Commission Implementing Regulation (EU) 2021/1811 of 14 October 2021 imposing a provisional anti-dumping duty on imports of calcium silicon originating in the People’s Republic of China

(187) Import prices from the PRC increased by 6 % from 2017 to 2018 and again from 2018 to 2019, but then fell sharply by 15,5 % from 2019 to the investigation period reaching a price level 5 % lower than that in 2017. Import prices from the PRC were below Union sales prices as reported in Table 8, with a difference between 15 %-30 % during the IP.

(189) The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary for discounts and commissions. This type-by-type analysis took into account whether sales were made in bulk or cored wire, as pointed out by Eurofer in its comments on initiation of the investigation described in recital (9). The result of the comparison was expressed as a percentage of the Union producers’ theoretical turnover during the investigation period. The weighted average undercutting found was 10,6 %. Bearing in mind that the product under investigation is a commodity, this was considered to be a significant undercutting margin. All product types of the cooperating exporting producers were found to be undercutting. These imports represented around 57 % of total imports.

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

(191) For the injury determination, all indicators were based on the two cooperating Union producers, which represented the totality of the Union industry as stated in recital (15).

(193) Production of the Union industry fell dramatically by 91 % from 2017 to 2020 while capacity increased by 3 %, resulting in a 91 % drop in capacity utilisation.

(194) The Union industry produces calcium silicon on furnaces, which can also be used to produce other ferro-alloys. In these circumstances, Union production of calcium silicon was not continuous over the period considered as Union producers can optimise profits or minimise losses by producing the most beneficial product on the same furnaces.

(195) Other reasons for interruptions in production were identified as technical issues with production equipment and essential maintenance. In order to supply its main customers during periods of no production, the Union industry supplied from stocks and at times from purchases.

(196) Production was low during 2019 and especially low during the investigation period, when producers were faced with price suppression from substantial volumes of low-priced calcium silicon imports, mainly from the PRC, despite lower demand in the Union due to reduced steel production and the Covid-19 pandemic.

(197) In addition, energy prices, which make up a significant proportion of manufacturing costs, were high. As Ferropem had built up calcium silicon stocks in 2018 and 2019, they decided to significantly reduce production in 2020.

(198) Ferropem is currently undertaking a significant restructuring programme of its activities. In respect of calcium silicon, Ferroglobe (Ferropem’s parent company) has indicated that it is committed to continue the production of the product concerned in the Union and has two current projects in this regard.

(199) The other Union producer (OFZ) indicated that it has substantial spare capacity that could be used to increase Union production provided fair competition conditions prevail on the market.

(200) The production capacity indicated for the Union industry is based on the capacity of furnaces, which were used for production of calcium silicon during the period considered. However, as mentioned by Eurofer and the German Steel Federation in their submission on the initiation of the investigation, it should be clarified that these furnaces were also used to produce other products, and therefore the capacity utilisation rates shown in Table 5 (which consider only calcium silicon) were low throughout the period considered. Nevertheless, the capacity indicated in the Union could be substantially increased at short notice by producing calcium silicon on the other furnaces, which were producing other ferro-alloys in the period considered. The small increase in the production capacity over the period considered was the result of improvements in efficiency.

(201) Therefore, the investigation concluded that the capacity of the Union industry shown in Table 5 is indicative of the conditions prevailing during the period considered, but that it can be increased substantially in the short term.

(203) The above table shows the sales volume of the Union producers of own production. The free market sales volume on the Union market decreased by 75 % between 2017 and the end of the investigation period. The reduced sales volumes followed the substantial fall in production shown above in Table 5.

(204) The Union industry lost about half of its market share between 2017 and the investigation period. The fall in market share was not as pronounced as the fall in sales volumes, but it occurred due to the continuation of imports, particularly from the PRC, in substantial volumes.

(205) In a context of decreasing consumption, the Union industry not only lost substantial sales volumes in the Union market, but also market share. Therefore, the Union industry position on the Union market has clearly contracted in both absolute and relative terms.

(207) The number of employees varied during the period considered reflecting the reallocation of certain employees to different products during periods of fluctuating production. As such the number of FTE employees working on calcium silicon fell by 73 % during the period considered.

(208) Productivity increased by 11 % from 2017 to 2018 and then declined by 21 % from 2018 to 2019 and fell substantially by 63 % between 2019 and the investigation period. Taking into account the fluctuations in employment levels shown in Table 7, the trend mainly followed that of production, which fell substantially over the period considered.

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

(210) This is the only anti-dumping investigation regarding the product concerned. Therefore, no data was available to assess the effects of possible past dumping.

(212) The average unit sales prices on the Union free market to unrelated customers increased by 14 % from 2017 to 2018 and remained at that level for 2019 before falling by 8 % in the investigation period. Prices in the investigation period were 5 % higher than in 2017. In 2018 and 2019, increasing sales prices were consistent with increasing costs. As sales volumes decreased substantially, sales prices on the Union market stagnated in 2019 and then fell significantly in 2020. Union producers’ prices were negatively impacted by continuing substantial low priced imports from China, which supressed prices in the Union market.

(213) The unit costs of production increased steadily by over 50 % from 2017 to 2020. These cost increases were, to a large degree, due to the substantial decrease in production throughout the period under investigation, which came about for the reasons outlined in recitals (193) to (197). In particular, the low levels of production in 2019 and 2020 meant that fixed costs (e.g. depreciation) had to be recovered over lower production volumes leading to higher unit costs of production. In addition there were increases in certain production costs such as energy.

(215) Labour costs per employee increased by 22 % from 2017 to 2018 and then decreased by 27 % between 2018 and the investigation period. This fluctuation results from significant differences in production quantity and labour rates of the two Union producers.

(217) Closing stock levels increased steadily from 2017 to 2019 before decreasing substantially from 2019 to the end of the investigation period. The Union producers did not produce all of the time during the period considered, but made production decisions depending on the market situation for calcium silicon and other ferro-alloys and the levels of calcium silicon in stock. As such, stock levels are generally higher following periods of production and then decrease during periods when producers decide to sell from stocks.

(218) Closing stocks as a percentage of production increased throughout the period considered due particularly to the substantial reduction in production shown in Table 4.

(220) The Commission established the profitability of sales of the Union producers’ own production by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. In 2018, profitability was maintained at a level similar to that of 2017, because increases in costs were matched by higher sales prices, therefore the Union industry achieved profit levels between 9,7 % and 12,5 % on turnover. However, lower sales volumes, stagnant market prices and further increases in costs saw profitability fall to levels between 0,9 % and 2,7 % in 2019. In 2020, as production and sales volumes fell further, market prices fell and costs increased again, resulting in very large losses. Eurofer used annual reports of Ferroglobe to challenge the profit margins quoted in the complaint. However, the above profit margins relate to the sales of the producing entities (Ferropem and OFZ) and relate solely to calcium silicon, while the reports quoted give the profitability of all products manufactured by Ferroglobe.

(221) The net cash flow is the ability of the Union producers to self-finance their activities. Cash flow was substantially positive in 2017 and the investigation period and substantially negative in 2018 and 2019. This trend was generally in line with changes in closing stock levels. When closing stock levels decreased in the investigation period, cash flow was positive as sales were made from stock, whereas in 2018 and 2019 when closing stock levels increased, cash flow from sales was reduced.

(222) The average investments during the period considered were low, less than EUR 600 000 per year. The higher investment in 2019 is consistent with the small increase in capacity in 2020.

(223) The return on investments is the profit in percentage of the net book value of investments. While the net book value of investments increased slightly over the period considered, the main reason for the dramatic fall in the return on investment in 2019 and 2020 was due to the substantial fall in profitability in those years.

(224) Although no large investments were planned during the period considered, the Union producers’ ability to raise capital would have deteriorated over that period as their level of profitability declined.

(225) During the period considered, imports from the country concerned fell by 22 % but gained considerably in market share as consumption fell by 50 %. Imports from the PRC substantially increased their market share (from 38,7 % to 60,8 %). In addition, Chinese import prices were consistently low and significantly below Union industry prices throughout the period considered. During the investigation period, the import prices of the cooperating exporting producers undercut Union industry prices by 10,6 % on average. As such, the Union industry was unable to raise prices to the same extent as costs were increasing because of the downward pressure on prices caused by imports from China.

(226) The injury suffered by the Union industry was a combination of volume and price effects. Many volume indicators showed a significant negative trend over the period considered: production fell by 91 %, capacity utilisation by 91 %, sales volume in the Union market fell by 75 % and its market share fell by 25 percentage points. In addition, employment fell by 73 %, average labour costs fell by 11 % and productivity fell by 67 %.

(227) The average prices of the Union industry increased by only 5 % over the period considered and its costs rose by 51 %. This had a dramatic impact on profitability and return on investment which fell from reasonable levels in 2017 and 2018 to a substantial loss situation in the investigation period. Investments were low throughout the period.

(228) Very few indicators showed a positive development. Capacity showed a slightly positive trend due to improvements in the efficiency of production. Calcium silicon is normally sold from stock, and it was evident that the development of cash flow and stocks were closely linked. As stocks were built up in 2018 and 2019, cash flow was negative, but then in 2020 when production was lower and larger quantities were sold from stock, cash flow improved and became positive. The relatively small captive use increased by 3 % over the period, but this development had only a marginal impact on the overall situation of the industry.

(229) In summary, consumption on the Union market was falling rapidly, but the Union industry was not able to maintain its market share. Imports from the PRC were substantial throughout the period considered, at prices which were lower than the Union industry prices. At the end of 2019 and in 2020, the Union industry was selling at prices which no longer covered its costs and consequently the industry substantially reduced its production and sales levels. The largest Union producer reduced the production significantly in 2020, and in the investigation period sales were made largely from stock. This situation was not sustainable and a restructuring plan was developed, which involved a possible closure of the site used for the production of calcium silicon.

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

(231) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the country concerned caused material injury to the Union industry. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could, at the same time, have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the dumped imports from the country concerned was not attributed to the dumped imports. These factors are: the impact of the fall in consumption due to contraction in demand by the steel industry, imports from third countries, the export performance of the Union industry, increased costs of production in the Union, the impact of imports to fulfil demand and captive use.

(232) The volume of imports from the PRC decreased (as shown in Table 3) by 22 % from 2017 to the investigation period. However, the market share of the PRC increased by 57 %, i.e. from 38,7 % to 60,8 %. This was at the detriment of the Union industry. Indeed, over the same period (as shown in Table 6), the Union industry sales on the free market decreased by 75 % and its market share on the free market fell from 50,5 % to 25,1 %, a decrease of 50 %.

(233) The prices of the dumped imports decreased by 5 % over the period considered (as shown in Table 4). In comparison, the Union industry prices on the free market increased by 6 % over the same period. The Chinese imports, ever more present in the Union market throughout the period considered, were made at prices that continuously undercut those of the Union industry.

(234) The pressure exerted by the dumped imports also caused significant price suppression as evidenced by the fact that the Union industry was unable to raise prices at the same rate as costs. Indeed, as shown in Table 8, during the IP the costs of production were more than 20 % higher than the Union industry’s sales prices. By 2019, this prevention of price increases caused the profitability of the Union industry to fall to below 3 %, which is clearly an unsustainable level. Over the period 2017 to 2019, imports from the PRC decreased in volume by only 6 % but their market share increased from 38,7 % to 55,3 % market share, while the market share of the Union industry dropped from 50,5 % to 29,5 %. Indeed, despite a decrease in consumption between 2017 and 2019 of 34 %, Chinese imports continued to gain market share from the Union industry. In the same period, Chinese import prices increased by 12 % (Table 4), while the Union industry prices increased more, by 14 %, but much less than the cost of production, that increased by 27 %. So already by 2019, the Union industry was suffering from material injury caused by the dumped imports.

(235) In 2020, Chinese prices fell by a further 16 % as compared to 2019 and the market share of the Chinese imports increased from 55 % to 61 %, an increase of 10 %. In the same period, the Union industry prices fell by 8,2 %, its cost of production increased by 19 %, and its market share fell by 15 %, going from 29,5 % to 25,1 %. This had a substantial impact on the Union industry, causing its profitability to become heavily negative in the investigation period.

(236) On the basis of the above, the Commission provisionally concluded that the imports from China caused material injury to the Union industry. Such injury had both volume and price effects.

(237) The development of consumption shown in Table 2 was considered as the main cause of injury by Eurofer and the German Steel Federation in their submissions on initiation. It fell by 50 % over the period considered. This development reflected lower demand from the main user sector (the steel industry). The steel industry reduced their purchases of calcium silicon by using its inventories of calcium silicon and over the period considered crude steel production fell by 18 %.

(238) In 2018 the consumption of calcium silicon fell by 14 % as compared to 2017 and the Union industry was still able to adjust its business to this fall, so that the profitability of calcium silicon sales was maintained at above 10 %. However, in 2019 the situation was no longer sustainable for the Union industry, as Chinese import penetration meant that the Union industry production and sales fell to levels that did not enable it to cover its rising unit costs. In 2020, the year of the start of the Covid-19 pandemic, consumption fell by a further 25 %.

(239) It was argued by both Eurofer and the German Steel Federation that the fall in production of crude steel was the main reason for the injury suffered by the calcium silicon industry rather than Chinese imports.

(240) However, against the backdrop of decreasing consumption the market share of the PRC increased by 57 %, i.e. from 38,7 % to 60,8 % while the Union industry’s fall in production, sales volume, market share, profitability, employment and return on investment showed bigger declines than the consumption. This is because the Chinese market penetration at low prices was causing substantial damage to these injury indicators.

(241) Therefore, the fall in consumption did not break the causal link between the dumped imports from the PRC and the material injury suffered by the Union industry. Furthermore, as pointed out by Eurofer, the Covid-19 pandemic began to have an impact in 2020 while an injurious situation had already been created by 2019. Therefore, the Covid-19 pandemic should be seen as an exacerbating factor in 2020.

(242) The Union industry cost of production increased for two main reasons. Firstly, the electricity costs used in the production of calcium silicon, which represent a significant proportion of the costs of production (up to 40 % in the period considered), increased for the largest Union producer by over 30 % over the period considered.

(243) Secondly, the unit cost of production increased substantially as a result of the lower production and sales quantities of the Union industry over the period considered. This meant that fixed costs were recovered over lower volumes of production and sales, which increased the unit fixed cost element in the unit costs of production.

(244) Eurofer claimed that Ferroglobe’s second quarter of 2020 Business Review indicated that there had been cost improvements attributable to a decrease in energy prices. However, this Business Review relates to Ferroglobe, which operates in several countries, and is not solely related to Ferrropem at its site used for calcium silicon production. Therefore, the argument could not be accepted.

(245) In 2018, the Union industry was able to maintain its profit levels above 10 % despite increases in electricity costs, as it was able to pass on those cost increases to its customers. However, in 2019 the Union industry was no longer able to increase prices due to the price pressure of the Chinese imports which, by 2019, were dominating the market (with a 55 % market share) and acting as its price setters. The Union industry was not able to follow such low import prices in 2019. This contributed to Ferropem’s decision to decrease significantly production in 2020.

(246) Therefore, it should be concluded that increases in the cost of production were not a cause of injury. It was the low priced Chinese imports, which increased their share on the Union market, even in the situation of a fall in consumption, to the detriment of the Union industry and prevented the Union industry to increase their prices to profitable levels.

(247) Purchases of calcium silicon from outside the Union (mainly from Argentina) were made by the Union industry during the period considered. The Commission therefore examined whether the decision to import calcium silicon had caused injury to the Union industry because of its impact on production and sales levels and, therefore, profitability. These imports, that fluctuated throughout the period considered and represent 15 % of total sales in that period, were generally made at times of technical issues with their Union production facilities to satisfy customer orders. Therefore, they allowed the Union industry to meet demand and as such cannot be considered to have contributed to the injury suffered by the Union industry. In addition, such purchases were not being made during the IP when the Union industry faced the most substantive injury.

(248) Eurofer pointed out that as the Union industry produced calcium silicon on the same equipment as other products, a switch to other products would prevent the production of calcium silicon.

(249) However, the investigation revealed that the Union producers had spare capacity throughout the period considered even taking into account these other ferroalloys. Therefore, it is clear that production of other products did not present a barrier to the production of calcium silicon and were not an indirect cause of injury during the period considered.

(251) Imports from Brazil increased by 30 % over the period considered. Their market share increased from 4,4 % to 11,5 % in this period. These imports were at similar prices to those from China in the period 2017 to 2019, but undercut the Chinese prices by 10 % in 2020. Brazilian imports should therefore be considered as a contributory factor to the injury suffered by the Union industry especially in 2020. This issue was also raised by Eurofer and the German Steel Federation in the context of comments on the Complaint.

(252) However, as the volume of such imports was always at least 5 times lower than those from China, it is clear that Chinese imports were a more important causation factor.

(253) Imports from other third countries were mainly from Argentina, including purchases made by one of the Union producers from a related company, but these imports were not made at volumes and prices which caused injury throughout the period considered and, as explained in recital (247), they allowed the Union industry to meet demand at concrete times of technical issues.

(254) Therefore, while imports took place in significant quantities and at low prices from Brazil, these were not significant enough to attenuate the causal link between the substantial quantities of imports of calcium silicon from China at low prices and the injury caused to the Union industry.

(256) Exports of the Union industry decreased by 46 % over the period considered, which was considerably less than the 75 % decrease in sales volume by Union producers on the Union market over the same period.

(257) The average price of these exports first increased by 25 % in 2018. That level was then maintained in 2019 before decreasing to a level that was still significantly above the 2017 level in the investigation period (+ 14 %). The average price of these exports was slightly lower than that the Union industry could have achieved on the Union market in 2017, but then export and domestic sale price levels remained at similar levels for the rest of the period considered.

(258) In view of the volumes and price levels of the Union industry exports to third countries, and given that the export sales did not deteriorate as much as the sales on the Union market (shown in Table 6), the Commission provisionally concluded that the export performance contributed, but only to a minimal extent, to the material injury suffered by the Union industry.

(259) The Union industry used the product concerned captively to produce other downstream ferroalloys. As shown in Table 2, captive use increased in 2018 and 2019 but over the period considered it only increased by 3 %. In addition, the captive market represented less than 10 % of the total market throughout the period considered.

(260) Therefore, it was provisionally concluded that developments in the captive market did not have a material impact on the Union industry.

(261) The dumped imports from China caused material injury to the Union industry in 2019 and 2020 because of the massive market penetration achieved at the expense of the Union industry. In terms of prices, the increasing market share of imports continuously undercut those of the Union industry and created substantial price pressure and prevented the market price increases which were necessary for the Union industry to achieve reasonable profit levels.

(262) Other factors also had an impact on the Union industry. The most important of these factors was the fall in consumption because of weaker demand from the steel industry. However, bearing in mind that the Union industry suffered falls in production, sales volume, market share and profitability much greater than the fall in consumption (50 %), and that against such a backdrop of decreasing consumption, the market share of the PRC increased by 57 %, i.e. from 38,7 % to 60,8 %, it is concluded that the fall in consumption was simply a contributing factor. The main cause of injury was the Chinese imports which had significantly penetrated the Union market at low prices throughout the period considered.

(263) In addition, imports from Brazil, and the export performance of the Union industry impacted the situation of the Union industry. However, these factors had a very limited impact on the industry, because imports from Brazil were at similar prices to the Chinese imports but at much lower volumes. The massive Chinese imports at prices much lower than those of the Union industry are the main reason why the Union industry lost sales and could not raise its prices in line with its cost of production, which led to severe losses.

(264) The Commission thus distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports.

(265) On the basis of the above, the Commission concluded at this stage that the dumped imports from the country concerned caused material injury to the Union industry and that the other factors, considered individually or collectively, did not attenuate the causal link between the dumped imports and the material injury. The injury is clear in the evolution of production, capacity utilisation, sales volume in the Union market, market share, employment, productivity, cost of production, profitability and return on investments.

(266) In the present case, the complainants claimed that there were raw material distortions within the meaning of Article 7(2a) of the basic Regulation. Thus, in order to assess the appropriate level of measures, the Commission first established the amount of duty necessary to eliminate the injury suffered by the Union industry in the absence of distortions under Article 7(2a) of the basic Regulation. Then it examined whether the dumping margin of the cooperating exporting producers would be higher than their underselling margin (see recitals (275) to (281) below).

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

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

(269) As a first step, the Commission established a basic profit covering full costs under normal conditions of competition. In 2017 and 2018, before the Union industry suffered material injury, the Union industry weighted average profitability rate was between 9,7 % and 12,5 % on turnover as shown in Table 11. Such profit margin was deemed to be the basic profit covering full costs under normal conditions of competition in this investigation.

(270) As one of the Union producers did not produce significant quantities of calcium silicon during the investigation period, its costs were not considered reliable and appropriate for the purposes of establishing the target price. As the sales of this producer were largely made from stocks produced in 2019, the production cost of that year was considered appropriate for this investigation.

(271) On this basis, the non-injurious price is between 1 650 and 1 750 EUR/tonne, resulting from applying the above-mentioned profit margin of between 9,7 % and 12,5 % to the weighted average cost of production of the Union producers.

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

(273) The Commission then determined the underselling margin level on the basis of a comparison of the weighted average import price of the cooperating exporting producers in the country concerned, as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the Union producers on the Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average import CIF value.

(275) Since the underselling margin so calculated was lower than the margin of dumping, the Commission undertook the examination required under Article 7(2a) of the basic Regulation.

(276) The complainant provided sufficient evidence in the complaint that there are raw material distortions within the meaning of Article 7(2a) of the basic Regulation in the PRC with regard to the product concerned. According to the evidence in the complaint, electricity, accounting for 20 % of the cost of production of the product concerned, is subject to a dual pricing scheme in the PRC. Therefore, as announced in the Notice of initiation, in accordance with Article 7(2a) of the basic Regulation, the Commission investigation covered the examination of the alleged distortions and any other distortions covered by Article 7(2a) of the basic Regulation in the PRC.

(277) The Commission first identified the main raw materials, including energy, used in the production of the product concerned by each of the cooperating exporting producers. As main raw materials were considered those raw materials which are likely to represent at least 17 % of the cost of production of the product concerned. The Commission established that electricity is the only raw material that represents more than 17 % of the cost of production of the product concerned.

(278) The Commission then examined whether electricity is distorted by a dual pricing scheme or any other of the measures listed in Article 7(2a) of the basic Regulation. For this purpose the Commission used the information in the complaint as well as the information provided by the cooperating exporting producers. As explained in recital (21), the Commission sent a questionnaire in this regard to the GOC. The GOC did not reply to this questionnaire. Subsequently, the Commission informed the GOC by letter of 31 March 2021 that it may have to apply facts available in this regard in accordance with Article 18 of the basic Regulation. The GOC did not reply to this letter either.

(279) In the complaint, the complainant alleged that the price of electricity in Northern provinces of the PRC is distorted by a dual pricing scheme. To support the allegation, the complaint contained a comparison of prices of electricity in Northern provinces of the PRC, in which the main exporters of the CaSi are located, and the export price of electricity exported from the same provinces, showing that consistently the latter is significantly higher.

(280) The investigation did not find any evidence of a dual pricing scheme or any other of the measures mentioned in Article 7(2a) of the basic Regulation in the PRC. Moreover, none of the cooperating exporting producers is located in the Northern regions identified in the complaint. Two of the cooperating exporting producers stated that they purchased electricity at the market rate in their province; one of them provided evidence that the electricity rates are much higher in its region than in those identified in the complaint.

(281) The Commission therefore provisionally concluded that, based on the evidence on file at this stage of the investigation and the specific circumstances of this case, electricity was not subject to a distortion within the meaning of Article 7(2a) of the basic Regulation.

(283) Having decided to apply Article 7(2) of the basic Regulation, the Commission examined whether it could clearly conclude that it was not in the Union interest to adopt measures in this case, despite the determination of injurious dumping, in accordance with Article 21 of the basic Regulation. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers and users, such as the cored wire manufacturers and the steel industry.

(284) The Union industry represents 100 % of Union production in this investigation. A combination of factors, including increasing penetration of Chinese imports at low prices, created difficult market conditions in 2019 and this situation was made worse in 2020 by further import penetration and falls in consumption caused partly by the Covid-19 pandemic. The Union industry suffered substantial falls in production, sales volume, employment and profitability.

(285) Ferropem, the largest Union producer, was forced to begin to implement a restructuring plan, which involved a possible closure of the main calcium silicon site at Chateau Feuillet. The imposition of measures on Chinese imports would enable Ferropem to restart calcium silicon production at another site in the Union. Employment at Chateau Feuillet site was around 250 FTEs, a significant proportion of which related to calcium silicon throughout the period considered.

(286) Measures would improve market conditions for both Union producers, as they would help them recover lost market share and price pressure would be lifted if Chinese import prices were higher due to the anti-dumping duties. The measures would also facilitate Ferropem’s implementation of its restructuring plan.

(287) The non-imposition of measures would put the Union industry in jeopardy because any continuation of the unsustainable situation on the market in 2019 and 2020 would threaten future production of calcium silicon in the Union.

(288) Furthermore, the profitability, and even the existence, of the production of other ferroalloys would be threatened if such products use the same facilities as calcium silicon. This is because ferroalloy sites depend on sharing fixed costs to lower unit costs of production in order to make sites profitable.

(289) Clearly the imposition of measures would be in the interest of both the calcium silicon industry and the wider ferroalloy sector.

(290) The investigation showed that the vast majority of imports from all countries were in powder or lumps and were normally transformed into cored wire products in the Union before being sold to the largest end user industry, the steel industry. Therefore, the interest of cored wire manufacturers is considered here together with the importers.

(291) As mentioned above, two importers submitted questionnaire replies following the decision not to apply sampling. These were Affival SAS in France and Coftech G.m.b.H. in Germany. Another cored wire manufacturer, Filo D.o.o. in Slovenia, cooperated by submitting a user questionnaire as they did not import directly themselves.

(292) The investigation showed that the cored wire producers also manufacture other products in cored wire. For the co-operators mentioned above, the turnover of products containing calcium silicon compared to total turnover varied from below 10 % to almost 50 %.

(293) The cored wire producers source calcium silicon from the country concerned, other third countries and the Union industry. Their main concern was that measures on Chinese imports would disrupt the calcium silicon market in the Union and may limit imports from one of their main sources of supply.

(294) However, it is recalled that other sources of supply exist around the world, the main ones being Brazil and Argentina in the period considered and the measures are intended to restore fair competition on the Union market for the benefit of all players on that market. If measures are not imposed this could threaten the supply of calcium silicon from the two Union producers which would be to the detriment of all participants in the supply chain of calcium silicon.

(295) Information in the complaint shows that the main user industry is the steel sector. However, calcium silicon is also used in foundries and the chemical sector.

(296) Only one steel producer, AFV Acciaierie Beltrame S.p.A., completed a questionnaire. In addition, Eurofer and the German Steel Federation (Wirtschaftsvereinigung Stahl) made submissions relevant to the investigation.

(297) Eurofer and the German Steel Federation submitted that the imposition of anti-dumping duties was not in the Union interest and that there was no economic justification for the imposition of anti-dumping measures. The main concern related to the availability of supply to the steel sector. It was claimed that the Union industry had never supplied more than 42 % of the Union apparent consumption.

(298) In addition, it was claimed that capacity figures published by one of the Union producers indicated only a limited amount of free capacity. Therefore, it would be highly questionable whether the Union industry would be able to supply the users if anti-dumping duties were applied on Chinese imports.

(299) Furthermore, they argued that there was no alternative source that could replace Chinese volumes and that duties were already levied in the Union as customs duties on imports from China.

(300) In this respect, the Union industry submitted that it did not question that there should be space for different sources of supply, as long as such imports were made at fair prices. However, for now imports from the PRC take place at injurious levels which put Union production in jeopardy.

(301) In terms of sources of supply, the Commission concluded that several sources of supply currently exist including the Union producers, which have ample spare capacity, and imports from China, Brazil, and Argentina. However, it was not in the Union interest to continue to allow dumped Chinese imports to threaten the existence of the Union calcium silicon industry which has traditionally supplied a large portion of the Union market. In the absence of measures, supply problems would clearly be created for the steel industry as production in the Union may no longer be possible.

(302) The Commission also examined the likely financial impact of measures on the steel industry if measures are imposed. According to the complainant, restoring fair market conditions would not come at a disproportionate cost for the downstream industry. The information in the response of AFV Acciaierie Beltrame S.p.A. showed that calcium silicon purchases represents a very low percentage of its costs (less than 0,5 %). The imposition of measures on the steel industry will, therefore, have a marginal financial impact on the industry.

(303) On the basis of the above, the Commission concluded that there were no compelling reasons to consider that it was not in the Union interest to impose measures on imports of calcium silicon originating in the country concerned at this stage of the investigation.

(304) On the basis of the preliminary conclusions reached by the Commission on dumping, injury, causation and Union interest, provisional measures should be imposed to prevent further injury being caused to the Union industry by the dumped imports.

(305) Provisional anti-dumping measures should be imposed on imports of calcium silicon originating in the country concerned, in accordance with the lesser duty rule in Article 7(2) of the basic Regulation. The Commission compared the underselling margins and the dumping margins as stated in recital (275) above. The amount of the duties was set at the level of the lower of the dumping and the underselling margins.

(307) The individual company anti-dumping duty rates specified in this Regulation were established on the basis of the findings of this investigation. Therefore, they reflect the situation found during this investigation with respect to these companies. These duty rates are exclusively applicable to imports of the product concerned originating in the country concerned and produced by the named legal entities. Imports of the product concerned produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, should be subject to the duty rate applicable to ‘all other companies’. They should not be subject to any of the individual anti-dumping duty rates.

(308) To ensure a proper enforcement of the anti-dumping duties, the anti-dumping duty for all other companies should apply not only to the non-cooperating exporting producers in this investigation, but also to the producers which did not have exports to the Union during the investigation period.

(309) To minimise the risks of circumvention due to the difference in duty rates, special measures are needed to ensure the application of the individual anti-dumping duties. The companies with individual anti-dumping duties must present a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(3) of this regulation. Imports not accompanied by that invoice should be subject to the anti-dumping duty applicable to ‘all other companies’.

(310) While presentation of this invoice is necessary for the customs authorities of the Member States to apply the individual rates of anti-dumping duty to imports, it is not the only element to be taken into account by the customs authorities. Indeed, even if presented with an invoice meeting all the requirements set out in Article 1(3) of this regulation, the customs authorities of Member States must carry out their usual checks and may, like in all other cases, require additional documents (shipping documents, etc.) for the purpose of verifying the accuracy of the particulars contained in the declaration and ensure that the subsequent application of the lower rate of duty is justified, in compliance with customs law.

(311) Should the exports by one of the companies benefiting from lower individual duty rates increase significantly in volume after the imposition of the measures concerned, such an increase in volume could be considered as constituting in itself a change in the pattern of trade due to the imposition of measures within the meaning of Article 13(1) of the basic Regulation. In such circumstances and provided the conditions are met an anti-circumvention investigation may be initiated. This investigation may, inter alia, examine the need for the removal of individual duty rate(s) and the consequent imposition of a country-wide duty.

(312) In accordance with Article 19a of the basic Regulation, the Commission informed interested parties about the planned imposition of provisional duties. This information was also made available to the general public via DG TRADE’s website. Interested parties were given 3 working days to provide comments on the accuracy of the calculations specifically disclosed to them.

(313) No comments on the accuracy of the calculations were received.

(314) In the interests of sound administration, the Commission will invite the interested parties to submit written comments and/or to request a hearing with the Commission and/or the Hearing Officer in trade proceedings within a fixed deadline.

(315) The findings concerning the imposition of provisional duties are provisional and may be amended at the definitive stage of the investigation,

HAS ADOPTED THIS REGULATION:

Article 1

Article 2

Article 3

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

Article 1 shall apply for a period of 6 months.

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

Done at Brussels, 14 October 2021.

For the Commission The President Ursula VON DER LEYEN

(1) OJ L 176, 30.6.2016, p. 21.

(2) Notice of initiation of an anti-dumping proceeding concerning imports of calcium silicon originating in the People’s Republic of China (OJ C 58, 18.2.2021, p. 60).

(3) https://trade.ec.europa.eu/tdi/case_details.cfm?id=2514

(4) Notice on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations (OJ C 86, 16.3.2020, p. 6).

(5) Commission Implementing Regulation (EU) 2020/909 of 30 June 2020 imposing a definitive anti-dumping duty on imports of ferro-silicon originating in Russia and the People’s Republic of China, following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 (OJ L 208, 1.7.2020, p. 2).

(6) Ibid, recitals 54-60 and 111-115.

(7) Ibid, recitals 61-64.

(8) Ibid, recitals 66-69. While the right to appoint and to remove key management personnel in SOEs by the relevant State authorities, as provided for in the Chinese legislation, can be considered to reflect the corresponding ownership rights, CCP cells in enterprises, state owned and private alike, represent another important channel through which the State can interfere with business decisions. According to the PRC’s company law, a CCP organisation is to be established in every company (with at least three CCP members as specified in the CCP Constitution) and the company shall provide the necessary conditions for the activities of the party organisation. In the past, this requirement appears not to have always been followed or strictly enforced. However, since at least 2016 the CCP has reinforced its claims to control business decisions in SOEs as a matter of political principle. The CCP is also reported to exercise pressure on private companies to put ‘patriotism’ first and to follow party discipline. In 2017, it was reported that party cells existed in 70 % of some 1,86 million privately owned companies, with growing pressure for the CCP organisations to have a final say over the business decisions within their respective companies. These rules are of general application throughout the Chinese economy, across all sectors, including to the producers of calcium silicon producers and the suppliers of their inputs.

(9) Ibid, recitals 70-80.

(10) Ibid, recitals 81-86.

(11) Ibid, recitals 87-90.

(12) Ibid, recitals 91-110.

(13) See company website: http://www.sxshyh.com/html/guanyuwomen/ (accessed on 3 August 2021). ‘It is controlled by Shaanxi Nonferrous Metallurgical Mining, a subsidiary of the large-scale state-owned enterprise Shaanxi Nonferrous Group. The company has a provincial-level recognised enterprise technology centre; it is a comprehensive non-ferrous metal and ferroalloy smelting, processing, R & D, and export trading enterprise. It is a national “high-tech enterprise”, a “technological innovation demonstration enterprise” at Shaanxi Province level, a “quality benchmarking enterprise” at Shaanxi Province level, and a Director of China Ferroalloy Industry Association and a Director of Shaanxi Provincial Institute of Metals’.

(14) See notably the following excerpt: ‘Shaanxi Shenghua Metallurgical & Chemical Co., Ltd was established in November 2007. After reorganization of assets in 2013, it became a subsidiary of Shaanxi Nonferrous Metals. Under the strong leadership of the group company and the strong support of the government and the whole society, all the cadres and employees of the company united, worked hard, and achieved significant economic and social benefits, and won the first prize of Shaanxi Science and Technology Award and many others honors […]. It belongs to the fourth batch of ferroalloy enterprises approved by the Ministry of Industry and Information Technology, and has the right to import and export’. http://sxshyh.cn/index/index/about

(15) See the Park’s website – Article 68: ‘Enterprises entering high-capacity industry parks determined by the Autonomous Region can benefit from electricity preferential policies regularly announced by the Autonomous Region’. http://www.gdsnxsh.com/h-nd-226.html (accessed on 3 August 2021).

(16) In 2017, the largest five power generators electricity generation accounted for 45,5 % (Huaneng, Huadian, Guodian, Datang and State Power Investment). Adding other state-owned power generators, such as China Yangtze Power Co. Ltd and CGN, the figure would probably exceed 50 %. Source: http://www.wusuobuneng.cn/archives/22266 (accessed on 25 August 2017). According to the data for 2015 of the China Statistical Yearbook 2016, National Bureau of Statistics of China, 97 % of the aggregated production and supply of electric power and heat power was state owned (97 % by assets and 83 % in terms of number of enterprises). See Report, p. 218.

(17) http://www.sxshyh.com/html/guanyuwomen/lingdaotuandui/

(18) See article of 20 July 2020 on company website: http://www.sxshyh.com/html/xinwenzixun/gongsixinwen/301.html (last accessed on 27 July 2021). Other such accounts of Party-building work are available. See also the description of another meeting in February 2018: ‘The event was hosted by the company’s Party Secretary and General Manager Comrade Wei Xinhua. At the meeting, Comarde Yang Hui, Deputy Secretary of the Party Committee, Secretary of the Disciplinary Committee, and Chairman of the Labor Union at Shenghua Metallurgical Chemical Industry Co., Ltd led the Non-Ferrous Group’s “Unbalanced and Insufficient Development” Special Investigation topic, and clarified the purpose and importance of the discussion: in order to thoroughly implement the spirit of the 19th National Congress of the Communist Party of China, in accordance with the documents and requirements of the Party Committee of the Nonferrous Metals Group Corporation and the Party Committee of the Metallurgical Group, starting from the aspects of Party-building work, production and operation, internal control management, reform and innovation, and carefully analyzing the symptoms and causes of the company’s own development imbalances and deficiencies and propose solutions and measures.’ http://www.sxshyh.com/html/dangqungongzuo/dangjiangongzuo/2018/0205/211.html (accessed on 27 July 2021).

(19) See point IX.5 of the Catalogue. https://www.ndrc.gov.cn/yjzxDownload/20200812xbdqgllcyfzml.pdf (accessed on 3 August 2021).

(20) Report – Chapter 10, p. 221-230.

(21) For instance, reforms in 2002 detached the power generation from transmission and distribution networks and the two are now operated by separate entities.

(22) Opinions Regarding the Deepening of the Power Sector’s Reform issued in March 2015 by the CCP Central Committee and the State Council.

(23) https://www.ndrc.gov.cn/xxgk/zcfb/tz/202012/t20201202_1252094.html?code=&state=123 (accessed on 3 August 2021).

(24) Notably ‘Local government departments shall, in coordination with the National Energy Administration’s seconded entity, report to the National Development and Reform Commission and the State Energy Administration in a timely manner on the signing of medium- and long-term contracts as well as on relevant issues, and ensure the connection of medium- and long-term contracts signature with the spot power.’

(25) http://www.gov.cn/zhengce/content/2021-01/06/content_5577440.htm (accessed on 3 August 2021).

(26) Report – Chapter 10.

(27) Report – Chapter 12, p. 269.

(28) Commission Implementing Regulation (EU) 2021/633 of 14 April 2021 imposing a definitive anti-dumping duty on imports of monosodium glutamate originating in the People’s Republic of China and in Indonesia following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council (OJ L 132, 19.4.2021, p. 63), recital 81.

(29) Available at the NEA website: www.nea.gov.cn/2021-05/18/c_139953498.htm (accessed on 3 August 2021).

(30) NDRC Notice No 902 (2020) https://www.ndrc.gov.cn/xxgk/zcfb/tz/202012/t20201207_1252389.html?code=&state=123 (accessed on 5 August 2021).

(31) Notice 338 (2021). www.ndrc.gov.cn/xxgk/zcfb/tz/202104/t20210429_1278643.html (accessed on 3 August 2021).

(32) See Nasdaq website article (original by Reuters Beijing Newsroom). China grants one-year trial extensions at 15 coal mines to boost output. 4 August 2021. https://www.nasdaq.com/articles/china-grants-one-year-trial-extensions-at-15-coal-mines-to-boost-output-2021-08-04.

(33) Report – Section 12.3.1.1. Limestone and quartzite feature notably in the Plan’s Annex 4 concerning design standards for the minimum mining scale of key minerals.

(34) Available at: https://qdd.oecd.org/subject.aspx?Subject=ExportRestrictions_IndustrialRawMaterials

(35) Company website. http://www.sxshyh.com/html/guanyuwomen/

(36) See article in the Ningxia News: Ningxia Autonomous Region adds 5 more enterprise technology centers. 27 October 2020. http://www.nxnews.net/sz/nxdj/202010/t20201027_6904926.html (accessed on 6 August 2021).

(37) See article in the Ningxia Daily: Ningxia strengthens, extends and expands the supply chain and to create an upgraded raw material industry. 11 September 2020. http://nx.cnr.cn/xwdd/20200911/t20200911_525250053.shtml (accessed on 5 August 2021).

(38) European Union – Anti-dumping measures on Biodiesel from Argentina, Report of Appellate Body, WT/DS473/AB/R, §6.23.

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

(40) https://ec.europa.eu/trade/policy/countries-and-regions/countries/brazil/

(41) https://www.jornalminasgerais.mg.gov.br/?dataJornal=2021-03-25#caderno-jornal

(42) https://www.jornalminasgerais.mg.gov.br/?dataJornal=2021-03-13#caderno-jornal

(43) https://www.agora-energiewende.de/fileadmin/Projekte/2019/Brazil_Country_Profile/155_CountryProf_Brazil_EN_WEB.pdf (page 31).

(44) ACR e ACL: as diferenças entre os ambientes de contratação (esferaenergia.com.br)

(45) The establishment of the undistorted value is explained in recital (145).

(46) The establishment of the undistorted value is explained in recital (146).

(47) The establishment of the undistorted value is explained in recital (148).

(48) Regulation (EU) 2015/755 of the European Parliament and of the Council of 29 April 2015 on common rules for imports from certain third countries (OJ L 123, 19.5.2015, p. 33).

(49) https://www.ilo.org/ilostat/faces/oracle/webcenter/portalapp/pagehierarchy/Page21.jspx?_afrLoop=2007202804813928&_afrWindowMode=0&_afrWindowId=ejmgka3iz_63#!%40%40%3F_afrWindowId%3Dejmgka3iz_63%26_afrLoop%3D2007202804813928%26_afrWindowMode%3D0%26_adf.ctrl-state%3Dejmgka3iz_119

(50) https://www.jornalcontabil.com.br/quanto-custa-um-funcionario-aprenda-a-calcular/ or https://establishbrazil.com/articles/whats-real-cost-employee.

(51) http://www.edp.com.br/distribuicao-es/saiba-mais/informativos/tarifas-aplicadas-a-clientes-atendidos-em-alta-e-media-tensao-(grupo-a)

(52) http://www.aneel.gov.br/a-aneel

(53) http://www.aneel.gov.br/bandeiras-tarifarias

(54) http://www.edp.com.br/distribuicao-es/saiba-mais/informativos/bandeira-tarifaria

(55) https://www.jornalminasgerais.mg.gov.br/?dataJornal=2021-03-13#caderno-jornal

(56) The import volume figures quoted here in Table 3 have been extrapolated. The 4 Member States represented 82,6 % in 2017, 72,7 %, in 2018, 95,2 % in 2019 and 94,8 % in the investigation period.