Proposal for a Council Regulation imposing a definitive anti-dumping duty on imports of Rubber Grade Carbon Black originating in Egypt and Russia
Date: 2003-02-19
Institutions: European Commission
Subjects: Egypt, Russia, anti-dumping duty, chemical product, import, originating product, rubber industry

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 19.02.2003
COM(2003) 80 final

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of Rubber Grade Carbon Black
originating in Egypt and Russia

(presented by the Commission)

EXPLANATORY MEMORANDUM

On 21 December 2001, the Commission opened an anti-dumping investigation with regard to
imports into the Community of rubber-grade carbon blacks originating in Egypt and Russia.

The  investigation  revealed  the  existence  of  injurious  dumping.  Given  the  need  to  further
examine  certain  aspects  of  causation  and  Community  interest,  no  provisional  anti-dumping
measures were imposed on rubber-grade carbon blacks originating in Egypt and Russia.

The  attached  proposal  for  a  Council  Regulation  is  based  on  the  definitive  findings  which
confirmed the existence of dumping and injury, and reached the conclusion that a causal link
existed between dumping and injury. The examination of all interests involved, in particular
that of the Community industry, of unrelated importers and of users, led to the conclusion that
it is not against the Community interest to take definitive measures.

It is therefore proposed that the Council adopt the attached proposal for a Regulation which
should be published in the Official Journal no later than 20 March 2003.

2

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of Rubber Grade Carbon Black
originating in Egypt and Russia

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having  regard  to  Council  Regulation  (EC)  No  384/96  of  22  December  19951  on  protection
against  dumped  imports  from  countries  not  members  of  the  European  Community,  and  in
particular Article 11(2) and (3) thereof,

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

Whereas:

1.

PROCEDURE

1.1.

Initiation

(1)

(2)

(3)

1

2

3

On 21 December 2001 the Commission announced by a notice (‘notice of initiation’)
published  in  the  Official  Journal  of  the  European  Communities  the  initiation  of  an
anti-dumping proceeding with regard to imports into the Community of rubber-grade
carbon blacks originating in Egypt and Russia2.

The  proceeding  was  initiated  following  a  complaint  lodged  in  November  2001  by
CEFIC  (European  Chemical  Industry  Council)  (‘the  complainant’)  on  behalf  of
producers  representing  a  major  proportion,  in  this  case  more  than  75%3,  of  the  total
Community production of rubber grade carbon blacks. The complaint contained prima
facie  evidence  of  dumping  of  the  said  product  and  of  material  injury  resulting
therefrom, which was considered sufficient to justify the initiation of an anti-dumping
proceeding.

The Commission officially advised the exporting producers and importers known to be
concerned as well as their associations, the representatives of the exporting countries
concerned, the complainant Community producers and the other Community producer,
as well as the users, of the initiation of the proceeding. Interested parties were given
the opportunity to make their views known in writing and to request a hearing within
the time limits set in the notice of initiation.

OJ L 56, 6.3.1996, p.1, as last amended by Regulation (EC) No 1972/2002, OJ L 305, 7.11.2002, p.1
OJ C 367, 21.12.2001, p.16
For confidentiality reasons a more precise figure cannot be disclosed.

3

                                                
(4)

A number  of exporting producers in  the  countries  concerned,  as  well  as  Community
producers,  Community  users  and  importers  made  their  views  known  in  writing.  All
parties  who  so  requested  within  the  above  time  limits  and  showed  that  there  were
particular reasons why they should be heard were granted the opportunity to be heard.

1.2.

Questionnaires

(5)

(6)

In order to allow exporting producers in Russia to submit a claim for Market Economy
Status (‘MES’)4, or individual treatment if they so wished, the Commission sent to all
Russian  companies  known  to  be  concerned  a  MES  and  individual  treatment  claim
form.  The  Commission  also  sent  questionnaires  to  all  Community  producers,  all
exporters/producers, all importers as well as all users known to be concerned and to all
other parties which made themselves known within the deadlines set out in the notice
of  initiation.  Questionnaires  were  also  sent  to  traders  based  in  countries  outside  the
Community,  when  it  became  clear  that  their  co-operation  would  be  useful  in  the
determination of the actual exports (volume and prices) to the Community.

Replies  were  received  from  three  complainant  Community  producers,  one  non-
complainant  Community  producer,  seven  producers/exporters  in  the  countries
concerned, four traders in non-EU countries, as well as from two importers related and
five  importers  unrelated  to  producers/exporters  in  the  Community.  Finally,  the
Commission  received  claims  for  MES/individual  treatment  from  two  Russian
exporting  producers  and  claims  for  individual  treatment  from  two  other  Russian
producers/exporters of the product concerned.

(7)

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

Community producers:

– 

– 

– 

– 

Cabot Europe Ltd., France;

Columbian Chemicals Europa GmbH, Germany;

Degussa AG, Germany;

Deutsche Gasrusswerke GmbH & Co, Germany.

Unrelated importers in the Community:

– 

– 

– 

CIE s.r.l., Italy;

C.D.M.A. S.A., France;

Lehmann & Voss & Co, Germany.

4

It  should  be  noted  that,  as  the  present  procedure  commenced  before  the  amendment  of  Council
Regulation  (EC)No  384/96  of  22  December  1995  by  Council  Regulation  (EC)  No  1972/2002  of
5th November 2002.

4

                                                
Exporters/producers in Russia:

– 

– 

– 

– 

– 

Omsky Zavod Technicheskogo Ugleroda OJSC, Omsk

Jaroslavsky Technichesky Uglerod OJSC, Jaroslavl

Tuimasytechuglerod OJSC, Tuimasy

Ivanovsky Techuglerod I Resina OJSC, Mikhalevo

Techuglerodexport  CJSC,  Moscow  and  Jejune  Trade  Ltd., 
traders  of
Tuimasytechuglerod  and  Ivanovsky  Techuglerod.  (The  verification  of  Jejune
Trade  Ltd.  took  place  in  Moscow  though  the  company  is  incorporated  in
Cyprus)

Exporter/producer in Egypt:

– 

Alexandria carbon Black Co. S.A.E.(ACB), Alexandria

Importers related to the exporting producer in Egypt:

– 

– 

ACB (UK) Ltd., Wolverhampton, UK

ACB Belgium BVBA, Rumst, Belgium

Traders:

– 

– 

Taurus Carbonpack KFT, Hungary

Carbon Black Ltd., Hungary

Analogue country:

– 

Columbian Tiszai Carbon Ltd., Hungary

Users:

– 

– 

Goodyear Dunlop Tyres Europe B.V., Belgium;

Nokian Tyre plc., Finland;

–  Manufacture Française des Pneumatiques Michelin, France;

– 

– 

– 

– 

– 

Continental AG, Germany;

Bridgestone / Firestone Europe S.A., Belgium;

Pirelli Pneumatici S.p.A., Italy;

Vredestein NV, Netherlands;

Cooper-Avon Tyres Ltd, Cooper Standard Automotive France SA and Cooper
Standard Automotive UK sealing Ltd, UK and France.

5

1.3.

Period of investigation

(8)

The investigation of dumping and injury covered the period from 1 October 2000 to 30
September  2001  (‘the  investigation  period’  or  ‘IP’).  The  examination  of  trends
relevant for the assessment of injury covered the period from 1997 to the end of the IP
(‘period considered’).

1.4.

Customs treatment

(9)

The product concerned enters free of any customs duties in the Community.

1.5.

Provisional measures

(10) Given  the  need  to  further  examine  certain  aspects  of  causation  and  Community
interest, no provisional anti-dumping measures were imposed on rubber-grade carbon
black originating in Egypt and Russia.

1.6.

Subsequent procedure

(11) On  20  September  2002  all  co-operating  parties  were  informed  of  the  Commission’s
preliminary assessment of the case and were in a position to make comments. Where
appropriate, the Commission’s findings have been modified accordingly.

(12)

The  Commission  requested  additional  information  from  virtually  all  co-operating
parties,  and  continued  to  seek  and  verify  all  information  it  deemed  necessary  for  its
definitive findings. In particular, further on-the-spot investigations were carried out at
the premises of two users, in order to complete the visit of all the co-operating users.

(13) All  parties  were  informed  of  the  essential  facts  and  considerations  on  the  basis  of
which it was intended to recommend the imposition of definitive anti-dumping duties.
They  were  also  granted  a  period  within  which  they  could  make  representations
subsequent to this disclosure. The oral and written comments submitted by the parties
were considered, and, where appropriate, the findings have been modified accordingly.

2.

PRODUCT CONCERNED AND LIKE PRODUCT

2.1.

Product concerned

(14)

The product concerned  is  rubber-grade  carbon  blacks,  a  carbon-based  chemical  used
as a functional filler in rubber products due to its reinforcing properties originating in
Egypt and Russia, currently classifiable within CN codes ex 2803 00 10 and ex 2803
00 80.

6

(15)

(16)

(17)

(18)

The  product  concerned  is  manufactured  in  various  grades.  The  investigation
established  that  the  reinforcing  properties  of  rubber-grade  carbon  blacks  may  vary
significantly  from  grade  to  grade.  It  was  found  that  some  -  so  called  “non  active”  -
grades  have  no  reinforcing  properties  at  all,  and  that  they  do  not  act  as  functional
fillers  in  rubber  compounds.  It  was  also  found  that  some  grades,  which  have
reinforcing properties, may sometimes also be used in products other than rubber, as
for  example  ink  or  plastic  products.  It  was  concluded  that  insofar  as  a  grade  has
reinforcing properties and can therefore act as functional filler in rubber compounds it
should be considered as falling within the scope of the product concerned, irrespective
from  its  actual  use.  Therefore,  apart  from  the  above-mentioned  “non-active”  grades,
which have no  reinforcing properties,  all other  grades  of  rubber-grade  carbon  blacks
should  be  considered  as  the  product  concerned  for  the  purpose  of  this  proceeding.
Moreover,  the  various  grades  in  which  the  product  is  manufactured  and  which  have
reinforcing  properties  have  the  same  basic  physical,  chemical  and  technical
characteristics and are therefore considered as a single product.

The investigation showed that three basic elements are at the same time necessary and
sufficient to identify a product as being a rubber-grade carbon black with reinforcing
properties:  the  “specific  surface  area”,  the  “structure”  and  the  "crush  strength  of  the
pellet".  These  elements  may  be  measured  by  following  various  testing  methods.  For
the  purpose  of  this  proceeding,  the  ASTM5  testing  methods  have  been  retained,  as
these  standards  are  the  most  widely  used  at  an  international  level.  After  considering
the submissions made by interested parties, the investigation concluded that the most
appropriate  way  to  determine  whether  a  rubber-grade  carbon  black  has  reinforcing
properties and can therefore be considered as the product concerned for the purposes
of this proceeding, is to refer to the surface area by applying the “Iodine Adsorption”
test  method,  to  refer  to  the  structure  of  the  product  by  applying  the  “Dybuthyl
Phthalate  (DBP)  Absorption”  test  method,  and  to  refer  to  the  crush  strength  of  the
pellet by applying the "Automated Individual Pellet Hardness" test method.

The  Iodine  Adsorption,  the  DBP  Absorption  and  the  Individual  Pellet  Hardness  are
measured following the standard test methods issued by the ASTM. The designations
of these standards are: ASTM D1510-02a for the  Iodine  Adsorption,  ASTM  D2414-
02a  for  the  DBP  Absorption  and  ASTM  D5230-00e1  for  the  Automated  Individual
Pellet Hardness.

It  was  consequently  established  that  all  rubber-grade  carbon  blacks  for  which  the
“Iodine  Adsorption”,  the  “DBP  Absorption”  and  the  "Automated  Individual  Pellet
Hardness" values are not below the minimum thresholds and, in the case of the DPB
absorption  test,  not  above  the  maximum  threshold  of  these  3  standards  have
reinforcing properties and should therefore be considered as product concerned. These
values are as follows:

5

ASTM stands for American Society for Testing and Materials.

7

                                                
Methods

Minimum value

Maximum value

Iodine Adsorption (mg/g)

DBP Absorption (ml/100g)

Individual Pellet Hardness (g)

20

25

15

--

200

--

(19)

Two Russian producers claimed that their products did not fall within the scope of the
proceeding.  The  investigation  showed  that  the  product  exported  by  one  of  these
producers  fell  indeed  outside  the  above-mentioned  values  and  was  therefore
considered  outside  the  scope  of  the  proceeding.  As  for  the  other  producer,  its  claim
had to be rejected since the product fell within the above product definition.

2.2.

Like product

(20)

It is determined that the rubber-grade carbon blacks as defined above manufactured by
the Community producers and sold on the Community market are like products to the
rubber-grade  carbon  blacks  manufactured  in  Egypt  and  Russia  and  exported  to  the
Community, as well as to the products sold on the domestic markets of these countries,
since  there  are  no  differences  in  the  basic  physical,  technical  and  chemical
characteristics  and  uses.  The  same  is  true  with  regard  to  the  rubber-grade  carbon
blacks manufactured and sold for export to the Community as compared to the product
manufactured  and  sold  in  Hungary,  which  was  selected  as  a  market  economy  third
country  for  Russia.  All  these  products  are  therefore  considered  to  be  like  products
within the meaning of Article 1(4) of Council Regulation (EC) No 384/96 (the “basic
Regulation”).

3.

DUMPING

3.1.

EGYPT

3.1.1. Normal value

(21)

(22)

For  the  sole  Egyptian  exporting  producer,  since  its  total  domestic  sales  of  the  like
product  carried  out  during  the  IP  represented  less  than  5%  of  export  sales  to  the
Community,  normal  value  had  to  be  constructed.  In  accordance  with  Article  2(3)  of
the basic Regulation, normal value was constructed by adding a reasonable amount for
SG&A  costs  and  for  profit  to  the  exporter's  cost  of  manufacturing.  As  the  domestic
sales of the product concerned were not representative, and in the absence of any other
appropriate  basis,  for  the  purpose  of  the  determination  of  dumping,  the  reasonable
amount for SG&A and profit was established, in accordance with Article 2(6)(c) of the
basic Regulation, on  the  basis  of  the  data  submitted  by  the  co-operating  producer  in
Hungary, selected as analogue country for Russia.

The  Egyptian  exporting  producer  claimed  that  the  profit  margin  used  by  the
Commission was abnormally high and that the Commission had not verified the profit
normally  realised  by  other  exporters  or  producers  on  sales  of  the  same  general
category in Egypt. As to the level of the profit margin, it should be considered that the
amount added to the exporter's cost of manufacturing did not only account for profit
but also for SG&A and thus represented the gross margin for both items. The amount
for profit cannot be analysed in isolation as it is a function, inter alia, of the SG&A.In

8

the  case  of  this  company,  the  SG&A  costs  are  limited  since  the  company  is  a
manufacturing subsidiary of a larger group. Moreover, it should be noted that the gross
margin of the  producer in  the  analogue country  is in  line with the gross  margin of a
leading USA producer of carbon black. Finally, the evidence provided by the exporter
did  not  refer  to  companies  producing  carbon  black  or  items  belonging  to  the  same
general  category  of  product.  For  all  the  above-mentioned  reasons  the  claim  was
rejected.

(23)

The  Community  industry  claimed  that  domestic  prices  should  have  been  used  to
calculate  the  normal  value.  However,  as  the  domestic  sales  volumes  to  unrelated
customers were below the threshold referred to in Article 2(2) of the basic Regulation
and no evidence was found that the domestic prices were representative for the market
concerned, normal value had to be constructed.

3.1.2.

Export price

(24)

(25)

In  some  cases,  the  product  concerned  was  exported  to  independent  customers  in  the
Community, and the export price was therefore established in accordance with Article
2(8) of the basic Regulation, namely on the basis of the export prices actually paid or
payable.

In  other  cases,  the  product  concerned  was  exported  to  two  related  importers  in  the
Community  (so  called  ‘refilling  stations’).  In  these  cases,  the  export  price  was
constructed on the basis of the price at which the imported products are first resold to
an independent buyer, in accordance with Article 2(9) of the basic Regulation. In order
to establish a reliable export price at the Community frontier level, adjustments were
made for all costs incurred between importation and resale. For one related importer,
the costs reported did not cover the totality of costs incurred. As no  further elements
had been  made  available  by  that  importer,  an  adjustment  was  therefore  made  on  the
basis of the facts available. The rate of profit applied (5%) was based on information
relating to independent traders in the Community.

3.1.3. Comparison

(26)

The  normal  value  and  export  prices  were  compared  on  an  ex-works  basis.  For  the
purpose of ensuring a fair comparison between the normal value and the export price,
due  allowance  in  the  form  of  adjustments  was  made  for  differences  affecting  price
comparability in accordance with Article 2(10) of the basic Regulation. Accordingly,
allowances for differences in discounts, rebates, transport, insurance, handling, loading
and ancillary costs, packing and credit were granted, where applicable and supported
by verified evidence.

3.1.4. Dumping margin

(27)

(28)

The  dumping  margin  was  established  on  the  basis  of  a  comparison  of  a  weighted
average  normal  value  with  a  weighted  average  of  export  prices,  in  accordance  with
Articles 2(11) and 2(12) of the Basic Regulation.

This comparison showed the existence of dumping, 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  price  at  the  Community  border,  duty  unpaid,  the
dumping margin is of:

9

– 

Alexandria Carbon Black: 6,6%

(29) As  the  co-operating  exporting  producer  is  acknowledged  to  be  the  sole  exporting
producer  of  the  product  concerned  in  Egypt,  the  residual  dumping  margin  for  this
country is set at this company’s level.

3.2.

RUSSIA

3.2.1.

Level of co-operation

(30)

The level of co-operation was high. Three exporting producers representing more than
85% of exports to the Community co-operated in the proceeding.

3.2.2. Market Economy Status (MES)

(31) As  when  the  proceeding  was  initiated,  Russia  was  still  considered  a  non-market
economy country6, normal value was to be determined in accordance with paragraphs
1 to 6 of Article 2 of the basic Regulation7, only for those producers which were found
to meet the criteria laid down in Article 2(7)(c), i.e. that market economy conditions
prevail in respect of the manufacture and sale of the product concerned.

(32)

Two exporting producers in Russia requested MES pursuant to Article 2(7)(b) of the
basic  Regulation,  or  individual  treatment  should  the  investigation  establish  that  they
did  not  meet  all  the  conditions  for  MES,  and  replied  to  the  MES  claim  form  for
exporting producers.

(33)

The Commission sought all information deemed necessary and verified all information
submitted in the MES application at the premises of the companies in question.

(34) Both companies were found to have one clear set of basic accounting records, which
were  independently  audited  in  line  with  international  accounting  standards.  The
production  costs  and  financial  situation  of  both  companies  were  not  subject  to
significant  distortions  carried  over  from  the  former  state  trading  system  and  both
companies were subject to bankruptcy and property laws. Exchange rate conversions
were  carried  out  at  the  market  rate.  As  far  as  decisions  regarding  prices,  costs  and
inputs are concerned, it was found that they were made in response to market signals
without significant state interference. As for market values, it was noted that prices of
oil (feedstock) and energy might still need to be adjusted to more appropriate market
levels,  should  it  be  found  in  the  course  of  the  further  investigation  that  these  prices
were not fully reliable.

(35) On the basis of the foregoing, it was concluded that the criteria in Article 2(7)(c) of the
basic Regulation were met and that both companies should therefore be granted MES.

(36)

The companies concerned and the complainant were given an opportunity to comment
on  the  above  findings.  The  complainant  claimed  that  MES  should  not  be  granted
because  energy prices  in  Russia  are  strongly  influenced  by  state  intervention  and  do
not reflect market values. This claim was rejected because the general level of energy
prices in Russia cannot be taken as such as an indication of undue state interference in

6

7

See article 2 of Council Regulation (EC) No 1972/2002
Basic Regulation before its amendment by Council Regulation (EC) No 1972/2002

10

                                                
the companies’ business decisions, to the extent, as is here the case, that any distortion
can  be  corrected  when  determining  the  normal  value  by  making  an  appropriate
adjustment. The existence of possible distortions in the determination of normal value
and costs may always be taken into account pursuant to Article 2(3) and Article 2(5)
of the basic Regulation.

3.2.3.

Individual Treatment

(37)

(38)

In  accordance  with  Article  9(5)  of  the  Basic  Regulation,  it  is  the  institution’s
consistent policy to  calculate  a  country-wide duty, if  any, for countries  falling  under
Article 2(7) except in those cases where companies are able to demonstrate that their
export prices and quantities as well as the conditions and terms of the sales are freely
determined,  exchange  rates  are  carried  out  at  market  rates  and  that  any  State
interference is not such as to permit circumvention of measures if exporters are given
different rates of duty. If these conditions are met, this would justify a departure from
the determination of a single countrywide duty.

Two  related  Russian  exporting  producers  claimed  individual  treatment.  The  issue  of
individual  treatment  became  irrelevant  in  respect  of  one  of  the  applicants  as  it  was
found  that  it  did  not  export  the  product  concerned  to  the  Community  during  the  IP.
The  Commission  sought  and  verified  all  information  deemed  necessary  for  the
purpose of determining whether the other applicant qualified for individual treatment.
It was found that the export prices, export quantities, conditions and terms of sale were
freely determined, that  the  exchange  rate  conversions  were  carried  out  at  the  market
rate,  and  that  the  company  was  sufficiently  independent  from  State  interference.
Finally, it was concluded that there was no risk of circumvention of the measures if the
exporter was granted individual treatment in this case. It was therefore concluded that
individual treatment should be granted to the company.

3.2.4. Analogue country

(39) According to Article 2(7) of the Basic Regulation, for companies to which MES could
not  be  granted  or  that  did  not  apply  for  MES,  normal  value  was  established  on  the
basis of the price or constructed value in an analogue country.

(40)

(41)

In the notice of initiation of the proceeding the Commission indicated that it envisaged
to use Hungary as the analogue country for the purpose of establishing normal value
for Russia, and invited interested parties to comment on this intention.

Some Russian exporters and other interested parties suggested that Poland would be a
more  appropriate  choice,  mainly  because  this  country’s  market  was  larger  than
Hungary’s,  competition  bigger,  and  it  was  claimed  that  imports  of  the  product
concerned  into  Hungary  were  negligible.  However,  it  was  established  that  the
Hungarian  market  was  big  enough  to  be  considered  representative  in  comparison  to
the volume of Russian exports of the product concerned to the EU. It was also found
that  the  volume  of  imports  and  the  presence  of  various  customers  on  the  Hungarian
market  implied  a  sufficient  degree  of  competition  on  this  market  which  was
considered  not  less  than  in  Poland.  It  was  also  considered  that  the  size  of  the
Hungarian producer was significantly bigger than that of the two Polish producers put
together, and much closer to the size of the Russian companies accounting for most of
the  Russian  exports  to  the  Community.  This  guaranteed  the  availability  of  more

11

appropriate  data,  e.g.  in  terms  of  economies  of  scale.  The  Commission  therefore
confirmed the selection of Hungary as analogue country.

3.2.5. Dumping

3.2.5.1. Normal Value in the analogue country

(42)

(43)

Pursuant  to  Article  2(7)(a)  of  the  basic  Regulation,  normal  value  for  the  Russian
producer  to  which  individual  treatment  was  granted  was  established  on  the  basis  of
verified information received from the producer in the analogue country.

It  was  found  that  the  grade  exported  by  this  producer  was  neither  manufactured  nor
sold by the co-operating producer in the analogue country. Normal value was therefore
constructed,  on  the  basis  of  the  cost  of  manufacturing  of  the  most  similar  grades
produced  by  the  co-operating  company  in  the  analogue  country.  This  cost  of
manufacturing was adjusted to take account of the value of the difference in the Iodine
Absorption  between  the  two  grades.  To  the  cost  of  manufacturing  established  as
above, a reasonable amount for SG&A and profit margin was added. This amount for
SG&A  and  profit  was  based  on  the  average  amounts  obtained  by  the  Hungarian
company in its domestic market sales.

3.2.5.2. Normal Value for companies to which MES was granted

(44)

(45)

In the case of both companies, domestic sales represented overall more than 5% of the
sales volume of the product concerned to the Community.

It  was  then  considered  whether  these  sales  had  been  made  in  the  ordinary  course  of
trade. In this respect, it should be noted that prices of electricity and gas  were found
not  to  be  fully  reliable  and  were,  therefore,  deemed  not  to  allow  an  appropriate
assessment of all the costs associated with the production and sale of the product under
consideration.  A  comparison  of  the  prices  paid  by  the  two  companies  for  these  cost
items with prices of comparable items in OECD countries had in fact shown that the
former  were  substantially  lower,  and  no  conclusive  explanation  was  provided
justifying  such  a  difference.  Therefore,  for  both  exporting  producers,  the  cost  of
manufacturing  was  adjusted  in  respect  of  prices  of  electricity  and  gas.  These
adjustments  were  based  on  the  price,  net  of  tax,  paid  by  the  industrial  users  of
electricity  and  gas  in  Hungary,  as  published  by  the  International  Energy  Agency.
These prices were found to be almost identical to the Russian export price as published
by the same agency.

(46) As far as oil is concerned, the Commission did not make any adjustment to the costs
submitted by  the companies.  As the price  of  petrochemical oil  in  Russia  represented
almost 80% of the price which was used as an analysis tool, it seemed indeed possible
that the difference of 20% be largely due to the specific advantages that Russia enjoys
in this market. No adjustment has either been made in the case of carbochemical oil, as
no evidence was found to establish an abnormal discrepancy between prices in Russia
and  in  other  countries,  and  as  it  was  considered  that  the  price  paid  for  the  other  oil
input,  petrochemical  oil  (for  which  there  is  evidence  to  establish  its  reliability),  was
acceptable.

(47) Both exporting producers objected to the adjustments made to the prices of electricity

and gas, and submitted a number of comments in this respect.

12

(48)

(49)

They first of all argued that any comparison between Russian prices and international
prices of gas and electricity would be unfair, as Russia enjoys a comparative economic
advantage, due to its significant  gas, oil and coal resources. This objection had to be
rejected  because  it  was  found  that  prices  paid  by  the  two  exporting  producers  for
electricity  and  gas  were  abnormally  low,  as  evidenced  by  the  fact  that  Russian
domestic  prices  were  found  to  be  between  15%  and  30%  of  the  corresponding
Hungarian  prices.  More  importantly,  it  was  found  that  Russian  domestic  energy
markets are regulated by public authorities who set the prices.

The  two  exporting  producers  further  argued  that  the  Commission  had  not  requested
co-operation  from  Russian  energy  producers  in  order  to  establish  that  the  suppliers
obtained a profit from their sales. This claim was rejected as irrelevant. Indeed, even if
the suppliers in question were making a profit on their domestic sales, this would not
detract  from  the  fact  that  the  prices  are  set  by  public  authorities  and  completely
disproportionate  when  compared  to  prices  charged  elsewhere,  so  that  they  cannot
reasonably be considered as reliable.

(50) Both  companies  claimed  that  their  accounting  records  correctly  reflected  the  prices
paid for raw materials. This claim was rejected because, although the Commission had
verified that the amounts set out in the accounting records for gas and electricity were
indeed paid by the producers, those prices were still deemed not to reflect a value at
least vaguely close to the market value.

(51)

(52)

(53)

The two exporting producers further argued that the Commission, in this case, should
have  initiated  an  anti-subsidy  investigation  in  accordance  with  Article  7(10)  of
Council Regulation (EC) No 3284/94. The Commission dismissed this claim because
situations which derive from the existence of subsidies may be examined in the course
of an anti-dumping investigation. As evidenced by the last sentence of Article 14(1),
the  basic  anti-dumping  Regulation  may  address  dumping  situations  stemming  from
subsidisation.

The  two  exporting  producers  also  submitted  that  the  Commission  had  not  consulted
them,  at  the  stage  of  provisional  determination  of  the  analogue  country,  on  the
possibility that Hungarian energy prices might be used for adjusting their energy costs.
The  Commission  rejected  this  argument  as  the  companies  were  granted  MES  and
therefore Hungary was not used as analogue country to establish normal value in their
regard, but only as a proxy, since these particular Russian prices could not be used.

The  two  exporting  producers  further  argued  that  if  Hungarian  gas  prices  were  to  be
used to adjust the Russian prices, account should in any case be taken of the difference
in transportation costs. This claim was accepted in substance, but as the quantification
provided  was  not  sufficiently  substantiated,  the  Commission  made  their  own
assessment of the allowance granted. It was also claimed that the gas price should be
reduced by the amount corresponding to the difference  between the taxes charged to
the  export  price  of  gas  and  those  applied  to  the  domestic  price.  This  claim  was
accepted as it had been properly substantiated.

(54)

Finally,  one  company  objected  to  the  methodology  of  adjusting  the  cost  of
manufacturing in respect to the cost of recycled raw materials. This claim was rejected
as  the  methodology  proposed  by  the  company  could  not  be  verified.  Another  duly
substantiated  claim  concerning  the  calculation  of  the  adjustment  for  electricity  costs
was instead accepted.

13

(55)

(56)

In the case of one company, domestic sales of each grade, when representative, were
found  to  be  made  in  the  ordinary  course  of  trade  even  after  adjusting  the  cost  of
manufacturing,  and  could  therefore  be  used  for  the  calculation  of  the  normal  value.
For the two grades for which domestic sales were not representative normal value was
constructed on the basis of the (adjusted) manufacturing cost of each grade, to which
the average SG&A  amount and  (adjusted)  margin  of  profit  for  domestic  sales  of  the
product concerned of the company was added, in accordance with Article 2(6) of the
basic Regulation.

In  the  case  of  the  other  company,  domestic  sales  were  representative  only  for  one
grade.  However,  for  this  grade,  the  domestic  transactions  made  at  profit  represented
less  than  10%  of  the  total  volume  sold  in  the  domestic  market  for  that  grade.
Therefore, for all grades, normal value was constructed on the basis of the (adjusted)
manufacturing  cost  of  each  grade,  to  which  a  reasonable  amount  for  SG&A  and  for
profit  was  added,  corresponding  to  the  average  SG&A  and  profit  of  the  transactions
made  in  the  ordinary  course  of  trade  of  domestic  sales  of  the  like  product,  in
accordance with Article 2(6) of the basic Regulation.

3.2.5.3. Export price

(57)

(58)

(59)

The  producer  being  granted  individual  treatment  sold  the  product  concerned  to  the
Community  via  two  related  traders  operating  in  Russia,  one  of  which  is  however
incorporated  in  Cyprus,  and  via  an  unrelated  trader  in  Bulgaria,  which  did  not
cooperate.

In  the  case  of  one  of  the  exporting  producers  being  granted  MES,  the  product
concerned was exported to the Community either directly to an independent customer
located in the Community or indirectly, via independent traders located in Poland and
Hungary. In the case of the other company being granted MES, the product concerned
was  exported  to  the  Community  only  via  independent  traders  located  in  Switzerland
and Hungary.

For the three companies, the export price was established in accordance with Article
2(8) of the basic Regulation, namely on the basis of the export prices actually paid or
payable  by  either  the  first  independent  customer  located  in  the  Community  or  the
independent  traders  located  in  the  above-mentioned  countries.  In  the  latter  case,  in
order  to  determine  which  sales  of  the  two  exporting  producers  had  actually  been
shipped  to  the  Community,  information  submitted  by  the  respective  independent
traders was used as available information.

3.2.5.4. Comparison

(60)

The  normal  value  and  export  prices  were  compared  on  an  ex-works  basis.  For  the
purpose of ensuring a fair comparison between the normal value and the export price,
due  allowance  in  the  form  of  adjustments  was  made  for  differences  affecting  price
comparability  in  accordance  with  Article  2(10)  of  the  basic  Regulation.  Appropriate
adjustments  were  granted  in  all  cases  where  they  were  found  to  be  reasonable,
accurate and supported by verified evidence. Accordingly, allowances for differences
in  transport,  insurance,  handling,  loading  and  ancillary  costs,  packing  and  credit,
where applicable and supported by verified evidence.

14

3.2.5.5. Dumping margin

(61)

(62)

The  dumping  margin  was  established  on  the  basis  of  a  comparison  of  a  weighted
average  normal  value  with  a  weighted  average  of  export  prices,  in  accordance  with
Articles 2(11) and 2(12) of the Basic Regulation.

This comparison showed the existence of dumping, the dumping margin being  equal
to  the  amount  by  which  the  normal  value  exceeded  the  export  price.  The  dumping
margin was then expressed as a percentage of the CIF import price at the Community
border.  In  some  cases,  the  CIF  import  price  at  the  Community  border  had  to  be
established  on  the  basis  of  the  information  submitted  by  the  independent  traders
located  in  Switzerland,  Poland  and  Hungary  co-operating  in  the  proceeding.  The
dumping margins so obtained are as follows:

a) Companies to which MES was granted:

– 

– 

Omsky Zavod Technicheskogo Ugleroda OJSC: 20,5%

Jaroslavsky Technichesky Uglerod OJSC: 54,8%

b) Company to which individual treatment was granted:

– 

Tuimasytechuglerod OJSC: 35%

(63) As  the  volume  of  exports  covered  by  the  co-operating  Russian  exporters/producers
represented  85%  of  the  import  data  as  registered  under  Eurostat  during  the  IP,  it  is
considered  that  the  level  of  co-operation  has  been  sufficiently  high,  i.e.  that  all
exporting producers actually  co-operated  in  the  investigation.  Therefore,  the  residual
dumping  margin  for  Russia  is  established  as  the  highest  level  calculated  for  a  co-
operating producer, i.e. 54,8%.

4.

INJURY

4.1.

Definition of the Community industry

(64)

(65)

The  three  complainant  Community  producers  replied  to  the  questionnaires  and  fully
co-operated in the investigation. During the IP they represented more than 75% of the
Community production.

The fourth and remaining Community producer, Deutsche Gasrusswerke GmbH & Co.
(DGW),  whilst  not  a  complainant,  neither  supported  nor  opposed  the  complaint,  but
did  co-operate  in  the  investigation.  The  company  represents  the  remainder  of
Community  production  and  it  is  50%  controlled  by  one  complainant  Community
producer and 50% by users of the product concerned, i.e. rubber goods manufacturers.
Due to its particular position, it is considered that DGW is shielded from competition
with the other Community producers or with importers on the free market of rubber-
grade carbon blacks. More importantly, DGW is related, within the meaning of Article
4(1) of the basic Regulation, to users who also import the product concerned from the
countries  concerned.  For  these  reasons,  its  production  cannot  be  attributed  to  the
Community producer concerned.

15

(66) On the basis of the above, the three complainant Community producers are deemed to
constitute the Community industry within the meaning of Article 4(1) and Article 5(4)
of the basic Regulation.

4.2.

Community consumption

(67) Community  consumption  was  established  on  the  basis  of  the  sales  volumes  of  the
Community  industry  on  the  Community market, the  "sales"  of  the  other  Community
producer  on  the  Community  market,  the  information  provided  by  the  co-operating
exporting  producer  in  Egypt,  and  Eurostat  data  for  the  imports  from  Russia  and  the
other third countries, duly adjusted where appropriate.

(68) On this basis, Community consumption increased by 6% between 1997 and the IP.

(69) Consumption  of  rubber-grade  carbon  black  in  the  Community  increased  sharply
between 1997 and 1998 and then remained relatively flat until 2000, before declining
slightly by 2% during the IP. The surge observed in 1998 was due to the good business
climate prevailing at that time in the economy at large, but more particularly so in the
car  and  the  tyre  industries.  It  should  be  noted,  that  the  various  operators  on  the
Community  market  benefited  differently  from  this  development  in  1998.  The
Community  industry’s  sales  rose  by  4%,  "sales"  of  the  fourth  Community  producer
rose  by  5%,  imports  from  Egypt  and  Russia  soared  by  59%  and  imports  from  other
countries increased by 33%.

Total EC consumption (tonnes)
Index (1997=100)

4.3.

Imports from the countries concerned

1998

1997

IP
1.061.824 1.142.669 1.139.388 1.150.437 1.130.457
106

1999

2000

100

107

108

108

4.3.1. Cumulative assessment of the effects of the imports concerned

(70)

(71)

The Commission considered whether imports from the countries concerned should be
assessed cumulatively on the basis of the criteria set out in Articles 3(4) of the basic
Regulation.

The  dumping  margin  found  for  each  of  the  countries  concerned  was  more  than  de
minimis,  the  volume  of  imports  from  each  of  these  countries  was  not  negligible  and
the  cumulative  assessment  was  considered  appropriate  in  view  of  the  conditions  of
competition  between  the  imports  from  the  countries  concerned  and  the  like
Community  product.  These  similar  conditions  of  competition  were  evidenced  by  the
fact  that  the  rubber-grade  carbon  blacks  imported  from  the  countries  concerned  and
those  produced  and  sold  by  the  Community  industry  within  the  Community  market
were alike and distributed via the same trade channels. Moreover all import volumes
were  substantial  and  resulted  in  significant  market  shares,  which  increased  between
1997 and the IP, and were made at prices significantly undercutting the prices of the
Community industry.

(72)

It  is,  therefore,  concluded  that  imports  originating  in  the  two  countries  concerned
should be assessed cumulatively.

16

4.3.2. Volume and market share of the imports concerned

(73)

Imports  of  rubber-grade  carbon  blacks  from  the  countries  concerned  into  the
Community increased in volume from 23 000 tonnes in 1997 to 98 000 tonnes in the
IP,  i.e.  by  332%.  The  corresponding  market  share  increased  from  2.1%  in  1997  to
8.7% in the IP, i.e. by 6.6 percentage points, corresponding to a rise of around 300%.

Volume of dumped imports (tonnes)
Index (1997=100)
Market share of dumped imports
Index (1997=100)

1997
22.666
100
2,1%
100

1998
36.006
159
3,2%
148

1999
57.127
252
5,0%
235

2000
90.069
397
7,8%
367

IP
97.930
432
8,7%
406

(74)

(75)

The  Egyptian  exporting  producer  and  other  parties  claimed  that  imports  from  Egypt
should  be  considered  in  combination  with  the  imports  from  Thailand.  They  claimed
that  due  to  a  commercial  decision,  taken  by  the  Indian  mother  company  of  both  the
Egyptian exporting producer and a Thai company manufacturing carbon black, to re-
allocate  carbon  black  shipments  to  western  Europe  between  the  Egyptian  exporting
producer and the Thai company, the import volumes from Egypt merely replaced the
Thai import volumes.

Even  were  this  argument  to  have  any  validity,  it  is  not  borne  out  by  the  facts.  Even
when  taken  in  combination,  the  trend,  between  1997  and  the  IP,  of  imports  from
Thailand  and  Egypt  is  actually similar to the trend of  the  imports  from  Egypt  alone.
The  development  of  imports  would  therefore  not  be  significantly  different  if  the
argument made by the said parties were to be followed.

4.3.3.

Prices of dumped imports

4.3.3.1. Price evolution

(76)

The  weighted  average  price  of  imports  originating  in  the  countries  concerned
increased by 17% during the period considered, i.e. from 441 €/tonne in 1997 to 516
€/tonne  in  the  IP.  The  investigation  showed  that  the  evolution  of  prices  of  rubber-
grade carbon blacks is linked to the evolution of the oil price (see recital (88) below)
and generally followed the price trend observed on the Community market as a whole.
1998 was the exception (see recital (69) above). In this year, when oil prices were low
and  falling,  prices  of  rubber-grade  carbon  blacks  from  the  countries  concerned  rose,
whilst those of the Community industry and the other third countries  fell (see  recital
(105) below). However, Community industry’s prices remained above that of imports
from the countries concerned throughout the period considered.

Prices of dumped imports
Index (1997=100)

4.3.3.2. Undercutting

1997
441
100

1998
476
108

1999
426
97

2000
465
105

IP
516
117

(77)

The  Commission  has  examined  whether  the  exporting  producers  of  the  countries
concerned  undercut  the  prices  of  the  Community  industry  during  the  IP.  For  the
purpose  of  this  analysis,  the  CIF  prices  of  the  exporting  producers  have  been  duly
adjusted  for  post  importation  costs  and  compared,  at  the  same  level  of  trade,  to

17

(78)

(79)

Community producers’ ex-works prices. All prices were compared net of all discounts
and rebates.

The  undercutting  margins  found  on  this  basis,  expressed  as  a  percentage  of  the
Community producers' prices, range from 4% to 8% as regards the Egyptian producer
and from 17.2% to 31.2% as regards Russian producers.

It  should  be  noted  that  these  price  undercutting  margins  do  not  fully  illustrate  the
effect  of  the  dumped  imports  on  prices  of  the  Community  industry,  given  that  both
price  depression  and  price  suppression  were  observed.  This  is  evidenced  by  the  low
profit margin achieved by the Community industry in the IP (see recital (90) below), a
level  substantially  lower  than  the  normal  profit  that  the  Community  industry  could
have achieved in the absence of dumping.

4.4.

Situation of the Community industry

(80)

The injury analysis focused on the three complainant Community producers only. As
to the fourth Community producer (DGW), as mentioned above, its production cannot
be  attributed  to  the  Community  industry  and  its  situation  is  therefore  not  taken  into
account for the assessment of the injurious situation of the Community industry.

4.4.1.

Production

(81) Community industry production remained relatively  stable between  1997  and the  IP.
After an increase of around 6% between 1997 and 1998, namely from around 925 000
tonnes to around 983 000 tonnes, it then steadily declined until the IP, when it returned
to  its  1997  level.  The  increase  experienced  in  1998  was  due  to  the  good  economic
climate,  which  also  translated  into  a  high  capacity  utilisation  rate  (see  recital  (82)
below).

Production (tonnes)
Index (1997=100)

4.4.2. Capacity

1997
925.123
100

1998
983.143
106

1999
937.818
101

2000
947.429
102

IP
925.075
100

(82)

The actual total production capacity of the Community industry exclusively dedicated
to  the  product  concerned  decreased  by  2%  during  the  period  considered.  It  firstly
gradually increased, reaching its peak in 2000, then it dropped by 7% in the IP. This
drop was due to the  closure  of  two  production units of one  Community producer, in
France and the UK, due to poor demand prospects and profitability. This resulted in a
sizeable loss of jobs.

Production capacity (tonnes)
Index (1997=100)

4.4.3. Capacity utilisation rates

1998

1997

IP
1.083.251 1.095.653 1.120.939 1.134.640 1.066.502
98

1999

2000

100

101

103

105

(83) Capacity  utilisation  experienced  a  relatively  uneven  development.  It  was  at  85%  in
1997, peaked at 90% in 1998 due to the good demand level, subsequently fell back to
84%  in  1999  and  2000  and  then  increased  again  to  87%  in  the  IP.  This  increase  of
capacity utilisation is linked to the reduction of capacity as mentioned above. It is to

18

be  noted  that  in  view  of  the  nature  of  the  industry  concerned,  which  is  capital-
intensive, it is vital to maintain a high capacity utilisation ratio.

Capacity utilisation
Index (1997=100)

4.4.4. Sales volume in the Community

1997
85%
100

1998
90%
105

1999
84%
98

2000
84%
98

IP
87%
102

(84) Despite  an  increase  in  consumption,  the  sales  volume  of  the  Community  industry
decreased  by  2.7%  between  1997  and  the  IP,  i.e.  from  around  855  000  tonnes  to
around  832  000  tonnes.  It  showed  a  positive  development  in  1998  as  compared  to
1997,  increasing  by  4%  (see  recital  (69)  above),  then  remained  relatively  stable
between  1999  and  2000,  and  finally  declined  in  the  IP.  This  is  in  contrast  with  the
development of imports as described in recital (73) above.

Sales volume EC market (tonnes)
Index (1997=100)

4.4.5.

Stocks

1997
854.649
100

1998
889.483
104

1999
853.087
100

2000
855.139
100

IP
831.882
97

(85)

Inventories are not particularly relevant for the injury determination in this case as this
industry  works  on  the  basis  of  contracts  with  its  largest  customers,  where
predictability  is  essential  for  both  parties.  Contracts  can  have  a  quarterly,  annual  or
sometimes  multi-annual  periodicity.  Stocks,  which  represent  around  7%  of  the  EC
sales volumes, consist basically of merchandise which has been produced to order but
not  shipped  yet.  However,  the  evolution  of  stocks  is  analysed  for  the  sake  of
completeness. The level of stocks decreased by around 6% between 1997 and the IP,
from  around  62  000  tonnes  to  around  58  000  tonnes.  They  first  increased  between
1997 and 1998 by 2% and then continuously declined, going up slightly again in the
IP.

Closing stock (tonnes)
Index (1997=100)

4.4.6. Market share

1997
61.828
100

1998
62.918
102

1999
60.423
98

2000
57.583
93

IP
57.888
94

Market share of Community industry
Index (1997=100)

1997
80,5%
100

1998
77,8%
97

1999
74,9%
93

2000
74,3%
92

IP
73,6%
91

(86)

The Community industry lost 6.9 percentage points of market share between 1997 and
the  IP, from 80.5% to  73.6%. Over the  same  period,  the  countries  concerned  gained
6.6  percentage  points  of  market  share  (from  2.1%  in  1997  to  8.7%  in  the  IP).  The
fourth  Community  producer  lost  0.3  percentage  point,  and  imports  from  countries
other than the countries concerned gained a mere 0.6 percentage point.

4.4.7.

Sales prices of the Community industry

(87)

The average unit sales price of the Community industry increased by 11% during the
period  considered.  More  specifically,  it  decreased  by  7%  between  1997  and  1999,

19

from  528  €/tonne  to  492  €/tonne.  Subsequently,  it  rose  by  12%  in  2000  and  by  a
further 6% in the IP.

Unit price EC market (EUR/tonne)
Index (1997=100)

1997
528
100

1998
513
97

1999
492
93

2000
555
105

IP
588
111

(88)

This evolution of the sales prices must be seen in the light of the high dependence of
rubber-grade carbon blacks on the price of oil which in the IP represented 45% of total
costs  of  production  (against  32%  in  1997).  The  principal  raw  material  used  for  the
production of rubber-grade carbon black is heavy fuel oil. Indeed the price of oil rose
significantly throughout 1999 and 2000 (on a monthly basis it more than tripled), with
a  direct  impact  on  the  cost  of  production  and  consequently  on  the  sales  prices  from
1999  onwards.  Prices,  however,  could  not  be  increased  sufficiently  to  cover  the
increased costs. It should be also noted that, with the exception of the year 1998, the
price  developments  were  in  line  with  those  of  the  imports  from  the  countries
concerned.

Community industry : Oil feedstock cost and 
Carbon black unit COP and sales price

EUR/tonne of CB

700

600

500

400

300

200

100

0

1997

1998

1999

2000

IP

Oil feedstock cost (EUR/tonne of CB)
Unit sales prices (EUR/tonne of CB)
Unit total COP (EUR/tonne of CB)

(89)

In this respect, the Commission also considered why, as opposed to the developments
seen  in  the  past,  the  unit  costs  of  production  slightly  increased  while  the  oil  cost
marginally decreased (see graph) between 2000 and the IP. Firstly, there is a time-lag
of about two months between the moment when the oil is purchased and the moment
when  it  is  consumed.  Secondly,  some  other  cost  items  have  moved  in  the  opposite
direction to  the oil  cost.  This  is particularly the case  for natural  gas,  which  typically
shadows  the  evolution  of  oil  prices  with  a  time-lag  of  about  six  months.  Gas
represented some 8% of total costs of production during the IP.

4.4.8.

Profitability and return on investments

(90)

Profitability, expressed as a percentage of net sales, dropped between 1997 and the IP
by more than 9 percentage points. While the Community industry enjoyed profit rates
of 9.7% in 1997, 16% in 1998 and 10% in 1999, in 2000 and the IP a sharp decrease
was observed, with profit/loss rates of –1.7% and 0.4%, respectively. In fact, the price
rise  which  occurred  between  1999  and  2000,  described  in  section  4.4.7,  was  not
sufficient to absorb the even larger rise in costs triggered by the hike in the oil price.
The marginal improvement in profits observed in the IP as compared to 2000 is due to
both cost cutting efforts (e.g. closure of two production units) and to a limited increase

20

of price levels in the IP. However, the latter was achieved at the expense of the market
share, which dropped by a further 0.7 percentage point.

(91)

The  return  on  investments  (ROI)  broadly  followed  the  profitability  curve  during  the
period considered. It went down from 21% in 1997 and 33% in 1998 to –3% and 1%
in 2000 and the IP, respectively.

Profitability of domestic sales (% of net sales)
Index (1997=100)
ROI (profit in % of net book value of investments)
Index (1997=100)

1997
9,7%
100
20,8%
100

1998
15,8%
163
32,8%
158

1999
10,0%
103
17,1%
82

2000
-1,7%
-17
-3,4%
-16

IP
0,4%
5
0,9%
4

4.4.9. Cash Flow

(92)

Like  most  other  indicators,  the  cash  flow  generated  by  the  sales  of  the  product
concerned  first  increased  in  1998  compared  to  1997.  It  then  decreased  sharply  from
€112 million in 1998 to €20 million in 2000, before recovering slightly to €31 million

Cash flow (000 EUR)
Index (1997=100)

in the IP.

4.4.10. Ability to raise capital

1997
92.540
100

1998
111.675
121

1999
74.751
81

2000
19.766
21

IP
30.917
33

(93) None of the companies mentioned any current difficulty in raising capital. It should be
considered in this respect that the three complainant Community producers are part of
large  groups,  in  two  cases  of  multinational  corporations,  which  have  good  credit
ratings. However, the individual companies of the relevant groups need to demonstrate
an  ability  to  give  reasonable  returns  if  they  are  to  justify  further  investments.
Consequently, should the cash flow continue to deteriorate, this situation may change.

4.4.11. Employment and wages

(94)

The  number  of  employees  directly  linked  or  allocated  to  the  production  of  rubber
grade  carbon  blacks  steadily  declined  throughout  the  period  considered  by  13%.
Employment fell from 1 903 in 1997 to 1 656 in the IP.

Employment product concerned
Index (1997=100)
Average salary (000 EUR)
Index (1997=100)

1997
1.903
100
52,0
100

1998
1.823
96
53,1
102

1999
1.784
94
56,0
108

2000
1.709
90
59,8
115

IP
1.656
87
57,7
111

(95) Overall  wages  followed  a  similar  pattern  as  the  number  of  persons  employed.  The
average salary per employee increased gradually over the period of examination, with
the exception of the IP when it witnessed a decline compared to 2000. Between 1997
and the IP, the overall increase was of around 11%. This figure exceeds the consumer
price inflation observed in the Community during the same period (7%), but remains
below the rate of increase of the average nominal compensation per employee (12%)
observed during the same period in the Community (all sectors).

21

4.4.12. Productivity

(96)

Productivity  increased  considerably  during  the  period  under  examination,  from  486
tonnes/employee in 1997 to 559 tonnes/employee in the IP. This represents an overall
increase of 15% during the period considered, which mirrors rationalisation efforts.

Productivity (tonnes per employee)
Index (1997=100)

4.4.13.

Investment

1997
486
100

1998
539
111

1999
526
108

2000
554
114

IP
559
115

(97)

Investments  remained  at  a  relatively  stable  level  during  the  period  considered,
amounting  to  around  €59  million  in  the  IP.  These  investments  mainly  consisted  in
renewal or improvements of existing equipment.

Net investments (000 EUR)
Index (1997=100)

4.4.14. Growth

1997
57.731
100

1998
48.519
84

1999
67.553
117

2000
64.011
111

IP
59.076
102

(98) While  the  Community  consumption  increased  by  7%  between  1997  and  the  IP,  the
quantities  sold  by  the  Community  industry  declined  by  2.7%  and  its  market  share
dropped  by  7  percentage  points.  The  Community  industry  was  therefore  unable  to
benefit  from  the  growing  market.  At  the  same  time  imports  from  the  countries
concerned  increased  by  332%,  whilst  their  increased  market  share  (from  2.1%  to
8.7%) replaced that lost by the Community industry.

4.4.15. Magnitude of the dumping margin

(99) Given the volume and the prices of the imports from the countries  concerned and of
the  magnitude  of  the  actual  margins  of  dumping,  the  impact  on  the  Community
industry cannot be considered to be negligible.

4.4.16. Conclusion on the analysis of the situation of the Community industry

(100) A  deterioration  of  the  situation  of  the  Community  industry  has  been  found  over  the
period considered. Between 1997 and the  IP, most injury indicators showed negative
developments.  All  indicators  related  to  market  shares,  sales  volumes,  profitability,
return on investment, cash-flow and employment declined. The marginal recovery of
profits in the IP is not sufficient to overturn this trend (see recital (90) above). Other
indicators such as production, capacity, capacity utilisation, and investments remained
rather  stable  during  the  period  considered  while  sales  prices  increased  (see  recital
(88)). The sizeable productivity gains achieved between 1997 and the IP, and the drop
in the number of  employees illustrate the  effort made by the Community industry to
remain  price  competitive.  However,  these  more  positive  developments  alone  cannot
offset  the  overall  weakened  position  of  the  Community  industry  in  the  market  as
indicated  above.  The  Community  industry,  whilst  attempting  to  limit  losses  by
increasing  its  sales  price  (a  trend  also  observed  for  the  imports  from  the  countries
concerned), could not pass on these increased costs, and consequently, the increase in
sales prices was insufficient.

22

(101) Taking  into  account  that  all  indicators  related  to  market  shares,  sales  volumes,
profitability,  return  on  investment,  cash-flow  and  employment  declined,  and  the
increase in sales prices was insufficient, it is therefore concluded that the Community
industry has suffered material injury.

5.

CAUSATION

5.1.

Introduction

(102)

In  accordance  with  Article  3(6)  and  (7)  of  the  basic  Regulation,  it  was  examined
whether the dumped imports of the product concerned originating in Egypt and Russia
have  caused  injury  to  the  Community  industry  to  a  degree  that  enables  it  to  be
classified as material. Known factors other than the dumped imports,  which could at
the same time be injurious to the Community industry, were also examined in order to
ensure that possible injury caused by these other factors was not such as to break the
causal  link  between  the  dumped  imports  originating  in  Egypt  and  Russia  and  the
injury suffered by the Community industry.

5.2.

Effect of the dumped imports

5.2.1. Volumes of dumped imports

Gain in consumption versus dumped Imports and 
Community industry's sales in EC

s
l
a
i
t
n
e
r
e
f
f
i

D

)
t

m
(
e
m
u
o
V

l

l
a
u
n
n
A

)
0
=
7
9
9
1
(

100.000

80.000

60.000

40.000

20.000

0

-20.000

-40.000

1997

1998

1999

2000

IP

Total EC consumption (tonnes)

Volume of dumped imports (tonnes)

Sales volume EC market (tonnes)

(103) The  imports  from  the  countries  concerned  increased  continuously  during  the  period
considered  both  in  volume,  by  332%,  and  in  terms  of  market  shares,  from  2.1%  to
8.7%,  i.e.  an  increase  of  6.6  percentage  points.  This  evolution  coincided  with  a
reduction  of  the  sales  volume  by  around  3%  of  the  Community  industry  and  a
corresponding  loss  in  market  shares  in  the  exact  proportion  that  the  exporting
countries concerned gained them (i.e. by around 7 percentage points).

(104)

In this context, the Commission paid particular attention to the fact that the imports of
the  product  concerned  occupy  a  relatively  small  market  share  (together  8.7%),  as
opposed to the Community industry, which had a 73.6% market share in the IP. The
imports  made  by  the  Community  industry  from  plants  owned  in  third  non-EC
countries is dealt under recital (116). Firstly, it should be noted that market shares of
the  countries  concerned  are  individually  not  only  above  the  de  minimis  threshold
(1%  of  EU  consumption),  but  also  substantial.  Secondly,  the  product  concerned  is
standardised  and  sold  in  a  transparent  market.  Therefore,  even  relatively  small

23

 
 
 
 
quantities  offered  at  low  prices  can  have  an  immediate  and  substantial  impact  on
pricing levels. In particular, once users, such as the tyre manufacturers, have granted
their  homologation  to  a  producer's  plant  for  a  specific  grade  of  rubber-grade  carbon
black, the material is considered to have the same basic intrinsic quality and physical
characteristics,  regardless  of  its  origin.  Therefore,  the  only  relevant  variable  for  the
users becomes the price.

5.2.2.

Prices of dumped imports

(105) Although prices of dumped imports increased more (17%) between 1997  and  the  IP,
than  the  ones  of the Community  industry  (11%),  they  still  significantly  undercut  the
sales prices of the Community industry during the  IP (by 12%) and  have thus  led to
sizeable price suppression. This is illustrated by the fact that the Community industry
operated  at  breakeven  during  the  IP,  whilst  it  could  have  achieved  a  much  higher
return in the absence of dumping practices.

(106)

In  1997,  import  volumes  from  the  countries  concerned  were  relatively  small.
However,  by  selling  carbon  black  at  extremely  low  prices,  they  were  able  to  gain
market  shares.  Once  they  had  established  themselves  on  the  European  market,  the
exporting producers in Egypt and Russia were able to raise prices and margins whilst
continuing to undercut Community producers' prices.

(107)

It  should  also  be  noted  that,  like  for  Community  producers,  the  production  costs  of
exporters in the countries concerned are closely tied to the price evolution of oil.

5.2.3. Alleged similar price increases in the EU and the US rubber black markets

(108) One interested party stated that if Egyptian and Russian imports had such a negative
effect on the Community industry, price increases applied by the Community industry
on  the  US  and  Community  markets  should  logically  be  different.  Yet,  the  interested
party claimed that the Community industry had made identical price increases in both
the US and the Community markets. This parity, it was claimed, would tend to negate
any allegation of price suppression in the Community caused by Egyptian and Russian
rubber black. The interested party concerned provided the Commission with evidence
supporting its allegation.

(109) The Commission has investigated the matter and allowed the Community industry to
comment. It appears that the price evidence submitted by this party did not cover the
IP  but  merely  the  period  1999/2000.  Moreover  it  was  found  that  the  price  evidence
submitted was not a complete set of price developments, but was rather, in their own
words, a “sample” of notices, referring for some of them to  products  not  covered by
the  current  proceeding.  It  was  therefore  not  adequate  to  convey  the  exact  picture  of
price developments over this period. Secondly, price increases in the Community were
invoiced  in  euro,  whilst  price  increases  in  the  US  were  invoiced  in  US  dollars.
Between January 1999 and December 2000, the euro depreciated by 23% vis-à-vis the
US  dollar.  It  is  therefore  misleading  to  compare  price  rises  for  an  oil-based  product
without  taking into account  exchange rate variations.  Finally,  the  Commission  asked
the  Community  industry  to  provide  it  with  US  rubber  black  price  data  for  the  years
1997 to the IP consistent with the data presented in this regulation for the Community
industry’s  EC  sales.  When  duly  adjusted  for  exchange  rate  variations,  the  result  is  a
price increase for the US rubber grade carbon blacks of 31% between 1997 and the IP,

24

whereas  the  price  of  Community  industry’s  EC  sales  increased  by  11%  (see  recital
(87) above).

5.3.

Effect of other factors

5.3.1.

Imports from other third countries

(110)

Imports  from  other  third  countries  increased  over  the  period  considered  by  around
18%, i.e., from around 79 600 tonnes in 1997 to 91 600 tonnes in the IP. Their market
shares remained almost stable over the period considered, going from 7.5% in 1997 to
8.1%  in  the  IP.  Based  on  Eurostat  data,  average  prices  for  imports  from  other  third
countries were substantially higher than either prices from the countries concerned and
the  Community  industry’s  prices.  Prices  were  791  €/tonne  in  1997  and  increased  by
29%  between  1997  and  the  IP,  to  1  017  €/tonne.  As  concerns  the  individual  market
shares of the other third countries, all of them, with the exception of the imports from
Hungary, were at de minimis levels during the IP, i.e. they were lower than 1% of the
Community consumption.

(111) Market  share  of  imports  from  Hungary  amounted  to  2.2%  of  the  Community
consumption during the IP, slightly decreasing compared to 1997, when it amounted to
2.5%. The Hungarian import volumes decreased by 7% during the period considered,
from 26 600 tonnes in 1997 to 24 550 tonnes in the IP. Average prices for Hungarian
imports  have  risen  by  21%,  from  523  €/tonne  in  1997  to  633  €/tonne  in  the  IP.  For
comparison, Community industry’s prices during the IP were at 588 €/tonne.

(112) Given  the  negligible  volumes  represented  by  each  individual  country,  with  the
exception of Hungary, the relative stability in terms of market shares and the fact that
their  average  prices  increased  faster  and  were  significantly  higher  than  the  ones  of
both  the  countries  concerned  and  the  Community  industry,  it  is  concluded  that  the
imports from the other third countries did not contribute to the material injury suffered
by the Community industry. The same conclusion is drawn with reference to Hungary
taken in isolation, in light of its decreasing import volumes and market shares and its
prices which, on average, were higher than the prices of the Community industry.

5.3.2.

Increase in raw material prices

(113) Certain interested parties claimed that the injury suffered by the Community industry

was caused by the increase in the raw material prices and not by the dumped imports.

(114) The  investigation  showed  that  the  prices  of  raw  material,  i.e.  oil  and  gas,  rose
dramatically  in  1999  and  2000.  As  previously  explained  (see  recital  (88)  above),  oil
and gas represented more than 50% of the total costs of production of the Community
industry  in  2000  and  the  IP.  Consequently,  costs  of  production  have  been  heavily
affected  by  the  price  developments  of  oil  and  gas  observed  in  1999  and  2000.
However, because of the price pressure of the imports from the  countries concerned,
the  Community  industry  was  unable  to  raise  its  own  sales  prices  to  a  reasonably
profitable level. Indeed, prior oil price increases did not lead to comparable injury but
could be passed on to customers. This argument is, therefore, rejected.

5.3.3. Own imports of the Community industry from other third countries

(115) Certain  interested  parties  argued  that  the  injury  suffered  by  the  Community  industry
was  the  result  of  its  own  imports  from  other  third  countries  for  resale  on  the

25

Community market, namely Hungary, Poland, the Czech Republic, the US and Brazil,
where the Community industry has production plants.

(116) The  investigation  established  that  during  the  IP,  one  Community  producer  imported
the product concerned from Hungary and Brazil, while another imported  the product
concerned  from  the  Czech  Republic  and  the  US.  The  third  Community  producer,
contrary  to  the  claims  made,  did  not  import  the  product  concerned  from  Poland  or
from  any  other  third  country.  Community  producers  import  the  product  concerned
essentially to complement the range of products supplied to their customers.

(117)

Imports from Hungary (already dealt in recital (111) above) represent the only sizeable
volume (2.2% of market share during the  IP). As already mentioned in recital (111),
prices  for  imports  from  Hungary  were,  during  the  IP,  above  that  of  the  Community
industry.  Virtually  all  of  the  imported  quantities  from  Hungary,  as  reported  by
Eurostat,  can  be  attributed  to  the  relevant  Community  producer.  All  other  import
volumes  made  from  the  facilities  owned  by  Community  producers  in  the  Czech
Republic,  the  US  and  Brazil  were  individually  and  collectively  at  de  minimis.
Considering  among  others  the  negative  developments  related  to  market  shares,  sales
volumes, employment and in particular to profitability, return on investment and cash
flow,  no  indications  could  be  found  that  these  imports  contributed  to  the  injury  as
described in recital (100) above.

5.3.4. Alleged inefficiency of the Community industry

(118) Certain interested parties claimed that the injury suffered by the Community industry

is the result of its inefficiency.

(119)

It has not been contested that the Community  industry is  at the forefront in  research
and development, continuously innovating the product concerned by developing new
grades  of  carbon  black.  The  Community  industry  has  consistently  carried  out
investments for rationalisation, for quality improvement and for  compliance with  the
high European environmental requirements. In addition, the Community industry has
made  rationalisation  efforts  in  order  to  reduce  production  costs.  This  is  particularly
evidenced  by  the  decrease  in  the  number  of  employees  and  the  rise  in  productivity.
Even taking out the job losses linked to the closures of two production units in 2000,
employment  has declined  by  201  employees,  i.e.  by  10%,  between  1997  and  the  IP.
This  rationalisation  effort  is  mirrored  by  the  fact  that  productivity  per  employee  has
increased by 15% over the period  examined,  a  figure  that  compares  favourably  with
medium term productivity gains observed in the Community economy  at large (1.5%
per year). This argument is therefore rejected.

5.3.5.

Export performance of the Community industry

(120) The Community increased its export sales between 1997 and the IP by about 8%, from
about 65 000 tonnes to about 70 000 tonnes, the major increase taking place in 2000.
Export  sales  represented  7%  of  the  total  sales  of  the  product  concerned  of  the
Community industry during the IP. On this basis, the Community industry has shown
itself  to  be  competitive.  The  export  activity  cannot  therefore  have  contributed  to  the
injury suffered by the Community industry.

5.3.6.

Strong market position of the Community industry

26

(121)

It has  also been  considered  whether  the  market  position  of  the  Community  industry,
holding  almost  74%  market  share,  would  be  such  as  to  undermine  the  causal  link
between  the  dumped  imports  and  the  material  injury  suffered  by  the  Community
industry.

(122) However, the fact that the price rises of the Community industry were in line with the
general  price  increases  observed  in  the  market,  that  oil  represents  a  significant
proportion of the full cost and the sales prices over time of the product concerned, and
that the price rises were in any event insufficient to bring about a reasonable level of
profitability,  demonstrates  that  the  Community  industry  is  not  able  to  dominate  the
market.  Indeed,  this  is  particularly  underlined  by  the  Community  industry  being
unable  to  fully  pass  on  the  effect  of  the  considerable  increases  in  oil  prices,  which
resulted in a mere "break-even" financial situation.

(123) Finally, it should also be noted that the main customers for rubber-grade carbon blacks
are  themselves  very  large  companies.  These  important  customers,  which  buy  in  big
volumes,  would  also  appear  to  exert  their  own  price  pressures  on  the  market  (see
recital  (125)  below),  which  obviously  is  facilitated  by  the  existence  of  dumped
imports. For these users, there is de facto price transparency. As a result, in spite of its
large share of the market, the Community industry does not enjoy  a correspondingly
strong price-setting power.

5.3.7. Role of the other Community producer

(124) The  impact  of  the  other  Community  producer  on  the  situation  of  the  Community
industry  was  also  examined.  It  was  found  that  no  significant  adverse  impact  could
have  resulted  from  the  other  Community  producer  since  this  company  is  in  fact  not
competing on the free market (see recital (65)) and is in a neutral position between the
Community industry and the users, which share its ownership.

5.3.8.

Price pressure from users

(125) Users  may  have  exerted a price pressure on the  Community industry.  However  until
1999,  the  Community  industry  was  able  to  react  to  it  and  be  profitable.  After  1999,
when the Community industry was increasingly faced with dumped imports from the
countries concerned, it became extremely difficult to fully pass on to their customers
the effect of high oil prices observed from that year onwards.

5.3.9. Conclusion on causation

(126)

In  conclusion,  it  is  confirmed  that  the  material  injury  of  the  Community  industry,
which is characterised by a decline in market share, sales volume, profitability, return
on  investment,  cash  flow,  employment  and  depressed  prices  was  caused  by  the
dumped imports concerned. Indeed, the effect of imports from other third countries, of
the increase in raw material prices, of the own imports of the Community industry, of
the alleged inefficiency of the Community industry, of the export performance of the
Community industry, of the strong market position of the Community industry, of the
role  of  the  other  Community  producer,  of  the  price  pressure  from  users  on  the
Community  industry's  negative  developments  as  described  in  the  preceding  sentence
were practically non-existent.

27

(127) Given  the  above  analysis  which  has  properly  distinguished  and  differentiated  the
effects of all the known factors on the situation of the Community industry from the
injurious effects of the dumped imports, it is hereby confirmed that these other factors
as  such  do  not  break  the  causal  link  between  the  injury  suffered  by  the  Community
industry and the dumped imports.

6.

Injury elimination level

(128)

In view of the conclusions reached with regard to dumping, injury, causation, and as
set  out  below  with  regard  to  Community  interest,  definitive  anti-dumping  measures
should  be  taken  in  order  to  prevent  further  injury  being  caused  to  the  Community
industry by the dumped imports. To establish the level of duty, account has been taken
of the dumping margins  found and  of the  amount  of  duty  necessary  to  eliminate  the
injury suffered by the Community industry.

(129) To establish the level of duty needed to remove the injury caused by dumping, injury
margins  have  been  calculated.  The  necessary  price  increase  was  determined  on  the
basis  of  a  comparison  of  the  weighted  average  import  price  with  the  non-injurious
price of rubber-grade carbon black sold by the Community industry on the Community
market.

(130) The non-injurious price has been obtained by taking the actual, verified sales prices of
the Community industry, adjusting these to a break even point, and then finally adding
a  profit  margin  that  may  reasonably  have  been  achieved  in  the  absence  of  injurious
dumping. The profit margin used for this calculation is 7% of turnover.

(131) The complainant submitted that a profit margin of 13% over capital employed (ROCE)
would be appropriate. It argued that this level of return was necessary to re-invest for
the long term and to achieve an adequate return on equity for shareholders.

(132) The  Court  of  First  Instance  has  ruled  that  it  is  normal  Community  practice  that  the
profit  margin  must  be  limited  to  the  profit  margin  which  the  Community  industry
could reasonably count on under normal conditions of competition, in the absence of
dumped  imports8.  Accordingly,  it  was  within  these  parameters  that  the  question  of
profitability was considered.

(133)

It  should  be  recalled  that  between  1997  and  1999,  the  Community  industry  average
profit  margins  were  above  10%  (over  turnover).  This  indicates  that  the  Community
industry  is  able  to  make  good  returns  when  fair  market  conditions  prevail.
Nevertheless the market conditions in this period are not necessarily representative of
the  market  conditions  existing  during  the  IP.  Accordingly,  an  examination  of  any
underlying  changes  in  the  market  between  the  beginning  and  the  end  of  the  period
considered was also made.

(134) The main users of the product concerned, the tyre manufacturers, were faced with an
economic slowdown and a decline in their profitability in 2000 and the IP. From the
submissions made in this case, it is clear that their ability to pass on price rises to their
customers  (car  manufacturers  in  the  first  place)  has  declined  over  the  period
considered.  In  order to preserve their own  profits  or  to  reduce  their  losses,  they  will
resist  as  much  as  possible  to  any  increase  in  their  own  costs.  At  the  same  time  raw

8

Case T-210/95 ruling dated 28 October 1999, recital 60.

28

                                                
material  prices  for  the  Community  industry  have  risen.  In  these  circumstances,  it  is
concluded that  there was no  likelihood  of  the  Community  industry  achieving  double
figure  profitability  during  the  IP.  Taking  all  circumstances  into  account,  7%  (over
turnover)  seems  to  be  a  reasonable  profit  that  the  Community  industry  could  have
achieved during the IP in the absence of dumped imports.

(135) The  difference  resulting  from  the  comparison  between  the  weighted  average  import
price and the non-injurious price of the Community industry was then expressed as a
percentage  of  the  total  CIF  import  value.  The  following  injury  margins9  have  been
calculated:

– 

– 

– 

– 

Alexandria Carbon Black: 12.1%

Omsky Zavod Technicheskogo Ugleroda OJSC : 29.3%

Jaroslavsky Technichesky Uglerod OJSC: 55.6%

Tuimasytechuglerod OJSC: 50.8%

(136)

In light of the foregoing, it is considered that, in accordance with  Article  9(4)  of the
basic  Regulation,  a  definitive  anti-dumping  duty  should  be  imposed  in  respect  of
imports  originating  in  Egypt  and Russia, at the level of the  dumping  margins  found,
since  these  are lower than the  injury margins  found,  for  all  the  exporting  companies
concerned.

7.

COMMUNITY INTEREST

7.1.

Preliminary remark

(137)

(138)

In  accordance  with  Article  21  of  the  basic  Regulation,  it  was  examined  whether  the
imposition of anti-dumping measures would be against the interest of the Community
as a whole. The determination of the Community interest was based on an examination
of all the various interests involved, in particular those of the Community industry, the
unrelated importers and the users of the product concerned.

In order to assess the likely impact of the imposition or non-imposition of measures,
the  Commission  requested  information  from  all  interested  parties  which  were  either
known to be concerned or which made themselves known. Questionnaires were sent to
the three complainant Community producers, the other producer in the Community, 12
unrelated  importers,  21  users  and  six  users'  associations.  The  three  complainant
Community  producers,  the  other  known  Community  producer,  four  importers  and
eight users replied to the questionnaires. One users' association made submissions.

(139) On this basis,  it  was  examined  whether,  despite  the  conclusions  on  dumping,  on  the
situation of the Community industry and on causation, compelling reasons exist which
would  lead  to  the  conclusion  that  it  is  not  in  the  Community  interest  to  impose
measures in this particular case.

7.2.

Interest of the Community industry

9

For confidentiality reasons only ranges are presented.

29

                                                
7.2.1.

Production capacity of the countries concerned

(140) On  the  basis  of  information  provided  by  exporting  producers  in  the  countries
concerned,  production  capacity  increased  from  207  000  tonnes  in  1997  to  272  000
tonnes in 2001. For the  years 2002 to 2004, both Egyptian and Russian co-operating
exporters foresee a stabilisation of their production capacity. As regards the past years,
the Egyptian producer is responsible for virtually all of the rise observed in cumulated
capacity.  Indeed,  Egyptian  capacity  has  more  than  doubled  between  1997  and  2000,
while Russian capacity only marginally increased.

(141) The information (including the forecasts) presented in the attached table comes from
the co-operating exporters themselves. This shows that the existing, verified capacity
currently amounts to 272 000 tonnes per year, a figure which has to be compared with
the tonnage imported in the EC from Egypt and Russia during the IP (approximately
100 000 tonnes).

(142) As concerns Russia, at the moment, the production and export of rubber-grade carbon
black  suitable  for  the  specific  needs  of  European  tyre  manufacturers  is  concentrated
essentially  with  two  large  co-operating  suppliers  (Omsk  and  Yaroslav).  However,
there  is  little  doubt  that  the  potential  for  exports  to  the  Community  is  larger  in  the
medium  term,  provided  that  some  modernisation  of  the  existing  industrial  base  is
carried out.

Co-operating exporters' production capacity of rubber-grade carbon blacks

(metric tonnes)

Egypt+Russia rubber-grade CB
From 1997 to 2001 : questionnaire response; from 2002 to 2004 : ACB and Russian companies  
(Omsk, Yaroslav, Tuimasy) response dated August 2002 to Commission services specific request.

1997
207500 229000 256250 268000 272000 272000 272000 272000

2004

2001

1999

2003

1998

2002

2000

(143) The  Egyptian  producer  has  repeatedly  expressed  its  ambition  to  become  the  world’s
largest carbon black producer at a single location, targeting an output capacity of 180
000  tonnes  per  annum  in  the  medium  run.  Given  the  limited  size  of  the  domestic
Egyptian market (estimated at 12 000 tonnes) and the growth rate of Egyptian exports
to  the  Community  observed  in  recent  years,  the  likelihood  of  significantly  increased
imports  is  clear.  It  should  also  be  remembered  that  this  producer  is  part  of  a  global
player, which has shown in the past its willingness and ability to shift production from
one plant to another.

(144) Finally,  the  investigation  has  shown  that  several  co-operating  users  are  testing  the
Egyptian and the Russian material for regular supply.  Is should be noted that not all
the  co-operating  users  as  yet  import  the  product  concerned  from  the  countries
concerned.

(145) As  a  conclusion,  there  is  a  clear  potential  for  an  even  larger  increase  of  imports  at

dumped prices, should measures not be imposed.

7.2.2. Risk of imminent further capacity shutdown in the Community

(146)

It  is  recalled  that  in  2000,  one  Community  producer  closed  two  production  units,  in
France and the UK (see recital (82) above). There are clear signs that, should dumped
imports continue, further plant closures by the Community industry are likely to occur.
Indeed,  another  Community  producer  has  very  recently  made  formal  steps  to  close
production lines in some member states.

30

7.2.3. Conclusion on Community industry interest

(147)

It  is  very  likely  that  without  measures  to  counter  the  injurious  effect  of  dumped
imports, the Community industry will lose more market share, will observe a further
deterioration  of  its  financial  situation  and  will  be  forced  into  plant  shutdowns.  The
Community  industry  has  proven  to  be  a  structurally  viable  industry.  This  was
confirmed  by  the  positive  development  of  its  economic  situation  at  a  time  when
competition was not distorted by dumping practices. Indeed, during the period 1997 to
1999,  when  the  market  share  of  the  imports  from  the  countries  concerned  was  still
relatively low (2% to 3%), its profitability was good (between 10% and 16%). Were
measures  to  be  imposed,  it  is  likely  that  the  Community  industry  would  be  able  to
improve its financial situation, being able to regain market share and increase its sales
volume.  This  should  allow  an  increase  of  capacity  utilisation  and  a  consequent
reduction of fixed-costs.

7.3.

Interest of unrelated importers

(148) The Commission sent questionnaires to 12 unrelated importers, of which four replied.
The co-operating importers opposed the imposition of anti-dumping measures on the
grounds of difficulties in finding new suppliers and of possible job losses.

(149) With respect to the difficulties  in  finding new sources of supply should  measures be
imposed,  the  investigation  established  that  other  sources  of  supply  outside  the
Community with no duty in force would still be available. Indeed, imports from other
third countries amounted to 8.1% of the Community consumption during the IP. While
approximately  2.7  percentage  points  of  these  imports  originated  from  companies
related  to  the  Community  industry  (see  recital  (116)  above),  the  remaining  5.4
percentage  points  were  not  controlled  by  the  Community  industry.  This  source  of
carbon  black,  which  can  be  increased  with  a  return  to  fair  market  conditions,  is
available to all users of the product concerned.

(150) As regards the possible job losses, the co-operating importers themselves admitted that
this  would  affect  a  very  small  number  of  jobs,  corresponding  to  the  number  of
employees  involved  in  the  trading  of  the  product  concerned,  out  of  a  total  of  276
employees.  It  should  be  noted  that  for  the  co-operating  importers  the  activity  of  the
product concerned represented on average around 2% of their total activity in terms of
turnover.

(151)

In  addition,  it  has  been  found  that  rubber-grade  carbon  blacks  are  sold  essentially
directly  to  the  users,  while  sales  via  importers  are  relatively  limited.  Indeed,  the
investigation  showed  that,  during  the  IP,  co-operating  importers  accounted  for  only
2% of Egyptian imports into the Community of the product concerned and for 28% of
the  Russian  imports.  During  the  same  period,  imports  made  directly  by  the  co-
operating users accounted respectively for 71% and for 67% of the imports concerned.

(152) On  the  basis  of  the  above,  it  was  concluded  that  the  imposition  of  measures  would,

overall, not have a significant negative effect on importers.

7.4.

Interest of users

(153) As mentioned in section 2.1, rubber-grade carbon blacks are used in the manufacture
of tyres  and  of  other  rubber  goods.  The  Commission  sent  questionnaires  to  21  users

31

and  six  users'  associations  and  received  replies  from  eight  tyre  manufacturers  and
submissions  from  one  users'  association,  BLIC  (Bureau  de  liaison  des  Industries  du
caoutchouc). During the IP, the co-operating users imported 71% of the imports into
the  Community  of  the  product  concerned  from  Egypt  and  67%  of  the  imports  from
Russia. They accounted for around 82% of the Community industry's sales and around
60% of the consumption of rubber-grade carbon blacks in the Community. Not all the
eight co-operating users import the product concerned from Egypt and Russia.

7.4.1. General

(154) Based on  their  own submission,  the eight  co-operating  users  account  for  93%  of  the

Community passenger car (replacement sales channel) tyre market.

(155) Co-operating  users  sell  their  products  via  two  distinct  sales  channels :  the  original
equipment (OE) sales channel, which represents some 28% of their total tyre sales and
the replacement tyres sales channel (72%). The pricing power of tyre manufacturers is
different  within  these  two  sales  channels.  Within  the  OE  sales  channel,  the  tyre
manufacturers  are  "price  takers"  (due  to  the  pressure  of  car/truck  manufacturers),
while within the replacement sales channel, they are more of "price makers", the result
being an OE tyre price approximately 25% lower than a replacement tyre price. In the
first  case, tyre manufacturers are  tied  to  the  activity  of  the  automotive  sector,  which
was already seeing falling sales volumes in the IP. The tyre industry alleges that due to
their  leveraged  purchasing  power  and  to  fierce  competition,  car  makers  request  and
obtain  a  drop  in  OE  tyre  prices  by  2%  to  6%  annually.  During  the  investigation,
several  co-operating  users  stated  that  they  make  no  profit  on  the  OE  sales  channel.
Conversely,  profits  were  made  in  the  replacement  sales  channel,  where  tyre
manufacturers either own their own distribution channel, or deal with numerous small
distributors with limited purchasing power. For this reason, smaller tyre manufacturers
had  deliberately  decided  to  be  present  only  on  the  replacement  market.  The
investigation has shown that, on a weighted average, co-operating users made a profit
of 3 to 5% during the IP, at a time when the Community industry was at break-even. It
is  therefore  considered  that,  although  the  co-operating  users  are  faced  with  a  certain
market pressure, they remain in a profitable financial position.

7.4.2.

Impact of anti-dumping measures on users

(156) The co-operating  users  claimed  that  the  imposition  of  anti-dumping  measures  would
have a serious adverse impact on their financial situation since they would not be able
to pass on the expected increase in costs resulting from the imposition of anti-dumping
measures to their customers.

7.4.2.1. Cost effects

(157) The investigation showed that rubber-grade carbon blacks represent on average 5% of
the  manufacturing  costs  of  co-operating  users  and  3.7%  of  their  total  costs.  The
weighted average duty for the countries concerned is 17%.

(158) As to the possible cost impact on users, the following has been considered.

(159) One  extreme  scenario  could  be  that  (scenario  1)  all  rubber-grade  carbon  black
consumption, including the one supplied by the Community industry, is impacted by

32

the  17%  price  increase,  i.e.  that  not  only  would  import  prices  increase,  but  that  the
Community industry would likewise increase its prices.

(160)

It was calculated that this would increase co-operating users’ total costs of production
by  0.7%  and  therefore  would  impact  the  co-operating  users'  profitability  by  0.7
percentage points, further assuming that they would not be able to pass on cost rises to
their  customers.  The  investigation  has  indeed  shown  that,  unlike  the  Community
industry,  co-operating  users  were  making  profits  in  the  IP  (between  3  and  5%  on
turnover on average).

(161) Another possibility could be (scenario 2) that only rubber-grade carbon black imported
from Egypt and Russia is impacted by a 17% price increase. In that case, co-operating
users’ total costs of production would rise by 0.1% and therefore the impact on profits
would be of 0.1 percentage point.

(162) On balance, it is estimated that the actual outcome is likely to stand in the middle of

these two scenarios, for the following reasons.

(163)

Indeed, probably the Community  industry  will increase its  prices  to  a  certain  extent,
but it will also likely take advantage of the relief in price pressure to regain lost market
share by pricing  competitively vis-à-vis  Egyptian and  Russian prices, making a  17%
price increase unlikely. In addition, the Community industry was operating below full
capacity during the  IP.  If they were to  return to full capacity, this would  reduce unit
costs  and  permit  higher  profitability  at  lower  prices.  In  addition,  some  10%  of  the
consumption of rubber grade carbon black is sourced from alternative suppliers (half
of  DGW  production  plus  imports  not  controlled  by  the  Community  industry).
Therefore, it is unlikely that a general price rise will happen or even be possible.

(164) The above cost impact calculations also assume that the increase in costs is absorbed
in full from profits. A more realistic scenario would however be that any extra-cost is
passed on at least in part to customers and thus will not fully impact on profits. In fact,
co-operating users have argued that they will not be able to pass on the price increase
to their OE customers. However, given the cumulated market share of the co-operating
users (93% of the Community tyre market) and in particular in the context of scenario
1,  whereby  they  would  all  be  affected  in  a  linear  fashion,  there  should  be  some
possibility to pass on price rises, at least in part. The same reasoning applies a fortiori
in the replacement tyre segment, which represents 72% of the total tyre sales.

7.4.2.2. Price effects

(165) Another way to examine the impact is to look at the price side.

(166) The  investigation  has  shown  that  the  average  ex-works  sales  price  for  a  “common”
passenger  car  tyre  in  the  replacement  segment  is  around  40  €.  For  a  truck  tyre,  this
would be approximately 203 €. Under scenario 1, the price of a car tyre and of a truck
tyre  is  increased  by  respectively  26  eurocents  and  1  euro  28  cents,  i.e  0.7%  in  both
cases.  Under  scenario  2,  price  increases  are  respectively  of  2  eurocents  and  11
eurocents, i.e 0.1 % in both cases.

(167) As to passenger car tyres sold at retail level to the end customer, based on an average
unit price of around 59 €/tyre, the price increase would be 30 eurocents under scenario
1 and 3 eurocents under scenario 2.

33

(168) As to OE tyres, for a car tyre worth 30 € and a truck tyre worth 182 €, results would be
as follows. Under scenario 1, the price of a car tyre and of a truck tyre is increased by
respectively 19 eurocents and 1 euro 15 cents, i.e 0.7% in both cases. Under scenario
2,  price  increases  are  respectively  of  2  eurocents  and  10  eurocents,  i.e  0.1%  in  both
cases.

Average**

17% AD duty Impact

Tyre unit price (Euro/tyre)

Passenger car and light truck, OE
Truck OE
Passenger car and light truck, replacement
Truck replacement
Passenger car and light truck, replacement

30
182
40
203
59

Scenario 1
0,19
1,15
0,26
1,28
0,30

Scenario2
0,02
0,10
0,02
0,11
0,03

Retailer price (Euro/tyre)*
Source: co-operating users
* for a tyre of the size 185/65HR14, price excluding V.A.T. but including fitting and balancing costs
** weighted average of the 8 co-operating users
Scenario 1 = price increase (in euro/tyre) if all rubber-grade carbon black consumption is impacted
Scenario 2 = price increase (in euro/tyre) if only consumption imported from Egypt and Russia is impacted

The above is summarised in the attached table.

7.4.3. Competition with tyre producers from third countries

(169) Some co-operating tyre producers claimed that the imposition of measures would lead
to them facing increased competition from imported tyres which would not be subject
to  the  effect  of  the  duties.  As  demonstrated  in  7.4.2  above,  any  price  increase  and
therefore deterioration of this competitive  situation is  likely to  be minimal.  It should
also be recalled that the tyre market in the Community is supplied to a degree of 93%
by the co-operating users who enjoy the advantage of being close to their customers.

(170) The  co-operating  users  also  claimed  that  the  proportion  of  tyres  produced  in  the
Community  and  exported  to  third  countries  would  be  placed  in  a  situation  of
competition  distortion  vis-à-vis  tyre  producers  not  subject  to  anti-dumping  measures
on these third country markets. Firstly, however, the inward processing regime would
allow  the  producers  of  tyres  intended  for  export  to  claim  back  the  anti-dumping
measures levied on  carbon black input imported from Egypt and Russia. In addition,
sales of tyres to third countries represented some 27% of the total sales of tyres during
the IP. While some co-operating users are indeed net exporters of tyres, some others
are  net  importers,  which  implies  that  part  of  their  Community  sales  will  not  be
affected by measures at all.

(171) Users  also  claimed  that  in  such  circumstances,  they  may  be  forced  to  re-locate
production  facilities  outside  the  Community.  A  process  of  relocation  outside  the
Community has indeed been undertaken by a number of  tyre  producers  in the recent
past.  However,  this  appears  to  be  for  strategic  reasons  in  order  to  locate  production
closer to expanding markets and also to reduce labour costs. There is no evidence that
the impact of the measures will either materially accelerate this process or lead to the
distortion of the Community tyre market.

7.4.4. Competition aspects

7.4.4.1. Strong market position

(172)

It  was  considered  whether  the  strong  market  position  held  by  the  Community
producers was such as to preclude competition taking place on the Community market
should measures be imposed.

34

(173) During  the  IP,  the  Community  industry  held  a  market  share  of  73.6%.  When  taking
into account the imports made by the Community industry from Hungary, the Czech
Republic,  the  USA,  and  Brazil,  this  would  result  in  a  market  share  of  76.3%.  This
leaves a market share of 23.7% not dependent upon the Community industry.

(174) Although  it  is  possible  that,  following  the imposition  of  measures,  sales  volume  and
market  share  of  the  imports  concerned  might  decrease,  imports  from  other  third
countries  would  still  represent  an  alternative  source  of  supply.  Those  imports
accounted  for  8.1%  of  the  Community  consumption  (5.4%  when  deducting  the
imports  made  by  the  Community  industry)  and  around  48%  of  the  imports  into  the
Community  market  during  the  IP  (32%  when  deducting  the  imports  made  by  the
Community  industry  from  their  own  facilities).  In  addition,  the  return  to  normal
market conditions should make the Community market more attractive to these other
sources of supply.

(175)

It should also be recalled that the aim of anti-dumping measures is not to stop access
into  the  Community  of  imports  against  which  the  measures  are  imposed,  but  to
eliminate  the  impact  of  distorted  market  conditions  arising  from  the  presence  of
dumped imports.

(176) Finally,  it  should  also  be  considered  that  all  Egyptian  and  Russian  producers  (with
duties based on the dumping margin) would, after the imposition of measures, still sell
at a price that is below the non-injurious price calculated for the purpose of the duties.

7.4.4.2. Difficulties in switching to alternative sources of supply

(177) Users argued that, due to the extensive authorisation procedure required to approve a
new carbon black supplier,  which  takes 2 to 5  years, it would  be  impossible  to  shift
rapidly from one supplier to another following any imposition of measures.

(178) The  investigation  confirmed  that  an  authorisation  procedure  is  indeed  required  to
approve a new carbon black supplier, although the time scale can be substantially less
than 2 years (e.g. minimum six months). As a consequence, it might take some time to
the tyre manufacturers to switch to sources of supply alternative to Egypt and Russia.
It  is  likely  therefore  that  they  will  keep  on  buying  from  the  countries  concerned
(although paying the duties) before eventually reverting to other sources of supply.

(179) Moreover,  it  was  found  that  approximately  20%  of  the  consumption  of  the  product
concerned  is  used  in  non-tyre  rubber  goods,  which  do  not  require  this  authorisation
procedure. These users will, therefore, be able to switch more rapidly to other sources
of supply.

(180) Finally,  given  the  nature  of  the  product  concerned  and  its  relatively  large  transport
costs, it is in the interest of the users themselves to keep  large,  reliable  and efficient
Community suppliers close to their own production facilities.

7.4.4.3. Competition between Community producers

(181) Several  interested  parties  alleged  that  the  Community  industry  had  price  agreements
and  implemented  price  rises  in  a  joint  manner.  Evidence  of  a  more  or  less
simultaneous  price  rise  in  April  2002  was  submitted  by  interested  parties  to  this
proceeding.

35

(182) Although  the  argument  refers  to  a  period  subsequent  to  the  IP,  the  Commission
assessed  the  matter  further,  within  the  framework  and  limitations  of  the  Basic
Regulation, in order to determine whether the possible impact on the investigation in
terms  of  competition  on  the  Community  market  is  significant.  Firstly,  it  should  be
noted  that  no  decision  on  a  possible  infringement  of  the  competition  rules  has  been
taken  by  the  Commission.  While  an  anti-trust  proceeding  has  been  initiated,  this
should  not,  in  the  absence  of  any  evidenced  findings,  deprive  the  Community
producers  of  carbon  black  of  their  right  to  obtain  relief  under  the  Basic  Regulation
against unfair  trade  practices.  Secondly,  on  the  merits  of  the  claim,  the  Commission
have  also  received  evidence  that,  over  the  period  considered,  Community  producers
lost  sales  volumes  to  other  Community  producers,  which  can  be  considered  as
indicating  that  competitive  behaviour  has  in  these  instances  taken  place  between
Community producers.

(183) Additionally,  as  previously  stated,  rubber-grade  carbon  blacks  production  costs  are
highly  dependent  on  the  price  of  oil.  The  price  increase,  announced  in  April  2002,
followed  a 30% price  increase  of  oil,  which  took  place  in  February  2002  and  which
was only partially covered by the subsequent price increases announced. The fact that
the price increases were simultaneous may have its reason in the fact that all the three
Community producers faced the same cost increase and were all in a situation of profit
squeeze.  Indeed,  in  their  longer-term  contracts  the  Community  producers  generally
foresee quarterly adaptations of their sales prices based on the oil price.

(184)

In  view  of  these  findings,  and  within  the  framework  and  limits  of  the  Basic
Regulation, it cannot be concluded at this stage that the overall competition situation
on  the  Community  market  would  be  such  as  to  constitute  a  compelling  reason  of
Community interest against measures.

(185) Furthermore,  according  to  Article  20(1)  of  Council  Regulation  17  of  6th  February
1962, which lays down procedural rules for investigations according to articles 81 and
82 (EC), “information acquired as a result of the application of  articles 11,12,13 and
14  shall  be  used  only  for  the  purpose  of  the  relevant  investigation”.  Article  20(2)
prohibits the disclosure of any information acquired under the provisions of Reg. 17.
In the present circumstances, this implies that the information gathered in the context
of  an  anti-trust  investigation  can  only  be  used  for  the  purpose  for  which  it  was
gathered. Hence, such information could in any event not be used for the purpose of
the anti-dumping investigation. Upon termination of the competition investigation, the
Commission’s anti-dumping will assess the implications for the present anti-dumping
case.  Should  the  Commission  establish  that  the  competition  rules  of  the  EC  Treaty
have  been  infringed,  the  Community  authorities  will  expeditiously  undertake  the
necessary  steps  to  ensure  that  the  companies  involved  do  not  benefit  from  anti-
dumping measures.

8.

UNDERTAKINGS

(186) The  two  Russian  exporting  producers  which  were  granted  market  economy  status
submitted offers of price undertakings before the expiry of the deadline for comments
subsequent to the disclosure of the definitive findings.

(187) These  applications,  in  the  current  form,  were  considered  impracticable  and  thus
unacceptable  mainly  because  the  sales  of  these  two  exporting  producers  to  the
Community  during  the  investigation  period  were  made  indirectly,  via  traders.  The

36

offers received did not explain clearly how this system, unacceptable under the terms
of an undertaking, would be changed.

(188)

In  the  light  of  these  facts,  it  was  concluded  that  a  proper  monitoring  could  not  be
satisfactorily guaranteed.

(189) The interested parties were informed accordingly and the reasons why the undertaking

offered could not be accepted were disclosed in detail to the exporters.

9.

CONCLUSION

(190) For the above reasons, it is unlikely that the possible impact on importers, users and on
competition  would  offset  the  positive  effect  on  the  Community  industry  of  the
measures against injurious dumping. Accordingly there are no compelling reasons that
would  make  the  imposition  of  anti-dumping  measures  on  injurious  dumped  imports
originating  in  the  countries  concerned,  as  proposed  in  recital  135,  against  the
Community interest.

37

HAS ADOPTED THIS REGULATION:

Article 1

1.

2.

A definitive anti-dumping duty is hereby imposed on imports of rubber-grade carbon
blacks for which the “Iodine Adsorption” value is of  20  mg/g  or  higher,  the  “DBP
Absorption”  value  is  of  25  to  200  ml/100g  and  the  “Individual  Pellet  Hardness”
value  is  of  15g  or  higher10,  currently  classifiable  within  CN  codes  ex  2803  00  10
(TARIC  code : 2803 00 10 10) and ex 2803  00 80 (TARIC  code  :  2803  00  80 10)
originating in Egypt and Russia.

The rate of duty applicable to the net-at-Community frontier price, before duty, for
products produced by the following companies shall be as follows:

Country

Company

Rate  of
duty (%)

TARIC
additional code

EGYPT

Alexandria Carbon Black Co. S.A.E.

All other companies

6,6

6,6

RUSSIA Omsky Zavod Technicheskogo Ugleroda OJSC 20,5

Jaroslavsky Technichesky Uglerod OJSC

Tuimasytechuglerod OJSC

All other companies

54,8

35

54,8

A424

A999

A425

A426

A427

A999

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

10

For the purpose of this Regulation, the Iodine Adsorption, the DBP Absorption and the Individual Pellet
Hardness are measured following the standard test methods issued by the American Society for Testing
and  Materials  (ASTM).  The  designations  of  these  standards  are:  ASTM  D1510-02a  for  the  Iodine
Adsorption,  ASTM  D2414-02a  for  the  DBP  Absorption  and  ASTM  D5230-00e1  for  the  Automated
Individual Pellet Hardness.

38