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* COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(91) 109 final 
Brussels, 4 Apr iI 1991 
Proposal for a 
COUNCIL REGULATION (EEC) 
imposing definitive anti-dumping duties 
in connection with the review of anti-dumping measures 
concerning imports of ferro-siI icon originating in Brazil 
(presented by the Commission) 
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EXPLANATORY MEMORANDUM 
1. In a notice published in the Official Journal of the European 
Communities (No C 109 of 3 May 1989), the Commission announced a review, 
under Article 14 of Regulation (EEC) No 2423/88, of the current anti­
dumping measures regarding imports into the Community of ferro-siI icon 
or iginat ing in BraziI. 
2. The Commission's investigation covered the period from 1 September 1989 
to 30 ApriI 1990. 
3. The normal value of the dumped product was established: 
for one Brazilian firm, on the basis of a constructed value 
determined by adding a reasonable profit margin to production 
costs. The dumping margin established was 12.18%; 
for the other Brazilian firms, on the basis of the prices charged 
on the domestic market by the producers concerned. The margin 
established ranged from 0% to 66.56% for the five exporting firms. 
4. For two Brazilian firms, which, while not exporting during the reference 
period, cooperated with the investigation, a normal value was 
established on the basis of prices they charged on the domestic market. 
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5. With regard to injury, exports from Brazil have increased; Community 
production capacity has fallen, although consumption has remained 
stable. In many cases, the resale price of imports was lower than that 
charged by Community producers; the prices of the imports in question 
were undoubtedly lower than those which would have enabled Community 
producers to cover their costs and obtain a reasonable profit. 
Moreover, with regard to the threat of injury, Brazil is maintaining a 
high production capacity although domestic consumption is relatively 
low. The Community is a market with attractive price levels. 
6. In these circumstances, it would seem appropriate to maintain anti­
dumping measures in the form of satisfactory price undertakings offered 
by six producer/exporters concerned and a duty of 12.20% for one 
producer not wishing to offer an undertaking. One firm has been 
entirely exempted from duty. 
7. To close any loopholes and to prevent the recurrence of the events which 
led to the initiation of this review, an anti-dumping duty should be 
imposed on imports of products sold to the Community by exporters other 
than those referred to at 5. This duty is 39%. 
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Proposal for a 
COUNCIL REGULATION (EEC) 
imposing definitive anti-dumping duties 
in connection with the review of anti-dumping measures 
concerning imports of ferro-siI icon originating in Brazi 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic Community, 
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on 
protection against dumped or subsidized imports from countries not members 
of the European Economic Community,1 and in particular Article 10 thereof, 
Having regard to the proposal from the Commission, presented after 
consultation within the Advisory Committee as provided for in the above 
Regulation, 
Whereas: 
A. PROCEDURE 
1. Council Regulation (EEC) No 3650/872 imposed a definitive anti­
dumping duty on imports of ferro-siI icon originating in Brazil. This 
duty does not apply to the product manufactured and exported by 
Companhia Brasileira Carbureto de Calcio SA and Electrometalur 
(currently trading as Rima SA) which were not dumping, nor to 
Italmagnesio SA, which, when the duty was imposed, offered a price 
undertaking which was considered acceptable by the Commission.3 
1 0J No L 209, 2.8.1988, p. 1. 
2 OJ No L 343, 5.12.1987, p. 1. 
3 OJ No L 219, 8.8.1987, p. 24. 
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2. Commission Regulation (EEC) No 2409/873 and Council Regulation (EEC) 
No 341/904 imposed measures on imports originating in the Soviet 
Union, Norway, Sweden, Iceland, Venezuela and Yugoslavia. 
3. In their request for a review lodged in November 1989, the Brazilian 
producers and/or exporters claimed that they were no longer dumping 
this product and that the Community industry was therefore no longer 
suffering material injury connected with the dumping of Brazilian 
products. The measures adopted in 1987 should therefore be repealed 
or amended. 
4. Having decided, after consultation, that there was sufficient evidence 
to Justify a review, the Commission began an investigation in 
accordance with Article 14 of Council Regulation (EEC) No 2423/88. As 
the Commission has, moreover, reason to believe that the circumstances 
cited by some Brazilian exporters are equally applicable to other 
Brazilian producer/exporters, the review was extended to all Brazilian 
producer/exporters.5 
5. The Commission officially notified the exporters, Community producers 
and importers known to be concerned and gave the parties concerned the 
opportunity to make known their views in writing and to request a 
hearing. 
6. The Community producers, the exporters and some importers made their 
views known fn writing. 
7. Some exporters and several importers and consumers of ferro-siI icon 
requested and were granted hearings. 
4 OJ No L 38, 10.2.1990, p. 1. 
5 OJ No C 109, 3.5.1990, p. 5. 
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8. The Commission sought and verified all the information it deemed 
necessary for the purposes of determining dumping, injury and the 
threat of injury and carried out inspections at the premises of: 
- Community producers 
Pechiney Electrométallurgie SA, France, 
SKW Trostberg AG, Germany, 
Carburos Metâlicos, Spain, 
Industria Elettrica Inde I, Italy, 
UtiIizzazioni Elettro Industrial (UEI), Italy. 
- Community importers 
Considar Europe SA, Belgium, 
Sogem Rohstoffhandel GmbH, Germany. 
- BrazlI Ian producer/exporters 
Companhia Bras Ile ira Carbureto de Calcio (CBCC), 
Companhia Italmagnesio SA, 
Companhia Ferroligas da Bahia - Ferbasa, 
Companhia Cimento Portland Maringa, 
Companhia Paulista de Ferroligas, 
Companhia Ferroligas Minas Gérais - Minasiigas, 
Companhia Ferroligas Piracicaba Ltda, 
Companhia Rima Eletrometalurgia SA. 
9. The Commission received and used information from the importer 
Marc Rich, Zug, Switzerland. 
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10. All producer/exporters were informed of the principal facts and 
considerations which would serve as the basis for the recommendation 
to impose definitive measures. They were also given time to submit 
their comments following the communication of this information. Their 
comments were examined and, where appropriate, taken into account in 
the Commission's conclusions. 
11. The dumping investigation covered the period from 1 September 1989 to 
30 April 1990. 
B. PRODUCT 
1- Description of the product 
12. The product concerned is ferro-siI icon containing between 10% and 96% 
of silicon by weight and falling within CN codes 7202 21 10, 
7202 21 90 and ex 7202 29 00. 
2. Like product 
13. The Commission established that the ferro-siI icon produced in the 
Community and that exported from Brazil were like products in all 
essential physical and technical properties. 
C. DUMPING 
1- Normal value 
14. In general, itormat value was calculated firm by firm and month by 
month and based on the prices chargedon the dcmestte market by seven 
Brazilian producers, five of wtiich exported to the Community during 
the reference perfod am* provided sufficient evidence. 
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15. Normal value was also calculated for two Brazilian producers which had 
not exported to the Community in the reference period. These 
exporters cooperated fully with the investigation and expressed a 
desire to export to the Community in the near future. 
16. During the reference period, one Brazilian producer made negligible 
and unrepresentative domestic sales, averaging a loss. It was 
therefore necessary to find another method of calculating normal 
value. Normal value was constructed on the basis of average monthly 
fixed and variable raw material and manufacturing costs - weighted 
according to the volume of export production - together with the 
selling costs, administrative expenditure and general overheads. 
Allowance was also made for a reasonable profit margin of 6%. 
17. To offset the inflationary effect of domestic prices in Brazil, normal 
values were expressed on a monthly basis in US dollars and according 
to the monthly average exchange rate. 
2. Export prices 
18. Export prices - expressed in US dollars - were based on the prices 
actually paid or payable for products sold for export to the 
Community. Where exports were made to subsidiary companies in the 
Community or where there was a compensatory arrangement between the 
exporter and the importer, export prices were determined on the basis 
of the price at which the imported product was first sold to an 
independent purchaser, with due allowance for all costs borne between 
import and resale of the products concerned and for a reasonable 
profit margin of 3%, calculated on the basis of the profit margin of 
independent importers of the product. All these sales were made 
before payment of the anti-dumping duty. 
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3. Comparison 
19. In comparing normal value with the export prices on a transaction-by-
transaction basis, the Commission took account when appropriate and 
where sufficient evidence was provided, of differences affecting the 
comparability @f prices; such adjustments were concerned mainly with 
payment and delivery terms, transport and insurance costs and 
different forms of presentation and packaging. 
20. Costs resulting from non-recoverable waste, incurred at each loading 
and unloading in the export process, were also deducted from the 
export prices. Where producers had failed to quantify such costs, a 
percentage deemed reasonable in the light of all the data verified 
during the investigation with other producers which did provide such 
evidence was deducted from the selling price to obtain the net ex-
works price of exports. 
21. Given Brazil's high and relentless inflation, normal values and export 
prices were compared in US dollars. 
22. All comparisons were made at the ex-works stage. 
4. Margin 
23. Comparison of normal value with the export prices for the period from 
September 1989 to April 1990 shows that five Brazilian producers' 
exports to the Community were being dumped, with the following average 
margins based on the free-at-Community-frontier price: 
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- ItaImagnesio SA 66.56% 
- Cia. Cimento Port land Maringa 39.31% 
- Cia. Ferroligas da Bahia 41.18% 
- Cia. Ferroligas Minas Gérais 26.03% 
- Rima Eletrometalurgia SA 12.18% 
- Cia. Brasilelra Carbureto de Calcio SA 0% 
D. INJURY 
24. The Commission's task was to determine whether, in spite of the anti­
dumping measures imposed on certain exporters, there was injury or 
threat of injury. 
I. CURRENT SITUATION 
1• Volume and price of imports 
25. Brazilian exports to the Community have increased, rising from 
7 000 tonnes in 1986 to 17 000 tonnes in 1987, the year the anti­
dumping measures entered into force, and reaching some 22 000 tonnes 
in 1990. Brazil's market share grew from about 1% in 1986 to over 4% 
in 1990. This relatively small market share must be considered in the 
light of that of other countries, such as Norway, Sweden, Iceland, 
Venezuela, the Soviet Union and Yugoslavia, which between them hold 
about 65% and, having been guilty of dumping, are subject to measures. 
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26. The Commission also established that while during the reference period 
the resale prices of the imports originating in Brazil were improved 
by the anti-dumping measures in force, many cases were found in which 
they remained lower than those charged by Community producers. 
2. Impact on the Community industry 
The Commission took note of the following information: 
(a) Community capacity and production 
27. Between 1986 and 1990 Community production capacity fell from 
285 000 tonnes to 252 000 tonnes; in reducing its capacity, the 
Community industry has sought to specialize to some extent in an 
attempt to limit its losses in the face of downward pressure exerted -
despite the anti-dumping measures in force - by exporters of non-
member countries and Brazil in particular, on prices for standard and 
other products in the Community. 
28. Community production has fallen by about 41%: standing at 
227 000 tonnes in 1986, it fell to 133 000 tonnes in 1990 and part of 
this output was exported or stockpiled. 
(b) Market share and consumption 
29. Between 1986 and 1990 the Community industry's market share shrank 
from 39% to 20%, while annual Community consumption stabilized at 
about 500 000 tonnes in the same period: consumption obviously 
benefited imports from non-member countries, including Brazil. 
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(c) Prices 
30. In almost all cases, the resale prices for dumped imports during the 
reference period would not have covered the costs of Community 
producers and allowed them a reasonable profit; in an attempt to 
preserve their sales and their share of the Community market, 
Community producers were forced during the reference period to sell 
their products at ever-lower prices until they could not even cover 
costs. 
(d) Profits 
31. The financial performance of the Community industry was negative from 
1986 to 1987. Only in 1988 did a number of firms make a small profit. 
There was a brief recovery in the first half of 1989 owing to a 
substantial increase in the selling prices of the product in question. 
This relative improvement was modest, despite the upturn in the iron 
and steel industry, which is the main customer for the product 
concerned, and despite restructuring, which allowed better, though 
still not satisfactory, capacity utilization. During the reference 
period, the Community industry once more registered appreciable 
losses. The current anti-dumping measures did, however, curb firms' 
losses at a time when prices were falling. 
3. Cause and effect and other factors 
32. The combination of the increase in imports originating in Brazil, the 
increase in their market share, the pressure exerted by the prices of 
those imports and the worsening situation in the Community industry 
despite the restructuring undertaken by the Community producers shows 
that the position of the Community industry remains precarious in 
spite of the current anti-dumping measures. 
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In such a situation, low-priced imports from Brazil further debilitate 
the industry and constitute an additional injury. 
33. The Commission examined whether other factors could be behind the 
injury caused to the Community industry, such as imports of products 
originating in other non-member countries. It established that, while 
other non-member countries held a substantial share of the market, 
measures had been imposed on dumped imports from these countries, 
namely Norway, Sweden, Iceland, Venezuela, Yugoslavia and the USSR. 
It would seem that all these countries have contributed to the 
difficulties of the Community industry. These countries would be the 
object of discrimination, if measures were not taken against Brazil, 
which has also played a part in the aggravating the situation in the 
Community. 
34. The Commission therefore concluded, on the basis of the evidence 
above, that the imports of products originating in Brazil concerned by 
this proceeding were, by themselves, a cause of material injury to 
the Community industry. The Council confirms this conclusion. 
II. THREAT OF INJURY 
35. There has been a significant increase in dumped imports originating in 
Brazil. If sustained, this rate of increase would have grave 
consequences for the Community industry. Brazil's production capacity 
of 280 000 tonnes, moreover, accounts for about 16% of the total for 
market economy countries, which is also a significant proportion of 
world capacity. In 1989 its output reached about 230 000 tonnes, 
while domestic consumption peaked at about 120 000 tonnes. This 
disparity leaves about 100 000 tonnes available for export. 
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36. As regards the possibility of Brazil adopting a more active export 
policy should the anti-dumping measures expire, it should be borne in 
mind that the Community is a very attractive market by virtue of its 
price levels, its terms of payment and the quality of its currencies. 
37. The investigation has also shown that low-priced Brazilian imports 
constantly undercut the Community industry. For all the reasons given 
in recitals 34, 35 and 36, the Council finds that there is also a 
threat of injury. 
III. CONCLUSIONS 
38. In these circumstances, the Commission concludes that the present 
anti-dumping measures should be maintained in an amended form and new 
measures be imposed on some exporters. The Council confirms this 
conclusion. 
E. COMMUNITY INTEREST 
39. It is in the Community's interest to restore fair competition, without 
the disturbance by unfair practices. Continued dumping would threaten 
the survival of the Community industry. 
In view of ferro-siI icon's importance in steelmaking, it could not be 
in the Community's interest to depend wholly on non-Community 
suppliers, particularly since some are located at a great distance 
from the Community. 
40. The representatives of Community manufacturing industries and of 
individual firms have argued that it would be against the Community's 
interest to keep the protective measures in force, since they would 
weaken competitiveness against imports of finished products 
or i g i nat i ng in non-member count ries. 
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41. As is the case for any raw material, it is probable that price rises 
influence the costs of the manufacturing industries. However, no firm 
provided the Commission with clear evidence of a specific effect of 
ferro-siI icon price increases on its production costs; nor was 
evidence supplied of the possible impact of an increase in 
manufacturers' prices on their total sales. The Commission considers 
that the impact would be slight, particularly in view of the low 
percentage of ferro-siI icon used in the production of a tonne of steel 
and the relatively small proportion of the overall cost of a tonne of 
steel represented by this product. 
42. Having carefully compared the above arguments and the particularly 
serious problems faced by the Community ferro-siI Icon industry, which 
can be attributed to a significant extent to the imports in question, 
the Commission has concluded that it is in the Community's interest to 
maintain anti-dumping measures. The Council confirms this conclusion. 
F. UNDERTAKINGS 
43. Six Brazilian producer/exporters, 
- Companhia de Cimento Portland Maringa, Sao Paolo, 
- Companhia de Ferroligas da Bahia - Ferbasa, Pojuca, 
- Companhia Ferroligas Minas Gérais - Minas Ligas, Contagem, 
- Companhia Italmagnesio SA, Sao Paolo, 
- Companhia Ferroligas Piracicaba Ltda, Sao Paolo, 
- Companhia Paulista de Ferroligas, Sao Paolo 
have offered price undertakings which the Commission considers 
satisfactory.6 They will bring the import prices of ferro-siI icon 
originating in Brazil up to a level considered sufficient to eliminate 
the Injury to the Community industry. 
6 OJ No L ... , .•. 
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G. DUTIES 
44. With regard to the firm Rima Eletrometalurgla SA, Belo Horizonte, 
which has offered no undertaking, the Commission considered that a 
duty deemed sufficient to eliminate the dumping margin determined 
should be imposed. 
To facilitate customs clearance the Commission considered that the 
duty should take the form of an ad valorem ant i-dumping duty. The 
Council confirms this conclusion. 
Expressed as a percentage of the net free-at-Community-frontier price 
of the product before duty, the rate of duty is 12.2%. The Council 
confirms this conclusion. 
45. To close any loopholes, an ant i-dumping duty should be imposed on 
imports of the Brazilian product sold to the Community by Brazilian 
firms other than those referred to in recital 8. The rate of duty to 
be imposed on these other Brazilian exporters was determined on the 
basis of the weighted average injury to the Community industry, which 
is lower than the highest dumping margin. The injury threshold was 
based on the target price required by the Community industry, which 
consists of the industry's weighted average production costs with the 
addition of a reasonable profit margin. 
Expressed as a percentage of the net free-at-Community-frontier price 
of the product before duty, the rate of duty is 39%. The Council 
confirms this conclusion, 
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HAS ADOPTED THIS REGULATION: 
Article 1 
1. A definitive anti-dumping duty is hereby imposed on imports of ferro-
si I icon falling within CN codes 7202 21 10, 7202 21 90 and 
ex 7202 29 00 (TARIC code 7202 29 00 * 10) and originating in Brazil. 
2. The duty, expressed as a percentage of the net free-at-Community-
frontier price of the product before duty, shall be 39% (additional 
TARIC code - 8537). 
Free-at-Community-frontier prices shall be net if the terms of sale 
provide for payment within thirty days of consignment. They shall be 
increased or reduced by 1% for each month's increase or decrease in 
the period of payment. 
3. The duty, expressed as a percentage of the net free-at-Commun ity-
frontier price of the product before duty, is 12.2% for the products 
referred to in paragraph 1 which are manufactured and exported direct 
to the Community by the Brazilian firm Rima Eletrometalurgla SA, Belo 
Horizonte (additional TARIC code - 8538). 
4. The duty shall not apply to products produced and/or exported by the 
fol lowing BraziIian firms (additional TARIC code - 8539): 
- Companhia Bras Lie ira Carbureto de Calcio, Rio de Janeiro, 
- Companhia de Cimento Portland Maringa, Sao Paolo, 
- Companhia de Ferroligas da Bahia - Ferbasa, Pojuca, 
- Companhia Ferroligas Minas Gérais - Minas Ligas, Contagem, 
- Companhia ItaImagnesio SA, Sao Paolo, 
- Companhia Ferroligas Piracicaba Ltda, Sao Paolo, 
« Companhia Paulista de Ferroligas, Sao Paolo. 
5. 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 Official Journal of the European Communities. 
This Regulation shall be binding in its entirety and directly applicable in 
a I I Member States. 
Done at Brussels , For the Council 
The President 
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. ISSN 0254-1475 
COM(91) 109 final 
DOGUI\l 
EN 02 
Catalogue number : CB-CO-91-135-EN-C 
ISBN 92-77-70929-4 
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