Proposal for a Council Regulation (EC) imposing a definitive anti-dumping duty on imports of tungsten carbide and tungsten fused carbide originating in the People's Republic of China
Date: 1998-03-12
Institutions: European Commission
Subjects: China, anti-dumping duty, competition law, import (EU), tungsten

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 12.03.1998 
COM(1998) 142  final 

Proposal for a 

COUNCIL REGULATION (EC) 

IMPOSING A DEFINITIVE 

ANTI-DUMPING DUTY ON IMPORTS OF TUNGSTEN CARBIDE AND 

TUNGSTEN FUSED CARBIDE 

ORIGINATING IN THE PEOPLE'S REPUBLIC OF CHINA 

(presented by the Commission) 

EXPLANATORY  MEMORANDUM 

1. 

In  September  1990, by  Regulation  (EEC)  N°  2737/90,  the  Council  imposed  a 

definitive  anti-dumping  duty  on  imports  of tungsten  carbide  and  fused  carbide 

originating  in  the  People's  Republic  of  China.  By  Decision  90/480/EEC  the 

Commission accepted undertakings given by two major exporters concerning the 

product subject to measures. 

2. 

Following  the  withdrawal  of  the  undertakings  by  the  two  Chinese  exporters 

concerned,  the  Council,  by  Regulation  (EC)  N°  610/95  of  22  March  1995, 

amended  Regulation  (EEC)  2737/90  and  imposed  a definitive  duty  of  33%  on 

imports of tungsten carbide and fused  carbide. 

3. 

In  June  1995,. a  request  for  a  review  pursuant  to  Article  11(2)  of  Council 

Regulation  (EC)  N°  3283/94  was  lodged  by  Eurométaux  on  behalf  of 

Community  producers  representing  a  major  proportion  of  the  Community 

production of tungsten  carbide and fused  carbide. This request  for  a review was 

made  on  the  grounds  that  there  was  still  dumping  and  that  the  expiry  of  the 

existing  anti-dumping  duty  on  imports  of  tungsten  carbide  and  fused  carbide 

originating in the People's Republic of China would lead to recurrence of injury. 

4.  On  21  September  1995,  by  a  notice  published  in  the  Official Journal  of  the 

European Communities, the  Commission  announced  the  review  of  Regulation 

(EEC) N° 2737/90. 

5. 

The  present  review  exceeded  the  period  of  one  year  within  which  it  should 

normally have been concluded, due to the complexity of the investigation,  and in 

particular  due  to  the  difficulties  in  obtaining  reliable  data  of  an  appropriate 

analogue  country.  Furthermore,  two  other  investigations  concerning  tungsten 

products, i.e. tungsten ores and concentrates on the one hand, and tungstic oxide 

and acid on the other hand, were initiated  at the same time as the present  review 

and had to be carried out in parallel given the links between these products in the 

tungsten production chain. 

t i) 

The  investigation  showed  that  tungsten  carbide  and  fused  carbide  from  the 

People's  Republic  of  China  was  being  exported  to  the  Community  with  a 

dumping margin of 30.6% and that, in the event  of the expiry  of the measures, 

material  injury  would  recur  for  the Community  industry,  notably  in the form  of 

financial  losses and  continuing  and even growing losses of market  share by this 

industry. 

The Community user industry made its views known. After  having examined  all 

the arguments put forward  by the interested  parties, it was concluded  that  there 

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

continuation of the measures appears therefore warranted. 

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

Council adopts the draft  Regulation annexed, imposing a definitive  anti-dumping 

duty on imports of tungsten carbide and fused  carbide originating in the People's 

Republic of China. 

o.^ 

Proposal for a 

COUNCIL REGULATION (EC) N°.../98 

OF... 

IMPOSING A DEFINITIVE 

ANTI-DUMPING DUTY ON IMPORTS OF TUNGSTEN CARBIDE AND 

TUNGSTEN FUSED CARBIDE 

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 

Community 1, as amended by Regulation (EC) N° 2331/96^ and in particular Articles 

9(4) and 11(6) thereof, 

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

Advisory Committee, 

Whereas: 

1  OJN°L 56, 6.3.1996, p.l. 
2  OJN°L 317, 6.12.1996, pi 

A. PROCEDURE 

1.  Measures in force 

(1)  By  Regulation  (EEC)  N°  2737/903,  the  Council  imposed  a  definitive  anti 

dumping  duty  on  imports of tungsten  carbide  and  fused  carbide  originating  in 

the  People's  Republic  of  China.  By  Decision  90/480/EEC^  the  Commission 

accepted  undertakings  given  by  two  major  exporters  concerning  the  product 

subject to measures. 

Following  the  withdrawal  of  the  undertakings  by  the  two  Chinese  exporters 

concerned,  the  Commission  imposed  by  Regulation  (EC)  N°  2286/94^  of  23 

September  1994 a provisional anti-dumping duty on the product concerned. 

By  Regulation  (EC)  N°  610/956  of  22  March  1995,  the  Council  amended 

Regulation (EEC) 2737/90 and imposed a definitive  duty of 33% on imports of 

tungsten carbide and fused carbide. 

3  OJ N° L 264,27.9.1990, p 7 
4  OJ N° L 264,27.9.1990, p 59 
5  OJ N° L 248,23.9.1994, p 8 
6  OJN°L 64,22.3.1995,  pi 

2. 

Request  for  review 

(2)  Following  the  publication  in  February  1995  of  a  notice?  of  the  impending 

expiry  of the measures in force, the Commission  received  a request  for  a review 

of  these  measures  lodged  by  Eurométaux,  on  behalf  of  three  Community 

producers  representing, with the exception  of one  small producer,  the totality  of 

the  producers  of  the  product  concerned  in  the  Community.  The  request 

contained  evidence  of  dumping  of  the  product  originating  in  the  People's 

Republic  of China and  of renewed  material  injury  likely  to recur in the event  of 

expiry  of  the  existing  measures.  This  evidence  was  considered  sufficient  to 

justify  the initiation of a review  investigation. 

(3)  On  21  September  1995, the  Commission  announced  by  a  notice  published 

in 

the Official  Journal  of the European  Communities^, the initiation  of a review  of 

Council  Regulation  (EEC) N°  2737/90. This  review  was  initiated  under  Article 

11(2)  of  Council  Regulation  (EC) N°  3283/949  which  was  replaced  during  the 

investigation  by Regulation  (EC) N°  384/96  (hereafter  referred  to  as the  "Basic 

Regulation"). 

7  O J N °C  48, 25.2.1995, p.3 
8  OJ N° C 244, 21.9.1995, p.3, p.4 and p.5 
9  O J N °L  349, 31.12.1994,  pi 

3. 

Investigation 

(4)  The  Commission  officially  advised  the  producers/exporters  and  importers 

known  to  be  concerned,  the  representatives  of  the  exporting  country  and  the 

complainant Community producers of the initiation of the review. 

(5) 

Interested  parties  were  given  the  opportunity  to  make  their  views  known  in 

writing and to request a hearing within the time limit set in the above notice. 

(6)  The Commission  sent  questionnaires  to all parties known to be concerned  and 

received  replies  from  the  three  complainant  Community  producers,  three 

importers  which  were  also  users  of  the  product  concerned  and  from  two 

exporters/producers  and  an 

importer 

in 

the  Community 

related 

to 

exporters/producers.  The Community  producers, exporters/producers  and  some 

importers/users made their views known in writing and were granted a hearing. 

(7)  The Commission sought and verified all information it deemed necessary for the 

purpose of the investigation and carried out verification  visits at the premises of 

the following companies: 

a) 

Community producers 

- Wolfram  Bergbau und Huttengesellschaft  m.b.H., St Peter,  Austria 

- H. C. Starck GmbH & Co KG, Goslar, Germany 

- Eurotungstène Poudres, Grenoble, France 

b) 

Importers/users in the Community 

- AB Sandvik Hard Materials, Sweden 

- Seco Tools AB, Sweden 

c) 

Related importer 

- Minmetals North-Europe AB,  Sweden 

d) 

Producer  in the analogue country 

- Teledyne Advanced Materials, USA 

(8)  The  investigation  of  dumping  covered  the  period  from  1 October  1994 to  30 

September  1995  (hereafter  referred  to  as  the  "Investigation  Period").  The 

examination  of  injury  covered  the  period  from  1991  up  to  the  end  of  the 

Investigation Period. 

(9)  The  present  review  exceeded  the  period  of  one  year  within  which  it  should 

normally  have  been  concluded  pursuant  to  Article  11 (5)  of  the  Basic 

Regulation, due to the complexity  of the investigation,  and  in particular  due to 

the  difficulties  in  obtaining  reliable  data  on  an  appropriate  analogue  country. 

Furthermore,  two  other  investigations  concerning  tungsten  products,  i.e. 

tungsten ores and concentrates on the one hand, and tungstic oxide and acid on 

the other hand, were initiated at the same time as the present review and had to 

be carried out in parallel given the links between these products in the tungsten 

production chain. 

B.  PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT 

1. 

Product under consideration 

(10)  The  product  concerned  by  the  present  review  is  the  same  as  the  one  under 

consideration in Council Regulation (EC) N° 2737/90 and falls within CN code 

2849 90 30. 

Tungsten  carbide  and  fused  tungsten  carbide  are  compounds  of  carbon  and 

tungsten produced by heat treatment (carburisation in the first case, fusion  in the 

second). Both products are intermediate products, used as input materials in the 

manufacture  of hard metal components  such as cemented  carbide  cutting tools 

and high-wear components, in abrasion-resistant coatings, in bits for oil drilling 

and  mining  tools  as  well  as  in  dies  and  tips  for  the  drawing  and  forging  of 

metals. 

(11)  An allegation was made by an importer that tungsten carbide and fused  tungsten 

carbide were different  products.  The arguments put forward  were mainly based 

on  the  different  manufacturing  processes  and  the  differences  in  chemical 

characteristics. 

However,  the  investigation  has  shown  that,  although  their  manufacturing 

process is different,  tungsten carbide and fused  tungsten carbide have the same 

chemical  composition  (both  consist  of  approximately  92  to  94%  of  tungsten 

metal  and  4  to  6%  of  carbon)  and  come  from  the  same  stage  in  the  tungsten 

' 

production  chain,  i.e.  between  tungsten  metal  powder  and  carbide  tools  and 

wear-resisting  materials.  Furthermore,  they  are  put  to  similar  end-uses  in  the 

industry,  i.e.  as  a  surface  hardening  component.  Although  for  certain  specific 

and limited applications which require higher wear and abrasive resistance only 

fused  tungsten carbide is used, fused  tungsten carbide and tungsten carbide are 

generally  interchangeable.  It  was  therefore  concluded  that,  as  in  the  original 

investigation, fused tungsten carbide and tungsten carbide are one single product 

for the purpose of the investigation. They are hereafter referred to as "carbide" . 

2 

Like product 

(12)  As  established  in  the  original  investigation,  the  review  investigation  has 

confirmed  that  the  products  exported  by  the  People's  Republic  of  China  and 

those manufactured  and sold by the Community producers and by producers in 

the analogue country  were like products within the meaning  of Article  1(4) of 

the  Basic  Regulation,  because  they  have  essentially  the  'same  physical 

characteristics and end-uses. 

C. CONTINUATION AND LIKELIHOOD OF RECURRENCE OF DUMPING 

1. 

Preliminary Remarks 

(13)  In  accordance  with  Article  11(2)  of  the  Basic  Regulation,  the  purpose  of  the 

present  review  was  to  determine  whether  or  not  the  expiry  of  the  measures 

would  lead  to  a  continuation  or  recurrence  of  dumping,  in  particular  by 

examining whether dumping continued to take place after  the adoption of anti 

dumping measures. 

2.  Analogue country 

(14)  Since the People's Republic of China is not a market economy country, normal 

value  had  to  be  determined  on  the  basis  of  information  obtained  in  a  third 

country market economy (hereinafter the "analogue country"). 

For  this  purpose  South  Korea  had  been  suggested  by  the  complainants.  The 

notice  of  initiation  envisaged  the  use  of  this  country  as  an  analogue  country. 

Although  substantial  efforts  were  made  to  secure  co-operation  from  several 

South Korean manufacturers  of the product concerned, these producers  refused 

to co-operate. 

(15)  As an alternative, the complainants had suggested the use of the United States of 

America as an analogue country.  In addition, the use of Israel  for  this purpose 

was  also  considered  in  the  light  of  the  readiness  of  the  Israeli  manufacturer 

Metek  Metal Technology  Ltd. to co-operate  not only  in the review  concerning 
tungstic  acid10,  but  also  in  this  review.  However,  when 

tungstic  oxide  and 

analysing  the  data  submitted  by the  Israeli  producer  Metek  Metal  Technology 

Ltd., it became clear that this company did not sell the product concerned on its 

domestic market. 

In the present case, only the US market seemed to provide for sufficient  sales in 

the  ordinary  course  of trade  of  domestically  produced  carbide.  One  major  US 

producer  of  carbide,  Teledyne  Advanced  Materials  (hereinafter  "Teledyne"), 

offered  to co-operate. 

The following facts and considerations were decisive for the choice of the 

United States of America as an appropriate analogue country: 

- the carbide produced in the US had the same characteristics as that produced in 

the People's Republic of China and exported to the Community ; 

10  OJN°L 

,p 

10 

- the carbide manufacturing  process of the co-operating US producer  is based  on 

the  calcination  into  tungstic  oxide  of  domestically  produced  or  imported 

ammonium  paratungstate  which  is  further  carburised  into  tungsten  carbide,  or 

on  the  direct  carburisation  of  imported 

tungstic  oxide,  as  well  as  the 

reprocessing  of  various  tungsten  containing  scrap  compositions.  It  is  similar  to 

the  manufacturing  process  of  the  Chinese  producers,  assessed  on  the  basis  of 

data  available  from  the  co-operating  Chinese  exporters/producers.  It  is  modern 

and efficient,  and proved to be profitable  during the Investigation  Period. 

-  in terms  of  sourcing,  Teledyne  had  unimpeded  access to the  raw materials  for 

the  production  of  carbide,  namely  ammonium  paratungstate  and  tungstic  oxide, 

which  were  purchased  at  world  market  prices  during  the  Investigation  Period 

from  different  sources of supply. 

- the US producer  sold around  85% of its production  on the US market,  an  open 

and  representative  domestic  market  with  a  considerable  number  of  end  users, 

where  it  competed  with  six  other  local  producers  of  carbide.  The  US  market 

showed  a  competitive  structure  of  supply  and  demand,  further  bolstered  by 

significant  import  volumes  of  carbide  from  various  countries  (the  People's 

Republic  of China,  South Korea, Israel  etc.). Nothing  was found  to  suggest  that 

costs  and  prices  were  not  governed  by  the  economic  forces  of  a  non-regulated, 

free market  economy. 

11 

(16)  On  the  basis  of  the  above  factors,  and  in  accordance  with  Article  2(7)  of  the 

Basic Regulation,  the United  States of America  was, therefore,  considered  to be 

an  appropriate  and  not  unreasonable  choice  of  an  analogue  country  for 

establishing normal value for the product under  investigation. 

No objections were raised to the choice of the US as an analogue  country, 

neither by the Chinese exporters/producers  nor by the Chinese authorities, nor 

by any other party  concerned. 

3 

Normal value based on domestic  sales 

(17)  In  accordance  with  Article  2  (2)  of  the  Basic  Regulation  it  was  examined 

whether  the  volume  of  sales  of  carbide  by  Teledyne  on  the  domestic  market 

reached  at  least  5%  of  the  volume  of  the  product  concerned  exported  by  the 

People's  Republic  of  China  to  the  Community.  It  was  found  that  the  domestic 

sales  of  the  like  product  achieved  by  Teledyne  represented  a  multiple  of  the 

volume of the exports made by the Chinese exporters to the  Community. 

(18)  It  was  subsequently  examined  whether  the  domestic  sales  of  Teledyne  to 

independent  customers  could  be  considered  to  have  been  made  in  the  ordinary 

course of trade. 

12 

Whether  or  not  domestic  sales  were  made  in  the  ordinary  course  of  trade  was 

determined  pursuant  to  Article  2(4)  of  the  Basic  Regulation.  It  was  found  that 

the  weighted  average  selling  price  of  all  sales  during  the  Investigation  Period 

was  equal  to  or  higher  than  the  weighted  average  unit  cost  of  production,  and 

that  the  volume  of  individual  sales  transactions  below  unit  cost  of  production 

was  less than  20% of  sales being  used  to  determine  normal  value;  therefore  all 

domestic  sales  were  regarded  as  having  been  made  in  the  ordinary  course  of 

trade. 

(19)  Normal  value  was  therefore  based,  as  set  out  in  Article  2(1)  of  the  Basic 

Regulation, on the basis of the prices paid or payable of all domestic  sales of the 

carbide  to  independent  customers  of  Teledyne  in  the  US  market  during  the 

Investigation  Period. 

4. 

Export prices 

(20)  Comprehensive  data  were  received  on  export  prices  from  two  Chinese 

producers/exporters  and  four  importers. The  data  covered  almost  the  totality  of 

Chinese  exports  concerned  carbide  to  the  Community  during  the  Investigation 

Period, as confirmed  by Eurostat  figures. 

13 

For  those  Chinese  exports  which  were  sold  directly  for  export  to  independent 

customers  in the  Community,  export  prices were  established  on the  basis  of  the 

prices  actually  paid  or  payable  for  the  product  concerned,  in  accordance  with 

Article 2 (8) of the Basic Regulation. For a significant  percentage of the  Chinese 

exports  which  were  made through  a related  company  (Minmetals  North-Europe 

AB),  export  prices  were  constructed  on  the  basis  of  resale  prices  to  the  first 

independent  customers  in  the  Community,  in  accordance  with  Article  2  (9)  of 

the  Basic  Regulation.  An  adjustment  was  made  for  all  costs,  including  duties 

and  taxes  incurred  between  importation  and  resale,  and  for  profit.  The  profit 

margin  was  established  on  the  basis  of  data  obtained  from  the  unrelated 

importers in the same business  sector. 

5. 

Comparison 

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

normal  value, on a  FOB  US  border  basis, was  compared  to  a weighted  average 

export price on a FOB China border basis, and at the same level of trade. 

For  the  purpose  of  a  fair  comparison,  in  accordance  with  Article  2(10)  of  the 

Basic  Regulation,  due  allowance  in  form  of  adjustments  was  made  for 

differences  in respect of transport, insurance, credit costs, handling and  ancillary 

costs, which were claimed and demonstrated to affect  price  comparability. 

6. 

Dumping  margin 

14 

The  above  comparison  showed  the  existence  of  dumping,  the  dumping  margin 

being equal to the amount by which the normal value exceeded the export price. 

Expressed  as a percentage  of the free-at-Community  frontier  price, duty  unpaid, 

the single weighted average dumping margin amounts to 30,6%. 

D.  COMMUNITY  INDUSTRY 

(22)  A  number  of  claims  were  made  by  the  Chinese  exporters/producers  and  some 

users  concerning  the  definition  of  the  Community  industry  and  the  standing  of 

the producers supporting the review request. 

(23)  The  Chinese  exporters/producers  claimed  that  one  of  the  producers  supporting 

the  review  request  was  related  to  one  importer  of  Chinese  carbide  and  should 

therefore  be  excluded  from  the  definition  of  the  Community  industry,  pursuant 

to Article 4(1 )(a) and (2) of the Basic Regulation. 

15 

It  was  established  during  the  investigation  that  the  two  companies  concerned 

although related had no control  over each other.  Moreover,  these companies  had 

conflicting  interests  regarding  the  imposition  of  the  anti-dumping  measures. 

One company  was producing  carbide whereas the other company  was  importing 

the  product  concerned.  It  was  found  that  the  two  companies  were  acting 

autonomously  when  defining  and  pursuing  their  business  strategy.  Overall,  it 

was  concluded  that  their  relationship  did  not  influence  the  behaviour  nor  did  it 

distort  the  analysis  of  the  economic  situation  of  the  Community  producer  in 

question  as regards  the product  concerned  and  there  was therefore  no  reason  to 

exclude this producer from  the definition  of the Community  industry. 

(24)  As  mentioned  in recital  (2), the  request  for  review  was  submitted  by  producers 

representing  almost  the  totality  of  the  production  of  carbide  intended  for  sales 

on the open market and, accordingly, they constituted the Community  industry. 

This  was  contested  by  a  number  of  integrated  producers  of  tungsten  end-

products  in  the  Community  (tools,  hard  metals),  producing  small  quantities  of 

carbide exclusively  for  internal consumption  .  Specifically,  they argued that the 

representativity  of  the  producers  supporting  the  review  should  be  assessed  by 

reference  to the totality  of the  Community  production  of the product  concerned 

(including  their  own  captive  production)  and  that,  on  this  basis,  the  producers 

supporting the review were not representative of the Community  industry. 

16 

(25)  This  issue  was examined  but  it was  concluded  that  the  argument  was  incorrect. 

Indeed,  even  if the output  of the  companies  which  only  produce  for  captive  use 

was taken  into  account,  the  producers  supporting  the  review  request  would  still 

account for  60% of the overall Community  production  of the product  concerned, 

thus  fulfilling  the  criteria  of Article  5(4)  of the  Basic  Regulation.  In addition,  it 

was confirmed  that the producers  supporting the review accounted  for  almost  all 

Community  production of carbide intended for  sales in the open  market. 

(26)  Given  the  above,  the  producers  supporting  the  review  request  constitute  the 

Community  industry  within  the  meaning  of  Articles  4(1)  and  5(4)  of  the  Basic 

Regulation.  For  the  remainder  of  this  Regulation,  the  term  "Community 

industry" will be used to refer to the companies supporting the review. 

E.  LIKELIHOOD OF CONTINUATION  OR RECURRENCE  OF  INJURY 

1. 

Preliminary  remarks 

(27)  When  examining  injury,  it  should  be  recalled  that  carbide  is  part  of  an  entire 

production  chain  of tungsten  products  and  that,  therefore,  any  developments  of 

the  market  for  the  product  concerned  should  be  seen  in  conjunction  with  the 

developments for the other products in the production  chain. 

Conclusions with regard to injury  were based on data relating to the  Community 

as composed  at the time of the initiation of the review, i.e. the Community  of  15 

Member States. 

17 

2. 

Community  consumption 

(28)  For  the  purpose  of  the  investigation,  and  as  the  Community  industry  only 

produced  carbide  for  the  open  market,  consumption  in  the  Community  market 

was  established  on the basis  of the  production  by the  Community  industry  plus 

imports,  minus  exports, plus  or minus  stock  variations.  This  approach  did  not 

take into account  captively  used production  of integrated  downstream  producers 

of  tungsten  end  products  (e.g.  hard  metal  components)  which  was  not 

considered to be  in direct competition with the dumped  imports. 

On  this  basis,  the  consumption  in  the  Community  went  from  2801  tonnes  in 

1991  to  2819  tonnes  in  1992, decreased  to  2706  tonnes  in  1993  and  increased 

again  in  1994  to  4236  tonnes  and  in  the  Investigation  Period  to  4703  tonnes, 

representing  an increase  of 68%  in comparison  with  1991. This development  of 

consumption,  showing  a  decrease  until  the  end  of  1993  and  a  recovery 

thereafter,  was  in  line  with  the  market  developments  for  the  industrial  sectors 

using the product  concerned. 

18 

3.  Volume and market share of the dumped imports 

(29)  Imports from tfee People's Republic of China in the Community decreased  from 

143 tonnes  in  1991 to 6$ tonnes  in  1992 and  increased  again  to  83 tonnes  in 

1993,  136 tonaes in  1994 and  234 tofcnes  in the  Investigation  Period  (overall 

increase by 63.6%). 

The market share of these imports decreased from 5.1% in 1991 to 2.4% in 1992 

but  increased  continuously  thereafter,  up  to  5%  in  the  Investigation  Period, 

despite  the  imposition  of  anti-dumping  measures  in  the  form  of  ad-valorem 

duties  after  the  withdrawal  of  the  undertakings  by  the  Chinese  exporters  in 

1994. 

4. 

Prices of the dumped imports 

a)  Overall trend 

(30)  On  the  basis  of  price  information  available  (Eurostat),  prices  of  the  Chinese 

exporters  (OF,  customs  and  anti-dumping  duties  unpaid)  remained  relatively 

stable between 1991 and the Investigation Period (+ 2%). 

The  relatively  stable prices  of  carbide  has to  be  seen  in  conjunction  with  the 

increase in prices of the tungsten upstream products, ammonium  paratungstate 

and tungstic oxide and acid which increased respectively by 27% and 25% over 

the same period. 

h) 

Price  Undercutting 

19 

(31)  For  the  Investigation  Period,  the  Community  industry's  monthly  weighted 

average  selling  price  for  carbide  was  compared  with  a  monthly  weighted 

average  price  of  tungsten  exported  from  the  People's  Republic  of  China  to  the 

Community. 

The Community  industry's prices were ex-works and the exporters' prices were 

at-Community  frontier,  customs and anti-dumping  duties paid. 

This  comparison  showed  a  negligible  undercutting  margin.  However,  it  should 

be  noted  that,  prior  to  the  imposition  of  the  ad  valorem  duty  (September  1994) 

resulting  from  the withdrawal  of the undertakings  by the  Chinese  exporters,  the 

Chinese  prices were found  to continuously  undercut  the  Community  producers' 

prices  and price  undertakings  in force  during  this  period  did  not  appear  to  have 

been consistently  adhered to. 

5. 

The situation of the Community  industry 

(32)  In  accordance  with  Article  11(2)  of  the  Basic  Regulation,  it  was  examined 

whether  the  expiry  of  the  measures  in  force  would  lead  to  a  continuation  or 

recurrence of injury  to the Community  industry. 

20 

a) Production,  production  capacity,  utilisation  rate and  stocks 

(33)  The Community  industry's production of the product concerned remained  stable 

at around  3300 tonnes  from  1991 to  1993 and increased to 4375 tonnes in  1994 

and  4641  tonnes  in  the  Investigation  Period,  which  represents  an  increase  by 

40%  in  comparison  with  1991. This  increase  should  be  seen  in  the  light  of  the 

increase in consumption over the same period (+68%). 

(34)  The  Community  industry's  production  capacity  remained  stable  from  1991  to 

1993 at  4240  tonnes  and  increased  to 4740  tonnes  in  1994  and  5095  tonnes  in 

the Investigation Period (+20% by comparison with  1991). 

(35)  The utilisation rate was stable from 1991 to  1993, at around  78%, and  increased 

up to more than 90% in  1994 and the Investigation  Period. 

(36)  Stocks  decreased  overall  during  the  period,  in  particular  in  1994  and  the 

Investigation  Period. 

b) Sales volume and market share 

(37)  The  quantity  of  carbide  sold  in  the  Community  market  by  the  Community 

industry  increased  in absolute terms from  1873 tonnes  in  1991, to  1993  tonnes 

in  1992,  decreased  to  1828  tonnes  in  1993,  increased  again  to  2596  tonnes  in 

1994 and 2994 tonnes in the Investigation Period (overall increase by 60%). The 

market  share  of this  industry,  after  an increase in  1992, decreased  continuously 

thereafter.  It  developed  as  follows:  66.9%  in  1991, 70.7%  in  1992,  67.6%  in 

1993, 61.3% in  1994 and 63.7% in the Investigation  Period. 

c) Price evolution 

21 

(38)  The weighted average selling price of carbide decreased sharply (-20%) between 

1991 and 1994 and strongly recovered during the Investigation Period. 

It  is  noted  that  this  recovery  in  prices  coincided  with  the  imposition  in 

September  1994 of a 33% ad valorem duty  on Chinese  imports.  Furthermore, 

this price  increase  followed  the increase in the prices of the tungsten  upstream 

intermediates,  i.e.  ammonium  paratungstate  and  oxide  (see  also  recital  (31)). 

The price increase also coincided with the increase in demand. 

d) Profitability 

(39)  The Community producers suffered  heavy losses of up to 20% on average from 

1991 to 1994. As a consequence of the strong price recovery, profitable returns 

on sales were reached during the Investigation Period (13% on average). 

e) Employment 

(40)  Given the fact  that the personnel  concerned  works  in an integrated  production 

chain  and  the  close  links  between  the  various  tungsten  products,  specific 

allocations  of  personnel  per  product  were  not  possible.  Employment  of  the 

tungsten  sector  decreased  by  14% over the  whole  period.  In  the  Investigation 

Period,  the  Community  industry  employed  580  people  in  the  tungsten 

production chain. 

f)  Conclusion  on the situation  of the Community  industry 

22 

(41)  The  above analysis has revealed  that  some injury  indicators  such  as  production, 

sales  and  capacity  utilisation  showed,  after  a  long  period  of  negative  trends, 

positive  developments  in  line  with  the  positive  development  in  the  market 

overall  and  coinciding  with  the  imposition  of  ad-valorem  anti-dumping  duties 

on  the  imports  concerned  by  the  present  investigation  after  1994. As  far  as  the 

financial  situation  of  the  Community  industry  is  concerned,  it  should  be  noted 

that profits  were only  made in the Investigation  Period.  In the years prior to  the 

Investigation  Period  (1991-1994),  the  Community  industry  continued  to  suffer 

material  injury  in the  form  of  decreasing  prices  and  heavy  losses  of  up  to  20% 

on  average.  Finally  it  should  be  noted  that  the  market  share  held  by  the 

Community  industry,  after  an  increase  in  1992,  decreased  continuously  from 

1993 to the Investigation  Period by almost  10 percentage  points. In this  respect, 

it  should  be  noted  that,  in  the  past,  the  Chinese  exports  were  mostly 

concentrated  on  ammonium  paratungstate  and  to  a  lesser  extent  oxide. 

However,  it  is  not  unlikely  that,  in  the  absence  of  measures  on  carbide,  the 

Chinese  exports  would  move  gradually  to  carbide  given  that  this  is  a  higher 

value product in the chain. 

6. 

Price undercutting in the event of the expiry of measures. 

(42)  A second price undercutting calculation was undertaken to establish the level of 

undercutting in the event of the expiry of anti-dumping measures.  The 

methodology  was the same as that described in recital (31) except that, no anti 

dumping duty was added to the import price. In this case, undercutting  margins 

resulted of 23% on average, expressed as a percentage of the  Community 

producer's prices. 

23 

7. 

Conclusion 

(43)  The  situation  of  the  Community  producers  improved  during  the  Investigation 

Period.  However,  it  can  be  concluded  from  the  investigation  that,  because  of 

their  low  prices, Chinese  imports  aggravated  the  difficulties  of  the  Community 

industry  prior  to  the  imposition  of  ad-valorem  duties  when  the  undertakings 

offered  by  the  Chinese  exporters/producers  were  apparently  not  respected.  This 

has prevented  the Community  industry  from  fully  recovering  from  the effects  of 

the  previous  dumping  practices.  It  appears  highly  likely  that  in  the  absence  of 

anti-dumping  measures,  the  prices  of  the  Chinese  dumped  imports  would  be 

made at a level that undercuts the prices of the Community  industry. 

(44)  In  this  context,  a  number  of  claims  were  made  by  the  Chinese  exporters 

questioning the causal  link between the dumped  imports and the situation  of the 

Community  industry. 

It was alleged  that the recovery  of the  Community  industry  was  only  due to  the 

surge  in demand  for  carbide  in  1994 and the  Investigation  Period  and not to  the 

imposition  of  an  ad  valorem  duty  on  Chinese  imports.  In this  respect,  it  cannot 

be  denied  that the  recovery  in demand  influenced  the  level  of prices.  However, 

it should be stressed that it was only after  September  1994, when the ad  valorem 

anti-dumping  duties  were  imposed,  that  the  sales  prices  achieved  by  the 

Community  industry  increased  and  the  financial  situation  of  the  Community 

producers improved after  years of losses. 

24 

(45) 

It was further claimed that Chinese imports have had less impact on the 

Community  market  than  imports  from  other  third  countries  like  the  United 

States  or  South  Korea.  It  should  be  noted  that,  although  imports  originating 

from  the USA and  South Korea took  over part  of the  increase  in  consumption 

during the period examined, with a consequent increase of the respective market 

shares, their  prices  were  found  to  be  generally  higher  than  the  Chinese  prices 

and  there  was  no  evidence  of  these  prices  being  dumped.  In  addition,  any 

influence  of other imports on the situation of the Community  industry does not 

detract  from  the negative impact that, in the  absence of measures, the Chinese 

imports could  continue to have on the situation  of the  Community  industry  as 

shown by the likelihood of continued price undercutting (see recital (43) above). 

(46)  Furthermore, the need for measures to be maintained  should also be seen in the 

light of the pressure that imports of Chinese intermediate products could cause 

on  the  prices  of  the  Community  industry's  end-product. 

In  this  context,  it 

should be noted that the Community  industry  is, to a certain degree, dependent 

on  external  supply  of  upstream  products  (mainly  ammonium  paratungstate), 

given that the recycling process of scrap materials does not, at the moment, meet 

the overall  needs of the  industry.  In the  absence  of anti-dumping  measures on 

carbide,  the  industry  could  be  compelled,  under  pressure  from  the  Chinese 

imports of this product, to lower its prices of carbide  and  if faced  at the  same 

time with  an  increase  in the  Chinese prices  of upstream  products,  its  viability 

would be compromised. 

(47)  It was therefore concluded that, in the absence of measures, there is a likelihood 

of a recurrence of injury. 

25 

F.  COMMUNITY INTEREST 

(48)  It should be recalled that in the previous investigation, the adoption of measures 

was considered not to be against the interest of the Community. Furthermore, it 

should  be  noted  that  the  present  investigation  is  a  review,  thus  analysing  a 

situation  in  which  anti-dumping  measures  have  already  been  in  place. 

Consequently, the timing and nature of the present investigation would allow to 

assess any negative undue impact on the parties concerned by the anti-dumping 

measures imposed. 

1.  The Community carbide industry 

(49)  The  Community  industry  in  the  Investigation  Period  was  composed  of  three 

companies  located  in  different  Member  States.  For  each  of  these  companies, 

carbide represents the most important product in the tungsten production chain, 

being the final product in this chain. In terms of turnover,  carbide accounts  for 

more than 60% of the value of all sales of tungsten products. In the past years, 

constant  investments  have  been  made  in  this  sector  in  order,  in  particular,  to 

ensure compliance of production methods with environmental requirements and 

to  develop  new processing  methods,  namely  recycling  of  tungsten  containing 

scrap  materials.  This technology  is aimed  at  gaining  more  independence from 

the  raw  materials  (concentrates)  or 

intermediate  products  (ammonium 

paratungstate and tungstic oxide and tungstic acid). 

26 

The  economic  situation  which  is  characterised  by  financial  losses  having  been 

incurred  during  four  years by the Community  industry  has not  yet been fully  re 

established  since the recent introduction of an ad valorem anti-dumping  duty. 

(50)  As  shown  in  the  investigation,  it  is  likely  that  in  the  absence  of  protective 

measures  on  carbide,  the  last  and  most  vulnerable  stage  of  the  tungsten 

production  chain,  injury  would  recur  in  the  form  of  losses  to  the  Community 

industry  and  continuing  and  even  growing  losses  of  market  share.  Fair 

conditions  of  competition  should  therefore  be  maintained 

to  allow 

the 

Community  industry to remain viable. 

2. 

The user  industry 

(51)  It is recalled  that the  Community  users  of carbide  are mainly  the  manufacturers 

of hard  metal  components,  (i.e. carbide  tools  and  wear resisting  materials).  It  is 

composed  of  a  few  large  companies  ("major  users")  which  partly  have  an 

integrated  production  (i.e.  they  start  from  the  ammonium  paratungstate  or 

tungsten  oxide  stage  and  transform  these  products  up  to  the  final  stage)  and 

around a hundred  smaller companies ("smaller  users"), which start mostly  at the 

carbide stage. 

(52)  One  major  user  claimed  that  the  anti-dumping  duty  on  Chinese  imports  would 

increase 

its  overall  production  costs  and  endanger 

its  position  on 

the 

Community  market  in  comparison  with  its  major  US  and  Japanese  competitors 

which  can  provide  themselves  with  carbide  not  subject  to  anti-dumping 

measures. It would allegedly  suffer  a loss of competitiveness. 

27 

It was found  that this user, which is an integrated producer of carbide tools and 

wear  resistant  materials,  started  its  production  process  during  the  period 

considered  mainly 

from  upstream 

intermediates  such  as  ammonium 

paratungstate and tungstic oxide and had, therefore,  limited  needs for  imported 

carbide.  It  imported  almost  a  fourth  of  the  total  of  carbide  imported  in  the 

Community  from  the  People's  Republic  of  China.  However,  this  represented 

less than 4% of its carbide consumption.  The maximum impact of the 33% duty 

was calculated to amount to less than 1% on the production costs of the tungsten 

related products of this user. Any impact of the duty on this company's tungsten 

chain would therefore appear to be minimal. 

(53)  A dozen smaller users have expressed  themselves  in favour  of maintaining  the 

measures.  The  main  argument  was  that  if  the  measures  on  carbide  lapsed,  it 

would  only  favour  the  major  users'  strong  position  in  the  market  of  carbide 

tools.  These  users  have  a  stronger  negotiating  position  vis-à-vis  the  Chinese 

suppliers  than  the  smaller  companies  and  could  therefore  obtain  more 

advantageous prices. 

(54)  No  other  substantiated  comments  against  measures  were  submitted  by  users. 

Since  the  measures  have  been  in  place  for  a  certain  period,  and  would  be 

maintained at the same level, it can be concluded that this would not imply any 

deterioration of the situation of the users in general. 

28 

3. 

Effective  competition 

(55)  It  has  also  been  claimed  that  the  level  of  competition  on  the  carbide  market 

would be affected  by the continuation  of the anti-dumping  duty  since  it would 

create an oligopolistic market. All users would have to rely on the  Community 

producers. 

(56)  It  should  be  recalled  that  in  spite  of  anti-dumping  measures,  the  Chinese 

exporters  have  always  been  present  on  the  Community  market  and  increased 

their  market  share  during  the  Investigation  Period.  It  should  be  further  noted 

that  there  are  other  third  country  suppliers  of  carbide  in  the  Community, 

ensuring that a number of alternative  supply  sources exist.  Finally,  it has been 

demonstrated  that  due to the  interrelationship  between  the various  products  of 

the tungsten chain, there is considerable competitive pressure  in the market  for 

any  product  in  the  chain  from  the  competitors  in  the  market  for  the  other 

products. 

4.  Conclusion on Community interest 

(57)  In the light of the above, it was concluded that there were no compelling reasons 

not to maintain the measures in force, in order to ensure competitive conditions 

of  fair  pricing  and  to  avoid  any  likelihood  of  a  recurrence  of  injury  to  the 

Community  industry which would  certainly  occur  if measures were allowed to 

expire. 

29 

G. 

ANTI-DUMPING MEASURES 

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

the  basis  of  which  it  was  intended  to  recommend  the  maintenance  of  the 

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

representations  subsequent  to  these  disclosures.  The  comments  of  the  parties 

were  considered  and,  where  appropriate,  the  findings  have  been  modified 

accordingly. 

(59)  It  follows  from  the  above that,  as provided  for  by  Article  11(2) of  the  Basic 

Regulation, the anti-dumping  duty of  33%  on imports of tungsten  carbide and 

fused  carbide  originating  in  the  People's  Republic  of  China  imposed  by 

Regulation  (EEC)  N°  2737/90  should  be  maintained.  Regulation  (EEC)  N° 

2737/90  has  been  maintained  in  force  by  this  review  and  will  lapse  on  its 

conclusion. The anti-dumping duty imposed by that Regulation should therefore 

be reimposed. 

30 

HAS ADOPTED THIS REGULATION: 

Article 1 

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

carbide and fused  carbide, falling within CN code 2849 90 30 and originating in 

the People's Republic of China. 

2.  The  duty  shall  be  33% of  the  net,  free-at-Community-frontier  price  of  the 

product, before duty. 

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, 

ISSN 0254-1475 

COM(98)  142 final 

DOCUMENTS 

EN 

02  12  11  09 

Catalogue number  :  CB-C0-98-147-EN-C 

ISBN 92-78-31909-0 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

2>t