[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 12.9.2008

COM(2008) 546 final

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of certain tube and pipe fittings, of iron or steel, originating in the Republic of Korea and Malaysia following an expiry review pursuant to Article 11(2) of Regulation (EC) No 384/96

(presented by the Commission)

EXPLANATORY MEMORANDUM

Context of the proposal |

Grounds for and objectives of the proposal This proposal concerns the application of Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community, as last amended by Council Regulation (EC) No 2117/2005 of 21 December 2005 ('the basic Regulation') in the proceeding concerning imports of tube and pipe fittings (other than cast fittings, flanges and threaded fittings), of iron or steel (not including stainless steel), with a greatest external diameter not exceeding 609.6 mm, of a kind used for butt-welding or other purposes, originating in the Republic of Korea and Malaysia. |

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

Existing provisions in the area of the proposal Council Regulation (EC) No 1514/2002 imposing definitive anti-dumping measures on imports of certain tube and pipe fittings of iron or steel, originating in the Czech Republic, Malaysia, Russia, the Republic of Korea and Slovakia |

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

Consultation of interested parties and impact assessment |

Consultation of interested parties |

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

Collection and use of expertise |

There was no need for external expertise. |

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

Legal elements of the proposal |

Summary of the proposed action The current expiry review was initiated on 18 August 2007 further to a request lodged by the Defence Committee of the Steel Butt-Welding Fittings Industry of the European Union. Definitive measures were originally imposed in August 2002. The anti-dumping duties in force for Malaysia are: 59.2% for Anggerik Laksana Sdn Bhd and 75% for all other companies; for the Republic of Korea the duty is 44% for all companies. The attached proposal for a Council Regulation maintaining the above-mentioned measures is based on the definitive findings on dumping, injury, causation and Community interest. It is therefore proposed that the Council adopt the attached proposal for a Regulation which should be published in the Official Journal of the European Union as soon as possible. |

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

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

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

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

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

Choice of instruments |

Proposed instruments: regulation. |

Other means would not be adequate for the following reason: The above-mentioned basic Regulation does not foresee alternative options. |

Budgetary implication |

The proposal has no implication for the Community budget. |

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of certain tube and pipe fittings, of iron or steel, originating in the Republic of Korea and Malaysia following an expiry review pursuant to Article 11(2) of Regulation (EC) No 384/96

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community[1] (the "basic Regulation"), and in particular Articles 9 and 11(2) thereof,

After consulting the Advisory Committee,

Whereas:

A. PROCEDURE

1. Measures in force

2. In August 2002, definitive anti-dumping measures on imports of certain tube and pipe fittings ("TPFs" or "the product concerned") originating, inter alia , in the Republic of Korea and Malaysia ("countries concerned") were imposed by Council Regulation (EC) No 1514/2002[2] ("original investigation"). The anti-dumping duties in force for Malaysia are: 59.2% for Anggerik Laksana Sdn Bhd and 75% for all other companies; for the Republic of Korea the duty is 44% for all companies.

3. Outside the scope of this proceeding, anti-dumping measures are currently in force imposed by Council Regulation (EC) Nº 964/2003[3] on exports from the People's Republic of China (58.6%) and Thailand (58.9%), with the exception of two companies in Thailand, and those consigned from Taiwan, whether declared as originating in Taiwan or not. The measures for the product concerned originating in China were extended to imports of the same product consigned from Indonesia by Council Regulation (EC) No 2052/2004[4], Sri Lanka by Council Regulation (EC) No 2053/2004[5] and the Philippines by Council Regulation (EC) No 655/2006[6], whether declared as originating in the Philippines, Indonesia, Sri Lanka or not.

4. Request for a review

5. Following the publication of a notice of impending expiry[7] of the anti-dumping measures in force on imports of TPFs originating in the Republic of Korea and Malaysia, the Commission received a request to review these measures pursuant to Article 11(2) of the basic Regulation.

6. The request was lodged on 23 May 2007 by the Defence Committee of the Steel Butt-Welding Fittings Industry of the European Union ("the applicant") on behalf of producers representing a major proportion, in this case more than 50%, of the total Community production of certain tube and pipe fittings.

7. The request was based on the grounds that the expiry of the measures would be likely to result in a continuation or recurrence of dumping and injury to the Community industry.

8. Having determined, after consultation of the Advisory Committee, that sufficient evidence existed for the initiation of a review, the Commission initiated an investigation[8] pursuant to Article 11(2) of the basic Regulation.

9. Investigation

10. The Commission officially advised the applicant Community producers, the other Community producers, the exporting producers in the countries concerned, the importers/traders, users and their associations known to be concerned, as well as the representatives of the governments of both exporting countries, of the initiation of the review.

11. The Commission sent questionnaires to all these parties and to those who made themselves known within the time limit set out in the notice of initiation.

12. The Commission also gave interested parties the opportunity to make their views known in writing and to request a hearing within the time limit set out in the notice of initiation.

13. In view of the apparent high number of exporting producers in the Republic of Korea, importers/traders of the product concerned and Community producers, sampling was envisaged in the notice of initiation, in accordance with Article 17 of the basic Regulation. In order to be able to decide whether sampling would be necessary and, if so, to select a sample, the Commission sent out sampling forms requesting specific information on the average sales volume and prices of each Community producer, exporting producer and importer concerned. No reply was received from any Korean exporting producer and eleven replies were received from importers. Only four Community producers replied to the sampling form. It was therefore decided that sampling was not necessary.

14. Four Community producers replied to the questionnaire, but one sent a partial answer and failed to reply after a deficiency letter had been sent. Regarding Malaysia, two replies to the questionnaire were received, one from a newcomer company and the other from a company that later on refused the verification visit. No Korean exporting producers replied to the questionnaire. Two importers submitted a reply to the questionnaire.

15. The Commission sought and verified all information deemed necessary for the purposes of determining the likely continuation or recurrence of dumping and injury and the Community interest. Verification visits were carried out at the premises of the following companies:

a) Applicant Community producers

- Erne Fittings GmbH, Schlins, Austria

- Interfit S.A., Maubeuge, France

- Virgilio Cena & Figli S.p.A, Brescia, Italy

b) Newcomer producer in Malaysia

Pantech Steel Industries SDN. BHD., Selangor, Malaysia

16. Investigation period

17. The investigation of continuation or recurrence of dumping covered the period from 1 July 2006 to 30 June 2007 (hereinafter referred to as the "IP"). The examination of the trends relevant for the assessment of a likelihood of a continuation or recurrence of injury covered the period from 1 January 2002 up to the end of the IP (the ‘period considered’).

B. PRODUCT CONCERNED AND LIKE PRODUCT

18. Product concerned

19. The product under review is tube and pipe fittings (other than cast fittings, flanges and threaded fittings), of iron or steel (not including stainless steel), with a greatest external diameter not exceeding 609.6 mm, of a kind used for butt-welding or other purposes, originating in the Republic of Korea and Malaysia (‘the product concerned’), currently classifiable within CN codes ex 7307 93 11, ex 7307 93 19, ex 7307 99 30 and ex 7307 99 90.

20. TPFs are manufactured essentially by cutting and forming tubes and pipes. They are used to join tubes and pipes and come in different shapes: elbows, reducers, tees and caps, as well as different sizes and material grades. They are used mainly in the petrochemical industry, construction, energy generation, shipbuilding and industrial installations. When sold for use in the petrochemical industry, the global standard used is the ANSI standard. For other purposes, the most common standard used in the Community is the DIN standard.

21. Like product

22. As in the original proceeding, the investigation has shown that the TPFs produced in the countries concerned, sold domestically and/or exported to the Community, have the same basic physical, technical and chemical characteristics and end uses as the products sold in the Community by the applicant Community producers and are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation.

C. LIKELIHOOD OF A CONTINUATION OF DUMPING

23. In accordance with Article 11(2) of the basic Regulation, it was examined whether the expiry of the measures would be likely to lead to a continuation of dumping.

24. Preliminary remarks

25. As mentioned above, in the absence of co-operation from any exporting producers in Korea and Malaysia, except for one newcomer company, this examination had to be based on information available to the Commission from other sources. In this respect, and in accordance with the provisions of Article 18 of the basic Regulation, Eurostat data referring to the 8-digit CN code, checked against other sources, were used to establish import quantities and prices. Facts available were used to calculate the dumping margin, i.e. in this case the information contained in the request and US statistics.

26. Due to the current small volume of imports of TPFs from Korea and Malaysia in the EU, the Commission had to use data from another country. The USA was considered appropriate, since the market is of a similar size, with many domestic producers but also with a large proportion of imports, making this market a very competitive one. In addition, the USA is the major destination for exports from Korea and Malaysia.

27. Dumping of imports during the investigation period

a) Normal value

28. In accordance with Article 18 of the basic Regulation, and in the absence of any co-operation from Korean or Malaysian exporting producers, except from one newcomer company, the normal value was based on the data provided in the request, i.e. estimated cost of manufacturing to which was added 12.3% and 15.1% for SGA and 5.6% and 6% for profit for Korea and Malaysia respectively, both expressed as a percentage of turnover. It is considered that the above percentages are rather conservative.

b) Export price

29. In accordance with Article 18 of the basic Regulation, and in the absence of co-operation from both Korean and Malaysian exporting producers, except from one newcomer company, the export price was calculated by using the Korean and Malaysian export prices for the product concerned to the USA, derived from the USA import statistics. These figures were adjusted by product types in proportion to the tonnage of each product type based on information provided in the request.

c) Comparison

30. The weighted average normal value was compared with the weighted average export price of TPFs, in accordance with Article 2(11) of the basic Regulation, both at ex-works level.

31. For the purpose of ensuring a fair comparison between normal value and export price, account was taken of differences in factors affecting prices and price comparability in accordance with Article 2(10) of the basic Regulation. In this respect, adjustments were made for inland and ocean freight, insurance, handling, loading and ancillary costs.

d) Dumping margin

32. The comparison of constructed normal value and constructed export price showed the existence of dumping in both countries concerned, the dumping margin being equal to the amount by which the normal value established exceeded the export price. The dumping margin found, as a percentage of the CIF Community-frontier import price, was 15.1% for Korea and 61.3% for Malaysia.

33. Developments of imports should measures be repealed

a) Preliminary remarks

34. Further to the analysis of the existence of dumping during the IP, the likelihood of continuation of dumping was also examined. In the absence of co-operation from any Korean or Malaysian exporting producers, except for one newcomer company, and given the lack of publicly available information on the TPF industry, the conclusions below rely mainly on the facts available in accordance with Article 18 of the basic Regulation, namely Eurostat data, the review request, and US Statistics.

b) Korean and Malaysian production capacity

35. The capacity available in both Korea and Malaysia is estimated at 35 300 tonnes and their export capacity at 20 000 tonnes. This represents more than one quarter of the Community consumption.

c) Korean and Malaysian export prices to the Community

36. As mentioned in the preliminary remarks, the exports of the product concerned from the two countries concerned to the Community market are almost non-existent. With regard to the exports to other third countries, it is alleged in the request that the exports of the product concerned to the USA are made at dumped prices.

d) Conclusion on the likelihood of a continuation of dumping

37. In the light of the above, i.e. the high dumping margins, the huge spare capacity available in these countries together with their high export capacities, it may be concluded that dumped imports from these two countries to the EU would resume if the measures were allowed to lapse. In addition, despite the high level of the anti-dumping duties imposed on their exports which virtually ceased, none of the exporting producers in Malaysia requested an interim review. Furthermore, it should be borne in mind that the Korean exporting companies have never co-operated in the original investigation. The absence of co-operation in this investigation also suggests that these exporting producers were not willing or able to show that no dumping would take place if measures were allowed to lapse.

D. DEFINITION OF THE COMMUNITY INDUSTRY

38. Three companies co-operated fully in the investigation. These companies are located in France (Interfit), Austria (Erne Fittings) and Italy (Virgilio Cena). The Austrian group also has a related company in Germany (Siekmann Fittings). The investigation established that the three applicant and fully co-operating Community producers represented more than 50% of the Community production of TPFs and therefore constitute the Community industry within the meaning of Articles 4(1) and 5(4) of the basic Regulation.

E. SITUATION ON THE COMMUNITY MARKET

39. Consumption in the Community market

40. Community consumption was based on the combined volume of sales made by the applicant Community producers and other Community producers, based on the request, and imports from the countries concerned and imports from other third countries, both based on Eurostat.

41. On this basis, during the period considered, Community consumption increased by 26%, from 58 561 tonnes in 2002 to 73 519 tonnes during the IP. Tube and pipe fittings are used mainly in the petrochemical industry, construction, energy generation, shipbuilding and industrial installations which, combined with the recovery of the steel industry, may explain this rise.

42. TABLE 1 – Community consumption

Community consumption | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Tonnes | 58 561 | 62 122 | 64 480 | 56 255 | 65 667 | 73 519 |

Index | 100 | 106 | 110 | 96 | 112 | 126 |

Y/Y trend | 100 | 6 | 4 | -14 | 16 | 13 |

Source: EUROSTAT, request, verified questionnaire replies of the Community industry

43. Imports from the countries concerned

a) Volume and market share

44. Volumes imported from Malaysia and Korea decreased drastically from 404 to 11 tonnes. This seems to be the result of the anti-dumping measures in force since February 2002. Their market share is de minimis .

45. TABLE 2 – Imports from the countries concerned

Imports from the countries concerned | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Tonnes | 404 | 22 | 54 | 94 | 17 | 11 |

Index | 100 | 5 | 13 | 23 | 4 | 3 |

Y/Y trend | 100 | -95 | 8 | 10 | -19 | -1 |

Market share in % of Community Consumption | 1% | 0,04% | 0,08% | 0,17% | 0,03% | 0,01% |

Source: EUROSTAT

b) Price evolution of the imports and undercutting

46. Due to very limited imports from the countries concerned and in view of the large variety of different types of products, prices in Eurostat cannot be considered as a reliable source for a detailed analysis.

47. In the absence of co-operation in the countries concerned, the undercutting margins were calculated using the same methodology as in the request, i.e. by comparing the export prices of the countries concerned to the USA and prices of the applicants charged on the Community market. The undercutting margin is 25.2% for Korea and 53.3% for Malaysia.

48. Economic situation of the Community industry

a) Production, production capacity and capacity utilisation

49. The Community industry’s production increased by 5% during the period considered, while Community consumption increased by 26%.

50. TABLE 3 – Production volume

Production volume | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Tonnes | 46 454 | 43 504 | 47 155 | 40 881 | 49 300 | 48 922 |

Index | 100 | 94 | 102 | 88 | 106 | 105 |

Y/Y trend | 100 | -6 | 8 | -14 | 18 | -1 |

Source: Verified questionnaire replies of the Community industry

51. During the period considered, the production capacity of the Community industry increased by 6%, despite a slight decrease in 2003.

52. TABLE 4 – Production capacity

Production capacity | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Tonnes | 89 400 | 87 800 | 89 700 | 90 300 | 94 800 | 95 000 |

Index | 100 | 98 | 100 | 101 | 106 | 106 |

Y/Y trend | 100 | -2 | 2 | 1 | 5 | 0 |

Source: Verified questionnaire replies of the Community industry

53. During the period considered capacity utilisation decreased by 1%.

54. TABLE 5 – Capacity utilisation

Capacity utilisation | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

% | 52% | 50% | 53% | 45% | 52% | 51% |

Index | 100 | 95 | 101 | 87 | 100 | 99 |

Y/Y trend | 100 | -5 | 6 | -14 | 13 | -1 |

Source: Verified questionnaire replies of the Community industry

b) Sales volume and sales prices

55. The Community industry’s sales to unrelated customers on the Community market increased by 11% between 2002 and IP.

56. TABLE 6 – Community industry’s sales to unrelated parties

Community industry’s sales to unrelated parties | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Tonnes | 34 968 | 34 893 | 38 401 | 32 841 | 36 908 | 38 750 |

Index | 100 | 100 | 110 | 94 | 106 | 111 |

Y/Y trend | 100 | -0,2 | 10 | -16 | 12 | 5 |

Source: Verified questionnaire replies of the Community industry

57. During the period considered the average sales prices charged by the Community industry on the Community market increased gradually. The total increase between 2002 and the IP was 63%. This rise is partly explained by the increase in the cost of the main raw material, steel tubes, and partly by a shift in two Community producers' production scope to focus on more expensive special types.

58. TABLE 7 – Community industry’s sales price

Community industry’s sales price | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

EUR/tonne | 1 553 | 1 652 | 1 783 | 2 133 | 2 217 | 2 528 |

Index | 100 | 106 | 115 | 137 | 143 | 163 |

Y/Y trend | 100 | 6 | 8 | 23 | 5 | 20 |

Source: Verified questionnaire replies of the Community industry

c) Market share

59. The overall market share held by the Community industry from 2002 to the IP decreased by 7 percentage points.

60. TABLE 8– Market share of the Community industry’s sales

Market share of the Community industry’s sales | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Percentage of market | 60% | 56% | 60% | 58% | 56% | 53% |

Source: EUROSTAT and verified questionnaire replies of the Community industry

d) Growth

61. While Community consumption increased by 26% during the period considered, the volume of Community industry sales on the market increased by only 11% and the Community industry market share on the market decreased by 7 percentage points. Thus, the growing trend in Community consumption was not followed by a corresponding increase in Community industry sales.

e) Profitability and return on investments

62. During the period considered profitability, expressed as a percentage of net sales value to unrelated parties, developed as follows:

63. TABLE 9 – Profitability

Profitability | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Percentage of net sales value | 2% | 1% | 4% | 1% | 6% | 10% |

Source: Verified questionnaire replies of the Community industry

64. The Community industry’s profitability followed a positive trend, in line with the increase in the Community industry sales prices. Despite a significant decrease in 2003 and 2005, overall profitability reached 10%. This was due to a switch to the production of products with a higher added value during the period considered, when the average profit made by the Community industry was 4%.

65. Return on investments, expressed as profits/losses in relation to the net book value of investments, followed the same trend as profitability.

66. TABLE 10 – Return on investments

Return on investments | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

% | 6% | 2% | 11% | 4% | 18% | 37% |

Index | 100 | 37 | 184 | 62 | 310 | 618 |

Y/Y trend | 100 | -63 | 147 | -122 | 248 | 309 |

Source: Verified questionnaire replies of the Community industry

f) Cash flow

67. There were considerable fluctuations in cash flow between 2002 and 2005 and a dramatic increase in 2006 and during the IP. This increase of cash flow also indicates that the industry was recovering. This level of cash flow allows companies to invest in the TPF business again after low periods.

68. TABLE 11 – Cash flow

Cash flow | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

EUR | 1 310 693 | 3 826 570 | 2 378 520 | 1 233 797 | 7 559 501 | 10040180 |

Index | 100 | 292 | 181 | 94 | 577 | 766 |

Y/Y trend | 100 | 192 | -110 | -87 | 483 | 189 |

Source: Verified questionnaire replies of the Community industry

g) Investments and ability to raise capital

69. The Community industry increased investments by 65% during the period considered. Most of them were concentrated on machinery to increase productivity. None of the companies investigated mentioned any current difficulty in raising capital.

70. TABLE 12 – Investments

Investments | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

EUR | 5 839 416 | 5 824 908 | 3 438 352 | 7 422 926 | 9 986 636 | 9 643 822 |

Index | 100 | 100 | 59 | 127 | 171 | 165 |

Y/Y trend | 100 | -0,2 | -41 | 68 | 44 | -6 |

Source: Verified questionnaire replies of the Community industry

h) Stocks

71. The table below shows that closing stocks maintained a stable curve; nevertheless, in the period considered there is a small decrease of around 1%.

72. TABLE 13 – Stocks

Closing Stock in Volume | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Tonne | 7 233 | 7 115 | 7 449 | 7 206 | 7 580 | 7 190 |

Index | 100 | 98 | 103 | 100 | 105 | 99 |

Y/Y trend | 100 | -2 | 5 | -3 | 5 | -5 |

Source: Verified questionnaire replies of the Community industry

i) Employment, productivity and labour cost

73. After a decrease of 5% in 2003, during the period considered the overall labour force decreased by 2%.

74. TABLE 14 – Employment

Employment | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Number of employees | 760 | 725 | 719 | 692 | 729 | 741 |

Index | 100 | 95 | 95 | 91 | 96 | 98 |

Y/Y trend | 100 | -5 | -0,8 | -3 | 5 | 2 |

Source: Verified questionnaire replies of the Community industry

75. In line with the increase in production and the decrease in employment, productivity improved by 8% during the investigation period.

76. TABLE 15 – Productivity

Productivity | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Tonnes/employee | 61 | 60 | 66 | 59 | 68 | 66 |

Index | 100 | 98 | 107 | 97 | 111 | 108 |

Y/Y trend | 100 | -2 | 9 | -11 | 14 | -3 |

Source: Verified questionnaire replies of the Community industry

77. During the period considered the labour costs of the Community industry gradually increased. The total increase in labour cost for the period considered was 22%. The main increase in labour costs happened in a company which changed its product mix from commodities to specialized products, which required higher professional qualifications.

78. TABLE 16 – Labour Costs

Labour Costs/ Wages | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

EUR | 28 941 652 | 28 436 139 | 29 607 915 | 29 754 664 | 33 069 402 | 35 312 821 |

Index | 100 | 98 | 102 | 103 | 114 | 122 |

Y/Y trend | 100 | -2 | 4 | 1 | 11 | 8 |

Source: Verified questionnaire replies of the Community industry

79. Effect of other factors

a) Export activity of the Community industry

80. The Community industry’s exports of tube and pipe fittings during the period considered were not very stable, showing strong fluctuations. Overall, the level of exports to third countries decreased by 15%, this reduction being mainly due to the unfavourable EUR/USD exchange rate.

81. TABLE 17 – Exports of the Community industry

Exports of the Community industry | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Tonnes | 10 893 | 8 003 | 9 358 | 8 410 | 11 890 | 9 278 |

Index | 100 | 73 | 86 | 77 | 109 | 85 |

Y/Y trend | 100 | -27 | 12 | -9 | 32 | -24 |

Source: Verified questionnaire replies of the Community industry

b) Import volumes and prices from other third countries

82. Council Regulation (EC) Nº 964/2003 imposed anti-dumping duties on imports of TPFs from the People's Republic of China (58.6%) and Thailand (58.9%). Measures are applicable for the product concerned originated in China and consigned from one of the following countries: the Philippines, Indonesia, Sri Lanka and Taiwan. Despite the measures in force against imports from China, their exports to the EU are increasing steadily.

83. The total import volumes of TPFs from third countries other than the countries concerned more than doubled during the period considered, increasing from 9 654 tonnes in 2002 to 24 105 tonnes at the end of the IP.

84. Import volumes of TPFs into the Community from countries other than Korea and Malaysia developed as follows:

85. TABLE 18 – Imports from other third countries

Imports from other third countries | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Tonnes | 9 654 | 12 453 | 11 488 | 13 344 | 19 020 | 24 105 |

Index | 100 | 129 | 119 | 138 | 197 | 250 |

Y/Y trend | 100 | 29 | -10 | 19 | 59 | 53 |

Source: EUROSTAT

86. The market share of imports originating in third countries other than the countries concerned reached 33% of the EU consumption. This means an increase of 99% in the period considered from 16 to 33%.

87. TABLE 19 – Market share of imports from other third countries

Market share imports from other third countries | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

Percentage of market | 16% | 20% | 18% | 24% | 29% | 33% |

Index | 100 | 122 | 108 | 144 | 176 | 199 |

Y/Y trend | 100 | 22 | -14 | 36 | 32 | 23 |

Source: EUROSTAT and market information provided by the applicant producers

88. TABLE 20 – Main imports into the EU

Imports from other third countries in tonnes | 2002 | 2003 | 2004 | 2005 | 2006 | IP |

China | 859 | 1428 | 1772 | 2236 | 5846 | 8339 |

Taiwan | 1101 | 2372 | 1894 | 2540 | 4774 | 5854 |

Vietnam | 1835 | 1214 | 767 | 694 | 1224 | 1475 |

India | 1522 | 1569 | 1537 | 1763 | 1552 | 2096 |

Thailand | 676 | 1508 | 778 | 558 | 1622 | 2334 |

c) Recovery from the effects of dumping

89. As shown by the positive evolution of most of the indicators listed above, in the years 2002 to mid-2007 the economic situation of the Community industry has partially recovered from the injurious effect of dumped imports originating in the two countries concerned.

90. Conclusion on the situation of the Community industry

91. The measures in force have led to a partial recovery of the Community industry since 2002. The Community industry managed to increase its sales volumes and its prices. Injury indicators such as production, production capacity, profitability, investments, return on investments and productivity also showed a positive development. This demonstrates that the Community industry made efforts to improve its competitiveness. As a result, Community industry sales in the Community have been profitable since 2002.

92. However, the Community industry did not manage to take advantage of the significant growth in consumption in the Community and some of the positive factors are also the result of the disappearance of a significant Community producer in the United Kingdom, whose activities were taken over by two of the companies supporting the request.

93. It may nevertheless be concluded that the introduction of measures against Korea and Malaysia had a positive impact on the economic situation of the Community industry.

94. In view of the tentative recovery of the Community industry, the continuation of injury caused by dumped imports could not be established. It was therefore examined whether there would be recurrence of injury if the measures were allowed to lapse.

F. LIKELIHOOD OF RECURRENCE OF INJURY

95. As mentioned above, the Korean and Malaysian producers have the potential to redirect huge export volumes to the Community market if measures are allowed to lapse. According to the request, these countries are heavily dependent on export markets: 75% for Korea and 84% for Malaysia. In addition, it seems that other export markets, such as the USA and Japan, could not absorb the spare capacity, since export volumes to these countries are already significant, and therefore these would be directed to the Community market. In addition, it seems that there is a general overcapacity on the Asian market.

96. With regard to prices, it was found from US statistics that the Malaysian and Korean export prices to the USA were lower than those of the Community industry. Even though a detailed analysis could not be carried out because of the many different types of products, it is likely that these exporters will align their prices with the very low ones from the other Asian countries in order to regain their lost market share. Such pricing behaviour, attested by their non co-operation coupled with their ability to deliver significant quantities of the product concerned to the Community market, would suggest a negative impact on the Community industry.

97. In addition, it should be borne in mind that the Community industry needs to remain competitive to produce a certain volume of standard products, which are therefore in direct competition with the imports from Korea and Malaysia, in order to make economies of scale.

98. In the light of the above, it is concluded that allowing the measures to lapse would in all likelihood result in a recurrence of injury to the Community industry caused by the dumped imports.

G. COMMUNITY INTEREST

99. Introduction

100. According to Article 21 of the basic Regulation, it was examined whether a prolongation of the existing anti-dumping measures would be contrary to the interests of the Community industry as a whole. The determination of the Community interest was based on an appreciation of all the various interests involved, i.e. those of the Community industry, the importers/traders as well as the users of the product concerned. No submissions were received from users.

101. In order to assess the likely impact of the continuation or non-continuation of the measures, the Commission requested information from all interested parties mentioned above. The Commission sent sampling questionnaires to 64 importers of the product concerned and received eleven answers. The Commission sent a questionnaire to these eleven companies and only received two partial answers which did not provide any evidence that the measures in force had materially affected them. It is clear that the importers have found other sources of supply, as can be seen from the significant market share (33%) held by other third countries, which showed that conditions of competition on the Community market are ensured.

102. Furthermore, the fact that the present investigation is a review, thus analysing a situation in which anti-dumping measures have already been in place, allows the assessment of any undue negative impact on the parties concerned by the current anti-dumping measures.

103. On this basis, it was examined whether, despite the conclusions on continuation of dumping and likelihood of recurrence of injury, compelling reasons existed which would lead to the conclusion that it was not in the Community interest to maintain measures in this particular case.

104. Interests of the Community industry

105. The Community industry has proved to be a structurally viable industry. This was confirmed by the positive development of its economic situation at a time when effective competition had been restored after the imposition of the anti-dumping measures that are currently in force. Indeed, the efforts made by the Community industry to rationalise its production and enhance its competitiveness have led to a reasonable profit in the last two years of the period considered.

106. Given the above, it appears necessary to maintain the existing measures in order to avoid the adverse effects of dumped imports, which could endanger the recovery process of the Community industry and ultimately its very existence. It has also to be borne in mind that if the Community industry disappeared, there would also be a negative impact on the downstream industry, since the latter would see a significant reduction in its choice of suppliers.

107. Interests of importers/traders

108. As stated above, only two of the 64 unrelated importers replied to the Commission's questionnaire. However, they did not express any negative opinions on a possible continuation of measures. The lack of co-operation is in itself an indication that this sector did not suffer any substantial negative effect on its economic situation as a result of the measures. This is confirmed by the fact that the importers continued to trade the product concerned in significant volumes, even raising the volume imported during the period considered.

109. It is therefore concluded that the economic situation of the importers of the product concerned has not been negatively influenced by the imposition of the anti-dumping measures currently in force. On the same grounds, it is also unlikely that a continuation of the measures would lead to a deterioration in their economic situation in the future.

110. Interests of users

111. No users made themselves known in the current investigation. The users of the product concerned are mainly the petrochemical and building industries. Their lack of co-operation seems to confirm that the tube or pipe fittings represent a very small part of their total production costs and that the measures in force do not appear to have caused any loss of competitiveness for them.

112. It was concluded that maintaining the measures at the same level would not imply any deterioration in the situation of the users.

113. Conclusion on Community interest

114. The investigation has shown that the existing anti-dumping measures have allowed the Community industry to recover to a certain extent. If measures were allowed to lapse, this would endanger the recovery process and possibly lead to the disappearance of the Community industry. Therefore, the continuation of measures is in the interest of the Community industry.

115. Furthermore, in the past, the existing measures appear not to have had any significant negative effects on the economic situation of users and importers. It is therefore concluded that there are no compelling reasons against the continuation of the existing anti-dumping measures.

H. ANTI-DUMPING MEASURES

116. All parties concerned were informed of the essential facts and considerations on the basis of which it is intended to recommend that the existing measures be maintained. They were also granted a period within which to make representations after disclosure. No comments were received from Korea; one comment was received from a Malaysian company, but not such as to alter the above conclusions.

117. It follows from the above that, as provided for by Article 11(2) of the basic Regulation, the anti-dumping duties on imports of tube and pipe fittings originating in the Republic of Korea and Malaysia, imposed by Regulation (EC) No 1514/2002, should be maintained.

HAS ADOPTED THIS REGULATION:

Article 1

118. A definitive anti-dumping duty is hereby imposed on imports of tube and pipe fittings (other than cast fittings, flanges and threaded fittings), of iron or steel (not including stainless steel), with a greatest external diameter not exceeding 609.6 mm, of a kind used for butt-welding or other purposes, originating in the Republic of Korea and Malaysia and falling within CN codes ex 7307 93 11, ex 7307 93 19, ex 7307 99 30 and ex 7307 99 90 (TARIC codes 7307 93 11 91, 7307 93 11 93, 7307 93 11 94, 7307 93 11 95, 7307 93 11 99, 7307 93 19 91, 7307 93 19 93, 7307 93 19 94, 7307 9319 95, 7307 93 19 99, 7307 99 30 92, 7307 99 30 93, 7307 99 30 94, 7307 99 30 95, 7307 99 30 98, 7307 99 90 92, 7307 99 90 93, 7307 99 90 94, 7307 99 90 95, 7307 99 90 98).

119. The rate of the definitive anti-dumping duty applicable to the net, free-at-Community-frontier price, before duty, of the products described in paragraph 1 and produced by the companies below shall be as follows:

Country | Company | Rate of duty (%) | TARIC Additional Code |

Malaysia |

Anggerik Laksana Sdn Bhd, Selangor Darul Ehsan | 59.2 | A324 |

All other companies | 75 | A999 |

Republic of Korea |

All companies | 44 | - |

120. Unless otherwise specified, the provisions in force concerning customs duties shall apply.

Article 2

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

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

Done at Brussels, […]

For the Council

The President […] [pic][pic][pic]

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

[2] OJ L 228, 24.08.2002, p. 1.

[3] OJ L 139, 6.6.2003, p. 1, as last amended by Council Regulation (EC) No 1496/2004 (OJ L 275, 25.08.2004, p. 1.).

[4] OJ L 355, 01.12.2004, p. 4.

[5] OJ L 355, 01.12.2004, p. 9.

[6] OJ L 116, 29.04.2006, p. 1.

[7] OJ C 286, 23.11.2006, p. 8.

[8] OJ C 192, 18.08.2007, p. 15.