Commission Regulation (EC) No 1251/2003 of 14 July 2003 imposing a provisional anti-dumping duty on imports of hollow sections originating in Turkey
Date: 2003-07-14
Institutions: European Commission
Subjects: Türkiye, anti-dumping duty, import, originating product, section

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COMMISSION REGULATION (EC) No 1251/2003

of 14 July 2003

imposing a provisional anti-dumping duty on imports of hollow sections originating in Turkey

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped
imports from countries not members of the European Community (1), as last amended by Regulation (EC)
No 1972/2002 (2), and in particular Article 7 thereof,

After consulting the Advisory Committee,

Whereas:

A. PROCEDURE

1. Initiation

(1)

(2)

(3)

(4)

On 16 October 2002, the Commission announced, by notice published in the Official Journal of the
European Communities (3), the initiation of an anti-dumping proceeding with regard to imports into
the Community of hollow sections originating in Russia and Turkey (the countries concerned) and
commenced an investigation.

The proceeding was initiated following a complaint lodged, in September 2002, by the Defence
Committee of the Welded Steel Tube Industry (the complainant) on behalf of producers representing
a major proportion, around 80 %, of the total Community production of hollow sections. The
complaint contained evidence of dumping of the product concerned and of material injury resulting
therefrom, which was considered sufficient to justify the initiation of a proceeding.

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

2. Sampling

In view of the large number of Community producers, importers in the Community not related to
an exporting producer in one of the countries concerned and of exporting producers in the coun-
tries concerned, it was considered appropriate, in conformity with Article 17 of Regulation (EC) No
384/96 (the basic Regulation), to examine whether sampling should be used. In order to enable the
Commission to decide whether sampling would indeed be necessary and, if so, to select a sample, all
the above parties were requested, pursuant to Article 17(2) of the basic Regulation, to make them-
selves known within two weeks of the initiation of the proceeding and to provide the Commission
with the information requested in the notice of initiation, for the period from 1 October 2001 to
30 September 2002 (the investigation period or IP).

(1) OJ L 56, 6.3.1996, p. 1.
(2) OJ L 305, 7.11.2002, p. 1.
(3) OJ C 249, 16.10.2002, p. 5.

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(5)

(6)

(7)

(8)

(9)

All 14 Community producers on behalf of which the complaint had been lodged agreed to be
included in the sample and provided the requested information within the deadline. Amongst them,
eight companies (1) were selected for the sample. These were found to be representative of the
overall complaining Community producers in terms of volume of production and sales of the
product concerned in the Community, as well as in terms of geographic coverage.

Twelve unrelated importers also agreed to be included in the sample and provided the requested
basic information within the deadline. In view of this situation, the Commission services decided not
to apply sampling in the case of the unrelated importers, but to send questionnaires to all the 12
aforementioned importers.

As far as exporting producers are concerned, only one exporting producer in Russia made itself
known within the relevant deadline, and therefore sampling was not applied for Russia. In the case
of Turkey however, 19 exporting producers agreed to be included in the sample and provided the
requested information within the deadline. From those producers, only 16 actually sold the product
concerned in the Community during the investigation period. The choice of the sample was made in
consultation with the representatives of the companies and the Turkish authorities. An agreement
was reached on a sample of five companies covering around 80 % of the total exports of the
product concerned to the Community during the IP. In addition to the above, among the companies
which had sales to the Community, six companies not selected in the sample have requested an indi-
vidual examination. In view of the large number of requests which was even exceeding the number
of companies selected in the sample, it was considered that such individual examinations would be
unduly burdensome in the sense of Article 17(3) of the basic Regulation and only two requests were
granted.

3. Investigation

The Commission sent questionnaires to all Community producers having agreed to be included in
the sample (a full questionnaire to the eight sampled companies and a small questionnaire limited to
certain macro-indicators to the six non-sampled companies, see the injury section below), all unre-
lated importers that made themselves known within the deadlines set out in the notice of initiation,
to the only known exporting producer in Russia as well as all exporting producers in Turkey that
have been included in the sample or which have been granted individual examination as well as to
11 associations of companies known to be users of the product under consideration.

Replies were received from the eight sampled Community producers, from the six non-sampled
Community producers, from six unrelated importers in the Community, one exporting producer in
Russia, that also requested market economy treatment (MET), and six exporting producers in Turkey.
No reply was received from users.

(10)

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

(a) Sampled Community producers

— Voestalpine Krems GmbH, Krems/Donau, Austria,

— SRW GmbH, Altensteig-Walddorf, Germany,

— Arcelor Tubes France SA, Vincey, France,

— ILVA SpA, Milano, Italy,

— Marcegaglia SpA, Mantova, Italy,

— Rautaruukki Oyj Metform, Helsinki, Finland,

— Corus UK Ltd, Corby, United Kingdom;

(1) SRW GmbH, KEM SA, Arcelor Tubes France SA, ILVA SpA, Marcegaglia SpA, Voestalpine Krems GmbH, Rautar-

uukki Oyj Metform, Corus UK Ltd.

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(b) Sampled exporting producers in Turkey

— Cayirova Boru San Ve Tic AS, Istanbul (related to Yücel Boru Profil Endüstrisi AS),

— Yücel Boru Profil Endüstrisi AS, Istanbul (related to Cayirova Boru San Ve Tic AS),

— MMZ Onur Boru Profil Uretim, Istanbul,

— Ozdemir Sanayi Ve Tic Ltd, Eregli;

(c) Exporting producers in Turkey granted individual examination

— Noksel Celik Boru Sanayi AS, Ankara,

— Guven Boru ve Profil Sanayi ve Ticaret Ltd, Istanbul;

(d) Exporting producer in Russia

— JSC Severstal, Cherepovets.

(11)

It should be noted that due to ‘force majeure’ reasons, one of the companies initially selected in the
sample for Turkey, Toscelik Profil ve Sac, was finally not able to supply all the requested information
to the Commission services in due time. Consequently this company was eventually excluded from
the sample and was not visited, but was however still considered as cooperating.

4. Investigation period

(12)

The investigation of dumping and injury covered the period from 1 October 2001 to 30 September
2002 (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 investigation period (period considered).

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. General

(13) Hollow sections consist of welded pipes, tubes and hollow profiles of a square or rectangular cross-
section of iron or steel with the exception of those made of stainless steel or of a perimeter greater
than 600 mm, currently classifiable within CN codes ex 7306 60 31 (TARIC code 7306 60 31 90)
and ex 7306 60 39 (TARIC code 7306 60 39 90).

(14) Hollow sections are produced in a vast range of dimensions, thickness, lengths and steel grades.
There are basically two fabrication processes. Hollow sections can be cold or hot formed. Both types
are used primarily in the construction industry, although the latter is normally used for more
demanding applications (e.g. load-bearing, engineering). Amongst the cold-formed hollow sections,
the most common type, the so-called ‘structural’ hollow sections, are primarily used in the construc-
tion industry, but which may also be found in various applications (e.g. construction, storage, farm
equipment, trailers, trucks, earth movers). By opposition, the so-called ‘precision’ hollow sections,
generally of a smaller size, which are used in end-consumer activities like the automotive industry,
office and design furniture, gardening tools and childcare applications. Volume wise, the ‘structural’
hollow section is by far the most employed.

2. Product concerned

(15)

The product concerned is hollow sections originating in Russia and Turkey (the product concerned).

(16)

The investigation showed that all types of the product concerned, despite differences in the produc-
tion methods have the same basic physical and technical characteristics and are used for the same
purposes.

(17)

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

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3. Like product

(18)

It is provisionally determined that the hollow sections produced and sold by the Community
industry on the Community market are a like product within the meaning of Article 1(4) of the
basic Regulation to the hollow sections exported to the Community originating in the countries
concerned. Similarly, the hollow sections produced and sold in the countries concerned are alike to
the hollow sections exported to the Community and originating in the countries concerned.

C. DUMPING

1. General methodology

(19)

The general methodology set out hereinafter has been applied for all exporting producers in Turkey
and for the sole cooperating Russian exporting producer, for which MET was granted, as explained
under recitals 34 to 39. 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

(20) As far as the determination of normal value is concerned, the Commission first established, for each
exporting producer, whether its total domestic sales of the product concerned 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 Commu-
nity.

(21)

(22)

The Commission subsequently identified those types of hollow sections, sold domestically by the
companies having representative domestic sales and that were identical or directly comparable to
the types sold for export to the Community.

For each type sold by the exporting producers on their domestic markets and found to be directly
comparable to the type of hollow sections 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 of hollow sections were considered sufficiently repre-
sentative when the total domestic sales volume of that type during the IP represented 5 % or more
of the total sales volume of the comparable hollow sections type exported to the Community.

(23) An examination was also made as to whether the domestic sales of each hollow sections 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 hollow sections type in question. In cases where the
sales volume of hollow sections type, sold at a net sales price equal to or above the calculated cost
of production, represented more than 80 % of the total sales volume of that type, and 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 of that type made during the IP, irrespective of whether these sales were profitable or not. In
cases where the volume of profitable sales of hollow sections type represented 80 % or less of the
total sales volume of that type, or where the weighted average price of that type was below the cost
of production, normal value was based on the actual domestic price, calculated as a weighted
average of profitable sales of that type only, provided that these sales represented 10 % or more of
the total sales volume of that type.

(24)

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

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(25) Wherever domestic prices of a particular type of hollow sections sold by an exporting producer
could not be used in order to establish normal value, another method had to be applied. In this
regard, the Commission used the prices of the product concerned charged on the domestic market
by the other producers, in accordance with Article 2(1) of the basic Regulation. In all cases where
this was not possible, constructed normal value was used, in accordance with Article 2(3) of the
basic Regulation.

(26)

In all cases where constructed normal value was used and in accordance with Article 2(3) of the
basic Regulation, normal value was constructed by adding to the manufacturing costs of the
exported types, adjusted where necessary, a reasonable percentage for selling, general and adminis-
trative expenses (SG&A) and a reasonable margin of profit. In all cases SG&A and profit were estab-
lished pursuant to the methods set out in Article 2(6) of the basic Regulation.

Export price

(27)

(28)

In all cases where the product concerned was exported to independent customers in the Commu-
nity, the export price was therefore established in accordance with Article 2(8) of the basic Regula-
tion, namely on the basis of export prices actually paid or payable.

In the case sales were made via a related importer, the export price was constructed on the basis of
the resale prices to independent customers. Adjustments were made for all costs incurred between
importation and resale by that importer, including SG&A expenses, and a reasonable profit margin,
in accordance with Article 2(9) of the basic Regulation.

Comparison

(29)

For the purpose of ensuring a fair comparison between the normal value and the export price, due
allowance in the form of adjustments was made for differences affecting price comparability in
accordance with Article 2(10) of the basic Regulation. Appropriate adjustments were granted in all
cases where they were found to be reasonable, accurate and supported by verified evidence.

Dumping margin

(30) According to Article 2(11) of the basic Regulation, for each exporting producer the weighted

average normal value was compared with the weighted average export price.

(31)

(32)

(33)

For non-cooperating 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 where the level of cooperation was high and where there was no reason to
believe that any exporting producer abstained from cooperating, it was decided to set the residual
dumping margin at the level of the cooperating company with the highest dumping margin, in
order to ensure the effectiveness of any measures.

In a case where the level of cooperation for one country was low, 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-
cooperation and in view of the fact that there were no indications that a non-cooperating party had
dumped at a lower level.

Market economy treatment

2. Russia

(34)

Pursuant to Article 2(7)(b) of the basic Regulation,
in anti-dumping investigations concerning
imports originating in Russia, normal value shall be determined in accordance with Article 2(1) to
2(6) for those producers which were found to meet the criteria laid down in Article 2(7)(c), i.e.
where it is shown that market economy conditions prevail in respect of the manufacture and sale of
the product concerned.

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(35) Only one Russian company, JSC Severstal, made itself known within the relevant deadlines and
requested MET pursuant to Article 2(7)(b) of the basic Regulation by replying to the MET claim for
exporting producers.

(36)

In order to be granted MET, the company concerned had to demonstrate that market economy
conditions prevailed for it.

(37)

The Commission sought all information deemed necessary and verified on the spot all information
submitted in the MET applications at the premises of the company in question.

(38)

It was confirmed that its decisions regarding prices and costs were made without significant state
interference within the meaning of Article 2(7)(c) and that costs and prices reflected market values.
This company had accounts independently audited in line with international accounting standards
and their production costs and financial situation was not subject to significant distortions carried
over from the former non-market-economy system. It was also confirmed that the company is
subject to bankruptcy and property laws which guarantee legal certainty and stability for the opera-
tion of firms and that exchange rate conversions are carried out at the market rate.

(39)

It was therefore concluded that JSC Severstal fulfils the conditions set out in Article 2(7)(c) of the
basic Regulation and could therefore be granted the MET. The Advisory Committee was consulted
and did not object to the Commission's conclusions.

(40)

(41)

(42)

Normal value

JSC Severstal was requested to submit a full questionnaire reply including information concerning
domestic sales and cost of production of the product concerned. As explained under recital 10, this
reply was verified at the premises of the company.

The normal value was established as described in recitals 20 to 26, i.e. either on the basis of the
prices paid or payable, in the ordinary course of trade, by independent customers on the domestic
market in accordance with Article 2(1) of the basic Regulation or constructed in accordance with
Article 2(3) of the basic Regulation for the type of the product concerned sold to the Community.

Export prices

The investigation showed that the exports of the Russian exporting producer were made directly to
unrelated customers in the Community and also via a related company located in Switzerland.
Therefore, the export price was established according to the methodology explained under recitals
27 and 28, i.e. respectively on the basis of either the export prices actually paid or payable or a
constructed export price based on the resale price to the first independent customer in the Commu-
nity.

(43)

In the second case, adjustments were made for all relevant costs incurred by the related importer,
including SG&A expenses, and a reasonable profit margin, in accordance with Article 2(9) of the
basic Regulation.

Comparison

(44)

The comparison was made on an ex-factory basis and at the same level of trade. In order to ensure
a fair comparison, account was taken, in accordance with Article 2(10) of the basic Regulation, of
differences in factors which were claimed and demonstrated to affect prices and price comparability.
On this basis, allowances for differences in transport, level of trade, insurance, handling, loading and
ancillary costs, credit, commissions and import charges were made.

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Dumping margin for the cooperating company

(45)

The weighted average normal value of each type of the product concerned exported to the Commu-
nity was compared with the weighted average export price of the corresponding type of the product
concerned, as provided for under Article 2(11) of the basic Regulation.

(46) On this basis, the provisional dumping margin, expressed as a percentage of the cif Community

frontier price duty unpaid, is 9,5 %.

Residual dumping margin

(47)

In view of the established high level of cooperation for Russia, around 90 %, and in absence of indi-
cation that any exporting producer deliberately abstained from cooperating, the residual dumping
margin is set at the level of the margin established for the only cooperating company, i.e. 9,5 % of
the cif Community frontier price.

(48) As explained in recitals 4 and 7, and given the large number of exporting producers concerned in

Turkey, sampling was applied. The companies selected in the sample are:

3. Turkey

— Cayirova Boru San Ve Tic AS, Istanbul,

— Yücel Boru Profil Endüstrisi AS, Istanbul,

— Özdemir Boru Profil San.ve Ticaret AS, Eregli,

— Toscelik Profil ve Sac. Endüstrisi AS, Iskenderun,

— MMZ Onur Boru Profil Uretim, Istanbul.

(49) As mentioned in recital 11, it should be noted that the company Toscelik Profil ve Sac was finally
not able to supply all the requested information to the Commission services in due time. Therefore,
it was eventually excluded from the sample but, for the reasons set out above in recital 11, was
however still considered as cooperating.

(50)

The following companies were granted individual examination:

— Noksel Celik Boru Sanayi AS, Ankara,

— Guven Boru ve Profil Sanayi ve Ticaret Ltd, Istanbul.

(51)

The following companies were not selected but agreed to cooperate:

— Goktas Yassi Hadde Mamülleri Sanayi ve Ticaret AS, Gebze-Kocaeli,

— Yasan Yassi Metal San. Tic. AS, Istanbul,

— Boral Boru Profil San. ve Tic. Ltd, Istanbul,

— Umran Celik Boru Sanayii AS, Istanbul,

— Borusan Birlesik Boru Fabrikalari AS, Istanbul,

— Mannesmann Boru Endustrisi AS, Istanbul,

— Erbosan Erciyas Boru Sanayii ve Ticaret AS, Kayseri,

— Borutas Boru Sanayii ve Ticaret AS, Adapazari,

— Cinar Boru Profil San. Tic. Ltd STI, Eregli,

— Sevil Boru-Profil Sanayii ve Ticaret AS, Istanbul,

— Özborsan Boru San.ve Ticaret AS, Istanbul.

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Normal value

(52) Given the significant inflation in Turkey, around 45 % in 2002, the Commission established normal
value on a monthly basis for those types of the product concerned which were directly comparable
to the types of hollow sections exported to the Community. In those cases where there were no sales
or no representative sales of comparable types of hollow sections on the domestic market or where
monthly domestic sales were not made in the ordinary course of trade, the Commission used the
average prices of other exporting producers in the domestic market of the exporting country as a
basis for establishing the normal value. Only in cases where the same types of hollow sections were
not found in the sales of other exporting producers in the domestic market of the exporting country,
normal values were constructed in accordance with Article 2(6) of the basic Regulation. For five
cooperating exporting producers, their own cost of manufacturing plus the companies' own SG&A
expenses and profits were used. For one company, given that its total domestic sales of the product
concerned were not representative in comparison with its total export sales to the Community the
Commission used the prices of other exporting producers in the domestic market of the exporting
country as a basis for establishing the normal value.

Export price

(53)

The export price of products originating in Turkey is based on export sales made directly to inde-
pendent customers in the Community and is thus established pursuant to Article 2(8) of the basic
Regulation.

Comparison

(54) Adjustments were made for rebates, discounts, transport, handling, charging, discharging costs,

ancillary costs (bank charges), insurance and credit costs where appropriate.

Dumping margin

(55) According to Article 2(11) of the basic Regulation, for each exporting producer the monthly
weighted average normal value was compared to the monthly weighted average export price.

1. Coop e r a t i ng e x p or ti ng p r odu c e r s

i n th e

sa mp le

a nd e x p or t i ng p r odu c e r s

g r a nte d w i t h a n i ndi v i du a l e x a mi na ti o n

(56)

It is the Commission's standard practice to establish one dumping margin for related exporting
producers, in order to preclude the possibility that future exports to the Community might be chan-
nelled through the companies having the lower margin.

(57)

The provisional dumping margins expressed as a percentage of the cif import price at the Commu-
nity border are:

— Özdemir Boru Profil San.ve Ticaret AS, Eregli: 14,7 %,

— MMZ Onur Boru Profil Uretim, Istanbul: 14,4 %,

— Guven Boru ve Profil Sanayi ve Ticaret Ltd, Istanbul: 6,4 %,

— Noksel Celik Boru Sanayi AS, Ankara: 5,3 %,

— Yücel Boru Profil Endüstrisi AS, Istanbul: 4,2 %,

— Cayirova Boru San Ve Tic AS, Istanbul: 4,2 %.

2. O t h e r c oop e r a ti ng e x p or ti ng p r odu c e r s not i nclu de d i n t h e sa mp le

(58)

In order to establish the dumping margin to be applied to the cooperating Turkish producers not
included in the sample, the Commission calculated a weighted average dumping margin for the
producers in the sample, as stipulated in Article 9(6) of the basic Regulation.

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(59)

This exercise led to a weighted average dumping margin of 6,4 % for the following companies:

— Goktas Yassi Hadde Mamülleri Sanayi ve Ticaret AS, Gebze-Kocaeli,

— Yasan Yassi Metal San. Tic. AS, Istanbul,

— Boral Boru Profil San. ve Tic. Ltd, Istanbul,

— Umran Celik Boru Sanayii AS, Istanbul,

— Borusan Birlesik Boru Fabrikalari AS, Istanbul,

— Mannesmann Boru Endustrisi AS, Istanbul,

— Erbosan Erciyas Boru Sanayii ve Ticaret AS, Kayseri,

— Borutas Boru Sanayii ve Ticaret AS, Adapazari,

— Cinar Boru Profil San. Tic. Ltd STI, Eregli,

— Sevil Boru-Profil Sanayii ve Ticaret AS, Istanbul,

— Toscelik Profil ve Sac. Endüstrisi AS, Iskenderun,

— Özborsan Boru San.ve Ticaret AS, Istanbul.

3. Non-c oop er ati ng compani e s

(60)

The level of cooperation for Turkey was high and the residual provisional dumping margin was set
at the same level as for the highest margin level of a cooperating company, i.e. 14,7 %.

D. COMMUNITY INDUSTRY

1. Total Community production

(61) Within the Community, the product concerned is manufactured by 14 producers located in Austria,
Belgium, Germany, Greece, France, Finland, Italy, Luxembourg, the Netherlands, Spain and the
United Kingdom, on behalf of which the complaint was lodged, and by 12 other producers. It is
considered that all the above 26 producers constitute the Community production within the
meaning of Article 4(1) of the basic Regulation.

2. Definition of the Community industry

(62) As provided for in the abovementioned notice of initiation, a sample of eight companies (1) amongst
the 14 complainant Community producers was selected. These companies fully cooperated in the
investigation. The selection of the sample was made by the Commission primarily on the basis of
the size of the relevant Community producers in terms of production and sales volume. Addition-
ally, attention was also paid to the criterion of geographic coverage, in order to have a geographi-
cally balanced picture of the relevant industry.

(63)

(64)

For information, the eight sampled Community producers alone account for 54 % of the total
Community production, for 69 % of the Community industry's production and held, during the IP, a
market share of 47 %.

It is therefore considered that the 14 complainant Community producers (i.e. both the eight sampled
Community producers and the six non-sampled but supporting Community producers) fulfil the
requirements of Article 5(4) of the basic Regulation, since they account for a major proportion of
in this case around 80 %. The 14
the total Community production of the product concerned,
complainant Community producers are therefore deemed to constitute the Community industry
within the meaning of Article 4(1) and Article 5(4) of the basic Regulation and will hereinafter be
referred to as the ‘Community industry’.

(1) SRW GmbH, KEM SA, Arcelor Tubes France SA, ILVA SpA, Marcegaglia SpA, Voestalpine Krems GmbH, Rautar-

uukki Oyj Metform, Corus UK Ltd.

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E. INJURY

1. Community consumption

Total EC consumption (tonnes)

2 566 399

2 779 176

2 811 285

2 796 609

2 722 450

1998

1999

2000

2001

IP

Index (1998 = 100)

100

108

110

109

106

(65)

Community consumption was established on the basis of the sales volumes of the Community
industry on the Community market, the sales volumes of the other Community producers on the
Community market, and Eurostat data for all EU imports, duly adjusted where appropriate.

(66) On this basis, between 1998 and the IP, Community consumption of the product concerned
increased by 6 %. Specifically, it increased by 8 % between 1998 and 1999 and remained broadly
it declined by 3 %. As the product
stable at this level until 2001. Between 2001 and the IP,
concerned is primarily used in the engineering and construction sector,
the development of
consumption has to be seen against the background of activity growth in the Community economy
at large and more precisely in the construction sector.

2. Decumulation of the imports from Russia from the imports from Turkey

(67)

The Commission examined whether imports of the product concerned originating in Russia and
Turkey should be assessed cumulatively in accordance with Article 3(4) of the basic Regulation. The
margin of dumping established in relation to the imports from Russia and Turkey was more than de
minimis as defined in Article 9(3) of the basic Regulation.

(68) As regards the conditions of competition, the investigation showed that the product concerned
imported from Russia and Turkey and those of the Community industry, considered on a type-by-
type basis, were alike in all their essential physical and technical characteristics. Furthermore, on that
basis, these products were interchangeable and were marketed in the Community during the period
considered mostly through comparable sales channels (i.e. traders). Therefore, the imports of the
products concerned were considered to compete with each other and with the ones produced in the
Community.

(69)

The Commission assessed whether the volume of imports from each of these countries was not
negligible. During the IP, consumption, as defined above, amounted to around 2 720 000 tonnes.
During the same period, Russian exports to the Community of the product concerned amounted,
according to Eurostat, to around 26 000 tonnes. To this amount should be added around a further
1 000 tonnes, as it was found during the verification visit that the cooperating Russian exporter had
declared sales of the product concerned to a tariff heading which fell outside the scope of the
proceeding.
It is therefore provisionally considered that Russia has exported slightly less than
27 000 tonnes of the product concerned to the Community, which is just below the de minimis
threshold. As a consequence, it is considered that provisional measures should not be imposed on
imports originating in Russia. However, the proceeding should remain open and the matter will be
investigated further in order to arrive at a definitive determination in this respect.

3. Imports originating in Turkey (the country concerned)

Volume

(70)

The volume of imports of the product concerned from Turkey into the Community increased by
30 % between 1998 and the IP. In detail, imports from Turkey remained relatively stable between
1998 and 1999. Subsequently, they increased sharply by 43 % between 1999 and 2000 from
135 357 tonnes to 195 331 tonnes. Between 2000 and 2001, they decreased by 8 %, and by a
further 2 % between 2001 and the IP.

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Market share

1998

1999

2000

2001

IP

Volume
(tonnes)

of

dumped

imports

139 721

135 357

195 331

184 755

181 253

Index (1998 = 100)

100

97

140

132

130

Market share of dumped imports

5,4 %

4,9 %

6,9 %

6,6 %

6,7 %

Index (1998 = 100)

100

89

128

121

122

(71)

(72)

The market share held by the country concerned increased by 1,3 percentage point during the
period considered from 5,4 % to 6,7 %. It first declined by 0,5 percentage point between 1998 and
1999, then increased by 2 percentage points to 6,9 % in 2000 before declining slightly to 6,7 % in
the IP.

It should be noted that over the period 1998 to the IP, the increase in imports and market shares
from the country concerned coincided with an increase in consumption of 6 %. Another element to
take into consideration is the fact that Turkish producers of the product concerned make substantial
profits on their domestic market. In these conditions, the volumes exported depend directly on what
the Turkish domestic market can or cannot absorb. For this reason, Turkish export volumes and
market share show this relatively uneven behaviour over time.

Prices

(a) Pr i c e e v olu ti on

(73)

Between 1998 and the IP, the average cif prices of imports of the product concerned originating in
Turkey first decreased from 331 EUR/tonne in 1998 to 283 EUR/tonne in 1999, but
then
increased again to 370 EUR/tonne in 2000, declined to 310 EUR/tonne in 2001 and finally ended
up a little lower than in 1998 at 314 EUR/tonne during the IP. Average import prices decreased by
14 % between 1998 and 1999 following the decrease in prices of the principal raw material (hot-
rolled coils), before rising again by 26 % between 1999 and 2000. In 2001, they declined again, by
18 % and remained practically flat at this level during the IP.

(b) Pr i ce u nde r c u tti ng

(74) A comparison for comparable models of the product concerned was made between the exporting
producers' and the Community industry's average selling prices in the Community. To this end,
Community industry's ex-works prices to unrelated customers, net of all rebates and taxes have been
compared with the cif Community frontier prices of exporting producers of Turkey, duly adjusted
for post importation costs, and at the same level of trade. The comparison showed that during the
IP the products concerned originating in Turkey were sold in the Community at prices which
undercut the Community industry's prices, ranging from 3,8 % to 5,6 %.

(75)

It should be noted that these price undercutting margins do not fully illustrate the effect of the
dumped imports on prices of the Community industry, given that both price depression and price
suppression were observed. These are evidenced by the fact that the Community industry made
losses between 2000 and the IP, despite the fact that, during this period, it could have made a
reasonable profit in the absence of dumping.

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15.7.2003

4. Situation of the Community industry

(76)

Pursuant to Article 3(5) of the basic Regulation, the Commission examined all relevant economic
factors and indices having a bearing on the state of the Community industry.

Preliminary remarks

(77)

In view of the fact that sampling had been used with regard to the Community industry, the injury
has been assessed both on the basis of information collected at the level of the entire Community
industry (CI) and on the basis of information collected at the level of the sampled Community
producers (SP).

(78) Where recourse is made to sampling within the Community industry, it is the Commission's practice
to establish certain injury indicators such as production, capacity, stocks, sales, market share and
employment for the Community industry as a whole and to establish those injury indicators relating
to the performances of individual companies, i.e. prices, costs of production, profits, on the basis of
information found for the sampled Community producers.

(79)

(80)

The investigation carried out for the sampled Community producers has shown that their produc-
tion, capacity, sales, market share and employment data are properly reflected in the information
collected at the level of the Community industry.

The examination of certain injury indicators (sales volumes, sales prices, profitability ratios) was
limited to the sales to unrelated customers. The investigation provisionally found that given that
sales to related customers represented on average less than 10 % of the total sales volumes, these
sales had no significative impact on the injury trends.

Data relating to the Community industry as a whole

(a) Pr odu c ti on

CI production (tonnes)

1 832 957

2 006 449

1 958 808

2 011 134

1 967 189

1998

1999

2000

2001

IP

Index (1998 = 100)

100

109

107

110

107

(81)

Community industry's production increased slightly (by 7 %) between 1998 and the IP. After an
initial increase of around 9 % between 1998 and 1999, it then declined in 2000 by 2 %, increased
again in 2001 by 3 % and finally declined by 3 % in the IP. The increase experienced in 1999 was
due to the good economic climate, which also translated into a rising capacity utilisation rate. The
production increase observed in 2001 aimed at recovering lost market shares, but this took place at
the expense of profit margins.

(b) Capac i ty a nd c apac i ty u ti li sat i on r a t e s

CI production capacity (tonnes)

4 199 632

4 360 742

4 322 935

4 431 340

4 451 540

1998

1999

2000

2001

IP

Index (1998 = 100)

100

104

103

106

106

CI capacity utilisation

44 %

46 %

45 %

45 %

44 %

Index (1998 = 100)

100

105

104

104

101

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(82)

The reported capacity figures refer to technical capacity, by opposition with theoretical capacity,
which implies that adjustments, considered as standards by the industry, for normal holidays, set-up
time, maintenance and other normal stoppages have already been discounted. In spite of these
adjustments, the complainant himself considers that it is impossible for an individual company to
reach a capacity utilisation ratio of a 100 % over a full year. Instead, 80 to 85 % would be consid-
ered as an absolute maximum. It should also be noted that the same tube lines are used to manufac-
ture either the product concerned or round tubes. Therefore an apportionment was consistently
made for the full tube line capacity reported by each individual company in order to ensure that the
capacity described below reflects only the capacity exclusively dedicated to the product concerned.
On this basis, the production capacity increased slightly over the period under review. Between
1998 and the IP, the rise amounted to 6 %. It should be noted that a large part of this increase
occurred in 1999,
i.e. at a time when the Community industry was still profitable. Capacity
remained stable in 2000, increased again in 2001 and remained stable at this level in the IP.

(83)

Capacity utilisation started from a level of 44 % in 1998, before increasing to 46 % in 1999, driven
by strong demand and positive profit levels. In 2000, 2001 and the IP, it subsequently declined
marginally to 45 % and then back to 44 %.

(c) Stocks

CI closing stock (tonnes)

206 252

210 124

211 253

213 275

234 515

1998

1999

2000

2001

IP

Index (1998 = 100)

100

102

102

103

114

(84)

Community producers generally produce to order and therefore stocks are goods awaiting dispatch
to customers. Therefore, the development of inventories does not appear to be relevant for the
examination of the economic situation of the Community industry. However, for the sake of
completeness, the evolution of stocks is analysed below. Inventories of finished products represent
on average 13 % of the EC sales volumes. The level of closing stocks of the Community industry
increased progressively throughout the period under review. At the end of the period under consid-
eration, the level of stocks was 13 % higher than in 1998.

(d) Sa le s v olu me

1998

1999

2000

2001

IP

CI EC sales volume to unrelated
customers (tonnes)

1 572 688

1 745 239

1 680 037

1 746 527

1 684 314

Index (1998 = 100)

100

111

107

111

107

(85)

(86)

The sales by the Community industry on the Community market to unrelated customers increased
by 7 % during the period considered from around 1 570 000 tonnes in 1998 to around 1 680 000
tonnes in the IP. It increased by 11 % in 1999, declined by 4 % in 2000, increased again by 4 % in
2001 and declined again by 4 % in the IP.

The development of sales volume should be seen in the light of the fact that the Community
industry, when faced with increasing low priced imports originating in the country concerned, had
the choice of either maintaining its sales prices at the expense of a negative development of its sales
volume and market share, or to lower its sales prices and follow the trend of the imports concerned
at the expense of its profitability. Between 1998 and 1999, the Community industry benefited from
the growing market and increased both its sales volume and profit. However, in 2000, while the
market was still growing, the Community industry lost both in terms of sales volumes and profits.
In the following years, the Community industry attempted to maintain its sales volumes in a
contracting market, but this took place at the expense of profitability.

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15.7.2003

(e) Fact or s a ffe cti ng dome sti c p r i c e s

(87)

The investigation showed that dumped imports were undercutting the average depressed sales price
of the Community industry by 5 % on average in the IP. However, on a type-by-type basis it was
found that in some instances prices charged by the exporting producers concerned were even signif-
icantly lower than the 5 % average, undercutting off the Community industry's prices. The combina-
tion of this kind of undercutting with the increased level of dumped imports from Turkey certainly
affected the domestic prices of the Community industry.

(f) M a r ke t sh a r e

(88)

The market share held by the Community industry first increased by almost one percentage point
between 1998 and 1999, and then sharply dropped by almost three percentage points in 2000. It
increased by some two percentage points in 2001 before declining marginally in the IP. As a result,
the market share of the Community industry was, at the end of the period under review very close
to the initial level observed in 1998.

(g) Gr ow th

(89)

Between 1998 and the IP, when the Community consumption increased by 6 %, the sales volume of
the Community industry increased by 7 %. The Community industry thus maintained broadly its
market share, whereas the market share of the imports concerned increased by 1,3 percentage
points during the same period. Thus, the Community industry maintained its presence in the market
but this should be seen in the light of the development of profitability and return on investments.

(h) E mp loy me nt

CI employment product concerned

2 750

2 766

2 787

2 780

2 772

1998

1999

2000

2001

IP

Index (1998 = 100)

100

101

101

101

101

(90)

The level of employment of the Community industry remained stable between 1998 and the IP. It
should be noted that these figures show a somewhat too positive picture as several companies were
occasionally forced to resort to short time working, when demand was low.

(i) Pr odu c ti v i t y

1998

productivity

CI
employee)

(tonnes

per

666

1999

725

2000

703

2001

723

IP

710

Index (1998 = 100)

100

109

105

109

106

(91)

Productivity of the Community industry's workforce, measured as output per person employed per
year, first increased strongly by 9 % from 1998 to 1999, before dropping by 4 % between 1999 and
2000, before rising in 2001 and then declining slightly in the IP. At the end of the period under
review, the productivity was 6 % higher than that observed at the start of the period. It should be
noted that productivity, as it is calculated here (production per employee per year) by definition
does not capture either the reduction of working time observed since 1998, notably in France with
the implementation of the 35-hour working week, or the fact that certain companies resorted to
short-time working (as mentioned above). If the productivity per worker per year rose by a mere
6 % since 1998, this hides that productivity per hour worked progressed much more.

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(j) Ma g nitude of dumpi ng ma rgin

(92) As concerns the impact on the Community industry of the magnitude of the actual margin of
dumping, given the volume and the prices of the imports from the country concerned, this impact
cannot be considered to be negligible, especially in transparent and thus highly price sensitive
markets like the one of the product concerned.

(k) R e c ov e r y f r om th e e f fe c t s o f p a st du mp i n g or su b si di sa ti o n

(93)

Considering that this is a new anti-dumping proceeding and that no evidence of previous dumping
has been provided, the issue is not considered relevant.

Data relating to the sampled Community producers

(a) Sa le s p r i c e s

(94) Unit sales price first decreased by 9 % in 1999, from EUR/tonne 400 to 365, then increased by
16 % in 2000 to EUR 427, before dropping by 11 % in 2001 to EUR 385, and stabilising at that
level in the IP. This relatively uneven development is explained by the following. The prices of the
product concerned sold by the Community industry are driven by two major forces: the price of the
raw material, normally hot-rolled coils (HRC), which typically represents some 70 % of the total
costs of production of the final product, and the competitive situation on the market.

(95)

Between 1998 and 1999, the costs of production of the Community industry decreased by 10 %
due to an important decrease in the prices of HRC. Between 1999 and 2000 the Community indus-
try's costs increased by 20 % as a consequence of an increase in the cost of HRC. Between 2000 and
2001, costs of production decreased by 5 %, and remained broadly flat during the IP. Therefore,
during the whole period under review (1998 — IP), total costs of production increased by 3 %,
whereas unit sales prices declined by 5 % and as a consequence, the Community industry suffered in
terms of decreasing profitability.

(b) Wa g e s

SP annual labour cost per employee
(000 EUR)

1998

39,4

1999

39,5

2000

40,3

2001

40,9

IP

41,3

Index (1998 = 100)

100

100

102

104

105

(96)

Between 1998 and the IP, the average wage per employee increased by 5 %. This figure is lower
than both the consumer price inflation observed in the Community during the same period (7 %)
and than the rate of increase of the average nominal compensation per employee (12 %) observed
during the same period in the Community (all sectors).

(c) Inve stme nt s

SP net investments (000 EUR)

20 227

28 432

26 223

30 079

32 656

1998

1999

2000

2001

IP

Index (1998 = 100)

100

141

130

149

161

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15.7.2003

(97)

The Community industry's total investments in the product concerned increased by around 60 %
between 1998 and the IP. The investigation showed that it is vital for this industry to maintain a
certain level of investment in order to stay competitive. Most of the investments were made for
modernisation purposes, and very little for capacity augmentation purposes. However, it should be
noted that even a replacement investment normally tends to raise slightly the technical capacity,
simply because the new equipment is more efficient and productive than the previous one.

(d) Pr ofi tabi li ty a nd r e tur n on i nve stme n ts

SP profitability of EC sales to unre-
lated (% of net sales)

1998

1,4 %

1999

3,3 %

2000

2001

IP

– 1,0 %

– 6,5 %

– 6,1 %

Index (1998 = 100)

100

231

– 69

– 455

– 428

SP ROI
value of investments)

(profit

in % of net book

20,0 %

24,5 %

5,0 %

– 14,3 %

– 9,8 %

Index (1998 = 100)

100

122

25

– 71

– 49

(98) During the period considered, profitability of sales in the Community to unrelated customers in
terms of return on net sales before taxes decreased from 1,4 % in 1998 and 3,3 % in 1999 to –
1,0 % in 2000, – 6,5 % in 2001 and – 6,1 % in the IP. The Community industry was still making
profits in the years 1998 and 1999, when dumped imports had a relatively small market share and
when demand was growing strongly (+ 8 % between 1998 and 1999).

(99)

Profitability became negative after 1999, reaching a level insufficient to ensure the long term viabi-
lity of the Community industry. It should be recalled that prices increased by 5 % between 1999
and the IP while costs increased by 14 %.

(100) The return on investments (ROI), expressed as the profit in percent of the net book value of invest-
ments, broadly followed the above profitability trend over the whole period considered. It went
down from 20 % and 24 % in 1998 and 1999 to – 14 % in 2001 and – 10 % in the IP.

(e) Ca sh flow and a bi li t y to r a i se c a p i ta l

SP cash flow (000 EUR)

39 936

46 518

22 698

– 6 475

– 6 017

1998

1999

2000

2001

IP

Index (1998 = 100)

100

116

57

– 16

– 15

(101) The net cash in (out) flow from operating activities, developed from around EUR 40 000 000 EUR
in 1998 to around EUR – 6 000 000 in the IP. It peaked in 1999, but subsequently dropped sharply
in 2000 and reached a low in 2001. As a consequence, the Community industry is, on average,
increasingly resorting to debt in order to help finance its current activity and investment.

(102) The investigation has shown that capital requirements of several sampled Community producers
have been adversely affected by their difficult financial situation. Although most of these companies
are part of large steel companies, capital requirements are not always met to the desired level, as
financial resources are generally allocated within these groups to the most profitable entities.

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5. Conclusion on injury

(103) Between 1998 and the IP, the volume of the dumped imports of the product concerned originating
in Turkey increased significantly by 30 % and its share of the Community market went from 5,4 %
in 1998 to 6,7 % in the IP. The largest increase took place between 1999 and 2000, when the
volume of dumped imports increased by 43 % gaining two percentage points in market shares. The
average prices of dumped imports from Turkey were consistently lower than those of the Commu-
nity industry during the period considered. Furthermore, during the IP, the prices of the imports
from the country concerned undercut those of the Community industry by around 5 % on average.

(104) A deterioration of the situation of the Community industry has been found over the period consid-
ered. Between 1998 and the IP, several injury indicators developed negatively: the unit sales price
declined by 4 % while the unit cost of production increased by 3 %, the profitability went from 1 to
4 % in 1998 and 1999 to – 6 % in 2001 and the IP, the return on investments and the cash-flow
from operating activities followed the same negative trend. Some injury indicators remained broadly
stable: capacity utilisation, market share of the Community industry, employment. Finally, some
indicators experienced apparent positive developments: over the whole period under review, produc-
tion increased by 7 %, capacity by 6 %, EC sales volumes by 7 %, in line with the development of
consumption,
it
should be noted that the hike in the production volume, in capacity utilisation and in the EC sales
volume occurred mostly between 1998 and 1999, at a time when demand was booming. Subse-
quently, all three data series generally declined. In the light of the foregoing it is provisionally
concluded that the Community industry has suffered material injury within the meaning of Article 3
of the basic Regulation.

investments (consisting mainly of replacement investments) by 61 %. However,

F. CAUSATION

1. Introduction

(105)

In accordance with Article 3(6) and (7) of the basic Regulation, the Commission examined whether
the dumped imports of the product concerned originating in the country concerned have caused
injury to the Community industry to a degree that enables it to be classified as material. Known
factors other than the dumped imports, which could at the same time be 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. Effects of the dumped imports

(106) The significant increase in the volume of the dumped imports by 30 %, i.e. from 140 000 tonnes in
1998 to 181 000 tonnes in the IP, and of its corresponding share of the Community market, i.e.
from 5,4 % in 1998 to 6,7 % in the IP as well as the undercutting found (around 5 % on average
during the IP) coincided with the deterioration of the economic situation of the Community
industry. This market penetration of the dumped imports was particularly significant between 1999
and 2000, when the import volume increased by 43 % and the market share of the dumped imports
rose by two percentage points. During the same period, the Community industry suffered a loss of
sales volume (– 4 %), market share (– 3 percentage points) and a deterioration of profitability (– 4,3
percentage points). This development should be seen against the background of the slightly growing
Community consumption of the product concerned during the years 1999 and 2000. In addition,
dumped prices were below those of the Community industry throughout the period considered and
exerted a pressure on them which prevented the Community industry's prices from developing at
the same rate as the increase in the costs of production between 1999 and the IP, thereby triggering
the observed drop into negative financial results from 2000 onwards. It is therefore considered that
the dumped imports had a significant negative impact on the situation of the Community industry.

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3. Effects of other factors

(a) Relatively small market share of the dumped imports

(107) The Commission examined whether the fact that dumped imports originating in Turkey held a rela-
tively small and slightly growing market share was such as to break the causal link between the
dumped imports from the country concerned and the material injury suffered by the Community
industry. As already addressed under recitals 71 and 72, the market share of dumped imports origi-
nating in Turkey increased by 1,3 percentage points, from 5,4 % in 1998 to 6,7 % in the IP. A
permanent undercutting of Community industry's prices by prices of the product concerned origi-
nating in Turkey has been found under recitals 73 and 74.

(108)

It should first be recalled that the investigation found that Turkish producers of the product
concerned made substantial profits on their domestic market. In these conditions, the volumes
exported depend directly of what the Turkish domestic market can or cannot absorb. For this
reason, Turkish export volumes and market share show a relatively uneven behaviour over time.

(109) The market structure of the product concerned is characterised by the relative scattering of the
production and by the absence of a genuine dominant position held by one single producer. Indeed,
the largest Community producer held during the IP a market share of 10,6 %, whilst seven other
Community producers held a market share comprised between 5 % and 10,5 %

(110) The product concerned is typically a commodity. It is homogeneous, interchangeable and sold in a
transparent market. It should be noted that in terms of volumes, the primary buyers of the product
concerned are stockists, who permanently compare prices and, to a large extent, set the final price.

(111) All these elements bring the Commission to the conclusion that in this highly price sensitive market,
even relatively small quantities can trigger a depressive price effect on the whole Community
market.

(b) Performance of other Community producers

(112) No other Community producer not belonging to the Community industry cooperated in the investi-
gation. Based on best available evidence, the EC sales volume of the other producers has remained
relatively stable around 490 000 tonnes per year throughout the period under review. As far as their
market share is concerned, it declined from 19,2 % in 1998 to 18,1 % in the IP. The above indicates
that other producers in the Community did not gain any market shares at the expense of the
Community industry, but rather experienced similar market losses as the Community industry.

(c) Trade protective measures imposed by the United States of America and other countries, impact of the 11

September 2001 event and export performance of the Community industry

(113) One interested party claimed that part of the injury suffered by the Community industry could be
attributed to the closure of several important export markets for the Community industry, due to
the various safeguard clauses imposed in the United States of America and other countries on the
product concerned, and to the impact on global demand of the 11 September 2001 event.

(114)

Indeed, EC exports of the product concerned are subject to several national safeguard measures
implemented from 2001 onward in the wake of the US measures. However, the Community
industry increased its export sales volumes by 33 %, namely from around 85 000 tonnes in 1998 to
around 114 000 tonnes in the IP, the major part of this increase taking place between 1998 and
2000. Export sales represented some 7 % of the total sales of the product concerned of the Commu-
nity industry during the IP. It should also be noted that the aforementioned profitability refers exclu-
sively to EC sales of the product concerned. By contrast, the profitability of export sales was positive
throughout 1998 — IP, with ratios ranging between 18 % and 9 %. It is therefore considered that
the export activity cannot have contributed to the injury suffered by the Community industry.

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Official Journal of the European Union

L 175/21

CI sales volume export (tonnes)

85 220

98 878

111 910

113 228

114 037

1998

1999

2000

2001

IP

Index (1998 = 100)

100

116

131

133

134

(d) Impact of the economic crisis in South East Asia

(115) One interested party argued that any injury suffered by the Community industry was caused by the
1997 and 1998 economic crisis in South East Asia. It should be noted that the Asian crisis may be
a cause of the decrease in the price of the steel products and therefore of the main raw material
(HRC) used in the production of the product concerned. Therefore, if it could have affected the
upstream industry, the producers of the product concerned could benefit from lower prices of the
main raw material. In fact when in 1999 the HRC prices were at their lowest level, the Community
industry was able to decrease its prices and increase its sales. It should also be noted that the investi-
gation did not show any surge in imports of the product concerned from Asian countries. In view
of the above, it is provisionally concluded that the Asian crisis did not contribute to the injury
suffered by the Community industry.

(e) Imports from other third countries

(116) According to the available information, the total import volume of the product concerned origi-
nating in third countries increased by 7 % from 197 000 tonnes in 1998 to 211 000 tonnes in the
IP, and their market share first increased from 7,7 % in 1998 to 10 % in 2000, before decreasing to
7,7 % in the IP. As regards the weighted average cif prices of these imports, they decreased by 12 %
between 1998 and the IP, from EUR/tonne 444 in 1998 to EUR/tonne 390 in the IP. It should be
noted that the prices of imports from other third countries remained substantially higher than the
prices of the imports from the country concerned throughout the period considered.

(117)

It was further found that only imports originating in two countries other than Turkey had a share of
the Community market above 1 % during the IP, i.e. Hungary and Slovenia. Regarding Hungary, it
was found that its market share decreased from 1,9 % in 1998 to 1,7 % in the IP. Concerning
Slovenia, its market share, which was nil in 1998, decreased from 1,5 % in 1999 to 1,2 % in the IP.
Although they appear to undercut the Community industry's prices, cif import prices of these two
countries have always been above those of the country concerned. Furthermore, no evidence is avail-
able that would indicate that these imports may have been made at dumped prices. In conclusion,
any effect of these imports on the Community industry's situation was only marginal, given the
average prices, the small volume of these imports and their limited market share. It is therefore
provisionally concluded that the imports from third countries only contributed to the injury suffered
by the Community industry to a very limited extent, if at all, and that their effect was consequently
not such as to alter the finding that there is a genuine and substantial relationship of cause and
effect between the dumped imports from the country concerned and the material injury suffered by
the Community industry.

(f) Over-investment and over-capacity

(118) Several interested parties claimed that the Community industry, like the global steel industry, suffers
from chronic over-capacity, due, inter alia, to the slow world market growth for steel products, the
fact that steel is increasingly replaced by other materials in some applications, and the improvement
in steel's own mechanical properties such as strength and stiffness. It is therefore argued that any
injury felt by the Community industry is merely the result of a systematic over-spending in invest-
ment goods, conducive to the accumulation of excess capacities.

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(119)

Investment carried out by the Community industry has consisted mainly in the replacement and
modernisation of obsolete tube lines, and in the construction of new, fully-automated warehouses.
Little of this investment has served for capacity augmentation purposes. It should be noted that even
a replacement investment normally tends to raise slightly the technical capacity, simply because the
new equipment is more efficient and productive than the previous one. The augmentation of capa-
city, which is rather limited (6 % over four years) has also to be seen against the following back-
ground: the Community industry was profitable at the start of the period under review and demand
was booming. A contrario, the already high capacity figures observed in the years 1998 and 1999, at
a time when volumes of dumped imports were low, did not prevent the Community industry from
making profits in these years. Finally, it should be noted that one sampled Community producer
closed one plant in 1998, representing a capacity of 50 000 tonnes. It is therefore provisionally
concluded that the alleged over-investment and over-capacity only contributed to the injury suffered
by the Community industry to a very limited extent, if at all, and that their effect was consequently
not such as to alter the finding that there is a genuine and substantial relationship of cause and
effect between the dumped imports from the country concerned and the material injury suffered by
the Community industry.

(g) Decline in demand illustrated by the drop in the activity of the construction sector

(120) One interested party claimed that any injury felt by the Community industry was linked to the
downturn experienced by the primary consumer of the product concerned, namely the construction
sector. To support its allegation, the said party presented a Eurostat data series referring to the EU
production in the construction sector, which shows a flattening of growth in this specific sector in
2000 and 2001, followed by a decline from the last quarter of 2001 onwards.

(121) The 2002 recession in the construction sector is acknowledged and is indeed confirmed by the
consumption figures of the product concerned presented above. These latter show that consumption
of the product concerned peaked in 2000, and subsequently declined in both 2001 and the IP.
However, it should be borne in mind that the major shift from a profitable situation of 3,3 % to a
loss situation of around 1 % occurred between 1999 and 2000, in spite of the market peaking that
year. The same year, import volumes from Turkey had sharply increased by 43 % and their market
share from 4,9 % to 6,9 %. It is therefore provisionally concluded that the decline in demand illu-
strated by the drop in the activity of the construction sector only contributed to the injury suffered
by the Community industry to a very limited extent, if at all, and that the effect was consequently
not such as to alter the finding that there is a genuine and substantial relationship of cause and
effect between the dumped imports from the country concerned and the material injury suffered by
the Community industry.

4. Conclusion on causation

(122)

In conclusion, it is confirmed that the material injury of the Community industry, which is charac-
terised especially by the decline in unit sales price (4 %) while the unit cost of production increased
by 3 %, the drop in profitability from 1998 and 1999 to 2001 and the IP, the similar drop in the
return on investments and the cash flow from operating activities was caused by the dumped
imports concerned.

(123)

Indeed, the effects of the relatively small market share of the dumped imports, of the performance
of other Community producers, of trade protective measures imposed by the US and other coun-
tries, of the impact of the 11 September 2001 event and of the export performance of the Commu-
nity industry, of the economic crisis in South East Asia, of the imports from other third countries,
of alleged over-investment and over-capacity, of the decline in demand illustrated by the drop in the
activity of the construction sector on the Community industry's negative developments was non-
existent or only very limited and consequently not such as to alter the finding that there is a genuine
and substantial relationship of cause and effect between the dumped imports from the country
concerned and the material injury suffered by the Community industry.

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(124)

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

G. COMMUNITY INTEREST

(125) 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 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 in the investigation.

1. Interest of the Community industry

Nature and structure of the Community industry

(126) The Community industry is composed of 14 companies. Almost all of them are part of international
groups acting mainly in the steel sector. Many of them purchase the main raw material from other
companies of their group at market prices. The Community industry employed a total of around
160 000 people out of which 2 772 were employed directly for the product concerned in the IP.

Possible effects of the imposition/non-imposition of measures on the Community industry

(127) Following an imposition of measures,

it is expected that the volume of sales of the product
concerned by the Community industry on the Community market would rise. This would enable the
Community industry to gain market shares and, by increasing capacity utilisation, decrease unit
production costs and further increase productivity. Furthermore, the level of the Community indus-
try's prices could increase moderately, although certainly not by the level of any anti-dumping duty
since competition will still remain amongst Community producers,
imports originating in the
country concerned made at non-dumped prices and imports originating in other third countries. In
conclusion it is expected that the increase in production and sales volume, on the one hand, and the
further decrease in unit costs, on the other hand, perhaps combined with a moderate price increase,
will allow the Community industry to improve its financial situation.

(128) On the other hand, should anti-dumping measures not be imposed, it is likely that the negative
trend of the Community industry will continue. The Community industry suffers particularly from
its loss-making situation. Indeed, in view of the material injury already suffered during the IP and
also given the downturn evident in the construction industry since the start of 2002, it is obvious
that the financial situation of the Community industry will deteriorate further in the absence of any
measures. This will in all likelihood lead to cuts in production, closures of certain production lines
and therefore threaten employment and investments in the Community.

Conclusion

(129)

In conclusion, the imposition of anti-dumping measures would allow the Community industry to
recover from the effects of injurious dumping found.

2. Interest of unrelated importers/traders in the Community

(130) The distribution of the product concerned in the Community is characterised by the presence of
importers/traders who trade in a large number of other products as well. Both Community industry
and exporting producers sell their products in the Community through traders. Given the large
number of importers involved, the Commission decided to apply sampling pursuant to Article 17 of
the basic Regulation and announced this in the notice of initiation accordingly. The Commission
requested all 102 importers listed in the complaint to reply to the questions listed in the Notice of
Initiation, i.e. basically their total turnover, their total number of employees, their volume and value
of imports into and resales made in the Community market during the IP of the product concerned.

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(131) Twelve importers agreed to be included in the sample and provided the requested basic information
within the deadline. In view of this situation, it was decided to send the questionnaire intended for
importers to all the 12 abovementioned companies. Only six (1) out of these 12 importers finally
fully cooperated and filled out the questionnaire.

(132) The six cooperating importers represent about 45 % of the total import volume of the product
concerned from the country concerned in the Community during the IP. Should anti-dumping
measures be imposed, it is possible that the level of imports originating in the country concerned
may decrease. Furthermore, it cannot be excluded that the imposition of anti-dumping measures
may result in a moderate increase in the prices of the product concerned in the Community, thus
affecting the economic situation of importers and traders. However, the impact of any anti-dumping
duty on the situation of importers and traders should be seen in the light of the small part of their
overall activities represented by trade in the product concerned. On the basis of the information
provided by the above cooperating importers,
it has been found that the product concerned
imported from Turkey represented on average about 12 % of the cooperating companies' total turn-
over. Likewise, the investigation showed that the proportion of employees directly or indirectly
involved in the trading of the product concerned represented only 23 % of a total staff of 107
employees of the above cooperating importers. Thus, the effect of any measures on the importers'
overall business would be limited. Furthermore, the effect on importers of the increase in the prices
of imports of the product concerned will depend on their ability to pass on increases in prices to
their customers. The low proportion of the product concerned in users' total costs should make it
easier for the importers to pass any price increase on to users. On this basis, it has been provision-
ally concluded that the imposition of anti-dumping measures is not likely to have a serious negative
effect on the situation of importers in the Community.

3. Interest of the user industry

(133) The main user of the product concerned in the Community is the construction industry. Conse-
quently, the demand for the product concerned is primarily dependent upon the evolution of
construction works in the private and industrial sectors. Questionnaires were sent to 11 associations
of users which were invited to forward copies of the questionnaire intended for users to those of
their members which were concerned by the investigation. No questionnaire replies were received
by the Commission either from interested users or their representative associations. Given the
absence of interest of the users of the product concerned, it can be provisionally concluded that the
imposition of any antidumping measure is unlikely to affect seriously their situation.

4. Conclusion on Community interest

(134) The effects of the imposition of measures can be expected to afford the Community industry with
the opportunity to regain lost sales and market shares and to improve its profitability. On the other
hand, in view of the deteriorated situation of the Community industry, there is a risk that in the
absence of measures, certain Community producers may close down their production lines or even
whole production facilities and lay-off part of their workforce. Whilst some negative effects are likely
to result in the form of decrease in the volumes imported and moderate price increases for the
importers/traders, the extent of these may be reduced by passing the increase on to the users. Users,
in turn, are unlikely to suffer serious consequences from such an increase given the likely low inci-
dence of the product concerned on their final products. In the light of the above, it is provisionally
concluded that no compelling reasons exist for not imposing measures in the present case and that
the application of measures would be in the interest of the Community.

(1) Metallurgica Piemontese Sas, Transider SA, Bemaco Steel Ltd, Eurosteel Products Ltd, Steel Traders Ltd, Thyssen

Mannesmann UK Ltd.

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H. PROVISIONAL ANTI-DUMPING MEASURES

(135)

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

1. Injury elimination level

(136) The level of the provisional anti-dumping measures should be sufficient to eliminate the injury to
the Community industry caused by the dumped 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 a profit before tax that could be reasonably achieved under normal conditions of
competition, i.e. in the absence of dumped imports.

(137) On the basis of the information available, it was preliminarily found that a profit margin of 3,3 % of
turnover, which the Community industry achieved in 1999, could be regarded as an appropriate
level which the Community industry could be expected to obtain in the absence of injurious
dumping. The necessary price increase was then determined on the basis of a comparison, at the
same level of trade, of the weighted average import price, as established for the price undercutting
calculations, with the non-injurious price of products sold by the Community industry on the
Community market. The non-injurious price has been obtained by adjusting the sales price of each
company composing the Community industry to a break-even point and by adding the abovemen-
tioned profit margin. Any difference resulting from this comparison was then expressed as a percen-
tage of the total cif import value.

(138) The individual company anti-dumping duty rates specified in this document were established on the
basis of the findings of the present investigation. Therefore, they reflect the situation found during
that investigation with respect to these companies. These duty rates (as opposed to the countrywide
duty applicable to ‘all other companies’) are thus exclusively applicable to imports of products origi-
nating in the country concerned and produced by the companies and thus by the specific legal enti-
ties mentioned. Imported products produced by any other company not specifically mentioned in
the operative part of this Regulation with its name and address, including entities related to those
specifically mentioned, cannot benefit from these rates and shall be subject to the duty rate applic-
able to ‘all other companies’.

(139) Any claim requesting the application of these individual company anti-dumping duty 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 Commission forthwith with all relevant information, in parti-
cular any modification in the company's activities linked to production, domestic and export sales
associated with, for example, 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.

2. Proposed provisional measures

(140)

In the light of the foregoing, it is considered that, in accordance with Article 7(2) of the basic Regu-
lation, a provisional anti-dumping duty should be imposed in respect of imports originating in
Turkey at the level of the dumping margins found, as these were found to be lower than the injury
margins.

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3. Undertakings

(141) Pursuant to Article 46 of Decision No 1/95 of the EU-Turkey Association Council on implementing
the final phase of the customs union, cooperating exporting producers in the Turkey received early
information on the findings of the investigation. A number of exporting producers, namely Özdemir
Boru Profil San.ve Ticaret AS, MMZ Onur Boru Profil Uretim and Guven Boru ve Profil Sanayi ve
Ticaret Ltd, offered price undertakings in accordance with Article 8(1) of the basic Regulation.

(142)

In this respect, the Commission has noted that:

— the product concerned is a commodity product with a considerable volatility in prices even in
the very short term, and therefore not suitable for a fixed price undertaking: the volatility is
partially due to the variation in prices of raw materials, namely hot-rolled coils, which constitute
major but variable components of the cost of production. Moreover, volatility is also linked to
currency exchanges rates, which are stable within the Community except
for the United
Kingdom, Sweden and Denmark, but fast changing with regard to the United States Dollar, the
currency in which the transactions are made in Turkey. A monthly revision of prices would be
necessary,

— if the MIPs (minimum import prices) were indexed to the price of hot-rolled coils, different
indexing formulae would have to be established by subproduct group, since the energy and
manpower per tonne vary between sizes. For this reason, should a review formula system be
implemented, it would be necessary to establish between three and four subformulae for each
category of product according to the size range,

— the product has a very large number of presentations (up to 250) given that several factors (steel
grade, sizes, thickness,..) affect prices. This renders customs control unduly burdensome and
complicated.

(143) Moreover, some of the producers who offered price undertakings export a variety of steel products
such as welded tubes, structural pipes, carbon steel tubes, square tubing, rectangular tubing, etc.,
which are only partially subject to the anti-dumping investigation. The risk of compensation in
prices for the different products exported to the same customers is therefore high. On a general
basis, the Community industry also claimed that undertakings, and thus minimum prices, would
clearly not be appropriate measures with regard to the product concerned for the same reasons.

(144)

In light of the above, these offers of price undertakings were rejected.

I. FINAL PROVISION

(145)

In the interest of sound administration, a period should be fixed within which the interested parties
which made themselves known within the time limit specified in the notice of initiation may make
their views known in writing and request a hearing. Furthermore, it should be stated that the find-
ings concerning the imposition of duties made for the purposes of this Regulation are provisional
and may have to be reconsidered for the purpose of any definitive duty,

HAS ADOPTED THIS REGULATION:

Article 1

1.
A provisional anti-dumping duty is hereby imposed on imports of hollow sections which consist of
welded pipes, tubes and hollow profiles of a square or rectangular cross-section of iron or steel with the
exception of those made of stainless steel or of a perimeter greater than 600 mm, currently classifiable
within CN codes ex 7306 60 31 (TARIC code 7306 60 31 90) and ex 7306 60 39 (TARIC code
7306 60 39 90), and originating in Turkey, and originating in Turkey.

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

2.
for products produced by the following manufacturers shall be as follows:

Country

Company

Provisional anti-
dumping duty
( %)

TARIC additional
code

Turkey

Özdemir Boru Profil San.ve Ticaret AS, Eregli

MMZ Onur Boru Profil Uretim, Istanbul

Guven Boru ve Profil Sanayi ve Ticaret Ltd, Istanbul

Noksel Celik Boru Sanayi AS, Ankara

Yücel Boru Profil Endüstrisi AS, Istanbul

Cayirova Boru San Ve Tic AS, Istanbul

Goktas Yassi Hadde Mamülleri Sanayi ve Ticaret AS,
Gebze-Kocaeli

Yasan Yassi Metal San. Tic. AS, Istanbul

Boral Boru Profil San. ve Tic. Ltd, Istanbul

Umran Celik Boru Sanayii AS, Istanbul

Borusan Birlesik Boru Fabrikalari AS, Istanbul

Mannesmann Boru Endustrisi AS, Istanbul

Erbosan Erciyas Boru Sanayii ve Ticaret AS, Kayseri

Borutas Boru Sanayii ve Ticaret AS, Adapazari

Cinar Boru Profil San. Tic. Ltd STI, Eregli

Sevil Boru-Profil Sanayii ve Ticaret AS, Istanbul

Toscelik Profil ve Sac. Endüstrisi AS, Iskenderun

Özborsan Boru San.ve Ticaret AS, Istanbul

14,7

14,4

6,4

5,3

4,2

4,2

6,4

6,4

6,4

6,4

6,4

6,4

6,4

6,4

6,4

6,4

6,4

6,4

All other companies

14,7

A446

A447

A448

A449

A450

A451

A452

A453

A454

A455

A456

A457

A458

A459

A460

A461

A462

A463

A999

3.

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

The release for free circulation in the Community of the product referred to in paragraph 1 shall be

4.
subject to the provision of a security, equivalent to the amount of the provisional duty.

Article 2

1. Without prejudice to Article 20 of Regulation (EC) No 384/96, interested parties requesting disclo-
sure of the essential facts and considerations on the basis of which this Regulation was adopted, shall
present their views in writing and request a hearing from the Commission within one month of the date of
entry into force of this regulation.

Pursuant to Article 21(4) of Regulation No 384/96, the parties concerned may comment on the

2.
application of this Regulation within one month of the date of its entry into force.

Article 3

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

Article 1 of this Regulation shall apply for a period of six months.

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

Done at Brussels, 14 July 2003.

For the Commission

Pascal LAMY

Member of the Commission