(1)

By Regulation (EC) No 435/2004 (2), the Council imposed, following an anti-dumping investigation, a definitive anti-dumping duty on imports of sodium cyclamate originating in the People’s Republic of China (‘the PRC’ or ‘the country concerned’) and Indonesia (‘the original investigation’). Following an expiry review, the Council, by Implementing Regulation (EU) No 492/2010 (3) imposed a definitive anti-dumping duty for a further period of five years. The measures were set at the level of dumping and consist of specific anti-dumping duties. The rate of the duty for the PRC ranges between 0 and 0,11 EUR/kilo for individually named Chinese producers with a residual duty rate of 0,26 EUR/kilo imposed on imports from other producers (‘current duties’).

(2)

A request for a partial interim review (‘the current review’) pursuant to Article 11(3) of the basic Regulation was lodged by Productos Aditivos S.A., the sole Union producer of sodium cyclamate and the complainant in the original investigation (‘the complainant’). The request was limited in scope to dumping and to Golden Time Enterprise (Shenzhen) Co., Ltd (‘GT Enterprise’ or ‘the company concerned’), member of the Rainbow Rich group (‘the group of companies concerned’, ‘Rainbow group’, or ‘Rainbow’), which was also one of the individually named Chinese producers in the original investigation. The anti-dumping duty applicable to imports of products produced by GT Enterprise is 0,11 EUR/kilo and the duty applicable to imports from the other production companies within the group of companies concerned is 0,26 EUR/kilo (i.e. the residual duty rate).

(3)

The complainant provided prima facie evidence that the existing measures are no longer sufficient to counteract the dumping which is causing injury.

(4)

Having determined, after consulting the Advisory Committee, that the request contained sufficient prima facie evidence to justify the initiation of the partial interim review, the Commission announced, by a notice of initiation published in the Official Journal of the European Union (4) on 17 February 2011, the initiation of a partial interim review pursuant to Article 11(3) of the basic Regulation limited to the examination of dumping as far as GT Enterprise is concerned.

(5)

The product under review is sodium cyclamate, originating in the People’s Republic of China, currently falling within CN code ex 2929 90 00 (‘the product concerned’).

(6)

As in previous investigations, this investigation has shown that the product concerned produced in the PRC and sold to the Union is identical in terms of physical and chemical characteristics and uses to the product produced and sold on the domestic market in Indonesia which served as an analogue country in the current review. It is therefore concluded that products sold on the domestic market in Indonesia and sold by the group of companies concerned on the Union market are like products within the meaning of Article 1(4) of the basic Regulation.

(7)

The Commission officially informed the complainant, the company concerned and the representatives of the country concerned about the initiation of the current review. The Commission also advised producers in Indonesia of the initiation of the proceedings, as Indonesia was envisaged as a possible analogue country.

(8)

Interested parties were given the opportunity to make their views known in writing and to request a hearing within the time limit set in the notice of initiation. All interested parties, who so requested and showed that there were particular reasons why they should be heard, were granted a hearing.

(9)

In order to obtain the information deemed necessary for its investigation, the Commission sent a questionnaire to the company concerned and received replies from five companies in the Rainbow group within the deadline set for that purpose. (As the Rainbow group now consists of two production companies (one being GT Enterprise), one raw material supplier, one company previously involved with the product concerned, but now dormant, and a trader in Hong Kong, the review encompassed the activities of the full group). The Commission also sent questionnaires to producers in Indonesia. One Indonesian producer showed willingness to provide information in the current review and provided a partial reply to the questionnaire.

(10)

The Commission sought and verified all information deemed necessary for the analysis of market economy treatment and individual treatment and the determination of dumping. The Commission carried out verification visits at the premises of the following members of the group of the companies concerned:

(11)

The investigation of dumping covered the period from 1 January 2010 to 31 December 2010 (‘the review investigation period’ or ‘RIP’).

(12)

In anti-dumping investigations concerning imports originating in the PRC, normal value shall be determined in accordance with paragraphs 1 to 6 of Article 2 of the basic Regulation for those producers which were found to meet the criteria laid down in Article 2(7)(c) thereof. Briefly, and for ease of reference only, the criteria in Article 2(7)(c) of the basic Regulation, fulfilment of which the applicant companies have to demonstrate, are set out in summarised form below:

(13)

The group of companies concerned requested MET pursuant to Article 2(7)(b) of the basic Regulation and submitted claim forms for four producers located in the People’s Republic of China. The Commission sought and verified at the premises of the companies all information submitted in the companies’ requests and deemed necessary.

(14)

The current review revealed that the situation of the company concerned changed since the original investigation. It was found that GT Enterprise no longer meets all MET criteria. Furthermore, compared to the original investigation the Rainbow group had been enlarged and restructured. The other companies within the group that submitted claim forms could not demonstrate either that they meet all MET criteria.

(15)

With regard to criterion 1 concerning business decisions and State interference, it was found that the local government has the authority to interfere in the hiring and dismissal of personnel in one company within the group. Furthermore, the local government is a major shareholder of the company producing raw materials. Indications of significant State interference were identified in the supply of raw materials to the company (electricity and water) and by the company to its related companies, in labour costs and in the operations and decision-making of this company. As a way of example the State shareholder outsourced personnel to the raw material producer at terms that the company could not specify. Furthermore, the company has been continuously loss-making due to selling raw material at abnormally low prices to its related companies and without any further compensation e.g. in the form of profit distribution. Through the accumulation of these losses, the State-owned raw material producer influenced the decisions of the related companies with regard to purchase of raw materials for the production of sodium cyclamate. Finally, interference and influence could be detected in the financing and investment decisions of another company within the group by a local government agency.

(16)

With regard to criterion 2 concerning accounting, the investigation showed that accounting records of all members of the group of companies concerned were not in line with international accounting standards as a number of material accounting shortcomings and errors were found which were not reported by the auditors.

(17)

With regard to criterion 3, it was found that distortions were carried over from the non-market economy system through the provision of infrastructure investments to one company of the group for free. The same company benefited from favourable rental conditions for the land it uses. The other companies within the group could not demonstrate that they acquired their land use rights in return for a consideration and/or that the consideration would have reflected a market value. Finally one company was not able to demonstrate that certain assets transferred to it were made for monetary consideration or otherwise at prices reflecting market values.

(18)

Finally, with regard to criteria 4 and 5, it was found that the companies met the criteria as the companies were subject to bankruptcy and property laws which guaranteed stability and legal certainty. Currency conversions were carried out at or following the official rate published by the Bank of China.

(19)

The group of companies concerned and the complainant were given an opportunity to comment on the above findings. The complainant had no comments but the group of companies concerned objected on several grounds. Some of these comments were reiterated after final disclosure of the facts and considerations on the basis of which it was proposed to impose definitive measures. The most important comments received are described in the recitals below.

(20)

The Rainbow group firstly stated that the Commission illegally imposed an obligation to re-qualify for MET as the group was given MET in the original investigation and the expiry review and thus the legal obligation to apply the same methodology in reviews as in the original investigation was breached. It argued that the Commission has not shown that circumstances of this company had changed in a way that would justify a different method to that applied in the original investigation. According to the claimant several of the issues identified by the Commission had already existed at the time of the original investigation and thus the Commission’s new findings do not relate to new circumstances but are merely a different interpretation of the same circumstances.

(21)

It should be noted that, contrary to the claimant’s statement, the same methodology was applied both in the original investigation and in the current review whereas due account was taken of the fact that certain circumstances have changed since the original investigation. Even if the claimant’s argumentation would be correct in relation to certain facts that were indeed the same during both the original and current investigations, namely in relation to GT Enterprise’s land use right agreement, the following can be noted. The current review established additional other facts that — even though they had already existed during the original investigation — were not disclosed at that time by GT Enterprise, such as the local government’s authority to approve the hiring and dismissal of its personnel. Finally, the circumstances of the company have also changed since the original investigation in respect of criterion 2. That is because it was established in the current review that during the RIP GT Enterprise had not had a clear set of accounting records that were independently audited in line with international accounting standards and applied for all purposes.

(22)

The claimant later explained that it considers that it had disclosed the local government’s authority to approve the hiring and dismissal of its personnel by providing in the original investigation the same Articles of Association as in the current review. However, the translation of this document provided by the claimant both during the original and current investigation was incomplete as it did not disclose the powers given by the Articles of Association to the local government.

(23)

The Rainbow group further argued that the MET regime was introduced for countries with an economy in transition, i.e. from the former non-market economy system towards a market economy. It would therefore be illogical to require a company that previously qualified for MET to once again submit sufficient evidence in an interim review that it still qualifies for MET. In this respect it should be noted that there is nothing in the basic Regulation which would support such an interpretation and which would prevent the application of Article 2(7)(c) of the basic Regulation in reviews initiated pursuant to Article 11(3) of the basic Regulation. Therefore, this argument had to be dismissed.

(24)

The Rainbow group also invoked the procedural requirement in Article 2(7)(c) that an MET determination shall be made within three months of the initiation of the investigation. Rainbow itself acknowledges that exceeding this deadline is in itself insufficient ground to contest the results of the investigation, but it highlights that the Commission services already had all the information necessary to calculate the dumping margin at their disposal when MET findings were disclosed. In its argumentation Rainbow however ignores the fact that even though the Commission indeed for administrative efficiency requested and verified all necessary information from the group of companies concerned at the same time, it had not had at its disposal information about the analogue country that would have made it possible to determine the dumping margin in case of rejecting MET. Indeed, information concerning the normal value in the analogue country was made available to the Commission only after the findings concerning MET had been disclosed to Rainbow. Thus the timing of the MET determination could not have any impact on its content. In the light of the above, this claim is rejected as unfounded.

(25)

With respect to criterion 1, it has been submitted as a general comment that the theoretical possibility of State influence or State control per se does not automatically mean that there is an actual and significant State interference within the meaning of Article 2(7)(c). Rainbow repeatedly quotes a decision of the Court of First Instance (5) to argue that State control does not equal significant State interference because this would ‘lead to the exclusion, in principle, of state-controlled companies from entitlement to MES, irrespective of the real factual, legal and economic context in which they operate.’ Rainbow also claims that it would mean an unreasonable burden of proof on MET applicants if they were to show that there can never be a possibility for the State to interfere in business decisions. Further it argues that the State action would have to render the company’s decisions incompatible with market considerations so as not to be in line with criterion 1.

(26)

Contrary to the above assertions by the Rainbow group, the current investigation established specific and significant State interference in the operations of several companies within the group. In the case of the group company in which the hiring and dismissal of personnel was subject to the approval of the local government, it is the company’s own rules of internal functioning, i.e. its Articles of Association, that clearly provide the authority for the State to interfere in its operational decisions. In the case of another group company, the State partner was found to have had an influence in the company in a manner which is incompatible with market considerations. Firstly, the State partner had contributed most of the capital to this company without this fact being reflected in the share of its ownership of the company. Secondly, the company’s operations were always loss-making, which was mostly detrimental to the State partner given the capital it invested. Thirdly, the State partner itself incurred continuous losses as it supplied inputs such as water and electricity to the group company at below market prices and without proper receipt of payment.

(27)

Concerning the conclusion on State interference in the financing and investment decisions of another member of the group of companies concerned, it was submitted that factual findings of the Commission on a loan and its conditions were incorrect. The Commission however, has evidence collected during the verification showing that the company was instructed by a local government agency to take a loan which was not related to its business operations. The company reasons that the financing decisions were taken as a favour to this government agency and not as an obligation and the transaction in question was without further risk to the company since it would have had the possibility to seek compensation through the non-payment of utilities’ invoices issued to it by the agency. The evidence collected by the Commission shows that the land use right of the company is indirectly used as a security in the relevant financial transaction; therefore the company bears significant risk. The land use right itself was acquired through the same government agency to whom the company alleges to have been providing only a favour. The allegation that a compensation would have been possible through non-payment for utilities demonstrates a basic misunderstanding of basic accounting standards (offsetting) and contradicts the company’s further claim that influence on financial operations as such do not mean an influence on ‘decisions on firms regarding prices, costs and inputs’ as required by Article 2(7)(c). Furthermore, investment decisions are clearly and significantly influenced by the government agency as there are company-specific requirements set in the land use right agreement of the company on the investment to be performed and these requirements go beyond local zoning laws contrary to what has been suggested by the company. Therefore the claim that State interference in the financing and investment decisions do not amount to an influence according to Article 2(7)(c) is rejected.

(28)

As to the group company producing one of the raw materials used in the production of sodium cyclamate, it was claimed that any shortcomings with respect to the company’s decision-making and financial situation would have a very limited impact as the raw material produced by this company represents only around 10 % of the cost of production of sodium cyclamate. As the Commission was able to calculate the difference between profitable sales price and actual sales price of the raw material, the company suggests that it would be more appropriate to adjust the costs of low-priced raw material rather than rejecting MET. However, the objective of the MET assessment is to ascertain that inputs reflect market values and business decisions are made in response to market signals. It should be noted that Article 2(7)(c) of the basic Regulation explicitly requires that costs of major inputs substantially reflect market value in order the conditions for the MET to be met without making any reference to the possibility of adjusting the distorted costs of major inputs. Therefore this claim has to be rejected.

(29)

The company’s claim concerning the abnormally low prices paid for water and electricity and labour costs — arguing that these are not major inputs only representing in total around 14 % of the total cost of production of the raw material — had to be rejected as this is considered, both individually and cumulatively, a significant enough cost element to have an impact on the total costs of the company. In the case of labour costs it is also noted that it was not possible to fully verify these elements as the company was not able to provide contracts or other documentation. Therefore it could not be ascertained that these costs reflected market values.

(30)

With respect to criterion 2 it was argued that the Commission ignored the materiality principle pursuant to which omissions or misstatements of items are material only if they could influence the economic decisions that users make on the basis of financial statements and that such immaterial shortcomings would not need to be reported by the auditor either.

(31)

Contrary to what the group claims, there were serious shortcomings in the accounting of the companies in relation to basic accounting principles (see, for more details, the next paragraph). Secondly, the objective of requiring a clear set of accounts for MET purposes is not for a user making economic decisions but to ensure that the financial statements provide a true and fair view of revenues, costs, etc. The objective of the MET investigation is to establish whether accounts are kept and audited in accordance with international accounting standards.

(32)

The Rainbow group disputed that its companies breached the elements of the IAS rules and accounting practices mentioned in the MET assessment such as the accrual principle, faithful representation of transactions principle and offsetting, going concern principle, correct classification of balance sheets items, recognition of losses, only business related transactions and recordings within the accounts, correct classification and depreciation of expenses, respect of IAS and/or Chinese GAAP rules on the recognition of the value and depreciation of assets. The abovementioned breaches of IAS were identified from the information provided by the group in its MET claim form and all issues were subject to verification at the premises of the companies. The arguments presented by the companies on these issues following the disclosure of the MET findings were not such as to warrant a change in the conclusion that, in regard to these issues, the companies failed criterion 2.

(33)

With respect to criterion 3, the Rainbow group claims that the provision of infrastructure investments to one company for free is a normal activity that also takes place in market economies in order to attract investments and that the impact of this subsidisation would be negligible on the financial situation of the company in the RIP. However, the fact that a company could avoid payments for infrastructure developments and at the same time benefited from very low rental prices for the same land do not reflect a normal situation in a market economy. This benefit on the other hand had a direct impact on the financial position of the production company and its ability to take decisions in response to market signals.

(34)

The Commission accepted the claimant’s arguments concerning GT Enterprise’s land use right as explained in recital 21. Arguments presented concerning the land use right by the other companies however were not such as to reverse findings as the company itself acknowledges that it had not paid the agreed amount for its land use right in one case. In the case of another land use right the Rainbow group claims that prices of land in that region had been rising sharply and thus it is normal that the land was valued significantly higher a few years after its acquisition date. However, the evidence provided by the company referred to price increases for residential properties in the region and thus it is irrelevant. Rainbow ultimately claimed that the Commission’s approach of requiring positive evidence that a company has paid a price that reflects market value imposes an unreasonable burden of proof. However, Article 2(7)(c) of the basic Regulation explicitly requires that a claim for market economy treatment must ‘contain sufficient evidence that the producers operates under market economy conditions’. Therefore this argument had to be rejected.

(35)

Rainbow group contests the finding on assets transferred to one company without a monetary consideration or otherwise at prices reflecting market values on the basis that this company had stopped production in the RIP. Indeed the company stopped production. However, the company was still selling its previously produced products on the domestic market. Thus an MET assessment had to be performed for this company as well to ascertain that there were no significant distortions carried over from the former non-market economy system that could affect prices.

(36)

It is therefore considered that GT Enterprise failed to meet the first and second criteria for MET, Jintian Industrial (Nanjing) Ltd failed to meet criterion two and three, Golden Time Chemical (Jiangsu) Ltd failed to meet criteria one and two and three for MET and Nanjing Jinzhang Industrial Ltd failed to meet criteria one, two and three. If one related company associated with the production and sale of the product concerned does not qualify for MET, MET cannot be granted to the group of related companies. Therefore, as all of the companies assessed for MET individually failed to meet the relevant criteria it is concluded that the Rainbow group cannot be granted MET. In these circumstances, after consulting the Advisory Committee, the group of companies concerned was denied MET.

(37)

Pursuant to Article 2(7)(a) of the basic Regulation, a countrywide duty, if any, is established for countries falling under that Article, except in those cases where companies are able to demonstrate that they meet all criteria set out in Article 9(5) of the basic Regulation to be granted IT. Briefly, and for ease of reference only, these criteria are set out below:

(38)

The two exporting producers within the group having exported sodium cyclamate during the RIP claimed IT. It was not necessary to make an IT assessment for the other companies in the Rainbow group given that they are not exporters of the product concerned. On the basis of the information available and verified during the verification visits, it was found that these two exporting producers fulfilled the requirements foreseen in Article 9(5) of the basic Regulation and thus could be granted IT.

(39)

According to Article 2(7)(a) of the basic Regulation, normal value for the exporting producers not granted MET has to be established on the basis of the price or constructed value in a market economy third country (analogue country).

(40)

In the notice of initiation the Commission indicated its intention to use Indonesia (the analogue country in the original investigation) as appropriate analogue country for the purpose of establishing normal value and invited interested parties to comment thereon.

(41)

The Commission has received no comments on the choice of the analogue country.

(42)

The Commission sought cooperation from producers in Indonesia. Letters and relevant questionnaires were sent to all known companies. Of the several companies contacted, only one producer submitted the necessary information for the determination of normal value and agreed to partially cooperate with the review. As the company could not accept a verification visit at its premises, the Commission analysed the information provided for completeness and consistency. The information was found to be sufficient and reliable for the determination of the normal value and, whenever necessary, the Indonesian producer provided clarifications sought by the Commission. The information used was cross-checked with information provided in the review request.

(43)

The investigation established that Indonesia has a competitive market for the like product.

(44)

The investigation further revealed that the production volume of the cooperating Indonesian producer constitutes considerably more than 5 % of the volume of Chinese exports of the product concerned to the Union, hence the production was representative in terms of volume. As for the quality, technical specifications and standards of the like product in Indonesia, no major overall differences were found when compared to Chinese products. Therefore, the Indonesian market was deemed sufficiently representative for the determination of normal value.

(45)

It is noted that to the Commission’s knowledge there are no other production facilities elsewhere in the world, besides the known producers in Spain, the PRC and Indonesia.

(46)

In view of all the above it was concluded that Indonesia constitutes an appropriate analogue country in accordance with Article 2(7)(a) of the basic Regulation.

(47)

Pursuant to Article 2(7)(a) of the basic Regulation, normal value was established on the basis of information received from the producer in the analogue country as set out below. It is noted that the Indonesian producer was investigated in a previous investigation concerning imports of sodium cyclamate from Indonesia (6). The data now provided by the company in its questionnaire response were found to be reliable and a solid basis to establish normal value for the purposes of this investigation. Indeed, average sales prices as well as the average cost of production followed a similar trend in line with the evolution of the average raw material cost. In addition, this trend could be confirmed by a similar evolution of the average raw material cost observed in the Union market.

(48)

The domestic sales of the Indonesian producer of the like product were found to be representative in terms of volume compared to the product concerned exported to the Union by the group of companies concerned in the PRC.

(49)

The Commission subsequently identified those product types, sold domestically by the producer in the analogue country, that were identical or directly comparable to the types sold for export to the Union. The standard product type of the Indonesian producer was found to be directly comparable.

(50)

For the standard product type sold by the producer in the analogue country on its domestic market and found to be directly comparable with the type sold for export to the Union, it was established whether domestic sales were sufficiently representative for the purposes of Article 2(2) of the basic Regulation. Domestic sales of a particular type of sodium cyclamate were considered sufficiently representative when the total domestic sales volume of that type during the IP represented 5 % or more of the total sales volume of the comparable type exported to the Union by the group of companies concerned.

(51)

An examination was also made as to whether the domestic sales could be regarded as having been made in the ordinary course of trade, by establishing for the standard product type the proportion of profitable sales to independent customers on the domestic market during the investigation period. Since the volume of profitable sales of the like product per product type represented more than 80 % of the total sales volume of that type and where the weighted average price of that type was equal to or above the cost of production, normal value was based on the actual domestic price, calculated as a weighted average of the prices of all domestic sales of that type made during the IP, irrespective of whether these sales were profitable or not.

(52)

In the determination of the normal value for the product type that had not been sold on the domestic market by the producer in the analogue country, the weighted average sales price of all the sales of the standard product type was used, after having adjusted for differences within the two product types.

(53)

All exporting producers within the group of companies concerned made export sales to the Union through their related trading company located outside the Union. The export price was established on the basis of the prices of the product when sold by the related trading company to the Union, i.e. to an independent buyer, in accordance with Article 2(8) of the basic Regulation on the basis of prices actually paid or payable.

(54)

The normal value and export price were compared on an ex-works basis. For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance in the form of adjustments was made for differences affecting price and price comparability in accordance with Article 2(10) of the basic Regulation. Accordingly, adjustments were made for differences in transport, insurance, handling, loading and ancillary costs and credit cost where applicable and supported by verified evidence.

(55)

The dumping margin was established on the basis of a comparison of a weighted average normal value with a weighted average export price for all exporting producers, in accordance with Article 2(11) of the basic Regulation.

(56)

This comparison showed a dumping margin of 14,2 %, expressed as a percentage of the CIF frontier price, duty unpaid.

(57)

In accordance with Article 11(3) of the basic Regulation, it was examined whether the circumstances on the basis of which the current dumping margin was based have changed and whether such change was of a lasting nature.

(58)

The current findings are based on the rejection of the claim for the market economy treatment to the group of companies concerned in the current review whereas the member of the group of related companies investigated in the original investigation GT Enterprise was granted MET. The circumstances that led to the different conclusion are firstly due to the fact that in the current review four companies within the group were investigated as compared to only GT Enterprise in the original investigation. The group was recently enlarged and reorganised with considerable investments and there is no indication that this situation would change in the foreseeable future. Secondly, as regards GT Enterprise, it was found that the company’s practice of not keeping a clear set of accounting audited in line with international accounting standard is an established practice and nothing indicates that this would change in the future. Also, its Articles of Association allowing for State influence had been in force for a longer period and there were no indications for their amendment in the future. In these circumstances, it is considered that the non-MET status of the group is of a lasting nature.

(59)

Furthermore, as regards export price, the investigation showed certain stability in pricing policies of the group of companies concerned over a longer period since the price of the product concerned charged to the Union and to other third countries did not differ significantly and followed the same trend between 2007 and the RIP. This supports the conclusion that the newly calculated dumping margin is likely to be of a lasting nature.

(60)

It was therefore considered that the investigation showed that the structure and behaviour of the group of companies concerned, including the circumstances that led to the initiation of the current review, were unlikely to change in the foreseeable future in a manner that would affect the findings of the current review. Therefore it was concluded that the changed circumstances are of a lasting nature and that the application of the measure at its current level is no longer sufficient to offset dumping.

(61)

In view of the findings of increased dumping as well as the lasting nature of the changed circumstances, it is considered that the existing measures are no longer sufficient to counteract the dumping which is causing injury. The measures imposed by Implementing Regulation (EU) No 492/2010 on imports of sodium cyclamate originating in the PRC should therefore be modified for GT Enterprise and the same duty should be imposed to the other exporting producer within the group by amending that Regulation accordingly.

(62)

No individual injury margin can be established in the current review, since it is limited to the examination of dumping as far as the GT Enterprise and its related companies within the group are concerned. Therefore, the dumping margin established in the current review was compared to the injury margin as established in the original investigation. Since the latter was higher than the dumping margin found in the current review, a definitive anti-dumping duty should be imposed for the group of companies concerned at the level of the dumping margin found in the current review.

(63)

Regarding the form of the measure, it was considered that the amended anti-dumping duty should take the same form as the duties imposed by Implementing Regulation (EU) No 492/2010. To ensure efficiency of the measures and to discourage price manipulation it was considered appropriate to impose duties in the form of a specific amount per kilo. As a result, the anti-dumping duty to be imposed on imports of the product concerned produced and sold for export to the Union by the group of companies concerned, calculated on the basis of the dumping margin as established in the current review expressed as a specific amount per kilo, should be EUR 0,23 per kilo.

(64)

The group of companies concerned as well as the other parties concerned were informed of the essential facts and considerations on the basis of which it was intended to propose the amendment of the anti-dumping measures in force.

(65)

Rainbow group commented on the final disclosure. These comments related mostly to the withdrawal of the complaint in the ongoing investigation concerning imports of sodium cyclamate originating in the People’s Republic of China limited to two Chinese exporting producers, Fang Da Food Additive (Shen Zhen) Limited and Fang Da Food Additive (Yang Quan) Limited (‘Fang Da group’) (‘parallel proceeding’) (7). Rainbow claimed that the withdrawal of the complaint in the parallel proceeding should, logically and legally, also result in the termination of anti-dumping measures against other producers in the PRC or, at the least, result in the termination of the current review with respect to Rainbow group.

(66)

It demanded the termination of the anti-dumping measures imposed by Implementing Regulation (EU) No 492/2010 arguing that in the absence of any finding that imports by Fang Da were not dumped and/or imports by Fang Da were not causing injury, the principle of non-discrimination contained in Article 9(5) of the basic Regulation mandates the termination of the anti-dumping measures imposed. To support its argument it referred to previous Council Regulations where simultaneous interim reviews concerning imports of some countries were terminated without the imposition of measures following the non-imposition of measures in anti-dumping investigations concerning the imports of the same products from other countries (LAECs (8), flat-rolled products of iron or non-alloy steel (9)). However, it should be noted that these cases refer to investigations where several countries were concerned and the principle of non-discrimination was applied vis-à-vis imports from different countries. Secondly, in these cases the reason for terminating the measures on some countries was that measures on other countries were not imposed because the Council did not adopt the proposal within the statutory time limits (LAECs, flat-rolled products of iron or non-alloy steel). Therefore even though indeed it was found necessary to terminate the proceedings of anti-dumping measures in the simultaneous proceedings in the quoted cases in order to respect the principle of non-discrimination, these have no relevance for the current review. A further reference to the approach taken in monosodium glutamate (10) concerns a case where the complainant intended to withdraw its complaint concerning imports of Brazil even though these were found to have been dumped. In that case it was envisaged not to accept the withdrawal of the complaint because it was concluded that to take measures against the other countries in the absence of measures against Brazil would have been discriminatory.

(67)

Furthermore, the two situations are quite different. In the parallel proceeding, the complaint was withdrawn and it was concluded that the termination was not against the Union interest. In the current review, the request was maintained and it was found that the dumping by the Rainbow group increased. Therefore, increasing the duty for that group does not constitute discrimination.

(68)

The Rainbow group also demanded that the withdrawal of the complaint should result in the termination of the current review with respect to Rainbow group as the two proceedings were initiated on the basis of the same procedural document, covered the same period of investigation and in the complaint the complainant treated Fang Da group and Rainbow group together for all practical purposes.

(69)

Secondly, it claimed that despite the investigation against Fang Da group being initiated under Article 5 of the basic Regulation, the investigation concerning imports of the Fang Da group and the interim review concerning the imports of Rainbow group are legally and for all practical purposes in essence the same proceeding. Finally it stated that having created the distinction between proceedings and investigations, Article 9(3) of the basic Regulation in effect means that even though Fang Da group was subject to a zero duty following the original investigation, it remained subject to the proceeding. For this reason, the withdrawal of the complaint concerning the imports by the Fang Da group should thus in view of the Rainbow group concerned result in the termination of the current review as well.

(70)

It should be noted in this respect that the document presented by the complainant constituted both the complaint for the anti-dumping investigation on the basis of Article 5 of the basic Regulation and the request for this interim review on the basis of Article 11(3) of the basic Regulation. It also presented sufficient evidence to justify initiating both proceedings individually. Indeed, the Commission has initiated the Article 5 investigation and the interim review in two separate notices of initiation. Thus the anti-dumping investigation based on Article 5 of the basic Regulation and the interim review based on Article 11(3) of the basic Regulation are two different proceedings.

(71)

Rainbow group presented further arguments speculating on the possible reasons for the withdrawal of the complaint. As these arguments are hypothetical and irrelevant, they cannot be addressed and are thus rejected.

(72)

Finally, Rainbow group stated that the Commission has manifestly violated its rights to have 10 days to comment on the final disclosure as a non-confidential version of the withdrawal letter was disclosed to it seven days before the deadline to submit comments.

(73)

As explained in recital 70, the Article 5 investigation in the framework of which Rainbow group received an information letter about the withdrawal of the complaint is a separate proceeding from the current review. Rainbow group was an interested party in the Article 5 review and only for this reason was it notified of the withdrawal of the complaint. This notification letter was not part of the final disclosure in the current review. The Rainbow group had 30 days to comment on the final disclosure in the current proceeding. Therefore its right to have sufficient time to comment was not violated.

(74)

To sum up, the comments received were not such as to change the above conclusion,

(1)

On 12 August 2011, the European Commission (the ‘Commission’) announced, by a notice published in the Official Journal of the European Union (2) (‘Notice of Initiation’), the initiation of an anti-dumping proceeding with regard to imports into the Union of aluminium radiators originating in the People’s Republic of China (‘PRC’).

(2)

The proceeding was initiated following a complaint lodged by the International Association of Aluminium Radiator Manufacturers Limited Liability Consortium (AIRAL Scrl - ‘the complainant’), representing a major proportion, in this case more than 25 % of the total Union production of aluminium radiators. The complaint contained prima facie evidence of dumping of the said product and of material injury resulting therefrom, which was considered sufficient to justify the initiation of an investigation.

(3)

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

(4)

The complainant, other Union producers, the exporting producers in the PRC, importers and distributors made their views known. All interested parties, who so requested and showed that there were particular reasons why they should be heard, were granted a hearing.

(5)

In view of the apparent high number of Union producers, importers and exporting producers sampling was envisaged in the notice of initiation, in accordance with Article 17 of the basic Regulation. In order to enable the Commission to decide whether sampling would be necessary and if so, to select a sample, importers and exporting producers were asked to make themselves known to the Commission and to provide, as specified in the notice of initiation, basic information on their activities related to the product concerned (as defined in section 3 below) during the period from July 2010-June 2011.

(6)

In order to allow exporting producers to submit a claim for market economy treatment (‘MET’) or individual treatment (‘IT’), if they so wished, the Commission sent claim forms to the Chinese exporting producers known to be concerned and to the authorities of the PRC. Only one group of companies, Sira (Tianjin) Aluminium Products Co. Ltd and Sira Group (Tianjin) Heating Radiators Co. Ltd (the ‘Sira Group’), came forward and requested MET. Requests for IT were received from Zhejiang Flyhigh Metal Products Co., Ltd. and Metal Group Co., Ltd.

(7)

As regards the Union producers and as duly explained in recital 24 below, eight Union producers provided the requested information and agreed to be included in a sample. On the basis of the information received from the cooperating Union producers, the Commission selected a sample of four Union producers on the basis of their sales/production volume, their size and geographic location in the Union.

(8)

As explained in recital 27 below, only three unrelated importers provided the requested information and agreed to be included in a sample. However two of these importers did not import/purchase the product concerned. Therefore, in view of the limited number of cooperating importers, sampling was deemed to be no longer necessary.

(9)

As explained in recital 28 below, 18 exporting producers in the PRC provided the requested information and agreed to be included in a sample. On the basis of the information received from these parties, the Commission selected a sample of two exporting producers having the largest volume of exports to the Union.

(10)

The Commission sent questionnaires to all parties known to be concerned and to all the other companies that made themselves known within the deadlines set out in the notice of initiation, namely to the exporting producers in the PRC, the four sampled Union producers, the cooperating importers in the Union and to the European Consumers’ Organization BEUC, with the request to send the users’ questionnaire to its associated companies.

(11)

Replies were received from the two sampled exporting producers in the PRC, from the four sampled Union producers and one unrelated importer. None of the users replied to the questionnaire.

(12)

In addition, one claim for individual examination in accrodance with Article 17(3) of the basic Regulation was received from one group of related exporting producers. The examination of these claims at the provisional stage would have been too burdensome to be carried out. A decision whether individual examination will be granted to this group of companies will be taken at the definitive stage.

(13)

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

(14)

The investigation of dumping and injury covered the period from 1 July 2010 to 30 June 2011 (the ‘investigation period’ or the ‘IP’). The examination of trends relevant for the assessment of injury covered the period from January 2008 to the end of the IP (‘period considered’).

(15)

The product concerned is aluminium radiators and elements or sections of which such radiator is composed, whether or not such elements are assembled in blocks, excluding radiators and elements and sections thereof of the electrical type (‘the product concerned’). The product concerned currently falls within CN codes, ex 7615 10 10, ex 7615 10 90, ex 7616 99 10 and ex 7616 99 90.

(16)

The product definition was contested by the Sira Group based on an alleged difference between the two production processes which are used to manufacture radiators. Within the Sira Group there are two Chinese exporting producers one of which used the die-casting production technique whereas the second company used the extrusion method. Sira Group argued that the extrusion method should be excluded from the definition of the product concerned because of alleged differences in physical and technical characteristics, raw materials, production costs and sales prices and because the extrusion technique is uncommon in the EU and in the PRC.

(17)

Another Chinese party, the China Chamber of Commerce for Imports and Exports of Machinery and Electronic Products (CCCME) requested clarification of this issue because of differences in costs and prices of radiators manufactured by the two production techniques.

(18)

In this respect, although there are minor differences it is clear that the radiators produced by both methods have the same basic physical and technical characteristics and have the same uses. Radiators produced by both methods are highly substitutable. These basic characteristics are, primarily, lightness, low thermal inertia and high heat conductibility. Differences in costs and prices and the fact that the extrusion technique may involve the use of a slightly different aluminium alloy do not change these basic characteristics. In terms of price comparisons, any differences are properly accounted for in the structure of the product type comparison system employed in this investigation (‘PCN-system’) which means that only like for like comparisons would be made.

(19)

Furthermore, aluminium radiators should be considered as one single product whatever their manufacturing process because they are sold through the same channels of sales and because end-user and consumer perception of them is that they are made of aluminium (with well-known characteristics as mentioned above) rather than any differentiation based on production method. In view of the above, this claim is therefore rejected.

(20)

CCCME also contested the fact that steel plate or even cast iron radiators are not included within the product scope. However, although such products have similar uses, they have different basic physical and technical characteristics as the basic raw material (aluminium alloy) is replaced by steel or iron which have different physical and technical characteristics in terms of weight, thermal inertia and conductibility. This claim is therefore rejected.

(21)

CCCME made further comments relating to references in the complaint to sales via ‘tender processes’. These comments revealed that it assumed that this concerned public procurement. The tender processes referred to in the complaint, however, related to normal business practice whereby an EU purchaser of radiators asks potential suppliers to quote prices before placing orders. None of the Chinese imports used in the calculations involved a public procurement process.

(22)

CCCME also commented on references in the Complaint to ‘design radiators’, assuming that such radiators are excluded from the product definition. Again, these comments were based on a misunderstanding as the product definition does not exclude such radiators. These comments were therefore dismissed.

(23)

The investigation has shown that aluminium radiators produced in and exported from the PRC and aluminium radiators manufactured and sold in the Union by the Union producers have the same basic physical and technical characteristics as well as the same basic uses and are therefore considered to be alike within the meaning of Article 1(4) of the basic Regulation.

(24)

In view of the apparent large number of Union producers, sampling was provided for in the notice of initiation for the determination of injury, in accordance with Article 17 of the basic Regulation.

(25)

In the notice of initiation the Commission announced that it had provisionally selected a sample of Union producers. This sample consisted of four companies, out of the eight Union producers that were known to produce the like product prior to the initiation of the investigation, selected on the basis of their sales volume, their size and geographic location in the Union. They represented 66 % of the total estimated Union production during the IP. Interested parties were invited to consult the file for inspection by interested parties and to comment on the appropriateness of this choice within 15 days of the date of publication of the notice of initiation. One interested party requested to take also production volume into consideration for the selection of the sample. It was accepted to change the sample accordingly. No interested party opposed to the final sample composed of four companies.

(26)

In view of the potentially large number of importers involved in the proceeding, sampling was envisaged for importers in the notice of initiation in accordance with Article 17 of the basic Regulation.

(27)

Only three unrelated importers provided the requested information and agreed to cooperate. Since two of these importers did not report imports or purchases the product concerned, sampling was no longer deemed to be necessary.

(28)

A total of 18 exporting producers in the PRC provided the requested information and agreed to be included in a sample. These companies exported around 5 million elements (3) or slightly less than 50 % of the Chinese exports to the EU market in the IP. On the basis of the information received from these parties, the Commission selected a sample of two exporting producers having the largest representative volume of production, sales and exports which could reasonably be investigated within the time available. The two exporting producers, Zhejiang Flyhigh Metal Products Co., Ltd. and Metal Group Co., Ltd., represented around 62 % of the sales volume of the 18 exporting producers which provided data for the sampling exercise.

(29)

One group of exporting producers (the Sira Group) contested their exclusion from the sample on the basis that it manufactured a certain type of radiator (using the extrusion production method) and that its inclusion in the sample would, therefore, increase the representativity of the sample. However, the addition of one extra group was not required as the sample originally selected yet represented more than 60 % of the exports reported by the co-operating companies. In addition, it is not necessary for the sample to cover all types of the product concerned. The claim for inclusion of Sira Group was therefore rejected and the original sample was confirmed.

(30)

Pursuant to Article 2(7)(b) of the basic Regulation, in anti-dumping investigations concerning imports originating in the PRC, normal value shall be determined in accordance with paragraphs 1 to 6 of the said Article for those exporting producers which were found to meet the criteria laid down in Article 2(7)(c) of the basic Regulation.

(31)

However, the two sampled exporting producers only requested Individual Treatment (‘IT’). MET criteria were therefore not investigated.

(32)

Pursuant to Article 2(7)(a) of the basic Regulation, a country-wide duty, if any, is established for countries falling under that Article, except in those cases where companies are able to demonstrate that they meet all criteria set out in Article 9(5) of the basic Regulation. Briefly, and for ease of reference only, these criteria are set out below:

(33)

Both sampled exporting producers claimed IT. These claims were examined. The investigation showed that the sampled companies fulfilled all the conditions of Article 9(5) of the basic Regulation.

(34)

Both sampled exporting producers were therefore granted IT.

(35)

According to Article 2(7)(a) of the basic Regulation, normal value for exporting producers not granted MET shall be established on the basis of the domestic prices or constructed normal value in an analogue country.

(36)

In the notice of initiation, the Commission indicated its intention to use Russia as an appropriate analogue country for the purpose of establishing normal value for the PRC and invited interested parties to comment on this.

(37)

No comments were received concerning Russia as proposed analogue country. None of the interested parties suggested alternative analogue country producers of like product in addition to those mentioned in the complaint during the course of investigation.

(38)

No co-operation from Russia was received although all known Russian producers were contacted repeatedly during the investigation and received analogue country questionnaires.

(39)

The Commission through its own research tried to identify any additional producers in third countries.

(40)

Letters and questionnaires were therefore sent to all known producers in other third countries (i.e. Turkey, Iran, Croatia, India, South Africa and Switzerland). However, despite follow-up action ultimately no co-operation was received.

(41)

As explained in the recitals 38, 39 and 40 above, the investigation revealed no other market economy third country which could be used as an analogue country in this proceeding. Consequently, in absence of such market economy third country, it was provisionally concluded in accordance with Article 2(7)(a) of the basic Regulation, that it was not possible to determine normal value for the sampled producers based on the domestic prices or constructed normal value in a market economy third country or the price from such a third country to other countries, including the Union, and that it was therefore necessary to determine normal value based on any other reasonable basis, in this case on the basis of the prices actually paid or payable in the Union for the like product. This was considered appropriate due to the lack of cooperation as mentioned above but also because of the size of the EU market, the existence of imports and the strong internal competition on the EU market for this product.

(42)

As MET was not claimed by the two sampled companies, the normal value for all Chinese exporting producers was determined, as explained in recital 41 above, on the basis of the prices actually paid or payable in the Union for the like product. Following the choice of the prices paid or payable in the Union, normal value was calculated on the basis of the data verified at the premises of the sampled Union producers listed in recital 13 above.

(43)

In accordance with Article 2(2) of the basic Regulation, the Commission first examined whether the EU sales of the like product to independent customers were representative. The Union sales of the Union producers of the like product were found to be representative compared to the product concerned exported to the Union by the exporting producers included in the sample.

(44)

The Commission subsequently examined whether these sales could be considered as having been made in the ordinary course of trade pursuant to Article 2(4) of the basic Regulation. This was done by establishing the proportion of profitable EU sales to independent customers. EU sales transactions were considered profitable where the unit price was equal to or above the cost of production. Cost of production on the Union market during the IP was therefore determined. This analysis showed that EU sales of some product types were profitable, i.e. the unit net sales price was above the calculated unit cost of production.

(45)

The normal value of each product type was based on the actual sales price (ex-works) for profitable sales and on a constructed normal value for non profitable sales.

(46)

Normal value was constructed by adding to the cost of manufacturing of the EU industry its SG&A and profit. Pursuant to Article 2(6) of the basic Regulation, the amounts for SG&A and profit of 4,43 % were established on the basis of the actual data pertaining to production and sales in the ordinary course of trade of the like product of the EU producers.

(47)

As the sampled exporting producers were granted IT and made export sales to the Union directly to independent customers in the Union, the export prices were based on the prices actually paid or payable for the product concerned, in accordance with Article 2(8) of the basic Regulation.

(48)

The comparison between normal value and export price was made on an ex-works basis. For the purpose of ensuring a fair comparison between the normal value and the export price, due allowance in the form of adjustments was made for differences affecting prices and price comparability in accordance with Article 2(10) of the basic Regulation. Appropriate adjustments for indirect taxes, freight, insurance, packing, handling and credit costs were granted in all cases where they were found to be reasonable, accurate and supported by verified evidence.

(49)

For one of the exporting producers it was clear that the company had not classified the product concerned correctly when using the system as required by the questionnaire. One of the specifications of product concerned related to the thermal output of the radiators. However the company did not posses evidence to support the thermal output reported for its exported models. The thermal output actually reported was not correct and did not correspond to other specifications, such as weight and dimensions. Therefore it was necessary to use only the remaining specifications for comparison purposes.

(50)

Using the PCN-system to classify product types, there was a high degree of matching for one sampled exporting producer. However, for the other sampled exporting producer a resembling technique was employed because no direct matches could be identified. Where the resembling technique was employed the details were disclosed to the party involved.

(51)

According to Article 2(11) and (12) of the basic Regulation, the dumping margin for the sampled exporting producers was established based on the comparison of the weighted average normal value with the weighted average export price expressed as a percentage of the CIF Union frontier price, duty unpaid.

(52)

A weighted average of these two dumping margins was calculated for the non sampled co-operating companies.

(53)

Given the low degree of co-operation from the PRC (below 50 %), it is considered appropriate that the countrywide dumping margin applicable to all other exporting producers in the PRC should be based on the most dumped transactions to a particular customer of the cooperating exporters.

(54)

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

Table 1

(55)

All available information concerning Union producers, including information provided in the complaint, data collected from Union producers before and after the initiation of the investigation, and the verified questionnaire responses of the sampled Union producers, was used in order to establish the total Union production for the period considered.

(56)

Aluminium radiators were manufactured by eight producers in the Union during the IP. All available information concerning Union producers, including information provided in the complaint and data collected from Union producers before and after the initiation of the investigation, was used in order to establish the total Union production during the IP.

(57)

On this basis, the total Union production, in number of elements, was estimated to be around 64 million during the IP. Given that the Union producers supporting the complaint accounted for the total Union production, they constitute the Union industry within the meaning of Articles 4(1) and 5(4) of the basic Regulation and will be hereafter referred to as the ‘Union industry’.

(58)

Eurostat import statistics could not be used in this investigation since the CN codes covering aluminium radiators include other aluminium products, such as electrical radiator, as well.

(59)

Union consumption was thus established on the basis of the data contained in the complaint concerning in particular the sales volume of the Union industry in the Union and the imports made by the exporting producers in the PRC. This data was cross-checked with the received replies to the sampling questionnaires and the data obtained and verified at the premises of the sampled Union producers and the exporting producers in the PRC.

(60)

On this basis the Union consumption was found to have developed as follows:

Table 2

(61)

Total consumption on the EU market decreased by 3,8 % during the period considered. Between 2008 and 2009 there was a decrease by about 12 %, in line with the global negative effects of the economic crisis, after which consumption decreased further by 3,7 %. It however recovered from 2010 to the IP, when it increased by 13,5 %, but it did not reach the initial level of 2008. The above table also shows that consumption increased by 9 % in the period from 2009 to the IP.

(62)

Imports into the Union from the PRC developed as follows during the period considered:

Table 3

(63)

Notwithstanding the evolution of consumption, the volume of imports from the PRC increased significantly by 77 % over the period considered. The increase was continuous and was the sharpest between 2010 and the IP (+ 33 %). Similarly, the market share held by Chinese exporting producers shows a steady increasing trend over the period considered, passing from 13 % in 2008 to 24 % during the IP. This trend should be seen in the light of the overall decrease in consumption by 3,8 % during the same period.

(64)

The above table shows that the average import price from the PRC slightly decreased during the period considered. In a first step, between 2008 and 2009, it decreased significantly by 20 %, then it increased by 25 % between 2009 and 2010. Finally it decreased again towards the end of the period considered.

(65)

The investigation also showed that the import prices from the PRC consistently remained below the sales prices of the Union industry during the period considered. The drop in prices in 2009 coincided with a sharp increase in Chinese market share from 13 % to 17,3 % of the Union market and the constant price undercutting explains the steady increase in the market share held by Chinese exporting producers in particular between 2009 and the IP.

(66)

In order to determine price undercutting during the IP, the weighted average sales prices per product type of the sampled Union Producers charged to unrelated customers on the Union market, adjusted to an ex-works level, were compared to the corresponding weighted average prices of the imports from the cooperating Chinese producers to the first independent customer on the Union market, established on a CIF basis, with appropriate adjustments for the existing customs duties and post-importation costs.

(67)

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, when expressed as a percentage of the sampled Union producers turnover during the IP, showed a weighted average undercutting margin of 6,1 % by the Chinese exporting producers.

(68)

As mentioned in recitals 24 and 25 above, sampling was used for the examination of the possible injury suffered by the Union industry. It should be noted that one of the Union producers included in the sample only started producing aluminium radiators in 2009. In order to provide a consistent trend analysis for the period considered, it was considered appropriate to set 2009 as benchmark year for the injury analysis, namely index 100. For the sake of completeness an index for 2008 has been also established based on the data available.

(69)

The data provided and verified by the four sampled EU producers was used in order to establish micro indicators, such as unit price, unit cost, profitability, cash flow, investments, return on investments, ability to raise capital and stocks. The index for 2008 was established on the basis of the data available for the three existing producers in 2008 compared to the data of the same three producers in 2009 (index 100).

(70)

The data provided for the eight EU producers of aluminium radiators was used to establish macro indicators, such as Union industry production, production capacity, capacity utilization, sales volume, market share and employment. The index for 2008 was established on the basis of the data available for the seven existing producers in 2008 compared to the data available for the same seven producers in 2009 (index 100).

(71)

In the context of Article 3(5) of the basic Regulation, the examination of the economic situation of the Union industry over the period considered includes an evaluation of all economic factors established mentioned in that Article.

(72)

All available information concerning Union producers, including information provided in the complaint, data collected from Union producers before and after the initiation of the investigation, and the verified questionnaire responses of the sampled Union producers, was used in order to establish the total Union production for the period considered.

(73)

The table above shows that production decreased over the period considered. In line with a decrease in demand, production decreased sharply in 2009, after which it recovered in 2010 and during the IP. Production remained relatively stable between 2009 and the IP despite an increase in consumption by 9 %. The level of production is also dependent on the export activity of the Union industry which remained significant throughout the period considered.

(74)

Despite the limited decrease in consumption capacity utilisation decreased from 70 % in 2008 to 60 % during the IP. It remained relatively stable in the period between 2009 and the IP.

(75)

The Union industry sales volume decreased by 16 % over the period considered and its market share continuously dropped from 87 % in 2008 to 76 % during the IP. In 2009 the Union industry sales volume decreased by 16 %, hence it lost more than four percentage points of market share. In 2010 sales volume further dropped by 7 % and its market share decreased from 82,7 % to 79,5 %. During the IP, in a context of increasing consumption (+ 13,5 %), the Union industry market share dropped further to 76 %. It was thus unable to benefit from the growing consumption and to regain some of the market share previously lost.

(76)

During the period considered it emerged that Union consumption decreased slightly by 3,8 %, while sales volume and market share of the Union industry decreased significantly, respectively by 15,9 % and by 12,6 %, during the same period. At the same time, imports from the PRC increased significantly by 76,9 % over the period considered. As a consequence, the market share of the Union industry decreased by 11 percentage points over the same period.

(77)

The number of employees increased slightly over the period considered, but this in turn led to a decrease in productivity. However, it should be noted that the upwards trend regarding employment is only due to the fact that one of the sampled companies, the smallest of the sample started producing in 2009. Otherwise the trend in employment would have been negative.

(78)

Productivity of the Union industry workforce, measured as output per person employed per year, decreased slightly over the period considered. It reached its lowest level in 2009, after which it started to recover towards the IP, without reaching the initial levels. Between 2009 and the IP productivity increased by 12 %.

(79)

The trend of the average sales prices shows a significant decrease by 6 % over the period considered. In the period from 2009 to the IP, in line with an increasing consumption and a recovery in the market, prices recovered by 6 % but did not reach the level of 2008.

(80)

In parallel, the relative costs to produce and sell the like product slightly decreased over the period considered but it was far from allowing the Union industry to remain profitable in 2010 and during the IP. If in 2009, the 11,5 % decrease in costs matched with a 11,5 % decrease in sales prices, in 2010 and during the IP, the Union industry experienced a sharp increase in costs and could only slightly increase its prices to cover the extra costs. This resulted in a further loss in profitability and in market share since the Union industry prices were constantly higher than the Chinese imports prices.

(81)

Profitability of the Union industry was established by expressing the pre-tax net profit of the sales of the like product as a percentage of the turnover of these sales. Over the period considered, and also on the period from 2009 to the IP, profitability of the Union industry decreased dramatically and barely reached the break even level.

(82)

The trend in cash flow, which is the ability of the industry to self-finance its activities, followed to a large extent the negative trend in profitability. The lowest level was achieved during the IP. Similarly, the return on investment decreased from 36 % in 2008 to 2 % in the IP.

(83)

The evolution of profitability, cash flow and return on investment during the period considered limited the ability of the Union industry to invest in its activities and undermined its development. The Union industry managed to invest heavily in the beginning of the period considered and modernize its machineries to produce more efficiently, but investments thereafter steadily decreased by 64,7 % during the remainder of the period considered.

(84)

The stock level of the sampled Union industry increased significantly during the period considered. In 2009 the level of closing stock decreased by 27 %; afterwards, in 2010 and in the IP increased by 30,8 % and 128,4 % respectively.

(85)

The dumping margins are specified above in the dumping section. All margins established are significantly above the de minimis level. Furthermore, given the volume and the prices of dumped imports from the PRC the impact on the EU market of the actual margin of dumping cannot be considered negligible.

(86)

The investigation showed that most of the injury indicators pertaining to the economic situation of the Union industry deteriorated or did not develop in line with consumption during the period considered. This observation particularly applies to the period from 2009 up to the end of the IP.

(87)

Over the period considered, in the context of a decreasing consumption, volume of imports from the PRC increased steadily and significantly. At the same time, the Union industry sales volume decreased overall by 16 % and its market share dropped from 87 % in 2008 to 76 % in the IP. Even when consumption recovered by 9 %, from 2009 to the IP, the Union industry market share continued to decrease further. The Union industry was unable to regain the market share previously lost in view of the significant expansion of the dumped imports from the PRC in the EU market. The low-priced dumped imports increased steadily over the period considered, constantly undercutting the prices of the Union industry.

(88)

Furthermore, the injury indicators related to the financial performance of the Union industry, such as cash flow and profitability were seriously affected. This means that the ability of the Union industry to raise capital and to invest was undermined.

(89)

In the light of the foregoing, it was concluded that the Union industry suffered material injury within the meaning of Article 3(5) of the basic Regulation.

(90)

In accordance with Article 3(6) and 3(7) of the basic Regulation, it was examined whether the dumped imports originating in the PRC have caused injury to the Union industry to a degree that enables it to be classified as material. Known factors other than the dumped imports, which might have injured the Union industry, were examined to ensure that any injury caused by those other factors was not attributed to the dumped imports.

(91)

The investigation showed that the Union consumption decreased by 3,8 % over the period considered, while the volume of dumped imports from the PRC increased dramatically by about 77 %, their market share also increased from 13 % in 2008 to 24 % in the IP. At the same time, sales volume of the Union industry decreased by 16 % and market share dropped from 87 % in 2008 to 76 % in the IP.

(92)

In the period from 2009 up to the IP, Union consumption increased by 9 %, while the Union industry market share dropped again, in contrast to an annual increase in dumped imports from the PRC by 52 % in that period.

(93)

With regard to price pressure, it should be highlighted that in 2009 average import prices from the PRC decreased by 20 % forcing the Union industry to significantly decrease its sales prices by about 11,5 %. In 2010 and during the IP, the Union industry tried to increase its prices, because of increased costs. This resulted in a further loss of market share, since the Union industry prices were constantly higher than the prices of dumped imports from the PRC. This situation led in particular to a significant deterioration in profitability, sales volume and market share of the Union industry.

(94)

Prices of dumped imports from the PRC decreased in the period considered. Even if in the period from 2009 to the IP, import price from the PRC increased by 23 %, they consistently remained significantly lower than sales prices of the Union industry during the period considered and in particular during the IP, thus keeping price in the Union market.

(95)

Based on the above it is concluded that the massive increase of the dumped imports from the PRC at prices constantly undercutting those of the Union industry have had a determining role in the material injury suffered by the Union industry, which is reflected in particular in its poor financial situation, in the drop in sales volume and in market share and in the deterioration of most of the injury indicators.

(96)

As clarified in recital 58 above, Eurostat import statistics could not be used in this investigation since the CN codes covering aluminium radiators and elements and sections thereof include all sorts of aluminium products. In the absence of any other reliable information, it was established on basis of the complaint, that apart from the PRC, there is no other non-EUcountry which produced and exported aluminium radiators to the EU during the period considered.

(97)

The economic crisis partially explains the contraction of the Union consumption in particular in 2009 and 2010. However, it is noteworthy that in a situation of decreasing consumption in the period considered and in a situation of increasing consumption in the period between 2009 and the IP, the volume of dumped imports from the PRC at prices undercutting those of the Union industry kept on increasing in the Union market.

(98)

The performances of the low-priced dumped imports contrast with those of the Union industry. Indeed, the investigation showed that as from 2009 and up to the IP, even if Union consumption increased in line with the general economic recovery, the Union industry market share kept decreasing. Even if production volume tended to increase, there was a surplus which had to be put into the stocks.

(99)

Under normal economic conditions and in the absence of strong price pressure and surge in import of dumped products, the Union industry might have had some difficulty in coping with the decrease in consumption and the increase in fixed costs per unit due to the decreased capacity utilisation it experienced. However, the investigation clearly suggests that the dumped imports from the PRC have intensified the effect of the economic downturn. Even during the general economic recovery, the Union industry was unable to recover and to regain sales volumes and the market share lost throughout the period considered.

(100)

Therefore, although the economic crisis may have contributed to the Union industry’s poor performance, overall, it cannot be considered to have an impact such as to break the causal link between the dumped imports and the injurious situation of that industry suffered in particular during the IP.

(101)

The investigation showed that the cost to produce aluminum radiators is directly linked to the price development of aluminum, the main raw material used to produce this product. Even if, as shown in table 8 above, Union industry cost of production decreased significantly in 2009, sales prices decreased at the same pace. In 2010 and during the IP, costs increased more than sale prices and thus did not allow for a recovery, in particular in the profitability of the Union industry. This situation occurred when the import price of the products imported from the PRC were consistently undercutting those of the Union industry.

(102)

In a market economy, it could be expected that prices on the market would regularly adapt to reflect the development in the various components of the cost of production. This did however not happen. The investigation confirmed that dumped imports from the PRC, undercutting the Union industry prices, continued to depress the Union market prices and thus prevented the Union industry from keeping its market share and adjusting prices to cover for its costs and achieve a reasonable profit level in particular during the IP.

(103)

The increase in raw material prices was therefore not such as to break the causal link between the dumped imports and the material injury suffered by the Union industry in particular during the IP.

(104)

The export activity of the Union industry constituted an important share of its business during the period considered. The core exports markets of the Union industry were mainly Russia and other East European countries where the products sold were of relatively lower quality and were thus cheaper compared to the radiators sold in the Union market.

(105)

The above table shows that the export turnover of the Union industry decreased in the period considered. This may partly be explained by the fact that, as available information suggests, growing export volumes of aluminium radiators from the PRC were also present in those export markets.

(106)

Nevertheless, it is clear that the export activity allowed the Union industry to achieve economies of scales and thus to reduce its overall costs of production. Hence, it can reasonably be considered that the export activity of the Union industry could not be a potential cause of the material injury it had suffered in particular during the IP. Any negative impact the export sales decrease may have had on the Union Industry, it cannot be such as to break the causal link between that injury and the low-priced dumped imports from China.

(107)

The above analysis demonstrated that there was a substantial increase in the volume and market share of the dumped imports originating in the PRC in the period considered and also from the period from 2009 up to the IP. It was found that these imports were constantly undercutting the prices charged by the Union industry on the Union market and in particular during the IP.

(108)

This increase in volume and market share of the low-priced dumped imports from the PRC was continuous and coincided with the negative development in the economic situation of the Union industry. This situation worsened in the IP, when the Union industry was unable to regain its lost market share and profitability and other financial indicators such as cash flow and return on investments reached their lowest levels.

(109)

The analysis of the other known factors, including the economic crisis, showed that any negative impact of these factors cannot be such as to break the causal link established between the dumped imports from the PRC and the injury suffered by the Union industry.

(110)

Based on the above analysis, which has properly distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped exports, it was provisionally concluded that the dumped exports from the PRC have caused material injury to the Union industry within the meaning of Article 3(6) of the basic Regulation.

(111)

In accordance with Article 21 of the basic Regulation, the Commission examined whether, despite the provisional conclusion on injurious dumping, compelling reasons existed for concluding that it is not in the Union interest to adopt measures in this particular case. The analysis of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, and users of the product concerned.

(112)

The Union industry has suffered material injury caused by the dumped imports from the PRC. It is recalled that most of the injury indicators showed a negative trend during the period considered. In the absence of measures, a further deterioration in the Union industry’s situation appears unavoidable.

(113)

It is expected that the imposition of provisional anti-dumping duties will restore effective trade conditions on the Union market, allowing the Union industry to align the prices of the product investigated to reflect the costs of the various components and the market conditions. It can also be expected that the imposition of provisional measures would enable the Union industry to regain at least part of the market share lost during the period considered, with a further positive impact on its profitability and overall financial situation.

(114)

Should measures not be imposed, further losses in market share could be expected and the Union industry would remain loss-making. This would be unsustainable in the medium to long-term. In view of the losses incurred and the high level of investment in production made at the beginning of the period considered it can be expected that most Union producers would be unable to recover their investments, should measures not be imposed.

(115)

It is therefore provisionally concluded that the imposition of anti-dumping duties would be in the interest of the Union industry.

(116)

There was no cooperation from users in this investigation.

(117)

As regards importers, only one importer located in Poland cooperated in this investigation by responding to the questionnaire and accepting a verification visit. This importer had small losses for the product concerned during the IP. However, the business of the product concerned is relatively small in relation to the total company’s activities. Therefore, imposition of measures is not likely to have a severe impact on its total profits.

(118)

In view of the above, it is provisionally concluded that based on the information available concerning the Union interest, there are no compelling reasons against the imposition of provisional measures on imports of the product concerned originating in the PRC.

(119)

In view of the conclusions reached with regard to dumping, injury, causation and Union interest, provisional anti-dumping measures should be imposed in order to prevent further injury being caused to the Union industry by the dumped imports.

(120)

For the purpose of determining the level of these measures, account was taken of the dumping margins found and the amount of duty necessary to eliminate the injury sustained by the Union industry, without exceeding the dumping margins found.

(121)

When calculating the amount of duty necessary to remove the effects of the injurious dumping, it was considered that any measures should allow the Union industry to cover its costs of production and to obtain a profit before tax that could be reasonably achieved by an industry of this type in the sector under normal conditions of competition, i.e. in the absence of dumped imports, on sales of the like product in the Union. It is considered that the profit that could be achieved in the absence of the dumped imports should be based on the average pre-tax profit margin of the sampled Union producers in the year 2008. It is thus considered that a profit margin of 7, 4 % of turnover could be regarded as an appropriate minimum which the Union industry could have expected to obtain in the absence of injurious dumping.

(122)

On this basis, a non-injurious price was calculated for the Union industry for the like product. The non-injurious price was obtained by adjusting the sales prices of the sampled Union producers by the actual profit/loss made during the IP and by adding the above mentioned profit margin.

(123)

The necessary price increase was then determined on the basis of a comparison of the weighted average import price of the cooperating exporting producers in the PRC, as established for the price undercutting calculations, with the non-injurious price of the products sold by the Union industry on the Union market during the IP. Any difference resulting from this comparison was then expressed as a percentage of the average total CIF import value.

(124)

In the light of the foregoing, it is considered that, in accordance with Article 7(2) of the basic Regulation, provisional anti-dumping measures should be imposed in respect of imports originating in the PRC at the level of the lower of the dumping and the injury margins, in accordance with the lesser duty rule.

(125)

On the basis of the above, the anti-dumping duty rates have been established by comparing the injury elimination margins and the dumping margins. Consequently, the proposed anti-dumping duty rates are as follows:

(126)

The individual company anti-dumping duty rates specified in this Regulation were established on the basis of the findings of the present investigation. Therefore, they reflect the situation found during that investigation with respect to these companies. These duty rates (as opposed to the country-wide duty applicable to ‘all other companies’) are thus exclusively applicable to imports of products originating in the PRC and produced by the companies and thus by the specific legal entities mentioned. Imported products produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, cannot benefit from these rates and shall be subject to the duty rate applicable to ‘all other companies’.

(127)

Any claim requesting the application of these individual company anti-dumping duty rates (e.g. following a change in the name of the entity or following the setting up of new production or sales entities) should be addressed to the Commission (4) forthwith with all relevant information, in particular any modification in the company’s activities linked to production, domestic and export sales associated with, for example, that name change or that change in the production and sales entities. If appropriate, the Regulation will accordingly be amended by updating the list of companies benefiting from individual duty rates.

(128)

In the interest of sound administration, a period should be fixed within which the interested parties which made themselves known within the time limit specified in the notice of initiation may make their views known in writing and request a hearing. Furthermore, it should be stated that the findings concerning the imposition of duties made for the purposes of this Regulation are provisional and may have to be reconsidered for the purpose of any definitive measures,