Council Regulation (EC) No 1000/2008 of 13 October 2008 imposing a definitive anti-dumping duty on imports of sulphanilic acid originating in the People’s Republic of China and India following an expiry review pursuant to Article 11(2) of Regulation (EC) No 384/96
Date: 2008-10-13
Institutions: Council of the European Union
Subjects: China, India, anti-dumping duty, chemical product, import (EU), originating product

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(Acts adopted under the EC Treaty/Euratom Treaty whose publication is obligatory)

I

REGULATIONS

COUNCIL REGULATION (EC) No 1000/2008

of 13 October 2008
imposing a definitive anti-dumping duty on imports of sulphanilic acid originating in the People’s
Republic of China and India following an expiry review pursuant to Article 11(2) of Regulation (EC)
No 384/96

THE COUNCIL OF THE EUROPEAN UNION,

7,1 % on imports of the same product originating in
India.

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 384/96 of
22 December 1995 on protection against dumped imports
from countries not members of the European Community (1)
(the basic Regulation), and in particular Articles 9 and 11(2)
thereof,

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

Whereas:

A. PROCEDURE

1. Measures in force

(1)

In July 2002, by Regulation (EC) No 1339/2002 (2), the
Council
imposed a definitive anti-dumping duty (the
existing measures) of 21 % on imports of sulphanilic
acid falling within CN codes ex 2921 42 10 (TARIC
People’s
code 2921 42 10 60)
Republic of China (PRC) and a residual duty rate of
18,3 % on imports originating in India. The measures
imposed had been based on the results of an anti-
dumping proceeding initiated pursuant to Article 5 of
the basic Regulation (the original investigation).

originating

the

in

(2)

At the same time, by Regulation (EC) No 1338/2002 (3),
the Council imposed a definitive countervailing duty of

(1) OJ L 56, 6.3.1996, p. 1.
(2) OJ L 196, 25.7.2002, p. 11.
(3) OJ L 196, 25.7.2002, p. 1.

(3) Within the framework of

and

countervailing

the abovementioned anti-
dumping
the
proceedings,
Commission, by Decision 2002/611/EC (4) accepted a
price undertaking offered by one Indian exporting
producer, Kokan Synthetics and Chemicals Pvt. Ltd
(Kokan).

(4)

(5)

(6)

In February 2004, following an anti-absorption reinves­
tigation pursuant to Article 12 of the basic Regulation,
the Council, by Regulation (EC) No 236/2004 (5),
increased the rate of the definitive anti-dumping duty
applicable to imports of sulphanilic acid originating in
the PRC from 21 % to 33,7 %.

In December 2003, Kokan informed the Commission
that it wished to withdraw its undertaking voluntarily.
the Commission Decision accepting the
Accordingly,
repealed by Commission Decision
undertaking was
2004/255/EC (6).

In April 2005, following a request lodged by Kokan, the
Commission initiated (7) a partial interim review pursuant
to Article 11(3) of the basic Regulation and Article 19 of
Council Regulation (EC) No 2026/97 (8) on protection
against subsidized imports from countries not members
of
the European Community (the basic anti-subsidy
Regulation), limited in scope to the examination of the
acceptability of a subsequent undertaking to be offered
by Kokan.

(4) OJ L 196, 25.7.2002, p. 36.
(5) OJ L 40, 12.2.2004, p. 17.
(6) OJ L 80, 18.3.2004, p. 29.
(7) OJ C 101, 27.4.2005, p. 34.
(8) OJ L 288, 21.10.1997, p. 1.

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(7)

(8)

(9)

By Decision 2006/37/EC (1), the Commission accepted
the
subsequent undertaking offered by Kokan in
connection with the anti-dumping and countervailing
proceedings concerning imports of sulphanilic acid orig­
inating in India.

At
the same time, Regulation (EC) No 1338/2002
imposing a definitive countervailing duty on imports of
sulphanilic acid originating in India and Regulation (EC)
No 1339/2002 imposing a definitive anti-dumping duty
on imports of sulphanilic acid originating,
inter alia, in
India, were amended by Council Regulation (EC) No
123/2006 (2),
the acceptance of
the said undertaking.

to take into account

2. Request for a review

Following the publication of a notice of
impending
expiry (3), the Commission, on 24 April 2007, received
a request for an expiry review pursuant to Article 11(2)
of the basic Regulation. This request was lodged by two
representing
(the
Community producers
100 % of the Community production of sulphanilic acid.

applicants)

(10)

The applicants alleged and provided sufficient prima facie
evidence that
there was a likelihood of continuation
and/or recurrence of dumping and recurrence of injury
to the Community industry with regard to imports of
sulphanilic acid originating in the PRC and India (the
countries concerned).

(14)

(15)

pursuant to Article 19 of the basic anti-subsidy Regu­
lation, since there was sufficient prima facie evidence
available to the Commission that
the circumstances
with regard to subsidisation, on the basis of which
measures had been established, had changed and that
these changes were of a lasting nature. This investigation
is still on-going.

4. Investigation

4.1. Investigation period

recurrence of
The investigation of continuation or
dumping covered the period from 1 April 2006 to
31 March 2007 (the review investigation period or
RIP). The examination of
for the
assessment of
continuation or
recurrence of injury covered the period from 2003 to
the end of the review investigation period (the period
considered).

the trends relevant

likelihood of

the

4.2. Parties concerned by the investigation

the

advised

officially

The Commission
exporting
producers, importers and users known to be concerned,
the representatives of the exporting countries and the
applicants, of
expiry review.
initiation of
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

the

(11) Having

after

an expiry

determined,
that

consulting
sufficient evidence existed for

the Advisory
the
Committee,
initiation of
the Commission
announced on 24 July 2007, by a notice of initiation
published in the Official Journal of the European Union (4),
the
to
Article 11(2) of the basic Regulation.

review pursuant

initiation of

an expiry

review,

3. Parallel investigations

(12)

By a notice of initiation published in the Official Journal of
the European Union on 24 July 2007 (5), the Commission
also initiated an expiry review investigation pursuant to
Article 18 of the basic anti-subsidy Regulation on the
in force on imports of
countervailing measures
sulphanilic acid originating in India. This investigation
is still on-going.

(13)

By a notice of initiation published in the Official Journal of
the European Union on 29 September 2007 (6),
the
Commission initiated on its own initiative a partial
interim review limited to the level of subsidisation,

(1) OJ L 22, 26.1.2006, p. 52.
(2) OJ L 22, 26.1.2006, p. 5.
(3) OJ C 272, 9.11.2006, p. 18.
(4) OJ C 171, 24.7.2007, p. 18.
(5) OJ C 171, 24.7.2007, p. 14.
(6) OJ C 229, 29.9.2007, p. 9.

(16) All interested parties, who so requested and showed that
there were particular reasons why they should be heard,
were granted a hearing.

(17) Questionnaires were sent

to all parties known to be
concerned, namely to the two Community producers
and to all known exporting producers,
importers and
users.

(18)

(19)

Replies to the questionnaires were received from the two
Community producers and from one exporting producer
the
in India, as well as from four users. None of
exporting producers
the
in the PRC and none of
importers replied to the questionnaire nor made them­
selves known in the course of this investigation.

The Commission sought and verified all the information
it deemed necessary for a determination of the likelihood
of continuation or recurrence of dumping and resulting
injury and of the Community interest. In this regard, the
Commission carried out verification visits at the premises
of the following companies:

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(a) Exporting producer in India:

— Kokan Synthetics & Chemicals Pvt Ltd, Mumbai,

India;

during the RIP and whether or not the expiry of the
measures would be likely to lead to a continuation or
recurrence of dumping.

(b) Community producers:

— Ardenity, Givet, France, and

— CUF Químicos Industriais, Estarreja, Portugal;

(23)

(c) Users:

— Kemira Germany GmbH, Leverkusen, Germany,

and

— Robama SA, Palafolls, Spain.

1. Preliminary remarks

It should be noted that, as the Community expanded to
25 Member States in 2004 and to 27 Member States in
2007, export volumes and market shares of imports in
the previous investigation and in the current expiry
review cannot be directly compared.

1.1. India

(24)

(25)

(26)

(27)

(20)

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. Product concerned

The product under review is the same as that of the
original
investigation, namely sulphanilic acid currently
classifiable within CN code ex 2921 42 10. There are
sulphanilic acid, which are
basically two grades of
determined according to their purity: a technical grade
and a purified grade. In addition, the purified grade is
sometimes commercialised in the form of a salt of
sulphanilic acid. Sulphanilic acid is used as a raw
in the production of optical brighteners,
material
concrete additives, food colourants and speciality dyes.
While there are different uses of sulphanilic acid, all
grades and forms are perceived by users to be reasonably
substitutable, are used interchangeably in most appli­
cations and are, therefore, treated, as was the case in
the original investigation, as one single product.

2. Like product

(21) As established in the original

investigation, this review
confirmed that sulphanilic acid is a pure commodity
product and its quality and basic physical characteristics
are identical, whatever the country of origin. The product
concerned and the products manufactured and sold by
the exporting producer in India on its domestic market
and to third countries, as well as those manufactured and
sold by the Community producers on the Community
market, have thus been found to have the same basic
physical and chemical characteristics and essentially the
same uses, and are therefore considered to be like
the
products within the meaning of Article 1(4) of
basic Regulation.

the fact

In order to respect confidential business information and
that Kokan represents 100 % of
in view of
it has been necessary to
imports originating in India,
present
in
indexed form.

information in ranges or

relevant

the

This examination was based on the verified questionnaire
reply from the cooperating exporting producer in India
that fully cooperated with the investigation. It appears
from the information provided by the company and
available Eurostat data that all
imports of the product
concerned during the RIP were accounted for by this
exporting producer.

It was found that during the RIP around 800 to 1 000
tonnes of sulphanilic acid were imported from India into
8-10 % of
the
approximately
Community consumption. In the original
investigation,
imports from India amounted to 1 712 tonnes.

Community,

i.e.

1.2. People’s Republic of China

In the absence of cooperation from any of the Chinese
exporting producers, the examination of whether or not
dumping was currently taking place had to be based on
the information available to the Commission from other
sources.
In this respect, and in accordance with the
provisions of Article 18 of the basic Regulation, official
Eurostat data was used in order to establish import quan­
tities and prices.

C. LIKELIHOOD OF CONTINUATION AND/OR
RECURRENCE OF DUMPING

(22)

In accordance with Article 11(2) of the basic Regulation,
it was examined whether dumping was taking place

(28) On the basis of available data, it was found that during
the RIP, 1 482 tonnes of sulphanilic acid were imported
from the PRC into the Community,
i.e. approximately
15 % of the Community consumption. In the original
investigation period,
imports from the PRC amounted
to 2 950 tonnes.

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2. Likelihood of continuation of dumping

2.1. India

(29)

In accordance with Article 11(9) of the basic Regulation,
the same methodology as in the previous investigation
was used to establish the dumping margin. It is recalled
that in the original
investigation a dumping margin of
24,6 % was established.

the RIP. For these product types, since more than 80 %
by volume was not sold at a loss on the domestic
market, and the weighted average sales price was equal
to or higher than the weighted average production cost,
normal value, by product type, was calculated as the
weighted average of all domestic sales prices, paid or
payable by independent customers, of the product type
in question, as set out in Article 2(1) of the basic Regu­
lation.

(30)

(31)

(32)

(a) N o r m a l v a l u e

(35)

For the determination of normal value, it was first estab­
lished for the cooperating exporting producer whether its
total domestic sales of the product concerned were rep­
resentative in comparison with its export sales to the
Community.
the
basic Regulation, domestic sales were considered rep­
resentative when the total domestic sales volume was
at least 5 % of its total export sales to the Community.
The investigation showed that the domestic sales were
representative.

In accordance with Article 2(2) of

For the product type which was not sold in representa­
tive quantities on the domestic market, normal value had
to be constructed. In order to establish the constructed
normal value, the cooperating exporting producer’s own
sales, general and administrative (SG&A) costs incurred
and weighted average profit realised on the domestic
in the ordinary course of
sales of
trade, during the RIP, were added to the average cost
of manufacturing during the RIP, pursuant to Articles
2(3) and 2(6) of the basic Regulation.

the like product,

Subsequently, those types of the product concerned sold
domestically by the exporting producer having overall
representative domestic sales, and which were identical
or directly comparable to the types sold for export to the
Community, were identified. The criteria used for the
types were the
the different product
identification of
grade (pure or technical),
the form (acid powder or
sodium salt) and the acid concentration.

For each product type sold by the exporting producer on
its domestic market which was found to be directly
comparable with the type sold for export
to the
it was established whether domestic sales
Community,
were sufficiently representative for
the purposes of
Article 2(2) of the basic Regulation. Domestic sales of
a particular product
type were considered sufficiently
representative when the total domestic sales volume of
that type during the RIP represented 5 % or more of the
total
type
exported to the Community. The investigation showed
that out of the three types exported by the exporting
producer concerned,
two were sold in representative
quantities on the domestic market.

the comparable product

sales volume of

(33) An examination was also made as

the
domestic sales of
the company could be regarded as
being made in the ordinary course of trade pursuant to
Article 2(4) of the basic Regulation.

to whether

(b) E x p o r t p r i c e

(36)

The investigation showed that the exports of the Indian
to unrelated
exporting producer were made only
customers in the Community.

(37)

export price was

established in
the
Consequently,
accordance with Article 2(8) of
the basic Regulation,
namely on the basis of export prices actually paid or
payable.

(c) C o m p a r i s o n

(38)

The normal value and export price 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 the price and price compa­
rability in accordance with Article 2(10) of the basic
Regulation. These adjustments were made in respect of
transport and insurance costs.

(d) D u m p i n g m a r g i n

(39) As provided by Article 2(11) and (12) of the basic Regu­
lation,
the weighted average normal value of each
product type of the product concerned exported to the
Community in the RIP was compared to the weighted
average export price of each corresponding type of the
product concerned.

(34)

This was done by establishing the proportion of domestic
sales to independent customers, of each of the two types
sold in representative quantities, not sold at a loss during

(40)

This comparison showed the absence of dumping for the
cooperating exporting producer in India that exported to
the Community during the RIP.

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(41) With regard to the absence of dumping by the coop­
erating exporter in the RIP, it should be noted that, as
mentioned in recital 7 above, a price undertaking was in
force during the RIP which required the exporting
producer concerned to respect a certain price level for
exports to the Community. Certain transactions were
found to be slightly higher
the
minimum import prices (MIPs) of the undertaking, but
the majority of the sales were priced at the level of the
MIPs.

than the level of

2.2. People’s Republic of China

(42)

In accordance with Article 11(9) of the basic Regulation,
the same methodology as in the previous investigation
was used to establish the dumping margin. It is recalled
investigation a dumping margin of
that in the original
following an anti-
21 % was established. However,
absorption reinvestigation initiated in June 2003,
the
dumping margin was reassessed and found to have
increased to 33,7 %, as described in Regulation (EC) No
236/2004.

(e) A n a l o g u e c o u n t r y

(43)

In accordance with Article 2(7) of the basic Regulation,
the PRC is not a market economy country and therefore,
the normal value for imports from the PRC had to be
based on data from a market economy third country.

(47)

(48)

(49)

(44)

(45)

India was envisaged as an
In the notice of initiation,
appropriate market economy third country in respect
to the Community exports of the PRC. India was also
used as the analogue country in the original
investi­
gation.

The applicants suggested, however, that it would be more
appropriate to use the United States of America (US) as
an analogue country in this case.
It was argued that
contrary to India, prices of sulphanilic acid in the US
are driven by normal undistorted market
forces.
Moreover, it was claimed that the process of producing
sulphanilic acid in the US is carried out in a manner
comparable to that in the PRC and that the quantities
produced and sold in the US are representative.
In
addition, the applicants also argued that access to raw
materials in India is not comparable to access to raw
materials in the PRC, as Indian producers, due to the
Advance
raw
materials instead of buying domestic materials.

importing

Scheme,

License

prefer

(46) As regards the suggestion of using the US as an analogue
country, it is noted that the US, for a number of years,
has had protective measures in place in the form of anti-

as well

dumping measures against imports from the PRC and
India
against
imports
it cannot be
excluded that prices have been influenced by these
trade defence measures.

as
from India. For

countervailing measures

reason,

this

Concerning the access to raw materials, it was also found
that Indian manufacturers of sulphanilic acid purchase
raw materials on the domestic market. Accordingly,
it
cannot be argued that access to raw materials makes
India an inappropriate analogue country. Moreover,
there are several producers of sulphanilic acid in India
and imports, for instance from the PRC, are also present
on the market. There is therefore no evidence to suggest
a lack of competition in India.

investigation,

In light of
the above, and in the absence of other
convincing arguments of changed circumstances since
India
it
the original
constitutes an appropriate analogue country for
the
purpose of establishing normal value in accordance
with Article 2(7)(a) of
the basic Regulation in the
context of this expiry review.

is concluded that

(f) 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

to Article 2(7)(a) of

Pursuant
the basic Regulation,
normal value was established on the basis of verified
information received from the cooperating exporting
in the analogue country. More specifically,
producer
normal value was based on the price paid or payable
in India by unrelated customers
comparable
product types, as these were found to be made in the
ordinary course of trade.

for

(g) E x p o r t p r i c e

(50) Given the lack of cooperation from Chinese exporting
producers, the export price had to be based on facts
available in accordance with Article 18 of the basic Regu­
lation. Official Eurostat figures were chosen as the appro­
priate basis for establishing the export price.

(h) C o m p a r i s o n

(51)

For the purposes of making a fair comparison between
the normal value and the export price, due allowance
was made for differences which could affect price compa­
rability. These adjustments were made in respect of
transport
in accordance with
Article 2(10) of the basic Regulation. Normal value at
Indian ex-works
then compared to the
level was
adjusted Chinese export price at the same level.

and insurance

costs

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(i) D u m p i n g m a r g i n

(52)

The comparison of normal value and export price
showed the existence of dumping, the dumping margin
being equal
to the amount by which normal value
exceeded the price for export to the Community. The
dumping margin found, as a percentage of
the CIF
Community-frontier price, was in the order of 15 to
20 %.

3. Development of imports should measures be

repealed

3.1. India

( j ) P r e l i m i n a r y r e m a r k s

(53)

it was
In the absence of dumping during the RIP,
examined whether dumping from India would be likely
to recur should measures be repealed. In order to assess
whether there was a likelihood of recurrence of dumping,
the pricing behaviour of Kokan, namely its prices to
other export markets in comparison with its export
prices to the Community and with its domestic prices,
and its production, production capacity and stocks were
examined. The analysis was based on the information
provided in the questionnaire reply and verified at the
premises of Kokan during the investigation.

(k) R e l a t i o n s h i p b e t w e e n p r i c e s

i n t h e

C o m m u n i t y a n d p r i c e s w i t h i n I n d i a

(54)

Prices on the Community market were higher that those
achieved by Kokan on its domestic market during the
RIP. This development, however, should be seen in the
light of the fact that the export prices of this company
were subject to the discipline of the MIPs of the under­
taking.

(57)

(58)

(59)

(l) R e l a t i o n s h i p b e t w e e n e x p o r t p r i c e s t o
t o t h e
i n

t h i r d c o u n t r i e s , e x p o r t p r i c e s
C o m m u n i t y
a n d
I n d i a

d o m e s t i c

p r i c e s

(55)

It was found that the average export price charged by
Kokan to third countries was significantly below its
average export price to the Community.
It was also
found that
these prices were dumped as they were
found to be well below the prices charged by Kokan
on its domestic market.

(56) As mentioned in recitals 7 and 41 above, Kokan was
subject to a minimum price undertaking for its exports
to the Community during the RIP, whereas the prices
third countries were
charged to customers in other
the latter
freely established.
prices are an indication of
for
export to the Community should measures be allowed

In these circumstances,

the likely price level

to lapse. It was thus concluded that Kokan is likely to
reduce its export prices to the Community and that
dumping is likely to recur in the Community market in
case measures are repealed.

(m) R e l a t i o n s h i p b e t w e e n e x p o r t p r i c e s
p r i c e

c o u n t r i e s

t h i r d

a n d

t h e

i n t h e C o m m u n i t y m a r k e t

t o
l e v e l

It is also noted that export prices to third countries were
found to be, on average, below the sales prices of the
Community industry in the Community market. This
for the product
means that
the prevailing price level
concerned in the Community market makes
this
market very attractive for the exporting producer in
there is
India. On this basis,
sales to the
indeed an economic incentive to shift
higher-priced Community market in case of repeal of
the measures in force.

is considered that

it

(n) U n u s e d c a p a c i t i e s a n d s t o c k s

it was found that

The investigation revealed that the cooperating exporting
producer did not build up stocks during the RIP.
However,
the company would be
able to increase its production as its capacity utilisation
rate was around 65 % during the RIP. It is noted in this
respect that unused production capacity of the coop­
erating exporting producer was found to correspond to
more than 30 % of Community consumption.

(o) C o n c l u s i o n o n I n d i a

The investigation clearly showed that price levels in India
and in other third countries’ markets is significantly
lower than the price levels in the Community market.
If the existing anti-dumping measures are repealed, there
will be a strong incentive for the cooperating Indian
exporting producer
to deploy unused capacities, but
also to shift more sales to the Community market and
therefore to continue exporting, even at increased quan­
tities. The assessment made above indicates that
the
increased quantities of
to the Community
would in all likelihood be made at dumped prices.

exports

3.2. PRC

(p) P r e l i m i n a r y r e m a r k s

(60)

Further to the finding of dumping during the RIP, the
likelihood of continuation of dumping in case measures
are repealed was also examined. In the absence of coop­
eration from any Chinese exporting producers,
the
conclusions below rely on facts available, namely infor­
mation submitted by the applicants, in accordance with
Article 18 of the basic Regulation, together with data
extracted from Eurostat.

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(61)

(q) P r o d u c t i o n c a p a c i t y

to

the

Publicly available data show that the Chinese production
volume is around 22 000 tonnes, which is more than
double the consumption in the Community during the
In the absence of cooperation from any Chinese
RIP.
exporting producer, no information was available as to
in the PRC. However,
whether spare capacities exist
according
available, Chinese
information
producers have the ability to use the relatively simple
batch process currently used to make speciality dyes
to produce sulphanilic acid.
and chemicals in order
Moreover,
the
Community market has continued for many years to
is,
be an attractive market
It
therefore,
spare
reasonable
production capacities
in the PRC
would be used to channel additional quantities to the
Community market and/or
that existing production,
increased by switches in production between speciality
dyes
redirected to the
Community, should the existing anti-dumping measures
be repealed.

for Chinese exporters.
any

to
that
assume
that might exist

as mentioned in recital 63 below,

and chemicals, would be

lihood that the volume of dumped imports would signif­
icantly increase in the absence of measures.

4. Conclusion regarding the likelihood of conti­

nuation or recurrence of dumping

(65) On the basis of the above, it is concluded that dumping
is likely to continue as concerns the Chinese exporters
and likely to recur as regards the Indian exporting
producers, should the existing measures be repealed.

D. DEFINITION OF THE COMMUNITY INDUSTRY

(66) Within the Community, the like product is manufactured
by two producers whose output is deemed to constitute
the total Community production of
the like product
within the meaning of Article 4(1) of the basic Regu­
lation.

(r) R e l a t i o n s h i p b e t w e e n e x p o r t p r i c e s t o
t o
t h i r d c o u n t r i e s a n d e x p o r t p r i c e s
t h e C o m m u n i t y

(62) According to the available data, Chinese export prices to
third countries were below Chinese export prices to the
Community during the RIP. There is a strong likelihood,
therefore, that if the measures were to be repealed, the
Chinese exporters would re-direct their current exports to
third countries to the Community market and that these
would continue to be at dumped prices.

(67)

It should be noted that as compared to the original
investigation,
and
‘Quimigal SA’
the
former to ‘Ardenity’ and the latter to ‘CUF Químicos
Industriais’.

Fine’
the
companies have been renamed,

‘Sorochimie Chimie

(68)

These two producers cooperated in the investigation and
supported the request
for a review. They therefore
constitute the Community industry within the meaning
of Articles 4(1) and 5(4) of the basic Regulation.

(s) A b s o r p t i o n p r a c t i c e s

(63) As established by Regulation (EC) No 236/2004, it was
found that absorption of
the anti-dumping duty had
taken place in respect of exports from the PRC to the
Community. This practice demonstrated the continued
attractiveness for Chinese exporting producers of
the
Community market. Since exports were found to be
it can be
made at dumped prices during the RIP,
the
concluded that dumping is likely to continue if
measures are allowed to lapse and export volumes are
likely to increase.

E. SITUATION ON THE COMMUNITY MARKET

1. Consumption in the Community market

(69)

The apparent Community consumption was established
on the basis of:

— imports

of

the

product

concerned

into

the

Community market derived from Eurostat,

(t) C o n c l u s i o n o n P R C

(64)

the Chinese exporters
The investigation showed that
continued their dumping practices during the RIP at a
significant level. On the basis of the findings in recitals
62 and 63 above,
it is concluded that there is a like­
lihood that significant dumping would continue if the
existing measures were repealed. Also, there is a like­

— total

sales of

the Community industry on the
Community market derived from the questionnaires’
replies.

(70)

Community consumption of sulphanilic acid in the RIP
was around 10 000 tonnes. Over the period considered,
a decrease in consumption of 6 % was observed.

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Table 1

Consumption on the Community market

2003

2004

2005

Consumption (tonnes)

10 684

10 443

10 899

Index

100

98

102

2. Current imports from the countries concerned

2006

9 939

93

RIP

9 997

94

(71)

In order to respect confidential business information, in view of the fact that Kokan represents 100 %
of imports originating in India and that the Community industry consists of only two producers, it
has been necessary to present the information in Tables 2 to 5 below in an indexed form.

2.1. Import volume and market share of the imports concerned in the RIP

(72)

The volumes and market shares of the imports from the PRC and India developed as set out in the
tables below. The import volume data is based on Eurostat.

Table 2

Imports from the countries concerned

Imports (index)

PRC

India

Total countries concerned

Source: Eurostat.

2003

100

100

100

2005

128

59

95

2004

106

54

81

Table 3

Market shares (index)

PRC

India

Total countries concerned

Market share of the countries concerned

2003

100

100

100

2004

109

55

83

2005

126

58

94

2006

86

56

72

2006

92

60

77

RIP

84

60

73

RIP

90

64

78

(73)

Imports from the countries concerned decreased by 27 % over the period considered. The market
share of the countries concerned decreased by 22 % between 2003 and the RIP.

(74)

Considering each country separately, import volumes from India decreased by 40 % between 2003
and the RIP and the market share of Indian imports decreased by 36 %.

(75)

The volume of imports originating in the PRC decreased by 16 % over the period considered and the
market share decreased by 10 % over the same period.

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2.2. Price evolution and price behaviour of the imports of the product concerned

Table 4

Prices of the imports concerned

Unit prices (EUR/tonne)

2003

2004

PRC

Index

India (indexed)

Total countries concerned

Index

Source: Eurostat.

773

100

100

956

100

876

113

85

910

95

2005

1 138

147

96

1 131

118

2006

1 128

146

110

1 180

123

RIP

1 040

135

111

1 138

119

(76)

The average price of the imports concerned originating in the PRC increased by 35 % over the period
considered. Over the same period, the average price of the imports concerned originating in India
increased by 11 %.

(77)

For the purpose of calculating the level of price undercutting during the RIP, the Community
industry’s ex-works prices to unrelated customers have been compared with the CIF Community-
frontier import prices of the countries concerned, and duly adjusted in order to reflect a landed price.
This adjustment was made by increasing the prices by the normal custom duty and post importation
costs, for both the PRC and India, and by further increasing the Chinese prices with the anti-dumping
duty. The comparison showed that the adjusted Chinese and Indian prices were not undercutting the
prices of the Community industry.

3. Imports from other third countries

Table 5

Imports from other third countries

Rest of the world

2003

2004

Imports (index)

Market share (index)

Average prices (EUR/tonne)

Index

Source: Eurostat.

100

100

935

100

80

82

927

99

2005

100

98

1 100

118

2006

97

104

1 255

134

RIP

97

104

1 285

137

(78)

The volume of
imports from other third countries slightly decreased by 3 % over the period
in view of the contraction in demand, their market share increased by 0,7
considered. However,
percentage points. The main exporting country, notably the US, accounted for most of these imports
during the period considered.

(79)

Prices of sulphanilic acid from other third countries were slightly lower than those of the Community
industry and followed the Indian price trends from 2005 onwards.

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4. Economic situation of the Community industry

(a) Preliminary remarks

(80)

In order to respect confidential business information, it has been necessary to present information
concerning the two companies forming the Community industry in an indexed form.

(81)

In accordance with Article 3(5) of the basic Regulation, all relevant economic factors and indices
pertaining to the Community industry were examined.

(b) Data relating to the Community industry

— Production, installed production capacity and capacity utilisation rate

Table 6

Production, installed production capacity, capacity utilisation

Capacity tonnes (index)

Production tonnes (index)

Capacity utilisation (index)

2003

100

100

100

2004

100

119

119

2005

100

115

115

2006

105

115

109

RIP

112

117

105

Source: Questionnaire replies of the Community industry.

(82)

The Community industry’s level of production in the RIP was 17 % higher than the level recorded at
the beginning of the period considered. The Community industry’s production capacity also increased
over the period considered by 12 % as a result of a Community producer increasing its capacity by
investing in equipment in order to produce pure grade sulphanilic acid. The combination of these
two factors led to an overall
increase in the capacity utilisation rate of the Community industry
during the period considered. It should be also noted that the Community industry achieved a
satisfactory level of capacity utilisation (in the range of 75-80 %) in the RIP.

— Inventories

(83)

The Community industry’s year-end stock levels decreased over the period considered by 22 %. The
levels of stock fell significantly in 2004 and 2005 but progressively increased in 2006 and in the RIP.

Table 7

Closing stock in volume

Stocks tonnes (index)

2003

100

2004

35

2005

38

2006

64

RIP

78

Source: Questionnaire replies of the Community industry.

— Sales volume, market share and growth

(84)

The sales volumes of the Community industry in the RIP were 5 % higher in comparison with the
beginning of the period considered. As Community consumption decreased by 6 % over the period
considered (see recital 70 above), the market share held by the Community industry increased by
12 % over the same period. Specifically, the Community industry gained around 7 percentage points
of market share over the period considered. The Community industry market share was kept above
50 % throughout the period considered.

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Table 8

Sales volume and market share

Sales volume – tonnes (index)

Market share % (index)

2003

100

100

2004

114

116

2005

107

105

2006

105

113

RIP

105

112

Source: Questionnaire replies of the Community industry.

(85)

It should be noted that the decrease in Community consumption in 2006 and in the RIP somewhat
affected the growth of the Community industry. The increase in market share is explained almost
equally by an increase in the sales volumes and by the weaker consumption towards the end of the
period considered.

— Factors affecting Community prices

(86) Average sales prices of the Community industry increased substantially by 26 % over the period
considered. The developments observed as from 2005 appear to reflect, in particular, the effects of
the anti-absorption measures imposed in 2004. The Community industry’s average selling prices
increased significantly between 2004 and 2005 and remained rather stable thereafter. However, this
increase was at a lower rate than the increase in the price of aniline, which is the most significant raw
Indeed, aniline, which is a benzene derivative,
material
represented around 50 % of the total manufacturing cost during the RIP and marked a price
increase of around 45 % between 2003 and the RIP.

for the production of sulphanilic acid.

Table 9

Sales prices

Average sales price (index)

2003

100

2004

104

2005

124

2006

125

RIP

126

Source: Questionnaire replies of the Community industry.

— Employment and productivity

(87)

The level of employment declined by 9 % between 2003 and the RIP, while production increased,
thus reflecting an increase in the Community industry’s productivity and competitiveness. The
average cost per employee, however, rose during the same period by 15 %.

Table 10

Employment and productivity

Employment (index)

Productivity (index)

Average labour cost (index)

2003

100

100

100

2004

96

125

82

2005

96

120

94

2006

98

117

106

RIP

91

129

115

Source: Questionnaire replies of the Community industry.

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— Profitability

Table 11

Profitability

Index

2003

100

2004

– 1 286

2005

1 519

2006

335

RIP

191

Source: Questionnaire replies of the Community industry.

(88)

(89)

The Community industry’s profitability, with the exception of the year 2005, was around or below
1 % of its turnover. Important losses were recorded in 2004, whereas the Community industry
recorded profits in 2005, 2006 and the RIP. Given that
the Community
industry was remarkably low in 2003, the apparent increase shown in the period considered led
to a level of profitability still far below the level which could be acceptable in this type of industry.

the profitability of

It is also noted that the Community industry’s profitability was influenced by the evolution of raw
material prices. The average production cost increased by 25 % between 2003 and the RIP. As
mentioned in recital 86 above, aniline is the key input in sulphanilic acid production and it
accounts for approximately half of the manufacturing cost. Given the fact that aniline prices signifi­
cantly rose in 2004, the Community industry was not able to pass this price increase to its customers
and incurred losses. The situation for the Community industry improved in 2005 as the prices of
aniline stabilised and the Community industry was able to increase its prices of sulphanilic acid to the
extent necessary to cover the rise in raw material costs. In 2006 and the RIP, confronted with new
rise of prices of the aniline, the Community industry’s profitability declined to levels below 1 % in
relation to turnover.

— Investments, return on investments and ability to raise capital

Table 12

Investments, return on investment

Investments (index)

Return on investments (index)

2003

100

100

2004

39

– 1 779

2005

57

2 498

2006

255

420

RIP

305

224

Source: Questionnaire replies of the Community industry.

(90)

The Community industry continued to make investments in its sulphanilic acid activities throughout
the period considered. In 2006 and the RIP, besides investments primarily related to the maintenance
of existing capital assets, one Community producer made investments in order to increase its capacity
concerning the production of pure grade sulphanilic acid. It should be however noted that this new
capacity is expected to be fully operational only from 2008.

(91) As the Community industry realised low profits throughout the period considered, the figure for the
return on investments, which expresses the pre-tax result as a percentage of the average opening and
closing net book value of assets employed in the production of sulphanilic acid, has also remained
very low, namely around 2 % during the RIP.

(92)

The investigation showed that the capital requirements of the Community industry have been
adversely affected by the difficult financial situation. Although one of the Community producers is
part of a large group, capital requirements are not always met to the desired level, as within this
group financial resources are generally allocated to the most profitable entities.

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— Cash flow

(93)

Cash flow significantly decreased, by 85 % between 2003 and the RIP, but still remained positive.
Cash flow is not following the trend of profitability as it was influenced by non–cash items such as
depreciation and inventory movements.

Cash flow

Index

2003

100

Source: Questionnaire replies of the Community industry.

Table 13

Cash flow

2004

41

2005

64

2006

32

RIP

15

(94)

(95)

5. Conclusion

Between 2003 and the RIP, most of
the indicators
pertaining to the Community industry developed posi­
sales volumes, capacity utilisation, production
tively:
investments and
volume, closing stocks, productivity,
return
profitability
its
investment. However,
remained below 1 % of turnover during the RIP.

on

The Community industry has benefited from a rise in its
unit price of sulphanilic acid, notably from 2004 to the
end of the RIP. However, the increase in the selling price
could not fully compensate for the rise in production
costs, and profit margins therefore decreased.

(96)

In addition, the decrease in Community consumption in
2006 and in the RIP somewhat hindered the recovery of
the Community industry.

(97) Overall,

it

is clear that

the introduction of

the anti-
dumping measures enabled the Community industry to
stabilise, but not
to fully recover from its injurious
situation because of the continued presence of dumped
imports from the PRC, as well as the increase in the cost
of raw materials, which the Community industry was
unable to pass on to its customers. Nevertheless, the
investigation showed that
the Community industry
started to invest in new equipment during the period
considered.

(98)

that

In the light of the above analysis, it emerged, on the one
the volume indicators developed positively
hand,
during the period considered. On the other,
the
financial
to the Community
industry such as profitability and cash flow showed
that
in a vulnerable
It is therefore concluded that the
economic situation.

the Community industry is still

indicators pertaining

Community industry could not fully recover from the
effects of injurious dumping.

F. LIKELIHOOD OF RECURRENCE OF INJURY

1. General

(99)

Pursuant to Article 11(2) of the basic Regulation, an
analysis of the likelihood of recurrence of injury should
the existing measures be repealed was carried out. In this
respect, the likely development of export volumes and
prices from the countries concerned was examined in
particular, as well as their likely effects on the situation
of the Community industry in the absence of measures.

2. Development of import volumes and prices from
the countries concerned should measures be
repealed

(100)

It is recalled that even with anti-dumping measures in
imports from the countries concerned had a
place,
market share of 24,6 % in the RIP.

(101) The investigation showed that

than

30 % of

to more

corresponds

the cooperating Indian
exporting producer has significant spare capacity, corre­
sponding
Community
information available to the
consumption. In addition,
Commission showed that
the existing production of
sulphanilic acid in the PRC is around 22 000 tonnes,
the
to more
which
Community consumption. On the basis of
the same
information, it also appears that Chinese producers are
able to easily switch production from speciality dyes and
chemicals to sulphanilic acid. These capacities, which
may be available in the countries concerned,
indicate
that
the exporting producers have the possibility to
increase their current production and thus also to
increase
acid to the
Community.

exports of

sulphanilic

double

their

than

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(102)

the period considered and it

It is also noted that Community consumption slightly
decreased over
is not
expected that the demand in the next few years will be
such as to absorb the potential increase in imports from
the PRC and India should the measures be terminated. In
this scenario, exports of sulphanilic acid from the PRC
and India would very likely replace a large share of the
sales made by the Community industry, as the prices of
imports are likely to be lower.

(103) The investigation established that the Community market
remains attractive for both Chinese and Indian exporting
producers. Indeed, as mentioned in recitals 57 and 62
above,
it was found that the average export price of
Indian and Chinese sales to other third countries was
significantly below the average export price to the
Community. Despite the fact that no price undercutting
was found to exist for Chinese and Indian export prices
when adjusted by the current anti-dumping and normal
customs duties, the Chinese and Indian CIF export prices
were found, on average, to be considerably lower (around
18 %) than the average price of the Community industry.
Therefore, without any measures in place,
imports of
sulphanilic acid from the countries concerned into the
Community are likely to significantly increase in the light
of (i) the unused capacities (namely in India), (ii) the re-
direction of exports to other third countries into the
to switch
Community market,
production from speciality dyes
to
sulphanilic acid (namely in the PRC), at price levels
significantly below the
in the
Community.

and chemicals

the possibility

current price

levels

(iii)

the
allows
measures have
assessment of any undue negative
impact on the
parties concerned by the current anti-dumping measures.

already been in place,

(107) On this basis,

it was examined whether, despite the
conclusions on the likelihood of recurrence 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.

2. Interest of the Community industry

(108)

the Community
It can reasonably be expected that
from the measures
industry will continue to benefit
recover by regaining
currently imposed and further
market share and improving its profitability. Should the
measures not be maintained,
the
Community industry will again begin to suffer injury as
a result of increased imports at dumped prices from the
countries concerned and that its currently fragile financial
situation will deteriorate.

likely that

is

it

(109) On this basis, it can be concluded that maintaining the
measures would be in the interest of the Community
industry.

3. Interest of importers

3. Conclusion on likelihood of recurrence of injury

(110)

(104) On the basis of the foregoing, it can be concluded that,
should measures lapse,
imports into the Community
market from the countries concerned would very likely
occur in significant volumes and at dumped prices which
would be below the Community industry’s prices. This
would in all likelihood have the effect of introducing a
price-depressive trend on the Community market, with
an expected negative impact on the economic situation
in particular,
of the Community industry. This would,
reverse the recovery that was achieved over the period
considered, leading to a likely recurrence of injury.

G. COMMUNITY INTEREST

1. Introduction

(105) According to Article 21 of the basic Regulation, it was
examined whether maintenance of
the existing anti-
dumping measures would be against the interest of the
Community as a whole. The determination of
the
Community interest was based on an appreciation of
all various interests involved.

(106) Furthermore, the fact that the present investigation is a
review, thus analysing a situation in which anti-dumping

investigation,

It is recalled that in the original
it was
found that the imposition of measures would not have
a serious impact on Community traders of sulphanilic
acid. As indicated above, no importer cooperated in
therefore, no compelling reasons
this
were presented to suggest
imposition of
the
measures would be against the interest of importers.

investigation;

that

4. Interest of users

(111) The Commission sent questionnaires to all 31 known
users, of which only four submitted a questionnaire
reply. Three questionnaire replies were received from
Community companies producing optical brighteners
and
company
producing dyes. However, the information provided by
these users regarding the effect of the measures and the
proportion that sulphanilic acid represented in their
manufacturing costs was not meaningful.

questionnaire

from a

reply

one

(112) The volumes of the product concerned imported by these
four users represented 47,3 % of the total imports in the
Community. Moreover, as these four users purchase
significant
acid from the
Community industry, they accounted overall for around
40 % of Community consumption in the RIP.

volumes of

sulphanilic

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(113) Three users have made the same comments opposing the
maintenance of the measures on the grounds that the
production capacity of the Community industry is insuf­
ficient to meet domestic demand and on the grounds
the measures harm their competitiveness on the
that
downstream products. The fourth user remained silent
on whether it was in favour or against the maintenance
of the measures.

(114) Regarding the supply situation on the Community
it is to be noted that the current production
market,
the Community industry could satisfy in
capacity of
It
the region of 80 % of Community consumption.
should also be stressed that
the Community industry
has invested in new facilities in order to increase its
output of pure grade sulphanilic acid. In any event, the
purpose of the measures is not to prevent imports from
the countries concerned entering the Community market
but to ensure that they are made at non-dumped and
non-injurious prices. It is therefore expected that imports
from the countries concerned will continue to enter the
market, as has been the case following the imposition of
measures in 2002.

(115)

It

It should also be noted that sulphanilic acid production
outside the Community is now restricted to a few
countries in the world, such as India, the PRC and the
US.
the Community
industry is allowed to operate under effective compe­
tition conditions
the
product continue to be available to all users in the
Community.

so that domestic supplies of

therefore important

that

is

(116) Regarding the competitiveness of the users, it should be
noted that, despite the lack of information obtained from
the users in the framework of this investigation, it was
investigation that anti-dumping
shown in the original
costs of optical
measures would increase
brighteners and of dyes containing sulphanilic acid by
less than 1 %.

full

the

(117) On the basis of the above, it is also considered, in the
framework of this expiry review investigation, that the
maintenance of measures would not have a major
adverse impact on the situation of users.

5. Conclusion on Community interest

(118) Given the above,

it

is concluded that

compelling reasons against
current anti-dumping measures.

the maintenance of

there are no
the

H. ANTI-DUMPING MEASURES

(119) 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 during which to make
representations and to comment. No comments which
were of a nature to change the above conclusions were
received.

(120)

In view of the conclusions reached with regard to the
likelihood of continuation of dumping regarding imports
the likelihood of
of sulphanilic acid from the PRC,
recurrence of dumping in regard to imports from India,
the likelihood of recurrence of injury and Community
the anti-dumping measures on imports of
interest,
sulphanilic acid should be maintained in order
to
injury being caused to the
prevent a recurrence of
Community industry by the dumped imports.

(121) The duty rate will not be applicable for imports of the
product concerned which are manufactured and sold for
export to the Community by one Indian company from
which an undertaking has been accepted by Commission
Decision 2006/37/EC,

HAS ADOPTED THIS REGULATION:

Article 1

A definitive anti-dumping duty is hereby imposed on
1.
imports
falling within CN codes
ex 2921 42 10 (TARIC code 2921 42 10 60) originating in
the People’s Republic of China and India.

sulphanilic

acid

of

2.
The rate of the definitive anti-dumping duty applicable to
the net free-at-Community frontier price, before duty, for the
products described in paragraph 1, shall be as follows:

Country

Definitive duty (%)

The People’s Republic of China

India

33,7

18,3

3.
Notwithstanding paragraph 1, the definitive anti-dumping
duty shall not apply to imports released for free circulation in
accordance with Article 2.

Unless otherwise

4.
concerning customs duties shall apply.

specified,

the provisions

in force

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Article 2

1.
Imports declared for release into free circulation which are
invoiced by companies from which undertakings are accepted
by the Commission and whose names are listed in Decision
2006/37/EC, as from time to time amended, shall be exempt
from the anti-dumping duty imposed by Article 1, on condition
that:

— they are manufactured, shipped and invoiced directly by the
said companies to the first independent customer in the
Community, and

— such imports are accompanied by an undertaking invoice
which is a commercial
the
elements and the declaration stipulated in the Annex of
this Regulation, and

invoice containing at

least

— the goods declared and presented to customs correspond
precisely to the description on the undertaking invoice.

the Annex or found not

that one or more of such conditions is not
paragraph 1,
fulfilled. The condition set out
in the second indent of
paragraph 1 shall be considered as not being fulfilled where
to comply with the
the undertaking invoice is found not
to be authentic or
provisions of
where the Commission has withdrawn the acceptance of the
undertaking pursuant to Article 8(9) of Regulation (EC) No
384/96 or Article 13(9) of the basic anti-subsidy Regulation
in a Regulation or Decision which refers to (a) particular trans­
action(s) and declares the relevant undertaking invoice(s) as
invalid.

Importers shall accept as a normal trade risk the fact that
3.
the
the non-fulfilment, by any party, of one or more of
conditions
listed in paragraph 1 and further defined in
paragraph 2, may give rise to a customs debt incurred under
Article 201 of Council Regulation (EEC) No 2913/92 of
12 October 1992 establishing the Community Customs
Code (1). The customs debt incurred shall be recovered upon
withdrawal by the Commission of the acceptance of the under­
taking.

2.
A customs debt shall be incurred at the time of acceptance
of the declaration for release into free circulation whenever it is
in respect of goods described in Article 1 and
established,
listed in
exempted from the duties under

the conditions

Article 3

This Regulation shall enter into force on the day following 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 Luxembourg, 13 October 2008.

For the Council
The President

B. KOUCHNER

(1) OJ L 302, 19.10.1992, p. 1.

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ANNEX

The following elements shall be indicated in the commercial invoice accompanying the company’s sales of sulphanilic
acid to the Community which are subject to an undertaking:

1. The heading ‘COMMERCIAL INVOICE ACCOMPANYING GOODS SUBJECT TO AN UNDERTAKING’.

2. The name of the company, mentioned in Article 1 of Commission Decision 2006/37/EC accepting the undertaking,

issuing the commercial invoice.

3. The commercial invoice number.

4. The date of issue of the commercial invoice.

5. The TARIC additional code under which the goods on the invoice are to be customs-cleared at the Community

frontier.

6. The exact description of the goods, including:

— the product code number (PCN) used for the purpose of the undertaking (e.g. PA99, PS85 or TA98),

— the technical/physical specifications of the PCN,

‘TA98’ grey free-flowing powder,

i.e. for ‘PA99’ and ‘PS85’ white free-flowing powder, and for

— the company product code number (CPC) (if applicable),

— CN code,

— quantity (to be given in tonnes).

7. The description of the terms of the sale, including:

— price per tonne,

— the applicable payment terms,

— the applicable delivery terms,

— total discounts and rebates.

8. Name of the company acting as an importer in the Community to which the commercial invoice accompanying goods

subject to an undertaking is issued directly by the company.

9. The name of the official of the company that has issued the commercial invoice and the following signed declaration:

‘I, the undersigned, certify that the sale for direct export to the European Community of the goods covered by this
invoice is being made within the scope and under the terms of the Undertaking offered by [COMPANY], and accepted
by the European Commission through Decision 2006/37/EC. I declare that the information provided in this invoice is
complete and correct.’