Commission Regulation (EC) No 1002/98 of 13 May 1998 imposing a provisional anti-dumping duty on imports of unwrought unalloyed magnesium originating in the People's Republic of China
Date: 1998-05-13
Institutions: European Commission
Subjects: China, anti-dumping duty, anti-dumping legislation, import, magnesium

L 142/24

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Official Journal of the European Communities

14. 5. 98

COMMISSION REGULATION (EC) No 1002/98

of 13 May 1998

imposing a provisional anti-dumping duty on imports of unwrought unalloyed
magnesium originating in the People’s Republic of China

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 384/96 of
22 December 1995 on protection against dumped imports
from countries not members of the European Commun-
ity (1), as last amended by Regulation (EC) No 905/98 (2),
and in particular Article 7 thereof,

After consulting the Advisory Committee,

Whereas:

themselves within the time period stipulated in the
notice of initiation. Replies to these questionnaires
were received from the sole Community producer,
10 Chinese exporters, three unrelated importers in
the Community and an unrelated trader located in
Switzerland. In addition, six users and an associa-
tion of users in the Community replied to the
Commission’s questionnaire and provided informa-
tion which was sufficiently complete so that
it
could be used for the assessment of Community
interest.

(5)

The Commission then sought and verified all
information it deemed necessary for the purpose of
a preliminary determination and carried out in-
vestigation visits at the premises of the following
companies:

A. PROCEDURE

— Community producer:

(1)

(2)

(3)

A complaint concerning imports of unwrought
unalloyed magnesium originating in the People’s
Republic of China was lodged on 7 July 1997 by
the Comit(cid:130) de Liaison des Industries de Ferro-
Alliages
the sole
(Euro Alliages) on behalf of
known Community producer of
that product,
Pechiney Electrometallurgie, France (PEM). The
complaint contained evidence of dumping of the
product concerned originating in the People’s
Republic of China and of material injury resulting
therefrom.

the Commission announced

Having decided, after consultation, that there was
sufficient evidence to justify the initiation of a
proceeding,
the
opening of an investigation by notice published in
the Official Journal of the European Commun-
ities (3)
(hereinafter referred to as ‘notice of initi-
ation’).

The Commission officially advised the producers,
exporters and importers known to be concerned,
the representatives of the exporting country and
the complainant of the initiation of an investiga-
tion and gave the parties directly concerned the
opportunity to make their views known in writing
and to request a hearing.

(4)

The Commission sent questionnaires to the parties
known to be concerned and to those who identified

(1) OJ L 56, 6. 3. 1996, p. 1.
(2) OJ L 128, 30. 4. 1998, p. 18.
(3) OJ C 256, 21. 8. 1997, p. 3.

— Pechiney Electrometallurgie, France.

— Analogue country producer:

— Norsk Hydro ASA, Hydro Magnesium

Norge, Porsgrunn, Norway,

and the sales coordination company,

— Hydro Magnesium Marketing SA, Belgium.

— Importers in the Community:

— Ayrton and Partners Ltd, United Kingdom,

— EHC Egger Consulting and Handelsgesell-

schaft GmbH, Germany,

— NV Specialty Metals SA, Belgium.

Although the Commission did not carry out an
investigation visit at the premises of the trader,
Ferrolegeringar AG,
information
included in its response was used (in conjunction
with the responses from the three Community
based importers) because it was considered reliable.

Switzerland,

The investigation of dumping covered the period 1
July 1996 to 30 June 1997 (hereinafter referred to
as the ‘investigation period’). The examination of
injury covered the period from 1993 up to the end
of the investigation period.

The present proceeding follows an earlier anti-
dumping proceeding concerning the same product
originating in Russia, the Ukraine and Kazakhstan
which resulted in anti-dumping measures consist-

(6)

(7)

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ing of a variable anti-dumping duty for imports
from Russia and the Ukraine with the exception of
certain cooperating companies in these countries
from which undertakings were accepted. With
the
regard
proceeding was terminated, without the adoption of
protective measures.

from Kazakhstan (1)

imports

to

B. PRODUCT

CONCERNED
PRODUCT

AND

LIKE

1. Product concerned

(8)

by

covered

complaint

is
the
The product
unalloyed magnesium. Unwrought
unwrought
magnesium is available as either pure,
i.e. unal-
loyed, magnesium containing minor quantities of
impurities or as alloyed magnesium with alloying
elements such as aluminium and zinc added. The
present proceeding concerns only unwrought unal-
loyed magnesium.

(9)

The two main types of production processes used
in the production of magnesium are the thermic
processes and the electrolytic processes.

In both of these processes, a variety of raw ma-
terials can be used due to the natural occurrence of
magnesium in several different compounds, e.g.
dolomite, carnalite, sea water.

(10) Unwrought unalloyed magnesium is generally sold
in ingots. The weight of these ingots can vary from
a few hundred grams to hundreds of kilograms.
The main uses of unwrought unalloyed magnesium
are as follows:

— as an alloying element in the production of

aluminium alloys,

— desulphurisation of steel,

— iron nodularisation,

— chemical applications, e.g. titanium production,

— others, e.g. anode production, pharmaceutical

and military applications.

(11) Unwrought unalloyed magnesium in all

forms,
from different production processes, has only
minor differences with regard to the proportion of
impurities and physical appearance, it is to a great
extent interchangeable in terms of end uses and
thus different
types of unwrought unalloyed
magnesium compete with each other.

(1) Council Regulation (EC) No 1347/96 (OJ L 174, 12. 7. 1996,

p. 1);
Commission Decision 96/422/EC (OJ L 174, 12. 7. 1996, p.
32).

Therefore,
types of
it was concluded that all
unwrought unalloyed magnesium form one single
product for the purpose of this proceeding.

2. Like product

In the course of the investigation, it was established
that unwrought unalloyed magnesium originating
in the People’s Republic of China and sold for
export
to the European Community, as well as
unwrought unalloyed magnesium manufactured
in the
and sold by the Community producer
Community market
and unwrought unalloyed
magnesium manufactured and sold in the analogue
country, Norway, are alike within the meaning of
Article 1(4) of Regulation (EC) No 384/96
(hereinafter referred to as the ‘basic Regulation’), as
the basic physical and technical characteristics and
uses in all these cases are the same or closely re-
sembling.

8104 11 00

within CN codes

The product under consideration is currently classi-
fiable
and
ex 8104 19 00. While CN code 8104 11 00 covers
unwrought unalloyed magnesium containing at
least 99,8 % by weight of magnesium, CN code
8104 19 00 covers other unwrought unalloyed
magnesium as well
as unwrought unalloyed
magnesium.

(12)

(13)

The Chinese exporters have argued that since an
insignificant proportion of unwrought unalloyed
magnesium (hereinafter also referred to as ‘mag-
nesium’) is imported under CN code 8104 19 00,
this code should be excluded from the scope of the
investigation. While it appears that none of the
imports from the People’s Republic of China, by
cooperating exporters, were made under this CN
code (and none of the Norwegian domestic sales
would have fallen into this code), to exclude it may
encourage circumvention of any measures through
an increase in the exports to the Community of the
product concerned entering under this code and
therefore,
the Commission does not consider
appropriate such exclusion.

C. DUMPING

1. Analogue country

(a) Analogue country

(14)

Since the People’s Republic of China is considered
to be non-market economy country, normal value
has to be determined by reference to a market
economy analogue country,
in accordance with
Article 2(7) of the basic Regulation.

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the

country,

analogue

As
complainant had
suggested Norway claiming that this country was
an appropriate selection. Norway was also used as
an analogue country in the previous proceeding
concerning imports of the same product origin-
ating in Russia, the Ukraine and Kazakhstan.

The cooperating Chinese exporters filed comments
concerning the choice of Norway as an analogue
country. Although they did not propose any alter-
native market economy third country, nor did any
other interested party, they argued that Norwegian
domestic sales prices could not be compared in a
fair manner to Chinese export prices, as the level of
development of
the Norwegian economy was
considerably higher than that of the People’s Re-
public of China and the sole producer in Norway
was the largest in the world, whereas the Chinese
producers were mostly small companies.

In respect of this argument, the fact that the largest
producer in the world of the product concerned
operates in a modern, efficient and cost conscious
environment, as has been found to be the case, is
considered to be much more relevant for estab-
lishing normal value in this investigation than the
overall comparative level of development of the
Norwegian economy. It follows that the selection
of Norway as the analogue country does not appear
to be unreasonable in this region.

(15)

The Chinese exporters further argued that
the
method of production used by the Norwegian
producer, i.e. the electrolytic method, was different
to the thermic method used predominantly by the
Chinese producers, i.e. the Pidgeon method, and
therefore, it would not be possible to make a fair
comparison for the purposes of calculating the
dumping margin.

With regard to the different technology, the Nor-
wegian producer operates in a highly cost efficient
environment, which is the result of continuous
research and investment. This led to the conclusion
that it is unlikely that the production method used
by the Chinese producers is more efficient than
that employed by the Norwegian producer, and
that, accordingly, costs and prices in Norway would
be inflated by the production process used by the
Norwegian producer. For this reason it was provi-
sionally concluded that the Chinese producers did
not enjoy any comparative advantage as compared
to the Norwegian producer with respect of
the
production technology used and therefore, no
allowance was granted in this regard.

(16)

In its decision to select Norway as an analogue
country, the Commission also considered the fol-
lowing:

— the like product is produced and sold on the
Norwegian domestic market in representative

(17)

(18)

(19)

quantities as compared with the volume of
Chinese exports of the product concerned to
the Community,

— there are significant

imports of unwrought
magnesium from third countries into Norway
with the consequence that there is a compet-
itive environment in this market,

— there are no trade restrictions concerning
imports of the product concerned into Norway,
which could distort the competitive environ-
ment,

— the Norwegian producer has a highly efficient
continuously

production process
invested in this process over the years,

and has

— the Norwegian producer has very good access to
the principal raw materials (dolomite and sea
water) used in the production process. The
production plant is located on the sea which
allows unlimited access to sea water and facil-
itates reception of raw materials and distribu-
tion of
finished products. Dolomite is also
sourced in Norway,

— there is a significant supply of local low cost

electricity.

In view of all the considerations outlined above, the
Commission considered it appropriate to take
Norway as the analogue country for the determina-
tion of normal value in respect of
imports of
magnesium from the People’s Repbulic of China.

(b) Determination of normal value

and sizes of

the different
The Commission ascertained that
purities
the product
ingots of
concerned could be used interchangeably for the
same end uses. The interchangeability was also
confirmed by an overlap in prices. Under these
circumstances,
value was
single
established for all categories, i.e. purities and sizes.

normal

a

the like product by the Norwegian
Sales of
producer during the investigation period were
made in sufficient quantities since they accounted
for substantially more than 5 % of the quantities of
the product concerned originating in the People’s
Republic of China sold for export to the Com-
munity.

The Commission further examined whether the
domestic sales of the like product could be con-
sidered as being made in the ordinary course of
trade by reason of price, i.e. as not being made at a
loss.

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For this purpose the full unit costs of domestic
sales during the investigation period, was compared
to the price of each domestic sales transaction
made during that period. It was found that more
than 80 % of the volume of the domestic sales had
been made at a profit.

As a result, normal value was established as the
weighted average domestic sales price for all trans-
actions to independent customers, as estasblished
for
the sole Norwegian producer, Hydro Mag-
nesium Norge.

the facts available,

munity from the People’s Republic of China, as
recorded in Eurostat
for the product concerned
during the investigation period. The export price
for
the remaining import volume from non-
cooperating exporters had to be established on the
basis of
in accordance with
Article 18 of the basic Regulation. Since the level
of non cooperation was significant and in order to
avoid parties benefiting from their non coopera-
tion, the Commission considered it appropriate to
establish that the lowest weighted average export
price found for a cooperating Chinese exporter
with a representative export volume was the export
price applicable to the remaining sales volume
from non-cooperating exporters.

2. Export price

3. Comparison

(20)

(21)

the 10 Chinese exporters which
Eight out of
replied to the Commission’s questionnaire had
export sales in the Community to independent
customers only. For them, the export prices were
established on the basis of the prices actually paid
or payable for the product when sold for export
from the People’s Republic of China to the
Community, in accordance with Article 2(8) of the
basic Regulation.

in

companies

the Community

The two other Chinese exporters sold to related
selling
and
submitted questionnaire responses which omitted
the necessary information requested with regard to
sales of
the product concerned by their related
companies to unrelated customers in the Com-
munity market. One of these two exporters made
no export sales directly to unrelated customers in
sold to both
the Community while the other
related and unrelated customers in the Community.

taken into

In the case of the latter exporter, it was decided
that the prices reported in the questionnaire reply,
concerning sales to unrelated customers in the
Community, would
account.
be
However, with regard to sales made by the two
related
to the Community via their
exporters
selling companies, the export price was calculated
on the same basis as was applied for all other non
cooperating companies, as described below, i.e. on
the basis of the facts available in accordance with
Article 18 of the basic Regulation.

(22)

The detailed information concerning sales volume
to unrelated customers in the Community received
from the Chinese exporters which replied to the
Commission’s questionnaires accounted for about
60 % of the total import volume into the Com-

(25)

(23)

The Commission compared the normal value and
the export pries on a fob Chinese/Norwegian fron-
tier basis and at the same level of trade.

For the purpose of ensuring a fair comparison
between normal value and export prices, adjust-
ments were made wherever appropriate to account
for differences affecting price comparability. Thus,
adjustments were made with regard to transport,
insurance, handling,
loading and ancillary costs,
credit costs and level of trade in accordance with
Article 2(10) of the basic Regulation.

(24)

quality

differences

The Chinese exporters have claimed allowances for
physical
differences
and
between the Chinese magnesium and Norwegian
magnesium. They have alleged that the quality of
the Chinese product is unreliable,
(i.e. it is more
susceptible to oxidation, possibly as a result of
exposure to water during the sea voyage) and that
consequently, the Chinese product suffers from an
inferior user perception. However, they have not
provided any evidence which would have allowed
quantification of their claimed differences and no
this provi-
adjustment was,
sional stage.

therefore, granted at

4. Dumping margin

The comparison of the weighted average normal
value with the weighted average export price as
established
of
revealed
dumping, the dumping margin being equal to the
amount by which normal value exceeds the export

existence

above

the

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price. The
single weighted average dumping
margin for all Chinese exporters, expressed as a
percentage of the cif export price free at Com-
munity frontier amounted to 40,6 %.

of over 170 % thus reaching a volume of 15 534
tonnes.

(ii) Market share of the dumped imports

D. INJURY

1. Introduction

(26)

(27)

(28)

(29)

The information supplied below on the Com-
munity industry has been indexed for reasons of
confidentiality, as it relates to a single Community
producer.

The Commission has examined the period 1993
until the investigation period but has concentrated
on the period from 1995 to the end of the invest-
igation period in the analysis of injury, as imports
of magnesium from the People’s Republic of China
were less than 1 % of Community consumption in
terms of volume in 1993 and 1994.

Eurostat was used as the source of the import data
used in the injury analysis (together with export
data submitted by the exporters) whereas Com-
munity industry data was obtained from the veri-
fied questionnaire response.

2. The Community market

(a) Consumption

The total consumption in the Community was
established on the the basis of the total imports of
the product
concerned into the Community
(Eurostat import statistics), plus the total verified
sales made by the Community industry on the
Community market.

With 1993 as 100, consumption in the Community
developed, in volume terms, to 162 in 1994, 166 in
1995, 150 in 1996 and 173 in the investigation
period,
i.e. an increase of 73 % over the whole
period examined.

(b) Factors relating to the dumped imports

(i) Volume of

the dumped imports

(31) Market share of imports from the People’s Republic
of China (in volume) rose throughout the period
from 0,5 % in 1993 and 1994 to 4,2 % in 1995
and 22,8 % during the investigation period. This
development resulted in the People’s Republic of
China becoming the second largest supplier in the
Community market.

(iii) Prices of the dumped imports

(32)

From 1993 to 1995 import prices rose by 24 %
increasing
mainly as a consequence of overall
demand in that period. However, between 1995 and
the investigation period, (i.e. when import volumes
from the People’s Republic of China were in-
creasing significantly)
import prices fell substan-
i.e. by 31,5 %, to levels below those pre-
tially,
vailing in 1993.

(c) Price undercutting of the dumped imports

(33) A comparison of sales prices of the Community
industry with those of the Chinese exporters on the
Community market
for the investigation period
showed a weighted average price undercutting
margin of 45,5 %. This comparison was made at
the same level of trade. Since the Chinese exporters
sold to traders, who in turn resold to end-users,
whereas the Community industry sold directly to
end-users, the Community industry’s sales prices
were adjusted downwards, deducting transport and
certain sales expenses,
thus resulting in a price
comparable to the cif import prices.

3. Situation of the Community industry

(a) Introduction

(34)

It should be borne in mind that in the previous
anti-dumping proceeding concerning imports of
the
same product originating in Russia,
the
Ukraine and Kazahkstan, it was determined that
the Community industry suffered material injury as
a result of the dumped imports from two of these
countries.

(30) During the period under examination,

from
1993 to the investigation period, the volume of
Chinese exports increased substantially.

i.e.

In 1993 Chinese exports into the Community
amounted to 205 tonnes. Between 1995 and 1996,
they increased over 300 %, and between 1996 and
the investigation period there was a further advance

It should also be noted that, in general, prices of
magnesium on the Community market rose in
1995, due to increasing demand. This led to the
the
brief
Community industry in that year, as evidenced by
the rise in the industry’s sales volumes and prices
between 1994 and 1995. This improvement was

in the performance of

improvement

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followed by the deterioration described below,
despite the introduction in 1995 of anti-dumping
measures on imports of magnesium originating in
Russia and the Ukraine.

(b) Production, production capacity and capacity

utilisation

(35)

Production over the period 1995 to the investiga-
tion period decreased by 5 % whereas production
capacity was static. The capacity utilisation rate of
the Community industry decreased therefore from
85 % to 81 % during this period.

(c) Soles volume, value and prices

(36)

The sales made by the Community industry on the
Community market during the period 1995 to the
investigation period decreased in volume by 28 %,
and in value by 36 %.

The average sales price of magnesium sold by the
Community industry on the Community market
between 1995
investigation period
the
decreased by 11 %.

and

(d) Market share

(37)

The Community industry’s share of
the Com-
munity market in terms of volume decreased from
15,5 % in 1995 to 10,7 %, i.e. by 31 %, in the
investigation period. The
corresponding value
figures were 18,4 % and 12,7 % respectively.

(e) Profitability

(38) After losses in 1993 and 1994, profitability defined
as the return on turnover became positive again in
1995 due to an increase in demand on the EU
market. However, profitability declined substan-
tially between 1995 and the investigation period
(on an index base 1995 = 100, 1996 = 110 and
the investigation period = 35). This decline was
mainly due to the substantial decreases in both
sales volumes and values described at recital 36.

(f) Employment

(39)

Between 1995 and the investigation period employ-
ment
in the Community industry decreased by
9 %. Since the product concerned constitutes the
majority of the production of the sole magnesium
plant of the Community producer, the viability of
the whole plant would be jeopardised if injury is
not removed.

4. Conclusion on injury

(40)

The above findings show that, between 1995 and
the investigation period, the Community industry

suffered material injury consisting of a reduction in
sales volume and value, market share, profitability
and employment levels.

E. CAUSATION OF INJURY

(41)

The Commission examined whether
the injury
suffered by the Community industry was caused by
the dumped imports from the People’s Republic of
China, and whether other factors had caused injury
or contributed to it in order to ensure that injury
caused by other factors was not attributed to the
dumped imports concerned.

In this context, it has already been found in the
previous
anti-dumping proceeding relating to
magnesium originating, inter alia, in Russia and
the Ukraine, that the Community market for the
product concerned is price sensitive and trans-
parent, with the consequence that the mere avail-
ability of low priced imports has an immediate
impact on the situation of the Community market
overall. No information has been obtained in the
course of
the present proceeding which would
contradict this finding.

1. Effect of the dumped imports

from 20 December 1995)

(42) After anti-dumping measures were imposed on
imports of magnesium from Russia
and the
imports
Ukraine (i.e.
from these two countries have fallen from 17 700
tonnes in 1995 to 8 969 tonnes in the investigation
period (a reduction of 8 731 tonnes or 49 %). The
reduction in imports volumes from Russia and the
Ukraine has however been more than counter-
balanced by imports from the People’s Republic of
China, which have risen over the same period from
2 753 tonnes to 15 534 tonnes — an increase of
12 781 tonnes or 464 %. These imports were made
at much lower prices than the average price pre-
vailing on the Community market, and undercut
the Community industry’s prices significantly, at a
time when the Community industry could have
from the effects of anti-
expected to benefit
dumping measures and an expanding market. It is
evident that in these circumstances price suppres-
sion took place.

Indeed,
the cif Community frontier prices of
Chinese imports decreased by 31,5 % between
1995 and the investigation period. At this time, the
Chinese prices were the lowest prices of all signi-
sellers on the Community magnesium
ficant
market, and were 17 % below the average import
prices and 19 % lower than the average of all
prices on the Community market.

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(43)

It is apparent that the deteriorating situation of the
Community industry coincided with the growth of
volume of Chinese imports made at dumped prices.
After a brief recovery in 1995, the situation of the
Community industry deteriorated considerably up
to the investigation period; dumped imports from
the People’s Republic of China grew at volumes
remarkable
that can only be characterised as
between 1995 and the end of
the investigation
period.

3. Conclusion on causation

(48) Given the fact that magnesium is a homogeneous
commodity-type product, sold in a highly trans-
parent and price sensitive market, the Commission
considers that imported magnesium originating in
the People’s Republic of China has had a signi-
ficant negative impact on the Community market,
and hence on the situation of the sole Community
producer.

2. Imports from other countries

(44)

in Norway,

inter
Imports into the Community originating,
alia,
the USA and Canada were
examined to assess whether, and to what extent,
they had caused injury to the Community industry.

(a) Norway

leader
the period examined,

in the Community market
(45) As market
throughout
imports from
Norway have had a strong influence on the market.
The Norwegian producer increased export volumes,
market share and share of total imports into the
Community between 1995 and the investigation
period, when Norway’s share of the Community
market was 31,3 %. However, between 1995 and
the investigation period, the prices of exports from
Norway have remained significantly above the
average import and market prices in the Com-
munity.

(b) USA and Canada

(46)

From 1995 to the investigation period,
import
volumes from these two countries taken together
decreased from 12 533 to 9 932 tonnes. In the same
period, prices of imports from the USA rose by
7 %, while the prices of imports from Canada were
the highest of all countries exporting to the
Community, being 22 % higher than the average
import price.

(c) Russia and the Ukraine

(47) After the imposition of anti-dumping measures on
the
Russian and Ukrainian magnesium imports,
volume of
imports from these countries fell by
49 % and their value by 55 %. Their joint market
share by volume also fell from 27,2 % in 1995 to
13,2 % in the investigation period. The weighted
average price of imports from these countries in
the investigation period was 14,5 % above that of
imports of
concerned from the
People’s Republic of China.

the product

The Community industry could not benefit from
the effect of anti-dumping measures imposed on
imports from Russia and the Ukraine, as these were
more than outweighed by an increase in imports
from the People’s Republic of China at dumped
prices. Indeed, between 1995 and the investigation
period, the volume of imports from the People’s
Republic of China rose by 464 % while those from
Russia
and the Ukraine halved. Furthermore,
compared to the increase in imports from the
People’s Republic of China, the increase in imports
from Norway is modest and cannot have broken
the causal link between the imports subject to the
investigation and the material injury suffered by the
Community industry.

Consequently, the Commission is of the opinion
that the dumped imports from the People’s Re-
public of China have, when taken in isolation,
caused material injury to the Community industry.
The fact
the pricing behaviour of Chinese
exporters to the Community is in sharp contrast to
that of the other market participants points to the
conclusion that dumped imports from the People’s
Republic of China have indeed caused material
injury.

that

F. COMMUNITY INTEREST

1. The Community interest investigation

(49)

In accordance with Article 21 of the basic Regula-
tion, and in order to evaluate whether the imposi-
tion of anti-dumping measures would be against
the interest of the Community as a whole, the
Commission examined the impact of imposition or
non-imposition of measures on the various interests
involved. As already mentioned at recital 4, the
Commission sent questionnaires
to known or
potential industrial users of the product concerned,
as follows:

— 11 questionnaires to associations of industries
operating in the sectors of major use of the
product concerned in the Community,

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— 75 questionnaires to individual companies (in
steel, chemistry,
other magnesium

the sectors of aluminium,
magnesium alloys
processing).

and

Questionnaire responses were received within the
time limits set from:

— two companies processing magnesium into
granules, powders and alloys (Magnesium Elek-
tron, a division of British Aluminium Ltd,
United Kingdom and Pometon SpA, Italy),

— one association of German steel producers

(Wirtschaftsvereinigung Stahl),

— five companies

in the steel manufacturing
the abovementioned
sector, all members of
association (H(cid:129)ttenwerke Krupp Mannesmann
GmbH, Preussag Stahl AG, Saarstahl AG,
Thyssen Krupp Stahl GmbH, AG der Dillinger
H(cid:129)ttenwerke).

2. The Community industry

(50) As mentioned above, anti-dumping measures were
imposed in 1996 on imports of magnesium ori-
ginating in Russia and the Ukraine. The dumped
from the People’s Republic of China
imports
subject to the present proceeding have caused new
injury to the Community industry, and prevented it
from recovering from the effects of previous
dumping.

Failure to address this continued injury would
bring into question the viability of
the sole
Community producer, especially bearing in mind
the trends in Chinese exports to the Community
between 1995 and mid-1997 (sharply increasing
volumes, decreasing prices), the wide range of dif-
ferent sources of supply of the product (see recitals
44 to 47), and the trade-diverting effects of the
anti-dumping duty (108 %) imposed in 1995 on
Chinese imports of this product into the USA.

3. Traders/Importers

(51) Cooperating traders/importers represent 11 % (by
volume) of the imports into the Community of the
product concerned during the investigation period.

Except for one company, for which the product
concerned represents the almost exclusive activity,
traders appear to deal in a wide range of different
metals. For the other three companies, the turnover

on the Community market of the product subject
to investigation, expressed as a percentage of their
total sales, ranges between 2 and 16 %. Their es-
timation of total staff numbers directly occupied by
the product concerned amounts to less than 10 for
the cooperating companies.

against

All
traders/importers
are
protective
the Community industry
measures, arguing that
has insufficient capacity to meet demand, and that
the negative effect for users of any price increase
following the introduction of measures would
outweigh the benefit for the Community industry.
This contention has been examined.

it

As far as the balance between supply and demand
should be recalled that anti-
is concerned,
dumping measures are intended to remove only the
trade distortion caused by dumping. Indeed, the
history of this product has shown that total imports
actually increased substantially, notwithstanding the
imposition of protective measures in 1995. The
market share of imports increased from 78,4 % in
1995 to 83,5 % in the investigation period. In view
of the numerous sources of supply of the product
concerned, a possible market shortage, if measures
are adopted, is therefore unlikely.

4. Interest of the users

(52)

The users are:

— the aluminium founders (circa 50 % of

the
1996 consumption on the Community market),
and

— the manufacturers of magnesium-based alloys,
magnesium turnings, granules and powders
(circa 50 % of the market),

— steel manufacturers.

(a) Aluminium founders

(53) No

aluminium manufacturer

association
thereof) made itself known or replied to question-
naires sent in the course of this investigation.

(or

On the basis of
information available to the
Commission, the content of magnesium used to
produce aluminium varies between 3 and 5 % of
total raw material input. The impact of any anti-
dumping duty on manufacturing costs can there-
fore be deemed as marginal. This would also
explain the lack of cooperation from users in this
sector.

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Official Journal of the European Communities

14. 5. 98

(b) Magnesium alloys,

turnings, granules and

powder manufacturers

(54)

of

than 10 % of
the

The two companies mentioned above that have
the
cooperated represent
less
Community
product
consumption
concerned, with varying volumes of magnesium of
Chinese origin. Total staff employed in production
using the product concerned amounts to circa 300
people, the vast majority of whom are in alloys.
However, labour intensiveness varies considerably
according to the products manufactured, i.e. either
magnesium-based alloys (which are used in the
automotive, pharmaceutical and nuclear industries),
or granules (used in chemical industries and by the
steel
industry as a desulphurising agent). Value
added and labour intensiveness are far greater for
alloys (particularly certain types) than for granules.
The impact of measures, therefore, will be less for
alloy manufacturers, which represent the overwhel-
ming majority of staff employed.

Both companies oppose protective measures, al-
leging that the share of the product concerned rep-
resents more than 50 %, in terms of raw materials
employed, of their manufacturing costs. They point
out that any increase in the price of magnesium
would lead the steel industry to source the com-
ponents
from
suppliers located outside the Community (they
would continue enjoying the possibility to source
magnesium from the People’s Republic of China at
dumped prices), or encourage the Chinese industry
to produce and export the granules themselves.

desulphurising

blends

for

its

These allegations, however, have not been substan-
tiated. It should also be noted that profitability
figures (provided by only one of the cooperating
companies) indicated levels suggesting that a large
margin for the absorption of any duty-induced cost
increases exists, and that their operations would not
be seriously affected if measures were imposed.

(c) Steel manufacturers

(55)

Steel manufacturers purchase magnesium granules
which are mostly used in mixtures for desulphur-
this, no
isation purposes. As a consequence of
figure was provided on the share of the product
concerned in their own cost structures.

Steel producers oppose measures, claiming that any
increase in the cost of the raw material used by
their suppliers will eventually be passed on to

them. However, no evidence was produced in this
regard. In view of the proportion of their total costs
likely to be represented by magnesium granules,
the Commission concludes
anti-dumping
measures can be expected to have little impact.

that

5. Conclusion on Community interest

(56) Any price increase resulting from anti-dumping
measures has the potential to increase the costs of
user industries. The existence of a wide range of
different sources of supply of magnesium, however,
means that competition will remain intense on the
Community market: not
taking anti-dumping
measures could entail the disappearance of the sole
Community producer, thus lessen the degree of
competition and prices would be likely to rise.

the above Community interest
On the basis of
provisionally
has
analysis,
concluded that there are no compelling reasons not
to adopt measures.

the Commission

G. PROVISIONAL DUTY

1. Injury elimination level

(57)

In order to prevent further injury being caused by
the dumped imports, the Commission considers it
necessary
anti-dumping
adopt provisional
measures.

to

For the purpose of determining the level and form
of these measures, the Commission took account of
the dumping margins found and of the amount of
duty necessary to eliminate the injury sustained by
the Community industry.

To that effect, the Commission considered that the
prices of the dumped imports should be increased
level. The necessary price
to a non-injurious
increase was determined on the basis of a com-
parison of the weighted average import price used
to establish price undercutting, as outlined at recital
33, with the production costs of the sole Commun-
ity producer and a profit margin of 5 %. This profit
margin was considered necessary to ensure the
viability of the industry.

The comparison (on a weighted average basis, and
expressed as a percentage of cif level) shows an
injury margin of 46,9 %. This margin is above the
dumping margin established.

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Official Journal of the European Communities

L 142/33

(58)

The provisional duty should therefore be set at the
level of the dumping margin established,
i.e. at
40,6 %.

2. Form of the duties

and given the material

In order
to be consistent with the measures
adopted in the previous proceeding concerning the
same product,
injury
suffered by the Community industry and the nature
of the product, a variable duty is considered the
most appropriate in this case. Thus, no extra
burden is imposed on exporters which will increase
export prices to or beyond the duty level.

In these circumstances, it is proposed that a vari-
able duty based on a minimum price of ECU 2 797
per tonne, on a cif Community border level for
imports of unwrought unalloyed magnesium ori-
ginating in the People’s Republic of China, should
be adopted.

H. FINAL PROVISION

(59)

In the interest of sound administration, a period
should be fixed within which the parties concerned
may make their views known in writing and
request a hearing. Furthermore, it should be stated
that the findings made for the purposes of this
Regulation are provisional, and may have to be
reconsidered for the purposes of any definitive duty
which the Commission may propose,

HAS ADOPTED THIS REGULATION:

Article 1

1.

(a) A provisional anti-dumping duty is hereby imposed
on imports of unwrought pure magnesium falling
within CN codes 8104 11 00 and ex 8104 19 00
(TARIC code 8104 19 00*10) originating in the
People’s Republic of China.

For the purpose of this Regulation unwrought pure
magnesium shall be defined as unwrought mag-
nesium unintentionally containing small amounts
of other elements as impurities.

(b) This Regulation shall not cover unwrought alloyed
magnesium which is
unwrought magnesium
containing more than 3 % by weight of intention-
ally added alloying elements such as aluminium
and zinc.

2.
The amount of the anti-dumping duty shall be the
difference between the minimum import price of ECU
2 797 per tonne and the cif Community frontier price in
all cases where the cif Community frontier price per
tonne is less than the minimum import price. No duty
shall be collected where the cif Community frontier price
per tonne is equal
the minimum
import price.

to, or higher than,

The provisions in force concerning customs duties

3.
shall apply.

4.
In instances where the customs value is reduced
pursuant to Article 145 of Commission Regulation (EEC)
No 2454/93 (1), the minimum import price, referred to in
paragraph 2 above, will also be reduced, on a pro-rata
basis, so that the duty payable will be the amount by
which the reduced minimum import price exceeds the
reduced customs value.

5.
The release for free circulation in the Community of
the products referred to in paragraph 1 shall be subject to
the provision of a security, equivalent to the amount of
the provisional duty.

Article 2

Without prejudice to Article 20 of Regulation (EC) No
384/96,
the parties concerned may make their views
known in writing and apply to be heard orally by the
Commission within one month of the date of entry into
force of this Regulation.

Pursuant to Article 21(4) of Regulation (EC) No 384/96,
the parties concerned may comment on the application of
this Regulation within one month of the date of its entry
into force.

Article 3

This Regulation shall enter into force on the day follow-
ing its publication in the Official Journal of the Euro-
pean Communities.

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

Done at Brussels, 13 May 1998.

For the Commission

Leon BRITTAN

Vice-President

(1) OJ L 253, 11. 10. 1993, p. 1.