Proposal for a Council Regulation imposing a definitive anti-dumping duty on imports of silicon originating in the People's Republic of China
Date: 2004-02-13
Institutions: European Commission
Subjects: China, anti-dumping duty, import, originating product, semi-metal

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.02.2004 
COM(2004)97 final 

Proposal for a 

COUNCIL REGULATION 

imposing a definitive anti-dumping duty on imports of silicon originating in 
the People's Republic of China 

. 

(presented by the Commission) 

EN 

   EN 

 
 
 
  
EXPLANATORY MEMORANDUM 

On 12 October 2002, the Commission initiated an expiry review of the measures in force in 
respect of imports of silicon originating in the People's Republic of China, after receipt of a 
request made by the Community producers, indicating that the expiry of the measures would 
be likely to lead to a continuation or recurrence of injurious dumping. 

The attached proposal for a Council Regulation is based on the findings on dumping, injury 
and  Community  interest  and  on  the  analysis  of  the  possible  effects  of  the  removal  or 
maintenance of the measures in force. 

The investigation confirmed the likelihood of continuation and recurrence of dumping and a 
recurrence  of  injury  resulting  there  from  should  the  measures  be  repealed  in  respect  of  the 
country concerned. 

It  is,  therefore,  proposed  that  the  Council  adopt  the  attached  proposal  for  a  Regulation  by 
which the existing measures would be maintained. 

2 

 
 
  
 
Proposal for a 

COUNCIL REGULATION 

imposing a definitive anti-dumping duty on imports of silicon originating in 
the People's Republic of China 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having  regard  to  Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection 
against  dumped  imports  from  countries  not  members  of  the  European  Community1,  as  last 
amended by Regulation (EC) No 1972/20022 (“Basic Regulation”), and in particular Article 
11(2) thereof, 

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

Whereas: 

Procedure 

Measures in force 

(1) 

By Regulation (EC) No 2496/973, the Council imposed a definitive ad valorem anti-
dumping  duty  on  imports  of  silicon  originating  in  the  People's  Republic  of  China 
(‘PRC’  or  ‘China’).  The  rate  of  the  definitive  duty  applicable  to  the  net  free-at-
Community frontier price, before duty, was 49%. It should be noted that the original 
measures  were  imposed  by  Council  Regulation  (EC)  No 2200/904,  as  amended  by 
Council Regulation (EC) No 1607/925 and that Council Regulation (EC) No 2496/97 
concluded an expiry review. 

1 
2 
3 
4 
5 

OJ L 56, 6.3.1996, p. 1. 
OJ L 305, 7.11.2002, p. 1. 
OJ L 345, 16.12.1997, p. 1. 
OJ L 198, 28.7.1990, p. 57. 
OJ L 170, 25.6.1992, p. 1. 

3 

 
 
  
 
                                                 
Request for a review 

(2) 

Following the publication, in March 2002, of a notice6 of the impending expiry of the 
anti-dumping  measures  in  force  on  imports  of  silicon  originating  in  the  People's 
Republic  of  China,  the  Commission  received  a  request  for  a  review  pursuant  to 
Article 11(2)  of  the  Basic  Regulation.  The  request  was  lodged  on  9  September  2002 
by  EUROALLIAGES 
Industry) 
('the  applicant')  on  behalf  of  producers  representing  100%  of  the  Community 
production of silicon metal. The request alleged that the expiry of measures would be 
likely  to  result  in  a  continuation  or  recurrence  of  dumping  and  injury  to  the 
Community industry. 

(Liaison  Committee  of 

the  Ferro-Alloy 

(3) 

Having  determined,  after  consultation  of  the  Advisory  Committee,  that  sufficient 
evidence  existed  for  the  initiation  of  a  review,  the  Commission  announced  the 
initiation of an expiry review7, pursuant to Article 11(2) of the Basic Regulation and 
commenced an investigation.  

Investigation 

Procedure 

(4) 

(5) 

(6) 

(7) 

The Commission officially advised the complainant Community producers, exporting 
producers  in  the  PRC,  importers/traders,  user  industries,  and  associations  of  users 
known to be concerned, as well as the representatives of the Chinese Government of 
the initiation of the review. Interested parties were given the opportunity to make their 
views  known  in  writing  and  to  request  a  hearing  within  the  time  limit  set  out  in  the 
notice of initiation.  

Questionnaires were sent to all the parties that were officially advised on the initiation 
of the review and to those who requested a questionnaire within the time limit set out 
in the notice of initiation.  

Replies  to  the  questionnaire  were  received  from  the  three  applicant  Community 
producers,  one  exporting  producer,  one  importer  and  two  producers  in  the  analogue 
country.  

Interested parties and verification visits 

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

(a)  Exporting producer 

Dalian DC Silicon Co., Ltd – Dalian, PRC 

6 
7 

OJ C 67, 16.3.2002, p. 34. 
OJ C 246, 12.10.2002, p. 9. 

4 

 
 
  
 
                                                 
(b)  Related Importer 

Dow Corning Ltd, Barry, Wales, UK 

(c)  Producers in the analogue country 

Fesil ASA, Trondheim, Norway 

Elkem ASA, Oslo, Norway 

(d)  Community producers 

Invensil, Pechiney Group, Paris, France 

Ferroatlantica, Madrid, Spain 

R W Silicium, Pocking, Germany 

Investigation period 

(8) 

(9) 

The  investigation  regarding  the  continuation  or  recurrence  of  dumping  and  injury 
covered  the  period  from  1  October  2001  to  30  September  2002  (‘IP’).  The 
examination of the trends relevant for the assessment of a likelihood of a continuation 
or recurrence of injury covered the period from 1 January 1998 up to the end of the IP 
(‘period under consideration). 

Proceeding concerning other countries 

In  October  2002  an  anti-dumping  proceeding  with  regard  to  imports  into  the 
Community of silicon originating in Russia was initiated. On 10 July 2003, by Council 
Regulation  (EC)  No  2229/20038,  a  provisional  anti-dumping  duty  of  between  22.7% 
and 23.6% was imposed. 

Product under consideration and like product 

(10)  The product under consideration is the same as in the original investigation, i.e. silicon 
metal originating in the PRC, classifiable within CN code 2804 69 00 (silicon content 
less than 99.99% by weight). Purely by reason of the current classification set out in 
the Customs nomenclature, it should read “silicon”. Silicon with a higher purity, that is 
containing  by  weight  not  less  than  99.99%  of  silicon,  used  mostly  in  the  electronic 
semiconductor  industry,  falls  under  a  different  CN  code  and  is  not  covered  by  this 
proceeding.  

8 

OJ L 339, 24.12.2003, p. 3. 

5 

 
 
  
 
                                                 
(11)  Silicon is produced in electric submerged arc furnaces with carbothermic reduction of 
quartz (silica) in the presence of various types of carbon reductants. It is marketed in 
the  form  of  lumps,  grains,  granules  or  powder  according  to  internationally  accepted 
technical  specifications  as  regards  its  purity.  Silicon  is  used  primarily  by  two 
industries,  the  chemical  industry  for  the  production  of  methylchlorosilanes  or 
trichlorosilanes and tetrachlorosilicon, and the aluminium industry for the production 
of aluminium alloys, primary and secondary smelters, intended for the production of 
casting alloys for different industries, in particular the automotive industry.  

(12)  As  in  the  previous  expiry  review,  the  investigation  has  shown  that  the  silicon, 
produced  in  the  PRC  and  sold  domestically,  as  well  as  that  exported  to  the 
Community,  the  silicon  produced  and  sold  on  the  domestic  market  of  the  analogue 
country (Norway) and that manufactured and sold in the Community by the applicant 
Community producers have the same basic physical and chemical characteristics, and 
the  same  basic  uses.  They  are  therefore  considered  to  be  like  products  within  the 
meaning of Article 1(4) of the Basic Regulation. 

(13)  Comments  regarding  the  different  grades  of  the  product  under  consideration  and  the 
like product were made, one by the Government of China and the other by the China 
Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters. 
However,  these  submissions  were  not  accompanied  by  any  supporting  evidence. 
Furthermore,  they  were  only  made  at  a  very  late  stage  of  the  proceeding.  For  these 
reasons  the  comments  received  regarding  the  product  under  consideration  were 
rejected. 

Likelihood of a continuation of dumping 

(14) 

In  accordance  with  Article  11(2)  of  the  Basic  Regulation,  it  was  examined  whether 
dumping  was  currently  taking  place  and,  if  so,  whether  or  not  the  expiry  of  the 
measures would be likely to lead to a continuation of dumping. 

Preliminary remarks 

(15)  Of the six Chinese exporting producers named in the complaint, only one co-operated. 
Based  on  Eurostat  data,  its  volume  of  exports  represented  more  than  80%  of  total 
Chinese  exports  to  the  EU.  No  information  was  submitted  by  any  other  Chinese 
exporting  producer  and  therefore  the  findings  relating  to  their  situation  had  to  be 
established  on  the  basis  of  the  facts  available,  in  accordance  with  Article  18  of  the 
Basic Regulation.  

(16)  During the  IP of  the previous expiry  review,  the  volume  of  silicon  imports  from  the 
PRC to the Community was 10 199 tonnes. After the imposition of the anti-dumping 
measures  the  imports  concerned  decreased  to  4 168  tonnes  in  1998,  but  they  had 
increased again to 14 454 tonnes by the end of the IP.  

(17) 

In  the  original  investigation,  Chinese  imports  had  a  market  share  of  9.3%  in  the  IP. 
The  market  share  of  the  imports  concerned  accounted  for  3.8%  of  total  Community 
consumption during the IP of the previous expiry review. In the period following the 
imposition  of  the  anti-dumping  measures,  this  market  share  decreased  to  1.4%  in 
1998, but during the IP it increased again and accounted for 3.9% of total Community 
consumption of the product under consideration.  

6 

 
 
  
 
Dumping during the IP 

(18) 

In  accordance  with  Article  11(9)  of  the  Basic  Regulation  the  Commission  used  the 
same methodology as in the original investigation. 

Analogue country 

(19)  Since  the  PRC  is  an  economy  in  transition,  normal  value  had  to  be  based  on 
information  obtained  in  an  appropriate  market  economy  third-country  in  accordance 
with Article 2(7) of the Basic Regulation.  

(20)  As  in  the  previous  expiry  review,  in  the  notice  of  initiation  of  this  expiry  review, 
Norway  was  proposed  as  analogue  country  for  the  purposes  of  establishing  normal 
value.  

(21)  The Chinese exporting producer opposed this proposal and argued that Brazil or South 
Africa  would  be  more  appropriate  choices,  mainly  because  competition  and  market 
conditions in these countries were more comparable with the situation in the PRC. The 
Community industry objected to Brazil and South Africa on the grounds of the strong 
devaluation of the local currency in Brazil and the lack of competition in South Africa, 
since  there  was  only  one  company  producing  the  product  under  consideration. 
Moreover, none of the known producers in these two countries agreed to co-operate in 
the  proceeding,  although  they  had  been  invited  by  the  Commission  to  do  so. 
Consequently, Brazil and South Africa could not be retained as analogue countries.  

(22)  With respect to Norway, it was found that it was one of the largest producers of silicon 
in the world, with two competing local producers. It was also established that Norway 
was  an  open  market  without  import  duties  for  silicon  and  that  there  were  sizeable 
imports  from  Brazil  and  the  PRC.  It  should  also be noted that  Norway has  a natural 
advantage  in  terms  of  access  to  cheap  energy,  whereas  no  submission  was  made  to 
suggest that the PRC enjoyed a similar advantage. 

(23) 

It is therefore concluded that Norway constituted an appropriate analogue country. The 
Commission contacted the two known producers of silicon in Norway and both agreed 
to co-operate. 

Normal value 

(24)  As far as the determination of the normal value is concerned, it was first established 
that  the  volume  of  the  Norwegian  producers’  domestic  sales  compared  with  the 
exported  volume  from  the  PRC  was  representative.  Normal  value  was  established 
either on the basis of the weighted average price paid in the ordinary course of trade 
by  independent  customers  or  on  the  basis  of  constructed  normal  value  where  these 
domestic sales were not profitable. In this respect, it should be noted that constructed 
normal value had to be used only for a minor proportion of the exports. In cases where 
normal  value  was  constructed,  this  was  done  by  adding  a  reasonable  amount  for 
selling,  general  and  administrative  expenses  (‘SG&A’)  and  a  reasonable  margin  of 
profit  to  the  cost  of  production  in  Norway.  In  all  cases  SG&A  and  profit  were 
established pursuant to the first method set out in Article 2(6) of the Basic Regulation.  

7 

 
 
  
 
Export price 

(25)  As  regards  the  exports  to  the  Community,  most  sales  by  the  co-operating  exporting 
producer in the PRC were sales to a related company in the Community which further 
processed the imported silicon into silicones. These export prices would not normally 
be used for the establishment of the export price because they might be influenced by 
the relationship. However, since it was found that the prices charged were in line with 
market prices as reported in specialised magazines, as well as with the prices charged 
by  another  Chinese  exporting  producer  that  did  not  co-operate  but  exported  to  the 
same  company  in  the  EU  during  the  IP,  it  was  decided  to  use  these  prices  for  the 
calculation of the export price. The export price was thus established on the basis of 
the  data  from  the  co-operating  exporting  producer,  the  non  co-operating  exporting 
producer  and  the  remaining  Eurostat  data.  It  should  be  noted  that  the  volume  of  the 
exports  by  the  co-operating  exporter  constituted  80%  of  the  imports  registered  by 
Eurostat  and  was  higher  than  the  total  volume  of  the  product  under  consideration 
imported from the PRC during the IP of the previous expiry review.  

Comparison 

(26)  For  the  purposes  of  ensuring  a  fair  comparison  between  the  normal  value  and  the 
export price at an ex-works level, due allowance in the form of adjustments was made 
for  differences  that  were  claimed  and  demonstrated  to  affect  prices  and  price 
comparability in accordance with Article 2(10) of the Basic Regulation. Adjustments 
were made in respect of transport, insurance, handling and credit costs.  

Dumping margin 

(27) 

In  accordance  with  Article  2(11)  of  the  Basic  Regulation,  the  dumping  margin  was 
established  on  the  basis  of  a  comparison  of  the  weighted  average  normal  value  with 
the weighted average export prices, as determined above. This comparison showed the 
existence  of  dumping.  The  dumping  margin,  expressed  as  a  percentage  of  the  CIF 
Community  frontier  price  duty  unpaid,  was  significant,  i.e.  12.5%,  although  well 
below the level found in the previous investigations.  

Conclusion 

(28)  The  investigation  has  revealed  that  the  import  volume  of  the  product  under 
consideration from China was higher than in the IP of the previous expiry review and 
that  it  had  clearly  remained  at  dumped  levels.  The  investigation  did  not  reveal  any 
reason why the level of dumping would disappear or decrease if the measures were to 
be repealed. It was therefore concluded that there was a likelihood of continuation of 
dumping.  

Development of imports should measures be repealed 

(29) 

It was also considered appropriate to examine whether there would be an increase in 
Chinese  import  volumes  should  the  existing  measures  be  repealed.  For  this  purpose 
the following factors were assessed: the evolution of export and/or production capacity 
and export behaviour of Chinese exporting producers on third country markets. 

8 

 
 
  
 
Export sales and spare capacity of co-operating exporter 

(30)  The  investigation  showed  that  the  co-operating  company  exported  100%  of  its 
production  of  the  product  under  consideration,  mainly  to  the  EU.  It  also  became 
apparent  that  this  company  had  considerable  excess  production  capacity  which  had 
recently been doubled. It should also be noted that the vast majority of exports to the 
EU  were  made  under  inward  processing  relief  to  a  related  company  which  used  the 
product under consideration for further processing. In other words, these exports never 
entered into free circulation on the Community market but they competed with silicon 
sold by other operators on the Community market. The repeal of the measures would 
thus be an additional incentive for this exporter to ship further quantities of the product 
under consideration to the Community market either for free circulation or for inward 
processing.  

Chinese production and capacity utilisation 

(31)  According to the application for the expiry review, which in this respect was based on 
information  in  the  Metal  Bulletin  of  August  2001,  the  total  Chinese  production 
capacity for the product under consideration is around 1 203 000 tonnes per year. The 
application  for  the  expiry  review  also  referred  to  information  from  a  leading 
independent  research  group,  which  estimated  the  production  capacity  at  around 
600 000  tonnes  in  2002.  The  Chinese  production  volume  was  estimated  at  around 
400 000  tonnes  in  that  year.  On  this  basis,  the  Chinese  capacity  utilisation  rate  is 
between 33% and 66% and on the best case scenario their spare capacity is at least half 
of  the  total  Community  consumption.  It  also  appeared  that  Chinese  production 
capacity could be rapidly increased further if warranted by market conditions. 

(32)  Consequently,  the  large  production  capacity  available  in  the  PRC  demonstrates  that 
producers are able to quickly increase production and  direct  it to any  export  market, 
including, if the measures are repealed, the Community market.  

(33)  Since  no  information  was  provided  by  Chinese  sources  and  given  that  little  public 
information  is  available  about  the  Chinese  silicon  industry,  it  should  be  noted  that 
according  to  the  Basic  Regulation,  and  in  particular  Article  18  thereof,  the  above 
conclusions  rely  mainly  on  the  best  information  available,  namely  the  information 
contained in the complaint. 

Exports to third countries 

(34)  On  the  basis  of  Chinese  export  trade  data  it  was  established  that  total  worldwide 
exports of Chinese silicon increased by 43%, from 271 626 tonnes in 1998 to 387 444 
tonnes in 20029. Export prices to the world market are 30% below the export prices to 
the Community, so that exporters would have an incentive to increase exports to the 
Community rather than to third countries should the measures be repealed. 

(35)  Moreover,  a  fall  of  almost  4%  in  the  Chinese  export  prices  of  the  product  under 
consideration  was  observed,  i.e.  from  USD 829  per  tonne  in  1998  to  USD 799  per 
tonne in 200210.  

9 
10 

In the absence of the monthly breakdown for the IP, annual data has been used. 
In the absence of the monthly breakdown for the IP, annual data has been used.  

9 

 
 
  
 
                                                 
(36)  This  clearly  shows  that,  if  the  measures  were  repealed,  the  Chinese  exporters  would 
have  an  incentive  to  target  the  Community  market  in  the  light  of  the  anti-dumping 
measures just imposed on the US market and the recent increase from 5 to 20% in the 
customs  duty  imposed  by  Russia  on  Chinese  imports  of  the  product  under 
consideration.  

Export prices to the Community 

(37) 

It should also be noted that the generally prevailing price level for the product under 
consideration in the Community makes the Community market a very attractive one. 
This  is  a  further  incentive  for  increasing  exports  to  the  Community  either  by 
increasing  production  or  by  diverting  to  the  Community  those  sales  which  are 
currently exported to third countries. Moreover, export prices to third countries were 
found  to  be  lower  than  those  to  the  Community.  However,  the  attractive,  relatively 
high prices on the Community market are not likely to be maintained in the long term 
since,  if  measures  were  lifted,  the  numerous  Chinese  exporters  would  compete  with 
each other in order to increase their shares on the Community market. Consequently it 
is  very  likely  that  all  operators  present  on  the  Community  market  would  have  to 
reduce their prices accordingly. 

Trade defence measures applied by third countries 

(38)  The  export  behaviour  of  Chinese  producers  on  other  significant  markets  for  the 
product under consideration was also investigated. In this respect the USA initiated a 
review of the anti-dumping duty on silicon from the PRC in 1999. The investigation 
established very high margins of dumping (up to 139%). Therefore, in February 2003, 
anti-dumping  measures  were  renewed  against  imports  of  the  product  under 
consideration  with  the  conclusion  that  the  removal  of  the  measures  would  lead  to 
continuation of injurious dumping11.  

(39)  Furthermore,  in  2002  the  Russian  administration  completed  an  anti-dumping 
investigation with regard to imports of silicon from the PRC with a recommendation 
that an anti-dumping duty of 25% be imposed. However, following consultations with 
the  Chinese  authorities,  the  import  duty  of 5%  has  been  increased  to  20%.  This  is  a 
clear indication that the Chinese exporters would have to find other markets to sell the 
product under consideration.  

(40) 

In  the  light  of  the  above,  it  may  be  concluded  that  there  is  pressure  on  Chinese 
exporting producers to find alternative export markets.  

11 

US Federal Register/Vol. 68, No. 25, 11.2.2003. 

10 

 
 
  
 
                                                 
Conclusion 

(41)  The investigation has shown that the PRC has continued its dumping practices during 
the  IP.  Given  the  fact  that  the  PRC  has  considerable  spare  production  capacity,  and 
that Chinese exports to third countries are made at even lower prices than those to the 
Community,  there  is  a  strong  likelihood  that  Chinese  exporting  producers  would 
substantially increase their dumped exports of the product under consideration to the 
Community if existing measures were repealed. In addition, the exports of the product 
under  consideration  by  Chinese  exporters  are  limited  by  the  new  anti-dumping 
measures in force in both the USA and Russia. In summary, it is highly probable that 
imports  to  the  Community  from  China  will  resume  in  significant  quantities  and  at 
dumped prices, should the measures be repealed.  

DEFINITION OF THE COMMUNITY INDUSTRY 

(42)  The  three  complainant  Community  producers  replied  to  the  questionnaires  and  fully 
co-operated  in  the  investigation.  During  the  IP,  they  represented  100%  of  the 
Community  production.  During  the  IP,  one  of  the  three  Community  producers 
imported the product under consideration from other third countries, principally from 
South  Africa.  However,  it  was  found  that  these  imports  were  essentially  made  to 
supplement  products  that  it  supplied  to  its  Community  customers.  These  imports 
decreased  over  the  period  under  consideration,  particularly  between  1998  and  1999 
when they dropped by half, following the installation of new Community production 
facilities by the producer under consideration, and its strategic commitment to produce 
and  sell  more  silicon  in  the  Community  market.  During  the  IP  the  volume  of  the 
product  under  consideration  imported  by  the  producer  in  question  represented  only 
2.1% of the Community industry's sales of silicon within the Community (3.5% of the 
sales of the producer in question) and 1.9% of the Community industry’s production of 
the product under consideration (3.2% of the production of the producer in question). 
In view of the above, it is concluded that the imports made this producer did not affect 
its status of Community producer.  

(43)  On this basis, the three complainant Community producers constitute the Community 

industry within the meaning of Article 4(1) and Article 5(4) of the Basic Regulation. 

SITUATION OF THE COMMUNITY MARKET 

Community consumption 

(44)  Community consumption was based on the combined volume of supplies made by the 
Community  industry  in  the  Community,  and  imports  from  China  and  other  third 
countries (based on EUROSTAT). 

Table 1 Community consumption (based on sales volumes) 

Tonnes 

Index 

Y/Y trend 

1998
290 684 

100 

1999
325 234 

112

+12%

2000
388 938 

134

+20%

2001
373 950 

129

-4%

IP
371 540 

128 

-1% 

Source: Verified questionnaire replies and EUROSTAT 

11 

 
 
  
 
(45)  EU consumption of silicon peaked in the year 2000 at almost 390 000 tonnes before 
falling back again in both 2001 and the IP to end at 371 540 tonnes. In total there was 
a 28% increase over the whole period under consideration, but a 4% decline between 
2000 and the IP. 

Imports from China 

Volume, market share and prices 

(46)  Based on information from Eurostat, volumes imported from China during the period 
under consideration increased from 4 168 tonnes to 14 454 tonnes. The market share 
of the Chinese imports, which was around 4% in the previous expiry review increased 
over  the  period  under  consideration  from  1.4  %  to  3.9  %  during  the  IP.  Prices  first 
decreased  by  8  percent  from  1998  to  2000,  and  then  increased  again  to  finish  at  a 
higher level than in 1998 at the end of the IP. 

Table 2 Imports from China (based on Eurostat) 

Imports from CHINA 

1998 

1999 

2000 

2001 

IP 

Volume, tonnes 

4 168 

3 560 

5 969 

9 709 

14 454 

Indexed 

100 

85 

143 

232 

347 

Market Share 

1.4% 

1.1% 

1.5% 

2.6% 

3.9% 

Price, € per tonne 

1 044 

953 

Indexed 

100 

91 

964 

92 

1 142 

1 158 

109 

110 

Price evolution of the imports 

(47)  Following  the  imposition  of  an  anti-dumping  duty  in  1997,  prices  of  silicon 
originating  in  China  remained  lower  than  the  Community  industry's  prices.  The 
difference with Community industry’s prices was 2% during the IP. This differential 
was  established  on  the  basis  of  average  sales  prices  (ex-works)  of  the  Community 
industry  with  Chinese  import  prices  derived  from  Eurostat,  adjusted  for  post 
importation cost, customs, and anti-dumping duties. It should  be noted that the sales 
prices  indicated  above  were  calculated  on  the  basis  of  both  the  sales  made  to 
Community users on the Community market and the sales of Chinese silicon destined 
for  inward  processing.  No  anti-dumping  duty  was  applied  to  the  latter  sales. 
Nevertheless, it should be noted that the average price of Chinese silicon released for 
free  circulation  on  the  Community  market was  found  to  be  extremely  low  at  around 
€870 per tonne. 

12 

 
 
  
 
Economic situation of the Community industry 

Production, production capacity and capacity utilisation 

Table 3 Production 

Tonnes 

Index 

Y/Y trend 

1998 

1999 

2000 

2001 

IP 

107 303 

129 285 

143 268 

147 811 

143 818 

100 

120 

134 

+20% 

+14% 

138 

+3% 

134 

-3% 

Source: Verified questionnaire replies of Community industry 

(48)  Over  the  period  under  consideration,  Community  industry  production  increased  by 
34%, but did fall by 3% between 2001 and the IP. During the IP Community industry 
production of silicon represented 38.7% of Community consumption. 

Table 4 Production capacity 

1998 

1999 

2000 

2001 

IP 

125 000 

142 300 

158 000 

165 600 

162 000 

100 

114 

126 

+14% 

+12% 

132 

+5% 

130 

-2% 

Tonnes 

Index 

Y/Y trend 

Source: Verified questionnaire replies of the Community industry 

(49)  Production capacity increased each year, except for the IP when there was a small fall. 
In all, capacity  increased by a  total  of 30% over the period  under consideration as a 
result of investment decisions made in 1998. 

Table 5 Capacity utilisation 

1998 

1999 

2000 

2001 

IP 

%age utilised 

85.8% 

90.9% 

90.7% 

89.3% 

88.8% 

Index 

100 

106 

106 

104 

103 

Source: Verified questionnaire replies of the Community industry 

(50)  The above table shows that during the period under consideration capacity utilisation 
increased by 3 percentage points. The main increase occurred between 1998 and 1999. 
Between 2000 and the IP capacity utilisation decreased by around 2 percentage points.  

13 

 
 
  
 
 
 
 
 
 
Sales volume and sales prices 

Table 6 Sales volume 

Tonnes 

Index 

Y/Y trend 

1998 

1999 

2000 

2001 

IP 

86 718 

114 587 

133 568 

128 219 

136 421 

100 

132 

154 

+32% 

+17% 

148 

-7% 

157 

+6% 

Source: Verified questionnaire replies of the Community industry 

(51)  The Community industry’s sales to unrelated customers in the Community increased 

by 57% between 1998 and the IP. 

(52)  Sales to related companies remained stable and represented less than 6% of all sales of 

silicon during the period under consideration. 

Table 7 Community industry sales prices of silicon 

1998 

1999 

2000 

2001 

IP 

Euro/Tonne 

1 415 

1 184 

1 231 

1 271 

1 185 

Index 

Y/Y trend 

100 

84 

-16% 

87 

+4% 

90 

+3% 

84 

-7% 

Source: Verified questionnaire replies of the Community industry 

(53) 

In  the  period  1998  to  the  IP,  the  average  sales  prices  of  silicon  charged  by  the 
Community industry on the Community market saw a significant fall of 16%. Average 
prices  fell  sharply  in  1999  to  reach  a  low  of  €1 184  per  tonne,  before  recovering  to 
€1 271  per  tonne  by  2001.  Prices  then  fell  by  7%  during  the  IP,  to  finish  at  an 
equivalent  level  to  that  seen  in  1999.  The  sharp  decrease  in  sales  prices  and  the 
increase in the cost of production played a significant role in the deterioration of the 
financial situation of the Community industry.  

Market share 

Table 8 Market share 

1998 

1999 

2000 

2001 

IP 

%age of market 

29.8% 

35.2% 

34.3% 

34.3% 

36.7% 

Index 

100 

118 

115 

115 

123 

Source: Verified questionnaire replies of the Community industry 

14 

 
 
  
 
 
 
 
 
 
(54)  The  market  share held by the Community industry increased from 29.8% in  1998 to 
36.7% in the IP in line with its increased production and sales volumes due to a new 
facility opened in the Community. A large increase took place between 1998 and 1999 
(+5.4%  of  the  market)  with  the  introduction  of  new  EU  manufacturing  facilities. 
A smaller rise (+2.4 percentage points) took place between 2001 and the IP. 

Stocks 

Table 9 Stocks 

Tonnes 

Index 

Y/Y trend 

1998 

1999 

2000 

2001 

IP 

32 768 

33 140 

27 803 

33 186 

23 118 

100 

101 

+1% 

85 

101 

71 

-16% 

+19% 

-30% 

Source: Verified questionnaire replies of the Community industry 

(55)  The above table shows that during the period under consideration stocks were reduced 
by 29%. Apart from the year 2000, stocks were at around 33 thousand tonnes, until the 
IP when they fell to just over 23 thousand tonnes. 

(56)  Stocks,  which  had  represented  around  38%  of  the  Community  industry’s  EU  sales 
volume  in  1998,  fell  to  below  17%  of  EU  sales  during  the  IP.  This  fall  is  mainly 
explained by the fact that stocks usually build up at the end of each calendar year to 
allow  for  reduced  production  volumes  during  the  winter  months  when  energy  costs 
peak. The IP ended in September, i.e. before the full effect of stock build-up is felt. 

Profitability and cash flow 

(57)  During  the  period  under  consideration  profitability  expressed  as  a  percentage  of  net 

sales value developed as follows: 

Table 10 Profitability 

%age profit 

Y/Y trend 

1998 

1999 

2000 

2001 

IP 

12.6% 

1.8% 

5.0% 

1.7% 

-2.1% 

-10.8% 

+3.2% 

-3.3% 

-3.8% 

Source: Verified questionnaire replies of the Community industry 

15 

 
 
  
 
 
 
 
 
(58)  Save for the year 2000, profitability deteriorated continuously over the whole period 
from a profit of 12.6% in 1998 to a loss of 2.1% in the IP. In 2000, the 4% sales price 
increase compared to 1999, plus lower production costs due to increased investments 
allowed for an improved return on sales. In 2001, profits fell due to rising production 
costs,  particularly  in  energy  and  consumable  prices,  not  being  reflected  by  a 
comparable increase in sales prices. In fact, average costs rose by Euro 80 per tonne 
that year, whilst Euro 40 per tonne could be passed on to the customers. During the IP 
prices  fell,  sending  the  Community  industry  into  a  loss-making  situation  despite  a 
decrease in average cost of production. 

Cash flow 

Table 11 Cash flow 

000 Euro 

Index 

Y/Y trend 

1998 

1999 

2000 

2001 

IP 

17 005 

8 962 

15 028 

5 876 

6 070 

100 

53 

88 

35 

36 

-47% 

+68% 

-61% 

+3% 

Source: Verified questionnaire replies of the Community industry 

(59)  Cash flow deteriorated by 64% during the period under consideration, and followed a 

similar trend as that for profitability. 

Investments, return on investments and ability to raise capital  

Table 12 Investments 

1998 

1999 

2000 

2001 

IP 

32 750 

15 539 

15 625 

8 559 

7 072 

100 

47 

-53% 

48 

+1% 

26 

22 

-45% 

-17% 

000 Euro 

Index 

Y/Y trend 

Source: Verified questionnaire replies of the Community industry 

(60)  The  significant  investments  during  the  period  1998  to  2000  were  primarily  aimed  at 
increasing  EU  production  capacity  on  the  back  of  the  favourable  conditions  in  1998 
and  on  a  positive  development  of  the  Community  silicon  market  which  the 
Community industry had expected at that time. This increased capacity was also used 
to  reduce  the  reliance  of  the  Community  industry  on  imported  silicon.  Indeed,  these 
expected improvements can be seen in the trend for Community consumption  which 
increased by 34% in this period (1998 to 2000). 

16 

 
 
  
 
  
 
 
 
(61)  The  investigation  showed  that  the  operating  return  on  investments,  including 
cumulated depreciation, during the period under consideration deteriorated in line with 
the development of profitability.  

Table 13 Return on investments and ability to raise capital 

1998 

1999 

2000 

2001 

IP 

%age return 

39.1% 

14.7% 

20.4% 

9.1% 

-5.7% 

Y/Y trend (%age points 

-24% 

+6% 

-11% 

-15% 

Source: Verified questionnaire replies of the Community industry 

(62)  The companies which make up the Community industry are all part of larger groups. 
As such, their ability to raise capital is determined by the financial situation of these 
groups  as  a  whole.  These  larger  groups  reported  no  problems  with  raising  capital 
during  the  period  under  consideration.  However,  problems  were  reported  with 
receiving funding for new projects in the silicon sector in particular. This seems to be 
supported  by  the  negative  development  of  the  financial  situation  of  the  Community 
industry and by data verified during the investigation. These data are summarised in 
Table 12 and show that investments in the IP were only 22% of their level in 1998. 

Employment, productivity and wages 

Table 14 Employment 

Employees 

Index 

Y/Y trend 

1998 

1999 

2000 

2001 

588 

100 

634 

108 

673 

114 

682 

116 

IP 

685 

116 

+8% 

+6% 

+2% 

+0% 

Source: Verified questionnaire replies of the Community industry 

(63)  The  above  table  shows  that  employment  increased  by  16%  during  the  period  under 
consideration. The main increase occurred in the period from 1998 to 2000 due to the 
increased  production  capabilities,  but  it  did  not  grow  further  significantly  during  the 
IP. 

17 

 
 
  
 
  
 
 
 
(64)  Given  that  production  increased  at  a  greater  rate  than  employment,  productivity 

increased by 15% over the same period, as shown in the table below: 

Table 15 Productivity 

1998 

1999 

2000 

2001 

182 

100 

204 

112 

213 

117 

217 

119 

+12% 

+5% 

+2% 

IP 

210 

115 

-4% 

Tonnes 

Index 

Y/Y trend 

Source: Verified questionnaire replies of the Community industry 

(65)  During  the  period  under  consideration  the  average  wages  of  the  employees  of  the 
Community industry increased by less than 1% per annum, i.e. by less than the rate of 
inflation. 

Table 16 Wages 

1998 

1999 

2000 

2001 

IP 

Euro/Employee 

32 537 

30 610 

33 162 

35 048 

33 740 

Index 

Y/Y trend 

100 

94 

-6% 

102 

+8% 

108 

+6% 

104 

-4% 

Source: Verified questionnaire replies of the Community industry 

Magnitude of dumping margins 

(66)  As concerns the impact on the situation of the Community industry of the magnitude 
of  the  actual  margin  of  dumping  found  during  the  IP,  it  should  be  noted  that  the 
margin  found  for  China  is  significant.  Therefore,  should  measures  be  repealed,  the 
impact of the dumping margin found in the current investigation would be significant 
as the duty is 49% on the CIF price of imports from China. 

18 

 
 
  
 
 
 
 
 
Export activity of the Community industry 

(67)  The  investigation  showed  that  the  export  activity  of  the  Community  industry 

developed as follows: 

Table 17 Community industry exports 

1998 

1999 

2000 

2001 

IP 

6 446 

6 776 

5 803 

6 285 

3 209 

100 

105 

+5% 

90 

-14% 

98 

+8% 

50 

-49% 

Tonnes 

Index 

Y/Y trend 

Source: Verified questionnaire replies of the Community industry 

(68)  Community  industry  exports  of  silicon  fell  by  half  over  the  period  under 
consideration,  mainly  in  the  IP.  Whilst  in  comparative  terms,  this  fall  might  appear 
dramatic, in absolute terms it represents a fall from a small number of sales, namely 
less than 4.8% of all sales in 2001 to even fewer sales of less than 2.4% during the IP. 
Whilst the reduced exports may have had some impact  on  the economic situation of 
the  Community  industry,  any  such  influence  will  be  limited.  Sales  prices  and 
profitability  on  the  Community  market  were  much  more  significant  for  the 
deterioration  of  the  situation  of  the  Community  industry.  A  reduction  in  the  export 
volumes,  which  were  already  marginal  before  the  IP,  will  have  had  little  or  no 
influence on the situation of the Community industry. 

Import volumes and prices from other third countries  

(69) 

Import  volumes  of  silicon  into  the  Community  from  countries  other  than  China, 
together with their average prices, developed as follows: 

Table 18 Imports into the Community from other third countries (volume) 

Tonnes 

1998

1999

2000

2001 

IP

Brazil 

Russia 

Norway 

43 536 

56 709 

67 663 

50 849 

52 089 

10 798 

6 272 

14 172 

16 907 

18 006 

92 200 

115 385 

124 790 

122 677 

114 254 

South Africa 

12 234 

6 225 

5 539 

6 203 

2 674 

Other 3rd countries 

41 029 

22 495 

37 236 

39 385 

33 643 

Total 

199 797 

207 086 

249 400 

236 021 

220 666 

Source: EUROSTAT 

19 

 
 
  
 
 
 
Table 19 Imports into the Community from other third countries (average price) 

Euro/Tonne

1998

1999

2000

2001 

IP

Brazil 

Russia 

Norway 

South Africa 

1 173 

1 048 

1 341 

1 198 

Other 3rd countries  1 273 

Total 

1 266 

Source: EUROSTAT 

1 040 

963 

1 207 

1 161 

1 205 

1 152 

1 158 

1 131 

1 197 

1 241 

1 165 

1 179 

1 231 

1 098 

999 

1 201 

1 149 

1 210 

1 193 

929 

1 199 

1 149 

1 156 

1 146 

(70)  Whilst  the  total  import  volumes  of  silicon  from  third  countries  other  than  China 
increased during the analysis period from about 200 thousand tonnes in 1998 to 221 
thousand tonnes in the IP, the market share of these imports fell from around 69% to 
59%  over  this  period.  The  major  exporters  to  the  Community  have  been  Norway, 
Brazil, South Africa, and Russia. Only imports from Russia had average import prices 
significantly lower than those of the Community industry during the IP. As indicated 
in recital (47) above, the price of Chinese silicon released for free circulation on the 
Community  market  was  significantly  lower  than  the  import  prices  from  other  third 
countries, referred to in Table 19 above.  

Conclusion 

(71)  As explained and shown above, from 1998 to 2000 the Community industry was able 
to benefit from a 34% market growth and significant increase in its sales volume and 
market  share.  Thereafter  however,  sales  volume  and  market  share  stagnated  and  the 
financial  situation  of  the  Community  industry  (prices,  profitability,  and  cash  flow) 
deteriorated. 

(72)  On  closer  examination  it  can  be  seen  that  the  main  positive  developments  for  the 
Community industry took place between 1998 and 2000. From 2000 onwards, no real 
improvements were noticeable 

20 

 
 
  
 
(73)  The improvements seen between 1998 and 2000 can be directly attributed to decisions 
taken  by  the  Community  industry  in  1998  to  invest  in  additional  Community 
production  facilities.  Between  1998  and  2000  EU  production  capacity  increased  by 
26% from (125 000 tonnes to 158 000 tonnes). These decisions were taken in response 
to the anti-dumping measures on imports of silicon from China which, as outlined in 
recital  (1),  had  been  extended  in  1997.  The  Community  industry  was  also  making 
good  profits on its EU sales of silicon in 1998 (see recital (58) above). Therefore, it 
can  be  seen  that  the  Community  industry  was  able  to  benefit  from  the  anti-dumping 
measures  on  imports  silicon  from  China.  From  2000  to  the  IP,  the  situation  of  the 
Community  industry  deteriorated,  in  particular  with  prices  which  fell  €46  per  tonne, 
profitability  which  fell  7.1  percentage  points,  cash  flow  which  fell  by  59%,  and 
investments which declined by 55%. By the IP the Community industry found itself in 
a  loss  making  situation.  For  these  reasons,  it  is  considered  that  during  the  IP,  the 
Community industry found itself in a very fragile and vulnerable position. 

LIKELIHOOD OF RECURRENCE OF INJURY  

(74)  The volume of dumped imports from China considerably increased during the period 
under  consideration  and  it  is  likely  that  without  anti-dumping  measures  in  place 
considerable  increased  volumes  of  the  product  concerned  would  be  shipped  to  the 
Community market at very low prices, undercutting the Community industry prices. In 
view of the level of the anti-dumping duty in force, the price differential between the 
imported  product  and  the  one  produced  by  the  Community  industry  could  be  more 
than 35% if the measure were allowed to expire. 

(75)  As outlined in recital (31), it is estimated that latent capacity in China is sufficient to 
supply  50%  of  Community  demand  for  silicon.  Were  the  current  measures  to  lapse, 
there is a threat that a significant proportion of unused production capability would be 
used to flood the Community market with silicon from the PRC. The information from 
Eurostat  suggests  that,  where  imports  are  made  with  suspension  of  duties,  Chinese 
silicon was entered into the Community at an average price of €870 per tonne. There is 
no reason to believe that future prices would be higher than this if the measure lapsed. 
When examining the impact of such additional low-priced imports on the situation of 
the  Community  industry,  the  following  should  be  borne  in  mind:  This  industry  is 
already in a fragile position due to the presence of dumped imports from both Russia 
and  China.  The  arrival  of  such  a  quantity  of  dumped  imports  from  China  would 
immediately  cause  a  further  severe  price  depression  on  the  EU  market  as  the 
Community industry would first try to maintain its market share rather than reduce its 
production.  This  would  in  turn  further  erode  the  Community  industry's  profitability, 
which  would  experience  even  greater  losses  than  the  2.1%  loss  seen  during  the  IP. 
Even in the short term the Community industry could be forced out of the market in 
view  of  its  untenable  financial  situation  reflected  in,  amongst  others,  the  decrease  in 
profitability (- 14,7 percentage points) during the period under consideration. 

(76) 

It is recalled that at recital (28) it was concluded that Chinese silicon continued to be 
dumped on the EU market, at recital (41) that these imports would be likely to increase 
substantially  were  the  measures  to  lapse,  and  at  recital  (73)  that  the  Community 
industry found itself in a fragile position. Whilst the current measures are sufficient to 
remove any injury to the Community industry from Chinese imports, it is concluded 
that,  a  repeal  of  measures  would  lead  to  a  recurrence  of  injury  resulting  from  the 
dumped imports from the PRC. 

21 

 
 
  
 
COMMUNITY INTEREST 

Preliminary remark 

(77) 

(78) 

In  accordance  with  Article  21  of  the  Basic  Regulation  it  was  examined  whether  a 
prolongation  of  the  existing  anti-dumping  measures  would  be  against  the  interest  of 
the Community as a whole. The determination of Community interest was based on an 
appreciation of all the various interests involved, i.e. those of the Community industry, 
the  importers/traders  as  well  as  the  users  and  suppliers  of  the  product  under 
consideration. 

It  should  be  recalled  that,  in  the  previous  review,  the  adoption  of  measures  was 
considered  not  to  be  against  the  interest  of  the  Community.  Furthermore,  as  the 
present  investigation  is  an  expiry  review,  it  allows  analysis  of  a  situation  in  which 
anti-dumping  measures have  already  been in place and to assess any undue negative 
impact on the parties concerned by the current anti-dumping measures. 

(79)  On this basis it was examined whether, despite the conclusion on the likelihood of a 
recurrence of injurious dumping, compelling reasons existed which would lead to the 
conclusion  that  it  is  not  in  the  Community  interest  to  maintain  measures  in  this 
particular case. 

Interests of the Community industry 

(80)  The Community industry has proven to be a structurally viable industry, able to adapt 
to  the  changing  conditions  on  the  market.  This  was  confirmed  in  particular  by  the 
positive  development  of  its  situation  at  a  time  when  effective  competition  had  been 
restored  after  the  imposition  of  anti-dumping  measures  on  imports  originating  in 
China  and  by  the  industry's  investment  in  additional  production  capacity  in  1998. 
However,  it  can  be  concluded  that,  without  the  continuation  of  anti-dumping 
measures, its situation will in all likelihood deteriorate severely. 

Interests of unrelated importers/traders 

(81)  The Commission services sent out questionnaires to nine unrelated importers/traders, 
and associations. No answers were received to these questionnaires, nor did any other 
importers/traders make themselves known. 

(82) 

In these circumstances, it was concluded that the measures in force did not manifestly 
affect importers or traders and therefore the continuation of measures would not affect 
these parties. 

22 

 
 
  
 
Interests of users 

(83)  The Commission services sent out questionnaires to 15 users and users’ associations. 
Only two incomplete answers were received from users, and one general submission 
from  a  users’  associations.  From  these  replies,  it  emerged  that  silicon  accounted  for 
about  10%  of  the  users’  cost  of  production.  They  also  showed  that  both  user 
companies were profitable even with the current anti-dumping duties on silicon from 
China.  These  submissions  did  not  contain  comments  on  the  possible  impact  of 
removing the measures. Moreover, the submission did not contain any information on 
what  impact  the  existence  of  measures  had  on  these  two  users.  Furthermore,  no 
information  was  received  as  to  whether  any  duty  could  have  been  passed  on  to  the 
users' customers. 

(84)  The reply from the users association stated that it would be in the Community interest 
to  have  as  many  different  sources  of  silicon  as  possible.  They  also  stated  that  they 
assumed  that  the  expiry  of  measures  would  not  lead  to  a  recurrence  of  injurious 
dumping of silicon from China. However, no evidence to support this assumption was 
provided. 

(85) 

In  light  of  (i)  the  low  response  rate  to  the  questionnaires  sent,  (ii)  the  incomplete 
nature of those submissions received, (iii) the lack of verifiable data in support of an 
expiry  of  the  measures  in  force,  it  is  concluded  that  the  continuation  of  the  duties 
would not have a significant effect on users. 

Conclusion 

(86)  Given the above, it is concluded that there are no compelling reasons, on the grounds 
of Community interest, against the maintenance of the anti-dumping measures. 

ANTI-DUMPING MEASURES 

(87) 

It  follows  from  the  above  that,  as  provided  for  by  Article  11(2)  of  the  Basic 
Regulation, the anti-dumping measures applicable to imports of silicon originating in 
China, imposed by Regulation (EC) No 2496/97, should be maintained. 

HAS ADOPTED THIS REGULATION: 

Article 1 

1. 

2. 

3. 

A definitive anti-dumping duty is hereby imposed on imports of silicon falling within 
CN code 2804 69 00 originating in the People’s Republic of China.  

The  rate  of  the  definitive  anti-dumping  duty  applicable  to  the  net,  free-at-
Community-frontier price, before duty, shall be 49%. 

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

23 

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

Article 2 

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

Done at Brussels, […] 

For the Council 
The President 

24