Proposal for a Council Regulation imposing a definitive anti-dumping duty on imports of magnesium oxide originating in the People's Republic of China
Date: 2005-04-18
Institutions: European Commission
Subjects: China, anti-dumping duty, import, magnesium, originating product, oxide

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 18.4.2005 
COM(2005) 149 final 

Proposal for a 

COUNCIL REGULATION 

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

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

– 

Grounds for and objectives of the proposal 

This  proposal  concerns  the  application  of  Council  Regulation  (EC)  No  384/96  of 
22 December 1995 on protection against dumped imports from countries not members of the 
European Community, as last amended by Council Regulation (EC) No 461/2004 of 8 March 
2004  ("the  basic  Regulation")  in  the  proceeding  concerning  imports  of  magnesium  oxide 
originating in the People's Republic of China. 

– 

General context 

This proposal is made in the context of the implementation of the basic Regulation and is the 
result  of  an  investigation  which  was  carried  out  in  line  with  the  substantive  and  procedural 
requirements laid out in the basic Regulation. 

– 

Existing provisions in the area of the proposal 

There are no existing provisions in the area of the proposal. 

– 

Consistency with other policies and objectives of the Union 

Not applicable. 

2. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

Interested parties concerned by the proceeding have already had the possibility to defend their 
interests during the investigation, in line with the provisions of the basic Regulation. 

– 

Collection and use of expertise 

There was no need for external expertise. 

– 

Impact assessment 

This proposal is the result of the implementation of the basic Regulation. 

The  basic  Regulation  does  not  provide  for  a  general  impact  assessment  but  contains  an 
exhaustive list of conditions that have to be assessed. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

– 

Summary of the proposed action 

On  18  May  2004,  the  Commission  initiated  an  expiry  review of the anti-dumping  measures 
applicable to imports of magnesium oxide originating in the People’s Republic of China. 

The review was initiated following a request from the Community producers, indicating that 
the expiry of the measures would be likely to lead to a continuation or recurrence of injurious 
dumping. 

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

It is therefore proposed to maintain the existing measures. 

The Member States were consulted regarding this review. Twenty Member States supported 
and five Member States opposed the proposal. 

It is proposed that the Council adopt the attached proposal for a Regulation which should be 
published in the Official Journal on 18 May 2005. 

– 

Legal basis 

Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection  against  dumped 
imports from countries not members of the European Community, as last amended by Council 
Regulation (EC) No 461/2004 of 8 March 2004.  

– 

Subsidiarity principle 

The  proposal  falls  under  the  exclusive  competence  of  the  Community.  Therefore  the 
subsidiarity principle does not apply. 

– 

Proportionality principle 

The proposal complies with the proportionality principle for the following reason(s). 

The form of action is described in the above-mentioned basic Regulation and leaves no scope 
for national decision. 

Indication of how financial and administrative burdens falling upon the Community, national 
governments, regional and local authorities, economic operators and citizens is minimized and 
proportionate to the objective of the proposal is not applicable. 

– 

Choice of instruments 

Proposed instrument: regulation. 

Other means would not be adequate for the following reason(s). 

The above-mentioned basic Regulation does not provide for alternative options. 

4. 

BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

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Proposal for a 

COUNCIL REGULATION 

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

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

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

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

Whereas: 

A. MEASURES IN FORCE 

(1) 

Following an expiry review, the Council imposed by Regulation (EC) No 1334/19992 
definitive  anti-dumping  measures  on 
imports  of  magnesium  oxide  (‘product 
concerned’) originating in the People's Republic of China (‘the PRC’). These measures 
took the form of a minimum import price. Following an interim review, by Regulation 
(EC) No  985/20033, the Council amended the form of the  anti-dumping  measures  in 
force  by  maintaining  the  minimum  price  but  subject  to  specific  conditions  and 
imposing an ad valorem duty of 27.1% in all other cases. 

(2) 

It  should  be  noted  that  the  original  measures  were  imposed  by  Council  Regulation 
(EC) No 1473/934 (‘original investigation’). 

B. PRESENT INVESTIGATION 

(3) 

Following  the  publication  of  a  notice  of  the  impending  expiry  of  the  anti-dumping 
measures  in  force  on  imports  of  magnesium  oxide  originating  in  the  PRC5,  the 
Commission’s  services  received  a  request  for  an  expiry  review  pursuant  to  Article 
11(2)  of  the  basic  Regulation.  The  request  was  lodged  on  9  March  2004  by 

1 

2 

3 
4 
5 

OJ L 56, 6.3.1996, p. 1. as last amended by Council Regulation (EC) No 461/2004 (OJ L 77, 13.3.2004, 
p. 12.). 
OJ  L  159,  25.6.1999,  p.  1,  as  last  amended  by  Council  Regulation  (EC)  No  985/2003  (OJ  L  143, 
11.6.2003, p. 1.). 
OJ L 143, 11.6.2003, p. 1. 
OJ L 145, 17.6.1993, p. 1. 
OJ C 230, 26.9.2003, p. 2. 

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Eurométaux ('the applicant') on behalf of producers representing a major proportion, in 
this  case,  96%  of  the  total  Community  production  of  magnesium  oxide.  The  request 
alleged  that  the  expiry  of  measures  would  be  likely  to  result  in  a  continuation  or 
recurrence of dumping and injury to the Community industry.  

Having determined, after consulting the Advisory Committee, that sufficient evidence 
existed  for  the  initiation  of  a  review,  the  Commission’s  services  announced  the 
initiation of an expiry review6, pursuant to Article 11(2) of the basic Regulation and 
commenced an investigation.  

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

The  Commission’s  services  sent  questionnaires  to  all  parties  known  to  be  concerned 
and to those who requested a questionnaire within the time limit set out in the notice of 
initiation. 

In view of the apparent high number of exporting producers in the PRC and importers 
of  the  product  concerned,  sampling  was  envisaged  in  the  notice  of  initiation,  in 
accordance  with  Article  17  of  the  basic  Regulation.  In  order  to  be  able  to  decide 
whether sampling would be necessary and, if so, to select a sample, the Commission’s 
services sent out sampling questionnaires asking specific information on average sales 
volume and prices of each exporting producer and importer concerned. No reply was 
received  from  any  exporting  producer  or  importer.  Therefore,  it  was  decided  that 
sampling was not necessary. 

In  addition,  questionnaires  were  sent  to  all  the  producers  in  the  United  States  of 
America  (‘USA’),  Australia  and  India  (potential  analogue  countries),  which  were 
known to the Commission’s services. 

Replies  to  the  questionnaire  were  received  from  the  four  applicant  Community 
producers and one producer in the analogue country, namely USA.  

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

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

Community producers 

– 

– 

– 

6 

Grecian Magnesite S.A., Athens, Greece 

Magnesitas Navarras, S.A., Pamplona, Spain 

Magnesitas de Rubian, S.A., Sarria (Lugo), Spain 

OJ C 138, 18.5.2004, p. 2. 

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– 

Styromag GmbH, St Katharein an der Laming, Austria 

Producer in the analogue country 

– 

PremierChemicals, LLC, King of Prussia, Pennsylvania, USA 

(11)  The investigation regarding the likelihood of a continuation or recurrence of dumping 
and  injury  covered  the  period  from  1  April  2003  to  31  March  2004  (the  ‘IP’).  The 
examination of the trends relevant for the assessment of a likelihood of a continuation 
or recurrence of injury covered the period from 1 January 2000 up to the end of the IP 
(the ‘period considered’). 

C. PRODUCT CONCERNED AND LIKE PRODUCT 

(12)  The product concerned is the same as that in the previous investigations which led to 
the  imposition  of  measures  currently  in  force,  i.e.  magnesium  oxide,  namely  natural 
caustic calcined magnesite, falling within CN code ex 2519 90 90 (Taric code 2519 90 
90*10).  

(13)  Magnesium  oxide  is  processed  from  naturally  occurring  magnesium  carbonate  or 
magnesite. In order to produce magnesium oxide, magnesite has to be mined, crushed, 
sorted  and  then  burned  in  a  kiln  at  temperatures  of  700  to  1  000°  C.  The  result  is 
magnesium  oxide  with  various  magnesium  oxide  contents  or  grades.  The  main 
impurities  in  magnesium  oxide  are  SiO2,  Fe2O3,  Al2O3,  CaO  and  B2O3  (silicon 
oxide,  iron  oxide,  aluminium  oxide,  calcium  oxide  and  boron  oxide  respectively). 
Magnesium oxide is mainly used in agriculture for animal feeding or as a fertiliser and 
for  industrial  applications  in  the  construction  industry  for  flooring  and  insulating 
boards  as  well  as  in  the  pulp,  paper,  chemicals,  pharmaceuticals,  flame  retardants, 
abrasives producing industries and environmental protection.  

(14)  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 on the Community market and by the producer in the analogue 
country on the domestic market of the analogue country have the same basic physical 
and  chemical  characteristics  and  end  uses  and  are  therefore  considered  to  be  like 
products within the meaning of Article 1(4) of the basic Regulation. 

D. LIKELIHOOD OF A CONTINUATION OF DUMPING 

(15) 

In accordance with Article 11(2) of the basic Regulation, it was examined whether the 
expiry of the measures would be likely to lead to a continuation of dumping.  

Preliminary remarks 

(16) 

In the absence of co-operation from either any of the Chinese exporting producers or 
any  importer  in  the  Community,  this  examination  had  to  be  based  on  information 
available  to  the  Commission’s  services  from  other  sources.  In  this  respect  and  in 
accordance  with  the  provisions  of  Article  18  of  the  basic  Regulation,  Eurostat  data 
with 8-digit CN code and 10-digit Taric code, checked with other sources, were used.  

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(17) 

It is noted that the relevant Eurostat data with 8-digit CN code includes other products 
than  the  product  concerned,  while  the  data  for  the  period  considered  with  10-digit 
Taric code did not include the ten acceding countries.  

(18)  Therefore,  Eurostat  data  with  10-digit  Taric  code  was  used  for  the  fifteen  Member 
States  which  composed  the  European  Union  before  the  enlargement,  while  Eurostat 
data  with  8-digit  CN  code  was  used  for  the  ten  new  Member  States.  In  addition, 
Eurostat data with 8-digit CN code used for the ten new Member Sates was adjusted 
by deducting the percentage difference existing between the data with 8-digit CN code 
and  10-digit  Taric  code  reported  by  the  ten  new  Member  States  in  the  six  month 
period  after  enlargement  in  order  to  exclude  products  other  than  the  product 
concerned.  

(19)  Based  on  the  adjusted  Taric  data,  it  was  found  that  during  the  IP  115  225  tonnes  of 
i.e. 

the  Community, 

the  PRC 

magnesium  oxide  were 
approximately 29% of the Community consumption. 

imported  from 

into 

(20)  During the IP of the previous expiry review, the import volume of Chinese magnesium 
oxide  into  the  Community  amounted  to  110  592  tonnes,  i.e.  approximately  31%  of 
Community consumption.  

(21) 

It should be noted that, as the Community expanded to the twenty-five Member States, 
export  volumes  and  export  market  shares  of  the  previous  and  the  current  expiry 
reviews cannot be compared.  

Dumping during the IP 

(22) 

In accordance with Article 11(9) of the basic Regulation, the Commission’s services 
used  the  same  methodology  as  in  the  original  investigation.  It  is  recalled  that  in  the 
original investigation, a dumping margin of 27.1% was established. 

Analogue country 

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

(24)  Since in the previous expiry review India was selected as an analogue country for the 
purposes  of  establishing  normal  value,  a  request  for  co-operation  was  sent  to  Indian 
producers.  Furthermore,  a  request  for  co-operation  was  also  addressed  to  all  known 
producers in Australia and the USA, which had been suggested as possible analogue 
countries in the request for the expiry review.  

(25)  One Indian producer agreed to co-operate, but did not reply to the questionnaire. One 
Australian  producer  replied  but  declared  itself  not  to  be  in  the  position  to  assist  the 
Commission’s  services  with  the  requested  information.  Only  one  USA  producer 
agreed to provide the information requested. 

(26)  With respect to the USA, it was found that competition is sufficiently strong in the US 
market.  Indeed,  there  are  no  anti-dumping  duties  imposed  on  imports  of  magnesium 
oxide,  considerable  volumes  of  the  product  concerned  are  imported  from  different 
third countries and there are two competing local producers. The production process of 

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the  co-operating  USA  producer  is  similar  to  that  of  the  Chinese  producers.  The 
domestic  sales  of  the  USA  producer  represent  a  significant  amount  (around  83%)  of 
the total Community imports from the PRC during the IP.  

(27) 

It is therefore concluded that the USA constituted an appropriate analogue country for 
the purpose of establishing normal value.  

Normal value 

(28) 

In  accordance  with  Article  2(4)  of  the  basic  Regulation,  it  was  considered  whether 
domestic  sales  of  the  producer  in  the  USA  could,  in  view  of  the  prices  charged,  be 
seen  to  be  made  in  the  ordinary  course  of  trade.  For  this  purpose,  the  full  cost  of 
production per unit during the IP was compared to the average unit price of the sales 
transactions made during the same period. It was found that all sales were made at a 
profit. The investigation also revealed that all sales of the co-operating producer in the 
USA were made to independent customers. As a result, the prices paid or payable by 
independent  customers  on  the  USA  domestic  market  in  the  ordinary  course  of  trade 
were used to determine the normal value in accordance with Article 2(1) of the basic 
Regulation.  

Export price 

(29)  As  already  mentioned,  in  the  absence  of  any  other  more  reliable  information,  the 
export  price  was  based  on  the  Eurostat  data.  It  was  found  that  data  on  prices  in  the 
Eurostat are recorded on a CIF European Community frontier basis. These prices were 
brought to a FOB basis by deducting ocean freight and insurance cost. The necessary 
information on these costs has been submitted by the Community industry and used in 
the calculations, in the absence of any other more reliable information.  

Comparison 

(30)  For  the  purposes  of  ensuring  a  fair  comparison  between  the  normal  value  and  the 
export price at an ex-works level, due allowance in the form of adjustments was made 
for  differences  that  were  claimed  and  demonstrated  to  affect  prices  and  price 
comparability in accordance with Article 2(10) of the basic Regulation. In this regard, 
adjustments were made in respect of ocean and inland freight. 

Dumping margin 

(31) 

In  accordance  with  Article  2(11)  of  the  basic  Regulation,  the  dumping  margin  was 
established  on  the  basis  of  a  comparison  of  the  weighted  average  normal  value  with 
the weighted average export prices, as determined above. This comparison showed the 
existence  of  dumping.  The  dumping  margin,  expressed  as  a  percentage  of  the  CIF 
Community  frontier  price,  duty  unpaid,  was  100.73%,  which  is  well  above  the  level 
found in the previous investigation (41.9%).  

Likelihood of continuation of dumping  

(32)  Further to the analysis of the existence of dumping during the IP, the likelihood of the 
continuation  of  dumping  was  also  examined.  In  the  absence  of  co-operation  from 
exporting  producers  and  given  that  little  public  information  is  available  about  the 
Chinese  magnesium  oxide  industry,  the  conclusions  below  rely  mainly  on  facts 

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available, namely the market research information based on Japan Trade Statistics, US 
bureau of the Census and China customs data submitted by the complainant. 

Chinese production capacity  

(33)  According  to  the  expiry  review  request,  Chinese  producers  have  substantial  spare 
production  capacity  as  they  have  the  largest  magnesite  ore  resource  in  the  world, 
estimated  at  1  300  million  tonnes.  The  total  Chinese  production  capacity  for  the 
product  concerned  is  estimated  at  between  800  000  and  1  000  000  tonnes  per  year, 
whereas the Chinese domestic consumption is estimated at some 250 000 tonnes and 
exports of around 550 000 tonnes per year. Therefore, the Chinese production could be 
rapidly increased further if warranted by market conditions.  

Exports to third countries 

(34)  On  the  basis  of  the  same  source,  it  was  established  that  total  worldwide  exports  of 
Chinese magnesium oxide increased by 17%, from 465 900 tonnes in 1999 to 545 600 
tonnes  in  2003.  Export  prices  to  other  world  markets  such  as  Japan  or  the  USA  are 
around 38% below those to the Community, so exporters would have an incentive to 
increase  exports  to  the  Community  rather  than  to  third  countries  should  the  existing 
measures be repealed.  

(35)  Moreover, in 2003, prices of Chinese exports to Japan fell by approximately 13%, i.e. 
from USD 109.4 per tonne in 2000 to USD 95 per tonne in 2003. Also prices to the 
USA  fell  by  approximately  8%  in  the  same  period,  i.e.  from  USD  133  per  tonne  in 
2000 to USD 122 per tonne in 2003. 

(36)  This  clearly  shows  that,  if  the  measures  were  repealed,  the  Chinese  exporters  would 
have an incentive to target the Community market in the light of their substantial spare 
production capacity and of the higher price level in the Community compared to third 
countries. 

Export prices to the Community 

(37) 

It  should  also  be  noted  that  the  generally  prevailing  price  level  for  the  product 
concerned in the Community makes the Community market a very attractive one. This 
is  a  further  incentive  for  increasing  exports  to  the  Community  by  increasing 
production. Moreover, as said above, export prices to third countries were found to be 
lower than those to the Community. However, the attractive and relatively high prices 
on the Community market are not likely to be maintained in the long term. If measures 
were  lifted,  the  numerous  Chinese  exporters  would  be  specifically  interested  in  the 
Community  market  in  order  to  increase  their  shares.  Such  an  increased  competition, 
however, might lead to lower prices. Consequently, it is very likely that all operators 
present on the Community market would have to reduce their prices accordingly. 

Conclusion 

(38)  The investigation shows that the PRC has continued its dumping practices during the 
IP at a far higher level than previously. Given the fact that the PRC has considerable 
spare production capacity and that Chinese exports to third countries are made at even 
lower  prices  than  those  to  the  Community,  there  is  a  strong  likelihood  that  Chinese 

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exporting producers would substantially increase their dumped exports of the product 
concerned to the Community if existing measures were repealed.  

E. DEFINITION OF THE COMMUNITY INDUSTRY 

(39)  The four complainant Community producers replied to the questionnaires and fully co-
operated in the investigation. During the IP, they represented 96% of the Community 
production.  

(40)  On this basis, the four  complainant Community producers constitute the Community 

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

F. SITUATION OF THE COMMUNITY MARKET 

Community consumption 

(41)  Community  consumption  was  based  on  the  combined  volume  of  sales  made  by  the 
Community industry in the Community, imports from the PRC and imports from other 
third countries. 

Table 1 Community consumption (sales volumes) 

Community consumption  

2000 

2001 

2002 

2003 

IP 

IP/2000 

Tonnes 

Index 

Y/Y trend % 

Source: Eurostat data. 

 423 791 

448 234 

456 197 

398 038 

392 416 

100 

106 

6 

108 

2 

94 

-14 

93 

-1 

-7 

(42)  EU consumption of magnesium oxide increased between 2000 and 2002 and peaked in 
the year 2002 at around 456 197 tonnes before falling back again in 2003 and the IP to 
end  at  392  416  tonnes.  In  total  there  was  a  7%  decrease  over  the  whole  period 
considered, but a 6% increase between 2000 and 2001.  

(43)  A fluctuation in the consumption of the product concerned reaching 10% positive or 
negative  year-to-year  change  is  not  indicative  of  a  long  term  trend.  The  Community 
industry  maintains  that  the  overall  magnesium  oxide  market  is  relatively  steady  and 
this slight fluctuation is within the normal range of consumption over the long term.  

Imports from the PRC 

Volume, market share and prices 

(44)  Volumes 

imported  from 

trend  as  Community 
consumption.  They  increased  by  on  average  8%  until  2002,  and  started  to  decrease 
afterwards. Overall, during the period considered imports from the PRC decreased by 
18%, from 140 171 tonnes to 115 225 tonnes.  

the  PRC  followed 

the  same 

Table 2 Imports from the PRC 

Import volumes from the PRC  

2000 

2001 

2002 

2003 

IP 

IP/2000 

Tonnes 

140 171 

150 403 

163 116 

126 387 

115 225 

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Index 

Y/Y trend 

Source: Eurostat data 

100 

107 

7 

116 

9 

90 

-26 

82 

-8 

-18 

(45)  The  market  share  of  the  Chinese  imports  increased  to  36%  in  2002  in  line  with  the 
increase  in  the  Community  consumption.  Since  2003  it  started  to  decrease  slightly, 
still reaching 29% during the IP.  

Table 3 Market share of Chinese imports 

Market share of Chinese imports  

2000 

2001 

2002 

2003 

Percentage of market 

Index 

Source: Eurostat data 

33 

100 

34 

103 

36 

109 

32 

97 

IP 

29 

88 

IP/2000 

-12 

(46)  Average import price from the PRC continually decreased by a total of 24% percent 

during the period considered.  

Table 4 Average import price of Chinese imports  

Average import price of Chinese imports  2000 

2001 

2002 

2003 

EUR/tonne 

Index 

Source: Eurostat data 

174 

100 

164 

94 

149 

86 

135 

78 

IP 

133 

76 

IP/2000 

-24 

Price evolution of the imports and undercutting  

(47)  The  average  price  of  imports  of  the  product  concerned  from  the  PRC  during  the  IP 
was 133 euro per tonne CIF at the EC frontier as reported in Taric. For the purpose of 
analysing  price  undercutting,  the  average  sales  prices  (ex-works)  of  the  Community 
industry were compared to the Chinese import prices during the IP, duly adjusted for 
post import cost, customs and anti-dumping duty. On this basis, no undercutting was 
found.  

Economic situation of the Community industry 

Production, production capacity and capacity utilisation 

Table 5 Production 

Production  

Index 

Y/Y trend 

2000 

100 

2001 

104 

4 

2002 

2003 

102 

-2 

97 

-5 

IP 

95 

-2 

IP/2000 

-5 

Source: Verified questionnaire replies of Community industry 

(48)  The Community industry’s production first increased by 4% between 2000 and 2001 
following to some extent the trend of the Community consumption. However, it then 
continuously decreased for a total decrease of 5% over the period considered. During 

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the IP the Community industry’s production of magnesium oxide represented around 
55% of Community consumption. 

Table 6 Production capacity 

Production capacity  

Index 

Y/Y trend 

2000 

100 

2001 

100 

0 

2002 

100 

0 

2003 

100 

0 

IP 

100 

0 

IP/2000 

0 

Source: Verified questionnaire replies of the Community industry 

(49)  Production capacity remained stable over the period considered. 

Table 7 Capacity utilisation 

Capacity utilization 

Index 

2000 

100 

2001 

104 

2002 

102 

2003 

97 

IP 

95 

IP/2000 

-5 

Source: Verified questionnaire replies of the Community industry 

(50)  The above table shows that during the period considered capacity utilisation followed 
the  same  trend  as  production.  After  an  increase  between  2000  and  2001,  it 
continuously  decreased.  Over  the  period  considered,  the  decrease  amounted  to  5 
percentage points.  

Sales volume and sales prices 

Table 8 Sales volume on the Community market (in tonnes) 

Sales volume on the Community market: 

2000 

2001 

2002 

2003 

IP 

IP/2000 

To unrelated parties  

Index 

To related parties  

Index 

To related and unrelated parties 

100 

98 

94 

87 

89 

-11 

100 

149 

150 

150 

157 

57 

Index 

100 

104 

101 

95 

97 

-3 

Source: Verified questionnaire replies of the Community industry 

(51)  The  Community  industry’s  sales  to  unrelated  customers  on  the  Community  market 
decreased by 11% between 2000 and the IP. Sales to related companies increased by 
57%  between  2000  and  the  IP.  These  sales  concerned  only  one  company  and  were 
made to subsidiaries belonging to the same group. They represented around 17% of all 
sales of magnesium oxide during the period considered.  

(52)  The overall sales volume  on  the  Community  market  decreased by 3% between 2000 

and the IP.  

Table 9 Community industry sales prices of magnesium oxide 

Community 

industry 

sales  price 

to  2000 

2001 

2002 

2003 

IP 

IP/2000 

EN 

12 

   EN 

 
 
 
unrelated parties 

Index 

Y/Y trend 

100 

108 

8 

110 

2 

109 

-1 

109 

-1 

9 

Source: Verified questionnaire replies of the Community industry 

(53) 

In the period 2000 to the IP, the average sales prices of magnesium oxide charged by 
the Community industry on the Community market increased by 9%. The sales prices 
peaked in the year 2002, slightly falling again in 2003 and the IP.  

Market share 

Table 10 Market share 

Market share of Community industry 

2000 

2001 

2002 

2003 

Percentage of market 

Index 

62 

100 

61 

98 

59 

95 

63 

102 

IP 

65 

105 

IP/2000 

5 

Source: Eurostat data and verified questionnaire replies of the Community industry 

(54)  The  market  share  held  by  the  Community  industry  increased  from  62%  in  2000  to 
65%  in  the  IP.  A  major  increase  took  place  between  2002  and  2003  (7%  of  the 
market).  

(55) 

It  seems  that  Community  industry  has  managed  to  gain  market  shares  due  to  its 
competitive prices compared to other third countries.  

Stocks 

Table 11 Stocks 

Stocks  

Index 

Y/Y trend 

2000 

100 

2001 

107 

7 

2002 

94 

-13 

2003 

101 

7 

IP 

81 

-20 

IP/2000 

-19 

Source: Verified questionnaire replies of the Community industry 

(56)  The above table shows that during the period considered stocks were reduced by 19%. 
During the period from 2000 to 2003 stocks were around 43 thousand tonnes, while in 
the IP, they fell to just over 35 thousand tonnes. 

(57)  Stocks,  which  had  represented  around  16%  of  the  Community  industry’s  EU  sales 

volume in 2000, fell to around 14% of EU sales during the IP. 

Profitability and cash flow 

(58)  During the period considered profitability expressed as a percentage of net sales value 

to unrelated parties developed as follows: 

Table 12 Profitability 

Profitability  

2000 

2001 

2002 

2003 

IP 

IP/2000 

EN 

13 

   EN 

 
 
 
 
 
 
Index 

100 

113 

538 

13 

200 

100 

Source: Verified questionnaire replies of the Community industry  

(59)  After a loss in 2000, the Community industry’s sales have started being profitable until 
the  end  of  the  IP.  In  2002  profit  peaked  up  to  4.3%  but  fell  to  0.1%  in  2003  and  to 
1.6%  in  the  IP.  A  decrease  in  2003  was  due  to  the  decrease  in  sales  volumes  and  a 
pressure  of  the  prices  exerted  by  the  Chinese  exporters  which  have  not  allowed  the 
Community  industry  to  increase  its  prices  at  the  level  sufficient  to  achieve  a 
reasonable profit margin. 

(60) 

It is noted that, when taking into account sales to related parties, profitability would be 
slightly lower, but the trend would not change. 

Table 13 Cash flow 

Cash flow  

Index 

Y/Y trend 

2000 

100 

2001 

2002 

2003 

128 

28 

160 

33 

82 

-79 

IP 

134 

52 

IP/2000 

34 

Source: Verified questionnaire replies of the Community industry 

(61)  Cash  flow  improved  by  34%  during  the  period  considered,  and  followed  a  similar 

trend as that for profitability. 

Investments, return on investments, ability to raise capital  

Table 14 Investments 

Investments 

Index 

Y/Y trend 

2000 

100 

2001 

92 

-8 

2002 

76 

-16 

2003 

74 

-2 

IP 

81 

6 

IP/2000 

-19 

Source: Verified questionnaire replies of the Community industry 

(62) 

Investments  decreased  by  around  19%  from  2000  to  the  IP.  Nevertheless,  in  the 
current IP investments were 24% higher then in the IP of the previous investigation in 
which  the  investments  peaked  at  4  219  thousand  ECU.  The  investments  mainly 
concerned  the  improvement  and  further  rationalisation  of  the  production  process  in 
order to economise costs and conform to environmental requirements. 

Table 15 Return on investments  

Return on investments 

Index 

2000 

100 

2001 

129 

2002 

700 

2003 

14 

IP 

231 

IP/2000 

131 

Source: Verified questionnaire replies of the Community industry 

(63)  After  being  negative  in  2000,  return  on  investments  increased  by  around  11.6 
percentage points during the period considered, and followed a similar trend as that for 
profitability. 

EN 

14 

   EN 

 
 
 
 
 
(64)  The Community industry remained able to raise capital during the period considered.  

Employment, productivity and wages 

Table 16 Employment 

Employment  

Index 

Y/Y trend 

2000 

100 

2001 

2002 

2003 

99 

-1 

90 

-9 

85 

-5 

IP 

80 

-5 

IP/2000 

-20 

Source: Verified questionnaire replies of the Community industry 

(65)  The  above  table  shows  that  employment  decreased  by  20%  during  the  period 

considered. The main decrease occurred in the period from 2001 to the IP.  

(66)  Given  that  production  decreased  at  a  lower  rate  than  employment,  productivity 

increased by 19% over the same period, as shown in the table below: 

Table 17 Productivity 

Productivity  

Index 

Y/Y trend 

2000 

100 

2001 

105 

5 

2002 

113 

8 

2003 

115 

2 

IP 

119 

4 

IP/2000 

19 

Source: Verified questionnaire replies of the Community industry 

(67)  During the period considered the wages of the employees of the Community industry 

decreased by around 4%.  

Table 18 Wages 

Wages  

Index 

Y/Y trend 

2000 

100 

2001 

104 

4 

2002 

99 

-4 

2003 

100 

0 

IP 

96 

-3 

IP/2000 

-4 

Source: Verified questionnaire replies of the Community industry 

Effect of other factors 

Export activity of the Community industry 

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

developed as follows: 

Table 19 Community industry exports 

Community industry exports 

Tonnes 

Index 

Y/Y trend 

2000 

9 240 

100 

2001 

9 206 

100 

0 

2002 

2003 

IP 

IP/2000 

15 671 

9 962 

10 022 

170 

70 

108 

-62 

108 

1 

8 

Source: Verified questionnaire replies of the Community industry 

EN 

15 

   EN 

 
 
 
 
 
 
 
 
 
 
(69)  The  Community  industry  exports  of  magnesium  oxide  increased  by  8%  over  the 
period considered, mainly in 2002. However, an increase in the export volumes might 
have had little influence on the situation of the Community industry as these exports 
amounted on average to around 4% of the total sales of the Community industry. 

Import volumes and prices from other third countries  

(70) 

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

Table 20 Imports into the Community from other third countries (volume) 

Tonnes 

Turkey 

USA 

Israel 

Mexico 

Japan 

Australia 

Norway 

Other third countries 

Total 

Source: Eurostat data. 

2000 

2001 

2002 

2003 

IP 

2 704 

849 

2 417 

703 

1 949 

1 115 

459 

56 

3 116 

1 518 

2 558 

781 

7 010 

2 105 

326 

704 

2 714 

3 156 

627 

1 658 

2 081 

749 

198 

1 462 

42 

72 

679 

856 

627 

341 

117 

109 

1 373 

897 

2 725 

755 

455 

301 

149 

516 

10 252 

12 041 

13 550 

8 016 

7 172 

Table 21 Imports into the Community from other third countries (average price) 

Euro 

Turkey 

USA 

Israel 

Mexico 

Japan 

Australia 

Norway 

Other third countries 

Source: Eurostat data 

2000 

128 

1 475 

964 

458 

2001 

147 

509 

712 

718 

2002 

154 

1 431 

607 

870 

1 164 

1 173 

1 044 

609 

284 

0 

495 

0 

528 

466 

495 

740 

2003 

169 

796 

611 

591 

713 

407 

295 

200 

IP 

195 

795 

667 

617 

458 

431 

270 

191 

Table 22 Market share of imports into the Community from other third countries 

into 
Market 
Community from other third countries 

share  of 

imports 

Percentage of market 

Index 

Source: Eurostat data 

the 

2000 

2001 

2002 

2003 

IP 

IP/2000 

2 

100 

2 

117 

3 

129 

2 

80 

1 

73 

-1 

EN 

16 

   EN 

 
 
(71)  The total import volumes of magnesium oxide from third countries other than the PRC 
decreased during the period considered from 10 252 tonnes in 2000 to 7 172 tonnes in 
the IP. For calculating market shares of the imports from other third countries, a slight 
adjustment  was  made  by  excluding  the  volume  of  imports  sold  on  the  Community 
market  and  purchased  by  one  of  the  Community  producers  from  its  subsidiary  in 
Turkey. The market share of these imports fell from around 2% to 1% over this period. 
The  major  exporters  to  the  Community  have  been  Turkey,  Israel,  Australia  and  the 
USA.  

(72)  The  average  import  prices  from  other  third  countries  were  significantly  higher  than 
those  of  the  Community  industry  during  the  IP.  It  should  be  noted,  however,  that 
Eurostat  data  with  10-digit  Taric  code  also  include  prices  of  synthetic  magnesium 
oxide  with  a  much  higher  purity  than  the  product  concerned  and  therefore  higher 
prices.  While  no  precise  information  is  available  as  to  the  proportion  between 
synthetic magnesium oxide and the product concerned in the product mix, subject to 
the  Eurostat  data  with  10-digit  Taric  code,  it  can  be  reasonably  assumed  that  the 
overall price level of magnesium oxide from third countries was higher than that of the 
Community industry during the IP. 

Conclusion 

(73)  As explained above, consumption of the product concerned decreased slightly during 
the period considered. As in the previous expiry review, it is considered, however, that 
Community  consumption  did  not  have  a  major  influence  on  the  situation  in  the 
Community  industry  during  the  period  considered  as  explained  in  recital  42  on  the 
Community consumption. 

(74)  The measures in force have led to a partial recovery of the Community industry since 
2000. Economic factors such as market shares, profitability, return on investment, cash 
flow, productivity and closing stocks showed a positive development. The Community 
industry’s sales have been profitable from 2001 (0.9%) to the IP (1.6%). However, due 
to  the  pressure  exerted  by  the  Chinese  exporters,  Community  industry  has  not  been 
able  to  achieve  sufficient  profit,  necessary  to  ensure  its  viability  in  the  future.  As 
regards the downward trend in production (-5%), capacity utilization (-5%) and sales 
in the Community market (-3%), it was more or less in line with the decrease in the 
consumption.  However,  this  has  been  at  the  expense  of  employment  (-20%),  and 
investments  (-19%).  It  is  noted  that  the  sales  made  by  one  Community  producer  to 
related  parties  did  not  change  the  overall  picture  of  the  situation  of  the  Community 
industry. It can therefore be concluded that, although the situation of the Community 
industry  has  improved,  it  remains  vulnerable,  inter  alia  as  a  result  of  the  continued 
dumped imports from the PRC. The efforts of the Community industry to improve its 
competitiveness have therefore not been entirely successful.  

(75)  On the other hand, it should also be noted that volumes and market share of Chinese 
imports  have  decreased  over  the  period  considered.  Furthermore,  it  was  found  that 
Chinese imports had not undercut the prices of the Community industry. Under these 
circumstances and, in particular, in view of the limited improvement of the situation of 
the  Community  industry,  the  decrease  of  Chinese  imports  and  market  share  and  the 
absence  of  undercutting,  the  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. 

EN 

17 

   EN 

 
Likelihood of recurrence of injury 

(76)  With  regard  to  the  likely  effect  on  the  situation  of  the  Community  industry  of  the 
expiry  of  the  measures  in  force,  a  number  of  factors  were  taken  in  line  with  the 
elements summarised in the recitals above.  

(77)  As already indicated, if the anti-dumping measures were allowed to expire, it is very 
likely  that  imports  at  dumped  prices  of  the  product  concerned  from  the  PRC  would 
increase considerably in view of the large spare production capacity held by the PRC 
resulting from the fact that it has the largest magnesite ore resources in the world.  

(78)  The  comparison  between  imports  from  the  PRC  and  other  third  countries  into  the 
Community has shown important differences in prices. Import prices from other third 
countries were high during the period considered while Chinese import prices, which 
are  dumped,  have  continuously  decreased.  Furthermore,  the  fact  that  Chinese  export 
prices  to  the  other  main  markets  for  magnesium  oxide  were  38%  below  the  export 
prices  to  the  Community  shows  clearly  that  Community  industry  would  face  more 
pressure from increased volumes of dumped exports of the product concerned from the 
PRC, bearing in mind that these exports have already exerted a downward pressure on 
the Community prices during the period considered. 

(79) 

In the light of the above, it is concluded that allowing the measures to lapse would in 
all likelihood result in a recurrence of injury to the Community industry.  

G. COMMUNITY INTEREST 

Preliminary remark 

(80) 

(81) 

In  accordance  with  Article  21  of  the  basic  Regulation,  it  was  examined  whether 
maintaining  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 concerned. 

It should be recalled that in the previous review, the re-imposition of the measures was 
considered  not  to  be  against  the  interest  of  the  Community.  Furthermore,  as  the 
present  investigation  is  also  an  expiry  review,  it  allows  an  analysis  of  any  undue 
negative impact on the parties concerned by the current anti-dumping measures. 

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

Interests of the Community industry 

(83) 

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 
recurrence of injury to the Community industry arising from such imports. Moreover, 
it was found that the Community industry is still in a fragile situation. Continuation of 
the measures should help them to fully recover and avoid further injury. Therefore, it 

EN 

18 

   EN 

 
is  in  the  interest  of  the  Community  industry  to  maintain  measures  against  dumped 
imports from the PRC. 

Interests of unrelated importers/traders 

(84)  The  Commission’s  services  sent  out  questionnaires  to  23  importers/traders  named  in 

the complaint. No answers were received.  

(85) 

In  these  circumstances,  it  was  concluded  that  the  measures  in  force  did  not  greatly 
affect  importers  or  traders  and  therefore  the  continuation  of  measures  would  not 
significantly affect these parties. This is also in line with the findings made in previous 
investigations. 

Interests of users 

(86)  The  Commission’s  services  sent  out  questionnaires  to  four  users.  No  answers  were 

received.  

(87)  Given the lack of response to the questionnaires and of verifiable data in support of an 
expiry of the measures in force, as in the previous expiry review, it is concluded that 
the continuation of the duties would not have a significant effect on users. 

H. CONCLUSION 

(88)  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  other 
export markets and bearing in mind significant spare capacity in the PRC. Therefore, 
if measures were repealed, it is likely that huge quantities of dumped imports would 
enter the Community market. 

(89)  The  situation  of  the  Community  industry,  reflected  in  the  reduced  production,  sales 
and  employment  and  insufficient  profit  during  the  period  considered,  would  most 
likely  be  aggravated  if  measures  were  repealed  as  increased  volumes  of  dumped 
imports from the PRC would start to flow onto the Community market. 

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

(91) 

It  is  therefore  considered  appropriate  to  maintain  the  current  anti-dumping  measures 
against imports of magnesium oxide originating in the PRC. 

(92)  All  parties  were  informed  of  the  essential  facts  and  considerations  on  the  basis  of 
which it was intended to recommend 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. 

(93) 

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  magnesium  oxide 
originating  in  the  PRC,  imposed  by  Council  Regulation  (EC)  No  1334/1999,  as  last 
amended by Regulation (EC) No 985/2003, should be maintained. 

EN 

19 

   EN 

 
HAS ADOPTED THIS REGULATION: 

Article 1 

1. A definitive anti-dumping duty is hereby imposed on imports of magnesium oxide falling 
within  CN  code  ex  2519  90  90  (Taric  code  2519  90  90*10)  and  originating  in  the  People's 
Republic of China. 

2. The amount of the anti-dumping duty shall be: 

(a) the difference between the minimum import price of EUR 112 per tonne and the net, free-
at-Community frontier price, before duty, in all cases where the latter is: 

— less than the minimum import price, and 

—  established  on  the  basis  of  an  invoice  issued  by  an  exporter  located  in  the  People's 
Republic of China directly to an unrelated party in the Community (TARIC additional code 
A420); 

(b) zero, if the net, free-at-Community-frontier price, before duty, is established on the basis 
of an invoice issued by an exporter located in the People's Republic of China directly to an 
unrelated party in the Community and equal to or higher than the minimum import price of 
EUR 112 per tonne (TARIC additional code A420);  

(c) equal to an ad valorem duty of 27.1% in all other cases not falling under subparagraph (a) 
and (b) (TARIC additional code A999). 

In cases where the anti-dumping duty is established according to subparagraph 2(a) of Article 
1 and 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 minimum import 
price set out above shall be reduced by a percentage which corresponds to the apportioning of 
the  price  actually  paid  or  payable.  The  duty  payable  will  then  be  equal  to  the  difference 
between the reduced minimum import price and the reduced net, free-at-Community-frontier 
price, before customs clearance. 

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

Article 2 

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

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

Done at Brussels, 

EN 

For the Council 
The President 

20 

   EN