Commission Implementing Regulation (EU) 2015/2272Show full title

Commission Implementing Regulation (EU) 2015/2272

of 7 December 2015

imposing a definitive anti-dumping duty on imports of certain seamless pipes and tubes of iron or steel originating in the People's Republic of China following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No 1225/2009

THE EUROPEAN COMMISSION,

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

Having regard to Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community(1) (‘the basic Regulation’), and in particular Article 11(2) thereof,

Whereas:

A. PROCEDURE

1. Measures in force

(1) Following an anti-dumping investigation (‘the original investigation’) in accordance with Article 5 of the basic Regulation, the Council imposed a definitive anti-dumping duty on imports of certain seamless pipes and tubes of iron and steel (‘SPT’) originating in the People's Republic of China (‘the PRC’, by Regulation (EC) No 926/2009(2) (the ‘original measures’). The original measures were based on a finding of a threat of injury and were annulled by a judgment of the General Court(3) as far as the exports of products produced by Hubei Xinyegang Steel Co. Ltd were concerned. The judgment is currently subject to appeal before the Court of Justice(4).

(2) The imposed measures took the form of the following ad valorem duty rates: 17,7 % for the company Shandong Luxing Steel Pipe Co. Ltd, 27,2 % (other cooperating companies) and 39,2 % (all other companies).

2. Measures in force in respect of other third countries

(3) Anti-dumping measures are currently in force on imports of SPT originating in Russia and Ukraine(5). The anti-dumping measures against Croatia were terminated on 26 June 2012(6).

3. Initiation of an expiry review

(4) Following the publication of a notice of impending expiry(7) of the anti-dumping measures in force, the Commission received a request for the initiation of an expiry review of these measures pursuant to Article 11(2) of the basic Regulation.

(5) The request was lodged by the Defence Committee of the Seamless Steel Tubes Industry of the European Union (‘the applicant’) on behalf of producers representing more than 25 % of the total Union production of seamless pipes and tubes.

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

(7) On 3 October 2014, the Commission initiated an expiry review pursuant to Article 11(2) of the basic Regulation. It published a notice in the Official Journal of the European Union (8) (‘Notice of Initiation’).

4. Parties concerned by the investigation

(8) In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the applicant, other known Union producers, exporting producers, importers and users in the Union known to be concerned, and the Chinese authorities of the initiation of the expiry review and invited them to participate.

(9) The Commission also informed producers in the United States of America (the ‘USA’) about the initiation of the investigation and invited them to participate. In the Notice of Initiation, the Commission informed interested parties that it envisaged the USA as a third market economy country (‘analogue country’) within the meaning of Article 2(7)(a) of the basic Regulation.

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

4.1. Sampling

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

(a) Sampling of Union producers

(12) In the Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers and invited interested parties to comment. The sample was selected on the basis of sales volumes of the like product during the review investigation period in the Union whilst ensuring a geographical spread. The sample consisted of six companies in the Czech Republic, France, Germany, Italy, Romania and Slovakia, representing about 55 % of the total sales to unrelated customers in the Union. No comments were received and thus the provisionally selected companies were retained in the final sample.

(b) Sampling of importers

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

(14) Given that only four unrelated importers came forward by providing the information requested in the Notice of Initiation, sampling was not necessary. However, out of the four unrelated importers only one cooperated in the investigation and submitted a reply to the questionnaire sent.

(c) Sampling of exporting producers in the PRC

(15) In view of the apparent large number of exporting producers in the PRC, sampling was envisaged in the Notice of Initiation.

(16) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all exporting producers in the PRC to provide the information specified in the Notice of initiation. In addition, the Commission requested the Mission of the PRC to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(17) Given that only three exporting producers in the PRC provided the Commission with the information requested, sampling was not considered necessary.

4.2. Questionnaires and verification visits

(18) The Commission sought and verified all the information it deemed necessary for the determination of the likelihood of continuation or recurrence of dumping and resulting injury and for the determination of the Union interest.

(19) Questionnaires were sent to the three Chinese exporting producers that came forward in the sampling exercise, to the six sampled Union producers, to the four unrelated importers that came forward in the sampling exercise and to seven users. Twenty-two potential analogue producers in six countries, namely Argentina, Brazil, Japan, Mexico, Ukraine and the USA were identified and received questionnaires.

(20) Questionnaire replies were received from one Chinese exporting producer, three analogue country producers in the USA, the six sampled Union producers, one importer and three users.

(21) Verification visits were carried out at the premises of the following companies:

(a)

Exporting producer in the PRC

• Shandong Luxing Steel Pipe Co., Ltd, the PRC

(b)

Union producers

• Arcelor Mittal Tubular Products Ostrava AS, Czech Republic

• Benteler Deutschland GmbH, Germany

• Tenaris-Dalmine SpA, Italy

• TMK-Artrom, Romania

• Vallourec Tubes France, France

• Železiarne Podbrezová, Slovakia

(c)

Importer

• Handelsonderneming Jan van Meever BV, the Netherlands

(d)

Producers in an analogue country:

• IPSCO Tubulars Inc. DBA TMK IPSCO, USA

• Vallourec Star, L.P., USA

• ArcelorMittal Tubular Products, USA

5. Review investigation period and period considered

(22) The investigation of the likelihood of continuation or recurrence of dumping covered the period from 1 July 2013 to 30 June 2014 (the ‘review investigation period’). 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 2011 to the end of the review investigation period (the ‘period considered’).

6. Disclosure

(23) All interested parties were informed of the essential facts and considerations on the basis of which it was intended to maintain the definitive anti-dumping measures in force. The parties were also granted a period within which they could make representations subsequent to this disclosure. Only the applicant submitted comments after disclosure.

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. Product concerned

(24) The product concerned is the same as in the original investigation referred to in recital 1, i.e. seamless pipes and tubes, of iron or steel, of circular cross section, of an external diameter not exceeding 406,4 mm with a Carbon Equivalent Value (CEV) not exceeding 0,86 according to the International Institute of Welding (IIW) formula and chemical analysis(9), originating in the PRC, currently falling within CN codes ex 7304 19 10, ex 7304 19 30, ex 7304 23 00, ex 7304 29 10, ex 7304 29 30, ex 7304 31 20, ex 7304 31 80, ex 7304 39 10, ex 7304 39 52, ex 7304 39 58, ex 7304 39 92, ex 7304 39 93, ex 7304 51 81, ex 7304 51 89, ex 7304 59 10, ex 7304 59 92 and ex 7304 59 93.

2. Like product

(25) The investigation showed that the following products have the same basic physical and chemical characteristics as well as the same basic uses:

• the product concerned,

• the product produced and sold on the domestic market in the USA, which served as an analogue country, and

• the product produced and sold in the Union by the Union industry.

(26) The Commission concluded that these products are like products within the meaning of Article 1(4) of the basic Regulation.

C. LIKELIHOOD OF A CONTINUATION OR RECURRENCE OF DUMPING

1. Preliminary remarks

(27) In accordance with Article 11(2) of the basic Regulation, it was examined whether dumping was taking place and whether the expiry of existing measures would be likely to lead to a continuation or recurrence of dumping.

(28) As mentioned above three Chinese exporting producers came forward after the initiation and received a questionnaire. However, only one reply was received. The cooperating exporting producer accounted for more than 25 % of the Chinese imports in the Union and its imports were considered to be representative of total imports from the PRC into the Union. Therefore the findings in relation to the likelihood of a continuation or recurrence of dumping set out below were based on data of the cooperating exporting producer.

2. Dumping during the review investigation period

2.1. Analogue country

(29) According to Article 2(7)(a) of the basic Regulation, normal value was determined on the basis of the price or constructed value in a market economy third country. For this purpose, a market economy third country had to be selected (‘the analogue country’).

(30) The Commission informed interested parties in the Notice of Initiation that it envisaged the USA, as in the original investigation, as a possible analogue country and invited parties to comment. No comments were received.

(31) The Commission nevertheless contacted a number of other potential analogue countries (Argentina, Brazil, India, Japan, Republic of Korea, Mexico, Russian Federation and Ukraine) to seek their cooperation and to provide information.

(32) Three producers from the USA cooperated and submitted a questionnaire reply.

(33) The level of competition on the US market was found to be high, with a large number of producers selling domestically and with significant import levels (despite the existing anti-dumping duties against the PRC). The quantities sold in the US market were substantial and the latter was comparable to the Chinese market also in terms of product range. In addition, the raw materials used and production process of the cooperating producers in an analogue country were found to be similar to the ones on the Chinese market. Therefore, and in view of the cooperation received, the USA were considered to be an appropriate analogue country under Article 2(7)(a) of the basic Regulation.

2.2. Normal value

(34) The information received from the cooperating producers in the USA was used as a basis for the determination of the normal value applicable to exporting producers in the PRC.

(35) In accordance with Article 2(2) of the basic Regulation, the Commission first examined whether the total volume of domestic sales for the cooperating producers in the USA was representative during the review investigation period. The domestic sales were considered representative if the total domestic sales volume of the like product to independent customers on the domestic market represented at least 5 % of the total Chinese export sales volume of the product concerned to the Union during the review investigation period. On this basis the domestic sales in the USA were representative.

(36) The Commission further examined whether the domestic sales of the like product could be regarded as having been made in the ordinary course of trade pursuant to Article 2(4) of the basic Regulation. The examination was made by establishing the proportion of the profitable sales to the independent customers of the product type in question. In cases where the domestic sales of the particular product type were made in sufficient quantities and in the ordinary course of trade, normal value was based on the actual domestic price, calculated as a weighted average of all the domestic sales of that type made during the review investigation period.

(37) For those product types where more than 80 % by volume of sales on the domestic market of the product type were above cost and the weighted average sales price of that type was equal to or above the unit cost of production, normal value, by product type, was calculated as the weighted average of the actual domestic prices of all sales of the type in question, irrespective of whether those sales were profitable or not.

(38) Where the volume of profitable sales of a product type represented 80 % or less of the total sales volume of that type, or where the weighted average price of that type was below the unit cost of production, normal value was based on the actual domestic price, which was calculated as a weighted average price of only the profitable domestic sales of that type made during the review investigation period.

2.3. Export price

(39) The cooperating exporting producer exported to the Union directly to independent customers. The export price was the price actually paid or payable for the product under review when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

2.4. Comparison

(40) The Commission compared the normal value and the export price on an ex-works basis. Where justified for the purpose of a fair comparison, the export price and normal value were adjusted for differences affecting prices and price comparability in accordance with Article 2(10) of the basic Regulation. Adjustments were made for transport costs (domestic and ocean freight), insurance costs, bank charges and commissions.

2.5. Dumping margin

(41) The Commission compared the weighted average normal value of each type of the like product in the analogue country with the weighted average export price of the corresponding type of the product concerned for the cooperating exporting producer, in accordance with Article 2(11) and (12) of the basic Regulation. On this basis, the weighted average dumping margin for the cooperating exporting producer expressed as a percentage of the cost, insurance, freight (‘CIF’) Union frontier price, duty unpaid, was 158,3 %.

3. Development of imports should measures be repealed

(42) The Commission analysed whether there was a likelihood of continuation of dumping should the measures lapse. The following elements were analysed: export price to other destinations, the production capacity and spare capacity in the PRC and the attractiveness of the Union market.

3.1. Chinese exports to other destinations

(43) According to the Chinese Export Statistics Database, Chinese exports of SPT worldwide (124 countries excluding the Union) amounted to 4,6 million tonnes in 2013. The prices ranged between 400 EUR/ton and 4 500 EUR/ton. Chinese imports to the Union amounted to 68 000 tonnes in the review investigation period with an average price below 700 EUR/ton (based on Eurostat data). The Commission considered that such considerable differences in prices do not allow to draw any meaningful conclusion on Chinese export price behaviour to other third countries. However, the investigation found that the average export price of the cooperating exporting producer in the PRC to third markets (Chile, Iran, Korea, UEA and Turkey) was lower than the average Chinese export price to the Union. In addition, the quantities exported and the prices charged by the Chinese exporting producers in some important export markets like the Union, Canada, the USA, Colombia, Mexico, Brazil, Russia, Belarus and Kazakhstan, are affected by the existing measures such as anti-dumping duties or safeguards.

3.2. Chinese production capacity and spare capacity

(44) The investigation established that the production capacity in the PRC grew significantly since the original investigation. Publically available data collected during the on the spot visit indicate a production capacity at a level of 32 million tonnes(10). The data provided by the applicant indicates even higher production capacity levels up to 43 million tonnes. Both sources confirm that since the original investigation, the production capacity of the Chinese producers increased significantly, i.e. by at least 60 %.

(45) All information collected confirms the existence of overcapacity of the Chinese industry. No information was put forward indicating that the domestic consumption in the PRC would increase in the following years, in sufficient proportion to absorb the existing overcapacity in the PRC.

(46) The investigation established that the production in the PRC was in the range of 30 million tonnes in the review investigation period thus leaving at least 2 million tonnes of spare capacity. That spare capacity constitutes more than 100 % of the Union consumption in the review investigation period and was therefore considered significant. There is therefore an important spare production capacity available in the PRC which will likely be used, in view of the conclusions with regard to the attractiveness of the Union market and of the difficulties, for the internal market, to absorb it, to increase export volumes to the Union market absent the measures.

3.3. Attractiveness of the Union market

(47) According to Eurostat, imports from the PRC to the Union first decreased from over 78 000 tonnes in 2011 to over 47 000 tonnes in 2012 and increased again to nearly 68 000 tonnes in the review investigation period. The decrease of imports in 2012 coincided with a contraction in demand on the Union market. While the contraction in demand continued in the review investigation period, the volume of imports grew which translated in an increase in market share of the Chinese imports, reaching 3,6 % in the review investigation period.

(48) As established in recital 41, the imports from the PRC were dumped during the review investigation period while measures were in force. The dumping margin established was even substantially higher than the dumping margin found during the original investigation. If the imports continued to be dumped in the presence of measures, then, there is no reason to believe that, absent the measures, the prices of imports from the PRC would increase, let alone to a level sufficient to eliminate the dumping.

(49) As mentioned in recital 43, the existing measures on Chinese imports of SPT in a number of important export markets for Chinese SPT exporting producers greatly limit the possibility of expansion or continuation of the Chinese exports to these markets. At the same time, it was established that the export price to the Union of the cooperating Chinese exporting producer was higher than its export price in third markets, which indicates the attractiveness of the Union market despite the duties in force. It was further shown that the Union market would be an open target to absorb a significant part of the Chinese spare capacities that would most certainly be directed to the Union market at dumped prices in the absence of anti-dumping measures.

(50) Furthermore, prior to the imposition of the measures in force in 2009 the Chinese exports to the Union amounted to 542 840 tonnes to the Union, i.e. nearly eight times more than in the review investigation period. This indicates that the Union market is attractive for Chinese imports in terms of market size and that there is a capacity in the Union market to absorb increased import volumes from PRC. The anti-dumping duties in place prevented Chinese exporting producers to increase their sales volumes to the Union, which will, most likely increase again should measures be allowed to lapse in particular considering the availability of significant spare capacities in PRC as outlined below.

(51) In addition, even if the consumption on the Chinese market grew significantly since the original investigation, it is unlikely that the significant spare production capacity of the Chinese producers can be absorbed domestically, as explained in recital 45.

(52) Therefore, should the current measures be allowed to lapse, the Chinese exporting producers are likely to significantly increase their exports to the Union market at dumped prices.

3.4. Conclusion on the likelihood of a continuation of dumping

(53) The investigation showed that Chinese sales of SPT to the Union were made at dumped prices in the review investigation period. In view of the significant spare capacity available in the PRC (exceeding the total Union consumption during the review investigation period), the measures in place against Chinese imports in other third markets and the attractiveness of the Union market, the Commission concluded that there is a very high likelihood of a continuation of dumping should measures be removed.

D. LIKELIHOOD OF A CONTINUATION OR RECURRENCE OF INJURY

1. Definition of the Union industry and Union production

(54) The Union industry did not undergo major structural changes since the original investigation. During the review investigation period, the like product was manufactured by around 20 known producers in the Union. They constitute the Union industry within the meaning of Article 4(1) of the basic Regulation.

(55) The total Union production during the review investigation period was established on the basis of the information collected from the cooperating Union producers and on data submitted by the applicant.

(56) As indicated under recital 12, due to the large number of Union producers, a sample of six Union producers was selected. The sample was considered representative for the Union industry, representing about 60 % of the total sales in the Union.

2. Union consumption

(57) The Commission established the Union consumption on the basis of (i) the sales volumes of the Union industry on the Union market based on data provided by the applicant; and (ii) the import volumes from third countries on the Union market obtained from Eurostat statistics. The applicant collected and aggregated the sales data from sixteen Union producers and estimated the data for the rest.

(58) On this basis, Union consumption developed as follows:

Table 1
Union consumption
Source: Eurostat and data submitted by the applicant
	2011	2012	2013	Review investigation period
Total Union consumption (tonnes)	2 353 291	2 058 262	1 841 591	1 904 410
Index (2011 = 100)	100	87	78	81

(59) Throughout the period considered the Union consumption decreased by 19 %. More specifically, the Union market for the product under review and like product decreased steadily until 2013 (by 22 %) and then slightly improved in the review investigation period (by 3,4 %).

(60) The declining trend in the Union consumption can be mainly explained by the contraction in demand coming from the construction, industrial and power generation sectors, which did not recover to the pre-crisis levels, i.e. before the year 2009.

3. Imports from the country concerned

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

Table 2

Import volume and market share

Source: Eurostat
Country		2011	2012	2013	Review investigation period
PRC	Volume (tonne)	78 153	47 279	55 777	67 977
	Index	100	60	71	87
	Market share (%)	3,3	2,3	3	3,6

(61) The volume of imports of the product under review from the PRC to the Union decreased by 13 % throughout the period considered, from around 78 000 tonnes in 2011 to 68 000 tonnes in the review investigation period. The import volume from the PRC dropped significantly in 2012 (by 40 %) and grew steadily ever since (by 18 % in 2013 as compared with 2012 and then by 22 % in the review investigation period as compared with 2013).

(62) The imports of the product under review from the PRC into the Union decreased to a lesser extent than the Union consumption and this resulted in a marginal market share increase of the Chinese imports from 3,3 % in 2011 to 3,6 % in the review investigation period. More specifically, the market share decreased to 2,3 % in 2012 and increased after that to 3 % and 3,6 % in 2013 and the review investigation period respectively.

3.2. Prices of imports from the country concerned

(63) The table below shows the average price of imports from the PRC:

Table 3
Import prices
Source: Eurostat
Country		2011	2012	2013	Review investigation period
PRC	Average price (EUR/tonne)	801	828	747	692
	Index	100	103	93	86

(64) Between 2011 and the review investigation period, the average import price of the product under review originating in the PRC decreased by 14 % from 801 EUR/tonne in 2011 to 692 EUR/tonne in the review investigation period. More specifically, the Chinese import price increased by 3 % in 2012 and then decreased by more than 16 % in the review investigation period. The average import price of the cooperating exporting producer was in the same range as the average import prices from Eurostat and followed the same trend over the period considered.

3.3. Price undercutting

(65) The Commission determined the price undercutting during the review investigation period by comparing the weighted average sales price of the sampled Union producers charged on the Union market, adjusted to an ex-works level and the average price of the imports from the country concerned to the first independent customer on the Union market, established at a cost, insurance, freight (CIF) level on the basis of the verified data from the cooperating Chinese exporting producer.

(66) For the purposes of calculating price undercutting, information from all sampled Union producers for the review investigation period was used. The comparison showed that, during the review investigation period, the weighted average price undercutting margin, expressed as a percentage of the Union industry's sales prices was 28,4 %. Should the anti-dumping duty of 17,7 % applicable to the cooperating Chinese exporting producer be deducted, the undercutting margin would amount to 39,2 %.

4. Imports from third countries

(67) The volume, market share and prices of imports from other third countries developed as follows:

Table 4
Imports from other third countries
Source: Eurostat
Country		2011	2012	2013	Review investigation period
Ukraine	Volume (tonnes)	44 615	39 168	57 915	59 656
	Index	100	88	130	134
	Market share (%)	1,9	1,9	3,1	3,1
	Average price (EUR/tonne)	900	898	838	776
	Index	100	100	93	86
Japan	Volume (tonnes)	51 852	47 163	23 721	21 426
	Index	100	91	46	41
	Market share (%)	2,2	2,3	1,3	1,1
	Average price (EUR/tonne)	2 303	2 526	2 244	2 330
	Index	100	110	97	101
Belarus	Volume (tonnes)	33 614	35 761	28 380	29 600
	Index	100	106	84	88
	Market share (%)	1,4	1,7	1,5	1,6
	Average price (EUR/tonne)	849	856	803	783
	Index	100	101	95	92
Russia	Volume (tonnes)	19 018	13 375	7 154	7 977
	Index	100	70	38	42
	Market share (%)	0,8	0,6	0,4	0,4
	Average price (EUR/tonne)	1 065	1 068	1 021	901
	Index	100	100	96	85
Other third countries	Volume (tonnes)	43 230	54 977	43 713	56 509
	Index	100	127	101	131
	Market share (%)	2,6	3,3	2,8	3,4
	Average price (EUR/tonne)	1 249	1 659	1 195	1 327
	Index	100	133	96	106

(68) In the period considered, import volumes from Ukraine increased by 34 %, to reach 59 656 tonnes in the review investigation period, while import volumes from Japan, Russia and Belarus decreased by 59 %, 58 % and 12 % respectively and were 21 426 tonnes, 7 977 tonnes and 29 600 tonnes in the same period. The import volumes from other third countries increased by 31 % from 43 230 tonnes to 56 509 tonnes. In terms of market share, Ukraine and other third countries had around 3 % of the Union market while Japan and Belarus had around 1 % and 2 % respectively. Russia's market share was marginal at 0,4 % in the review investigation period.

(69) Import prices from Ukraine, Belarus and Russia showed a downward trend throughout the period considered while import prices Japan and other third countries showed an increasing trend. In the review investigation period, the import price of SPT was around 780 EUR/tonne for Belarus and Ukraine while for Japan and other third countries it was around 2 330 EUR/tonne and 1 327 EUR/tonne. The import price for Russia was around 900 EUR/tonne in the review investigation period. Current anti-dumping measures exist on imports of SPT from Ukraine and Russia.

5. Economic situation of the Union industry

5.1. General remarks

(70) In accordance with Article 3(5) of the basic Regulation, the examination of the impact of the dumped imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

(71) For the injury analysis, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of the data submitted by the applicant, which consisted of data relating to 16 Union producers, and of estimations for the rest as mentioned in recital 57; the data relate to all known Union producers. The Commission evaluated the microeconomic indicators on the basis of data related to the sampled Union producers.

(72) The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.

(73) The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.

5.2. Macroeconomic indicators

(a) Production, production capacity and capacity utilisation

(74) The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 5
Production, production capacity and capacity utilisation
Source: data submitted by the applicant
	2011	2012	2013	Review investigation period
Production volume	3 746 432	3 585 043	3 292 752	3 361 226
Index (2011 = 100)	100	96	88	90
Production capacity	5 118 662	5 085 063	5 039 564	5 046 214
Index (2011 = 100)	100	99	98	99
Capacity utilisation	73 %	71 %	65 %	67 %

(75) The Union industry's production decreased by 10 % during the period considered from a level of 3 746 432 tonnes in 2011 to a level of 3 361 226 tonnes in the review investigation period. More specifically, it first decreased by 12 % until 2013 and then increased marginally by 2 % in the review investigation period.

(76) The production capacity remained overall stable in the period considered and was around 5 million tonnes in the review investigation period.

(77) As a result of the decrease in production volume and stable production capacity, the capacity utilisation developed in line with the production volume, namely it decreased to 65 % until 2013 and then improved slightly to 67 % in the review investigation period. Overall, capacity utilisation decreased from 73 % in 2011 to 67 % in the review investigation period.

(b) Sales volume and market share

(78) The Union industry's sales volume and market share in the Union developed over the period considered as follows:

Table 6
Sales volume and market share
Source: data submitted by the applicant
	2011	2012	2013	Review investigation period
Total sales volume in the Union	2 082 810	1 820 539	1 624 931	1 661 265
Index (2011 = 100)	100	87	78	80
Market share of the Union industry	89 %	89 %	88 %	87 %

(79) The total sales volume of the Union industry reported in Table 6 includes sales to unrelated and related customers which were found to be made at arm's length.

(80) Total sales of the Union industry on the Union market declined by 20 % during the period considered. The sales of the Union industry gradually dropped by 22 % until 2013 and then improved marginally to reach over 1,6 million tonnes in the review investigation period. The decrease in the Union industry sales is mainly a consequence of the contraction of the Union demand for SPT (see recital 60). As a consequence, the Union industry lost 2 percentage points of market share during the period considered, reaching 87 % in the review investigation period.

(c) Growth

(81) While Union consumption decreased by 19 % over the period considered, the sales volume of the Union industry decreased by 20 %, which translated in a loss of market share of 2 percentage points.

(d) Employment and productivity

(82) Employment and productivity developed over the period considered as follows:

Table 7
Employment and productivity
Source: data submitted by the applicant.
	2011	2012	2013	Review investigation period
Number of employees	21 131	20 850	20 455	20 768
Index (2011 = 100)	100	99	97	98
Productivity (unit/employee)	177	172	161	162
Index (2011 = 100)	100	97	91	91

(83) Employment of the Union industry diminished by 2 % in the period considered and was 20 768 employees in the review investigation period.

(84) Productivity decreased by 9 % over the period considered due to a slower decrease in Union employment than in Union production. Indeed, under normal economic conditions it takes longer for the Union industry to adapt to the contraction in demand and therefore there is usually a lagged effect between the decrease in production and the reduction of the number of employees.

(e) Magnitude of the dumping margin and recovery from past dumping

(85) The dumping margin established for the PRC was well above the de minimis level, while the import volumes from PRC remained low throughout the period considered. The investigation established that imports of SPT from PRC continued to enter the Union market at dumped prices and that the situation of the Union industry deteriorated significantly as concluded in recitals 99 to 102.

5.3. Microeconomic indicators

(a) Prices and factors affecting prices

(86) The average sales prices of the Union industry to unrelated customers in the Union developed over the period considered as follows:

Table 8
Average sales prices
Source: questionnaire replies of the sampled Union producers
	2011	2012	2013	Review investigation period
Average unit price Union market (EUR/tonne)	1 294	1 258	1 187	1 170
Index (2011 = 100)	100	97	92	90
Unit cost of production (EUR/tonne)	1 257	1 186	1 167	1 128
Index (2011 = 100)	100	94	93	90

(87) The Union industry's average unit selling price to unrelated customers in the Union decreased by 10 % over the period considered to reach 1 170 EUR/tonne in the review investigation period. The decrease in price can be seen as a consequence of the efforts made by the Union industry to cut costs and also of the price pressure of the low-priced Chinese imports.

(88) Likewise, the average cost of production of the Union industry dropped by 10 % over the period considered, from 1 257 EUR/tonne in 2011 to 1 128 EUR/tonne in the review investigation period. The cuts in cost of production could be explained mainly by more efficient production process and equipment.

(b) Labour costs

(89) The average labour costs of the Union industry developed over the period considered as follows:

Table 9
Average labour costs per employee
Source: questionnaire replies of the sampled Union producers
	2011	2012	2013	Review investigation period
Average labour costs per employee (EUR)	41 710	41 465	41 662	41 191
Index (2011 = 100)	100	99	100	99

(90) The average labour costs per employee remained relatively stable over the period considered with marginal decrease of 1 % over the period considered. Specifically, the average labour costs decreased by 1 % in 2012, then increased by 0,5 % and then decreased again by 1 %.

(c) Inventories

(91) Stock levels of the sampled Union producers developed over the period considered as follows:

Table 10
Inventories
Source: questionnaire replies of the sampled Union producers
	2011	2012	2013	Review investigation period
Closing stocks (tonnes)	145 083	129 772	166 387	153 971
Index (2011 = 100)	100	89	115	106
Closing stocks as a percentage of production (%)	3,9	3,6	5,1	4,6

(92) Overall closing stocks increased by 6 % over the period considered. From 2011 to 2012 the closing stocks decreased following a decrease in production volume and an increase in export sales volume. From 2012 to 2013 stocks increased due to a decrease in the total sales of the Union industry. From 2013 to the review investigation period closing stocks decreased again mainly because of an increase in the sales of the Union industry both outside and on the Union market.

(93) The investigation showed that, in this industry, the production is executed mainly on the basis of customers' short-term orders and therefore the stocks represent a relatively low percentage of the production. Closing stocks as a percentage of production followed the trend of the closing stocks and increased marginally from 3,9 % in 2011 to 4,6 % in the review investigation period mainly due to the decrease in the total Union sales. More specifically, it decreased by 0,3 percentage points from 2011 to 2012 and then it increased by 1,5 percentage points in 2013 for the reasons explained in recital 92.

(d) Profitability, cash flow, investments, return on investments and ability to raise capital

(94) Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

Table 11
Profitability, cash flow, investments and return on investments
Source: questionnaire replies of the sampled Union producers
	2011	2012	2013	Review investigation period
Profitability Union industry (% net sales)	2,9	5,7	1,7	3,6
Cash flow (EUR)	59 174 934	274 503 811	191 142 121	246 791 720
Index (2011 = 100)	100	464	323	417
Investments (EUR)	141 658 302	134 147 382	140 277 636	146 208 274
Index (2011 = 100)	100	95	99	103
Return on investments (%)	3,7	8,2	5,9	7,6

(95) The Commission established the profitability of the Union industry by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. The profitability of the Union industry fluctuated from one year to another depending on the market conditions and, overall, increased from 2,9 % to 3,6 % during the period considered mainly due to the product mix sold, i.e. the Union industry sold more products with relatively higher profit margin. In particular, the profitability of the Union industry increased to 5,7 % in 2012 then dropped to 1,7 % in 2013 and increased again to 3,6 % in the review investigation period.

(96) The net cash flow is the Union industry's ability to self-finance their activities. The net cash flow increased more than four times during the period considered. The substantial increase in cash flow is mainly explained by changes in the working capital.

(97) The investments increased marginally, by 3 %, over the period considered. They mainly represented investments necessary for the replacement of production equipment.

(98) The return on investments is the profit in percentage of the net book value of investments. The return on investment from the production and sale of the like product increased from 3,7 % to 7,6 % during the period considered. Like the profit, the trend of the return on investment was unstable as it first increased to 8,2 % in 2012, then decreased to 5,9 % in 2013 and then increased again to 7,6 % in the review investigation period.

5.4. Conclusion on injury

(99) A number of indicators, in particular the financial indicators, improved over the period considered. The profitability increased marginally from 2,9 % to 3,6 %, which is slightly above the target profit of 3 % established in the original investigation. The return on investment improved from 3,7 % to 7,6 % while the cash flow level increased more than four fold. These developments suggest that the anti-dumping measures in place were effective since the Union industry was sheltered from the potential injurious effect of the dumped Chinese imports of SPT.

(100) On the other hand, some of the main injury indicators, in particular the macroeconomic indicators, still experienced a negative development during the period considered. Thus the production volume decreased by 10 %, the sales volume to unrelated customers in the Union decreased by 20 %, the capacity utilisation decreased to 67 %, the Union's market share decreased by 2 percentage points and employment by 2 %. In the context of a decreasing demand for SPT, the Union industry produced and sold less on the Union market resulting in relatively low capacity utilisation levels, which negatively impacted on the fixed costs of the Union industry. To be noted that the capacity utilisation level dropped significantly from the original investigation, specifically from 90 % in the original investigation to 67 % in the review investigation period.

(101) Therefore, the picture of the Union industry was mixed. Some of the main injury indicators such as sales, production volumes and market share showed negative trends in the period considered. At the same time, other factors such as profitability, return on investment and the cash flow showed positive trends in the same period. However, the investigation has established that despite these positive trends observed for some injury factors, overall, the Union industry is in a situation where it would not be able to cope with a surge of dumped imports from PRC. More importantly, the situation of the Union industry overall showed in fact a significant deterioration when compared to the investigation period of the original investigation. Thus, even though the Union industry was profitable during the period considered, the profit levels were much lower as compared to the original investigation (3,6 % in the review investigation period as compared with 15,4 % in the investigation period of the original investigation) and also varied greatly from one year to another according to the SPT market conditions (e.g. from 5,7 % in 2012 to 1,7 % in 2013 and then to 3,6 % in the review investigation period).

(102) On the basis of the above, the Commission concluded that in the review investigation period, the Union industry did not suffer material injury within the meaning of Article 3(5) of the basic Regulation and was not exposed to a threat of injury within the meaning of Article 3(9) of the basic Regulation, mainly due to the fact that the anti-dumping measures in force shielded it from the injurious effect of the Chinese dumped imports. Nevertheless, the situation of the Union industry strongly deteriorated as compared to the original investigation with instable profit levels and low capacity utilisation rates.

6. Likelihood of a recurrence of injury

(103) As concluded in recitals 99 to 102, the Union industry did not suffer material injury during the review investigation period, but its situation strongly deteriorated as compared to the original investigation. As outlined in recital 41, Chinese imports were made at dumped price levels during the review investigation period and, as concluded in recital 53, there is a very high likelihood of a continuation of dumping should the measures be allowed to lapse.

(104) The original investigation determined the existence of a threat of injury in accordance with Article 3(9) of the basic Regulation. In the current investigation it was determined that there exists a likelihood of a recurrence of a threat of injury should the measures be allowed to lapse. This determination is based on the assessment of the following factors: (a) the likely development of the volume of dumped imports; (b) the availability of spare capacity of the exporters; (c) the level of prices of the Chinese imports and the likely demand for further imports; and (d) the level of inventories.

(a) likely development of the volume of dumped imports

(105) As mentioned in recital 50, the Chinese imports of SPT into the Union amounted to 542 840 tonnes in the original investigation and dropped to 68 000 tonnes (i.e. eight times less) in the review investigation period. It is likely that, due to their low prices, the Chinese dumped imports of SPT could reach the level of imports in the original investigation (542 840 tonnes) should the measures be allowed to lapse. In the context of a decreasing Union demand of SPT (from 3,2 million tonnes in the original investigation to 1,9 million tonnes in the review investigation period), this likely increase in Chinese dumped imports of SPT would likely translate into a Chinese market share increase from the current 3,6 % to around 30 %. Indeed, the investigation revealed that the Union customers will relatively easy switch their short-term orders from the Union producers to the Chinese exporting producers should the measures be allowed to lapse. This will negatively impact the Union producers since fewer orders imply lower production levels and thus working at economically unsustainable capacity utilisation levels. For the reasons outlined and taking into account that Chinese production capacity of SPT has grown significantly (by around 60 %) since the original investigation, it is likely that the dumped Chinese imports of SPT will imminently flood the Union market and gain substantial market share at the expense of the Union industry should the measures be allowed to lapse.

(b) availability of spare capacity of the exporters

(106) As established in recital 46, the total spare capacity of SPT in the PRC was estimated at around 2 million tonnes in the review investigation period. This amount exceeded the total Union consumption of SPT during the same period. Therefore, the PRC would be able to export significant additional volumes to the Union market. Furthermore, Canada, the USA, Colombia, Mexico and Brazil have anti-dumping and safeguard measures in place on Chinese SPT, while Russia, Belarus and Kazakhstan provisionally imposed measures on the unfairly priced Chinese imports. These countries were important export markets for the Chinese exporting producers before the imposition of measures(11). Furthermore, the evidence collected indicates that the significant Chinese overcapacity and the recent downturn of the Chinese economy exert strong pressure on the Chinese SPT producers to produce at high capacity utilisation rates. In view of these elements, the investigation has established that there is a strong likelihood that, should the measures be lifted, the Chinese exporting producers would direct their production to the Union market, which remains an attractive market as established in recitals 47 to 52.

(c) likely evolution of the level of Chinese prices

(107) As explained in recitals 64 to 66, the current Chinese prices are substantially below the Union industry's sale prices, with an average undercutting margin of 28,4 % during the review investigation period. As established in recital 52, Chinese imports of SPT will likely continue to enter the Union market at dumped prices should the measures be repealed. In addition, as mentioned in recital 66, without the anti-dumping measures the Chinese imports would undercut the Union industry's sales prices by 39,2 %. Should the measures be repealed, this will, in all likelihood, create a significant price pressure on the Union market, which will be accentuated by the likely imminent surge of SPT imports from the PRC. The investigation revealed that the Union producers cannot decrease their prices to compete with the dumped priced Chinese imports. The prices are usually agreed with the customers on the basis of the product type and quantity ordered. As explained in recitals 92 and 93, the Union producers mainly produce on the basis of short-term orders. This makes it relatively easy for the customers to switch to the cheaper Chinese imports of SPT. Therefore, the likely negative effect would be twofold: (a) on the one hand, the significant price differential is likely to cause a shift towards the low priced dumped imports from the PRC. There is no indication that the Union consumption will increase in the short to medium term. Therefore, the increased dumped imports from the PRC are likely to gain a significant market share on the Union market to the detriment of the Union industry. This would also result in an even lower capacity utilisation by the Union industry, which is one of the crucial elements that is contributing to the current overall negative situation of the Union industry; (b) on the other hand, the low-priced dumped Chinese imports will exert significant price pressure on the Union market and will force the Union industry to further lower its sales prices to economically unsustainable levels, which will ultimately lead to losses.

(108) Therefore, there is a strong likelihood that, as a consequence of the significant Chinese spare capacity, the existing anti-dumping and safeguard measures on Chinese imports of the product under review in some of its important export markets for SPT, and of the attractiveness of the Union market as described in recitals 47 to 52, significantly increased quantities of low priced Chinese dumped imports into the Union would be imminent should the measures be allowed to lapse.

(d) level of inventories

(109) As explained in recitals 92 and 93 the level of inventories is not of any particular significance for the analysis because the Union producers mainly produce on the basis of short-term orders from customers and the inventories represent an insignificant percentage of the Union producers' production.

7. Conclusion

(110) In view of the findings of the investigation, namely the significant spare capacity in the PRC, the attractiveness of the Union market, the situation in other main export markets, the likely imminent increase of significant quantities of Chinese dumped imports and the expected price levels of these dumped imports, while also taking into consideration the overall deterioration of the Union industry since the imposition of the original measures and the shrinking of the Union market for SPT, it is considered that the repeal of the measures would in all likelihood lead to a recurrence of a threat of injury.

(111) It is therefore concluded that the repeal of the existing measures would be likely to lead to a continuation of dumping and to a recurrence of a threat of injury.

E. UNION INTEREST

(112) In accordance with Article 21 of the basic Regulation, the Commission examined whether maintaining the existing anti-dumping measures against the PRC would be against the interest of the Union as a whole. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers and users.

(113) All interested parties were given the opportunity to make their views known pursuant to Article 21(2) of the basic Regulation.

(114) On this basis, the Commission examined whether, despite the conclusions on the likelihood of a continuation of dumping and recurrence of a threat of injury, compelling reasons existed which would lead to the conclusion that it was not in the Union interest to maintain the existing measures.

1. Interest of the Union industry

(115) The investigation established that the Union industry was in a vulnerable position during the review investigation period. As mentioned in recital 60 the contraction in the Union demand together with instable profit margins and low capacity utilisation levels of the Union industry indicate that the Union industry would not be able to cope with unfairly priced Chinese imports. The investigation also established that there was a likelihood of recurrence of a threat of injury should measures against Chinese imports be allowed to lapse. In particular, it is expected that the Union industry suffer material injury and possibly disappear should Chinese imports of SPT resume on the Union market at dumped prices due to the fact that any lost sale would increase the fixed costs.

(116) Should measures be maintained it is expected that the Union industry will be able to fully benefit from the effects of the measures imposed, namely it will be able to maintain its market share on the Union market and improve capacity utilisation levels. Eventually it should be able to keep the profit levels on the positive side.

(117) It was therefore concluded that maintaining the measures in force against the PRC would be in the interest of the Union industry.

2. Interest of importers/traders

(118) Out of the four importers that came forward following the publication of the Notice of Initiation, only one unrelated importer submitted a reply to the questionnaire.

(119) The analysis of the verified data showed that SPT constitutes only about 5 % to 10 % of their total sales. The cooperating importer was profitable in the period under review. Profitability of the cooperating importer of the business related to SPT was between 1 % and 7 % in the review investigation period. On this basis, should the measures be maintained, it is likely that they would not significantly affect the activity of this cooperating importer. Furthermore, given the non-cooperation of other importers, there are no factors suggesting that the rest of importers would be disproportionately affected if measures were to be extended.

3. Interest of users

(120) Three users co-operated in the investigation. Two out of the three cooperating users purchased SPT from the Union producers and the third one purchased Chinese SPT from a trader. None of the three users put forward any argument against the maintenance of the measures in force. On the basis of the information submitted and in line with the conclusions drawn in the original investigation, it is expected that the continuation of measures will not have a significant negative impact on users. To the contrary, it is expected that the continuation of the measures will ensure competition in the EU market giving the possibility to choose among different suppliers, including European and other third country suppliers.

4. Conclusion on Union interest

(121) In view of the above, the Commission concluded that there are no compelling reasons of Union interest against the maintenance of the current anti-dumping measures on imports from the PRC.

F. ANTI-DUMPING MEASURES

(122) It follows from the above considerations that, under Article 11(2) of the basic Regulation, the anti-dumping measures applicable to imports of certain seamless pipes and tubes originating in the PRC, imposed by Regulation (EC) No 926/2009 should be maintained.

(123) This regulation is in accordance with the opinion of the Committee established by Article 15(1) Regulation (EC) No 1225/2009,

HAS ADOPTED THIS REGULATION:

(1)

OJ L 343, 22.12.2009, p. 51.

(2)

Council Regulation (EC) No 926/2009 of 24 September 2009 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain seamless pipes and tubes of iron or steel originating in the People's Republic of China (OJ L 262, 6.10.2009, p. 19).

(3)

General Court judgment of 29 January 2014, in case T-528/09, Hubei Xinyegang Steel v Council.

(4)

Case C-186/14 P, ArcelorMittal Tubular Products Ostrava and Others v Hubei Xinyegang Steel Co.

(5)

Council Implementing Regulation (EU) No 585/2012 of 26 June 2012 imposing a definitive anti-dumping duty on imports of certain seamless pipes and tubes, of iron or steel, originating in Russia and Ukraine, following an expiry review pursuant to Article 11(2) of Regulation (EC) No 1225/2009, and terminating the expiry review proceeding concerning imports of certain seamless pipes and tubes, of iron or steel, originating in Croatia (OJ L 174, 4.7.2012, p. 5).

(6)

See footnote 5.

(7)

Notice of impending expiry of certain anti-dumping measures (OJ C 49, 21.2.2014, p. 6).

(8)

Notice of initiation of an expiry review of the anti-dumping measures applicable to imports of certain seamless pipes and tubes of iron or steel originating in the People's Republic of China (OJ C 347, 3.10.2014, p. 6).

(9)

The CEV shall be determined in accordance with Technical Report, 1967, IIW doc. IX-535-67, published by the International Institute of Welding (IIW).

(10)

China Industry Data Website (www.chyxx.com), China Steel News Web (www.csteelnews.com) and China Business Info Web (www.askci.com).

(11)

The anti-dumping measures in force on imports of SPT from China in these countries range from 32,7 % to 429,95 %.