Proposal for a Council Regulation imposing a definitive anti-dumping duty on imports of furfuraldehyde originating in the People's Republic of China following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No 384/96
Date: 2005-04-05
Institutions: European Commission
Subjects: China, anti-dumping duty, chemical industry, import, oil industry

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 5.4.2005 
COM(2005) 126 final 

Proposal for a 

COUNCIL REGULATION 

imposing a definitive anti-dumping duty on imports of furfuraldehyde originating in the 
People's Republic of China following an expiry review pursuant to Article 11(2) of 
Council Regulation (EC) No 384/96 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

On  18  December  2003,  the  Commission  initiated  an  expiry  review  of  the  anti-dumping 
measures in force in respect of imports of furfuraldehyde originating in the People's Republic 
of China, after receipt of a request made by a Community producer, indicating that the expiry 
of the measures would be likely to lead to a continuation or recurrence of injurious dumping. 

The  attached  proposal  for  a  Council  Regulation  is  based  on  a  finding  of  likelihood  of 
continuation of injurious dumping should the measures be repealed in respect of the country 
concerned, which confirmed that the prolongation of the anti-dumping measures is not against 
the Community interest. 

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

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Proposal for a 

COUNCIL REGULATION 

imposing a definitive anti-dumping duty on imports of furfuraldehyde originating in the 
People's Republic of China following an expiry review pursuant to Article 11(2) of 
Council Regulation (EC) No 384/96 

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: 

1. 

Measures in force 

A. PROCEDURE 

(1) 

In January 1995, the Council, by Regulation (EC) No 95/952, imposed definitive anti-
dumping  measures  in  the  form  of  a  specific  duty  on  imports  of  furfuraldehyde 
originating in the People's Republic of China (‘PRC’). The specific duty rate amounts 
to  EUR  352  per  tonne.  Following  an  interim  review  initiated  in  May  1997  upon 
request  of  a  Chinese  exporter,  the  measures  were  maintained  by  Council  Regulation 
(EC) No 2722/19993 for a further period of four years.  

2. 

Initiation of expiry review investigation 

(2) 

Following the publication, in March 2003, of a notice of impending expiry of the anti-
dumping  measures  applicable  to  imports  of  furfuraldehyde  originating  in  the  PRC4, 
the  Commission  received  on  19  September  2003  a  request  for  a  review  pursuant  to 
Article 11(2) of the basic Regulation.  

(3) 

The request was lodged by Furfural Español SA ('the applicant') representing a major 
proportion,  in  this  case  more  than  25%,  of  the  total  Community  production  of 

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4 

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). 
OJ L15, 21.1.1995, p.11. 
OJ L328, 22.12.1999, p. 1. 
OJ C72, 26.3.2003, p. 2. 

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furfuraldehyde.  The  other  Community  producer,  Lenzing  AG,  supported  the  request. 
The  two  producers  represent  100%  of  the  Community  production  of  furfuraldehyde. 
The request was based on the grounds that the expiry of the measures would be likely 
to  result  in  a  continuation  or  recurrence  of  dumping  and  injury  to  the  Community 
industry. 

(4) 

Having  determined,  after  consultation  of  the  Advisory  Committee,  that  sufficient 
evidence existed for the initiation of an expiry review pursuant to Article 11(2) of the 
basic Regulation, the Commission published a notice of initiation of this review in the 
Official Journal of the European Union5.  

3. 

Parties concerned by the investigation 

(5) 

(6) 

(7) 

(8) 

The Commission officially advised the authorities of the PRC, the exporting producers 
in the PRC, the producers in the suggested analogue country, Argentina, the producers, 
importers/traders and industrial users in the Community known to be concerned, of the 
initiation  of  the  review.  Interested  parties  were  given  the  opportunity  to  make  their 
views  known  in  writing  and  to  request  a  hearing  within  the  time  limit  set  out  in  the 
notice of initiation.  

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

Replies  to  the  questionnaire  were  received  from  the  two  Community  producers,  one 
importer/trader,  one  industrial  user  and  one  producer  in  the  analogue  country, 
Argentina. 

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

(a)  Producer in the analogue country 

- Indunor SA, Buenos Aires, Argentina 

(b)  Community producer 

- Furfural Espanol SA, Alcantarilla, Spain 

(c)  Unrelated importer 

- International Furan Chemicals B.V., Rotterdam, Netherlands 

(9) 

The  investigation  regarding  the  continuation  or  recurrence  of  dumping  and  injury 
covered  the  period  from  1  October  2002  to  30  September  2003  (‘IP’).  The 
examination of the trends relevant for the assessment of a likelihood of a continuation 

5 

OJ C308, 18.12.2003, p. 2. 

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or recurrence of injury covered the period from 1 January 2000 up to the end of the IP 
(‘period considered’). 

B. PRODUCT CONCERNED AND LIKE PRODUCT 

1. 

The product concerned 

(10)  The product concerned is the same as in the original investigation, i.e. furfuraldehyde 
originating  in  the  PRC,  falling  within  CN  code  2932  12  00.  Furfuraldehyde  is  also 
known as 2-furaldehyde or furfural.  

(11)  Furfuraldehyde  is a  light yellow liquid with a characteristic pungent odour, which is 
obtained  by  processing  different  types  of  agricultural  waste.  Furfuraldehyde  has  two 
main  applications:  as  a  selective  solvent  in  petroleum  refining  for  the  production  of 
lubricating oils and as raw material for processing into furfuryl alcohol, which is used 
to make synthetic resin for foundry moulds. 

2. 

Like product 

(12)  As in the previous investigations, this investigation has shown that the furfuraldehyde 
produced  in  the  PRC  and  exported  to  the  Community,  the  furfuraldehyde  produced 
and  sold  on  the  domestic  market  of  the  analogue  country  Argentina  and  the 
furfuraldehyde manufactured and sold in the Community by the Community producers 
have  the  same  basic  physical  and  chemical  characteristics,  and  the  same  basic  uses. 
They were therefore considered to be like products within the meaning of Article 1(4) 
of the basic Regulation. 

C. LIKELIHOOD OF CONTINUATION OF DUMPING 

(13) 

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

1. 

Preliminary remarks 

(14)  Of the 24 Chinese exporting producers named in the complaint, none co-operated with 
the  investigation  and  no  information  was  submitted  by  any  of  these  companies.  In 
view  of  this  non-cooperation  by  the  Chinese  exporting  producers,  the  findings  on 
dumping set out below had to be based on facts available, in particular Eurostat data 
and  information  submitted  in  the  review  request.  In  this  respect,  it  is  noted  that 
Eurostat shows only imports for inward processing during the IP. 

2. 

Analogue country 

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

(16)  As in the original investigation, in the notice of initiation Argentina was proposed as 
analogue  country  for  the  purposes  of  establishing  normal  value.  Following  the 
publication of the notice of initiation, no comments concerning the proposed analogue 
country were received. 

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(17)  One  producer  of  furfuraldehyde  in  Argentina  co-operated  with  the  investigation  by 
replying  to  the  questionnaire  and  accepting  an  on-spot  verification  of  its  reply.  The 
investigation showed that Argentina has a competitive market for furfuraldehyde with 
around  72%of  the  market  supplied  by  local  production  and  the  rest  by  imports  from 
third countries. The production volume in Argentina constitutes more than 60% of the 
volume  of  Chinese  exports  of  the  product  concerned  to  the  Community  for  inward 
processing. The Argentinean market was therefore deemed sufficiently representative 
for the determination of normal value for the PRC.  

(18) 

It is therefore concluded, as in the original investigation, that Argentina constitutes an 
appropriate  analogue  country  in  accordance  with  Article  2(7)(a)  of  the  basic 
Regulation. 

3. 

Normal value 

(19)  Pursuant  to  Article  2(7)(a)  of  the  basic  Regulation,  normal  value  was  established  on 
the  basis  of  verified  information  received  from  the  co-operating  producer  in  the 
analogue country, i.e. on the basis of the price paid or payable on the domestic market 
of  Argentina  to  unrelated  customers,  since  these  sales  were  found  to  be  made  in  the 
ordinary course of trade. 

(20)  As a result, normal value was established as the weighted average domestic sales price 

to unrelated customers by the co-operating producer in Argentina. 

4. 

Export price 

(21)  As  none  of  the  Chinese  exporters  to  the  Community  co-operated  with  the 
investigation,  export  prices  were  established  on  the  basis  of  the  facts  available.  The 
most appropriate basis was found to be Eurostat data in relation to Community imports 
of the product concerned. Though these imports were made under inward processing 
arrangements (Chinese furfuraldehyde was further processed into furfuryl alcohol for 
export),  there  was  no  reason  to  believe  that  they  were  not  a  reasonable  basis  for 
establishing  export  prices.  Furthermore,  the  verification  visit  at  the  co-operating 
importer  confirmed  that  the  Eurostat  data  were  in  line  with  the  verified  data.  The 
export price was thus established on the basis of the Eurostat data on Chinese imports 
for inward processing. 

5. 

Comparison 

(22)  For  the  purposes  of  ensuring  a  fair  comparison  between  the  normal  value  and  the 
export  price,  and  in  accordance  with  Article  2(10)  of  the  basic  Regulation,  due 
allowance in the form of adjustments was made with regard to certain differences in 
transport and insurance, which affected prices and price comparability. 

6. 

Dumping margin 

(23) 

In  accordance  with  Article  2(11)  of  the  basic  Regulation,  the  dumping  margin  was 
established  on  the  basis  of  a  comparison  of  the  weighted  average  normal  value  with 
the weighted average export prices at the same level of trade. This comparison showed 
the existence of significant dumping. In fact, the dumping margin found for the IP is 

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higher than the dumping margin of 62,6% established in the original investigation and 
in the previous review. 

7. 

Development of exports should measures be repealed 

(a) Exports 

(24)  The  investigation  has  shown  that  the  quantities  exported  from  the  PRC  to  the 
Community  for  inward  processing  have  increased  significantly  from  2000  to  the  IP 
(see recital (33) below). If the measures were repealed, it can be expected that exports 
from 
inward  processing 
arrangements, given the significant price difference between the Chinese and the EC 
producer’s furfuraldehyde and the unused capacity explained in recital (26) below.  

increase  significantly  also  outside 

the  PRC  would 

(b) Unused capacity in the PRC 

(25)  Since 

little  public 

industry  of 
furfuraldehyde, the following conclusions rely mainly on the information contained in 
the review request. 

is  available  about 

the  Chinese 

information 

(26)  According  to  the  request  for  the  expiry  review,  the  total  Chinese  production  of 
furfuraldehyde  is  around  180.000  tonnes  per  year,  which  is  more  than  four  times 
higher  than  the  total  Community  consumption  of  furfuraldehyde.  The  Chinese 
capacity  utilisation  rate  is  said  to  be  around  70%  which  means  that  there  is  idle 
capacity  of  around  50-60.000  tonnes  per  year  in  the  PRC,  i.e.  more  than  total 
consumption in the Community. According to the Community producers, the Chinese 
production is constantly changing in accordance with need. In this regard, some plants 
are  closed  for  temporary  periods  and  then  reopened  when  needed.  More  than  80 
production plants of furfuraldehyde are said to operate currently, mainly in the North-
East part of the PRC. 

(27)  Consequently,  the  large  production  capacity  available  in  the  PRC  and  the  flexibility 
with regard to reopening plants demonstrate that producers are able to quickly increase 
production  and  direct  it  to  any  export  market,  including,  if  the  measures  were  to  be 
repealed, to the Community market. 

(c) Exports for inward processing 

(28) 

It  is  noted  that  all  the  exports  from  the  PRC  of  the  product  concerned  to  the 
Community  during  the  IP  were  made  for  inward  processing.  The  Chinese 
furfuraldehyde was further processed into furfuryl alcohol which was then exported. It 
is reasonable to assume that a repeal of the measures would result in a resumption of 
exports from the PRC to the Community outside the inward processing arrangements. 
Such additional exports would in all likelihood also be significantly dumped. Indeed, 
the current export prices made under inward processing arrangements are not affected 
by  anti-dumping  duties  as  such  exports  obviously  do  not  bear  any  duty.  The 
Community producers and the Chinese exporters competed for these sales on the basis 
as if there was no duty. Thus, it can be reasonably assumed that such prices are also 
indicative  as to  future  price  levels should measures be repealed. Moreover, it is  also 
noted  that  Chinese  export  prices  under  inward  processing  were  undercutting  the 

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Community producers’ prices by 44% in the IP and that even if they did not undercut 
Community prices, they would still be dumped. 

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8. 

Conclusion on the likelihood of a continuation of dumping 

(29)  Since  the  PRC  has  significant  unused  production  capacity  and  is  currently  only 
exporting  to  the  Community  for  inward  processing,  it  could  reasonably  be  expected 
that, should the measures be repealed, additional volumes would be directed towards 
the Community market in significant quantities. 

(30)  The  investigation  has  shown  that  exports  from  the  PRC  are  still  made  at  dumped 
prices and that the dumping margin during the IP was found to be even higher than the 
dumping  margin  established  in  the  previous  review.  Given  the  circumstances  of  the 
case, it is reasonable to expect that dumping is likely to continue in the future. 

D. DEFINITION OF THE COMMUNITY INDUSTRY 

(31)  There  are  two  Community  producers  of  the  product  concerned.  In  addition  to  the 
applicant,  the  other  Community  producer,  Lenzing  AG  (‘the  other  Community 
producer’),  supported  the  request  for  a  review.  During  the  IP,  the  two  producers 
represented  100%  of  the  Community  production  of  furfuraldehyde.  Both  companies 
replied to the questionnaires and fully co-operated in the investigation. On this basis, 
the two Community producers constitute the Community industry within the meaning 
of Article 4(1) and Article 5(4) of the basic Regulation. For reasons of confidentiality 
data concerning the performance of the Community industry are given only in indexed 
form. 

E. SITUATION OF THE COMMUNITY MARKET 

1. Community consumption 

Table 1 Community consumption 

Tonnes 
Index 
Y/Y trend 

2000 
38.699 
100 

2001 
45.005 
116 
16 

2002 
38.007 
98 
-16 

IP 
41.513 
107 
9 

(32)  Community  consumption  was  based  on  the  combined  volume  of  sales  made  by  the 
Community industry in the Community and imports from the PRC made under inward 
processing  and  imports  from  other  third  countries.  Community  consumption  of 
furfuraldehyde  increased  significantly  between  2000  and  2001.  In  2002,  Community 
consumption of furfuraldehyde fell back to approximately the same level as in 2000. 
Between  2000  and  the  IP,  Community  consumption  of  furfuraldehyde  increased  by 
9%. The development of consumption is linked to the fact that furfuraldehyde is also 
used  to  produce  furfuryl  alcohol.  The  production  and  sales  of  furfuryl  alcohol 
increased in 2001, but decreased significantly in 2002 and, as a result, consumption of 
furfuraldehyde dropped accordingly. In the IP, sales and production of furfuryl alcohol 
recovered as well as consumption of furfuraldehyde. 

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2. Imports from the PRC 

(a) Volume, market share and prices 

(33)  Based  on  information  from  Eurostat,  imports  from  the  PRC  were  made  since  2001 
only under inward processing arrangements. This practice had already started in 2000, 
when  around  75%  of  Chinese  imports  were  under  inward  processing.  The  volumes 
imported from the PRC increased from 3.198 tonnes to 5.167 tonnes during the period 
considered, which is an increase of 61,6% between 2000 and the IP. It is noted that in 
2002 the sales of furfuryl alcohol dropped significantly. However, this was followed 
by an increase in the IP. The market share of these Chinese imports increased over the 
period  considered  from  8,2%  to  12,4%.  While  the  fluctuations  in  these  Chinese 
imports  of  furfuraldehyde  may  to  a  certain  extent  be  due  to  fluctuations  in  the 
production  of  furfuryl  alcohol,  this  cannot  explain,  however,  the  huge  increase  of 
import volumes, in particular during the IP, and of market share. The average price of 
the Chinese imports declined from EUR 648,68 per ton in 2000 to EUR 508,65 per ton 
in  the  IP,  which  is  a  decline  of  21,6%  during  the  period  considered.  A  trend  of 
increased undercutting can also clearly be seen when comparing the Chinese and the 
Community  producers’  unit  prices  of  furfuraldehyde.  In  the  beginning  of  the  period 
considered,  in  2000,  the  Chinese  prices  were  4,4%  lower  than  those  of  Community 
producers. In the IP, they were 44,1% lower. 

Table 2 Imports from the PRC under inward processing 

Volume, tonnes 
Indexed 
Market share 
Price, €/tonne 
Indexed 

2000 
3.198 
100 
8,3% 
648,68 
100 

2001 
4.143 
130 
9,2% 
678,48 
104,6 

2002 
2.450 
77 
6,4% 
540,06 
83,3 

IP 
5.167 
162 
12,4% 
508,65 
78,4 

3. Economic situation of the Community industry  

(a) Production  

Table 3 Community production 

Index 
Y/Y trend 

2000 
100 

2001 
94 
-5,8 

2002 
87 
-7,3 

IP 
85 
-2,2 

(34)  The  Community  industry’s  production  decreased  every  year  during  the  period 
considered, being 15% lower in the IP than in 2000. One of the Community producers 
ceased the production of furfuraldehyde in one of its production plants in 2000. 

(b) Production capacity and capacity utilisation 

Table 4 Community capacity 

Index 
Y/Y trend 

2000 
100 

2001 
104 
3,9 

2002 
100 
-3,4 

IP 
99 
-1,2 

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(35)  Production  capacity  decreased  slightly  during  the  period  considered,  after  having 
increased  by  3,9%  in  2001  compared  to  2000.  The  cessation  of  furfuraldehyde 
production  in  one  production  plant  in  2000  is  not  reflected  in  the  above  capacity 
figures,  because  the  company  still  considers  this  plant  as  part  of  their  production 
capacity, i.e. the production can be restarted within a short period if necessary. 

Table 5 Capacity utilisation 

Index 

2000 
100 

2001 
91 

2002 
87 

IP 
86 

(36)  The above table shows that capacity utilisation decreased every year during the period 

considered, being 14% lower in the IP than in 2000.  

(c) Sales in the Community 

Table 6 Sales volume 

Index 
Y/Y trend 

2000 
100 

2001 
96 
-4,4 

2002 
87 
-9,4 

IP 
87 
0,3 

(37)  The Community industry’s sales to unrelated customers in the Community decreased 
by 13% between 2000 and the IP. The fall was particularly significant between 2000 
and  2002  as  the  industry  increased  the  prices  in  order  to  compensate  for  drastically 
increased  raw  material  costs.  During  the  IP  this  trend  could  be  stopped  as  the 
Community industry reduced prices in order to avoid further losses of sales volumes. 

(d) Prices 

Table 7 Community industry sales prices 

Index 
Y/Y trend 

2000 
100 

2001 
127 
27,2 

2002 
135 
6,0 

IP 
134 
-0,6 

(38)  The  average  sales  prices  of  furfuraldehyde  increased  by  35%  from  the  year  2000  to 
2002, when the Community industry tried to compensate for drastically increased raw 
material costs by increasing their sales prices.  

(e) Market share 

Table 8 Community industry’s market share 

Index 

2000 
100 

2001 
82 

2002 
88 

IP 
81 

(39)  The  market  share  held  by  the  Community  industry  decreased  by  19%  between  2000 
and  the  IP.  The  biggest  decline  in  the  Community  producer’s  market  share  was 
between  2000  and  2001.  The  Community  consumption  of  furfuraldehyde  decreased 
significantly  in  2002,  mainly  due  to  declining  production  of  furfuryl  alcohol.  The 
Community  industry’s  sales  of  furfuraldehyde  decreased  as  well  in  2002.  However, 
the decline in the sales of the Community industry was relatively lower than the drop 
in  the  consumption  of  furfuraldehyde  in  2002.  Therefore,  the  market  share  of  the 
Community  industry  increased  in  2002.  In  the  IP,  consumption  of  furfuraldehyde  as 
well  as  the  Chinese  imports  increased  again,  while  the  sales  of  the  Community 

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industry  remained  roughly  at  the  same  level  as  the  previous  year.  As  a  result,  the 
Community industry’s market share decreased.  

(f) Stocks 

Table 9 Stocks 

Index 
Y/Y trend 

2000 
100 

2001 
103 
3,5 

2002 
128 
23,3 

IP 
122 
-4,1 

(40)  The above table shows that the stocks of the Community industry increased by 22% 
during  the  period  considered.  The  increase  of  stocks  was  particularly  significant 
between 2001 and 2002, when stocks increased by 24%. Stocks represented 9,4% of 
the Community industry’s EU sales volume in 2000, but increased to 13,3% of the EU 
sales during the IP.  

(g) Profitability 

Table 10 Profitability 

Index 
Y/Y trend 

2000 
100 

2001 
235 
135,1 

2002 
133 
-43,5 

IP 
146 
9,3 

(41)  The  total  profitability  of  the  Community  industry  has  remained  at  a  relatively  good 
level during the period considered. However, the main reason for this is the fact that 
the  other  Community  producer  supporting  the  complaint  shows  exceptionally  high 
profitability in all years under consideration, whereas the applicant’s profitability has 
declined  drastically  (8,2  percentage  points)  during  the  same  period.  The  other 
Community  producer  obtains  furfuraldehyde  as  a  by-product  when  producing  pulp 
viscose,  while  the  applicant  uses  almond  shells  as  a  principal  raw  material  in  the 
furfuraldehyde  production.  The  price  of  almond  shells  increased  drastically  between 
2000  and  2002  (by  51%),  worsening  significantly  the  profit  margin  of  the  applicant, 
while the raw material cost of the other Community producer increased only modestly. 
The increase in the applicant’s selling, general and administrative expenses in absolute 
terms was modest, i.e. 5,5% from year 2000 to the IP. Thus, the decline in profitability 
was mainly caused by the increased raw material costs. The attempt to compensate the 
higher  raw  material  costs  by  increased  sales  prices  of  furfuraldehyde  resulted  in 
reduced sales.  

(h) Cash flow 

Table 11 Cash flow 

Index 
Y/Y trend 

2000 
100 

2001 
141 
41,1 

2002 
104 
-26,0 

IP 
107 
2,5 

(42)  Cash  flow  followed  a  similar  trend  as  profitability,  increasing  significantly  between 
2000 and 2001, but worsening in the following years. In line with the profitability, the 
other Community producer supporting the complaint showed exceptionally good cash 
flow  during  the  period  considered,  while  the  applicant  showed  a  clear  decline  in  its 
cash flow (-42,7%) during the same period. 

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(i) Investments, return on investments and ability to raise capital 

Table 12 Investments 

Index 
Y/Y trend 

2000 
100 

2001 
93 
-6,8 

2002 
63 
-32,8 

IP 
98 
55,9 

(43)  The  investments  considerably  declined  between  2000  and  2002,  increasing  again 
during  the  IP,  when  the  other  Community  producer  made  significant  investments  in 
the viscose pulp production line (furfuraldehyde is a by-product in the pulp production 
process). The investments of the applicant fell by 80% during the period considered. 
The investigation showed that the operating return on investments deteriorated in line 
with the development of profitability during the period considered.  

Table 13 Return on investments and ability to raise capital 

Index 
Y/Y trend 

2000 
100 

2001 
207 
107,4 

2002 
38 
-81,7 

IP 
34 
-11,0 

(44)  The return on investment figures in the table above shows only the development of the 
applicant. This table shows a clear deterioration in its return on investment during the 
period considered. As for the other Community producer supporting the complaint, it 
belongs to a group of companies which focus on products other than furfuraldehyde. 
In fact, furfuraldehyde is a small by-product of one of its main production processes. 
Therefore, the company is not able to calculate any meaningful return on investment 
for furfuraldehyde. As a result of the deterioration in profitability and cash flow, the 
applicant’s ability to raise capital has worsened significantly during the period under 
consideration. This worsening can also be clearly seen in the applicant’s investments, 
which fell by 80% during the period considered. 

(j) Employment, productivity and wages 

Table 14 Employment 

Index 
Y/Y trend 

2000 
100 

2001 
75 
-25,0 

2002 
84 
12,1 

IP 
82 
-2,7 

(45)  The  above  table  shows  that  employment  decreased  by  18%  during  the  period 
considered.  The  decrease  in  employment  in  2000/2001  reflects  the  cessation  of 
production of furfuraldehyde in one production plant. 

(46)  The  productivity  increased  by  4%  over  the  period  considered,  as  shown  in  the  table 

below: 

Table 15 Productivity 

Index 
Y/Y trend 

2000 
100 

2001 
126 
25,6 

2002 
104 
-17,4 

IP 
104 
0,5 

(47)  During the period considered, the average wages of the employees of the Community 

industry increased by 6%, i.e. less than the average inflation rate in the Community: 

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Table 16 Wages 

Index 
Y/Y trend 

2000 
100 

2001 
99 
-0,8 

2002 
97 
-1,9 

IP 
106 
8,7 

(k) Magnitude of the dumping margin and effects of past dumping or subsidization 

(48)  Since dumping continued at levels similar to, if not higher than, that established in the 
previous  investigations  (see  recital  (1)  above),  the  impact  on  the  situation  of  the 
Community industry of the magnitude of the actual margin of dumping could not be 
considered different from that established during these investigations. 

(l) Growth 

(49)  While  Community  consumption  grew  by  7  %  during  the  period  considered,  the 
Community industry’s production, sales volume and market share decreased over the 
same period. At the same time, the volume and market share of imports from the PRC 
increased considerably. This meant that the Community industry did not fully benefit 
from the growth of the market over the period considered. 

4. Effect of other factors 

(a) 

Prices of raw materials 

(50)  The considerable rise in the price of the raw material used by the applicant in 2001 and 
2002 had naturally a negative impact on its profitability in these years. However, the 
situation changed in the IP when the raw material prices dropped. Therefore, although 
fluctuations of raw material prices may have contributed to the precarious situation of 
the Community industry during the period considered, they were not so significant as 
to have caused any injury suffered during the IP. 

(b) 

Export activity of the Community 

(51)  According  to  Eurostat  data,  the  total  exports  from  the  Community  during  the  period 
considered  were  insignificant,  i.e.  one  to  two  tonnes  per  year.  Therefore,  the  export 
activity of the Community industry could not have contributed to any injury suffered 
during the period considered. 

(c) 

Import volumes and prices from other third countries  

(52)  According  to  Eurostat,  import  volumes  of  furfuraldehyde  into  the  Community  from 
countries other than the PRC, together with their average prices, developed as follows: 

Table 17 Imports into the Community from other third countries (volume) 

Tonnes 
Thailand 
Slovenia 
South Africa 
Dominican Republic 
Total 

2000 
167 
1.227 
4.183 
24.017 
29.594 

2001 
551 
1.290 
7.852 
25.509 
35.202 

2002 
1.481 
1.204 
2.601 
25.157 
30.443 

IP 
888 
1.410 
3.706 
25.213 
31.217 

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

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Euro/tonne 
Thailand 
Slovenia 
South Africa 
Dominican Republic 
Average 

2000 
2.150 
694 
1.158 
543 
645 

2001 
1.849 
618 
1.558 
1.235 
1.294 

2002 
5.271 
647 
543 
541 
775 

IP 
635 
635 
832 
452 
510 

(53)  The  import  volumes  of  furfuraldehyde  from  all  third  countries  other  than  the  PRC 
have  remained  relatively  stable  during  the  period  considered,  except  in  2001,  when 
imports  from  South  Africa  and  Dominican  Republic,  in  particular,  increased  due  to 
increased  consumption  of  furfuraldehyde  in  the  production  of  furfuryl  alcohol.  It 
should be noted that, as in the original investigation, the imports from the Dominican 
Republic are entirely shipments from a mother company to its European subsidiary to 
produce furfuryl alcohol. Thus, the prices used in these transactions are transfer prices 
between  related  companies  and  may  not  reflect  real  market  prices.  It  is  noted  that 
furfuraldehyde from the Dominican Republic is not available on the free Community 
market.  Therefore,  no  indications  had  been  found  that  these  imports  would  have 
contributed to the precarious situation of the Community industry. Imports from South 
Africa, the second biggest exporting country, decreased during the period considered 
by  11%.  During  the  IP  the  average  import  prices  from  all  third  countries,  with  the 
exception  of  the  Dominican  Republic,  were  significantly  higher  than  import  prices 
under inward processing from the PRC. It is therefore concluded that although other 
imports could have contributed to the precarious situation of the Community industry, 
their  volumes  and  prices  are  such  that  their  effect  cannot  be  considered  to  be 
substantial. 

5. Conclusion on the situation of the Community industry 

(54)  Following  the  imposition  of  the  anti-dumping  measures,  the  situation  of  the 
Community  industry  has  stabilised,  but  remains  fragile.  Production,  production 
capacity and sales have decreased, as well as sales prices and the market share of the 
Community  industry.  Investments,  return  on  investment  and  employment  have  also 
decreased, whereas the stocks have increased, in particular between 2001 and 2002, in 
line with decreased sales and market share. Profitability and cash flow have improved 
on  average  during  the  period  considered,  but  they  have  declined  since  2001.  The 
injury indicators therefore do not allow to conclude that there is a clear injury picture. 
Moreover, it needs to be stressed that the situation of the two Community producers 
differs  considerably,  with  the  applicant  in  a  much  more  precarious  position  than  the 
other  supporting  Community  producer.  For  the  former  producer,  some  injury  may 
have been caused partially by prices of raw materials. Under these circumstances, and 
in  particular  also  the  fact  that  imports  from  the  PRC  were  made  only  under  inward 
processing, a situation of continuation of injury caused by dumped imports could not 
be established. Therefore it was examined whether there would be recurrence of injury 
if the measures lapsed. 

F. LIKELIHOOD OF RECURRENCE OF INJURY 

(55) 

It  is  recalled  that  in  recitals  (29)  and  (30)  it  was  concluded  that  the  expiry  of  the 
measures would be likely to lead to a significant increase of dumped exports from the 
PRC to the Community. 

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(56) 

Indeed,  the  volume  of  dumped  imports  under  inward  processing  considerably 
increased during the period considered. As pointed out above, it is likely that without 
anti-dumping  measures  in  place  further  increased  volumes  would  be  shipped  to  the 
Community  market  at  very  low  prices  significantly  undercutting  the  Community 
industry  prices.  Currently,  the  difference  of  prices  of  the  imported  Chinese  product 
and the one produced by the Community industry is more than 40%.  

(57)  As outlined in recital (26), it is estimated that the idle capacity in the PRC is sufficient 
to  supply  the  whole  Community  demand  for  furfuraldehyde.  If  the  current  measures 
were  allowed  to  lapse,  there  is  a  real  threat  that  a  significant  proportion  of  unused 
production  capacity  in  the  PRC  would  be  used  to  flood  the  Community  market  with 
furfuraldehyde.  It  appears  that  there  are  no  other  markets  available  to  absorb  the 
Chinese capacity. 

(58)  When examining the impact of such additional low-priced imports on the situation of 
the  Community  industry  it  is  noted  that  the  sudden  arrival  of  a  large  quantity  of 
dumped  imports  would  immediately  cause  a  severe  price  depression  on  the 
Community market as the Community industry would be likely to first try to maintain 
its market share and its production. This would in turn erode the Community industry's 
profitability, and risk losses. It is clear that in this scenario the Community producers 
would suffer material injury caused by the dumped imports or even risk not to survive 
this situation. 

(59)  On  the  basis  of  the  above,  it  is  concluded  that  a  repeal  of  measures  would  in  all 
probability lead to a recurrence of injury resulting from the dumped imports from the 
PRC. 

G. COMMUNITY INTEREST 

1. Preliminary remark 

(60) 

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

(61) 

It should be recalled that, in the previous investigations, the adoption of measures was 
considered not to be against the interest of the Community. Furthermore, the present 
investigation  is  an  expiry  review,  thus  analysing  a  situation  in  which  anti-dumping 
measures are in place. 

(62)  On  this  basis  it  was  examined  whether,  despite  the  conclusion  that  there  exists  a 
likelihood of continuation of dumping and recurrence of injury, there are compelling 
reasons which would lead to the conclusion that it is not in the Community interest to 
maintain measures in this particular case. 

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2. Interest of the Community industry 

(63)  The Community industry has proven to be a viable industry, able to adapt to changing 
conditions  on  the  market.  This  was  confirmed  in  particular  by  the  positive 
development and stabilisation of its situation at a time when effective competition had 
been restored after the imposition of anti-dumping measures on imports originating in 
the PRC. The Community industry should be able to continue recovering through its 
sales prices, any increase in the prices of raw materials. However, it can be concluded 
that,  without  the  continuation  of  anti-dumping  measures,  its  situation  will  in  all 
likelihood severely deteriorate, with a distinct possibility of further plant closures. 

3. Interest of unrelated importers/traders 

(64)  The  Commission  sent  out  questionnaires  to  seven  unrelated  importers/traders.  Only 
one  importer/trader  co-operated  with  the  investigation.  In  its  questionnaire  reply  the 
importer/trader  explained  that  the  removal  of  measures  would  increase  its  choice  of 
suppliers,  because  then  it  could  also  sell  Chinese  furfuraldehyde  in  the  Community 
market. Anti-dumping measures are not intended to prevent imports from the PRC but 
to  ensure  that  they  are  not  made  at  injuriously  dumped  prices.  In  addition,  there  are 
many other sources of supply available in the market. Furthermore, it is noted that the 
continuation  of  measures  would  not  have  a  serious  impact  on  the  business  of  this 
importer/trader in question and that the latter has been profitable every year during the 
period considered. 

(65)  Considering the low rate of co-operation by the Community importers and traders, and 
the comments received from the co-operating importer/trader, it is concluded that the 
measures in force do not unduly affect importers and/or traders and that therefore the 
continuation of measures would have the same result. 

4. Interest of users 

(66)  The Commission sent out questionnaires to 16 industrial users of furfuraldehyde. Only 
one  user  co-operated  with  the  investigation.  In  its  questionnaire  reply  the  company 
explained that most of the furfuraldehyde the company uses as a raw material for the 
production  of  furfuryl  alcohol  is  supplied  by  its  parent  company  situated  in  the 
Dominican Republic. Only a shortfall of this supply would oblige the company to look 
for  other  suppliers.  According  to  the  company,  the  existing  Community  producers 
would be its first choice to cover any shortage of supply.  

(67) 

In  light  of  the  low  response  rate  to  the  questionnaires  sent  and  the  comments  of  the 
sole co-operating user, it is concluded that the continuation of the measures would not 
have a significant effect on users. 

5. Competition aspects 

(68) 

It  is  noted  that,  in  addition  to  the  two  Community  producers,  imports  originating  in 
Thailand, Slovenia (then not member of the European Community), South Africa and 
Dominican  Republic,  are  competing  in  the  Community  market.  Should  the  existing 
measures be lifted, this would be unlikely to improve the competitive situation on the 
Community  market.  To  the  contrary,  it  would  risk  eliminating  the  Community 
producers, at least in part, from the market because they would have great difficulty in 

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operating  at  the  price  level  currently  existing  for  the  Chinese  furfuraldehyde.  Other 
suppliers  would  be  likely  to  find  it  equally  difficult  to  compete  with  the  Chinese 
product.  Consequently,  there  is  no  indication  that  the  continuation  of  the  measures 
would have a negative effect on the competitive situation in the Community market. 

6. Conclusion on Community interest 

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

H. FINAL PROVISION 

(70)  All  parties  concerned  were  informed  of  the  essential  facts  and  considerations  on  the 
basis  of  which  it  was  intended  to  recommend  the  maintenance  of  the  existing  anti-
dumping  duty  in  respect  of  imports  of  furfuraldehyde  originating  in  the  PRC.  No 
comments were received within the period granted to make representations following 
this disclosure which could alter the conclusions. 

(71) 

It  follows  from  the  above  that  the  anti-dumping  measures  currently  in  force  with 
regard to imports of furfuraldehyde originating in the PRC, i.e. a specific duty of EUR 
352 per tonne, should be maintained, 

HAS ADOPTED THIS REGULATION: 

Article 1 

1. 

2. 

3. 

A definitive anti-dumping duty is hereby imposed on imports of 2-furaldehyde (also 
known as furfuraldehyde or furfural) falling within CN code 2932 12 00 originating 
in the People’s Republic of China.  

The amount of duty applicable is EUR 352 per tonne. 

In  cases  where  goods  have  been  damaged  before  entry  into  free  circulation  and, 
therefore, the price actually paid or payable is apportioned for the determination of 
the  customs  value  pursuant  to  Article  145  of  Commission  Regulation  (EEC)  No 
2454/93, the amount of the anti-dumping duty, calculated on the basis of paragraph 2 
above, shall be reduced by a percentage which corresponds to the apportioning of the 
price actually paid or payable. 

4. 

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

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

Article 2 

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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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