Commission Implementing Regulation (EU) 2026/270 of 4 February 2026 imposing provisional anti-dumping duties on imports of 1,4-Butanediol originating in the People’s Republic of China, the Kingdom of Saudi Arabia and the United States of America

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	2026/270	5.2.2026

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union [^ntr1-L_202600270EN.000101-E0001] (‘the basic Regulation’), and in particular Article 7 thereof,

After consulting the Member States,

Whereas:

1. PROCEDURE

1.1.   Initiation

• (1) On 6 June 2025, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of 1,4-Butanediol (‘BDO’) originating in the People’s Republic of China (‘PRC’ or ‘China’), the Kingdom of Saudi Arabia (‘Saudi Arabia’) and the United States of America (‘USA’ and, together with China and Saudi Arabia, ‘the countries concerned’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union [^ntr2-L_202600270EN.000101-E0002] (‘the Notice of Initiation’).

• (2) The Commission initiated the investigation following a complaint lodged on 24 April 2025 by INEOS Solvents SA (‘the complainant’ or ‘Ineos’). The complaint was made by the Union industry of BDO in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

1.2.   Registration

• (3) The Commission made imports of the product concerned subject to registration by Commission Implementing Regulation (EU) 2025/1718 [^ntr3-L_202600270EN.000101-E0003] (‘the registration Regulation’).

1.3.   Interested parties

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

• (5) Qore LLC, a producer of BDO in the United States, requested to be registered as an interested party in the proceeding as, it argued, the procedure might affect it. According to Article 6(7) of the basic Regulation, interested parties are defined as Union producers, trade unions, importers and exporters and their representative associations, users and consumer organisations, as well as the representatives of the exporting country. Since Qore had no exports to the EU, it did not meet the criteria of an interested party as defined in the basic Regulation. Its request was therefore rejected. Qore and the United States Federal Government (‘USG’) submitted that the Commission should accept Qore as an interested party irrespective of the export activity, arguing that the latter is not a requirement to be considered an interested party under the WTO Anti-Dumping Agreement (‘ADA’). The Commission noted that nothing in the WTO Anti-Dumping Agreement or in the WTO jurisprudence contradicts the Commission’s decision to refuse interested party status to producers not exporting to the Union. Indeed, Article 6.11 ADA requires two categories of producers to be included in the definition of ‘interested parties’ within the meaning of the Agreement: a ‘foreign producer […] of a product subject to investigation’ (Article 6.11(i) ADA) and ‘a producer of the like product in the importing Member’ (Article 6.11(ii) ADA). Qore LLC being a foreign producer of a like product does not fall within any of the two categories. Thus, the USG failed to demonstrate why the Commission should accept Qore as interested party under the law governing this proceeding, i.e. the basic Regulation.

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

1.4.   Comments on initiation

• (7) Lyondell Chemie Nederland B.V. (‘LYB’), Sahara International Petrochemical Co. (‘Sipchem’), Helm AG (‘Helm’), Qore LLC (‘Qore’), the Government of the Kingdom of Saudi Arabia (‘GKSA’) and the USG provided comments on the complaint and the initiation of the investigation.

• (8) At the outset, the Commission noted that it carried out its examination of the complaint in accordance with Article 5 of the basic Regulation and concluded that the requirements for initiation of an investigation were met, i.e. that there was sufficient evidence to initiate the investigation.

• (9) According to Article 5(2) of the basic Regulation, a complaint shall contain such information as is reasonably available to the complainant. The legal standard of evidence required for the purpose of initiating an investigation (‘sufficient’ evidence) is different from that which is necessary for the purpose of a preliminary or final determination of the existence of dumping, injury or of a causal link. Therefore, evidence which is insufficient in quantity or quality to justify a preliminary or final determination of dumping, injury or causation, may nevertheless be sufficient to justify the initiation of an investigation.

• (10) Pursuant to Article 5(4) of the basic Regulation, a complaint is considered to ‘have been made by, or on behalf of, the Union industry’ if it is supported by Union producers whose collective output constitutes more than 50 % of the total production of the like product produced by Union industry expressing their position on the complaint – be it in favour or against, and, second, it is supported by of the Union producers accounting for more than 25 % of the total production of the like product produced by the Union industry.

• (11) LYB took issue with the Commission’s analysis of the degree of support for the complaint (‘standing analysis’). Concretely, it claimed that the investigation should have not been initiated with respect to Saudi Arabia and the USA, as the complainant fell short of the standing requirement under Article 5(4) of the basic Regulation, given that LYB alone accounted for more than half of the production of the product concerned among those Union producers which expressed their position about the investigation and expressed a ‘neutral’ position to the initiation of the investigation because it had ‘[n]o concerns with regards to imports from Saudi Arabia & the USA’, and it was ‘[i]n favor of investigating imports originating in China’.

• (12) Sipchem also argued that the investigation should be discontinued as concerns BDO imports from Saudi Arabia and the USA. Concretely, Sipchem claimed that the Commission erred twice in its standing analysis: first, deeming LYB neutral regarding the investigation as concerns BDO imports from Saudi Arabia and the USA, and, second, concluding that the complaint complied with Article 5(4) of the basic Regulation. Therefore, Sipchem concluded that the investigation was wrongfully initiated as concerns BDO imports from Saudi Arabia and the USA, and, consequently, requested the Commission to terminate it immediately except for China.

• (13) The GKSA also claimed that the complainant failed to demonstrate that it accounted for a major proportion of the BDO Union production in the IP, hence it did not comply with the requirement on standing. GKSA underlined that the complainant itself indicated that it represented 39,1 % of the total Union production of the product concerned during the investigation period. It followed that without any evidence demonstrating the other two Union producers’ position, i.e. LBY and Novamont, it cannot be assumed, according to GKSA, that the 50 % threshold for the standing exercise was met.

• (14) Regarding the standing analysis, on 2 June 2025 the Commission issued a note for the file on standing (‘Note on standing’) for inspection by interested parties. The analysis established that companies supporting the complaint represented between 45 % and 46 % of the total EU production in 2024, that no producer expressing opposition came forward and that one producer expressed a neutral position. The Commission therefore concluded that the conditions of Article 5(4) of the basic Regulation to consider that a complaint had to been made by, or on behalf of, the Union industry were met. LYB expressly stated a neutral position. The claims were therefore rejected.

• (15) Second, according to LYB, imports from the USA should be addressed separately from imports from Saudi Arabia and China since they were supposedly not subject to the same conditions of competition and hence should not be cumulated with imports from the USA. According to LYB, (i) BDO imports originating from the USA were exclusively undertaken by two Union producers only, i.e. LYB itself and BASF; (ii) most of those imports were likely for captive consumption by the Union industry, and (iii) the remaining volumes were not imported for direct sale to independent customers on the Union market. Sipchem made similar claims regarding imports from Saudi Arabia.

• (16) The Commission found that the conditions for cumulation of the countries concerned at the stage of the complaint were met on the basis of the available information and statistics.

• (17) The dumping margins in the complaint were found to be above de minimis. As shown by available official import statistics, dumped imports were not negligible in terms of volumes for all countries concerned. Furthermore, the conditions of competition were considered similar, as

• (a) there was a general overlap in terms of geographical presence among the products from the countries concerned and the like product produced by the Union industry;

• (b) prices from all countries concerned were below Union industry price and full cost levels;

• (c) there had been a significant market presence of imports from all countries concerned, whether in absolute or relative terms, during the period examined.

• (18) Therefore, the Commission dismissed the claims that imports from the countries concerned should not have been cumulated at initiation. In addition, comments on cumulation were addressed in section 4.3 ‘Imports from the countries concerned’ of this regulation.

• (19) LYB argued that any injury suffered by the Union industry was directly caused by imports of BDO from China. Consequently, LYB argued that the pricing behaviour of the Chinese BDO industry was responsible for the situation of the Union industry. As a result, the Union industry could only follow the pricing behaviour of the Chinese BDO industry, as so to not be flooded by the surge of Chinese BDO imports. In LYB’s view, there was a direct coincidence in time between the surge in Chinese BDO imports in 2023 with, in parallel, a meaningful drop in production of the Union industry, which then reversed in 2024 when the Union industry began to recover. As to the decline in Chinese BDO imports, LYB asserted that it was not a systematic change in the dumping practices of the Chinese industry, but rather it was due to the BASF’s decision to divest from its joint ventures in China. Specifically, LYB contended that the decrease in Chinese imports was accompanying the relative stable flux of imports from the USA in 2023 and 2024, given that, to overcome the loss of supply from China, BASF had to resort to BDO imported from the USA. However, LYB underlined that such trend was artificial given that BASF used US BDO imports for captive consumption only.

• (20) The Commission does not dispute that Chinese dumped imports and price behaviour contributed to the Union industry injury. However, it could not be concluded that only Chinese imports were at fault based on the complaint submitted. The complaint provided sufficient evidence on the role of US and Saudi Arabia imports in causing an injury to the Union industry, such as for example the significantly increasing volume of imports and market shares in the Union, combined with substantial and continuously reduced prices from imports from the USA and Saudi Arabia in the period used in the complaint. In addition, based on the complaint the Commission could observe underselling, undercutting and dumping from the countries concerned. Finally, these comments were also further analysed as part of the injury assessment and causation.

• (21) LYB claimed that anti-dumping measures against the USA would directly harm the Union interest, as LYB deemed US BDO supply as a ‘vital lifeline for the Union industry’ given that it was closely integrated with EU production, serving BASF for captive use and LYB in exceptional circumstances to overcome production shortfalls. Qore claimed that the imposition of anti-dumping measures on BDO imports from the USA would harm Union downstream users. Chimica Organica Industriale Milanese S.p.a. (‘COIM’), a Union user of the product concerned, raised similar claims, namely that the imposition of measures would be against the interest of the Union as it would (i) have a negative impact due to the cumulation with potential anti-dumping duties on adipic acid from China, (ii) injure the Union downstream industry, (iii) make Union users dependant on the Complainant, and (iv) prejudice the position of Union users against competitors from third countries. Because of the alleged lack of Union interest, COIM called for the Commission to terminate the investigation without imposing any measures.

• (22) Union interest considerations are irrelevant for the initiation of an investigation. These claims were therefore addressed under section 7.3 ‘Interest of users’ of this regulation.

• (23) LYB asserted that the Commission should ensure the economic reality of US BDO imports be properly reflected when determining the injury margin. LYB submitted that the Commission should establish the injury margin at the level of undercutting margin, and, consequently, should not adjust the US BDO export price pursuant to Article 2(9) of the basic Regulation, nor construct ‘an artificial and entirely hypothetical’ [^ntr4-L_202600270EN.000101-E0004] export price at the Union border. Consequently, LYB concluded that the price comparison should be done through the actual price paid by the first independent customer in the EU.

• (24) Such claim was irrelevant for the initiation of the investigation. It was therefore dismissed.

• (25) Qore submitted that (i) the Union industry did not suffer any material injury; (ii) the complainant failed to demonstrate that BDO US imports harmed the Union industry; and (iii) price and volume trends as presented in the complaint are better explained by internal decisions by the Union industry itself, downstream market shifts and cost-driven volatility.

• (26) Qore failed to provide any evidence supporting its claim, which were hence unsubstantiated. In addition, based on the complaint, there was sufficient evidence of injury such as for example significant reduced volumes, market shares and sales prices combined with a significant negative profitability due to dumped imports. Therefore, Qore’s claims were rejected.

• (27) The GKSA submitted that the complaint did not satisfy the requirements to initiate an anti-dumping investigation because it lacked sufficient evidence on dumping, injury and the causal link.

• (28) The analysis of the evidence provided by the complainants has yielded the result that the complaint contained sufficient prima facie evidence of dumping of BDO in the EU market. Indeed, the complaint provided sufficient evidence on both normal values and export prices for all countries concerned and, on this basis, established dumping margins of 87 % for the PRC, 27 % for Saudi Arabia and 57 % to 78 % for the United States. Regarding injury and causality, in accordance with the principles of Article 2 of the basic Regulation, the complaint provided prima facie evidence injury suffered by the Union industry from the dumped imports of the countries used in the complaint, for example a substantial loss of market share of the Union was accompanied with substantial increase in market share form the countries concerned in the Union, offered at continuously reduced prices in the period considered. Resulting in prices being lower than the cost of production and of significant losses by the Union producers. In addition the complaint provided sufficient evidence of underselling and undercutting.

• (29) The USG claimed that the Commission erred in including bio BDO in the product scope together with fossil BDO because of the fundamental differences between the two. The USG referred to the submission of Qore and BASF, which both requested the Commission to exclude bio BDO from the product scope of this investigation. Lastly, the USG contended that bio BDO should be examined as a separate domestic like product from BDO. Chimica Organica Industriale Milanese S.p.a. (‘COIM’), a Union user of the product concerned, at the outset stressed that bio BDO fundamentally differs from fossil BDO. The request for the exclusion of bio BDO from the product scope is addressed in section 2.4 ‘Claims regarding product scope’ of this regulation.

• (30) At the initiation of the investigation, COIM argued that the Union industry does not suffer any material injury because they alleged that there is no significant difference in prices between the Union-produced BDO and BDO imported from the countries concerned. In any event, any alleged injury is not attributable to BDO imports from the countries concerned, but solely to the Union industry’s increasing costs of production.

• (31) The Commission took note of COIM’s claims. However, COIM failed to provide evidence for any of the claims it raised. In accordance with the principles of Article 3 of the basic Regulation, the complaint provided sufficient evidence of injury suffered by the Union industry from the dumped imports of the countries considered, for example a substantial loss of market share of the Union was accompanied with substantial increase in market share form the countries concerned in the Union, offered at continuously reduced prices in the period considered. In addition, the complaint provided prima facie evidence of underselling and undercutting. Therefore, COIM’s claims were dismissed.

1.5.   Sampling

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

Sampling of Union producers

• (33) In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. This sample consisted of all 3 Union producers which took part in the sampling process. These were:

• — BASF SE, Ludwigshafen, Germany (BASF),

• — INEOS Solvents Marl GmbH, Marl, Germany (INEOS),

• — Lyondell Chemie Nederland B.V., Rotterdam, The Netherlands (LCN).

• (34) The sampled Union producers accounted for more than 70 % of production and sales quantities on the Union market. The Commission invited interested parties to comment on the provisional sample. No comments were received on the sample. The sample was deemed representative of the Union industry.

Sampling of unrelated importers

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

• (36) No unrelated importers provided the requested information and agreed to be included in the sample. Industrial user/importers which came forward in this process as interested parties were directed to complete user questionnaires. In view of this, the Commission decided that sampling was not necessary.

Sampling of exporting producers

• (37) To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in China and the USA to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the People’s Republic of China to the European Union, the Mission of the Kingdom of Saudi Arabia to the European Union and the Mission of the United States of America to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

• (38) With regard to China, six exporting producers in China provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of two producers on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. One exporting producer, Shandong Yuanli Science and Technology Co., Ltd. (‘Shandong Yuanli’), requested, by way of a submission filed together with its sampling reply, to be sampled due to the specificities of the BDO it produced. The Commission analysed the request and sampling reply and concluded that it was not justified because such specificities alone when seen together with the volume of exports to the Union of Shandong Yuanli would not justify including Shandong Yuanli in a sample chosen on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available.

• (39) In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of China were consulted on the selection of the sample. No comments were received.

• (40) With regard to the USA, two exporting producers provided the requested information and agreed to be included in the sample. In view of the low number of replies, the Commission decided that sampling was not necessary.

• (41) On 23 June 2025, the Commission informed the two US exporting producers of its decision not to sample, granting them 30 days to submit their questionnaire replies.

1.6.   Individual examination

• (42) No exporting producer in China, Saudi Arabia or the USA requested individual examination under Article 17(3) of the basic Regulation.

1.7.   Questionnaire replies and verification visits

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

• (44) The Commission sent questionnaires to the known Union producers, sampled exporting producers in China, known exporting producers in USA and Saudi Arabia, known importers and users. The same questionnaires were made available online [^ntr5-L_202600270EN.000101-E0005] on the day of initiation.

• (45) On 8 July 2025, one of the US exporting producers, BASF Corporation (US), informed the Commission that they would not submit the questionnaire reply. The deadline for the submission of the questionnaire reply expired on 23 July 2025. On 1 August 2025, the Commission sent a letter to BASF Corporation informing them of its intention to apply Article 18 of the basic Regulation. No comments were received.

• (46) The Commission sought and verified all the information deemed necessary for a provisional determination of dumping, resulting injury and Union interest. Verification visits pursuant to Article 16 of the basic Regulation were carried out at the premises of the following companies:

Union producers

• — BASF SE, Ludwigshafen, Germany

• — INEOS Solvents Marl GmbH, Marl, Germany

• — Lyondell Chemie Nederland B.V., Rotterdam, The Netherlands

Users

• — Envalior BV, Geleen, The Netherlands

• — Envalior Deutschland GmbH, Dusseldorf, Germany

Exporting producers in China

• — Xinjiang Markor Chemical Industry Co., Ltd., Korla

• — Wanhua Chemical (Sichuan) Co., Ltd., Meishan

Exporting producer in Saudi Arabia

• — International Diol Company (‘IDC’), Al Khobar

Exporting producer in the US

• — Lyondell Chemical Company, Houston

Related traders

• — Wanhua Chemical (Sichuan) Sales Co., Ltd., Meishan, China

• — Wanhua Chemical (Singapore) Pte. Ltd., Meishan, China

• — Sipchem Marketing Company (‘SMC’), Al Khobar, Saudi Arabia

Related importers

• — Lyondell Chemie Nederland B.V., Rotterdam, The Netherlands

• — Sipchem Europe SA (‘SESA’), Lausanne, Switzerland.

1.8.   Investigation period and period considered

• (47) The investigation of dumping and injury covered the period from 1 January 2024 to 31 December 2024 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2021 to the end of the investigation period (‘the period considered’).

2. PRODUCT UNDER INVESTIGATION, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under investigation

• (48) The product under investigation is BDO usually falling under the Chemical Abstracts Service’s registration (CAS) number 110-63-4 and usually classified in the European Inventory of Existing Commercial Chemical Substances (EINECS) under EC-number 203-786-5 and currently classified under CN codes 2905 39 26 and 2905 39 28 (‘the product under investigation’).

• (49) The main production processes of BDO include: (i) Reppe process using acetylene; (ii) N-Butane/Maleic Anhydride (MAN) process, which converts maleic anhydride into butanediol or n-butane to maleic anhydride; (iii) Propylene Oxide (PO) process, which uses propylene oxide to form allyl alcohol; (iv) Bio process using sugars, biomass material or other carbon-based compounds.

• (50) BDO is used in the production of a wide range of downstream chemical products including polybutylene terephthalate (PBT), polybutylene adipate terephthalate (PBAT), polyurethane (PU), saturated polyester (SAT), tetrahydrofuran (THF), n-methyl pyrrolidone (NMP), thermoplastic copolyester (TPC) and gamma-butyrolactone (GBL), which are then ultimately used in a wide range of applications, including in automotive, defence, textiles, plastics, electronics, construction, batteries, pharmaceutical and cosmetics.

2.2.   Product concerned

• (51) The product concerned is product under investigation originating in China, Saudi Arabia and the USA, usually falling under the Chemical Abstracts Service’s registration (CAS) number 110-63-4 and usually classified in the European Inventory of Existing Commercial Chemical Substances (EINECS) under EC-number 203-786-5, and currently classified under CN codes 2905 39 26 (‘bio BDO’), and 2905 39 28 (‘other BDO’ or ‘fossil based BDO’).

2.3.   Like product

• (52) The investigation showed that the following products have the same basic physical chemical and technical characteristics as well as the same basic uses:

• — the product concerned when exported to the Union;

• — the product under investigation produced and sold on the domestic market of the PRC, Saudi Arabia and the US; and

• — the product under investigation produced and sold in the Union by the Union industry.

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

2.4.   Claims regarding product scope

• (54) BASF, Helm AG, COIM and Qore made comments asking for the exclusion of BDO derived from bio-based carbon content of 100 % by mass, classified under CN code 2905 39 26 or ‘bio BDO’, from the product under investigation and therefore the scope of the measures. These parties pointed out several differences between bio BDO and fossil based BDO.

• (55) The main differences argued were as follows:

• — Different production processes, and different raw materials i.e. non-fossil sources,

• — Different chemical characteristics,

• — There are different consumer perceptions and end-uses, and

• — Bio BDO has higher costs and sales prices.

• (56) In the investigation the Commission found that BDO has several different production processes, with different use of raw materials, including for both bio BDO and other BDO. For instance, bio BDO is typically produced using sugars fermentation with for example E. coli bacteria, furfural or succinic acid methods, and can be produced using a wide range of different raw materials including corn, agricultural waste, sugar cane or wheat. Other BDO is typically produced using fossil-based materials, with multiple manufacturing processes, such as the Reppe process using acetylene, N-Butane/Maleic Anhydride process suing maleic anhydride into butanediol or n-butane to maleic anhydride or Propylene Oxide process, which uses propylene oxide to form allyl alcohol. The parties submitted that the production process and different use of raw materials for bio BDO affects the physical characteristics, chemical characteristics and the intended use of BDO, and that the differences in production process are of critical importance, resulting in key in physical characteristics, consumer perception and end-uses differences between the two products (bio BDO and other BDO).

• (57) The Commission noted however, that as per BASF own submission both BDO products can be used interchangeably, because both other BDO and bio BDO ‘[…] are chemically identical (C4H10O2) and share the same physical and chemical characteristics, namely being colourless, viscous liquids with a mild odour and no difference in weight’, despite having different production process or the different use of raw materials. In addition, INEOS submitted, and was confirmed by Novamont submission, that whilst BDO can be indeed produced with different raw materials and through different production processes these differences of production have no impact on the end-result of the downstream product. In addition, BASF, INEOS and Novamont confirmed there is a full interoperability between bio-based and other BDO for downstream products, being chemically identical. Despite the wide difference of raw materials and production process observed for BDO (both bio BDO and other BDO), during the investigation the Commission found that the products are used interchangeably, share the same physical, chemical and technical characteristics, whilst having the same end-uses.

• (58) BASF argued that substituting bio BDO with other BDO would result in the loss of the ‘bio-based content’ of the final product, for example in bioplastics and PBAT. Similarly, Qore submitted that bio BDO product is not interchangeable with fossil based BDO without invalidating downstream consumer claims. Helm AG in turn submitted that bio BDO and other BDO are not interchangeable products, and that ‘bio-BDO is vital for specialized applications requiring sustainable characteristics for which Conventional BDO cannot be used’. However, the Commission found, as also submitted by Novamont, that both BDO products can be used interchangeably and with different mix levels to produce a range of downstream products in the Union, including products under PBAT or bioplastics. The claimants did not provide any other specific example on how downstream consumers and/or products could be affected by the different use of BDO and bio BDO. However, the Commission noted that bio BDO and other BDO share the same molecules and the same basic functions and are interchangeable, despite downstream costumers preferring different BDO mixes for their design of downstream products or for their marketing reasons. In addition, BASF own submission clarifies that both bio BDO and other BDO can be used to produce PBAT or biodegradable plastics. In any event, as per explained by INEOS, fossil based BDO could be technically produced with an overall lower carbon footprint than bio based BDO, resulting in wider applications and potentially lower CO2 consumption of BDO downstream users.

• (59) Helm AG submitted that bio BDO enjoys an entirely different consumer perception by comparison with that of conventional BDO, with bio BDO marketed as a ‘green’, bio based low-carbon input, and other BDO marketed primarily as a commodity chemical and is used across a wide variety of industrial applications where bio-based content or traceability is not an issue. Qore submitted that the bio-BDO market exist in the Union, not as a voluntary consumer preference alone, but because of binding contracts with costumers or EU Law for which BDO is not a substitute of bio BDO, as it would ‘disturb sustainability specifications or invalidate certification-based product claims’. The parties commented that bio BDO is typically not in competition with other BDO. However, the Commission noted that BDO from fossil sources and bio BDO is used interchangeably for the production of various downstream products, including certified or biodegradable products, and users adjust the BDO mix when necessary. Consequently, both bio BDO and other BDO have the same use, are part of the same manufacturing process for downstream products and are in competition with each other in the Union.

• (60) BASF, Helm AG and Qore submitted that bio BDO has a different production process, which incurs in more costs and therefore selling price, which can result in different consumers and uses than other BDO, and a lack of competition between both products (Bio and other BDO) due to different pricing. However, the Commission noted that the observed divergence in price may also change in the future and be temporary: (i) as explained by BASF and Qore, new Bio BDO capacity is being installed which may result in additional supply to the Union, using new production technology, and the lowering of prices; (ii) a significant part of the cost is dependent on volatile wide range of raw materials, as per submitted by BASF, and since the raw materials are subject to price changes due to their volatile nature they may result, in comparison to the fossil BDO manufacturing process, in also reaching a lower price in the future. Indeed, the Commission noted that as per Novamont submission, bio BDO already became more economically advantageous than other BDO during certain periods of 2021-2023 when gas and oil prices spiked. In any case difference in price alone does not justify exclusion of bio BDO from the product scope.

• (61) Furthermore, BASF, Helm AG and Qore submitted that since bio BDO is not produced by the complainant, INEOS, it should be excluded from the investigation. In addition, Helm AG submitted that bio BDO is not imported into the Union from the countries concerned, nor produced outside the Union and therefore cannot be dumped. However, the Commission noted that bio BDO was imported into the Union during the investigation period, as confirmed in the verification visits. In addition, bio BDO is also produced by the Union industry producer Novamont.

• (62) Finally, Helm AG argued that the distinction between bio BDO and other BDO is reflected in their respective customs classification, meaning that they are classified as two different products due to the different CN codes. However, both CN codes relate exclusively to BDO, and as explained above, a distinction of the production process is not be sufficient to exclude either type of BDO from the product scope of the investigation.

• (63) In conclusion, the Commission does not dispute that there are differences between bio and other BDO in respect of input raw materials and production processes. However, since the bio and fossil-based BDO share the same basic technical, chemical and physical characteristics and their uses are largely interchangeable, the differences highlighted by interested parties were not considered as determinant and the products should be considered as one single product. In addition, these production methods and raw material differences are also present within the bio BDO and other BDO product classification. Furthermore, a low carbon footprint (green) product can also be technically made from fossil-based sources, meaning that customers requiring a green product can also be supplied with other BDO. Bio BDO products can have higher costs and sale prices, but such costs and sale prices vary and may converge or even become cheaper. The Commission therefore rejected the above claims to exclude bio BDO from the product scope.

3. DUMPING

3.1.   China

3.1.1.   Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation

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

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

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

• (67) In point 5.3.2 of the Notice of Initiation the Commission also specified that, in view of the evidence available, it had provisionally selected Malaysia as an appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation for the purpose of determining the normal value based on undistorted prices or benchmarks. The Commission further stated that it would examine other possible appropriate representative countries in accordance with the criteria set out in 2(6a)(a) first indent of the basic Regulation.

• (68) On 18 July 2025, the Commission informed by a note (‘the Note’) interested parties on the relevant sources it intended to use for the determination of the normal value. In that note, the Commission provided a list of all factors of production such as raw materials, labour and energy used in the production of BDO. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified possible representative countries, namely Brazil and Malaysia, as an appropriate representative country. The Commission received comments on the Note from the complainant, LYB, and Wanhua Chemical (Sichuan) Co., Ltd. together with its related companies (‘Wanhua Group’).

• (69) The Commission addressed the comments received in detail in section 3.1.2.4.1. Based on the comments received, the Commission identified the sources it intends to use for the determination of the normal value, with Brazil as the representative country. It also concluded that it would establish selling, general and administrative (‘SG & A’) costs and profits based on available information for the investigation period for Rhodia Brasil SA (‘Rhodia Brasil’), a producer in Brazil.

3.1.2.   Normal value

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

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

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

3.1.2.1.   Existence of significant distortions

• (73) In recent investigations concerning the chemical sector in the PRC [^ntr6-L_202600270EN.000101-E0006], the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present.

• (74) In those investigations, the Commission found that there is substantial government intervention in the PRC resulting in a distortion of the effective allocation of resources in line with market principles [^ntr7-L_202600270EN.000101-E0007]. In particular, the Commission concluded that in the chemical sector not only does a substantial degree of ownership by the GOC persist in the sense of Article 2(6a)(b), first indent of the basic Regulation [^ntr8-L_202600270EN.000101-E0008], but the GOC is also in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation [^ntr9-L_202600270EN.000101-E0009]. The Commission further found that the State’s presence and intervention in the financial markets, as well as in the provision of raw materials and inputs have an additional distorting effect on the market. Indeed, overall, the system of planning in the PRC results in resources being concentrated in sectors designated as strategic or otherwise politically important by the GOC, rather than being allocated in line with market forces [^ntr10-L_202600270EN.000101-E0010]. Moreover, the Commission concluded that the Chinese bankruptcy and property laws do not work properly in the sense of Article 2(6a)(b), fourth indent of the basic Regulation, thus generating distortions in particular when maintaining insolvent firms afloat and when allocating land use rights in the PRC [^ntr11-L_202600270EN.000101-E0011]. In the same vein, the Commission found distortions of wage costs in the chemical sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation [^ntr12-L_202600270EN.000101-E0012], as well as distortions in the financial markets in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, in particular concerning access to capital for corporate actors in the PRC [^ntr13-L_202600270EN.000101-E0013].

• (75) Like in previous investigations concerning the chemical sector in the PRC, the Commission examined in the present investigation whether it was appropriate or not to use domestic prices and costs in the PRC, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the complaint, and in the Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defence Investigations [^ntr14-L_202600270EN.000101-E0014] (‘Report’), which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in the PRC’s economy in general, but also the specific market situation in the relevant sector including the product under investigation. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in the PRC as also found by its previous investigations in this respect.

• (76) The complaint alleged that significant distortions exist in the Chinese BDO sector. It referred to the Report and in particular to the PRC’s economic system being a ‘socialist market economy’ and the active role of the Chinese Communist Party (‘CCP’) in both the public and private sectors in the PRC [^ntr15-L_202600270EN.000101-E0015].

• (77) More specifically, the complaint pointed out that:

• — The Chinese BDO industry can be characterised by State ownership and a high level of State control/interference. Several BDO producers have close ties with the GOC, regional or local governments, either directly or through associations.

• — The GOC and the Chinese CCP maintain structures that ensure their continued influence and control over enterprises, in particular State-owned enterprises (‘SOEs’). Generally, the GOC actively formulates and oversees the implementation of general economic policies by individual companies as well as participates in operational decision-making through the rotation of cadres between government authorities and companies, the presence of CCP members on executive bodies and through the shaping of the corporate structure [^ntr16-L_202600270EN.000101-E0016].

• — Chinese BDO producers receive subsidies and funding from government agencies at different levels, have preferential access to financing and production factors and are shielded from competition [^ntr17-L_202600270EN.000101-E0017].

• — There are public policies or measures applicable to the Chinese BDO industry that discriminate in favour of domestic suppliers or otherwise influence free market forces. Specifically, the chemical industry is regarded as a strategic industry by the GOC, as explained in the 14th Five-Year Plan [^ntr18-L_202600270EN.000101-E0018] (‘FYP’). The chemical industry is also considered a key industry under the Made in China 2025 Roadmap, which gives Chinese producers access to strategic support mechanisms.

• — The costs of essentially all factors of production of BDO are distorted in China and as such the Chinese costs and prices are not driven by market forces [^ntr19-L_202600270EN.000101-E0019]. Several raw materials to produce BDO, including calcium carbide and methanol, are chemical raw materials subject to the same distortions as the BDO industry itself. In addition, the GOC intervenes significantly and systematically in the Chinese power market so that energy prices are also distorted. Energy (natural gas and coal) is a significant cost in the production of the main raw materials of BDO and in the production of BDO itself [^ntr20-L_202600270EN.000101-E0020]. State policies also bring down the cost of equipment and machinery for encouraged industries, such as the chemical industry, including the BDO industry. The GOC also often covers the costs of research and development in the chemical sector through policy schemes. Finally, chemical producers are generally subject to top-down distortions arising from the discriminatory application of property laws and wage costs in the PRC [^ntr21-L_202600270EN.000101-E0021]. Considering the above, it can be concluded that the GOC exerts a significant influence over price setting in and the development of the BDO industry in the PRC.

• — Access to finance and capital in the chemical industry, including the BDO industry, in the PRC is granted by institutions, often State-owned, that implement public policy objectives or otherwise do not act independently of the State. Bonds and credit ratings are often distorted and borrowing costs are kept artificially low to stimulate investment growth [^ntr22-L_202600270EN.000101-E0022]. Finally, Chinese bankruptcy laws are not strictly enforced in the chemical sector, of which the BDO sector is part, which generates distortions by maintaining insolvent firms afloat.

• (78) In conclusion, the complaint took the position that prices or costs, 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. On that basis, according to the complaint, it is not appropriate to use domestic prices and costs to establish normal value in this case.

• (79) The Commission examined whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. That analysis covered the examination of the substantial government interventions in China’s economy in general, but also the specific market situation in the relevant sector including the product concerned.

• (80) In this regard, the Commission first assessed whether the BDO sector in the PRC is being served to a significant extent by enterprises which operate under the ownership, control or policy supervision or guidance of the Chinese authorities, within the meaning of the first indent of Article 2(6a)(b) of the basic Regulation. The sector of the product concerned is served by private companies, such as Shandong Yuanli [^ntr23-L_202600270EN.000101-E0023] [^ntr24-L_202600270EN.000101-E0024], Inner Mongolia Dongjing Bioenvironmental Protection Ltd. [^ntr25-L_202600270EN.000101-E0025] which is 100% held by the private company Inner Mongolia Dongyuan Science and Technology Group Co., Ltd. [^ntr26-L_202600270EN.000101-E0026] [^ntr27-L_202600270EN.000101-E0027], as well as by private companies with minority state-owned shareholding like Wanhua Chemical Group Co., Ltd. [^ntr28-L_202600270EN.000101-E0028] [^ntr29-L_202600270EN.000101-E0029] and by SOEs such as Xinjiang Markor Chemical Industry Co., Ltd. [^ntr30-L_202600270EN.000101-E0030], Henan Kaixiang Fine Chemical Co. Ltd. [^ntr31-L_202600270EN.000101-E0031], Xinjiang Blue Ridge Tunhe Energy Co. Ltd. [^ntr32-L_202600270EN.000101-E0032] or Sinopec Group [^ntr33-L_202600270EN.000101-E0033]. The exact ratio of private versus state-owned producers in the BDO market could not be determined. However, the Commission found that several producers are directly controlled by the State. Examples include Xinjiang Markor Chemical Industry Co., Ltd. [^ntr34-L_202600270EN.000101-E0034] as well as Xinjiang Blue Ridge Tunhe Energy Co. Ltd. [^ntr35-L_202600270EN.000101-E0035], both companies being ultimately controlled by the State-owned Assets Supervision and Administration Commission of Xinjiang Uygur Autonomous Region. Furthermore, Sinopec Group is a central enterprise controlled by the State Council’s State Asset Supervision and Administration Commission [^ntr36-L_202600270EN.000101-E0036] (‘SASAC’) and Sinopec produces both BDO and calcium carbide, an input used to produce BDO [^ntr37-L_202600270EN.000101-E0037].

• (81) Moreover, CCP interventions into operational decision-making have become the norm, not only in SOEs but also in private companies [^ntr38-L_202600270EN.000101-E0038], with the CCP claiming leadership over virtually every aspect of the country’s economy. Indeed, the State’s influence by means of CCP structures within companies effectively results in economic operators being under the government’s control and policy supervision, given how far the State and Party structures have grown together in China.

• (82) The investigation found that the industry national association covering the chemical sector is the China Petroleum and Chemical Industry Federation [^ntr39-L_202600270EN.000101-E0039] (‘CPCIF’) and more particularly its Chemical New Materials Professional Committee [^ntr40-L_202600270EN.000101-E0040]. The CPCIF adheres to the overall leadership of the CCP, carries out Party activities, and provides necessary conditions for the activities of party organizations [^ntr41-L_202600270EN.000101-E0041]. Moreover, the ‘registration and management authority of the Association is the Ministry of Civil Affairs’ [^ntr42-L_202600270EN.000101-E0042] and the conditions to be eligible as a representative of the CPCIF include to ‘adhere to the leadership of the CCP, support socialism with Chinese characteristics, resolutely implement the Party’s line, principles, and policies, and possess good political qualities’ [^ntr43-L_202600270EN.000101-E0043].

• (83) Sinopec Group as well as Xinjiang Zhongtai Chemical Co. Ltd. which is the holding company of Xinjiang Markor Chemical Industry Co., Ltd. are both members of CPCIF [^ntr44-L_202600270EN.000101-E0044].

• (84) More specifically, the investigation also found that another industry national association representing the producers of BDO is the China Chemical Fibers Association (‘CCFA’). The CCFA adheres to the overall leadership of the CCP, carries out Party activities, and provides necessary conditions for the activities of party organizations [^ntr45-L_202600270EN.000101-E0045]. Moreover, the ‘registration and management authority of the Association is the Ministry of Civil Affairs’ [^ntr46-L_202600270EN.000101-E0046] and the conditions to be eligible as a representative of the CCFA include to ‘adhere to the leadership of the CCP, support socialism with Chinese characteristics, resolutely implement the Party’s line, principles, and policies, and possess good political qualities’ [^ntr47-L_202600270EN.000101-E0047].

• (85) Wanhua Chemical Group Co. Ltd as well as various entities of Sinopec Group are members of CCFA [^ntr48-L_202600270EN.000101-E0048].

• (86) Both public and privately owned enterprises in the chemical sector are subject to policy supervision and guidance. The latest Chinese policy documents concerning the chemical and petrochemical sector confirm the continued importance which the GOC attributes to the sector, including the intention to intervene in the sector to shape it in line with the government policies. This is exemplified by the 14th FYP on Economic and Social Development and 2035 Perspectives, according to which the GOC intends to ‘accelerate the transformation and upgrading of key industries such as chemicals’ [^ntr49-L_202600270EN.000101-E0049].

• (87) Additionally, the Guiding Opinion on Promoting the High-Quality Development of the Petrochemical and Chemical Industries during the 14th FYP [^ntr50-L_202600270EN.000101-E0050] (‘the Guiding Opinion’) also stipulates that the GOC will ‘accelerate the transformation and upgrading of traditional industries, vigorously develop new chemical materials and fine chemicals, […] and foster China’s transition from a large petrochemical and chemical country into a strong petrochemical and chemical power. […] By 2025, […] [t]he production concentration of bulk chemical products will be further improved, and the capacity utilization rate will reach more than 80 %’ [^ntr51-L_202600270EN.000101-E0051]. In addition, the GOC shall ‘[p]romote industrial structure adjustment: strengthen specific measures and scientifically regulate the scale of the industry [and] [s]trictly control new production capacity in industries such as […] calcium carbide, […] and accelerate the exit of inefficient and outdated production capacity; Promote the high-end, diversified, and low-carbon development of the coal chemical industry; and steadily and orderly develop modern coal chemical industry in accordance with the requirements of ecological priority, water-based production, total quantity control, and the development of clusters’ [^ntr52-L_202600270EN.000101-E0052].

• (88) Similarly, the Notice on Promoting the Healthy Development of a Modern Coal Chemical Industry [^ntr53-L_202600270EN.000101-E0053] stipulates that ‘[b]ased on the modern coal chemical industry layout outlined in the [14th FYP], and in accordance with regional major strategies [and] regional coordinated development strategies’, […] the GOC will ‘further strengthen planning guidance, optimize industrial layout, and promote the accelerated implementation of advanced technology and equipment upgrades for existing modern coal chemical projects’ [^ntr54-L_202600270EN.000101-E0054].

• (89) Furthermore, the Work Plan for the Steady Growth of the Chemical and Petrochemical Industry (2025-2026) [^ntr55-L_202600270EN.000101-E0055] (‘the Work Plan’) seeks to ‘appropriately deploy coal-to-oil and coal-to-chemicals projects, and carry out industrial application demonstrations of coal chemical industry together with new energy sources, advanced materials, technology and equipment, industrial operating systems’ [^ntr56-L_202600270EN.000101-E0056] as well as to ‘cultivate and strengthen advanced manufacturing clusters and specific industrial clusters of small and medium-sized enterprises and leading enterprises in the fields of petrochemicals, coal chemicals, phosphorus chemicals, biochemicals and fine chemicals’ [^ntr57-L_202600270EN.000101-E0057].

• (90) Similar examples of the intention of the Chinese authorities to supervise and guide the developments of the BDO sector can be found at the provincial level, such as in the Shandong 14th FYP on the Development of the Chemical Industry seeking to ‘[c]omprehensively promote the upgrading of industrial foundation and modernization of industrial chain, accelerate the withdrawal of backward and inefficient production capacity, and promote the development of chemical products in the direction of functionalization, refinement and differentiation. Guide enterprises to merge and reorganize, optimize resource allocation and industrial chain structure, and improve production efficiency and profitability’ [^ntr58-L_202600270EN.000101-E0058]. It also stipulates that the GOC will ‘rely on key [chemical] parks, optimize the allocation of resources, build a number of major projects [and] create a high-end chemical development pattern with outstanding technical advantages and orderly regional coordination; […] give full play to the advantages of the basic coal chemical industry […] and accelerate the research, development and production of downstream coal-based fine chemical products’ [^ntr59-L_202600270EN.000101-E0059].

• (91) More specifically, the Catalogue of Encouraged Industries in the Western Regions (2025) [^ntr60-L_202600270EN.000101-E0060] lists BDO as an encouraged industry in several provinces like Ningxia, Guizhou and Xinjiang.

• (92) As to the GOC being in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation, the Commission found that the chairman of Shandong Yuanli also serves as the secretary of the Party Branch and is reported to follow the principle that ‘Party building gives the enterprise the direction and the Party and the company are strongly integrated’ [^ntr61-L_202600270EN.000101-E0061].

• (93) Additionally, the investigation found that Dongyuan Science and Technology Group Co. Ltd. is regularly involved in Party building activities so as to ‘guide cadres and workers to understand the greatness of the Party’ [^ntr62-L_202600270EN.000101-E0062].

• (94) The chairman and a director of Wanhua Chemical Group Co. Ltd also serve respectively as the secretary and deputy secretary of the Party Committee [^ntr63-L_202600270EN.000101-E0063].

• (95) Furthermore, the general manager of Zhongtai Chemical, the mother company holding Xinjiang Markor Chemical Industry Co., Ltd, also serves as the deputy secretary of the Party Committee.

• (96) Similarly, Sinopec Group’s chairman of the board of directors is the secretary of the Party committee and several members of the board serve as deputy secretaries of the Party committee [^ntr64-L_202600270EN.000101-E0064]. Sinopec Group stated that it intends to ‘focus on the company's new mission and new tasks on the new journey, carry forward the party's self-revolutionary spirit, strengthen the party's leadership and party building in an all-round and integrated manner, and systematically promote comprehensive and strict party governance, so as to provide a strong guarantee for writing a new chapter of China's modern petrochemical industry’ [^ntr65-L_202600270EN.000101-E0065].

• (97) It was not possible to systematically establish the existence of personal connections between all the Chinese BDO producers and the CCP. However, given that the product under investigation represents a subsector of the chemical sector, the Commission considered that the information established in the recent investigations concerning the chemical sector, as indicated in recital 74, is relevant also to the product under investigation.

• (98) Further, policies discriminating in favour of domestic producers or otherwise influencing the market in the sense of Article 2(6a)(b), third indent of the basic Regulation, are in place in the BDO sector. The Commission identified several documents demonstrating that the BDO industry benefits from the governmental guidance and intervention into the chemical sector, given that BDO represents a subsector of the chemical sector.

• (99) The chemical industry is consistently regarded as a key industry by the GOC [^ntr66-L_202600270EN.000101-E0066]. This is confirmed in the numerous plans, directives and other documents focused on chemicals, which are issued at national, regional, and municipal level. Under the 14th FYP, the GOC earmarked the chemical industry for optimization and upgrade [^ntr67-L_202600270EN.000101-E0067]. Similarly, the 14th FYP on Developing the Raw Materials Industry stipulates that the GOC will ‘Optimize the organizational structure: Make leading enterprises bigger and stronger. […] [S]upport enterprises to accelerate cross-regional and cross-ownership mergers and reorganizations, increase industrial concentration, and conduct international operations. In the chemical, petrochemical, steel, non-ferrous metals, building materials and other industries, cultivate a group of leading enterprises in the industrial chain with ecological dominance and core competitiveness’ [^ntr68-L_202600270EN.000101-E0068] .

• (100) More specifically, the Shandong province released a Breakthrough Action Plan for the High-Quality Development of the High-End Chemical Industry (2021-2022) [^ntr69-L_202600270EN.000101-E0069] and selected ‘10 high-end chemical industry chains such as coal-based chemicals, fluorine materials, polyurethane, nylon, and electronic chemicals and chose 25 enterprises as “leader of the industry chain”.’ BDO is one of the industry chains selected and the Shandong province ‘shall use financial rewards, promote experiences, grant priorities and use other methods to promote Wanhua Chemical Group Co. Ltd. […] and other enterprises to strengthen their basic advantages and create a number of leading enterprises with large scale, good efficiency and strong innovation ability’ [^ntr70-L_202600270EN.000101-E0070] .

• (101) Additionally, in 2022 the Wuhai Municipality promoted ‘the construction of key projects, […] promptly solved the difficulties existing in the process of project promotion, made preparations for various production factors, and ensured that the projects progressed as scheduled […]. Thanks to the focus on the construction of new energy and new materials, the construction of a number of key projects in [Wuhai] has been rapidly promoted this year. After more than a year of intense construction, recently, Inner Mongolia Dongjing Bioenvironmental Protection Technology Co., Ltd. successfully commissioned the 280 000-ton 1,4-butanediol (BDO) project with an annual output of 280 000 tons. After the project is officially put into operation, Dongyuan Technology Co., Ltd. will have an annual output of 380 000 tons of BDO production capacity, becoming the largest production base for BDO and the whole industry chain of downstream deep processing products in China’ [^ntr71-L_202600270EN.000101-E0071] .

• (102) In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production of the product under investigation. Such measures impede market forces from operating freely.

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

• (104) Further, the product under investigation is also affected by the distortions of wage costs in the sense of Article 2(6a)(b), fifth indent of the basic Regulation, as referred to in recital 74. Those distortions affect the sector both directly (when producing the product under investigation or the main inputs), as well as indirectly (when having access to inputs from companies subject to the same labour system in the PRC) [^ntr72-L_202600270EN.000101-E0072].

• (105) Moreover, no evidence was submitted in the present investigation demonstrating that the BDO sector is not affected by the government intervention in the financial system in the sense of Article 2(6a)(b), sixth indent of the basic Regulation. The abovementioned Guiding Opinion requiring to ‘improve supporting policies, strengthen the coordination between fiscal, financial, regional, investment, import and export […] policies with the industry policies [to] give full play to the national cooperation platform between industry and finance and [to] foster the connection between enterprises and banks’ [^ntr73-L_202600270EN.000101-E0073] also exemplifies this type of government intervention very well. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

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

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

• (108) In sum, the evidence available showed that prices or costs of the product under investigation, including the costs of raw materials, land, 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.

3.1.2.2.   Arguments raised by interested parties on the existence of significant distortions

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

• (110) The Commission received comments concerning the significant distortions affecting the BDO industry from Wanhua Group. Wanhua Group argued that the allegation in the complaint on ‘significant distortions’ in China in accordance with Article 2(6)(a) of the basic Regulation, should be confirmed by the Commission in the specific proceeding and should not become a pre-determined conclusion.

• (111) In view of the above, the Commission’s investigation found evidence of significant distortions affecting the Chinese BDO industry, thus warranting the application of the methodology of Article 2(6a) of the basic Regulation to construct the normal value. Therefore, Wanhua Group’s claim was rejected.

3.1.2.3.   Conclusion on the existence of significant distortions

• (112) In view of the above, the Commission concluded that it was 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.

3.1.2.4.   Representative country

3.1.2.4.1.   General remarks