Council Regulation (EC) No 1100/2000 of 22 May 2000 imposing definitive anti-dumping duties on imports of silicon carbide originating in the People's Republic of China, the Russian Federation and the Ukraine and prolonging the undertaking accepted by Commission Decision 94/202/EC
Date: 2000-05-22
Institutions: Council of the European Union
Subjects: China, Russia, Ukraine, anti-dumping duty, import, semi-metal

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COUNCIL REGULATION (EC) No 1100/2000

of 22 May 2000

imposing definitive anti-dumping duties on imports of silicon carbide originating in the People's
Republic of China, the Russian Federation and the Ukraine and prolonging the undertaking
accepted by Commission Decision 94/202/EC

THE COUNCIL OF THE EUROPEAN UNION,

(4)

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 Community (1), and in
particular Articles 9 and 11(2) thereof,

Having regard to the proposal submitted by the Commission,
after consulting the Advisory Committee,

(5)

Whereas:

A. PREVIOUS INVESTIGATION

the Council

By Regulation (EC) No 821/94 (2), following an expiry
review,
imposed definitive anti-dumping
duties on imports of silicon carbide, falling within CN
code 2849 20 00, originating in the People's Republic of
China (hereinafter referred to as ‘China’), the Russian
Federation (hereinafter referred to as ‘Russia’) and the
Ukraine. At the same time, the Commission accepted an
undertaking offered by the Government of Russia,
in
conjunction with V/O Stankoimport, Moscow, Russia.

The investigation of
the possibility of continuation
and/or recurrence of dumping covered the period from
1 January 1998 to 31 December 1998 (hereinafter
referred to as ‘investigation period’ or ‘IP’). The exam-
ination of trends relevant for the assessment of any
injury (hereinafter
continuation and/or recurrence of
referred to as
‘IIP’)
covered the period from 1 January 1995 to 31
December 1998.

‘injury investigation period’ or

the

advised

applicant
The Commission officially
Community producers,
the exporters and exporting
producers in China, Russia and the Ukraine, the impor-
ters known to be concerned, and the representatives of
the exporting countries concerned 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 initiation, as
well as to the cooperating exporting producer in the
analogue country, Brazil. The Commission also gave the
parties directly concerned the opportunity to make their
views known in writing and to request a hearing.

(6)

All the applicant Community producers replied to the
questionnaire, as well as four importers, two traders
associated to a related importer and six users. In addi-
tion, three other importers made their views known in
writing.

B. PRESENT INVESTIGATION

(7)

In respect of the exporting countries concerned, the
following companies cooperated in the investigation:

Following the publication in October 1998 (3) of a
notice of the impending expiry of the measures in force,
the Commission received a request for a review lodged
by the European Chemical Industry Council (CEFIC) on
behalf of producers representing a major portion of the
Community production of silicon carbide (hereafter ‘the
applicant Community producers’). The request was
based on the grounds that the expiry of the measures
would be likely to result in the continuation or recur-
rence of dumping and injury to the Community
industry.

after

Having determined,
consulting the Advisory
Committee, that sufficient evidence existed for the initia-
tion of a review, the Commission initiated an invest-
igation pursuant to Article 11(2) of Council Regulation
(EC) No 384/96 (hereinafter referred to as the ‘basic
Regulation’) through the publication of a notice of initia-
tion (4).

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

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

(2) OJ L 94, 13.4.1994, p. 21. Regulation as last amended by Regula-

tion (EC) No 1786/97 (OJ L 254, 17.9.1997, p. 6).

(3) OJ C 316, 14.10.1998, p. 4.
(4) OJ C 99, 10.4.1999, p. 18.

(a) exporting producers:

— Zaporozhsky Abrasivny Combinat, Zaporozhye,

Ukraine,

— Volzhsky Abrasive, Volzhsky, Volgograd Region,

Russia;

(b) exporter:

— Stankoimport, Moscow, Russia;

(c) related importer:

— Mineral

Abrasive

Rohstoff,

Kuppenheim,

Germany;

(d) producer in the analogue country:

— Casil S/A Carbureto de Silício, São Paulo, Brazil.

(8)

No exporting producer located in China cooperated in
the investigation.

(1)

(2)

(3)

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(9)

The Commission sought and verified all information it
deemed necessary for the purpose of determination of
continuation or recurrence of dumping and injury and
of
the Community interest. Verification visits were
carried out at the premises of the following companies:

(a) applicant Community producers:

— Elektroschmelzwerk Kempten GmbH, Munchen,

Germany,

— Navarro SA, Madrid, Spain;

(b) unrelated importers in the Community:

— Intermat SA, Hody, Belgium,

— Imexco Ullrich GmbH, Saarbrücken, Germany;

(c) traders associated to a related importer:

— Mineralien-Werke GmbH Kuppenheim, Kuppen-

heim, Germany,

— Mineralien-Werke Duisburg GmbH, Duisburg,

Germany;

(d) users in the Community:

— Carborundum Schleifmittelwerke GmbH, Düssel-

dorf, Germany,

— Sebald & Co. GmbH, Marktredwitz, Germany,

— Werner Kessl Giessereibedarf, Trabitz, Germany.

(10)

(11)

(12)

C. PRODUCT CONCERNED AND LIKE PRODUCT

The product concerned by this proceeding is silicon
carbide, falling within CN code 2849 20 00 (hereinafter
referred to as ‘silicon carbide’ or the ‘product concer-
ned’).

The production process of silicon carbide is such that
output automatically comprises a variety of qualities of
silicon carbide which can be segregated into two main
grades: crystalline and metallurgical. The crystalline
grade, which is further classified under the types black
and green,
is normally used in the manufacturing of
abrasive tools, grinding wheels, high-quality refractory
products, ceramics, plastic materials etc., while the
metallurgical grade is normally used in foundry and
blast-furnace operations as a silicon carrier. As in the
previous investigations, both grades have to be consid-
ered as forming one product for the purpose of this
investigation.

In this respect, the Commission also examined whether
nitrified silicon carbide blocks should be considered as
falling under the product description as outlined above.
It was found that, even if these nitrified silicon carbide
blocks are made of silicon carbide, the silicon carbide
undergoes a specific additional production process
giving the blocks different physical and chemical charac-
teristics as compared to silicon carbide. On this basis it
has been concluded that they do not fall under the
product definition as outlined above. This conclusion is

supported by the fact that nitrified silicon carbide blocks
are imported under a separate customs heading, namely
CN code 6902 90 00.

(13) As the previous investigation has shown, the product
produced and sold by the applicant Community produ-
cers on the Community market is alike in all respects to
the silicon carbide imported from the three countries
concerned and also to the product sold on the domestic
market of the market-economy third country, i.e. Brazil.
All these products should therefore be considered a like
product within the meaning of Article 1(4) of the basic
Regulation.

D. LIKELIHOOD

OF

CONTINUATION
RECURRENCE OF DUMPING

AND/OR

(a) Preliminary remarks

(14)

(15)

In accordance with Article 11(2) of the basic Regulation,
the purpose of
this type of review is to determine
whether, or not, expiry of the measures would lead to
continuation or recurrence of injurious dumping.

In examining whether there is a likelihood of continua-
tion of dumping if measures were removed, it is neces-
sary to verify whether dumping exists at present and/or
whether any such dumping is likely to continue. In this
respect it should be noted that all three exporting coun-
tries continued to export to the Community during the
IP. The level of imports from Russia, which was only
slightly below the level in the previous investigation, was
considered sufficient for a reliable and representative
picture to be obtained for the IP and for the prognosis as
to whether such findings were likely to apply for the
future (‘continuation test’). For China and the Ukraine,
whose volume of imports was relatively low, the find-
ings on dumping for the IP were supplemented by an
examination of whether removal of measures would
likely lead to a recurrence of dumping (‘recurrence test’).

(b) Analogue country

(16)

Since the three countries concerned are considered to be
non-market economy countries, normal value had to be
established in accordance with Article 2(7)(a) of
the
basic Regulation, i.e. based on information obtained in a
market-economy third country where the product was
produced and sold.

(17) After examination of

the worldwide silicon carbide
market, the Commission concluded that Brazil was the
appropriate choice of analogue country for the following
reasons:

— the size of its domestic market makes Brazil a repres-
entative country for the establishment of normal
value for the countries concerned,

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— domestic prices in Brazil are governed by normal
market
forces given the level of demand in the
market and the existence of competing producers,

(25)

— in terms of the range of qualities of silicon carbide
and its basic physical and chemical characteristics,
the product manufactured in Brazil can be consid-
ered identical
to the product exported from the
countries concerned.

For the purpose of determining the export price, the
Commission did not take into consideration the sales
made by the Russian exporting producer to its related
importer in the Community due to insufficient coopera-
tion concerning dumping aspects. Consequently,
the
export price has been determined in accordance with
Article 18(1) on the basis of the remaining sales.

(18) On this basis, it was concluded that Brazil was a reason-
able and appropriate choice as an analogue country in
order to establish normal value for imports of silicon
carbide originating in China, Russia and the Ukraine.

(26)

Since no cooperation was received from any Chinese
producer, the export price had to be determined in
accordance with Article 18(1) of the basic Regulation.
The Commission found that Eurostat figures were the
best information available and export prices were estab-
lished on that basis.

(c) Normal value

(e) Comparison

(19) Normal value was calculated on the basis of the data of

the cooperating Brazilian company.

(27)

(20)

First of all, it was examined whether the domestic sales
made by the cooperating Brazilian company were
representative when compared to the imports into the
Community from the three countries concerned. This
was found to be the case for each grade of silicon
carbide, i.e. crystalline and metallurgical, exported from
the countries subject to investigation to the Community.

(21)

It was then examined whether the relevant sales could
be considered as having been made in the ordinary
course of trade, comparing domestic prices and costs of
production for each grade of silicon carbide.

(22)

For crystalline silicon carbide the sales were made in the
ordinary course of trade and normal value was therefore
based on the actual price on the Brazilian market.

(23) As the sales of metallurgical silicon carbide in the
Brazilian domestic market were made at a net sales price
that was lower than the cost of production, these actual
prices could not be used to establish normal value. It
was consequently necessary to calculate a constructed
normal value for the grade in question, in accordance
with Article 2(3) of the basic Regulation. The calculation
was made on the basis of the costs of manufacturing
incurred by the Brazilian exporting producer plus a
reasonable amount
for selling, general and adminis-
trative costs (SGA) and for profits. To this end, the
Commission used the actual SGA expenses incurred and
the domestic profit margin realised on the basis of those
domestic sales of crystalline silicon carbide which were
made in the ordinary course of trade.

(d) Export price

(24)

In all cases where exports of silicon carbide were made
to independent customers in the Community, the export
price was established in accordance with Article 2(8) of
the basic Regulation, i.e. on the basis of export prices
actually paid or payable.

For the purpose of ensuring a fair comparison between
the normal value and the export price, due allowances in
the form of adjustments were made for differences
affecting price comparability, in accordance with Article
2(10) of the basic Regulation. On this basis, an adjust-
ment to the normal value was made for packaging costs
while
freight,
discounts, packaging and commission expenses.

export price was

adjusted for

the

(f) Dumping margin

(28) A dumping margin was determined for Russia and the
Ukraine respectively, by comparing the weighted-average
normal value with the weighted-average export price to
the Community.

(29)

(30)

The comparison showed the existence of significant
dumping margins with regard to imports originating
from both countries. These margins were even higher
than those established in the previous investigation.

For China, a comparison between the average Brazilian
normal value of silicon carbide per tonne and the
average export price per tonne based on Eurostat data
for silicon carbide originating in China, showed a signifi-
cant dumping margin.

(g) Likelihood of continuation and/or recurrence of

dumping

(31) As outlined above, imports into the Community from
the countries concerned were still dumped at significant
levels, which implies a likelihood of continuation of
dumping, in particular for Russia. However, as far as the
Ukraine and China are concerned, the import volumes
during the IP were comparatively low (below 1 % of
Community consumption). Therefore it was
further
examined whether there was also a likelihood of recur-
rence of dumping through increased imports.

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(i) China

(32)

In the absence of cooperation from the Chinese
exporting producers, the Commission based its analysis
on information provided in the review request as well as
on information obtained from specialised press and
market studies submitted by interested parties in the
course of the investigation.

idle production capacities and/or by redirecting exports
currently destined for the United States of America),
should measures be repealed. The current Chinese
export prices charged to the United States of America
can serve as an indication of the price level of any future
exports to the Community. Consequently, there is a
likelihood of recurrence of high dumping for significant
volumes.

(33) According to the abovementioned sources, China has a
large production capacity of silicon carbide which repre-
the worldwide production
sented around 40 % of
capacity in the IP. The same sources rate the actual
Chinese production at about 70 % of its potential.

(ii) The Ukraine

(34) Under these circumstances, the Chinese producers are
capable of producing additional quantities, which would
represent around 70 % of the Community consumption
during the IP.

(35)

(36)

(37)

(38)

Currently, the Chinese exports of silicon carbide already
strongly dominate the American and Japanese markets
and it is unlikely that their domestic consumption will
increase significantly in the coming years. These markets
cannot, therefore, absorb any additional quantities.

In respect of Chinese exports to third countries, the
Commission analysed the situation on the American
market which is, in terms of volume, the most impor-
tant export market
silicon
carbide.

for Chinese exports of

Concerning the export prices,
the investigation has
established that Chinese exports to the United States of
America are mainly of the metallurgical grade, i.e. the
lower grade. It was further found that the price of the
Chinese material sold on the American market was
substantially below the normal value established in
Brazil and also lower than the price of the metallurgical
grade of silicon carbide sold by the Community produ-
cers on the Community market. It was also lower than
the cif prices actually offered for Chinese imports into
the Community. Thus, imports into the United States of
America would be dumped to a larger degree than
Chinese imports into the Community. In this respect, it
should finally be noted that a considerable part of the
Community consumption also consists of the metallurg-
ical grade.

The key factors found are thus the large unused produc-
tion capacity, the substantial Chinese export volumes to
the United States of America and the low level of the
export prices to the United States of America (even
lower
the
Community). On this basis, it is more than likely that
exports in significant quantities would recur (by using

the Chinese

export

prices

than

to

(39)

(40)

(41)

The known exporting producer from the Ukraine coop-
erated in the investigation and provided information
which the Commission used in its investigation. The
Commission also based its analysis on information
provided in the review request as well as on information
obtained from the specialised press and market studies.

The investigation has established that the capacity utili-
sation of this exporting producer was less than 60 %
during the IP. In terms of quantities, and given the total
Community consumption, it would be in a position to
produce additional volumes representing around 6 % of
the Community consumption during the IP.

The investigation has established that the largest export
market for the Ukraine is the Czech Republic. The IP
exports to the Czech Republic amounted to a quantity
the
which corresponded to between 2 % to 5 % of
Community consumption. Since only a part of these
exports were directly sold by the cooperating Ukrainian
exporting producer, the official trade statistics of these
countries were used in order to determine the average
Ukrainian export prices. These were found to be signifi-
cantly lower than the prices of silicon carbide produced
and sold by the Community industry on the Community
market and also lower than the Ukrainian export prices
charged in the Community.

(42)

The Ukrainian exports to the Czech Republic give a clear
indication of their potential export behaviour on the
Community market, both in terms of volume and value,
if measures were repealed.

current

import volumes

(43) Given the attractiveness of the Community market in
it
terms of prices compared to other markets,
is
concluded that
into the
Community from the Ukraine are likely to increase
substantially should measures be repealed. There is no
indication that the future export prices would be higher
than the current dumped Ukrainian export prices to the
Community. It has therefore to be concluded that there
is a likelihood of recurrence of dumping in significant
volumes for the Ukraine.

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(h) Conclusion

(44)

In view of the above it has been established that there is
likelihood of continuation of dumping with respect to
Russia and, as
the Ukraine and China are
concerned, there is likelihood of recurrence of dumping,
should the measures be repealed.

far as

E. DEFINITION OF THE COMMUNITY INDUSTRY

(45)

(46)

producers

represented

The investigation confirmed that during the IP, the two
applicant
of
Community production of silicon carbide. Therefore,
they constitute the Community industry within the
meaning of Article 4(1) and Article 5(4) of the basic
Regulation.

totality

the

investigations ceased their

It should be noted that two out of the four Community
producers representing the Community industry in the
previous
silicon carbide
related operations a few months after the imposition of
the measures currently in force. These two producers
were Pechiney Electrometallurgie in France and Samatec
in Italy.

F. THE SITUATION IN THE COMMUNITY MARKET

1. CONSUMPTION IN THE COMMUNITY

level, all other
subject to anti-dumping duties.

imports originating in Russia being

(50)

The overall market share of the imports from the coun-
tries concerned in the Community decreased by 39 %
between 1995 and the IP. The market share of China
and the Ukraine fell below 1 %, while the market shares
of
from Russia remained relatively stable
between 5 % to 10 %.

imports

(b) Price evolution of the imports concerned and

related price behaviour

(i) Price evolution of the imports concerned

(51) On the basis of Eurostat figures, a price evolution has
been established for the IIP. This analysis was however
hampered by the fact that the relevant CN code does not
distinguish between the different grades of
silicon
carbide. On the basis of the information collected in the
course of the investigation, it has been established that
imports originating in China mostly consist of metal-
lurgical (i.e. lower) grades while imports originating in
the two other countries concerned cover both metallurg-
ical and crystalline grades.

(52) On this basis Eurostat figures showed that the Russian
prices increased by 11 % between 1995 and the IP,
while the average prices of exports from China and the
Ukraine decreased by 28 % and 8 %, respectively.

(47)

apparent Community consumption of

silicon
The
carbide was established on the basis of the sales volumes
of the Community industry on the Community market,
as well as imports into the Community of silicon carbide
from the countries concerned and all other third coun-
tries.

(53)

(48) On this basis, consumption increased by 8 % during the
IIP. In this respect, it should be noted that the silicon
carbide market overall has been a stable market during
the period investigated. Only 1998 (the IP) showed an
increase in consumption which can be explained by the
increased activity of the steel industry and should thus
be considered exceptional. The exceptional character of
the consumption in 1998 is confirmed by figures avail-
able for the first six months of 1999 which are compar-
able to the levels reached in 1996 and 1997.

2. IMPORTS FROM THE COUNTRIES CONCERNED

(a) Import volume and market share of the imports

concerned

(49)

The import volume of silicon carbide originating in the
countries concerned dropped significantly from 37 886
tonnes in 1995 to 15 492 tonnes in the IP, equivalent to
a decrease of about 59 % during the IIP. This decrease is
especially marked for China and the Ukraine. By
comparison, the relatively small decrease of the Russian
import volume (– 7 %) can be explained by the accep-
tance of an undertaking from the Russian exporter Stan-
koimport limiting Russian imports to a non-injurious

(54)

(ii) Price behaviour

In order to examine the exporters' price behaviour in
relation to that of the Community industry, a price
comparison was made and it was established that,
during the IP, the prices of the imports concerned (at a
customs and anti-dumping duty-paid level) were on
average significantly below the Community industry's
it was found that the
sales prices. More specifically,
Russian imports made in the framework of the under-
taking (i.e. exempt from anti-dumping duties) were made
at prices considerably below those of the Community
industry. All
these sales were of crystalline grades.
However, the price of the additional import volume of
the product under consideration originating in Russia,
mostly of metallurgical grade, was found to be higher
than Community
even when
discounting the anti-dumping duty.

industry's

prices,

3. ECONOMIC SITUATION OF THE COMMUNITY INDUSTRY

(a) Production

The production of silicon carbide by the Community
industry increased by 13,4 % between 1995 and the IP.
The largest increase took place in 1996, after the impo-
the measures currently in force. Thereafter
sition of
production remained
should,
however, be noted that the evolution of the production
during 1996 was not matched by a similar evolution of
the sales volume.

relatively

stable.

It

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(b) Production capacity

(g) Employment

(55)

Production capacity remained stable during the IIP. In
this respect
the production
capacity under consideration is exclusively dedicated to
the production of silicon carbide.

it should be noted that

(c) Capacity utilisation

(56)

Capacity utilisation rose by 13,4 % during the IIP, corre-
sponding to the increase in production.

(62)

Employment decreased by 9 % during the IIP.

(h) Investment

(63)

Investment was especially high during 1995 and 1996,
in which the Community industry had to change its
to comply with the
production processes in order
requirements of the environmental Community legisla-
tion. During 1997 and the IP,
investment was then
mainly related to the improvement and renewal of
existing equipment. It is therefore concluded that the
Community industry continued to invest in order to
further improve its production processes.

(d) Sales volume

(i) Profitability

(57)

The sales volume of the Community industry on the
Community market increased by 14,5 % during the IIP.
The increase was most remarkable between 1997 and
the IP, when Community consumption expanded. In this
it should be noted that the expansion of the
respect,
sales volume concerned mainly the low grades.

(64)

The profitability of the Community industry, expressed
as a percentage of net sales, while increasing between
1995 and 1996, fell afterwards to slightly below the
break-even point during the IP. This trend can be linked
with the price evolution.

(58)

(59)

(60)

(61)

(e) Market share

industry's market

The Community
in the
Community market slightly increased by around two
percentage points during the IIP, reaching a level of
around 30 % of the total Community market.

share

(f) Price development

The average sales price of
the Community industry,
while showing a clear increase after the imposition of
the measures currently in force in 1995 and 1996, then
decreased again towards the IP,
leading to an overall
decrease of 7 %.

established that

investigation has

This development should be seen in the light of a
change of product mix of the Community industry's
sales. The
the
Community producers increased their proportion of
sales of lower grades which resulted in a decrease of the
average sales price. When disregarding this product-mix
effect, the prices actually increased during 1996, but
afterwards went down for
the lower grade, while
remaining stable for the higher grade. The price trend
over the whole IIP was accordingly stable with a peak
during 1996.

should also be noted that while

It
the average
Community industry price is significantly higher than
the prices of the imports concerned, the Community
industry's sales also include highly specific grades which
are significantly more expensive than the average, thus
having likewise a strong impact on the average sales
price.

(65)

(66)

(67)

4. IMPORT VOLUME, MARKET SHARES AND IMPORT

PRICES FROM OTHER THIRD COUNTRIES

(a) Import volume and market shares

The import volume of silicon carbide from other third
countries increased during the IIP by around 30 000
tonnes, representing an increase of 27 %. In terms of
market shares, these third countries gained about nine
percentage points.

share

remained stable during the

It should be noted that 80 % of these imports originated
only from three countries, namely Norway, Venezuela
and the Czech Republic. In terms of quantities, Norway
is the most significant, but its import volume as well as
its market
IIP.
However, the Venezuelan imports increased by 163 %
during the IIP, more than doubling their market share
which reached around 10 % during the IP. As far as the
Czech imports and market share is concerned they
increased fivefold during the same period reaching a
level of around 6 % during the IP. The market shares of
these three countries increased by 35 % and fluctuated
between 30 % to 50 % of the Community market.

(b) Sales prices of imports from third countries

The import-price evolution of the three most significant
exporting countries is as follows. The Norwegian prices
always remained at a high level during the IIP which is
consistent with the fact that their exports are mostly of
high grades. The prices of the product under considera-
tion originating in the Czech Republic significantly
decreased during the IIP (– 35 %), whilst
the price
decrease of the Venezuelan imports amounted to 9 %,
the prices from these two latter countries being at a very
low level as compared to the prices of the Community
industry.

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the
terms of volume and prices,
Community market will be highly attractive for the
Chinese exporters should measures lapse.

it appears

that

(74)

(75)

(76)

(77)

It was also considered whether the fact that, since the
beginning of 1999, exports of silicon carbide from
China are subject to a local licence system operated for
certain minerals and rare earths, could have any possible
effects on the future pricing of the Chinese exporters. In
this respect, it is considered that the system described
above is run autonomously by the government of the
exporting country and that its existence cannot have any
influence on the decision of the Community institutions
as to whether or not injurious dumping would recur.

(b) Russia and the Ukraine

In accordance with the findings explained in recitals 37
to 42, the unused production capacity for both coun-
tries allows potential for Russian and Ukrainian expor-
ters to raise their production and export volume to the
Community in the future. Furthermore, having regard to
their export behaviour on third-country markets, mainly
the Czech Republic, both in terms of volume and prices,
it appears that the Community market would be highly
attractive also for these exporters should measures lapse.

Since the imposition of the measures, imports into the
Czech Republic originating in Russia and the Ukraine
have multiplied by 6,5 in terms of volume reaching a
level corresponding to 6 % of Community consumption.

Should the measures be repealed,
the Russian and
Ukrainian exporters will be able to redirect some of their
significant exports to the Community and market their
production surplus, and this would take place at prices
which would undercut the Community industry's prices,
as indicated by their price behaviour on third-country
it should be noted that the best
markets. Moreover,
quality Russian silicon carbide
(crystalline grade),
imported into the Community free of anti-dumping
is
duties within the framework of
currently sold at a significantly lower price than the
price of the corresponding grades of the Community
industry.

the undertaking,

5. CONCLUSION ON THE SITUATION IN THE COMMUNITY

MARKET

(68)

The measures currently in force have had a significant
positive impact on the Community industry since 1995.
Indeed, most of the economic factors analysed showed a
positive development from 1995 to the IP: production
volume and the production-capacity utilisation increased
by 13 %, sales volume increased by 15 %, and there was
a slight gain in of market share. However, the positive
trend was diluted by, in particular, low sales prices of
the Community industry. This explains why the profit-
ability of the Community industry did not improve in
line with the trends and remained at around break-even
point.

(69) As for the exporting countries concerned, two of them
(China and the Ukraine) lost significant sales volume and
their market shares are now minimal. The Russian
imports have decreased less drastically and have
remained stable at a market share of around 5 % to
10 %. In terms of prices,
imports from the countries
concerned have been made at low prices as compared to
those of the Community industry.

(70) During this period, imports from other third countries
increased. This especially concerns imports from Vene-
zuela and the Czech Republic which during the last two
years of
the IIP significantly increased their market
shares, and this took place at low and decreasing sales
prices.

(71)

It can thus be concluded that the Community industry
could not fully recover from the effects of injurious
dumping for the reasons explained above and is there-
fore still

in a fragile situation.

G. LIKELIHOOD

OF

CONTINUATION

AND/OR

RECURRENCE OF INJURIOUS DUMPING

1. THE SITUATION OF THE COUNTRIES CONCERNED

In order to assess the likely effect of expiry of the
measures in force, and taking into account the fact that
the Community industry is still in a difficult situation
having regard,
the
following elements were considered.

to its profitability,

in particular,

(72)

(73)

2. CONCLUSION ON THE LIKELIHOOD OF CONTINUATION

AND/OR RECURRENCE OF INJURIOUS DUMPING

(a) China

In accordance with the findings explained in recitals 30
to 36, the large and unused production capacity allows
potential for Chinese exporters to raise their production
and export volumes to the Community in the future.
Furthermore, having regard to these findings with
respect
export behaviour on third-country
markets, namely the United States of America, both in

to the

(78)

In view of the above, namely the following factors:

— should the measures be repealed, there is a likelihood
that
imports from the three countries concerned
would continue at dumped prices because there has
been a continuation of dumping and no reasons are
apparent as to why dumping would stop in the near
future,

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26.5.2000

— there is a likelihood that import volumes would rise
significantly because there are clear indications that
the three countries concerned have the potential to
raise their production and export volumes in view of
their
large unused production capacity and the
significant exports to third-country markets,

— furthermore,

the likelihood that

import volumes
would rise significantly is reinforced by their export
behaviour in these third-country markets after the
imposition of the anti-dumping measures currently
in force,

on the parties concerned by the current anti-dumping
measures to be identified.

(81) On this basis it was examined, whether, despite the
conclusions on dumping, on the situation of
the
Community industry and on the recurrence of injurious
dumping, compelling reasons existed which would lead
to the conclusion that
in the Community
it
interest to maintain measures in this particular case.

is not

— furthermore, it is also likely that the prices charged
by the exporters from the countries concerned, in
the absence of anti-dumping measures, would be
significantly below the prices of
the Community
industry considering, on the one hand, the price
behaviour of these exporters on their major export
markets and, on the other hand, the low prices (even
including duty) that they currently apply to their
exports to the Community market. In addition, the
Community market being stable in terms of demand,
an increase of supply of silicon carbide on the
market would certainly have a price-depressing
impact,

— although the situation of the Community industry
improved markedly following the imposition of the
measures under consideration, it could not maintain
its profitability and is thus still in a delicate situation,

(82)

(83)

it is concluded that, should the measures be repealed,
there is a likelihood of recurrence of injurious dumping.

H. COMMUNITY INTEREST

1. PRELIMINARY REMARK

(79)

(80)

In order to assess the likely impact of continuation or
repeal of the measures, the Commission requested infor-
mation from all interested parties mentioned above. The
to 40 importers
Commission sent questionnaires
(including two associated traders) and 22 users of the
product concerned. Six importers replied to the ques-
tionnaires, while four of them provided the Commission
with information. As to the users, six of them replied to
the questionnaires and data were verified.

It should be recalled that, in the previous investigation,
the adoption of measures was considered not to be
against the interest of the Community. Furthermore, it
should be noted that
investigation is a
review of a situation in which anti-dumping measures
have already been in place. Consequently the present
investigation should allow any undue negative impact

the present

2. INTERESTS OF THE COMMUNITY INDUSTRY

It is considered that a repeal of the anti-dumping meas-
ures imposed in the previous investigation would be
likely to result in the recurrence of injurious dumping
and that consequently the situation of the Community
industry, which has improved but is still fragile, would
deteriorate.

The Community industry has developed the production
of very high quality silicon carbide. Together with one
non-Community-based producer, it is currently the only
one able to produce and supply the Community market
with such high quality products.
It is used for very
specific and newly-developed applications in the field of
the electronic and advanced ceramics sector. These two
market segments are the greatest area of growth from
which the Community industry will certainly continue
to benefit in the coming years. But even if they represent
they still represent a low
high added-value markets,
volume of sales, which is not sufficient to cover the
entire production cost, bearing in mind that both high-
grade and low-grade silicon carbide result from one
production process. It is therefore important to ensure
that unfair trade practices do not
impede the high-
volume market segment for lower grades which have
also to be sold at a reasonable price in order to sustain
the viability of the Community industry.

(84)

Indeed, all players in the sector seem to agree on the fact
that if measures were repealed, competition would be
particularly fierce at the low grade level. Accordingly it
can be expected that the Community industry would
lose significant volume and market shares on this
segment with the consequence that its situation would
be seriously endangered.

(85) Given the above,

it appears justified to prolong the
existing measures in order to ward off the adverse effects
of dumped imports which could endanger the existence
of the Community industry. It has also to be considered
that
there will also be a
negative impact on the downstream industry, since the
latter will become totally dependent on imports from
third countries.

the industry disappears,

if

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3. INTERESTS OF IMPORTERS

could therefore be a risk that competition in the sector
could become more and more difficult for the ‘indepen-
dent’ users.

(86) Out of

the 40 importers (including two associated
traders) who received questionnaires, five replied. Four
of them are clearly in favour of the continuation of the
measures, arguing that if the measures were repealed, the
market would be flooded by cheap and low-quality
products which would cause a disruption of the market.
One importer opted for a neutral position.

(91)

(87)

In view of the low level of cooperation and taking into
account the above comments, it is concluded that the
economic situation of
the product
concerned would in general not be unduly and nega-
tively influenced by the continuation of the measures.

the importers of

claimed a

Two users were in favour of repealing the measures.
One, active in abrasive applications, argued that without
anti-dumping measures in place, it would be possible to
find cheaper raw materials to better compete with
comparable imported applications using the cheapest
silicon carbide. The other, active on the metallurgical
market,
in the
Community. The above should be analysed in the light
of the fact that silicon carbide represents on average
20 % of the cost of production of abrasive applications
and that it is currently available, free of anti-dumping
duty, from numerous different sources covering a signifi-
cant part of Community
consumption including
Community producers, third countries and even partially
free of duty from Russia.

shortage of material

4. INTERESTS OF THE USERS

(92)

In view of the above, it can be concluded that continua-
tion of the measures is generally not against the interests
of the users of silicon carbide.

(88)

the abrasive segment

The downstream industry is mainly active in three
different market segments:
(i.e.
polishing applications), the refractory segment (i.e. lining
in furnaces) and the metallurgical segment where silicon
carbide is used as an alloy. This last segment represents
the largest in the Community but covers the lowest-
quality grade silicon carbide.

(89) With regard to the impact of the anti-dumping duties on
users,
the low level of cooperation as well as the
comments given by the cooperating companies indicate
that the measures currently in force did not have a
significant negative impact on the users of silicon
carbide. In this respect it should be noted that none of
the users claimed that there had been a general price
increase and/or reduction in their profitability since the
measures had been imposed five years previously.

(90)

that

In more detail, concerning the six cooperating users one
did not give any comments on the situation whereas
three clearly claimed to be in favour of the continuation
of the measures. They were of the opinion that in the
case that the measures were repealed, the Community
industry would have to discontinue its operation and,
they would lose their source of
consequently,
supply for the high-grade silicon carbide used for the
high-end applications.
already
In this
explained above, apart from the Community industry
only one other third-country producer is in the position
of producing and selling comparable grades on the
Community market. This latter would eventually remain
the only producer supplying the Community market,
with the risk of a monopolistic position. In addition, this
latter producer is part of an international group which is
also strongly active on the downstream markets. There

respect,

as

5. CONCLUSION ON COMMUNITY INTEREST

(93)

Leaving the Community industry without any protection
would most likely not only weaken its position, but
could even lead to its disappearance, as has happened
for two of the Community producers involved in the
previous investigation.

(94) As for the users and importers of silicon carbide,

it
appears that the imposition of the measures in general
did not have any undue negative effects on their
economic situation. A significant number of the cooper-
ating users and importers are even in favour of the
continuation of the measures.

(95)

Therefore, it is concluded that there are no compelling
reasons of Community interest against the continuation
of the measures.

I. ANTI-DUMPING MEASURES

(96) All parties concerned were informed of the essential
facts and considerations on the basis of which the main-
tenance of the existing measures is based. They were
granted a period within which to make representations
subsequent to the disclosure. No comments which were
of a nature to change the above conclusions were
received.

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Official Journal of the European Communities

26.5.2000

(97)

(98)

(99)

It should be recalled that by Decision 94/202/EC the
undertakings offered by the Russian Government
in
conjunction with the company Stankoimport were
accepted. These undertakings are still applicable.

The exporter concerned as well as the authorities of the
exporting country have been informed that continuation
of
to
the definitive anti-dumping measures pursuant
Article 11(2) of the basic Regulation also implies that
the company would remain bound by the terms of its
undertaking. No comments were received in this respect.

It follows from the above that, as provided for by Article
11(2) of the basic Regulation, the anti-dumping meas-
ures currently in force with regard to imports of silicon
carbide originating in China, Russian and the Ukraine
imposed by Regulation (EC) No 821/94, as last amended
by Regulation (EC) No 1786/97 should be maintained,

HAS ADOPTED THIS REGULATION:

originating in the People's Republic of China,
Federation and the Ukraine.

the Russian

2.
The amount of the duty applicable to the net, free-at-
Community-frontier price, before customs clearance, shall be as
follows:

— People's Republic of China: 52,6 %,
— the Russian Federation: 23,3 % (TARIC additional code

8747),

— the Ukraine: 24 %.

The duty shall not apply to imports of

3.
the product
concerned as described in paragraph 1, exported to the
Community by the company V/O Stankoimport, Moscow,
Russia (TARIC additional code 8746).

Article 2

Unless otherwise specified, the provisions in force concerning
customs duties shall apply to the said duties.

Article 1

Article 3

1.
A definitive anti-dumping duty is hereby imposed on
imports of silicon carbide, falling within CN code 2849 20 00,

This Regulation shall enter into force on the day following its
publication in the Official Journal of the European Communities.

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

Done at Brussels, 22 May 2000.

For the Council

The President

J. GAMA