Proposal for a Council Regulation imposing a definitive anti-dumping duty on imports of tungsten carbide and fused tungsten carbide originating in the People’s Republic of China
Date: 2004-12-06
Institutions: European Commission
Subjects: China, anti-dumping duty, import, originating product, tungsten

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 06.12.2004 
COM(2004)776 final 

Proposal for a 

COUNCIL REGULATION 

imposing a definitive anti-dumping duty on imports of tungsten carbide and fused 
tungsten carbide originating in the People’s Republic of China 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

On 8 April 2003, the Commission initiated an expiry review on imports into the Community 
of tungsten carbide and fused tungsten carbide originating in the People’s Republic of China. 

The review revealed the risk of continuation of injurious dumping, and, if measures were to 
be repealed, the injury suffered by the Community industry would be further aggravated. 

It is therefore proposed that the Council adopt the attached proposal for a Regulation 

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Proposal for a 

COUNCIL REGULATION 

imposing a definitive anti-dumping duty on imports of tungsten carbide and fused 
tungsten carbide 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 (’the basic 
Regulation’), and in particular Article 11(2) thereof, 

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

Whereas: 

A. PROCEDURE 

1. Measures in force 

(1) 

(2) 

(3) 

1 

2 
3 
4 
5 
6 

By  Regulation  (EEC)  No  2737/902,  the  Council  imposed  a  definitive  anti-dumping 
duty of 33% on imports of tungsten carbide and fused tungsten carbide originating in 
the  People’s  Republic  of  China  (‘PRC’).  By  Decision  90/480/EEC3the  Commission 
accepted undertakings given by two major exporters concerning the product subject to 
measures. 

Following the withdrawal of the undertakings by the two Chinese exporters concerned, 
the Commission imposed by Regulation (EC) No 2286/944 a provisional anti-dumping 
duty on imports of the product concerned. 

By Regulation (EC) No 610/955, the Council amended Regulation (EEC) No 2737/90 
and  imposed  a  definitive  duty  of  33%  on  imports  of  tungsten  carbide  and  fused 
tungsten  carbide.  Following  a  review  which  had  been  initiated  pursuant  to  Article 
11(2)  of  the  basic  Regulation  (‘the  previous  review  investigation’),  these  measures 
were extended for another five-year period by Regulation (EC) No 771/986. 

OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Council Regulation (EC) No 461/2004 (OJ L 77, 
13.3.2004, p.12) 
OJ L 264, 27.9.1990, p. 7. 
OJ L 264, 27.9.1990, p. 59. 
OJ L 248, 23.9.1994, p. 8. 
OJ L 64, 22.3.1995, p. 1. 
OJ L 111, 9. 4. 1998, p. 1. 

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(4) 

(5) 

(6) 

(7) 

(8) 

2. Present investigation 

Following  the  publication  of  a  notice  of  the  impending  expiry  of  the  anti-dumping 
measures  in  force  on  imports  of  tungsten  carbide  and  fused  tungsten  carbide 
originating in the PRC7, on 9 January 2003 the Commission received a request for an 
expiry review from Eurometaux (‘the applicant’) on behalf of producers representing a 
major proportion, in this case more than 80%, of the total Community production. The 
request was based on the grounds that the expiry of measures would be likely to result 
in a continuation or recurrence of dumping and injury to the Community industry.  

Having  determined,  after  consultation  of  the  Advisory  Committee,  that  sufficient 
evidence  existed  for  the  initiation  of  a  review,  the  Commission  initiated  an 
investigation, pursuant to Article 11(2) of the basic Regulation8. 

3. 

Request for interim review 

On 25 November 2003, the Commission also received a request for an interim review 
from the applicant, on behalf of producers representing a major proportion of the total 
Community production. 

The  applicant  alleged  that  a  new  product  type  had  appeared  on  the  market  which 
shares  the  same  basic  physical  and  chemical  characteristics  and  end  uses  as  the 
product concerned by the measures in force on imports of tungsten carbide and fused 
tungsten  carbide  originating  in  the  PRC.  Although  not  subject  to  the  measures,  the 
applicant claimed that the new product type is infact a part of the product concerned. 
The  applicant  claimed  that,  in  consequence,  the  existing  measures  were  no  longer 
sufficient to counteract the dumping which is causing injury, and that the scope of the 
measures  should  therefore  be  amended  so  that  the  new  product  type  falls  within  the 
product definition.  

Having determined, after consulting the Advisory Committee, that sufficient evidence 
existed  to  justify  the  initiation  of  a  partial  interim  review,  on  31  March  20049  the 
Commission  initiated  a  review  in  accordance  with  Article  11(3)  of  the  basic 
Regulation,  limited  in  scope  to  the  definition  of  the  product  concerned.  This 
investigation is at present still ongoing.  

4. 

Parties concerned by the investigation 

(9) 

The  Commission  officially  advised  the  producers,  importers  and  users  as  well  as 
exporters in the PRC of the initiation of the review. 

(10) 

Interested  parties  were  given  the  opportunity  to  make  their  views  known  in  writing 
and to request a hearing within the time limit set in the Notice of Initiation. 

(11)  The Commission sent questionnaires to all parties known to be concerned and received 
replies  from  the  three  complainant  Community  producers,  one  other  Community 
producer,  one  importer  that  was  also  a  user  of  the  product  concerned,  seven 

7 
8 
9 

OJ C 166, 12. 7. 2002, p. 2. 
OJ C 84, 8.4.2003, p. 2. 
OJ C 81, 31.3.2004, p. 8. 

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exporters/producers, one trader based in Hong Kong, one trader/importer in Germany 
and  one  producer  in  the  analogue  country.  All  parties  made  their  views  known  in 
writing and were granted a hearing when requested. 

(12)  The  Commission  sought  and  verified  all  information  it  deemed  necessary  for  the 
purpose  of  investigation,  and  carried  out  verification  visits  at  the  premises  of  the 
following companies: 

(a) Community producers 

- 

- 

- 

Wolfram Bergbau und Hütten-GmbH Nfg.KG., St Peter, Austria 

H. C. Starck GmbH & Co. KG, Goslar, Germany 

Eurotungstène poudres S.A., Grenoble, France 

(b) Importers / users in the Community 

Harditalia SpA and F.I.L.M.S. SpA, Anzola D'ossola, Italy (related companies)  

( c) Exporters in the PRC 

- 

- 

- 

- 

Nanchang Cemented Carbide Co., Ltd., Nanchang City, Jiangxi Province 

Xiamen Golden Egret Special Alloy Co., Ltd., Xiamen City, Fujian Province 

Zhuzhou Cemented Carbide Works Import & Export Company, Zhuzhou City, Hunan 
Province 

Zigong Cemented Carbide Corp., Ltd., Zigong City, Sichuan Province 

(d) Producer in the analogue country 

- 

Osram Sylvania Inc., Towanda, Pennsylvania, United States of America 

5. 

Investigation period 

(13)  The investigation regarding the continuation and/or recurrence of dumping and injury 
covered  the  period  from  1  January  2002  to  31  December  2002  (the  ‘IP’).  The 
examination of the trends relevant for the assessment of a likelihood of continuation of 
dumping and recurrence of injury covered the period from 1998 up to the end of the IP 
(the ‘period considered’). 

6. 

Product concerned and like product 

6.1. 

Product concerned 

(14) 

It  is  recalled  that,  following  the  alleged  appearance  of  a  new  product  type  on  the 
market which shares the same basic physical and chemical characteristics and end uses 
as the product covered by the measures, a partial interim review limited in scope to the 
definition of the product concerned was initiated on 31 March 2004 (see recitals 6 to 
8).  

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(15)  However,  the  product  concerned  by  the  present  review  is  the  same  as  the  one  under 
consideration  in  Council  Regulation  (EEC)  No  2737/90  and  its  subsequent 
amendments, i.e. tungsten carbide and fused tungsten carbide falling within CN code 
2849 90 30.  

(16)  Tungsten  carbide  and  fused  tungsten  carbide  are  compounds  of  carbon  and  tungsten 
produced by heat treatment (carburisation in the first case, fusion in the second). Both 
products are intermediate products, used as input materials in the manufacture of hard 
metal components such as cemented carbide cutting tools and high-wear components, 
in abrasion-resistant coatings, in bits for oil drilling and mining tools as well as in dies 
and tips for the drawing and forging of metals.  

(17)  Some exporters argued that tungsten carbide and fused tungsten carbide were different 
products.  This  was  based  on  the  assertion  that  their  production  processes  are 
completely different, and that their end uses are also different.  

(18) 

It  is  recalled  that  in  recital  (11)  of  Council  Regulation  (EC)  No  771/98,  the 
investigation  had  shown  that,  although  their  manufacturing  process  is  different, 
tungsten  carbide  and  fused  tungsten  carbide  have  the  same  chemical  composition 
(both consist of approximately 92 to 94 % of tungsten metal and 4 to 6 % of carbon) 
and come from the same stage in the tungsten production chain, i.e. between tungsten 
metal powder and carbide tools and wear-resisting materials. Furthermore, they are put 
to  similar  end-uses  in  the  industry,  i.e.  as  a  surface  hardening  component.  Although 
for  certain  specific  and  limited  applications  which  require  higher  wear  and  abrasive 
resistance  only  fused  tungsten  carbide  is  used,  fused  tungsten  carbide  and  tungsten 
carbide  are  generally  interchangeable.  It  was  therefore  concluded  in  the  previous 
review  investigation,  that  tungsten  carbide  and  fused  tungsten  carbide  are  one  single 
product for the purpose of the investigation.  

(19)  No  compelling  argument  was  submitted  which  would  justify  a  change  in  approach 
leading to a different conclusion to that reached in the previous review investigation. 
Moreover,  there  is  no  significant  price  difference  on  the  market  between  fused 
tungsten  carbide  and  tungsten  carbide,  because  some  additional  processing  for  fused 
tungsten carbide is offset by a less refined selection of grain sizes. Therefore, tungsten 
carbide  and  fused  tungsten  carbide  are  to  be  considered  a  single  product  sharing  the 
same basic characteristics for the purpose of this investigation. 

6.2.  Like product 

(20)  As established in the previous investigations, this review investigation has confirmed 
that  the  products  exported  by  the  PRC  and  those  manufactured  and  sold  by  the 
Community producers and by the producer in the analogue country were, because they 
have  essentially  the  same  physical  characteristics  and  end  uses,  like  products  within 
the meaning of Article 1(4) of the basic Regulation. 

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B. LIKELIHOOD OF CONTINUATION OR RECURRENCE OF DUMPING 

1. 

Preliminary remarks 

(21)  As a general background, it is recalled that imports of the product concerned from the 
PRC  during  the  9-month  IP  of  the  investigation  which  led  to  the  imposition  of 
measures in 1990 were 117 tonnes, representing a market share of 5.3%. The dumping 
margin found at that time was 73.13%. In the IP of the previous review investigation, 
imports  were  234  tonnes,  representing  a  market  share  of  5%,  while  the  dumping 
margin was 30.6%.  

2. 

Market Economy Status and Analogue country 

(22) 

(23) 

It  is  recalled  that  none  of  the  exporters  of  the  product  concerned  obtained  market 
economy status (‘MES’) in the previous investigations. Co-operating exporters argued 
that the possibility of granting MES should be examined pursuant to Article 2(7)(b) of 
the basic Regulation, stating that there are no provisions in the basic Regulation which 
prevent  co-operating  exporters  being  granted  MES  in  a  review  pursuant  to  Article 
11(2) of the basic Regulation.  

It  is  recalled  that  the  current  investigation  is  an  expiry  review,  following  which 
measures  can  only  be  repealed  or  maintained,  but  not  amended.  In  line  with  the 
consistent practice of the Institutions, claims for MES are therefore to be addressed in 
the context of interim reviews because as a result of such interim review the level of 
measures may be changed.  

(24)  The co-operating exporters also questioned the use of the United States of America as 
an  appropriate  market  economy  third  country  (‘analogue  country’),  referring  to  the 
difference  in  GDP  per  capita  between  the  PRC  and  United  States  of  America  as  a 
reason for its inappropriateness. Instead, the co-operating exporters proposed the use 
of  the  Republic  of  Korea  or  the  Czech  Republic,  on  the  grounds  that  the  GDP  per 
capita was more in line with the level of GDP in the PRC. 

(25)  The  issue  of  GDP  per  capita  alone  is  not  considered  as  a  determinative  factor  in 
deciding upon a suitable analogue country. The United States of America was found to 
be an appropriate analogue country in the previous review investigation and no change 
of circumstances was identified which would make its use inappropriate in the current 
investigation.  Moreover,  no  convincing  evidence  was  provided  showing  that  the 
Republic of Korea or the Czech Republic would be more suitable. 

(26)  Osram  Sylvania  Inc.,  a  producer  of  the  product  concerned  in  the  United  States  of 
America,  had  offered  to  co-operate  in  the  investigation  and  it  was  accordingly 
examined  whether  the  domestic  sales  of  Osram  Sylvania  Inc.  were  significant  in 
comparison  to  the  volume  of  the  product  concerned  exported  from  the  PRC.  It  was 
found that the domestic sales by Osram Sylvania Inc to domestic customers, and in the 
ordinary course of trade, were made at volumes which considerably exceeded 5 % of 
the  exports  made  by  the  Chinese  exporters  to  the  Community,  as  required  if  normal 
value is to be based on domestic sale prices. 

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(27)  Hence, pursuant to Article 2(7)(a) of the basic Regulation, it was decided to maintain 
the United States of America as the analogue country in the present proceeding and to 
use the domestic sales by Osram Sylvania Inc. as the basis for establishing the normal 
value. 

3. 

Normal value 

(28) 

(29) 

(30) 

It  was  examined  whether  the  domestic  sales  of  Osram  Sylvania  Inc.  to  independent 
customers  could  be  considered  to  have  been  made  in  the  ordinary  course  of  trade, 
pursuant to Article 2(4) of the basic Regulation. 

It  was  found  that  the  weighted  average  selling  price  of  all  sales  during  the  IP  was 
higher than the weighted average unit cost of production. Therefore, all domestic sales 
were regarded as having been made in the ordinary course of trade. 

In accordance with Article 2(1) of the basic Regulation, normal value was based on the 
prices  of  all  Osram  Sylvania  Inc.’s  domestic  sales  of  tungsten  carbide  and  fused 
tungsten carbide to independent customers in the United States of America during the 
IP. 

4. 

Export price 

(31)  Five  of  the  seven  co-operating  exporters  accounted  for  almost  all  exports  from  the 
PRC  to  independent  customers  in  the  Community  during  the  IP.  The  other  two  co-
operating exporters did not export the product concerned to the Community during the 
IP. The export price could therefore be established in accordance with Article 2(8) of 
the  basic  Regulation  (i.e.  on  the  basis  of  the  prices  actually  charged  by  the  five  co-
operating exporters). 

5. 

Comparison 

(32)  To  achieve  a  fair  comparison,  in  accordance  with  Article  2(10)  of  the  basic 
Regulation, adjustments were made for differences in respect of transport, packaging, 
insurance,  credit  costs,  payment  terms,  handling  and  ancillary  costs,  which  were 
claimed and demonstrated to affect prices and price comparability. 

6. 

Dumping margin 

(33) 

(34) 

In  accordance  with  Article  2(11)  of  the  basic  Regulation,  the  normal  value  was 
compared  to  the  export  price.  Both  were  calculated  on  an  ex-factory  basis,  and  the 
comparison was made at the same level of trade. 

In  order  to  calculate  the  dumping  margin,  the  weighted  average  normal  value  was 
compared to the weighted average export price to the Community at ex-factory level 
and at the same level of trade. This comparison showed the existence of dumping at a 
level of around 31% which is close to the current level of anti-dumping duty. 

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7. 

Likelihood of continuation of dumping 

(35)  As  dumping  had  not  stopped,  it  was  examined  whether  there  is  a  likelihood  of 
continuation  of  exports  of  the  product  concerned  at  dumped  prices.  In  this  context, 
factors  such  as  the  production  capacity  of  producers  of  the  product  concerned  in  the 
PRC and their sales prices to other third countries and on the domestic market in the 
PRC were taken into account. 

7.1. 

Spare production capacity 

(36)  As  mentioned  in  recital  (31),  there  were  five  co-operating  exporters  in  the  PRC  that 

exported the product concerned to the Community during the IP.  

(37)  Two of these exporters produced the product concerned themselves, i.e. the production 

and export sales occurred in the same legal entity.  

(38)  Two  other  exporters  were  each  related  to  production  companies,  i.e.  production  and 

export sales occurred in two separate but related legal entities.  

(39)  The  fifth  exporter  had  no  related  production  company;  its  products  were  instead 
purchased  from  the  producers/exporters  mentioned  under  recitals  (37)  and  (38),  and 
thereafter exported. 

(40)  The four exporters with a production facility had a combined theoretical10 capacity of 
9,850 tonnes during the IP and total production of 8,460 tonnes, which represented a 
utilisation rate of 86 %. The four producing exporters therefore have spare production 
capacity of 1,390 tonnes, which is equivalent to 21.5 % of the calculated consumption 
of the product concerned for the free market (6,461 tonnes)11.  

(41)  The  two  other  co-operating  exporters  which  did  not  export  the  product  concerned  to 
the Community during the IP also submitted information on their production and sales 
during  the  IP.  One  of  these  two  exporters  was  a  trader  without  own  production,  the 
other  had  its  own  production  capacity,  with  a  production  capacity  of  approximately 
200 tonnes and an actual production during the IP of 49 tonnes.  

(42)  The combined capacity of the seven exporters amounted to 10,050 tonnes. The seven 
exporters  had  spare  production  capacity  of  1,541  tonnes  during  the  IP,  representing 
approximately 24% of free market consumption in the Community as defined in recital 
(41) above. This spare capacity is a clear indication that Chinese exporters could opt 
for a substantial increase of their exports of the product concerned to the Community 
market  if  measures  were  repealed.  It  is  recalled  that  the  total  exports  of  the  co-
operating exporters amounted to 239 tonnes, or close to 100% of the total imports of 

10 

11 

Production  capacity  was  established  on  the  basis  of  the  maximum  hourly  output  of  the  machines 
installed, multiplied by the annual maximum working hours, less a deduction for maintenance and other 
similar production interruptions. The method applied is the same as the capacity calculations made for 
the Community Industry. 
Free market consumption is defined as the total import volumes of the product concerned plus the total 
verified sales volumes on the Community market of the three co-operating Community producers which 
produce for the free market. See also recital (60). 

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the  product  concerned  during  the  IP,  and  that  the  co-operating  exporters  therefore 
account for almost all exports to the Community. 

7.2. 

Sales by PRC exporters on the domestic market and on markets of third 

countries 

(43)  Since the imposition of the existing measures, the Chinese exporters have developed 
their  competence  in  downstream  utilisation  of  the  product  concerned,  mainly  for  the 
tool industry (derived from cemented carbides).  

(44)  During the IP, approximately 4,846 tonnes (57%) of total production by the five co-
operating  exporters  were  further  processed,  whilst  1,557  tonnes  (18%)  were  sold  on 
the domestic market, and 2,021 tonnes (24%) were exported through the co-operating 
exporters.  

(45)  The table below shows the average sales price by destination by the five co-operating 
exporters  during  the  IP,  and  a  comparison  with  the  average  sales  price  of  the 
Community Industry: 

Average Sales 
Price/kg (EUR)
(CIF) 

Compared with the Average 
Sales Price of the Community 
Industry in the Community 

Domestic Sales 

Export sales to Japan 

Export sales to United States of 
America 

Export sales to other countries in 
Southeast Asia 

Export sales to European 
Community  

9.79 

11.99 

12.54 

12.33 

12.59 

Export sales to other destinations 

12.30 

- 34 % 

- 20 % 

- 16 % 

- 17 % 

- 16 % 

- 18 % 

(46)  As  seen  above,  Chinese  exporters  would  have  all  interest  in  not  only  using  their 
existing spare capacity to increase sales to the Community market, but also in shifting 
at  least  part  of  their  domestic  sales  and  sales  to  third  countries  to  the  Community 
market.  Indeed,  in  comparison  to  the  prices  that  the  co-operating  exporters  could 
charge on their domestic market, the prices on the Community market would make it a 
very attractive market, if the existing anti-dumping measures were allowed to expire.  

(47)  Also in comparison with the Chinese exports to other third countries such as Japan and 
the  United  States  of  America,  the  prices  on  the  Community  market  would  be  an 
attractive  market,  and  the  risk  for  trade  diversion  to  the  Community  market,  if 
measures were allowed to lapse, would be high. 

(48)  Accordingly, it was consdiered that should the measures be repealed, it was likely that 
significant  quantities  of  the  product  concerned  would  be  sold  at  prices  which  would 

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undercut the average sales prices of the Community industry thereby causing injury to 
that industry. 

8. 

Conclusion 

(49)  As noted in recital (34), the Chinese exporters have continued their dumping practices. 
The dumping margin established during the IP was 31%, which is at approximately the 
same level as the dumping margin established in the previous review investigation.  

(50)  The  combined  capacity  of  the  five  co-operating  producing  exporters  amounted  to 
10,050  tonnes  during  the  IP,  which  is  more  than  the  combined  capacity  of  the 
Community  Industry.  Furthermore,  the  five  co-operating  producing  exporters  had 
spare  production  capacity  in  the  IP  representing  approximately  24%  of  free  market 
consumption in the Community. 

(51)  Regarding  export  prices  of  the  product  concerned  from  the  PRC  during  the  IP,  it  is 
noted that the average sales prices to the Community market are attractively high for 
Chinese exporters. Therefore, it was considered that should the measures be repealed, 
there would be a risk of continuation of injurious dumping. Moreover, given the price 
differences  found  in  the  IP  between  the  co-operating  exporters’  export  prices  of  the 
product concerned to  the  Community  and those to other third countries, there  would 
also be a likelihood that dumped exports would be diverted from other markets (e.g. 
Japan and the United States of America) to the Community market, as the prices in the 
Community were higher than those found on the other main exports markets.  

(52) 

In summary, all indicators suggest that imports to the Community from the PRC will 
continue at dumped prices, and were the measures repealed, in increasing quantities.  

C. 

COMMUNITY INDUSTRY  

(53)  During the IP, the product concerned was manufactured by  

– 

– 

– 

three  complainant  producers  which  fully  co-operated  with  the  Commission 
during  the  investigation,  and  which  manufactured  the  product  concerned  for 
sale to third parties at prices determined by the market (‘the free market’),  

one other producer which manufactures for the free market and supported the 
complaint, but did not co-operate in the investigation, 

three other producers which manufactured the product concerned for their own 
captive  use.  One  of  these  producers  cooperated  and  the  others  have  neither 
supported nor opposed the present investigation.  

(54)  Regarding  the  producers  which  manufacture  the  product  concerned  for  captive  use, 
these  companies’  production  of  the  product  concerned  is  an  intermediate  product 
which is fully consumed in the production of high-value downstream products. None 
of their production was sold on the free market.  

(55)  The distinction between captive use and the free market is relevant for the analysis of 
the  economic  situation  on  the  Community  market  and  situation  of  the  Community 
industry  because  products  destined  for  captive  use  are  not  exposed  to  direct 
competition from imports. By contrast, production destined for free market sales was 

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found to be in direct competition with imports of the product concerned from the PRC. 
In light of the above, it is considered that the situation is different as between the free 
and captive markets. 

(56)  The  production  of  the  three  co-operating  Community  producers  which  produced  for 
the  free  market  and  fully  co-operated  constituted  approximately  89%  of  the  total 
Community  production  of  the  product  concerned  for  the  free  market  during  the  IP. 
These Community producers constitute the Community industry within the meaning of 
Articles 4(1) and 5(4) of the basic Regulation. 

D. 

SITUATION ON THE COMMUNITY MARKET  

1. General 

1.1. Import data 

(57)  Eurostat information related to import volumes for CN code 2849 90 30 and verified 
export data from the co-operating exporters in the PRC were used as the source of the 
import data.  

1.2 Community Industry data 

(58)  Community industry data were obtained from the verified questionnaire responses of 
the  three  co-operating  Community  producers  which  manufactured  the  product 
concerned  for  sale  on  the  free  market,  and  from  the  co-operating  producer  which 
manufactured the product concerned for its own captive use.  

1.3 Community consumption 

(59)  Apparent consumption on the free market of the product concerned in the Community 

was established on the basis of:  

– 

– 

the total import volumes of the product concerned into the Community as reported by 
Eurostat, plus 

the total verified sales volumes to independent customers on the Community market 
of the three co-operating Community producers which produce for the free market. 

(60)  Free  market  consumption  in  the  Community  increased  by  9%  during  the  period 
considered.  However,  this  increase  followed  an  uneven  trend.  Following  a  decrease 
between  1998  and  1999,  consumption  increased  until  2001  when  it  peaked  at  7,949 
tonnes before falling back to 6,461 tonnes in the IP. 

Free market 
consumption (tonnes) 

1998 

1999 

2000 

5.947 

5.393 

6.706 

2001 

7.949 

IP 

6.461 

1998 = 100 

100 

91 

113 

134 

109 

(61)  The  significant  increase  in  free  market  consumption  during  2000  and  2001  is  partly 
explained  by  higher  economic  activity  in  the  Community  as  well  as  on  the  world 
market, and partly by the enforcement of a new export licensing system in the PRC. 

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The  latter  prompted  massive  purchases  (stock-building  by  users)  towards  the  end  of 
2000 and during 2001 for fear of eventual shortages of raw materials and the product 
concerned.  

2.1.  Volume and market share 

2. Imports from the PRC 

1998 

1999 

2000 

2001 

Volume (tonnes) 

1998 = 100  

Market Share 

179 

100 

3% 

132 

73 

2% 

212 

118 

3% 

315 

175 

4% 

IP 

240 

134 

4% 

(62)  The volume of imports from the PRC shows a somewhat fluctuating trend during the 
period considered, ending with an increase in volume in comparison with 1998 which 
is reflected in a higher market share in the IP compared to 1998.  

2.2. 

Prices and Undercutting 

(63)  The  average  price  of  imports  of  the  product  concerned  from  the  PRC  during  the  IP 
was €12.59/kg CIF at EC frontier. For the purpose of analysing price undercutting, the 
weighted  average  prices  of  the  product  concerned  sold  by  the  Community  Industry 
were  compared  to  the  weighted  average  prices  of  imports  from  the  PRC  on  the 
Community  market  during  the  IP,  duly  adjusted  for  customs  duties  and  post-
importation costs.  

(64)  The  prices  of  the  Community  Industry  are  those  reported  in  the  responses  to  the 
questionnaires for their sales in the Community to the first unrelated customer on an 
ex-works  basis.  The  prices  of  the  Chinese  imports  are  those  reported  by  those  co-
operating exporting producers which exported the product concerned during the IP.  

(65)  On  this  basis,  the  price-undercutting  margin,  expressed  as  a  percentage  of  the 
Community industry’s prices, was found to be around 10%. If the present level of anti-
dumping duties is included in the calculation, there is no undercutting. 

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(66) 

3. 
the IP 

Volumes and unit prices of imports and Community Industry EU sales in 

Country 

Volumes (tonnes) 

Average Sales Price (CIF)/kg 
(EUR) 

United States of America 

Republic of South Korea 

Canada 

Israel 

Switzerland 

824 

217 

181 

159 

54 

Community Industry 

4154 

17,0 

16,1 

14,8 

13.6 

15.3 

14.92 

(67) 

In  comparison  to  imports  originating  in  other  third  countries  the  prices  of  imports 
originating in the PRC (i.e. €12.59/kg on average) were considerably lower. In these 
circumstances there is a clear likelihood that, were the measures repealed, imports of 
the  product  concerned  originating  in  the  PRC  would  gain  ground  at  the  expense  of 
other third countries exports to the Community, and this at dumped prices.  

E. SITUATION OF THE COMMUNITY INDUSTRY 

(68) 

In  accordance  with  Article  3(5)  of  the  basic  Regulation,  the  examination  of  the 
situation  of  the  Community  industry  included  an  evaluation  of  all  economic  factors 
and indices having a bearing on the state of the industry from 1998 (base year) to the 
IP.  The  Community  industry  data  below  represent  the  aggregated  information  of  the 
three co-operating Community producers except where otherwise stated.  

1. Production, capacity, capacity utilisation and stocks 

(69)  Production capacity was established on the basis of the maximum hourly output of the 
machines  installed,  multiplied  by  the  annual  maximum  working  hours,  less  a 
deduction  for  maintenance  and  other  similar  production  interruptions.  Production 
capacity increased by 22% during the period considered. 

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1998 

Production (tonnes) 

5.494 

Index 

Production  capacity 
(tonnes) 

100 

6.838 

1999 

5.150 

94 

2000 

5.606 

102 

2001 

IP 

6.528 

5.554 

119 

101 

6.848 

7.799 

8.030 

8.310 

Index 

100 

100 

114 

117 

122 

80.3% 

75.2% 

71.9% 

81.3% 

66.8% 

Capacity  utilisation 
in % 

Index 

Stocks (tonnes) 

Index 

100 

996 

100 

Stocks 
Production 

as% 

of 

18 % 

94 

1.133 

114 

22 % 

90 

1.189 

119 

21 % 

101 

834 

84 

83 

1.688 

169 

13 % 

30 % 

Index 

100 

122 

117 

72 

167 

(70)  Production by the Community Industry increased during the period considered by 1%. 
However, this modest increase followed an uneven trend. Following a decrease of 6% 
in  1999,  production  increased  between  1999  and  2001  by  27%.  Finally,  in  the  IP, 
production returned to a level which was only marginally above the production level 
in 1998.  

(71)  The  reasons  for  the  increase  in  production  and  capacity  in  2000  and  2001  are 
explained  in  recital  (61).  The  dramatic  surge  in  worldwide  demand  of  the  product 
concerned, which was due to higher economic activity on the world market and to the 
enforcement  of  a  new  export  licensing  system  in  the  PRC,  triggered  investments  in 
production capacity, especially during 2000 and 2001, which resulted in an increase in 
capacity of 22% in the period considered. 

(72)  The decrease in the capacity utilisation rate during the IP compared to the preceding 
years is explained by the sudden drop in demand for the product concerned in the IP. 
Whilst capacity had increased based on the assumption of continuous strong demand 
in  the  market,  this  was  not  achieved  as  during  the  IP  customers  reduced  their 
purchases  in  order  to  reduce  their  stock  levels.  In  consequence,  production  in  the  IP 
was more or less at the same level as in 1998. 

(73)  Stock levels remained relatively stable in relation to production and sales up to 2000. 
In  2001,  stocks  fell  due  to  high  demand.  In  the  IP,  due  to  the  unexpected  drop  in 
worldwide demand, the level of stocks held by the Community Industry increased, and 
reached a level of 30% of production, compared to 18% in 1998. The level of stocks 
which is normal for this industry is around 20% of production. 

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2. Sales volume, prices, market share and sales volumes on export markets 

(74)  The  figures  below  represent  the  Community  Industry’s  sales  volumes  and  prices  to 
independent  customers in the Community, market share in the Community and sales 
volumes on export markets. 

Sales  volumes  on 
the 
Community 
market (tonnes) 

Market share on the 
Community market 

Average Sales Price 
(EUR) 

Sales  volumes  on 
the  export  market 
(tonnes) 

Total 
volumes (tonnes) 

Sales 

in 

1998 

3.662 

1999 

3.702 

2000 

4.353 

2001 

IP 

4.164 

4.154 

62% 

69% 

65% 

52% 

64% 

14,27 

13,65 

13,70 

17,10 

14,92 

1.367 

1.118 

1.470 

1.955 

1.696 

5.029 

4.820 

5.823 

6.119 

5.850 

(75)  Sales  volumes  on  the  Community  market  show  a  modest  increase  during  the  period 
considered, with quantities sold  during the IP  13% above the level in 1998. Overall, 
the Community Industry gained some ground at the expense of imports, with market 
share increasing from 62% in 1998 to 64% in the IP. 

(76)  With  the  exception  of  2001,  the  average  sales  price  of  the  Community  Industry  has 
remained relatively stable, with its average sales price during the IP 5% higher than in 
1998. During 2001, the average sales price increased to €17,10/tonne but subsequently 
fell back during the IP to €14.92. 

(77)  Export  sales  volumes  also  increased  during  the  period  considered.  Quantities  sold 
increased by 24% between 1998 and the IP, having peaked in 2001. As a proportion of 
overall  sales,  export  sales  represented  around  25-30%  of  overall  sales  during  the 
period considered.  

(78)  Total  sales  volumes  increased  by  16%  between  1998  and  the  IP,  having  peaked  in 

2001 for the reasons explained in recital (61).  

3. Profitability, Return on Investments (Assets) and Cash Flow 

Profitability  on  EC 
Sales 

1998 

7,9 % 

Return on Assets 

4,5 % 

Cash  Flow 
EUR) 

(Mio 

8.596 

1999 

5,9 % 

2,8 % 

6.932 

16 

EN 

2000 

2001 

IP 

3,3 % 

10,9 % 

1,4 % 

2,5 % 

6,7 % 

1,0 % 

6.559 

13.798 

5.399 

   EN 

 
 
 
(79)  With the exception of 2001, which, as explained above, was an exceptional year, the 
economic indicators (profitability, return on investments and cashflow) show that the 
Community Industry has experienced some deterioration in profit margins, returns and 
cash flow generated from the sales on the Community market.  

(80)  A contributing factor to the loss of profitability during the IP was the temporary loss 
of a major supply contract by one of the Community producers and a fall in sales at 
least partly caused by users depleting the stocks which they had built up in 2001 for 
fear of eventual shortages. There is also evidence that severe fluctuations in the price 
of the main raw material (APT), most of which originates in China, have affected the 
profitability of those producers in the Community which are dependent on purchasing 
this commodity on the open market. 

4. Investments and ability to raise capital 

1998 

Investments 
EUR) 

(Mio 

2.685 

1999 

2.395 

2000 

3.081 

2001 

IP 

3.062 

1.264 

(81)  The levels of investment were relatively stable between 1998 and 2001, with regular 
investments  in  technical  refinements  to  the  production  process  and  other  related 
installations. However, during the IP, the level of investments decreased significantly 
due to the low level of return from sales on the Community market. 

(82)  The Community industry remained able to raise capital, either from external providers 
of finance or parent companies during the period considered, including the IP.  

5. Employment, Productivity and Wages 

Number of 
employees 

Employment  costs 
(EUR 1000’) 

Productivity 
(tonne/employee) 

1998 

464 

1999 

455 

2000 

456 

2001 

474 

IP 

460 

22.223 

21.563 

22.591 

24.188 

23.928 

11,84 

11,32 

12,29 

13,77 

12,07 

(83)  The number of employees decreased slightly over the period considered. The total cost 
of employment remained relatively stable until 2000, but then increased in 2001 and 
remained  at  a  higher  level  in  the  IP.  In  the  period  considered  employment  costs 
increased by 8%, representing normal wage increases. 

(84)  Productivity  increased  by  2%  between  1998  and  the  IP  in  line  with  an  increase  in 
production. Indeed, the Community Industry was able to increase production in 2000 
and  2001  without  a  significant  increase  in  employment,  resulting  in  improved 
productivity in those years. However, it should be noted that the level of productivity 
is affected not only by the level of production itself, but also by the different product 
mix in different years.  

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6. Magnitude of dumping margin and recovery from past dumping 

(85)  The  volume  and  market  share  of  dumped  imports  from  PRC  increased  during  the 
period considered. However, they both remained small relative to the size of the free 
market (being only 4% of consumption on the free market). Nevertheless, due to the 
magnitude  of  the  dumping  margin  (31%)  as  well  as  external  factors  such  as 
fluctuations in the price of the main raw material (APT) and the temporary loss of a 
major supply contract, and despite broadly stable demand for the product concerned, 
the Community Industry experienced some fall in its level of profitability (10%) and 
other financial indicators as described in recital (78).  

7. Captive market 

(86)  The  findings  concerning  certain  economic  indicators  relating  to  the  Community 
industry  were  compared  with  the  data  provided  by  the  co-operating  Community 
producer which produced solely for captive use in order to provide a fuller picture of 
the  situation  of  Community  producers.  The  findings  relating  to  this  producer  are  as 
follows (on an indexed basis given that findings concern only one company): 

1998 

1999 

2000 

2001 

Production  

Capacity  

Capacity utilisation 

Stocks 

Investments 

Employment 

Employment costs 

Productivity 

100 

100 

100 

100 

100 

100 

100 

100 

92 

116 

99 

328 

2 

100 

110 

92 

108 

116 

99 

360 

1 

97 

110 

111 

98 

116 

94 

449 

75 

97 

117 

101 

IP 

73 

116 

57 

331 

1 

87 

109 

84 

(87)  Production  capacity  increased  by  16%  between  1998  and  1999  and  subsequently 
remained stable. Production fell by 27% over the period concerned, having fluctuated 
between  index  92  and  index  108.  Capacity  utilisation  fell  by  6%  between  1998  and 
2001, and then by a further 39% in the IP in line with a fall in production. Stocks have 
more than trebled over the period concerned, although the scale of this increase partly 
reflects  low  stocks  in  1998.  Major  investments  were  undertaken  in  1998  and  2001. 
Employment remained fairly stable until 2001, but fell by 10% in the IP. Employment 
costs  increased  to  index  117  up  to  2001,  but  then  fell  to  index  109  in  the  IP. 
Productivity fluctuated between index 92 and index 111 from 1998 to 2000, but fell to 
index 84 in the IP in line with the fall in production, and notwithstanding the fall in 
employment, in that year. 

(88)  The  product  concerned  was  sold  internally  at  a  transfer  price.  Transfer  prices  were 
found not to be sufficiently closely based on actual market prices to be considered to 
reflect  market  prices.  Nor  would  an  analysis  of  the  breakdown  of  the  various  costs 
associated with the production of the downstream product contribute to establishing a 

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market value for the transferred product concerned. Therefore, analysis of profitability, 
return on investment and cash-flow in relation to captive use is not considered to be a 
reliable indicator. As part of a larger group, the ability of the company concerned to 
raise capital was not seriously affected. 

(89)  As  imports  were  not  found  to  be  in  direct  competition  with  the  product  concerned 
produced for captive use, notwithstanding the magnitude of the dumping margin, those 
producers producing for captive use were not found to be significantly affected by the 
dumped imports or the measures. 

(90)  Overall, developments in the captive market were similar to those in the free market, 
albeit  in  the  case  of  production,  employment  and  productivity  they  showed  a  more 
negative trend. Therefore, inclusion of the captive market would not have impacted on 
the overall conclusions reached in relation to the free market. 

8. Conclusion on the situation of the Community industry 

(91)  Although  measures  have  been  in  place  for  some  time  and  despite  broadly  stable 
demand  for  the  product  concerned,  the  Community  Industry  experienced  some 
deterioration  in  profit  margins  and  other  financial  indicators  during  the  period 
considered.  By  limiting  its  price  increases  during  the  period  considered,  the 
Community industry has been able to increase sales and market share. However, this 
has been at the expense of profitability. During the IP, the industry was only slightly 
above  break-even  point,  although  this  result  must  be  balanced  against  that  in  2001, 
which was an exceptional year. Whilst the unfair effect of dumping is compensated by 
the duty, there is evidence that severe fluctuations in the price of the main raw material 
(APT),  most  of  which  originates  in  the  PRC,  have  affected  the  profitability  of  those 
producers  in  the  Community  which  are  dependent  on  purchasing  this  commodity  on 
the open market.  

F. LIKELIHOOD OF CONTINUATION OF INJURY  

(92) 

In light of the foregoing, and with special regard to recital (66) above, it is likely that 
the Community industry would face more pressure from increased volumes of dumped 
exports  of  the  product  concerned  from  the  PRC  if  the  measures  were  allowed  to 
expire. The increased unfair competition from dumped imports would very likely lead 
to  further  deterioration  in  the  financial  situation  of  the  Community  Industry.  It  is 
therefore  concluded  that  the  repeal  of  the  measures  would  in  all  likelihood  result  in 
continuation of injury to the Community Industry.  

G. 

COMMUNITY INTEREST 

1. General considerations 

(93) 

It  has  been  examined  whether  compelling  reasons  exist  which  could  lead  to  the 
conclusion that it is not in the Community interest to maintain the present measures. 
For  this  purpose  and  in  accordance  with  Article  21(1)  of  the  basic  Regulation,  the 
determination of Community interest was based on an appreciation of all the various 
interests involved, i.e. those of the Community industry, other Community producers, 
the importers/traders as well as the users of the product concerned. For the purpose of 
this analysis, information was requested from all identified interested parties.  

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(94) 

It should  be  recalled that in the previous investigation the adoption of measures was 
considered not to be against the interest of the Community. Furthermore, the fact that 
the  present  investigation  is  a  review  of  anti-dumping  measures  already  in  place 
allowed the assessment of any undue negative impact on the parties concerned by the 
current anti-dumping measures. 

(95) 

It was examined whether, despite the conclusion on the likelihood of continuation of 
injurious  dumping,  compelling  reasons  existed  which  would  lead  to  the  conclusion 
that it is not in the Community interest to maintain the measures in this particular case. 

2. Interest of the Community Industry 

(96) 

It  is  recalled  that  it  has  been  established  that  there  is  a  likelihood  of  continuation  of 
dumping  of  the  product  concerned  originating  in  the  PRC  and  that  there  is  a  risk  of 
continuation  of  injury  to  the  Community  Industry  arising  from  such  imports.  It  is  in 
the  interest  of  the  Community  Industry  to  avoid  injury  and  continuation  of  the 
measures should help to achieve this. Therefore, it is in the interest of the Community 
Industry to maintain measures against dumped imports from the PRC.  

3. Interest of unrelated importers and traders 

(97)  No  replies  were  received  from  any  importers  or  traders.  The  non-co-operation  of 
importers  and  traders  suggests  that  the  continued  imposition  of  measures  on  imports 
originating  in  the  PRC  would  not  have  any  significant  impact  on  the  situation  of 
unrelated  importers  and  traders  of  the  product  concerned  in  the  Community.  This  is 
also in line with the findings made in previous investigations. 

4. Interest of users 

(98)  The  Community  users  of  the  product  concerned  are  mainly  manufacturers  of  hard 
metal  components  which  use  the  product  concerned  as  a  raw  material.  Some  of  the 
users are large international manufacturers which mainly use their own production of 
tungsten carbide as raw material (captive use), whilst some other users (mainly smaller 
manufacturers)  purchase  the  product  concerned  either  from  exporters  or  from  the 
Community Industry. 

(99)  Concerning the interest of the large international manufacturers, the lack of support or 
opposition by these large users suggests that the continued imposition of measures on 
imports  originating  in  the  PRC  would  not  have  any  significant  impact  on  their 
situation in the Community. 

(100)  One small manufacturer of tools replied to the questionnaire. Approximately 90% of 
its supply of tungsten carbide is purchased from the Community Industry. It expressed 
concern that, should the measures be maintained, this would strengthen the position of 
the Community Industry in relation to the users, an industry which this user claimed to 
be  fragmented,  and  make  users  more  dependent  on  the  Community  Industry  as  a 
source of supply. However, albeit the Community Industry dominated 64% of the EU 
market and is an important source of supply, it is not the only source of supply. During 
the  IP,  four  producers  in  the  EU  competed  for  sales  on  the  EU  market.  In  addition, 
there  is  competition  from  imports  from  the  PRC  and  other  countries  which  together 
had 36% of the market in the IP. Therefore, it is considered that there are a number of 

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alternative sources of supply on the EU market and that the concerns of this user are 
unfounded.  

(101)  Whilst  the  continuation  of  measures  may  help  to  maintain  the  position  of  the 
Community Industry in relation to the users, there are adequate alternative sources of 
supply.  If  the  measures  were  terminated  there  is  a  clear  risk  that  the  Community 
Industry  would  go  out  of  the  market  and  users  would  lose  an  important  source  of 
supply.  

5. Conclusion on Community Interest 

(102)  In  view  of  the  above,  the  continued  imposition  of  measures  does  not  appear  to  be 
against  the  Community  interest.  On  the  contrary,  insofar  as  it  will  allow  the 
Community Industry to remain active on the Community market, it helps to maintain 
different sources of supply for users. 

H. CONCLUSION 

(103)  The investigation has shown that exporters in the PRC have continued their dumping 
practices during the IP. It has also been demonstrated that the Community market is an 
attractive  market  for  Chinese  exporters,  given  the  level  of  prices  charged  to  its 
domestic customers and other export markets. Therefore, if measures were repealed, it 
is  likely  that  significant  quantities  of  dumped  imports  would  enter  the  Community 
market.  

(104)  The  financial  situation  of  the  Community  Industry,  reflected  in  the  reduced 
profitability,  return  on  investment and cashflow during the  period  considered, would 
most likely be aggravated if measures were repealed as increased volumes of dumped 
imports from the PRC would start to flow onto the Community market. 

(105)  Regarding  Community  interest,  it  is  concluded  that  there  are  no  compelling  reasons 
not  to  impose  anti-dumping  measures  against  imports  of  the  product  concerned 
originating in the PRC. 

(106)  It  is  therefore  considered  appropriate  to  maintain  the  current  anti-dumping  measures 
against imports of tungsten carbide and fused tungsten carbide originating in the PRC. 

I. ANTI-DUMPING MEASURES 

(107)  All  parties  were  informed  of  the  essential  facts  and  considerations  on  the  basis  of 
which it was recommended that the existing measures be maintained. They were also 
granted a period to make representations subsequent to disclosure. No comments were 
received which were such as to change the above conclusions. 

(108)  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 the product concerned 
originating in the PRC should be maintained, 

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HAS ADOPTED THIS REGULATION: 

Article 1 

1. 

2. 

3. 

A definitive anti-dumping duty is hereby imposed on imports of tungsten carbide and 
fused  tungsten  carbide  falling  within  CN  code  2849  90  30  and  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 33 %. 

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

Article 2 

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

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

Done at Brussels, 

For the Council 
The President 

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