CELEX: 51996PC0307
Language: en
Date: 1996-06-21
Title: Proposal for a COUNCIL REGULATION (EC) imposing definitive anti-dumping duties on imports of unwrought pure magnesium originating in Russia and Ukraine and collecting definitively the provisional duty imposed

COMMISSION OF THE EUROPEAN COMMUNITIES
   •Cr   <r
                                                 Brussels, 21.06.1996
                                                 COM(96) 307 final
                                  Proposal for a
                        COUNCIL REGULATION (EC)
                 imposing definitive anti-dumping duties on
imports of unwrought pure magnesium originating in Russia and Ukraine and
             collecting definitively the provisional duty imposed
                         (presented by the Commission)
 ---pagebreak---  ---pagebreak---                               EXPLANATORY MEMORANDUM
 1. By Regulation (EC) No 2997/951, the Commission imposed provisional anti-
dumping duties on imports into the Community of unwrought magnesium originating in
 Russia and Ukraine, falling within CN codes 8104 11 00 or 8104 19 00.
2. By Regulation (EC) No 720/962, the Council extended the validity of these duties for
a period of two months.
3. Certain parties requested and were granted hearings and presented written
comments which were taken into account where appropriate. The Commission
continued to seek and verify all information it deemed necessary for its definitive
findings.
4. At the definitive stage it was concluded that the two categories of unwrought
magnesium, pure and alloyed, are distinct products. This is mainly due to differences
in their use. As neither the exporters nor the Community industry sold any unwrought
alloyed magnesium the proceeding should be terminated with respect to this product.
5. The definitive determination confirmed that exports originating in Kazakhstan were
de-minimis. Consequently, no dumping margin was calculated with respect to these
imports. The proceeding with respect to this country is terminated by separate
Commission Decision.
6. The definitive determination confirmed the existence of dumping with respect to
Russia and Ukraine. Decreases in individual margins compared to the provisional
findings are due to downward adjustments made to the normal values following claims
by the non-market economy producers.
1
        OJ No L 312 of 23.12.95, p. 37
2
        OJ No L 100 of 23.4.96, p. 1
 ---pagebreak--- 7. The conclusion that the complaining industry suffered material injury is also
confirmed.
8. The Commission confirmed the causal link between the dumped imports and the
injury suffered by the Community industry. It is the volume of the dumped imports,
their low prices and decreasing prices, a price pattern which differs significantly from
the price pattern of other third country suppliers and the fact that such imports, to a
significant extent went to the same channels as sales of the Community industry that
led to this conclusion.
9. On Community interest, it was concluded that the interests of users will not be
affected substantially in the event anti-dumping measures are introduced and that
despite the fact that there is only one producer in the Community a competitive
environment will prevail in this market.
10. Therefore, definitive duties should be imposed. The level at which the definitive
duties should be set was determined by the dumping margins finally established
which were lower than the injury level. It was considered appropriate to impose
measures in the form of variable duties at a level of 2.602 and 2.568 ECU per ton at a
CI F Community border level for imports originating in Russia and Ukraine
respectively.
11. The Russian and the Ukrainian producers offered undertakings. The Commission
considered these offers as acceptable because they were considered sufficient to
remove injurious dumping.
12. It is therefore proposed that the Council adopts the draft Regulation annexed
imposing a residual definitive anti-dumping duty on imports of unwrought pure
magnesium originating in Russia and Ukraine falling within CN codes 8104 11 00 or
ex 8104 19 00.
 ---pagebreak---    Council Regulation (EC) No ..../ imposing definitive anti-dumping duties on
  imports of unwrought pure magnesium originating in Russia and Ukraine and
                  collecting definitively the provisional duty imposed
THE COUNCIL OF THE EUROPEAN'UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 384/96 of 22 December 1995 on
protection against dumped imports from countries not members of the European
Community3, and in particular Article 23 thereof,
Having regard to Council Regulation (EEC) No 2423/88 of 11 July 1988 on protection
against dumped or subsidized imports from countries not members of the European
Economic Community4, as last amended by Regulation (EC) No 522/945 and in
particular Article 12 thereof,
Having regard to the proposal submitted by the Commission after consulting the
Advisory Committee,
WHEREAS :
3
       OJ No L 56, 6.3.1996, p.1.
4
       OJNoL209, 2.8.1988, p. 1.
5
       OJ No L 66, 10.3.1994, p. 10.
 ---pagebreak--- I.   Provisional Measures:
(1.)   By Regulation (EC) No 2997/95 provisional anti-dumping measures were
       imposed on 23 December 19956 ("provisional duty Regulation") on imports into
      the Community of unwrought magnesium originating in Russia and Ukraine.
       By Regulation (EC) No 720/96 the validity of the provisional anti-dumping
       measures was extended until 24 June 19967 by the Council.
II.  Subsequent Procedure:
(2.)   Following the imposition of the provisional anti-dumping measures the following
       interested parties submitted comments in writing:
      A. Producers in Russia:
      Avisma Titanium-Magnesium Works, Berezniki, Perm region ("Avisma"),
      Solikamsk Magnesium Works, Solikamsk, Perm region ("Solikamsk"),
       B. Producers in Ukraine:
      Concern Chlorvinil, Kalush, Ivano-Frankovsk region ("Chlorvinil")8.
      C. Producer in the Community:
      Péchiney Electrométallurgie
      D. Producer in the analogue country:
      Hydro Magnesium, Porsgrunn, Norway
6
      OJ No L 312 of 23.12.95, p. 37
7
      OJ No L 100 of 23.4.96, p. 1
8
      This producer has changed its name to "Oriana" after the period of investigation.
 ---pagebreak---      E. Importer in the Community:
     Ayrton & Partners, London, U.K.
     F. User in the Community:
     Aluminium Norf, Neuss, Germany, ("Alunorf")
     G. User association in the Community:
     Arbeitsgemeinschaft der Eisen und Metall verarbeitenden Industrie, Dusseldorf,
     Germany, ("AVI")
(3.) Those parties who so requested were granted an opportunity to be heard by
     the Commission.
(4.) The Commission continued to seek and verify all information it deemed
     necessary for its definitive findings.
(5.) Parties were informed of the essential facts and considerations on the basis of
     which it was intended to recommend the imposition of definitive anti-dumping
     duties and the definitive collection of amounts secured by way of a provisional
     duty. They were also granted a period within which to make representations
     subsequent to the disclosure.
(6.) The parties' oral and written comments were considered, and the conclusions
     altered where deemed appropriate.
 ---pagebreak--- (7.)   Owing to the complexity of the case, in particular the determination of the
       appropriateness of the analogue country, the investigation overran the normal
      duration of one year provided for in Article 7 (9) (a) of Regulation (EEC) No.
      2423/88 (hereafter referred to as the 'basic anti-dumping Regulation').
III. Product under consideration and like product:
(8.)  At the provisional stage unwrought pure and alloyed magnesium, both
       produced in ingot form, were considered as the product concerned.
(9.)  After the imposition of provisional measures, the Russian and Ukrainian
       producers submitted that there are differences between the two above
      categories of unwrought magnesium , i.e. pure and alloyed, in terms of physical
      characteristics, production process and end-use, warranting the treatment of
      these two categories of unwrought magnesium as two distinct products.
(10.) The Community industry has submitted that the Community Institutions should
      take into account its sales volume and value of pure magnesium in granular
      form in order to allow a complete assessment of injury.
A.     Differences between unwrought pure magnesium and unwrought alloyed
      magnesium in ingot form:
(11.) The final stage of the investigation has shown that the two categories of
       unwrought magnesium are different in their composition, in particular their
      magnesium content, although the latter is above 90% for both categories.
      At the same time the additional alloying agents contained in unwrought alloyed
      magnesium enhance or even alter the basic physical characteristics of this
      category as compared to the other category, i.e. unwrought pure magnesium.
 ---pagebreak---          On this basis it is concluded that certain differences in physical characteristics
         between unwrought pure and alloyed magnesium do exist.
 (12.) As already pointed out in recital (11) of the provisional duty Regulation, it has
        been established that the two different categories of unwrought magnesium are
        used in a variety of applications, mainly in aluminium alloying, in steel
        desulphurisation and in die-casting.
        Although there are applications in which the use of either of the two categories
        of unwrought magnesium is theoretically possible, in practical terms the use is
        limited to one or the other category of unwrought magnesium for technical
        reasons.
        In particular, the use of unwrought pure magnesium for die-casting is basically
        impossible whereas the use of certain types of unwrought alloyed magnesium
        in both steel desulphurisation and aluminium alloying is possible with certain
       technical adjustments.
       Given also that the two categories of unwrought magnesium are traditionally
       used only in certain applications, the customers also perceive differences
       between them.
       Thus, the areas of use which are common for unwrought pure and alloyed
       magnesium in practical and even theoretical terms are very limited and
       therefore the interchangeability of the two categories of products is also limited.
(13.)  In the light of the above, it is concluded that unwrought pure and alloyed
       magnesium have to be considered as two distinct products.
       As neither the producers in the exporting countries nor the Community industry
       have produced or sold unwrought alloyed magnesium in any significant
       quantity, it is concluded that this product can be excluded from the scope of the
       present investigation.
 ---pagebreak---       Consequently, the analysis of dumping, of injury, of causation between
      dumping and injury and of Community interest detailed below is exclusively
      based on information related to unwrought pure magnesium (hereinafter
      referred to as "magnesium").
      Magnesium, depending on the content of impurities is classified under the
      Combined Nomenclature as 8104 11 00 or 8104 19 00.
B.    Magnesium in granular form:
(14.) At the provisional stage, the Commission for the injury determination
      considered the volume and value of the Community industry's sales of
      magnesium in ingot form.
      Since then, the Community industry has submitted that the Commission should
      also take into account for the injury determination its sales of magnesium
      processed in-house from ingot form into magnesium granules, subsequently
      sold in the open market to independent customers.
      It should be noted that magnesium granules are used as such in one of the
      main applications for magnesium, i.e. for steel desulphurisation.
      The sole remaining Community producer performs the magnesium grinding
      process in-house. In contrast, the Russian and Ukrainian producers of
      magnesium sell the latter in ingot form to independent grinders in the
      Community for processing the ingots into granules.
(15.) Given the importance of steel desulphurisation as a usage of magnesium and
      the relative simplicity of the grinding process, it has been concluded that the
      volume and value of sales of magnesium ingots transformed into magnesium
      granules should be taken into account, subject to an allowance for grinding
      costs, in determining the situation of the Community industry.
 ---pagebreak--- IV. Dumping:
A. Russia and Ukraine:
1. Normal value
(16.) The Russian producers have submitted that the analogue country, i.e. Norway,
       was not an appropriate choice. These producers have argued in general terms
      that given the difference in economic development between Russia and
       Norway leading to, for example, substantial labour cost differences, the latter
      could not be used as an analogue country.
      The Community industry, on the contrary, has submitted that the producer
       located in Norway is among the most efficient world-wide manufacturer,
      operating a particularly cost effective production when compared to the
      exporting producers concerned.
      In respect of this argument, it is noted that the justification for using an
      analogue country in anti-dumping proceedings involving non-market economy
      countries is the lack of reliable cost and price information in the non-market
      economy country concerned. Therefore, it is considered groundless to argue
      that certain costs prevailing in the non-market economy are lower than in the
      market economy analogue country and that accordingly adjustments of the
      normal value determined for the analogue country when applying it to the non-
      market country should be made. Based on the same reasoning, the
      Commission does not take into account costs resulting from inefficiencies in for
      example the use of the workforce, which would result in adjustments in the
      normal value to the disadvantage of the non-market economy producers, as it
      appears reasonable to assume that such disadvantages are the result of that
      form of economic system.
 ---pagebreak--- (17.) Furthermore, the Russian and Ukrainian producers have alleged that Norway
      does not represent an appropriate choice of analogue country because the
      producer located in this country would have an interest in the outcome of this
      proceeding.
      As mentioned in recital (68) of the provisional duty Regulation, it has been
      found that part of this Norwegian producer's field of activity was the Community
      magnesium market.
      The investigation conducted has ensured, however, that the conclusions
      reached are based on verified and thus reliable cost and sales price
      information for Norway. On this basis any allegation that the particular interest
      of the producer in question may have influenced the conclusions of the present
      investigations are unfounded.
(18.) As far as certain allegations made by the Russian and Ukrainian producers
      related to the reliability of production costs determined for the analogue country
      producer, it is not considered necessary to address these allegations in detail,
      indeed, they are based on the use of an inconsistent set of exchange rates, on
      the comparisons of normal values determined in anti-dumping proceedings
      carried out in the past by the US authorities using different methodologies and
      ignoring the methodology used by the Commission in order to determine the
      level of duty at the provisional stage.
(19.) Finally, certain allegations are based on the situation of the magnesium
      operations of the group to which the analogue country producer belongs which
      also includes magnesium operations in Canada. In this respect it should be
      noted that the determination of the normal value was exclusively based on the
      situation of the producer located in the analogue country, i.e. Norway.
                                              10
 ---pagebreak---  (20.)  In conclusion, it is maintained that the information collected in respect of the
        analogue country producer is reliable and is actually supported by information
        submitted by the Russian and Ukrainian producers.
2. Export prices:
(21.) One Russian producer found, as set out in recital (30) of the provisional duty
        Regulation, to have sold the product concerned to a related company in
        Switzerland, and which had omitted to specify this relationship, did not contest
       after the provisional stage that the relationship existed. However, this producer
       claimed that it did not know the final destination of its exports and that therefore
       the sales to this related company should not be considered as sales destined
       for export to the Community.
       This approach cannot be accepted given the relationship between the
       companies concerned and also taking into account the fact that the Russian
       company in question did not submit any information linked to the sales to the
       related party (e.g. shipping documents indicating the actual shipping
       destination) that would demonstrate that the approach taken at the provisional
       stage for the determination of export sales and export prices as set out in
       recitals (30) and (31) of the provisional duty Regulation was incorrect.
(22.) The two Russian producers have claimed that an amount for commission from
       their export prices was wrongfully deducted, as this commission was paid to
       parties located in Russia. The Russian producers have submitted that, given
       the status of Russia as a non-market economy country, any costs incurred
       there should not be considered.
       The information at hand was reviewed, and it is concluded that the deduction
       concerned should not be made, given the status of this country as a non-
       market economy. It appears, as argued by the Russian producers, that the
       commission payments relate to activities in Russia.
                                              H
 ---pagebreak--- (23.) The Ukrainian producer has submitted that the export price of certain export
      transactions were wrongfully adjusted by twice deducting an amount for
      commission.
      Based on the information submitted, it was established that the claim of the
      Ukrainian producer is justified and the calculation was adapted accordingly.
3. Comparison:
(24.) The Russian producers have claimed that the production process used by the
      analogue country producer is partly different from the production process used
      in Russia, yielding extra costs of production. These claims concern one specific
      production step, i.e. the treatment of the feedstock and the production of
      certain by-products.
(25.) With respect to differences in the processing of the feedstock, it was
      determined that prior to the investigation period, the analogue country producer
      used two different production processes in order to prepare the feedstock for
      the production of magnesium. One of the production processes was
      discontinued well before the beginning of the investigation period. The claims
      of the Russian producers in respect of differences in the processing of the
      feedstock relate to this discontinued production process. Since this production
      process was discontinued and did not affect the situation prevailing during the
      investigation period, it was not considered necessary to address the question
      raised by the Russian producers.
(26.) With respect to certain by-products resulting from the production process, this
      aspect was examined carefully in order to address the question of possible
      inherent differences in the efficiency of the production processes used during
      the investigation period in the analogue country and in the exporting countries.
                                            12
 ---pagebreak---       The following should be noted:
             On the basis of the information available, the electrolysis-process (i.e.
             one of the major production steps in the production of magnesium) of
             the analogue country producer, given that the structure of the
             electrolysis cells used by the analogue country producer is inherently
             less energy consuming when compared to the electrolysis process used
             in the exporting countries. In addition, the lifetime of the electrolysis cells
             is substantially shorter in the exporting countries concerned (i.e. around
             1 year against 5 years in the analogue country).
             The production process used in the exporting countries yields, to a
             greater extent than the production process performed in the analogue
             country, certain by-products. From information submitted in the course
             of the investigation it appears that these by-products are used as inputs
             in the production of other products in the exporting countries.
(27.) On the basis of the above, it has been concluded that the normal value
      established in the analogue country should be adjusted in order to reflect that
      the Norwegian production process had a lower yield of by-products while being
      more energy efficient. Such an adjustment was done on the basis of electricity
      prices prevailing in the analogue country and on the basis of an estimate of the
      prices of the main by-products valued at prices prevailing in the Community
      adjusted for necessary purification treatment.
                                            13
 ---pagebreak---  4. Dumping margins:
 (28.) The Russian producers have claimed that the CIF EC border value used in
        determining the provisional dumping margin should be adapted because of the
        effects of the enlargement of the Community. They argued that they had
       exported their products during the investigation period to a port in Finland and
       as a consequence the export transactions should not be adjusted to bring them
       to a Community frontier level by adding all relevant costs to reach a CIF-
        Rotterdam level.
       The destination of the export sales made by the Russian producers during the
       investigation period have been verified and it is concluded that the claim is not
       justified. Indeed, contrary to the claim of the Russian producers, export sales to
       independent customers were made at a Rotterdam-harbour level in the
       overwhelming majority of cases. Therefore, the claim of the producers
       concerned is rejected.
(29.) A comparison of the adjusted normal value with the export prices revealed that
       the ex-national frontier prices of all export transactions from Russia and
       Ukraine were below normal value. The revised dumping margins were
       aggregated for all export transactions and when expressed as a percentage of
       the total CIF EC border value are as follows:
               Russia:       46.5 %
               Ukraine:      54.5 %
B. Kazakhstan:
(30.) The conclusion concerning imports of magnesium originating in Kazakhstan
       reached at the provisional stage, i.e. that imports are de-minimis, was
       confirmed at the definitive stage. Consequently, no dumping margin has been
       determined with respect to imports originating in this country.
                                              14
 ---pagebreak--- V. Injury:
A. Volume of Community market, consumption in the Community:
(31.) The consumption in the Community market for the product concerned was
       determined based on market research information compiled by a market
       research organisation on the basis of a survey among suppliers and users.
       The information used does include the consumption of magnesium by
       companies belonging to the group of the sole remaining producer of the
       Community industry. It has to be noted that these companies were free to
       purchase magnesium from whatever supplier and therefore, the consumption
       determined reflects the open market for the product concerned.
       The resulting consumption of magnesium in the Community measured in
       metric tons was as follows:
           1990          1991         1992         1993
            46,000        42,000        47,000      41,000
B. Dumped imports from Russia and Ukraine:
1. Cumulation of imports:
(32.) The Ukrainian producer stated that imports originating in Ukraine should not be
       cumulated with those originating in Russia. The producer mentioned in this
       context, that, unlike the situation with regard to Russia it had exported neither
       any unwrought alloyed magnesium nor any stockpile magnesium.
                                              15
 ---pagebreak---        As far as the argument related to sales of unwrought alloyed magnesium is
       concerned, reference is made to point III. in which the product definition was
       revised.
(33.) As far as the argument about exports of stockpile material is concerned,
       reference is made to recital (31) of the provisional duty Regulation, where it is
       stated that export prices and volumes for unwrought magnesium originating in
       Russia were made on the basis of the transactions of the two cooperating
       producers which, according to the information submitted by them, have not sold
       any stockpile material themselves.
(34.) On this basis, and taking into account the arguments raised already at the
       provisional stage (see recitals (43) to (45) of the provisional duty Regulation), it
       is considered that the cumulation of imports originating in Russia and Ukraine
       is appropriate.
2. Volume of imports:
(35.) The volume of dumped imports of magnesium originating in Russia and
       Ukraine, measured in metric tons product, show a significant increase from
       around 2,100 metric tons in 1991 to around 5,400 metric tons in 1992,
       ultimately rising to around 9,200 metric tons in the investigation period.
(36.) On the basis of the total Community consumption, this development
      corresponds to a rise in market share held by dumped imports from 5% in 1991
      to 11% in 1992 and to 23% in the investigation period.
(37.) The price level for magnesium for the imports concerned has been determined
       and the following price trend for the two exporting countries concerned has
       been established (table given in indexed form, base in 1990: 100):
                                             16
 ---pagebreak---                1990         1991         1992        1993
                    100          86            92         87
       These prices were at a consistently low level and undercut those of the
       Community industry by a substantial margin. A detailed evaluation of the export
       prices charged during the period of investigation as compared to prices
       charged by the Community industry at a comparable level of trade, and taking
       into account where appropriate differences in the quality of the products was
       made. The prices of all export transactions undercut prices of the Community
       industry by an average margin of 35%.
C. Situation of the Community industry:
(38.) A number of interested parties have pointed out that the Community industry
       no longer suffers injury as the demand for magnesium has changed since the
       end of the investigation period, leading to a supply shortage and a considerable
       increase in prices.
       However, the alleged change in demand has occurred in the market for die-
       casting which essentially uses unwrought alloyed magnesium.
1. Sales volume and market share of Community industry:
(39.) As mentioned in point III.B., sales of magnesium ingots of the Community
       industry were analysed taking into account quantities sold in ingot form as such
       ("magnesium ingots") and the quantities of ingots attributable to sales in
       granular form ("magnesium granules").
                                            17
 ---pagebreak---       Total yearly sales volume of the Community industry to unrelated customers in
      the Community of magnesium ingots and magnesium granules decreased
      since 1990. From 1991 to 1992 the decrease was almost 40%. From 1992 to
      the investigation period more than 10%, i.e. on an indexed basis from 62 to 53
      between 1992 and the investigation period (base 1990: 100).
      This decrease in sales volume resulted in a decrease in market share of the
      Community-industry from 20% in 1991 to 11% in both 1992 and in the
      investigation period.
(40.) If sales of magnesium granules are excluded from the analysis, the following,
      similar pattern emerges: yearly sales volume of the Community industry to
      unrelated customers in the Community decreased since 1990. From 1991 to
      1992 the decrease was almost 40%. From 1992 to the investigation period
      sales fell by around 20%, i.e. on an indexed basis from 55 to 44 between 1992
      and the investigation period (base 1990: 100).
      This decrease in sales volume resulted in a decrease in market share of the
      Community industry for sales of magnesium ingots from around 15% in 1991,
      to 8% in 1992 and 7% in the investigation period.
(41.) Finally, if sales transactions to related companies using the product concerned
      which were free to purchase their raw materials from independent suppliers are
      also included in the analysis, the total yearly sales volume again shows a
      decrease since 1990. From 1991 to 1992 the decrease continued and was
      almost 30%. From 1992 to the investigation period it was around 10%, i.e. on
      an indexed basis from 74 to 69 between 1992 and the investigation period
      (base 1990: 100).
      This decrease in sales volume resulted in a development of market share of
      the Community industry for its total sales of magnesium from around 30% in
      1991, to around 20% in both 1992 and in the investigation period.
                                             18
 ---pagebreak--- 2. Prices of the Community industry:
(42.) The Russian producers have argued that the Community industry obtained an
       increase in its sales prices from 1991 through 1992 into the investigation
       period.
(43.)  In this context it must be noted that prices of the Community industry improved
       from 1991 to the investigation period as a result of a market recovery. This
       price recovery reflects, as far as its pattern is concerned, world market price
       fluctuations.
       From the beginning of the investigation period however, these prices have
       declined substantially up to the end of the investigation period.
       As for the analysis of sales and market share, yearly price trends (in index form
       with the base 100 in 1990) are shown for
       - sales of magnesium ingots,
                    1990         1991         1992         1993
                          100          74           79           92
         sales of magnesium ingots and magnesium granules,
                     1990        1991          1992         1993
                          100          76            81          91
 ---pagebreak---          total sales including sales to related customers.
                    1990         1991         1992        1993
                         100           75          81          91
(44.) Prices within the investigation period decreased by about 6% between the first
      quarter and the last quarter for sales of magnesium ingots, by around 8% when
      taking account of sales both of magnesium ingots and magnesium granules
      and also by 8% if total sales of the Community industry are taken into account.
      This underlines that prices of the Community industry were under particular
      pressure during the investigation period.
3. Other factors:
(45.) As far as the financial situation, production, stocks, capacity, capacity utilisation
      and employment are concerned, no new information was received from
      interested parties after the imposition of provisional measures and now new
      information is available, therefore the provisional determinations reached
      concerning these factors are confirmed.
D. Conclusion:
(46.) In conclusion, the substantial reduction in the Community industry's sales,
      production and market share, the substantial increase in stock volume and the
      loss of employment as well as the negative development as far as the financial
      results are concerned, led to the conclusion, at the definitive stage, that the
      Community industry has been suffering material injury within the terms of
      Article 4 (1) of the basic anti-dumping Regulation.
                                             20
 ---pagebreak--- VI. Causation:
A. Price situation of the Community industry:
(47.) The Russian producers have argued that their exports have not caused the
       injury suffered by the Community industry as this industry experienced a
       negative situation in a time period before their exports gained importance.
       Furthermore, the Russian producers have submitted that their argument is
       corroborated by the fact that the situation of the Community industry improved
       in terms of resale prices as imports of magnesium originating in Russia gained
       importance.
(48.) As already mentioned in recital (69) of the provisional duty Regulation, it has
       been acknowledged that dumped imports were not the sole cause of the
       injurious situation of the Community industry. Indeed, it was determined that
       the Community industry has faced negative developments because of a
       downturn in the market for magnesium triggered by a general downturn in the
       magnesium-using industries. However, it has also been established that since
       1991, imports of magnesium originating in the two exporting countries
       concerned increased considerably, contrary to the development of
       consumption in the Community, and have consistently been made at prices
       undercutting those of the Community industry.
       On this basis, it can be concluded that the two developments, a market
       downturn and the undisputed increase in low-priced imports originating in the
       two countries concerned, overlap, as do their consequent effects . It was
       provisionally determined that the appearance of high volumes of dumped
       imports have jeopardised the recovery of the Community industry after a
       consolidation of the market and a restructuring programme which took effect
      toward the end of 1992.
                                            21
 ---pagebreak--- (49.) In order to distinguish between the possible effects of these two factors, the
      pricing pattern of the various suppliers on the Community market has been
      analysed. These suppliers are, in decreasing order of market share during the
      investigation period, Norway (around 16%), the US (around 16%) and Canada
      (around 3%) apart from the countries concerned by this proceeding and the
      Community industry.
      An analysis of the pricing pattern of these suppliers based on the information
      received from the producers located in the exporting countries concerned, from
      the Community industry and based on import statistics for other suppliers,
      together with market research information revealed that there was a world wide
      price slump in the years 1991 and 1992. By the middle of 1992 and at the
      beginning of 1993, the market recovered leading to an increase in sales prices.
      For imports from Russia and Ukraine, throughout the period from 1990 to the
      investigation period, these were made at prices consistently and substantially
      undercutting those of the other main suppliers.
      Furthermore, the year-to-year price changes of the various suppliers indicate
      for all of them an upward price trend in the period of 1992 to the investigation
      period, in line with a price increase in the world market. On the contrary
      however, the two exporting countries concerned decreased their prices.
      The Community industry has not been able to effect price increases to the
      same extent as those of other third country suppliers. This explains why this
      industry's market share has remained relatively stable, while the market share
      of other third country suppliers substantially deteriorated from 1992 to the
      investigation period.
      This indicates that the price increase which resulted from the world market
      recovery from 1992 to the investigation period was substantially hampered for
      the Community by the pricing of the exports concerned, which undercut those
      of the other suppliers substantially, leading to the Community industry having to
      forego price increases.
                                             22
 ---pagebreak--- (50.)  Furthermore, it was established that prices of the Community industry
      deteriorated during the investigation period after having recovered somewhat at
      the beginning of it. From the first quarter to the last quarter of the investigation
      period alone prices decreased by between 6% and 8%. It was in this period that
      imports from the countries concerned increased markedly.
B. Sales channels of Russian exporters and of the Community industry:
(51.) The Russian producers have stated that their sales of the product concerned
      could not have caused injury because these sales in the Community went into
      other sales channels than those of the Community industry and were destined
      for other uses. It was claimed that the Russian material was often off-grade
      material, i.e. magnesium with a higher content of impurities, which was used for
      steel desulphurisation purposes. The Russian producers claimed that there
      was very little overlap between the channels and uses for their products and for
      those of the Community industry as the Russian producers did not sell any
      unwrought alloyed magnesium to, for example, die-casters.
(52.) As regards this claim, the following should be noted:
             First, the present investigation deals with products which are very
             similar, if not identical, in their characteristics and uses. It is considered
             that for this reason alone, the low priced sales of the imported products
             have an impact on the Community industry.
             Second, it is undisputed that the market for magnesium is highly
             transparent with the effect that not only prices realised but even price
             offers quoted have an impact on the market overall.
                                               23
 ---pagebreak---              Third, the investigation has shown that the Community industry sells
             magnesium in substantial quantities in the market segment and to
             customers in which the Russian producers have claimed to be
             specialised.
             Fourth, the investigation has not confirmed that the cooperating Russian
             producers have sold to any extent any off-grade magnesium. Indeed,
             the producers themselves have claimed that their product is of good
             quality, a statement confirmed during the investigation by the
             cooperating importers and user.
C. Other imports:
(53.) The Russian producers have finally claimed that Russian exports have mainly
      affected the position of other countries' imports.
      As already mentioned in recital (68) of the provisional duty Regulation, the
      market share of imports of magnesium originating in countries other than those
      covered by the present proceeding has actually decreased over the years
      leading to the investigation period. However, the divergence in the trend of
      Community and third country market shares does not support the claim that the
      imports concerned have not caused injury to the Community industry. The
      Community industry has opted to keep its market position by increasing its
      prices substantially less than the other suppliers.
                                           24
 ---pagebreak--- D. Purchases by the Community industry of magnesium originating in Russia
and Ukraine:
(54.) It was argued that the sole remaining Community producer had purchased
    » magnesium originating in Russia and Ukraine and had in this respect inflicted
      injury on itself.
      In this respect it was found that the Community producer has not bought any of
      the product concerned originating from these sources.
E. Conclusion:
(55.) It is therefore concluded that high volume, low-priced dumped imports of
      magnesium originating in Russia and Ukraine, taken in isolation, have caused
      material injury to the Community industry.
                                            25
 ---pagebreak--- VII. Community interest:
A. User, Aiunorf:
1. Competitive situation:
(56.) One magnesium user, Aiunorf, has submitted information. Notwithstanding the
       question whether Aiunorf is representative of user interests, it was examined
       whether the user company would be put at a disadvantage compared to
       competitors located outside the Community by the adoption of anti-dumping
       measures.
       In this respect it was established that there are few imports into the Community
       of the products which the user company and its owners manufacture, indicating
       that any impact that these companies might face due to competitive
       advantages gained by competitors located outside the Community and
       potentially benefiting from low priced input materials is limited.
2. Effect on cost of production:
(57.)  During the investigation period Aiunorf produced aluminium-based products
       containing between 0 and 5% magnesium. It has been determined that the cost
       of magnesium as a proportion of the total cost of production were substantially
       below 3%. It follows that the impact of price variations in magnesium must be
       very small.
B. Other users:
(58.) With respect to other users of magnesium, it was argued that the cost of
       magnesium represented a significant share of the overall cost of production,
       with the result that any increase in the cost of this important input would have a
       negative effect on this industry's competitive situation.
                                             26
 ---pagebreak---       In this respect, it is acknowledged that there might be an effect on this user
      industry. The anti-dumping measures imposed have therefore been designed
      to allow the continued presence on the Community market of the suppliers
      located in the exporting countries.
C. Conclusion:
(59.) In summary, it is considered that, on balance, it is in the Community interest to
      impose definitive measures in the present investigation. This view takes
      specifically into account the situation of one category of user industry which
      uses magnesium as its main raw material. The definitive measures proposed
      ensure that the effects on this part of the user industry will be limited.
                                            27
 ---pagebreak--- VIM. ANT1 DUMPING MEASURES:
A. Level of duties:
(60.) Based on the above conclusions on dumping, injury, causal link and
      Community interest, it was considered what form and level the anti-dumping
      measures would have to take in order to remove the trade distorting effects of
       injurious dumping and to restore effective competitive conditions on the
      Community magnesium market.
(61.)  In the present circumstances the overall loss-making situation of the
      Community industry of magnesium had to be taken into account as well as the
      volatility of the market.
(62.) Since the level of prices at which the injurious effects of the imports would be
      removed was higher than the dumping margin of both exporting countries
      concerned, the dumping margin was used in order to determine the level of
      measures.
B. Form of duties:
(63.) Given the material injury suffered by the Community industry in the form of
      financial losses being the result of a depression of sales prices, the nature of
      the product and possible price fluctuations resulting from demand for
      downstream products, a variable duty is considered the most appropriate form
      of duty in this case.
      Taking into account the adjustment made in the determination of the respective
      normal values at the definitive stage, such variable duties would be based on a
      minimum price of 2.602 and 2.568 ECU per ton at a CIF Community border
      level for imports of magnesium originating in Russia and Ukraine respectively
      taking into account the differences in the actual export channels used during
      the investigation period.
                                            28
 ---pagebreak--- C. Undertakings:
(64.) Having been informed of the essential facts and considerations on the basis of
      which it was intended to recommend the imposition of definitive anti-dumping
      duties, the two Russian and the Ukrainian producers offered undertakings
      concerning their exports of the product concerned to the Community. After
      examination of these offers, the Commission considered the undertakings as
      acceptable since they would eliminate the injurious effects of dumping pursuant
      to Article 10 (2) of the basic anti-dumping Regulation. Furthermore, given the
      nature of the product and given the particular terms of the undertakings, in
      particular the fact that these undertakings cover exports of the product
      concerned for the Community directly invoiced to unrelated importers, it was
      established that these undertakings could be monitored effectively.
(65.) The Commission consulted the Advisory Committee on the acceptance of
      these undertakings and, since objections were raised, sent a report on these
      consultations to the Council. In accordance with Articles 9 and 10 (1) of the
      basic anti-dumping Regulation, the undertakings offered were accepted by
      Commission Decision
(66.) Notwithstanding the acceptance of the undertakings offered by the Russian
      and Ukrainian producers, a residual duty should be imposed on imports of the
      product concerned originating in Russia and Ukraine, in order to underpin the
      undertakings by avoiding their circumvention. This residual duty should be
      imposed in the form of a variable duty as discussed above.
                                            29
 ---pagebreak--- IX. COLLECTION OF THE PROVISIONAL DUTIES:
(67.) In view of the magnitude of the dumping margins found for the exporting
      producers and in light of the seriousness of the injury, in particular in light of the
      level of price undercutting and price underselling, it is considered necessary
      that amounts secured by way of provisional anti-dumping duties for
      transactions involving the product concerned, i.e. exclusively magnesium at the
      definitive stage should be definitively collected for all companies, including
      those from which undertakings have been accepted, at the level of the
      definitive duties,
HAS ADOPTED THIS REGULATION :
                                           30
 ---pagebreak---                                      Article 1
1. Definitive anti-dumping duties are hereby imposed on imports of unwrought
   pure magnesium falling within CN codes 8104 11 00 and ex 8104 19 00 (Taric
   code 8104 19 00 10) and originating in Russia and Ukraine.
   For the purpose of the present Regulation unwrought pure magnesium is
   defined as unwrought magnesium unintentionally containing small amounts of
   other elements as impurities.
   The present Regulation does not cover unwrought alloyed magnesium which is
   unwrought magnesium containing more than 3% by weight of intentionally
   added alloying elements such as aluminium and zinc.
2. For the above product originating in Russia, the amount of anti-dumping duty
   shall be the difference between the minimum import price of ECU 2.602 per
   metric tonne product and the CIF Community frontier price in all cases where
   the CIF Community frontier price per metric tonne product is less than the
   minimum import price (Taric additional code: 8899) except for imports of the
   product directly invoiced to an unrelated importer after the entry into force of
   this Regulation by the following producers located in Russia:
                  Avisma Titanium-Magnesium Works, Berezniki, Perm region,
                  (Taric additional code: 8898)
                  Solikamsk Magnesium Works, Solikamsk, Perm region,
                  (Taric additional code: 8903)
   which shall be exempt from the duty subject to the above conditions pursuant
   to the acceptance of undertakings by Commission Decision ....
                                         31
 ---pagebreak---         For the above product originating in Ukraine, the amount of anti-dumping duty
        shall be the difference between the minimum import price of ECU 2.568 per
        metric tonne product and the CIF Community frontier price in all cases where
        the CIF Community frontier price per metric tonne product is less than the
        minimum import price (Taric additional code: 8902) except for imports of the
        product directly invoiced to an unrelated importer after the entry into force of
        this Regulation by the following producers located in Ukraine.
                       Concern Oriana, Kalush, Ivano-Frankovsk region
                       (Taric additional code: 8901).
        which shall be exempt from the duty subject to the above conditions pursuant
        to the acceptance of an undertaking by Commission Decision ....
4.      Unless otherwise specified, the provisions in force concerning customs duties
        shall apply.
                                          Article 2
The amounts secured by way of provisional anti-dumping duty under Regulation
No. 2997/95 and related to imports of unwrought pure magnesium as defined in
Article 1 shall be definitively collected at the duty rate definitively imposed.
Amounts secured in excess of the definitive rate of anti-dumping duty and related to
imports of unwrought pure magnesium shall be released.
Amounts secured by way of provisional anti-dumping duty under Regulation
No. 2997/95 and related to imports of unwrought alloyed magnesium as defined in
Article 1 shall be released.
                                               32
 ---pagebreak---                                         Article 3
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,
                                             33
 ---pagebreak---                                                                     ISSN 0254-1475
                                                             COM(96) 307 final
                                              DOCUMENTS
EN                                                                        02    il
                                    Catalogue number : CB-CO-96-316-EN-C
                                                              ISBN 92-78-05853-X
Office for Official Publications of the European Communities
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