Council Regulation (EC) No 2229/2003 of 22 December 2003 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of silicon originating Russia
Date: 2003-12-22
Institutions: Council of the European Union
Subjects: Russia, anti-dumping duty, import, originating product, semi-metal

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Official Journal of the European Union

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COUNCIL REGULATION (EC) No 2229/2003
of 22 December 2003
imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed
on imports of silicon originating Russia

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 384/96 of 22
December 1995 on protection against dumped imports from
countries not members of the European Community (1)
(the
basic Regulation), and in particular Article 9 thereof,

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

Whereas:

1. Procedure

1.1. P r ov i si ona l me a su r e s

(1)

(2)

(3)

(4)

The Commission, by Regulation (EC) No 1235/2003 (2)
(‘provisional Regulation’),
anti-
dumping measures on imports of silicon originating in
Russia. The measures were expressed as an ad valorem
duty, ranging between 24,0 % and 25,2 %.

imposed provisional

It is recalled that the investigation of dumping and injury
covered the period from 1 October 2001 to 30
September 2002 (‘investigation period’ or
‘IP’). The
examination of the trends in the context of the investiga-
tion of injury analysis covered the period from 1 January
1998 to the end of the IP (‘period under consideration’).

1.2. O th e r me a su r e s i n for ce

Anti-dumping duties at an ad valorem rate of 49 % are
currently in force on imports of silicon originating in
the People's Republic of China (‘China’) (3). A review (4)
of these measures pursuant to Article 11(2) of the basic
Regulation is ongoing.

1.3. S u b se q u e n t p r oc e du r e

Following the imposition of provisional anti-dumping
duties, parties received a disclosure of
the facts and
considerations on which the provisional Regulation was
based. Some parties submitted comments in writing. All
interested parties who so requested were granted an
opportunity to be heard by the Commission.

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

Regulation (EC) No 1972/2002 (OJ L 305, 7.11.2002, p. 1).

(2) OJ L 173, 11.7.2003, p. 14.
(3) Council Regulation (EC) No 2496/97 of 11 December 1997
imposing a definitive anti-dumping duty on imports of metal origin-
ating in the People's Republic of China (OJ L 345, 16.12.1997,
p. 1).

(4) OJ C 246, 12.10.2002, p. 9.

(5)

(6)

(7)

(8)

(9)

(10)

the essential

All parties were informed of
facts and
considerations on the basis of which it was intended to
recommend the imposition of definitive anti-dumping
duties and the definitive collection of amounts secured
by way of provisional duties. They were also granted a
period within which to make representations subsequent
to this disclosure.

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

The Commission continued to seek all
information it
deemed necessary for the purpose of its definitive find-
ings.

In addition to the verification visits undertaken at the
premises of the companies mentioned in recital 7 of the
provisional Regulation, it should be noted that after the
imposition of provisional measures, an on-spot visit was
carried out at the premises of the following Community
users:

— GE Bayer Silicones, Leverkusen, Germany,

— Raffinera Metalli Capra SpA, Brescia, Italy,

— Vedani Carlo Metalli SpA, Milan, Italy.

2. Product concerned and like product

2.1. P r odu c t conce r ne d

2.1.1. Comments from exporting producers

In recital 9 of the provisional Regulation, the product
concerned was defined as silicon currently classifiable
within CN code 2804 69 00. Some exporters queried
whether silica fumes, which is a by-product of silica,
obtained by a filtering process during the production of
Silicon, is covered by the present proceeding.

It should be noted that silica fumes does not correspond
to the definition of the product concerned provided in
recitals 9 and 10 of the provisional Regulation since it is
merely a by-product
from the production of silicon
taking the form of a powder which is used as an additive
to concrete. It is therefore confirmed that this product,
covered under CN code ex 2811 22 00, is outside the
scope of this proceeding.

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(11)

(12)

The definition of the product concerned was questioned
by one Russian exporting producer, which claimed that
there are in fact two distinct types of silicon, within this
CN code, one type destined to metallurgical users and
one type to chemical users. In support of this assertion,
the Russian producer claimed that the two grades have
significantly different chemical compositions based on
their trace element content, with different end uses; that
there are two distinct sets of users which do not
compete with each other; and that there is no significant
interchangeability between the two grades.

The investigation showed that silicon is produced in
different grades and that silicon sold on the EU market
during the IP, whether produced by the Community
industry or imported from Russia, contained more than
95 % silicon by weight. The grade of the silicon is deter-
mined in the first place by the percentage of silicon, and
in the second place by the other elements, in particular
the content of iron and calcium. For specialist users,
particularly chemical users,
the proportions of other
trace elements determine whether the silicon is suitable
for the intended use. Commonly, for a specialist user,
silicon is manufactured to specific requirements and is
only purchased following a lengthy verification process
by the individual user. However, whilst the levels of trace
elements are important to chemical users, this is not
sufficient to conclude that it is a separate product from
silicon consumed by metallurgical users.

(13)

Evidence was also provided to show that the high-grade
material was not sold exclusively to chemical users, and
that chemical users also purchased certain quantities of
the lower grade so-called metallurgical silicon. It is also
generally accepted that users with lower quality require-
ments,
in particular secondary metallurgical users, are
able to use higher-grade silicon. For them the determi-
nant factor is the price, as they are not willing to pay a
premium for silicon of a higher grade than they require.

2.1.2. Comments of users

(14) A number of users also questioned the provisional
determination of the product concerned. The submis-
sions made were very similar to those received by
exporting producers, particularly from the metallurgical
users. All metallurgical users argued that there are three
distinct product types i.e. chemical, and a split between
standard, and low grade silicon for metallurgical users.
However, all accepted that they are able to use any of
these grades in their production process, although they
prefer
silicon on cost grounds. These
comments were repeated by a metallurgical users' orga-
nisation.

low grade

(15) One chemical user commented on the issue of product
concerned. They confirmed that
silicon they
purchase is tailor-made to their specifications and that
the trace elements within the silicon are the most impor-
tant factor for them.

the

2.1.3. Comments of the Community industry

(16)

The Community industry agreed with the provisional
determination that all grades of silicon falling under the
definition used in recitals 9 and 10 of the provisional
the product
regulation should be
concerned. They also pointed out that many of the argu-
ments are not raised within the context of the product
concerned but within the context of the like product
the exporting producers are
determination, and that
confusing these two issues.

considered as

2.1.4. Conclusion on product concerned

(17)

Silicon is a product which is manufactured in several
grades, depending firstly on the iron content, then on
the calcium content, and thirdly on other trace elements.
The production process employed in the EU and in
Russia, i.e. electric arc furnaces, is largely the same.

(18) On the EU market, there are essentially two different
user groups: chemical users mainly manufacturing sili-
cones, and metallurgical users manufacturing aluminium.
The metallurgical users can also be subdivided between
primary aluminium producers and secondary (recycled)
aluminium producers. However, all of the silicon used
contains at least 95 % silicon by weight, and is typically
98 or 99 % silicon.

(19)

It

Three grades of silicon have been identified, high grade,
standard grade, and low grade, based upon the percen-
tages of iron and calcium in the silicon. Between these
grades, it was found that there is some overlap in the
use made by different user groups.
is generally
accepted that there are no physical, chemical, or tech-
nical characteristics which would prevent secondary
aluminium producers from using any of the grades of
silicon, or primary aluminium producers from using
standard or high grade silicon. There is not the same
degree of interchangeability in the opposite direction,
although evidence has been submitted of chemical users
being prepared to use standard and low grade silicon.
The cost of the different grades usually determines which
grade is used by which user group.

(20)

The investigation has shown, as mentioned above, that
all types of silicon, despite any differences in terms of
the content of other chemical elements, have the same
basic physical, chemical, and technical characteristics.
Whilst the silicon can be used for different end uses, it
was found that there was substitutability to a greater or
lesser degree between the different grades and different
uses.

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(21)

Therefore, the findings at recitals 9 and 10 of the provi-
sional Regulation are definitively confirmed.

3. Dumping

2.2. L i ke p r odu ct

(22) After analysis, it was found that the claim concerning
the product control number (PCN) addressed in recital
14 of the provisional Regulation concerned the price
comparison of silicon originating in Russia with Com-
munity produced silicon and the correspondent injury
elimination level. Differences in prices, quality and in
uses do not necessarily lead to the conclusion that the
products are not alike.
Indeed, what matters in this
context is whether the product types in question share
the same basic physical and chemical characteristics and
basic uses. The aforementioned differences will be taken
into account in the comparison between export price
and normal value and in determining e.g. price under-
cutting and the injury elimination level).

(23) One Russian exporting producer referred to the anti-
dumping measures currently imposed on imports of
silicon from China (see recital 3). In particular, they refer
to recital 55 of Council Regulation (EC) No 2496/97
which states that ‘the quality of silicon metal from Russia
and Ukraine is not comparable to European or Chinese
silicon metal’.

(24)

investigation, and that

In response to this point, it should first be pointed out
that this statement was made in an investigation dating
back more than five years, was based on information
submitted in that
this is not
confirmed in the current investigation. In addition recital
55 of the above Regulation deals with the issue of caus-
ality only. It is clear from the wording that the product
concerned, and indeed the like product from all sources,
be it China, Russia, the EU, or the analogue country, i.e.
Norway is silicon. This silicon forms one like product
within the definition of Article 1(4) of the basic Regu-
lation. Moreover, to the extent that quality differences
can be found between different silicon producers in
different countries, such differences can be adequately
taken into consideration by means of adjustments. It is
also noted that there were quality differences between
the various types exported from Russia to the Com-
munity.

(25)

Based on the above and based on the findings of the
investigation, it is confirmed that the silicon produced in
Russia and sold domestically as well as that exported to
the Community, the silicon sold on the domestic market
of the analogue country, and that manufactured and sold
in the Community by the Community industry have the
same basic physical and chemical characteristics. It is
therefore concluded that all types of silicon forms one
product family and are considered to be like products
within the meaning of Article 1(4) of the basic Regu-
lation.

3.1. N or ma l v a lu e

(26)

In the absence of any comments, the recitals 15 to 18
concerning market economy treatment of
the provi-
sional Regulation are confirmed.

(27) All exporting producers made submissions arguing that
the cost of electricity used at provisional stage should be
amended. They emphasised that their main electricity
supplier is a majority private-owned company and that
its low price can be explained by the presence of the
world's largest complex of hydro-electric power stations,
based on a natural comparative advantage. This matter
was further investigated, but since it was found that elec-
tricity prices in Russia are regulated and that the price
charged by this electricity supplier was very low, even
when compared to other suppliers of electricity gener-
ated by hydro-electric power stations in the analogue
country Norway and also in Canada, it was decided to
reject this claim and to confirm the provisional decision
to use the electricity price charged by another electricity
supplier in Russia. This price was found to be in line
with the lowest price of representative electricity produ-
cers found in the Community.

(28)

In the absence of any other comments, the recitals 19 to
26 concerning the determination of normal value of the
provisional Regulation are confirmed.

3.2. E x p or t p r i ce

(29) All exporting producers have argued that the companies
involved in selling the product concerned to the EC
which are located outside Russia are related parties and
that
these companies should be treated as a single
economic entity together with the companies located in
Russia. They claimed that the export price used should
therefore be the price charged by these related compa-
nies to the first independent customer in the EC.

(30)

(31)

In the case of the importer located in the Community
(United Kingdom), no new evidence was presented
which demonstrated that it was related to the exporting
producer. The claim was therefore rejected and the
provisional approach of establishing the export price on
the basis of the sales price to this importer was main-
tained.

In the case of the importer in Switzerland, an on-spot
verification visit was carried out following the imposi-
tion of the provisional measure and it was found that
this company was
indeed related to the exporting
producer. For the sales made through this importer, the
export price was therefore based on the price of this
importer to the first unrelated customer in the Com-
munity.

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(32) As regards the importer located in the British Virgin
Islands, it should first be noted that according to Article
2(8) of the basic Regulation the export price to be used
is the ‘price actually paid or payable when sold for
export from the exporting country to the Community.’
In other words, in cases where the export transaction to
the Community involves intermediaries,
it is not the
price ultimately charged to the Community customer
which matters (and which is often not known to the
exporting producer), but the price at which the product
‘leaves’ the exporting country. This price may have to be
substituted by subsequent resale prices in particular if
the parties are related. Rusal has submitted new informa-
tion which,
in their view, proved such a relationship.
However, it is considered that this relationship was not
demonstrated in a conclusive and unambiguous way. In
fact, there is no direct shareholding between the Rusal
and the company in the British Virgin Islands and struc-
tures are complex and non-transparent. According to the
company, the link is a result of indirect shareholding but
no verifiable documentation to this effect was submitted.
Moreover, according to the Rusal the company in the
British Virgin Islands does not perform any economic
activity in the sale or distribution of
the exported
products but is merely a letter box company. In other
words, this is not really a sale via a third party. Rather
the British Virgin Islands company is an addressee for
unclear accounting purposes. There was no way to verify
the true role of this company located in the British
Virgin Islands or follow with sufficient certainty the
payment flows. It was consequently decided to maintain
the provisional approach and to establish the export
price on the basis of the sales price to the company in
the British Virgin Islands.

3.4. Du mp i ng ma r g i ns

(35)

(36)

In the absence of any comments, the determination of
the dumping margin, as described in recitals 29 and 30
of the provisional Regulation are confirmed.

The definitive dumping margins, expressed as a percen-
tage of the CIF import price at the Community border,
are as follows:

Company

Dumping margin

OJSC ‘Bratsk Aluminium Plant’ (RUSAL
Group)

SKU LLC, Sual Kremny-Ural and ZAO
Kremny (SUAL Group)

Russia

4. Injury

23,6 %

24,8 %

24,8 %

4.1. Commu ni ty i ndu str y

(37)

Since no comments were received regarding the defini-
tion of the Community industry, the contents and provi-
sional conclusions of recitals 33 and 34 of the provi-
sional Regulation are hereby confirmed.

4.2. Con su mp ti on of si li c on i n th e Commu ni ty

(38)

In the absence of any new information on consumption,
the provisional findings as described in recitals 35 and
36 of the provisional Regulation are confirmed.

3.3. Comp a r i son

4.3. Imp or ts of si li c on i nto th e Commu n i ty

(33) One exporting producer again claimed an adjustment for
physical characteristics based on the fact that the average
grade of silicon sold on the Russian market is of higher
quality and therefore involves higher production costs.
However, the company failed to present new evidence
demonstrating that there was a consistent difference in
quality between the product types sold on the domestic
market and those exported to the Community. There-
fore, the provisional approach was maintained and no
adjustment for physical differences was made.

(34)

Two companies repeated their claims concerning an
adjustment for quantities and for level of trade. The
request for an adjustment for quantities could not be
taken into account since the company was not able to
demonstrate that discounts or rebates had been specifi-
cally given for the purchase of different quantities and
since these differences in quantity had already been
taken into account by the level of trade adjustment for
different types of customers granted at the provisional
stage. With respect
for an additional
to the request
adjustment for level of trade, the company was not able
to demonstrate that the adjustment made at the provi-
sional stage had been insufficient and therefore no addi-
tional adjustment could be granted.

4.3.1. Volume and market share of imports

(39)

In the absence of any new information either on the
imports of silicon into the Community or on their
market share, the provisional findings as described in
recitals 37 to 43 of
the provisional Regulation are
confirmed.

4.3.2. Price undercutting and price depression

(40) Undercutting calculations were revised to reflect adjust-
ments for level of trade and quality. These adjustments
were established on the basis of verified information and
correspond to a reasonable estimate of the market value
of the differences.

(41) Definitive undercutting margins showed that undercut-

ting was 10,2 %.

(42)

The existence and the level of undercutting should be
seen in the light of the fact that prices were depressed.
Prices decreased significantly over
the period under
consideration (– 16 %), to the extent that they were not
covering the Community industry's full costs of produc-
tion during the IP.

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4.4. E c onomi c

si t u a t i on of

th e Commu ni t y

5. Causation

i ndu str y

(43)

The two Russian exporting producers claimed that the
Community industry did not suffer material
injury as
most of the injury indicators showed positive develop-
ments. In particular, the exporting producers pointed to
improvements for production, capacity, capacity utilisa-
tion, sales volume in the Community, market share,
stocks, employment, and productivity over the period
under consideration.

(44) However for the injury indicators, and as outlined in
recitals 71 and 72 of the provisional Regulation, a closer
examination showed that
the main positive develop-
ments for the Community industry took place between
1998 and 2000. Between 2000 and the IP, nearly all
indicators either rose only slightly, remained stagnant, or
indeed fell.
It is during this period that the material
injury suffered by the Community industry is most
apparent.

(45)

It should be noted that as indicated in recital 72 of the
provisional Regulation the relatively good performances
of the Community industry up to 2000 was directly
attributed to decisions taken by the Community industry
to invest in additional community production facilities.
Indeed, during that period the Community industry
production, production capacity, sales volume, market
share, employment and productivity increased. Profit-
ability was set at 5 % of the net sales value.

(46)

Subsequently, and mirroring the increased presence of
low-priced dumped imports from Russia, the situation of
the Community industry deteriorated. Market share, cash
flow, investments, and return on investments saw impor-
tant decreases.

(47) Moreover, the trend of other injury indicators, and in
particular the decrease in profitability and sales prices
suffered by the Community industry over the period
under consideration led to the conclusion that the Com-
munity industry suffered material injury.

(49) One Russian exporting producer argued that even if the
finding of material injury is confirmed, this injury was
not caused by the Russian imports of silicon. A number
of other factors were alleged to be the true cause of the
injury,
if any, suffered by the Community industry.
Other third countries with a much larger share of
imports compared with Russia, Community industry's
self-inflicted injury, the export performance of the Com-
munity industry, imports of silicon by the community
industry itself, and the differences in the markets for
chemical and metallurgical silicon were all cited as expla-
nations for any injury suffered by the Community
industry. One Russian producer also alleged that there
was a 16 % difference between prices of the Community
industry and Russian prices during the IP, and that such
a large difference showed that there is no price competi-
tion between the silicon from the two sources on the
Community market.

5.1. Imp or ts fr om oth e r t h i r d cou ntr i e s

(50) As outlined in recital 98 of the provisional Regulation,
imports from a number of other third countries were
made at much higher volumes than those from Russia.
However, with the exception of China,
imports from
each of these countries actually fell in volume between
2000 and the IP i.e. when the Community industry saw
a downturn in its economic situation. Furthermore, the
prices of these other imports were in all cases higher
than those of the Russian imports, and where they did
the price
the Community industry's prices,
undercut
differential was very limited.

(51) One Russian exporting producer claimed that the infor-
mation from Eurostat could not be relied upon as no
account is taken of differences in product mix. They
pointed out that there are important price differences
silicon
between the predominantly
exported from Russia, and the higher quality silicon
from other third countries. Rather, they claimed that the
prices actually paid by users for silicon from different
sources should be used when comparing prices.

quality

lower

4.5. Conc lu si on on i n ju r y

(48)

For these reasons, and in the absence of any new infor-
mation that would necessitate a revision of the finding
that the Community industry suffered material
injury
during the IP, in particular for prices and profitability,
the arguments raised by the Russian exporting producers
are rejected. The findings and the conclusion set out in
the provisional Regulation are
recitals 71 to 73 of
confirmed.

(52)

This producer did not adduce any evidence in support of
its claim. Moreover, due to the lack of substantial data
from users as to the price they paid for silicon from
other third countries, this price comparison could not be
made. The information available from Eurostat repre-
sents in these circumstances the best source for estab-
lishing prices of silicon from third countries. In relation
to the information available for
the parallel expiry
review against China, it emerged that the average under-
cutting margin found when prices were compared on a
grade-by grade basis was in line with the margin found
when Eurostat average import price was compared to
Community industry average price.

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(53)

it should also be noted that

for a fair
Furthermore,
comparison of import prices, Eurostat data was used in
all cases. For Russia, where verified information was
available for the IP, the true price of the imports was
actually slightly lower than that recorded on Eurostat.

(57)

The total fall in export sales between 1998 and the IP
represented only 2,3 % of all Community industry sales
during the IP. Their impact, if any, on the prices and
profitability of
the Community industry on the EU
market can, therefore have been of only a minor nature.
It can also reasonably be assumed that the reduction in
export
is partly due to the demand for Community
produced silicon during the IP.

5.2. S e lf-i nfli ct e d i nju r y

(54)

It was claimed that the injury suffered by the Com-
munity industry was primarily due to increasing costs
incurred for new production capacities in an effort to
increase market share. To this end it was claimed that
the Community industry has the highest average costs of
production (COP) in the world. This claim was based
upon a comparison of the verified cost of production for
the Community industry and Russian producers in this
proceeding against published costs for other third coun-
tries. However,
included in the
the cost elements
published figures were not clearly identified and there-
fore there was no evidence to indicate that these COP
could be compared with the COP verified during the
investigation. Typically it appeared that these published
figures are based on manufacturing cost only, and do
not include essential cost elements such as SG & A. In
addition,
the Russian
is interesting to note that
producer did not provide any corresponding published
is
data for Community producers. On this basis it
considered that this claim could not be addressed and
the arguments raised by the Russian exporter were
rejected. In support of this approach, it was found that
the verified COP in the analogue country, Norway, was
than that provided by the Russian
indeed higher
producer. When adjusted to full costs, the verified COP
in Norway was found to be consistent to that of the
Community industry.

it

5.4. Imp or ts of
i ndu str y

si li c on by

t h e Commu ni t y

(58) One Russian producer queried the conclusion at recital
85 of the provisional Regulation that companies related
to the Community industry, and which purchase silicon,
have taken such decision on their own behalf and
without
In
support of this point, it was claimed that these related
companies were not allowed to express their opinion on
the proceeding. This was said to prove that these compa-
nies are indeed controlled by the Community industry.

influence from the Community industry.

(59)

The fact that the companies related to the Community
industry do not make comments opposing anti-dumping
measures in this proceeding does not mean that they are
not free to source their own raw materials based on
financial considerations. As these companies were seen
to buy silicon from the Community industry,
from
Russia, and indeed from any other source as they
wished, the conclusion at recital 85 of the provisional
Regulation are therefore confirmed.

(55) Nevertheless, even if

the costs of

the Community
industry were comparatively higher, this fact would not
break in itself the link between the low-priced dumped
imports and the injury suffered by the Community
industry. As outlined at recital 83 of the provisional
Regulation, had prices not fallen between the year 2000
and the IP, then the Community industry would have
made a profit of 1,7 %, as opposed to an actual loss of
2,1 %.

5.3. E x p or ts by th e Commu ni ty i ndu str y

5.5. Di ffe r e nc e s

b e t w e e n
c h e mi ca l a n d me ta l lu r g i c a l s i l i c on

th e ma r ke ts

for

(60)

It was alleged that the problems faced by the Com-
munity industry from 2000 onwards were due to a
downturn in the demand for chemical grade silicon
caused by a downturn in demand for the products of
this user industry. It was claimed that the Community
industry sells a higher proportion of its silicon to these
chemical users than it does to metallurgical users, whilst
the opposite is true for Russian exporting producers.
Therefore, as Russian silicon does not compete with
Community produced silicon in the chemical market,
any problems faced by the Community industry cannot
be attributed to Russian imports.

(56)

It was claimed that the reduction in export sales by the
Community industry would have impacted on the profit-
their EU sales. However, no evidence to
ability of
support this claim was submitted.

(61)

The table below outlines the trends in prices and
volumes for Community industry sales of silicon to their
chemical customers.

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Community industry sales to chemical customers

Tonnes

Index

1998

1999

2000

2001

IP

48 907

59 924

74 880

74 435

69 652

100

123

153

152

142

EUR per tonne

1 488

1 313

1 287

1 316

1 301

Index

100

88

86

88

87

Source: Community industry.

(62)

From this table, it can be seen that over the period under consideration, the sales of silicon sold to
chemical users increased by 42 % in volume but fell by 13 % in terms of average price. This
compares with a 57 % increase in volume and a 16 % fall in prices for all sales of silicon over the
period under consideration (see Tables 8 and 9 of the provisional Regulation).

(63) During the period between 2000 and the IP, when the injury trend showed a particular downturn in
respect of prices and profitability, sales to chemical users fell by around five thousand tonnes (–
7,0 %), but average prices increased by EUR 14 per tonne (+ 1,1 %). For all sales the comparable
figures show an increase of around three thousand tonnes (+ 2,1 %) whilst average prices fell by
EUR 46 per tonne (– 3,7 %).

(64)

Therefore, there are no reasons to believe that the injury suffered by the Community industry was
caused by a downturn in sales to chemical customers. In fact, given the nature of the injury suffered,
the reverse is true.

(65) Accordingly, the argument that it is the trend for the sales of the Community industry to chemical

customers that was the real cause of the injury suffered during the IP is rejected.

5.6. Pr i ce c omp e ti ti on

(66)

Concerning the price difference between the silicon produced in the Community and the silicon
imported from Russia, it is confirmed that this difference is not 16 %, as claimed by a Russian
exporter, but 11 % on average during the IP (see recital 46 of the provisional Regulation). This
difference existed despite Community industry price falls of 7 % between 2001 and the IP. This is
seen as a clear indication of the effect that Russian prices had on those of the Community industry.
To claim that the price undercutting is so large that it cannot have been the cause of the injury to
the Community industry would be counter intuitive.

(67)

Indeed, the investigation showed that large quantities of silicon are sold by both the Community
industry and the Russian exporting producers to the same customers or customers operating in the
same sector. It is also clear that the low level of the Russian price was used as a lever by these users
when negotiating prices with the Community industry.

5.7. Conc lu si on on ca u sa ti on

(68)

In light of the above, the arguments raised by the Russian exporting producers are rejected and the
the provisional Regulation are
findings and conclusions set out
confirmed.

in recitals 101 and 102 of

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6. Community interest

(69)

(70)

Following the provisional determination, that the imposition of measures was not against the Com-
munity interest, interested parties were invited to come forward and to cooperate in the proceeding.
Comments were received from four users and a users' association which had cooperated during the
provisional stage of the proceeding. In addition five users and one users' association which did not
cooperate during the provisional stage of the proceeding made comments on the provisional find-
ings. No importers of silicon made any comments. Three Community suppliers of raw materials to
the Russian producers had already submitted comments at the provisional stage.

Those comments which were made following the publication of
the provisional Regulation
concerned only the need to differentiate between chemical and metallurgical silicon i.e. on issues
concerning the product concerned and the like product. The users submitted no comments
regarding the impact of any measures either on their costs or on their profitability, nor provided the
necessary information to allow such an assessment to be made.

(71) However, following on-spot visits to users, it was found that whilst these users are opposed to
measures as this will increase their costs, they were generally in agreement with the methods we
employed in our analysis. It is likely that the measure will have an impact on users. The information
available indicates that duties will increase the costs for metallurgical users in the order of EUR 11
per tonne of finished product, i.e. by 0,8 %.

(72)

(73)

For the Community suppliers of raw materials, even it were accepted that the imposition of
measures may have some negative consequences on their turnover and profitability. no evidence
was submitted that would lead to the conclusion that this impact would be such as to outweigh the
expected benefits to the Community industry.

Therefore, there was no new information provided at all that could lead to a finding that the imposi-
tion of definitive measures would be against the Community interest. Accordingly, the conclusion
reached in recital 118 of the provisional Regulation is definitively confirmed.

7. Definitive measures

(74)

In view of the conclusions reached regarding dumping, injury, causation and Community interest, it
is considered that definitive anti-dumping measures should be imposed in order to prevent further
injury being caused to the Community industry by dumped imports from Russia.

7.1. Inju r y e li mi n a ti on le v e l

(75) A number of claims were made regarding the methodology used for calculating the injury elimina-

tion level at the provisional stage.

7.1.1. PCN Table

(76) As stated in recital 14 of the provisional Regulation, it was claimed that the product control number
(PCN) table which identifies all types of silicon did not include sufficient details of the chemical
composition of the different types of silicon and that it was therefore not possible to make a proper
comparison of the different grades of silicon. It was thus proposed to amend the PCN table to clearly
identify the types imported from Russia as compared to those sold by the Community industry.

(77) One company claimed that an extra grade should be included to cover silicon with an iron content
of above 0,8 %. Whilst it may be that silicon with high levels of iron command lower prices on the
market, no evidence was submitted to show that there was a clear market difference between silicon
containing more than 0,5 % iron and that containing more than 0,8 %. As any price differences
resulting from these different iron contents can, in any case be addressed by way of a price adjust-
ment, which was indeed given, this claim is rejected.

(78)

The other Russian exporting producers requested two changes to the PCN Table. They firstly
requested that a new grade be defined where the trace elements are the main determining factor. It
was claimed that without this adjustment, silicon sold to metallurgical users could be unfairly
compared with silicon sold to chemical users. They also requested that the silicon containing exactly
0,5 % iron be classified as low quality instead of standard quality as in the current PCN table.

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(79)

The acceptance of the first request would not have led to a more accurate PCN Table, but would
instead have resulted in poorly defined criteria, with a risk that the interested parties would have a
degree of freedom in allocating sales to particular PCNs. Such a freedom would undermine the relia-
bility of the information provided by PCN and thus on the reliability that could be placed on the
injury elimination level. There is also no evidence indicating that maintaining the current PCN struc-
ture would lead to erroneous or less accurate findings. For example an underselling calculation based
on standard and low quality silicon only would result in margins which changed by at most 0,2 %.
For these reasons, the claim is rejected.

(80) As to the second claim, again no evidence to support this change has been provided. Indeed there
are indications that silicon containing 0,5 % iron is seen as the standard grade by users. Accordingly,
no change to the PCN Table was considered necessary.

7.1.2. Profit margin

(81)

(82)

It was provisionally found that a profit margin of 6,5 % on total turnover could be regarded as an
appropriate minimum which the Community industry could reasonably expect to obtain in the
absence of injurious dumping. It was claimed that this margin was too high and that a margin of
around 3 % would be more appropriate.

The request to use a 3 % margin is not borne out by the facts. Indeed, a profit of 6,5 % is in line
with the profits achieved by the Community industry when fair market conditions prevailed on the
Community market, i.e. between 1998 and 2000. Moreover, given the level of the dumping margins
found and the volume of imports from Russia, it is also likely that the Community industry would
have achieved profits of at least this level during the IP.

7.1.3. Quality adjustment

(83) One Russian producer claimed that the silicon produced at one of its plants was of a lower quality
than that produced at the other plant due to differences in the production process. Accordingly it
was claimed that the lower quality silicon should be adjusted to allow a fair comparison with the
prices of the Community industry. The adjustment claimed was the difference in the average cost of
production between the two plants.

(84)

(85)

(86)

It is indeed accepted that there is a quality difference between the two plants. However, for any
adjustment to be merited, it should be demonstrated that these differences impact on the prices that
can be achieved in the market, in this case the EU. A comparison was, therefore made on a grade-
by-grade basis to see if there was a consistent difference in the sales prices achieved between the
two plants. For the high quality silicon, no sales were made of silicon from the lower quality plant,
and no adjustment was necessary. For the standard grade, a clear price difference was observed, and
an adjustment of 4 % was made for sales of this quality from the relevant plant. For the low quality
silicon, no price difference was found and thus no adjustment was warranted.

The second Russian producer claimed that all of its silicon was of such low quality, that it could not
be directly compared even with the prices of low-quality silicon produced by the Community
industry.

It is again accepted that the iron level in particular is higher in the silicon produced by this producer
compared to that produced by both the Community industry and by the other Russian producer. In
order to calculate the quality effect, if any, on the prices achieved by this producer on the EU
market, a comparison was made with the average prices achieved by the other Russian producer,
again on a grade-by-grade basis.

(87)

The results of this comparison showed that an adjustment to the prices of low-quality silicon from
this Russian producer should be granted so that it could be compared with the prices of the low-
quality silicon produced by the Community industry.

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7.1.4. Level of trade adjustment

(88)

(89)

The Russian producers claimed a price adjustment to allow for different levels of trade for their EU
sales. It was found that one Russian producer sold all of its silicon via a trader in the British Virgin
Islands. The second producer sold via a related trader in Switzerland, via an unrelated trader in the
EU, and directly to end users. The Community industry sold almost all of its silicon directly to end-
users.

In order to determine if a level of trade adjustment was warranted, all sales of the same grade from
the same producer via the different sales channels were analysed to see if there was a consistent
price differential. As a result of this analysis, a level of trade adjustment was granted for all sales via
an unrelated trader.

7.2. F or m a nd le v e l of th e de fi ni ti v e du t y

(90)

In accordance with Article 9(4) of the basic Regulation, definitive anti-dumping measures should be
imposed at the level of the dumping or injury margins found, whichever are the lower. These
measures, as with the provisional measures, should take the form of an ad valorem duty.

7.3. De fi ni ti ve c olle cti on of t h e p r ovi si ona l du ty

(91)

In view of the magnitude of the dumping margins found for the exporting producers in Russia and
in light of the level of the injury caused to the Community industry, it is considered necessary that
the amounts secured by way of provisional anti-dumping duty imposed by the provisional Regu-
lation, i.e. Commission Regulation (EC) No 1235/2003, should be definitively collected to the extent
of the amount of definitive duties imposed. Where the definitive duties are higher than the provi-
sional duties, only the amounts secured at the level of the provisional duties should be definitively
collected.

(92) 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 particu-
lar any modification in the company's activities linked to production, domestic sales and export sales
associated with e.g. that name change or that change in the production and sales entities. If appro-
priate, the Regulation will accordingly be amended by updating the list of companies benefiting
from individual duties.

7.4. Unde r ta ki ng s

(93)

(94)

(95)

Subsequent to the imposition of provisional measures, and after disclosure of the definitive findings,
one exporting producer in Russia offered a price undertaking in accordance with Article 8(1) of the
basic Regulation.

The exporting producer concerned is a producer of different types of products which can be sold
together. This raises a potential risk of cross-compensation i.e. that any undertaking prices would be
formally respected but that prices for products other than the one concerned would be lowered
when sold together with the product concerned. All this would render the commitment to respect a
minimum price for silicon easy to circumvent and very difficult to monitor effectively.

For the reasons set out above, it was therefore concluded that the undertakings offered subsequent
to the disclosure of the definitive findings could not be accepted as such in their current form. The
interested parties were informed accordingly and the deficiencies of the undertaking offered were
disclosed in detail to the exporters concerned,

HAS ADOPTED THIS REGULATION:

Article 1

A definitive anti-dumping duty is hereby imposed on imports of silicon with a silicon content less

1.
than 99,99 % by weight, falling within CN code 2804 69 00, originating in Russia.

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The rate of the definitive anti-dumping duty applicable for the product produced by the companies

2.
named below and originating in Russia shall be as follows:

Companies

Rate of duty
(%)

TARIC additional code

OJSC Bratsk Aluminium Plant, Bratsk,
Russia

Irkutsk Region,

23,6%

SKU LLC, Sual-Kremny-Ural, Kamensk, Ural Region,
Russia, and ZAO KREMNY, Irkutsk, Irkutsk Region, Russia

All other companies

22,7%

23,6%

A464

A465

A999

3.

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

Article 2

The amounts secured by way of provisional anti-dumping duties pursuant to Commission Regulation (EC)
No 1235/2003 on imports of silicon with a silicon content less than 99,99 % by weight, falling within CN
code 2804 69 00, originating in Russia shall be definitively collected in accordance with the rules set out
below.

The amounts secured in excess of the definitive rate of anti-dumping duties shall be released. Where the
definitive duties are higher than the provisional duties, only the amounts secured at the level of the provi-
sional duties shall be definitively collected.

This Regulation shall enter into force on the day following its publication in the Official Journal of the Euro-
pean Union.

Article 3

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

Done at Brussels, 22 December 2003.

For the Council
The President
A. MATTEOLI