CELEX: 51998PC0142
Language: en
Date: 1998-03-12
Title: Proposal for a Council Regulation (EC) imposing a definitive anti-dumping duty on imports of tungsten carbide and tungsten fused carbide originating in the People's Republic of China

COMMISSION OF THE EUROPEAN COMMUNITIES
                                         Brussels, 12.03.1998
                                         COM(1998) 142 final
                          Proposal for a
                COUNCIL REGULATION (EC)
                 IMPOSING A DEFINITIVE
ANTI-DUMPING DUTY ON IMPORTS OF TUNGSTEN CARBIDE AND
               TUNGSTEN FUSED CARBIDE
     ORIGINATING IN THE PEOPLE'S REPUBLIC OF CHINA
                 (presented by the Commission)
 ---pagebreak---  ---pagebreak---                       EXPLANATORY MEMORANDUM
1. In September 1990, by Regulation (EEC) N° 2737/90, the Council imposed a
   definitive anti-dumping duty on imports of tungsten carbide and fused carbide
   originating in the People's Republic of China. By Decision 90/480/EEC the
   Commission accepted undertakings given by two major exporters concerning the
   product subject to measures.
2. Following the withdrawal of the undertakings by the two Chinese exporters
   concerned, the Council, by Regulation (EC) N° 610/95 of 22 March 1995,
   amended Regulation (EEC) 2737/90 and imposed a definitive duty of 33% on
   imports of tungsten carbide and fused carbide.
3. In June 1995,. a request for a review pursuant to Article 11(2) of Council
   Regulation (EC) N° 3283/94 was lodged by Eurométaux on behalf of
   Community producers representing a major proportion of the Community
   production of tungsten carbide and fused carbide. This request for a review was
   made on the grounds that there was still dumping and that the expiry of the
   existing anti-dumping duty on imports of tungsten carbide and fused carbide
   originating in the People's Republic of China would lead to recurrence of injury.
4. On 21 September 1995, by a notice published in the Official Journal of the
   European Communities, the Commission announced the review of Regulation
   (EEC) N° 2737/90.
5. The present review exceeded the period of one year within which it should
   normally have been concluded, due to the complexity of the investigation, and in
   particular due to the difficulties in obtaining reliable data of an appropriate
   analogue country. Furthermore, two other investigations concerning tungsten
   products, i.e. tungsten ores and concentrates on the one hand, and tungstic oxide
   and acid on the other hand, were initiated at the same time as the present review
   and had to be carried out in parallel given the links between these products in the
   tungsten production chain.
                                          ti)
 ---pagebreak--- The investigation showed that tungsten carbide and fused carbide from the
People's Republic of China was being exported to the Community with a
dumping margin of 30.6% and that, in the event of the expiry of the measures,
material injury would recur for the Community industry, notably in the form of
financial losses and continuing and even growing losses of market share by this
industry.
The Community user industry made its views known. After having examined all
the arguments put forward by the interested parties, it was concluded that there
were no compelling reasons not to maintain the measures in the present case. A
continuation of the measures appears therefore warranted.
It is therefore proposed, after consultation of the Advisory Committee, that the
Council adopts the draft Regulation annexed, imposing a definitive anti-dumping
duty on imports of tungsten carbide and fused carbide originating in the People's
Republic of China.
                                       o.^
 ---pagebreak--- Proposal for a
                     COUNCIL REGULATION (EC) N°.../98
                                        OF...
                             IMPOSING A DEFINITIVE
   ANTI-DUMPING DUTY ON IMPORTS OF TUNGSTEN CARBIDE AND
                           TUNGSTEN FUSED CARBIDE
          ORIGINATING IN THE PEOPLE'S REPUBLIC OF CHINA
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) N°3 84/96 of 22 December 1995 on
protection against dumped imports from countries not members of the European
Community 1, as amended by Regulation (EC) N° 2331/96^ and in particular Articles
9(4) and 11(6) thereof,
Having regard to the proposal submitted by the Commission after consulting the
Advisory Committee,
Whereas:
1
    OJN°L 56, 6.3.1996, p.l.
2
    OJN°L 317, 6.12.1996, pi
 ---pagebreak---                                  A. PROCEDURE
1.   Measures in force
(1)  By Regulation (EEC) N° 2737/903, the Council imposed a definitive anti-
     dumping duty on imports of tungsten carbide and fused carbide originating in
     the People's Republic of China. By Decision 90/480/EEC^ the Commission
     accepted undertakings given by two major exporters concerning the product
     subject to measures.
     Following the withdrawal of the undertakings by the two Chinese exporters
     concerned, the Commission imposed by Regulation (EC) N° 2286/94^ of 23
     September 1994 a provisional anti-dumping duty on the product concerned.
     By Regulation (EC) N° 610/956 of 22 March 1995, the Council amended
     Regulation (EEC) 2737/90 and imposed a definitive duty of 33% on imports of
     tungsten carbide and fused carbide.
 3
    OJ N° L 264,27.9.1990, p 7
4
    OJ N° L 264,27.9.1990, p 59
 5
    OJ N° L 248,23.9.1994, p 8
 6
    OJN°L 64,22.3.1995, p i
 ---pagebreak--- 2.    Request for review
(2)   Following the publication in February 1995 of a notice? of the impending
      expiry of the measures in force, the Commission received a request for a review
      of these measures lodged by Eurométaux, on behalf of three Community
      producers representing, with the exception of one small producer, the totality of
      the producers of the product concerned in the Community. The request
      contained evidence of dumping of the product originating in the People's
      Republic of China and of renewed material injury likely to recur in the event of
      expiry of the existing measures. This evidence was considered sufficient to
      justify the initiation of a review investigation.
(3)   On 21 September 1995, the Commission announced by a notice published in
      the Official Journal of the European Communities^, the initiation of a review of
      Council Regulation (EEC) N° 2737/90. This review was initiated under Article
       11(2) of Council Regulation (EC) N° 3283/949 which was replaced during the
      investigation by Regulation (EC) N° 384/96 (hereafter referred to as the "Basic
      Regulation").
7
    O J N ° C 48, 25.2.1995, p.3
8
    OJ N° C 244, 21.9.1995, p.3, p.4 and p.5
9
    O J N ° L 349, 31.12.1994, pi
 ---pagebreak--- 3.  Investigation
(4) The Commission officially advised the producers/exporters and importers
    known to be concerned, the representatives of the exporting country and the
    complainant Community producers of the initiation of the review.
(5) Interested parties were given the opportunity to make their views known in
    writing and to request a hearing within the time limit set in the above notice.
(6) The Commission sent questionnaires to all parties known to be concerned and
    received replies from the three complainant Community producers, three
    importers which were also users of the product concerned and from two
    exporters/producers    and an importer        in the Community          related  to
    exporters/producers. The Community producers, exporters/producers and some
    importers/users made their views known in writing and were granted a hearing.
(7) The Commission sought and verified all information it deemed necessary for the
    purpose of the investigation and carried out verification visits at the premises of
    the following companies:
 ---pagebreak---      a)       Community producers
    - Wolfram Bergbau und Huttengesellschaft m.b.H., St Peter, Austria
    - H. C. Starck GmbH & Co KG, Goslar, Germany
    - Eurotungstène Poudres, Grenoble, France
    b)       Importers/users in the Community
    - AB Sandvik Hard Materials, Sweden
    - Seco Tools AB, Sweden
    c)       Related importer
    - Minmetals North-Europe AB, Sweden
    d)       Producer in the analogue country
    - Teledyne Advanced Materials, USA
(8) The investigation of dumping covered the period from 1 October 1994 to 30
    September 1995 (hereafter referred to as the "Investigation Period"). The
    examination of injury covered the period from 1991 up to the end of the
    Investigation Period.
 ---pagebreak--- (9)  The present review exceeded the period of one year within which it should
     normally have been concluded pursuant to Article 11 (5) of the Basic
     Regulation, due to the complexity of the investigation, and in particular due to
     the difficulties in obtaining reliable data on an appropriate analogue country.
     Furthermore, two other investigations concerning tungsten products, i.e.
     tungsten ores and concentrates on the one hand, and tungstic oxide and acid on
     the other hand, were initiated at the same time as the present review and had to
     be carried out in parallel given the links between these products in the tungsten
     production chain.
B. PRODUCT UNDER CONSIDERATION AND LIKE PRODUCT
     1.        Product under consideration
(10) The product concerned by the present review is the same as the one under
     consideration in Council Regulation (EC) N° 2737/90 and falls within CN code
     2849 90 30.
     Tungsten carbide and fused tungsten carbide are compounds of carbon and
     tungsten produced by heat treatment (carburisation in the first case, fusion in the
     second). Both products are intermediate products, used as input materials in the
     manufacture of hard metal components such as cemented carbide cutting tools
     and high-wear components, in abrasion-resistant coatings, in bits for oil drilling
     and mining tools as well as in dies and tips for the drawing and forging of
     metals.
 ---pagebreak--- (11) An allegation was made by an importer that tungsten carbide and fused tungsten
      carbide were different products. The arguments put forward were mainly based
      on the different manufacturing processes and the differences in chemical
      characteristics.
      However, the investigation has shown that, although their manufacturing
     process is different, tungsten carbide and fused tungsten carbide have the same
     chemical composition (both consist of approximately 92 to 94% of tungsten
     metal and 4 to 6% of carbon) and come from the same stage in the tungsten           '
     production chain, i.e. between tungsten metal powder and carbide tools and
     wear-resisting materials. Furthermore, they are put to similar end-uses in the
     industry, i.e. as a surface hardening component. Although for certain specific
     and limited applications which require higher wear and abrasive resistance only
     fused tungsten carbide is used, fused tungsten carbide and tungsten carbide are
     generally interchangeable. It was therefore concluded that, as in the original
     investigation, fused tungsten carbide and tungsten carbide are one single product
     for the purpose of the investigation. They are hereafter referred to as "carbide" .
2    Like product
(12) As established in the original investigation, the review investigation has
     confirmed that the products exported by the People's Republic of China and
     those manufactured and sold by the Community producers and by producers in
     the analogue country were like products within the meaning of Article 1(4) of
     the Basic Regulation, because they have essentially the 'same physical
     characteristics and end-uses.
 ---pagebreak--- C. CONTINUATION AND LIKELIHOOD OF RECURRENCE OF DUMPING
1.   Preliminary Remarks
(13) In accordance with Article 11(2) of the Basic Regulation, the purpose of the
     present review was to determine whether or not the expiry of the measures
     would lead to a continuation or recurrence of dumping, in particular by
     examining whether dumping continued to take place after the adoption of anti-
     dumping measures.
2.   Analogue country
(14) Since the People's Republic of China is not a market economy country, normal
     value had to be determined on the basis of information obtained in a third
     country market economy (hereinafter the "analogue country").
     For this purpose South Korea had been suggested by the complainants. The
     notice of initiation envisaged the use of this country as an analogue country.
     Although substantial efforts were made to secure co-operation from several
     South Korean manufacturers of the product concerned, these producers refused
     to co-operate.
 ---pagebreak--- (15) As an alternative, the complainants had suggested the use of the United States of
      America as an analogue country. In addition, the use of Israel for this purpose
      was also considered in the light of the readiness of the Israeli manufacturer
      Metek Metal Technology Ltd. to co-operate not only in the review concerning
      tungstic oxide and tungstic acid10, but also in this review. However, when
      analysing the data submitted by the Israeli producer Metek Metal Technology
      Ltd., it became clear that this company did not sell the product concerned on its
      domestic market.
      In the present case, only the US market seemed to provide for sufficient sales in
      the ordinary course of trade of domestically produced carbide. One major US
      producer of carbide, Teledyne Advanced Materials (hereinafter "Teledyne"),
      offered to co-operate.
      The following facts and considerations were decisive for the choice of the
      United States of America as an appropriate analogue country:
      - the carbide produced in the US had the same characteristics as that produced in
      the People's Republic of China and exported to the Community ;
 10
    OJN°L ,p
 ---pagebreak---                                                                               10
- the carbide manufacturing process of the co-operating US producer is based on
the calcination into tungstic oxide of domestically produced or imported
ammonium paratungstate which is further carburised into tungsten carbide, or
on the direct carburisation of imported tungstic oxide, as well as the
reprocessing of various tungsten containing scrap compositions. It is similar to
the manufacturing process of the Chinese producers, assessed on the basis of
data available from the co-operating Chinese exporters/producers. It is modern
and efficient, and proved to be profitable during the Investigation Period.
- in terms of sourcing, Teledyne had unimpeded access to the raw materials for
the production of carbide, namely ammonium paratungstate and tungstic oxide,
which were purchased at world market prices during the Investigation Period
from different sources of supply.
- the US producer sold around 85% of its production on the US market, an open
and representative domestic market with a considerable number of end users,
where it competed with six other local producers of carbide. The US market
showed a competitive structure of supply and demand, further bolstered by
significant import volumes of carbide from various countries (the People's
Republic of China, South Korea, Israel etc.). Nothing was found to suggest that
costs and prices were not governed by the economic forces of a non-regulated,
free market economy.
 ---pagebreak---                                                                                     11
(16) On the basis of the above factors, and in accordance with Article 2(7) of the
     Basic Regulation, the United States of America was, therefore, considered to be
     an appropriate and not unreasonable choice of an analogue country for
     establishing normal value for the product under investigation.
     No objections were raised to the choice of the US as an analogue country,
     neither by the Chinese exporters/producers nor by the Chinese authorities, nor
     by any other party concerned.
3    Normal value based on domestic sales
(17) In accordance with Article 2 (2) of the Basic Regulation it was examined
     whether the volume of sales of carbide by Teledyne on the domestic market
     reached at least 5% of the volume of the product concerned exported by the
     People's Republic of China to the Community. It was found that the domestic
     sales of the like product achieved by Teledyne represented a multiple of the
     volume of the exports made by the Chinese exporters to the Community.
 ---pagebreak---                                                                                       12
(18) It was subsequently examined whether the domestic sales of Teledyne to
     independent customers could be considered to have been made in the ordinary
     course of trade.
     Whether or not domestic sales were made in the ordinary course of trade was
     determined pursuant to Article 2(4) of the Basic Regulation. It was found that
     the weighted average selling price of all sales during the Investigation Period
     was equal to or higher than the weighted average unit cost of production, and
     that the volume of individual sales transactions below unit cost of production
     was less than 20% of sales being used to determine normal value; therefore all
     domestic sales were regarded as having been made in the ordinary course of
     trade.
(19) Normal value was therefore based, as set out in Article 2(1) of the Basic
     Regulation, on the basis of the prices paid or payable of all domestic sales of the
     carbide to independent customers of Teledyne in the US market during the
     Investigation Period.
4.   Export prices
(20) Comprehensive data were received on export prices from two Chinese
     producers/exporters and four importers. The data covered almost the totality of
     Chinese exports concerned carbide to the Community during the Investigation
     Period, as confirmed by Eurostat figures.
 ---pagebreak---                                                                                        13
     For those Chinese exports which were sold directly for export to independent
     customers in the Community, export prices were established on the basis of the
     prices actually paid or payable for the product concerned, in accordance with
     Article 2 (8) of the Basic Regulation. For a significant percentage of the Chinese
     exports which were made through a related company (Minmetals North-Europe
     AB), export prices were constructed on the basis of resale prices to the first
     independent customers in the Community, in accordance with Article 2 (9) of
     the Basic Regulation. An adjustment was made for all costs, including duties
     and taxes incurred between importation and resale, and for profit. The profit
     margin was established on the basis of data obtained from the unrelated
     importers in the same business sector.
5.   Comparison
(21) In accordance with Article 2(11) of the Basic Regulation, a weighted average
     normal value, on a FOB US border basis, was compared to a weighted average
     export price on a FOB China border basis, and at the same level of trade.
     For the purpose of a fair comparison, in accordance with Article 2(10) of the
     Basic Regulation, due allowance in form of adjustments was made for
     differences in respect of transport, insurance, credit costs, handling and ancillary
     costs, which were claimed and demonstrated to affect price comparability.
 ---pagebreak---                                                                                   14
6.   Dumping margin
     The above comparison showed the existence of dumping, the dumping margin
     being equal to the amount by which the normal value exceeded the export price.
     Expressed as a percentage of the free-at-Community frontier price, duty unpaid,
     the single weighted average dumping margin amounts to 30,6%.
D.    COMMUNITY INDUSTRY
(22) A number of claims were made by the Chinese exporters/producers and some
     users concerning the definition of the Community industry and the standing of
     the producers supporting the review request.
(23) The Chinese exporters/producers claimed that one of the producers supporting
     the review request was related to one importer of Chinese carbide and should
     therefore be excluded from the definition of the Community industry, pursuant
     to Article 4(1 )(a) and (2) of the Basic Regulation.
 ---pagebreak---                                                                                     15
     It was established during the investigation that the two companies concerned
     although related had no control over each other. Moreover, these companies had
     conflicting interests regarding the imposition of the anti-dumping measures.
     One company was producing carbide whereas the other company was importing
     the product concerned. It was found that the two companies were acting
     autonomously when defining and pursuing their business strategy. Overall, it
     was concluded that their relationship did not influence the behaviour nor did it
     distort the analysis of the economic situation of the Community producer in
     question as regards the product concerned and there was therefore no reason to
     exclude this producer from the definition of the Community industry.
(24) As mentioned in recital (2), the request for review was submitted by producers
     representing almost the totality of the production of carbide intended for sales
     on the open market and, accordingly, they constituted the Community industry.
     This was contested by a number of integrated producers of tungsten end-
     products in the Community (tools, hard metals), producing small quantities of
     carbide exclusively for internal consumption . Specifically, they argued that the
     representativity of the producers supporting the review should be assessed by
     reference to the totality of the Community production of the product concerned
     (including their own captive production) and that, on this basis, the producers
     supporting the review were not representative of the Community industry.
 ---pagebreak---                                                                                        16
(25) This issue was examined but it was concluded that the argument was incorrect.
     Indeed, even if the output of the companies which only produce for captive use
     was taken into account, the producers supporting the review request would still
     account for 60% of the overall Community production of the product concerned,
     thus fulfilling the criteria of Article 5(4) of the Basic Regulation. In addition, it
     was confirmed that the producers supporting the review accounted for almost all
     Community production of carbide intended for sales in the open market.
(26) Given the above, the producers supporting the review request constitute the
     Community industry within the meaning of Articles 4(1) and 5(4) of the Basic
     Regulation. For the remainder of this Regulation, the term "Community
     industry" will be used to refer to the companies supporting the review.
E.   LIKELIHOOD OF CONTINUATION OR RECURRENCE OF INJURY
 1.  Preliminary remarks
(27) When examining injury, it should be recalled that carbide is part of an entire
     production chain of tungsten products and that, therefore, any developments of
     the market for the product concerned should be seen in conjunction with the
     developments for the other products in the production chain.
     Conclusions with regard to injury were based on data relating to the Community
     as composed at the time of the initiation of the review, i.e. the Community of 15
     Member States.
 ---pagebreak---                                                                                   17
2.   Community consumption
(28) For the purpose of the investigation, and as the Community industry only
     produced carbide for the open market, consumption in the Community market
     was established on the basis of the production by the Community industry plus
     imports, minus exports, plus or minus stock variations. This approach did not
     take into account captively used production of integrated downstream producers
     of tungsten end products (e.g. hard metal components) which was not
     considered to be in direct competition with the dumped imports.
     On this basis, the consumption in the Community went from 2801 tonnes in
      1991 to 2819 tonnes in 1992, decreased to 2706 tonnes in 1993 and increased
     again in 1994 to 4236 tonnes and in the Investigation Period to 4703 tonnes,
     representing an increase of 68% in comparison with 1991. This development of
     consumption, showing a decrease until the end of 1993 and a recovery
     thereafter, was in line with the market developments for the industrial sectors
     using the product concerned.
 ---pagebreak---                                                                                  18
3.    Volume and market share of the dumped imports
(29) Imports from tfee People's Republic of China in the Community decreased from
      143 tonnes in 1991 to 6$ tonnes in 1992 and increased again to 83 tonnes in
      1993, 136 tonaes in 1994 and 234 tofcnes in the Investigation Period (overall
     increase by 63.6%).
     The market share of these imports decreased from 5.1% in 1991 to 2.4% in 1992
     but increased continuously thereafter, up to 5% in the Investigation Period,
     despite the imposition of anti-dumping measures in the form of ad-valorem
     duties after the withdrawal of the undertakings by the Chinese exporters in
      1994.
4.   Prices of the dumped imports
     a)     Overall trend
(30) On the basis of price information available (Eurostat), prices of the Chinese
     exporters (OF, customs and anti-dumping duties unpaid) remained relatively
     stable between 1991 and the Investigation Period (+ 2%).
     The relatively stable prices of carbide has to be seen in conjunction with the
     increase in prices of the tungsten upstream products, ammonium paratungstate
     and tungstic oxide and acid which increased respectively by 27% and 25% over
     the same period.
 ---pagebreak---                                                                                    19
     h)    Price Undercutting
(31) For the Investigation Period, the Community industry's monthly weighted
     average selling price for carbide was compared with a monthly weighted
     average price of tungsten exported from the People's Republic of China to the
     Community.
     The Community industry's prices were ex-works and the exporters' prices were
     at-Community frontier, customs and anti-dumping duties paid.
     This comparison showed a negligible undercutting margin. However, it should
     be noted that, prior to the imposition of the ad valorem duty (September 1994)
     resulting from the withdrawal of the undertakings by the Chinese exporters, the
     Chinese prices were found to continuously undercut the Community producers'
     prices and price undertakings in force during this period did not appear to have
     been consistently adhered to.
5.   The situation of the Community industry
(32) In accordance with Article 11(2) of the Basic Regulation, it was examined
     whether the expiry of the measures in force would lead to a continuation or
     recurrence of injury to the Community industry.
 ---pagebreak---                                                                                    20
     a) Production, production capacity, utilisation rate and stocks
(33) The Community industry's production of the product concerned remained stable
     at around 3300 tonnes from 1991 to 1993 and increased to 4375 tonnes in 1994
     and 4641 tonnes in the Investigation Period, which represents an increase by
     40% in comparison with 1991. This increase should be seen in the light of the
     increase in consumption over the same period (+68%).
(34) The Community industry's production capacity remained stable from 1991 to
     1993 at 4240 tonnes and increased to 4740 tonnes in 1994 and 5095 tonnes in
     the Investigation Period (+20% by comparison with 1991).
(35) The utilisation rate was stable from 1991 to 1993, at around 78%, and increased
     up to more than 90% in 1994 and the Investigation Period.
(36) Stocks decreased overall during the period, in particular in 1994 and the
     Investigation Period.
     b) Sales volume and market share
(37) The quantity of carbide sold in the Community market by the Community
     industry increased in absolute terms from 1873 tonnes in 1991, to 1993 tonnes
     in 1992, decreased to 1828 tonnes in 1993, increased again to 2596 tonnes in
     1994 and 2994 tonnes in the Investigation Period (overall increase by 60%). The
     market share of this industry, after an increase in 1992, decreased continuously
     thereafter. It developed as follows: 66.9% in 1991, 70.7% in 1992, 67.6% in
     1993, 61.3% in 1994 and 63.7% in the Investigation Period.
 ---pagebreak---                                                                                     21
     c) Price evolution
(38) The weighted average selling price of carbide decreased sharply (-20%) between
     1991 and 1994 and strongly recovered during the Investigation Period.
     It is noted that this recovery in prices coincided with the imposition in
     September 1994 of a 33% ad valorem duty on Chinese imports. Furthermore,
     this price increase followed the increase in the prices of the tungsten upstream
     intermediates, i.e. ammonium paratungstate and oxide (see also recital (31)).
     The price increase also coincided with the increase in demand.
     d) Profitability
(39) The Community producers suffered heavy losses of up to 20% on average from
     1991 to 1994. As a consequence of the strong price recovery, profitable returns
     on sales were reached during the Investigation Period (13% on average).
     e) Employment
(40) Given the fact that the personnel concerned works in an integrated production
     chain and the close links between the various tungsten products, specific
     allocations of personnel per product were not possible. Employment of the
     tungsten sector decreased by 14% over the whole period. In the Investigation
     Period, the Community industry employed 580 people in the tungsten
     production chain.
 ---pagebreak---                                                                                       22
     f) Conclusion on the situation of the Community industry
(41) The above analysis has revealed that some injury indicators such as production,
      sales and capacity utilisation showed, after a long period of negative trends,
      positive developments in line with the positive development in the market
      overall and coinciding with the imposition of ad-valorem anti-dumping duties
      on the imports concerned by the present investigation after 1994. As far as the
      financial situation of the Community industry is concerned, it should be noted
      that profits were only made in the Investigation Period. In the years prior to the
      Investigation Period (1991-1994), the Community industry continued to suffer
      material injury in the form of decreasing prices and heavy losses of up to 20%
      on average.     Finally it should be noted that the market share held by the
      Community industry, after an increase in 1992, decreased continuously from
      1993 to the Investigation Period by almost 10 percentage points. In this respect,
     it should be noted that, in the past, the Chinese exports were mostly
     concentrated on ammonium paratungstate and to a lesser extent oxide.
     However, it is not unlikely that, in the absence of measures on carbide, the
     Chinese exports would move gradually to carbide given that this is a higher
     value product in the chain.
6.      Price undercutting in the event of the expiry of measures.
(42) A second price undercutting calculation was undertaken to establish the level of
     undercutting in the event of the expiry of anti-dumping measures. The
     methodology was the same as that described in recital (31) except that, no anti-
     dumping duty was added to the import price. In this case, undercutting margins
     resulted of 23% on average, expressed as a percentage of the Community
     producer's prices.
 ---pagebreak---                                                                                     23
7.   Conclusion
(43) The situation of the Community producers improved during the Investigation
     Period. However, it can be concluded from the investigation that, because of
     their low prices, Chinese imports aggravated the difficulties of the Community
     industry prior to the imposition of ad-valorem duties when the undertakings
     offered by the Chinese exporters/producers were apparently not respected. This
     has prevented the Community industry from fully recovering from the effects of
     the previous dumping practices. It appears highly likely that in the absence of
     anti-dumping measures, the prices of the Chinese dumped imports would be
     made at a level that undercuts the prices of the Community industry.
(44) In this context, a number of claims were made by the Chinese exporters
     questioning the causal link between the dumped imports and the situation of the
     Community industry.
     It was alleged that the recovery of the Community industry was only due to the
     surge in demand for carbide in 1994 and the Investigation Period and not to the
     imposition of an ad valorem duty on Chinese imports. In this respect, it cannot
     be denied that the recovery in demand influenced the level of prices. However,
     it should be stressed that it was only after September 1994, when the ad valorem
     anti-dumping duties were imposed, that the sales prices achieved by the
     Community industry increased and the financial situation of the Community
     producers improved after years of losses.
 ---pagebreak---                                                                                     24
     (45)      It was further claimed that Chinese imports have had less impact on the
     Community market than imports from other third countries like the United
     States or South Korea. It should be noted that, although imports originating
     from the USA and South Korea took over part of the increase in consumption
     during the period examined, with a consequent increase of the respective market
     shares, their prices were found to be generally higher than the Chinese prices
     and there was no evidence of these prices being dumped. In addition, any
     influence of other imports on the situation of the Community industry does not
     detract from the negative impact that, in the absence of measures, the Chinese
     imports could continue to have on the situation of the Community industry as
     shown by the likelihood of continued price undercutting (see recital (43) above).
(46) Furthermore, the need for measures to be maintained should also be seen in the
     light of the pressure that imports of Chinese intermediate products could cause
     on the prices of the Community industry's end-product. In this context, it
     should be noted that the Community industry is, to a certain degree, dependent
     on external supply of upstream products (mainly ammonium paratungstate),
     given that the recycling process of scrap materials does not, at the moment, meet
     the overall needs of the industry. In the absence of anti-dumping measures on
     carbide, the industry could be compelled, under pressure from the Chinese
     imports of this product, to lower its prices of carbide and if faced at the same
     time with an increase in the Chinese prices of upstream products, its viability
     would be compromised.
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(47) It was therefore concluded that, in the absence of measures, there is a likelihood
     of a recurrence of injury.
F.   COMMUNITY INTEREST
(48) It should be recalled that in the previous investigation, the adoption of measures
     was considered not to be against the interest of the Community. Furthermore, it
     should be noted that the present investigation is a review, thus analysing a
     situation in which anti-dumping measures have already been in place.
     Consequently, the timing and nature of the present investigation would allow to
     assess any negative undue impact on the parties concerned by the anti-dumping
     measures imposed.
1. The Community carbide industry
(49) The Community industry in the Investigation Period was composed of three
     companies located in different Member States. For each of these companies,
     carbide represents the most important product in the tungsten production chain,
     being the final product in this chain. In terms of turnover, carbide accounts for
     more than 60% of the value of all sales of tungsten products. In the past years,
     constant investments have been made in this sector in order, in particular, to
     ensure compliance of production methods with environmental requirements and
     to develop new processing methods, namely recycling of tungsten containing
     scrap materials. This technology is aimed at gaining more independence from
     the raw materials (concentrates) or intermediate products (ammonium
     paratungstate and tungstic oxide and tungstic acid).
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     The economic situation which is characterised by financial losses having been
     incurred during four years by the Community industry has not yet been fully re-
     established since the recent introduction of an ad valorem anti-dumping duty.
(50) As shown in the investigation, it is likely that in the absence of protective
     measures on carbide, the last and most vulnerable stage of the tungsten
     production chain, injury would recur in the form of losses to the Community
     industry and continuing and even growing losses of market share. Fair
     conditions of competition should therefore be maintained to allow the
     Community industry to remain viable.
2.   The user industry
(51) It is recalled that the Community users of carbide are mainly the manufacturers
     of hard metal components, (i.e. carbide tools and wear resisting materials). It is
     composed of a few large companies ("major users") which partly have an
     integrated production (i.e. they start from the ammonium paratungstate or
     tungsten oxide stage and transform these products up to the final stage) and
     around a hundred smaller companies ("smaller users"), which start mostly at the
     carbide stage.
(52) One major user claimed that the anti-dumping duty on Chinese imports would
     increase its overall production costs and endanger its position on the
     Community market in comparison with its major US and Japanese competitors
     which can provide themselves with carbide not subject to anti-dumping
     measures. It would allegedly suffer a loss of competitiveness.
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     It was found that this user, which is an integrated producer of carbide tools and
     wear resistant materials, started its production process during the period
     considered mainly from upstream intermediates such as ammonium
     paratungstate and tungstic oxide and had, therefore, limited needs for imported
     carbide. It imported almost a fourth of the total of carbide imported in the
     Community from the People's Republic of China. However, this represented
     less than 4% of its carbide consumption. The maximum impact of the 33% duty
     was calculated to amount to less than 1% on the production costs of the tungsten
     related products of this user. Any impact of the duty on this company's tungsten
     chain would therefore appear to be minimal.
(53) A dozen smaller users have expressed themselves in favour of maintaining the
     measures. The main argument was that if the measures on carbide lapsed, it
     would only favour the major users' strong position in the market of carbide
     tools. These users have a stronger negotiating position vis-à-vis the Chinese
     suppliers than the smaller companies and could therefore obtain more
     advantageous prices.
(54) No other substantiated comments against measures were submitted by users.
     Since the measures have been in place for a certain period, and would be
     maintained at the same level, it can be concluded that this would not imply any
     deterioration of the situation of the users in general.
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3.   Effective competition
(55) It has also been claimed that the level of competition on the carbide market
     would be affected by the continuation of the anti-dumping duty since it would
     create an oligopolistic market. All users would have to rely on the Community
     producers.
(56) It should be recalled that in spite of anti-dumping measures, the Chinese
     exporters have always been present on the Community market and increased
     their market share during the Investigation Period. It should be further noted
     that there are other third country suppliers of carbide in the Community,
     ensuring that a number of alternative supply sources exist. Finally, it has been
     demonstrated that due to the interrelationship between the various products of
     the tungsten chain, there is considerable competitive pressure in the market for
     any product in the chain from the competitors in the market for the other
     products.
4.   Conclusion on Community interest
(57) In the light of the above, it was concluded that there were no compelling reasons
     not to maintain the measures in force, in order to ensure competitive conditions
     of fair pricing and to avoid any likelihood of a recurrence of injury to the
     Community industry which would certainly occur if measures were allowed to
     expire.
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G.     ANTI-DUMPING MEASURES
(58) All parties concerned were informed of the essential facts and considerations on
     the basis of which it was intended to recommend the maintenance of the
     existing measures. They were also granted a period within which to make
     representations subsequent to these disclosures. The comments of the parties
     were considered and, where appropriate, the findings have been modified
     accordingly.
(59) It follows from the above that, as provided for by Article 11(2) of the Basic
     Regulation, the anti-dumping duty of 33% on imports of tungsten carbide and
     fused carbide originating in the People's Republic of China imposed by
     Regulation (EEC) N° 2737/90 should be maintained. Regulation (EEC) N°
     2737/90 has been maintained in force by this review and will lapse on its
     conclusion. The anti-dumping duty imposed by that Regulation should therefore
     be reimposed.
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HAS ADOPTED THIS REGULATION:
                                  Article 1
 1. A definitive anti-dumping duty is hereby imposed on imports of tungsten
carbide and fused carbide, falling within CN code 2849 90 30 and originating in
the People's Republic of China.
2. The duty shall be 33% of the net, free-at-Community-frontier price of the
product, before duty.
3. Unless otherwise specified, the provisions in force concerning customs duties
shall apply.
                                  Article 2
This Regulation shall enter into force on the day following its publication in the
Official Journal of the European Communities.
  This Regulation shall be binding in its entirety and directly applicable in all
  Member States.
  Done at Brussels,
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                                                           COM(98) 142 final
                                             DOCUMENTS
EN                                                            02 12 11 09
                                    Catalogue number : CB-C0-98-147-EN-C
                                                             ISBN 92-78-31909-0
Office for Official Publications of the European Communities
L-2985 Luxembourg
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