The investigation concerning the likelihood of continuation or recurrence of dumping covered the period from 1 July 2010 to 30 June 2011 (‘the review investigation period’ or ‘RIP’). The examination of the trends relevant for the assessment of a likelihood of a continuation or recurrence of injury covered the period from 1 January 2008 to the end of the review investigation period (‘the period considered’).

The Commission officially advised the applicant, other known Union producers, exporting producers in the country concerned, unrelated importers, users in the Union known to be concerned, as well as the representatives of the 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 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.

In view of the apparently large number of exporting producers in the PRC, unrelated importers and Union producers, sampling was envisaged in the notice of initiation in accordance with Article 17 of the basic Regulation.

In respect of exporting producers in the PRC and unrelated importers, in order to enable the Commission to decide whether sampling would be necessary and, if so, to select a representative sample, those parties were requested to make themselves known within 15 days of the initiation of the review and to provide the Commission with the information requested in the notice of initiation. Given that no exporting producer in the PRC made itself known and provided the Commission with the information requested in the notice of initiation and that only one unrelated importer made itself known but did not provide the Commission with the information requested in the notice of initiation, sampling was not considered necessary in either case.

The Commission announced in the notice of initiation that it had provisionally selected a sample of Union producers. This sample consisted of two companies, out of the six Union producers that were known prior to the initiation of the investigation, selected on the basis of their sales and production volume of the product concerned in 2010 as well as geographic location in the Union. The sample represented over 50 % of the total estimated Union production and sales during the RIP. Interested parties were invited to consult the file and to comment on the appropriateness of this choice within 15 days of the date of publication of the notice of initiation. No interested party opposed the proposed sample.

The Commission sent questionnaires to the two sampled Union producers, the importer that made itself known and all users known to be concerned.

Replies to the questionnaires were received from the two sampled Union producers and two users. The unrelated importer mentioned in recital 9 that made itself known neither replied to the sampling questions nor filled in a questionnaire reply.

In view of the lack of cooperation from exporting producers in the PRC, normal value was compared to export prices from the PRC in accordance with Article 2(7) of the basic Regulation.

Since no cooperation from exporting producers was forthcoming, the following conclusions rely mainly on the information contained in the request for review, cross-checked where possible against publicly available information.

On this basis, it was found that the PRC production capacity of LAM is estimated to be at least within a range of 600 million and 700 million pieces, which is based on information provided by the Union industry.

In addition, information obtained during the investigation shows that the production capacity in the PRC for LAM can be easily increased, inter alia, through the employment of additional workforce and by limited investment in tooling, in case of increased demand.

No interested party has come forward with other comments and/or information in relation to production capacity in the PRC.

On this basis, production capacity in the PRC is around 170 %-350 % higher than the Union consumption and significantly more than the Union production.

Since no cooperation from exporting producers was forthcoming, information in relation to actual production and spare capacity relied mainly on the information contained in the request for review, cross-checked where possible against publicly available information.

In the request for review, production of LAM was estimated at between 200-400 million pieces and the spare capacity of between 200-500 million pieces. This spare capacity corresponds roughly to the equivalent of Union consumption.

The submitted estimates were found to be reasonable after being cross-checked by reference to publicly available sources where possible.

In relation to spare capacity, as mentioned in recital 41, the information obtained during the investigation shows that the production capacity in the PRC for LAM can be easily increased, inter alia, through the employment of additional workforce and by limited investment in tooling, in case of increased demand.

Based on the above, it can reasonably be concluded that substantial spare capacity exists in the PRC. As explained in recitals 49 to 55, there is a strong likelihood that such spare capacity would be directed towards the Union market should measures be repealed.

Information gathered during the present review reveals that the Union market would be an attractive market for imports of LAM from the PRC, should measures be repealed. It is recalled that prior to the imposition of the measures in force, consumption in the Union was substantial and close to 400 million pieces. At the same time, imports from the PRC were over 200 million pieces accounting for over 50 % of the entire Union consumption.

The investigation has demonstrated that Union demand for LAM remained substantial. The Union consumption has only modestly declined over the period considered as determined in recitals 63 to 64 and 98 and the Union market remains the largest worldwide for LAM, representing over 50 % of the world market.

Furthermore, there are few other markets for LAM, which are not likely to accommodate the excess PRC capacity.

Moreover, as established in recital 38, a comparison between the export prices of imports from the PRC to third countries with prices in the Union market shows that the Union market would be attractive for such low-priced imports, if measures were repealed. This is also due to the fact that the prevailing prices are generally higher in the Union market than in other export markets.

Given the above considerations, if measures were to be repealed, the likelihood would be that the exports from the PRC would be directed towards the Union market.

Publicly available information in respect of producers in the PRC reveals that such companies often primarily or exclusively direct their sales to the export market.

Finally, it should be observed that since the imposition of definitive measures a number of cases of misclassification of LAM imports have been observed whereby large volumes of separate LAM and covers were declared as complete lever arch files. This resulted in no duties being paid for such imports. This misclassification prompted the Customs Code Committee (in November 2010) to clarify in a statement that LAM imported under such circumstances must be separately declared. It is too early to determine whether such a statement has had the required effect and the Commission intends to monitor the situation closely. However, the practice constitutes further evidence that, in spite of measures, the Union market continues to be attractive for exporting producers in the PRC.

As mentioned in recital 38, a comparison between the export prices to other third countries contained in the request for review with the price on the Union market reveals a strong likelihood that dumping may recur.

In addition, considering the significant production capacity available in the PRC, the ability of Chinese producers to increase rapidly their production volumes and direct them for export, the likely low prices of such exports and the attractiveness of the Union market for such exports, it is reasonable to assume that a repeal of the measures would result in increased exports at dumped levels of LAM from the PRC to the Union.

Due to the lack of cooperation of the Chinese exporting producers and lack of alternative sources, it was not possible to establish an accurate import price. This is because, as explained in recital 21, statistics were considered unsuitable in so far as one of the sources also covered imports other than the product concerned and the other sources did not allow for the possibility to compare export prices with those of the Union industry on a type-per-type basis.

Due to the lack of cooperation of the Chinese exporting producers and lack of alternative sources, the undercutting calculation was, for the reasons set out in recital 37, based on the export prices to third countries contained in the request for review. The level of undercutting indicatively established amounts to about 20 %.

Based on the abovementioned analysis, the economic situation of the Union industry has improved and the industry is proving to be viable after the imposition of the measures in 2006. Nonetheless, taking into account that the abovementioned positive developments occurred only after the imposition of the measures, employment is decreasing and profitability is still below its target level, it is considered that the economic situation of the industry remains fragile and vulnerable. It may therefore be concluded that the evidence suggests that the removal of injury is partly or solely due to the existence of the measures.