Commission Decision No 1238/2000/ECSC of 14 June 2000 imposing a provisional anti-dumping duty on imports of coke of coal in pieces with a diameter of more than 80 mm originating in the People's Republic of China
Date: 2000-06-14
Institutions: European Commission
Subjects: China, anti-dumping duty, coke, import, originating product

15.6.2000

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Official Journal of the European Communities

L 141/9

COMMISSION DECISION No 1238/2000/ECSC

of 14 June 2000

imposing a provisional anti-dumping duty on imports of coke of coal in pieces with a diameter of
more than 80 mm originating in the People's Republic of China

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Coal and
Steel Community,

Having regard to Commission Decision No 2277/96/ECSC of
28 November 1996 on protection against dumped imports
from countries not members of the European Coal and Steel
Community (1), as amended by Commission Decision No
1000/1999/ECSC (2), and in particular Article 7 thereof,

After consulting the Advisory Committee,

Whereas:

A. PROCEDURE

1. Initiation

On 16 September 1999, the Commission announced by
notice (the ‘notice of initiation’) published in the Official
Journal of the European Communities (3) the initiation of an
anti-dumping proceeding with regard to imports into
the Community of coke of coal in pieces with a diameter
of more than 80 mm (‘coke 80 +’) originating in the
People's Republic of China (the ‘PRC’).

The proceeding was initiated as a result of a complaint
lodged in August 1999 by Eucoke-EEIG (the ‘complai-
nant’) on behalf of producers representing 80 % of the
community production of coke 80 +. The complaint
contained evidence of dumping of the said product and
of material injury resulting therefrom, which was consid-
ered sufficient to justify the initiation of a proceeding.

2. Investigation

the

The Commission officially advised the producers/expor-
ters,
importers and the users known to be
concerned, the representatives of the exporting country
concerned and the complainant Community producers
about the initiation of the proceeding. Interested parties
were given the opportunity to make their views known
in writing and to request a hearing within the time limit
set out in the notice of initiation.

country
A number of producers/exporters
concerned,
producers,
as
as well
Community users and importers/traders made their
views known in writing. All parties who so requested
within the set time limit and who indicated that there

Community

in the

(1)

(2)

(3)

(4)

(1) OJ L 308, 29.11.1996, p. 11.
(2) OJ L 122, 12.5.1999, p. 35.
(3) OJ C 262, 16.9.1999, p. 10.

(5)

(6)

(7)

(8)

were particular reasons why they should be heard were
granted the opportunity to be heard.

In view of the large number of producers/exporters in
the exporting country concerned, and in conformity
with Article 17(1) of
the Commission Decision No
2277/96/ECSC (the ‘basic Decision’), it was considered
appropriate to make use of sampling.

The Commission sent questionnaires to parties known
to be concerned and to all the other companies, which
made themselves known, within the deadlines set out in
the Notice of Initiation. Replies were received from six
Community producers, four Chinese producers/expor-
ters, six importers, and two users of coke 80 +.

the Commission sent

Furthermore,
to all producers/
exporters known to be concerned or which made them-
selves known a claim form to be completed by the
companies requesting market economy status pursuant
to Article 2(7) of the basic Decision. The Commission
received one claim for market economy status within
the time limit set.

The Commission sought and verified all the information
it deemed necessary for the purpose of a provisional
determination of dumping,
injury and Community
interest. Verification visits were carried out at the prem-
ises of the following companies:

(a) C o m m u n i t y p r o d u c e r s :

— Coal Products Ltd, Chesterfield, United Kingdom,

— Cokes de Drocourt SA, Rouvroi, France,

— Cokeries d'Anderlues SA, Anderlues, Belgium,

— Industrias Doy SL, Oviedo, Spain,

— Industrial Química del Nalon SA,

— Italiana Coke SA, Savona, Italy,

— Productos de Fundición SA, Baracaldo, Spain;

(b) E x p o r t i n g p r o d u c e r

i n t h e P R C :

— Tianjin General Nice Coke & Chemicals Co. Ltd,

Tianjin;

(c) P r o d u c e r s i n t h e a n a l o g u e c o u n t r y ( U S A ) :

— Citizen Gas & Coke Utility, Indianapolis (IN),

— Empire Coke Company, Birmingham (AL),

— Sloss Industries Corporation, Birmingham (AL);

(d) I m p o r t e r s i n t h e C o m m u n i t y :

— SSM Coal BV, Rotterdam, The Netherlands;

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(e) U s e r s i n t h e C o m m u n i t y :

(14)

— Rockwool
Denmark.

International A/S, Hedehusene,

(9)

The investigation of dumping and injury covered the
period from 1 July 1998 to 30 June 1999 (hereinafter
referred to as ‘the investigation period’ or the ‘IP’). As for
the trends relevant for the assessment of injury, the
Commission analysed the period from 1 January 1995
to the end of
the investigation period (the ‘period
considered’)

The investigation has shown that a clear dividing line
exists between coke 80 + and coke below 80 mm. Coke
80 +, which is exclusively used in industrial applications,
is the only size suitable for use as a combustion agent in
cupola ovens for the production of cast iron, stone wool
and zinc lead, mainly due to its high combustion heat
and strength to support the burden without breakdown.
Coke below 80 mm is generally unsuitable for the
abovementioned uses. It may be used in steel furnaces
and for other purposes such as the production of chemi-
cals and sugar.

(10)

(11)

(12)

(13)

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. General

Coke 80 + is a solid carbonaceous residue in a size over
80 mm in diameter that remains after certain coal
blends are heated to a high temperature out of contact
with air. This product is currently classifiable within CN
code ex 2704 00 19. Coke 80 + is commonly known as
foundry coke.

Coke 80 + is produced from coking coals which are the
only coals having coking properties. By mixing together
different coking coals with antifracturants (powdered
anthracite and coke breeze) into blends, a wide variety of
grades of coke 80 + can be produced, in particular, with
different contents of fixed carbon (calculated as ‘100
minus ash content minus moisture content minus vola-
tile matter content’) as well as of various lump sizes.

There are two methods for producing coke 80 +, by
means of ‘beehive ovens’ and by means of ‘coke oven
batteries’. Beehive ovens are fire brick chambers with a
roof in which coking-coals undergo carbonisation and
where by-product gases are vented to the atmosphere.
Carbonisation in coke oven batteries is highly mecha-
nised and environmental pollution is minimised since
hot gases leaving the ovens are collected, drawn away,
and cooled. Crude tar is separated and removed for
refining. The crude coke oven gas is washed free of
ammonia, and then crude benzol is removed from it.
Some of the remaining gas is used to heat the coke
ovens, while the rest is generated to produce electricity.

Irrespective of the production method used, the carboni-
sation is a process where at high temperatures, the coal
mix first becomes plastic, then undergoes decomposi-
tion, and finally forms coke when the decomposed
material resolidifies into a hard and porous solid. In a
production chain and after carbonisation, hot coke is
discharged and quenched. Given that
the product
concerned is marketed in sizes over 80 mm, coke then
in
undergoes
screening to separate
commercial sizes from smaller particle sizes,
i.e. coke
below 80 mm.

fractions

the

2. Product concerned

(15)

(16)

The product concerned is coke 80 + originating in the
PRC. The investigation has shown that in the PRC, coke
80 + is produced mostly in beehive ovens and to a lesser
extent in coke oven batteries.

The investigation showed that all types of the product
concerned, despite differences in coal blends used as raw
materials, differences in the production methods and
different grades according to its fixed carbon content
and lump sizes, have the same basic physical, technical
and chemical characteristics and are used for the same
purposes (as a combustion agent for cast iron, stone
wool and zinc lead production).

(17)

the present anti-
Therefore and for the purpose of
dumping proceeding all types of the product concerned
are regarded as one product concerned.

3. Like product

(18)

(19)

(20)

In the Community coke 80 + is produced in coke oven
batteries. This development took place mainly for envir-
onmental and cost reasons in order to minimise atmos-
pheric pollution and lessen the labour needed. Those
companies in the United States of America (the ‘USA’),
which cooperated with the Commission, also use coke
oven batteries.

argued that

Certain interested parties
coke 80 +
produced in the Community should not be considered
as a like product to coke 80 + originating in the PRC.
They claimed in particular that in comparison to the
Community produced product the Chinese product was
produced from lower quality raw materials, by different
production processes, and was of a lower quality. More-
over, the Chinese product could not be used for as many
purposes as the Community product.

It should be noted that the criteria to be applied in the
determination of the ‘like product’ are based on the basic
physical, technical and chemical characteristics, the end
uses or functions, and finally the user's perception of the
product, and not the raw materials or the methods used
for their production.

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(21)

(22)

(23)

i.e.

in smelting iron, stone and zinc, and it

The investigation has shown that, although the coke
80 + exists in many different grades, the Chinese coke
80 + and that produced and sold in the Community by
the Community industry have the same basic physical,
technical and chemical characteristics, i.e. it is a hard,
dry and porous fuel with a high carbon content. Further-
more, the end uses are the same,
it is used as a
combustion agent, a reducing agent and a supporting
material
is
generally interchangeable, although particular users may
require specific grades. This has been confirmed by the
fact that end-users of the product concerned, such as
foundries as well as stone wool and zinc producers, have
switched from the Community-produced product to the
Chinese coke 80 +. Furthermore, differences in quality
have no incidence on the definition of the like product,
as no clear distinction can be made between the two
products in relation to their physical,
technical and
chemical characteristics and to the end use and to the
perception of the users.

The same holds true for the coke 80 + produced and
sold on the domestic market of the USA. In this respect
the Commission found that coke 80 + originating in the
PRC and exported to the Community on one hand and
the product produced and sold on the domestic market
of the USA, on the other, are closely resembling in their
basic physical, technical and chemical characteristics and
in their uses.

In view of the above, it is provisionally concluded that
coke 80+ produced and sold by the Community
industry on the community market is a like product
within the meaning of Article 1(4) of the basic Decision
to the coke 80 + exported to the Community originating
in the PRC. Similarly, the coke 80 + produced and sold
in the USA, which served as an analogue country,
is
alike to the coke 80 + exported to the Community and
originating the PRC.

C. DUMPING

(26) As regards the claim for MES made by TJGN, it could
not be established whether all export sales during the
investigation period were reflected in the company's
accounts and it was thus concluded that these did not
show a true picture of the company's financial situation
and activity during the investigation period. Since inter-
national accounting standards were not respected it was
concluded that TJGN did not meet the criterion set out
in the second indent of Article 2(7)(c) of
the basic
Decision.

(27)

(28)

Furthermore it was established that there was significant
State interference. TJGN did not have an export licence
and had to export exclusively via State-owned Chinese
traders against an agency fee, which equalled the net
profit on turnover during the same period and had thus
to be considered as significant within the meaning of
Article 2(7)(c), first indent of the basic Decision. Finally,
there were also indications of State interference as
regards the setting of the salaries for workers.

The Commission informed the company concerned and
the complainant Community industry of its findings and
granted them the possibility to comment. Finally, the
Commission concluded that the conditions set out in
Article 2(7)(c) of the basic Decision for obtaining MES
were not met by TJGN.

(29)

The Advisory Committee did not object to this conclu-
sion.

2. Individual treatment

(30)

It is the Commission's policy to calculate a countrywide
duty for non-market economy countries, except in those
their
cases where companies can demonstrate that
export activities are free from state interference and that
there is a degree of legal and factual independence from
the State so that
the
country-wide duty is removed.

the risk of circumvention of

1. Market economy status

(31)

Three Chinese producers requested individual treatment.
However, one company did not cooperate during the
investigation and its claim had thus to be rejected.

(24) One company, namely Tianjin General Nice Coke &
Chemicals Co Ltd (‘TJGN’) applied for market economy
status (‘MES’).

(25)

Pursuant to Article 2(7)(b) of the basic Decision,
in
anti-dumping investigations concerning imports origin-
ating in the PRC, normal value shall be determined in
accordance with paragraphs 1 to 6 of the said article for
those producers, which can show that they meet the
criteria laid down in Article 2(7)(c),
i.e. that market
economy conditions prevail in respect of the manufac-
ture and sale of the product concerned.

(32) As regards the second company, TJGN, following the
rejection of the claimed MES, the Commission examined
whether the company qualified for individual treatment.
However, as mentioned, TJGN not having an export
licence had no alternative but to export the product
concerned exclusively via State owned traders. It was
therefore concluded that its independence from State
authorities could not be sufficiently guaranteed and thus
the risk of circumvention of anti-dumping measures was
clearly present. Moreover, TJGN's mother company in
Hong Kong which was directly involved in the export to
the Community of
the product concerned did not
provide a reply to the Commission's questionnaire.

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(33) As regards the third company, the investigation revealed
that it was fully State-owned, did not have an export
licence and thus exported the product concerned via
State owned traders which negotiated for more than half
of the reported export sales price and volume of the
transaction. The trader subsequently offered the contract
as negotiated to the producer concerned which had no
influence on the price setting. Consequently, there was a
clear interference from the State authorities regarding
the determination of export prices and quantities.

(34)

Considering the above, no individual treatment could be
granted to any of the three companies.

(41)

3. Sampling

(35) Due to the large number of Chinese producers/exporters
listed in the complaint,
the Commission decided to
apply sampling in accordance with Article 17 of the
basic Decision. In order to enable the Commission to
select a sample, producers/exporters were requested,
pursuant to Article 17(2) of the basic Decision, to make
themselves known within two weeks of the initiation of
the proceeding and to provide basic information on
their export sales for the investigation period as well as
the names and activities of all related companies.

(36)

(37)

(38)

In total 25 Chinese companies expressed their willing-
ness to participate in the sample. The investigation
revealed that 19 companies were either not producing
the product concerned or did not export the product
concerned to the Community during the IP. Therefore,
the
these companies could not be considered for
purpose of determining a sample.

There were consequently only six companies left which
were taken into consideration for
the purpose of
selecting the sample. The volume of sales by these
companies represented nearly 60 % of all coke 80 +
originating in the PRC exported to the Community
during the investigation period.

The selection of the sample was made in agreement with
the companies concerned. According to Article 17(1) of
the basic Decision, the selection was based on the largest
representative volume of exports which could reason-
ably be investigated within the time available. Therefore,
three companies which represented more than 50 % of
the total export volume to the Community during the
investigation period were selected.

(39)

Interested parties were invited to comment on the
choice of the sample. No substantive comments were
received in this respect.

4. Normal value

4.1. Analogue country

(40)

In the absence of any companies qualifying for MES, it
was necessary to establish normal value on the basis of
the prices and costs in an appropriate market economy
third country (‘analogue country’), pursuant to Article
2(7) of the Basic Decision. The USA was suggested by

the complainant Community industry and was also
proposed by the Commission in the notice of initiation.

the physical,

The Commission subsequently verified in more detail
whether the USA was indeed an appropriate choice. It
was found that the production volume of coke 80 + in
the USA was comparable to the one in the PRC, the
USA being after PRC the second largest producer of
technical and
coke 80 +. Furthermore,
chemical characteristics and uses of coke 80 + in the
USA were similar to those of the coke 80+ produced in
the PRC and exported to the Community. Moreover,
coke 80 + producers in the USA and the PRC had a
similar access to raw material and domestic sales of coke
80 + on the US domestic market were substantial and
representative as compared to the quantities exported to
the Community by the PRC. Finally,
the level of
competition in the USA was found to be very high.
Indeed, in addition to the competition between several
producers on the United States domestic market, there
was also competition from imported coke 80+, which
could be imported in the United States without quantit-
ative restrictions or import duties.

(42)

In these circumstances, the selection of the USA as an
analogue country appeared reasonable and justified.

4.2. Determination of normal value

(43)

(44)

(45)

(46)

The Commission considered it appropriate to make use
of sampling in accordance with Article 17 of the basic
Decision. Thus, out of a total of five producers of coke
80 + in the USA three producers, representing more
than 50 % of the total US domestic sales of coke 80 +
were selected. This was the largest representative volume
of sales which could reasonably be investigated within
the time available.

In accordance with Article 2(7) of the basic Decision,
normal value for the Chinese exports was calculated on
the basis of the weighted average normal values estab-
lished for the three sampled producers of coke 80+ in
the USA.

It was considered that the United States-domestic sales
of coke 80 + were representative in comparison to the
quantity of the product concerned produced in the PRC
and sold for export to the Community.

The Commission examined whether United States sales
of the product concerned could be considered as being
made in the ordinary course of trade by reason of price,
i.e. not made at a loss. For this purpose the full cost of
production per unit during the investigation period was
compared to the average unit price of the sales transac-
tions made during this period. It was found that all
domestic sales were made at a profit.

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(47) As a result, normal value was established as

the
weighted average domestic sales price for all transactions
to independent customers by the three selected United
States producers.

5. Export price

(53)

For the purpose of ensuring a fair comparison between
the normal value and the export price, due adjustments
were made, where applicable and justified,
for other
differences affecting price comparability in accordance
with Article 2(10) of the basic Decision.

(54) On this basis, adjustments for differences in grades of
the products, in transport costs, insurance costs, credits
costs, commissions as well as handling and loading costs
have been made when found justified.

(48)

The export prices were calculated in accordance with
Article 2(8) of the basic Decision, i.e. on the basis of the
export prices actually paid or payable.

(55)

(49) As a result of the particular economic structure of the
sector in the PRC, most producers of coke 80+ were
small-sized companies not directly exporting to the
Community, but selling via traders located in the PRC.
Since the export price had to be established on an
fob-basis, the Commission concluded that it should not
use the prices charged by the these producers to the
exporting traders. Thus, the Commission considered as
export price the resale price from the Chinese traders
concerned charged to the first independent party in the
Community.

6. Comparison

(50)

The Commission compared the normal value and the
export price at an fob-basis at the same level of trade.

(51)

The Chinese companies concerned claimed that they had
a comparative advantage as to the purchase price of the
main raw material used in the production of coke,
namely coking coal. They argued that coking coal in the
PRC was sold at a market price and an adjustment was
claimed for the difference in the coking coal prices
between the PRC and the USA. This claim could not be
accepted because it was merely based on a price differ-
ence between the raw material in different markets and
not on the basis of evidence of a comparative advantage.
Furthermore, it should be noted that costs and prices in
the PRC, being a non-market economy country, are in
general considered unreliable and that for this reason
and pursuant to Article 2(7) of the basic Decision, the
normal value established for the PRC should be based on
prices of an analogue country. An allowance for higher
costs for raw materials in the analogue country is there-
fore incompatible with the objectives underlying Article
2(7) and thus not justified.

(52)

The Chinese companies concerned further claimed an
adjustment for differences in the production process.
They argued that Chinese coke 80+ producers used
different ovens from United States producers, which
were less capital intensive. However, the Chinese compa-
nies did not provide details of such statement and failed
to quantify it. Moreover and taking into consideration
that
the United States producers of coke 80+ are
amongst the most efficient producers in the world, it
was provisionally concluded that no adjustment should
be made for differences in the production process.

Finally, an allowance to the normal value was granted
for screening costs of
the product concerned when
exported from the PRC into the Community. In this
the screening cost per ton was provisionally
regard,
estimated based on information collected during the
investigation and deducted from the normal value.

7. Dumping margin

(56) According to Article 2(11) of the basic Decision the
weighted average normal value was compared to the
weighted average export price.

(57)

(58)

The comparison as described above, showed the exis-
tence of dumping.

the Chinese producers/
The level of cooperation of
exporters concerned has to be further investigated and
the dumping margin was therefore provisionally estab-
lished on the basis of data obtained from cooperating
Chinese producers/exporters only.

(59)

The weighted average dumping margin expressed as a
percentage of the cif export price free at Community
frontier exceeded 60 %.

D. COMMUNITY INDUSTRY

1. Total Community production

(60) Within the Community,

the product concerned was

manufactured during the IP by:
— five producers on whose behalf the complaint was
lodged and one supporting the complaint and coop-
erating in the investigation, and

— three other Community producers supporting the

complaint.

(61)

It was found that, during the IP,
three Community
producers had resold Chinese coke 80 +. The volume of
these sales by all of these producers did not, on an
individual basis, exceed 8,5 % of their total production
the
and they represented 3,8 % of
Community industry in the
therefore
IP.
concluded that
this was in accordance with normal
in the face of
commercial behaviour of self-defence,
increased low priced imports of Chinese coke 80 +. In
light of
is provisionally
concluded that there are no reasons for the exclusion of
any of these Community producers from the definition
of the Community production.

the above circumstances,

the
It was

sales of

it

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Official Journal of the European Communities

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(62)

The nine Community producers of coke 80 + mentioned
therefore, constitute the Community production within
the meaning of Article 4(1) of the basic Decision.

million tonnes in 1998 and to 1,372 million tonnes in
the IP.

(63)

2. Community industry

The following Community producers cooperated in the
investigation, i. e. replied to the Commission's question-
naires, allowed on-spot verifications and provided the
Commission with
information when
additional
requested:
— Coal Products Ltd, Chesterfield, United Kingdom,
— Cokeries d'Anderlues SA, Anderlues, Belgium,
— Cokes de Drocourt SA, Rouvroy, France,
— Industrial Química del Nalón SA, Oviedo, Spain,
— Italiana Coke SA, Savona, Italy,
— Productos de Fundición SA, Baracaldo, Spain.

It should be noted that although Cokes de Drocourt SA
was not among the companies on whose behalf the
this company, nevertheless,
complaint was
supported it and cooperated in the investigation.

lodged,

(64) On this basis, the Community producers supporting the
complaint and fully cooperating in the investigation
represented 73,1 % of the total Community production
of the product concerned in the IP and, thus, constituted
a major proportion of the total Community production
pursuant to Articles 4(1) and 5(4) of the basic Decision.
These companies are referred to as the ‘Community
industry’.

3. Other Community producers

(65) None of the three other producers in the Community
fully cooperated in the investigation. Nevertheless, they
provided information on their overall production and
sales. These three companies are referred to as the ‘other
Community producers’.

E. INJURY

1. Apparent Community consumption

(66) Apparent consumption of coke 80 + in the Community
was established on the basis of the total sales of the
the other
Community industry,
the total
Community producers,
the product
concerned originating in the PRC as provided by the
cooperating importers and on the basis of the informa-
tion contained in the complaint and the estimated
imports originating in third countries other than the
PRC as provided in the complaint (the ‘other third coun-
tries’).

the imports of

sales of

(67) On this basis,

it was found that

the total apparent
Community consumption of coke 80 + remained practi-
cally stable over the period considered. It went from
1,358 million tonnes in 1995, to 1,290 million tonnes
in 1996, to 1,344 million tonnes in 1997, to 1,394

2. Imports originating in the PRC

2.1. Volume of the imports concerned

(68) Despite the fact

that Community consumption has
remained stable, imports of Chinese coke 80 + into the
Community increased substantially throughout
the
period considered, equivalent to an increase of 63 %
when comparing 1995 and the IP. Imports of Chinese
from 235 000 tonnes in 1995 to
coke 80+ went
233 000 tonnes in 1996, before rising to 270 000
tonnes in 1997, to 362 386 tonnes in 1998 and to
383 150 tonnes in the IP.

(69)

(70)

(71)

2.2. Market share and share of production of the imports

concerned

The market share held by the Chinese imports rose
steadily from 17,3 % in 1995 to 27,9 % in the IP, which
is equivalent to an overall increase of 10,6 percentage
points over the period considered. It went from 17,3 %
in 1995 to 18,1 % in 1996, to 20,1 % in 1997, to
26,0 % in 1998 and to 27,9 % in the IP. It should also
be noted that the share of imports originating in the
PRC as compared to the total imports of coke 80 + into
the Community has
around 95 %
throughout the period considered.

accounted for

Furthermore, the proportion of the Chinese imports as
compared to the total production of the Community
industry has also steadily increased throughout
the
period considered from 26,6 % in 1995 to 47,0 % in the
IP representing an overall increase of 77 %. The highest
share was reached during the IP.

2.3. Prices of the imports concerned

(a) E v o l u t i o n o f
c o n c e r n e d

t h e p r i c e s o f

t h e

i m p o r t s

The weighted average unit prices of coke 80 + imported
from the PRC and sold on the Community market were
established on the basis of the information provided by
the co-operating importers. Expressed in ECU-EUR/
tonne, they increased by 12 % over the period consid-
ered with a peak in 1997. Prices increased from ECU
71,1 per tonne in 1995 to ECU 77,9 per tonne in 1996,
to ECU 90,1 per tonne in 1997 and then decreased to
ECU 82,6 per tonne in 1998 and further decreased to
ECU/EUR 79,7 per tonne in the IP.

(72) According to the information provided by interested
parties, the increase in prices between 1995 and 1997
(27 %) was linked to improved stability of quality of
Chinese coke 80 +, which therefore obtained higher
prices in the Community market. Between 1997 and the
IP the price decrease was very marked and amounted to
11 %. This price decrease coincided with a gain in
market share through low prices.

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(b) P r i c e u n d e r c u t t i n g

(73)

the prices of

the PRC undercut

It was further examined whether the producers/exporters
of
the Community
industry during the IP. For that purpose, the weighted
average prices of
the Chinese coke 80 + in the
Community were compared to the weighted average
prices of the Community industry in the Community
market, at the same level of trade.

Indeed, the production facilities, which are dedicated to
the production of coke 80 +, have to operate 24 hours a
day, all year round. Coke oven batteries are also, due to
the environmental standards of the Community, linked
to specific coking gas purification and water treatment
machinery and equipment limiting atmospheric pollu-
tion. As a whole, the capacity in place cannot in practice
be adjusted to the actual volumes of sales or used to
produce other products.

(74) As regards the prices of the Chinese coke 80 +, the
Commission used the export transactions reported by
the cooperating Chinese producers/exporters. The fob
Chinese border prices reported were converted into cif
Community frontier prices by adding the cost of freight
and insurance on the basis of the information provided
by co-operating importers. In a second step, the Chinese
prices thus calculated were adjusted for differences in
grade according to the content of fixed carbon. In a
third step,
the cif Community frontier prices were
further adjusted by a margin reflecting the selling and
financing costs incurred by importers in the Community
subsequent to importation to an ex-importer-warehouse
level (e.g. unloading, inspection, screening and degrada-
tion). This adjustment was done on the basis of a
substantiated claim made by one importer representing
around 26 % of total imports originating in the PRC in
the IP.

(79)

(80)

(81)

(75) As regards the prices of the Community industry, the
Commission used
the
Community industry to the first unrelated customers,
whether directly ('ex-works' basis) or
through their
related sales companies ('ex-related-salescompany' basis).

transactions of

sales

the

respect

In this
the Community
the production of
industry decreased from 884 809 tonnes in 1995 to
816 026 tonnes in the IP, which represents an overall
decrease of 8 %. Production remained stable between
1995 and 1997 and then showed a continuous
decreasing trend between 1997 and the IP. It is also
worth noting
consumption
remained relatively stable over the same period.

the Community

that

Community

The
capacity
remained constant between 1995 and the IP, at around
1,130 million tonnes.

production,

industry's

The utilisation of production capacity decreased in line
with production, i.e. capacity utilisation declined by 6
percentage points, going from 78 % in 1995 to 72 % in
the IP. Given the fact that coke-making is capital inten-
sive, the decreasing utilisation rate has significant effects
on unit costs:

(76)

Since it was found that the importers sold the Chinese
coke 80 + exclusively to users, the Chinese prices were
compared with the prices of the Community industry
for sales made at the same level of trade, i.e. to users.
These sales represented around 67 % of total sales made
by the Community industry during the IP. Therefore the
Community producers' weighted average net ex-works
sales prices to unrelated users in the Community were
compared to the net weighted average prices of Chinese
coke 80+ at an ex-importer-warehouse level.

(77)

This comparison showed that during the IP, Chinese
coke 80 + was sold in the Community at prices, which
undercut
industry's prices, when
expressed as a percentage of the latter by 29,5 %.

the Community

3. Situation of the Community industry

3.1. Production, capacity and capacity utilisation

3.2. Stocks

(82)

The Community industry's closing stocks increased by
22 % between 1995 and the IP reaching a peak in 1997.
In relation to the total sales volume on the Community
market, closing stocks have increased by 42 % over the
period considered, namely stocks represented 6,2 % of
total sales volume in 1995 and 8,8 % in the IP.

3.3. Sales volume and market share

(83)

Sales volume of
the Community industry in the
Community market decreased continuously over the
period considered equal to an overall decrease of 14 %
between 1995 and the IP. Sales went from 880 666
tonnes in 1995 to 813 789 tonnes in 1996, to 818 061
tonnes in 1997, to 788 176 tonnes in 1998 and to
753 866 tonnes in the IP.

(78) Given the special nature of the production process and
the high fixed costs linked to the production of coke
80 +, it is important to use capacity as fully as possible
and to maintain a relatively stable level of production,
even if the sales of this product would be made at a loss.

(84)

The corresponding market share of
the Community
industry dropped constantly representing an overall loss
of market share of 9,9 percentage points, going from
64,8 % in 1995 to 54,9 % in the IP.

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3.4. Sales prices

(90)

(85)

(86)

The weighted average selling prices of coke 80+ sold by
the Community industry in the Community market,
whether directly or through related sales companies,
showed an overall decrease of 1 % over the period
considered. After an increase of 6 % between 1995 and
1997, prices decreased by 7 % between 1997 and the IP.
Prices went from ECU 146,5 per tonne in 1995 to ECU
154,1 per tonne in 1996, to ECU 154,9 per tonne in
1997,
tonne in 1998 and to
ECU/EUR 144,5 per tonne in the IP.

to ECU 149,0 per

Between 1995 and 1996 the Community industry's
prices increased in line with the increase in the cost of
raw materials. Between 1996 and 1997 prices remained
stable whereas prices of raw materials increased, which
coincided with a reduction in the profitability of the
Community industry to the level of 1995. Between
1997 and the IP raw material prices decreased and so
did the prices of the Community industry. However,
during that period the unit costs of the Community
industry increased coinciding with a decrease in the level
of capacity utilisation. Therefore, between 1997 and the
IP the Community industry's prices were prevented from
increasing so as to keep in line with the evolution of
costs of production. On the contrary, the Community
industry was obliged to decrease its prices in an attempt
to maintain its market share. This situation can therefore
be characterised as one of price depression.

3.5. Cost of production

(87)

It was found that the Community industry's average full
unit cost of production increased by 11 % between
1995 and the IP. While the selling and financing unit
costs decreased, the unit cost of manufacturing increased
over the period (14 %). Within the cost of manufac-
turing, the purchase prices of the main raw material
(coking coal) remained stable over the period, whereas
the unit cost of direct labour and other manufacturing
overheads, which represent around 40 % of the cost of
manufacturing, increased substantially, notably between
1997 and the IP.

(88)

The increase in the unit cost of manufacturing of the
Community industry, especially from 1997, coincided
with the decrease in the capacity utilisation of
the
Community industry, which led to an increase in fixed
costs per unit produced.

The improvement of the Community industry's profit-
ability between 1995 and 1996 coincided with an
increase in sales prices and relatively stable costs of the
raw materials. The reduction in profitability between
1996 and 1997 coincided with relatively stable sales
prices but with a moderate increase in the costs of the
raw materials and an increase in the unit costs due to
decreasing production and capacity utilisation. Between
1997 and the IP the profitability of the Community
industry deteriorated continuously, which coincided
with a continuous decrease in the sales prices and an
increase in unit costs due to decreasing production and
capacity utilisation.
is worth noting that between
1997 and the IP the cost of raw materials decreased. It
should also be noted that all of the producers forming
the Community industry suffered losses or decreasing
profitability in the IP.

It

3.7. Investments and employment

(91)

(92)

investments went

The Community industry's
from
ECU 7,787 million in 1995 to ECU/EUR 6,777 million
in the IP. The investments have in general been in
replacement of coking gas purification and water treat-
ment machinery and equipment. Between 1995 and
1997 the Community industry's return on sales was
sufficient
to cover the necessary yearly investments.
However, the level of investments in 1998 and the IP
shows that the Community industry had to maintain the
rate of investments even at a time when profitability was
insufficient to cover the costs of those investments.

The Community industry's employment related to the
production of coke 80 + declined by 10 %, from 750
persons employed in 1995 to 673 employed in the IP.
The total employment of the Community industry was
1 461 persons in the IP. The relatively low number of
employees is explained by the fact that the coke produc-
tion by coke oven batteries used by the Community
industry is by far more capital than labour intensive.

3.8. Productivity

(93)

Productivity of the Community industry, measured as
output per person employed, increased by 3 % over the
period considered. After increasing between 1995 and
1998, productivity decreased by 3 % between 1998 and
the IP coinciding with a decrease in employment of 1 %
and a decrease in production of 4 %.

3.6. Profitability

4. Conclusion on injury

(89)

Profitability of
the Community industry in terms of
return on net sales in the Community market before any
extraordinary items went from 4,8 % in 1995, to 9,6 %
in 1996, to 5,9 % in 1997, to 0,9 % in 1998 and to
-3,9 % in the IP.

(94)

In assessing the situation of the Community industry,
account has been taken of the fact that a high level of
capacity utilisation is necessary to cover the fixed costs
of this industry. Furthermore, constant investments are
needed in order to comply with the environmental legis-
lation of the Community. Thus, an essential condition

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for the Community industry to keep pace with the
capacity utilisation and investment flow required is the
achievement of adequate levels of production, sales and
prices yielding an appropriate profitability.

Article 3(7) of the basic Decision, in order to ensure that
injury caused by these other factors was not attributed
to the dumped imports concerned.

(95)

(96)

In this respect it was found that between 1995 and the
IP, the economic factors pertaining to the Community
industry such as production, capacity utilisation and
consequent unit
sales
volume, unit prices, market share as well as profitability
deteriorated.

cost of production,

stocks,

in a practically stable market,

In particular,
the
Community industry suffered a serious erosion of its
market share. It has since 1997 tried to face this situa-
tion by reducing its sales prices down to a level suffi-
cient to at least cover its operational costs in order to
maintain its market
the
share.
Community industry suffered a 7 % reduction in its sales
prices between 1997 and the IP.

In this

respect,

(97) Moreover, the decline in sales volume affected the level
of capacity utilisation and increased unit production
costs. Indeed, the rise in unit production costs occurred
when the fixed costs had to be spread over a continu-
ously decreasing production volume, which dropped by
8 % between 1995 and the IP. The decline in the
Community industry's sales prices, together with the
increase in the unit costs as a result of a decrease in
capacity utilisation led to a decreasing profitability espe-
cially since 1997, which went to losses in the IP (-3.9 %).
In this respect, the investments required in this type of
industry had to be maintained even at a time when
earnings achieved were insufficient
to finance these.
Indeed, particularly in 1998 and the IP, the return on
sales of the Community industry was insufficient to
cover the costs of yearly investments required. Further-
more, as mentioned above in recital 78, the capacity of
the Community industry in place cannot in practice be
adjusted to actual volumes of sales or converted to other
products. In this respect, the specificity of the produc-
tion capacity exacerbated the material injury experienced
by the Community industry when losing sales volumes
and market share.

(98)

In the light of the foregoing analysis, it has been provi-
sionally concluded that the community industry suffered
material injury within the meaning of Article 3(1) of the
basic Decision.

F. CAUSATION

1. Preliminary remarks

(99)

In accordance with Article 3(6) of the basic Decision, it
was examined whether the material injury suffered by
the Community industry was caused by the volume and
the price level of the Chinese dumped imports to a
degree, which enables it to be classified as material.
Other factors were also examined, in accordance with

2. Effects of the dumped imports

(100)

In this respect it was found that the dumped imports
originating in the PRC increased significantly in terms of
volume and market share over the period considered.
The increase was particularly significant between 1997
and the IP (41 % for import volume and 7,8 percentage
points for market share). This coincided with the deteri-
oration of the situation of the Community industry in
terms of loss of market share, price depression as well as
deterioration of its profitability.

(101) With regard to the import volume and market share,
imports originating in the PRC increased by 63 % over
the period considered. This represents an overall increase
in their market share of 10,6 percentage points, while
the market share of the Community industry decreased
by 9,9 percentage points. It is therefore concluded that
the loss of market share suffered by the Community
industry could be entirely attributed to the gain in
market share held by the PRC. This conclusion is justi-
fied taking into consideration that the other Community
producers also lost market share (1,2 percentage points)
and imports from the other third countries remained
stable over the period considered.

(102) As concerns the Community industry's financial situa-
tion, it improved from 1995 to 1997. This was due to
the increase in the level of prices of the Community
industry and the relatively stable level of production and
improvement in productivity. However, the increase in
prices was at
the expense of market share, which
declined by 3.9 percentage points over the same period.
It is worth noting that this development coincided with
the price increase (27 %) of the Chinese exports. From
to the
1997 onwards,
Community dropped (–11 %)
and import volume
(+42 %) as well as corresponding market share (+7,8
percentage points)
to the
downward trend of the situation of the Community
(–5,9
industry, which lost
percentage points) and suffered a decrease in its sales
prices (–8 %).

the Chinese export prices

rose significantly, parallel

further market

share

(103)

In this respect, the decline in sales volume affected nega-
tively the level of production and hence capacity utilisa-
tion, unit production costs and productivity of
the
Community industry. The progression in imports of
Chinese coke 80 + can be clearly illustrated by the ratio
between the share of these imports as compared to the
total production of the Community industry, which has
increased from 26,6 % in 1995 to 47,0 % in the IP
representing an overall increase of around 20 percentage
points.

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(104) Furthermore, imports of Chinese coke 80 + were made
those of
the
IP. Consequently,
losses were recorded during the IP when
in terms of

at prices, which significantly undercut
Community industry during the
substantial
these imports reached their highest level
volume and market share.

(105)

It has therefore provisionally been concluded that the
depressed prices and the deteriorating situation of the
Community industry, in particular in terms of market
share and financial losses, can clearly be attributed to the
persistently low prices of the imports of Chinese coke
80 + in increasing volumes, which reached a significant
level of the Community market during the IP.

3. Impact of other factors

3.1. Preliminary remarks

(106)

In terms of other factors, the Commission examined the
development of consumption in the Community market,
the performance of the other Community producers,
developments of the Community industry's production
capacity and export performance, new environmental
legislation, changes in the prices of raw materials, the
evolution and impact of imports from third countries
not
covered by the present proceeding and the
Community industry's resale of Chinese coke 80 +.

3.2. Development of consumption

(107) Consumption of

the product

concerned on the
Community market remained relatively stable over the
period considered. Furthermore, it should be noted that
the Community industry suffered decreasing profitability
and became loss making between 1997 and the IP when
the Community market increased by 2 %. Therefore, the
injury suffered by the Community industry
material
cannot be attributed to a contraction in demand on the
Community market.

(110)

it is concluded that the other
In view of the above,
Community producers were also facing difficulties in
line with those of the Community industry. Thus, the
other Community producers cannot have contributed to
the material injury suffered by the Community industry.

3.4. Over-capacity of
performance

the Community industry and export

(111) Certain interested parties argued that any injury suffered
by the Community industry was caused by over-capacity
to
in the Community coke 80+ production due
declining demand and to a deterioration of the export
performance of the Community industry.

(112) The investigation has shown, however, that Community
consumption has remained relatively stable between
1995 and the IP, as did the production capacity of the
Community industry. Moreover,
the
Community industry in the IP was almost the same as
that existing in 1996 when the Community industry
achieved adequate profits.

the capacity of

(113) With regard to export sales, these have represented a
small percentage (around 5 %) of the total sales made by
the Community industry. Although the volume of
export sales declined overall by 8 % between 1995 and
the
sales volume on the
Community market, exports have increased from 5,2 %
in 1995 to 5,6 % in the IP.

in relation to the

IP,

(114)

In view of the above, the material injury suffered by the
Community industry cannot be attributed to any
increase in capacity. As regards the contraction in the
export performance of
the
relatively low percentage that export sales represent on
the total sales made by the Community industry cannot
link between dumped
be such as to break the causal
injury
imports of Chinese coke 80+ and the material
suffered by the Community industry.

the Community industry,

3.3. Performance of other Community producers

3.5. Change in the environmental

legislation

(108)

In the course of the investigation it was also considered
whether the situation of the other Community produ-
cers, which represented 26,9 % of the total Community
production in the IP, was different from that of the
Community industry. For
information
contained in the complaint as well as information
provided by the other Community producers on their
overall production, sales volume and prices was exam-
ined.

this purpose,

(115)

(116)

(109)

It was found that the other Community producers also
lost market share from 16,9 % in 1995 to 15,7 % in the
IP. Furthermore, in the period considered they lost sales
volume (-6 %) and their average sales price declined by
11 %. It is also worth noting that after the IP one of the
other Community producers closed down its two coke-
making plants in Germany.

It has been examined whether the injury suffered by the
Community industry is due to any extraordinary invest-
ments that it has been obliged to make in view of any
change in the environmental
legislation applicable to
this industry.

It was found that during the period considered, the
Community industry has maintained a normal level of
investments for this type of industry. The Community
industry has not invested with the aim of increasing its
production capacity but in replacement of coking gas
purification and water treatment machinery and equip-
ment required by the Community's environmental legis-
lation. Therefore, no extraordinary investments have
been made by the Community industry as a result of any
new environmental

legislation.

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(117)

It is therefore concluded that the injury suffered by the
Community industry has not been caused by excessive
investments due to the introduction of new environ-
mental

legislation.

3.8. Community industry's re-sale of Chinese coke 80 +

(124)

It was also considered whether the Community industry
had caused injury through its resale of coke 80+ origin-
ating in the PRC.

3.6. Prices of raw materials

(118)

(119)

It has also been considered whether the injury suffered
by the Community industry could be attributed to an
increase in the costs of raw materials, as it was claimed
that these increases were at least in part responsible for
the injury suffered.

It was found that the basic raw material used in the
production of coke 80 + is coking coal, which repre-
sents around 60 % of the cost of manufacturing coke
80 +. The coking coal used by the Community industry
is imported from the USA. As regards the prices of the
coking coal used by the Community industry, the invest-
igation showed that
these remained stable over the
period considered. After an increase of 7 % between
1995 and 1997, prices of the raw materials decreased by
8 % between 1997 and the IP. In this respect, it should
be noted that although the dollar has appreciated with
respect to the ECU/EUR, especially during the IP, the
higher purchase price of coking coal has been compen-
sated by a sharp decrease in the costs of ocean freight.

(120)

the increase in raw material prices
In this respect,
between 1995 and 1997 could be passed on in the sales
prices, which increased during the same period coin-
ciding with the higher profit margins of the Community
industry. On the contrary, between 1997 and the IP,
despite a decrease in 8 % in the prices of raw materials,
the financial situation of the Community industry deteri-
orated since its sales prices decreased more than the
decrease in the prices of raw material while its cost of
production increased due to a decrease in the capacity
utilisation.

(121) Consequently, it is considered that the prices of the raw
materials did not contribute to the material
injury
suffered by the Community industry.

3.7. Imports from other third countries

(122)

It was found that the market share of the imports from
other third countries taken together represented, over
the period considered, less than 1,5 % of the Community
market. As far as prices of imports from other third
countries are concerned, no indications were available
that suggested that the imports concerned were made at
low prices.

(123) Even if imports from other third countries were made at
low prices, the negligible market share of these imports
is not such as to have materially contributed to the
injury suffered by the Community industry.

(125) As already mentioned above,

it was found that

the
volume of these sales by the Community industry in the
IP did not, on an individual basis, exceed 8,5 % of their
total production volume. These imports represented
only 7,6 % of the total imports originating in the PRC
and 3,8 % of all sales by the Community industry in the
IP. This clearly corresponded to normal commercial
behaviour of self-defence in order to counteract
the
surge in imports originating in the PRC. Furthermore,
the low level of this resale cannot have shielded the
Community industry from the effects of dumping nor
have these imports substantially benefited it.

4. Conclusion on causation

share of

injury found. This conclusion is based,
loss of market

(126) The Commission found that there is strong evidence of
link between the dumped imports and the
the causal
in
material
particular, on the
the
Community industry combined with the deterioration of
profitability, which coincided with the increase in the
volume of imports originating in the PRC at prices that
were constantly and significantly below those of the
Community industry. Any other factors that may have
contributed to the injurious situation of the Community
industry, in particular the Community industry's export
performance, changes in the cost of raw materials and
the Community industry's own resale of Chinese coke
80 + are such that they cannot be considered to break
the causal link between the dumping and the material
injury found.

(127)

It is therefore provisionally concluded that the dumped
imports originating in the PRC have caused material
injury to the Community industry within the meaning of
Article 3(6) of the basic Decision.

G. COMMUNITY INTEREST

1. Preliminary remarks

(128) The purpose of anti-dumping measures is to remedy
unfair trading practices having an injurious effect on the
Community industry and re-establish a situation of effec-
tive competition on the Community market. In addition
to the investigation of dumping and injury caused
thereby, it has been examined whether any compelling
reasons existed which could lead to the conclusion that
it is not in the Community interest to impose measures
in the present case. For this purpose, and in accordance
with Article 21(1) of the basic Decision, the impact of
possible measures on all parties
involved in this
proceeding and the consequences of taking or not taking
measures, were considered on the basis of all evidence
submitted.

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2. Collection of Community interest data

3. Impact on the Community industry

(129)

In order to assess the impact of possible measures, ques-
tionnaires were sent to all interested parties, including
the importers/traders and the industrial users known to
the Commission at the time of the initiation of the
proceeding. Other
interested parties, which came
forward, were invited to provide information on the
likely effects of the imposition/non-imposition of anti-
dumping measures. The Commission also requested
information
from the
Community industry.

Community

interest

on

(130) Questionnaire responses were received within the time
limits set
together repre-
from six importers/traders,
senting the quasi-totality of imports of coke 80 + origin-
ating in the PRC:

— Adriacoke SpA, Ravena, Italy,

— Eurocoke Due Srl, Milano, Italy,

— Krupp Energiehandel GmbH, Essen, Germany,

— Mongecoke SpA, Milano, Italy,

— RAG Trading GmbH, Essen, Germany and

— SSM Coal BV, Rotterdam, The Netherlands.

(131) During the investigation it was found that Eurocoke Due
Srl ceased importing coke 80 + originating in the PRC
since the beginning of 1999.

(132) Responses were also received from two companies using
coke 80+ in manufacture of cast iron or stone wool:

— Buderus Guss GmbH, Wetzlar, Germany, and

— Rockwool International A/S, Copenhagen, Denmark,

on behalf of the following subsidiaries:

— Rockwool A/S, Hedehusene, Denmark,

— Deutsche Rockwool Mineralwoll, GmbH, Glad-

beck, Germany,

— Rockwool Lapinus, BV, Roermond, The Nether-

lands,

— Rockwool Isolation SA, Paris, France.

(133) Substantiated comments were received from three cast

iron producers:

— Fritz Winter Eisengiesserei GmbH & Co KG, Stadtal-

lendorf, Germany,

— Georg Fischer GmbH & Co KG, Mettmann, Germany,

— Pont-à-Mousson, SA Nancy, France.

3.1. Nature and viability

(135) The Community industry is composed of medium-sized
companies dedicated only to coke production located in
France, Spain, Belgium, UK and Italy. The Community
industry employed a total of 1 461 people out of which
673 were employed directly for the product concerned
in the IP. It should also be noted that the Community
industry is a mature industry, with strategic importance
in terms of reliability of supply for the user industries.

is evident

(136) The Community industry has been found to be viable.
This
from the profit margins obtained
between 1995 and 1997 (ranging between 4,8 % and
investments made
9,6 %) as well as by the level of
throughout the period considered. However, the impact
of the dumped Chinese imports as from 1997 has signif-
icantly worsened the situation of
the Community
industry, to the extent that it suffered losses amounting
to -3,9 % in the IP.

in practice,

(137) As mentioned in recital 78, the product concerned is
produced in coke oven batteries, which are dedicated to
the production of coke 80 + and the capacity in place
can neither be adjusted,
to the actual
volumes of sales, nor can it be used to produce other
products. Furthermore, coke-making using coke oven
batteries is capital intensive, highly automated and the
Community industry constantly needs to make invest-
ments in order to comply with the Community's envir-
onmental legislation. In this respect, during the period
considered the Community industry maintained its
investments in replacement of machinery and equipment
in order to comply with anti-pollution obligations.

3.2. Effects of the imposition of measures

(138)

injurious dumping caused by low-priced
In case of
dumped imports,
the need to eliminate the trade
distorting effects of injurious dumping and to restore
effective competition shall be given special considera-
tion.

(134) The Committee of Associations of European Foundries
as well as six National Foundry Associations also made
allegations as
the possible impact of anti-
dumping measures on Community foundries.

regards

(139)

In order to assess the effects of any possible measures on
the Community industry, the Commission has assumed
a stable demand situation. This is justified given the
stability in production of cast iron, stone wool and zinc
lead in the Community.

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(140) Following the imposition of measures, it is expected that
the volume of sales and to a certain extent prices of the
product concerned on the Community market would
rise. This volume increase would enable the Community
industry to recover market share and with increased
capacity utilisation decrease unit production costs and
increase productivity. Although a reduction in the
volume of imports originating in the PRC is possible,
given that the Community industry does not have the
capacity to supply the whole Community market, this
reduction in imports is not expected to be significant.

(145)

(141) As regards the level of prices by the Community
industry, it is expected that it will increase, although not
by the full amount of the duty, since part of the benefit
to the Community industry will result from an increase
in the sales volume, which it can obtain if it regains a
certain advantage in terms of prices over imports of
Chinese coke 80 +.

(142) Any increase in sales volume and the level of

the
Community industry's prices would,
likelihood,
enable it to restore its financial situation, thus allowing
the companies concerned to continue trading and
making the necessary investments.

in all

3.3. Effects of

the non-imposition of measures on the

Community industry

(143) Should measures not be imposed, it is likely that the
negative trend of the Community industry will continue,
leading in the medium/long term to the closure of
companies. The Community industry is particularly
marked by a loss of market share and a negative finan-
cial situation. Indeed, in view of the decreasing profit-
ability particularly since 1997 and the material injury
suffered during the IP, it is obvious that the financial
situation of the Community industry will deteriorate
further in the absence of any measures to correct the
negative effects of dumped imports. This may ultimately
lead to cuts in production or closures of certain facilities
and therefore threaten employment and substantial
investments in the Community.
the
closure of two production plants by one of the other
Community producers should be noted.

In this respect

(144) Consequently, without measures, the price effect of the
dumped imports will continue to frustrate the efforts of
the Community industry to regain a satisfactory margin
of profitability, which could lead to a further reduction
the product concerned in the
in the production of
Community.
that with fewer producers
present in the Community market, effective competition
will also be reduced.

follows

It

3.4. Conclusion

it

it

is structurally viable,

In conclusion, given that the analysis of the Community
industry indicated that
is
expected that measures would be effective in affording
the industry the opportunity to recover from the injury
suffered. The Community industry would be expected to
improve its sales volume and recover lost market share,
which as such would reduce unit costs and increase
profitability. Furthermore, a certain increase in the sales
prices by the Community industry is expected, albeit not
by the full extent of the duty. Therefore, it is considered
to be in the interest of the Community industry to
impose measures.
If anti-dumping measures are not
adopted, there is a risk that certain Community produ-
cers may close down their facilities.

4. Impact of the measures on importers/traders

4.1. Structure of the import and distribution channels

(146) Distribution of coke 80 + in the Community is charac-
terised by a limited number of importers/traders who
hold large stocks of the product concerned. Essentially
these companies act between the Chinese exporters and
the end-users in the Community by importing, screening
and keeping stocks of Chinese coke 80 +. The invest-
igation showed that end-users are not importing the
product concerned directly from the PRC but
their
purchases are made out of importers' stocks.

4.2. Economic situation of importers

(147) The abovementioned cooperating importers represent
around 96 % by volume of the imports of the product
concerned in the Community during the IP. All of these
importers were against anti-dumping measures, as they
argue that since the Community industry has insufficient
capacity to supply demand, measures would lead to loss
of their business and earnings as well as have a negative
effect on the users.

(148)

stocks of

In this respect it should firstly be noted that although
importers hold significant
the product
concerned, they also trade in a large number of other
coal products that are not concerned by this proceeding.
It was found that the total turnover of the cooperating
importers was ECU/EUR 1,627 million in the
IP
whereas the turnover relating to the product concerned
was ECU/EUR 40 million representing less than 2,5 %
of the total turnover. On the basis of the information
available the total employment of these companies was
around 500 people of which, allocated on the basis of
turnover, 12 can be considered as related to the product
concerned. With regard to the financial situation,
it
should be noted that the weighted average profit for
those importers amounted to 7,2 % in the IP.

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4.3. Effect of imposition/non-imposition of measures

(149) As previously stated, it is considered that in the event of
the imposition of measures, prices of coke 80+ on the
Community market will increase while, given the level
and nature of the measures proposed as well as the
production capacity
in the Community,
available
imports will continue to take place, albeit at non-injur-
ious prices. This increase in prices is likely to have a
negative impact on importers who may see their
margins reduced.

(150) However, any reduction in the margins of the importers
should be seen in the light of the profitability achieved
by importers in the IP as well as the fact that importers
also act to a large extent as traders and may choose an
alternative source of supply, for instance the Community
produced coke 80+. Indeed,
it was found that some
traders importing from the PRC also purchased coke
80 + from the Community industry. Furthermore, the
negative impact of any price increases is likely to be
minimised by combining reduced margins with a certain
price increase to the user industries. Given that
the
Community industry is unable to supply the entirety of
consumption on the Community market, the volume of
imports will

likelihood remain significant.

in all

company was carried out by the Commission services.
This company represents around 10 % of
the total
consumption of coke 80 + in the Community and
around 28 % of the total imports of Chinese coke 80 +
into the Community in 1998.

(154) Coke 80 + is used as a combustion agent to melt stone.
The melted stone is then spun into fine fibres, which are
then impregnated by binder and oils to produce stone
is
wool. After hardening and shaping the stone wool
used as insulation material. Rockwool
is the leading
Community producer of stone wool and holds around
one
in the
Community, which includes stone wool, glass wool and
plastic foam insulation.

insulation market

third of

total

the

(155) Coke 80+ has been found to represent between 2 % and
5 % (4) of the total costs of production of Rockwool in
1998.

(156) The company has eleven production plants in the
Community employing a total of around 7 000 persons.
According
the
company, only four production plants use Chinese coke
80+ with an employment of around 3 490 persons in
1998.

information presented by

to the

(151) Given the above,

it is provisionally concluded that if
measures are not imposed, the positive trend observed
in the situation of the importers is likely to continue.
However, in the event of the imposition of measures, the
likely impact of anti-dumping measures on the impor-
ters of the product concerned would not be such as to
put their economic activity at serious risk, although their
situation could deteriorate.

5. Users

5.1. Economic operators concerned

(152) The Community user industry is comprised of three

major sectors:

— foundries producing castings,

— producers of stone wool, and

— producers of zinc lead.

5.2. Stone wool producers

(a) N a t u r e a n d s t r u c t u r e

(153)

Information available to the Commission indicates that
one user, Rockwool represents the quasi-totality of stone
wool production in the Community. This company
responded to the questionnaire addressed to it in the
course of the investigation. A verification visit to this

(b) E f f e c t s o f

t h e i m p o s i t i o n o f m e a s u r e s

(157) Rockwool expressed concerns over the imposition of
measures in the present proceeding. It argued that the
imposition of measures would result in an increase in
purchase costs, which could affect its competitiveness
and thus compromise its manufacturing operations in
the Community. It also argued that the increase in costs
resulting from the imposition of anti-dumping measures
would reduce its profitability since these costs cannot be
passed on to its customers.

through importers in the Community.

(158) As regards the impact of the imposition of an anti-
dumping duty on Rockwool, it should firstly be noted
that Chinese coke 80 + is not imported directly by users
but
is not
excluded, therefore, that importers sustain part of the
price increase resulting from the imposition of an anti-
this will
dumping measure, although the extent of
depend on both the behaviour of
the Community
industry in its pricing strategy and of the importers.

It

(159) Secondly, the investigation showed that coke 80+ repre-
sents between 2 % and 5 % (4) of the total costs of stone
wool production. Therefore, an anti-dumping duty as
proposed would have a maximum hypothetical increase
in the cost of production of Rockwool of around 1 %.
This impact has been calculated on the assumption that
the importers pass the duty fully to the users and that
the Community industry increases its prices on average
by 5,6 %,
i.e. regaining the situation being present in
1996. It is unlikely that such a cost increase takes place
given that it cannot be excluded that importers sustain
the increase in the price of coke 80 +. As
part of
mentioned,
the
the weighted average profitability of
cooperating importers amounted to 7,2 % in the IP.

(4) Actual data has been indexed for reasons of confidentiality.

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Official Journal of the European Communities

L 141/23

it

the prices of

is expected that

the
Furthermore,
Community industry will increase by less than the calcu-
lated 5,6 % mentioned above, since part of the benefit to
the Community industry will consist of decreasing unit
costs due to increasing production and sales in the
Community.

(160)

In addition,
the profitability of Rockwool almost
doubled between 1995 and 1998 and amounted to
between 7 % and 9 % in 1998 (5).

(161) As regards the impossibility to pass on to customers of
stone wool any increase in costs, this has been analysed
by reference to one of Rockwool's subsidiaries for which
information had been provided on costs, and also on
prices of stone wool and which represented around
40 % of the total imports of Rockwool from the PRC in
1998. The strong market position held by Rockwool in
the segment of stone wool as such, where the company
claims to be Community leader, and the fact that the
stone wool represents around one third of the total
Community market
for insulation products, seem to
contradict that argument. Despite an increase in the unit
full cost of production of this subsidiary between 1995
and 1998 (between 4 % and 7 %) (5), the profitability of
this subsidiary increased by 20 % during the same
period. It should be noted that the prices of stone wool
also increased during the same period (by 7 %). This
indicates that such increases in costs can be passed on in
the prices to the final customers.

(162) Rockwool claimed that following the imposition of anti-
dumping measures, imports of coke 80 + originating in
the PRC would decrease. This would cause difficulties to
users of Chinese coke 80 +, which would have to bear
considerable costs in adjusting their cupola ovens as a
result of switching from the Chinese coke 80 + to that
produced by the Community industry.

(163)

the investigation showed that cupola
In this respect
ovens in general have to be adjusted switching from one
coke 80 + to another irrespective of whether it
is
sourced from the PRC or from different Community
producers. In this respect the imposition of an anti-
dumping measure is not likely to have a major impact
beyond these normally associated with the switching of
sources of supply. In any event, such costs, should they
be considerable, have not constituted an insurmountable
barrier for this company when it initially decided to
switch sources of supply between 1995 and the IP.

(c) E f f e c t s o f t h e n o n - i m p o s i t i o n o f m e a s u r e s

(164) Should measures not be imposed, Rockwool would
continue to benefit from the existing low prices of coke
80 + on the Community market. While it is acknowl-
edged that every reduction in cost is important, it must
be stressed that the lower prices being offered by the
Chinese producers are the result of unfair trading prac-

(5) See footnote 4.

tices, which are injurious and detrimental
Community industry.

to the

the

for Rockwool.

In such an event

eventual disappearance of

(165) Furthermore, it should be noted that, in the event of a
the
reduction or
Community industry of coke 80+, the available sources
of supply would also be reduced with the consequent
negative effect
the
supply of coke 80+ in the Community could become
entirely dependent on Chinese production which would
then enjoy a dominant position in the Community
market. In this respect it is considered that the existence
of alternative sources of supply is vital for guaranteeing
proper access to raw materials. Information available to
the Commission indicates that shortages of supply of
Chinese coke 80 + for export are currently taking place
for reasons unrelated to the anti-dumping proceeding.
The reduction or even disappearance of the Community
industry could exacerbate such problems and create
supply shortage to the user industry.

(d) C o n c l u s i o n

(166) The information provided by Rockwool does not
confirm the allegations made as regards the likely impact
of the imposition of anti-dumping measures on stone
wool producers. Firstly,
the incidence of an anti-
dumping measure of the amount found, on the cost of
production would likely be limited and secondly, any
increase in the cost is likely to be passed to the final
is
in these
customer. Therefore,
concluded that the imposition of anti-dumping measures
on Chinese coke 80+ is not expected to significantly
impact their economic situation.

circumstances,

it

5.3. Foundries

(a) N a t u r e a n d s t r u c t u r e

the

imports of Chinese

(167) Foundries represent around 85 % of the total consump-
tion of coke 80 + in the Community and around 63 %
of
coke 80 + into the
Community in 1998. Information on the impact of any
anti-dumping measure on foundries was received from
four Community foundries representing 10 % of total
consumption and 13 % of total imports from the PRC.
Furthermore, a number of claims were made by several
National Foundry Associations as well as by the
Committee of Associations of European Foundries.
Those claims have been examined in the light of the
substantiated information provided by the abovemen-
tioned four foundries.

(168) Coke 80 + is used as a combustion agent to melt scrap
for the production of ferrous castings. The melted cast-
ings are then further transformed and used as input in
the production of parts for the automotive, engineering,
machinery and public utilities sectors.

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(169) Coke 80 + has been found to represent 2,3 % of the
total costs of production of foundries in 1998.

(174)

(170) As regards the employment by the user industry, the
Committee of Associations of European Foundries
alleged that the employment concerned in this sector
amounted to around 194 000 people in 1998. In this
respect, information provided by the four cooperating
foundries' users representing 10 % of total consumption
the total
of coke 80 + during 1998, showed that
employment of
these four
companies amounted to around 6 000 people in 1998.
In view of this it appears that the total employment of
foundries in the sector using coke 80+ would rather be
at around 50 000. It should again be stressed that this
figure represents total employment for that sector and
not employment directly related to the use of
the
product concerned.

the sector concerned of

(b) E f f e c t s o f

t h e i m p o s i t i o n o f m e a s u r e s

(171) The National Foundry Associations claimed that

the
imposition of an anti-dumping measure on imports of
Chinese coke 80 + would have significant adverse effects
on foundries, which are mostly small and medium sized
companies and would be likely to lead to plant closures.
Furthermore, it was alleged that given that coke 80 +
represents a high share of the total costs of foundries,
any anti-dumping measure would significantly affect the
profitability of foundries, which is currently very low
(between 1 % and 3 %).

(172) As already explained in recital 146, Chinese coke 80+ is
not imported directly by users but through importers in
therefore,
the Community.
that
the price increase
importers would sustain part of
resulting from the imposition of an anti-dumping
measure.

is not excluded,

It

(173) As regards the share of coke 80+ on the total costs of
foundries, the National Foundry Associations claimed
that it ranged between 2,6 % and 6 %. According to the
information presented by the four foundries, coke 80+
represents 2,3 % of the their total costs. Therefore, an
anti-dumping duty as proposed would have a maximum
average hypothetical increase in the cost of production
of foundries of less than 0,5 %. This impact has been
calculated on the assumption that the importers pass the
duty fully to the users and that the Community industry
increases its prices on average by 5,6 %, i.e. regaining
the situation being present in 1996. Whether this cost
increase takes place will firstly depend on the behaviour
of importers, who could sustain part of the increase in
the price of coke 80 + and on the behaviour of the
Community industry, whose prices could increase by
less than the calculated 5,6 %, since part of the benefit to
the Community industry will consist of decreasing unit
costs due to increasing production and sales in the
Community.

In relation to the costs of foundries, it should be noted
that they are generally subject to fluctuations in the
main cost items.
In more detail, the prices of scrap
representing around 50 % of the foundries' full cost of
production fluctuated greatly over time. According to
information available to the Commission prices of scrap
fluctuated by 24 % between 1995 and 1998. In view of
the limited maximum impact of an anti-dumping
measure on the costs of foundries it is unlikely that any
closures of foundries would take place as a result of the
imposition of measures.

foundries

the profitability of

the National Foundry Associations claimed
(175) Secondly,
that
in 1998 ranged
between 1,5 % and 3 %. However, the average profit-
ability of the Community foundries submitting informa-
tion in this respect and representing a usage of 13 % of
all imports of Chinese coke 80 + ranged between 5,1 %
and 22,1 %, on an average basis around 18 % in 1998.
Profits of other major foundries (which alleged to repre-
sent an additional usage of around 4 % of Community
consumption) that have made themselves known and
whose profitability (return on sales) is publicly available
range between 10 % and 13 % in 1998. These foundries
are suppliers of castings for automotive and machinery
industries. The argument of the low profitability margins
attained by Community foundries could therefore not be
sustained on the basis of the evidence available. The
Commission will further look into this matter on the
basis of additional information submitted by interested
parties subsequent to the disclosure of the provisional
findings.

(c) C o n c l u s i o n

(176) On the basis of the evidence available to the Commis-
sion at this stage, the claims made by the National
Foundry Associations as regards the impact of an anti-
dumping measure on Community foundries have not
been confirmed. Indeed, the evidence presented to the
Commission indicates that coke represents a marginal
proportion of the total costs of foundries and that there-
fore the impact of any anti-dumping measure on the
costs of foundries is likely to be minimal. This conclu-
sion has been reached, in particular, in view of the large
fluctuations in the costs of raw materials which have
occurred in the past and which did not appear to have
the negative impact that the National Foundry Associa-
tions now claims would occur should anti-dumping
measures be introduced. The claims regarding the profit-
ability of Community foundries have also not been
confirmed. It is therefore concluded that the impact of
an anti-dumping measure such as the one proposed is
not likely to significantly affect the economic situation
of foundries.

6. Consequences for competition in the Community

market

(177) As

as

far

the

competitive

in the
Community market is concerned, two aspects have to be
highlighted. First, although it is the intended effect of the
the price
imposition of anti-dumping measures that

environment

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the exports originating in the PRC in the
levels of
Community increase, the measures are not such as to
close the Community market to the Chinese exporters
and therefore will allow the continued presence of
Chinese products in the market.

the

convincing reasons

(178) On the contrary, the removal of the unfair advantages
gained by the dumping practices is designed to prevent
the further decline of the Community industry and thus
help to maintain the availability of a wide choice of
supply sources and even strengthen competition among
existing producers. Indeed, without such measures, there
are
the
that
Community industry would further deteriorate and the
competition in the Community market might ultimately
be limited to coke 80+ originating in the PRC. This
would clearly not be in the interest of the Community,
in particular
since the Community industry would
ensure a more effective competition on the Community
market as there would be a greater number of players
involved on that strategically important market. Thus,
the benefits of a market governed by a greater number
of competitive forces would be available to the industrial
users of the product concerned.

situation of

(179) Secondly, as far as other imports to the Community are
concerned, which were found to have been relatively
stable during the period considered, there is no evidence
that
increase their presence in the
Community market once fair competitive conditions are
restored.

these could not

(180) Consequently,

the benefit of a market governed by
competitive forces would still be available to end-users
of the product concerned.

7. Conclusion on Community interest

(181) The imposition of measures can be expected to afford
the Community industry with the opportunity to regain
lost market share and restore profitability, with conse-
quent beneficial effects on the competitive conditions on
the Community market.
the deteriorated
situation of the Community industry, there is a risk that
in the absence of measures, certain Community produ-
cers may close down their facilities. In that event the
Community market will become more dependent on
imports.

In view of

(182) Whilst negative effects are likely to result in the form of
price increases for the importers, the extent of these may
be reduced by decreasing margins or by passing part of
the increase on to the user industry.

(183) As regards stone wool producers, it is unlikely that they
will be significantly affected by the imposition of anti-
dumping measures given that any increase in costs,
which is likely to be minimal, could be passed on to the
final customer. As regards foundries, the information

available to the Commission at this stage indicates that,
given the relatively low incidence of coke 80 + in the
total cost of foundries, the imposition of anti-dumping
measures
their
economic situation. Furthermore, users are likely to
benefit from the maintenance of an alternative source of
coke 80 + production on the Community market.

likely to significantly affect

is not

(184)

It is therefore provisionally concluded that no compel-
to impose provisional anti-
ling reasons exist not
dumping measures in the present case.

H. PROVISIONAL MEASURES

1. Injury elimination level

(185) Having established that the dumped imports have caused
injury to the Community industry and that
material
there are no compelling reasons not
to take anti-
dumping measures, the Commission considers it neces-
sary to adopt anti-dumping measures in the form of
provisional measures.

(186) The level of the anti-dumping measures should be suffi-
cient to eliminate the injury to the Community industry
caused by the dumped imports, without exceeding the
dumping margins found.

(187) The removal of such injury requires that the industry
should be put in a position where the prices of the
Chinese imports should be increased to a non-injurious
level. For the purposes of calculating the necessary price
increase, i.e. the injury margin, it is considered that the
prices of the dumped imports should be compared with
the non-injurious prices of the Community industry.
This non-injurious price has been calculated by adding
to the average sales prices of the Community industry in
the IP the profit shortfall and a reasonable margin of
profit.

(188) When determining the profit margin, the Commission
examined what amount the Community industry could
reasonably expect to obtain in the absence of dumping.
The investigation revealed that a profit margin of 9,6 %
should be provisionally regarded as appropriate. This
was the profit margin, which was achieved by the
Community industry in 1996 at a time when the
volume of imports of Chinese coke 80 + were at their
lowest level and when no other significant imports were
present in the Community market.

(189) On this basis, the weighted average export prices duly
adjusted for quality differences and post-importation
costs, as explained in recitals 73 to 77, were compared,
for the IP, with the weighted average non-injurious
prices of the Community industry. The difference, when
expressed as a percentage of the total cif import value
amounted to 45,1 %, i.e. less than the dumping margin.

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(190)

(191)

2. Provisional anti-dumping measures

In accordance with Article 7(2) of the basic Decision, the
provisional anti-dumping duty should not exceed the
margin of dumping established but should be less than
the margin if such lesser duty would be adequate to
remove the injury to the Community industry. The
provisional anti-dumping duty should therefore amount
to 45,1 %.

In order to ensure the efficiency of the measures and to
discourage any absorption of the anti-dumping measure
through a decrease in the export prices, it was found
that
the duty should be imposed in the form of a
specific amount per ton. This amount results from the
application of the injury margin to the export prices
used in the calculation of the injury elimination level
during the IP. Therefore, the duty amounts to EUR 33,7
per tonne.

I. FINAL PROVISION

(192)

In the interest of a sound administration, a period
should be fixed within which the interested parties may
make their views known in writing and request a
hearing. Furthermore it should be stated that the find-
ings made for the purpose of this Decision are provi-
sional and may have to be reconsidered for the purpose
of any definitive finding,

HAS ADOPTED THIS DECISION:

Article 1

A provisional anti-dumping duty is hereby imposed on
1.
imports of coke of coal
in pieces larger than 80 mm in
maximum diameter, falling within CN code ex 2704 00 19
(TARIC code 2704 00 19 10), and originating in the People's
Republic of China.

Unless otherwise specified,
3.
concerning customs duties shall apply.

the provisions

in force

4.
The release for free circulation in the Community of the
product referred to in paragraph 1 shall be subject to the
provisions of a security, equivalent to the amount of the provi-
sional duty.

5.
In cases where the goods as described in paragraph 1 are
imported together with coke of smaller sizes the quantity of
goods subjects to the anti-dumping duty of paragraph 2 shall
be determined in accordance with Articles 68 and 69 of
Council Regulation (EEC) No 2913/92.

6.
In cases where goods have been damaged before entry
into free circulation and, therefore, the price actually paid or
payable is apportioned for the determination of the customs
value pursuant to Article 145 of Commission Regulation (EEC)
No 2454/93, the amount of anti-dumping duty, calculated on
the basis of the fixed amounts set out above, shall be reduced
by a percentage which corresponds to the apportioning of the
price actually paid or payable.

Article 2

Without prejudice to Article 20 of Decision No 2277/96/ECSC,
interested parties may request disclosure of the essential facts
and considerations on the basis of which this Decision was
adopted, present their views in writing and request a hearing
from the Commission within one month of the date of entry
into force of this Decision.

Pursuant to Article 21(4) of Decision No 2277/96/ECSC, the
parties concerned may request a hearing concerning the
analysis of the Community interest and may comment on the
application of this Decision within one month of the date of its
entry into force.

Article 3

This Decision shall enter into force on the day following that
of its publication in the Official Journal of the European Communi-
ties.

2.
The amount of the anti-dumping duty shall be equal to
the fixed amount of EUR 33,7 per tonne of dry net weight.

Article 1 of
months.

this Decision shall apply for a period of six

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

Done at Brussels, 14 June 2000.

For the Commission

Pascal LAMY

Member of the Commission