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OTTAWA, December 5, 2003
4366-14
Concerning a determination under paragraph 76.03(7)(a) of the Special Import Measures Act regarding
CERTAIN HOT-ROLLED CARBON STEEL PLATE AND HIGH-STRENGTH LOW-ALLOY STEEL PLATE NOT FURTHER MANUFACTURED THAN HOT-ROLLED, HEAT-TREATED OR NOT, IN CUT LENGTHS, ORIGINATING IN OR EXPORTED FROM ITALY, THE REPUBLIC OF KOREA, SPAIN AND UKRAINE
DECISION
On November 20, 2003, pursuant to paragraph 76.03(7)(a) of the Special Import Measures Act, the Commissioner of Customs and Revenue determined that the expiry of the order made by the Canadian International Trade Tribunal on May 17, 1999, in Review No. RR-98-004, continuing, without amendment, its finding made on May 17, 1994, in Inquiry No. NQ-93-004, concerning certain hot-rolled carbon steel plate and high-strength low-alloy plate not further manufactured than hot-rolled, heat-treated or not, in cut lengths, originating in or exported from Italy, the Republic of Korea, Spain and Ukraine, is likely to result in the continuation or resumption of dumping of the goods into Canada.
This statement of reasons is also available in French.
TABLE OF CONTENTS
INFORMATION TO BE USED BY THE COMMISSIONER
- New Information Accepted After The Closing of the Record Date
- New Information Not Accepted After The Closing of the Record Date
- Parties arguing that resumed or continued dumping is likely
- Party arguing that resumed or continued dumping is unlikely
SUMMARY
[1] On July 23, 2003, the Canadian International Trade Tribunal (Tribunal), pursuant to subsection 76.03(3) of the Special Import Measures Act (SIMA), initiated an expiry review of its order made on May 17, 1999, in Review No. RR-98-004 (the Order). That order continued, without amendment, the Tribunal's finding made on May 17, 1994, in Inquiry No. NQ-93-004 (the Finding), concerning certain hot-rolled carbon steel plate and high-strength low-alloy plate not further manufactured than hot-rolled, heat-treated or not, in cut lengths, (certain carbon steel plate) originating in or exported from Italy, the Republic of Korea, Spain and Ukraine (the Named Countries). The purpose of the expiry review is to determine whether the Order should be continued or rescinded. The Order is scheduled to expire on May 17, 2004.
[2] As a result of the Tribunal's decision to initiate a review of the Order, the Commissioner of Customs and Revenue (Commissioner) initiated an investigation on July 24, 2003, to determine whether the expiry of the Order is likely to result in the continuation or resumption of dumping of the goods into Canada.
[3] On November 20, 2003, the Commissioner determined, pursuant to paragraph 76.03(7)(a) of SIMA, that the expiry of the Order was likely to result in the continuation or resumption of dumping of the goods.
[4] On November 21, 2003, the Tribunal initiated an inquiry to determine whether the expiry of the Order in respect of the goods is likely to result in injury or retardation to the domestic industry. If the Tribunal determines that the expiry of the Order is likely to result in injury or retardation, the Order will be continued, with or without amendment. If the Tribunal determines that the expiry of the Order is unlikely to result in injury or retardation, the Order will be rescinded.
BACKGROUND
[5] An anti-dumping investigation of certain carbon steel plate, originating in or exported from the Named Countries, was initiated on October 18, 1993. A preliminary determination of dumping was issued, followed by a final determination of dumping on April 15, 1994.1 The Tribunal issued a finding of injury on May 17, 1994.2
[6] Injury findings and orders expire five years from the date of the finding or order unless an expiry review has been initiated. The Tribunal initiated a review of the Finding on November 24, 1998. Following public and in-camera hearings, the Tribunal concluded that there was a likelihood of resumed dumping and that such resumed dumping was likely to cause material injury to the domestic industry. On May 17, 1999, the Tribunal issued an order continuing the Finding without amendment.3 The Order is scheduled to expire on May 17, 2004.
[7] On June 3, 2003, the Tribunal issued a Notice of Expiry, informing interested persons and governments of the impending expiry of the Order and inviting representations requesting or opposing the initiation of an expiry review.4 On July 23, 2003, the Tribunal initiated an expiry review of the Order and notified the Commissioner, as well as interested persons, of its decision.5
[8] On July 24, 2003, the Commissioner initiated an investigation to determine whether the expiry of the Order in respect of the goods is likely to result in the continuation or resumption of dumping of the goods. In accordance with the Anti-dumping and Countervailing Directorate's guidelines on the conduct of expiry reviews6, interested persons (see Participants section) were requested to provide any information they considered relevant to the Commissioner's investigation.
Findings in Respect of Similar Goods
[9] The original dumping investigation from the Named Countries is informally referred to as Plate II because it followed a previous investigation of carbon steel plate from different countries, which is referred to as Plate I. Currently, there are two other Tribunal injury findings in place concerning similar carbon steel plate. These are referred to as Plate III and Plate IV. Another carbon steel plate dumping investigation is currently underway, Plate V.
[10] Plate I- Carbon steel plate from Belgium, Brazil, the Czech Republic, Denmark, Germany, Romania, United Kingdom and the former Yugoslav Republic of Macedonia was subject to a Tribunal injury finding, rescinded in 1998.7
[11] Plate III- Tribunal injury finding of October 1997. The finding was continued in January 2003, respecting carbon steel plate from the People's Republic of China (China), the Republic of South Africa (South Africa), and the Russian Federation (Russia), and was rescinded respecting goods from Mexico.8
[12] Plate IV- Tribunal injury finding of June 2000, involving carbon steel plate from Brazil, Finland, India, Indonesia, Thailand and Ukraine.9
[13] Plate V- Tribunal preliminary determination of injury was made on August 12, 2003, respecting carbon steel plate from Bulgaria, the Czech Republic and Romania.10
[14] On January 15, 2002, the Canada Customs and Revenue Agency (CCRA) concluded re-investigations to update normal values and export prices with regard to Plate II, Plate III and Plate IV11. Only one of the Plate II exporters cooperated with the re-investigation, JSC Azovstal Iron and Steel Works, Ukraine12. Despite full cooperation, the factual information provided indicated that the CCRA could not rely on the submitted costs and profitability analysis of the domestic sales of like goods; in the circumstances, normal values were determined pursuant to a ministerial specification under section 29 of SIMA on the basis of the weighted average normal values as determined in surrogate countries13.
PRODUCT INFORMATION
Definition
[15] The goods subject to the expiry review investigation 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 in. (610 mm) to 152 in. (3,860 mm) inclusive, and thicknesses from 0.187 in. (4.75 mm) to 4 in. (101.6 mm) inclusive as follows:
plate made to CSA specifications: G40.21, grades 230G/33G, 260W/38W, 300W/44W, 350W/50W, 350A/50A, 350AT/50AT, 400W/60W, 260WT/38WT, 300WT/44WT, 350WT/50WT and 400WT/60WT, or equivalent specifications in either CSA or other recognized designation systems or standards;
plate made to ASTM specifications: A283M/A283, grades A, B, C and D, A36M/A36, A572M/A572, grades 42, 50, 60 and 65, A588M/A588, A242M/A242, Types 1 and 2, A515 and A516M/A516, grade 70, or equivalent specifications in either ASTM or other recognized designation systems or standards;
but excluding:
- plate for use in the manufacture of pipe and tube (also known as "skelp");
- plate in coil form;
- universal mill plate;
- plate made to ASTM specifications A515 and A516M/A516, grade 70, in thicknesses greater than 3.125 in. (79.375 mm); and
- plate made to ASTM specification A516M/A516, grade 70, which also meets one or more of the following specifications:
- (i) plate required to meet NACE standard TM 0284/87, using the solution specified in TM 01-77/86, at the following levels: CLR 10% or less, CTR 5% or less and CSR 2% or less;
- (ii) plate greater than 2.5 in. (63.5 mm) in thickness required to meet impact testing in the transverse orientation at -50°F under ASTM A370, to meet or exceed 25 ft-lb on average and 20 ft-lb on individual specimens;
- (iii) plate greater than 2.5 in. (63.5 mm) in thickness required to meet the ultrasonic evaluation standards of ASTM/ASME SA-577 and/or SA-578;
- (iv) plate 112 in. (2,844 mm) or greater in width with a total pattern weight in excess of 25,000 lbs;
- (v) plate required to meet the following carbon equivalent as per ASME SA-20:
- carbon equivalent equal to or less than 0.40 for plate equal to or less than 1.5 in. (38.1 mm) in thickness; or
- carbon equivalent equal to or less than 0.42 for plate greater than 1.5 in. (38.1 mm) in thickness; or
- carbon equivalent equal to or less than 0.42, with maximum hydrogen and oxygen contents of 2 parts per million and 10 parts per million respectively, for plate equal to or less than 1.5 in. (38.1 mm) in thickness
originating in or exported from Italy, the Republic of Korea, Spain and Ukraine."
[16] The foregoing definition is referred to in short form as "certain hot-rolled carbon steel plate and high-strength low-alloy plate not further manufactured than hot-rolled, heat-treated or not, in cut lengths" or "certain carbon steel plate", for purposes of this expiry review investigation.
Product Information
[17] The types of carbon steel plate typically made in Canada include plate meeting CSA specification G40.21 or equivalent specifications in various grades, as well as plate made to ASTM specifications A283M/A283, A36M/A36, A572M/A572, A588M/A588, A242M/A242, A515M/A515, and A516M/A516 or equivalent specifications in various grades.
[18] Subject carbon steel plate made to the above specifications can be used in a number of applications, the most common being in the production of rail cars, oil and gas storage tanks, heavy construction machinery, agricultural equipment, bridges, industrial buildings, high rise office towers, automobiles and truck parts, shipbuilding, ship repairs, and pressure vessels.
[19] Steel plates are made by hot-rolling from either semi-finished slabs or directly from ingots into rectangular shapes or coils. While details may vary from mill to mill, the process by which carbon steel plate is produced is essentially the same for all producers and entails the following processes: heating the slabs/ingots, descaling, rolling, levelling, cutting to size, inspecting and testing. Subsequently, the plate may be heat-treated which may include annealing, normalizing, stress relieving, quenching, tempering or combinations of these treatments.
CLASSIFICATION OF IMPORTS
[20] Certain carbon steel plate is normally imported into Canada under the following Harmonized System classification numbers:
7208.51.91.10 7208.51.99.10 7208.52.90.10
7208.51.91.91 7208.51.99.91 7208.52.90.91
7208.51.91.92 7208.51.99.92 7208.52.90.92
7208.51.91.93 7208.51.99.93 7208.52.90.93
7208.51.91.94 7208.51.99.94 7208.52.90.94
7208.51.91.95 7208.51.99.95 7208.52.90.95
PERIOD OF REVIEW
[21] The period of review (POR) for this expiry review investigation is January 1, 2000, to June 30, 2003.
CANADIAN INDUSTRY
[22] Three Canadian steel mills produce carbon steel plate, namely Algoma Steel Inc., Sault Ste. Marie, Ontario (Algoma), IPSCO Inc., Regina, Saskatchewan (IPSCO) and Stelco Inc., Hamilton, Ontario (Stelco). A small volume of plate is also cut to length from coil and sold by some Canadian steel service centers.14
Algoma
[23] 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 its predecessor, Algoma Steel Corporation, Limited. On January 29, 2002, the company was further reorganised under a plan of Arrangement and Reorganisation pursuant to the Companies' Creditors Arrangement Act.
[24] Algoma operates a major steelworks at Sault Ste. Marie, Ontario, where it produces carbon steel plate and other plate, as well as hot-rolled sheet, cold-rolled sheet, welded wide flange and unfinished parts. Algoma has two facilities that can produce plate, the 166-inch Plate Mill which produces discrete plate of thicknesses ranging from 0.3125 inch to 4 inches, and the 106-inch Wide Strip Mill which produces thinner plate in coil form which is subsequently uncoiled and cut to length. Algoma can produce plate up to 152 inches wide. Algoma has produced and sold plate up to 4 inches thick and 96 inches wide, but has not produced nor sold plate over 3 inches for several years. Algoma intends to resume production of plate over 3 inches thick to a maximum thickness of 4 inches.15
IPSCO
[25] IPSCO was incorporated in 1956 under the name of Prairie Pipe Manufacturing Co. Ltd. Carbon steel plates are manufactured in discrete form at the company's steel mill in Regina, Saskatchewan. Cut-to-length plates are produced from coil in Regina, Surrey, B.C., and Toronto, Ontario. Other products produced by the company include alloy plate and sheet, Oil Country Tubular Goods, line pipe, standard pipe and hollow structural sections.16
[26] The discrete steel plates produced in Regina vary in thicknesses from 0.375 inch to 3 inches and in widths from 40 inches to 76 inches. The cut-to-length plates produced in Regina and in Surrey vary in thicknesses from 0.1875 inch to 0.5 inch and in widths from 48 inches to 96 inches; those produced in Toronto vary in thicknesses from 0.1875 inch to 0.75 inch and in widths from 48 inches to 96 inches.17 IPSCO plans to increase the thickness of the plate produced in Regina.
Stelco
[27] Stelco was established in 1910 as the Steel Company of Canada Ltd. The company is a vertically-integrated steel company producing flat-rolled steel, bars and rods, wire and wire products, as well as pipes and tubes.
[28] An $85-million modernization project to improve and expand the capability of Stelco's plate mill and to include production of heavy gauge coil was completed over the period 1997 to 2001. The mill's operating rate was reduced to 25% of capacity in August 2002, and idled in April 2003.
[29] Stelco can produce discrete plate from 0.1875 inch to 5.25 inches thick18 and up to 138 inches wide, and plate cut-to-length from coil from 0.125 inch to 0.625 inch thick up to 120 inches wide.19
CANADIAN MARKET
[30] The Canadian market for certain carbon steel plate has declined over the past few years, as shown in the tables below:
Table I: Apparent Canadian Market of Certain Carbon Steel Plate20 (In Canadian Dollars)
|
12 months ended: |
2000 |
2001 |
2002 |
|
Canadian Producers |
$359,378,926 |
$309,353,534 |
$261,495,410 |
|
Named Countries |
$225,709 |
$244 |
$633,304 |
|
Other Countries |
$143,158,856 |
$131,297,894 |
$151,607,303 |
|
Total Market |
$502,763,491 |
$440,651,672 |
$413,736,017 |
Table I: Apparent Canadian Market of Certain Carbon Steel Plate 21 (In Metric Tonnes)
|
12 months ended: |
2000 |
2001 |
2002 |
|
Canadian Producers |
609,084 |
584,266 |
447,298 |
|
Named Countries |
372 |
0.3 |
1,381 |
|
Other Countries |
255,696 |
227,904 |
276,848 |
|
Total Market |
865,152 |
812,170 |
725,527 |
[31] Combined imports from the Named Countries represented very low volumes, ranging from virtually no share of the apparent Canadian market (0.00004%) in 2001 to a high of about 0.2% in 2002.22 Specific information for each Canadian producer and Named Country cannot be shown, as it would disclose confidential information.
ENFORCEMENT
[32] In enforcement of the Order, 82.67% of the carbon steel plate imported from the Named Countries was found to be dumped and were assessed anti-dumping duty in the year 2000. In the remainder of the POR, 100% of the carbon steel plate subject to the Order was assessed anti-dumping duty.23
PARTICIPANTS
[33] At the start of the expiry review, the Tribunal distributed a notice of the initiation of the expiry review and an expiry review schedule to interested persons including the Canadian producers, exporters and importers. At the same time, any person or government having an interest in the Commissioner's investigation was invited to provide a submission to the Commissioner containing information that they deemed relevant.
[34] Expiry Review Questionnaires (ERQs) were sent to Canadian producers of certain carbon steel plate, known exporters of these goods originating in or exported from the Named Countries, and known Canadian importers of the goods, requesting information necessary for the Commissioner to consider the factors listed in subsection 37.2(1) of the Special Import Measures Regulations (SIMR). Interested persons were also invited to submit case briefs arguing whether dumping is likely to continue or resume absent the Order. In addition, persons could submit reply submissions providing their comments in respect of the case briefs submitted by other persons.
[35] Algoma24, Stelco25, and IPSCO26 provided responses to the ERQ, supplemental information and case briefs detailing facts and arguments in support of their position that the Commissioner should determine that, should the Order expire, resumption or continuation of dumping of certain carbon steel plate from the Named Countries is likely. In their submissions, they also made reference to the arguments and evidence they had provided earlier to the Tribunal in support of initiating an expiry review.
[36] An ERQ response was received from one importer, Wirth Steel (Wirth) of Montreal, Quebec27, in support of a determination that resumed or continued dumping is unlikely.
[37] A submission in the form of a letter was received from Group Arcelor stating that its Spanish subsidiary Aceralia has not exported certain carbon steel plate, that its Canadian subsidiary Arcelor International Canada has not imported such plate in recent years, that Aceralia does not foresee exporting to Canada in the immediate future, that ERQ responses would not be provided, and that no notice of appearance will be given.28 As a result, neither Aceralia nor Arcelor Canada was considered a party to this proceeding.
[38] Participants are divided into two broad categories, i.e. "parties to the proceeding" and "interested persons". Both groups are allowed to file any information that they feel is pertinent and may file case arguments and reply submissions. The main difference between the two groups is that counsel for "interested persons" may not be given access to confidential or protected information, while counsel for "parties to the proceeding" may be given access to such information provided all the relevant conditions of SIMA are met.
[39] A person is regarded as a "party to the proceeding" if the person has a direct interest in the outcome of the proceeding and actively participates in the proceeding. In an expiry review proceeding, only exporters, importers and Canadian producers may be considered parties to the proceeding.
[40] In this expiry review, the three Canadian producers, Algoma, IPSCO, and Stelco, and the importer Wirth, were considered parties to the proceeding, as they have a direct interest in the outcome of the proceeding and participated in the proceeding.
INFORMATION TO BE USED BY THE COMMISSIONER
[41] The information used and considered by the Commissioner for purposes of an expiry review proceeding is contained on the record. The record typically includes the exhibits listed on the CCRA's Exhibit Listing, which is comprised of the Tribunal's administrative record at initiation of the expiry review, CCRA 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, absent the 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, responses to the ERQs submitted by Canadian producers, importers and exporters.
[42] For purposes of an expiry review investigation, the CCRA sets a date after which no "new" information may be placed on the record. This is referred to as the "closing of the record date". This allows participants time to prepare their case briefs and reply submissions based on the information that is on the record as of the closing of the record date. For this expiry review, the closing of the record date was September 11, 2003.
PROCEDURAL ISSUES
New Information Accepted After the Closing of the Record Date
[43] Information was placed on the record after the closing of the record date, September 11, 2003. On October 6, 2003, the Department of Finance, on behalf of the Canadian Government, announced the decision to not implement safeguard surtaxes on imports of certain steel products as recommended by the Tribunal29.
[44] In considering whether to accept new information after the closing of the record date, the Commissioner considers the factors set forth in the Guidelines on the Conduct of Expiry Review Investigations Under the Special Import Measures Act (the Guidelines). The five factors listed in the Guidelines as being relevant in considering the acceptance of new information, and the analysis for this particular issue, are as follows:
The availability of the information prior to the closing of the record date: As previously stated, the Department of Finance News Release occurred on October 6, 2003. This information was therefore not available prior to the closing of the record date on September 11, 2003.
The emergence of new or unforeseen issues: Prior to the closing of the record date, the Department of Finance had given no indication of when it would decide on the safeguard recommendations set forth by the Tribunal. The decision by the Department of Finance was therefore a new issue that was unforeseen prior to the closing of the record.
The relevancy and materiality of the information: The Tribunal made its determinations respecting safeguard inquiry CG-2001-001 on July 4, 2002, and made public its final report and recommendations to the Department of Finance on August 19, 2002. Both of these documents already form part of the record for the Plate II expiry review30, and were commented on in case arguments submitted by participants. The decision by the Department of Finance was considered to be both relevant and material in the Commissioner's determination.
The opportunity for other participants to respond to the new information: Participants in the Plate II expiry review process were provided with the opportunity to comment on the new information. The participants were informed that new information was placed on the record and were given the opportunity to submit comments. Two did.
Whether the new information can reasonably be taken into consideration by the Commissioner in making the determination: The availability of the information, the relevancy of the information to the proceeding, the opportunity for participants to submit comments, and the amount of time remaining before the determination was to be made, made it reasonable for the Commissioner to accept this new information, place it on the record, and consider it for purposes of the determination.
[45] Taking into account the foregoing, the new information, the decision by the Department of Finance to not implement surtaxes on imports of certain steel products, as recommended by the Tribunal, was accepted by the Commissioner and was therefore included on the record31.
New Information Not Accepted After the Closing of the Record Date
[46] Other information was also submitted to the Commissioner after the closing of the record date by a Canadian producer, Algoma. On November 3rd and 4th, 2003, the CCRA received minor revisions to certain sales and production data previously submitted by a Canadian producer in response to the ERQ. In view of the immateriality of the revisions and the lateness of their receipt, the information was not placed on the record, and was therefore not considered by the Commissioner for the purposes of this determination.
POSITIONS OF THE PARTIES
Parties arguing that resumed or continued dumping is likely
[47] All three Canadian producers, Algoma, IPSCO and Stelco, presented arguments supported by evidence that dumping into Canada of certain carbon steel plate from the Named Countries would resume or continue in the event of the expiry of the Order.
[48] The Canadian producers made many common arguments. They described the global context in which the Named Countries export steel as follows: supply of certain carbon steel plate exceeds demand in the world and in the Named Countries, production capacity in the Named Countries has increased over the years, weak domestic demand in the Named Countries exerts pressure to increase exports to maintain production and sales, many export markets are restricted due to anti-dumping and safeguard measures against the Named Countries, Canada would quickly become a targeted export market if current anti-dumping measures were to disappear. Against this background, the producers pointed to the past dumping practices of exporters and importers and argued that, should the Order expire, the prices that would be offered in Canada by the Named Countries would be dumped prices.
[49] Algoma and IPSCO noted the non-participation of any current or former exporters to Canada of certain carbon steel plate from the Named Countries in this review and previous investigations. Algoma submitted that with the lack of exporter participation and the ERQ response by only one of the current and former importers, there is insufficient evidence for the Commissioner to determine that continued or resumed dumping is unlikely. IPSCO submitted that the minimal participation of exporters in the anti-dumping process denotes an inability to compete at normal values.
[50] Algoma noted that dumping had occurred during the POR, and that import volumes had declined significantly since before the Finding in 1994. Algoma and IPSCO submitted that the low import activity from the Named Countries during the POR shows an inability to compete at undumped prices, which in turn indicates likely resumption of dumping should the Order expire. Algoma and Stelco argued that imports from the Named Countries would need to compete against prices of carbon steel plate from the Plate V countries, and would be dumped.
[51] All three Canadian producers noted a pattern displayed by the same importers of carbon steel plate in Plate I-II-III-IV-V, that of switching countries of supply after a finding of injurious dumping from certain countries, and continuing to import at low prices from other countries. All three Canadian producers submitted that this pattern indicates a likelihood of resumed dumping should the Order expire.
[52] The three Canadian producers all noted increasing steel production capacities and global over-capacity in the carbon steel plate market. Algoma and Stelco further quoted the Tribunal in its 1999 Plate II expiry review, where it commented on the economics of the steel industry whereby producers, facing declining demand, are willing to sell at any price to maintain production. Algoma and Stelco both noted that the current capacity to produce carbon steel plate in the Named Countries is several times the size of the Canadian market and that just the unused capacity is enough to overwhelm the Canadian industry should the Order expire. Stelco further submitted that all the conditions that led to the Tribunal's 1999 Order to continue the Finding still exist today. IPSCO made the point that producers in the Named Countries face the same excess capacity and export incentives as those in the Plate III countries, and in the Plate V countries, currently being investigated for dumping.
[53] All three Canadian producers submitted that the Named Countries have significantly reduced exports of carbon steel plate to the United States of America (U.S.) because of recent trade actions there, exerting pressure to find other export markets not subject to anti-dumping or other trade remedies. IPSCO and Algoma noted that the European Commission (EC) has determined that the U.S. safeguards are likely to divert steel to the European Union (EU) and has also imposed safeguard measures, further restricting export markets. IPSCO and Algoma submitted that the U.S. and the EU are significant world steel markets with restricted access to the Named Countries, and that this would likely cause significant volumes of carbon steel plate to be diverted to Canada from the Named Countries if the Order were to expire. Algoma and IPSCO further submitted that the Canadian Government's decision not to impose the steel safeguard surtaxes recommended by the Tribunal will have an immediate impact, that of greatly increasing the risk of diversion of carbon steel plate from the U.S. to Canada and of resumed or continued dumping by the Named Countries.
[54] All three Canadian producers submitted listings of anti-dumping measures taken by numerous countries against carbon steel plate and similar steel products from the Named Countries. They argued that these other dumping measures restrict carbon steel plate markets for the Named Countries and submitted that this reinforces the likelihood of resumed dumping to Canada should the Order expire.
[55] Algoma and Stelco submitted that current Canadian anti-dumping cases against various steel products from the Republic of Korea (Korea) and Ukraine demonstrate a propensity to dump and a likelihood of resumed dumping should the Order expire.
[56] Algoma noted that most producers in the Named Countries also produce hot-rolled steel sheet and can easily switch to producing carbon steel plate. Algoma cited the case of Ukrainian exporters who, subsequent to the Finding, switched from dumping carbon steel plate to dumping steel sheet until anti-dumping measures against steel sheet were imposed. Algoma argued this indicates a likelihood of exporters switching back to dumping carbon steel plate if the Order were to expire.
[57] Stelco argued that the dumping of carbon steel plate is facilitated by the fact that it is a highly price-sensitive commodity product that can easily be produced and shipped to Canadian importers, as found by the Tribunal in past findings, enhancing the risk of renewed dumping.
Italy
[58] All three Canadian producers noted the capacity and over-capacity at Italian steel mills. Algoma and IPSCO submitted that Italian steel producers are export-dependent to maintain production because Italian domestic demand for carbon steel plate is weak.
[59] Algoma submitted that Italian carbon steel plate producers have been unable to compete in the U.S. where they are subject to anti-dumping measures, diverting volume that could go to Canada were the Order to expire.
[60] IPSCO provided a listing of numerous anti-dumping measures imposed by countries other than Canada against Italian carbon steel plate producers. They submitted this to demonstrate the propensity of Italian carbon steel plate producers to dump.
[61] Algoma and Stelco submitted that Italian mills have been unable to compete in Canada at undumped prices.
Korea
[62] All three Canadian producers noted the significant capacity and over-capacity at Korean steel mills. Algoma and IPSCO submitted that Korean steel producers are export-dependent to maintain production.
[63] The three Canadian producers also noted that Korean steel producers have dumped corrosion-resistant steel sheet and steel concrete-reinforcing bars into Canada. IPSCO further listed numerous anti-dumping actions by several countries against other steel products produced in Korea. These factors were cited as indicating the Korean producers' propensity to dump and likelihood of resumed dumping should the Order expire.
[64] Algoma further submitted that Korean carbon steel plate producers have been significantly reducing exports to the U.S. where they are subject to anti-dumping and safeguard measures, diverting volume that could go to Canada were the Order to expire. Increased capacity in China and a recent anti-dumping investigation by Australia will put pricing pressure on Korean carbon steel plate producers. Likelihood of resumed dumping is increased by the fact that one Korean carbon steel plate exporter is reported as saying costs have risen and prices are not profitable.
- a. IPSCO further submitted that Korean carbon steel plate producers are unable to make a profit, have poor domestic demand, and have recently increased exports to Japan on short notice, all of which show they would export to Canada if allowed to do so by the expiry of the Order.
Spain
[66] All three Canadian producers noted the over-capacity in Spain. Algoma and IPSCO submitted that the Spanish steel producer is export-dependent to maintain production.
[67] Algoma submitted that the Spanish carbon steel plate producer has been unable to compete in Canada at undumped prices.
[68] IPSCO noted the continuation of anti-dumping measures against carbon steel plate imported into the U.S. after an expiry review determined likely resumption of dumping. IPSCO further lists numerous anti-dumping actions by several countries against other steel products produced in Spain to illustrate a propensity to dump. IPSCO submitted that, should the Order be allowed to expire, the combined conditions in Europe of excess capacity, weak demand, low prices and increased imports are likely to lead to resumed dumping to Canada.
[69] Stelco noted that the Tribunal found in its Plate II expiry review Order that the Spanish exporter's interest in exporting to North America and other export markets was an important factor leading to a likelihood finding; moreover, the Tribunal found that the exporter's association with a large European steel conglomerate and trading group would also facilitate renewed dumping. Stelco submitted that, notwithstanding the exporter's claim of no longer being interested in Canada, its size and past practices demonstrate a likelihood of resumed dumping.
Ukraine
[70] All three Canadian producers noted the significant capacity and over-capacity at Ukrainian steel mills. Algoma and IPSCO submitted that Ukrainian steel producers are export-dependent to maintain production. Stelco noted that the main exporter in the original investigation has significantly increased its carbon steel plate-making capacity since the Tribunal's Plate II expiry review and plans further expansion.
[71] The three Canadian producers also noted that, following the Finding, the Ukrainian exporters shipped large quantities of non-subject plate to Canada. This carbon steel plate was found in Plate IV to have been injuriously dumped because it undercut and exerted downward pressure on the price of other types of carbon steel plate produced in Canada. They submitted that the Ukrainian exporters switching to dumping a different type of carbon steel plate because it was not subject to anti-dumping measures indicates their inability to compete at undumped prices and points to a likelihood of resumed dumping if the Order were to expire. Algoma further noted that the Order for Ukraine must remain in place to maintain the entire product coverage with Plate IV, to be consistent with the product coverage for the other Plate IV countries.
[72] The three Canadian producers noted that in the U.S., Ukrainian carbon steel plate is subject to an anti-dumping undertaking and safeguard tariffs, causing a decline in exports to the U.S. They argued that this restriction of Ukrainian exports to the U.S. will encourage exports to Canada as it is part of the North American market and indicates a likelihood of resumed dumping should the Order expire.
[73] Algoma and IPSCO noted that Ukrainian carbon steel plate and other steel products are also subject to quotas by the EC. They submitted that these restrictions are diverting huge volumes of carbon steel plate in search of an open market and Canada would become a market for diverted Ukrainian carbon steel plate should the Order expire.
[74] Algoma and IPSCO submitted that since the Plate II and Plate IV investigations, Ukrainian exporters have also dumped hot-rolled steel sheet and steel concrete-reinforcing bars into Canada. IPSCO further listed numerous anti-dumping actions by several countries against other steel products produced in Ukraine to illustrate a propensity to dump.
Party arguing that resumed or continued dumping is unlikely
Wirth
[75] Wirth did not submit any case brief. However, Wirth referred to an article about the effects of steel tariffs in the U.S. and submitted that a parallel exists in the Canadian market.32 The article is an editorial commentary arguing that tariffs to protect the U.S. steel industry have damaged the U.S. economy, with significant job losses in the steel consuming industries, whose input costs have risen due to the tariffs; that the benefits to the steel industry brought about by the tariffs are offset many times by the damages caused to the manufacturing sector; that the WTO has ruled that the tariffs are illegal; and that the tariffs should be rescinded because, if not, more jobs will disappear.
CONSIDERATION AND ANALYSIS
[76] Paragraph 76.03(7)(a) of SIMA requires the Commissioner to determine whether the expiry of a finding or order in respect of goods of a country or countries is likely to result in the continuation or resumption of dumping of the goods. Subsection 37.2(1) of the SIMR lists the factors that the Commissioner may consider in making a determination under paragraph 76.03(7)(a) of SIMA33.
[77] The following analysis first describes the international economic situation in general and the global carbon steel plate market in particular, and then proceeds to the specifics of each of the Named Countries. The Commissioner, in making the determination, considered information that was on the record, which was made available for all parties to the proceeding.
International
[78] During the period of review (POR) from January 1, 2000, to June 30, 2003, the world economy was characterized with growth in Asia generally, led by China and Korea, and relatively flat or even slightly underperforming in North America and Europe, according to industrial production figures from the Organization for Economic Cooperation and Development (OECD).34
[79] Growth forecasts for the European economy are lower than expected, due not only to the appreciation of the euro against the U.S. dollar but also because of constraints by poor global demand including in Europe, according to a report by EUROFER.35 This report notes mixed signals from the U.S. economy and describes the Asian economy as "buoyant". For the steel sector, the report describes the international environment as "morose" due to no rebound in industrial production, which appears to be worse in Europe where demand is described as "sluggish". According to EUROFER, steel consumption in the EU has fallen in 2002 and is expected to fall again in 2003 "as economic recovery fails to take hold and the situation of the steel consuming sectors remains weak". Exports are constrained "due to poor demand in certain large third country markets such as the USA"; while demand in China is "strong" and in some parts of Asia it is "vibrant", the euro-dollar exchange erodes competitivity. Another report by a steel market analyst offers similar views.36
[80] The issue of excess steel-making capacity in the world noted by the Tribunal in 1999 was taken up by the OECD.37 Since September 2001, a "High-Level Group" of senior government officials from major steel-producing economies have been meeting to discuss various issues, one of which is overcapacity. In December 2002, the group noted "the underlying situation in steel remains serious ... signs of recovery in certain markets ... the recovery is viewed as fragile ... the persistence of inefficient excess capacity world-wide has contributed to volatility in steel trade", and discussed possible closures to improve the situation. In July 2003, the group noted improvement in global steel markets, international trade described as "strong ... despite the widespread use of trade defense instruments by some countries"; participants reported that closures have slowed global capacity expansion "to a modest level".
[81] Excess crude steel capacity is estimated at 200 million metric tonnes (mmt) in 2002, down from about 250 mmt in 1998, as shown in the following table:
Table II: World Excess Crude Steel Capacity38
(estimated metric tonnes)
|
1998 |
2002 |
% Change |
|
|
Capacity |
1,030,300,000 |
1,104,400,000 |
+ 7% |
|
Production |
777,400,000 |
900,000,000 |
+ 16% |
|
Excess Capacity |
252,900,000 |
204,400,000 |
- 19% |
[82] Into 2003, it is estimated by the International Iron and Steel Institute (IISI), that global steel production rose by an additional 9% in the first quarter of this year compared to Q1 2002.39 The IISI reported a record 900 mmt produced in 2002.40 IISI said that this record in 2002 and continued increase in 2003 "reflected the economic recovery in the global economy and the increased demand for steel in China and the rest of Asia".
[83] Evidence on the record shows that excess steel capacity in the world remains high. Despite having received no information from exporters nor from producers of carbon steel plate in the Named Countries, compelling evidence of excess production capacity was obtained from public sources and reported in the next sections of this report covering each of the Named Countries. The "economics" of steel production was described as follows by the Tribunal in its Order: "... steel producers, when faced with declining demand, have little choice but to maximize production if they are to make a contribution to high fixed costs, even if it means selling at lower prices. 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".41
[84] In a report by Industry Canada42, continued economic growth of about 3% in this country is forecasted. In the steel sector in particular, demand is described as "strong" and estimated at about 15 mmt in 2002. However, the carbon steel plate market, estimated at 0.73 mmt in 2002, has declined during the POR by 16%.43 The Canadian carbon steel plate market is covered by four anti-dumping findings covering 13 countries. If the Order was allowed to expire, producers in the Named Countries would likely look to Canada as an opportunity to increase exports.
[85] On March 5, 2002, the U.S. Government imposed safeguard measures against several steel products imported into the U.S., including additional duty on carbon steel plate, because it was determined that the imports were in such high volumes that they caused serious injury to the U.S. steel industry.44 This was followed one week later by a similar safeguard action by the EC "to prevent floods of steel imports being diverted (from the U.S.) into the EU".45 On August 19, 2002, the Tribunal also recommended safeguard quotas and surtaxes46, but the Canadian Government decided against implementing them.47
[86] Imports of carbon steel plate and other steel products are restricted into the large U.S. and EU markets. The EC estimated a diversion of 15 mmt of steel previously exported to the U.S. as a result of safeguard tariffs imposed there. With the U.S. and EU markets severely restricted, steel producers around the world including the carbon steel plate producers in the Named Countries are likely in constant search for export opportunities in open markets free of anti-dumping or similar measures. Canada would become such a market for the producers of carbon steel plate in the Named Countries if the Order was to expire.
[87] With regard to the international market for carbon steel plate in particular, an indication of the fierce competition on world markets is the large number of anti-dumping measures against importations of carbon steel plate into many countries, as will be discussed later in this report. In Canada and elsewhere, carbon steel plate has been consistently characterized as a price-sensitive commodity product, where the lowest price usually gets the business.48
[88] Another recurrent characteristic of the Canadian carbon steel plate market is the pattern of importers switching sources of supply after anti-dumping measures are imposed on plate from certain countries, seeking the cheapest plate in other countries not subject to anti-dumping measures, as recently observed in the Plate IV investigation and in the Plate III expiry review.49 An example that this practice is continuing is the importation of plate by Wirth in Plate I50, Plate II51, Plate III52, Plate IV53 and Plate V54.
[89] Furthermore, confidential CCRA enforcement data demonstrates that some of the exporters identified in the Plate II, Plate III and Plate IV anti-dumping measures continue to dump certain carbon steel plate into Canada.
[90] It is therefore likely that, in the event of the expiry of the Order, importers would quickly switch to importing carbon steel plate from the Named Countries at prices competitive with the lowest prices on the Canadian market. Prices of carbon steel plate sold at those levels by producers in the Named Countries would likely be possible only if dumped, as will be demonstrated later in this report.
Italy
[91] Two Italian producers were named in the original dumping investigation in 1994.55 They did not cooperate with the investigation and therefore normal values for their shipments of carbon steel plate to Canada in the period of investigation were determined by ministerial specification. In this case the Minister specified, under section 29 of SIMA, that normal value be determined on the basis of export price plus an amount equal to the highest margin of dumping found from cooperative exporters, 80.2%.
[92] As noted in the Canadian Market section of this report, import volumes of both dumped and undumped carbon steel plate from the Named Countries, which include Italy, were very low during the POR. No Italian producers participated in the expiry review hearing conducted by the Tribunal in 1999 (it is not clear from the record whether Italian producers replied to the Tribunal's questionnaire).56 No Italian producers participated in the CCRA's re-investigation conducted in 2001 to update normal values.57 No Italian producers participated in this expiry review.
[93] The small number of shipments to Canada from the Named Countries, which include Italy, and the lack of cooperation by Italian producers in the various anti-dumping proceedings mentioned above cannot necessarily be interpreted as a demonstration of lack of interest in the Canadian market. Rather, considering the export interests of Italian carbon steel plate producers, it suggests an inability to compete in Canada at undumped prices.
[94] Ilva SpA was one of the Italian producers that exported carbon steel plate during the original investigation in 1994.58 The company, described as running the largest steelworks in Europe, has recently invested in upgrading its plate mill; the mill can produce 1 mmt of plate a year59 and produced 0.79 mmt in 200260, for an excess capacity of 0.21 mmt.
[95] Another Italian producer, Ferriera Valsider SpA, has a capacity of 1mmt of carbon steel plate and thinner coiled sheet, produced 0.29 mmt in 2002 and plans to increase production to 0.65 mmt, 0.30 mmt of carbon steel plate and 0.35 mmt of sheet.61 There would still remain unused capacity of 0.35 mmt for carbon steel plate and sheet which might reasonably mean, keeping the same ratio of production, perhaps 0.15 mmt for carbon steel plate and 0.20 mmt for sheet in excess capacity.
[96] The combined estimated excess capacity at these two mills is very significant when compared to the Canadian market for carbon steel plate. In fact, it represents about half of the Canadian carbon steel plate market in 2002, estimated at 0.73 mmt.62 With other Italian carbon steel plate producers, there is a minimum 2.7 mmt of plate-making capacity.63 Due to the lack of information on the record, excess carbon steel plate capacity in all of Italy could not be ascertained.
[97] Likely export prices of Italian carbon steel plate to Canada were estimated for structural quality plate, based on commercial intelligence provided by Stelco64 and Algoma65. These price offerings were from the Plate V countries, which were the lowest prices on the market from 2001 to 2003 against which the Canadian producers have been competing and against which Italian carbon steel plate producers would have to compete in the Canadian market.
[98] A recent report on international steel markets shows that conditions in the EU are reflected in Italy.66 The report also shows that the average carbon steel plate export price in May 2003 from the EU is 14% lower than the EU domestic carbon steel plate price. This suggests that EU carbon steel plate, including Italian carbon steel plate, may be dumped into some export markets. This average export price is higher than estimated Plate V export prices described above which suggests that Italian producers would need to dump to compete in Canada.
[99] There are anti-dumping measures in Canada against stainless steel round bars originating in or exported from Italy. However, the exporters of stainless steel round bars do not produce carbon steel plate. 67
[100] Aside from anti-dumping measures in Canada against carbon steel plate, Italian carbon steel plate exported to the U.S. also attracts anti-dumping duties. As well, there are seven other anti-dumping actions in place in the U.S. against other steel products produced by companies in Italy.68 Two of these anti-dumping actions cover products which are produced by some of the Italian carbon steel plate producers.69 This demonstrates that exporters of Italian steel products have a history of dumping steel.
[101] In Europe, "the economic outlook for the region remains depressed and does not bode well for steel demand. ... It would now appear that the sector is falling back into recession. ... Output was particularly weak in ... Italy, as ... a downturn in sentiment hindered a near-term rebound".70 With "soft" demand in the EU and in the world generally for carbon steel plate and excess production capacity for carbon steel plate in Italy, Italian plate exporters are pressured to increase exports to maintain production levels. With the safeguard restrictions in the U.S., the expiry of the Order would offer Canada as an attractive open market free of anti-dumping and safeguard measures.
[102] The three Canadian producers made arguments in the same direction supported by information they placed on the record from some of the sources cited in this report and numerous other sources. No Italian party provided any information or argument that might have refuted the Canadian producers' common position. The CCRA compiled additional information that was reasonably available with respect to Italy. The information provided by Wirth presents no evidence or argument supporting a position that resumed or continued dumping from Italy is unlikely.
[103] Based on present excess plate-making capacity in Italy, weak demand in the EU and a restricted U.S. market creating pressure to seek other export markets, an inability to compete in Canada at undumped prices, a history of dumping carbon steel plate into the U.S., a demonstrated ability of Canadian importers to quickly change sources of supply and import at the lowest competitive price point, which appears to be a dumped price, the Commissioner determined that the expiry of the Order was likely to result in continued or resumed dumping into Canada of certain carbon steel plate originating in or exported from Italy.
Korea
[104] One Korean producer was named in the original dumping investigation in 1994.71 The company did not cooperate with the investigation and therefore its shipments of carbon steel plate to Canada were assessed anti-dumping duty equal to the highest margin of dumping found from cooperative exporters, 80.2% of export price.
[105] As noted in the Canadian Market section of this report, import volumes of both dumped and undumped carbon steel plate from the Named Countries, which include Korea, were very low during the POR. Two Korean producers, Pohang Iron & Steel Co., Ltd. (POSCO), and Dongkuk Steel Mill Co., Ltd. (Dongkuk), participated in the 1999 expiry review. No Korean producer participated in the CCRA's normal value re-investigation conducted in 2001.72 No Korean producer participated in this expiry review.
[106] The small number of shipments to Canada from the Named Countries, which include Korea, and the lack of cooperation by Korean producers in the various anti-dumping proceedings mentioned above cannot necessarily be interpreted as a demonstration of lack of interest in the Canadian market. Rather, considering the export interests of Korean carbon steel plate producers, it suggests an inability to compete in Canada at undumped prices.
[107] Dongkuk's carbon steel plate-making capacity was 3.6 mmt in 200273; deducting production, excess capacity was 1.1 mmt. POSCO's capacity is 3.5 mmt74; noting sales of 3.1 mmt in 200275, excess capacity was 0.4 mmt. In the 1999 Plate II expiry review, the Tribunal described Korean excess capacity in 1999 as being of a "high-level"76, and it is now higher.
[108] The combined estimated excess capacity of 1.5 mmt at these two mills is very significant when compared to the Canadian market for carbon steel plate. In fact, it represents about twice the Canadian carbon steel plate market in 2002, estimated at 0.73 mmt.77
[109] Likely export prices of Korean carbon steel plate to Canada were estimated for structural quality plate, based on commercial intelligence provided by Stelco78 and Algoma79. These price offerings were from the Plate V countries, which were the lowest prices on the market from 2001 to 2003 against which the Canadian producers have been competing and against which Korean carbon steel plate producers would have to compete in the Canadian market. Based on various reports80, Korean plate export prices in 2003 are higher than the estimated Plate V export prices described above. Were Korean carbon steel plate exporters to resume shipping to Canada they would have to offer lower export prices than they do to other export markets in order to meet the Canadian competitive price point.
[110] There are Canadian anti-dumping measures against Korean steel concrete-reinforcing bars, stainless steel round bars, carbon steel welded pipe and corrosion-resistant steel sheet. Dongkuk was named in the Tribunal's finding of injurious dumping of steel concrete-reinforcing bars81, and POSCO was named in the corrosion-resistant steel sheet finding82. This indicates that Korean steel exporters have a history of dumping.
[111] Aside from anti-dumping measures in Canada against carbon steel plate, Korean carbon steel plate exported to the U.S. also attracts anti-dumping duties, including actions in place in the U.S., the EU, Argentina, Australia, Chinese Taipei (Taiwan), South Africa, Thailand and China against other steel products produced by companies in Korea.83 Eleven of these anti-dumping actions cover products which are produced by some of the Korean steel plate producers.84 This further demonstrates that exporters of Korean steel products have a history of dumping.
[112] Steel markets in Asia are reported to be "strong" including in Korea with "booming domestic and export markets".85 Despite this, Korean steel plate producers still have significant excess production capacity and limited export opportunities because of numerous anti-dumping measures in place and safeguard measures in the U.S. and EU. As a result of pressure to increase exports to use up their high levels of excess capacity, the expiry of the Order would offer Canada as an attractive open market free of anti-dumping and safeguard measures.
[113] The three Canadian producers made arguments in the same direction supported by information they placed on the record from some of the sources cited in this report and numerous other sources. No Korean party provided any information or argument that might have refuted the Canadian producers' common position. The CCRA compiled additional information that was reasonably available with respect to Korea. The information provided by Wirth presents no evidence or argument supporting a position that resumed or continued dumping from Korea is unlikely.
[114] Based on present excess plate-making capacity in Korea, strong export interests, the U.S. and EU markets restricted by safeguard measures, a history of dumping carbon steel plate and other similar products into many countries, an inability to compete in Canada at undumped prices, a demonstrated ability of Canadian importers to quickly change sources of supply and import at the lowest competitive price point, the Commissioner determined that the expiry of the Order was likely to result in continued or resumed dumping into Canada of certain carbon steel plate originating in or exported from Korea.
Spain
[115] One Spanish producer was named in the original dumping investigation in 1994.86 The company provided sufficient information to determine normal values. The company underwent several re-structurings and is now known as Acelaria Corporacion Siderurgica S.A. (Acelaria).87
[116] Acelaria participated in the Tribunal's expiry review in 1999.88 Acelaria did not participate in the CCRA's normal value re-investigation conducted in 200189, as a result, any subsequent export of carbon steel plate attracts 80.2% anti-dumping duty pursuant to a ministerial specification. Acelaria did not participate in this expiry review. The company provided a letter indicating that it does not foresee exporting to Canada in the immediate future.90
[117] As noted in the Canadian Market section of this report, import volumes of both dumped and undumped carbon steel plate from the Named Countries, which include Spain, were very low during the POR. The small number of shipments to Canada from the Named Countries, which include Spain, and the lack of cooperation by Acelaria in the various anti-dumping proceedings cannot necessarily be interpreted as a demonstration of lack of interest in the Canadian market. Rather, considering the export interests of Acelaria, it suggests an inability to compete in Canada at undumped prices.
[118] Acelaria is the sole carbon steel plate producer in Spain.91 It is owned by the Arcelor Group, described in Acelaria's 2001 Annual Report as the world's largest steel company.92 Acelaria's plate-making capacity was 0.78 mmt in 2001.93 Deducting production94, excess capacity was 0.47 mmt in 2001. This estimated excess capacity is very significant when compared to the Canadian market for carbon steel plate. In fact, it represents 64% of the Canadian market, more than the combined sales of Algoma, IPSCO and Stelco in 2002.95
[119] Likely export prices of Spanish carbon steel plate to Canada were estimated for structural quality plate, based on commercial intelligence provided by Stelco96 and Algoma97. These price offerings were from the Plate V countries, which were the lowest prices on the market from 2001 to 2003 against which the Canadian producers have been competing and against which Spanish carbon steel plate producers would have to compete in the Canadian market.
[120] A recent report on international steel markets shows that conditions in the EU are reflected in Spain.98 The report also shows that the average carbon steel plate export price in May 2003 from the EU is 14% lower than the EU domestic carbon steel plate price. This suggests that EU carbon steel plate, including Spanish carbon steel plate, may be dumped into some export markets. This average export price is higher than estimated Plate V export prices described above, which suggests that Spanish producers would need to dump to compete in Canada.
[121] There are Canadian anti-dumping measures against stainless steel round bars from Spain. However, the exporters of stainless steel round bars do not produce carbon steel plate.99
[122] Spanish carbon steel plate exported to the U.S. currently attracts anti-dumping duties. This demonstrates that exporters of Spanish carbon steel plate have a history of dumping.100
[123] In Europe, "the economic outlook for the region remains depressed and does not bode well for steel demand. ... It would now appear that the sector is falling back into recession. ... Output was particularly weak in ... Spain, as ... a downturn in sentiment hindered a near-term rebound".101 With "soft" demand in the EU and in the world generally for carbon steel plate and excess production capacity for carbon steel plate in Spain, Spanish plate exporters are pressured to increase exports to maintain production levels. With the safeguard restrictions in the U.S., the expiry of the Order would offer Canada as an attractive open market free of anti-dumping and safeguard measures.
[124] The three Canadian producers made arguments in the same direction supported by information they placed on the record from some of the sources cited in this report and numerous other sources. Arcelor did not provide any information or arguments that might have refuted the Canadian producers' common position. The CCRA compiled additional information that was reasonably available with respect to Spain. The letter from the Arcelor Group presented no evidence or argument supporting a position that resumed or continued dumping from Spain is unlikely. Neither does the information provided by Wirth.
[125] Based on present excess capacity at Acelaria, strong export interests, weak demand in the EU and a restricted U.S. market, an inability to compete in Canada at undumped prices, a history of dumping carbon steel plate into the U.S., a demonstrated ability of Canadian importers to quickly change sources of supply and import at the lowest competitive price point, which appears to be a dumped price, the Commissioner determined that the expiry of the Order was likely to result in continued or resumed dumping into Canada of certain carbon steel plate originating in or exported from Spain.
Ukraine
[126] The Ukrainian carbon steel plate producer Met Zavod Azovstal (Azovstal) was named in the original dumping investigation in 1994.102 Ukraine was considered to be a "state-controlled economy" and consequently normal values were established on the basis of values in surrogate countries. There were no importations of Ukrainian carbon steel plate into Canada between the Finding in 1994 and the Tribunal's Plate II expiry review in 1999.103 There were imports into Canada of Ukrainian carbon steel plate having dimensions and grades outside of the Plate II product definition, which were found injuriously dumped in 2000 (Plate IV).104
[127] Azovstal participated in the Tribunal's 1999 Plate II expiry review.105 The company also participated in the CCRA's normal value re-investigation conducted in 2001106 and normal values were issued. Since the Government of Ukraine no longer had a monopoly of the export trade in the Ukrainian steel industry, information was requested from Azovstal to determine normal values on the basis of the company's domestic sales of certain carbon steel plate. However, despite full cooperation, the unreliability of cost information prevented the determination of normal values based on Azovstal's domestic prices; in the circumstances, normal values were based on values in surrogate countries.
[128] Azovstal's participation in the proceedings of the CCRA and of the Tribunal demonstrates an interest in the Canadian market. However, the small volume of shipments of carbon steel plate to Canada from the Named Countries, which include Ukraine, shows the company's inability to compete in Canada at undumped prices. Particularly telling in the case of Plate IV are the Tribunal's comments concerning a request by Azovstal for an exclusion of a specific type of plate that "... it is not clear to the Tribunal why specialized low-carbon PVQ plate is being sold into the Canadian market at such low prices, generally below the price of domestic PVQ plate and often below the price of domestic structural plate. It is also unclear as to the applications for which this specialized steel was being used."107 That type of plate had been specifically excluded from the Plate II product definition, and became subject to anti-dumping measures with the Plate IV product definition after a huge increase in the quantity of imports following the Finding. This indicates a degree of persistence in maintaining a presence in the Canadian carbon steel plate market.
[129] Ukrainian carbon steel plate-making capacity was evaluated at 4 mmt in 1998108, which has grown to at least 4.4 mmt in 2002 based on public information with regard to two Ukrainian producers.109 Current production figures could not be ascertained from the information on the record with respect to Ukraine. A report by a steel market publication has noted falling prices and "distress sales" of Ukrainian steel products because they are subject to quotas in the EU on carbon steel plate110 and other steel products. The above suggests significant excess production capacity in Ukraine during the POR.
[130] Likely export prices of Ukrainian carbon steel plate to Canada were estimated for structural quality plate, based on commercial intelligence provided by Stelco111 and Algoma112. These price offerings were from the Plate V countries, which were the lowest prices on the market from 2001 to 2003 against which the Canadian producers have been competing and against which Ukrainian carbon steel plate producers would have to compete in the Canadian market. Compared to Azovstal's normal values effective since January 2002, this indicates that dumping would have occurred in 2002 had Azovstal exported at those prices.
[131] Exports prices for Ukrainian carbon steel plate, as reported in an independent publication113, would be dumped because they are below the normal values currently in place for Azovstal.
[132] There are Canadian anti-dumping measures against Ukrainian steel concrete-reinforcing bars and hot-rolled steel sheet and strip. Some of the Ukrainian producers of these products also produce carbon steel plate.114
[133] Aside from anti-dumping measures in Canada against carbon steel plate, Ukrainian carbon steel plate exported to the U.S. is subject to quotas in place of anti-dumping duties, which were recently renewed as a result of an expiry review determining that revocation of the quotas would likely lead to the continuation or recurrence of dumping.115 Ukrainian carbon steel plate exported to South Africa and Indonesia also attracts anti-dumping duties. As well there are 21 other anti-dumping actions in place in the U.S., the EU, Argentina, Columbia, Egypt, India, Mexico, South Africa, Thailand, Turkey, Venezuela and Peru against other steel products produced by companies in Ukraine.116 Eighteen of these anti-dumping actions cover products which are produced by some of the Ukrainian carbon steel plate producers. 117 This demonstrates that exporters Ukrainian steel products have a history of dumping carbon steel plate and similar goods.
[134] Limited export opportunities for Ukrainian carbon steel plate including in China and the Middle East are "forcing the Ukrainians to search out more exotic destinations"; they are unable to ship much to the EU because (of) their quota ... (and) [A]s a result Ukrainian prices for fob Black Sea shipments have fallen further and faster." 118 Given Ukrainian producers' probable excess capacity exerting pressure to increase their exports, shrinking traditional export markets, major markets restricted by safeguard measures in the U.S. and the EU, the expiry of the Order would offer Canada as an attractive open market free of anti-dumping and safeguard measures.
[135] The three Canadian producers made arguments in the same direction supported by information they placed on the record from some of the sources cited in this report and numerous other sources. No Ukrainian party provided any information or argument that might have refuted the Canadian producers' common position. The CCRA compiled additional information that was reasonably available with respect to Ukraine. The information provided by Wirth presents no evidence or argument supporting a position that resumed or continued dumping from Ukraine is unlikely.
[136] Based on probable excess plate-making capacity in Ukraine, shrinking traditional export markets, other export markets restricted with anti-dumping and safeguard measures, an inability to compete in Canada at undumped prices, a history of dumping into the U.S. and many other countries, a demonstrated ability of Canadian importers to quickly change sources of supply and import at the lowest competitive price point, which appears to be a dumped price, and a demonstrated interest in the Canadian steel plate market, the Commissioner determined that the expiry of the Order was likely to result in continued or resumed dumping into Canada of certain carbon steel plate originating in or exported from Ukraine.
CONCLUSION
[137] For the purpose of making a determination in this expiry review investigation, the CCRA conducted its analysis within the scope of the factors contained in subsection 37.2(1) of the SIMR. Based on the foregoing consideration of pertinent factors and analysis of evidence on the record, on November 20, 2003, pursuant to paragraph 76.03(7)(a) of the Special Import Measures Act, the Commissioner of Customs and Revenue determined that the expiry of the order made by the Canadian International Trade Tribunal on May 17, 1999, in Review No. RR-98-004, continuing, without amendment, its finding made on May 17, 1994, in Inquiry No. NQ-93-004, concerning certain hot-rolled carbon steel plate and high-strength low-alloy plate not further manufactured than hot-rolled, heat-treated or not, in cut lengths, originating in or exported from Italy, the Republic of Korea, Spain and Ukraine, was likely to result in the continuation or resumption of dumping of the goods into Canada.
FUTURE ACTION
[138] On November 21, 2003, the Tribunal commenced its inquiry to determine whether the expiry of the Order is likely to result in injury or retardation. The Tribunal will make an order by May 17, 2004.
[139] If the Tribunal determines that the expiry of the Order is likely to result in injury or retardation, the Order will be continued, with or without amendment. If this is the case, the CCRA will continue to levy anti-dumping duties on dumped importations of certain carbon steel plate from the Named Countries.
[140] If the Tribunal determines that the expiry of the Order is unlikely to result in injury or retardation, the Order will be rescinded. Anti-dumping duties would no longer be levied on importations of certain carbon steel plate from the Named Countries beginning on the date the Order is rescinded.
INFORMATION
For further information, please contact Vincent Gaudreau at:
Canada Customs and Revenue Agency
Anti-dumping and Countervailing Directorate
100 Metcalfe Street, 11th Floor
Ottawa, Ontario K1A 0L8
Canada
Telephone
(613) 954-7262
Telefax
(613) 941-2612
Web site
www.ccra-adrc.gc.ca/sima
Denis Lefebvre
Assistant Commissioner
Customs Branch
1 Exhibit 1 of the Canada Customs and Revenue Agency's (CCRA) Exhibit Listing (Please see the "Information To Be Used By The Commissioner" section of this report): CCRA Statement of Reasons (SOR) for Plate II final determination of dumping April 15, 1994.
2 Exhibit 2: Tribunal Plate II injury finding May 17, 1994. SOR issued June 1, 1994.
3 Exhibit 5: Tribunal order continuing Plate II finding based on an expiry review determination of likelihood of a resumption of injurious dumping if the finding was rescinded, May 17, 1999. SOR issued May 25, 1999.
4 Exhibit 18: Tribunal Notice of Expiry of Order June 3, 2003.
5 Exhibit 23: Tribunal Notice of initiation of Expiry Review July 23, 2003.
6 CCRA Guidelines on the Conduct of Expiry Review Investigations under the Special Import Measures Act, July 2001.
7 Exhibit 102: CCRA final determination of dumping April 5, 1993; Exhibit 103: Tribunal finding of injury May 6, 1993; Exhibit 104: rescission of finding by Tribunal May 5, 1998.
8 Exhibit 3: CCRA final determination of dumping September 25, 1997; Exhibit 4: Tribunal finding of injury October 27, 1997; Exhibit 37: CCRA determination of likelihood of continued or resumed dumping June 26, 2002; Exhibit 11: Tribunal order rescinding finding regarding Mexico and continuing finding regarding China, South Africa and Russia January 10, 2003.
9 Exhibit 6: CCRA final determination of dumping (and of subsidizing from India, Indonesia and Thailand) May 29, 2000; Exhibit 7: Tribunal finding of injury June 27, 2000.
10 Exhibit 64: CCRA initiation of investigation June 13, 2003; Exhibit 65: Tribunal preliminary determination of injury August 12, 2003.
11 Exhibit 9: Customs Notice on the conclusion of the re-investigations of Plate II, Plate III and Plate IV March 4, 2002.
13 Protected Exhibit 71: Normal value ruling letter to JSC Azovstal Iron and Steel Works, January 15, 2002.
14 Exhibit 28: Tribunal pre-hearing staff report February 17, 1999, page 4; Exhibit 11: Tribunal continuation of finding on Plate III after expiry review, January 10, 2003, page 3.
15 Exhibit 58: Algoma's questionnaire responses A2, A6, A16, A18 and Attachment A7 page 52.
16 Exhibit 51: IPSCO's questionnaire responses A2, A6 and A18.
17 Exhibit 11: Tribunal Statement of Reasons on continuation of finding regarding Plate III after expiry review, January 10, 2003, page 4.
18 Exhibit 65: Tribunal Notice of preliminary determination of injury regarding Plate V, page 3.
19 Exhibit 55: Stelco's questionnaire responses A2, A6 and Attachment A6 page 48.
20 Exhibit 74: CCRA Apparent Canadian Market for certain carbon steel plate.
21 Exhibit 74: CCRA Apparent Canadian Market for certain carbon steel plate.
23 Exhibit 78: CCRA enforcement data.
24 Algoma ERQ response protected Exhibit 57 and public Exhibit 58, supplementary information protected Exhibit 107 and public Exhibits 108 and 116, case brief protected Exhibit 113 and public Exhibit 114, submission to the Tribunal public Exhibit 28
25 Stelco ERQ response protected Exhibit 54 and public Exhibits 55 and 56, supplementary information protected Exhibit 72 and public exhibit 73, case brief public Exhibit 112, submission to the Tribunal public Exhibit 28
26 IPSCO ERQ response protected Exhibit 50 and public Exhibit 51, supplementary information public exhibits 109 and 111, case brief public Exhibit 115, submission to the Tribunal public Exhibit 28
27 Wirth ERQ response Protected Exhibit 59 and public exhibits 60 and 66.
28 Exhibit 67: Letter from Arcelor Group, September 5, 2003.
29 Safeguard measures may be requested by Canadian industry facing serious injury caused by a surge of imports.
30 Exhibit 100: Tribunal notice and reports concerning steel safeguard inquiry CG-2001-001.
31 Exhibit 116: New information placed on the record after closing of the record date: Department of Finance press release: Canada Joins North American Steel Trade Committee, October 6, 2003.
32 Exhibit 60: Wirth ERQ response, attachment relating to question B17, Tariffs and the Party of Free Trade, David R. Breuhan, Barrons's Online, August 11, 2003.
33 While most of these factors apply to the Named Countries, the factors applying to each country are described in detail in separate sections of this report.
34 OECD Main Economic Indicators, Industrial Production, Exhibit 28 IPSCO submission tab 17.
35 Report by the European Confederation of Iron and Steel Industries, Exhibit 91.
36 Exhibit 105, pages 13-16: James King, Global Steel Industry Analysis, May 1, 2003.
37 Reports on OECD High-Level Group meetings on steel, December 2002 and July 2003, Exhibit 105 pages 4 to 7.
38 1998 production at exhibit 28 page 85 and exhibit 105 page 9; 1998 capacity at exhibit 28 page 86; 2002 production at exhibit 101 and exhibit 105 page 9; 2002 capacity at exhibit 105 page 8.
39 Protected Exhibit 106, page 6: Metal Bulletin World May Have Over-Produced In First Quarter, April 28, 2003, page 22.
40 Exhibit 101: IISI news bulletins May 27 and June 3, 2003.
41 Supra note 3, pages 13 and 14.
42 Exhibit 99: Industry Canada, Canada: the steel market in 2002 and the outlook for 2003, April 1, 2003.
44 Exhibit 92: Press release from U.S. President Bush March 5, 2002, and determinations by the U.S. International Trade Commission, December 2001, regarding safeguard measures against imported steel.
45 Exhibit 98: Press release from the European Commission, March 27, 2002, regarding safeguard measures against imported steel.
46 Exhibit 100: Tribunal notice of determinations of serious injury, July 4, 2002, and recommended safeguard remedies, August 19, 2002.
47 Exhibit 116: Press release from the Department of Finance announcing the formation of a North American Steel Trade Committee and the decision not to implement steel safeguard measures, October 6, 2003.
48 Exhibit 100, page 123: Tribunal safeguard investigation report, chapter on plate; Exhibit 11, page 14: Tribunal Statement of Reasons for continuation of Plate III finding.
49 Exhibit 7: Tribunal Statement of Reasons on Plate IV, page 26; Exhibit 37: CCRA Statement of Reasons on Plate III expiry review, page 9; Exhibit 11: Tribunal Statement of Reasons on Plate III expiry review, page 14.
50 Exhibit 102: CCRA Statement of Reasons for Plate I final determination of dumping, page 11.
52 Exhibit 3: CCRA Statement of Reasons for Plate III final determination of dumping, Appendix 2.
53 Exhibit 6: CCRA Statement of Reasons for Plate IV final determination of dumping, Appendix 3.
54 Exhibit 65: Tribunal Statement of Reasons for Plate V preliminary determination of injury, page 2.
56 Supra note 3, pages 6 and 19.
58 Supra note 1, Statement of Reasons Appendix 2.
59 Protected Exhibit 106, page 16: Metal Bulletin article, Riva invests in Taranto plate mill, December 5, 2002.
60 Exhibit 85: Website of Riva Group, owner of ILVA, printed September 3, 2003.
61 Protected Exhibit 106, page 9: Metal Bulletin article, Leman ramps up production at Valsider, May 12, 2003.
63 Exhibit 85: Ilva website; exhibit 84: Palini e Bertoli website; exhibit 58: Algoma ERQ response, attachment 25(d), excerpts of Iron and Steel Works of the World, 14th edition, 2001.
64 Exhibit 73: Stelco submission of Romanian plate price offerings.
65 Protected Exhibit 107, Attachment B5: Algoma submission of Romanian, Bulgarian and Czech plate prices offered in Canada.
66 Protected Exhibit 106, pages 4 and 5: Emerging Steel Markets Monthly, Global steel focus, May 2003.
67 Exhibit 56, pages 178 to 187: Stelco ERQ response, tab 14, excerpt of Iron and Steel Works of the World, 14th edition, 2001.
68 Exhibit 108: Supplemental information submitted by Algoma, Att. B1. Exhibit 111 Corrigenda submitted by IPSCO.
70 Protected Exhibit 106, pages 4 and 5: Emerging Steel Markets Monthly, Global steel focus, May 2003.
73 Exhibit 87: Dongkuk website.
74 Exhibit 56: Stelco submission, tab 14, page 191.
75 Exhibit 86 page 10: POSCO website.
80 Protected exhibit 106, Metal Bulletin articles: page 13, Posco raises domestic heavy plate price, June 4, 2003; page 15, Dongkuk raises plate exports to Japan, April 17, 2003.
81 Tribunal Inquiry No. NQ-99-002, Statement of Reasons, January 12, 2000.
82 Tribunal Inquiry No. NQ-93-007, Statement of Reasons, July 29, 1994.
83 Exhibit 108: Supplemental information submitted by Algoma, Att. B1. Exhibit 111 Corrigenda submitted by IPSCO.
84 Exhibit 56, pages 188 to 193: Stelco ERQ response, tab 14, excerpt of Iron and Steel Works of the World, 14th edition, 2001.
85 Protected Exhibit 106, page 5, Metal Bulletin article Global steel focus.
87 Exhibit 112: Stelco case brief, page 22; Exhibit 83: Acelaria Annual Report 2001.
90 Exhibit 67: Letter from Groupe Arcelor, parent of Spanish producer Arcelor.
92 Exhibit 83: Acelaria Annual Report 2001.
93 Exhibit 56: Stelco questionnaire response, tab 14, page 197.
94 Exhibit 83, page 35: 2001 production estimated from quantity sold reported in Acelaria's 2001 Annual Report.
98 Protected Exhibit 106, pages 4 and 5: Emerging Steel Markets Monthly, Global steel focus, May 2003.
100 Exhibit 108: Supplemental information submitted by Algoma, Att. B1. Exhibit 111 Corrigenda submitted by IPSCO.
104 Exhibit 7: Tribunal Statement of Reasons for Plate IV, July 12, 2000.
109 Exhibit 89, page 3: Azovstal website, plate mill 2003 capacity 2mmt; Exhibit 56, page 202: Stelco questionnaire response, tab 14, 2001 capacity at JSC Ilyich Iron & Steel Works 0.188mmt at one plate mill and 2.4mmt at another.
110 Exhibit 98, page 3: EC press release about safeguard quotas and additional duty on plate and other steel products.
113 Protected Exhibit 106, pages 1 and 2: Metal Bulletin Research, Emerging Steel Markets Monthly, Flat steel product analysis, May 2003 and July 2003.
114 Exhibit 56: Stelco ERQ response pages 201 and 202, tab 14.
115 Protected exhibit 106, page 19: Metal Bulletin article, ITC votes to keep quotas on plate, August 21, 2003.
116 Exhibit 108: Supplemental information submitted by Algoma, Att. B1. Exhibit 111 Corrigenda submitted by IPSCO.
117 Exhibit 56, pages 188 to 193: Stelco ERQ response, tab 14, excerpt of Iron and Steel Works of the World, 14th edition, 2001.
118 Protected exhibit 106, page 2: Metal Bulletin Research, Emerging Steel Markets Monthly, May 2003
