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OTTAWA, February 4, 2005
RR-2004-003
4258-28
Concerning a determination under paragraph 76.03(7)(a) of the
Special Import Measures Act regarding
CERTAIN CARBON STEEL WELDED PIPE ORIGINATING IN OR EXPORTED FROM THE REPUBLIC OF KOREA
DECISION
On January 20, 2005, 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 order made by the Canadian International Trade Tribunal on June 5, 2000, in Review No. RR-99-004 concerning certain carbon steel welded pipe originating in or exported from the Republic of Korea was likely to result in the continuation or resumption of dumping of the goods into Canada.
This statement of reasons is also available in French.
Cet énoncé des motifs est également disponible en français.
TABLE OF CONTENTS
- SUMMARY
- BACKGROUND
- SUMMARY OF THE LAST ORDER
- PRODUCT DEFINITION
- CLASSIFICATION OF IMPORTS
- PERIOD OF REVIEW
- CANADIAN INDUSTRY
- CANADIAN MARKET
- ENFORCEMENT
- PARTICIPANTS
- INFORMATION USED BY THE PRESIDENT
- POSITION OF THE PARTIES
- CONSIDERATION AND ANALYSIS
- CONCLUSION
- FUTURE ACTION
- INFORMATION
[1] On September 22, 2004, the Canadian International Trade Tribunal (Tribunal), pursuant to subsection 76.03(3) of the Special Import Measures Act (SIMA), initiated an expiry review of its order made on June 5, 2000, in Review No. RR-99-004 (Order). The Order concerned certain carbon steel welded pipe originating in or exported from the Republic of Korea (Korea). The purpose of the expiry review is to determine whether the Order should be continued or rescinded. The Order is scheduled to expire on June 5, 2005.
[2] As a result of the Tribunal's decision to initiate a review of its order, the President of the Canada Border Services Agency (President) initiated an investigation on September 23, 2004, to determine whether the expiry of the Order is likely to result in the continuation or resumption of dumping of the goods from Korea.
[3] On January 20, 2005, the President determined, pursuant to paragraph 76.03(7)(a) of SIMA, that the expiry of the Order was likely to result in the continuation or resumption of dumping of the goods originating in or exported from Korea.
[4] An anti-dumping investigation of certain carbon steel welded pipe, originating in or exported from Korea, was initiated on September 14, 1982, following a complaint filed by the Canadian producers. On June 28, 1983, the Anti-dumping Tribunal issued an injury finding1 subsequently on June 27, 1984, the Deputy Minister of National Revenue issued a final determination of dumping concerning the subject pipe originating in or exported from Korea.
[5] Since then, the Tribunal has conducted three reviews, namely in 1990 in Review No. RR-89-008, 1995 in Review No. RR-94-004 and 2000 in Review No. 99-004, and in each instance has continued the anti-dumping measure. An amendment was made in 2000 to exclude specific types of carbon steel welded pipe.
[6] Carbon steel welded pipe of similar specifications from several other countries is subject to anti-dumping measures. Most recently the Tribunal continued in Review No. RR-2000, on July 24, 2001, its order in respect of carbon steel welded pipe from Argentina, Brazil, India, Romania, Chinese Taipei, and Thailand.
[7] As part of its enforcement responsibilities, the Canada Border Services Agency (CBSA) completed its last re-investigation of normal values and export prices of carbon steel welded pipe from Korea and the above-noted countries, on March 4, 2004. The results of this re-investigation were made public in Customs Notice N-562 issued on March 31, 2004.2
Tribunal Order No. RR-99-004
[8] On June 5, 2000, upon review, the Tribunal continued, with amendments, its order issued on June 5, 1995 (in review No. RR-94-004), regarding certain carbon welded steel pipe originating in or exported from Korea. The amendment excluded lightwall sprinkler pipe that meets the requirements of particular technical specifications and falls within certain sizes.
[9] In conducting its analysis, the Tribunal took into consideration the following facts: Korea's enormous production capacity for the subject goods, the fact that Korean production is export-oriented, a continued presence of Korean pipe in the Canadian market in spite of on-going anti-dumping duties, the price differentiation between Korean landed prices for pipe in the United States of America (United States) versus Canada, the past behaviour of Canadian importers in shifting sources of supply, the high-quality reputation of Korean products, the anti-dumping measures imposed by other countries on the same goods, the Canadian industry's performance, the commodity nature of the product and ensuing competitive conditions, and the vulnerability of the Canadian producers to price undercutting. The Tribunal also considered the manufacturing status of a specific pipe which was the subject of an exclusion request by an importer. On the basis of the evidence, the Tribunal concluded there was a real possibility that the domestic market conditions would significantly deteriorate and that the Canadian industry's situation would worsen should the order expire. As to the exclusion request, the Tribunal considered it was warranted since the demand was not being fulfilled, nor could it be fulfilled, by the Canadian producers. In conclusion, the Tribunal ruled that there was a likelihood that the dumping from Korea would continue or resume and that there was a likelihood of injury to the domestic industry from such dumping. As such, the Tribunal continued the order with an amendment to provide for the excluded products.
[10] The goods subject to this expiry review are defined as:
- Carbon steel welded pipe in the nominal size range 12.7 mm to 406.4 mm (1/2 in. to 16 in.) inclusive, in various forms and finishes, usually supplied to meet ASTM A53, ASTM A120, ASTM A252, ASTM A589 or AWWA C200-80 or equivalent specifications, including water well casing, piling pipe, sprinkler pipe and fencing pipe, but excluding oil and gas line pipe made to API specifications exclusively, originating in or exported from the Republic of Korea, with an amendment to exclude lightwall sprinkler pipe that meets the requirements of ASTM A135 and/or A795 with the following dimensions:
- non-threadable - nominal size of 1 1/4 in. and wall thickness of 0.076 in.; nominal size of 1 1/2 in. and a wall thickness of 0.076 in.; nominal size of 2 in. and wall thickness of 0.076 in.; nominal size of 2 1/2 in. and wall thickness of 0.076 in.; nominal size of 3 in. and wall thickness of 0.076 in.; and nominal size of 4 in. and wall thickness of 0.086 in.; and
- threadable - nominal size of 1 in. and wall thicknesses of 0.093 in. to 0.123 in.; nominal size of 1 1/4 in. and wall thicknesses of 0.093 in. to 0.131 in.; nominal size of 1 1/2 in. and wall thicknesses of 0.098 in. to 0.135 in.; and nominal size of 2 in. and wall thicknesses of 0.103 in. to 0.140 in.;
- and subject to the condition that the pipe be stencilled to indicate that it is approved by the Factory Mutual Research Organization and is listed by Underwriters' Laboratories, Inc. and Underwriters' Laboratories of Canada.
- Carbon steel welded pipe meeting the above specifications and sizes will be referred to hereinafter in this report as "standard pipe at issue."
[11] The American Iron and Steel Institute classifies steel pipe into the following groups according to its end uses: standard pipe, pressure pipe, line pipe, structural pipe, mechanical pipe and oil country tubular goods.3 Standard pipe is generally intended for the low-pressure conveyance of steam, water, natural gas, air and other liquids and gases in plumbing and heating applications and is produced to the American Society for Testing and Materials (ASTM) specifications that prescribe chemical and mechanical properties.
[12] The standard pipe at issue is used in large part for plumbing and heating applications, commonly with a standard black or galvanized finish. For these applications, the most common sizes are diameters of one to eight inches. The ASTM A53 specification is considered to be the highest quality and is suitable for welding, coiling, bending and flanging. Other uses for the standard pipe at issue include piling pipe (ASTM A252), water well casing (ASTM A589 or AWWA C200-80) and sprinkler pipe (ASTM A795).4
[13] The standard pipe at issue is generally produced in mills using either continuous weld (CW) or electric resistance weld (ERW) processes. Manufacturing using either process begins with strips of steel sheet that have been slit from coils of flat steel. The CW process can be used to manufacture pipe with a diameter of up to 4.5 in. while the ERW process can be used to produce pipe with a diameter up to 24 in. CW pipe and ERW pipe are interchangeable, although certain users prefer ERW to CW pipe.
[14] After the basic pipe is formed using either the CW or the ERW process, it is cut to length, straightened and tested, and the pipe ends are processed, i.e. cropped, faced and reamed. The surface of the pipe will be finished, if required, with such finishes as lacquer or zinc (galvanizing). Other operations include stencilling and bundling of the pipe.
[15] Standard pipe at issue is normally imported into Canada under the following Harmonized System classification numbers5:
7306.30.10.14 7306.30.90.14 7306.30.90.29
7306.30.10.24 7306.30.90.19 7306.30.90.34
7306.30.10.34 7306.30.90.24 7306.30.90.39
[16] The period of review (POR) for this expiry review is January 1, 2001 to June 30, 2004.
[17] The Canadian industry for standard pipe at issue is currently comprised of the following four companies:
- Ispat Sidbec Inc.
- IPSCO Inc.
- Stelpipe Ltd.
- Prudential Steel Ltd.
[18] Ispat Sidbec Inc. (Ispat) of Contrecoeur, Quebec, was incorporated in 1928 and was purchased by Ispat International N.V., Rotterdam, Netherlands in 1994 and is a wholly owned subsidiary of that company which is in turn now part of Mittal Steel. Ispat also owns several subsidiaries. The company has been producing standard pipe using the CW process at its Montreal mill since 1960. The pipe produced at the Montreal facility range between 0.5 in. and 4 in. inclusively in nominal diameter size. Pipe is also produced at one of Ispat's subsidiaries, Delta Tube in Lasalle, Quebec. The pipe is produced from Ispat's hot rolled sheets using an ERW process and is shipped to Ispat's Montreal facility for finishing. The pipe produced by Delta Tube range from 2 in. to 6 in. in diameter and are sold through Ispat.
[19] IPSCO Inc. (IPSCO) was incorporated in 1956 as Prairie Pipe Manufacturing Co. Ltd. It commenced operations in 1957 with the completion of an ERW pipe mill in Regina, Saskatchewan. In 1959, the company acquired the assets of Inter-Provincial Steel and Pipe Corp. The company has been operating under the IPSCO name since 1984 and has ERW production facilities in Regina, Saskatchewan, Red Deer, Alberta and Calgary, Alberta.
[20] Stelpipe Ltd. (Stelpipe) and its previous subsidiaries have produced standard pipe in Canada since 1962. The standard pipe at issue is currently produced at Stelpipe's facilities in Welland, Ontario. The standard pipe at issue is produced under the ERW process and ranges from 0.5 in. to 8 in. in diameter.
[21] Prudential Steel Limited (Prudential) was incorporated in 1966 in Alberta and commenced operations with one mill in Calgary manufacturing carbon steel pipe for the industrial market. Additional mills were subsequently added over the years and in 2000 Maverick Tube Corporation of Chesterfield, Missouri purchased the company and Prudential become a wholly owned subsidiary. Prudential currently has production facilities in Calgary, Alberta and produces mostly oil well casing, API line pipe and hollow steel structurals.6 It also manufactures some standard pipe using the ERW process in diameter sizes ranging from 2 3/8 in. to 12 in.
[22] The details of the Canadian market are presented in the tables below. During the POR, the apparent Canadian market for the standard pipe at issue decreased from 2001 to 2003, but began to recover in 2004. As indicated in Table 1 below, the Canadian industry collectively produced and sold approximately 62,000 tonnes7 of the standard pipe at issue in the Canadian market8 in 2003. Collectively they accounted for nearly 45% of the Canadian market.
Table 1: Apparent Canadian Market for Standard Pipe at Issue
Source |
2001 |
2002 |
2003 |
Jan. - June 2004 |
||||
Producers |
Tonnes |
Market Share |
Tonnes |
Market Share |
Tonnes |
Market Share |
Tonnes |
Market Share |
Total Canadian Producers |
80,117 |
37.13% |
66,062 |
38.00% |
61,940 |
44.75% |
36,257 |
40.82% |
Imports* |
||||||||
Korea |
1,191 |
0.55% |
2,114 |
1.22% |
244 |
0.18% |
297 |
0.33% |
All other countries |
134,486 |
62.32% |
105,689 |
60.78% |
76,223 |
55.07% |
52,274 |
58.85% |
Total Market** |
215,794 |
100% |
173,865 |
100% |
138,407 |
100% |
88,828 |
100% |
- * To determine the volume of standard pipe at issue from non-subject countries sampling was used.
- ** Rounding of previous lines may skew totals
[23] During the POR, anti-dumping duties equal to 19% of the export price were levied on all imports of standard pipe at issue from Korea, in the following amounts:9
Year |
Anti-dumping * Duties Levied |
2001 |
$ 98,704 |
2002 |
$182,042 |
2003 |
$ 24,119 |
2004 (Jan.- June) |
$ 35,538 |
* All figures are in Canadian Dollars
[24] At the start of this 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, importers and exporters. 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.
[25] Expiry Review Questionnaires (ERQs) were put on the CBSA website and was available to the Canadian producers of standard pipe at issue, exporters, importers. The ERQs requested information necessary for the President to consider in relation to 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 provide case arguments regarding the likelihood of continued or resumed dumping of the goods if the Order expired. In addition, persons were provided an opportunity to submit reply submissions providing their comments in respect of the case arguments submitted by other persons.
[26] All four Canadian producers participated in the expiry review and provided a response to the producer ERQ. Two of the Canadian producers, through their respective counsel, also provided case arguments supporting the position that the dumping of subject goods would continue or resume should the Order expire. No ERQ responses, representations or comments were submitted by or on behalf of the Korean exporters or traders.
[27] With regard to the participation of importers of the subject goods, two responses to the importer ERQ were received, from Protin Import Ltd. of Vancouver, British Columbia, and ITT Industries of Canada L.P. of Toronto, Ontario. No subsequent case arguments or reply submissions were received from these importers and no other importers provided information.
INFORMATION USED BY THE PRESIDENT
[28] The information used and considered by the President for purposes of this expiry review proceeding is contained on the administrative record. The administrative record includes the exhibits recorded on the CBSA's Exhibits 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 believe is relevant to the decision. This information consists of expert analysts reports10, excerpts from trade magazines11 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 as well as responses to the ERQs and case arguments.
[29] For purposes of an expiry review, the CBSA sets a date after which no new information may be placed on the administrative record. This is referred to as the "closing of the record date." For purposes of this expiry review, the administrative record closed on November 12, 2004. Participants were provided the opportunity to prepare case arguments and reply submissions based on the information that was on the administrative record as of the closing of the record date.
Parties Contending that Continued or Resumed Dumping is Likely
[30] All four Canadian producers provided responses to the ERQs, and two provided case arguments for the position that the dumping of subject goods from Korea would continue or resume should the Order expire.
Positions of the Canadian Producers
[31] Ispat submitted that the Korean producers have been unable to sell into the Canadian market at undumped prices. To support this contention, Ispat referred to CBSA's enforcement data12 showing that all importations of subject goods made during the period of January 1, 2001 to June 30, 2004 have been dumped. The company claimed that this constant presence, at dumped prices, of the standard pipe at issue in the Canadian market is a clear indication that this presence will continue and increase should the Order expire.
[32] Ispat also commented on the fact that none of the Korean producers has obtained normal values during the period the Order has been in force including the last CBSA reinvestigation. Ispat contended that the Korean exporters have been absorbing the anti-dumping duties (equivalent to an export price advance of 19%) and have sold the subject pipe during that same time period at price levels that have been significantly lower than those prevailing into the Canadian market.13 They viewed these pricing practices as revealing of the Korean producers' behaviour to significantly undercut Canadian domestic prices, despite the improved pricing in the market for these products in the last few years.
[33] Ispat contended that the situation will only worsen since the Korean exporters will have to compete with even lower priced imports of standard pipe from countries such as the People's Republic of China (China) and Turkey. Both Ispat and IPSCO expressed serious concerns about the increasing presence in the Canadian market of very low-priced imports from these two countries which are offered in substantial volumes and at prices considerably lower than those of the Korean imports.
[34] Given the known habits among Canadian importers to shift to new low-priced sources of supply to replace the old sources that had become less competitive because of anti-dumping duties, they contended that the only factor preventing the Korean producers from selling further below market prices is the Order. They pointed out that this historical behaviour pattern was also described by the Tribunal in previous reviews. The producers claimed that the expiry of the Order will allow the Korean producers to reduce prices by at least an additional 19% (the amount of the anti-dumping duty currently imposed) in order to compete with the new low-priced imports and thus capture a larger share of the Canadian market.
[35] Ispat referred to the Tribunal's remarks in Review RR-99-00414 regarding Korea's reputation for being a more reliable and higher-quality supplier of standard pipe than many of the low-priced countries and, consequently, a preferred source for some Canadian importers and distributors. The Tribunal further stated that standard pipe is considered a commodity product and is subject to intense competition where small price differentials in the range of 2% and 3% are determining factors in gaining additional sales.
[36] Both Ispat and IPSCO are persuaded that the Korean producers will react aggressively to the emerging market conditions and will try to compete with the low-priced imports in the absence of the dumping restrictions, given their continued interest in the Canadian market. They claimed that this will inevitably lead to a considerable increase in the margins of dumping.
[37] The Canadian producers stated Korea has significant production capacity and substantial volumes of standard pipe for export. Both IPSCO and Ispat noted that the combined production capacity is many times larger than Canada's entire market for standard pipe. Ispat stated that the sheer size of standard pipe production in Korea reinforces the likelihood of resumed dumping should the Order expire.
[38] Ispat referred to the status of the Korean market for standard pipe as flat or declining15 given the low level of current and future activities within the Korean construction sector. It also referred to the low-priced competition in the Korean market, which may constitute an additional reason for Koreans to turn even more to export markets such as Canada where current prices are at higher levels.
[39] Ispat claimed that Korean producers export nearly 25% of their annual production. It pointed out to the high volume of standard and other pipe products that have been exported this year by the Korean producers to Canada and the United States. In the first 10 months of 2004, import permit data, as issued by International Trade Canada, show that Korea exported 14,705 tonnes of standard pipe and other pipe products to Canada. In 2004, exports of Korean welded tubular products to the United States have averaged 12,107 tonnes per month i.e. over 145,000 tonnes on a yearly basis.16
[40] Ispat further contended that the number reported for Canada could very well be understated given the known practice among Korean producers to dual stencil pipe products to indicate that it meets more than one set of technical specifications. For example, it cited that line pipe produced to the API 5L specification could also be certified as a standard pipe produced to the ASTM A53 specification since the requirements for line pipe are more stringent than those for standard pipe. Both Ispat and IPSCO claimed that the Korean pipe producers engage in this stencilling practice as a means of circumventing the anti-dumping measures.17 They also made reference to the Tribunal's remarks in the last review (RR-99-004) where the same alleged circumvention practices by Korean producers were identified as a factor in support of the propensity of Korean producers to resume dumping.
[41] Ispat and IPSCO submitted that Korean producers of subject pipe currently face problems selling to China, a key export market for Korea, and as such are forced to turn to other export markets.18 For many carbon steel products, China is a significant importer. However, China is now a major exporter of standard pipe to Canada and to the United States. According to Statistics Canada, for the first 8 month of 2004, China was the single largest exporter of standard pipe to Canada, shipping 35,802 tonnes. Chinese shipments of standard pipe to the United States for the same time period totalled over 150,000 tonnes. In addition, steel capacity is rapidly expanding in China and it is expected that the steel output will double by 2007. Ispat contended that the disappearance or limited access to the Chinese export market will only increase the likelihood of dumping in Canada should the Order expire.
[42] IPSCO further commented on the weakening demand that appears to be widespread in Asia and the presumably excess production in China. It contended that any excess inventory from Korea or like goods from China cannot be absorbed by the Chinese market and will likely find its way into the North American market.19 Ispat stated that the situation is exacerbated by the fact that there is new construction of standard pipe manufacturing facilities in several countries around the world, such as Malaysia and Bulgaria20 which will reduce export market opportunities for Korea and consequently reinforce the need to look for alternative markets like Canada should the Order expire.
[43] Ispat referred to the soft demand in the United States market for standard pipe in 200421 which is occurring at the same time that imports have increased by 20% over 2003. It contended that the increasing supply of welded tubular products in the United States, combined with the diminished demand and the United States finding in respect of standard pipe from Korea increase the likelihood that Korean exports will continue or resume dumping in Canada should the Order expire.
[44] Ispat argued that the Korean producers of standard pipe have the ability to produce standard pipe at issue and other pipe products in the same facilities and could easily switch production should they choose to do so. For example, they claimed that the Korean producers could easily shift the production dedicated to structural steel tubing which are currently subject to Canadian anti-dumping duties to the standard pipe at issue should the Order expire.22
[45] Ispat submitted that the evidence relating to numerous dumping actions and affirmative findings by Canadian authorities and other jurisdictions in the world on similar goods and other steel products in respect of Korea demonstrates a propensity to dump.23 IPSCO added that the various trade remedies in place in respect of this country make diversion of substantial volumes of standard pipe at issue to Canada inevitable if the Order expires and dumping will arise because of increased price competition.
[46] Paragraph 76.03(7)(a) of SIMA requires the President of the CBSA to determine whether the expiry of the Order in respect of goods of a country or countries is likely to result in the continuation or resumption of dumping of the goods. In making this determination, the President may consider the factors set out in subsection 37.2(1) of the Special Import Measures Regulations (SIMR).
[47] Guided by these factors and based on the documentation submitted by the various participants and the consideration of the information on the administrative record, the ensuing list represents a summary of the analysis:
- the production capacity of Korean producers is vast in comparison to the Canadian market;
- Korean exporters have maintained an interest and presence in the Canadian market despite anti-dumping measures in place;
- Korea is a net exporter of pipe and tube products;
- for Korean standard pipe at issue, the main price competition in the Canadian market is from other low-priced imports from countries such as China, whose market share has risen greatly in the past few years;
- anti-dumping duty has been assessed and collected on all imports of Korean standard pipe during the POR;
- there are a number of anti-dumping measures both in Canada and abroad in respect of similar steel products from Korea.
[48] As noted earlier, this is the fourth review concerning the anti-dumping measure in respect of standard pipe from Korea. While changes have occurred over time, many of the important factors that were taken into consideration in past expiry reviews remain valid today. One of these factors is the magnitude of Korea's production capacity in relation to the Canadian market.
[49] Korea has a significant production capacity for standard pipe at issue. The total production capacity of Korean mills producing pipe and tube products has been estimated to be approximately 4,000,000 tonnes24. These figures were derived primarily from the publication "Pipe and Tube Mills of the World (2001)."25 However, these figures refer to production of all types of pipe and tube, including many products other than standard pipe, which are made in the same facility using the same equipment, such as mechanical and structural tubing, oil well casing, etc. The production capacity for standard pipe alone is unknown, but even a small fraction of the total pipe and tube capacity noted above would exceed the entire Canadian market for standard pipe at issue.
[50] Information on the record shows that Korea has been a net exporter of pipe and tube products for a number of years.26 In 2001 and 2002, more than one quarter of all pipe and tube produced in Korea was exported.27 Import data shows that, in terms of volume and value, Korea was one of the top six sources of standard pipe at issue imported into Canada during the POR.28 Information on the record also shows Korea to be a major player in the standard pipe market in the United States.29 Clearly, the Korean exporters have a large volume of standard pipe available for export, they have an export orientation and they find the North American market attractive.
[51] Standard pipe is sold throughout the world primarily in the commercial and residential construction markets. It is noted that the demand for standard pipe in Korea has weakened recently. This situation may be further exacerbated in the near to medium term, as Korea's construction market is forecasted to become even more sluggish,30 with a predicted weakening demand for steel products used in construction.31 In that event, it is likely that more standard pipe will be available for export markets.
[52] As noted earlier, the apparent Canadian market for standard pipe at issue has experienced a weakened overall demand since 2001. Given that standard pipe is a commodity product, for which purchasing decisions are based on the best available price, importers have continued to search out the lowest cost product and source switch as necessary. Tables 2 and 3 below show the apparent Canadian market for standard pipe at issue as well as the average prices of these goods during the POR.
[53] As indicated in the tables, which show the major participants in the Canadian market, Korean imports held a larger portion of the Canadian market in 2001 and 2002 when their price levels were below $560 per tonne. As prices from Korea spiked in 2003 at $657 per tonne, import volumes declined. Volumes appear to be rebounding in 2004 as prices have dropped to $631 per tonne.32 These prices reflect the export price of the goods before applicable anti-dumping duty. An additional 19% was paid by the importer as anti-dumping duty, raising the landed price to the importer to $782 in 2003 and $751 in 2004. This compares to average prices for Canadian-produced pipe of $856 in 2003 and $1,051 in 2004.33
Table 2: Apparent Canadian Market for Standard Pipe at Issue
Source |
2001 |
2002 |
2003 |
Jan. - June 2004 |
||||
Tonnes |
Market Share |
Tonnes |
Market Share |
Tonnes |
Market Share |
Tonnes |
Market Share | |
Total Canadian Producers |
80,117 |
37.13% |
66,062 |
38.00% |
61,940 |
44.75% |
36,257 |
40.82% |
Imports* |
||||||||
Korea |
1,191 |
0.55% |
2,114 |
1.22% |
244 |
0.18% |
297 |
0.33% |
China |
10,130 |
4.69% |
12,399 |
7.13% |
19,701 |
14.23% |
16,450 |
18.52% |
United States |
108,217 |
50.15% |
78,907 |
45.38% |
47,947 |
34.64% |
30,934 |
34.82% |
All other countries |
16,138 |
7.48% |
14,384 |
8.27% |
8,575 |
6.20% |
4,891 |
5.51% |
Total Market** |
215,794 |
100% |
173,865 |
100% |
138,407 |
100% |
88,828 |
100% |
* To determine the volume of standard pipe at issue from non-subject countries sampling was used.
** Rounding of previous lines may skew totals.
Table 3: Average Selling Prices
(Canadian Dollars per Tonne)
2001 |
2002 |
2003 |
2004 (Jan. to June) | |
677 |
843 |
856 |
1,051 | |
Korea |
555 |
514 |
657 |
631 |
China |
402 |
394 |
389 |
434 |
United States |
424 |
660 |
930 |
999 |
All other countries |
416 |
433 |
506 |
618 |
[54] Other factors influencing the price of standard pipe at issue in Canada are imports from the United States and China. Imports from the United States made up about 50% of the total quantity sold in Canada in 2001 but this figure dropped to about 35% in the first six months of 2004. Meanwhile imports from China, which represented about 5% of the total quantity sold in Canada in 2001, rose to about 18.5% in the first six months of 2004.34 The average import price from the United States was $930 in 2003 and $999 in 2004,35 which were in line with those of the Canadian producers at the time. In contrast, the average import price for Chinese standard pipe at issue was $389 in 2003 and $434 in 2004.36 The record clearly shows that imports from China were growing quickly and were undercutting other suppliers, including Korea.
[55] It is unclear why Canadian and United States origin standard pipe at issue commands such a high price point in relation to imports. One can speculate that the North American products may benefit from more active distribution channels, the involvement of related parties in the market, premiums for the timeliness of delivery, or perhaps standard pipe is sold as a secondary product included in a larger product mix. Whatever the reason for the price differential, the record shows that offshore products have gained market share, command a significantly lower price point, and compete against each other on the basis of price. Even though Korean exporters are more reliable and higher-quality suppliers of pipe than their low price rivals,37 they have found it necessary to reduce their prices to compete. Source switching and increased sales of the lower-priced imports is evidenced by the strong growth of imports from China, which now commands the more competitive price point. Given that Korean exporters now hold only a minor share of the Canadian market, they would have to compete at the low price point set by the Chinese in order to regain market share.
[56] Based on the above, it would appear that, while there may be little incentive for Korean exporters to dump when competing with North American product in Canada, they would be under pressure to do so when competing with other imports.
[57] This is illustrated by the fact that the average price of imports from Korea decreased in 2004 compared to 2003 while it increased for all other countries, which led to a slight rebound in their market share.38 It would seem that Korean exporters see their main competition in the Canadian market as product from China and the other low-priced sources.
[58] Korean standard pipe has maintained a presence in the Canadian market throughout the POR (January 1, 2001 to June 30, 2004) despite the imposition of anti-dumping duties.39 Since no Korean exporters provided information to obtain normal values, all subject imports were assessed anti-dumping duty equal to 19% of the export price in accordance with the ministerial specification. Despite this, Korean exporters have demonstrated a continuing interest and ability to participate in the Canadian market.
[59] Anti-dumping measures have also been imposed on other steel products from Korea.40 41 Canada has anti-dumping measures in place in respect of the following products from Korea: structural tubing, and stainless steel wire.42
[60] The recent anti-dumping investigations by the CBSA with respect to structural tubing (final determination - November 2003) and stainless steel wire (final determination - June 2004) and subsequent injury findings by the Tribunal on both investigations indicate that Korean exporters continue to aggressively price steel products in the Canadian market. None of the Korean exporters cooperated with the CBSA or the Tribunal in these investigations.
[61] In addition, the behaviour of Korean exporters in dumping steel products has caused concern in other jurisdictions, including the United States which currently has 14 anti-dumping measures in respect of Korean steel products43 such as welded steel pipe and welded line pipe. Other anti-dumping measures imposed by other jurisdictions in respect of other steel products from Korea are cited on the administrative record.
[62] The number of anti-dumping measures in respect of Korean steel products in Canada and the United States is further indication that Korean exporters have developed and maintained a keen interest in the North American steel market over the years and have priced their products aggressively.
[63] Consideration and analysis of the evidence on record suggests there is a strong possibility that continued dumping would occur if the Order expires. In summary, the key factors are: the vast production capacity of Korean producers in comparison to the Canadian market; the interest and presence that Korean exporters have maintained in the Canadian market despite anti-dumping measures in place; the fact that Korea is a net exporter of pipe and tube products; the main price competition for Korean standard pipe at issue in the Canadian market is from other low-priced imports from countries such as China, whose market share has risen greatly in the past few years; anti-dumping duty has been assessed and collected on all imports of standard pipe at issue during the POR; there are a number of anti-dumping measures both in Canada and abroad in respect of related steel products from Korea.
[64] For purposes of making a determination in this expiry review, the CBSA conducted its analysis within the scope of the factors set forth 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 20, 2005, pursuant to paragraph 76.03(7)(a) of SIMA, the President of the Canada Border Services Agency determined that the expiry of the Order by the Canadian International Trade Tribunal made on June 5, 2000, in Order No. RR-99-004, was likely to result in the continuation or resumption of dumping of the goods originating in or exported from the Republic of Korea.
[65] On January 21, 2005, the Tribunal commenced its inquiry to determine whether the continued or resumed dumping with respect to goods from Korea is likely to result in injury or retardation to Canadian Industry if the Order were allowed to expire. The Tribunal will make its decision by June 3, 2005.
[66] If the Tribunal determines that the expiry of the Order with respect to goods from Korea is likely to result in injury or retardation to Canadian industry, the Order 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 duty on dumped importations of the subject standard pipe.
[67] If the Tribunal determines that the expiry of the Order with respect to the goods from Korea is unlikely to result in injury or retardation to Canadian industry, the Order will be rescinded in respect of those goods. Anti-dumping duty would no longer be levied on importations of certain carbon steel welded pipe beginning on the date the Order is rescinded.
[68] For further information, please contact Pat Mulligan at:
Canada Border Services Agency | |
Telephone |
(613) 952-6720 |
Fax |
(613) 954-3750 |
Web site |
Pierre Richard
Vice President
Admissibility Branch
1 Exhibit 1 Finding and Statement of Reasons of the Anti-dumping Tribunal regarding certain carbon steel welded pipe originating in or exported from the Republic of Korea, the Republic of South Africa and Luxembourg.
2 Exhibit 7 Customs Notice N-562, March 31, 2004.
3 Exhibit 17 Pre Hearing Staff Report, Inquiry No. RR-99-004.
4 Pipe made to the ASTM A53 and ASTM A135 specifications may also be used as sprinkler pipe.
5 Exhibit 9 Customs Tariff - Schedule.
6 Pre-Hearing Staff Report, RR-99-004.
7 Tonne refers to a metric tonne which is equal to 1,000 kilograms, or 2,204.6 pounds or 1.102 short tons.
8 Exhibit 52 CBSA - Total Canadian Market Carbon Steel Welded Pipe.
9 Exhibit 50 CBSA enforcement information on imports of subject goods during the POR.
10 Excerpts from World Steel Dynamics.
11 Metal Bulletin PLC, MEPS International Ltd., International Iron and Steel Institute, etc.
12 Exhibit 50 CBSA enforcement information on imports of subject goods during the POR.
13 Exhibit 64 Ispat case brief (page 6).
14 Exhibit 64 Ispat case brief (page 8).
15 Exhibit 64 Ispat case brief (page 17).
16 Exhibit 64 Ispat case brief (page 10).
17 Exhibit 64 Ispat case brief (page 18).
18 Exhibit 64 Ispat case brief (page 15).
19 Exhibit 65 IPSCO case brief (page 7).
20 Exhibit 64 Ispat case brief (page 15).
21 Exhibit 64 Ispat case brief (page 13).
22 Exhibit 64 Ispat case brief (page 19).
23 Exhibit 64 Ispat case brief (page 22).
24 Exhibit 65 IPSCO case brief (page 3).
25 Exhibit 61 MEPS International Steel Market Roundup.
26 Exhibit 40 World Steel Dynamics: Global Steel Mill Product Matrix.
27 Exhibit 40 World Steel Dynamics: Global Steel Mill Product Matrix.
28 Exhibit 48 CBSA - Statistics for imports into Canada of certain carbon steel welded pipe for the period of January 1, 2001, to June 30, 2004.
29 Exhibit 59, Import and Trade Statistics (page 36).
30 Exhibit 60 Steel Market Information (page 51).
31 Exhibit 61 MEPS International Steel Market Roundup (page 2).
32 Exhibit 52 CBSA - Total Canadian Market Carbon Steel Welded Pipe.
33 Exhibit 52 CBSA - Total Canadian Market Carbon Steel Welded Pipe.
34 Exhibit 52 CBSA - Total Canadian Market Carbon Steel Welded Pipe.
35 Exhibit 52 CBSA - Total Canadian Market Carbon Steel Welded Pipe.
36 Exhibit 52 CBSA - Total Canadian Market Carbon Steel Welded Pipe.
37 Exhibit 5 Order and Statement of Reasons of the Canadian International Trade Tribunal regarding certain carbon steel welded pipe originating in or exported from the Republic of Korea dated June 5, 2000 (page 13).
38 Exhibit 52 CBSA - Total Canadian Market Carbon Steel Welded Pipe.
39 Exhibit 50 CBSA enforcement information on imports of subject goods during the POR.
40 Exhibit 64 Ispat case brief (pages 19-22).
41 Exhibit 65 IPSCO case brief (pages 3 and 4).
