PLA3 2017 ER
Certain Hot-rolled Carbon Steel Plate
Statement of Reasons

[1] On October 3, 2017, the Canadian International Trade Tribunal (CITT), pursuant to subsection 76.03(3) of the Special Import Measures Act (SIMA), initiated an expiry review of its order issued on January 8, 2013, in Expiry Review No. RR 2012 001, concerning the dumping of certain hot rolled carbon steel plate and high strength low alloy plate, originating in or exported from China.

[2] For the purposes of this Statement of Reasons, the subject goods shall be referred to as “hot rolled steel plate” or “certain hot-rolled steel plate”, with “certain” limiting the corresponding plate to the product definition.

[3] As a result of the CITT’s notice of expiry review, on October 4, 2017, the Canada Border Services Agency (CBSA) initiated an investigation to determine whether the expiry of the order with respect to certain hot rolled steel plate is likely to result in the continuation or resumption of dumping.

[4] The Canadian producers of hot-rolled steel plate, namely Essar Algoma Steel Inc. (Essar Algoma) and Evraz Inc. NA Canada (Evraz Canada) provided responses to the Expiry Review Questionnaire (ERQ).

[5] The Canadian producer Essar Algoma provided a case brief in support of its position that continued or resumed dumping of certain hot-rolled steel plate from China is likely if the CITT order is rescinded. Evraz Canada did not provide a case brief or a reply submission.

[6] Responses to the ERQ were also received from eight service centers: Olbert Metals Sales Limited, C&F Steel, Russel Metals, Alliance Steel Corporation, SSAB Central Inc., Acier Nova Inc. and Samuel, Son and Co. None of the eight service centers imported subject goods from China during the Period of Review (POR). Acier Nova Inc. expressed its position that continued or resumed dumping is likely if the CITT order is rescinded. No case briefs or reply submissions were received from any importers/service centers.

[7] The CBSA did not receive any response to the ERQ from the producers/exporters of certain hot-rolled steel plate. None of the producers/exporters provided a case brief or expressed a position on the likelihood of continued or resumed dumping if the CITT order is rescinded.

[8] The analysis of the information on the record in respect of the commodity nature of hot rolled steel plate and capital intensive nature of steel production; China’s high export dependency of steel products; excess production capacity, tendency of re-directing its steel exports; in addition to its steel industry being at a loss; that there is anti-dumping measures in place in Canada and other jurisdictions against steel products from China; and that China has an interest in the Canadian market and inability to compete in at non-dumped prices, all of which taken together indicate a likelihood of continued or resumed dumping into Canada should the CITT’s order be rescinded.

[9] For the foregoing reasons, the CBSA, having considered the relevant information on the record, made a determination under paragraph 76.03(7)(a) of SIMA that the expiry of the order in respect of the dumping of certain hot-rolled steel plate originating in or exported from China is likely to result in the continuation or resumption of dumping of the goods into Canada.

[10] On February 13, 1997, following a complaint filed by Canadian industry, the original anti-dumping investigation was initiated concerning certain hot-rolled steel plate originating in or exported from Mexico, China, Poland, South Africa, and Russia.

[11] The complaint was made by Stelco Inc. of Hamilton, Ontario, and was supported by the other Canadian manufacturers of the product at that time. Stelco Inc. ceased operation in June 2004.

[12] On June 27, 1997, the Deputy Minister of National Revenue terminated the investigation with respect to the subject goods from Poland. On September 25, 1997, the Deputy Minister made a final determination of dumping in respect of certain hot-rolled steel plate originating in or exported from Mexico, China, South Africa, and Russia.

[13] On October 27, 1997, the CITT found that the dumping of the subject goods from Mexico, China, South Africa, and Russia threatened to cause injury to the domestic industry.

[14] On June 11, 2002, following the initiation of an expiry review of the CITT’s finding of injury, the Commissioner of Customs and Revenue determined that the expiry of the finding was likely to result in the continuation or resumption of dumping of the subject goods from Mexico, China, South Africa, and Russia.

[15] On January 10, 2003, in Expiry Review No. RR-2001-006, the CITT continued its finding concerning the subject goods from China, Russia and South Africa, but rescinded its finding with respect to Mexico.

[16] On March 6, 2007, the CITT issued a notice concerning the upcoming expiry of its order and on April 25, 2007, the CITT, pursuant to subsection 76.03(3) of SIMA, initiated an expiry review of its order issued on January 10, 2003, concerning certain hot-rolled steel plate, originating in or exported from China, South Africa and Russia.

[17] On April 26, 2007, the CBSA initiated an expiry review investigation concerning certain hot-rolled steel plate, originating in or exported from China, South Africa and Russia. On August 23, 2007, pursuant to paragraph 76.03(7)(a) of SIMA, the CBSA determined that the expiry of the order was likely to result in the continuation or resumption of dumping of the goods from China, South Africa and Russia.

[18] On January 9, 2008, in Expiry Review No. RR-2007-001, the CITT continued its order in respect of certain hot-rolled steel plate originating in or exported from China. The CITT, pursuant to subparagraph 76.03(12)(a)(i) of SIMA, rescinded its order in respect of certain hot rolled steel plate originating in or exported from South Africa and Russia.

[19] On April 25, 2012, the CITT, pursuant to subsection 76.03(3) of SIMA, initiated an expiry review of its order issued on January 9, 2008, concerning certain hot-rolled steel plate, originating in or exported from China. On August 23, 2012, pursuant to paragraph 76.03(7)(a) of SIMA, the CBSA determined that the expiry of the order was likely to result in the continuation or resumption of dumping of the certain hot-rolled steel plate from China.

[20] On January 8, 2013, in Expiry Review No. RR-2012-001, the CITT continued its order in respect of certain hot-rolled steel plate originating in or exported from China.

[21] On August 14, 2017, the CITT issued a notice concerning the upcoming expiry of its order and on October 3, 2017, the CITT, pursuant to subsection 76.03(3) of SIMA, initiated an expiry review of its order issued on January 8, 2013, concerning certain hot-rolled steel plate, originating in or exported from China.

[22] The goods subject to the order are defined as:

Hot-rolled carbon steel plate and high-strength low-alloy plate not further manufactured than hot-rolled, heat-treated or not, in cut lengths, in widths from 24 inches (+/- 610 mm) to 152 inches (+/- 3,860 mm) inclusive, and thicknesses from 0.187 inches (+/ 4.75 mm) to 4.0 inches (+/- 101.6 mm) inclusive, originating in or exported from the People’s Republic of China, but excluding plate for use in the manufacture of pipe and tube (also known as skelp); plate in coil form; plate having a rolled, raised figure at regular intervals on the surface (also known as floor plate); and plate produced to American Society for Testing and Materials specifications A515 and A516M/A516, grade 70 (also known as pressure vessel quality plate) in thicknesses greater than 3.125 inches (+/- 79.3 mm).

Additional Product Information

[23] Certain hot-rolled steel plate is manufactured to meet certain Canadian Standards Association (CSA) and/or American Society for Testing and Materials (ASTM) specifications or equivalent specifications.

[24] The CSA specification G40.21 covers steel for general construction purposes. In the ASTM, for instance, specification A36M/A36 comprises structural plate; specifications A572M/A572 comprises high strength low alloy steel plate; and specification A516M/A516 comprises pressure vessel quality plate.

[25] ASTM standards, such as A6/A6M and A20/A20M, recognize permissible variations for dimensions.

[26] It should be noted that the metric equivalent dimensions in the definition of the goods are rounded numbers as indicated by the “+/ ” symbols.

[27] Certain hot-rolled steel plate is normally imported into Canada under the tariff classification numbers found in Appendix A. The tariff classification numbers provided may include goods that are not subject goods and subject goods may be imported into Canada under tariff classification numbers other than those provided. Refer to the product definition for authoritative details regarding the subject goods.

[28] The period of review (POR) for the CBSA’s expiry review investigation is January 1, 2014 to June 30, 2017.

[29] The Canadian industry for hot-rolled steel plate production is comprised of the following two companies*:

• Essar Steel Algoma Inc. of Sault Ste. Marie, Ontario
• Evraz Inc. NA Canada of Regina, Saskatchewan
• Steel service centres also provided responses to the Expiry Review Questionnaires. They do not heat or roll plate in Canada, however, they operate cut-to-length facilities.

Essar Steel Algoma Inc.

[30] Incorporated on June 1, 1992, under the Ontario Business Corporations Act, Algoma Steel Inc. acquired all of the assets and some of the liabilities of the old Algoma Steel Corporation, Limited. On January 29, 2002, the company was further reorganized under a plan of Arrangement and Reorganization pursuant to the Companies’ Creditors Arrangement Act.

[31] In June 2007, Algoma Steel Inc. was acquired by Essar Steel Holdings Ltd., a division of the multi-national conglomerate, Essar Global. On May 8, 2008, the company was renamed Essar Steel Algoma Inc.^{Footnote 1}

[32] Essar Algoma is a primary iron and steel producer. It has a present capacity to produce approximately 3.7 million metric tonnes (MT) of raw steel annually. Expressed in terms of finished steel products, the annual capacity is approximately 3.4 million MT consisting of carbon steel plate, hot-rolled steel sheet and cold-rolled sheet.^{Footnote 2} The company’s production facilities are located in Sault Ste. Marie, Ontario and regional sales offices are located in Burlington, Ontario and Calgary, Alberta.^{Footnote 3}

Evraz Inc. NA Canada

[33] Evraz Canada (the Western Canadian operations of the former IPSCO Inc.) was originally incorporated as the Prairie Pipe Manufacturing Co., Ltd. in 1956. The company commenced production of its own flat-rolled steel, including hot-rolled steel sheet in 1960. Evraz Canada continues to produce hot-rolled carbon and alloy steel plate in addition to other flat-rolled steel, including hot-rolled steel sheet products, oil country tubular goods, standard pipe and piling pipe.

[34] On July 17, 2007, SSAB, a subsidiary of SSAB Svenskt Stahl of Sweden, acquired IPSCO Inc. and its subsidiaries. A further reorganization led to IPSCO Inc. owning only the Canadian operations, excluding the coil processing facility in Scarborough, Ontario.

[35] On June 12, 2008, Evraz Group S.A. acquired from SSAB all of its IPSCO Inc. shares and all of its subsidiaries. SSAB retained a number of U.S. facilities and the coil processing facility in Scarborough, Ontario.

[36] On October 15, 2008, the name IPSCO Inc. was changed to Evraz Inc. NA Canada and the name of its wholly owned subsidiary IPSCO Canada Inc. was changed to Evraz Inc. NA Canada West.

[37] On January 1, 2009, Evraz Canada West was amalgamated into Evraz Inc. NA Canada.^{Footnote 4}

[38] The company produces steel plate, steel sheet, tubular products and processes coils in four locations in Canada. Evraz’s Regina facility is the largest steel industrial complex in Western Canada. Evraz produces steel plate at its Regina facility only.^{Footnote 5}

[39] The imports into Canada of hot-rolled steel plate over the POR is presented in the following tables. The CBSA cannot release specific quantitative data for domestic producers as it relates to only two companies and would lead to the disclosure of confidential information.

Table 1
Imports into Canada during the Period of Review^{Footnote 6}
Hot-Rolled Steel Plate ($)

Source	2014	2015	2016	2017 (Jan - Jun)
Canadian Production	*	*	*	*
China	$0	$0	$0	$0
Other Country Imports	$595,612,747	$410,189,848	$394,957,504	$197,896,109
Total Market	*	*	*	*

Table 2
Imports into Canada during the Period of Review^{Footnote 7}
Hot-Rolled Steel Plate (Metric Tonnes)

Source	2014	2015	2016	2017 (Jan - Jun)
Canadian Production	*	*	*	*
China	0	0	0	0
Other Country Imports	798,917	515,548	479,445	235,560
Total Market	*	*	*	*

Production

[40] In 2014, production from Canadian manufacturers represented approximately a quarter of the total apparent Canadian market of hot-rolled steel plate. In 2015, the Canadian producers’ apparent market share slightly increased and continued to slightly increase in 2016 and in 2017.

Imports

[41] During the POR, there were no imports of subject goods from China. The tables above demonstrate that the overall imports from other countries have declined since 2014. These imports originate in a number of countries, with Turkey and the United States being significant sources during the POR.

[42] During the POR, there were no exports of subject goods to Canada. As a result, the CBSA did not collect anti-dumping duties during the POR.

[43] On October 4, 2017, a notice concerning the initiation of the expiry review investigation and the ERQs were sent to the known Canadian producers, potential importers and potential producers/exporters.

[44] The ERQ requested information needed to consider the factors, as listed in subsection 37.2(1) of the Special Import Measures Regulations (SIMR), relevant to this expiry review investigation. Any persons having an interest in this investigation were also invited to provide a submission regarding the effect the expiry of the CITT’s injury order would have on the continuation or resumption of dumping of the goods.

[45] As mentioned above, there are presently two Canadian producers of hot-rolled steel plate. Both participated in the expiry review investigation by answering the ERQ. Essar Algoma also provided a case brief. The case brief states that the dumping of subject goods would continue or resume should the CITT’s order be rescinded.

[46] Responses to the ERQ were also received from eight Canadian steel service centres (some are also importers of non-subject steel products) and importers, namely from SSAB Central Inc^{Footnote 8}, Alliance Steel Corporation^{Footnote 9}, Russel Metals^{Footnote 10}, Acier Nova^{Footnote 11}, Olbert Metal^{Footnote 12}, C&F Steel^{Footnote 13}, Reliance Metals^{Footnote 14} and Samuel, Son and Co. Limited^{Footnote 15}.

[47] None of these parties provided case briefs or reply submissions and only Acier Nova expressed a position with respect to the likelihood of resumed or continued dumping. None of these Canadian service centres/importers imported subject goods during the POR.

[48] None of the potential exporters or producers located in China provided responses to the ERQ. None provided a case brief or a reply submission.

Administrative Record

[49] The information considered by the CBSA for purposes of this expiry review investigation is contained on the administrative record. The administrative record consists of the exhibits listed on the CBSA’s Exhibit Listing, which is comprised of the CITT’s administrative record relating to the initiation of 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 is likely to continue or resume, if the order is rescinded. The information may consist of expert analyst 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 domestic producers, importers, exporters and foreign governments.

[50] For purposes of an expiry review investigation, the CBSA sets a date after which no new information may be placed on the administrative record. This is referred to as the “closing of the record date.” For this investigation, the administrative record closed on December 4, 2017. This allows 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. There were no procedural issues surrounding the information submitted on the record.

Parties Contending that Continued or Resumed Dumping is Likely

[51] Two parties expressed a position that continued or resumed dumping is likely. As mentioned above, Acier Nova stated that: [Translation] “Nova is currently very concerned about the threat of heavy plate imports from China into Canada if the CBSA does not maintain the safeguards currently in place.”^{Footnote 16}

[52] The Canadian producer, Essar Algoma provided a case brief stating that in absence of the CITT order, dumping is likely to continue or resume from China. The main factors identified by Essar Algoma^{Footnote 17} can be summarized as follows:

• International market conditions;
• Excess production capacity in China;
• China’s dependence on exports;
• Large volume of low-priced plate being sold into the Canadian market from new offshore sources;
• Trade measures in other jurisdictions;
• Behaviour of Chinese exporters while the order has been in effect.

International Market Conditions

[53] Essar Algoma quoted various reports with regards to the international market conditions. It argued that the conditions in the international steel and steel plate markets increase the likelihood of resumed dumping if the order is rescinded. The Organisation for Economic Co-operation and Development (OECD) Steel Committee stated that 2017 has seen improvements in markets conditions for steel globally. The Chair also noted that the moderate demand growth expected in 2017 and 2018 will not eliminate concerns about the supply-demand imbalance in the global market.^{Footnote 18} “The market situation of the steel industry has improved only modestly compared to its 2015 lows and its recovery is expected to remain sluggish”^{Footnote 19}

[54] Essar Algoma stated: “This generally subdued demand forecast is especially problematic in light of the continuing global overcapacity crisis.”^{Footnote 20}

Excess Production Capacity in China

[55] In its case brief, Essar Algoma provided detailed statistics regarding capacity, production and capacity utilization for plate rolling production facilities in China for the period from 2014 to 2020. The data indicates that there is significant excess production capacity in China’s plate rolling industry.

[56] Global reversing mill plate production is expected to grow by over 5 million MT in 2018 and nearly another 4 million MT in 2019. Altogether, reversing mill production will grow by approximately 12 million MT globally from 2017 to 2020. The global excess production capacity of reversing mills increased from 50 million MT in 2014 to 59 million MT in 2017. While excess reversing mill capacity is expected to decrease over the next three years, global capacity utilization will remain below 75%, with 50 million MT of available capacity through 2019.^{Footnote 21}

[57] Essar Algoma further stated that total global capacity on equipment used to produce plate (reversing mills, steckel mills and hot-strip mills) has grown by almost 50 million MT from 2014 to 2017, and is expected to grow by another 3.7 million MT between 2017 and 2019. Production from 2017 to 2019 is forecasted to grow by just under 35 million MT. Even with this increased production, excess capacity on this equipment will remain well over 150 million MT, or 16% of total capacity in that year.^{Footnote 22}

[58] Essar Algoma noted in its case brief that when it comes to overcapacity in the global steel industry, China leads the way accounting for two-thirds of global overcapacity. China added 990 million MT of steelmaking capacity from 2000 to 2015, accounting for more than three quarters of global capacity growth (1.2 billion MT) during that period.^{Footnote 23} China’s massive production capacity buildup can be attributed largely to supportive industrial policies which treated steel as a strategic industry.

[59] In February 2016, the Government of China announced that its goal is to cut steelmaking capacity by 100 to 150 million MT by 2020. These intentions are positive, however, if the Government achieves this goal, it would be insufficient to fix the Chinese overcapacity problem.^{Footnote 24}

[60] Essar Algoma mentioned that “…China’s efforts to cut excess capacity are leading to the emergence of bigger, more powerful State-owned enterprises (SOEs) while marginalizing private operators. This increase in the relative capacity held by SOEs at the expense of smaller, private producers increases the threat of resumed dumping. These giant SOEs have significant market power and export distribution through which dumped plate can be shipped to Canada.”^{Footnote 25}

[61] Essar Algoma provided statistics to show that Chinese production of plate on reversing mills stands at 69 million MT in 2017, several times the size of the Canadian market. Total Chinese capacity to produce plate, in all its plate rolling mills, meeting the product definition is 353 million MT.^{Footnote 26}

China’s Dependence on Exports

[62] Essar Algoma emphasized the Chinese steel industry’s dependence on exports of their steel products. Information was provided to support this dependence. It was stated that: “The Chinese steel industry is highly export-oriented. This increases the likelihood that Chinese producers would respond to difficulties in their home market by dumping subject goods in Canada if the CITT order were to expire.”^{Footnote 27}

[63] Essar Algoma submitted evidence that there is an important weakness in the shipbuilding industry, particularly in China. This will likely make Chinese plate producers look further abroad, competing on price to secure volume. This situation poses a distinct threat of resumed dumping into Canada if the CITT order is rescinded.

Large Volume of Low-priced Plate being Sold into the Canadian Market from new Offshore Sources

[64] Essar Algoma submitted that there are currently new offshore sources selling low priced plate in the Canadian market. If the order expires, exporters in China would need to compete with these low priced import sources, particularly, Turkey, Malaysia and Taiwan.^{Footnote 28}

Trade Measures in Other Jurisdictions

[65] Essar Algoma argued that there is a history of a propensity to dump plate and other steel products by the exporters of subject goods from China. Essar Algoma listed the steel products exported to Canada from China and subject to anti-dumping and/or countervailing duty orders. Furthermore, a reference was made to the number of anti-dumping measures in other countries against Chinese origin flat rolled products as evidence that Chinese exporters of flat rolled products have a propensity to dump. Examples include anti-dumping duties being imposed on Chinese flat-rolled steel products by Australia, Indonesia, Mexico, and the United States.^{Footnote 29}

Behaviour of Chinese Exporters while the Order has been in Effect

[66] Essar Algoma mentioned that since the finding has been in place against China, Chinese exporters have not exported subject goods to Canada. Chinese exporters have maintained a significant presence in Canada’s plate market by selling high volumes of non-subject plate.^{Footnote 30}

Parties Contending That Resumed or Continued Dumping is Unlikely

[67] None of the parties to the proceeding contended that resumed or continued dumping is unlikely.

[68] In making a determination under paragraph 76.03(7)(a) of SIMA whether the expiry of the order is likely to result in the continuation or resumption of dumping, the CBSA may consider factors identified in subsection 37.2(1) of the SIMR, as well as any other factors relevant under the circumstances.

[69] Before presenting the specific analysis with respect to China concerning the likelihood of continued or resumed dumping in absence of the CITT order, there are issues that relate to the goods on a broader scale which are addressed as follows:

• the commodity nature of hot-rolled steel plate;
• the capital intensive nature of steel production; and
• steel market developments and trends.

Commodity nature of hot-rolled steel plate

[70] The significant number of anti-dumping measures involving steel products, both in Canada and several other jurisdictions, can be related, in large part, to the very nature of the product and the industry.

[71] Generally speaking, hot-rolled steel plate produced to a given specification by a producer in a given country is physically interchangeable with hot-rolled steel plate produced to the same specification in any other country. As such, the goods compete amongst themselves regardless of origin and share the same channels of distribution and the same potential customers. This characteristic means that hot rolled steel plate must compete in a market that is extremely price sensitive, where price is one of the primary factors affecting purchasing decisions from customers. Furthermore, because of this high degree of price sensitivity, prices in a given market may tend to converge over time towards the lowest available price offerings.

[72] There is a history of plate dumping cases in Canada. Since 1992, there have been eight inquiries concerning similar steel plate products from various countries, seven resulting in the imposition of either anti-dumping measures or both anti-dumping and countervailing measures against these products.

[73] Given the commodity nature of the subject goods, when the measures are in place for one country, other sources of hot-rolled steel plate emerge. This is evident from the number of measures in place in Canada, both historically and currently, with respect to hot-rolled steel plate.

Capital-intensive nature of steel production

[74] A second characteristic of the product involves the capital intensive nature of steel production. As noted previously 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 home market demand drops, producers will search out foreign markets to maintain capacity utilization to ensure that these fixed costs are recovered.”^{Footnote 31}

[75] This is often referred to as the “economics of steel production.” This characteristic is particularly important when there are conditions of overcapacity, 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.

Steel market developments and trends

[76] According to the Commodity Research Unit (CRU), global steel consumption decreased by 0.8% year-on-year in the first quarter of 2014 after a growth of 9.3% in the third quarter of 2013 and 8.7% in the fourth quarter of 2013. The sudden halt in global steel consumption growth in the first quarter of 2014 was driven by the 0.7% decline in Chinese steel demand in that quarter, following strong steel demand increases of 15.3% in the third quarter and 12.0% in the fourth quarter of 2013 (in year-on-year terms).^{Footnote 32} By the end of 2014, steel production growth slowed to 1.2%. The continued oversupply of steel combined with weak demand growth exacerbated the market conditions. While several regions like Turkey, Brazil and Ukraine saw decreased production, China’s steel production grew to 822.7 million MT in 2014.^{Footnote 33}

[77] Global steel producing capacity has significantly increased over the last decade. In 2014, there was a significant gap between global crude steel demand at 1.65 billion MT and global steelmaking capacity at 2.24 billion MT. The excess capacity in China alone was estimated at 427 million MT.^{Footnote 34} The global steel exports grew by 9% year over year in 2014 marking a new record of 440 million MT. More than 80% of the increase was due to an increase in Chinese exports to over 90 million MT in 2014. That year, steel demand growth was significantly lower in China due to declining real estate demand, and as a result, there was a surge in exports.^{Footnote 35}

[78] In 2015, the world production of crude steel, excluding China, was 816.2 million MT and the production in China was 803.8 million MT. In 2016, the world production of crude steel, excluding China, was 821.2 million MT and the production in China was 808.4 million MT.^{Footnote 36} Between 2005 and 2015, 987.8 million MT of capacity were added globally, an increase of 71.8%. After an 8.1% jump in 2013, global capacity growth began to slow. From 2013 to 2015, capacity has increased by 4% or 90.8 million MT.^{Footnote 37}

[79] Global capacity utilization rates have declined in the majority of the years since 2005. Capacity utilization dropped to 70% in 2009 following the global financial crisis. In 2011, the capacity utilization rate recovered to 77.4%. After 2011, however, the rates began a downward trend, falling to a 10-year low in 2015 at 68.7%.^{Footnote 38}

[80] As steel is a key intermediate good used by the industrial sector, demand for steel often leads the cycle in the industrial production. The lowest point of the steel demand cycle was reached in September 2015, approximately half a year before global industrial production growth began to recover.^{Footnote 39} The demand for steel had decreased by 2.8%.^{Footnote 40} Steel demand only started increasing during 2016.^{Footnote 41}

[81] In 2015, global steelmaking capacity was over 700 million MT larger than production and over 800 million MT larger than demand. These gaps were exacerbated by production and demand declines in 2015.^{Footnote 42} In 2015, the outlook for the steel sector remained weak due to near stagnation in global steel demand, persistence of excess capacity as new investments continued to take place and low profitability for steelmaking companies.^{Footnote 43}

[82] Standard plate pricing over the period of 2014 to 2016 was volatile with prices falling off sharply in the fourth quarter of 2015 and first quarter of 2016 and fluctuating throughout the remaining period. By the end of the third quarter of 2017, prices still had not recovered to 2008 levels, before the financial crisis, although there was significant improvement.^{Footnote 44}

[83] With investment projects continuing to increase in a number of economies, and while steel consumption growth is anticipated to remain moderate, the global imbalance between capacity and demand will continue to pose risks for the industry for the foreseeable future.^{Footnote 45} Information on announced investment projects suggests that nearly 40 million MT of gross capacity additions are currently underway and was expected to come on stream during 2017-2019, while an additional 54.5 million MT of capacity additions are currently in the planning stages for possible start-up during the same period.^{Footnote 46} Capacity utilisation rates were forecasted to be 75% by the end of 2017 and in 2018.^{Footnote 47}

[84] Guided by the factors in subsection 37.2(1) of the SIMR and having considered the information on the administrative record, the ensuing list represents a summary of the analysis conducted in this review:

• High export dependency of steel products;
• Excess production capacity;
• Tendency of re-directing steel exports
• China’s steel industry at a loss;
• Anti-dumping measures in place in Canada and other jurisdictions against steel products from China;
• China’s interest in the Canadian market and inability to compete at non-dumped prices.

[85] As noted earlier, no Chinese hot-rolled steel plate producers provided a response to the ERQ, nor did they file case briefs or reply submissions.

High Export Dependency of Steel Products

[86] Regarding import and export activities, China is the world’s largest steel exporter as 108.1 million MT of steel were exported in 2016. However, during the same period, China only imported 13.6 million MT of steel products. As a result, China’s net exports in 2016 was 94.5 million MT.^{Footnote 48}

[87] The volume of China’s 2016 steel exports was more than double that of the world’s second-largest exporter, Japan, and more than triple that of the third and fourth largest exporters, Russia and the Republic of Korea. Since 2009, China steel exports grew by 421%.^{Footnote 49}

[88] From 2009 to 2016, China’s steel exports as a share of production more than tripled from 4% to 13.2% of which flat products account for more than 53%. Production of steel in China has stabilized with 822.7 million MT produced in 2014, 803.8 million MT in 2015 and 808.4 million MT in 2016. Meanwhile, the apparent Chinese steel domestic consumption has decreased from 776.5 million MT in 2014 to 715.2 million MT in 2016.^{Footnote 50} China’s significant increase in exports as a share of production is evidence that Chinese steel producers are highly dependent on export sales to maintain production levels.

[89] The Steel Statistical Yearbook 2016 provides a detailed breakdown of imports and exports of a narrow category of goods, namely flat products which includes hot-rolled steel plate. Based on the data presented in the table below, the net exports of flat products from China increased from 5.56 million MT in 2011 to 37.70 million MT in 2015. This is an increase of 578%.

Exports and Imports of Flat Products
(Values in million MT)^{Footnote 51}

China	2011	2012	2013	2014	2015
Exports of flat products	26.59	26.97	27.64	43.67	48.47
Imports of flat products	13.20	11.67	11.89	12.08	10.77
Net exports	13.39	15.30	15.75	31.59	37.70

[90] Based on the foregoing, the data confirms China’s continued and growing high export dependency of steel products, including flat products such as plate. The result of which will be continued focus by the Chinese exporters on export markets, which could include Canada should the CITT order be rescinded.

China’s Excess Production Capacity

[91] China is the biggest producer of crude steel in the world. As mentioned earlier, in 2016, a total of 808.4 million MT of crude steel was produced by Chinese steel producers and accounted for approximately 50% of the world’s total steel production.^{Footnote 52} The crude steel production capacity in China is 1,100 million MT.^{Footnote 53}

[92] China’s crude steel production increased steadily between 2009 and 2014 but levelled off in 2015 and 2016. Production in 2017 (until June 2017) increased 4% compared to the same period in 2016. While the difference between production and apparent consumption was nearly non existent in 2009, by 2016, China’s production outpaced domestic demand by 93.2 million MT.^{Footnote 54}

[93] The largest excess steel production capacity today is in China.^{Footnote 55} In 2015, the amount of Chinese excess steel capacity was estimated between 325 million to 350 million MT.^{Footnote 56} The Chinese government has awakened to the need to rationalize this excess capacity and is putting in place policy measures to deal with it. However, given the social implications of these initiatives, it will be a few years before the country achieves any meaningful capacity reduction.^{Footnote 57} The Government of China plans to cut excess steel capacity by 150 million MT by 2020.^{Footnote 58} As the Canadian producer’s case brief and the information gathered through independent research by the CBSA suggests, the Chinese overcapacity issue with respect to the steel industry will be a longstanding one, despite the Government of China efforts to reduce capacity and output by 2020.

[94] Although there is no information on the record indicating the quantity of certain hot rolled steel plate produced in China, the Steel Statistical Yearbook 2016, which was published by the World Steel Association, provides information pertaining to crude steel and hot rolled plate.^{Footnote 59} The table below summarizes China’s production of crude steel and hot rolled plate for 2011 to 2015.

Production of Crude Steel and Hot-rolled Plate in China^{Footnote 60}
(Values in million MT)

China	2011	2012	2013	2014	2015
Production of crude steel	638.74	731.04	822.00	822.75	803.82
Production of hot-rolled Plate (≥ 3 mm)	180.30	176.03	188.35	196.67	196.68

[95] Based on the information presented above, the hot-rolled plate (≥ 3 mm) share of crude steel production decreased from 28% in 2011 to 24% in 2012 and dropped slightly to 23% in 2013. For 2014 and 2015, the hot-rolled plate (≥ 3 mm) share of crude steel production remained at 24%.

[96] With respect to production capacity in China, based on the information presented by Essar Algoma and the CRU Steel Plate Products Market Outlook, the total capacity for hot-rolled plate was 353 million MT for 2017 and it should remain the same for 2018, 2019 and 2020.^{Footnote 61Footnote 62}

[97] Despite the Government of China efforts to reduce capacity, China’s steel output was expected to grow from 3% to 5% in 2017 compared with 2016. The world’s largest steel producer would have produced around 840 million MT of crude steel in 2017, an increase of 4% year over year.^{Footnote 63} Should the hot rolled steel plate share of crude steel production have stayed at 24% through 2017, hot rolled steel plate production could be estimated at 202 million MT for 2017. That is 151 million MT in excess capacity of hot rolled steel plate, when compared to China’s 353 million MT of capacity. The estimated excess is several times larger than the anticipated 2017 Canadian market.

[98] As indicated earlier, China’s steel producers are largely export oriented. Given the exporters’ estimated excess capacity of certain hot-rolled steel plate, in the absence of the CITT’s order, Chinese exporters would likely resume exporting hot rolled steel plate to Canada.

Tendency of Re-directing Steel Exports

[99] Exports to China’s top 10 steel markets represented 54% of China’s steel export volume from January to June 2017 at 21.6 million MT. South Korea was the largest market followed by Vietnam, the Philippines, Thailand and Indonesia. In comparison to 2016, China’s exports in the first six months of 2017 decreased in volume to all of its top 10 export markets to be re-directed to other emerging markets such as Russia (up 107%) and Ecuador (up 85%).^{Footnote 64}

[100] Flat products accounted for 53% of China’s steel exports from January to June 2017 with 21.2 million MT. South Korea received the largest share of China’s flat products for this period with 3.7 million MT.^{Footnote 65} According to the WorldSteel Association (WSA) Short Range Outlook, Chinese exporters will not be able to look to South Korea to absorb increased volumes in 2018, as South Korea’s demand will drop significantly.

[101] Furthermore, the WSA notes that: “South Korea’s Steel demand is suffering from high consumer debts, weakening construction and a depressed shipbuilding sector, while escalated tension around the North Korean nuclear weapons threat poses a serious and highly unpredictable risk.”^{Footnote 66} This pressure on Chinese volumes to its biggest export market for flat products will push Chinese exporters to seek new export markets.

[102] The aforementioned export re directions demonstrates Chinese exporters’ willingness and ability to export their continued and growing excess production to any country with suitable demand. Furthermore, weakening demand in China’s traditional markets will push Chinese exporters to seek other export markets. As a result, should the CITT order be rescinded Chinese exporters would likely export these volumes to the Canadian market.

Steel Industry at a Loss

[103] China’s difference between crude steel production and apparent consumption has grown steadily larger since 2009. China has traditionally been a driver of strong global steel demand growth; but in 2014, Chinese domestic steel demand registered a decline for the first time since 1996. In 2016, China’s production outpaced the country’s demand by 93.2 million MT. In turn, China’s crude steel inventories are rising.^{Footnote 67Footnote 68}

[104] The growth in exports of flat products from China, particularly recently, may have been fuelled by Chinese steel producers having no choice but to lower their export prices to move those inventories.

[105] According to the China Iron and Steel Association, China’s 101 big steel companies lost a total of approximately US$10 billion in 2015. SOEs were the main contributors to the loss, while the most efficient private-sector firms managed to squeeze out marginal profits.^{Footnote 69}

[106] A proportion of the shortfall is likely attributable to China’s iron and steel product sales being at such low prices, whereby Chinese producers are not recovering their costs. Based on SteelBenchmarker Plate Price data, the table below show the price for standard plate in the United States and in China at different dates in 2016-2017.^{Footnote 70}

Standard Plate Prices
(USD/MT)

	United States	China
June 13, 2016	$731	$311
October 24, 2016	$612	$345
March 27, 2017	$841	$444
October 23, 2017	$738	$525

[107] Given the substantial disparity between plate prices in United States and China combined with the fact the China’s steel industry is operating at a loss, it is likely that hot rolled steel plate is being sold at a loss.

[108] The fact that China has a high export dependency of steel products, together with China’s insufficient internal demand for steel, and given that hot-rolled steel plate is likely sold at a loss, there is a strong likelihood that Chinese exporters will resume the export of low priced hot rolled steel plate to Canada should the current CITT order be rescinded.

Anti-dumping Measures in Place in Canada and other Jurisdictions Against Steel Products from China

[109] The propensity of Chinese exporters to dump hot rolled steel plate in Canada is further demonstrated by the numerous anti dumping measures imposed against them by Canada and other countries.

[110] Other jurisdictions, including Australia (December 19, 2013), the European Union (June 9, 2017) India (May 11, 2017), Indonesia (October 2, 2012) and the United States (March 20, 2017) also have anti-dumping measures in place against imports of hot rolled steel plate from China.^{Footnote 71}

[111] Furthermore, Chinese exporters’ propensity to dump is further evidenced by the fact that Canada has put in place anti dumping measures concerning similar products from China, such as Hot rolled Steel Sheet and many other steel products from China, including Piling Pipe, Line Pipe, Pup Joints, Carbon Steel Welded Pipe, and Concrete Reinforcing Bar to name a few.^{Footnote 72}

[112] As discussed above, given China’s continued and growing export dependency of flat products together with the weakening demand in China’s traditional markets, Chinese exporters may have no choice but to dump into their unrestrained export markets.

[113] The numerous measures on the dumping of hot rolled steel plate from China in other countries and Canada’s numerous measures on other steel products indicates that Chinese exporters have a propensity to dump these products into their export markets.

China’s Interest in the Canadian Market and Inability to Compete at Non-dumped Prices

[114] Since the CITT’s order of January 8, 2013 has been in place against China, Chinese exporters have not exported subject hot-rolled steel plate.^{Footnote 73} Chinese exporters of steel plate continued to show an interest in selling into the Canadian market throughout the POR by maintaining a presence in Canada’s flat product market by selling significant volumes of non subject plate.^{Footnote 74}

[115] This demonstrates that Chinese exporters remain interested in the Canadian market for plate but have been unable to compete in the hot-rolled steel plate market during the POR, while the order was in place. This indicates an inability to compete in the Canadian market at non dumped prices.

Determination Regarding Likelihood of Continued or Resumed Dumping for China

[116] Based on evidence on the record in respect of commodity nature of hot rolled steel plate and capital intensive nature of steel production; China’s high export dependency of steel products; excess production capacity, tendency of re directing its steel exports; in addition to its steel industry being at a loss; that there is anti dumping measures in place in Canada and other jurisdictions against steel products from China; and that China has an interest in the Canadian Market and inability to compete at non-dumped prices, the CBSA determined that the expiry of the order is likely to result in the continuation or resumption of dumping into Canada of certain hot rolled steel plate originating in or exported from China.

[117] For the purpose of making a determination in this expiry review investigation, the CBSA conducted its analysis within the scope of the factors found under subsection 37.2(1) of the SIMR. Based on the foregoing consideration of pertinent factors and an analysis of the evidence on the record, on March 2, 2018, the CBSA made a determination pursuant to paragraph 76.03(7)(a) of SIMA that expiry of the CITT’s order made on January 8, 2013 in Expiry Review No. RR 2012 001 in respect of the dumping of certain hot rolled carbon steel plate and high strength low-alloy plate originating in or exported from China is likely to result in the continuation or resumption of dumping into Canada.

[118] On March 5, 2018, the CITT commenced its inquiry to determine whether the expiry of the order with respect to the dumping of the goods from China is likely to result in injury. The CITT’s Expiry Review schedule indicates that it will make its decision by August 9, 2018.

[119] If the CITT determines that the expiry of the order with respect to the goods is likely to result in injury, the CITT will make an order continuing the order in respect of those goods, with or without amendment. If this is the case, the CBSA will continue to levy anti-dumping duties on dumped importations of the subject goods.

[120] If the CITT determines that the expiry of the order with respect to the goods is not likely to result in injury, the CITT will make an order rescinding the order in respect of those goods. Anti dumping duties would then no longer be levied on importations of the subject goods, and any anti dumping duties paid in respect of goods that were released after the date that the order was scheduled to expire will be returned to the importer.

[121] For further information, please contact the officer listed below:

Tariff Classification Numbers

Imports into Canada of the subject goods are normally classified under the following tariff classification numbers:Prior to January 1, 2012:

Prior to January 1, 2012:

1. 7208.51.91.10
2. 7208.51.91.91
3. 7208.51.91.92
4. 7208.51.91.93
5. 7208.51.91.94
6. 7208.51.91.95
7. 7208.52.90.10
8. 7208.52.90.91
9. 7208.52.90.92
10. 7208.52.90.93
11. 7208.52.90.94
12. 7208.52.90.95
13. 7208.51.99.10
14. 7208.51.99.91
15. 7208.51.99.92
16. 7208.51.99.93
17. 7208.51.99.94
18. 7208.51.99.95

From January 1, 2012 to December 31, 2016:

1. 7208.51.00.10
2. 7208.51.00.91
3. 7208.51.00.92
4. 7208.51.00.93
5. 7208.51.00.94
6. 7208.51.00.95
7. 7208.52.00.10
8. 7208.52.00.91
9. 7208.52.00.92
10. 7208.52.00.93
11. 7208.52.00.94
12. 7208.52.00.95

As of January 1, 2017:

1. 7208.51.00.10
2. 7208.51.00.91
3. 7208.51.00.92
4. 7208.51.00.93
5. 7208.51.00.94
6. 7208.51.00.95
7. 7208.52.00.10
8. 7208.52.00.91
9. 7208.52.00.92
10. 7208.52.00.93
11. 7208.52.00.96

These tariff classification numbers may include both subject goods and non-subject goods. Also, subject goods may have been imported into Canada under other tariff classification numbers.