Proposal for a Council Regulation (EC) amending Regulation (EEC) No 2552/93, imposing a definitive anti- dumping duty on imports of artificial corundum originating in the People's Republic of China
Date: 1997-09-25
Institutions: European Commission
Subjects: China, EU production, anti-dumping duty, dumping, precious stones

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  25.09.1997 
COM(97)468  final 

Proposal  for a 

COUNCIL REGULATION ŒC) 

AMENDING  REGULATION (EEC) N° 2552/93, 

IMPOSING  A DEFINITIVE 

ANTI-DUMPING  DUTY ON IMPORTS OF ARTIFICIAL  CORUNDUM 

ORIGINATING  IN THE PEOPLE'S REPUBLIC OF CHINA 

(presented  by the  Commission) 

EXPLANATORY  MEMORANDUM 

1. 

In  September  1993,  by  Regulation  (EEC)  N°  2552/93,  the  Council  imposed  a 

residual  anti-dumping  duty  on  imports  of  artificial  corundum  originating  in  the 

People's Republic of China. 

2. 

The  definitive  anti-dumping  duty  was  subsequently  extended  to  all  imports  of 

artificial  corundum  originating  in  the  People's  Republic  of  China  by  Council 

Regulation (EC) N° 2556/94. 

3. 

In  July  1995,  a request  for  a review pursuant  to Article  12 of  Council  Regulation 

(EC)  N°  3283/94  was  lodged  by  CEFIC  on  behalf  of  Community  producers 

representing  a  major  proportion  of  the  Community  production  of  artificial 

corundum.  This  request  for  a  review  was  made  on  the  grounds  that  the  existing 

definitive  anti-dumping  duty  on  imports  of  artificial  corundum  originating  in  the 

People's Republic of China was no longer sufficient  to counteract the dumping. 

However,  as  a  period  of  more  than  four  years  had  elapsed  since  the  adoption  of 

measures  following  the  last  review  in  1991,  the  Commission  considered  it 

appropriate  to  initiate  an  interim  review  covering  dumping  and  injury  pursuant 

Article  11(3)  of  Regulation  (EC)  N°  384/96  which  replaced  Regulation  (EC) 

N°3283/94. 

4.  On  12 January  1996, by a notice published  in the Official Journal  of the  European 

Communities,  the  Commission  announced  the  review  of  Regulation  (EEC)  N° 

2552/93 amended by Regulation (EC) N° 2556/94. 

A 

5. 

The investigation  showed that artificial  corundum  from  China  was  exported  to  the 

Community  with  a  dumping  margin  of  88.7%  and  that,  as  measures  were  not 

adhered  to,  further  material  injury  was  suffered  by  the  Community  industry 

because  of  the  increased  volumes  and  low  prices  of  the  product  in  question. 

Furthermore  it  was  established  that  an  expiry  of  the  measures  would  be  likely  to 

increase  the  injurious  effects  of  dumping  and,  consequently,  further  weaken  the 

situation of the Community industry. 

After  having  consulted  the  Community  user  industry,  it  was  concluded  that  there 

were  no  compelling  reasons  not  to  maintain  the  measures  in  the  present  case  and 

that it was in the Community interest to impose amended anti-dumping measures. 

After  examining  the  arguments  put  forward  by  the  interested  parties,  the 

Commission has definitively  established the facts. 

6.  A  continuation  of  the  measures  appears  therefore  warranted,  but  they  have  to  be 

adapted  in the  light  of  findings  on dumping  and  injury  based  on the  results  of  the 

investigation. 

7. 

It  is  therefore  proposed,  after  consultation  of  the  Advisory  Committee,  that  the 

Council  adopts  the  draft  Regulation  annexed,  amending  Regulation  (EEC)  N° 

2552/93, imposing a definitive  anti-dumping duty on imports of artificial  corundum 

originating in the People's Republic of China. 

•)  CU 

Proposal for a 

COUNCIL REGULATION (EC) N°.../97 

OF... 

AMENDING REGULATION (EEC) N° 2552/93, 

IMPOSING A DEFINITIVE 

ANTI-DUMPING  DUTY ON IMPORTS OF ARTIFICIAL  CORUNDUM 

ORIGINATING  IN THE PEOPLE'S REPUBLIC OF CHINA 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European  Community, 

Having regard to Council  Regulation (EC) N°3 84/96 of 22 December  1995 on protection 

against  dumped  imports from countries  not  members  of the  European  Community1,  and 

in particular Article  11(6) thereof, 

Having  regard  to  the  proposal  submitted  by  the  Commission  after  consulting  the 

Advisory  Committee, 

Whereas: 

A.  PREVIOUS  PROCEDURE 

(1)  Following  a  complaint  lodged  by  the  European  Chemical  Industry  Council 

(CEFIC), the Commission,  by Regulation  (EEC) No 2690/842 imposed  provisional 

anti-dumping  duties  on  imports  of artificial  corundum  originating  inter alia  in the 

People's  Republic  of  China. 

Subsequently,  by  Decision  84/650/EEC3,  the 

Commission  accepted  an  undertaking  given  by  the  China  National  Import  and 

Export Corporation and repealed the provisional duties previously  imposed. 

1  OJ  N°  L  56,  6.3.1996,  p.l.  Regulation  as  amended  by  Regulation  (EC)  N°  2331/96  (OJ  N°  L  317, 

6.12.1996, p. 1) 

2  OJ No L  255 of  25.09.1984, p. 9 

3  OJ No L  340 of  28.12.1984, p. 82 

A  & 

(2)  Following  a  request  by  CEFIC,  a  review  of  the  afore  mentioned  measures  was 
carried out which led to Decision 91/512/EEC4 by which the Commission accepted 

undertakings given by six Chinese companies authorised by the Chinese Chamber 

of Commerce to export artificial corundum to the Community. 

(3) 

It was subsequently found that other exports were being made from China by other 

exporters  and  trade  organisations  previously  unknown  to  the  Commission  which 
led to the imposition, by Council Regulation  (EEC) No 2552/935, of a  definitive 

residual anti-dumping duty of 30.8% on imports of artificial  corundum originating 

in the People's Republic of China, with the exception of  imports sold for export to 

the Community by the six Chinese companies from  which price undertakings had 

been accepted. 

(4)  Subsequently, the Commission established that the above mentioned undertakings 

had  been  violated.  The  anti-dumping  duty  was  consequently  extended  to  the  six 
Chinese companies concerned  by Council  Regulation  (EC) No 2556/946 with the 

result that  an anti-dumping  duty of 30.8% was applied  as from  22.10.1994 to all 

imports of artificial corundum originating in the People's Republic of China. 

4  O J N oL  275-of  02.10.1991, p. 27 

5  OJ No L 235 of  18.9.1993, p. 1 

6  OJ No L 270 of 21.10.1994, p. 24 

B.  REVIEW INVESTIGATION 

(5)  On  27  July  1995,  a  request  for  a  review  was  lodged  by  CEFIC  on  behalf  of 

Community  producers  representing  a  major  proportion  of  the  Community 

production of artificial  corundum. This request for a review was made pursuant to 

Article 12 of Council Regulation (EC) No 3283/94 as replaced by Regulation (EC) 

No 384/96 (the "Basic Regulation") on the grounds that the existing definitive anti 

dumping  duty  on  imports  of  artificial  corundum  originating  in  the  People's 

Republic of China had not resulted in sufficient  movement in resale prices  in the 

Community,  the  duty  having  been  compensated  by  a  further  decrease  in  the 

Chinese  export  prices.  Consequently  the  Community  industry  was  allegedly 

suffering  further injury from the Chinese dumped imports. 

(6)  As a period  of more than  four  years had elapsed  since the  adoption  of measures 

following  the  last  review  in  1991  and  in  the  light  of  evidence  that  indicated 

changed  circumstances  regarding  both  dumping  and  injury,  the  Commission 

considered it appropriate to initiate an interim review covering dumping and injury 

pursuant to Article 11(3) of the Basic Regulation. 

(7)  On 12 January  1996, by a notice published in the Official Journal of the European 
Communities1, the  Commission  announced  the  review  of  Regulation  (EEC) 

No 2552/93, as amended by Regulation (EC) No 2556/94, pursuant to Article 11(3) 

of the Basic Regulation. 

7  O J N o C 7 of  12.1.1996, p. 5 

(8)  The  Chinese  producers  claimed  that  the  request  for  review  contained  evidence 

relating  exclusively  to  the  evolution  of  resale  prices  in  the  Community  market, 

while  no  meaningful  information  was  provided  about  the  complainants'  current 

market  situation,  as would  normally  be  the  case  in  a complaint  giving  rise  to  full 

investigation of dumping and  injury. 

In this respect,  it should be noted that the complaint  contained  sufficient  evidence 

of both a sharp increase in the volume and market  share of the Chinese  imports  of 

artificial  corundum combined with a decrease in the Chinese export prices and of a 

corresponding decline of the Community producers' market share. 

(9)  The  Commission  officially  advised  the  producers,  exporters  and  importers  known 

to  be  concerned,  and  gave  the  parties  directly  concerned  the  opportunity  to  make 

their views  known in writing and to request a hearing. 

(10)  The Commission sent questionnaires to parties known to be concerned and received 

replies  to  its  questionnaires  from  the  complainant  producers  and  two  other 

producers  in  the  Community,  eight  Chinese  exporters  and  three  importers  in  the 

Community.  Concerning  the  market  economy  country,  to  be  used  as  analogue 

country  for  the purpose  of  establishing  normal  value  for  the  People's  Republic  of 

China,  the  Commission  received  replies  from  three  producers  in  Brazil  and  one 

producer in the USA. 

(11)  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: 

(a) 

Community producers: 

- Péchiney Electrométallurgie, France 

- Universal Abrasives, United Kingdom 

- H. C. Starck, Germany 

(b) 

Importers in the Community: 

(i) related importer 

- Sinabrasive Import-Export GmbH., Ratingen, Germany 

(ii) unrelated importers 

- Smyris Abrasive s.r.L, Pero, Italy 

- Mineralien-Werke Kuppenheim GmbH., Kuppenheim, Germany 

(12)  The following Chinese exporters fully replied to the questionnaire. 

- China Abrasives import and Export Corporation, Zhengzhou, PRC 

- CMEC Guizhou Corporation Ltd., Guizhou, PRC 

- Guangdong Machinery & Equipment Import & Export,  Guangzhou, 

PRC 

- Guiyang Xinsheng Abrasives & Abrasive Tools Factory, Guiyang, PRC 

- Mount Tai Abrasives Company, Shandong, PRC 

- Shandong Machinery & Equipment Import & Export Corp., Qingdao, 

PRC 

- The 7th Grinding Wheel Factory Import & Export Corp., Guizhou, PRC 

- White Dove (Group) Corporation Ltd., Zhengzhou, PRC 

(13)  As  Brazil  has  been  used  as  the  analogue  country  for  the  purpose  of  establishing 

normal  value,  as  explained  in  recitals  (25)  to  (28), the  Commission  conducted  an 

investigation  at  the  premises  of  three  Brazilian  producers  of  artificial  corundum. 

Their names are not mentioned in this Regulation for reasons of  confidentiality. 

(14)  The  investigation  of  dumping  covered  the  period  from  1  January  1995  to  31 

December  1995  (hereinafter  referred  to  as the  "investigation  period").  The  period 

for  the  determination  of  injury  covered  the  years  1992 to  1995.  The  geographical 

scope  of  the  investigation  was  the  Community  as  constituted  at  the  time  of  the 

initiation, thus including all  15 Member States. 

(15)  All parties concerned were informed  of the essential facts and considerations on the 

basis  of  which  it  was  intended  to  recommend  the  amendment  of  the  existing 

measures.  They  were  also  granted  a period  within  which  to  make  representations 

subsequent to these disclosures. 

(16)  Since  the  interim  review  in  respect  of  imports  from  China  was  not  concluded 

before  the  end  of the five-year period  of  application  of  the  measures  concerned 

(that is to say on 26 July  1996), the interim review has also covered, in accordance 

with  Article  11(7) of  the  Basic  Regulation,  the  circumstances  set  out  in  Article 

11(2) of the said Regulation (the circumstances to be examined in the context of an 

expiry review, i.e. likelihood of continuation or recurrence of dumping and injury). 

This  is  why  the  investigation  has  exceeded  the  normal  period  of  one  year  as 

provided for in Article 6(9) of the Basic Regulation. 

C. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT 

I.  Description of the product  under consideration 

(17)  The product  concerned  by this review is fused  aluminium  oxide, also known  as 

artificial  corundum falling from 1  January  1997 onwards within CN codes 2818 10 

10 and 2818  10 90. It is principally produced in two basic varieties, for which the 

chemical formula is identical (A1203): 

- brown artificial corundum, consisting of 94 to 97% aluminium oxide 

- white artificial corundum, consisting of 97.5 to 99.5% aluminium oxide 

Small  quantities  of  pink  artificial  corundum  which  has  a  content  of  aluminium 

oxide  similar  to  the  white  artificial  corundum  are also  produced  and  sold  in the 

Community.  Hence the term white corundum will be intended hereafter  to include 

pink corundum as well. 

(18)  The  raw  material  for  the  production  of  brown  artificial  corundum  is  bauxite  in 

natural  or  calcined  form,  while  for  the  production  of  white  artificial  corundum, 

calcined alumina is used, which is a processed form  of bauxite. Artificial  corundum 

is manufactured  by melting the raw material in electric-arc furnaces  at temperatures 

higher than 2000° C. 

Artificial  corundum,  due to  its  specific  characteristics,  notably  hardness, is mainly 

used, in  the  production  of  abrasive  materials  such  as  grinding  wheels,  cutting 

wheels, sandpaper and in the production of refractory  materials. 

The  production  process  generates  a  certain  amount  of  lower  quality  artificial" 

corundum  containing  less  than  94% of aluminium  oxide.  Its  use  is  limited  to  the 

production of resin-bonded grinding wheels and to sand-blasting purposes. 

(19)  In the Community, the product is sold mainly in the form of grains for mixture (less 

than  10  mm)  and  in  grains  for  grit  size  (crystalline  powder).  These  latter  are 

normally  classified  following  international  standards  (FEPA  in  the  Community). 

However,  artificial  corundum  is also sold  in the form  of lumps of variable  sizes of 

more than  100 mm. 

These  different  forms  in  which  the  product  in  question  is  sold  correspond  to 

different  steps of the final stage of the production  process.  For the purpose  of the 

investigation,  both white and brown artificial  corundum have been classified  in the 

following  four categories, according to the form in which the product is sold: 

- lumps 

- grains for mixture (size range: 0 to  10 mm) 

- grains for grit size macro (FEPA standard: 8 to 220) 

- grains for grit size micro (FEPA standard: 240 to 1200). 

(20)  The Chinese producers submitted that brown and white artificial  corundum  are two 

distinct  products, with  different  qualities  and  characteristics  which  make  them  not 

interchangeable  for  the production  of specific  abrasive  end-products.  Accordingly, 

these producers claimed that brown and white artificial  corundum  should be treated 

separately for the purpose of the anti-dumping  investigation. 

It  should  be  noted,  however,  that  the  arguments  put  forward  by  the  Chinese 

producers  refer  exclusively  to  the  use  of  artificial  corundum  for  manufacturing 

abrasive  end-products,  and  not  to  the  production  of  refractory  masses  which 

constitutes  the  other  main  end  use  of  artificial  corundum  and  for  which  the 

interchangeability  of white and brown corundum was not put into question. 

' Furthermore,  it has been  found  that brown  and white artificial  corundum  are  made 

from the same raw material, i.e. the bauxite, and through the same basic production 

process.  Moreover,  they  both  have  the  same  basic  chemical  and  physical 

characteristics  and  final  applications.  They  are  both  used  for  the  production  of 

abrasives  and  refractory  materials,  are  to  a  certain  degree  interchangeable  as 

regards  both  these  uses,  hence  no  clear  dividing  line  can  be  established  between 

basic  varieties  as  far  as their  use  is concerned.  Therefore,  for  the purpose  of  this 

investigation,  the  various  forms  of  artificial  corundum  have  been  considered  as  a 

single  product.  This  approach  confirms  the  one  adopted  in  the  previous 

investigation. 

2.  Like product 

(21)  The  Commission  found  that  the  artificial  corundum  produced  and  sold  in  the 

Community and in Brazil, which was chosen as the analogue country, on the one 

hand, and that  imported from China on the other, were made from the same raw 

material and were manufactured  by using the same basic technology. Moreover, it 

was found  that Community and Brazilian artificial  corundum were comparable in 

their  essential physical  and chemical characteristics, applications  and uses to that 

imported from the People's Republic of China. 

(22)  In this context, the Chinese producers argued that the artificial  corundum imported 

from  China  in  lump  form  is  not  in  any  sense  comparable  with  the  artificial 

corundum in grain form marketed by the Community producers. 

In  this  respect,  it  was  found  however,  that  lumps  and  grains  correspond  to  two 

subsequent  final  steps  of  the  production  process  of  artificial  corundum.  Indeed, 

lumps can be easily processed into grains and this operation is often carried out by 

the  importers/traders  with  little  effect  on  the  market  price  of  the  product. 

Furthermore,  Chinese  exports  of  artificial  corundum  in  the  form  of  lumps 

represented only 25% of total exports of the product in question to the Community, 

the rest being exported in the form of grains. This mix of sales was similar to that 

of the Community producers. 

(23)  On  the basis of all the above, it is considered that artificial corundum produced and 

sold  in  the  Community  and  Brazil,  as  well  as  that  imported  from  the  People's 

Republic of China, are like products within the meaning of Article 1(4) of the Basic 

Regulation. 

10 

D.  DUMPING 

(24)  The continued existence of dumping was verified, to ascertain firstly whether there 

were  still  grounds  for  continuation  of  measures  against  artificial  corundum 

originating from the  People's  Republic  of  China  and,  if  so, whether  the  alleged 

changed  circumstances  with  regard  to the  dumping  margin  required  the  existing 

measures to be adapted accordingly. 

1.  Normal Value 

(25)  In  establishing  normal  value,  account  was  taken  of  the  fact  that  the  People's. 

Republic of China is considered to be a non market economy country.  Therefore, 

in  accordance  with  Article  2  (7)  of  the  Basic  Regulation,  the  determination  of 

normal value had to be based on a market economy third country. In this respect, 

the  United  States  of America  (USA)  and Brazil  were  envisaged  in the  notice of 

initiation  of  the  review  as  appropriate  market  economy  countries  for  the 

determination  of normal value.  The Chinese producers  submitted that Brazil was 

inappropriate  because  only  one  major  producer  operates  in  that  market  and 

alumina,  the  raw  material  for  the  production  of  white  artificial  corundum,  is 

allegedly  purchased  at  inflated  prices from its  major  competitor  in  the  domestic 

market  or  sourced  from  Australia.  Consequently,  it  was  argued  that  prices  of 

artificial  corundum  in  Brazil  are  abnormally  high,  and  therefore  exports  to  the 

Community from this country have ceased. 

11 

(26)  The  Commission  requested  the two known  USA producers  of artificial  corundum 

to  co-operate  in  this  review,  but  only  one  of  them  accepted  to  answer  to  the 

questionnaire.  A  request  for  co-operation  was  also  made  to  the  three  known 

producers  in Brazil  which all accepted to provide the  information  requested  in the 

questionnaire. 

(27)  The  domestic  sales  of  the  product  concerned  by  the  three  Brazilian  producers 

during the investigation period have been found to represent about 80% of the total 

exports  from  China to the  Community.  The relative  size-of these  three  producers 

was such that none of them appeared to have a dominant position on the  Brazilian 

market.  Furthermore, imports into Brazil from third countries have been  estimated 

to represent about 20% of the domestic market. Hence, Brazil is considered to be a 

sufficiently  open  and  competitive  market  for  artificial  corundum.  Bauxite,  the 

main raw material, is easily  available in an area close to the plants and no  relevant 

supply from  Australia has been recorded.  No evidence was found  of alumina being 

sold at inflated  prices by any of the three producers to the others. Finally,  Brazilian 

exports  of  artificial  corundum  to  the  Community  during  1995  were  almost  3000 

tonnes,  which  is  a  significant  volume.  In  the  light  of  the  above,  and  taking  into 

account  of  the  number  of  co-operating  producers  in  USA  and  Brazil,  this  latter 

country is considered to be an appropriate market economy country  for the purpose 

of establishing normal value for the Chinese exports to the Community. 

12 

(28)  Normal  value  has  been  determined  for  each  product  type  of  artificial  corundum 

exported from China to the  Community  during the  investigation  period.  Normal 

value per product type was generally established on the basis of the prices paid or 

payable  by  independent  customers  in Brazil  for sales  of the  like product made  in 

sufficient  quantities  and  in  the  ordinary  course  of  trade.  In  cases  where  it  was 

found that no or insufficient  sales of a given product type were made in Brazil by 

any of the producers investigated, normal value for this type was constructed on the 

basis  of  its  cost  of  production  in  Brazil,  plus  a  reasonable  amount  for  selling, 

general and administrative expenses and for profits, in accordance with Article 2(3) 

of  the  basic  Regulation.  The  amounts  of  these  expenses  and  profit  have  been 

determined on the basis of the actual amounts applicable to production and sales, in 

the ordinary course of trade, of the like product for the producer in question in the 

Brazilian market, in conformity with Article 2(6) of the Basic Regulation. 

2.  Export Price 

(29)  Exports  of  the  product  concerned  to  the  Community  by  the  Chinese  producers 

which  replied  to  the  Commission's  questionnaire  represented  about  76% of  total 

imports  from  China  during  the  investigation  period  as  recorded  in  Eurostat 

statistics  The  export  price  was  generally  established  on  the  basis  of  the  price 

actually paid or payable for the product sold for export from the People's Republic 

of  China to  independent customers in the Community,  in conformity  with Article 

2(8) of the Basic Regulation. 

13 

(30)  One  Chinese  producer  provided  information  about  the  export  price  which  was 

found  to  be  false.  This  information  has been  disregarded  and,  in  conformity  with 

Article  18  of  the  Basic  Regulation,  the  export  prices  of  the  producer  in  question 

were determined on the basis of the information  provided by its unrelated  importers 

in the Commumty. 

(31)  Two  other  Chinese  producers  sold  for  export  to  a  related  importer  in  the 

Community, but only in one case did the importer co-operate and it was possible to 

construct the export price on the basis of the resale price at which the imported 

product  was first resold  to an independent  buyer.  From the resale price  all cost, 

between  importation  and  resale  incurred  by  the  importer,  as  well  as  a  reasonable 

amount  for  profit,  were  deducted,  so  as  to  establish  a  reliable  export  price,  in 

conformity  with  Article  2  (9)  of  the  Basic  Regulation.  The  amount  for  profit  has 

been  calculated  by  reference  to  those  realised  by  the  co-operating  independent 

importers. As to the other Chinese producer it was considered non co-operating. 

(32)  With  regard  to  exports  made  by  either  the  aforementioned  non  co-operating 

Chinese producer or those who did not manifest  themselves, the export price had to 

be  established  pursuant  to  Article  18 of  the  Basic  Regulation  on  the  basis  of  the 

facts  available.  It  was  considered  that  the  figures  reported  by  Eurostat,  duly 

adjusted  to  deduct  the  volume  and  value of the  imports  into  the  Community  from 

the  co-operating  Chinese  producers,  provided  the  most  appropriate  basis  and  the 

export price has been determined  accordingly. 

14 

3.  Comparison 

(33)  Normal value  and  export price have been compared  for  each product  type  at  FOB 

level.  For the  purpose  of  ensuring  a  fair  comparison  between  normal  value  and 

export  price,  account  was  taken  and,  where  appropriate,  adjustments  made  in 

accordance  with  Article  2  (10)  of  the  Basic  Regulation,  for  differences  affecting 

price comparability» 

(34)  While a considerable proportion of domestic sales in Brazil was made to end-users, 

i.e.  grinding  wheel  producers  and  refractory  producers,  the  major  part  of  the 

Chinese  exports to the Community  were made to traders.  However,  no  clear price 

difference  has been found  in Brazil between sales to traders and sales to end-users. 

Hence, no adjustment  has been made with regard to differences  in levels of trade. 

(35)  Adjustments  for other factors affecting  price comparability have been made.  Ocean 

freight,  insurance  costs  for  transport  and  credit  costs  were  deducted,  where 

appropriate,  from  the  export  price  in  order  to  express  it  at  a  Chinese  border  FOB 

level. 

(36)  In the case of normal value, adjustments  for inland transport to harbour  and  loading 

costs have been made in order to bring the normal  value, initially  established  at an 

ex-factory  level, to a FOB Brazilian border level.  Adjustments  for credit costs have 

also been made where appropriate. 

15 

(37)  The Chinese producers submitted that artificial  corundum in grain form originating 

in China must undergo further  processing by the importer in order to be made fit 

for sale in the Community market. The Commission found that the Chinese product 

actually underwent a number of processes including reseiving, removal of iron and 

finally packing  before  being  sold  to  the  end-users.  Moreover,  sometimes  the 

product  needed  to  be dried  and/or  made  more  cubic  (block  shaped).  The  costs 

relating to these operations have been deducted from normal value for the purpose 

of comparability with the export price of the Chinese product. 

(38)  Regarding other alleged physical differences  which are claimed to result in a lower 

quality of the Chinese product, no evidence has been provided to substantiate such 

allegations.  Hence, no further adjustment was granted in this respect. 

4.  Dumping margin 

(39)  In accordance  with  Article 2(11) of the Basic Regulation,  the weighted  average 

normal value per product type of artificial corundum was compared to the weighted 

average  export  price  of  the  corresponding  type.  This  comparison  showed  the 

existence of dumping, the dumping margins per type being equal to the amount by 

which the normal value exceeded the export price. 

(40)  Seven  Chinese  exporters  asked  that  individual  dumping  margins  should  be 

determined  for them. However,  some exporters did not provide any documentary 

evidence  to  support their  claim,  some others  only provided  the  business  licence. 

This document was not considered sufficient  to support the claim of these exporters 

to be independent from the State. Consequently their request could not be accepted. 

It  is  therefore  considered  appropriate,  in  accordance  with  previous  Community 

practice, to establish one country-wide dumping margin. 

i6 

(41)  This margin has been calculated by comparing the overall weighted average normal 

value  to  the  overall  weighted  average  export  price.  The  amount  of  this  dumping 

margin, expressed as a percentage of the CIF Community frontier export price duty 

unpaid, has been established to be 88.7%. 

E.  COMMUNITY  INDUSTRY 

(42)  The  complaining  Commumty  producers  which  took  part  in  the  investigation 

account  for  almost  50% of the total Community  production  of artificial  corundum. 

The  other  known  producers  did  not  fully  co-operate  in  the  investigation,  but 

expressed their support for the review of the measures in force. 

Given the above, the complaining Community producers which cooperated with the 

investigation  are  considered  to  constitute  the  Community  industry  within  the 

meaning  of  Article  4(1)  of  the  Basic  Regulation  for  the  purpose  of  the 

investigation. 

F.  INJURY 

1.  Community  consumption 

(43)  The  consumption  of  artificial  corundum  in  the  Community  increased  by  70,000 

tonnes  from  1992 (272,913 tonnes) to the end of the investigation  period  (343,185 

tonnes).  This represents an overall increase of 25%.  This increase was constant as 

from  1993, after a slight decrease in 1992-1993 by 2.4%. 

17 

2.  Volume and prices of the dumped imports 

2. J. Volume and market shares of imports 

(44)  The  volume  of  imports  from  China  increased  continuously  and  more  than 

quadrupled  during  the  period  examined,  from  13,403  tonnes  in  1992  to  54,836 

tonnes in  1995. The market  share of these imports followed  a  similar  progressive 

trend:  4.9%  in  1992,  6.6%  in  1993,k 9.7%  in  1994  and  16% in  1995,  gaining  a 

further  11% of market share since 1992. 

2.2. Prices of the dumped imports 

(45)  For the investigation period, the undercutting calculations were made separately for 

brown  and  white  corundum  and  each  type  was  classified  in  four  categories 

according  to  the  grain  mix.  For  the  purposes  of  comparison,  an  adjustment  was 

made to the exporters' prices of grain (ex-Community frontier)  to take account of 

customs  duty  and  anti-dumping  duty  plus  an  allowance  in  respect  of  processing 

costs  incurred  by  importers  in  the  Community  (based  on  information  collected 

during the investigation). The Community producers' prices were considered at ex-

works level. Comparisons were made at comparable levels of trade. The comparison 

showed a weighted average undercutting margin of 21.7% for  all types of  artificial 

corundum during the investigation period. 

18 

For  the  period  between  1991  and  1994,  while  undertakings  were  in  force,  the 

investigation  confirmed  that  the  Chinese  prices  (Eurostat  basis)  were  on  average 

below the Community industry's prices and, indeed, below the undertaking prices. 

Moreover,  the  ad  valorem  duty  of  30.8%  imposed  in  June  1994  was  largely 

absorbed by a subsequent 24% decrease in the export price between 1994 and 1995. 

2.3.  Conclusion 

(46)  The allegation made in the request for review was fully confirmed.  The volume and 

market  share  of  the  Chinese  imports  have  substantially  increased  in  the  period 

examined and the replacement of the undertakings by a duty has resulted in a further-

fall in export prices. 

3.  Situation of the Community industry 

3. J. Production, production capacity,  utilisation rate 

(47)  The production of the Community industry increased  regularly, with the exception 

of  1993, from  91,056 tonnes in  1992 to  102,821  tonnes in  1995.  However, this 

increase in production  of  11,500 tonnes (12.9%)  should  be seen in relation  to an 

increase in consumption of 70,000 tonnes (25%) during the same period. 

(48)  The production  capacity  of  the  Community  industry  remained  stable,  at  140,700 

tonnes for the period examined. 

19 

(49)  The capacity utilisation rate on average for the Community industry decreased "from 

66% in 1992 to 60% in 1993 and increased thereafter up to 73% in  1995, since the 

production increased and the production capacity did not significantly change. 

3.2. Sales volume and market share of the Commumty industry 

(50)  The  sales  of  the  complaining  Community  producers  increased  constantly  in  the 

period  considered  (with  the  exception  of  1993)  from  87,488  tonnes  in  1992  to 

93,531  tonnes  in  1995  (increase  by  6.9%).  However,  this  development  of  sales 

volume compared to the much more significant increase of the apparent Community 

consumption led to a decrease in the market share held by the Community industry 

from  32,1% in 1992 to 27,3% in 1995. 

3.3.  Stocks 

(51)  Stocks  of  artificial  corundum  held  by the  Community  industry  increased  regularly 

from 11,842 tonnes in 1992 to  17,160 in 1995 (increase by 45%). 

3.4.  Price evolution. 

(52)  The prices of the Community industry have been depressed over the past years. The 

Community producers had to  adapt their prices to  the  downward  pressure  exerted 

by the Chinese dumped imports. Prices decreased  on average by 8% from 1992 to 

1994, albeit there was a slight recovery (less than 2% on average ) after 1994. 

20 

3.5.  Profitability 

(53)  The Commission  found  that  during the period  considered,  the  artificial  corundum 

Community industry has recorded poor financial results. The worst financial results 

were recorded in 1994 (-23.6% on a weighted average basis) where prices were at 

their lowest. In 1995, (investigation period) losses decreased on a weighted average 

basis  to  -13.9%,  partly  as  a  consequence  of  an  increase  in  this  period  of  the 

Community  industry's  production  of  special  types  of  the  product  designed  for 

specific  applications.  However,  on average, losses were prevalent  throughout  the 

period. 

3.6.  Employment 

(54)  The  employment  levels  of  the  Community  industry fluctuated during  the  period 

under  consideration,  representing  in  1995  similar  levels  to  1992  (around  750 

persons). 

4.  Conclusion on  injury 

(55)  In  spite  of  the  measures  in  force,  an  overall  assessment  of  the  main  economic 

indicators leads to the conclusion that the artificial  corundum  Community industry 

continues to show clear signs of economic difficulties.  The production  and sales of 

the complainants increased  in the examined  period,  however, this increase did not 

reflect  the increase  in consumption  with a consequent  loss in market  share of 4.8 

percentage  points  between  1992  and  1995.  Financial  losses  were  prevalent 

throughout  the period examined and indeed the Community industry was unable to 

recover  from  the  price  pressure  and  financial  difficulties  encountered  when  the 

proceeding  was  reviewed  in  1991. It  is therefore  concluded  that  the  Community 

industry continued to suffer material injury during the period examined. 

21 

5.  Causation of injury 

-  -

5.1.  Dumped imports 

(56)  The extent to which the injury suffered  by the Community industry had continued to 

be  caused  by  the  dumped  imports  was  examined.  It  was  found  that  the  injury 

consisted mainly in financial losses resulting from depressed prices together with a 

loss in market  share in an expanding market.  In this context,  it is noted  that  the 

market share of the Chinese imports substantially increased at the same time as the 

Community  industry's  market  share  decreased.  Moreover^  the  Chinese  prices 

significantly undercut those of the Community industry. It was therefore  concluded 

that the Chinese imports largely contributed to the continued injury sustained by the 

Community industry. 

5.2.  Other imports 

(57)  The effect  of imports from other third countries in determining the injury suffered by 

the Commumty industry were analysed. 

Measures on artificial  corundum were in force  until 26 July  1996 for  a number of 

countries  namely  Hungary,  Poland,  the  Czech  Republic,  Brazil,  the  Republic  of 

Slovenia, the Russian Federation and Ukraine. No expiry review of these measures 

was requested by the Community industry which considered  that the imports  from 

the above-mentioned countries no longer constituted a threat to this industry. 

22 

On the  basis  of  Eurostat  data,  the  investigation  confirmed  that  during  the  period 

examined,  imports from the above  countries  remained  relatively  stable  in terms  of 

market  share  (slight  increase  for  Russia  and  Ukraine).  Moreover,  the  prices  of 

imports originating in these countries were in all cases consistently higher than the 

Chinese prices and indeed there were no  indications that  such imports were being 

dumped. 

5.3. Structure of the industry 

(58)  The Commission  examined whether the difficulties  faced  by the  industry  could  be 

attributed  to  structural  problems.  It  was  found  that  considerable  efforts  of. 

rationalisation have been made by the Community industry allowing this industry to 

develop  the  production  of  a  significant  range  of  types  of  artificial  corundum, 

including special types, and to be competitive with regard to the product concerned. 

Moreover,  this  industry  has  made  significant  investments  in  particular  to  comply 

with environmental requirements and is overall modernized. 

5.4.  Conclusion on causation 

* * 

(59)  No  other  factors  were  found  which  could  have  had  a  particular  impact  on  the 

situation of the Community industry.  It is therefore concluded that the imports  from 

China,  because  of  their  increased  volumes  and  low  prices  have,  in  isolation, 

continued to cause material injury to the Community industry. 

23 

^6.  Likelihood of continuation of dumping and injury 

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

the measures in force, the following  was considered: 

(61)  - Since measures  were  first  imposed  in  1984, the Community  industry  of  artificial 

corundum  has undergone  considerable restructuring,  with  some companies  closing 

down  and  others  merging.  Furthermore,  the  industry  has  tended  to  develop  the 

production  of  more  specialized  types  of  artificial  corundum,  in  particular  that  of 

white  corundum.  In  spite  of  these  restructuring  efforts,  the  present  review  has 

shown  that  continued  dumping  and  price  undercutting  has  jeopardized  the 

possibility  of  the  industry's  recovery,  with  low  financial  results  incurred  by  all 

producers.  Should  measures  be  allowed  to  lapse,  this  could  only  worsen  the 

difficulties  faced by this industry. 

(62)  - As  regards  the  issue  of  dumping,  it  is  noted  that  the  measures  in  force  have,  in 

recent times, generally been insufficient  to prevent dumping from  continuing with a 

consequent  substantial  increase  in  the  volume  of  the  imports  concerned.  The 

market  share  of  the  Chinese  imports  increased  from  5% in  1992  to  16% in  1996. 

Moreover,  it  is  noted  that  the  undertakings  in  force  between  1991  and  1994  were 

not  adhered  to  and the  ad valorem  duty  subsequently  imposed  in  1994  as a  result, 

has been largely  absorbed by a significant  decrease in the export price.  In the light 

of the behaviour  of the exporters concerned  and the rate of increase of the  Chinese 

imports,  the  indications  are  that  dumping  is  likely  to  continue,  causing  further 

injury  in the absence of effective  measures. 

24 

(63)  It  follows  from  the  foregoing  that  an  expiry  of the measures  would t>e likely  to 

increase  the  injurious  effects  of  dumping  and,  consequently,  further  weaken  the 

situation  of  the  Community  industry.  A  continuation  of  the  measures  appears 

therefore warranted, but they have to be adapted in the light of findings on dumping 

and injury  based on the results of the present investigation, in order to ensure that 

the measures are appropriate in the circumstances found. 

G.  COMMUNITY INTEREST 

1.  The Community artificial corundum industry 

(64)  The  Community  artificial  corundum  industry  was  in  the  investigation  period 

composed  of  large  companies  located  in  different  Member  States.  Artificial 

corundum  represents  an  important  branch  of  their  activities  for  which  constant 

investment  has  been  made  in  the  recent  years  in  order,  in  particular,  to  ensure 

compliance of production methods with environmental requirements. Furthermore, 

this  industry  is  able  to  supply  a  wide  range  of  types  tif  artificial  corundum, 

including a number of specialities which are designed for  specific  applications, in 

particular  in  the  steel  and  car  manufacturing  industries.  The maintenance  of this 

industry is therefore, from the viewpoint of variety and capacity for  specialisation, 

in the interest of users in the Community. In this context, it is noted that although 

not all types of the product have been imported  from  China, the investigation has 

shown that the continued  imports at low prices of certain types of corundum  are 

putting at risk the viability of the Community industry as a whole and that a further 

deterioration  could be expected in the absence of effective measures. 

25 

(65)  One association of abrasive producers pointed out that the anti-dumping_ measures 

have been in force for a considerable period. This association claimed that in the 

recent past a number of producers had closed  down and others  merged  with the 

result that the number of suppliers on the side of the Community industry had been 

considerably  reduced  and  might  therefore  no  longer  justify  the  continued 

imposition of the measures. 

In this respect, it is noted that the present producers of artificial  corundum account 

for  a  significant  production  capacity,  which  would  allow  the  supply  of 

approximately  90% of  the  artificial  corundum  consumption  in  the  investigation 

period. Furthermore, the industry has undergone considerable restructuring over the 

past years in a attempt to rationalise production; however these efforts  have been 

largely  undermined  by  the  continuous  and  increasing  presence  of  the  dumped 

imports. In particular, it is noted that the duty imposed in 1994 was almost entirely 

absorbed, thus, undermining any useful effects of the measures to the industry. 

(66)  It was also claimed that the Community producers had a dominant position due to 

recent  consolidations  in  the  market  and  that  this  position  would jeopardise  the 

conditions  of competition  on the Community market.  It should  be noted  that the 

merger  referred  to,  which  concerned  one  complainant  producer  and  another 

producer  in  Austria  was  authorised  pursuant  to  the  Community  competition 

legislation. Furthermore, given the existence of other Community producers in the 

market  (a total  of four  producers  following  the said merger) and the presence of 

imports from a number of countries, this claim does not appear to be justified. 

26 

2.  The user industry 

(67)  It  is  recalled  that  the  Community  users  of  artificial  corundum  are  mainly  the 

manufacturers  of  abrasives  (such  as  grinding  and  cutting  wheels  and  disks, 

sandpaper  and  abrasive  paper)  and  the  industry  of  refractory  products  (refractory 

masses for furnaces  and safes). 

The  abrasive  applications  account  for  70  %  of  the  Community  consumption  and 

refractory  applications for 30 %. 

(68)  No  users  contacted  the  Commission  following  the  publication  of  the  notice  of 

initiation.  The  Commission  has  nonetheless  sent  questionnaires  to  a  number  of 

known  major  users  of  artificial  corundum  in  the  Community  which  represented  a 

variety  of possible  uses  of the product  either  imported  from  China  or  Community 

produced.  Several  replies were received from companies  and from one  association 

of users 

(69)  The  information  provided  was  mostly  of  a  general  nature  and  to  a  large  extent 

incomplete  and  contained  insufficient  indications  on the  impact  of  measures.  On 

the  basis  of  all  the  information  provided  for  both  abrasive  and  refractory  uses,  it 

appears  that  the  potential  impact  of  the  anti-dumping  measures  would  vary 

considerably  according  to  the  content  of  artificial  corundum  in  the  end  products 

which,  in  turn,  depends  on  the  applications  in  both  the  abrasive  and  refractory 

industries. Indeed, the cost of artificial  corundum  in the final production cost of the 

end products  was estimated  to range in the abrasive  industry from  5% to  25% and 

in the refractory  industry  from  8% to 40%. However, any potential  effect  of a duty 

would  be  minimised  by  the  fact  that  all  users  provide  themselves  with  artificial 

corundum  from  a  large  number  of  countries  as  well  as  from  the  Community 

industry. 

\ 

27 

Considering  that  users  purchase  artificial  corundum  from  different  sources  and 

taking  into account the level of consumption  of Chinese  artificial  corundum  in the 

Community  in the investigation period, it was estimated that the average impact of 

an  increase  in the rate of duty  on the costs  of these  industries'  products  would  be 

for the abrasive industry  1.2% and for the refractory  industry 3%. 

(70)  Furthermore,  there  appear  to  be  users  for  whose  specific  applications  artificial 

corundum  from  China  could  not  be  used.  These  users  reported  that  they  were 

dependent on the Community industry supplies. 

(71)  One manufacturer  of abrasive products commented  that the duty  could  result  in an 

encouragement  to the Chinese producers to no longer trade artificial  corundum  but 

manufacture  and  export  finished  products  instead.  However,  no  evidence  was 

provided  that  this  would  be  a  probable  consequence  of  maintaining  the  anti 

dumping  duties  and  would  in any event not  be a sufficient  reason  in  itself  for  not 

imposing duties. 

(72)  It  was  also  submitted  that  some  users  of  artificial  corundum  were  suffering  from 

the  adverse  effects  of  competition  both  on  the  Community  market  and  the  third 

country  markets  from  third  country  competitors  which  could  purchase  raw 

materials  not  subject  to  anti-dumping  measures.  Given  the  wide  diversity  of 

applications  of  the  product  concerned  ,  the  general  nature  of  these  allegations, 

which were not sustained by substantiated evidence, were too imprecise to show to 

what extent such negative effects  would  affect  the users concerned. In any event, it 

is  to  be  recalled  that  the  investigation  has  proven  that  the  existing  anti-dumping 

duty  has  been  absorbed  by  the  Chinese  exporters  and  that  the  measures  in  force 

.previous to  ad valorem  duties  were not  adhered  to. As a consequence,  any  alleged 

decrease  in  fair  competition  cannot  be  attributed  to  the  anti-dumping  duties  in 

force. That argument has therefore to be rejected. 

28 

(73)  It was also claimed  by two abrasive users of artificial  corundum  that  anti-dumping 

duties  on  artificial  corundum  from  China  would  lead  to  relocation  of  production 

and job losses. 

In the present  case, one of the two companies which claimed  that relocation  could 

take  place  because  of  anti-dumping  measures  has  already  relocated  part  of  its 

production  to  a  third  country,  justifying  this  notably  by  the  lower  labour  costs 

outside the  Community  ; the other user admitted that relocation  was an  alternative 

to high costs of production and expenses related to importation and was a common 

trend among its competitors, irrespective of anti-dumping measures. 

Given,  in  addition,  that  anti-dumping  duties  can  hardly  be  blamed  for  being 

responsible  for  relocation  decisions  taken  previously,  since  it  was  clearly 

established  during  the  investigation  that  the  anti-dumping  duty  has  been  absorbed 

completely  by the Chinese exporters and has not had the expected  effect  on prices, 

this argument has to be rejected. 

(74)  A shortage of supply of certain types of artificial  corundum was also alleged by one 

user  which  had  contacted  one  Community  producer  which  could  not  at  that  time 

deliver  all  the  requested  quantities.  Another  user,  on  the  contrary,  wrote  that  no 

shortage of supply took place to his knowledge. No other user raised this argument, 

which has consequently to be rejected. 

(75)  One user claimed that, in the context of trade globalisation, no anti-dumping  duties 

should be imposed. 

29 

It  is  recalled  that  anti-dumping  measures  are  imposed  in  order  to  maintain  fair 

conditions  of  trade  and  competition  in  accordance  with  Community  legislation 

adopted in conformity  with the World Trade Organisation rules.  Given that this is 

not contested by the user in question, the allegation was not considered to be valid. 

(76)  It  must  also  be  noted  that  some  users  expressly  indicated  that  anti-dumping 

measures  would  have  a  favourable  effect  on  them  since,  quality  and  proximity 

being reported to be the decisive factors for the choice of the supplier of  artificial 

corundum by certain types of user, the defence  of the situation of the Commumty 

industry  would  provide  such  advantages  in  the  future  and  therefore  be  in  these 

users' interest. 

(77)  Finally, it is considered that, although anti-dumping duties should allow the prices 

of the Community industry to increase, any increase would be limited by the high 

level  of  competition  in  the  Community  market  and  the  number  of  alternative 

sources.  Overall,  the  amended  measures  should  therefore  not  result  in  any 

significant adverse effect on users. 

3.  Conclusion on Community interest 

(78)  In the light of the above, it is considered that there are no compelling reasons for 

not maintaining the measures in the present case.  Furthermore, it should be noted 

that  the  Community  industry  has  made  considerable  investments  and  that  this 

restructuring  has  led  to  improved  efficiency. 

It  is  therefore  concluded  that  the 

Community  interest calls for  anti-dumping  measures to be maintained  in order to 

eliminate the injurious  effects  of dumped imports and that the measures should be 

amended in accordance with the present findings. 

30 

H.  MEASURES 

(79)  When  calculating  the  adequate  amount  of  duty,  the  Council  has  noted  that  the 

injury  caused  to the Community  industry  consists mainly  of  substantial  financial 

losses due to depressed prices resulting from price undercutting. It is thus necessary 

that  the  measures  taken  allow  the  Community  industry  to  improve  its  financial 

situation in the future. 

(80)  In  this  respect,  an  injury  elimination  level  has  been  calculated,  based  on  the 

weighted average cost of production per product type of the Community producers 

plus  a  profit  of  5% considered  reasonable  for  this  type  of  industry.  This  injury 

elimination  level was then compared  to the weighted  average  import  prices  on a 

CIF  basis,  duties  paid,  for  the  same  product  types  as  used  for  the  undercutting 

calculations  and adjusted  to take account  of import and processing  costs incurred 

by the importers. 

Since the result of this comparison showed a  higher injure level than the dumping 

margin  established,  the  duty  should  be based  on the  dumping  margin  found  i.e. 

88.7% in accordance with Article 7(2) of the Basic Regulation. 

(81)  In order to ensure the effectiveness  of the measures and minimise the risk that the 

duty be evaded by price manipulation,  it is considered  appropriate  to express the 

duty as a fixed amount of ECU per tonne. 

The  amount  of  the  duty  has  been  calculated  on  the  basis  of  the  dumping  level 

mentioned above and amounts to 204 ECU per tonne. 

31 

HAS ADOPTED THIS REGULATION: 

Article 1 

Article  1  of Regulation (EEC) No 2552/93  shall be replaced by the following: 

'Article 1 

1.  A  definitive  anti-dumping  duty  is  hereby  imposed  on  imports  of  artificial 

corundum, falling  within CN codes  2818  10  10 and 2818  10 90  originating in the 

People's Republic of China. 

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

before customs clearance, shall be 204 ECU per tonne. 

3.  Unless  otherwise  specified,  the  provisions  in  force  concerning  customs  duties 

shall apply.' 

Article 2 

This Regulation  shall  enter  into  force  on  the  day  following  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, 

32 

ISSN 0254-1475 

COM(97) 468 final 

DOCUMENTS 

EN 

02  05  08  11 

Catalogue  number  :  CB-CO-97-482-EN-C 

ISBN  92-78-24963-7 

Office  for  Official  Publications  of the European  Communities 

L-2985  Luxembourg