1999R1334 — EN — 12.06.2003 — 001.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B COUNCILREGULATION(EC)No1334/1999
of21June1999
imposing a definitive anti-dumping duty on imports of magnesium oxide originating in the
People's RepublicofChina
(OJ L 159, 25.6.1999, p. 1)
Amended by:
Official Journal
No page date
►M1Council Regulation (EC) No 985/2003 of 5 June 2003 L 143 1 11.6.2003
NB: This consolidated version contains references to the European unit of account and/or the ecu, which from 1 January 1999
should be understood as references to the euro — Council Regulation (EEC) No 3308/80 (OJ L 345, 20.12.1980, p. 1) andCouncil Regulation (EC) No 1103/97 (OJ L 162, 19.6.1997, p. 1).
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COUNCILREGULATION(EC)No1334/1999
of21June1999
imposing a definitive anti-dumping duty on imports of magnesium
oxideoriginatinginthePeople's RepublicofChina
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
membersof the European Community (1) and in particular Article
11(2) thereof,
Having regard to the proposal submitted by the Commission after
having consulted the Advisory Committee,
Whereas:
A.PROCEDURE
1.Measuresinforce
(1)In June 1993, definitive anti-dumping measures were imposed by
Council Regulation (EEC) No 1473/93 (2) on importsof caus tic
calcined magnesium oxide (hereinafter referred to as ‘CCM’)originating in the People's Republic of China. These measures
took the form of a variable duty, i.e. the duty wasimpos ed on
those imports which were below the minimum import pricespecified in the Regulation subject to review. The minimumimport price wasbas ed on the normal value calculated.
2.Requestforareview
(2)Following the publication of a notice of impending expiry of the
anti-dumping measures in force on imports of CCM originatingin the People'sRepublic of China (
3), the Commission received a
request in March 1998 to review these measures pursuant to
Article 11(2) of Council Regulation (EC) No 384/96 (hereinafter
referred to as‘the Bas ic Regulation’).
(3)The request was lodged by Eurometaux acting on behalf of
Community producerswhos e collective output of the product
concerned constitutes 100 % of the Community production ofthisproduct.
(4)The request was based on the grounds that the expiry of themeasures would be likely to result in the recurrence of dumpingand injury to the Community industry. Having determined, afterconsulting the Advisory Committee, that sufficient evidenceexisted for the initiation, of a review, the Commission initiatedan investigation through the publication of a notice of initia-
tion (
4) pursuant to Article 11(2) of the Basic Regulation.
3.Investigation
(5)The Commission officially advised the complaining Community
producers, the exporters and producers in the exporting country
and the importers as well as their representative associations
known to be concerned, and the representatives of the exportingcountry of the initiation of the review. The Commission sentquestionnaires to all these parties and to those who made them-selves known within the time limit set in the notice of initiation.In addition, the producersin India, which waschos en asan1999R1334 — EN — 12.06.2003 — 001.001 — 2
(1) OJ L 56, 6.3.1996, p. 1. Regulation aslas t amended by Regulation (EC) No
905/98 (OJ L 128, 30.4.1998, p.18).
(2) OJ L 145, 17.6.1993, p. 1.
(3) OJ C 383, 17.12.1997, p. 9.
(4) OJ C 190, 18.6.1998, p. 4.
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analogue country, were advised and sent questionnaires. The
Commission also gave the parties directly concerned the oppor-tunity to make their viewsknown in writing and to reques t a
hearing.
(6)All Community producersreplied to the ques tionnaire. Replies
were also received from three Chinese exporters, LiaoningMetals& MineralsImport & Export Corp., Citic Trading Co.Ltd and Liaoning Foreign Trade Corp. (hereinafter referred toas the ‘Chinese exporters’), one related importer and one related
trader replied to the questionnaires. The level of cooperation
amounted, according to Eurostat data, to more than 87 % of theoverall importsfrom the People'sRepublic of China. Three unre-lated importers, Frank & Schulte Benelux from the Netherlands,Timab Industries SA from France and GBC Ltd from the UnitedKingdom, also replied to the questionnaire and made their views
known in writing. No reply wasobtained from the us ersof the
product with the exception of Timab Industries, which itselfimported the product in question.
(7)The Commission services sought and verified all informationthey deemed necessary for the purpose of determining the conti-nuation or recurrence of dumping and injury and of the
Community interest. Investigations were carried out at the
premises of the following companies:
(a)Community producers:
— Grecian Magnesite SA, Athens, Greece
— Magnesitas Navarras, Pamplona, Spain
— Magnesitas de Rubian, Sarria (Lugo), Spain— Styromag GmbH, St Katharein an der Laming, Austria
(b)Producers in the analogue country:
— Tamil Nadu Magnesite Ltd, Salem, India
(c)Unrelated importers into the Community:
— Frank & Schulte Benelux, Capelle a/d Ijssel, Netherlands
— Timab Industries SA, St Malo, France (also a user of the
product concerned)
— GBC Ltd., Ewell (Surrey), United Kingdom
(d)Related importers and traders:
— Citic Germany GmbH, Bad Homburg, Germany
— Lutz Mineralien GmbH, Schifferstadt, Germany
(8)The investigation of dumping covered the period from 1 July
1997 to 30 June 1998 (hereinafter referred to as‘the IP’). Theexamination of the situation of the Community industry coveredthe period from 1 January 1994 up to the end of the IP (herein-after referred to as‘the IIP’).
B.PRODUCTUNDERCONSIDERATIONANDLIKEPRODUCT
1.Productunderconsideration
(9)The product concerned by thisproceeding isa form of magne-
sium oxide, namely natural caustic calcined magnesite (CCM),
which is processed from naturally occurring magnesium carbo-
nate or magnesite. In order to produce CCM, magnesite has tobe mined, crushed, sorted and then burned in a kiln at tempera-turesof 700 to 1 000 ºC. The res ult isCCM with variousmagnesium oxide (‘MgO’) contents or grades. The main impuri-
tiesin CCM are SiO
2,F e2O3,A l2O3, CaO and B2O3(silicon
oxide, iron oxide, aluminium oxide, calcium oxide and boronoxide respectively). CCM is mainly used in agriculture foranimal feeding or as a fertiliser and for industrial applicationsin the construction industry for flooring and insulating boardsas well as in the pulp, paper and abrasives producing industries.1999R1334 — EN — 12.06.2003 — 001.001 — 3
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(10)Furthermore, CCM isnot chemically uniform. However, no clear
dividing lines were found enabling the classification of CCM
into different products. The boundary between the grades isblurred by overlapping usage since users do use, for identicalpurposes, magnesite of different grades and from differentsources of supply.
(11)Although CCM originating in the People'sRepublic of China
which wass old in the Community market differed in termsof
MgO content, overall thisdid not entail any s ignificant differ-ences in the basic physical characteristics, theinterchangeability, the perception or the marketing of the productconcerned. Asin the previousinves tigation, all gradesand typesof CCM should therefore be considered as one single product for
the purpose of this investigation.
2.Likeproduct
(12)It was found that there were no basic differences in the physical
and chemical characteristics and the uses of CCM exported tothe Community and the product produced and sold in the
domestic market of the analogue country. Furthermore, there
were no differencesbetween the product concerned and theproduct produced and sold by the complaining Communityindustry in the Community market. In this respect, the investiga-tion has confirmed the conclusion of the previous investigation
that users could process both the imported product and the
Community-produced product without any alterationsin theirproduction process.
(13)Some unrelated importerss tated that CCM from the People'sRepublic of China wasnot like CCM produced and s old by theCommunity industry. They claimed that these could not be
considered as similar, since the raw material (MgCO
3) in the
People's Republic of China was readily accessible in massivedeposits, while the Community raw material had to be extractedfrom narrow veins. Furthermore, the MgO content of Chinesemagnesite was naturally higher.
(14)Though the methodsof extraction, the magnes ite content of thedeposit and the production process may vary from producer to
producer, and this is so worldwide, these differences do not
have a significant bearing on the end product and are not suchas to justify the claim of some unrelated importers that theproduction of CCM in the People'sRepublic of China isuniquein terms of the methods and processes used and the chemical and
physical characteristics of the magnesite. This is confirmed by
the fact that both the Community producersand the Chines eexporters have a number of common customers.
(15)Therefore, CCM exported to the Community on the one handand the product produced and sold by the Community industryin the Community market and the product produced and sold in
the domestic market of the analogue country, on the other hand,
are interchangeable and have to be considered a single likeproduct within the meaning of Article 1(4) of the Basic Regula-tion.
C.DUMPING
1.Preliminary remarks
(16)In accordance with Article 11(2) of the Basic Regulation, the
investigation examined whether there were grounds forconcluding that, in the absence of measures, there was a likeli-
hood of a continuation or recurrence of dumping.
2.Analoguecountry
(17)In order to establish the normal value, account was taken of the
fact that for thisinves tigation the normal value for importsfromthe People'sRepublic of China had to be bas ed on data from a1999R1334 — EN — 12.06.2003 — 001.001 — 4
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market economy third country. In thisres pect, Turkey wasenvi-
saged in the notice of initiation of this review as an appropriatemarket economy third country for the determination of normal
value. However, a number of importerss ubmitted that Turkey
wasinappropriate on the ground that the acces sto raw materialsin Turkey ismore difficult than in the People'sRepublic ofChina. Consequently, as the mines in Turkey do not enjoy thesame natural advantages as in the People's Republic of China,
the extraction and processing costs in Turkey are higher than in
Chinese mines. As an alternative, one importer suggestedSlovakia, where the natural conditionswere alleged to becomparable to the People's Republic of China. Others suggestedthat the normal value should be based on domestic sale prices oflimestone or dolomite in Germany, which is mined and
processed like the CCM in the People's Republic of China and
has a similar use.
(18)In view of the commentsof the importerson the choice ofTurkey asan analogue country, cooperation wasnot only s oughtin Turkey, but also in other countries where CCM was known tobe produced in sufficient quantities. In particular, a request for
cooperation was addressed to three known producers in Turkey,
two in Brazil, one in Slovakia and two in India. No reply wasobtained from Brazil, while the Slovakian producer declareditself not to be in the position to provide the requested informa-tion with respect to the IP. The sole Turkish producer of CCMwilling to cooperate indicated a domestic sales volume which
could not be considered as representative in relation to Chinese
exportsto the Community, while another Turkis h producer onlyproduced a different form of MgO, namely deadburned magne-site. Finally, one Indian producer agreed to provide theinformation requested in the questionnaire.
(19)As far as the proposal to use the domestic sales prices of the
limestone or dolomite in Germany is concerned, it should be
pointed out that limestone and dolomite cannot be consideredasbeing like CCM astheir chemical characteris ticsare different.
(20)The domestic sales of the Indian cooperating producer have beenfound to represent significantly more than 5 % of the totalCommunity importsfrom the People'sRepublic of China during
the IP. The Indian market of CCM appeared to be a competitive
market where at least five domestic producers of CCM competeagainst each other. The magnesite, the raw material for theproduction of CCM, iseas ily available in large quantitiesinopen cast mines close to the plants. The extraction and produc-tion process of the Indian producer is very similar to that of the
Chinese producers.
(21)The Chinese exporters submitted that Turkey, though not
entirely suitable, should have been maintained as an analoguecountry on the grounds that the normal value established in Indiawould not have any link with the one found in Turkey in theprevious investigation. However, as previously stated, sales in
Turkey were too low to be representative and therefore there
wasno alternative to the s election of another analogue country.
(22)The Chinese exporters raised the argument that the cooperatingIndian producer isentirely State-owned and hence the pricesofCCM in India are controlled by the government. It isindeed truethat the company in question is State-owned. However, it oper-
ates in a market economy context and its domestic sales are
made in competition with a number of companies, which do notbelong to the Indian Government. It wasnot found that the Stateownership resulted in any distortion of costs or prices charged.
(23)In the light of the above, the Commission considers that India isan appropriate analogue country for the purpose of establishingnormal value.1999R1334 — EN — 12.06.2003 — 001.001 — 5
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3.Normalvalue
(24)For the sole grade of CCM which is produced and sold in India,
normal value hasbeen determined on the bas isof the pricespaidor payable by independent customers in the domestic market forthe sales of the like product which have been found to be made
in sufficient quantities and in the ordinary course of trade. For
the other grades, which are not produced by the cooperatingcompany, normal value hasbeen determined by applying anadjustment factor to the normal value determined on the basisof the grade produced by the cooperating company. Since ahigher MgO content corresponds to a higher quality and there-
fore a more valuable product, it hasbeen found reas onable to
establish the amount of the adjustment as a direct proportion ofthe MgO content for the variousgradesexported from thePeople'sRepublic of China.
4.Exportprice
(25)Exportsof CCM to the Community by the cooperating Chines e
exportersrepres ented around 87 % of the total importsof theproduct in question from the People's Republic of China, as esti-
mated by the questionnaire responses and Eurostat data
concerning CN code 2519 90 90 TARIC heading 10/80 underwhich the importsof the product under inves tigation arerecorded.
(26)For the two cooperating exporters whose sales in the Communitywere all made to unrelated importers, the export price was estab-lished on the basis of the price actually paid or payable for theproduct sold for export to the unrelated importers.
(27)With regard to the exporter whose sales to the Community wereall made to itsrelated importer in the Community who in turn
sold to a related trader, the export price has been constructed
by deducting from the resale price to the first independent buyerall costs between importation and resale incurred by both therelated importer and the related trader aswell asa reas onableamount for profit so as to establish a reliable export price inaccordance with Article 2(9) of the Basic Regulation. The
amount for profit hasbeen calculated by reference to that
realised by the cooperating independent importers on average,i.e. 9 % on the sales turnover of the related trader.
5.Comparison
(28)The weighted average normal value per grade wascompared to
the weighted average export price of the corresponding grade ofCCM at a fob port producing country level, in accordance withArticle 2(11) of the Basic Regulation.
(29)For the purpose of ensuring a fair comparison between normalvalue and export price, account wastaken of differencesinfactors, which were claimed and demonstrated to affect compar-
ability in accordance with Article 2(10) of the Basic Regulation.
In this respect, adjustments were made for inland and oceanfreight, insurance, handling, loading and ancillary costs andcredit costs. Furthermore, since the producers in the People'sRepublic of China have easier access to raw material, theCommission considered that an additional allowance should be
made in order to take into account the lower costs of extraction
of the magnesite ore resulting from a more favourable orerecovery ratio in the People'sRepublic of China ascompared toIndia. Consequently, having found that the ore recovery ratio inIndia is similar to that found in Turkey, which was used as a
reference country in the previousinves tigation and in the
absence of any other new facts provided by the interestedparties, it has been decided to apply the same adjustment to thenormal value as requested by Chinese parties in the previousinvestigation, i.e. a reduction of 20 % of the extraction cost asfound in India.1999R1334 — EN — 12.06.2003 — 001.001 — 6
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(30)Finally, a request of the Chinese exporters for an adjustment for
difference in the level of trade was found justified, but a precise
calculation was not considered necessary, given that this is anexpiry review and considering that there was still a significantdumping margin if such adjustment had been made.
6.Dumpingmargin
(31)The comparison of normal value and export price showed the
existence of dumping, the dumping margin being equal to theamount by which normal value, so established, exceeded theprice for export to the Community. The dumping margin found,asa percentage of the cif Community-frontier import price, wassubstantial.
D.LIKELIHOOD OF RECURRENCE OR CONTINUATION OF
DUMPING
(32)Further to the analysis of the existence of dumping during the
IP, the likelihood of continuation of dumping, should the
measures in question be removed, was examined. On the basis
of the information supplied by the exporters, it is consideredlikely that the Chinese exports of CCM will continue to bemade either at the same or even at lower prices than during theIP. This is supported by the fact that US official statisticsshowed that the fob Chinese export prices to this country, which
isone of the main des tinationsof CCM from the People's
Republic of China, were on average considerably lower thanthe corresponding prices of Chinese exports to the Communityduring the IP.
(33)On the basis of the fact that the exports of CCM originating inChina have been found to be made at dumped pricesduring the
IP and that, according to the information provided by the expor-
ters, a slight decline of the Chinese export prices to theCommunity is forecast and considering the Chinese pricingpolicy applied for third countrieswhere no anti-dumpingmeas uresare in force, it isconcluded that dumping islikely tocontinue, should the measures in force be removed.
(34)In addition, the abolition of the export licence system mentioned
below would probably lead to a drop of Chinese export prices to
around EUR 75, which would be tantamount to a furtherincrease of dumping.
E.DEFINITIONOFTHECOMMUNITYINDUSTRY
(35)According to Article 4(1) of the Basic Regulation, the term
‘Community industry’ shall be interpreted as referring to the
Community producersasa whole of the like product or to thos eof them whose collective output of the products constitutes amajor proportion, asdefined in Article 5(4) of the Bas ic Regula-tion, of the total Community production of those products. The
investigation confirmed that the applicant Community producers
represented 100 % of the Community production of CCM.Therefore, they constitute the Community industry within themeaning of Article 4(1) and Article 5(4) of the Basic Regulation.
F.ANALYSISOFTHESITUATIONINTHECOMMUNITYCCM
MARKET
(36)Firstly, it should be noted that most of the specific data relating
to the Community industry for the IIP have been calculated onthe basis of the data of three Community producers GrecianMagnesite, Magnesitas Navarras and Magnesitas de Rubián.
The fourth Community producer, Styromag, was only established
asan independent company in 1996 asa res ult of the bankruptcyof the company Magindag in 1994, which wasals o a producer ofCCM. Since information wasonly available for Styromag asfrom 1996 onwardsand in order to pres ent a coherent pictureof the economic situation of the Community industry, the1999R1334 — EN — 12.06.2003 — 001.001 — 7
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Commission considered it inappropriate to take Styromag's infor-
mation into account for the purpose of the analysis of thesituation of the Community industry. Data from Styromag have
been included in the determination of total Community
consumption and have been reflected in the analysis of priceundercutting, which covers the IP. It can also be stated that theanalysis of the situation of the Community industry set outbelow would not have differed, if extrapolated data for Styromag
for the years 1994 and 1995 had been included in the analysis.
1.ConsumptionintheCommunitymarket
(37)The total consumption of CCM in the IP was calculated on the
basis of:
— the sales volume of the Community industry in the Commu-
nity market,
— the importsinto the Community of CCM from the People's
Republic of China, and
— the importsinto the Community of CCM from all other third
countries.
(38)On this basis, consumption rose from 328 000 t in 1994 to356 000 t in the IP, a level close to that established for thepreviousinves tigation period (368 000 t). The period 1994 to1996 was characterised by a continuous growth of consumptionup to 422 000 t in 1996. Consumption in the Community was
pushed up by the influence of weather conditions on the demand
for low gradesof CCM which are mainly us ed in agriculture andby the potential development of a number of new industrialmarketsfound. After the peak, demand decreas ed by 18 % in1997, but partially recovered in the IP.
(39)Finally, it can be stated that Community consumption of CCMused for the two applications was relatively evenly split, i.e.about 50 % of the consumption was used for agriculturalpurposes, while the other half was destined for industrial uses.
2.Importsfromthecountryconcerned
(a)Import volume, import share and market share of the imports
concerned in the IIP
(40)The volume of importsof CCM originating in the People's
Republic of China increased from 86 089 t in 1994 to 110 592 t
in the IP, equivalent to an increase of about 28 % during the IIP.The volume imported during the IP isnear the level of theprevious investigation period in the original investigation(120 000 t).
(41)The share of CCM imported from the People's Republic ofChina in termsof volume among all importsinto the Communitywasbetween 77 % and 82 % during the IIP. The highes t importshare was reached in the peak demand year of 1996. However, it
should be noted that at the time of the previous investigation
period, the import share of the People's Republic of Chinaaccounted only for around 54 %.
(42)The market share of the imports from the People's Republic of
China in the Community market rose from 1994 to the IP from
26,3 % to 31 %. Thisisequivalent to an overall increas e of 4,7pointsduring the IIP. In 1996, in the year with the exceptionallyhigh demand, the Chinese market share reached 36,4 %. In thepreviousinves tigation, importsfrom the People'sRepublic ofChina held a market share of 32 % in the IP.1999R1334 — EN — 12.06.2003 — 001.001 — 8
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(b)Price evolution and price behaviour of the imports of the
product concerned
(i)Price evolution of the imports concerned
(43)According to Eurostat information, the Chinese average cif sales
prices into the Community significantly increased between 1994
and 1995 and decreased continuously thereafter. The average
sales prices of the imports concerned increased thus during theIIP by about 14 %.
(44)It was argued that the Chinese export licence system which wasallegedly introduced after the anti-dumping dutieshad been
imposed would have progressively limited the supply of Chinese
CCM into the Community thereby pushing up the Chinese salespricesto the Community. However, asmentioned above, theChinese import volume increased by 28 % during the IIP and,although Chinese import prices into the Community increased
after the imposition of the measures in 1993 until 1995, they
decreased continuously since.
(ii)Price behaviour of the exporters
(45)In order to determine the price behaviour of the exportersin
relation with the Community producers' price behaviour, boththe exporters' prices and the Community industry's prices wereanalysed for the IP. In this analysis, sales of the Communityindustry and sales of the Chinese cooperating exporters to unre-
lated importersin the Community, aswell asthe res alesby
related importers to unrelated customers, considered to be at thesame level of trade, were used. For this analysis, the product wasgrouped into two categoriesaccording to itsus e for agriculturaland industrial applications. On this basis, the sales prices for
CCM produced and sold by the Community industry were
compared to the sales prices of Chinese CCM used for thesame purpose.
(46)It should be noted that the cooperating Chinese exporters sold asignificant share of their export volume to the Community via
customers located outside the Community at a fob-Chinese
border level. Hence, adjustments had to be made in order tocome to a cif Community frontier level on the basis of the infor-mation of the cooperating importersand exporters .
(47)The weighted average cif pricesof the importsconcerned were
compared to the prices of the Community producers, adjusted
for differences in delivery terms, for those markets where bothparties realised sales, since only in such markets could a mean-ingful comparison be carned out. The investigation establishedthat the overall average sales prices of the Chinese exportersfor both uses were lower than those of the Community industry.
In particular, it was established that, in relative terms, the
average difference between the pricesof Chines e exportsandthe Community industry's prices was bigger for CCM used inthe industrial sector than for CCM used in the agricultural sector.
(48)Finally, the analysis of the cooperating importers' questionnaireresponses revealed that, for significant sales of CCM used foragricultural purposes, the exporters' cif sales price was just atthe minimum price level of ECU 112 t, suggesting that theseprices were limited by the anti-dumping measures presentlyapplicable.
(49)Despite the fact that the exporters' prices were not reflecting thatChinese CCM was of a higher purity than the CCM produced bythe Community industry, the Commission did not deem it to benecessary to apply an adjustment factor. Such an adjustment hadbeen claimed by the Community industry.1999R1334 — EN — 12.06.2003 — 001.001 — 9
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3.EconomicsituationoftheCommunityindustry
(a)Production
(50)Comparing the situation at the beginning and at the end of the
IIP, the total production of CCM hasbeen relatively s tablefrom 1994 to the IP. The production rose by 6 % from around207 000 t to around 219 000 t in the period mentioned above.
(b)Production capacity
(51)The production capacity of the Community industry rose from
265 000 t in 1994 to 280 000 t in the IP. Thisisequivalent to
an increase of around 6 % during the IIP.
(c)Capacity utilisation
(52)At 78 %, capacity utilisation of the Community industry
amounted to about the same level in 1994 and in the IP.
However, capacity utilisation rose to 89 % and 88 % respec-
tively in 1995 and 1996. Thiswasthe res ult of an expectationof strong sales in this period, which in particular in 1996, didnot materialise. Since then, the capacity utilisation of theCommunity industry decreased continuously.
(d)Sales by volume
(53)The total sales volume of the Community producers went up
from around 209 000 t in 1994 to almost 211 000 t in the IP.The sales volume considerably increased between 1994 and1995, but it has decreased continuously since.
(e)Market share
(54)The Community industry's market share in the Community
market decreased from 63 % in 1994 to 58 % in the IP. This isequivalent to a decrease of five percentage points during the IIP.In 1996, the year with the especially high demand, the Commu-nity industry's market share dropped down to 50 %. Although inthe following year the Community industry regained the lost
percentage points, the share of the Community industry has
again shown a downward trend since 1997.
(f)Price development
(55)The investigation showed that the Community producers'
average selling price of CCM rose by 7 % from 1994 to the IP.
The Community industry's sales prices reached a peak in 1996
due to the high demand of the market in that year. While thepricesfor agricultural CCM increas ed during the IIP by 13 %,the sales prices for CCM used for industrial purposes rose by6 %. However, whereasthe pricesfor agricultural CCM s howeda relatively stable development after the peak in 1996, prices for
CCM used for industrial purposes dropped by 5 %.
(g)Profitability
(56)For the purpose of the profitability analysis, sales of certain by-
productsof the CCM production of the Community indus trywere taken into account with the result of decreasing CCM
specific costs and increasing CCM related profits. However, the
Community industry claimed that these sales were only of atemporary character and could cease immediately. The Commis-sion considered that, due to the considerable amount of sales ofby-products, both in value and volume terms, which had beenmarketed over an extended period of time, they had to be
reflected in the CCM profitability analysis with the result that
the profitability realised on CCM sales increased.
(57)On this basis, the profitability of the Community industry,expressed as a percentage of net sales, increased during the IIP1999R1334 — EN — 12.06.2003 — 001.001 — 10
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from a weighted average loss of 4,0 % in 1994 to a profit of
5,2 % in the IP. The profit situation of the Community industryasa whole hasimproved by 9,2 percentage pointsduring the IIP.
However, the Community industry considers a yearly profit rate
of 10 % as necessary to maintain their activities.
(h)Employment
(58)Employment in the Community industry declined by 6,7 %
during the IIP.
(i)Stocks
(59)The closing stocks of the Community producers went up from
24 788 t in 1994 to 34 240 t in the IP which amountsto an
increase of about 38 % in the IIP. Closing stocks increasedcontinuously from 1994 to 1997, but dropped then in the IP.
(j)Investments
(60)The figure of total investments of the Community industry went
up by about 23 % within the period from 1994 to the IP. TheCommunity industry has invested strongly, particularly in theyears1995 and 1996. The inves tmentsmainly concerned theimprovement and further rationalisation of the production
process in order to economise costs. Part of the Community
industry installed modern filters in their kilns to reduce environ-mental pollution.
(k)Export activity of the Community industry
(61)The Community industry's exports of CCM to third countries
show a relatively stable development. The yearly exports duringthe IIP amounted to about 8 000 t to 11 000 t per year.
(l)Conclusion
(62)After the imposition of a variable anti-dumping duty in 1993, the
situation of the Community industry has improved during theIIP. Economic factorss uch asproduction, production capacity,average sales prices per tonne, profitability and investments
showed a positive development. Both production and production
capacity have increased by about 6 % during the IIP, while theaverage sales prices rose by about 7 % in the same period. Aftertwo years of losses, the Community industry's sales have beenprofitable again since 1996. It is likely that this was due to thereduction of personnel and the investments made in the previous
year in order to rationalise production. In the IP the Community
industry's sales volume and the capacity utilisation reached thesame level as in 1994. Nevertheless, the above analysis alsoshows that this is not the case for all indicators and that in parti-cular from 1996 onwardsa downward trend hasoccurred.
(63)In fact, capacity utilisation, market share, employment andclosing stocks did not develop favourably. The Communityindustry lost about five percentage points of the Communitymarket during thisperiod. The Community indus try employed6,7 % less personnel in the IP as compared to 1994. The closingstocks of the Community industry continuously rose between
1994 and 1997-the overall increase in the IIP amounted to 38 %.
Furthermore, capacity utilisation by the Community industrydecreased constantly from 1995 onwards, i.e. even in 1996, theyear of the high demand, capacity utilisation did not rise tomore than 88 %.
(64)The investigation established that, although the situation of theCommunity industry has improved in some areas, some othereconomic factorsdid not develop s o favourably. Thishasto beseen in conjunction with the low prices of the Chinese imports,which were made close to the minimum price and which exertedprice pressure on the Community industry. This has prevented1999R1334 — EN — 12.06.2003 — 001.001 — 11
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the Community industry from fully recovering from the effects
of the previousdumping practices .
(65)It was alleged that the Community industry improved its situa-tion in the Community market despite the continued presenceof importsfrom the country concerned. In thisres pect, it can benoted that, although the anti-dumping measures have contributed
to the improvement of the economic situation of the Community
industry, their effect has, as shown above, been diluted. Thisargument iss upported by the fact that importsfrom the People'sRepublic of China increased by 28 % during the IIP therebygaining 4,7 percentage pointsin termsof market s hare in thesame period.
4.Importvolumesandimportpricesfromotherthirdcoun-
tries
(a)Import volume
(66)The import volume of CCM from other third countriesincreas ed
in the IIP from about 25 000 t in 1994 to 26 000 t in the IP. Thisisequivalent to an increas e of about 4 %. Due to the above-
described high demand for CCM in 1996, imports from other
third countriesreached a peak in that year with more than33 000 t.
(67)The market share of imports from other third countries was 8 %
from 1994 to 1996 and decreased by one percentage point in
1997. The market share for these countries has thus been rela-tively stable during the IIP.
(b)Sales prices for imports from third countries
(68)According to Eurostat the average sales price for imports from
third countriesros e by 43 % in the IIP.
5.Conclusion
(69)Compared with the figuresof the previousinves tigation,
Community consumption has shown a relatively stable develop-ment. It wasalleged that the demand in the Community
expanded rapidly between 1995 and 1996, thereby exceeding
the Community industry's capacity, which made an increase ofChinese CCM imports inevitable. It should be noted, however,that the capacity utilisation rate of the Community industry wasabout 89 % in 1995 and dropped continuously since. It cantherefore be concluded that Community consumption did not
have a major influence on the situation of the Community
industry during the IIP.
(70)Moreover, it seems that it was rather the decreasing Chinese
import pricesfrom 1995 onwardsthat made the Chines e import
volume increase. In any event, no such significant increase indemand occurred in the period up to the IP, which could explainthe increase in imports and market share of Chinese CCM asestablished during the investigation.
(71)The Community industry undertook considerable efforts toimprove its competitiveness towards the main Chinese competi-tors and competitors from other third countries. These efforts areparticularly visible when looking at the extent of investments
during the IIP. From 1994 to 1997, the Community industry
invested considerable amounts in order to modernise and rationa-lise its production facilities. However, due to the continueddumped importsfrom the People'sRepublic of China, thes eefforts have not been entirely successful. The Communityindustry remained in a vulnerable situation.1999R1334 — EN — 12.06.2003 — 001.001 — 12
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G.LIKELIHOODOFRECURRENCEOFINJURY
1.Analysis of the situation of the exporting country
concerned
(a)The Chinese Licence System
(72)In April 1994, the MOFTEC (Ministry of Foreign Trade and
Economic Cooperation) and the CCCMMC (China Chamber ofCommerce of Metals, Minerals and Chemicals Importers andExporters) introduced an export licence system for all exportsof certain mineralswhich isbas ically identical to an export
quota system. All different sorts of magnesia, including caustic
calcined magnesite, have been covered by this licence systemsince. In 1998, the licence fee was about ECU 37 t CCM. Thisimpliesthat, if the minimum price of ECU 112 t ismet, theactual sales price without licence fee would be around ECU 75 t.
(73)Furthermore, according to Eurometaux the Liaoning Provincewhere most of the producers are situated, introduced in 1995another local tax which in 1997 amounted to around ECU 15 t.It has been argued that this licence system is sufficient to reduce
the risk of renewed injurious dumping.
(74)Eurometaux claimed that the Chinese licence system for magne-
site could be abolished soon and feared that Chinese exports ofmagnesite would, as a consequence of the abolition, increase in
volume and considerably decrease in prices, should the anti-
dumping measures not be continued.
(75)The exporters argue that the licence system has brought stability
and reliability in the exportsof magnes ite from the People's
Republic of China and that there is no reason to assume thatthe system would be dropped soon. They further stated that theexporterswould, if the anti-dumping meas uresdid not continueand the licence system dropped, certainly not drop their prices ina stable market such as exists in the European Community and
suddenly voluntarily abstain from making higher gains.
(76)In view of the above argumentsand in view of the nature of the
system described above which is run autonomously by the
government of the exporting country, it must be stated that the
existence or abolition of an export licence system cannot haveany influence on the decision of the Community institutionswhether or not to renew anti-dumping measures. However, theanalysis of this system merely underlined the potential of theChinese exporters to sell CCM at very low prices.
(b)Chinese exports to third countries
(77)The Commission has, on the basis of US trade statistics,
analysed the Chinese CCM exports to the USA. These importsaccounted for 67 % of the worldwide CCM importsinto theUSA in 1997 and to 63 % in 1998 until August.
(78)The total volume of Chinese exports to the USA rose from72 477 t in 1994 to 89 440 t in 1997 which isequivalent to anincrease of 23 %. In 1995, Chinese exports to the USA increased
to an absolute maximum of more than 96 000 t a volume at
about the same level as the volume of Chinese exports to theCommunity, while the trend wasdecreas ing in 1996 again.
(79)Even though the Chinese CIF sales prices to the United States
increased from 1994 to 1995 by 80 % starting from a very low
level, they have decreased since and remained considerablybelow the EU minimum price of ECU 112 t imposed in 1993.
(80)A price comparison for all types of CCM shows, according toEurostat, a Chinese average sales price in the Community marketwhich isabout one third higher than the average s alesprice inthe US market. Therefore, there appearsto be no reas on tobelieve that, in the absence of measures, Chinese prices wouldnot drop to levelscomparable to the pricesfor importsinto the1999R1334 — EN — 12.06.2003 — 001.001 — 13
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US, in particular asimport pricesinto the Community have been
found to be partially very close, if not equal, to the minimumprice, i.e. they appear to be only at that level because of the
existence of the minimum price.
(c)Production, capacity, capacity utilisation and stocks
(81)The Commission sent questionnaires to eight Chinese producers
and trading companies, inter alia , in order to establish the level
of production, the production capacity, the capacity utilisationand the stocks. However, the Commission could not determinethe production levelsof the Chines e producersnor the exact
capacity, capacity utilisation and stocks, since three of the four
cooperating companiesare pure trading companiesand only onecompany itself produces CCM. The other producers did notcooperate. Since this did not allow for a representative analysisof the Chinese CCM production and since no official statisticswere available, the Commission had, according to Article 18 of
the Basic Regulation, to use the information available.
(82)Therefore, it wasdecided that the information provided in therequest for review reflecting industry and market research infor-
mation should be used. According to these sources, production inthe last few years can be estimated to be at around 600 000 tannually, of which only 200 000 t are destined for the Chinesedomestic market.
(83)On the same basis, information from the request for review hadto be used in determining the production capacity, capacity utili-
sation and stocks. According to the same source, the production
capacity of the Chinese producers amounted to more than700 000 t per year. Asfar asthe capacity utilis ation isconcerned, the Chinese producers have substantial idle produc-tion capacities. Chinese stocks of CCM amounted to around500 000 t.
2.Conclusionontherecurrence ofinjuriousdumping
(84)The Chinese export prices to the other main market for CCM,
the USA, for which the export licence system is also applicable,
were very low between 1994 and mid 1998. Even though theseprices increased from 1994 to 1997 by about 70 % starting froma very low level, they still remained considerably below the EUminimum price imposed in 1993 and the actual Chinese export
pricesto the Community.
(85)Furthermore, given the nature of the Chinese licence system,whose abolition would alone allow the Chinese cif sales prices
to drop by about EUR 37 t, the huge raw material reserves andthe large Chinese unused production capacities demonstrate thatthere is a significant potential that the Chinese exporters willresume injurious imports again. Therefore, it was concludedthat, in the absence of the measures, there is a likelihood of a
recurrence of injuriousdumping and that the meas uresin force
should, for that reason, be maintained.
H.COMMUNITYINTEREST
1.Introduction
(86)In accordance with Article 21 of the Basic Regulation, it was
examined whether a prolongation of the existing anti-dumpingmeasures would be against the interest of the Community as a
whole. The determination of Community interest was based on
an appreciation of all the various interests, such as the Commu-nity industry, the importers and traders, the users of the productconcerned. In order to assess the likely impact of a continuationof the measures, the Commission services requested informationfrom all interested parties mentioned above.1999R1334 — EN — 12.06.2003 — 001.001 — 14
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(87)It should be recalled that, in the previous investigation, the adop-
tion of measures was considered not to be against the interest of
the Community. Furthermore, it should be noted that the presentinvestigation is a review, thus analysing a situation in whichanti-dumping measures have already been in place. Conse-quently, the timing and nature of the present investigation hasallowed an assessment of any negative impact on the parties
concerned by the anti-dumping measures imposed.
(88)The Commission sent questionnaires to 24 importers, of which
three unrelated importersand one related importer fully coop-
erated. Furthermore, questionnaires were sent to two user
organisations, CEFIC and Emfema. However, they did not replyto the questionnaire.
(89)On this basis, it was examined, whether, despite the findings ondumping, injury and continuation or recurrence of injuriousdumping respectively, compelling reasons existed which wouldlead to the conclusion that it is not in the Community interestto maintain measures in this particular case.
2.InterestsoftheCommunityIndustry
(90)The results of the investigation allow for the conclusion that,
without the continuation of the measures, the situation of theCommunity Industry will continue to be vulnerable or will even
deteriorate.
(91)The Community industry has been suffering from low priced
dumped importsof CCM from the People'sRepublic of China.
The objective of the anti-dumping measures under review, that
is, to reestablish fair competition in the Community marketbetween the Community producersand their exporting counter-partsin third countries , hasnot been fully met ashasbeenshown above.
(92)The Community industry has been making considerable effortsto improve itsproductivity in recent years , in an attempt tolower its cost of production and to enhance its competitivenessin this price sensitive market. Rationalisation efforts and invest-
ments were made and the selling, general and administrative (SG
& A) costs of the Community industry declined during the IIP.Furthermore, one Community producer in Greece who took partin the previousinves tigation went bankrupt, the parent companyof the newly participating Austrian Community producer Styr-
omag, Magindag, had gone bankrupt, too, in 1994, and
Styromag had to be completely restructured. The Communityindustry has not been in a position to make a reasonable profitduring the IIP.
(93)In view of the nature of the economic difficultiesexperienced bythe Community industry, in particular the fact that it wasprevented from recovering from the unhealthy situation causedby the dumped imports, the Commission services consider that,in the absence of intervention, further deterioration of the situa-
tion of the Community industry is quite likely, given the level of
losses incurred by them over an extended period. This couldentail a severe reduction in the number of employees. In thecourse of this investigation it has been established that theCommunity industry is viable, but continues to be in precarious
situation, and that it is highly probable that, without the conti-
nuation of anti-dumping measures to correct the effects ofdumped imports, the financial situation of the Communityindustry will deteriorate. Thus, the existence of the Communityindustry and many jobs may, ultimately, be at risk.
(94)Furthermore, the continuing restructuring efforts made by theCommunity industry show that it is not ready to abandon thissegment of production. To maintain anti-dumping measureswould therefore be in the interest of the Community industry.1999R1334 — EN — 12.06.2003 — 001.001 — 15
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3.Interestsofimportersandtraders
(95)On the one hand, some importers and traders are against the
prolongation of the anti-dumping measures arguing that a fixedminimum price distorts international trade and artificiallyincreases the import price of the product concerned. They
claimed that the Community industry constantly decreased its
pricesduring the IIP, whereasthe Chines e producerswere notin the position to compete with the Community industry, asthey were constrained by the minimum price. It should be noted,however, that the importerscould not provide any evidence forthisargument. On the contrary, the inves tigation revealed that
the Community industry's sales prices have increased during the
IIP by about 7 % and the Chinese market share in the Commu-nity during the IIP rose by about 5 %.
(96)On the other hand, some other importers and one importing userstated that the anti-dumping measures had created a certain pricestability in the Community market for CCM. Moreover, theminimum price hasenabled the Community indus try to continuewith itsproduction and thereby maintained competition betweenChinese and Community producers.
(97)It is therefore concluded that the cost situation of the importersof the product concerned hasnot been negatively influenced bythe imposition of the anti-dumping measures. It is likely that a
continuation of the measures will not lead to a deterioration of
their cost situation in the future.
4.Interestsofusers
(98)None of the Community users answered the questionnaire sent
by the Commission services during the current investigation nor
provided any evidence on the incidence on their cost of produc-tion of the measures in force. Following the lack of substantiatedinformation submitted by the users concerning the impact of themeasures in force on the structure of the cost of production using
CCM, a subsequent analysis was not performed. However, since
the users did not respond, it can be assumed that the anti-dumping measures did not have any negative influence on theircost situations.
(99)In any case, the result of the present anti-dumping measures hasnot been to close the Community market to imports, but rather tolevel the unfair trade practicesand to prevent the dis tortingeffects of dumped imports. In this specific case, it seems thatthe measures did not prevent imports from the country concerned
from entering the Community market. Asmentioned above,
imports from the People's Republic of China increased signifi-cantly, by 28 %, during the IIP.
(100)Furthermore, it wasfound that, in view of the fact that theCommunity industry has a significant market share, is viableand has invested significant amounts to improve its competitive-ness, and given the presence of other suppliers located outsidethe Community, the risk of a general supply shortage is very
low.
(101)Since the measures have been in place for a certain period and
would be maintained at the same level, it can be concluded that
thiswould not imply a deterioration, if at all, of the s ituation of
the users.
5.Consequencesforcompetition intheCommunitymarket
(102)Asfar asthe competitive environment in the Community market
is concerned, the measures proposed below are not such as to
foreclose the Community market to the exporters under review,and therefore it will allow the continued presence of these expor-tersin the market. It s hould be recalled that the importersandusers have always enjoyed the presence of a number of competi-torsin the market. The Community indus try, even when1999R1334 — EN — 12.06.2003 — 001.001 — 16
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exploiting its total production capacity, could only satisfy about
80 % of the demand on the Community market. Importsfromthird countries will therefore always be necessary. Thus, even if
the existing anti-dumping measures were continued, the expor-
tersof the country concerned would be able to continue toexport to the Community at fair prices.
6.ConclusiononCommunityinterest
(103)On the basis of the information available and having analysed all
the various interests involved, the Commission services state the
following: On the one hand, a continuation of the anti-dumping
measures is likely to result in a stable price for CCM in theCommunity market which, over the duration of the measures inforce, appearsnot to have had any negative effectson theeconomic situation of users and importers. However, on theother hand, leaving the Community industry without adequate
protection against the dumped imports, would not only further
aggravate itsdifficulties , but could even lead to itsdis appear-ance. The price advantage for users resulting from the non-imposition of anti-dumping measures does not compensate forthe benefit achieved by the removal of the trade distortion
caused by the dumped imports.
I.ANTI-DUMPINGMEASURES
(104)All parties concerned were informed of the essential facts and
considerations on the basis of which it was intended to recom-mend the maintenance of the existing measures. They weregranted a period within which to make representations subse-quent to disclosures. The comments of the parties were
considered and, where appropriate, the findings have been modi-
fied accordingly.
(105)It followsfrom the above that, asprovided for by Article 11(2)of the Basic Regulation, the anti-dumping measures in the form
of a variable duty associated to a minimum import price of ECU
112 t on importsof CCM originating from the People'sRepublicof China imposed by Regulation (EEC) No 1473/93 should bemaintained, but expressed in the new the European currencyEURO. The new minimum price istherefore to be EURO 112 t.
HAS ADOPTED THIS REGULATION:
Article 1
1. A definitive anti-dumping duty ishereby impos ed on importsof
magnesium oxide originating in the People's Republic of China fallingwithin CN code ex 2519 90 90 (Taric code 2519 90 90*10).
2. The amount of the anti-dumping duty shall be:
(a) the difference between the minimum import price of EUR 112 per
tonne and the net, free-at-Community-frontier price, before duty, in
all cases where the latter is:
— less than the minimum import price, and
— established on the basis of an invoice issued by an exporter
located in the People'sRepublic of China directly to an unre-lated party in the Community (TARIC additional code A420);
(b) zero, if the net, free-at-Community-frontier price, before duty, is
established on the basis of an invoice issued by an exporter located
in the People'sRepublic of China directly to an unrelated party in
the Community and equal to or higher than the minimum importprice of EUR 112 per tonne (TARIC additional code A420);
(c) equal to an ad valorem duty of 27,1 % in all other cases not falling
under subparagraph (a) and (b) (TARIC additional code A999).1999R1334 — EN — 12.06.2003 — 001.001 — 17
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In cases where the anti-dumping duty is established according to
subparagraph 2(a) of Article 1 and where goods have been damagedbefore entry into free circulation and, therefore, the price actually paid
or payable isapportioned for the determination of the cus tomsvalue
pursuant to Article 145 of Commission Regulation (EEC) No 2454/93,the minimum import price set out above shall be reduced by a percen-tage which corresponds to the apportioning of the price actually paid orpayable. The duty payable will then be equal to the difference between
the reduced minimum import price and the reduced net, free-at-
Community-frontier price, before customs clearance.
3. Unless otherwise specified, the provisions in force concerning
duties and other customs practices shall apply.
Article 2
ThisRegulation s hall enter into force on the day following itspublica-
tion in the Official Journal of the European Communities .
ThisRegulation s hall be binding in itsentirety and directly applicable
in all Member States.1999R1334 — EN — 12.06.2003 — 001.001 — 18
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