Council Regulation (EC) No 1334/1999 of 21 June 1999 imposing a definitive anti-dumping duty on imports of magnesium oxide originating in the People's Republic of China
Date: 1999-06-21
Institutions: Council of the European Union
Subjects: China, anti-dumping duty, import, magnesium, originating product, oxide

25. 6. 1999

EN

Official Journal of the European Communities

L 159/1

I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 1334/1999

of 21 June 1999

imposing a definitive anti-dumping duty on imports of magnesium oxide origin-
ating 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) No 384/96 of
22 December 1995 on protection against dumped imports
from countries
the European
not members
Community (1) and in particular Article 11(2) thereof,

of

Having regard to the proposal submitted by the Commis-
sion after having consulted the Advisory Committee,

Whereas:

(1)

(2)

A. PROCEDURE

1. Measures in force

referred to as

In June 1993, definitive anti-dumping measures
were imposed by Council Regulation (EEC) No
1473/93 (2) on imports of caustic calcined magne-
sium oxide (hereinafter
‘CCM')
originating in the People’s Republic of China.
These measures took the form of a variable duty,
i.e. the duty was imposed on those imports which
were below the minimum import price specified in
the Regulation subject to review. The minimum
import price was based on the normal value calcu-
lated.

2. Request for a review

Following the publication of a notice of impending
expiry of the anti-dumping measures in force on
imports of CCM originating in the People’s
Republic of China (3), the Commission received a
request in March 1998 to review these measures
pursuant to Article 11(2) of Council Regulation
(EC) No 384/96 (hereinafter referred to as ‘the
Basic Regulation').

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regu-

lation (EC) No 905/98 (OJ L 128, 30.4.1998, p.18).

(2) OJ L 145, 17.6.1993, p. 1.
(3) OJ C 383, 17.12.1997, p. 9.

(3)

(4)

(5)

(6)

The request was lodged by Eurometaux acting on
behalf of Community producers whose collective
output of the product concerned constitutes 100 %
of the Community production of this product.

The request was based on the grounds that the
expiry of the measures would be likely to result in
the recurrence of dumping and injury to the
Community industry. Having determined, after
consulting the Advisory Committee, that sufficient
evidence existed for the initiation, of a review, the
Commission initiated an investigation through the
publication of a notice of initiation (4) pursuant to
Article 11(2) of the Basic Regulation.

3. Investigation

advised

officially

Commission

The
the
complaining Community producers, the exporters
and producers in the exporting country and the
importers as well as their representative associa-
tions known to be concerned, and the represent-
atives of the exporting country of the initiation of
the review. The Commission sent questionnaires to
all these parties and to those who made themselves
known within the time limit set in the notice of
the producers in India,
initiation. In addition,
which was chosen as an analogue country, were
advised and sent questionnaires. The Commission
also gave the parties directly concerned the oppor-
tunity to make their views known in writing and to
request a hearing.

All Community producers replied to the question-
naire. Replies were also received from three
Chinese exporters, Liaoning Metals & Minerals
Import & Export Corp., Citic Trading Co. Ltd and
Liaoning Foreign Trade Corp. (hereinafter referred
to as the ‘Chinese exporters'), one related importer
and one related trader replied to the questionnaires.
The level of cooperation amounted, according to

(4) OJ C 190, 18.6.1998, p. 4.

L 159/2

EN

Official Journal of the European Communities

25. 6. 1999

Eurostat data, to more than 87 % of the overall
imports from the People’s Republic of China.
Three unrelated importers, Frank & Schulte
Benelux from the Netherlands, Timab Industries
SA from France and GBC Ltd from the United
Kingdom, also replied to the questionnaire and
made their views known in writing. No reply was
obtained from the users of the product with the
exception of Timab Industries, which itself
imported the product in question.

(7)

The Commission services sought and verified all
information they deemed necessary for the purpose
of determining the continuation or recurrence of
the Community
dumping and injury and of
interest. Investigations were carried out at
the
premises of the following companies:

(a) Community producers:

(cid:190) Grecian Magnesite SA, Athens, Greece
(cid:190) Magnesitas Navarras, Pamplona, Spain
(cid:190) Magnesitas de Rubian, Sarria (Lugo), Spain
(cid:190) Styromag GmbH, St Katharein an der

Laming, Austria

(b) Producers in the analogue country:

(cid:190) Tamil Nadu Magnesite Ltd, Salem, India

(c) Unrelated importers into the Community:

(cid:190) Frank & Schulte Benelux, Capelle a/d Ijssel,

Netherlands

(cid:190) Timab Industries SA, St Malo, France (also a

user of the product concerned)

(cid:190) GBC Ltd., Ewell (Surrey), United Kingdom

(d) Related importers and traders:

(cid:190) Citic Germany GmbH, Bad Homburg,

Germany

(cid:190) Lutz Mineralien GmbH,

Schifferstadt,

Germany

The investigation of dumping covered the period
from 1 July 1997 to 30 June 1998 (hereinafter
referred to as ‘the IP'). The examination of the
situation of the Community industry covered the
period from 1 January 1994 up to the end of the IP
(hereinafter referred to as ‘the IIP').

B. PRODUCT UNDER CONSIDERATION AND

LIKE PRODUCT

(8)

(9)

O
3

, Fe
2

has to be mined, crushed, sorted and then burned
in a kiln at temperatures of 700 to 1 000 (cid:176)C. The
result
is CCM with various magnesium oxide
(‘MgO') contents or grades. The main impurities in
CCM are SiO
(silicon
O
, Al
3
2
2
oxide, iron oxide, aluminium oxide, calcium oxide
and boron oxide respectively). CCM is mainly used
in agriculture for animal feeding or as a fertiliser
and for industrial applications in the construction
industry for flooring and insulating boards as well
as in the pulp, paper and abrasives producing
industries.

, CaO and B
2

O
3

(10)

Furthermore, CCM is not chemically uniform.
However, no clear dividing lines were found
enabling the classification of CCM into different
products. The boundary between the grades is
blurred by overlapping usage since users do use, for
identical purposes, magnesite of different grades
and from different sources of supply.

(11) Although CCM originating

in the People’s
Republic of China which was
sold in the
Community market differed in terms of MgO
content, overall this did not entail any significant
differences in the basic physical characteristics, the
interchangeability, the perception or the marketing
of
the product concerned. As in the previous
investigation, all grades and types of CCM should
therefore be considered as one single product for
the purpose of this investigation.

2. Like product

(12)

It was found that there were no basic differences in
the physical and chemical characteristics and the
uses of CCM exported to the Community and the
product produced and sold in the domestic market
of the analogue country. Furthermore, there were
no differences between the product concerned and
the product produced and sold by the complaining
Community industry in the Community market. In
this respect, the investigation has confirmed the
conclusion of the previous investigation that users
could process both the imported product and the
Community-produced product without any altera-
tions in their production process.

1. Product under consideration

The product concerned by this proceeding is a
form of magnesium oxide, namely natural caustic
calcined magnesite (CCM), which is processed from
naturally
or
magnesite. In order to produce CCM, magnesite

occurring magnesium carbonate

(13)

Some unrelated importers stated that CCM from
the People’s Republic of China was not like CCM
produced and sold by the Community industry.
They claimed that these could not be considered as
in
similar,

raw material

since

the

)

(MgCO3

25. 6. 1999

EN

Official Journal of the European Communities

L 159/3

(14)

(15)

the People’s Republic of China was readily acces-
sible in massive deposits, while the Community
raw material had to be extracted from narrow veins.
Furthermore, the MgO content of Chinese magne-
site was naturally higher.

Though the methods of extraction, the magnesite
content of the deposit and the production process
may vary from producer to producer, and this is so
worldwide, these differences do not have a signifi-
cant bearing on the end product and are not such
as to justify the claim of some unrelated importers
the production of CCM in the People’s
that
the
Republic of China is unique in terms of
methods and processes used and the chemical and
physical characteristics of the magnesite. This is
confirmed by the fact that both the Community
producers and the Chinese exporters have a
number of common customers.

Therefore, CCM exported to the Community on
the one hand and the product produced and sold
by the Community industry in the Community
market and the product produced and sold in the
domestic market of the analogue country, on the
other hand, are interchangeable and have to be
considered a
like product within the
meaning of Article 1(4) of the Basic Regulation.

single

C. DUMPING

1. Preliminary remarks

alternative, one importer suggested Slovakia, where
the natural conditions were alleged to be compar-
able to the People’s Republic of China. Others
suggested that the normal value should be based on
domestic sale prices of limestone or dolomite in
Germany, which is mined and processed like the
CCM in the People’s Republic of China and has a
similar use.

(18)

In view of the comments of the importers on the
choice of Turkey as an analogue country, coopera-
tion was not only sought in Turkey, but also in
other countries where CCM was known to be
produced in sufficient quantities. In particular, a
request
for cooperation was addressed to three
known producers in Turkey, two in Brazil, one in
Slovakia and two in India. No reply was obtained
from Brazil, while the Slovakian producer declared
itself not
to be in the position to provide the
requested information with respect to the IP. The
sole Turkish producer of CCM willing to cooperate
indicated a domestic sales volume which could not
be considered as
representative in relation to
Chinese exports to the Community, while another
Turkish producer only produced a different form of
MgO, namely deadburned magnesite. Finally, one
Indian producer agreed to provide the information
requested in the questionnaire.

(19) As far as the proposal to use the domestic sales
prices of the limestone or dolomite in Germany is
concerned, it should be pointed out that limestone
and dolomite cannot be considered as being like
CCM as their chemical characteristics are different.

(16)

In accordance with Article 11(2) of the Basic Regu-
lation, the investigation examined whether there
were grounds for concluding that, in the absence of
measures, there was a likelihood of a continuation
or recurrence of dumping.

(20)

2. Analogue country

(17)

In order to establish the normal value, account was
taken of the fact that for this investigation the
normal value for
from the People’s
imports
Republic of China had to be based on data from a
market economy third country. In this respect,
Turkey was envisaged in the notice of initiation of
this review as an appropriate market economy third
country for the determination of normal value.
However, a number of importers submitted that
Turkey was inappropriate on the ground that the
access to raw materials in Turkey is more difficult
than in the People’s Republic of China. Conse-
quently, as the mines in Turkey do not enjoy the
same natural advantages as in the People’s Republic
of China, the extraction and processing costs in
Turkey are higher than in Chinese mines. As an

The domestic sales of
the Indian cooperating
producer have been found to represent significantly
more than 5 % of the total Community imports
from the People’s Republic of China during the IP.
The Indian market of CCM appeared to be a
competitive market where at least five domestic
producers of CCM compete against each other. The
magnesite, the raw material for the production of
CCM, is easily available in large quantities in open
cast mines close to the plants. The extraction and
production process of the Indian producer is very
similar to that of the Chinese producers.

(21)

submitted that Turkey,
The Chinese exporters
though not entirely suitable, should have been
maintained as an analogue country on the grounds
that the normal value established in India would
not have any link with the one found in Turkey in
the previous investigation. However, as previously
stated, sales in Turkey were too low to be repres-
entative and therefore there was no alternative to
the selection of another analogue country.

L 159/4

EN

Official Journal of the European Communities

25. 6. 1999

(22)

The Chinese exporters raised the argument that the
cooperating Indian producer
is entirely State-
owned and hence the prices of CCM in India are
controlled by the government. It is indeed true that
the company in question is State-owned. However,
it operates in a market economy context and its
domestic sales are made in competition with a
number of companies, which do not belong to the
Indian Government. It was not found that the State
ownership resulted in any distortion of costs or
prices charged.

(23)

the Commission
the above,
In the light of
considers that India is an appropriate analogue
country for the purpose of establishing normal
value.

(27) With regard to the exporter whose sales to the
Community were all made to its related importer
in the Community who in turn sold to a related
trader, the export price has been constructed by
deducting from the resale price to the first inde-
pendent buyer all costs between importation and
resale incurred by both the related importer and
the related trader as well as a reasonable amount for
profit so as to establish a reliable export price in
accordance with Article 2(9) of the Basic Regula-
tion. The amount for profit has been calculated by
reference to that realised by the cooperating inde-
pendent importers on average, i.e. 9 % on the sales
turnover of the related trader.

(24)

(25)

(28)

(29)

3. Normal value

For the sole grade of CCM which is produced and
sold in India, normal value has been determined on
the basis of the prices paid or payable by indepen-
dent customers in the domestic market for the sales
of the like product which have been found to be
made in sufficient quantities and in the ordinary
course of trade. For the other grades, which are not
produced by the cooperating company, normal
value has been determined by applying an adjust-
ment factor to the normal value determined on the
basis of the grade produced by the cooperating
company. Since a higher MgO content corresponds
to a higher quality and therefore a more valuable
product, it has been found reasonable to establish
the amount of the adjustment as a direct propor-
tion of the MgO content for the various grades
exported from the People’s Republic of China.

4. Export price

Exports of CCM to the Community by the cooper-
ating Chinese exporters represented around 87 %
of the total imports of the product in question from
the People’s Republic of China, as estimated by the
questionnaire
data
concerning CN code 2519 90 90 TARIC heading
10/80 under which the imports of
the product
under investigation are recorded.

responses

Eurostat

and

5. Comparison

The weighted average normal value per grade was
compared to the weighted average export price of
the corresponding grade of CCM at a fob port
producing country level, in accordance with Article
2(11) of the Basic Regulation.

For the purpose of ensuring a fair comparison
between normal value and export price, account
was taken of differences in factors, which were
claimed and demonstrated to affect comparability
in accordance with Article 2(10) of the Basic Regu-
lation. In this respect, adjustments were made for
insurance, handling,
inland and ocean freight,
and credit costs.
loading and ancillary costs
Furthermore, since the producers in the People’s
Republic of China have easier access
to raw
material, the Commission considered that an addi-
tional allowance should be made in order to take
into account the lower costs of extraction of the
magnesite ore resulting from a more favourable ore
recovery ratio in the People’s Republic of China as
compared to India. Consequently, having found
that the ore recovery ratio in India is similar to that
found in Turkey, which was used as a reference
country in the previous investigation and in the
absence of any other new facts provided by the
interested parties, it has been decided to apply the
same adjustment to the normal value as requested
by Chinese parties in the previous investigation, i.e.
a reduction of 20 % of the extraction cost as found
in India.

(26)

For the two cooperating exporters whose sales in
the Community were all made to unrelated impor-
ters, the export price was established on the basis of
the price actually paid or payable for the product
sold for export to the unrelated importers.

(30)

Finally, a request of the Chinese exporters for an
adjustment for difference in the level of trade was
found justified, but a precise calculation was not
considered necessary, given that this is an expiry
review and considering that there was still a signifi-
cant dumping margin if such adjustment had been
made.

25. 6. 1999

EN

Official Journal of the European Communities

L 159/5

6. Dumping margin

(31)

The comparison of normal value and export price
showed the existence of dumping, the dumping
margin being equal
to the amount by which
normal value, so established, exceeded the price for
export to the Community. The dumping margin
found, as a percentage of the cif Community-fron-
tier import price, was substantial.

tion of those products. The investigation confirmed
that
the applicant Community producers repre-
sented 100 % of the Community production of
CCM. Therefore, they constitute the Community
industry within the meaning of Article 4(1) and
Article 5(4) of the Basic Regulation.

F. ANALYSIS OF THE SITUATION IN THE

COMMUNITY CCM MARKET

D. LIKELIHOOD

RECURRENCE
CONTINUATION OF DUMPING

OF

OR

(36)

(32)

Further to the analysis of the existence of dumping
during the IP, the likelihood of continuation of
dumping, should the measures in question be
removed, was examined. On the basis of the infor-
mation supplied by the exporters, it is considered
likely that
the Chinese exports of CCM will
continue to be made either at the same or even at
lower prices than during the IP. This is supported
by the fact that US official statistics showed that
the fob Chinese export prices to this country,
which is one of the main destinations of CCM
from the People’s Republic of China, were on
average considerably lower than the corresponding
prices of Chinese exports
to the Community
during the IP.

(33) On the basis of the fact that the exports of CCM
originating in China have been found to be made
at dumped prices during the IP and that, according
to the information provided by the exporters, a
slight decline of the Chinese export prices to the
Community
the
Chinese pricing policy applied for third countries
where no anti-dumping measures are in force, it is
concluded that dumping is likely to continue,
should the measures in force be removed.

and considering

forecast

is

(34)

In addition, the abolition of the export licence
system mentioned below would probably lead to a
drop of Chinese export prices to around EUR 75,
which would be tantamount to a further increase of
dumping.

E. DEFINITION

OF
THE
INDUSTRY

COMMUNITY

(35) According to Article 4(1) of the Basic Regulation,
the term ‘Community industry' shall be interpreted
as referring to the Community producers as a
whole of the like product or to those of them
whose collective output of the products constitutes
a major proportion, as defined in Article 5(4) of the
Basic Regulation, of the total Community produc-

Firstly, it should be noted that most of the specific
data relating to the Community industry for the IIP
have been calculated on the basis of the data of
three Community producers Grecian Magnesite,
Magnesitas Navarras and Magnesitas de Rubi(cid:145)n.
The fourth Community producer, Styromag, was
only established as an independent company in
1996 as a result of the bankruptcy of the company
Magindag in 1994, which was also a producer of
CCM. Since information was only available for
Styromag as from 1996 onwards and in order to
present a coherent picture of the economic situa-
tion of the Community industry, the Commission
considered it
inappropriate to take Styromag’s
information into account for the purpose of the
analysis of
the Community
situation of
industry. Data from Styromag have been included
in
total Community
consumption and have been reflected in the
analysis of price undercutting, which covers the IP.
It can also be stated that the analysis of the situa-
tion of
the Community industry set out below
would not have differed, if extrapolated data for
Styromag for the years 1994 and 1995 had been
included in the analysis.

determination

the

the

of

1. Consumption in the Community market

(37)

The total consumption of CCM in the IP was
calculated on the basis of:

(cid:190) the sales volume of the Community industry in

the Community market,

(cid:190) the imports into the Community of CCM from

the People’s Republic of China, and

(cid:190) the imports into the Community of CCM from

all other third countries.

(38) On this basis, consumption rose from 328 000 t in
1994 to 356 000 t in the IP, a level close to that
established for the previous investigation period
(368 000 t). The period 1994 to 1996 was character-
ised by a continuous growth of consumption up to
422 000
the
Community was pushed up by the influence of

1996. Consumption

in

in

t

L 159/6

EN

Official Journal of the European Communities

25. 6. 1999

weather conditions on the demand for low grades
of CCM which are mainly used in agriculture and
by the potential development of a number of new
industrial markets found. After the peak, demand
decreased by 18 % in 1997, but partially recovered
in the IP.

(39)

Finally, it can be stated that Community consump-
tion of CCM used for the two applications was
the
relatively evenly split,
consumption was used for agricultural purposes,
while the other half was destined for industrial
uses.

i.e. about 50 % of

(44)

2. Imports from the country concerned

(a) Import volume, import share and market share

of the imports concerned in the IIP

The volume of imports of CCM originating in the
People’s Republic of China increased from 86 089 t
in 1994 to 110 592 t in the IP, equivalent to an
increase of about 28 % during the IIP. The volume
imported during the IP is near the level of the
previous investigation period in the original invest-
igation (120 000 t).

(45)

The share of CCM imported from the People’s
Republic of China in terms of volume among all
imports into the Community was between 77 %
and 82 % during the IIP. The highest import share
was reached in the peak demand year of 1996.
However, it should be noted that at the time of the
previous investigation period, the import share of
the People’s Republic of China accounted only for
around 54 %.

(40)

(41)

(42)

to an overall

The market share of the imports from the People’s
Republic of China in the Community market rose
from 1994 to the IP from 26,3 % to 31 %. This is
equivalent
increase of 4,7 points
during the IIP. In 1996, in the year with the excep-
tionally high demand, the Chinese market share
reached 36,4 %.
investigation,
imports from the People’s Republic of China held
a market share of 32 % in the IP.

In the previous

(b) Price evolution and price behaviour of the

imports of the product concerned

( i ) P r i c e

e v o l u t i o n

o f

t h e

i m p o r t s

c o n c e r n e d

(43) According to Eurostat

the Chinese
average cif sales prices into the Community signifi-
cantly increased between 1994 and 1995 and

information,

decreased continuously thereafter. The average sales
prices of
the imports concerned increased thus
during the IIP by about 14 %.

the Chinese export

It was argued that
licence
system which was allegedly introduced after the
anti-dumping duties had been imposed would have
progressively limited the supply of Chinese CCM
into the Community thereby pushing up the
Chinese sales prices to the Community. However,
as mentioned above, the Chinese import volume
increased by 28 % during the IIP and, although
Chinese
into the Community
increased after the imposition of the measures in
1993 until 1995, they decreased continuously since.

import prices

( i i ) P r i c e b e h a v i o u r o f

t h e e x p o r t e r s

to

unrelated

In order to determine the price behaviour of the
exporters in relation with the Community produ-
cers’ price behaviour, both the exporters’ prices and
the Community industry’s prices were analysed for
the IP. In this analysis, sales of the Community
the Chinese cooperating
industry and sales of
exporters
the
Community, as well as the resales by related impor-
ters to unrelated customers, considered to be at the
same level of trade, were used. For this analysis, the
product was grouped into two categories according
to its use for agricultural and industrial applica-
tions. On this basis,
the sales prices for CCM
produced and sold by the Community industry
were compared to the sales prices of Chinese CCM
used for the same purpose.

importers

in

(46)

It should be noted that the cooperating Chinese
exporters sold a significant share of their export
volume to the Community via customers located
outside the Community at a fob-Chinese border
level. Hence, adjustments had to be made in order
to come to a cif Community frontier level on the
basis of the information of the cooperating impor-
ters and exporters.

(47)

the imports
The weighted average cif prices of
the
concerned were compared to the prices of
Community producers, adjusted for differences in
delivery terms, for those markets where both parties
realised sales, since only in such markets could a

25. 6. 1999

EN

Official Journal of the European Communities

L 159/7

meaningful comparison be carned out. The invest-
igation established that the overall average sales
prices of the Chinese exporters for both uses were
lower than those of the Community industry. In
particular, it was established that, in relative terms,
the average difference between the prices of
Chinese exports and the Community industry’s
prices was bigger for CCM used in the industrial
sector than for CCM used in the agricultural sector.

(d) Sales by volume

(53)

The total sales volume of the Community produ-
cers went up from around 209 000 t in 1994 to
almost 211 000 t
in the IP. The sales volume
considerably increased between 1994 and 1995, but
it has decreased continuously since.

(48)

Finally, the analysis of the cooperating importers’
questionnaire responses revealed that, for signifi-
cant sales of CCM used for agricultural purposes,
the
the exporters’ cif
minimum price level of ECU 112 t, suggesting that
these prices were limited by the anti-dumping
measures presently applicable.

sales price was

just at

(49) Despite the fact that the exporters’ prices were not
reflecting that Chinese CCM was of a higher purity
than the CCM produced by the Community
industry, the Commission did not deem it to be
necessary to apply an adjustment factor. Such an
adjustment had been claimed by the Community
industry.

(e) Market share

(54)

The Community industry’s market share in the
Community market decreased from 63 % in 1994
to 58 % in the IP. This is equivalent to a decrease
of five percentage points during the IIP. In 1996,
the year with the especially high demand,
the
Community industry’s market share dropped down
to 50 %. Although in the following year
the
Community industry regained the lost percentage
points, the share of the Community industry has
again shown a downward trend since 1997.

3. Economic situation of

the Community

(f) Price development

industry

(a) Production

(50) Comparing the situation at the beginning and at
the end of the IIP, the total production of CCM has
been relatively stable from 1994 to the IP. The
production rose by 6 % from around 207 000 t to
around 219 000 t in the period mentioned above.

(b) Production capacity

(51)

The production capacity of
the Community
industry rose from 265 000 t in 1994 to 280 000 t
in the IP. This is equivalent to an increase of
around 6 % during the IIP.

(c) Capacity utilisation

(52) At 78 %, capacity utilisation of the Community
industry amounted to about the same level in 1994
and in the IP. However, capacity utilisation rose to
89 % and 88 % respectively in 1995 and 1996.
This was the result of an expectation of strong sales
in this period, which in particular in 1996, did not
materialise. Since then, the capacity utilisation of
the Community industry decreased continuously.

(55)

(56)

The investigation showed that
the Community
producers’ average selling price of CCM rose by
7 % from 1994 to the IP. The Community indus-
try’s sales prices reached a peak in 1996 due to the
high demand of the market in that year. While the
prices for agricultural CCM increased during the
IIP by 13 %, the sales prices for CCM used for
industrial purposes rose by 6 %. However, whereas
the prices for agricultural CCM showed a relatively
stable development after the peak in 1996, prices
for CCM used for industrial purposes dropped by
5 %.

(g) Profitability

For the purpose of the profitability analysis, sales of
certain by-products of the CCM production of the
Community industry were taken into account with
the result of decreasing CCM specific costs and
increasing CCM related profits. However,
the
Community industry claimed that these sales were
only of a temporary character and could cease
immediately. The Commission considered that,
due to the considerable amount of sales of by-prod-
ucts, both in value and volume terms, which had
been marketed over an extended period of time,
they had to be reflected in the CCM profitability
analysis with the result that the profitability real-
ised on CCM sales increased.

L 159/8

EN

Official Journal of the European Communities

25. 6. 1999

(57) On this basis, the profitability of the Community
industry, expressed as a percentage of net sales,
increased during the IIP from a weighted average
loss of 4,0 % in 1994 to a profit of 5,2 % in the IP.
The profit situation of the Community industry as
a whole has improved by 9,2 percentage points
during the IIP. However, the Community industry
considers a yearly profit rate of 10 % as necessary
to maintain their activities.

(h) Employment

(58)

Employment in the Community industry declined
by 6,7 % during the IIP.

(i) Stocks

(59)

The closing stocks of the Community producers
went up from 24 788 t in 1994 to 34 240 t in the IP
which amounts to an increase of about 38 % in the
IIP. Closing stocks increased continuously from
1994 to 1997, but dropped then in the IP.

(j) Investments

(60)

The figure of total investments of the Community
industry went up by about 23 % within the period
from 1994 to the IP. The Community industry has
invested strongly, particularly in the years 1995 and
1996. The investments mainly concerned the
the
improvement and further
production process in order to economise costs.
Part of the Community industry installed modern
filters in their kilns to reduce environmental pollu-
tion.

rationalisation of

(k) Export activity of the Community industry

(61)

The Community industry’s exports of CCM to
third countries show a relatively stable develop-
ment. The yearly exports during the IIP amounted
to about 8 000 t to 11 000 t per year.

(l) Conclusion

(62) After the imposition of a variable anti-dumping
duty in 1993,
the Community
the situation of
industry has improved during the IIP. Economic
factors such as production, production capacity,
average sales prices per tonne, profitability and
investments showed a positive development. Both
production and production capacity have increased

(63)

(64)

(65)

by about 6 % during the IIP, while the average
sales prices rose by about 7 % in the same period.
After two years of losses, the Community industry’s
sales have been profitable again since 1996. It is
this was due to the reduction of
likely that
personnel
and the investments made in the
previous year in order to rationalise production. In
the IP the Community industry’s sales volume and
the capacity utilisation reached the same level as in
1994. Nevertheless, the above analysis also shows
that this is not the case for all indicators and that in
particular from 1996 onwards a downward trend
has occurred.

In fact, capacity utilisation, market share, employ-
ment and closing stocks did not develop favour-
ably. The Community industry lost about
five
percentage points of
the Community market
during this period. The Community industry
in the IP as
employed 6,7 % less personnel
compared to 1994. The closing stocks of
the
Community industry continuously rose between
1994 and 1997–the overall
increase in the IIP
amounted to 38 %. Furthermore, capacity utilisa-
industry decreased
tion by
constantly from 1995 onwards, i.e. even in 1996,
the year of the high demand, capacity utilisation
did not rise to more than 88 %.

the Community

The investigation established that, although the
situation of the Community industry has improved
in some areas, some other economic factors did not
develop so favourably. This has to be seen in
conjunction with the low prices of the Chinese
imports, which were made close to the minimum
price and which exerted price pressure on the
Community industry. This has prevented the
Community industry from fully recovering from
the effects of the previous dumping practices.

It was alleged that
the Community industry
improved its situation in the Community market
despite the continued presence of imports from the
country concerned. In this respect, it can be noted
that, although the anti-dumping measures have
contributed to the improvement of the economic
situation of the Community industry, their effect
has, as shown above, been diluted. This argument is
from the
supported by the fact
People’s Republic of China increased by 28 %
during the IIP thereby gaining 4,7 percentage
points in terms of market share in the same period.

imports

that

25. 6. 1999

EN

Official Journal of the European Communities

L 159/9

4. Import volumes and import prices from

(71)

other third countries

(a) Import volume

(66)

(67)

The import volume of CCM from other third coun-
tries increased in the IIP from about 25 000 t in
1994 to 26 000 t in the IP. This is equivalent to an
increase of about 4 %. Due to the above-described
high demand for CCM in 1996, imports from other
third countries reached a peak in that year with
more than 33 000 t.

imports from other third
The market share of
countries was 8 % from 1994 to 1996 and
decreased by one percentage point in 1997. The
market share for these countries has thus been
relatively stable during the IIP.

(b) Sales prices for imports from third countries

The Community industry undertook considerable
efforts to improve its competitiveness towards the
main Chinese competitors and competitors from
other third countries. These efforts are particularly
visible when looking at the extent of investments
during
the
the
Community
considerable
amounts in order to modernise and rationalise its
production
the
from the People’s
continued dumped imports
Republic of China, these efforts have not been
entirely
industry
successful. The Community
remained in a vulnerable situation.

IIP. From 1994
industry

facilities. However,

invested

1997,

due

to

to

G. LIKELIHOOD OF RECURRENCE OF INJURY

1. Analysis of the situation of the exporting

country concerned

(68) According to Eurostat the average sales price for
imports from third countries rose by 43 % in the
IIP.

(a) The Chinese Licence System

(72)

(73)

(74)

5. Conclusion

(69) Compared with the figures of the previous invest-
igation, Community consumption has shown a
relatively stable development. It was alleged that
the demand in the Community expanded rapidly
between 1995 and 1996,
thereby exceeding the
Community industry’s capacity, which made an
increase of Chinese CCM imports inevitable. It
should be noted, however, that the capacity utilisa-
tion rate of the Community industry was about
89 % in 1995 and dropped continuously since. It
can therefore be concluded that Community
consumption did not have a major influence on the
situation of the Community industry during the
IIP.

(70) Moreover, it seems that it was rather the decreasing
Chinese import prices from 1995 onwards that
made the Chinese import volume increase. In any
event, no such significant
increase in demand
occurred in the period up to the IP, which could
explain the increase in imports and market share of
Chinese CCM as established during the invest-
igation.

and Economic Cooperation)

In April 1994, the MOFTEC (Ministry of Foreign
Trade
and the
CCCMMC (China Chamber of Commerce of
Metals, Minerals and Chemicals Importers and
Exporters) introduced an export licence system for
all exports of certain minerals which is basically
identical to an export quota system. All different
calcined
sorts of magnesia,
licence
magnesite, have been covered by this
system since. In 1998, the licence fee was about
ECU 37 t CCM. This implies that, if the minimum
price of ECU 112 t is met, the actual sales price
without licence fee would be around ECU 75 t.

including caustic

according

to Eurometaux

Furthermore,
the
Liaoning Province where most of the producers are
tax
introduced in 1995 another
situated,
which in 1997 amounted to around ECU 15 t. It
has been argued that this licence system is suffi-
cient
renewed injurious
dumping.

to reduce the risk of

local

Eurometaux claimed that
the Chinese licence
system for magnesite could be abolished soon and
feared that Chinese exports of magnesite would, as
a consequence of the abolition, increase in volume
and considerably decrease in prices, should the
anti-dumping measures not be continued.

L 159/10

EN

Official Journal of the European Communities

25. 6. 1999

(75)

(76)

(77)

(78)

(79)

The exporters argue that the licence system has
brought stability and reliability in the exports of
magnesite from the People’s Republic of China
and that there is no reason to assume that the
system would be dropped soon. They further stated
that
the anti-dumping
measures did not continue and the licence system
dropped, certainly not drop their prices in a stable
market such as exists in the European Community
and suddenly voluntarily abstain from making
higher gains.

the exporters would,

if

In view of the above arguments and in view of the
nature of the system described above which is run
autonomously by the government of the exporting
country,
it must be stated that the existence or
abolition of an export licence system cannot have
any influence on the decision of the Community
institutions whether or not to renew anti-dumping
measures. However,
this system
merely underlined the potential of the Chinese
exporters to sell CCM at very low prices.

the analysis of

(b) Chinese exports to third countries

The Commission has, on the basis of US trade
statistics, analysed the Chinese CCM exports to the
USA. These imports accounted for 67 % of the
worldwide CCM imports into the USA in 1997 and
to 63 % in 1998 until August.

The total volume of Chinese exports to the USA
rose from 72 477 t in 1994 to 89 440 t in 1997
which is equivalent to an increase of 23 %. In
1995, Chinese exports to the USA increased to an
absolute maximum of more than 96 000 t a volume
at about the same level as the volume of Chinese
exports to the Community, while the trend was
decreasing in 1996 again.

Even though the Chinese CIF sales prices to the
United States increased from 1994 to 1995 by
80 % starting from a very low level, they have
decreased since and remained considerably below
the EU minimum price of ECU 112 t imposed in
1993.

found to be partially very close, if not equal, to the
minimum price, i.e. they appear to be only at that
level because of the existence of the minimum
price.

(c) Production, capacity, capacity utilisation and

stocks

The Commission sent questionnaires
to eight
Chinese producers and trading companies, inter
alia, in order to establish the level of production,
the production capacity, the capacity utilisation and
the stocks. However, the Commission could not
determine the production levels of the Chinese
producers nor the exact capacity, capacity utilisa-
tion and stocks, since three of the four cooperating
companies are pure trading companies and only
one company itself produces CCM. The other
producers did not cooperate. Since this did not
allow for a representative analysis of the Chinese
CCM production and since no official statistics
were available, the Commission had, according to
Article 18 of the Basic Regulation, to use the infor-
mation available.

for

it was decided that

the information
Therefore,
provided in the request
review reflecting
industry and market research information should
be used. According to these sources, production in
the last few years can be estimated to be at around
600 000 t annually, of which only 200 000 t are
destined for the Chinese domestic market.

(81)

(82)

(83) On the same basis, information from the request
for review had to be used in determining the
production capacity, capacity utilisation and stocks.
the production
According to the same source,
capacity of the Chinese producers amounted to
more than 700 000 t per year. As far as the capacity
utilisation is concerned,
the Chinese producers
have substantial idle production capacities. Chinese
stocks of CCM amounted to around 500 000 t.

2. Conclusion on the recurrence of injurious

dumping

(80) A price comparison for all types of CCM shows,
according to Eurostat, a Chinese average sales price
in the Community market which is about one third
higher than the average sales price in the US
market. Therefore, there appears to be no reason to
believe that, in the absence of measures, Chinese
prices would not drop to levels comparable to the
prices for imports into the US,
in particular as
import prices into the Community have been

(84)

The Chinese export prices to the other main
market for CCM, the USA, for which the export
licence system is also applicable, were very low
between 1994 and mid 1998. Even though these
prices increased from 1994 to 1997 by about 70 %
starting from a very low level, they still remained
considerably below the EU minimum price
imposed in 1993 and the actual Chinese export
prices to the Community.

25. 6. 1999

EN

Official Journal of the European Communities

L 159/11

(90)

(91)

(92)

(93)

(85)

the Chinese
Furthermore, given the nature of
licence system, whose abolition would alone allow
the Chinese cif sales prices to drop by about EUR
37 t, the huge raw material reserves and the large
Chinese unused production capacities demonstrate
that there is a significant potential that the Chinese
exporters will
imports again.
resume injurious
Therefore, it was concluded that, in the absence of
the measures, there is a likelihood of a recurrence
of injurious dumping and that the measures in
force should, for that reason, be maintained.

H. COMMUNITY INTEREST

1. Introduction

(86)

(87)

In accordance with Article 21 of the Basic Regula-
tion, it was examined whether a prolongation of the
existing anti-dumping measures would be against
the interest of the Community as a whole. The
determination of Community interest was based on
an appreciation of all the various interests, such as
the Community industry, the importers and traders,
the users of the product concerned. In order to
assess the likely impact of a continuation of the
measures, the Commission services requested infor-
mation from all interested parties mentioned above.

It should be recalled that, in the previous invest-
igation, 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 has allowed an assessment
of any negative impact on the parties concerned by
the anti-dumping measures imposed.

(88)

The Commission sent questionnaires to 24 impor-
ters, of which three unrelated importers and one
related importer
fully cooperated. Furthermore,
questionnaires were sent to two user organisations,
CEFIC and Emfema. However, they did not reply
to the questionnaire.

2. Interests of the Community Industry

the investigation allow for

The results of
the
conclusion that, without the continuation of the
measures, the situation of the Community Industry
will continue to be vulnerable or will even deteri-
orate.

The Community industry has been suffering from
low priced dumped imports of CCM from the
People’s Republic of China. The objective of the
anti-dumping measures under review, that is, to
reestablish fair competition in the Community
market between the Community producers and
their exporting counterparts in third countries, has
not been fully met as has been shown above.

The Community industry has been making consid-
erable efforts to improve its productivity in recent
years, in an attempt to lower its cost of production
and to enhance its competitiveness in this price
sensitive market. Rationalisation efforts and invest-
ments were made and the selling, general and
administrative (SG & A) costs of the Community
industry declined during the IIP. Furthermore, one
Community producer in Greece who took part in
the previous
the
parent
the newly participating
Austrian Community producer Styromag, Magi-
ndag, had gone bankrupt, too, in 1994, and Styr-
omag had to be completely restructured. The
Community industry has not been in a position to
make a reasonable profit during the IIP.

investigation went bankrupt,

company

of

the

situation of

the Commission

in the absence of

In view of the nature of the economic difficulties
experienced by the Community industry, in partic-
ular the fact that it was prevented from recovering
from the unhealthy situation caused by the
imports,
dumped
services
intervention,
consider
that,
further deterioration of
the
Community industry is quite likely, given the level
of losses incurred by them over an extended period.
This could entail a severe reduction in the number
of employees. In the course of this investigation it
has been established that the Community industry
is viable, but continues to be in precarious situa-
tion, and that it is highly probable that, without the
continuation of anti-dumping measures to correct
the effects of dumped imports, the financial situa-
tion of the Community industry will deteriorate.
Thus, the existence of the Community industry
and many jobs may, ultimately, be at risk.

(89) On this basis, it was examined, whether, despite the
findings on dumping, injury and continuation or
injurious dumping respectively,
recurrence of
compelling reasons existed which would lead to the
conclusion that it is not in the Community interest
to maintain measures in this particular case.

(94)

Furthermore, the continuing restructuring efforts
made by the Community industry show that it is
not ready to abandon this segment of production.
To maintain anti-dumping measures would there-
fore be in the interest of the Community industry.

L 159/12

EN

Official Journal of the European Communities

25. 6. 1999

3. Interests of importers and traders

People’s Republic of China increased significantly,
by 28 %, during the IIP.

the prolongation of

(95) On the one hand, some importers and traders are
against
the anti-dumping
measures arguing that a fixed minimum price
distorts international trade and artificially increases
the import price of the product concerned. They
claimed that the Community industry constantly
decreased its prices during the IIP, whereas the
Chinese producers were not
in the position to
compete with the Community industry, as they
were constrained by the minimum price. It should
be noted, however, that the importers could not
provide any evidence for this argument. On the
contrary,
the
Community industry’s sales prices have increased
during the IIP by about 7 % and the Chinese
market share in the Community during the IIP
rose by about 5 %.

investigation revealed that

the

(96) On the other hand, some other importers and one
importing user stated that the anti-dumping meas-
ures had created a certain price stability in the
Community market
the
minimum price has enabled the Community
industry to continue with its production and
thereby maintained competition between Chinese
and Community producers.

for CCM. Moreover,

(97)

It is therefore concluded that the cost situation of
the importers of the product concerned has not
been negatively influenced by the imposition of
the anti-dumping measures. It
is likely that a
continuation of the measures will not lead to a
deterioration of their cost situation in the future.

4. Interests of users

(98) None of the Community users answered the ques-
tionnaire sent by the Commission services during
the current investigation nor provided any evidence
on the incidence on their cost of production of the
measures in force. Following the lack of substan-
tiated
users
concerning the impact of the measures in force on
the structure of the cost of production using CCM,
a subsequent analysis was not performed. However,
since the users did not respond, it can be assumed
that the anti-dumping measures did not have any
negative influence on their cost situations.

information

submitted

the

by

(99)

In any case, the result of the present anti-dumping
measures has not been to close the Community
market to imports, but rather to level the unfair
trade practices and to prevent the distorting effects
of dumped imports. In this specific case, it seems
that the measures did not prevent imports from the
country concerned from entering the Community
imports from the
market. As mentioned above,

(100) Furthermore, it was found that, in view of the fact
the Community industry has a significant
that
market share, is viable and has invested significant
amounts to improve its competitiveness, and given
the presence of other suppliers located outside the
Community, the risk of a general supply shortage is
very low.

(101) 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 a
deterioration, if at all, of the situation of the users.

5. Consequences

for

competition in the

Community market

(102) As far as the competitive environment

is concerned,

in the
Community market
the measures
proposed below are not such as to foreclose the
Community market to the exporters under review,
and therefore it will allow the continued presence
of
these exporters in the market. It should be
recalled that the importers and users have always
enjoyed the presence of a number of competitors
in the market. The Community industry, even
when exploiting its total production capacity, could
only satisfy about 80 % of the demand on the
Community market. Imports from third countries
will therefore always be necessary. Thus, even if the
existing anti-dumping measures were continued,
the exporters of the country concerned would be
able to continue to export to the Community at fair
prices.

6. Conclusion on Community interest

(103) On the basis of

the information available and
having analysed all the various interests involved,
the Commission services state the following: On
the one hand, a continuation of the anti-dumping
measures is likely to result in a stable price for
CCM in the Community market which, over the
duration of the measures in force, appears not to
have had any negative effects on the economic
situation of users and importers. However, on the
leaving the Community industry
other hand,
without adequate protection against the dumped
imports, would not only further aggravate its diffi-
culties, but could even lead to its disappearance.
The price advantage for users resulting from the
non-imposition of anti-dumping measures does not
compensate for the benefit achieved by the removal
of
the trade distortion caused by the dumped
imports.

25. 6. 1999

EN

Official Journal of the European Communities

L 159/13

I. ANTI-DUMPING MEASURES

HAS ADOPTED THIS REGULATION:

(104) All parties concerned were informed of the essen-
tial facts and considerations on the basis of which it
was intended to recommend the maintenance of
the existing measures. They were granted a period
within which to make representations subsequent
to disclosures. The comments of the parties were
considered and, where appropriate,
the findings
have been modified accordingly.

(105)

the Basic Regulation,

It follows from the above that, as provided for by
Article 11(2) of
the anti-
dumping measures in the form of a variable duty
associated to a minimum import price of ECU
112 t on imports of CCM originating from the
People’s Republic of China imposed by Regulation
(EEC) No 1473/93 should be maintained, but
expressed in the new the European currency
EURO. The new minimum price is therefore to be
EURO 112 t.

Article 1

1.
A definitive anti-dumping duty is hereby imposed
on imports of magnesium oxide originating in the
People’s Republic of China falling within CN code
ex 2519 90 90 (Taric code 2519 90 90*10).

2.
The amount of the duty shall be the difference
free-at-
between EUR 112 per
Community-frontier price before customs clearance, if the
latter price is lower.

tonne and the net,

Unless otherwise specified, the provisions in force
shall

3.
concerning duties and other customs practices
apply.

Article 2

into force on the day
This Regulation shall enter
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 Luxembourg, 21 June 1999.

For the Council

The President

G. VERHEUGEN