Proposal for a Council Regulation imposing a definitive anti-dumping duty on imports of fluorspar originating in the People's Republic of China
Date: 2000-09-06
Institutions: European Commission
Subjects: China, anti-dumping duty, import, metallic ore, originating product

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 06.09.2000
COM(2000) 504 final

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of fluorspar originating in the
People's Republic of China

(presented by the Commission)

EXPLANATORY MEMORANDUM

By Regulation (EC) No 486/941,
imposed definitive anti-dumping
the Council
measures on imports of fluorspar originating in the People's Republic of China in the
form of a variable duty associated to a minimum import price of 113,50 ECU per dry
metric tonne.

Further to the request presented by the Community industry, the Commission opened
an expiry review of the anti-dumping measures in March 1999. At the same time, the
Commission also opened an interim review limited to the form of the measures in
place, since it had reasons to believe that the current form of the measure rendered
them ineffective.

It has been confirmed that despite the anti-dumping measures in force, the Chinese
exporters/traders have continued to export Chinese fluorspar to the Community
market at dumped prices and in significant quantities. Should measures be removed,
it is likely that dumping would recur given the huge production capacity and the high
level of stocks held by the Chinese exporters. Moreover, the increase in Chinese
prices was mainly due to the Chinese export
licence system in place which
artificially mirrors export prices from the PRC and which will in all likelihood be
removed if measures lapse.

As far as injury is concerned,
the Community industry has
it was found that
improved its situation. However, the period of application of the anti-dumping
measures has not allowed the industry to fully recover, notably in terms of
profitability, from the injurious effects of the Chinese imports which continued after
the imposition of the anti-dumping measures.

Other factors including imports from other third countries were examined but they
were not found to be the cause of the difficulties suffered by the Community
industry. Indeed, these third countries have lost market share to Chinese imports.

If measures expired, there is a likelihood that injury would continue. This has been
concluded in view of the increase in the production capacity and production of
Chinese fluorspar which is unmatched by internal consumption and the likely
decrease in the Chinese export prices in the absence of the export licensing system.

As regards Community interest,
the
continuation of the measures will allow the Community industry to fully recover, the
impact of the measures on users is unlikely to be significant.

the investigation has shown that whilst

The investigation has shown that the form of the measure, i.e. a variable duty
associated with a minimum import price, appears still to be appropriate. It should
therefore not be modified.

It is therefore proposed that the Council adopt the attached proposal.

1.

2.

3.

4.

5.

6.

7.

8.

9.

1 OJ L 62, 05.03.1994.

2

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of fluorspar originating in the
People's Republic of China

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) N° 384/96 of 22 December 1995 on protection
against dumped imports from countries not members of the European Community2, and in
particular Articles 9, 11(2) and 11(3) thereof,

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

Whereas:

1.

(1)

2.

(2)

(3)

A. Procedure

Measures in force

In March 1994, definitive anti-dumping measures were imposed by Council
Regulation (EC) No 486/943 in the form of a variable duty associated with a minimum
price of 113,50 ECU per tonne on imports of fluorspar originating in the People's
Republic of China ("the PRC"). The original investigation period covered the period
from 1 January 1991 to 30 March 1992.

Initiation of the review

Following the publication of a notice of impending expiry of the anti-dumping
measures in force on imports of fluorspar originating in the PRC4, in December 1998,
the Commission received a request to review these measures pursuant to Article 11 (2)
of Council Regulation (EC) No 384/96 (the "Basic Regulation").

The request was lodged by Eurométaux, ("the applicant") acting on behalf of
Community producers representing more than 95% of the total Community production
of fluorspar.

2 OJ L 56, 6.3.1996, p.1, Regulation as last amended by Regulation (EC) N° 905/98 (OJ L 128, 30.4.1998,

p. 18)

3 OJ L 62, 05.03.1994, p. 1.
4 OJ C 276, 04.09.1998, p. 2.

3

(4)

(5)

3.

(6)

(7)

(8)

The request was based on the grounds that the expiry of the measures would be likely
to result in the continuation or recurrence of dumping and injury to the Community
industry. Having determined, after consulting the Advisory Committee, that sufficient
evidence existed for the initiation of a review pursuant to Article 11(2) of the Basic
Regulation, the Commission initiated a review5.

At the same time, the Commission decided to initiate a review, on its own initiative,
pursuant to Article 11(3) of the Basic Regulation, limited in scope to the form of the
duty. This decision was based on the grounds that the effectiveness of the measures to
remove the injury appeared to be undermined given the continuous decline of the
market share held by the Community industry following the imposition of measures,
and that export prices of Chinese fluorspar appeared to have remained below the level
of the minimum price.

Investigation

The Commission officially advised the applicant Community producers, the exporters
and producers in the exporting country, the importers as well as their representative
associations known to be concerned, and the representatives of the exporting country
of the initiation of the review. The Commission sent questionnaires to all these parties
and to those who made themselves known within the time limit set out in the notice of
initiation. In addition, a producer in South Africa, which was chosen as analogue
country, was advised and received a questionnaire. The Commission also gave the
parties directly concerned the opportunity to make their views known in writing and to
request a hearing.

All the applicant Community producers replied to the questionnaire. Nine Chinese
exporters/traders, all of them members of the China Chamber of Commerce of Metal,
Mineral, and Chemical
replied to the
exporters/traders questionnaire. In addition, Cometals, New York, United States of
America, an independent trader of Chinese fluorspar, and CMC Trading AG, Zug,
Switzerland, completed the exporters/traders questionnaire.

Importers and Exporters ("CCCMC"),

The Commission sought and verified all information it deemed necessary for the
purpose of a determination of the likelihood of a 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

–

–

–

–

Minersa, Bilbao, Spain;

Nuova Mineraria Silius, Cagliari, Italy;

Sachtleben Bergbau, Lennestadt, Germany;

Sogerem, Albi, France.

b)

users in the Community:

–

Ausimont SpA, Milan, Italy;

5 OJ C 62, 04.03.1999, p. 3, as amended by OJ C 120, 01.05.1999, p. 23.

4

–

–

–

Bayer, Leverkusen, Germany;

Fluorsid, Assemini, Italy;

ICI Chemicals, Runcorn, United Kingdom

(9)

The investigation of continuation or recurrence of dumping covered the period from 1
March 1998 to 28 February 1999, in particular the months of March and September
1998 and February 1999, (“IP”). The examination of continuation or recurrence of
injury covered the period from 1 January 1993 up to 28 February 1999 (hereinafter
referred to as "the period examined").

B. Product under consideration and like product

1.

Product under consideration

(10)

The product under consideration is fluorspar of both acid and ceramic grade presented
in filter cake or in powder form, with a content of 97% or less of calcium fluoride
(CaF2) falling under CN code ex 2529 21 00 (TARIC code 2529 21 00*10), as well as
with a content of more than 97% of calcium fluoride (CaF2) falling under CN code ex
2529 22 00 (TARIC code 2529 22 00*10) ("fluorspar"). In order to produce fluorspar,
ore has to be mined, crushed and floated. The result is fluorspar with various calcium
fluoride contents. Fluorspar in filter cake form and in powder form differs only in its
moisture content, but
is perfectly interchangeable in its use. Fluorspar is used
essentially as a feedstock in the manufacture of hydrofluoric acid. This product is
largely employed in the production of fluorocarbons, the basic acid products for
aerosols, refrigerants and plastic foam; the production of aluminium fluoride used in
the aluminium sector and the production of fluorine chemicals such as solvents. Since
all types of fluorspar have identical or similar physical and chemical characteristics
and identical uses, as in the investigation leading to the measures presently reviewed,
they are considered as one single product.

2.

Like product

(11) As established in the previous investigation and confirmed in this investigation,
fluorspar exported to the Community from the PRC, fluorspar manufactured and sold
by the Community industry on the Community market and fluorspar produced and
sold on the domestic market of the analogue country, are identical or bear a close
resemblance in their basic physical and chemical characteristics and in their uses.

This conclusion was reached taking into account the fact that fluorspar is mined and
processed in similar ways, despite differences in methods of extraction,
in CaF2
content of the deposit and in production method which may vary from producer to
producer world-wide and also within the Community. This is confirmed by the fact
that both the Community producers and the Chinese exporters have a number of
common customers.

(12)

In view of the above, the fluorspar exported to the Community, that sold on the
domestic market in South Africa and that produced and sold on the Community
market are to be considered a like product within the meaning of Article 1(4) of the
Basic Regulation.

5

C. Likelihood of continuation of dumping

(13) Despite the imposition of anti-dumping measures, the volume of imports of fluorspar
from the PRC grew significantly during the period of enforcement of the measures
going from 62.935 tonnes in 1995 to 155.200 tonnes in the year1998, which covers the
main part of the IP as defined in above recital (9). It has been examined whether
dumping continued or was likely to continue during the IP.

1.

a)

Normal value

Analogue country

(14) Normal value for imports from the PRC was based, in accordance with Article 2(7) of
the Basic Regulation, on data from a market economy third country. South Africa was
selected in the original investigation as an appropriate market economy third country.
It was, therefore, envisaged in the notice of initiation of this review to retain this
country for the determination of normal value. One cooperating exporter/trader and
several Community users of fluorspar submitted that South Africa was inappropriate
on the grounds that the access to raw materials in South Africa is more difficult than in
the PRC. In particular, it was submitted that mines of fluorspar in South Africa do not
enjoy the same natural advantages as those in the PRC, and that as a result the
extracting and processing costs are higher in South African mines than in Chinese
mines; however, these parties did not argue that the circumstances prevailing during
the previous investigation had changed. These parties suggested Mexico and Kenya as
alternative analogue countries in which, it was claimed, the natural conditions were
comparable to those prevailing in the PRC.

(15)

In this respect, the Commission sought cooperation in countries where fluorspar was
known to be produced in sufficient quantities. In particular, a request for cooperation
was addressed to one producer in South Africa, one in Morocco, four in Mexico, and
one in Kenya. Only the South African producer cooperated fully. None of the other
companies approached responded to the questionnaire within the time limit set for the
response. The Kenyan producer submitted an incomplete response beyond the time-
limit.

(16) Given that cooperation of a representative South African producer was obtained, and
as other countries were considered less appropriate as analogue countries, this country
was retained as analogue country.

(17)

(18)

It should be noted in this respect that the South African cooperating producer had
representative domestic sales (see recital 20), whereas the above mentioned Kenyan
producer did not have any domestic sales.

The extraction method, quality and production process of the South African producer
can be considered as similar to that of the Chinese producers, as established in the
investigation that led to the measures under review. The alleged difference in access to
raw materials between South Africa and the PRC has been duly treated as in the
original investigation when comparing export price and normal value (see recital 26).
All parties were duly informed on the final selection of South Africa as analogue
country.

6

b)

Normal value determination

(19) Normal value was established on the basis of the information provided by the
cooperating South African producer. The name of the company is not disclosed
herewith as its cooperation could only be secured provided a strict guarantee of
confidential treatment of its identity would be granted by the Commission.

(20)

2.

(21)

In accordance with Article 2 of the Basic Regulation, it was first examined whether
domestic sales of the product concerned were representative in relation to the Chinese
exports to the Community. The domestic sales of the South African cooperating
producer were found to represent slightly less than 5% of the total Community imports
from the PRC during the IP, while being generally above 5% during the period of
enforcement of measures. In these circumstances, the Commission considered that the
domestic sales in South Africa were representative for Chinese exports to the
Community. It was further established that domestic sales were made in the ordinary
course of trade, i.e. domestic prices provided for the recovery of all cost. Therefore,
the selling price in the domestic market was used as basis for the calculation of normal
value.

Export price

In accordance with Article 17 of the Basic Regulation, given that the number of
Chinese exporters/traders, members of CCCMC, willing to cooperate was large, the
investigation was limited to a sample of the export transactions made by nine of the
above-mentioned exporters/traders. Their export transactions collectively accounted
for a representative volume of exports,
imports into the
Community of the product concerned from the PRC in 1998, the period for which data
was available at the time of the selection of the sample.

i.e. 70% of the total

(22) As the Chinese exporters/traders sold for export

to unrelated importers in the
Community, the export price was established, in accordance with Article 2 (8) of the
Basic Regulation, on the basis of the export prices actually paid or payable for export
to the Community.

(23)

The CIF Community border prices used were based on the prices declared by the
cooperating US exporter/trader Cometals and the calculated prices resulting from the
data submitted by the cooperating Chinese exporters/traders. Given that
the
cooperating Chinese exporters/traders sold to the Community on a FOB ex-PRC basis,
their CIF values were determined by adding to those prices a reasonable amount for
ocean freight and insurance as established on the basis of information submitted by
cooperating Community users.

3.

Comparison

(24)

For the purpose of ensuring a fair comparison between normal value and export price,
account was taken of differences in factors, which were demonstrated to affect prices
and price comparability in accordance with Article 2 (10) of the Basic Regulation.

(25) Adjustments for differences in physical characteristics, transport, insurance, handling

charge and credit were made.

7

(26)

Two adjustments, in respect of physical characteristics, deserve special consideration:

–

–

Chinese exports of fluorspar to the Community market are made in wet form,
whereas domestic sales made by the cooperating South African producer on the
South African market are made in dry form. As in the previous investigation,
to the normal value was made and has been based on a
an adjustment
reasonable estimate of the difference in market value between fluorspar
presented in dry and wet form, i.e. cost of drying plus a reasonable amount for
SG&A and profit.

The investigation that led to the imposition of the measures under review
established that the PRC enjoys natural advantages over South Africa by
reason of the easier access to raw material which, in turn, has an impact on the
purity of the product, and that in this respect certain costs are incurred in South
Africa but not in the PRC. Accordingly, in order to offset this difference
affecting price comparability, an adjustment
to normal value was granted
within the framework of the original investigation. Given that the natural
advantage in question continued to exist, it was decided for the purpose of the
present review to apply the same adjustment to the normal value as in the
original investigation.

The cooperating Chinese exporters/traders claimed an adjustment for differences in
levels of trade on the basis that the South African cooperating producer sells to users
and the Chinese exporters/traders sell to importer/traders. After further analysis of the
matter, it was concluded that there was a difference in levels of trade that merited an
adjustment. Since the cooperating South African producer does not sell to the two
different levels of trade under consideration, the adjustment was estimated, pursuant to
Article 2(10)(d)(ii), as 10% of its gross margin in accordance with the established
practice of the Community Institutions.

Dumping margin

The comparison of the weighted average export price with the weighted average
normal value showed still the existence of dumping during the IP, the dumping margin
being equal to the amount by which the normal value exceeded the export price
(expressed as a percentage of the CIF import prices at the Community border, duty
unpaid). However, the dumping margin found was lower than that established in the
original investigation. It should also be noted that the reduced level of dumping is in
essence due to the rise in export prices which reflect the Chinese export licence system
and the form of the anti-dumping duty (i.e. the variable duty).

(27)

4.

(28)

5.

Conclusion on likelihood of continuation of dumping

(29)

Since dumping was found to exist during the IP, there is no reason to believe that
dumping will not continue should the anti-dumping measures currently applicable be
repealed.

D.

Likelihood of recurrence of dumping

1.

Preliminary remarks

(30)

Further to the establishment of the continuation of dumping during the IP,
the
likelihood of recurrence of dumping, should the measures in question be removed, was

8

examined. For that purpose, the following factors were examined: the evolution of
Chinese export prices from 1993 to the IP, the impact of the export licence system
introduced by the Chinese authorities in 1994 and the situation in the PRC as regards
fluorspar production, production capacity and stocks.

2.

(31)

Evolution of Chinese export prices to the Community

Parallel
to the imposition of anti-dumping measures, export prices of Chinese
fluorspar have progressively increased and have, on average and on a CIF at
Community frontier basis, come close to the minimum price of 113,5 ECU per dry
metric tonne. In particular prices went from 86 ECU in 1993 to 111 ECU per dry
metric tonne in 1998. This appears to indicate that the minimum price acted as an
incentive for a price increase. Therefore, it is likely that the removal of the measures
would reverse the situation and bring about a decrease of export prices.

3.

The impact of the Chinese export licence system

(32)

(33)

(34)

The Chinese government introduced in 1994 a regulatory system consisting of an
annual export quota combined with an export licence fee that covered a number of
minerals including fluorspar. It should be noted that the introduction of the export
license system coincided with the imposition of anti-dumping duties on fluorspar, and
the existence of anti-dumping duties on other minerals covered. The declared object
was to stabilise the exported volumes of fluorspar and other minerals, as well as
preventing export prices from falling under the pressure of internal competition. It
actually had an impact in increasing the Chinese export prices to the Community. The
quota was lifted in 1998, and reintroduced in 1999, while the export licence fee has
remained in force since its introduction. Export licences are auctioned and awarded to
the highest bidders or to the bidders that are above the average price.

The export licence system has been substantially modified several times since its
introduction,
including a temporary suppression of the quota system in 1998.
Therefore, should prevailing conditions in international markets vary, or the scheme
be perceived as not fulfilling its objectives, the Chinese administration might decide to
amend the system or to remove it altogether without prior notice. This in turn might
lead to decreasing export prices, in particular if the anti-dumping measures currently
in force were repealed.

In any event, in view of the fact that the system described above is run autonomously
by the authorities of the exporting country, it should not have any influence on the
decision of the Community institutions whether or not
to renew anti-dumping
measures in the framework of an investigation carried out pursuant to Article 11(2)
and 11(3) of the Basic Regulation.

4.

Chinese production, production capacity and stocks

(35) No cooperation was obtained from any Chinese producer of fluorspar. The Chinese
authorities and the CCCMC were informed that, in the absence of full cooperation, the
responses provided by various Chinese parties concerned by the review would be
considered to be deficient. No information was submitted within the time limit
specified. The Commission had consequently, in accordance with Article 18 of the
Basic Regulation, to base its findings in respect of production, production capacity and
stocks of Chinese fluorspar on the basis of the facts available. The information used
stems from market research in the sector, information provided by a leading world

9

trader of the product concerned as well as from public information available from
other anti-dumping authorities.

(36)

In this respect an increase in Chinese production capacity of fluorspar and a build up
of stocks have been found during the investigation which poses the risk of an increase
of Chinese exports that could trigger a world-wide price depression. Indeed, Chinese
production capacity of acid grade fluorspar has increased by 26% between 1993 and
1998. The capacity increase has also led to a reduced utilisation of capacity that was
estimated to be 59% in 1998 for acid grade fluorspar. Large amounts of Chinese
stocks were found to have been built up. This creates a situation that is particularly
volatile given that Chinese production of acid-grade fluorspar represents around 52%
of world production and Chinese exports correspond to 38% of world output.

5.

Conclusion on recurrence of dumping

(37)

Taking into account that:

–

–

–

–

exports of fluorspar to the Community originating in the PRC were found to be
made at dumped prices during the IP,

the evolution of Chinese CIF export prices largely depends on the existence of
the anti-dumping measures under review and on an export licence system
introduced and run autonomously by the PRC government,

given the possible temporary nature of the export licence system, this system
cannot be considered as a guarantee that current export prices will be
maintained,

Chinese producers of fluorspar have dramatically increased their production
capacity, have built up enormous stocks and currently have a very low
utilisation of capacity,

is concluded that there is a likelihood that dumping will continue at

it
increased quantities, should the measures in force be removed.

largely

E. Community industry

(38)

The investigation has shown that the cooperating Community producers represent
more than 95% of the total Community production of the product concerned during
the IP. Therefore, these producers constitute the Community industry within the
meaning of Article 4(1) and 5(4) of the Basic Regulation. Hereinafter they will be
referred to as the Community industry.

F. Analysis of the situation in the Community fluorspar market

1.

Consumption in the Community Market

(39) Apparent consumption was based on the combined volume of sales to unrelated parties
into the Community market by the Community industry, the information on the
volume of total imports from the PRC reported in the exporters/traders' questionnaires,
imports from other third countries as reported by Eurostat as well as data from the
national statistical offices of Austria, Finland and Sweden for the import data prior to
1995.

10

(40)

(41)

(42)

Sales of Community producers to related parties which transform fluorspar internally
have been considered to take place in a captive market and were therefore excluded
from the assessment of the Community consumption and, more generally, the situation
of the Community industry. This conclusion was reached in view of the fact that the
fluorspar intended for the captive market was not in competition with the fluorspar
available in the Community and that the sales of that product to related parties were
made at transfer prices.

The applicant claimed that some imports originating in Namibia and South Africa
should be excluded from the calculation of consumption since these imports were
made to users in the Community related to the exporters concerned and thus were
made on a captive market.

It was found that both countries exported the product concerned to both related and
unrelated companies. Furthermore, the related parties in the Community purchased the
product concerned also from unrelated sources. Given that no clear separation could
be established between these two types of sales, it was therefore concluded that all
imports should be included in the calculation of the Community consumption.

(43) On this basis,

the consumption in the Community market evolved from around
284.300 tonnes in 1993, to 392.700 tonnes in 1994, to 400.900 tonnes in 1995, to
470.700 tonnes in 1996, to 491.800 tonnes in 1997 and to 496.200 tonnes in 1998.
Consumption of fluorspar in the Community has increased by 75% over the period
considered, especially between 1993 and 1994 (+38%) and between 1995 and 1996
(+17%). This increase in consumption is linked to the developments of the demand for
aluminium and the increasing demand for fluorocarbons (refrigerants) as well as their
specific fluorspar requirements. This increase is also attributable to the development of
new downstream applications for fluorspar.

2.

Imports from the country concerned

(44)

(45)

(46)

(a)

Import volume, share of the imports and market share of the imports concerned

The volume of imports of fluorspar originating in the PRC increased significantly
from around 60.400 tonnes in 1993, to 62.900 tonnes in 1994, to 68.500 tonnes in
1995, to 109.300 tonnes in 1996, to 128.800 tonnes in 1997 and to 155.200 tonnes in
1998. Chinese imports of fluorspar into the Community have continuously increased
during the period considered by about 157%, growing at a higher pace than the
Community consumption.

The share of imports from the PRC of the total
imports of fluorspar into the
Community has fluctuated between 26,7% and 50,6%. The highest import share was
reached in the IP.

The share of the Community market held by the imports from the PRC developed
from 21,3% in 1993, to 16% in 1994, to 17,1 in 1995, to 23,2% in 1996, to 26,2% in
1997 and to 31,3 % in 1998. This is equivalent to an overall increase of 10 points over
the period examined. The decrease in market share in 1994and 1995 can be explained
by both the introduction of the anti-dumping measures in March 1994 and the Chinese
export licence system introduced in April 1994.

11

(b) Price evolution and price behaviour of the imports concerned

(i)

Price evolution

(47) According to the exporters/traders' questionnaire replies it was found that the prices of
Chinese fluorspar, have increased by 29% between 1993 and the IP to reach a level on
a CIF Community frontier basis slightly below the minimum price of 113,5
Euro/Tonne. In particular, between 1993 and 1997, prices of Chinese fluorspar have
continuously increased from 86,06 ECU/tonne to 114,58 ECU/tonne. The decrease in
Chinese prices between 1997 and 1998 coincided with the elimination of the Chinese
export quota which triggered a general decrease in Chinese export prices to all export
markets.

(ii)

Price behaviour

(48)

In order to examine the price behaviour of Chinese imports during the IP, a price
comparison was made on the basis of the average sales prices of the Community
industry and the average sales price of the cooperating Chinese exporters/traders and
non-EC traders to unrelated importers in the Community adjusted to the same level of
trade.

(49) Chinese prices during this time period were lower by a margin of around 12% than
those of the Community industry. It should be noted that the undercutting margin in
the previous investigation amounted to 41%.

3.

Economic situation of the Community industry

(a) Production

(50)

The production of the Community industry increased by 32% over the period
examined going from around 276.000 tonnes in 1993 to around 363.800 tonnes in
1998. A peak of around 372.300 tonnes was reached in 1995.

(51)

(52)

(b) Production capacity

The production capacity of the Community industry was calculated on the basis of the
flotation capacity, which represents the bottleneck of the fluorspar production. It went
from 518.000 tonnes in 1993 to 502.000 in 1998, representing a decrease of 3 %
during the period examined.

(c) Capacity utilisation

The capacity utilisation of the Community industry increased from 53% in 1993 to
60% in 1994, to 72% in 1995, to 68% in 1996 and 1997, and to 72% in 1998. The low
levels of 1993 and 1994 can be explained by the effects of the dumped imports as
established in the previous investigation. It is only after 1994 that the anti-dumping
measures started to have an effect allowing the Community industry to operate at
higher capacity utilisation levels.

(d)

Sales volume

(53)

The sales of the Community industry in the Community increased from around
120.000 tonnes in 1993 to around 189.000 tonnes in 1998. The increase in sales was in

12

particular noticeable in 1995, when the Community industry increased its sales to
191.600 tonnes by decreasing its prices. This was done in order to maintain its share of
the Community market.

(e) Market share

(54)

(55)

The Community industry's share of the Community market decreased from 42,1% in
1993 to 38,1% in 1998, with a peak in 1995. The market share of 47.8% attained in
1995 corresponds to a general decrease in imports into the Community that year which
was the result of low prices charged by the Community industry to the detriment of its
profitability. After 1995,
the market share decreased regularly, dropping by 4
percentage points compared to 1993.

(f)

Price development

The average price for sales of fluorspar of the Community industry in the Community
market decreased between 1993 and 1995 and increased globally between 1995 and
1998 with a peak in 1997. The low price level in 1995 corresponds to the strategy of
the Community industry outlined above of trying to maintain market share by
decreasing its price level. Between 1995 and 1997, the price level of the Community
industry increased, coinciding with the steady increase of both Chinese prices and
demand of fluorspar. Between 1997 and 1998, prices of the Community industry
slightly decreased, coinciding with a decrease in the Chinese import prices.

(g) Profitability

(56)

The profitability of the Community industry, expressed in percentage of the net sales
went from -11,8% in 1993 to 0,9% in 1998.

(h) Employment

(57)

Employment of the Community industry went from 696 employees in 1993 to 689
employees in 1998.

(i) Stocks

(58)

The stocks of the Community producers decreased steadily from around 50.000 tonnes
in 1993 to 28.400 tonnes in 1998 which is equivalent to a decrease of 43%. Stocks
represented 18% of production in 1993 and 8% in 1998.

(j) Investments

(59)

The total investments of the Community industry related to fluorspar increased from
around 2,2 Mio ECU in 1993 to 9,4 Mio ECU in 1998.

(k) Conclusion

(60) After the imposition of the anti-dumping measures in 1994, the situation of the
Community industry improved overall. Continued efforts to rationalise the production
process and new investments were made. However, although the situation has
improved globally, the period in which the measures were in force has not allowed the
Community industry to fully recover from the past effects of the dumped imports,
the profitability of the
especially as far as profitability is concerned.

Indeed,

13

Community industry remained negative between 1993 and 1997. As from 1997 the
the Community industry improved, coinciding with an overall
profitability of
improvement in its sales prices in the Community and in its productivity. However,
the Community industry is only just above break-even and its financial results remain
clearly below what
industry could achieve under normal market
conditions.

this type of

(61)

It is therefore concluded that although the situation of the Community industry has
improved subsequent to the imposition of anti-dumping measures, it has not fully
recovered and continues to be in a precarious situation.

4.

Impact of the imports concerned

(62)

The investigation has shown that, despite the imposition of the anti-dumping measures
in March 1994, Chinese exports to the Community market have continued to increase.
Indeed, imports of fluorspar from the PRC increased by 157% between 1993 and 1998
and their share of the Community market increased from 21,3% to 31,3%. Over the
same period, sales of the Community industry increased by 58% but they lost market
share to the benefit of Chinese imports. Their share of the Community market
decreased from 42,1% to 38,1%.

(63) As regards prices, prices of the Chinese imports increased by 29% over the period
considered. This development in prices has to be seen in the light of the introduction
of the anti-dumping measures in March 1994 and the Chinese export licence system
introduced in 1994 which has contributed to the increase of the Chinese prices world-
wide. The increase in prices is more significant as from 1996, coinciding with an
improvement in the sales prices and a reduction of the losses of the Community
industry.

(64)

In July 1998, the Ministry for Foreign Trade and Economic Cooperation (MOFTEC)
eliminated the export quota maintaining only the licence fee. Coinciding with this,
Chinese prices decreased, notably in the second half of 1998 and in 1999, showing the
potential for a decrease in the prices of Chinese fluorspar in the absence of anti-
dumping measures.

5.

Import volumes and import prices of other third countries

(65)

The volume of fluorspar imports from other third countries increased by 46% over the
period examined from some 104.100 tonnes in 1993 to 151.700 tonnes in 1998.
However, the market share of the above-mentioned countries decreased globally
between 1993 and 1998 from 36,6% to 30,6%.

(66) As regards the prices of these other exporting countries, it is noted that they increased
by 20% between 1993 and 1998. However, they remained on average lower than the
Chinese prices with the exception of Morocco. In the case of Namibia and South
Africa, the fact that average export prices are lower than the Chinese prices should be
seen in the light of the fact that part of the exports to the Community are made to
related Community users, likely at transfer prices. As regards Kenya and Mexico, their
fluorspar prices appear to reflect a higher percentage of impurities, which command
lower prices as they entail additional costs for the users.

14

(67) On the basis of the above, it is considered that imports of fluorspar from other third
countries have had a limited impact on the economic situation of the Community
industry. Furthermore, it indicates that the Chinese exporters were able to significantly
improve their position in the Community to the detriment not only of the Community
industry, but also of other third countries.

G. Likelihood of continuation of injury

(68)

In order to assess the likely effect of the expiry of the measures in force, the following
the
factors were examined:
behaviour of Chinese imports of fluorspar in other third countries and the likely
consequences of the removal of the anti-dumping measures on the situation of the
Community industry.

the situation of the fluorspar industry in the PRC,

1.

Analysis of the situation of the fluorspar industry in the PRC

(a)

Production, production capacity, stocks

(69)

(70)

The applicant argued that production and production capacity of fluorspar in the PRC
have substantially increased in the period considered, reaching levels well above
annual world consumption. It was further argued that if measures are removed, there is
a threat of a further increase of dumped Chinese imports.

The Chinese exporters/traders claimed that
it was very unlikely that exports of
fluorspar to the Community would increase if measures were repealed given the
increase in domestic consumption and the controls imposed by the Chinese authorities
to production and production capacity.

(71) A number of Community users claimed that the current level of production and
production capacity in the PRC during the IP did not constitute a threat to the
Community industry given that internal consumption was growing, third countries
which did not traditionally purchase from the PRC, such as India, were starting to
import Chinese fluorspar and it was expected that Chinese exports will focus on the
United States of America (hereinafter referred to as the US) market, given the
expected increased demand in that market.

(72) According to the information available and as mentioned in recital (36) above, it
should be noted that Chinese production and Chinese production capacity have
steadily increased over the period examined. Indeed, the Chinese production capacity
has increased from 1,9 million tonnes in 1993 to 2,4 million tonnes in 1998. The
production has increased from 0.8 million tonnes to 1,4 million tonnes over the same
years. At the same time, utilisation of capacity has been low, estimated at 59% in
1998. Chinese domestic consumption is estimated to be at around 300.000 tonnes per
year. Furthermore, during that same period, large amount of Chinese stocks have been
built up.

(73) With such a huge production capacity and the possible dropping of the Chinese licence
system, there is a likelihood that large quantities, above the current imports volume, of
dumped Chinese fluorspar, could revert to the Community market in the absence of
anti-dumping measures.

15

(b) The Chinese export licence system

(74) As already mentioned in recital (32), in April 1994, the Chinese authorities introduced
an export licence system consisting of an annual export quota combined with an
export licence fee on Chinese exports of fluorspar.

(75)

(76)

(77)

(78)

(79)

(80)

2.

(81)

The system has undergone some changes over recent years: the export quota was lifted
mid 1998, thus from the second half of 1998 only the export licence fee remained in
force. At the beginning of 1999, the Chinese authorities reintroduced the quota. In
1998, the licence fee was about 20,3 ECU per tonne on average. This implies that if
exports are made at a level of 113,5 ECU, the actual export price without licence fee
would be 93,2 ECU.

The applicant claimed that the Chinese licence system could be abolished soon, raising
fears that Chinese exports of fluorspar to the Community would increase at lower
prices, should the anti-dumping measures be allowed to expire.

The Chinese exporters/traders argued that the licence system was intended to protect
the resources of fluorspar and ensure stability and reliability in the fluorspar market
and that there was no reason to assume that the system would be abolished soon. They
further stated that, should the anti-dumping measures not be continued, the licence
system would not be lifted.

It was considered that any presumption on the future development of the licence
system is rather speculative. However, an analysis of the Chinese licence system
shows that it has been substantially modified several times since its introduction,
including a suppression of the export quota in 1998. Furthermore, the considerable
amount of the Chinese licence fee shows the potential of Chinese fluorspar producers
to sell at very low prices. In addition, the existence of an export licence system
conceived and administered by a third country government for the purpose of the
preservation of the resources cannot be relied on to conclude whether or not injurious
dumping would continue.

(c)

Evolution of Chinese export prices to the Community

The anti-dumping measures appear to have led to a progressive increase in the export
prices practised by the Chinese exporters. Therefore, the removal of measures could
reverse the situation and bring along a decrease of export prices as shown by the
experience during 1998 and the considerable amount of the Chinese export licence fee.

Furthermore, a number of instances were found in 1998 where users purchased
Chinese fluorspar below the minimum price and had therefore to pay anti-dumping
duties.

Likely consequences of the removal of the anti-dumping measures on the
situation of the Community industry

In the first place, it is noted that after the IP, one of the applicant Community
producers ceased its fluorspar production when it lost its biggest customer to Chinese
competition. The fact that this took place at a time when anti-dumping measures were
in force, shows the potential of further injury to the Community industry should anti-
dumping measures be eliminated.

16

(82)

It

is expected that

Secondly, the investigation has shown that even with the anti-dumping measures in
force, the prices of the Community industry were under pressure from the imports
concerned.
in the absence of measures, prices, which the
investigation has shown have been positively affected by the anti-dumping measures,
would start to decrease and price undercutting would continue at higher levels. The
potential for the decrease in Chinese prices is reflected in the amounts paid for the
export licence fee, which amounted to 20,3 ECU on average in 1998. When deducting
this amount from the export price, the undercutting margin could be estimated at
26,7%. It is expected that such a price undercutting would result in severe losses to the
Community industry.

(83)

Thirdly, it is expected that in the absence of anti-dumping measures large volumes of
low priced dumped imports of fluorspar will be present on the Community market.
Community producers will then likely lose further sales volume and market share to
the Chinese exporters.

3.

Conclusion on the likelihood of continuation of injury

(84)

Taking into account that:

–

–

–

–

–

Chinese producers of fluorspar had dramatically increased their production
capacity, had built up large stocks and had a very low capacity utilisation level,

the evolution of Chinese CIF export prices has been considerably influenced by
the anti-dumping measures in force and the existence of an export licence
system imposed by the PRC government. This system cannot be considered as
a guarantee that export prices will be maintained, in the absence of anti-
dumping measures,

the prices that the Chinese exporters would charge in the absence of anti-
dumping measures are potentially very low in particular if account is taken of
the amount of the export licence fee paid, which indicates a strong likelihood
of continuation of undercutting,

the situation of the Community industry is still precarious,

the fact that a number of instances have been found where the users in the
Community have purchased Chinese fluorspar below the minimum import
price,

it is concluded that the injury caused by Chinese dumped imports is likely to continue
should the measures in force be removed and the situation of the Community industry
could even further deteriorate in such an event.

H. Community interest

(85) According to Article 21 of the Basic Regulation, it was examined whether it could be
clearly concluded that maintaining the anti-dumping measures would not be in the
Community interest. The determination of the Community interest was based on an
appreciation of all the various interests involved taken as a whole, i.e. those of the
Community industry, the importers as well as the users of the product concerned.

17

(86)

(87)

1.

(88)

It should be recalled that, in the previous investigation, the adoption of anti-dumping
measures consisting of a minimum price was considered not to be against the interest
of the Community. It should be noted that the present investigation is a review, which
requires an analysis of a situation in which anti-dumping measures are already in
place. Consequently, the timing and nature of the present investigation allows an
assessment of any negative undue impact by the anti-dumping measures under review.

In order to assess the likely impact of a continuation or non continuation of the
measures, the Commission requested information in the form of questionnaires from
all interested parties mentioned above. No importers replied to the questionnaire. Nine
users replied to the questionnaires.

Interest of the Community industry

The investigation has shown that the Community industry has benefited from the anti-
it has made considerable efforts to
dumping measures in place. In recent years,
the productivity of the
improve its productivity through rationalisation. Indeed,
Community industry has increased by 33% during the period examined and
investments have been made constantly throughout that same period. The level of
investments has been especially high in 1998, showing that this industry is viable and
determined to remain in operation.

(89) However, the situation of the Community industry still remains difficult, notably in
terms of profitability. In this context, any change in the commercial environment of
the product concerned may have a significant adverse effect on the situation of the
Community fluorspar industry.

(90)

In view of the above, it was considered that without the continuation of the measures,
the situation of the Community industry is likely to deteriorate. The continuation of
the measures would, therefore, be in the interest of the Community industry.

2.

Interest of the importers

(91) None of the unrelated importers replied to the questionnaires. The lack of cooperation
could be an indication that the anti-dumping measures imposed in March 1994 have
not had a significant adverse effect on importers. This can be supported by the fact that
imports from the PRC have continuously increased during the period examined and
thus importers have been able to continue sourcing from the PRC.

(92)

In view of the above, it is therefore concluded that a continuation of the measures
would not lead to a deterioration of their economic situation in the future.

3.

Interest of the user industry

(a)

Preliminary remarks

(93)

Fluorspar is a basic raw material for a large number of downstream products with very
high value added. The first transformation step of fluorspar is the production of
hydrofluoric acid (hereinafter referred to as "HF") which is in turn used for the
production of fluorocarbons (input for refrigerants, solvents, foamings), aluminium
fluoride (for aluminium production) and other chemical derivatives.

18

(b) Data gathered from cooperating parties

(94)

(95)

In 1998, the cooperating users purchased the totality of the imports of fluorspar from
the PRC and around 80% of the sales of fluorspar made by the Community industry.

In 1998, these cooperating companies represented a turnover of 26.465 Mio ECU out
of which 682 Mio ECU (2,6%) related to fluorspar derivative applications. The
fluorspar user industry is composed of small, medium size and large companies which
made significant
investments in 1998. The weighted average profitability of the
fluorspar derivatives sector has increased from 3,7% in 1996 to 6,3% in 1998.

(96)

The investigation has shown that fluorspar represents around 30% of the total costs of
production of HF and between 5% to 20% for HF derivatives.

(c) Arguments raised by the users

(i) Dependence on imports

(97)

(98)

(99)

Some users claimed that the maintenance of the measures is not in the interest of the
Community given that the users are dependent on imports in view of the limited
production capacity available in the Community. In this respect they argued that the
continuation of the anti-dumping measures could create a shortage of supply in the
Community whereas the demand for fluorspar is rising due to a combination of
technological and regulatory developments.

The Community industry did not dispute that
imports from third countries are
necessary to meet the Community demand for fluorspar. It claimed that the aim of
anti-dumping measures is not to keep imports out of the Community but to ensure that
these imports are made at fair prices.

The investigation has shown that
the anti-dumping measures in force have not
prevented the Chinese imports from entering the Community market. Indeed, between
1994 and 1998 imports from the PRC increased by 146%, following an increase in
demand for fluorspar. At the same time, the Community industry also increased its
sales by 58%.

(100)

In view of the above, the maintenance of the measures is not likely to prevent users
from sourcing from the PRC, whereas the maintenance of a safety net will assist the
Community industry in fully recovering from the injury suffered. From the above it is
also unlikely that shortages of supply could occur should anti-dumping measures be
maintained.

(ii) Competition disadvantages

(101) Some users claimed that the anti-dumping measures imposed on Chinese fluorspar
will lead to artificially high fluorspar prices in the Community and will result in the
fluorspar users being placed at a competitive disadvantage as regards their Community
competitors not sourcing from the PRC and also as regards their competitors
internationally. This would result in a relocation of HF production to the US and the
PRC where access to fluorspar would be cheaper with consequent
loss of jobs,
investments and profits in the Community in high value added industries which are
vital for the future competitiveness of the Community fluorspar user industry.

19

(102) The Community industry has argued that during the period of application of the
in the

the downstream industry has made significant

investments

measures,
Community, contradicting the argument of relocation.

(103)

It was found that between 1996 and 1998, significant investments were made by the
fluorspar user industry in the Community. Furthermore, prices of fluorspar in the US
have been found to be higher than in the Community. Indeed during 1998, prices of
Chinese imports into the US were 7% higher than those of the Chinese imports in the
Community market. Profits of the users have increased on average from 3,7% in 1996
to 6,3% in 1998 notwithstanding the anti-dumping measures in force.

(104) As regards, more specifically, the relocation of the HF production in the PRC, it
should be noted that HF is a highly dangerous product that is not suitable for travelling
over long distances. This means in practice that the relocation of the HF production in
the PRC would entail the relocation of the entire downstream industry in the PRC.
Information provided by cooperating users relating to the period when anti-dumping
measures were applicable seems to contradict the above. Indeed, users have made
significant investments in the Community in downstream production during the period
of application of anti-dumping measures. In view of the above, the relocation of the
entire downstream industry in the PRC, should anti-dumping measures be allowed to
continue, does not appear likely.

(105)

In view of the above, the maintenance of anti-dumping measures in their current form
is not expected to cause any competitive disadvantages for the user industry.

(iii) Alternative sources of supply

(106) A number of large fluorspar derivatives producers have to rely on imports of fluorspar.
It was claimed by the users that there are significant
impurities in non-Chinese
fluorspar, i.e. in Kenyan and Mexican fluorspar, which explains why the main reliable
source of supply is the PRC. Therefore, the continuation of the anti-dumping measures
on imports from the PRC would hamper the access of users to good quality fluorspar.

(107) Firstly, it should be noted that, despite the differences in purity, imports from other
countries have increased during the period of application of anti-dumping measures,
following an increase in demand. For example,
imports from Mexico have been
multiplied by six while imports from Kenya have increased by 57%. The above
appears to indicate that such fluorspar is suitable for certain downstream applications.

(108) Secondly, the substantial increase of imports from the PRC indicates that the measures
imposed in 1993 have not had the effect of excluding Chinese imports from the
Community market but have resulted in an increase in prices.

(109)

It is therefore concluded that the continuation of the current anti-dumping measures is
not likely to result in a reduced access to fluorspar of all qualities for users.

4.

Conclusion on Community interest

(110) Having analysed the various interests involved it has been found that the continuation
of the anti-dumping measures is likely to result in a relatively stable price for fluorspar
in the Community market, which during the period of application of the measures in
force appeared not to have any negative effects on the economic situation of the users.

20

Furthermore, leaving the Community industry without protection against the dumped
imports could aggravate its precarious situation and endanger its viability.

(111)

In view of the above, it is concluded that there are no compelling reasons on grounds
of Community interest against the maintenance of the anti-dumping measures in the
present case.

I.

Interim review

(112) The Chinese exporters/traders argued that the initiation of the interim review, limited
in scope to the form of the measures, was illegal since no evidence had been presented
which would suggest the need to change the form of the measure. In this respect they
argued that the request for a review according to Article 11(2) of the Basic Regulation
did not contain any information on the ineffectiveness of the anti-dumping measures in
place.

(113)

It should be mentioned that the interim review limited to the form of the measures was
initiated ex officio by the Commission. The initiation was based on the grounds that
information contained in the request for a review according to Article 11(2) of the
Basic Regulation presented by the applicant contained indications of the undermining
of the effectiveness of the measures concerned.

(114) The investigation has shown that, although the Community industry lost market share
during the period examined, the anti-dumping measure in its current form has allowed
the Community industry to increase its prices and therefore to reduce its losses, in
particular during the time period between 1996 and 1998. However, the duration of the
measure has not allowed the Community industry to fully recover, namely in terms of
profitability. Therefore, as far as the effectiveness of the measure is concerned, its
current form appears to be appropriate to fully restore the situation of the Community
industry and should consequently not be modified.

(115) Finally, as far as users are concerned, the investigation has shown that the anti-
dumping measures in their current form have not significantly affected the economic
situation of users.

(116)

It is therefore concluded that the anti-dumping measures should be maintained in their
current form.

J.

Anti-dumping measures

(117) All parties concerned were informed of the essential facts and considerations on the
basis of which it was intended to recommend that the existing measures be maintained.
They were granted a period within which to make representations subsequent to
disclosure. Representations made after
final disclosure were duly taken into
consideration.

(118)

It follows from the above that, as provided for by Article 11(2) of the Basic
Regulation, the anti-dumping duty calculated on the basis of the minimum price of
113,50 ECU per dry metric tonne on imports of fluorspar originating in the People's
Republic of China imposed by Regulation (EC) N° 486/94 should be maintained,

21

HAS ADOPTED THIS REGULATION:

Article 1

1.

2.

3.

A definitive anti-dumping duty is hereby imposed on imports of fluorspar presented in
filter cake or powder form, falling within CN code ex 2529 21 00 (Taric code 2529 21
00 * 10) or CN code ex 2529 22 00 (Taric code 2529 22 00 * 10), originating in the
People' s Republic of China.

The duty shall be equal to the difference between a minimum price of EUR 113,50 per
tonne (dry net weight) and the net, free-at-Community-frontier price, before customs
clearance.

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 minimum import price set out above shall be reduced by a percentage which
corresponds to the apportioning of the price actually paid or payable. The duty payable
will then be equal to the difference between the reduced minimum import price and the
reduced net, free-at-Community frontier price, before customs clearance.

4.

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

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

Article 2

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

Done at Brussels,

For the Council
The President
[…]

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