Commission Implementing Regulation (EU) 2025/1151 of 11 June 2025 imposing a definitive anti-dumping duty on imports of vanillin originating in the People’s Republic of China
Date: 2025-06-11
Institutions: Directorate-General for Trade and Economic Security, European Commission
Subjects: China, anti-dumping duty, flavouring, import (EU), originating product




L_202501151EN.000101.fmx.xml












Official Journal of the European Union


EN
L series













2025/1151


12.6.2025







            COMMISSION IMPLEMENTING REGULATION (EU) 2025/1151
of 11 June 2025
         
imposing a definitive anti-dumping duty on imports of vanillin originating in the People’s Republic of China


THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,


Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Article 9 thereof,


After consulting the Member States,

Whereas:
1.   PROCEDURE

1.1.   Initiation







(1)


On 24 May 2024 the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of vanillin originating in the People’s Republic of China (‘the country concerned’ or ‘the PRC’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).










(2)


The Commission initiated the investigation following a complaint lodged on 9 April 2024 by Syensqo (‘the complainant’). The complaint was made on behalf of the Union industry of vanillin in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.




1.2.   Registration







(3)


The Commission made imports of the product concerned subject to registration by Commission Implementing Regulation (EU) 2024/2716 (‘the registration Regulation’) (3).




1.3.   Interested parties







(4)


In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainant, known exporting producers and the PRC authorities, known importers, suppliers and users, traders about the initiation of the investigation and invited them to participate.










(5)


Interested parties had an opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.




1.4.   Claims on Initiation







(6)


One user, Frey & Lau GmbH (‘Frey & Lau’), which is also an importer, registered as an interested party but did not submit a questionnaire reply. It expressed its opposition to the initiation of the investigation. Its arguments have been summarised below.










(7)


Frey & Lau submitted that, since the complainant Union producer did not manufacture all types of vanillin, it could not constitute the Union industry for those types of vanillin that it did not manufacture. It also referred to imports by the complainant Union producer itself as a factor to undermine its status as a genuine Union producer. This claim is addressed under Section 4.1 below.










(8)


As addressed in more detail in Section 2.4 and 4.1 below, the complainant Union producer could constitute the Union industry as per the basic Regulation, since its production of the like product constituted more than 98 % of total Union production of the like product as defined in recitals (41) and (44). Therefore, the Union producer constitutes the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation for the like product defined in the aforementioned recitals.










(9)


Frey & Lau claimed that the calculations of the normal value presented by the complainant are incorrect since the theoretical Bill of Materials used for ethylvanillin and synthetic vanillin should not be considered for Brazil, the representative country proposed by the complainant, as there is no production of such product types of vanillin in that country. Frey & Lau also claimed that the complainant calculated the dumping margin for two products which are not produced in the Union, notably ethylvanillin and bio-vanillin, and that the calculation of a single dumping margin for all types of vanillin is not appropriate given the different price ranges of the four types of vanillin. In their claim, Frey & Lau proposed to use India as the appropriate representative country. It submitted that India would be suitable as representative country as it would have a similar level of economic development as China, export prices of vanillin from India would be comparable to those from China and there would be production of vanillin in India.










(10)


The Union industry replied to the comments submitted by Frey & Lau on the complaint, clarifying that the calculations of the normal value and dumping margin are in accordance with Article 2(6a) of the basic Regulation. On this issue, the Commission noted that Frey & Lau did not submit evidence to support its allegation that the calculations of the normal value and dumping margin by the Union industry are erroneous, nor did it submit revised calculations. Its claim was therefore rejected.










(11)


The Commission noted that India does not belong to the group of countries within the same level of economic development as China, as per definition of the World Bank. China is considered an upper-middle income country, whereas India is considered a lower-middle income country. Therefore, the claim to consider India as representative country was rejected.




1.5.   Sampling







(12)


In the Notice of Initiation, the Commission stated that it might sample the interested parties in accordance with Article 17 of the basic Regulation.




1.5.1.   No sampling of Union producers







(13)


As mentioned in the Notice of Initiation, the Commission made available questionnaires to the only two known Union producers, namely to the complainant and Ennolys. Sampling of Union producers was not considered necessary.




1.5.2.   Sampling of importers







(14)


To decide whether sampling is necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation.










(15)


Two unrelated importers came forward and submitted questionnaires replies. Only one of them provided the requested information and agreed to be included in the sample. In view of the limited number of replies, the Commission considered that sampling was not necessary.










(16)


The Commission received questionnaires replies from two users that also were importers, one of which is referred to in the previous recital. See Sections 7.2 and 7.3 below.




1.5.3.   Sampling of exporting producers in the PRC







(17)


To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in the PRC to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the People’s Republic of China to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.










(18)


Six exporting producers in the country concerned provided the requested information and agreed to be included in the sample. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. The selected sample consisted of two exporting producers Jiaxing Zhonghua Chemical Co., Ltd (‘Jiaxing Zhonghua’) and Jiangxi Brother Pharmaceutical Co. (‘Jiangxi Brother’), Ltd. In accordance with Article 17(2) of the basic Regulation, all known exporting producers and the authorities of the country concerned were consulted on the selection of the sample. The Commission received no comments on the selected sample and the sample was therefore confirmed on 11 June 2024.










(19)


In the course of the investigation, the Commission established that the Brother Holding, owner of majority stake of the shares of Jiangxi Brother, owns also a significant stake of the shares of Jiaxing Zhonghua. Both parties declared that they do act independently from one another. However, the Commission concluded that because of a third party directly or indirectly owning, controlling or holding 5 % or more of the outstanding voting stock or shares of both exporting producers, the latter have to be considered related within the meaning of Article 127(d) of Commission Implementing Regulation (EU) 2015/2447 (4).










(20)


Following disclosure of definitive findings, Jiangxi Brother contested the Commission’s conclusion that Jiangxi Brother and Jiaxing Zhonghua should be treated as related parties. It reiterated that both companies operate independently and are not in any meaningful way connected in terms of ownership, management or market conduct and in practice they are direct competitors in the vanillin market. However it did not put into question the Commission’s assessment that a third party directly or indirectly owns, controls or holds 5 % or more of the outstanding voting stock or shares of both exporting producers. The claim was therefore rejected.










(21)


In view of the facts explained in recital (19), the final sample consists of two related entities.




1.6.   Individual examination







(22)


As mentioned in recital (28), on 20 December 2024, in accordance with Article 19a(2) of the basic Regulation, the Commission informed interested parties by a Note to the File of its intention not to impose provisional measures. As explained in the Note to the File, this decision was due to the technical complexity of the case. In other words, in view of this technical complexity, the workload associated with the sampled exporting producers was already such that it precluded the imposition of provisional measures. Against this background, the Commission decided that any individual examinations would be unduly burdensome and would jeopardise the timely completion of the investigation within the meaning of Article 17(3) of the basic Regulation. In the definitive disclosure, the Commission explained that one non-sampled exporting producer in the PRC – Xiamen Oamic Biotech Co., Ltd (‘Oamic’) – had requested individual examination under Article 17(3) of the basic Regulation. However, it stated that the company had failed to submit a questionnaire reply within the deadline set by the Commission. In its comments on the definitive disclosure, Oamic pointed out that this statement was factually incorrect, as it had submitted a questionnaire reply. Whilst the Commission acknowledged its clerical error and the fact that Oamic was correct, nevertheless, this does not alter the conclusion that, due to the complexity of the case and the workload arising from the sampled exporting producers, any individual examinations would have been unduly burdensome and would have prevented the investigation from being completed in a timely manner. Accordingly, the request for individual examination submitted by Oamic was rejected.




1.7.   Questionnaire replies and verification visits







(23)


The Commission sent questionnaires to the known Union producers, users and the sampled exporting producers. The same questionnaires were made available online on the day of initiation.










(24)


The Commission sent a questionnaire concerning the existence of significant distortions in the PRC within the meaning of Article 2(6a)(b) of the basic Regulation to the Government of the People’s Republic of China (‘GOC’).










(25)


Questionnaire replies were received from the complainant Union producer, two Union users and the sampled exporting producers in the PRC.










(26)


The Commission sought and verified all the information deemed necessary for a provisional determination of dumping, resulting injury and Union interest. Verification visits pursuant to Article 16 of the basic Regulation were carried out at the premises of the following companies:






 


Union producer






—


Syensqo (Name of manufacturing entity: Specialty Operations France S.A.S.), Saint Fons, Lyon, France














 


Union user






—


Lucta S.A., Barcelona, Spain














 


Exporting producers in the PRC






—


Jiaxing Zhonghua Chemical Co., Ltd, Jiaxing City, China










—


Jiangxi Brother Pharmaceutical, Co., Ltd Pengze town, China.












1.8.   Investigation period and period considered







(27)


The investigation of dumping and injury covered the period from 1 January 2023 to 31 December 2023 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2020 to the end of the investigation period (‘the period considered’).




1.9.   Non imposition of provisional measures







(28)


Pursuant to Article 7(1) of the basic Regulation, the deadline for the imposition of provisional measures was 24 January 2025. On 20 December 2024, in accordance with Article 19a(2) of the basic Regulation, the Commission informed the interested parties of its intention not to impose provisional measures.




1.10.   Subsequent procedure







(29)


The Commission continued to seek and verify all the information it deemed necessary for its final findings.










(30)


When reaching its definitive findings, the Commission considered the comments submitted by interested parties.










(31)


On 8 April 2025, the Commission informed all interested parties of the essential facts and considerations, on the basis of which it intended to impose a definitive anti-dumping duty on imports of vanillin originating in the People’s Republic of China (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure. Following the assessment of a comment submitted by the exporting producer Oamic, a supplementary disclosure was sent to all parties on 16 April 2025 (‘supplementary final disclosure’).










(32)


Following the disclosure of definitive findings, the Commission received submissions from Arethia Services Germany GmbH & Co. KG (‘Arethia’), a newly registered interested party (user); the user Frey & Lau; the complainant, the Chinese exporting producers Jiangxi Brother, Oamic and Chongqing Thrive Fine Chemicals Co., Ltd. (‘Thrive’); Orchidlinn Biotech Co. Ltd (‘Orchidlinn’), a producer of the product concerned that did not export to the Union during the investigation period. Orchidlinn requested a hearing in the presence of the Hearing Officer in trade defence proceedings, which was held on 13 May 2025. Also, a hearing took place with Oamic on 23 April 2025.










(33)


Orchidlinn informed the Commission that it was preparing a new exporter review request to be submitted once measures would be imposed. It considered that the Commission had changed its conclusion on sampling after it had realised and corrected the erroneous description of Oamic’s situation, as explained in recital (22). However, it held that the sampling procedure and the determination of the individual examination constitute two distinct and legally sequenced procedures, whereas the sampling procedure comes first and the individual examination findings are made subsequently. It argued that a change in the second step, individual examination, cannot result in a change in the preceding step, which is sampling.










(34)


The Commission agreed that, in view of the correction made with regard to Oamic as mentioned in recital (33), it had also discovered and corrected a clerical error in the preceding paragraph of the final disclosure document. That paragraph concerned sampling and was replaced by a paragraph which is reflected in recital (22) of this regulation. Interested parties were thus fully informed on the correction in the supplementary final disclosure document. Orchidlinn argued that the Commission had failed to justify why it considered that sampling had not been abandoned, as it had erroneously stated in the document issued on 8 April 2025. However, as mentioned in recital (18) above, in the course of the proceeding, the Commission informed interested parties that six exporting producers had come forward in the sampling exercise (5) and that it had selected a sample of two which, absent of any comments, it had shortly afterwards confirmed to interested parties (6). At no later stage it had revoked or abandoned that sample. The mentioning of abandoning sampling in the document sent to interested parties on 8 April 2025 was thus clearly erroneous and the Commission made use of the sending of the supplementary final disclosure document, on 16 April, to correct also that clerical mistake.










(35)


Orchidlinn also submitted that the sample lacked representativity, as the product type it produces, natural vanillin, is not produced by either one of the sampled parties. With regard to this claim, as concluded in the analysis under Section 2.4, the Commission had concluded that the scope of the investigation was correctly defined and the four product types, natural vanillin being one of them, are substitutable and in direct competition with each other. The Commission further reiterated that the sample had been selected on the basis of Article 17(1) of the basic Regulation, i.e. by selecting the largest representative volume of exports which can reasonably be investigated within the time available. A sample representing more than 80 % of imports is by all means representative.










(36)


Finally, Orchidlinn urged the Commission that, if the Commission would maintain that sampling has been applied, it would nevertheless allow new exporting producers of natural vanillin to seek for individual dumping margins through a new exporter review as that product type is not produced by the sampled parties. The Commission failed to see any legal basis for such course of action as Article 11(4) of the basic Regulation, which regulates the determination of individual margins of dumping for new exporting producers, explicitly mentions that it does not apply where duties have been imposed under Article 9(6) of the basic Regulation, i.e. where sampling has been applied. In any event, the possibility to request refunds periodically in accordance with Article 11(8) remains possible.










(37)


Oamic claimed that the Commission’s Note for the File of 20 December mentioned in recital (28) did not comply with the requirement under Article 19(a)(2) as Oamic was through that Note not informed whether its request for individual examination had been accepted or not. However, Article 19(a)(2) obliges the Commission to inform interested parties on the non-imposition of provisional measures within a certain time limit, not to provide them with an interim report. Moreover, as already stated in recital (22), the Note mentioned that the non-imposition of provisional measures had been due to the technical complexity of the case. The Commission finally observed that Oamic had never inquired whether the Commission intended to assess the request for individual examination or contacted the Commission between the submission of its request for individual examination, on 3 July 2024, and its comments to the final disclosure, submitted on 11 April 2025. The claim was rejected.










(38)


Oamic submitted that the two sampled parties should have been treated, in accordance with Article 9(5) of the basic Regulation, as a single group entity. Therefore, it argued, sampling had indeed not been necessary. It understood that the weighted average duty rate under the sampling provision means that the margin of dumping shall be calculated on the basis of (at least) two unrelated, separate and independent cooperating parties.










(39)


With regard to this claim, the Commission confirmed that sampling had been applied, as six exporting producers had come forward and the Commission had selected the largest two companies amongst those to form the sample. Parties had also been informed accordingly and accepted that decision, as recalled in recital (34) above. Dumping and injury calculations had been made for and disclosed to each of the two parties individually, as the Commission found that Jiangxi Brother and Jiaxing Zhonghua did in practice not operate as one single entity. That is different from situations where there are close operational links between related parties and normal value, export price, dumping and injury are therefore calculated by combining the relevant financial data from the companies concerned and only one dumping and one injury calculation is made for the group. Pursuant to the provisions of Article 127(d) of Implementing Regulation (EU) 2015/2447, however, the Commission considered them related (see recitals (19) to (21)). Thus, Jiangxi Brother and Jiaxing Zhonghua should be attributed the weighted average duty of the two of them, and the same weighted average duty was attributed to the non-sampled cooperating parties, for the reasons explained in recital (187).










(40)


The comments from the other parties mentioned in recital (32) are addressed in the appropriate sections in this regulation.




2.   PRODUCT UNDER INVESTIGATION, PRODUCT CONCERNED AND LIKE PRODUCT

2.1.   Product under investigation







(41)


The product subject to this investigation is vanillin with the molecular formula C8H8O3 or C9H10O3, and with a purity level higher than 95 % by weight (‘the product under investigation’). The product under investigation includes Synthetic Vanillin, Natural Vanillin, Bio-sourced Synthetic Vanillin (Biovanillin) and Ethylvanillin. The Chemical Abstracts Service Registration number (CAS number) for Synthetic Vanillin, Natural Vanillin and Bio-sourced Synthetic Vanillin (Biovanillin) is 121-33-5. The CAS number for Ethylvanillin is 121-32-4. The product under investigation does not cover mixtures of different aroma chemicals containing concentrations of Vanillin below 95 % by weight.










(42)


Vanillin is used in the food (aroma and flavours) and cosmetic (fragrances) sector by way of an ingredient in the users’ recipes.




2.2.   Product concerned







(43)


The product allegedly being dumped is the product under investigation, originating in the PRC, currently classified under CN codes ex 2912 41 00  for Synthetic Vanillin, Natural Vanillin and Bio-sourced Synthetic Vanillin and ex 2912 42 00  for Ethylvanillin (TARIC codes 2912 41 00 10 and 2912 42 00 10) (‘the product concerned’).




2.3.   Like product







(44)


The investigation showed that the following products have the same or similar basic physical, chemical and technical characteristics as well as the same basic uses:






—


the product concerned when exported to the Union,










—


the product under investigation produced and sold on the domestic market of PRC, and










—


the product under investigation produced and sold in the Union by the Union industry and by third country producers.














(45)


The Commission decided that those products are therefore like products within the meaning of Article 1(4) of the basic Regulation.




2.4.   Claims regarding product scope







(46)


The user Frey & Lau, which is also an importer of the product concerned, claimed that the types of vanillin described in recital (43) could not be treated as one single product and hence could not be treated as ‘the product concerned’. It argued that there are large differences between synthetic vanillin, natural vanillin, bio-sourced synthetic vanillin (‘biovanillin’) and ethylvanillin, in terms of quality, price and flavour intensity. These products are used in different ways and in different quantities among customers that may use them also to prepare, inter alia, components for manufacturers of fragrances and food and baking mixtures.










(47)


Frey & Lau substantiated its claim by pointing at differences in declaration obligation and regulatory compliance that Frey & Lau and the downstream brand owner must meet, and any switch between the types of vanillin that would require a significant amount of regulatory work and extensive analyses of differences in flavour profiles and intensities. Frey & Lau submitted that the complainant could therefore not constitute the Union industry within the meaning of the basic Regulation for those types of vanillin that it did not manufacture in the Union, since it only manufactured synthetic vanillin and natural vanillin during the investigation period, and only natural vanillin since May 2024. Consequently, biovanillin and ethylvanillin should be excluded from the scope of the investigation, as well as synthetic vanillin since the production thereof halted in the Union in May 2024.










(48)


In reply to these comments, the Union industry considered that, while certain differences exist between the four types of vanillin, this does not preclude them from constituting a single product for the purposes of an anti-dumping investigation and falling under one single scope therein. It submitted that all types of vanillin are man-made, are used for the same purposes and share the same basic physical, chemical and technical characteristics, as follows:

Table 1










Type of Vanillin


CN Code


Chemical molecular formulas


Chemical Abstract Number (CAS)


Origin of raw material




Synthetic vanillin


2912 41 00 


C8H8O3



121-33-5


Crude Oil




Natural vanillin


2912 41 00 


C8H8O3



121-33-5


Bio-fuel




Bio-sourced synthetic vanillin (‘biovanillin’)


2912 41 00 


C8H8O3



121-33-5


Bio-fuel




Ethylvanillin


2912 42 00 


C9H10O3



121-32-4


Crude Oil














(49)


The Commission recalled that the definition of the like product in Article 1(4) of the basic Regulation is a product which is identical i.e. alike in all respects to the product under consideration or, in the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration.










(50)


The Commission considered that the scope of the investigation is correctly defined, since all types of vanillin are man-made molecules with a smell and taste resembling vanilla. All types of vanillin are used in a similar way and for the same purpose, namely, to constitute an input in inter alia fragrances and food recipes. The four product types are substitutable and in direct competition with each other. Therefore, excluding any of the types of vanillin would likely render a potential measure ineffective.










(51)


Concerning whether the Union industry has met the legal requirement for standing pursuant to Article 5(4) of the basic Regulation, the Commission refers to recitals (189) onwards of this Implementing Regulation.










(52)


Following disclosure of definitive findings, Frey & Lau reiterated its opposition against the definition of the product concerned. Also, the non-sampled exporting producer Thrive submitted its opposition against the said definition.










(53)


Frey & Lau and Thrive claimed that ethylvanillin cannot be considered to be a like product to synthetic vanillin. They also claimed that bio-sourced vanillin and natural vanillin carry a considerably higher production cost, and a corresponding higher sales price, than synthetic vanillin, and occur in much smaller quantities on the Union market. Hence, these can neither be considered a like product to synthetic vanillin.










(54)


One additional user, Arethia, which hitherto did not make itself known nor submitted a questionnaire, also submitted comments. It echoed the view of Frey & Lau (see recitals (46) and (47)) that ethylvanillin is a separate product compared to synthetic vanillin and natural vanillin.










(55)


As listed in the Table under recital (48) above, the Commission recognises that there are minor chemical differences between the different types of vanillin and that they are not alike in all respects.










(56)


Nevertheless, as stressed above, all types of vanillin are used in a similar way and for the same purpose, namely, to constitute an input in inter alia fragrances and food recipes. To this end, excluding one type of vanillin may undermine the effectiveness of the anti-dumping measures, as downstream users may adapt their recipes and doses of the type of vanillin that is exempted from measures.










(57)


The Commission recognises that the risk for substitution of one type of vanillin to another is not immediate since the user’s process of adapting recipes entail significant testing before release, as already emphasised by Frey & Lau in recital (47). But since measures are proposed for a five-year period, the effectiveness of anti-dumping measures must be assessed taking a longer term perspective.










(58)


On this basis, the Commission considered that all types of vanillin mentioned in the complaint and in recital (42) constitute the like product within the meaning of Article 1(4) of the basic Regulation.




3.   DUMPING

3.1.   Procedure for the determination of the normal value under Article 2(6a) of the basic Regulation







(59)


In view of the sufficient evidence available at the initiation of the investigation pointing to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation with regard to the PRC, the Commission considered it appropriate to initiate the investigation with regard to the exporting producers from this country having regard to Article 2(6a) of the basic Regulation.










(60)


Consequently, in order to collect the necessary data for the eventual application of Article 2(6a) of the basic Regulation, in the Notice of Initiation the Commission invited all exporting producers in the PRC to provide information regarding the inputs used for producing vanillin. Six exporting producers submitted the relevant information.










(61)


In order to obtain information deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in point 5.6 of the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union. No questionnaire reply and no submission on the application of Article 2(6a) of the basic Regulation was received within the deadline from the GOC. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in the PRC.










(62)


Following the initiation, the Commission received comments regarding the applicability of Article 2(6a) of the basic Regulation from Frey & Lau, Jiangxi Brother and Thrive. These comments are addressed in Section 3.2.2. below.










(63)


In the Notice of Initiation, the Commission also specified that, in view of the evidence available, it may need to select an appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation for the purpose of determining the normal value based on undistorted prices or benchmarks.










(64)


On 21 October 2024, the Commission informed by a note to the file (‘the First Note’) interested parties on the relevant sources it intended to use for the determination of the normal value. In that note, the Commission provided a list of all factors of production such as raw materials and inputs, labour and energy used in the production of vanillin. In addition, based on the criteria guiding the choice of undistorted prices or benchmarks, the Commission identified two possible representative countries, namely Brazil and Türkiye. The Commission received comments on the First Note from the complainant, the sampled exporting producer Jiangxi Brother and Thrive. The comments are addressed in the relevant sections below.










(65)


On 3 January 2025, the Commission addressed the comments received from interested parties on the First Note in a second note to the file (‘the Second Note’) and informed interested parties on the relevant sources it intended to use for the determination of the normal value, with Brazil as the representative country. It also informed interested parties that it would establish selling, general and administrative (‘SG&A’) costs and profits based on available information for the companies Dexxos Participações S.A. and Prox do Brasil.










(66)


The Commission received comments to the Second Note from the complainant and from the exporting producers Jiaxing Zhonghua and Thrive referring to the sources used to establish undistorted costs in the representative country. These have been addressed under the respective headings of Section 3.4 below.










(67)


After having analysed the comments and information received, the Commission concluded that Brazil was an appropriate representative country from which undistorted prices and costs would be sourced for the determination of the normal value. The underlying reasons for that choice are developed in detail in Section 3.3 below.




3.2.   Normal value







(68)


According to Article 2(1) of the basic Regulation, ‘the normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country’.










(69)


However, according to Article 2(6a)(a) of the basic Regulation, ‘in case it is determined […] that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions within the meaning of point (b), the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks’, and ‘shall include an undistorted and reasonable amount of administrative, selling and general costs and for profits’ (‘administrative, selling and general costs’ is refereed hereinafter as ‘SG&A’).










(70)


As further explained below, the Commission concluded in the present investigation that, based on the evidence available, and in view of the lack of cooperation of the GOC, the application of Article 2(6a) of the basic Regulation was justified.




3.2.1.   Existence of significant distortions







(71)


In recent investigations concerning the chemical sector (7) in the PRC (8), the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present.










(72)


In those investigations, the Commission found that there is substantial government intervention in the PRC resulting in a distortion of the effective allocation of resources in line with market principles (9). In particular, the Commission concluded that in the chemical sector not only does a substantial degree of ownership by the GOC persist in the sense of Article 2(6a)(b), first indent of the basic Regulation (10), but the GOC is also in a position to interfere with prices and costs through state presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation (11). The Commission further found that the state’s presence and intervention in the financial markets, as well as in the provision of raw materials and inputs have an additional distorting effect on the market. Indeed, overall, the system of planning in the PRC results in resources being concentrated in sectors designated as strategic or otherwise considered as politically important by the GOC, rather than being allocated in line with market forces (12). Moreover, the Commission concluded that the Chinese bankruptcy and property laws do not work properly in the sense of Article 2(6a)(b), fourth indent of the basic Regulation, thus generating distortions in particular when maintaining insolvent firms afloat and when allocating land use rights in the PRC (13). In the same vein, the Commission found distortions of wage costs in the chemical sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation (14), as well as distortions in the financial markets in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, in particular concerning access to capital for corporate actors in the PRC (15).










(73)


Like in previous investigations concerning the chemical sector in the PRC, the Commission examined in the present investigation whether it was appropriate or not to use domestic prices and costs in the PRC, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the complaint, and in the Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defence Investigations (16) (‘Report’), which relies on publicly available sources. That examination covered not only the substantial government interventions in the PRC’s economy in general, but also the specific market situation in the relevant sector including the product concerned. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in the PRC.










(74)


The complainant, referring to its own market intelligence, to the Report, to previous Commission’s trade defence investigations and to additional publicly available information sources (17), alleged that significant distortions exist in China which influence the domestic price of the product concerned.










(75)


More specifically, the complaint highlighted the following practices affecting the Chinese market of the product concerned:






(a)



the control by the state and the Chinese Communist Party (‘CCP’ or ‘Party’) over the market: the Chinese economic system continues to be based on a ‘socialist market economy’ whereby the state and the CCP hold a leading role in the economic governance of China (18) and the CCP maintains tight control over all aspects of the economy, not least through CCP cells which exist in both privately and state-owned enterprises (19); furthermore, all investments by enterprises, whether state-owned or not, are subject to approval by the National Development and Reform Commission (‘NDRC’), which drafts the five-year plans (‘FYP’) and implements competition law in China;










(b)



the FYPs for the overall economy and by sector: a planning system is in place in China, designed to achieve the objectives of the CCP and the state; the FYPs are implemented by all organs of the state and the CCP, and through their implementation the state and the CCP control the conditions of competition in China and encourage resource allocation in strategic sectors so as to create national enterprise champions to dominate domestic and international markets; a coordinated implementation of the FYPs has resulted in the massive build-up of overcapacity in many sectors including the chemical sector;










(c)



distortive practices in raw materials: the price of inputs is exposed to systemic distortions, with direct price-setting for certain inputs (20); China also uses stockpiling as an instrument which allows the state to significantly influence raw material prices; state-owned enterprises (‘SOEs’) also represent a majority in several raw material industries, including manufacturing of raw chemical materials where SOEs represent 52 % of the industry (21); the GOC limits investment into a number of businesses related to raw materials, for domestic as well as foreign investments; additionally, the 13th FYP, the effects of which are still seen today, mentioned the role of the state in controlling ownership, supply and distribution of raw materials;










(d)



distortions in the energy market: energy prices are not market-based but controlled by the PRC which is the world’s largest electricity producer (22) with 50 % of its generating capacity state-owned; the GOC regulates prices for electricity as well as natural gas and ensures that energy prices are differentiated for different industries; cheaper energy is provided, among others, to some manufacturers of electrolytic caustic soda which is one of the main inputs for the product concerned (23);










(e)



distortions in the capital market: the credit system in China is affected by distortions resulting from the pervasive role of the state in capital markets; access to capital is not equally available; rather, it is biased in favour of SOEs and private enterprises with close government ties or in encouraged sectors (24); government organisations seek to direct investment into strategic projects and industries by offering loan interest subsidies and other means of reducing capital costs and banks and other lenders are encouraged to support these policies by providing loans to companies active in such sectors (25); activities performed through the local government financing vehicles also provide evidence of the pervasive role of the state, contributing to the excessive use of debt instruments, the overinvestment in capital intensive industries, and the increasingly inefficient allocation of credit (26); the presence of ‘zombie companies’ (mainly SOEs in sectors plagued by excess capacity) takes up vast resources that could be allocated for more productive purposes (27); in addition, state sector profitability has constantly decreased, whereas investment has peaked in the years after the global crisis and again as of the end of 2015, suggesting that the mechanisms operating in the banking system are not consistent with normal commercial conditions; in the above mentioned aluminium foil investigation, (28) the US Department of Commerce noted that ‘because there has been no fundamental change in the state’s pervasive role in the financial system and the institutional relationships that bind the government and the principal actors in that system, Commerce’s properly determined, as detailed in the Financial System Memo, that the Chinese financial system is distorted’ (29); since production of the product concerned is capital intensive, the availability of cheap capital has contributed significantly to overcapacity in China in the sector;










(f)



distortions in the labour market: China lacks a market-based wage system (30), not least due to the absence of independent trade unions (31) and an underdeveloped collective bargaining, as well as in view of the household registration system which discourages or effectively hinders labour force mobility in China; although the current structure is gradually converging with internationally recognised labour standards, the labour market in China is still impacted by distortions of the past;










(g)



land distortions: the state owns all land in China and it pursues specific political goals in the allocation of land rather than free market principles; some official documents favour land allocation to SOEs and authorities are also instructed to consider industrial policy when setting the price of industrial land; moreover, even in case of bidding for land-use rights, it is common practice that only a number of bidders are allowed to participate, instead of accepting all parties that registered to enter a bid; in addition, in a 2014 State Council notice, China acknowledged that its preferential land-pricing policies may violate international legal obligations, particularly under WTO rules; the notice emphasised the need to align to international rules and to abolish policies that are inconsistent with these obligations, such as ‘reducing, waiving, or deferring the levy of administrative and institutional fees and government funds on enterprises, or transferring land parcels to enterprises at discounted prices or zero land price in violation of applicable provisions’;










(h)



recent distortive practices affecting the price of the product concerned: the chemicals industry represents a priority sector both in the 13th and 14th FYPs in China; one of the effects of the 13th FYP was overcapacity in the production of caustic soda, a major input for the product concerned, as well as overcapacity in the market of the product concerned itself; based on the complainant’s business intelligence three Chinese producers of the product concerned were expected to increase their capacity in 2024 – Jiaxing Zhonghua, Jiangxi Brother and Thrive; Jiaxing Zhonghua, the largest producer, would boost capacity by 2,5 kT (25 % increase); Jiangxi Brother, the second largest producer, planned to add 3 kT (doubling its capacity) and Thrive would expand by 1,5 kT, (375 % increase from its previous capacity of 0,4 kT); ethylvanillin production capacity is set to grow in the next five years, with Jiaxing Zhonghua to add 2,5 kT (32) and Jiangxi Brother to increase capacity by 1,3 kT (57 % increase); furthermore, China’s demand for synthetic vanillin as a percentage of domestic supply has decreased from 16 % in 2019 to 13 % in 2023, with a projected ratio of 11 % by 2028, indicating growing overcapacity; from 2019 to 2028, ethylvanillin overcapacity in China is likely to follow a similar trend – the demand as a percentage of supply decreased from 18 % in 2019 to 14 % in 2023, with a projected ratio of 12 % in 2028; as a consequence, the Chinese market cannot absorb the volume of production, and producers of the product concerned have to find markets in third countries which in turn drives the dumping on the EU market.














(76)


Furthermore, the complaint emphasised the systematic nature of the distortions where the state interventionist policies exert a decisive influence on the allocation of resources and their prices, leading to lower costs of raw materials and production and ultimately lowering the prices of finished products, such as the product concerned.










(77)


In conclusion, the complaint took the position that prices or costs, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation. On that basis, according to the complaint, it is not appropriate to use domestic prices and costs to establish normal value in this case.










(78)


The Commission examined whether it was appropriate or not to use domestic prices and costs in China, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. That analysis covered the examination of the substantial government interventions in China’s economy in general, but also the specific market situation in the relevant sector including the product concerned.










(79)


The sector of the product concerned is mainly served by private companies, such as Jiangxi Brother (33), Kunshan Asia Aroma (34) (‘Asia Aroma’) or Thrive (35), and by private companies with some minority state-ownership such as Jiaxing Zhonghua (36), but also, to some extent, by SOEs like Sinopec Group (37) and Sinochem Group (38), both central enterprises controlled by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), supplying Mono Ethylene Glycol, an input used to produce glyoxylic acid (39), which is in turn used for the production of vanillin.










(80)


Moreover, the investigation found that the national industry association representing the producers of chemical and petrochemical products, such as the product concerned, the China Petroleum and Chemical Industry Federation (‘CPCIF’), established a special committee on high-end specialty chemicals (40) like vanillin. The CPCIF adheres to the overall leadership of the CCP, carries out Party activities, and provides necessary conditions for the activities of Party organisations (41). Moreover, the ‘registration and management authority of the Association is the Ministry of Civil Affairs’ (42) and the conditions to be eligible as a CPCIF representative include to ‘adhere to the leadership of the CCP, support socialism with Chinese characteristics, resolutely implement the Party’s line, principles, and policies, and possess good political qualities’ (43).










(81)


Similar provisions are found also in the Articles of Association of China Food Additives and Ingredients Association (‘CFAA’) (44). The Party Branch of CFAA (45) is further set to ‘continuously enhance research capabilities, […] strengthen the party building work of industry associations and fully implement the general requirements for Party building in the new era’ (46)
. CFAA has also set up a special committee on food flavors and fragrances covering vanillin (47).










(82)


The investigation confirmed that Sinopec Group and Sinochem Group are both members of CPCIF (48).










(83)


Furthermore, at provincial level, the Jiangxi Food Additives and Ingredients Association explained on its website that the Association ‘must be under the leadership of the Party, take socialist values as the leading role’ (49). The investigation confirmed that Jiangxi Brother, which is located in Jiangxi, is a member of the association (50).










(84)


Both public and privately owned enterprises in the chemical sector are subject to policy supervision and guidance. The latest Chinese policy documents concerning the chemical sector confirm the continued importance which GOC attributes to the sector, including the intention to intervene in the sector in order to shape it in line with the government policies.










(85)


This is exemplified by the 14th FYP on Economic and Social Development and 2035 Perspectives (‘14th FYP’), according to which the GOC intends to ‘[t]ransform and upgrade traditional industries, promote the optimization of the layout and structural adjustment of raw material industries [and] accelerate the transformation and upgrading of key industries such as chemicals and papermaking’ (51).










(86)


Also, the 14th FYP on Developing the Raw Materials Industry requires that ‘[k]ey industries such as petrochemicals, chemical industry and steel shall focus on the plan’s goals and tasks’ (52).










(87)


Additionally, the Guiding Opinion on Promoting the High-Quality Development of the Petrochemical and Chemical Industries during the 14th FYP (‘the Guiding Opinion’) stipulates that the GOC will ‘[p]romote industrial structure adjustment: strengthen specific measures and scientifically regulate the scale of the industry’ and ‘[v]igorously develop new chemical materials and fine chemicals’ (53).










(88)


As to the GOC being in a position to interfere with prices and costs through state presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation, due to the lack of cooperation by the exporting producers, it was impossible to systematically establish existence of personal connections between producers of the product concerned and the CCP. However, given that the product concerned represents a subsector of the chemical sector, information established in the recent investigations concerning the chemical sector, as indicated in recital (72), is relevant also to the product concerned.










(89)


Moreover, the investigation found that Jiaxing Zhonghua’s CCP members are to ‘earnestly study and implement the spirit of the 19th National Congress of the Communist Party of China, to actively participate in all aspects of the company’s production and operation’ (54).










(90)


In addition, the chairman and general manager of Thrive was awarded the title of ‘Chongqing Outstanding Private Enterpreneur’ by the Chongqing Municipal Committee of the Communist Party of China and the Chongqing Municipal People’s Government in recognition for his ‘adher[ing] to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era’ (55).










(91)


Furthermore, as regards input suppliers, Sinochem Group’s chairman of the board of directors serves as the secretary of the Party committee and several members of the board of directors serve as deputy secretaries of the Party committee (56). Also, Sinochem Group presents itself as a company that ‘adheres to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, effectively strengthens the Party's overall leadership over the enterprise, deepens Party building, [and] gives full play to the role of Party organizations at all levels’ (57).










(92)


Similarly, Sinopec Group’s chairman of the board of directors is the secretary of the Party committee and several members of the board serve as deputy secretaries of the Party committee (58). Sinopec Group stated it intends to ‘focus on the company’s new mission and new tasks on the new journey, carry forward the party’s self-revolutionary spirit, strengthen the party’s leadership and party building in an all-round and integrated manner, and systematically promote comprehensive and strict party governance, so as to provide a strong guarantee for writing a new chapter of China’s modern petrochemical industry’ (59).










(93)


Further, policies discriminating in favour of domestic producers or otherwise influencing the market in the sense of Article 2(6a)(b), third indent of the basic Regulation are in place in the sector of the product concerned. The investigation identified documents showing that the industry benefits from governmental guidance and intervention into the chemical sector, given that the product concerned represents one of its subsectors.










(94)


The chemical industry keeps being regarded as a key industry by the GOC (60). This is confirmed in the numerous plans, directives and other documents focused on chemicals, which are issued at national, regional, and municipal level. Under the 14th FYP, the GOC earmarked the chemical industry for optimisation and upgrade (61).










(95)


Similarly, the 14th FYP on Developing the Raw Materials Industry stipulates that the GOC will ‘[p]romote standardized cluster development. Formulate the conditions for the identification of chemical parks, guide local governments to identify a number of chemical parks, and guide the clustering and standardized development of chemical enterprises. […] Promote the construction of national new industrialization industry demonstration bases in the field of raw materials, promote the transformation and upgrading of industrial agglomerations into clusters. […] [C]reate a number of chemical, petrochemical […] and new materials industry clusters. Optimize the organizational structure: Make leading enterprises bigger and stronger. […] [S]upport enterprises to accelerate cross-regional and cross-ownership mergers and reorganizations, increase industrial concentration, and conduct international operations. In the chemical, petrochemical, steel, non-ferrous metals, building materials and other industries’ sectors, cultivate a group of leading enterprises in the industrial chain with ecological dominance and core competitiveness’ (62).










(96)


Furthermore, at provincial level, the chemical sector is also singled out as a sector to be promoted, like for instance in Jiaxing Municipality, where Jiaxing Zhonghua is located. The Jiaxing Municipal Bureau of Economy and Information Technology’s Implementation Opinion on Chemical and New Material Industry Cluster Cultivation and Development requires that ‘[b]y 2025, the proportion of high-end chemical new materials products in our city will be greatly increased, advanced chemical new materials and high-end fine chemicals will develop rapidly […] and overcapacity will be effectively resolved. […] [The Municipality] will strive to exceed RMB 300 billion in total output value of chemical new materials enterprises above designated size by 2025, ensure that there are 3 enterprises with an output value of RMB 10 billion, 5 enterprises with an output value of RMB 5 billion or more, and 20 enterprises with an output value of RMB 1 billion or more’. To this end, the Jiaxing Municipality intends to ‘[i]mplement relevant national and provincial support policies, [and] [i]ncrease support for the technological transformation of the new chemical materials industry.’ (63)











(97)


More specifically, the food additive subsector is also singled out at provincial level like in Chongqing, where Jiangxi Brother is located. The Chongqing Municipality People’s Government’s 14th FYP on the High Quality Development of the Manufacturing Industry requires to ‘actively introduce and cultivate food additive production enterprises’ (64).










(98)


The product concerned is also affected by the distortions of wage costs in the sense of Article 2(6a)(b), fifth indent of the basic Regulation, as also referred to above in recital (72). Those distortions affect the sector both directly (when producing the product concerned or the main inputs), as well as indirectly (when having access to inputs from companies subject to the same labour system in the PRC) (65).










(99)


Moreover, no evidence was submitted by interested parties in the present investigation demonstrating that the sector of the product concerned is not affected by the government intervention in the financial system in the sense of Article 2(6a)(b), sixth indent of the basic Regulation.










(100)


Finally, the Commission recalls that in order to produce the product concerned, a number of inputs is needed. When the producers of the product concerned purchase/contract these inputs, the prices they pay (and which are recorded as their costs) are clearly exposed to the same systemic distortions mentioned before. For instance, suppliers of inputs employ labour that is subject to the distortions. They may borrow money that is subject to the distortions on the financial sector/capital allocation. In addition, they are subject to the planning system that applies across all levels of government and sectors.










(101)


As a consequence, not only the domestic sales prices of the product concerned are not appropriate for use within the meaning of Article 2(6a)(a) of the basic Regulation, but all the input costs (including raw materials, energy, land, financing, labour, etc.) are also affected because their price formation is affected by substantial government intervention, as described in Parts I and II of the Report. Indeed, the government interventions described in relation to the allocation of capital, land, labour, energy and raw materials are present throughout the PRC. This means, for instance, that an input that in itself was produced in the PRC by combining a range of factors of production is exposed to significant distortions. The same applies for the input to the input and so forth.










(102)


In sum, the evidence available showed that prices or costs of the product concerned, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation, as shown by the actual or potential impact of one or more of the relevant elements listed therein.




3.2.2.   Arguments raised by interested parties







(103)


Upon initiation, Jiangxi Brother requested the Commission to reject the Complainant’s claim on the alleged significant distortions and urged the Commission to accept the domestic prices and costs reported by the cooperating Chinese exporters. However, it did not substantiate the claim which was therefore rejected.










(104)


Frey & Lau also contested the application of Article 2(6a) of the basic Regulation. It submitted that no distortion with the meaning of Article 2(6a) of the basic Regulation could be present, as the fluctuating market price in recent years in combination with the existing overcapacities in PRC would show the absence of state intervention and demonstrate the existence of undistorted prices of the product under investigation, as otherwise, prices would have been kept constant or low. The Commission considered that stable prices are not a necessary consequence of a distortion within the meaning of Article 2(6a) of the basic Regulation. Equally, fluctuating prices do not demonstrate a lack of such distortions. Therefore, the arguments brought by Frey & Lau did not demonstrate the absence of a price distortion or state intervention. The claim was thus rejected.










(105)


In response to the Commission’s First Note, Thrive argued that a comparison of domestic prices for factors of production for synthetic vanillin and ethylvanillin – particularly energy, key raw materials, and labour – with prices in the representative countries examined by the Commission does not indicate the presence of market distortions in China. The Commission noted that Thrive neither claimed that Article 2(6a) should therefore not be applied, nor that it substantiated why this price analysis would entail that Article 2(6a) cannot be applied. In any event, the Commission considered that the price analysis provided by Thrive was incomplete, as it consisted of only a limited number of factors of production.










(106)


Upon definitive disclosure, Thrive submitted, on 8 April 2025, an additional set of comments pointing out the following alleged inaccuracies or misunderstandings in the complaint or in the Commission’s argumentation concerning the existence of significant distortions: (i) the company’s approved production capacity does not correspond to the levels indicated by the complainant (see recital (75)); (ii) Jiaxing Zhonghua has not set up a new production site, as indicated by the complainant, but new company; moreover, the production capacities of Chinese producers indicated by the complainant are incorrect (see recital (75)); (iii) the development of the Chinese market, characterised by the market’s inability to absorb the production volumes of the product under investigation, as described by the complainant (see recital (75)), does not correspond to Thrive’s perception of the market development; (iv) the fact that Thrive’s general manager was awarded the title of Chongqing Outstanding Private Entrepreneur (see recital (90)) was due to Thrive’s contribution to tax income and the company’s social responsibility and the award has nothing to do with the general manager’s political stance; in any event, Thrive’s general manager is not a CCP member; (v) Jiangxi Brother is not located in Chongqing and therefore not subject to Chongqing’s 14th FYP on the High Quality Development of the Manufacturing Industry (see recital (97)); (vi) as to the food additive subsector being singled out at provincial level for government support (see recital (97)), while ethyl vanillin and vanillin are considered food additives, synthetic aroma chemical industry is not mentioned in the FYP quoted by the Commission and, consequently, Thrive does not enjoy governmental support or special treatment through policies.










(107)


The Commission took note of Thrive’s comments and pointed out that: (i) irrespective of the accuracy of the production capacity indicated by the complainant, the production capacity levels provided by Thrive confirm the complainant’s argument concerning the sharp increase of production capacity in China of the product concerned, the production capacity indicated by Thrive being even higher than the capacity referred to by the complainant; (ii) Thrive merely claimed that the production capacities of other Chinese producers, indicated by the complainant, are incorrect, without providing any data which would actually call into question the complainant’s submission; (iii) similarly, Thrive’s remark concerning the market dynamics of the product concerned was not substantiated by any additional data or explanation and the Commission therefore did not see any reason to doubt the information provided by the complainant; (iv) the Commission did not claim that Thrive’s general manager would be CCP member, nor did it make any statement concerning the manager’s political persuasions; the Commission merely observed that the title had been awarded by the Chongqing CCP Municipal Committee and the Chongqing Municipal People's Government and that the manager’s adhering to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era was considered relevant by the respective authorities when awarding the title. In addition, the investigation showed that Thrive’s general manager promotes CCP building work within the company and ‘trusts that if Thrive can combine and integrate the CCP’s concepts and practices, Thrive will also be able to reach a very good development and will gain global competitiveness’ (66); (v) as to the reference to Chongqing as municipality where Jiangxi Brother is located, this is a clerical error on the Commission’s part, recital (97) should have referred to Thrive, located in Chongqing; while it can be therefore accepted that Jiangxi Brother is not subject to Chongqing’s industrial policies referred to in recital (97), it remains subject to the governmental interference of the Jiangxi authorities (see recital (83)), as well as to the nation-wide distortions described in recitals (83)-(102); correspondingly, the Chongqing policies are relevant for local vanillin producers, such as Thrive; (vi) irrespective of whether Thrive specifically benefits from the government mandate to cultivate food additive production enterprises in Chongqing due to the policy support being directed to companies producing food additive but not to producers of synthetic aromas, the Commission explained above (see in particular Sections 2.1 to 2.4) why all types of vanillin constitute like product; therefore, the reference in recital (97) to the Chongqing’s 14th FYP on the High Quality Development of the Manufacturing Industry remains fully relevant for the purpose of identifying government interventions within the meaning of point (b) of Article 2(6a) of the basic Regulation. Consequently, Thrive’s comments could not alter the Commission’s determinations concerning the existence of significant distortions in the sector of the product concerned.




3.2.3.   Conclusion







(108)


In view of the above, the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case. Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as described in the following section.




3.3.   Representative country

3.3.1.   General remarks







(109)


The choice of the representative country was based on the following criteria pursuant to Article 2(6a) of the basic Regulation:






—


A level of economic development similar to the PRC. For this purpose, the Commission used countries with a gross national income per capita similar to the PRC on the basis of the database of the World Bank (67),










—


Production of the product under investigation in that country,










—


Existence of relevant readily available data in the representative country,










—


Where there is more than one possible representative country, preference was given, where appropriate, to the country with an adequate level of social and environmental protection.














(110)


As explained in recitals (64) to (67), the Commission issued two notes for the file on the sources for the determination of the normal value: the First Note on 21 October 2024 and the Second Note on 3 January 2025. These notes described the facts and evidence underlying the relevant criteria, and addressed the comments received by the parties on these elements and on the relevant sources. In the Second Note, the Commission informed interested parties of its intention to consider Brazil as an appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation would be confirmed.




3.3.2.   A level of economic development similar to the PRC







(111)


In the First Note, the Commission noted that the product under investigation is not produced in any country with the same level of economic development as China. Then, in absence of a product in the same general category and/or sector as vanillin as described under point 3.3.3 below, the Commission identified Brazil, Indonesia, Mexico and Türkiye as countries where production of products under the same NACE code (68) of the product under investigation was known to take place and with a similar level of economic development as the PRC according to the World Bank, i.e. they are all classified by the World Bank as ‘upper-middle income’ countries on a gross national income basis.










(112)


Comments were received from Thrive. It submitted that the chosen countries are not suitable due to the high transportation costs because of the absence of availability of basic raw materials at local level. Transportation costs of those raw materials to these countries would amount to 50 %-100 % of these products costs or even exceed these. Thrive also claimed that the complexity of the taxation system in Brazil would unduly increase the cost of production of vanillin, further disqualifying it. Thrive suggested that only the United States of America, China, India and Europe possess the prerequisites for the production of synthetic and ethylvanillin.










(113)


However, the above countries including EU Member States, apart from China itself which, obviously, could not be considered, do not have a similar level of economic development as the PRC according to the World Bank. As explained in the First Note, the Commission could not identify any country within the same level of economic development as China where vanillin is produced, therefore focused its analysis on countries where products with the same NACE code of product under investigation are produced. The Commission noted that the presence of raw materials in the representative country is not a criterion to be considered, and that the claim that the taxation system in Brazil would be a major factor for increased cost was neither accompanied by any underlying evidence. Thrive also failed to explain why a country other than an ‘upper-middle income’ country should be selected. The Commission therefore rejected the claims of Thrive.




3.3.3.   Production of products in the same general category and/or sector







(114)


In the First Note, the Commission explained that, despite extensive research, it could not identify production of the product under investigation or of a product in the same general category and/or sector as vanillin in countries with a similar level of economic development as the PRC, in combination with readily available financial data for the producers concerned, as explained in recital (118). The Commission had therefore indicated that it would enlarge the scope of its research to products under the same NACE code as the product under investigation, namely manufacturing of organic chemicals, in order to establish an appropriate representative country for the application of Article 2(6a) of the basic Regulation and it identified Brazil, Indonesia, Mexico and Türkiye as such countries.










(115)


No interested party submitted comments on the intention of the Commission to use companies active in the production of products falling within the same NACE code of the product under investigation. No interested party came up with a proposal for an alternative product.




3.3.4.   Existence of relevant readily available data in the representative country







(116)


In the First Note the Commission indicated that for the countries identified as countries where products with the same NACE code as the product under investigation are being produced, i.e. Brazil, Indonesia, Mexico and Türkiye, it would continue to look for readily available reliable financial data from producers active in the sector with the same NACE code of the product under investigation.










(117)


With regard to Indonesia, the Commission analysed the imports of the main factors of production. For four out of the eight main factors of production which represent altogether 33 %-52 % of the total cost of manufacturing of vanillin, there were high volumes of imports (43 %, 53 %, 80 % and 90 %), from the PRC. In addition, three other main factors of production are imported from China in material volumes, ranging from 6 % to 11 %. In addition, the Commission found that Indonesia imports steam coal from Russia at distorted prices. In light of these observations, the Commission considered that the main factors of production imported to Indonesia are affected by price distortions. Therefore, the Commission considered that Indonesia could not be considered as a suitable representative country.










(118)


With regard to Mexico, in the First Note the Commission sought for companies active in the production of natural vanillin with readily available financial statements and no such producers could be identified. As a result, the Commission concluded that Mexico could not be considered as an appropriate representative country for this investigation.










(119)


In the First Note, the Commission noted that it had found readily available financial data related to two Brazilian companies, Dexxos Participações S.A. and Prox do Brasil, and to seven Turkish companies (69) manufacturing other organic basic chemicals products.










(120)


In its comments to the First Note, Thrive commented that they did not consider the Brazilian and Turkish companies identified by the Commission as comparable to their industry. The Commission clarified that due to the absence of production of a product in the same general category and/or sector as vanillin in the countries that could be considered as potential appropriate representative countries it had enlarged the scope of its research to products under the same NACE code as the product under investigation. Thrive did not submit any evidence that such approach would be erroneous, neither did it substantiate why these companies would be unsuitable. The Commission therefore rejected the claim.










(121)


Jiangxi Brother commented that the two Brazilian producers manufacture products which are different from flavour and fragrance or aroma chemicals and therefore should not be used for the calculation of the normal value. With regard to the Turkish manufacturers, Jiangxi Brother submitted that the company Mercan Kimya has publicly available financial statements which provide better financial details than the other six companies, in particular SG&A costs are explicitly disclosed. In support of this claim Jiangxi Brother referred to the General Court Case T-762/20 Sinopec Chongqing SVW Chemical and Others v Commission (70), which stipulates that SG&A costs of a company in the representative country incurred beyond the EXW level should not be considered in the construction of the normal value under the application of Article 2(6a) of the basic Regulation. According to Jiangxi Brother, the financial data not disclosing such level of details should not be considered because they do not allow for the exclusion of SG&A costs. In addition, Jiangxi Brother also noted that Türkiye appears to have the lowest percentage of imports from China and non-WTO countries, and on this basis it suggested Türkiye to be the most suitable representative country.










(122)


In the Second Note, the Commission addressed the above claims. In particular, the Commission noted that Jiangxi Brother had not contested the use of company financial data at NACE code, where the two Brazilian manufacturers belong to. Furthermore, the Commission found that the fact that some of their products are not similar to the aroma chemicals used in the flavour or fragrance sector – the more specific category to which the product under investigation belongs – does not constitute a relevant consideration to the assessment of the Commission. It is noted that it is almost always the case that the companies considered suitable in the context of Article 2(6a)(a) of the basic Regulation are producing several products. The Commission further clarified that it is also very common that the level of detail of readily available financial data of suitable companies in the representative country usually does not allow a more granular analysis of the SG&A and profit at the level of individual products.










(123)


With regard to the claim from Jiangxi Brother about the details available in the financial data of Turkish manufacturers, the Commission explained that, while agreeing that the level of detail available in the financial statements is a relevant factor, it does not constitute a sufficient criterion to exclude available financial data from other companies. Furthermore, as explained in recital (125), Türkiye was excluded due to distortions in prices of one of the key FOPs. For the reasons presented above, the Commission rejected the claims of Jiangxi Brother regarding certain financial data.










(124)


With regard to Jiangxi Brother’s claim that Türkiye would have a lower share of imports from the PRC or any of the countries listed in Annex I to Regulation (EU) 2015/755 of the European Parliament and of the Council (71) of the main factors of production than Brazil, in the First Note the Commission considered that both countries could be used as an appropriate representative country as such import volumes were overall relatively limited for each of these countries.










(125)


After having analysed the comments to the First Note, the Commission further analysed the import data of the factors of production in Brazil and Türkiye. The Commission found that there was a major distortion in the imports of phenol into Türkiye, one of the most important FOPs (72). In particular, it found that Türkiye imports large volumes of phenol from Russia (40 % during the investigation period), while imports of this raw material from Russia are currently under EU sanctions (73). The downwards evolution of prices of imports from Russia following the imposition of EU sanctions and increased volumes of phenol from Russia into Türkiye suggests that a distortion is present. On this basis, the Commission rejected the claim of Jiangxi Brother that Türkiye would be more suitable than Brazil as representative country.










(126)


A further analysis of import data of the factors of production in Brazil showed that the imports in Brazil from China and the countries listed in Annex I to Regulation (EU) 2015/755 did not have an impact on the determination of price of the factors of production, with the exception of glyoxylic acid. Regarding glyoxylic acid, the Commission did not use import prices into Brazil as benchmark for the reasons explained in recital (141) below.










(127)


The Commission found that there were no imports from China into Brazil of methanol, sulphuric acid, ethyl vanillin crude and ethanol. The Commission established for the following inputs that there were imports from China and, where relevant, imports from the countries listed in Annex I to Regulation (EU) 2015/755:






—


14 % of phenol imports into Brazil were from China and 4 % from the countries listed in Annex I to Regulation (EU) 2015/755,










—


25 % of mono-chloroethane imports into Brazil were from China,










—


6 % of caustic soda imports into Brazil were from China.














(128)


For all of the above inputs the Commission concluded that import prices into Brazil from all other countries were not distorted as they were not in line with the prices of imports from the PRC or from countries listed in Annex I to Regulation (EU) 2015/755. For all other factors of production, including glyoxylic acid, the Commission did not use import prices into Brazil as benchmark, as duly explained in recital (141).










(129)


Interested parties were informed thereof in the Second Note. In that Note, the Commission also informed parties that it had revised the list of factors of production, as it had established that two factors of production were not actually used by the sampled exporting producers.










(130)


In light of the above considerations, notably the distortion with regard to imports of phenol in Türkiye whereas no such distortion exists in Brazil, and in light of the overall quantities of imports in the two countries considered, the Commission informed the interested parties in the Second Note that it intended to use Brazil as representative country and the companies Dexxos Participações S.A. and Prox do Brasil, in accordance with Article 2(6a)(a), first ident of the basic Regulation in order to source undistorted prices or benchmarks for the calculation of normal value.










(131)


Interested parties were invited to comment on the appropriateness of Brazil as a representative country and of Dexxos Participações S.A. and Prox do Brasil as producers in the representative country.










(132)


The complainant agreed to the Commission’s proposal. Jiangxi Brother did not submit comments on the appropriateness of Brazil as representative country, however it submitted comments on certain financial data of one of the two producers identified by the Commission, as reported in recitals (165) below. The Commission addressed these comments in the same recital.




3.3.5.   Level of social and environmental protection







(133)


Having established that Brazil was the only available appropriate representative country, based on all of the above elements, there was no need to carry out an assessment of the level of social and environmental protection in accordance with the last sentence of Article 2(6a)(a) first indent of the basic Regulation.




3.3.6.   Conclusion







(134)


In view of the above analysis, Brazil met the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation in order to be considered as an appropriate representative country.




3.4.   Sources used to establish undistorted costs







(135)


In the First Note, the Commission listed the factors of production such as materials, energy and labour used in the production of the product under investigation by the exporting producers and invited the interested parties to comment and propose readily available information on undistorted values for each of the factors of production mentioned in that note.










(136)


Subsequently, in the Second Note, the Commission stated that, in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, it would use GTA (74) and undistorted international benchmarks (75) to establish the undistorted cost of the raw materials. In addition, the Commission stated that it would use the statistics published by the Instituto Brasileiro de Geografia e Estatística (IBGE) for establishing undistorted costs of labour (76) and the statistics published by the Ministry of Mines and Energy of Brazil for electricity (77).




3.4.1.   Factors of production







(137)


Considering all the information submitted by the interested parties and collected during the verification visits, the following factors of production and their sources have been identified in order to determine the normal value in accordance with Article 2(6a)(a) of the basic Regulation:

Table 2


Factors of production of vanillin









Factor of Production


Commodity Code


Undistorted value


Source of data





Raw materials





Phenol


2907 11 


9,42  CNY/kg


GTA




Guaiacol (Guetol)


2909 50 10 , 2909 50 10 00


30,18  CNY/kg


GTA




Hydrogen Peroxide


2847 00 00


3,56  CNY/kg


GTA




Methanol


2905 11 


2,77  CNY/kg


GTA




Mono-chloroethane


2903 11 10 , 2903 11 20 


9,74  CNY/kg


GTA




Glyoxylic Acid


2918 30 00 


51,48  CNY/kg


GTA




Caustic soda


2815 12 


2,98  CNY/kg


GTA




Sulfuric Acid


2807 00 10, 2807 00 20


0,75  CNY/kg


GTA




Toluene


2902 30 00 


5,93  CNY/kg


GTA




Ethanol


2207 10 10 , 2207 10 90 


4,68  CNY/L


GTA




Copper Sulphate


2833 25 10 , 2833 25 20 


15,46  CNY/kg


GTA




Ethyl vanillin crude


2912 42 


119,24  CNY/kg


GTA





Consumables






By/Co products





Ortho vanillin


2912 49  xx (**)



61,98  CNY/kg


GTA




Ethoxysalicylaldehyde


2912 49  xx (**)



61,98  CNY/kg


GTA




Hydroquinone


2907 22 


77,64  CNY/kg


GTA




O-Diethoxy benzene


2909 30  xx (**)



79,06  CNY/kg


GTA





Energy





Electricity


Not applicable


0,93  CNY/ kWh


Ministério de Minas e Energia




Coal


Not applicable


1,22  CNY/kg


World Bank Commodities Price Data (The Pink Sheet)




Steam


Not applicable


132,08  CNY/ton


World Bank Commodities Price Data (The Pink Sheet)





Labour





Labour


Not applicable


97,98  CNY/hour


IBGE














(138)


The Commission included a value for manufacturing overhead costs in order to cover costs not included in the factors of production referred to above. To establish this amount, the Commission used the percentage of manufacturing overheads over the costs of manufacturing actually incurred by the exporting producers. The methodology is duly explained in Section 3.4.8.










(139)


The amounts thereof were taken from the exporting producers questionnaire replies. The new amount for manufacturing overheads was expressed as a percentage of the reported manufacturing costs and has been applied to the recalculated manufacturing costs.




3.4.2.   Raw materials







(140)


In order to establish the undistorted price of raw materials as delivered at the gate of a representative country producer, the Commission used as a basis the weighted average import price to Brazil as reported in the GTA to which import duties and transport costs were added. The import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding the PRC and third countries listed in Annex 1 to Regulation (EU) 2015/755. The remaining quantities were considered representative. The Commission decided to exclude imports from the PRC into the representative country as it concluded in Section 3.2 above that it is not appropriate to use domestic prices and costs in the PRC due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. Given that there is no evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected export prices.










(141)


For glyoxylic acid, guaiacol/guetol, toluene, copper sulphate and hydrogen peroxide, the GTA import data for Brazil were not considered appropriate, due to the absence of significant imports and/or inclusion of several product labels within the same GTA product. For those raw materials the Commission has identified as best alternative an undistorted international price according to the availability of data for each of these FOPs. For toluene, copper sulphate and hydrogen peroxide the Commission noted Brazil is a net exporter of significant quantities (78) at a reasonable price. For these three raw materials the Commission established the international prices based on Free on Board prices sourced from GTA Brazilian export data to all trade partners.










(142)


For glyoxylic acid, the commodity coded 2918 30 00  used in Brazil to import the product includes a mix of multiple products (i.e. Tariff description in GTA: ‘carboxylic acids with aldehyde or ketone function but without other oxygen function, their anhydrides, halides, peroxides, peroxyacids and their halogenated, sulphonated, nitrated or nitrosated derivatives’) and the Commission was not in a position to relay on the GTA imports statistics. The Commission found that, such product is only produced in France and the PRC and in order to limit the risk of selecting a non-correct price benchmark, it used the GTA exports statistics from France to all countries (China and non-WTO countries excluded). For guaiacol/guetol, which have limited trade globally, including exports/imports from/to Brazil, the Commission established the benchmark on the basis of imports from all countries (China and non-WTO countries excluded).










(143)


In its comments to the Second Note, Jiaxing Zhonghua contested the GTA data proposed by the Commission for guaiacol/guetol, arguing that the products covered by the extraction included other products such as triclosan, eugenol, isoeugenol, other ether-phenols, ether-alcohol-phenols and their halogenated derivatives. The company claimed that this methodology was inaccurate for valuing guaiacol or guetol. The Commission analysed the claim and considered that the issue could be addressed by narrowing down the selection of the raw material by identifying, through the tariff line description, only the transactions with the guaiacol (and/or guetol) name reported. The Commission considered that the revised approach would address the company’s claim.










(144)


In its comments to the Second Note, Jiaxing Zhonghua also claimed that the Commission should, in its normal value calculation, not use a benchmark price for guaiacol/guetol, but start the normal value calculation at a more upstream FOP level using the information provided by the related supplier. In support of its claim, Jiaxing Zhonghua submitted a newly consolidated COP table (79). The Commission rejected the claim on three grounds: (i) Jiaxing Zhonghua submitted the consolidated COP table in support of its claim at an excessively late stage of the proceeding, rendering it impossible for the Commission to reasonably verify its accuracy; (ii) the Commission found the consolidated COP table to be inaccurate (i.e. the overhead costs incurred by the related supplier to manufacture the guaiacol/guetol from catechol were missing); (iii) the Commission also found unsubstantiated and without merit the suggestion to value the catechol not on the basis of an international price but by using the same price of phenol, which is the raw material used to produce guaiacol/guetol, and the company failed to provide evidence to justify the lack of any upward price adjustment to account for the processing of phenol into catechol.










(145)


Jiaxing Zhonghua and Jiangxi Brother submitted comments on the Second Note in relation to the undistorted value of glyoxylic acid. Jiaxing Zhonghua submitted that the HTS code 2918 30 00  is covering a basket of various products and thus does not accurately reflect the international price of the glyoxylic acid. For this reason, it claimed that the Commission should source the glyoxylic acid benchmark from other sources such as data provided by Procurement Resource (80). Jiangxi Brother claimed that the Commission's methodology should be further improved. In particular, it explained that glyoxylic acid is utilised in both the vanillin and pharmaceutical industries, with variations in purity and concentration tailored to each application’s specific requirements. The purity level and the concentration have a significant impact on the final price and are therefore crucial factors that should be taken into account. Jiangxi Brother explained that France (where the sole EU producer is located) exports a large quantity of glyoxylic acid to various countries and among those countries only a limited number of countries produce vanillin. Jiangxi Brother suggested that the Commission should refine its methodology by using only the French exports to USA, as in terms of volumes these exports are representative and there is a producer of vanillin in the USA, whereas that is not the case in other countries. The prices of glyoxylic acid sold on the US market would therefore be more representative for the prices of glyoxylic acid used in the production of vanillin than prices of glyoxylic acid to countries that do not produce vanillin. Furthermore, Jiangxi Brother also claimed that the Commission should adjust Eurostat prices to reflect the price differences resulting from differences in purity.










(146)


The Commission analysed Jiangxi Brother’s claim to determine the price of glyoxylic acid based on France export to USA. First, the claim was not substantiated by any evidence that price of glyoxylic acid used for vanillin production differs from that used for other purposes such as pharmaceuticals. Second, the available statistics did not allow either for distinguishing glyoxylic acid used for vanillin from any other uses. Third, while vanillin production is indeed present in the USA, nothing submitted by the exporting producer or available on the file suggested that, given the huge size of the USA market for the use of glyoxylic acid, that the export statistics to the USA would better reflect glyoxylic acid used for vanillin than the total exports from France to all other countries. The Commission therefore rejected the claim of Jiangxi Brother.










(147)


The Commission also rejected Jiaxing Zhonghua’s request to use an alternative source, such as Procurement Resource, instead of GTA to determine the benchmark. The data provided by Jiaxing Zhonghua from Procurement Resource were not cleared for use in terms of copyrights and therefore could not be disclosed in the open file.










(148)


Following the disclosure of definitive findings, Jiangxi Brother reiterated its claim that the Commission should establish the price benchmark for glyoxylic acid solely on the basis of exports from France to the USA. Jiangxi Brother argued that French exports to other countries are more likely to be destined for production in the pharmaceutical industry. Furthermore, Jiangxi Brother claimed that the Commission should use Eurostat export prices at the 10-digit code level, to which it has access, as that would be more precise and thus give a more accurate glyoxylic acid price.










(149)


The Commission as explained above in recital (146) reaffirmed its position and rejected the claim due to the lack of evidence provided by Jiangxi Brother. Jiangxi Brother failed to demonstrate that exports from France to other countries are primarily intended for production in the pharmaceutical industry contrary to the export to USA which are intended for chemical industries. Furthermore, regarding the second claim, the Commission noted that the 10-digit Taric code is only available for imports into the EU, whereas all statistical data for EU exports to third countries are collected at the 8-digit CN level (81).










(150)


Jiangxi Brother also submitted comments on the Second Note in relation to caustic soda. It emphasised that purity is an important element in terms of this product, finding the benchmark identified by the Commission significantly higher than their purchase price of this raw material. Jiangxi Brother suggested the Commission to verify the purity reported in the GTA import data and to assess whether the related price could be linked to the purity level.










(151)


The Commission noted, first, that the purchase price that Jiangxi Brother paid on its domestic market is irrelevant, in view of the established existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. The Commission further noted that the claim was not substantiated, neither did Jiangxi Brother provide a method for possible adjustment. The claim was therefore rejected.










(152)


The Commission expressed the transport cost incurred by the cooperating exporting producer for the supply of raw materials as a percentage of the actual cost of such raw materials and then applied the same percentage to the undistorted cost of the same raw materials in order to obtain the undistorted transport cost. The Commission considered that, in the context of this investigation, the ratio between the exporting producers’ raw material and the reported transport costs could be reasonably used as an indication to estimate the undistorted transport costs of raw materials when delivered to the company’s factory.




3.4.3.   Consumables







(153)


In the Second Note, the Commission also informed the interested parties that due to the large number of factors of production used by the sampled exporting producers that provided complete information, also for the auxiliary materials (82), and the negligible weight of some of these materials in the total cost of production, all auxiliary materials identified were grouped under ‘consumables’. Further, the Commission informed that it would calculate the percentage of the consumables on the total cost of raw materials and apply this percentage to the recalculated cost of raw materials when using the established undistorted benchmarks in the appropriate representative country.




3.4.4.   Labour







(154)


The IBGE publishes detailed information on wages in different economic sectors in Brazil. The Commission used the latest available statistics covering 2022 for average labour cost in Sector of manufacturing of organic chemicals according to the Brazilian Classification CNAE 2.0 (83). The values were further indexed for inflation using the labour cost index published by the ‘Brazilian institute of Geography and Statistics’ (84) to reflect the costs in the investigation period.










(155)


Jiangxi Brother submitted that the hourly rate calculated by the Commission is overly high compared with the hourly rate in another dumping case (85). Furthermore, Jiangxi Brother claimed that the Commission should further check whether the hourly rate includes any additional taxes and charges.










(156)


The Commission recalled, first, that each case has to be assessed on its own merits. Secondly, Jiangxi Brother has not contested the methodology applied by the Commission nor identified methodological mistakes. Thirdly, while in previous dumping cases, like the case quoted by Jiangxi Brother, the Commission used ILO statistics to calculate the labour hourly rate, it moved away therefrom because ILO statistics do not distinguish salary based on specific business categories and because there is no distinction based on the size of companies. The Commission considered the IBGE statistics thus more accurate. For the reasons explained in the recital above, the claim of Jiangxi Brother regarding labour cost is rejected. Regarding the second part of the claim, the Commission confirms that the hourly rate calculated includes only social charges, labour indemnities and benefits and not additional taxes and charges.




3.4.5.   Electricity







(157)


The price of electricity for industrial users in Brazil is published by the Government of Brazil in the Monthly Energy Bulletin (86). The Commission used the data on the industrial electricity prices in the corresponding consumption band in CNY/MWh as published for the investigation period.




3.4.6.   Coal







(158)


As explained in the First Note, the Commission found that significant quantities of coal imported into Brazil are from Russia, which is currently under EU sanctions (87). The Commission found that imports of coal from Russia increased by 52 % in 2022, the year that the sanctions were imposed, and imports of coal from Russia remained at comparable high levels thereafter, representing 39 % of imports in the investigation period. The Commission also observed a sharp decrease of the import price of coal from Russia during the investigation period by 29 % compared to the previous year and found that the decrease in price of Russian imports triggered a drop in prices of coal imports from other countries to similar low levels. In light of the above, the Commission considered the prices of imported coal in Brazil distorted.










(159)


Regarding coal, Russia holds the second largest coal reserves in the world and has been expanding its production in the last decade because of growing exports (88). Combined with the sanctions, this circumstance has lowered the price of Russian exports and Turkish imports of Russian coal have increased significantly in the recent years (89).










(160)


Jiangxi Brother commented on the First Note claiming that the Commission should use as a benchmark the Australian export price of coal sourced from the World Bank Commodities Price (90), making reference to a previous investigation (91) where the Commission had applied the same approach. The Commission assessed the claim of Jiangxi Brother. It found the benchmark proposed reasonable and consistent with the methodology applied in other cases. The Commission therefore accepted Jiangxi Brother’s claim and decided to use the price of Australian coal published by the World Bank as benchmark price.




3.4.7.   Steam







(161)


In the Second Note, the Commission indicated that it intended to calculate the price of steam in Brazil using the methodology suggested by the U.S. Department for Energy (92). This methodology provides a cost for steam based on the heat input required to produce it. To this end, the Commission used coal as heat input and used the price of coal calculated as explained in the previous recital.




3.4.8.   Manufacturing overhead costs, SG&A costs, profits







(162)


According to Article 2(6a)(a) of the basic Regulation, ‘the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits’.










(163)


The manufacturing overheads incurred by each sampled exporting producer were expressed as a share of the costs of manufacturing actually incurred by the exporting producer. This percentage was used to determine the undistorted value of manufacturing overheads.










(164)


As proposed in the Second Note, for establishing an undistorted and reasonable amount for SG&A costs and for profit, the Commission relied on the financial data for the year 2023 from the Brazilian companies Dexxos Participacoes S.A. and Prox do Brasil, as extracted from Orbis and the company’s internet websites, when available. With regard to the SG&A calculation of Dexxos Participações S.A., the Commission had in the Second Note identified transport costs linked to sales which had been reported under the company’s total cost of goods sold (‘COGS’), and deducted a representative share of these transport costs from the COGS in calculating ex-works SG&A.










(165)


In response to the Second Note, Jiangxi Brother requested a clarification with regard to the calculation of SG&A, as it suspected that the Commission’s calculation, as described above, resulted in an understated COGS amount and, consequently, overstated SG&A rate.










(166)


The Commission assessed the claim. It acknowledged that in the financial statements of the two Brazilian companies it was not possible to identify whether the amount of transport and related costs was reported under COGS or SG&A costs. Consequently, without this piece of information, the Commission found that it was not in a position to revise the SG&A costs or COGS amount in order to calculate the respective values at ex-works level. The Commission therefore revised its calculations of the SG&A rate, limited to Dexxos Participações S.A., by accepting Jiangxi Brother’s claim that the freight, commission and royalties costs should not be deducted from the COGS.










(167)


The undistorted SG&A costs and profit were determined as a percentage of the costs of goods sold at the rates of 6,76 % and 14,22 % respectively. Those rates were considered by the Commission to be reasonable, within the meaning of the last subparagraph of Article 2(6a)(a) of the basic Regulation, for the ex-works level of trade.




3.5.   Calculation







(168)


On the basis of the above, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.










(169)


First, the Commission established the undistorted manufacturing costs. The Commission multiplied the verified actual consumption quantity of the individual factors of production of the cooperating exporting producers by the undistorted unit costs of those factors of production observed in the representative country, as described in Section 3.4.










(170)


Second, the portion of the undistorted cost of manufacturing reflecting the undistorted value of consumables was established by multiplying the undistorted value of raw materials determined as described in recital (169) by the percentage of consumables determined as described in recital (153).










(171)


Third, the Commission established the undistorted value of manufacturing overheads by multiplying the undistorted value of cost of manufacturing by the percentage of manufacturing overheads determined as described in recital (163).










(172)


By adding the undistorted value of the manufacturing overheads to the undistorted value of the cost of manufacturing, the Commission established the undistorted cost of production.










(173)


Finally, the Commission established the undistorted amounts for SG&A and for profit by multiplying the undistorted value of cost of production by the rates of S&GA and of profit determined as explained in recitals (164) to (167). The undistorted amounts for SG&A and for profit, which were considered by the Commission to be reasonable for the ex-works level of trade, were added to the undistorted cost of production.










(174)


On that basis, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.




3.6.   Export price







(175)


The sampled exporting producers exported to the Union either directly to independent customers or through related companies located outside the Union.










(176)


In case of direct sales, the export price was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.










(177)


For indirect sales, the export price was established on the basis of the price at which the imported product was first resold to independent customers in the Union, in accordance with Article 2(9) of the basic Regulation. Established case-law clarifies that adjustments pursuant to Article 2(9) of the basic Regulation include costs incurred by an entity located outside the European Union, provided that such an entity appears to be associated with the importer or exporter and that the costs in question would normally be borne by an importer (93). In this context, case-law equates these costs with those related to sales activities performed by subsidiaries as they reduce the amount received by the exporting producer, in as much as they are typically borne by the importer (94). As noted by the Court of Justice, this approach is in line with the objective of Article 2(9) of the basic Regulation. According to the Court, that objective would not be achieved if an exporting producer could simply structure its sales in such a way as to ensure the involvement, prior to the importation of the product concerned into the European Union, of an intermediary associated with it which would assume responsibility for the costs normally borne by an importer, so as to increase the export price actually paid by the importer (95).










(178)


In light of the above, the Commission noted that traders related to the exporting producers located in third countries were performing functions similar to those of importers. Costs associated with these functions would normally be borne by a related importer and therefore an adjustment under Article 2(9) of the basic Regulation for these costs (SG&A costs) and a nominal profit is warranted.










(179)


The SG&A costs were based on the data provided by the related party. With regard to the adjustment for profit, considering that only one independent importer cooperated during the investigation and for confidentiality reason its profit margin could not be disclosed, the Commission relied on the profit realised by unrelated importers involved in the trade of chemical products in a previous investigation. Thus, the level of profit of 6,89 % found in Polyvinyl alcohols (96) was considered reasonable, as it was realised by unrelated importers in the chemical industrial sector.




3.7.   Comparison







(180)


Article 2(10) of the basic Regulation requires the Commission to make a fair comparison between the normal value and the export price at the same level of trade and to make allowances for differences in factors which affect prices and price comparability. In the case at hand the Commission chose to compare the normal value and the export price of the sampled exporting producers at the ex-works level of trade. As further explained below, where appropriate, the normal value and the export price were adjusted in order to: (i) net them back to the ex-works level of trade; and (ii) make allowances for differences in factors which were claimed, and demonstrated, to affect prices and price comparability.




3.7.1.   Adjustments made to the normal value







(181)


As explained in recital (174), the normal value was established at the ex-works level of trade by using costs of production together with amounts for SG&A costs and for profit, which were considered to be reasonable for that level of trade. Therefore, no adjustments were necessary to net the normal value back to the ex-works level.










(182)


The Commission found therefore no reasons for making any allowances to the normal value, nor were such allowances claimed by any of the sampled exporting producers.




3.7.2.   Adjustments made to the export price







(183)


In order to net the export price back to the ex-works level of trade, adjustments were made on the account of handling, loading and ancillary expenses, freight in country concerned, ocean freight, ocean insurance, customs duty, other import charges and freight in the Union.










(184)


Allowances were made for the following factors affecting prices and price comparability: credit cost and bank charges.




3.8.   Dumping margins







(185)


For the sampled exporting producers, the Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned, in accordance with Article 2(11) and (12) of the basic Regulation.










(186)


The Commission, in view of the evidence collected during the verification visits, considered the two sampled exporting producers as related companies in accordance with Article 2(1) of the basic Regulation. Therefore, the Commission calculated a weighted average of the dumping margins established for each of them and made both entities subject to the single dumping margin thus calculated.










(187)


For the cooperating exporting producers outside the sample, the Commission calculated the weighted average dumping margin, in accordance with Article 9(6) of the basic Regulation. Therefore, that margin was established on the basis of the margins of the sampled exporting producers. Since the cooperating companies covered almost all imports from the country concerned, the Commission considered it appropriate that the duty determined for the sampled exporting producers will apply to all exporting producers from the country concerned.










(188)


On this basis, the definitive weighted average dumping margins expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:






Company


Definitive dumping margin (%)




Brother Corporation Group:






—


Jiangxi Brother Pharmaceuticals Co., Ltd










—


Jiaxing Zhonghua Chemicals Co., Ltd






186,9 




Non sampled cooperating exporting producers


186,9 




All other companies originating in the country concerned


186,9 








4.   INJURY

4.1.   Definition of the Union industry and Union production







(189)


The like product was manufactured by two producers in the Union during the investigation period. One of them, Syensqo, the complainant, represented 98 % of the total Union production, and constituted the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.










(190)


As the data relating to the injury assessment was derived from only one Union producer, the figures for the injury analysis are given in ranges for reasons of confidentiality. However, the indexes are based on actual data and not on the ranges.










(191)


The total Union production during the investigation period was in the range of 1 500 to 1 900 tonnes. The Commission established the actual figure on the basis of a verification of the questionnaire reply of the sole Union producer that cooperated, namely Syensqo.










(192)


The user Frey & Lau, which is also an importer, claimed that the complainant did not have sufficient standing pursuant to Article 4(1) of the basic Regulation, since it closed down its production of synthetic vanillin and the remaining production of natural vanillin constituted very limited volumes. Moreover, Frey & Lau also referred to Syensqo’s relationship to a Chinese exporting producer – Solvay Zhenjiang Chemicals Co Ltd – as a reason for not meeting the requirement of a genuine Union producer within the meaning of the basic Regulation.










(193)


The complainant recalled that its decision to temporarily close its manufacturing of synthetic vanillin was directly related to price competition by dumped imports from the PRC. Moreover, the mothballing of this manufacturing process was done after the end of the investigation period, and since it is a temporary action in response to price competition, its production during the investigation period should be included in the calculation of standing pursuant to Article 5(4 ) of the basic Regulation.










(194)


The complainant recalled that the basic Regulation sets a threshold for a complaint to be considered to have been made by, or on behalf of, the Union industry. This is the case if the complaint is supported by those Union producers whose collective output represents more than 50 % of total production of the like product produced by that portion of the Union industry expressing either support for or opposition to the complaint. Given that the complainant’s production represented 98 % of Union production during the investigation period, the complainant qualified to constitute the Union industry as per the basic Regulation.










(195)


With regard to its common ownership with a Chinese exporting producer, the complainant claimed that this relationship did not influence its long-term business model in the Union, which had been exemplified by its decision to lodge the anti-dumping proceeding against the PRC, which would also cover its own related entity.










(196)


The Commission considers that the complainant constituted the ‘Union industry’ within the meaning of the basic Regulation since its production of vanillin constituted 98 % of total Union production of the like product within the Union. While the Union Industry indeed closed down some production operations, this took place after the end of the investigation period and was a temporary action in response to the prevailing market situation and should not impact its standing in this proceeding.










(197)


The Commission considers that the mere fact that a part of the Union industry has an economic relationship with a Chinese exporting producer does not per se disqualify a Union producer to be treated as such under the basic Regulation. The Chinese exporting producer related to the Union industry only supplied limited quantities of the product concerned to the Union market, which could be regarded as a temporary act in order to keep its Union customers without further economic effects.










(198)


Set against the claim by Frey & Lau that the injury picture in the complaint is flawed, given that the Commission considers all types of vanillin as like product (see recital (49)), the Union industry is correctly defined as including the complainant and consequently, the injury analysis to be carried out in this investigation also involves an assessment of the situation of the complainant.




4.2.   Union consumption







(199)


The Commission established the Union consumption on the basis of: (i) the verified sales of the Union industry; and (ii) all the imports from third countries into the Union.










(200)


Union consumption developed as follows:

Table 3


Union consumption (tonnes)










 


2020


2021


2022


Investigation period




Total Union consumption


7 496 


7 688 


8 404 


6 444 





Index




100 




103 




112 




86 












Source:



Eurostat.


















(201)


While EU consumption was stable during the first two years of the period considered, it was volatile during 2022 and the investigation period. The supply chain of many goods was disrupted due to lack of workforce in many exporting countries (such as in the country concerned) and exacerbated by a shortage of shipping possibilities and sudden events such as the blockage in the Suez Canal (which triggered shipping prices to increase) and later on by the Russian war of aggression against Ukraine (resulting in energy price increases notably in the Union) (97).










(202)


The Union demand at the level of the users increased in 2022, but then reversed during the investigation period, resulting in a drop by 23 % between 2022 and the investigation period.




4.3.   Imports from the country concerned

4.3.1.   Volume and market share of the imports from the country concerned







(203)


As explained in recital (43) the product concerned falls under two separate CN codes:






—



                                    ex 2912 41 00  for Synthetic Vanillin, Natural Vanillin and Bio- sourced Synthetic Vanillin, and










—



                                    ex 2912 42 00  for Ethylvanillin.














(204)


The market share of the Chinese exports to the Union was established by comparing export volumes with the Union market consumption (see Table 3 above).










(205)


Imports into the Union from the country concerned developed as follows:

Table 4


Import volume and market share










 


2020


2021


2022


Investigation period




Volume of imports from the PRC (tonnes)


3 138 


3 667 


4 564 


4 220 





Index




100 




117 




145 




134 





Market share (%)


42 


48 


54 


65 





Index




100 




114 




130 




156 












Source:



Eurostat.


















(206)


Table 4 shows that during the period considered imports from the PRC increased in absolute terms by 34 %. In terms of market share, imports from the PRC increased from 42 % to 65 % during the period considered, or by around seven percentage points annually.




4.3.2.   Prices of the imports from the country concerned and price undercutting







(207)


The Commission established the prices of imports on the basis of import data from Eurostat. Price undercutting of the imports was established based on verified questionnaire replies of the sampled exporting producers in the PRC.










(208)


The average price of imports into the Union from the country concerned developed as follows:

Table 5


Import prices (EUR/tonne)










 


2020


2021


2022


Investigation period




Price of imports from the PRC


16 365 


16 141 


22 589 


11 870 





Index




100 




99 




138 




73 












Source:



Eurostat and questionnaire replies of the sampled exporting producers in the PRC.


















(209)


While prices were stable during the first two years of the period considered, this price stability was replaced by a period of high volatility during 2022 and 2023, where there was a sudden increase in prices in 2022, during which prices increased by 40 % when compared to the previous year.










(210)


This trend was reversed during the investigation period, when prices were almost halved when compared to 2022, with prices during the investigation period being 27 % lower than they were in 2020.










(211)


The Commission determined the price undercutting during the investigation period by comparing:






—


the weighted average sales prices per product type of the known Union producer charged to unrelated customers on the Union market, adjusted to an ex-works level, and










—


the corresponding weighted average prices per product type of the imports from the sampled cooperating Chinese producers to the first independent customer on the Union market, established on a cost, insurance, freight (CIF) basis, with appropriate adjustments for customs duties and post-importation costs.














(212)


The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts.










(213)


The result of the comparison was expressed as a percentage of the known Union producer’s theoretical turnover during the investigation period. It showed a weighted average undercutting margin of between 45 % to 55 % by the imports from the country concerned on the Union market. Undercutting was found for all of the imported volumes of the sampled companies.




4.4.   Economic situation of the Union industry

4.4.1.   General remarks







(214)


In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.










(215)


For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic and the microeconomic indicators on the basis of data contained in the complaint and the questionnaire reply of the only Union producer cooperating (the complainant). As the complainant represents 98 % of the total Union production and the other Union producer is small, both sets of data were found to be representative of the economic situation of the Union industry.










(216)


As mentioned in recital (190), while the actual figures are in ranges, the indexes are based on the real figures.










(217)


The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.










(218)


The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.




4.4.2.   Macroeconomic indicators

4.4.2.1.   Production, production capacity and capacity utilisation






(219)


The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 6


Production, production capacity and capacity utilisation










 


2020


2021


2022


Investigation period




Production volume (tonnes)


[4 100  – 4 700 ]


[4 100  – 4 700 ]


[3 700  – 4 300 ]


[1 600  – 2 100 ]





Index




100 




101 




91 




39 





Production capacity (tonnes)


[3 900  – 4 500 ]


[3 900  – 4 500 ]


[4 300  – 4 900 ]


[4 300  – 4 900 ]





Index




100 




100 




110 




111 





Capacity utilisation


98  %


99  %


81  %


35  %





Index




100 




101 




82 




36 












Source:



Syensqo questionnaire reply.


















(220)


Total production encompasses both the production volumes of Synthetic Vanillin and of Natural Vanillin, each having separate production lines.










(221)


In line with Union consumption (see Table 3 above), the Union industry’s production volumes were stable during the first two years of the period considered.










(222)


In 2022, despite the increased EU consumption, an increase in the cost of production (as explained in recital (239) below), forced the Union industry to cut back on production volumes in order to keep a sustainable price level.










(223)


In 2023, when EU consumption decreased, and with import prices from the PRC cut in half (see Table 5 above), the Union industry was forced to cut back even further on production, with production volumes during the investigation period at only 39 % of those in 2020 and 2021.










(224)


Production capacity was stable over the period considered. The slightly higher capacity in 2022 and 2023 is due to shorter periods of planned regular maintenance.










(225)


The production capacity utilisation rate mirrors the development of production. While the utilisation rate was satisfactory during 2020 and 2021, during the cut down of production volumes as mentioned above, the utilisation rate of the production equipment decreased to a very low level, a level which is not financially sustainable in the longer term.




4.4.2.2.   Sales volume and market share






(226)


The Union industry’s sales volume and market share developed over the period considered as follows:

Table 7


Sales volume and market share










 


2020


2021


2022


Investigation period




Sales volume on the Union market (tonnes)


[2 000  – 2 400 ]


[1 850  – 2 250 ]


[1 750  – 2 150 ]


[650  – 1 050 ]





Index




100 




93 




87 




41 





Market share (%)


[27  – 30 ]


[24  – 27 ]


[20  – 23 ]


[12  – 15 ]





Index




100 




91 




78 




48 












Source:



Syensqo questionnaire reply.


















(227)


Reflecting the evolution of EU Consumption (see Table 3), sales volumes on the Union market were kept stable during the first two years of the period considered.










(228)


Following the supply-chain disruption referred to in recital (201) that inter alia increased the cost of certain raw materials and energy for the Union industry, as mentioned in recital (222), the Union industry had to selected orders on the basis of what was financially sustainable. Hence, sales volumes decreased by 6 % between 2021 and 2022.










(229)


When the supply chain disruption ended in 2023, the trend reversed and prices of imports from the PRC on the market fell drastically (see Table 5 above). The Union industry had to cut back even more on sales volumes since the prevailing price level did not cover the full cost of manufacturing. Hence, sales volumes during the investigation period fell by more than half compared to the volumes sold during 2020 and 2021.




4.4.2.3.   Growth






(230)


The Union Industry has suffered negative growth during the period considered. While the situation was stable in 2020 and 2021, this changed in 2022, a year when while sales volumes fell further, price increases compensated for the lost volumes and total turnover increased.










(231)


In the investigation period, as Chinese import prices halved, the Union industry could no longer compete, and it lost significant sales volumes and hence sales revenues.




4.4.2.4.   Employment and productivity






(232)


Employment and productivity developed over the period considered as follows:

Table 8


Employment and productivity










 


2020


2021


2022


Investigation period




Number of employees (FTE)


[60  – 70 ]


[60  – 70 ]


[70  – 80 ]


[60  – 70 ]





Index




100 




100 




120 




106 





Productivity (tonne/FTE)


[60  – 70 ]


[60  – 70 ]


[40  – 50 ]


[20  – 30 ]





Index




100 




101 




75 




37 












Source:



Syensqo questionnaire reply.


















(233)


During the period considered, employment in the Union increased by 6 %. Despite lower production volumes during 2022 and the investigation period, the complainant did not furlough or dismissed the highly trained and qualified staff in the expectation that the market situation would normalise, and higher production volumes could resume.










(234)


It follows from the previous recital and recital (222) that productivity dropped significantly during the period considered, as staff was used for maintenance and other expected tasks while production volumes decreased.




4.4.2.5.   Magnitude of the dumping margin and recovery from past dumping






(235)


All dumping margins were significantly above the de minimis level. The impact of the magnitude of the actual margins of dumping on the Union industry was substantial, given the volume and prices of imports from the country concerned.










(236)


This is the first anti-dumping investigation regarding the product concerned. Therefore, no data were available to assess the effects of possible past dumping.




4.4.3.   Microeconomic indicators

4.4.3.1.   Prices and factors affecting prices






(237)


The weighted average unit sales prices of the Union producer to unrelated customers in the Union developed over the period considered as follows:

Table 9


Sales prices in the Union










 


2020


2021


2022


Investigation period




Average unit sales price in the Union on the total market (EUR/tonne)


[17 500  – 19 500 ]


[17 000  – 19 000 ]


[21 900  – 23 900 ]


[21 900  – 23 900 ]





Index




100 




97 




125 




126 





Unit cost of production (EUR/tonne)


[16 000  – 18 000 ]


[13 700  – 15 500 ]


[17 600  – 20 000 ]


[23 800  – 27 000 ]





Index




100 




81 




110 




144 












Source:



Syensqo questionnaire reply.


















(238)


The Union industry’s average sales prices on the Union market were rather stable between 2020 and 2021 and increased as from 2022 onwards including the investigation period. The higher average sales prices partly reflected the increase in demand on the European market in 2022 (see recital (201)), but partly also to cover the increased costs of production.










(239)


Reflecting increased costs for inter alia energy and higher fixed costs per unit due to lower production capacity utilisation rate, the average cost of production increased by 44 % during the period considered.










(240)


It should be noted that the portion of fixed manufacturing costs (manufacturing overheads) out of the total manufacturing costs is rather small, between 9 % and 15 % of unit cost of production during the investigation period.










(241)


Moreover, Union industry also incurred costs associated with the production process interruption, less efficient production/start-up costs, due to the lower production volumes. These amounted to between 5 %–10 % of unit cost of production during the investigation period.










(242)


Hence, the lower production volumes in 2022 and 2023, including production interruptions and higher fixed costs (manufacturing overheads and SG&A), impacted the unit cost of production by some 15 %–25 %.




4.4.3.2.   Labour costs






(243)


The labour costs of the Union industry developed over the period considered as follows:

Table 10


Average labour costs per employee










 


2020


2021


2022


Investigation period




Average labour costs per employee (EUR/FTE)


[67 000  – 73 000 ]


[67 000  – 73 000 ]


[80 000  – 86 000 ]


[63 000  – 69 000 ]





Index




100 




100 




119 




94 












Source:



Syensqo questionnaire reply.


















(244)


During the period considered, and apart from 2022, the average labour cost per employee was rather stable, with a small decrease in the investigation period. The increase in salary that occurred in 2022 was due to accrued bonuses paid for certain staff pertinent to financial performance of previous years.




4.4.3.3.   Inventories






(245)


Stock levels of the complainant developed over the period considered as follows:

Table 11


Inventories










 


2020


2021


2022


Investigation period




Closing stocks (tonnes)


[390  – 490 ]


[350  – 450 ]


[580  – 680 ]


[780  – 890 ]





Index




100 




90 




134 




177 





Closing stocks as a percentage of production (%)


[10  – 15 ]


[10  – 15 ]


[13  – 17 ]


[47  – 57 ]





Index




100 




89 




147 




448 












Source:



Syensqo questionnaire reply.


















(246)


The level of stocks increased during the period considered by 77 % in absolute terms, mainly in 2022 and 2023 when the volatility of the market took place.










(247)


In relation to production, the level of stocks increased as from 2022 onwards. As a percentage of production volumes, the level of stocks increased from 13 %–17 % in 2022 to 47 % to 57 % in 2023. Indeed, in 2023, the level of stocks represented approximately half of the production volumes during that year.










(248)


The reason for this increase in stocks in relation of production is twofold.










(249)


Due to the expectation of reduced production volumes ahead (the mothballing of the synthetic vanillin production line as from May 2024, as mentioned in recital (193), was planned and communicated well ahead of that month), and in order to avoid a shortage of synthetic vanillin to its customers, the complainant started to build up stocks as to enable it to also continuously serve its customers with synthetic vanillin.










(250)


The increase of stock in relation to production is also due to the much lower levels of production of synthetic vanillin.




4.4.3.4.   Profitability, cash flow, investments, return on investments and ability to raise capital






(251)


Profitability, cash flow, investments and return on investments of the complainant developed over the period considered as follows:

Table 12


Profitability, cash flow, investments and return on investments










 


2020


2021


2022


Investigation period




Profitability of sales in the Union to unrelated customers (% of sales turnover)


[0  – 4 ]


[10  – 14 ]


[15  – 18 ]


[–15  to –18 ]





Index




100 




558 




721 




– 759 





Cash flow (EUR 000)


[– 800  to –1 000 ]


[10 000  to –12 000 ]


[9 000  to –10 000 ]


[–1 200  to –2 000 ]





Index




- 100 




+1 259 




+1 052 




– 175 





Investments (EUR 000)


[2 500  – 3 500 ]


[8 000  – 9 000 ]


[6 000  – 7 000 ]


[4 000  – 5 000 ]





Index




100 




287 




220 




163 





Return on investments (%)


[14  – 18 ]


[40  – 50 ]


[60  – 70 ]


[–45  to –60 ]





Index




100 




284 




448 




– 397 












Source:



Syensqo questionnaire reply.


















(252)


The profitability on Union sales increased during the first three years of the period considered. During 2020 and 2021, as noted in Table 9, average sales prices were stable, while unit cost of production was decreasing.










(253)


This situation changed in 2022, when both average Union sales prices but also unit cost of production increased. In the investigation period, there was increased price competition. The Chinese import prices dropped significantly while the Union industry’s unit cost of production increased on a yearly basis, resulting in a considerable loss for the Union industry.










(254)


The loss was to a limited degree caused by lower production volumes, resulting in higher unit cost (as noted in recitals (239) to (242), the portion of fixed costs out of total unit cost is limited to between 10 %–20 %). However, the main factor causing the loss was fierce price competition by dumped imports. During the investigation period the Union industry sold the product under investigation below its cost of production in order to avoid losing even more market share.










(255)


The evolution of cash flow mirrors the evolution of profit during the period considered, with a negative cash flow during the investigation period.










(256)


The return on investments (fixed assets) also reflects the profitability development, with a clear negative return on investments in the investigation period.










(257)


The complainant’s ability to raise capital has not been severely hampered, since it forms part of a major group of companies and the access to finance is managed at group level.




4.4.4.   Conclusion on injury







(258)


The Union industry performed well at the beginning of the period considered, with injury indicators generally at healthy levels and on an upward trend during 2020 and 2021.










(259)


However, 2022 saw a sudden change of the situation on the market for the Union industry, with a sudden increase of both prevailing sales prices as well as unit cost of production.










(260)


This trend reversed in 2023, when the users needed to reduce their stocks as not to tie up their capital in raw materials, and when Chinese exporting producers continued their penetration of the Union market accelerated by even more aggressive price competition. Prices of imports from China in 2023 were half of those in the previous year.










(261)


With unit cost of production driven upwards by high cost of raw materials and energy, in 2023, the Union industry had to focus on those orders where sales prices at least to some extent covered the unit cost of production. But these volumes were by far from sufficient and the Union industry had to cut back significantly on production.










(262)


In the end, the Union industry’s market share had decreased by 52 %, from [27 %–30 %] to [12 %–15 %], while the market share of imports from the PRC increased from 42 % to 65 %.










(263)


In summary, extremely aggressive Chinese import prices in the investigation period, well below both the Union industry’s unit cost of production and average sales prices forced the Union industry to cut back on production and reduce its sales on the Union market, resulting in a significant loss of [– 15 % to – 18 %] during the investigation period.










(264)


On the basis of the above, the Commission concluded that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation.




5.   CAUSATION







(265)


In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the country concerned caused material injury to the Union industry. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the dumped imports from the country concerned was not attributed to the dumped imports. These factors are: imports from other third countries, export performance of the Union industry, Union consumption and other factors related to costs and imports from the PRC by the Union industry.




5.1.   Effects of the dumped imports







(266)


As set out in recital (206), the import volume of the product concerned from the PRC increased by 34 % during the period considered, thereby increasing the Chinese market share on the Union market by 23 percentage points from 42 % to 65 %. During the same period, as set out in recital (226), the Union industry saw its sales volume decrease by more than 50 % and its market share dropping from [25 %–30 %] to [10 %– 5 %]. This happened in a context where Union consumption was volatile and decreased overall by 14 % during the period considered.










(267)


It should be noted that the period preceding the investigation period, i.e. 2020–2022, the Union industry increased its profit in parallel with an increase in import volumes from the PRC. Indeed, the Union industry lost both sales volumes and market shares during this period. The reason for the Union industry still being able to generate a profit was due to the increase in market prices up to 2022.










(268)


During the investigation period, when the market prices suddenly decreased, due to the dumping behaviour by the Chinese exporting producers, the situation of the Union industry deteriorated rapidly.










(269)


As shown in Section 4.3.2 above, for the investigation period, by comparing average unit prices of the Union industry in Table 9 with the Chinese import prices from Eurostat in Table 5, the Chinese imports were significantly undercutting the Union industry prices. Indeed, during the investigation period, the average import price from China was less than half of that of the Union industry, when the Union industry had to significantly cut back production due to reduced sales volumes.










(270)


Therefore, the Commission concluded that, during the investigation period, a significant increase in dumped imports from the PRC at prices that were significantly undercutting Union prices, caused material injury to the Union industry.




5.2.   Effects of other factors







(271)


The Commission also examined whether other known factors, individually or collectively, are capable of attenuating the causal link established between the dumped imports and the material injury found to exist to the effect that such link would no longer be genuine and substantial.




5.2.1.   Imports from third countries







(272)


The volume of imports from other third countries developed over the period considered as follows:

Table 13


Imports from third countries











Country


 


2020


2021


2022


Investigation period




Norway


Volume (tonnes)


507 


429 


345 


294 





Norway




Index




100 




85 




68 




58 





Norway


Market share (%)


[5 -7 ]


[4 -6 ]


[3 -5 ]


[3 -5 ]




Norway


Average price (EUR/tonne)


22 706 


28 212 


27 629 


28 328 





Norway




Index




100 




124 




122 




125 





USA


Volume (tonnes)


1 276 


1 556 


1 547 


931 





USA




Index




100 




122 




121 




73 





USA


Market share (%)


[16 -18 ]


[19 -21 ]


[17 -19 ]


[13 -15 ]




USA


Average price (EUR/tonne)


13 582 


13 140 


15 438 


16 350 





USA




Index




100 




97 




114 




120 





All other countries


Volume (tonnes)


459 


65 


97 


130 





All other countries




Index




100 




14 




21 




28 





All other countries


Market share (%)


[4 -6 ]


[0 -2 ]


[0 -2 ]


[0 -2 ]




All other countries


Average price (EUR/tonne)


16 871 


83 156 


74 191 


55 729 





All other countries




Index




100 




492 




439 




330 












Source:



Eurostat.


















(273)


As set out in recital (206), import volumes of the product concerned from the PRC increased by 34 % during the period considered. In parallel, import volumes from the United States decreased by 27 %, falling to a market share of [13 % to 15 %] during the investigation period, while imports from Norway decreased by 42 %, falling to a market share of [3 % to 5 %] during the investigation period. Volumes from other third countries were marginal.










(274)


While the average import prices of vanillin originating in Norway (Table 13) constantly exceeds the average sales price of the Union industry (Table 9), the average import price from the United States undercut the Union industry’s average sales price by around 30 % over the period considered.










(275)


It should be noted that most, if not all, of the volumes of imports from the United States stem from an exporting producer that is related to the complainant, and whose exports to the Union, while falling into the description of the product concerned, complements the type of the like product manufactured in the Union, and is resold by the Union industry both on the Union market and on its export markets. The type of vanillin imported from the United States that complements the Union industry’s production in the Union represents between 85 % and 95 % of all imports from the United States by the Union industry.










(276)


Hence, the lower average price of the imported quantities from the United States reflects the lower cost of manufacturing of ethylvanillin compared to the type of vanillin that is manufactured in the Union (natural vanillin and synthetic vanillin).










(277)


The prices of imports from other third countries stem from very low quantities. The low quantities entails that their impact has been marginal.










(278)


For the imports from third countries, the Commission concluded that aside from the fact that these imports were not made at prices below the prices of the Union industry (which is the case for imports from Norway) or complemented the Union industry’s offer to its European customers (which is the case for imports from the United States), these imports were still made at prices significantly above those of the imports from the PRC. Hence, they did not break the causal link between dumped imports and the injury suffered by the Union industry.




5.2.2.   Export performance of the Union industry







(279)


The volume of exports of the Union industry to unrelated customers developed over the period considered as follows:

Table 14


Export performance of the sampled Union producers










 


2020


2021


2022


Investigation period




Export volume (tonnes)


[870  – 1 050 ]


[870  – 1 050 ]


[870  – 1 050 ]


[270  – 370 ]





Index




100 




106 




93 




36 





Average price (EUR/tonnes)


[11 000  – 14 000 ]


[13 000  – 16 000 ]


[19 000  – 22 000 ]


[18 000  – 21 000 ]





Index




100 




112 




168 




158 












Source:



Syensqo questionnaire reply.


















(280)


The export volume of the Union industry decreased considerably during the period considered, by 64 %. The loss of market shares on the export markets was mainly due to competition from exports originating in the PRC.










(281)


The loss of export sales volume had a negative effect on the production volume and capacity utilisation of the Union producer, thus contributing to an increase in its fixed costs per unit produced.










(282)


Therefore, the Commission concluded that the export performance of the Union industry, while it had contributed to the injury suffered by the Union industry, it did not break the causal link between the dumped imports from the country concerned and the material injury found.




5.2.3.   Consumption and other factors related to costs







(283)


As explained in Section 4.2 above, consumption of vanillin decreased during the investigation period.










(284)


Moreover, given the volatility during 2022 and 2023, there is a high uncertainty to which extent the decrease of consumption (i.e. sales to users) mirrors a decrease in actual usage of vanillin.










(285)


To conclude, it cannot be excluded that a decrease of consumption, i.e. sales of vanillin to users in the Union, has had a negative impact of the financial performance of the Union industry. However, given the increased market share of Chinese imports at dumped prices, the Commission considers that the decrease of the Union consumption does not attenuate the causal link between the dumped imports from the country concerned and the material injury found.










(286)


When it comes to cost of production, as noted in recital (239), the unit cost increased by 25 % during the period considered. The Commission examined whether this increase could have had any impact on the material injury suffered by the complainant. Despite the increased energy costs (mainly gas) following the Russian aggression against Ukraine, the Union industry was prevented from passing-on its costs in view of the surge of heavily dumped imports in the investigation period.










(287)


With regard to fixed costs as noted in under Section 4.4.3.1, when the production volumes decreased, the fixed costs per unit produced increased. The Commission examined whether the evolution of fixed costs per unit produced could have had any impact on the material injury suffered by the complainant. The conclusion is that the relative increase in fixed costs as share of unit costs of production is due to the lower production volumes, which can be attributed to lower sales volumes caused by unfair competition with dumped imports and not by an absolute increase (98) of the fixed costs themselves. Therefore, the relative increase of fixed costs does not attenuate the causal link between the dumped imports from the country concerned and the material injury found.




5.2.4.   Imports from the PRC by the Union industry







(288)


Faced with fierce price competition from Chinese exporting producers, the Union industry had to resort to buying quantities of vanillin from its related company in the PRC.

Table 15


Imports of vanillin by the Union industry










 


2020


2021


2022


Investigation period




Import volumes (tonnes) from related exporting producer in the PRC


[280  – 310 ]


[360  – 400 ]


[300  – 330 ]


[420  – 470 ]





Index




100 




131 




107 




152 





Share of PRC-imports from the related exporting producer out of total imports from the PRC


[9  % -12  %]


[11  % -14  %]


[7  % -10  %]


[11  % -14  %]





Index




100 




118 




72 




118 












Source:



Eurostat, Syensqo questionnaire reply.


















(289)


It follows from the above that the volumes of imports from the related exporting producer in the PRC increased by 52 % during the period considered, reflecting, on the one hand, the Union industry’s commitment to sell vanillin to its customers, but on the other hand, the inability to cover the unit cost of production at its European manufacturing site during a period when the price of the dumped imports was halved (see recital (208)).










(290)


In terms of share of total imports from the PRC, while the volumes increased in absolute terms, the share of the imports for which the Union industry was responsible for remained at between 7 % and 14 % throughout the period considered.










(291)


These imports have, to some extent, contributed to the injury suffered by the Union industry by contributing to the negative price development noted during the investigation period. However, these imports do not attenuate the causal link between the dumped imports by unrelated exporting producers, which were responsible for 86 % to 93 % of total import volumes, and the material injury suffered by the Union industry, as established by the investigation.




5.3.   Conclusion on causation







(292)


As set out above in recitals (259) to (264), following a stable market situation in 2020 and 2021, the Union industry faced a different market situation in 2022.










(293)


As explained in recital (201), there was an increased demand post-COVID-19 pandemic, which led to increased sales prices in the Union. Hence, the Union industry could keep its profit margins even if costs for energy increased in parallel. The market situation also attracted significant volumes of imports from China.










(294)


This trend completely reversed during the investigation period, when imports from China met this new market situation by aggressively cutting sales prices, by around 50 %.










(295)


The Union industry could not follow the aggressive price behaviour and had to cut back on its production volumes and, to a limited extent, started to import increased volumes from its related company in the PRC in self-defence.










(296)


The Union industry was also facing aggressive price behaviour on its export markets, with export volumes lost to Chinese exporting producers.










(297)


The Commission distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports. The effect of these factors on the Union industry’s economic situation during the investigation period was however limited.










(298)


On the basis of the above, the Commission concluded that the dumped imports from the country concerned caused material injury to the Union industry and that the other factors, considered individually or collectively, did not attenuate the causal link between the dumped imports and the material injury. The injury consists notably of reduced production and sales volumes, profits, market share, return on investments and utilisation of capacity.




6.   LEVEL OF MEASURES







(299)


To determine the level of the measures, under Article 9(4), second subparagraph of the basic Regulation the Commission examined whether a duty lower than the margin of dumping would be sufficient to remove the injury caused by dumped imports to the Union industry.




6.1.   Injury margin







(300)


The injury would be removed if the Union Industry were able to obtain a target profit by selling at a target price in the sense of Articles 7(2c) and 7(2d) of the basic regulation.










(301)


In accordance with Article 7(2c) of the basic Regulation, for establishing the target profit, the Commission took into account the following factors: the level of profitability before the increase of imports from the PRC, the level of profitability needed to cover full costs and investments, research and development (‘R&D’) and innovation (‘IRI’), and the level of profitability to be expected under normal conditions of competition. Such profit margin should not be lower than 6 %.










(302)


As a first step, the Commission established a basic profit covering full costs under normal conditions of competition. In the absence of data showing a higher profit achieved under normal conditions of competition, the Commission used at this stage a target profit of 6 % as provided in Article 7(2c) of the basic Regulation. This constitutes a conservative approach compared to the profits achieved by the complainant in 2021 and 2022, which however, were affected by the post-COVID-19 recovery.










(303)


The Union Industry provided evidence that its level of expenses related to Investments, Research & Development and Innovation (‘IRI’) during the period considered would have been higher under normal conditions of competition. To reflect this in the target profit, the Commission calculated the difference between IRI expenses under normal conditions of competition as provided by the Union industry and verified by the Commission with actual IRI expenses over the period considered. Such difference, expressed as a percentage of turnover, was 1,2 %.










(304)


Such percentage of 1,2 % was added to the basic profit margin of 6,0 % mentioned in the recital (302), leading to a target profit of 7,2 %.










(305)


In accordance with Article 7(2d) of the basic Regulation, as a final step, the Commission assessed the future costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia to the basic Regulation that the Union industry will incur during the period of the application of the measure pursuant to Article 11(2) of the basic Regulation. In the absence of available evidence, no additional future costs were added.










(306)


On this basis, the Commission calculated a non-injurious weighted average price in the range of EUR 20 200–22 200 per tonne for the like product of the Union industry by applying the above-mentioned target profit margin (see recital (304)) to the cost of production of the complainant as shown in Table 9 and then adding the adjustments under Article 7(2d) of the basic Regulation.










(307)


The Commission then determined the injury margin level on the basis of a comparison of the weighted average import price of the sampled cooperating exporting producers in the PRC, as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the Union producer on the Union market during the investigation period.










(308)


The injury margin for ‘non sampled cooperating exporting producers’ and ‘all other companies’ is defined in the same manner as the dumping margin for these companies (see Section 3.8).







Company


Dumping margin (%)


Injury margin (%)




Brother Corporation Group:






—


Jiangxi Brother Pharmaceutical Co., Ltd










—


Jiaxing Zhonghua Chemical Co., Ltd






186,9 


131,1 




Non sampled cooperating exporting producers


186,9 


131,1 




All other companies


186,9 


131,1 








6.2.   Conclusion on the level of the definitive measures







(309)


Following the above assessment, definitive anti-dumping duties should be set at the level of the injury margin in accordance with Article 9(4), second subparagraph of the basic Regulation.




7.   UNION INTEREST







(310)


The Commission examined whether it could clearly conclude that it was not in the Union interest to adopt measures in this case, despite the determination of injurious dumping, in accordance with Article 21 of the basic Regulation.










(311)


The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, and users.




7.1.   Interest of the Union industry







(312)


The investigation has shown that the Union industry is suffering material injury caused by the dumped imports from the country concerned. These imports significantly undercut the Union producer’s prices, and caused significant loss of market share and profits towards the end of the period considered, and during the investigation period, as explained in recitals (214) to (298) above.










(313)


The imposition of measures would likely prevent a further surge of imports from the PRC at very low dumped prices. Without measures, Chinese exporting producers will continue to dump the product concerned on the Union market preventing the Union industry from resuming full production, from selling at an adequate price and from generating a sufficient profit and thus causing further material injury to the Union industry.










(314)


It was therefore concluded that imposing measures on imports of the vanillin from the PRC would be in the interest of the Union industry.




7.2.   Interest of unrelated importers







(315)


The Commission did not receive a questionnaire response from any Union importer whose business is solely to import and resell the product concerned.










(316)


The Commission, thus, concluded that it is unlikely that the imposition of anti-dumping duties on vanillin originating in the PRC will have a negative effect on the situation of unrelated importers and traders in the Union.




7.3.   Interest of users







(317)


Two users who are also importers came forward in the investigation and provided replies to the questionnaire. One of them thereafter refused to allow for a verification of the questionnaire reply, and the Commission sent a non-cooperation letter pursuant of Article 18 of the basic Regulation.










(318)


The sole Union user that fully cooperated, including allowing the Commission to conduct a verification of its questionnaire reply, stated that it was against the imposition of duties on Chinese imports of vanillin, as it considered that such duties would undermine its ability to source raw materials from several origins, considering that the complainant was the sole Union producer of certain types of the like product.










(319)


For this user, the cost of vanillin was material for those final products which included vanillin as input. At the same time, the sales of these products generated a positive contribution to the company’s overall financial result.










(320)


Nevertheless, this user acknowledged the need for a Union producer to obtain a sustainable profit on its Union sales.










(321)


Thus, measures re-establishing a level playing field on the Union market would not be against the interest of Union users, since it would safeguard the supply of vanillin from several sources including from the Union, and not allow for a monopolistic situation of imported vanillin.










(322)


In the light of the above, it is concluded that the imposition of any anti-dumping measures is unlikely to affect seriously the situation of the users.










(323)


Following disclosure of definitive findings, Frey & Lau and the new interested party, Arethia (see recital (54)), stressed the severe impact that any anti-dumping measures would have on the downstream industry, including on their own.










(324)


In this context, the Commission noted that neither Frey & Lau nor Arethia submitted questionnaires, which would enable the Commission to measure the impact that any measures would have on them. The Commission could therefore only measure the impact at the level of the downstream industry on the basis of the information provided by the user that fully cooperated (see recital (318)). This user did not provide comments to the definitive disclosure and on this basis, the Commission considered that the conclusion drawn in recital (322) remained valid.




7.4.   Conclusion on Union interest







(325)


On the basis of the above, the Commission concluded that there were no compelling reasons that it was not in the Union interest to impose definitive measures on imports of vanillin originating in the country concerned.




8.   DEFINITIVE ANTI-DUMPING MEASURES

8.1.   Definitive measures







(326)


In view of the conclusions reached with regard to dumping, injury, causation, level of measures and Union interest, and in accordance with Article 9(4) of the basic Regulation, definitive anti-dumping measures should be imposed in order to prevent further injury being caused to the Union industry by the dumped imports of the product concerned.










(327)


On the basis of the above, the definitive anti-dumping duty rate expressed on the CIF Union border price, customs duty unpaid, should be set at the level of 131,1 %.




8.2.   Retroactivity







(328)


As mentioned in recital (3), the Commission made imports of the product under investigation subject to registration.










(329)


As provisional measures were not imposed in this proceeding, the conditions as set out in Article 10(4) of the basic Regulation for the retroactive application of the definitive anti-dumping duty were not met.




9.   FINAL PROVISION







(330)


In view of Article 109 of Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council (99), when an amount is to be reimbursed following a judgment of the Court of Justice of the European Union, the interest to be paid should be the rate applied by the European Central Bank to its principal refinancing operations, as published in the C series of the Official Journal of the European Union on the first calendar day of each month.










(331)


The measures provided for in this regulation are in accordance with the opinion of the Committee established by Article 15(1) of the basic Regulation,




HAS ADOPTED THIS REGULATION:



Article 1

1.   A definitive anti-dumping duty is imposed on imports of vanillin with the molecular formula C8H8O3 or C9H10O3, and with a purity level higher than 95 % by weight, including Synthetic Vanillin, Natural Vanillin, Bio-sourced Synthetic Vanillin (Biovanillin) and Ethylvanillin, currently classified under CN codes ex 2912 41 00  for Synthetic Vanillin, Natural Vanillin and Bio-sourced Synthetic Vanillin and ex 2912 42 00  for Ethylvanillin (TARIC codes 2912 41 00 10 and 2912 42 00 10), and originating in the People’s Republic of China.


2.   Mixtures of different aroma chemicals containing concentrations of Vanillin below 95 % by weight are excluded from the product described in paragraph 1.


3.   The rate of the definitive anti-dumping duty applicable to the net, free-at-Union-frontier price, before duty, of the products described in paragraph 1, shall be 131,1 %.


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



Article 2
Customs authorities are hereby directed to discontinue the registration of imports established in accordance with Article 1 of Implementing Regulation (EU) 2024/2716.


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 Brussels, 11 June 2025.


For the Commission


The President

Ursula VON DER LEYEN
            





(1)  
            OJ L 176, 30.6.2016, p. 21, ELI: http://data.europa.eu/eli/reg/2016/1036/oj.

(2)  
            OJ C, C/2024/3241, 24.5.2024, ELI: http://data.europa.eu/eli/C/2024/3241/oj.

(3)  Commission Implementing Regulation (EU) 2024/2716 of 24 October 2024 making imports of vanillin originating in the People’s Republic of China subject to registration (OJ L, 2024/2716, 25.10.2024, ELI: http://data.europa.eu/eli/reg_impl/2024/2716/oj).

(4)  Commission Implementing Regulation (EU) 2015/2447 of 24 November 2015 laying down detailed rules for implementing certain provisions of Regulation (EU) No 952/2013 of the European Parliament and of the Council laying down the Union Customs Code (OJ L 343, 29.12.2015, p. 558, ELI: http://data.europa.eu/eli/reg_impl/2015/2447/oj).

(5)  TRON document t24.004546 of 3 June 2024.

(6)  TRON document: t24.004732 of 10 June 2024.

(7)  In particular the subsector of organic chemicals and food additives, which is the focus of the present investigation.

(8)  Commission Implementing Regulation (EU) 2024/1959 of 17 July 2024 imposing a provisional anti-dumping duty on imports of erythritol originating in the People’s Republic of China (OJ L, 2024/1959, 19.7.2024, ELI: http://data.europa.eu/eli/reg_impl/2024/1959/oj); Commission Implementing Regulation (EU) 2023/2180 of 16 October 2023 amending Implementing Regulation (EU) 2021/607 imposing a definitive anti-dumping duty on imports of citric acid originating in the People’s Republic of China as extended to imports of citric acid consigned from Malaysia, whether declared as originating in Malaysia or not, following a new exporter review pursuant to Article 11(4) of Regulation (EU) 2016/1036 of the European Parliament and of the Council (OJ L, 2023/2180, 17.10.2023, ELI: http://data.europa.eu/eli/reg_impl/2023/2180/oj); Commission Implementing Regulation (EU) 2023/752 of 12 April 2023 imposing a definitive anti-dumping duty on imports of sodium gluconate originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council (OJ L 100, 13.4.2023, p. 16, ELI: http://data.europa.eu/eli/reg_impl/2023/752/oj).

(9)  Implementing Regulation (EU) 2024/1959, recitals 161-162; Implementing Regulation (EU) 2023/2180, recitals 89-90; Implementing Regulation (EU) 2023/752, recital 70.

(10)  Implementing Regulation (EU) 2024/1959, recitals 103-113; Implementing Regulation (EU) 2023/2180, recitals 46-50; Implementing Regulation (EU) 2023/752, recital 49.

(11)  Implementing Regulation (EU) 2024/1959, recitals 114-122; Implementing Regulation (EU) 2023/2180, recitals 51-55; Implementing Regulation (EU) 2023/752, recitals 50-54. While the right to appoint and to remove key management personnel in SOEs by the relevant State authorities, as provided for in the Chinese legislation, can be considered to reflect the corresponding ownership rights, CCP cells in enterprises, state-owned and private alike, represent another important channel through which the State can interfere with business decisions. According to the PRC’s company law, a CCP organisation is to be established in every company (with at least three CCP members as specified in the CCP Constitution) and the company shall provide the necessary conditions for the activities of the party organisation. In the past, this requirement appears not to have always been followed or strictly enforced. However, since at least 2016 the CCP has reinforced its claims to control business decisions in SOEs as a matter of political principle. The CCP is also reported to exercise pressure on private companies to put ‘patriotism’ first and to follow party discipline. In 2017, it was reported that party cells existed in 70 % of some 1,86 million privately owned companies, with growing pressure for the CCP organisations to have a final say over the business decisions within their respective companies. These rules are of general application throughout the Chinese economy, across all sectors, including to the producers of the product under review and the suppliers of their inputs.

(12)  Implementing Regulation (EU) 2024/1959, recitals 123-133; Implementing Regulation (EU) 2023/2180, recitals 56-65; Implementing Regulation (EU) 2023/752, recitals 55-63.

(13)  Implementing Regulation (EU) 2024/1959, recitals 134-138; Implementing Regulation (EU) 2023/2180, recitals 66-69; Implementing Regulation (EU) 2023/752, recital 64.

(14)  Implementing Regulation (EU) 2024/1959, recitals 139-142; Implementing Regulation (EU) 2023/2180, recitals 71-72; Implementing Regulation (EU) 2023/752, recital 65.

(15)  Implementing Regulation (EU) 2024/1959, recitals 143-152; Implementing Regulation (EU) 2023/2180, recitals 72-81; Implementing Regulation (EU) 2023/752, recital 66.

(16)  Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the purposes of Trade Defence Investigations, 10 April 2024, SWD(2024) 91 final, available at: https://ec.europa.eu/transparency/documents-register/detail?ref=SWD(2024)91&lang=en, including the previous version of the document: Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the purposes of Trade Defence Investigations, 20 December 2017, SWD(2017) 483 final/2, available at: https://ec.europa.eu/transparency/documents-register/detail?ref=SWD(2017)483&lang=en.

(17)  Such as: WTO Trade Policy Review 2021, WT/TPR/S/415; US Department of Commerce and International Trade Administration, C-570-054, Issues and Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Certain Aluminium Foil from the People’s Republic of China, 26 February 2018.

(18)  Report, p. 109.

(19)  Ibid., p. 6.

(20)  Ibid., p. 312.

(21)  Ibid., p. 321.

(22)  Ibid., p. 217.

(23)  Ibid., p. 223.

(24)  Ibid., p. 234.

(25)  Ibid., p. 270.

(26)  Ibid., p. 246.

(27)  Ibid., p. 254.

(28)  See US Department of Commerce and International Trade Administration, C-570-054, Issues and Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Certain Aluminium Foil from the People’s Republic of China, 26 February 2018.

(29)  
            Ibidem.

(30)  Commission Implementing Regulation (EU) 2021/2011 of 17 November 2021 imposing a definitive anti-dumping duty on imports of optical fibre cables originating in the People’s Republic of China (OJ L 410, 18.11.2021, p. 51, ELI: http://data.europa.eu/eli/reg_impl/2021/2011/oj), recitals 126 and 140; Commission Implementing Regulation (EU) 2022/191 of 16 February 2022 imposing a definitive anti-dumping duty on imports of certain iron or steel fasteners originating in the People’s Republic of China (OJ L 36, 17.2.2022, p. 1, ELI: http://data.europa.eu/eli/reg_impl/2022/191/oj), recitals 188 and 203-208.

(31)  Report, p. 343.

(32)  Jiaxing Zhonghua is due to set up a new company and build a new production site (Shandong Wanhua). This new entity has the approval from the Chinese authorities to build up to 10 kT synthetic vanillin and 3 kT ethylvanillin capacity.

(33)  See Jiangxi Brother annual report 2023, p. 66, available at: https://q.stock.sohu.com/newpdf/202457673962.pdf (accessed on 10 January 2025).

(34)  See Asia Aroma annual report 2023, p. 118, available at: http://file.finance.sina.com.cn/211.154.219.97:9494/MRGG/CNSESZ_STOCK/2024/2024-4/2024-04-22/10016936.PDF (accessed on 10 January 2025).

(35)  See: http://www.thrive-chemicals.com/ (accessed on 10 January 2025).

(36)  See: https://www.zhhhg.com/ (accessed on 10 January 2025).

(37)  See: http://www.sinopec.com/listco/000/000/042/42065.shtml (accessed on 10 January 2025).

(38)  See: http://www.sinochemhx.com/en/14661.html (accessed on 10 January 2025).

(39)  See: http://wap.sasac.gov.cn/n2588045/n27271785/n27271792/c14159097/content.html (accessed on 10 January 2025).

(40)  See: http://www.cpcif.org.cn/detail/39747711-f959-4eb8-8a59-0f3f776ae8e0 (accessed on 10 January 2025).

(41)  See CPCIF Articles of Association, Article 3, available at: http://www.cpcif.org.cn/detail/40288043661e27fb01661e386a3f0001?e=1 (accessed on 10 January 2025).

(42)  Ibid.

(43)  Ibid., Article 36.

(44)  See: https://www.cfaa.cn/lxweb/showSecondryPage.action?subLanmuVo.paramRoot=UTI_FIC_INTRODUCTION&chapter.param.paramCode=UTI_FIC_INTRODUCTION_2 (accessed on 10 January 2025).

(45)  See: https://www.cfaa.cn/ (accessed on 10 January 2025).

(46)  See: https://www.cfaa.cn/lxweb/showSecondryPage.action?subLanmuVo.paramRoot=UTI_CATEGORY_7&chapter.id=2286&type= (accessed on 10 January 2025).

(47)  See: https://www.cfaa.cn/lxweb/toIndex.action?type=en&param.paramCode=UTI_ENGLISH_2, (accessed on 13 January 2025).

(48)  See: http://www.cpcif.org.cn/list/40288043661dc14701661ddbe0980010 (accessed on 10 January 2025).

(49)  See: http://www.jx-sptjj.com/html/xhgk/index.html (accessed on 13 January 2025).

(50)  See: http://www.jx-sptjj.com/html/hyml/list_10.html (accessed on 13 January 2025).

(51)  See Section III.8.3, available at: https://www.gov.cn/xinwen/2021-03/13/content_5592681.htm (accessed on 13 January 2025).

(52)  See Section VIII.1, available at:https://www.gov.cn/zhengce/zhengceku/2021-12/29/5665166/files/90c1c79a00b44c67b59c29392476c862.pdf (accessed on 13 January 2025).

(53)  See Section III.4 and I.1, available at:https://www.gov.cn/zhengce/zhengceku/2022-04/08/content_5683972.htm#msdynttrid=WRmyf07ph0z74SHmXoOLKjRWl09BdZ4lGdYp9fiI9xU (accessed on 13 January 2025).

(54)  See: https://www.zhhhg.com/newsshow.php?newsid=140 (accessed on 15 January 2025).

(55)  See: http://cq.gov.cn/ywdt/jrcq/202306/t20230620_12079206.html (accessed on 15 January 2025).

(56)  See: https://www.sinochem.com/sinochem/guwm/zlzz/ds/A031002002002Gone1.html (accessed on 15 January 2025).

(57)  See: https://www.sinochem.com/sinochem/dzyjj/dj11/A031007001Gone1.html (accessed on 15 January 2025).

(58)  See: http://www.sinopecgroup.com/group/gsglc/index.shtml (accessed on 10 December 2024).

(59)  See: http://www.sinopecgroup.com/group/000/000/041/41878.shtml (accessed on 10 December 2024).

(60)  Report, Chapter 16.

(61)  See Section III.8.3.

(62)  See Section IV.1.3, available at: https://www.gov.cn/zhengce/zhengceku/2021-12/29/content_5665166.htm (accessed on 6 December 2024).

(63)  See: https://www.jiaxing.gov.cn/art/2020/12/28/art_1228922755_59069897.html (accessed on 15 January 2025).

(64)  See Section III.2.4, available at: https://www.cq.gov.cn/zwgk/zfxxgkml/szfwj/qtgw/ 202108/t20210803_9538603.html (accessed on 13 January 2025).

(65)  Implementing Regulation (EU) 2024/1959, recitals 153-157; Implementing Regulation (EU) 2023/2180, recitals 82-84; Implementing Regulation (EU) 2023/752, recital 67.

(66)  See: http://www.thrive-chemicals.com/content.php?catid=39&id=118 (accessed on 28 April 2025).

(67)  World Bank Open Data – Upper Middle Income, https://data.worldbank.org/income-level/upper-middle-income.

(68)  NACE (‘Nomenclature statistique des Activités économiques dans la Communauté Européenne’) is the classification of economic activities in the European Union (EU). The NACE code concerned is C20.1.4: ‘Manufacture of other organic basic chemicals’. For the full list of NACE codes: https://ec.europa.eu/competition/mergers/cases/index/nace_all.html.

(69)  These companies are listed in the First Note (TRON save number t24.008986).

(70)  Judgment of the General Court of 21 February 2024 – Sinopec Chongqing SVW Chemical Co Ltd. and Others v European Commission, T-762/20, ECLI:EU:T:2024:113.

(71)  Regulation (EU) 2015/755 of the European Parliament and of the Council of 29 April 2015 on common rules for imports from certain third countries (OJ L 123, 19.5.2015, p. 33, ELI: http://data.europa.eu/eli/reg/2015/755/oj) as amended by Commission Delegated Regulation (EU) 2017/749 of 24 February 2017 (OJ L 113, 29.4.2017, p. 11, ELI: http://data.europa.eu/eli/reg_del/2017/749/oj).

(72)  Phenol represents between 25 %-30 % of the cost of manufacturing of the product under investigation.

(73)  Council Regulation (EU) 2022/576 of 8 April 2022 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ L 111, 8.4.2022, p. 1, ELI: http://data.europa.eu/eli/reg/2022/576/oj).

(74)  Global Trade Atlas: https://connect.ihsmarkit.com/,http://www.gtis.com/gta/secure/default.cfm.


(75)  For five raw materials (glyoxylic acid, hydrogen peroxide, guaiacol/guetol, copper sulphate, toluene) the GTA import data for Brazil were not considered appropriate, due to the absence of significant imports and/or inclusion of several product labels within the same GTA product. For these five raw materials, the Commission considered imports from all countries (guaiacol/guetol), exports from Brazil (hydrogen peroxide, toluene, copper sulphate) and exports from France (glyoxylic acid).

(76)  
            https://www.ibge.gov.br/en/statistics/economic/prices-and-costs/17136-national-consumer-price-index.html?edicao=36055&t=downloads.

(77)  
            https://www.gov.br/mme/pt-br/assuntos/secretarias/sntep/publicacoes/boletins-mensais-de-energia/boletins/2023-1/ingles/brazilian-monthly-energy-bulletin-january-2023.pdf/view.

(**)  
            ‘xx’ stands for several codes after the 6-digit code level. For Ortho vanillin and Ethoxysalicylaldehyde the full list of commodity codes is: 2912 49 10 , 2912 49 20 , 2912 49 30 , 2912 49 41 , 2912 49 49 , 2912 49 90 ; For O-Diethoxy benzene the full list of commodity codes is: 2909 30 11 , 2909 30 12 , 2909 30 13 , 2909 30 14 , 2909 30 19 , 2909 30 21 , 2909 30 23 , 2909 30 29 .

(78)  During the investigation period, Brazil’s export volumes far exceeded its import volumes for the relevant products. Specifically, Brazil exported over 122 000 tonnes of hydrogen peroxide, compared to just 220 tonnes imported; over 43 000 tonnes of toluene, compared to only 8 tonnes imported; and over 11 000 tonnes of copper sulphate, compared to just 7 tonnes imported. Furthermore, the price analysis revealed a significant disparity, with average import prices being approximately 100 times higher than average export prices (source: GTA).

(79)  TRON document: t25.000690 submitted on 13 January 2025.

(80)  Procurement resources (https://www.procurementresource.com/) is a platform that provides procurement data and insights to help organisations make informed purchasing decisions. This is a pay-per-use website.

(81)  For more information see the Commission website: https://taxation-customs.ec.europa.eu/customs-4/calculation-customs-duties/customs-tariff/eu-customs-tariff-taric_en#:~:text=Legal%20basis,07%2F09%2F1987).


(82)  Here some examples of auxiliary materials reported by the exporting producers in their COP files: Packing material, Chemical solvent, Acetone, Methyl isobutyl ketone, Phosphoric acid, Freon, Sodium Triphosphate, Tetrasodium, Scale and Corrosion Inhibitor, Calcium Hydroxide, Anhydrous Ammonia, Calcium Chloride, Iron powder.

(83)  
            https://www.ibge.gov.br/en/statistics/technical-documents/statistical-lists-and-classifications/17245-national-classification-of-economic-activities.html?edicao=17248&t=resultados.

(84)  
            https://www.ibge.gov.br/en/statistics/economic/prices-and-costs/17136-national-consumer-pricce-index.html?edicao=36055&t=downloads.

(85)  Commission Implementing Regulation (EU) 2022/2247 of 15 November 2022 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of electrolytic chromium coated steel products originating in the People’s Republic of China and Brazil (OJ L 295, 16.11.2022, p. 7, ELI: http://data.europa.eu/eli/reg_impl/2022/2247/oj).

(86)  
            https://www.gov.br/mme/pt-br/assuntos/secretarias/sntep/publicacoes/boletins-mensais-de-energia/boletins/2023-1/ingles/brazilian-monthly-energy-bulletin-january-2023.pdf/view.

(87)  Regulation (EU) 2022/576.

(88)  Commission Staff Working Document on Significant Distortions in the Economy of the Russian Federation for the Purposes of Trade Defence Investigations, see in Chapter 10.2.3.

(89)  Commission Staff Working Document on Significant Distortions in the Economy of the Russian Federation for the Purposes of Trade Defence Investigations, SWD(2020) 242 final, 22.10.2020, https://ec.europa.eu/transparency/documents-register/detail?ref=SWD(2020)242&lang=en, see in Chapter 14.1 (accessed 18 December 2024).

(90)  
            https://thedocs.worldbank.org/en/doc/5d903e848db1d1b83e0ec8f744e55570-0350012021/related/CMO-Pink-Sheet-November-2024.pdf. This price is Australian export price FOB Newcastle, Australia.

(91)  Commission Implementing Regulation (EU) 2025/81 of 13 January 2025 imposing a provisional anti-dumping duty on imports of flat-rolled products of iron or non-alloy steel plated or coated with tin originating in the People’s Republic of China (OJ L, 2025/81, 14.1.2025, ELI: http://data.europa.eu/eli/reg_impl/2025/81/oj).

(92)  
            Benchmark the Fuel Cost of Steam Generation, Energy Tips: STEAM, Steam Tip Sheet #15 (Fact Sheet), Advanced Manufacturing Office (AMO), Energy Efficiency & Renewable Energy (EERE).

(93)  See judgment of 7 March 2024, AO Nevinnomysskiy Azot and AO Novomoskovskaya Aktsionernaya Kompania NAK ‘Azot’ v European Commission, C-725/22, ECLI:EU:C:2024:217, paras. 67 and 72.

(94)  Judgment of 14 March 1990, Gestetner Holdings plc v Council and Commission of the European Communities, C-156/87, ECLI:EU:C:1990:116, para. 31.

(95)  Judgment of 7 March 2024, AO Nevinnomysskiy Azot and AO Novomoskovskaya Aktsionernaya Kompania NAK ‘Azot’ v European Commission, C-725/22, ECLI:EU:C:2024:217, para. 66.

(96)  Commission Implementing Regulation (EU) 2020/1336 of 25 September 2020 imposing definitive anti-dumping duties on imports of certain polyvinyl alcohols originating in the People’s Republic of China (‘Polyvinyl alcohols’) (OJ L 315, 29.9.2020, p. 1, ELI: http://data.europa.eu/eli/reg_impl/2020/1336/oj), recital 352.

(97)  
            https://www.ecb.europa.eu/press/economic-bulletin/focus/2022/html/ecb.ebbox202108_01~e8ceebe51f.en.html.

(98)  During the investigation period the fixed costs decreased in absolute terms.

(99)  Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council of 23 September 2024 on the financial rules applicable to the general budget of the Union (OJ L, 2024/2509, 26.9.2024, ELI: http://data.europa.eu/eli/reg/2024/2509/oj).


ELI: http://data.europa.eu/eli/reg_impl/2025/1151/oj
ISSN 1977-0677 (electronic edition)