Commission Implementing Regulation (EU) 2021/1029 of 24 June 2021 amending Commission Implementing Regulation (EU) 2019/159 to prolong the safeguard measure on imports of certain steel products
Commission Implementing Regulation (EU) 2021/1029of 24 June 2021amending Commission Implementing Regulation (EU) 2019/159 to prolong the safeguard measure on imports of certain steel products THE EUROPEAN COMMISSION,Having regard to Regulation (EU) 2015/478 of the European Parliament and of the Council of 11 March 2015 on common rules for importsRegulation (EU) 2015/478 of the European Parliament and of the Council of 11 March 2015 on common rules for imports, (OJ L 83, 27.3.2015, p. 16). and in particular Article 19 thereof,Having regard to Regulation (EU) 2015/755 of the European Parliament and of the Council of 29 April 2015 on common rules for imports from certain third countriesRegulation (EU) 2015/755 of the European Parliament and of the Council of 29 April 2015 on common rules or imports from certain third countries, (OJ L 123, 19.5.2015, p. 33)., and in particular Article 16 thereofWhereas:1.BACKGROUND(1)By Commission Implementing Regulation (EU) 2019/159Commission Implementing Regulation (EU) 2019/159 of 31 January 2019 imposing definitive safeguard measures against imports of certain steel products ("Definitive Safeguard Regulation") (OJ L 31, 1.2.2019, p. 27)., the European Commission imposed a definitive safeguard measure on certain steel products ("the safeguard"), which consists of tariff-rate quotas ("TRQs") with respect to certain steel products ("the product concerned") encompassing 26 steel product categories, set at levels preserving traditional trade flows on a per-product-category basis. A 25 % tariff duty applies only if the quantitative thresholds of these TRQs are exceeded. The safeguard measure was imposed for an initial period of three years, that is to say, until 30 June 2021.(2)On 15 January 2021, the Commission received a substantiated request by twelve EU Member States to examine, pursuant to Article 19 of Regulation (EU) 2015/478 of the European Parliament and of the Council and Article 16 of Regulation (EU) 2015/755, whether the existing safeguard measure should be prolonged.(3)The Commission considered that the request contained sufficient evidence to initiate an expiry/prolongation review investigation. Accordingly, it published a Notice of InitiationNotice of initiation concerning the possible extension of the safeguard measure applicable to imports of certain steel products (OJ C 66, 26.2.2021, p.50). ("the Notice of Initiation") in the Official Journal of the European Union on 26 February 2021.2.PROCEDURE(4)In order to carry out a proper assessment as to whether the safeguard measure continues to be necessary to prevent or remedy serious injury, whether the Union steel industry is adjusting, and whether such prolongation is in line with the wider Union interest, the Commission collected specific data from the Union industry by means of questionnairesThe open versions of questionnaire replies are available for inspection of interested parties in the open file of the investigation: https://tron.trade.ec.europa.eu/tron/TDI (accessible to registered interested parties).. These data included, inter alia, the evolution of key economic and financial indicators for the product concerned during the period 2018-2020 ("the period considered"), as well as evidence that the industry is adjusting.(5)The Commission also sought the position of other interested parties on a potential prolongation. To this end, the Notice of Initiation invited interested parties to participate in the investigation by submitting their observations and supporting evidence.(6)In terms of due process, the prolongation review investigation comprised a two-stage written procedure, under which interested parties, first, submitted their observations and, subsequently, were given the possibility to rebut the other parties’ observations and submit comments on the questionnaire replies. Overall, the Commission received more than 150 individual questionnaire replies and over 160 submissions from interested parties within the established deadlines. The Commission also offered interested parties the possibility of hearings, if duly justified. Only the Government of the Russian Federation made use of this possibilityA virtual hearing between the Commission and the Russian Government took place on 8 April 2021..(7)In its prolongation review investigation, the Commission assessed, first, whether the requirements of necessity and adjustment, mandatory under the rules of both the Agreement establishing the World Trade Organization (WTO Agreement) and Union legislation, were satisfied (see Section 3). Second, it also assessed what length and liberalisation terms for the prolongation would be justified (see Sections 3.3 and 3.4 respectively). Finally, the Commission assessed whether such prolongation would be in line with the interest of the Union (See Section 5). In its assessment, the Commission took due account of the observations and evidence received from interested parties, as well as any other publicly available information, in relation to the above questions. The Commission specifically addressed the relevant claims made by interested parties that deviate from the Commission’s assessment in a dedicated Section (see Section 7).3.LEGAL REQUIREMENTS3.1.Necessity(8)According to Article 7.1 of the WTO Agreement on Safeguards and Article 19(2) of EU Regulation (EU) 2015/478 on common rules for importsRegulation (EU) 2015/478 of the European Parliament and of the Council of 11 March 2015 on common rules for imports (OJ L83 of 27.3.2015)., the period of application of a safeguard measure may be extended "provided that (…) the safeguard measure continues to be necessary (…) and that there is evidence that the industry is adjusting".(9)The Commission first examined and described the economic situation of the Union industry based on the questionnaire replies received (Section 3.1.1). Subsequently, the Commission assessed whether, and to what extent, import pressure existed or continued during the period considered (Section 3.1.2.). This assessment included a detailed analysis of the evolution of imports and TRQs use over the period of application of the safeguard, as well as a detailed assessment of several other relevant factors to determine the likely behaviour of imports into the Union, if the safeguard measure lapses ("counterfactual analysis").3.1.1.Economic situation of the Union steel industry(10)In order to assess the economic situation of the Union steel industry, the Commission issued questionnaires to the known Union steel producers to collect information regarding injury indicators about the product concerned during the period 2018-2020 ("the period considered"). The Commission also requested the known Union industry associations (EUROFER, ESTA and CET) to distribute the questionnaires among their individual members. In addition, the Commission notified the known Union producers, through the open file system (TRON)https://tron.trade.ec.europa.eu/tron/TDI (accessible only by registered interested parties)., of the request to fill in questionnaires, which were also made available on the website of the Directorate-General for TradeAvailable at DG TRADE’s dedicated website to the investigation (publicly accessible)..(11)The Commission received over 150 individual questionnaire replies. The Commission also received consolidated data submissions from the industry associations known to the Commission. In addition, the Commission received individual questionnaire replies from each producer that had supplied the data to the industry associations individually and by producers that did not belong to any association. The Commission then processed the data received. It first consolidated the data directly received from members of associations, and later crosschecked their accuracy and the consolidation methodology with the dataset submitted by the industry associations in dedicated remote crosscheck sessions that took place on 14 June 2021. The Commission then merged the association members’ replies together with the individual replies received by producers not belonging to any association into a single consolidated dataset. This dataset constitutes the basis for the assessment of the economic situation of the Union industry. The assessment of this dataset (in Tables 1 to 4) showed the following:(a)Production, production capacity, capacity utilisation, stocks
Table 1Production, production capacity, capacity utilization, stocksSource: Questionnaire replies.
in 000 tonnes201820192020
Production volume of the product concerned200416189459168675
index 2018 = 1001009584
Production capacity for the product concerned252367252461251864
index 2018 = 100100100100
Capacity utilisation79,41 %75,04 %66,97 %
Stocks214642000018251
index 2018 = 1001009385
(12)Over the period considered production volume steadily decreased year-on-year, with -5 % decrease in 2019 and a sharper reduction -16 % in 2020, when compared to 2018 figures. The 2020 quarterly breakdownData on a quarterly basis for the year 2020 is included in the questionnaire replies. shows that this decrease was driven largely by the performance in the second and third quarters, which were the most heavily affected by the effects of the COVID-19 pandemic. Production capacity remained stable throughout the period and, thus, capacity utilisation followed a declining trend in line with the reduction in production (See Table 1). Lastly, stocks went down by 7 % in 2019 and by 15 % in 2020 as compared to the year 2018.(b)Union consumption, domestic sales and market shareGiven that the questionnaire replies do not include every steel producer in the Union, market share of the Union industry has been calculated based on the consumption data, import data and data from questionnaire replies.
Table 2Union consumption, domestic sales and market shareSource: Industry data and questionnaire replies
201820192020
Consumption in 000 tonnes167140157120139955
index 2018 = 1001009484
Domestic sales in 000 tonnes132960127448114936
index 2018 = 1001009686
Market share in %79,6 %81,1 %82,1 %
(13)Consumption in the Union market started declining in 2019 (-6 %), and this trend continued in 2020 (-16 %) when compared to the year 2018. The evolution of domestic sales volume by Union producers followed a very similar trend during the period considered (-4 % in 2019 and -14 % in 2020). During the period considered, the Union industry increased its market share by more than 2 percentage points.(c)Unit sales price, profitability, cash flow and return on capital employed
Table 3Unit sales price, profitabilityCalculated over sales to unrelated customers in the Union., cash flow and return on capital employedSource: Industry data and questionnaire replies
201820192020
Unit sales price (EUR/tonne)763725666
index 2018 = 1001009587
Profitability ( % turnover)5,7 %-0,4 %-3,7 %
Cash flow (million EUR)745667986386
index 2018 = 1001009186
Return on capital employed ( % )8,6 %-2,6 %-19,4 %
(14)Injury indicators related to sales volume (see Table 2) and value saw a continuous decline over the period considered. Unit sales prices went steadily down by 5 % in 2019 and by 12 % in 2020 when compared to 2018. Cash flow and return on capital employed also deteriorated year-on-year during the period considered, the latter reaching negative figures in both 2019 (-2,6 %) and (-19,4 %) in 2020.(15)The decrease in prices, coupled with the reduction in production and sales volumes described in Tables 1 and 2, turned the Union industry into a loss-making situation already in 2019 (-0,4 %) and the situation further deteriorated in 2020, reaching -3,7 % losses.(d)Employment
Table 4EmploymentSource: Questionnaire replies
(FTE)201820192020
Employment215359215620202331
index 2018 = 10010010094
(16)Employment remained stable in 2019, but decreased by 6 % in 2020 when compared to 2018.Conclusion(17)The data in Section 3.1.1. showed that the economic situation of the Union industry had deteriorated significantly already in the year 2019, when the Union industry already became lossmaking, with virtually all injury indicators showing a sharp negative trend. It should be noted that from 2018 to 2019 the profitability experienced a slump by 6,1 percentage points to reach -0,4 % at the end of 2019. This serious worsening thus took place well before the unexpected onset of the COVID-19 pandemic and its ensuing effects on the market. The financial position of the Union industry further deteriorated in the course of 2020, when the economic effects of the COVID-19 pandemic further complemented the weakening of the Union industry’s financial position produced by the continuation during 2020 of the import pressure exerted by exporters to the Union. The effects of the COVID-19 pandemic came on top of the continuous jeopardy to the financial position of the Union industry caused by import pressure. Imports together with to some extent the COVID-19 pandemic plunged the Union industry into a serious financial situation with losses of -4 %. It should be emphasized that the additional impact of the pandemic-induced crisis on the financial position of the Union industry, which deepened the already undergoing import-induced deterioration, was comparatively smaller. From 2019 to 2020 the profitability decreased 3,3 percentage points to reach the bottom losses of almost -4 %. Therefore, the COVID-19 pandemic has thus amplified a pre-existing and continuing source of serious injury for the Union industry, which is mainly driven by imports.(18)In conclusion, the Commission therefore found that, during the period of application of the safeguard measure the economic situation of the Union industry continued worsening as a result of import pressure during a period where the important adjustments made by the Union industry have not yet produced positive effects.Additional analysis per product family(19)The Commission concluded on the basis of the economic situation and development of injury indicators for the product concerned in Tables 1 to 4 that the Union industry continued worsening between 2018 and 2020 and it is currently in a fragile situation.(20)In addition to this finding, and in accordance with the approach followed in the original investigation,Definitive Safeguard Regulation, recital (47). the Commission also confirmed its findings on the basis of three product families, this is flat products, long products and tubesFor a full description of the product families, see recital (21) of the Definitive Safeguards Regulation..
Table 5Production, production capacity, capacity utilization, stocksSource: Industry data and questionnaire replies
in 000 tonnes201820192020
Production volume of the product concerned (flat)150598143287126795
index 2018 = 1001009584
Production volume of the product concerned (long)413953887935769
index 2018 = 1001009486
Production volume of the product concerned (tubes)842372936111
index 2018 = 1001008773
Production capacity for the product concerned (flat)184802184682183924
index 2018 = 100100100100
Production capacity for the product concerned (long)547555501355278
index 2018 = 100100100101
Production capacity for the product concerned (tubes)128101276712661
index 2018 = 10010010099
Capacity utilisation (flat)81,49 %77,59 %68,94 %
Capacity utilisation (long)75,60 %70,67 %64,71 %
Capacity utilisation (tubes)65,75 %57,12 %48,27 %
Stocks (flat)137121354912354
index 2018 = 1001009990
Stocks (long)485944694146
index 2018 = 1001009285
Stocks (tubes)289319821751
index 2018 = 1001006961
Table 6The Union consumption, domestic sales and market shareSource: Industry data and questionnaire replies
201820192020
Consumption in 000 tonnes (flat)10866110335791373
index 2018 = 1001009584
Consumption in 000 tonnes (long)482264449540521
index 2018 = 1001009284
Consumption in 000 tonnes (tubes)1025392698060
index 2018 = 1001009079
Domestic sales in 000 tonnes (flat)865858353374504
index 2018 = 1001009686
Domestic sales in 000 tonnes (long)387143691834252
index 2018 = 1001009588
Domestic sales in 000 tonnes (tubes)766169986180
index 2018 = 1001009181
Market share in % (flat)79,7 %80,8 %81,5 %
Market share in % (long)80,3 %83,0 %84,5 %
Market share in % (tubes)74,7 %75,5 %76,7 %
Table 7Unit sales price, profitability, cash flow and return on capital employedSource: Industry data and questionnaire replies
201820192020
Unit sales price (EUR/tonne) (flat)775741689
index 2018 = 1001009689
Unit sales price (EUR/tonne) (long)674623556
index 2018 = 1001009282
Unit sales price (EUR/tonne) (tubes)10651070999
index 2018 = 10010010094
Profitability ( % turnover) (flat)6,0 %-1,0 %-4,6 %
Profitability ( % turnover) (long)6,0 %0,4 %-2,8 %
Profitability ( % turnover) (tubes)3,3 %0,9 %-0,5 %
Cash flow (million EUR) (flat)565236094402
index 2018 = 1001006478
Cash flow (million EUR) (long)14112300879
index 2018 = 10010016362
Cash flow (million EUR) (tubes)3948891106
index 2018 = 100100226281
Return on capital employed ( % ) (flat)7,68 %-3,75 %-28,47 %
Return on capital employed ( % ) (long)10,13 %-1,59 %-4,76 %
Return on capital employed ( % ) (tubes)8,58 %3,05 %-3,16 %
Table 8EmploymentSource: Industry data and questionnaire replies
(FTE)201820192020
Employment (flat)134788137719128837
index 2018 = 10010010296
Employment (long)491164731445487
index 2018 = 1001009693
Employment (tubes)314553058728007
index 2018 = 1001009789
(21)Tables 5 to 8 showed the evolution of the injury indicators per product family during the period considered. In particular, they confirmed that the economic and financial situation of the Union industry followed, for each of the product families individually, comparable deteriorating trends as those established for the product concerned as a whole. By means of example, injury indicators such as production volume, domestic sales volume, unit sales price and profitability, consistently deteriorated in 2019 and this trend continued in 2020, showing a negative economic and financial situation. The only exception, in terms of diverging trend when compared to those of the product concerned, has to do with development of cash flow in the tubes family during the period considered.(22)In view of this, the supplementary analysis undertaken per product family thus corroborates the findings reached for the product concerned, namely that even when assessed on a product family basis, the Union industry’s economic situation significantly worsened over the period considered and that it is currently in a fragile situation.3.1.2.Import pressure(a)Evolution of imports(23)To determine whether imports exerted pressure on the Union steel industry during the period considered and to what extent, the Commission assessed, first, the evolution of importsThe import data used in the investigation does not include imports from those countries that were excluded unconditionally from the safeguard measure. For these exclusions, see Article 6.1 of the Definitive Safeguards Regulation for European Economic Area ("EEA") countries, and Commission Implementing Regulation (EU) 2018/1712 of 13 November 2018 amending Implementing Regulation (EU) 2018/1013 imposing provisional safeguard measures with regard to imports of certain steel products, OJ L 286, 14.11.2018, p. 17, for South Africa and certain other African countries with whom the EU had Economic Partnership Agreements ("EPAs") in place. This means that all findings throughout this investigation refer to worldwide imports except imports from those origins. Likewise, all findings regarding the effects of imports – both existing imports during the period considered and expected imports in the event of a lapsing of the safeguard measure – pertain to worldwide imports minus imports from those origins. of the product concerned in overall terms and, second, with respect to the level of consumption. In addition, the Commission assessed the evolution of TRQs used under the safeguard (See section 3.1.2(b)).
Table 9Evolution of imports in tonnesSource: EUROSTAT
201820192020
Volume of imports341800002967200025019000
index 2018 = 1001008773
(24)In overall terms, the volume of imports of the product concerned decreased by 13 % in 2019 and by 27 % in 2020 when compared to the 2018 levelFor a broader picture on import evolution in previous years, see Table 2 of the Definitive Regulation..
Table 10Import share evolutionSource: EUROSTAT, Industry data and questionnaire replies
201820192020
Consumption in 000 tonnes167140157120139955
index 2018 = 1001009484
Volume of imports in 000 tonnes341802967225019
index 2018 = 1001008773
Market share20,4 %18,9 %17,9 %
Table 11Market share of imports per product familySource: EUROSTAT and Industry data
Consumption in 000 tonnes (flat)10866110335791373
index 2018 = 1001009584
Consumption in 000 tonnes (long)482264449540521
index 2018 = 1001009284
Consumption in 000 tonnes (tubes)1025392698060
index 2018 = 1001009079
Imports in 000 tonnes (flat)220761982416869
index 2018 = 1001009076
Imports in 000 tonnes (long)951375776270
index 2018 = 1001008066
Imports in 000 tonnes (tubes)259222711880
index 2018 = 1001008873
Market share in % (flat)20,3 %19,2 %18,5 %
Market share in % (long)19,7 %17,0 %15,5 %
Market share in % (tubes)25,3 %24,5 %23,3 %
(25)When the decrease in the volume of imports shown in Table 9 is assessed against the evolution of consumption in the Union market, the Commission noted that although the market share of imports gradually decreased over the period concerned, the market share of imports nevertheless remained at the same level in 2020 when compared to 2017, that is to say, the year just prior to the imposition of the safeguard measureThe Commission recalls that in Provisional Safeguard Regulation it had concluded that up to end of 2017, there had been a significant increase in imports into the Union market.Furthermore, the share of imports compared with the production of the Union industry considerably increased under the safeguard measure (average of 16 % during the period considered) as compared to the years prior to the imposition of the measure (2013-2017, whether individually (maximum of 12 % in one year) or averaged (10 %)). Data regarding production for the period 2018-2020 can be found in Table 1 and for the period 2013-2017 in table 5 of the Definitive Safeguards Regulation.. Furthermore, the average market share of imports during the period under the safeguard was higher than in the years prior to its imposition (whether individual years, or averaged). This shows that, despite the safeguard, the presence of imports on the Union steel market has not diminished. Rather, it has increased in relative terms compared to the period prior to the imposition of the safeguardSee table 2 of Definitive Safeguard Regulation..(b)Evolution of TRQ Use(26)The Commission also undertook a closer look on import pressure by assessing the evolution of TRQ use under the safeguardData extracted from the Commission’s dedicated website providing information on every TRQ use, which is updated on a daily basis. The underlying data used for this analysis is publicly available at:https://ec.europa.eu/taxation_customs/dds2/taric/quota_consultation.jsp.(27)This analysis shows that the main steel exporting countries have exhausted a large number of the country-specific quotas allocated to them and, quite often, in a rather short time frame within the relevant periods of application of the safeguard measure. In some extreme cases, large volumes of annual quotas were exhausted within the first day of the period or within a few weeks. This trend continued under the quarterly administration of country-specific quotas introduced on 1 July 2020. The analysis also showed that some of those countries also exhausted extremely quickly some residual quotas in several categories after previously exhausting their own, thus crowding out other historical suppliers. This is a consistent pattern, which can be observed across product categories and origins, and in large volumes.(28)The main exporting countries not only demonstrate capacity to supply large volumes within a short period of time, creating significant disturbances on the market, but also appear ready to increase their presence on the Union market further, whenever the design of the measure gives them an opportunity to do so (for instance, through the exceptional access to the residual quota). Therefore, as found during the second functioning review of the safeguard measureCommission Implementing Regulation (EU) 2020/894 of 29 June 2020 amending Implementing Regulation (EU) 2019/159 imposing definitive safeguard measures against imports of certain steel products (OJ L 206, 30.6.2020, p. 27). See e.g. recitals (35), (36), (80)., the exporters of the main exporting countries clearly show an opportunistic behaviour seeking to maximise their market presence under the safeguard measure, by all possible means.(c)Evolution of worldwide exports by main steel exporting countries and of consumption in their domestic markets(29)Before the adoption of the US tariff measures under Section 232 of the Trade Expansion Act of 1962 ("Section 232 measures") measure on certain steel products in March 2018, the US was the largest steel importing market. After imposing a 25 % upfront duty on imports, the US lost this position to the Union, which is at present the world’s largest steel importing country, followed by the USWorld Steel Report: "World Steel in Figures, 2020", p. 25. Available at: World Steel Report. See also OECD’s Steel Market Developments, Q4 2019, p. 24 and table 3. Available at: https://www.oecd.org/industry/ind/steel-market-developments-Q4-2020.pdf. In order to shield the Union market from the ensuing trade diversion, the Union imposed its safeguard, provisionally in July 2018 and in its definitive shape in February 2019, by means of TRQs on the product concerned that, unlike the US measure, preserve historical trade flows and deter additional imports, including diverted trade.(30)Imports into the Union decreased by 13 % in 2019 and by 27 % in 2020 with respect to their peak in 2018 (See Table 5). At the same time, during the same period, imports into the US market followed a parallel even steeper declining trend after the imposition of the Section 232 measures, as shown in Table 11.
Table 11Imports into United States in tonnesSource: United States International Trade Commission - https://dataweb.usitc.gov/
YearYear 2017Year 2018Year 2019Year 2020
Total Third countries (excluding EU)21933440184723011505256112143791
(31)Therefore, these data prove a close and significant correlation between the strong reduction in import volumes into the US after the imposition of the US Section 232 measures and the parallel increase of imports into the Union, partially cushioned by the safeguard measure. This correlation is confirmed for all safeguard periods up to the impact of the COVID-19 pandemic.(32)After having identified these import trends into the two largest importing markets of steel (the Union and the USA), the Commission turned to assess the export performance in other third markets of the main steel supplying countries to the UnionThese countries are (alphabetically listed): China, India, Korea (Republic of), Russia, Taiwan, Turkey, and Ukraine. The United Kingdom is also amongst the major exporting countries. However, since during the period considered it was still a member of the European Union, it has not been included when carrying out a backward looking assessment of import data of third countries..
Table 12Evolution of exports of the product concerned from main steel supplying countries to the EU to third markets (other than EU and US)
Year201820192020% variationvolume variation
Volume in tonnes126541868125633907117579311-7 %-8962557
(33)The Commission undertook a statistical analysis of the exporting trends of the product concerned for the main steel exporting countries based on data from the Global Trade AtlasThis database gathers statistical information supplied by the national customs statistical offices from each country.. Table 8 shows that, overall, the main exporting countries to the Union of the product concerned substantially decreased their export volumes to other third markets over the period considered. An individual assessment of these countries’ export performance confirmed that most of these countries also experienced a decline in their export volumes for every country (other than the Union and the US). Therefore, this means that during a period where the world’s two main largest steel importing countries (the Union and the USA) saw a significant decline in imports when their respective measures were in place, the main exporting countries to the Union also decreased their export volumes to other third markets.(34)The Commission further supplemented its own assessment with the analysis carried out by the OECD. The OECD data confirmed the Commission’s own assessment that the export performance of the main steel exporting countries had overall consistently decreased over the period consideredThe OECD also confirmed this generally declining exporting trend on a wider level, i.e. covering also steel products outside the product concerned. See: OECD’s Steel Market Developments, Q4 2020, tables 3, 4 and 5. This general trend is also confirmed by tables 6 and 7 in the same document, showing the import evolution into the largest steel importing economies (table 6) and imports into other major steelmaking economies (table 7), and figure 8 (p.32). Available at: https://www.oecd.org/industry/ind/steel-market-developments-Q4-2020.pdf.(35)The Commission then assessed the evolution in the domestic consumption in the main steel exporting countriesMain steel exporting countries of the product concerned to the Union. over the period considered.
Table 13Consumption evolution in the main steel-making markets (including the main exporting countries to the EU)Source: CRU database. Data available for the main steel-making countries: Belarus, Bosnia and Herzegovina, Brazil, Canada, China, Egypt, India, Iran, Japan, North Macedonia, Mexico, Moldova, Russia, Serbia, South Korea, Switzerland, Taiwan, Turkey, Ukraine and Vietnam, and for the following group of product categories: Hot-Rolled coil and coil plate CR coil, Hot-Dipped Galvanized (HDG), EZ coil, Tinplate, Reversing mill plate, Rebar, wire rod, Merchant bar, Structural Sections and Rail.
Year/ ProductHR coil and coil plateCR coilHDG + EZ coilTinplateReversing mill plateRebar + wire rodMerchant bar + Structural SectionsRailAll - incl. ChinaChinaWithout China
2018501093,59172655,5387021,828539,49110692,33495876,36190878,278136,931574894,32964829,00610065,32
2019505032,94167800,9090303,028819,83113426,32531934,21197669,278709,861623696,351024140,84599555,50
2020518795,17176848,7791167,348371,03121358,51552591,72211094,728110,751688338,021141388,71546949,31
(36)Table 13 shows that, overall over the period considered, consumptionThis table is meant to give a general overview of consumption trends of some of the main product categories in the Union and in the main steel markets worldwide. As it is clear from the table, the data does not cover the product concerned as a whole. in the domestic market of the major steelmaking countries (encompassing the main steel supplying countries to the Union) increased. However, this overall trend is driven by the exceptional consumption surge experienced in China, by far the largest steel-making market in the world. With this exception, all the other countries saw a continuous decline in domestic consumption.(37)Therefore, the simultaneous decrease of exports and domestic consumption over the period considered in the majority of the main steel-making countries unequivocally witnesses to the increasing difficulties they experience to find outlets for their traditional export operations. These difficulties strongly enhance competitive tension and induce a forceful conduct of exporters in third markets.(d)Overcapacity(38)The Commission also assessed the most recent developments related to global overcapacity in the steel sector that it had already considered in its Provisional and Definitive Safeguard Regulations.(39)An analysis of various authoritative sources referred to in this Regulation show that the situation of overcapacity in the global steel market has worsened over the period considered. The OECD noted that "the latest available information (as of December 2020) suggests that global steelmaking capacity increased in 2020 for the second year in a row (Figure 10). The net capacity change in 2020, taking into account new capacity additions and closures, brings current global steelmaking capacity up to 2453,2 mmt, representing a 1,6 % increase from the level at the end of 2019"See OECD’s Steel Market developments Q2 2021, of 1 March 2021, p.28, recital 53..(40)Furthermore, the OECD added that "Global steelmaking capacity rose to 2453,2 mmt in 2020, while crude steel production declined to 1827,8 mmt, with the gap between the two increasing to 625,4 mmt from 568,7 mmt in 2019. Global steel production as a share of capacity, as a rough indicator of the global utilisation rate, declined from 76,5 % in 2019 to 74,5 % in 2020"Ibid. at recital 55..(41)The conclusions of the 2020 Global Forum on Steel Excess Capacity ("GFSEC") Ministerial Report, based on data up to 2019, had already pointed that developments in the sector could follow this direction. The report noted that "two particular concerns at the close of 2019 were the reversing trend being observed in Chinese steelmaking capacity, with several very large greenfield projects being initiated particularly in southern and eastern coastal areas supported by the government-led capacity swaps scheme, and Chinese support for or participation in capacity expansion in third countries. Rapid capacity growth was also taking place in Southeast Asia and the Middle East"Global Steel Forum on Steel Excess Capacity, 2020 Ministerial Report, recital 17..(42)The Report added that "the immediate implication of the demand outlook is that the global capacity-demand gap, an indicator of over-supply risks for the steel market, is going to increase significantly to at least 606 mmt in 2020"Ibid. at recital 23.. It also noted "this reversal in excess capacity can lead to trade disturbances, trigger sharply lower steel prices and hurt the economic sustainability of the steel industry".Ibid. at recital 24 (including figure 5).(43)Therefore, the Commission considered it evident that the problem of global overcapacity in the steel sector has worsened in the period considered, resulting in an even larger gap between production, consumption and installed capacity. The Commission further confirmed this information with its own assessment of the data from the CRU database for the main steel-making countries worldwide, which include the main steel-exporting countries to the Union marketSource: CRU database for years 2018-2020, in particular overcapacity figures compared to consumption and production. https://www.crugroup.com/analysis/steel/ (access under subscription).(e)US Section 232 measures(44)In its regulations imposing a provisional and a definitive safeguard measure, the Commission found that the US Section 232 measures on certain steel products were likely to cause considerable trade diversion to the Union market of exports originally destined to the US market, if no remedial action was taken by the Union. In its definitive regulation, the Commission concluded that there was evidence that the first signs of trade diversion were already taking place in 2018See recitals (99) to (110) of Definitive Safeguard Regulation.(45)The Commission has already shown in Table 11 that, since the adoption of the US Section 232 measures on steel, the level of imports into the US market had significantly declined. In fact, over the period considered, the imports formerly directed to the US do not appear to have found other outlets worldwide, as overall exports to other countries, including the Union market, decreased in a situation of declining domestic consumption for the main steel exporting countries to the Union.(46)To date, the US Section 232 measures continue and there is no indication by the US authorities foreseeing its repeal. Accordingly, the risk of trade diversion, of both goods currently shipped to the US and those that used to be imported into the US market but which, as a result of the US Section 232 measures, are not being imported anymore, fully remains if the Union safeguard measure were to lapse.(f)Situation of trade defence and trade restrictive measures in third countries(47)Over the period considered, in addition to the US Section 232 measures, which remain in place, the Commission observed the continuous imposition of new measures across different jurisdictions that largely affect the main steel exporting countries to the Union in a wide variety of steel products, including several of those falling under the safeguard measureOECD, Steel trade and trade policy developments, 24 February 2021, Annex A.. This includes the recently announced notice to prolong the safeguard measure on certain steel products by the United KingdomNotice of determination 2020/06: safeguard measures on certain steel products – application of tariff rate quotas - GOV.UK (www.gov.uk).(48)This observed trend of continuous increase in the scope of steel categories subject to anti-dumping and countervailing duties, without signs of reversal in the foreseeable future, reinforce the above-mentioned difficulties for exporting countries to find outlets for their exports, which enhances competitive tension and makes more forceful the conduct of exporters(g)Attractiveness of the Union market(49)The Union is at present the largest steel importing market in the world in terms of volumes.See Section 3.1.2.c. of this Regulation. In terms of price levels, import prices into the Union from its main supplying countries are consistently higher than their export prices to other third markets for a large majority of their steel exports (in 53 % to 73 % of the total codes affected the export values to the Union are higher than to other third markets)Source of raw data: Global Trade Atlas "GTA". https://www.gtis.com/gta/. Figures pertaining to the period 2015-2020, for exports from the main steel exporting countries to the EU, namely China, India, Russia, South Korea, Taiwan, Turkey and Ukraine. (United Kingdom was not included because, despite being one of the top 8 exporting countries to the Union, in the period assessed it was still an EU Member State)..(50)This means that exporters have an interest in penetrating the Union market by all means and sometimes incurring in unfair pricing conduct. In fact, in recent years the Commission has imposed a series of anti-dumping and countervailing measures on imports of steel, including on product categories covered by the safeguard.(51)The statistical trends of imports into the EU (see Table 9) confirm the attractiveness of the Union market for exporters. Imports into the Union have, on average, even increased their market share during the period considered as compared to the period prior to the imposition of the safeguard, in a context of decreasing consumption and despite a safeguard in place.(52)In view of these elements, the Commission concluded that the Union steel market remains attractive for exporting countries.3.1.3.Conclusions(53)Based on the foregoing evidence and considerations, the Commission found that the Union steel industry, after the first three years of the safeguard measure, still finds itself in a fragile economic situation.(54)The Commission also found that imports from the main steel exporting countries have exerted and still continue exerting very high import pressure on the Union’s steel market, with a an aggressive and opportunistic pattern of commercial behaviour, that is to say, using any margin to increase market presence.(55)Furthermore, given the prevailing downward trends in worldwide exports and domestic consumption by the main steel exporting countries over the period considered, which were already underway prior to the COVID-19 pandemic, and in an overall context of significant overcapacity, the Commission then noted that exporters are in need to increase their sales on any possible market to continue operating.(56)The investigation also confirmed that other significant steel markets, including the second largest importing country, the US, continue having trade restrictions in place affecting the ability of exporting countries to sell thereto, in a general context of continuous decline in steel consumption.(57)The investigation further confirmed that the Union market is comparatively more attractive for imports in terms of size and price levels, thereby becoming a market where large volumes of steel could be directed.(58)The counterfactual analysis undertaken in the light of the set of factors described in Section 3.1.2. to determine what would happen if the safeguard is removed clearly shows at this moment a high likelihood that very substantial volumes of steel unsold in other parts of the world could end up being directed towards in the Union market.(59)These additional imports, together with the currently existing ones, would overall lead to a very serious further deterioration of the economic situation of the Union industry, and could seriously endanger its viability. It is therefore established that the lapsing of the safeguard measure would result in serious injury to the Union industry caused by increased imports. This conclusion is not affected by the current effects of the COVID-19 pandemic on the Union industry. Whilst the economic situation of the Union industry was further aggravated in 2020 because of the COVID-19 pandemic, the Commission established that the likely increase in imports should the safeguard measure lapse would result in serious injury to the Union industry.(60)The Commission concluded that such increased volumes could undermine significantly any meaningful economic recovery and the efforts being made by the Union steel industry in its process of adjustment to a higher level of imports, which are described in the following section. Therefore, the Commission considered that the safeguard measure continues to be necessary to prevent serious injury.(61)This necessity exists also because the Union does not have the possibility under WTO rules to increase import duties on the product concerned without taking a safeguard measure. Indeed, in the WTO the Union has bound its import tariffs at the level of zero for the tariff lines included in the product concerned. For this reason, just as in 2018 the increase in imports evidently was the result of the effect of these obligations (namely zero-duty tariff concessions) incurred by the Union under the GATT, so would these obligations also now permit imports to increase again, resulting in serious injury to the Union industry, should the safeguard lapse.3.2.Adjustment(62)When the Commission introduced the provisional steel safeguard in July 2018, the Union steel industry had already started a process of adjustment to the serious crisis experienced by the steel sector since mid-2010, when world steel demand slowed down and capacity nonetheless continued expanding. This imbalance, aggravated by State intervention supporting capacity increases and preventing closures of uneconomic facilities in some third countries, distorted market dynamics and constrained producers to turn increasingly to export markets, which fuelled trade defence cases, many of them involving China where the largest overcapacity lays.(63)The Union reacted swiftly to this challenge. In 2013, with its "Action Plan for a competitive and sustainable steel industry in Europe"Commission Communication of 11 June 2013 (COM/2013/0407 final)., the Commission set out an ambitious plan of targeted actions, both at Union and Member State level, to enhance the competitiveness of the Union steel industry and make it sustainable and able to compete globally, as well as to develop the next generation of steel products vital for other key European industries.(64)The McKinsey consulting firm, in its Report "The current capacity shake-up in steel and how the industry is adapting"©McKinsey & Company, Metals and Mining Practice, January 2018. Available at: https://www.mckinsey.com/~/media/mckinsey/industries/metals %20and %20mining/our %20insights/the %20current %20capacity %20shake %20up %20in %20steel %20and %20how %20the %20industry %20is %20adapting/the-current-capacity-shake-up-in-steel-and-how-the-industry-is-adapting.pdf published in January 2018, saw the 2016-2025 decade volatile and ripe for further restructuring, in view that the consolidation and adjustment efforts in some parts of the world, notably in Europe, had been "largely offset by continuing expansion elsewhere". The Report also explained how companies, “especially in Europe, South Korea and Japan, are adjusting to global overcapacity "by pursuing new products and business model extensions that enable them to move up the value chain". The Report further explained that, "in addition, innovation in steel also encompasses the core production processes, aiming at solutions to reduce production costs, improve functionality products, or reduce the environmental burden". The Report finally expected "more leading players to experiment with radical innovation in production processes, breaking the long-held belief that steel production technology has matured and thus has limited room for further productivity gains".(65)In this context, in March 2016, the Commission took stock of the actions implemented under the 2013 Steel Action Plan and, by means of its Communication "Steel: Preserving sustainable jobs and growth in Europe"Commission Communication of 16 March 2016 (COM/2016/0155 final)., strengthened the actions in order to promote investment and create a more favourable business that should assist the Union steel industry in its adaptation efforts. In particular, the Commission refocussed all its Union strategic initiatives to the fullest extent and in an accelerated manner in order to step up the efforts that the EU steel industry was making to modernise and implement innovations that guarantee its long-term competitiveness and sustainability.(66)As explained in Section 3.1.e), the adoption by the US of its Section 232 measures on steel, which entered into force in June 2018, deepened the chronic imbalance between steel capacity and demand. The closure of the, at the time, largest steel importing market has exacerbated the aggressive conduct by the steel exporting countries in their desperate search for outlets to place their output excess.(67)In these circumstances, the proportionate reaction by the Commission with the introduction of its safeguard measure in TRQ shaped to deter trade diversion, provisionally in July 2018 and in their definitive form in February 2019, prevented that the sudden and sharp steel imports surge that the EU steel market was already experiencing got reinforced. In the absence of this action, the adjustments efforts the Union steel industry was undertaking to adapt to the increasing global overcapacity and the progressively integrated steel markets would have been thwarted.(68)Under the Union safeguard, the adjustments efforts of the Union steel industry continued. In their submissions and questionnaire replies, the Union steel industry has documented that it has been adjusting during the first three years of application of the safeguard. The confidential information submitted, complemented with press releases, company reports, and other publically available information, showed that the Union steel industry has been adopting adjustment actions to reduce costs, improve performance, innovate, and undertake its environmental transformation in line with the EU commitments to fight climate change. The adjustments documented concern the product categories covered by the EU steel safeguard. These adjustments are preparing the EU steel industry for remaining financially and environmentally sustainable in the long-run.(69)On the one hand, the Union steel industry has reported performance-enhancing measures to save costs and optimize value chain, such as job cuts, closing of less efficient or underutilised facilities, coupled with investments in new machinery and production processesSee, for instance, ArcelorMittal’s announcement to permanently close Krakow furnace and steel plant in Poland, 8 October 2020, available at: https://www.spglobal.com/platts/en/market-insights/latest-news/metals/100820-arcelormittal-to-permanently-close-krakow-furnace-and-steel-plant-in-poland.Also see Bekaert’s announcement at: https://www.bekaert.com/en/about-us/news-room/news/bekaert-announces-restructuring-plans-belgium , Productos Tubulares’ job reduction in its open questionnaire reply and Outokumpu’s announcement to reduce its total employee headcount in Annex 32 of EUROFER’s submission.. On the other hand, the Union steel industry has also documented more forward-looking adjustments to reinforce competitiveness in the longer run, such as investments in new sustainable technologies (including environmental tech), production processes, and product innovation. Among others, some steel producers, such as AperamSee Interim Financial Report, Half year ending 30 June 2020, pages 12-14, Aperam Leadership Journey® available at: https://www.aperam.com/sites/default/files/documents/Aperam %20Half %20Year %202020.pdf, ThyssenkruppSee, for instance, Thyssenkrupp’s open questionnaire reply and annexes. or ArcelorMittalFor detailed description of ArcelorMittal’s projects and related press releases, see ANNEX 18 of EUROFER’s submission., have adopted the latest technological innovations and increased automation and digitalization in their processes. Others, such as VoestalpineSee, for instance Voestalpine’s open questionnaire reply. or SalzgitterSee Salzgitter’s comprehensive restructuring program available at:https://www.salzgitter-ag.com/en/company/strategy.html and also Salzgitter Mannesman Precision Tubes’ investment at: https://www.ndt.net/search/docs.php3?id=24381, have pursued the differentiation of their products by investing on premium end-use sectors (such as automotive, energy) and collaborating closely with customers on new steel grades and solutions. All these adjustment help the Union steel industry adapt to a more competitive market with higher import pressure.(70)It is to be noted that these adjustment efforts did not cease with the onset of the economic crisis caused by the COVID-19 pandemic, though the ensuing shocks and adverse economic effects of the crisis have increased the complexity and the burden for the Union industry to pursue its adaptation process.(71)The principles that are at present guiding the adjustments efforts of the Union steel industry were established by the Commission in its Communication "A New Industrial Strategy for Europe", published in March 2020Commission Communication of 10.3.2020 (COM(2020) 102 final)., in which it laid the foundations for an industrial policy that would support the twin transition to a green and digital economy, make EU industry more competitive globally, and enhance Europe’s open strategic autonomy.(72)As this strategy was adopted just when the COVID-19 pandemic started, the Commission has recently updated it in May 2021 by means of its Communication "Building a stronger Single Market for Europe's recovery"Commission Communication of 5.5.2021 (COM(2021) 350 final)., which takes stock of the emergency and recovery measures the EU implemented in the meantime, in the wider EU industrial policy context. In this update of the EU industrial policy, the Commission highlights the "need for more speed in the transition towards a cleaner, more digital, and more resilient economic and industrial model, in order to maintain and enhance Europe’s drive towards sustainable competitiveness".(73)On account of its key importance, one of the three Staff Working Documents ("SWD") accompanying the update of the 2020 Industrial Strategy concerns the steel industry: "Towards competitive and clean European steel"Commission Staff Working Document of 5.5.2021 (SWD(2021) 353 final).. This SWD describes the challenges and opportunities for the Union steel industry, as well as the EU policy toolbox available to support the future efforts of the Union steel industry in leading the twin transition.(74)Accordingly, the Commission concluded that the EU steel industry is and will continue adjusting to a situation of higher imports during the application of the safeguard.3.3.Length of the prolongation(75)The Commission found that the EU steel safeguard continues to be necessary to prevent a serious injury and that there is evidence that the EU industry continues implementing measures to adjust to a market situation characterised by a higher import pressure. However, according to Article 19 of Regulation (EU) 2015/478, transposing Article 7.2 of the WTO Agreement on Safeguards, the duration of a safeguard measure "must be limited to the period of time necessary to prevent or remedy serious injury and to facilitate adjustment on the part of Union producers".(76)The Union safeguard measure was initially set to last three years until 30 June 2021. However, the Commission noted that, during the second year of application of the safeguard, the economic crisis resulting from the COVID-19 pandemic has lengthened the adaption process of the Union steel industry, with part of the available resources devoted to keep the steel companies going during the most critical phases of the COVID-19 pandemic.(77)The Commission also found that a prolongation for only one year would be disproportionately short. In this respect, the Commission noted that the Union steel industry is at present, as its industrial and financial indicators for 2020 show, in a fragile situation and remains vulnerable to import shocks if the safeguard measure lapses at this stage, which could jeopardise the adjustment efforts made so far. Moreover, the Commission also noted that there is still a weak general and economic trade situation, which has not yet fully recovered from the pandemic recession.(78)In this latter respect, the Commission observed that, although GDP growth outlooks for 2021 are being gradually upgraded by the majority of forecasts, due to the positive results of the vaccination roll-out in the majority of western countries, at this time confidence still remains fragile because of uncertainties in the vaccination process and the difficulties to control the pandemic in important trading countries like Brazil and India. Oxford Economics in its latest Outlook May/June 2021 has raised its world GDP forecast and now expects it to grow 6,3 % this year and 4,6 % in 2022, respectively 0,4 and 0,2 percentage points higher than in its previous forecast, as economies regain ground lost during the worst phases of the pandemic. As to the Eurozone, Oxford Economics expects GDP to grow 4,2 % in 2021 and 4,7 % in 2022, with a return to its pre-crisis level only until the start of 2022. For its part, the Commission in its Spring 2021 Economic forecast has also upgraded its forecast for the EU economy and expects it to expand by 4,2 % in 2021 and by 4,4 in 2022. In terms of recovery, growth rates vary importantly between Member States and the Commission expects that all Member States should see their economies return to pre-crisis levels only by the end of 2022.(79)In these current circumstances, in order to prevent that the Union industry suffers an undue serious injury if the safeguard measure lapses at this stage, the Commission considers it necessary to prolong the measure for three additional years until 30 June 2024.(80)However, in order to guarantee that the prolongation remains limited to the strict minimum necessary, the prolongation will be subject to the review regime provided for in Section 4, which, among others, foresees a review to determine whether the safeguard should not be terminated by 30 June 2023 after two years of prolongation.3.4.Level of Liberalisation(81)The current liberalisation rate of the safeguard was set at an annual rate of 3 %. The Commission assessed, based on evidence available, whether this level of liberalisation continued to be appropriate and commensurate to the market developments and outlooks. In addition to the general economic forecasts and industry specific recovery indicators described in the previous section for the assessment of the prolongation length, the Commission has also considered trade recovery indicators.(82)In this respect, IHS Markit, in its GTA Forecast of trade flows of April, has predicted important year-on-year rises in the real value of global trade with increases of 6,5 % and 4,3 % respectively in 2021 and 2022 that will allow to already reach the pre-COVID-19 pandemic level by the end of 2021. However, global trade will continue being depressed with respect to its long-term pre-COVID 2011-2019 trend, which will not be reached than until 2025/2026. Moreover, IHS Markit predicts that in the longer run global trade will grow at a lower average Compound Annual Growth Rate of just 2,9 % over the period 2021-2030.(83)In these circumstances, as the current forecasts foresee, pre-pandemic economic and trade conditions are not expected to be soundly re-established within the Union until the end of the first half of 2022, and in line with the growth rate predicted over the current trade flows trend, the Commission does not see any reasons to alter at this stage the liberalisation rate of 3 % for the first year of prolongation.(84)Furthermore, maintaining 3 % at least until 30 June 2022 will keep imports at maximum 32,5 million tonnes, still slightly below the historical 2018 record. The historical record could be achieved a year later, once economic and trade conditions are by that time recovered.4.REVIEW REGIME DURING PROLONGATION(85)With a view to guaranteeing that the safeguard measure remains in place only to the extent that it is necessary, the Commission will carry out a review to determine whether, on the basis of the circumstances at that time, the safeguard measure should be terminated by 30 June 2023, namely after two years of prolongation. In addition, in order to keep in the meantime the operation of the safeguard adapted to market evolution and in line with the interest of all stakeholders, the Commission will undertake a functioning review, like those conducted in 2019 and 2020. Such functioning review will be initiated sufficiently in advance to introduce any needed changes from 1 July 2022, after the first year of prolongation. An immediate review of the safeguard measure will also be triggered if the US introduces changes to its Section 232 measure on steel that may have a significant impact on the unduly diverted trade flows it currently generates.(86)The Commission also decided that the liberalisation pace of 3 % could nevertheless be reviewed and if necessary changed during the functioning review to be completed by 30 June 2022, if the circumstances justify it.5.UNION INTEREST(87)The Commission has also examined whether any compelling economic reasons exist which could lead to the conclusion that it is not in the Union interest to prolong the existing safeguard.(88)For this purpose, the Commission assessed the impact of possible measures on Union producers, importers and users. The assessment of the evidence available is structured as follows: i) the economic situation of Union steel producers and the possible effect of a removal of the measure (see Section 5.1); and ii) the interest of users and importers, in the light of the alleged shortages of supply, the high level of steel prices, and the supply delays claimed by some interested parties, as well as the potential causal link between these alleged effects and the Union steel safeguard (see Section 5.2). In its assessment, the Commission particularly looked into the TRQ use evolution under the safeguard and the overall availability of imports in the supply to the Union market.5.1.Interest of Union producers(89)The Union steel industry has more than 500 production sites operating across 23 EU Member States. The industry directly employs 330000 people, and when including indirect and induced jobs in other sectors, creates 2,6 million jobs throughout the UnionCommission Staff Working Document "Towards competitive and clean European steel", SWD (2021) 353 final, 5.5.2021..(90)The Commission described in Section 3.1.1 the economic situation of the Union steel producers and concluded that it was necessary to prolong the measure to prevent or remedy serious injury. If the measure is not prolonged, the investigation has established that the Union industry would likely face a significant wave of imports that would seriously undermine any efforts to adjust to the import pressure in an overall still uncertain economic situation in the Union.(91)Therefore, it would be in the interest of the Union steel producers to prolong the measure.5.2.Interest of users and importers(92)The Commission noted that the safeguard measure has allowed historical trade volumes to continue entering the Union market free-of-duty, and that it has been liberalised regularly (by increasing the TRQ volumes by 3 % in July 2019 and July 2020 respectively)The Commission recalled that it had already increased the historical trade flows (average of imports in 2015 to 2017) by 5 % upon entry into force of the Definitive Safeguards Regulation.. Therefore, the traditional trade volumes have gradually increased under the safeguard measure. Furthermore, during its prolongation, the safeguard measure will continue being liberalised further.5.2.1.TRQ use under the measure and the alleged supply shortage(93)When assessing the TRQ use, the Commission noted that, during the first three years of application of the safeguard, there have been consistently (and increasingly) free-of-duty TRQ volumes available at the end of each relevant period in virtually all product categories, often with more than one country-specific quota available, and in many instances also part of the residual quota. The Commission also noted that, since the second year of application of measures, this is, 1 July 2019, the trend in TRQ use experienced a steep decline. This was thus the case even before the COVID-19 pandemic.(94)This evolution is clearly shown in Table 14Based on a compilation of the data available in the database at the end of the respective period.:32021R1029_en_img_1(95)The Commission therefore concluded that, while the safeguard has met its objective to deter trade diversion towards the Union market, there has been sufficient free-of-duty TRQ volumes available for importers and users in the Union, commensurate to demand, and exceeding generously historical trade volumes.5.2.2.High steel prices(96)The Commission has also assessed the evidence available with regard to the price increases observed in the steel sector in the first months of 2021 and part of the second half of 2020. The Commission looked, in particular, at whether these increases in the Union and worldwide markets had any link with the EU steel safeguard measure, and the impact this increase is having and/or would have on the Union market if the safeguard measure is prolonged.(97)In this respect, the Commission first noted that it is an undisputedSee EUROFER’s rebuttal, p.37-39. fact that steel prices, including those of some product categories within the product concerned, have experienced a sharp increase worldwide during the last months (starting in the course of the second half of 2020)See OECD’s Steel Market developments Q2 2021, of 1 March 2021, figures 3, 4 and 5.. This trend and scope is also clearly depicted in the charts contained in Graphs 1-3Source: S&P Global Platts, ©2021 by S&P Global, Inc. – data until 11 May 2021. which show the price evolution of three product categories (categories 1, 4 and 13)The choice of these categories is not meant to be exhaustive in scope, but it is nevertheless relevant to corroborate the price trends referred to by several interested parties (mostly users) because these categories are amongst the most relevant in terms of import volumes and they also concern two product families (flats (categories 1 and 4) and longs (category 13).:32021R1029_en_img_232021R1029_en_img_332021R1029_en_img_4(98)Furthermore, the Commission noted that steelmaking raw material prices notably iron ore and scrap have also been experiencing a drastic increase over the same period when steel prices started increasing, as explained in recital (91) (see Graph 4)Ibid. p.24, section 6.2. See also: Steel Plats Global "Fundamentals support strong iron ore prices in 2021: Platts Analytics", 4 May 2021: https://www.spglobal.com/platts/en/market-insights/latest-news/metals/050421-fundamentals-support-strong-iron-ore-prices-in-2021-platts-analytics (last accessed 12 May 2021); Financial Times "Iron ore price leaps 10 % on hopes of global economic recovery", 10 May 2021: https://www.ft.com/content/e4c5d29b-51c2-4e8c-b87a-ad6cac924476 (last accessed 12 May 2021); Argus Media "Australia extends forecasts for iron ore price strength" 11 May 2021, https://www.argusmedia.com/en/news/2213766-australia-extends-forecasts-for-iron-ore-price-strength?backToResults=true (last accessed 12 May 2021), Kallanish "Scrap exceeds $500 in Turkey" 12 May 2021, https://www.kallanish.com/en/steel-news/market-reports/article-details/scrap-price-exceeds-dollar500t-in-turkey-0521/ (last accessed 12 May 2021). See also the sharp increase in transportation costs, S&P Global Platts (25 March 2021) ‘High container freight rates leave commodity traders scrambling for alternatives: https://www.spglobal.com/platts/en/market-insights/latest-news/shipping/032521-high-container-freight-rates-leave-commodity-traders-scrambling-for-alternatives.32021R1029_en_img_5(99)The OECD Report explained that "prices of the main steelmaking raw materials increased dramatically during the second half of 2020, and as of February 2021 benchmark prices for iron ore, coking coal and scrap were up 97 %, 53 % and 56 %, y-o-y, respectively."See OECD’s Steel Market developments Q2 2021, of 1 March 2021 at p.24.(100)This information confirms the picture outlined by the evolution of the injury indicators in Tables 1 to 4. In particular, that the increase in prices in the second half of 2020, coupled with signs of recovery in demand, contributed to the improvement in the situation of the Union industry from a previous very negative situation. However, such price increase did not allow the Union industry to return to profitable margins by the end of 2020. This fact is attributable, at least partially, to the parallel surge in prices experienced in the main steelmaking raw materials.(101)In this regard the OECD noted that and "spite of the sharp increase in steel prices, the steel-raw material price margin, measured by the difference between the price of steel and a basket of steel inputs, has not increased, due to the upswing in raw material prices (Figure 9). Indeed, the basket of raw material prices used to compute the margins was 97 % higher in February 2021, y-o-y"Ibid. at p.27..(102)As shown in Graphs 1-3, the Commission also noted that the rise in steel prices is not a phenomenon tied to the Union market, but a widespread trend across the main steel markets worldwide.(103)Despite this, however, as shown in table 14, the Commission noted that there has been ample availability of free-of-duty quotas from several sources in virtually all product categories in the last period of the measure, i.e. starting on 1 July 2020See also S&P Global Platts, 14 May 2021, ‘Galvanized sheet supply squeeze, short imports leave EU buyers stranded Galvanized sheet supply squeeze, short imports leave EU buyers stranded - EUROMETAL (last accessed 15 May 2021).. Consequently, the safeguard did not limit Union users to purchasing steel exclusively from Union producers at the prices these would have set, thus leaving them without any other realistic (and free-of-duty) alternative of supply. On the contrary, Union users had the possibility to import from other origins under the relevant volumes of free-of-duty TRQ available for every product category.(104)The Commission also observed that the submissions of certain users alleged that they were prevented from importing larger free-of-duty volumes from certain specific origins (these origins would vary depending on the product category at issue). However, the Commission noted that one of the enforcement conditions of a safeguard is to preserve that traditional trade flows in terms of both volumes and origins continue being available on the Union market. The fact that a given country may have exhausted its country-specific TRQ in a specific product category, while there are multiple volumes and origins with free-of-duty TRQ available in that same category, does not mean that the safeguard measure is creating an undue shortage in the market.(105)These facts thus strongly suggest that the safeguard measure is not the cause of the observed steel price increase, and that it did not create an overall shortage of steel on the Union market. The Commission thus concluded there is not a direct connection between the safeguard measure and the recent evolution in steel price levels. Furthermore, it is not evident that the currently high prices will be sustained in the longer term, once the market adjusts to a post-COVID-19 pandemic situation.See Fitch Ratings "Global Steel Price Rally Will Be Short-Lived" (2 February 2021) https://www.fitchratings.com/research/corporate-finance/global-steel-price-rally-will-be-short-lived-02-02-2021 (last accessed 12 May 2021). See also IHS Markit, Steel Price Forecast and Market Outlook: https://ihsmarkit.com/solutions/steel-forecast.html (last accessed 25 May 2021)5.2.3.Alleged supply delays(106)The Commission then turned to assess the alleged delays incurred by the Union steel industry in supplying the Union marketAllegations made by several interested parties.. It became apparent from the investigation that in the last part of the period considered, there had been a transitory mismatch between demand and supply in the Union (as well as in other third markets) when the economy started to rebound from the bottom of the COVID-19 pandemic recession.See Global Market Outlook of December 2020 and Global Market Outlook of April 2021, S&P Global Platts (last accessed 18 May 2021). In this regard, the Commission noted that the steel producers had to react to the sudden and drastic reduction in demand that took place in 2020 because of the COVID-19 pandemicSee consumption figures in table 2.. The Union industry idled some of its capacity to reduce as much as possible its fixed costs and to align the available capacity to the existing demand. Subsequently, later in 2020 and in early 2021, demand in some steel using sectors experienced a quick and sudden recovery, e.g. automotiveSee European Manufacturers Automobile Association (ACEA) statements of 3 February 2020 https://www.acea.be/press-releases/article/covid-stakes-are-high-for-european-automotive-recovery-new-facts-and-figure, and of 30 July 2020 https://www.acea.be/press-releases/article/eu-car-sales-covid-recovery-expected-to-start-in-2021-auto-industry-says.(107)This situation has occurred also across several markets worldwide. In this regard, according to the OECD latest Report "Vast steelmaking capacity idled during the heights of the pandemic could not be brought online quickly enough to meet recovering steel demand and restocking, leading to the rapid rise in global steel prices"OECD’s Steel Market developments Q2 2021, of 1 March 2021, p.21..(108)In the same vein, S&P Platts Global noted "China aside, crude steel production has been slow to ramp up post lockdowns in key countries and regions. Europe's output fell 7,1 % on year in March, North America's by 8,9 % and India's by 8,6 %, according to the World Steel Association. In the US, mill capacity utilization rates are still only around 77 %, compared with 80 % in March last year before the pandemic took hold. Japan's METI forecasts the country's crude steel production at 23,24 million mt in Q2, down from 23,67 million mt in Q1"See S&P Global Platts, 16 April 2021, "Trade Review: Global steel imbalances present export opportunities in Q2" https://www.spglobal.com/platts/en/market-insights/latest-news/metals/041621-trade-review-global-steel-imbalances-present-export-opportunities-in-q2 (last accessed 21 May 2021).. IHS Markit also noted that "furnace restarts and sharply increasing imports are starting to alleviate the supply crunch"See IHS Markit, Steel Price Forecast and Market Outlook: https://ihsmarkit.com/solutions/steel-forecast.html (last accessed 25 May 2021).(109)To reach a conclusion, the Commission analysed the evidence available on the file regarding the resumption of operations in the production lines that had been idled by the Union industry during the pandemic.(110)The evidence in the file points to a steady increase of capacity available in the market from furnaces that were idled in 2020See Exhibit 6 of EUROFER’s rebuttal, containing information from external sources confirming the restart of several furnaces by various Union producers in recent months.. The Commission considered that this evidence shows that the Union industry is responding to the economic recovery in certain downstream sectors in 2021, which should result in it being able to supply larger volumes of steel in a shorter period, and hence restoring a balance in the marketSee also Global Market Outlook of December 2020 and of April 2021, S&P Global Platts (last accessed 18 May 2021)..(111)The OECD Report further observed in this respect that "steel supply is widely expected to catch up with orders by the end of the first quarter of 2021"See OECD’s Steel Market developments Q2 2021, of 1 March 2021, at p.22.. Similar forecasts are echoed by several specialised publicationsSee S&P Global Platts " Steel supply should start to ease toward mid-year as production is restored", 16 April 2021, "Trade Review: Global steel imbalances present export opportunities in Q2" https://www.spglobal.com/platts/en/market-insights/latest-news/metals/041621-trade-review-global-steel-imbalances-present-export-opportunities-in-q2 (last accessed 21 May 2021). See also Fitch Ratings "High EU Carbon Prices to Weigh on Steelmakers’ Profitability", 12 May 2021, https://www.fitchratings.com/research/corporate-finance/high-eu-carbon-prices-to-weigh-on-steelmakers-profitability-12-05-2021 (last accessed 23 May 2021)..(112)The Commission therefore found that the problems of supply experienced after demand the rebounded were transitory and that the return to operation of idled facilities by the Union industry, which is underway, should thus help ensuring that normal pre-pandemic steel supply conditions are re-established in a reasonably short timeframe.5.3.Conclusions(113)A recent Commission Staff Working Document has confirmed the importance of having a strong and competitive steel sector in the Union. In this respect, it noted that the EU’s Industrial Strategy also recognised that "energy-intensive industries are indispensable to Europe’s economy and that other sectors rely on them" and that "the steel sector and other energy-intensive industries play a vital role in providing products and services to a wide-range of Europe’s industrial ecosystems"Commission Staff Working Document "Towards competitive and clean European steel", SWD(2021) 353 final, 5.5.2021, p. 2..(114)The same Staff Working Document also observed that "steel is a crucial input to several downstream ecosystems, such as construction, mobility and automotive, or for mechanical engineering companies. Data on steel consumption per sector shows that construction account for 35 % steel use in the EU, automotive for 19 %, mechanical engineering and metal ware by 15 % each and tubes for 10 %. Companies active in these sectors, many of which are small and medium-sized enterprises (SMEs), employ millions of workers in Europe and depend on EU steel production"Ibid. at p. 3.. In a similar vein, in 2016, a Commission Communication had already underlined that “a robust industrial base is essential for Europe's economic growth, preservation of sustainable jobs and our competitiveness on global markets, and that "a strong steel sector forms the basis of many industrial value chains"Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank, "Steel: Preserving sustainable jobs and growth in Europe", COM(2016) 155 final, 16.3.2016, p. 2..(115)The Commission has established that the legal requirements of necessity and adjustment required to prolong a safeguard measure are met.(116)Furthermore, the Commission has also found that a removal at this stage of the safeguard measure is liable to cause a sudden import wave that will severely worsen the current still fragile financial situation of the Union steel industry. Such removal would jeopardise the Union industry’s recovery, just when the Union and world economy and trade are rebounding after the COVID-19 pandemic recession, and have not yet returned to pre-pandemic conditions. This import shock, in turn, risks negating the adjustment efforts the Union steel industry is making to adapt to stronger import pressure coming from market dynamics seriously distorted by increasing global overcapacity, and State intervention.(117)Moreover, the Commission has also found that the steel prices increases recently observed on the Union steel market cannot be imputable to, or be the result of, the Union steel safeguard because similar such high prices also prevail on worldwide markets and large volumes of free-of-duty TRQs remain nevertheless unused available under the safeguard.(118)In this regard, the Commission also noted that, less than a month and a half to reach the end of the third year of the measure, around 11 million tonnes of free-of-duty TRQ remained unused, this is, 36 % of the total TRQ availableThis situation of large unused TRQ volumes across categories has taken place, to different degrees, throughout each period since the imposition of a provisional safeguard measure on 18 July 2018. A "period" or "year" under the safeguard measure has comprised the following: Period/year 1: 18 July 2018 – 30 June 2019, period/year 2: 1 July 2019 - 30 June 2020 and period/year 3: 1 July 2020 – 30 June 2021.. Thus showing that users, across product categories, have had the possibility to source sufficient free-of-duty steel from multiple sources, and that the safeguard measure has not unduly limited effective supply, neither in terms of volume, nor in terms of origins.(119)In sum, the Commission found that the downsides of letting the safeguard lapse on 30 June 2021 would clearly outweigh any potential benefits its termination could bring about.(120)Accordingly, the Commission thus concluded that it is in the overall Union interest to prolong the safeguard measure.6.DEVELOPING COUNTRIES SUBJECT TO THE SAFEGUARD MEASURE(121)The list of developing countries that will continue being subject to the safeguard measure remains the same as that included in Annex II to Commission Implementing Regulation (EU) 2020/2037.Commission Implementing Regulation (EU) 2020/2037 of 10 December 2020 amending Implementing Regulation (EU) 2019/159 imposing definitive safeguard measures against imports of certain steel products, OJ L 416, 11.12.2020, p.32.7.COMMENTS FROM INTERESTED PARTIES(122)The Commission received over 160 submissions of observations and rebuttals from interested parties, including Union steel producers, Union steel users and importers, exporting producers and third country governments. In this section, the Commission will address the claims made by these interested parties. For the sake of administrative economy, the Commission grouped the claims by nature and content. Where appropriate, the Commission referred to previous findings in this Regulation that already addressed in detail most of the claims made by interested parties.7.1.Legal requirements to prolong a measure(123)Several interested parties argued that the legal requirement of import surge was not met, since, over the period considered, the overall level of imports had decreased; in these circumstances, they contended that the Commission is not entitled to prolong the safeguard. Furthermore, some parties argued that any injurious situation of the Union industry would not have been the result of an increase in imports. Other parties claimed that the effects derived from the COVID-19 pandemic, including a decrease in demand, do not justify an extension of the measure. Lastly, other parties claimed that the legal requirements to prolong a measure are the same as for imposing an original measure, including increased imports, causal link and unforeseen developments.(124)In this respect, the Commission notes that the requirements to prolong a safeguard measure under Article 7.1 of the WTO Agreement on Safeguards and Article 19(2) of Regulation (EU) 2015/478, namely necessity to prevent or remedy serious injury and ongoing adjustment, do not require that an increase in imports takes place during the period considered. The Commission established that there is a likelihood that, should the safeguard lapse, imports would increase resulting in serious injury to the Union interest. Therefore, the Commission rejected these claims.7.2.The Union industry is not adjusting(125)Several interested parties challenged the fact that the Union steel industry is adjusting and therefore claimed that this legal requirement is not met.(126)The Commission refers to the adjustments described in Section 3.2. The measures and the examples listed within this section illustrate that the Union steel industry is adjusting by means of numerous actions aimed at efficiency and innovation. Consequently, the Commission rejected these claims.(127)Several interested parties argued that the adjusting measures of the Union industry were restructuring actions carried out during the Covid-19 pandemic or just regular investment, partially driven by the EU policies, such as European Green Deal, rather than measures adopted in the context of improving the Union steel industry competitiveness vis-à-vis foreign competition. In this respect, the Commission found that the adjustment measures adopted by companies in whatever context normally respond to many different reasons and are at the same time multi-objective. In the safeguard case, indeed, as stated under the adjustment section, some of the adjustments undertaken by the Union steel industry also aimed, among other objectives, at mitigating the shocks and adverse economic effects of the pandemic or meeting EU environmental commitments. However, these types of adjustments are in any event also measures that adapt the activities of the Union steel industry to a situation with higher level of imports and import pressure, in line with the EU industrial policy guidelines and objectives described in the same section. By way of example, Arvedi’s installationFor detailed description of this project see file "Start-up of the new Tenova Consteel® EAF at Arvedi Plant, Cremona, Italy - TENOVA.pdf" under Annex 19 in EUROFER’s submission. of a new highly efficient electrical furnace in its production line aimed at becoming more cost efficient while reducing its carbon emissions. Therefore, the Commission considers that there was not sufficient evidence to justify these claims and rejected them.7.3.No risk of trade diversion from the US Section 232 measures(128)Some interested parties claimed that the US Section 232 measures on steel no longer pose a risk of trade diversion, as the market would have adjusted in the last three years. In addition, some parties claim that the exemptions in place under that measure would in any event largely reduce the risk of any trade diversion into the Union market. Furthermore, some parties also claimed that the level of prices in the US is substantially higher than other markets and hence, making trade diversion less likely.(129)With respect to the US Section 232 measures, the Commission refers to Table 7, showing that imports into the US were drastically reduced after their imposition and that other markets have not absorbed that excess volume. Regarding the exemptions in place, the Commission noted that in certain cases, for instance Canada and Mexico (which are amongst the largest exporting countries to the US), these exemptions have no bearing on the risk of trade diversion, as these countries have negligible steel export volumes into the Union market. The main steel exporting countries to the EU continue to be subject to the US Section 232 measures and have sufficient capacity to increase their exports to the EU. The individual analysis of their export performance since the imposition of the US Section 232 measures shows a steady declineSee evolution of imports in Table 9.. Therefore, any exemption that may be in place does not diminish the risk of trade diversion. Lastly, the fact that prices in the US are higher does not invalidate the finding that a risk of trade diversion continues. In fact, the Commission points to the import trends into the US since 2018. Such massive reduction in imports is linked in time with the imposition of the US Section 232 measures. Therefore, the fact that the US may have higher domestic prices than other markets did not prevent imports from decreasing substantially over the period considered.7.4.Overcapacity developments and link with trade diversion(130)Several interested parties claimed that overcapacity was decreasing and that even if overcapacity continued in the steel sector, as such it did not automatically mean that it would lead to trade diversion into the Union market.(131)The Commission considered that the evolution of overcapacity in the recent years is clear, and it refers to Section 3.1.2.d. Therefore, the claims that it is being reduced is clearly contradicted by evidence. Second, in the context described, namely, a decrease in exports to third countries, decline in domestic consumption, higher prices achieved in exports to the Union as compared to other markets, the EU being the largest importing market, and thus capable of absorbing large volumes, export behavior under the TRQ system, it would defy any economic logic to deny that exporting countries would have a clear incentive to increase their production and production capacity in order to sell larger volumes to the Union market. Therefore, the Commission noted that the findings of this investigation, in a context of an established significant global overcapacity (including amongst the main steel exporting countries to the Union), create a strong likelihood that imports into the Union would increase substantially if the safeguard measure expires.7.5.Claims pertaining to specific product categories(132)Several interested parties requested that a given product category be excluded from the measure, or be granted a special treatment within the measure if this were to be prolonged. The arguments in support of these claims were diverse.(133)The Commission, however, noted that the scope of this investigation was limited to assess whether the measure, in its current form, should be extended in time or not. The investigation therefore did not cover any potential modification to the functioning of the measure affecting individual product categories. These claims were thus rejected, as they are not pertinent under the framework of this investigation.7.6.Imports from a given country or in a given product category are not responsible for increased imports/injury/overcapacity(134)Some interested parties claim that certain product categories, i.a. 1, 2, 3B, 4B, 6, 16, 18, 20, 21, 22, 24 and 25A, should be excluded from the scope of the measure in case of prolongation, given that either TRQs are allegedly too narrow, that TRQs remained unused, or that import volumes of the category concerned recently decreased.(135)The Commission recalls that the safeguard measure is not adopted against one particular country of origin or against one product category. Rather, the measure is in place on imports of the product concerned (certain steel products) from multiple origins. Therefore, any claim founded on individual country or product-category basis is against the principle of the measure. Like in the context of the original safeguard, and as explained in section 3.1.1., the Commission examined the situation on the basis of the product concerned as a whole (that is to say the 26 steel product categories) and confirmed its analysis on the basis of three product families.7.7.Some countries claimed exclusion if the measure was prolonged on account of bilateral trade agreements in place with the European Union(136)Some third countries, including some with whom the Union has bilateral trade agreements in place, requested the Commission to exclude them from the measure, should it be prolonged. Some of these countries referred to specific provisions in their respective bilateral agreements as an argument for the exclusion.(137)The Commission noted that none of these agreements provide for the exclusion of a multilateral safeguard measure such as the one at hand. Therefore, the Commission confirmed that under these bilateral agreements, it is under no legal obligation to exclude any of these countries from the measure and it rejected these claims accordingly.7.8.Risk of rebalancing(138)Some interested parties claimed that because exporting countries would be entitled to seek compensation and in the absence of an agreement, rebalancing against the Union and that for this reason, the Commission should not prolong the safeguard measure.(139)In this respect, the Commission is aware of the applicable legal framework in those cases where a measure lasts more than three years. However, the Commission recalls that the WTO Agreement on Safeguards and Regulation (EU) 2015/478 allow for a measure to last more than three years if the legal conditions are met. Thus, the Commission, by prolonging the measure beyond three years when the relevant conditions are met, is exercising its legal right under WTO and EU rules.7.9.Illegal to extend the measure on an EU27 basis(140)Some interested parties claimed that because the original measure was based on EU28 data, extending it on an EU27 basis would be illegal.(141)The Commission considered that the current review investigation is based on EU27. No interested party contested that the original safeguard measure, adopted on the basis of the at the time EU28, was illegal. The scope of the safeguard measure in view of the UK’s withdrawal of the Union already took place by means of Regulation (EU) 2020/2037Commission Implementing Regulation (EU) 2020/2037 of 10 December 2020 amending Implementing Regulation (EU) 2019/159 imposing definitive safeguard measures against imports of certain steel products, OJ L 416, 11.12.2020, p.32.. Thus, the Commission rejected this claim.7.10.The protection granted through anti-dumping and countervailing duties is sufficient for the Union steel industry(142)Some interested parties submitted that anti-dumping and anti-subsidy measures already sufficiently protect the Union Industry against unfair imports and safeguards would allegedly provide for an exaggerated protection, giving the Union industry additional advantage in their dominant position in the Union market.(143)The Commission recalls that anti-dumping and countervailing duties address unfair trade practices, while safeguards rather deal with an issue of increased volumes. The Commission has the so-called "double remedy regulation" in place for those imports subject to both safeguards and anti-dumping and/or countervailing dutiesCommission Implementing Regulation (EU) 2019/1382 of 2 September 2019 amending certain Regulations imposing anti-dumping or anti-subsidy measures on certain steel products subject to safeguard measures (OJ L 227, 3.9.2021, p. 1).. Such regulation ensures that when imports under the safeguard exceed the volume of free-of-duty TRQ, then the 25 % is not cumulated to the applicable anti-dumping and/or countervailing duty so that it does not lead to an effect on trade greater than desirable. On these grounds, the Commission rejected the double-remedy claims.(144)Furthermore, the alleged protection granted through EU trade defence measures (ant-dumping and countervailing duties) is insufficient for the purposes of the current safeguard investigation as shown in Section 3.1. The majority of injury factors significantly worsened during the period considered.(145)The measures provided for in this Regulation are in accordance with the opinion of the Committee on Safeguards established under Article 3(3) of Regulation (EU) 2015/478 and Article 22(3) of Regulation (EU) 2015/755 respectively,HAS ADOPTED THIS REGULATION:
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