Council Regulation (EC) No 151/2003 of 27 January 2003 imposing a definitive anti-dumping duty on imports of certain grain oriented electrical sheets originating in Russia
Date: 2003-01-27
Institutions: Council of the European Union
Subjects: Russia, anti-dumping duty, import, originating product, sheet

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COUNCIL REGULATION (EC) No 151/2003

of 27 January 2003

imposing a definitive anti-dumping duty on imports of certain grain oriented electrical sheets
originating in Russia

THE COUNCIL OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 384/96 of 22
December 1995 on protection against dumped imports from
countries not members of the European Community (1)
(the
basic Regulation), and in particular Article 11(2) and (3)
thereof,

After consulting the Advisory Committee,

Whereas:

(5)

(6)

A. PROCEDURE

1. Previous investigation and measures in force

By Decision No 303/96/ECSC (2),
the Commission
imposed a definitive anti-dumping duty on imports into
the Community of certain grain oriented electrical sheets
(GOES) originating in Russia and falling within CN codes
7225 11 00 and 7226 11 10. The rate of
the anti-
dumping duty imposed was 40,1 %. An undertaking
offered in connection with such imports was accepted.

that

anti-dumping

In view of the expiry of the Treaty establishing the
European Coal and Steel Community on 23 July 2002,
the Council, by Regulation (EC) No 963/2002 (3),
decided
initiated
pursuant to Commission Decision No 2277/96/ECSC (4)
(basic Decision) and still in force on that date shall be
continued and be governed by the provisions of the
basic Regulation with effect from 24 July 2002. Like-
wise, any anti-dumping measures resulting from pending
anti-dumping investigations shall be governed by the
provisions of the basic Regulation from 24 July 2002.

proceedings

the Community production of the product concerned.
The request was based on the grounds that the expiry of
measures would be likely to result in a continuation
and/or
recurrence of dumping and injury to the
Community industry.

after

Having determined,
consulting the Advisory
Committee, that sufficient evidence existed for the initia-
tion of a review, the Commission initiated an investiga-
tion pursuant to Article 11(2) of the basic Regulation (6).

the Commission

the measures (7). During the course of
investigations,

At the same time a decision to open an Article 11(3)
investigation was taken by the Commission on its own
initiative in order to examine the appropriateness of the
form of
the
ongoing
received
requests for Market Economy Treatment (MET) pursuant
to Article 11(3) of the basic Regulation by Viz Stal and
Novolipetsk Iron and steel Corporation. These requests
were made on the grounds that the exporting producers
concerned would now fulfil these requirements and that
their dumping margins had consequently decreased
substantially. As a result of these requests for MET the
Commission decided to initiate specific interim reviews
in accordance with Article 11(3) of the basic Regulation,
limited in scope to the investigation of dumping of these
exporting producers. Therefore, it is considered appro-
priate to only decide on the results of the expiry review
(which was initiated on 20 February 2001) at this stage.
The interim review limited to the form of the measures
on the other hand will be concluded together with the
MET reviews, thereby taking into account the current
economic circumstances of the exporters.

2. Requests for reviews

3. Present investigation

Following the publication of a notice of the impending
expiry of the anti-dumping measures in force on imports
of GOES originating in Russia (5),
the Commission
received a request to review the measures pursuant to
Article 11(2) of the basic Decision.

The request was lodged by the European Confederation
of Iron and Steel Industries (Eurofer) (the applicant) on
behalf of producers representing a major proportion of

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

(EC) No 2238/2000 (OJ L 257, 11.10.2000, p. 2).

(2) OJ L 42, 20.2.1996, p. 7.
(3) OJ L 149, 7.6.2002, p. 3. Regulation as last amended by Regulation

(EC) No 1310/2002 (OJ L 192, 20.7.2002, p. 9).

(4) OJ L 308, 29.11.1996, p. 11.
(5) OJ C 216, 28.7.2000, p. 2.

(a) Procedure

(7)

The Commission officially advised the Community
producers requesting the review, the exporting produ-
cers, the importers, the suppliers and the users known to
be concerned, as well as the representatives of
the
exporting country, of the initiation, and gave interested
parties the opportunity to make their views known in
writing and to request a hearing within the time limits
set out in the notice of initiation.

(6) OJ C 53, 20.2.2001, p. 13.
(7) OJ C 53, 20.2.2001, p. 13.

(1)

(2)

(3)

(4)

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(b) Interested parties and verification visits

— Société Nouvelle Transfix SA, Toulon, France

(8)

(9)

Japan,

The Commission sent questionnaires
to the parties
known to be concerned and to all known producers of
the product concerned in Brazil, the Czech Republic,
the Republic of Korea, Poland and the
India,
United States of America, these countries being consid-
ered as potential analogue countries in the present inves-
tigation. The Commission received replies from the four
Community producers, requesting the review, the two
exporting producers in Russia, one supplier and from 10
user companies in the Community. Additionally, two
Community importers both related to one of the Russian
exporting producers
replied to the questionnaires.
Finally, one producer of GOES in Brazil replied to the
questionnaire.

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

Community producers requesting the review:

— Acciai Speciali Terni SpA, Terni, Italy

— EBG Gesellschaft für elektromagnetische Werkstoffe

mbH, Gelsenkirchen, Germany

— Orb Electrical Steels Limited, Newport, United

Kingdom

— Ugo SA, Isbergues, France

Supplier:

— Thyssen Krupp Stahl AG, Duisburg, Germany

Users:

— Alstom T & D SA, Saint-Ouen, France

— Blum GmbH, Vaihingen, Germany

Exporting producers in Russia:

— Novolipetsk Iron and Steel Corporation (NLMK),

Lipetsk

— VIZ STAL, Ekaterinburg

Other cooperating company, situated in a third country:

— Duferco Investment SA, Lugano, Switzerland (Import

coordinator within Duferco Group)

Analogue country producer:

— South Wales Transformers Limited, Blackwood,

United Kingdom

— Surahammars Bruks AB, Surahammar, Sweden.

(11) All parties concerned were informed of the essential
facts and considerations on the basis of which it was
intended to recommend the maintenance of
the
measures. They were also granted a period within which
to make representations subsequent to these disclosures.
The comments of the parties were considered and, where
appropriate,
the findings have been modified accord-
ingly.

(c) Investigation period

(12)

The investigation into the continuation and/or recur-
rence of dumping and injury covered the period from 1
January 2000 to 31 December 2000 (IP). The examina-
tion of the trends relevant for the assessment of likeli-
hood of a continuation and/or recurrence of
injury
covered the period from 1997 to the end of the IP
(analysis period).

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. Product concerned

(13)

(14)

The product concerned is the same as in the original
investigation,
i.e. grain oriented cold-rolled sheets and
strips of silicon-electrical steel with a width of more than
500 mm originating in Russia, falling within CN codes
7225 11 00 and 7226 11 10. This product is used for
electromagnetic appliances and in installations such as
power and distribution transformers.

In the rather complex manufacturing process of GOES,
grain structures are orientated uniformly in the direction
of the rolling of the sheet or of the strip in order to
allow it to conduct a magnetic field with a high degree
of efficiency. The product in question has to comply
with specifications concerning the magnetic induction,
the pile factor as well as the highest admissible level of
re-magnetisation losses.
In general, both sides of the
product are covered with a thin isolating coating.

— ACESITA SA, Sao Paulo and Timoteo, Brazil.

2. Like product

(10)

The following companies also cooperated with the inves-
tigation but were not visited:

Users:

— Alstom T & D SA, Le Petit Quevilly, France

— Brush Transformers Limited, Loughborough, United

Kingdom

— Cogent Power Ltd, Bilston, United Kingdom

— France Transfo SA, Maizières-les-Metz, France

— Hawker

Siddeley

Power Transformers

Limited,

London, United Kingdom

(15) GOES produced and sold in the Community by the
Community producers requesting the review and GOES
produced in Russia and sold in the Community by the
exporting producers are considered to be like products,
within the meaning of Article 1(4) of the basic Regula-
tion. It was also established that GOES produced and
sold domestically in the market economy third country
(the analogue country), i.e. Brazil (see recitals 20 to 28),
had the same basic physical and technical characteristics
as GOES produced in Russia and exported to the
Community. Therefore, they were considered to be like
products within the meaning of Article 1(4) of the basic
Regulation.

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C. LIKELIHOOD OF CONTINUATION OF DUMPING

(24)

1. Preliminary remarks

(16) According to Article 11(2) of the basic Regulation, the
purpose of an expiry review is to determine whether
dumping prevailed during the IP and whether the expiry
of the measures is likely to lead to a continuation or
recurrence of dumping.

(17)

In this regard, the volumes exported to the Community
during the present IP were examined. During the original
IP, the share of Russian GOES exports on the Commu-
the Community
nity market amounted to 7,4 % of
consumption, while the market share of Russian imports
of GOES in the Community during the present IP was
2,2 %. This is, however, still significant, i.e. above the de
minimis threshold defined in Article 5(7) of the basic
Regulation.

(18)

The level of cooperation in the present proceeding was
high. Both known Russian exporting producers coop-
erated and replied to the Commission questionnaire. The
replies of both companies were verified on-the-spot.

(19)

(20)

2. Likelihood of continuation of dumping

it was

In the context of the likelihood of a continuation of
dumping,
investigated whether dumping of
exports from Russia was currently taking place. This was
on the grounds that, if dumping was taking place now,
this could be an important
indication that dumping
would be likely to continue and increase in the future,
should the measures be allowed to expire.

(a) Analogue country

The dumping margin calculated in the original investiga-
tion resulted in a single countrywide margin concerning
all imports into the Community of GOES originating in
Russia. In accordance with Article 11(9) of the basic
Regulation, the same methodology was employed as in
the original investigation. Accordingly, normal value was
determined on the basis of information obtained in an
appropriate analogue country selected in accordance
with Article 2(7) of the basic Regulation.

(27)

(21)

Brazil was selected as an appropriate analogue country
in the original investigation. As indicated in the notice
of initiation, the Commission envisaged to use Brazil as
an appropriate analogue country also in the present
investigation.

(22) One exporting producer objected to the choice of Brazil,
arguing that the domestic market of GOES of the Czech
Republic or Poland would be more similar
to the
Russian market.

The Commission, as mentioned in recital 8, sent ques-
to all producers known to produce the
tionnaires
product concerned in other third countries,
including
the Czech Republic and Poland. These producers were
invited to cooperate in the present proceeding and to
provide information on production and domestic sales
of GOES. However, none of these producers were willing
to provide such information and to cooperate in the
present investigation.

(25)

Therefore, it should be noted that, although the investi-
gation confirmed the existence of only one producer of
GOES in Brazil, no cooperation at all was received from
other producers in any other potential analogue country.
Therefore, the information provided by the producer in
Brazil was considered the best and most reliable one
which was available for the purpose of determining
normal value.

(26) Alternatively,

the first mentioned exporting producer
argued that in case of non-cooperation in both proposed
countries, the Czech Republic and Poland, export prices
of the product concerned from these countries to the
Community should be used to establish the normal value
in accordance with Article 2(7) of the basic Regulation.
However, due to the non-cooperation, export prices
would have to be based on Eurostat data instead of
actual and verified figures. In this regard, it was consid-
ered that the use of Eurostat data would result in less
accurate findings, due to the fact that export prices are
recorded on a general basis without making any distinc-
tion between differences having an influence on the
export price, such as different product qualities or level
of trade. Since the producer in Brazil cooperated in the
present proceeding it was considered more appropriate
to use actual, verified data of
this producer, which
resulted therefore in more precise findings. Accordingly,
the use of either Czech Republic or Poland had to be
rejected.

Indeed,

in Russia.

the production process

Furthermore, it was found that the production volume
and production process in Brazil were comparable to the
ones
is
virtually the same worldwide. As mentioned in recital
it was also established that the product produced
15,
and sold on the domestic market in Brazil was a like
product to GOES produced in Russia and exported to
the Community. Furthermore, domestic sales of GOES
on the Brazilian market were representative as compared
to the Russian exports to the Community. Brazil was
also used as an analogue country in the original investi-
gation.

(23)

The other exporting producer opposed to the choice of
Brazil, arguing that because of the existence of only one
producer of the product concerned in Brazil the level of
competition on that domestic market was low.

(28)

Consequently, the Commission had no reason to believe
that the choice of Brazil was not appropriate. Consid-
ering the above, and in the absence of any alternatives,
Brazil was selected as the most appropriate analogue
country.

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(b) Normal value

(29)

In accordance with Article 2(1) of the basic Regulation,
it was considered whether domestic sales of GOES in
Brazil could be seen to be made in the ordinary course
of trade by reason of price. For so doing the Commis-
sion examined whether domestic sales were profitable.
For this purpose the full cost of production per unit
during the IP was compared to the average unit sales
price of the IP. It was found that sales were made at a
profit. The investigation also revealed that all sales were
made to independent customers. As a result the prices
paid or payable for GOES by independent customers on
the Brazilian domestic market in the ordinary course of
trade were used to determine the normal value in accor-
dance with Article 2(1) of the basic Regulation.

(c) Export price

(30) During the original investigation three exporters/produ-
cers, of which one was a trader, cooperated. The present
investigation revealed that
the trader had ceased its
the product concerned to the Community
export of
prior to the current IP. Therefore, the export price in the
present investigation was established on the basis of the
information submitted by the remaining two exporting
producers in Russia, which both cooperated.

(31) One of these Russian exporting producers exported the
product concerned to the Community via two indepen-
dent traders, both of which engaged merely in the re-
invoicing to end-users in the Community and other third
countries. For this exporting producer, export prices
were determined on the basis of the prices charged to
the first
the unrelated
traders. Thus, export prices were established on the basis
of the price actually paid or payable for the product
concerned when sold for export to the Community in
accordance with Article 2(8) of the basic Regulation.

independent customers,

i.e.

(32)

(33)

The other Russian exporting producer was largely owned
and controlled by a related holding/trading company in
Switzerland. All exports were made via the Swiss
company to two related importers in the Community,
which resold the product concerned to the final custo-
mers in the Community. Therefore, export prices were
constructed on the basis of resale prices to the first inde-
pendent customer in the Community in accordance with
Article 2(9) of the basic Regulation.

the

related company

Furthermore,
in Switzerland
imported the product concerned into the Community
via its two Community based importing companies. It
carried out the functions of a trader and an adjustment
was made to the export price by deducting a commis-
sion from the export price to take account of the func-
tions performed by it. As far as the two related impor-
ters in the Community are concerned, selling, general

and administrative costs were deducted. In addition, for
each related Community importer involved, a reasonable
profit margin was deducted. Since no unrelated importer
cooperated in the proceedings and in the absence of any
other more reliable information, a profit margin of 5 %
was considered reasonable.

(34) During the original
investigation, the above exporting
producer was not
in the
related to any importer
the
Community or in third countries and therefore,
determination of the export price was originally based
on prices actually paid or payable in accordance with
Article 2(8) of the basic Regulation.

(d) Comparison

(35)

(36)

In order to allow a fair comparison between normal
value and export price, account was taken of differences
in factors, which were found to affect prices and price
comparability in accordance with Article 2(10) of the
basic Regulation.

In this regard, it was found that the GOES produced and
sold in Brazil had slightly different features with regard
to thickness and the maximum core loss under certain
specific electrical conditions. Therefore, adjustments for
slight physical differences between GOES sold on the
Brazilian domestic market and those exported from
In addition,
Russia into the Community were made.
adjustments relating to export duties and, in case of the
unrelated Russian exporting producer, also to credit
costs, were made as they affected the export prices
assessed for the exporting producers.

(e) Dumping margin

(37) A comparison was made between the weighted average
normal value and the weighted average export price on
an ex-works basis. The comparison showed that exports
from Russia of GOES to the Community have been
dumped at a substantial margin during the IP. The
dumping margin was equal to the amount by which the
normal value exceeded the prices for exports to the
Community. The single countrywide weighted average
dumping margin exceeded 80 % and was thus even
slightly higher than the dumping margin found during
the original investigation.

3. Development of imports should measures expire

(38)

It was also examined how imports of GOES from Russia
would develop should the measures expire. For that
purpose the exports to the Community and third coun-
tries as well as on the domestic market were examined.
Consideration was also given to the price behaviour of
the Russian exporting producers on the different
markets.

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(a) Evolution of export volume and prices to the Community

i.e.

export

quantities of

(39) As mentioned above in recital 1, an undertaking offered
by the Russian exporting producers in the original inves-
tigation had been accepted by the Commission. The
undertaking consisted mainly in an annual quantitative
limitation,
the product
concerned after imposition of the definitive measures
were limited to a ceiling fixed in the undertaking. In
spite of
that export
volumes remained stable, they nevertheless continued to
be made at dumped prices. There was therefore no
reason to believe that, in case the measures in force were
repealed, prices would increase to non-dumped levels.
On the contrary, without the limitation of the quota,
import volumes
into the Community are likely to
increase significantly, which would very likely lead to
further downwards price pressure.

the undertaking, and the fact

easily further increase their production volume to a level
exceeding that which the domestic market or other
potential third markets could absorb.
In fact, and as
mentioned below in recital 82, the capacity installed
during the IP reached a level sufficient to meet the entire
demand of GOES in the Community. It is therefore not
unreasonable to conclude that export volumes would
increase in future,
to the Community,
in particular
should access to the market be free due to the expiry of
the current measures.

(42) As mentioned below in recital 83, the Russian GOES
producers have a well developed selling organisation in
the European Community, which facilitates the selling
and distribution of
the product concerned in the
Community market.

(43) Accordingly, due to the anticipated increasing volume of
imports into the Community in the absence of measures
and hence of available supply,
it can reasonably be
expected that prices will
follow a further downward
trend, if the measures are allowed to lapse.

(b) Evolution of sales volume and prices on the domestic

market and on markets of third countries

4. Conclusion on the likelihood of a continuation of

dumping

(40)

(41)

It was found that a major part of the exports are likely
to be directed to the Community for reasons of the
different price levels in the respective markets. Further-
more, it was found that access to a number of potential
export markets is restricted due to the existence of
considerably high custom tariffs. Despite these restric-
tions, exports to third countries exceeded those to the
Community and domestic sales during IP. In addition,
the recent appreciation of the euro makes exports to the
Community more attractive than those to third coun-
tries. All these factors indicate that any increased export
volumes would be likely to be directed to the Commu-
nity market should measures under investigation be
repealed.

Sales on the Russian domestic market and exports to
third countries have increased since 1997, while exports
to the Community decreased after the imposition of the
anti-dumping measures and stayed relatively stable at a
very low level due to the undertaking. Demand on the
Russian domestic market, though risen since 1997, has
always been far too weak to absorb the output volumes
of the Russian exporting producers. The total volume of
Russian domestic sales has always been clearly below the
total export volume (to all countries). As mentioned
below in recital 82, Russian producers increased their
production capacities during the analysis period, which
lead to significant spare capacities and accumulated
stocks during the current investigation period. A major
part of the available stocks is likely to be exported to the
Community, should measures lapse. Furthermore, and
given the high spare capacities, Russian producers could

(44)

Imports of Russian GOES during the IP were still
dumped, despite the measures imposed. It was estab-
lished that dumping continued and that there is a strong
likelihood that it would also continue should measures
be allowed to lapse. Moreover, exports of Russian GOES
to the Community are likely to increase significantly and
in all
prices of these additional
likelihood be dumped at significant levels, should the
anti-dumping measures lapse.

import quantities will

D. COMMUNITY INDUSTRY

(45)

The four Community producers that cooperated in the
the Community
investigation represented 100 % of
production of GOES during the IP. Therefore,
they
constitute the Community industry within the meaning
of Article 4(1) and Article 5(4) of the basic Regulation.

E. SITUATION OF THE COMMUNITY INDUSTRY

1. Community consumption

(46)

Community consumption was calculated on the basis of
the cumulated volume of sales on the Community
market by the Community industry and of total import
reported by Eurostat or by cooperating
volumes
exporting Russian producers.

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(47) On this basis, Community consumption expressed in tonnes increased by 5 % between 1997 and
1999, from around 186 000 to 195 500 respectively. It then dropped by 4,9 % to reach around
186 000 in the IP. Detailed data are as follows.

Consumption

1997

1998

1999

2000 (IP)

in tonnes

indexed

186 087

183 648

195 601

186 220

100

99

105

100

2. Imports from Russia

Volume of imports

(48) On the basis of the information from Eurostat and submitted by cooperating exporting producers,
the import volumes from Russia varied between around 3 750 tonnes and 6 701 tonnes during the
analysis period. Detailed import data are as follows.

Volume

in tonnes

indexed

1997

5 238

100

1998

6 701

128

1999

5 899

113

2000 (IP)

3 750

72

Market share of imports

(49)

The market share of imports from Russia was in the region of 2 % to 3,6 % during the analysis
period.

Quality improvement of Russian products and pricing behaviour of Russian exporters

(50)

In the original investigation, GOES from Russia were sold in substantial quantities as second choice
material on the Community market, due to quality deficiencies. This led the Commission to grant
price adjustments when assessing price undercutting and injury elimination margin. As a conse-
quence of the investments made by Russian producers to improve their facilities, the GOES now
imported from Russia is first quality material in the vast majority of cases.

(51) On the basis of Eurostat figures, prices of imports, expressed in EUR/tonne, decreased sharply from
954 in 1997 to 862 in 1998 and 741 in 1999, a drop of more than 200 EUR/tonne in absolute
terms within two years. Then prices partially recovered, reaching 860 in 2000, a level still below, by
around 10 %, that achieved in 1997. Detailed data are as follows:

Unit prices/imports

in EUR/tonne

indexed

1997

954

100

1998

862

90

1999

741

78

2000 (IP)

860

90

(52)

The Commission also compared Russian import prices, as extracted from the replies to the question-
naires (cif basis) to the prices charged by the Community industry for the same product (ex-works
basis). In order to take account of the variety of GOES, the products sold by the Community
industry and imported from Russia were classified into categories, according to the thickness and
the maximum core loss under certain specific electrical conditions. Comparison was then made, in
similar conditions of trade and on a per category basis, between the weighted average selling prices
of both imported products and Community industry products. On this basis, the Russian import
prices were found significantly below those of the Community industry.

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3. Imports from other third countries

(53)

(54)

(55)

(56)

The total import volumes of GOES from all third countries other than Russia decreased during the
analysis period from around 44 300 tonnes in 1997 to around 38 600 tonnes in the IP. Substantial
quantities of these imports either originated in Japan or were classified by Eurostat as ‘declared
under secret origin’. The Commission verified that these secret imports did not originate in Russia.
The remaining imports were mainly originating in Poland or the Czech Republic. Imports from
Poland varied during the analysis period, between a minimum of around 1 600 tonnes in 1999 and
a maximum of around 4 800 tonnes in the IP. Imports from the Czech Republic sharply decreased
all over the analysis period from around 7 000 tonnes in 1997 to less than 2 000 tonnes in the IP.

In the IP, the market share of imports from third countries other than Russia amounted to 20,7 %;
Japan, 11,2 %; Poland, 2,6 % and the Czech Republic, 1,1 %. Market share of imports under secret
origin reached 4,7 % in the IP.

Prices of imports from Japan and of imports ‘declared under secret origin’ as well as imports from
other sources were substantially higher than those of the Community industry.

Following a trend similar to that observed for prices of the Community industry on the Community
market (see recital 58), prices of imports from Poland decreased between 1997 and 1999 and then
slightly increased in the IP, to reach a level still below that achieved in 1997. These prices were
slightly below those of the Community industry but significantly higher than prices of imports from
Russia.

(57)

Prices of imports from the Czech Republic remained more or less stable at a level below those of
the Community industry and of the imports from Poland, but higher than that of imports from
Russia in the same year.

(58) Detailed data on volumes (expressed in tonnes) and on prices (expressed in EUR/tonne) of imports

from third countries other than Russia are as follows:

Other third imports

1997

1998

1999

2000 (IP)

Japan

Volumes

Prices

Secret Area

Volumes

Prices

Poland

Volumes

Prices

Czech Republic

Volumes

Prices

Others

Volumes

Prices

Total

Volumes

Prices

15 357

1 324

18 774

1 386

2 455

1 101

7 038

929

676

1 739

10 730

1 428

19 303

1 471

3 224

1 027

5 540

928

1 718

1 577

15 109

1 362

18 200

1 390

1 588

994

2 724

923

1 800

1 481

20 859

1 348

8 801

1 359

4 863

1 070

1 964

959

2 121

1 484

44 300

1 282

40 515

1 355

39 421

1 335

38 608

1 303

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4. Situation of the Community industry

Restructuring of the Community industry

(59)

(60)

It is recalled that in the original investigation, it was found that between 1990 and the end of the
investigation period (end of April 1994), the Community industry suffered material injury which
consisted mainly of a decline in sales with a resulting loss of market share as well as price depres-
sion. These factors together led to a decline in profits and, overall, financial losses.

Since the current anti-dumping measures were imposed, the Community industry has undergone a
restructuring programme aimed at improving its competitiveness. Following a merger which was
approved by the Commission on 8 October 1999 (1), three of the four Community producers
became part of the Thyssen Krupp Steel group.

Production and stocks

(61)

Production of GOES slightly decreased between 1997 and 1998 and then increased to a level of
around 220 000 tonnes in the IP. This represents an increase of 3 % over the analysis period.
Detailed data are shown below:

Production

1997

1998

1999

2000 (IP)

in tonnes

indexed

212 891

211 655

220 734

220 176

100

99

104

103

(62)

Taking into account the fact that the Community industry generally used a production to order
system which had the effect of minimising stock levels, it is therefore considered that the develop-
ment of the level of stocks is not a relevant factor having a bearing on the state of the Community
industry. Indeed, stocks usually consisted of merchandise which was merely to be delivered to custo-
mers which had already ordered the products.

Capacity

(63) As the production facilities used in the manufacturing of GOES are also used for producing other
products, it was not possible nor meaningful to establish the capacity and utilisation of capacity that
related specifically to the product concerned.

(64) However, the assessment of the total level of capacity for producing both GOES and other products
showed that the Community industry continued to have spare capacity available which would have
allowed it to produce GOES in greater quantities.

Sales

(65)

Sales of GOES on the Community market increased by around 10 % between 1997/1998 and 1999
from a level of around 136 500 tonnes in 1997 and 1998 to around 150 000 tonnes in 1999. They
fell sharply by about 5 % in the IP to less than 144 000 tonnes, in line with Community consump-
tion. Detailed figures are reported below:

Sales

1997

1998

1999

2000 (IP)

in tonnes

indexed

136 549

136 432

150 281

143 862

100

100

110

105

(1) See website DG COMP (http://europa.eu.int/comm/competition/mergers/cases).

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Market share

(66)

Community industry market share rose by 3,4 percentage points from 73,4 % in 1997 to 76,8 % in
1999 before increasing slightly again to 77,3 % in the IP, an additional gain of 0,5 percentage point
in that year. Detailed data are reported below:

Market share

1997

73,4

100

1998

74,3

101

1999

76,8

105

2000 (IP)

77,3

105

in %

indexed

Prices

(67)

Community industry prices on the Community market developed as follows:

Unit prices

in EUR/tonne

indexed

1997

1 140

100

1998

1 122

98

1999

1 044

92

2000 (IP)

1 089

96

(68)

(69)

(70)

Prices of GOES in the Community decreased by around 8 % between 1997 and 1999 from a level
of 1 140 EUR/tonne in 1997 to 1 044 EUR/tonne in 1999, an overall loss of around 100 EUR/
tonne in absolute terms in only two years. This decrease has to be seen in the light of the overall
instability of the world steel market, which resulted in a general fall in prices of steel products in the
years 1998/1999. However, taking account of the fact that the prices of Russian imports were the
lowest during the analysis period (see recitals 51 and 58), it is clear that the prices of Russian
imports also exerted a negative pressure on the prices of the Community industry in this period.

Profitability

The overall profitability of
decreased in the analysis period, as shown below:

the Community industry for its sales on the Community market

Profitability

in %

1997

2,6

1998

4,3

1999

1,7

2000 (IP)

1,8

Taking into account the degree of sophistication of the manufacturing process which is necessary to
produce GOES, a level of 8 % of profit was found reasonable for this industry to maintain its viabi-
lity. The level attained in 1997 cannot be considered representative as in that year it was mainly
influenced by the high financial losses registered by one Community producer which experienced
difficulties with its supply of raw materials. In the same year, the other Community producers all
registered profits of the satisfactory level of around 8 % on average. With regard to development of
profitability and its decline from 1998 to the IP, reference is also made to the explanation provided
in recitals 77 and 80.

Cash flow, ability to raise capital and wages

(71)

Figures for cash flow and wages developed as follows:

Cash flow

Wages

1997

n.r.

1997

100

1998

100

1998

98

1999

80

1999

94

2000 (IP)

103

2000 (IP)

103

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No specific problems were encountered as regards ability to raise capital during the analysis period.
It should also be recalled that three of the Community producers belong to a larger group.

Investments and return on investments

(72)

To accompany the strong restructuring programme undertaken, the Community industry made
significant investments in order to rationalise production and sales.

Return on investment (%)

1997

n.r.

1998

12,2

1999

4,0

2000 (IP)

3,6

Productivity and employment

(73) Detailed data on productivity and employment were as follows:

Index 1997 = 100

Productivity

Number of employees

1997

100

100

1998

106

94

1999

115

90

2000 (IP)

115

90

(74) Due to the major restructuring efforts undergone by the Community industry after the imposition
of the anti-dumping measures currently under review, productivity improved during the analysis
period by 15 % overall.

(75)

Restructuring also led to a reduction by 10 % in the number of employees over the same period.

Export activity of the Community industry

(76)

The Community industry was very active on third country markets, exporting around one third of
its production of GOES. This shows that this industry is well established and able to meet competi-
tion on a global basis. Confronted to the international steel crisis, its exports decreased by 7 % from
around 78 000 tonnes in 1997 to around 73 000 tonnes in 1999 and then increased to around
76 000 tonnes in the IP. Detailed data on export volumes of the Community industry were as
follows:

Export

Volumes in tonnes

indexed

1997

78 209

100

1998

73 774

94

1999

72 961

93

2000 (IP)

76 345

98

Magnitude of dumping and recovery from past dumping

(77) As concerns the impact on the situation of the Community industry of the magnitude of the actual
margin of dumping found during the IP, it should be noted that the margin found for Russia is
higher than that found in the original IP (see recital 37). The situation of the Community industry
improved to a certain extent after the imposition of measures, but it has not completely recovered.
Therefore, should measures be repealed, the impact of the dumping margin found in the current
investigation would be significant.

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Growth

(78)

It is recalled that Community consumption increased by
5 % between 1997 and 1999 and then dropped by
4,9 % in the IP, going back to a level close to that
achieved in 1997.

The sales volume of the Community industry followed a
similar trend in this period, the decline between 1999
and 2000 being however less marked than the decrease
in consumption in these years.

(79)

(80)

5. Conclusion on the situation of the Community

industry

the introduction of

In terms of volumes,
the anti-
dumping measures on imports of the product concerned
from Russia enabled an improvement in the economic
situation of the Community industry between 1997 and
1999. This allowed the Community industry to improve
its production by 3,7 % and its sales to the Community
market by 10 %. It also improved its market share by
3,4 percentage points in the same period. However, this
trend reversed in the IP (production – 0,3 %, deliveries to
the Community – 4,3 % percentage points) while
consumption decreased by 4,9 % in the same time (see
recital 47).

The financial situation of the Community industry initi-
ally improved after the imposition of
the measures.
However, in the wake of the general instability experi-
enced by the world steel market, the Community indus-
try's prices, which were also subject to the downward
pressure of prices of imports from Russia, decreased by
around 8 % between 1997 and 1998. Despite the signifi-
cant restructuring efforts undertaken by the Community
producers, their substantial gains in productivity as well
as their improved situation in terms of sales volumes,
the drop in prices resulted, from 1998 to the IP, in a
steady decline in the profitability of the Community
industry.

(81)

It is therefore concluded that despite the improvement
observed subsequent to the imposition of anti-dumping
measures, the Community industry is still in a weakened
situation.

their domestic market or other potential third markets
could absorb. Indeed, the level of capacity now reached
would be sufficient to meet the entire demand of GOES
in the Community. As already pointed out in recital 40,
Russian GOES producers have significant spare capacity
available which they could use to supply export markets.
Indeed,
additional volumes were directed
towards the Community market, they could very well go
beyond the significant levels found in the original inves-
tigation.

these

if

(83)

Since 1994, the Russian GOES producers have devel-
oped their selling organisation in the European Commu-
nity. For instance, one of the exporting producers has
now its own related selling organisation in the Commu-
nity. Taking account of the investments made for that
purpose,
is therefore clear that Russian producers
intend to develop their sales on the EU market.

it

(84) As in the IP, the Russian producers are still selling GOES
on the Community market at prices substantially below
those of the Community producers, such a price beha-
increased
viour combined with their capacity to sell
quantities would likely result in price depression on the
Community market, as found in the original investiga-
tion, if the measures in force were allowed to lapse.

It

(85) As shown in recitals 59 to 81, the Community industry
is still in a precarious situation, in particular as regards
its profitability.
the Community
is likely that
industry was exposed to increased volumes of imports
from Russia at dumped prices this would result in a
deterioration of its financial situation as found in the
original
is therefore
concluded, that the repeal of the measures would in all
likelihood result in the continuation, and/or recurrence
of injury to the Community industry.

investigation. On this basis,

it

if

G. COMMUNITY INTEREST

1. Introduction

(86)

In accordance with Article 21 of the basic Regulation, it
was examined whether a prolongation of
the anti-
dumping measures in force would be against the inter-
ests of the Community as a whole.

F. LIKELIHOOD OF CONTINUATION AND/OR RECUR-

RENCE OF INJURY

(82)

Bearing in mind that GOES production facilities can also
be used to manufacture other products (see recital 63), it
was not meaningful to accurately assess the production
capacity for the Russian exporters in relation only to the
product concerned. Nevertheless, as referred to in recital
41, the GOES producers in Russia have increased their
total available capacity (destined both to the product
concerned and to other products)by around 10 % in the
analysis period. The level attained now far exceeds what

This analysis was based on an appreciation of all the
various interests involved, i.e. those of the Community
industry, of its suppliers of raw materials, of the impor-
ters and of the users of the product concerned. For the
purpose of
the Commission requested
information from all identified interested parties.

this analysis,

(87)

It should also be noted that, in the context of an expiry
review, the scrutiny of a situation in which anti-dumping
measures have been in place allows assessment of any
negative, undue impact of the anti-dumping measures in
force on the parties concerned.

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2. Interests of the Community industry

(88) As shown in the analysis of its situation above, the
Community industry was able at the beginning of the
analysis period to improve its situation and to restore, in
particular, a satisfactory level of profitability. This shows
that
this industry is capable of benefiting from the
protection offered by anti-dumping measures against
unfair trade practices.

(89)

(90)

The Community industry has also shown its willingness
and resolution to consolidate its competitive presence
both on the Community market and worldwide. Since
the original investigation, the industry has undergone a
major restructuring programme and it is now controlled
by two independent financial groups in order to centra-
lise and secure the sourcing of the GOES raw material
with Thyssen Krupp Group and to pool investment in
higher technical grades and performance improvement
(core loss reduction). Indeed, the merging of three of the
complainants under the same holding company was
intended to create a larger entity which could compete
more effectively with other GOES producers (around 11)
on the world market.

It is clear that the Community industry was still in a
vulnerable situation during the analysis period and that
it needed to maintain an adequate volume of production
and of deliveries both on its domestic market and on
export markets to keep the charge of its fixed costs at a
sustainable level and to remain competitive.
In other
words,
efforts undertaken by the Community
industry both to rationalise its production and to
restructure would be wasted if renewed and increased
dumping would prevent it to reach a sufficient sales
volume.

the

(91)

In conclusion, taking into account the current viability
of the Community industry and its strong efforts to
remain competitive both at European and world level it
is considered that
if measures lapse the Community
industry's situation would be jeopardised by a subse-
quent expected increase in imports of GOES from
Russia.

3. Interests of the upstream industries

(92) Only one supplier replied to the Commission's question-
naire. This company, which belongs to the same holding
company as the three Community producers mentioned
above (see recital 60), produces different qualities of steel
and in particular the raw material necessary for manu-
facturing GOES. It is now the only remaining important

this quality of

in the European
producer of
Community as the other large steel groups have aban-
doned its production.

steel

This company has made substantial investments in order
to rationalise and develop production of silicon electrical
steel. This investment occurred at the same time as the
merger mentioned above (see recital 60). It can be seen
as part of
the group overall efforts to improve its
competitive position.

From the above, it is clear that this supplier of silicon-
electrical steel is closely dependent on the situation of
the Community industry. Moreover, as it is difficult to
shift from the production of silicon-electrical steel to the
production of other qualities of steel without incurring
significant costs, any reduction in the production of
GOES would lead to a knock-on effect on employment.

(93)

It is therefore concluded that it is also in the interests of
the suppliers that the measures remain in force.

4. Interest of importers of GOES

(94) No independent importer cooperated in this investiga-
tion. On the basis of information available, it is to be
noted that the product concerned, which is in general
imported by specialised steel
importers/traders, repre-
sents only a small part in the diverse range of the steel
products they handle.
the
continuation of anti-dumping measures would have no
more than a minimal impact, if any, on the overall situa-
tion of the importers/traders in question.

is thus considered that

It

5. Interests of the user industries

(95) Around 40 users of GOES received a questionnaire

tailored to their activity.

Nine responses were received by the Commission,
covering less than 20 % of the total consumption of
GOES in the Community.

(96)

The downstream industry can be divided in two main
sectors:

— the first cuts GOES according to pre-defined shapes
and assembles these pieces to manufacture trans-
former cores which are then resold to transformer
producers for further processing,

— the other produces transformers. This industry either
utilises the cores manufactured by the companies
mentioned above or manufactures the cores them-
selves before manufacturing the transformers.

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(97)

(98)

(99)

The sector of manufacturers of transformer cores devel-
oped recently. There are few operators and only one
company, related to one of the complainants, cooperated
in the investigation. Although GOES are the most signif-
icant item in cost terms in the manufacture of trans-
former cores, there is no indication that this sector is
subject to specific pressures aimed at reducing its prices.
In fact,
these operators who supply the transformer
manufacturers are closely dependent on the prices that
final
transformer manufacturers
products.

can get

their

for

By contrast, the sector of transformer manufacturers is a
long-established industry which traditionally supplies the
large energy producers. This transformer industry in
general, belongs to large industrial groups, which have a
worldwide presence. Some of them have set up single
purchasing organisations which concentrate all orders
for the group in order to improve their negotiating posi-
tion towards producers of GOES. There are also some
smaller groups or companies.

appeared to be almost stable. It therefore appears that
the existing anti-dumping measures did not erode the
competitiveness of this industry.

(101)

In addition, the fact that the Thyssen Krupp group was
both the sole producer of silicon electrical steel in the
Community and owner of three of the four Community
producers of GOES was also criticised.

The specific situation of the Thyssen Krupp group has
been analysed in detail by the Commission with regard
to provisions of the ECSC Treaty concerning competi-
tion (see recital 60 and recital 89). No new or further
information was made available during the investigation
which would indicate that the competitive situation had
changed since the abovementioned examination by the
also
Commission. Therefore,
unfounded.

criticisms

these

are

(102) On the basis of the above, it appears that the situation
of the users is not significantly affected by the measures.
There is in addition no indication that their continuation
will have a different impact in the future.

(103)

(104)

GOES represent a substantial item in the total cost of
the final products of this industry (from 10 % to 30 %
depending on the type of
transformer). The main
concern expressed by this industry was to operate in a
fair competitive market, which allowed it to produce
and sell quality products.

In this respect, certain users of GOES alleged that they
had been confronted in the IP by a shortage of supply
from the part of certain Community producers due to a
perceived lack of available capacity. Others argued that
it was not possible to import GOES from other sources.
However, they did not submit any evidence supporting
these allegations. In any event, this is in clear contradic-
tion with the findings of
investigation.
Indeed, as set out at recital 64, the Community industry
had available capacities in the analysis period, allowing
it to produce higher quantities of GOES. In addition, it
was also possible to import GOES from other sources
such as Poland and the Czech Republic (see recital 58).
These allegations are therefore unfounded.

the current

If measures were to be repealed the situation of the
Community industry risks to be weakened further by a
continuation/recurrence of dumped imports. Indeed, as
noted at recital 92 above and taking account the specific
nature and the complexity of GOES manufacturing, the
number of available sources of supply of GOES is rather
limited at world level. Should the Community industry
decrease its activity, this would make users of GOES
progressively more dependent on imported materials.

In this regard, it should also be noted that the product
concerned can be considered as a strategic product for
the user industries. In fact, GOES is a unique product
in the majority of its applications, be
which cannot,
substituted by any alternative material.
the
complicated manufacturing process makes grain oriented
steel significantly different from most other steel grades.
GOES are used mainly in the manufacture of power and
distribution transformers. It is therefore a key element in
a strategic sector underpinning the energy distribution
the
infrastructure.
European user industries that the sources of supply in
the Community are not further weakened by a continua-
tion or recurrence of dumped imports.

is therefore in the interest of

Indeed,

It

(100) As regards the competitive situation on the Community
market of GOES, some users argued that the continua-
tion of measures, by limiting exports from Russia, would
maintain GOES prices artificially high. This would
hamper their own competitiveness on the Community
market. However, on the basis of Eurostat figures, the
volume of imports from third countries appeared to be
rather limited so that the market share of European users
did not deteriorate nor did their volume of export sales
go down. Average prices of imported transformers also

6. Conclusion

(105) Taking account of the above facts and considerations, it
is concluded that the prolongation of the measures is
not against the interest of the Community as a whole.

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H. FORM OF THE MEASURES

HAS ADOPTED THIS REGULATION:

(106) The present investigation was limited to Article 11(2) of
the basic Decision (1). As mentioned above (see recital 6),
the investigations in the framework of Article 11(3) on
the appropriateness of the form of the measures and the
MET status will be continued.
is
recalled that by Commission Decision No 303/96/ECSC
of 19 February 1996 the Commission accepted an
undertaking which should be maintained pending the
outcome of the reviews under Article 11(3).

In this context,

it

I. ANTI-DUMPING MEASURES

(107) All parties concerned were informed of the essential
facts on the basis of which it is intended to recommend
the maintenance of existing measures in their present
form. They were also granted a period to make represen-
tations subsequent to this disclosure. No new arguments
were received.

(108)

the basic Regulation,

It follows from the above that, as provided for by Article
anti-dumping
11(2) of
measures applicable to imports of GOES originating in
Russia, imposed by Decision No 303/96/ECSC, should
be maintained,

the

Article 1

1.
A definitive anti-dumping duty is hereby imposed on
imports of grain oriented cold-rolled sheets and strips of
silicon-electrical steel with a width of more than 500 mm
originating in Russia and falling within CN codes 7225 11 00
(sheets of a width of 600 mm or more) and 7226 11 10
(sheets of a width of more than 500 mm but
less than
600 mm).

The rate of the definitive anti-dumping duty shall be
free-at-Community frontier price, before

2.
40,1 % of the net,
duty (TARIC additional code 8877).

Unless otherwise

3.
concerning customs duty shall apply.

specified,

the provisions

in force

Article 2

Notwithstanding Article 1, the duty shall not apply to imports
of the products concerned exported and invoiced direct to
buyers in the Community by the following companies (both
under TARIC additional code 8878):

— Novolipetsk Iron and Steel Corporation (NLMK), Lipetsk,

— Viz Stal, Ekaterinburg.

Article 3

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

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

Done at Brussels, 27 January 2003.

For the Council

The President

G. PAPANDREOU

(1) Replaced by the basic Regulation (Regulation (EC) No 384/96 of 22

December 1995) after expiry ECSC Treaty.