Proposal for a COUNCIL REGULATION (EC) imposing a definitive anti-dumping duty on imports of silicon carbide, originating in the People' s Republic of China, Poland, the Russian Federation and Ukraine
Date: 1994-03-09
Institutions: European Commission
Subjects: USSR, anti-dumping duty, import, republic, semi-metal, third country

COMMISSION  OF THE  EUROPEAN  COMMUNITIES 

COM(94) 30  final 

Brussels,  09.03.1994 

Proposal  for a 
COUNCIL  REGULATION (EC) 
imposing  a definitive  anti-dumping  duty on  imports of  silicon  carbide, originating in 
the People's  Republic  of  China, Poland, the Russian  Federation  and Ukraine 

(presented  by the  Commission) 

Explanatory  Memorandum 

By  Decision  86/497/EEC,  the  Commission  accepted  in  October  1986 
price  undertakings  offered  by  exporters  in  connection  with  the 
anti-dumping  proceeding  concerning  imports  of  silicon  carbide 
originating  in  Norway,  the  People's  Republic  of  China,  Poland  and 
the former  USSR. 

In  1991  the  Commission  received  a  request  for  a  review  of  these 
measures  under  Article  15  of  the  basic  anti-dumping  regulation 
(Council  Regulation  2423/88),  lodged  by  the  European  Chemical 
Industry  Council  (CEFIC),  and  subsequently  announced  a review  by a 
notice published  in official Journal No  C 279 of 26.10.1991. 

The  review  investigation  revealed  that,  notwithstanding  the 
measures  in force, imports of silicon carbide originating  in China, 
Poland,  the  Russian  Federation  and  Ukraine  were  dumped  and  were 
continuing  to cause injury to the Community  industry. 

Imports  from  Norway  were  found  neither  to  be  dumped  nor  causing 
injury. It was also found that the lapsing of the existing  measures 
with  regard  to  Norwegian  exporters  would  not  lead  to  an  imminent 
recurrence  of injurious  dumping. 

*  With  regard  to  the  former  USSR,  imports  of  silicon  carbide  during 
the  period  under  investigation  originated  only  in  the  Russian 
Federation  and  Ukraine. The anti-dumping  proceeding  concerning  the 
other former USSR Republics is consequently  terminated. 

In the  light  of the  investigation  findings  it  is considered  in the 
interest  of  the  Community  to  take  measures  in  the  form  of  the 
imposition  of an anti-dumping  duty. 

The  following rates of duty are proposed: 

China 
Poland 
Russian Federation 
Ukraine 

52.6% 
8.3% 
23.3% 
23.3% 

The duty  for the Russian Federation would be a residual duty  as the 
sole  Russian  exporter,  together  with  the  Russian  Government,  have 
offered undertakings which the Commission considers  acceptable. 

It  is  therefore  proposed  that  the  Council  imposes  a  definitive 
anti-dumping  duty  on  imports  of  silicon carbide  originating  in the 
People's  Republic  of  China,  Poland,  the  Russian  Federation  and 
Ukraine. 

Proposal  for a 
COUNCIL  REGULATION  (EC) 

imposing  a definitive  anti-dumping  duty on imports of  silicon  carbide, originating in 
the  People's  Republic of  China,  Poland, the  Russian  Federation  and Ukraine 

THE COUNCIL OF THE EUROPEAN  UNION, 

Having regard to the Treaty  establishing  the  European  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(,), and in particular  Articles  12,  14 and  15  thereof, 

Having  regard  to  the  proposal  submitted  by  the  Commission  after  consultation  within  the 

Advisory  Committee, 

Whereas: 

A.  PROCEDURE 

(1) 

(2) 

In  October  1986,  the  Commission,  by  Decision  86/497/EEC(2),  accepted  price 
undertakings  offered  by  the  exporters  in  Norway,  the  People's  Republic  of  China 
(hereinafter  referred to as "China"), Poland and the former USSR, in connection with 
the  anti-dumping  proceeding  concerning  imports  of  silicon  carbide.  The  measures 
concerning Norway were suspended by Council Regulation (EC) No 5/94(3) with effect 
from  1 January  1994. 

Following  the publication  in April  I991(4) of a notice of  the impending expiry  of the 
measures  in  force,  the  Commission  received  a  request  for  a  review  lodged  by  the 
European  Chemical  Industry  Council  (CEFIC),  on  behalf  of  producers  allegedly 
representing  a major part of total  Community  production  of  silicon carbide. 

( i) 

CO 

(3) 

(4) 

OJ No  L 209,  2 8.1988, p.  I. 
OJ No  L 287,  10 10.1986, p. 25. 
OJ No  L 3,  5 I  1994, p. 1. 
OJ No C  100,  17.4.1991, p.  17. 

(3) 

(4) 

(5) 

Subsequently,  in  a  notice  published  in  the  Official  Journal  of  the  European 

Communities'^, the  Commission  announced  a review  of  the  anti-dumping  measures 

in force. 

The  Commission  notified  the  exporters  and  importers  known  to  be  concerned,  the 
representatives of the exporting countries and the complainant Community producers, 
and gave the parties directly  concerned the opportunity to make their views known in 
writing  and to request a hearing. 

All  complainant  Community  producers  replied  to  the  questionnaire  and  made  their 
views  known  in  writing.  CEFIC  requested  and  was  granted  a  hearing  by  the 
Commission. 

The Polish  exporter,  Intervis Co. Ltd, Warsaw, replied to the questionnaire and made 
its  views  known  in  writing.  The  Norwegian  exporters  listed  below  replied  to  the 
questionnaire only  in relation to their export transactions covered by the measures in 
force.  Three Chinese corporations, the China Minerals Import and Export Corporation, 
the  China  Abrasives  Export  Corporation  and  the  China  Metallurgical  Import  and 
Export Corporation, Jiangu  Branch, representing  a minor portion of  total  imports of 
silicon  carbide  originating  in  China,  replied  to  the  questionnaire.  Three  export 
organizations of the former  USSR  were sent questionnaires, but did not reply. 

The original  investigation  covered the whole of the former USSR.  Since  information 
at  the  disposal  of  the  Commission  indicates  that  the  silicon  carbide  concerned 
originates  only  in  the  Russian  Federation  (herinafter  referred  to  as  "Russia")  and 
Ukraine, this review  investigation  is  limited to  imports of  silicon  carbide originating 
in these two  countries of the former  USSR. 

(6) 

Four importers replied to the questionnaire. 

(7) 

The  Commission  sought  and  verified  all  information  it  deemed  necessary  for  the 
purposes  of  a  determination  and  carried  out  investigations  at  the  premises  of  the 
following  companies: 

(5) 

OJ No C 279, 26.10.1991,  p.  II. 

-  complainant Community  producers: 

-  Pechiney  Electrometallurgie (France) 
-  Elektroschmelzwerk  Kempten GmbH (Germany) 
-  Samatec,  Societâ  Abrasivi  e  Materiali  Ceramics  S.A.  (Italy) 
-  Navarro SA  (Spain) 

-  producers/exporters: 

-  Arendal  Smelteverk  AS.  (Norway) 

-  Norton  AS.  (Norway) 
-  Orkla-Exolon A.S.  (Norway) 

-  importers: 

-  Frank  and Schulte GmbH (Germany) 

-  Ferrocarbon  GmbH (Germany) 

-  reference  country: 

- Exolon  ESK Company, Tonawanda, USA 
- Norton Company, Worchestef,  USA 

(8) 

The investigation  of  dumping covered the period  from  1  Juty  1990 lo  30 June  1991 
(investigation period). 

(9)  Owing  to  the  complexity  of  the  investigation  and the  volume  of data gathered, the 
investigation could not be concluded within the normal time limit of ©ne year provided 
for in Article  7(9)(a) of  Regulation (EEC) No 2423/88 (hereinafter  referred to as "the 
basic  Regulation"). 

B. PRODUCT UN0ER <3DN!^DÈRAT»0N AM» UB®. PRODUCT 

(10)  The  product  covered  by  the  complaint  and  for  which  the  review  investigation  was 
initiated  is  silicon  carbide falling  within  CN  code  2849  20  00.  It is  identical  to the 
product  which  was  the  subject  of  the  previous  investigation  and  for  which  price 
undertakings  were accepted. 

(11)  The production  process of silicon  carbide  is such  that output automatically  comprises 
a  variety  of  qualities  of  silicon  carbide.  These  qualities  can  be  segregated  into  two 
main  grades,  crystalline  and  metallurgical.  The  crystalline  grade  is  normally  used, 
depending  on the  quality, in the  manufacture  of abrasive tools, grinding  wheels, high 
quality  refractory  products,  ceramics,  plastic  materials  etc.,  while  the  metallurgical 
grade  is normally  used  in  foundry  and  blast  furnace  operations  as a silicon  carrier. 

The  various  qualities  of  silicon  carbide  do  not  entail  any  significant  differences  in 
basic  physical  characteristics,  although  in  use, differences  occur. 

Given that both  main grades result from  the same production  process - one cannot be 
produced  without  the  other  -  and  that  the  metallurgical  grade  can  technically  be 
replaced  by  the  crystalline  grade,  both  grades  of  silicon  carbide  and  their  different 
qualities  should  be  considered  as  forming  one  product  for  the  purpose  of  this 
proceeding. 

(12)  The  investigation  showed  that  the  product  produced  and  sold  by  the  Community 
producers on the Community  market  is identical  in  its particular  characteristics to the 
silicon  carbide  imported  from  the  five  countries  in  question.  It  should  therefore  be 
considered  as  a  like  product  within 
the 
basic  Regulation. 

the  meaning  of  Article  2(12)  of 

C.  COMMUNITY  INDUSTRY 

(13)  The  complainant  producers  continue  to  manufacture  more  than  90% of  Community 
output  of  silicon  carbide.  It was therefore  considered  that  these producers  constitute 
a  major  proportion  of  total  Community  production  of  this  product. 

Account  was  taken  of  the  fact  that  some  Community  producers  imported  small 
quantities  of  silicon  carbide  from  the  countries  under  investigation.  Since  these 
imports were test purchases in order to analyse the products produced  by  competitors 
and represented, in any event, negligible quantities, there appears no reason to exclude 
these  Community  producers  from  the  "Community  industry",  in  accordance  with 
Article  4(5) of  the basic  Regulation.  Indeed, these  importing  Community  producers 
were neither  participating  in, nor  benefiting  from  nor  shielded  from  dumping  by  the 
countries  concerned. 

D. THE  PRESENT SITUATION  IN THE COMMUNITY  MARKET 

(14) 

In order to establish  whether the expiry  of  the measures in  force  would lead  again  to 
dumping and  injury  or threat of  injury,  it was first  necessary  to examine the  present 
economic  situation  of  the Community  industry. 

(a) 

Production, capacity utilization and stocks 

(15)  The  production  of  silicon  carbide  by  the Community  industry  showed  a brief  upturn 
between  1988 and  1989, from  101  500  tonnes to  107  500 tonnes, but  then  gradually 
declined  to  101 700  tonnes  in  1990  and  to  95  000  tonnes  during  the  investigation 
period.  This  represented  a  decrease  of  6.4%  when  compared  to  1988,  11.6%  when 
compared  to  1989 and  6.5% when  compared  to  1990. 

Since the production  capacity  of the Community  industry  remained  stable at  129 000 
tonnes,  its  utilization  rate  which  stood  at  79% in  1988  increased  to  83% in  1989 to 
decline  to  74% in  the investigation  period. 

During this period  the stocks of  the Community  industry  rose gradually  from  17 000 
tonnes  to  20  500 tonnes, i.e.  by  20 6% 

(b) 

Sales 

(16)  Between  1988 and the end of the investigation  period, the quantity  of  silicon  carbide 
sold  on  the  Community  market  by  the  Community  industry  gradually  decreased  by 
15% from  93 419 tonnes to  79 385 tonnes. 

(c) 

Profitability 

(17) 

It  was  found  that  the  Community  industry  on  the  whole  suffered  a  considerable 
deterioration  in profitability  after  1988. In  1990, although some Community  producers 
were  still  profitable,  the  industry  on  average  incurred  losses,  while  during  the 
investigation  period  all  Community  producers  incurred  losses. 

(d) 

Employment 

(18)  The  workforce  of  the complainant  producers  has generally  declined  and one plant in 

Italy  was closed  during  the  investigation  period. 

(e) 

Community  consumption 

(19)  Between  1988  and  the  investigation  period  the  total  estimated  consumption  in  the 

Community  of 

the  product  concerned 

increased 

from  152 977 

tonnes 

to 

185 400  tonnes, i.e.  an  increase of  21%  since  1988. 

(f)  Market share of  the Community  industry 

(20)  The Community  market share of  the Community  industry  recovered  as a result of the 
anti-dumping  measures  adopted  in  1986  from  52.5%  in  1984  to  61.1% in  1988. 
However,  after  1988  this  market  share  declined  to  42.8%  at  the  end  of  the 
investigation  period. 

(g) 

Conclusion 

(21) 

It  was  accordingly  concluded  that,  in  spite  of  the  price  undertakings  in  force,  the 
Community  industry  continues  to  show  clear  signs  of  economic  difficulties.  This 
situation  has  consistently  deteriorated  since  1988,  manifested  on  the  one  hand  by  a 
decline  of  production,  capacity  utilisation  and  sales, and, on  the other,  by  increasing 
stocks, 
losses  and  a  declining  market  share 
notwithstanding  the  increase  in  Community  consumption. 

loss  of  employment,financial 

E. THE BEHAVIOUR OF THE EXPORTERS CONCERNED 

(22) 

It  was  also necessary  to  examine  the  behaviour  of  the  exporters  concerned. 

(a) 

Volume  and market share of  imports from the exporting  countries concerned 

(23)  The  volume  of  Norwegian  imports  increased  from  42  035 tonnes to 49  185 tonnes 
between  1988 and  1989, but decreased thereafter  to 45  288 tonnes in the investigation 
period.  The  market share of the Norwegian  imports  increased slightly  between  1988 
and  1989  from  27.5%  to  28.8%,  but  eroded  over  1990  to  25.7%  and  in  the 
investigation  period  to 24.4%. 

Imports  from  China  increased  between  1988  and  the  investigation  period  from 
1  758  tonnes to 28  295 tonnes; imports from  Poland  rose over the same period  from 
1  276  tonnes  to  3 497  tonnes  and  from  Russia  and  Ukraine  from  5 078  tonnes  to 
12 921 tonnes.  This corresponds to an  increase  in market share over the same period 
from  1.1% to  15 3% for  China,  0.8% to  1.9% for  Poland  and  from  3.3% to  7%  for 
Russia  and  Ukraine.  The  total  volume  of  imports  from  China,  Poland,  Russia  and 
Ukraine has accordingly  increased  by  more than  four  and a half  times in this  period. 
The market  share of the four  countries taken  together  increased  from  5.2% to 24.2% 
between  1988  and  the  investigation  period. 

The volume  of  imports from  China,  Norway,  Poland,  Russia  and  Ukraine has, taken 
together,  increased  from  50  147 tonnes in  1988 to 90 001 tonnes in the  investigation 
period  corresponding  to  an  increase  in  market  share from  32.7% to 48.6%. 

(b) 

Prices 

(24) 

It was  investigated  whether  the  exporting  producers  were  undercutting  the  prices  of 
the  Community  producers  during  the  investigation  period.  A price  comparison  was 
made  on  the  basis  of  sales  by  both  the  Community  industry  and  the  exporters  to 
unrelated  customers  at the  same  level  of  trade on  the most  important  markets of  the 
Community.  In  order  to  ensure  a  fair  comparison,  prices  of  similar  qualities  were 
compared. 

This comparison  showed  significant  price undercutting on the part of the exporters in 
all  countries  involved  with  the  exception  of  Norway.  Norwegian  prices  were  found 
to oscillate  around  the prices charged  by  the Community  industry. 

For die Polish  exporter, the  Community  producers' prices were found  to  be  undercut 
by  margins  of  up  to  29%.  Exports  from  Russia  and  Ukraine  were  undercutting 
Community  producers' prices by margins from  23% to 49%, and  exports  from  China 
by  margins  from  50% to  71%. 

(c) 

Price undertakings 

(25)  This price examination  also  revealed  that the exports from  China,  Russia and  Ukraine 
were  consistently  sold  in  violation  of  the  undertakings  agreed  in  the  previous 
proceeding  with  the  Commission.  Although  the  Polish  exporter  was  found  to  be 
undercutting,  it  did  not  violate  its  price  undertaking.  The  Norwegian  exporters  also 
respected  their  price  undertakings. 

(d) 

Conclusion 

(26)  The increased  market penetration  of imports from  China, Poland,  Russia and Ukraine, 
taken  together  in  combination  with  the  price  undercutting  established  for  these 
countries and the breach  of the price  undertakings  by all but  Norway  and  Poland, led 
to  the  conclusion  that  it  was  necessary  to  examine  whether  dumping  is  occurring 
which  contributed  to  the  deteriorated  situation  of  the  Community  industry  and 
whether  the  expiry  of  protective  measures  would  lead  to  a  recurrence  of  dumping 
and  injury. 

F.  RECURRENCE OF DUMPING 

(I) 

Reference  country 

(27)  The countries covered by this proceeding, with the exception of Norway, were, during 
the period of  investigation,  non-market  economy  countries  (hereinafter  referred  to as 
"NMEs").  Normal  value  for  these  NMEs had  therefore  to  be  based  on  data  obtained 
in  a  market  economy  country  (in  accordance  with  Article  2(5)  of  the  basic 
Regulation).  Interested  parties  suggested  several  countries  including  Norway  as  an 
analogue  market  for  that  purpose.  Since  the  Norwegian  exporters  did  not  supply 
information  relating  to  domestic  prices,  cost  of  production  or  export  prices  for  all 
grades  of  the  product  concerned,  Norway  could  not  be  used. 

It was determined that the market of the United States of America (hereinafter  referred 
to  as "the  US market")  would  in this  respect  be an  appropriate  and  not  unreasonable 
choice due to the easy access to raw materials, the availability  of competitively  priced 
energy, its open and competitive nature and the fact that, in terms of volume and range 
of qualities of silicon carbide, it is considered to be representative in comparison  with 
the  exports  from  each  individual  NME. 

Furthermore,  the  product  manufactured  in  the  USA  has  the  same  basic  physical  and 
chemical  characteristics as the product  manufactured  by  all  NMEs concerned  and can 
therefore  be considered  a like  product. 

(II)  Normal  value 

(a) 

NMEs 

(28)  Normal  value was determined  on the basis of  prices in the ordinary  course of trade at 
which  the  silicon  carbide  was  actually  sold  for  consumption  on  the  US  market.  All 
sales transactions  were to  unrelated  purchasers  and  involved  quantities  considered  to 
be  representative. 

Account was taken of the fact that the companies investigated  in the reference  market 
were  directly  or  indirectly  related  to  certain  silicon  carbide  producers  in  the 
Community or in Norway. It was examined whether their relationship had an  influence 
on the determination of normal value. Since normal value was determined on the basis 
of  sales  prices  to  independent  customers  on  the  US  market  and  these  prices  were 
subject  to  normal  competitive  forces,  it  was  concluded  that  the  relationship  had  no 
influence  on  the normal  value thus  determined. 

(b) 

Norway 

(29)  No  normal  value  based  on  prices  or  costs  in  Norway  could  be  established  as  the 
Norwegian  producers  did  not  fully  cooperate.  In  view  of  the  similarity  of  the 
production  processes,  costs  of  raw  materials,  in  particular  energy  costs,  and  other 
economic circumstances, between  Norway  and the USA for  this product, and the  fact 
that  in  both  countries  producers  are  operating  on  a  competitive  market,  it  was 
considered  that  the  prices  for  this  product  in  the  USA  constituted  the  best  facts 
available  for  prices  in  Norway. 

Normal  value for all qualities was therefore  established, pursuant to Article 2(3)(a) of 
the basic  Regulation, on the basis of the weighted  average of the US sales prices. The 
information  concerning the production  costs of silicon  carbide in the  USA - increased 
by  a  reasonable  margin  for  profit  (as  explained  in  recital  49)  -  confirmed  the 
reasonableness  of  the  use of  the  US sales  price on  the  US  market. 

11 

For the qualities  covered  by the  undertakings  accepted  from  the  Norwegian  exporters 
concerned,  separate  normal  values  were  established  on  the  basis  of  the  weighted 
average  of  the  sales prices on  the  US  market  of  the  corresponding  qualities. 

(Ill)  Export prices 

(a) 

Poland 

(30)  Exports by the Polish exporting producer were made directly to independent  importers 
in the Community. The export prices were therefore  determined on the basis of prices 
actually  paid  or  payable  for  the  products  sold. 

(b) 

China 

(31)  The  export  volume of the cooperating  Chinese  export  corporations  represented  22% 
of  total  Chinese  silicon  carbide  imports  into the Community  during the  investigation 
period. It was considered whether individual company findings  should be made for the 
three  export  corporations  referred  to  in  recital  5.  Since  they  are  all  State-owned 
corporations,  individual  determinations  were  not  made  in  conformity  with  the 
established  practice  of  the  institutions,  especially  since  the  State  can  at  any  time 
interfere in their economic operations.  In addition, the percentage of 22% was deemed 
to be too  small  to  be  representative  of  total  Chinese  silicon  carbide  exports.  Export 
prices  of  the  Chinese  export  sales  were  therefore  based  on  the  facts  available  in 
accordance  with  Article  7(7)(b)  of  the  basic  Regulation.  Consequently,  the  data 
supplied by Eurostat was used, from  which all costs incurred between the Chinese port 
of  loading  and  CIF Community  frontier  were  deducted. 

(c) 

Norway 

(32)  Since the Norwegian  producers supplied  information  for only  part of their exports, an 
average  export  price  for  silicon  carbide  from  Norway,  irrespective  of  quality,  was 
established  on  the basis of  Eurostat  figures. 

12 

(d) 

Russia and Ukraine 

(33)  The  exporters  in  Russia  and  Ukraine,  did  not  cooperate:  export  prices  had  therefore 
to be based on the facts available. In this respect, export prices for  Russia and  Ukraine 
were established on the basis of purchase prices of an independent importer which was 
considered  appropriate  since  it  imported  during  the  investigation  period  more  than 
50% of total  imports of  silicon  carbide originating  in the  countries concerned.  These 
purchase prices were at franco  destination  level. Freight  and  insurance costs  incurred 
were deducted  in order to establish  an ex-national  border price. The data supplied by 
this  importer  did  not  permit  a  distinction  to  be  made  between  the  silicon  carbide 
originating  in  Russia  and  Ukraine. 

(IV)  Comparison 

(34)  For  all  countries,  with  the  exception  of  China  and  Norway,  the  normal  value  was 
compared  with  the  export  price  for  comparable  qualities,  transaction-by-transaction, 
and on an ex-works basis.  For the NMEs, ex-factory  was taken as ex-national  border 
in accordance  with normal  practice for  these countries.  No adjustments  were claimed 
or deemed necessary  in respect of different  levels of trade (Article 2(9)(a) of the basic 
Regulation)  since the investigation  showed  that  no different  price patterns  existed on 
the  reference  market  for  different  types  of  customers  of  silicon  carbide. 

For  the  product  originating  in  Russia  and  Ukraine  an  adjustment  based  on  detailed 
information  supplied by the importer referred  to in recital  33 was made to the normal 
value  in  order  to  take  account  of  the  difference  in  physical  characteristics  in 
accordance  with  Article  2(9)(a) of  the basic  Regulation. 

(35)  The  average  price  of  all  Norwegian  export  transactions  of  silicon  carbide,  based  on 
Eurostat figures,  was compared on an ex-works basis with the normal  value for silicon 
carbide  established  on  the  basis  of  the  average  price  of  all  transactions  on  the  US 
market,  all  qualities  taken  together. 

The  export  prices  for  certain  qualities  reported  under  the  Norwegian  producers' 
undertakings  were  also  compared  with  the  sales  prices  on  the  US  market  for  the 
comparable  qualities.  These  findings  confirmed  the  results found  in  the  comparison 
of  all  Norwegian  export  transactions. 

13 

(36) 

In  the  case  of  China,  the  three  exporters  which  replied  to  the  Commission's 

questionnaire  claimed  several  adjustments  for  differences  in  physical  characteristics 

and  certain  selling  expenses.  Since,  as  previously  mentioned,  these  exporters  were 

deemed  to  be  unrepresentative  of  total  Chinese  exports  of  silicon  carbide  to  the 

Community,  it  was  not  possible  to  determine  on  the  basis  of  the  evidence  available 

whether  such  adjustments  were  applicable  to  all  exports  to the  Community.  However, 

since  it  became  known  from  different  sources  during  the  investigation  that  China 

exports predominantly  metallurgical  silicon  carbide,  it was considered  that  in  applying 

the  provisions  of  Article  7(7)(b)  of  the  basic  Regulation  (facts  available),  it  would  be 

unreasonable 

to  use  an  average  normal  value  based  on  both  crystalline  and 

metallurgical  grades.  A  normal  value  based  on  the  average  price  for  metallurgical 

grade only  was therefore  used  .  The  comparison  was  made  between  this normal  value 

and  the  export  price  as  determined  above. 

In  so  doing,  adjustments  warranted  for 

differences  affecting  price  comparability,  in  respect  of  the  volume  of  exports  by  the 

three  Chinese  cooperating  exporters,  have  been  taken  into  account. 

Claims  for  adjustments  for  differences  in  cost  factors,  such  as  labour,  between  the  US 

producers  on  the one  hand  and  the  Chinese  producers  on  the other  were  rejected  since 

no  adjustments  other  than  those  resulting  from  comparative  natural  advantages  can  be 

granted.  Cost  differences,  if any, due to the economic  system  existing  in the  exporting 

country  cannot  be  taken  into  consideration  as  this  would  negate  the  purpose  of 

Article  2(5) of the  basic Regulation  of determining  normal  value on the basis of  prices 

or  costs  in  a  market  economy;  however,  cost  differences  resulting  from  comparative 

natural  advantages  are  not  due 

to 

the  economic 

system  existing 

in  an 

exporting  country. 

(V) 

Dumping  margins 

(37)  These  comparisons  showed 

the  following  weighted  average  dumping  margins, 

expressed  as  a  percentage  of  the  free-at-Community  frontier  price: 

China: 

Norwegian  exporting  producers: 

Poland: 

Russia. 

Ukraine: 

72.5% 

0.0% 

8.3% 

23.3% 

23.3% 

14 

G.  RECURRENCE OF INJURY 

(38) 

In  the  light of  the above  analysis  and  in order  to assess the effect  of the expiry  of 

measures  in  force,  the  following  was  considered: 

(I) 

Norway 

(39) 

Although  the  Norwegian  exporters  did  not  fully  cooperate,  evidence  available 
clearly  indicates  that  the  Norwegian  product  is  mostly  present  in  the  high  quality 
market  segment,  where higher  prices  prevail. 

In  the  light  of  the  past  pricing  behaviour  of  Norwegian  producers  which  has  led 
to prices being  kept generally  in  line with  those of  Community  producers, even  at 
the  expense  of  loss  of  market  share,  it  appeared  unlikely  that  the  expiry  of  the 
undertakings  would  lead  to an  imminent  recurrence of  dumped  imports  and  injury 
caused  by  Norwegian  exporters. 

(II) 

China, Poland, Russia and Ukraine 

(40) 

Exporters  in  these  countries  sold  silicon  carbide  at  high  undercutting  prices  to  the 
Community  in  increasing  quantities,  without  respecting,  except  for  the  Polish 
exporter,  the  undertaking  conditions  agreed  with  the  Commission. 

Since these imports continued to injure the Community  industry, it can be expected 
that the expiry  of measures would only lead to a further  deterioration  of an already 
weakened  Community  industry. 

(III) 

Effect  of  the cumulated, low-priced imports 

(41) 

For  this  examination,  it  was  considered  appropriate  to  cumulate  the  imports  from 
China, Poland, Russia and Ukraine because the exporters in these countries followed 
largely  the  same  low-pricing  behaviour  and  the  imports  have  the  same  basic 
physical characteristics, are interchangeable, have the same channels of distribution 
and  were  sold  in the  same geographical  market  during  the same  period. 

15 

(42) 

In  considering  the  relationship  between  these  low-priced  imports  and  the  weak 
situation  of  the Community  industry,  it was found  that  the  increase  in volume and 
market  share  of  these  imports  in  combination  with  their  undercutting  prices, 
coincided  with  the  deterioration  of  the  situation  of  the  Community  industry. 

Since this is a price-sensitive product in a transparent  market which consists mainly 
of  industrial  users,  sales  at  low  prices  inevitably  have  substitution  effects  as 
customers  choose  to  be  supplied  at  the  lowest  price  offered.  It  was  therefore 
concluded  that  these  low-priced  imports  can  be  clearly  associated  with  the 
deteriorating  situation  of  the  Community  industry. 

(IV) 

Effect  of  other factors 

(43) 

It was examined  whether factors, other than the low-priced  imports from  these  four 
countries, might have led to or contributed to the weak situation of the Community 
industry  and 
especially  whether  imports  from  countries  other  than  the  four 
mentioned,  may  have  contributed  to this  situation.  This examination  was based on 
"Eurostat"  figures. 

(a) 

Norway 

(44) 

Regarding imports from  Norway, it has to be noted that Norwegian prices of silicon 
carbide  imported  into  the  Community  were  in  general  in  line  with  those  of  the 
Communtiy producers.  Furthermore, the Norwegian market share has declined from 
1989  to  the  investigation  period.  Therefore,  it  was  considered  unlikely  that 
to  the  deteriorating  situation  of  the 
Norwegian 
Community  industry. 

imports  have  contributed 

(b) 

Other third countries 

(45) 

A certain  quantity  of  imports  (7.7% market  share  during  the  investigation  period) 
originates  from  third  countries  other  than  Norway.  It  was  found  that  prices  of 
imports  from  these  countries  were  on  average  below  those  charged  by  the 
Community  producers. 

No evidence  has been  supplied  to the Commission  as to whether  these prices  were 
low in respect of low-quality  silicon carbide or whether these products were actually 
being  sold  at  dumped  prices. 

Conclusion 

(46) 

It  was  considered  arguendo  that,  even  if  the  imports  from  other  countries  had 
contributed  to the difficult  state of the Community  industry, it would not affect  the 
conclusion  that the cumulated  imports from  the four  countries in question  taken  in 
isolation  have  been  a cause of  this  difficult  state. 

(V) 

Conclusion on recurrence of injury 

(47) 

(48) 

findings,  it  was  concluded  that  a 
In  the  light  of  the  new  dumping  and  injury 
continuation  of  measures  for  all  countries  except  Norway,  would be warranted  but 
that  the  nature  of  such  measures  should  be  reconsidered  in  the  light  of  the  new 
dumping  and  injury  findings.  With  regard  to  Norway, the  findings  of  no  dumping 
for  all  grades of  silicon  carbide exported  to the  Community  and not only  for  those 
grades  covered  by  the  undertakings  confirms  that  the  pricing  behaviour  of  the 
Norwegian  exporters  is such that  there  is nothing  to suggest  that the  expiry  of  the 
measures  would  lead  to  an  imminent  recurrence  of  injury  caused  by  dumping. 

H.  COMMUNITY  INTEREST 

The  purpose  of  anti-dumping  measures  is,  in  general,  to  eliminate  distortion  of 
competition  arising  from  dumping  practices  and  thus to  re-establish  open  and  fair 
competition  on  the  Community  market.  In  considering  the  Community  interest, 
account has been taken of the effectiveness  of the existing measures in addition  to 
the interest  of  the Community  silicon  carbide  industry, the users of  silicon  carbide 
and  the  final  consumers  of  the  end  product.  In  this  respect  it  is also  recalled  that 
in the previous  investigation,  the adoption  of measures was considered  to be in the 
interest  of  the  Community. 

Leaving  the  Community  industry  without  adequate  protection  against  the  unfair 
competition  as established  would  add  to  the  difficulties  of  this  industry  and  could 
lead  to  its disappearance  with  the  consequent  negative  effect  on  employment  and 
investment. One plant in Italy had already closed during the investigation period and 

17 

a further plant in France has subsequently  had to close  Such closures, resulting in 
reduced  competition  for  the  supply  of  silicon  carbide,  have  a negative  impact on 
users.  As far as these purchasers of silicon carbide are concerned, it may be argued 
that they  could derive  some benefit  from  buying silicon  carbide at dumped prices. 
Any such benefit, however, would be minimal, since the silicon carbide in question 
accounts for only  a fraction  of  the price of  most end-products. 

In these circumstances,  it is in the Community  interest to maintain  definitive  anti 

dumping  measures  to  eliminate  the  injurious  effects  of  dumped  imports  and that 

these measures should take the form  of  anti-dumping  duties. 

I.  DUTY 

(49) 

When  calculating  the  amount of  duty  necessary  to  provide  adequate  protection  to 
the Community  industry  from  continued  injurious dumping,  it was considered that 
any measures should allow the Community  industry to cover its costs of production 
and to obtain a reasonable  profit. 

In this respect and based on the findings  in the reference country, it was found that 
a profit margin of 5% of the cost of production for this sector could be regarded as 
an appropriate  minimum  taking  into account  the need for  long-term  investment. 

(50) 

In order to calculate the amount of duty, a price level  was established which would 
permit the Community  industry  to achieve  this result. 

Since  silicon  carbide  consists  of  two  main  grades,  chrystalline  and  metallurgical, 
two  different  price levels  were calculated,  consisting of  the weighted  average cost 
of  production  of  the  Community  producers  for  each  main  grade  and  the  profit 
margin. 

(51) 

(52) 

It was considered that the duty should cover the difference  between  this price and 
the actual  selling  prices of  the exporters  in the Community. 

In order  to  determine  the  level  of  the  duty,  price  increases  thus  established  have 
been expressed as a percentage of the weighted average free-at-Community  frontier 
value of the imported goods. 

18 

(53) 

(54) 

For  Russia and  Ukraine, an  injury  margin  of  51.1%  was found.  Since this  margin 
was higher than the dumping margin,  the rate of duty should be  established on the 
basis of  the  latter. 

The  free-at-Community-frontier  price  established  for  exports  originating  in  China 
was  compared  with  the  injury  level  determined  for  the  Community  industry  in 
respect of  metallurgical  grade silicon  carbide.  This comparison  results in an  injury 
margin  of  52.6%,  which  is  lower  than  the  dumping  margin.  Therefore,  the  duty 
should  be  established  on  the  basis of  the  injury  margin. 

(55) 

For Poland,  an  injury  margin  of  27% was found.  Since this  margin  is higher  than 
the  dumping  margin  determined,  a  duty  should  be  established  on  the  basis  of  the 
latter. 

The undertaking  accepted  in  1986 from  the only  Polish  exporter  is no longer apt to 
prevent  injury.  This exporter  has not offered  a revised  undertaking,  despite  having 
been  given  the opportunity  to do  so by  the  Commission. 

Notwithstanding the acceptance of an undertaking from  the Russian government (see 
recital  56), a  residual  duty  should  be  imposed  on  imports  originating  in  Russia  in 
view  of  the  rapid  changes  taking  place  in  that  country's  economic  system  which 
may  lead  to  the  emergence  of  new  producers  and  exporters  of  silicon  carbide 
operating  independently  of  the  State. 

Undertakings 

(56) 

Having  been  informed  of  the  essential  facts  and  considerations  on  the  basis  of 
which  it  was  intended  to  recommend  the  imposition  of  definitive  duties,  certain 
exporters  in  China  and  Russia  offered  undertakings. 

For China, these exporters are those mentioned  in  recital  5 which  responded  to the 
Commission's  questionnaire.  They  offered  undertakings  in  respect  of  their 
individual  circumstances  as  to  dumping  and  injury  caused  thereby. 
It  has  been 
deemed  inappropriate  to  determine  individual  company  findings  for  these  State-
owned  corporations  for  the  reasons  set  out  in  recital  31.  The  Commission  has 
therefore considered the undertakings offered  by the Chinese exporters unacceptable 
and  have  informed  the three  Chinese  exporters  accordingly. 

19 

The  Russian  government, 

in  conjunction  with  the  State-trading  organization 

V/O  Stankoimport, offered  undertakings  which  would  remedy  the  injurious  effects 

of  the  dumped  exports.  The  Commission  consulted  the  Advisory  Committee  on 

acceptance  of  these  undertakings  and,  since  some  objections  were  raised,  sent  a 

report  on  these  consultations  to  the  Council.  These  undertakings  were  accepted  by 

ftC 

Commission  Decision  ^5/...  EC*, 

HAS  ADOPTED  THIS  REGULATION: 

Article  1 

1.  A  definitive  anti-dumping  duty  is  hereby  imposed  on  imports  of  silicon  carbide  falling 

within  CN  Code  2849  20  00  originating  in  the  People's  Republic  of  China,  Poland,  the 

Russian  Federation  and  Ukraine. 

However,  the  duty  shall  not  apply  to  silicon  carbide  exported  by  V/O  Stankoimport, 

Moscow,  Russia  (Taric  additional  code  8746). 

2.  The  rate of  the  duty  applicable  to  the  net,  free-at-Community-frontier  price, before  duty, 

shall  be  as  follows: 

Country 

Rate  of  duty  (%) 

Taric  additional  code 

People's  Republic  of  China 

Poland 

The  Russian  Federation 

Ukraine 

52.6 

8.3 

23.3 

23.3 

8747 

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

*See page  ....  of  this  Official  Journal. 

20 

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 all  Member States. 

Done  at Brussels, 

For the Council 

The President 

21 

ISSN 0254-1475 

COM (94) 30 final 

DOCUMENTS 

EN 

11 02 

Catalogue number : CB-CO-94-036-EN-C 

ISBN 92-77-64867-8 

Office for Official Pablications of the European Communities 
1^2985 Luxembourg 

22