Commission Implementing Regulation (EU) 2025/2314 of 17 November 2025 imposing a provisional anti-dumping duty on imports of phosphorous acid originating in the People’s Republic of China

• (124) With regard to Brazil, the Commission identified readily available financial statements of Nortox S.A. and Vittia S.A. In addition, financial data of three more Brazilian manufacturers of products in the same general category were readily available in the Orbis [^ntr76-L_202502314EN.000101-E0076] database. With regard to the financial data available in the Orbis database, the Commission found that the companies reported unreasonable amounts of SG & A cost and/or profit. Therefore, the Commission concluded that only the financial information on Nortox S.A. and Vittia S.A. should be used as a source of undistorted SG & A cost and profit.

• (125) In addition, in the Orbis database, the Commission identified readily available financial data for one Indonesian, 11 Malaysian and one Serbian manufacturers of products in the same general category.

• (126) In light of the above considerations, in particular the existence of readily available benchmarks for the most important raw materials used in the production of phosphorous acid, the Commission informed the interested parties that it intended to use Brazil as an appropriate representative country, and the financial information of Nortox S.A. and Vittia S.A., 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.

• (127) Interested parties were invited to comment on the appropriateness of Brazil as a representative country, and of Nortox S.A. and Vittia S.A. as producers of products in the same general category in the representative country.

• (128) No comments were received regarding the existence of readily available data in the four potential representative countries.

3.2.4.4.   Level of social and environmental protection

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

3.2.4.5.   Conclusion

• (130) The Commission established that there was production of a product in the same general category in four countries at a level of economic development similar to the PRC, namely Brazil, Indonesia, Malaysia and Serbia. However, information on import prices of the main raw materials used in the production of phosphorous acid was only available for Brazil. Those imports were found to be in representative quantities and their prices were not distorted by substantial imports from the PRC or the existence of trade restrictions. Financial information for the investigation period containing all necessary data, such as cost of goods sold, reasonable amounts for SG & A cost and profit, details of various revenue categories, detailed information on selling cost, was readily available for two Brazilian producers of products in the same general category.

• (131) Contrary to that, the information available for Indonesia, Malaysia and Serbia were lacking in many aspects. Most importantly, there were no or very low imports of the main raw materials. In addition, imports of all or some of those raw materials were subject to export and import restrictions in Indonesia and Malaysia. Furthermore, the very few imports of yellow phosphorus to Serbia originating almost exclusively in the PRC. Finally, financial data for companies manufacturing products in the same general category in Indonesia, Malaysia and Serbia was available for the investigation period. Some of the companies however did not achieve reasonable amounts of SG & A cost and profit.

• (132) 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.

3.2.5.   Sources used to establish undistorted costs

• (133) In the Note on sources, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under investigation and stated that, in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, it would use GTA [^ntr77-L_202502314EN.000101-E0077] to establish the undistorted cost of most of the factors of production, notably the raw materials. In addition, the Commission stated that it would use Brazilian as well as international statistics for establishing undistorted costs of labour and energy.

• (134) The Commission invited the interested parties to comment and propose publicly available information on undistorted values for each of the factors of production mentioned in that note. As mentioned in recital 60, only the complainant submitted its views regarding the undistorted value of by-product.

3.2.5.1.   Factors of production

• (135) Considering all the information submitted by the interested parties and the facts available on the file of the investigation, 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 product under investigation

Factor of Production	Commodity Code	Undistorted value (CNY)	Unit of measurement
RAW MATERIALS	RAW MATERIALS	RAW MATERIALS	RAW MATERIALS
Yellow phosphorus	2804 70 10	38,34	kg
Chlorine	2801 10 00	2,75	kg
Caustic soda (sodium hydroxide) in aqueous solution	2815 12 00	3,59	kg
BY-PRODUCT	BY-PRODUCT	BY-PRODUCT	BY-PRODUCT
Hydrochloric acid	2806 10 20	1,68	kg
LABOUR	LABOUR	LABOUR	LABOUR
Labour	n/a	123,67	hours
ENERGY	ENERGY	ENERGY	ENERGY
Electricity	n/a	0,80	kWh
Steam	n/a	0,95	kg

• (136) The Commission included a value for manufacturing overhead costs in order to cover costs not included in the factors of production referred to above. To establish this amount, the Commission used the financial statements of Vitia S.A. which contained the necessary information. The methodology is duly explained in Section 3.2.5.7.

3.2.5.2.   Raw materials and by-product

• (137) In order to establish the undistorted price of raw materials as delivered at the gate of a producer in the representative country, the Commission used as a basis the import price to the representative country as reported in 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 1 of Regulation (EU) 2015/755 of the European Parliament and the Council [^ntr78-L_202502314EN.000101-E0078]. The Commission decided to exclude imports from the PRC into the representative country as it concluded in Section 3.2.1 that it was 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. After excluding imports from the PRC into the representative country, the volume of imports from other third countries remained representative.

• (138) With regard to import duties, the Commission added import duties to the weighted average import price of each raw material based on its commodity code and the respective country of origin. To determine the applicable import duty rate, the Commission relied on the information collected by Market Access Map [^ntr79-L_202502314EN.000101-E0079].

• (139) Considering the lack of cooperation by the Chinese exporting producers, the Commission used publicly available information to estimate the cost normally incurred by a company in Brazil for transport of inputs between a supplier and its premises. After irregularities revealed in the scoring of certain countries [^ntr80-L_202502314EN.000101-E0080] under the Doing Business report, the World Bank released a new report in 2024 using improved methodologies. The Business Ready (‘B-Ready’) report [^ntr81-L_202502314EN.000101-E0081] however neither covered Brazil in 2024 nor included a study on domestic transport cost of exports and imports. Therefore, the Commission relied on the most recent Doing Business [^ntr82-L_202502314EN.000101-E0082] report [^ntr83-L_202502314EN.000101-E0083] and applied an inflation adjustment [^ntr84-L_202502314EN.000101-E0084].

• (140) With regard to hydrochloric acid, the by-product, the Commission used the methodology described in recitals 137 and 138, except that the transport costs were not added to the import price. The Commission considered that since the by-product was produced by a notional Brazilian producer of phosphorous acid, i.e. it did not have to be brought to its premises from a supplier, its undistorted value was sufficiently reflected in the landed price of the by-product.

• (141) In its comments on the Note on sources, the complainant argued that hydrochloric acid was traded in various purity grades which influenced its price. According to the complainant, hydrochloric acid obtained as a by-product in the manufacturing of phosphorous acid is of low, industrial grade with a concentration of about 30 %. The complainant asserted that the tariff nomenclature of Brazil did not allow for differentiation of the various purity grades of hydrochloric acid. It furthermore claimed that the imports to Brazil contained also hydrochloric acid of high purity based on the high unit import prices. The complainant suggested that the Commission should only consider those imports of hydrochloric acid where the unit price did not exceed 0,30 USD/kg as this price level corresponded to the price of industrial grade hydrochloric acid based on the complainant’s knowledge.

• (142) The Commission considered that the complainant did not provide any evidence to support its claims concerning the usual concentration of by-product hydrochloric acid obtained in the manufacturing of phosphorous acid, the purity of hydrochloric acid imported to Brazil or the typical price of hydrochloric acid of industrial grade. In addition, it was not clear whether the claimed typical price of industrial grade hydrochloric acid was also prevalent on the Brazilian market as Brazil was selected as an appropriate representative country. Finally, the Commission considered that the unusually high prices of certain imports might have been caused by the low import quantities rather than by significant differences in the purity of hydrochloric acid. Considering the low quantities of those high-priced imports, they had only negligible impact on the weighted average import price. Consequently, the Commission rejected the claim.

3.2.5.3.   Consumables

• (143) For a number of factors of production, the actual costs incurred by the complainant represented a negligible share of total raw material costs in the investigation period. As the value used for these had no appreciable impact on the dumping margin calculations, the Commission decided to include those costs into consumables as explained in recital 157.

3.2.5.4.   Labour

• (144) Instituto Brasileiro de Geografia e Estatística (‘IBGE’) [^ntr85-L_202502314EN.000101-E0085] publishes detailed information on wages in different economic sectors in Brazil. The Commission used the latest available statistics, namely information on the number of employees, total annual salary cost and social charges, compensations and benefits cost, covering the investigation period to determine average labour cost in industrial sector 20.12 – Manufacturing of intermediates for fertilisers [^ntr86-L_202502314EN.000101-E0086].

• (145) In addition, the Commission used the information on average weekly worked hours per employed person in Brazil in 2024 as published by ILOSTAT [^ntr87-L_202502314EN.000101-E0087].

3.2.5.5.   Electricity

• (146) The price of electricity for companies (industrial users) in Brazil is published by the Ministry of Mines and Energy of Brazil [^ntr88-L_202502314EN.000101-E0088] (Ministério de Minas e Energia).

• (147) 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 can be claimed back by the industrial users and was therefore deducted from the established benchmark. As ICMS was collected at the rate ranging from 17 % to 18 % depending on the state, during the investigation period, the Commission recalculated the electricity benchmark, deducting an average of 17,5 % ICMS.

3.2.5.6.   Steam

• (148) The Commission derived the undistorted cost of steam from the undistorted cost of natural gas based on the price paid by industrial users in the investigation period as published in the monthly bulletins by the Ministry of Mines and Energy of Brazil [^ntr89-L_202502314EN.000101-E0089].

• (149) The price of natural gas included taxes [^ntr90-L_202502314EN.000101-E0090]. There was, however, no evidence at this stage that those taxes were similar to a sales tax/VAT, which could normally be claimed back by the company and thus did not become a part of the company’s cost.

• (150) The Commission calculated the price of steam in Brazil using the methodology suggested by the U.S Department for Energy [^ntr91-L_202502314EN.000101-E0091]. This methodology provides a cost for steam based on the heat input required to produce it. The Commission based its calculation on natural gas as the heat input as also suggested in the complaint. Using the information included in the complaint, the Commission determined the undistorted cost of low-pressure steam, corresponding to 150 psig in the calculation methodology.

• (151) The Commission further added operational cost amounting to estimated 10 % of total cost of production of steam, and SG & A cost and profit of a Brazilian natural gas producer and distributor, the company Petrobras.

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

• (152) 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.

• (153) To establish an undistorted value of MOH and given the absence of cooperation from the exporting producers, the Commission used facts available in accordance with Article 18 of the basic Regulation. The Commission relied on information on MOH contained in the financial statements of Vitia, S.A. [^ntr92-L_202502314EN.000101-E0092], one of the Brazilian manufacturers of products in the same general category.

• (154) To establish an undistorted value of SG & A cost and profit, the Commission used the financial information of two Brazilian manufacturers of products in the same general category, Nortox S.A. [^ntr93-L_202502314EN.000101-E0093] and Vittia S.A. The financial information was readily available, audited, consolidated, covered the investigation period and showed a reasonable levels of SG & A cost and profit.

3.2.6.   Calculation

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

• (156) First, the Commission established the undistorted cost of manufacturing. In the absence of cooperation by the exporting producers, the Commission relied on the information provided by the complainant in the complaint on the usage of each factor of production (materials, energy and labour) for the manufacturing of phosphorous acid. The unit consumption of each factor of production was multiplied by the undistorted cost based on data from the representative country, as described in Section 3.2.5. On this basis, the Commission determined undistorted total direct cost.

• (157) As explained in Section 3.2.5.3, the Commission treated the cost of certain negligible materials and energy sources as consumables. The Commission expressed the cost of consumables incurred by the complainant as a percentage of the complainant’s total direct cost, i.e. cost of materials, energy and labour. This percentage amounting to [4-4,5 %] was then applied on top of the undistorted total direct cost.

• (158) The sum of undistorted cost of raw materials, energy, labour and consumables represents the undistorted cost of manufacturing.

• (159) Once the undistorted cost of manufacturing established, the Commission added the MOH, SG & A cost and profit as noted in Section 3.2.5.7.

• (160) MOH were determined on the basis of the financial statements of Vittia S.A. They accounted for 6,6 % of the Costs of Goods Sold (‘COGS’). In this calculation, COGS are considered an equivalent of cost of production, i.e. cost of manufacturing plus MOH. Therefore, the undistorted cost of manufacturing was increased in such a way that MOH represented 6,6 % of the resulting undistorted cost of production.

• (161) By adding the undistorted MOH to the undistorted cost of manufacturing, the Commission established the undistorted cost of production.

• (162) SG & A cost and profit were determined on the basis of the financial statements of Nortox S.A. and Vittia S.A. as explained in Section 3.2.5.7. SG & A cost and profit accounted for 31,1 % and 19,2 % of COGS respectively. The respective percentages of undistorted SG & A cost and profit were applied on top of the undistorted cost of production to arrive at the undistorted normal value before a by-product adjustment.

• (163) Finally, from the undistorted normal value mentioned in recital 162, the Commission deducted the undistorted value of the by-product hydrochloric acid determined as explained in recital 140 to account for the portion of cost and profit that should be allocated to by-product obtained in the manufacturing of phosphorous acid.

• (164) On that basis, the Commission constructed the normal value on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation. The constructed normal value was 28 850,04 CNY/tonne.

3.3.   Export price

• (165) In the absence of cooperation by exporting producers from the PRC, the export price was determined on the basis of import statistics as detailed in recital 182. The CIF Union frontier import price recorded in Surveillance 3 database [^ntr94-L_202502314EN.000101-E0094] was 13 558,63 CNY/tonne.

3.4.   Comparison

• (166) 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 determined at country-wide level 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 net them back to the ex-works level.

3.4.1.   Adjustments made to the normal value

• (167) As explained in recital 164, the normal value was established at the ex-works level of trade by using costs of production together with amounts for SG & A cost 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.

3.4.2.   Adjustments made to the export price

• (168) In order to net the export price back to the ex-works level of trade, adjustments were made on the account of ocean freight and insurance pursuant to Article 2(10)(e) of the basic Regulation.

• (169) The export price at ex-works level amounted to 12 195,27 CNY/tonne.

3.5.   Dumping margin

• (170) As noted in recital 33, the Commission concluded that the degree of non-cooperation in this investigation was likely to materially affect the outcome of the investigation within the meaning of Article 17(4) of the basic Regulation, and thus it intended to establish findings of dumping at country-wide level.

• (171) The provisional dumping margin, expressed as a percentage of the CIF Union frontier price, duty unpaid, is as follows:

	Provisional dumping margin (%)
All imports originating in the People’s Republic of China	122,8

4. INJURY

4.1.   Definition of the Union industry and Union production

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

• (173) As the Union industry consists of only two Union producers, the figures for the injury analysis are given in ranges for reasons of confidentiality.

• (174) The total Union production during the investigation period was in the range of [8 400 to 9 200] tonnes. The Commission established the figure on the basis of the questionnaire replies of the two Union producers.

4.2.   Determination of the relevant Union market

• (175) To establish whether the Union industry suffered injury and to determine consumption and the various economic indicators related to the situation of the Union industry, the Commission examined whether and to what extent the subsequent use of the Union industry’s production of the like product had to be taken into account in the analysis.

• (176) Phosphorous acid is used as an intermediate material for the production of phosphonates and other specialty chemicals, which have a wide range of applications across various industries (water treatment, detergents and cleaning agents, agriculture, oil and gas, construction and building materials, textile and leather industry, paper and pulp industry, pharmaceuticals and personal care, food and beverage industry).

• (177) The Commission found that the total phosphorous acid production of one of the two Union producers was destined for captive use. The product was often simply transferred (without invoice) and/or delivered at transfer prices within the same group of companies located in third countries, i.e. outside the Union. The distinction between captive and free market is relevant for the injury analysis because products destined for captive use are not exposed to direct competition from imports. By contrast, production destined for free market sale is in direct competition with imports of the product concerned.

• (178) The Commission examined certain economic indicators for the macroeconomic analysis from both ICL and Italmatch. In view of the absence of sales on the free market by Italmatch, the microeconomic analysis (sales price, COP, cash flow and return of investments) was based only on ICL data.

4.3.   Union consumption

• (179) The Commission established the Union consumption on the basis of (i) Surveillance 3 import statistics (see Section 4.4.1); and (ii) the verified sales volumes of the Union industry.

• (180) Union consumption developed as follows:

Table 2

Union consumption (tonnes)

	2021	2022	2023	IP
Total Union consumption	[10 500 –11 700 ]	[9 200 –10 200 ]	[6 200 –6 900 ]	[8 300 –9 300 ]
Index	100	87	59	79
Source: Union producers’ questionnaire replies, Surveillance 3.	Source: Union producers’ questionnaire replies, Surveillance 3.	Source: Union producers’ questionnaire replies, Surveillance 3.	Source: Union producers’ questionnaire replies, Surveillance 3.	Source: Union producers’ questionnaire replies, Surveillance 3.

• (181) The Union consumption peaked in 2021 due to the post-COVID economic recovery. Subsequently, consumption declined progressively in 2022 and 2023, after which it strongly recovered in the investigation period (however, still 21 % below 2021 level). The most significant decline occurred between 2022 and 2023, with a drop between 3 000 and 3 300 tonnes (– 32 percentage points).

4.4.   Imports from the country concerned

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

• (182) In Eurostat, imports of phosphorous acid are classified under a broad TARIC code (2811 19 80 90), that includes many other products. The complainant had therefore used, in the complaint, a market intelligence report. However, these data were protected by copyright and not publicly available. Moreover, they were based on reported export quantities from China rather than import quantities into the EU and a description of the goods concerned was missing.

• (183) The Commission found that using statistical data from Surveillance 3 imports database would allow for a more accurate calculation of imports of the product concerned. These data generally provide a clear description of the goods described, allowing the Commission to identify and isolate only phosphorous acid import transactions. Although specific product details were not available for all transactions, especially during periods prior to the investigation period, the Commission could apply some reasonable estimations to complete the picture.

• (184) The Commission provided full disclosure of the methodology applied to establish phosphorous acid imports in a Note to the file [^ntr95-L_202502314EN.000101-E0095].

• (185) The market share of the imports was established by comparing the import volumes to the Union free market consumption as determined in Section 4.2.

• (186) On the basis of the methodology described above, as set out in the mentioned Note to the File, imports into the Union from the country concerned developed as follows:

Table 3

Import quantity and market share

	2021	2022	2023	IP
Volume of imports from the PRC (tonnes)	6 393	6 434	3 959	5 468
Index	100	101	62	86
Market share (%) on the free market	[52 –58 ]	[61 –67 ]	[55 –61 ]	[57 –63 ]
Index	100	115	105	108
Source: Surveillance 3.	Source: Surveillance 3.	Source: Surveillance 3.	Source: Surveillance 3.	Source: Surveillance 3.

• (187) Table 3 shows that during the period considered imports from the PRC decreased in absolute terms by 14 %. In terms of market share, imports from the PRC increased from [52–58] % to [57–63] % during the period considered, or by around five percentage points.

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

• (188) The Commission established the prices of imports on the basis of Surveillance 3 data, as explained in Section 4.4.1 above. Price undercutting of the imports was established on the basis of the resulting average import price from the PRC, adjusted to EU landed level, and the average sales price of all crystal product types sold by the complainant.

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

Table 4

Import prices (EUR/tonne)

	2021	2022	2023	IP
Price of imports from the PRC	2 141	4 711	1 823	1 763
Index	100	220	85	82
Source: Surveillance 3.	Source: Surveillance 3.	Source: Surveillance 3.	Source: Surveillance 3.	Source: Surveillance 3.

• (190) The average price of imports into the Union from the country concerned decreased by 18 % overall over the period considered.

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

• (1) the weighted average prices of the imports of phosphorous acid sourced from the statistics on the Union market (all phosphorous acid in crystal form), established on a Cost, insurance, freight (CIF) basis, with appropriate adjustments for customs duties and post-importation costs; and

• (2) the corresponding weighted average sales prices of the phosphorous acid sold in crystal form sold by the Union producer to unrelated customers on the Union market, adjusted to an ex-works level.

• (192) The price comparison was made at the same level of trade, duly adjusted where necessary, and after deduction of commissions fees. The result of the comparison was expressed as a percentage of the Union producer’s theoretical turnover during the investigation period. It showed a weighted average undercutting margin of between 23 % and 27 % by the imports from the country concerned on the Union market. Undercutting was found for all of the imported phosphorous acid originating from China.

4.5.   Economic situation of the Union industry.

4.5.1.   General remarks

• (193) 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.

• (194) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic and microeconomic injury indicators on the basis of data contained in the questionnaire reply of the Union producers. The macroeconomic data fully related to both Union producers, but absent of free market sales by Italmatch, for certain microeconomic data the Commission had to rely on the questionnaire reply of the complainant only. Both sets of data were found to be representative of the economic situation of the Union industry.

• (195) 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.

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

• (197) The Commission analysis of the statistical data revealed that, during the investigation period, phosphorous acid was only imported in solid/crystal form from China, whereas the Union industry sold the product under investigation in both solid and liquid form. To ensure comparability, the Commission converted the volumes of various indicators into the solid form, when needed.

4.5.2.   Macroeconomic indicators

4.5.2.1.   Production, production capacity and capacity utilisation

• (198) 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	IP
Production quantity (tonnes)	[9 600 –10 700 ]	[9 100 –10 100 ]	[5 300 –5 900 ]	[8 000 -8 900 ]
Index	100	95	55	83
Production capacity (tonnes)	[11 900 –13 200 ]	[11 900 –13 200 ]	[11 900 –13 200 ]	[11 900 –13 200 ]
Index	100	100	100	100
Capacity utilisation (%)	[75 –83 ]	[71 –79 ]	[42 –46 ]	[63 –69 ]
Index	100	95	55	83
Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.

• (199) The production volume trend showed a decrease from 9 600–10 700 tonnes in 2021 to 5 300–5 900 tonnes in 2023 (– 45 %), followed by an increase to 8 000–8 900 tonnes in 2024. The production capacity remained stable at 11 900–13 200 tonnes during the period considered, while the production capacity utilisation trend decreased from 75 %–83 % in 2021 to 42 %–46 % in 2023 and then increased to 63 %–69 % in 2024.

4.5.2.2.   Sales quantity and market share

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

Table 6

Sales quantity and market share

	2021	2022	2023	IP
Total sales quantity on the Union market (tonnes)	[4 500 –5 100 ]	[3 200 –3 600 ]	[2 500 –2 800 ]	[3 100 –3 600 ]
Index	100	70	55	69
Market share (%)	[41 –45 ]	[33 –36 ]	[38 –42 ]	[35 –39 ]
Source: ICL questionnaire reply.	Source: ICL questionnaire reply.	Source: ICL questionnaire reply.	Source: ICL questionnaire reply.	Source: ICL questionnaire reply.

• (201) The sales by the Union industry on the Union market decreased from 4 500–5 100 tonnes in 2021 to 2 500–2 800 tonnes in 2023 (– 45 %) and then increased to 3 100–3 600 tonnes in 2024. Overall, the sales of the Union industry in its domestic market decreased by 31 % which is stronger than the drop in consumption (– 21 %).

• (202) Accordingly, the market share of the Union industry dropped from 41 %–45 % in 2021 to 35 %–39 % in the investigation period.

4.5.2.3.   Growth

• (203) The Union industry suffered negative growth during the period considered, in particular in 2022 and 2023 as compared with 2021. The Union industry showed a glimmer of resilience in the investigation period, when, at the cost of price decreases, it was able to increase the sales volumes as compared with the previous years.

4.5.2.4.   Employment and productivity

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

Table 7

Employment and productivity

	2021	2022	2023	IP
Number of employees (FTE)	[22 –25 ]	[22 –25 ]	[22 –25 ]	[22 –25 ]
Index	100	100	100	100
Productivity (tonne/FTE)	[400 –450 ]	[370 –430 ]	[220 –250 ]	[330 –380 ]
Index	100	95	55	83
Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.

• (205) During the period considered, employment in the Union remined stable. Despite lower production volumes over the period under consideration, the Union industry maintained the highly trained and qualified staff in the expectation that the market situation would normalise, and higher production volumes could resume.

• (206) It follows from the previous recital and recital 204 that productivity dropped significantly during the period considered, as a result of the drop of production volumes.

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

• (207) 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.

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

4.5.3.   Microeconomic indicators

4.5.3.1.   Prices and factors affecting prices

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

Table 8

Sales prices in the Union

	2021	2022	2023	IP
Average unit sales price in the Union on the free market (EUR/tonne)	[1 600 –1 900 ]	[4 000 –4 500 ]	[2 600 –2 900 ]	[2 100 –2 500 ]
Index	100	247	161	134
Unit cost of production (EUR/tonne)	[1 600 –1 900 ]	[2 700 –3 100 ]	[2 200 –2 500 ]	[2 100 –2 400 ]
Index	100	167	135	130
Source: ICL questionnaire reply.	Source: ICL questionnaire reply.	Source: ICL questionnaire reply.	Source: ICL questionnaire reply.	Source: ICL questionnaire reply.

• (210) The complainant’s average sales prices on the Union market exceptionally doubled between 2021 and 2022 and then decreased significantly onwards in the following two years, as compared to the 2022 price level. The higher average sales prices partly reflected the increase of cost of production and a particular market situation in 2022 and 2023 where China experienced two problematic years due to disruptions in the domestic raw material supply chain and to soaring of ocean freight costs to the Union.

• (211) Unit cost of production increased by 67 % between 2021 and 2022, then decreased by 32 percentage points in 2023. In the investigation period, unit cost of production were 30 % higher in comparison to 2021.

4.5.3.2.   Labour costs

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

Table 9

Average labour costs per employee

	2021	2022	2023	IP
Average labour costs per employee (EUR)	[78 000 –88 000 ]	[81 000 –91 000 ]	[74 000 –83 000 ]	[74 000 –83 000 ]
Index	100	104	95	95
Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.

• (213) Average labour cost per employee grew between 2021 and 2022 by 4 %. The increase in salary that occurred in 2022 was due to accrued bonuses paid for certain staff pertinent to financial performance of the year. 2023 and in the investigation period, average labour cost per employee decreased by 5 % in comparison to 2021 due to the reduction of bonuses and replacement of experienced employees with high labour cost with new labour force.

4.5.3.3.   Inventories

• (214) Stock levels of the Union industry developed over the period considered as follows:

Table 10

Stocks

	2021	2022	2023	IP
Closing stock (tonnes)	[300 –400 ]	[100 –300 ]	[300 –400 ]	[200 –400 ]
Index	100	60	105	91
Closing stock as a percentage of production	[3 –4 ]	[1 –3 ]	[5 –7 ]	[3 –4 ]
Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.	Source: Union producers’ questionnaire replies.

• (215) The level of closing stocks followed the downward trend of production in the first two years. Then, it increased in 2023 by coming back to the same level of 2021 for finally decreases in the investigation period.

• (216) As a percentage of production volumes, the level of stocks decreased from 3 %–4 % in 2021 to 1 %–3 % in 2022. In 2023 the depleted stocks had to be replenished. In the investigation period the closing stocks expressed as percentage of production returned at the same level of 2021.

• (217) Throughout the period considered closing stock levels were negligeable. While this might appear to indicate efficient inventory management, the lack of meaningful stockpiles has, in fact, compromised the Union industry’s operational flexibility. Holding adequate inventory is essential to effectively manage fluctuations in demand.

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

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

Table 11

Profitability, cash flow, investments and return on investments

	2021	2022	2023	IP
Profitability of sales in the Union to unrelated customers (% of sales turnover)	[–1 to –2 ]	[29 to 33 ]	[13 to 16 ]	[1 to 2 ]
Cash flow (EUR 000)	[800 –1 000 ]	[5 600 –6 300 ]	[1 600 –1 900 ]	[1 400 –1 700 ]
Index	100	691	200	184
Investments (EUR 000)	[200 –300 ]	[700 –900 ]	[300 –400 ]	[400 –500 ]
Index	100	360	153	202
Return on investments (%)	[–4 to –6 ]	[279 to 310 ]	[63 to 71 ]	[9 to 11 ]
Index	– 100	5 695	1 296	194
Source: ICL questionnaire reply.	Source: ICL questionnaire reply.	Source: ICL questionnaire reply.	Source: ICL questionnaire reply.	Source: ICL questionnaire reply.

• (219) The Commission established the profitability of the Union industry 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 union industry was loss making in year 2021, in 2022 the profitability jumped to [29–33] %, decreased in 2023 to [13–16] % and in the investigation period the complainant achieved a meagre profit of [1–2] %.

• (220) The profitability over the two-year period 2022-2023 was influenced by the economic circumstances generated by the slowdown of the demand and a temporary decrease of imports from the PRC, caused by soaring ocean freight costs to deliver the product to the Union. In 2022 and 2023, despite the energy crisis that emerged after the start of Russia’s war of aggression against Ukraine in 2022 and disruptions in the raw material supply chain in Europe (that also affected Chinese production – see Section 5.2.1), the Union industry managed to pass the increase in costs to users in the Union. The observed markup over production costs was exceptionally high [1 200–1 400] EUR/tonne in 2022 and [300–500] EUR/tonne in 2023.

• (221) The Union industry’s profitability during the investigation period remained slightly above the break-even point, a consequence of the impact of surged dumped imports. The Union industry lost control over the pricing of the product, caused by the availability of phosphorous acid from the country concerned at very low prices, leading to a situation of price suppression during the investigation period.

• (222) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow followed the trend of profitability, it developed positively during the period considered, allowing the Union industry to invest in necessary maintenance and replacement of machinery but mainly in 2022.

• (223) During the period considered, the annual flow of investments in the product under investigation made by the Union industry started to increase mainly in 2022, following the increase in profitability levels. Investments reached around EUR 300 000-500 000 in the second part of the period considered, with investments related to maintenance and replacement of machinery on the production plant.

• (224) The return on investments is the profit in percentage of the net book value of investments. It was negative in 2021, improved significantly between 2020-2022 in line with the increase of profitability to finally dropping down to [9–11] % during the investigation period.

4.6.   Conclusion on injury

• (225) The Union industry lost significant sales volumes and [4–7] percentage points market share in a shrinking Union market. In terms of pricing, the Union industry was loss-making in 2021 and only slightly profitable in the investigation period, but it was profitable in 2022 and 2023. The profits achieved in those two years were however due to exceptional circumstances and in the investigation period, the Union industry’s profitability was only slightly above break-even.

• (226) 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

• (227) 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: effects of the dumped imports, effects of the yellow phosphorus prices surge, effects of imports from other third countries, the export performance of the Union industry, the increasing cost of production and a decreasing Union consumption.

5.1.   Effects of the dumped imports

• (228) During the period considered, the Union industry lost significant sales volumes on the Union market, as its Union sales volumes decreased by 31 %. As consumption dropped by 21 %, the Union industry’s market share decreased from [41 %–45 %] to [35 %–39 %]. As consumption dropped by 21 %, the Union industry’s market share decreased from [40,5 %–45 %] to [35,4 %–39,3 %].

The decrease of the Union industry’s market share could be fully attributed to a parallel increase of imports from the country concerned, as there were no other sources of imports of significance. Indeed, China increased its market share from [52 %–58 %] to [57 %–63 %]. At the same time, Chinese import prices undercut the Union industry prices by more than 25 % during the investigation period. This resulted in a significant price suppression on the Union market.

• (229) Due to the lost sales volumes, the Union industry also experienced a significant decline in production quantities. To remain competitive, the Union industry was forced to lower its sales prices (by 35 % in year 2023 and by 15 % in year 2024), which negatively affected profitability. In the investigation period, its profitability was only slightly above break-even.

• (230) It was, therefore, provisionally concluded that dumped imports of phosphorous acid from China caused material injury to the Union industry.

5.2.   Effects of other factors

5.2.1.   Increase of costs of raw materials

• (231) Yellow phosphorous is the main raw material, accounting for more than 50 % of the phosphorous acid cost of production. This raw material experienced an extraordinary price surge during the period considered. The Commission thus assessed the possible injurious effect of the yellow phosphorous price increase on the Union industry’s economic situation.

Table 12

Yellow phosphorous price evolution (USD/kg)

	2021	2022	2023	IP
China	4,45	5,29	3,74	3,22
Index	100	119	84	72
Europe	3,13	5,06	4,95	3,94
Index	100	162	158	126
Source: https://businessanalytiq.com/procurementanalytics/index/yellow-phosphorus-price-index/.	Source: https://businessanalytiq.com/procurementanalytics/index/yellow-phosphorus-price-index/.	Source: https://businessanalytiq.com/procurementanalytics/index/yellow-phosphorus-price-index/.	Source: https://businessanalytiq.com/procurementanalytics/index/yellow-phosphorus-price-index/.	Source: https://businessanalytiq.com/procurementanalytics/index/yellow-phosphorus-price-index/.

• (232) The Commission found that globally, the price of yellow phosphorus increased abnormally in the market at the beginning of the period considered. This price increase was global and thus affected also Chinese producers.

• (233) The Union industry was able to pass on the cost increase to its customers in 2022, when Chinese imports were at levels comparable with 2021, and still in 2023, when imports from China decreased by 38 % (see Table 3). As the price of yellow phosphorous decreased significantly in the investigation period, whereas the economic situation of the Union industry deteriorated in the same period, the price fluctuations of yellow phosphorous did not attenuate the causal link between the dumped imports and the injury of the Union industry.

5.2.2.   Imports from third countries

• (234) The quantity of imports from third countries, over the period considered, as follows:

Table 13

Imports from third countries

	2021	2022	2023	IP
tonnes	[63 -71 ]	[67 -75 ]	[58 -66 ]	[106 -119 ]
Index	100	107	93	169
Market share (%)	[0 –1 ]	[0 –1 ]	[0 –1 ]	[0,5 –1,5 ]
Average price	[1 500 -1 800 ]	[2 000 -2 300 ]	[1 600 -1 900 ]	[1 700 -2 000 ]
Index	100	131	108	116
Source: Surveillance 3.	Source: Surveillance 3.	Source: Surveillance 3.	Source: Surveillance 3.	Source: Surveillance 3.

• (235) Imports from third countries accounted for [0,5 %–1,5 %] of consumption in the investigation period and less than 1 % for the three other years in the period considered (and it amounted to [106-119] tonnes in the investigation period). With such low level of imports from third countries, the Commission concluded that imports from third countries did not attenuate the causal link between the dumped imports and the material injury suffered by the Union industry.

5.2.3.   Export performance of the Union industry

• (236) The volume of exports of the Union industry developed over the period considered as follows:

Table 14

Export performance of the Union industry

	2021	2022	2023	2024
Export volume (tonnes)	[286 –318 ]	[50 –56 ]	[35 –40 ]	[65 –73 ]
Index	100	18	12	23
Average price (EUR/tonne)	[1 800 -2 100 ]	[4 800 -5 400 ]	[4 400 -5 000 ]	[3 600 -4 100 ]
Index	100	260	242	198
Source: ICL questionnaire reply.	Source: ICL questionnaire reply.	Source: ICL questionnaire reply.	Source: ICL questionnaire reply.	Source: ICL questionnaire reply.

• (237) On average the export volumes accounted for 3 % of the Union industry’s phosphorous acid overall sales during the period considered. In addition, the decline in export sales was far more pronounced than the drop in Union sales, even in relative terms. Moreover, the prices of the Union industry’s exports were found consistently higher those on the Union market. The Commission therefore provisionally concluded that the export performance of Union industry did not contribute to the injury suffered by the Union industry.

5.3.   Conclusion on causation

• (238) The investigation showed a correlation between the increase of dumped imports from the country concerned and the material injury suffered by the Union industry. The significant increase in import volumes and at lower prices exerted a strong price pressure on the Union market and led to a strong decline in the Union industry’s production and sales volumes and its market share in its home market.

• (239) Average Chinese import prices were below the average Union industry’s sales prices as of 2023. At the same time, the market share of Chinese imports, which stood already at [52 %–58 %] at the beginning of the period considered, further increased by 8 %. The loss of sales volume and, consequently, production volume led to an increase of fixed costs that translated in a considerable unit cost increases of the Union industry. The Union industry aligned its prices to the increased cost of production, but this led to a price level that was not competitive with the dumped Chinese imports that continued to increase significantly in absolute and relative terms at prices that were below the Union industry’s cost and sales prices. This situation created a significant price suppression on the Union market, leading to a decline in sales, market share and profitability.

• (240) The Commission established thus a causal link between the dumped imports from China and the injury suffered by the Union industry.

• (241) The Commission distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports. The effect of these factors on the Union industry’s negative developments were, however, not significant.

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

6. LEVEL OF MEASURES

• (243) In the present case, the complainants claimed the existence of raw material distortions within the meaning of Article 7(2a) of the basic Regulation. Thus, in order to conduct the assessment on the appropriate level of measures, the Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry in the absence of distortions under Article 7(2a) of the basic Regulation. Then it examined whether the dumping margin calculated at country-wide level (see Section 3.5 above) would be higher than their injury margin, see recitals 244 to 250 below.

6.1.   Injury margin

• (244) The injury would be removed if the Union industry were able to obtain a target profit by selling at a target price in the sense of Articles 7(2c) and 7(2d) of the basic Regulation.

• (245) In accordance with Article 7(2c) of the basic Regulation, for establishing the target profit, the Commission took into account the following factors: the level of profitability before the increase of imports from the country under investigation, the level of profitability needed to cover full costs and investments, research and development (R & D) and innovation, and the level of profitability to be expected under normal conditions of competition. Such profit margin should not be lower than 6 %.

• (246) As a first step, the Commission established a basic profit covering full costs under normal conditions of competition on the basis of the profitability achieved before the increase of imports from the country under investigation, i.e. in the years 2017 to 2019. Such profit margin was established at 9,96 %.

• (247) On this basis, the non-injurious price is [2 400–2 800] EUR/tonne, resulting from applying the above-mentioned profit margin of 10 % to the cost of production during the investigation period of the complainant.

• (248) In accordance with article 7(2d) of the basic Regulation, as a final step, the Commission assessed the future costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia that the Union industry will incur during the period of the application of the measure pursuant to Article 11(2). There were, however, no such future costs reported by the Union industry.

• (249) On this basis, the Commission calculated a non-injurious price of [2 400–2 800] EUR/tonne for the like product of the Union industry by applying the above-mentioned target profit margin (see recital 246) to the cost of production of the complainant during the investigation period.

• (250) The Commission then determined the injury margin level on the basis of a comparison of the weighted average import price for the country concerned, as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the complainant on the Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average import CIF value.

	Dumping margin (%)	Underselling margin (%)
All imports originating in the People’s Republic of China	122,8	39,7

6.2.   Examination of the margin adequate to remove the injury to the Union industry

• (251) As explained in the Notice of initiation, the complainant provided the Commission sufficient evidence that there are raw material distortions in the country concerned regarding the product under investigation. Therefore, in accordance with Article 7(2a) of the basic Regulation, this investigation examined the alleged distortions to assess whether, if relevant, a duty lower than the margin of dumping would be sufficient to remove injury.

6.3.   Raw material distortions

• (252) According to the evidence in the complaint, yellow phosphorus, accounting for [55-60 %] of the cost of production of the product concerned, is subject to an export tax of 20 % in the PRC.

• (253) Therefore, as announced in the Notice of initiation, in accordance with Article 7(2a) of the basic Regulation, the Commission examined the alleged distortion and any other distortions covered by Article 7(2a) of the basic Regulation in the PRC, as well as the impact of such distortion(s) on the production of phosphorous acid in the PRC. Considering the lack of cooperation by the GOC and the exporting producers in the PRC, the Commission based its findings on facts available pursuant to Article 18 of the basic Regulation, in particular publicly available information concerning relevant regulatory documents imposing restrictions that amount to raw material distortions covered by Article 7(2a) of the basic Regulation and the information contained in the complaint.

• (254) The Commission first identified the main raw materials used in the production of the product concerned. As main raw materials are considered those raw materials which are likely to represent at least 17 % of the cost of production of the product concerned. The Commission established that only yellow phosphorus met that condition.

• (255) The Commission then examined whether the Chinese price of yellow phosphorus was distorted by one of the measures listed in Article 7(2a) of the basic Regulation: dual pricing schemes, export taxes, export surtax, export quota, export prohibition, fiscal tax on exports, licensing requirements, minimum export price, value added tax (‘VAT’) refund reduction or withdrawal, restriction on customs clearance point for exporters, qualified exporters list, domestic market obligation, captive mining.

• (256) The complainant referred to the Notice of the State Council Customs Tariff Commission on Adjusting Export Tariffs on Certain Products [2009] No 6 [^ntr96-L_202502314EN.000101-E0096], which stated that ‘a 20 % export tariff will continue to be levied on yellow phosphorus’. The Commission confirmed that the measure was still in place during the investigation period [^ntr97-L_202502314EN.000101-E0097].

• (257) The Commission established that the domestic Chinese price of yellow phosphorus was distorted by a measure listed in Article 7(2a) of the basic Regulation, namely an export tax.

• (258) Next the Commission compared the Chinese price of yellow phosphorus to prices in the representative international market(s). The complaint referred to the publicly available price index published by the market intelligence provider Business AnalytIQ. This source provided prices of yellow phosphorus in China, the US, Europe and South-east Asia for the investigation period on monthly basis. In addition, the Commission used the undistorted value of yellow phosphorus established in the representative country, Brazil. The Commission found that the prices in those international markets were by 22 % (Europe) to 67 % (Brazil) higher than in the PRC.

• (259) Finally, the Commission examined whether yellow phosphorus affected by the export tax described in recital 256 accounted for at least 17 % of the cost of production of the product concerned. Considering the lack of cooperation by the exporting producers in the PRC, the Commission relied on the complainant’s cost of production. For the purpose of this calculation, an undistorted price of the raw material as established in the international markets mentioned in recital 258 was used. The Commission established that yellow phosphorus accounted for more than 50 % of the actual cost of production of the complainant.

• (260) Consequently, the Commission concluded that yellow phosphorus was subject to a distortion within the meaning of Article 7(2a) of the basic Regulation.

6.4.   Union interest under Article 7(2b) of the basic Regulation

• (261) In accordance with Article 7(2b) of the basic Regulation, the Commission examined whether it could clearly conclude that it was in the Union interest to determine the amount of provisional duties in accordance with Article 7(2a) of the basic Regulation. The determination of the Union interest was based on an appreciation of all pertinent information to this investigation, including the spare capacities in the exporting country, competition for raw materials and the effect on supply chains for Union companies.

6.4.1.   Spare capacities in the exporting country

• (262) The Commission established that Chinese producers of phosphorous acid possess exceptionally large spare production capacities, which create a serious risk of continued exports to the Union market even after the possible imposition of measures. According to the evidence in the complaint, the total installed capacity in the PRC was found to be more than forty times the size of Union consumption. Approximately 23 % of this capacity remained unused during the investigation period and could therefore be readily redirected towards exports to the Union.

6.4.2.   Competition for raw materials

• (263) The Commission analysed the market conditions for the main raw material used in the production of phosphorous acid. Yellow phosphorus, the key input material in the production of phosphorous acid, is subject in China to a 20 % export tax. This measure restricts international supply and keeps Chinese domestic prices artificially low, giving Chinese producers a cost advantage. Yellow phosphorus represents [55-60 %] of the cost of production of phosphorous acid. This significant cost gap distorts competition and puts Union producers at a structural disadvantage.

6.4.3.   Effect on supply chains for Union companies

• (264) The Commission analysed the potential impact of the imposition of measures on the Union supply chains, including effects on the downstream market and the availability of the product concerned within the Union. This assessment was based on the information provided by cooperating interested parties. Only one user submitted a complete questionnaire reply, and the Commission therefore relied primarily on the data provided by that user. The analysis showed that the imposition of measures would not have a material adverse impact on the profitability of that user, which would remain at a sustainable level, allowing it to continue its operations without significant disruption. Furthermore, the Commission established that the Union industry retains sufficient unused capacity to increase production and thereby meet a greater share of Union demand.

6.4.4.   Conclusion on Union interest under Article 7(2b) of the basic Regulation

• (265) Having assessed all pertinent information to this investigation, the Commission concluded that it is in the Union interest to determine the amount of provisional duties in accordance with Article 7(2a) of the basic Regulation.

6.5.   Conclusion on the level of measures

• (266) Following the above assessment, provisional anti-dumping duties should be set, in accordance with Article 7(2a) of the basic Regulation, at the following level:

	Anti-dumping duty rate (%)
All imports originating in the People’s Republic of China	122,8

7. UNION INTEREST

• (267) Having decided to apply Article 7(2a) of the basic Regulation, the Commission also examined whether it could clearly conclude that it was not in the Union interest to adopt measures in this case, despite the determination of injurious dumping, in accordance with Article 21 of the basic Regulation. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, and users.

7.1.   Interest of the Union industry

• (268) The Union producer that lodged the complaint, accounting for the entire Union production available on the free market, cooperated fully in the investigation and expressed its interest to the imposition of measures. The other Union producer, Italmatch, also cooperated fully by providing dedicated questionnaire responses.

• (269) The imposition of duties is expected to restore fair trade conditions on the Union market and enable the Union industry to recover from the material injury suffered during the investigation period. In particular, the measures would allow the Union producer to regain lost sales volumes and market share, improve profitability, and ensure the sustainable operation of production facilities. The imposition of measures is therefore likely to have a positive impact on the viability and long-term competitiveness of the Union industry.

• (270) In the absence of measures, Chinese exporting producers would continue to export the product concerned to the Union at dumped prices, thereby further depressing prices on the Union market and eroding the Union industry’s profitability. This would undermine its capacity to invest, innovate, and maintain production, ultimately threatening its viability.

• (271) It was therefore concluded that imposing measures on imports originating in the PRC would be in the interest of the Union industry.

7.2.   Interest of unrelated importers

• (272) The Commission did not receive questionnaire responses from Union importers or traders. One importer (S. Goldmann GmbH & Co. KG, Germany) provided a written submission, expressing its opposition to measures.

• (273) Goldmann claimed that the measures would give the complainant a monopolistic position which would likely increase their own costs and would also endanger the supply chain in the Union, as ICL cannot cover the entire demand. Regarding the supply chain security, the Commission concluded that the only sources of phosphorous acid are the complainant and the Chinese producers. The loss of the Union industry would make the PRC the sole source of phosphorous acid. Regarding the monopolistic position of the Union industry, the Commission concluded measures would reinstate fair trade conditions for all parties; the downstream industry could still source material from the PRC, but at fair non-dumped prices.

• (274) The Commission therefore concluded that no sufficient evidence was submitted demonstrating that the imposition of anti-dumping duties on imports of phosphorous acid originating in the PRC would have a lasting adverse effect on the profitability of importers or traders.

7.3.   Interest of users, consumers or suppliers

• (275) One user, Giovanni Bozzetto Spa, came forward during the investigation and provided a questionnaire reply and a written submission, expressing its opposition to measures. Phosphorous acid is one of the raw materials for Bozzetto in the production of detergent and water treatment formulations.

• (276) The Commission established, based on the data reported in the company’s questionnaire reply and the total imports from the PRC shown in Table 3, that Bozzetto accounted for 15 % to 25 % of all imports of the product concerned from the PRC into the Union.

• (277) Bozzetto claimed that the measures would give the complainant a monopolistic position which would likely increase their own costs and would also endanger the supply chain in the Union, as the complainant cannot cover the entire demand.

• (278) Regarding the effects on supply chain security, the Commission noted that anti-dumping measures are not meant to block imports, but rather to reinstate fair trade conditions for all parties; the downstream industry could still source material from China, thus the Union industry would not enjoy a monopolistic position. Conversely, the loss of the Union industry would make China the sole source of phosphorous acid.

• (279) Bozzetto expressed its concerns over the ability of vertically integrated Chinese producers to avoid the measures, by further processing phosphorous acid into phosphonates and exporting the downstream product into Union distorting competition in the Union phosphonates market. Third-country chemical producers for downstream products would gain a competitive advantage over Union producers as they would continue to purchase Chinese phosphorous acid without AD duties and thus sell the final product at a lower price in the Union. Also, third-country phosphorous acid importers could perform targeted assembly activities for the product originating in China and circumvent the measures by exporting the product into the Union market.