Proposal for a Council Regulation imposing a definitive anti-dumping duty on imports of certain flat rolled products of iron or non-alloy steel, of a width of 600 mm or more, not clad, plated or coated, in coils, not further worked than hot-rolled, originating in Egypt, Slovakia and Turkey, terminating the proceeding in respect of such imports originating in Hungary, Iran and Libya, amending Commission Decision No 283/2000/ECSC imposing a definitive anti dumping duty on imports of certain flat rolled products of iron or non-alloy steel, of a width of 600 mm or more, not clad, plated or coated, in coils, not further worked than hot-rolled, originating, inter alia, in Bulgaria and South Africa and specifying the rate of anti-dumping duty payable when a safeguard additional duty is payable
Date: 2003-02-21
Institutions: European Commission
Subjects: anti-dumping duty, anti-dumping legislation, flat product, import, iron and steel product, originating product, third country

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 21.2.2003
COM(2003) 84 final

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of certain flat rolled products of
iron or non-alloy steel, of a width of 600 mm or more, not clad, plated or coated, in coils,
not further worked than hot-rolled, originating in Egypt, Slovakia and Turkey,
terminating the proceeding in respect of such imports originating in Hungary, Iran and
Libya, amending Commission Decision No 283/2000/ECSC imposing a definitive anti
dumping duty on imports of certain flat rolled products of iron or non-alloy steel, of a
width of 600 mm or more, not clad, plated or coated, in coils, not further worked than
hot-rolled, originating, inter alia, in Bulgaria and South Africa and specifying the rate of
anti-dumping duty payable when a safeguard additional duty is payable

(presented by the Commission)

EPLANATORY MEMORANDUM

On 20 December 2001 the Commission initiated an anti-dumping investigation in respect of
imports  of  hot-rolled  iron  or  non-alloy  steel  coils  (HRC’s)  originating  in  Egypt,  Hungary,
Iran, Libya, Slovakia and Turkey. On the same date the initiation of a review investigation of
the definitive anti-dumping duties imposed in February 2000 on imports of HRC’s originating
in Bulgaria and South Africa was also published.

Given  the  complexity  of  the  investigation,  provisional  measures  were  not  imposed  in  the
former  proceeding.  Subsequently,  the  results  of  both  proceedings  were  combined  into  one
regulation imposing definitive measures on imports of HRC’s originating in Bulgaria, Egypt,
Slovakia, South Africa and Turkey and terminating the proceeding against Hungary, Iran and
Libya. Hungarian imports were found not to have had a material impact on the situation of the
Community industry, wheras imports from Iran and Libya were found to be de minimis, i.e.
below the 1% threshold compared to Community consumption of HRC’s.

Following disclosure of the  findings  of  both  investigations,  all interested parties were  given
the opportunity to submit their comments in writing and to request a hearing.

Significant dumping has been found for all exporting producers in Bulgaria, Egypt, Slovakia,
South Africa and Turkey, except for one South African company, which did not export during
the investigation period. For the latter company, it was established that there is a likelihood of
recurrence of injurious dumping should the measures be allowed to lapse and therefore it was
considered appropriate to maintain the original anti-dumping duty for that company. For the
other Bulgarian and South African companies, higher dumping was found than in the original
investigation and this change in circumstances was considered to have a lasting effect, leading
to  the  conclusion  that  anti-dumping  duties  should  take  into  account  the  higher  level  of
dumping found.

It  was  considered  that  the  Community  industry  has  suffered  material  injury  based  on  the
decline  of  production  volumes  and  the  rate  of  capacity  utilisation,  the  drop  in  free  market
sales  at  lower  price  levels,  the  reduction  of  market  share,  the  increase  of  the  cost  of
production,  the  negative  profitability  and  cash  flow  during  the  investigation  period  and  the
decrease of employment. It was found that the evolution of the volume and market shares of
low-priced  dumped  imports  from  Bulgaria,  Egypt,  Slovakia,  South  Africa  and  Turkey  and
their price-depressing effect had material negative consequences for the Community industry.
Other factors were investigated and the development of consumption and the cyclical nature
of  the  HRC  business  were  found  also  to  have  contributed  to  the  material  injury  of  the
Community  industry,  without  breaking,  however,  the  genuine  and  substantial  causal  link
between that injury and the dumped imports.

The introduction of anti-dumping measures on imports from Egypt, Slovakia and Turkey and
the continuation of  anti-dumping  measures  on  imports  from  Bulgaria  and  South  Africa  will
likely cause some financial losses at the level of certain Community traders and users if they
either do not change their purchase strategy or raise sales prices. However, on balance, these
likely costs for certain traders and users are not considered to constitute compelling reasons
against the imposition of anti-dumping measures.

Referring to the findings of higher dumping margins than in the investigation that led to the
imposition  of  the  measures  currently  in  force  against  Bulgaria  and  South  Africa,  it  is
concluded  that  the  injurious  situation  of  the  Community  industry  would  be  worsened  if  the
measures were allowed to lapse or were continued in their current level.

2

Undertakings have been offered from the exporting producers in [Bulgaria, Egypt, Slovakia,
South Africa and Turkey] and were accepted.

Regarding the parallel safeguard measures on HRC’s, a Council Regulation has been adopted
regarding  the  measures  that  may  be  taken  by  the  Community  in  relation  to  the  combined
effect of anti-dumping or anti-subsidy measures with safeguard measures. In the present case
it  is  considered  that  the  combination  of  the  above-mentioned  anti-dumping  duties  with  the
safeguard  measures  could  lead  to  effects  which  are  greater  than  desirable  in  terms  of  the
Community’s  trade  defence  policy.  The  Commission  should  therefore  propose  that  the
Council amend  the  level of  the  anti-dumping  duty applicable when  the safeguard  additional
duty is also payable.

It is hereby proposed that the Council adopts the attached proposal for Regulation.

3

Proposal for a

COUNCIL REGULATION

imposing a definitive anti-dumping duty on imports of certain flat rolled products of
iron or non-alloy steel, of a width of 600 mm or more, not clad, plated or coated, in coils,
not further worked than hot-rolled, originating in Egypt, Slovakia and Turkey,
terminating the proceeding in respect of such imports originating in Hungary, Iran and
Libya, amending Commission Decision No 283/2000/ECSC imposing a definitive anti
dumping duty on imports of certain flat rolled products of iron or non-alloy steel, of a
width of 600 mm or more, not clad, plated or coated, in coils, not further worked than
hot-rolled, originating, inter alia, in Bulgaria and South Africa and specifying the rate of
anti-dumping duty payable when a safeguard additional duty is payable

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  1995  on  protection
against  dumped  imports  from  countries  not  members  of  the  European  Community1
(hereinafter referred to as ‘the Basic Regulation’), and in particular Article 9 and Article 11(3)
thereof,

Having  regard  to  Council  Regulation  (EC)  No  963/2002  of  3  June  2002  laying  down
transitional provisions concerning anti-dumping and anti-subsidy measures adopted pursuant
to Commission Decision No 2277/96/ECSC and No 1889/98/ECSC as well as pending anti-
dumping  and  anti-subsidy  investigations,  complaints  and  applications  pursuant  to  those
Decisions2,

Having regard to Council Regulation (EC) No REG .../2003

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

Whereas:

1. Legal basis

A. PROCEDURE

(1)

The  Treaty  establishing  the  European  Coal  and  Steel  Community  (ECSC  Treaty)
expired  on  23  July  2002.  Products,  which  were  covered  by  the  ECSC  Treaty,  are
currently  subject  to  the  Treaty  establishing  the  European  Community  as  of  24  July

1

2

OJ  L  56,  6.3.1996,  p.1.  Regulation  as  last  amended  by  Regulation  (EC)  No  1972/2002  (OJ  L  305,
7.11.2002, p.1)
OJ L 149, 7.6.2002, p.3

4

                                                
2002.  In  accordance  with  Council  Regulation  (EC)  No  963/2002  all  anti-dumping
investigations pending at that date are therefore governed by the Basic Regulation.

2. Measures in force

In  February  2000,  by  Commission  Decision  No  283/2000/ECSC3,  the  Commission
imposed  definitive  anti  dumping  duties  on  imports  of  certain  flat  rolled  products  of
iron  or  non-alloy  steel,  not  further  worked  than  hot  rolled,  originating  in  Bulgaria,
India, Taiwan, South Africa, and the Federal Republic of Yugoslavia.

The  level  of  the  definitive  anti-dumping  duties  found  for  the  exporting  producers  in
Bulgaria and South Africa subject to the above mentioned investigation expressed as a
percentage of the CIF frontier value was as follows:

- Bulgaria
Kremikovtzi 
Sofia, 

Corporation,
Botunetz

All other companies

- South Africa
Iscor,  Ltd.  Pretoria,  and
Saldanha  Steel  (PTY)  Ltd.,
Saldanha

Steel 

and
Highveld, 
Vanadium  Corporation  Ltd.,
Witbank

7.5%

7.5%

5.2%

37.8%

All other companies

37.8%

By  the  same  Decision,  the  Commission  also  accepted  a  minimum  price  undertaking
offered  by  the  sole  known  exporting  producer  in  Bulgaria  and  by  one  of  the  two
known exporting producers in South Africa, namely Highveld.

3. Present investigations

Pursuant  to  Article  5  of  Decision  n°  2277/96/ECSC4  (the  ECSC  Decision),  the
Commission  on  20  December  2001  announced  by  a  notice  (‘notice  of  initiation’)
published  in  the  Official  Journal  of  the  European  Communities5  the  initiation  of  an
anti-dumping  proceeding  with  regard  to  imports  into  the  Community  of  certain  flat
rolled  products  of  iron  or  non-alloy  steel,  of  a  width  of  600  mm  or  more,  not  clad,
plated  or  coated,  in  coils,  not  further  worked  than  hot-rolled  (‘hot  rolled  coils  or
HRC’s’), originating in Egypt, Hungary, Iran, Libya, Slovakia and Turkey.

OJ  L  31,  5.2.2000,  p.15  as  last  amended  by  Commission  Decision  No  1043/2002/ECSC  (OJ  L  157,
15.6.2002, p.45).
OJ  L  308,  29.11.1996,  p.  11,  as  amended  by  Commission  Decision  No  1000/1999  (OJ  L  122,
12.5.1999, p.35).
OJ C 364, 20.12.2001, p.5

5

(2)

(3)

(4)

(5)

3

4

5

                                                
(6)

(7)

(8)

(9)

(10)

(11)

Pursuant  to  Article  11(3)  of  the  ECSC  Decision,  the  Commission  on  20  December
2001  announced  by  a  notice  published  in  the  Official  Journal  of  the  European
Communities6,  the  initiation  of  a  review  of  the  definitive  anti-dumping  duties  and
undertakings  imposed  by  Commission  Decision  No  283/2000/ECSC  as  amended  by
Commission  Decision  No  1043/2002/ECSC  on  imports  of  HRC’s  originating  in
Bulgaria and South Africa.

The  initiation  of  the  investigations  resulted  from  a  complaint  and  a  request  for  a
review  lodged  in  November  2001  by  Eurofer  (European  Confederation  of  Iron  and
Steel  Industries)  (‘the  complainant’)  on  behalf  of  producers  representing  a  major
proportion  of  the  total  Community  production  of  HRC’s.  The  complaint  contained
prima  facie  evidence  of  dumping  of  HRC’s  originating  in  Egypt,  Hungary,  Iran,
Libya, Slovakia and Turkey and of material injury resulting therefrom. The request for
a review contained prima facie evidence that dumping continued and that the existing
measures  against  imports  from  Bulgaria  and  South  Africa  were  not  sufficient  to
counteract the injurious effects of dumping. The evidence contained in the complaint
and the request for a review was considered sufficient to justify the initiation of both
anti-dumping 
reasons  of  administrative  efficiency  both
investigations were combined.

investigations.  For 

The Commission officially advised the complainant Community producers, as well as
the  other  known  Community  producers, 
importers,
Community users and suppliers known to be concerned and the representatives of the
exporting countries of the initiation of the investigations. Interested parties were given
the opportunity to make their views known in writing and to request a hearing.

the  exporting  producers, 

A  number  of  exporting  producers,  as  well  as  complainant  and  other  Community
producers, importers and users made their views known in writing. All parties, who so
requested and indicated that there were particular reasons why they should be heard,
were granted a hearing.

The  Commission sent  questionnaires  to  all  parties  known  to  be  concerned  and  to  all
the other companies that made  themselves known within the deadlines set out  in the
notices  of  initiation.  Replies  were  received  from  the  nine  complaining  Community
producers,  seven  other  Community  producers,  nine  exporting  producers  and  eleven
importers related to these exporting producers, two unrelated importers, four unrelated
importers/users and one user in the Community.

The Commission sought and verified  all the information it deemed  necessary  for  the
purpose  of  the  determination  of  dumping,  resulting  injury  and  Community  interest.
Furthermore,  in  the  framework  of  the  interim  review  concerning  the  definitive  anti-
dumping duties imposed on imports of the product concerned originating in Bulgaria
and  South  Africa,  the  Commission  carried  out  an  investigation  as  to  whether  it  was
likely that injurious dumping would continue/recur should the anti-dumping measures
be  modified  or  allowed  to  lapse,  i.e.  whether  changed  circumstances  could  be
reasonably  considered  of  a  lasting  nature.  Verification  visits  were  carried  out  at  the
premises of the following companies:

a) Exporting producers

6

OJ C 364, 20.12.2001, p.8

6

                                                
- Bulgaria

Kremikovtzi Corporation, Sofia, Botunetz

- Egypt

Alexandria National Steel and Iron Company, Alexandria

- Hungary:

DUNAFERR SteelWorks Company Limited, Dunaujvaros
DUNAFERR Kereskedöház Kft.(Trading House), Budapest
DWA Hideghengermü Kft., Dunaujvaros

- Iran:

Mobarakeh Steel Company, Esfahan

- Libya

Libyan Iron and Steel Company (Lisco), Misurata

- Slovakia

U.S. Steel Kosice, Kosice

- South Africa

Highveld Steel and Vanadium Corporation Ltd, Witbank
Iscor Ltd, Pretoria and Saldanha Steel (PTY) Ltd, Saldanha

- Turkey

Ereğli Demir ve Celik Fabrikalari T.A.Ş, Zonguldak
Borçelik Celik Sanayii Ticaret A.S., Bursa

b) Producers in the Community

- Aceralia Corporacion Siderurgica, Madrid, Spain

- Corus Staal B.V., Ijmuiden, The Netherlands

- Corus U.K., London, United Kingdom

- ILVA Spa, Genova, Italy

- Salzgitter Flachstahl GmbH, Salzgitter, Germany

- Sidmar N.V., Gent, Belgium

- Stahlwerke Bremen GmbH, Bremen, Germany

- Thyssen Krupp Stahl AG, Duisburg, Germany

7

c) Unrelated importer in the Community

- Stemcor Europe Limited, London, United Kingdom

(d) Unrelated importer/user in the Community

Marcegaglia S.p.A., Gazoldo Ippoliti, Italy

(e) Related importers in the Community

- US Steel Kosice Germany GmbH, Düsseldorf, Germany

(f) Related companies outside the Community

-Kremikovtzi Trade EOOD, Sofia, Bulgaria

-Mac Steel International South Africa, Johannesburg, South Africa

(12)

The investigation of dumping and injury covered the period from 1 January 2001 to 31
December 2001 (‘investigation period’ or ‘IP’). The examination of trends relevant for
the assessment of injury covered the period from 1 January 1998 to the end of the IP
(‘the period considered’). These periods were also used for the review investigation.

(13) Given  the  complexity  of  the  present  investigation  provisional  measures  were  not
imposed in the proceeding initiated pursuant to Article 5 of the Basic Regulation.

(14) All  parties  were  informed  of  the  essential  facts  and  considerations  on  the  basis  of

which it was intended to recommend

(i) the imposition of definitive anti-dumping duties on imports of HRC’s originating in
Egypt, Slovakia and Turkey,

(ii)  the  termination  of  the  proceeding  against  imports  of  HRC’s  originating  in
Hungary, Iran and Libya.

(iii)  to  amend  Commission  Decision  283/2000/ECSC  imposing  definitive  anti-
dumping  duties  on,  inter  alia,  imports  of  HRC’s  originating  in  Bulgaria  and  South
Africa and accepting undertakings from certain exporting producers

In  accordance  with  the  provisions  of  the  basic  Regulation  parties  were  granted  a
period in which they could make representations subsequent to this disclosure.

(15)

The oral and  written comments submitted by the parties were  considered  and, where
appropriate, the definitive findings have been modified accordingly.

4. Opening of the present investigations

(16)

It  has  been  claimed  that  the  non-inclusion  of  Russian  imports  in  the  complaint
constitutes discrimination and infringement of Article 9(5) of the basic Regulation. In
this respect it is noted that no complaint against this country was lodged and that no
prima  facie  evidence  of  dumping  and  injury  justifying  the  initiation  of  an  anti-
dumping  investigation  was  available.  As,  furthermore,  the  investigation  has  not
revealed any evidence, which could point to injurious dumping practices by this third
country’s exports, the allegation of discrimination was not found to be substantiated.

8

5. Other investigations and measures in force

(17) On  28  September  2002  the  Commission  by  Commission  Regulation  (EC)  No
1694/20027  imposed  definitive  safeguard  measures  against  imports  of  certain  steel
products  of  which  HRC’s  form  a  product  group.  Based  on  this  Regulation,  HRC’s
currently  fall  under  a  tariff  quota  system  above  which  an  additional  safeguard  duty
rate applies.

(18) Based  on the Commission Decision mentioned  in  recital  (2)  anti-dumping  measures,
not subject to the review investigation, are currently in force against imports of HRC’s
from India, Taiwan and the Federal Republic of Yugoslavia.

(19) By  Commission  Decision  No  284/2000/ECSC  of  4  February  20008  definitive
countervailing duties were imposed on imports of hot rolled coils originating in India
and Taiwan. By the same Decision the Commission accepted undertakings offered by
certain exporting producers in India.

B. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT

1. Product under consideration

(20)

(21)

The definition  of  the  product  concerned  corresponds  to  the  one  that  was  used  in  the
investigation mentioned under recital (2) above.

The  product  under  consideration  is  certain  flat  rolled  products  of  iron  or  non-alloy
steel, of a  width of 600 mm or more,  not  clad, plated or coated, in  coils,  not further
worked than hot-rolled. This product is currently classifiable within CN codes 7208 10
00, 7208 25 00, 7208 26 00, 7208 27 00, 7208 36 00, 7208 37 10, 7208 37 90, 7208 38
10, 7208 38 90, 7208 39 10 and 7208 39 90.

(22) HRC’s can be classified according to their finishing: black HRC’s can be considered
the basic product as opposed to pickled HRC’s, which undergo an additional surface
treatment called pickling. The distinction between the two major types is reflected in
the CN codes (7208 25 00, 7208 26 00, 7208 27 00 are pickled).

(23)

The  investigation  showed  that  both  major  types  of  HRC’s  are  imported  from  the
exporting  countries  under  investigation  (“the  countries  concerned”),  although  black
coils  form  the  majority  of  imports,  as  also  already  found  in  the  above  mentioned
former review investigation. Notwithstanding the fact that each CN code corresponds
to a distinguishable type of HRC’s mainly based on thickness and surface treatment, it
was found that they all have identical or similar physical and technical characteristics
and uses. Accordingly, all types  of HRC’s form one single product falling under  the
CN codes listed in recital 21 above.

2. Like product

(24)

Similar to the findings of the investigation mentioned  under  recital (2) above, it was
found that there were no differences in the basic physical and technical characteristics
and  uses  of  the  HRC’s  imported  into  the  Community  originating  in  the  countries

7

8

OJ L 261, 28.9.2002, p.1
OJ L 31, 5.2.2000, p.44

9

                                                
concerned and the HRC’s produced by the Community industry. It was also found that
there was no difference between the HRC’s produced in the countries concerned and
exported  to  the  European  Community  and  those  sold  on  the  domestic  market  of  the
same countries. It was therefore concluded that both the HRC’s produced and sold by
the Community industry on the Community market and the HRC’s produced and sold
on the domestic market of the countries concerned were, within the meaning of Article
1(4) of  the basic Regulation,  alike to the HRC’s  imported  into  the  Community  from
the countries concerned.

C. DUMPING

1. General methodology

(25)

The  general  methodology  set  out  hereinafter  has  been  applied  for  all  exporting
countries  concerned  by  the  present  proceeding.  The  presentation  of  the  findings  on
dumping for each of the countries concerned therefore only describes what is specific
for each exporting country.

Normal value

(26) As  far  as  the  determination  of  normal  value  is  concerned,  the  Commission  first
established,  for  each  exporting  producer,  whether  its  total  domestic  sales  of  HRC’s
were  representative  in  comparison  with  its  total  export  sales  to  the  Community.  In
accordance with Article 2(2) of the Basic Regulation, domestic sales were considered
representative when the total domestic sales volume of each exporting producer was at
least 5% of its total export sales volume to the Community.

(27)

(28)

The Commission subsequently identified those product types, sold domestically by the
companies  having  representative  domestic  sales,  that  were  identical  or  directly
comparable  to  the  types  sold  for  export  to  the  Community.  Product  types  were
considered directly comparable when, although almost identical, they nevertheless had
some minor physical differences such as length or width.

For each type sold by the exporting producers on their domestic markets and found to
be  directly  comparable  to  the  type  sold  for  export  to  the  Community,  it  was
established whether domestic sales were sufficiently representative for the purposes of
Article  2(2)  of  the  Basic  Regulation.  Domestic  sales  of  a  particular  type  were
considered  sufficiently  representative  when  the  total  domestic  sales  volume  of  that
type during the IP represented 5% or more of the total sales volume of the comparable
type exported to the Community.

(29) According to Articles 2(3) and 2(4) of the Basic Regulation, an examination was also
made as to whether the domestic sales of each type could be regarded as having been
made in the ordinary course of trade, by establishing the proportion of profitable sales
to  independent  customers  of  the  type  in  question.  In  cases  where  the  sales  volume,
sold at a net sales price equal to or above the calculated cost of production, represented
80% or more of the total sales volume and in cases where the weighted average price
of that type was equal to or above the cost of production, normal value was based on
the  actual  domestic  price,  calculated  as  a  weighted  average  of  the  prices  of  all
domestic sales made during the IP, irrespective of whether these sales were profitable
or not. In cases where the volume of profitable sales of HRC’s represented less  than

10

80% but 10% or more of the total sales volume, normal value was based on the actual
domestic price, calculated as a weighted average of profitable sales only.

(30)

In cases where the volume of profitable sales of a type represented less than 10% of
the  total  sales  volume,  it  was  considered  that  this  type  was  sold  in  insufficient
quantities for the domestic price to provide an appropriate basis for the establishment
of the normal value.

(31) Wherever domestic prices of a particular type sold by an exporting producer could not
be used in order to establish normal value, another method had to be applied. This was
the case for Bulgaria, Egypt, Slovakia and Turkey.  In this regard, Article 2(1) of the
Basic  Regulation  foresees  that  prices  of  the  product  concerned  charged  on  the
domestic  market  by  another  producer  may  be  used.  However,  in  Bulgaria,  Slovakia
and  Turkey,  there  was  only  one  exporting  producer  and  in  Egypt,  only  one  of  the
existing  exporting  producers  co-operated  in  the  present  proceeding.  Therefore,  no
information was available concerning domestic sales prices of other producers of hot
rolled coils in these countries. In any case, it was also considered that the large variety
of  different  types  of  the  product  concerned,  depending  in  particular  on  steel  grades,
width,  length,  strip  treatment  and  strip  pattern,  would  have  implied  numerous
adjustments, which, in turn, would have to be based on estimates, had prices by other
producers  for  such  types  been  used  to  establish  normal  value.  Consequently,  normal
value  was  constructed  in  accordance  with  Article  2(3)  of  the  Basic  Regulation  by
adding  to  the  manufacturing  cost  of  the  exported  types  a  reasonable  percentage  for
selling,  general  and  administrative  expenses  (“SG&A”)  and  a  reasonable  margin  of
profit realised on the domestic market.

(32)

Therefore,  the  Commission  examined  whether  the  SG&A  incurred  and  the  profit
realised  by  each  of  the  producing  exporters  concerned  on  the  domestic  market
constituted reliable data.

(33) Actual domestic SG&A expenses were used where the domestic sales volume of the
company concerned  could be regarded  as representative.  The domestic  profit  margin
was determined on the basis of domestic sales made in the ordinary course of trade. In
all cases where these conditions were not met, the Commission examined whether data
of  other  exporters  or  producers  could  be  used.  As  already  mentioned  above,  for
Bulgaria, Slovakia and Turkey there was only one exporting producer, while for Egypt
only  one  of  the  two  known  exporting  producers  co-operated  during  the  present
investigations. In the case of South Africa, only two exporting producers co-operated
and therefore, data of the remaining co-operating exporting producer could not be used
to establish  the amount of profit for the  other  exporting  producer,  as  one  set  of  data
can not be considered as a weighted average in the meaning of Article 2(6)(a) of the
Basic Regulation. Therefore, whenever possible, the Commission used the amount of
SG&A expenses and profit applicable to the same general category of products for the
exporting producer concerned  as  a  basis  for  the  construction  of  the  normal  value,  in
accordance with Article 2(6)(b) of the Basic Regulation. In all other cases, SG&A and
profits were established in accordance with Article 2(6)(c) of the Basic Regulation, i.e.
on the basis of any other reasonable method.

(34)

Finally,  in  cases  where  the  exporting  producer  was  located  in  a  country  with
significant  inflation,  normal  value  was  established  on  a  monthly  basis,  in  order  to
make the comparison with the export price as fair as possible.

11

Export price

(35)

In  all  cases  where  hot  rolled  coils  were  exported  to  independent  customers  in  the
Community,  the  export  price  was  established  in  accordance  with  Article  2(8)  of  the
Basic Regulation, namely on the basis of export prices actually paid or payable.

(36) Where  the  export  sale  was  made  via  a  related  importer,  the  export  price  was
constructed pursuant to Article 2(9) of the Basic Regulation, duly adjusted for all costs
incurred  between  importation  and  resale,  as  well  as  a  reasonable  margin  for  SG&A
and profits for the related importer. In this regard, the related importer’s own SG&A
costs  were  used.  The  profit  margin  was  established  on  the  basis  of  the  information
available from co-operating unrelated importers.

Comparison

(37)

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
justified, accurate and supported by verified evidence.

Dumping margin for the companies investigated

(38) According  to  Article  2(11)  of  the  Basic  Regulation,  for  each  exporting  producer  the
weighted  average  normal  value  by  type  was  compared  with  the  weighted  average
export price.

Residual dumping margin

(39)

(40)

(41)

For  non-co-operating  companies,  a  “residual”  dumping  margin  was  determined  in
accordance with Article 18 of the Basic Regulation, on the basis of the facts available.

For  those  countries  with  a  reported  level  of  export  volume  close  to  the  information
provided by Eurostat, it was considered that the level of the country-wide co-operation
was  high.  Indeed,  in  these  cases,  there  was  no  reason  to  believe  that  any  exporting
producer  abstained  from  co-operating.  Therefore,  it  was  decided  to  set  the  residual
dumping  margin  at  the  level  of  the  co-operating  company  with  the  highest  dumping
margin in order to ensure the effectiveness of any measures.

For those countries where the level of co-operation was low, i.e. the reported level of
export volume by the co-operating companies represented less than 80% of the import
volume  recorded  in  Eurostat,  the  residual  dumping  margin  was  determined  on  the
basis  of  the  highest  dumped  export  sales  to  the  Community  of  representative
quantities.  This  approach  was  also  considered  necessary  in  order  to  avoid  giving  a
bonus for non-co-operation and in view of the fact that there were no indications that a
non-co-operating party had dumped at a lower level.

2. Bulgaria

(42)

The sole known exporting producer replied to the questionnaire. Part of the domestic
sales  was  sold  to  a  related  company,  which  re-sold  the  product  concerned  on  the
domestic market. The information concerning re-sales of the product concerned to the

12

first independent customers as well as costs incurred  when reselling the product was
collected and verified during the on-spot verification visit.

Normal value

(43)

Since domestic sales of HRC’s were not  representative  when  compared  with  exports
of the product concerned to the Community, and given that there were no other known
producers  of  HRC’s  in  Bulgaria,  normal  value  had  to  be  constructed  in  accordance
with Article 2(3) of the Basic Regulation.

(44) As far  as  SG&A  and profits are  concerned, it was examined  whether  these  could  be
established in accordance with Article 2(6)(b) of the Basic Regulation, i.e. on the basis
of the actual amounts applicable to production and sales of the same general category
of products. Since this data was not available, the Commission based the calculation of
SG&A  and  profit  on  any  reasonable  basis  in  accordance  with  Article  2(6)(c)  of  the
Basic  Regulation.  In  the  absence  of  any  other  more  reliable  information,  it  was
considered  that  the  information  submitted  by  the  Community  industry  in  the  request
was the most reasonable basis and was therefore used. In any event, this approach was
the most favourable with regard to the exporting producer concerned.

Export price

(45) All export sales were made directly to independent customers in the Community and
the  export  price  was  therefore  established  pursuant  to  Article  2(8)  of  the  Basic
Regulation.  It  is  noted  that  these  prices  were  in  accordance  with  the  minimum  price
undertaking in force.

Comparison

(46) Adjustments were made for differences in inland freight costs and bank charges.

Dumping margin

(47)

The comparison between the normal value and the export price showed the existence
of  dumping  in  respect  to  the  co-operating  exporting  producer,  despite  the  exporter
respecting  the  minimum  price  undertaking.  The  dumping  margin  expressed  as  a
percentage of the CIF import price at the Community border is

Kremikovtzi  Corporation,  Sofia,  Botunetz,  and  Kremikovtzi  Trade  EOOD,  Sofia,
Botunetz : 8.6%

(48)

It  was  found  that  the  level  of  co-operation  for  Bulgaria  was  high  and  the  residual
dumping margin was set at the same level as for the co-operating company, i.e. 8.6%.

3. Egypt

(49) One  exporting  producer  replied  to  the  questionnaire.  Part  of  the  domestic  sales  was
made  to  a  related  company,  which  re-sold  the  product  concerned  on  the  domestic
market.

13

Normal value

(50) Nearly  half  of  the  domestic  sales  were  made  in  the  ordinary  course  of  trade  and
normal  value  was  therefore  established  on  the  basis  of  the  domestic  sales  price  in
accordance with Article 2(1) of the Basic Regulation. For the remaining product types
exported to the Community for which no or insufficient domestic sales were made in
the ordinary course of trade, normal value was constructed in accordance with Article
2(3) of the Basic Regulation.

(51) Normal  value  was  constructed  on  the  basis  of  the  cost  of  manufacturing  and  the
SG&A expenses per product type incurred on domestic sales as established during the
investigation, i.e. costs per product type were used. The profit margin was determined
on the basis of domestic sales made in the ordinary course of trade in accordance with
Article 2(6) of the Basic Regulation.

(52) As  far  as  sales  of  the  product  concerned  via  the  related  company  on  the  domestic
market are concerned, normal value was established on the basis of the resale price to
the first independent customer. In order to determine whether these sales were made in
the ordinary course of trade, SG&A of the related company as established during the
on  spot  investigation  were  added  to  the  reported  cost  of  production  of  the  relevant
product types of the exporting producer.

Export price

(53) All export sales were made directly to independent customers in the Community and
the  export  price  was  therefore  established  pursuant  to  Article  2(8)  of  the  Basic
Regulation.

Comparison

(54) Adjustments were made for sales discounts, inland transport, ocean freight cost, bank

charges, packing cost and credit cost.

(55) As far as bank charges for export sales to the Community are concerned, these had to
be corrected on the basis of the findings during the on-spot verification because of a
clerical error in the reporting. Also, costs for the letter of credit issued for each export
sale were not reported and had to be added on the basis of actual figures found during
the on-spot investigation.

(56)

The company also claimed an adjustment for import duties paid for raw materials used
in  the  production  of  the  product  concerned  when  intended  for  consumption  on  the
domestic market and not collected or refunded in respect of the product exported to the
Community  on  the  basis  of  Article  2(10)(b)  of  the  Basic  Regulation.  Although,  a
certain  amount  was  received  per  exported  ton  of  flat  products  including  HRC,  the
amount received when exporting HRC only could not be quantified. Furthermore, no
evidence could be provided that duties refunded when the product was exported were
incorporated in the normal value. The claim had therefore to be rejected.

Dumping margin

(57)

The comparison between the normal value and the export price showed the existence
of  dumping  in  respect  of  the  co-operating  exporting  producer.  The  dumping  margin

14

expressed as a percentage of the CIF import price at the Community border is

Alexandria National Iron & Steel Company, Eldekheila, Alexandria: 34,4%

(58)

It was found that the level of co-operation for Egypt was low. The residual dumping
margin  was  therefore  determined  on  the  basis  of  the  weighted  average  dumping
margin of the highest dumped product types exported to the Community representing
10%  of  the  total  export  sales  volume  during  the  investigation  period.  The  residual
dumping margin amounted thus to 58,4%.

4. Hungary, Iran and Libya

(59)

For the reasons set out in recital (186) and (130) below, the proceeding was terminated
in respect of imports of hot rolled  coils  originating in  Hungary,  Iran  and  Libya.  It is
noted  that  the  dumping  margin  for  the  sole  Hungarian  exporting  producer  after
comparing normal value and export prices amounted to around 20%.

5. Slovakia

(60)

The  sole  known  exporting  producer  and  its  four  related  importers  replied  to  the
questionnaire.

Normal value

(61)

(62)

The  exporting  producer’s  domestic  sales  of  HRC’s  were  not  representative  when
compared with its exports of HRC’s and domestic prices could therefore not serve as a
basis  for  normal  value.  Given  the  fact  that  there  were  no  other  known  producers  of
HRC’s  in  Slovakia,  normal  value  could  not  be  based  on  prices  of  other  sellers  or
producers.

The exporting producer claimed that although domestic sales were below the threshold
referred  to  in  Article  2(2)  of  the  Basic  Regulation,  they  were  still  of  sufficient
magnitude to serve as a basis for the determination of normal value. It should be noted
that besides the fact that domestic sales were significantly below the 5% threshold, the
actual quantities sold by the company were fairly limited.

(63) Consequently, normal value was constructed. In accordance with Article 2(6)(b) of the
Basic  Regulation,  the  SG&A  expenses  and  profit  used  were  those  applicable  to
production and sales of the same general category of products, i.e. hot rolled products
(coils,  sheets  and  strips),  for  the  exporting  producer  in  question  in  Slovakia.  The
domestic sales of hot rolled products were made in significant quantities.

(64)

The  exporting  producer  claimed  that  SG&A  expenses  and  profit  used  by  the
Commission were influenced by the high profit made on one particular product out of
those belonging to the same general category used to determine SG&A expenses and
profit.  The  exporting  producer  claimed  an  adjustment  for  physical  differences  under
Article  2(10)(a)  of  the  Basic  Regulation,  which  would  correspond  to  a  reasonable
estimate  of  the  market  value  of  the  difference  between  coils  and  the  higher  priced
product. Alternatively,  an adjustment  for  other  factors  within  the  meaning  of  Article
2(10)(k) should be granted.

(65)

It is noted that in this case, as mentioned above in recital (61) and in accordance with
Article 2(6) of the Basic Regulation, data pertaining to sales of the product concerned

15

could not be used for the calculation of the constructed normal value and SG&A and
profit from the same general category of products were used instead. By definition, the
general  category  is  composed  of  several  products  the  actual  amounts  of  SG&A  and
profit of which form an average and accordingly, individual values may be  above or
below the  average  arrived  at.  Furthermore,  the  exporter’s  argument  is  circular:  since
SG&A  and  profit  for  the  product  concerned  could  not  be  used  because  of  not  being
representative, it is also impossible to base an adjustment on this unreliable set of data.

(66)

Finally,  Article  2(10)  concerns  differences  affecting  price  comparability  between
normal  value  and  export  price  of  the  product  concerned.  An  alleged  difference  in
profit margins between the like  product  and one of  the  products of the  same general
category of products is not in itself relevant under Article 2(10). Since no comparison
was established between HRC’s (the product concerned) and the other products, which
compose  the  same  general  category  of  products,  no  adjustment  is  necessary.
Furthermore,  differences  in  physical  characteristics  between  the  products  within  the
same general category are reflected both in costs and prices. By using actual costs and
prices of each of the products the Commission has duly taken account of any of such
differences.

Export price

(67) Around  50%  of  export  sales  were  made  directly  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  export  prices  actually  paid  or
payable. The remaining export sales were made through four related importers, based
in the Community.

(68) Where  the  export  sale  was  made  via  a  related  importer,  the  export  price  was

constructed pursuant to Article 2(9) of the Basic Regulation.

(69)

For  those  sales  made  by  the  exporting  producer  to  a  related  end-user,  representing
10% of the quantity exported and which were not resold in the condition in which they
were imported, the Commission considered it appropriate to disregard these sales since
the remaining export sales were a representative basis for the dumping calculation.

Comparison

(70) Adjustments  were  made  for  differences  in  physical  characteristics,  level  of  trade,
commissions, freight, handling, loading and ancillary costs, insurance, packing, credit
and bank charges.

(71) As  far  as  the  adjustment  for  differences  in  physical  characteristics  is  concerned,  the
company  was  not  able  to  quantify  its  claim.  Therefore  in  the  absence  of  any  other
more reliable information, the adjustment was calculated on the basis of the difference
in price of prime and non-prime products sold on the domestic market.

(72) Regarding the adjustment for level of trade, the exporting producer alleged that on the
domestic market the product concerned was exclusively sold to end-users while only
around  half  of  the  exported  quantity  was  sold  to  this  category  of  customers,  the
remaining being sold to distributors. Furthermore, the exporting producer claimed that
it  performed  different  functions  depending  on  the  category  of  customer,  namely

16

providing  technical  assistance  and  after  sales  services  to  users  whereas  for  sales  to
distributors such services were not provided.

(73) When  examining  this  claim,  the  Commission  considered  that  export  sales  to  related
importers in the Community were subsequently re-sold to independent end-users and
distributors. In this case, the export price was constructed as mentioned in recital (36)
above. However, it was not possible to exactly identify the resulting level of trade after
the construction of the export price. It was therefore decided not to use these quantities
for the purposes of comparison. It was considered that direct export sales to unrelated
distributors and end-users representing more than half of the export sales in question
reasonably  reflect  the  overall  dumping  margin.  In  any  event,  the  granting  of  the
adjustment  as  claimed  by  the  company  would  not  have  any  impact  on  the  definitive
duty imposed.

(74) As  far  as  direct  export  sales  to  independent  distributors  were  concerned  it  was
concluded  that  the  claimed  adjustment  was  warranted.  Since  the  exporting  producer
did not sell to this level of trade in the domestic market, and following the claim by the
company, the adjustment according to Article 2(10)(d) (ii) was established on the basis
of 10% of the gross margin (SG&A expenses plus profit), realised on the production
and sales of the same general category of products, in line with the established practice
of the Community Institutions.

Dumping margin

(75)

The comparison between the normal value and the export price showed the existence
of  dumping  in  respect  of  the  co-operating  exporting  producer.  The  dumping  margin
expressed as a percentage of the CIF import price at the Community border is

U.S. Steel Kosice, s.r.o., Kosice, Slovakia: 25.8%

(76)

The level of co-operation for Slovakia was high and the residual dumping margin was
set at the same level as for the co-operating exporting producer, i.e. 25.8%.

6. South Africa

(77)

The two known exporting producers in South Africa replied to the questionnaire.

(78) One of the exporting producer consists of a group of related companies, two of which
are  producers  of  the  product  concerned,  both  having  sold  HRC’s  on  the  domestic
market and exported it to the  Community.  Furthermore,  the  group  also  encompasses
three  related  importers  in  the  Community  and  one  related  company  in  South  Africa
which  were  involved  in  the  export  of  the  product  concerned.  All  of  these  related
companies  submitted  a  questionnaire  reply.  For  this  exporting  producer  a  single
individual dumping margin was established since it was considered as one economic
entity.

(79)

For  the  second  exporting  producer  an  undertaking  had  been  accepted  during  the
original investigation. It was established that this exporting producer did not export the
product  concerned  to  the  Community  during  the  investigation  period.  Therefore,  no
dumping  margin  relating  to  the  current  investigation  period  could  be  established.  It
was however  examined  whether it would be likely that dumping would recur should
measures be allowed to lapse (see recital (226) to (233) below).

17

Normal value

(80) Normal  value  for  the  two  producers’  part  of  the  group  was  established  separately,
since both sold the product concerned on the domestic market during the investigation
period.

(81)

For  one  of  these  producers  none  of  the  domestic  sales  were  made  in  the  ordinary
course of trade and normal value had  therefore to be constructed  in accordance  with
Article 2(3) of the Basic Regulation. The reported cost of manufacturing and the actual
SG&A were used in the calculation of the normal value.

(82) As far as the reasonable amount for profits is concerned, it was first examined whether
it  could  be  established  in  accordance  with  Article  2(6)(b)  of  the  Basic  Regulation.
Since  the  company  did  not  produce  and  sell  products  of  the  same  general  category
than  the  product  concerned,  the  Commission  established  the  profit  margin  on  any
other reasonable basis in  accordance with  Article 2(6)(c) of the  Basic  Regulation.  In
the  absence  of  any  other  more  reliable  information,  it  was  considered  that  the
information  submitted  by  the  Community  industry  in  the  request  was  the  most
reasonable basis and was therefore used.

(83)

For the other producer of this group, almost 90% of the domestic sales were made in
the ordinary  course of  trade  and for  these  sales  normal  value  was  established  on  the
basis  of  the  domestic  sales  price  in  accordance  with  Article  2(1)  of  the  Basic
Regulation.  For  those  product  types  exported  to  the  Community  for  which  no  or
insufficient  domestic  sales  were  made  in  the  ordinary  course  of  trade,  normal  value
was constructed in accordance with Article 2(3) of the Basic Regulation for the type of
the product concerned sold to the Community. In this regard, the company’s own data
regarding  cost  of  manufacturing,  SG&A  and  profits  pertaining  to  the  product
concerned were used.

(84)

For the second exporting producer in South Africa, which did not export the product
concerned during the investigation period normal value has not been calculated.

Export price

(85)

(86)

For  the  exporting  producer  who  did  not  export  the  product  concerned  during  the
investigation period, no export price could be established.

For  export  sales  made  by  the  two  producers  of  the  same  group,  export  prices  were
established  separately  for  each  producer  part  of  the  group,  since  both  exported  the
product concerned to the Community during the investigation period.

(87) One  of  these  producers  made  all  export  sales  to  the  Community  directly  to
independent  customers  and  the  export  price  was  therefore  established  pursuant  to
Article 2(8) of the Basic Regulation.

(88)

(89)

For  all  export  sales  made  via  its  related  company  the  export  price  had  to  be
constructed pursuant to Article 2(9) of the Basic Regulation.

It  was  claimed  that,  for  the  sales  via  one  of  the  related  importers  to  independent
customers, only the related company in South Africa was involved, and that therefore
the  export  price  should  not  be  constructed  but  established  on  the  basis  of  the  prices

18

paid or payable in accordance with Article 2(8) of the Basic Regulation. However and
in contrast to what was claimed, the investigation revealed that all related importers in
the  Community,  including  the  one  in  question,  were  responsible  for  regularly
marketing  the  product.  The  related  importer  was  therefore  clearly  involved  in  the
selling  of  the  product  concerned  in  the  Community  and  costs  were  incurred  by  this
importer  when  importing  and  reselling  HRC’s  in  the  Community,  which  had  to  be
deducted  from  the  export  price  in  accordance  with  Article  2(9)  of  the  Basic
Regulation.  More  importantly,  the  prices  between  the  exporting  producer  in  South
Africa  and  its  related  importer  in  the  Community  were  intra-group  transfer  prices.
Accordingly, they had to  be  considered as unreliable.  Therefore, the  export price for
sales made via the related importers had to be constructed in accordance with Article
2(9) of the Basic Regulation.

Comparison

(90) Adjustments  were  made  for  commissions,  freight,  handling,  loading  and  ancillary

costs, insurance, packing, credit and bank charges.

(91)

The exporting producer claimed that start-up costs should be taken into consideration
and  that  therefore  the  cost  of  manufacturing  for  the  investigation  period  should  be
based  on data pertaining to the end  of 2001 or the  beginning  of  2002.  However,  the
on-spot  verification  showed  that  the  production  for  sale  started  already  in  1999  and
that  the  capacity  utilisation  rates  reached  between  1999  and  the  end  of  the
investigation  period  were  significant,  i.e.  the  company  was  producing  almost  at  full
capacity. Finally, in the company’s internal accounting, all production expenses have
been treated as part of normal cost accounting since July 1999. Therefore, the claim to
take  into  consideration  start-up  costs  during  the  investigation  period  could  not  be
accepted.

Dumping margin

(92) A  single  individual  dumping  margin  was  calculated  with  respect  to  one  exporting
producer  in  South  Africa,  namely  the  group  consisting,  inter  alia,  of  two  related
producers, due to the fact that it was the only with export sales.

(93)

The comparison between the normal value and the export price showed the existence
of dumping in respect of this exporting producer. The dumping margin was calculated
on  the  basis  of  the  total  dumping  amount  found  for  each  individual  producer  within
this  group.  The  dumping  margin  expressed  as  a  percentage  of  the  total  CIF  import
price of the group at the Community border is

Iscor  Steel,  Saldanha  Steel,  Macsteel  International  South  Africa  (Pty)  Ltd,  and
Macsteel International UK Ltd : 85.1%

(94) As  mentioned  above  in  recital  (79),  one  exporting  producer  in  South  Africa  did  not
export the product concerned during the investigation period. No new dumping margin
could therefore be established for this company.

(95)

The level of co-operation for South Africa was high and the residual dumping margin
was set at the level of the co-operating company with the highest dumping margin in
order to ensure the effectiveness of any measures, i.e. 85.1%

19

7. Turkey

(96)

The  sole  known  exporting  producer  in  Turkey  replied  to  the  questionnaire.  This
exporting  producer  had  one  related  customer  which  used  the  purchased  quantities
mainly as a raw material for further processing, but also re-sold very small quantities
of the product concerned both, on the domestic market and to the Community during
the IP. In both cases, the resold quantities represented less than 1% of the total sales of
the exporting producer. Consequently, the volume of the sales made by the exporting
producer  directly  to  the  independent  customers  on  the  domestic  market  and  to  the
Community  was  considered  sufficiently  representative.  Therefore,  it  was  decided  to
disregard the sales made via the related customer.

Normal value

(97)

Since  Turkey  is  a  country,  which  experienced  significant  inflation  during  the  IP,
normal  value  was  established  on  a  monthly  basis  in  order  to  reduce  possible
distortions due to this inflation.

(98) Approximately  one  third  of  the  domestic  sales  were  made  in  the  ordinary  course  of
trade  and  normal  value  for  these  sales  was  consequently  established  in  accordance
with Article 2(1) of the Basic Regulation.

(99)

For  the  remaining  domestic  sales,  normal  value  had  to  be  constructed  in  accordance
with Article 2(3) of the Basic Regulation.

(100) As  far  as  manufacturing  cost  are  concerned,  the  company  allocated  costs  to  the
different  types  of  HRC’s  sold  on  the  basis  of  a  statistical  coefficient  capturing
differences  in  width,  thickness  and  steel  quality  of  the  product.  However,  this
allocation  method  was  never  actually  used  in  the  company’s  cost  accounting  system
but  was  only  suggested  for  the  purpose  of  the  present  proceeding.  In  the  cost
accounting system of the company the cost of manufacturing  was kept on a per type
basis (product families). It could not be established whether the allocation of costs on
the basis of the statistical coefficient was more accurate than the allocation method on
the basis of product families. Therefore, it was considered more appropriate to use the
allocation method used by the company in their accounts, i.e. monthly manufacturing
cost per product family. This approach was also agreed by the company.

(101) Cost  of  production  for  product  families  for  which  the  exporting  producer  did  not
provide any information on costs in a certain month, were established on the basis of
facts available, i.e. on the basis of the highest cost found for any other product family
in  the  same  month.  The  company  contested  this  approach.  However,  the  company
submitted  contradicting  information  with  regard  to  production  and  sales  volume  and
did  furthermore  not  provide  any  evidence  that  the  methodology  used  by  the
Commission was unreasonable. Consequently, the approach used by the Commission
was considered to be the most appropriate.

(102) Normal  value  was  constructed  on  the  basis  of  cost  of  manufacturing  by  adding  a
reasonable  amount  of  SG&A  and  profit.  As  far  as  SG&A  expenses  on  the  domestic
market  were  concerned,  these  were  used  as  established  during  the  on-spot
investigation,  i.e.  on  a  product  family  (product  type)  basis.  The  profit  margin  was
determined  on  the  basis  of  domestic  sales  made  in  the  ordinary  course  of  trade  in
accordance with the chapeau of Article 2(6) of the Basic Regulation.

20

Export price

(103) The  export  sales  reported  by  the  company  were  initially  converted  from  US$  into
Turkish  liras  on  the  basis  of  the  monthly  exchange  rates  as  provided  by  the
Commission services. Due to the sharp inflation of the Turkish lira during the IP it was
considered more accurate to use the daily exchange rates of the Turkish central bank
as submitted on spot.

(104) Export sales were established pursuant to Article 2(8) of the Basic Regulation.

Comparison

(105) Adjustments for differences in credit costs, deferred rebates, handling and loading cost

and packing cost have been granted.

(106) An  adjustment  was  claimed  on  the  normal  value  for  differences  in  credit  costs.
However,  the  investigation  revealed  that  no  such  credit  cost  were  incurred  by  the
exporting  producer  concerned.  It  was  found  that  although  the  company  granted  so-
called  “deferred  payment  terms”,  the  cost  of  the  credit  granted  was  borne  by  the
customer,  and  not  by  the  company.  It  was  indeed  found  that  the  system  worked  as
follows:  The  customer  issued  a  bond  for  the  invoice  value.  At  maturity  date  of  the
bond  the  exporting producer cashed  an  amount  corresponding  to  the  sales  price  plus
the  interest.  However,  for  the  purpose  of  this  investigation  only  the  amount
corresponding to the sales price, i.e. without interest, has been taken for comparison.
Consequently, no adjustment was warranted. The exporting producer opposed to these
findings but could not submit any evidence, which could have put in doubt the above
findings. The claim had therefore to be rejected.

(107) The  exporting  producer  also  reported  credit  costs  on  its  export  sales  to  the
Community, which could be verified and were accordingly deducted from the export
price  when  calculating  the  dumping  margin.  After  disclosure  of  the  findings,  the
exporting  producer  claimed,  however,  that  these  costs  should  not  be  taken  into
consideration since they have no impact on the determination of the sales price. This
new  argument  could  not  be  supported  by  any  evidence  and  had  therefore  to  be
rejected.

(108) As far as the adjustment for deferred rebates on the domestic market is concerned, the
company  provided  contradicting  information.  After  examination  of  all  information
submitted  and  explanations  given,  it  had  to  be  concluded  that  it  was  not  possible  to
establish  a  direct  link  between  the  rebates  granted  and  the  sales  of  the  product
concerned  during  the  investigation  period.  Furthermore,  no  evidence  for  the  actual
payment  of  rebates  relating  to  these  sales  was  submitted.  The  company  in  fact
provided  information  regarding  deferred  rebates  for  sales  of  a  whole  category  of
products (hot rolled products) including the product concerned, whereas the amounts
for  rebates  relating  to  the  domestic  sales  of  HRC’s  during  the  investigation  period
could not be specified. The claim had therefore to be rejected.

(109) The company did not report handling and loading cost incurred for the domestic and
the  export  sales  of  the  product  concerned,  although  it  was  requested  in  the
questionnaire.  During  the  on-spot  investigation,  the  company  was  again  asked  to
provide details of these costs, which could, however, not be provided.

21

(110) The  Commission,  in  the  absence  of  any  more  reliable  information,  had  to  base  its
calculation of the appropriate adjustments on estimates, in accordance with Article 18
of the Basic Regulation. It was considered that the most reasonable methodology was
to base the calculation of the relevant adjustment on the costs found and verified for
the  Egyptian  company  covered  by  the  same  proceeding.  This  Egyptian  company
showed close resemblance to the Turkish company as far as the relevant elements are
concerned,  i.e.  both  companies  are  situated  at  the  seaside  and  have  their  own  port
facilities. Handling and loading costs thus established were deducted from the normal
value and export price.

(111) The  company  also  claimed  an  adjustment  for  differences  in  physical  characteristics
between  the  product  sold  on  the  domestic  market  and  the  product  exported  to  the
Community. The amount of the adjustment claimed was based on the  yearly average
difference  between  the  cost  of  production  according  to  width,  thickness  and  steel
grades of these product types during the IP. As mentioned above, it was found that no
difference in costs linked to these factors existed.

(112) Subsequently,  the  company  claimed  that  the  differences  in  physical  characteristics
should  be  calculated  on  the  basis  of  price  lists  submitted  during  the  investigation.  It
should first be  noted  that this  claim was made at  a very late stage of the proceeding
and that the information submitted in this regard was insufficient and could in any case
not  be  verified.  Finally,  it  should  be  noted  that  in  the  present  investigation,  the
Commission  used  internal  product  codes  pertaining  to  different  product  families  as
identified by the company in their accounts. It was found that these product types are
identical  on  the  domestic  and  the  export  market  and  allowed  consequently  a
comparison without the need to proceed to numerous adjustments.

Dumping margin

(113) Export sales to the EC were made on a FOB basis. Ocean freight  and insurance cost
were  established  on  the  basis  of  the  information  submitted  by  the  Turkish  exporting
producer.

(114) The comparison between the normal value and the export price showed the existence
of  dumping  in  respect  of  the  co-operating  exporting  producer.  The  dumping  margin
expressed as a percentage of the CIF import price at the Community border is

Ereğli Demir ve Celik Fabrikalari T.A.Ş, Zonguldak, Turkey:11.5%

(115) As  the  level  of  co-operation  for  Turkey  was  high  the  residual  provisional  dumping
margin was set at the same level as for the co-operating company, i.e. 11.5%.

D. DEFINITION OF THE COMMUNITY INDUSTRY

1. Community production

(116) During  the  IP  HRC’s  were  manufactured  in  the  Community  by  the  following

companies:

-  nine  complainant  producers  who  co-operated  in  the  proceeding,  but  of  which  one
was unable to submit all the data required for the purpose of the investigation;

22

- seven non-complainant producers who only partly co-operated in the proceeding, but
provided  general  information  to  the  Commission,  six  of  which  supported  the
complaint and one which did not express any opinion.

(117) The  HRC’s  produced  by  all  these  companies  constitute  the  Community  production

within the meaning of Article 4(1) of the basic Regulation.

2. Definition of the Community industry

(118) The  eight  supporting  and  fully  co-operating  Community  producers,  who  provided
sufficient  information,  represented  a  major  proportion  of  the  total  Community
production of HRC’s during the IP, in this case 60,2%.

(119)

It  was  found  that  they  purchased  from  the  countries  concerned.  During  the  IP
purchases  represented  less  than  0,4%  of  the  Community  industry’s  own  production
destined for the free market and less than 0,15% of the Community industry's overall
production. The company  with the highest incidence of purchases from the countries
concerned showed  corresponding  percentages of  1,61%  and  0,81%  respectively.  The
distinction between production destined for the free market and overall production is
commented upon under E.1. (recitals (121) to (126)).

(120) Given  their  major  share  of  total  Community  production  and  the  low  percentage  of
purchases  from  the  countries  concerned,  the  above  mentioned  eight  Community
producers  were deemed  to  constitute the Community  industry  within  the  meaning of
Articles 4(1) and 5(4) of the basic Regulation. They are referred to as the ‘Community
industry’ hereafter.

E. INJURY

1. Determination of the relevant Community market

(121) For the purpose of establishing whether or not the Community industry suffered injury
and  for  determining  consumption  and  the  various  economic  indicators  related  to  the
situation of the Community industry, it was examined whether and to which extent the
subsequent use of the Community industry’s production of the product concerned had
to be taken into account in the analysis.

(122) HRC’s are used as an intermediate material for other steel products (such as wide and
narrow strips, cold rolled products and hollows) within the same steel mill or the same
group  of  companies,  or  are  sold  as  such  to  a  third  party,  related  or  not.  The  former
possibility is referred to as captive use. Sales to third companies may be free market
sales,  but  can,  under  certain  conditions,  also  be  captive,  namely  when  they  are  not
made  at  arm’s  length  conditions  or  when  customers  do  not  have  a  free  choice  of
supplier.

(123) For  the  purposes  of  the  investigation  captive  use  was  defined  as  occurring  when
production was delivered within the plant or within a group of companies for further
downstream  processing.  In  situations  of  captive  use,  internal  transfers  were  not
accompanied  by  invoices,  or  were  sales  made  at  transfer  prices  not  set  according  to
market  conditions  or  were  made  to  a  company,  which  did  not  have  a  free  choice  of
supplier.  Consequently,  captive  use  had  to  be  analysed  at  the  level  of  produced
quantities  and  the  proportion  of  total  production  it  represented.  All  other  situations
were considered as free market sales.

23

(124)

In order to provide as complete a picture as possible of the situation of the Community
industry, data have been obtained and analysed for the  complete HRC activity and it
was determined whether HRC’s were destined for captive use or destined for the free
market.  HRC’s  destined  for  captive  use  were  found  not  to  be  directly  affected  by
imports of HRC’s. By contrast, production destined for free market sales was found to
be  in  direct  competition  with  imports  of  HRC’s,  because  of  the  fact  that  they  were
made  under  normal  market  conditions,  implying  free  choice  of  supplier.  Because  of
this,  attention  was  focused  on  the  free  market.  While,  where  justified,  data  on  free
market sales and captive use were combined, the analysis was also split between free
market and captive deliveries where necessary and possible.

(125) On the basis of its investigation it was found that certain economic indicators related
to  the  Community  industry  could  best  be  commented  upon  by  referring  to  the
complete  activity.  Indeed,  production  capacity,  production  (for  both  captive  use  and
free  market  sales),  capacity  utilisation,  cost  of  production,  stocks,  investments,
employment and productivity depend upon the complete HRC’s activity, whether the
production  of  HRC’s  is  transferred  downstream  within  a  group  of  companies  for
further processing or whether HRC’s are sold on the free market.

(126) The other economic indicators related to the Community industry will be analysed and
evaluated  in  particular  referring  to  the  situation  prevailing  on  the  free  market  where
measurable  market  conditions  exist  and  where  transactions  are  made  under  normal
market  conditions  implying  free  choice  of  supplier:  in  particular  sales  volume  and
sales  prices  on  the  Community  market,  export  volume  and  prices.  To  this  effect,
consumption and market shares were determined based on the volume of free market
sales and imports.

2. Community consumption

(127) Community  consumption  was  based  on  the  volume  of  sales  of  HRC’s  in  the
Community market by  the  Community  industry  and  the  other  Community  producers
and  on  Eurostat-information  and  the  questionnaire  responses  concerning  the  import
volumes originating in the countries concerned and in other third countries.

Consumption

1998

1999

2000

2001 (= IP)

in tonnes

HRC

Index

22.894.274

22.544.897

23.178.301

22.501.555

100

98

101

98

(128) Community  consumption  of  HRC’s  remained  almost  stable  over  the  period

considered.

3. Imports of HRC’s into the Community originating in the countries concerned

(129) The Commission considered whether imports of HRC’s originating in Bulgaria, Egypt,
Hungary,  Slovakia,  South  Africa  and  Turkey  should  be  assessed  cumulatively  in
accordance  with  Article  3(4)  of  the  basic  Regulation.  This  Article  provides  that
imports  shall  be  cumulatively  assessed  when  the  margin  of  dumping  established  in
relation to the imports from each country is more than de minimis as defined in Article
9(3) of the basic Regulation, the volume of imports of each country is not negligible
and the conditions of competition between the imported products and the conditions of

24

competition  between  the  imported  products  and  the  like  Community  product  make
such an assessment appropriate.

3.1. Negligible imports

(130) On the basis of Eurostat statistics and the questionnaire responses, imports originating
in Iran and Libya, were below the 1% threshold foreseen in Article 5(7) of the basic
Regulation.  Therefore,  the  proceeding  should  be  terminated  in  respect  of  these  two
countries.  Their  imports  will  nevertheless  be  considered  in  the  causation  analysis
under factors other than the dumped imports.

3.2. Cumulative assessment of imports

(131) Claims were made by Egypt, Hungary, South Africa and Slovakia that they should be
decumulated  from  the  other  countries  and  hence  the  effects  of  their  imports  be
evaluated in isolation from the other countries concerned by this proceeding.

3.2.1. Hungary

(132) The  Hungarian  exporting  producer  claimed  that  its  import  development  over  the
period 1998-2001 and its corresponding relatively stable market share, as well as the
decrease  in  imports  between  2000  and  the  IP,  marginally  above  de  minimis,  should
lead  to  decumulation  from  the  other  countries  concerned  and  allow  an  evaluation  in
isolation.

Hungary

1998

1999

2000

2001 (= IP)

Imports (tons)

230.348

254.604

276.028

242.434

Index

Market share

Index

100

1,01%

100

111

1,13%

112

120

1,19%

118

105

1,08%

107

(133) Hungarian  imports  in  volume  increased  by  5%  over  the  period  1998-2001,  whereas
market  share  varied  between  1%  and  1,2%.  However,  the  investigation  also  showed
that the imports from Hungary, unlike all other imports, decreased between 2000 and
the  IP  by  12%,  leading  to  a  loss  in  market  share,  which  remained  only  minimally
above  1%.  Moreover  the  prices  of  a  large  proportion  of  Hungarian  sales  were  the
highest of all operators (both EC producers and imports). On this basis it is considered
that  the  conditions  of  competition  under  which  Hungarian  HRC  were  sold  on  the
Community  market  were  different  from  those  of  the  other  operators  concerned,  and
that consequently the effect of their imports had to be assessed separately.

(134) The  evolution  of 

imports  of  HRC’s  originating 

thus  diverged
fundamentally  from  the  evolution  observed  for  the  other  countries  concerned.
Therefore an analysis of the possible effects of Hungarian imports, taken in isolation,
is warranted. The claim was therefore accepted.

in  Hungary 

25

3.2.2. Egypt

(135) Based  on  Eurostat-figures,  an  Egyptian  exporting  producer  argued  that  its  high
average import price, which remained stable over the period 2000-2001, distinguished
it  from  the  other  countries  concerned,  because  of  an  alleged  difference  in  pricing
policy.

(136) Based  on  the  on-site  verification,  the  co-operating  Egyptian  exporting  producer  was
found to export to the Community at a CIF price, which was comparable to that of the
other exporting producers concerned by  this  investigation. Such  direct exports  to  the
EU during the IP represented 76,5% of the volume reported by Eurostat.

(137) The  high  average  import  price  based  on  Eurostat  figures  could  be  attributed  to  the
specific  delivery  conditions  regarding  imports  by  an  unrelated  trader  of  HRC’s  of
Egyptian origin. This Community trader delivered Egyptian HRC’s customs uncleared
to an important user of HRC’s in the Community. This user took care of the clearance
itself and reported to the Customs Authorities a purchased CIF value and price per ton
that corresponded to  the  Eurostat  data.  The  reported  import  value  therefore  included
the trading margin realised by the Community trader, which was the first independent
buyer of HRC’s in the Community. Therefore, the figures determined during the on-
site verification of the co-operating Egyptian exporting producer were confirmed.

(138) The import volume of HRC’s originating in Egypt increased by a factor of 9 over the
period  considered  and  by  66%  between  2000  and  the  IP.  Its  market  share  attained
1,52% during the IP compared to 0,17% in 1998 and 0,88% in 2000.

(139) Therefore, given that no significant difference of the overall price, volume and market
share trends by comparison to the other countries concerned could be established, the
claim that the  effects  of  imports  originating in Egypt should be assessed  in  isolation
was rejected.

3.2.3. South Africa

(140) A South African exporting producer claimed that a cumulative assessment with regard
to  South  Africa  was  not  warranted  based  on  a  different  pattern  of  market  share
evolution during the period considered and more particularly based on the alleged fact
that  South  Africa’s  market  share  is  negligible  and  that  the  market  share  follows  a
pattern of decrease.

(141)

It  should  be  noted  that  in  a  review  investigation  the  likelihood  of  continuation  or
recurrence of injurious dumping is to be investigated and that the issue of market share
in this respect is irrelevant. However, South Africa’s market share of free market sales
in the Community during the IP was found not to be de minimis. From 1998 to 2000, a
decrease  of  market  share  indeed  took  place  to  below  de  minimis  level.  However,
notwithstanding  the  imposition  of  anti-dumping  measures  in  February  2000,  import
volumes  increased  by  more  than  a  factor  of  3,  representing  a  1,09%  market  share
during  the  IP.  The  alleged  decreasing  trend  of  market  share  could  therefore  not  be
confirmed and, moreover, the imports made during the IP originating in South Africa
have  been  found  to  be  dumped.  Furthermore,  no  differences  of  conditions  of
competition were claimed and none were found.

26

(142) On  that  basis,  the  claim  that  the  effects  of  imports  of  HRC’s  originating  in  South

Africa should be analysed in isolation was rejected.

3.2.4. Slovakia

(143) The  Slovakian  exporting  producer  claimed  that  it  only  accounted  for  negligible
imports into the Community if sales to Community producers were excluded from its
overall sales to the Community and that it sold through different distribution channels
and used a different marketing strategy than the other importing countries concerned.

(144) As to the sales to Community producers it should be noted that the sales for which the
Slovakian exporting producer requested the exclusion were made at dumped prices in
the  free  market.  Therefore,  there  are  no  grounds  to  exclude  these  sales  from  the
analysis.

(145) No  substantiation  was  received  which  would  lead  to  the  conclusion  that  the  alleged
different  distribution  channels  and  marketing  strategy  would  have  led  to  different
conditions of competition compared to the other countries concerned.

(146) Finally,  the  overall  import  trends  are  in  line  with  the  overall  trend  found  for  the
countries  concerned.  After  a  relatively  stable  period  between  1998  and  2000,
Slovakian imports of HRC’s more than doubled between 2000 and the IP, accounting
for an increase in market share from 1,24 percentage points to 2,83 percentage points,
thus well above de minimis level.

(147) On  the  basis  of  the  observations  mentioned  above  the  claim  that  the  effect  of

Slovakian imports of HRC’s should be considered in isolation was rejected.

3.2.5. Conclusion on cumulative assessment of imports

(148) For the above reasons, it is concluded that all conditions justifying the cumulation of

imports originating in Bulgaria, Egypt, Slovakia, South Africa and Turkey were met.

(149) The situation for Hungary  was considered  to be different, particularly in view of  the
development  of  the  import  volume  between  2000  and  the  IP  and  the  level  of  sales
prices during the IP. The total volume of imports remained relatively stable over  the
period considered and even decreased by 12% between 2000 and the IP. Moreover, the
prices of the most important types of Hungarian imports of HRC’s were the highest of
all  operators  concerned  selling  HRC’s  on  the  Community  market  during  the  IP.  On
this basis it was considered that the imports from this country should not be cumulated
with the imports from the other countries concerned.

27

3.3. Cumulative developments of imports originating in Bulgaria, Egypt, Slovakia,
South Africa and Turkey

Bulgaria

Egypt

Slovakia

South Africa
Turkey

Imports (tons)

Index

Average import
price (€ per ton)

Index

Market shares

Index

1998

1999

2000

2001 (= IP)

1.345.709

1.160.570

1.161.248

2.211.852

100

264,00

100

5,88%

100

86

208,79

79

5,15%

88

86

294,54

112

5,01%

85

164

258,67

98

9,83%

167

(150) The  volume  of  imports  from  Bulgaria,  Egypt,  Slovakia,  South  Africa  and  Turkey
increased significantly over the period 1998-2001, namely by 64%. After a lower level
of  imports  during  1999  and  2000,  the  increase  was  most  pronounced  between  2000
and 2001 when imports increased by 90%.

(151) Eurostat statistics show that the average import price of HRC’s from Bulgaria, Egypt,
Slovakia, South Africa and Turkey decreased by 2% over the period 1998-2001. The
statistics however include the higher price level for Egypt as described under recitals
(135)  to  (137)  above,  meaning  that  the  average  cumulative  price  level  is  actually
lower. Especially between 2000 and the IP the average import price decreased by more
than 12%.

(152) The market share of imports from Bulgaria, Egypt, Slovakia, South Africa and Turkey
increased  considerably  over  the  period  1998-2001  and  this  increase  was  especially
pronounced between 2000 and 2001, when the market share almost doubled.

3.4. Price undercutting

(153) For  the  determination  of  price  undercutting  the  Commission  analysed  price  data
referring to the IP. The relevant sales prices of the Community industry are net prices
after deduction of discounts and rebates. Where necessary these prices were adjusted
to an ex-works level, i.e. excluding freight costs in the Community. Import prices used
were  also  net  of  discounts  and  rebates  and  are  adjusted  where  necessary  to  CIF
Community frontier. Prices were compared at the same level of trade.

(154) During the IP, weighted average price undercutting margins, expressed as a percentage
of  the  Community  industry's  sales  prices,  indicate  that  on  average  undercutting  of
3,7%  of  the  Community  industry’s  sales  prices  by  the  Slovakian  exporting  producer
occurred. It was also found that certain types of HRC’s were undercut by up to 17,7%
by the exporting producers concerned.

28

(155) Furthermore,  the  price  depressive  effect was  assessed. Such an  effect was  evidenced
by the fact that the Community industry lost significant market share (-3,7 percentage
points  between  2000  and  the  IP)  and  had  to  significantly  reduce  its  prices  (-10%
between 2000 and the IP) to avoid losing more orders during the IP. During the IP, the
Community industry nevertheless suffered significant losses.

4. Situation of the Community industry

4.1. Analysis of the factors pertinent for the overall HRC activity

4.1.1. Production, capacity and capacity utilisation

1998

1999

2000

2001 (=IP)

Production

41.358.852

41.094.020

42.274.032

38.223.630

In tons

Index

100

99

102

92

Capacity

47.834.000

46.629.000

47.907.000

48.410.000

in tons

index

Capacity
utilisation

100

86,5%

97

88,1%

100

88,2%

101

79,0%

(156) The Community industry’s production and production capacity of HRC’s refers to the
combined captive production and the production destined for the free market. Overall
production  decreased  by  8%  over  the  period  considered,  whereas  capacity  remained
relatively  stable  and  increased  by  1%,  the  combined  effect  of  which  caused  the
capacity utilisation to decrease from 86,5% to 79%.

(157)

It  should  be  noted  that  the  production  facilities  can  also  be  used  to  manufacture
products that are not concerned by this proceeding, such as e.g. alloyed coils or narrow
strip products. Capacity  utilisation therefore has  been  established  on  the  basis  of  the
capacities  officially  declared  to  the  Commission  within  the  framework  of  the  ECSC
Treaty.  These  technical  capacities  take  into  account  factors  such  as  holiday  periods,
set-up  times  and  periods  in  which  the  equipment  stands  idle  for  reasons  of
maintenance. In the steel business it is essential that a high rate of production capacity
is maintained.

(158) Given  that  the  production  capacity  can  be  allocated  to  a  range  of  products,  its
importance as an injury-determining factor for HRC’s should be attenuated. However,
the  decline  of  produced  quantities  of  HRC’s  between  2000  and  the  IP  and  the
corresponding decrease of capacity utilisation retain their relevancy.

29

Production

1998

1999

2000

2001 (=IP)

For captive use

28.075.070

28.265.878

29.138.693

26.467.114

in tons

index

100

101

104

94

For free market

13.283.781

12.828.142

13.135.339

11.756.516

in tons

index

Proportion of
total production

captive use

100

97

99

89

67,88%

68,78%

68,93%

69,24%

free market sales

32,12%

31,22%

31,07%

30,76%

(159) Production  for  the  free  market  decreased  by  11%  overall  between  1998  and  the  IP.
Considered in more detail it remained relatively stable over the period 1998-2000 but
dropped by around 10% during the IP.

(160) Likewise,  captive  production  decreased  by  6%  over  the  period  considered.  Again,
considered in more detail, it increased by 4% between 1998 and 2000 but dropped by
9% during the IP.

(161) The production of HRC’s for captive use helped the Community industry to keep up
its  capacity  utilisation.  However,  the  proportion  between  production  destined  for
captive  use  and  for  the  free  market  remained  relatively  stable  and  both  followed  a
significant decreasing trend between 2000 and the IP.

4.1.2. Stocks

Stocks

in tons

index

as  %  of  total
production

1998

1999

2000

2001 (= IP)

2.382.295

2.891.011

2.977.430

2.545.798

100

5,8%

121

7,0%

125

7,0%

107

6,7%

(162) Stocks  of  own  produced  HRC’s  concern  both  coils  used  captively  and  coils  that  are
sold on the free market. In practice, companies do not keep track of stocks according
to  the  distinction  captive  use  /  free  market  sales.  Rather,  HRC’s  are  either  produced
according to the unrelated or related client’s specifications or in the case of the most
used or sold specifications for out-of-stock internal use or free market sales. In relation
to  total  production  (for  captive  use  and  free  market  sales)  the  importance  of  stocks
remained rather constant over the period 1998-2001.

30

4.1.3. Cost of production and wages

1998

1999

2000

2001 (= IP)

Cost of production

250,93

245,62

263,48

288,07

€ per ton

index

100

98

105

115

(163) The  increase  of  the  cost  of  production  can  be  attributed  to  additional  depreciations
following investments in new processes mainly during the year 2000 and the effect of
the lower volume produced causing certain overhead costs such as depreciations to be
allocated over a lower tonnage, thereby increasing the unit cost per ton produced.

(164)

In  this  respect,  the  average  wage  per  employee  increased  by  2,5%  on  a  yearly  basis
between 1998 and the  IP,  a rate that is  comparable to  yearly inflation  over the  same
period.

4.1.4. Investments

1998

1999

2000

2001 (= IP)

Investments
(in ‘000 €)

Index

505.321

481.852

793.414

535.485

100

95

157

106

(165)

Investments traditionally have been considerable and concern both the replacement of
machinery  and  equipment  and  the  already  mentioned  investments  in  new  processes.
The timing of the latter investments, which occurred mainly  in  2000,  coincided  with
the  imposition  of  anti-dumping  measures  following  the  proceeding  mentioned  under
recital (2) implying an expected improvement of market conditions.

4.1.5. Employment and productivity

1998

1999

2000

2001 (= IP)

Employment

index

Productivity

tons per employee

index

21.431

100

1.930

20.968

98

1.960

20.335

95

2.079

19.505

91

1.960

100

102

108

102

(166) Employment  for  the  product  under  consideration  declined  by  9%  over  the  period
considered with the most pronounced annual decrease of 4% occurring between 2000
and the IP.

(167) The improvement  of  productivity  between  1998  and  1999  was  a  consequence  of  the
reduction of  employment.  Between 1999 and 2000 the  combination  of  higher  output

31

and  lower  employment  allowed  for  the  most  pronounced  increase  of  productivity
during  the  period  considered.  Between  2000  and  the  IP,  the  further  reduction  of
employment could not compensate for the decline in output, bringing the productivity
back to the 1999 level.

4.2. Analysis of the factors pertinent to the free market HRC activity

4.2.1. Sales volume, sales price, market share and growth

Free market sales
in the Community
Volume (in tons)
index
sales price
in € per ton
index
market share
index

1998

1999

2000

2001 (= IP)

11.934.472
100
280,72
100

11.641.842
98
221,19
79

11.899.864
100
293,09
104

10.701.589
90
264,22
94

52,1%
100

51,6%
99

51,3%
98

47,6%
91

(168) The sales volume in the Community was relatively stable between 1998 and 2000 but

decreased by 10% during the IP.

(169) Average sales prices went down by 6% over the period 1998-IP. Prices were restored
to slightly above the 1998 level in 2000, after a very pronounced decline in 1999 when
the  average  price  level  was  21%  lower  than  in  1998.  Between  2000  and  the  IP
however, prices went down again by 9%.

(170) Over the period 1998-2001 the Community industry lost 4,5 percentage points market
share, the largest loss in one single year occurring between 2000 and 2001, when 3,7
percentage points market share were lost.

4.2.2. Factors affecting domestic prices

(171) The  investigation  showed  that  the  average  depressed  sales  price  of  the  Community
industry was more or less at the same level of that of the dumped HRC imports during
the  IP.  However,  on  a  type-by-type  basis  it  was  found  that  in  some  instances  prices
charged  by  the  exporting  producers  concerned  were  significantly  undercutting  the
Community industry’s prices. The  combination  of  this  kind  of  undercutting  with  the
increased level of dumped imports from the countries concerned certainly affected the
domestic prices  of  the  Community  industry.  The  decline  in  domestic  prices  between
2000  and  the  IP  occurred  precisely  when  the  largest  surge  of  dumped  imports  took
place, hereby causing a downward pressure on sales prices in the Community market.

4.2.3. Profitability

Profitability

1998

1999

2000

2001 (= IP)

free market sales

10,6%

-11,0%

10,1%

-9,0%

(172) Notwithstanding  the  increase  in  the  cost  of  production  in  2000,  the  Community
industry became profitable again because of the increase in sales prices, influenced by
the  imposition  of  anti-dumping  duties  on  dumped  imports  subject  to  the  proceeding
mentioned under recital (2). Subsequently, whereas the average price level decreased
by  10%  between  2000  and  2001,  the  cost  of  production  increased  by  9%,  thereby

32

causing losses of 9%. Indeed, the combination of a lower sales price level and lower
production  volumes,  implying  a  higher  cost  of  production  per  ton,  led  to  the
Community industry’s substantial losses during the IP.

4.2.4. Return on investment

(173) The information provided for investments relates to the production capacity that serves
both the needs of the captive use and the free market. However, the net result of free
market  sales  only  relates  to  the  production  capacity  theoretically  allocable  to  those
sales.  The  return  on  investment,  calculated  by  dividing  the  net  result  of  free  market
sales by the  theoretical proportion  of  the  acquisition value  of investments  relating to
such  sales,  amounts  to  a  negative  –6,5%  in  the  IP  compared  to  a  positive  9,6%  in
2000.

4.2.5. Cash flow and the ability to raise capital

(174) The  Community  industry’s  cash  flow  during  the  IP  was  negative  meaning  that  cash
outflow  exceeded  cash  receipts  and  that  the  financial  results  were  insufficient  to
support  depreciations,  value  adjustments  and  provisions.  The  continuation  of
investments  therefore  could  not  be  guaranteed  without  attracting  additional  external
funding.

(175) The ability to raise capital was not found to be affected by the negative results during
the  IP,  as  good  financial  results  were  realised  in  the  year  2000.  Moreover,  HRC’s
concern only a part of the overall activity of steel companies, meaning that HRC’s are
not the only factor influencing their overall financial abilities.

4.2.6. Magnitude of dumping and effects of past dumping and subsidisation

(176) Given  the  volume  and  the  price  of  the  dumped  imports,  the  impact  of  the  actual
margins of dumping, which are significant, cannot be considered to be negligible.

(177) Given  the  nature  of  the  steel  industry  and  the  contents  of  recitals  (165)  above  and
(243)  below,  it  is  considered  that  the  Community  industry  is  still  in  the  process  of
recovering from the negative effects of past dumping and subsidisation.

4.3. Captive use

Captive
production

Volume

in tonnes

index

Proportion  of
total
production

1998

1999

2000

2001 (=IP)

28.075.070

28.265.878

29.138.693

26.467.114

100

101

104

94

67,88%

68,78%

68,93%

69,24%

33

(178) Some indicators relating to captive use form part of the analysis of the whole activity
of  the  product  concerned  (i.e.  production  capacity  and  capacity  utilisation,  cost  of
production,  stocks,  investments,  employment  and  productivity).  With  respect  to
certain  factors  which  are  analysed  above  in  respect  of  the  free  market  (i.e.  sales
volumes and prices and profitability), the data received are not, by their very nature,
adapted to an immediate and objective comparison with the data obtained for the free
market.  Nevertheless,  there  was  no  evidence  found  that  it  was  more  profitable  to
produce  for  captive  use  than  for  the  free  market.  Therefore,  this  analysis  focuses  on
production for captive use and examines if its trend is comparable to that of the free
(and total) markets.

(179) Production for captive use increased by more than 1 million tons or 4% between 1998
and  2000,  allowing  the  Community  industry  to  increase  total  production  despite  the
fact  that  production  for  the  free  market  remained  at  almost  the  same  level.  Between
2000  and  the  IP  however,  captive  use  decreased  by  9,2%,  slightly  less  than  the
decrease  of  production  for  the  free  market  of  10,5%,  leading  to  a  fall  in  total
production of more than 4 million tons or 9,6%.

5. Conclusion on injury

(180) During the period considered the volume of imports from Bulgaria, Egypt, Slovakia,
South Africa and Turkey increased by 64%. Their market share increased from 5,9%
to 9,8% and their average import prices were reduced by 2%.

(181) The gain in market share, the increase of import volumes and the decline of the sales
price were particularly pronounced between 2000 and the IP. Import volumes during
that period almost doubled, market share increased from 5% to 9,8% and import prices
decreased  by  12%.  In  addition,  it  was  found  that  prices  charged  by  the  Community
industry  for  HRC  sold  on  the  free  market  were  undercut  by  the  exporting  producers
concerned  by  margins  exceeding  10%  depending  on  the  type  of  HRC  and  that  such
undercutting exerted a downward price pressure on all types of HRC’s.

(182) Only  three  economic  indicators  pertaining  to  the  situation  of  the  Community,  i.e.
production  capacity  installed,  investments  and  productivity  showed  moderately
positive developments over the period considered. Production declined by 8%, the rate
of  capacity  utilisation  fell  from  86,5%  to  79%,  the  free  market  sales  volume  in  the
Community  decreased  by  10%,  corresponding  average  sales  prices  by  6%,  market
share  decreased  from  52,1%  to  47,6%,  cost  of  production  increased  by  15%,
profitability in the Community fell from 10,6% to –9%, employment was reduced by
9% and cash flow was negative during the IP.

(183) Taking  into  account  all  factors  mentioned  above,  in  particular  the  decrease  in
production  and  sales  volumes,  prices  and  market  share  and  the  financial  losses
incurred  during  the  IP,  it  is  considered  that  the  Community  industry  has  suffered
material injury.

34

F. CAUSATION OF INJURY

1. Introduction

(184)

In  accordance  with  Article  3(6)  and  (7)  of  the  basic  Regulation,  the  Commission
examined  whether  the  dumped  imports  of  HRC’s  originating  in  Bulgaria,  Egypt,
Hungary,  Slovakia,  South  Africa  and  Turkey  have  caused  injury  to  the  Community
industry. Known factors other than the dumped imports, which could at the same time
be injuring the Community industry, were also examined to ensure that possible injury
caused by these other factors was not attributed to the dumped imports.

2. Effect of the dumped imports

2.1. Hungary

(185) With  reference  to  recital  (148)  of  this  Regulation,  it  was  found  that  imports  from
Hungary increased by 5% over the period 1998-2001 but decreased between 2000 and
the  IP  by  12%.  During  the  latter  period  the  Hungarian  market  share  decreased  from
1,19% to 1,08%. The same period is the one during which the financial situation of the
Community industry deteriorated dramatically, turning a 10% average profit into a 9%
average  loss.  However,  the  prices  of  a  large  share  of  Hungarian  imports  were  the
highest  of  all  operators  concerned,  the  Community  industry  itself  included,  selling
HRC’s on the Community market during the IP.

(186) Consequently,  the  likelihood  that  Hungarian  imports,  taken  in  isolation,  have
contributed  significantly  to  the  material  injury  suffered  by  the  Community  industry
during the  IP, is considered  to be  remote. The proceeding should  thus  be  terminated
with  respect  to  imports  of  HRC’s  originating  in  Hungary  and  the  effects  of  these
imports  will  be  taken  into  consideration  within  the  analysis  of  the  effects  of  other
imports.

2.2. Imports from the remaining countries concerned

(187) Although  Community  consumption  of  HRC’s  remained  stable  over  the  period
considered,  dumped  imports  originating  in  Bulgaria,  Egypt,  Slovakia,  South  Africa
and  Turkey  have  increased  significantly  over  the  same  period,  reaching  2,2  million
tons in the IP, which corresponded to an increase of market share from 5,9% to 9,8%
over the period considered. Over the same period considered, the Community industry
lost market share from 52,1% to 47,6%.

(188) These trends were even more pronounced between 2000 and the IP. While Community
consumption  decreased  by  2,9%,  dumped  imports  originating  in  Bulgaria,  Egypt,
Slovakia, South Africa and Turkey almost  doubled,  which  corresponded  to  a  market
share  gain  from  5%  to  9,8%.  Meanwhile,  the  Community  industry’s  market  share
decreased from 51,3% to 47,6%.

(189) The Bulgarian, Egyptian, Slovakian, South African and Turkish average import prices
did not or not significantly undercut the Community industry’s prices. However, on a
type-by-type basis significant price undercutting was found up to 17,7%. The presence
of  these  imports  prevented  the  Community  industry  to  increase  its  prices  and  the
increase of these low-priced imports further strengthened the downward price pressure
on the Community market.

35

(190)

In this respect, it is worth noting that the Community market for HRC’s is particularly
transparent since HRC’s are a commodity product and the major operators are known.
Sellers of HRC’s are aware of the buyers’ needs and the buyers are aware of the level
of prices basically on a daily basis. As a result, even episodic undercutting of differing
types of HRC’s still exerts a significant downward effect on overall prices.

(191)

It  is  therefore  concluded  that  the  increased  presence  of  low-priced  dumped  imports
from Bulgaria, Egypt, Slovakia, South  Africa  and  Turkey on the  Community market
contributed  to  the  depressed  price  level  and  consequently  had  a  significant  negative
impact on the situation of the Community industry.

3. Impact of other factors

3.1. Development of consumption

(192) Over the period considered Community consumption remained at a comparable level,
with  the  exception  of  the  years  1998  and  2000  where  the  level  was  respectively  2%
and 3% higher than in 1999 and the  IP. Under normal circumstances, namely, in the
absence  of  dumped  imports,  the  decrease  in  consumption  between  2000  and  the  IP
should have  affected  all operators selling HRC’s on the  Community  market  more  or
less  in  a  similar  way.  The  investigation  showed  that  this  was  not  the  case.  Whilst
dumped  imports  increased  by  90%  between  2000  and  the  IP,  Community  industry's
sales in the free market dropped by 10%.

(193) The  decrease  of  Community  consumption  between  2000  and  the  IP  may  have
contributed  to  the  injury  suffered  by  the  Community  industry.  However,  under  the
present circumstances, it is very likely that a higher level of consumption would have
been mainly taken over by dumped imports and not by the Community industry. The
slight decrease in consumption during the IP thus cannot explain the drop by 10% of
Community industry's free market sales.

(194) Based on the above facts and considerations, it is considered that any injury caused by

the decrease in consumption could not be substantial.

36

3.2. Imports of HRC’s from other third countries

volumes in tons

1998

1999

2000

2001 (=IP)

Consumption
Index

22.894.274
100

22.544.897
98

23.178.301
101

22.501.555
98

Imports

Russia
Index
Other third
countries
Including
Hungary, Libya
and Iran
Index
Total third
countries not
concerned
Index

582.691
100
2.888.386

934.471
160
1.748.714

1.115.350
191
2.552.179

735.120
126
2.063.933

100
3.471.077

61
2.683.185

88
3.667.529

71
2.799.053

100

77

106

81

(195) During the IP and making abstraction of the countries concerned by this proceeding,
only  imports  originating  in  Russia  were  significantly  above  de  minimis  threshold  of
1% of Community consumption. It should be noted that Russian imports are subject to
a voluntary restraint agreement, putting a quantitative ceiling on the volume imported.
The “other third countries” under this heading refer to all countries not concerned by
the  present  investigations  (including  Hungary,  Iran  and  Libya  in  view  of  the
termination) at the exclusion of Russia, which is mentioned separately.

(196) Russian imports increased in total by 26% over the period 1998-2001. However, after
a  very  pronounced  increase  from  1998  to  2000,  Russian  imports  decreased  by
approximately  one  third  between  2000  and  2001.  Other  imports  decreased  by  29%
over  the  period  considered.  Overall  imports  originating  in  third  countries  not
concerned by both proceedings decreased by 19% over the period considered.

Average  import
price
in € per ton
Russia
Index
Other third
countries
Index
Total third
countries not
concerned

1998

1999

2000

2001 (= IP)

255,5
100
276,4
100

272,9

191,4
75
217,2
79

208,2

303,4
119
316,3
114

312,4

240,2
94
255,6
92

251,5

Index

100

76

114

92

37

(197) Over the period considered, the prices of all third country-imports followed a similar
trend  as  observed  for  the  imports  from  Bulgaria,  Egypt,  Slovakia,  South  Africa  and
Turkey and for the Community industry. Based on information available, the low level
of  Russian  import  prices  reflects  an  inconsistent  and  low  quality  of  the  coils,  which
explains the historical price difference with other imports.

Market shares

1998

1999

2000

2001 (= IP)

Russia

Index

Other countries

Index

Total third
countries not
concerned

Index

2,55%

100

12,62%

100

15,17%

4,14%

162

7,76%

61

11,90%

4,81%

189

11,01%

87

15,82%

3,27%

128

9,17%

73

12,44%

100

78

104

82

(198) The  market  share  of  Russia  increased  by  28%  or  0,72  percentage  points  over  the
period  1998-2001,  in  line  with  the  increase  of  imported  volumes.  Market  share
increased by 2,26 percentage points until 2000 but decreased from 2000 to the  IP by
1,54  percentage  points.  Imports  originating  in  other  countries  lost  3,45  percentage
points of market share over the period considered. Overall, countries not concerned by
both proceedings lost 2,73 percentage points over the period considered. Compared to
the year 1998, their market share in 2000 was 0,65 percentage points higher, followed
by a 3,38 percentage point drop between 2000 and the IP.

(199) Based  on  the  34%  decrease  of  Russian  imports  between  2000  and  the  IP  and  the
corresponding  loss  of  1,5%  market  share  and  on  the  reduced  importance  of  other
countries’  imports,  it  was  concluded  that  the  dumped  imports  from  Bulgaria,  Egypt,
Slovakia, South Africa and Turkey have contributed significantly to the injury suffered
by  the  Community  industry  by  means  of  their  significant  increase  of  volumes  and
market share at depressed prices.

3.3. Export activity of the Community industry

Exports

in tons

index

1998

1999

2000

2001 (= IP)

1.282.606

1.110.693

1.176.297

1.008.515

100

87

92

79

Export price

283,15

245,72

303,66

265,04

€ per ton

index

100

87

107

94

(200) The export activity of the Community industry in the IP represented 8,6% of its total
free market sales of own produced HRC’s, compared to 9,7% in 1998, 8,7% in 1999
and 9% in 2000. Given the fact that exports of HRC’s to third countries are therefore a

38

relatively minor and stable activity, any injury in terms of the evolution of production
or  sales  caused  by  the  evolution  of  exports  over  the  period  considered  is  considered
non-existent. Furthermore, export prices obtained during the IP are comparable to the
free market sales prices on the Community market.

3.4. World-wide situation and cyclical nature of the steel business

(201) The  injurious  situation  suffered  by  the  Community  industry  during  the  IP  cannot  be
completely separated from the prevailing conditions on the world steel markets. Many
reports  including  a  recent  study  performed  by  the  OECD  underlined  the  need  to
restructure  the  steel  industry  and  the  urgency  to  eliminate  the  excess  of  production
capacity  worldwide.  Some  major  steel  producers,  such  as  the  Japanese  and
Community  steel  producers  have  already  implemented  a  voluntary  process  of
restructuring in the past while others have not done so.

(202) However,  while  it  cannot  be  ignored  that  the  worldwide  steel  situation  and  the
corresponding downward price tendency have contributed to the injurious situation of
the Community industry, this should have affected all market players in a similar way.
The surge in low-priced imports and the shift of corresponding market shares in favour
of  Bulgaria,  Egypt,  Slovakia,  South  Africa  and  Turkey  cannot  be  explained  on  the
basis of the world-wide steel situation and prevented the Community industry to keep
its market share.

(203)

(204)

(205)

It  has  also  been  claimed  that  the  evolution  of  steel  prices  is  of  a  cyclical  nature  as
illustrated by the relatively high prices in 1998 and 2000, each time followed by lower
prices  in  1999  and  2001.  In  this  respect,  the  injurious  situation  of  the  Community
industry  during  the  IP  is  alleged  to  be  the  consequence  of  a  cyclical  downturn  and
hence by definition temporary.

It  can  indeed  be  confirmed  that  the  steel  business  is  to  a  certain  extent  cyclical.
However,  the  analysis  of  the  trends  followed  by  the  volumes  and  prices  on  the
Community market in the last years did not indicate that cycles would be yearly ones
and that therefore such cycles cannot be the only explanation for the injurious situation
of  the  Community  industry  during  the  IP.  It  should  also  be  noted  that  consumption
remained relatively stable throughout the period examined. This points to the fact that
there was no cyclical impact from the demand side.

In  this  respect,  the  investigation  also  showed  that  the  low  price  level  in  1999  was
countered by the imposition of anti-dumping measures against Bulgaria, India, South
Africa,  Taiwan  and  the  Federal  Republic  of  Yugoslavia.  The  upward  price  effect,
contributing  to  the  good  financial  performance  during  the  year  2000,  however,  was
diluted again during the IP when imports from Bulgaria, Egypt, Libya, Slovakia, South
Africa and Turkey filled the gap left by the decrease of imports of HRC’s originating
in Brazil, China, India, Romania, Russia and Thailand.

(206) Therefore, while certain cyclical price effects cannot be excluded, their average impact
on  the  situation  of  the  Community  industry,  in  light  of  the  above  factors,  is  not
considered to be substantial.

39

3.5. Captive use

(207)

It was also investigated whether or not the Community industry harmedits free market
sales  by  shifting  its  attention  to  deliveries  for  captive  use,  thereby  causing  the
production intended for the free market to drop by 10,5% between 2000 and the IP.

(208) The  proportion  of  captive  use  of  total  production  increased  slightly  from  67,9%  to
69,2% over the period considered. The trends of both production for captive use and
for free market sales were however comparable, dropping dramatically between 2000
and the IP.

(209) Between  2000  and  the  IP  the  Community  industry's  production  intended  for  captive
use decreased by 9,2%, or by over 3 million tons. As explained in recital (157) above,
the  interest  of  the  Community  industry  is  to  maintain  a  high  rate  of  capacity
utilisation.  It  is  well  aware  that  it  would  draw  no  benefit  from  voluntarily  shifting
production from one use to another. In view of the lost production for the captive use,
the industry had to try to offset this decline by increasing its production for deliveries
into the free market. However, this has not been  possible  in view of the presence of
low-priced dumped imports on that market. In fact, the Community industry did only
very  partially  compensate  the  deteriorated  market  conditions  in  the  free  market  by
more  production  intended  for  captive  use.  Indeed,  the  proportion  of  this  production
increased from 68,9% in 2000 to 69,2% of total production of the Community industry
in the IP.

(210)

It is therefore considered that the development of captive use did not in any significant
way contribute to the material injury suffered by the Community industry.

3.6. Capacity increase

(211) The  Community  industry  increased  its  capacity  by  approximately  500.000  tons
between  2000  and  the  IP.  This  was  a  consequence  of  the  investments  made  during
2000 which, apart from maintenance, related to the replacement of certain traditional
lines  by  the  continuous  casting  technology.  However,  if  the  Community  industry
would  have  been  able  to  maintain  its  production  and  sales  volumes  at  the  level  of
2000, the depreciations linked to this new technology would have been fully absorbed
and would  not  have affected the  cost  of production per  ton for the HRC  sold  on  the
free market.

(212)

Indeed,  the  impact  of  the  production  capacity  increase  on  its  own  did  not  affect  the
Community industry. On the contrary, under normal market conditions, namely in the
absence of dumped imports, such an investment should have allowed the Community
industry to decrease its costs and make overall economies of scales for the benefit of
the whole production of HRC.  The investigation showed that in an  overall shrinking
market dumped imports were gaining considerable market share and sales  volume at
the expense of the other operators including the  Community industry. Therefore,  the
capacity increase has not contributed in any significant manner to the material injury
suffered by the Community industry during the IP.

4. Conclusion on causation

(213) The  investigation  has  shown  that  over  the  period  considered,  and  in  particular  from
2000  to  the  IP,  the  volume  of  low-priced  dumped  imports  from  Bulgaria,  Egypt,

40

Slovakia,  South  Africa  and  Turkey  considerably  increased,  contributing  to  the
Community  industry’s  impossibility  to  raise  prices  on  the  Community  market  to  an
acceptable  level,  especially  considering  the  decreased  impact  of  economies  of  scale.
Given  the  9,8%  market  share  of  Bulgarian,  Egyptian,  Slovakian,  South  African  and
Turkish  imports  on  the  Community  market  during  the  IP,  this  development  had
material negative consequences for the Community industry.

(214) Other factors than the dumped imports from Bulgaria, Egypt, Slovakia, South Africa
and  Turkey,  such  as  the  development  of  Community  consumption,  the  imports  from
other  third  countries,  the  export  activity  of  the  Community  industry,  the  worldwide
situation  and  the  alleged  cyclical  nature  of  the  HRC  business,  the  Community
industry’s  production  intended  for  captive  use  and  the  Community  industry’s
production capacity increase were investigated. It was found that the development of
consumption and the cyclical nature of the HRC business have also contributed to the
material  injury  suffered  by  the  Community  industry.  However,  as  explained  above,
this  impact  was  not  substantial,  and  not  such  as  to  break  the  chain  of  causation
between the dumped imports and the injury suffered by the Community industry.

(215)

In  conclusion,  it  is  therefore  confirmed  that  the  material  injury  of  the  Community
industry, which is characterised by  a reduction of produced and  sold  volumes, lower
capacity  utilisation,  suppressed  sales  prices,  increased  cost  of  production,  reduced
market  share,  financial  losses,  negative  cash  flow  and  reduced  employment,  was
caused  by  the  dumped  imports  concerned.  Indeed,  the  effect  of  the  development  of
Community consumption, the imports from other third countries, the export activity of
the Community industry, the world-wide situation and the cyclical nature of the steel
business,  the  Community  industry’s  captive  use  and  the  Community  industry’s
capacity  increase  on  the  Community  industry’s  negative  developments  in  terms  of
production volumes, capacity utilisation, sales, sales prices, cost of production, market
share, financial results and employment was  only  limited.  A  genuine  and  substantial
link was found to exist between the dumped imports and the injurious situation of the
Community industry.

(216) Given the above analysis which has properly distinguished and separated the effects of
all  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  reverse  the  fact  that  the  injury  assessed  must  be  attributed  to  the  dumped
imports.

G. LIKELIHOOD OF CONTINUATION/RECURRENCE OF INJURIOUS DUMPING

(217)

In  the  context  of  the  interim  review  concerning  Bulgaria  and  South  Africa,  it  was
examined whether the changed circumstances with respect to the original investigation
regarding dumping and injury could reasonably be considered to be of a lasting nature.
However, as regards the exporting producer in South Africa, which did not export the
product concerned during the IP, it was examined whether it was likely that dumping
would recur should measures be removed.

1. Bulgaria

(218) The analysis took into account that in the original investigation an undertaking offered
by  the  exporting  producer  had  been  accepted.  The  effect  of  the  undertaking  on  the
export price was examined (see recital (221) below).

41

(219) A  price  comparison  was  made  between  the  prices  of  the  product  concerned  sold  for
export  to  the  Community  and  for  export  to  third  countries  during  the  investigation
period.

(220)

It was found that for the most representative CN codes (as far as the quantities sold are
concerned) and for the global figures (including all CN codes), the selling prices of the
product concerned were significantly higher in the Community than in third countries.
The exports to third countries were therefore very likely made at dumped prices, and
these dumping margins are in all likelihood, higher than the one stated in recital (47).

(221) This price difference noted between the Community market and other export markets
is  explained  to  a  large  extent  by  the  existence  of  the  minimum  price  undertaking
accepted by the exporting producer. Indeed, the company did respect the undertaking
during  the  investigation  period.  However,  the  company  never  sold  at  significantly
higher  prices  than  the  minimum  prices,  and  this  regardless  of  the  relevant  market
conditions. This indicates that the exporting producer did not set export prices to the
Community according to market forces, but that these were largely determined by the
minimum price obligation, the minimum import price thus being a measure that affects
the  export  price.  The  possible  margin  of  the  company  to  decrease  prices  to  the
Community further is shown by the price level practised on other export markets. It is
to  be  recalled  that  despite  the  respect  of  the  exporter  of  the  minimum  price
undertaking, exports to the Community market were still made at dumped prices. This
shows  that  the  undertaking  in  force  is  not  sufficient  to  counteract  the  injurious
dumping.

(222) Consequently,  it  was  considered  that  should  the  measures  in  the  form  of  the
undertaking  be  removed,  the  company  would  be  able  to  adopt  the  same  pricing
behaviour as for exports to third countries, which means reducing its export price. This
would  also  mean  that  in  case  the  measures  in  the  form  of  an  ad-valorem  duty  were
only  to  be  applied  at  the  level  found  in  recital  (47),  these  measures  would  not  fully
reflect  the  actual  dumping  practised  during  the  investigation  period  and  would  be
likely to be ineffective.

(223) Given  the  above,  it  is  necessary  to  adjust  the  existing  undertaking  by  increasing  the
minimum prices to reflect the dumping findings of this investigation, i.e. by the level
of dumping found in recital (47).

(224) Finally,  and for the  same reasons  as  outlined  in  recital  (222),  the  applicable  level  of
duty  should  be  determined  in  case  the  company  breaches  or  withdraws  the
undertaking. In this respect it is recalled that the dumping margin found in the original
investigation  was  27.1  %  and  that  the  injury  margin  was  7.5%.  Thus,  the  measure
subject to this review only  removes partially the dumping  found originally. This  has
been confirmed in this review where there is, over and above the dumping eliminated
by  the  existence  of  an  undertaking,  still  additional  dumping  of  8.6%.  In  these
circumstances  any  duty  applicable  in  case  of  a  breach  or  withdrawal  of  the
undertaking is meant to remove the injury level as found in the original investigation.
The  foregoing  should  be  seen  in  the  light  of  the  fact  that,  as  explained  in  detail  in
recital  (221)  above,  the  current  Bulgarian  export  prices  to  the  Community  are
substantially influenced by the undertaking subject to review. The export prices reflect
essentially the  level  fixed in the  undertaking  but  do  not  significantly  go  beyond  that
level. Without the existence of an undertaking, export prices to the Community would
in  all  likelihood  fall  and  there  is  no  reason  to  believe  that  any  injurious  dumping

42

resulting  therefrom  would  be  lower  than  16.1%,  i.e.  7.5%  as  originally  found,  and
8.6% as established in this review. Consequently, any duty should be set in the above
circumstances at a level of 16.1%.

(225)

It  is  recalled  that  the  residual  duty  level  specified  in  Commission  Decision
283/2000/ECSC  for  Bulgaria  was  7.5%.  This  residual  duty  level  should  be  aligned
with  the  new  undertaking  level  in  order  to  avoid  the  undermining  of  anti-dumping
measures against Bulgaria. Consequently, the new residual duty level should be set at
16.1%, i.e. 7.5% plus 8.6%.

2. South Africa

(226)

(227)

It  is  recalled  that  only  one  exporting  producer  in  South  Africa  exported  the  product
concerned to the Community during the investigation period. It is also recalled that for
the  other  exporting  producer  who  did  not  export  HRC’s  to  the  Community  an
minimum price undertaking had been accepted during the original investigation.

It  was  first  examined  whether,  with  regard  to  the  latter  exporting  producer  and
although no exports were made, it is appropriate to maintain the anti-dumping duties
imposed further to the original investigation and to renew the undertaking in force at
the same level as accepted during the original investigation. For this determination, the
Commission  examined  the  production  capacity,  the  sales  volume  on  the  different
markets,  and  the  price  level  of  sales  made  on  the  domestic  market  and  on  third
countries’ export markets.

(i) Production capacity

(228) Production volume of the product  concerned has decreased by  almost 40% since the
imposition of the measures in 2000 while production capacity remained the same. The
production volume remained stable at a low level since 2000 and spare capacity during
the  investigation  period  reached  almost  40  %.  It  is  worth  noting  that  the  company
forecasted to produce at full capacity in 2002, i.e. at the same level than prior to the
imposition of the definitive anti-dumping measures. These findings show that there is
not  only  a  significant  potential  to  increase  production  in  future,  but  also  that  such
increase  is  very  likely  to  be  realised  if  measures  would  be  allowed  to  lapse,  as  the
company  itself  already  forecasted  an  increase  despite  the  measures  being  in  force.
Furthermore, besides the increase in production by using the current spare capacities, a
shift in  production from  plates  (also  produced  by  this  exporting  producer)  to  HRC’s
would be relatively  easy due  to  the fact  that  both products  are  produced  at  the same
production line. This shift in production would not only be technically simple, but also
with no or only little impact on the costs.

(ii) Sales volume

(229) The domestic market remained relatively stable during the last years. Since there were
no indications that conditions on the domestic market will change significantly in the
future,  it  had  to  be  concluded  that  this  market  would  most  likely  not  absorb  an
increased offer of the product concerned. As far as export sales to third countries are
concerned, these decreased significantly in 2001 mainly due to the imposition of anti-
dumping duties (in the second half of the IP) in the United States and Canada against

43

imports of HRC’s originating in South Africa. Therefore, it had to be concluded that
the possibilities to sell increased quantities to other third countries are limited.

(230) Considering these facts, and given the significant spare capacities available, it had to
be concluded that exports to the Community would resume at significant levels should
measures be allowed to lapse and access to the Community market would be free.

(iii) Sales prices

(231) An  analysis  of  export  prices  to  third  countries  made  during  the  investigation  period
has shown that these were, on an average level, lower than sales prices of the product
concerned  on  the  domestic  market.  Since  sales  of  the  product  concerned  on  the
domestic  market  were  profitable  during  the  IP,  and  these  prices  could  have
consequently been used as a basis for normal value. It had to be concluded that export
sales prices to third countries were very likely to be at dumped levels.

(232) Furthermore, export sales prices to third countries during the investigation period were
made at a level below the current minimum price undertaking in force for exports to
the  Community.  Consequently,  as  far  as  future  export  sales  to  the  Community  are
concerned,  these  would,  in  all  likelihood,  not  be  made  at  non-dumped  price  levels,
should measures be allowed to lapse. Additionally, the company‘s internal target price
for export sales as well as the break even price of the product concerned were found to
be significantly lower than the current undertaking minimum price. Also, it was found
that the company is able to sell at dumped prices, while still selling at profitable levels.

(233)

In  conclusion,  the  likelihood  that  production  volume  will  increase  whereas  the
domestic  and  third  country  markets  are  most  likely  not  able  to  absorb  the  increased
offer, it had to be concluded that a major part of the increased production will enter the
Community at significantly dumped price levels, should measures be allowed to lapse.
On the basis of the information obtained in this investigation, the dumping margin in
case of repeal of the measures would, in all likelihood, not be lower than the one found
in the original investigation, i.e. 37.8%.

(234) As far as the exporting producer, which did not export to the Community during the IP
is  concerned,  the  Commission  examined  whether  the  changed  circumstances  (higher
dumping) found with respect to this exporter had a lasting effect.

(235)

It  is  recalled  that  this  exporting  producer  is  related  with  other  companies,  and  in
particular with two related producers of the product concerned in South Africa. One of
these related producers was not operational during the original investigation and only
started production in mid 1999. This related producer was found to be mainly export
oriented given its geographical location near a sea port. Furthermore, on the domestic
market,  this  company  had  only  one  customer.  The  investigation  also  showed  that
export  sales  of  this  producer  accounted  for  around  80%  of  its  total  sales  in  volume.
There are indications that this  new company was  set  up mainly  for exports, and that
this situation is likely to last.

(iv) Export sales prices

(236) No indication had been found that the export prices would increase, in the foreseeable

future.

44

(v) Likely development of the normal value

(237) As mentioned in recital (93), significant dumping was found for the  group. This was
mainly  due to the  new related  producer (which  started  production  only  in  1999),  for
which a high normal value had been established during the present investigation.

(238) Since  normal  value  for  this  producer  was  constructed,  the  cost  of  production  had  a
significant  impact  on  its  level.  Cost  of  production  was  found  to  be  at  a  high  level.
Although  the  company  claimed  that  this  high  level  of  costs  was  due  to  a  start-up
process, this claim was not accepted (see recital (91)). As no evidence was submitted
showing that costs would decrease in the foreseeable future, it was not unreasonable to
conclude that the normal value found would remain at a high level.

(239) Considering  the  above,  it  has  been  concluded  that  for  the  exporting  producer  which
did  export  to  the  Community  during  the  IP,  the  current  measures  are  no  longer
sufficient to counteract the dumping which is causing injury.

(vi) Conclusions for South Africa

(240) For the exporting producer which did export to the Community during the IP, it was
found  that  there  is  a  likelihood  of  recurrence  of  dumping  should  the  measures  be
allowed to remove, and that accordingly, the measures should remain in place.

(241) For the other exporting producer, the level of the dumping margin should be set at the
level found during the current review, as the measures currently in place were found
not to suffice to remove the effects of injurious dumping.

(242) Consequently, the level of the dumping margin, expressed as a percentage of the CIF

import price at Community border is

Highveld Steel and Vanadium Corporation: 37.8%

Iscor  Steel,  Saldanha  Steel,  Macsteel  International  South  Africa  (Pty)  Ltd,  and
Macsteel International UK Ltd. :85.1%

3. Conclusion on the likelihood of continuation/recurrence of injurious dumping

(243) The current measures in place regarding imports of HRC’s originating in Bulgaria and,
in case of imports originating from one producer, South Africa. South Africa no longer
remove  sufficiently  the  injurious  effect  of  the  dumped  imports.  Considering  the
likelihood  that  dumping  would  continue  or  recur  (in  the  case  of  the  South  African
producer  which  did  not  export  during  the  IP)  if  the  measures  were  allowed  to  lapse
and considering that the measures currently in force against Bulgaria and South Africa
are no longer sufficient to remove the injurious effect of dumping, it is concluded that
the injurious situation of the Community industry would worsen if the measures were
allowed to continue in their current form (or to lapse in the case of one of the South
African producers).

45

H. COMMUNITY INTEREST

1. Introduction

(244) The Commission examined whether, despite the conclusions on dumping, injury  and
causation, compelling reasons existed which would lead to the conclusion that it is not
in the Community interest to adopt or amend measures in this particular case. For this
purpose,  and  pursuant  to  Article  21(1)  of  the  basic  Regulation,  the  Commission
considered the likely impact of measures for all parties concerned bythe investigation.

2. Interest of the Community industry

(245) The situation of the Community industry has deteriorated due to the downward price
pressure  exercised  by  low-priced  imports  of  HRC’s  from  Bulgaria,  Egypt,  Slovakia,
South  Africa  and  Turkey,  especially  between  2000  and  the  IP  when  those  imports
almost  doubled  in  volume,  causing  a  situation  in  which  the  decline  of  sales  by  the
Community  industry  was  more  pronounced  than  the  reduction  of  free  market
Community consumption and in which sales were made at a loss.

(246) The sales volume lost by the Community industry was taken over by dumped imports.
The  investigation  has  underlined  the  importance  of  the  volume  factor  in  the  steel
industry, namely the need to maintain a high rate of production capacity utilisation in
order to benefit from economies of scale. The loss of production and sales volume had
a negative impact on the financial situation of the Community industry.

(247)

It is considered that,  in the  absence  of the  imposition of  anti-dumping  measures,  the
situation of the Community industry  will further deteriorate, depressing the financial
results further and thus reduce employment.

(248) As  the  Community  industry  has  proved  to  be  viable  in  principle  in  the  absence  of
injurious  dumping,  the  adoption/maintenance  of  anti-dumping  measures  would  be  in
the Community industry’s interest.

3. Interest of importers

(249) The  Commission  services  received  six  questionnaire  replies  from  importers,  two  of
which being traders and the remaining being at the same time industrial users (mainly
tubemakers),  representing  28,4%  of  total  imports  from  Bulgaria,  Egypt,  Slovakia,
South Africa and  Turkey  during the  IP  and 28,3%  of  imports  from  all  other  origins.
The companies involved were:

- Arvedi Tubi Acciaio s.r.l., Cremona, Italy

- Eurostahl GmbH, Linz, Austria

- Marcegaglia S.p.A., Gazoldo Ippoliti, Italy

- Profiltubi P.P.A., Reggiolo, Italy

- Stemcor Europe Limited, London, United Kingdom

- Subergal-Trading Lda., Mozelos, Portugal

46

These  interested  parties  pronounced  themselves  against  the  imposition  of  anti-
dumping duties.

(250) The two traders of HRC’s realised an average profit margin on sales of 2,3% during
the  IP.  It  is  clear  that  the  proposed  anti-dumping  margins  would  cause  losses  in  the
event  that  these  traders  would  continue  to  source  from  the  same  origins  and  not  be
able  to  raise  the  price  level  of  their  corresponding  sales.  In  this  respect,  it  should
however  be  underlined  that  the  possibility  to  source  elsewhere  exists  and  that  it  is
expected  that  price  increases  would  be  passed  on  to  the  customers.  Therefore,  the
interest of importers does not lead to the conclusion that it would, on balance, not be in
the Community interest to adopt measures.

4. Interest of users

(251) The Commission services received questionnaire replies from five users, four of which
at  the  same  time  were  importing  during  the  IP  and  are  already  mentioned  under
recital(249) and one which is mentioned below:

Fabbrica Tubi Mobilio (F.T.M.), S.A., Trieste, Italy

(252) During  the  IP,  these  five  co-operating  companies  represented  around  4%  of
Community consumption of HRC's and absorbed around 8% of the free market sales
of the Community industry. They imported around 28% of all imports (25% from the
countries  concerned  and  29%  from  other  third  countries).  Based  on  the  replies
received, the incidence of HRC’s in the full cost of production of finished products of
these co-operating users during the IP was high (over 60%). The users, whose overall
profitability on sales amounted to only 0,8% during the IP claimed that the imposition
of measures would negatively affect them.

(253) Tubemakers in general, which in total represent 12% of free market sales made by the
Community industry and 6% of Community consumption, may be negatively affected
by any price increase of HRC’s. Indeed, they claim that it will not be possible for them
to pass on any price increases.

(254) However,  although  prices  of  HRC’s  from  the  countries  concerned  are  likely  to
increase, there remain other, non-dumped sources of supply from other third countries.
In addition, as far as supplies from the Community industry are concerned, it should
be  noted  that  the  imposition  of  measures  on  HRC's  might  not  necessarily  lead  to
automatic price increases of HRC's. Prices may not increase as a result of the measures
if  the  Community  industry  could  recover  the  market  share  lost  to  dumped  imports
during the IP.

(255) As  to  the  alleged  impossibility  to  pass  on  any  price  increases  to  downstream
industries,  it  should  be  noted  that  the  tube  industry  also  alleged  that  any  increase  in
their  sales  prices  was  hampered  by  low-priced  dumped  tubes  imported  into  the
Community.  In  this  respect  it  should  be  noted  that  the  Defence  Committee  of  the
Welded Steel Tube Industry lodged an anti-dumping complaint concerning imports of
hollow  sections  originating  in  Russia  and  Turkey  and  that  a  notice  of  initiation  was
published  on  16  October  20029.  There  are  therefore  reasons  to  believe  that  the  poor
sales price level and profitability achieved by that industry during the IP is not due to

9

OJ C 249, 16.10.2002, p.5

47

                                                
the  price  level  of  purchased  coils,  and  that  accordingly,  imposing  measures  on  coils
would not contribute in any major way to the challenge faced by the tubemakers.

(256) Given the large impact of HRC’s on the cost of production of certain users, the latter
are  particularly  concerned  about  the  possible  price  level  of  HRC's  in  case  of  the
imposition  of  anti-dumping  measures.  This  particularly  applies  to  users,  which  are
sourcing their coils from the countries concerned. However, it is considered that any
negative  effects  on  certain  users  from  taking  measures  against  dumped  imports  will
not outweigh the positive effects overall from which all the other operators active on
the Community market will benefit.

5. Conclusion on Community interest

(257) On  the  basis  of  the  above,  it  is  concluded  that  the  imposition  of  anti-dumping
measures  is  necessary  to  prevent  further  dumped  imports  in  order  to  prevent  the
situation of the Community industry to deteriorate further. The imposition of measures
in the present  case  will re-establish effective trade conditions for  all operators in the
Community.  The  introduction  of  anti-dumping  measures  on  HRC’s  imported  at
dumped prices into the Community and originating in Egypt, Slovakia and Turkey and
the  continuation  of  anti-dumping  measures  on  imports  originating  in  Bulgaria  and
South Africa will likely cause some financial losses at the level of certain Community
traders and users.

(258) However, on balance, these likely costs for certain traders and users are not considered

to constitute compelling reasons against the imposition of anti-dumping measures.

I. DEFINITIVE ANTI-DUMPING MEASURES

1. Injury elimination level

(259)

In  view  of  the  conclusions  reached  with  regard  to  dumping,  injury,  causation  and
Community  interest,  definitive  measures  should  be  taken  in  order  to  prevent  further
injury being caused to the Community industry by the dumped imports

(260) For the purpose of establishing the level of the definitive measures, account has been
taken  of  both  the  dumping  margins  found  and  the  amount  of  injury  suffered  by  the
Community industry.

(261) The measures with regard to Egypt, Slovakia and Turkey and the revised measures as
regards Bulgaria and South Africa should be imposed at a sufficient level to eliminate
the  injury  caused  by  these  imports  without  exceeding  the  dumping  margins  found.
When calculating the amount of duty necessary to remove the effects of the injurious
dumping, it was considered that any measures should allow  the  Community industry
to  cover  its  costs  and  obtain  overall  a  profit  before  tax  that  could  be  reasonably
achieved  under  normal  conditions  of  competition,  i.e.  in  the  absence  of  dumped
imports, on the sales of the like product in the Community. The t margin used for this
calculation was 8% of turnover, based primarily on an assessment of the profitability
required  to  cover  the  financial  costs  of  the  investments  made  by  the  Community
industry.

(262) The necessary price increase was then determined on the basis of a comparison of the
weighted  average  import  price,  as  established  for  the  undercutting  calculations,  with
the non-injurious price of the different types of coils sold by the Community industry

48

on the Community market, taking into account the level of trade, i.e. sales to traders
and sales to users. The non-injurious price per type has been  obtained  by adding the
above  mentioned  profit  margin  of  8%  to  the  cost  of  production  per  type.  Any
difference  resulting  from  this  comparison  was  then  expressed  as  a  percentage  of  the
total CIF import value.

(263) The corresponding injury  elimination  margins  for  the  exporting producers  concerned

are the following:

Kremikovtzi  Corporation, 
Sofia,
Botunetz,  and  Kremikovtzi  Trade
EOOD, Sofia, Botunetz (Bulgaria):

Alexandria  National  Iron  &  Steel
Company, Eldekheila (Egypt):

U.S.  Steel  Kosice,  s.r.o.,  Kosice
(Slovakia):

Iscor  Steel,  Saldanha  Steel,  Macsteel
International  South  Africa  (Pty)  Ltd,
and  Macsteel  International  UK  Ltd.
(South Africa) :

21,3%

13,8%

18,6%

20,8%

Ereğli  Demir  ve  Celik  Fabrikalari
T.A.Ş, Zonguldak (Turkey):

17,6%

For all the exporting producers concerned, significant underselling of the Community
industry’s sales prices was found to have occurred during the IP.

(264) Residual  injury  elimination  margins  for  the  non-co-operating  exporting  producers
have either been set at the same level as mentioned under recital (263) if overall co-
operation was high or, alternatively, were based on the highest underselling found on a
CN code basis for the co-operating exporting producer of that country concerned.

2. Definitive measures

(265) For  Bulgaria the dumping margin  was found  to  be  lower  than  the  injury  elimination
level.  Bulgaria  was  informed  of  the  new  findings  and  of  their  lasting  nature,  which
necessitated  the  amendment  of  the  undertaking  in  force,  taking  into  account  the
adjusted level of the dumping margin.

(266) The  South  African  exporting  producer,  for  whom  an  undertaking  based  on  the
dumping margin was in force during the IP, did not export to the Community during
the IP. It was determined that the existing undertaking should be prolonged, given the
likelihood of recurrence of injurious dumping.

(267) The  ad  valorem  duty  for  the  other  South  African  exporting  producer  should  be
adjusted on the basis of the findings during the IP. The measure in force during the IP
was based on an underselling margin of 5,2% and should be adjusted in order to reflect
an  additional  underselling  margin  of  15,6%.  Indeed,  a  higher  ad  valorem  duty  is
needed to correct for the injurious dumping that was found during the IP.

49

(268) For Turkey the dumping margin has been found to be lower than the injury elimination
level.  As  a  result,  the  definitive  measures  to  be  imposed  should  correspond  to  the
dumping margin established, in conformity with Article 9(4) of the basic Regulation.
For  Egypt  and  Slovakia,  the  injury  elimination  level  was  lower  than  the  dumping
margins  and  consequently  the  injury  elimination  margins  concerned  determine  the
level of the measures imposed.

3. Undertakings

(269) Exporting producers in Bulgaria, the Slovak Republic, South Africa and Turkey have
offered  price  undertakings  in  accordance  with  Article  8(1)  of  the  Basic  Regulation.
The  price  undertaking  offers  contain  the  usual  stipulations  but  provide  for  some
additional  flexibility  in  the  form  of  different  minimum  prices  depending  on  export
volumes, instead of providing straightforward price increases  for  all  export  volumes.
The  Commission  considers  that  the  undertakings  offered  are  acceptable  for  this
particular case in view of the large number of safeguard measures on steel adopted by
many players world-wide to which the exporters from Bulgaria, the Slovak Republic,
South  Africa  and  Turkey  are  subject  or  are  likely  to  be  subject.  On  this  basis,  it  is
considered that the undertakings will be sufficiently flexible to allow the exporters to
act in this uncertain environment and also sufficient to shield the Community Industry
from the injurious effect of dumping.

(270) The  companies  will  also  provide  the  Commission  with  regular  and  detailed
information concerning their exports to the Community, meaning that the undertakings
can be  monitored  effectively by  the Commission. Furthermore,  the  sales  structure  of
the companies are  such  that  the Commission  considers  the  risk  of  circumventing the
agreed undertakings is limited. In addition, the terms of the undertakings are such that
their  efficiency  and  practicability  will  be  the  subject  of  an  appraisal  by  the
Commission nine months after their acceptance,  at the  latest.  Unless  earlier  action is
warranted,  reassessment  of  any  of  the  elements  of  the  undertakings  which  are
considered necessary will be made at that time.

(271)

In order to ensure the effective respect and monitoring of the undertakings, when the
request for release for free circulation pursuant to the undertaking is presented to the
relevant  customs  authority,  exemption  from  the  duty  should  be  conditional  upon
presentation of a commercial invoice containing the information listed in the Annex to
this Regulation which is necessary for customs to ascertain that shipments correspond
to the commercial documents at the required level of detail. Where no such invoice is
presented,  or  when  it  does  not  correspond  to  the  product  concerned  presented  to
customs, the appropriate amount of anti-dumping duty should instead be payable.

(272)

In  the  event  of  suspected  breach,  breach  or  withdrawal  of  the  undertaking  an  anti-
dumping  duty  may  be  imposed,  pursuant  to  Article  8(9)  and  (10)  of  the  Basic
Regulation.

4. Combined effects of anti-dumping measures and safeguard duties

(273) Definitive  safeguard  measures  on  a  range  of  steel  products,  including  HRC’s  were
imposed  by  Commission  Regulation  (EC)  No  1694/200210.  Whereas,  the  above

10

OJ L 261, 28.9.2002, p.1

50

                                                
mentioned anti-dumping measures take the form of either a duty or an undertaking, the
safeguard  measures  take  the  form  of  tariff  quotas  applicable  for  specific  periods,  in
excess  of  which  safeguard  additional  duty  (“safeguard  duty”)  must  be  paid.  With
regard  to  HRC’s,  if  the  total  volume  of  imports  originating  in  all  third  countries
exceeds  the  quota  mentioned  in  annex  1  of  that  Regulation,  safeguard  duties  will
apply.

(274)

If the relevant tariff quota established under the safeguard measures is exhausted, or in
case the benefit of the tariff quota is not requested or not granted, both the safeguard
duty  and  the  anti-dumping  duty  would  become  payable  on  the  same  imports.
Similarly,  where  price  undertakings  have  been  accepted,  the  safeguard  duty  would
become payable in addition to the obligation to observe such price undertakings.

(275) The Council, by Council Regulation (EC) N° ………, considered that the combination
of  anti-dumping  or  anti-subsidy  measures  with  safeguard  measures  on  the  same
product could have  an effect greater than that intended in terms of the Community’s
trade defence policy and objectives and could place an undesirably onerous burden on
certain exporting producers seeking to export to the Community, which may have the
effect  of  denying  them  access  to  the  Community  market.  As  a  result,  the  Council
introduced  specific  provisions  to  enable  the  Community,  where  it  considers  it
appropriate,  to  take  action  to  ensure  that  a  combination  of  anti-dumping  or  anti-
subsidy  measures  with  safeguard  tariff  measures  on  the  same  product  does  not  have
such an effect.

(276)

(277)

In the present  case,  whilst  there  is  some uncertainty  as to if and  when  the  safeguard
tariff  quota  imposed  by  Regulation  (EC)  No  1694/2002  will  be  exhausted,  it  is
possible  that  imports  of  hot  rolled  coils  which  are  subject  to  anti-dumping  duties  or
undertakings  will  also  become  subject  to  payment  of  safeguard  duty,  for  a  limited
period of time towards the end of the specified quota period.

In  the  present  case,  where  both  an  anti-dumping  duty  and  a  safeguard  duty  would
normally  be  payable  and  where  the  anti-dumping  duty  is  less  than  or  equal  to  the
amount of the safeguard duty, it is considered appropriate that no  anti-dumping duty
should be payable, but only the safeguard duty; where the anti-dumping duty is greater
than the amount of the safeguard duty, it is considered appropriate that, in addition to
the safeguard duty, that part of the anti-dumping duty which is in excess of the amount
of  the  safeguard  duty  should  be  payable.  Similarly,  in  those  cases  in  which  a  price
undertaking  has  been  accepted,  the  Commission  has  agreed  to  accept  equivalent
reductions  in  the  minimum  import  prices  of  those  price  undertakings  for  the  period
during which any safeguard duty is payable.

(278)

In  order  to  ensure  legal  certainty  for  the  economic  operators  concerned,  it  is
considered  appropriate  to  specify  the  anti-dumping  measures,  which  should  apply  in
the event that the safeguard tariff quota is exhausted, or in case the benefit of the tariff
quota  is  not  requested  by  an  exporting  producer  or  an  importer  or  not  granted,  for
example,  because  the  necessary  formalities  are  not  complied  with  by  the  importing
party.

J. FINAL PROVISION

(279) The  individual  company  anti-dumping  rates  specified  in  this  Regulation  were
established  on  the  basis  of  the  findings  of  the  present  investigation.  Therefore,  they

51

reflect  the  situation  found  during  that  investigation  with  respect  to  these  companies.
These duty rates are thus exclusively applicable to imports of products originating in
the country concerned and produced by those companies and thus by the specific legal
entities  mentioned.  Imported  products  by  any  other  company  not  specifically
mentioned in the operative part of this Regulation with its name and address, and also
entities  related  to  those  specifically  mentioned,  cannot  benefit  from  these  rates  and
shall be subject to the duty rate applicable to “all other companies” for that particular
country.

(280) Any  claim regarding  the  application  of these individual company  anti-dumping  rates
(e.g. following a change in the name of the entity or following the setting up of new
production or sales entities) should be addressed to the Commission11 forthwith with
all  relevant  information,  in  particular  any  modification  in  the  company’s  activities
linked to production, domestic and export sales associated with e.g. that name change
or  that  change  in  the  production  and  sales  entities.  The  Commission,  if  appropriate,
will, after consultation of the Advisory Committee, amend the Regulation accordingly
by updating the list of companies benefiting from individual duty rates.

HAS ADOPTED THIS REGULATION:

Article 1

A definitive anti-dumping duty,  as specified in paragraph 3 of this Article, is hereby
1.
imposed on imports of certain flat rolled products of iron or non-alloy steel, of a width of 600
mm or more, not clad plated or coated, in coils, not further worked than hot-rolled, currently
classifiable within CN codes 7208 10 00, 7208 25 00, 7208 26 00, 7208 27 00, 7208 36 00,
7208 37 10, 7208 37 90, 7208 38 10, 7208 38 90, 7208 39 10 and 7208 39 90, originating in
Egypt, the Slovak Republic and Turkey.

2. The definitive anti-dumping duties on imports of certain flat rolled products of iron or non-
alloy  steel,  of  a  width  of  600  mm  or  more,  not  clad  plated  or  coated,  in  coils,  not  further
worked than hot-rolled, currently classifiable within CN codes 7208 10 00, 7208 25 00, 7208
26 00, 7208 27 00, 7208 36 00, 7208 37 10, 7208 37 90, 7208 38 10, 7208 38 90, 7208 39 10
and 7208 39 90, originating in Bulgaria and South Africa imposed by Commission Decision
No 283/2000/ECSC are amended as shown in paragraph 3.

The rate of the definitive duty applicable to the net free-at-Community-frontier price,

3.
before duty, for products produced by the following companies shall be as follows:

11

European Commission, Directorate-General Trade, Directorate B, B-1049 Brussels

52

                                                
Country

Company

Rate of duty

TARIC
additional
code

Bulgaria

Kremikovtzi Corp. 1870 Sofia,
Botunetz

16,1 %

A082

Kremikovtzi Trade EOOD 1870 Sofia,
Botunetz

Others

Egypt

Alexandria  National  Iron  and  Steel
Company, Eldekheila, Alexandria

Al Ezz Flat Steel Co., Kairo

Others

Slovakia

U.S.  Steel  Kosice,  Vstupny  areal  US
Steel, 044 54 Kosice

South Africa

Others

Iscor,  Ltd.  PO  Box  450  Pretoria  0001,
Saldanha Steel (PTY) Ltd., Private Bag
X11,  Saldanha  7395,  Mac  Steel
International South Africa (Pty) Ltd, PO
Box  8370,  Johannesbourg  2000  and
Mac  Steel 
International  UK  Ltd.
Exchange  Tower,  1  Harbour  Exchange
Square,  London  E14  9GE,  United
Kingdom.

Steel 

and  Vanadium
Highveld 
Corporation  Ltd.,  Old  Pretoria  Road,
Witbank, Mpumalanga

Others

Turkey

Ereğli Demir ve Celik Fabrikalari
T.A.Ş, 67330 KDZ Eregli, Zonguldak-

16,1 %

13,8%

29,2%

18,6%

18,6%

20,8%

A999

A429

A999

A430

A999

A079

37,8%

A085

37,8%

11,5%

A999

A431

Others

11,5%

A999

Notwithstanding  paragraph  1,  the  definitive  anti-dumping  duty  shall  not  apply  to

4.
imports released into free circulation in accordance with Article 2.

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

5.
apply.

53

Article 2

1.
Imports  declared  for  release  into  free  circulation  under  the  following  TARIC
additional codes which are produced and directly exported (i.e. shipped and invoiced) by the
companies below to a company in the Community acting as an importer shall be exempt from
the  anti-dumping  duty  imposed  by  Article  1  provided  that  such  imports  are  imported  in
conformity with paragraph 2 of this Article.

Company

Country

TARIC additional code

Kremikovtzi Corp. 1870 Sofia,
Botunetz and Kremikovtzi Trade EOOD
1870 Sofia, Botunetz

Bulgaria

U.S. Steel Kosice, Vstupny areal US
Steel, 044 54 Kosice

Slovakia

South Africa

A082

A430

A079

Iscor, Ltd. PO Box 450 Pretoria 0001,
Saldanha Steel (PTY) Ltd., Private Bag
X11, Saldanha 7395, Mac Steel
International South Africa (Pty) Ltd, PO
Box 8370, Johannesbourg 2000 and
Mac Steel International UK Ltd.
Exchange Tower, 1 Harbour Exchange
Square, London E14 9GE, United
Kingdom.

Highveld Steel and Vanadium
Corporation Ltd, Old Pretoria Road,
Witbank, Mpumalanga

South Africa

A085

Ereğli Demir ve Celik Fabrikalari
T.A.Ş, 67330 KDZ Eregli, Zonguldak-

Turkey

A431

Imports  mentioned  in  paragraph  1  shall  be  exempt  from  the  anti-dumping  duty  on

2.
condition that:

(a) a commercial invoice containing at least  the elements  listed in the  annex  is presented to
Member  States  customs  authorities  upon  presentation  of  the  declaration  for  release  for  free
circulation; and

(b) the goods presented and declared to customs correspond exactly to the description on the
commercial invoice.

Article 3

Notwithstanding paragraph 1(3) above, where imports of the product concerned are subject to
payment  of  a  safeguard  additional  duty  pursuant  to  Article  1(3)  of  Regulation  (EC)  No
1694/2002,  the  rate  of  the  definitive  anti-dumping  duty  applicable  to  the  net  free-at-
Community-frontier  price,  before  duty,  for  products  produced  by  the  following  companies
shall be as follows:

54

Country

Company

Bulgaria

Kremikovtzi Corp. 1870 Sofia,
Botunetz and Kremikovtzi Trade
EOOD 1870 Sofia, Botunetz

Others

Egypt

Alexandria  National  Iron  and
Steel  Company,  Eldekheila,
Alexandria,  Al  Ezz  Flat  Steel
Co., Kairo

Rate of AD duty (%) applicable
when safeguard additional duty is
payable

TARIC
additional
code

to
28.3.03

29.3.03
to
28.9.03

29.9.03
to
28.3.04

29.3.04
to
28.9.04

29.9.04
to
28.3.05

0%

0,4% 0,4% 2%

2%

0%

0%

0,4% 0,4% 2%

0%

0%

0%

2%

0%

Others

11,7% 13,5% 13,5% 15,1% 15,1%

Slovakia

U.S. Steel Kosice, Vstupny areal
US Steel, 044 54 Kosice

1,1% 2,9% 2,9% 4,5% 4,5%

Others

1,1% 2,9% 2,9% 4,5% 4,5%

South
Africa

Iscor, Ltd. PO Box 450 Pretoria
0001,  Saldanha  Steel  (PTY)
Ltd., Private Bag X11, Saldanha
7395,  Mac  Steel  International
South  Africa  (Pty)  Ltd,  PO
Johannesbourg
Box  8370, 
Steel
2000 
International 
Ltd.
Exchange  Tower,  1  Harbour
Exchange  Square,  London
E14 9GE, United Kingdom.

and  Mac 
UK 

Highveld  Steel  and  Vanadium
Corporation  Ltd.,  Old  Pretoria
Road, Witbank, Mpumalanga

3,3% 5,1% 5,1% 6,7% 6,7%

20,3% 22,1% 22,1% 23,7% 23,7%

Others

20,3% 22,1% 22,1% 23,7% 23,7%

Turkey

Ereğli Demir ve Celik
Fabrikalari T.A.Ş, 67330 KDZ
Eregli, Zonguldak-

0%

0%

0%

0%

0%

Others

0%

0%

0%

0%

0%

55

Article 4

The  anti-dumping  proceeding  concerning  imports  of  certain  flat  rolled  products  of  iron  or
non-alloy steel, of a width of 600 mm or more, not clad plated or coated, in coils, not further
worked than hot-rolled originating in Hungary, Iran and Libya is hereby terminated.

Article 5

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

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

Done at Brussels,

For the Council
The President

56

INFORMATION NECESSARY FOR COMMERCIAL INVOICES ACCOMPANYING
SALES MADE SUBJECT TO THE UNDERTAKING (Article 2(2))

ANNEX

1.

2.

3.

4.

5.

6.

The  heading  “COMMERCIAL  INVOICE  ACCOMPANYING  GOODS  SUBJECT
TO AN UNDERTAKING”

The name of the company issuing the Commercial Invoice

The Commercial Invoice number

The date of issue of the Commercial Invoice

The TARIC additional code under which the goods on the invoice are to be customs-
cleared at the Community frontier,

The exact description of the goods, including:

– 

– 

– 

– 

– 

the product code number (PCN) (as established in the undertaking offered  by
the producing exporter in question),

the technical specification of the PCN,

the company product code number (CPC) (if applicable),

CN code,

quantity (to be given in tonnes),

7.

The description of the terms of the sale, including:

– 

– 

– 

– 

price per tonne,

the applicable payment terms,

the applicable delivery terms,

total discounts and rebates.

8.

9.

Name of the first buyer acting as an importer to which the invoice is issued directly
by the company.

The name of the official of the company that has issued the commercial invoice and
the following signed declaration:

“I, the undersigned, certify that the sale for direct export to the European Community
of the goods covered by this invoice is  being made within the scope and under  the
terms  of  the  undertaking  offered  by  …..  (name  of  company),  and  accepted  by  the
European Commission through Decision Nº…../2003. I declare that the information
provided in this invoice is complete and correct.”

57