(1)

On 19 December 2024, the European Commission (‘the Commission’) initiated an anti-dumping investigation with regard to imports of Acrylonitrile-Butadiene-Styrene Resins originating in the Republic of Korea (‘ROK’ or ‘Korea’) and Taiwan (‘the countries concerned’) on the basis of Article 5 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2)

The Commission initiated the investigation following a complaint lodged on 4 November 2024 by INEOS Styrolution Switzerland SA, Versalis SpA, and Trinseo Europe GmbH (‘the complainants’). The complaint was made by the Union industry of Acrylonitrile-Butadiene-Styrene Resins in the sense of Article 5(4) of the basic Regulation. The complaint contained evidence of dumping and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3)

The Commission made imports of the product concerned subject to registration by Commission Implementing Regulation (EU) 2025/412 (3) (‘the registration Regulation’).

(4)

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 complainants, other known Union producers, the known exporting producers and the Taiwanese and Korean authorities, known importers and users about the initiation of the investigation and invited them to participate.

(5)

Interested parties had an opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(6)

The Commission received comments on initiation from the Government of Korea (‘GOK’) and LG Chem.

(7)

In its comments on initiation (4), LG Chem submitted that the level of confidentiality granted to the complainants in the complaint was inconsistent with Article 6.5.1 of the WTO Anti-dumping agreement (‘WTO ADA’) and the corresponding case law. The company specified that the complete redaction of Union industry’s sales prices on the Union free market infringed on the company’s rights of defence as it was not possible to compare those prices with the Korean prices and thus adequately respond to the allegations of injury.

(8)

Following LG Chem’s comments, the Commission requested the Union industry to supplement the missing information in the non-confidential version of the compliant. The Union industry provided the requested information.

(9)

LG Chem disagreed with the allegations of dumping made in the Complaint, arguing that the claims of unprofitable sales of Acrylonitrile-Butadiene-Styrene resins (‘ABS’) on the Korean domestic market were based on inaccurate financial information and did not reflect the company’s positive operating and net profits. LG Chem claimed also that the Complaint's calculation of costs and profit margins was also flawed, as it relied on data from unrelated companies and products and failed to account for differences in cost structure and price between standard and premium ABS products. LG Chem argued that the Complaint’s data on raw material prices was unreliable, as it did not reflect the actual quality and cost of raw materials used by Korean ABS producers. The exporting producers failed to provide evidence that would call into question the accuracy of the information provided by the complainant. The Commission found no grounds to disregard it as sufficient to justify the initiation of an investigation. Therefore, the claims were rejected.

(10)

LG Chem argued that the complaint did not provide evidence of the existence of material injury to the Union industry, for the following reasons:

(11)

The Commission recalled that a prima facie finding of material injury requires an examination, inter alia, of the relevant factors as described in Article 5(2) (d) of the basic Regulation. It is not specifically required in Article 5 of the basic Regulation that all injury factors mentioned in Article 3(5) show deterioration in order for material injury to be established. Indeed, the wording of Article 5(2) of the basic Regulation states that the complaint shall contain the information on changes in the volume of the allegedly dumped imports, the effect of those imports on prices of the like product on the Union market and the consequent impact of the imports on the Union industry, as demonstrated by relevant (not necessarily all) factors and indices having a bearing on the state of the Union industry, such as those listed in Articles 3(3) and 3(5).

(12)

Therefore, not all factors must show deterioration in order for material injury to be established. Furthermore, the existence of other factors which may have an impact on the situation of the Union industry does not necessarily imply that the effect of dumped imports on this industry is not material.

(13)

The Commission considered that the complaint provided sufficient evidence of the existence of material injury, when it showed that in a situation of declining Union consumption, the imports from the countries concerned increased in absolute and relative terms, and on the contrary, the Union industry’s production and sales volume, as well as its profitability decreased over the period considered.

(14)

Furthermore, the GOK and LG Chem claimed that the surge in ABS imports from Korea were caused by the product quality, not by dumping. In this respect, the GOK submitted that the ABS imports from Korea also increased due to the shortage on the Union market caused by the force majeure events in 2021. In addition, both parties claimed that the alleged injury was caused by surging energy prices in the Union.

(15)

The Commission considered that the parties did not provide any evidence to support the claims that the increase in imports of ABS from Korea were caused by product quality and short-term force majeure events in 2021. In addition, the Commission found that the complaint sufficiently addressed the issue of rising energy cost at complaint’s stage.

(16)

Consequently, the claims concerning the injury and causality analysis included in the complaint as presented in recitals 10 and 14 were rejected.

(17)

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

(18)

In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of sales and product mix. This sample consisted of two Union producers. The sampled Union producers accounted for [38-48] % of sales volume of the like product in the Union. The Commission invited interested parties to comment on the provisional sample. No comments were received in this respect. The sample is representative of the Union industry.

(19)

To decide whether sampling is necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation.

(20)

Six unrelated importers contacted the Commission with regard to sampling. However, only four of them provided the requested information. They also agreed to be included in the sample. In view of the low number of replies, the Commission decided that sampling was not necessary.

(21)

To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in the Republic of Korea to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the Republic of Korea to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(22)

Three exporting producers in the Republic of Korea provided the requested information and agreed to be included in the sample. These exporting producers represented in tonnes over 90 % of Korean imports during the investigation period. In accordance with Article 17(1) of the basic Regulation, the Commission selected a sample of two on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. These companies account in tonnes for [75-85] % of the total export volume to the Union from ROK in the investigation period. No interested parties provided comments on the sampling.

(23)

To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in Taiwan to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Taipei Representative Office in the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(24)

Three Taiwanese exporting producers in Taiwan provided the requested information and agreed to be included in the sample. These parties represented 100 % of Taiwanese imports during the investigation. The Commission deemed two out of the three exporting producers to be related and be part of the same group. The Commission decided to investigate this group (the Chimei Corporation/Grand Pacific Petrochemical Corporation group) and the additional exporting producer, covering 100 % of imports from Taiwan.

(25)

The Taiwanese exporting producers Chimei Corporation and Grand Pacific Petrochemical Corporation contested the decision insofar it considered both parties as related. Chimei Corporation and Grand Pacific Petrochemical Corporation claimed to be independent parties in respect of the product under investigation manufactured in Taiwan based on namely the absence of mutual shareholding or common board members, managers or employees.

(26)

The Commission disagreed that the parties could be considered as unrelated for the purpose of this investigation. As acknowledged by Chimei Corporation and Grand Pacific Petrochemical Corporation themselves, these companies have a common joint venture in China, thus are related parties in light of Article 127 (1) (g) of the Commission Implementing Regulation (EU) 2015/2447 (5). The fact that their joint venture is located in China or that joint venture company did not sell the product under investigation to the Union is irrelevant for the purpose of Article 127 (1) (g). The Commission thus confirmed its initial decision.

(27)

Notwithstanding the above, given the disproportion of Chimei Corporation versus Grand Pacific Petrochemical Corporation in terms of volumes of the product under investigation exported to the EU in the IP, upon request by Grand Pacific Petrochemical Corporation, the Commission exempted Grand Pacific Petrochemical Corporation from submitting a questionnaire reply and informed the party that the dumping margin calculated for Chimei Corporation would be applied also to Grand Pacific Petrochemical Corporation. Grand Pacific Petrochemical Corporation agreed to this proposal.

(28)

One exporting producer in Korea requested individual examination under Article 17(3) of the basic Regulation. At this stage of the investigation, the Commission has not taken any decision about the requests for individual examination. The Commission will decide whether to grant individual examination at the definitive stage of the investigation.

(29)

The Commission sent questionnaires to the sampled exporting producers, to the sampled Union producers, and to all cooperating unrelated importers. The same questionnaires, including questionnaires for users, were made available online (6) on the day of initiation. The Commission also sent a questionnaire requesting the macro-indicators of the Union industry to the complainants.

(30)

The Commission sought and verified all the information deemed necessary for a provisional determination of dumping, resulting injury and Union interest. Verification visits pursuant to Article 16 of the basic Regulation were carried out at the premises of the following companies:

(31)

The investigation of dumping and injury covered the period from 1 October 2023 to 30 September 2024 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2020 to the end of the investigation period (‘the period considered’).

(32)

The Notice of Initiation defined the product under investigation as Acrylonitrile-Butadiene-Styrene Resins, a thermoplastic copolymer consisting of acrylonitrile, butadiene, and styrene in different proportions, regardless of colour or any other physical or mechanical properties, whether or not further processed or treated to confer specific additional physical properties, with the Chemical Abstracts Service (CAS) number 9003-56-9.

(33)

ABS can be produced through two polymerisation processes: the emulsion process and the mass production process. The processes differ in the raw materials and technologies used. The final product has usually the form of pellets and, without addition of pigments, it is of an off-white / yellowish colour.

(34)

The emulsion process uses styrene, acrylonitrile and butadiene as feedstocks. Butadiene is first polymerised in water. This forms a rubber latex, i.e. rubber particles dissolved in water. In the second step, styrene and acrylonitrile are polymerised in the rubber latex solution. The product obtained at this stage is not considered a finished product due to its high butadiene content, which makes it unsuitable for industrial use. In its solid form, it is described as dry powder, rubber powder or grafted rubber concentrate. In parallel to the production of dry powder, styrene and acrylonitrile are polymerised to produce a styrene acrylonitrile (‘SAN’) copolymer. To obtain ABS (finished product), dry powder and styrene acrylonitrile copolymer are compounded. In this last, compounding, step, pigments, additives or other (co)polymers may be added to the blend to adapt its properties. The resulting compound is finally dried and pelletised.

(35)

The mass production process is more recent and allows for a continuous mass production of ABS. It uses styrene, acrylonitrile, and polybutadiene rubber as feedstocks. Polybutadiene rubber is first ground in a mill and then dissolved in styrene. It is further mixed with chemicals and acrylonitrile. The mass polymerisation reaction is carried out in the presence of a solvent. At the end of reaction train, the monomers, which did not polymerise, and low-boiling compounds are removed from the polymer. Pigments, additives or other (co)polymers may be blended in before ABS is sent for pelletising.

(36)

ABS is used in a wide variety of applications, e.g. automotive (vehicle bumpers, decorative elements etc.), household appliances (washing machines, dishwashers etc.), electronics (computer keyboards, mouse, remote controls, phone cases, etc.), furniture, construction (construction pipes and tubes), medical devices, toys (LEGO bricks etc.).

(37)

Depending on the application and the process used to manufacture downstream products, users may have a preference for ABS produced through emulsion or mass production process. ABS produced via the emulsion process provides for a glossier surface of the downstream products. ABS produced as a result of a mass production process contains bigger particles of rubber and thus results in a matt surface. Downstream products are usually produced either via extrusion or via injection moulding. In the extrusion process, the shine of the surface depends on the process used to produce ABS, i.e. glossy surface for emulsion ABS and matt surface for mass produced ABS. Under injection moulding, the surface depends on the mould, i.e. mass produced ABS can also result in a glossy surface.

(38)

In the course of the investigation, the Commission observed varying practices by the producers, both in the Union and in the countries concerned, regarding the use of CAS Registry number (7). Where ABS was produced as a compound of dry powder and SAN, some producers presented it under one CAS number, namely 9003-56-9, while others used two CAS numbers, namely 9003-56-9 for dry powder and 9003-54-7 for SAN. To avoid any potential misunderstandings stemming from such divergent practices, the Commission decided to remove the reference to a CAS number from the definition of the product under investigation.

(39)

Consequently, the product under investigation is as Acrylonitrile-Butadiene-Styrene Resins, a thermoplastic copolymer consisting of acrylonitrile, butadiene, and styrene in different proportions, regardless of colour or any other physical or mechanical properties, whether or not further processed or treated to confer specific additional physical properties (‘the product under investigation’ or ‘ABS’).

(40)

The product concerned is the product under investigation originating in the Republic of Korea and Taiwan, currently falling under CN code 3903 30 00 (‘the product concerned’).

(41)

The investigation showed that the following products have the same basic physical, chemical and technical characteristics as well as the same basic uses:

(42)

The Commission decided at this stage that those products are therefore like products within the meaning of Article 1(4) of the basic Regulation.

(43)

Several exporting producers requested a clarification as to whether the following products fall under the scope of this investigation:

(44)

In this respect, the Commission wishes to clarify that copolymers or compounds that consist only of acrylonitrile, butadiene and styrene fall under the scope of this investigation provided that styrene is predominant in such copolymer or blend. Such copolymers or compounds shall be referred to as ABS in the present investigation.

(45)

As explained in recital 34, dry powder is a semifinished product. Although it already contains all three comonomers, butadiene is predominant and thus it does not meet the condition of styrene content mentioned in recital 44. Consequently, dry powder does not fall in the scope of this investigation.

(46)

Furthermore, ABS (as defined in recital 44) compounds with other (co)polymers and/or additives, such as but not limited to pigments, antistatic agents, UV stabilisers, flame retardant substances, glass fibres, fall in the scope of this regulation as long as ABS is predominant in the compound.

(47)

Therefore, flame retardant ABS and glass reinforced ABS are covered by the scope of this investigation as those product types are produced as compounds where the ABS content is predominant. On the other hand, transparent ABS is not covered by the present investigation. Transparent ABS is produced as a compound of ABS and methyl methacrylate, so called MABS. ABS is not predominant in that compound and thus not falling in the product scope of this investigation.

(48)

Finally, copolymers consisting of acrylonitrile, butadiene, styrene and other comonomers fall under the scope of this investigation as long as acrylonitrile, butadiene and styrene are predominant in the copolymer.

(49)

In its questionnaire reply, Chimei requested flame retardant ABS be excluded from the scope of this investigation as it allegedly was not produced in the Union.

(50)

Contrary to the company’s allegations, flame retardant ABS is produced by the Union producers. Therefore, the Commission rejected the claim.

(51)

Chimei and LEGO claimed that ABS with mass-balanced content should be excluded. The parties argues that mass-balanced ABS is considerably more expensive due to the green premium paid by the customer. As an alternative, LEGO suggested that the anti-dumping duties should not be levied only on the mass-balanced content or at the very least, the mass-balanced ABS should be recognised for the purpose of fair comparison.

(52)

Mass-balanced ABS is ABS produced from circular (mechanically or chemically recycled) inputs or from bio feedstock, e.g. used cooking oil. It is indeed more expensive than ABS produced from non-circular or fossil-based inputs. The green premium can reach up to 100 % of the price of the non-circular or fossil-based ABS. Mass-balanced ABS has however the same basic physical, chemical and technical characteristics as well as the same basic uses as ABS produced from non-circular or fossil-based inputs and therefore compete with standard ABS. Neither Chimei nor Lego provided evidence to the contrary. Therefore, the Commission rejected the exclusion request.

(53)

Imposition of anti-dumping duties on ABS content of non-circular or fossil origin cannot be implemented in practice. The green premium is negotiated between the ABS producer and its customer, and is included directly in the price. It cannot be identified on the invoice or other documents accompanying the import transaction and thus, the value of the green premium cannot be determined for customs valuation purposes. Consequently, the Commission rejected LEGO’s request that the anti-dumping duties be levied on the non-circular or fossil content of ABS only.

(54)

The Commission however duly took into account the fact that certain product types contain mass-balanced ABS for the purpose of fair comparison in the determination of the dumping and injury margins.

(55)

The Commission first examined whether the total volume of domestic sales for each sampled cooperating exporting producer was representative, in accordance with Article 2(2) of the basic Regulation. The domestic sales are representative if the total domestic sales volume of the like product to independent customers on the domestic market per exporting producer represented at least 5 % of its total export sales volume of the product concerned to the Union during the investigation period. On this basis, the total sales by each sampled exporting producer of the like product on the domestic market were representative.

(56)

The Commission subsequently identified the product types sold domestically that were identical or comparable with the product types sold for export to the Union for the exporting producers with representative domestic sales.

(57)

The Commission then examined whether the domestic sales by each sampled exporting producer on its domestic market for each product type that is identical or comparable with a product type sold for export to the Union were representative, in accordance with Article 2(2) of the basic Regulation. The domestic sales of a product type are representative if the total volume of domestic sales of that product type to independent customers during the investigation period represents at least 5 % of the total volume of export sales of the identical or comparable product type to the Union. The Commission established that no more than a third of the product types were unrepresentative for the sampled exporting producers.

(58)

The Commission next defined the proportion of profitable sales to independent customers on the domestic market for each product type during the investigation period in order to decide whether to use actual domestic sales for the calculation of the normal value, in accordance with Article 2(4) of the basic Regulation.

(59)

The normal value is based on the actual domestic price per product type, irrespective of whether those sales are profitable or not, if:

(60)

In this case, the normal value is the weighted average of the prices of all domestic sales of that product type during the IP.

(61)

The normal value is the actual domestic price per product type of only the profitable domestic sales of the product types during the IP, if:

(62)

The analysis of domestic sales showed that 64 % of all domestic sales were profitable and that the weighted average sales price was higher than the cost of production. Accordingly, the normal value was calculated for majority of the transactions as a weighted average of the prices of all domestic sales during the IP and for some part as a weighted average of the profitable sales only.

(63)

In some instances where there were insufficient sales of a product type of the like product in the ordinary course of trade or where a product type was not sold in representative quantities on the domestic market, the Commission constructed the normal value. In other instances where there were no sales of a product type of the like product in the ordinary course of trade the Commission looked for alternative sources for prices in the ordinary course of trade. Since there were no domestic sales of other sampled producer or the domestic sales price of other sampled producer for that product type could not be disclosed in a meaningful manner without breaching the confidentiality of that producer, and no other sources of prices for the particular product types were available, the Commission constructed the normal value for the relevant product types in accordance with Article 2(3) and (6) of the basic Regulation.

(64)

Normal value was constructed by adding the following to the average cost of production of the like product of the cooperating sampled exporting producers during the investigation period:

(65)

For the product types not sold in representative quantities on the domestic market, the average SG&A expenses and profit of transactions made in the ordinary course of trade on the domestic market for those types were added. For the product types not sold at all on the domestic market, the weighted average SG&A expenses and profit of all transactions made in the ordinary course of trade on the domestic market were added.

(66)

The sampled exporting producers exported to the Union either directly to independent customers or through related companies acting as an importer.

(67)

For the exporting producers that exported the product concerned directly to independent customers in the Union, the export price was the price actually paid or payable for the product concerned when sold for export to the Union, in accordance with Article 2(8) of the basic Regulation.

(68)

For the exporting producers that exported the product concerned to the Union through related companies acting as an importer, the export price was established on the basis of the price at which the imported product was first resold to independent customers in the Union, in accordance with Article 2(9) of the basic Regulation. In this case, adjustments to the price were made for all costs incurred between importation and resale, including SG&A expenses and profit (of [9-12] %), which was obtained from two cooperating unrelated importers that provided required information.

(69)

Article 2(10) of the basic Regulation requires the Commission to make a fair comparison between the normal value and the export price at the same level of trade and to make allowances for differences in factors which affect prices and price comparability. In the case at hand the Commission chose to compare the normal value and the export price of the sampled exporting producers at the ex-works level of trade. As further explained below, where appropriate, the normal value and the export price were adjusted in order to: (i) net them back to the ex-works level; and (ii) make allowances for differences in factors which were claimed, and demonstrated, to affect prices and price comparability.

(70)

For sales of product types for which the normal value was constructed, as explained in recital 64, the normal value was established at the ex-works level of trade by using costs of production together with amounts for SG&A and for profit, which were considered to be reasonable for that level of trade. Therefore, no adjustments were necessary to net the normal value back to the ex-works level.

(71)

For sales of product types for which there were sales in the ordinary course of trade, in order to net the normal value back to the ex-works level of trade, adjustments were made on the account of transport and packing expenses. Moreover, allowances were made on the account of credit costs. The Commission found no reasons for making any other allowances to the normal value.

(72)

LG Chem claimed adjustment regarding the production process and differences in product characteristics. Moreover, LG Chem claimed an adjustment for technical assistance. The Commission rejected LG Chem’s claimed adjustments. As regards the adjustment for differences in the production process, the company has not provided evidence that the difference in production process had any impact on prices or their comparability. Following the amendment of the product control number (‘PCN’), any differences with a significant impact on the price are reflected in the amended PCN; therefore, the adjustments for differences in physical characteristics have become moot as those differences that affect prices and their comparability were reflected in the PCN. Lastly, the adjustments for technical assistance services have been rejected, as the company did not provide evidence that such services are contracted and included in the sales price.

(73)

Lotte claimed adjustment on duty drawback, however, the company was unable to allocate specific quantities of the imported raw materials to the product under investigation, therefore this claim was rejected.

(74)

In order to net the export price back to the ex-works level of trade, adjustments were made on the account of: freight, insurance, handling loading and ancillary expenses.

(75)

Allowances were made for the following factors affecting prices and price comparability: credit cost, bank charges.

(76)

One exporting producer claimed an adjustment for sales made through a related importer that were delivered directly from Korea to the independent customer in the Union, because the sales department in Korea performs all the sales functions. On these grounds, the company claimed that the related importer does not bear these costs, and the price should be adjusted accordingly. The claim was not supported by any evidence and thus was rejected.

(77)

A small portion of an exporting producer’s exports was sold to a related user in the Union to produce other goods in which the product concerned constitutes small part of the cost of production. For these quantities it would be impossible to establish a reliable export price based on the sales of the final product to the first independent buyer. Therefore, these quantities were considered in the calculations using the export price established for direct sales of the like product types.

(78)

An exporting producer exports the product under investigation to its related company in the Union that further process it to sell it to the independent customers. For these sales, an additional allowance was deducted from the price to the first unrelated customer. The Commission has deducted costs of the processing/compounding of the imported ABS that took place in the company’s facilities in the Union. This adjusted price was used for comparison with the similar products to the input ABS imported from Korea by the related company.

(79)

For the sampled cooperating exporting producers, the Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned, in accordance with Article 2(11) and (12) of the basic Regulation.

(80)

On this basis, the provisional weighted average dumping margins expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:

(81)

For the cooperating exporting producers outside the sample, the Commission calculated the weighted average dumping margin, in accordance with Article 9(6) of the basic Regulation. Therefore, that margin was established on the basis of the margins of the sampled exporting producers.

(82)

On this basis, the provisional dumping margin of the cooperating exporting producers outside the sample is 4,3 %.

(83)

For all other exporting producers in Korea, the Commission established the dumping margin on the basis of the facts available, in accordance with Article 18 of the basic Regulation. To this end, the Commission determined the level of cooperation of the exporting producers. The level of cooperation is the volume of exports of the cooperating exporting producers to the Union expressed as proportion of the total imports from the country concerned to the Union in the IP, that were established on the basis of import data in Eurostat.

(84)

The level of cooperation in this case is high because the exports of the cooperating exporting producers constituted around [75-85] % of the total imports during the IP. On this basis, the Commission found it appropriate to establish the dumping margin for non-cooperating exporting producers at the level of the cooperating sampled individually examined company with the highest dumping margin.

(85)

The provisional dumping margins, expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:

(86)

The Commission first examined whether the total volume of domestic sales for each cooperating exporting producer was representative, in accordance with Article 2(2) of the basic Regulation. The domestic sales are representative if the total domestic sales volume of the like product to independent customers on the domestic market per exporting producer represented at least 5 % of its total export sales volume of the product concerned to the Union during the investigation period. On this basis, the total sales by each cooperating exporting producer of the like product on the domestic market were representative.

(87)

The Commission subsequently identified the product types sold domestically that were identical or comparable with the product types sold for export to the Union.

(88)

The Commission then examined whether the domestic sales by each cooperating exporting producer on its domestic market for each product type that is identical or comparable with a product type sold for export to the Union were representative, in accordance with Article 2(2) of the basic Regulation. The domestic sales of a product type are representative if the total volume of domestic sales of that product type to independent customers during the investigation period represents at least 5 % of the total volume of export sales of the identical or comparable product type to the Union. The Commission established that the domestic sales of few product types were not representative for the sampled exporting producers.

(89)

The Commission next defined the proportion of profitable sales to independent customers on the domestic market for each product type during the investigation period in order to decide whether to use actual domestic sales for the calculation of the normal value, in accordance with Article 2(4) of the basic Regulation.

(90)

The normal value is based on the actual domestic price per product type, irrespective of whether those sales are profitable or not, if:

(91)

In this case, the normal value is the weighted average of the prices of all domestic sales of that product type during the IP.

(92)

The normal value is the actual domestic price per product type of only the profitable domestic sales of the product types during the IP, if:

(93)

The analysis of domestic sales showed that over 99 % of all domestic sales were profitable and that the weighted average sales price was higher than the cost of production. Accordingly, the normal value was calculated as a weighted average of the prices of all domestic sales during the IP (in general) or a weighted average of the profitable sales only (on a few instances).

(94)

The methodology explained in the recital above was also applied to domestic sales made by the cooperating exporting producer that had few sales via a related processing entity.

(95)

Where there were insufficient sales of a product type of the like product in the ordinary course of trade or where a product type was not sold in representative quantities on the domestic market, the Commission constructed the normal value in accordance with Article 2(3) and (6) of the basic Regulation. Where there were no domestic sales of a product type of the like product, the Commission looked for alternative sources for prices in the ordinary course of trade. Ultimately, the normal value was constructed because the domestic sales price of other sampled producer for that product type could not be disclosed in a meaningful manner without breaching the confidentiality of that producer. The Commission was not aware of any other potential sources for prices of the relevant product types in the ordinary course of trade.

(96)

Normal value was constructed by adding the following to the average cost of production of the like product of the cooperating exporting producers during the investigation period:

(97)

For product types processed and sold domestically by a party related to one of the cooperating exporting producers, the ordinary course of trade per type test considered the cost of production, SG&A and profit of the related entity.

(98)

For the product types not sold in representative quantities on the domestic market, the average SG&A expenses and profit of transactions made in the ordinary course of trade on the domestic market for those types were added. For the product types not sold at all on the domestic market, the weighted average SG&A expenses and profit of all transactions made in the ordinary course of trade on the domestic market were added.

(99)

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

(100)

Article 2(10) of the basic Regulation requires the Commission to make a fair comparison between the normal value and the export price at the same level of trade and to make allowances for differences in factors which affect prices and price comparability. In the case at hand the Commission chose to compare the normal value and the export price of the sampled exporting producers at the ex-works level of trade. As further explained below, where appropriate, the normal value and the export price were adjusted in order to: (i) net them back to the ex-works level; and (ii) make allowances for differences in factors which were claimed, and demonstrated, to affect prices and price comparability.

(101)

In order to net the normal value back to the ex-works level of trade, when claimed and justified by the sampled exporting producers, adjustments were made on the account of transport and/or packing expenses.

(102)

When the normal value was established based on costs of production together with amounts for SG&A and for profit reasonable for that level of trade, no adjustments were necessary to net the normal value back to the ex-works level.

(103)

One of the cooperating exporting producers that had few domestic sales via a related party claimed for an adjustment for SG&A and profit for that related party and its transactions. However, in light of the information on file, the Taiwanese toller/trader related to the cooperating exporting producer could not be considered to be carrying out functions similar to those of an agent acting on a commission basis within the meaning of Article 2(10)(i) of the basic Regulation. The claim is therefore rejected.

(104)

In order to net the export price back to the ex-works level of trade, when claimed and justified by the sampled exporting producers, adjustments were made on the account of transport, insurance, packing, handling and loading expenses.

(105)

Allowances were made for the following factors affecting prices and price comparability: credit cost and bank charges.

(106)

For the sampled cooperating exporting producers, the Commission compared the weighted average normal value of each type of the like product with the weighted average export price of the corresponding type of the product concerned, in accordance with Article 2(11) and (12) of the basic Regulation.

(107)

On this basis, the provisional weighted average dumping margins expressed as a percentage of the CIF Union frontier price, duty unpaid, are as follows:

(108)

As cooperation was 100 %, it was not necessary to calculate a weighted average dumping margin which would normally be applied for cooperating not sampled companies.

(109)

For all other exporting producers in Taiwan, the Commission established the dumping margin on the basis of the facts available, in accordance with Article 18 of the basic Regulation. To this end, the Commission determined the level of cooperation of the exporting producers.

(110)

The level of cooperation in this case is high because the exports of the sampled exporting producers covered the totality of the total imports during the IP. On this basis, the Commission found it appropriate to establish the dumping margin for non-cooperating exporting producers at the level of the individually examined company with the highest dumping margin.

(111)

The like product was manufactured by four producers in the Union during the investigation period. In addition, during the investigation, five producers of recycled ABS came forward via their association Plastics Recyclers Europe. They constitute the ‘Union industry’ within the meaning of Article 4(1) of the basic Regulation.

(112)

The information provided by the producers of recycled ABS was limited to production volumes in 2022, 2023 and in the investigation period. Considering their insignificant share on total production of ABS in the Union (around 1,5 %), the Commission considered that the lack of complete information from recyclers did not affect the findings concerning injury.

(113)

The total Union production during the investigation period was established at around 500 000 tonnes. The Commission established the figure on the basis of all the available information concerning the Union industry, such as the verified production volumes of the sampled Union producers, verified production volumes of the non-sampled Union producers, and production volumes of recyclers. As indicated in recital 18, the sampled Union producers represented [38-48] % of the total Union production of the like product.

(114)

In addition to ABS producers and recyclers, the complaint further analysed the role of the compounders, which sourced products from producers in the Union and in the countries concerned and either blended them with additives to enhance certain properties of ABS or transformed them into products which do not fall in the scope of this investigation.

(115)

The Commission contacted all known compounders before initiation. However, none of the known compounders replied to the Commission’s enquiries. At a later stage of the investigation, one compounder, Romira GmbH, registered as an interested party in the investigation. The company claimed to be an ABS producer and provided some initial explanations. It however did not make any further representations, neither did it provide any data that would enable the Commission to conclude on the nature of Romira’s activities in relation to this investigation.

(116)

The Commission found that from the chemical and technical viewpoint, the final key step in the production of ABS is the completion of the polymerisation process. In addition, the value added by the compounding step tends to be rather limited representing 7-10 % of the production cost. Therefore, at this stage, the Commission concluded that compounders do not form a part of the Union industry.

(117)

The Commission established the Union consumption on the basis of

(118)

Union consumption developed as follows:

Table 1

Union consumption (tonnes)

(119)

The Union consumption temporarily increased in 2021 only to continue declining in the rest of the period considered. By the end of the investigation period, it was by 16 % lower than at the beginning of the period considered.

(120)

The Commission examined whether imports of product originating in the countries concerned should be assessed cumulatively, in accordance with Article 3(4) of the basic Regulation.

(121)

The margin of dumping established in relation to the imports from Korea and Taiwan was above the de minimis threshold laid down in Article 9(3) of the basic Regulation. The volume of imports from each of the countries concerned was not negligible within the meaning of Article 5(7) of the basic Regulation. Market shares in the investigation period were 25,2 % and 5,9 %, respectively.

(122)

The conditions of competition between the dumped imports from Korea and Taiwan and between the dumped imports from the countries concerned and the like product were similar. More specifically, the imported products competed with each other and with ABS produced in the Union because they are sold through the same sales channels and to similar categories of customers.

(123)

Therefore, all the criteria set out in Article 3(4) of the basic Regulation were met and imports from Korea and Taiwan were examined cumulatively for the purposes of the injury determination.

(124)

The Commission established the volume of imports on the basis of data recorded in the Comext database of Eurostat. The market share of the imports was established by comparing the imports volumes to the Union consumption as determined in section 4.2.

(125)

Imports into the Union from the countries concerned developed as follows:

Table 2

Import volume (tonnes) and market share

(126)

Cumulative imports from the countries recorded continuous sharp growth from 124 000 tonnes to almost 190 000 tonnes over the period considered. Although they peaked at 200 000 tonnes in 2022, they were still by 53 % higher at the end of the period considered as compared to its beginning.

(127)

Market share of the imports from the countries concerned increased steadily from 19 % to 31 % over the period considered. They gained 12 pp or 63 % of market share between 2020 and the investigation period.

(128)

The Commission established the prices of imports on the basis of Eurostat data. Price undercutting of the imports was established on the basis of verified information provided by the sampled exporting producers in the countries concerned and sampled Union producers.

(129)

The weighted average price of imports into the Union from the countries concerned developed as follows:

Table 3

Import prices (EUR/tonne)

(130)

The import prices from the countries concerned increased on average by 28 % over the period considered. This was mainly driven by the increase in prices of Korean imports (+31 %), while price of imports from Taiwan grew only by 14 %. The exceptionally sharp price increase in 2021 and 2022 was caused by events in the global economy. The post-pandemic economic rebound of 2021 saw a recovery of global trade flows and thus a growing demand for shipping, which lead to an increase in ocean freight cost. This situation continued into early 2022 (8). In late 2021 and throughout 2022, the effects of increased shipping cost were bundled with the global energy crisis caused by the growing demand for fuel following the post-pandemic economic recovery, but mainly by the consequences of the military aggression of Russia against Ukraine which started with Russia’s invasion of Ukraine in February 2022 (9).

(131)

The Commission determined the price undercutting during the investigation period by comparing:

(132)

The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ theoretical turnover during the investigation period.

(133)

The above comparison showed a weighted average undercutting margin on the Union market of between 30,4 % and 30,9 % for Korea, and between 20,9 % and 29,9 % for Taiwan.

(134)

In addition and regardless of findings of considerable undercutting, the Commission found that because of the price suppression caused by the volumes and prices of imports from Korea and Taiwan, the Union industry was not able to increase its prices to a level that would generate reasonable profits. Starting in 2022 and during the remainder of the period considered, the average price of imports from the countries concerned was below the cost of production the sampled Union producers (see table 7).

(135)

The price suppression found at macro level was further confirmed at company level. The injury elimination levels were determined per product type thus taking into account any potential differences between the product mix of imports and domestic sales of the Union industry. In the investigation period, the imports from the sampled exporting producers were underselling the domestic sales prices of the sampled Union producers by 62,9 % to 66,6 % for Korea, and by 51,7 % to 67,8 % for Taiwan (for details see section 6.1).

(136)

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.

(137)

As mentioned in recital 18, sampling was used for the determination of possible injury suffered by the Union industry.

(138)

For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data contained in the macroeconomic questionnaire replies submitted by the four Union producers of ABS, on one hand, and by Plastics Recyclers Europe on behalf of Union producers of recycled ABS, on the other hand. The data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the verified questionnaire replies from the sampled Union producers. The data related to the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

(139)

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.

(140)

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

(141)

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

Table 4

Production, production capacity and capacity utilisation

(142)

The production volume of the Union industry increased by 14 % in 2021. It then declined between 2021 and 2023, before slightly recovering in the investigation period. By the end of the period considered, the production volumes had dropped below the 2020 level by 16 %.

(143)

The Union industry’s production capacity slightly increased in 2021 and 2022 following the completion of investment projects initiated well before the period considered. Overall, the production capacity increased by 9 % in the period considered.

(144)

In view of the additional capacities and declining production, the capacity utilisation also decreased from 65 % in 2020 to 50 % in the investigation period with a temporary increase to 71 % in 2021.

(145)

The Union industry’s sales quantity and market share developed over the period considered as follows:

Table 5

Sales volume and market share

(146)

The sales volume of the Union industry increased in 2021 by 16 %. Afterwards, it however continuously declined and by the end of the period considered, the Union industry had lost 19 % of its sales volume of 2020.

(147)

The volume of sales dropped stronger than consumption (19 % vs. 6 %) and, consequently, the Union industry’s market share went down from 72 % in 2020 to less than 63 % in the investigation period.

(148)

The year 2021 was marked by a global post-pandemic economic rebound. This was also reflected on the Union market where the consumption of ABS increased temporarily, which allowed the Union industry to grow in terms of production and sales. But subsequently, the situation reversed.

(149)

Over the period considered, consumption decreased strongly. The Union industry, however, lost more than double the sales volumes as compared to the drop in consumption. This resulted in a loss of market share by almost 10 percentage points.

(150)

Employment and productivity developed over the period considered as follows:

Table 6

Employment and productivity

(151)

The employment in the ABS industry in the Union remained rather stable over the period considered with only slight increase of 2 % in 2021 and 4 % in 2022. This growth in employment can be attributed to the deployment of additional production capacities in 2021 and 2022.

(152)

The temporary increase in production volumes in 2021 was reflected in the productivity that increased by 12 % in the same period. The production volumes, however, started declining after 2021, which translated into decreasing productivity from 2022 until the end of the period considered when it dropped 18 % below the level of 2020.

(153)

In view of the declining market, the Union industry started to reduce employment as from 2023. In the investigation period, employment was slightly higher (+1 %) than in 2020.

(154)

All dumping margins were above the de minimis level. The impact of the magnitude of the actual margins of dumping on the Union industry was not negligible, given the volume and prices of imports from the countries concerned.

(155)

This is the first anti-dumping investigation regarding the product concerned. Therefore, no data were available to assess the effects of possible past dumping.

(156)

The weighted average unit sales prices of the sampled Union producers to unrelated customers in the Union developed over the period considered as follows:

Table 7

Sales prices in the Union

(157)

Between 2020 to 2022, the Union industry’s sales prices increased by 92 %. Subsequently, sales prices decreased. However, in the investigation period, the average unit sales price was still almost 50 % higher than at the beginning of the period considered.

(158)

The cost of production followed a similar trend. It increased by 90 % between 2020 and 2022 and afterwards, it decreased – but less than the average unit sales price. In the investigation period, the cost of production was 60 % higher than in 2020.

(159)

In 2021, the Union industry’s ABS sales price increased much more than the cost. The difference between sales price and cost of production reached almost 550 EUR/tonne in that period. Afterwards, the cost of production increased exponentially and in the investigation period, the average sales price surpassed the average cost by only around 50 EUR/tonne.

(160)

The average labour costs of the sampled Union producers developed over the period considered as follows:

Table 8

Average labour costs per employee

(161)

Average labour cost per employee temporarily increased in 2021 and 2022 by 11 % and 10 % respectively. It remained however stable over the rest of the period considered with a slight decrease in the investigation period.

(162)

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

Table 9

Inventories

(163)

The volume of closing stock followed the trend of production. It increased in 2021 but decreased in the rest of the period considered.

(164)

The Union industry reacted to the reduced sales volume by reducing its production volume. Therefore, the share of closing stocks on the production volume remained rather stable (7,5-9 %) over the whole period considered.

(165)

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

Table 10

Profitability, cash flow, investments and return on investments

(166)

The Commission established the profitability of the sampled Union producers 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 increased in 2021, when the economic circumstances for the sector, in the Union, were exceptionally favourable. With high demand and import prices being affected by the high ocean freight prices in 2021 (see recital 131), the Union industry was able increase its own sales prices on the Union market and generate a profit of [21,4-23,7] %. Although the increase cost of ocean freight continued in the first half of 2022, it was coupled with an increase in energy cost, including the cost of oil and gas (see recital 131), which are the ultimate raw materials for the production of the monomers of which ABS consists. Therefore, in 2022 the profitability more than halved as compared to 2021, although the sales price remained rather high. Subsequently, the profitability continued to drop significantly, reaching [3,2-3,5] % in 2023 and [2,0-2,2] % in the investigation period.

(167)

Net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow followed the trend of profitability. The net cashflow temporarily increased in 2021. In the rest of the period considered it declined and in the investigation period, the net cashflow reached only 14 % of its 2020 level.

(168)

Investments of the Union industry fluctuated between 4,4 million EUR and 5,9 million EUR in 2020, 2023 and in the investigation period. They increased significantly in 2022 (more than [6,6-7,3] million EUR) and in particular in 2022 ([11-12,2] million EUR).

(169)

The return on investments is the profit in percentage of the net book value of investments. The significant reduction in profitability was reflected also in the declining return on investments. It increased temporarily in 2021 to the level of 92 %. In the investigation period, it however reached only the level of 4 %.

(170)

If follows from the above that the sampled Union producers’ ability to raise capital was negatively affected by the declining profitability and net cash flow.

(171)

The Union market enjoyed a strong post-covid recovery hike in 2021, but it has been strongly shrinking as from 2022. Over the period considered, however, the Union industry lost sales at a rate that was markedly higher than the decline in Union consumption. This led to a significant reduction of the Union industry’s market share from 72,4 % to 62,8 %. The Union industry’s production volumes (-16 %) declined in line with its sales volumes (-19 %).

(172)

Apart from volume injury, the Commission also established price injury. Whereas the Union industry was able to achieve healthy profits in the first three years on the period considered, this was not the case in 2023 and the investigation period anymore when its profitability had declined to very low levels. The trend of the other financial indicators (cash flow, investments, return on investments) was similarly negative as from 2022 or 2023.

(173)

On the basis of the above, the Commission concluded at this stage that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation.

(174)

In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the dumped imports from the countries concerned caused material injury to the Union industry. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the dumped imports from the countries concerned was not attributed to the dumped imports. These factors are: imports from third countries, export performance of the Union industry, consumption, cost of production, production capacity of the Union industry, shortage of supply on the Union market, and users’ preferences, product quality and after-sales services.

(175)

The cumulated import volumes from the countries concerned increased by 53 % (see table 2) while the consumption in the Union declined by 6 % (see table 1). This resulted in a market share increase of the countries concerned by 12 percentage points from 19 % to 31 %. At the same time, the market share of the Union industry went down by almost 10 percentage points from 72 % to 63 %.

(176)

The average prices of imports from Korea and Taiwan were lower than the prices of the Union industry throughout the whole period considered. In the investigation period, they undercut the Union industry prices by 20,9 % to 30,9 %. Such import prices resulted in price suppression on the Union market, as a result of which the Union industry was not able to make healthy profits. In the investigation period, sales prices of the Union industry were only marginally above its cost of production.

(177)

Lotte claimed that ABS imports from Korea only increased because 2020, a year affected by the Covid-19 pandemic, was used as a basis year for the evaluation of trends. The company argued that in the period considered, the imports from Korea merely recovered to pre-pandemic level.

(178)

Similarly, LEGO argued that the increase in imports from Taiwan can only be observed because the period considered starts in 2020, a year affected by the pandemic related economic slowdown. The party insisted that 2021 should have been used as the beginning of the period considered.

(179)

Indeed, year 2020 was marked by a general reduction in economic activity due to the Covid-19 pandemic, which affected not only Union industry but also imports. On the other hand, the year 2021 cannot be considered representative of normal economic activity on the Union market of ABS either due to the significant post-pandemic economic rebound. In this context, even if the absolute increase of imports was to be disregarded, the evolution of the market share of the imports from the countries concerned clearly shows that they disproportionally grew relatively to the size of the Union market. In addition, several injury indicators (production and sales volumes, market share, profitability, cash flow, return on investments) show a negative trend in the investigation period even when compared to the pandemic year of 2020. This only confirms the injurious impact of increased dumped imports from Korea and Taiwan. The claim that 2020 is inappropriate to use as base year of the period of analysis was therefore rejected.

(180)

LG Chem argued that the injury of the Union industry was not caused by the imports from Korea based on the following reasons:

(181)

It must be noted that the Commission’s findings regarding the injury suffered by the Union industry are based on the analysis of trends that could be observed over the whole period considered. Individual changes of economic indicators between individual years do not provide a sufficiently representative picture of the effects of imports from the countries concerned on the economic situation of the Union industry. The Commission does not dispute that the prices of imports from the countries concerned grew over the period considered. However, their levels were always and increasingly below the price levels that the Union industry achieved on the Union market. These low prices, combined with the high import volumes from Korea and Taiwan, suppressed the prices on the Union market and did not anymore allow the Union industry to achieve healthy profits in 2023 and the investigation period. With regard to the production volumes in the investigation period, the Commission found that contrary to the data for the investigation period of the complaint, the production volumes slightly declined. Thus, the claim of LG Chem was rejected.

(182)

On the basis of the above, the Commission concluded that the imports from China caused material injury to the Union industry. Such injury had both volume and price effects.

(183)

The quantity of imports from other third countries developed over the period considered as follows:

Table 11

Imports from third countries

(184)

Imports from the US and Saudi Arabia remained rather stable for the most part of the period considered with a market share ranging from 1,0 % to 1,9 % for the US and 0,6 % to 1,0 % for Saudi Arabia, but without significant variation between both ends of the period considered. Imports from China significantly increased in the period considered from 0,1 to 1,2 % market share. Import prices from China decreased 15 % throughout the period considered, reaching 1 893 euro/tonne during the investigation period.

(185)

Total imports from third countries (including those named above individually) however decreased by almost 20 000 tonnes, which led to a drop on their market share by 2,5 percentage points from 8,6 % in 2020 to 6,1 % in the investigation period.

(186)

On that basis, the Commission concluded that while the imports from other third countries did not cause injury to the Union industry, given its volumes and prices, Chinese imports might have contributed to injury to a small extent. However, they did not attenuate the causal link between the injury suffered by the Union industry and the dumped imports from the countries concerned.

(187)

The volume of exports of the Union producers developed over the period considered as follows:

Table 12

Export performance of the sampled Union producers

(188)

The export sales volumes of the Union industry fluctuated during the period considered but they were at similar levels in the investigation period as compared to the first year of the period considered. Export sales volumes were at their lowest in 2023, when they were 25 % below the export sales volumes of 2020 and the investigation period.

(189)

In relative terms, however, the export sales of the Union industry increased. While the export sales volumes represented no more than one quarter of the Union sales volumes in 2020, they were close to one third of the Union sales volume in the investigation period.

(190)

Moreover, average export sales prices were very similar to and in most years slightly above Union sales prices during the period considered.

(191)

On that basis, the Commission concluded that the export performance of the Union industry did not attenuate the causal link between the injury suffered by the Union industry and the dumped imports from the countries concerned.

(192)

The consumption on the Union market declined during the period considered, except for 2021, the year of post-Covid economic recovery. However, whereas consumption decreased by 40 000 tonnes over the period considered, the Union industry sales on the Union market went down by double of that. At the same time, the imports from the countries concerned increased by 65 000 tonnes, even in a shrinking market.

(193)

The drop in consumption may thus have contributed to the injury but only to a limited extent, as the sales volumes lost to the countries concerned are higher than the drop in consumption, and prices of those additional imports supressed the prices that the Union industry could achieve.

(194)

The GOK, LG Chem and Lotte argued that the injury suffered by the Union industry should be attributed to increase in cost of production in particular to the high energy cost on the Union market. In addition, Lotte claimed that the increase in cost of production was also caused by the unusually high ocean freight cost that the Union industry had to bear when importing raw materials.

(195)

Indeed, the cost of production of the Union industry overall increased over the period considered while reaching their maximum in 2022, which is aligned with the global energy crisis caused by the post-pandemic economic recovery and the consequences of the military aggression of Russia against Ukraine (10). The global increase in energy cost and cost of oil and natural gas, which are the ultimate raw materials used to produce the acrylonitrile, butadiene and styrene monomers, did not however only affect the Union producers but also producers in the countries concerned.

(196)

Indeed, the changes in energy supply mix following the economic sanctions against Russia might have amplified the increase in energy cost for Union producers and thus contributed to the injury suffered by the Union industry. However, in conditions of fair competition, the Union producers would have been able to reflect the increased cost in their sales prices. This was nevertheless prevented by the price pressure from dumped imports from the countries concerned.

(197)

The cost of ocean freight from Asia was unusually high only in 2021 and 2022 (11). It however affected not only the prices of imported raw materials but also the prices of ABS imports from the countries concerned. In addition, contrary to what the party (Lotte) claimed, the sampled Union producers procured a majority of the main raw materials in Europe, i.e. they were not affected by the cost of ocean freight from Asia.

(198)

Considering that (a) the energy crisis of 2022 affected energy cost globally, (b) the increased ocean freight cost in 2021 and 2022 may have influenced the cost of raw materials used by the sampled Union producers only marginally, and (c) in the absence of unfair competition, the Union industry would be able to recover its cost of production and achieve reasonable profits, the Commission concluded that the effect of the increased cost of production was not of such nature that it would attenuate the causal link between the injury suffered by the Union industry and the dumped imports from the countries concerned.

(199)

LG Chem argued that the injury suffered by the Union industry was caused by its inefficiencies. In particular, the party noted that the Union producers increased their production capacity in spite of the drop in the Union consumption.

(200)

The capacity increase of 9 % in 2021 and 2022 was a result of projects that were underway long before the decline in the Union consumption occurred. These projects were not carried out by the sampled companies, i.e. the relevant micro indicators (cost of production, profitability, return on investments) were not affected by the increased production capacity. The only affected injury indicator is the capacity utilisation, which dropped from 65 % in 2020 to 50 % in the investigation period (with a temporary increase to 71 % in 2021). The capacity utilisation would have decreased even with an unchanged production capacity (level of 2020). Instead of reaching only 50 % in the investigation period, it would have declined to 54 % (with a temporary increase to 75 % in 2021).

(201)

Therefore, the findings of injury as presented in section 4 were in fact not affected by the increase in production capacity. On this basis, the Commission concluded that the increase in production capacity did not attenuate the causal link between the dumped imports from the countries concerned and the injury suffered by the Union industry.

(202)

The GOK, LG Chem and Lotte argued that the increase in imports from Korea did not cause injury to the Union industry. It rather occurred as a response to the shortage of supply on the Union market. In this respect, the parties highlighted that two Union producers declared force majeure in 2021.

(203)

The Commission acknowledged that two Union producers declared force majeure events in 2021. In February 2021, Ineos (the sampled entity in Germany) experienced a shortage of supply of acrylonitrile (12). In September 2021, Versalis suffered a break-down of a furnace (13). As a consequence, the companies reduced their output for the duration of the force majeure, which in both cases lasted for a period of 2-5 months.

(204)

These events could have had a negative effect on production and sales volumes, potentially also profitability of the Union producers affected by the disruptions. They, however, occurred only in two plants and not simultaneously, and thus presented an opportunity for the Union producers not affected by the disruptions to increase their production and sales. As the relevant periods (2021, potentially beginning of 2022) show an exceptionally positive economic situation of the Union industry, the force majeure events were unlikely to negatively affect the performance of the Union industry as a whole. Finally, considering their short-term nature, the force majeure events could not explain the long-term trend of growing imports from the countries concerned.

(205)

Therefore, the Commission concluded that the force majeure events did not attenuate the causal link between the dumped imports from the countries concerned and the injury suffered by the Union industry.

(206)

The GOK, LG Chem and Lotte submitted that the injury suffered by the Union industry was caused by its inability to meet users’ preferences and needs for specific ABS grades, such as emulsion ABS, flame retardant ABS, insufficient product quality and inadequate after-sales services, in particular with regard to the emulsion ABS, where the product quality and after-sales services represent decisive factors instead of price.

(207)

The Commission noted that emulsion ABS, as well as flame retardant ABS, are produced by the Union industry, although the flame retardant grades in smaller quantities.

(208)

The parties alleging that the Union industry had insufficient product quality and provided inadequate after-sales services did not bring forward any evidence supporting their claims. On the contrary, the Commission found that the Union industry remained the main supplier of ABS for users of emulsion ABS with high quality requirements. Thus, the product quality and after-sales services of the Union industry could not have been a reason for the loss of market share.

(209)

On this basis, the Commission concluded that the factors mentioned in recital 206 could not have in any way contributed to the injury suffered by the Union industry.

(210)

The Commission distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports. The Commission found that the imports from third countries (other than China), export performance of the Union industry, consumption, production capacity of the Union industry, shortage of supply on the Union market, and users’ preferences, product quality and after-sales services did not contribute to the material injury suffered by the Union industry. On the other hand, it found that the effects of imports from China and the increase of the Union industry’s cost of production on the negative developments in the economic situation of the Union industry, alone or together, could only have been limited.

(211)

On the basis of the above, the Commission concluded at this stage that the dumped imports from the countries concerned caused material injury to the Union industry and that the other factors, considered individually or collectively, did not attenuate the causal link between the dumped imports and the material injury. The injury is clear, in particular as regards production and sales volumes, market share, profitability, cash flow, and return on investments.

(212)

To determine the level of the measures, the Commission examined whether a duty lower than the margin of dumping would be sufficient to remove the injury caused by dumped imports to the Union industry.

(213)

The injury would be removed if the Union Industry were able to obtain a target profit by selling at a target price in the sense of Articles 7(2c) and 7(2d) of the basic regulation.

(214)

In accordance with Article 7(2c) of the basic Regulation, for establishing the target profit, the Commission took into account the following factors: the level of profitability before the increase of imports from the countries concerned, the level of profitability needed to cover full costs and investments, research and development (‘R&D’) and innovation, and the level of profitability to be expected under normal conditions of competition. Such profit margin should not be lower than 6 %.

(215)

As a first step, the Commission established a basic profit covering full costs under normal conditions of competition. The two sampled Union producers provided a calculation of the profitability of the product under investigation for ten years prior to the initiation of this investigation. The Commission verified the data and determined the basic profit as a weighted average profit achieved by the sampled Union producers before the increase of imports from the countries under investigation, namely in the period of 2017 to 2019. Such profit margin was established at [12,0-12,8] %.

(216)

One sampled Union producer provided evidence that its level of investments, R&D and innovation during the period considered would have been higher under normal conditions of competition. The Commission verified this information and concluded that the provided internal documentation and communications showed that the company did not carry out certain investments due to the situation on the Union market. To reflect this in the target profit, the Commission calculated the difference between investments, R&D and innovation (‘IRI’) expenses under normal conditions of competition as provided by the sampled Union producer and verified by the Commission with actual IRI expenses over the period considered. Such difference, expressed as a percentage of turnover, was [0,1-0,5] %.

(217)

That percentage was added to the basic profit mentioned in the recital 216, leading to a target profit of [12,1-13,3] % for the product types produced by that sampled Union producer.

(218)

In accordance with article 7(2d) of the basic Regulation, as a final step, the Commission assessed the future costs resulting from Multilateral Environmental Agreements, and protocols thereunder, to which the Union is a party, and of ILO Conventions listed in Annex Ia that the Union industry will incur during the period of the application of the measure pursuant to Article 11(2). Only one sampled Union producer provided evidence of having incurred compliance cost, such as internal data and compliance cost audit report. Based on the evidence available, which was supported by the companies’ reporting tools and forecasts, the Commission established an additional cost of [12-15] EUR/tonne, which was reflected in the non-injurious price mentioned in recital 220 for the product types produced by that sampled Union producer.

(219)

On this basis, the Commission calculated a non-injurious price of 2 502 EUR/tonne on average for the like product of the Union industry by applying the above-mentioned target profit margin (see recital 218) to the cost of production of the sampled Union producers during the investigation period and then adding the adjustments under Article 7(2d) on a type-by-type basis.

(220)

The Commission then determined the injury margin level on the basis of a comparison of the weighted average import price of the sampled cooperating exporting producers in countries concerned, as established for the price undercutting calculations, with the weighted average non-injurious price of the like product sold by the sampled Union producers on the Union market during the investigation period. Any difference resulting from this comparison was expressed as a percentage of the weighted average import CIF value.

(221)

The injury elimination level for ‘other cooperating companies’ and for ‘all other imports originating in country concerned’ is defined in the same manner as the dumping margin for these companies and imports (see recitals 82 to 84 for Korea, and 109 and 110 for Taiwan).

(222)

Following the above assessment, provisional anti-dumping duties should be set as below in accordance with Article 7(2) of the basic Regulation:

(223)

Having decided to apply Article 7(2) of the basic Regulation, the Commission examined whether it could clearly conclude that it was not in the Union interest to adopt measures in this case, despite the determination of injurious dumping, in accordance with Article 21 of the basic Regulation. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, users, consumers.

(224)

The investigation has shown that the Union industry suffered material injury caused by the increasing volume of dumped imports from Korea and Taiwan. The injury materialised in particular in a strong decline in production and sales volumes and a continuous erosion of its profit margin, due to the price suppression caused by these imports. Should the anti-dumping measures not be imposed, the Union industry would become lossmaking which would further compromise its viability. On the contrary, the imposition of the measures will help to restore fair competition on the Union market and thus allow the Union industry to recover.

(225)

The Commission therefore concluded that the imposition of the measures would be in the interest of the Union industry.

(226)

Initially, four out for the 20 known unrelated importers cooperated in the investigation by providing a questionnaire reply. Only two of them however provided sufficient cooperation. The other two failed to provide certain requested information and/or supporting evidence, or did not reply to requests for corrections and additional questions and/or replied with delays significantly beyond the set deadlines. Therefore, their data was taken into account only to such an extent that it could be considered reliable.

(227)

Three additional importers registered as interested parties and made submissions mostly related to the interests of their customers, i.e. users of the product under investigation. Those comments were addressed in section 7.3 below.

(228)

Finally, several importers formed an ad hoc Coalition for an Open and Competitive EU ABS Market, which also on their behalf submitted comments concerning Union interest. Those comments were addressed in the appropriate sections of this regulation.

(229)

The four (partially) cooperating unrelated importers accounted for 28 % of imports of ABS originating in the countries concerned. Some of them did not only import ABS from the countries concerned but were also part of the sales channels of the Union industry.

(230)

The unrelated importers reported high profitability on their trading of ABS (above 10 %). Trading with ABS represented a minor share on their overall business with less than 10 % of their turnover originating from the sales of ABS notwithstanding its origin.

(231)

Furthermore, considering the level of the measures the imports from the countries concerned are unlikely to fully disappear. Finally, there are other sources of ABS available on the Union market, namely imports from third countries such as the US, China and Saudi Arabia.

(232)

Considering the above, the Commission concluded that the measures will not have disproportionally negative effect on unrelated importers and traders.

(233)

ABS is used in a wide variety of applications (see recital 36). Only two users, however, cooperated in the investigation: LEGO, a producer of toys in Denmark, and Valeo Vision, a supplier of car parts located in France. LEGO is one of the largest individual users of ABS on the Union market accounting for [5-10] % of the Union consumption in the investigation period.

(234)

Both companies procured substantial quantities of ABS from the Union industry, supplemented with imports from the countries concerned. In addition, the share of ABS in the total cost of the products using ABS was below 4 %. Finally, both users achieved healthy profits, for example LEGO’s global profits exceeded 25 % in the long term (14).

(235)

Considering the above findings and the level of the proposed measures, the Commission concluded that the imposition of anti-dumping measures will not have a disproportionally negative effect on users.

(236)

The GOK, LG Chem, Lotte, the Coalition for an Open and Competitive EU ABS Market and five importers (15) and two users (16) made comments regarding the interest of the users in the Union. They argued that the imposition of measures would increase the production cost of users, limit the availability of ABS on the Union market in general, as well as reduce the users’ access to specific ABS grades (e.g. emulsion ABS, flame retardant ABS) and to pre-approved ABS meeting the specific requirements of users, and finally prevent the users from benefiting from high quality technical support and after-sales services.

(237)

With regard to the users’ production cost, the Commission noted that the considering the findings for the two cooperating users and the level of the measures, a disproportionally negative impact of the measures on the users is highly unlikely. The Union producers’ installed capacity currently exceeds the demand in the Union. Should the demand pick up in the future, imports from third countries are also available although in limited extent. In addition, the Union producers offer a wide range of ABS grades, including emulsion ABS and flame retardant ABS, and there is no evidence on the file that quality of products, technical support and after-sales services offered by the Union industry would be lacking in any way. Finally, the objective of the measures is not to prevent imports of ABS from the countries concerned but to restore fair competition on the Union market. In this respect, and considering the level of the measures, it is unlikely that the anti-dumping duties will block the users’ access to ABS originating in the countries concerned. Consequently, the Commission rejected the claims.

(238)

Taking into account the limited share of ABS on total cost of final products in the toys and automotive industries, the effect on the sales price of the consumer products (toys, cars) will be negligible.

(239)

The GOK recalled the investments of the Korean ABS producers in the Union and argued that the measures would put in jeopardy the over 80 million EUR of investments in factories and R&D (with more investment under consideration), more than 300 jobs created in the Union, and more than 80 million EUR of profits reinvested in the local facilities.

(240)

Contrary to that, the Commission considered that the imposition of the measures might serve as an incentive for the exporting producers with facilities in the Union to expand their presence on the Union market via local subsidiaries.

(241)

The GOK, LG Chem, Lotte, the Coalition for an Open and Competitive EU ABS Market and three importers (17) pointed out that the Korean exporting producers invested heavily in the production of sustainable products, i.e. mass-balanced ABS. Limiting the access to those products might motivate the users to switch to alternatives with higher CO2 footprint, such as polyamide or polycarbonate, which would in the end hinder the Union from reaching its European Green Deal goals and from the transition to a circular economy.

(242)

The Commission agreed with the importance of transition to a circular economy and the green goals. First, without further details on the contribution of mass-balanced ABS, and specifically mass-balanced ABS from the countries concerned, to the reduction of CO2 emissions (including in comparison to alternative products), the Commission was not able to examine the impact of the measures on green goals of the Union. Furthermore, the Union industry has also invested into sustainable solutions and currently offers a range of mass-balanced ABS, whether originating in mechanically or chemically recycled inputs or using bio feedstock. Finally, as mentioned above the main aim of the measures is not to prevent imports from the countries concerned altogether but to restore level playing field on the Union market.

(243)

Consequently, the Commission concluded that the measures will not have a disproportionately negative effect on the investments carried out by the exporting producers in the Union and the green goals of the Union as raised by the parties and described in recitals 240 and 242.

(244)

On the basis of the above, the Commission concluded that there were no compelling reasons that it was not in the Union interest to impose measures on imports of ABS originating in Korea and Taiwan at this stage of the investigation.

(245)

On the basis of the conclusions reached by the Commission on dumping, injury, causation, level of measures and Union interest, provisional measures should be imposed to prevent further injury being caused to the Union industry by the dumped imports.

(246)

Provisional anti-dumping measures should be imposed on imports of ABS originating in countries concerned, in accordance with the lesser duty rule in Article 7(2) of the basic Regulation. The Commission compared the injury margins and the dumping margins recital 222 above. The amount of the duties was set at the level of the lower of the dumping and the injury margins.

(247)

On the basis of the above, the provisional anti-dumping duty rates, expressed on the CIF Union border price, customs duty unpaid, should be as follows:

(248)

The individual company anti-dumping duty rates specified in this Regulation were established on the basis of the findings of this investigation. Therefore, they reflect the situation found during this investigation with respect to these companies. These duty rates are exclusively applicable to imports of the product concerned originating in the countries concerned and produced by the named legal entities. Imports of the product concerned produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, should be subject to the duty rate applicable to ‘all other imports originating in country concerned’. They should not be subject to any of the individual anti-dumping duty rates.

(249)

To minimise the risks of circumvention due to the difference in duty rates, special measures are needed to ensure the application of the individual anti-dumping duties. The application of individual anti-dumping duties is only applicable upon presentation of a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(3) of this regulation. Until such invoice is presented, imports should be subject to the anti-dumping duty applicable to ‘all other imports originating in country concerned’.

(250)

While presentation of this invoice is necessary for the customs authorities of the Member States to apply the individual rates of anti-dumping duty to imports, it is not the only element to be taken into account by the customs authorities. Indeed, even if presented with an invoice meeting all the requirements set out in Article 1(3) of this regulation, the customs authorities of Member States must carry out their usual checks and may, like in all other cases, require additional documents (shipping documents, etc.) for the purpose of verifying the accuracy of the particulars contained in the declaration and ensure that the subsequent application of the lower rate of duty is justified, in compliance with customs law.

(251)

Should the exports by one of the companies benefiting from lower individual duty rates increase significantly in volume after the imposition of the measures concerned, such an increase in volume could be considered as constituting in itself a change in the pattern of trade due to the imposition of measures within the meaning of Article 13(1) of the basic Regulation. In such circumstances and provided the conditions are met an anti-circumvention investigation may be initiated. This investigation may, inter alia, examine the need for the removal of individual duty rates and the consequent imposition of a country-wide duty.

(252)

As mentioned in recital 3, the Commission made imports of the product concerned subject to registration. Registration took place with a view to possibly collecting duties retroactively under Article 10(4) of the basic Regulation.

(253)

In view of the findings at provisional stage, the registration of imports should be discontinued.

(254)

No decision on a possible retroactive application of anti-dumping measures has been taken at this stage of the proceeding.

(255)

In accordance with Article 19a of the basic Regulation, the Commission informed interested parties about the planned imposition of provisional duties. This information was also made available to the general public via DG TRADE’s website. Interested parties were given three working days to provide comments on the accuracy of the calculations specifically disclosed to them.

(256)

Chimei, LG Chem and Lotte provided comments on the pre-disclosure that referred to the methodology used to calculate the dumping margin. Since these comments did not directly concern the accuracy of the calculation, they will be addressed, where appropriate, at the definitive stage of the investigation.

(257)

In the interests of sound administration, the Commission will invite the interested parties to submit written comments and/or to request a hearing with the Commission and/or the Hearing Officer in trade proceedings within a fixed deadline.

(258)

The findings concerning the imposition of provisional duties are provisional and may be amended at the definitive stage of the investigation,