(1)

On 10 August 2012, the European Commission (‘the Commission’) announced, by a notice published in the Official Journal of the European Union (2) (‘the notice of initiation’), the initiation of an anti-dumping proceeding (‘the anti-dumping proceeding’) with regard to imports into the European Union (‘the Union’) of certain stainless steel wires originating in India (‘the country concerned’).

(2)

On the same day, the Commission announced by a notice published in the Official Journal of the European Union (3), the initiation of an anti-subsidy proceeding with regard to imports into the Union of certain stainless steel wires originating in India and commenced a separate investigation (‘the anti-subsidy proceeding’).

(3)

The anti-dumping proceeding was initiated following a complaint lodged on 28 June 2012 by the European Confederation of Iron and Steel Industries (Eurofer) (‘the complainant’) on behalf of producers representing more than 50 % of the total Union production of certain stainless steel wires. 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.

(4)

The Commission officially advised the complainant, other known Union producers, the known exporting producers, known importers and users, and the Indian authorities of the initiation of the investigation.

(5)

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. All interested parties, who so requested and showed that there were particular reasons why they should be heard, were granted a hearing.

(6)

In view of the large number of exporting producers in the country concerned, unrelated importers and Union producers involved in the proceeding and in order to complete the investigation within the statutory time limits, the Commission announced in the notice of initiation that it had decided to limit to a reasonable number the exporting producers in the country concerned, unrelated importers and Union producers that would be investigated by selecting a sample in accordance with Article 17 of the basic Regulation (this process is also referred to as ‘sampling’).

(7)

In order to enable the Commission to decide whether sampling would be necessary and, if so, to select a sample, all exporting producers in the country concerned were requested to make themselves known to the Commission and to provide information specified in the notice of initiation.

(8)

In total, 18 exporting producers, some belonging to the same group, provided the requested information, agreed to be included in the sample and seven of them asked for individual examination in case they would not be included in the sample. 15 of these cooperating companies reported exports of stainless steel wires to the Union during the investigation period. Therefore, the sample was chosen on the basis of the information submitted by these 15 exporting producers.

(9)

In accordance with Article 17 of the basic Regulation, the Commission selected a sample based on the largest representative volume of exports of the product concerned to the Union which could reasonably be investigated within the time available. The sample selected consisted of two individual companies and one group of companies consisting of four related companies, together representing more than 63 % of the total volume of exports to the Union of the product concerned.

(10)

In accordance with Article 17(2) of the basic Regulation, all known exporting producers concerned and the authorities of the country concerned were consulted on the selection of a representative sample. No comments to the selection of the sample were made.

(11)

As mentioned in recital 9 above, the sample was limited to a reasonable number of companies which could be investigated within the time available. The companies investigated for the purpose of the investigation are listed in recital 19 below.

(12)

Moreover, as mentioned in recital 8 above, initially 7 requests for individual examination were received. Hence it was considered that at this stage the individual examination would be unduly burdensome and would prevent the timely completion of the investigation.

(13)

However, the requests made by exporters that submitted the necessary information within the time limits will be examined in the remainder of the investigation.

(14)

The Commission announced in the notice of initiation that it had provisionally selected a sample of Union producers. This sample initially consisted of five producers that were known to the Commission prior to the initiation of the investigation to produce stainless steel wires in the Union. The Commission selected the sample on the basis of the sales, production volume and geographical location. Interested parties were also invited in the notice of initiation to make their views known on the provisional sample. No comment was received on the proposed sample. The analysis of the questionnaire replies revealed that one selected Union producer had a related company also involved in the manufacturing and sales of stainless steel wires. This related company was thus also included in the sample. Thus, the six sampled Union producers accounted for 46,5 % of the estimated total Union production The sample is considered to be representative of the Union industry.

(15)

In order to enable the Commission to decide whether sampling would be necessary and, if so, to select a sample, all unrelated importers were requested to make themselves known to the Commission and to provide information specified in the notice of initiation.

(16)

A total of nine unrelated importers provided the requested information and agreed to be included in the sample. The Commission selected a sample of three companies accounting for 23,8 % of Indian imports into the Union during the investigation period on the basis of the largest volume of imports into the Union. However, two of the importers selected in the sample did not submit questionnaire replies. Therefore, sampling at this stage of the investigation could not be applied and cooperation will be again sought from importers in the remainder of the investigation.

(17)

Questionnaires were sent to the three sampled (groups of) exporting producers in India and to the exporting producers which requested individual examination, to the six sampled Union producers, to the three sampled unrelated importers and to nine known users.

(18)

Questionnaire replies were received from the three sampled (groups of) exporting producers in India as well as from two of those exporting producers which had requested individual examination, the six sampled Union producers, one unrelated importer and three users.

(19)

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

(20)

The investigation of dumping and injury covered the period from 1 April 2011 to 31 March 2012 (‘the investigation period’ or ‘IP’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2009 to the end of the investigation period (‘period considered’).

(21)

The product concerned is wire of stainless steel containing by weight:

currently falling within CN codes 7223 00 19 and 7223 00 99 and originating in India.

(22)

One party claimed that there exist so called ‘highly technical’ product types which are different from the other types of the product concerned produced in India but also in the Union. They further alleged that unlike most types exported from India to the Union, the technical types are not commodities but specific product types produced for specific uses in certain steel grades and certain diameters and should not be covered by the investigation.

(23)

At this stage, it appears that the technical types were part of the product definition and they have similar basic physical, chemical and technical characteristics compared to other types of the product concerned. Moreover, it appears that these types are also produced in by Union producers, hence the technical types are covered by the scope of the investigation.

(24)

The investigation that the product concerned and the product produced and sold on the domestic market of India, as well as the product produced by the Union industry and sold on the Union market have the same basic physical, chemical and technical characteristics and uses. They are therefore provisionally considered to be alike within the meaning of Article 1(4) of the basic Regulation.

(25)

During the verification visits at the premises of the three sampled Indian exporting producers and the subsequent analysis of the collected information, it was found that they all had submitted some information which could not be considered to be reliable.

(26)

In the case of one exporting producer, the Commission had found that the costs reported in its questionnaire reply was not in line and could not be reconciled with the costs reported in the producer’s internal accounting system.

(27)

The exporting producer alleged that the observed differences between the costs reported to the Commission and the costs found in the internal accounting system during the verification visit were due to errors in the registration of the transactions and to differences in accounting methods, in particular with regards to the raw material consumption. The exporting producer argued that the data in the internal accounting system was not reliable and should not be used for the purposes of the investigation. Although the exporting producer has been using the same accounting system for several years, it claimed that the Commission should base its analysis on the costs reported in the questionnaire reply, not on the cost data contained in the company’s internal accounting system.

(28)

It should be noted that, whilst the data contained in the internal accounting system was consistent with the audited financial statements provided by the exporting producer, it has not been possible to establish during the verification visit the reconciliation and thus the link between the costs tables specifically prepared for the current investigation and the data contained in the internal accounting system. Hence, in accordance with Article 18 of the basic Regulation, it is considered that the information found in the accounting system of the exporting producer should be used for the purpose of this anti-dumping investigation.

(29)

For this reason, the Commission provisionally adjusted the cost data provided by the said exporting producer in its questionnaire reply by using the facts available in its internal accounting system.

(30)

In the case of a second exporting producer, the Commission found that the purchases and the consumption of raw materials reported to the Commission in its questionnaire reply were not supported by the data found in the producer’s inventories management system. In particular, it appeared that the distribution per steel grades was different in the two sources. The Commission notes that the steel grade is a key factor in the determination of the cost of the final product. Unreliable information concerning the steel grade could seriously distort the calculations of costs and sales prices of individual product types and could therefore be misleading.

(31)

The exporting producer claimed however that the computer files containing the purchases of raw material collected by the Commission during the verification visit were incomplete, because additional purchases of raw material had been made by other units in the company, but those purchases had not been reported and were not included in the computer files collected during the verification visit and examined by the Commission. Furthermore, the exporting producer claimed that the observed discrepancies in the quantities of steel grades were due to the fact that some steel grades were partly overlapping with each other and that some parts of the production process were not traceable on the level of individual steel grades.

(32)

The Commission however notes that the above claims made by the company relating to the additional purchases of raw material are not sufficient to explain the observed discrepancies at the level of individual steel grades. The Commission also notes that the company has alleged that it is not possible to make an exact tracing by individual steel grades in all the stages of the production process. This argument further undermines the reliability of the reporting system of steel grades as a whole. The information provided concerning steel grades must be provisionally considered misleading.

(33)

The Commission considers that the reported distribution of raw material by steel grade is not reliable and should be provisionally disregarded and that the determinations should be made on the basis of facts available pursuant to Article 18 of the basic Regulation. Due to the unreliability of the reporting system as a whole, it was not possible to make the determinations on the basis of any of the reported steel grades. Therefore the total consumption of all raw materials taken as a whole, without considering the distribution by steel grade, was used in calculating an overall dumping margin for all products.

(34)

In the case of the third exporting producer, the Commission also found during the verification visit that the flows of raw materials reported in the questionnaire reply were not consistent with the data contained in the producer’s accounting system. It appeared that the distribution per steel grades was different in the two sources.

(35)

The exporting producer, while admitting some errors in its questionnaire reply, alleged that the differences in the overall quantities of raw material could be reconciled by taking into account the changes in inventories. However, the company also alleged that partly overlapping steel grades make it impossible to make an exact reconciliation as per each individual steel grade. This argument further undermines the reliability of the reporting system of steel grades as a whole. The information provided concerning steel grades must be considered misleading.

(36)

The Commission considers that the reported distribution of raw material by steel grade is not reliable and should be provisionally disregarded and that the determinations should be made on the basis of facts available pursuant to Article 18 of the basic Regulation. Due to the unreliability of the reporting system as a whole, it was not possible to make the determinations on the basis of any of the reported steel grades. Therefore the total consumption of all raw materials taken as a whole, without considering the distribution by steel grade, was used in calculating an overall dumping margin for all products.

(37)

Each exporting producer received an individual letter outlining the specific and detailed reasons for which it was considered that some of the data provided in the questionnaire reply could not be accepted. They were also informed that the Commission intended to make provisional findings on the basis of facts available pursuant to Article 18 of the basic Regulation.

(38)

All three exporting producers were given the opportunity to comment and requested hearings which were granted to them. They also provided their observations regarding the possible application of Article 18 of the basic Regulation in writing. Despite the explanations obtained from the companies, they could not satisfactorily clarify the issues described above which led to the replacement of some of the data by best facts available.

(39)

For the determination of normal value, the Commission first examined for each sampled exporting producer whether the total domestic sales volume of the like product to independent customers was representative, i.e. whether the total volume of such sales represented at least 5 % of the total export sales volume of the product concerned to the Union during the IP in accordance with Article 2(2) of the basic Regulation. The Commission found that the overall sales by each sampled producer of the like product on the domestic market were representative.

(40)

The Commission subsequently identified for the sampled producers having overall representative domestic sales those product types sold domestically which were identical or directly comparable with the types sold for export to the Union.

(41)

However, as explained in Section 3.1, for two of the exporting producers the comparisons described hereunder were made on the basis of the total of all products, instead of comparing individual product types separately.

(42)

For each product type sold by each sampled producers on its domestic market and found to be identical or comparable with the product type sold for export to the Union, it was examined whether the domestic sales were sufficiently representative for the purposes of Article 2(2) of the basic Regulation. Domestic sales of a particular product type were considered sufficiently representative when the total volume of that product type sold on the domestic market to independent customers during the IP represented at least 5 % of the total volume of the identical or comparable product type sold for export to the Union.

(43)

The Commission subsequently examined whether the domestic sales of each sampled producer could be considered as being sold in the ordinary course of trade pursuant to Article 2(4) of the basic Regulation. This was done by establishing the proportion of profitable sales to independent customers on the domestic market during the IP.

(44)

Where the sales volume of a product type, sold at a net sales price equal to or above the calculated cost of production, represented more than 80 % of the total sales volume of that type, and where the weighted average sales price was equal to or higher than the unit cost of production, normal value was based on the actual domestic price calculated as the weighted average of the prices of all domestic sales of that type made during the IP, irrespective of whether those sales were profitable or not.

(45)

Where the volume of profitable sales represented 80 % or less of the total sales volume of that type, or where the weighted average price of that type was below the unit cost of production, normal value was based on the actual domestic price calculated as the weighted average price of only the profitable domestic sales of that type made during the IP.

(46)

Where the product types were all sold at a loss, it was considered that they were not sold in the ordinary course of trade.

(47)

Where there were no sales of a like product in the ordinary course of trade or where a product type was not sold in representative quantities on the domestic market, the Commission constructed normal value in accordance with Article 2(3) and (6) of the basic Regulation.

(48)

Normal value was constructed by adding to the average cost of production during the investigation period, adjusted where necessary, the weighted average selling, general and administrative (‘SG&A’) expenses incurred and the weighted average profit realised by the sampled exporting producers on domestic sales of the like product, in the ordinary course of trade, during the investigation period. Where necessary, in particular as explained in Section 3.1 above, the cost of production and SG&A expenses were adjusted, before being used in the ordinary course of trade test and for constructing normal value.

(49)

Each company receives its individual detailed calculations used to determine their normal values and will be given the opportunity to comment.

(50)

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

(51)

Where the product concerned was directly exported to independent customers in the Union, the export price was established in accordance with Article 2(8) of the basic Regulation on the basis of export prices actually paid or payable.

(52)

Where export sales to the Union were made through a related company, the export price was established in accordance with Article 2(9) of the basic Regulation on the basis of the price at which the imported product was first resold to independent customers in the Union. In such cases, adjustments were made for all costs incurred between importation and resale, including duties and taxes, as well as for SG&A and profits. The related importer’s own SG&A costs were used and a reasonable profit margin was established on the basis of the profit margin attained by an independent importer of the product concerned.

(53)

The normal value and export price of the sampled exporting producers were compared on an ex-works basis.

(54)

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.

(55)

On this basis, adjustments were made for transport, ocean freight and insurance costs, handling loading and ancillary costs, packing costs, credit costs, discounts and commissions where demonstrated to affect price comparability.

(56)

As provided by Article 2(11) and (12) of the basic Regulation, for each sampled company the weighted average normal value established for the like product was compared with the weighted average export price of the product concerned.

(57)

In line with the provisions of Article 9(6) of the basic Regulation, due to the application of Article 18 of the basic Regulation to all three sampled exporting producers, the dumping margin of the cooperating exporting producers not included in the sample could not be established on the basis of the average dumping margin of the sampled companies.

(58)

In this case, it was considered appropriate to provisionally establish the dumping margin applicable to the cooperating non-sampled exporting producers based on their export price, established on the basis of Eurostat import statistics, and the average normal value established for the sampled Indian producers insofar as the average normal value had not been affected by the application of Article 18 of the basic Regulation.

(59)

On this basis, the dumping margin calculated for the cooperating companies not included in the sample was provisionally established at 28,0 %.

(60)

With regard to all other exporting producers in India, the Commission first established the level of cooperation. To this end, a comparison was made between the total export quantities indicated in the sampling replies and the total imports from India as derived from the Eurostat import statistics. Since the level of cooperation was high, the residual dumping margin was set at the level of the highest dumping margin established for the sampled exporting producers.

(61)

On this basis, the country-wide level of dumping was provisionally established at 32,3 %.

(62)

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

(63)

The like product was manufactured by 27 Union producers. They are deemed to constitute the Union industry within the meaning of Articles 4(1) and 5(4) of the basic Regulation and will hereinafter be referred to as the ‘Union industry’.

(64)

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

(65)

It should be mentioned that one Union producer related to an Indian exporting producer and which opposed the initiation of the investigation is also included in the definition of the Union industry.

(66)

On this basis, the total Union production was estimated to be around 139 141 tonnes during the IP. This figure includes the production of all Union producers that made themselves known and the estimated production volume of the rest of the Union producers, which did not come forward in the investigation.

(67)

As indicated in recital 14 above six Union producers were included in the sample representing 46,5 % of the estimated total Union production of the like product.

(68)

Union consumption was established on the basis of the total sales volume of the Union industry on the Union market and the total imports. The year of 2009 was marked by unprecedented high prices of nickel, the main raw material used to produce the product concerned and the like product, and the global negative effects of the financial crisis, which together led to a particularly low level of Union consumption in that year. However, the market situation improved, as shown in the table below and Union consumption increased by 50 % between 2009 and the IP.

(69)

During the period considered the dumped imports into the Union from the cooperating exporting producers were found to have developed in terms of volume and market share as follows:

(70)

Import volumes from India increased considerably by 110 % over the period considered. The increase was particularly marked between 2009 and 2010 when imports from India surged by 72 % and when the Union consumption increased by 42 %. However, whilst consumption only increased by 5 % between 2010 and the IP, the import volume from India continued increasing significantly by 22 % in the same period.

(71)

The market share of dumped imports from India has increased significantly by 40 % during the period considered.

(72)

As explained above in recital 22 one party expressed concerns regarding the fact that the anti-dumping questionnaire did not allow to distinguish in particular certain types of the product concerned, which in their view are different.

(73)

This concern was addressed in the questionnaire by enlarging the so-called product control numbers (PCN) in order to clearly identify the relevant types in the investigation in particular for the price comparison exercise. At this stage, the investigation revealed that Indian exporting producers only exported limited quantities of these highly technical types. Nevertheless, it is pointed that the changes made in the PCN ensured that prices of certain product types were compared directly with the prices of similar product types.

(74)

The table below shows the average price of dumped imports:

(75)

The average import prices from India increased by 35 % during the period considered, but they remained below the sales prices of the Union industry during the same period (see recital 93 below). This explains the surge in import volume and the significant increase by 40 % in the market share held by Indian exporters in the same period.

(76)

In order to determine the 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-work level, were compared to the corresponding weighted average prices per product type of the dumped imports from the sampled Indian producers to the first independent customer on the Union market, established on a CIF basis, with appropriate adjustments for post-importation costs.

(77)

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 15 % by the dumped imports from the country concerned on the Union market. The lower prices of the dumped imports compared to the Union ones during the period considered, explain the significant increase in Indian import volume and in the market share held by the imports from India between 2009 and the IP.

(78)

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

(79)

As mentioned in recital 14, sampling was used for the examination of the possible injury suffered by the Union industry.

(80)

For the purpose of the injury analysis, the Commission distinguished between macroeconomic and microeconomic injury indicators. In this regard, the economic situation of the Union industry is assessed on the basis of (a) macroeconomic indicators, namely indicators such as production, production capacity, capacity utilisation, sales volume, market share and growth, employment, productivity, magnitude of the actual dumping margin and recovery from past dumping, for which the data was collected at the level of the total Union industry and on the basis of (b) microeconomic indicators, namely indicators such as average unit prices, unit cost, profitability, cash flow, investments, return on investment and ability to raise capital, stocks and labour costs, for which the data was collected at the level of the sampled Union producers.

(81)

It is noteworthy that all available information concerning the Union industry including information provided in the complaint, data collected from the Union producers before and after the initiation of the investigation, and the questionnaire responses of the sampled Union producers, was used in order to establish the macroeconomic indicators and in particular the data pertaining to the non-sampled Union producers.

(82)

The microeconomic indicators were established on the basis of information provided by the sampled Union producers in their questionnaire replies.

(83)

The trends for Union production, production capacity and the utilization of the capacity developed as follows during the period considered:

(84)

Union production increased by 32 % during the period considered reflecting to a certain extent the positive evolution of consumption. Production volumes, however, stagnated between 2010 and the IP.

(85)

Whilst capacity utilization improved and increased by 13 percentage points during the period considered, production capacity remained fundamentally stable during the period considered.

(86)

The trends concerning sales volumes, market share and growth developed as follows during the period considered:

(87)

After a considerable increase between 2009 and 2010, in the context of an increasing consumption, the sales volume to unrelated customers slowed down and did not benefit from the continued increase in demand (4,9 % between 2010 and 2011). This is also reflected in the upward trend of closing stocks, which increased overall by 41 % during the period considered as shown in recital 100 below.

(88)

Furthermore, the Union industry market share decreased by 4,7 percentage points during the period considered despite the steady increase of 50 % in consumption.

(89)

As indicated in recital 68 above, the Union consumption was growing with 50 % between 2009 and the IP, while the volume of dumped imports increased significantly, by 110 % during the same period, as indicated in recital 70 above. The growth of the Union market between 2009 and the IP was therefore partially absorbed by dumped imports, while the Union sales of the Union industry grew by 40 % during the same period. This shows that Union industry could not fully benefit from the growth in Union consumption due to the increasing market share of dumped imports.

(90)

Notwithstanding the difficult financial situation described in recitals 94-99 below, the employment of the Union industry remained relatively stable during the period considered. Given the increased production volume (see recital 84 above), productivity as measured as output in tonnes per person employed per year increased by 30 % during the same period suggesting that the Union industry made significant efforts to improve its efficiency.

(91)

The dumping margins of three of the sampled Indian exporting producers are above the de minimis level (see recital 62 above). Given the sector of the product concerned, the volume, market share and prices of the dumped imports from India, discussed above, the impact on the Union industry of the actual dumping margin cannot be considered to be negligible.

(92)

It is recalled that in 1999 anti-dumping and anti-subsidy measures (4) were imposed on the product concerned. However, given the time lap between the expiry of the measures that were introduced in 1999 and the current investigation, there is no data available to assess the effect of the past dumping. The investigation in any case did not bring forward any evidence that the industry is still recovering from past dumping practices.

(93)

The average sales prices of the sampled Union producers to unrelated customers in the Union increased by 34 % over the period considered. The rise reflects the general increase in the cost of raw material experienced by the industry during the same period. In 2011 and during the IP the Union producers could only moderately increase the prices to cover the increasing costs of production, enough just to keep profitability slightly above 1 % in 2011 and at break-even level in the IP. Thus, as the figures show in the table above, even a significant increase in sales price did not allow the Union industry to achieve a reasonable level of profit.

(94)

During the period considered the Union producers’ cash flow, investment, return on investment and their ability to raise capital developed as follows:

(95)

The profitability of the sampled Union producers was established by expressing the pre-tax net profit of the sales of the like product to unrelated customers as a percentage of the relevant turnover. In 2009, the sampled Union producers were loss making but started to recover in 2010 in line with the increase by 50 % in consumption described in recital 68 above. However, even if profitability slightly increased, profit levels at 0,2 % were still far below a reasonable level of profitability in the steel sector. Indeed, the target profit margin was provisionally set at 5 %, because it is considered that it corresponds to the margin that could be reasonably achieved by an industry of this type in the sector of the product investigated under normal conditions of competition, i.e. in the absence of dumped imports, on sales of the like product in the Union as indicated by the Union industry. Furthermore this 5 % is a pre-tax profit margin which was considered as an appropriate minimum in other investigation into similar products in the same sector.

(96)

During the IP the sampled Union producers managed to break even; however, the price pressure exerted by dumped imports prevented them from aligning their prices with costs and thus to achieve satisfactory results. This situation is also explained by the fact that the product under investigation is considered to be a commodity and thus prices are the main factor which is driving customer’s choices.

(97)

Cash flow, which is the ability of the industry to self-finance its activities and which was calculated on the basis of operations, was negative until 2010. Although it improved in 2011, it decreased by 34 % between 2011 and the IP.

(98)

The evolution of profitability and cash flow during the period considered limited the ability of the sampled Union producers to invest in their activities and undermined their development. As a consequence the ability of the Union producers to raise capital and finance costs was hindered. Although the sampled Union producers managed to make some investments related to the like product in 2010, they dropped thereafter and in particular during the IP when they decreased by 51 % compared to 2010 levels. Moreover, even if the return on investment, expressed as the profit in percentage of the net book value of investments, became positive in 2011, it decreased considerably, by 5,9 percentage points during the IP, reaching a low level of 0,8 %.

(99)

In light of the above, it can be concluded that the financial performance of the sampled Union producers remained somewhat fragile during the IP.

(100)

The level of stocks of the sampled Union producers increased by 41 % during the period considered; their increase coincided with losses in market share, in particular during the IP.

(101)

The average labour costs of the sampled Union producers increased modestly during the period considered therefore they do not represent a determining factor in the rise of cost of production.

(102)

The investigation showed that the Union industry did not fully benefit from the increase in consumption during the period considered and in particular during the IP. Initially, between 2009 and 2010, most of the injury indicators pertaining to the Union industry largely improved but, subsequently, its economic situation stagnated or even deteriorated.

(103)

Indeed, in the context of a booming market, certain indicators such as production and sales volume of the Union industry increased significantly between 2009 and 2010 but then registered a slowdown from 2010 onwards. This situation occurred despite a continued increase in consumption.

(104)

Furthermore, the injury indicators related to the financial performance of the Union industry such as cash flow, investment and profitability were seriously affected by the price pressure which prevailed in the Union market, in particular during the IP. The Union industry was not able to increase its prices sufficiently in order to cover its costs of production between 2009 and 2010. Profitability was improving between 2009 and 2011 by making a slight profit of 1,4 % in 2011; however, it started deteriorating again during the IP when it reached only a breakeven level. This means that the ability of the Union industry to raise capital and recover was also undermined.

(105)

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

(106)

In accordance with Article 3(6) and (7) of the basic Regulation, the Commission examined whether the dumped imports from India had caused injury to the Union industry to a degree sufficient to be considered as material. Known factors other than the dumped imports, which could at the same time be injuring the Union industry, were also examined to ensure that the possible injury caused by these other factors was not attributed to the dumped imports.

(107)

The investigation showed that the Union consumption increased by 50 % over the period considered and at the same time the volume of imports originating in India more than doubled. On the other hand, the increase of dumped imports coincided with a slowdown in the sales volume of the Union industry to unrelated parties between 2010 and the IP.

(108)

With regard to the price pressure prevailing on the Union market during the period considered, it was found that the average import prices from India remained constantly lower than the average sales prices of the Union industry. By undercutting the Union industry on average by 15 % during the IP, Indian dumped imports increased their market share from 2009 to the IP by 40 %, whilst the market share of the Union industry decreased by 4,7 percentage points (from 67,6 % in 2009 to 62,9 % in the IP). The loss in market share reveals that the Union industry could only benefit from the increased consumption to a limited extent.

(109)

In view of the increasing cost of production, the Union industry tried to increase the unit price to unrelated customers as shown in recital 93 above. However, due to the price pressure exerted by the increasing volumes of dumped Indian imports as stated above, the price increase was not sufficient to sustain the growing costs, thus the Union industry could not reach satisfactory profit levels that could be considered necessary for this particular industry.

(110)

Based on the above, it is concluded that the surge of dumped imports from India at prices constantly undercutting those of the Union industry have had a determining role for the material injury suffered by the Union industry.

(111)

Apart from the dumped imports from India that constituted 48 % of all imports into the Union market during the IP, there were other sources of imports, including the People’s Republic of China, Korea and Switzerland, that had to be examined in the context of the causal link.

(112)

The investigation showed that the average sales prices of Korean and Swiss exporting producers remained above the sales prices of the Indian exporting producers and those of the Union industry during the period considered and in particular during the IP. Moreover, their market share decreased by 0,5 and 1,6 percentage points respectively during the IP.

(113)

The average price from the People’s Republic of China was below the price level of the Union industry and that country’s market share showed an increasing trend during the period considered. However, the investigation showed that the product mix represented by the Chinese imports is different and that the Chinese products are not in direct competition with the ones of the Union industry or those of Indian origin. It was therefore considered that the Chinese exports could not have had a significant impact on the core product types sold by the Union industry in the Union market. Hence, any effect the imports from China may have had on the injury suffered by the Union industry was minimal.

(114)

Nevertheless, an exporting producer claimed that imports of stainless steel wires from the People’s Republic of China, the Republic of Korea and Switzerland should have been included in the scope of this investigation.

(115)

In addition to the facts and considerations given above, it should be noted that, at initiation stage and up to now, there is no evidence of dumping, injury and or causal link which would have justified the initiation of an anti-dumping proceeding concerning imports originating in the abovementioned countries. Moreover, even if there would be evidence to justify investigating other imports, a difference in treatment which consists of opening an anti-dumping proceeding against Indian imports only would not qualify as discriminatory. The claim that these countries should have been included in the scope of the investigation is therefore not founded and should be rejected.

(116)

On the basis of above, it is concluded that exports from third countries did not contribute significantly to the injury suffered by the Union industry.

(117)

The total exports of the product concerned by the Union industry represented 8,5 % of total production in the IP. This picture is mirrored by exports to unrelated customers by the sampled Union producers whose exports represented 7 % of production in the IP and prices were 36 % higher than the one in the EU market in the same period. Based on this, it can be concluded that the export activity of the Union industry could not be a potential cause of material injury.

(118)

As mentioned in recital 68 above, consumption in 2009 was particularly low due to the exceptional high price level of nickel and the effects of the economic crisis. This situation certainly explains the particularly bad financial state of the Union industry in 2009. However, it is noteworthy that in the situation of growing consumption from 2010 onwards the performances of the low-priced dumped imports contrast with that of the Union industry.

(119)

The investigation showed that even during the general economic recovery, the Union industry was unable to benefit from the growing consumption and was losing market share throughout the period considered, whereas the dumped Indian exports gained more market share.

(120)

Therefore, although the economic crisis and the increase in the prices of the raw materials 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 material injury that the Union industry suffered during the IP.

(121)

It has been demonstrated that there was a substantial increase in the volume and market share of the dumped imports originating in India in the period considered (by 110 % and by 40 % respectively). In addition, 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 (on average by 15 %).

(122)

This increase in volume and market share of the dumped imports from India coincided with the slow development of the financial situation of the Union industry in particular as of 2010. Thus, despite the recovery in consumption, the Union industry was unable to pass on the increase in cost of production to its customer to a satisfactory level and consequently financial indicators such as profitability, cash flow and investment remained at low levels.

(123)

The examination of the other known factors which could have caused injury to the Union industry revealed that these factors were not such as to break the causal link established between the dumped imports from India and the injury suffered by the Union industry.

(124)

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

(125)

In accordance with Article 21 of the basic Regulation it has been examined whether, despite the provisional finding of injurious dumping, compelling reasons exist 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.

(126)

The Union industry is composed of 27 known producers representing all of the Union production of the like product. The producers are located in different Member States of the Union, employing directly 1 747 people in relation to the like product during the IP.

(127)

One Union producer, representing a relatively small share of the Union production and having a related company in India opposed the initiation of the investigation. As mentioned in recital 22, it also argued that the highly technical products should not be covered and that it was not in the Union interest to impose the same measures on this product type.

(128)

As mentioned in recital 72 this concern was addressed in the questionnaire by enlarging the PCNs which clearly identified these types in the investigation. However, at this stage, the investigation revealed that highly technical products were covered by the investigation and that Indian exporting producers only exported limited quantities of these product types. Hence, the concerns expressed by this producer were not considered to be founded and its claim was rejected.

(129)

It has been established that the Union industry suffered material injury caused by the dumped imports from India. It is recalled that the Union industry could not fully benefit from the growing consumption and the financial situation of the Union industry remained fragile.

(130)

It is expected that the imposition of anti-dumping duties will restore fair trade conditions on the Union market, allowing the Union industry to align its prices of the like product to the costs of production.

(131)

It can also be expected that the imposition of measures will enable the Union industry to regain at least part of the market share lost during the period considered, with a positive impact on its profitability and overall financial situation. The imposition of measures would enable the industry to maintain and further develop its efforts to be cost efficient.

(132)

Should measures not be imposed, further losses in market share could be expected and the Union industry’s profitability would deteriorate.

(133)

It is, therefore, provisionally concluded that the imposition of anti-dumping measures on imports originating in India would be in the interest of the Union industry.

(134)

Questionnaires were sent to nine users in the Union. Only three replied to the questionnaires representing around 6 % of total imports from India of the product concerned during the IP. They are present in sectors regarding food processing including commercial kitchens and catering, home appliances, automotive industry.

(135)

On average, purchases from India constituted around 67 % of their total purchases of the product concerned, and India represented the exclusive source of supply only for one user. During the IP, the average percentage of the turnover incorporating the product concerned represented 54 % of their total turnover.

(136)

The investigation showed that, during the IP, the average profitability of all cooperating users in the sectors which use the product concerned was above 9 % on turnover.

(137)

The likely effect of the proposed measures was assessed on the basis of questionnaire replies received from the users and the total Union market for the product concerned and the like product. Assuming the worst case scenario for the Union market, i.e. that no price increase could be passed on to the distribution chain and that the users would continue purchasing from India in previous volumes, the impact of the duty on the users’ profitability would mean a decrease of around 1,2 percentage points.

(138)

It has to be noted that one user had a neutral position regarding the investigation because it considers that the imposition of measures will have no significant effect on the market prices as the potential price increase would be absorbed by the distributors.

(139)

Another user expressed concerns that, if imposed, measures would hit also certain product types that are no longer produced in the Union. The investigation showed, however that the product types referred to by the said user are still produced in the Union and that the demand of those types of stainless steel grades is not significant. Moreover, it should be noted that the Union producers did not produce at full capacity during the period considered, and therefore if demand increases the production could follow accordingly.

(140)

It should be pointed out that since the product concerned is standardised in terms of sector and use, users could easily change their sources of supply as far as the product quality, or price is concerned. The imposition of measures should not preclude the possibility for importing the product concerned from other countries and even from India once trade distorting effects due to dumping have been removed.

(141)

Taken the above into consideration, even if certain users are likely to be impacted more negatively than others by the measures on Indian imports, the overall impact on users is considered limited.

(142)

Limited cooperation was obtained from unrelated importers. Nine importers provided sampling information, but only one cooperated. This company accounted for around 7 % of total imports from India during the IP. The company opposes the imposition of measures since India is by far its most important supplier. Although the imposition of measures would have a negative impact on its profitability due to the higher costs to be incurred, the importing company should be in a position to pass on at least part of the increased cost to its customers.

(143)

Furthermore, importers could shift to other sources including the Union industry and other exporting countries.

(144)

On this basis, it is provisionally concluded that the imposition of anti-dumping measures will not have substantially negative effects on the interest of importers.

(145)

In view of the above, it is provisionally concluded that overall, based on the information concerning the Union interest, there are no compelling reasons against the imposition of measures on imports of the product concerned from India.

(146)

Moreover, when considering the overall impact of the anti-dumping measures on the Union market, the positive effects, in particular on the Union industry, appear to outweigh the potential negative impacts on the other more limited interest groups.

(147)

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.

(148)

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 suffered by the Union industry.

(149)

When calculating the amount of duty necessary to remove the effects of the injurious dumping, it was considered that any measure should allow the Union industry to cover its costs of production and 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.

(150)

Therefore, the injury elimination level was calculated on the basis of a comparison of the weighted average price of the dumped imports, as established for the price undercutting calculations in recital 77 above, and the non-injurious price of the Union industry for the like product. The non-injurious price was established by adding to the cost of production a reasonable profit level. The target profit margin was provisionally set at 5 % as stated in recital 95.

(151)

Any difference resulting from this comparison was then expressed as a percentage of the average total CIF import price, see recital 154.

(152)

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

(153)

As concerns the parallel anti-subsidy investigation, pursuant to Article 14(1), of the basic Regulation and Article 24(1) second subparagraph of Council Regulation (EC) No 597/2009 of 11 June 2009 on protection against subsidised imports from countries not members of the European Community (5) no product shall be subject to both anti-dumping and countervailing duties for the purpose of dealing with the one and the same situation arising from dumping and from export subsidisation. All subsidy schemes addressed in the provisional anti-subsidy regulation (6) refer to export subsidisation. The relevant provisional anti-dumping duty rates of the cooperating producers concerned are therefore adjusted accordingly.

(154)

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

(155)

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 product concerned originating in India and produced by the companies and thus by the specific legal entities mentioned. Imported product concerned produced by any other company not specifically mentioned in the operative part of this Regulation with its name and address, 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’.

(156)

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 (7) 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.

(157)

In order to ensure a proper enforcement of the anti-dumping duty, the residual duty level should not only apply to the non-cooperating exporting producers but also to those producers which did not have any exports to the Union during the IP.

(158)

In the interests 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 anti-dumping duties made for the purposes of this Regulation are provisional and may have to be reconsidered for the purposes of any definitive findings,