Commission Implementing Regulation (EU) 2023/2659of 27 November 2023imposing a provisional anti-dumping duty on imports of certain polyethylene terephthalate originating in People’s Republic of China

was added to calculate the labour cost per hour.

3.2.4.4.

Electricity

(127) The Commission established the benchmark price for electricity using the quotation for companies (industrial users) in Malaysia published by the electricity company Tenaga Nasional Berhad

https://www.tnb.com.my/commercial-industrial/pricing-tariffs1

. The electricity benchmark was established based on the price for electricity published for the billing month of January 2014 and adjusted to the IP with the applicable energy inflation rate for Malaysia, published by the Word Bank

https://www.worldbank.org/en/research/brief/inflation-database

. To establish the electricity cost per kWh:

the rate of tariff E1 applicable to medium voltage general industrial tariff, was used for producers that reported electricity consumption as general;

the rate of tariff E2 applicable to medium voltage peak/off-peak industrial tariff, was used for producers that reported peak/off-peak electricity consumption.

The benchmark was established for each company based on respective peak and off-peak consumption of the sampled exporting producers when available. The resulting percentage was allocated to the peak and off-peak rates. If a sampled exporting producer did not distinguish peak and off-peak consumption, general tariffs were applied to their whole consumption.

3.2.4.5.

Natural gas

(128) The Commission established the benchmark for gas by using the prices of gas for companies (industrial users) in Malaysia published by the Malaysian Energy Commission (Suruhanjaya Tenaga)

https://www.st.gov.my/en/

.

(129) The monthly averages for the year 2021 available from the source

https://www.st.gov.my/en/web/consumer/details/2/10 and https://www.st.gov.my/contents/2021/Fuel%20Prices/11%20Nov/1-%20Regulated%20piped%20gas%20prices%20as%20of%20November%202021.pdf

were adjusted by the yearly energy CPI inflation rate

https://www.worldbank.org/en/research/brief/inflation-database

for Malaysia for the investigation period.

3.2.4.6.

Manufacturing overhead costs, SG&A, profit and depreciation

(130) According to Article 2(6a)(a) of the basic Regulation, the constructed normal value shall include an undistorted and reasonable amount for administrative, selling and general costs and for profits. In addition, a value for manufacturing overhead costs needs to be established to cover costs not included in the factors of production referred to above. In addition, a percentage factor of consumables including a number of raw materials, which represent only an insignificant share in the total raw material costs, was calculated over the costs of manufacturing for each producer.

(131) The manufacturing overheads incurred by the cooperating exporting producers were expressed as a share of the costs of manufacturing actually incurred by the exporting producers. This percentage was applied to the undistorted costs of manufacturing.

(132) For establishing an undistorted and reasonable amount for manufacturing overheads, SG&A, profit and depreciation, the Commission relied on the financial data for the financial year Q3 2021 to Q2 2022 for MPI as extracted from Orbis

Orbis | Company information across the globe | BvD (bvdinfo.com)

.

3.2.4.7.

Calculation

(133) Based on the above, the Commission constructed the normal value per product type on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

(134) First, the Commission established the undistorted manufacturing costs. The Commission applied the undistorted unit costs to the actual consumption of the individual factors of production of the cooperating exporting producer. These consumption rates provided by the applicant were verified during the verification. The Commission multiplied the usage factors by the undistorted costs per unit observed in the representative country, as described in Section 3.2.4.1.

(135) Once the undistorted manufacturing cost established, the Commission applied the manufacturing overheads, SG&A, profit and depreciation as noted in recitals (130) to (132). They were determined based on the financial statements of MPI as explained in recital (132).

(136) Manufacturing overheads were not separately identified in the available Profit and Loss account figures of MPI, so they are deemed to be included in is the costs of goods sold.

(137) To the costs of production established as described in the previous recital, the Commission applied SG&A and profit of MPI. SG&A expressed as a percentage of the costs of goods sold and applied to the undistorted costs of production, amounted to 2,51 %. The profit expressed as a percentage of the costs of goods sold and applied to the undistorted costs of production, amounted to 14,84 %.

(138) On that basis, the Commission constructed the normal value on an ex-works basis in accordance with Article 2(6a)(a) of the basic Regulation.

3.3.

Export price

(139) The sampled exporting producers exported to the Union directly to independent customers.

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

3.4.

Comparison

(141) The Commission compared the normal value and the export price of the sampled exporting producers on an ex-works basis.

(142) Where justified by the need to ensure a fair comparison, the Commission adjusted the normal value and/or the export price for differences affecting prices and price comparability, in accordance with Article 2(10) of the basic Regulation. Adjustments were made for transport, insurance, handling and loading, discounts, commission, credit costs and bank charges as well as for the differences in sales channels.

3.5.

Dumping margins

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

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

CompanyProvisional weighted average dumping margin

Sanfame Group:

Jiangsu Hailun Petrochemical Co., Ltd

Jiangsu Xingye Plastics Co., Ltd.

Jiangyin Xingu New Material Co., Ltd.

Jiangyin Xingtai New Material Co., Ltd.

16,0 %

China Resources Chemical Innovative Materials Group:

China Resources Chemical Innovative Materials CO., LTD

Zhuhai China Resources Chemical Innovative Materials Co., Ltd.

17,2 %

Wankai New Materials Group:

Wankai New Materials Co., Ltd.

Chongqing Wankai New Materials Technology Co. Ltd.

22,6 %

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

(146) On this basis, the provisional dumping margin of the cooperating exporting producers outside the sample is 19,7 %.

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

(148) The level of cooperation in this case is low because the imports of the cooperating exporting producers constituted around 76 % of the total exports to the Union during the IP, according to Eurostat statistics. On this basis, the Commission considered it appropriate to establish the residual dumping margin at the level of the highest margin found among the entities of the sampled exporting producers.

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

CompanyProvisional dumping margin

Sanfame Group:

Jiangsu Hailun Petrochemical Co., Ltd

Jiangsu Xingye Plastics Co., Ltd.

Jiangyin Xingu New Material Co., Ltd.

Jiangyin Xingtai New Material Co., Ltd.

16,0 %

China Resources Chemical Innovative Materials Group:

China Resources Chemical Innovative Materials CO., LTD

Zhuhai China Resources Chemical Innovative Materials Co., Ltd.

17,2 %

Wankai Group

Wankai New Materials Co., Ltd.

Chongqing Wankai New Materials Technology Co. Ltd.

22,6 %Other cooperating companies19,7 %All other companies24,2 %

1. INJURY

4.1.

Definition of the Union industry and Union production

(150) The like product was manufactured by around 60 producers in the Union during the investigation period. They constitute the Union industry within the meaning of Article 4(1) of the basic Regulation.

(151) The total Union production during the investigation period was established at around 3250 thousand tonnes. The Commission established the figure on the basis of all the available information concerning the Union industry from the complainant, the producers’ association Plastic Recyclers Europe (PRE) and Wood Mackenzie (Woodmac) industry experts. As indicated in recital (19), the sampled Union producers represented 35 % of the total Union production of the like product.

4.2.

Union consumption

(152) The Commission established the Union consumption on the basis of:

the verified sales of the sampled Union producers;

the sales of non-sampled cooperating Union PET producers, obtained from the complainant;

the sales of non-sampled Union rPET producers, obtained from the complainant, extrapolated on the basis of the proportion of rPET production (obtained on the basis of Woodmac data on flake consumption for (i) production of PET bottles (food/non-food grade) and (ii) PET production resulting from chemical recycling on the total Union vPET and rPET production);

the imports from the country concerned and from all other third countries, as recorded in the Comext database of Eurostat.

(153) The Commission also found that around 2 % of the total Union producers’ production (not reflected in the Union consumption and other economic indicators outlined in this Regulation) was destined for captive use in the period considered.

(154) Union consumption developed as follows:

Table 3

Union consumption (tonnes)

Source:

questionnaire replies of sampled Union producers, complaint, information provided by the complainant, Woodmac and Eurostat

201920202021Investigation periodTotal Union consumption3765652381557236299383893890Index10010196103

(155) On this basis, Union consumption increased slightly over the period considered.

4.3.

Imports from the country concerned

4.3.1.

Volume and market share of the imports from the country concerned

(156) The Commission established the volume of imports on the basis of the Eurostat database. The market share of the Chinese imports was established by comparing import volumes with the Union market consumption (see Table 3 above).

(157) Imports into the Union from the country concerned developed as follows:

Table 4

Import volume (tonnes) and market share

Source:

Eurostat, replies of sampled Union producers

201920202021Investigation periodVolume of imports from the PRC (tonnes)19294188041102865305055Index1004653158Market share5,1 %2,3 %2,8 %7,8 %Index1004555153

(158) The above table shows that in absolute figures the imports from the PRC increased during the period considered by 112115 tonnes. In parallel, the total market share of the Chinese imports into the Union increased by 2,7 percentage points (or by 53 %) during the period considered. In 2020, Chinese imports were severely affected by the COVID-19 pandemic but recovered in 2021 and almost tripled during the IP compared to the previous year. The majority of these imports was vPET, however four of the eight cooperating exporting producers indicated in their sampling reply that they had the capacity to produce rPET. Some of the cooperating exporting producers indicated that they exported rPET to the Union during the IP, however those represented less than 1 % of the Union exports by the cooperating exporting producers.

(159) One of the Union producersresold on the Union market PET that it imported from the PRC in the period considered (UI imports). The table below indicates the size of these imports during the period considered and the market share of the Chinese imports without these imports. This shows that even when excluding the Chinese imports by the Union industry, the market share of the Chinese imports increased by 1,0 – 1,5 % percentage points during the period considered.

Table 5

UI imports (tonnes) and Chinese market share without UI imports

Source:

Eurostat, replies of sampled Union producers

201920202021Investigation periodVolume of UI imports from the PRC (tonnes)[0 – 3000][4000 – 6000][7000 – 9000][50000 – 70000]Market share of Chinese imports without UI imports[5,0 – 5,5 %][2,0 – 2,5 %][2,5 – 3,0 %][6,0 – 6,5 %]

4.3.2.

Prices of the imports from the country concerned and price undercutting

(160) The Commission established the prices of imports on the basis of Eurostat data.

(161) The weighted average price of imports into the Union from the country concerned developed as follows:

Table 6

Import prices (EUR/ tonne)

Source:

Eurostat

201920202021Investigation periodPrice of imports from the PRC10137788841276Index1007787126

(162) The average price of the Chinese imports first decreased in 2020, reaching 778 EUR/tonne (from 1013 EUR/tonne in 2019) and then increased to 884 EUR/tonne in 2021 and to 1276 EUR/tonne during the investigation period. During the period considered, the increase of the average unit price of the dumped imports was 26 %. In 2021 and the IP, import prices were around 9 % and 13 % lower compared to Union prices, as shown in Table 10.

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

(a) 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; and

(b) the corresponding weighted average prices per product type of the imports from the sampled cooperating Chinese producers to the first independent customer on the Union market, established on a Cost, insurance, freight (CIF) basis, with appropriate adjustments for customs duties and post-importation costs.

(164) The price comparison was made for the same product type (in this case solely vPET) for transactions at the same level of trade. The result of the comparison was expressed as a percentage of the sampled Union producers’ theoretical turnover during the investigation period. On the basis of the above, the dumped Chinese imports were found to undercut the Union industry prices by 9,5 %.

4.4.

Economic situation of the Union industry

4.4.1.

General remarks

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

(166) As mentioned in recital (19), sampling was used for the determination of possible injury suffered by the Union industry.

(167) For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data contained in complaint and the complainant’s reply to a specific questionnaire. The data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

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

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

4.4.2.

Macroeconomic indicators

4.4.2.1.

Production, production capacity and capacity utilisation

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

Table 7

Production, production capacity and capacity utilisation

Source:

PET Europe questionnaire reply

201920202021Investigation periodProduction volume (tonnes)3173696332151933657953248786Index100105106102Production capacity (tonnes)3718259388052239565554043716Index100104106109Capacity utilisation85 %86 %85 %80 %Index10010010094

(171) During the period considered, the Union industry’s production volume increased by 2 %, despite the fact that several Union producers of (predominantly) vPET reduced their operating rate towards the end of the period considered. Such reduction of vPET output was offset by an increasing trend in production of rPET which reached 63 % (632000 tonnes in the IP up from 388000 tonnes in 2019) over the period considered, representing around 20 % of PET capacity and production of the Union industry in the IP.

(172) The reported capacity figures refer to installed capacity, which increased by 9 % during the period considered. This trend was due to a steady increase in production capacity at rPET production facilities, while the production capacity at vPET producers remained stable.

(173) The decrease in capacity utilisation rate by 6 % over the period considered was driven mainly by sharp drop in utilisation rate levels in the last quarter of the IP.

(174) CPCIF claimed that the Union PET production capacity was increasing, as a number of Union producers have expanded their facilities or were planning to do so.

(175) An increase in production capacity does not inevitably imply equivalent rise in production. As evidenced in Table 7, the production increase did not match the rate of capacity increase, and capacity utilisation figures even showed a downward trend over the period considered.

4.4.2.2.

Sales volume and market share

(176) The Union industry’s sales volume and market share developed over the period considered as follows:

Table 8

Sales volume and market share

Source:

PET Europe questionnaire reply

201920202021Investigation periodSales volume on the Union market (tonnes)2768907295114728505092755783Index100107103100Market share73,5 %77,3 %78,5 %70,8 %Index10010510796

(177) The Union industry sales volume on the Union market remained relatively stable during the period considered, i.e. between 2750 and 2950 thousand tonnes. The Union sales volume in 2019 was comparable to that in the investigation period.

(178) During the period considered, the Union industry’s market share in terms of Union consumption went down with 2,7 percentage points, i.e. from 73,5 % to 70,8 %, with a significant drop between 2021 and the IP of 7,7 percentage points.

4.4.2.3.

Growth

(179) The Union consumption slightly increased during the period considered, while the sales volume of the Union industry in the Union market remained stable. The Union industry thus lost market share, contrary to the market share of the imports from the country concerned which increased by 2,7 percentage points during the period considered.

4.4.2.4.

Employment and productivity

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

Table 9

Employment and productivity

Source:

PET Europe questionnaire reply

201920202021Investigation periodNumber of employees1365141014531529Index100103106112Productivity (tonne/FTE)2325235623172125Index10010110091

(181) During the period considered, employment in the Union increased by 12 %, while the productivity dropped by 9 % over the period considered, given that the employment increase was not matched by the rate of increase in production.

4.4.2.5.

Magnitude of the dumping margin and recovery from past dumping

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

4.4.3.

Microeconomic indicators

4.4.3.1.

Prices and factors affecting prices

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

Table 10

Sales prices in the Union

Source:

Questionnaire reply of sampled Union producers

201920202021Investigation periodAverage unit sales price in the Union on the total market (EUR/ tonne)9727169561444Index1007498149Unit cost of production (EUR/ tonne)9307219161353Index1007898146

(184) The table above shows the evolution of the unit sales price on the Union market as compared to the corresponding cost of production. Sales prices have on average been higher than the unit cost of production.

(185) The Union industry’s average unit sales price to unrelated customers in the Union

In the IP, [30-35] % of the sales by the sampled Union producers in the Union was made indirectly via related trading entities.

increased by 49 % from 2019 to the IP, which is due mainly to the tight PET supply and successful passing-on of increase in raw material prices in the course of 2022.

(186) The average cost of production of the Union industry increased over the period considered, although to a lower extent than the sales prices (by 46 %). However, in general the evolution of the cost of production followed the same trend as the sales prices. The major factor having influenced the increase in the unit cost of production was the increase in the raw material price

The price of PET is by around 90 % determined by the prices of the main raw material, i.e. purified terephthalic acid (PTA), which in turn fluctuates on the basis of prices of crude oil. This causes high volatility of the PET prices.

over the period considered.

4.4.3.2.

Labour costs

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

Table 11

Average labour costs per employee

Source:

Questionnaire reply of sampled Union producers

201920202021Investigation periodAverage labour costs per employee (EUR)57253618246437267727Index100108112118

(188) During the period considered, the average wage per employee went up by 18 %.

4.4.3.3.

Inventories

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

Table 12

Inventories

Source:

Questionnaire reply of sampled Union producers

201920202021Investigation periodClosing stocks (tonnes)67824511895813383236Index1007586123Closing stocks as a percentage of production6,09 %4,67 %5,12 %8,05 %Index1007784132

(190) There was an increase in stock levels over the period considered of 23 %. While the stock levels in 2020 and 2021 were below the 2019 levels, the increase in inventories in 2022 is largely due to accumulation of stock by the producers in the second half of 2022, when the demand for PET dropped.

4.4.3.4.

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

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

Table 13

Profitability, cash flow, investments and return on investments

Source:

Questionnaire reply of sampled Union producers

201920202021Investigation periodProfitability of sales in the Union to unrelated customers (% of sales turnover)4 %1 %8 %7 %Index10020208193Cash flow (EUR)63713072574963649632186991341517Index10090151143Investments (EUR)266706683057721593733914756777Index100311598553Return on investments18 %6 %41 %48 %Index10032225266

(192) The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales. Profitability was positive throughout the entire period considered, with the highest profits recorded in 2021 and 2022, with 8 % and 7 % profitability respectively. However, as mentioned in recital (197), the Union industry incurred in losses (-12 %) during the last quarter of the IP, in view of the continued increase in the dumped imports at lower prices, leading to price suppression.

(193) The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow remained overall largely positive, following similar trend as profitability throughout the period considered.

(194) Investments, while being relatively low at the beginning of the period considered increased by 453 % over the period considered. Most of the investment concerned production line maintenance aiming at increasing the longevity of the plants. There was no investment in new PET capacity at the sampled Union producers during the period considered.

(195) The return on investments is the profit in percentage of the net book value of investments. Consistent with the profitability, the return on investment was positive over the period considered, increasing by 166 % in the investigation period.

(196) The sampled Union producers’ ability to raise capital has not been affected over the period considered.

4.4.3.5.

Developments in the investigation period and post-IP

(197) During the period considered the injury indicators showed a stable trend. However, when assessing the indicators at a more granular level for the IP and in Q1 2023, a negative trend is visible. Validation of this trend, taking into account the developments in 2023 is subject to further investigation at the definitive stage of the proceedings.

(198) As outlined in Table 14 below, Union consumption, production and sales of the Union industry showed a decline in the last two quarters of the IP. Moreover, after an increase in market share in 2020 and 2021, the Union industry lost 4 percentage points of market share in the course of the IP and another 7 percentage points between the end of 2022 and the first quarter 2023 alone. This deterioration is also reflected in the profitability of the Union industry, which became lossmaking in the last quarter of the IP, while this trend continued also into the first quarter of 2023.

Table 14

2022 and Q1 2023 Union consumption / production / sales / market share / profitability / Chinese imports

Source:

Questionnaire reply of sampled Union producers, PET Europe questionnaire reply, Eurostat

Union consumption (tonnes)Union production (tonnes)Union sales volume (tonnes)Union industry market share (%)Profitability (%)Chinese imports (tonnes)Chinese import prices including common customs duty of 6,5 % (EUR)Q1 2022100529091812374432174 %15 %54765 (including [0 – 4000] tonnes of UI imports)1212Q2 2022107543288664277309972 %12 %84906 (including [20000 – 25000] tonnes of UI imports)1306Q3 202297984281467365645367 %13 %112658 (including [20000 – 25000] tonnes of UI imports)1426Q4 202283332662934858191070 %-12 %52726 (including [13000 – 18000] tonnes of UI imports)1455Q1 2023103656168559465404563 %-11 %134604 (including [20000 – 25000 tonnes of UI imports)1146

4.4.4.

Conclusion on injury

(199) The Union industry performed well during the period considered, with the injury indicators and trends largely stable or positive, in particular at microeconomic level.

(200) However, towards the end of the investigation period, a number of injury indicators (in particular, market share and profitability) showed a sharp deterioration of the situation on the market for the Union industry, beyond what could be expected as a return to normal market conditions as seen in 2019 and 2020. Losses were incurred in the last quarter of 2022, which were at unsustainable levels (-12 %). The Union industry, faced with undercutting during the IP and increased costs, had to reduce operating rates in the light of the reduced demand and started losing sales volumes towards the end of 2022, which was reflected also in loss of market share in 2022.

(201) Imports from the PRC were affected in 2020 and 2021 because of the high transport shipping costs and economic conditions during and after the COVID-19 pandemic. However, when comparing the start of the period considered with the IP, an increase of 58 % is visible. Especially during the IP, when returning to normal market conditions after the COVID-19 pandemic, the dumped imports showed an increasing trend. At the end of the IP as well as in Q1 2023, Union industry prices were suppressed by the dumped imports. Indeed, in view of the low prices of the Chinese imports, the Union industry could not sell above its cost of production, incurring losses also in Q1 2023 (-11 %). Compared to the period concerned, there is a change in circumstances resulting from the recovery of normal market conditions in the Union market now affected by the increase in Chinese imports leading to a vulnerable situation of the Union industry up to the first quarter of 2023.

(202) On the basis of the above, it is concluded at this stage that the Union industry was negatively affected by imports from the PRC, especially at the end of the investigation period, but not to the extent that the Union industry has suffered material injury during the period considered within the meaning of Article 3(5) of the basic Regulation. The Commission therefore proceeded with the analysis of a threat of material injury in accordance with Article 3(9) of the basic Regulation.

(203) CPCIF claimed that considering the evolution of indicators such as profitability, sales, market share, Union production and Union production capacity, investments and employment over the period considered, the Union industry did not suffer material injury in the said period. Svepol equally argued with reference to the long-term trends in the injury indicators over the period considered that the Union industry is not suffering material injury.

(204) For the Commission to impose anti-dumping duties, it is sufficient that the investigation concludes that there is a threat of material injury. While no material injury was found over the period considered, it is noted that the facts of the case are assessed against Article 3(9) basic Regulation for establishment of threat of injury.

1. THREAT OF INJURY

5.1.

Introduction

(205) In the analysis of a threat of material injury to the Union industry, in accordance with Article 3(9), second subparagraph, of the basic Regulation, consideration is given below to such factors as:

(a) a significant rate of increase of dumped imports into the Union market indicating the likelihood of substantially increased imports;

(b) sufficient freely disposable capacity of the exporting producer on the part of the exporter or an imminent and substantial increase in such capacity indicating the likelihood of substantially increased dumped exports to the Union, account being taken of the availability of other export markets to absorb any additional exports;

(c) whether imports are entering at prices that would, to a significant degree, depress prices or prevent price increases which otherwise would have occurred, and would probably increase demand for further imports, and;

(d) the level of inventories.

(206) As the wording such as in Article 3(9), second subparagraph, indicates, next to these four factors other factors may be analysed as well for the determination of a threat of injury. In particular, the Commission further analysed factors like recent evolution in profitability, for which it had investigation period and post-investigation period data available.

(207) With respect to the period considered, the Commission reviewed again the data collected for 2019 until the IP, as an understanding of the present situation of the Union industry is necessary in order to be able to determine whether there is a threat of injury to the Union industry

World Trade Organization, WT/DS132/R, 28 January 2000, Mexico- Anti-dumping investigation of high fructose corn syrup (HFCS) from the United States – Report of the Panel, recital 7.140, page 214. The WTO Panel stated the following: in order to conclude that there is a threat of material injury to a domestic industry that is apparently not currently injured, despite the effects of dumped imports during the period of investigation, it is necessary to have an understanding of the current condition of the industry as a background. Merely that dumped imports will increase, and will have adverse price effects, does not, ipso facto, lead to the conclusion that the domestic industry will be injured – if the industry is in very good condition, or if there are other factors at play, dumped imports may not threaten injury.

. It then conducted a prospective analysis for all factors. In addition, it collected data on dumped import volumes and import prices for the first two quarters of 2023 in order to confirm or invalidate the forecasts, as required by the Court

Judgment of The Court of Justice, 7 April 2016, case number C-186/14, paragraph 72, confirming the General Court’s judgment of 29 January 2014, on case T-528/09, Hubei Xinyegang Steel Co. Ltd versus Council of the European Union.

. For the level of inventories and profitability, comprehensive data was collected up to the end of March 2023. This data will be updated for a definitive determination and, where possible, also other factors will be analysed. At this stage, the data for spare capacity in the PRC and the level of inventories were the best available data.

(208) Finally, Article 3(9) first subparagraph, second sentence of the basic Regulation requires that the change in circumstances must have been clearly foreseen and must be imminent.

(209) All those elements and the data collected are analysed in the next sections.

5.2.

Significant rate of increase of dumped imports into the Union market indicating the likelihood of substantially increased imports

(210) Imports from the country concerned significantly increased from 192941 to 305055 tonnes between 2019 and the investigation period, as shown in Table 4. Such an increase was significant between 2021 and the IP. The same trend was observed in Q1 2023. During 2021 and the IP these imports have taken place at a price lower than that of the Union industry. The market share held by these Chinese dumped imports (+53 %) confirms the substantial increase of imports while demand remained stable (+3 %). The Chinese exporting producers have gained market share with low-priced imports at the expense of the Union producers. The volume of Chinese imports further increased (by 60 %) in the first half of 2023 (223558 tonnes) (source: Eurostat), compared to the first half of 2022 (139672 tonnes). The available data show that not only the Chinese dumped imports have shown a substantial increase during the period considered, but also that this trend was not stopped or reversed during the post-investigation period.

(211) Moreover, as indicated below, the Chinese overcapacity and attractiveness of the Union market for the Chinese imports, due to the absence of trade defence measures in the Union, coupled with the existence of measures against the Chinese PET imports in numerous other countries, indicate that there is a likelihood of substantial increase of Chinese imports into the Union.

5.3.

Sufficient freely disposable capacity

(212) Concerning Chinese PET capacity, the available information (Woodmac) indicates that the production capacity of PET in the PRC has increased from [11,3 – 12,3] million tonnes in 2020 to [11,6 – 12,6] million tonnes in the IP, while the spare capacity in the IP was [1,5 – 2,5] million tonnes, accounting for no less than [40 – 60] % of the Union consumption. Both the production capacity as well as freely disposable capacity are expected to grow significantly to [21,0 – 23,0] million tonnes and [10,5 – 11,5] million tonnes respectively in 2026.

(213) Chinese domestic demand has grown in the period considered in line with the increase in capacity and made up around [50 – 60] % of Chinese capacity. However, in the coming years the growth in capacity is expected to significantly overtake the increase in domestic demand, which is expected to drop below [35 – 45] % of capacity

in 2026. This would thus increase Chinese export capacities from a level of [5 – 6] million tonnes in 2022 to [7,5 – 8,5] million tonnes in 2023 and more than [13 – 15] million tonnes in 2026, while the Union consumption has been stable around 3,8 million tonnes during the period considered.

(214) CPCIF claimed that demand for PET in the Chinese market has significantly increased, which led to a corresponding increase in production capacity in order to satisfy the needs of the Chinese consumers. As noted above, the growth in capacity is expected to significantly overtake the increase in domestic demand. Therefore, CPCIF’s claim had to be rejected.

(215) UNESDA argued that the production in the PRC is not expected to grow in line with the estimated increase in installed capacity. According to UNESDA, production estimates are more realistic than the future installed capacity forecasts, as the former is based on operating plants and utilisation rates adjusted according to the demand. Moreover, UNESDA maintained that the production/demand ratio for the years 2023 to 2026 is similar to the ratio existing in the period considered, when the excess capacity of the PRC did not create injury to Union producers.

(216) As mentioned in recital (212), PET capacity in the PRC is expected to increase significantly in the coming years, while domestic consumption in the PRC is not expected to increase at the same rate as capacity. The increase in production capacity inevitably implies pressure on the Chinese PET facilities to raise production levels and will incentivize them to look for market opportunities outside of the PRC given the limitations to the domestic demand. Given the Chinese export record and the attractiveness of the Union market (see recitals (217)-(220)), it is likely that a sizeable part of Chinese production would be directed at the Union market. Therefore, UNESDA’s claim was rejected.

(217) In line with Article 3(9), 2nd subparagraph, lit (b) of the basic Regulation, the Commission analysed the availability of other export markets for the Chinese exporting producers to absorb any additional exports and found that some (major) exporting markets are increasingly difficult to access for the Chinese exporting producers because of trade defence measures, including Argentina, Türkiye, Brazil, Indonesia, the United States, Japan, India, and South Africa. Mexico imposed in August 2023 tariffs on imports of PET originating in the PRC. Furthermore, it is observed that in the first quarter of 2023, Chinese exports to the Union rose at a pace higher than the overall worldwide Chinese exports of PET.

(218) UNESDA claimed that any trade deviation that could have occurred from the adoption of trade defence measures by third countries has already taken place, since these measures have been in force for several years. It is considered that the existence of the trade defence measures must be read in light of the recent surge in Chinese PET capacity. With trade defence measures in place in other export markets, Chinese export capacity will likely be directed to those countries without any trade defence measures, such as the Union.

(219) CPCIF argued that Russia was the largest destination for Chinese PET exports during the IP and that Latin American countries continued to be key destinations for Chinese exports. UNESDA also submitted that there is a wide spread of countries without any particular concentration that may be abnormal and that proportionally to population, the PRC’s exports to the Union are smaller than exports to Russia, Philippines, Türkiye and Algeria, the next four largest Chinese importers.

(220) The Commission found that exports to the Union during the IP were larger than those to Russia, i.e. 305000 tonnes and 274000 tonnes respectively, showing the attractiveness of the Union market for Chinese exporting producers. None of the other Chinese export destinations for PET came close to the export volume made during the IP to the Union. Furthermore, this trend continued even in the post-IP period. The import statistics show that the Union is the PRC’s primary PET export destination and a large proportion of the Chinese overcapacity is very likely to be directed for export to the Union.

(221) In conclusion, it is likely that significant volumes of the existing excess capacity on PET will continue to be directed to the Union market. The present overcapacities and the insufficient absorption capacity of third states or the PRC itself indicate the likelihood of further substantial increase of Chinese exports to the Union, where an increase in market share has proven relatively easy during the period considered and notably during the IP and the first quarter of 2023.

5.4.

Price level of imports

(222) During the period considered, the average import price of the country concerned showed a 26 % increase over the full period considered. As explained in recital (164), the Commission established for the investigation period that Chinese prices undercut the Union industry’s prices. The Chinese prices started to decrease in the last quarter of the investigation period and this trend continued in the two quarters following the investigation period.

Table 15

Import price of Chinese imports after the investigation period

Source:

Eurostat

Average import price of Chinese imports (euro/tonne)January 2023February 2023March 2023April 2023May 2023June 202311581067103010119931006

(223) The sales price of the Union industry increased over the period considered by 49 %, while the cost of production increased by 46 %. This resulted in increasing profit margins for 2021 and the investigation period. However, due to the large influx of dumped Chinese imports in the investigation period at prices undercutting the Union industry’s prices, the Union industry was forced to lower its prices in the last quarter of the investigation period and the first quarter after the investigation period, resulting in a lossmaking situation in those two quarters.

(224) The continuing large volume of Chinese imports at decreasing prices after the investigation period show a further shift towards these dumped imports at prices that suppress the prices offered by the Union producers.

(225) An unrelated trader claimed that import prices from the PRC have increased in the second half of the IP, while the Union industry price has shown a decrease in the same period. This resulted in Chinese import prices above Union industry’s prices in the last quarter of the IP.

(226) The Commission found that over the investigation period the Chinese import price was undercutting the Union industry’s price and that the Chinese import price increased less than the overall increase in the cost of production. With regard to the last quarter of the IP, the increasing Chinese imports in the quarters before pushed the Union industry to decrease its prices to an unsustainable lossmaking level to remain competitive, as set out in recital (223).

(227) CPCIF claimed that the transport costs have stabilised since the beginning of the investigation period after historical highs.

(228) The Commission assessment showed that an extreme surge in the shipping costs provided an impediment to Chinese exports to the Union from 2021 until mid-2022. Now that the costs have dropped to previous levels, this impediment no longer exists allowing for Chinese dumped imports to flood the European market. It is this return to the usual level of transport costs, and the disappearance of the previous surge, that contributes to the threat of injury.

5.5.

Level of inventories

(229) The evolution of the level of inventories of the sampled Union producers has been described in detail in recitals (189) and (190). The Commission considered that this factor is not of any particular significance for the analysis because producers are able to respond to changes in demand relatively rapidly, hence keeping stocks at sustainable levels. No evidence could be found that stockpiling activities might have taken place by the Union industry or the Chinese exporting producers to an extent which may significantly influence the Union market in the near future.

5.6.

Other elements: profitability and other economic indicators

(230) While the Union industry showed an increase in profitability during the period considered, there was a significant deterioration in the last quarter of the IP due to depressing sales prices on the Union market caused by the dumped Chinese imports. Also other injury indicators showed a deterioration of the Union industry situation. The Union sales volume, the Union production, and capacity utilisation all dropped significantly in the course of the IP, causing a drop in the Union industry’s market share. This situation caused the Union industry to reduce its sales prices in the last quarter of the IP while the cost of production kept increasing, resulting in a lossmaking situation. This negative trend continued in the first quarter of 2023 (see Table 14 for more details).

(231) Furthermore, the Commission established the existence of price suppression. Indeed, the Union industry was selling below the cost of production in the last quarter of the IP and the first quarter post-IP. Due to the significant price pressure caused by the low-priced dumped imports from the PRC, the Union industry was prevented from increasing its sales prices to achieve a profitable situation, resulting in a loss at the end of the IP, which continued after the IP.

5.7.

Foreseeability and imminence of the change in circumstances

(232) Article 3(9) of the basic Regulation provides that […] the change in circumstances which would create a situation in which the dumping would cause injury must have been clearly foreseen and must be imminent..

(233) All the above-mentioned factors have been analysed and verified with respect to the investigation period. In particular, the profitability of the sampled Union producers reached an unsustainable level of -12 % in the fourth quarter of 2022 when Chinese price pressure was felt most after the continuous increase in undercutting Chinese imports during the first three quarters of the IP. Furthermore, the post-investigation period data revealed that this negative situation was still present during the first quarter of 2023. If this trend continues, the fragile situation of the Union industry will be turned into a material injury immediately. Moreover, the fact that the Chinese capacity is expected to almost double in the period 2020 – 2026 which cannot be absorbed by domestic Chinese demand or by other Chinese export markets, makes the Union market increasingly attractive to low-priced Chinese imports. Based on the data for the investigation period, the Commission thus concluded that there was a clearly foreseeable and imminent change in circumstances at the end of the investigation period, which will create a situation in which the dumping will cause injury. When the market conditions changed after the COVID-19 pandemic, the Chinese imports started to come back to the Union market, displacing the sales of the Union industry, which had to start reducing prices and incurred in losses towards the end of the IP and Q1 2023, having to sell at loss to compete with the dumped imports.

(234) Svepol argued that the complainant could not be considered to be in a vulnerable situation on the basis of the data submitted in the complaint, but that this data showed a return to normal market conditions following the post-COVID-19 pandemic boom. Svepol further submitted that the Union producers’ profit margins in fact showed signs of a stabilising industry after a period with exceptionally high profitability, when the Union producers have been able to increase prices above unit costs, made high investments and maintained a dominant market share.

(235) The Commission acknowledged that profit level of the Union industry during the period considered, especially in 2021 and the first three quarter of the IP, was much higher than seen in the years before. However, a multitude of injury indicators, such as production, sales, and profitability, show a massive and extraordinary drop at the end of the IP to unsustainable levels. Therefore, the Commission concluded that the situation at the end of the IP could not simply be considered a return to normal market conditions.

(236) CPCIF and Svepol argued that the Chinese imports did not indicate foreseen or imminent injury, since they dropped by more than half during the last quarter of the investigation period and the increased imports in the third quarter of the investigation period were an exception. Svepol moreover claimed that there was no coincidence in time between the decline in the Union industry’s sales and the Chinese import volume trend.

(237) The Commission found that the Chinese imports had significantly increased over the full period considered. Moreover, the drop in imports in the last quarter of the investigation period succeeded a continuous and steep increase in dumped imports in the quarters before and was followed by a further increase in the first quarter after the investigation period. Contrary to the claim of Svepol, this coincided with a continuous decrease in sales by the Union industry during the investigation period. Therefore, the Commission concluded that there was a significant rate of increase of dumped imports indicating the likelihood of substantially increased imports.

5.8.

Conclusion on threat of injury

(238) While the Union industry was doing well until the third quarter of 2022, almost all injury indicators started to fall dramatically during the last quarter of 2022. The investigation provisionally revealed that this negative situation continued during the first quarter of 2023.

(239) Whereas the average cost of Union producers and Union producer sales prices were highly correlated during the period considered, with an increase of 46 % in costs matched by an increase of 49 % in the average sales price in the IP compared to 2019, the Chinese prices had only risen by about 26 %. In 2019 and 2020, average Chinese import prices had been above Union industry prices, whereas in the IP, Chinese imports were undercutting.

(240) Although imports from other countries also exhibited a slight increase in the IP, notably from Türkiye, Egypt, and Vietnam, the average prices of those imports were on average 1,2 % lower to 2,0 % higher than Union average sales prices. When assessed cumulatively, these imports were slightly higher than Union prices.

(241) The Union industry’s forecast concerning future profitability and future sales is negative. Decreasing sales and negative margins are most likely to lead to heavy losses, lost orders and reduced jobs. As a result, all factors assessed in the framework of Article 3(9) of the basic Regulation, in particular the significant rate of increase of dumped imports in 2022 which continued in the first half of 2023 at further decreasing prices, the excess capacity in the PRC, and the negative developments in profitability of the Union industry point to the same direction.

(242) In the view of this analysis, at this stage the Commission concluded that there was a threat of a clearly foreseeable and imminent injury to the Union industry at the end of the investigation period.

1. CAUSATION

(243) In accordance with Article 3(6) of the basic Regulation, the Commission examined whether the threat of material injury to the Union industry was caused by the existing and future dumped imports from the country concerned. In accordance with Article 3(7) of the basic Regulation, the Commission also examined whether other known factors could at the same time have threatened to injure the Union industry. The Commission ensured that any possible threat of injury caused by factors other than the dumped imports from the country concerned was not attributed to the dumped imports. These factors are: imports by the complainants and related companies to the complainants, the increased use of recycled PET by PET users, imports from other third countries, cost increases in raw materials and energy prices, and an increase in investment costs.

6.1.

Effects of the dumped imports

(244) As set out in recital (210), the import volume of PET from the PRC increased significantly over the period considered and showed an increasing trend over the IP and the first quarter after the IP, with the exception of the last quarter of the IP. As shown in recital (164), the Chinese imports were undercutting the Union industry prices. The Commission also established that the Chinese PET imports suppressed the Union industry prices, in particular at the end of the investigation period.

(245) Due to the significant increase of the Chinese PET imports during the investigation period at prices below those of the Union industry, the Union industry lost market share to the Chinese imports and lost its profitable situation in the last quarter of the IP.

(246) Therefore, the Commission provisionally concluded that those dumped imports had a negative impact on the situation of the Union industry.

(247) Moreover, not only do the Chinese PET producers have significant spare capacity as set out in recital (212), which is forecasted to grow even larger in the coming years, but the Union has also been the most attractive destination for dumped Chinese imports during the investigation period, to the detriment of the Union industry, and no other third countries would be able to absorb the Chinese spare capacity of PET.

(248) The CPCIF claimed with reference to the Commission’s reasoning in Silico-Manganese and Styrene-Butadiene-Styrene cases that there has been a lack of coincidence in time between the profitability and capacity utilisation trend of the Union industry and the increase of dumped imports from the PRC, a claim that was echoed by Svepol, and that the increase in market share of the Chinese imports and the level of undercutting were too limited to have a material impact on the Union industry. Also, comparing Eurostat figures on PRC import prices with the Union industry sales figures presented in the complaint, the unrelated importer argued that the Union industry could not be threatened by PRC imports when import prices from the PRC actually increased and stood above the Union industry’s sales prices since September 2022.

(249) The Commission found that the production level and capacity utilisation of the Union industry showed a significant drop during the investigation period, right after a period where a significant increase in Chinese imports was seen. The Chinese prices, which were below the Union industry’s price and the price from other third countries in the first three quarters of the investigation period, drove the prices of the Union industry and third countries down in the last quarter of the investigation period to the price level of the Chinese imports in the previous quarter, resulting in a lossmaking level for the Union industry. This showed that the Chinese prices were capable of negatively impacting the price level on the Union market. Therefore, the claim was rejected.

(250) Therefore, the Commission provisionally concluded that the Chinese dumped imports had a negative impact on the situation of the Union industry and were causing a threat of material injury to the Union industry.

6.2.

Effects of other factors

(251) The Commission also examined whether other known factors, individually or collectively, are capable of attenuating the causal link established between the dumped imports and the threat of injury provisionally found to exist to the effect that such link would no longer be genuine and substantial.

6.2.1.

Imports by the complainants and related companies to the complainants

(252) UNESDA argued that the sampled Union producers Indorama and NEO have made imports of PET from the PRC. Indeed, the Commission found that a part of the imports from the PRC were made by the complaining companies accounting for [15 –25] % of imports from the PRC in 2022 and [25 – 35] % in the last quarter of 2022 alone. However, even when assessing the import trends without these imports, a significant increase in Chinese imports took place over the period considered. Therefore, the existence of imports by the complainant did not attenuate the causal link.

6.2.2.

The increased use of recycled PET by PET users

(253) UNESDA claimed that policies by the European Union concerning waste management and reduction of plastic use have led to the increasing substitution of vPET for rPET (despite the systematically higher prices of rPET over vPET), resulting in a high usage rate of rPET.

(254) Indeed, when analysing the injury indicators at a more granular level, an increasing trend in capacity, production, and sales of rPET can be observed during the period considered. However, this increase of around 250000 tonnes in production and around 200000 tonnes in sales, representing around 20 % of the Union industry’s PET capacity and production, did not make up for the loss of production to the dumped Chinese imports and stagnation of sales and therefore did not attenuate the causal link between the dumped Chinese imports and the threat of injury suffered by the Union industry. Moreover, the complainant provided data that rPET producers were reducing their production post-IP due to low vPET prices on the Union market, caused by the dumped imports from the PRC.

6.2.3.

Imports from third countries

(255) CPCIF and UNESDA submitted that import volumes from Egypt, Türkiye, and Vietnam have increased considerably during the period considered but all showed a significant drop in import volume in the last quarter of the IP. However, the fall in import volumes from the PRC during this quarter was far larger than for the other third countries. Furthermore, CPCIF observed that imports from India remained significant and stable over the period considered and imports from South Korea increased in the last quarter of the IP. Therefore, CPCIF argued that any injury suffered by the Union industry is caused by the imports from other countries and not by imports from the PRC, notably because the imports from these other countries also undercut the Union industry’s prices to a similar degree as the Chinese imports. Moreover, the 6,5 % customs duty levied on the Chinese imports when entering the Union should be incorporated in this analysis.

(256) The volume of imports from other third countries developed over the period considered as follows:

Table 16

Imports from third countries

Source:

Eurostat

Country201920202021Investigation periodEgyptVolume (tonnes)876888194270786172913Index1009381197Market share2 %2 %2 %4 %Average price99779410201474Index10080102148TürkiyeVolume (tonnes)103246124883160162172516Index100121155167Market share3 %3 %4 %4 %Average price10337879401443Index1007691140

VietnamVolume (tonnes)779619235991709156003Index100118118200Market share2 %2 %3 %4 %Average price10087329401426Index1007393141Other third countriesVolume (tonnes)534910477200353908331621Index100896662Market share14 %13 %10 %9 %Average price9987569251458Index1007693146Total of all third countries except the country concernedVolume (tonnes)803805776385676564833052Index1009784104Market share21 %20 %19 %21 %Average price10037629401451Index1007694145

(257) As set out in the table in recital (157), imports from the PRC grew with 58 % during the period considered. Although the growth rate for Egypt, Türkiye, and Vietnam cumulatively has been larger, their individual levels of imports were much lower than the imports from the PRC in absolute figures.

(258) Moreover, the average prices of all other third countries in the investigation period were higher than the import price from the PRC and were around the price of the Union industry. Cumulatively assessed, these imports were above the price of the Union industry.

(259) Therefore, the Commission provisionally concluded that aside from the fact that these imports were not made at prices below the prices of the Union industry, the import volumes were also not of such a scale that they would attenuate the causal link between the Chinese dumped imports and the threat of injury to the Union industry.

6.2.4.

Export performance of the Union industry

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

Table 17

Export performance of the sampled Union producers

Source:

verified data from questionnaire replies

201920202021Investigation periodExport volume (tonnes)228466260053333941291338Index100114146128Average price (EUR)10067419921469Index1007499146

(261) The exports of the Union industry increased from 2019 to 2021, after which they dropped but remained significantly above the quantity sold at the start of the period considered.

(262) Exports were only a small part of the Union industry’s overall sales, accounting for between 7 % and 10 % of its production in 2019. The average sales price for exports followed the fluctuations in the cost of production of the Union industry.

(263) Therefore, the Commission provisionally concluded that the export performance of the Union industry did not attenuate the causal link between the dumped imports from the country concerned and the threat of injury found.

6.2.5.

Cost increases in raw materials and energy prices

(264) UNESDA claimed that the price of PET in the second semester of 2022 has been affected by the energy crisis that unfolded due to the war of Russia on Ukraine. CPCIF also contended that the increase in the costs of raw materials, energy costs and the inflationary pressure were factors that caused injury to the Union industry, arguing that the decrease in profitability of the Union industry coincided with a high inflation rate, caused by increasing energy costs. As a result of war in Ukraine petroleum prices have increased significantly in Europe, affecting the price of the raw materials paraxylene, purified terephthalic acid, and mono-ethylene glycol, while Chinese producers of PET were less affected by the rise in energy costs.

(265) As set out in recital (183), the Union industry’s cost of production first showed a decrease in 2020, after which the costs increased significantly in the investigation period. However, the Union industry could also increase its prices in line with the increase in cost of production for most of 2021 and the investigation period. When assessing this data at a quarterly level for the investigation period, it is visible that the Union industry had to lower its prices in the last quarter of the investigation period to the level below its cost of production in response to the unfair competition of dumped imports. Therefore, the cost increase did not attenuate the causal link.

6.2.6.

Increase in investment costs

(266) CPCIF claimed that the investment figures of the Union industry more than quadrupled over the period considered, caused by an increase in working capital due to higher inventories and to comply with the regulatory obligations under the Single-use plastics Directive.

(267) As set out in recital (191), the Commission found that investments indeed increased substantially. However, when compared to the sales value on the Union market, investment costs were limited and never got above 2,1 % of turnover for the sampled Union producers. Moreover, the investments were made in order to ensure compliance with existing Union regulations, for plants’ maintenance and to increase their longevity. This level of investment costs could therefore not attenuate the causal link between the dumped Chinese imports and the threat of injury found.

6.2.7.

Customer purchasing preferences

(268) Svepol argued that the declining production and sales volumes were responses to changes in customer purchasing preferences (including shifting from long-term contracts to more flexible spot contracts) and wide-spread destocking by PET customers.

(269) The Commission found that while the Union consumption temporarily decreased in the last quarter of 2022, it has actually increased in the IP compared to the beginning of the period considered and remained at the average quarterly IP level also in the first quarter of 2023 (see Table 3 and Table 14). Therefore, the alleged destocking by customers is not duly substantiated. Moreover, a potential change in preferred purchasing terms itself cannot be considered a factor that should automatically lead to a drop in production or sales of the Union producers. Indeed, the investigation provisionally found that the Chinese imports were done on spot contract basis, while historically the Union industry sold mainly on a long-term contract basis. However, the Chinese imports were made at dumped prices undercutting the Union industry, thus potentially even aggravating this shift from long-term contracts to spot contracts. The difference in purchase contracts might therefore have aggravated the effect between the dumped Chinese imports and the threat of injury found.

6.2.8.

Conclusion on causation

(270) The Commission distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the dumped imports. The effect of these other factors on the Union industry’s negative developments were however only limited, if any.

(271) On the basis of the above, the Commission provisionally concluded at this stage that the dumped imports from the PRC caused a threat of material injury to the Union industry and that the other factors, considered individually or collectively, did not attenuate the causal link between the dumped imports and the material injury.

1. LEVEL OF MEASURES

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

7.1.

Injury margin

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

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

(275) The profit in the first two years of the period considered was below 6 % (in 2019 or 2020) and the market conditions were abnormal in 2021, due to the COVID-19 pandemic coupled with unprecedented rise in transport costs associated with an overall drop in imports from third countries in 2021. None of these years would therefore qualify for providing a target profit in accordance with Article 7(2c) of the basic Regulation. None of the sampled Union producers made a substantiated claim for investments foregone or R&D and innovation costs. In view of those facts, the Commission resorted to the use of the minimum 6 % target profit which was added to the Union industry’s actual cost of production to establish the non-injurious price.

(276) As no substantiated claims were made pursuant to Article 7(2d) concerning current or future costs which result from multilateral environmental agreements and protocols thereunder or from the listed ILO Conventions, no further costs were added to the non-injurious price thus established.

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

(278) Svepol suggested that if the Commission were to impose duties, the actual prices and profit realised by the Union producers during the second half of 2022 should be relied upon in order to establish the injury margin, since the Union industry sales prices were neither depressed, nor suppressed in 2022. It is noted that 2022 was the year when imports from the PRC increased substantially and hence the profit realised by the Union producers in the investigation period or any period within 2022 was not deemed appropriate to be used as a target profit.

(279) The injury elimination level for other cooperating companies and for all other companies is defined in the same manner as the dumping margin for these companies (see Section 3.5).

CompanyDumping marginInjury margin

Sanfame Group:

Jiangsu Hailun Petrochemical Co., Ltd

Jiangsu Xingye Plastics Co., Ltd.

Jiangyin Xingu New Material Co., Ltd.

Jiangyin Xingtai New Material Co., Ltd.

16,0 %6,6 %

Wankai New Materials Group:

Wankai New Materials Co., Ltd.

Chongqing Wankai New Materials Technology Co. Ltd.

22,6 %10,7 %

China Resources Chemical Innovative Materials Group:

China Resources Chemical Innovative Materials CO., LTD

Zhuhai China Resources Chemical Innovative Materials Co., Ltd.

17,2 %21,2 %Other cooperating companies19,7 %11,1 %All other companies24,2 %27,5 %

7.2.

Conclusion on the level of measures

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

CompanyProvisional anti-dumping duty

Sanfame Group:

Jiangsu Hailun Petrochemical Co., Ltd

Jiangsu Xingye Plastics Co., Ltd.

Jiangyin Xingu New Material Co., Ltd.

Jiangyin Xingtai New Material Co., Ltd.

6,6 %

Wankai New Materials Group:

Wankai New Materials Co., Ltd.

Chongqing Wankai New Materials Technology Co. Ltd.

10,7 %

China Resources Chemical Innovative Materials Group:

China Resources Chemical Innovative Materials CO., LTD

Zhuhai China Resources Chemical Innovative Materials Co., Ltd.

17,2 %Other cooperating companies11,1 %All other companies24,2 %

1. UNION INTEREST

(281) The Commission examined whether, despite the determination of injurious dumping, the imposition of measures would not be against the Union interest in accordance with Article 21 of the basic Regulation. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, users, and consumers.

8.1.

Interest of the Union industry

(282) Across the Union around 60 companies produced PET, providing employment to around 1500 staff. 16 producers cooperated during the investigation. None of the known producers opposed the initiation of the investigation. As shown above when analysing the injury indicators, the Union industry showed a deteriorating trend at the end of the investigation period. In particular, injury indicators related to the financial performance of the sampled Union producers, such as profitability, were seriously affected. The Union industry experienced a deterioration of its situation at the end of the investigation period and was negatively affected by the dumped imports from the PRC, causing the threat of injury at the end of the investigation period.

(283) It is expected that the imposition of provisional anti-dumping duties will restore fair trade conditions on the Union market, putting an end to the price suppression and enabling the Union industry to recover. This would result in an improvement of the Union industry’s profitability. In absence of measures, it is very likely that the threat of injury will materialise and that there will be a further deterioration of the Union industry’s economic situation and idling or closure of Union industry plants.

(284) The Commission therefore concluded at this stage that the imposition of anti-dumping duties would be in the interest of the Union industry.

8.2.

Interest of users and unrelated importers

(285) An unrelated importer (Svepol) and a number of large user companies like Danone, Nestle Waters, Coca-Cola, and Refresco, along with associations like Soft Drinks Europe (UNESDA) and Natural Mineral Waters Europe (NWME), have come forward and cooperated in this investigation. UNESDA represents major corporate users, national soft drink producers, bottlers, and distributors, while NWME speaks for the natural mineral water producers. Svepol as well as four groups of users (Refresco, Danone, Nestle and Retal) provided structured replies (verified at this stage for Svepol) to the Commission questionnaire. Furthermore, over 30 other users (mainly bottlers) and national associations from Austria, Bulgaria, Germany, France, Italy, Spain, and Poland came forward, providing comments and voicing the opposition to the potential duties on PET imports.

(286) The PET bottling industry is significant in terms of employment, with over 300000 direct jobs provided across 1000 bottling sites. Importantly, most of these businesses are small and medium enterprises (SMEs), often employing fewer than 50 people. Many of the users claimed to already operate on thin margins and face rising costs due to EU regulatory measures on single-use plastics and other packaging obligations. They further argued that PET is a commodity not produced in sufficient quantities in the Union, making therefore imports an essential component of the Union consumption.

(287) Furthermore, the users and Svepol (importer) claimed that imposing anti-dumping measures on PET imports from the PRC would adversely affect these European businesses in several ways, as set out below.

8.2.1.

Increased vPET Prices

(288) The users argued that measures will likely raise the prices of vPET. This is documented on the example of the United States, which has significantly higher PET prices compared to countries with lower or no duties such as the Union or South Korea. This would impact SMEs who cannot easily transfer these increased costs to their customers hampering the beverage industry, where PET is a major cost component. The users have indicated (without further substantiation) that the price of PET on the final product varies between 8 and 15 % and that a price increase cannot be fully passed on to buyers.

8.2.2.

Slower transition to rPET

(289) The soft drinks industry submitted that it is trying to shift from vPET to rPET, which is currently more expensive. Higher vPET prices might slow this shift, undermining the industry’s sustainability initiatives.

8.2.3.

Concerns over market dominance

(290) Several users submitted that anti-dumping measures on PET imports from the PRC would further consolidate the control of the Union producer Indorama in the PET market, also in a view of Indorama’s ownership of PET production facilities in Türkiye and Egypt, the next major PET exporters to the Union, and argued that such market constellation could negatively impact competition and might not align with the broader interests of the Union.

8.2.4.

Analysis of the impact of the measures on users and unrelated importers

(291) While the anti-dumping measures are indeed likely to increase the PET price and negatively impact the user industries and final users of PET-packaged products, this would not necessarily result in job losses among PET users, given the PET costs make up to 15 % of final product prices. Furthermore, it follows from the evidence available that not only are the PET production facilities at the Union producers fully utilised, but that also numerous other countries such as Türkiye, Egypt, and Vietnam have the capacity to supply PET to the user industry in the Union.

8.3.

EU’s Ambition Towards Sustainable Plastics

(292) The European Union, in its commitment to counteract pollution and single-use plastics, adopted the EU Action Plan for a Circular Economy in 2015. This plan marked plastics as a priority, aiming for strategies that consider the entire life cycle of plastics. PET, a fully recyclable plastic, is at the forefront of these efforts. In 2016, while 72,7 % of plastic waste was collected in the Union, only 31,1 % was recycled, underscoring the importance of pure plastics like PET.

8.4.

Challenges with regard to rPET

(293) The Union’s directive on single-use plastics set ambitious recycling targets for the upcoming decade, pushing Union PET producers to invest in rPET technologies. However, this progress is threatened by the influx of dumped vPET from the PRC. These dumped imports have made European-produced rPET less competitive, leading to a shift back to vPET, especially when energy costs for rPET production are high. The dumped imports might hinder innovation and built up of rPET production capacity, and weaken the recycling PET loop, essential for the Union’s carbon reduction and recycling targets.

8.5

Conclusion on Union interest

(294) The duties (see Section 9 below) are moreover set at a level which would allow imports of Chinese PET at fair prices.

(295) The Union’s commitment to environmental protection, as evident in the single plastics directive, emphasizes recycling investments, would be potentially hindered by cheap vPET.

(296) Overall, it is provisionally found that the benefits of measures outweigh potential negative impact for importers, users, and consumers.

(297) On the basis of the above, the Commission concluded that there were no compelling reasons that it was not in the Union interest to impose measures on imports of PET originating in the PRC at this stage of the investigation.

1. PROVISIONAL ANTI-DUMPING MEASURES

(298) On the basis of the conclusions reached by the Commission on dumping, injury, causation, level of measures and Union interest, provisional measures should be imposed to prevent that the imminent threat of material injury which is caused to the Union industry by the dumped imports would materialise.

(299) Provisional anti-dumping measures should be imposed on imports of PET originating in the PRC, in accordance with the lesser duty rule in Article 7(2) of the basic Regulation. The Commission compared the injury margins and the dumping margins in recital (279) above. The amount of the duties was set at the level of the lower of the dumping and the injury margins.

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

CompanyProvisional anti-dumping duty

Sanfame Group:

Jiangsu Hailun Petrochemical Co., Ltd

Jiangsu Xingye Plastics Co., Ltd.

Jiangyin Xingu New Material Co., Ltd.

Jiangyin Xingtai New Material Co., Ltd.

6,6 %

Wankai New Materials Group:

Wankai New Materials Co., Ltd.

Chongqing Wankai New Materials Technology Co. Ltd.

10,7 %

China Resources Chemical Innovative Materials Group:

China Resources Chemical Innovative Materials CO., LTD

Zhuhai China Resources Chemical Innovative Materials Co., Ltd.

17,2 %Other cooperating companies11,1 %All other companies24,2 %

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

(302) To minimise the risks of circumvention due to the difference in duty rates, special measures are needed to ensure the application of the individual anti-dumping duties. The companies with individual anti-dumping duties must present a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(3) of this regulation. Imports not accompanied by that invoice should be subject to the anti-dumping duty applicable to all other companies.

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

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

1. INFORMATION AT PROVISIONAL STAGE

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

(306) No comments on the accuracy of the calculations were received.

1. FINAL PROVISIONS

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

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

HAS ADOPTED THIS REGULATION:

Article 1

1. A provisional anti-dumping duty is imposed on imports of polyethylene terephthalate (PET), having a viscosity of 78 ml/g or higher, according to ISO Standard 1628-5, currently falling under CN code 39076100 and originating in the People’s Republic of China.

1. The rates of the provisional anti-dumping duty applicable to the net, free-at-Union-frontier price, before duty, of the product described in paragraph 1 and produced by the companies listed below shall be as follows:

CompanyProvisional anti-dumping dutyTARIC additional code

Sanfame Group:

Jiangsu Hailun Petrochemical Co., Ltd

Jiangsu Xingye Plastics Co., Ltd.

Jiangyin Xingu New Material Co., Ltd.

Jiangyin Xingtai New Material Co., Ltd.

6,6 %899V

Wankai New Materials Group:

Wankai New Materials Co., Ltd.

Chongqing Wankai New Materials Technology Co. Ltd.

10,7 %899W

China Resources Chemical Innovative Materials Group:

China Resources Chemical Innovative Materials CO., LTD

Zhuhai China Resources Chemical Innovative Materials Co., Ltd.

17,2 %899XOther cooperating companies11,1 %See annexAll other companies24,2 %8999

1. The application of the individual duty rates specified for the companies mentioned in paragraph 2 shall be conditional upon presentation to the Member States’ customs authorities of a valid commercial invoice, on which shall appear a declaration dated and signed by an official of the entity issuing such invoice, identified by his/her name and function, drafted as follows: I, the undersigned, certify that the (volume) of (product concerned) sold for export to the European Union covered by this invoice was manufactured by (company name and address) (TARIC additional code) in [country concerned]. I declare that the information provided in this invoice is complete and correct. If no such invoice is presented, the duty applicable to all other companies shall apply.

1. The release for free circulation in the Union of the product referred to in paragraph 1 shall be subject to the provision of a security deposit equivalent to the amount of the provisional duty.

1. Unless otherwise specified, the provisions in force concerning customs duties shall apply.

Article 2

1. Interested parties shall submit their written comments on this regulation to the Commission within 15 calendar days of the date of entry into force of this Regulation.

1. Interested parties wishing to request a hearing with the Commission shall do so within 5 calendar days of the date of entry into force of this Regulation.

1. Interested parties wishing to request a hearing with the Hearing Officer in trade proceedings are invited to do so within 5 calendar days of the date of entry into force of this Regulation. The Hearing Officer may examine requests submitted outside this time limit and may decide whether to accept to such requests if appropriate.

Article 3

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union. Article 1 shall apply for a period of six months.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 27 November 2023.

For the Commission

The President

Ursula von der Leyen

Annex

ANNEX

COOPERATING EXPORTING PRODUCERS NOT SAMPLED

CountryNameTARIC additional codePeople’s Republic of ChinaSinopec Yizheng Chemical Fibre Limited Liability Company899YPeople’s Republic of ChinaDragon Special Resin (XIAMEN) Co., Ltd.899ZPeople’s Republic of ChinaFar Eastern Industries (Shanghai) Ltd.89AAPeople’s Republic of ChinaJiangsu Ceville New Materials Technology Co., Ltd.89AB