Initiation the Commission invited all exporting producers in the PRC to provide information regarding the inputs used for producing fused alumina. 10 exporting producers submitted the relevant information.

(51) In order to obtain information, it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in point 5.3.2 of the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union. No questionnaire reply was received from the GOC and no submission on the application of Article 2(6a) of the basic Regulation was received within the deadline. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in the PRC. The Commission invited the GOC to submit its comment on the application of Article 18. No comments were received.

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

(53) On 21 January 2025, the Commission informed by a note (‘the First Note’) interested parties on the relevant sources it intended to use for the determination of the normal value. In that note, the Commission provided a list of all factors of production such as raw materials, labour and energy used in the production of the product under investigation in the PRC. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified possible representative countries, namely Mexico and Brazil as an appropriate representative country. All comments were addressed below in section 3.2.2.1.

(54) On 5 March 2025, the Commission informed by a second note (‘the Second Note’) interested parties on the relevant sources it intended to use for the determination of the normal value, with Mexico as the representative country. It also informed interested parties that it would establish selling, general and administrative costs (‘SG & A’) and profits based on ELMET, S.A. DE C.V.

(55) Comments on the two notes were summarized and addressed in Section 3.2.2.

(56) According to Article 2(1) of the basic Regulation, ‘the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country’.

(57) However, according to Article 2(6a)(a) of the basic Regulation, ‘in case it is determined […] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks’, and ‘shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits’ (‘administrative, selling and general costs’ is refereed hereinafter as ‘SG & A’).

(58) As further explained below, the Commission concluded in the present investigation that, based on the evidence available, and in view of the lack of cooperation of the GOC, the application of Article 2(6a) of the basic Regulation was appropriate.

(59) In recent investigations concerning the metallurgical and chemicals sector, in the People’s Republic of China (‘PRC’) (5), the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present.

(60) In those investigations, the Commission found that there is substantial government intervention in the PRC resulting in a distortion of the effective allocation of resources in line with market principles (6). In particular, the Commission concluded that in the metallurgical and chemical sectors, not only does a substantial degree of ownership by the Government of China (‘GOC’) persist in the sense of Article 2(6a)(b), first indent of the basic Regulation (7), but the GOC is also in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation (8). The Commission further found that the State’s presence and intervention in the financial markets, as well as in the provision of raw materials and inputs have an additional distorting effect on the market. Indeed, overall, the system of planning in the PRC results in resources being concentrated in sectors designated as strategic or otherwise politically important by the GOC, rather than being allocated in line with market forces (9). Moreover, the Commission concluded that the Chinese bankruptcy and property laws do not work properly in the sense of Article 2(6a)(b), fourth indent of the basic Regulation, thus generating distortions in particular when maintaining insolvent firms afloat and when allocating land use rights in the PRC (10). In the same vein, the Commission found distortions of wage costs in the metallurgical and chemical sectors in the sense of Article 2(6a)(b), fifth indent of the basic Regulation (11), as well as distortions in the financial markets in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, in particular concerning access to capital for corporate actors in the PRC (12).

(61) Like in previous investigations concerning the metallurgical and chemical sectors in the PRC, the Commission examined in the present investigation whether it was appropriate or not to use domestic prices and costs in the PRC, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the complaint, and in the Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defence Investigations (13) (‘Report’), which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in the PRC’s economy in general, but also the specific market situation in the relevant sector including the product under investigation. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in the PRC as also found by its previous investigations in this respect.

(62) The complaint alleged that due to the existence of significant distortions in China, domestic prices and costs of the Chinese metallurgical and chemical industry cannot be used in the present case. To support its position, the complainant referred to the Report, especially the sections concerning the chemical sector (14), to previous Commission investigations of chemical and downstream metallurgical products (15), as well as to Chinese legislation.

(63) More specifically, the complaint pointed out that the Chinese economic system is based on the concept of a ‘socialist market economy’, with the state-owned economy being the ‘leading force of the national economy’ (16). The Chinese Constitution and property law reinforce the unquestioned and ever-growing control of the Chinese Communist Part (‘CCP’) over the economic system of the PRC, which goes well beyond the situation customary in other countries where the governments exercise general macroeconomic control. The Chinese state engages in an interventionist economic policy using various tools as industrial planning, financial systems, and regulatory environment to control the economy (17). Crucially, the relevant Chinese authorities at all levels of government adhere to the system of plans and they use their vested powers, accordingly, thereby inducing the economic operators to comply with the priorities set out therein (18).

(64) The chemical market, and specifically the alumina sector is subject to significant interference by the GOC, as extensively described in the Report. State control is further exercised through various planning and regulatory documents, along with ad hod policy interventions, targeting the chemical sector and allowing the State to pursue its vision and make necessary adjustments (19). Regarding alumina, a raw material for fused alumina production, it is identified in plans such as the Chongqing municipality 14th FYP on the High-Quality Development of Manufacturing Industry (‘Chongqing Plan’), which aims to enhance alumina projects and build a local supply system (20).

(65) Referring again to the Report, the complaint pointed out that the market in question is being served to a significant extent by enterprises which operate under the ownership, control or policy supervision, or guidance of the authorities of the exporting country. The State party not only actively formulates and oversees the implementation of general economic policies by individual SOEs, but it also claims its rights to participate in operational decision-making in SOEs. This is typically done through the rotation of cadres between government authorities and SOEs, through presence of party members in SOEs executive bodies and of party cells in companies, as well as by shaping the corporate structure of the SOE sector. In exchange, SOEs enjoy a number of economic benefits, in particular the shielding from competition and the preferential access to relevant inputs, including financing. With the high level of government intervention in the chemical industry and a high share of SOEs in the sector relative to overall production, even privately owned producers of the product under investigation are prevented from operating under market conditions. Rather, both public and privately owned enterprises in the chemicals sector are likely subject to policy supervision and guidance by the GOC.

(66) The presence of the State in firms allows it to interfere with respect to prices or costs. In this respect, the complaint referred to the Report, highlighting that while the right to appoint and to remove key management individuals in SOEs by the relevant State authorities (as provided for in Chinese legislation) can be considered to reflect the corresponding ownership rights, the CCP cells in enterprises, state-owned and private alike, represent another channel through which the State can interfere with business decisions. Since at least 2016, the CCP has reinforced its claim to control business decisions in SOEs for the purpose of pursuing governmental objectives. The CCP is also reported to exercise pressure on private companies to put ‘patriotism’ first and to follow Party discipline. Furthermore, the State’s presence and intervention in financial markets as well as in the provision of raw materials and inputs have a further distorting effect on the market.

(67) Moreover, public policies or measures in China discriminate in favour of domestic suppliers or otherwise influencing free market forces. Relevant plans exist at all levels of government and cover virtually all economic sectors, and specifically those considered as ‘strategic’. The authorities at each administrative level monitor the implementation of such plans. The economic planning system in China results therefore in resources being directed to sectors designated as strategic or politically important by the government, including the chemical one, affecting the downstream industries, among which the production of fused alumina.

(68) There is a lack of discriminatory application or inadequate enforcement of bankruptcy, corporate or property laws. While the Chinese bankruptcy law formally rests on similar principles as corresponding laws in other countries, the Chinese system is characterised by systematic under-enforcement. The State plays a strong and active role in the insolvency proceedings, often having direct influence on their outcome (21). In addition, in China, all land is owned by Chinese State and its allocation is solely dependent on the State. Therefore, the Chinese bankruptcy and property laws result in distortions by maintaining insolvent firms and not providing land at market conditions.

(69) Wage costs in China are also distorted since China has not ratified several fundamental conventions of the International Labour Organisation, in particular those on the freedom of association and on collective bargaining. Moreover, the mobility of the Chinese workforce is restricted by the household registration system, which limits access to the full range of social security and other benefits to residents of a given administrative area.

(70) Access to finance is granted by institutions which implement public policy objectives and act dependently on the State. The Chinese financial system is characterized by the strong position of State-owned banks, which remain connected to the State, not only through ownership but also via personal relations and just like non-financial SOEs, the banks regularly implement public policies designated by the government. Moreover, borrowing costs have been kept artificially low to stimulate investment growth. Even though nominal interest rate liberalization was achieved in October 2015, price signals are still not the result of free market forces but are influenced by Government induced distortions. In essence, despite the steps that have been taken to liberalize the market, the corporate credit system in China is affected by significant systemic issues and distortions resulting from the continuing pervasive role of the state in the capital markets.

(71) In addition, the distortions of the Chinese market have a systematic nature. Regarding the production of fused alumina, Government involvement in the energy sector is particularly relevant. Due to high temperature levels that are required for the production of fused alumina (more than 2 000 °C) production is highly energy intensive. In addition to this, the electricity market in China is characterized by strong involvement of SOEs in various stages of the supply chain. There is also strong involvement of the GOC in the setting of energy prices in particular, including the granting of preferential electricity prices for certain industries at the provincial level.

(72) In conclusion, the complaint took the position that prices or costs are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation. On that basis, according to the complaint, it is not appropriate to use domestic prices and costs to establish normal value in this case.

(73) The GOC did not comment or provide evidence supporting or rebutting the existing evidence on the case file, including the Report and the additional evidence provided by the complainant, on the existence of significant distortions and/or appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand.

(74) Consequently, when examining in the present investigation whether it was appropriate or not to use domestic prices and costs in the PRC, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation, the Commission did so on the basis of the evidence available on the file, including the evidence contained in the complaint, as well as in the Report. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in the PRC, as also found by its previous investigations in this respect.

(75) In the sector of the product under investigation, a substantial degree of ownership, control, policy supervision or guidance by the GOC persists in the sense of Article 2(6a)(b), first indent of the basic Regulation. In China, enterprises operating under the ownership, control and/or policy supervision or guidance by the state represent an essential part of the economy. The GOC and the CCP maintain structures that ensure their continued influence over enterprises, and in particular SOEs (22). However, CCP interventions into operational decision making have become the norm not only in SOEs, but also in private companies (23), with CCP claiming leadership over virtually every aspect of the country’s economy.

(76) The investigation established that the sector of the product under investigation is served both by SOEs and private companies (24). For instance, Chinalco, an SOE under SASAC (25), and China Henan International Cooperation Group Co. Ltd. (26), an SOE owned by the Henan government, are among the largest bauxite suppliers (27), bauxite being an essential input to produce fused alumina. Moreover, while several producers are private, such as Zhengzhou Yufa Abrasives Co. Ltd., (a subsidiary of the Zhengzhou Yufa Group) (28), and Saite. (29), a subsidiary of the Bosai Group, they too operate under the supervision and guidance of the Chinese authorities (see recitals 85 and 86).

(77) Not only, the GOC exerts guidance on enterprises also by setting specific objectives and policies for the metallurgical and chemical sectors, which all industry participants, regardless of their private or public nature, are obliged to comply with.

(78) To give an example, the Standard Conditions Applicable to the Aluminium Industry (30) (‘Standard Conditions’), issued by the Ministry of Industry and Information Technology (‘MIIT’) in 2020, set the overall framework for the operation of the aluminium industry at the central level. Nominally, the Standard Conditions pursue the objective to: ‘[p]romote the supply-side structural reform of the aluminium industry, promote the technological development of the industry, and promote the high-quality development of the industry’ and provide that: ‘[b]auxite mining, alumina, electrolytic aluminium and secondary aluminium production must comply with national and local industrial policies, mineral resource plans, environmental protection and energy conservation laws, regulations and policies, mining laws, regulations and policies, safety production laws, regulations and policies, industry development plans and other requirements’ (31).

(79) Furthermore, alumina is included in the 2025 Catalogue of Encouraged Industries in the Western Regions (32).

(80) More recently, the GOC released the Implementation Plan for the High Quality Development of the Aluminium Industry (33) (‘Aluminium Plan’) stating that: ‘To promote the high-quality development of the aluminium industry, better support key manufacturing industry chains, […] we have formulated this Plan for the period from 2025 to 2027 […]. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we must fully implement the guiding principles of the 20th National Congress of the [CCP], and the Second and Third Plenary Sessions of the 20th CPC Central Committee, and act in accordance with the decisions of the national meeting on promoting new industrialization. […] We will strive to significantly enhance the resilience and security level of the industrial and supply chains by 2027, with the overall situation of the industry chain leading the world. Aluminium resource security capacity will be substantially improved, striving for a 3 %–5 % increase in domestic bauxite resources, and an annual recycled aluminium output of over 15 million tons. The industrial structure will be optimized, with aluminium processing industry clusters improved.’

(81) The Shandong Province 14th FYP on Aluminium Industry Development (34) (‘Shandong Plan’) lists the following targets: ‘[b]y 2025, the production capacity of electrolytic aluminum and alumina will be controlled […]. The province will evolve into a major aluminium industrial cluster with significant domestic and overseas influence’ (35).

(82) In September 2022, the Standing Committee of the People’s Congress of Guangxi Zhuang Autonomous Region issued the Decision on Promoting the High-quality Development of the Aluminium Industry (36) (‘Guangxi Decision’) and specified the goals regarding cultivating leading enterprises and steering the development path of SOEs in the province: ‘Cultivate and introduce a group of leading enterprises with core competitiveness. Establish an ‘industrial chain leader’ system in the aluminium industry, for enterprises leading the alumina and electrolytic aluminium industrial chains, to implement a comprehensive energy efficiency evaluation and incentive mechanism covering the whole industry […]. Improve the development quality and efficiency of aluminium-related state-owned enterprises, support Guangxi Investment Group and other state-owned enterprises to optimize and integrate their internal aluminium business; take and use capital to deploy the aluminium industry chain across provinces and countries via mergers and acquisitions, participating or controlling equity interest or other methods, so as to implement coordinated development of the whole industrial chain and build up leading enterprises in the aluminium industry with national influence and international competitiveness’ (37).

(83) Government control and policy supervision can be also observed at the level of the relevant industry associations. Indeed, Chinese industry associations are to guarantee that industry implements the policies of the GOC. This responsibility is confirmed by the fact that in their activity, they liaise closely with State authorities, which is reflected in their statutes.

(84) For instance, China Non-Ferrous Metals Fabrication Industry Association (38) (‘CNFA’) notably states in Article 3 of its Articles of Association that the organisation ‘[a]dheres to the overall leadership of the [CCP], establishes an organization of the [CCP], carries out Party activities, and provides the necessary conditions for the activities of the Party organization’ and ‘accepts the professional guidance, supervision and management by the entities in charge of registration and management, by entities in charge of Party building, as well as by the relevant administrative departments in charge of industry management’ (39). According to Article 6 of its Articles of Association, the scope of the Association’s business is, inter alia, the following: ‘[i]n accordance with the general policy and general task of establishing a socialist market economic system put forward by the Party and the state, and in view of the actual situation of the industry, actively put forward suggestions and opinions on industry development, industry policies, laws and regulation’ (40). Moreover, the conditions to be eligible as a representative of the Association include the adhesion to the leadership of the Communist Party of China, supporting socialism with Chinese characteristics, resolutely implementing the Party’s line, principles and policies, and possessing good political qualities (41).

(85) Some bauxite suppliers, for instance Chinalco, are members of CNFA.

(86) Similarly, the Association of China Refractory Industry (42) (‘ACRI’) states in Article 3 of its Articles of Association that the organisation [a]dheres to the overall leadership of the [CCP], establishes an organization of the [CCP], carries out Party activities, and provides the necessary conditions for the activities of the Party organization’ and ‘accepts the professional guidance, supervision and management by the Ministry of Civil Affairs.’ Additionally, the Association’s Party work ‘accepts the unified guidance of the Society work department of the CCP Central Committee (43).’

(87) The Bosai Group as well as the Zhengzhou Yufa Group are members of ACRI (44).

(88) Also, the Articles of Association of the downstream China Machine Tool Industry Association (45) (‘CMTBA’), which has nevertheless a branch concerned specifically with abrasives, contain the identical Article 3 (46), declaring the Association’s compliance with the CCP’s leadership and its acceptance of the supervision and management by the Ministry of Civil Affairs and by the Party Committee of the State-owned Assets Supervision and Administration Commission of the State Council as concerns CMTBA’s Party building activities (47).

(89) As to the GOC being in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation, CCP cells in enterprises, state-owned and private alike, represent an important channel through which the state can interfere with business decisions. During the investigation, the Commission established the existence of personal connections between producers of the product under investigation and the CCP, such as CCP members among the senior management or members of the board of directors in a number of companies manufacturing the product under investigation.

(90) For instance, Chinalco’s chairman and Chinalco’s director and general manager, are respectively the party secretary and the party deputy-secretary of Chinalco’s party organization. Not only, in 2024, all units of Chinalco Group launched the Party Discipline Study and Education: ‘[t]he deployment meeting of the Party Discipline Study and Education of Chinalco Group emphasized that party organizations at all levels should strengthen the combination of learning and application, combine the Party Discipline Study and Education with the implementation of the annual implementation system of the strategic planning of Chinalco Group’s “4 + 4 + N + annual key projects”, and strive to achieve annual goals and tasks, and effectively transform the learning results into an inexhaustible driving force for accelerating the construction of a world-class excellent aluminium company with strong comprehensive competitive advantages, and provide strong political guarantees for striving to write a new chapter of Chinalco’s modernization’ (48).

(91) Also privately owned enterprises in the alumina industry are subject to Party interference. For example, the Chairman of the Bosai Group also serves as ‘the Chairman of the Chinese People's Political Consultative Conference of Nachuan District, Chongqing’ and has won the honorary title of ‘China’s outstanding characteristic socialist builder’ (49). Furthermore, the Deputy General Manager of the Group also serves as the Secretary of the Group’s Party Committee and participated in a meeting with the Chongqing ‘Municipal Party Committee Propaganda Group to study and implement the spirit of the Third Plenary Session of the 20th Central Committee of the CCP’ (50).

(92) Further, policies discriminating in favour of domestic producers or otherwise influencing the market in the sense of Article 2(6a)(b), third indent of the basic Regulation are in place in the sector of the product under investigation.

(93) The metallurgical industry keeps being regarded as a key industry by the GOC (51). This is confirmed in the numerous plans, directives and other documents covering alumina, issued at national, provincial, and municipal level, which have been documented in detail by the Commission’s previous investigations of the sector (52), as well as by the Report (53).

(94) At national level, for instance, the 14th FYP on Developing the Raw Materials Industry (54) (‘Raw Materials Plan’) includes provisions ‘encouraging coastal areas to orderly arrange alumina and other projects using overseas resources’. The plan further calls for capacity control in the aluminium sector in general, including in the alumina sector: ‘Strictly control newly increased production capacity. […] Prevent the disorderly development of […] and alumina’.

(95) Additionally, the Aluminium Plan states that the GOC ‘will strive to significantly enhance the resilience and security level of the industrial and supply chain by 2027, and make sure the industry chain development reaches a world-leading level. Aluminum resource security capacity will be substantially improved, striving for a 3 %–5 % increase in domestic bauxite resources’. Beyond this focus on bauxite inputs, the GOC also intends to ‘build alumina projects in a steady and prudent fashion. We will strengthen the scientific planning of alumina […] projects with bauxite as raw material […] New projects will be advanced prudently. Newly modified or expanded alumina projects must strictly comply with relevant policies on industry […]’ (55).

(96) As can be seen from the above documents, the alumina sector is closely monitored and steered by the central government and the sector, including the whole fused alumina industry chain, is to a large extent shaped by governmental intervention rather than by free market forces.

(97) At local level, the extent of China’s interference into the alumina industry is more evident. One such example is the Shandong Plan, that, alongside the goals described in recital 81, sets out support measures for the local aluminium enterprises: ‘Increase policy and regulatory support. Actively implement various national and provincial-level support policies, provide support to eligible industrial clusters, key products and key technologies. Support enterprises undertaking major national and provincial projects’ (56).

(98) In Yunnan, the Yunnan Province Action Plan on Reshaping the Whole Chain of Nonferrous Metals and New Material Industries with New Advantages 2021-2023 (57) (‘Yunnan Plan’) seeks to ‘[d]evelop intelligent manufacturing: […] promote the transformation of production methods to intelligent, flexible, and refined, and carry out pilot demonstrations of intelligent manufacturing in the non-ferrous metal industry. In the mining fields of […] bauxite, […] we will promote a complete set of intelligent collaborative mining technology systems […] and build digital mines based on leading backbone enterprises in the industry and carry out industry demonstrations. […] promote enterprises to improve their intelligence level in process optimization […] and safe production and improve their ability to meet user needs quickly and at low cost’ (58).

(99) The Yunnan Plan also contains measures to lower the operating costs of the alumina industry by the means of preferential tax policies: ‘Implement preferential tax policies for the development of the western region, and duly conduct investigation and registration of relevant enterprises for the […] green aluminium industry and non-ferrous metal deep processing industry listed in the catalogue of encouraged industries in the western regions; provide unsolicited advice and services to help enterprises reduce their tax burden’ (59).

(100) The Guangxi Decision, as already pointed out in recital 82, sets out several objectives for the aluminium industry development in the province. Furthermore, it mandates that: ‘[T]he competent departments of the Autonomous Region such as Development and Reform, Industry and Information Technology, and Ecology and Environment shall guide and support alumina and electrolytic aluminum enterprises to use new processes, new technologies, and green and low-carbon technologies to carry out energy-saving transformation […]’ (60).

(101) In Henan, the Bauxite International Trade Business Cooperation Agreement was signed between China Henan International Cooperation Group Co., Ltd. and the Sanmenxia Municipality State-owned Assets Operation and Management Co., Ltd. According to the agreement, ‘[i]n the future, the Sanmenxia Municipal Party Committee and the Municipal Government will include aluminum-based new materials in one of the 12 key industrial chains that the city will focus on cultivating. As an important platform enterprise for the province’s opening up and cooperation, China Henan International Cooperation Group Co., Ltd. serves and guarantees the province's key strategies […]. As a municipal state-owned enterprise, Sanmenxia State-owned Assets Operation and Management Co., Ltd. […] strives to cultivate new quality productivity, has been deeply cultivated in the field of aluminum industry for many years, strives to achieve new breakthroughs in the expansion of aluminum-based industrial chain, and actively explores new paths for innovation and development. The cooperation between the two parties to carry out bauxite international trade business is not only an important measure to implement the national strategy, expand the field of foreign economic cooperation, and promote the high-quality development of the local economy, but also a vivid practice of deepening the reform and innovative development of the city's state-owned enterprises, which is of great significance and far-reaching impact on solving the problem of tight local bauxite supply faced by the city and the development of the aluminum industry in the current and future periods’ (61).

(102) At local level, in 2021, the Fuling High Tech Zone (the Fuling district is located in the Chongqing Municipality area) declared to have ‘spent RMB 185 million on scientific and technological innovation, which was 10,9 percentage points higher than the growth rate of the general public budget expenditure of the whole region’ and added that ‘through platform construction and policy support, the zone has effectively promoted the agglomeration of innovative elements to the new material industry chain, and many innovative achievements have filled the domestic gap. For example, […] Fuling [Chongqing] Saite’s annual output of brown fused alumina exceeded 200 000 tons, becoming the world’s largest brown fused alumina monomer manufacturing enterprise. By the end of 2021, the Fuling District cultivated 98 private high-tech enterprises’ (62).

(103) Additionally, state-owned banks also support some fused alumina producers, like for instance Chongqing Branch of the Export and Import Bank of China which ‘introduced a number of measures to help Chongqing do everything possible to stabilize the basic market of foreign trade and foreign investment, and promote the new development of Chongqing’s open economy […] and strengthened trade financial support, […] provided settlement services […] letter of credit and trade financing for many production-oriented and trade-oriented enterprises such as [Chongqing] Saite Corundum and Chongqing International Trade’ (63). In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production of the main inputs used in the manufacturing of the product under investigation. Such measures impede market forces from operating freely.

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

(105) The product under investigation is also affected by the distortions of wage costs in the sense of Article 2(6a)(b), fifth indent of the basic Regulation, as also referred to above in recital 60. Those distortions affect the sector both directly (when producing the product under investigation or the main inputs), as well as indirectly (when having access to inputs from companies subject to the same labour system in the PRC).

(106) Moreover, no evidence was submitted in the present investigation demonstrating that the sector of the product under investigation is not affected by the government intervention in the financial system in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, as also referred above in recital 60. Even at policy level, the government deeply regulates financial measures. For instance, Raw Materials Plan mandates that ‘[t]he existing funding channels will be made full use of to support major projects involved in the Plan. [The GOC] will deepen industry-finance cooperation and leverage the role of the national industry-finance cooperation platforms to provide strong support for projects in line with the Plan by means of financial services and equity investment’ (64).

(107) Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

(108) Finally, the Commission recalls that to produce the product under investigation, a number of inputs is needed. When the producers of the product under investigation purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors.

(109) As a consequence, not only the domestic sales prices of the product under investigation are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the Report. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout the PRC. This means, for instance, that an input that in itself was produced in the PRC by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth.

(110) In sum, the evidence available showed that prices or costs of the product under investigation, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation, as shown by the actual or potential impact of one or more of the relevant elements listed therein. On that basis, and in the absence of any cooperation from the GOC, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case. Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as described in the following section.

(111) On 31 January 2025, Runbao and Saite, submitted a set of comments in reply to the First Note, including with respect to application of Article 2(6a) of the basic Regulation.

(112) First, Runbao and Saite took the position that Article 2(6a) of the basic Regulation is not applicable as Chinese fused alumina industry operates under market-oriented conditions. Runbao and Saite also argued in this connection that the Commission should accept the domestic prices and costs reported by both companies since they are privately-owned.

(113) This argument could not be accepted. As described in detail in recitals 74 to 110 above, the sector of the product under investigation is subject to numerous significant distortion within the meaning of Article 2(6a)(b) of the basic Regulation. While such distortions take various forms and presence of SOEs in the sector is indicative of the existence of significant distortions, the government intervention affecting the market forces is not limited to economic operators owned by the state but extends also to private companies (see in particular recital 91 above).

(114) Second, Runbao and Saite submitted that even if the Commission were to find that significant distortions exist, the relevant assessment must be done individually for Runbao and Saite as stipulated in the third paragraph of Article 2(6a) of the basic Regulation.

(115) The Commission noted that the existence of significant distortions giving rise to the application of Article 2(6a) of the basic Regulation is established on a country-wide level. If the existence of significant distortions in a definitive sector is established, then the provisions of Article 2(6a) of the Regulation apply a priori to all exporting producers of the sector in question in the PRC and concern all costs relating to their factors of production. While the same provision of the basic Regulation provides for the use of domestic costs which are positively established not to be affected by significant distortions, no domestic costs have been established to be undistorted based on accurate and appropriate evidence. In particular, the exporting producers did not submit accurate and appropriate evidence on undistorted prices and costs, they limited themselves to the above-mentioned general claim that the fused alumina industry operates under market-oriented conditions.

(117) As explained in recitals 53 and 54, the Commission issued two notes for the file on the sources for the determination of the normal value: the first note on production factors of 21 January 2025 (hereinafter the ‘First Note’) and the second note on the production factors of 5 March 2025 (hereinafter the ‘Second Note’). These notes described the facts and evidence underlying the relevant criteria, and also addressed the comments received by the parties on these elements and on the relevant sources. In the second note on production factors, the Commission informed interested parties of its intention to consider Mexico as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed. Following comments and supporting evidence received from interested parties regarding the absence of genuine production of the product under investigation in Mexico, the Commission considered that Brazil was the most appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed.

(118) In the First Note on production factors, the Commission identified Mexico and Brazil as countries 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 where production of the product under investigation was known to take place.

(119) In its comments, Tyrolit proposed three potential countries – Brazil, Kazakhstan and India – as suitable representative countries for this investigation. VDS argued that India would be the most appropriate choice, citing the presence of numerous producers of the product under investigation. Additionally, VDS submitted that India offers a realistic reflection of raw material prices and that its energy prices are more comparable to those in China.

(120) The Commission noted that, contrary to the country concerned, Kazakhstan and India do not fall under the category of ‘upper middle income’ countries according to the classification of World Bank and do therefore not qualify as possible representative countries in view of their level of economic development, as provided for in Article2(6a)(a) of the basic Regulation. Consequently, Kazakhstan and India cannot be used as representative countries. Hence these claims were rejected.

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

(122) With regard to Brazil, the Commission could not find, at this stage, readily available financial statements (whether consolidated or not) for Elfusa Geral de Eletro Fusão, the only known company producing the product under investigation in Brazil. The Commission therefore concluded that it could not use the data of this company in the proceeding. As a result, the Commission concluded that Brazil could not be considered as an appropriate representative country for this investigation.

(123) With regard to Mexico, the Commission identified readily available financial statements for Elmet which show a reasonable level of profitability in the year 2022 but not covering the investigation period.

(124) The Commission analysed the imports of the main factors of production into Mexico and Brazil. The complainant provided prima facie evidence of the existence of significant distortions concerning fused alumina in China. Therefore, should the existence of such distortions be confirmed, imports from China would be excluded from the calculation of benchmark prices for the raw materials in the representative countries. The Commission also examined imports from non-WTO countries listed in Annex I to Regulation (EU) 2015/755 of the European Parliament and the Council (66). In all cases, these imports were either non-existent or minimal (below 1 %) during the investigation period. Accordingly, both Mexico and Brazil could be considered appropriate representative countries (67).

(125) Tyrolit and VDS asserted that there are strong indications suggesting that Elmet, an identified producer in Mexico, primarily operates as an importer and distributor of raw materials for the refractory and metallurgical industries rather than producing any type of fused alumina. They further stated that Brazil has domestic production of the product under investigation, with Elfusa Geral de Eletro Fusão (‘Elfusa’) being a well-known producer among VDS members.

(126) The Commission noted that Tyrolit and VDS did not provide evidence that Elmet does not produce the product under investigation. On the contrary, Elmet’s website explicitly states that the company produces BFA and operates its own furnace. Such element was also not contradicted by other interested parties that reckon the existence of such producer in Mexico. Additionally, Elmet’s financial statements are readily accessible through Orbis, whereas the financial statements of the Brazilian producer, Elfusa, are not readily available and were not submitted by Tyrolit and/or VDS. Consequently, these claims were rejected.

(127) Union users, Vesuvius Poland Sp. z o.o. (‘Vesuvius’) and Calderys and Union users association European Refractories Producers’ Association (‘PRE’) came forward in support for the choice of Mexico as the representative country at this stage. According to Vesuvius, Brazil is an inappropriate representative country as there is insufficient and “unsuitable” data for key factors of production, as imports of these materials into Brazil are limited, particularly when excluding those of Chinese origin. Furthermore, based on Vesuvius' knowledge, the imported materials do not correspond to those typically used in fused alumina production. Instead, these imports primarily consist of specialized grades of bauxite intended for specific applications, which are unlikely to be used for producing fused alumina. Additionally, no financial data is available for fused alumina producers in Brazil. Vesuvius therefore recommended that if the Commission were to select Brazil as the representative country, it should rely on export data rather than import data, as done in previous investigations, to ensure a fair and accurate determination of the normal value. Calderys supported the selection of Mexico as the representative country due to the availability of financial data for an identified fused alumina producer in Mexico. Additionally, Mexico's import patterns indicate lower exposure to potentially distorted imported inputs and adherence to stronger social and environmental standards. PRE noted that Brazil is one of the world’s largest producers of bauxite and, as a result, is a net exporter. Consequently, PRE argued that the unit import price of bauxite in Brazil may not accurately reflect the domestic market, either due to the low volume of imports or because imported products are specialized, focusing on higher-value specialty grades. Additionally, like the Commission, PRE was unable to find available financial statements for Elfusa.

(128) Tyrolit and Reckel commented that the factors of production for manufacturing alumina-based fused alumina and sol-gel corundum were not listed in the First Note. Meanwhile, Reckel argued that the production factors identified by the Commission should be reconsidered, as they do not accurately reflect the primary raw materials used for producing sol-gel corundum. Both companies urged the Commission either to adjust the identified production factors or to exclude sol-gel corundum from the scope of the investigation.

(129) In response to the comments from Tyrolit and Reckel, one additional input used in the manufacturing of sol-gel – a product type included in the product under investigation –was also considered, as it was reported by one of the sampled exporting producers. The Commission calculated dumping margins based on the data gathered and verified during the investigation, ensuring that all necessary inputs for the production of the various types of fused alumina by the two sampled producers are considered.

(130) Saite and Runbao argued that GTA import statistics are not a suitable basis for determining the raw material costs of the normal value unless adjustments required under Article 2(10) of the basic Regulation are made to ensure that benchmark prices are comparable to the actual prices paid by Chinese exporting producers. They noted that Chinese companies source a significant portion of their raw materials and other inputs on the domestic market, meaning that the factor of production (FOP) prices in question do not include costs such as ocean freight, insurance, and import duties. Therefore, they claimed that when using GTA import data, the Commission should adjust the benchmark prices to reflect the actual procurement conditions of the Chinese producers, including the mode of transportation, transport distance, and the applicability of costs such as insurance, import duties, and VAT.

(131) The Commission noted that Article 2(6a)(a) of the basic Regulation prescribes the use of corresponding data in an appropriate representative country ‘provided that the relevant data are readily available’. In this case, import prices in the potential representative countries are readily available, and the Commission uses GTA data as the source for those prices. If evidence confirms the basis to apply the methodology in Article 2(6a)(a) of the basic Regulation, the Commission further adjusts these import prices (e.g. by adding the relevant customs duties) to arrive at a reasonable proxy representing an undistorted domestic price in these countries. Moreover, the Commission excluded data on imports into the representative country from China to determine the relevant benchmarks. As long as the import quantities of the factors of production are deemed by the Commission sufficiently representative at undistorted prices and there are no other specific circumstances rendering them unsuitable, there is no objective reason to exclude them. Therefore, in the absence of evidence to the contrary, the Commission rejected this claim.

(132) In light of the above considerations, the Commission informed the interested parties with the second note that it intended to use Mexico as an appropriate representative country, 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. When establishing reasonable values for SG & A costs and for profit, the Commission initially proposed to use financial data of Elmet, which were available in the ORBIS database for a period preceding the IP.

(133) Interested parties were invited to comment on the appropriateness of Mexico as a representative country and of Elmet as producers in the representative country.

(134) Saite and Runbao emphasized the importance of adjusting GTA import data to exclude costs like ocean freight, insurance, and import duties, as these are not incurred when they source raw materials domestically in China. They argued that including such costs would distort the comparison between export prices and normal value as they urged the Commission to ensure that the normal value sources reflect actual procurement conditions of Chinese producers to ensure fair comparison. In addition, Runbao objected to using Brazil's GTA import statistics for silicon carbide as suggested in the Second Note, recommending Turkey instead due to higher import volumes and more reliable data reflecting a comparable economic development level.

(135) As mentioned in recital 110, in view of the existence of significant distortions on the Chinese domestic market, the Commission is entitled to construct the normal value exclusively on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation. In this regard, the Commission could not identify prevailing domestic prices on the domestic market and had to resort to import statistics including transport cost and import duties, where applicable, to reflect the domestic prices in the representative country that would be payable by a local producer. Hence this claim is rejected. The specific claim relating to silicon carbide was considered and addressed in recital 154.

(136) Wester argued that Elmet is too small, with fluctuating financial data, to be representative of Mexico’s industry for this purpose. Additionally, there is no confirmation that Elmet manufactures BFA in Mexico, as the company’s website does not support the Commission’s claim. Even if Elmet produces BFA, Wester pointed out that it is a minor part of Elmet's product range, and the financial data from Elmet primarily reflects their other trades, rendering it unsuitable for determining the normal value of BFA. Wester urged the Commission to reconsider using Elmet’s financial data and, if no other appropriate data is available, to reconsider the use of a representative country altogether.

(137) Traxys challenged the selection of Elmet in Mexico as a representative producer, providing evidence that Elmet does not manufacture BFA for the refractory industry but rather operates as an importer-trader sourcing from the PRC. They contended that using Elmet's data would distort normal value calculations since it does not properly reflect production processes, cost structure or pricing strategies relevant to the product under investigation. Traxys also pointed out that ocean freight significantly impacts costs, making Mexican sales prices unsuitable for proper comparison with the EU market. They suggested that Elfusa in Brazil could be a more representative producer due to its local production of BFA and similarity in freight costs compared to PRC. Traxys emphasized that the current selection lacks sufficient evidence and may lead to inaccurate normal value determination, affecting procedural fairness and European interests.

(138) The Verband Deutscher Schleifmittelwerke e.V. (VDS) questioned the choice of Mexico as a representative country, arguing that Elmet does not produce the product under investigation. They claimed that Elmet imports the BFA from PRC, potentially leading to distorted calculations if used as a benchmark. VDS claimed that the Commission had not sufficiently scrutinized assumptions brought forward by complainants and neglected important arguments from interested parties.

(139) Further to the above claims and evidence put forward, the Commission further investigated whether Elmet was a genuine producer of the product under investigation in Mexico whose financial statements could be used for the determination of reasonable amounts for SG & A and for profit in the representative country. Following its research, the Commission confirmed that Elmet was not a genuine producer. Furthermore, the Commission has obtained a letter from Elmet clarifying that the company does not produce the product under investigation. In the absence of genuine production of the product under investigation, the Commission had to reconsider its selection of an appropriate representative country.

(140) Imerys and VDS also made certain claims regarding the price of electricity in Mexico, GTA import statistics for alumina and bauxite in Mexico. VDS repeated that India should be used as a representative country. Considering the absence of genuine production in Mexico, these claims were considered moot. Furthermore, as already explained in recital 120, India does not belong to the same income group as the PRC and cannot be considered for the selection of an appropriate representative country.

(141) When re-considering the selection of an appropriate representative country, the Commission relied on the information contained in the first and second notes to the file and on the comments received in this regard. In the first and second notes, the Commission had identified Mexico and Brazil as potential representative countries. While there were no decisive factors favouring the choice of Brazil or Mexico as far as production of the product under investigation, import statistics, labour or energy are concerned, the Commission selected Mexico based on the availability of financial statements. Considering the comments received pointing to the absence of genuine production in Mexico -contrary to Brazil- and the absence of financial statements for producers of the product under investigation in Brazil, the Commission examined the availability of financial statements for companies active in the same NACE sector as fused alumina in Brazil. In this context, the Commission identified 3 companies operating in the NACE sector C 23.9 – Manufacture of abrasive products and non-metallic mineral products in Brazil with available financial statements for the years 2023 and 2024 i.e. covering partially the investigation period. This sector was considered representative as it includes companies whose industrial processes are close to those of producers of the product under investigation as production steps such as high temperature processing, mechanical grinding and classification systems, are fundamentally aligned across these companies and fused alumina manufacturing. On this basis, the Commission considered that Brazil was appropriate representative country for the purpose of this investigation.

(142) Having established that Brazil was 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.

(143) 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.

(144) 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 cooperating 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.

(145) In the same 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 to establish the undistorted cost of most of the factors of production, notably the raw materials. In the second note, the Commission listed certain sources for labour cost and energy. Given the intended change in the appropriate representative country, these sources for labour and energy will no longer be used should Brazil be used as an appropriate representative country. Rather the Commission will use Brazilian sources for establishing undistorted costs of labour (68) and energy (69).

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

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

(149) 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 the representative country as reported in the GTA to which import duties and transport costs were added. An 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 countries which are not members of the WTO, listed in Annex I to Regulation (EU) 2015/755. The Commission decided to exclude imports from the PRC into the representative country as it concluded in recitals 110 and 115 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.

(150) Imerys and Tyrolit commented that the HS code for calcined bauxite appears to be incorrect, as it should fall under the same CN code as bauxite – specifically, all aluminium ores and concentrates are classified under HS code 2606 . Additionally, Tyrolit noted that calcined bauxite is not a homogeneous commodity, with unit prices varying significantly. Therefore, Tyrolit recommended using pricing data from reputable sources such as CM Group or Fast Markets, adding transport costs where appropriate, or conducting cross-checks by comparing import prices in GTA with readily available market prices to avoid significant deviations from expected prices. Lastly, Tyrolit asserted that aluminium oxide powder, commonly referred to as alumina, is the primary raw material for producing various types of fused alumina and should not be regarded as a waste by-product of the fusion process involving calcined bauxite.

(151) With regard to the claim concerning the classification of calcined bauxite and the Commission confirmed that, in accordance with the Combined Nomenclature (CN) and the Harmonised System (HS), all aluminium ores and concentrates, including calcined bauxite, fall under CN code 2606 . No evidence was provided to demonstrate that this classification was incorrect or that its use led to unreliable data. With regard to the suggestion to use pricing data from sources such as CM Group or Fastmarkets, the interested parties did not submit any concrete data from these sources, nor did they substantiate why such data would be more reliable than GTA import statistics. While the Commission has access to Fastmarkets, the information contained therein was not considered an appropriate basis to determine the benchmark for this factor of production as it did either not correspond to that factor of production at stake or related to a Chinese port price quotation. Therefore, the Commission rejected this claim.

(152) With regard to aluminium oxide powder, considering the absolute and relative negligible value of this factor of production in the total cost of manufacturing, it was moved under consumables for the purpose of constructing normal value. This claim therefore became irrelevant.

(153) As explained in recital 127, several interested parties claimed that, should Brazil be selected as an appropriate representative country, the undistorted price for bauxite and calcined bauxite should be based on export statistics rather than import statistics as they would correspond to specialised forms of bauxite intended for specific applications. The Commission noted that, the benchmark was actually in the range of the price paid by Union producers for the same factor of production. On this basis, this claim was rejected.

(154) Runbao objected to the use of Brazil’s GTA import statistics for silicon carbide to determine the value of this factor of production, arguing that Brazil’s import volumes during the investigation period were too low to be considered representative and that there is significant price dispersion among Brazil’s import sources. As an alternative, Runbao proposed using Turkey as the source for the benchmark price, citing Turkey’s significantly higher import volume of silicon carbide, lower number of minor suppliers and classification as an upper-middle-income country comparable to China. Runbao further argued that Turkey’s import data is publicly available and more reliable and submitted data from Trade Map in support of its claim.

(155) After reviewing Brazilian import statistics, the Commission observed that a marginal share in quantity of imports from countries showed abnormally high import unit prices, several hundred times higher than the weighted average price established. Considering that these volumes must have corresponded to a different product than the relevant FOP included under the same HS code, the Commission decided to exclude the quantities in question. As a result, the benchmark price was based on over 91% of the import volume into Brazil during the investigation period. As for the proposal to use Turkey as an alternative source, the Commission noted that Turkey was not retained as an appropriate representative country in this investigation due to the absence of production of the product under investigation. Therefore, Turkey’s import data could not be used for the purpose of determining benchmark prices, and the claim was rejected.

(156) In the absence of available import statistics in Brazil for ‘Slag, ash and residues’ that reflected the specific by-product generated in the production process of the product under investigation by one cooperating exporting producer, the Commission had to rely on an alternative method to establish the undistorted price for ‘Slag, ash and residues’. In this regard, the Commission calculated a ratio between the domestic sales price in the PRC of this by-product and the total material cost. This ratio was then applied to the undistorted total material cost calculated and the resultant amount was then divided by the actual quantity sold to arrive at the undistorted unit price. For reasons of confidentiality, the calculated benchmark is reported in ranges in Table 1. However, it was disclosed to the exporting producer concerned in its specific disclosure.

(157) In order to establish the undistorted price of raw materials, as provided by Article 2(6a)(a), first indent of the basic Regulation, the Commission added the relevant import duties to the CIF value recorded in the import statistics of the representative country, as available in GTA.

(158) The Commission expressed the transport cost incurred by the cooperating exporting producers 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 producer’s raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory.

(159) Insitituto Brasileiro de Geografia e Estatística (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 relation to the economic activity 23.91 ‘Fabricação de produtos cerâmicos refratários’ according to the Brazilian classification CNAE 2.0. The IBGE statistics provide information on the total annual wages and related charges and on the number of employees per sector of economic activity for the year 2022. Only information related to staff linked to production was considered. Values were indexed to the investigation period using the national consumer price index (71).