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COMMISSION DECISION No 163/88/ECSC

of 20 January 1988

imposing a provisional anti-dumping duty on imports of certain iron or steel coils, originating in Algeria, Mexico and Yugoslavia

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Coal and Steel Community,

Having regard to Commission Decision No 2177/84/ECSC of 27 July 1984 on protection against dumped or subsidized imports from countries not members of the European Coal and Steel Community (1), and in particular Article 11 thereof,

After consultations within the Advisory Committee as provided for by the above Decision,

Whereas:

A. Procedure

(1) In October 1986 the Commission received a complaint lodged by the European Confederation of Iron and Steel Industries (Eurofer) on behalf of producers whose collective output constitutes the majority of Community production of the product in question. The complaint contained evidence of dumping and of material injury resulting therefrom, which was considered sufficient to justify the initiation of a proceeding. The Commission accordingly announced, by a notice published in the Official Journal of the European Communities (2), the initiation of an anti-dumping proceeding concerning imports into the Community of certain iron or steel coils falling within Common Customs Tariff subheading 73.08 B, corresponding to NIMEXE codes 73.08-21, 25, 29, 41, 45 and 49 and to combined nomenclature codes 7208 11 00, 7208 12 91, 7208 12 99, 7208 13 91, 7208 13 99, 7208 14 90, 7208 21 10, 7208 21 90, 7208 22 91, 7208 22 99, 7208 23 91, 7208 23 99, 7208 24 90, 7211 12 10, 7211 19 10, 7211 22 10 and 7211 29 10, originating in Algeria, Mexico and Yugoslavia and commenced an investigation.

(2) The Commission officially so advised the exporters and importers known to be concerned, the representatives of the exporting countries and the complainants and gave the parties directly concerned the opportunity to make known their views in writing and to request a hearing.

(3) All of the producers/exporters and some importers known to the Commission made known their views in writing. The Algerian and Mexican producers/exporters requested hearings which were granted.

(4) No submissions were made by or on behalf of Community purchasers or processors of iron or steel coils.

(5) The Commission sought and verified all information it deemed to be necessary for the purposes of a preliminary determination of dumping and carried out investigations at the premises of the following companies:

EEC producers:

- Usinor, Paris La Défense, France,

- Thyssen Stahl AG, Duisburg, Federal Republic of Germany,

- Peine-Salzgitter AG, Salzigitter, Federal Republic of Germany,

- Nuova Italsider SpA, Genoa, Italy,

- Sidmar, Gent, Belgium,

- Hoogovens BV, Ijuiden, Netherlands;

Non-EEC producers/exporters:

- Sidermex, SA de CV, Mexico DF, Mexico (holding company),

- Altos Hornos de Mexico SA, Monclova, Mexico (producer/exporter),

- Sidermex International Inc., San Antonio, Texas, United States of America (exporter),

- Hylsa SA, Monterrey, Mexico,

- Ensider, Algiers, Algeria;

EEC importers:

- Intersteel and Metals, Milan, Italy,

- Primary Industries Ltd, London, United Kingdom.

(6) The Commission requested and received detailed written submissions from complainant Community producers and some importers and verified the information therein to the extent considered necessary.

(7) The investigation of dumping covered the period from 1 January to 31 December 1986.

B. Normal value

Mexico

(8) Normal values were established for each export transaction by recalculating the sales price on the Mexican domestic market for the like product of identical steel quality and dimension including extras on the basis of the domestic price lists

applicable for domestic sales at the time of exportation. To this effect the Commission has verified that domestic sales had been invoiced in conformity with the official price lists issued by the producer/exporter concerned.

Algeria

(9) As claimed by the producer/exporter concerned and verified on-the-spot by the Commission, the exporter has not sold the product on the domestic market in the ordinary course of trade since all sales were made to only one domestic customer which is linked to the producer. There were no exports of the product in question to third countries during the investigation period. The Commission further examined whether it was possible to construct normal value for the Algerian producer. As no sufficient evidence was provided by the Algerian producer concerning its cost of production structure the Commission provisionally based normal value in accordance with Article 2 (6) (b) of Decision No 2177/84/ECSC on the basis price published by the Commission for the product in question (1). The producer/exporter concerned did not object to this determination of normal value.

Yugoslavia

(10) None of the Yugoslav exporters has submitted detailed information which would enable normal value to be established. The Commission therefore decided that on-the-spot investigations were not warranted and, as for Algeria, provisionally based normal value on the basis price published by the Commission for the product in question.

C. Export prices

(11) Where the information was submitted and sufficiently documented by the producers/exporters, export prices were determined on the basis of the prices actually paid or payable for the products sold for export to the Community.

(12) In the case of Yugoslavia the necessary information on export prices was not made available to the Commission. Export prices were therefore determined according to Article 7 (7) (b) of Decision No 2177/84/ECSC on the basis of the facts available. For this purpose the Commission used information from import licence applications, in particular the purchase prices which were declared by the importers.

D. Comparison

(13) In comparing normal value with export prices the Commission took account, where appropriate and to the extent of the evidence available, of differences in conditions and terms of sale such as transport, insurance, forwarding, handling costs and differences in physical characteristics.

(14) A Mexican producer claimed in addition adjustments for differences in certain financial costs due to the very high domestic interest rates for borrowing funds, reflecting the highly inflationary situation of the Mexican economy.

(15) With regard to financing costs for stock keeping at the domestic distribution level, the Commission concluded that these pre-sale warehousing costs should be considered to be overheads not directly related to the sales under consideration and therefore not allowable under Article 2 (10) (c) of Decision No 2177/84/ECSC.

(16) With regard to credit costs the Commission, on the basis of the evidence submitted by the exporter, took account of the fact that in the domestic market payments are made some time after sales take place. In order to calculate the amount of the adjustment to be made for these payment terms in a country where there is a high rate of infation, the Commission considered that the real financing costs, instead of the nominal cost of money, should be relied upon; to that effect, it took into consideration the amount by which the money market interest rate for borrowing funds exceeded the inflation rate in Mexico during the investigation period. The Mexican exporter had also eliminated, in his financial accounts, the effects of inflation on monetary assets and liabilities by using an equivalent devaluation factor. The Commission used the same factors which were applied by the Mexican exporter for its accountring purposes.

(17) It was further claimed that an allowance should be made for savings in the cost of producing different quantities. The claim, however, was based on the argument that the fixed costs per unit would have increased if the quantities exported to the Community had not been produced. This request cannot be accepted since no proof is supplied for effective savings due to the fact that greater lot sizes of the product in question were produced for the export market. Instead, the argument is based on purely theoretical considerations.

(18) In the case of Mexico all comparisons were made at the ex-works level.

(19) The Algerian producer/exporter claimed an allowance for differences in physical characteristics on the grounds that, during the investigation period, he had exported to the Community practically nothing but declassified material, stemming from failures in the production process. The Commission has verified the facts. It came to the conclusion that more than 98 % of the exports of hot-rolled coils to the Community originating in Algeria were sold as declassified material and that the market value in Algeria of such material was

significantly inferior to that of prime material. Physical inspection by the Commission of the product available for export in Algeria has shown that the product is in fact to be graded as second choice. The Commission therefore granted an allowance for the differences in the quality of the product exported from Algeria.

(20) Since, in the cases of Algeria and Yugoslavia, the basic prices are calculated cif Community frontier, all comparisons were made at the level cif Community frontier, duty unpaid.

E. Margins

(21) The above provisional determination of the facts shows the existence of dumping, the margins of dumping being equal to the amount by which the normal values as established exceed the prices for export to the Community. Export prices were compared on a transaction by transaction basis with normal values, the weighted average margins amounting to the following:

Yugoslavia: 25,2 %,

Sidermex SA, Mexico: 22,2 %,

Hylsa SA, Mexico: 15,8 %,

Algeria: 5,8 %.

F. Injury

(22) With regard to the injury caused by the dumped imports, the evidence available to the Commission shows that imports into the Community from Mexico increased from 9 700 tonnes in 1983 to 63 800 tonnes in 1986, from Yugoslavia from 18 000 tonnes to 72 600 tonnes and from Algeria from 22 000 tonnes to 70 900 tonnes in the same period.

(23) Considering that the product exported by Algeria during the investigation period was of inferior quality the Commission has examined whether it was appropriate to aggregate the imports of the products in question originating in Algeria with those originating in Mexico and Yugoslavia. The Commission found that the products under investigation originating in each of the exporting countries involved in this proceeding competed with those of the Community producers in the Community market. Furthermore, as their volume increase is of the same order of magnitude, the Commission concluded that in order to determine whether material injury was caused by the dumped products aggregation of the imports from Algeria with those from Mexico and Yugoslavia was not unreasonable. On this basis the combined market share of the dumped imports of hot-rolled coils originating in Algeria, Mexico and Yugoslavia was not unreasonable. On this basis the combined market share of the dumped imports of hot-rolled coils originating in Algeria, Mexico and Yugoslavia increased from 1,6 % in 1983 to 5,9 % in 1986. The increase in market share in the Member States most affected is as follows: Belgium - nil to 9,6 %; United Kingdom - 1,4 % to 7,6 %; Federal Republic of Germany - 5,9 % to 9,0 %; Italy - 1,8 % to 6,4 %.

(24) The evidence available to the Commission also indicates that the prices of these products undercut the published list prices of the Community producers during the investigation period, to a varying degree according to the market and the steel quality concerned, by between 18 % and 47 %. The published list prices which are deposited with the Commission are generally binding for Community producers. However, Community producers are entitled under certain conditions to align their prices with low priced offers from third countries, with the exception of those countries with which the Community has concluded a steel arrange- ment (1), and to notify the Commission of special sectoral rebates in order to maintain their competitiveness with offers not respecting the Community price rules.

As the Commission had relaxed the price regulations as from 1 January 1986, Community producers made increasing use of these possibilities in order to cope with low-price competition from non-arrangement countries. Thus the notification of special rebates spread through the market and caused progressive price depression.

(25) The Commission has determined price undercutting directly on the basis of the notifications of price alignments to offers for export of the product in question from the countries concerned submitted by Community producers in the framework of the ECSC price rules. These figures reveal that the price-depressive effect of low-priced offers can reach a volume of sales which is a multiple of the dumped imports eventually effected. The detrimental effect on market equilibrium is particularly accentuated in the case of largely standardized products as produced and traded in the steel sector. The situation is aggravated under conditions of overcapacity in the Community and a market hardly balanced by regular Commission interventions taking the form of adaptation of production quotas imposed on Community producers. These circumstances have been taken into consideration by the Commission for the assessment of the injurious effects of the relatively small market shares gained by the dumped imports.

(26) The Commission had also to take into consideration that there are production quotas for hot-rolled coils which are fixed by the Commission on a quarterly basis. Any reduction of the production quota reduces further the capacity utilization of Community producers which induces a loss of revenues. Mainly due to the increasing pressure from imports, the Commission had to reduce production quotas throughout the investigation period.

(27) In consequence, Community production of hot-rolled coils started to decrease again in 1986 after a steady rise since 1983. The production of hot-rolled coils, measured by deliveries of Community producers to the free market, was down in 1986 by 8,3 % against the proceding year.

(28) The price slide, which started early in 1986 and which was accentuated in the second half of 1986 when the effects of the dumped imports has spread through the market, interrupted the return to profitability of the Community industry which was under way and had led the Commission to take the first steps towards a gradual relaxation of the price regulations.

(29) Imports of significant quantities of dumped products into the Community also put into question the objectives sought by the external measures adopted within the framework of the Community steel policy. Third countries which have concluded steel trade arrangements with the Community will only respect and renew these arrangements if they see a reasonable chance of selling the quantities provided for at the price levels agreed. During the investigation period more than 70 % of all imports of hot-rolled coils into the Community originated in countries with which arrangements had been concluded.

(30) The Commission has considered whether injury has been caused by other factors, such as imports of hot-rolled coils from certain other third countries. It was provisionally established that these imports also increased during the investigation period. The Commission is, however, satisfied that this increase is mainly attributable to the fact that third countries having arrangements have made fuller use of the agreed tonnages, and to reciprocity of trade with EFTA member countries with the effect that the market share already held in 1983 was more or less regained in 1986. Furthermore, these imports are not likely to upset the equilibrium of the market because the countries concerned are bound to observe the Community price rules.

(31) The substantial increase in dumped imports and the prices at which they are offered for sale in the Community led the Commission to determine that the effects of the dumped imports of certain iron or steel coil originating in Algeria, Mexico and Yugoslavia taken in isolation have to be considered as contituting material injury to the Community industry concerned.

G. Community interest

(32) In view of the particular serious difficulties facing the Community industry, and in the light of the factors referred to above, the Commission has come to the conclusion that it is in the Community's interest that action be taken. In order to prevent further injury being caused during the remainder of the proceeding, this action should take the form of provisional anti-dumping duties to be imposed on imports of certain iron or steel coils originating in Yugoslavia, Algeria and Mexico.

H. Rate of duty

(33) Having regard to the injury caused, the rates of such duties should be adequate to remove the injury caused but not be exceed the dumping margins provisionally established.

(34) Taking into account the fact that it is necessary for the Community industry to achieve statisfactory prices for hot-rolled coils in order to generate a sufficient flow of earnings to cope with restructuring and to keep the impact of the dumped imports on employment within acceptable limits, the rate of the duty should be sufficient to prevent the undermining of the Community's basis price system (the prices of which have recently been revised and published by the Commission in order to take account of changes in steel production costs and market conditions) but not exceed the dumping margin. The duty should be expressed as an amount in ECU to be paid on each tonne imported into the Community. This form of duty appears more appropriate in the light of the specific circumstances of the market of the relevant products in order to avoid evasion. On this basis the Commission calculated the amount of the duty per 1 000 kilograms as follows:

- with regard to Yugoslavia: 64 ECU,

- with regard to Algeria: 15 ECU,

- with regard to Mexico: 50 ECU,

with the exception of products imported from Hylsa SA de CV, Monterrey, on which a provisional duty of 39 ECU should be imposed based on the lower dumping margin found. (35) A period should be fixed within which the parties concerned may make their views known and request a hearing,

HAS ADOPTED THIS DECISION:

Article 1

1. A provisional anti-dumping duty is hereby imposed on imports of certain hot-rolled iron or steel coils, not intended for re-rolling, failing within Common Customs Tariff heading No 73.08 B, corresponding to NIMEXE codes 73.08-21, 25, 29, 41, 45, 49 and to combined nomenclature codes 7208 11 00, 7208 12 91, 7208 12 99, 7208 13 91, 7208 13 99, 7208 14 90, 7208 21 10, 7208 21 90, 7208 22 91, 7208 22 99, 7208 23 91, 7208 23 99, 7208 24 90, 7211 12 10, 7211 19 10, 7211 22 10 and 7211 29 10, originating in Algeria, Mexico and Yugoslavia.

2. The amount of the duty shall be for hot-rolled coils originating in:

- Yugoslavia: 64 ECU per 1 000 kilograms,

- Algeria: 15 ECU per 1 000 kilograms,

- Mexico: 50 ECU per 1 000 kilograms.

3. By way of derogation from paragraph 2, the rate of the provisional anti-dumping duty shall be 39 ECU per 1 000 kilograms for products manufactured by Hylsa SA de CV, Monterrey, Mexico, and exported by Hylsa International Corporation, Houston, Texas, USA.

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

5. The release for free circulation in the Community of the products referred to in paragraph 1 shall be subject to the provision of a security, equivalent to the amount of the provisional duty.

Article 2

Without prejudice to Article 7 (4) (b) and (c) of Decision No 2177/84/ECSC, the parties concerned may make known their views in writing and apply to be heard by the Commission within one month of the entry into force of this Decision.

Article 3

This Decision shall enter into force on the day following its publication in the Official Journal of the European Communities.

Subject to Articles 11, 12 and 14 of Decision No 2177/84/ECSC, it shall apply for a period of four months, unless the Commission adopts definitive measures before the expiry of that period.

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

Done at Brussels, 20 January 1988.

For the Commission

Willy DE CLERCQ

Member of the Commission

(1) OJ No L 201, 30. 7. 1984, p. 17.

(2) OJ No C 126, 12. 5. 1987, p. 2.

(1) OJ No C 119, 5. 5. 1987, p. 3.

(1) Commission Decision No 1031/86/ECSC, OJ No L 95, 10. 4. 1986, p. 14.