Commission Implementing Regulation (EU) 2025/4 of 17 December 2024 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of titanium dioxide originating in the People’s Republic of China

• (181) It is apparent from the information supplied by LB and verified by the Commission that the related traders perform functions similar to those of an agent working on a commission basis. Indeed, LB itself concedes that its related traders do perform export sales functions. They market the products, facilitate contracts, ensure currency exchange and risk management, take care of contacts with existing and potential customers, arrange logistics, manage legal documentation, solicit, and receive the orders and negotiate the sales, issue invoices, and assume corresponding commercial risks. LB itself conceded that its related traders do perform export sales functions. In exchange for performing these functions both traders received a mark-up. LB failed to explain why these functions would be different to those functions would not be similar to those of an agent working on a commission basis. Therefore, contrary to the claim made by LB following definitive disclosure, the Commission provided consistent indicia demonstrating that LB traders performed functions comparable to those of an agent working on a commission basis. Furthermore, the above assessment indicates that the Commission does not consider the LB traders a single economic entity with the production entities. In any event, LB did not bring forward any evidence to substantiate such claim nor has formally requested prior to the adoption of the provisional measures the single economic entity treatment for any of the LB traders. The Commission recalled that in terms of the burden of proof, “where the EU institutions have adduced consistent indicia to establish that a trader affiliated to a producer carries out functions comparable to those of an agent working on a commission basis, it will be for that trader or that producer to adduce evidence that an adjustment under Article 2(10)(i) of the basic regulation is not justified”. [^ntr18-L_202500004EN.000101-E0018] In other words it is for LB to argue and substantiate that they form a single economic entity. LB failed to do so.

• (182) In line with the case-law of the European Court of Justice [^ntr19-L_202500004EN.000101-E0019], Article 2(10)(i) of the basic Regulation does not cover only commercial agency relationships in their strict sense. On the contrary, adjustment under the said provision is foreseen also in respect of the mark-up received even if the parties do not act on the basis of a principal-agent relationship but achieve the same result by acting as seller and buyer (which is the case here). LB producing entities and their related traders act as seller and buyer. The traders purchase the product concerned and subsequently resell it, receiving a mark-up. Such mark-up is explicitly recognised by Article 2(10)(i) of the Basic Regulation as a form of “commission”. This transfer of ownership to the related traders necessarily implies transfer of commercial risks, however it does not preclude the application of Article 2(10)(i) of the basic Regulation.

• (183) With reference to the notional profit of 6,89 % as generated by unrelated importers for another chemical product (PVA) and used in the present investigation to establish a reliable export price (see recitals (246) and (252) of the provisional Regulation), LB claimed following the provisional and final disclosure that LB HK does not carry out functions that are typical for an importer. Therefore, LB does not consider that a benchmark of an importer reflects a profit margin that LB HK can be expected to achieve. According to LB, at most an adjustment for the actual profit of LB HK can be made for LB HK involvement in the sales to the Union.

• (184) Akzo Nobel equally argued that the deducted profit margin of 6,89 % per trading entity is excessive and should be limited to a total of 6,89 % regardless of how many traders are involved or at the very least, the Commission should use 5 % profit margin previously used in Commission Regulations from 2007 and 2014 and concerning the chemicals industry. [^ntr20-L_202500004EN.000101-E0020]

• (185) First, Article 2(9) of the basic Regulation gives the Commission the choice between using the actual profit margin of the related importer and using a notional profit margin, the sole obligation being that the margin must be reasonable. Applying Article 2(9) of the basic Regulation by analogy to Article 2(10)(i), it was considered appropriate to use a reasonable profit margin as a basis for deduction under the said provision, to avoid any distorting effects that may arise from internal arrangements between the exporting producer and the related traders.

• (186) LB does not contest that both LB HK and BEL UK: (i) act as traders; (ii) incur relevant costs as such; (iii) receive a mark-up on the account of the functions they perform; and (iv) generate profit. It is also uncontested that both traders are related to the producer. Therefore, in line with its consistent practice confirmed by the General Court, [^ntr21-L_202500004EN.000101-E0021] the Commission applied Article 2(9) of the basic Regulation by analogy and used the SG&A costs and a notional profit margin based on the profit achieved by an unrelated trader/importer.

• (187) Regarding the quantification of the adjustment, what matters is the impact of the related trader’s role on the export price. The issue is what the actual export price would be based on an arm’s length relationship between the exporter and the trader. [^ntr22-L_202500004EN.000101-E0022] It is uncontested that both LB HK and BEL UK acted as traders for LB. It follows that a profit margin of an unrelated trader/importer is a reasonable benchmark for the adjustments. In other words, had LB HK and BEL UK been independent from LB, and the transactions between them and LB were at arm’s length, it is reasonable to assume that, in addition to covering their SG&A costs, they would have charged LB an amount equivalent to the nominal profit a trader/importer acting in this industry would expect to generate. LB failed to explain why this would not be the case for LB HK, especially since LB does not contest that LB HK acts as a trader, is remunerated for that in the form of a mark-up and generates profit. Using the actual profit of LB HK, as advocated by LB, is inappropriate due to the relationship between the producer and the trader, which affects that profit amount. Moreover, the profit margin used relates to a relatively recent investigation, rather than to information that is outdated and originates from 2014 or even 2007 (as put forward by Akzo Nobel). Furthermore, nothing in Article 2(10)(i) of the basic Regulation precludes the Commission from applying successive adjustments if successive traders are involved, whose involvement, had it been based on arm’s length transactions, would have affected the export price accordingly. It is therefore necessary to make the adjustments in order to remove factors affecting price comparability between normal value and export price. Consequently, LB’s and Akzo Nobel’s argument had to be rejected.

• (188) In response to the provisional disclosure as well as the final disclosure, LB argued that for BEL UK’s involvement in sales to the EU, instead of a profit margin of an unrelated importer established in the PVA investigation (6,89 %) a different basis should be used. Namely, LB argued that the adjustment for the “reasonable profit” of BEL UK regarding sales to the EU, should be based on the median profit margin established by a third-party professional firm in a benchmarking study analysing profit margins over several years for several companies performing similar functions as BEL UK. According to the LB’s submission following the final disclosure, what matters is the functions performed and not the products that are being sold. LB further argued that the failure by the Commission to compare BEL’s activities with those of the PVA importer and the fact that only data from a single source and from more than 4 years ago was used rendered the Commission’s benchmark unreasonable.

• (189) As set out in recital (185) above, when making adjustments under Article 2(9) and Article 2(10)(i) of the basic Regulation respectively, the Commission enjoys wide discretion between choosing the actual profit margin of the related importer and a notional profit margin, the sole obligation being that the margin must be reasonable for a trader / importer trading the product concerned or similar products. Furthermore, it is a consistent practice of the Commission to use a profit margin based on the profit achieved by an unrelated importer, be it for the purposes of Article 2(9) or 2(10)(i) of the basic Regulation. While the functions performed (i.e. importing business) are a key consideration in choosing the benchmark for reasonable profit, it is equally important for the Commission to identify importers active in the same industry (if not the same product). Moreover, the data on profit for the PVA sampled unrelated importers was produced for the purposes of a trade defence investigation and was duly checked and verified by the Commission. Even if the profit used is from 4 years ago this does nor render the benchmark unreasonable. In any event LB failed to explain why it would be so. The document referred to by LB Group is an internal report, issued specifically for LB, covering also companies from sectors other than chemical sector and considering companies also with negative profits, all of which undermines the reasonableness principle applied by the Commission in choosing the notional profit. Moreover, whilst seeking to lower the profit margin and thereby its dumping margin, at no point did LB explain in a substantiated manner why the profit margin found in a recent investigation and actually generated by a trader of chemical products should be deemed as unreasonable. LB Group’s argument was therefore rejected.

• (190) Further to the final disclosure, LB argued that, before the Commission can adjust the mark-up under Article 2(10)(i) of the basic Regulation, it is under the obligation to show that the mark-up is affected (i.e. not at arm’s length) by the relationship between the LB traders on one hand and the LB production entities on the other hand. In addition to that, according to LB, any adjustment for mark-up should be tailored to the functions carried out by these entities and, therefore, be linked to the expenses they incurred. LB further claimed by reference to the methodology used in OECD Transfer Pricing Guidelines that LB HK’s and BEL’s mark-up is at arm’s length.

• (191) As set out in recital (187), the actual profit generated by the LB traders is affected by the relationship with the LB producing entities. Indeed, as confirmed in Çolakoğlu, the principle set out in Article 2(9) of the basic Regulation, according to which ‘where it appears that the export price is unreliable because of an association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported products are first resold to an independent buyer’ must also be capable of applying when quantifying the amount of commission to be deducted from the export price in order not to deprive Article 2(10)(i) of the basic Regulation of its practical effect. [^ntr23-L_202500004EN.000101-E0023] Hence, the actual profit generated does not reflect the proper remuneration for the service rendered on an arm’s length basis. Reference is further made to the Commission assessment set out in recitals (185)-(189). Regarding the correlation between the number of functions performed and the mark-up adjustment to be made, the basic Regulation does not preclude the Commission from applying the same adjustment under Article 2(10)(i) for traders performing services to varying degrees. The LB traders do not need to perform the same functions or range of functions. The fact that the role of LB HK is in certain cases (for example when reselling to BEL, rather than directly to the unrelated customers) more limited does not invalidate the application of the same notional profit for both, LB HK and BEL, provided that both traders perform functions similar to those of an agent working on a commission basis (which is the case). Lastly, it is noted that the Commission assessment in this case is not based on any OECD guidelines, used for taxation purposes, rather than in the trade defence investigations. The claim was therefore rejected.

• (192) In relation to the VAT adjustment in constructing the normal value, LB argued that the Commission omitted the legal basis for the adjustment and failed to provide evidence or explanation as to why it was necessary to ensure price comparability. LB restated following the final disclosure that the Commission failed to show evidence in support of the adjustment made. First, as it follows from the provisional Regulation, namely Section 3.6, the VAT adjustment is made under Article 2(10) of the basic Regulation (more specifically Article 2(10)(k)). The Commission further elaborated on the adjustment and provided its reasoning in Section 4.3.6 of Annex 2 (entitled ‘Dumping calculations and information on the methodology used’) of the pre-disclosure document. The adjustment is made for a difference in VAT reimbursement between the domestic and export sales (zero refund of the VAT payable on the export sales is in place). Therefore, LB’s argument was rejected.

3.2.4.   Dumping margins

• (193) As described in recitals (164), (171) and (173), following claims from interested parties, the Commission revised the dumping margins.

• (194) The complainant submitted following the provisional Regulation that by finding a lower provisional dumping margin for Anhui Gold Star, it showed that Anhui sold TiO2 at considerably higher prices in the domestic market compared to LB.

• (195) It is noted that Article 2(6a) of the basic Regulation applies in this case and that correspondingly normal value for the sampled exporting producers is not calculated with reference to the domestic prices in China, but rather on the basis of replacement costs in a representative country (in this case Brazil) pursuant to Article 2(6a) of the basic Regulation.

• (196) Furthermore, the complainant questioned the involvement of all related companies in the investigation and whether the relationship between companies may have had an impact on the dumping margin calculation.

• (197) It is a consistent practice of the Commission to consider and duly reflect the cost structure of the individual sampled exporting companies in determining the basis for normal value, including whether and to what extent raw materials are sourced from third or related parties or manufactured internally or which initial inputs are used in making the product concerned.

• (198) Finally, the complainant sought clarification as to whether the duties set for the Anhui Gold Star Group will be extended to other TiO2 producers of a larger CNNC group, to which Anhui pertains. As set out in recital (199) of this Regulation, the individual duty of 11,4 % is set for the two exporting producers within the Anhui Gold Star group (which is indeed part of a wider corporate group owned by CNNC HUA YUAN TITANIUM DIOXIDE CO., LTD), namely Anhui Gold Star Titanium Dioxide (Group) Co., Ltd. and ANHUI GOLD STAR TITANIUM DIOXIDE TRADING COMPANY LIMITED and does not extend to other exporting producers, related or not to the said Anhui Gold Star group companies.

• (199) The definitive dumping margins expressed as a percentage of the cost, insurance and freight (CIF) Union frontier price, duty unpaid, are as follows:

Company	Definitive dumping margin
LB group: — LB GROUP CO., LTD. — HENAN BILLIONS ADVANCED MATERIAL CO., LTD. — LB LUFENG TITANIUM INDUSTRY CO., LTD. — LB SICHUAN TITANIUM INDUSTRY CO., LTD. — LB XIANGYANG TITANIUM INDUSTRY CO., LTD.	32,3  %
Anhui Gold Star group: — Anhui Gold Star Titanium Dioxide (Group) Co., Ltd. — ANHUI GOLD STAR TITANIUM DIOXIDE TRADING COMPANY LIMITED	11,4  %
Other cooperating companies	28,4  %
All other companies	32,3  %

4. INJURY

4.1.   Definition of the Union industry and Union production

• (200) In absence of any comments, recitals (261) and (262) of the provisional Regulation are confirmed.

4.2.   Determination of the relevant Union market

• (201) In absence of any comments, recitals (263) through (268) of the provisional Regulation are confirmed.

4.3.   Union consumption

• (202) In absence of any comments, recitals (266) through (272) of the provisional Regulation are confirmed.

4.4.   Imports from the country concerned

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

• (203) In absence of any comments, recitals (273) through (275) of the provisional Regulation are confirmed.

• (204) CNCIA objected to the Commission’s findings that the drop in import volumes observed in 2021 was due to extraordinary circumstances related to international shipping, claiming that the Commission provided no evidence in that regard. CNCIA reiterated this claim in its comments on the final disclosure adding that in some recent investigations [^ntr24-L_202500004EN.000101-E0024] import volumes from China to the EU rose sharply in 2021 and that the Union industry’s export volumes also increased in 2021.

• (205) The Commission reminded that the year 2021 was affected by large disruptions in international supply chains due to port closures and subsequent shortage of shipping containers, which also drove the ocean shipping costs up by several orders of magnitude into 2022, while import volumes of many products went down.

• (206) The Commission already reached such conclusions in recent cases, [^ntr25-L_202500004EN.000101-E0025] while the complainant and Siegwerk also expressed the same position in this case. On the other hand, CNCIA offered no alternative explanation for this drop in volume of imports, compared to all the other years when they have been on constant rise.

• (207) The Commission thus rejected this claim and confirmed its conclusions from recitals (276) and (277) of the provisional Regulation.

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

• (208) In the absence of any comments, recitals (278) through (281) of the provisional Regulation are confirmed.

• (209) In its comments on the provisional Regulation, AkzoNobel stated that it is unclear from the provisional Regulation whether the Commission complied with the case-law of the Court of Justice, requiring the Commission to calculate undercutting and underselling at the same level of trade. [^ntr26-L_202500004EN.000101-E0026]

• (210) The Commission pointed in that regard to recital (283) of the provisional Regulation, where it specified that the calculations were done on the same level of trade as explained in the recitals (247), (248) and (249) of the provisional Regulation. The Commission also performed an alternative set of calculations, without the adjustment of SG&A and profit for exporting producers under Article 2(9), and these also showed significant undercutting and underselling margins.

• (211) The Commission therefore confirmed its conclusions set out in recitals (282) and (283) of the provisional Regulation.

• (212) AkzoNobel further disagreed with the Commission’s conclusions on price suppression and depression, claiming that the Commission should find that there is no price suppression or depression.

• (213) AkzoNobel first claimed that the Commission concluded that there is price depression “only because prices decreased by 4 % from 2022 to the [investigation period],” while the Commission “ignored that prices increased 35 % from 2020 to 2022, and by 31 % from 2020 to the [investigation period].”

• (214) Second, AkzoNobel believes that the fact that the complaint did not allege the existence of price suppression casts doubt on the Commission's conclusion that there was price suppression.

• (215) Finally, AkzoNobel claimed that the Commission in any case failed to assess the explanatory force of Chinese imports for any price suppression, required under WTO rules. [^ntr27-L_202500004EN.000101-E0027]

• (216) The Commission considered the above claims by AkzoNobel unfounded.

• (217) First, just because the complaint did not allege price suppression, that does not mean that such price suppression did not occur. As explained in recital (316) read together with recitals (308) and (285) of the provisional Regulation, the Commission concluded that there was price suppression in the period considered due to the overlap of several factors:

• (a) Chinese imports were consistently priced below the Union industry’s prices, and they were increasing in volume in each year of the period considered (the exception to both being 2021 when shipping costs increased and volumes of imports decreased), which coincided in time with

• (b) a rise in the Union industry’s cost of production in each year of the period considered, while

• (c) the Union industry’s sales price did not increase at the same pace and therefore they could not fully offset those cost increases.

• (218) The Commission thus found the existence of price suppression and assessed the causal link between Chinese imports and price suppression.

• (219) Second, contrary to AkzoNobel’s claims, the Commission did not conclude that there was price depression in the investigation period only because the Union industry’s prices decreased between 2022 and the investigation period.

• (220) As set out in recital (316) and recitals (286), (308), and (309) of the provisional Regulation, and in light of the factors mentioned in recital (217), the Commission concluded that there was price depression because:

• (a) while the price of Chinese imports increased in each year of the period considered, in the investigation period the prices of Chinese imports suddenly dropped forcing the Union industry to decrease their prices to maintain at least some share of the market, while

• (b) Chinese imports gained market share.

• (221) The Commission thus rejected AkzoNobel’s comments as unfounded and confirmed recitals (284) through (286) of the provisional Regulation.

4.5.   Economic situation of the Union industry

4.5.1.   General remarks

• (222) In absence of any comments, recitals (287) through (291) of the provisional Regulation are confirmed.

4.5.2.   Macroeconomic indicators

4.5.2.1.   Production, production capacity and capacity utilisation

• (223) In absence of any comments, recitals (292) through (296) of the provisional Regulation are confirmed.

4.5.2.2.   Sales volume and market share

• (224) In absence of any comments, recitals (297) through (299) of the provisional Regulation are confirmed.

4.5.2.3.   Growth

• (225) In absence of any comments, recital (300) of the provisional Regulation is confirmed.

4.5.2.4.   Employment and productivity

• (226) In absence of any comments, recitals (301) through (303) of the provisional Regulation are confirmed.

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

• (227) In absence of any comments, recitals (304) and (305) of the provisional Regulation are confirmed.

4.5.3.   Microeconomic indicators

4.5.3.1.   Prices and factors affecting prices

• (228) In absence of any comments, recitals (306) and (307) of the provisional Regulation are confirmed. After addressing the comments by AkzoNobel on price suppression and depression in section 4.4.2 above, the Commission confirmed recitals (308) and (309) of the provisional Regulation.

4.5.3.2.   Labour costs

• (229) In absence of any comments, recitals (310) and (311) of the provisional Regulation are confirmed.

4.5.3.3.   Inventories

• (230) In absence of any comments, recitals (312) and (313) of the provisional Regulation are confirmed.

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

• (231) The Commission corrected a clerical error in the data reported in Table 11 in the provisional Regulation regarding the cash flow of the Union industry during the IP. In fact, the cash flow in the IP was minus 42,3 million EUR instead of minus 4,3 million EUR. However, the indexed figures showing the trend of cash flow over the period considered were accurate in Table 11 of the provisional Regulation.

• (232) The corrected cash flow figure is shown in the table below.

Table 11

Profitability, cash flow, investments and return on investments

	2020	2021	2022	Investigation period
Profitability of sales in the Union to unrelated customers (% of sales turnover)	7,9  %	9,8  %	5,1  %	–11,7  %
Index	100	125	65	- 148
Cash flow (EUR)	92 461 606	124 892 941	3 767 112	-42 293 138
Index	100	135	4	-46
Investments (EUR)	37 870 922	36 314 534	39 542 712	43 030 210
Index	100	96	104	114
Return on investments	53 %	41 %	2 %	-67  %
Index	100	79	5	- 127
Source: Verified questionnaire replies of the sampled Union producers.	Source: Verified questionnaire replies of the sampled Union producers.	Source: Verified questionnaire replies of the sampled Union producers.	Source: Verified questionnaire replies of the sampled Union producers.	Source: Verified questionnaire replies of the sampled Union producers.

• (233) This clerical error does not impact the conclusions in section 4.5.3.4. of the provisional Regulation.

• (234) With the above modification to the table 11, the Commission confirmed its findings in recitals (314) through (322) of the provisional regulation.

4.6.   Conclusion on injury

• (235) CNCIA argued in its comments that the Union industry was not suffering material injury and that the injury indicators set out in the provisional Regulation did not paint a negative picture of the Union industry. CNCIA reiterated this claim in its comments on the final disclosure.

• (236) In this respect CNCIA argued that despite the drop in certain injury indicators such as production, the Union industry was able to maintain its strong position on the Union market and lost only a few percentage points in market share.

• (237) CNCIA also maintained that the drop in profitability of the Union producers in the IP was only temporary as it was due to the sharp increase in production costs combined with a strong drop in demand which prevented the Union industry from passing on its increased costs to consumers.

• (238) CNCIA also pointed to some of the injury indicators and analysed them separately claiming that the decrease was either limited or due to other factors than the Chinese imports.

• (239) The Commission recalls that it analysed all injury indicators separately and as a whole in its injury analysis. In particular, the Commission found price undercutting ranging between 14 % and 15,3 % as set out in recital (283) of the provisional Regulation. The Commission also found that Chinese landed prices were even below Union industry’s average cost of production both in 2020 and the investigation period (recital (342) of the provisional Regulation).

• (240) In addition, all main injury indicators followed a negative trend: profit, cash flow, return on investment plummeted in the IP. Over the period considered, production volume decreased by 31 %, sales volume dropped by 25 % and market share, employment and productivity also decreased. On the basis of the assessment carried out and described in the provisional Regulation, the Commission concluded that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation.

• (241) None of the arguments of CNCIA put into question the above conclusion. The Commission therefore confirms its findings in recitals (323) – (337) of the provisional Regulation.

5. CAUSATION

5.1.   Effects of the dumped imports

• (242) Interested parties claimed that it was not possible to make a valid finding on the causal link between the presence of allegedly dumped imports of TiO2 from China and injury caused to the Union industry because several factors, which do not reflect normal market reality, influenced the investigation period and the period concerned.

• (243) Siegwerk argued in that regard that, first, China greatly reduced its overall exports during the Covid-19 pandemic and thus the increase in imports of Chinese TiO2 observed after the end of the pandemic actually represented a normalisation of trade volumes. Second, demand in the Union was above average during the pandemic. Third, Siegwerk claimed that, as a result of the prior two factors, the Union producers were operating in “near-monopolistic position” and were able to achieve extraordinary profits during the pandemic.

• (244) The Commission noted that it analysed these elements in its analysis of the injury indicators and the causal link in the provisional Regulation.

• (245) In Section 4.4.1, recital (276) of the provisional Regulation, the Commission observed that during 2021 there was indeed a drop in volumes of imports from China. The Commission concluded that this was due to general disruptions of sea trade from China which was present in that year as a consequence of the Covid-19 pandemic.

• (246) Likewise, the Commission concluded in recital (271) of the provisional Regulation that demand was above average in 2020 and 2021.

• (247) The Commission recalled that, precisely because of those two factors together, the Union industry managed to temporarily increase its market share and profitability in 2021, while volumes of Chines imports and market shares both went down in that year. [^ntr28-L_202500004EN.000101-E0028]

• (248) The Commission thus established in the provisional Regulation, in the context of the overall analysis of all the injury indicators taken together, that these two elements do not invalidate the conclusions on injury and the causal link. The Commission thus rejected the above claims.

• (249) CNCIA also noted that the Chinese import prices in 2022 were only 1,5 % lower than the Union industry sales prices, which cannot be considered to represent “significant price undercutting.” On the other hand, prices of imports from Mexico were 65 % lower in that year.

• (250) At the outset the Commission noted that simple price comparison cannot be considered as undercutting as it fails to account for product types. The Commission noted that, even if 1,5 % lower prices in 2022 could not be considered as significant price undercutting (quod non), the difference in price was much higher in other years: 6,4 % in 2020, and 24,2 % in the investigation period. Significant price difference was therefore present in the period concerned.

5.2.   Effects of other factors

• (251) Several parties contested the Commission’s causality analysis after the provisional Regulation.

• (252) CNCIA argued that Chinese imports were not the cause for the state of the Union industry and claimed that the Commission did not examine the other factors which affected the Union industry: third country imports, rising cost of production, contraction in demand and intra-Union industry competition.

• (253) Other interested parties similarly claimed that a contraction in demand and the rising cost of production were the cause of injury to the Union industry.

• (254) Felix, Munksjö, and AkzoNobel claimed that the Commission made a manifest error in assessment by not acknowledging cyclicality in the TiO2 market as a cause of injury to the Union industry.

• (255) Siegwerk further listed other factors that influenced the market from the end of 2023 onwards. Since these occurred after the investigation period, they are not pertinent for the Commission’s backward-looking analysis. At the same time, they were not such to make the imposition of anti-dumping duties manifestly inappropriate. They mainly concern the evolution of market demand, which the Commission assessed in section 5.2.1 below.

• (256) In addition, AkzoNobel claimed that complainant’s investment decisions actually caused negative profitability. AkzoNobel pointed to the investment and cashflow figures in the investigation period, concluding that the 10 million EUR investment split over 2022 and the investigation period [^ntr29-L_202500004EN.000101-E0029] was directly responsible for the –4,3 million EUR negative cash flow in the investigation period.

• (257) However, as the Commission explained in recitals (231) and (232) above, the –4,3 million negative cashflow figure in the investigation period was a clerical error in the provisional Regulation. The actual drop in cashflow was much more significant: 50 percentage points and the cashflow of the Union industry was –42,3 million EUR, as shown in the corrected Table 11 above.

• (258) This drop in cash flow cannot thus be attributed solely to the above investment.

• (259) The Commission addressed the other comments, outlined in recitals (252) to (254), in relevant subsections below.

5.2.1.   Cyclicality of the TiO2 market

• (260) Several interested parties made comments in relation to Commission’s findings set out in recitals (349) to (358) of the provisional Regulation. Felix and Munksjö claimed that the Commission failed to sufficiently consider cyclicality, being one of the crucial characteristics of the TiO2 market, thus breaching its obligation under Article 3(7) of the basic Regulation.

• (261) While the users acknowledge that cyclicality is not exclusive to the TiO2 market, they claim that it is its vital attribute which affects the dynamics in this market (pricing and availability of TiO2 and negotiating power of various parties) and thus has an impact on the Union producers’ performance. Any downturn in financial performance experienced during periods of lower demand, they can recover during the periods of market growth.

• (262) AkzoNobel submitted comments along similar lines. They claimed that the Commission’s conclusions that “cyclicality is not unique to the TiO2 market and thus “merits” no “special consideration” [^ntr30-L_202500004EN.000101-E0030] and that it is not possible to “draw a pattern showing with utter certainty when an upturn or a downturn will take place” [^ntr31-L_202500004EN.000101-E0031] to conclude that “contraction was bound to happen in 2023” are not valid reasons to reject the claim that the injury to the Union producers were caused by a bottom of the cycle.

• (263) AkzoNobel submitted that while cyclicality indeed was not unique to the TiO2 industry, it was a known factor in the industry and the Commission was required to assess the extent to which it caused the injury to the Union industry. It is irrelevant that one cannot accurately predict when a downturn would happen, but, as the Commission itself concluded, after the “big demand uptick” in 2020 and 2021, “any drop in consumption that follows would naturally also be pronounced.”

• (264) AkzoNobel stressed that this confirmed its point that the performance of the Union industry followed a cyclical pattern. Thus, the selected period concerned, and the investigation period would have shown negative trends even in the absence of any imports. AkzoNobel reiterated that the complainant had selected the investigation period shrewdly with this in mind, so that it would coincide with the bottom of a cycle.

• (265) Many parties claimed, essentially, that the Union industry was bound to perform poorly in the investigation period, pointing to the cyclical nature of the market and the market intelligence forecasts, and that therefore there was no injury caused to the Union industry by the Chinese imports.

• (266) The complainant contested these claims. While they acknowledged the existence of cyclicality, they pointed to the fact that Chinese import volumes and market shares have consistently increased over time, starting to significantly rise since 2017.

• (267) The complainant thus concluded that the impact of cyclicality was negligible, since even despite cyclical trends, Chinese imports into the Union kept rising, both in the previous period of contraction in demand in 2017-2018, and in the investigation period.

• (268) The Commission noted that it analysed in detail whether and to what extent cyclicality could have affected the Union industry, and concluded that, due to all the considerations laid out in the provisional Regulation, it cannot be claimed that it is the cyclicality in the market which is the sole reason for injury.

• (269) In its provisional findings, the Commission acknowledged that the TiO2 market is indeed cyclical on the global level (see for instance recital (355) of the provisional Regulation). The Commission noted, however, that cyclicality is not specific to the TiO2 market, but that many markets go through regular cycles of contraction and expansion in demand. [^ntr32-L_202500004EN.000101-E0032] It could not thus be concluded that the fact of cyclicality alone suffices to attenuate the causal link.

• (270) Furthermore, the Commission found that, compared to the global predictions of TiO2 market behaviour by the market intelligence forecasts which the interested parties relied on to claim that cyclicality is the main cause of injury to the Union industry, [^ntr33-L_202500004EN.000101-E0033] the Union (and also global) market was actually affected by several extraordinary circumstances. [^ntr34-L_202500004EN.000101-E0034] These circumstances led to the Union market deviating from said predictions, [^ntr35-L_202500004EN.000101-E0035] making it unrealistic that the predicted downturn would have, as alleged, happened in 2023 in exactly the kind of way which would have resulted in the level of injury that the Union industry experienced in the investigation period. [^ntr36-L_202500004EN.000101-E0036]

• (271) Instead, these circumstances affected the behaviour of the market cycle in the Union. Thus, while the Commission acknowledged that a downturn may have been bound to happen, the injury suffered by the Union industry was much too pronounced to be attributed squarely to the cyclicality, and the situation in the Union market had to be considered more broadly than just through the prism of cyclicality.

• (272) As the Commission acknowledged in recital (388) of the provisional Regulation, the drop in demand in 2022 and the investigation period (whether due to an expected downturn in the cycle or not) indeed made the Union industry’s situation challenging. Nonetheless, this (either on its own or taken together with other factors such as increase in cost of production) did not attenuate the causal link between dumped Chinese imports and injury.

• (273) As explained in recital (389) of the provisional Regulation, imports from China were increasing throughout the period considered. What is more, even in the contracting market of 2022 and the investigation period, when import volumes from virtually all other third countries were decreasing, alongside the Union industry’s sales volumes, the volumes of Chinese imports kept going up and gaining market share. As already concluded in recital (361) of the provisional Regulation, this is not to be expected in a shrinking market.

• (274) To reinforce the claim that the injury was caused by a bottom of a cycle which coincided with the investigation period, and out of which the Union industry was now exiting, AkzoNobel submitted public global earning reports from Tronox Holdings plc (‘Tronox Holdings’) [^ntr37-L_202500004EN.000101-E0037]and Kronos Worldwide, Inc. (‘Kronos Worldwide’) [^ntr38-L_202500004EN.000101-E0038] from Q1 2024.

• (275) These reports show Kronos Worldwide reporting USD 23,4 million profit in Q1 2024 and an increase in capacity utilization and sales volumes of 11 percentage points and 15 %, respectively, in Q1 2024 compared to Q1 2023. The Tronox Holdings report showed an increase in sales volumes of 18 % in Q1 2024 compared to Q4 2023, stressing good performance in Europe, and an EBITDA margin [^ntr39-L_202500004EN.000101-E0039] of 16,9 % at the global level. AkzoNobel further cited Tronox Holdings’ report itself stating that such increase in demand is indicative of a front end of a recovery.

• (276) The Commission noted on the outset that it does not collect post-investigation period data on the Union industry in a material injury analysis, while non-verified financial data which includes activities other than TiO2 [^ntr40-L_202500004EN.000101-E0040] and related companies outside the Union cannot be considered relevant for Commission’s analysis.

• (277) In light of AkzoNobel’s claims, however, the Commission nevertheless examined the publicly available financial reports for the first half of 2024 for Tronox Holdings and Kronos Worldwide at the global level. The Commission also examined the reports for the first half of 2024 of Grupa Azoty Zakłady Chemiczne “Police” S.A. (‘Police’) and Cinkarna metalurško kemična industrija Celje, d.d. (‘Cinkarna’), considering that these Union producers operate TiO2 facilities in the Union only and had publicly available financial reports.

• (278) In that regard the Commission noted that, while EBITDA margin may have indeed been high for Tronox Holdings in Q1 2024, the Commission’s analysis in Table 11 looks at income before tax to determine the net profit margin, making EBITDA an improper comparison. Nonetheless, examining even Tronox Holdings’ EBITDA margin evolution year-over-year between 2023 and 2024, there is a decrease both in Q1 and Q2. This is not indicative of a recovery in 2024 compared to the investigation period, contrary to AkzoNobel’s claims.

• (279) Furthermore, Tronox Holdings’ income before taxes was USD 2 million in Q1 2024 [^ntr41-L_202500004EN.000101-E0041], compared to USD 34 million in Q1 2023, showing a significant decrease year-over-year. On the other hand, in Q2 it somewhat increased, from 53 million in Q2 2023, to 55 million in Q2 2024. Nonetheless, as percentage of net sales, this translates into a pre-tax profit of 0,2 % in Q1 2024 and 6,7 % in Q2 2024, compared to 4,8 % in Q1 2023, 6,7 % in Q2 2023. This shows that profitability situation remained at best the same for Tronox Holdings at the global level.

• (280) Kronos Worldwide did show better performance. Half year figures [^ntr42-L_202500004EN.000101-E0042] show that Kronos Worldwide posted 39,6 million USD income before taxes in first half of 2024, compared to 34,4 million USD losses in first half of 2023. This translates into a pre-tax profit margin of 4 % in first half 2024 compared to -4 % loss in first half of 2023.

• (281) Police, on the other hand, reported pre-tax loss of –10,12 % as percentage of turnover in H1 2024 [^ntr43-L_202500004EN.000101-E0043] (even bigger losses than -5 % from first half of 2023), while Cinkarna reported net profit as percentage of turnover of 7,38 % [^ntr44-L_202500004EN.000101-E0044] (compared to almost the same level of 7,30 % the year before). Neither of these are indicative of a recovery, as AkzoNobel argued.

• (282) In their financial reports, Police reported 20 % increase in sales volumes, and Cinkarna 5 % increase. Both of those producers are among the smaller ones in the Union, however, representing around [3-8] % of Union production capacity each. Tronox Holdings and Kronos Global (parent companies of two of the Union producers that were sampled, among other reasons, due to their size) claimed their global sales volume increase of 11 % and 15 %, respectively. However, the Commission has no specific information on the evolution of Tronox and Kronos sales volumes in the Union.

• (283) The Commission thus concluded that the available post-investigation period data does not indicate that the Union producers stopped suffering injury in 2024, even if the TiO2 market might see an increase in demand, and Kronos Worldwide was performing better on the global level than it did in the investigation period. Moreover, it does not render the imposition of the proposed anti-dumping duties manifestly inappropriate. [^ntr45-L_202500004EN.000101-E0045]

5.2.2.   Demand in the Union market

• (284) As the contraction in demand was already addressed in section 5.2.1 above, in light of those considerations and absence of additional comments to the contrary, the Commission confirmed its conclusions set out in recitals (359) through (365).

5.2.3.   Rising production costs

• (285) Siegwerk further claimed that the Russian invasion of Ukraine in February 2022 caused a sharp increase in energy costs in the Union, while resulting inflation caused a decrease in demand for TiO2. The same factors also led to a spike in costs of production which made Union TiO2 more expensive compared to Chinese TiO2.

• (286) The Commission took those elements into account in its analysis of injury and causal link. [^ntr46-L_202500004EN.000101-E0046] The Commission thus rejected those claims.

• (287) CNCIA contested the Commission’s conclusion in recital (383) of the provisional Regulation, that, the increase in cost of production was global and affected all the market players to a similar extent as evidenced by the rising prices of imports from other third countries than China.

• (288) CNCIA argued that the Commission therein failed to adequately separate and distinguish the effect of increasing cost of production on the Union industry from the effects of Chinese imports, while, in any case, the Commission should have considered the different degrees to which such increases in costs may have affected different market players.

• (289) The Commission clarified in that regard that the global increase in cost of production, and notably the main raw material, ilmenite ore, would have affected all the market players. In other words, such an increase in costs was not an element that was unique to the Union industry only and thus capable of attenuating the causal link.

• (290) At the same time, neither the exporting producers nor CNCIA present evidence that would indicate that other market players, such as Chinese exporting producers, were affected differently.

• (291) In its comments on definitive disclosure, CNCIA argued that the Commission was incorrect to conclude that the cyclicality of demand and the increase in production costs, which were factors not specific to the TiO2 market, did not attenuate the causal link. In this respect, the CNCIA claimed that a factor did not need to be unique to the Union industry to influence the casual link. The Commission recalls that it analysed in detail all claims relating to the cyclicality of the TiO2 market in recitals (349) to (358) of the provisional Regulation and in recitals (260) to (283) of the present Regulation. The Commission also analysed in detail all claims relating to the rising production costs in recitals (381) to (384) of the provisional Regulation and in recitals (285) to (290) in the present Regulation. The Commission recalls its conclusion in recital (383) that the increase in cost of production, notably the price of the main raw material, ilmenite ore, was global and affected all the market players and was therefore not specific to the Union industry. However, contrary to CNCIA’s claim, this finding cannot be interpreted as a general conclusion on whether a factor needs to be unique to the Union industry to influence the casual link.

• (292) The Commission thus rejected the above arguments and confirmed its conclusion that the rising costs of production did not attenuate the causal link.

5.2.4.   Imports from third countries

5.2.4.1.   Imports from the United Kingdom

• (293) In relation to Commission’s conclusion set out in recitals (366) and (367) of the provisional Regulation, Felix and Munksjö claimed that the fact that TiO2 production plants in the UK are owned by Tronox and Venator, does not mean that they are not in competition with other Union producers.

• (294) In relation to the same recitals, the CNCIA argued that, if UK producers are not in competition with the Union industry on the Union market, imports from the UK to the Union should be considered ‘self-imports’ by the Union industry and therefore be included in the market share of the Union industry.

• (295) Felix and Munksjö further claimed that the Commission is under obligation to examine whether “restrictive trade practices of, and competition between, third country and Union producers” could have been the cause of injury to the Union industry.

• (296) The Commission clarified that recitals (366) to (373) of the provisional Regulation concerned the analysis whether imports from third countries, including imports from the UK might have contributed to the injury of the Union industry. In this respect, the Commission concluded that the average price of imports from the UK to the Union were the highest of all imports from third countries to the Union, considerably higher than Chinese prices and even higher than Union sales prices between 2021 and the investigation period and therefore they did not contribute to the injury of the Union industry.

• (297) As concerns the arguments referred to in recital (294), the Commission notes that the concept of “self-import” is unknown under the basic Regulation and products produced in a third country cannot be considered as produced by the Union producers. Therefore, the Commission rejected the argument that imports from the UK should be added to the market share of the Union industry.

• (298) In that regard, the Commission recalled that it had already established in recital (367) of the provisional Regulation that import prices from the UK were higher than the Chinese import prices. For that matter, UK import prices were the highest from all third country imports, and higher even than the Union industry prices throughout the period considered, except in 2020.

• (299) In its comments on the final disclosure, CNCIA reiterated its claim that imports from the UK were conducted by the Union producers themselves and should be taken into account for the assessment of the injury indicators. CNCIA also repeated its argument that the Union industry might have shifted its production to their non-EU production sites in the UK and in other non-EU countries and that this shift could potentially impact the injury indicators for their EU-based operation and explain the decline in production volume and capacity utilization. CNCIA did not provide any evidence to support this hypothesis.

• (300) In addition, CNCIA stated that the Commission took into account ‘self-imports’ in the investigation into battery electric vehicles [^ntr47-L_202500004EN.000101-E0047] differentiating between imports by ‘Chinese brands’ and those by Union producers and also in the investigation regarding polyethylene terephthalate (PET) from China [^ntr48-L_202500004EN.000101-E0048] adjusting the market share of the Union industry to take into account imports made by a Union producer. Moreover, CNCIA claimed that the European Court of Justice also recognized the relevance of considering the imports by the Union industry when defining the Union industry. [^ntr49-L_202500004EN.000101-E0049]

• (301) In this respect, the Commission first recalls that it assessed the effect of imports from the UK and other third countries in recitals (367) to (373) of the provisional Regulation and concluded that they did not attenuate the causal link between the dumped Chinese imports and the injury suffered by the Union industry. Concerning past investigations and the judgement of the Court of Justice relied on by CNCIA and referred to in recital (300), in those cases the imports made by the Union producers were from the country concerned by the investigation and not from other third countries and were taken into account in order to assess the impact and the market share of imports from the country concerned. In the present investigation that is not the case, the Union industry does not import TiO2 from China and therefore there is no need to differentiate between the imports made by the Union industry and the rest of the imports.

• (302) Concerning CNCIA’s hypothesis on the strategic shift of production by the Union industry whereby they allegedly lowered the production at their EU facilities and enhanced production in the UK in order to import these volumes to the EU, the Commission notes that the volume imports from the UK to the EU dropped by almost half during the period considered and their market share also decreased while their average price was the highest of all imports and therefore this claim is not substantiated. Moreover the hypothesis itself was not supported by any evidence.

• (303) The Commission thus maintained its conclusion that imports from the UK did not attenuate the causal link established between the dumped Chinese imports and the injury suffered by the Union industry.

5.2.4.2.   Imports from Mexico and the USA

• (304) CNCIA argued the Commission did not sufficiently assess the impact of imports from Mexico on the state of the Union industry. In this respect, CNCIA pointed out that the prices of Mexican imports were significantly lower than Chinese, except prices in the investigation period, and they were also considerably lower than the prices of the Union industry throughout the period considered and that imports from Mexico (and from the USA) did not lose market share in the investigation period compared to 2020. CNCIA repeated the same claims in its comments on the final disclosure, without providing new evidence to contest Commission’s conclusions.

• (305) The Commission recalled that the volume of imports from Mexico and the USA decreased over the period considered as set out in recital (369) of the provisional Regulation and their market share has remained stable during the period considered. The fact that Mexican imports did not increase in volume, and they maintained their market share at 8 % despite their low prices throughout the period considered while Chinese imports increased both in terms of volume and market share, show that Mexican imports are not susceptible of attenuating the causal link between dumped imports from China and the injury suffered by the Union industry.

• (306) Without further claims or evidence to the contrary, the Commission thus confirmed its conclusion from recital (373) of the provisional Regulation, that imports of TiO2 from third countries did not cause injury to the Union industry.

5.2.5.   Export performance of the Union industry

• (307) CNCIA objected to the Commission’s conclusions in recital (378) of the provisional Regulation. CNCIA noted that by relying on the initiation of an investigation by the Brazilian investigating authority, for which evidentiary threshold is much lower than for definitive finding of injurious dumping, the Commission is obstructing the right of defence of the exporting producers.

• (308) In addition, CNCIA claimed that the Commission’s conclusion that China’s geographical proximity to Japan and Taiwan means that Chinese TiO2 exports could have played a role in closure of the latter’s TiO2 plants is logically flawed. Geographic proximity between the countries is not a relevant criterion in anti-dumping investigations.

• (309) The Commission underlined that the relevant recital was a summary of the complainant’s claims that unfair trade practices of the Chinese exporting producers in all markets were making it hard for them to compete also in the export markets without a conclusion on those claims.

• (310) In fact, the Commission concluded in recital (90) of the provisional Regulation that, driven by 13^th and 14^th Five Years plans, large increases in Chinese TiO2 production capacities took place already between 2016and 2020 with a further capacity expansion expected, which is difficult to absorb on the Chinese domestic market and which will encourage Chinese producers to export.

• (311) Finally, the present investigation has found that Chinese exporting producers are engaging in injurious dumping in the EU.

• (312) In any case, even if there were no indications that Chinese exporters could be practicing dumping in other markets, this assessment of the complainant’s claims was ancillary to the conclusion that the export performance of the Union industry is not the cause of its injury.

• (313) Therefore, in absence of any comments to recitals (374) to (377) and (379), the Commission confirmed those recitals and, taking them together with the above, maintained its conclusion from recital (380).

5.2.6.   Intra-Union industry competition

• (314) CNCIA brought forward new arguments at the definitive stage, claiming that the Commission should have examined the effects of intra-Union industry competition on the injury it may have suffered. CNICIA pointed to the public statements of Union producers’ executives and published annual reports which show that the other Union producers are their main competitors.

• (315) The Commission pointed out in that regard that it is only natural and expected that in the free-market Union industry members would compete with each other. However, such competition is not something that would have driven down the performance of the entire Union industry – some would perform better while others would perform worse.

• (316) The Commission also reminded that it always investigates a representative sample of Union producers precisely to get a reasonable understanding of how the industry as a whole was performing in the period concerned, to level out any outliers. No party objected to the selection of the sample on the grounds that it would not be representative for the situation of the Union industry.

• (317) The Commission thus rejected these claims as unfounded.

5.3.   Conclusion on causation

• (318) In its comments on the final disclosure CNCIA argued that the Commission failed to address its claims on the lack of causation. In this respect CNCIA reiterated its claims that the Union industry was not suffering material injury, and even if material injury was found, this was not caused by Chinese imports of TiO2 but by the cumulative impact of the contraction in demand and the parallel increase in production costs which would have prevented the Union industry from increasing its prices even in the absence Chinese imports. The CNCIA also reiterated its reference to the Commission decision regarding imports of certain soy protein products originating in China [^ntr50-L_202500004EN.000101-E0050]. CNCIA also reiterated its comment that the Chinese imports do not have explanatory force for the suppression of domestic prices as required by WTO Appellate Body in HP-STT (Japan) [^ntr51-L_202500004EN.000101-E0051].

• (319) The Commission assessed the above claims in recitals (363) and (381) to (384) of the provisional Regulation. Concerning price suppression, the Commission confirmed its findings in recitals (284), (285) and (316) of the provisional Regulation and in recital (217) of this Regulation.

• (320) In light of the above considerations, and in absence of further comments to the contrary, the Commission confirmed its conclusions from recitals (388) through (394) of the provisional Regulation.

6. LEVEL OF MEASURES

6.1.   Injury margin

• (321) In absence of any comments, the Commission confirmed its conclusions from recitals (398) through (415) of the provisional Regulation.

6.2.   Examination of the margin adequate to remove the injury to the Union industry

• (322) In absence of any comments, recitals (416) through (418) of the provisional Regulation are confirmed.

6.3.   Conclusion on the level of measures

• (323) Following the above assessment, definitive anti-dumping duties should be set in accordance with Article 7(2) of the basic Regulation. The amount of the definitive duty is set out in recital (541) below.

7. UNION INTEREST

• (324) Following the publication of the provisional Regulation, several new interested parties came forward opposing the measures. As indicated in recital (13) above, ten users and four user associations submitted comments opposing the measures. Hearings were held with six of those users and two users’ associations. Multiple new evidence was submitted to show that duties would have undue impact on the users.

• (325) In total, users employing an estimated 30 000 people came forward in the investigation opposing the duties. Furthermore, CEPE, a European level association of paints, printing inks and artists’ colours producers in Europe claimed that the members it represents employ up to 150 000 people, with most of them being SMEs.

• (326) AkzoNobel in that regard pointed out that the fact that there are so many interested parties underscores how big of an impact, duties will have on users and that more attention should be paid to their interests.

• (327) The Commission took all their claims into account and assessed them in detailed in this section.

7.1.   Interest of the Union producers

• (328) Siegwerk claimed that the imposition of anti-dumping duties would result in a relocation of production capacities of large multinational users of TiO2 outside the Union, while SMEs, which do not have such flexibility in relocating assets, would be forced to shut down or curtail production. This would result in Union producers losing a large chunk of their customers, ultimately adversely affecting their performance too.

• (329) While such risk may exist, the Commission considered that the more imminent risk from price and volume pressure of Chinese dumped imports vastly outweighed any potential risk to the Union industry compared to the potential decreased demand further down the line.

• (330) In light of the above, and in absence of further claims, recitals (422) to (424) of the provisional Regulation are confirmed.

7.2.   Interest of unrelated importers and traders

• (331) AAKO claimed that the duties at the level proposed in the provisional Regulation would have a huge impact on prices of the TiO2 they import and the sunscreens industry, since that type of TiO2 can cost up to eight times more than the more common grades.

• (332) The Commission addressed the effect of definitive duties on AAKO and similar importers, as well as their customers in recital (539).

• (333) As no other importers or traders came forward and contested Commission’s conclusions on the interest of importers and traders, the Commission maintains its conclusion in recital (426) of the provisional Regulation that the imposition of anti-dumping measures is not likely to have a negative effect on the situation of importers and traders in the Union.

7.3.   Interest of users

7.3.1.   General

• (334) Several users and user associations in addition to those mentioned in recital (427) of the provisional Regulation came forward to oppose the duties.

• (335) No comments were received concerning the assessed size of TiO2 downstream market segments. Recital (428) of the provisional Regulation is thus confirmed.

7.3.2.   Masterbatch White (MW)

• (336) Schulman Plastics, a Union producer of plastics and related materials which cooperated with the Commission in the provisional stage of the investigation, did not provide any comments in the definitive stage of the investigation. With the new, lower, recalculated dumping margins (see recital (199) above), however, the impact on its plant which mainly produces MW will be even less pronounced than estimated in the provisional Regulation.

• (337) The Commission thus maintained its conclusion in recital (434) of the provisional regulation, that Schulman Plastics would be able to absorb the duties and remain profitable, even if it would not be able to pass cost increase onto customers.

• (338) Plastika Kritis claimed that the imposition of duties against Chinese TiO2 would be detrimental to the MW industry in the Union. Plastika Kritis claimed that there are over 300 producers of MW in the Union, mostly SMEs, employing in total over 15 000 people. With MW being a light and inexpensive material, orders are won or lost on a few cents difference. Thus, any increase in the price of the main raw material (TiO2) resulting from the imposition of the anti-dumping duties will make the Union MW producers uncompetitive compared to competitors from abroad.

• (339) As a result, large masterbatch producers will be forced to relocate their production outside Europe while smaller ones will stop producing and will become importers. Plastika Kritis thus claimed that there is clearly a prevailing interest of the MW industry that duties are not imposed, even if that would lead to a demise of the Union producers of TiO2, since MW industry employs far more people and producers higher added value products.

• (340) No data was presented to the Commission, however, which would show that MW producers are exposed to heavy competition from abroad or what are the market shares between Union and foreign MW producers.

• (341) On the other hand, the complainant provided their own estimates, according to which Union MW producers hold 95 % of the Union market.

• (342) The actual impact is hard to quantify as none of the smaller users submitted a questionnaire reply. It could not be excluded, however, that, due to the very high incidence of TiO2 cost in the total cost of production of MW, producers of this product could be heavily impacted by the imposition of duties if they source non-negligible quantities of TiO2 from China.

• (343) In fact, the analysis of impact of duties on a MW producer’s profitability (based on Schulman Plastic’s data) has shown that, with currently proposed duties, profitability of a MW producer decreases by around 1 percentage points for each additional 5 percentage points of TiO2 sourced from China in their supply mix. It remained unclear, however, to which extent the Union MW producers are exposed to competition from abroad.

• (344) In their comments on final disclosure, Plastika Kritis reiterated its previous claims on the effect of duties on producers of MW and requested an exemption from anti-dumping duties for TiO2 destined for the production of masterbatches. While the legal basis for the exemption request was not specified, and after having rejected at provisional stage Schulman Plastic’s request to expand the product scope in this investigation to also cover MW to which no comments were received (see recital (26) above) from the nature and the phrasing of the request, the Commission treated it as a request for an end-use exemption under Article 254 of the Union Customs Code [^ntr52-L_202500004EN.000101-E0052].

• (345) The Commission noted on the outset that this end-use exemption came extremely late in the investigation. As already stressed in recital (86) above, such claims should have been submitted in the early stages of the investigation, in order to allow sufficient time to assess their merit and to give the opportunity to other interested parties to react to them.

• (346) Nonetheless, even if the Commission was thus not able to assess the request to a sufficient extent, the Commission examined the request in light of the evidence it had available. In that regard, the Commission reminded that only one TiO2 user that produced MW, Schulman Plastic, submitted a questionnaire reply which was verified.

• (347) First, no evidence was provided to the Commission that TiO2 used in production of masterbatches is in some way unique when compared to other grades. To the contrary, it appears that several TiO2 grades can be used in the production of masterbatches.

• (348) Second, no evidence was provided to the Commission that would prove a shortage of supply of TiO2 for MW producers. Given the relatively broad range of TiO2 grades advertised for use in masterbatches, which also appear to be of relatively standard specifications, as well as the size of the plastics market segment, it appears unlikely that there would be a shortage of supply of TiO2 for this use.

• (349) Third, as concerns the share of the product concerned in the cost structure and the ability of the user(s) to absorb the duties, as already stated in recitals (342) and (343) above, the Commission acknowledged that MW producers might be the most affected by the duties, due to the high incidence of TiO2 in their overall cost structure. [^ntr53-L_202500004EN.000101-E0053]

• (350) At the same time, the Commission again highlighted that it could verify the profit levels and the share of Chinese TiO2 in the supply mix only for Schulman Plastics, on the basis of its questionnaire reply. The Commission could adequately estimate Schulman Plastics’ exposure to imports from China and the impact the duties would have on its profitability. The Commission was thus able to conclude, as laid out in recitals (434) of the provisional Regulation and (336) and (337) above, that Schulman Plastics could absorb the duties and remain profitable, even if it would be assumed that it would not be able to pass on cost increases to consumers.

• (351) Plastika Kritis did not submit a questionnaire reply or other verifiable data on their profitability or sources of supply. The Commission was thus not able to assess and conclude how seriously they would individually be impacted by the imposition of duties on TiO2 imports from China and whether this condition for the end-use exemption could be met.

• (352) Plastika Kritis again reiterated its claim that importers of masterbatch into the Union from nearby markets will become even more competitive against the Union masterbatch producers, since the former will still have access to cheaper Chinese TiO2.