Common menu bar links
ARCHIVED - Statement of Reasons
This page has been archived.
Archived Content
Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
Ottawa, February 6, 2004
4258-13(JA)
AD1210
Concerning a determination under paragraph 76.03(7)(a) of the Special Import Measures Actregarding
CERTAIN FLAT HOT-ROLLED CARBON AND ALLOY STEEL SHEET AND STRIP ORIGINATING IN OR EXPORTED FROM FRANCE, ROMANIA, THE RUSSIAN FEDERATION AND THE SLOVAK REPUBLIC
DECISION
On January 22, 2004, pursuant to paragraph 76.03(7)(a) of the Special Import Measures Act, the President of the Canada Border Services Agency determined that the expiry of the finding made by the Canadian International Trade Tribunal on July 2, 1999, in inquiry No. NQ 98-004, concerning certain flat hot-rolled carbon and alloy steel sheet and strip originating in or exported from Romania, the Russian Federation and the Slovak Republic was likely to result in the continuation or resumption of dumping of the goods into Canada. It was further determined on that date, that the expiry of the finding in respect of certain flat hot-rolled carbon and alloy steel sheet and strip originating in or exported from France was unlikely to result in the continuation or resumption of dumping of the goods.
Cet énoncé des motifs est également disponible en français.
TABLE OF CONTENTS
INFORMATION TO BE USED BY THE PRESIDENT
- New Information Accepted After the Closing of the Record Date
- New Information Not Accepted After the Closing of the Record Date
- Parties arguing that continued or resumed dumping is likely
- Parties arguing that continued or resumed dumping is unlikely
[1] On September 24, 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 finding made on July 2, 1999, in inquiry No. NQ 98-004. That finding concerned certain flat hot-rolled carbon and alloy steel sheet and strip (hot-rolled steel sheet) originating in or exported from France, Romania, the Russian Federation and the Slovak Republic (the Named Countries). The purpose of the expiry review is to determine whether the finding should be continued or rescinded. The finding is scheduled to expire on July 2, 2004.
[2] As a result of the Tribunal's decision to initiate a review of the finding, the Commissioner of the Canada Customs and Revenue Agency (Commissioner) initiated an investigation on September 25, 2003, to determine whether the expiry of the finding is likely to result in the continuation or resumption of dumping of the goods into Canada.
[3] On December 12, 2003, the responsibility for the customs program of the Canada Customs and Revenue Agency (CCRA) was transferred to the new Canada Border Services Agency (CBSA), created on the same date. All of the responsibilities of the former Commissioner of the CCRA with respect to the administration of SIMA were transferred to the President of the CBSA (President) on that date.
[4] On January 22, 2004, the President determined, pursuant to paragraph 76.03(7)(a) of SIMA, that the expiry of the finding was likely to result in the continuation or resumption of dumping of the goods from Romania, the Russian Federation and the Slovak Republic and unlikely to result in the continuation or resumption of dumping of the goods from France.
[5] The original anti-dumping investigation of hot-rolled steel sheet, originating in or exported from the Named Countries, was initiated on December 3, 1998. A preliminary determination of dumping was issued, followed by a final determination of dumping on June 1, 1999. The Tribunal subsequently issued a finding of injury on July 2, 1999.
[6] The original dumping investigation from the Named Countries is informally referred to as Hot-Rolled I because it was followed by another investigation of hot-rolled steel sheet from different countries, which is referred to as Hot-Rolled II.
[7] The Hot-Rolled II - Tribunal finding of injury was made on August 17, 2001, Inquiry No. NQ 2001-001, concerning certain hot-rolled steel sheet originating in or exported from Brazil, Bulgaria, the People's Republic of China, Chinese Taipei, the Ukraine, Serbia-Montenegro (formerly the Federal Republic of Yugoslavia), the former Yugoslav Republic of Macedonia, South Africa and India.
[8] Following the results of an interim review of Hot-Rolled I by the Tribunal as of January 17, 2003, products made to the "Solbor 30MnB5" specification were excluded from the finding. A detailed description of this product is available in the "Product Information" section of this report.
[9] On March 3, 2003, the CCRA concluded reinvestigations to update normal values and export prices with regard to Hot-Rolled I and II. The results of this review were made public in Customs Notice N-502 on March 26, 2003.12
[10] Injury findings and orders expire five years from the date of the finding or order unless an expiry review has been initiated. The finding is scheduled to expire on July 2, 2004.
[11] On August 5, 2003, the Tribunal issued a Notice of Expiry, informing interested persons and governments of the impending expiry of the finding and inviting representations requesting or opposing the initiation of an expiry review. On September 24, 2003, the Tribunal initiated an expiry review of the finding and notified the Commissioner, as well as interested persons, of its decision.
[12] On September 25, 2003, the Commissioner initiated an investigation to determine whether the expiry of the finding 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 reviews, interested persons (see Participants section) were requested to provide any information they considered relevant to the Commissioner's investigation.
[13] The goods subject to this expiry review are defined as:
flat hot-rolled carbon and alloy steel sheet and strip, including secondary or non-prime material, originating in or exported from France, Romania, the Russian Federation and the Slovak Republic, in various widths from ¾ in. (19 mm) and wider, and
(a) for product in coil form, in thicknesses from 0.054 in. to 0.625 in. (1.37 mm to 15.88 mm) inclusive,
(b) for product that is cut to length, in thicknesses from 0.054 in. up to but not including 0.187 in. (1.37 mm up to but not including 4.75 mm), excluding stainless steel sheet and strip.
[14] Certain hot-rolled steel sheet products include strip and sheet, but do not include floor plate. Strip is usually produced in widths up to 12 in. (305 mm). Sheet is usually produced in widths greater than 12 in. Hot-rolled stainless steel sheet and strip are also excluded from the product definition. Hot-rolled stainless steel sheet contains, by weight, 1.2 percent or less of carbon and 10.5 percent or more of chromium, with or without other elements.
[15] Hot-rolled steel sheet products are normally produced to ASTM standards or some other international standards or to proprietary specifications. ASTM specifications for flat hot-rolled carbon and alloy steel strip and sheet include, but are not limited to, A505, A506, A507, A568, A569, A570, A606, A607, A621, A622, A635, A659, A715, A749, A907, A935 and A936.
[16] As of January 17, 2003, the following products are also excluded:
(c) hot-rolled steel sheet in coil, mill-edge/slit-edge, with hardenable manganese-boron steel for heat treatment, manufactured to the "Solbor 30MnB5" specification, or equivalent, and imported into Canada under classification Nos. 7226.91.90.90 and 7225.30.90.00, for use in the manufacture of agricultural disks and sweeps; and
(d) the chemical requirements of the "Solbor 30MnB5" specification include the following elements: 0.27-0.33 percent carbon; 1.15-1.45 percent manganese; max. 0.015 percent phosphorus; max. 0.005 percent sulphur; 0.200-0.300 percent silicon; min. 0.020 percent aluminum; 0.0010-0.0040 percent boron; various proprietary combinations of titanium, chromium, nitrogen, copper and nickel, with copper and nickel not to exceed 0.15 percent. The "Solbor 30MnB5" specification must also be treated to produce a minimum of 80 percent globular sulphide inclusions, and calcium must be the primary element used for inclusion shape control, with a typical range of 0.002-0.005 percent. If cerium is used for sulphide inclusion shape control, the cerium/sulphur ratio must be 3.0 minimum. Use of zirconium for sulphide inclusion shape control is not permissible.
[17] The foregoing definition is referred to in short form as "hot-rolled steel sheet" for purposes of this expiry review.
[18]Hot-rolled steel sheet products are used in the automotive industry in the manufacture of frames, bumpers, wheels and some power train components. In the construction industry, hot-rolled steel sheet are used in the manufacturing of sheet piling and guard rails. In the pipe and tube producing industry, hot-rolled steel sheet, known as "skelp", are used in the manufacturing of pipe and tubes. Significant quantities of hot-rolled steel sheet products are also consumed by non-automotive stampers, steel fabricators and producers of agricultural and other machinery.
[19] For the purpose of this investigation, hot-rolled steel sheet include strip and sheet, but do not include floor plate. Strip is usually produced in widths up to 12 in. (305 mm), inclusive. Sheet and floor plate are usually produced in widths over 12 in. (305 mm). Floor plate is hot finished in a final pass or passes to form a pattern on the surface of the sheet.
[20] Alloy steel sheet that are subject to this investigation are alloy steels, other than stainless steel, that contain by weight one or more of certain specified elements in minimum specified proportions. The notes to Chapter 72 of the Customs Tariff Schedule specify the elements and the minimum proportions.
[21] Flat hot-rolled stainless steel sheet and strip, excluded from the product definition, is commercially and metallurgically distinct from carbon steel, being produced to a lower carbon and higher alloy content than the subject goods. Stainless steel contains, by weight, 1.2 percent or less of carbon and 10.5 percent or more of chromium, with or without other elements.3
CLASSIFICATION OF IMPORTS
[22] Hot-rolled steel sheet is normally imported into Canada under the following Harmonized System classification numbers:
7208.25.10.10, 7208.25.10.20, 7208.25.10.30, 7208.25.10.40
7208.25.90.10, 7208.25.90.20, 7208.25.90.30, 7208.25.90.40
7208.26.10.10, 7208.26.10.20, 7208.26.10.30, 7208.26.10.40
7208.26.90.10, 7208.26.90.20, 7208.26.90.30, 7208.26.90.40
7208.27.10.10, 7208.27.10.20, 7208.27.10.30, 7208.27.10.40
7208.27.90.10, 7208.27.90.20, 7208.27.90.30, 7208.27.90.40
7208.36.00.10, 7208.36.00.20, 7208.36.00.30, 7208.36.00.40
7208.37.10.10, 7208.37.10.20, 7208.37.10.30, 7208.37.10.40
7208.37.90.10, 7208.37.90.20, 7208.37.90.30, 7208.37.90.40
7208.38.10.10, 7208.38.10.20, 7208.38.10.30, 7208.38.10.40
7208.38.90.10, 7208.38.90.20, 7208.38.90.30, 7208.38.90.40
7208.39.00.10, 7208.39.00.20, 7208.39.00.30, 7208.39.00.40
7208.53.00.10, 7208.53.00.20, 7208.53.00.30, 7208.53.00.40
7208.54.00.10, 7208.54.00.20, 7208.54.00.30, 7208.54.00.40
7208.90.00.00, 7211.13.00.00, 7211.14.00.90, 7211.19.10.00
7211.19.90.10, 7211.19.90.90, 7211.90.10.00, 7211.90.90.90
7225.20.00.91, 7225.20.00.92, 7225.30.10.00, 7225.30.90.00
7225.40.10.10, 7225.40.10.20, 7225.40.10.30, 7225.40.10.40
7225.40.20.10, 7225.40.20.20, 7225.40.20.30, 7225.40.20.40
7225.40.90.11, 7225.40.90.19, 7225.40.90.21, 7225.40.90.91
7225.40.90.92, 7225.40.90.93, 7225.40.90.94, 7225.99.00.90
7226.20.00.91, 7226.20.00.92, 7226.91.10.00, 7226.91.90.20
7226.91.90.30, 7226.91.90.40, 7226.91.90.90, 7226.99.90.00
[23] The period of review (POR) for this expiry review investigation is January 1, 2000, to August 31, 2003.
[24] The Canadian industry for hot-rolled steel sheet production is comprised of the following five companies:
- Algoma Steel Inc. (Algoma) of Sault Ste. Marie, Ontario
- Dofasco Inc. (Dofasco) of Hamilton, Ontario
- IPSCO Inc. (IPSCO) of Regina, Saskatchewan
- Ispat Sidbec Inc. (Ispat) of Montreal, Quebec
- Stelco Inc. (Stelco) of Hamilton, Ontario
[25] 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.
[26] Algoma, with its subsidiaries, is a vertically integrated primary iron and steel producer having a present capacity to produce approximately 2.5 million metric tonnes of raw steel annually. Expressed in terms of finished steel products, the annual capacity is approximately 2.1 million metric tonnes consisting of carbon steel plate, hot-rolled steel sheet, cold-rolled sheet, welded wide flange and unfinished parts. Algoma operates a major steelworks at Sault Ste. Marie, Ontario.4
[27] Dofasco Inc. was incorporated under the laws of Canada by letters patent dated May 15, 1917, and was continued under the Canada Business Corporations Act in 1980, at which time the Corporation's name was changed from Dominion Foundries and Steel Limited to its present name. Head office, sales, administrative and production facilities are all located at Dofasco's Hamilton Ontario plant and at its 50 percent owned mini mill facility, Gallatin Steel Company, located in Gallatin County, Kentucky. Products manufactured by Dofasco and its steel related joint ventures include: flat rolled steels (both hot and cold-rolled); galvanized and GalvalumeTM steel; prepainted steel; tinplate and chromium coated steels and ZyplexTM; welded tubular products; ExtragalTM for exposed automotive parts; and tailor-welded blanks.
[28] Dofasco started production of hot-rolled steel sheet in 1940. The original mill was modified many times over the years, but taken out of commission in 1993. A new hot mill was brought into use in 1983. This mill is capable of producing hot-rolled products up to 62 in. wide, and up to 0.5 in. in thickness. Dofasco produces a full range of carbon and high strength steels, up to 0.5 percent carbon. As part of the finishing for hot-rolled steel sheet, Dofasco has three pickle lines that use acid to remove oxide from the steel. Oil may also be applied to the coils once they have gone through the acid bath. Dofasco also has slitters and shears to slit the coils to narrower widths, or shear the coils into cut lengths. If customers require extra-flat product, Dofasco will put the steel through a temper mill to provide this flatness.5
[29] IPSCO was incorporated in 1956 under the name of Prairie Pipe Manufacturing Co. Ltd. It commenced operations in 1957 with the completion of construction of an electric resistance weld (ERW) pipe mill in Regina. In 1959, the company acquired the assets of Interprovincial Steel Corp. Ltd. and in 1960, it commenced production of its own flat rolled steel, including goods of the same description as those in this finding. Since that time, the company has expanded its manufacturing capabilities through acquisition and plant construction. The hot-rolled steel sheets are manufactured in coil form at the company's steel mill in Regina, Saskatchewan. Cut-to-length sheet products are produced from coil in Regina and Surrey, B.C. A cut-to-length facility in Toronto, Ontario, concentrates on plate products. Other products produced by the company include Oil Country Tubular Goods, line pipe, standard pipe, hollow structural sections, and alloy sheet and plate. 6
[30] Sidbec was incorporated in 1928 and continued in 1987. Sidbec was purchased by Ispat International N.V. in 1994 and is now a wholly owned subsidiary of that company. Flat rolled products (hot-rolled and cold-rolled) were first produced in the late 1960's. The company is split into five different strategic business units: primary operations, flat rolled products, wire rod, bars and shapes and pipe. Ispat also owns several subsidiaries.7 Ispat's primary hot-rolled steel sheet facilities are located in Contrecoeur, Quebec.
[31] Stelco was incorporated in 1910 by Max Aitken (Lord Beaverbrook) who created the Steel Company of Canada Limited from numerous steel making and steel processing businesses in Ontario and Quebec. Hot-rolled steel sheet has been manufactured at Stelco Hamilton on a 56-in. mill since December 12, 1945. The mill was modernized with the installation of the Coilbox in 1980. Production of hot-rolled steel sheet began at Stelco Lake Erie in May 1983, on a 2050-mm (80-in.) mill. A $105 million project to upgrade the blast furnace and continuous slab caster and to build a new hot metal transfer and treatment facility was completed at Stelco Lake Erie in 1998. Stelco Lake Erie produces only hot-rolled steel sheet for both sales to the market and for use as feedstock at Stelco Hamilton.8
[32] In 2002, the Canadian manufacturers produced and sold over 4.1 million metric tonnes9 of hot-rolled steel sheet into the Canadian market. The five manufacturers represented about 78 percent of the Canadian market.10
[33] The apparent Canadian market for hot-rolled steel sheet has declined over the past few years, as shown in the table below:
Apparent Canadian Market 11
Hot-Rolled Steel Sheet (Metric Tonnes)
Table 1:
Source |
2000 |
2001 |
2002 |
Jan-Aug 2002 |
Jan-Aug 2003 |
Canadian Producers |
3,962,257 |
4,060,847 |
4,114,627 |
2,797,760 |
2,681,937 |
Named Countries (HR I) |
6,710 |
9,412 |
7,104 |
4,226 |
644 |
HR II Countries |
765,204 |
29,311 |
33,523 |
4,584 |
13,609 |
United States |
899,389 |
672,700 |
771,433 |
427,484 |
639,083 |
Other Countries |
544,768 |
233,202 |
358,817 |
235,989 |
127,173 |
Total Market |
6,178,328 |
5,005,472 |
5,285,504 |
3,470,043 |
3,462,446 |
[34] Specific information for each Canadian producer and exporters cannot be shown, as it would disclose confidential information.
[35] In the enforcement of the Tribunal finding during the POR, the amount of anti-dumping duty collected on subject imports was only a little over $13,000 Cdn.12 The comparative value for duty on all subject imports over this period was $10.75 million Cdn. It is also worthy to note that in each instance where anti-dumping duty was collected on subject imports, the goods were re-exported from United States of America (U.S.). U.S. exporters did not provide information in order to receive normal values and were, therefore, subject to the imposition of anti-dumping duties equivalent to a 77 percent advance over export price, pursuant to the ministerial specification issued under subsection 29(1) of SIMA. For the year 2003, up to the end of the POR, there have been no subject importations, which have resulted in the imposition of anti-dumping duties.
[36] 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 CBSA's investigation was invited to provide a submission containing information that they deemed relevant.
[37] Expiry Review Questionnaires (ERQ) were sent to Canadian producers of hot-rolled steel sheet, known exporters of these goods originating in or exported from the Named Countries, and known Canadian importers of the goods to request information necessary for the President to consider the factors listed in subsection 37.2(1) of the Special Import Measures Regulations (SIMR) to determine the likelihood of continued or resumed dumping. Interested persons were also invited to submit case arguments arguing whether dumping is likely to continue or resume absent the finding. In addition, persons could submit reply submissions providing their comments in respect of the case arguments submitted by other persons.
[38] As mentioned above, there are five manufacturers of hot-rolled steel sheet in Canada. In addition to participating in the expiry review and responding to the ERQ, the five manufacturers provided case arguments and reply submissions supporting the position that the dumping of subject goods would continue or resume should the finding expire.
[39] Of the 23 exporters to whom questionnaires were sent, only 5 participated in the review and were considered parties to the proceeding. The participating exporters were: Arcelor of France; JSC Severstal (Severstal), JSC Magnitogorsk Iron & Steel Works (MMK) and Novolipetsk Iron and Steel Corporation (NLMK) of the Russian Federation; and, U.S. Steel Ko_ice of the Slovak Republic (USSK).
[40] Arcelor is the only producer of subject goods in France. In the original investigation on Hot-Rolled I, the company was identified as Sollac, Aciers d'Usinor (Sollac).13 Arcelor was created in February 2002, through an amalgamation of three companies, including Usinor S.A. (Usinor). The exporting entity for the purposes of the subject goods originating in France is Sollac Méditerranée, through the Fos-sur-Mer plant.14 There are two other facilities that produce hot-rolled steel sheet for Arcelor. They are Sollac Atlantique and Sollac Lorraine. The collective efforts of these three facilities constitute virtually 100 percent of the hot-rolled steel sheet produced in France.15
[41] The Russian producers, Severstal, MMK and NLMK were also participants in the original investigation. According to data submitted regarding the period of January to June 2003, these companies account for approximately 84 percent of the total hot-rolled steel sheet production in Russia. Consequently, these parties are representative of the hot-rolled steel sheet industry in Russia as no other single producer is accredited with more than six percent of the production share.16
[42] USSK is the only producer of subject goods in the Slovak Republic. In the original investigation, the company was identified as VSZ Holding, a.s. (VSZ).17 The difference in the corporate name arose from a change in legal ownership effective December 14, 2000. On this date, the company, now known as the United States Steel Corporation (U.S. Steel) of Pittsburgh, Pennsylvania, took ownership of the entity now called USSK. The company has one production facility where it produces the subject goods in the Slovak Republic.18
[43] These exporters answered the ERQ, each supporting the position that the export of the subject goods from their respective countries was not likely to result in the continuation or resumption of dumping should the Tribunal's injury finding expire. With the exception of NLMK, the other exporters submitted case arguments and reply submissions in support of their position.
[44] With regard to the participation of importers of the subject goods, out of the 25 importers contacted, 7 complete responses to the ERQ were received, namely from Titus Steel Company Ltd., Daewoo Canada Limited, Salzgitter Trade Inc., General Motors of Canada Ltd., IPSCO Canada Inc., Maverick Tube Corporation and Arcelor International Canada.
[45] In addition, 13 importers responded stating that they had not imported the subject goods during the POR. These 13 importers did not participate further in the review and were not considered parties to the proceeding.
[46] One Canadian importer, Titus Steel Company Ltd., requested a product exclusion for certain flat hot-rolled carbon and alloy steel sheet and strip meeting the specification of "3 mm A/R 400 or 500 wear plate".20 The principal reason for the request for exclusion was that the product was not produced in Canada.
[47] With the exception of Arcelor Canada Inc. and IPSCO, no importers provided case arguments or reply submissions.
[48] Arcelor Canada's case arguments were in association with the submission made on behalf of their related exporter, Arcelor, France, supporting the position that continued or resumed dumping is unlikely. IPSCO provided case arguments in connection with their status as a Canadian producer supporting the position that continued or resumed dumping is likely. Since these parties are directly linked with an exporter and Canadian producer respectively, the positions of these two parties are discussed under the corresponding portions of the "Position of the parties" section in this statement of reasons (SOR).
[49] Amongst the remaining five importers who responded, there was little provided in terms of firm positions as to whether the expiry of the finding is likely to result in continued or resumed dumping from any of the Named Countries. Furthermore, since none of these five importers expressed a firm position in the matter of the likelihood of continued or resumed dumping, their position could not be ascertained or reflected in the position of the parties section of the SOR.
INFORMATION TO BE USED BY THE PRESIDENT
[50] The information used and considered by the President for purposes of an expiry review proceeding is contained on the record. The record typically includes the exhibits listed on the CBSA's Exhibit Listing, which is comprised of the Tribunal's administrative record at 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, absent the finding. 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.
[51] For purposes of an expiry review investigation, the CBSA 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 arguments 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 November 13, 2003.
[52] The closing of the record date for this expiry review was November 13, 2003. Normally, the President will not consider any new information submitted by participants subsequent to the closing of the record date. However, in certain exceptional circumstances, it may be necessary to permit new information to be submitted. The President will consider the following factors set forth in the Guidelines on the Conduct of Expiry Review Investigations Under the Special Import Measures Act:
- (a) the availability of the information prior to the closing of the record date;
- (b) the emergence of new or unforeseen issues;
- (c) the relevance and materiality of the information;
- (d) the opportunity for other participants to respond to the new information; and
- (e) whether the new information can reasonably be taken into consideration by the President in making the determination.
[53] Participants wishing to file new information after the closing of the record date, either separately or in case arguments or reply submissions, must identify this information so that the President can decide whether it will be included in the record for purposes of the determination.
New Information Accepted After the Closing of the Record Date
[54] Information was submitted and placed on the record after the closing of the record date, November 13, 2003. This information was as follows:
- On November 20, 2003, counsel for Severstal and MMK provided the President with additional information concerning the captive portion of total production. This clarification was made at the CBSA's request.21
- On December 4, 2003, counsel for Severstal and MMK of the Russian Federation provided the President with additional information concerning the United States authorities announcement ending the section 201 safeguard measures put in place in March 2002 with respect to several categories of steel products.22
- On December 15, 2003, NLMK of the Russian Federation submitted a request to accept the European Commission Regulation No. 2142/2003, dated December 5, 2003, in respect of the termination of the definitive safeguard measures in relation to certain steel products imposed by the Commission Regulation (EC) No. 1694/2002 as new information after the closing of the record date.
- On December 16, 2003, counsel for USSK provided the CBSA with amended appendices to those provided in the original response to the ERQ. The amendments were made pursuant to a request from the CBSA to ensure that apparently inconsistent figures with respect to production costs were correct.
The President accepted this information after the closing of the record based on the reasons that, in all cases, the information was not available prior to the closing of the record date, the issues were considered as emerging and unforeseen, and the information was considered to be relevant and material. The information was provided at a time whereby it could reasonably be taken into consideration by the President in making the determination. In all cases, the exhibit list was updated; parties were notified and given the opportunity to respond to the new information.
New Information Not Accepted After the Closing of the Record Date
[55] Information was submitted and not accepted after the closing of the record date, November 13, 2003. This information was as follows:
- On December 29, 2003, counsel for MMK and Severstal of the Russian Federation submitted a newspaper article from the International Herald Tribune, dated December 26, 2003. That article made reference to the recent decision of the Chinese Commerce Ministry to remove import tariffs on various steel products including hot-rolled steel sheet.23
- Counsel was notified on December 30, 2003, that the CBSA would not be accepting this document for consideration in this expiry review proceeding.
- On December 30, 2003, counsel for MMK and Severstal reiterated its request of December 29, 2003, suggesting that the relevance of this information should not be ignored in this proceeding, regardless of the timeliness of the development.24
- On December 31, 2003, the CBSA responded to the December 30, 2003, request for reconsideration and notified counsel that the CBSA would maintain its original position on the matter.
[56] The President has considered the information contained in the document. The information constituted a new and unforeseen issue and was not available prior to the closing of the record date. However, the new information was deemed not to be sufficiently material at the time to warrant its acceptance. In addition, the lack of time to provide an opportunity for participants to submit comments and the amount of time remaining before the determination was to be issued, made it unreasonable for the President to accept this new information.
Parties arguing that continued or resumed dumping is likely
[57] All five Canadian producers, Algoma, Dofasco, IPSCO, Ispat and Stelco, presented arguments supported by evidence that dumping into Canada of hot-rolled steel sheet from the Named Countries would continue or resume in the event of the expiry of the finding.
[58] The Canadian producers have made many common arguments. All have described the global context in which the Named Countries export steel as follows: the global steel production overcapacity crisis, particularly the massive excess capacity in the Named Countries, in conjunction with volatile economic conditions that continue to plague the global steel market are conducive to the continued or resumed dumping of steel products to North America. Furthermore, the threat of continued or resumed dumping from the Named Countries in particular stems from the dependency these producers have on exports to maintain their utilization rates. According to the producers, the numerous anti-dumping measures against the goods from each of the Named Countries, which limits the markets available for their product, make Canada a prime target for the diversion of subject goods if the dumping of the goods is not restrained by the finding.
[59] Stelco submitted that, in order to regain market share in the event the finding expires, the exporters in the Named Countries would have to reduce prices to the lowest level currently in the Canadian market. Stelco implied the need to resort to dumping to achieve such sales. Dofasco noted that the propensity of exporters from the Named Countries to dump is clearly demonstrated by the numerous anti-dumping measures in place. Algoma, Dofasco and Ispat submitted that Canadian importers have a practice of source switching from countries covered by anti-dumping measures to those countries that are not.
[60] The Canadian producers submitted that the Tribunal has previously found that the import prices tend to converge at the lowest possible price point necessary to make a sale in the Canadian market and that this reflects the price sensitivity of hot-rolled steel sheet as a commodity product.
[61] Both Ispat and Algoma noted that there are significant volumes of low priced imports from other countries not named in this review with which imports from the Named Countries must compete. IPSCO submitted that the price levels of the subject goods in Canada, as well as that of similar goods from other currently unrestricted countries, are well below the Canadian domestic price for like goods, and if the finding expires, the price levels of the subject goods will enter the Canadian market at the current low, or even lower prices in order to capture market share.
[62] The Canadian producers submitted that the data on the CBSA's record indicates that subject goods from the Named Countries were dumped in each of 2000, 2001, 2002, and that the volume of subject imports from the Named Countries has declined significantly since the 1999 finding. The producers asserted that, consistent with past practice of the Tribunal, the President has considered the inability of exporters to make sales in Canada at normal values to be a strong indicator that dumping will resume if the finding is rescinded. The volume of potential imports into Canada if the finding expires is significant given the commodity nature of the subject goods and the demonstrated historical and continuing interest of the exporters from the Named Countries in the Canadian market.
[63] Commenting on the changes in market conditions domestically, Ispat and Algoma submitted that Canadian demand for hot-rolled steel sheet has been declining in recent years and that certain groups of low priced imports have set the pricing floor in the Canadian market. In 1996 through 1998, this group was comprised of imports from the Named Countries, which became subject to the 1999 finding. After this finding was put into place, exporters from other countries began to export low-priced hot-rolled steel sheet to Canada, which became subject to the subsequent Hot-Rolled II finding in 2001.
[64] Stelco noted that since that finding, imports from other countries have appeared in the Canadian market. The pricing of these imports into Canada has declined greatly in recent years, creating significant pricing pressures in the Canadian market. Stelco noted that the present situation of the Canadian hot-rolled steel sheet industry reflects the global situation of excess supply and weak demand.
[65] Commenting on the changes in market conditions in the United States (U.S.), Ispat and Algoma submitted that following recent trade actions, there has been a significant volume of hot-rolled steel sheet imports which have been "displaced" from the U.S. market and exporters must aggressively seek other open export markets, where they are not subject to trade measures.25 Stelco noted that the U.S. safeguard action (pursuant to section 201 of the U.S. 1974 Trade Act, imposing a tariff surcharge of 30 percent on hot-rolled steel sheet imports) was a response to the import crisis facing numerous producers in the U.S.26
[66] All five Canadian producers submitted listings of anti-dumping measures taken by numerous countries against hot-rolled steel sheet from the Named Countries. They noted that these other dumping measures would further restrict hot-rolled steel sheet export markets for the Named Countries and submit that this reinforces the likelihood of continued or resumed dumping should the finding expire.
[67] Ispat and Algoma submitted that many producers have the ability to produce a variety of flat-rolled carbon steel products in the same facilities and as a result, in the absence of measures in respect of hot-rolled steel sheet from the Named Countries, one could expect producers in these countries to switch production from plate to hot-rolled steel sheet if exports of plate from that country were to continue to be subject to a dumping finding.
Positions of the Canadian Producers - Country Specific
[68] IPSCO noted that France's steel producer, Arcelor, is the largest steel producer in the world. With the induction of many countries into the European Union (E.U.) in May of 2004, Arcelor's massive capacity will have to compete in the E.U. market and therefore, French steel producers will have to look to new export markets for their product.
[69] Stelco noted that Arcelor, even with consolidation and rationalization, will still be faced with 3 to 4 million metric tonnes per year of overcapacity by 2005.27 There are two countries other than Canada that have measures in force against flat-rolled steel products from France: the United States (corrosion-resistant steel sheet) and Brazil (cold-rolled steel sheet).
[70] Ispat and Algoma noted that French exporters of subject goods are likely to continue or resume dumping subject goods to Canada if the 1999 finding is rescinded due to significant production capacity and over capacity. According to the Canadian producers, French mills are dependent on exports to maintain capacity utilization, as domestic demand for subject goods is weak. They also contend that French hot-rolled steel sheet producers have been unable to compete in the U.S. where they were subject to safeguards.
[71] IPSCO noted that due to its reliance on industrial production, Romania has significant steel making capacity, yet it does not have the corresponding domestic demand for steel consumption and Romanian producers must rely on export markets for their product. Although reliant on export markets, Romanian producers have proven unable to participate in the Canadian market at fairly traded prices and they have been all but absent from the market since the finding has been in place.
[72] Algoma submitted that Romanian mills have significant production capacity and overcapacity and are dependent on exports to maintain capacity utilization; Romanian hot-rolled steel sheet producers have demonstrated disruptive marketing practices in terms of their exports to the U.S. and Romanian mills have continued to dump other carbon steel products into Canada.
[73] Stelco submitted that there are four countries other than Canada that have measures in place against flat-rolled products from Romania.
[74] IPSCO submitted that Russian producers remain dependent of export of commodities, including metal production. IPSCO also noted that certain Russian mills are continuing to expand their capacity, even in the face of the global overcapacity crisis and that Russian producers have consistently increased production of hot-rolled steel sheet products since 1976. IPSCO further noted that weak domestic and global economic steel demand coupled with increases in Russian capacity, does not lend itself to Russian producers decreasing dependence on exporting steel at low, dumped prices.
[75] Ispat and Algoma noted that Russian mills have significant production capacity and overcapacity and are dependent on exports to maintain capacity utilization; Russian hot-rolled steel sheet producers have demonstrated disruptive marketing practices in terms of their exports to the United States and to other countries and Russian hot-rolled steel sheet is subject to significant international trade restrictions.
[76] Stelco submitted that the Russian market suffers from chronic excess capacity and over-production of flat-rolled steel and that Russian-origin hot-rolled steel sheet is subject to both U.S. and E.U. import quotas. These are the result of bilateral agreements that limit the volume of hot-rolled steel sheet exports from Russia, with respect to anti-dumping investigations by each jurisdiction. With exports to those two major markets capped, Russian producers will take advantage of any open market to absorb excess production. Stelco noted also that some of the larger mills, particularly in Russia, are adding substantial hot-rolling capacity through ambitious enhancement and expansion programs.
[77] IPSCO submitted that the capacity utilization of hot-rolled steel sheet facilities in the Slovak Republic has fallen in the third quarter of 2003. The Slovak Republic has signed an accession treaty with the E.U. As a condition of accession, over concerns of excess capacity, the E.U. Commission required that the Slovak Republic agree to cap annual increases in its production and sales based on levels achieved in 2001. However, in the lead up to its accession, the Slovak Republic has been accelerating both its production and sales in anticipation of the cap applying in 2009.28
[78] Ispat and Algoma submitted that Slovakian producers have significant production capacity and overcapacity and that Slovakian mills are dependent on exports to maintain capacity utilization. Furthermore, Slovakian hot-rolled steel sheet exports to the U.S. market have increased dramatically to take advantage of import restrictions against other countries, and notwithstanding the protected U.S. market, have been sold at very low prices.
[79] Stelco submitted that three jurisdictions have anti-dumping measures in place against flat-rolled steel products from the Slovak Republic, including measures on hot-rolled steel sheet recently imposed by the E.U.
Parties arguing that continued or resumed dumping is unlikely
France
[80] Arcelor asserted that the continuation or resumption of dumping from France is unlikely if the finding should be allowed to expire. Arcelor addressed the issue of production capacity by cautioning that the recent increases seen in potential `capacity' for the company are attributable to "investments and productivity improvements" rather than the opening of new facilities.29 Furthermore, although Arcelor's capacity utilization rates may indicate a declining trend, the company maintained that such trends are attributable to the well publicized voluntary reductions in production employed by Arcelor and other European producers in an effort to stabilize the higher prices enjoyed in recent months.30
[81] Arcelor also stated that it has announced plans to close its Florange (Sollac Lorraine) plant in France, which is presently used for hot-rolled steel sheet and associated downstream production. Arcelor stated that his high capacity utilization rates are evidence that "there is no available excess capacity in France on hot-rolled products." Further to the issue of capacity, Arcelor emphasized in its case arguments that regardless of available capacity, the question to ask is "whether any available capacity could be said to be targeted to export markets and to Canada in particular."31 The company also asserted that there are no other facilities in France, which Arcelor could convert to produce hot-rolled steel sheet.32
[82] In regards to export orientation, Arcelor emphasized in its submission that its focus on overseas hot-rolled steel sheet export markets is diminishing, which is the result of Arcelor prioritizing its service to customers in the E.U. and France, given the company's growing strength in those markets.33 Arcelor further noted that sales trends include increases in `niche, value added products' which require hot-rolled steel sheet substrate, resulting in less base hot-rolled steel sheet product available for sale into the market.
[83] Arcelor cited the decrease in the relative share that hot-rolled products constitute of the total strip mill products produced. Arcelor identified the "Solbor" products exported to Canada during the period of review as an example of the type of `higher margin' product (in comparison with base hot-rolled steel sheet products), which the company is driven to sell given the increased profitability.34
[84] Arcelor presented statistics to support its claim of decreased emphasis on export sales and base hot-rolled steel sheet sales overall. Arcelor stated that this evidence of an increase in production for downstream production of hot-rolled steel sheet in both real and percentage terms demonstrates a decline in the likelihood of exports, in addition to decreasing the likelihood of dumping.35
[85] Arcelor contended that its increased profitability in flat-rolled products in 2003 over 2002, notwithstanding decreased sales activity in the North American market and decreased production of hot-rolled steel sheet for the merchant market, demonstrates its position that the incentive for profits, not production, is what drives the product mix; the results of which suggest the strategy will continue, thereby decreasing the likelihood that hot-rolled steel sheet would be dumped into Canada.36
[86] Arcelor stated that local markets are its strategic focus and cited figures, which assert that the European Union (E.U.) "consumed 1,760,000 metric tonnes of hot-rolled steel sheet products more than it produced in 2002, and that figure increased to 2,394,000 metric tonnes for the first three quarters of 2003."37 Combined with the assertion that exports of steel products from France to North America have declined since 2000, the company maintained that this trend bears no indication of changing and consequently, any allegation that the company is `export dependant' (outside the E.U.) is unfounded.38
[87] Following from the notion that the E.U. is its growing strategic focus, Arcelor cited both the CRU Monitor39 and World Steel dynamics40 sources, (independent publications which report on the global steel industry) which have forecasted improvements to hot-rolled steel sheet prices in the European market in 2004. Arcelor stated that this forecast is supported by the already seen improvements in the market in 2003. Arcelor also cited announced price increases by major steel mills in North America and Europe to provide additional support to the contention that prices and thus markets are strengthening. In proclaiming the strength of the home market, Arcelor further questioned what incentive it would have to sell hot-rolled steel sheet to Canada, let alone at dumped prices, given the "existing price differentials between Canada and the E.U." Arcelor further stated that: "this price differential renders the Canadian market unattractive for Arcelor and France."41
[88] Arcelor also submitted that France has not had any anti-dumping measures against them by any other country in respect of the hot-rolled steel sheet subject to this review over the last five years. Citing factors detailed in the SIMR, Arcelor asserted that the `conduct of the exporter' does not demonstrate likelihood that dumping of hot-rolled steel sheet into Canada would resume. Arcelor also stated that the primary evidence presented is the company's demonstrated ability to sell to Canada `a fair and steady commercial tonnage'42 during the finding without incurring anti-dumping duties and the lack of any similar anti-dumping measures taken by other countries, which are also export markets for France.
[89] Arcelor further argued that the likelihood for dumping any steel product originating in France is unlikely given that there are only two such anti-dumping measures presently in place; both in respect of the United States, for plate and galvanized sheet. The company stated that each product is produced at facilities not used in the production of hot-rolled steel sheet and both findings date back to the year 2000.
[90] Given the age of the measures and the distinction in product type in comparison to hot-rolled steel sheet, Arcelor is of the position that these measures are irrelevant to the consideration in this review.43 Arcelor submitted that since it exports to dozens of countries outside the E.U., the fact that no other country (outside the aforementioned U.S. and Canada) has anti-dumping measures in place against France to be the more telling testimony that dumping to Canada is also unlikely.44
[91] Arcelor also noted that its steel making divisions extend into other European countries such as Germany and Belgium and that neither one of the entities present in these countries, both under the corporate ownership of Arcelor, France, have been alleged to dump hot-rolled steel sheet into Canada by the Canadian producers over the period of review, in spite of exporting volumes to Canada which Arcelor deems are "commercially significant."45 Arcelor also asserted that no European country in which it has manufacturing operations is subject to anti-dumping measures for hot-rolled steel sheet.46
[92] In respect of using historical tendencies to gauge future performance, Arcelor argued that "a good indication of how France and Arcelor is likely to behave" can be sighted in respect of recent export activity to Canada for goods where a previously existing Tribunal finding is no longer in place, where France was a named country and goods for which Arcelor was a producer. Arcelor identified three such instances and asserted that:
"since the expiration of the findings against France (1998 in the case of cold-rolled and 1999 in the corrosion-resistant case), [Arcelor] has not flooded the Canadian market to any extent, and has presumably sold at undumped and non-injurious prices as it managed to avoid being implicated in any of the dumping actions brought forward by the Canadian Producers on these two products since 1999."47
[93] Arcelor made this statement to support its claim that exports of these products have continued to Canada steadily since the anti-dumping measures expired. Arcelor purported itself to be a "responsible importer in the Canadian market and has not been found or even accused of dumping its products into the Canadian market since then."48 The company contended that this is further evidence that the conduct of the company does not indicate likelihood to dump into Canada.
[94] Furthermore, Arcelor noted that both Germany and Belgium, in addition to France, were subject to the United States Section 201 safeguard action. As a result of the tariffs, the company stated that exports of hot-rolled products of all nature to the U.S. declined significantly, however, such declines did not translate into any diversion of exports to Canada as reported in Arcelor's case arguments.49 In fact, Arcelor submitted that exports to Canada have shown a decline from those countries.50 Consequently, Arcelor argued that considerations for diversion as envisioned by the SIMR are not supported by the evidence.
[95] The known Romanian producer, Ispat Sidex Galati did not provide a response to the ERQ and hence, no position from this country is available.
[96] The three Russian producers who participated in this expiry review proceeding, namely: NLMK, MMK and Severstal, provided several arguments in support of their position that the continuation or resumption of dumping into Canada of hot-rolled steel sheet in the absence of the finding is unlikely. One of those arguments concerned capacity utilization. MMK and Severstal contended that the evidence on the record proves that all Russian hot-rolled steel sheet producers are producing at what is effectively full capacity.51
[97] MMK and Severstal argued that given the position that capacity is at or near full and with the projected economic growth in the Russian domestic market and the suggested surge in demand for hot-rolled steel sheet from Russia, that the evidence on the record indicates that it is highly unlikely that hot-rolled steel sheet would be dumped into Canada.
[98] Rather, MMK and Severstal argued that it is more likely that currently exported product would be reduced to help fill the domestic demand in Russia.52 Severstal contended that they are focusing on the domestic market given the numerous infrastructure projects, which are under way in Russia. Construction in railroads, buildings and machinery are identified as areas where significant growth is expected. Severstal stated that increases in the domestic consumption of hot-rolled steel sheet will be required to satisfy the demands of these developments.
[99] NLMK also remarked that the demand in the domestic market for hot-rolled products will result in a decrease in exports in the coming year to service that demand. To explain, NLMK stated that in 2002, market demand in Russia exceeded supply in all commodity groups of flat-rolled steel products.53 NLMK also forecasted that hot-rolled steel sheet consumption in 2003 will hit 7.5 million metric tons (mmt) with annual growth of more than 17 percent.54
[100] Figures provided by Severstal indicated that there has been an increase in apparent consumption of hot-rolled steel sheet products in Russia when comparing the first eight months of 2002 with the same period in 2003. Severstal further supported the position that the domestic market is more attractive and a more strategically important market by providing spot sale price quotations, which rose steadily in 2003 to a last reported high of near $350 U.S. per metric tonne.55
[101]NLMK stated that the total export volume by Russian companies is expected to decrease to compensate for the increase in service to the domestic market. NLMK contended that the decrease in exports is deemed necessary by the fact that the company is already reporting a capacity utilization rate of near 100 percent.56
[102] NLMK also stated that sales to Canada in general are unlikely because current export markets they service will not only continue but also grow. Consequently, with the concentration of export sales already heavily weighted towards Southeast Asia and the projected increases in demand in China and India, NLMK contended that there is insufficient domestic supply in those countries to satisfy that demand.
[103] NLMK stated that there will be less hot-rolled steel sheet being sold into the market and more used in captive production for products that offer a higher added value.
[104] In the same manner, MMK stated that it also plans to direct more focus towards steel products requiring `further processing', thus reducing the amount of hot-rolled steel sheet available for sale to the market.57
[105] MMK contended that recent selling trends indicate its increased service to the domestic market versus the export market and its movement towards specialized products and away from the subject goods.
[106] The exporters also asserted that growth in the Russian economy, which include increases in prices, are conditions that contrast significantly to what existed in 1999. Severstal cited growth in the Russian Gross Domestic Product (GDP) (presently estimated at exceeding 6.5 percent) and in per capita income (20 percent from 1999 to 2002) as factors that are driving the increasing consumption trend.58 Severstal further remarked that the growth in the Russian economy can be largely attributed to the `great progress of [sic] oil-producing and gas industry'.59
[107] MMK also remarked on the growth in the Russian economy and provided consumption increase forecasts for the domestic hot-rolled steel sheet industry. Hot-rolled steel sheet has production applications for the pipe and tube industry. NLMK also cited the development of the domestic pipe industry, including an oil pipeline project and the growth in other steel consuming industries such as the automotive industry as reasons why the Russian domestic market has captured the focus of the company's business.60
[108] Consequently, MMK and Severstal contended that this strength in the home market further supports the notion that dumping into Canada is unlikely. They also emphasized that each of the three Russian producer's responses indicates no intention to expand existing capacity of hot-rolled steel sheet and that no potential exists to produce the subject goods in facilities currently used to produce other goods.61 To that effect, NLMK asserted that it has not opened any new factories capable of producing the subject goods nor is it planning any such expansion. NLMK also remarked that it has made no closures of any such facilities related to the subject goods.
[109] Severstal and MMK submitted that in spite of trade disputes (including anti-dumping measures) with other countries, Russian producers maintained their full capacity. Severstal and MMK asserted that the evidence does not support the contention that these other measures will lead to diversion to Canada, as Russian producers still have no available excess product to divert. Russia's increased service to the domestic market and alternative export markets are cited as reasons this high capacity has been achieved in spite of these measures.
[110] MMK and Severstal also suggested that the increase in Chinese quotas for Russian exports further reduce the likelihood of diversion, as any additional exports from Russia would more likely be made to supplement the established customers in China.62 Severstal also touched briefly on the growth and demand for steel in China and the increases in ocean freight charges, the latter of which is a hindrance to overseas exports.63
[111] The transition from state-controlled to market economy is also cited by Severstal and MMK as important in the context of a `production focused industry' versus one that reacts to the `market demand'.64 Severstal and MMK submitted that there is a dramatic difference in the way Russian producers conduct business as compared to the old regime of pure state control. MMK and Severstal pointed to the producer's movement into specialized grades of steel, the use of wholly owned trading companies in export sales and the mandate to produce for orders only. In underscoring this last point, they stated: "in absence of firm orders, goods are simply not produced. The spectre of boat loads of Russian steel roaming the seas in search of a market is clearly a preposterous suggestion."65
[112] Severstal asserted that export markets are only attractive where "a higher price is available in the export market than in Russia."66 MMK further asserted that it does not foresee exports of subject goods to Canada given the already full capacity reported for 2003 and the increase in production of non-subject goods using the same machinery as is used for subject goods.
[113] MMK also argued that the growth in the Russian economy is a strong indicator that the major focus of sales for Russian steel producers will be on the domestic front. MMK remarked that the stable growth of domestic consumption is confirmed by "increases in the sales in the domestic market, increases in prices for steel products and full utilization of capacity."67
[114] NLMK cited anti-dumping measures by Canada and the U.S. in the late 1990's as a principal cause for the change in export focus from North America to the Middle East, South-East Asia and the E.U. The company asserted that current market conditions and relationships existing with its present client base in other export markets has taken the place of what the North American market once represented to NLMK.
[115] USSK provided several arguments in support of their position that the evidence on the record does not demonstrate that there is a likelihood of continuation or resumption of dumping of hot-rolled steel sheet into Canada in the absence of the finding.
[116] USSK contended that its imminent accession to the E.U. expected in May 2004 has significant ramifications for its potential to ship subject goods overseas.68 The company stated that the accession agreement stipulates USSK must cap its production.
[117] USSK stated that the accession to the E.U. supports its position that USSK is driven to serve the local European markets ahead of any overseas opportunities. Similar to Arcelor, USSK also cited its commitment to increase the amount of base hot-rolled steel sheet produced towards captive production to benefit the returns on higher value products, thereby lessening the amount of hot-rolled steel sheet available to the merchant market. Combining this with the aforementioned cap on production and the fact that the company is already producing near capacity,69 USSK stated that the likelihood of large volume exports to distant markets, like Canada, is not foreseeable.70
[118] Following in the theme of world overcapacity, USSK submitted that suggestions by the Canadian producers that dumping by the Named Countries will resume in absence of the finding are "general assertions, which do not accurately reflect market conditions facing USSK."71 In this context, USSK pointed to its high capacity utilization rates. The company also cited recent reports regarding the state of the Chinese market that indicate "a surge in Chinese demand will likely lead to market shortages going forward."72
[119] USSK identified only two countries, Argentina and Thailand, which have initiated and imposed anti-dumping measures against exports from the Slovak Republic for hot-rolled steel sheet in the past five years. However, USSK emphasized that this Argentinean measure pre-dates the November 24, 2000, acquisition of the company by U.S. Steel. Accordingly, USSK asserted that "its philosophy and commercial policies and practices are diametrically opposed to those of the previous operator" (i.e. VSZ).73 The measures imposed by Thailand (2002) involved goods that USSK stated were not shipped directly to Thailand from the Slovak Republic but were rather re-sold by a European customer.
[120] USSK contended that to hold it accountable based on a history created by a previous regime would be inappropriate given the present context of this review. In support of this contention that USSK is philosophically and for the purposes of this review, materially different from VSZ Holding, the company pointed to the temporary shutdown of USSK operations in 2001, which extended throughout the holiday season "due to soft market conditions and a weak order book." The company asserted that this "responsible decision clearly demonstrates the new, responsible commercial practices implemented by USSK in action."74 In keeping with the theme that ownership under U.S. Steel is a major consideration for this proceeding, USSK asserted that it is the most profitable subsidiary of U.S. Steel.75
[121] USSK identified itself as "commercially driven, not production driven",77 underscoring that the company does not produce unless it has confirmed orders. Consequently, the company does not report ending inventories beyond what is awaiting shipment to customers.
[122] Furthermore, USSK identified its sales strategy under U.S. Steel as one that has increased the company's focus on the home and E.U. markets. The company supported its claim by citing the decrease in export sales of hot-rolled steel sheet to non-E.U. members as a percentage of production.
[123] Combined with the announced January 2004 price increase, USSK submitted that the projected growth in economic activity in the Slovakian and European markets at large support the company's position that these will be the areas targeted for hot-rolled steel sheet sales.78
[124] USSK pointed out that although they are subject to an E.U. safeguard action, it is expected that the May 2004 accession of the Slovak Republic to the E.U. will terminate this action.79 USSK asserted that safeguard measures in China are also of no consequence to the Slovak Republic in this review in regards of the potential diversion of goods to Canada given that China has designated the Slovak Republic as a `developing country' and have, therefore, exempted them from any safeguard measures.80
[125] USSK affirmed that they don't foresee making any sales of subject goods to Canada in the near future. Given the present ownership structure, USSK suggested that the U.S. Steel operations in the United States would be a more logical source from which the Canadian market would be serviced if required. To this extent, USSK refuted any suggestion that it would dump into the Canadian market in stating:
"There is no incentive (indeed, a significant disincentive) for USSK to operate in Canada in a disruptive manner"81 and further asserted "the clear disincentive for USSK to sell into the North American market in competition with U.S. Steel."82
[126] USSK concluded its arguments by resting foremost on the declaration that the change in ownership realized since the original finding in 1999 is fundamental to their position that this change has also altered the likelihood that dumping would resume in absence of a finding respecting the subject goods.
[127] Paragraph 76.03(7)(a) of SIMA requires the President 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 President may consider in making a determination under paragraph 76.03(7)(a) of SIMA.
[129] Before conducting a country-by-country analysis on the issue of the likelihood of continued or resumed dumping, there are three issues that relate to the subject goods on a broader scale that need to be discussed. This will focus principally on the concerns of excess capacity of hot-rolled steel sheet, the apparent demand for steel in Canada and abroad and the effect of industrial and economic growth in China. Following this global analysis, specifics with respect to each of the Named Countries will be presented.
[130]Evidence on the record indicates that there is presently over 40 mmt of excess hot-rolled steel sheet capacity in the world.83 The countries involved in this review, however, are producing at very high capacity. Furthermore, the production trends have generally supported the exporters' contention that movement away from base hot-rolled steel sheet products, although modestly realized to date, is the focus of the future.
[131] The apparent unused hot-rolled steel sheet capacity, which could potentially be exported or sold to the merchant market, is well over the apparent Canadian market for 2002 for each Russia and France.
[132] For the period of Jan.-Aug. 2003, the hot-rolled steel sheet capacity utilization for each company as per their respective responses were reported as being very high.
[133] While conflicting information is presented regarding the prospects for hot-rolled steel sheet in the coming year, there is ample information on the record that indicates modest improvement is expected in the short to medium term for hot-rolled steel sheet demand in the world overall.84
[134]The CRU Monitor report for November 2003, indicates that total world consumption of hot-rolled steel sheet for 2002 was approximately 154,486,000 metric tonnes (mt).86
[135]The record includes a CRU International statistical review of hot-rolled steel sheet consumption, updated to October 2003. CRU International also includes hot-rolled steel sheet consumption projections through 2008.87 Projections for total world consumption of hot-rolled steel sheet are that it will climb from the present estimate in 2003 of 162,739,000 mt to 178,671,000 mt in 2005. Consequently, the proposed growth in consumption from the projected level in 2003 through 2005 represents a near 10 percent increase.
[136] Consumption growth in North America is projected to account for a little over 2 mmt. As a matter of perspective, the Canadian market for hot-rolled steel sheet would account for about 3 percent of this world consumption estimate for 2003 of over approximately 162 mmt.
[137] The `Apparent Canadian Market88 table on the record indicates that demand for hot-rolled steel sheet in Canada has been declining in recent years.89 The evidence on the record supports the position that the demand for hot-rolled steel sheet in the Canadian market has declined over the POR.
China Impact on Excess Capacity - Hot-rolled Steel Sheet
[138] While citing that there is "over 40 million mt per year of spare hot strip rolling capacity in industrialised countries alone," a CRU Monitor report further stated that "China will add over 14 million metric tonnes per year (mmtpy) in 2003 and 2004."90 A further source estimates additions to Chinese production capacity will reach about 16.5 mmt by 2005.91 The same source estimated North America to add about 8.2 mmt of capacity by 2005. Metal Bulletin Research also stated earlier this year that Chinese hot-rolled steel sheet gross nominal capacity will increase from 35.9 mmt in 2002 to 47 mmt in 2003.92
[139] The largest consumption growth continues to be in China. For the first three quarters in 2003, CRU International stated that consumption of hot-rolled steel sheet in China rose over 25 percent over the same period in 2002. This follows a year on year increase in 2002 from 2001 of near 30 percent for hot-rolled steel sheet consumption in China. Furthermore, prorating the first three quarters of 2003 over the full year, the forecasted production in China of hot-rolled steel sheet comes to just below 25 mmt. The projected consumption comes to over 30 mmt.93 The CRU Monitor report also states that "Chinese demand growth shows no signs of slowing sharply."94 To put matters into perspective, the 5 mmt shortfall is made up by imports and thus represents close to the apparent size of the Canadian market (of about 5.2 mmt) on the record for this expiry review.
[140] An International Iron and Steel Institute (IISI) report in September 2003, projects GDP growth of 8.3 percent in 2003 and another 8 percent in 2004 in China. This compared with world GDP growth projections of a more modest 2.2 percent in 2003 and 3.1 percent in 2004.95
[141] Given this substantial growth trend in hot-rolled steel sheet consumption in China, it is reasonable to conclude that China will continue to require significant imports of hot-rolled steel sheet to meet its escalating demand. However, additions to production capacity being made in China should assist in limiting the dependency on hot-rolled steel sheet imports to meet the domestic demand.
[142] The evidence on the record indicates that, even if demand for hot-rolled steel sheet imports continues to grow in China, there would still be a substantial portion of the estimated 40 mmt of world excess hot-rolled steel sheet capacity remaining. Consequently, while China may indeed absorb much of the `excess' hot-rolled steel sheet available, it is unlikely to absorb all of it, leaving substantial quantities of surplus hot-rolled steel sheet making capacity as a threat to world markets.
[143] The evidence on the record supports Arcelor's position that: "exports of hot-rolled products from France outside of the European Union are declining, in absolute numbers and relative to the total production from France."96
[144] Based on the evidence on the record, Arcelor's sales of hot-rolled steel sheet into the E.U. presently represents over 85 percent of total exports. In 2000, the share of total exports was just over 76 percent.97
[145] Furthermore, it is reported that: "the E.U. consumed 1,760,000 metric tonnes of hot-rolled steel sheet products more than it produced in 2002, and that figure increased to 2,394,000 metric tonnes for the first three quarters of 2003."98 These statistics are supported by data reported by independent sources.99
[146] Despite comments from the Canadian producers to the contrary, the most recent information regarding the European market for hot-rolled steel sheet is relatively positive.100 Announced sheet price increases to take effect in the first quarter of 2004 is cited as primary evidence to the present trend. In addition, CRU International predicts a drop of the Euro against the U.S. dollar, suggesting that the influx of imports of hot-rolled steel sheet will become less likely.101
[147] An analysis of the data on the record indicates that Arcelor's principal hot-rolled facility, Sollac Méditerranée, has actually increased its production of hot-rolled steel sheet since 2000 by a marginal amount. However, the amount of hot-rolled steel sheet destined for the merchant market has indeed decreased since that time, while production for downstream production of hot-rolled steel sheet has increased every year since 2000.102 Similarly, domestic sales of hot-rolled steel sheet (coil form) from Sollac Lorraine have also decreased each year since 2000.103 Overall production of hot-rolled coil in 2003 is also projected to be its lowest level over the last four years at Sollac Lorraine.
[148] While significant representations have been made pointing to the available capacity of Arcelor to produce hot-rolled steel sheet, the evidence on the record does not seem to indicate that the exporter will use that capacity to dump. Our analysis reveals that, overall, Arcelor's typical capacity utilization rate is almost full capacity.104
[149] Given that their capacity utilization rate is fairly consistent and no anti-dumping action has been taken against France in the last 5 years for hot-rolled steel sheet, the fact that the company may have excess production capacity cannot, on its own, support the allegation that this excess capacity will lead to dumping hot-rolled steel sheet into Canada.
[150] Since 2002, the average export price of hot-rolled steel sheet (in coil form) exported from Arcelor's Sollac Méditerrannée mill is above the domestic selling average in all instances (this mill is where virtually all Arcelor, France, exports to Canada originate).105 All average selling prices also exceed average costs over that time frame.106
[151] Arcelor's export prices are generally significantly higher than the average domestic prices. Average sales value per tonne is high, which supports Arcelor's contention that their focus is primarily on the higher end hot-rolled steel sheet products and not on base hot-rolled steel sheet, which comprises a significant portion of the competitive product in Canada.
To support the position that France can compete in Canada at undumped prices, Arcelor provided comparisons to the Canadian producers' selling prices in Canada, which are lower than the imported prices of hot-rolled steel sheet sold by Arcelor in Canada.107
Arcelor submitted that this represents `evidence' that Arcelor's strategy is one which is focused on "value-added products and in higher-end products where it is not competing on price but rather on quality and technical specifications with the Canadian mills."108 Indeed, the record shows that
[153] Arcelor's average selling prices to Canada of subject goods over the POR are substantially higher than the selling prices from all other sources.109
[154] The only instances that the subject goods originating in France were dumped into Canada over the POR arose where the goods were re-exported from the United States, but the volume of dumped imports was negligible. All direct shipments from France were undumped and represented virtually all of the total exported volume of subject goods from France to Canada.
[155] Arcelor demonstrated to the CBSA during its participation in the past re-investigations through verification meetings at the company's premises in France and at its related Canadian affiliate's premises in Canada, that the export prices of subject goods sold through its affiliate in Canada are being made to the purchaser in Canada at or above the normal value for each hot-rolled steel sheet product being sold.
[156] The evidence demonstrates that France has been able to export to Canada at undumped prices. The aforementioned price quotations also support the notion that Arcelor is able to cater to high-end hot-rolled steel sheet customers, both in Canada and in other markets. Average selling prices to other export markets attest to the fact that Arcelor caters to these sorts of niche product needs.
[157] No countries have anti-dumping measures in place against hot-rolled steel sheet originating in or exported from France. However, two anti-dumping measures are in place against other flat-rolled steel products from France, both measures stemming from the U.S. (corrosion-resistant steel sheet and steel plate). Each of those measures was issued in 2000.
[158] The aforementioned anti-dumping measures in the U.S. for corrosion-resistant steel and steel plate appear to demonstrate a propensity to dump. However, in light of the age of the measures and that these products are produced at different facilities than the subject goods,110 it is not reasonable to conclude that these measures demonstrate that France is likely to dump a different product into a different country during a period, which is several years after the time of those decisions.
[159] The Canadian producers identified the large decrease in volumes of subject goods exported from France since the finding went into effect in 1999, in spite of Arcelor's contention that they continue to export significant volumes of subject goods to Canada.111 The producers allege that in the absence of the finding, France would resort to dumping to recapture sales to Canada that it lost during the finding, where it was deterred from the threat of anti-dumping duties.
[160] While there is a decrease in volumes of subject good exports from France since the finding has been in place, the evidence on the record also indicates that the demand in the Canadian market has declined over the POR and that France is presently focused on selling to niche markets which demand higher-end hot-rolled steel sheet products. France has also not been subject to any anti-dumping measures for hot-rolled steel sheet in any of its export markets during the POR. Given these considerations, the decrease in volumes of subject goods exported from France since the finding went into effect is inconclusive in asserting that in the absence of the finding, France is likely to resume dumping hot-rolled steel sheet.
[161] When considering the activities of other entities under the `Arcelor Group', it is noted that Canada has not applied anti-dumping measures against either Germany or Belgium, each of which have produced hot-rolled steel sheet during the POR, or in respect of any Arcelor subsidiaries in other countries.
[162] The corporate strategy of these subsidiaries would be under the control of Arcelor. Consequently, the absence of dumping measures against these entities, including those who produce hot-rolled products, supports Arcelor's contention that within the context of these proceedings and as a company at large, it is unlikely to dump.
[163] As previously noted, on January 17, 2003, an interim review of "Hot-Rolled I" conducted by the Tribunal granted exclusion for a product meeting the "Solbor 30MnB5" specification. This product had comprised a significant portion of the subject good imports from France during the POR, prior to the exclusion. The exclusion recognized that the "Solbor" product is a niche hot-rolled steel sheet products, which the Canadian producers do not make.
[164] As an importer and participant in this expiry review, Titus Steel Company Ltd., made a request for exclusion due to their inability to source a product meeting the specification of "3 mm A/R 400 or 500 wear plate" from the Canadian producers. This particular product was identified as one which is a `higher-end' hot-rolled steel sheet product, typically selling for between $900 and $1300 per metric tonne. 112
[165] The information provided by Titus Steel Company Ltd. and the exclusion granted for "Solbor" further supports the position of Arcelor that it is an exporter that caters to higher-end, niche hot-rolled steel sheet products.
[166]In considering the likelihood of continued or resumed dumping of the subject goods including the specific goods in the exclusion request and based on Arcelor's behaviour during the POR, its historical and continuing strong exports interest towards the European market, the demonstrated ability to compete in the Canadian market at undumped prices, the consistently high levels of capacity utilization with low levels of inventories, the absence of anti-dumping measures by other countries in respect of French origin hot-rolled steel sheet and the evidence that Arcelor has been and is geared to selling higher-end niche hot-rolled products over base hot-rolled steel sheet, the President determined that the expiry of the finding was unlikely to result in the continuation or resumption of dumping into Canada of certain hot-rolled steel sheet originating in or exported from France.
[167] As previously mentioned, there were no submissions received from producers in Romania. The lack of participation in the expiry review on behalf of the Romanian producers prevented further evidence from being considered in this matter, which may have been relevant and only accessible by the Romanian producers. The Canadian industry made representations in respect of the likelihood that dumping from Romania is likely to continue in the absence of the finding.
[168] The Romanian producer, Ispat Sidex Galati S.A., participated in the last re-investigation of normal values, which concluded March 3, 2003. However, the CCRA could not rely on the submitted sales and costing information. The information indicated that a significant proportion of domestic sales and costs were transacted using non-monetary instruments such as barter.113 Consequently, normal values were determined by way of a Ministerial Specification pursuant to subsection 29(1) of SIMA. Since the exporter did provide a complete submission in response to the Request for Information, normal values were based on the average normal values of co-operative exporters from a surrogate country.114
[169] It is noted that crude steel production in Romania for the year up until August 2003 was reported by the IISI to be over 3.7 mmt. Prorated over a full year this would come to approximately 5.6 mmt.115 Present capacity estimates from Ispat Sidex Galati S.A, indicate that it can produce 2.2 mmt of hot-rolled steel sheet per year.116 Canadian producers have also estimated that Ispat Sidex has 2.2 mmt of hot-rolled steel sheet production capacity, approximately 50 percent of which is exported.117
[170] Romania has not shipped subject hot-rolled steel sheet to Canada during the POR even with normal values. Since Ispat Sidex showed its interest in shipping to Canada through participation in the re-investigation but has not shipped subject goods even though it received normal values, the exporter has not demonstrated that it can compete at undumped prices.
[171] Metal Bulletin also reported in September 2003 that Romanian exports of hot-rolled steel sheet to China reached 260,000 metric tonnes in 2003. However, with their share of the Chinese quota effectively filled, the publication suggests Romania will have to seek out other export markets to absorb their hot-rolled steel sheet production.118
[172] There have been numerous anti-dumping measures against Romanian hot-rolled steel sheet, including those from: the E.U. in 2000, the U.S. in 2001, Argentina in 2002 and Peru in 2003.119 The E.U. safeguard measures implemented in September of 2002 also applied to Romania, mandating quota restrictions on hot-rolled steel sheet imports.120
[173] The Canadian producers provided documentation supporting the position that Romanian exporters have demonstrated a willingness to sell hot-rolled steel sheet into the U.S. at low prices in spite of existing anti-dumping measures (although exempted as a developing country from the section 201 safeguard).121
Algoma stated that:
"Romanian hot-rolled sheet is not subject to the U.S. safeguard measures, but is subject to a U.S. anti-dumping measure. The monthly average volume of Romanian hot-rolled sheet imports into the U.S. in 2001, the year before the section 201 safeguard measures were announced, was 4,299 MT. In the second half of 2002 (when many countries, but not Romania, had become subject to the section 201 duties) the monthly average was 15,651 MT, nearly a four-fold increase."122
[174] Evidence on the record indicates that the average selling price of the goods sold to the U.S., originating from Romania over this period in 2002 is significantly lower than the average price of hot-rolled steel sheet goods imported from all other sources. Given these figures, it is highly likely that these exports were indeed dumped.
[175] The significance of this activity is most notable when considering the disincentive Romania has in the U.S. given the threat of anti-dumping duty assessments. Anti-dumping tariffs on hot-rolled steel sheet in the U.S. are at 30 percent.123
[176] Export activity to the U.S. which had been dormant for over a year (following the U.S. anti-dumping measure in November 2001), picked up soon after the section 201 safeguard measures came into effect, illustrating Romania's willingness to promptly capitalise on an export opportunity in the North American market.
[177] This analysis of Romanian hot-rolled steel sheet activity in the U.S. provides evidence of continued interest in the North American market by Romanian producers within the last year. Romania has also demonstrated a recent interest in the Canadian market through its exports of steel `plate' to Canada.
[178] Ispat Sidex has historically demonstrated a willingness to participate in requests for information pertaining to CBSA anti-dumping proceedings. The lack of participation on the part of Romanian producers in this review can only indicate that the position of Ispat Sidex is not one of strength in offering evidence that it is not likely to dump hot-rolled steel sheet in the absence of the finding. While not compelling evidence on its own, the decision to not contribute to the proceedings with any evidence in support of their interests can only support the position of a likelihood to dump and not oppose it.
[179] One Canadian importer, Titus Steel Company Ltd., requested a product exclusion for certain flat hot-rolled carbon and alloy steel sheet and strip meeting the specification of "3 mm A/R 400 or 500 wear plate".124 The principal ground for the requested exclusion was that the specified products were not produced in Canada.
[180] The President, pursuant to subsection 76.03(8) of SIMA, may determine whether the expiry of the finding is unlikely to result in the continuation or resumption of dumping "in respect of any goods."125 In considering the likelihood of continued or resumed dumping with respect to the goods subject to the request for exclusion, the CBSA notes that the record contains very little information on Romania. The CBSA finds that the case for exclusion with respect to this country has not been adequately demonstrated.
[181] Based on a history of dumping evidence by anti-dumping measures in effect abroad, opportunistic export activity in the U.S., export orientation, demonstration of continuing interest and regular presence in the Canadian market (i.e. plate), the apparent inability to compete in Canada at undumped prices, evidence of the need to export to justify production volumes, the President determined that the expiry of the finding was likely to result in the continuation or resumption of dumping into Canada of certain hot-rolled steel sheet originating in or exported from Romania.
[182] The evidence on the record indicates that Russian producers will continue to rely heavily on export markets for sales of hot-rolled steel sheet. The evidence indicates that production of hot-rolled steel sheet far surpasses domestic consumption. In support of this reliance on export markets, the evidence on the record indicates that Russian producers have been quick to fill hot-rolled steel sheet quotas in both the E.U. and China.126
[183] The CRU Monitor for November 2003 suggests that Eastern Europe and `Commonwealth of Independent States' (CIS) country production of hot-rolled steel sheet in 2003 to date (first three quarters) was about 19 mmt. The consumption is believed to be only 9 mmt.127 More specifically, a World Steel Dynamics forecast projects Russian hot-rolled steel sheet production and consumption in 2004 to be 7.8 and 3.2 mmt respectively.128 The 3.2 mmt projected consumption represents only about a 3.2 percent growth over 2003 levels. In comparison, production projections for 2004 represent a 4 percent increase over 2003.
[184] The most reliable evidence on the record, the World Steel Dynamics forecast, indicates only moderate increases in projected consumption in Russia over the short to medium term. Consequently, this evidence suggests that the impact the domestic market will have in absorbing Russian production of hot-rolled steel sheet over this period is significantly weaker than the Russian producers have proposed.
[185] Independent market analysis obtained by the CBSA also detracts from the notion that the domestic Russian market is as burgeoning as suggested by the exporters. In speaking of the Russian and Ukrainian steel industry as a whole, Metal Bulletin reported in October 2003 that: "With home demand reduced to a fraction of its former levels, these countries have had to turn to external markets to ensure the survival of their steel industries."129
[186] An IISI report also projected only marginal increases in demand through 2004 for finished steel in Russia.130 Again, the evidence on the record does not support the position that domestic market trends in Russia are diverting the focus from exports towards the domestic demand.
[187] The Russian producers report capacity utilization for hot-rolled steel sheet at or near 100 percent for the most recently available period. The evidence on the record reveals that while capacity utilization may indeed be this high; maintenance of high capacity utilization rates is creating pressure to sell into the export market.
[188] There have been no subject imports from Russia during the POR. NLMK was the only Russian producer to participate in the re-investigation, which concluded on March 3, 2003. It was determined during that review that the submitted costs of hot-rolled steel sheet provided by NLMK could not be accepted as reasonably reflecting the costs associated with the production and sales of the subject goods. However, in recognition of their cooperation in participating in the review, NLMK received normal values based on the average normal value of like goods as determined for surrogate countries in accordance with a Ministerial Specification made pursuant to subsection 29(1) of SIMA. The exporter has not since shipped subject goods to Canada. Consequently, the Russian producers have demonstrated an apparent inability to compete in Canada at undumped prices. 131
[189] In an analysis of the market conducted in June 2003, Metal Bulletin Research reported that the average list price for hot-rolled steel sheet in the Russian domestic market for that month was $397 U.S.132 Export prices during the same period were significantly low.
[190] Russian exporters typically sell subject hot-rolled steel sheet in coil form, particularly in the export market. An analysis of sales of hot-rolled steel sheet (in coil form) reveals that the average export price consistently undercuts the average domestic selling price - at times by considerable amounts.
[191] The evidence on the record indicates that MMK has sold below its average domestic market-selling price to each of its top five export markets. In each instance the differences are significant. Similar differences were found for Severstal and NLMK.
[192] Russian producers have not provided evidence, which would clarify these price differentials. The disparity between selling prices is significant enough to suggest that hot-rolled steel sheet products are being sold in export markets below home market prices. Since the Russian exporters provided no evidence to the contrary, the facts available on the record indicates that Russian producers have been dumping hot-rolled steel sheet into their export markets.
[193] The administrative record contains significant evidence of anti-dumping measures imposed by other countries in respect of hot-rolled steel sheet from Russia including: Peru (1999), Columbia (2000), Egypt (2000), Mexico (2000), Thailand (2003) and Malaysia.133 It is also noted that other countries/territories, namely the U.S., China and the E.U., presently have quota measures in place to limit the amount of hot-rolled steel sheet from Russia.
[194] Clearly, the preponderance of the evidence in regards to protective action taken against Russian hot-rolled steel sheet over the last few years speaks to the merits of the concern of low-priced imports from Russia. This behaviour is a strong indication of Russia's propensity to dump hot-rolled steel sheet.
[195] On December 5, 2003, the E.U. terminated its safeguard measures.134 As conceded by NLMK, however, Russia, is still subject to an E.U. quota restriction for hot-rolled steel sheet and is thereby, not directly affected by this development.135
[196] A similar situation exists with respect to the United States section 201 safeguard measures. Here too, Russia already has a bilateral trade agreement with the U.S. which effectively limits the amount of hot-rolled steel sheet that Russian can export to the U.S.136
[197] Information obtained by the CBSA from independent sources suggests that recently added steel making capacity in Russia is geared towards higher-end products such as coated steels that require hot-rolled steel sheet as a substrate.137 There is no evidence on the record, however, which would indicate that these further worked products will coincide with a decrease in hot-rolled steel sheet sold to the merchant market.
[198] One Canadian importer, Titus Steel Company Ltd., requested a product exclusion for certain flat hot-rolled carbon and alloy steel sheet and strip meeting the specification of "3 mm A/R 400 or 500 wear plate".138 The principal ground for the requested exclusion was that the specified products were not produced in Canada.
[199] The President, pursuant to subsection 76.03(8) of SIMA, may determine whether the expiry of the finding is unlikely to result in the continuation or resumption of dumping "in respect of any goods."139 In considering the likelihood of continued or resumed dumping with respect to the goods subject to the request for exclusion, the CBSA notes that the record contains very little information on Russia. The CBSA finds that the case for exclusion with respect to this country has not been adequately demonstrated.
[200] Based on excess production capacity in Russia, export dependency and continuing pressure to export to maintain high capacity utilization rates in light of insufficient domestic demand, the apparent inability to compete in Canada at undumped prices, the tendency of Russian producers to dump into their export markets and the significant number of anti-dumping and other related trade measures currently in place in respect of Russian origin hot-rolled steel sheet, the President determined that the expiry of the finding was likely to result in the continuation or resumption of dumping into Canada of certain hot-rolled steel sheet originating in or exported from Russia.
[201] As with all producers in the Named Countries, hot-rolled steel sheet is predominantly sold by USSK in coil, rather than sheet form. 140 The recent trend is that almost all volume of total sales to the merchant market is in coil form.141
[202] USSK's domestic sales are significantly low in comparison of what was sold in the total export market. Evidence on the record indicates that USSK is clearly dependent on hot-rolled steel sheet exports to support its associated levels of production.
[203] The amount of hot-rolled steel sheet (coil form) produced for the merchant market and sold on the export market in 2003 (prorated) will exceed 2002 levels. Production destined for the merchant market of hot-rolled coil in 2002 is reported by USSK to be near 1.4 mmt. In 2003, the prorated figure comes to closer to 1.5 mmt.142
[204] USSK's submission illustrates the production trends of downstream products are rising. In the case of cold-rolled steel, the projected increase in 2003 from 2002. Galvanized sheet is also projected to increase.
The Slovak Republic's accession to the E.U. will mandate production caps below current levels or reported levels during the POR.
[205] Consequently, the stipulations for accession to the E.U. and the resulting improvement in the Slovak Republic's access to that market cannot be seen as developments likely to cause any increase in the propensity of USSK to dump hot-rolled steel sheet to Canada, in the event that the finding is allowed to expire.
[206] When examining the conduct of USSK in the domestic versus the export market, it is apparent that average prices of hot-rolled steel sheet (coil form) in the export market are comparatively lower than those in the domestic market since 2002. Indeed, each of the top five export markets detailed in USSK's submission report average hot-rolled steel sheet selling prices below those in the domestic market in 2002 and the first eight months of 2003. The amount of difference in those averages is in many cases significant. Product mix could in part explain this discrepancy. However, USSK has not provided any substantive evidence to clarify these differentials.
[207] The Slovak Republic is presently subject to anti-dumping measures for hot-rolled steel sheet in two countries: Argentina and Thailand. The Argentinean measure dates back to the year 2000 and pre-dates the acquisition of USSK by U.S. Steel. USSK states that the measures imposed by Thailand in 2002 were in respect of a re-sale of goods sold by USSK to a European customer. USSK maintains they have never sold directly to Thailand and have since "instituted a requirement that each customer must identify at the time of purchase, the country of destination for all steel it orders."143
[208] A Commission of the European Communities investigation was commenced in December 2001 and concluded in February 2003 with a recommendation to the E.U. Council which included a positive finding of dumping against the Slovak Republic in respect of hot-rolled steel sheet. The results of the investigation revealed a dumping margin of 25.8 percent, expressed as a percentage of the Cost, Insurance and Freight (CIF) import price at the Community border.144 Anti-dumping measures were not put in place because it was ruled that the E.U. safeguards, which included hot-rolled steel sheet and were already in effect (2002), would have precedence over this determination. Since no anti-dumping duties were imposed, the investigation was terminated in March 2003, 15 months after the investigation was initiated.
[209] USSK has recently demonstrated an interest in the North American hot-rolled steel sheet market. The Canadian producers identified low priced hot-rolled steel sheet exports from the Slovak Republic to the U.S. in comparison with hot-rolled steel sheet exports from other countries, during the period following the imposition of the U.S. section 201 safeguards, from which the Slovak Republic was excluded.145 This demonstrates a recent opportunistic behaviour and continued interest in the North American market in respect of hot-rolled steel sheet.146
[210] USSK argued that there is no incentive to dump hot-rolled steel sheet into Canada given that it has no desire to cause disruption in a market, which is occupied by its parent company, U.S. Steel (Pittsburgh). U.S. Steel is a noted seller of hot-rolled steel sheet to Canada. It is conceivable, however, that there may be instances where U.S. Steel is not competitive in a sales negotiation and USSK could enter the Canadian market and offer more competitive prices, likely at dumped levels.
[211] USSK has stated that its lack of hot-rolled steel sheet shipments during the POR is attributable to strategic reasons. The company asserts that the North American market is simply not a focus for USSK exports. USSK supports this notion with respect to other products such as coated sheet and tin plate, also produced by the company, which have not been exported to Canada over the POR even though no anti-dumping measures are in place against them.147
[212] In analysing the evidence on the record, the facts available indicate that the lack of subject shipments to Canada over the POR reveals that in spite of participating in the normal value review, which concluded on March 3, 2003, USSK has demonstrated an apparent inability to compete in Canada at undumped prices.
[213] While USSK has stated that its propensity to dump hot-rolled steel sheet is lessened by the fact that their corporate strategy is shifting towards `higher-end' steel products, which use hot-rolled steel sheet as a substrate, current trends illustrated in USSK's submission do not entirely support this position.
[214] One Canadian importer, Titus Steel Company Ltd., requested a product exclusion for certain flat hot-rolled carbon and alloy steel sheet and strip meeting the specification of "3 mm A/R 400 or 500 wear plate".148 The principal ground for the requested exclusion was that the specified products were not produced in Canada.
[215] The President, pursuant to subsection 76.03(8) of SIMA, may determine whether the expiry of the finding is unlikely to result in the continuation or resumption of dumping "in respect of any goods."149 In considering the likelihood of continued or resumed dumping with respect to the goods subject to the request for exclusion, the CBSA notes that the record contains very little information on the Slovak Republic. The CBSA finds that the case for exclusion with respect to this country has not been adequately demonstrated.
[216] Based on the strong export dependency of Slovak producers, the pressure to export due to insufficient domestic demand, the recent evidence of dumping in major export markets, the apparent inability to export hot-rolled steel sheet to Canada at undumped prices and opportunistic presence demonstrated in the North American market in respect of hot-rolled steel sheet, the President determined that the expiry of the finding was likely to result in the continuation or resumption of dumping into Canada of certain hot-rolled steel sheet originating in or exported from the Slovak Republic.
[217] For the purpose of making a determination in this expiry review investigation, the CBSA 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 January 22, 2004, pursuant to paragraph 76.03(7)(a) of SIMA, the President of the Canada Border Services Agency determined that the expiry of the finding made by the Canadian International Trade Tribunal on July 2, 1999, in inquiry No. NQ 98-004 concerning certain flat hot-rolled carbon and alloy steel sheet and strip, originating in or exported from Romania, the Russian Federation and the Slovak Republic, was likely to result in the continuation or resumption of dumping of the goods into Canada.
[218] On that same note, the President determined that the expiry of the finding was unlikely to result in the continuation or resumption of dumping into Canada of certain flat hot-rolled carbon and alloy steel sheet and strip originating in or exported from France.
[220] On January 23, 2004, the Tribunal commenced its inquiry to determine whether the expiry of the finding is likely to result in injury or retardation with respect to goods from Romania, the Russian Federation or the Slovak Republic. The Tribunal will make its decision by June 30, 2004.
[221] If the Tribunal determines that the expiry of the finding with respect to goods from Romania, the Russian Federation or the Slovak Republic is likely to result in injury or retardation, the finding will be continued 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 certain hot-rolled steel sheet.
[222] If the Tribunal determines that the expiry of the finding with respect to the goods from Romania, the Russian Federation or the Slovak Republic is unlikely to result in injury or retardation, the finding will be rescinded in respect of those goods. Anti-dumping duties would no longer be levied on importations of certain hot-rolled steel sheet beginning on the date the finding is rescinded.
[223] Given that the President has determined that the expiry of the finding in respect to certain flat hot-rolled carbon and alloy steel sheet and strip originating in or exported from France was unlikely to result in the continuation or resumption of dumping of the goods, the Tribunal will not consider these goods in its determination of the likelihood of material injury or retardation and will issue an order rescinding the finding as to respect to those goods.
For further information, please contact Robert Veilleux at:
Mail :
Canadian Border Services Agency
Anti-dumping and countervailing directorate
100 Metcalfe Street, 11th floor
Ottawa (Ontario) K1A 0L8 Canada
Phone
(613) 954-1666
Fax
(613) 941-2612
Email
robert.veilleux@ccra-adrc.gc.ca
Website
www.ccra-adrc.gc.ca/sima-lmsi/
M.R. Jordan
Head
Customs Trade, Anti-dumping and Countervailing and Appeals
1 Exhibit 9. Customs Notice N-502, March 26, 2003.
3 Exhibit 1. Statement of Reasons - Hot-Rolled I, June 1, 1999.
4 Exhibit 104. Algoma response to ERQ, question A2.
5 Exhibit 92. Dofasco response to ERQ, question A2.
6 Exhibit 126. Ipsco response to Producer ERQ, question A2.
7 Exhibit 102. Ispat Sidbec response to Producer ERQ, question A2.
8 Exhibit 94. Stelco response to ERQ, question A2.
9 Exhibit 152. Apparent Canadian Market Statistics.
10 Exhibit 152. Apparent Canadian Market Statistics.
11 Exhibit 152. Apparent Canadian Market Statistics.
12 Exhibit 153. Updated Import Statistics for Day 50.
13 Exhibit 2. CITT finding, July 2, 1999, page 8.
14 Exhibit 115. Arcelor exporter response to ERQ, page 3.
15 Exhibit 115. Arcelor exporter response to ERQ, page 15.
16 Exhibit 100. JSC Severstal exporter response to ERQ, Annex B-11, page 395 in response to question B-11, page 13.
17 Exhibit 2. CITT finding, July 2, 1999. Page 8.
18 Exhibit 96. USSK exporter response to ERQ, page 14.
20 Exhibit 39. Titus Steel Co. Ltd. Response, question B5.
21 Exhibit 177. MMK supplementary response in clarification of captive portion of production as per CBSA request.
22 Exhibit 195. Section 201 termination, December 4, 2003.
25 Exhibit 178. Ispat case arguments. Page 11, paragraph 34.
26 Exhibit 185. Stelco case arguments. Page 7, paragraph 18.
27 Exhibit 185. Stelco case arguments. Page 6, paragraph 15.
28 Exhibit 162. Supplementary information filed on behalf of Dofasco. Appendix 10, page 9.
29 Exhibit 115. Arcelor ERQ response, page 12.
30 Exhibit 115. Arcelor ERQ response, pages 18 and 19.
31 Exhibit 188. Arcelor case arguments, page 15.
32 Exhibit 188. Arcelor case arguments, page 15.
33 Exhibit 115. Arcelor ERQ response, page 17.
34 Exhibit 115. Arcelor ERQ response, page 17.
49 Exhibit 188. Table 6, page 27.
51 Exhibit 192. Severstal and MMK Case arguments. Page 2.
55 Exhibit 100. Severstal ERQ Response, page 19. www.metaltrade.ru
57 Exhibit 98. Magnitogorsk ERQ Response, page 15.
58 Exhibit 100. Severstal ERQ Response, page 18.
59 Exhibit 100. Severstal ERQ Response, page 18.
63 Exhibit 100. Severstal ERQ Response, page 16.
66 Exhibit 100. Severstal ERQ Response, page 21.
67 Exhibit 98. Magnitogorsk ERQ Response, page 14.
69 Exhibit 96. Annex B1a and B1b and B2 regarding capacity utilization trends.
81 Exhibit 190. Page 10, paragraph 41.
82 Exhibit 190. Page 11, paragraph 45.
83 Exhibit 170. CRU Monitor Report, November 2003, page 2.
84 Exhibit 115. Appendix B-17. CRU International Review. October 2003. Exhibit 170. Pages 1-6.
86 Exhibit 170. Page 6 of CRU International Monitor. Also Exhibit 115. Appendix B17, page 4.
87 Exhibit 115. Arcelor Submission. Appendix B17, page 4.
88 Exhibit 152. Apparent Canadian Market, 5 pages.
89 Exhibit 181. Algoma case arguments, page 6.
90 Exhibit 170. Page 2 of CRU International Monitor.
91 CRU Report extract: Joint Plant Committee (India), Commentary, "Capacity, Demand and Price Hike" (22 August 2003), online: Steelrx.com, www.steelrx.com/Indian_Economic_Policy33.cfm
92 Exhibit 72. "China on the up, but just a blip?" Metal Bulletin Research: Emerging Steel Markets Monthly issue 9 (19 June 2003), page 3.
93 Exhibit 170. Page 6 of CRU report for November 2003.
94 Exhibit 170. Page 2 of CRU International Monitor.
95 Exhibit 80. International Iron and Steel Institute, Report, "Monthly Statistics - Figures for August 2003" (18 September 2003), online: International Iron and Steel Institute www.worldsteel.org/csm_text/56.
96 Exhibit 208. Page 17, paragraph 54.
98 Exhibit 208. Arcelor Reply Submission. Page 17, paragraph 56.
102 Exhibit 115. Arcelor Submission. Page 26.
104 Exhibit 115. Arcelor ERQ response. Appendix 1.
105 Note : Arcelor has pointed out in its Exhibit 208 (beginning with page 18, paragraph 59) rebuttal that the producers briefs erroneously calculated selling prices net of freight. Arcelor's submission in Exhibit 115 (response to B8) clearly states that selling prices in the appendices are ex-works so the calculated freight would have to be added on, not subracted to get total selling prices.
106 Exhibit 115. Arcelor submission. Appendices 1-5.
107 Exhibit 188. Arcelor case arguments. Pages 11 and 21.
108 Exhibit 188. Arcelor case arguments. Page 11.
109 Exhibit 203. Stelco Reply Submission. Page 7, paragraph 24.
110 Exhibit 188. Arcelor case arguments. Page 28.
111 Exhibit 201. Algoma Steel Reply Submission. Pages 2-3, paragraphs 11-13.
112 Exhibit 39. Titus Steel Co. Ltd Response, question B13.
113 Exhibit 9. Customs Notice N-502.
114 Exhibit 40. Ispat Sidex Galati Ruling Letter. March 3, 2003.
115 Exhibit 80. IISI steel production figures. Page 3.
117 Exhibit 185. Case arguments Stelco.
118 Exhibit 168. Attachment B10. Pages 3-4.
119 The EU finding was identifed as `flat rolled products' which may or may not include the subject goods definition.
121 Exhibit 169. Attachment B18.
122 Exhibit 181. Algoma steel, pages 16-17.
123 Exhibit 175. Tab 6, page 1.
124 Exhibit 39. Titus Steel Co. Ltd. Response , question B5.
125 Special Import Measures Act, R.S.C. 1985, c. S-76.03(8) [SIMA].
126 Exhibit 72. Metal Bulletin's Iron and Steel News, "Russia fills 2003 EU quotas early" (8 September 2003), online: Metal Bulletin www.metalbulletin.com
128 Exhibit 100. Annex B-17. Pages 405-406.
129 Exhibit 72. Metal Bulletin's Iron and Steel News, "Go with the flow" (15 October 2003), page 2; online: Metal Bulletin www.metalbulletin.com
130 Exhibit 74. International Iron and Steel Institute, Conference Report, "IISI-37/04 Short Range Outlook" (6 October 2003), page 6; online: International Iron and Steel Institute www.worldsteel.org/news/42.
131 Counsel for MMK and Severstal cited article 2.2.1.1 of the WTO Anti-Dumping Agreement which asserts that a member should accept the exporter or producer's costs provided the information submitted is: "in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration." The concerns of the CBSA are reflected in the second part of this requirement. That is, the CBSA has not been convinced that the standards adhered to by those Russian exporters offering a submission have included figures, which "reasonably reflect the costs associated with the production and sale of the product under consideration."
132 Exhibit 72. China on the up, but just a blip?" Metal Bulletin Research: Emerging Steel Markets Monthly issue 9 (19 June 2003), p. 1.
133 Exhibit 62. Page 14 and Exhibit 144, pages 531-532. WTO notifications also indicate India has measures in place against Russia for hot-rolled products.
134 The administrative record was opened to allow the inclusion of this development.
135 Exhibit 216. NLMK supplementary submission. Page 2, paragraph 7.
136 Exhibit 216. Page 1, paragraph 4.
137 Exhibit 72. Metal Bulletin's Iron and Steel News, "Russian mills target growing market for coated sheet" (1 September 2003), online: Metal Bulletin www.metalbulletin.com
138 Exhibit 39. Titus Steel Co. Ltd. Response, question B5.
139 Special Import Measures Act, R.S.C. 1985, c. S-76.03(8) [SIMA].
140 Identified in ERQ responses as `category A' and `category B' respectively.
141 Exhibit 96. USSK Submission. Annex 14.
142 Exhibit 96. USSK ERQ Response. Appendices 1-6.
145 Exhibit 178. Ispat Case Arguments.
146 Exhibit 169. Attachment B18.
147 Exhibit 205. USSK Reply Submission. Page 14.
148 Exhibit 39. Titus Steel Co. Ltd. Response, question B5.
149 Special Import Measures Act, R.S.C. 1985, c. S-76.03(8) [SIMA].
