COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 24.11.1997 
COM(97) 616 final 
Proposal for a 
COUNCIL REGULATION (EC) 
imposing a definitive anti-dumping duty on imports of silicon metal 
originating in the People's Republic of China 
(presented by the Commission) 

EXPLANATORY MEMORANDUM 
By Regulation (EEC) No 2200/90 the Council imposed a definitive anti-dumping duty on 
imports of silicon metal originating in the People's Republic of China. Following a complaint 
lodged by the European industry and the Commission's subsequent investigation, the Council, 
by Regulation (EEC) Not 1607/92, concluded that the anti-dumping duty in force had been 
absorbed, amended Regulation (EEC) No 2200/90 and imposed an additional duty on imports 
of Chinese silicon metal of an amount equal to that of the original duty. 
The notice of initiation of this review was published in the Official Journal of the 
European Communities on 27 July 1995. All interested parties were given the opportunity to 
make themselves known and to submit comments in due course. 
No Chinese exporter cooperated with the review. 
The investigation, taking into account the conclusions on dumping, injury, causality, likelihood 
of continuation of dumping and injury and Community interest, led to the conclusion that it 
was in the Community interest to continue to impose antidumping measures, amended 
according to the findings of the review. 
It is hereby proposed that the Council adopt the attached draft Regulation. 
Proposal for a 
COUNCIL REGULATION (EC) 
imposing a definitive anti-dumping duty on imports of silicon metal 
originating in the People's Republic of China 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, 
Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection 
against dumped imports from countries not members of the European Community1, as 
amended by Regulation (EC) 2331/962, and in particular Articles 9, 11 and 23 thereof, 
Having regard to the proposal submitted by the Commission after consulting the 
Advisory Committee, 
Whereas: 
1. Measures in force A. PROCEDURE 
(1) By Regulation (EEC) No 2200/903 the Council imposed a definitive anti-dumping 
duty on imports of silicon metal originating in the People's Republic of China 
(hereinafter referred to as "China"). Following a complaint lodged by the 
Community industry and the Commission's subsequent investigation, the Council, by 
Regulation (EEC) No 1607/924, concluded that the anti-dumping duty in force had 
been absorbed, and by amending Regulation (EEC) No 2200/90, imposed an 
additional duty on imports of Chinese silicon metal of an amount equal to that of the 
original duty. 
2. Request for a review 
(2) Following the publication, in February 1995, of a notice of the impending expiry5 of 
the measures in force, the Commission received a request for a review lodged by the 
Comité de Liaison des Industries de Ferro-Alliages (C.L.I.F.A.) on behalf of 
four Community producers allegedly representing a major proportion of the total 
production of the product concerned in the Community. The request contained 
OJL56, 6.3.1996, p. 1. 
OJL 317, 6.12.1996, p. 1. 
OJL 198, 28.7.1990, p. 57. 
OJL 170, 25.6.1992, p. 1. 
OJC35, 11.2.1995, p. 3. 
evidence of dumping of the product originating in China, and of material injury likely 
to result in the event of expiry of the existing measures. This evidence was considered 
sufficient to justify the opening of a review investigation. 
(3) On 27 July 1995, the Commission announced by a notice6 published in the 
OfficialJournal of the European Communities (hereinafter referred to as the 
"Notice of Initiation") the initiation of an expiry review of Regulation (EEC) 
No 2200/90 concerning imports into the Community of silicon metal originating 
in China and commenced an investigation pursuant to Article 11(2) of 
Council Regulation (EC) No 3283/947, subsequently repealed and replaced by 
Regulation (EC) No 384/96 (hereinafter referred to as "the Basic Regulation"). The 
Commission also decided to initiate, on its own initiative, an interim review pursuant 
to Article 11(3) of the Basic Regulation. 
3. Investigation 
(4) The Commission officially advised the exporting producers and importers known to 
be concerned as well as their associations, the representatives of the exporting 
country and the complainant Community producers, of the initiation of the review. 
Interested parties were given the opportunity to make their views known in writing 
and to request a hearing within the time limit set in the Notice of Initiation. A number 
of importers and two organisations representing the user industry made their views 
known in writing. Hearings were granted to Community producers and to the 
Chinese exporters which had requested them. 
(5) The Commission sent questionnaires for the purpose of a determination of 
dumping and injury to all parties known to be concerned and received replies from 
four complainant Community producers and two importers. 
(6) No replies to the questionnaire were received from any Chinese producer of the like 
product. A number of Chinese exporters (trading companies) responded within the 
time limits laid down in the questionnaires. 
(7) The Commission sought and verified all information deemed necessary for the 
purpose of a determination of dumping and injury, and carried out investigations at 
the premises of the following companies: 
(a) Complainant Community producers 
- Vereinigte Aluminium Werke AG, Bonn, Germany 
- Ferroatlântica SL, Madrid, Spain 
- Pechiney Electrométallurgie, Paris, France 
- Industria Elettrica Indel SpA, Belluno, Italy 
OJC193, 27.7.1995, p. 3. 
OJL 349, 31.12.1994, p. 1. 
(b) Producers in the analogue country 
ELKEM A/S, Oslo/Kristiansand, Norway 
FESIL A/S, Trondheim, Norway 
(8) The investigation of dumping covered the period from 1 July 1994 to 30 June 1995 
(hereinafter called "the investigation period"). The examination of injury covered the 
period from 1992 up to the end of the investigation period. 
(9) All interested parties received disclosure of the essential facts and considerations on 
the basis of which it was intended to recommend the imposition of definitive 
measures. Those parties were also given time to submit their views on the disclosure 
and, where requested, were again heard by the Commission. The views expressed 
were taken into account, where appropriate. 
(10) Due to the complexity of the proceeding and, in particular, the fact that precise facts 
about producers in the analogue country not subject to the investigation had to be 
established, the investigation could not be completed within the indicative deadline 
under Article 11(5) of the Basic Regulation. 
B. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT 
1. Product under consideration 
(11) The product covered by this proceeding is silicon metal produced in an electric arc 
furnace by reducing quartz in the presence of various carbonaceous products. It is 
marketed in the form of lumps, granules or powder under internationally accepted 
technical specifications as regard its purity. On the basis of those specifications it is 
possible to classify silicon metal in different qualities, destined for different end-uses, 
namely the production of silicones ("chemical grade"), the production of the primary 
aluminium grade and secondary aluminium grade. Its silicon content is less than 
99.99% by weight. The customs classification code for silicon metal under the 
Combined Nomenclature during the investigation period was 2804 69 00. 
Silicon metal with a higher purity, that is, with a silicon content exceeding 99.99% by 
weight, used mostly in the electronic semiconductor industry, falls under a different 
— CN code and is not covered in this proceeding 
2. Like product 
(12) The same international technical specifications apply both to the imported product 
referred to in the complaint and to silicon metal produced in the Community. Despite 
some difference in purity and dimensions between the Chinese and the Community 
product, their physical characteristics and applications are essentially the same, as are 
those of silicon metal produced and sold on the domestic market in the analogue 
country "(Norway). The Community product and the imported one are therefore 
"like products" within the meaning of Article 1(4) of the Basic Regulation. 
C. DUMPING 
1. Analogue country 
(13) As China is a non-market economy country, the Commission, in accordance 
with Article 2(7) of the Basic Regulation, determined the normal value on the 
basis of data collected from producers in a market economy third country 
(the "analogue country"). In the original investigation normal value was established 
on the basis of the prices payable in the Community. 
(14) In the notice of initiation of the review the Commission stated that Norway was 
envisaged as an appropriate market-economy third country for the purpose of 
establishing normal value. This preliminary choice was based on information 
submitted in the review application, which stated that, in terms of both cost structure 
and production technology, the Norwegian producers of the product concerned were 
amongst the most advanced in the world market, thus enabling a reasonable 
assessment to be made of normal value for the product concerned. 
(15) All interested parties were given the opportunity to comment on the choice 
envisaged. The exporters objected to this choice. Their objections were, however, 
raised after expiry of the time-limit laid down in the Notice of Initiation. They 
proposed Estonia as an alternative analogue country, erroneously claiming that this 
country had been the analogue country in the original investigation. No evidence in 
respect of the representativity of Estonian production was, however, received. Other 
parties, in the course of a hearing they were granted, even contested that there was 
any production in Estonia. Eurostat statistics, according to them, only reflected 
transhipped exports originating in other countries. Romania and Brazil were also 
suggested as analogue countries, but no evidence was provided as to why either of 
these countries would be a more suitable analogue country than Norway. 
(16) In the course of the investigation, the Commission confirmed that Norway was one of 
the most important and efficient silicon metal producers in the world. Norway 
benefits from low energy costs, this fact being of importance since energy costs 
account for a large part of the manufacturing cost of silicon metal. Moreover, in 
particular because the factories are generally located in industrial harbours, the 
Norwegian producers benefit from a good access to raw materials and good 
— exporting conditions. In addition, the production process in Norway is similar to the 
one now used in China, and the presence of two significant producers competing with 
imports ensures normal market conditions. Finally, silicon metal sales by the two 
cooperating Norwegian producers on their domestic market during the investigation 
period were made in significant quantities, since they amounted to more than 5% of 
the exports from China to the Community. 
(17) In the light of the above, it was considered appropriate and reasonable to use Norway 
as the analogue country for the establishment of normal value in, respect of exports 
from China to the Community. 
2. Normal value 
(18) As far as the determination of normal value is concerned, the Commission established 
that the volume of the Norwegian producers' domestic sales to unrelated customers 
of the silicon metal grade similar to that exported from China constituted more than 
5% of the sales volume of the products under consideration exported to the 
Community and were, consequently, "representative" within the meaning of 
Article 2(2) of the Basic Regulation. 
(19) Subsequently, in accordance with Article 2(4) of the Basic Regulation, the 
Commission examined whether the domestic sales of the like product had been made 
in the ordinary course of trade, by assessing the proportion of sales which were 
profitable. The assessment showed that more than 20%, by volume, of sales were 
made below the average cost. Normal value was thus established on the basis of the 
weighted average prices actually paid for the remaining profitable sales only, as the 
volume of the latter exceeded 10% of those sales. Normal value was established at 
the FOB Norwegian frontier level. 
3. Export price 
(20) Replies to the questionnaire sent by the Commission were received from five 
companies exporting the product concerned from China. All those companies were 
represented by the China Chamber of Commerce for Import and Export of Metals, 
Minerals & Chemicals (CCCMC). Owing to the persisting paucity and deficiencies of 
the replies, little information could be used. In particular, replies did not contain 
evidence that all sales of the product concerned to the Community had been reported. 
Nor did they did refer to the fact that some of the main Community importers might 
be related to the exporters, a$ part of State-controlled "Minemetals" import and 
export network. Accordingly, in pursuance of Article 18(1) of the Basic Regulation, 
the findings with regard to export prices had generally to be based on facts available. 
In this respect, it was considered whether or not, in the absence of any other source 
of information, the export price for the product concerned could be based on 
Eurostat import statistics. In examining the reliability of the information provided by 
those statistics, the Commission noted that data relating to CN code 2804 69 00 
covered exclusively silicon metal. Moreover, according to the information available, 
the characteristics of the silicon metal grade exported from China did not vary to any 
— significant extent during the investigation period, so that an average price was in this 
case considered to be sufficiently accurate. 
(21) It was therefore concluded that the most reasonable basis for establishing the export 
price was to take the CIF Eurostat import value for the CN code in question and 
corresponding statistics for Austria, Finland and Sweden before their accession to 
the Community. 
4. Comparison 
(22) In accordance with Article 2(10) of the Basic Regulation, normal value and export 
price were, however, adjusted to take account of differences in factors which were 
claimed and demonstrated, on satisfactory evidence, to affect price comparability. 
Normal value was indeed adjusted to take into account a difference in the level of 
trade when compared to Chinese export sales, as Norwegian domestic sales are 
generally made direct to end-users. These adjustments were also made in respect of 
transport and insurance costs, the corresponding costs being established on the basis 
of data available in the Chinese exporter's responses to the questionnaire, and the 
export price thus expressed at FOB Chinese frontier level. 
5. Dumping margin 
(23) In accordance with Article 2(11) of the Basic Regulation, the weighted average 
normal value (FOB Norwegian frontier) was compared with the weighted average 
export price (FOB Chinese frontier). 
(24) The comparison of the normal value with the export price as defined above showed 
the existence of dumping, the dumping margin being equal to the amount by which 
the normal value exceeded the price of export to the Community. 
The dumping margin, expressed as a percentage of the CIF export price, 
free-at-Community frontier, amounted to 68.1%. 
D. COMMUNITY INDUSTRY 
(25) The Commission considered whether the Community producers which supported the 
request for a review and cooperated with the investigation represented a major 
proportion of total Community production, as provided for in Article 4(1) of the 
Basic Regulation. In this respect it was found that the four producers which 
cooperated with the review manufactured almost the whole of the Community's 
output. It was therefore concluded that the four cooperating producers constituted 
the "Community industry" within the meaning of Article 4(1) of the Basic Regulation. 
E. INJURY 
1. Consumption in the Community market 
(26) Apparent consumption (EU 15) of silicon metal in the Community market (based 
on questionnaire replies, Eurostat data and market information available to 
the Commission) increased from approximately 195 000 tonnes to around 
256 000 tonnes - an increase of about 32% between 1992 and the end of the 
investigation period. 
2. Volume and market share of the dumped imports 
(27) It should be recalled that Chinese exporters had absorbed in 1992 the anti-dumping 
duty in force (see recital (1)). It has been established in the present investigation that 
the volume of dumped imports of silicon metal originating in China into the 
Community measured in metric tonnes showed an large decrease after the imposition 
of this additional anti-dumping (anti-absorption) duty in 1992. However, these 
imports subsequently recovered with a rise by 171% between 1993 and 1994, and by 
13.5% from 1994 to the end of the investigation period. Thus, between 1992 and the 
end of the investigation period, imports originating in China, and sold in the 
Community, increased by 37% in volume. These findings contradict claims that the 
imposition of additional anti-dumping measures would have resulted in the exclusion 
from the Community market of Chinese silicon metal. 
(28) The estimated market share of these imports into the Community market, based on 
apparent consumption, increased from 3.7% in 1992 to 3.8% during the investigation 
period- a rise of 3%. 
3. Prices of dumped imports 
(29) As was explained in recitals (20) and (21), the paucity and deficiencies of the replies 
to the questionnaires received from the Chinese exporters obliged the Commission to 
establish the export price on the basis of statistical figures (Eurostat and Austrian, 
Finnish and Swedish national statistics). The investigation has shown that after the 
review of the measures in 1992, Chinese duty-unpaid prices had increased by 12.5% 
in 1993. However, from 1994 up to the end of the investigation period, they 
decreased again to close to the level of 1992. From 1992, the year of the introduction 
of additional anti-dumping measures, up to the end of the investigation period those 
prices increased by only 4%. 
(30) The Commission also compared the prices of Chinese imports with the prices of the 
Community producers in order to determine whether the former undercut the latter. 
For this purpose, it was first established which of the Community produced silicon 
metal was equivalent, in terms of specifications and uses, to the imported Chinese 
product (standard grade used in the aluminium industry). Since Chinese imports are 
all of standard quality the price comparison was made only with standard quality 
— products of the Community industry. The weighted average ex-works producers' sale 
prices in the Community were then compared to the weighted average import prices 
of the Chinese product, adjusted to duty-paid net ex-warehouse levels in the 
Community at the same level of trade. For this analysis, four markets were examined 
representing the most important markets (Germany, United Kingdom, France, Italy). 
(31) On the above basis, it was found that Chinese import prices did not undercut the 
Community producers prices during the investigation period. However, when 
analysing actual resale prices to the first independent buyer of Chinese silicon metal, 
charged by a major unrelated importer representing 11% of the total Chinese imports 
and who cooperated with the investigation, it was found that its prices were about 
7% lower than the corresponding Community industry prices. In addition, it is 
important to note that on the Community market, a fixed anti-dumping duty of 
ECU 396 per tonne, representing 51% of the CIF price, was in force. Consequently, 
if these measures were to lapse, undercutting would occur by a percentage of not less 
than 30%. 
4. Situation of the Community industry 
(a) General 
(32) A number of interested parties have pointed out that the Community industry does 
not suffer injury any more, as the demand for silicon metal has changed since the end 
of the investigation period, leading to a supply shortage and a considerable increase 
in prices. 
It should be noted that, pursuant to Article 6(1) of the Basic Regulation, it is the 
practice of the Community institutions to base their analysis on dumping and injury 
on the situation prevailing during the investigation period. Such an approach is 
justified by the fact that the exact effect of developments such as those mentioned 
above can only be established within the framework of a properly conducted 
investigation in which all interested parties can put forward their views and in which 
the information submitted can be verified and analysed. 
(33) In this case, the volatility of the silicon metal market justifies the Community's 
approach, as no conclusions can be drawn from these alleged price fluctuations 
without investigation. 
(34) The Commission took account of the following economic indicators in order to 
determine the state of the Community industry: 
(b) Production 
(35) Community production increased from approximately 98 000 tonnes to 
approximately 122 000 tonnes between 1992 and the end of the investigation period, 
an increase of 24.1%. The output figures for this period reveal a slowdown in 1993 
(-1.2%), followed by a general increase as a result of a favourable outlook on the 
world market. Two of the Community producers who participated in the first 
investigation ceased their activities in 1992, while another restructured a production 
— plant in Spain in 1993. The other Community producers have maintained a stable rate 
or have slightly increased their production. 
(c) Capacity, capacity utilization 
(36) Production capacity of Community industry increased by 5% between 1992 and the 
end of the investigation period. This is mainly due to the restructuring in Spain. In 
addition, between 1992 and the end of the investigation period capacity utilisation 
increased by 18% for the reason given above. 
10 
(d) Stocks 
(37) The volatility of the market and the expectations of the Community industry 
concerning the likely development of the Community market are shown by the trend 
in stocks. In this regard, stocks held by the Community industry grew by 47% during 
the period 1992 to the end of the investigation period, increasing from approximately 
11 600 tonnes to approximately 17 000 tonnes. 
(e) Sales 
(38) Sales by the Community industry on the Community market increased from 
approximately 80 800 tonnes in 1992 to approximately 111 200 tonnes to the end of 
the investigation period, an increase of 37.6% over the period of investigation. 
(f) Market share 
(39) The increase in sales volume resulted in a slight increase in market share from 39.8% 
in 1992 to 41.1% of the market during the investigation period. 
(g) Average sales price and price trends 
(40) As regards the development of Community industry, prices increased by 3%, after the 
imposition of additional anti-dumping duties on imports originating in China. 
However, between 1993 and 1994, they decreased by 3%. Over the period 
considered, the Community industry sales price increased by 2%. 
(h) Profitability 
(41) Between 1992 and 1993 the Community industry registered an overall weighted 
average loss of 21.7% and 22% respectively, for sales of silicon metal in the 
Community market. The restructuring of a plant in Spain and a slight upward trend in 
market prices did not bring the Community industry out of a loss-making situation in 
1993 and 1994. During and up to the end of the investigation period, the Community 
industry registered a weighted average loss of 13.4%. 
(42) The weighted average losses between 1992 and the end of the investigation period 
— decreased by 38%. Nevertheless, the Community's silicon-metal industry has not 
made any profit over the last ten years. 
(i) Employment 
(43) The employment situation deteriorated steadily between 1992 and 1994, since the 
total workforce of the entire Community industry was reduced by 7%. 
11 
5. Conclusion 
(44) After the imposition of measures the Community industry improved its position as to 
production, capacity utilization, and sales. Nevertheless, it should be noted that 
capacity and market share have stagnated. The Community industry was unable to 
increase its prices to a satisfactory level even after the imposition of these 
measures, owing to the fact that the Chinese continued to lower their prices. In 
addition, following the substantial increase in the volume of stocks, the loss in 
employment and the accumulation of new financial losses, it is concluded that the 
Community industry continues to suffer material injury within the meaning of 
Article 3(1) of the Basic Regulation. 
F. CAUSATION 
(45) The Commission examined whether the injury suffered by the Community industry 
was caused by dumped Chinese imports or whether other factors had caused or 
contributed to that injury. 
1. Effect of dumped imports 
(46) The silicon metal produced by the Community and the silicon metal imported from 
China are in direct competition with each other, essentially on the basis of prices. This 
is explained by the fact that there are no significant differences in quality between the 
imported product and the Community produced one. The imported product is aimed 
at the same customers, namely aluminium smelters. 
(47) Since silicon metal is a commodity, its market is highly price-sensitive and, 
consequently, low prices charged by certain vendors have a generally depressive 
effect on the market. The investigation has shown that after the review of the 
measures in 1992, Chinese duty-unpaid prices had increased by 12.5% in 1993. 
However, from 1994 up to the end of the investigation period, they decreased almost 
to the level of 1992. 
Between 1992 (see recital (29)), the year of the introduction of additional 
anti-dumping measures, and the end of the investigation period, the prices only 
__ increased by 4%. Consequently, their level had a clearly depressive effect on the price 
of silicon metal in the Community market. 
(48) Moreover, if one analyses the period between 1993 and the end of the investigation 
period, Chinese prices fell by 7%, while the Community market prices increased 
by 3%. This fact shows the capacity of Chinese exporters to partly absorb the effect 
of the anti-dumping duties in force. 
(49) The Community industry tried to increase their prices in 1993, but had to follow the 
Chinese pricing policy. So, in 1994 the Community industry had attempted to reduce 
its financial loses by decreasing prices and trying to improve its sales. 
12 
(50) Furthermore, owing to the price depression exerted by Chinese imports and despite 
the increased consumption of silicon metal in the Community market, the 
Community industry continued to suffer from losses or. barely managed to cover their 
production costs. 
(51) Chinese exporters argued that there is no injury or likelihood of recurrence of 
injury suffered by the Community industry due to imports from China, because 
the Community industry has increased its production of silicon metal, particularly 
since 1992. 
(52) However, as it was mentioned before (see recital (35)), the Community industry 
increased their own production between 1992 and the end of the investigation period 
by 24.1%, in a market which grew up by 32% (see recital (26)). At the same time, the 
stocks of the Community industry increased by 46.6% (see recital (37)). The 
Community industry expected, on account of a favourable market situation, to 
increase their sales accordingly. On the contrary, they were forced to increase 
their stocks, instead of following the depressed prices dictated by the 
Chinese imports, which continued to enter the Community market at low prices 
before anti-dumping duty. 
(53) In conclusion, the Chinese dumped imports have clearly had a depressive effect on 
the market price in the Community and have had an impact on the poor financial 
situation of the Community industry. 
2. Effect from other factors 
(54) Imports of silicon metal from countries producing silicon metal, other than China, 
have entered the Community in the period from 1992 up to the end of the 
investigation period. The market share of Norwegian imports (calculated on the basis 
of the apparent consumption figures in recital (26) above) increased from 22.1% in 
1992 to 27.7% up to the end of the investigation period. Imports originating in Brazil 
fell during the same period from 10.4% to 7.3%. The same situation prevailed for the 
other two important exporters of silicon metal into the Community, South Africa and 
Australia. Their imports fell from 14.8% to 9.2% and from 4.1% to 3% respectively. 
(55) Chinese exporters argued that silicon metal from Russia and the Ukraine may also 
__ have caused injury to the Community industry. However, the Commission considers 
that the quality of silicon metal from Russia and the Ukraine is not comparable to 
European or Chinese silicon metal. The standard quality exported by China contains 
0.5% of iron, compared with between 0.8% to 1% for the Russian and Ukrainian 
product. The abovementioned imported products need special treatment before they 
can be compared to the European and Chinese product. 
Indeed, it was established that anti-dumping measures are not applied in the 
United States of America to silicon metal originating in Russia, owing to the fact that 
these products have to be treated and purified before being used by the aluminium 
smelting industry. 
13 
(56) In addition, the Commission examined the Eurostat import statistics and established 
that imports originating in Russia and the Ukraine are not carried out on a regular 
basis. In 1992 there were no imports from Russia or the Ukraine. According to 
market information, actual production capacity in the two countries seems to be 
limited to 100 000 tonnes per year. Thus, it seems unlikely that significant quantities 
would be shipped from Russia and Ukraine. 
(57) Lastly, it was established that the market share of South Africa had decreased owing 
to production problems, and that Norway increased its market share, but with the 
highest CIF price shown in Eurostat. 
(58) No other factors were found which would have negative influence on the 
Community industry. 
3. Conclusion 
(59) Given the simple production process involved, the maturity and simplicity of 
the product offered through similar sales channels in the Community, and 
the transparency of the market, the Commission considers that the Chinese 
low-priced imports policy had a substantial negative impact on the situation of the 
Community industry. 
Even if certain imports originating in other countries may have contributed to the 
negative situation of the Community industry, it must be concluded that the price 
suppression, due to the Chinese imports has, taken in isolation, clearly caused 
material injury to the Community industry. 
G. CONTINUATION OF DUMPING/INJURY 
1. General 
(60) Exporters argued that in order to determine whether there is a likelihood of 
continuation of dumping and injury the market trend has to be analysed throughout 
the period between 1988 and the end of the investigation period. 
(61) In this respect the Commission examined the level of imports into the Community of 
15 over a four-year period and especially after the imposition of the additional 
anti-dumping measures due to the absorption. This period can be considered to be 
sufficiently long for the purposes of establishing injury indicator trends in 
anti-dumping investigations. 
2. Chinese position in the world market 
(62) Past experience, combined with the present situation, show that the Chinese industry 
has continued to export silicon metal into the Community at dumped prices. An 
anti-dumping investigation carried out by the United States administration has 
established, in 1991, that Chinese exports had been dumped and anti-dumping duties 
at a rate of 134% were imposed. Chinese exports to the United States decreased 
dramatically after the imposition of these measures. 
14 
(63) China is by far the biggest supplier of silicon metal in the world. In 1994, Chinese 
exports were approximately 116 000 tonnes. The lion's share of these exports goes to 
Japan which purchased 83 763 tonnes, or 72% of total Chinese exports in 1994. Until 
1993, Chinese sales to {he other Asian countries had increased sharply while sales 
into the US market remained depressed due to anti-dumping duties in force since 
1991. Sales to the Community recovered in 1994 despite the continued existence of 
anti-dumping duties. 
(64) Chinese exports of silicon metal into Japan stagnated in 1993 and 1994, totalling 
86 400 tonnes and 82 600 tonnes respectively. The same occurred in Australia. In 
South Korea the Chinese exports decreased over the same period. All the above 
corroborates the fact that the Japanese and other Asian markets are saturated, a 
finding which is confirmed by the fact that patterns of export volumes to China's 
main clients, namely Japan, South Korea and Australia, showed a substantial increase 
up to 1993 and stability thereafter. 
3. Chinese capacity of production 
(65) The exporters argued that numerous Chinese factories have been closed down and 
that production capacity in China has been reduced. Moreover, increasing domestic 
consumption of silicon metal in China would result in smaller quantities being 
available for export. The same exporters argued that an increase in demand in the 
Community is expected by the end of the decade and that, consequently, the 
Community industry will not have the capacity to supply sufficient quantities. 
(66) According to market information, the Chinese production of silicon metal decreased 
from 450 000 tonnes in 1989 to 250 000 tonnes in 1994. It is likely that as soon as 
the measures in the Community and the United States lapse, the Chinese may convert 
production from other alloys to silicon metal and regain previously held high levels of 
production, which could be exported to the Community. 
4. Likelihood of continuation of dumping 
(67) As regards dumping, it should be recalled that, during the investigation period, the 
imports concerned originating in China have continued to be dumped, at a level 
similar to that established during the investigation into absorption of the original duty 
-_ rate carried out in 1992. Moreover, the prices of Chinese imports into Austria, 
Sweden and Finland shortly before their accession to the Community were also low 
and likely to have been dumped. It is therefore considered highly likely that if the 
measures were to expire this would lead to a continuation of dumping, within the 
meaning of Article 11(2) of Basic Regulation. 
15 
5. Likelihood of continuation of injury 
(68) Chinese imports continued to be low-priced and to suppress the Community prices of 
silicon metal even after the imposition of additional anti-dumping duties. Chinese 
import prices were the lowest in the Community market over the period from 1992 to 
the end of the investigation period. Even with a small percentage of the Community 
consumption, they have had an important effect on the downward trend of the prices. 
Finally, if the measures of a fixed amount of ECU 396 per tonne were to lapse, an 
undercutting of 30% would occur. 
(69) Furthermore, given the present huge capacity of Chinese production and the existence 
of high anti-dumping duties in the United States, it is very likely that the Chinese will 
try to increase their sales into the Community market at very low prices if the 
measures lapse, leading to an aggravation of price depression on the Community 
market and consequently a growing injury to the Community industry. 
The trend of imports into Sweden and Finland before and after their accession to the 
Community confirms the likelihood of such a development. Between July and 
December 1994, Sweden imported 493 tonnes, in contrast to the period from January 
to June 1995, when no imports from China were declared. The same situation 
prevailed in Finland, where in the last semester of 1994 2 097 tonnes were imported 
from China, whereas no imports were declared for the first semester of 1995. It is 
obvious that the volume of Chinese imports is strongly influenced by the existence or 
absence of anti-dumping measures. It is therefore concluded that at least a 
continuation of the injury suffered by the Community industry will occur should the 
anti-dumping duties in force be allowed to expire. 
6. Conclusion 
(70) On the basis of the above it is therefore considered that, if the anti-dumping measures 
currently in force were to lapse, the Chinese exporters would continue to export to 
the Community market at very low prices. This would have as a consequence the 
continuation of price depression on the market causing further injury to the 
Community industry. 
H. COMMUNITY INTEREST 
1. General 
(71) Pursuant to Article 21(1) of the Basic Regulation, the Commission examined, on the 
basis of all evidence submitted, whether it could clearly be concluded that it was not 
in the Community interest to continue to apply measures. 
For this purpose, the Commission considered the impact of existing measures and 
other possible measures, and the consequences, for all parties involved in the 
proceeding, of not taking measures. 
16 
2. Consequences for the Community industry 
(72) The purpose of anti-dumping measures is to remedy an unfair trading practice that 
has an injurious effect on a Community industry. Such a remedy should result in the 
re-establishment of a situation of effective competition which, as such, is in the 
interest of all the operators in the Community. 
(73) In the course of this investigation it has been established that the Community industry 
continues to suffer injury, and that it is highly probable that, without the continuation 
of anti-dumping measures to correct the effects of dumped imports, the precarious 
financial situation of the Community industry will further deteriorate. Thus, the 
existence of the Community industry as a whole may • ultimately be at risk. 
Two companies which took part in the previous investigations do not exist any more. 
It is also the Commission's opinion that if fewer producers are present in the 
Community market, competition may be reduced commensurately. 
(74) On the basis of the facts established, it is reasonable to conclude that if the measures 
are allowed to lapse, there will be further factory closures and job losses in addition 
to those which have already occurred. 
(75) When examining the Community interest in relation to the Community industry, the 
Commission had to take future developments into consideration. On the basis of 
studies for the future of the silicon metal industry world-wide it can reasonably be 
assumed that the use of this product could increase by possibly around 5% per year. 
(76) Furthermore, the ongoing restructuring efforts made by the Community industry 
show that it is not ready to abandon this segment of production, and therefore action 
against the adverse effects of dumped imports is necessary. 
3. Impact on the users 
(77) No individual user submitted any substantiated information during the current 
investigation. One Community user association and two national user associations 
submitted information requesting the termination of the measures. 
(78) A United Kingdom aluminium producers' association claimed that the quality of the 
__ silicon metal imported from China justified a price lower than that for the same 
product originating in other countries. This allegation was not substantiated by any 
evidence. In addition, neither in the original investigation nor in the present 
investigation was it established that there was a significant difference in quality, 
justifying different pricing between Chinese silicon metal and that originating from 
other sources. This claim has to be rejected. 
(79) The same association also argued that the international competitive position of the 
aluminium products produced in the Community is damaged by the imposition of the 
anti-dumping measures. It was however established that the silicon metal used for the 
production in the Community of aluminium for export can enter the Community 
without any duty, under the inward processing arrangements. This argument has 
therefore been dismissed. 
17 
(80) A user claimed that it is against the Community interest to continue imposing 
anti-dumping duties on Chinese imports of silicon metal, owing to the fact that the 
Community industry would not be able to supply the Community market with 
sufficient quantities. It was found that, owing to the presence of other extra 
Community suppliers, the risk of a general supply shortage is very low. 
(81) As far as the competitive environment of the Community market is concerned, user 
industries and other economic operators have always enjoyed the presence of a wide 
range of competitors in the market, since the Community industry, even exploiting its 
entire production capacity, could only satisfy roughly 50% of the demand on the 
Community market. 
Imports from third countries will therefore always be necessary. After the imposition 
of anti-dumping measures, producers located in China would be able to promote their 
exports to the Community at fair prices. The only anti-dumping measures in force 
against imports into the Community of silicon metal are those applied on imports 
originating in China and Brazil. 
(82) The incidence of the measures in force on the structure of the cost of production at 
the aluminium smelters in particular was examined. This analysis showed that for the 
production of aluminium 226 and 231, representing 50% of total aluminium 
production, a weight of between 5.5% to 6% of silicon metal is required. The value 
of silicon metal used in this production represents 5.2% of the overall cost of the 
aluminium. The incidence of the existing measures on the price of an aluminium alloy 
which included only silicon metal originating in China accounts for 1.7%. This is a 
relatively small percentage of the total production costs, which points to the 
conclusion that any effect on users of the existing anti-dumping measures remains 
very limited. 
4. Impact on importers 
(83) Only a limited number of importers made their views on Community interest known 
to the Commission. One of them cooperated in the determination of dumping 
and injury. 
(84) One company located in the United Kingdom and no longer importing the product 
__ explained that the prices charged by the Chinese exporters FOB are such as to give 
only a slightly lower price. 
It further claimed that since the imposition of the measures, a price increase of over 
GBP 300 per metric tonne has occurred. Moreover, it maintained that the imposition 
of measures had conferred little benefit on the Community industry, as the main 
suppliers of the Community market are Norway and South Africa. They would, 
allegedly, have used the imposition of anti-dumping measures on the Chinese imports 
in order to dominate the British market. 
18 
It has to be pointed out that after the imposition of the additional anti-dumping 
measures and up to the investigation period a weighted average increase of only 9.8% 
was recorded on all imports of silicon metal into the Community market. 
Furthermore, the Community industry increased its prices by 2% during the same 
period (recital (40)). It has already been established (recital (57)) that the market 
share of South Africa decreased owing to production problems, and that Norway 
increased its market share, but with however the highest CIF Eurostat price. 
These arguments have to be rejected. 
5. Impact on the competitive environment 
(85) With respect to the competitive situation on the Community market, the Commission 
considered whether the existing measures and their continuation might affect effective 
competition. First, it should be recalled that after five years of anti-dumping 
measures silicon metal of Chinese origin was still available on the Community market. 
Other exporters had increased their presence in that market. Consequently, the 
Commission came to the conclusion that it does not appear to be realistic to foresee 
acute supply shortages in the silicon metal market, nor any negative effect on 
effective competition. 
6. Conclusion on Community interest 
(86) On the basis of the above facts and considerations, in particular, and having examined 
the arguments submitted by the Community industry, Community downstream 
industry and importers of the product concerned, it is considered that, on balance, it 
is in the overall Community interest that the anti-dumping measures on silicon metal 
originating in China should not be allowed to expire. 
I. ANTI-DUMPING MEASURES 
1. Injury elimination level 
(87) During the investigation period, it was established that the return on sales of the 
product concerned was negative because the selling prices charged by the Community 
industry were below the verified cost of production. 
(88) In order to obtain a non-injurious reference level for export prices, the Commission 
established first the Community industry's actual cost of production. With respect to 
a reasonable level of profit, one Community producer claimed that a minimum pre-tax 
profit of 7.5%» on sales was required for it to remain competitive. The Commission 
used a rate of 6.5% on turnover, a rate which is considered to be sufficient given the 
mature nature of the product, requiring only modest investment in research and 
development or in production equipment. 
(89) The price, determined by adding 6.5% profit to the average cost of production of the 
Community industry, was duly adjusted to take account of differences in the level of 
trade between the imports and the sales of the Community industry. 
19 
(90) On this basis, the injury margin was determined by taking into account the CIF 
Chinese prices (Eurostat data) and amounted to 49% of the CIF price of the imports 
in question. According to the present injury margin, which is lower than the actual 
dumping margin, the actual measures would have to be ECU 376.5/tonne, instead of 
ECU 396/tonne which is the level of the measures in force. 
2. Definitive duties 
(91) Considering the conclusions on dumping, injury, causality, likelihood of continuation 
of dumping and injury and Community interest outlined above, the Commission 
considers it necessary to continue to impose anti-dumping measures which 
should restore effective and fair competitive conditions on the Community 
silicon-metal market. 
(92) Referring to Article 8 of the Basic Regulation, the Chinese traders proposed an 
undertaking or the imposition of a variable duty. The lack of cooperation, as 
demonstrated by the inadequacy of the Chinese replies to the questionnaires, indicates 
that efficient monitoring of undertakings would be jeopardized. Furthermore, the 
previous behaviour of the Chinese traders does not make the imposition of a variable 
duty appropriate. 
(93) On the basis of the above, and taking into account the fact that those measures have 
been in force since 1992 at the current level, it is considered more appropriate that 
the anti-dumping measures on imports of silicon metal originating in China should 
take the form of an ad-valorem anti-dumping duty, the rate of which should be set 
at 49%. 
(94) The Council confirms the above conclusions, 
HAS ADOPTED THIS REGULATION: 
Article 1 
1. A definitive anti-dumping duty is hereby imposed on imports of silicon metal 
originating in the People's Republic of China, falling within CN code 2804 69 00. 
2. The rate of the definitive anti-dumping duty applicable to the net, free-at-
Community-frontier price, before duty, shall be 49%. 
3. Unless otherwise specified, the provisions in force concerning customs duties 
shall apply. 
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Article 2 
This Regulation shall enter into force on the day following that of its publication in the 
OfficialJournal of the European Communities. 
This Regulation shall be binding in its entirety and directly applicable in all Member States. 
Done at Brussels, For the Council 
The President 
21 

ISSN 0254-1475 
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