**Important legal notice**

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# 52006PC0415

**Proposal for a Council Regulation imposing a definitive anti-dumping duty on imports of silicon carbide originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No 384/96, and terminating the investigations concerning the anti-dumping measures applicable to imports of silicon carbide originating in the Russian Federation and Ukraine  /* COM/2006/0415 final */****

[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 24.7.2006

COM(2006) 415 final

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of silicon carbide originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No 384/96, and terminating the investigations concerning the anti-dumping measures applicable to imports of silicon carbide originating in the Russian Federation and Ukraine

(presented by the Commission)

EXPLANATORY MEMORANDUM CONTEXT OF THE PROPOSAL |

Grounds for and objectives of the proposal This proposal concerns the application of Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community, as last amended by Council Regulation (EC) No 2117/2005 of 21 December 2005 ("the basic Regulation") in the proceeding concerning imports of silicon carbide originating in the People’s Republic of China, The Russian Federation and Ukraine following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No 384/96. |

General context This proposal is made in the context of the implementation of the basic Regulation and is the result of an investigation which was carried out in line with the substantive and procedural requirements laid out in the basic Regulation. |

Existing provisions in the area of the proposal There are no existing provisions in the area of the proposal. |

Consistency with other policies and objectives of the Union Not applicable. |

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT |

Consultation of interested parties |

Interested parties concerned by the proceeding have already had the possibility to defend their interests during the investigation, in line with the provisions of the basic Regulation. |

Collection and use of expertise |

There was no need for external expertise. |

Impact assessment This proposal is the result of the implementation of the basic Regulation. The basic Regulation does not foresee a general impact assessment but contains an exhaustive list of conditions that have to be assessed. |

LEGAL ELEMENTS OF THE PROPOSAL |

Summary of the proposed action On 26 May 2005, the Commission initiated an expiry review of the anti-dumping measures in force in respect of imports of silicon carbide originating in the People’s Republic of China, the Russian Federation and Ukraine together with an interim review of the anti-dumping measures applicable to imports of the same product originating in the Russian Federation and limited to the form of the measures. The review investigation found continuing dumping of the product concerned for the People’s Republic of China, which, should measures be lifted, would result in the recurrence of injury to the Community industry. At the same time neither continuing dumping nor the likelihood of recurrence of dumping of the product concerned was found from imports originating in the Russian Federation and Ukraine. It was further established that the lapse of measures as far as imports originating in Russia and Ukraine are concerned, would not be against the interest of the Community. Therefore, it is suggested that the Council adopts the attached proposal for a Regulation in order to prolong the existing measures against the People’s Republic of China and to terminate the measures against the Russian Federation and Ukraine. |

Legal basis Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community, as last amended by Council Regulation (EC) No 2117/2005 of 21 December 2005. |

Subsidiarity principle The proposal falls under the exclusive competence of the Community. The subsidiarity principle therefore does not apply. |

Proportionality principle The proposal complies with the proportionality principle for the following reasons: |

The form of action is described in the above-mentioned basic Regulation and leaves no scope for national decision. |

Indication of how financial and administrative burden falling upon the Community, national governments, regional and local authorities, economic operators and citizens is minimized and proportionate to the objective of the proposal is not applicable. |

Choice of instruments |

Proposed instruments: regulation. |

Other means would not be adequate for the following reason: Other means would not be adequate because the basic Regulation does not foresee alternative options. |

BUDGETARY IMPLICATION |

The proposal has no implication for the Community budget. |

1.  Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of silicon carbide originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No 384/96, and terminating the investigations concerning the anti-dumping measures applicable to imports of silicon carbide originating in the Russian Federation and Ukraine

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (the ‘basic Regulation’)[1] and in particular Articles 11(2) and 11(3) thereof,

Having regard to the proposal submitted by the Commission after having consulted the Advisory Committee,

Whereas:

1. PROCEDURE

1.1 Previous investigations, measures in force and on-going investigations

(1) By Regulation (EC) No 821/94[2], following an expiry review in accordance with Article 14 and 15 of Regulation 2423/88[3], the Council prolonged the imposed definitive anti-dumping duties on imports of silicon carbide (‘SiC’) originating in the People’s Republic of China (‘PRC’), Poland, the Russian Federation (‘Russia’) and Ukraine. At the same time, the Commission, by Decision 94/202/EC[4], accepted an undertaking offered by the Government of Russia, in conjunction with V/O Stankoimport, Moscow, Russia.

(2) In May 2000, by Regulation (EC) No 1100/2000[5], the Council again prolonged the definitive anti-dumping duty on imports of SiC originating in the PRC, Russia and Ukraine following an expiry review and also prolonged the undertaking offered by the Russian government in conjunction with V/O Stankoimport, Moscow, Russia accepted by Commission Decision 94/202/EC.

(3) The investigation mentioned above in recital (1) leading to the imposition of definitive anti-dumping duties and the acceptance of undertakings from certain exporters concerned by this investigation, and the expiry reviews concluded in 1994 and 2000 mentioned above in recitals (1) and (2) will hereinafter be referred as to “the original investigations”.

(4) In 2004, by Regulation (EC) 991/2004[6], the Council provided for the exemption from the anti-dumping duties of imports into the new Member States that acceded to the European Union on 1 May 2004 (‘the EU-10’) made under the terms of special undertaking offers (‘enlargement undertakings’), and authorised the Commission to accept those enlargement undertakings. On this basis, by Decisions 2004/498/EC[7] and 2004/782/EC[8], the Commission accepted the undertakings offered by the Ukrainian exporting producer Open Joint Stock Company ‘Zaporozhsky Abrasivny Combinat”. The acceptance of this undertaking expired on 20 May 2005.

(5) In January 2004 the Commission initiated a partial interim review[9] requested by Zaporozhsky Abrasivny Combinat, the Ukrainian exporting producer. The applicant had alleged that following a significant change of circumstances it should be granted market economy treatment (‘MET’) and that its dumping margin was significantly below the level of the measures in force. However, following an investigation, it was found that the company did not meet the criteria to be granted MET (Article 2(7)(c) of Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not member of the European Community[10] (‘the basic Regulation’)) and the investigation was subsequently terminated.[11]

(6) Finally, on 30 June 2005[12], the Commission initiated an anti-dumping proceeding concerning imports of SiC originating in Romania, further to a complaint lodged by the European Chemical Industry Council (‘CEFIC’) on behalf of producers representing 100 % of the total Community production of SiC. However, further to the withdrawal of the complaint by CEFIC on 1st March 2006, the investigation was terminated by Commission Decision EC/423/2006[13].

1.2 Request for an expiry review

(7) Following the publication of a notice of impending expiry of the anti-dumping measures in force of SiC originating in the PRC, Russia and Ukraine[14], the Commission received, on 24 February 2005, a request to review these measures pursuant to Article 11(2) of the basic Regulation. At the same time, the Commission received also a request to review the form of the measures applicable to imports of the product concerned originating in Russia pursuant to Article 11(3) of the basic Regulation.

(8) These requests were lodged by the European Chemical Industry Council (‘CEFIC’) on behalf of producers representing 100 % of the total Community production of SiC. The request for an expiry review was based on the grounds that the expiry of the measures would be likely to result in a continuation or recurrence of dumping and injury to the Community industry. The request for an interim review was based on the fact that the form of the measures would be inappropriate and would not eliminate the injurious effects of the dumping.

(9) Having determined, after consulting the Advisory Committee, that sufficient evidence existed for the initiation of an expiry review pursuant to Articles 11(2) and an interim review pursuant to Article 11(3) of the basic Regulation, the Commission initiated both reviews on the same date[15].

1.3 Investigation

(10) The Commission officially advised the exporting producers, importers, raw material producers, users known to be concerned and their associations, the representatives of the exporting countries and the Community producers of the initiation of the expiry and the interim review. Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set out in the notice of initiation.

(11) In view of the large number of Chinese exporting producers and importers in the Community not related to an exporting producer in one of the countries concerned, it was considered appropriate, in conformity with Article 17 of the basic Regulation, to examine whether sampling should be used. In order to enable the Commission to decide whether sampling would indeed be necessary and, if so, to select a sample, the above parties were requested, pursuant to Article 17(2) of the basic Regulation, to make themselves known within two weeks of the initiation of the proceeding and to provide the Commission with the information requested in the notice of initiation.

(12) No Chinese exporting producer submitted the requested information and none cooperated in the present proceeding. It was thus decided that sampling was not necessary with regard to the Chinese producers.

(13) Six unrelated importers in the Community provided the information requested in the notice of initiation and expressed their willingness to cooperate in the further investigation. From the above six importers, three companies were selected for the sample. These importers represented the largest representative volume of imports of known importers in the Community (98%), which could be investigated within the time available.

(14) Questionnaires were therefore sent to the three sampled Community importers, to two Community producers, to eighteen Community users, to sixteen raw material suppliers and to the two known exporting producers in the Ukraine and in the Russian Federation. In addition, two producers in Brazil, which was selected as the potential analogue country, were contacted and received a questionnaire.

(15) Full replies to the questionnaires were received from the three sampled Community importers, seven users, two raw material producers and two exporting producers in the countries concerned, as well as from two producers in the analogue country.

(16) The Commission sought and verified all the information deemed necessary for its investigation, and carried out verification visits at the premises of the following companies:

Community producers:

-  Kollo Silicon carbide B.V. (Netherlands), ESK-SIC GmbH (Germany)

-  Navarro SiC, S.A. (Spain),

Producers in the exporting countries:

-  JSC Zaporozhsky Abrasivny Combinat, Zaporozhsky (Ukraine)

-  JSC Volzhsky Abrasive Combinat, Volzhsky (Russia)

Producers in the analogue country:

-  Saint-Gobain Materials Cerámicas Ltda, Minas Gerais (Brazil)

-  Treibacher Schleifmittel Brasil Ltda, Sao Paolo (Brazil)

Importers in the Community:

-  Imexco-Ullrich GmbH (Germany)

-  Smyris Abrasivi (Italy)

Users the Community:

-  Morganite Crucible Limited (United Kingdom)

-  TGA Ltd (Czech Republic)

(17) The investigation regarding the likelihood of a continuation or recurrence of dumping and injury covered the period from 1 April 2004 to 31 March 2005 (‘investigation period’ or ‘IP’). The examination of the trends relevant for the assessment of a likelihood of a continuation or recurrence of injury covered the period from 1st January 2001 up to the end of the IP (‘period considered’).

(18) All the parties concerned were informed of the essential facts and considerations on the basis of which the conclusions of this review were based. They were also granted a period within which to make representations subsequent to this disclosure. The representations received, within the deadlines, were carefully considered and where deemed appropriate, taken into account for the findings.

2. PRODUCT CONCERNED AND LIKE PRODUCT

2.1 Product concerned

(19) The product concerned is the same as that in the original investigations which led to the imposition of measures currently in force, i.e. silicon carbide (SiC). SiC is currently classifiable within CN code 2849 20 00.

(20) SiC is produced by heating silicon and coke (or petroleum coke) at high temperatures (up to 2000°C). The output of this process is crude SiC which is usually further processed for its final end-uses. The production process of SiC is such that the output automatically comprises a variety of grades related to different content concentration of silicon. The different grades can be segregated into two main grades: crystalline and metallurgical. The crystalline grade is considered to be of higher quality because it has higher silicon content. The crystalline grade is further classified under the types black and green.

(21) The crystalline grade is normally used in the manufacturing of abrasive tools, grinding wheels, high-quality refractory products, technical ceramics, while the metallurgical grade is normally used in foundry and blast-furnace operations as a silicon carrier. As in the previous investigations, both grades have to be considered as forming one product for the purpose of this investigation.

2.2 Like product

(22) As established in the original investigations, the current investigation confirmed that the product concerned and the products manufactured and sold by the exporting producers on their domestic markets, as well as those manufactured and sold by the Community producers on the Community market and by the producer in the analogue country on the domestic market of the analogue country have the same basic physical and chemical characteristics and end uses and are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation.

3. LIKELIHOOD OF A CONTINUATION AND/OR RECURRENCE OF DUMPING

3.1 Preliminary remarks

(23) In this expiry review, full cooperation from the two known producers in Ukraine and the Russian Federation was obtained. However, as mentioned in recital (12), no producer came forward from the PRC.

3.2 Dumping of imports during the investigation period

3.2.1 Analogue country

(24) Since the Ukraine ([16]) and the PRC were not considered as market economy countries during the investigation period (and in the preceding investigations), normal value had to be established in accordance with Article 2(7)(a) of the basic Regulation, i.e. based on information obtained in a market economy third country where the product was produced and sold domestically. Moreover, it is recalled that the exporting producer in Ukraine had not been able to obtain MET in an interim review which was concluded just before the initiation of this expiry review (see recital (5)).

(25) In the initiation of this expiry review, it was envisaged to use Brazil as an analogue country from where information about production costs and domestic sales could be obtained. It is recalled that Brazil has also been used in the previous expiry review.

(26) The investigation has confirmed that Brazil is still an appropriate analogue country for the following reasons:

(27) First, the size of its domestic market makes Brazil a representative country for the establishment of normal value for the two countries concerned. Second, domestic prices in Brazil are governed by normal market forces given the level of demand in the market and the existence of competing producers. Third, the basic physical and chemical characteristics of the like product produced in Brazil can be considered to be identical to the product exported from the two countries concerned. Finally, no arguments against the use of Brazil as an analogue country were put forward.

(28) Therefore it was concluded that Brazil was a reasonable and appropriate choice as an analogue country in order to establish normal value for imports of SiC originating in the PRC and the Ukraine.

3.2.2 Normal Value

3.2.2.1 Normal Value for exporting producers in the PRC and the Ukraine

(29) It was first examined whether the domestic sales by the Brazilian producers, overall and per product type, were made at volumes which were representative as compared to the volumes exported by the PRC and the Ukraine respectively.

(30) It was found that the volumes of domestic sales by the Brazilian producers exceeded considerably the export sales to the Community by exporting producers in the PRC and the Ukraine, both overall and by product type.

(31) It was then examined whether the domestic sales of each of the two cooperating producers in Brazil, Saint-Gobain Materials Cerámicas Ltda and Treibacher Schleifmittel Brasil Ltda, to independent customers had been made in the ordinary course of trade, pursuant to Article 2(4) of the basic Regulation.

(32) It was found that, for both companies, the weighted average selling price of all sales during the IP, was higher than the weighted average unit cost of production. Therefore, all domestic sales were regarded as having been made in the ordinary course of trade. In addition, in order to ensure a fair comparison between prices in Brazil and normal value in the PRC and the Ukraine, adjustments were made in order to take into account of any differences in PCN or level of trade.

(33) In accordance with Article 2(1) of the basic Regulation, normal value was based on the weighted average prices of the two Brazilian producers’ sales to independent customers on their domestic market.

(34) Subsequent to the definitive disclosure, CEFIC questioned the accuracy of the determination of the normal value claiming that according to their information, sales prices in the Brazilian domestic market were above the export price from the Ukraine to the Community market. However, this claim was not supported by substantiated documentary evidence and had to be rejected. Indeed, the adjustments mentioned in recital (32) above allowed ensuring fair calculation of normal value.

3.2.2.2 Normal Value for exporting producers in Russia

(35) It was first examined whether the volumes, overall and per product type, of domestic sales by the exporting producer in Russia were representative, i.e. represented at least 5 % of the volumes exported to the Community.

(36) It was found that, compared to the overall volume of sales, and for some of the product types, the volume of domestic sales represented at least 5% of the volumes exported to the Community. For those product types where the volume of domestic sales was less than 5% of the volumes exported to the Community, the normal value had to be constructed pursuant to Article 2(3) of the basic Regulation.

(37) For those product types where the volumes of domestic sales represented 5% of the volumes exported, it was examined whether the domestic sales of the Russian producer to independent customers had been made in the ordinary course of trade, pursuant to Article 2(4) of the basic Regulation. This was done by establishing the proportion of domestic sales to independent customers, of each exported type of the product concerned, not sold at a loss on the domestic market during the investigation period.

(a) For those product types where more than 80%, by volume, of sales on the domestic market were not below unit costs, i.e. where the average sales price of the product type concerned was equal to or higher than the average production cost for the product type concerned, normal value was calculated as the average price of all domestic sales of the product type in question irrespective of whether these sales were profitable or not.

(b) For those product types where at least 10% but no more than 80%, by volume, of sales on the domestic market were not below unit costs, normal value was calculated as the weighted average sales price of those transactions which were made at or above unit costs of the type in question.

(c) For those product types where less than 10%, by volume, was sold on the domestic market at a price not below unit cost, it was considered that the product type concerned was not sold in the ordinary course of trade and therefore, normal value had to be constructed in accordance with Article 2(3) of the basic Regulation.

(38) Normal values were constructed in accordance with Article 2(6) of the basic Regulation on the basis of the manufacturing cost of the type concerned, to which was added an amount of selling, general and administrative (SG&A) expenses and a margin of profit. The amount of SG&A was that incurred by the exporting producer for the like product and the amount for profit equated to the average profit realised by the exporting producer on sales of the like product in the ordinary course of trade.

3.2.3 Export price

PRC

(39) As mentioned in recital (12), no exporting producers in the PRC cooperated in the investigation. As a result, export prices had to be established on the basis of facts available in accordance with Article 18(1) of the basic Regulation, i.e. information in the complaint.

Ukraine and Russia

(40) The export prices for exporting producers in Ukraine and Russia were established in accordance with Article 2(8) of the basic Regulation, on the basis of export prices actually paid or payable by independent customers in the Community.

(41) When calculating the export price for the Russian exporter for those transactions which were handled by Stankoimport (i.e. imported AD-free under the Quantitative Undertaking (QT)), all expenses incurred as a result of Stankoimport’s involvement have been deducted in order to arrive at the export price at ex-works level.

(42) CEFIC contested the findings with regard to the export prices determined for Ukraine arguing that prices charged for Ukrainian imports would be much lower. In support of their claim, they submitted certain price offers. This claim, however, had to be rejected as price offers can not be taken into consideration without proof that the transaction(s) finally materialised. In any event, as mentioned above at recital (40), export prices retained for dumping calculation were those charged by the exporting producer concerned. These prices were verified during the on spot investigation at the premises of the company concerned.

3.2.4 Comparison

(43) The normal values and the export prices were compared on an ex-works basis. In accordance with Article 2(10) of the basic Regulation, to achieve a fair comparison between the normal value and the export price, adjustments were made in respect of transport costs, level of trade and packing cost which were claimed and demonstrated to affect prices and price comparability.

3.2.5 Dumping margin

(44) In accordance with Article 2(11) and (12) of the basic Regulation, the dumping margin was established on the basis of a comparison of the weighted average normal value of each product type with the weighted average export price of the corresponding type.

PRC

(45) On the basis of facts available, in accordance with Article 18(1) of the basic Regulation, i.e. information in the complaint, the dumping margin has been established in the same order as the previous investigation, i.e. around 50 %.

Ukraine

(46) The dumping margin for exports of SiC from Ukraine during the IP was found to be below the de minimis threshold of Article 9(3) of the basic Regulation.

Russia

(47) It is recalled that Russia has a QT since 1986. The QT has enabled one Russian importer, Stankoimport, to import into the Community a fixed quantity (fixed in % of Community consumption) into the Community free of anti-dumping duties. Quantities above this threshold have been subject to anti-dumping duties. In the dumping calculations performed, no distinctions have been made between those quantities which were exported through the QT (77 %) and those which were subject to the antidumping duty (23 %).

(48) The dumping margin for exports of SiC from Russia during the IP was found to be below the de minimis threshold of Article 9(3) of the basic Regulation.

3.3 Developments of imports should measures be repealed

3.3.1 PRC

(49) As has already been explained, no exporting producers cooperated in this investigation. Thus, the likely scenario of what would happen if measures were allowed to lapse has been based on facts available, in particular the complaint and data from COMEXT (COMEXT is an electronic database of foreign trade of the European Communities).

Relationship between Chinese export prices to third countries and the price level in the Community

(50) The main third countries to which Chinese exports were directed during the IP were the United States of America and Japan. Information in the complaint suggests that Chinese CIF-prices to the United States of America, for the grade ‘Macro Black’, expressed in Euro, were in the range of Euro 650/ton. Moreover, Chinese CIF-prices to Japan for the grade ‘Macro Green’, expressed in Euro, were in the range of Euro 770/ton. Price statistics published in business journals supports the accuracy of these price quotations by Chinese exporters.

(51) Moreover, it was found that the average export prices from the PRC to the United States of America, as obtained from the COMEXT database, were significantly below the normal value obtained from the analogue country in this investigation, which indicates that these exports may also have been made at dumped prices during the investigation period.

(52) Given that the average price of the Community Industry (around Euro 1000 ‘Macro Black’ and around Euro 1500 for ‘Macro Green’) is considerably higher, Chinese exporting producers would, in the absence of measures, have an important incentive to divert significant export quantities from their present third country markets to the Community market.

(53) It should also be recalled that Chinese exports of the product concerned to the EU were found to be dumped in the original investigation and continued to be dumped at the same high levels during the IP of the current investigation. There is no reason to believe that this behaviour would change.

(54) Moreover, the information available on normal value and prices to third countries, as explained above, supports the conclusion that there is likelihood that, if measures would lapse, Chinese exporters would continue their dumping practises.

(55) To conclude, there is likelihood that, should measures be repealed, Chinese exports which at present are destined to third country markets are redirected to the Community. Moreover, should measures be repealed, there is a clear risk for dumping of the quantities exported.

Unused capacities and stocks

(56) In the request for this review, CEFIC (referring to information collected and published in business journals) has estimated the total production capacity in the PRC to be between 600.000 and 700.000 tons. The actual production has been estimated to be around 440.000 tons, leaving an unused capacity of between 160.000 and 260.000 tons. There is no information about stocks.

(57) On the basis of the above, it is clear that exporting producers in the PRC have a significant spare capacity to utilise for increased production. To conclude, should measures be repealed, exporting producers would very likely start to utilise their significant unused capacity for exports to the Community.

3.3.2 Russia

(58) As the only known exporting producer in Russia has co-operated in this investigation, the likely scenario of what would happen if measures were allowed to lapse has been mainly based on information supplied by the exporting producer’s verified reply to the questionnaire.

Relationship between prices in the Community and prices within Russia

(59) It should first be mentioned that the prevailing price level within the Community is already subject to a significant influence from imports from Russia given the QT in place, as the Russian exporter is already satisfying around 10% of Community consumption.

(60) When comparing the prevailing price level on the domestic market in Russia with the prevailing price level in the Community, the price level in Russia is generally lower. However, given that the quantities that the Russian producer has been able to export free from antidumping duties under the QT were pre-set, the Russian producer has had an incentive to export the crystalline grades (triggering higher prices per tonne) to the Community, leaving metallurgical grades for its domestic market and for other destinations). Therefore the real price differential between the same grades, if any, would be smaller than what a comparison between average price levels suggests.

(61) To conclude, while the generally higher price level in the Community would normally trigger an increase in exports to the Community should measures be allowed to lapse, this scenario does not appear to be likely in the present case. Indeed, given the existence of the QT, the potential increase of imports of especially high-grade SiC should not be overestimated as the Russian exporter already has had the opportunity to export significant quantities of SiC and has had the incentive to export high-grade SiC. Thus, an increase of imports of SiC is likely to be limited both in quantities and in types of SiC (metallurgical grades) and would in any event in all likelihood not be at dumped prices.

Relationship between export prices to third countries and prices within Russia

(62) More than 75% of the exports to third countries by the Russian producers are destined for the United States of America. When comparing the domestic prices and the export prices to the United States of America, the price levels of the exports to the United States of America are, on average, higher. It should be recognised, however, that the mix of grades of the products sold for export and those sold on the domestic market are probably different (likelihood of exports containing higher value-per-tonne grades to cover the transport costs involved), which makes it difficult to draw conclusions from such a comparison. Nevertheless, it is noted that these exports are not subject to antidumping measures and that there are no indications that such exports would be dumped.

Relationship between export price to third countries and the price level in the Community

(63) When comparing the Russian exporter’s export prices to its main third country market, the United States of America, with the Russian exporter’s export prices to the Community market, it is important to recall the QT in place. As explained above, given the pre-set quantities that the Russian exporter has been able to export to the EC, it has had an incentive to export high value-per-tonne grades to the Community market.

(64) Similarly and as explained in recital (62) above, it can be assumed that also the exports to the United States of America, given the transport costs involved, contain mainly high value-per-tonne grades. Thus, this puts the average selling price to the Community market and to the United States market on a reasonably comparable basis.

(65) Having compared the average selling price to the Community market with the average selling price to the market of the United States of America, the prices to the United States market have been found to be, on average, higher.

(66) To conclude, there seems to be no apparent incentive for the Russian producer to divert its quantities presently sold on its main export market, the United States, to the Community market, should measures be repealed.

Unused capacities and stocks

(67) The capacity of the exporting producer in Russia is limited to 62.000 tons. During the IP, it was found to work close to full capacity, having increased its utilisation rate during the reference period. The stocks were found to be normal for this kind of business.

(68) Given the technology used by the Russian producer (a technology using ‘train cars’ as place of processing, which are marshalled between electricity installations and places to unloading/sorting), it is unlikely that the exporting producer would be able to expand in the near future.

(69) To conclude, should measures be allowed to lapse, there are no indications that the Russian producer would be able to increase its production in order to increase its exports to the Community.

3.3.3 Ukraine

(70) As the only known exporting producer in the Ukraine has cooperated in this investigation, the likely scenario of what would happen if measures were allowed to lapse has been mainly based on information supplied by the exporting producer’s verified reply to the questionnaire.

Unused capacities and stocks

(71) The capacity of the exporting producer in Ukraine is limited to 23.000 tons. During the IP, it was found to work close to full capacity, having increased its utilisation rate during the reference period. The stocks were found to be normal for this kind of business.

(72) Given the technology used by the Ukrainian producer (same as the Russian producer which is explained in recital (68), it is unlikely that that the exporting producer would be able to expand in the near future.

(73) CEFIC claimed that the capacity of the exporting producer would be as high as 32.000 tons. However, this argument was based on hypothetical information without taking into considerations standstill periods for maintenance and repair, nor taking into account the specificities of the producing company concerned which is located in an urban area and submitted to environmental constraints. On these grounds, the capacity as established in recital (71) above was confirmed and the claim by CEFIC had to be rejected.

(74) To conclude, should measures be allowed to lapse, there are no indications that the Ukrainian producer would be able to increase its production in order to increase its exports to the Community.

Relationship between prices in the Community and prices within the Ukraine and third countries

(75) When comparing the prevailing price level on the domestic market in the Ukraine with the prevailing price level in the Community, and prices to third countries, the price level in the Ukraine and to third countries are, on average, lower.

(76) However, a meaningful comparison between the Ukrainian market, third country markets and the Community market was not possible because the product mix is very different and average prices are therefore not comparable. Moreover, the domestic market in the Ukraine is limited in size and the Ukrainian producer is not able to produce all the various (high-value) grades as the Community producers.

(77) It could therefore not be established whether, should measures be allowed to lapse, the Ukrainian exporter would have an incentive to divert volumes from its domestic market or from its export markets to the Community market. However, in view of the findings on dumping, and in the light of the overall higher price level prevailing in the Community, it is concluded that, even if exports to the Community market increased, these exports would in all likelihood not be made at dumped prices. Moreover, the increase would in any event be limited (estimated at less than 10.000 tons), given the limited capacity of the Ukrainian exporter.

3.4 Conclusions on likelihood of a continuation or recurrence of dumping

3.4.1 PRC

(78) It is recalled that no exporting producers in the PRC have cooperated in the investigation.

(79) On the basis of facts available, it was found that Chinese exporters are still dumping and would be likely to continue their dumping practices towards the Community market should measures be allowed to lapse.

(80) Therefore, it was found that there is a likelihood of continuation of dumping by exporting producers in the PRC should measures be allowed to lapse.

3.4.2 Ukraine

(81) It is recalled that the Ukrainian exporter has been found not to export at dumped prices during the investigation period and there are no indications that such situation would change if measures were allowed to lapse.

(82) Furthermore, it was found that, although exports from the Ukraine to the Community may increase, should measures be repealed, such increase is expected to be limited. Indeed, given the limited capacity that the Ukrainian producer holds, this increase of exports to the Community is assumed to be less than 10.000 tons and would in all likelihood not be made at dumped prices.

(83) Therefore, it is considered that there is no likelihood of recurrence of dumping of imports originating in the Ukraine.

3.4.3 Russian Federation

(84) It is recalled that during the investigation period, the Russian producer has been found not to export at dumped prices and there are no indications that such situation would change if measures were allowed to lapse.

(85) Furthermore, it is recalled that the Russian exporting producer has been able to supply the Community market with a fixed quantity of SiC through a QT for many years. The quantities exported through this channel have amounted to, during the IP, around 17% of the Russian producer’s total capacity. Thus, the Russian exporting producer is already well established on the market, i.e. a sudden increase of imports originating in Russia is therefore highly unlikely.

(86) Moreover, since the prices at which the Russian exporting producer has sold to third countries were found to be higher than those at which quantities were sold to the Community, the risk for trade diversion of significant quantities to the Community market appears to be relatively small.

(87) Finally, it was found that the Russian exporting producer was working close to full capacity and has a limited ability to increase its capacity.

(88) For these reasons, it is considered that there is no risk of recurrence of dumping of imports originating in the Russian Federation.

(89) Given the findings for Ukraine and Russia, the proceeding should be terminated against these countries .

4. DEFINITION OF THE COMMUNITY INDUSTRY

(90) The structure of the Community industry changed since the last expiry review, i.e. the former German producer Elektroschmelzwerk Kempten GmbH, München, split in two related companies, one located in the Netherlands and the other in Germany. Only the former is producing and processing the crude SiC, the latter one further processes SiC produced by Kollo Silicon carbide B.V. but the final product remains the like product. Moreover, ESK-SIC GmbH sells its own SiC but also SiC produced by Kollo Silicon carbide B.V. Therefore both companies are considered as forming one group.

4.1 Community production

(91) Within the Community, the like product is manufactured by two producers which constitute the total Community production within the meaning of Article 4(1) of the basic Regulation.

4.2 Community industry

(92) The following European Community producers have supported the request:

-  Kollo Silicon carbide B.V. (Netherlands), with its related company ESK-SIC GmbH (Germany).

-  Navarro SiC, S.A. (Spain)

(93) As above Community producers represent 100% of the Community production of the like product, it is concluded that the complainant producers constitute the Community industry within the meaning of Articles 4(1) and 5(4) of the basic Regulation.

5. SITUATION ON THE COMMUNITY MARKET

5.1 Preliminary remarks

(94) The examination of the impact of the imports concerned on the Community industry included an evaluation of the economic factors and indices having a bearing on the state of the industry as listed in Article 3(5) of the basic Regulation.

5.2 Consumption in the Community market

(95) The apparent Community consumption was established on the basis of the volume of imports of the product concerned from the countries concerned and all other third countries and the volumes of sales in the Community market of the Community industry.

(96) The volume of imports was determined on the basis of Eurostat figures corresponding to the relevant CN code during the period considered.

(97) On this basis, Community consumption has slightly increased from 217 137 tons in 2001 to 226 450 tons in the IP, i.e. an increase by 4 % over the period considered. The trend is showed in table 1.

(98) The consumption trend did however not evolve steadily. It is noted that it first decreased from 2001 to 2003 where it fell by 10%. From 2003 onwards, however, consumption increased again by more than 10% up to the IP where it exceeded the level of 2001.

(99) The decrease at the beginning of the period considered is to a large extent explained by the replacement of SiC by other products such as ferro-silicone and industrial diamond, which were less expensive at that time.

(100) From 2003 onwards, however, in line with a price decrease of SiC, consumption increased again.

Table 1 |

2001 | 2002 | 2003 | 2004 | IP |

2001 | 2002 | 2003 | 2004 | IP |

2001 | 2002 | 2003 | 2004 | IP |

2001 | 2002 | 2003 | 2004 | IP |

2001 | 2002 | 2003 | 2004 | IP |

2001 | 2002 | 2003 | 2004 | IP |

2001 | 2002 | 2003 | 2004 | IP |

People’s Republic of China | 52.6 |

2.  The provisions in force concerning customs duties shall apply.

Article 3

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President

 [1] OJ L 56, 6.3.1996, p.1. Regulation as last amended by Regulation (EC) No 2117/2005 (OJ No L 340, 23.12.2005, p.17)

[2] OJ L 94, 13.4.1994, p.21, Regulation as last amended by Regulation (EC) No 1786/97 (OJ L 254, 17.9.1997, p.6)

[3] OJ L 209 , 02.08.1988, p.1.

[4] OJ L 94, 13.4.1994, p.32

[5] OJ L 125 of 26.5.2000, p.3, as last amended by Regulation (EC) Nr 991/2004 (OJ L 182 of 19.5.2004, p.18)

[6] OJ L 182, 19.5.2004, p.18

[7] OJ L 183, 20.5.2004, p.88

[8] OJ L 344, 20.11.2004, p.37

[9] OJ C 3, 7.1.2004, p.4

[10] OJ L 56, 6.3.1996, p.1. Regulation as last amended by Regulation (EC) No 2117/2005 (OJ L 340, 23.12.2005, p.17).

[11] Termination through Council Regulation (EC) No 779/2005 (L 131 of 25.5.2005, p. 18)

[12] OJ C 159, 30.6.2005, p.4

[13] OJ L 168, 21.06.2006, p.37

[14] OJ C 254, 14.10.2004, p.3

[15] OJ C 129, 26.5.2005, p.17

[16] The Ukraine was granted Market Economy Status through Council Regulation (EC) 2117/2005 (OJ No 340 of 23.12.2005, p. 17). The new status only applies to investigations initiated as from 1 January 2006.