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

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

• — A level of economic development similar to the PRC. For this purpose, the Commission used countries with a gross national income per capita similar to the PRC on the basis of the database of the World Bank [^ntr74-L_202600270EN.000101-E0074];

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

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

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

• (114) As explained in recital 68, the Commission issued the Note on the sources for the determination of the normal value. This Note described the facts and evidence underlying the relevant criteria. Based on the comments received, the Commission considered Brazil as an appropriate representative country in the present case.

A level of economic development similar to the PRC

• (115) In the Note, the Commission explained that the product under investigation did not appear to be produced in any country with a similar level of economic development as the PRC according to the World Bank. The complainant also indicated that BASF Petronas Chemical had produced BDO in Malaysia until March 2021 and therefore proposed using Malaysia as representative country.

• (116) The Commission indicated in the Note that as all countries where there is production of BDO have a different level of economic development than the PRC, and since BDO is no longer produced in Malaysia, the Commission considered the production of a product in the same general category and/or sector of the product under investigation. The Commission therefore indicated it would use production of mono ethylene glycol (‘MEG’), a similar product to BDO, to establish an appropriate representative country for the application of Article 2(6a) of the basic Regulation. Indeed, as explained in the Note, MEG is a diol which, as is the case for BDO, has a relatively high boiling point, a similar viscosity and is also miscible with water. Moreover, as some of the manufacturing pathways to produce BDO, MEG relies on a muti-step catalytic conversion of petrochemical products. Furthermore, MEG is produced from ethylene which in turn may be obtained from, for instance, cracking natural gas, ethane or naphtha, some of which are the same feedstocks required to produce BDO in some of the possible manufacturing pathways. In addition, the manufacturing processes for both BDO and MEG are energy intensive. In terms of applications, BDO and MEG can be used for polymer production, as solvents, chemical intermediates, antifreeze components or humectants. In summary, both products have comparable chemical structures, may share fossil fuel feedstocks and their manufacturing processes may involve comparable chemical and energy-intensive processes.

• (117) The Commission found production of MEG in the following countries with a similar level of economic development as the PRC: Brazil, Indonesia, Malaysia, Mexico, Thailand and Türkiye.

• (118) Following the Note, Wanhua Group questioned whether the factors of production used to produce MEG could be considered representative for those used to produce BDO.

• (119) The Commission noted that, when establishing the normal value, it took into consideration only the factors of production used to produce the product under investigation (in this case BDO). Consequently, MEG was identified as a product in the same general category as BDO only for the purpose of selecting an appropriate representative country which could provide undistorted benchmarks and representative SG & A costs and profits of a producer of BDO. Therefore, the benchmarks were sought only for factors of production used to produce BDO, and not MEG. Furthermore, Wanhua Group did not propose any alternative product within the same general category or sector as BDO. Therefore, this claim was rejected.

• (120) The complainant supported the Commission’s approach and the choice of MEG, which was produced in Malaysia and Brazil, the most appropriate representative countries in its view.

• (121) LYB also agreed with the Commission that diol chemicals were in the same general category as BDO. However, it claimed that also the precursors of diol chemical production, such as ethylene and propylene, as well as solvents such as diethylene glycol, propylene glycol, or tetrahydrofuran, were in the same general category as BDO. Based on this assumption, LYB researched available 2024 financial data of profitable companies producing such products but was unable to find them in Indonesia, Mexico and Thailand. Moreover, LYB did not propose additional companies for Malaysia. On the contrary, LYB proposed a producer of solvents and propylene in Brazil or to resort to the sector-wide data of the chemical sector in Türkiye.

• (122) The Commission examined the additional products allegedly in the same general category or sector as BDO proposed by LYB. The Commission noted that ethylene and propylene are feedstocks for the production of BDO. While propylene is used by LYB itself in the production of BDO as propylene oxide, ethylene is generally used as ethylene oxide in the production of MEG, as indicated in the Note. This shows that, while BDO and MEG share the same position in the production chain and thus have a similar cost structure, propylene and ethylene are located a few steps upstream in the production chain, which takes their cost structure further from BDO. It follows that MEG is a more specific and appropriate product in the same general category or sector as BDO, compared to ethylene and propylene. Therefore, the Commission considered that MEG was a more appropriate product in the same general category or sector as BDO. The Commission further analysed solvents such as diethylene glycol, propylene glycol, or tetrahydrofuran. The Commission noted that diethylene glycol is a by-product of MEG production [^ntr75-L_202600270EN.000101-E0075] and is therefore produced in the same countries as MEG. Propylene glycol appears to have a significant use in the food and drug sector, which is considerably different to the applications of BDO. Tetrahydrofuran is, instead, a derivative of BDO and is therefore located at a different level of the value chain compared to BDO, with the consequence that it could not be an adequate proxy for BDO itself and the risk that its producers could source the BDO from China. Thus, MEG remained the most appropriate product in the same general category or sector as BDO. Therefore, the Commission did not further investigate the production of these alternative products in countries with the same level of development as China, notably in Brazil and Türkiye.

Existence of relevant readily available data in the representative country

• (123) In the Note the Commission indicated that for the countries identified as countries where MEG is being produced, i.e. Brazil, Indonesia, Malaysia, Mexico, Thailand and Türkiye, the availability of data needed to be further verified in particular with regard to the readily available financial data from producers of MEG.

• (124) In addition, following the reply to the Information on inputs for exporting producers and the Note, an additional factor of production was reported by the sampled exporting producers and then verified by the Commission during the verification visits: formaldehyde. As a result, formaldehyde was also considered by the Commission in its analysis below.

• — Brazil

• (125) Wanhua Group claimed that the price for imports of oxygen, sodium hydroxide and nitrogen into Brazil was abnormally high, because it exceeded its actual purchase price. On the contrary, the complainant did not claim any distortion with regards to factors of production prices in Brazil.

• (126) The Commission noted that, following verification, it considered sodium hydroxide and nitrogen as consumables, as explained in recitals 180 to 182. Therefore, Wanhua Group’s comment was not relevant anymore in this respect. Moreover, the Commission noted that Wanhua Group did not explain why the import price of oxygen into Brazil should not be taken into account as an undistorted benchmark. The fact that it was higher than Wanhua Group’s own purchase price constituted no evidence that the import price into Brazil cannot be considered an undistorted benchmark. Therefore, the Commission decided to rely on the import price of oxygen into Brazil.

• (127) While the complainant considered the 2022 data for SGA costs and profit of the MEG producers identified in Brazil reliable, Wanhua Group and LYB claimed that the financial data of Oxiteno SA Industria e Comercio were outdated, and LYB added that, in 2023, the company was loss-making.

• (128) Wanhua Group and LYB also claimed that the financial data of Rhodia Brasil SA (‘Rhodia Brasil’) were outdated as they covered the 2022 financial year. Moreover, Wanhua Group claimed that Solvay SA (‘Solvay’), the group owning Rhodia Brasil, produced a large number of products and its P&L did not reflect the situation of BDO or MEG, therefore it could not be considered representative. Instead, LYB agreed with the use of the groups’ data. However, LYB claimed that the data sourced by the Commission was different from the data reported in Solvay’s 2024 financial statement. Thus, LYB proposed to rely on the published version of the accounts, apportioned by the share of revenue of the ‘performance chemical’ segment.

• (129) The Commission noted that Rhodia Brasil’s financial data for the investigation period had become available in the meantime [^ntr76-L_202600270EN.000101-E0076]. For this reason, the Commission decided to rely on Rhodia Brasil’s data for the investigation period and thus the comments concerning Solvay became irrelevant.

• (130) In the Note, the Commission noted that the selection of Brazil as an appropriate representative country was subject to further analysis of the low import volume of hydrogen and the high import share of calcium carbide from China (80 %) into Brazil.

• (131) In this respect, LYB claimed that imports of hydrogen into Brazil were low because Brazil is a major producer of hydrogen. LYB suggested to use as an alternative benchmark for hydrogen either a benchmark within Brazil or the average export price of hydrogen from Brazil to all countries.

• (132) The Commission acknowledged that the six cubic meters of hydrogen imported into Brazil during the investigation period was a volume insufficient to establish an undistorted benchmark. For this reason, the Commission decided to resort to an international benchmark represented by the grey hydrogen price index for the European region published by Businesss Analytiq as an undistorted benchmark [^ntr77-L_202600270EN.000101-E0077].

• (133) LYB noted that the Commission had proposed investigating further the high import share of calcium carbide from China into Brazil and proposed using as a benchmark the average import price into all countries. The complainant noted that the share of Chinese imports of calcium carbide into Brazil was significantly lower than that into Malaysia, and that therefore data relating to imports of calcium carbide might be considered less affected by distortions than any other proposed countries.

• (134) The Commission noted that all potential representative countries, with the exception of Türkiye, reported high shares of imports of calcium carbide from China. With the exception of Türkiye, the shares of Chinese imports of calcium carbide into other potential representative countries were higher than the shares of Chinese imports of calcium carbide into Brazil. Therefore, the Commission considered that calcium carbide is a commodity generally sourced from China in all potential representative countries and that imports into Brazil represent the most appropriate benchmark, taking also into account that (i) Türkiye cannot be considered an appropriate representative country, as explained in recitals 166 to 174, (ii) the price of Chinese imports into Brazil is in line with the price of imports from other countries, and (iii) with the exception of Türkiye, Brazil has the lowest share of Chinese imports of calcium carbide amongst the possible representative countries.

• (135) The Commission also analysed the import data into Brazil of formaldehyde. The Commission identified a negligible import volume of formaldehyde into Brazil, corresponding to few transactions, which would appear to make the import price not representative. For this reason, the Commission used the average export price from Brazil in the investigation period, sourced from Global Trade Atlas [^ntr78-L_202600270EN.000101-E0078] (‘GTA’).

• (136) In conclusion, the Commission concluded that Brazil constituted the most appropriate representative country.

• — Indonesia

• (137) Wanhua Group claimed that the price for imports of oxygen and sodium hydroxide into Indonesia was abnormally high, because it exceeded its actual purchase price.

• (138) The Commission noted that, following verification, it considered sodium hydroxide as a consumable, as explained in recitals 180 to 182. Therefore, Wanhua Group’s comment was not relevant anymore in this respect. Moreover, the Commission noted that Wanhua Group did not explain why it considered that the import price of oxygen into Indonesia should not be taken into account as an undistorted benchmark. The fact that it was higher than Wanhua Group’s own purchase price constitutes no evidence that the import price into Indonesia cannot be considered an undistorted benchmark. Thus, this claim was rejected.

• (139) The complainant and Wanhua Group claimed that the financial data available for PT Polychem Indonesia Tbk were outdated and the company was loss-making. Therefore, its data could not be used by the Commission.

• (140) The Commission reiterated that it did not consider such a profit reasonable.

• (141) In addition, LYB claimed that Indonesia should be rejected as a possible representative country due to the high share of imports from China on a number of factors of production and to the export restrictions on coal identified in the Note, in conjunction with the high share of imports of coal from Russia. Similarly, the complainant argued that Indonesia could not be considered an appropriate representative country due to the high share of imports of coal from Russia, given the sanctions package imposed by the Union against Russia and the fact that energy prices in Russia were heavily influenced by the state.

• (142) The Commission concluded that Indonesia could not be selected as an appropriate representative country due to the high share of imports from China for calcium carbide (higher than 99 %) and catalysts (higher than 82 %), due to the market distortions identified for coal in the Note, and due to the absence of reasonable financial data. As Indonesia could not be regarded as an appropriate representative country, other claims with regard to Indonesia did not need to be addressed.

• — Malaysia

• (143) Wanhua Group claimed that the price for imports of oxygen, sodium hydroxide and nitrogen into Malaysia was abnormally high, because it exceeded its actual purchase price.

• (144) The Commission noted that, following verification, it considered sodium hydroxide and nitrogen as consumables, as explained in recitals 180 to 182. Therefore, Wanhua Group’s comment was not relevant anymore in this respect. Moreover, the Commission noted that Wanhua Group did not explain why it considered that the import price of oxygen into Malaysia should not be taken into account as an undistorted benchmark. The fact that it was higher than Wanhua Group’s own purchase price constitutes no evidence that the import price into Malaysia cannot be considered an undistorted benchmark. Thus, this claim was rejected.

• (145) Wanhua Group and LYB claimed that Pengerang Petrochemical Company Sdn. Bhd reported a loss for 2023 and therefore such financial data should not be used. Moreover, LYB raised the fact that data dated back to 2023.

• (146) The Commission reiterated that such a profit cannot be considered reasonable.

• (147) The complainant deemed the 2023 data of Petronas Chemicals Glycols Sdn. Bhd reliable. Wanhua Group claimed that the financial data of Petronas Chemicals Group Berhad (‘Petronas Group’), the group owning Petronas Chemicals Glycols Sdn. Bh, was not representative since it was related to 2023 and its activities went beyond BDO or MEG. LYB did not object to the use of Petronas Group’s data but proposed not to separate the data into the segments pertaining to olefins and derivatives as it would lead to a profit of 1 %.

• (148) The Commission noted that, as reported in the Note, financial data for Petronas Group were available for 2024, i.e. the investigation period. However, Petronas Group’s financial data could not be further apportioned to meet Wanhua Group’s concern. Petronas Group’s financial data for 2024 remained the most granular data available for Malaysia. Still, they were less granular than the comparable financial data available for the investigation period for Rhodia Brasil in Brazil, because Petronas Group is only the parent company of a MEG producer in Malaysia, whereas Rhodia Brasil is the company producing MEG in Brazil, so Rhodia Brasil’s financial data are more directly related to the production of MEG.

• (149) The Commission noted that the selection of Malaysia as an appropriate representative country was subject to further analysis of the high Chinese share of imports of calcium carbide into Malaysia.

• (150) In this respect, the complainant claimed that the fact that only one factor of production – calcium carbide – was affected by a high share of imports from China made Malaysia a more appropriate representative country compared to the others, which had either more factors of production imported from China or Russia or did not have readily available data. In respect of the high share of imports of calcium carbide from China, LYB suggested to use as a benchmark the average import price into all countries.

• (151) The Commission noted that all potential representative countries, with the exception of Türkiye, reported high shares of imports of calcium carbide from China, with Brazil being affected by the lowest share. In particular, Malaysia’s share of Chinese imports of calcium carbide was in excess of 98 %. Therefore, the complainant’s claim was rejected.

• (152) Therefore, the Commission concluded that Malaysia could not be considered an appropriate representative country due to the facts that the share of Chinese imports of calcium carbide is higher than Brazil, that imports of catalysts are also affected by a significant share of Chinese imports of approximately 61 %, and that the financial data readily available in Malaysia are less accurate compared to the financial data available for the investigation period in Brazil.

• — Mexico

• (153) Wanhua Group claimed that the price for imports of sodium hydroxide into Mexico was abnormally high, because it exceeded its actual purchase price.

• (154) The Commission noted that, following verification, it considered sodium hydroxide as a consumable, as explained in recitals 180 to 182. Therefore, Wanhua Group’s comment was not relevant anymore in this respect.

• (155) Wanhua Group noted that there were no readily available financial data for the Mexican company. Given the absence of readily available data for this factor of production, the complainant submitted that Mexico could not be considered as a representative country.

• (156) The Commission reiterated that it could not find available financial information for Idesa Petroquimica SA de CV.

• (157) Therefore, Mexico could not be considered an appropriate representative country.

• — Thailand

• (158) Wanhua Group claimed that the price for imports of oxygen and sodium hydroxide into Thailand was abnormally high, because it exceeded its actual purchase price.

• (159) The Commission noted that, following verification, it considered sodium hydroxide as a consumable, as explained in the recitals 180 to 182. Therefore, Wanhua Group’s comment was not relevant anymore in this respect. Moreover, the Commission noted that Wanhua Group did not explain why it considered that the import price of oxygen into Thailand should not be taken into account as an undistorted benchmark. The fact that it was higher than Wanhua Group’s own purchase price constitutes no evidence that the import price into Thailand cannot be considered an undistorted benchmark. Thus, this claim was rejected.

• (160) Wanhua Group claimed that the profit of GC Polyols Company Limited should be rejected.

• (161) The Commission reiterated that it could not consider such a profit as a reasonable profitability.

• (162) Wanhua Group further claimed that the profit of 2,9 % achieved by Indorama Petrochem Co, Ltd could be considered reasonable. In this respect, Wanhua Group noted that the target profit of 6 % in Article 7(2c) of the basic Regulation is used only in the context of the injury margin calculations. On the contrary, the complainant claimed that a very low profit of 2,9 % represented a risk with regards to the reliability of the information readily available in that country.

• (163) The Commission noted that, irrespective of the separate 6 % threshold for the target profit in the context of the injury margin determination, a profit of 2,9 % could not be considered reasonable because it is too low compared to the profits of the other profitable companies identified in the Note, which were at least 7,1 %.

• (164) In addition, the complainant and LYB claimed that Thailand should be rejected as a possible representative country because of the high share of imports of the factors of production from China.

• (165) The Commission concluded that Thailand could not be selected as an appropriate representative country due to the high share of imports from China for calcium carbide and oxygen, as indicated in the Note, and the lack of readily available data to establish a reasonable level of profit in Thailand.

• — Türkiye

• (166) Wanhua Group claimed that the price for imports of oxygen and nitrogen into Türkiye was abnormally high, because it exceeded its actual purchase price.

• (167) The Commission noted that, following verification, it considered nitrogen as a consumable, as explained in recitals 180 to 182. Therefore, Wanhua Group’s comment was not relevant anymore in this respect. Moreover, the Commission noted that Wanhua Group did not explain why it considered that the import price of oxygen into Türkiye should not be taken into account as an undistorted benchmark. The fact that it was higher than Wanhua Group’s own purchase price constitutes no evidence that the import price into Türkiye cannot be considered an undistorted benchmark. Thus, this claim was rejected.

• (168) Wanhua Group and the complainant noted that there were no readily available financial data for the Turkish producer of MEG. For this reason, the complainant claimed that Türkiye could not be a representative country.

• (169) The Commission reiterated that it could not find available financial information for Petkim Petrokimya Holding Anonim Sirketi.

• (170) LYB claimed that the share of Chinese imports of catalyst of 34 % was not significant enough to disregard the import price into Türkiye. In any case, alternatively, the Commission could use the import price into any other upper-middle income country reported in the Note.

• (171) Moreover, LYB submitted that the Commission could use an international benchmark for coal, affected by significant imports from Russia, such as the Australian export price of coal. The complainant on the other hand argued that Türkiye could not be considered an appropriate representative country precisely due to the high share of imports of coal from Russia, given the sanctions package imposed by the Union against Russia and the fact that energy prices in Russia were heavily influenced by the state.

• (172) In the absence of readily available financial data in Türkiye, the Commission did not take into consideration LYB’s proposed approach for catalyst and coal.

• (173) In conclusion, Türkiye cannot be considered an appropriate representative country.

• (174) In light of the above considerations, the Commission selected Brazil as an appropriate representative country and Rhodia Brasil for the establishment of undistorted SG & A costs and profit, in accordance with Article 2(6a)(a), first indent of the basic Regulation, in order to source undistorted prices or benchmarks for the calculation of normal value.

Level of social and environmental protection

• (175) 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.

3.1.2.4.2.   Conclusion

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

3.1.2.5.   Sources used to establish undistorted costs

• (177) In the Note, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under investigation by the sampled exporting producers and 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.

• (178) The Commission, in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, used GTA to establish the undistorted cost of most of the factors of production, notably the raw materials. Moreover, as explained in recitals 132 and 135, the Commission relied on the grey hydrogen price index for the European region published by Business Analitiq [^ntr79-L_202600270EN.000101-E0079] to establish the undistorted cost of hydrogen and on the average export price from Brazil in the investigation period, sourced from GTA, to establish the undistorted cost of formaldehyde.

• (179) In addition, the Commission used the statistics published by the Instituto Brasileiro de Geografia e Estatística (‘IBGE’) for establishing undistorted costs of labour [^ntr80-L_202600270EN.000101-E0080], the industrial electricity price statistics published by the Ministry of Mines and Energy of Brazil [^ntr81-L_202600270EN.000101-E0081], the price of natural gas for industrial users in Brazil as published by the Ministry of Mines and Energy of Brazil [^ntr82-L_202600270EN.000101-E0082], the price of coal in Brazil as published by the Ministry of Mines and Energy of Brazil [^ntr83-L_202600270EN.000101-E0083], and the water tariff charged by Companhia de Saneamento Básico do Estado de São Paulo [^ntr84-L_202600270EN.000101-E0084] (‘SABESP’) for establishing undistorted benchmarks for electricity, natural gas, coal and water.

• (180) Due to the large number of factors of production of the sampled exporting producers that provided complete information and the negligible weight of some of the raw materials in the total cost of production, these negligible items were grouped under ‘consumables’. Notably, such consumables included: nitrogen, sodium hydroxide, caustic soda, sulfuric acid, nickel aluminium catalysts, compressed air, steam, and other factors of production individually weighting less than 0,1 % in the total cost of production.

• (181) The Commission considered also some by-products as consumables. These included: ammonium sulphate, liquid nitrogen, tar, liquid argon, carbon black, PSA desorbed gas, steam, and other by-products individually weighting less than 0,1 % in the total cost of production.

• (182) Collectively, the factors of production considered as consumables amounted to less than 2,5 % of the total cost of production, whereas the by-products considered as consumables amounted to an absolute value of [0,5–2] %. The Commission calculated the percentage of the consumables on the total cost of raw materials and applied this percentage to the recalculated cost of raw materials when using the established undistorted benchmarks in the appropriate representative country.

3.1.2.5.1.   Factors of production

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

Table 1

Factors of production of BDO

Factor of Production	Commodity Code	Sources of data	Undistorted value	Unit of measurement
Raw materials	Raw materials	Raw materials	Raw materials	Raw materials
Natural gas	2711 21	Ministry of Mines and Energy of Brazil	4,25	CNY/m3
Calcium carbide	2849 10	GTA	7,31	CNY/kg
Coal	2701 12	Ministry of Mines and Energy of Brazil	1,26	CNY/kg
Methanol	2905 11	GTA	2,97	CNY/kg
Hydrogen	2804 10	Business Analitiq	2,01	CNY/m3
Oxygen	2804 40	GTA	17,04	CNY/m3
Copper catalysts	3815 19	GTA	311,19	CNY/kg
Formaldehyde / Formaldehyde (45 %)	2912 11	GTA (exports from Brazil)	3 504,19	CNY/tonne
Labour	Labour	Labour	Labour	Labour
Labour	n/a	IBGE	97,98	CNY/hour
Energy	Energy	Energy	Energy	Energy
Electricity	n/a	Ministry of Mines and Energy of Brazil	0,97	CNY/kWh
Water	n/a	SABESP	23,10	CNY/m3
By-products	By-products	By-products	By-products	By-products
Semi-finished n-butanol	2905 13	GTA	9,33	CNY/kg
Acetylene tail gas	2901 29	Pro rata based on the benchmark for natural gas[^ntr85-L_202600270EN.000101-E0085]	1,42	CNY/m3
Methanol	2905 11	GTA and pro rata based on the benchmark for natural gas[^ntr85-L_202600270EN.000101-E0085]	4,42	CNY/kg

• (184) 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 manufacturing overhead cost incurred by the sampled exporting producers, applied to the undistorted costs of manufacturing. The methodology is duly explained in recitals 205 to 207.

Raw materials

• (185) In order to establish the undistorted price of raw materials (other than coal, hydrogen and formaldehyde) as delivered at the gate of a representative country producer, the Commission used as a basis the weighted average import price to the representative country as reported in the GTA to which import duties and transport costs were added. An import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding the PRC and countries which are not members of the WTO, listed in Annex 1 of Regulation (EU) 2015/755 of the European Parliament and the Council [^ntr86-L_202600270EN.000101-E0086]. The Commission decided to exclude imports from the PRC into the representative country as it concluded in recital 112 that it is not appropriate to use domestic prices and costs in the PRC due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. Given that there is no evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected export prices.

• (186) For a number of factors of production the actual costs incurred by the sampled exporting producers represented a negligible share of total raw material costs in the review investigation period. As the value used for these had no appreciable impact on the dumping margin calculations, regardless of the source used, the Commission decided to include those costs into consumables as explained in the recitals 180 and 182.

• (187) With regard to import duties, the Commission consulted the International Trade Centre’s Market Access Map to determine the applicable import duties per good code and country of origin [^ntr87-L_202600270EN.000101-E0087]. The import duties were added to the CIF value recorded in the Brazilian import statistics as available in the GTA database.

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

By-products

• (189) As mentioned in recital 181, the Commission considered certain by-products as consumables.

• (190) For the remaining by-products, the Commission analysed the accounting practices of the sampled Chinese exporting producers pertaining to by-products. On that basis, the Commission relied on GTA import data for establishing a benchmark for semi-finished n-butanol since it was sold to customers. For acetylene tail gas, which one sampled exporting producer had used internally, the Commission took the ratio between the price in the PRC for acetylene tail gas compared to the price in the PRC for the main input material, i.e. natural gas, as reported by the exporting producer. This ratio was applied to the price for natural gas in Brazil, as derived from the source indicated in recital 179 in order to calculate the benchmark for this by-product. For methanol, which the relevant exporting producer had partially sold to customers and partially used internally, the Commission used a composite value from GTA import data and from the value resulting from the method described for acetylene tail gas.

Labour

• (191) The Commission used the statistics published by the IBGE for establishing undistorted costs of labour [^ntr88-L_202600270EN.000101-E0088]. The Commission relied on the detailed information on wages in companies with 30 or more employees for the latest available statistics covering 2023, for the economic activity 20.2 – ‘Fabricação de produtos químicos orgânicos’ according to NACE Rev.2 classification. The IBGE statistics provide information on the total annual wages and related charges and on the number of employees in the manufacturing of organic chemicals for the year 2023. The 2023 value was duly adjusted for inflation using the domestic consumer price index as published by the IBGE itself [^ntr89-L_202600270EN.000101-E0089] to adapt it to the investigation period (year 2024).

Electricity

• (192) The price of electricity for industrial users in Brazil is published by the Ministry of Mines and Energy of Brazil [^ntr90-L_202600270EN.000101-E0090] in its monthly bulletin. The Commission used the data of the industrial electricity prices in the corresponding consumption band in kWh covering the investigation period.

• (193) The rates published in the monthly bulletins include the Imposto sobre Circulação de Mercadorias e Serviços (‘ICMS’), a state-level tax levied on the circulation of goods and on the provision of inter-state and inter-municipal transport and communication services. This tax is recoverable by industrial users and, accordingly, was deducted from the established benchmark.

• (194) As the ICMS was applied at rates ranging between 17 % and 18 % depending on the state [^ntr91-L_202600270EN.000101-E0091], the Commission applied an average deduction of 17,5 % ICMS for the recalculation of the benchmark.

• (195) Wanhua Group claimed that the benchmark for electricity was not included in the Note.

• (196) The Commission noted that, in the Note, only benchmarks for raw materials based on import data were reported. The Commission included the benchmark for electricity in the pre-disclosure.

Natural gas

• (197) The price of natural gas for industrial users in Brazil is published by the Ministry of Mines and Energy of Brazil [^ntr92-L_202600270EN.000101-E0092]. The Commission used the consumption band in cubic meters covering the investigation period. The rates published in the monthly bulletins for 2024 included the same ICMS tax as explained for electricity above, and the Commission treated this tax in the same way as done for electricity.

• (198) Wanhua Group claimed that the benchmark data for natural gas were missing from Annex II of the Note, despite the importance of this factor of production in the total cost of manufacturing.

• (199) The Commission noted that, as indicated in Annex I to the Note, it did not intend to use import data of natural gas as an undistorted benchmark, and for this reason natural gas was not included in Annex II. On the contrary, as indicated above, the Commission relied on the monthly bulletins of the Ministry of Mines and Energy of Brazil for gas. The Commission included the benchmark for natural gas in the pre-disclosure.

Coal

• (200) The Commission used the price of coal in Brazil as published by the Ministry of Mines and Energy of Brazil [^ntr93-L_202600270EN.000101-E0093] in its monthly bulletins.

Water

• (201) The Commission used the water tariff charged by SABESP [^ntr94-L_202600270EN.000101-E0094], that is responsible for water supply, sewage collection and treatment in the state of São Paulo. The information enabled to identify tariffs applicable for industrial users in July 2024 in an area under the abbreviation OJ including the city of Paulínia, where the main production facility of Rhodia Brasil in Brazil is located.

Steam

• (202) The Commission noted that, following verification, steam was considered to be a consumable, as indicated in recital 180. Therefore, the Commission did not establish a benchmark for steam.

• (203) Wanhua Group claimed that the benchmark data for steam were missing from Annex II of the Note.

• (204) The Commission noted that, as indicated in Annex I to the Note, it did not intend to use import data of steam as an undistorted benchmark, and for this reason steam was not included in Annex II.

Manufacturing overhead costs, SG & A, costs and profits

• (205) 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.

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

• (207) For establishing an undistorted and reasonable amount for SG & A costs and profit, the Commission relied on the financial data for 2024 for Rhodia Brasil as extracted from Data Mercantil [^ntr95-L_202600270EN.000101-E0095].

Calculation

• (208) 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.

• (209) First, the Commission established the undistorted manufacturing costs. The Commission applied the undistorted unit costs to the actual consumption of the individual factors of production of the sampled exporting producer. These consumption rates were verified during the verification. The Commission multiplied the usage factors by the undistorted costs per unit observed in the representative country, as described in recitals 177 to 204.

• (210) Then the Commission added manufacturing overheads, as explained in recitals 205 to 207 to the undistorted cost of manufacturing in order to arrive at the undistorted costs of production.

• (211) To the costs of production established as described in the previous recital, the Commission applied SG & A costs and profit of Rhodia Brasil. SG & A costs expressed as a percentage of the Costs of Goods Sold (‘COGS’) and applied to the undistorted costs of production amounted to 14,6 %. The profit expressed as a percentage of the COGS and applied to the undistorted costs of production amounted to 8,0 %.

• (212) 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.

3.1.3.   Export price

• (213) The sampled exporting producers exported to the Union either directly to independent customers or to a related company acting as a user.

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

• (215) For the exporting producer that exported the product concerned to the Union to a related company acting not only as an importer but also as a user, as the product concerned was not resold in the condition in which it was imported, the export price had to be constructed on any reasonable basis pursuant to Article 2(9) of the basic Regulation. The investigation established that the product concerned constituted a very small part of the cost of production of the product that was eventually sold to the first independent customer in the Union by the related user. Consequently, the Commission could not establish a reliable export price based on the sales of the final product to the first independent buyer for those sales. The Commission constructed the export price using the monthly average of the prices at which the same sampled exporting producer sold the product concerned to independent customers in the Union, as established pursuant to Article 2(8) of the basic Regulation. For the month for which the sampled exporting producer in question reported no sales to independent customers in the Union, the Commission established the export price on the basis of the average price of the exporting producer’s sales to independent customers in the Union throughout the investigation period.

3.1.4.   Comparison

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

3.1.4.1.   Adjustments made to the normal value

• (217) As explained in recital 212, the normal value was established at the ex-works level of trade by using costs of production together with amounts for SG & A costs and for profit, which were considered to be reasonable for that level of trade. Therefore, no adjustments were necessary to net the normal value back to the ex-works level.

3.1.4.2.   Adjustments made to the export price

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

• (219) Allowances were made for the following factors affecting prices and price comparability: credit cost, bank charges and, for one of the two sampled exporting producers, commissions.

• (220) One sampled exporting producer exported to the Union through a related company outside the Union. The investigation established that the functions of the related trader were similar to those of an agent working on a commission basis. Indeed, such related trader obtained a profit for its services and traded a broad array of goods other than the product concerned. Consequently, the Commission made an adjustment to the export price pursuant to Article 2(10)(i) of the basic Regulation for the mark-up received by the related trader.

• (221) The adjustment for the constructed commission was based on the SG & A costs incurred by the related trader and, given the relationship between both companies and the fact that no unrelated importer cooperated in the current investigation, a notional profit of 6,89 % considered reasonable in a previous investigation concerning imports of another chemical product, namely polyvinyl alcohols (‘PVA’) originating in China [^ntr96-L_202600270EN.000101-E0096]. Such level of profit of 6,89 % was provisionally considered reasonable also in this case because it was realised by unrelated importers involved in the trade of chemical products.

3.1.5.   Dumping margin

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

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

Country	Company	Provisional dumping margin (%)
China	Xinjiang Markor Chemical Industry Co., Ltd.	311,9
China	Wanhua Chemical (Sichuan) Co., Ltd.	522,4

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

• (225) On this basis, the provisional dumping margin of the cooperating exporting producers outside the sample is 362,8 %.

• (226) For all other exporting producers in the PRC, the Commission established the dumping margin on the basis of the facts available, in accordance with Article 18 of the basic Regulation. To this end, the Commission determined the level of cooperation of the exporting producers. The level of cooperation is the volume of exports of the cooperating exporting producers to the Union expressed as proportion of the total imports from the country concerned to the Union in the investigation period, as established on the basis of Eurostat.

• (227) The level of cooperation in China is high because the exports of the cooperating exporting producers constituted around 85 % of the total imports from China during the investigation period. On this basis, the Commission decided to establish the dumping margin for non-cooperating exporting producers in China at the level of the sampled company with the highest dumping margin in each country.

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

Country	Company	Provisional dumping margin (%)
China	Xinjiang Markor Chemical Industry Co., Ltd.	311,9
China	Wanhua Chemical (Sichuan) Co., Ltd.	522,4
China	Other cooperating companies in China	362,8
China	All other imports originating in China	522,4

3.2.   Saudi Arabia

• (229) The sole exporting producer in Saudi Arabia, International Diol Company (‘IDC’), exported to the Union exclusively through its related trader Sipchem Marketing Company (‘SMC’), established in Saudi Arabia. In turn, SMC exported to the Union exclusively through its fully owned subsidiary Sipchem Europe SA (‘SESA’), which is established in Switzerland. The three companies are part of the Saudi International Petrochemical Company (‘Sipchem’) group.

3.2.1.   Normal value

• (230) IDC made no sales of BDO intended for domestic consumption in the investigation period. Therefore, the Commission constructed the normal value in accordance with Article 2(3) and (6)(c) of the basic Regulation.

• (231) Normal value at the ex-works level was constructed by adding the following to the average cost of production of the like product of the cooperating exporting producer during the investigation period:

• (a) the weighted average selling, general and administrative (‘SG & A’) expenses incurred by IDC on sales of the product under investigation to the Union during the IP; and

• (b) the weighted average profit realised in 2024 by companies in Saudi Arabia active in the production of products falling under NACE code 201 [^ntr97-L_202600270EN.000101-E0097], as reported by Moody’s ORBIS database [^ntr98-L_202600270EN.000101-E0098]. The Commission considered that there is no reason why domestic sales of such products would be less profitable than export sales, and therefore, the requirement of Article 2(6)(c), that the profit used would not exceed the profit normally realised by other exporters or producers on sales of products of the same general category in the domestic market of the country of origin, is met.

3.2.2.   Export price

• (232) As explained in recital 229, IDC exported to the Union exclusively through SMC, its related trader established in Saudi Arabia. In turn, SMC exported to the Union exclusively through its fully owned subsidiary SESA, which is established in Switzerland. For these sales, SESA acted as an importer for the Union market, incurring the relevant costs and accruing profits.

• (233) In view of this, the export price was established on the basis of the price at which the imported product was first resold by SESA to independent customers in the Union, in accordance with Article 2(9) of the basic Regulation. In this case, adjustments to the price were made for all costs incurred between importation and resale, including SG & A expenses, and for profits accruing. The adjustment was made using the actual SG & A costs incurred by SESA and, on the grounds explained in recital 221, a notional profit of 6,89 %.

• (234) Sipchem claimed that its sales to a certain Union BDO producer and marketer should be excluded from the export price calculation, on the grounds that the price of these sales were much lower than Sipchem’s average prices and were the result of hard negotiations.

• (235) The Commission recalled that for the determination of the dumping margin, all export sales must be considered. The claim was therefore rejected.

3.2.3.   Comparison

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

3.2.3.1.   Adjustments made to the normal value

• (237) As explained in recital 231, the normal value was established at the ex-works level of trade by using costs of production together with amounts for SG & A and for profit, which were considered to be reasonable for that level of trade. Therefore, no adjustments were necessary to net the normal value back to the ex-works level.

• (238) The Commission found no reasons for making any allowances to the normal value, nor were such allowances claimed by the sole cooperating exporting producer.

3.2.3.2.   Adjustments made to the export price

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

• (240) Allowances were made for the following factor affecting prices and price comparability: credit costs and commissions

• (241) As all Union sales were made via a related trader in Saudi Arabia (SMC), and that company carried out functions similar to those of an agent working on a commission basis, and received a commission for those sales, an adjustment to the export price was made under Article 2(10)(i) of the basic Regulation. The adjustment was made using the actual SG & A costs incurred by SMC and, given the relationship between the companies, a notional profit of 6,89 % as set out in recital 221.

• (242) In its questionnaire reply, the company had claimed that IDC, SMC, and SESA form a single economic entity and therefore, such an adjustment would not be justified. To substantiate its claim, the company argued that SMC/SESA have been entrusted by IDC, which has no sales functions of its own, with tasks that normally fall within the scope of responsibilities of a centralized internal sales department (SMC) and export department (SESA). However, the Commission found that there is a very detailed contract between IDC and SMC, setting out the commissions paid by IDC and also including an arbitration clause, thereby demonstrating a limited economic solidarity between the two companies. In view of this, the Commission rejected the claim and considered the adjustment of the export price under Article 2(10)(i) of the basic Regulation as warranted.

3.2.4.   Dumping margins

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

• (244) As there was only one exporting producer that covered the totality of exports from Saudi Arabia to the Union in the investigation period, it was not necessary to calculate a weighted average dumping margin which would normally be applied for cooperating not sampled companies.

• (245) For all other imports originating in Saudi Arabia, the Commission established the dumping margin on the basis of the facts available, in accordance with Article 18 of the basic Regulation. On this basis, the Commission found it appropriate to establish the dumping margin at the level of the dumping margin of the cooperating producer.

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

Company	Provisional dumping margin (%)
International Diol Company	52,4
All other imports originating in Saudi Arabia	52,4

3.3.   USA

3.3.1.   Normal value

• (247) The Commission first examined whether the total volume of domestic sales for the cooperating exporting producer was representative, in accordance with Article 2(2) of the basic Regulation. The domestic sales are representative if the total domestic sales volume of the like product to independent customers on the domestic market per exporting producer represented at least 5 % of its total export sales volume of the product concerned to the Union during the investigation period. On this basis, the total sales of the cooperating exporting producer of the like product on the domestic market were representative.

• (248) The Commission subsequently identified the product types sold domestically that were identical or comparable with the product types sold for export to the Union for the exporting producer with representative domestic sales.

• (249) The Commission then examined whether the domestic sales by the cooperating exporting producer on its domestic market for each product type that is identical or comparable with a product type sold for export to the Union were representative, in accordance with Article 2(2) of the basic Regulation. The domestic sales of a product type are representative if the total volume of domestic sales of that product type to independent customers during the investigation period represents at least 5 % of the total volume of export sales of the identical or comparable product type to the Union. The Commission established that the domestic sales of each product type were representative for the exporting producer.

• (250) The Commission next defined the proportion of profitable sales to independent customers on the domestic market for each product type during the investigation period in order to decide whether to use actual domestic sales for the calculation of the normal value, in accordance with Article 2(4) of the basic Regulation.

• (251) The normal value is based on the actual domestic price per product type, irrespective of whether those sales are profitable or not, if:

• (a) the sales volume of the product type, sold at a net sales price equal to or above the calculated cost of production, represented more than 80 % of the total sales volume of this product type; and

• (b) the weighted average sales price of that product type is equal to or higher than the unit cost of production.

• (252) In this case, the normal value is the weighted average of the prices of all domestic sales of that product type during the IP.

• (253) The normal value is the actual domestic price per product type of only the profitable domestic sales of the product types during the IP, if:

• (a) the volume of profitable sales of the product type represents 80% or less of the total sales volume of this type; or

• (b) the weighted average price of this product type is below the unit cost of production.

• (254) The analysis of domestic sales showed that [8 %–12 %] of all domestic sales were profitable and that the weighted average sales price was lower than the cost of production. Accordingly, the normal value was calculated as a weighted average of the profitable sales only.

3.3.2.   Export price

• (255) The cooperating exporting producer exported to the Union through a related company acting as an importer.

• (256) For the exporting producers that exported the product concerned to the Union through a related company acting as an importer, the export price was established on the basis of the price at which the imported product was first resold to independent customers in the Union, in accordance with Article 2(9) of the basic Regulation. In this case, adjustments to the price were made for all costs incurred between importation and resale, including SG & A expenses, and for profits accruing.

• (257) The Commission relied on the actual SG & A costs reported by the related importer. With regard to profit, the Commission used the notional profit of 6,89 % for the reasons set out in recital 221, namely the relationship between companies and the lack of cooperation of unrelated importers in this investigation.

3.3.3.   Comparison

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

3.3.3.1.   Adjustments made to the normal value

• (259) In order to net the normal value back to the ex-works level of trade, adjustments were made on the account of transport, handling, loading, ancillary and insurance expenses as well as expenses for technical assistance and services.

• (260) Allowances were made for the following factors affecting prices and price comparability: commission, credit costs and bank charges.

3.3.3.2.   Adjustments made to the export price

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

• (262) Allowances were made for the following factor affecting prices and price comparability: credit costs.

3.3.4.   Dumping margins

• (263) On this basis, the dumping margin for Lyondell Chemical Company, expressed as a percentage of the CIF Union frontier price, duty unpaid, was 135,7 %.

• (264) The level of cooperation in the USA is low because the imports of the cooperating exporting producer constituted around 17 % of the total exports to the Union during the IP.

• (265) The Commission recalled that Section 10 of the Notice of Initiation [^ntr99-L_202600270EN.000101-E0099] had informed interested parties that failure to cooperate, or only partial cooperation, could lead to findings based on facts available under Article 18 of the basic Regulation, potentially resulting in less favourable outcomes for those parties. Given that the interested parties were clearly warned of the consequences of non-cooperation in the Notice of initiation and in the proceeding as stated in recital 45, and that the level of cooperation in this case was particularly low, the Commission deemed it appropriate to determine the residual anti-dumping duty based on a representative subset of sales by Lyondell Chemical Group which, itself, represented over 47 % of the sales of the company and 8 % of the total export volume of all sampled companies to the Union during the investigation period. These sales were considered a reasonable and representative proxy for the dumping behaviour of the non-cooperating exporters.

• (266) On this basis, the residual dumping margin for the USA was set at 142,5 %.

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

Country	Company	Provisional dumping margin (%)
US	Lyondell Chemical Company	135,7
US	All other imports originating in the US	142,5

4. INJURY

4.1.   Definition of the Union industry and Union production

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

• (269) The total Union production during the investigation period was established at around 189 700 tonnes. The Commission established the figure on the basis of the questionnaire replies of the three sampled Union producers: BASF SE (‘BASF’), INEOS Solvents Marl GmbH (‘INEOS’) and Lyondell Chemie Nederland BV (‘LCN’) and the macro questionnaire reply of Novamont S.p.A (‘Novamont’). The three sampled producers manufactured fossil based BDO whereas Novamont produced bio BDO. As indicated in recital 34, the three sampled Union producers represented more than 70 % of the total Union production and sales of the like product.

4.2.   Determination of the relevant Union market

• (270) 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.

• (271) BDO is used as an intermediate material for the production of a wide range of downstream chemical products including PBT, PBAT, TPU, THF and GBL. The Commission found that a substantial part of the sampled Union producers’ production was destined for captive use. The business model of the Union producers and their degree of vertical integration varied. Nevertheless, the Union industry can overall be characterised as an industry with a high degree of vertical integration, as Union producers were found to be at the same time producers, importers, sellers and users of the product under investigation and regarding other chemical products.

• (272) BDO was often transferred at cost within the same company for further downstream processing. Union producers could source BDO either from other unrelated Union producers, imports or from own internal production which was then further processed to a wide range of downstream products and/or resold, and in the market conditions which existed in 2023 and the investigation period multiple sourcing methods of BDO were employed by Union producers. In addition, related parties were free to source their BDO purchases from either related or unrelated suppliers, within or outside the Union. Furthermore, BDO was often produced in chemical parks which included downstream products and other chemical products.

• (273) Bearing in mind that, in the market conditions which existed in 2023 and the investigation period, captive use could be sourced from either related parties or unrelated suppliers, within or outside the Union, and the sales from related parties were fixed at international market prices, it was considered that the captive sales are part of the free market. This finding supports the view that total consumption should be used to calculate market shares in this case. Nevertheless, for the sake of completeness, the Commission also showed other market share trends in its analysis. Therefore, given that the Union producer source BDO for downstream production both from their own production or from the free market, depending on prices and cost of the product concerned, the Commission considered that total consumption (free market plus captive) is the best indicator for the injury analysis.

4.3.   Union consumption

• (274) The Union industry is vertically integrated and the product under investigation is regarded as a primary material for the production of various value-added downstream products. The captive and free market consumptions were analysed separately.

• (275) The Commission established the total Union consumption on the sum of the free market and the captive markets.

• (276) The Commission established the captive market based on captive use of the Union industry, and the free market use on the basis of production sold of the Union industry to third parties plus imports into the Union from all third countries.

• (277) On that basis Union consumption developed as follows:

Table 2

Union consumption (tonnes)

	2021	2022	2023	Investigation period
Captive market	264 489	183 604	134 693	163 036
Index	100	69	51	62
Free market	159 456	138 725	150 534	184 036
Index	100	87	94	115
Total Union consumption	423 944	322 329	285 226	347 072
Index	100	76	67	82
Source: Producer questionnaires replies, Union customs import statistics.	Source: Producer questionnaires replies, Union customs import statistics.	Source: Producer questionnaires replies, Union customs import statistics.	Source: Producer questionnaires replies, Union customs import statistics.	Source: Producer questionnaires replies, Union customs import statistics.

• (278) Captive market consumption in tonnes decreased from 2021 to 2023, with a substantial decrease of 31 % in 2022 and a decrease of 49 % in 2023 when compared to 2021 consumption. In the IP, captive market consumption increased compared to 2023, but still remained below 2021 levels with a decrease of 38 % in the period considered. This resulted in captive market consumption falling to 163 036 tonnes in the IP from 264 489 tonnes in 2021.

• (279) Free market consumption experienced a slight decrease in 2022 and 2023, with consumption decreasing by 13 % in 2022 and 6 % in 2023 when compared to 2021. However, overall free market consumption grew significantly over the period considered, with a 15 % increase in the IP when compared to 2021. This resulted in an increase from 159 456 tonnes in 2021 to 184 036 tonnes in the IP.

• (280) Overall, total Union consumption reduced in the period considered. First, it reduced by 24 % in 2022, and then by 33 % in 2023 when compared to the total Union consumption in 2021. Despite an increase of total Union consumption in the IP compared to 2023, the total Union consumption remained 18 % lower in the IP than in 2021. This is because an increase in free market consumption in the IP was not enough to compensate the decline of the Union captive market consumption, resulting in a lower total Union consumption of the product concerned from 423 944 tonnes in 2021 to 347 072 tonnes in the IP.

• (281) Total Union consumption was high in 2021 due to high demand in the numerous downstream BDO value chain industries, largely related to COVID-19 issues. Consumption fluctuated from 2022 to the investigation period and in fact increased by 8 % over this period. The Union industry explained that for the foreseeable long-term, demand for BDO globally and in the Union is stable.