HRSS 2021 ER: Certain flat hot-rolled carbon and alloy steel sheet and strip
Statement of Reasons: Expiry review determination

Additional product information

[24] Hot-rolled carbon and alloy steel sheet products include strip and sheet, but do not include floor plate. Strip is usually produced in widths up to 12” (305 mm) inclusive. Sheet and floor plate are usually produced in widths over 12” (305 mm). Floor plate is hot finished in a final pass or passes to form a pattern on the surface of the sheet.

[25] The subject goods are normally produced to a specification of the ASTM standard, some other international standard, or to a proprietary specification. ASTM specifications for flat hot-rolled carbon and alloy steel strip and sheet include, but are not limited to A505, A506, A507, A568, A569, A570, A606, A607, A621, A622, A635, A659, A715, A749, A907, A935, and A936.

[26] Flat hot-rolled carbon steel sheet products are usually classified as either carbon-manganese or high-strength low alloy (HSLA) steels and are available in several qualities and grades, which are usually reflected in ASTM or equivalent specifications or standards.

[27] Alloy steel sheet products that are subject to this investigation are alloy steels, other than stainless steel, that contain by weight one or more of certain specified elements in minimum specified proportions. The notes to Chapter 72 of the Customs Tariff Schedule specify the elements and the minimum proportions.

[28] Flat hot-rolled stainless steel sheet and strip, excluded from the product definition, is commercially and metallurgically distinct from carbon steel, being produced to a lower carbon and higher alloy content than the subject goods. Stainless steel contains, by weight, 1.2 per cent or less of carbon and 10.5 per cent or more of chromium, with or without other elements.

Canadian production

[55] Overall, the Canadian producers’ share of the apparent Canadian market in terms of both volume and value remained relatively stable over the POR, from 2019 through March 2021.

[56] In 2018, the volume of sales of HRSS produced by the Canadian producers represented about 81.1% of the total apparent Canadian market for HRSS.

[57] The Canadian producers’ market share of volume increased to 84.3% in 2019 and kept increasing slightly in 2020 and for the first three months of 2021.^{Footnote 19}

[58] In terms of value, a similar market share trend was evident during the POR. The Canadian producers’ share of the market value was 77.2% in 2018 and increased to 77.6% in 2019. In 2020, the Canadian producers’ share of the market value increased to 78.2% and to 82.7% in the first three months of 2021.^{Footnote 20}

Imports

[59] The volume of subject goods imported from the named countries represented close to 0% of the apparent Canadian market for HRSS throughout the POR, while imports from all other countries accounted for 15-19% of the Canadian market.^{Footnote 21}

[60] In 2018, the volume of imports from all other countries represented 18.9% of the apparent Canadian market. This share decreased to 15.7% in 2019, and further contracted to 15.6% in 2020 and to 15.3% in the first three months of 2021.^{Footnote 22}

[61] When imports from all other countries are measured by value, the market share percentages are higher than those reported based on volume. Market share of imports on a value basis in 2018 were about 22.8% before slightly decreasing to 22.4% in 2019, then 21.8% for 2020 and 17.3% for the balance of the POR.^{Footnote 23}

Administrative record

[69] The information considered by the CBSA for purposes of this expiry review investigation is contained in the administrative record. The administrative record includes the information on the CBSA’s exhibit listing, which is comprised of the CITT’s administrative record on which the CITT based its decision to initiate the expiry review, CBSA exhibits and information submitted by interested persons, including information which they feel is relevant to the decision as to whether dumping and subsidizing are likely to continue or resume absent the CITT order. This information may consist of expert analysts’ reports, excerpts from trade magazines and newspapers, orders and findings issued by authorities of Canada or of a country other than Canada, documents from international trade organizations such as the World Trade Organization and responses to the ERQs submitted by Canadian producers, exporters, importers, and governments.

[70] For purposes of an expiry review investigation, the CBSA sets a date after which no new information submitted by interested parties will be placed on the administrative record or considered as part of the CBSA’s investigation. This is referred to as the “closing of the record date” and is set to allow participants time to prepare their case briefs and reply submissions based on the information that is on the administrative record as of the closing of the record date. For this investigation, the administrative record closed on August 31, 2021.

Procedural issues

[71] On October 6, 2021, the Canadian producers filed a letter, expressing their objection to certain parts of the reply submission filed by USIMINAS on September 28, 2021. In their letter, Canadian producers argued the reply submission filed by USIMINAS introduced new documents on the administrative record by appending them as annexes and references to websites. The Canadian producers requested the CBSA to disregard all new information introduced and relied upon by USIMINAS in its reply submission.

[72] On the same date, USIMINAS objected to the Canadian industry’s letter, contending that it was not possible to anticipate the arguments of the Canadian industry, and that the CBSA should not ignore or undermine the rights of any party to a fair reply on the basis of natural justice and procedural fairness.

[73] The CBSA will normally not consider any new information submitted by participants subsequent to the closing of the record date. However, in certain exceptional circumstances, it may be necessary to permit new information to be submitted. The CBSA will consider the following factors in deciding whether to accept new information submitted after the closing of the record date:

1. the availability of the information prior to the closing of the record date
2. the emergence of new or unforeseen issues
3. the relevance and materiality of the information
4. the opportunity for other participants to respond to the new information and
5. whether the new information can reasonably be taken into consideration by the CBSA in making the determination

[74] Participants wishing to file new information after the closing of the record date, either separately or in case briefs or reply submissions, must identify this information so that the CBSA can decide whether it will be included in the record for purposes of the determination.

[75] In their reply submissions filed on September 28, 2021, USIMINAS made reference to information which was not on the administrative record at the time of the close of record, such as annexes and references to websites.^{Footnote 27} Following the analysis of the information, the CBSA determined it was immaterial to the decision and available prior to the close of record. Further, other parties were likely to be prejudiced if the information was used as there would be no opportunity to respond to the new information. For these reasons, the CBSA did not consider the new information.

Parties contending that continued or resumed dumping is likely

[76] The Canadian producers made representations through their ERQ responses as well as in their case brief and reply submission in support of their position that dumping from the named countries is likely to continue or resume in the event that the present order is rescinded. Consequently, the Canadian producers argued that the measures should remain in place.

[77] For further clarity, AMD, Algoma, Evraz and Stelco presented their case brief and reply submission together.

[78] The main global factors identified by the parties can be summarized as follows:

• International Market Conditions
• Canadian Market Conditions and
• Factors Specific to named countries

International market conditions

Global economic conditions

[79] The Canadian producers stated that while the global economy is forecast to continue its recovery and rebound from the Covid-19 pandemic, the recovery forecast is projected to be uneven and global economic activity will remain lower at the end of 2022 than what was expected prior to the pandemic.

[80] Furthermore, Canadian producers argued emerging and developing markets will not rebound as fast as developed economies. It was alleged that producers of subject goods may need to divert exports traditionally destined for emerging market to other markets, and that Canada will be an attractive market for such exports. The Canadian producers alleged that this forecast will incentivise a resumption of dumped and subsidized subject goods to Canada if the order is rescinded.^{Footnote 28}

Global excess capacity

[81] The Canadian producers submitted that global excess steel production capacity continues to be a serious problem in the steel industry, including the HRSS sector. Specifically, the Canadian industry argued that while global excess capacity decreased between 2015-2018, it began to rise again in 2019 and 2020.^{Footnote 29} The Canadian producers also stated that there are concerns with respect to excess capacity growing further in the years to come due to investments supported by governments and not driven by market considerations.^{Footnote 30} The Canadian producers submitted that the trends demonstrate an existing structural imbalance in the steel market which will remain a major destabilizing factor in the coming years.^{Footnote 31}

[82] Additionally, the Canadian producers stated that it is difficult to determine the excess capacity of China. Specifically, the Canadian producers argued that the information relating to China’s production capacity of HRSS and steel in general, is significantly underreported and unreliable. The Canadian producers indicated that China’s production figures surpassed its capacity by over 10% in 2019.^{Footnote 32} The Canadian producers stated that the CBSA should draw negative inference from China’s misreporting of its production capacity figures.^{Footnote 33}

Slowing global demand for HRSS

[83] The Canadian producers submitted that HRSS demand is set to rebound from the lows in 2020, but this will take time. The Canadian producers stated that the global consumption of HRSS in 2019 contracted from 2018, meaning the global HRSS market was already in a downturn before the Covid-19 pandemic, and that global gross demand for 2022 will barely surpass 2018 levels.^{Footnote 34} Additionally, the Canadian producers stated that HRSS consumption will not return to 2018 levels until after 2023 in the European Union and United Kingdom, and until 2022 for North America and Asia (excluding China).^{Footnote 35}

[84] The Canadian producers also argued that the disconnect between demand and supply, which made steel prices soar globally since the second half of 2020, will soon be resolved. As global demand diminishes in the near future, the Canadian producers contended that export dependant HRSS producers in the named countries will need to find new markets to sustain their production as their domestic market will be unable to absorb their production.

[85] The Canadian producers submitted that as the rest of the world will not have enough demand to absorb excess HRSS production, HRSS export prices will need to significantly undercut the domestic prices in export markets. As a result, it is argued that producers from the named countries will likely be pressured to export subject goods at dumped prices.^{Footnote 36}

Canadian market conditions

Economy of Canada

[86] The Canadian producers submitted that the Canadian economy is forecasted to remain strong through 2022 and 2023. In 2020, the Bank of Canada reported the economy contracted by 5.3%, but it is projected to grow by 6% in 2021, 4.6% in 2022 and 3.3% in 2023. The major Canadian banks’ expectations are also optimistic, and the major consuming industries of HRSS are also expected to do well in 2022 and 2023.^{Footnote 37}

[87] Consequently, the Canadian producers argued that Canada will remain an attractive market for subject goods if the order is rescinded. As HRSS markets are forecast to maintain stable and growing demand, combined with relatively high prices in the coming years, producers of subject goods in the named countries will need to undercut prices in order to export significant volume to Canada.^{Footnote 38}

Canadian HRSS market conditions

[88] The Canadian producers indicated that apparent consumption in Canada has been declining significantly during the 2018-2020 period. In 2019, demand for HRSS fell 20%, before decreasing by another 11% in 2020.^{Footnote 39} As the Canadian market shrunk in recent years, the Canadian producers stated that their market shares remained relatively stable.^{Footnote 40}

[89] The Canadian producers submitted that the consumption of HRSS will recover in 2021-2022, and remain stable in 2023.^{Footnote 41} It is also submitted that Canadian HRSS prices will remain among the highest in the world, which will be attractive to exporters engaged in dumping.

[90] The Canadian producers argued that the greater the degree to which the exporter can undercut domestic prices, the more attractive the exports are to the importers. Therefore, an exporter seeking to maintain or increase its production through the export of dumped or subsidized goods would see Canada as a prime target, should the order be rescinded.^{Footnote 42}

[91] The Canadian producers noted that named countries have remained largely absent from the Canadian market during the POR, stating that this is an indication producers from these countries will not compete at non-dumped prices.^{Footnote 43}

[92] The Canadian producers argued that producers from the named countries are also likely to resume HRSS exports to Canada at dumped prices because they will have to compete with other low-priced imports that are targeting Canada.^{Footnote 44}

Factors specific to named countries

[93] The Canadian producers identified the following factors as significant in arguing that the expiry of the CITT’s order will lead to continued or resumed dumping of HRSS from Brazil, China and Ukraine.

[94] The Canadian producers placed particular emphasis on the repeated behavior of the named countries in dumping steel products, including flat-rolled product in Canada.^{Footnote 45}

[95] The Canadian producers also cited the numerous anti-dumping measures and trade remedies against the named countries in other jurisdictions for steel products, including HRSS, as evidence that the exporters in these countries have a propensity to dump the subject goods.^{Footnote 46}

[96] Prices cited by the Canadian producers showed that the average price spread between US Midwest prices and the export prices for China, Ukraine, India and Brazil increased significantly in 2021 compared to the 2017-2019 period. Similar price differences were projected to exist throughout 2022-2023.^{Footnote 47}

[97] The Canadian producers alleged that named countries have continued to engage in dumping in recent years by estimating margins of dumping based on domestic and export pricing available to them.^{Footnote 48}

[98] The Canadian producers alleged that the named countries can “product shift” their export emphasis within the flat-rolled steel range of goods as opportunities present themselves.^{Footnote 49}

[99] The effect China is having on the dynamics of trade for HRSS is discussed in greater detail in the following sections with respect to each of the named countries.

Brazil

[100] The Canadian producers identified the following factors as significant in arguing that the expiry of the CITT’s order will lead to continued or resumed dumping of HRSS from Brazil.

[101] The Canadian producers submitted that Brazil’s economy only grew by 1.4% in 2019 before contracting by 4.1% in 2020. For 2021, forecasts indicate that the economy will grow by 4.5%, meaning that by the end of the year, Brazil’s economy will only be at 2019 levels.^{Footnote 50}

[102] The Canadian producers argued that risk remains with respect to the economic recovery and the HRSS industry with respect to unstable vaccine distribution, persisting sanitation issues, increasing inflation and high unemployment rate.^{Footnote 51}

[103] The Canadian producers stated steel imports in Brazil increased in the fist half of 2021, by over 103% year-on-year. Further, the imports are alleged to be priced at US $200 to US $300 lower than the domestic market, threatening the Brazilian steel industry. The Canadian producers referenced CRU, arguing that imports are causing a slump in Brazil’s flat-rolled steel sales and that Brazilian producers have been turning to exports since demand is supplied by low-priced imports. Additionally, the Canadian producers alleged that increased competition from Asian exports to Latin America and trade remedies in the United States will push Brazilian producers to shift their exports to other markets, including Canada.^{Footnote 52}

[104] The Canadian producers also submitted that downstream industries are showing worrying signs. The Canadian producers argued that a decline in oil production, a slowdown of domestic vehicle sales and a decline in production in the automotive sector are indications of slowing demand for domestic steel products in Brazil.^{Footnote 53}

[105] With respect to HRSS, the Canadian producers referenced CRU data, indicating excess capacity in the HRSS industry in Brazil will remain considerable relative to the size of Canada’s HRSS market. While there is a decrease on a year-to-year basis in excess capacity, the Canadian producers argued that the excess capacity volume is considerable relative to the size of Canada’s HRSS market and that this production imperative will provide incentive to Brazilian exporters to increase exports, if given the opportunity.^{Footnote 54} The Canadian producers also contended that Brazil would find the Canadian market particularly attractive as a result of the trade remedy in the United States and increased competition in the domestic and Latin American markets.

[106] The Canadian producers referenced the plans of Gerdau, a Brazilian producer of HRSS, to expand capacity for hot-rolled coil by 250,000 MT at its Ouro Branco installations in 2024, as an indication that HRSS capacity will expand in the coming years.^{Footnote 55} Furthermore, the Canadian producers also referenced Arcelor Mittal’s annual report, submitting that developing markets, like Brazil, continue to show structural overcapacity when domestic demand decreases due to weakening economic conditions.^{Footnote 56}

[107] The Canadian producers provided an analysis of Brazilian domestic and export prices using confidential information on the record to demonstrate that Brazilian export prices are consistently below domestic prices for HRSS.^{Footnote 57}

China

[108] The Canadian producers identified the following factors as significant in arguing that the rescission of the CITT’s order will lead to continued or resumed dumping of HRSS from China.

[109] The Canadian producers referenced a recent International Monetary Fund (IMF) report that China’s economy grew 2.3% in 2020. For 2021, forecasts indicate the Chinese economy will grow by 8.1%, a rate similar to the United States and the United Kingdom, but lower than other developing countries such as India (8.5%) and the ASEAN countries (6.3%).^{Footnote 58} Furthermore, the Canadian producers referenced an economist from the New Zealand Banking Group stating that China’s economy is already slowing down, which will weaken demand for global commodities, including steel.^{Footnote 59}

[110] The Canadian producers referenced the China Steel and Logistic Professional Committee, indicating total steel production declined as a result of persisting weak demand, and that overall downward pressure on the steel market has increased.^{Footnote 60}

[111] The Canadian producers stated that the demand for flat steel products, including HRSS are forecasted to experience a slowdown beginning in the second half of 2021. The Canadian producers referenced multiple sources indicating demand for downstream industries was slowing down in the first half of 2021. Furthermore, other sources were presented, forecasting demand for downstream industry would slowdown or decline starting June 2021.^{Footnote 61}

[112] The Canadian producers referenced CRU data and forecasts, indicating that domestic consumption of HRSS in China will see its first year-on-year decline in 2021, 2022 and 2023, as China’s government stimulus ends. The Canadian producers submitted that even if China became a net importer of HRSS in 2020 as a result of this stimulus, production also increased. Consequently, it is argued that Chinese HRSS producers will need to turn to export markets, as the production levels achieved prior to 2021 are expected to decrease at a lower rate than domestic demand.^{Footnote 62}

[113] The Canadian producers argued China’s return to a significant volume of excess HRSS is underway, as exports of HRSS rose significantly in the first half of 2021, reaching 7.6 million MT. Exports of HRSS for the full year of 2019 were reportedly 12.9 million MT.^{Footnote 63}

[114] The Canadian producers noted that China cancelled its VAT rebate on HRSS exports. Despite its cancellation, they argued that net exports are set to demonstrate a significant increase in 2021.^{Footnote 64}

[115] The Canadian producers indicated China is obfuscating its steel and HRSS production capacity, noting the Global Forum on Excess Steel Capacity singled out China’s capacity reporting and identified significant discrepancies between various reported figures and actual production, which led various Government of China departments and agencies to launch investigations to determine the true capacity of its steel industry in 2019. The reported capacity utilization rate of many Chinese steelmakers surpassed 100% suggesting wide-scale inaccuracies.^{Footnote 65}

[116] The Canadian producers indicated China was to commission new mills in 2020-2021, adding an additional 50.8 million MT of steelmaking production capacity following the addition of another 26.5 million MT which was added in 2019. While there are claims that these new mills will only replace existing capacity, the Canadian producers referenced trade publication Platts, which stated that only some capacity will be replaced.^{Footnote 66} The Canadian producers also referred to the Organisation for Economic Co-operation and Development (OECD), stating that even if China’s figures were accurate, China increased its steelmaking capacity during the POR. The reported capacity increase was 2.1% in 2019 and the Canadian producers contend it increased further by 1.6% in 2020 as global capacity increased.^{Footnote 67}

[117] The Canadian producers submitted that while there are rumors of China contemplating capping its steel production at 2020 volume, even if production was so capped, domestic consumption is expected to decrease on a year-to-year basis. Consequently, the Canadian producers contended China will have excess production and production imperative will incentivize producers to export to Canada.^{Footnote 68}

[118] The Canadian producers provided an analysis of Chinese domestic and export prices using confidential information on the record to demonstrate that Chinese export prices are consistently below domestic prices for HRSS.^{Footnote 69}

Ukraine

[119] The Canadian producers identified the following factors as significant in arguing that the expiry of the CITT’s order will lead to continued or resumed dumping of HRSS from Ukraine.

[120] The Canadian producers cited Bloomberg, which recently stated that Ukraine entered its second recession since the start of the Covid-19 pandemic. Ukraine’s economy contracted by 1.2% in the first quarter of 2021, and by 0.8% in the second quarter. Furthermore, high inflation, slow structural reforms and the slow vaccination campaign were identified as risks for future recovery.^{Footnote 70}

[121] The Canadian producers alleged Ukraine’s strong propensity to export is enhanced by the devaluation of the domestic currency (Hyrvnia) relative to the US dollar due to the country’s high rate of inflation.^{Footnote 71}

[122] The Canadian producers stated that demand for HRSS in Ukraine contracted in 2019, before increasing due to the government’s infrastructure stimulus spending in response to the Covid-19 pandemic. Domestic consumption is also expected to decrease in 2021 and 2022.^{Footnote 72}

[123] The Canadian producers noted the particular export dependence of Ukrainian producers, referencing the World Bank report that Ukraine’s economy is reliant on the export of commodities. The export of steel products is listed as the second largest export of the country, with three steel companies making the top ten list of Ukraine’s largest exporters.^{Footnote 73}

[124] The Canadian producers stated that Ukraine’s major steelmakers quickly adapt to declining exports in traditional markets and declining demand by exporting to non-traditional markets. The Canadian producers further noted that Ukrainian producers maintained significant HRSS production during the POR, despite the decreasing domestic consumption in 2019 and 2021. As Ukraine only consumed 52% to 54% of the HRSS it produced during the 2017-2020 period, the Canadian producers contend the remainder was exported.^{Footnote 74}

[125] The Canadian producers submitted that Ukraine did not export HRSS to North America likely because of existing trade remedies in Canada, the United States and Mexico. However, the North American market is attractive given the relatively higher prices than in the Commonwealth of Independent State (CIS) countries.^{Footnote 75}

[126] The Canadian producers referenced confidential data demonstrating that the HRSS industry operated with a very low utilization rate during the POR. The Canadian producers argued that given the opportunity, Ukraine producers would increase their production to export significant volume to Canada, without altering export volumes to other markets.^{Footnote 76}

[127] The Canadian producers referenced different sources indicating that new HRSS production capacity may be coming online in the near future.^{Footnote 77}

[128] The Canadian producers provided analysis of Ukrainian domestic and export prices using confidential information on the record to demonstrate that Ukrainian export prices are consistently below domestic prices for HRSS.^{Footnote 78}

[129] The Canadian producers cited the numerous anti-dumping measures against Ukrainian HRSS and other flat-rolled steel products in other jurisdictions as evidence that Ukraine has a propensity to dump steel products, including HRSS.^{Footnote 79}

[130] The Canadian producers argued that the continuous marketing of HRSS exports through low-priced dumping has resulted in numerous trade remedies against Ukraine in the United States, the European Union, Mexico, and others countries, effectively limiting its export markets. It is argued that the limited export markets would result in Ukraine targeting Canada should the order be rescinded.^{Footnote 80}

[131] The Canadian producers asserted that the lack of exports of HRSS during the POR from Ukraine into North America, including Canada, demonstrates an inability to compete at non-dumped prices in Canada.^{Footnote 81}

Parties contending that continued or resumed dumping is unlikely

[132] Arcelor Mittal Brazil and USIMINAS provided a complete response to the exporter ERQ. USIMINAS also provided a case brief and reply submission in support of the position that dumping from Brazil is unlikely to continue or resume in the event the present order is rescinded. Consequently, the Brazilian producers argued that the measures should not remain in place.

Brazil

[133] USIMINAS submitted that the vast majority of the evidence provided by the Canadian producers to support their assertion that there is a likelihood of resumed dumping does not meet the standard of evidence, as they have presented allegations, conjectures and speculations.^{Footnote 82} Furthermore, it was indicated that there is no evidence on the record that imports of subject goods from Brazil into Canada have been dumped since Brazil has not exported subject goods to Canada during the POR (with the exception of 14 MT in 2020). Moreover, the Brazilian exporter contended that the absence of SIMA duty collection from Brazil in this case supports the rescission of the order.^{Footnote 83}

[134] USIMINAS indicated that evidence on the record shows both USIMINAS and Arcelor Mittal Brazil have little capacity for exports, let alone for exports to Canada. In its ERQ response, USIMINAS contended that Brazil is in a net import position for HRSS. Furthermore, it was stated that focus will be kept on selling HRSS to the domestic market and that the recent historically low export levels shall be maintained.^{Footnote 84}

[135] USIMINAS submitted that it does not operate on the basis of alleged production imperative but rather on a profit imperative and that it did not engage in a sharp and significant increase in exports during the POR.^{Footnote 85}

[136] USIMINAS argued that steel trade publications MEPS and Fastmarkets data confirm the absence of dumping since the fourth quarter of 2019, as the domestic and export price differential in Brazil shows negative margins of dumping.^{Footnote 86}

Likelihood of continued or resumed dumping

[158] The following country specific analysis of the likelihood of continued or resumed dumping begins with Brazil, followed by China and Ukraine.

Brazil

[159] As earlier indicated, the CBSA received an ERQ response, a case brief and a reply submission to this expiry review investigation from USIMINAS and an ERQ response from Arcelor Mittal Brazil, both producers and exporters of HRSS in Brazil. The CBSA relied on the information submitted by USIMINAS, Arcelor Mittal Brazil and other participating parties, as well as other information on the administrative record for the purposes of the expiry review investigation with respect to Brazil.

Domestic steel market in Brazil

[160] The steel sector in Brazil suffered the impact of deteriorating market conditions related to the Covid-19 pandemic. The 2020 Ministerial Report of the GFSEC revealed that a strong impact was felt by Brazilian producers who supply steel to the car-making, machinery and equipment industries, causing one plant with an estimated production capacity of 500,000 MT per year to permanently shut down.^{Footnote 106}

[161] While 500,000 MT worth of steelmaking capacity has been shut down permanently, information on the record indicates that additional investment in steel production capacity has been made by Brazilian producers, Arcelor Mittal Brazil and Gerdau. The Canadian producers submitted evidence that Arcelor Mittal Brazil will start the production of steel rods in João Monlevade, Brazil, by January 2022, with a capacity of 1 million MT, and that Gerdau plans to increase hot-rolled coil and structural beam production capacity by another 750,000 MT, effectively negating the 500,000 MT shutdown and increasing the total steelmaking capacity in Brazil by 250,000 MT.^{Footnote 107}

[162] According to the 2020 Ministerial Report of the GFSEC, Brazil’s steelmaking capacity was 51.5 million MT in both 2018 and 2019.^{Footnote 108} In terms of production, according to a May 2019 U.S. Department of Commerce (USDOC) report, the major Brazilian steel producers are Gerdau SA, which produced the most steel with 26 million MT; Arcelor Mittal Brazil, which produced 11.3 million MT; USIMINAS, which produced 9.6 million MT; and Companhia Siderúrgica Nacional (CSN) with a production of 5.6 million MT.^{Footnote 109}

Significant decrease in exports of HRSS from Brazil

[163] Brazil’s steel industry experienced a sharp rebound from the Covid-19 pandemic starting in the second half of 2020, due to increasing domestic demand. The Brazil Steel Institute foresees domestic steel consumption to grow by 5.8% in 2021.^{Footnote 110}

[164] Arcelor Mittal Brazil reported that “for 2022 […] demand should stay at [sic] same level of 2021 or even decrease”.^{Footnote 111} The differing expectation with the Brazil Steel Institute concerning the evolution in domestic demand for steel in Brazil is an indication that uncertainty remains regarding the post Covid-19 pandemic recovery in Brazil’s steel industry.

[165] Brazil’s steel industry is traditionally export-oriented. In 2018, Brazil exported 40% of its steel production.^{Footnote 112} Flat products represented 18% (2.5 million MT) of all exported steel products from Brazil.^{Footnote 113} However, Brazil’s export performance has weakened over the last few years.^{Footnote 114}

[166] With respect to HRSS, the Global Export Statistics provided by the Canadian industry showed that the export performance of Brazilian producers followed the same trend as its steel industry:

[167] Brazil’s HRSS export volume decreased significantly from year-to-year over the POR. Information on the record also indicates the value per MT was decreasing until the second half of 2020, but at a slower rate than the volume. During the second half of 2020, the value per MT of Brazilian exports increased significantly, leading to a 10.5% increase for the full year 2020. During the last three months of the POR, the value per MT further increased by 64%.^{Footnote 116}

[168] Brazil’s steel imports also decreased from 2.2 million MT in 2018 to 1.7 million MT in 2020, before increasing sharply at the end of 2020 and early 2021.^{Footnote 117} During the first half of 2021, Brazil’s steel imports increased by 104% and the price of these imports were estimated to be around US$200-300/MT lower than their domestic steel prices. As a result, steel imports will increase their share of apparent consumption in Brazil in 2021.^{Footnote 118}

[169] In its ERQ response, Arcelor Mittal Brazil indicated that due to the Chinese overcapacity, the high volume of imports from China to Brazil will continue to be a problem for hot-rolled coil markets for years to come. Arcelor Mittal Brazil also indicated that the accumulated volume of imported hot-rolled steel products during the first half of 2021 is nearly triple the full year 2020 and double that of 2019.^{Footnote 119}

[170] As Brazil faces increasing challenges in its domestic market due to the exponential increase of low priced imports of HRSS from China, Brazilian producers, while having seen a decrease in exports during the POR, will be pressured to lower their domestic prices and may need to aggressively pursue new markets to maintain capacity utilization.

Increasing excess HRSS capacity in Brazil

[171] USIMINAS reported that “it expects to increase capacity utilization in the coming year” driven by the increase in domestic demand.^{Footnote 120}

[172] Confidential information on the record demonstrated that capacity utilization rates were in a downward trend between 2018 and 2020, prior to the Covid-19 pandemic recovery. The CBSA is of the opinion that the current surge in capacity utilization rates of Brazilian exporters is the result of the temporary supply disruption stemming from the post-pandemic economic recovery that extended through the end of the POR. The CBSA expects utilization rates to return to pre-pandemic levels in the near future.

Exports from Brazil to other markets at potentially dumped prices

[173] CBSA’s analysis of confidential information on the record indicates that Brazilian export prices of HRSS have been significantly lower than prices in their domestic markets and at prices lower than their cost of production during the POR.

[174] Furthermore, the CBSA’s analysis of confidential information on the record indicates that Brazilian export prices of HRSS have also been significantly lower than average import prices in Canada during the POR.

[175] The CBSA’s analysis of publicly available Brazilian export data shows that throughout the POR, export prices were lower than average import prices in Canada. Table 5 below shows a summary of this price difference.

[176] Based on the pricing analysis, it is evident that Brazilian producers’ export prices are well below the Canadian import prices and that Brazilian exporters are selling at low and potentially dumped prices in other markets. As such, in the event that the order is rescinded, it is likely that the subject goods exported from Brazil to Canada would be at prices lower than domestic prices in Brazil and well below Canadian import prices.

Inability of Brazilian exporters to compete in Canada at non-dumped prices

[177] During the POR, Brazilian exporters have exported only limited amount of subject goods to Canada (14 MT, valued at CAD $32,393), which resulted in the assessment of CAD $24,942 in anti-dumping duties.^{Footnote 122} This further demonstrates that Brazilian producers have been unable to compete in the HRSS market at non-dumped prices during the POR.

Trade measures against Brazilian steel products in Canada and other jurisdictions

[178] The propensity of Brazilian exporters to dump steel products, including HRSS in Canada and other markets is further demonstrated by numerous anti-dumping measures imposed against Brazil by Canada and other countries. The CBSA currently has one other anti-dumping measure against Brazil for a flat-rolled steel product; hot-rolled carbon steel plate (2014).

[179] Globally, there are currently six trade remedies in effect involving HRSS from Brazil (one in each of Canada, India, the EU and Thailand and two in the United States). Furthermore, 27 trade remedies involving steel mill imports from Brazil are in effect as of 2019.^{Footnote 123} Of these trade remedies, 24 involve anti-dumping duties in eight countries (two in Canada; one in each of India, the EU, Taiwan and Thailand; nine in Mexico; six in the U.S.; and three in Vietnam).

China

[181] Under SIMA, China is a “prescribed” country and normal values may be determined under section 20 of SIMA in situations 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.

[182] Since June 2005, the CBSA has conducted five dumping re-investigations on steel products within the Chinese flat-rolled steel industry. This involved three re-investigations on the current goods under review, HRSS (2007, 2010, 2015) and two re-investigations concerning hot-rolled steel plate (2006, 2010).

[183] In respect of each of these products, the CBSA has consistently formed the opinion under section 20 that domestic prices are substantially determined by the Government of China (GOC) and that 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.

[184] As previously noted, no exporter in China provided a response to the ERQ in this expiry review investigation nor did any provide case briefs or reply submissions. Similarly, no exporter in China participated in the 2011 or the 2016 expiry review investigations. The CBSA relied on the information submitted by other participating parties, as well as other information on the administrative record for the purposes of the expiry review investigation with respect to China.

Domestic steel market slowdown in China

[185] China’s economy has been slowing in recent years. In 2020, its GDP increased by approximately 2.3% as a result of the Covid-19 pandemic. For 2021, the International Monetary Fund (IMF) forecasts China’s growth to be 8.1%, barely above the United States and that it will slow further, below India and the ASEAN countries, to 5.7% in 2022.^{Footnote 124} As China’s economy slows, the demand in most commodities, including steel and HRSS is expected to weaken as well.

[186] The apparent consumption of HRSS in China was also showing signs of a slowdown before the pandemic, reporting weak increases on a year-to-year basis. Domestic steel consumption barely grew in 2018 and 2019. In 2020, despite the Covid-19 pandemic, apparent consumption in China increased significantly due to the GOC’s infrastructure stimulus. By the end of 2020, demand had already started to decrease and is expected to keep contracting in 2021, 2022 and 2023.^{Footnote 125}

[187] In July 2021, the China Steel and Logistic Professional Committee also indicated that the demand for steel products in China remained weak and that steel production had slowed in recent months, indicating that the overall downward pressure on prices in the Chinese market had increased.^{Footnote 126} As demand weakens in China, there are legitimate concerns that producers may be pressured to find new export markets to maintain capacity utilization and cover their high fixed costs.

Significant excess capacity in China

[188] According to the 2020 Ministerial Report of the GFSEC, China’s steelmaking capacity was estimated to be 1,147.5 million MT in 2019, up from 1,123 million MT in 2018.^{Footnote 127} Although China has been reporting capacity reductions in recent years, this data indicates otherwise. Furthermore, it is difficult to assess the real steelmaking capacity in China as many discrepancies in the information provided by various GOC departments exist.^{Footnote 128}

[189] Comparing China’s actual production to its reported capacity reveals a major understatement of China’s true production capacity. The 2020 Ministerial Report of the GFSEC noted China’s actual production figures consistently exceeded the reported capacity by over 10% during the POR.^{Footnote 129} After this was revealed, multiple GOC departments and agencies launched an investigation in November 2019 to determine the true capacity of China’s steel industry, suggesting wide-scale inaccuracies in the reported data.^{Footnote 130}

[190] Confidential information on the record pertaining to China’s HRSS production and capacity displays similar discrepancies.

[191] As stated in the 2019 OECD “Steel production capacity and trade dynamics” report:

Chinese Steel Producers’ Dependence on Exports and Scale of Production

[192] The information on the record indicates that China’s steel exports have steadily decreased since 2018. In 2019, its exports decreased by 8.6%, reaching 56.3 million MT, while the value of exports decreased even further, by 12.1%. In 2020, during the Covid-19 pandemic, China’s steel exports decreased again to 47.3 million MT.^{Footnote 132} Flat products represent 57.7% of all exported steel products from China.^{Footnote 133}

[193] The HRSS sector followed the same trend over the POR. In 2019, its exports decreased by 11%, reaching 12.94 million MT. In 2020, China’s HRSS exports decreased by another 28%, to 9.35 million MT as the government’s stimulus response to the Covid-19 pandemic drastically increased the domestic demand and temporarily put China in a position of net importer.^{Footnote 134} However, this situation was short-lived. In the first half of 2021, 7.6 million MT of HRSS were exported from China.^{Footnote 135}

[194] The scale of production and exports from China can have devastating effects on markets that are not protected by trade measures as they may be otherwise overwhelmed by massive volumes of imports at prices that are below prevailing price levels. In their ERQ response, Arcelor Mittal Brazil specifically referenced China in stating:

Exports from China to other markets at potentially dumped prices

[195] The CBSA’s analysis of confidential information on the record indicates that Chinese export prices of HRSS have been significantly lower than prices in the domestic markets of other jurisdictions during the POR. The CBSA’s analysis relied on other domestic market prices available on the record as a comparative in lieu of Chinese domestic prices as they are not considered reliable under section 20 of SIMA.

[196] Furthermore, the CBSA’s analysis of confidential information on the record indicates that Chinese export prices of subject goods have been significantly lower than average import prices in Canada during the POR.

[197] Based on the pricing analysis, it is evident that Chinese producers’ export prices are well below the domestic prices and import prices of other jurisdictions, including Canada. As such, in the event that the order is rescinded, it is likely that the subject goods exported from China to Canada would be at prices lower than Canadian import prices and, potentially, at dumped prices.

Inability of Chinese exporters to compete in Canada at non-dumped prices

[198] During the POR, Chinese exporters exported only a limited amount of subject goods to Canada (30.5 MT, valued at CAD $36,050), which resulted in the assessment of CAD $28,312 anti-dumping duties.^{Footnote 137} This further demonstrates that Chinese producers have been unable to compete in the HRSS market at non-dumped prices, during the POR.

Trade measures against China steel products in Canada and other jurisdictions

[199] The propensity of Chinese exporters to dump steel products, including HRSS into Canada and other markets is demonstrated by the numerous anti-dumping measures imposed against them by Canada and other countries. The CBSA currently has three other anti-dumping measures against China for flat-rolled steel products: hot-rolled carbon steel plate (1997), corrosion-resistant steel sheet (2018) and cold-rolled steel sheet (2018). Globally, there are currently 11 trade remedies in effect involving HRSS against China (two in Brazil, one in Canada, India, Indonesia, Mexico and the United States, respectively; two in the European Union; and two in Thailand).^{Footnote 138}

Ukraine

[201] As previously noted, no exporter in Ukraine provided a response to the ERQ in this expiry review investigation nor did any provide case briefs or reply submissions. Similarly, no exporter in Ukraine participated in the 2011 or the 2016 expiry review investigations. The CBSA relied on the information submitted by other participating parties, as well as other information on the administrative record for the purposes of the expiry review investigation with respect to Ukraine.

Domestic steel market slowdown in Ukraine

[202] Ukraine’s economy keeps struggling as it entered its second recession since the start of the Covid-19 pandemic in the second quarter of 2021. Ukraine’s economy contracted by 1.2% in the first quarter of 2021, before decreasing again by 0.8% in the second quarter. The slow vaccination campaign, with only 6% of the country vaccinated as of August 2021 is also a cause of concern with respect to the country’s economic recovery from the pandemic.^{Footnote 139}

Significant excess capacity in Ukraine

[203] Confidential information on the record indicates that Ukraine had significant excess steelmaking capacity during the POR. While the information on the record indicates that capacity utilization increased as a result of an increase in exportations and the government’s infrastructure stimulus in 2020, it also demonstrates that it was expected to decrease for the full years 2021 and 2022, respectively.

[204] Confidential information on the record indicates that Ukraine’s capacity utilization rate with regards to HRSS also increased significantly in 2020, compared to 2018 and 2019. In a similar manner as noted above, the utilization rate was expected to decline for the full years 2021 and 2022, respectively.^{Footnote 140}

[205] HRSS apparent consumption in Ukraine contracted in 2019 compared to 2018. In 2020, as a result of the government’s infrastructure stimulus, apparent consumption increased significantly. However, as government stimulus decreased, demand also plummeted at the end of the POR and is expected to contract considerably for the full year of 2021. Further contraction is expected in 2022.^{Footnote 141} As demand weakens in Ukraine, there are legitimate concerns that producers may be pressured to find new export markets and redirect their production to maintain capacity utilization and cover their high fixed costs.

Ukrainian steel producers’ dependence on exports

[206] In addition, Ukraine’s steelmaking industry is extremely dependant on the exportation of steel products, including HRSS. The information on the record indicates that Ukraine exports over 70% of its steel production.^{Footnote 142} With respect to HRSS, nearly half of its production was destined for export markets during the POR.^{Footnote 143}

[207] Information on the record also showed that when faced with declining exports in their traditional markets, Ukraine’s producers quickly adapt and shift exports to non-traditional markets in order to maintain their capacity utilization and cover production imperatives. As an example, Ukraine shipped 250,000 MT of HRSS to China in 2020, despite not having exported to this market since 2018. In the first quarter of 2021, Ukraine’s exports to China fell to 0 while the total HRSS exports of the country increased.^{Footnote 144} Table 6 below summarize the export performance of Ukrainian producers:

[208] Furthermore, the information on the record indicates that steel producers in Ukraine are looking for further export opportunities to lower their significant excess capacity, in part due to tepid business conditions, decreasing domestic prices and slowing demand from Ukraine’s downstream industries.^{Footnote 146}

Exports from Ukraine to other markets at potentially dumped prices

[209] The CBSA’s analysis of confidential information on the record indicates that Ukrainian export prices of HRSS have been significantly lower than prices in the domestic markets of other jurisdictions during the POR. The CBSA’s analysis relied on other domestic market prices available on the record as a comparative in lieu of Ukrainian domestic prices (the information was not available to the CBSA).

[210] Additionally, the CBSA’s analysis of confidential information on the record indicates that Ukrainian export prices of HRSS have been significantly lower than average import prices in Canada during the POR. Table 7 below summarizes the export price comparison of Ukrainian producers.

[211] Based on the pricing analysis above, it is evident that Ukrainian producers’ export prices are well below the domestic prices and import prices of other jurisdictions, including Canada. As such, in the event that the order is rescinded, it is likely that the subject goods exported from Ukraine to Canada would significantly undercut Canadian import prices.

Inability of Ukrainian exporters to compete at non-dumped prices

[212] Moreover, Ukraine did not export HRSS to Canada during the POR. Similarly, the information on the record indicates Ukraine did not export to two other countries which have trade remedies against HRSS from Ukraine during the POR, namely, the United States and Mexico. This further demonstrates that Ukrainian producers have been unable to compete in the Canadian HRSS market and other North American HRSS markets, at non-dumped prices, during the POR.

Propensity of Ukrainian exporters to dump hot-rolled steel products

[213] The propensity of Ukrainian exporters to dump steel products, including HRSS in Canada and other markets is well documented. On June 27, 2005 the CITT rescinded its anti-dumping finding on hot-rolled steel plate from six countries including Ukraine.^{Footnote 148} On February 2, 2010, the CITT issued a new anti-dumping finding against Ukraine for steel plate.^{Footnote 149} This finding was renewed in the CITT’s order issued on January 30, 2015 and the order was subsequently renewed on November 10, 2020.^{Footnote 150}

[214] Consequently, exporters in Ukraine have a history of dumping other flat-rolled steel products (hot-rolled steel plate) into Canada and then returning to the market and resuming dumping once anti-dumping measures are removed. As such, there are legitimate concerns that Ukrainian producers could resume dumping HRSS into Canada, should the order be rescinded.

Trade measures against Ukrainian steel products in Canada and other jurisdictions

[215] The propensity of Ukrainian exporters to dump steel products, including HRSS in Canada and other markets is further demonstrated by numerous anti-dumping measures imposed against them by Canada and other countries. As noted above, the CBSA currently has one other anti-dumping measure against Ukraine for a flat-rolled steel product, hot-rolled carbon steel plate (2010). Globally, there are currently four other trade remedies in effect involving HRSS (one in each of the United States, Mexico, European Union and Thailand).^{Footnote 151}

Parties contending that continued or resumed subsidizing is likely

India

[217] The Canadian producers provided detailed but limited information in regards to the likelihood of continued or resumed subsidizing of HRSS originating in or exported from India. The Canadian producers identified multiple examples indicating the GOI’s export incentives in its steel industry: the GOI’s National Steel Policy (2017), a key instrument by which the strategy and development of India’s steel industry is promoted by the GOI;^{Footnote 152} the GOI’s development of the Draft Framework Policy of the Ministry of Steel, which will include a number of government incentives and benefits to further steelmaking capacity and production in India;^{Footnote 153} and the Production Linked Incentive (PLI) Scheme for speciality steel as a government incentive to reduce India’s reliance on imports and increase exports of steel products.^{Footnote 154}

[218] The Canadian producers cited the CBSA’s 2015 subsidy re-investigation, for which the CBSA found eight countervailable Indian programs on HRSS.^{Footnote 155}

[219] The Canadian producers also cited the CBSA’s countervailing measures against three other Indian steel products, as evidence of continued subsidizing of India’s steel industry by the GOI, which includes HRSS. The Canadian producers referenced the 2021 Grinding Media final determination, where the CBSA concluded that there were 16 actionable subsidy programs which led to margins of subsidy ranging between 6.3% and 34.5% of the export price.^{Footnote 156}

[220] The Canadian producers noted that out of the 55 subsidy programs identified by the CBSA in the ERQ for this expiry review, the GOI confirmed the continuance of 42 programs, the subsuming of 6 programs relating to various taxes under the Integrated Goods and Services Act (2017) and the termination of 5 programs. The Canadian producers noted that the GOI did not provide any legislation confirming the reported terminations of subsidy program as requested by the CBSA.^{Footnote 157}

[221] The Canadian producers also cited countervailing determinations in other jurisdictions as evidence that the GOI continues to subsidize HRSS in India. As an example, in June 2019, a USDOC sunset review concerning certain hot-rolled steel sheet determined that Indian exporters were continuing to receive countervailable subsidies.^{Footnote 158}

[222] The Canadian producers also referenced the USDOC sunset reviews on Indian corrosion-resistant steel and cold-rolled steel, noting that due to the lack of participation from exporters and the GOI, an expedited sunset review would be conducted.^{Footnote 159}

[223] The Canadian producers submitted that the GOI has not provided an updated WTO notification with respect to its subsidy programs since 2019. In the most recent notification, nine subsidy programs were declared at the central government level and 20 at the sub-central government level.^{Footnote 160}

[224] The Canadian producers referenced the October 31, 2019, WTO Panel report in India - Export Related Measures concerning a complaint by the United States which alleged certain Indian subsidy programs were contingent on export performance and therefore prohibited. The WTO Panel concluded that several exemptions under the alleged programs were contingent on export performance and therefore inconsistent with India’s obligations.^{Footnote 161}

[225] The Canadian producers referenced the annual reports of several Indian producers of HRSS to demonstrate that they have availed themselves of subsidy programs which are countervailable. Examples referenced in the annual reports include: “export incentives”—including those under the Export Promotion Capital Goods scheme; sales tax exemptions; loans under the Steel Development Fund; and grants and tax incentives for facilities located in “economically backward regions.”^{Footnote 162}

Parties contending that continued or resumed subsidizing is unlikely

[226] The GOI provided a response to the ERQ, but did not provide case briefs or reply submissions in regards to the likelihood of continued or resumed subsidizing of HRSS from India.

Likelihood of continued or resumed subsidizing

India

[228] Guided by the factors in the aforementioned subsection 37.2(1) of the SIMR and having considered the information on the administrative record, the following list represents a summary of the CBSA’s analysis conducted in this expiry review investigation with respect to subsidizing:

• the continued availability of subsidy programs for HRSS exporters
• the GOI’s provision of subsidies to its manufacturers in the steel sector and
• the countervailing measures against Indian flat-rolled steel sheet products, including HRSS, in the United States

[229] As earlier indicated, no exporter in India provided a response to the ERQ in this expiry review investigation nor did any provide case briefs or reply submissions. The CBSA received an ERQ response from the GOI. The CBSA relied on the information submitted by the GOI and other participating parties, as well as other information on the administrative record for the purposes of the expiry review investigation with respect to India.

The continued availability of subsidy programs for HRSS exporters in India

[230] At the time of the original investigation in 2001, the CCRA, now the CBSA, determined that the GOI had conferred a benefit to exporters of HRSS under the following programs totaling 3,150 rupees per MT (R/MT) exported, currently about CAD $52.^{Footnote 163}

1. Duty Entitlement Pass Book Scheme
2. Advance Licences (now: Advance Authorization Scheme)
3. Special Import Licences
4. Export Promotion Capital Goods Scheme
5. Pre-shipment Export Financial Assistance
6. Post-shipment Export Financial Assistance
7. Forgiveness of Loans from the Steel Development Fund and
8. Forgiveness of Loans from the GOI

[231] Of the programs listed, programs 1—6 were determined to be specific since, being contingent upon export performance, they were prohibited subsidies under SIMA. Programs 7 and 8 constituted specific subsidies for the reason that they were limited to a particular enterprise.

[232] Detailed descriptions of the programs and explanations as to why they were regarded as subsidies subject to countervailing duties are contained in the Statement of Reasons issued at the final determination.^{Footnote 164}

[233] On October 28, 2015, the CBSA concluded a re-investigation to update the amounts of subsidy for HRSS from India. The CBSA did not receive a complete response to any RFI sent to exporters or the GOI.^{Footnote 165} Due to the lack of participation on the part of the Indian exporters and the GOI, at the conclusion of the re-investigation, the ministerial specification of 3,150 R/MT, which represents the sum of the highest amounts of subsidy found under each of the programs utilized at the final determination dated July 2001, was applied to all subject goods shipped to Canada from India.

[234] Indian producers did not export HRSS to Canada during the POR. However, the information on the record does indicate that HRSS producers in India have access to and have availed themselves of subsidy programs that would render future shipments of these goods to Canada countervailable.

[235] In its ERQ sent to the GOI, the CBSA identified 55 subsidy programs. Of these 55 programs, the GOI confirmed the continuance of 42. Additionally, the GOI indicated six programs were subsumed into one program administered under the Integrated Goods and Services Act when the Goods and Service Tax (GST) was introduced in 2017.^{Footnote 166} As a result, only five programs were reported to be terminated by the GOI since the conclusion of the last expiry review on April 6, 2016; however, no legislation was provided to confirm this.

The GOI’s provision of subsidies to its manufacturers in the steel sector

[236] Indian steelmakers predicted a reduction in subsidies following a WTO ruling on Indian exports in October, 2020.^{Footnote 167} However, recent actions taken by the GOI demonstrate further efforts to confer financial benefits to Indian steel producers. On July 29, 2021, the GOI approved a production-linked incentive (PLI) scheme for speciality steel, totaling INR 6,322 crore.^{Footnote 168} The purpose of the PLI scheme is to create “global manufacturing champions in India” and bring the country “on a par with global steel making majors such as South Korea and Japan”.^{Footnote 169}

[237] Information on the record indicates that Indian producers of HRSS have availed themselves of subsidies under a variety of export-based incentive schemes as well, including the Export Promotion Capital Goods scheme (EPCG). The EPCG scheme allows exporters to import capital equipment and components at reduced or nil rates of import duty. Duty exemption for such goods is considered an actionable subsidy under SIMA. As noted above, the EPCG has previously been determined to be countervailable by the CBSA.

[238] Information on the record indicates that Indian producers of HRSS have availed themselves of loans under the Steel Development Fund (SDF), a GOI initiative under India’s Ministry of Steel. Under the scheme, financial assistance from SDF is provided to R&D projects pursued by reputed research laboratories, academic institutions and industries. Financial contributions under this fund have previously been investigated as loans which have been forgiven by the government.

[239] During the original investigation into the subsidizing of HRSS in 2001, the Steel Authority of India Ltd. (SAIL) reported the forgiveness of certain long-term loans it had received from the SDF through the GOI. As noted above, the SDF has previously been determined to be countervailable by the CBSA.^{Footnote 170}

[240] In its annual report, Jindal Steel & Power Limited (JSPL), an HRSS producer, indicates it received several subsidies from both the GOI and State government. In its 2019-2020 annual report, “export incentives” amounted to IND 73.21 crores.^{Footnote 171}

[241] JSW Steel, an HRSS producer also reported receiving export subsidies in its 2021 annual report. JSW Steel reported it has imported capital goods under the EPCG scheme to utilize the benefit of a zero or concessional customs duty rate. These benefits are subject to future exports. Such export obligations at year end aggregate to IND 20,728 crores, an increase from the previous year, where it reached IND 17,407 crores. Further, JSW Steel reported an export turnover which was 47% higher than in 2019, resulting in “higher exports benefits and higher […] EPCG grant income”.^{Footnote 172}

[242] Similarly, Tata Steel another HRSS producer reported in its 2021 annual report that: “other operating revenues include export incentives […]”, though it is not possible to specifically identify the amounts received.”^{Footnote 173} Tata Steel also benefits from a long-term loan of IND 2,677.40 crores from the SDF, for which the CBSA previously determined forgiveness to be a countervailable subsidy.

[243] Steel Authority of India Limited (SAIL), another HRSS producer, reported revenues of IND 123 crores for “Export incentives” in its 2020 annual report. SAIL also benefits from a long-term loan of IND 204.16 crores from the SDF, for which the CBSA previously determined forgiveness to be a countervailable subsidy.

[244] It is thus clear from the information on the record that subsidies in the form of export-based incentives continue to exist and are available to producers of HRSS in India.

[245] Given the absence of participation of Indian exporters in this expiry review investigation, it is uncertain how many exporters have benefited from loan forgiveness under the SDF scheme; however, it is clear that producers of HRSS have benefitted from loans under the SDF.

Countervailing measures against Indian flat-rolled steel sheet products, including HRSS

[246] The developments in the United States with respect to countervailing investigations on Indian flat-rolled steel products is significant as they represent timely confirmations of countervailable programs attributable to the Indian flat-rolled steel sector, which includes HRSS.

[247] The information on the record indicates that Indian producers of hot-rolled carbon steel flat products, including HRSS, are likely to continue to receive countervailable subsidies from the GOI and State government. In its June 5, 2019 sunset review, the USDOC found that a revocation of the order on hot-rolled carbon steel flat products from India would likely lead to continuation or recurrence of countervailable subsidies at rates between 336.62%-360.23%.^{Footnote 174}

Determination regarding likelihood of continued or resumed subsidizing

[248] Based on the information on the record in respect of: the continued availability of subsidy programs for HRSS exporters; the GOI provision of subsidies to its manufacturers in the steel sector; and the multiple countervailing measures against Indian steel products, including HRSS, in both Canada and the United States, the CBSA determined that the rescission of the order is likely to result in the continuation or resumption of subsidizing of HRSS originating in or exported from India.