Commission Implementing Regulation (EU) 2026/1857 of 27 July 2026 imposing a provisional anti-dumping duty on imports of benzyl alcohol originating in the People’s Republic of China

• (140) Thirdly, although nominal interest rate liberalization was achieved in October 2015, price signals are still not the result of free market forces but are influenced by government-induced distortions. The share of lending at or below the benchmark rate still represented at least one-third of all lending as of the end of 2018 [^ntr100-L_202601857EN.000101-E0100]. Official media in China have recently reported that the CCP called for ‘guiding the loan market interest rate downwards’ [^ntr101-L_202601857EN.000101-E0101]. Artificially low interest rates result in under-pricing, and consequently, the excessive utilization of capital.

• (141) Overall credit growth in the China indicates a worsening efficiency of capital allocation without any signs of credit tightening that would be expected in an undistorted market environment. As a result, non-performing loans have increased rapidly, with the GOC a number of times opting to either avoid defaults, thus creating so called ‘zombie’ companies, or to transfer the ownership of the debt (e.g. via mergers or debt-to-equity swaps), without necessarily removing the overall debt problem or addressing its root causes.

• (142) In essence, despite the steps that have been taken to liberalize the market, the corporate credit system in China is affected by significant distortions resulting from the continuing pervasive role of the state in the capital markets. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

• (143) No evidence was submitted in the present investigation demonstrating that the sector of the product concerned 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. Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

3.2.3.   Systemic nature of the distortions described

• (144) The Commission noted that the distortions described in the updated Report are characteristic for the Chinese economy. The evidence available shows that the facts and features of the Chinese system as described above as well as in Part I of the updated Report apply throughout the country and across the sectors of the economy. The same holds true for the description of the factors of production as set out above and in Part II of the updated Report.

• (145) The Commission recalls that in order to produce the product concerned, certain inputs are needed. When the producers of the product concerned 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. These distortions were described in detail above, in particular in recitals 71 - 143. The Commission pointed out that the regulatory setup underpinning those distortions is generally applicable, benzyl alcohol producers being subject to those rules as any other economic operator in China. The distortions have therefore a direct bearing on the cost structure of the product concerned.

• (146) As a consequence, not only the domestic sales prices of the product concerned 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 updated Report.

• (147) Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout China. This means, for instance, that an input that in itself was produced in China 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.

• (148) No evidence or argument to the contrary has been adduced by the GOC or the exporting producers in the present investigation.

3.2.4.   Representative country

3.2.4.1.   General remarks

• (149) 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 [^ntr102-L_202601857EN.000101-E0102];

• — 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.

• (150) As explained in recitals 31 and 32, the Commission issued two notes for the file on the sources for the determination of the normal value. These notes described the facts and evidence underlying the relevant criteria, and addressed the comments received by the parties on these elements and on the relevant sources. In the Second Note, the Commission informed interested parties of its intention to consider Türkiye as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a)(a) of the basic Regulation would be confirmed.

3.2.4.2.   Choice of the representative country

• (151) Following the First Note, the exporting producer Qianjiang Xinyihong proposed Brazil as a representative country, based on the existence of readily available financial statements showing a reasonable profitability. Qianjiang Xinyihong added that the raw materials and energy prices in Brazil were less volatile than those in Türkiye.

• (152) Further to the First and the Second Note, the exporting producer Hubei Greenhome questioned the choice of Türkiye as a representative country because import prices of toluene were inflated given the existence of a licensing scheme for toluene imports and because toluene was almost exclusively imported from EU countries, each of which were high income economies. Hubei Greenhome added that import prices for toluene were inordinately high in relation to other markets (including the representative countries proposed by the Commission) and therefore inappropriate as a factor of production in constructing the normal value for benzyl alcohol.

• (153) The complainants noted that the import prices of toluene and sodium carbonate into Indonesia and Malaysia closely mirror the average Chinese import prices, due to the fact that a large share originates in the PRC. The complainants outlined what was already mentioned by the Commission in the First Note, i.e. that, during the IP, the Chinese share in total toluene imports was 27 % in Indonesia and 59 % in Malaysia and the Chinese share in total sodium carbonate imports was 24,8 % in Indonesia and 24,9 % in Malaysia.

• (154) The complainants also stressed that, during the IP, Türkiye imported 58 288 tonnes of toluene, while Brazil only 7 438 tonnes. The complainants noted that such substantial import volumes in Türkiye ensure a more representative and reliable basis for establishing undistorted toluene prices, which account for the largest share of the cost of the product concerned.

• (155) In response to the complainants’ comments, Hubei Greenhome invoked that Indonesia should not be dismissed as a representative country simply because 27 % of all toluene and 24,8 % of all sodium carbonate imports originate from China. Hubei Greenhome recalled that the Commission typically relied on import prices where the representative country imported less than 50 % of a given raw material from China.

• (156) Furthermore, Hubei Greenhome disagreed with the complainants’ argument for selecting Türkiye over Brazil, which rests solely on the difference in import volume between Türkiye and Brazil during the investigation period. Hubei Greenhome hinted that the large volume of imports into Türkiye was the consequence of weak domestic production of toluene. According to Hubei Greenhome, a lower level of import quantities (such as noted in Brazil) does not automatically mean that prices are unrepresentative, or that they are not market prices.

• (157) As to the differences in volatility and level of toluene import prices in Türkiye on the one hand, and the four other proposed countries on the other hand, as claimed by Qianjiang Xinyihong and Hubei Greenhome (see recitals 151 and 152), the Commission observed that, as a matter of fact, the respective toluene import prices per kilogram of the five proposed countries were in a close range between 5,64 CNY and 7,00 CNY in the investigation period. In that regard, the Commission disagrees with Hubei Greenhome on the allegation that toluene import prices for Türkiye were extraordinarily high when compared to other markets. Moreover, the price difference between Türkiye and Brazil (7,00 versus 6,57 CNY/kg, which is just about 6 %) seems not to support Hubei Greenhome’s assumption that the applicable import licence scheme or the alleged strong share of EU origin in Türkiye’s toluene imports inflated prices. The Commission also notes that Brazil also has licensing scheme for toluene regarding imports and exports in force. Hubei Greenhome’s claim was thus rejected.

• (158) In addition, the Commission notes that 99,5 % of toluene imports into Brazil come from only one country, Argentina, contrary to imports into Türkiye. In addition, Argentina has imposed a tax of 4,5 % on toluene exports to other countries, including Brazil.

• (159) As to the share of Chinese import volumes (see Hubei Greenhome’s claim under recital 156), the Commission clarifies that even if in some cases a share of such imports in the magnitude of about 25 % may not have stood in the way of accepting the concerned representative country, priority should generally be given to representative countries with raw material imports that are found not to be distorted by Chinese imports. As in the present case, since Türkiye reported no Chinese imports of toluene, Türkiye should be given priority over the countries reporting Chinese imports.

3.2.4.3.   A level of economic development similar to the PRC

• (160) In the First Note, the Commission explained that the product under investigation appears to be produced only in the USA and India, none of which is a country with a level of economic development similar to the PRC in accordance with the criteria mentioned in recital 149 above. The Commission based its further research on countries producing organic chemical products (classified under NACE 2014). On this basis, Brazil, Indonesia, Malaysia, Mexico and Türkiye were identified as countries with a similar level of economic development as the PRC according to the World Bank, i.e. they are all classified by the World Bank as ‘upper-middle income’ countries on a gross national income basis where organic chemical products production was known to take place.

• (161) Hubei Greenhome agreed with the Commission that an upper middle-income country with imports of toluene and sodium carbonate should be selected as a representative country, and the five proposed countries met that criteria. Both sampled exporting producers expressed however a preference for Brazil to be selected as a representative country, mainly in view of the better ranking of Brazil on the level of social and environmental protection when compared to, for instance, Türkiye.

• (162) In the First Note, the Commission explained that the product under investigation appears to be produced only in countries none of which is a country with a level of economic development similar to the PRC in accordance with the criteria mentioned in recital 149.

• (163) The Commission therefore indicated it would use chemical products classified under NACE code 2014, covering producers active in the industry of organic chemical products, to establish an appropriate representative country for the application of Article 2(6a) of the basic Regulation.

3.2.4.4.   Existence of relevant readily available data in the representative country

• (164) As pointed out in the First Note, the Commission could not find financial data related to the year 2024 of any Mexican producer, active in the organic chemical industry, manufacturing chemical products that fall under NACE code 2014. By contrast, the Commission could find such data of 2 producers in Indonesia, 1 producer in Malaysia, 6 producers in Brazil and 7 producers in Türkiye.

• (165) In light of the above considerations in combination with the fact that Türkiye had reported the by far largest volume of toluene imports, which in addition were not found distorted by imports from China, the Commission informed the interested parties with the Second Note that it intended to use Türkiye as an appropriate representative country 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.

• (166) Specifically, the Commission found financial data for 38 producers within the same category of manufacture as benzyl alcohol, i.e. NACE Code C2014 (‘Manufacture of other organic basic chemicals’) [^ntr103-L_202601857EN.000101-E0103] in Türkiye.

• (167) The Commission analysed the readily available financial data of the 38 Turkish companies and found that 26 of them had incomplete data and one was in a loss-making situation. It therefore considered only the eleven companies with a positive profit margin. The financial data pertaining to these eleven producers were listed in Annex III to the Second Note [^ntr104-L_202601857EN.000101-E0104].

• (168) Based on the financial data of the above eleven companies, the Commission established a weighted average rate of SG&A costs of 25,56 % and a profit margin of 11,22 %.

• (169) Interested parties were invited to comment on the appropriateness of Türkiye as a representative country and the eleven companies listed in Annex III to the Second Note as producers in the representative country, as well as on other elements of the Note.

• (170) Following the Second Note, Hubei Greenhome claimed that the Commission should rely on the financial statements of either Aksa Akrilik Kimya Sanayii A.Ş. (Aksa Akrilik), a Turkish producer of acrylic fibre, or Türkiye Petrol Rafinerileri A.Ş. (Tüpraş,) a Turkish producer of petrochemicals, rather than relying on the Orbis data provided in Annex III to the Second Note. The Orbis data related to the eleven Turkish companies would provide no detail on the companies selected by the Commission. Moreover, Hubei Greenhome referred to a previous antidumping case, in which the Commission selected a company outside of the NACE code applicable to the exporting producer when this resulted in a more appropriate choice [^ntr105-L_202601857EN.000101-E0105].

• (171) The Commission rejected this claim. The underlying facts of the case quoted by Hubei Greenhome were different from the current case and the approach taken is compliant with the requirements of the basic Regulation. As a general practice, the Commission has selected appropriate companies to determine SG&A costs and profits for the sake of constructing normal values based on a given NACE code. There was no obvious reason why the Commission would not follow this general practice in the present case, by relying on the appropriate eleven companies found in Türkiye under NACE code 2014.

• (172) Furthermore, Hubei Greenhome claimed that the Commission should remove companies from the selection under NACE code 2014, for whom inappropriate costs were included in the line item for operating expenses, i.e. SG&A costs. In that regard, Hubei Greenhome referred to the First Note, where the Commission had disregarded companies with abnormally high SG&A costs. In the Second Note, Tarimsal Kimya Teknolojileri Sanayi ve Ticaret Anonim Sirketi (‘Tarkim’) was added back to the list of representative producers after the Commission found that “all reported SG&A and profit rates were deemed reasonable”. Given that Tarkim’s SG&A costs is over half of its cost of goods sold, which is almost double that of every other producer included in the Orbis data except one, the Commission should exclude Tarkim from the list of producers used to assess SG&A costs. The Commission should do the same for Hurkimsa Kimya Sanayi ve Ticaret Anonim Sirketi, the second company re-added to the group of representative producers. Hubei Greenhome specified that Tarkim maintained its own transportation fleet and presumably provided specialized transportation services to customers as part of its operating expenses. These expenses should not be reflected in the SG&A costs because the constructed normal value should reflect costs at an ex-works level, i.e. without transportation costs.

• (173) In response to the claim under recital 172, the Commission pointed out that it lies in the nature of anti-dumping proceedings that considerations and resulting conclusions may alter from step to step. Having revisited the selection of companies in the chosen representative country, the Commission found that there were no objective grounds to reject the two re-added companies in view of the level of their SG&A costs. Moreover, among the eleven companies listed in the footnote of recital 32, there are companies with relatively low SG&A and profit rates, showing that the Commission calculated the weighted average of SG&A and profit based on objective criteria such as classification under NACE 2014. In addition, when revisiting the selection of companies in the chosen representative country, the Commission found that the compounded rates of SG&A costs and profit of each of the eleven companies were within normal ranges. Last, in this claim, Hubei Greenhome relied inter alia on the assumption that specialized transportation services to customers as part of Tarkim’s operating expenses. This part of the claim was hence not substantiated. The claim was therefore rejected.

• (174) Following the Second Note, Hubei Greenhome reiterated its disagreement over selecting Türkiye as a representative country, and instead proposed Brazil as a representative country. Hubei Greenhome acknowledged that Türkiye reported greater volumes of toluene imports than Brazil did but felt that other factors, in particular a better performance of Brazil on the level of social and environmental protection, spoke in favour of Brazil. In that regard, Hubei Greenhome referred to the Article 2(6a)(a), 2^nd subparagraph, 1^st indent of the basic Regulation, which provides that in case of more than one possible representative country, preference shall be given, where appropriate, to countries with an adequate level of social and environmental protection.

• (175) The Commission considered Hubei Greenhome’s reasoning flawed. For all the reasons stated above from recital 149 and following, and since toluene is the main raw material needed to produce the product concerned, the Commission considers the volume of imports into each representative country to be an additional factor to conclude on the choice of the representative country. Indeed, Türkiye’s relevant imports of toluene, of which none originated in China, Russia or a non-WTO member country, were more than seven times greater than those from Brazil. Based on that, the Commission confirmed the choice of Türkiye over Brazil.

3.2.4.5.   Level of social and environmental protection

• (176) As explained above the Commission initially considered five potential representative countries: Brazil, Indonesia, Malaysia, Mexico and Türkiye. As mentioned in recital 153, Indonesia and Malaysia were found not to be appropriate representative countries in this case because both imported significant volumes of toluene and sodium carbonate from China. The total imports of these two major raw materials were thus found to be distorted as shown by the average import prices being close to the corresponding import price from China. As explained in recital 164, Mexico was found not to be an appropriate representative country in this case because no Mexican producer making chemical products falling under NACE code 2014 was found to have relevant readily available data. As explained in recital 175, Brazil was not considered an appropriate representative country in view of the relatively low toluene import volumes. It follows that Türkiye was the only appropriate representative country.

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

3.2.4.6.   Conclusion

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

3.2.5.   Sources used to establish undistorted costs

• (179) In the First Note, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under investigation by the exporting producers and invited the interested parties to comment and propose readily available information on undistorted values for each of the factors of production mentioned in that note.

• (180) Subsequently, in the Second Note, the Commission stated that, in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, it would use GTA to establish the undistorted cost of most of the factors of production, notably the raw materials. In addition, the Commission stated that it would use data published by the Turkish Statistical Institute and by the Turkish Energy Market Regulatory Authority for establishing undistorted costs of labour and energy.

3.2.5.1.   Factors of production

• (181) 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 product under investigation

Factor of Production	Commodity Codes	Source of data the Commission intends to use	Value (CNY)[^ntr106-L_202601857EN.000101-E0106]	Unit of measurement
Raw materials	Raw materials	Raw materials	Raw materials	Raw materials
Toluene	2902 30	Global Trade Atlas (GTA)[^ntr107-L_202601857EN.000101-E0107]	7,00	Kg
Sodium Carbonate	2836 20	Global Trade Atlas (GTA)	1,99	Kg
Consumables[^ntr108-L_202601857EN.000101-E0108] (Liquid Chlorine, Liquid Caustic and Chinoline)	Consumables[^ntr108-L_202601857EN.000101-E0108] (Liquid Chlorine, Liquid Caustic and Chinoline)	Consumables[^ntr108-L_202601857EN.000101-E0108] (Liquid Chlorine, Liquid Caustic and Chinoline)	Consumables[^ntr108-L_202601857EN.000101-E0108] (Liquid Chlorine, Liquid Caustic and Chinoline)	Consumables[^ntr108-L_202601857EN.000101-E0108] (Liquid Chlorine, Liquid Caustic and Chinoline)
Labour	Labour	Labour	Labour	Labour
Labour	[N/A]	Turkish Statistical Institute[^ntr109-L_202601857EN.000101-E0109]	89,64	Working hour
Energy	Energy	Energy	Energy	Energy
Electricity	[N/A]	Turkish Energy Market Regulatory Authority[^ntr110-L_202601857EN.000101-E0110]	0,66	kWh
Natural gas	[N/A]	Turkish Statistical Institute	4,63	m3
Steam	[N/A]	Turkish Statistical Institute	501,61[^ntr111-L_202601857EN.000101-E0111]	tonne
Coal	2701 12 90	Global Trade Atlas (GTA)	0,78	Kg
By-product	By-product	By-product	By-product	By-product
Dibenzyl ether	2909 30 90 90	Global Trade Atlas (GTA)	12,62	Kg

[^ntr106-L_202601857EN.000101-E0106]: The Commission identified some discrepancies between the Second Note and its annexes. The correct values were provided originally in the annexes of Second Note and in the above table 1.

[^ntr108-L_202601857EN.000101-E0108]: In Second Note, liquid chlorine was erroneously mentioned both in consumables and in annex I with the factors of production. Liquid Chlorine is treated as consumable.

[^ntr109-L_202601857EN.000101-E0109]: http://www.turkstat.gov.tr => Press releases => select Producer Price Index.

[^ntr110-L_202601857EN.000101-E0110]: epdk.gov.tr => Press releases => select Electricity Market board decisions.

[^ntr111-L_202601857EN.000101-E0111]: There was a clerical error in the calculation of the benchmark of steam in the Second Note. The benchmark of steam was established at 501,61CNY/tonne.

• (182) Following the complainants’ comments on the Second Note, Hubei Greenhome requested that the Commission uses the undistorted benchmark for non-coking coal (thermal coal) as used by Hubei Greenhome in its production process, and not the bituminous coal that includes the coking coal that is used for steel making (thus, is more expensive). The Commission accepted Hubei Greenhome’s claim, as this coal type was found to be commonly used for heating processes in the manufacturing of chemical products.

• (183) 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 verified data reported by the sampled exporting producers and added research and development costs for the IP as they were incurred and accounted by the exporting producers.

• (184) Further to the Second Note, Hubei Greenhome claimed that research and development costs should be regrouped under SG&A costs because under Turkish Accounting Law they are in general classified under such SG&A costs. If the Commission relied on the SG&A costs of eleven Turkish chemical manufacturers to construct the normal value used in the dumping calculations of the co-operating Chinese exporting producers, research and development costs could potentially be double counted when regrouped under manufacturing overheads.

• (185) The Commission rejected the claim for the following reasons. First, the Turkish accounting law rules submitted by Hubei Greenhome do not clearly provide to book research and development costs solely under SG&A costs. Second, the data of the eleven companies considered do not break down research and development costs under SG&A costs in the available financial statements. In other words, Hubei Greenhome did not demonstrate that the R&D costs were included in the SG&A costs used by the Commission to establish the SG&A rates to arrive at reasonable amounts within the meaning of Article 2(6a)(a) of the basic Regulation.

Raw materials

• (186) In order to establish the undistorted price of raw materials as delivered at the gate of a representative country producer, the Commission used as a basis the weighted average import price to the representative country as reported in the GTA to which import duties and transport costs were added.

• (187) The import price in the representative country was determined as the 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 [^ntr112-L_202601857EN.000101-E0112].

• (188) The Commission decided to exclude imports from the PRC into the representative country as it concluded in Section 3.2.4 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.

• (189) 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.

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

Labour

• (191) Labour is a factor of production representing between 1 % to 2 % of total cost of production. The Commission intends to use the statistics published by the TurkStat, the Turkish labour costs statistics [^ntr113-L_202601857EN.000101-E0113], to determine the wages in Türkiye using the detailed information on wages in the producing sector for 2022, for the economic activity for NACE code 2014 – manufacturing of basic organic chemicals, in which the production of benzyl alcohol falls, according to NACE Rev.2 classification.

• (192) The average monthly value has been duly adjusted for inflation using the domestic producer price index as published by the Turkish Statistical Institute [^ntr114-L_202601857EN.000101-E0114] to adapt to the investigation period, going from 1 October 2024 to 30 September 2025. The hourly rate for the investigation period obtained after indexation amounts to 89,64 CNY/hour.

Electricity

• (193) The Commission used the electricity price statistics published by the EMRA, Energy Market Regulatory Authority of Türkiye [^ntr115-L_202601857EN.000101-E0115] in its regular press releases. The Commission used the average industrial electricity prices in the corresponding consumption band in kWh covering the investigation period. The Commission established the cost for electricity for the investigation period at 0,66 CNY/kWh.

Natural gas

• (194) The Commission used the average natural gas prices in m³ from the Turkish statistical institute. These prices were duly adjusted for inflation using the Producer Price Index published by the Turkish Statistical Institute [^ntr116-L_202601857EN.000101-E0116] to adapt to the investigation period. The price was adjusted to remove the VAT of 18 %, as the quoted price is VAT included. The Commission established the price for natural gas for the investigation period at 4,63 CNY/m³.

Steam

• (195) The Commission established the benchmark for steam on the basis of the benchmark calculated for natural gas, considering that the unit for steam is GigaJoule (GJ). One GJ is converted into m³ gas based on the general accepted content of mmbtu (million metric British thermal units) in 1 GJ [^ntr117-L_202601857EN.000101-E0117], and the general accepted content of natural gas in 1 mmbtu [^ntr118-L_202601857EN.000101-E0118]. The consumption of steam by the exporting producers is expressed in tonnes, so the Commission converted the equivalent of 1 GJ into tonnes [^ntr119-L_202601857EN.000101-E0119]. The Commission also noted a clerical mistake in the conversion formula from GJ into tonnes which had resulted in an incorrect steam benchmark price in the Second FOP Note and it therefore put on file during pre-disclosure, a revised version of the Annex V to the second FOP Note, correcting the mistake. By applying the benchmark for natural gas, the Commission established a benchmark of 501,61 CNY/tonne for steam, as presented in Table 1 above.

• (196) The complainants identified the clerical mistake in the steam calculation and requested the Commission to revise the steam benchmark in Türkiye according to its established practice in anti-dumping investigations, such as relying on the methodology outlined by the U.S. Department of Energy.

• (197) Further to the complainants’ comments, Hubei Greenhome replied that, should the Commission decide to revise its calculations for the steam benchmark in Türkiye, then should calculate a benchmark for steam produced from coal, claiming that its steam supplier uses coal instead of natural gas for the production of the steam. In support of this claim, Hubei Greenhome has provided a contract for the purchase of coal by its steam supplier which is used to generate steam. The Commission considered that the sales agreement provided did not prove the end use of the coal purchased under this agreement, nor that the steam supplier uses exclusively coal for the steam production sold. At this stage of the investigation, the Commission, therefore, rejected the claim.

Coal

• (198) In the First Note, the Commission established a benchmark of 1,01 CNY/kg for coal, as classified under Commodity code 2701 12 .

• (199) Further to the Second Note, Hubei Greenhome claimed that the Commission should use the code which is most specific to the coal which is actually purchased and used by Hubei Greenhome to value the factor of production of coal – which, in this case, is non-coking coal. Coking coal (or ‘metallurgical coal’) has a higher cost than non-coking coal and is almost exclusively used for steelmaking. The coal purchased by Hubei Greenhome is for energy production, not steelmaking, and thus it is clear that HS code 2701 12 90 covering non-coking coal should apply. The Commission agreed with Hubei Greenhome’s reasoning and accepted the claim.

• (200) The Commission decided to exclude imports of coal from Russia into the representative country because of significant distortions. Coal originating in Russia is subject to several distortions, such as dual pricing policies, restrictions on critical raw materials and discounted export sales prices as a result of international sanctions targeting Russian coal exports [^ntr120-L_202601857EN.000101-E0120]. This is also shown by the fact that 80 % of Türkiye’s total coal imports originate in Russia at low prices, giving Russian imports a dominant position over other suppliers in Türkiye and pressing prices downwards.

Consumables

• (201) For a number of factors of production, the actual costs incurred by the cooperating exporting producers represented a negligible share of the 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.

• (202) The Commission calculated the percentage of the consumables in the total cost of production and applied this percentage to the recalculated cost of production based on benchmarks.

By-product

• (203) In the First note, the Commission identified five by-products i.e. industrial salt, crude epichlorohydrin, sodium hypochlorite, hydrochloric acid and dibenzyl ether. Based on the questionnaire replies of the two sampled exporting producers and given the low share of some of the identified by-products such as the industrial salt, crude epichlorohydrin, sodium hypochlorite and hydrochloric acid in the total cost of production, the Commission calculated the percentage of these by-products in the total cost of production and applied this percentage to the recalculated cost of production based on benchmarks.

• (204) The Commission identified dibenzyl ether as a by-product obtained from the production of the product under investigation which can be sold without further processing. The Commission used the import statistics from the GTA database as benchmark of dibenzyl ether. The Commission established an undistorted import price of 12,62 CNY/Kg for dibenzyl ether.

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 cooperating exporting producers were expressed as a share of the costs of manufacturing actually incurred by these producers. As mentioned in recital 182, the Commission included in the manufacturing overheads the research and development costs allocated by the sampled exporting producers to the investigation period. The resulting 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 the year 2024 for the eleven Turkish companies active in NACE code 2014 and listed in the footnote of recital 32, as extracted from Orbis.

Calculation

• (208) Based on 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 cooperating exporting producer. These consumption rates were verified during the performed on-spot verifications. The Commission multiplied the usage factors by the undistorted costs per unit observed in the representative country, as listed in Table 1 above.

• (210) Once the undistorted manufacturing cost were established, the Commission assessed the manufacturing overheads, SG&A costs and profit as noted in recitals 206 and 207. They were determined based on the financial statements of the eleven companies listed in paragraph (203) above.

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

• (212) To the costs of production established as described in the previous recital, the Commission added the weighted average SG&A costs and profit of the eleven companies listed in recital 203. SG&A costs, expressed as a percentage of the Costs of Goods Sold (‘COGS’) and applied to the undistorted costs of production, amounted to 25,56 %. The profit expressed as a percentage of the COGS and applied to the undistorted costs of production, amounted to 11,22 %.

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.

3.3.   Export price

• (213) As all sampled exporting producers exported to the Union directly to independent customers, 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.

3.4.   Comparison

• (214) 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.

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

3.4.1.   Adjustments made to the normal value

• (216) As explained in Section 3.2 above, 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.

• (217) The Commission found no reasons for making any allowances to the normal value, nor were such allowances claimed by any of the sampled exporting producers.

3.4.2.   Adjustments made to the export price

• (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 commissions.

3.5.   Dumping margins

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

• (221) 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
Hubei Greenhome Materials Technology, Inc.	71,2 %
Qianjiang Xinyihong Organic Chemical Co., Ltd.	52,6 %

• (222) 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.

• (223) On this basis, the provisional dumping margin of the cooperating exporting producers outside the sample is 66,8 %.

• (224) 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.

• (225) 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 PRC to the Union in the investigation period, that were established on the basis of imports statistics from Eurostat for the CN code listed in recital 23.

• (226) The level of cooperation in this case is high because the exports of the cooperating exporting producers constituted around 90 % of the total imports during the investigation period. On this basis, the Commission decided to establish the dumping margin for non-cooperating exporting producers at the level of the cooperating sampled individually examined company with the highest dumping margin.

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

Company	Provisional dumping margin
Hubei Greenhome Materials Technology, Inc.	71,2  %
Qianjiang Xinyihong Organic Chemical Co., Ltd.	52,6  %
Other cooperating companies: — Chongqing Zoteq Aroma Chemical Co.,Ltd, — Hubei Kelin Bolun New Materials Co., Ltd, — Tianjin Dacals Chemical Co., Ltd.	66,8  %
All other imports originating in the PRC	71,2  %

4. INJURY

4.1.   Definition of the Union industry and Union production

• (228) During the investigation period, the like product was manufactured by three producers belonging to two distinct groups in the Union. They constitute the Union industry within the meaning of Article 4(1) of the basic Regulation.

• (229) As the Union industry consists of two groups of companies, the figures in this and the next section are given in ranges for confidentiality reasons.

• (230) The total Union production during the investigation period was established at [31 000 – 33 000] tonnes. The Commission established the figure on the basis of the questionnaires replies of the two sampled Union producers and the questionnaire reply on macro-indicators. As indicated in recital 7, the two sampled Union producers represented over 95 % of the total Union production of the like product.

4.1.1.   Determination of the relevant Union market

• (231) 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.

• (232) The Commission found that a minor part of the sampled Union producers’ production was destined for captive use. This concerned around [1-2,5] % of the Union production and one producer only. The product was simply transferred (without invoice) and/or delivered at transfer prices within the same company or groups of companies for further downstream processing.

• (233) The distinction between captive and free market is relevant for the injury analysis because products destined for captive use are not exposed to direct competition from imports. By contrast, production destined for free market sale is in direct competition with imports of the product concerned.

• (234) To provide a picture of the Union industry that is as complete as possible, the Commission obtained data for the entire product activity and determined whether the production was destined for captive use or for the free market.

• (235) The Commission examined certain economic indicators relating to the Union industry on the basis of data for the free market. These indicators are: sales volume and sales prices on the Union market; market share; growth; export volume and prices; profitability; return on investment; and cash flow. Where possible and justified, the findings of the examination were compared with the data for the captive market in order to provide a complete picture of the situation of the Union industry.

• (236) However, other economic indicators could meaningfully be examined only by referring to the whole activity, including the captive use of the Union industry. These are: production; capacity, capacity utilisation; investments; stocks; employment; productivity; wages; and ability to raise capital. They depend on the whole activity, whether the production is captive or sold on the free market.

4.2.   Union consumption

• (237) The Commission established the Union consumption as the sum of the free market and the captive market. The free market was established on the basis of the sales volume of the Union industry to unrelated parties on the Union market plus imports from all third countries as recorded in Eurostat. The captive market reflects captive transactions as reported by the Union industry.

• (238) Union consumption developed as follows:

Table 2

Union consumption (tonnes)

	2022	2023	2024	IP
Total Union consumption	[30 500 – 32 500 ]	[29 500 – 31 500 ]	[30 500 – 32 500 ]	[31 000 - 33 000 ]
Index	100	95	100	102
Captive market	[500 – 700 ]	[500 – 700 ]	[500 – 700 ]	[500 – 700 ]
Index	100	88	93	91
Free market	[30 000 – 32 000 ]	[29 000 – 31 000 ]	[30 000 – 32 000 ]	[30 500 - 32 500 ]
Index	100	95	100	102
Source: Macro-questionnaire reply, questionnaire replies of sampled Union producers and Eurostat.	Source: Macro-questionnaire reply, questionnaire replies of sampled Union producers and Eurostat.	Source: Macro-questionnaire reply, questionnaire replies of sampled Union producers and Eurostat.	Source: Macro-questionnaire reply, questionnaire replies of sampled Union producers and Eurostat.	Source: Macro-questionnaire reply, questionnaire replies of sampled Union producers and Eurostat.

• (239) Overall, Union consumption remained at stable levels. After a drop in 2023, it recovered. At the end of the period considered it was 2 % higher than in 2022.

• (240) The captive market concerned captive use for the production of blends for personal care applications. It represented a minor share of the Union production and was stable throughout the period considered.

• (241) As far as the free market is concerned, 2023 saw unusually lower figures due to force majeure supply issues experienced by one Union producer, as well as temporarily weaker Union demand due to a general destocking by customers taking place that year [^ntr121-L_202601857EN.000101-E0121]. Otherwise, free market consumption in the Union was relatively stable. It experienced a slight growth in the second half of the period considered to reach [30 500 - 32 500] tonnes in the investigation period.

4.3.   Imports from the country concerned

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

• (242) The Commission established the volume of imports on the basis of Eurostat. The market share of the imports was established on the basis of imported volumes compared to Union consumption in the free market as per table 2.

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

Table 3

Import quantity (tonnes) and market share (%)

	2022	2023	2024	IP
Quantity of imports from the country concerned (tonnes)	5 059	9 246	10 611	13 067
Index	100	183	210	258
Market share (%)	[15 – 20 ]	[30 – 35 ]	[32 – 37 ]	[39 – 53 ]
Source: Eurostat (tonnes).	Source: Eurostat (tonnes).	Source: Eurostat (tonnes).	Source: Eurostat (tonnes).	Source: Eurostat (tonnes).

• (244) Imports from the country concerned increased significantly over the period considered, from 5 059 tonnes in 2022 to 13 067 tonnes in the investigation period. This represents an increase by 158 %.

• (245) Similarly, the market share of Chinese imports more than doubled, from around [15 – 20] % in 2022 to [39 – 53] % in the investigation period.

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

• (246) The Commission established the prices of imports on the basis of Eurostat data. Price undercutting of the imports was established on the basis of data provided by sampled exporting producers and sampled Union producers.

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

Table 4

Import prices (EUR/tonne)

	2022	2023	2024	IP
Country concerned	2 737	1 846	1 690	1 444
Index	100	67	62	53
Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.	Source: Eurostat.

• (248) Import prices from the country concerned shrank over the period considered, from 2 737 EUR/tonne in 2022 to 1 444 EUR/tonne in the investigation period. The fall by almost 900 EUR/tonne between 2022 and 2023 can be partly attributed to the fall of all-time high shipping prices in 2022 to more normalised levels in 2023. However, Chinese import prices continued their downward trend in 2024 (notwithstanding the surge of global shipping costs that year [^ntr122-L_202601857EN.000101-E0122]) and the investigation period.

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

• (1) the weighted average sales prices of the imports from the sampled cooperating Chinese producers to the first independent customer on the Union market, established on a Cost, insurance, freight (CIF) basis, with appropriate adjustments for customs duties and post-importation costs; and

• (2) the corresponding weighted average sales prices of the sampled Union producers charged to unrelated customers on the Union market, adjusted to an ex-works level.

• (250) The price comparison was made after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ theoretical turnover during the investigation period. It showed a weighted average undercutting margin of over 18 % by the imports from the country concerned on the Union market. 100 % of the imported volumes were found to be undercutting.

4.5.   Economic situation of the Union industry

4.5.1.   General remarks

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

• (252) As mentioned in recital 7, sampling was used for the determination of possible injury suffered by the Union industry.

• (253) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data contained in the questionnaire reply on macro-data. The data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. The data related to the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

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

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

4.5.2.   Macroeconomic indicators

4.5.2.1.   Production, production capacity and capacity utilisation

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

Table 5

Production, production capacity and capacity utilisation

	2022	2023	2024	IP
Production quantity (tonnes)	[37 500 – 39 500 ]	[30 000 – 32 000 ]	[34 000 – 36 000 ]	[31 000 – 33 000 ]
Index	100	78	91	82
Production capacity (tonnes)	[50 000 – 58 000 ]	[50 000 – 58 000 ]	49 000 – 57 000 ]	[50 000 – 58 000 ]
Index	100	100	100	100
Capacity utilisation (%)	79	61	72	65
Index	100	78	91	82
Source: Macro-questionnaire reply.	Source: Macro-questionnaire reply.	Source: Macro-questionnaire reply.	Source: Macro-questionnaire reply.	Source: Macro-questionnaire reply.

• (257) Between 2022 and 2023, Union production fell by [20-30] %, from [37 500 - 39 500] tonnes to [31 000 – 33 000] tonnes. In the period considered, production reached its lowest point in 2023. This occurred largely due to a force majeure event that year with regards to the supply of chlorine to one Union producer, which forced the company to reduce its production.

• (258) The production capacity remained relatively stable throughout the period. The number of turnaround days resulted in some fluctuations in the effective production capacity. However, nameplate capacity did not change at all during the period.

• (259) Capacity utilisation is an important injury indicator for a commodity producer. Capacity utilization decreased overall during the period considered from [75-85] % in 2022 to [65-75] % by the end of the investigation period. Although the capacity utilization seems to have improved between 2023 and 2024, this was in fact a reflection of the end of the force majeure incident in 2023 referred to in recital 257 above.

4.5.2.2.   Sales quantity and market share

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

Table 6

Sales quantity and market share

	2022	2023	2024	IP
Total sales quantity on the Union market (tonnes)	20 000 – 25 000	18 000 – 23 000	20 000 – 25 000	17 000 – 22 000
Index	100	82	89	79
Captive market	500 - 700	500 - 700	500 - 700	500 – 700
Index	100	88	93	91
Free market sales	20 000 – 25 000	18 000 – 23 000	20 000 – 25 000	17 000 – 22 000
Index	100	82	89	79
Market share of free market sales (%)	[65 – 75 ]	[60 – 70 ]	[60 – 70 ]	[50 – 60 ]
Source: Macro-questionnaire reply.	Source: Macro-questionnaire reply.	Source: Macro-questionnaire reply.	Source: Macro-questionnaire reply.	Source: Macro-questionnaire reply.

• (261) The sales of the Union industry fell by around 20 %, from [20 000 – 25 000] tonnes in 2022 to [17 000 – 22 000] tonnes in the investigation period, despite the slight growth of Union consumption. Lower sales in 2023 were partly due to a force majeure event that year with regards to the supply of chlorine to the main Union producer, which forced the company to reduce its production.

• (262) Accordingly, the market share of the Union industry dropped around 17 percentage points in the investigation period.

4.5.2.3.   Growth

• (263) The Union industry has shown no growth over the period considered. In the investigation period, despite a slightly increasing Union consumption, the Union industry lost sales volumes, market share, decreased its production and production capacity utilisation and lost bargaining power, thus had a worse position than in 2022.

4.5.2.4.   Employment and productivity

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

Table 7

Employment and productivity

	2022	2023	2024	IP
Number of employees	[100 - 120 ]	[100 - 120 ]	[100 - 120 ]	[100 - 120 ]
Index	100	97	102	92
Productivity (unit/employee)	[300 - 400 ]	[250 - 350 ]	[250 - 350 ]	[250 - 350 ]
Index	100	80	89	89
Source: Macro-questionnaire reply.	Source: Macro-questionnaire reply.	Source: Macro-questionnaire reply.	Source: Macro-questionnaire reply.	Source: Macro-questionnaire reply.

• (265) Employment levels remained relatively stable, with few jobs lost by the end of the investigation period (- 8 %).

• (266) Given a drop in production volumes higher than the decline of job levels, productivity shrank from [300 – 400] tonnes/employee in 2022 to [250 – 350] tonnes/employee in the investigation period.

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

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

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

4.5.3.   Microeconomic indicators

4.5.3.1.   Prices and factors affecting prices

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

Table 8

Sales prices in the Union & Unit cost of production

	2022	2023	2024	IP
Average unit sales price in the Union on the free market (EUR/tonne)	[2 500 – 3 000 ]	[2 000 – 2 400 ]	[1 800 – 2 200 ]	[1 600 – 2 000 ]
Index	100	80	74	66
Unit cost of production (EUR/tonne)	[2 400 – 2 900 ]	[2 400 – 2 900 ]	[2 100 – 2 600 ]	[2 100 – 2 600 ]
Index	100	98	84	84
Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.

• (270) The Union sales prices in the Union free market fell by over 30 %, from [2 500 – 3 000] EUR/tonne in 2022 to [1 600 – 2 000] tonnes in the investigation period, in an attempt not to lose customers in a context of increasing Chinese imports at decreasing prices. The Unit sales prices were below the unit cost of production during the entire period considered. As of 2023, the gap between the average prices by Union producers and Chinese import prices was significant, the highest gap occurring in the investigation period.

• (271) The unit cost of production fell by 16 %, from [2 400 – 2 900] EUR/tonne in 2022 to [2 100 – 2 600] EUR/tonne in the investigation period. This was the result of a normalisation of the energy prices (all-time high in 2022) and cost reduction programmes, namely within one Union producer facing financial difficulties.

4.5.3.2.   Labour costs

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

Table 9

Average labour costs per employee

	2022	2023	2024	IP
Average labour costs per employee (EUR)	[100 000 – 115 000 ]	[95 000 - 105 000 ]	[90 000 - 105 000 ]	[95 000 – 110 000 ]
Index	100	90	90	95
Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.

• (273) The average labour cost per employee of the sampled Union producers varied over the period considered, partly due to changes in the labour base resulting from new recruitments and the fulfilment of salary indexation commitments. Labour costs per employee were relatively high in 2022 because of the bonus paid to employees by one of the sampled producers that year.

4.5.3.3.   Inventories

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

Table 10

Stocks

	2022	2023	2024	IP
Closing stock (tonnes)	[1 200 – 1 900 ]	[1 700 – 2 000 ]	[1 200 – 1 600 ]	[900 – 1 300 ]
Index	100	107	86	61
Closing stock as a percentage of production (%)	5	7	5	4
Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.

• (275) Closing stock fell by 39 % over the period considered. As to stock as a percentage of production, it ranged from 7 % in 2023, when the gap between Union and Chinese prices started to widen, to 4 % in the investigation period. The deteriorating situation of the Union producers led to actions to reduce working capital in the investigation period.

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

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

Table 11

Profitability, cash flow, investments and return on investments

	2022	2023	2024	IP
Profitability of sales in the Union to unrelated customers (% of sales turnover)	[0 – 10 ]	[-17 – -21 ]	[-13 – -6 ]	[-20 – -15 ]
Cash flow (EUR)	[2 000 000 ] – [5 000 000 ]	[-13 000 000 ] – -10 000 000 ]	[-8 000 000 ] – [-5 000 000 ]	[-13 000 000 – [-10 000 000 ]
Index	100	- 617	- 376	- 631
Investments (EUR)	1 500 000 – 3 500 000	1 000 000 – 3 000 000	800 000 – 1 800 000	1 000 000 – 3 000 000
Investments -Index	100	65	49	72
Return on investments (%)	2	-60	-45	-66
Index	100	-2 668	-2 031	-2 947
Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.	Source: Questionnaire replies of sampled Union producers.

• (277) The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. 2022 was an exceptional year, with high raw material and energy prices and disruptions following Russia’s war of aggression against Ukraine that year. However, 2022 was the only year in the period considered in which Union producers made profits as a result of their contracted volumes and prices and the lower presence of Chinese imports at fairer prices. Profitability turned from positive in 2022 to negative the following year and was extremely loss-making since as a result of the developments in the Union industry’s average sales prices and costs of production described in recitals 270-271, lower capacity utilisation and lower production to absorb fixed costs.

• (278) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow developed negatively throughout the period considered and followed closely the profitability trend and fluctuations in stock levels. Since 2023, the net cash flow available became too short even for the maintenance and replacement of machinery in plants.

• (279) Other than one more significant investment coming from a decision that had been made all the way back in 2018, the Union industry had limited investments in the period considered, even if continuous investment in a chemical plant is essential to long-term survival and keeping up with regulatory requirements. These few investments focused on reducing energy consumption, rationalisation and efficiency gains.

• (280) The return on investments is the profit in percentage of the net book value of investments. It developed negatively over the period considered reflecting the trends previously described for profitability and cash flow.

• (281) The sampled Union producers’ ability to raise capital was hindered by the drop in profitability and cashflow. One of them was in severe financial difficulties [^ntr123-L_202601857EN.000101-E0123].

4.6.   Conclusion on injury

• (282) Over the period considered, the Union industry experienced decreasing sales prices (- 34 %), which together with high cost of production have caused the low profit level of 2022 to turn into losses in 2023, 2024 and the investigation period. These trends resulted in substantial falls in cash flow, return on investment and investment levels. Despite a healthy and stable Union consumption, significant negative trends were also observed in volume indicators such as production, which decreased by 18 %, sales volume, which decreased by 21 %, and market share, that went from [65 – 75] % in 2022 to [50 – 60] % in the investigation period. Also, capacity utilisation levels shrank to unsustainable levels, being too low for a commodity chemical producer to recover relevant costs. These developments left the Union industry in an injurious situation. Jobs in the Union disappeared. None of the indicators examined showed a positive development.

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

5. CAUSATION

• (284) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the country concerned caused material injury to the Union industry. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the dumped imports from the country concerned was not attributed to the dumped imports. These factors are: effects of imports from other third countries, the export performance of the Union industry and the fluctuations in the prices of material factors of production.

5.1.   Effects of the dumped imports

• (285) Over the period considered, there was a clear and constant overtake by Chinese imported volumes of the growing EU market, as depicted in table 3. As a result, the Union industry lost significant sales volumes and market share and other sources of supply (i.e. non-Chinese imports) faded out.

• (286) In 2022, Chinese imports arrived at prices close to those of the Union industry. From 2023 onwards, Chinese exporters permanently sold at prices below the Union industry prices. The Chinese import prices were below the Union industry’s cost of production during the entire period considered.