Statement of reasons—Expiry review determination: Corrosion-Resistant Steel Sheet (COR1 2024 ER)

Additional product information

[22] The product definition includes corrosion-resistant steel sheet where the substrate is coated or plated with a corrosion resistant material such as zinc, aluminum, and other alloys. The coating may be applied by a variety of processes including hot-dip galvanizing or electro-galvanizing.

[23] The product definition includes corrosion-resistant steel sheet which has been chemically passivated by coating with standard or acrylic chromate and non-chromate solutions.

[24] Passivation refers to a material becoming “passive”, that is, less affected or corroded by the environment of future use. Passivation involves creation of an outer layer of shield material that is applied as a micro-coating, created by chemical reaction with the base material, or allowed to build from spontaneous oxidation in the air. As a technique, passivation is the use of a light coat of a protective material, to create a shell against corrosion. The most common method of passivation for steel products is the application of a standard chromate based or acrylic chromate and non-chromate coatings. Passivation treatments provide protection against oxidation during handling, transportation, and storage, and they also add lubricity during the forming or stamping of the part.

[25] Corrosion-resistant steel sheet is usually produced from cold-rolled carbon steel sheet (CRS) and sometimes from hot-rolled carbon steel sheet (HRS). However, additions of certain elements, such as titanium, vanadium, niobium or boron, during the steel-making process enable the steel to be classified as alloy steel. Therefore, corrosion-resistant steel produced from either carbon steel or alloy steel is included in the definition of the subject goods.

[26] The subject goods are manufactured to meet certain American Society for Testing and Materials (ASTM), Society of Automotive Engineering (SAE) or equivalent specifications, including, but not limited to:

• ASTM A653/653M
• ASTM A792/A792M
• SAE J403
• SAE J1392
• SAE J2329
• SAE J1562

[27] The product definition excludes corrosion-resistant steel for use in automobiles and automobile parts, hereafter referred to as “automotive”. Automotive end users include original equipment manufacturers (“OEMs”) and auto part producers. Such excluded goods normally fall under Customs Tariff item 9959.00.00.

[28] The product definition excludes corrosion-resistant steel sheet products that have been pre-painted or coated with organic (non-metallic) coatings. In Canada, the commonly used term for steel that has been coated with paint at the mill is “pre-painted” or “pre-coated” steel. Outside Canada, it is common for the term “organic coated” to be used to describe pre-painted steel. “Organic coated” may also refer to permanently applied plastic coatings or films. Common paint types for pre-painted and other organic coating products are silicon modified polyester, polyester, polyurethane, acrylic, epoxy, epoxy phenolic, polyvinylchloride and polyvinylidene difluoride.

[29] The product definition includes “seconds”. Seconds are goods that do not meet some aspect of the original specification. This could include dimensions, grade, or coating. It could also include a coil that has been damaged. Seconds are sold at a discount. Seconds may meet ASTM, SAE or other specifications or may be re-certified to meet a standard. For example, a coil that is damaged along the edge may be a “second”. However, if the damaged edge is slit and the damage is removed, the coil could be classified as a primary coil produced to the new width. Seconds are graded and sold on a scale of five.

Parties contending that continued or resumed dumping is likely

AMD and Stelco (collectively, the “Canadian producers”)

[56] The Canadian producers made representations through their case brief in support of their position that dumping from China, Chinese Taipei, India and South Korea is likely to continue or resume in the event the present finding expires. Accordingly, it is argued that the measures should remain in place.

[57] The main factors identified by the Canadian producers can be summarized as follows:

Common Factors Impacting Subject Countries

• Attractiveness of the Canadian Market
• Subject Countries Continue to Market Products at Dumped Prices
• The Production Imperative
• Trade Measures in Other Jurisdictions
• Global Economic Conditions

China

• Section 20 Condition in China
• China’s Forecasted Excess COR production
• China’s Economic Conditions
• China’s Export Orientation

Chinese Taipei

• Chinese Taipei’s Forecasted Excess COR Production and Weak Demand
• Inefficient Utilization Rate
• Export Dependence

India

• The Government of India’s Investments in Increased Steel Production and Capacity
• Difficult Domestic Market Conditions
• Difficulties in Main Export Markets

South Korea

• Production and Overcapacity in South Korea
• South Korea’s Economic Conditions
• South Korea's Export Orientation

Common factors impacting subject countries

[58] The Canadian producers submit that international market conditions make it likely that large volumes of COR will be exported to Canada at low prices if the CITT’s finding expires. They submit that the international market is volatile and that the situation is expected to continue in the near term as there is excess capacity in the steel industry, including in the flat-rolled steel sector. Further, it is submitted that in order to spread high fixed costs, COR producers are incentivized to increase production and to look to overseas markets to export their goods. At the same time, demand is expected to be weak globally. The producers contend that this situation will make the Canadian COR market susceptible to continued or resumed dumping if the CITT’s finding expires. Additional details are discussed below.

The attractiveness of the Canadian market^{Footnote 19}

[59] The Canadian producers state that the Canadian economy is currently experiencing a period of weak but stable growth with the Bank of Canada lowering its GDP growth forecast for 2024 to 0.8%. However, the Bank of Canada expects a slight rebound in 2025 with a GDP growth of 2.4%. Further, inflation is outpacing this weak growth, with the Consumer Price Index (CPI) inflation at 3.3% for 2023, three times the GDP growth. The inflation forecast for 2024 and 2025 is 2.4% and 2.1% respectively.

[60] The Canadian producers contend that the Canadian COR market saw a significant increase in demand in 2021 due to the economy rebounding from the initial impacts of COVID-19. However, domestic demand declined significantly in 2022 and continued to decline in 2023. The Canadian producers contend that even with a forecasted stable but weak GDP growth, Canada will remain an attractive market for COR producers, especially those facing weakening demand in their home and primary export markets. Canadian producers claim that due to weaker than average forecasted economic growth, there may not be enough Canadian demand to absorb an influx of subject good imports if the CITT’s finding expires. Further COR producers are highly likely to market exports to Canada at dumped prices to re-acquire market share.

Subject countries continue to market products at dumped prices^{Footnote 20}

[61] The Canadian producers indicate that in 2021, there was a significant increase in COR imports from China, Chinese Taipei, and South Korea to Canada. However, after the CBSA updated the normal values in 2023, these imports declined significantly. The Canadian producers state that this suggests that producers from these countries are interested in the Canadian market only if they can sell below appropriately set normal values. They contend that the importer ERQ responses support this, indicating that some exporting countries were hindered by trade restrictions during the POR. The Canadian producers argue that the lack of interest in exporting subject goods to Canada with updated normal values, and recent findings regarding the likelihood of continued or resumed dumping or subsidizing of other related steel products, increases the likelihood that subject good exports to Canada will be dumped if the CITT’s finding expires.

The production imperative^{Footnote 21}

[62] The Canadian producers contend that the production imperative for flat-rolled steel products, including COR, incentivizes producers to export excess goods to Canada at dumped prices. They argue that this is due to the high fixed costs associated with HRS production, which encourages producers to maintain high capacity utilization rates. They indicate that both the CITT and the CBSA have recognized this issue. Additionally, they state that excess HRS production can be easily transformed into COR by producers with the necessary equipment, encouraging further production. Canadian producers present that this is particularly the case for producers from China and India due to Canada’s HRS anti-dumping and countervailing trade measures. Consequently, they argue that the production imperative significantly increases the likelihood that producers will resume exporting significant volumes of COR to Canada at dumped prices if the CITT’s finding expires.

Trade measures in other jurisdictions^{Footnote 22}

[63] The Canadian producers note that the relatively higher-priced North American and European markets are more attractive to exporters of dumped COR. However, trade measures in place against COR from China, Chinese Taipei, India and South Korea in the United States (US) and European Union (EU), as well as many other countries, as listed in Table 5 below, have limited the ability of subject countries to export excess production of dumped COR to these markets. These measures divert subject good exports to markets without trade measures, which would include Canada if the CITT’s finding expires. The parties point to Morocco’s safeguard measures against COR imports from China, India, and South Korea; the US Section 232 duties of 25% on “steel articles” including COR from China, India, and Chinese Taipei; and US import quotas assigned to South Korea. In addition, they state that the European Commission announced in June 2023 that it will continue the EU’s steel safeguard measure until June 2024 and that Mexico, in addition to the existing 2017 trade measure against COR from China and Chinese Taipei, imposed an additional duty of 25% in August 2023 that affects COR imports from the subject countries. They argue that these measures increase the likelihood that producers will resume exporting COR to Canada at dumped prices if the CITT’s finding expires.

Global economic conditions^{Footnote 23}

[64] The Canadian producers indicate that both the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) forecast modest global economic growth for 2023-2025, with the US exceeding pre-pandemic projections while China falls short. China’s economy is still lagging, and it faces trade measures from the US. The Canadian producers indicate that global excess production capacity remains a serious problem for steel, including COR, with new capacity increases beginning to offset recent success in shrinking global excess steel production capacity. The Canadian producers submitted information from OECD which reports that global steel production as a share of capacity fell from 77.3% in 2022 to 75.6% in 2023 and the OECD has voiced concerns about the growing overcapacity, softening demand for steel, and government interventions in certain economies which continue to distort steel markets. In addition, the OECD emphasized significant state involvement to promote and support internationalized Chinese steel expansion investments through large subsidies. The Canadian producers contend that these trends significantly increase the likelihood that COR producers, particularly those in China, will need to market exports at dumped prices in the near-to-medium term.

China and the COR market

Section 20 conditions in China

[65] Section 20 of SIMA may be applied to determine the normal value of goods where certain conditions prevail in the domestic market of the exporting country. In the case of a prescribed country, under paragraph 20(1)(a) of SIMA, it is applied where, in the opinion of the CBSA, domestic prices are substantially determined by the government of that country and there is sufficient reason to believe that they are not substantially the same as they would be if they were determined in a competitive market. Where section 20 is applicable, normal values for the goods are not determined based on domestic prices or costs in that country.

[66] During the original COR investigation, the CBSA formed the opinion that section 20 conditions exist in China. On April 26, 2023, at the conclusion of the re-investigation, the CBSA affirmed it opinion that section 20 conditions exist in China’s COR industry.

[67] The Canadian producers submit that an expiry review is not the appropriate proceeding for the CBSA to reconsider whether section 20 conditions exist in any of the subject countries.^{Footnote 24}

[68] The case brief submitted by the Canadian producers nonetheless included additional details in an appendix regarding the continued existence of section 20 conditions in China, which outlined the numerous methods used by the Government of China to control the price of steel through economic policies, directives and subsidies.^{Footnote 25}

[69] The Canadian producers assert that the GOC’s ongoing influence over China’s steel sector results in significant market distortions, causing severe excess capacity and fostering conditions that promote the Chinese exporters’ tendency to export steel products at dumped prices.^{Footnote 26}

China’s forecasted excess COR production^{Footnote 27}

[70] The Canadian producers indicate that China’s continued build-up of steel production capacity, despite slowing global steel demand, has led to increased levels of production beyond real demand. They indicate that this overcapacity threatens to destabilize the global steel industry, as profitability in the industry can only be ensured through meaningful reductions in global excess capacity. They argue that despite low domestic steel demand, the Chinese steel industry is operating at high levels, with an estimated output for the second half of 2023 to be at the highest point since 2020. Canadian producers provided forecasts that demonstrate that China’s excess capacity is expected to grow through 2026, and without significant increases in domestic demand, China’s high production levels will drive producers to increase exports to sustain their output levels and improve their capacity utilization. They argue that this could lead to a situation where Chinese COR exports to Canada are dumped if the CITT’s finding expires.

China’s economic conditions^{Footnote 28}

[71] The Canadian producers indicate that China’s GDP growth slowed to 3% in 2022, down from 8.4% in 2021, and is forecasted to be 4.6% in 2024 and 4.1% in 2025, which is lower than pre-pandemic levels. They demonstrate that while economic activity in China began to recover in early 2023, that it was supported more by domestic services than by the steel-intensive infrastructure and manufacturing sectors. They further present that a real estate crisis in China is causing a decline in demand in the construction and consumer household goods industries, which are major downstream industries for COR. This, along with a decline in demand for non-construction products that consume COR, is leading to a contraction in China’s total steel demand.

[72] The Canadian producers identify economic indicators that predict challenging domestic demand conditions for China’s COR producers over the next 12 to 24 months, likely leading to an increase in COR exports. Forecasts for 2024 through 2026 show very low growth in Chinese COR demand. The construction industry, accounting for 57% of China’s steel demand, is facing a crisis, with real estate investments plunging by 10% from December 2022. In addition, they argue that the government stimulus efforts have been unsuccessful in improving steel demand. Similarly, China’s manufacturing industry, which accounts for about a quarter of its steel demand, is experiencing a decline in growth. Canadian producers indicate that despite stimulus packages targeting these industries, the domestic demand for COR is not expected to grow over the next two years. With slow domestic demand forecasted through 2026, Canadian producers indicate that Chinese exporters are likely to target other markets with stronger COR demand, including Canada.

China’s export orientation^{Footnote 29}

[73] The Canadian producers indicate that China has seen significant fluctuations in its COR exports. In 2021, exports rose significantly due to the global economic rise and rebound from COVID-19. Although exports dropped in 2022, they remained significantly above 2020 volumes and increased by 33% in 2023. The parties contend that this trend correlates with China’s diminished demand, excess production, and exports. China’s exports of flat-rolled products, which includes COR, has been its top exported steel product since 2017. The Canadian producers claim that China is expected to maintain similar export levels due to overcapacity and weak domestic demand in 2024. They identify other Asian markets that are also experiencing low demand similar to China and are feeling the impact of China’s economic slowdown. Canadian producers indicate that recent applications or extensions of anti-dumping measures against China have been put in place in several countries, increasingly restricting the markets available to Chinese COR producers.

[74] Given the challenging domestic demand conditions for China’s COR producers, as identified by the Canadian producers, and the forecasted slow growth in Chinese COR demand through 2026, it is likely that Chinese exporters will seek markets with stronger COR demand. Table 6, which outlines China’s top 10 export markets for COR by volume, highlights the markets that may be targeted by Chinese exporters in the coming years:

Summary: China

[75] The Canadian producers summarize that China’s forecasted excess production, diminished economic growth, weakening construction sector, weak COR demand growth and export dependence make it very likely that Chinese COR exporters will continue or resume sales to Canada at dumped prices if the CITT’s finding is permitted to expire.

Chinese Taipei and the COR market

Chinese Taipei’s forecasted excess COR production and weak demand^{Footnote 31}

[76] The Canadian producers state that economic conditions in Chinese Taipei will likely incentivize steel producers to export COR to Canada at dumped prices if the CITT’s finding expires.

[77] They point to Chinese Taipei’s weak economic growth rate in 2023 which was the lowest it had been since the 2009 global financial crisis, with the industrial sector, including the steel industry, particularly affected. The construction sector, which accounts for approximately 25% of steel consumption, also declined due to high interest rates, rising construction costs, and subdued demand.

[78] Chinese Taipei’s economy is highly dependent on exports, which accounted for an average of 57% of its GDP over the 2019 to 2023 period. However, Canadian producers outline that exports declined by 9.8% in 2023, due to a sudden drop in demand. The economic setback in 2023 significantly increases the likelihood that COR producers from Chinese Taipei will resume exporting COR to Canada at dumped prices if the CITT’s finding expires.

Inefficient utilization rate^{Footnote 32}

[79] The Canadian producers indicate that Chinese Taipei’s capacity utilization rate for COR from 2019 to 2023 was highly inefficient. They outline that this inefficiency and the production imperative will likely encourage COR producers to increase production to spread costs. Consequently, the Canadian producers claim that COR producers from Chinese Taipei have a high incentive to resume exporting COR to Canada at dumped prices if the CITT’s finding expires.

Export dependence^{Footnote 33}

[80] According to the Canadian producers, Chinese Taipei’s steel industry, particularly the COR industry, is reliant on exports for growth. They indicate, however, that in the near-to-medium term, Chinese Taipei will experience difficulties with accessing their main export markets – China, the EU, and North America – due to the imposition of duties and quotas, which significantly increases the likelihood of resumed dumping of COR in Canada if the CITT’s finding expires. Despite the original COR finding and the 2023 re-investigation, Canada continues to be an important export market for Chinese Taipei COR, ranking 11th in terms of top export markets. Further, Chinese Taipei’s propensity to quickly switch export markets is evident from its export trends. For instance, from 2020 to 2023, Chinese Taipei’s COR exports to China declined by 33%, while exports to key markets like Belgium, Spain, and Portugal increased substantially, as shown in Table 7 below.

[81] In the near-to-medium term, COR producers from Chinese Taipei will experience difficulties accessing their main export markets due to the deteriorating steel market conditions caused by the oversupply and the dumping of Chinese steel products. The oversupply caused by China; the effect of EU's Carbon Border Adjustment Mechanism (CBAM), increasing the price of COR exports to the EU in the coming years; and the continuation of the US and Mexico trade remedies, increases the likelihood that COR exporters from Chinese Taipei would increase exports to Canada at dumped prices if the CITT’s finding expires.

Summary: Chinese Taipei

[82] Canadian producers argue that Chinese Taipei’s weak economy and export reliance may lead to increased COR exports to Canada at dumped prices if the CITT’s finding expires. The industrial and construction sectors, including steel, faced challenges in 2023. Low COR capacity utilization from 2019 to 2023 could prompt increased production to distribute costs. Despite the original COR finding and the 2023 re-investigation, Canada remains a top export market for Chinese Taipei. The access to main export markets may be hindered in the near-to-medium term due to ongoing US and Mexico trade remedies. All the above could lead to increased COR exports to Canada at dumped prices if the CITT’s finding expires.

India and the COR market

The Government of India’s investments in increased steel production and capacity^{Footnote 35}

[83] The Canadian producers indicate that in 2021, the Government of India (GOI) approved the “Production-Linked Incentive” (PLI) program for “Specialty Steel”, aiming to promote the manufacturing of higher value steel in India by incentivizing investment in production and technology. The program specifically targets increasing production and exports for “coated/plated steel products”, which includes COR. The PLI program forecasts a 144% increase in coated/plated steel production from 2019/2020 to 2026/2027. In addition, the Canadian producers argue that despite alarms over the global steel excess capacity, the GOI will continue to pursue steel capacity increases in the near-to-medium term. India’s 2017 “National Steel Policy” is still in effect (i.e. target steelmaking capacity of 300 million MT by 2030), and with India’s 2023 steelmaking capacity at 161 million MT, the Canadian producers claim that this means that the GOI and India’s steel industry will have to increase steelmaking capacity by 139 million MT or 86% in the next seven years to meet this target. S&P Global reported in January 2024 that by 2025, India’s top four steel companies will increase steelmaking capacity by approximately 23 million MT. All four Indian steel companies are COR producers. As such, the Canadian producers assert that India’s government and steel industry are on a determined path to significantly boost their steelmaking capacity and production, particularly of coated/plated steel products, despite global concerns about steel excess capacity.

Difficult domestic market conditions^{Footnote 36}

[84] The Canadian producers claim that India’s COR industry is facing challenges due to insufficient domestic demand from downstream industries and increased domestic competition against Chinese COR.

[85] The Canadian producers state that despite India’s projected GDP growth, it is not being driven by downstream industries of COR but rather by private investment in the technology sector. The manufacturing and construction sectors, two downstream sectors of COR, are reliant on government spending for growth. However, growth in these sectors is forecasted to decline in the near-to-medium term. Additionally, high inventory levels in the automotive sector and slow growth in the steel industry, will likely incentivize Indian COR producers to resume dumping COR to attractive markets like Canada if the CITT’s finding expires. Further, increased competition from cheap Chinese steel and the lack of intervention from the GOI will continue to impact India’s domestic steel and COR market. The Canadian producers argue that India’s overall COR demand will be insufficient to absorb the projected COR production, significantly increasing the likelihood that Indian COR producers will continue dumping subject goods to Canada if the CITT’s finding expires.

Difficulties in main export markets

[86] The Canadian producers report that India’s COR industry is facing challenges in their export markets, which significantly increases the likelihood of resumed dumping of Indian COR to Canada if the CITT’s finding expires. They state that India’s propensity to quickly switch export markets is evident from its export trends in Table 8 below. Additionally, Indian COR exports in 2024 will face challenges due to the EU’s existing steel safeguard, CBAM and Mexico’s new general steel tariff. The Canadian producers indicate that over 50% of India’s COR exports will be adversely impacted by the CBAM and that the COR producers from India must divert COR exports intended for EU countries to alternative export markets without a trade remedy in place. Further, China’s penetration in India’s steel market and reported fierce competition in export markets, will place Indian COR producers in a situation where they have increased excess COR inventory, but will have fewer export markets. The Canadian producers deduce that the situation would make Canada a prime target for dumped COR from India if the CITT’s finding expires.

Summary: India

[87] The Canadian producers are of the opinion that India’s COR industry is facing significant challenges both domestically and in their main export markets, which could lead to a resumption of dumping COR to Canada if the CITT’s finding expires. They contend that the combination of India’s aggressive steel production targets, insufficient domestic demand, increased domestic and international competition, and difficulties in export markets due to trade restrictions, will result in excess COR inventory and make Canada a prime target for dumped COR from India if the CITT’s finding expires.

South Korea and the COR market

Production and overcapacity in South Korea^{Footnote 38}

[88] The Canadian producers indicate that South Korea’s COR industry, has a large production capacity and low-capacity utilization rates. Data provided outlines that for the 2020 to 2023 period, excess production accounted for a close to half of total production. The Canadian producers argue that this excess is expected to grow in 2024 and 2025, with production increasing each year, outpacing consumption. The parties state that as a result, South Korea’s excess production in 2025 will exceed the entire Canadian COR market. The parties argue that financial motivations and market conditions, including the availability of low-priced Chinese steel products, are likely to drive South Korean producers to increase production and export sales, potentially leading to the dumping of COR into the global marketplace, including Canada.

South Korea economic conditions^{Footnote 39}

[89] The Canadian producers present evidence, that absent a finding, South Korean steel producers are likely to export COR to Canada at dumped prices in the near-to-medium term. They argue that this is due to challenging domestic demand conditions, with GDP growth slowing down and a significant share of this growth tied to exports. Canadian producers argue that the steel industry, a key sector in South Korea, is focusing on increasing self-sufficiency and improving trade balance by boosting exports. The Canadian producers report that the government of South Korea has announced a $150 billion program to transition to low-carbon steel production and boost steel exports. Further, the construction industry, a major consumer of COR, is sluggish, and the steel industry faces challenges due to a decline in demand. They argue that these factors create an environment conducive to the dumping of COR in export markets.

South Korea's export orientation^{Footnote 40}

[90] According to the Canadian producers, South Korea’s COR industry is highly export-oriented, with the Korea Customs Service reporting an increase in exports to its top 10 markets over the 2020 to 2023 period, as noted in Table 9 below. The parties claim that as South Korea becomes more export-reliant due to weak domestic demand and rising excess production, South Korean COR producers will seek to increase exports to any and all available markets.

[91] In 2023, South Korean exports of COR to China declined by 16%, as noted in Table 9 below, due to China’s excess production and stagnant consumption in the construction industry. The Canadian industry states that this decline is likely to continue beyond 2023 as China’s property crisis continues to weigh down property-related activity. They indicate that as a result, it is very likely that South Korea will need to find new COR export markets in 2024 and 2025.

[92] In January 2024, the South Korean steel industry, led by the major COR producer POSCO, prepared to file an anti-dumping case against the dumping of Chinese and Japanese HRS products. This anti-dumping case in South Korea is an indication of low domestic demand in China and Japan, South Korea’s neighbouring countries. Canadian producers indicate that if South Korea imposes a trade remedy against Chinese HRS, it is likely to see Chinese producers increase their COR exports to South Korea, as HRS is a substrate of COR. Which may push South Korean producers to dump COR in export markets, such as Canada.

[93] The Canadian industry indicated that South Korean producers responded to declining exports to China by increasing exports to other countries. When South Korea’s exports to China fell by 16% in 2023, South Korea quickly pivoted to other markets, resulting in a 6% increase in overall COR exports. This included increasing exports by 27% to Japan, 8% to Mexico, 30% to India, 39% to Türkiye, 13% to Slovenia, and 14% to Italy.

[94] However, the Canadian industry states that the South Korean exporters’ ability to enter or expand in new markets is restricted by trade measures in numerous jurisdictions. Many markets have trade remedies against South Korea, including Australia, India, Malaysia, Mexico, Chinese Taipei, Thailand, and the US. Three of South Korea’s top 10 export markets are located in Europe (Italy, Belgium and Slovenia). With respect to European export markets, forecasts provided by the Canadian producers show that costs from the CBAM will raise prices for steel supplied from South Korea to the EU starting from 2026 onwards to 2030. As such, the Canadian producers argue that South Korean COR exports, that would historically be destined for these European markets, may need to find new export markets in 2024 and onwards.

[95] Further, the Canadian producers claim that in addition to CBAM, there are demand challenges in South Korea’s largest EU export markets. In Italy, investment in the construction sector had declined sharply in 2023 and is forecasted to decline a further 8.6% in 2024, along with falling employment and construction permits.

[96] In Belgium, the construction industry sentiment is pessimistic and the majority of those in the residential construction and home renovation sector expect worsening conditions in 2024, rather than a recovery from 2023.

[97] Forecasts of construction permit growth is likely to remain pessimistic for Slovenia, with 2024 demand remaining below that observed in prior years. Forecasts call for growth deceleration in 2024 and 2025 in the residential and non-residential sectors.

[98] After a drop in sales in 2023, the outlook for the European automotive industry is currently negative for Italy, Belgium and Slovenia.

[99] As such, the Canadian producers argue that South Korean COR exports, which would historically be destined for these European markets, may need to find new export markets in 2024 and onwards.

Summary: South Korea

[100] The Canadian producers summarize that given historical trends; the sluggish domestic demand for COR and downstream products, coupled with the weakness of South Korea’s primary export market in China; forecasted excess production; and steel trade remedies and economic difficulties in other traditional South Korean export markets, the export-oriented South Korean producers will be highly incentivized to find new export markets. This increases the likelihood that South Korean COR producers will resume dumping in the Canadian market if the CITT’s finding expires.

Parties contending that continued or resumed dumping is unlikely

Yieh Phui Enterprise Co., Ltd.

[101] YPE made representations through its ERQ response and its case brief that dumping from Chinese Taipei is unlikely to continue or resume in the event that the CITT’s finding expires.^{Footnote 42} Accordingly, YPE argues that the measures should no longer remain in place.

[102] The main factors identified by YPE can be summarized as follows:

• Economic Conditions in the Global Steel Sector
• Chinese Taipei’s Economic Conditions
• Absence of Trade Remedies on COR Products Exported from Chinese Taipei in Major Third Markets
• COR Manufacturers From Chinese Taipei Have Diversified Export Markets and Have Minimal Presence in Canada

Economic conditions in the global steel sector^{Footnote 43}

[103] YPE reports that the global economy, which was severely impacted by the COVID-19 pandemic, has resumed growth since 2021, with inflation under control and no economic recessions despite rate hikes by central banks. The IMF projects global economic growth at 3.1% in 2024 and 3.2% in 2025, and major economies are expected to cut interest rates in late 2024, leading to cautious optimism about the global economy. Concurrently, the demand for steel products, including COR, is expected to grow moderately with the expansion of global GDP. Even though demand in China for steel is declining in 2024, it is anticipated that a surge in demand from India will offset this slowdown. This pattern of heightened steel demand, which has been evident since late 2023, is mirrored in the North American market. YPE argues that the steel industry is rebounding from the 2022 slump and the company holds a positive outlook for demand growth in 2024.

Chinese Taipei’s economic conditions^{Footnote 44}

[104] YPE submits that Chinese Taipei’s economy demonstrated resilience during the POR, outperforming its Asian peers despite the global COVID-19 pandemic. Its GDP growth in 2020 and 2021 surpassed the world average, and even with a slowdown in 2022, its GDP per capita exceeded that of Japan and South Korea in that year. This robust economic performance is attributed to the return of many China-based Chinese Taipei businesses due to the US-China trade tensions and growing global dependence on Chinese Taipei’s tech sector, particularly semiconductors. Concurrently, Chinese Taipei’s steel sector, especially the hot-dipped galvanized steel, saw steady growth, with domestic consumption increasing by approximately 30% from 2019 to 2022. With the construction market expected to grow at 3.4% in 2024, in line with Chinese Taipei’s GDP growth rate, Chinese Taipei’s leading steelmakers are generally optimistic about the steel market in 2024. YPE argues that the resilience and robust growth of Chinese Taipei’s economy, coupled with the optimistic outlook of its steel market, underscore its potential to continue thriving amidst global challenges, further solidifying its position as a key player in the Asian and global economy.

Absence of trade remedies on COR products exported from Chinese Taipei in major third markets

[105] YPE presents that Chinese Taipei’s three major COR manufacturers, Yieh Phui, Prosperity Tieh Enterprise Co., Ltd., and Shen Yu Steel Co., Ltd., have a combined production capacity of approximately two million MT. Over the past five years, these manufacturers have not been found to be dumping COR products to countries other than Canada. They have been subject to two anti-dumping investigations by Australia and New Zealand, both of which concluded with no dumping found and no anti-dumping measures imposed. YPE argues that in Canada, past investigations have found low dumping rates. YPE argues that, it is therefore unlikely that COR manufacturers from Chinese Taipei will continue or resume dumping COR to Canada in the future.

COR manufacturers from Chinese Taipei have diversified export markets and minimal presence in Canada

[106] YPE states that COR manufacturers from Chinese Taipei have diversified export markets, providing, as an example, YPE sales records demonstrating that it has dozens of export markets for COR. In addition, YPE argues that its sales of COR to Canada account for a minimal percentage of its exports and that the percentage has been decreasing over the past five years. YPE concludes that while the global economy and the global steel market are expected to continue to grow in the near term, there is a lack of evidence that YPE or its peer COR manufacturers in Chinese Taipei will continue or resume dumping COR to Canada.

[107] None of the other parties who participated contended that resumed or continued dumping of subject goods from China, India or South Korea is unlikely if the CITT’s finding expires.

China

[128] The CBSA did not receive any ERQ responses, case briefs, or reply submissions from exporters in China. Therefore, the CBSA, relied on information submitted from participating parties, as well as other information on the administrative record, for the purposes of the expiry review investigation with respect to China.

[129] Regarding the demand for COR in China, main downstream industries for subject COR include construction and consumer household goods. These industries are experiencing a domestic demand decline.^{Footnote 59} There is currently a growing real estate crisis in China that poses a risk to the global economy. The supply of housing is not matched with demand, and the property sector has experienced a severe contraction in response to collapsing demand. Demand for new housing in China is projected to drop around 50% over the next decade.^{Footnote 60}

[130] The Chinese automotive sector has also been performing poorly, with declines in passenger vehicle sales in June and July of 2023 and new energy vehicles in January of 2024.^{Footnote 61} While COR for automotive end-use is outside the scope of the finding, weaker consumption will increase the general availability of COR in the marketplace.

[131] Regarding capacity issues, since no ERQ responses were received from Chinese producers, the CBSA has limited information regarding the production levels of COR producers in China. However the issue is well documented in other CBSA measures in force regarding the Chinese steel industry as well as in the public domain. For example, a chief analyst from a Chinese government owned steelmaker admitted that capacity is a serious problem estimating that China’s capacity totalled 1.25 billion MT in 2023.^{Footnote 62}

[132] In 2024, Chinese authorities informed steel producers that there would be no annual production limits, as part of a strategy to boost economic growth. This effectively places the nation’s economic expansion above the worldwide issue of surplus steel capacity.^{Footnote 63}

[133] As previously noted by the CITT, “Steel mills are capital intensive with high fixed costs. In order to recover fixed expenses, steel mills must run at high levels of production capacity. When demand in the domestic market decreases, producers will search out foreign markets to maintain capacity utilization to ensure that these fixed costs are recovered.” This is often referred to as the “economics of steel production.”^{Footnote 64} Conditions of overcapacity exacerbate this characteristic as a producer may find it more feasible to sell excess production in foreign markets at depressed prices rather than reduce production, as long as the producer’s variable costs are covered.

[134] Without significant increases in domestic demand, it is reasonable to expect that China’s current high production levels could drive producers to increase exports to sustain their output levels and improve their capacity utilization.

[135] Lastly, exporters in China have a propensity to dump COR and other steel products which is demonstrated by the numerous anti-dumping measures that have been imposed by Canada and other jurisdictions as discussed above in this report.

Determination regarding likelihood of continued or resumed dumping: China

[136] Based on information on the record regarding: the large number of producers in China capable of producing a significant amount of COR; the weak domestic demand; China’s export dependence; the attractiveness of the Canadian market; the propensity of Chinese exporters to market products at dumped prices; the production imperative; the imposition of anti-dumping measures by other jurisdictions in respect of COR or similar steel products from China; and the weakened global market conditions and demand for steel products, the CBSA determined that the expiry of the CITT’s finding is likely to result in the continuation or resumption of dumping of COR into Canada from China.

Chinese Taipei

[137] The CBSA received an ERQ response from one exporter located in Chinese Taipei, YPE.^{Footnote 65} The exporter expressed the opinion that dumping from Chinese Taipei is unlikely to continue or resume in the event the CITT’s finding expires. Additionally, a case brief was received from YPE.^{Footnote 66}

[138] YPE indicates that the three major manufacturers of COR in Chinese Taipei have a total production capacity of approximately two million MT.^{Footnote 67} This is refuted by data submitted by the Canadian producers.

[139] COR producers in Chinese Taipei are export oriented. Data provided by the Canadian producers indicate that the COR producers in Chinese Taipei have had low capacity utilization rates from 2019 to 2023.^{Footnote 68} As such, economies of scale and low domestic consumption encourage these COR producers to increase production and actively pursue new markets.

[140] The data reported in Table 7 demonstrates that exporters from Chinese Taipei have shown a tendency to rapidly shift export markets as required by market conditions. For example, from 2020 to 2023, Chinese Taipei’s COR exports to China fell by 33% or 80,486 MT. However, Chinese Taipei’s COR exports to key markets such as Belgium, Spain, and Portugal saw substantial increases during the same time.

[141] The CBSA is of the opinion that exporters from Chinese Taipei will face increasing difficulties in accessing their main export markets; China, the EU, the US and Mexico.

[142] The South East Asia Iron and Steel Institute attributes Chinese Taipei’s decline in steel exports in 2023 to worsening market conditions in China. As noted previously, these worsening market conditions in China have led to an oversupply and subsequent overseas dumping of Chinese steel products, which has resulted in a significant reduction in demand for steel from Chinese Taipei, as international buyers are turning to cheaper Chinese steel. This shift has had a profound impact on the steel industry in Chinese Taipei, leading to a decrease in their export volumes. This situation is expected to persist in the near-to-medium term. Consequently, Chinese Taipei steel and COR manufacturers will likely redirect their COR to other export markets, such as Canada, to compensate for the drop in export sales.^{Footnote 69}

[143] YPE states that while the EU has imposed a quota system under global safeguard measures on steel products, these quantity restrictions have not prohibited sales from Chinese Taipei.^{Footnote 70} While the CBSA acknowledges this present situation, evidence on the record indicates that 51%^{Footnote 71} of steel produced in Chinese Taipei is from blast furnaces, which would mean that a majority of exports to the EU would be subject to the CBAM when the tax is implemented. As such, COR producers in Chinese Taipei would need to seek out other exports markets.

[144] Finally, in North America, while YPE is not subject to US anti-dumping measures due to the revocation of these duties in August of 2023, it must comply with Section 232 duties and the newly imposed 25% duties in Mexico and as such may need to seek out other export markets.

Determination regarding likelihood of continued or resumed dumping: Chinese Taipei

[145] Based on information on the record regarding: the overcapacity and inefficient utilization rate of Chinese Taipei producers; the insufficient domestic demand; Chinese Taipei’s export dependence; the attractiveness of the Canadian market; the propensity of Chinese Taipei exporters to market products at dumped prices; the production imperative; the imposition of trade measures in other jurisdictions in respect of COR; and the weakened global market conditions and demand for steel products, the CBSA has determined that the expiry of the CITT’s finding is likely to result in the continuation or resumption of dumping of COR into Canada from Chinese Taipei.

India

[146] The CBSA did not receive any ERQ responses, case briefs, or reply submissions from exporters in India. The CBSA, therefore, relied on information submitted from participating parties, as well as other information on the administrative record, for the purposes of the expiry review investigation with respect to India.

[147] In 2021, the GOI approved the PLI program for specialty steel, aimed at promoting the manufacturing of high-value steel in India by incentivizing investment in production assets and technology. This program, which targets the increase of production and exports for coated/plated steel products including COR, is expected to be implemented over six years starting from the 2023-2024 fiscal year. Most coated/plated steel, including COR, is produced on the same equipment, implying that the majority of the increased production and capacity could be used to produce COR. As of January 2024, the GOI approved 67 applications for the PLI program from 32 Indian steel companies, eight of which are COR producers. The GOI forecasts that coated/plated steel exports will increase by 179% from 2019 to 2026, increasing excess production by a significant margin.^{Footnote 72} India’s planned increases in steel capacity, including COR, in the near-to-medium term will intensify the supply-demand imbalance in their domestic steel market and aggravate the global excess capacity issue in the steel industry. Consequently, Indian steel and COR producers will likely shift their focus to export markets for sales.

[148] The CBSA is of the opinion that India, similar to China, Chinese Taipei and South Korea, is also experiencing limited domestic demand for COR as well as in downstream products.

[149] Despite the GOI’s expenditure, the growth of India’s construction industry, a downstream sector of COR, is predicted to decrease in the near-to-medium future. This is crucial as the construction and infrastructure sectors in India collectively consume 68% of total steel.^{Footnote 73}

[150] The passenger vehicle segment in India is also forecasted to have a year of single digit growth despite manufacturers offering significant discounts,^{Footnote 74} increasing the likelihood of diverting volumes of COR to non-automotive use.

[151] Indian steel manufacturers are dealing with heightened competition from inexpensive Chinese steel, exacerbating their situation. Following the GOI’s revocation of their anti-dumping finding on COR from China and other countries in 2023, Indian steel suppliers have reported an influx of cheap Chinese steel, including galvanized steel products and COR, into their domestic market. This is attributed to Indian steel traders receiving significant discounts on Chinese flat steel products, including hot-rolled coil and cold-rolled coil, which are substrates for COR. The resulting lost sales may lead domestic COR producers to pursue export sales aggressively.^{Footnote 75}

[152] UN Comtrade data reveals several trends that suggest a heightened probability of India resuming the export of COR to Canada at dumped prices if the CITT’s finding expires. One key trend is India’s ability to swiftly shift export markets. For example, as reported in Table 8, between 2020 and 2023, Indian exports of COR to the UAE and Argentina fell by 87% and 100% respectively, while exports to Mexico and the UK rose by 964% and 273% respectively. Furthermore, India has shown the capacity to rapidly increase exports on an annual basis. In 2021, data from Table 8 also demonstrates that Indian exports of COR to certain markets, including Belgium, Italy, and Mexico, saw significant year-on-year increases. This indicates that Indian exporters are adept at seizing new export opportunities and can swiftly ramp up export volumes when such opportunities present themselves.^{Footnote 76}

[153] As the majority of Indian steel is made in furnaces that use coking coal, exports to the EU will be subject to the CBAM tax once implemented. Mexico’s new general steel tariff imposing a duty of 25% may also further restrict export opportunities from India.

Determination regarding likelihood of continued or resumed dumping: India

[154] Based on information on the record regarding: the commodity nature of COR; the projected excess steel and COR overcapacity in India; the weakened market conditions and demand for COR in India; the attractiveness of the Canadian market; the propensity of Indian exporters to market products at dumped prices; the production imperative; the imposition of trade measures in other jurisdictions in respect of COR; and the weakened global market conditions and demand for steel products, the CBSA has determined that the expiry of the CITT’s finding is likely to result in the continuation or resumption of dumping into Canada of COR from India.

South Korea

[155] The CBSA received an ERQ response from one exporter located in South Korea, KG Dongbu.^{Footnote 77} The exporter indicated that they did not wish to express an opinion on the likelihood of continued or resumed dumping of COR if the CITT’s finding expires. Additionally, no case briefs or reply submissions were received from South Korean exporters. The CBSA, therefore, relied on information submitted from participating parties, as well as other information on the administrative record, for the purposes of the expiry review investigation with respect to South Korea.

[156] South Korea’s COR demand in major downstream industries, such as construction, has slowed and pushed demand for steel down. As such, the CBSA agrees with the Canadian producers’ contention that South Korea’s forecasted COR demand is not a sufficient disincentive for South Korean COR producers to refrain from dumping excess production into export markets.^{Footnote 78}

[157] In terms of production capacity, information submitted by the Canadian producers shows that South Korea has a large COR production capacity, and that its COR production volumes exceed its domestic demand.

[158] Data provided by the Canadian producers indicates that South Korea’s COR production increases are expected to outpace domestic consumption leading to annual excess production that surpasses the entire Canadian COR market in 2023.

[159] The global steel market’s slowdown led to stagnant or reduced profits for major South Korean COR producers, POSCO and Hyundai Steel. This was due to the influx of low-priced steel products from China, which lowered prices in the South Korean market in 2023. POSCO, still feeling the effects of the Chinese steel product, remains negative about South Korean steel prices mirroring raw material costs, stating that South Korean prices are unlikely to improve in the short-term and the overall market downturn will persist. These financial outcomes and the pressure from cheap Chinese steel will continue to motivate South Korean producers to boost export sales and dump COR into the global market to enhance capacity utilization rates and decrease average costs.^{Footnote 79}

[160] COR demand in construction is impacted by South Korea’s fiscal policy, with interest rates staying elevated from late 2023 to early 2024. These high interest rates notably impact the demand for new homes and construction, as the South Korean government addresses the significant challenge of having a large volume of unsold residential units across the country.^{Footnote 80} By the close of 2023, it was reported that investment in construction had declined by 4.2% on a quarterly basis, with developers ensnared in a debt crisis that suggests a prolonged shortfall in housing.^{Footnote 81}

[161] With relation to South Korea’s export orientation, the South Korean Customs Trade Statistics data reported in Table 9 shows the country’s top export markets.^{Footnote 82} The trend of declining sales to China, historically South Korea’s largest export market, is noted to have the impact of increasing the need for producers of subject goods to find alternative markets for COR.

[162] The Korea Automobile Importers and Distributors Association reports a decline in South Korea’s new car registrations, with a 1.2% decrease from January to September 2023. In December 2023, domestic auto sales from South Korea’s five main automakers also fell by 13.0% year-over-year, and this downward trend continued into January 2024 with a combined decrease of 2.0%. The domestic demand for electric vehicles also slowed in Q4 2023 due to sluggish economic growth.^{Footnote 83} While COR for automotive uses is not within the scope of the CITT’s finding, the declining demand from South Korea’s automotive industry suggests that more COR production will be directed towards export markets for alternative end-uses.

[163] Another trend observed from the export data is that South Korean producers quickly pivoted to other markets when faced with declining demand from China, resulting in a 6% increase in overall COR exports. This included increasing exports to Japan, Mexico, India, Turkey, Slovenia and Italy.^{Footnote 84}

[164] Three of South Korea’s top 10 export markets are located in Europe. With respect to European export markets, CRU forecasts that the EU’s CBAM will increase the price of COR exports to the EU in the coming years starting from 2026 onwards to 2030. Consequently, South Korean producers are likely to spend 2024 and 2025 securing market share in non-EU markets in order to reduce their exposure to the CBAM as of 2026.^{Footnote 85}

[165] The CBSA has anti-dumping measures in force for the following steel products originating in or exported from South Korea:

• Carbon Steel Welded Pipe 2
• Cold-Rolled Steel
• Concrete Reinforcing Bar
• Hollow Structural Sections
• Line Pipe 2
• Oil Country Tubular Goods 2 and
• Steel Plate 7

[166] Other jurisdictions, which have also been noted earlier in this report in Table 5, have trade remedies against flat-rolled steel products, including COR, from South Korea.

Determination regarding likelihood of continued or resumed dumping: South Korea

[167] Based on information on the record regarding: the major COR producers in South Korea and their excess production capacities; South Korea’s weakened domestic market; South Korea’s export dependence; the attractiveness of the Canadian market; the propensity of South Korean exporters to market products at dumped prices; the production imperative; the imposition of trade measures in other jurisdictions in respect of COR; and the weakened global market conditions and demand for steel products, the CBSA has determined that the expiry of the CITT’s finding is likely to result in the continuation or resumption of dumping of COR into Canada from South Korea.