Commission Implementing Regulation (EU) 2023/968 of 16 May 2023 imposing a definitive anti-dumping duty on imports of certain heavy plate of non-alloy or other alloy steel originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

COMMISSION IMPLEMENTING REGULATION (EU) 2023/968 of 16 May 2023 imposing a definitive anti-dumping duty on imports of certain heavy plate of non-alloy or other alloy steel originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council

THE EUROPEAN COMMISSION,

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

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Article 11(2) thereof,

Having regard to Regulation (EU) 2015/477 of the European Parliament and of the Council of 11 March 2015 on measures that the European Union may take in relation to the combined effect of anti-dumping or anti-subsidy measures with safeguard measures (2), and in particular Article 1 thereof,

Whereas:

(1) By Implementing Regulation (EU) 2017/336 (3), the European Commission (‘the Commission’) imposed anti-dumping duties on imports of certain heavy plates of non-alloy or other alloy steel, originating in the People’s Republic of China, (‘the PRC’ or ‘China’ or ‘the country concerned’), (‘the original measures’). The investigation that led to the imposition of the original measures will be referred to hereinafter as ‘the original investigation’.

(2) By Implementing Regulation (EU) 2019/1382 (4) (‘the safeguard Regulation’), the Commission amended certain Regulations imposing anti-dumping or anti-subsidy measures on certain steel products subject to safeguard measures.

(3) The anti-dumping duties currently in force are at rates ranging between 65,1 % and 73,7 % on imports from the sampled exporting producers; at the rate of 70,6 % on imports from the non-sampled cooperating companies; and at the rate of 73,7 % on imports from all other companies from China.

(4) Following the publication of a notice of impending expiry (5) the Commission ('the Commission') received a request for a review pursuant to Article 11(2) of the basic Regulation.

(5) The request for review was submitted on 26 November 2021 by the European Steel Association EUROFER (‘the applicant’) on behalf of the Union industry of certain heavy plates of non-alloy or other alloy steel in the sense of Article 5(4) of the basic Regulation.

(6) The request for review was based on the grounds that the expiry of the measures would be likely to result in continuation or recurrence of dumping and of injury to the Union industry.

(7) Having determined, after consulting the Committee established by Article 15(1) of the basic Regulation, that sufficient evidence existed for the initiation of an expiry review, the Commission initiated, on 25 February 2022, an expiry review with regard to imports into the Union of certain heavy plates of non-alloy or other alloy steel originating in China on the basis of Article 11(2) of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (6) (‘the Notice of Initiation’).

(8) The investigation of continuation or recurrence of dumping covered the period from 1 January 2021 to 31 December 2021 (‘review investigation period’). The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2018 to the end of the review investigation period (‘the period considered’).

(9) In the Notice of Initiation, interested parties were invited to contact the Commission in order to participate in the investigation. In addition, the Commission specifically informed the applicant and other known Union producers, the known producers in the PRC and the authorities of the PRC, known importers, users, traders, as well as associations known to be concerned, about the initiation of the expiry review and invited them to participate.

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

(11) No parties requested to be heard.

(12) The Commission received comments on initiation from China Iron and Steel Association (‘CISA’) and Primex Steel Trading GmbH (‘Primex’). The applicant also provided comments in this regard.

(13) Primex claimed that the request did not contain sufficient evidence of likelihood of recurrence or continuation of dumping. In particular, Primex claimed that the level of imports in the Union in case the measures are terminated will depend not only on the spare capacity in the PRC but also on the demand in the Union, price and cost relations as well as the intensity of competition on the world market, the existence of trade barriers on the world market and the development of exchange rates. Primex also claimed that the different sources for the spare capacity used by the applicant in the request raised doubt about the validity of this data. Primex stated that due to the change of the steel policy in China, including a reduction in certain export VAT refunds, there will be a moderate increase of imports into the Union in case measures were terminated. Primex also claimed that the Union market was not as attractive for the Chinese exporters as the applicant argued in the request for review.

(14) The analysis of the request has shown that there was sufficient evidence at initiation stage pointing to a likelihood of continuation or recurrence of dumping should the anti-dumping measures applicable to imports from the PRC be allowed to lapse. The applicant based its analysis not only on the spare capacity in the PRC, but also on the attractiveness of the Union market due to its size and the established network of trading companies that the large Chinese heavy plate producers have in the Union, the trade defence measures imposed by third countries, and the unfair pricing behaviour of the PRC on third country markets. The legal standard of evidence required for an initiation (“sufficient evidence of dumping, injury and a causal link”) is lower than that required to reach a final determination (7). The requirement to provide sufficient evidence is limited to information which may be “reasonably available” to the requesting party (8). The information provided in the request is not required to constitute irrefutable evidence of the existence of the facts alleged (9). Therefore these claims were rejected.

(15) Primex disagreed with the applicant’s selection for the representative country, i.e. Brazil. In particular, Primex claimed that: the Brazilian market was smaller than the Chinese market: the Brazilian company Usinas Siderúrgicas de Minas Gerais SA (‘Usiminas’), used by the applicant for the calculation of the selling, general and administrative (‘SG&A’) costs and the profit margin, was not appropriate as this company has a dominant market position on the domestic market; the Brazilian market is protected from international import competition by anti-dumping duties against imports from Ukraine, China, South Africa and South Korea (10); and there are minor imports from Brazil into the Union.

(16) Based on the information provided by the applicant, the Commission analysed the proposed representative country and considered that Brazil met the statutory requirements to be used as a representative country for the purpose of initiation of the expiry review. In particular, Brazil has a level of economic development similar to China according to the World Bank, it is a significant producer of heavy plate, and it has readily available data for the corresponding costs of production and sale. Therefore, the Commission considered that Brazil was an appropriate choice as a representative country at the initiation stage.

(17) Primex also argued that the methodology for the dumping calculation in the request for review was not correct. In particular, Primex claimed that the investigation period (i.e. 1 January 2021 to 31 December 2021) was too short to establish a representative normal value and it was different than the period in the request for review. Primex also claimed that the prices of the main raw materials (iron ore, coking coal and scrap) were subject to strong fluctuations, especially the price of iron ore in 2021 and therefore 2021 could not be considered a representative year. Furthermore, Primex claimed that it was questionable whether the data of Union producer used by the applicant in the request for the consumption factors was representative for the whole market. Moreover, Primex claimed that the methodology used by the applicant in the request for review for the calculation of normal value for the PRC was not suitable as the applicant used only the data for labour costs, SG&A and profit from the Brazilian company Usiminas. Primex also claimed that the request for the review did not include evidence that the cost structure of the Union, Brazilian and Chinese producers were comparable with one another. Furthermore, Primex claimed that the request for review did not explain whether the price for the individual factors of production in Brazil are representative. Primex also argued that the applicant wrongly calculated the percentage of profit as a percentage of cost of sales when it should have been as a percentage of sales. Moreover Primex claimed that the representative profit margin should be calculated for a longer period of time and should include 2019 as well, as this year was not affected by the Covid-19 pandemic. Finally Primex claimed that the profit margin of 14 % used by the applicant in the request for review was not achievable under normal market conditions. Primex also claimed that the two methods used by the Applicant to calculate the export price in the request for review were not appropriate.

(18) An expiry review shall be initiated where the request contains sufficient evidence that the expiry of the measures would likely result in a continuation or recurrence of dumping and injury. The applicant has provided sufficient evidence on the export price and normal value showing that the dumping margins would be significant if measures were allowed to lapse. The figures on which normal value and export price were based were supported by sufficient evidence as confirmed by the Commission services’ own analysis. In practice, the calculation of normal value as well as the export price were in accordance with the principles of Article 2 of the basic Regulation and showed that the request contained sufficient evidence of dumping of the product concerned in the Union market. In its statutory analysis, the Commission took into account only those elements for which evidence was adequate and accurate.

(19) The Commission noted that there is no legal requirement in the basic Regulation regarding the period chosen by the applicant, nor any that the period chosen for the investigation had to be the same as the one chosen by the applicant. Pursuant to Article 6(1) of the basic Regulation, an investigation period shall be selected which in the case of dumping shall, normally, cover a period of no less than six months immediately prior to the initiation of proceeding. The period chosen by the applicant, i.e. 1 July 2020 until 30 June 2021, ended shortly before the submission of the expiry review request on 26 November 2021 and was therefore considered to be representative for the likelihood of continuation or recurrence of dumping and injury at the initiation stage.

(20) In the original investigation, the Commission found that the product concerned and the product produced and sold in the Union by the Union industry are like products within the meaning of Article 1(4) of the basic Regulation. The expiry review request sets out that the production process of the Union industry, used by the applicant for the consumption factors, was similar to the production process in the PRC and in the representative country. The cost structure and the consumption factors used in the request were therefore considered representative. Pursuant to Article 2(6a) of the basic Regulation, the applicant constructed the normal value using the corresponding costs of production and sale in a representative country, i.e. Brazil. The costs in this country were applied to the consumption rates of the factors of production in order to calculate the costs of manufacturing, whereas SG&A and profit derived from publicly available financial statements of a producer in the representative country. It should be noted that even the comparison of the constructed costs of production, without any SG&A and profit of the producer in the representative country with Chinese export prices of the product under review to third countries showed dumping. Therefore, the claims of Primex on the profitability level are moot.

(21) For the export price, the expiry review request used three methods, i.e. the average Chinese import price to the Union on a TARIC (11) level, the published average Chinese export FOB price for one of the main product types to all third countries, and the average Chinese export price to all third countries. These three methods were found to be sufficiently substantiated to comply with the legal standard at the initiation stage.

(22) CISA submitted that the request for review had an excessive use of confidentiality which precluded them from assessing the economic situation of the Union industry, as well as addressing the applicant’s claims in the request for review. This allegedly resulted in a breach of CISA’s rights of defence. For example, CISA referred particularly to Annex F1 (Capacity), Annex F2 (Exports), more specifically concerning Chinese exports of heavy plate from August 2020 until July 2021, and Annex N (undercutting and underselling calculations), more specifically in relation to Union industry sales and cost data to EU27 of the request for review.

(23) The Commission notes that the non-confidential Annex F1 contained ranged data for Chinese heavy plate consumption, capacity and production. The non-confidential Annex F2 contained a comprehensive summary of the average Chinese export price and the Chinese total volume of exports to the rest of the world, as well as to the top five export destinations. The non-confidential Annex N contained the full undercutting and underselling calculations, as well as the aggregated data on the average price and cost of the Union Industry. The non-confidential Annex M contained all applicants’ injury indicators indexed per company and non-confidential Annex K contained aggregated values of all data required for the calculation of EU consumption, including sales, as well as indexed per company. The information provided in the non-confidential version of the request for review was therefore considered to have sufficient detail to permit a reasonable understanding of the substance of the information submitted in confidence.

(24) Article 19 of the basic Regulation allows for the safeguarding of confidential information in circumstances where disclosure would be of significant competitive advantage to a competitor or would have a significant adverse effect upon a person providing the information or upon a person from whom that person has acquired the information. The information provided in the limited annexes to the request fell under these categories. The Commission considered that the version open for inspection by interested parties of the request contained all the essential evidence. The non-confidential summaries of data provided under confidential cover were sufficiently detailed to permit a reasonable understanding of the substance of information submitted in confidence in order for interested parties to exercise their rights of defense throughout the proceeding. Therefore, the claim was rejected.

(25) CISA claimed that the request for review included contradictory information, in particular as regards the export price from the PRC to the Union which had an impact on the findings of dumping.

(26) The request for review did not contain contradictory information. The applicant constructed the normal value of two product types (S235 and S355) and used the Chinese import price at TARIC level for grade S235, and the published average Chinese export price for grade S355. Therefore, the applicant calculated the dumping margins by comparing similar product types. Moreover, the applicant found dumping when comparing the average Chinese sales price of the product under review to all third countries with both constructed normal values. Therefore, the claim had to be rejected.

(27) CISA claimed that the request did not contain sufficient evidence of likelihood of continuation or recurrence of injury. In particular, CISA claimed that there was no evidence in the request that demonstrated that the expiry of measures could lead to the continuation of injury. CISA also doubted the alleged fragile state of the Union Industry and claimed that if this state was valid, it could be attributed entirely to the decline of consumption and the contraction of demand. CISA also claimed that there was no indication of recurrence of injury because of the EU safeguard measures on certain steel products, among which heavy plate, and the fact that Chinese heavy plate exports were no longer eligible for VAT export refunds.

(28) The Commission considered the evidence present in the request as sufficient for dumping, injury and a causal link, which was reasonably available to the applicant. The main injury indicators included in the request showed a negative trend for the reference period chosen by the applicant and the applicant therefore claimed that it continued to suffer material injury.

(29) However, the applicant also acknowledged in its request for review that imports from the PRC had essentially stopped since the imposition of the original measures and the injurious situation of the Union industry as well as the decline of consumption was caused by other factors, such as the state of the general economy, especially in construction and pipeline projects, and the negative effect of the COVID-19 pandemic. It therefore also claimed the likelihood of recurrence of injury if measures were to lapse and provided sufficient evidence in this regard, showing that in the absence of measures imports from the PRC would likely increase at undercutting prices. The claim of CISA thus has to be rejected.

(30) Primex claimed that the CIF import price as well as the Union sales price that the applicant used for undercutting and underselling calculations in the request for review were wrong, and no undercutting or underselling margins should be found. In addition, Primex claimed that the profit margin used for the underselling calculation has not been achieved, even with measures in force during the past years.

(31) The Commission disagreed that the undercutting and underselling calculations in the request were incorrect. The applicant provided a comparison between the export price and the Union sales price for the most common product types, which is a comparison at a more granular level than the comparison of the average export price with the average Union industry’s sales price proposed by Primex. The applicant’s methodology is clearly explained in the expiry review request under point 3.6 and in Annex N, which contains a calculation for each representative product type, showing undercutting and underselling. Furthermore, regarding the profit margin used by the applicant for the underselling calculations, the Commission considered that this profit margin could be reasonably achieved under normal conditions of competition in the original investigation. It has to be noted that even if the applicant had not provided any underselling calculations, there was still sufficient evidence showing that injury caused by dumped imports from China would recur if measures were allowed to expire. Therefore, the claim was rejected.

(32) CISA claimed that the Report relied on by the Commission failed to meet the standards of impartial and objective evidence and evidence of sufficient probative value, given in particular that it was prepared by the Commission with the specific purpose of facilitating Union industries to lodge a complaint in the area of trade measures. Furthermore, CISA claimed that since the Report was published in 2017, it could not reflect the alleged distortions for the investigation period covering the 2021 calendar year.

(33) The Commission disagreed. The Commission noted that the Report is a comprehensive document based on extensive objective evidence, including legislation, regulations and other official policy documents published by the Government of the People’s Republic of China (‘GOC’), third party reports from international organisations, academic studies and articles by scholars, and other reliable independent sources. It was made publicly available since December 2017 so that any interested party would have had ample opportunity to rebut, supplement or comment on it and the evidence on which it is based, and neither the GOC nor other parties have submitted arguments or evidence rebutting the sources included in the Report. Likewise, regarding the argument that the Report was outdated, the Commission noted in particular that the main policy documents and evidence contained in the Report, including the relevant five-year plans and legislation applicable to the product under review were mostly still relevant during the RIP, and that no parties have proven that this was no longer the case. China only started publishing new five-year plans throughout year 2021 and a lot of those plans were only made public in the second half of the year. This was further confirmed through the case-specific research undertaken by the Commission, as summarised above.

(34) Second, CISA submitted that the WTO Anti-Dumping Agreement (‘ADA’) does not recognize the concept of significant distortions in Article 2.2 of ADA. Instead, the provision allows the construction of the normal value in a limited number of specific conditions, which significant distortions not featuring among such conditions. Moreover, CISA submitted that Article 2.2 of ADA only permits using the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and profits whereas Article 2(6a) of the basic Regulation allows the use of data from and appropriate representative country, thereby being WTO inconsistent. Furthermore, CISA claimed that any constructed value would need to be calculated in accordance with Article 2.2.1.1 of ADA and in line with the interpretation by WTO Appellate Body given in the EU – Biodiesel (DS 473) case, as well as by the WTO Panel in the EU – Cost Adjustment Methodologies II (Russia) (DS494) case, which do not mention the concept of significant distortions nor the possibility to disregard the exporting company’s data.

(35) The Commission considered that the provisions of Article 2(6a) of the basic Regulation are fully consistent with the European Union's WTO obligations and the jurisprudence cited by CISA. First, the Commission considers concept of 'significant distortions’ to be compatible with the ADA. Furthermore, it is the Commission’s view that, in accordance with the decision of the WTO Panel and the Appellate Body in DS473, the provisions of the basic Regulation that apply generally with respect to all WTO Members, such as Article 2(5), second sub-paragraph, permit the use of data from a third country, duly adjusted when such adjustment is necessary and substantiated. The existence of significant distortions renders costs and prices in the exporting country inappropriate for the construction of normal value. In these circumstances, Article 2(6a) of the basic Regulation envisages the construction of costs of production and sale on the basis of undistorted prices or benchmarks, including those in an appropriate representative country with a similar level of development as the exporting country. In relation to the DS 494, the Panel Report in this dispute specifically considered the provisions in Article 2(6a) of the basic Regulation to be outside the scope of the dispute. Moreover, the Commission recalled that both the EU and the Russian Federation appealed the findings of the Panel, which are not final and therefore, according to standing WTO case-law, have no legal status in the WTO system, since they have not been endorsed by the Dispute Settlement Body through a decision by the WTO Members. Therefore, the Commission rejected this claim.

(36) Third, CISA argued that the practice of referring to past investigations as “evidence” of certain allegations, as done by the applicant in the request in the present investigation, would likely not withstand the Appellate Body’s approach on the burden of proof, as set out in the WTO Appellate Body’s ruling in the US – Definitive Antidumping and Countervailing Duties on Certain Products (China) (DS 379) case.

(37) The Commission recalled that in DS 379 case, the Appellate Body’s ruling explicitly set out that cross referencing from one determination into another is allowed, where there is close temporal and substantive overlap between the two investigations. Such substantive overlap clearly exists between the present investigation and the GOES ('grain-oriented flat-rolled products of silicon-electrical steel') investigation referred to in the Request, as both investigations not only concern the steel sector in China but there was only a six months gap between the investigation period in GOES (1 July 2019 – 30 June 2020) and the RIP in the present investigation (1 January 2021 – 31 December 2021).

(38) Fourth, CISA raised the issue of the 13th Five-Year Plan ('five years plan (‘FYP'’)), pointing out that, on the one hand, the plan should not be considered binding law but rather a general policy document which exist also in the EU and that, on the other hand, the RIP falls outside of the period covered by the 13th FYP. Further, CISA argues that the request continues referring to the 13th FYP, indicating that there is nothing in the 14th FYP that reduces State controls over the PRC economy in general or the steel sector in particular.

(39) This argument could not be accepted. First of all, China operates a periodic five years planning cycle. In that cycle, individual planning documents for the following cycle are prepared already during the previous one while, at the same time, individual planning documents of following cycle may be formally issued with some delay after the expiry of the corresponding planning documents of the previous cycle. The fact that the formal end date of the 13th FYP may not fall into the review investigation period or that the relevant 14th FYPs were published following a certain time gap after the end of the previous planning period cannot alter the nature of Chinese planning system in which the authorities and business operators always find themselves being part of the planning cycle. The Commission further underlined that the FYPs published by the GOC are not merely general guidance documents, but are of a legally binding nature. In this respect, the Commission referred to the detailed analysis of the plans in Chapter 4 of the Report, with a section specifically dedicated to the binding nature of plans in Section 4.3.1. Both the 14th FYP and the 13th FYP explicitly remind all authorities to diligently implement the plans: “We will strengthen planning management systems such as catalogues and lists, compilation and archival, and alignment and coordination, develop lists and catalogs such as the “14th Five-Year” National-Level Special Plans, promote plan archival relying on the national planning integrated management information platform, and bring various plans under unified management. We will establish and improve planning alignment and coordination mechanisms, align plans approved by the [Chinese Communist Party (‘CCP’)] Central Committee and the State Council and provincial development plans with this plan before submission for approval, ensure that national-level spatial planning, special planning, regional planning, and other levels of planning are coordinated with this plan in terms of main goals, development directions, overall layout, major policies, major projects, and risk prevention and control.” (12) Furthermore, the 14th FYP on Developing the Raw Materials Industry stipulates that “all localities need to better themselves with this Plan, and include the main contents and major projects herein in their primary local tasks”, while “steel and other key sectors shall formulate specific implementation opinions based on the objectives and tasks of this Plan.” (13) The claim of CISA thus has to be rejected.

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

(41) In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of the provisions of Article 17 of the basic Regulation. The Commission selected the sample on the basis of production and sales of the like product in the Union during the review investigation period, namely from 1 January 2021 until 31 December 2021. This provisional sample consisted of three Union producers. The sampled Union producers accounted for more than 25 % of the estimated total volume of Union production and more than 31 % of the estimated total Union sales volume of the like product. In accordance with Article 17(2) of the basic Regulation, the Commission invited interested parties to comment on the provisional sample. No comments were received.

(42) In the Note of 8 March 2022, the Commission confirmed the provisionally selected sample as the definitive sample, which is deemed to be representative of the Union industry.

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

(44) No unrelated importers came forward.

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

(46) None of the exporting producers in the country concerned provided the requested information and agreed to be included in the sample.

(47) The Commission sent a questionnaire concerning the existence of significant distortions in the PRC within the meaning of Article 2(6a)(b) of the basic Regulation to the GOC.

(49) The same questionnaire had also been made available in the file for inspection by interested parties and on DG Trade’s website online (14) on the day of initiation.

(50) Questionnaire replies were received from the three sampled Union producers.

(51) In the notice of initiation, the Commission also invited users and their representative associations, trade unions and representative consumer organisations to provide information on the Union interest and to fill in a specific questionnaire.

(54) The Commission intended to carry out a verification visit at the premises of the main independent user (Vestas) but the company did not offer sufficient cooperation to allow such visit to take place.

(55) On 28 February 2023, the Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive anti-dumping duty on imports of heavy plates originating in the PRC (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure. The Commission received comments from the applicant and from CISA.

(56) Following final disclosure, interested parties were granted an opportunity to be heard according to the provisions stipulated under point 5.8 of the Notice of Initiation. A hearing on final disclosure took place with CISA.

(57) The product under review is the same as in the original investigation, namely flat products of non-alloy or alloy steel (excluding stainless steel, silicon-electrical steel, tool steel and high-speed steel), hot-rolled, not clad, plated or coated, not in coils, of a thickness exceeding 10 mm and of a width of 600 mm or more or of a thickness of 4,75 mm or more but not exceeding 10 mm and of a width of 2 050 mm or more, (‘the product under review’ or ‘heavy plate’).

(58) Heavy plates are used in the manufacture of construction, mining and logging equipment; pressure vessels; oil and gas pipelines; shipbuilding and bridges and buildings.

(59) The product concerned by this investigation is the product under review originating in China currently falling under CN codes ex 7208 51 20, ex 7208 51 91, ex 7208 51 98, ex 7208 52 91, ex 7208 90 20, ex 7208 90 80, 7225 40 40, ex 7225 40 60 and ex 7225 99 00 (TARIC codes: 7208512010, 7208519110, 7208519810, 7208529110, 7208902010, 7208908020, 7225406010 and 7225990045). The CN and TARIC codes are given for information only, without prejudice to a subsequent change in the tariff classification.

(61) These products are therefore considered to be like products within the meaning of Article 1(4) of the basic Regulation.

(62) During the review investigation period, heavy plates from the PRC were imported in negligible volume, which could not form the basis for a determination of continuation of dumping. The Commission therefore analysed the likelihood of recurrence of dumping in the next section.

(63) The Commission investigated, in accordance with Article 11(2) of the basic Regulation, the likelihood of recurrence of dumping, should the measures be repealed. The following elements were analysed: the production capacity and spare capacity in the PRC, attractiveness of the Union market and export prices to third country markets, as well as possible absorption capacity of third country markets.

(64) As mentioned in recital (46), none of the producers from the PRC cooperated in the investigation. Therefore, the Commission informed the authorities of the PRC that due to the absence of cooperation, the Commission may apply Article 18 of the basic Regulation concerning the findings with regard to the exporting producers in the PRC. The Commission did not receive any comments or requests for an intervention of the Hearing Officer in this regard.

(65) Consequently, in accordance with Article 18 of the basic Regulation, the findings in relation to the likelihood of recurrence of dumping were based on facts available, in particular information in the request for review duly updated if available, information obtained from the applicant) and information from other publicly available sources, in particular the Global Trade Atlas (‘GTA’) (15).

(66) According to information provided by the applicant in the request for review, heavy plates production capacity in the PRC in the RIP was based on two sources of information, such as CRU (16) and MCI (17). According to the CRU report, China had a heavy plate production capacity of 94 million tonnes in 2021 with actual production of 86 million tonnes, leaving a spare capacity of at least 8 million tonnes. According to MCI, China had a heavy plate production capacity of 113 million tonnes in 2021 with actual production of 99 million tonnes, leaving a spare capacity of at least 14 million tonnes.

(67) Therefore, it follows that the spare capacity in China is between 8 and 14 million tonnes, which is sufficient to cover the entire Union consumption in the RIP, which was 8,2 million tonnes as indicated in Table 2 in recital (177). The applicant considered that, given such a large spare capacity, imports to the Union from China could increase to over 1 million tonnes per year, as they did in the investigation period (2015) of the original investigation (18).

(68) As indicated in recital (13), Primex argued that the Chinese capacity for heavy plates was indicated very differently according to the source, that the origin of the original data was not stated and that the decline in spare capacity between 2018 and 2021 suggested that potential Chinese exports to the Union have become smaller in recent years.

(69) The applicant clarified that the capacity estimates were based on two detailed reports provided by independent third parties, i.e. CRU and MCI, based on the data of substantial numbers of Chinese companies. In addition, the applicant argued that the decline in spare capacity was associated with an increase in apparent Chinese consumption until 2020, followed by a decline in consumption from 2021 and a forecast of continuing weakness in the Chinese economy. The Chinese consumption of heavy plates was at around 85 million tonnes in 2021. The applicant also stated that the International Monetary Fund reported that growth in China had weakened significantly since the start of 2022 (19). Furthermore, according to the OECD, the slowdown in steel consumption started in July 2021 when the construction sector experienced a deceleration (20). According to one of the Union producers’ market knowledge, it is expected that China will register a negative heavy plate demand growth in the medium term.

(70) Therefore, the applicant argued that Chinese consumption of heavy plate would likely decline further, resulting in a continuing increase in spare capacity resulting in greater pressure for Chinese producers to find third country markets for their excess steel capacity.

(71) The applicant further argued that a sharp increase in imports of Chinese slab (CN code 7207 12 10) into the Union in the period June to August 2022 demonstrates large Chinese spare capacity and their ability to move very large amounts of steel into the Union in a very short timeframe.

(72) The Commission considered that the information provided in the request, as clarified by the applicant, as well as the evidence they provided with regard to an anticipated reduction in consumption in China and the recent increase in slab imports, suggested that spare capacity of heavy plates in China is substantial and unlikely to decrease in the medium term. The Commission therefore, rejected the arguments put forward by Primex.

(73) Therefore, the Commission found that there was substantial spare capacity to increase exports to the Union in substantial quantities, if measures were allowed to expire.

(74) According to the information provided by the applicant in the request for the review, the Union heavy plate market is amongst the largest markets in the world. In addition, the capacity of Chinese producers as stated in recital (66) exceeds the Chinese consumption stated in recital (69) by at least 9 million tonnes, so Chinese producers are searching for export markets to absorb their excess capacity.

(75) The applicant indicated in the request for review that large Chinese heavy plate producers, like Baoshan Iron & Steel Co., Ltd. (“Baosteel”) and Wuhan Iron & Steel Co., Ltd. (“WISCO”), have established trading companies in the Union to facilitate their imports into the Union. This was confirmed in the Commission Implementing Regulation imposing a definitive anti-dumping duty on imports of certain GOES originating, among other countries, in the PRC (21).

(76) As mentioned in recital (67), imports of heavy plate from China reached over 1 million tonnes in 2015, before the imposition of anti-dumping duties. Therefore, it is likely that if the measures are allowed to lapse, Chinese exporters would once again be attracted to export in substantial volumes to the Union market.

(77) Primex argued that the safeguard measures applied to heavy plates (adjusted by Commission Implementing Regulation (EU) 2022/434 (22)) limited imports into the Union until 30 June 2024. They argued that imports from China fall under the quota for other countries and imports in that category in 2021 were around 370 000 tonnes. They argued that as other countries will not stop exporting to the Union, China will not have access to the full quota allotted to other countries.

(78) The applicant also commented in the request for review that the current EU safeguard measures on imports of certain steel products do not meaningfully restrict the import volumes for heavy plate.

(79) However, for the period 1 July 2022 until 30 June 2023 the total tariff-rate quota for non-alloy and other alloy quarto plates was set at more than 3,2 million tonnes, out of which around 2,2 million tonnes of this amount was allocated to “other countries”, including China. Furthermore, for the period 1 July 2023 to 30 June 2024 the quota was set at about 3,4 million tonnes, out of which around 2,3 million tonnes were allocated to “other countries”, including China as well (23). Imports of heavy plates from countries classified as “other countries” (i.e. excluding Ukraine) totalled less than 0,8 million tonnes during the RIP as indicated in tables 3 and 5, so there is scope for China to increase imports to more than 1 million tonnes without being affected by the safeguard measures.

(80) The Commission considers that the quota available to imports from China is therefore, substantial and the existence of the quota would not detract from the attractiveness of the Union market, if the anti-dumping duties were allowed to expire, while imports within the substantial quota were still available.

(81) Furthermore, in order to have an indication of the likely pricing behaviour to the Union in the absence of measures, the Commission also compared the Chinese export price to third countries with the Chinese normal value.

(82) In the absence of cooperation from the Chinese exporting producers and the GOC, the Commission determined normal value based on the information provided in the request for the expiry review and other readily available information as explained in the following section.

(83) Given the sufficient evidence available at the initiation of the investigation tending to show, with regard to the PRC, the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation, the Commission initiated the investigation on the basis of Article 2(6a) of the basic Regulation.

(84) In order to obtain information it deemed necessary for its investigation with regard to the alleged significant distortions, the Commission sent a questionnaire to the GOC. In addition, in point 5.3.2 of the Notice of Initiation, the Commission invited all interested parties to make their views known, submit information and provide supporting evidence regarding the application of Article 2(6a) of the basic Regulation within 37 days of the date of publication of the Notice of Initiation in the Official Journal of the European Union. No questionnaire reply was received from the GOC. Subsequently, the Commission informed the GOC that it would use facts available within the meaning of Article 18 of the basic Regulation for the determination of the existence of the significant distortions in the PRC.

(85) In point 5.3.2 of the Notice of Initiation, the Commission also specified that, in view of the evidence available, it may need to select an appropriate representative country pursuant to Article 2(6a)(a) of the basic Regulation for the purpose of determining the normal value based on undistorted prices or benchmarks and suggested Brazil in this regard. The Commission further stated that it would examine other possibly appropriate countries in accordance with the criteria set out in first indent of Article 2(6a) of the basic Regulation.

(86) On 16 December 2022 , the Commission informed by a Note to interested parties of the relevant sources that it intended to use for the determination of the normal value (the Note), with Brazil as a representative country. It also informed interested parties that it would establish SG&A costs and profits based on available information for the company Usinas Siderúrgicas de Minas Gerais (‘Usiminas’) and Gerdau S/A (‘Gerdau’), producers of the product under review in the representative country.

(87) In their comments to the Note the applicant claimed that the Commission should take into account also other factors of production used in the manufacturing of heavy plates such as wire of non-alloy aluminium, aluminium waste and scrap, ferro-alloy, ferro-silicon, water, heavy oils, acetylene etc.

(88) In the Note the Commission presented the main factors of production. In addition to those factors of production the Commission also added consumables and overheads as explained in recitals (139) and (149). Furthermore, considering that the current investigation is an expiry review pursuant to Article 11(2) on the basic Regulation, which does not require a precise dumping margin calculation, but rather to establish the likelihood of continuation or recurrence of dumping, the Commission considered that in this case it could exceptionally focus on the main factors of production for the calculation of the normal value. Furthermore, as specified in recitals (184) and (185), there were negligible imports of product concerned from the PRC during the review investigation period. Therefore, the constructed normal value will be used only for comparison with the Chinese export price to third countries.

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

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

(91) As further explained below, the Commission concluded in the present investigation that, based on the evidence available the application of Article 2(6a) of the basic Regulation was appropriate.

(92) In recent investigations concerning the steel sector in the PRC (24), the Commission found that significant distortions in the sense of Article 2(6a)(b) of the basic Regulation were present.

(93) In those investigations, the Commission found that there is substantial government intervention in the PRC resulting in a distortion of the effective allocation of resources in line with market principles (25). In particular, the Commission concluded that in the steel sector, which is the main raw material to produce the product under review, not only does a substantial degree of ownership by the GOC persist in the sense of Article 2(6a)(b), first indent of the basic Regulation (26), but the GOC is also in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation (27). The Commission further found that the State’s presence and intervention in the financial markets, as well as in the provision of raw materials and inputs have an additional distorting effect on the market. Indeed, overall, the system of planning in the PRC results in resources being concentrated in sectors designated as strategic or otherwise politically important by the GOC, rather than being allocated in line with market forces (28). Moreover, the Commission concluded that the Chinese bankruptcy and property laws do not work properly in the sense of Article 2(6a)(b), fourth indent of the basic Regulation, thus generating distortions in particular when maintaining insolvent firms afloat and when allocating land use rights in the PRC (29). In the same vein, the Commission found distortions of wage costs in the steel sector in the sense of Article 2(6a)(b), fifth indent of the basic Regulation (30), as well as distortions in the financial markets in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, in particular concerning access to capital for corporate actors in the PRC (31).

(94) Like in previous investigations concerning the steel sector in the PRC, the Commission examined in the present investigation whether it was appropriate or not to use domestic prices and costs in the PRC, due to the existence of significant distortions within the meaning of point (b) of Article 2(6a) of the basic Regulation. The Commission did so on the basis of the evidence available on the file, including the evidence contained in the request, as well as in the including the Commission Staff Working Document on Significant Distortions in the Economy of the People’s Republic of China for the Purposes of Trade Defense Investigations (32) (‘Report’), which relies on publicly available sources. That analysis covered the examination of the substantial government interventions in the PRC’s economy in general, but also the specific market situation in the relevant sector including the product under review. The Commission further supplemented these evidentiary elements with its own research on the various criteria relevant to confirm the existence of significant distortions in the PRC as also found by its previous investigations in this respect.

(95) The applicant submitted in the request that the prices and costs of steel products in the PRC, including the product under review, are not the result of free market forces. The request alleged that all factors of production – land, energy, capital, raw materials and labour – are equally distorted. To support its position, the request referred to a number of publicly available information sources, such as the Report, the conclusions reached by the U.S. Department of Commerce (33), the Commission’s recent investigations of the Chinese steel sector (34), the 13th FYP for National Economic and Social Development of the PRC as well as the 14th FYP for National Economic and Social Development of the PRC.

(97) The GOC did not comment or provide evidence supporting or rebutting the existing evidence on the case file, including the Report and the additional evidence provided by the applicant, on the existence of significant distortions and/or appropriateness of the application of Article 2(6a) of the basic Regulation in the case at hand.

(98) Specifically in the sector of the product under review, i.e. the steel sector, a substantial degree of ownership by the GOC persists in the sense of Article 2(6a)(b), first indent of the basic Regulation. Since there was no cooperation from Chinese exporters of the product under review, the exact ratio of the private and state-owned producers could not be determined. However, the investigation confirmed that the two largest producers in the steel sector, namely Angang Steel Group (‘Ansteel’) and Baowu are either fully state-owned or the State holds a controlling stake. In any event, even when specific information may not be available for the product under review, the sector represents a sub-sector of the steel industry and the findings concerning the steel sector are therefore deemed indicative also for the product under review.

(99) Both public and privately owned enterprises in the steel sector are subject to policy supervision and guidance. The latest Chinese policy documents concerning the steel sector confirm the continued importance which GOC attributes to the sector, including the intention to intervene in the sector in order to shape it in line with the government policies. This is exemplified by the Ministry of Industry and Information Technology’s draft Guiding Opinion on Fostering a High Quality Development of Steel Industry which calls for further consolidation of the industrial foundation and significant improvement in the modernization level of the industrial chain (35), by the 14th FYP on Developing the Raw Material Industry according to which the sector will “adhere to the combination of market leadership and government promotion” and will “cultivate a group of leading companies with ecological leadership and core competitiveness” (36)or also by the 14th FYP on Developing Scrap Steel Industry whose key objectives is to “continuously increase the application ratio of scrap steel, and by the end of the 14th FYP, the comprehensive scrap ratio of national steelmaking will reach 30%.” (37)

(100) Similar examples of the intention by the Chinese authorities to supervise and guide the developments of the sector can be seen at the provincial level, such as in Hebei which plans to “steadily implement the group development of organizations, accelerate the reform of mixed ownership of state-owned enterprises, focus on promoting the cross-regional merger and reorganization of private iron and steel enterprises, and strive to establish 1-2 world-class large groups, 3-5 large groups with domestic influence as the support” and to “further expand the recycling and circulation channels of scrap steel, strengthen the screening and classification of scrap steel.” (38) Similarly, the Henan Implementation Plan for the Transformation and Upgrade of the Steel Industry during the 14th FYP foresees the “construction of characteristic steel production bases […], build 6 characteristic steel production bases in Anyang, Jiyuan, Pingdingshan, Xinyang, Shangqiu, Zhouou, etc., and improve the scale, intensification, specialisation and distinction of the industry. Among them, by 2025, the production capacity of pig iron in Anyang will be controlled within 14 million tons, and the production capacity of crude steel will be controlled within 15 million tons.” (39) Further industrial policy objectives can also be seen in the planning documents of other provinces, such as Jiangsu (40), Shandong (41), Shanxi (42), Liaoning Dalian (43) or Zhejiang (44).

(101) As to the GOC being in a position to interfere with prices and costs through State presence in firms in the sense of Article 2(6a)(b), second indent of the basic Regulation, due to the lack of cooperation from the side of the exporting producers, it was impossible to systematically establish existence of personal connections between producers of the product under review and the CCP. However, given that the product under review represents a subsector of the steel sector, information available with respect to steel producers is relevant also to the product under review.

(102) For instance, Ansteel’s Chairman serves at the same time as the Secretary of the Party Committee. Similarly, the Director and General Manager of Ansteel occupies the position of the Party Committee’s Deputy Secretary (45). In the case of Baowu, the Chairman of Baosteel, which is a subsidiary held at 100 % by Baowu, holds at the same time the position of Secretary of the Party Committee, whereas the Managing Director serves also as the Deputy Secretary of the Party Committee and the Deputy General Manager serves as a Member of the Standing Committee of the Party Committee (46).

(103) Moreover, Ansteel’s Party Committee issued a report on the study and implementation of the spirit of General Secretary Xi Jinping’s “July 1” important speech on 22 July 2022: “We must work hard to implement the spirit of General Secretary Xi Jinping’s “July 1” important speech, carefully compare the arrangements and arrangements of the Ansteel Group Party Committee, study and formulate “optional actions”, closely contact the actual situation of promoting Ansteel Group’s “14th Five-Year” development strategy, and conduct in-depth investigations research, do practical things well, and open new affairs well.” (47) On 2 April 2021, their affiliation to the party was emphasized in a trade union meeting of the Ansteel Group that “trade union organizations at all levels of Ansteel Group should adhere to the leadership of the party, reflect the political responsibility of trade unions, and consciously serve the overall high-quality development of Ansteel Group.” (48)

(104) Furthermore, as reported on Baowu’s website: “Baowu fully implements the requirements of the “Opinion on Strengthening the Party’s Leadership in the Improvement of Corporate Governance by Central Enterprises”, systematically optimizes the major decision-making system, and forms the implementation measures for the “three important and one big” decision-making system, the list of decision-making powers and responsibilities for major matters, and the board of directors.” (49)

(105) Further, policies discriminating in favour of domestic producers or otherwise influencing the market in the sense of Article 2(6a)(b), third indent of the basic Regulation are in place in the sector of the product under review. Even though no policy documents guiding specifically the development of the heavy plates industry as such could be identified during the investigation, the industry benefits from governmental guidance and intervention into the steel sector, given that the product under review represents one of its subsectors.

(106) The steel industry keeps being regarded as a key industry by the GOC (50). This is confirmed in the numerous plans, directives and other documents focused on steel, which are issued at national, regional and municipal level. Under the 14th Five Years Plan adopted in March 2021, the GOC earmarked the steel industry for transformation and upgrade, as well as optimization and structural adjustment (51). Similarly, the 14th Five Years Plan on Developing the Raw Materials Industry, applicable also to the steel industry, lists the sector as the “bedrock of the real economy” and “a key field that shapes China’s international competitive edge” and sets a number of objectives and working methods which would drive the development of the steel sector in the time period 2021-2025, such a technological upgrade, improving the structure of the sector (not least by means of further corporate concentrations) or digital transformation (52).

(107) The other important raw material used for the production of heavy plates is iron ore. Iron ore is also mentioned in the 14th FYP on Developing the Raw Materials Industry, in which the State plans to “rationally develop domestic mineral resources. Strengthen the exploration of iron ore […], implement preferential tax policies, encourage the adoption of advanced technology and equipment to reduce the generation of mining solid waste.” (53) In provinces, such as Hebei, the authorities foresee the following for the sector: “new project investment discount subsidy; explore and guide financial institutions to provide low-interest loans for iron and steel enterprises to switch to new industries, and at the same time, the government will provide discount subsidies.” (54) In sum, the GOC has measures in place to induce operators to comply with the public policy objectives of supporting encouraged industries, including the production of the main raw materials used in the manufacturing of the product under review. Such measures impede market forces from operating freely.

(108) The present investigation has not revealed any evidence that the discriminatory application or inadequate enforcement of bankruptcy and property laws according to Article 2(6a)(b), fourth indent of the basic Regulation in the heavy plates sector referred to above in recital (93) would not affect the manufacturers of the product under review.

(109) The heavy plates sector is also affected by the distortions of wage costs in the sense of Article 2(6a)(b), fifth indent of the basic Regulation, as also referred to above in recital (93). Those distortions affect the sector both directly (when producing the product under review or the main inputs), as well as indirectly (when having access to inputs from companies subject to the same labour system in the PRC) (55).

(110) Moreover, no evidence was submitted in the present investigation demonstrating that the sector of the product under review is not affected by the government intervention in the financial system in the sense of Article 2(6a)(b), sixth indent of the basic Regulation, as also referred to above in recital (93). Therefore, the substantial government intervention in the financial system leads to the market conditions being severely affected at all levels.

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

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

(113) In its comments on the Note, CISA reiterated the comments it had in reaction to the initiation of the investigation (see recitals (32) to (39)). Furthermore, it added that according to Article 2(6a)(a) of the basic Regulation the assessment concerning the existence of significant distortions should be done for each exporting producer separately. Therefore, the Commission had the obligation to analyse the situation of each Chinese producer and decide whether any of the factors of costs of production and sales are distorted for each of them. CISA claimed that while there was an absence of cooperation from individual Chinese producers in this case, “country-wide” or “industry-wide” findings should not be allowed.

(114) The Commission noted that once it is determined that, due to the existence of significant distortions in the exporting country in accordance with Article 2(6a)(b), it is not appropriate to use domestic prices and costs in the exporting country, the Commission may construct normal value using undistorted prices or benchmarks in an appropriate representative country for each exporting producer according to Article 2(6a)(a). Article 2(6a) of the basic Regulation provides that domestic costs of each producer can be used if they are positively established not to be distorted, on the basis of accurate and appropriate evidence. However, no costs of production and sale of the product under review could be established as undistorted in light of the evidence available on the factors of production of individual exporting producers. Therefore this claim was dismissed.

(115) In their comments on the final disclosure, CISA once again reiterated its comments submitted in reaction to initiation and in reply to the Note (see recitals (32) to (39)). Specifically, while stating that the Commission had addressed its previous comments, CISA expressed its disappointment that the Commission had dismissed the arguments raised. Consequently, CISA insisted on (i) the Report being of doubtful probative value and failing to meet the standards of impartial and objective evidence, (ii) the various FYPs being only general policy documents without binding legal effects – which is in CISA’s view also apparent from the lack of explicit sanctions in case of violation - and the EU having in place similar types of policy documents.

(116) The arguments brought by CISA have already been addressed above in recital (33) concerning the Report and in recital (39) concerning the FYPs. As to CISA’s remark on the EU having in place policy documents similar to the Chinese FYPs, the Commission noted that these are completely irrelevant for the assessment of significant distortions in China pursuant to Article 2(6a) of the basic Regulation. Similarly, the reference to absence of sanctions in the FYPs cannot alter the assessment in recital (39), which on the basis of specific provisions from the relevant FYPs, in combination with the facts discussed in the Report, demonstrates the unambiguous obligation of the Chinese authorities concerned to implement the FYPs in question. Consequently, CISA’s arguments cannot alter the Commission’s conclusions reached in recitals (32) to (39).

(117) In sum, the evidence available showed that prices or costs of the product under review, including the costs of raw materials, energy and labour, are not the result of free market forces because they are affected by substantial government intervention within the meaning of Article 2(6a)(b) of the basic Regulation, as shown by the actual or potential impact of one or more of the relevant elements listed therein. On that basis the Commission concluded that it is not appropriate to use domestic prices and costs to establish normal value in this case. Consequently, the Commission proceeded to construct the normal value exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, that is, in this case, on the basis of corresponding costs of production and sale in an appropriate representative country, in accordance with Article 2(6a)(a) of the basic Regulation, as described in the following section.

(119) As explained in recital (86), the Commission issued a Note on relevant sources to use for the determination of the normal value. This Note described the facts and evidence underlying the relevant criteria. The Note informed interested parties of the Commission’s intention to consider Brazil as the appropriate representative country in the present case if the existence of significant distortions pursuant to Article 2(6a) of the basic Regulation were confirmed.

(120) In line with the criteria listed under Article 2(6a) of the basic Regulation, the Commission identified Brazil as a country with a similar level of economic development as the PRC as it was suggested by the applicant in the request for review. Brazil is classified by the World Bank as ‘upper-middle income’ country on a gross national income basis. It is thus considered to have a similar level of economic development as the PRC.

(121) The Commission has found that Brazil is a significant producer of heavy plates (installed capacity of about 3,1 million tonnes per year (58)). The Commission has also established that Brazil meets all of the criteria set out in article 2(6a) of the basic Regulation and that all relevant public data are readily available and accessible, including import statistics, as well as data on costs of raw materials and such factors of production as natural gas, electricity and labour.

(122) The main Brazilian producer of heavy plates is Usinas Siderúrgicas de Minas Gerais (‘Usiminas’). According to the applicant, Usiminas is a large integrated steel producer, manufacturing steel using the same process as the Chinese producers (i.e. from coal and iron ore, to pig iron through blast furnace reduction, to crude steel through the basic oxygen furnace method (“BOF”) and then continuous casting and rolling). The Commission noted that financial statements for Usiminas for the financial years ending 31 December 2020 and 31 December 2021 are available in the Orbis Bureau van Dijk database (‘Orbis database’). Gerdau S/A (‘Gerdau’) is another Brazilian producer of heavy plates. The financial statements of Gerdau for the financial years ending 31 December 2020 and 31 December 2021 are also available in the Orbis database. Therefore, the Commission intends to use the financial data of both Brazilian producers of heavy plates.

(123) Comments regarding the proposed representative country in the request for review were received from the importer Primex.

(124) As stated in recital (15), Primex disagreed with the selection of Brazil as a representative country in the request for review. In particular, Primex claimed that (1) the Brazilian market was smaller than the Chinese market, (2) the Brazilian company Usiminas, used by the applicant for the calculation of the SG&A and profit margins, was not appropriate as this company had a dominant market position on the domestic market, (3) the Brazilian market was protected from international import competition by anti-dumping duties against imports of heavy plates from Ukraine, China, South Africa and South Korea and (4) there were minor imports of heavy plates from Brazil into the Union.

(125) The Commission noted that the fact that a country has a smaller market than the Chinese markets does not disqualify it for being a representative country. The requirement of ‘appropriateness’ in the basic Regulation refers to the similar level of economic development, while there is no reference to the size of the market as such. It was also noted that, as the applicant mentioned in the request, Brazil is one of the three largest producers of heavy plates in the World Bank group of “upper-middle income” countries, together with Russia and the PRC (which is subject to this proceeding). As explained above, there are two suitable producers of heavy plates in Brazil with reasonable data on SG&A and profits.

(126) Furthermore, the claim that Usiminas has a dominant position on the Brazilian market is not substantiated by evidence showing if and how this circumstance would render this company unsuitable to establish undistorted sources. In any event, as explained above, for the calculation of SG&A and profit margins the Commission used the financial data of both Brazilian producers of heavy plates as the financial data of both companies is readily available.

(127) Moreover, Primex did not substantiate how the imposition of anti-dumping measures on imports of heavy plates from the PRC, South Africa and South Korea affected the appropriateness of SG&A of Usiminas as undistorted source. As regards the profit, while the existence of the anti-dumping measures in Brazil could indeed have an impact on the profit margin of Usiminas, the result of anti-dumping measures is to restore fair competition including the achievement of a regular profit level for the domestic producers. In any event, the Commission noted that the financial statements of both Usiminas and Gerdau are not limited to heavy plates only, but reflect an aggregation of the steel products manufactured by these companies. The Commission also noted that Primex did not suggest an alternative representative country at this stage.

(128) Interested parties were invited to comment on the appropriateness of Brazil as a representative country and of Usiminas and Gerdau as producers in the representative country.

(129) Following the Note on the appropriate representative country, no interested party made any comments regarding the selection of Brazil as a representative country.

(130) In their comments to the Note, CISA argued that for establishing the unit price of the main factors of production, the Commission should use domestic prices and not the GTA import data as the imports prices are affected by several factors such as the quantity of imports of a particular product, the availability of such product and the distance between the exporting and importing countries.

(131) The Commission noted that Article 2(6a)(a) of the basic Regulation prescribes the use of corresponding data in an appropriate representative country “provided that the relevant data are readily available.” The Commission does not have at its disposal data on domestic prices of the relevant factors of production in the possible representative countries, and such data are not readily available. By contrast, data on import prices in the possible appropriate representative countries are readily available. If, based on the evidence, the application of Article 2(6a)(a) of the basic Regulation is warranted, the Commission further adjusts these import prices (e.g. by adding the relevant customs duties) to arrive at a reasonable proxy representing an undistorted domestic price in these countries. The Commission also verifies that there be sufficient representative undistorted quantities of these import data so that the resulting final average automatically reduces the impact of the potential abnormal prices at the lower and higher end of the range, thereby reflecting a mix of the different qualities and availabilities of a certain input. Moreover, the Commission excludes data on imports into the representative country from China and non-WTO members (59) to determine the relevant benchmarks. As long as the import quantities of the factors of production are sufficiently representative and there are no other specific circumstances rendering them unsuitable, there is no objective reason to exclude them. CISA also did not submit any evidence in support of their claim. Therefore, in the absence of evidence to the contrary, the Commission rejected this claim.

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

(133) In the absence of cooperation and comments on the Note on the appropriate representative country, as proposed in the expiry review request and given that Brazil met all the criteria laid down in Article 2(6a)(a), first indent of the basic Regulation, the Commission selected Brazil as the appropriate representative country.

(134) In the Note the Commission listed the factors of production such as materials, natural gas, energy and labour used in the production of the product under review by the exporting producers. The Commission also stated that, in order to construct the normal value in accordance with Article 2(6a)(a) of the basic Regulation, it would use GTA to establish the undistorted cost of most of the factors of production, notably the raw materials. In addition, the Commission stated that it would use information from: the International Labour Organization (‘ILO’) for establishing undistorted costs of labour and public tariffs from electricity suppliers in Brazil.

(135) Finally, the Commission stated that to establish SG&A costs and profit, it would use the financial data from Brazilian producers of the product under review.

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

(138) In order to establish the undistorted price of raw materials as delivered at the gate of a representative country producer, the Commission used as a basis the weighted average import price to the representative country as reported in the GTA to which import duties were added. An import price in the representative country was determined as a weighted average of unit prices of imports from all third countries excluding the PRC and countries which are not members of the WTO, listed in Annex 1 of Regulation (EU) 2015/755 (60). The Commission decided to exclude imports from the PRC into the representative country as it concluded in section 4.2.2.1 that it is not appropriate to use domestic prices and costs in the PRC due to the existence of significant distortions in accordance with Article 2(6a)(b) of the basic Regulation. Given that there is no evidence showing that the same distortions do not equally affect products intended for export, the Commission considered that the same distortions affected export prices. After excluding imports into the representative country from the PRC, and from countries which are not members of the WTO, the volume of imports from other third countries remained representative.

(139) For a number of factors of production the actual costs incurred by the applicant represented a negligible share of total raw material costs in the review investigation period. As the value used for these had no appreciable impact on the dumping margin calculations, regardless of the source used, the Commission decided to include those costs into all other raw materials. In order to establish an undistorted value of all other raw materials, and given the absence of cooperation from the exporting producers, the Commission used facts available in accordance with Article 18 of the basic Regulation. Therefore, based on the data provided by the applicant, the Commission established the ratio of all other raw materials to the total raw material costs, at 7,5 %. This percentage was then applied to the undistorted value of the raw materials to obtain the undistorted value of other raw materials.

(140) Normally, domestic transport prices should also be added to these import prices. However, considering the nature of this expiry review investigation, which is focused on finding whether dumping reoccur, should the measures be allowed to lapse, rather than finding its exact magnitude, the Commission decided that adjustments for domestic transport were unnecessary. Such adjustments would only result in increasing the normal value and hence the dumping margin. Labour

(141) The Commission used ILO statistics to determine the wages in Brazil (61). These provide information on monthly wages of employees in the manufacturing sector and average weekly hours worked in Brazil for the investigation period (year 2021). Electricity

(142) For electricity, the Commission used the readily available prices from Cemig Distribuição S.A, one of major electricity suppliers in Brazil (62). This source allows to determine the price of average industrial tariff for the investigation period (year 2021). Natural gas

(143) For natural gas, the Commission used the price of gas in Brazil for the review investigation period as published by Companhia de Gás de Minas Gerais (GASMIG) (63) that enables to determine the price of natural gas supplied to industrial users.

(144) In their comments to the Note, CISA stated that Brazil was used as a representative country in other two investigation such as AD683 - Electrolytic Chromium Coated Steel products (64) (‘ECCS’) and R728 - Certain grain-oriented flat-rolled products of silicon-electrical steel (65). CISA stated that while the periods of investigation in each proceeding was not exactly the same, since the two above-mentioned proceedings are recent, the Commission should have extracted data from similar sources in relation to energy and costs, and as a result, found similar unit cost for each factor. CISA argued that in the current investigation the benchmark for the natural gas was established based on the price of gas in Brazil published by GASMIG and it was calculated at 7.46 CNY/M3. In the ECCS investigation, the benchmark for gas was established based on the statistics from the Brazilian Ministry of Energy and it was calculated at 2.257 CNY/M3. In the GOES investigation, the benchmark for gas was established based on the prices reported by GASMIG and it was calculated at 3.42 to 3.72 CNY/M3. CISA stated that, despite the fact that the investigation periods of ECCS and GOES investigations are very close to the investigation period of the current investigation, the difference in prices between the current investigation and the ECCS and GOES investigation are more than double and therefore it exceeded a reasonable range. CISA requests the Commission to compare the prices from those different sources and therefore determine a reasonable price.

(145) Furthermore, CISA made a similar comment for the labour cost. CISA highlighted that in the current investigation the benchmark for labour was established based on the data from the ILO Statistics and Sustainability Report published by Usiminas and it was calculated at 46.69 CNY/hour. In the ECCS investigation, used only the statistics from ILO and calculated at average labour cost of 27.112 CNY/hour. CISA argued that the labour cost in Brazil could not have increased that much within a short period of time and asked the Commission to use in the current investigation the same methodology as in the ECCS investigation for establishing the benchmark for labour.

(146) The Commission noted that the investigation period of the current investigation is different than in the two investigations mentioned by CISA. As stated in recital (8), the investigation period on the current investigation is from 1 January 2021 to 31 December 2021, while the investigation period of the ECCS investigation was from 1 July 2020 to 30 June 2021 and for the GOES investigation was from 1 July 2019 to 30 June 2020. Therefore, the value of the benchmarks could be different as it relates to different periods. Furthermore, CISA did not specify whether any of the methodologies used by the Commission to calculate the benchmarks were wrong. CISA seemed to focus only on the value of the benchmark. CISA did not specify what a reasonable value of the benchmark was. CISA seemed to imply that a lower benchmark would be a reasonable benchmark. The Commission also noted that while for gas CISA referred to both ECCS and GOES investigations, for labour CISA referred only to the ECCS investigation. It is noted that in the GOES investigation the benchmark for labour was calculated at 84.59 CNY/hour, double than in the current investigation. Furthermore, the Commission noted that CISA does not comment on the value of the benchmark for electricity in relation to the ECCS and GOES investigations. In the current investigation, the benchmark for electricity was significantly lower as compared to the other two investigation. In the current investigation, the benchmark for electricity was calculated at 0,79 kWh while in the ECCS investigation to 5,034 kWh and in the GOES investigation to 8,251 kWh.

(147) In each investigation the Commission calculates the benchmarks based on the information readily available as well as the information specific to the investigation and the Chinese exporting producers. It is recalled that in the current investigation, the Chinese exporting producers did not cooperate, while in the ECCS and GOES investigations the Chinese exporting producers cooperated. Whether in one investigation the value of a benchmark is lower than in another investigation, it is not relevant. Therefore, the claim was rejected.

(148) According to Article 2(6a)(a) of the basic Regulation, “the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits”. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above.

(149) In order to establish an undistorted value of the manufacturing overheads and given the absence of cooperation from the Chinese producers, the Commission used facts available in accordance with Article 18 of the basic Regulation. Therefore, based on the data provided by one of the sampled Union producers, the Commission established the ratio of manufacturing overheads to the total manufacturing and labour costs. This percentage was then applied to the undistorted value of the cost of manufacturing to obtain the undistorted value of manufacturing overheads.

(150) For establishing an undistorted and reasonable amount for SG&A and profit, the Commission relied on the most recent available financial data of the companies in Brazil that had been identified in the Note as active and profitable producers of the product under review. Financial data for the following companies as extracted from Orbis Bureau van Dijk was used for the financial year 2021 and 2020: Usiminas and Gerdau.

(151) Following the Note, CISA argued that both Usiminas and Gerdau have recorded exceptionally high revenues and profits in 2020 as compared to 2021. In view of this, CISA asked the Commission not to use the financial data from 2021 but an average of the financial data for 2020 and 2021 to reasonably reflect a normal financial situation of the two Brazilian producers.

(152) The Commission found this claim reasonable. In fact both Usiminas and Gerdau have registered very high profits in 2021. Therefore, the Commission considered that would be more reasonable to use the financial data of both Brazilian producers for 2020 instead of 2021 which seemed to be an exceptional year for both companies.

(153) In its comments following final disclosure, CISA claimed that the SG&A and profit margins used by the Commission were still high. It claimed that in an industry like iron and steel, it was very rare, if not impossible, to achieve a double-digit profit. CISA claimed that the Commission should not use the financial information from Orbis for the two Brazilian companies which did not cover only the product concerned, but should rely instead on the findings of the expiry review investigation published by the Ministry of Economic of Brazil (66) concerning imports of heavy plates originating in South Africa, China, South Korea and Ukraine. CISA asked the Commission to take into account the findings of this investigation when adjusting the SG&A and profit margins.

(154) The Commission noted that in its comments to the First Note CISA asked the Commission not to use the financial data from 2021 but an average of the financial data for 2020 and 2021 to reasonably reflect a normal financial situation of the two Brazilian producers as stated in recital (151). The Commission accepted this claim and, to remain even more conservative, used the SG&A and profit margins only for 2020, which were lower than the average SG&A and profit margins for 2020 and 2021 that CISA’s suggested. As concerns the investigation mentioned by CISA, the Commission noted that this investigation was completed in October 2019 and it was based on data covering 2013 and 2017, while the investigation period of the current investigation is 2021. Furthermore, CISA did not specify how the Commission should adjust the SG&A and profit margins based on the findings of the Brazilian investigation. Moreover, Article 2(6a)(a) of the basic Regulation requires that the amounts for SG&A and for profit used in the construction of the normal value are undistorted and reasonable. CISA failed to demonstrate that these values were either distorted or unreasonable. Therefore, the claim was rejected.

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

(156) First, the Commission established the undistorted manufacturing costs. In the absence of cooperation by the exporting producers, the Commission relied on the information provided by the applicant in the review request on the usage of each factor (materials and labour) for the production of the product under review.

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

(159) In the absence of cooperation by exporting producers from the PRC, the export price was determined based on FOB GTA data for exports from China to third countries, adjusted to ex-works.

(160) In this regard the Commission used the export statistics from the GTA of the following Chinese commodity codes: 7208 51 10, 7208 51 20, 7208 51 90, 7208 52 00, 7208 90 00, 7225 40 91, 7225 40 99 and 7225 99 90. The Commission notes that these commodity codes do not cover only the product concerned but also include also other types of products. However, given the non-cooperation of producers from China, the information in the file does not allow the identification of the volume of the product concerned in the total volume of exports of these Chinese commodity codes. The average export prices range between EUR 619 per tonne and EUR 1 163 per tonne depending on the commodity code. The average export price for all eight Chinese commodity codes was EUR 749 per tonne. The biggest volume of exports to third countries were made via the Chinese commodity code 7225 40 99 which has the lowest export price EUR 619 per tonne out of the eight Chinese commodity codes.

(161) The FOB GTA data was adjusted to ex works level. Thus the FOB price was reduced by the domestic transport cost based on information provided by the applicant in the request for review.

(162) The Commission compared the normal value established in accordance with Article 2(6a)(a) of the basic Regulation and the Chinese export price to third countries on an ex-works basis as established above.

(163) On this basis, the price differences between the normal value and the export prices to third countries established as a percentage of the CIF frontier price, range between 9 % and 97 %, depending on the Chinese commodity code. On average, the price difference found as a percentage of the CIF frontier price was 65 %.

(164) This suggests that if the measures were to expire, and the prices at which the Chinese exporting producers would export the product concerned to the Union are in line with prices to other third countries observed during the review, the dumping margins would likely be significant, similar to the levels found in the original investigation.

(165) In addition, as indicated in recitals (13) and (27), CISA and Primex claimed that in order to curb exports and redirect Chinese steel production to the Chinese domestic industry, the Chinese Ministry of Finance announced that as of 1 August 2021, certain steel products, including heavy plate, were no longer eligible for VAT export refund (67). CISA argued that the GOC’s intention behind this change in policy was to decrease exports and redirect Chinese production to the domestic industry. CISA argued that, as a result of this change in policy, a significant decrease of exports of heavy plate from China can be expected in the immediate future, while Primex argued that there would be a moderate increase in imports from China.

(166) While indeed the Chinese exporting producers lost this export incentive as of 2021, in view of: the (1) decrease in demand on the Chinese market as stated in recital (69); (2) the existence of anti-dumping measures in several other major markets as explained in recital (169); and (3) significant spare capacity as stated in recitals (66) and (69), the loss of this incentive would not preclude the Chinese producers from exporting to the Union market heavy plates in high volumes at dumped prices in case the measures are terminated in order to use their spare capacity. Furthermore, CISA and Primex did not quantify the likely impact the removal of the VAT refund may have on the export price. They also have conflicting views on the impact on import volumes if measures were allowed to lapse. The Commission therefore, rejected these arguments.

(167) The Commission examined the price levels which the Union producers would be able to attain on the Union market as compared to the Chinese exporting producers’ price levels to other third country markets.

(168) In the absence of cooperation from the Chinese producers, the Commission used GTA. The Commission found that during the review investigation period the average sales price of the Union industry on the free market (749 EUR/tonne) during the review investigation period as stated in Table 9 was the same as the average FOB price to third countries (EUR 749 per tonne) but higher than the average price of the Chinese commodity code with the biggest volume of exports. Therefore, Chinese exporting producers would find it advantageous to shift exports from third countries to the Union, should the measures lapse, thereby taking the opportunity to expand their exports to the Union market.

(169) According to information provided by the applicant in the request for review, internet research and examination of the WTO database, the Commission found that anti-dumping measures are imposed on heavy plate imports from the PRC to Brazil, Canada, Indonesia, Thailand, the United States of America (68) and the United Kingdom (69). Given the Chinese exporters’ difficulties to sell to all of these markets, if the current measures were allowed to expire, the Union market would become very attractive to Chinese exporters seeking to export their excess production and use spare capacity.

(170) In view of the assessment made in recitals (66) to (169), in particular the significant spare capacity of Chinese exporters, the attractiveness of the Union market and the low absorption capacity of third country markets, the Commission concluded that dumped imports from the PRC are likely to recur if the measures in force were allowed to lapse.

(171) Primex claimed that the level of imports in the Union in case the measures were terminated will not depend solely on the production capacity in China but on many factors of which the most important one was the consumer demand in the Union. Other factors were price and cost relations as well as the intensity of competition on the world market, the existence of trade barriers on the world market and the development of exchange rates. Primex also stated that how these factors will develop in the future cannot be predicted.

(172) As stated in recital (170) the Commission’s conclusion that dumped imports from the PRC are likely to recur in high volumes if the measures in force were allowed to lapse is not solely based on the spare capacity in China, but also on the attractiveness of the Union market and the low absorption capacity of third country markets. Primex did not substantiate its claim regarding the other factors and therefore it was rejected.

(173) The like product was manufactured by more than 25 producers in the Union during the period considered. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

(174) The total Union production during the review investigation period was established at around 9,4 million tonnes. The Commission established the figure on the basis of all the available information concerning the Union industry, such as the request for the expiry review, verified questionnaire replies of the sampled Union producers and the verified submission of EUROFER.

(175) As indicated in recital (41) above, three Union producers were selected in the sample. They represent more than 25 % of the total Union production of the like product and more than 31 % of the estimated total Union sales volume of the like product during the review investigation period.

(176) The Commission established the Union consumption on the basis of Eurostat import statistics and verified sales data from the Union industry.