The investigation of continuation of dumping covered the period from 1 January 2010 to 31 December 2010 (‘the review investigation period’ or ‘RIP’). The examination of the trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2007 to the end of the review investigation period (‘the period considered’).

The Commission officially advised the applicants, other known Union producers, exporting producers, importers, users in the Union known to be concerned and their associations, and the representatives of the exporting country concerned 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.

In view of the apparent large number of exporting producers from China, unrelated importers in the Union and Union producers involved in the investigation, sampling was envisaged in the notice of initiation, in accordance with Article 17 of the basic Regulation. In order to enable the Commission to decide whether sampling would be necessary and, if so, to select a sample, the above parties were requested, pursuant to Article 17 of the basic Regulation, to make themselves known within 15 days of the publication of the notice of initiation and to provide the Commission with the information requested in the notice of initiation.

In view of the replies received it was decided to apply sampling in respect of Union producers. No unrelated importers in the Union cooperated in the investigation. As regards exporting producers from China, only two exporting producers manifested their willingness to cooperate in the investigation. It was therefore decided that sampling was not necessary as regards exporting producers.

Six Union producers provided the information requested in the notice of initiation and agreed to be included in the sample. On the basis of the information received from these Union producers, the Commission selected a sample of four Union producers which were found to be representative of the Union industry in terms of sales volumes of the like product in the Union. Their combined sales volume represented 61 % of the sales volume in the Union market.

Questionnaire replies were received from the four sampled Union producers, two users in the Union, and two exporting producers in China. In addition, two cooperating Union producers provided the requested general data for the injury analysis.

Exports made by Hangzhou Bioking, whose individual dumping margin in the original investigation was zero, have been excluded from both dumping and injury analysis, including the likelihood of continuation of dumping and risk of recurrence of injury resulting from dumped imports. The analysis in the present review was therefore based on exports of product concerned from China to the Union during the RIP excluding the exports made by the producer Hangzhou Bioking and is also referred to as ‘exports subject to measures’ in this Regulation.

1. (a)

   Union producers:

   • Comercial Química Sarasa SL,

   • Alcoholera Vinícola Europea SA,

   • Distillerie Mazzari SpA,

   • Distillerie Bonollo SpA;

2. (b)

   exporting producers in China:

   • Changmao Biochemical Engineering Co. Ltd,

   • Ninghai Organical Chemical Factory;

3. (c)

   users:

   • Danisco A/S,

   • Kerry (NL) BV;

4. (d)

   producer in the analogue country:

   • Tarcol SA, Argentina.

Since China is an economy in transition and in accordance with the provisions of Article 2(7)(a) of the basic Regulation, normal value for exporting producers not granted market economy treatment (MET) has to be determined on the basis of the price or constructed value in an appropriate market economy third country (‘analogue country’).

As in the original investigation, Argentina was proposed as analogue country in the notice of initiation for the purpose of establishing normal value. Interested parties were given the opportunity to comment on the appropriateness of this choice.

One industrial consumer of tartaric acid highlighted some constraints linked to the choice of Argentina as analogue market arguing that it should not be the sole benchmark for the purpose of determining normal value. The party concerned addressed in particular alleged differences in the production processes between China and Argentina, the limited amount of annual production as compared to world production and currency exchange rates fluctuation. However, none of these arguments were substantiated by any documentary evidence.

In any event, the different production processes in Argentina and China and the resulting impact on the costing and the valuation of the product concerned were already carefully considered in the original investigation and it was concluded that it did not alter the comparability of the products that were found to be similar. As the allegation of the industrial consumer did not bring any new element and its claims were not substantiated, the argument is rejected. The findings of the current expiry review, therefore confirm the findings of the original investigation, i.e. that the differences in production processes did not have an impact on the comparability of the products.

The limited size of the annual production in Argentina as compared to the world market of TA is not a relevant argument when assessing whether a specific market is suitable to establish normal value in an analogue market. Indeed, the investigation confirmed that Argentina is an open and competitive market with at least two operators. On these grounds, the argument is rejected.

The argument of significant currency exchange fluctuation between regions was not substantiated. In addition, the on spot investigation did not gather any element pointing to any distortion of currency rates between regions. On these grounds, the argument is also rejected.

Therefore, as in the original investigation, it was concluded that Argentina was an appropriate analogue country from which normal value will be determined.

Two known Argentinean companies were contacted but only one of them agreed to cooperate, to reply to the questionnaire and to accept a verification visit. Its figures have been used for the determination of the normal value.

For the two companies granted MET in the original investigation, normal value has been established based on their respective data. In accordance with Article 2 of the basic Regulation, the Commission examined whether the domestic sales of tartaric acid to independent customers were representative during the RIP, i.e. if the sales volume of the product intended for domestic consumption represents 5 % or more of their exports of the product concerned to the Union.

For one company granted MET, normal value had to be constructed since its domestic sales were not sufficient to be considered representative as explained in recital 31. Therefore, the established normal value was calculated using the company’s cost of manufacturing and adding selling, general and administrative costs (SG&A) and profit achieved on the domestic sale made in the ordinary course of trade.

For the other company granted MET, since the domestic sales were representative and made in the ordinary course of trade, normal value was established on the prices paid by independent customers in the exporting country.

As far as the companies not granted MET in the original investigation are concerned, pursuant to Article 2(7)(a) of the basic Regulation, normal value was established on the basis of information collected from the cooperating producer in the analogue country.

Therefore, the domestic sales to independent customers in the analogue country were also assessed in accordance with the criterion defined in Article 2 of the basic Regulation. The Commission could verify that these sales were made in sufficient quantities and in the ordinary course of trade and could thus be used to determine normal value for the companies not granted MET.

All export sales to the Union of the cooperating exporting producers were made directly to independent customers established in the Union. In accordance with Article 2(8) of the basic Regulation, the export price was established on the basis of the prices actually paid or payable.

For the export price of all other producers established in China, information was taken from imports statistics made available in the Article 14(6) database.

The comparison between normal value and export price was made on an ex-works basis.

For the purpose of ensuring a fair comparison between the normal value and the export price of the cooperating exporting producers, and in accordance with Article 2(10) of the basic Regulation, due allowance in the form of adjustments was made with regard to certain differences in transport, insurance, taxes and credit costs which affected prices and price comparability.

In order to fairly compare the ex-works normal value from the analogue country and the export price as mentioned in recital 37, the CIF export prices were adjusted to ex-works using data collected during the verification visits.

As provided for under Article 2(11) of the basic Regulation, the dumping margin was established on the basis of a comparison of the weighted average normal value with the weighted average export price.

For the cooperating exporting producers, granted MET in the original investigation this comparison showed that these companies continued dumping although at a slightly lower level.

The residual duty calculated showed a significant level of dumping even higher than in the original investigation.

After imposition of definitive measures in January 2006, dumped imports from China continued to increase, raising from 3 034 metric tonnes (MT) in 2007 to 3 649 MT in the RIP, i.e. an increase of around 20 %. In parallel, market share of dumped imports from China gained 1,0 percentage points in the period considered from 12,6 % in 2007 to 13,5 % in the RIP.

In the same period, prices of dumped imports from China remained relatively stable with an increase of 12,6 % between 2007 and 2008 followed by a continued reduction in 2009 and the RIP, to reach in the latter period the level achieved in 2007.

In addition, there are strong indications that capacity in China is even higher than 25 000 MT. Indeed, total capacity of the two cooperating Chinese exporters went up by more than 200 % comparing data for the original IP to the current RIP. The corresponding spare capacity was of around 20 % of total capacity in the RIP.

Furthermore, information collected from extracts of the reports mentioned above in recital 48 and publicly available information show that at least two new producers of tartaric acid were set up in 2007.

On these grounds, it is clear that capacity in China is disproportionate as compared to domestic consumption, which confirms a clear need for the Chinese producers to increase their position on export markets.

From the information gathered at the Chinese cooperating companies, the level of prices to third countries is in line with the level of prices that they could obtain in the Union market. As mentioned above, there is an important production overcapacity on the Chinese domestic market suggesting a strong and natural need to find alternative markets to absorb this excess in production capacity.

The Union market is by far the biggest in the world reaching around 40 % of the world consumption of tartaric acid and is still growing as mentioned in recital 60. It is also clear, based on information collected during the investigation that Chinese companies have shown a big interest in developing their presence on the biggest market in the world and maintaining a significant market share on the Union market.

The volume of all imports of the product concerned from China into the Union increased by 45 % during the period considered. It reached 8 495 tonnes in the RIP corresponding to a market share of 28,4 %.

Average unit selling prices of Chinese exports subject to measures at CIF level in the RIP reached 1 819 EUR/MT, corresponding, over the period considered, to an increase of 20 %.

Concerning the selling price on the Union market of the TA during the RIP, a comparison was made between the prices of TA produced and sold by the Union industry and those of the imports subject to measures from China. The relevant sales prices of the Union industry were those to independent customers, adjusted where necessary to an ex-works level, i.e. excluding freight costs in the Union and after deduction of discounts and rebates. These prices were compared with the sales prices charged by the aforementioned Chinese exporting producers net of discounts and adjusted where necessary to CIF EU frontier with an appropriate adjustment for the customs clearance costs and post importation costs. The Union weighted average selling price during the RIP was 2 496 EUR/MT.

The comparison on a type by type basis showed that, during the RIP, imports subject to measures from China of the product concerned were sold in the Union at prices which significantly undercut the Union industry’s prices, when expressed as a percentage of the latter, by 32,6 %.

In view of the fact that sampling was used with regard to the Union industry, for the purpose of the injury analysis, the injury indicators have been established at two levels as mentioned in recital 57 above.