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

• (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.

3.2.1.1.   Arguments of the interested parties

• (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.

3.2.2.   Representative country

3.2.2.1.   General remarks

• (116) The choice of the representative country was based on the following criteria pursuant to Article 2(6a) of the basic Regulation:

• — A level of economic development similar to the PRC. For this purpose, the Commission used countries with a gross national income per capita similar to the PRC on the basis of the database of the World Bank ⁶⁵;

• — Production of the product under investigation in that country;

• — Existence of relevant readily available data in the representative country.

• — Where there is more than one possible representative country, preference was given, where appropriate, to the country with an adequate level of social and environmental protection.

• (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.

3.2.3.   A level of economic development similar to the PRC

• (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.

3.2.4.   Availability of relevant readily available data in the representative country

• (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.

3.2.5.   Level of social and environmental protection

• (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.

3.2.5.1.   Conclusion

• (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.

3.2.6.   Sources used to establish undistorted costs

• (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.

3.2.6.1.   Factors of production

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

Table 1

Factors of production of fused alumina

Factor of Production	Commodity Code	Source	Unit of measurement	Undistorted value (CNY)
Raw materials	Raw materials	Raw materials	Raw materials	Raw materials
Calcined Bauxite	2606 00 12 2606 00 90	Global Trade Atlas70 (‘GTA’)	kg	4,03
Artificial Corundum	2818 10	GTA	kg	7,45
Silicon Carbide	2849 20	GTA	kg	22,81
Aluminium Oxide	2818 20 10 2818 20 90	GTA	kg	13,60
Anthracite Coal	2701 11	GTA	kg	1,24
Aluminium Hydroxide	2818 30	GTA	kg	10,29
Iron Filings	7204 41	GTA	kg	1,92
Non-calcined Petroleum Coke	2713 11	GTA	kg	0,81
Consumables	Consumables	Consumables	Consumables	Consumables
By-products	By-products	By-products	By-products	By-products
Slag, ash and residues	2620 99 90	GTA	kg	[3,50 -7,50 ]
Labour	Labour	Labour	Labour	Labour
Labour	N/A	Instituto Brasileiro de Geografia e Estatística (IBGE)	Hour	58,36
Energy	Energy	Energy	Energy	Energy
Electricity	N/A	Ministry of Mines and Energy of Brazil	kWh	0,98
Gas	N/A	Ministry of Mines and Energy of Brazil	m3	4,32

• (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.

3.2.6.2.   Raw materials

• (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.

3.2.6.3.   Labour

• (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.

3.2.6.4.   Electricity and gas

• (160) The price of electricity and gas for companies (industrial users) in Brazil is published by the Ministry of Mines and Energy of Brazil ⁷² for the investigation period. The rates published in the monthly bulletin included the ‘Imposto sobre Circulação de Mercadorias e Serviços’ (‘ICMS’), a tax levied by the Brazilian states on the circulation of goods and the provision of interstate and inter municipal transportation and communications services. This tax could be claimed back by the industrial users and was deducted from the established benchmark. As ICMS was collected by Brazilian states at the rate ranging from 17 % to 18 % depending on the state, during the investigation period, the Commission recalculated the electricity and gas benchmarks, deducting an average of 17,5 % ICMS. The recalculated electricity benchmark is an average industrial tariff for the IP and is 0,98 CNY/kWh while gas benchmark is 4,32 CNY/m³.

3.2.6.5.   Manufacturing overhead costs, SG & A costs and profits

• (161) According to Article 2(6a)(a) of the basic Regulation, ‘the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits’. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above.

• (162) The manufacturing overheads incurred by the cooperating exporting producers were expressed as a share of the costs of manufacturing actually incurred by the exporting producers. This percentage was applied to the undistorted costs of manufacturing.

• (163) For establishing an undistorted and reasonable amount for SG & A costs and profit, the Commission relied on the financial data for years 2023 or 2024, depending on the availability of companies’ data, for three Brazilian companies operating under NACE Code 23.9. These companies are Bozel Brasil S.A., Trevo Industrial de Acartonados S/A and Technosulfur Sistema de tratamento de metais liquidos Ltda as extracted from Orbis. Greca Distribuidora de Asflatos Ltda, also identified in NACE Code 23.9, was disregarded since the latest identified readily available financial statements were from 2022, that is outside the investigation period.

3.2.6.6.   Calculation

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

• (165) First, the Commission established the undistorted manufacturing costs. The Commission applied the undistorted unit costs to the actual consumption of the individual factors of production of the cooperating exporting producers. These consumption rates provided by the cooperating exporting producers were verified during the verification. The Commission multiplied the usage factors by the undistorted costs per unit observed in the representative country, as described in recitals 144 to 146.

• (166) Once the undistorted manufacturing cost established, the Commission added the manufacturing overheads as explained in recital 162.

• (167) The SG & A costs and profit determined on the basis of the financial statements of 3 companies as explained in recital 163 were applied to the sum of undistorted manufacturing cost and manufacturing overheads; i.e. the costs of production.

• (168) SG & A costs expressed as a percentage of the Costs of Goods Sold (‘COGS’) and applied to the undistorted costs of production, amounted to 13,25 %. The profit expressed as a percentage of the COGS and applied to the undistorted costs of production, amounted to 19,68 %.

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

3.3.   Export price

• (170) The sampled exporting producers exported to the Union either directly to independent customers or through a related company acting as an importer.

• (171) For the exporting producer that exported the product concerned directly to independent customers in the Union, the export price was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

• (172) For the exporting producer that exported the product concerned to the Union through a related company acting as an importer based in the Union, the export price was established on the basis of the price at which the imported product was first resold to independent customers in the Union, in accordance with Article 2(9) of the basic Regulation. In this case, adjustments to the price were made for all costs incurred between importation and resale, including SG & A expenses actually incurred by the related importer, and a profit (of [4-6] % ⁷³) which was obtained from the two sampled unrelated importers in the Union.

3.4.   Comparison

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

3.4.1.   Adjustments made to the normal value

• (174) As explained in recital 169, the normal value was established at the ex-works level of trade by using costs of production together with amounts for SG & A and for profit, which were considered to be reasonable for that level of trade. Therefore, no adjustments were necessary to net the normal value back to the ex-works level.

• (175) Regarding allowances, the Commission found that the HS code under which the product under investigation is classified for exports in the PRC is subject to a non-refundable VAT of 13 %, whereas the normal value had been constructed net of VAT. Therefore, in order to ensure a fair comparison, an upward adjustment of the normal value has been made in accordance with Article 2(10)(k) of the basic Regulation for the exporting producers subject to this VAT. The Commission found no reasons for making any other allowances to the normal value, nor were such allowances claimed by any of the sampled exporting producers.

3.4.2.   Adjustments made to the export price

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

• (177) Allowances were made for the following factors affecting prices and price comparability: transport, insurance, handling and loading, packing expenses, credits costs and bank charges. An adjustment was also made for commissions under Article 2(10)(i) of the basic Regulation for the related trader of Runbao by deducting a constructed commission (based on the SG & A costs of the related trader and a notional profit of [4-6 %] used by analogy to one applied to related importers, as explained in recital 172 above.

3.5.   Dumping margins

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

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

Company	Provisional dumping margin (%)
Chongqing Saite Corundum Co., Ltd.	125,23
Luoyang Runbao Abrasives Co., Ltd.	111,95

• (180) For the cooperating exporting producers outside the sample, the Commission calculated the weighted average dumping margin, in accordance with Article 9(6) of the basic Regulation. Therefore, that margin was established on the basis of the margins of the sampled exporting producers, on a weighted average basis.

• (181) On this basis, the provisional dumping margin of the cooperating exporting producers outside the sample is 118,88 %.

• (182) For all other exporting producers in the PRC, the Commission established the dumping margin on the basis of the facts available, in accordance with Article 18 of the basic Regulation. To this end, the Commission determined the level of cooperation of the exporting producers. The level of cooperation is the volume of exports of the cooperating exporting producers to the Union expressed as proportion of the total imports from the country concerned to the Union in the IP, that were established on the basis of Eurostat. As mentioned in recital 20, the level of cooperation in this case is very low because the exports of the cooperating exporting producers constituted less than 20 % of the total imports into the Union during the IP.

• (183) The Commission recalled that section 10 of the Notice of Initiation ⁷⁴ had informed interested parties that failure to cooperate, or only partial cooperation, could lead to findings based on facts available under Article 18 of the basic Regulation, potentially resulting in less favourable outcomes for those parties. Given that the interested parties were clearly warned of the consequences of non-cooperation, and that the level of cooperation in this case was particularly low, the Commission deemed it appropriate to determine the residual dumping duty based on the dumping bahaviour observed in relation to a subset of sales by Saite – the sampled exporting producer with the highest dumping margin rep–resenting 7 % of the total export volume of all sampled companies to the Union during the investigation period. These sales were considered a reasonable and representative proxy for the dumping behaviour of the non-cooperating exporters.

• (184) The residual dumping margin was therefore set at 136,36 %.

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

Company	Provisional dumping margin (%)
Chongqing Saite Corundum Co., Ltd.	125,23
Luoyang Runbao Abrasives Co., Ltd.	111,95
Other cooperating companies	118,88
All other imports originating in the PRC	136,36

4. INJURY

4.1.   Definition of the Union industry and Union production

• (186) The like product was manufactured by nine producers in the Union during the investigation period. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

• (187) The total Union production during the investigation period was established at around 131 810 tonnes on the basis of all the available information concerning the Union industry, such as data contained in the questionnaire reply of the complainant relating to all Union producers and the questionnaire replies received from the sampled Union producers. As indicated in recital 14, the sampled Union producers represented more than 44 % of the total Union production of the like product.

4.2.   Union consumption

• (188) The Commission established the Union consumption on the basis of (a) data submitted by the complainant concerning the Union industry’s sales of the like product to unrelated customers in the Union, as cross-checked with the sales volumes reported by the sampled Union producers; (b) imports of the product under investigation from all third countries as reported in Eurostat.

• (189) Union consumption developed as follows:

Table 2

Union consumption (tonnes)

	2021	2022	2023	Investigation period
Total Union consumption	379 436	367 672	294 891	305 360
Index	100	97	78	80
Source: Complainant, sampled Union producers and Eurostat.	Source: Complainant, sampled Union producers and Eurostat.	Source: Complainant, sampled Union producers and Eurostat.	Source: Complainant, sampled Union producers and Eurostat.	Source: Complainant, sampled Union producers and Eurostat.

• (190) Consumption in the Union decreased by 20 % during the period considered. Union consumption declined by 3 % from 2021 to 2022, followed by a significant drop of 19 percentage points in 2023. From 2023 to the investigation period, consumption increased by 2 percentage points but remained 20 % below the beginning of the period considered.

4.3.   Imports from the country concerned

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

• (191) The Commission established the volume of imports on the basis of Eurostat data. The market share of the imports was established by comparing the volume of imports with the Union consumption.

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

Table 3

Import volume and market share

	2021	2022	2023	Investigation period
Volume of imports from the country concerned (tonnes)	140 372	175 343	151 650	160 549
Index	100	125	108	114
Market share (%)	37	48	51	53
Index	100	129	139	142
Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.

• (193) Imports from the country concerned increased from 140 372 tonnes to 160 549 tonnes over the period considered, an increase of 14 %. After a significant rise of 25 % in 2022, where imports peaked at 175 343 tonnes, volumes declined in 2023 to 151 650 tonnes before partially recovering during the investigation period. The overall increase during the investigation period was 14 %.

• (194) The market share of those imports increased from 37 % to 53 % over the period considered, an increase of 42 % in a period of constant declining of Union consumption.

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

• (195) The Commission established the prices of imports on the basis of data provided by the cooperating exporting producers that represented 4 % of Chinese imports to the Union in the IP.

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

Table 4

Import prices (EUR/ tonne)

	2021	2022	2023	Investigation period
China	809	1 169	865	878
Index	100	144	107	108
Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.

• (197) The average import price from China increased by 8 % over the period considered. Prices first increased by around 44 % to reach 1 169 EUR/ tonne in 2022. This was followed by a drop of 37 percentage points in 2023, with prices falling to 865 EUR/ tonne, before rising slightly to 878 EUR/tonne during the investigation period. The price fluctuation was mainly influenced by fluctuations in the cost of raw materials.

• (198) The Commission determined the price undercutting during the investigation period by comparing the weighted average sales prices per product type of the sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level, and the corresponding weighted average prices per product type of the imports from the sampled Chinese producers to the first independent customer on the Union market, established on a Cost, insurance, freight (CIF) basis, with appropriate adjustments for customs duties and post-importation costs.

• (199) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. An adjustment in the PCN was necessary given an identified inconsistency in the PCN description concerning brown fused alumina, as detailed in recital 11. The result of the comparison was expressed as a percentage of the sampled Union producers’ theoretical turnover during the investigation period. It showed a weighted average undercutting margin of between 42,94 % and 61,37 % by the imports from the country concerned on the Union market. Around 99,9 % of the import volumes from sampled exporting producers were found to be undercutting the Union industry’s prices.

• (200) In addition to price undercutting, there was also significant price suppression within the meaning of Article 3(3) of the basic Regulation. Due to the significant price pressure caused by the low-priced dumped imports from Chinese exporting producers, the Union industry was unable to raise the prices throughout the IP in line with the development of costs of production and in order to achieve a reasonable level of profit, as set out in Table 8 below. The significant price suppression is confirmed by the data in Tables 4 and 8 as well as the price underselling found on the basis of the data provided by the sampled exporting producers.

4.4.   Economic situation of the Union industry

4.4.1.   General remarks

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

• (202) As mentioned in section 1.5, sampling was used for the determination of possible injury suffered by the Union industry.

• (203) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data contained in questionnaire reply of the complainant relating to all Union producers, cross-checked where necessary with the questionnaire replies of the sampled Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

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

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

4.4.2.   Macroeconomic indicators

4.4.2.1.   Production, production capacity and capacity utilisation

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

Table 5

Production, production capacity and capacity utilisation

	2021	2022	2023	Investigation period
Production volume (tonnes)	210 321	187 988	139 354	131 810
Index	100	89	66	63
Production capacity (tonnes)	305 500	305 500	305 500	305 500
Index	100	100	100	100
Capacity utilisation (%)	69	62	46	43
Index	100	89	66	63
Source: Complainant and sampled Union producers.	Source: Complainant and sampled Union producers.	Source: Complainant and sampled Union producers.	Source: Complainant and sampled Union producers.	Source: Complainant and sampled Union producers.

• (207) During the period considered, the Union industry’s production volume experienced a consistent and significant decrease of 37 %. From 2021 to 2022, production decreased by 11 %. This downward trend accelerated in 2023, with production falling by 34 % compared to 2021. The decline continued during the investigation period, reaching a low of 131 810 tonnes, a 37 % decrease from the initial volume.

• (208) During the period considered, the Union industry’s production capacity remained stable at a level of 305 500 tonnes. Given the decrease in the production volume in the period considered, the capacity utilisation sharply decreased from 69 % in 2021 to 43 % in the IP.

4.4.2.2.   Sales volume and market share

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

Table 6

Sales volume and market share

	2021	2022	2023	Investigation period
Total Sales volume on the Union market (tonnes)	155 270	138 751	103 994	98 005
Index	100	89	67	63
Market share (%)	41	38	35	32
Index	100	92	86	78
Source: Complainant, sampled Union producers and Eurostat.	Source: Complainant, sampled Union producers and Eurostat.	Source: Complainant, sampled Union producers and Eurostat.	Source: Complainant, sampled Union producers and Eurostat.	Source: Complainant, sampled Union producers and Eurostat.

• (210) Over the period considered the Union industry’s sales volume decreased significantly by 37 % and its market shared reduced by 22 %, reducing its market share from 41 % in 2021 to 32 % in the IP.

4.4.2.3.   Growth

• (211) In the context of declining Union consumption, the Union industry suffered significant decreases in production, sales volume, and market share that outpaced the overall Union market contraction. The Union industry's performance deteriorated more sharply than the market, highlighting the industry's particularly vulnerable position during the period considered and negative growth.

4.4.2.4.   Employment and productivity

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

Table 7

Employment and productivity

	2021	2022	2023	Investigation period
Number of employees	1 145	1 085	1 049	962
Index	100	95	92	84
Productivity (tonnes/employee)	184	173	133	137
Index	100	94	72	75
Source: Complainant and sampled Union producers.	Source: Complainant and sampled Union producers.	Source: Complainant and sampled Union producers.	Source: Complainant and sampled Union producers.	Source: Complainant and sampled Union producers.

• (213) The Union industry experienced a decline in employment of 16 % over the period considered, with the total number of employees falling from 1 145 in 2021 to 962 during the investigation period.

• (214) In view of the decrease in production and employment the productivity of the Union industry’s workforce, measured as tonnes per employee produced per year, decreased by 25 % over the period considered. Productivity increased from 2023 to the investigation period by 3 %, this marginal improvement was not due to a recovery in output but rather to a further reduction in the workforce.

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

• (215) All dumping margins were significantly above the de minimis level. The impact of the magnitude of the actual margins of dumping on the Union industry was substantial, given the volume and prices of imports from the country concerned.

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

4.4.3.   Microeconomic indicators

4.4.3.1.   Prices and factors affecting prices

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

Table 8

Sales prices in the Union

	2021	2022	2023	Investigation period
Average unit sales price in the Union on the total market (EUR/ tonne)	[1 310 -1 536 ]	[1 780 -2 093 ]	[1 630 -1 914 ]	[1 446 -1 692 ]
Index	100	139	126	109
Unit cost of production (EUR/ tonne)	[1 321 -1 548 ]	[1 931 -2 271 ]	[2 010 -2 360 ]	[1 716 -2 009 ]
Index	100	149	154	129
Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.

• (218) Sales prices on the Union market to unrelated parties increased 9 % over the period considered. In 2022, the price increased by 39 % reflecting rising input costs. However, this was not sustained. In 2023, the average price declined and continued to fall during the investigation period, reaching EUR [1 446-1 692] per tonne.

• (219) Over the same period, the unit cost of production of sampled union producers increased by 29 %. From 2021 to 2022, there was a significant increase of 49 %. This trend continued in 2023 with a further increase of 5 percentage points, before decreasing in the investigation period. The overall rise in Union prices was primarily driven by the development of raw material prices and the companies’ inability to take full advantage of economies of scale due to a reduction in sales and production.

4.4.3.2.   Labour costs

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

Table 9

Average labour costs per employee

	2021	2022	2023	Investigation period
Average labour costs per employee (EUR)	[73 334 -85 951 ]	[77 354 -90 954 ]	[75 976 -89 190 ]	[85 504 -100 058 ]
Index	100	108	105	115
Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.

• (221) The average labour costs per employee increased by 15 % over the period considered.

4.4.3.3.   Inventories

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

Table 10

Inventories

	2021	2022	2023	Investigation period
Closing stocks (tonnes)	[14 355 -16 824 ]	[14 828 -17 435 ]	[12 148 -14 260 ]	[12 999 -15 212 ]
Index	100	106	86	90
Closing stocks as a percentage of production	[16 -19 ]	[20 -24 ]	[22 -26 ]	[18 -21 ]
Index	100	125	138	112
Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.

• (223) In absolute terms, the stocks of the sampled Union producers declined by 10 % over the period considered. This overall reduction, however, contains significant fluctuations within the period. Specifically, stock levels increased by 6 % between 2021 and 2022, followed by a pronounced decrease of 20 percentage points in 2023. Subsequently, from 2023 to the investigation period, stocks increased again by 4 percentage points.

• (224) When production levels are taken into consideration, the percentage of closing stocks as a percentage of production increased by 12 % over the period considered. Notably, this ratio increased by 38 % between 2021 and 2023, indicating a substantial discrepancy between production and stock clearance. Although the Union industry managed to partially realign stock levels with production from 2023 to the IP, the closing stock ratio remained 12 % higher than in 2021.

• (225) This trend indicates that despite efforts to align production, the accumulation of unsold stock, particularly during periods of declining production, reflects difficulties in accessing the Union market.

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

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

Table 11

Profitability, cash flow, investments and return on investments

	2021	2022	2023	Investigation period
Profitability of sales in the Union to unrelated customers (% of sales turnover)	[2 -6 ]	[3 -7 ]	[(–17 )-(–13 )]	[(–14 )-(–10 )]
Index	100	146	– 399	– 317
Cash flow (EUR)	[(–1 566 629 )-(–1 336 665 ]	[(–7 115 748 )- (–6 051 711 )]	[(–12 241 286 )- (–10 427 762 )]	[(–8 766 054 )- (–7 490 992 )]
Index	– 100	– 463	– 789	– 554
Investments (EUR)	[2 289 616 -2 683 529 ]	[6 081 027 -7 150 218 ]	[3 560 302 -4 179 484 ]	[2 999 817 -3 510 425 ]
Index	100	271	157	130
Return on investments	[(–10 )-(–8 )]	[(–11 )-(–9 )]	[(–75 )-(–63 )]	[(–41 )-(–35 )]
Index	– 100	– 106	– 731	– 387
Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.	Source: Sampled Union producers.

• (227) The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. The profitability of the sampled producers declined significantly over the period considered, falling from nearly [2-6] % in 2021 to approximately [(– 14)-(– 10)] % during the investigation period. Profitability temporary increased in 2022 to [3-7] %, followed by a sharp downturn to a loss of [(– 17)-(– 13)] % in 2023. Despite a partial recovery that followed, profitability remained negative during the investigation period.

• (228) The net cash flow is the ability of the Union producers to self-finance their activities. The cash flow was negative throughout the period considered, deteriorating further due to investment expenditures and increase of operational losses. This persistent negative cash flow was sustained by financial support from the ultimate shareholders of the Union producers, who continued to back the companies’ investment programmes despite the challenging financial environment.

• (229) The level of yearly investments increased over the period considered by 30 %, it notably increased between 2021 and 2022 by 171 %, to later decrease in the following period until the IP. The increase in investments was primarily aimed at maintaining existing capacities and replacing essential production assets. The investment continued despite severe competition, loss of market share and a financially difficult situation.

• (230) The return on investments is the profit in percentage of the net book value of investments. It fell over the period considered by 287 %, starting from [(– 10)-(– 8)] % in 2021 to [(– 41)-(– 35)] % in the investigation period. The negative development showed that, although investments have continued in order to maintain competitiveness, the returns on those investments decreased substantially over the period considered

• (231) The sampled Union producers’ ability to raise capital, as explained in recital 227, was based on the financial support from the ultimate shareholders of the Union producers, who continued to back the companies’ investments.

4.5.   Conclusion on injury

• (232) In a context of a substantial decrease of the Union consumption (– 20 %), imports from China increased noticeably during the period considered (+ 14 %), at prices which significantly undercut those of the Union industry. This allowed Chinese exporting producers to reach a market share of 53 % in the IP (up from 37 % in 2021)

• (233) In these circumstances, the Union industry’s economic situation worsened as shown by all major macro-indicators presenting a negative trend: production (– 37 %), Union sales (– 37 %) and a significant reduction of its market share (from 41 % to 32 %) in the period considered

• (234) In reaction to the pressure of low Chinese import prices, the Union industry tried to reduce costs and adjustments in employment (– 16 %) were undertaken. Investments continued over the period considered in attempt to stay competitive. However, as a result of the pressure exerted by dumped Chinese imports in terms of increased volumes and low prices, Union sales, productivity and return on investments dropped rapidly in the period considered.

• (235) The cost of production of the Union industry went up significantly during the period considered (+ 29 %), mainly because of a strong increase in the raw material prices.

• (236) The Union industry’s cost increased more than sales prices. Consequently, profitability collapsed in the period considered, from a moderate situation (+ [2-6] %) in 2021 to an unsustainable loss-making scenario ([(– 14)-(– 10)] %) in the IP.

• (237) On the basis of the above, the Commission concluded at this stage that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation.

5. CAUSATION

• (238) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the country concerned caused material injury to the Union industry. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the dumped imports from the country concerned was not attributed to the dumped imports. These factors are: imports from third countries, export performance of the Union industry, contraction in EU consumption, increase of energy prices in the Union, competitive disadvantage in the use of the main raw material, lack of adequate level of investment, self-imports of Chinese fused alumina.

5.1.   Effects of the dumped imports