The investigation of continuation or recurrence of dumping covered the period from 1 January 2009 to 31 December 2009 (‘the review investigation period’ or ‘RIP’). The examination of the trends relevant for the assessment of the likelihood of a recurrence of injury covered the period from 1 January 2006 to the end of the RIP (‘the period considered’).

The Commission officially advised the applicant, other known Union producers, exporting producers, importers and users known to be concerned, producers in the analogue country and the representatives of the PRC of the initiation of the expiry review. Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set out in the notice of initiation.

All interested parties, who so requested and showed that there were particular reasons why they should be heard, were granted a hearing.

The Commission sent questionnaires to all parties known to be concerned and to those who made themselves known within the deadlines set in the Notice of initiation. Replies were received from seven Union producers, one exporting producer in the PRC, one exporting producer in the analogue country and three users.

None of the importers replied to the sampling exercise nor supplied the Commission with any information or made themselves known in the course of the investigation. As only one exporting producer from the PRC came forward with the requested information, it was not necessary to select a sample.

1. (a)

   Union producers

   • Wolfram Bergbau und Hütten-GmbH Nfg.KG., St Peter, Austria

   • H. C. Starck GmbH & Co. KG, Goslar, Germany

   • Eurotungstène poudres S.A., Grenoble, France

   • Global Tungsten & Powders spol. s.r.o, Bruntál, Czech Republic

   • Treibacher Industrie AG, Althofen, Austria

2. (b)

   Analogue Country

   • Global Tungsten & Powders Corp., USA

3. (c)

   User

   • Sandvik Hard Materials, Epinouze, France

Since no exporting producer from PRC was granted MET in the previous investigations, the normal value for China was established in accordance with the provisions of Article 2(7)(a) of the basic Regulation.

In the notice of initiation, it was envisaged to use the USA as an appropriate analogue country for the purpose of establishing normal value for the PRC. Interested parties were invited to comment on the appropriateness of this choice. No comments or objections were received from any parties in that respect. The USA was used also as an analogue country in the original investigation and no new or changed circumstances which would justify a change appeared to exist nor were any such circumstances communicated to the Commission. It was considered that the USA was representative as a reference market, especially in view of the openness and competitiveness of the US domestic market. In addition, one producer from the USA agreed to cooperate within the present review.

Therefore, the USA has been used as an analogue market economy country for the purpose of this review.

Pursuant to Article 2(7) of the basic Regulation, normal value was established on the basis of the verified information received from the cooperating US producer in the analogue country, i.e. on the basis of prices paid or payable on the domestic market in the USA, for product types which were found to be sold in the ordinary course of trade.

As a result, normal value was established as the weighted average domestic sales price to unrelated customers by the cooperating producer in the USA.

It was first established whether the total domestic sales of the like product to independent customers of the US cooperating producer were representative in accordance with Article 2(2) of the basic Regulation, i.e. whether they accounted for 5 % or more of the total sales volume of the product concerned exported to the Union. The domestic sales of the cooperating US producer were found to be sufficiently representative during the review investigation period.

It was subsequently examined whether the domestic sales of the like product could be regarded as being sold in the ordinary course of trade pursuant to Article 2(4) of the basic Regulation. This was done by establishing for the like product sold on the US market the proportion of profitable domestic sales to independent customers during the RIP.

Since the volume of profitable sales of the like product represented less than 80 % of the total sales volume of the like product, normal value was based on the actual domestic price, calculated as a weighted average of profitable sales.

As explained above, in view of the fact that the cooperating exporting producer represented more than 90 % of total Chinese imports to the Union, the export price was examined on the basis of data provided by that exporting producer, i.e. the duly adjusted price actually paid or payable for the product concerned when sold for export to the Union.

The weighted average normal value was compared with the weighted average export price for each type of product concerned, on an ex-works basis, at the same level of trade and the same level of taxation. In accordance with Article 2(10) of the basic Regulation, and for the purpose of ensuring a fair comparison, differences in factors which were claimed and demonstrated to affect price and price comparability were taken into account. Adjustments were made for ocean and domestic freight, insurance, bank charges and packaging costs. Further, a 5 % adjustment on the export price for the export tax was made and the adjustment for Value Added Tax (VAT) on the normal value.

In accordance with Article 2(11) of the basic Regulation, the dumping margin was established per product type on the basis of a comparison of the weighted average normal value with the weighted average export price at the same level of trade. This comparison showed the existence of dumping during the RIP amounting to more than 80 %, hence at a significantly higher level than in the last review investigation (31 %). The precise dumping margin cannot be disclosed due to confidentiality reasons. The calculations have been based on data provided by one exporting producer in the PRC and one producer in the analogue country. Disclosure of the dumping margin would allow both the cooperating exporting producer in the PRC and the producer in the analogue country to deduce respectively the other’s normal value and export price, which would amount to a clear breach of both parties right to confidentiality.

The data included in this section were obtained through the analysis of the data provided by the cooperating exporting producer, by Eurostat and by the review request.

Data on spare capacity provided by the cooperating Chinese exporting producer were presented with a 20 % increase or decrease to respect confidentiality. The production capacity in the PRC amounted to around 21 000 tonnes in 2006 and 2007 and increased substantially to around 35 000 tonnes in 2008 and the RIP, an increase of more than 80 % over the period considered. These figures can be considered as conservative, as the review request reported a production capacity in the vicinity of 50 000 tonnes.

In addition the cooperating exporting producer reported a substantial increase in capacity during the period considered.

On the basis of the information collected during the investigation, the total Chinese production capacity exceeded considerably the actual Chinese production (by at least more than 20 000 tonnes in 2008 and in the RIP).

In the RIP the PRC had a spare capacity amounting to a six fold of the Union consumption (25 000 tonnes as related to 3 800 tonnes of Union consumption).

In view of the above, it is clear that a large part of the spare capacity available in the PRC could be used to increase exports to the Union in the absence of anti-dumping measures.

Moreover, information submitted during the investigation indicated important distortions in the raw materials market used to manufacture the product concerned. Firstly, raw materials are subject to quotas granted by the Chinese authorities. Secondly, the Chinese authorities limit the access to raw materials through the imposition of export taxes and VAT rebate policies, which as indicated in recital 31 also applied to the product concerned. These factors constitute additional elements pointing to the likelihood of continuation of dumping in the present case.

Price information provided by the cooperating exporter, which cannot be disclosed due to confidentiality reasons, shows that the Union constitutes indeed an interesting market for the Chinese exporting producers. Throughout the period considered the prices achieved on other third-country markets were below (except in 2007) those charged to the Union (roughly between 10 and 20 % lower in different years throughout the period considered).

On these grounds, it can be concluded that in terms of prices achievable, the EU market is definitely an attractive alternative for the Chinese exporters.

On that basis, Chinese exporting producers have an incentive to direct their exports to the Union market, should measures be repealed. The high prevailing prices in the Union market would allow the Chinese exporting producers to achieve better profit margins.

The foregoing analysis demonstrates that Chinese imports continued to enter the Union market at dumped prices with very high dumping margins. Given most notably the analysis of price levels on the EU and other third-country markets as well as the capacities available in the PRC, it can be concluded there is a likelihood of continuation of dumping should measures be removed.

As the decrease in sales was slightly lower than the decrease in consumption, the Union industry was able to gain some market share.

Average ex-works sales price of the Union industry to unrelated customers in the Union followed a declining trend over the period considered. Overall, the Union industry had to decrease its prices by 15,4 % between 2006 and the RIP.

Between 2006 and 2008, the annual flow of investments in the product concerned made by the Union industry increased by 18 %. Investments between 2007 and 2008 increased by 103 %. However, during the RIP investments decreased by 65 % compared to 2008.

Investments were mainly made in the construction of new facilities to produce tungsten material from used materials and scrap. Investments had to be reduced due to: (i) the decrease on the general level of production in the Union market, (ii) the distortions in the raw materials (see recital 39), (iii) the economic crisis.

Thanks in part to the anti-dumping measures in force and in part to the efforts made by the Union industry to diversify the raw material sources, between 2006 and 2008 the Union industry was able to maintain a positive level of profitability, even if it overall decreased by 26 % during this period. During the RIP, however, the Union industry had a much less favourable result, showing a certain fragility in this respect.

Dumping from PRC continued during the RIP at a level which is significantly above the current level of measures. Furthermore, given the distortions on raw materials, the spare capacity and prices of the imports from the PRC, the impact on the Union industry of the actual margins of dumping cannot be considered to be negligible.

It was analysed whether the Union industry recovered from the effects of past dumping. It was concluded that it managed to recover to a large extent from such effects given that the anti-dumping measures in force proved to be effective. However, the economic crisis stopped that process and has accentuated the difficulties of the Union industry.

In parallel to the shrinking consumption in the Union, the market share of Chinese imports decreased from 7,1 % to 2,1 % (see recital 52). The available information indicates that these imports were made at prices which were lower than those of the Union industry and also lower than those of the imports originating in other third countries. As mentioned in recital 56 above, based on a calculation excluding anti-dumping duty, the Chinese imports undercut the Union industry prices by 10,7 % during the RIP. It is recalled that the duty rate amounts to 33 %. Consequently, the level of undercutting demonstrates on one hand the effectiveness of the duties in place and on the other hand the necessity to continue the measures. This conclusion is reinforced by the fact that the undercutting found was at the same level as in the last review investigation. Hence, the price impact of dumped imports from the PRC on the Union industry remained unchanged and, in the absence of any evidence pointing to the contrary, it is likely to continue.

Due to the very negative economic conditions prevailing during the RIP in the tungsten’s downstream sector, in particular in the sector of steel and cemented carbides, which represents the majority of tungsten consumption in the Union, the Union industry drastically reduced production and sales of the product concerned.

Prior to the crisis, companies operating in the downstream sector had high level of tungsten' stocks that were not built up during the RIP, further affecting the production level of the Union industry.

As production decreased, and as the Union industry is a capital intensive one, thus needing to produce certain volumes to keep down the unit fixed cost, the profitability was seriously affected.

However, the analysis of the Union industry, before the crisis, proves the effectiveness of the anti-dumping measures in force. The investigation showed that the largest Union producers were making important investments in order to avoid the raw material distortions while at the same time they were able to compete in the market keeping a healthy position.

It is estimated that the volume of imports from other third countries decreased by 36 % from 1 500 tonnes in 2006 to 675 tonnes in the RIP. The market share of imports from other countries increased from 10,5 % in 2006 to 17,9 % in the RIP. Their average imports price decreased by 8,9 % between 2006 and the RIP. The main importing countries were South Korea and the USA.

The market share of imports from South Korea doubled over the period considered (from 2,2 % to 4,4 %). However, the available information indicates that during the RIP these imports were made at prices only slightly lower than those of the Union industry (by 6,6 %), but higher (by 9,8 %) than those of the imports originating in the PRC.

The market share of imports from the USA decreased by 15,1 percentage points over the period considered (from 4,2 % to 3,6 %). The available information indicates that during the RIP these imports were made at prices which were above those of the Union industry and thus also substantially higher (by 31 %) than those of the imports originating in the PRC.

In conclusion, among the biggest importers of tungsten carbide into the EU, the South Korean and US imports could not have a negative impact on the situation of the Union industry mainly because of their price levels (similar or even higher than the Union industry prices) and in the case of the US also because of the decreasing market share.