Commission Regulation (EC) No 862/2005 of 7 June 2005 imposing provisional anti-dumping duties on imports of granular polytetrafluoroethylene (PTFE) originating in Russia and the People's Republic of China
Date: 2005-06-07
Institutions: European Commission
Subjects: China, Russia, anti-dumping duty, anti-dumping legislation, chemical product, import, originating product

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COMMISSION REGULATION (EC) No 862/2005

of 7 June 2005

imposing provisional anti-dumping duties on imports of granular polytetrafluoroethylene (PTFE)
originating in Russia and the People's Republic of China

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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 Community (1) (basic Regulation), and in particular
Article 7 thereof,

After consulting the Advisory Committee,

Whereas:

1. Initiation

A. PROCEDURE

(1)

(2)

(3)

(4)

(5)

On 9 September 2004, the Commission announced by a notice (notice of initiation) published in the
Official Journal of the European Union (2), the initiation of an anti-dumping proceeding with regard to
imports into the Community of granular polytetrafluoroethylene resin (PTFE) originating in Russia
and the People’s Republic of China (PRC).

The anti-dumping proceeding was initiated following a complaint lodged on 26 July 2004 by the
European Chemical Industry Council (CEFIC or the complainant) on behalf of producers representing
a major proportion, in this case more than 80 %, of the total Community production of PTFE. The
complaint contained evidence of dumping of the said product and of material
injury resulting
therefrom, which was considered sufficient to justify the initiation of a proceeding.

2. Parties concerned by the proceeding

importers/
The Commission officially advised the exporting producers in Russia and in the PRC,
traders and their associations, suppliers and users known to be concerned, the representatives of the
exporting countries concerned and the complainant and all known Community producers of the
initiation of the proceeding. Interested parties were given the opportunity to make their views known
initiation.
in writing and to request a hearing within the time limit set

in the notice of

In view of the apparent large number of Chinese exporting producers listed in the complaint,
sampling was envisaged in the notice of initiation for the determination of dumping, in accordance
with Article 17 of the basic Regulation.

In order to enable the Commission to decide whether sampling would be necessary and, if so, to
select a sample, all exporting producers from the PRC were asked to make themselves known to the
Commission and to provide, as specified in the notice of initiation, basic information on their
activities related to PTFE during the investigation period (1 July 2003 to 30 June 2004).

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation (EC) No 461/2004 (OJ L 77, 13.3.2004, p. 12).
(2) OJ C 225, 9.9.2004, p. 18.

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(6)

(7)

(8)

(9)

After examination of the information submitted by exporting producers and due to the low number
of replies to the sampling questions, it was decided that sampling was not necessary with regard to
the exporters in the PRC.

In order to allow exporting producers in the PRC to submit a claim for market economy treatment
(MET) or individual treatment (IT),
if they so wished, the Commission sent claim forms to the
Chinese exporting producers known to be concerned. Claims for MET, or for IT in case the inves-
tigation establishes that they do not meet the conditions for MET, were received from three exporting
producers.

The Commission sent questionnaires to all parties known to be concerned and to all the other
companies that made themselves known within the deadlines set out in the notice of initiation.
Replies were received from three Chinese exporting producers,
from two Russian exporting
producers, from three Community producers, and from one unrelated importer.

The Commission sought and verified all the information it deemed necessary for the purpose of a
preliminary determination of dumping, resulting injury and Community interest. Verification visits
were carried out at the premises of the following companies:

(a) Community producers:

— Dupont de Nemours BV, the Netherlands,
— Dyneon, Germany,
— Solvay Solexys, Italy.

(b) Unrelated importer:

— Resyncom, Germany.

(c) Exporting producers in the PRC:

— Shandong Dongyue Polymer Material Co. Ltd,
— Shanghai 3F New Material Company Co. Ltd,
— Zheijiang Jusheng Fluorochemicals Co. Ltd and its related company Zheijang Juhua Group

Imp. & Exp. Co. Ltd.

(d) Exporting producers in Russia:

— Kirovo-Chepetsky Khimichesky Kombinat and its related company Priborlab Ltd,
— Open Joint Stock Company ‘Halogen’.

(e) Related importers

— Chemical Goods Ltd, United Kingdom.

(10)

In view of the need to establish a normal value for exporting producers in the PRC to which MET
might not be granted, a verification visit to establish normal value on the basis of data from an
analogue country, the United States of America (USA), took place at the premises of the following
companies:

— AGC Chemicals Americas, Inc., USA,
— E. I. DuPont de Nemours & Company, Inc., USA.

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3. Investigation period

(11)

The investigation of dumping and injury covered the period from 1 July 2003 to 30 June 2004
(investigation period or IP). The examination of trends in the context of the injury analysis covered
the period from 1 January 2001 to the end of the IP (period under consideration or period
considered).

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. General

(12)

Fluoropolymers are a group of high performance plastics, of which polytetrafluoroethylene (PTFE) is
the best known and most widely used.

(13) Granular PTFE is a chemical product (a fluoropolymer) which bears a number of high resistance
properties (such as high melting point, high thermal stability, insolubility, non-inflammability, low
dielectric constant). It is used as a component in a wide number of industrial sectors, e.g. the
(inner shield of cables), automotive, construction (as isolation
chemical, mechanical, electrical
agent), cookware (pans),
(surgery instruments) sectors. The most known
trade mark under which this product is commercialised is Teflon.

textile, or biomedical

(14)

(15)

(16)

2. Product concerned

The product concerned is so called granular polytetrafluoroethylene (PTFE), containing not more than
3 % of other monomer unit than tetrafluoroethylene, without fillers, in the form of powder or pellets,
with the exclusion of micronised materials, and its raw polymer (reactor bead). The latter can be in
wet or dry form. Notwithstanding the different possible product types due to different form, average
particle size, thermo treatment or co-monomer content, all of them constitute one product for the
purpose of this proceeding because they have the same physical characteristics and essentially the
same basic uses. The product concerned is currently classifiable within CN code ex 3904 61 00.

3. Like product

The product concerned, and the PTFE produced and sold in the Community by the Community
industry, the PTFE produced and sold on the domestic market of both exporting countries and the
PTFE produced and sold on the domestic market of the analogue country were found to have
essentially the same physical and technical characteristics and the same basic uses. They are
therefore provisionally considered to be alike within the meaning of Article 1(4) of the basic
Regulation.

The two importers claimed that for certain applications, the product imported from Russia and China
is not in competition at all with the PTFE produced and sold in the Community market. This
concerns mainly PTFE scrap or ‘off-spec’ which is used to produce fine particle size PTFE. This
fine particle size product is used e.g. as an additive in processing plastics or in printing inks as
well as in coatings for metals. This had to be rejected, as it was found that the Community industry
also produces scrap or ‘off-spec’ material which is sold to the same customers.

1. General methodology

C. DUMPING

(17)

the general methodology is described. The subsequent presentation of

Below,
the findings on
dumping for the countries concerned therefore only describes issues specific to each exporting
country.

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(18)

(19)

(20)

(21)

1.1. Normal value

In accordance with Article 2(2) of the Basic Regulation, it was first examined for each cooperating
exporting producer whether its domestic sales of PTFE were representative,
i.e. whether the total
volume of such sales represented at least 5 % of the total export sales volume of the producer to the
Community.

The Commission subsequently identified those types of PTFE sold domestically that were identical or
directly comparable with the types sold for export to the Community. With regard to the exam-
ination on a product type basis, the Commission considered as identical or directly comparable the
product types sold domestically and exported, which were of similar average particle size, thermo
treatment and co-monomer content.

For each type sold by the exporting producers on their domestic markets and found to be directly
comparable with the type of PTFE sold for export to the Community, it was established whether
domestic sales were sufficiently representative for the purposes of Article 2(2) of the basic Regulation.
Domestic sales of a particular type of PTFE were considered sufficiently representative when the total
domestic sales volume of that type during the IP represented 5 % or more of the total sales volume of
the comparable type of PTFE exported to the Community.

The Commission subsequently examined whether the domestic sales of each type of PTFE, sold
domestically in representative quantities could be regarded as having been made in the ordinary
course of trade in accordance with Article 2(4) of the Basic Regulation, by establishing the proportion
of profitable sales to independent customers of the PTFE type in question. Since the sales volume of
each PTFE type, sold at a net sales price equal to or above the calculated cost of production,
represented more than 80 % of the total sales volume of that type, and the weighted average
price of that type was equal to or above the cost of production, normal value was based on the
actual domestic price, calculated as a weighted average of the prices of all domestic sales of that type
made during the IP, irrespective of whether these sales were profitable or not.

1.2. Export price

(22)

In all cases the export price was established in accordance with Article 2(8) of the Basic Regulation,
namely on the basis of export prices actually paid or payable.

1.3. Comparison

(23)

The normal value and export prices were compared on an ex-works basis. For the purpose of
ensuring a fair comparison between the normal value and the export price, due allowance in the
form of adjustments was made for differences affecting prices and price comparability in accordance
with Article 2(10) of the basic Regulation. Appropriate adjustments were granted in all cases where
they were found to be reasonable, accurate and supported by verified evidence.

1.4. Dumping margin

(24) According to Article 2(11) of the basic Regulation the dumping margin for each exporting producer
was established on the basis of a comparison between the weighted average normal value with the
weighted average export price per product type.

1.5. People’s Republic of China

1.5.1. M a r k e t E c o n o m y T r e a t m e n t

( M E T )

(25)

In anti-dumping investigations concerning imports originating in the PRC, normal value shall be
determined in accordance with paragraphs 1 to 6 of Article 2 of the basic Regulation for those
producers which were found to meet the criteria laid down in Article 2(7)(c) of the basic Regulation.

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(26)

Briefly, and for ease of reference only, the criteria in Article 2(7)(c) of the basic Regulation, fulfilment
of which the applicant companies have to demonstrate, are set out in summarised form below:

1. business decisions and costs are made in response to market conditions, and without significant

State interference;

2. accounting records are independently audited in line with international accounting standards and

applied for all purposes;

3. there are no significant distortions carried over from the former non-market economy system;

4.

legal certainty and stability are provided by bankruptcy and property laws;

5. currency exchanges are carried out at the market rate.

(27)

(28)

Three exporting producers in the PRC requested MET pursuant to Article 2(7)(b) of the basic
Regulation and replied to the MET claim form for exporting producers. For these companies, the
Commission sought and verified at the premises of these companies all information submitted in the
MET applications and deemed necessary.

The investigation showed that none of the three companies mentioned above fulfilled the criteria
required and their claims had to be rejected. The following table summarises the determination for
the three companies against each of the five criteria as set out in Article 2(7)(c) of the basic
Regulation.

Criteria

Company

1

2

3

Article 2(7)(c)
indent 1

Article 2(7)(c)
indent 2

Article 2(7)(c)
indent 3

Article 2(7)(c)
indent 4

Article 2(7)(c)
indent 5

Not met

Not met

Not met

Not met

Not met

Not met

Not met

Not met

Not met

Met

Met

Not met

Met

Met

Met

Source: Verified questionnaire replies of cooperating Chinese exporters.

(29)

The companies concerned were given an opportunity to comment on the above findings. All three
companies disagreed with the determinations made and claimed that they should be granted MET.

(30) One company questioned whether the Commission’s practice of assessing MET on the basis of the
five criteria laid by Article 2(7)(c) of the basic Regulation could be regarded in line with GATT/WTO
provisions.
the Commission based its decisions on indications and
presumptions, and that Article 2(7) of the basic Regulation was not applied in an objective way.

It was further argued that

(31)

In this respect it should be noted that the current investigation, including the assessment of whether
an exporting producer operates under market economy conditions, is made in accordance with the
applicable provisions of the basic Regulation, which are fully in line with WTO obligations.

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(32) As acknowledged by the Court of First Instance, the burden of proof is on the exporting producer to
demonstrate that it fulfils the conditions laid down in Article 2(7)(c) of the basic Regulation. If no
such evidence has been provided the claim for MET must be rejected. Such conclusion is made on the
basis of an objective analysis of substantiated evidence, as disclosed to the companies concerned, and
subject to judicial review.

(33)

Concerning the first criterion, i.e. that business decisions are made in response to market signals,
without significant State interference, and costs reflect market values, it was concluded that there was
no evidence that the Articles of Association of one company were adhered to. Therefore, no evidence
was available that this company’s decisions could not be significantly influenced by the State,
including through the State-owned shareholder. The company objected to the Commission’s
conclusions arguing that its Articles of Association offer a reliable guarantee that the State may
not exert a significant influence in its decisions and that, in any event, the State-owned shareholder is
a trustee acting on behalf of a private company. However, the Articles of Association of the company
stipulate its organisation and decision-making procedures. Since the investigation revealed that such
Articles of Association were not respected and could be easily changed by the company itself, it can
reasonably be concluded that eventual provisions of such Articles of Association, seeking to ensure
that the State cannot significantly influence the company’s decision, are unreliable and cannot
provide any guarantee in that respect. In addition, the company did not provide any explanation,
other than ‘visibility’, as to why the State-owned trust fund was its actual shareholder. On the
contrary,
it was argued during the on-the-spot verification that this would allow the company,
inter alia, a better access to financing in the future. The risk of State interference was therefore
deemed significant.

The company further argued that, contrary to the Commission services’ conclusions, prices of its raw
materials did reflect market values. Besides the fact that no evidence was submitted that this was the
case, comparable purchases of raw materials were made at different prices, without the company
being able to give any reasonable explanation as to these important differences.

Therefore, it had to be concluded that the exporting producer did not provide sufficient information
that it was operating under market economy conditions. None of the arguments brought forward by
the company concerned subsequent to the disclosure could reverse this conclusion and the claim had
to be rejected.

such meeting was not

(34) One company argued that the absence of a minimum quorum in the shareholders meeting, which
allows the State-owned shareholder to significantly influence the company’s decisions, was not
relevant as
responsible for operational decisions. Nevertheless, State
influence is relevant not only when it relates to operational decisions. In addition, according to
the company’s Articles of Association, the shareholders meeting is competent, inter alia, to decide
on business operation and investment plans, to examine and approve the financial budget and final
accounts, as well as the plan for the company’s profit distribution. Hence, the State can significantly
influence the company’s decisions on such important matters. It was also argued that the fact that
export sales were made via a partly State-owned trader during half of the IP, did not constitute a
reason to conclude that there was State interference. In this respect, it should be noted that this trader
was involved in sales of the product concerned (including signing contracts, receiving payments and
invoicing to customers), but did not submit a MET claim. Therefore, the company was not able to
demonstrate that it operated without significant State interference.

(35)

It was also argued by one company that the State-owned shareholder owning the majority of the
company’s shares, and which consequently nominated the majority of the members of the board,
could not significantly influence the company’s decisions.
in
accordance with a consistent Commission practice, where the State has the possibility to exert
significant influence on the company’s decisions, whether legally or de facto, it is considered that
the first criterion of Article 2(7)(c) of the basic Regulation is not met. Therefore, the claim had to be
rejected.

it is recalled that,

In this respect,

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(36)

(37)

Regarding the second criterion, i.e. that firms have one clear set of basic accounting records which
are independently audited in line with international accounting standards, all
three companies
submitted that they are fulfilling the criterion because their accounting records are independently
it was found that the auditors’ reports of the companies contained significant
audited. However,
discrepancies with the company’s accounts, or that changes in the accounting policy of
the
companies concerned were not addressed, as required by international accounting standards.
In
it was also found that the amounts mentioned in the auditor’s notes to the accounts
one case,
did not coincide with the company’s accounts. Another company did not submit an English version
of the complete financial statements including the auditor’s notes thereto, which prevented a proper
examination. Therefore, it had to be concluded that the accounting records of all three companies
concerned were not audited in line with international accounting standards as required by Article
2(7)(c) second indent of the basic Regulation and the claims were rejected.

Regarding the third criterion, the three companies submitted that contrary to the Commission’s
findings, there were no significant distortions carried over from the former non-market economy
system. One company disagreed that no evidence was available showing that its land use rights
reflected market values and submitted public information concerning land prices. This information
was provided significantly after the deadline to submit a properly documented claim for MET and it
could no longer be verified;
it had therefore to be rejected. As far as the second company is
concerned, this was found to have bought its production facilities of the product concerned from
a State-owned company, however, at a substantial discount in comparison to the value determined by
independent evaluators. Its depreciation of fixed assets was also found to be inconsistent. The third
company was found to receive bank loan guarantees from its State-owned shareholder and to operate
a settlement account in such a way that it was not possible to link invoices and payments. This
means that there are significant distortions carried over from the former non-market economy
system.

(38)

It was consequently concluded that the companies concerned did not fulfil the conditions set out in
Article 2(7)(c) third indent of the basic Regulation and their claims had therefore to be rejected.

(39)

The company which did not fulfil the fourth criterion argued that, contrary to the Commission’s
findings, bankruptcy law did guarantee stability and legal certainty. However, it was found that this
company faced significant financial difficulties having been loss-making for a number of consecutive
years, and was bailed out by its State-owned shareholder. Although, as argued by the company, such
significant financial difficulties may not necessarily result in bankruptcy, the fact that the State-owned
shareholder rescued the company (including through debt write-off),
in a situation where under
normal market conditions a shareholder would not have done this, indicates that the application
of such law to this particular case is doubtful. It had therefore to be concluded that there was no
evidence that the bankruptcy law applied in practice to the company. In the absence of such evidence
this criterion was considered as not being fulfilled.

(40)

The Advisory Committee was consulted and the parties directly concerned were informed
accordingly. The main arguments raised by exporters have already been addressed above. The
Community industry was also given the opportunity to comment, and agreed with the MET deter-
mination.

1.5.2. I n d i v i d u a l T r e a t m e n t

( I T )

(41)

is established for
Further to Article 2(7)(a) of the Basic Regulation, a countrywide duty,
countries
in those cases where
companies are able to demonstrate that they meet all criteria set out in Article 9(5) of the basic
Regulation for receiving individual treatment.

falling under Article 2(7) of

the Basic Regulation, except

if any,

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(42)

The three exporting producers, as well as requesting MET, also claimed individual treatment in the
event of not being granted MET.

(43)

(44)

Since none of the three companies was able to demonstrate that State interference, whether actual or
potential, was not such as to also influence their export prices and quantities, as well as their
conditions and terms of the sales, it had to be concluded that they did not meet the conditions
set in Article 9(5)(b) of the basic Regulation.

Equally, for all three companies it was found that the risk of circumvention of the measures could
not be excluded, if these exporters were to be given an individual duty rate. This risk results from the
abovementioned actual or potential State influence in the operation of the companies. Moreover,
given the nature and presentation of PTFE,
in particular for customs
authorities, to identify the producer of the PTFE being imported. Therefore, the risk of circumvention
of measures by way of exporting via a company with a lower level of duty, which is aggravated by
the fact that there is significant risk of State interference, was also deemed significant. Therefore, the
conditions set in Article 9(5)(e) of the basic Regulation were not met.

it is usually very difficult,

(45)

Since none of the companies meets all the criteria set out in Article 9(5) of the basic Regulation, it is
provisionally decided not to grant them IT.

1.5.3. N o r m a l v a l u e

1.5.3.1. D e t e r m i n a t i o n o f n o r m a l v a l u e

f o r

e x p o r t i n g p r o d u c e r s n o t g r a n t e d

M E T

Analogue country

(46)

Pursuant to Article 2(7)(a) of the basic Regulation, normal value for the exporting producers not
granted market economy treatment has to be established on the basis of the prices or constructed
value in a market economy third country (analogue country).

(47)

In the notice of initiation, the USA was envisaged as an appropriate market economy third country
for the purpose of establishing normal value for the PRC and interested parties were invited to
comment on this. Two exporting producers in the PRC argued that the USA was not an appropriate
choice and proposed Russia instead. It was submitted that the USA market of PTFE is not sufficiently
competitive since there are anti-dumping duties imposed on imports from Italy and Japan since
1988. It was also argued that the biggest US producer is related to one of the EU complainants. In
addition, it was submitted that there are differences in technical levels, quality and end-uses between
the PTFE sold in the USA market and that exported by Chinese producers into the Community.
Furthermore, it was argued that there are differences in access to raw materials since USA producers
must import fluorspar, facing export quotas imposed by the PRC which represents 50 % of that
product’s world production. On the other side, Chinese exporters would have direct access to
it was submitted that China’s economic development (with
fluorspar produced in China. Finally,
lower labour costs than USA), is closer to Russia, which is also subject to the same investigation.

(48)

It should be noted that production of PTFE is made in a limited number of countries. One Indian
producer came forward supporting the allegations of dumping against Chinese exporting producers
and was asked to cooperate as a producer in a potential analogue country. However, the Indian
producer did not agree to cooperate.

(49) As regards the suggested choice of Russia, for the reasons explained under recitals 70 to 75, data
regarding normal value submitted by the Russian exporting producers was found to be unreliable and
could not, therefore, be used. Consequently, the use of such data for the determination of normal
value for Chinese exporting producers not granted market economy treatment could not be accepted.
Moreover, a country also subject to investigation is not normally considered to be an appropriate
analogue country, since its domestic market could be distorted.

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(50)

(51)

(52)

(53)

(54)

Concerning the choice of the USA, the analysis of all of the information available showed that the
USA appeared to be the most appropriate analogue country. The USA has a large and highly
competitive market for the product concerned, with three producers and, despite anti-dumping
duties, significant
including from the PRC and
Russia. Customs duties on imports of PTFE are lower in the USA (5,8 %) than in Russia (10 %).

imports (above 20 % of

the domestic market)

Regarding the relationship between a producer in the analogue country and in the Community this is
not per se a reason to consider the choice of the USA as unreasonable. Data reported by USA
producers was verified by the Commission services, which were fully satisfied with regard to its
appropriateness and reliability.

The argument on differences in access to raw materials (fluorspar) was found not to prevent the
choice of the USA either. No evidence was provided regarding the effect of the Chinese export quotas
on the USA market so as to allow a quantification of such possible effect. It was found however, that
fluorspar is the fourth upstream raw material of PTFE and should therefore represent only a very
small part of its cost of manufacturing (roughly estimated at less than 5 %). In these circumstances,
the effect of the Chinese export quotas on the USA market for PTFE would be minimal. Moreover,
chloroform is a much more important input of PTFE, in which the PRC has a disadvantage due to its
dependence on imports and the high AD duties in force against several exporting countries. It is
therefore concluded that any difference in access to raw materials between USA and the PRC is not
such as to render the choice of the former as analogue country unreasonable.

Regarding physical and technical differences and end-uses, the information available indicates that the
product exported by Chinese producers, although normally of a lower quality due to different levels
of contamination than the PTFE produced in the USA, still follows industry standards and is generally
used for the same applications. Nevertheless, in order to take into account the possibility of different
levels of contamination between the product concerned and the like product, and in the absence of
any other basis, an adjustment was provisionally established at 10 %, based on estimations provided
by the USA producers.

Finally, as far as the different level of economic development of the USA and the PRC is concerned,
no evidence was submitted which could demonstrate whether and to what extent normal value was
affected by such difference. Moreover, such difference in itself is not a relevant factor when selecting
an analogue country. Indeed, the selection of a modern and cost efficient market characterised by
intensive competition may well result in a lower normal value than if the analogue country has a
comparable economic development to the non market economy country.

(55)

Considering the above, it was concluded that the USA was the most appropriate analogue country
and that under these circumstances the selection of the USA seemed reasonable and justified in
accordance with Article 2(7) of the basic Regulation.

(56)

The Commission sent a more detailed questionnaire to the producers in the USA requesting infor-
mation on domestic sales prices and cost of production of the like product. The reply of the
producers was verified on the spot.

Determination of normal value in the analogue country

(57)

Pursuant to Article 2(7) of the basic Regulation, normal value for the Chinese exporting producers
was established on the basis of verified information received from two producers in the analogue
country,
i.e. on the basis of prices paid or payable on the domestic market of the USA for
comparable product types, since these were found to be made in the ordinary course of trade and
in representative quantities.

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(58) As far as the determination of normal value is concerned, the Commission followed the same

methodology as the one explained in recitals 18 to 28.

1.5.4. E x p o r t p r i c e

(59) All export sales to the Community by the Chinese exporting producers were made directly to
independent customers in the Community and therefore,
the export price was established in
accordance with Article 2(8) of the Basic Regulation on the basis of the prices actually paid or
payable.

1.5.5. C o m p a r i s o n

(60) Adjustments were made in respect of discounts and rebates, commissions, transport,

insurance,

packing, credit costs, after sales costs and bank charges where applicable and justified.

(61) As mentioned in recital 53 an adjustment pursuant to Article 2(10)(a) of the basic Regulation was
made to the normal value for differences in degrees of contamination between the product sold by
the Chinese producers to the Community and that sold in the domestic market in the USA.

(62)

(63)

Furthermore, one product type exported by the Chinese exporting producers had a different thermo
treatment when compared to the comparable type sold in the analogue country. Therefore, an
allowance in line with Article 2(10)(a) of the basic Regulation was made. In the absence of any
more reliable information, the adjustment was established on the basis of the price difference related
to that specific characteristic found in the analogue country.

For one product type exported by the Chinese producers, with an average particle size between 100
microns and 400 micros, no direct matching product type was produced during the IP by the
cooperating producers in the USA, and no estimation of the market difference could be established.
Nevertheless, on the basis of the information provided by one producer in the USA, it was provi-
sionally concluded that this product type sold by the Chinese exporters, with inconsistent particle
sizes, had characteristics closely resembling those of low flow PTFE (or less than 100 micron). It was
therefore considered appropriate to provisionally base the normal value of that type on the normal
value found for low flow PTFE sold in the USA market.

(64) An adjustment was also made with regard to claimed differences in Chinese VAT reimbursement.

1.5.6. D u m p i n g m a r g i n

(65)

For each Chinese exporting producer, the weighted average normal value for the types exported to
the Community established for the analogue country was compared with the weighted average export
price of the corresponding type exported to the Community, as provided for under Article 2(11) of
the Basic Regulation.

(66) As explained in recitals 41 to 43, none of the three cooperating Chinese companies was granted IT.
Consequently, a single countrywide dumping margin was established on the basis of the weighted
average of the dumping margins found for each of the three Chinese producers.

(67)

The countrywide dumping margin expressed as a percentage of the CIF net free-at-Community-
frontier price, before duty, is 99,7 %.

(68)

Since the three known exporting producers appeared to account for all Chinese exports of the
product concerned to the Community,
there was no reason to believe that any exporting
producer abstained from cooperating. Therefore, it is provisionally considered that the countrywide
dumping margin should be set at the same level.

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1.6. Russia

(69) Questionnaire replies were received from the two known exporting producers and from the related
companies of one of the exporters (one trader in Russia and one importer in the Community).

1.6.1. N o n - c o o p e r a t i o n

(70)

The questionnaire replies of both companies were significantly deficient. Furthermore, in both cases,
the on-the-spot verification showed that these companies had submitted incomplete, incorrect and
misleading information.

(71)

(72)

Thus, in one of the companies, the accounting had significant shortcomings and was found to be
unreliable. Therefore, the completeness and accuracy of the data submitted could not be verified.
Furthermore, significant parts of the questionnaire reply could not be verified at all
(since no
reconciliation with its accounts was provided by the company) and in some instances the
company even refused to submit some information necessary for the calculation of the dumping
margin, or did not provide such information in a timely manner so that it could not be verified
anymore.

The reply of the second company was also deficient, and it was found on-the-spot that the company
had given misleading information of an essential nature concerning its organisational structure. Thus,
it was only found during the on-the-spot investigation that the company actually split into two
entities at the beginning of the IP (one of them producing the product concerned). The fact that the
complex company structure was not declared before the verification visit significantly impeded the
investigation because of its far-reaching consequences in terms of accounting and determinations of
costs.

(73) Moreover, the company did not submit essential elements of the reply, including audited financial
statements, claiming these were not available. However, this proved to be wrong during the verifi-
cation visit. In addition, the company re-submitted at the beginning of the investigation verification
significant parts of its questionnaire reply, impeding the verification of the questionnaire reply.

(74)

The related trader in Russia of the company mentioned in the previous recital did not cooperate.
Indeed, the company impeded the verification, by refusing access to information pertaining to
organisation, sales of the product concerned, and payments, in such a way that this party could
not be considered to be a cooperating party. Finally, the related trader in the United Kingdom could
not provide any financial figure for the IP.

(75)

In view of the above, it was considered that the dumping margins for both exporting producers could
not be established on the basis of their own data. The dumping margin was therefore provisionally
determined on the basis of facts available, in accordance with Article 18 of the basic Regulation.

1.6.2. N o r m a l v a l u e

(76)

In the absence of any other information, the normal value was provisionally calculated on the basis
of the information in the complaint. An average normal value was calculated from the prices
indicated in the price lists of the domestic market during the IP of both exporting producers. In
the absence of any more appropriate basis, one single normal value was calculated for the product
concerned as a whole.

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1.6.3. E x p o r t p r i c e

(77)

Export price was provisionally calculated on the basis of Eurostat data for the IP.

1.6.4. C o m p a r i s o n

(78)

Pursuant to Article 2(10)(e) of the basic Regulation, adjustments were made to the normal value, to
take into account the fact that the prices in the price-lists included terms of delivery other than ex-
works, and to the export price to take into account the differences in terms of delivery and other
charges incurred between ex-works and CIF incoterms.

(79) All adjustments were made on the basis of information provided in the complaint.

1.6.5. D u m p i n g m a r g i n

(80)

The provisional dumping margin was established on the basis of a comparison of the weighted
average normal value with the weighted average export price, as determined above.

(81)

The comparison between the normal value and the export price showed the existence of dumping.
The provisional dumping margins, expressed as a percentage of the cif net free-at-Community-
frontier price, before duty, is 36,6 %.

(82)

Since the aforementioned two companies represented all export sales from Russia to the Community,
and since there was no reason to believe that any exporting producer abstained from cooperating, the
residual duty was also set at the same level.

1. Community production

D. INJURY

(83) Within the Community, the product concerned is known to be manufactured in Germany, Italy, the

Netherlands, the United Kingdom and Poland by:

— three producers on behalf of which the complaint was lodged, representing more than 80 % of

the Community production, and

— two other Community producers which were not complainants. Only one has submitted general
information to the Commission. Neither of these two producers opposed the present proceeding.

(84)

The Commission has found that all the above companies could be considered as Community
producers within the meaning of Article 4(1) of the basic Regulation. The output of all the above
companies constitutes
the Community production, established by adding to the volume of
production reported by the three producers supporting the complaint, the estimated production of
the two non-complaining producers, as contained in the complaint.

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2. Community industry

(85)

The accumulated production of
the three Community producers which cooperated with the
Commission represents 81 % of the total production of granular PTFE resin in the Community.
They are therefore deemed to constitute ‘the Community industry’ within the meaning of Ar-
ticles 4(1) and 5(4) of the basic Regulation.

3. Community consumption

(86)

Community consumption was established on the basis of the sales volumes of the Community
industry on the Community market, plus the estimated sales of the other Community producers,
plus the imports from Russia, the PRC and the other third countries under CN code ex 3904 61 00.
It is noted that imports from Russia under CN code 3904 61 00 cover the product concerned and
other products. The total import volume from Russia of PTFE was therefore estimated based on the
methodology followed in the complaint. For the other countries no information indicated that
imports under such CN code would contain PTFE not in granular form.

(87)

Between 2001 and the IP, the apparent Community consumption decreased from 16 185 tonnes to
14 725 tonnes, i.e. by 9 %. This decrease in consumption was caused to a large extent by the general
economic downturn in the period since 2002.

Community consumption (tonnes)

16 185

14 301

14 736

14 725

Index (2001 = 100)

100

88

91

91

2001

2002

2003

IP

4. Cumulative assessment of the effects of the imports concerned

(88)

The Commission examined whether imports of granular PTFE resin originating in Russia and the PRC
should be assessed cumulatively in accordance with Article 3(4) of the basic Regulation.

(89)

The margin of dumping established in relation to the imports from each of the countries concerned
was above the de minimis threshold as defined in Article 9(3) of the basic Regulation and the volume
of imports from each of these countries was not negligible in the sense of Article 5(7) of the basic
Regulation (i.e. their market shares attaining 10,8 % and 23,7 % respectively in the IP).

(90) As regards the conditions of competition, the investigation showed that granular PTFE resin imported
from the countries concerned and that of the Community industry were alike in all their basic
physical and technical characteristics. On that basis, PTFE originating in Russia and the PRC on
the one hand and PTFE produced and sold in the Community on the other hand were inter-
changeable. Likewise, they were marketed in the Community through comparable sales channels
and under similar commercial conditions. It was also found that export prices from Russia and
China had a similar trend during the period considered and both were significantly undercutting
the Community prices.

(91)

The Russian exporting producers argued that PTFE imported from Russia on the one hand and the
one imported from the PRC on the other hand were subject to different conditions of competition
and that imports originating in Russia should therefore be decumulated. In this regard, it was argued
that import trends from Russia were declining over the period considered, while imports from China
showed an increasing trend. Secondly, it was pointed out that imports from China and Russia were
mainly concentrated in one Member State (Italy). Therefore, Russian and Chinese PTFE products were
not in competition in the other 24 Member States.

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share of 23,7 % of

(92) However, despite the decreasing trend, the volume of imports originating in Russia remains far from
negligible, with a market
the Community consumption during the IP.
Furthermore, PTFE exported from Russia was of a similar quality to PTFE exported from the PRC
and destined for similar-end uses and applications. In addition, as mentioned above, export prices
from Russia and China had a similar trend during the period considered and both were significantly
undercutting the Community prices. Finally, it should be noted that the Community industry sales
were also concentrated mainly in Italy and therefore in direct competition with the imports origi-
nating in Russia and the PRC. PTFE produced by the Community industry was sold through the same
type of distribution channels in Italy as PTFE from Russia and China. It is also noted that there was
no indication that Russian and Chinese imports into Italy were not further resold to other parts of
the Community market and entered therefore into competition with Community products also
outside Italy. On this basis, the argument that the product imported from Russia on the one hand
and the one imported from the PRC on the other hand were subject to different conditions of
competition had to be rejected.

(93)

In the light of the above, it is provisionally considered that all the criteria set out in Article 3(4) of
the basic Regulation were met and that imports from the countries concerned should be examined
cumulatively.

5. Imports from the countries concerned

5.1. Volume and market share of the imports concerned

(94) Although imports of the product concerned from Russia and the PRC into the Community decreased
from 6 281 tonnes in 2001 to 4 838 tonnes in 2002, they increased since 2002 and reached
5 079 tonnes in the IP.

Imports from Russia and the PRC (tonnes)

Index (2001 = 100)

2001

6 281

100

2002

4 838

77

2003

5 069

81

IP

5 079

81

(95)

The corresponding market share decreased from 38,8 % in 2001 to 34,5 % in the IP, but remained
very significant. It is noted that the market share has shown a continuous gradual increase since
2002, i.e. from 33,8 % to 34,5 % in the IP.

Market share of imports from Russia and the PRC

38,8 %

33,8 %

34,4 %

34,5 %

2001

2002

2003

IP

5.2. Prices

(96)

The average price of
they shrank from
EUR 7 236/tonne in 2001 to EUR 4 092/tonne in the IP, i.e. a decrease of 43 % over the period
considered.

the imports concerned decreased significantly. Thus,

Average price of imports from Russia and the PRC
(EUR/tonnes)

Index (2001 = 100)

7 236

100

5 949

83

4 499

63

4 092

57

2001

2002

2003

IP

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(97)

(98)

5.3. Price undercutting

For the purposes of analysing price undercutting, the weighted average sales prices per product type
of the Community industry to unrelated customers on the Community market were compared with
the corresponding weighted average export prices of the product concerned. The comparison was
made after deduction of rebates and discounts. The prices of the Community industry were adjusted
to an ex-works basis. The prices of the imports concerned were on a CIF basis adjusted by customs
duties and post-importation costs.

Some interested parties argued that the quality of the products manufactured by the Community
industry is generally higher than that of the product concerned imported from the PRC and Russia.
it was provisionally considered that an
Based on the evidence found during the investigation,
adjustment was warranted for quality differences which are mainly determined by lower physical
properties and inconsistency of the material, i.e. significant variations of the particle size within one
product type and impurities. The Russian exporting producers claimed that as a consequence, the
PTFE produced and exported by them can only be used when further processed which involves
additional costs. However, none of the interested parties was able to precisely quantify the market
value of these differences in quality, nor the processing costs of the imported PTFE. A number of
parties estimated the adjustment at 30 %, based on the alleged price difference between the different
qualities. This estimate corresponded to the one made by the Russian exporting producers. On this
basis, and given that no other more reliable information was available in this regard, an adjustment
of 30 % was provisionally added to the CIF Community frontier price of the cooperating exporting
producers from both countries. It is noted that this issue will be further investigated in order to reach
definitive conclusions.

(99) A comparison showed that the products concerned originating in the PRC and Russia were sold in
the Community at prices which undercut the Community industry's prices by 24 % and 17 %
respectively during the IP when expressed as a percentage of the Community industry's prices.

6. Situation of the Community industry

(100)

In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped
imports on the Community industry included an evaluation of all economic factors and indices
having a bearing on the state of the Community industry from 2001 to the IP.

6.1. Production, capacity and capacity utilisation

(101) The production volume of the Community industry increased by 8 % between 2001 and the IP, from
6 798 tonnes to 7 326 tonnes. Despite a fall in Community consumption during the same period, it
should be noted that the Community industry had to decrease its sales prices as a consequence of the
dumped imports in order to compete with the imports under consideration. This lead to an increase
in production to cater for the increased demand for its products.

2001

2002

2003

IP

Production (tonnes)

6 798

5 885

7 066

7 326

Index (2001 = 100)

100

87

104

108

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(102) The production capacity slightly increased, by 8 % over the period considered. During the same
period, the capacity utilisation of the Community industry remained stable at 80 %. The drop in
the capacity utilisation between 2001 and 2002 is a consequence of the decrease in consumption
and the general economic downturn during this period. Subsequently, as stated above,
the
Community industry had to lower its prices, thereby increasing its sales, in order to compete with
the imports of the countries concerned whose prices had fallen by almost 40 % in 2004 (see recital
96). Thus, capacity utilisation of the Community industry recovered, while profitability went down
dramatically (see recital 110w).

2001

2002

2003

IP

Production capacity (tonnes)

8 480

9 050

9 100

9 200

Index (2001 = 100)

Capacity utilisation

100

80 %

107

65 %

107

78 %

108

80 %

6.2. Sales volume and market share

(103) Over the period under consideration, the EC sales volume of the Community industry increased by
15 %, from 4 223 tonnes in 2001 to 4 845 tonnes during the IP. This development should be seen
in the light of the fact that the Community industry, when faced with low-priced imports originating
in Russia and the PRC, had the choice of either maintaining its sales prices at the expense of a
negative development of its sales volume and market share, or to lower its sales prices in order to
preserve as far as possible economies of scale. All Community producers lowered their sales prices as
from 2001 in an effort to maintain or even increase their volume of sales in order to reach the
critical mass of production needed to cover their fixed costs.

EC sales (tonnes)

Index (2001 = 100)

2001

2002

2003

IP

4 223

100

4 058

96

4 522

107

4 845

115

(104) The Community industry’s market share increased in volume from 26,1 % in 2001 to 32,9 % in the

IP.

EC market share

26,1 %

28,4 %

30,7 %

32,9 %

2001

2002

2003

IP

6.3. Stocks

(105)

It is noted that the stock levels of the Community industry slightly declined during the period under
consideration, but shall be nevertheless considered as globally stable. This is in line with the
Community industry’s policy to maintain stock levels at a minimum. Consequently, the level of
the
stocks was found not
Community industry. It is also noted that stocks were at levels considered normal in this industry.

indicator in the assessment of

to be a significant

the situation of

Stock (tonnes)

Index (2001 = 100)

2001

2002

2003

IP

1 232

100

1 078

87

1 361

110

1 145

93

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6.4. Prices and factors affecting domestic prices

(106) Average prices per tonne of the Community industry have dropped significantly between 2001 and
the IP, by 22 %. This constant price decline over the period under consideration is a key factor in the
assessment of the case. It is noted that the price decline of Russian and Chinese imports was even
considerably higher than that of the Community industry.

Average selling price (EUR/tonnes)

Index (2001 = 100)

9 521

100

9 182

7 649

7 431

96

80

78

2001

2002

2003

IP

6.5. Growth

(107) While Community consumption declined by 9 % between 2001 and the IP, the market share of the
Community industry grew by 6,8 percentage points from 26,1 % in 2001 to 32,9 % in the IP.

6.6. Investments and ability to raise capital

(108) During the year 2001, when the return on investment was significant, the Community industry made
big investments, i.e. EUR 8,3 million. After 2001, investments decreased sharply and then further
decreased from EUR 4,7 million in 2002 to EUR 3,4 million in the IP.

Investments (in EUR 1 000)

Index (2001 = 100)

2001

2002

2003

IP

8 331

100

4 730

3 833

3 387

57

46

41

(109) As to ability to raise capital, all of the cooperating Community producers are part of larger groups
and are financed via intra group cash pooling systems. Therefore, whilst none of the companies
reported any difficulties in raising capital for their activities during the period considered, this
indicator is not considered to be a good reflection of the situation of the Community industry.

6.7. Profitability, return on investment and cash flow

(110) Over the period under consideration, the profitability of the Community producers dropped signifi-
cantly from 9,3 % in 2001 to 0,1 % in the IP. The return on investment followed a similar downward
trend as that seen for profitability. This dramatic trend in profitability and return on investment
would certainly be worse should the Community industry have maintained its prices, in which case it
would have suffered loss of market share and sales volume, and the consequent declining economies
of scale.

Profitability

Return on investment

2001

9,3 %

9,2 %

2002

3,5 %

3,3 %

2003

– 3,2 %

– 2,9 %

IP

0,1 %

0,1 %

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(111) The cash flow generated by the like product diminished considerably from EUR 10 million in 2001

to EUR 4,2 million during the IP, i.e. by 58 %.

Cash flow (in EUR 1 000)

Index (2001 = 100)

6.8. Employment and productivity

2001

2002

2003

IP

9 988

100

6 711

1 281

4 200

67

13

42

(112) Employment decreased by 10 % between 2001 and the IP. Productivity increased between 2001 and
the IP, by 17 %, due to the important measures put into place to improve cost efficiency, such as the
reduction of personnel and removal of bottlenecks in production.

Employment

Index (2001 = 100)

Production per employee (tonnes/employee)

Index (2001 = 100)

6.9. Wages

2001

123

100

55

100

2002

111

90

53

96

2003

117

95

61

110

IP

111

90

66

119

(113) Labour costs increased by 6 % over the period under consideration, from EUR 6,2 million in 2001 to
EUR 6,5 million during the IP. This development is merely in line with the cost of living increase.
Due to the reduction in the number of people employed, average labour costs per employee actually
increased by 17 %, from EUR 50 239 to EUR 58 842.

Labour costs per employee (EUR)

50 239

55 538

57 920

58 842

Index (2001 = 100)

100

111

115

117

2001

2002

2003

IP

6.10. Magnitude of the dumping margin

(114) Given the volume and the price of the dumped imports, the impact of the actual margins of

dumping, which are also significant, cannot be considered negligible.

6.11. Recovery from past dumping

(115) The Community industry was not in a situation where it had to recover from the past effects of

injurious dumping.

7. Conclusion on injury

(116) Although the volume of dumped imports of the product concerned originating in Russia and the
PRC decreased from 6 281 tonnes to 5 079 tonnes between 2001 and the IP, it remained constantly
high during the whole period considered. The corresponding market share decreased from 38,8 % in
2001 to 34,5 % during the IP but remained also at a very high level. The average prices of the
dumped imports decreased dramatically over the period under consideration, i.e. by 43 % and were
consistently lower than those of the Community industry, resulting in substantial price undercutting
by 17,4 % for Russia and 24,5 % for China during the IP.

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(117) An examination of the situation of the Community industry as outlined above shows that between
2001 and the IP, the situation of the Community industry overall deteriorated. While it is true that
market share and sales volume developed positively, this does not detract from the overall negative
picture. Thus, major injury indicators, such as sales value, profitability,
investments, return on
investments, ability to raise capital, cash flow and employment, showed negative developments
during the period under consideration. As explained in recitals 101, 102 and 103 above, the
Community industry’s increase in production and sales volume as well as market share has to be
seen in the context of the significant price decline in the Community and the Community industry’s
consequent decision to lower its sales prices to thus maintain or increase its sales volume and to
reach the critical mass of production volume needed to cover fixed costs. This had a dramatic impact
on the Community industry’s profitability which declined substantially from 9,3 % in 2001 to 0,1 %
in the IP and with substantial
It should furthermore be noted that
consumption only decreased between 2001 and 2002, but remained stable between 2002 and the
IP, or even increased slightly. It is therefore concluded that the Community industry could at least
take partly advantage of this slight increase in consumption by increasing their sales volume.

losses in 2003 (– 3,2 %).

(118) Finally as explained in recital 105, the slight decrease in stock volumes was found not to be a
significant factor since this was in line with the Community industry’s policy to maintain stock levels
at a minimum.

(119) This decline in profitability coincided with a sharp decrease in prices. The industry compensated to
some extent for the fall in prices through increased production and sales, leading to an increase in
market share. These positive effects have not prevented the Community industry from seeing a sharp
decrease in its profitability. It was therefore concluded that the positive trends of injury indicators
such as sales volume and market share did not outweigh the overall deteriorated situation of the
Community industry because it did not change the fact that the financial situation of the Community
industry was indeed critical. The increase in sales volume and market share was therefore not
considered as decisive for the assessment of the Community industry’s situation during the period
considered.

(120)

In the light of the foregoing,
material injury within the meaning of Article 3(5) of the basic Regulation.

it is provisionally concluded that the Community industry suffered

1. Introduction

E. CAUSATION

(121)

In accordance with Article 3(6) and (7) of the basic Regulation, it was examined whether the dumped
imports originating in Russia and the PRC have caused injury to the Community industry to a degree
that may be considered as material. Known factors other than the dumped imports, which could at
the same time have injured the Community industry, were also examined to ensure that the possible
injury caused by these other factors was not attributed to the dumped imports.

2. Effect of the dumped imports

(122)

It has to be noted that although imports from Russia and China decreased overall between 2001 and
the IP, they showed an increasing trend since 2002. Thus, imports fell from 2001 to 2002 from
6 281 tonnes to 4 838 tonnes. Between 2002 and the IP, however, the volume of imports of the
product concerned from Russia and the PRC into the Community increased from 4 838 tonnes to
5 079 tonnes. The corresponding share of the Community market went from 33,8 % in 2002 to
reach 34,5 % during the IP.

(123) More importantly, the overall decrease of imported volumes (which still remained at very high levels
and held a higher market share than that of the Community industry) was accompanied by a
substantial decrease of import prices. The latter basically collapsed. This coincided with the dete-
rioration of the situation of the Community industry during the same period. This deterioration is
seen,
in terms of sales prices, profitability, return on investment, cash flow and
employment. As mentioned above, the imports originating in Russia and the PRC undercut the
average sales price of the Community industry by significant amounts, with undercutting margins
of 17,4 % and 24,5 %.

in particular,

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(124)

In the analysis of the effect of the dumped imports, it was found that price is an important element
of competition. Moreover, even taking into account the differences in quality, the prices of dumped
imports were considerably below both those of the Community industry as well as those of other
third country exporters.

(125)

It was verified with one of the Community producers, that for so called ‘modified’ grades which are
not produced by Russian nor Chinese exporters, the injury situation was inexistent as demonstrated
by a positive evolution of the profitability. However, in those instances of the market where this same
its
producer was exposed to competition from the dumped imports from Russia and the PRC,
financial situation was significantly negative.

(126)

It is therefore provisionally concluded that the pressure exerted by the imports concerned, which
increased their volume and market share from 2002 onwards, and which were made at very low and
dumped prices, played a determining role in the deterioration of the Community industry’s financial
situation.

3. Effects of other factors

3.1. Development of consumption

(127) The Community consumption, although having decreased by 12 % between 2001 and 2002,
remained stable afterwards up to the IP at the level of 2002 and increased even slightly. This
drop in consumption is, however, not in line with the decrease of the total Community market
value, which fell by 39 % during the same period, i.e. substantially more than consumption. This
significant decline of the market value is due to a substantial drop in prices of the imports under
consideration which the Community industry was obliged to follow in order to keep its market share
and capacity utilisation. It is noted that the overall decrease of the Community consumption did not
prevent the Community industry to increase its sales volume (by 15 % over the period considered),
while the increase in sales volume was accompanied by a dramatic decrease in sales value which
caused significant financial losses to the Community industry. This shows that the material injury
suffered by the Community industry is rather a consequence of the decline in sales value than the fall
in consumption.

(128) As mentioned in recital 87, the reason for the decline in the Community consumption was the
general economic downturn worldwide. In this regard, it should be noted that the PTFE market is
cyclical and depends strongly on global economic developments. This linkage also explains the
decrease in consumption despite the decline in sales prices.

(129)

It should also be noted that import prices decreased to a significantly higher degree than Community
consumption during the same period. Thus, consumption fell by 9 %, while import prices declined by
43 % during the period under consideration. Import prices undercut substantially the Community
industry prices throughout the whole period under consideration and were moreover significantly
dumped during the IP. Given this sharp and constant price decline, whereas consumption although
decreasing between 2001 and 2002 remained relatively stable subsequently, it was concluded that the
material
injury suffered is not caused by a decrease in consumption but rather by the dumped
imports from the countries concerned which as a consequence forced the Community industry to
lower its sales prices.

3.2. Imports originating in third countries other than Russia and the PRC

(130)

import

Imports originating in third countries other

It should be recalled that the product concerned forms only a part of CN code 3904 61 00. However,
since no information indicates that imports under this CN heading are other than granular PTFE,
figures for the full CN heading are considered to relate only to the product
Eurostat
than Russia and the PRC decreased
concerned.
slightly, from 4 270 tonnes in 2001 to 3 699 tonnes during the IP. Consequently, their market
share decreased overall from 26,4 % in 2001 to 25,1 % in the IP. The main individual countries
exporting the product concerned to the Community are Japan and the USA. The USA increased its
market share from 13 % in 2001 to 23 % in the IP, while Japan's market share decreased from 15 %
to 11 % during the same period.

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(131) According to Eurostat, the average price of imports originating in countries other than Russia and the
PRC remained virtually unchanged or slightly diminished between 2001 and the IP. Throughout this
period, prices of imports from other countries were nearly 50 % higher than the prices of imports
from Russia and the PRC. They were also higher than prices charged by the Community industry.
imports from other third countries did not exert a competitive pressure on the
Consequently,
Community industry to the extent that imports from Russia and the PRC did.

(132)

It is therefore provisionally concluded that imports from other third countries could not be a
determining reason for the injurious situation of the Community industry.

3.3. Performance of non-complainant Community producers (other Community producers)

(133) Two Community producers, representing approximately 19 % of the total Community production,
did not expressively oppose or support
the complaint. Determinations with regard to other
Community producers were largely based on estimates provided by the complainant, but also
these producers. As regards the sales volume of other
some information provided by one of
Community producers, it declined from an estimated 1 411 tonnes in 2001 to 1 102 tonnes in
the IP. Their share of the Community market fell
from 25 % to 19 % over the same period.
According to the information submitted by one of the non-complaining producers, average unit
prices were slightly lower than those of the cooperating Community industry during the period
considered, but far higher than those of Russia and the PRC. On the basis of this information, it can
be reasonably presumed that other Community producers also suffered injury from the dumped
imports, which is mainly translated in a loss of market share. Therefore, it is provisionally concluded
that the products produced and sold by the other Community producers did not contribute to the
material injury suffered by the Community industry.

3.4. Exports by the Community industry

(134) Exports of PTFE by the Community industry outside the Community were slightly increasing during
the period considered (by 3 %) and represented 12,7 % of the Community industry’s total sales during
the IP. Profitability of these exports was, however, higher than the profit made for sales in the
Community market over the period considered. Therefore, exports of the Community industry
could not be said to have any negative impact on the situation of the Community industry.

3.5. Efficiency of the Community industry

(135) Over the period considered, the Community industry made a constant effort to rationalise its
production process. Thus, production costs of the Community industry decreased constantly over
the period considered and fell by 13 % between 2001 and the IP. Despite the significant reduction of
production costs, the Community industry could not benefit from its increased efficiency but was
forced to sell its products either below costs or at break even. The Community industry’s profitability
decreased therefore substantially. On this basis, it was concluded that the Community industry was a
viable, efficient industry and that the injury suffered was not caused by inefficient production
processes but by the dumped imports from the countries concerned.

4. Conclusion

(136) The substantial market share of the imports originating in Russia and the PRC, as well as the
considerable decrease in their sales prices and the level of price undercutting found during the IP
coincided with the material injury suffered by the Community industry.

(137) The development of the Community consumption, imports from other third countries, exports of the
Community industry, the performance of other Community producers and the development of costs
were analysed but found not to be a determining reason for the injury suffered by the Community
industry.

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(138) Based on the above analysis, which has properly distinguished and separated the effects of all known
factors having an effect on the situation of the Community industry from the injurious effect of the
dumped imports, it is therefore provisionally concluded that the imports from Russia and the PRC
have caused material
injury to the Community within the meaning of Article 3(6) of the basic
Regulation.

F. COMMUNITY INTEREST

(139)

In accordance with Article 21 of
it was examined whether, despite the
conclusion on injurious dumping, compelling reasons existed for concluding that it is not in the
Community interest to adopt measures in this particular case. The impact of possible measures on all
parties involved in this proceeding and also the consequences of not
taking measures were
considered.

the basic Regulation,

1. Interests of the Community industry

(140) Fluoropolymers are a group of high performance plastics, of which PTFE is the best known and most
widely used. All of the Community producers investigated are totally or partially specialised in PTFE,
which has distinct characteristics in terms of its production process, quality, applications, marketing
channels etc.

(141) The imposition of measures is expected to prevent further distortions and restore fair competition on
the market. The Community industry should then be able to increase its sales prices, and thereby
reach reasonable profit levels necessary to improve the industry’s financial situation and to allow it
thus guaranteeing the Community industry’s
continued investments in its production facilities,
survival.

(142) On the other hand, should anti-dumping measures not be imposed, it is likely that the deterioration
of the already poor situation of the Community industry would continue. It would not be able to
carry out the necessary investments in order to compete effectively with the dumped imports from
the third countries concerned. This would also in all
likelihood force some companies to cease
production and lay off their employees in the near future. With the closure of the Community
production the PTFE users would become more dependent on suppliers outside the Community.

(143) Accordingly, it is provisionally concluded that the imposition of anti-dumping measures would allow
the Community industry to recover from the effects of injurious dumping suffered and that it
therefore is in the interest of the Community industry.

2. Interest of unrelated importers/traders and users in the Community

(144) The Commission sent questionnaires to all known importers/traders. Only two importers/traders,
representing almost 30 % of total imports from Russia and the PRC, replied to the questionnaire. The
Commission also sent questionnaires to all known users in the Community (a total of nine) and
received three (partial) replies to the questionnaire. The users represented only 14 % of Community
consumption.

(145) PTFE is used as a component in a wide number of industrial sectors including chemical, mechanical,
electrical
(inner shield of cables), automotive, construction (as isolation agent), cookware (pans),
textile, biomedical (surgery instruments), semi-conductors, and aerospace. The most known trade
mark under which this product is commercialised is Teflon.

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(146) The cooperating users were producers of semi-finished products which were further used in various
industry sectors, such as automotive and electronics. These users claimed that they could not pass on
any cost increase of PTFE (used as a raw material) to their customers because of the price sensitive
market of the semi-finished products. They argued that any price increase would put them in a non-
competitive position vis-à-vis producers outside the Community which would not be subject to an
anti-dumping duty on PTFE.

(147) The cooperating users did not submit any information with regard to the proportion of the imported
PTFE in their total cost of production. Thus, it was not possible to calculate any potential impact of
an anti-dumping duty for these users. In any case, it is noted that granular PTFE constitutes a rather
low proportion of the overall cost in sectors such as the chemical industry, domestic and leisure,
electrical industry or mechanical and automotive engineering, as PTFE is commonly used in the form
of miniature components. PTFE is also used in very small quantities in consumer applications, i.e. an
anorak would contain around 20 grams of PTFE inlays. On this basis it was provisionally concluded
that the financial impact for final users shall be considered as negligible. It was also noted that, on
the basis of the information submitted by these users, their profitability was substantial during the IP.
On this basis, it was provisionally concluded that the impact of any anti-dumping duties would be
negligible.

(148) Finally, the downstream industry claimed that the Community industry did not have sufficient

capacity to meet the Community market demand of PTFE.

(149)

It should be noted that measures are not intended to prevent imports into the Community but to
ensure that they are not made at injuriously dumped prices. Furthermore, as mentioned in recital
147, the impact of the anti-dumping duty on the users’ industry is expected to be negligible and
therefore, will not necessarily prevent the final users to source PTFE from the same suppliers even at
a higher price.

(150)

It should also be noted that Community consumption dropped from 2001 to 2002 by 12 % and
then remained practically stable until the IP with a small growth of 3 % since 2002. It should also be
pointed out that the Community producers still have unused production capacity. This together with
exports from other third countries provides alternative sources of supply for the downstream
industry. It is therefore unlikely that anti-dumping measures would lead to a shortage of supply.

3. Interest of raw material suppliers in the Community

(151) The Commission sent questionnaires to all known Community suppliers of the main raw materials
(including Chlorodifluormethane (R22) and Anhydrous Hydrofluoric Acid)
to the Community
industry. The cooperation was very high as five replies were received, of which three suppliers are
related to each other. The majority of these suppliers worked closely with the Community industry
and other producers of granular PTFE located in the Community. A large part of their turnover
(75 %) was derived from sales made to granular PTFE producers. Therefore any reduction in the
Community industry’s purchases would have a significant effect on the situation of these companies,
which together employed 176 people directly dedicated to the production of the raw material
concerned.

(152) Another supplier stated that, without the imposition of measures, there would be a risk of migration
of the Community PTFE production to third countries outside the Community. This company
claimed that, as a consequence, the raw material suppliers would be forced to search for clients
outside the Community, in third markets where they would be in competition with the traditional
indigenous raw material suppliers. Exports of raw material would, moreover, invoke additional costs
which would erode the already low margins of the upstream industry. It was therefore provisionally
concluded that the imposition of anti-dumping is in the interest of upstream industries.

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4. Conclusion on Community interest

(153) On the basis of the above, it is provisionally concluded that no compelling reasons exist for not
imposing measures and that the application of measures would be in the interest of the Community.

1. Injury elimination level

G. PROVISIONAL ANTI-DUMPING MEASURES

(154)

In view of the conclusions reached with regard to dumping, injury and Community interest, provi-
sional measures should be imposed in order to prevent further injury being caused by the dumped
imports.

(155) For the purpose of determining the level of these duties, account was taken of the dumping margins
found and the amount of duty necessary to eliminate the injury sustained by the Community
industry.

(156) When calculating the amount of duty necessary to remove the effects of the injurious dumping, it
was considered that any measures should allow the Community industry to cover its costs of
production and to obtain overall a profit before tax that could be reasonably achieved by an
industry of this type in the sector under normal conditions of competition, on the sales of the
like product in the Community. The pre-tax profit margin used for this calculation was 9,3 % of
turnover which the Community industry realised before the sharp decline of the import prices from
the countries concerned in 2001. This was regarded as an appropriate minimum which the
Community industry could have expected to obtain in the absence of injurious dumping.

(157) The necessary price increase was then determined on the basis of a comparison of the weighted
average import price, as established for the price undercutting calculations, with the non-injurious
price of products sold by the Community industry on the Community market. The non-injurious
price has been obtained by adjusting the sales price of the Community producers by the actual
profit/loss made during the IP and by adding the abovementioned profit margin. Any difference
resulting from this comparison was then expressed as a percentage of the total CIF import value.

(158) As far as Russia is concerned and due to the non-cooperation of Russian exporters as mentioned in
recitals 70 to 75, the injury margin was determined on the basis of export figures as recorded in
Eurostat. It is noted that as mentioned in recital 98 above, the cif export price was adjusted taking
into consideration the quality difference between the PTFE produced in the Community and that
imported from Russia and the PRC. Secondly, since all export sales of PTFE from Russia were made
to traders, while the Community industry sold mainly to users, an adjustment was also made for
differences in the level of
this
adjustment was provisionally estimated with 5 % which was considered as a reasonable profit
margin of an unrelated importer.

In the absence of any other more reliable information,

trade.

(159) With regard to China and given that none of the cooperating Chinese producers was granted MES or
IT, the provisional single countrywide injury elimination level was calculated as a weighted average of
the injury margins of all three cooperating Chinese exporting producers.

2. Provisional measures

(160)

In the light of the foregoing,
in accordance with Article 7(2) of the basic
Regulation, provisional anti-dumping duties should be imposed in respect of imports originating in
Russia and the PRC at the level of the lowest of the dumping and the injury margins, in accordance
with the lesser duty rule.

it is considered that,

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(161) The proposed provisional anti-dumping duties are as follows:

Exporting country

People’s Republic of China

Russia

Injury elimi-
nation margin

62,7 %

46,7 %

Dumping
margin

99,7 %

36,6 %

Proposed anti-
dumping duty

62,7 %

36,6 %

H. FINAL PROVISION

(162)

In the interests of sound administration, a period should be fixed within which the interested parties,
which made themselves known within the time limit specified in the notice of initiation, may make
their views known in writing and request a hearing. Furthermore, it should be stated that the findings
concerning the imposition of duties made for the purposes of this Regulation are provisional and
may have to be reconsidered for the purposes of any definitive measures,

HAS ADOPTED THIS REGULATION:

Article 1

A provisional anti-dumping duty is hereby imposed on so called granular polytetrafluoroethylene
1.
(PTFE), containing not more than 3 % of other monomer unit than tetrafluoroethylene, without fillers, in
the form of powder or pellets, with the exclusion of micronised materials, and its raw polymer (reactor
bead), the latter in wet or dry form, falling within CN code ex 3904 61 00 (Taric code 3904 61 00 50) and
originating in Russia and the People’s Republic of China.

The rate of the provisional anti-dumping duty applicable to the net, free-at-Community-frontier price,

2.
before duty, of the products described in paragraph 1, shall be as follows:

Country

People’s Republic of China

Russia

Rate of duty

62,7 %

36,6 %

The release for free circulation in the Community of the product referred to in paragraph 1 shall be

3.
subject to the provisions of a security, equivalent to the amount of the provisional duty.

4.

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

Without prejudice to Article 20 of Regulation (EC) No 384/96, the interested parties may make their views
known in writing and apply to be heard orally by the Commission within one month of the date of entry
into force of this Regulation.

Article 2

Pursuant to Article 21(4) of Regulation (EC) No 384/96, the parties concerned may comment on the
application of this Regulation within one month of its entry into force.

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

Article 3

Article 1 of this Regulation shall apply for a period of six months.

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

Done at Brussels, 7 June 2005.

For the Commission

Peter MANDELSON
Member of the Commission