Council Regulation (EC) No 2268/2004 of 22 December 2004 imposing a definitive anti-dumping duty on imports of tungsten carbide and fused tungsten carbide originating in the People's Republic of China
Date: 2004-12-22
Institutions: Council of the European Union
Subjects: China, anti-dumping legislation, originating product, tungsten

L 395/56

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Official Journal of the European Union

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COUNCIL REGULATION (EC) No 2268/2004

of 22 December 2004

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,

(‘the previous review investigation’), these measures were
extended for another five-year period by Regulation (EC)
No 771/98 (6).

(4)

(5)

(6)

(7)

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 384/96 of 22
December 1995 on protection against dumped imports from
(‘the
countries not members of the European Community (1)
basic Regulation’), and in particular Article 11(2) thereof,

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

Whereas:

(1)

(2)

(3)

A. PROCEDURE

1. Measures in force

By Regulation (EEC) No 2737/90 (2) 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/EEC (3)
the 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 2286/94 (4) a provisional anti-
dumping duty on imports of the product concerned.

By Regulation (EC) No 610/95 (5) 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

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

(EC) No 461/2004 (OJ L 77, 13.3.2004, p. 12).

(2) OJ L 264, 27.9.1990, p. 7. Regulation as amended by Regulation

(EC) No 610/95 (OJ L 64, 22.3.1995, p. 1).

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 origi-
nating in the PRC (7) 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.

that

Having determined, after consultation of the Advisory
Committee,
the
initiation of a review, the Commission initiated an inves-
tigation, pursuant to Article 11(2) of the basic Regu-
lation (8).

sufficient evidence existed for

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 in fact a part of the product concerned. The
the existing
applicant claimed that,
measures were no longer sufficient
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.

in consequence,

to counteract

(3) OJ L 264, 27.9.1990, p. 59.
(4) OJ L 248, 23.9.1994, p. 8. Regulation as amended by Regulation

(6) OJ L 111, 9.4.1998, p. 1.
(7) Commission Regulation (EC) No 1094/2002 (OJ C 166, 12.7.2002,

(EC) No 82/95 (OJ L 14, 20.1.1995, p. 1).

(5) OJ L 64, 22.3.1995, p. 1.

p. 2).

(8) OJ C 84, 8.4.2003, p. 2.

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L 395/57

(8)

(9)

(10)

(11)

after

determined,

the Advisory
consulting
Having
Committee,
that sufficient evidence existed to justify
the initiation of a partial interim review, on 31 March
2004 (1) the Commission initiated a review in accordance
limited in
with Article 11(3) of the basic Regulation,
scope to the definition of the product concerned. This
investigation is at present still ongoing.

4. Parties concerned by the investigation

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

advised

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.

producers,

Community

The Commission sent questionnaires to all parties known
to be concerned and received replies from the three
other
complainant
Community producer, one importer that was also a
user of
the product concerned, seven exporters/pro-
ducers, one trader based in Hong Kong, one trader/im-
porter in Germany and one producer in the analogue
country. All parties made their views known in writing
and were granted a hearing when requested.

one

(13)

— 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

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
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’).

examination of

relevant

trends

the

for

(12)

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

the premises of

(a) Community producers

— Wolfram Bergbau und Hütten-GmbH Nfg. KG,

St. Peter, Austria

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

— Eurotungstène poudres SA, Grenoble, France

(b) Importers / users in the Community

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).

(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
i.e. tungsten carbide and fused tungsten
amendments,
carbide falling within CN code 2849 90 30.

— Harditalia

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

SpA, Anzola

(16)

(c) Exporters in the PRC

— Nanchang Cemented Carbide Co., Ltd, Nanchang

City, Jiangxi Province

(1) OJ C 81, 31.3.2004, p. 8.

and fused tungsten carbide

are
Tungsten carbide
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
in the manufacture of hard metal
input materials
components such as cemented carbide cutting tools
in abrasion — resistant
and high-wear components,
coatings,
in bits for oil drilling and mining tools as
well as in dies and tips for the drawing and forging of
metals.

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(17)

(18)

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.

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 %.

tools

It is recalled that in recital (11) of Council Regulation
the investigation had shown that,
(EC) No 771/98,
although their manufacturing process
is different,
tungsten carbide and fused tungsten carbide have the
same chemical composition (both consist of approxi-
mately 92 to 94 % of tungsten metal and 4 to 6 % of
carbon) and come from the same stage in the tungsten
i.e. between tungsten metal powder
production chain,
and wear-resisting materials.
and
carbide
to similar end-uses in the
Furthermore,
component.
i.e.
industry,
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 investi-
gation, that tungsten carbide and fused tungsten carbide
are one single product for the purpose of the investi-
gation.

they are put
a

surface hardening

as

2. Market Economy Status and Analogue country

(22)

the possibility of

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

granting MES

(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 inves-
tigation. 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
like
the same physical characteristics and end uses,
products within the meaning of Article 1(4) of
the
basic Regulation.

(23)

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 cooperating 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 inappropri-
ateness. Instead, the cooperating 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.

B. LIKELIHOOD OF CONTINUATION OR RECURRENCE
OF DUMPING

(25)

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
the investigation which led to the imposition of
of
representing a
measures in 1990 were 117 tonnes,

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 iden-
tified 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.

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(26) Osram Sylvania

Inc.,

a producer of

the product
concerned in the United States of America, had offered
to cooperate 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
volumes which considerably
the exports made by the Chinese
exceeded 5 % of
exporters to the Community, as required if normal
value is to be based on domestic sale prices.

at

(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

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

to independent

customers

Inc.

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.

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)

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

calculated on an ex-factory basis,

(34)

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.

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.

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.

7.1. Spare production capacity

(36) As mentioned in recital (31), there were five cooperating
exported the product

exporters
in the PRC that
concerned to the Community during the IP.

4. Export price

all

exports

Five of the seven cooperating exporters accounted for
from the PRC to independent
almost
customers in the Community during the IP. The other
two cooperating 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 cooperating
exporters).

(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.

5. Comparison

(39)

(32)

To achieve a fair comparison, in accordance with Article
2(10) of the basic Regulation, adjustments were made for

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

recitals

(37)

(28)

(29)

(30)

(31)

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(40)

(41)

(42)

(43)

The four exporters with a production facility had a
combined theoretical (1)
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) (2).

the product

The two other cooperating exporters which did not
export
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.

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, repre-
senting 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
cooperating exporters amounted to 239 tonnes, or close
to 100 % of the total imports of the product concerned
the cooperating exporters
during the IP, and that
therefore
to the
exports
Community.

account

almost

for

all

7.2. Sales by PRC exporters on the domestic market and on markets

of third countries

the existing measures,

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

the product

(44) During the IP, approximately 4 846 tonnes (57 %) of
total production by the five cooperating exporters were
further processed, whilst 1 557 tonnes (18 %) were sold

(1) Production capacity was established on the basis of the maximum
hourly output of the machines installed, multiplied by the annual
less a deduction for maintenance and
maximum working hours,
other similar production interruptions. The method applied is the
same as the capacity calculations made for the Community Industry.
(2) 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 cooperating Community producers
which produce for the free market. See also recital (60).

on the domestic market, and 2 021 tonnes (24 %) were
exported through the cooperating exporters.

(45)

The table below shows the average sales price by desti-
nation by the five cooperating 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

Export sales to other
destinations

9,79

11,99

12,54

12,33

12,59

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
their domestic sales and sales to third
least part of
countries
in
to the Community market.
comparison to the prices that the cooperating exporters
could charge on their domestic market, the prices on the
Community market would make it a very attractive
market,
the existing anti-dumping measures were
if
allowed to expire.

Indeed,

(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 considered that should the measures
be repealed, it was likely that significant quantities of the
product concerned would be sold at prices which would
undercut
the Community
the average sales prices of
industry thereby causing injury to that industry.

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8. Conclusion

(49) As noted in recital

their

(34),

the Chinese exporters have
continued
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.

dumping practices. The

(50)

(51)

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

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'
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.

export prices of

(52)

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

C. COMMUNITY INDUSTRY

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

by

— three complainant producers which fully cooperated
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
cooperate 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 investi-
gation.

(54)

(55)

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.

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
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 cooperating Community
producers which produced for the free market and fully
cooperated 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
cooperating 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 cooperating
Community producers which manufactured the product
concerned for sale on the free market, and from the
cooperating 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

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— the total verified sales volumes

to independent
customers on the Community market of the three
cooperating Community producers which produce
for the free market.

weighted average prices of imports from the PRC on the
Community market during the IP, duly adjusted for
customs duties and post-importation costs.

(60)

Free market consumption in the Community increased
this
by 9 % during the period considered. However,
a
Following
increase
decrease
consumption
increased until 2001 when it peaked at 7 949 tonnes
before falling back to 6 461 tonnes in the IP.

an uneven trend.
followed
between 1998 and 1999,

(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 cooperating exporting producers which
exported the product concerned during the IP.

1998

1999

2000

2001

IP

Free market
consumption (tonnes)

5 947 5 393 6 706 7 949 6 461

1998 = 100

100

91

113

134

109

(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.

(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. 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. Imports from the PRC

2.1. Volume and market share

1998

1999

2000

2001

IP

Volume (tonnes)

179

132

212

315

240

1998 = 100

100

73

118

175

134

Market Share

3 %

2 %

3 %

4 %

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 EUR 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

3. Volumes and unit prices of imports and Community

Industry EU sales in the IP

Country

United States of America

Republic of South Korea

Canada

Israel

Switzerland

Volumes
(tonnes)

Average Sales
Price (CIF)/kg
(EUR)

824

217

181

159

54

17,0

16,1

14,8

13,6

15,3

Community Industry

4 154

14,92

In comparison to imports originating in other third
countries the prices of imports originating in the PRC
(i.e. EUR 12,59/kg on average) were considerably lower.
In these circumstances there is a clear likelihood that,
were the measures repealed,
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.

imports of

E. SITUATION OF THE COMMUNITY INDUSTRY

the situation of

In accordance with Article 3(5) of the basic Regulation,
the examination 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 cooperating Community producers except
where otherwise stated.

(66)

(67)

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1. Production, capacity, capacity utilisation and stocks

Production capacity was established on the basis of the
maximum hourly output of
installed,
multiplied by the annual maximum working hours, less
similar
a
production interruptions. Production capacity increased
by 22 % during the period considered.

for maintenance

the machines

deduction

other

and

Production
(tonnes)

Index

1998

1999

2000

2001

IP

5 494 5 150 5 606 6 528 5 554

100

94

102

119

101

Production capacity
(tonnes)

6 838 6 848 7 799 8 030 8 310

Index

100

100

114

117

122

Capacity utilisation
in (%)

80,3

75,2

71,9

81,3

66,8

(73)

Index

Stocks
(tonnes)

Index

Stocks as % of
Production

Index

100

94

90

101

83

996 1 133 1 189

834 1 688

100

114

119

84

169

18

22

21

100

122

117

13

72

30

167

followed

Production by the Community Industry increased during
this modest
the period considered by 1 %. However,
increase
a
Following
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.

an uneven trend.

continuous

this was not

strong demand in the
assumption of
market,
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.

achieved as during the

(72)

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.

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

export markets

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 Sales in volumes
(tonnes)

1998

1999

2000

2001

IP

3 662 3 702 4 353 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

(68)

(69)

(70)

The reasons for the increase in production and capacity
(61). The
in 2000 and 2001 are explained in recital
the product
dramatic surge in worldwide demand of
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.

(74)

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.

(71)

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

(75) 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 EUR 17,10/tonne but subsequently fell back during the
IP to EUR 14,92.

L 395/64

EN

Official Journal of the European Union

31.12.2004

(76)

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
represented
sales during the period
around 25-30 % of overall
considered.

sales, export

sales

refinements to the production process and other related
installations. However, during the
level of
investments decreased significantly due to the low level
of return from sales on the Community market.

the

IP,

(77)

Total sales volumes increased by 16 % between 1998 and
the IP, having peaked in 2001 for the reasons explained
in recital (61).

(81)

The Community industry remained able to raise capital,
finance or parent
either
companies during the period considered, including the IP.

from external providers of

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

Flow

1998

1999

2000

2001

IP

Profitability on EC
Sales

7,9 % 5,9 % 3,3 % 10,9 % 1,4 %

Return on Assets

4,5 % 2,8 % 2,5 %

6,7 % 1,0 %

Cash Flow
(Mio. EUR)

8 596 6 932 6 559 13 798 5 399

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

(79) 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
those
producers in the Community which are dependent on
purchasing this commodity on the open market.

affected the profitability of

(82)

(83)

5. Employment, Productivity and Wages

1998

1999

2000

2001

IP

Number of employees

464

455

456

474

460

Employment costs
(EUR 1 000)

Productivity
(tonne/employee)

22 223 21 563 22 591 24 188 23 928

11,84 11,32 12,29 13,77 12,07

The number of employees decreased slightly over the
employment
period considered. The
then
remained
stable
in
increased in 2001 and remained at a higher level
the IP.
In the period considered employment costs
increased by 8 %, representing normal wage increases.

cost of
until 2000,

relatively

total

but

Indeed,

Productivity increased by 2 % between 1998 and the IP
in line with an increase in production.
the
Community Industry was able to increase production in
in
2000 and 2001 without a significant
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.

increase

4. Investments and ability to raise capital

(84)

1998

1999

2000

2001

IP

Investments
(Mio EUR)

2 685 2 395 3 081 3 062 1 264

(80)

The levels of investment were relatively stable between
1998 and 2001, with regular investments in technical

6. Magnitude of dumping margin and recovery from past

dumping

The volume and market share of dumped imports from
PRC increased during the period considered. However,
the
they both remained small relative to the size of
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).

31.12.2004

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Official Journal of the European Union

L 395/65

7. Captive market

(85)

The findings concerning certain economic indicators
relating to the Community industry were compared
with the data provided by the cooperating 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

IP

Produkction

100

92

108

98

73

Capacity

100

116

116

116

116

Capacity utilisation

100

99

99

94

57

Stocks

Investments

Employment

100

328

360

449

331

100

2

100

100

1

97

75

97

1

87

Employment costs

100

110

110

117

109

Productivity

100

92

111

101

84

(86)

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.

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.

(88) 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.

(89) 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
impacted on the overall
market would not have
conclusions reached in relation to the free market.

8. Conclusion on the situation of the Community industry

(90) 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
share.
has been able to increase sales and market
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

(91)

(87)

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
the
reflect market prices. Nor would an analysis of
the various costs associated with the
breakdown of
production of
the downstream product contribute to
establishing a market value for the transferred product
concerned. Therefore, analysis of profitability, return on
investment and cash-flow in relation to captive use is not

it

is

likely that

(66) above,

In light of
the foregoing, and with special regard to
the Community
recital
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
is
therefore concluded that
the measures
would in all likelihood result in continuation of injury
to the Community Industry.

the Community Industry.

the repeal of

It

L 395/66

EN

Official Journal of the European Union

31.12.2004

G. COMMUNITY INTEREST

4. Interest of users

(92)

(93)

(94)

(95)

1. General considerations

(97)

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,
the importers/traders as
other Community producers,
the product concerned. For the
well as the users of
purpose of
requested
from all identified interested parties.

information was

this analysis,

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
(captive use), whilst
tungsten carbide as raw material
some
smaller manufacturers)
users
purchase the product concerned either from exporters
or from the Community Industry.

(mainly

other

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.

of

It was examined whether, despite the conclusion on the
likelihood
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.

continuation of

injurious

2. Interest of the Community Industry

continuation of

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
injury to the Community
Industry arising from such imports. It is in the interest
of the Community Industry to avoid injury and conti-
nuation of the measures should help to achieve this.
Therefore,
the Community
in the interest of
Industry to maintain measures against dumped imports
from the PRC.

is

it

(98)

Concerning the interest of the large international manu-
facturers, 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.

(99) One small manufacturer of tools replied to the ques-
tionnaire. Approximately 90 % of its supply of tungsten
carbide is purchased from the Community Industry. It
expressed concern that, should the measures be main-
the
this would strengthen the position of
tained,
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
in the EU
supply. During the IP,
four producers
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 alternative sources of supply on the EU
market and that the concerns of this user are unfounded.

(100) Whilst

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

risk that

3. Interest of unrelated importers and traders

(96) No replies were received from any importers or traders.
The non-cooperation 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.

(101)

5. Conclusion on Community Interest

not

does

the above,

the continued imposition of
In view of
measures
the
appear
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.

against

be

to

31.12.2004

EN

Official Journal of the European Union

L 395/67

H. CONCLUSION

(102) 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
if measures were
repealed,
significant quantities of
dumped imports would enter the Community market.

export markets. Therefore,

likely that

is

it

situation of
reduced
the

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

profitability,

return

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

(105)

It is therefore considered appropriate to maintain the
current
imports of
tungsten carbide and fused tungsten carbide originating
in the PRC.

anti-dumping measures

against

mended 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.

(107)

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 origi-
nating in the PRC should be maintained,

HAS ADOPTED THIS REGULATION:

Article 1

1.
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.

2.
The rate of the definitive anti-dumping duty applicable to
the net free-at-Community-frontier price, before duty, shall be
33 %.

Unless otherwise

3.
concerning custom duties shall apply.

specified,

the provisions

in force

I. ANTI-DUMPING MEASURES

Article 2

(106) All parties were informed of

facts and
considerations on the basis of which it was recom-

the essential

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, 22 December 2004.

For the Council
The President

C. VEERMAN