COMMISSION IMPLEMENTING REGULATION (EU) 2022/2247

of 15 November 2022

imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of electrolytic chromium coated steel products originating in the People’s Republic of China and Brazil

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Article 9(4) thereof,

Whereas:

1. PROCEDURE

1.1. Initiation

(1) On 24 September 2021, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of electrolytic chromium coated steel (‘ECCS’) originating in the People’s Republic of China (‘the PRC’ or ‘China’) and Brazil (together ‘the countries concerned’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 13 August 2021 by the European Steel Association (‘EUROFER’) (‘the complainant’). The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3) The complaint was made on behalf of the following Union producers: ArcelorMittal Atlantique et Lorraine (France), ArcelorMittal Etxebarri S.A. (Spain) and ThyssenKrupp Rasselstein GmbH (Germany), allegedly representing 100 % of the Union industry. In the course of the investigation, it came to the Commission’s attention the existence of an additional Union producer of ECCS, namely Acciaierie d’Italia. Since the complainants nonetheless represented [85-95] % of the production and sales of the Union industry, the complaint was considered to have been made by the Union industry in accordance with Article 5(4) of the basic Regulation.

1.2. Interested parties

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

1.3. Provisional measures

(5) In accordance with Article 19a of the basic Regulation, on 25 April 2022, the Commission provided parties with a summary of the proposed duties and details about the calculation of the dumping margins and the margins adequate to remove the injury to the Union industry four weeks before the imposition of provisional duties (‘the pre-disclosure period’). Interested parties were invited to comment on the accuracy of the calculations within three working days. As explained in recitals (29) to (34) of the provisional Regulation, the Commission concluded that the requirements for registration under Article 14(5a) of the basic Regulation were not met. Therefore, imports from the countries concerned have not been subject to registration during the pre-disclosure period.

(6) The Commission received comments from Baoshan Iron & Steel Co., Ltd (‘Baosteel’), Handan Jintai Packing Materials Co., Ltd (‘Jintai’), and CANPACK. The submission of Baosteel led to the correction of a clerical error in the calculations. The comments of Jintai were related to Article 7(2a) of the Basic Regulation and therefore not related to the accuracy of calculations. Therefore they were considered after the disclosure of provisional measures and are addressed in Section 3.1 below. As the comments of CANPACK related to Union interest, they have been addressed in Section 7 below.

(7) On 23 May 2022, the Commission published in the Official Journal of the European Union Implementing Regulation (EU) 2022/802 imposing a provisional anti-dumping duties on imports of electrolytic chromium coated steel products originating in the People’s Republic of China and Brazil (3) (‘the provisional Regulation’).

1.4. Subsequent procedure

(8) Following the disclosure of the essential facts and considerations on the basis of which provisional anti-dumping duties were imposed (‘provisional disclosure’), Eurofer (complainant), Eviosys (Union user), CANPACK, representing CANPACK Slovakia s.r.o., Can-Pack Food and Industrial Packaging Sp. z o.o. and Tapon France S.A.S. (Union users), Astir Vitogiannis Bros Single Member S.A. (‘Astir Vitogiannis’) (Union user), Baosteel (exporting producer from China), Jintai (exporting producer from China), Companhia Siderurgica Nacional (‘CSN’) (exporting producer from Brazil), the China Iron and Steel Association (‘CISA’), the Government of the PRC (‘GOC’) and the Government of Brazil (‘GOB’) filed written submissions making their views known on the provisional findings within the deadline provided by Article 2(1) of the provisional Regulation.

(9) The parties who so requested were granted an opportunity to be heard. Hearings took place with Baosteel, CISA and Astir Vitogiannis.

(10) The Commission continued to seek and verify all the information it deemed necessary for its final findings. When reaching its definitive findings, the Commission considered the comments submitted by interested parties and revised its provisional conclusions when appropriate.

(11) On 31 August 2022, the Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive anti-dumping duty on imports of electrolytic chromium coated steel products originating in the People’s Republic of China and Brazil (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure.

(12) Following comments from interested parties, the Commission informed, on 16 September 2022, interested parties about some clarifications and minor corrections in the final disclosure that did, however, not have an impact on the definitive duties. Parties were granted a period within which they could make comments. Only CISA made comments.

(13) Parties who so requested were also granted an opportunity to be heard. Hearings took place with CISA, Baosteel, Eviosys and Eurofer.

1.5. Comments on initiation

(14) As explained in recitals (6) and (7) of the provisional Regulation, the China Iron and Steel Association (‘CISA’) submitted comments following initiation claiming that the complaint relied too much on confidential information and that the non-confidential version was therefore insufficient to allow a proper understanding of the evidence underlying the complaint. CISA reiterated this claim following the imposition of provisional measures.

(15) The Commission confirmed its conclusion in recital (8) of the provisional Regulation that the non-confidential version of the complaint available in the file for inspection by interested parties contained all the essential evidence and non-confidential summaries of the confidential data allowing interested parties to properly exercise their rights of defence, and thus rejected the claim.

1.6. Sampling

(16) In the absence of comments regarding the sampling of Union producers, importers and exporting producers, recitals (9) to (17) of the provisional Regulation are confirmed.

1.7. Individual examination

(17) As explained in recital (18) of the provisional Regulation, an exporting producer in China, GDH Zhongyue (Zhongshan) Tinplate Industry Co., Ltd. requested individual examination under Article 17(3) of the basic Regulation and provided a questionnaire reply within the deadline. This request was reiterated after the final disclosure. The Commission had provisionally found that an examination of this request would have been unduly burdensome and would not have allowed the completion of the investigation within the time period established in the basic Regulation. The Commission recalled that it had limited its sample to two companies representing the largest volume of imports from China that could reasonably be investigated within the time available. Both companies fully cooperated, which included examination and verification (by means of remote cross-checks or ‘RCCs’) of information provided by several related entities both in China and in the Union which precluded the Commission from individually examining GDH Zhongyue (Zhongshan) Tinplate Industry Co., Ltd. in addition to the sampled companies. This conclusion remained valid also during the definitive stage. The Commission therefore confirmed its decision not to grant individual examination to this company.

1.8. Questionnaire replies and verification visits

(18) As set out in recitals (19) and (21) of the provisional Regulation, the Commission sent questionnaires to three Union producers, the complainant, one unrelated importer and known users, and three exporting producers in the countries concerned. It also sent questionnaires to the Government of the People’s Republic of China (‘GOC’) concerning the existence of significant distortions in the PRC within the meaning of Article 2(6a)(b) of the basic Regulation as well as concerning raw material distortions in China regarding the product under investigation.

(19) In addition to RCCs mentioned in recital (23) of the provisional Regulation, the Commission further carried out a verification visit at the following Union user: — Eviosys, Paris (France)

1.9. Investigation period and period considered

(20) As stated in recital (24) of the provisional Regulation, the investigation of dumping and injury covered the period from 1 July 2020 to 30 June 2021 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2018 to the end of the investigation period (‘the period considered’).

2. PRODUCT CONCERNED AND LIKE PRODUCT

2.1. Product concerned

(21) The Commission recalled that, as set out in recital (25) of the provisional Regulation, the product concerned is flat-rolled products of iron or non-alloy steel, plated or coated with chromium oxides or with chromium and chromium oxides originating in the PRC and Brazil, currently falling under CN codes 7210 50 00 and 7212 50 20 (‘the product concerned’).

(22) ECCS is used in a wide range of applications, typically for consumer and industrial packaging. It is most frequently used for food packaging, for example in can tops and bottoms, screw and lug caps, tabs, etcetera. Other types of uses include external parts for home appliances, photographic film cases, protective material for optical fibre protection or other electrical and electronic parts.

2.2. Like product

(23) In the absence of any related claim or comment, the conclusions in recital (27) and (28) of the provisional Regulation are hereby confirmed.

3. DUMPING

3.1. China

(24) Following provisional disclosure, the Commission received written comments from the two sampled exporting producers, CISA and the Government of the People’s Republic of China (‘GOC’) on the provisional dumping findings.

3.1.1. Normal value

(25) The details of the calculation of the normal value were set out in recitals (42) to (109) of the provisional Regulation.

3.1.2. Existence of significant distortions

(26) Following provisional disclosure, CISA and the GOC commented on the application of Article 2(6a) of the basic Regulation in the current investigation. In addition, Baosteel endorsed CISA’s comments.

Arguments concerning the Report (4)

(27) The GOC submitted that the Report is factually and legally flawed and decisions based on it lack legitimacy. On the factual side, the Report is, according to the GOC, misrepresentative, one-sided and out of touch with reality. Moreover, the fact that the Commission has issued country reports for a few selected countries raises concerns about most favoured nation (‘MFN’) treatment. Further, relying by the Commission on the evidence in the Report is, in the GOC’s view, not in line with the spirit of fair and just law, as it provides unfair advantages to the Union industry and as it effectively amounts to judging the case before trial.

(28) Similarly, CISA submitted that the Commission relied excessively on the Report, which in CISA’s opinion is one-sided, non-objective, outdated, and deliberately omits factual elements to facilitate lodging of the complaints based on the application of Article 2(6a) of the basic Regulation. CISA furthermore disagreed with the Commission’s reply in Section 3.1.3 of the provisional Regulation, where the Commission argued that both the GOC as well as other parties had the opportunity to submit information rebutting the sources included in the Report by specifying that the burden of proof lies in this case with the investigating authority and not the third country exporters. In addition, CISA underlined that the Report did not concern the ECCS industry but it is simply a one-size-fits-all document which the Commission uses for various investigations indiscriminately. Furthermore, CISA submitted that the Five-Year Plans (‘FYP’) to which the Commission refers in its investigation to prove the existence of significant distortions are merely guiding documents expressing policy views for the future, similar to such documents published also in the European Union, and hence not distortive. Finally, CISA submitted that the 13th FYP referred to in the Report only covers the period until 2020, meaning it was not relevant for the second part of the investigation period.

(29) The Commission disagreed. These arguments were already largely addressed in the provisional Regulation and the Commission therefore confirmed the conclusions from recitals (68) to (70) of the provisional Regulation. The Commission failed to see how, for example, referring to Chinese legislation in force can be out of touch with reality. Similarly, CISA claimed that the Commission omits factual circumstances, elements and conclusions which would contradict the purpose of the Report, without pointing out which specific factual circumstances or elements would put in question the existence of significant distortions in the sense of Article 2(6a) of the basic Regulation. Concerning the burden of proof, the Report as well as the other evidence put forward meant that the Commission had satisfied its burden of proof, and that neither CISA nor other interested parties had been able to rebut the evidence put forward. The Commission further underlined that the FYPs published by the GOC are not merely general guidance documents, but are of a legally binding nature. In this respect, the Commission referred to the detailed analysis of the plans in Chapter 4 of the Report, with a section specifically dedicated to the binding nature of plans in Section 4.3.1.

(30) With regard to the claim that 13th FYP was irrelevant for the second part of the investigation period (1 January – 30 June 2021), the Commission reiterated, as already stated in recital (69) of the provisional Regulation, that the 14th FYPs only started being published throughout 2021. As an example, the General 14th FYP was published on 12 March, the 14th FYP on Scrap Steel on 15 September and the 14th FYP on Developing Raw Materials on 21 December 2021. The Commission noted that during the period between the date of application of the 13th FYP and the publication of the 14th FYP, the provisions of the 13th FYP were still applicable. In any event, irrespective of when exactly individual 14th FYPs were published, the fact that the 13th FYP was applicable during the first half of the investigation period is already indicative of the existence of significant distortions within the meaning of Article 2(6a) of the basic Regulation. This claim was therefore dismissed.

(31) Upon final disclosure, the GOC re-submitted its claims concerning the Report, without adding any further elements to its argumentation. The Commission therefore noted that these claims were already addressed in recitals (68) to (70) of the provisional Regulation, as well as in recital (29) above.

(32) Similarly, CISA repeated its criticism of the Report following the final disclosure, restating its view that the Report fails to meet the standards of impartial and objective evidence. In addition, CISA raised again the issue of the 13th FYP, pointing out that, on the one hand, the plan should not be considered to be binding law but rather a general policy document, which exists also in the EU, and that, on the other hand, half of the IP falls outside of the period covered by the 13th FYP. In that connection, CISA invited the Commission to explain how the content of the 13th FYP can be considered as evidence of significant distortions after its application expired.

(33) The Commission disagreed. First of all, as already pointed out in recital (29) above, China operates a periodic five year planning cycle. In that cycle, individual planning documents for the following cycle are being prepared already in the course of the previous one while, at the same time, individual planning documents of the following cycle may be formally issued with some delay after the expiry of the corresponding planning documents of the previous cycle. The fact that the formal end date of the 13th FYP may fall into the middle of the IP or that the relevant 14th FYPs were published with a certain time gap following the end of the previous planning period cannot alter the nature of Chinese planning system in which the authorities and business operators always find themselves being part of a planning cycle. The Commission also disagreed with CISA’s argument that the 13th FYP was a mere general policy document on public investment priorities. To start with, CISA did not bring any argument calling into question the Commission’s analysis in Section 4.3.1. of the Report, as referred to in recital (29) above. Moreover, CISA’s comparison of the Commission’s ‘New Industrial Strategy’ with the 13th FYP is misplaced on a number of levels, such as the typology of the documents (a Commission communication to the European Parliament and other EU institutions compared to a document actually adopted by the Chinese highest legislative body) as well as their nature and substance (an explanatory document outlining policy priorities compare to a prescriptive guidance replete with industrial output targets and explicit implementation obligations for all subjects concerned).

(34) Consequently, the arguments brought by the GOC and CISA were rejected and the Commission’s confirmed its conclusions in recitals (68) to (70) of the provisional Regulation.

Arguments concerning WTO compatibility of Article 2(6a) of the basic Regulation

(35) First, the GOC, as well as CISA, argued that constructing the normal value in accordance with Article 2(6a) of the basic Regulation is inconsistent with the WTO Anti-Dumping Agreement (‘ADA’), in particular with Article 2.2. of the ADA which provides an exhaustive list of situations where the normal value can be constructed, the ‘significant distortions’ not being listed among such situations.

(36) Second, using data from an appropriate representative country is, according to the GOC and CISA, inconsistent with GATT Article VI.1(b) and Article 2.2.1.1. of the ADA which require using the cost of production in the country of origin when constructing the normal value. In CISA’s view, the Commission ignored the finding of the Appellate Body in European Union – Anti-Dumping Measures on Biodiesel from Argentina (‘DS473’) that the permissible use of data from the source outside the exporting country ‘does not mean that an investigating authority may simply substitute the cost from outside the country of origin for the cost of production in the country of origin.’ CISA further recalled that according to the Appellate Body in DS473, when relying on any out-of-country information to determine the ‘cost of production in the country of origin’ under Article 2.2 of the ADA, an investigating authority has to ensure that such information is used to arrive at the ‘cost of production in the country of origin’ and this may require the investigation authority to adapt that information. However, according to CISA, no record has shown that the Commission has made efforts to adapt the data from the appropriate representative country to arrive at the cost of production in China. This appears to be in CISA’s view inconsistent with the EU’s obligation under Article 2.2 of the ADA.

(37) Third, the GOC and CISA claimed that the Commission’s investigating practices under Article 2(6a) of the basic Regulation are inconsistent with WTO rules insofar as the Commission, in violation of Article 2.2.1.1. of the ADA, disregarded records of the Chinese producers without determining whether those records are in accordance with the generally accepted accounting principles in China and whether they reasonably reflect the costs associated with the production and sales. CISA claimed in this connection that the Commission’s practice was already found WTO-inconsistent in DS473. The GOC further recalled that the Appellate Body in DS473 and the Panel Report in European Union – Cost Adjustment Methodologies II (Russia) (‘DS494’) asserted that according to Article 2.2.1.1 of the ADA, as long as the records kept by the exporter or producer under investigation correspond – within acceptable limits – in an accurate and reliable manner, to all the actual costs incurred by the particular producer or exporter for the product under consideration, they can be deemed to ‘reasonably reflect the costs associated with the production and sale of the product under consideration’ and the investigating authority should use such records to determine the cost of production of the investigated producers.

(38) As to the first claim, CISA brought the identical argument already in its comments on the First Note and the Commission addressed it in detail in recital (66) of the provisional Regulation. The Commission therefore confirmed its conclusions in that recital.

(39) Concerning the second argument, it is to a large extent a reiteration of the claim already addressed in recitals (65) and (66) of the Provisional Regulation. In addition, the Commission noted that when applying Article 2(6a) of the basic Regulation, it is bound to use undistorted costs in an appropriate representative country to ensure that the applied costs are not affected by distortions and are based on readily available data. In the absence of any specific information by CISA which would substantiate further adjustments, the undistorted costs in the representative country based on the readily available data, were considered to fulfil the criteria of Article 2(6a) of the basic Regulation. Therefore, the Commission confirmed its findings in recital (66) of the provisional Regulation and rejected this claim.

(40) With respect to the third argument, other than reiterating the position which CISA communicated already in its comments on the First Note and claiming that the Commission allegedly repeats its legal mistakes established in DS473, the argument appears to be of the same nature as the one already addressed in recitals (66) and (67) of the provisional Regulation. The Commission therefore rejected the claim and confirmed its provisional findings.

(41) Upon final disclosure, the GOC re-submitted its claims concerning the compatibility of Article 2(6a) of the basic Regulation with WTO rules, as well as concerning the Commission’s investigating practices under Article 2(6a) of the basic Regulation with respect to the use of records of the Chinese producers, without adding any further elements to its argumentation. The Commission therefore noted that these claims were already addressed in recitals (65) to (67) of the provisional Regulation, as well as in recitals (35) – (37) above. The Commission therefore rejected also these arguments and confirmed its provisional findings.

Other arguments concerning significant distortions

(42) The GOC submitted that the Commission should be consistent and fully examine whether there are so-called market distortions in the representative country. Readily accepting the representative country’s data without such an evaluation represents ‘double standards’. The GOC pointed out that under the EU law, the Commission is obliged to use undistorted prices to construct the normal value. Therefore, the Commission should, in the GOC’s view, take the initiative to investigate and prove the existence or non-existence of distortions in the representative countries, rather than passively waiting for the parties involved in the case to submit evidence. The GOC further submitted that the Commission should examine whether there are market distortions in the EU domestic market, not least because there are allegedly many situations within the EU that should raise concerns of the potential of ‘market distortions’.

(43) The GOC re-submitted these claims also following definite disclosure, reiterating its position that a government’s necessary regulation of economic operation should not be regarded as market-distorting nor should it be considered a basis for artificially raising the dumping margin of imported products without assessing the impact of similar behaviours on production costs within the domestic market.

(44) CISA pointed out that according to Article 2(6a) of the basic Regulation, the assessment of the significant distortions should be done for each exporter separately, which was not done in the current investigation.

(45) Concerning the arguments by the GOC, the Commission recalled that, in accordance with Article 2(6a)(a) of the basic Regulation, it proceeds to construct the normal value on the basis of chosen data other than domestic prices and costs in the exporting country only where it establishes that such data is appropriate to reflect undistorted prices and costs. In this process, the Commission is bound to use only undistorted data. In that respect, far from waiting passively, the Commission does its own analysis and also invites interested parties to comment on the proposed sources for the determination of the normal value in the early stages of the investigation, namely via the notes on the undistorted sources it intends to use released early on in the proceeding. The Commission’s ultimate decision as to which undistorted data should be used to calculate the normal value takes full account of all comments received by parties. As to the GOC’s request for the Commission to evaluate possible distortions in the EU’s internal market, the Commission failed to see the relevance of this point in the context of assessing the existence of significant distortions in accordance with Article 2(6a) of the basic Regulation.

(46) The argument by CISA was already discussed and rejected in recitals (71) and (72) of the provisional Regulation. The Commission noted that CISA appears to have chosen to read only the first sentence of recital (72) of the provisional Regulation. The Commission therefore referred to the second sentence of that recital and to the underlying analysis in Section 3.1.3 of the provisional Regulation. Absent any additional arguments by the interested parties, the Commission therefore definitively confirmed its findings in the aforementioned recitals of the provisional Regulation.

3.1.3. Representative country

(47) No comments were received from interested parties refuting the appropriateness of Brazil as a representative country and of CSN as a producer in the representative country. The conclusion of recital (87) of the provisional Regulation was therefore confirmed.

3.1.4. Benchmarks used to establish the normal value

(48) Following the publication of the provisional Regulation, CISA and Baosteel commented on some of the benchmark prices and claimed that other more representative benchmark prices should be used.

(49) Firstly, CISA and Baosteel questioned the use the Brazilian domestic steel prices to establish the benchmark prices for hot rolled steel and cold rolled steel. According to these parties, the Brazilian domestic steel prices were significantly higher than those in other major steel producing countries, such as Turkey and India. In their view, the Brazilian domestic steel prices were distorted during the investigation period, and therefore could not be considered as a representative benchmark.

(50) The Commission pointed out that Brazil was selected as an appropriate representative country in accordance with objective criteria established in Article 2(6a)(a) of the basic Regulation. The Commission considered that the Brazilian domestic hot rolled steel coils (‘HRC’) and cold rolled steel coils (‘CRC’) prices published by Metal Bulletin were appropriate in that regard.

(51) In particular, the Commission did not find any indication that that these domestic prices were distorted and inappropriate to use as benchmarks. The Commission did not consider that there were measures implemented in Brazil that could be considered as distorting the domestic prices of steel coils, to the extent that those should be disregarded.

(52) CISA and Baosteel pointed to the limited number of steel producers in Brazil and the consequent low level of competition. CISA and Baosteel indicated that according to a report of the US International Trade Commission (ITC) (5), a ‘vast majority’ of the cold rolled steel in Brazil was produced by three companies. CISA and Baosteel also pointed to some recent developments of the Brazil cold rolled steel industry summarized in the same report. These developments included changes in operations by the three Brazilian steel producers, such as halted production, closings and shutdowns, temporary idling and expansions during the period 2015 – 2021. In addition, gross production and gross consumption decreased in Brazil between 2018 and 2020. This situation was allegedly exacerbated by the depreciation of the Brazilian Real. The Commission noted, however, that all these allegations were of a general nature and did not demonstrate that the domestic prices were affected by distortions.

(53) In this respect, the Commission noted that Brazil has a significant production of steel products, it is in the top 10 world steel producing countries with an output of 36,2 million tons of crude steel and 34,8 million tons of steel products in 2021 (6). There are 31 steel plants in Brazil, run by 12 business groups (7). A market of three main competitors, as detailed in the ITC report, and several secondary players, cannot be considered as such as a non-competitive market, without specific evidence that this market is not functioning properly. Therefore, the allegation that the Brazilian prices were distorted due to a high concentration and limited competition cannot be accepted. In any event, even if the Brazilian market structure as alleged, would be considered a concentrated market, the Commission could not consider the purported level of concentration on the market in itself as a ‘distortion’ in the sense of Article 2(6a). There was no evidence that the domestic prices were a consequence of State direction or intervention with normal market forces. On the contrary, the evidence suggests a competitive market, and the recent developments of the Brazil cold rolled steel industry described in recital (52) did not contradict this finding. This renders the Brazilian steel market and its prices representative, and at least partly protected from the effect of currency fluctuations.

(54) CISA and Baosteel also mentioned the existence of import tariffs of 12 % on HRC and CRC as a further price distortion. The Commission considered that the mere existence of import tariffs in itself, could not lead to the conclusion that the domestic prices were distorted, and most countries apply some level of import tariffs. Moreover, as set out in recital (55), for most of the year Brazilian prices closely followed those of other emerging markets, and there was thus no evidence of structural or systemic distortions.

(55) CISA and Baosteel also referred to an alleged imbalance on the Brazilian flat steel market in 2020 which led to an increase in prices. However, this increase in prices was observed globally. According to the OECD (8), in January 2021, flat steel prices stood 47 % higher than one year earlier. Moreover, according to the price data submitted by CISA and Baosteel, Brazilian prices generally followed those in other developing countries’ economies except for the last two months of the investigation period; yet in those two months prices rose similar to those in Europe. So price developments in Brazil did not appear de-coupled from global trends rendering those prices unrepresentative or distorted.

(56) Concerning the claim that Brazilian prices were significantly higher than those in other major steel producing countries, such as Turkey and India, the Commission noted that simple price differentials as such between different potential representative countries are not a sufficient justification to reject prices in the representative country. There are always bound to be some price differences and local variations between the several factors of production in the different potential representative countries. These objective price differences are not in themselves an indication of distortions in the chosen representative country. If this was the case, it would lead to using systematically the lowest values in all the potential representative countries. This would not be in line with the letter and rationale of the provisions in Article 2(6a) of the basic Regulation. Instead, the Commission considers it appropriate to use, to the extent possible (that is, absent distortions or abnormal situations), domestic prices in the same representative country chosen in order to ensure coherence, as the market conditions are similar for all the inputs in that country. Moreover, as noted in recital (55), Brazilian prices generally followed those of other developing countries’ economies. The rise in the last two months of the investigation period was not decoupleddevelopments-Q2-2021.pdf from the global trend of rising prices during that period, and the Commission noted that in any event, the price increase during that period did not have an appreciable impact on the dumping margin calculation. This claim was therefore rejected.

(57) Baosteel also contested the benchmark from the GTA used for Hot-Pressed Iron Block. Baosteel argued that CN code 7326 90 (‘other articles of iron or steel wire’) contains a large scope of products, most of which are more expensive than Hot-Pressed Iron Block.

(58) The Commission noted that GTA prices of ‘other articles of iron or steel wire’ falling under HS code 7326 90 were of a completely different range as compared to prices generally observed for iron blocks and scrap actually used for steelmaking at converter smelting stage (that is a factor of more than 30) and that the value linked to this code was thus not representative of the specific factor of production. Therefore, it accepted that the benchmark provisionally used was inappropriate. The Commission found that the closest resembling product to hot-pressed iron blocks used for steelmaking and for which a benchmark price was available was hot-briquetted iron (or ‘HBI’). According to Metal Bulletin, the price of hot-briquetted iron including freight (9) was 2 464 CNY/tonne on average during the investigation period. The Commission therefore decided to definitively use this as a benchmark price.

(59) Thirdly, Baosteel contested the benchmark from GTA used for ‘Aluminium Extrusions’.

(60) After analysing the product actually used by Baosteel it found that the raw material used in the converter and refining process was aluminium scrap rather than ‘Aluminium Extrusions’. The Commission thus decided to replace the benchmark with the GTA price of aluminium scrap and waste falling under HS code for this raw material (7602 00). The undistorted benchmark price of aluminium scrap was determined at 15 132 CNY/tonne.

(61) Lastly, Baosteel contested the use of the GTA benchmark for Iron Ore Powder. According to Baosteel the vast majority of this raw material were imported from market economy countries (mostly from Australia and Brazil) and in USD. Consequently, Baosteel requested the Commission to use the actual import price reported by Baosteel instead of the benchmark price.

(62) In this respect, the Commission noted that Baosteel did not import directly, but via a related company established in Hong Kong and that it had not provided sufficient appropriate evidence allowing the Commission to positively conclude that the final purchase price of Baosteel was not affected by the relationship between the related companies and/or by the prevailing significant distortions in China as requested by Article 2(6a)(a), third indent, of the Basic Regulation. Thus, the claim was rejected.

(63) The Commission therefore used for its final determination of the normal value for Baosteel the benchmarks set out in recitals (93) to (102) of the provisional Regulation, with the exception of two raw materials, as explained above in recitals (58) and (60).

(64) On this basis, the Commission constructed the normal value per product type on an ex-works basis. The methodology of the calculation of the normal value was set out in recitals (103) to (109) of the provisional Regulation, which in the absence of any comments is herewith confirmed.

3.1.5. Export price

(65) The details of the calculation of the export price were set out in recital (110) and (111) of the provisional Regulation. In the absence of any comments with respect to this section, the Commission confirmed its provisional conclusions.

3.1.6. Comparison

(66) The details concerning the comparison of the normal value and the export price were set out in recitals (112) and (113) of the provisional Regulation. In the absence of any comments with respect to this section, the Commission confirmed its provisional conclusions.

3.1.7. Dumping margins

(67) In the absence of any claim concerning the methodology used for the dumping margin calculation, recital (114) of the provisional Regulation is hereby confirmed. As explained in recitals (116) and (117) of the provisional Regulation, for the cooperating companies that were not sampled, the Commission calculated the weighted average of the dumping margins of the two sampled exporting producers. For all other exporting producers in China, the Commission established the dumping margin on the basis of facts available, in accordance with Article 18 of the basic Regulation. As the level of cooperation in this case was low, the Commission decided that it was appropriate to establish the residual dumping margin for all other companies at the level of the highest dumping margin found for product types sold in representative quantities by the sampled cooperating exporting producer with the highest dumping margin.

(68) The definitive dumping margins expressed as a percentage of the cost, insurance and freight (CIF) Union frontier price, duty unpaid, are as follows: Company Definitive dumping margin Baoshan Iron & Steel Co., Ltd. 30,7 % Handan Jintai Packing Material Co., Ltd. 53,9 % Cooperating companies 34,6 % All other companies 77,9 %

3.2. Brazil

(69) Following provisional disclosure, the Commission received written comments from the cooperating exporting producer, CSN, on the provisional dumping findings.

3.2.1. Normal Value

(70) The details of the calculation methodology of the normal value were set out in recitals (119) to (127) of the provisional Regulation. In the absence of any comments with respect to this section, the Commission confirmed its provisional conclusions.

3.2.2. Export price

(71) The details of the calculation of the export price were set out in recital (128) of the provisional Regulation. In the absence of any comments with respect to this section, the Commission confirmed its provisional conclusions.

3.2.3. Comparison

(72) The details concerning the comparison of the normal value and the export price were set out in recitals (129) and (130) of the provisional Regulation.

(73) After provisional disclosure, the exporting producer CSN claimed that in its questionnaire reply it had emphasized that quality issues should be considered by the Commission, that it had indicated such issues in its domestic and export sales data and that it had provided further demonstration in this sense during the RCCs. CSN therefore requested the Commission to consider in its dumping calculations the differences in quality, as such differences impact price comparability.

(74) The Commission considered that, although CSN had indeed provided information regarding quality differences of the product under investigation, it had not made a claim for an adjustment on this basis in its questionnaire reply, nor during the RCC. However, in light of the claim made after provisional disclosure, the Commission re-examined the information provided with regard to quality differences. Apart from the request to consider quality differences, no additional information or data was provided by CSN after provisional disclosure.

(75) A difference in quality of the product concerned, in this case first and second quality ECCS, is due to the physical characteristics of the product. Second quality ECCS has certain flaws or defects which might prevent the use of the ECCS in the application for which it was produced. As explained by CSN during the deficiency process and the RCC, such second quality ECCS is sold by CSN to third country customers in bulk via a small tender-like procedure, where the product is sold to the highest bidder.

(76) Article 2(10)(a) of the basic Regulation states the following: ‘An adjustment shall be made for differences in the physical characteristics of the product concerned. The amount of the adjustment shall correspond to a reasonable estimate of the market value of the difference.’

(77) The Commission considered that no reasonable estimate of the market value of the difference was provided by CSN. In reply to one of the Commission’s questions during the deficiency process, CSN had mentioned that second quality ECCS is usually a certain percentage lower than first quality. However, when examining the data supplied by the company at product type level for both export and domestic sales, it was clear that no such general statement could be made with regard to the price difference.

(78) First, second quality was not always cheaper than first quality. The price differences between first and second quality during the investigation period ranged from a negative two digit percentage to a positive two digit percentage. This was true for the investigation period as a whole, while the differences were even larger when examined on a monthly basis.

(79) Second, the difference in price between the two qualities could differ from month to month. For example, for one specific product type the Commission noticed that the first quality product was indeed slightly more expensive than the second quality in one month, but it had been substantially cheaper than the second quality only a few months earlier.

(80) It was clear from the analysis that the price differences occurred on a monthly basis, where the price difference between first and second quality ECCS could be either positive or negative, depending on the month. For Union sales, this was most likely caused by the tender-like procedure for sales of second quality mentioned in recital (75), where the second quality price-setting did not depend on first quality prices, but rather on supply and demand at the time of a particular second quality tender. This was confirmed by statements made by CSN during the RCC.

(81) Since (i) the price differences between first and second quality were inconsistent and erratic, (ii) they did not reflect the overall price difference mentioned by CSN in their deficiency letter reply and (iii) CSN did not provide any new evidence substantiating their claim, the Commission considered that no reasonable market value of the difference as required by Article 2(10)(a) had been demonstrated or could be estimated. The Commission therefore rejected CSN’s claim for an adjustment for quality differences.

3.2.4. Dumping margins

(82) In the absence of any accepted claim concerning the dumping margin calculation, recital (133) of the provisional Regulation is hereby confirmed.

(83) The definitive dumping margins expressed as a percentage of the cost, insurance and freight (CIF) Union frontier price, duty unpaid, are as follows: Company Definitive dumping margin Companhia Siderúrgica Nacional 66,8 % All other companies 66,8 %

4. INJURY

4.1. Definition of the Union industry and Union production

(84) In recital (135) of the provisional Regulation, the Commission explained that as data relating to the injury assessment was primarily derived from the three sampled Union producers, two of which belong to the same group, all figures are given in an indexed form or as ranges to protect the confidentiality of the data provided.

(85) Following provisional disclosure, CISA claimed that the presentation of the economic indicators in the form of ranges, especially concerning Union consumption and including Eurostat data regarding foreign exporters with reference to Table 1 and Table 4 of the provisional Regulation, prevented it from being able to meaningfully comment on these indicators and requested the Commission to provide accurate data. CISA further argued that considering that there are four Union producers, which represent three independent Union producer groups, there is no danger of interested parties being able to reverse engineer information specific to Union producers.

(86) In this respect, as explained in recitals (31) and (135) of the provisional Regulation, data relating to the injury assessment was primarily derived from the three sampled Union producers, two of which belong to the same group. Therefore, all figures had to be provided in an indexed form or as ranges to protect the confidentiality of the data provided. In addition, although there are four Union producers representing three Union producer groups, two of the groups are related because ArcelorMittal has a stake in Acciaierie d’Italia (10). Therefore, the Commission considered that there is a need to protect the confidentiality of the data provided and thus use ranges.

(87) The Commission estimated that also data on Union consumption and the data regarding imports and market share contained in Tables 1 and 4 of the provisional Regulation needed to be presented in ranges because the absolute figures would render it possible to calculate the total sales and their market share of the Union producers and, therefore, divulge business confidential information specific to individual Union producers. Consequently, the claim was rejected.

(88) Therefore, recitals (134) to (139) as well as recitals (144) to (146) of the provisional Regulation are confirmed.

4.2. Union consumption

(89) In the absence of comments regarding Union consumption, recitals (137) to (139) of the provisional Regulation are confirmed.

4.3. Imports from the countries concerned

4.3.1. Cumulative assessment of the effects of imports from the countries concerned

(90) In the absence of comments regarding the cumulative assessment of the effects of imports from the countries concerned recitals (140) to (143) of the provisional Regulation are confirmed.

4.3.2. Prices of the imports from the countries concerned and price undercutting

(91) The GOB claimed that under the ADA, the basic parameters for carrying out an undercutting test are the prices of the dumped imports and the like product in the importing Member as a whole and that there is no basis in paragraphs 1 and 2 of Article 3 of the ADA nor in any other provision in the Agreement for excluding imports from companies not composing the producers/exporters sample, since they are considered to be dumped. In the same way, according to the GOB, for an undercutting analysis there is nothing in the ADA authorizing the exclusion of transactions between related parties or any other kind of sales not considered to be in the ordinary course of trade for the calculation of the price of a like product of the importing Member. The GOB referred to the decisions of the Panels in EC – Fasteners (China) and Morocco – Definitive anti-dumping measures on exercise books (Tunisia) in this respect.

(92) Furthermore, the GOB claimed that the wording of recital (151 (11)) of the provisional Regulation suggests that the undercutting analysis was performed on a country-by-country basis for China and Brazil although in accordance with recital (33) of the provisional Regulation, ‘the Commission decided to cumulate the imports from the countries concerned for the purpose of the analysis described in the recitals above’. The GOB’s understanding is that once the imports have been cumulated for injury analysis, the same procedure should be followed regarding all examinations required by Article 3 of the ADA, including price effects, and referred to the decision of the Panel in EC – Tube or Pipe Fittings in this respect.

(93) The GOB requested the Commission to clarify whether its understanding of the investigation facts is correct and, if so, to perform the following adjustment in the calculations: — to consider the price of all sales of the like product by the Union producers, including operations between related parties; — to consider all the imports of the product under investigation from China and Brazil, regardless of producers/exporters sample made under Article 6.10 of the ADA; and — to cumulate the imports from all the investigated origins (China and Brazil) when assessing the effect of the dumped imports on prices in the domestic market for like products.

(94) The Commission underlined that as stated in recitals (186) and (194) of the provisional Regulation, the Union industry’s prices in the investigation period had been seriously suppressed by dumped imports from both Brazil and China, which led to increasing financial losses during the period considered. By contrast, the arguments by the GOB focus on the other standard of price comparison, that is, price undercutting (see recitals (91)-(92)). The Commission maintained therefore that prices on the Union market had been suppressed from 2018 to the end of the investigation period. Even if the arguments of the GOB were meant to refer to price suppression, there is no information on the file that the prices of non-sampled Union producers would be substantially different from the prices of the sampled producers, and hence that the conclusions on price suppression would be different. In fact, a comparison between import prices and Union prices in tables 5 and 6 of the provisional Regulation already shows that import prices were lower than Union prices (see recital (149) of the provisional Regulation). The Commission was thus, as part of its price effects analysis, taking into account the price effects of all imports on all sales of the Union industry. In any event, the Commission noted that the selection of a sample is provided in the basic Regulation, and the corresponding provisions of the WTO ADA when there is a large number of parties and therefore the investigation can be limited to a reasonable number of representative parties to reach representative findings. The case-law cited by the GOB did not support the assertion that representative findings with respect to the sampled companies could not be used to reach conclusions regarding the remainder of sales and imports. These claims by the GOB were therefore rejected.

(95) As for the claims concerning price undercutting and the set of the Union industry sales used for the undercutting calculations, the Commission confirmed that imports of ECCS of the sampled exporting producers were compared solely to Union industry sales of the same product type. In this respect, the Commission calculated undercutting for all imports from the countries concerned and conducted the price effects analysis together. The result was an undercutting ranging between 1,9 % and 21,8 %, that is a weighted average for both countries of 11,2 %.

(96) Following final disclosure, the GOB reiterated its claim that the Commission should have taken into account sales transactions between related parties. The GOB also argued that the sales of the non-sampled Union and exporting producers should have also been taken into account when carrying out undercutting and underselling calculations. The GOB referred to a Panel report where the Panel rejected the investigating authority’s approach to construct the prices of the domestic industry for the purpose of price undercutting because the prices were found not to be profitable (12). The Commission failed to see how this report is relevant for the GOB’s assertion that the sales transactions between related parties should have been also taken into account for its undercutting calculations. In any event, that Panel Report has not been adopted. Furthermore, as explained in recital (94) above, the Commission was entitled to apply sampling and to use the representative findings with respect to the sampled companies to reach conclusions regarding the remainder of sales and imports. Consequently, it rejected the claim. In any event, for analysing the price effects of the dumped imports on the Union industry, the Commission considered that the price suppression as established in recitals (186), (188), (193), (194) and (208) of the provisional Regulation is already a sufficient indicator. The findings of price suppression at the macro level was also confirmed by the findings of significant underselling with respect to each sampled exporting producer during the investigation period. As set out in recital (185), underselling margins ranged from 23,9 % to 53,2 %, that is a weighted average for both countries of 37,7 %. In addition, as indicated in table 9 of the provisional Regulation, in the investigation period the average sales price of the Union industry on the Union market was EUR/tonne [780-910], while the unit cost of production was EUR/tonne [840-980]. Consequently, due to the price suppression the Union industry sold at prices which did not even cover their cost of production let alone a normal profit margin. Therefore, the findings of price suppression of the dumped imports from the countries concerned were confirmed at definitive stage.

(97) The Commission noted that these unequivocal findings of significant price suppression are already alone legally sufficient to confirm that the dumped imports caused significant injury to the Union industry. In these circumstances there is no legal requirement to have a separate analysis and findings on price undercutting, because it is an alternative standard of price effects analysis under Article 3(3) of the basic Regulation. Consequently, despite the findings on price undercutting made in the provisional Regulation, given the above findings on price suppression, the analysis and findings of price undercutting are unnecessary for the outcome of the investigation. Furthermore, in its recent judgments the General Court confirmed the Commission’s analysis of significant price suppression as a tool to assess the price effects under Article 3(3) of the basic Regulation (13). In view of this, the comments by the parties concerning price undercutting are also without object. Nevertheless, for the sake of completeness the Commission decided to address the claims from interested parties.

(98) Following final disclosure, the GOB took issue with the Commission’s statement that the findings of price undercutting are unnecessary to the outcome of the investigation as, according to GOB, the injury margin was based on price undercutting. However, as explained in sections 6.1 and 6.2 below, and contrary to GOB’s assertion, the injury margin was not based on the undercutting found but rather on the underselling margin established for each sampled exporting producer, except for Jintai for which the injury margin equalled the dumping margin found.

(99) With respect to the claim of the GOB that the Commission should consider the price of all sales of the like product in the Union market, including transactions between related parties, the Commission noted that in its investigations it collects all information, including sales prices between related parties. In this context, the Commission also asks Union producers to explain the transfer pricing policies of sales transactions with related parties. If these sales are affected by the relationship and their prices are not at arm’s length, they are not taken into account in the undercutting analysis because the resulting calculations would be tainted by this relationship. By contrast, if the sales between related parties are at arm’s length and reflect a market transaction, they may be fully taken into account in the undercutting calculation (provided there are no adjustments concerning level of trade). This approach is fully in line with the rules of the basic Regulation and the WTO jurisprudence quoted by the GOB. This claim was therefore dismissed.

(100) Baosteel raised a procedural and rights of defence issue with respect to the Commission’s disclosure document where the Union industry’s unit sales prices and target unit prices relied on for the purposes of these calculations are provided in broad ranges, and the same ranges irrespective of the difference in price between different PCNs, which prevented the company from providing meaningful comments. As the underselling amount is calculated as a difference between the exporter’s CIF value and the Union industry’s target price, without a meaningful disclosure of the latter, exporters would not be able to verify the accuracy of the Commission’s underselling margin calculations. Jintai expressed similar concerns.

(101) In this respect, the Commission pointed out that because of the confidentiality concerns already explained in recital (86), it was necessary to present the data in ranges. Following the claim of Baosteel, the Commission revised the ranges taking into account the price differences between the different PCNs.

(102) Moreover, Baosteel requested the Commission to clarify whether it has compared the prices at the same level of trade. In particular, Baosteel claimed that since on the exporter’s side the Commission has deducted the SG&A and profits of the related traders, it must do the same on the Union producer’s side, if they do sell the product concerned via related traders on the Union market.

(103) Jintai also claimed that the Commission has failed to make a comparison of prices at the same level of trade when calculating the undercutting margin. According to Jintai, by carrying out, for the price comparison made in the context of the injury calculations, the assimilation between the prices charged by the sampled Union producers in their direct sales to independent buyers and the prices charged by the related selling entities of those producers to such buyers, the Commission took into account for that product a price which was inflated and therefore unfavourable to Jintai. In other words, by taking into account, in relation to the prices of the sampled Union producers, certain elements which concern a different level of trade from that which it used for the purposes of the comparison (ex-works), the Commission has not made a fair comparison in the calculation of Jintai’s price undercutting margin. Jintai argued that if the correct and proper comparison is done at the same level of trade, Jintai’s price undercutting margin would likely be far below 0 %. Therefore, Jintai requested the Commission to make a proper and fair level of trade comparison to establish Jintai’s correct price ‘over-cutting’ margin and referred to the Court decisions Jindal Saw and Jindal Saw Italia v Commission (14) and Giant Electric Vehicle Kunshan v Commission (15) in this respect.

(104) The Commission first noted that the analysis on price undercutting is supplemented by its separate findings on price suppression as detailed in recitals (185), (186) and (194) of the provisional Regulation. These findings of significant price suppression are already legally sufficient to show the negative impact on the prices charged by the Union industry, as explained in recital (97). Nevertheless, as explained in that recital, the Commission addressed the arguments concerning undercutting for the sake of completeness.

(105) Regarding the claim of Baosteel about an adjustment for SG&A and profits of the related traders of the Union producers, the Commission confirmed that in its undercutting calculations it had not made such an adjustment. As indicated in recitals (150) and (151) of the provisional Regulation, the Commission made a number of other adjustments in order to ensure a fair comparison at the same level of trade. This resulted in bringing back the Union industry prices to ex-works level and the exporting producers’ import prices to CIF Union frontier level (16). However, the Commission made a simulation by calculating undercutting both with and without the application of Article 2(9) of the basic Regulation by analogy to the sales of Baosteel, and established that the undercutting was significant for Baosteel in both cases, with a minimum level of 7,5 %. Consequently, contrary to Baosteel’s claim, even when not deducting, under Article 2(9), the SG&A and profits of the related traders of Baosteel, a significant undercutting was found.

(106) Regarding Jintai, the Commission pointed out that since this exporting producer did not export the product under investigation via related sales entities, no adjustment to its export price through the application of Article 2(9) of the basic Regulation by analogy was made. In the present case, the Commission also did not consider it appropriate to adjust the sales of the Union producers. The Commission noted that in order to ensure symmetry in the price comparison, the respective prices should include as far as possible the same elements, and also reflect as far as possible the same level of trade. As for the former, the export price of Jintai reflected a direct sale from the Chinese legal entity to the independent customers in the Union. In the Union, one sampled producer had direct sales to final customers, and its price reflected the same elements as Jintai’s price. The other two sampled Union producers were part of the Arcelor Mittal Group. Both of them did not have direct sales from the producing entities, but sold via related entities. The Commission found that the producing entities did not have their own sales structure, but had to rely on their related selling entities in order to carry out the sales. In other words, the costs associated with the production and sale of the product concerned were split between the producing entities that were bearing just the manufacturing costs, and the related selling entities located in different Member States were bearing the sales and marketing costs. The production entity did not incur any selling expense, and the sales department of Arcelor Mittal was entirely contained in the separate legal sales entities. The SG&A and profit concerning the sales of Arcelor Mittal Group, were incurred by the related selling entities when selling to Union customers. In order to ensure a fair comparison, the Commission took into account the price of the selling entity to the Union customers, as this price reflected the same production and marketing costs reflected in the export price of Jintai, which conducted both production and sale through a single entity, just like the other sampled Union producer. Not taking the price of the Arcelor Mittal Group’s relating selling entity would understate the actual price as it would not reflect the necessary selling costs of the entity to independent customers in the Union. The related selling entities of the Union industry, on the one hand, and Jintai, on the other hand, exercised similar sales functions because (1) they both need to find customers in the Union, (2) sign sales contracts and (3) ensure deliveries and payments of invoices, etc. Therefore, in line with the judgments in Hansol (17), CRIA and CCCMC (18), and Giant Electric Vehicles (19), this price comparison reflected the respective economic realities and corresponding roles played by the respective entities on both the export and EU side, and at a point where both entities compete on the Union market.

(107) Nevertheless, even assuming that granting Jintai’s request (namely, that the Commission adjusted the Union industry’s sales for the purposes of the undercutting calculation through the application of Article 2(9) of the basic Regulation by analogy) would show no undercutting as regards this exporting producer, this would not change the Commission’s determination of undercutting as regards China and both countries concerned as a whole. Indeed, Jintai’s exports to the Union represent only 6,3 % of the total exports to the Union and only 11,6 % of the exports within the sample. Thus, even if there is no undercutting as regards Jintai’s exports, the findings of price undercutting would be confirmed on the basis of the other sampled exporting producer for China as well as for both countries concerned. Likewise, any finding as regards the level of undercutting of Jintai would not affect the Commission’s findings with respect to price suppression, as already recalled in recitals (97) and (104). Indeed, Jintai’s prices exhibited a high level of underselling (see recital (185)).

4.4. Economic situation of the Union industry

4.4.1. General remarks

(108) Following provisional disclosure, CISA inquired whether the data concerning macroeconomic indicators included data pertaining to Acciaierie d’Italia. The Commission replied by the affirmative.

(109) Therefore, recitals (153) to (157) of the provisional Regulation are confirmed.

4.4.2. Macroeconomic indicators

(110) Following provisional disclosure, CISA requested the Commission to confirm whether it has ensured that all producers, including Acciaierie d’Italia, have indeed been included in the relevant datasets concerning the macroeconomic indicators and pointed out that Acciaierie d’Italia alone accounts for [5-15] % of the total production and sales of the product concerned in the Union, which is above the negligible level.

(111) In this respect, the Commission confirmed that data relating to Acciaierie d’Italia have been considered in the macroeconomic indicators.

4.4.2.1. Production, production capacity and capacity utilisation

(112) In the absence of comments regarding production, production capacity and capacity utilisation, recitals (158) to (160) of the provisional Regulation were confirmed.

4.4.2.2. Sales volume and market share

(113) In the absence of comments regarding sales volume and market share, recitals (161) and (162) of the provisional Regulation were confirmed.

4.4.2.3. Employment and productivity

(114) In the absence of comments regarding employment and productivity, recitals (163) and (164) of the provisional Regulation were confirmed.

4.4.2.4. Growth

(115) In the absence of comments regarding growth, recitals (165) to (167) of the provisional Regulation were confirmed.

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

(116) Following provisional disclosure, the GOB claimed that in its assessment of the magnitude of the margin of dumping, the Commission simply restated conclusions already reached under other examinations. For instance, the conclusion that the margins of dumping are above the de minimis threshold is already expressed in recital (141) of the provisional Regulation related to the assessment of imports cumulation and can be derived from the application of provisional measures itself. Moreover, the analysis of the volume and price of the dumped imports was made under Articles 3.1, 3.2 and 3.5 of the Anti-dumping Agreement and is expressed in recitals (144) – (152) of the provisional Regulation. Therefore, no specific analysis regarding the magnitude of the margin of dumping was performed. Therefore, the GOB requested the Commission to analyse this factor in a non-redundant manner in relation to other indicators contained in Article 3 of the Anti-dumping Agreement.

(117) In this respect, the Commission noted that consideration of the magnitude of the margin of dumping involves an examination of whether, having regard the volume and the price of the dumped imports, the impact on the Union industry cannot be considered negligible.

(118) The Commission recalled that all dumping margins were significantly above the de minimis level. The volume of imports from the countries concerned was significant in the period considered and the investigation period, while the prices of the dumped imports have exerted price undercutting and price suppression on the prices of Union industry. Therefore, given the volume and the price of the dumped imports, the impact of the actual margins of dumping cannot be considered negligible and was even substantial, as concluded by the Commission in recital (168) of the provisional Regulation.

(119) Therefore, recitals (168) and (169) of the provisional Regulation were confirmed.

4.4.3. Microeconomic indicators

4.4.3.1. Prices and factors affecting prices

(120) In the absence of comments regarding prices and factors affecting prices, recitals (170) to (172) of the provisional Regulation were confirmed.

4.4.3.2. Labour costs

(121) In the absence of comments regarding labour costs, recitals (173) and (174) of the provisional Regulation were confirmed.

4.4.3.3. Inventories

(122) In the absence of comments regarding inventories, recitals (175) and (176) of the provisional Regulation were confirmed.

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

(123) In the absence of comments regarding profitability, cash flow, investments, return on investments and ability to raise capital, recitals (177) to (182) of the provisional Regulation were confirmed.

4.4.4. Conclusion on injury

(124) Following provisional disclosure, CISA and Eviosys claimed that the Union industry did not suffer material injury and that any negative economic effects experienced by the Union industry were in fact due to other factors such as the impact of the COVID-19 pandemic. After final disclosure, CISA reiterated its claims.

(125) First, CISA and Eviosys pointed to the fact that the market share held by the Union industry in fact increased during the period considered in the context of a decreasing Union consumption.

(126) Second, concerning the macroeconomic indicators, CISA noted that none of them could possibly result in a finding of the Union industry being materially injured. It pointed out that the levels of production capacity and domestic sales have been constant, against a background of decreasing consumption, thus explaining the clear increase in market shares. Moreover, the Union industry has clearly been able to increase the number of persons employed, again pointing to the contrary of a materially injured status.

(127) Third, in relation to the microeconomic indicators, CISA noted that the Union sales price did not decline between the period considered and the investigation period, and in the intermediate duration had only slightly fluctuated. Eviosys also pointed out that the Union industry’s sales prices remained overall stable and disagreed with the Commission’s conclusion that the Union industry ‘was not able to increase sales prices to cover the increased cost of production’ and that this was allegedly a result of ‘price pressure by imports’. In this respect, Eviosys claimed that the decreasing demand during the period considered combined with the effects of the COVID-19 pandemic prevented the Union industry from increasing its sales prices.

(128) Fourth, CISA pointed to the fluctuation in the profitability figures in spite of the fact that the market share of the Union industry had increased. In this regard, CISA questioned the Union industry’s decision to continue significant investments, despite the fact that the Union consumption was clearly not increasing and requested the Commission to clarify the precise legal requirements under which the Union industry must make investments and to ensure their relevance in view of the product concerned. CISA also noted that the increased production costs have no link at all to exports from China, and as a result, this should be treated as a causality-breaking factor by the Commission.

(129) Furthermore, CISA claimed that in contrast to the profitability levels reported in the provisional Regulation, the relevant market outlooks are generally regarded as highly positive. CISA made reference to certain articles (20) and pointed out that the three sampled producers (two of which belong to the same group) are all explicitly referenced in these articles, indicating that Arcelor Mittal increased its sales by 44 % last year, and that ThyssenKrupp increased its quarter revenue by 39 % year-on-year in December 2021.

(130) After final disclosure, CISA reiterated its claim that the Commission should assess the alleged high profitability achieved by Arcelor Mittal and ThyssenKrupp after the investigation period. Furthermore, CISA as well as CANPACK argued that the import prices from China and Brazil have increased significantly after the investigation period and that this should be taken into account by the Commission.

(131) The Commission disagreed with these claims. As stated in recital (183) of the provisional Regulation, economic indicators at both macro and micro level deteriorated during the period considered. Although the Union industry sales volume remained overall stable and it gained some market share in the period considered the financial situation of the Union industry deteriorated mainly due to the increased cost of production, which could not be covered by a corresponding increase of its sales prices. The significant price suppression exercised by the dumped imports led to losses as from 2019, which further increased in the investigation period. Although the number of employees increased during the period considered, this increase mainly occurred in 2019 and 2020. During the investigation period, the Union industry was laying off employees.

(132) As set out in recital (187) of the provisional Regulation, profitability, cash flow and return on investment deteriorated significantly during the period considered. This negatively affected the ability of the Union industry to self-finance operations, to make necessary investments and to raise capital, thus impeding its growth and even threatening its survival.

(133) As far as investments made to comply with legal requirements are concerned, the Commission pointed out that these investments relate to environmental and social obligations and are not linked to any production capacity increase.

(134) The market outlooks, price developments of imports as well as the alleged profitability of the Union producers achieved after the end of the investigation period referred to by CISA and CANPACK are irrelevant for the assessment of the injury suffered by the Union industry during the investigation period.

(135) Following final disclosure, CISA made a link between the increase in the number of employees and Commission’s explanation that the investments made related to environmental and social standards, arguing that such investments would not require an increase in employees. It further requested the Commission to elaborate on the precise scope and amounts of the investment undertaken by the industry that were needed to comply with environmental and social obligations.

(136) The Commission did not make a link between the increase in employment and the investments made. Indeed, as pointed out in recital (131) above, employment increased mainly in 2019 and 2020, while it decreased by 8,9 % between 2020 and the investigation period. At the same time investments continued to increase during the investigation period. The Commission also pointed out that it was unable to disclose the precise scope and amount of investments made by the sampled companies since this is confidential information. However, as already indicated in recital (133) above, those investments were not linked to any production capacity increase but rather to adapting and/or replacing already existing capacities.

(137) Therefore, the Commission concluded that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation. Consequently, the Commission rejected the claims of interested parties concerning the absence of material injury and confirmed recitals (183) to (188) of the provisional Regulation.

(138) The claims on other factors causing injury are addressed in Section 5 below.

5. CAUSATION

5.1. Effects of the dumped imports

5.1.1. Volume and market share of the dumped imports from the countries concerned

(139) Following provisional disclosure, CISA argued that the levels of market shares held by the countries concerned, which never exceeded 18 %, and subsequently decreased in the investigation period, cannot be considered as excessively high.

(140) The Commission disagreed with this claim. As explained in recital (192) of the provisional Regulation, the market share of the imports from the countries concerned increased from 13,1 % in 2018 to 15,4 % in the investigation period. The Commission considered such a market share to be significant and, in light with the price levels established, able to have an impact on the Union industry within the meaning of Article 3(2) of the basic Regulation. Therefore, the Commission rejected the claim and confirmed recitals (190) to (192) of the provisional Regulation.

5.1.2. Price of the dumped imports from the countries concerned and price effects

(141) Following provisional disclosure, Eviosys claimed that there is no evidence of any price pressure by the imports from the countries concerned and that the prices of the Union producers do not seem to have followed Chinese or Brazilian prices, which suggests that they were unaffected by the latter.

(142) As explained in recital (193) of the provisional Regulation, the average import price of the imports from the countries concerned were significantly below the average sales prices of the Union industry in the Union market and these imports undercut the Union industry’s prices on weighted average by 11,2 %. The significant import volumes at low prices depressed the Union industry’s prices, which could not cover the costs of production, thereby incurring losses.

(143) Moreover, irrespective of whether the prices of the Union industry have followed or not the Chinese and Brazilian prices, it is clear that the imports from the countries concerned at low prices suppressed the Union industry prices and thus had a negative price effect. The existence of price suppression is sufficient in the context of the price effects analysis under Article 3(3) of the basic Regulation to conclude that there was a significant negative impact on the Union prices by the dumped import prices. Consequently, the claim was rejected and recital (193) of the provisional Regulation confirmed.

5.1.3. Causal link between the dumped imports from the countries concerned and the material injury of the Union industry

(144) Following provisional disclosure, Eviosys repeated its claim that any injury could not have been caused by the imports from the countries concerned and reiterated that there is very little competitive relationship between the products sold by the Union industry and the imports from the countries concerned because of factors such as lower quality level and non-suitability for certain uses, longer lead times and higher transport costs as well as limited customer support, which also explains the different prices and the fact that they are generally lower than the Union industry’s sales prices.

(145) However, Eviosys failed to provide new evidence to substantiate its claims. Therefore, recitals (194) to (197) of the provisional Regulation are confirmed.

5.2. Effects of other factors

5.2.1. Imports from third countries

(146) Following provisional disclosure, the GOB observed that the non-injurious price calculated in the preliminary determination is EUR/tonne [850-990]. Considering that this value is higher than the import price of imports from non-investigated origins (EUR/tonne 822) and that the volume of imports from non-investigated origins is higher the one originating from Brazil and China, the Commission should recognize the implications in the assessment of the imports from non-investigated origins as a possible other injury factor. Thus, their injurious effects shall be separated and distinguished from the ones arising from the alleged dumped imports.

(147) As stated in recital (199) of the provisional Regulation, the volume of imports from other third countries and their market share decreased during the period considered by 23 % and 21 %, respectively, and their average import price remained close to the average sales price of the Union industry, and were significantly higher than the average import price of imports from the countries concerned. In that context, it was clear that any material injury suffered by the Union industry was being caused by imports from the product concerned, which were keeping price levels down. Although it cannot be excluded that the other import sources would, once duties on the imports of the product concerned have been imposed, be a cause of injury to the Union industry, they were clearly not a cause capable of attenuating the causal link between the dumped imports and the material injury observed during the investigation period.

(148) Furthermore, with respect to the average non-injurious price, this was calculated on the basis of a specific product mix based on the actual exports of the sampled exporting producers and compared with the landed price of the imports from those exporting producers. As such, it was not directly comparable to the average CIF import prices.

(149) Therefore, the claim was rejected and recitals (198) to (201) of the provisional Regulation are confirmed.

5.2.2. The COVID-19 pandemic

(150) Following provisional disclosure, CISA, Eviosys and CANPACK claimed that the COVID-19 pandemic and its economic consequences break the causal link between imports and the state of the Union industry. CISA argued that the COVID-19 pandemic is mostly a demand side-crisis and not one of increased imports injuring an industry, with the main result being the suspension of production and consequently a recession on the Union market.

(151) The GOB referred to recitals (203) to (205) of the provisional Regulation and argued that the Commission seemed to minimize the effects of the COVID-19 pandemic on the Union industry on the grounds that ‘the deterioration of the situation of the Union industry had already started before the pandemic and continued after the production of the Union industry resumed in the IP’. The GOB is of the opinion that this argument is not a sufficient reason for mitigating the effects of the COVID-19 pandemic, since the afore-mentioned pandemic may have had negative effects of the Union industry simultaneously with the alleged dumped imports.

(152) In this respect, the Commission referred to recital (203) of the provisional Regulation, where it has acknowledged that the COVID-19 pandemic had a negative impact on the Union industry, especially in 2020 when production sites of the Union industry had to close temporarily and that it is possible that the COVID-19 pandemic might have contributed to the injury suffered by the Union industry. However, the Commission insisted on the fact that the deterioration of the financial situation of the Union industry had already started before the pandemic and continued during the post-COVID-19 recovery period, including in the investigation period. Therefore, the negative impact of the COVID-19 pandemic could not be considered as the main cause of the injury suffered by the Union industry to the extent that it would have attenuated the causal link between such injury and the dumped imports from the countries concerned. Consequently, the Commission rejected these claims.

5.2.3. The evolution of the cost of production

(153) In the absence of comments regarding the evolution of the cost of production following provisional disclosure, recitals (206) to (209) of the provisional Regulation are confirmed.

5.2.4. Export performance of the Union industry

(154) Following provisional disclosure, CISA pointed out that the exports of the Union industry were significant, amounting to 22 % in the investigation period. It further referred to Table 14 of the provisional Regulation showing that the export volume of the Union industry dropped by 7 percentage points and that export prices dropped by 6 percentage points. CISA claimed that the negative development relating to export sales had significant impact on the overall Union industry’s economic performance.

(155) CANPACK disagreed with the Commission’s conclusion that export performance of the Union industry was not enough to attenuate the casual link as Table 14 in the provisional Regulation shows clearly that the sales price of Union producers to countries outside the Union was at a similar level as the prices of the ECCS originating in China. CANPACK considered that the argument of the Union producers that the reason for selling outside the Union was that the Union industry is not able to sell it within the Union market, while there was high demand of Union users for ECCS, was not convincing.

(156) The GOB estimated that given that the volume of exports of the Union industry is higher than the alleged dumped imports, the export performance could not be considered as a minor factor.

(157) Regarding the export performance of the Union industry, the export volume first increased in 2019 and 2020 before it decreased in the investigation period, while the average export prices decreased as from 2020. This evolution corresponded to a slight increase of the Union sales of the Union industry between 2020 and the investigation period. The slight decrease of the export performance of the Union industry therefore does not appear to have a strong impact on the overall economic performance of the Union industry, which deteriorated to a higher extent during the same period of time. Moreover, the negative profitability figures in Table 12 of the provisional Regulation are based only on EU sales, and are thus not the result of any potential export losses. Therefore, the Commission confirmed its conclusion in recital (213) of the provisional Regulation that although the decline in export performance could have contributed to the injury suffered by the Union industry, it is not enough to attenuate the causal link between the dumped imports from the countries concerned and the injury suffered by the Union industry considering the high share of Union sales compared to export sales. Consequently, the Commission rejected the claims of interested parties in this respect.

5.2.5. Effect of yearly contracts

(158) Following provisional disclosure, CANPACK disagreed with the argument that effect of long-term (yearly) contracts between the Union suppliers and their Union customers on the injury of Union industry found is limited and cannot attenuate the casual link. According to CANPACK, as indicated in recital (214) of the provisional Regulation, sales of the Union industry are based on yearly contracts that fix the quantities and prices for the following year, and give the Union producers minimal (if any) margin to increase sales prices in the context of increasing raw materials prices during the application of the yearly contract. Union producers base their offers on the estimated prices of raw materials and production costs for the next year, considering the risk of changes (in practice negotiations of the prices for the next year take place in Q4 of the previous year).

(159) In this respect, the Commission referred to recital (208) of the provisional Regulation, where it was noted that the Union industry was unable to increase its sales prices during the entire period considered, which covers more than 3 years. Since this pattern was observed during a long period of time, it could not be explained only by the increase of raw materials cost and the effect of the yearly contracts in terms of fixed prices.

(160) Therefore, the Commission rejected the claim and confirmed recitals (214) and (215) of the provisional Regulation.

5.2.6. Consumption

(161) Following provisional disclosure, CISA and Eviosys pointed to the consumption decrease as a relevant factor when considering causality. After final disclosure, CISA reiterated its claim arguing that the decrease in consumption could break the causal link found between the dumped imports and the injury found. However, they did not substantiate their claims. Therefore, these claims were rejected.

(162) The GOB disagreed with the conclusion of the Commission in recital (218) of the provisional Regulation that the contraction of the market demand by 3 % could not be considered as a cause of injury attenuating the causal link between the dumped imports and the injury found. According to the GOB, market decrease also has the ability to affect the domestic industry production volume and fixed costs and it should be analysed jointly with other factors resulting in the same effects.

(163) In this respect, the Commission concluded in recital (217) of the provisional Regulation that despite the contraction of the market by 3 %, Union sales figures remained constant, which indicated that the injury suffered by the Union industry was not caused by a loss of volumes due to falling demand, but rather by the price suppression exerted by the imports from the countries concerned. Therefore, the Commission rejected the claim and confirmed recitals (216) to (218) of the provisional Regulation.

5.3. Conclusion on causation

(164) The volume of imports from the countries concerned and their market share increased during the period considered, while their prices decreased. This coincided in time with the deterioration of the economic situation of the Union industry. Therefore, the Commission confirmed that there is a clear causal link between these imports and the injury of the Union industry.

(165) Following provisional disclosure, the GOB argued that the Commission did not properly separate and distinguish the effects of the export performance of the Union industry, the Union consumption decrease and the effects of the COVID-19 pandemic from the effects stemming from the dumped imports and made reference to the Appellate Body ruling in US – Hot-Rolled Steel (para. 226).

(166) The GOB requested the Commission to reassess these three factors, preferably on a cumulative basis, with regard to their consequences to the Union industry output and fixed costs and to separate and distinguish those effects from the ones arising from the alleged dumped imports.

(167) Eviosys claimed that the Union industry could not increase its sales prices during the period considered, although it faced increasing production cost, because of the decreasing demand and the COVID-19 pandemic. Eviosys considered that the Commission should assess more carefully the impact of other factors on the Union industry’s economic situation.

(168) CANPACK also considered that the Commission has underestimated the impact of other factors. In particular, they disagreed that the impact of the COVID-19 pandemic and the lack of raw materials on the Union market was not sufficient to attenuate the causal link between the dumped imports from the countries concerned and the material injury suffered by the Union industry.

(169) After final disclosure, CISA also argued that the Commission did not sufficiently address the effects caused by the COVID-19 pandemic while the entire investigation period was set during the most economically significant impact of this pandemic. Furthermore, CISA claimed that the investments made by the sampled Union producers singlehandedly explained the decreased profitability and the resulting state of the domestic industry.

(170) In this respect, the Commission confirmed, as stated in recital (220) of the provisional Regulation, that it has distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports.

(171) As far as investments are concerned, the Commission observed that the company that had the highest amounts of investments had the best performance among the sampled companies. Therefore, there was no direct link between the profitability of the Union industry and the investments made during the investigation period. Rather, investments were necessary and legally required and, together with the full costs, should have been possible to be financed by reasonable profits in accordance with Article 7(2c) of the basic Regulation, in the absence of the dumped imports. Consequently, this claim was rejected.

(172) The Commission assessed the impact of other factors taking into account the comments of interested parties and concluded that those factors did not attenuate the causal link. Indeed, factors such as the COVD-19 pandemic or the yearly sales contracts with fixed prices for the entire year together with the decreasing demand of ECCS during the period considered, might have had an impact on the performance of the Union industry. However, these factors did not explain the price suppression suffered by the Union industry during the entire period considered and, in particular, during the investigation period.

(173) The deterioration of the economic situation of the Union industry started before the COVID-19 pandemic and the disruption of the raw material supply. Furthermore, in a normal competitive environment, the Union industry should be able to increase its sales prices following the increase of input materials cost; therefore, the effect of the yearly contracts could not explain the fact that the Union industry was unable to increase its sales prices for the entire period considered in order to remain profitable.

(174) Therefore, the Commission confirmed the conclusion in recitals (219) to (221) of the provisional Regulation.

6. LEVEL OF MEASURES

6.1. Underselling margin calculation

(175) Following provisional disclosure, CISA commented that, according to its understanding, the adjustment linked to future environmental costs did not take into account any existing and future compensations to the Union industry to offset increases in electricity prices. In this respect, the Commission confirmed that such compensations have not been taken into account in the calculation of the future environmental costs.

(176) Following provisional disclosure, CSN submitted that the additional future cost of EUR/tonne [10-20] mentioned in recital (228) of the provisional Regulation, which is added to the non-injurious price, was arbitrary, speculative and distorted the price comparability between Union and Brazilian sales. CSN underlined that within the EU-Mercosur Agreement, Brazil made strong commitments regarding sustainable development, in particular regarding multilateral labour standards and agreements, multilateral environmental agreements, and trade and climate change. According to CSN, the Commission is offering to Union producers a protection in excess of what is necessary to remove injurious dumping and requested the Commission not to add an additional future cost with respect to Brazil.

(177) The GOB argued before and after final disclosure that costs associated with compliance with other international agreements (such as the Paris Agreement and the ones signed under the auspices of the International Labour Organization) were included in the non-injurious price, although they do not reflect the effects of the dumped imports in any way. In addition, the GOB argued that the profit margin used for constructing the non-injurious price of 6 % was never achieved during the period of injury analysis, thus, by using a profit margin of 6 % for constructing the non-injurious price the Commission will more than offset the injurious effects of the alleged dumping imports, deviating from the purpose set out in paragraph 2 of Article VI of GATT 1994. Therefore, the GOB requested the Commission to remove the additional costs from the non-injurious price.

(178) In this respect, the Commission pointed out that future costs were taken into account under Article 7(2d) of the basic Regulation, irrespective of the situation and implementation of environmental and labour standards in a third country, and/or of bilateral and/or multilateral agreements to which the respective countries are parties. The Commission applied the basic Regulation, which focuses exclusively on the cost of production of the Union industry, including, inter alia, possible future costs resulting from Agreements and Conventions referred to in that provision. This provision does not require that these future costs reflect the effects of the dumped imports. The request to assess the implementation by Brazil of similar international agreements or the EU-Mercosur Agreement (which is yet to enter into force), is irrelevant in this context. Consequently, the Commission rejected the claim of the GOB.

(179) Therefore, the Commission confirmed recitals (228) to (232) of the provisional Regulation.

(180) For the purpose of establishing the underselling margin, in order to address the comments of Baosteel regarding possible asymmetry, the Commission used the constructed export price for Baosteel established pursuant to Article 2(9) of the basic Regulation, applied by analogy, and compared it with a target price of the Union industry which did not include the SG&A of the related sales entities of Arcelor Mittal. The target price thus established was used in the underselling calculations for all exporting producers. Consequently, no costs of the related selling entities of the Union producers were taken into account and, as a result, there was no longer any asymmetry. The approach of not taking into account costs of the related selling entities of the Union producers was recently confirmed by the General Court (21).

(181) Following the same approach as in recital (234) of the provisional Regulation, the Commission then determined the underselling margin on the basis of a comparison of the weighted average import price of the sampled cooperating exporting producers in the countries concerned with the weighted average non-injurious price of the like product sold by the sampled Union producers in the Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average imp