ARCHIVED - STATEMENT OF REASONS

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Ottawa, April 13, 2006

DECISION

On March 30, 2006, 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 August 17, 2001, in Inquiry No. NQ 2001-001, concerning certain flat hot-rolled carbon and alloy steel sheet and strip originating in or exported from Brazil, the People's Republic of China, Chinese Taipei, India, South Africa and Ukraine was likely to result in the continuation or resumption of dumping of the goods into Canada. The President also determined that the expiry of the finding was likely to result in the continuation or resumption of subsidizing of certain flat hot-rolled carbon and alloy steel sheet and strip originating in or exported from India. It was further determined 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 the former Yugoslav Republic of Macedonia, Bulgaria, and Serbia and Montenegro (formerly the Federal Republic of Yugoslavia) was unlikely to result in the continuation or resumption of dumping of the goods.

Table of Contents

Summary
Background
Product
Classification of Imports
Period of Review
Canadian Industry
Canadian Market
Enforcement
Participants
Information to be Used by the President
Procedural Issues
Positions of the Parties
Consideration and Analysis
Conclusion
Future Action

SUMMARY

1. On October 11, 2005, the Canadian International Trade Tribunal (CITT) issued a notice concerning the upcoming expiry of its injury finding. Based on the available information and the information submitted by the interested parties, the CITT decided that a review of the finding was warranted.
   
   
2. On November 30, 2005, the CITT, pursuant to subsection 76.03(3) of the Special Import Measures Act (SIMA), initiated an expiry review of its finding issued on August 17, 2001, in Inquiry No. NQ 2001-001, concerning certain flat hot-rolled carbon and alloy steel sheet and strip, including secondary or non-prime material, originating in or exported from Brazil, Bulgaria, the People's Republic of China (China), Chinese Taipei, India, the former Yugoslav Republic of Macedonia, Serbia and Montenegro (formerly the Federal Republic of Yugoslavia), South Africa and Ukraine (the 'Named Countries'). The finding is scheduled to expire on August 16, 2006.
   
   
3. Analysis of evidence on the record shows that numerous producers of certain flat hot-rolled carbon and alloy steel sheet and strip in the Named Countries, are experiencing the effects of global over-supply, have excess production capacity, insufficient domestic demand creating pressures to export, are subject to anti-dumping measures in several countries other than Canada indicating a propensity to dump, have recently sold into worldwide export markets at prices which suggest they continue to dump and have not demonstrated an ability to compete in Canada at undumped prices despite obtaining normal values.
   
   
4. Regarding India, the evidence on the record shows the continued availability of subsidy programs for hot-rolled steel sheet exporters, recurring benefit streams from certain past subsidies, the introduction of new export promotion programs, and the imposition of countervailing measures by authorities other than Canada in respect of hot-rolled steel sheet and other steel goods.
   
   
5. For the foregoing reasons, the President of the Canada Border Services Agency (President), having considered the relevant information on the record, determined under paragraph 76.03(7)(a) of SIMA that the expiry of the finding made by the CITT on August 17, 2001, concerning certain flat hot-rolled carbon and alloy steel sheet and strip, originating in or exported from Brazil, Bulgaria, China, Chinese Taipei, India, the former Yugoslav Republic of Macedonia, Serbia and Montenegro, South Africa and Ukraine was likely to result in the continuation or resumption of dumping from Brazil, China, Chinese Taipei, India, South Africa and Ukraine.
   
   
6. The President also determined that the expiry of the finding was likely to result in the continuation or resumption of subsidizing of certain flat hot-rolled carbon and alloy steel sheet and strip originating in or exported from India.
   
   
7. The President further determined that the expiry of the finding was unlikely to result in the continuation or resumption of dumping of certain flat hot-rolled carbon and alloy steel sheet and strip originating in or exported from the former Yugoslav Republic of Macedonia, Bulgaria, and Serbia and Montenegro.
   
   

BACKGROUND

8. On December 1, 2005, the Canada Border Services Agency (CBSA) initiated an expiry review to determine whether the expiry of the finding was likely to result in the continuation or resumption of dumping and in the case of India, subsidizing as well, of the goods from the above mentioned countries. The President of the CBSA had to make a decision no later than March 30, 2006.
   
   
9. The original anti-dumping and countervailing duty investigation into certain flat hot rolled carbon and alloy steel sheet and strip products originating in or exported from the Named Countries was initiated on January 19, 2001, following a complaint made by Algoma Steel Inc. (Algoma) of Sault Ste. Marie, Ontario. This complaint was supported by the other Canadian manufacturers of the product: Stelco Inc. (Stelco) of Hamilton, Ontario, Dofasco Inc. (Dofasco) of Hamilton, Ontario, IPSCO Inc. (IPSCO) of Regina, Saskatchewan, and Ispat Sidbec Inc. (Ispat) of Montreal, Quebec (now Mittal Canada Inc.).
   
   
10. On April 19, 2001, the Canada Customs and Revenue Agency (CCRA, now Canada Border Services Agency) made a preliminary determination of dumping concerning the subject goods of the Named Countries and a preliminary determination of subsidizing in respect of the same goods from India. A final determination of dumping and a final determination of subsidizing in respect of India, was made on July 18, 2001, followed by an injury finding issued by the CITT on August 17, 2001. Imports of the subject goods have been monitored since the CITT's finding. This finding is also referred to as "Hot Rolled II."
    
    
11. It should be noted that another injury finding was made by the CITT regarding certain hot rolled steel sheet on July 2, 1999. On June 30, 2004, the CITT rescinded this finding following an expiry review conducted pursuant to subparagraph 76.03(12)(a)(ii) of SIMA. The countries subject to this finding were: France, the Russian Federation, the Slovak Republic and Romania.
    
    
12. The CBSA completed its last reinvestigation to update the normal values, export prices and where applicable, amounts of subsidy, of Hot-Rolled II on June 29, 2005. The results of this review were made public in Customs Notice 625 on August 11, 2005¹.
    
    

PRODUCT

Definition

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, in various widths from ¾" (19 mm) and wider and:
    
    
    1. for product in coil form, in thicknesses from 0.054" to 0.625" (1.37 mm to 15.88 mm) inclusive,
    2. for product that is cut-to-length, in thicknesses from 0.054" up to but not including 0.187" (1.37 mm up to but not including 4.75 mm),
    
    excluding flat-rolled stainless steel sheet and strip and flat hot-rolled, cut-to-length alloy steel products containing no less than 11.5 percent manganese, in thicknesses from 3 mm to 4.75 mm.
    
    Hereafter, the subject goods will be referred to as "hot-rolled steel sheet."

Product Information

14. Hot-rolled steel sheet is used in the automotive industry in the manufacture of frames, bumpers, wheels and some powertrain components. Hot-rolled steel sheet is also used in the manufacture of sheet piling and guard rails for use in construction. As well, hot-rolled steel sheet is consumed by non-automotive stampers, steel fabricators and producers of agricultural and other machinery.
    
    
15. For the purpose of this investigation, hot-rolled steel sheet includes strip and sheet, but does 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.
    
    
16. 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.
    
    
17. 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.
    
    

CLASSIFICATION OF IMPORTS

18. Certain hot-rolled steel sheet is normally imported into Canada under the following Harmonized System (HS) 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

PERIOD OF REVIEW

19. The period of review (POR) for this expiry review investigation in respect of sales and costing data requested from participants is January 1, 2003 to September 30, 2005. The President also considered additional information placed on the administrative record, up to the closing of the record date, which was January 19, 2006. The purpose of the administrative record is discussed later in this paper.

CANADIAN INDUSTRY

20. The Canadian industry for hot-rolled steel sheet production is comprised of the following five companies:
    
    
    • Algoma Steel Inc. of Sault Ste. Marie, Ontario
    • Dofasco Inc. of Hamilton, Ontario
    • IPSCO Inc. of Regina, Saskatchewan
    • Mittal Canada (Mittal) of Montreal, Quebec
    • Stelco Inc. of Hamilton, Ontario

Algoma

21. Incorporated on June 1, 1992, under the Ontario Business Corporations Act, Algoma 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.
    
    
22. Algoma, with its subsidiaries, is a vertically integrated primary iron and steel producer having a present capacity to produce approximately 2.7 million metric tonnes (mmt) of raw steel annually. Expressed in terms of finished steel products, the annual capacity is approximately 2.3 mmt 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, Ontario².

Dofasco

23. 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 minimill facility, Gallatin Steel Company, located in Gallatin County, Kentucky. Products produced 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.
    
    
24. Dofasco started production of hot-rolled steel sheet in 1940. The original mill was modified many times over the years and 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" wide and up to 0.5" 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 3 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 flatness³.
    
    
25. Most recently, Arcelor S.A. of Luxembourg and Canadian steelmaker Dofasco. announced that Arcelor had acquired 88 percent of Dofasco's outstanding common shares.

Ipsco

26. 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' (OCTG), line pipe, standard pipe, hollow structural sections and alloy sheet and plate⁴.

Mittal

27. Mittal was incorporated under the former name 'Sidbec' in 1928. Mittal was purchased by Mittal Steel (formerly 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. Mittal produces hot and cold-rolled sheet, pipes, hot-rolled bars, rebar and wire rod. The company is split into five different strategic business units: primary operations, flat-rolled products, wire rod, bars and shapes and pipe⁵. Mittal's primary hot-rolled steel sheet facilities are located in Contrecoeur, Quebec.

Stelco

28. 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-inch 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 inch) 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 Hamilton⁶.

CANADIAN MARKET

29. In both 2003 and 2004, these Canadian manufacturers produced and sold approximately 4.1 mmt⁷of flat hot rolled carbon and alloy steel sheet and strip into the Canadian market. This represented about 79 percent of the total Canadian market in 2003 and 71 percent of the market in 2004. For the year to date period ending September 30, 2005, the Canadian manufacturers produced and sold approximately 2.8 mmt and accounted for approximately 75 percent of the Canadian market, as compared to 3.1 mmt and 74 percent of the market for the corresponding period in 2004⁸.
    
    
30. The apparent Canadian market for certain hot-rolled steel sheet over the POR is indicated in Table 1 below:

    Apparent Canadian Market⁹
    Hot-Rolled Steel Sheet (Metric Tonnes)

    Table 1:

    Source	2003	2004	Jan-Sept 2004	Jan-Sept 2005
    Canadian Producers	4,130,823	4,123,964	3,120,584	2,855,277
    Named Countries (HR II)	5,161	23,266	10,315	9,145
    United States	918,190	1,033,711	801,671	768,754
    Other Countries	148,334	608,073	271,546	180,175
    Total Market	5,202,508	5,789,014	4,204,116	3,813,351

ENFORCEMENT

31. During the POR, China, Chinese Taipei and Ukraine were the only Named Countries that exported the subject goods to Canada. Imports from Chinese Taipei and Ukraine were only in 2005 and in very small quantities¹⁰.
    
    
32. In the enforcement of the CITT finding during the POR, the amount of anti dumping duty collected on subject imports was slightly less than $10,000¹¹. In comparison, the value for duty on all subject imports over this period was around $26 million. Subject goods exported directly from China were always shipped at or above normal value. The only imposition of anti-dumping duties during the POR came in 2005 from subject shipments originating in Ukraine. Although these goods were of Ukrainian origin, they were exported from the United States.

PARTICIPANTS

33. The CITT's notice concerning the expiry review and a questionnaire were sent to the Canadian producers, the importers, the exporters, the Government of India (GOI) and other interested parties.
    
    
34. The expiry review questionnaire (ERQ) requested information needed to consider the factors, as per subsection 37.2(1) of the Special Import Measures Regulations (SIMR), relevant to this expiry review. Any persons or governments having an interest in this investigation were also invited to provide a submission regarding the effect the expiry of the CITT's injury finding would have on the continuation or resumption of dumping and (where applicable) subsidizing of the goods.
    
    
35. As mentioned above, there are five manufacturers of flat hot-rolled carbon and alloy steel sheet and strip products in Canada. In addition to participating in the expiry review and answering the President's questionnaire, four of the five manufacturers provided case briefs and two provided reply submissions stating that the dumping and (where applicable) subsidizing of subject goods would continue or resume should the CITT's finding expire.
    
    
36. Thirteen exporters, to whom ERQ's were sent, participated in the review and provided responses to the ERQ. The participating exporters were: Angang Group Ansteel Co. Ltd. (Ansteel) and the Baosteel Group (Baosteel) of China, Chung Hung Steel¹²of Chinese Taipei, JSW Steel Ltd. (JSW)¹³and Steel Authority of India Ltd. (SAIL) of India, Companhia Siderúrgica Nacional (CSN), Usinas Siderurgicas de Minas Gerais S.A. (USIMINAS), Companhia Siderúrgica Paulista (COSIPA) and Companhia Siderúrgica de Tubarão (CST) of Brazil, Mittal Steel Skopje of the former Yugoslav Republic of Macedonia, Mittal Steel of South Africa¹⁴, United States Steel Serbia (USSS) of Serbia and Montenegro¹⁵and Ilyich Iron and Steel Works of Ukraine.
    
    
37. Three of the Brazilian producers, namely, CSN, USIMINAS and COSIPA, were all named in the original CITT finding on August 17, 2001¹⁶. The other producer, CST, only began its hot-rolling operation after the finding. According to information provided in their ERQ responses, these four producers account for nearly all the hot-rolled steel sheet produced in Brazil¹⁷.
    
    
38. The Chinese producers that responded to the ERQ, Baosteel and Ansteel, are two of the largest steel producers in China. Each of these producers are state owned enterprises (SOE's). The ERQ response from Baosteel covers three steelmaking entities. The primary production facilities for hot-rolled steel sheet making owned by Baosteel include Baoshan Iron & Steel Co. Ltd. (Baoshan) and Shanghai Meishan Iron & Steel Co. Ltd. (Meigang). Baoshan has three production lines that produce hot-rolled steel sheet¹⁸. Roughly 16 percent of the company's total sales are from hot-rolled steel sheet¹⁹.
    
    
39. Ansteel has five production facilities, only one of which is capable of producing hot-rolled steel sheet²⁰. Hot-rolled steel sheet is Ansteel's major product segment, accounting for about 70 percent of the company's total sales in the most recent fiscal year²¹.
    
    
40. Chung Hung Steel Corp. (formerly 'Yieh Loong Enterprise') of Chinese Taipei also provided an ERQ response. The company was named in the original CITT finding on August 17, 2001²². Hot-rolled steel sheet comprises approximately 60 percent of the company's total sales²³. The company typically represents about 20 percent of the country's domestic sales of hot-rolled steel sheet²⁴.
    
    
41. In addition to providing a response to the ERQ in this proceeding, Chung Hung Steel also participated in the CBSA's reinvestigation of normal values and export prices, which concluded on March 3, 2003²⁵.
    
    
42. Ilyich Iron and Steel Works of Mariupol, Ukraine, was the only Ukrainian hot-rolled steel producer to respond to the ERQ. Ilyich's ERQ response indicates that they comprise a significant portion of the country's total hot-rolled steel domestic sales²⁶. Ilyich was first incorporated in 1920 and only privatized in November 2000²⁷.
    
    
43. Two Indian hot-rolled steel sheet producers, namely, JSW Steel Limited (JSW: formerly Jindal Vijayanagar Steel Limited - JVSL) and Steel Authority of India Limited (SAIL) provided responses to the ERQ. Each of these companies were named in the CITT's finding of August 17, 2001²⁸, and each participated in the two reinvestigations concluded by the CBSA on March 3, 2003 and June 29, 2005, respectively²⁹.
    
    
44. Hot-rolled steel sheet accounts for about 85 percent of JSW's total sales³⁰. The company estimates it accounts for about 12 percent of the country's total hot-rolled steel domestic sales³¹. SAIL indicated that hot-rolled steel sheet accounts for approximately 57 percent of the company's total sales tonnage³². The company has typically represented around 20 percent of the country's hot-rolled steel sheet domestic sales³³. The GOI owns over 85 percent of SAIL's equity capital³⁴.
    
    
45. Mittal Steel Skopje (MSS) of the former Yugoslav Republic of Macedonia provided an ERQ response in this expiry review. MSS is the country's only producer of hot-rolled steel sheet. The Skopje facility was acquired by Mittal Steel (Netherlands) in 2004. Hot-rolled steel sheet represents a significant proportion of the company's total sales³⁵.
    
    
46. Mittal Steel (formerly 'Iscor') of South Africa was the only South African producer to provide a response to the ERQ. The company has two mill facilities located in Vanderbijlpark and Saldanha Bay which produce hot-rolled steel sheet and is the largest seller of hot-rolled steel sheet in South Africa. Hot-rolled steel sheet accounted for significant proportions of each of the company's respective mills' sales in 2004³⁶. Mittal Steel also participated in each of the CBSA's reinvestigations which concluded on March 3, 2003³⁷and June 29, 2005³⁸.
    
    
47. US Steel Serbia (USSS) is the only producer of subject goods in Serbia and Montenegro³⁹. In the original CITT finding, the company was known as Sartid AD. The company did not provide a response to the questionnaire in the original investigation. A wholly owned subsidiary of the United States Steel Corporation purchased the bankrupt company on September 13, 2003, resulting in the name change to USSS. The company is an integrated mill, which produces hot-rolled and cold-rolled steel sheet from concast slabs at its production facility in Smederevo⁴⁰.
    
    
48. These exporters answered the ERQ, each supporting the notion that the export of the subject goods from their respective countries was not likely to result in the continuation or resumption of dumping if the CITT's injury findings expired. The Brazilian producers (all four collectively), US Steel Serbia, Mittal Steel (South Africa) and Ilyich (Ukraine) were the only exporters to submit case briefs and reply submissions in support of this argument.
    
    
49. The GOI provided limited information in response to the subsidy ERQ. They did not express an opinion concerning the likelihood of continued or resumed subsidizing and did not further participate in the proceedings⁴¹. Since the GOI did not express a position concerning the likelihood of resumed or continued subsidizing, they are not considered in the "positions of the parties" section of this report.
    
    
50. With regard to the participation of importers of the subject goods, five responses to the ERQ were received, namely from Salzgitter Mannesmann International (Canada) Inc., General Motors of Canada Ltd., Atlas Tube, Namasco and Prudential Steel. No importers provided case briefs or reply submissions. Since none of these five importers expressed a firm position in the matter of the likelihood of resumed or continued dumping or subsidizing, they are not considered in the "positions of the parties" section of this report.
    
    

INFORMATION TO BE USED BY THE PRESIDENT

The Administrative Record

51. 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 listed on the CBSA's Exhibit Listing, which is comprised of the CITT'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 and where applicable, subsidizing, is likely to continue or resume, absent the finding. This information may consist of expert analyst's 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.
    
    
52. For purposes of an expiry review investigation, the CBSA sets a date after which no "new" information may be placed on the administrative record. This is referred to as the "closing of the record date." For this expiry review, the administrative record closed on January 19, 2006. This allows participants time to prepare their case briefs and reply submissions based on the information that is on the administrative record as of the closing of the record date.

PROCEDURAL ISSUES

53. The closing of the record date for this expiry review was January 19, 2006. In accordance with the CBSA's Expiry Review Guidelines, the President will normally not consider any new information submitted by participants subsequent to the closing of the record date. However, in certain exceptional circumstances, it may be necessary to permit new information to be submitted. The President will consider the following factors in deciding whether to accept new information submitted after the closing of the record date:
    
    
    • the availability of the information prior to the closing of the record date;
    • the emergence of new or unforeseen issues;
    • the relevance and materiality of the information;
    • the opportunity for other participants to respond to the new information; and
    • whether the new information can reasonably be taken into consideration by the President in making the determination.
      
      
54. Participants wishing to file new information after the closing of the record date, either separately or in case briefs or reply submissions, must identify this information so that the President can decide whether it will be included in the record for purposes of the determination.

New Information Not Accepted After the Closing of the Record Date

55. The CBSA did strike three specific documents from consideration in this review. Counsel for the Brazilian producers and Mittal of South Africa submitted these documents as attachments to two case briefs and one reply submission. Upon review, it was determined in each instance that the information contained in these documents did not meet the acceptance requirements outlined in the aforementioned Expiry Review Guidelines. Furthermore, counsel provided no explanation to justify the inclusion of the documentation in respect of those guidelines. Details of the items stricken from the record are found under non-confidential Exhibit 174 of the CBSA's listing of exhibits.

POSITIONS OF THE PARTIES

Parties arguing that continued or resumed dumping is likely - Canadian Producers

56. Regarding global developments, the Canadian producers referred to the glut of hot-rolled steel sheet and submitted that the steel industry continues to be plagued by over-capacity, driven by large capacity additions and increases in Chinese production, as well as capacity expansion projects in other emerging markets⁴².
    
    
57. In addition, Dofasco referred to market reports on the record which outline extensive plans by producers in the Named Countries, and other regions, to construct new steel facilities and upgrade existing facilities⁴³. Algoma also submitted that there is substantial production capacity, many times larger than the Canadian market, and significant available unused capacity, of the mills in the Named Countries and in countries not subject to the finding⁴⁴.
    
    
58. Dofasco stated that excess capacity and over-production has caused export dependant countries to search for new destinations for their sales of hot-rolled steel sheet, leading to sharp price drops in the world market for the subject goods and projections of further price declines into 2006 and 2007⁴⁵. Dofasco added that producers will be required to dump the goods since they will be attempting to find a new market for a commodity product that is being sold into a world export market already suffering from over-supply⁴⁶.
    
    
59. Further on this additional new capacity, Dofasco, Stelco and Algoma, all referred to the nature of steel production and the related production and export imperative, which encourages producers to operate at high capacity levels, even in times of excess capacity, compelling mills to search out sales in foreign markets at prices which do not fully recover costs⁴⁷.
    
    
60. Stelco pointed to reports on the record about weak regional markets affecting many of the Named Countries, combined with excess capacity and over-supply in China which, it stated, underpins the world glut of hot-rolled steel sheet⁴⁸. Ipsco also cited reports about the absence of demand drivers and weakening in many regional markets, largely related to problems caused by oversupply⁴⁹.
    
    
61. The Canadian producers all referred to the significant developments in China, and their resultant impact on Asian and global markets⁵⁰. Stelco noted that the country has emerged as the world's largest producer of hot-rolled sheet since the present finding was applied⁵¹. Dofasco added that the Chinese market for the subject goods is now in serious over-supply caused by the substantial new production capacity added in the last few years, new capacity which it submitted is well in excess of 20 mmt since 2002⁵².
    
    
62. The producers noted that the Chinese industry has rapidly transitioned to the point where it has changed from a large importing source to a major exporter of the goods⁵³. Dofasco, Stelco and Ipsco noted that China is plagued by excess production, overcapacity, and slowing demand, which has led to significant weakening in the Chinese market and continuing deterioration in pricing. Pointing to extensive reports on the record, the producers stated that the Chinese market can no longer absorb existing hot-rolled steel sheet production, and much of this excess is now being sold into international markets, disrupting regional markets and other major exporting countries throughout the world⁵⁴.
    
    
63. Further, Dofasco and Stelco submitted that producers in the Asian market, along with other third country exporters previously reliant on China, will be forced to target other world markets, inevitably leading to dumping, according to Dofasco, as the producers must find these new buyers in a world export market plagued by excess capacity⁵⁵.
    
    
64. Citing the current market situation in Asia as a precedent, and the world situation of substantial over-capacity and declining export prices, Dofasco claimed that Canada will become one of the new markets for dumped imports from the Named Countries, if the finding is rescinded⁵⁶.
    
    
65. All the producers commented on the relative price strength of the North American market, in sharp contrast to Chinese and other global markets which have weakened and experienced significant price declines. Dofasco attributed this pricing strength to anti-dumping protection that exists in Canada and the United States against most of the major exporting countries⁵⁷.
    
    
66. Similarly, Stelco contended that, absent the measures, there is a likelihood that exporters from the Named Countries will look increasingly to North America and Canada to get rid of excess supply, drawing dumped and subsidized goods into the Canadian marketplace⁵⁸.
    
    
67. Algoma and Dofasco cited market reports which confirm that such price differentials are not sustainable and which forecast increasing import offers and price declines in North American prices in 2006 due to increased import pressure from markets which are in oversupply⁵⁹.
    
    
68. Dofasco added that exporters would only be able to compete in the Canadian domestic market if they sell at dumped prices and undercut the selling price of the domestic producers⁶⁰. Stelco and Algoma also remarked on the minimal volumes of subject imports in the Canadian market during the POR and contended that this demonstrates the fact that exporters are not able to compete at undumped or unsubsidized prices⁶¹.
    
    
69. Stelco, Ipsco and Algoma pointed to the numerous anti-dumping and countervailing orders in other markets covering hot-rolled steel sheet and related flat-rolled products from many of the Named Countries. The producers argued that this offers clear evidence of a propensity to dump⁶². Ipsco and Algoma also noted that these measures, including measures imposed by the United States, leave few "open" markets available, which will result in significant volumes of dumped and subsidized product being sold to Canada if the finding were to expire⁶³.
    
    
70. Stelco commented on the commodity nature of the product, and its ease of transportation, distribution and sale, which increases the likelihood that exporters will revert to past patterns and resume exporting unfairly priced goods to the Canadian market⁶⁴. Stelco and Algoma also referred to the marketing practices of steel exporters, traders, and importers. On this issue, Algoma referred to past CITT descriptions of steel trader and importer practices as "highly destabilizing" and alleged that this same behaviour is being carried out by hot-rolled steel sheet importers in Canada⁶⁵.
    
    
71. Algoma and Stelco also remarked on their past practice of "source shifting" in response to new or rescinded SIMA measures, which, it submits, will re-occur if the finding expires, leading to substantial volumes of dumped and subsidized goods⁶⁶.
    
    
72. Regarding the current state of the Canadian market, Dofasco cited the company's third quarter 2005 results and stated that the Canadian market is plagued by declines in spot selling prices, significant increases in costs and falling flat rolled steel sheet demand. In its Report to Shareholders, Dofasco also commented on recent and future market trends, noting that flat rolled steel demand in Canada declined by 4.5 percent through the first 8 months of 2005, and will be down 3 percent to 4 percent for the year, reflecting a draw down of customer inventories. Dofasco stated that imports increased by 19 percent over the first 8 months of 2005, contributing to a 13 percent decline from domestic shipments⁶⁷.
    
    
73. Dofasco added that flat-rolled steel demand is expected to decline by a further 2.5 percent for 2006, resulting from lower automotive production and a general slowing of manufacturing activity because of the stronger Canadian dollar. Domestic deliveries by Canadian steel mills are projected to recover somewhat in 2006 as the market share of steel demand in Canada, held by imports, is expected to move back below 30 percent, from the very high 34 percent share currently⁶⁸.
    
    
74. Algoma also commented on trends in the Canadian market and contended that the market share of the domestic industry has declined significantly through the past 4 years since the 2001 hot-rolled sheet finding, increasing its vulnerability to continued or resumed dumped and subsidized price competition. Domestic market share, according to Algoma, was 82.4 percent in 2001 and has declined dramatically to 68 percent in 2005⁶⁹.
    
    
75. Algoma argued that a strong indicator that dumping and subsidizing will resume is reflected by the volumes and low prices of hot-rolled steel sheet imported into Canada from countries formerly subject to anti-dumping measures, including Russia and Romania. Algoma submitted that significant import volumes of low priced product re-entered the Canadian market from these countries following the rescission of the finding in June 2004, and this has resulted in a cycle of downwards pricing movements as they compete with other import sources not covered by the finding⁷⁰. According to Algoma, this demonstrates that hot-rolled imports from subject countries inevitably resume in significant quantities and at low prices once the discipline of the anti-dumping measures are removed⁷¹.
    
    
76. Algoma also cited a series of internal company reports, which it submits, documents various examples of low pricing from countries not subject to the finding, as well as low pricing from Russia and Romania, at prices below Algoma price offerings. It added that these low price offerings, from import sources not covered by the finding, have resulted in price pressures and lost orders for Algoma⁷². Absent the measures, Algoma argued that dumping and subsidizing would resume as it is with these very low-priced imports that imports from the Named Countries would have to compete⁷³.
    
    
77. In addition to specific comments about China, India and Brazil, Stelco made general statements about the imminent risk of renewed dumping by exporters in the other Named Countries. Stelco contended that the combination of weak prices in domestic and adjacent regional markets in the other Named Countries, plus competition from Asian producers, will lead to a search for open markets to take up excess or even marginal supply. These conditions, according to Stelco, will result in a resumption of predatory pricing and dumping to regain market share⁷⁴.

Positions of the Canadian Producers - Country Specific

China

78. Regarding China, Dofasco and Algoma pointed out that it is now the largest steel producing country in the world, producing 272 mmt of steel in 2004, dwarfing the next two largest global producers⁷⁵. Dofasco added that the Chinese market is extremely fragmented with a large number of steel producers⁷⁶.
    
    
79. According to Dofasco, as a result of the massive additions to capacity that have occurred in China and domestic capacity in excess of domestic demand, steel producers have substantially increased their exports in an attempt to maintain and raise capacity utilization rates⁷⁷. Algoma noted that while there are conflicting estimates concerning the amount of steel overcapacity in China, the issue remains a primary concern for government and industry players⁷⁸. Algoma added that Chinese excess production is many times larger than Canada's entire steel production in 2004⁷⁹.
    
    
80. Dofasco referred to Chinese production and consumption figures, derived from CRU market reports, to illustrate China's growing dependency on exports, noting that while consumption has increased substantially, it has not kept pace with new production. Dofasco added that this export dependancy is even higher because imports into China also act to displace domestic production and stimulate additional exports⁸⁰.
    
    
81. In addition, Dofasco referred to sales data provided in the replies to the ERQ by the two participating Chinese mills, the Angang Group and Shanghai Baosteel, to support its claims that export tonnages from China, and related export dependency, have increased significantly in 2005⁸¹.
    
    
82. Dofasco also attached a list of industry articles and reports as further evidence of China's over-production, increasing level of exports, the low prices of these export sales and the disruption these are causing in world markets⁸². Stelco also submitted that there is extensive information on the record which chronicles the enormous capacity additions, huge increase in Chinese production, demand slowdown and price weakness, and resulting surge in flat-rolled exports⁸³. Algoma cited market reports chronicling these same developments and noted that China is increasingly exporting its excess capacity⁸⁴.
    
    
83. Concerning the propensity to dump, Dofasco referred to recent market reports which indicate that prevailing domestic selling prices in China are below average production costs. Similarly, Dofasco cited market price information from Metal Bulletin's January 2006 Emerging Steel Markets Monthly that includes price offerings to export markets that Dofasco states, clearly represents steel being sold at dumped prices. Referring to these same commercial reports, Dofasco noted that the distressed pricing environment is producing a knock-on effect where regional suppliers are being forced to cut prices to match the low Chinese import prices⁸⁵.
    
    
84. It added that anti-dumping actions against low-priced Chinese imports are being considered by various Asian countries including Thailand, India and Indonesia. These are in addition to current measures in place by the United States⁸⁶.
    
    
85. Consistent with arguments raised by Dofasco, Stelco cited the current situation in China as a factor that increases the likelihood that exporters will again export below Canadian and North American prices in order to shed excess supply and maintain plant loading, adding that China's change to a net export position means that hot-rolled steel from third countries once destined for China will be directed onto world markets, including Canada. Stelco contended that the Chinese threat of forcing dumped prices of hot-rolled steel by third countries is even more likely today where China is now the world's leading producer and exporter of hot-rolled sheet⁸⁷.
    
    
86. Algoma also referred to current and predicted Chinese excess hot-rolled sheet production capacity, low domestic pricing in China, and the very attractive high pricing in the North American market which will act to attract low priced exports to Canada⁸⁸.

India

87. Dofasco and Algoma noted that India is the world's ninth largest steel producing country, Dofasco adding that India is also the world's ninth largest exporter. Based on CRU market data, Dofasco submitted that India's rated capacity for hot-rolled strip production is approximately 15.4 mmt⁸⁹.
    
    
88. Stelco noted the ambitious Indian government goal of 100 mmt per year of steel production by 2020. Parallel to the situation in China, Stelco contended that as Indian capacity accelerates, there is a danger that larger hot-rolled producers will turn to foreign markets to dispose of excess supply. Based on past experience, it argued that these are likely to be made at dumped and subsidized prices. Stelco asserted that there are many reports on the record indicating that the combination of a slowdown in Chinese demand and increased hot-rolled steel production in India will have continuing negative effects on world markets, ultimately affecting North American prices⁹⁰.
    
    
89. Algoma also referred to various publications on the record which, it submits, demonstrate that the Indian hot-rolled sheet producers intend to increase their production capacity. Similarly, Ipsco also cited reports about significant capacity expansion plans in India⁹¹. Algoma stated that with such massive capacity and a history of past dumping and subsidization, it is inevitable that Indian producers of hot-rolled sheet would resume dumping and subsidization if this finding is rescinded. Algoma added that market developments in China are also negatively impacting Indian producers⁹².
    
    
90. Dofasco referred to Indian production and consumption figures for 2005, derived from CRU market data, which it states provides an illustration of India's dependency on exports. It added that India's dependency on exports is expected to increase substantially in the next few years as it adds massive new capacity⁹³. Dofasco also cited export sales data and trends from the ERQ response of Jindal Vijayanagr Steel Ltd. (Jindal), which it stated is further evidence of the increasing dependency of Indian producers on exports⁹⁴.
    
    
91. As further support of its position that there is growing export dependence by Indian producers, Dofasco referred to submissions made to the Organization for Economic Cooperation and Development (OECD) regarding "Capacity expansions in the Global Steel market" which notes that India is expected to add some 48.5 million tons of steel making capacity by 2008, an increase of more than 124 percent. Dofasco added that figures from this same report indicate that in 2003 the Indian industry exported 5.5 mmt of semi-finished and finished product or 17 percent of its production and expects the majority of new steel production to be exported⁹⁵.
    
    
92. Dofasco referred to other sources on the record which chronicle the rapid expansion in Indian capacity, the risk of substantial overcapacity, and the need to substantially increase exports, which one industry analyst stated must reach an average of 34-35 mmt (or 45 to 46 percent of production) in 2010, from an estimated 4.5 mmt (or 15 percent) in 2005, if average operating rates of 88 percent are to be maintained⁹⁶. Dofasco submitted that evidence on the record already confirms significant export activity by Indian producers, noting industry reports of significant export tonnages to the European Union (EU) in the January-April 2005 period⁹⁷.
    
    
93. Dofasco stated that the absence of Indian exports to Canada provides clear evidence that the Indian producers cannot sell into Canada at non-dumped prices⁹⁸. Dofasco also referred to the pricing information provided by the two Indian mills, SAIL and Jindal, in their ERQ replies as further evidence of a propensity to dump. Specifically, Dofasco submitted that this data shows that SAIL consistently sold exported goods during the POR below prevailing prices in the home market⁹⁹.
    
    
94. Regarding subsidies, Algoma submitted that there is no evidence to suggest that any existing subsidy programs have been removed for Indian producers of the goods. The absence of imports from India during the POR, added Algoma, indicates that they cannot compete in the Canadian marketplace at unsubsidized prices¹⁰⁰.

Brazil

95. Dofasco and Algoma noted that Brazil is the world's eighth largest steel making country in the world with Dofasco adding that the country has a total rated capacity of 12.92 mmt of hot-rolled strip production¹⁰¹.
    
    
96. In addition, Dofasco identified Brazil as a major steel exporting nation whose hot-rolled steel mills are extremely dependant on exports and referred to reports from the International Iron and Steel Institute (IISI) that list Brazil as the eighth largest steel exporter in the world and fourth largest net exporter. Dofasco also cited Brazilian production and consumption statistics which, it submitted, shows evidence of continuing new capacity and an increased reliance on exports¹⁰². On this same issue, Stelco also identified Brazil as one of the world's largest producers of hot-rolled steel and a leading exporter with a combined capacity far in excess of Canadian production¹⁰³.
    
    
97. Stelco asserted that the Brazilian market is limited in its ability to absorb the country's increasing capacity and production, forcing Brazilian producers to make sales at prices needed to capture market share¹⁰⁴.
    
    
98. Algoma outlined several reasons why it believes Brazilian exporters of subject goods are likely to continue or resume dumping subject goods if the 2001 hot-rolled sheet finding is rescinded. According to Algoma, Brazilian mills have significant production capacity and over-capacity; Brazilian mills are dependant on exports to maintain capacity utilization; Brazilian hot-rolled sheet producers have been unable to compete in the US where they are subject to a dumping finding; and Brazilian mills have been unable to compete in the Canadian market at undumped prices¹⁰⁵.
    
    
99. Dofasco and Algoma referred to Brazilian sales data from the ERQ replies of the four participating Brazilian mills¹⁰⁶which, they submitted, shows the Brazilian's heavy reliance on exports¹⁰⁷. Dofasco stated that this export dependence is necessary to maintain utilization rates and production. Dofasco added that as the Brazilian economy and domestic market weakened through 2005, the Brazilian mills increased their export sales¹⁰⁸. Dofasco referred to recent market reports in support of its contention that the rising export trend will continue through 2006¹⁰⁹.
    
    
100. Regarding the propensity to dump, Dofasco noted that there were no imports from Brazil during the POR, and claimed that this is evidence that the Brazilian mills are not able to sell the goods into the Canadian market without dumping. Dofasco also referred to pricing information from the Brazilian mills in their ERQ replies as further evidence of a propensity to dump. Specifically, citing the latest available figures from the third quarter of 2005, Dofasco submitted that all of the participating Brazilian mills exported subject product below prevailing domestic market prices¹¹⁰.

Ukraine

101. Dofasco submitted that Ukraine is a substantial producer of the subject goods with a total rated capacity of 6.6 mmt for its hot-rolled strip rolling mills and has plans to add substantial new capacity¹¹¹.
     
     
102. Dofasco and Ipsco referred to IISI reports which identify Ukraine as the third largest steel exporting country and net exporter, exporting 26.6 mmt in 2004¹¹². Algoma also noted Ukraine's status as one of the world's largest steel producing countries.
     
     
103. Dofasco stated that trends in consumption and production figures for the Ukraine demonstrate that hot-rolled steel sheet is one of the country's major exported products and the Ukrainian mills' dependency on exports is increasing¹¹³.
     
     
104. As further evidence of export dependence, Dofasco referred to sales information filed by the Ukrainian producer, Ilyich Iron and Steel Works (Ilyich), in its ERQ reply, which shows that export sales accounted for a significant percentage of total sales during the POR¹¹⁴. Dofasco also cited market reports which note that Ukrainian exports are being driven out of South-East Asia as the result of an increase in Chinese exports, and targeting alternate markets¹¹⁵.
     
     
105. Algoma also referred to October and November 2005 market reports which, it submits, confirms that primary export markets for Ukrainian flat products, including Turkish and Asian markets, are drying up. These reports, according to Algoma, also show increased price competition in the Middle East and confirm the view that Ukrainian and other producers, now faced with low priced competition from Asian suppliers in their traditional markets, will be forced to export to other markets, including North America¹¹⁶.
     
     
106. Algoma also pointed to industry reports that the Ukrainian producer, Alchevsk Iron and Steel Works, has announced a significant expansion project, including a hot strip mill with a capacity of up to 4 mmt per year¹¹⁷.
     
     
107. Dofasco stated that the Ukraine has not sold any product to Canada since the CITT finding which, it claimed, is evidence that they cannot compete in the marketplace at normal values. It added that the absence of sales to Canada is even more significant given that they are being forced to look for alternate markets as a result of being displaced from their traditional markets by Chinese exports. In their efforts to find new markets, Dofasco cited information on the record which identifies various countries that have imposed anti-dumping duty on hot-rolled steel sheet from Ukraine or are contemplating such trade actions. These trade actions against Ukraine are in addition to findings already in place in various jurisdictions including the United States¹¹⁸.

Chinese Taipei

108. Chinese Taipei is cited as a substantial steel producing country including the goods in question. Dofasco referred to data from commercial reports which indicates that Chinese Taipei has a rated capacity of 11.95 mmt for its hot-strip rolling mills¹¹⁹. Algoma noted IISI (International Iron and Steel Institute) 2004 statistics which rank Chinese Taipei 13th in the world in total steel crude production¹²⁰.
     
     
109. Dofasco cited production and consumption figures which, it submits, show a clear dependency by Chinese Taipei on exports. It added that this export dependency will increase as new production capacity is added in Chinese Taipei and they are forced to seek new sources for their product, in light of the oversupply situation in China¹²¹.
     
     
110. Dofasco also cited information provided in the ERQ reply by the sole respondent in Chinese Taipei, Chung Hung Steel (CHS), which it contended, shows an increased dependency on exports, especially in the later part of 2005 when world markets declined as a result of the over-supply situation in China. Algoma also referred to this exporter's 2004 sales data, and related percentage of export sales, as evidence of its high reliance on exports¹²².
     
     
111. Dofasco noted that the mills in Chinese Taipei have not shipped to Canada during the POR indicating that they cannot compete at undumped prices. Similarly, Dofasco cited various market reports which chronicle recent developments in Chinese Taipei in response to the market weakness in Asia and increased market penetration by Chinese imports, including cuts to export prices and the search for new markets. Dofasco submitted that the inability to sell to Canada, given the weakness in Asian markets, is evidence that they cannot sell subject goods to Canada without dumping¹²³.

Other Named Countries

112. Dofasco and Algoma stated that Bulgaria and South Africa are substantial steel producing countries. Dofasco cited capacity levels for hot-rolled steel sheet of 1.55 mmt for Bulgaria and 6.4 mmt for South Africa. Algoma noted that South Africa ranked 20th in the world in crude steel production in 2004 and Bulgaria ranked 39th¹²⁴.
     
     
113. Dofasco and Algoma stated that the two countries are export dependant. Further, Dofasco submitted that both countries are required to search for new markets as a result of the over-supply situation that currently exists in the world export market¹²⁵.
     
     
114. According to Dofasco, even though Canadian spot prices are substantially higher than prices in other export markets, the absence of sales to Canada provides further evidence that producers in these countries cannot sell into Canada without dumping¹²⁶.
     
     
115. The Canadian producers provided little specific information concerning Serbia and Montenegro, and the former Yugoslav Republic of Macedonia. Algoma briefly noted that sales and export data, as provided in the ERQ replies submitted by the exporter in the former Yugoslav Republic of Macedonia and by the exporter in Serbia and Montenegro, demonstrate both exporters' high reliance on exports¹²⁷.
     
     
116. In its conclusion, Algoma referred to the April 2005 determination by the US International Trade Commission (USITC) and its ruling to continue the findings covering imports into the United States of the same goods from Russia, Japan and Brazil. Algoma argued that many of the same factors identified by the USITC in its determination are also applicable in the present expiry review proceedings and should be fully considered by the CBSA as part of its deliberations¹²⁸.
     
     

Parties arguing that continued or resumed dumping is unlikely - Exporters

Brazil

117. CSN, CST, COSIPA and USIMINAS (hereafter "the Brazilian producers") provided numerous common arguments. Central to their position is that the evidence on the record, including that provided by the Canadian producers, does not support the view that there is a likelihood of continued or resumed dumping from Brazil¹²⁹.
     
     
118. The Brazilian producers also clarified reports on the record in respect of planned expansion to increase production of hot-rolled steel sheet in Brazil. COSIPA, for instance, asserted that while an intention to make such investments has been announced, "the Company is still studying it. There are no details such as schedule and anticipated benefits...Plans are not expected to commence until 2008 at the earliest."¹³⁰
     
     
119. Furthermore, the Brazilian producers stated: "CST has not increased its capacity to produce subject hot-rolled steel sheet." CST has a plan that would increase capacity but has yet to receive board approval¹³¹. The Brazilian producers stated: "the record reflects a growing importance of the domestic market, as temporary demand softening due to inventory corrections is reversed."¹³²
     
     
120. In regards to their export tendencies, the Brazilian producers stated they "have no desire, nor intent in disrupting any market."¹³³
     
     
121. The Brazilian producers stated that no anti-dumping measures have been initiated against them in the last five years. They confirmed that the only measures involving Brazil for hot-rolled steel products are in the US and Argentina. The Brazilian producers further clarified that CSN and CST are no longer subject to anti-dumping duties in the US¹³⁴.
     
     
122. The Brazilian producers also asserted that there are no anti-dumping measures in place "in Canada for flat-rolled steel products originating in Brazil"¹³⁵outside of the present measures for hot-rolled steel sheet.

Bulgaria

123. As mentioned previously, the known Bulgarian producer, Kremikovtzi Corp. did not offer a response to the ERQ or provide a case brief and hence, no position from this country is available.

China

124. No producers in China provided case briefs or reply submissions and hence, no position from this country is available. However, the two participating Chinese mills, Ansteel and Baosteel, did provide the following statements regarding steel trends and future sales plans.
     
     
125. In global terms, Ansteel stated that it anticipates the world market for hot-rolled steel sheet to be stable in the next few years. It provided varied forecasts for its biggest export markets. It added that the Chinese economy is expected to continue experiencing strong growth and a correspondingly high demand for hot-rolled steel sheet¹³⁶.
     
     
126. Baosteel stated that it intends to retain current export volumes in order to meet increased demand in the domestic market. It also expects continuing strong demand growth in the Chinese market for each of the next two years¹³⁷.

Chinese Taipei

127. As mentioned previously, no producers in Chinese Taipei provided case briefs or reply submissions. However, Chung Hung Steel (CHS) did make the following comments regarding future sales plans and strategies in its response to the ERQ.
     
     
128. CHS stated that it intends to develop its domestic sales by expanding its customer base which has traditionally looked to imports for supply. CHS expects Japan and Korea to be key markets of growth while sales to South East Asia and South Asia are expected to remain stable. CHS stated that it has not established any plans to export the subject goods to Canada. Given capacity expansion in China, CHS stated that it does not intend to expand its own capacity of hot-rolled products but will focus on higher quality and downstream products¹³⁸.

India

129. As mentioned previously, no producers in India provided case briefs or reply submissions. The two participating Indian mills, JSW and SAIL, did provide the following statements regarding future sales strategies.
     
     
130. JSW expects that the company will continue to export existing tonnages of hot-rolled product for the coming years. According to JSW, their key markets will continue to be the Indian sub-continent, Thailand, Europe, etc. JSW also forecasted continued strength in demand in the Indian domestic market¹³⁹.
     
     
131. According to SAIL, its export sales emphasis during the POR was focused on regional markets due to the freight advantage and easier land route movement. It also noted that Indian demand growth rates are expected to remain strong for the foreseeable future and that availability of product for export will be low, or directed toward neighbouring markets because of this freight advantage¹⁴⁰.

The former Yugoslav Republic of Macedonia

132. Mittal Steel Skopje (MSS) provided no case brief in this proceeding and made only limited representations on the issue of the likelihood of continued or resumed dumping in its ERQ response.
     
     
133. MSS identified itself as the only hot-rolled steel sheet producer in the former Yugoslav Republic of Macedonia (hereafter 'FYROM'), although it is not a fully integrated steel producer. MSS is a rolling facility that can only produce hot-rolled sheets and coils after purchasing slabs from outside suppliers¹⁴¹.
     
     
134. MSS indicated that about 30 percent of the company's projected sales in 2006 would be hot-rolled steel sheet¹⁴². The company projects that the balance of their sales will come largely from cold-rolled, hot-dipped galvanized and pre-painted products¹⁴³.
     
     
135. MSS stated that its company's sales policy is to focus its sales efforts on servicing its 'natural markets' which include the domestic market, the other Balkan states and the European Union¹⁴⁴.
     
     
136. MSS cited its global steel affiliates, including those of Mittal (formerly 'Ispat Sidbec') as support to its position that global consolidation of hot-rolled steel production, with common ownership, "contrasts significantly from the fragmented marketing and sales practises that existed when the finding was originally put in place in 2001."¹⁴⁵
     
     
137. MSS cited other multi-national steel producers such as Arcelor and Thyssen Krupp as examples of the movement away from fragmentation and in many cases, state-ownership, where profit seeking was not a primary driver of business¹⁴⁶.
     
     
138. In terms of its likelihood to dump in Canada, MSS asserted that it sees "little commercial sense" in dumping hot-rolled product into Canada given its relationship with Mittal, a Canadian producer that also makes the goods under review¹⁴⁷.

Serbia and Montenegro

139. United States Steel Serbia (USSS) opposes the continuation of the finding on the basis that the evidence on the record does not support the position that in absence of the finding dumping from Serbia and Montenegro will resume.
     
     
140. USSS submitted that: "Rather than present positive evidence, as required, the Canadian mills have simply presented allegation, conjecture and pure speculation."¹⁴⁸
     
     
141. USSS submitted that the change in corporate ownership structure in the latter part of 2003 is a significant development, not to be overlooked. Amongst its submissions, the company referenced the CITT decision in its expiry review of cold-rolled steel sheet in 2004, where the CITT acknowledged that US Steel's controlling acquisition of US Steel Kosice (USSK - Slovak Republic) and the resulting change in strategic direction, along with its then pending accession to the European Union, as developments which merited strong consideration¹⁴⁹:
     
     

     "The Tribunal accepts USSK's position that this change in ownership has brought with it a significant change in commercial strategy...the Slovak Republic's accession to the European Union in May 2004, reduces the incentive for the company to export to distant merchant markets such as Canada. Given these arguments, the Tribunal considers it unlikely that USSK will engage in activities of such volumes that they would disrupt the North American Market."¹⁵⁰

142. USSS also submitted that US Steel's assertion that it would not allow one of its subsidiaries to cause market disruption in North America is supported by the fact that USSK has not exported flat-rolled products to Canada in 2004 or 2005¹⁵¹.
     
     
143. USSS distinguished itself from other steel making enterprises by asserting:
     
     

     "USSS is commercially driven, not production driven. USSS does not produce and sell on a speculative basis. USSS produces and sells only against prior confirmed orders."¹⁵²

144. USSS asserted that under its new corporate direction, the company "has emerged as a responsible producer, focused on its local Balkan and European Union markets."¹⁵³
     
     
145. USSS summarized its position that it is unlikely to dump hot-rolled steel sheet into Canada because of its change in business practises (i.e. since it ceased to operate as Sartid A.D. and became US Steel Serbia), its focus on local markets, the improvement in USSS's markets and its relationship with US Steel¹⁵⁴.
     
     
146. Further to their asserted focus on local markets, USSS stated:
     
     

     "The choice of markets is driven by transportation costs - the closer the market is to the mill, the better the return. There are a number of other mills which are prepared to compete in the region on the basis of price instead of quality and service. USSS will not engage in a race for the bottom based on price."¹⁵⁵

147. Continuing with the position that the local market provides ample opportunity for its sales, USSS stated:
     
     

     "Since 2000, Serbia and Montenegro has benefited from Autonomous Trade Measures (ATMs) granted by the European Community. These measures allow almost all imports originating in Serbia and Montenegro to enter the EU without quantitative restrictions and exempt from custom duties. The only exceptions are some beef and fish products, sugar and wine, to which tariff quotas apply."¹⁵⁶

148. USSS stated it does not foresee itself making any sales of subject goods to Canada in the near future. Rather, given the present ownership structure, the company suggested that the US 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, while not precluding the possibility of making sales, USSS refuted any suggestion that it would dump into the Canadian market¹⁵⁷.

South Africa

149. Only one South African producer, Mittal Steel South Africa (Mittal SA), participated in this expiry review and provided both a case brief and reply submission in support of its position that the continuation or resumption of dumping of South African hot-rolled steel sheet into Canada is unlikely if the finding is allowed to expire.
     
     
150. With respect to the performance of exporters regarding production, capacity utilization, sales volume, inventories, etc., Mittal SA stated very generally that there is no evidence on the record that any such factors exist which would encourage Mittal SA to engage in injurious dumping of hot-rolled sheet into Canada. No further argument or evidence was addressed. Regarding the likely future performance of exporters, Mittal SA stated that it has no plans for capacity expansion concerning hot-rolled steel sheet¹⁵⁸.
     
     
151. Mittal SA forecasted that its exports will decline due to rising demand in the domestic market and any exports will be focused in Africa. Mittal SA indicated that its domestic sales increased in 2004 and the domestic market continued its strong steel demand in 2005 driven by good economic conditions¹⁵⁹.
     
     
152. Mittal SA provided a list of anti-dumping and countervailing measures in place concerning hot-rolled sheet and other steel products from South Africa. These measures include three from the US and one each from Thailand, Pakistan and Argentina. Mittal SA stated that South African exports were not subject to safeguards and that the inclusion in a safeguard measure indicates nothing with respect to past or future behaviour. Mittal SA further stated that findings concerning other flat-rolled products are not relevant to this expiry review investigation¹⁶⁰.
     
     
153. Mittal SA argued that should the finding be rescinded and it were to export to Canada, it would sell in relatively small volumes and in a disciplined and non-disruptive manner. Mittal SA stated that it is likely that any exports from Mittal SA would complement or supplement production of Mittal Canada, a hot-rolled sheet producer in Canada and a sister company of Mittal SA¹⁶¹.
     
     
154. In its case brief, Mittal SA rebutted two issues, namely: global overcapacity and anti-dumping orders, as raised by the Canadian producers. Mittal SA submitted that the general assertion of global overcapacity by the Canadian producers does not accurately reflect the specific market conditions facing South African producers. Mittal SA further stated that the Canadian producers rely heavily on the existence of anti-dumping orders in Canada and other jurisdictions to demonstrate propensity to dump. Mittal SA submitted that there are no recent findings in place with respect to subject hot-rolled sheet and there are no anti-dumping measures in place that are directly related to this expiry review¹⁶².
     
     
155. Mittal SA stated that arguments presented by the Canadian producers in their case briefs are highly generalized and often their allegations relate to products other than subject goods, or to total steel production. Mittal SA further argued that whether or not a Named Country might technically dump into other countries is not relevant to the President's determination concerning the likelihood of resumed dumping into Canada from the Named Country¹⁶³.
     
     
156. With respect to Stelco's case brief, Mittal SA argued that weak demand and overcapacity presented in Stelco's case brief are in a global context and not specific to South Africa or to the subject goods. Mittal SA stated that it is a historical and habitual argument that an absence of imports during the finding is an indicator of resumed dumping after the finding is rescinded¹⁶⁴.
     
     
157. Regarding new offshore sources addressed in Algoma's case brief, Mittal SA stated that none of the new offshore sources of hot-rolled steel sheet into Canada was from South Africa or from Mittal SA. If they are a problem, the new offshore sources should be addressed through a separate complaint. Mittal SA argued that there is no evidence on the record that Mittal SA could use another production facility in South Africa to produce subject hot-rolled sheet¹⁶⁵.
     
     
158. In response to Dofasco's case brief, Mittal SA argued that there is no reason to lump South Africa and Bulgaria together because South Africa has nothing in common with Bulgaria, other than their mutually relative insignificance in the Canadian market¹⁶⁶.

Ukraine

159. Ukrainian producer, Zaporozhstal Iron and Steel Works, notified the CITT on November 3, 2005, that it did not export its own metal products to Canada during the period of 1996-2005 and does not plan to in the future¹⁶⁷. The company further identified Ilyich as the party which carried out flat-rolled exports to Canada.
     
     
160. In its case arguments, Ilyich submitted that there is no likelihood of continued or resumed dumping from Ukraine because: there are no planned capacity additions to their facilities, the domestic market has continued to experience growth since 2001 and with prices for hot-rolled steel sheet in North America the highest in the world, any product sold to Canada would be sold at those high levels and would hence, not be dumped¹⁶⁸.
     
     
161. In addition, Ilyich cited the volume of its hot-rolled steel sheet production, 30 percent, which goes into downstream production as further decreasing the opportunity to dump¹⁶⁹.
     
     
162. Ilyich stated that the market for hot-rolled steel sheet is different today than it was in 2001, with much stronger prices today, even with the recent minor declines. Ilyich further remarked that the Canadian market for hot-rolled steel is very strong and figures to be very strong going forward, helping maintain high price levels¹⁷⁰.
     
     
163. To support its contention that North American prices will remain high through 2006 and into 2007, at levels that would not encourage dumped imports, Ilyich referenced a Morgan Stanley report for December 2005 which projected that hot-rolled coil spot prices in North America in 2006 and 2007 would be around US$ 550 and US$ 530 per mt, respectively. That article also made the following forecast:
     
     

     "Looking ahead to 2006-07, we expect that average annual prices will be mostly lower than in 2005; however, this is due largely to strong 1H05 pricing. Our 2007 estimates project a further decline in steel prices for all regions. At the regional level, the price differential between the US hot-rolled spot price and those in China is roughly $200/ton. Imports in the US are likely to pick up during 1Q06, with imports coming in the $50-100 below the domestic price. This is expected to put pressure on US steel pricing."¹⁷¹

164. Ilyich also cited an American Metal Markets report which the company stated demonstrates that current import prices are considerably higher than Ukrainian home market prices. Those quotes have commodity based hot-rolled coil selling at between US$ 500 and US$ 510/short ton¹⁷². (Translates to approximately US$ 550-562/metric tonne.)
     
     
165. Furthermore, in its ERQ submission, Ilyich stated: "We are not selling flat steel products to the to US market nor we [sic] ever consider [sic] Canadian market as a potential for our products."¹⁷³
     
     
166. Ilyich stated that its non-participation in the latest normal value review reflected its lack of interest in the Canadian market, not its inability to sell at undumped prices. Ilyich further remarked that given the higher prices in Canada, had the company been interested in the Canadian market it would certainly have participated¹⁷⁴.
     
     
167. Ilyich stated that its company's focus is on the domestic and surrounding markets and geared towards downstream production, including the production of galvanized cold-rolled sheet products¹⁷⁵.
     
     
168. The company asserted that the evidence on the record demonstrates that Ilyich does not, on average, dump into its export markets, and referred to export sales information provided in Appendix 3 from its ERQ response¹⁷⁶.
     
     
169. Ilyich further maintains that no anti-dumping cases have been initiated against Ukrainian flat-rolled products since 2001.

CONSIDERATION AND ANALYSIS

170. In deciding whether the expiry of the finding was likely to result in the continuation or resumption of dumping, the President considered factors specifically identified in paragraphs (a) to (i) of subsection 37.2(1) of the SIMR, as well as any other factors relevant in the circumstances in rendering a determination pursuant to paragraph 76.03(7)(a) of SIMA.
     
     
171. Guided by the factors in the aforementioned SIMR 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 conducted in this review:
     
     
     • There is significant over-supply in global markets, driven by the supply surplus in China;
     • New capacity and production is being added, leading to continuing supply increases;
     • Excess capacity and production in China has now transformed that country into an exporting source;
     • Amidst the over-supply, there has been a dramatic deterioration in global export prices;
     • China and export dependant suppliers are directing increasing export volumes to alternate markets;
     • Recent pricing data shows that the exporters are selling at "dumped" prices in these alternate markets, including prices below the total cost of the goods;
     • The exporters in the Named Countries sold little tonnage into Canada while the finding was in place, suggesting that they cannot compete in the Canadian marketplace at undumped prices;
     • Trade measures by other countries, including the United States, mean there are fewer "open" markets, increasing the risk that significant export volumes will be directed to Canada in the absence of the anti-dumping measures.
     
     
172. Before presenting a country-by-country analysis on the issue of the likelihood of continued or resumed dumping and/or subsidizing, there are certain issues that relate to the subject goods on a broader scale. In particular, the following issues are addressed: factors relating to the nature of the product including the commodity nature of hot-rolled steel sheet and the capital-intensive nature of steel production; steel market developments and trends; and the impact of China.

Factors Related to the Nature of the Product

173. The significant number of anti-dumping measures involving steel products, both in Canada and several other jurisdictions, can be related in large part to the very nature of the product and the industry.
     
     
174. The factors that relate to the nature of the product include the commodity nature of hot-rolled steel sheet as well as the capital-intensive nature of steel production. The combined effects of these characteristics can have a significant impact on pricing. These are addressed hereafter.

Commodity nature of hot-rolled steel sheet

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

Capital-intensive nature of steel production

176. A second characteristic of the product involves the capital intensive nature of steel production. As the CITT once noted, "Steel mills are capital intensive with high fixed costs. In order to recover fixed expenses, steel mills must run at high levels of production capacity. When home market demand drops, producers will search out foreign markets to maintain capacity utilization to ensure that these fixed costs are recovered."¹⁷⁷This is often referred to as the "economics of steel production." This characteristic is particularly important when there are conditions of overcapacity, as a producer may find it more feasible to sell excess production in foreign markets at depressed prices rather than reduce production, as long as the producer's variable costs are covered.

Steel market developments and trends

177. Since 2003, the global steel industry and steel markets have experienced a series of dramatic changes.
     
     
178. The most significant development continues to revolve around China's emergence as a dominant steel producing country and its influence on global steel markets and developments.
     
     
179. Other fundamental changes in the industry include the dramatic upturn in raw material input costs and the extreme volatility in prices and supply-and-demand conditions, both directly impacted by China's phenomenal steel output growth.
     
     
180. Also noteworthy are the trends relating to steel industry consolidation and rationalization, which has been a driving force in recent years, mostly in mature markets such as North America and Europe. While this continues to be a defining feature in the industry, this effort is only starting to be pursued in other key regions, including Asia and China.

Impact of China

181. As China is fundamental to a wider analysis of global steel trends and issues, it is important to consider recent developments in the Chinese steel market.
     
     
182. The dramatic jump in world steel output and demand in recent years is directly linked to increased economic activity in China and the related expansion of Chinese steelmaking production.
     
     
183. China is now the world's largest steel producer, accounting for approximately 350 mmt or 31 percent of total global crude steel output. In fact, over the period from 2000 to 2006, Chinese steel production will have increased by 220 mmt (170 percent) as compared to 54 mmt (7.5 percent) in the rest of the world. Chinese consumption statistics are equally striking over this period, growing by 180 mmt as compared to 70 mmt in all other countries combined. Put another way, the amount of steel production added by China in just the last five years is almost equal to twice the total current amount of steel production from all of North America (NAFTA countries) (NAFTA steel production is reported to be approximately 126 mmt in 2005)¹⁷⁸.
     
     
184. China's impact on steel markets extends into other key areas including raw materials. Raw material costs for steelmakers for important inputs such as iron ore and coking coal have moved up dramatically in recent years, led by the voracious appetite of Chinese steel makers and related global concerns about shortages¹⁷⁹.
     
     
185. The Government of the People's Republic of China (GPRC) has become increasingly concerned with the aggressive investment and expansion of the Chinese steel sector (as well as other industry sectors) and the related consequences of supply and demand disparities and unsustainable rates of growth.
     
     
186. Consequently, in late 2003 and into 2004, the GPRC introduced a number of measures to curtail growth in the steel sector including administrative actions such as: tightening on bank lending to steel producers, restrictions on project approvals, land-use restrictions, etc.
     
     
187. As an extension of these previous efforts, China's National Development and Reform Commission (NDRC) introduced a comprehensive steel policy in July 2005, with a range of regulatory provisions intended to direct and control what is arguably the world's most fragmented and fastest growing national steel industry¹⁸⁰. Additional industry and government initiatives have been announced recently¹⁸¹.
     
     
188. Despite these efforts, overall steel output has continued rising, in excess of demand growth rates, leading to a supply surplus and related price declines in China and other Asian markets, in the last quarter of 2005.
     
     

Likelihood of Continued or Resumed Dumping

189. The following analysis starts with the Asian markets, specifically China, Chinese Taipei and India, followed by Brazil, Bulgaria, the former Yugoslav Republic of Macedonia, Ukraine, Serbia and Montenegro and South Africa. The analysis of the continuation or resumption of subsidizing, relating to India, is addressed subsequently.

China

190. As noted earlier, two Chinese producers provided a response to the ERQ, Baosteel Group (Baosteel) and Angang Group Ansteel Co. Ltd. (Ansteel), two of the largest steel producers in China. No case arguments or reply briefs were filed by either of these two producers.
     
     
191. China is the world's largest steel producer and is expected to account for approximately 350 mmt, or 31 percent of global crude steel output in 2005¹⁸².
     
     
192. In terms of economic activity, China continues to generate robust economic growth with reported 2004 GDP growth rates of 9.5 percent; and rates of 9.4 percent, annualized, for the third quarter 2005. In fact, these GDP figures may be understated, as there are reports that official estimates of the size of the Chinese economy should be expanded by up to 20 percent¹⁸³.
     
     
193. Similarly, fixed asset investment is continuing to grow strongly, in the range of 25-30 percent and industrial production grew 16.3 percent in the first 9 months of 2005¹⁸⁴. Consistent with this economic activity, the China Iron and Steel Association (CISA) reported that China's investment in the iron and steel sector rose 28.1 percent to 173.3 billion RMB (approximately US$ 20.8 billion ) in the first 9 months of 2005¹⁸⁵.
     
     
194. Evidence regarding market intrusive behaviour by the GPRC and the introduction of a range of regulatory and administrative measures, is well chronicled as part of the CBSA's recent reinvestigation of normal values and export prices on certain hot-rolled steel sheet products from China and other countries¹⁸⁶.
     
     
195. This evidence of government interference and controls resulted in the determination by the CBSA, as per section 20 of SIMA, of substantial price determination by the GPRC and the opinion that domestic pricing is not the same as it would be if determined in a competitive market.
     
     
196. As per this provision of the law, normal values for Chinese exporters were subsequently established based on pricing data from alternate competitive third country markets, namely India¹⁸⁷.
     
     
197. This "surrogate country" normal value methodology is consistent with the approach followed on previous normal value reinvestigations involving steel products from China.
     
     
198. The development of the steel surplus in China is directly related to the phenomenal growth in steel making investment and expansion. Chinese crude steel output totalled 255.3 mmt in the 9-month period ending September 2005 and is expected to reach almost 350 mmt for the full year. This compares with crude steel output of approximately 280 mmt in 2004, a growth rate of 67 mmt or approximately 24 percent¹⁸⁸. In fact, China's projected rise in steel production will likely account for the bulk of gains in world crude steel production recorded in 2005¹⁸⁹.
     
     
199. The growth in steel output, in excess of demand rates, has prompted continuing warnings of over-supply¹⁹⁰. Consistent with wider developments in the industry, hot-rolled steel sheet has been one of the product segments most affected by developments in the Chinese steel market in 2005. It is more widely traded than downstream products¹⁹¹and new integrated steelmakers usually sell most of their output as hot-rolled coil because there can be a significant time lag before the needed expertise is developed to produce high quality downstream products such as cold-rolled coil and coated products¹⁹².
     
     
200. Taking the January to April 2005 period as an example, while crude steel output increased almost 25 percent when compared with the corresponding period in 2004, market reports indicate that the hot-rolled coil product segment itself generated an increase of 7.4 mmt, or 42.2 percent¹⁹³. Figures to the end of May 2005 from this same market source show hot-rolled coil output up 43.5 percent over the same period in 2004¹⁹⁴.
     
     
201. Consistent with this growth in output, the CISA has stated that China could see its hot-rolled coil capacity expand from around 121 mmt by the end of 2005 to 208 mmt by 2010¹⁹⁵.
     
     
202. The dynamics and nature of the Chinese steel industry make it difficult to accurately determine and forecast Chinese steel capacity, production and consumption figures, for steel products in aggregate and the hot-rolled steel sheet products subject to this expiry investigation. Different analysts and steel authorities often present significant differences in their steel projection forecasts¹⁹⁶.
     
     
203. In order to interpret and analyze capacity, production and consumption figures for the Chinese hot-rolled steel sheet sector, the CBSA relied on industry data and information from the participating Chinese mills as well as various independent market sources. Specifically, Baosteel provided a statistical worksheet, drawn from Chinese industry sources, which provided total consumption, and a related break-out of production, imports, and exports up to the end of the third quarter 2005¹⁹⁷.
     
     
204. Beyond the third quarter 2005, the two Chinese mills provided little information on Chinese industry capacity and production aside from some general statements about projected demand increases in future years. In considering possible developments after 2005, the CBSA relied on forecasted data from the October 2005 market publication World Steel Dynamics (WSD)¹⁹⁸. Data from WSD appears consistent with wider market commentary on the Chinese steel industry.
     
     
205. Statistical data provided by Baosteel shows that China has dramatically increased its production of hot-rolled steel sheet over the POR. Specifically, Chinese hot-rolled steel sheet production is up 24 percent for 2004 when compared with the previous year and production to the end of the third quarter 2005 already exceeds the total production reported for all of 2004¹⁹⁹. A straight-line projection of these third quarter figures indicates that production of hot-rolled steel sheet for the full year 2005 will grow in excess of 34 percent when compared to 2004. In fact, other market sources indicate production growth for hot-rolled steel sheet in excess of 40 percent in 2005²⁰⁰.
     
     
206. As well, Baosteel's reported data shows that the large jump in Chinese production of hot-rolled steel sheet has acted to displace imports into China during the POR. Regarding exports, the industry data provided by Baosteel shows Chinese exports of hot-rolled steel sheet have increased from 530,000 tpy (tons per year - approximately 482,000 mt²⁰¹) in 2003 to 1.60 million tpy (1.45 mmt) in 2004. For the full year 2005, Chinese exports are forecast to reach 2.31 million tpy (2.1 mmt) based on a projection of Baosteel's reported data for the third quarter 2005²⁰². Alternate information available to the CBSA from other steel industry sources indicates that Chinese exports of hot-rolled steel sheet could be closer to 4.80 million tpy (4.35 mmt) for the full year 2005, based on a projection of August year-to-date numbers²⁰³.
     
     
207. In summary, between 2003 and 2005, not only has China's rising production now displaced imports, it has resulted in China becoming a significant exporter and resulted in the development of a Chinese hot-rolled steel sheet market defined by significant excess supply.
     
     
208. While the Chinese mills made general statements about demand forecasts beyond the third quarter 2005, they did not provide capacity and production forecasts for future periods. The CBSA relied on data from an October 2005 publication of WSD for this information²⁰⁴.
     
     
209. In 2006, WSD forecasts Chinese hot-rolled steel sheet capacity to increase 43 percent, accompanied by production growth of 17 percent. Even with strong demand growth rates of 10 percent, as forecast by Baosteel for 2006 and 2007²⁰⁵, it appears that capacity and production growth will continue to outpace consumption, adding to the surplus of finished hot-rolled steel sheet available for sale to export markets.
     
     
210. In 2007, total hot-rolled steel sheet capacity, as forecast by WSD, continues to grow significantly, up 28 percent²⁰⁶. While growth in actual production output is estimated to slow to 12.5 percent, this still exceeds Chinese demand rates projected by Baosteel of 10 percent which would likely result in continuing high surpluses available for export. In summary, based on these projections, not only will China likely have significant amounts of hot-rolled steel sheet production available for sale to export markets, it will potentially have even larger amounts of available unused capacity.
     
     
211. Ultimately, the dilemma faced by China is not on the demand side. Rather, the issue is that the country's demand increases are being offset by even more significant increases in capacity and supply. Similarly, the surplus position available for export does not look likely to recede any time soon and there is the related spectre of large amounts of available unused capacity in the near future.
     
     
212. Regarding market and pricing developments, while Chinese domestic price declines on hot-rolled steel sheet occurred as early as the second quarter 2005²⁰⁷, the over-supply of hot-rolled steel sheet and related price declines accelerated by the end of September and into October 2005, with prices slipping to lows of RMB 2,800/mt, or less, including VAT (US$ 295/mt excluding VAT)²⁰⁸. The latest available information on the record from January 2006 suggest that domestic prices remain at low levels²⁰⁹.
     
     
213. These domestic prices are below estimated average total costs for even the lowest cost producers in China, as reported by WSD in October 2005²¹⁰.
     
     
214. Consistent with the difficult domestic market situation in China, the availability of Chinese exports of hot-rolled steel sheet at low prices have been widely reported. These sales of low-priced hot-rolled coil are reported to have been disrupting and undermining prices in various markets, most notably the Asian region, as well as Middle Eastern markets²¹¹. According to market reports, export quotes for Chinese hot-rolled coil have been available into January 2006²¹², at prices below the total average cost reported by WSD for low cost Chinese mills.
     
     
215. It seems likely that Chinese mills have incurred significant losses on these sales and have exported to foreign markets at dumped prices. In fact, Dofasco cited various market reports which indicate that a number of countries are considering the filing of anti-dumping petitions against the increasing volume of low-priced Chinese imports of hot-rolled steel sheet²¹³. Similarly, rising internal capacity, excess supply and low prices are not only stimulating higher export volumes out of China, but are encouraging other suppliers, who historically relied on China as a major buying source, to look for alternate markets²¹⁴.
     
     
216. There are also a wide range of anti-dumping measures in place against hot-rolled steel sheet and other steel products from China. Most notably, the United States has measures in place against hot-rolled steel sheet, with anti-dumping duty rates ranging from 64.2 percent for product from Baosteel to 90.8 percent for product from other steelmakers²¹⁵. Not only does this suggest a propensity to dump, it also means there are fewer open markets available to absorb the increasing quantities of hot-rolled sheet product available for sale.
     
     
217. As noted by market analysts, Chinese exports can be disruptive to export markets²¹⁶. Remarkably, China is said to have around 200,000 steel trading companies, many of which have been criticized by Chinese mills for their role during the recent price collapse²¹⁷.
     
     
218. Regarding import activity into Canada, while China accounted for almost all of the import activity of hot-rolled steel sheet from the Named Countries during the POR²¹⁸, the total tonnages shipped are relatively small when compared to total imports of hot-rolled steel sheet. It is also likely that the anti-dumping measures have ensured some price discipline on these sales to Canada.
     
     
219. Opinions regarding developments in the Chinese steel industry, including the problems of oversupply and future levels of export activity, are mixed²¹⁹.
     
     
220. On the issue of steel production and oversupply, recent behavior suggests that most Chinese mills will continue to maximize output and price aggressively to clear product. The fragmented state of the industry makes it difficult for companies to reduce output and supply. In fact, as noted by Metal Bulletin Research, it is quite possible that "...industry consolidation will only take place against a background of little alternative options. That will mean widespread bankruptcy, potential closures and massive industry losses. We are nowhere near that stage yet in the development of the Chinese steel industry."²²⁰
     
     
221. Even with strong or increasing demand levels driven by continuing urbanization, infrastructure development and demand for consumer products, it is unlikely that the over-supply situation, including the surplus of hot-rolled steel sheet, can be reversed in the near-term. Regarding the hot-rolled steel sheet sector specifically, China is in a net export position and capacity and production growth in the next few years would appear to be well in excess of potential real steel consumption and demand rates. Absent dramatic reductions in new hot-rolled steel sheet steel capacity and output, it is hard to see how the current supply-demand imbalance can be reversed in the near-term absent significant export outflows.
     
     
222. In terms of possible Chinese central government measures to restrain exports, this remains uncertain. While the central government will likely play an increasing role in the steel market, capacity growth and over-supply is so great in the hot-rolled sheet product segment and the market so fragmented, it is difficult to see how such measures can be successfully implemented in the near term.
     
     
223. Rather, it appears likely that this over-supply for hot-rolled steel sheet will ensure sustained price pressures in the Chinese domestic market and on-going efforts to clear product in export markets at low prices, especially commodity grade hot-rolled coil.
     
     
224. While North America has largely avoided the price weakening to date and has been able to sustain a price premium relative to other markets, it is difficult to imagine that such a price gap can be maintained. A significant part of this relative pricing strength can also be related to the anti-dumping measures currently in place on hot-rolled steel sheet products in the United States and Canada from various countries including China, which has acted to shield the North American market from large import volumes of dumped product.
     
     
225. Ultimately, absent the anti-dumping measures, the CBSA is satisfied that there is a strong likelihood that China will try to increase exports to markets such as Canada, to help alleviate the supply-demand imbalance. As well, imports from China during the POR already suggest that Chinese mills continue to retain an interest in the Canadian market place.
     
     
226. Based on the addition of significant new hot-rolled steel sheet capacity and production and planned new capacity, in excess of Chinese domestic demand growth rates; continuing over-supply of hot-rolled steel sheet in China maintained by high capacity utilization and production rates; China's change to a net export position for hot-rolled steel sheet and increasing presence in export markets; recent evidence of aggressive pricing and disruption in export markets; anti-dumping measures in place by other countries; and a continuing commercial interest in the Canadian market place, 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 China.

Chinese Taipei

227. Chung Hung Steel (CHS) provided a response to the exporter ERQ as part of the current expiry review proceedings. However, they did not provide a case brief or reply submission regarding the likelihood of continued or resumed dumping if the anti-dumping measures are rescinded.
     
     
228. CHS's affiliate, China Steel Corporation, is the dominant steel producer in Chinese Taipei and is ranked in the top five steelmakers in the Emerging Market Economies²²¹. China Steel Corporation did not participate in these proceedings.
     
     
229. Chinese Taipei's economy is heavily leveraged and integrated with the Chinese mainland and China's economy plays an important role as an instrument of economic growth for Chinese Taipei. This interdependence extends to the steel sector where Chinese Taipei has acted as a major supplier to China, accounting for 46.7 percent of China's total steel imports in 2003²²².
     
     
230. In terms of economic activity, while Chinese Taipei experienced GDP growth of 5.7 percent in 2004, this is forecast to decline to 3.4 percent in 2005 and 4.3 percent in 2006.²²³
     
     
231. Chinese Taipei is a major steel producer and exporter, ranking 13th in the world in crude steel production in 2004²²⁴. It is also one of the world's top 10 steel exporting regions.²²⁵
     
     
232. Statistical data from the industry publication CRU Monitor (CRU) indicated that total hot-rolled steel sheet capacity in Chinese Taipei was approximately 12 mmt for 2004²²⁶.
     
     
233. Based on production and consumption figures from CRU reports, Chinese Taipei's production of finished hot-rolled steel sheet products²²⁷is estimated to be 4.055 mmt in 2004; 3.792 mmt in 2005; and 4.078 mmt in 2006²²⁸.
     
     
234. Similarly, Chinese Taipei's apparent consumption of finished hot-rolled steel sheet is estimated by CRU to be 3.7 mmt in 2004; 3.26 mmt in 2005; and 3.234 mmt in 2006²²⁹.
     
     
235. Despite the absence of net trade data, these figures suggest that minimum tonnages of hot-rolled steel sheet available for export will have increased from approximately 355,000 mt in 2004 to 532,000 mt in 2005; and close to 850,000 mt in 2006, or approximately 21 percent of total production.
     
     
236. Not only does this indicate that Chinese Taipei is increasingly export dependant, this apparent reliance on exports appears set to increase as there are reports of significant new production capacity being added in the next few years including approved expansion plans by Dragon Steel, which is 49 percent owned by China Steel Corporation. Formosa Plastics Group and the E United Group are also pursuing plans to build new integrated steel mills²³⁰.
     
     
237. CHS (then known as Yieh Loong Corporation) participated in the original dumping investigation and the subsequent review of normal values and export prices, completed March 3, 2003.
     
     
238. CHS did not participate in the most recent reinvestigation of normal values and export prices completed June 29, 2005. In fact, no other producer in Chinese Taipei participated in the original investigation proceedings or subsequent normal value reviews.
     
     
239. Regarding pricing developments, during the fourth quarter of 2005, Chinese Taipei suffered the same dynamics of high stock levels and low pricing for hot-rolled steel sheet, as has occurred in many other Asian markets.
     
     
240. This trend of tumbling prices was driven by oversupply in China. As China continued to produce large volumes of hot-rolled steel sheet in a domestic market environment characterized by low prices and excess supplies, it also constantly made low priced export offers of hot-rolled steel sheet to adjacent markets, adding to regional supply imbalances²³¹. The supply and pricing pressures are compounded in Chinese Taipei because China has traditionally been a major buying source for suppliers in Chinese Taipei and much of this sales output is being displaced by rising internal steel capacity in China.
     
     
241. Sales data provided by CHS in its exporter response to the ERQ, confirm the difficult market conditions faced by hot-rolled steel sheet producers in Chinese Taipei during 2005, including a substantial drop in total sales and significant price declines reported for both home market prices and export prices over the course of the year²³².
     
     
242. Ultimately, faced with the continuing presence of very low prices from Chinese hot-rolled coil exports, regional suppliers, including producers in Chinese Taipei, continued to cut prices during the latter part of 2005 in an effort to stay competitive.
     
     
243. Market reports note that China Steel Corporation dropped selling prices for hot-rolled coil by US$74 per mt for the fourth quarter 2005²³³. Additional price cuts were implemented in Chinese Taipei by China Steel and its affiliate, CHS, in December 2005 matching the downwards price spiral of regional price leaders such as China's Baosteel²³⁴. As noted in November's Metal Bulletin - Emerging Steel Markets Report, "...falling Chinese prices is resulting in the Chinese steel industry exporting deflation to its regional partners - particularly for hot-rolled coil."²³⁵
     
     
244. In fact, growing inventory levels and weak domestic market conditions appeared to be causing mills such as Chung Hung Steel to start looking more aggressively to export markets. For instance, market sources indicate that CHS increased their export volume from 25,000 tons to 36,000 tons from September to October 2005, an increase of more than 40 percent²³⁶.
     
     
245. As further evidence of the depressed pricing environment in the last half of 2005, CHS's ERQ response confirms that during the third quarter of 2005, average selling prices in the home market and export market for sales of hot-rolled steel sheet product were unprofitable²³⁷.
     
     
246. Prices at the end of 2005 for hot-rolled steel sheet from CHS were approximately $14,000 NTD (New Taiwan Dollars) or close to US$420 per mt²³⁸and confirms that CHS has continued to suffer from price deterioration. In fact, market reports suggest that CHS will incur a loss of at least $2 billion NTD in 2005 (over US$60.6 million), due to the difficult market environment²³⁹.
     
     
247. It should be noted that Chinese Taipei represented the second largest source of imports into Canada from subject countries in the period leading up to the CBSA's final determination of dumping and subsidizing on hot-rolled steel sheet, made July 18, 2001. For the 1999 calendar year, imports from Chinese Taipei totalled 129,537 mt, or more than 27 percent of total subject country imports. Similarly, for the 9 months ending September 2000, imports from Chinese Taipei totalled over 150,000 mt or more than 19 percent of total subject country imports²⁴⁰.
     
     
248. Following the imposition of the anti-dumping measures in 2001, Chinese Taipei's exports to Canada dwindled and, in fact, there have been no shipments of subject goods during the POR²⁴¹. The absence of sales activity since the imposition of the measures, particularly in light of the recent market weakness in Asian markets, provides a strong indication that exporters in Chinese Taipei are unable to compete at undumped prices.
     
     
249. In addition to Canadian anti-dumping measures against Chinese Taipei on hot-rolled steel sheet, other jurisdictions, including the United States, also have anti-dumping measures in place against imports of hot-rolled steel sheet and other steel products from Chinese Taipei²⁴². Not only does this suggest a propensity to dump, it also means there are fewer open markets available to absorb the increasing quantities of hot-rolled sheet product available for sale.
     
     
250. There appears to be no easing of the over-supply situation in the Asian region in the near-term, particularly for commodity hot-rolled coil and prices look likely to continue at low levels. The on-going weakness in pricing is likely to be particularly acute for export dependent steel countries like Chinese Taipei that have historically relied on China as a major buying source. Clearly, rising internal capacity in China has not only displaced imports from Chinese Taipei, but has also resulted in significant Chinese export tonnages into Chinese Taipei and other Asian markets at low price levels²⁴³.
     
     
251. Chinese and other emerging market suppliers such as Chinese Taipei appear compelled to compete for sales in alternate markets and there is already evidence that over-supply and related price weakening was spreading through Asia and into Middle East Markets at the end of 2005 and early 2006²⁴⁴.
     
     
252. It has been previously noted that North America has largely avoided the price weakening to date and has been able to sustain a price premium relative to other markets. However, as discussed previously, it is difficult to imagine that such a price gap can be maintained. Similarly, a significant part of this relative pricing strength can be related to the anti-dumping measures currently in place on hot-rolled steel sheet products from China and Chinese Taipei, which has acted to shield the North American market from large import volumes of dumped product.
     
     
253. Absent the anti-dumping measures, the CBSA is satisfied that there is a likelihood that Chinese Taipei will try to increase exports to markets such as Canada, to help alleviate the supply-demand imbalance in Asian markets. As well, the significant import activity from Chinese Taipei in the period leading up to the original finding suggest that mills in Chinese Taipei will take advantage of opportunities to find new markets. Similarly, when combined with competing low-priced tonnages from major supply sources in other disrupted markets, especially Asia, there is a strong risk that the pricing weakness already evident there will spread to Canada.
     
     
254. Based on the continued hot-rolled steel sheet supply surplus in Asian markets; the export dependence of mills in Chinese Taipei and displacement from the Chinese market; evidence of recent dumping in export markets and deterioration in export pricing; the search for new export markets in competition with low-priced imports from other countries such as China; the lack of a demonstrated ability to compete in Canada at undumped prices; past export activity to Canada; and the number of anti-dumping measures in place against steel goods from Chinese Taipei, 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 Chinese Taipei.

India

255. Two Indian hot-rolled steel sheet producers, namely, JSW Steel Limited (formerly Jindal Vijayanagar Steel Limited, JVSL) and SAIL provided responses to the exporter ERQ. However, they did not provide a case brief or reply submission regarding the likelihood of continued or resumed dumping or subsidizing if the anti-dumping and countervailing measures against India are rescinded.
     
     
256. The GOI also provided a response to the subsidy request for information but did not provide a case brief or reply submission. The analysis of India's subsidy programs and determination whether there is a likelihood of continued or resumed subsidizing if the finding is rescinded, is addressed separately in this report.
     
     
257. Based on 2004 steel rankings, India is the world's 8th largest steel producing country with approximately 32.6 mmt of crude steel output²⁴⁵. Based on available 2003 statistics, India is also the world's ninth largest net steel exporter²⁴⁶. For the 9 months ended September 30, 2005, crude steel output totalled 27.5 mmt, up almost 15 percent over the corresponding period in 2004²⁴⁷ and steel production continues to grow strongly. Consistent with this growth in steel making activity, the Indian government has recently introduced a National Steel Policy including the goal of tripling steel production to 110 mmt by 2020²⁴⁸.
     
     
258. With GDP of 7.3 percent in 2004 and GDP growth rate projections of 6.7 percent and 6.4 percent for 2005 and 2006, respectively, along with significant economic activity relating to infrastructure, housing and manufacturing, steel demand and consumption in India are likely to remain strong in the near term²⁴⁹.
     
     
259. Essar Steel Ltd. and JSW Steel Limited both participated in the CBSA's last two reinvestigations of normal value, export price and amounts of subsidy, completed March 3, 2003 and June 29, 2005, respectively²⁵⁰.
     
     
260. Although it provided a response to the exporter ERQ as part of the current expiry review proceedings, SAIL has not previously participated in any of the CBSA's reinvestigations to update normal values, export prices and amounts of subsidy.
     
     
261. During the POR, there were no shipments of hot-rolled steel sheet exported to Canada from India²⁵¹.
     
     
262. Statistical data from the industry publication CRU indicates that total hot-rolled steel sheet capacity in India is approximately 15.4 mmt in 2004, including downstream products processed from hot-rolled steel sheet. India's production of finished hot-rolled steel sheet products is estimated to be 10.208 mmt in 2004; 10.527 mmt in 2005; and 11.032 mmt in 2006²⁵².
     
     
263. Taking into consideration Indian consumption figures²⁵³, net exports of hot-rolled steel sheet have ranged between 700,000 and 850,000 mt during the last 3 years.
     
     
264. Consistent with the government's new National Steel Policy, many Indian and foreign steel makers have introduced large scale plans to increase steel production in India. This includes significant capacity additions of hot-rolled steel sheet, much of which is scheduled to come on stream over the next couple of years, along with large-scale investment and capacity expansion plans scheduled in future years.
     
     
265. Specifically, the CBSA has estimated that current expansion plans are expected to increase total hot-rolled steel sheet capacity by about 7.7 million tpy (7 mmt) or 45 percent over the next few years when measured against 2004 total hot-rolling sheet capacity of 15.4 mmt²⁵⁴.
     
     
266. Notwithstanding that some of this new hot-rolled output may be further processed into downstream products, it is difficult to see how the Indian domestic market will be able to absorb all of this increase in hot-rolled steel sheet capacity. Even with strong steel demand growth rates in the Indian market which are expected to range between 6 to 7 percent annually in future years²⁵⁵, it is unlikely that the Indian market will be able to absorb all of this new capacity and production. Rather, it appears more likely that substantial amounts of this new hot-rolled steel sheet output will be directed onto export markets.
     
     
267. Aside from the aforementioned projects, there are a number of even larger scale steel projects planned for future years. This includes planned projects by Tata Steel, Mittal Steel, South Korea's Posco, Jindal Power and Steel, and India's state-owned SAIL, amongst others²⁵⁶.
     
     
268. Recent reports from October 2005 and January 2006, confirm that India has not been able to escape the wider on-going weakness in Asian steel markets. As noted previously, the collapse of hot-rolled coil prices in China, in particular, appears to be undermining regional prices with significant tonnages being exported or diverted from that market, forcing regional players, including Indian suppliers, to look for other markets²⁵⁷.
     
     
269. Indian export price trends reflect these pricing pressures, with January 2006 transaction spot prices for commercial quality hot-rolled product down to US$ 400 /mt²⁵⁸as compared to April 2005 price highs of US$ 630/mt²⁵⁹.
     
     
270. Sales data provided by Indian producers provides further evidence of the difficult market environment at the end of 2005 and a propensity to dump. Specifically, JSW's sales data confirms that by the third quarter 2005, it is being forced to discount heavily on its export sales and sell in export markets at prices below prevailing home market prices²⁶⁰. In fact, on certain export sales, it appears that JSW is unprofitable and not recovering the full cost of the goods²⁶¹.
     
     
271. In terms of current and future sales strategies, SAIL will likely continue to be a major domestic market player because of government ownership. Similarly, both JSW and SAIL indicated that their future sales strategies will likely focus on their existing customer base including their growing home market, as well as export markets in adjacent Asian countries and Europe²⁶².
     
     
272. However, it should be noted that India was the largest source of imports into Canada from the Named Countries in the periods leading up to the CBSA's final determination of dumping and subsidizing on hot-rolled steel sheet, made July 18, 2001. For the 1999 calendar year, imports from India totalled 189,062 mt, or 40 percent of total imports from the Named Countries. Similarly, for the 9 months ending September 2000, imports from India totalled over 240,000 mt or approximately 32 percent of total imports from the Named Countries²⁶³.
     
     
273. As noted earlier, following the imposition of the anti-dumping measures in 2001, India's exports to Canada have fallen off dramatically and, in fact, there have been no shipments of subject goods during the POR²⁶⁴. The absence of sales activity since the imposition of the measures, particularly in light of the current market weakness in Asian markets, provides a strong indication that Indian exporters are unable to compete at undumped prices.
     
     
274. In addition to Canadian anti-dumping measures against India on hot-rolled steel sheet, other jurisdictions, including the United States, also have measures in place against imports of hot-rolled steel sheet and other steel products from India²⁶⁵. Not only does this suggest a propensity to dump, it also means there are fewer open markets available to absorb the increasing quantities of hot-rolled sheet product available for sale.
     
     
275. Many analysts and reports have pointed to the strong dangers of an Indian steel supply glut in light of the ambitious list of expansion plans²⁶⁶. While growing domestic demand supports the need for additional capacity, available evidence suggests that the Indian steel industry, aside from future large scale plans for massive capacity expansion, is already adding significant amounts of new hot-rolled steel sheet capacity in the near term.
     
     
276. Out to the year 2010, the outlook is even more pessimistic, with some market sources suggesting that domestic crude steel capacity could reach 114 mmt per year from 43 mmt per year in 2005. These same sources state that this could lead to dramatically higher export tonnages of 34-35 mmt (representing 45-46 percent of production), as compared to exports of approximately 4.5 mmt (or 15 percent of production) in 2005²⁶⁷.
     
     
277. In summary, it appears that India is building up hot-rolled steel sheet producing potential in excess of forecasted domestic demand levels and thus will likely become a significantly larger exporter, sooner rather than later. This export build-up is occurring at the same time that other Asian markets, including China, are suffering from a supply surplus of hot-rolled steel sheet products.
     
     
278. Compounding these difficulties is the loss of China as a major buying source. Ultimately, Indian exporters will increasingly have to compete in alternate markets against Chinese and other emerging market suppliers, all of this in a global hot-rolled pricing and supply environment that is likely to remain under pressure for the foreseeable future.
     
     
279. Absent the anti-dumping measures currently in place, the CBSA is satisfied that there is a strong likelihood that India will try to increase exports to markets such as Canada, to help alleviate the supply-demand imbalance in Asian markets.
     
     
280. As well, the significant import activity from India in the period leading up to the original finding suggest that Indian mills will take advantage of opportunities to find new markets. Similarly, when combined with competing low-priced tonnages from major supply sources in other disrupted markets, especially Asia, there is a strong risk that the pricing weakness already evident there will spread to Canada.
     
     
281. Based on reports of significant new hot-rolled steel sheet capacity in excess of potential domestic demand growth rates; a continued export build-up at the same time that Indian suppliers are increasingly displaced from major markets such as China; the need to search for new export markets, such as Canada, in competition with low-priced imports from other emerging markets such as China; evidence of recent dumping in export markets and deterioration in export pricing; the lack of a demonstrated ability to compete in Canada at undumped prices; past export activity to Canada; and the existence of anti-dumping measures in place against steel goods from India by other countries, 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 from India.

Brazil

282. Four Brazilian producers, namely: Companhia Siderúrgica Nacional (CSN), Usinas Siderurgicas de Minas Gerais S.A. (USIMINAS), Companhia Siderúrgica Paulista (COSIPA) and Companhia Siderúrgica de Tubarão (CST), provided reponses to the ERQ as well as case briefs and reply submissions to the expiry review proceeding.
     
     
283. A 2005 publication by the International Iron and Steel Institute (IISI) identified Brazil as the fourth largest net exporter of steel, by volume, in the world at 11 mmt, trailing only Japan, Ukraine and Russia²⁶⁸.
     
     
284. Other figures from the IISI rank Brazil as South America's largest hot-rolled flat product producer, accounting for 14.4 mmt of the total 19.7 mmt produced, a 73 percent share²⁶⁹. According to this same report, at the time of the original finding in August 2001, Brazil accounted for a similar share of the South American market but produced almost 3.8 mmt less of hot-rolled flat products.
     
     
285. CSN, COSIPA and USIMINAS²⁷⁰ were all named in the original CITT finding on August 17, 2001²⁷¹. One other producer, CST²⁷², was not named in the original CITT finding, given that the company only began its hot-rolling operation in 2002²⁷³.
     
     
286. Regarding the CBSA's last two reinvestigations of normal values and export prices, CSN, COSIPA and USIMINAS each participated in the first reinvestigation completed on March 3, 2003, while CST was the lone Brazilian participant in the second reinvestigation completed June 29, 2005²⁷⁴. In each instance of participation, the Brazilian exporters applied for and received normal values. Nonetheless, Brazil did not ship to Canada during the POR²⁷⁵.
     
     
287. According to data submitted by the four Brazilian producers, these companies account for nearly all the hot-rolled steel sheet production in Brazil²⁷⁶. Another Brazilian steel producer, Acesita S.A., was provided an ERQ but did not respond. Acesita S.A. represents the only other Brazilian steel producer the CBSA believes may produce hot-rolled steel sheet for open market sale.
     
     
288. Taking into consideration typical product mix, the Brazilian producers have reported a total hot-rolled sheet capacity of about 13 mmt²⁷⁷.
     
     
289. The CBSA consulted several independent trade reports with respect to Brazilian production and sales of hot-rolled steel sheet. The CRU Monitor for November 2005, for example, suggested that Latin American countries production of hot-rolled steel sheet for the first three quarters of 2005 was about 4.7 mmt²⁷⁸. Brazil is by far the largest hot-rolled producer amongst the Latin American countries²⁷⁹.
     
     
290. Metal Bulletin Research's Emerging Steel Markets Monthly (ESMM) reported that through the first 10 months of 2005, exports accounted for about 34 percent of Brazilian hot-rolled sheet sales. This figure is close to the figure provided by the Brazilian producers for the first three quarters of 2005²⁸⁰.
     
     
291. The aforementioned ESMM publication also indicated that of the more than 10 mmt of hot-rolled steel sheet produced and sold in 2005²⁸¹, less than 4.1 million was actually sold as hot-rolled sheet, with the rest used in downstream production, which includes cold-rolled and coated sheet products²⁸². According to the report, apparent domestic consumption of hot-rolled sheet in Brazil is believed to be about 2.8 mmt for prorated 2005, with hot-rolled imports accounting for less than 3 percent of that market²⁸³. The 1.3 mmt of estimated exports is consistent with reported amounts by the Brazilian producers.
     
     
292. CST's controlling company, Arcelor Brasil, recently stated its intention to expand CST's annual hot-rolling capacity from 2.3 to 4 mmt²⁸⁴; a plan that may be accelerated in light of the recent lifting of anti-dumping measures in the US²⁸⁵. The evidence on the record indicates that this is the only confirmed expansion plan in respect of Brazilian hot-rolled steel sheet production. The Brazilian producers stated in their case brief that these plans are still under review²⁸⁶.
     
     
293. Although certain details from different sources vary, the evidence on the record supports the position that the Brazilian producers sell upwards of 4.9 mmt of hot-rolled sheet per year, about a quarter to a third of which is exported²⁸⁷.
     
     
294. The Brazilian producers reported capacity utilization for hot-rolled steel sheet at or near 100 percent for the most recently available POR²⁸⁸. The evidence on the record reveals that while capacity utilization may be high, these rates are creating pressure to sell into the export market.
     
     
295. The reliance on exports was an increasing trend in the first three quarters of 2005, with the Brazilian producers reporting, on aggregate, that 26 percent of their hot-rolled steel sheet sales on a volume basis came from exports during that period²⁸⁹. That figure was as low as 15 percent in the first quarter and increased to 43 percent in the third quarter.
     
     
296. The Brazilian producers contended that it is more likely that currently exported product would be reduced to help fill the domestic demand in Brazil. USIMINAS and COSIPA asserted that their business plans are focused on the domestic market. They stated that:
     
     

     "(The) USIMINAS SYSTEM has become highly focussed and intends to become increasingly focused on the production of high value added materials such as galvanized products (especially to the auto industry) and will therefore decrease its supply of hot-rolled products sold into the merchant market as such."²⁹⁰

297. With this said, USIMINAS/COSIPA also remarked on the downturn for hot-rolled steel in Brazil in 2005.
     
     

     "In 2005, HR demand from the Construction, Rerolling and Small Diameter Tubes also fell. The only representative segment with a positive performance is the Autoparts, which will show a 3 percent growth in hot-rolled consumptions this year (due to strong vehicle exports and domestic sales)." ²⁹¹

298. CSN also projected a 9.8 percent increase in domestic flat steel product consumption in 2006, while at the same time acknowledging the minimal growth in hot-rolled domestic sales in 2005, largely attributable to the early year spike in interest rates and the resulting downturn in domestic demand from the construction industry²⁹².
     
     
299. The evidence on the record indicates that Brazilian interest rates are declining and the Brazilian Steel Institute (IBS), the national association of Brazilian steel producers, is forecasting domestic flat product sales to increase by 6.9 percent in 2006²⁹³. The IBS also reported that domestic flat-steel sales in 2005 were expected to be down 8 percent from the previous year²⁹⁴. Consequently, projected increases in 2006 would be insufficient to fully recover the expected decline in domestic flat-steel demand in 2005.
     
     
300. The Brazilian producers also asserted that prospective growth in the Brazilian economy reflects the strength for hot-rolled steel in the domestic market. For example, CST projected flat-rolled steel consumption growth at 7-8 percent²⁹⁵.
     
     
301. Brazilian producers have expressed confidence in the strength of their domestic market for hot-rolled steel sheet and will thus favour domestic sales over exports going forward in 2006 and 2007. Notwithstanding this optimism for growth, the evidence on the record indicates that Brazil will likely maintain a high dependency on exports.
     
     
302. Independent market analysis obtained by the CBSA also detracts from the notion that strength in the domestic Brazilian market will deter exports as suggested by the Brazilian producers. In speaking of the Brazilian hot and cold-rolled products, Metal Bulletin Research reported in January 2006 that:
     
     

     "Brazilian flat product exports have been on a rising trend. They have been rising steadily, driven by rising HR and CR volumes...We expect the rising export trend to continue in 2006²⁹⁶.

303. CSN's own report to the US Securities Exchange Commission for 2004 stated:
     
     

     "...(a)s the Brazilian steel industry produces substantially more steel than the domestic industry can consume, the Brazilian steel industry is heavily dependent on export markets."²⁹⁷

304. Complicating Brazil's export dependency is the supply glut in China, decreasing China's previously voracious appetite for steel imports. China had been a major consumer of hot-rolled steel sheet from many steel-producing countries including Brazil²⁹⁸. Without the ability to rely on China to absorb steel at the rate it did through most of 2004, exporting nations like Brazil will need other markets to absorb their export sales.
     
     
305. The Brazilian producers have asserted that the lack of exports to Canada of hot-rolled steel sheet by Brazilian producers with normal values is not an indication of an inability to sell subject goods at undumped prices. The Brazilian producers cited evidence that normal values for Chinese exporters were, at given times, based on a surrogate country methodology, which involved Brazil.
     
     
306. The Brazilian producers stated that since exporters from China were able to ship during the POR using those values, the Brazilian values are clearly sufficient to compete in the Canadian market²⁹⁹.
     
     
307. Notwithstanding instances where Brazil has been used as a surrogate for Chinese normal values, the conclusion drawn by the Brazilian producers is an oversimplification of the dynamic involved in completing a sale. Acquiring a surrogate normal value is but one element of this dynamic and consequently, the CBSA is unable to draw any conclusion from the ability of Chinese exporters to sell at or above normal value in relation to Brazil.
     
     
308. The only clear evidence on the record is that Brazilian producers have applied for and received normal values during the POR but have not exported to Canada during that time. Participation in a reinvestigation to receive normal values plainly implies an interest in the market, especially considering the time and resources expense that such participation involves.
     
     
309. An analysis of hot-rolled steel sheet sales as per the Brazilian exporter submissions reveals that the average export price often undercuts the average domestic selling price, at times by considerable amounts.
     
     
310. CSN's submission, for example, indicates that it has sold hot-rolled steel sheet below its average domestic market-selling price to each of its top four export markets in the first three quarters of 2005. In fact, through the first three quarters of 2005, the degree of price undercutting in the export market relative to home market prices became progressively greater. By the third quarter, the reported average domestic price was nearly double the average export price in the four largest export markets³⁰⁰.
     
     
311. Similar selling practices were demonstrated by CST and to a lesser extent, USIMINAS. In the case of the latter, only the third quarter of 2005 shows a considerable gap between the home market average price and each export market price³⁰¹. CST, however, demonstrated export pricing for hot-rolled steel sheet in the third quarter at discounts comparable to those of CSN. Two of CST's markets in that period reported average prices that were nearly half of the domestic average price³⁰².
     
     
312. The disparity between selling prices is significant enough to suggest that hot-rolled steel sheet products are being sold in export markets at discounted levels. Since the Brazilian exporters provided no evidence to the contrary, the best available information on the record indicates that Brazilian producers have recently been discounting the price of hot-rolled steel sheet into their export markets.
     
     
313. The administrative record contains little evidence of anti-dumping measures imposed by other countries in respect of hot-rolled steel sheet originating in Brazil. Only the United States and Argentina presently have such measures³⁰³. There is no evidence on the record of anti-dumping measures initiated against Brazil for hot-rolled steel sheet in the last five years.
     
     
314. Based on the continuing pressure to export to maintain high capacity utilization rates in light of insufficient domestic demand, the lack of a demonstrated ability to compete in Canada at undumped prices in spite of their apparent interest in the Canadian market as evidenced through past participation in normal value reinvestigations, the recent behaviour of the Brazilian producers which suggests they have been significantly discounting prices in their export markets, the volume of hot-rolled steel sheet available for export and the present outlook for the Brazilian domestic market and the search for new export markets in competition with low-priced imports from other countries such as China, 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 Brazil.

Bulgaria

315. As previously stated, there were no submissions received from producers in Bulgaria. In addition, the Canadian industry made limited representations to support a position that dumping from Bulgaria is likely to continue or resume in the absence of the finding.
     
     
316. Bulgarian producer, Kremikovtzi Corp., is the only known hot-rolled steel sheet producer in Bulgaria³⁰⁴. Kremikovtzi did not participate in the original investigation concluded by the CBSA (then CCRA) on July 18, 2001, and did not participate in either of the two subsequent reinvestigations of normal value and export price conducted by the CBSA during the POR.
     
     
317. The record contains various estimates as to the production and capacity capabilities of the lone Bulgarian hot-rolled steel sheet producer.
     
     
318. For instance, the IISI reported that hot-rolled flat product production in Bulgaria for the year 2003 was slightly more than 1 mmt³⁰⁵. There were no more up-to-date figures published by the IISI.
     
     
319. The fall issue of CRU Analysis' 'Steel Sheet Quarterly' estimated that Bulgaria produced about 599,000 mt of finished hot-rolled steel sheet in 2004 and another 597,000 mt in 2005. There is very little variation in production from quarter to quarter throughout that period³⁰⁶. In 2001, the year of the finding, this CRU Analysis report estimated that Bulgaria produced 683,000 mt.
     
     
320. The amount of domestic consumption in Bulgaria is estimated at 218,000 mt in 2004 and 205,000 in 2005. That results in as much as 381,000 mt and 392,000 mt destined for export in each of those respective years³⁰⁷.
     
     
321. The capacity estimated by the CRU Analysis report of the Bulgarian hot-rolled steel sheet producer, based on 2004 levels, is 1.55 mmt³⁰⁸. The report also provides capacities for cold-rolled and galvanized sheet at 500,000 mt and 200,000 mt, respectively. That would amount to roughly 2.25 mmt of total hot-rolled sheet capacity, as both cold-rolled and galvanized sheet are downstream goods produced from hot-rolled steel sheet³⁰⁹.
     
     
322. The 2.25 mmt figure closely resembles other evidence on the administrative record, which listed wide hot-strip capacity of Kremikovtzi at 2.1 mmt³¹⁰. Given that production capacity is an inherently theoretical figure, it is expected that different sources reporting such an estimate will not match precisely but will come within a reasonable range.
     
     
323. Kremikovtzi is reportedly set to receive a $300 million investment from its parent company, Global Steel Holdings (GSHL)³¹¹. GSHL acquired 71 percent of Kremikovtzi in August 2005³¹². The planned investment would increase overall steel output by 40 percent in 2006 to 1.6 mmt and double 2005 output to 2.5 mmt by 2008. According to the report, a significant portion of this output would be hot-rolled coil³¹³.
     
     
324. Those increases would suggest Kremikovtzi is presently producing an annualized amount of around 1.14 mmt of finished steel.
     
     
325. At the time of the closing of the record, there was no additional information as to the status of these plans or the degree to which hot-rolled steel sheet capacity might be expanded.
     
     
326. Another published report indicated that GSHL is considering installing a cold-rolling mill and Kremikovtzi is targeting hot-rolled steel sheet production of 2.1 mmt in 2007, up from its present level of around 1.2 mmt³¹⁴.
     
     
327. Further evidence on the record indicates that Kremikovtzi is presently operating under capacity, reducing its steel output by 20 percent to 80,000 tonnes/month in the third quarter of 2005 due to weak domestic demand³¹⁵. That adjusted monthly figure translates to about 960,000 mt per year, down from its previous annual pace of 1.15 mmt.
     
     
328. Taking into consideration the aforementioned total estimated production, this would mean a significant portion of unused capacity was at the producer's disposal. Nonetheless, the evidence on the record indicates that Kremikovtzi has exercised restraint in production, rather than operating under a production imperative to maintain a higher capacity utilization rate³¹⁶.
     
     
329. Furthermore, the evidence on the record indicates that Kremikovtzi has been producing in the neighbourhood of 1.2 mmt per year of hot-rolled steel sheet, roughly half of which has been used in downstream production (i.e. cold-rolled, galvanized sheet). This is evident from various published reports referenced and the aforementioned finished hot-rolled steel sheet production report from the October 2005 issue of CRU Analysis³¹⁷.
     
     
330. To put the Bulgarian production in perspective, the CRU Analysis report estimated that Commonwealth of Independent State (CIS) countries³¹⁸ produced almost 16 mmt of finished hot-rolled steel sheet in 2005 and East and South-East Asia³¹⁹ are estimated to have produced about 77 mmt in the same period³²⁰.
     
     
331. Even in the event of expansions to plant capacity (which cannot happen until 2007 at the earliest due to Bulgaria's EU accession agreement)³²¹, Kremikovtzi is clearly a relatively small producer of hot-rolled steel sheet, which has not demonstrated irresponsible market disrupting behaviour during the POR.
     
     
332. In September 2005, The International Monetary Fund (IMF) projected Bulgarian GDP to grow by 5.5 percent in 2006³²². This type of projection is consistent with the continued efforts to restore and expand infrastructure in and around the Balkan countries, where the need for steel remains strong³²³.
     
     
333. The evidence on the record indicates that Bulgaria is scheduled to join the European Union sometime in 2006³²⁴. This expanded regional market is also favourable for Bulgarian hot-rolled steel sheet since Europe, as a whole, has consumed more of the product than it has produced over the last two years of the POR³²⁵. The improved access to this proximate market should also reduce the likelihood of interest in distant markets such as North America, particularly given the country's relatively small tonnage presently available for export.
     
     
334. Bulgaria has not shipped subject hot-rolled steel sheet to Canada during the POR. There is also no evidence on the record that indicates any other country has anti-dumping measures against Bulgaria for hot-rolled steel sheet.
     
     
335. Canada does have measures against Bulgaria in respect of carbon steel plate. Kremikovtzi, however, does not export, nor is it a producer of those types of goods. That investigation was concluded with the CITT's finding on January 9, 2004³²⁶. A reinvestigation of the normal values of that finding was also concluded on February 3, 2006³²⁷. No exporter in Bulgaria provided information in either proceeding.
     
     
336. In the original hot-rolled steel sheet investigation, Bulgaria was found to have dumped all of the 22,178 tonnes of subject goods exported to Canada during the period of investigation (POI)³²⁸. The total tonnage dumped from Named Countries in that investigation was 761,463. Consequently, Bulgarian dumped goods accounted for about 3 percent of the total dumped goods in that investigation. In terms of the overall share, Bulgarian dumped product accounted for only 1.3 percent of the total hot-rolled steel sheet goods imported during the POI. By comparison, India was found to have dumped 243,471 tonnes and Chinese Taipei was found to have dumped 153,917 tonnes during that period³²⁹.
     
     
337. The lack of participation on the part of Kremikovtzi Corp. in this review is consistent with the general lack of interest they have demonstrated with respect to the measures since the initiation of the original investigation in 2000. The CBSA does not regard the lack of cooperation in this proceeding as an indication for or against the likelihood of resumed dumping from Bulgaria.
     
     
338. Based on the apparent lack of interest in the Canadian market, including historically low volume of exports of subject goods to Canada even during the original POI, the absence of trade measures in other jurisdictions with respect to the subject goods, the relatively small volumes available for export, the country's accession agreement with the EU, the production restraint demonstrated by Kremikovtzi Corp. and the relative stability of the regional and domestic market, the President determined that the expiration 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 Bulgaria.

The former Yugoslav Republic of Macedonia

339. Mittal Steel Skopje (MSS) is the only producer of hot-rolled steel sheet in the former Yugoslav Republic of Macedonia (FYROM). The company provided a response to the exporter ERQ but did not provide any case briefs or reply submissions.
     
     
340. In both 2004 and 2005, the vast majority of MSS' hot-rolled steel sales were to the export market³³⁰.
     
     
341. It is worthy to note that since MSS is not an integrated producer of hot-rolled steel sheet, significant portions of its downstream production come from open-market purchases of hot-rolled sheet which are imported and transformed. All imported hot-rolled steel sheet in 2004 and 2005 were moved into downstream production³³¹.
     
     
342. There is other evidence on the record, which suggested MSS has capacity to produce hot-rolled steel sheet of up to 1 mmt³³². MSS also provided documentation to closely support that level of capacity³³³. The evidence on the record suggested, however, that MSS uses only a small portion of that available capacity in its hot-rolled steel sheet production³³⁴.
     
     
343. The evidence on the record also contains conflicting information respecting the number of hot-rolled steel sheet producers in the FYROM and the total capacity of those facilities.
     
     
344. For example, a CRU Analysis report from October 2005 identifies both MSS and 'Balkan Steel' as having hot and cold-rolling capacity³³⁵. The combined annual hot-rolled steel sheet capacity identified in the report is 2.2 mmt, with 1 mmt attributed to MSS.
     
     
345. The same report also estimated MSS has capacity to produce 750,000 mt of cold-rolled sheet and 100,000 mt of hot-dipped galvanized sheet³³⁶.
     
     
346. The CRU Analysis report provided no figures, however, in respect of FYROM production of hot-rolled steel sheet. Indeed, there is no evidence on the record as to the hot-rolling production or sales by Balkan Steel. Furthermore, there is no evidence on the record suggesting Balkan Steel has ever exported subject goods to Canada. The Canadian producers have not stated any views on Balkan Steel³³⁷.
     
     
347. The evidence on the record discloses little information pertaining to the relative strength of the FYROM domestic market. However, general economic indicators do point towards sustained growth. For example, GDP figures published by the IMF project the FYROM to have 3.7 percent growth in 2006, which follows an estimated growth of 3.8 percent in 2005³³⁸.
     
     
348. MSS's most predominant export markets for hot-rolled steel sheet as per its ERQ response are Eastern Europe and the Baltic States region. There were virtually no distant export markets reported by MSS during the POR. The United States ceased to be a prevalent export market for MSS shortly after Mittal Steel purchased the 'Skopje' steel making assets.
     
     
349. There is no evidence on the record indicating that anti-dumping or other trade measures exist against the FYROM for any steel products. Evidence provided by MSS in their response to the ERQ suggests that the exporter typically sells into export markets at prices higher than domestic price levels³³⁹.
     
     
350. MSS has, however, been selling well below the company's reported costs of production throughout 2005, as the company, like most other steel producers, copes with the rising costs associated with raw materials³⁴⁰. Reported costs of production for hot-rolled steel sheet surged from the second to third quarter of 2005 alone³⁴¹.
     
     
351. It is worthy to note than in spite of selling below the cost of production over this period, MSS also demonstrated measured restraint in its exports and in fact significantly increased sales to the domestic market in the third quarter of 2005 as compared with the second quarter. Conversely, sales to export markets dropped substantially in the second quarter as compared to quarter three of 2005³⁴².
     
     
352. There were no subject imports from the FYROM during the POR. The FYROM did not participate in either of the two reinvestigations of normal values and export prices, completed in 2003 and 2005, supporting MSS' position that they have a lack of interest in the Canadian market.
     
     
353. The Canadian producers have provided very little evidence to support the continuation of the finding against the FYROM. Indeed, the best information on the record pertaining to Macedonia is found in MSS' response to the ERQ.
     
     
354. Notwithstanding the relative export dependency of MSS, the evidence on the record indicates that export volumes are relatively small in terms of actual tonnage and the targeted markets are almost exclusively regional, with particular emphasis on Europe and the Balkan states.
     
     
355. Furthermore, the new ownership structure headed by Mittal steel as of 2004 only strengthens the company's image as a supplier geared to regional markets. The aforementioned decrease in exports to the US around the time of the ownership change is evidence of a broader corporate strategy to acquire steelmaking assets in various world markets to better serve those proximate markets, not to ship production from those facilities to distant markets abroad.
     
     
356. This is the favourable position of MSS, given the numerous regional steel consuming markets throughout the Balkan and Eastern European landscape, each within land distance to the FYROM's borders.
     
     
357. The extent of Mittal's consolidation of steel making assets worldwide makes this regional focus even more feasible, given the coordinated business strategy this consolidation facilitates³⁴³. Furthermore, it should also not be understated that part of Mittal Steel's corporate umbrella includes Mittal (formerly 'Ispat Sidbec') of Contrecoeur, Quebec, and Mittal Steel USA of Chicago, Illinois. Both Mittal operations include production of hot-rolled steel sheet and are wholly owned subsidiaries of Mittal Steel (Netherlands)³⁴⁴.
     
     
358. Consequently, the presence of numerous hot-rolled steelmaking assets in both Canada and the US under Mittal's corporate banner further detracts from the likelihood that MSS would sell hot-rolled steel sheet to Canada, let alone dump and risk disrupting the Canadian market and harming affiliates' interests. Indeed, the Canadian market is a far and relatively small market in relation to the proximate large markets at the FYROM's doorstep.
     
     
359. At the original investigation, the FYROM was found to have shipped and dumped 10,899 mt of subject hot-rolled steel to Canada. That tonnage was by far the least of all subject countries, given that the next largest exporting country shipped more than double that amount. In percentage terms, FYROM dumped goods accounted for only 0.6 percent of the total hot-rolled steel sheet goods imported during the period of investigation³⁴⁵. The FYROM exporter identified at that time was R.Z. Valavnica za Lenti A.D, which is a former name of MSS, under previous ownership.
     
     
360. The relatively small import volumes found at the original investigation and the lack of evidence on the record that any other party in the FYROM has shipped subject goods to Canada at any time supports the notion that the threat of continued or resumed dumping from the FYROM is not strong.
     
     
361. Based on the relatively small quantities of hot-rolled steel sheet available for sale, the relatively small quantities traditionally exported, the regional focus of MSS under the current corporate structure, the absence of anti-dumping measures against the FYROM in other jurisdictions, the apparent lack of interest in the Canadian market and the lack of evidence put forward by the Canadian producers in support of a continuation of the finding against the FYROM, the President determined that the expiry of the finding was not likely to result in the continuation or resumption of dumping into Canada of certain hot-rolled steel sheet originating in or exported from the former Yugoslav Republic of Macedonia.

Ukraine

362. Ilyich was the only Ukrainian hot-rolled steel sheet producer to participate in this expiry review, providing a response to the ERQ as well as case briefs and reply submissions.
     
     
363. The evidence on the record indicates that the Ukrainian hot-rolled producers are very export dependent. Ilyich's ERQ response indicates that the company typically exports substantial amounts of its hot-rolled steel sheet made available for sale³⁴⁶. A proportion of Ilyich's total hot-rolled steel sheet production is used for making downstream products such as cold-rolled and galvanized steel sheet.
     
     
364. Evidence on the record citing the IISI stated that Ukraine is the third largest steel exporting country in the world³⁴⁷.
     
     
365. The fall issue of CRU Monitor's 'Steel Sheet Quarterly' estimated that Ukraine's total production of hot-rolled steel sheet was about 6 mmt and 5.7 mmt in 2004 and 2005, respectively. The same publication estimated consumption in Ukraine over that period to be about 880,000 mt and 1.2 mmt³⁴⁸. Without consideration to imports, those figures result in over 80 percent of production targeted for export over that period.
     
     
366. The evidence on the record indicates that aside from Ilyich, Zaporozhstal is the only other current producer of hot-rolled steel sheet in Ukraine. That company did not provide a response in these proceedings. The estimated capacity of these mills is 6.6 mmt, with Zaporozhstal accounting for 2.8 mmt and Ilyich 3.8 mmt³⁴⁹.
     
     
367. Ukrainian producer, Alchevsk, recently announced investment plans which would give it hot-rolled coil capacity of 4 mmt per year³⁵⁰. In 2004, Alchevsk produced 3.8 mmt of crude steel, which was close to 10 percent of Ukraine's total production of 38.7 mmt³⁵¹. The administrative record indicates that Alchevsk does not presently produce hot-rolled steel sheet and that this capacity would not come on stream for a few years³⁵².
     
     
368. In October 2005, Mittal Steel acquired Ukraine's largest carbon steel long product producer, Krivorozhstal. Mittal later announced intentions to convert part of Krivorzhstal's capacity towards 3.5 to 5 mmt per year of flat products. There was no specific time frame given for the plans to come to fruition³⁵³.
     
     
369. Ilyich has asserted at length that the price premium in the North American market for hot-rolled steel sheet is too high to attract dumped product from Ukraine. The record indicates that current prices cited in North America are around US$ 550/mt³⁵⁴. Even at significantly discounted export prices relative to the North American price, the Ukrainian producer contends that such a price would not be dumped.
     
     
370. Ilyich also referenced projections in its case briefs that suggested North American hot-rolled prices would sustain a level well above US$ 500/mt through 2006 and into 2007. Given the state of domestic hot-rolled steel sheet prices in Ukraine, export prices to North America would have to severely undercut the prevailing North American price in order to constitute dumping.
     
     
371. However, the evidence on the record in respect of projected North American hot-rolled steel sheet prices going forward is conflicting. The aforementioned CRU Monitor Quarterly report, for example, projected hot-rolled steel sheet prices to dip substantially in 2006 to a low of US$ 428/mt and as low as US$ 360/mt in the first quarter of 2007³⁵⁵.
     
     
372. Compounding the discrepancy in price projections, since shipments from overseas incur ocean freight and additional handling charges, which can easily amount to 15 to 20 percent of the total shipment value, it is foreseeable that discounted shipments from Ukraine would be made at prices which are often dumped. Consequently, since Eastern European prices for hot-rolled steel sheet are presently in the range of US$ 400/mt in the local market, the North American domestic price would need dip to only around US$ 500/mt to be threatened by dumping³⁵⁶.
     
     
373. Given the current price gap between North American and many world market prices for hot-rolled steel sheet, the CBSA believes that a drop in prices to this level and even towards the CRU Monitor report quotation is foreseeable.
     
     
374. Ilyich also asserted its position as the only Ukrainian producer capable of selling to North America, given its ASTM certification. Ilyich went as far to state in its reply submission that "it must be remembered that this other mill Zaporozhstal does not produce subject goods." ³⁵⁷
     
     
375. The CBSA acknowledges that the capability of selling to a recognized North American certification may increase the likelihood of sales. The evidence on the record does not, however, provide any indication that Zaporozhstal's hot-rolled production is 'non-subject' in nature. For instance, the ASTM standard is not a criterion in the CBSA's product definition for the subject goods.
     
     
376. There are presently numerous anti-dumping measures throughout the world against Ukrainian hot-rolled products. In addition to Canada, measures against hot-rolled steel products are presently in effect by: Argentina since 1999, Venezuela since 1999, Columbia since 2000, Mexico since 2000, Peru since 2001, the United States since 2001 and Thailand since 2003³⁵⁸. It is worthy to note that the measures originating from Venezuela were recently renewed for another five years³⁵⁹.
     
     
377. More recently, the Ministry of Economics of Mexico imposed anti-dumping duties on all types of carbon steel from three countries, including Ukraine. It was noted that during the investigation period import volumes (from all countries) rose by 227 percent. The rate of anti-dumping duties applied for Ukrainian origin products was 60.1 percent. Ukraine accounted for 22 percent of the total volume of imports into Mexico from all (including non-subject) countries³⁶⁰. This represents positive evidence that Ukraine has recently dumped steel into the North American market.
     
     
378. In addition to anti-dumping trade measures, Ukraine is also subject to export quotas in the EU and Russia. The quota agreement with the EU was reported to permit 980,000 mt of steel in 2005 and 1 mmt in 2006. The quota agreement with Russia was reported to allow 2.2 mmt in 2005 and 2.3 mmt in 2006³⁶¹.
     
     
379. There is also evidence on the record reporting that Indian steel producers have recently petitioned for anti-dumping duties against four countries, including Ukraine³⁶². Steel imports in India reportedly grew 60 percent in the first six months of 2005 at prices which undercut the domestic price by an average of well over US$ 100. It was also reported that the government of Ukraine is concerned with such potential action given that 10 percent of Ukraine's steel exports are to India³⁶³.
     
     
380. Ilyich stated in its case briefs that the evidence on the record indicates that they do not dump into their export markets³⁶⁴. Nonetheless, the CBSA cannot ignore the aforementioned abundance of anti-dumping and related trade measures in place against Ukrainian hot-rolled steel and steel products in general. This is especially relevant given the number of these measures that are new and developing.
     
     
381. Furthermore, the evidence on the record demonstrates the scope of export markets targeted by Ukraine, across the world, giving no indication that Ukraine's export focus is regional. Compounding this propensity is the decreased import consumption of hot-rolled steel sheet in China, which has created additional pressures on large steel producing and exporting nations like Ukraine to seek out other markets³⁶⁵.
     
     
382. Consequently, a full consideration of the evidence on the record indicates that existing trade measures have reduced the available markets for Ukrainian steel. These measures contradict the contention that Ukraine does not engage in dumping in its export markets.
     
     
383. Moreover, the greater the number of export markets 'closed' due to trade action, the more likely the scenario that product would be exported and dumped into Canada if the finding were to expire as Ukrainian producers would seek other markets to sell their steel.
     
     
384. Based on the continuing pressure to export in light of insufficient domestic demand, the volume of hot-rolled steel sheet available for export, the historical behaviour of Ukrainian producers which demonstrates they have dumped in numerous world markets, the developing threats of further anti-dumping measures in other world markets and the existence of other trade measures limiting the penetration of hot-rolled steel sheet into existing export markets, 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 Ukraine.

Serbia and Montenegro

385. According to evidence on the record, United States Steel Serbia (USSS) accounts for all the domestic production of hot-rolled steel sheet in Serbia and Montenegro³⁶⁶. At the time of the original investigation, the steelmaker was known as Sartid A.D. The company did not participate in the original investigation, which concluded with the CITT's finding on August 17, 2001. Similarly, no steelmaker in Serbia and Montenegro, including USSS, has participated in either of the last two reinvestigations of normal values and export prices completed by the CBSA during the POR.
     
     
386. According to the company's ERQ submission, the annual hot-rolling capacity of USSS is normally about 2.2 mmt. Only the hot strip mill at Smederevo is capable of producing the subject goods³⁶⁷.
     
     
387. Other evidence on the record estimated the company's hot-rolling capacity to be 2.4 mmt³⁶⁸. The difference in estimates is, therefore, relatively negligible³⁶⁹.
     
     
388. According to USSS, approximately 66 percent of the company's total sales in 2005 were represented by sales of subject goods³⁷⁰.
     
     
389. Given some inconsistencies with USSS' ERQ appendices, the CBSA was able to consider only part of the company's appendices in its analysis. Consequently, the remainder of the CBSA's analysis was based on the other information available from the administrative record.
     
     
390. Based on the levels of production achieved through the first 10 months of 2005, USSS' capacity utilization stands around 55 percent, a slight increase over 2004³⁷¹. Looking ahead to 2006, USSS projected total sheet production that would increase capacity utilization to well over 70 percent.
     
     
391. The projection for 2006 also forecasts a significant decrease in the share of hot-rolled steel sheet used in downstream production from 2005³⁷².
     
     
392. The drop in the forecasted proportion of total hot-rolled steel sheet used in downstream production may in part be explained by USSS' statement that sister company United States Steel Kosice's (USSK - Slovakia) "ability to produce hot-rolled for the merchant market will decline when their new hot-dip galvanizing line becomes operational." ³⁷³ USSS suggested that it would then be able to supply a significant proportion of the hot-rolled sheet to the merchant market, formerly supplied by USSK.
     
     
393. USSS has traditionally been export dependant. As recently as 2004, only 30 to 35 percent of its steel production was reported to have remained in Serbia and Montenegro³⁷⁴. In respect of hot-rolled steel sheet specifically, USSS' ERQ response indicated that through the first 10 months of 2005, a large proportion of sales were to export markets. That ratio dipped slightly in 2004³⁷⁵.
     
     
394. Over the first three quarters of 2005, USSS' top four hot-rolled steel sheet export markets represented about 60 percent of their total hot rolled steel sheet exports by volume. Each of these export markets are European and proximate European countries, including Italy, Turkey, Germany and the former Yugoslav Republic of Macedonia³⁷⁶. In 2005, nearly all of USSS' hot-rolled steel sheet shipments were sold in Europe³⁷⁷.
     
     
395. When examining the conduct of USSS in the domestic versus export market, it is apparent that average prices of hot-rolled steel sheet in the export market are comparatively lower than those in the domestic market since the second quarter of 2004³⁷⁸.
     
     
396. Indeed, most of the top four export markets detailed in USSS's submission for each of the reporting periods between the second quarter of 2004 and through the third quarter of 2005, report average hot-rolled steel sheet selling prices below those in the domestic market. The typical difference in those averages while not insignificant is less than 10 percent.
     
     
397. It is worthy to note that there is no noticeable trend towards increased discounts off the domestic price in USSS' export markets. Furthermore, product mix does not likely account for these differences given that reported prices of commercial quality grades of hot-rolled steel sheet similarly undercut the reported domestic prices³⁷⁹.
     
     
398. A closer examination of average hot-rolled steel sheet prices in USSS' export markets compared to its domestic markets indicate that the degree of discounting in the export markets has, on average, decreased since the middle of 2004.
     
     
399. That change may be attributable to the adjustment in corporate strategy since the company's acquisition by US Steel (Pittsburgh). The parent company acquired control of the Serbia and Montenegro operation in late 2003³⁸⁰. It is, therefore, reasonable to foresee that by the mid-point of 2004, the parent company would have begun to effect strategic changes in the operation of the subsidiary, including pricing strategies.
     
     
400. It has certainly been the contention of USSS that its status as a wholly owned subsidiary of US Steel has dramatically shifted its focus towards a larger operational picture, which exists to serve the best interests of the US Steel 'group' as a whole, rather than operating in isolation, absent a larger corporate strategy with lesser concern for the implications of its actions.
     
     
401. Nonetheless, USSS has also sold at prices below the full cost of production. The second and third quarters of 2005 are the most evident period of selling below costs to export markets; a period that saw the simultaneous effects of continued rising input costs and drops in market prices, in addition to a depreciation of the domestic currency in relation to the US dollar³⁸¹.
     
     
402. The effect of rising production costs, due largely to the widely reported increases in raw material prices such as iron ore and natural gas, is not something exclusive to USSS, given that most steel producers are at least in part at the mercy of market prices when it comes to raw material inputs. However, while not as significant a gap between costs and selling prices as found in the second and third quarters of 2005, the evidence on the record does indicate that USSS has consistently sold below cost on its export markets, going back to the early part of 2004³⁸².
     
     
403. Given the projections by USSS for its 2006 production levels, it is feasible that the per unit cost of production will decrease as fixed costs are absorbed over a larger amount of tonnage produced. The evidence on the record is not, however, sufficient to perform such a detailed analysis.
     
     
404. The evidence on the record pertaining to other trade measures concerning Serbia and Montenegro is limited. The EU terminated its finding on hot-rolled coils in September 2004³⁸³. That finding included Serbia and Montenegro. The administrative record holds no evidence of other anti-dumping measures in place or recently terminated against Serbia and Montenegro.
     
     
405. Consequently, in spite of apparent dumping in its export markets, there is no evidence that another jurisdiction has taken action against Serbia and Montenegro for dumping hot-rolled steel sheet. The relative insignificance of the quantities exported to each market and the limited degree of discounting off domestic prices may account for the lack of anti-dumping action taken.
     
     
406. Prospective figures related to domestic growth in the Serbia and Montenegro market are also relatively limited. Evidence on the record indicates that GDP figures published by the IMF project the country to have 4.8 percent growth in 2006, which follows an estimated growth of 4.6 percent in 2005³⁸⁴.
     
     
407. There were also no shipments of subject goods from Serbia and Montenegro during the POR³⁸⁵. During the original investigation, Serbia and Montenegro (then "Yugoslavia") was found to have sold and dumped 30,455 mt of hot-rolled steel sheet into Canada during the POI. That figure amounted to about 1.8 percent of the total tonnage shipped to Canada during that period. By comparison, the subject countries in total, accounted for 43.8 percent of the total shipments to Canada during the POI³⁸⁶.
     
     
408. USSS 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 that is occupied by its parent company, US Steel (Pittsburgh). US Steel is a noted seller of hot-rolled steel sheet to Canada. USSK, the aforementioned Slovakian sister company of USSS, is also a subsidiary of US Steel. Slovakia was previously subject to anti-dumping measures in another CITT finding on hot-rolled steel sheet, which expired in 2004, as well as cold-rolled steel sheet, which expired that same year.
     
     
409. USSS cited the absence of flat-rolled steel exports from USSK since that time as proof that the corporate strategy of US Steel is to use its affiliates to service local markets and not to ship vast distances at dumped prices, especially into markets already serviced by other US Steel operations³⁸⁷.
     
     
410. The evidence on the record indicates a shift in corporate strategy from around the time US Steel gained control of the Serbia and Montenegro mill. In 2004, the mill reported moderate amounts of hot-rolled steel exports to the US. In 2005, that number exported by USSS fell to nearly zero³⁸⁸.
     
     
411. Further evidence of a corporate strategy, which does not foster a production imperative, is the degree to which USSS has maintained production at well below its capacity, demonstrating that it is not geared towards producing beyond its ability to make sales at or close to prevailing regional market prices³⁸⁹.
     
     
412. Evidence as it pertains specifically to hot-rolled steel sheet produced in Serbia and Montenegro is countered by the producer's subordinate relationship to the major North American producer, US Steel.
     
     
413. Indeed, given the evidence on the record pertaining to USSK, including its lack of interest in the North American market since anti-dumping measures against Slovakia for both hot-rolled and cold-rolled sheet in Canada ceased and the conduct of USSS since its acquisition by US Steel (i.e. reducing its hot-rolled exports to the US to almost nil), considerable deference must be given to the unlikelihood that the parent company US Steel would allow dumped product to risk disrupting its own regional market.
     
     
414. This corporate consideration was in fact a major factor highlighted by the CITT in its 2004 cold-rolled steel expiry review decision, where the CITT considered another US Steel subsidiary, United States Steel Kosice (USSK) of the Slovak Republic. In that decision, the CITT cited USSK's newfound regional market focus and stated: "the Tribunal accepts USSK's position that this change in ownership has brought with it a significant change in commercial strategy... (and) reduces the incentive for the company to export to distant merchant markets such as Canada."³⁹⁰
     
     
415. Consequently, in spite of the evidence on the record, which suggests USSS has sold at dumped prices into its regional markets, the prospect of selling to Canada at dumped prices, given its similar standing to sister company USSK is unlikely. The CBSA finds it unlikely that the corporate governance of US Steel would allow an affiliate to disrupt a market (North America) presently served by the parent company.
     
     
416. The record is in fact absent of evidence to suggest that USSS will be unable to sell its export-destined production to its regional markets where virtually all of its current exports are destined. Consequently, the compounded effect of its aforementioned relationship with US Steel in North America and the diminished returns it would obtain on dumped sales to Canada, make it unlikely that in absence of the finding hot-rolled steel sheet sales to Canada from USSS would be dumped.
     
     
417. Based on the apparent change in corporate strategy that new ownership has brought, the regional focus of its hot-rolled steel sheet sales, the lack of anti-dumping measures against Serbia and Montenegro for the subject goods, the relatively small volumes typically available for export, the apparent lack of interest in the Canadian market and the lack of evidence brought forth supporting a likelihood of resumed dumping in absence of the finding by the Canadian producers, 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 Serbia and Montenegro.

South Africa

418. South Africa is one of the world's major carbon steel producing countries. It ranked 20th in the world with approximately 9.5 mmt of crude steel output in 2004. South Africa produced approximately 4.26 mmt of hot-rolled flat products in 2004, an increase of 3 percent compared to 2003³⁹¹. However, domestic consumption of flat carbon steel products in South Africa dropped 8.6 percent year-on-year in the first 6 months of 2005 due to poor end-use demand, particularly from the manufacturing sector³⁹².
     
     
419. According to the 2006 Sales and Marketing Budget prepared by Mittal SA, the largest steel producer in South Africa, South Africa's GDP growth was 3.7 percent in 2004 and is forecast to be 4.1 and 3.9 percent in 2005 and 2006, respectively. Fixed investment is expected to be the driver of economic growth in 2006 as the South African government is committed to upgrade infrastructure as well as the preparation of the 2010 Soccer World Cup³⁹³.
     
     
420. Mittal SA and Highveld Steel and Vanadium Corp. (Highveld) are the two major hot-rolled flat product producers in South Africa. Both Mittal SA and Highveld participated in the CBSA's original investigation and subsequent reinvestigations of normal values and export prices and received specific normal values. With respect to this expiry review investigation, only Mittal SA participated and provided a response to the CBSA's ERQ.
     
     
421. Notwithstanding specific normal values received by the two major South African producers, there have been no imports into Canada of subject hot-rolled steel sheet during the POR³⁹⁴.
     
     
422. According to Mittal SA's ERQ response, Mittal SA does not have plans for capacity expansion related to hot-rolled steel sheet. Mittal SA's two production facilities have a combined capacity of approximately 4.6 mmt of hot-rolled steel sheet production (including 3.36 mmt for Vanderbijlpark and 1.247 mmt for Saldanha)³⁹⁵. With respect to Highveld, it has a capacity of 0.6 mmt of hot-rolled steel sheet production³⁹⁶. The combined capacity of the two producers (i.e. 5.2 mmt) represents nearly 100 percent of the country's total capacity of hot-rolled sheet production.
     
     
423. The overall capacity utilization rates for both of Mittal SA's facilities were fairly high in both 2003 and 2004, respectively. During the first three quarters of 2005, those rates crept closer to full capacity³⁹⁷. On the whole however, South Africa maintains excess capacity for hot-rolled steel sheet production.
     
     
424. Mittal SA exported significant amounts of its hot-rolled steel sheet to the international market in 2003, 2004 and the first three quarters of 2005, demonstrating an upward trend during the 2005 period. Saldanha is the more export oriented of Mittal SA's two production facilities. Its export sales of hot-rolled sheet peaked in the third quarter of 2005. Mittal SA's other facility, Vanderbijlpark, also peaked its hot-rolled steel sheet sales, albeit at a lower level, during the same period³⁹⁸. This trend clearly indicates a growing dependency on exports by Mittal SA to maintain its hot-rolled steel sheet capacity utilization rate.
     
     
425. Africa and Asia are Mittal SA's major export destinations. It is interesting to note that while China was a major hot-rolled steel sheet export destination for Mittal earlier in the POR, shipments to China from Mittal SA have ceased for some time. Alternatively, EU destinations became the Saldanha mill's top export market during the first three quarters of 2005³⁹⁹. The market share change indicated that South African producers are compelled to target alternative markets such as the EU and other international markets due to rising hot-rolled steel capacity in China and a corresponding decline of hot-rolled sheet imports into the Chinese market.
     
     
426. According to Mittal SA's submission, Mittal SA estimated that it comprised the vast majority of the country's total domestic sales of hot-rolled 2004⁴⁰⁰. Its domestic selling prices of hot-rolled sheet increased from the first quarter of 2004 and experienced a decrease in the third quarter of 2005. In particular, domestic selling prices of hot-rolled sheet from Saldanha decreased significantly in the third quarter of 2005 compared to the second quarter of 2005⁴⁰¹. For most periods during the POR, the domestic selling prices of hot-rolled sheet were above costs.
     
     
427. With respect to export sales of hot-rolled sheet from Vanderbijlpark, selling prices to all major export markets were consistently below domestic selling prices during the entire POR. Regarding sales of hot-rolled sheet from Saldanha, selling prices to its largest export market during the first three quarters of 2005 were below its domestic selling prices. The average selling prices to all export markets during the first two quarters of 2005 were also below the domestic prices⁴⁰². Evidence on the record clearly revealed that hot-rolled steel sheet products are being frequently sold by Mittal SA to its export markets below home market prices.
     
     
428. Mittal SA argued that it has a policy ensuring that its activity in all export markets is disciplined in order not to inflict injury to export markets. Mittal SA further stated that it is likely that any exports from Mittal SA would complement or supplement production of Mittal Steel Canada, a Canadian hot-rolled sheet producer and a sister company of Mittal SA⁴⁰³.
     
     
429. However, given Mittal SA's present practice of selling to distant export markets such as Asia and the EU and the broad range of its international markets, it would appear more likely that Mittal SA may sell its products in North American markets, including Canada. However, the aforementioned corporate relationship with Mittal Steel Canada and Mittal USA significantly mitigates this likelihood.
     
     
430. Nonetheless, while disruption into the Canadian market from Mittal SA is less likely given its affiliate's presence in North America, it is unclear as to whether the other major South African hot-rolled sheet producer Highveld, would have reason to follow a similar disciplined manner in its approach towards prospective hot-rolled steel sheet sales to Canada.
     
     
431. Since Highveld did not participate in the CBSA's expiry review proceeding, the evidence pertaining to Highveld is limited, yet noteworthy. That evidence includes the fact that Highveld participated in both of the CBSA's normal value reviews which concluded in 2003 and 2005, respectively. This participation is a clear indication of an interest in the Canadian market and like Mittal SA, Highveld's relatively isolated position in the South African market increases the need for exports which target more distant markets.
     
     
432. The US found injury with respect to the dumping and subsidizing of hot-rolled carbon steel flat products from South Africa in 2001⁴⁰⁴. The US has another measure in place concerning seamless pipe from South Africa⁴⁰⁵. There are also several anti-dumping measures in place concerning flat steel products from South Africa in Argentina, Australia and Thailand⁴⁰⁶. Canada currently has another measure in place concerning hot-rolled steel plate from South Africa⁴⁰⁷.
     
     
433. Based on the apparent inability to compete in Canada at undumped prices with the finding in place, the available excess capacity to produce hot-rolled steel sheet, the growing dependency on distant export markets to maintain utilization rates, the apparent price discounting of hot-rolled sheet in export markets and anti-dumping measures in place against South African steel products in other countries including the United States, 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 South Africa.

Likelihood of Continued or Resumed Subsidizing

Summary

434. In deciding whether the expiry of the finding was likely to result in the continuation or resumption of subsidizing, the President considered factors specifically identified in paragraphs (a) to (i) of subsection 37.2(1) of the SIMR, as well as any other factors relevant in the circumstances in rendering a determination pursuant to paragraph 76.03(7)(a) of SIMA.
     
     
435. Guided by the aforementioned factors, the CBSA has examined the documents submitted by the Government of India (GOI) in response to the CBSA's ERQ on the likelihood of continued or resumed subsidizing of hot-rolled steel sheet from India and has reviewed the other information on the administrative record. The following list summarizing the most relevant aspects of this analysis has been compiled on the basis thereof:
     
     
     • Recurring benefit streams resulting from certain past subsidies;
     • Continued availability of subsidy programs for hot-rolled steel exporters;
     • Introduction of new export promotion programs; and
     • Imposition of countervailing measures by authorities other than Canada in respect of hot-rolled steel and other goods.

History of the Subsidy Finding on the Subject Goods from India

436. At the time of the original investigation in 2001, responses to the Subsidy Request for Information (RFI) issued by the CCRA (now CBSA), were received from the GOI and from four Indian exporters: Essar Steel Ltd. (Essar), Jindal Vijayanagar Steel Ltd. (Jindal), Steel Authority of India Ltd. (SAIL) and Tata Iron and Steel Company Ltd. (Tata).
     
     
437. Further to the CCRA's analysis of the submissions, it was determined that the GOI had conferred a benefit to the exporters under the following programs, totaling 3,150 rupees per metric tonne (r/mt), or about $100 CAD⁴⁰⁸.
     
     
     1. Duty Entitlement Pass Book Scheme (export subsidy)
     2. Advance Licences (export subsidy)
     3. Special Import Licences (export subsidy)
     4. Export Promotion Capital Goods Scheme (export subsidy)
     5. Pre-shipment Export Financial Assistance (export subsidy)
     6. Post-shipment Export Financial Assistance (export subsidy
     7. Forgiveness of Loans from the Steel Development Fund (specific to SAIL) and
     8. Forgiveness of Loans from the Government of India (specific to SAIL)
     
     
438. Of the programs listed, programs 1 - 6 are specific subsidies under paragraph 2(7.2)(b) of SIMA for the reason that they are prohibited subsidies as defined in subsection 2(1) of SIMA, because they are contingent upon export performance. Programs 7 and 8 constitute specific subsidies under paragraph 2(7.2)(a) of SIMA for the reason that they are limited to a particular enterprise.
     
     
439. Detailed descriptions of the programs and explanations as to why they were regarded as subsidies subject to countervailing duties are contained in the Statement of Reasons issued at the final determination⁴⁰⁹.
     
     
440. A reinvestigation of normal values and export price, as well as a review of the amounts of subsidy for India, was conducted in late 2002⁴¹⁰. The GOI and two Indian exporters, Essar and Jindal, provided complete responses to the CCRA's RFIs in that reinvestigation. On the basis of the information received, the CCRA was able to determine specific subsidy rates for these two co-operating exporters during the period reviewed and to confirm that the following programs were used by them:
     
     
     • Duty Entitlement Pass Book Scheme
     • Advance Licences
     • Export Promotion Capital Goods Scheme
     
     
441. Since no information was received from SAIL, Tata or any other Indian exporters, the amount of subsidy for these exporters was determined by ministerial specification pursuant to section 29 of SIMA, to be 3,150 r/mt (or about $100 CAD), representing the highest amounts of subsidy found under all programs found at the final determination⁴¹¹.
     
     
442. In early 2005, the CBSA initiated a second reinvestigation respecting the subsidizing of hot-rolled steel sheet from India. Again, the GOI, Essar and Jindal provided complete responses to the CBSA's RFI⁴¹², and on the basis of the information received, the CBSA was able to revise their specific subsidy rates and to confirm that the following programs were used by Essar and Jindal during the period reviewed⁴¹³:
     
     
     • Duty Entitlement Pass Book Scheme
     • Advance Licences
     • Export Promotion Capital Goods Scheme
     • Tax Exemption on Export Profits
     
     
443. Specific subsidy rates were determined for both Essar and Jindal⁴¹⁴. The ministerial specification of 3,150 rupees/mt, representing the highest amounts of subsidy found under all programs utilized at the final determination⁴¹⁵, continues to be applicable to subject goods shipped to Canada by all other Indian exporters.
     
     
444. It is noted that since the date of the original finding, August 17, 2001, there have been no imports of subject goods from India. Indian exports are also subject to a dumping finding, as discussed earlier in this report.
     
     
445. In its analysis into the likelihood of continued or resumed subsidizing of hot-rolled steel sheet from India, the CBSA reviewed the GOI export programs found at the time of the final determination in 2001 and/or in subsequent reinvestigations. On the basis of information received from the GOI and other publicly available sources, the CBSA compiled a summary of the current status of each export program. The programs found that were specific to SAIL are addressed in the following section on recurring benefit streams.
     
     

Recurring benefit streams resulting from certain past subsidies

446. Under SIMA, when a subsidy is used by the recipient to acquire capital assets, the amount of the subsidy is generally amortized over the useful life of the assets rather than being expensed in the period in which the subsidy was received. This results in a benefit stream from the subsidy that continues over an extended period of time and confers a subsidy on the production of the subject goods that occurs during the amortization period. Therefore, for purposes of an expiry review, the government of the country of export is deemed to be providing a subsidy until the end of the amortization period notwithstanding that the subsidy program in question may no longer exist or that no future disbursements will occur.
     
     
447. In reviewing the presence of benefit streams resulting from past subsidies, the CBSA notes that during the original subsidy investigation in 2001, SAIL reported the forgiveness of certain loans it had received from the GOI and from the Steel Development Fund (SDF). For the final determination of subsidy, the CCRA calculated amounts of subsidy respecting the forgiveness of SDF and GOI loans distributed over 10 years⁴¹⁶. As these waivers took place in 2000, SAIL will continue to derive benefits from them for another four years.
     
     
448. Another source of recurring benefits to exporters is the GOI's previously described Export Promotion Capital Goods (EPCG) scheme, which allows exporters to import capital equipment and components at reduced or nil rates of import duty. The CCRA, in its calculation of subsidy amounts under SIMA, amortized the duty exemptions or reductions received under the EPCG scheme over the useful life of the equipment. Since this capital equipment will be used for at least another 10 years, exporters of hot-rolled steel sheet will continue to benefit from the duty exemptions and reductions received when the goods were imported, even in the event that the EPCG program is abolished.
     
     
449. One can summarize, therefore, that Indian exporters of hot-rolled steel sheet presently receive recurring benefit streams deriving from certain subsidies received in the past and that they are likely to continue receiving such benefits in the foreseeable future.

Continued Availability of Export Subsidy Programs

1. Duty Entitlement Passbook Scheme
   
   
   450. The GOI's Duty Entitlement Pass Book (DEPB) scheme is a duty exemption program, which has conferred certain benefits to exporters that the CBSA has deemed to be actionable subsidies⁴¹⁷.
        
        
   451. In its submission, the GOI confirmed that the DEPB program is still in effect⁴¹⁸. Originally scheduled to expire on September 30, 2005, the DEPB scheme was extended to December 31, 2005, while latest published reports indicate that it is to continue indefinitely until the announcement of a new program⁴¹⁹.
        
        
2. Advance Licence Scheme
   
   
   452. The Advance Licence (AL) scheme is another duty-exemption program administered by the GOI. The CBSA has found that Indian exporters of hot-rolled steel have used ALs to import goods for which duty exemption constitutes a subsidy under SIMA⁴²⁰. In its submission, the GOI confirmed that the AL scheme is still in effect⁴²¹. As the GOI has reported no intention to modify or replace the scheme⁴²², it is likely that exporters will continue in the future to derive benefits under the AL scheme that would be subject to countervailing duties.
        
        
3. Special Import Licences
   
   
   453. Special Import Licences (SILs) were previously issued to selected categories of exporters to allow the importation of certain restricted goods. The GOI abolished the SIL scheme on March 31, 2001 (subsequent to the POI for the final determination). This followed the removal of quantitative restrictions on imports and the consequent rendering of SILs worthless⁴²³.
        
        
4. Export Promotion Capital Goods Scheme
   
   
   454. The GOI's Export Promotion Capital Goods (EPCG) scheme allows exporters to import capital equipment and components at reduced or nil rates of import duty. Exporters have reported benefits deriving from reduced duties on imports of capital goods that continue to be used in the production of hot-rolled steel sheet⁴²⁴.
        
        
   455. Furthermore, the GOI has confirmed that the EPCG scheme remains in existence⁴²⁵ and has even been expanded under the new Foreign Trade Policy to allow second hand goods to be imported at reduced duty rates⁴²⁶. In light of the capital intensive nature of steel production and continuing high tariffs on capital goods⁴²⁷, it is likely that the exporters will continue to derive countervailable benefits under the EPCG scheme.
        
        
5. Pre- and post shipment Export Financial Assistance
   
   
   456. Under programs administered by the Reserve Bank of India (RBI), banks extend pre shipment and post-shipment loans to exporters at preferential ceiling rates set by the RBI⁴²⁸.
        
        
   457. The GOI has confirmed that pre-and post-shipment export financial assistance is still in effect⁴²⁹. Furthermore, evidence on the record indicates that the interest rates under these programs remain preferential, currently running at 2.5 percent below prime rate and will likely remain so in the foreseeable future⁴³⁰. Thus, it is likely that exporters would resume using pre- and post-shipment financing if they were to commence selling to Canada again.
        
        
6. Tax Exemption for Export Profits
   
   
   458. The tax deduction exemption program used by Indian exporters of hot-rolled steel sheet was abolished as of April 1, 2004⁴³¹, so it is unlikely that exports of steel plate will continue to be subsidized through this program under section 80 HHC of the Indian Income Tax Act. At the same time, the GOI Ministry of Revenue lists other types of income tax deductions and exemptions⁴³², some of which could potentially constitute actionable subsidies if available to and used by Indian exporters of hot-rolled steel sheet.

Summary of Availability of Export Subsidy Programs

459. The above analysis indicates that the majority of the GOI export promotion schemes, which were found in the original and/or subsequent reinvestigations to be conferring countervailable benefits to Indian exporters of hot-rolled steel sheet, are still in place. It is, therefore, likely that these export subsidy programs will continue to be used by exporters in the foreseeable future.

Introduction of new export promotion programs

460. In addition to the programs in place at the time of the final determination in 2001, the GOI introduced several new export promotion schemes in its Indian Foreign Trade Policy (2004-2009), which has the stated objective of doubling India's percentage share of global merchandise trade by 2009⁴³³.
     
     
461. One of the programs listed therein has been publicized as a potential replacement for the DEPB scheme⁴³⁴. Referred to as the "Target Plus Scheme," the program grants duty free credits to exporters, who achieve certain performance targets in terms of export growth, of up to 15 percent of the value of their incremental growth in exports.
     
     
462. Another 12 programs listed in the GOI's Foreign Trade Policy (2004-2009) handbook are identified as export promotional measures⁴³⁵. In addition, the Reserve Bank of India runs several new GOI export financing initiatives such as the Gold Card Scheme, which extends preferential post-shipment credit to a full year and preferential rates for export credit against incentives receivable from the GOI⁴³⁶.
     
     
463. The existence of these new programs increases the likelihood that Indian exporters of hot-rolled steel sheet will continue to receive actionable subsidies from the Indian government within the next five years.

Other Findings of Subsidizing on Exports from India

464. The GOI has reported that between 1995 and 2004, WTO member countries initiated 41 subsidy investigations against imports from India⁴³⁷. In 25 of these cases (14 of which involved steel products) definitive countervailing measures were subsequently imposed, including four by Canada⁴³⁸. Besides hot-rolled steel sheet, the CBSA currently has countervailing measures in place regarding stainless steel wire.
     
     
465. The latest information available to the CBSA respecting other countries' orders and findings indicates that on January 10, 2006, the United States International Trade Administration Agency issued preliminary results of a Countervailing Duty Administrative Review respecting Certain Hot-Rolled Carbon Steel Flat Products from India. The US authorities preliminarily determined that four of the programs investigated, including the Export Promotion Capital Goods scheme and three programs not previously reviewed by the CBSA, were countervailable.
     
     
466. The existence of these other countervailing findings/orders and the results from the recent administrative review by US authorities are further indications that hot-rolled steel sheet and other products from India are being subsidized at this time and that they will likely continue to be subsidized in the foreseeable future.
     
     
467. Upon analysis of the results of a recent CBSA subsidy review confirming the continued use of several export subsidy programs that are conferring benefits to Indian producers of hot-rolled steel sheet, together with an examination of existing recurring benefits resulting from past subsidies and new export promotion programs, and upon review of other countervailing measures respecting exports from India, the President determined that the expiry of the finding was likely to result in the continuation or resumption of subsidizing of certain flat hot-rolled carbon and alloy steel sheet and strip originating in or exported from India.

CONCLUSION

468. 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 March 30, 2006, pursuant to paragraph 76.03(7)(a) of SIMA, the President of the CBSA determined that the expiry of the finding made by the CITT on August 17, 2001, in Inquiry No. NQ-2001-001 concerning certain flat hot-rolled carbon and alloy steel sheet and strip, originating in or exported from Brazil, the People's Republic of China, Chinese Taipei, India, South Africa and Ukraine was likely to result in the continuation or resumption of dumping of the goods into Canada.
     
     
469. Furthermore, the President determined that the expiry of the finding was likely to result in the continuation or resumption of subsidizing of certain flat hot-rolled carbon and alloy steel sheet and strip, originating in or exported from India.
     
     
470. The President also 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 the former Yugoslav Republic of Macedonia, Bulgaria, and Serbia and Montenegro (formerly the Federal Republic of Yugoslavia).

FUTURE ACTION

471. On March 31, 2006, the CITT commenced its inquiry to determine whether the expiry of the finding is likely to result in injury or retardation with respect to goods from Brazil, China, Chinese Taipei, India (dumping and subsidizing), South Africa and Ukraine. The CITT will make its decision by August 16, 2006.
     
     
472. If the CITT determines that the expiry of the finding with respect to goods from Brazil, China, Chinese Taipei, India (dumping and subsidizing), South Africa and Ukraine 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 and countervailing duties, if applicable, on subsidized importations of certain hot-rolled steel sheet from India.
     
     
473. If the CITT determines that the expiry of the finding with respect to the goods from Brazil, China, Chinese Taipei, India (dumping and subsidizing), South Africa and Ukraine is unlikely to result in injury or retardation, the finding will be rescinded in respect of those goods. Anti-dumping and countervailing duties would no longer be levied on importations of certain hot-rolled steel sheet beginning on the date the finding is rescinded.
     
     
474. Given that the President has determined 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 the former Yugoslav Republic of Macedonia, Bulgaria, and Serbia and Montenegro (formerly the Federal Republic of Yugoslavia) was unlikely to result in the continuation or resumption of dumping of the goods, the CITT will not consider these goods in its determination of the likelihood of material injury or retardation and will issue an order rescinding the finding in respect of those goods.
     
     

INFORMATION

For further information, please contact the officer listed below:

Mail:
Canada Border Services Agency
Anti-dumping and Countervailing Program
SIMA Registry and Disclosure Unit
100 Metcalfe Street, 11th floor
Ottawa, Ontario K1A 0L8
Canada

Telephone: Dan St. Arnaud  (613) 954-7373

Fax: (613) 948-4844

Email: simaregistry-depotlmsi@cbsa-asfc.gc.ca

Website: www.cbsa-asfc.gc.ca/sima-lmsi/menu-eng.html

Greg Goatbe
Vice-President
Admissibility Branch

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1. Exhibit 4: Customs Notice 625, August 11, 2005.
2. Exhibit 90: Algoma Response to Producer ERQ, Question A2.
3. Exhibit 86: Dofasco response to Producer ERQ, Question A2.
4. Exhibit 92: Ipsco Response to Producer ERQ, Question A2.
5. Exhibit 88: Mittal Canada Response to Producer ERQ, Question A2.
6. Exhibit 84: Stelco Response to Producer ERQ, Question A2.
7. Exhibit 133: Apparent Canadian Market Statistics.
8. Exhibit 133: Apparent Canadian Market Statistics.
9. Exhibit 133: Apparent Canadian Market Statistics.
10. Exhibit 131: Updated Enforcement Statistics for Day 50.
11. Exhibit 131: Updated Enforcement Statistics for Day 50.
12. Company was formerly called 'Yieh Loong Enterprise Company.'
13. Company was formerly called 'Jindal Vijayanagar Steel Limited' (JVSL).
14. Company was formerly called Iscor.
15. Company was formerly called Sartid AD.
16. Exhibit 2: CITT finding, August 17, 2001.
17. Exhibits 94, 96, 98 and 100: Response to B11 of ERQ.
18. Exhibit 110: Shanghai Baosteel ERQ Response to Question A2, page 7.
19. Exhibit 110: Shanghai Baosteel ERQ Response to Question B10, page 14.
20. Exhibit 79: Angang Group (Ansteel) ERQ Response to Question A8, page 4.
21. Exhibit 79: Angang Group (Ansteel) ERQ Response to Question B10, page 9.
22. Exhibit 2: CITT finding, August 17, 2001.
23. Exhibit 112: Chung Hung Steel Corp. ERQ Response to Question B10, page 25.
24. Exhibit 112: Chung Hung Steel Corp. ERQ Response to Question B11, page 25.
25. Exhibit 3: Customs Notice N-502. March 26, 2003. Company was called 'Yieh Loong Enterprises Co. Ltd.' at that time.
26. Exhibit 106: Ilyich Iron and Steel Works ERQ Response to Question B11, page 9.
27. Exhibit 106: Ilyich Iron and Steel Works ERQ Response to Question A2, page 3.
28. Exhibit 2: CITT finding, August 17, 2001. JSW was called JSVL at that time.
29. Exhibits 3 and 4: Customs Notices N-502 and 625.
30. Exhibit 114: JSW Steel Limited ERQ Response to Question B10, page 3.
31. Exhibit 114: JSW Steel Limited ERQ Response to Question B11, page 3.
32. Exhibit 81: SAIL ERQ Response to Question B10, page 13.
33. Exhibit 81: SAIL ERQ Response to Question B11, page 13.
34. Exhibit 81: SAIL ERQ Response to Question A2, page 2.
35. Exhibit 108: Mittal Steel Skopje ERQ Response to Question B10, page 13.
36. Exhibit 102: Mittal Steel South Africa ERQ Response to Question B10, page 21.
37. Exhibit 3: Customs Notice N-502. March 26, 2003. Company was called 'Iscor Ltd.' at that time.
38. Exhibit 4: Customs Notice 625. August 11, 2005.
39. Exhibit 104: USSS ERQ Response to Question B11, page 23.
40. Exhibit 104: USSS ERQ Response to Question A6, page 13.
41. Exhibit 83: Government of India Subsidy ERQ Response.
42. Exhibit 158: Dofasco case arguments, paragraphs 23-27; Exhibit 153: Stelco case arguments, paragraph 4; Exhibit 154: Algoma case arguments, paragraphs 77-82; Exhibit 144: Ipsco case arguments, paragraphs 1-2.
43. Exhibit 158: Dofasco case arguments, paragraphs 31-33.
44. Exhibit 154: Algoma case arguments, paragraphs 67-75.
45. Exhibit 158: Dofasco case arguments, paragraphs 27-28.
46. Exhibit 158: Dofasco case arguments, paragraph 35.
47. Exhibit 158: Dofasco case arguments, paragraph 34; Exhibit 153: Stelco case arguments, paragraph 26; Exhibit 154: Algoma case arguments, paragraph 66.
48. Exhibit 153: Stelco case arguments, paragraph 2.
49. Exhibit 144: Ipsco case arguments, paragraph 5-9.
50. Exhibit 158: Dofasco case arguments, paragraphs 11-18; Exhibit 153: Stelco case arguments, paragraphs 4-6; Exhibit 154: Algoma case arguments, paragraphs 61-64; Exhibit 144: Ipsco case arguments, paragraphs 16-21.
51. Exhibit 153: Stelco case arguments, paragraph 4.
52. Exhibit 158: Dofasco case arguments, paragraphs 11-13.
53. Exhibit 158: Dofasco case arguments, paragraphs 14-15; Exhibit 153: Stelco case arguments, paragraph 6; Exhibit 154: Algoma case arguments, paragraphs 61-63; Exhibit 144: Ipsco case arguments, paragraphs 18-21.
54. Exhibit 158: Dofasco case arguments, paragraphs 14 -20; Exhibit 153: Stelco case arguments,paragraphs 6-7; Exhibit 144: Ipsco case arguments, paragraphs 16-21.
55. Exhibit 158: Dofasco case arguments, paragraphs 19-22.
56. Exhibit 158: Dofasco case arguments, paragraphs 40-42.
57. Exhibit 158: Dofasco case arguments, paragraphs 36-37.
58. Exhibit 153: Stelco case arguments, paragraph 23.
59. Exhibit 154: Algoma case arguments, paragraph 79-82.
60. Exhibit 158: Dofasco case arguments, paragraph 47.
61. Exhibit 153: Stelco case arguments, paragraph 24; Exhibit 154: Algoma case arguments, paragraphs 22-23.
62. Exhibit 153: Stelco case arguments, paragraph 30; Exhibit 154: Algoma case arguments, paragraphs 130-133; Exhibit 144: Ipsco case arguments, paragraph 15.
63. Exhibit 154: Algoma case arguments, paragraph 134-138; Exhibit 144: Ipsco case arguments, paragraph 15.
64. Exhibit 153: Stelco case arguments, paragraph 28.
65. Exhibit 154: Algoma case arguments, paragraph 28.
66. Exhibit 153: Stelco case arguments, paragraphs 29-31; Exhibit 154: Algoma case arguments, paragraphs 25-27.
67. Exhibit 158: Dofasco case arguments, paragraphs 43-44.
68. Exhibit 158: Dofasco case arguments, paragraph 46.
69. Exhibit 154: Algoma case arguments, paragraph 33.
70. Exhibit 154: Algoma case arguments, paragraphs 37-42.
71. Exhibit 154: Algoma case arguments, paragraph 38.
72. Exhibit 154: Algoma case arguments, paragraph 43-56.
73. Exhibit 154: Algoma case arguments, paragraph 57.
74. Exhibit 153: Stelco case arguments, paragraphs 17-18.
75. Exhibit 154: Algoma case arguments, paragraph 92.
76. Exhibit 158: Dofasco case arguments, paragraph 48-49.
77. Exhibit 158: Dofasco case arguments, paragraph 50.
78. Exhibit 154: Algoma case arguments, paragraphs 95-96.
79. Exhibit 154: Algoma case arguments, paragraph 95.
80. Exhibit 159: Dofasco case arguments, paragraphs 53-55.
81. Exhibit 159: Dofasco case arguments, paragraphs 57-59.
82. Exhibit 158: Dofasco case arguments, paragraph 60.
83. Exhibit 153: Stelco case arguments, paragraph 6.
84. Exhibit 154: Algoma case arguments, paragraphs 98-102, 64.
85. Exhibit 158: Dofasco case arguments, paragraph 63-64.
86. Exhibit 158: Dofasco case arguments, paragraphs 64-65.
87. Exhibit 153: Stelco case arguments, paragraphs 7-9.
88. Exhibit 154: Algoma case arguments, paragraph 64.
89. Exhibit 158: Dofasco case arguments, paragraphs 69-70.
90. Exhibit 153: Stelco case arguments, paragraphs 11-13.
91. Exhibit 144: Ipsco case arguments, paragraph 23.
92. Exhibit 154: Algoma case arguments, paragraphs 108, 113.
93. Exhibit 159: Dofasco case arguments, paragraphs 71-72.
94. Exhibit 159: Dofasco case arguments, paragraphs 73-74.
95. Exhibit 158: Dofasco case arguments, paragraphs 75-76.
96. Exhibit 158: Dofasco case arguments, paragraph 77.
97. Exhibit 158: Dofasco case arguments, paragraph 79.
98. Exhibit 158: Dofasco case arguments, paragraph 80.
99. Exhibit 159: Dofasco case arguments, paragraphs 80-82.
100. Exhibit 154: Algoma case arguments, paragraphs 15-20.
101. Exhibit 158: Dofasco case arguments, paragraph 83.
102. Exhibit 158: Dofasco case arguments, paragraphs 84-86.
103. Exhibit 153: Stelco case arguments, paragraphs 14-15.
104. Exhibit 153: Stelco case arguments, paragraphs 15-16.
105. Exhibit 154: Algoma case arguments, paragraph 83.
106. The four participating Brazilian mills include: Companhia Siderurgica de Tubarao (CST); Companhia Siderurgica Paulista (COSPIPA); Usinas Siderurgicas de Minas Gerais S.A. (Usiminas) and Companhia Siderurgica Nacional (CSN).
107. Exhibit 154: Algoma case arguments, paragraph 89; Exhibit 158: Dofasco case arguments, paragraphs 87-92.
108. Exhibit 159: Dofasco case arguments, paragraphs 87-92.
109. Exhibit 158: Dofasco case arguments, paragraph 94.
110. Exhibit 159: Dofasco case arguments, paragraphs 95-98.
111. Exhibit 159: Dofasco case arguments, paragraphs 99-100.
112. Exhibit 158: Dofasco case arguments, paragraphs 99-101; Exhibit 144: Ipsco case arguments, paragraph 26.
113. Exhibit 158: Dofasco case arguments, paragraphs 101-104.
114. Exhibit 159: Dofasco case arguments, paragraphs 105-106.
115. Exhibit 158: Dofasco case arguments, paragraphs 106-107.
116. Exhibit 154: Algoma case arguments, paragraphs 122-124.
117. Exhibit 154: Algoma case arguments, paragraph 125.
118. Exhibit 158: Dofasco case arguments, paragraphs 109-113.
119. Exhibit 158: Dofasco case arguments, paragraph 114.
120. Exhibit 154: Algoma case arguments, paragraph 104.
121. Exhibit 158: Dofasco case arguments, paragraphs 115-116.
122. Exhibit 158: Dofasco case arguments, paragraph 118; Exhibit 154: Algoma case arguments, paragraph 106.
123. Exhibit 158: Dofasco case arguments, paragraphs 119-120.
124. Exhibit 158: Dofasco case arguments, paragraph 121; Exhibit 154: Algoma case arguments, paragraph 117.
125. Exhibit 159: Dofasco case arguments, paragraphs 121-125.
126. Exhibit 158: Dofasco case arguments, paragraph 126.
127. Exhibit 154: Algoma case arguments, paragraphs 115-116.
128. Exhibit 154: Algoma case arguments, paragraphs 143-145.
129. Exhibit 161: Brazilian producers Case Briefs, paragraph 11.
130. Exhibit 161: Brazilian producers Case Briefs, paragraph 21.
131. Exhibit 161: Brazilian producers Case Briefs, paragraph 22.
132. Exhibit 161: Brazilian producers Case Briefs, paragraph 27.
133. Exhibit 161: Brazilian producers Case Briefs, paragraph 36.
134. Exhibit 161: Brazilian producers Case Briefs, paragraphs 25 and 26.
135. Exhibit 161: Brazilian producers Case Briefs, paragraph 34.
136. Exhibit 80: Angang ERQ Response to Questions B18 and B19.
137. Exhibit 110: Shanghai Baosteel ERQ Response to Questions B18-B20.
138. Exhibit 113: Chung Hung Steel ERQ Response to Questions B18 and B21.
139. Exhibit 115: JSW (Jindal) ERQ Response to Questions B18-B21.
140. Exhibit 82: SAIL ERQ Response to Questions B17-B21.
141. Exhibit 108: Mittal Steel Skopje ERQ Response to Question B10, page 2.
142. Exhibit 108: Mittal Steel Skopje ERQ Response to Question B10, page 13.
143. Exhibit 108: Mittal Steel Skopje ERQ Response to Question B21, page 18.
144. Exhibit 108: Mittal Steel Skopje ERQ Response to Question B13, page 13.
145. Exhibit 108: Mittal Steel Skopje ERQ Response to Question B13, page 14.
146. Exhibit 108: Mittal Steel Skopje ERQ Response to Question B22, page 18.
147. Exhibit 108: Mittal Steel Skopje ERQ Response to Question B22, page 19.
148. Exhibit 165: USSS Case Briefs, paragraph 30, page 7.
149. Exhibit 20: USSS Submission to CITT, November 3, 2005, page 4.
150. Exhibit 165: USSS Case Briefs, paragraph 25, page 6.
151. Exhibit 104: USSS ERQ Response to Question B30, page 32.
152. Exhibit 165: USSS Case Briefs, paragraph 23, pages 5 and 6.
153. Exhibit 165: USSS Case Briefs, paragraph 57, page 13.
154. Exhibit 165: USSS Case Briefs, paragraph 46, page 10.
155. Exhibit 104: USSS ERQ Response to Question B14(a), page 24.
156. Exhibit 104: USSS ERQ Response to Question B14(b), page 26.
157. Exhibit 104: USSS ERQ Response to Question B15, page 26.
158. Exhibit 163: Mittal SA case argument, paragraph 16.
159. Exhibit 163: Mittal SA case argument, paragraph 29.
160. Exhibit 163: Mittal SA case argument, paragraph 21.
161. Exhibit 163: Mittal SA case argument, paragraph 34.
162. Exhibit 163: Mittal SA case argument, paragraph 50.
163. Exhibit 163: Mittal SA case argument, paragraph 51.
164. Exhibit 171: Mittal SA reply submission, paragraph 23.
165. Exhibit 171: Mittal SA reply submission, paragraph 43.
166. Exhibit 171: Mittal SA reply submission, paragraph 51.
167. Exhibit 20: CITT Administrative Record - November 3, 2005, page 2.
168. Exhibit 157: Ilyich Case Brief, paragraph 5(d), page 4.
169. Exhibit 157: Ilyich Case Brief, paragraph 5(e), page 5.
170. Exhibit 157: Ilyich Case Brief, paragraph 5(h), page 5.
171. Exhibit 148: Algoma Supplemental Submission, Attachment 2. Morgan Stanley Report. December 14, 2005, page 12.
172. Exhibit 137: American Metal Market report. January 13, 2006, page 6 of 12.
173. Exhibit 106. Ilyich ERQ Response to Question B17, page 11.
174. Exhibit 157: Ilyich Case Brief, paragraph 7, page 5.
175. Exhibit 157: Ilyich Case Brief, paragraph 12, page 7.
176. Exhibit 157: Ilyich Case Brief, paragraph 17, page 9.
177. CITT Statement of Reasons, RR-98-004, pages 13-14.
178. Exhibit 24: MEPS Steel News extract, "The changing face of steel," November 1, 2005, page 2.
179. Exhibit 24: MEPS Steel News extract, "Iron ore negotiations on a knife edge," October 26, 2005; Exhibit 24: MEPS Steel News extract, "The changing face of steel," November 1, 2005, page 2; Exhibit 23: Metal Bulletin articles, "Coking coal prices set to roll over in 2006," September 21, 2005.
180. Exhibit 32: Metal Bulletin Weekly feature, "Perfect Timing," August 1, 2005.
181. Exhibit 75: Metal Bulletin, "China targets 500 small steelmakers under new production standards," December 22, 2005; "China's plan to cap steel capacity at 400 million tpy questioned," December 15, 2005; "China lists banned steel and metal projects," December 21, 2005.
182. Exhibit 24: MEPS Steel News, "The Changing Face of Steel," World Crude Steel production table.
183. Exhibit 75: Metal Bulletin article, "China's 2004 steel production revised upwards."
184. Exhibit 33: People's Daily On-Line, "China's GDP rises 9.4 percent for the first 3 quarters 2005," October 20, 2005; Exhibit 33, People's Daily On-Line, "2004 GDP growth unrevised at 9.5 percent," March 1, 2005; Exhibit 75: Metal Bulletin article, "China's 2004 steel production revised upwards"
185. Exhibit 33: Miscellaneous articles, Forbes.com (FAX News interview), "China 2006 steel output growth seen slowing," October 31, 2005.
186. CBSA administrative record, "Reinvestigation hot-rolled steel sheet, File #: 4258-114," initiated February 15, 2005 and concluded June 29, 2005.
187. Exhibit 4: CBSA Customs Notice 625 regarding the conclusion of a reinvestigation of normal values and export prices regarding certain hot-rolled steel sheet, June 29, 2005.
188. Exhibit 75: Metal Bulletin Research, "China's 20004 steel production revised upwards," which includes revised crude steel production figures of 280 mmt for 2004.
189. Exhibit 24: MEPS Steel News extract, "China's rise in steel production to outstrip total world increase in 2005," October 25, 2005.
190. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 35, August 2005, page 6.; Exhibit 32: Metal Bulletin Research article, "China's steel surplus to hit 116 million tones in 2006," November 30, 2005; Exhibit 33: China Daily, "Nation plans to control steel production," December 14, 2005; Exhibit 33: China Daily, "Policies to help prevent industry uncertainty," December 12, 2005; Exhibit 33: Reuters, "Top Chinese planner sees huge steel overcapacity," December 5, 2005; Exhibit 33: Yahoo Finance, "China to rationalize steel sector due to over-capacity," November 15, 2005; Exhibit 32: Metal Bulletin article, "China's NDRC warns of oversupply in 2005," July 27, 2005.
191. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 33, June 2005, page 4.
192. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 33, June 2005, page 5.
193. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 33, June 2005 page 4.
194. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 34, July 2005, chart on page 3.
195. Exhibit 32: Steel Business Briefing article, "Chinese HRC prices fall further as over-supply worsens," September 29, 2005.
196. Exhibit 33: China Daily, "Policies to help prevent industry uncertainty," December 12, 2005; Exhibit 32: Metal Bulletin Research article, "China's steel surplus to hit 116 million tones in 2006," November 30, 2005. Exhibit 33: Reuters, "Top Chinese planner sees huge steel over-capacity," December 5, 2005; Exhibit 32: Metal Bulletin article, "CISA official launches broadside against government predictions," December 5, 2005.
197. Exhibit 110: Shanghai Baosteel Group Corporation, exporter response to the ERQ, Exhibit B11-b.
198. Exhibit 98: Reply to the exporter ERQ by Brazilian mill Usiminas, Attached Report, World Steel Dynamics, Inside Track #152, "Chinese steel in crisis," October 7, 2005, page 12.
199. Exhibit 110: Shanghai Baosteel Group Corporation, exporter response to the ERQ, Exhibit B11-b.
200. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 34, July 2005, page 3. Hot-rolled coil output is reported to be up 43.5% in the January-May 2005 period when compared to the same period in 2004.
201. 1.102 tons = 1 metric tonne (mt)
202. Exhibit 110: Shanghai Baosteel Group Corporation, exporter response to the ERQ, Exhibit B11-b.
203. Exhibit 32: Steel Business Briefing, "China's HRC exports are mostly unpickled, says ISSB," October 27, 2005.
204. Exhibit 98: Reply to the exporter ERQ by Brazilian mill Usiminas (Exhibit 33), World Steel Dynamics, Inside Track #152, "Chinese steel in crisis," October 7, 2005, Page 12.
205. Exhibit 110: Shanghai Baosteel Group Corporation, exporter response to the ERQ, Question B20.
206. Exhibit 98: Reply to the exporter ERQ by Brazilian mill Usiminas, Attached Report, World Steel Dynamics, Inside Track #152, "Chinese steel in crisis," October 7, 2005, Page 12.
207. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 34, July 2005, page 2. Chinese domestic market prices plunged by 25 percent in the second quarter, down to RMB 3,600 from highs of RMB 4,800.
208. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 38, November 2005, page 6. Exhibit 32: Steel Business Briefing article, Steel Business Briefing article, "CISA to call on mills to stabilise prices," October 19, 2005; Exhibit 32: Steel Business Briefing article, "Chinese coil prices head lower further," October 19, 2005; Exhibit 32: Steel Business Briefing article, "Sales volumes fall for Chinese coil products," October 26, 2005.
209. Exhibit 126: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 40, January 2006, page 3.
210. Exhibit 98: Reply to the exporter ERQ by Brazilian mill Usiminas, Attached Report, World Steel Dynamics, Inside Track #152, "Chinese steel in crisis," October 7, 2005, page 4.
211. Exhibit 32: Steel Business Briefing articles, "Chinese traders look increasing overseas," October 28, 2005; Exhibit 29: Steel Business Briefing article, "Korean HRC import prices hit by Chinese offers," October 31, 2005, "HRC import market sentiment in Asia dampens," October 25, 2005; Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 37, October, page 3; Issue 38, November, pages 6-7; Issue 39, December, page 2; Exhibit 126: Issue 40, January 2006, page 2; Exhibit 141: Dofasco supplemental information, page 172, CRU Monitor, Steel Sheet products (December), Asia, "Downturn continues as fundamentals weaken further."; Exhibit 126: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 40, January 2006, page 4.
212. Exhibit 126: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 40, January 2006, pages 2-4.
213. Exhibit 159: Dofasco case brief, paragraph 65.
214. Exhibit 29: "HRC import market sentiment in Asia dampens," October 25, 2005; Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 37, October, page 3; Exhibit 126: Metal Bulletin, Emerging Steel Markets Monthly Issue 40, January 2006, page 4.
215. Exhibit 110: Shanghai Baosteel Group Corporation response to the exporter ERQ, reply to Question A13; Exhibit 98: Reply to the exporter ERQ by Brazilian mill Usiminas, Attached Report, World Steel Dynamics, Inside Track #152, "Chinese steel in crisis," October 7, 2005, page 7; Exhibit 155: Algoma case brief, paragraphs 130-133.
216. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 37, October 2005, page 3;
217. Exhibit 32: Steel Business Briefing article, "Chinese mills accuse traders of causing price weakness," October 27, 2005.
218. Exhibit 129: CBSA Canadian Import Statistics for the period of review.
219. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 38, November 2005, pages 6-7; Issue 39, December 2005, pages 4-7; Exhibit 32: Metal Bulletin article, "China will move to limit export tonnages says WSD", November 28, 2005; Exhibit 98: Reply to the exporter ERQ by Brazilian mill Usiminas, Attached Report, World Steel Dynamics, Inside Track #152, "Chinese steel in crisis," October 7, 2005; Exhibit 32: Steel Business Briefing article, "China has to cut production "sooner or later," October 13, 2005; "China steel consolidation could take 4-5 years," October 4, 2005, "China threatens world market stability, says Standard Bank," September 28, 2005; Exhibit 75: Metal Bulletin article, "China's plan to cap steel capacity at 400 million tpy questioned," December 15, 2005.
220. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 38, November 2005, page 7.
221. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 32, May 2005, page 6.
222. Exhibit 35: Miscellaneous articles, Asia Time On-line, China, "Taiwan investors 'China fever' cools," May 19, 2004, page 5.
223. Exhibit 35: International Monetary Fund, World Economic Outlook database, September 2005, Gross Domestic Product.
224. Exhibit 25: International Iron and Steel Institute, World Steel in Figures 2005, page 3.
225. Exhibit 33:, Miscellaneous articles, Asia Times On-line, China Business, "Steel the new textiles for China," November 5, 2005, page 1.
226. Exhibit 159: Dofasco case brief, paragraph 114.
227. According to CRU product definitions, "Finished hot-rolled sheet" includes coil, sheet and strip net of derived products (i.e. not including hot-rolled steel sheet further processed into downstream product). Refer to Exhibit 141: Dofasco supplemental information, CRU Monitor, Steel Sheet Products, December, Footnote 1, page 167.
228. Exhibit 141: Dofasco supplemental information, CRU Analysis, Steel Sheet Quarterly October 2005, Statistical Review, Table S.15, page 137.
229. Exhibit 141: Dofasco supplemental information, CRU Analysis, Steel Sheet Quarterly October 2005, Statistical Review, Table S.7, page 136.
230. Exhibit 34: Metal Bulletin Monthly, May 2005, "Project fever in Taiwan."
231. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 38, November 2005, pages 1-6; Issue 39, December 2005, page 2; Exhibit 126, Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 40, January 2006, pages 2-3.
232. Exhibit 112: Chung Hung Steel's Response to the ERQ, Appendix 2 and Appendix 3.
233. Exhibit 34: Metal Bulletin article, "China Steel Corp cuts Q4 domestic HR prices by $74," August 25, 2005; Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 36, September 2005, page 4.
234. Exhibit 34: Metal Bulletin article, "China Steel follows Baosteel by tabling price cuts," November 25, 2005; Exhibit 35:, Miscellaneous Articles, Forbes.com (AFX News Limited), "Taiwan's China Steel to follow China's Baosteel on steel prices - report," November 13, 2005; Exhibit 35:, Miscellaneous Articles, Interfax China, "Baosteel to fight domestic rivals by cutting Q1 prices," November 15, 2005; Exhibit 126: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 40, January 2006, page 3.
235. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 38, November 2005, page 6.
236. Exhibit 35: Miscellaneous Articles, Yieh.com, Market news, "Taiwanese mills increase export volume," November 1, 2005.
237. Exhibit 112: Chung Hung Steel response to the exporter ERQ, Based on a comparison of average unit export selling prices and average total unit costs from Appendix 3 and Appendix 4.
238. Exhibit 35: Miscellaneous Articles, Yieh.com Market News, "Subject: CHS sees drop in Q3 net income," Exhibit 126: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 40, January 2006, page 3.
239. Exhibit 35: Miscellaneous Articles, Yieh.com Market News, "CHS predicts profit loss over NT $2 billion for 2005," November 29, 2005.
240. Refer to the Canada Customs and Revenue Agency's (now the Canada Border Services Agency) Statement of Reasons Preliminary Determination of dumping and subsidizing, Appendix 1, April 19, 2001 and the Statement of Reasons final determination of dumping and subsidizing, Appendix 2, July 18, 2001.
241. Exhibit 129: CBSA's Canadian Import Statistics for the Period of Review, January 18, 2006.
242. Exhibit 112: Chung Hung Steel ERQ Response to Question A13; Exhibit 155: Algoma case brief, paragraphs 130-133.
243. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 37, October 2005, page 3; Issue 38, November 2005, page 7; Issue 39, December 2005, page 2; Exhibit 126: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 40, January 2006, pages 2-3.
244. Exhibit 22: Metal Bulletin, Emerging Steel Markets Monthly, Issue 38, November 2005, page 7.; Exhibit 126: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 40, January 2006, page 4.
245. Exhibit 37: MEPS Steel News, "Can India be the next China?" August 24, 2005.
246. Exhibit 25: International Iron and Steel Institute, Word Steel in Figures 2005, "Major importers and exporters of steel 2003," page 12.
247. Exhibit 25: International Iron and Steel Institute, Worldsteel.org, Monthly statistics, December 2004; September 2005.
248. Exhibit 37: MEPS Steel News, "Can India be the next China?" August 24, 2005.
249. Exhibit 38: International Monetary Fund, World Economic Outlook database, April 2005, Gross Domestic Product.
250. Exhibit 3 and 4: CBSA Customs Notices 502 and 625.
251. Exhibit 129: CBSA Canadian import statistics.
252. Exhibit 141: Dofasco supplemental information, CRU Analysis, Steel Sheet Quarterly October 2005, Statistical Review, Table S.16, page 139.
253. Exhibit 141: Dofasco supplemental information, CRU Analysis, Steel Sheet Quarterly October 2005, Statistical Review, Table S.8, page 138.
254. Exhibit 36: Metal Bulletin articles, "Ispat to invest Rs 11 billion to boost HRC capacity at Dolvi," September 28, 2005; Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 35, August 2005, page 7; Exhibit 36: Metal Bulletin article, "Indian cold roller BSSL unveils Rs 50 bn upstream capital investment," August 9, 2005; Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 35, August 2005, page 7; Exhibit 36: Metal Bulletin article, "Tata signs MOU to build 12 m tpy steel plant in Jharkhand,", September 9, 2005; Exhibit 114: JSW ERQ Response to Questions B5 and B6; Exhibit 141: Dofasco supplemental information, "India: Construction plans for proposed $918,000,000 steel plant....Essar Global," Gale Group - Report on Mining, Metal Making and Conversion, August 31, 2005, p.56; Also refer to same exhibit - CRU Analysis, Steel Sheet Quarterly October 2005, Statistical Review, Table S.108, page 150, where Essar Steel, Hazira is identified as hot strip rolling facility.
255. Exhibit 114: JSW ERQ Response to Question B20.
256. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 35, August 2005, page 7; Exhibit 36: Metal Bulletin articles, "Tata signs MOU to build 12 m tpy plant in Jharkhand," September 9, 2005; Exhibit 38: Miscellaneous Articles, Globe and Mail "Mittal invests $9 billion in Indian steel plant," October 10, 2005; "Expansion plans in India fuel steel glut worries," November 1, 2006; Exhibit 37: MEPS article extracts, "Can India be the next China?" August 24, 2005; Exhibit 36: Metal Bulletin articles, "JSPL boosts initial capacity at Orissa project to 6 m tpy," November 4, 2005; Exhibit 36: Metal Bulletin articles, "SAIL unveils $2.26 billion plans to boost capacity even further," October 5 2005; Exhibit 25: OECD/IISI Outlook for Steel Conference, Comments re. "Capacity Expansion in the global steel industry," page 8 and Attachment 1.
257. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 37, October 2005, page 3; Exhibit 126: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 40, January 2006, page 4.
258. Exhibit 126: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 40, January 2006, page 1.
259. Exhibit 22: Metal Bulletin Research, Emerging Steel Markets Monthly, Issue 31, April 2005, page 1.
260. Exhibit 114: JSW ERQ Response to Appendix 3.
261. Exhibit 114: JSW ERQ Response, Appendix 3 and 4. A comparison of total average export prices and total unit costs in the third quarter 2005 indicates that average export selling prices are unprofitable.
262. Exhibit 114: JSW ERQ Response to Questions B18 and B21; Exhibit 81: SAIL ERQ Response to Questions B17, B18 and B21.
263. Refer to the Canada Customs and Revenue Agency's (now the Canada Border Services Agency) Statement of Reasons, Preliminary Determination of dumping and subsidizing, Appendix 1, April 19, 2001; and the Statement of Reasons - final determination of dumping and subsidizing, Appendix 2, July 18, 2001.
264. Exhibit 129: CBSA's Canadian Import Statistics for the Period of Review, January 18, 2006.
265. Exhibit 114: JSW ERQ Response to Questions A13; Exhibit 81: SAIL ERQ Response to Questions A13; Exhibit 155: Algoma case brief, paragraphs 130-133.
266. Exhibit 36: Metal Bulletin article, "Pace of growth may harm India's steel industry," October 25, 2005; Exhibit 38: Miscellaneous Article, The Globe and Mail, "Expansion plans in India fuel steel glut worries," November 1, 2005; Exhibit 37: MEPS article extracts, "Can India be the next China?" August 24, 2005.
267. Exhibit 36: Metal Bulletin article, "Pace of growth may harm India's steel industry," October 25, 2005.
268. Exhibit 98: USIMINAS ERQ Response, Attachment 30, page 3.
269. Exhibit 25: IISI Steel Statistical Yearbook 2005, page 51. (2004 base-year statistics).
270. Note that COSIPA, while a separate corporate entity, is a wholly owned subsidiary of USIMINAS.
271. Exhibit 2: CITT finding, August 17, 2001, page 14.
272. Note that CST is a wholly owned subsidiary of the Arcelor steel group. Exhibit 94: CST ERQ Response to Question A2(b), page 12.
273. Exhibit 94: CST ERQ Response to Question A2(b), page 12.
274. Exhibit 3: Customs Notice N-502. Exhibit 4: Customs Notice 625.
275. Exhibit 15: Import Statistics.
276. Exhibits 94, 96, 98 and 100: ERQ Responses to Question B11.
277. Exhibits 94, 96, 98 and 100: ERQ Responses to Appendix 1.
278. Exhibit 100: CSN ERQ Response, Attachment 18. CRU Monitor Report, November 2005, page 6.
279. Latin American countries, as interpreted by the CRU Monitor report, appears to include all of South America and Central America, with the exception of Mexico.
280. The fact that the EMMS report is based on 10 months versus the ERQ responses which are the first 9 months could account for the difference given that exports increased dramatically in the last quarter overall.
281. Prorated figure based on the first 10 months of 2005.
282. Exhibits 22 and 126: Emerging Markets Monthly, page 6 of Issue 39, December 2005 and Issue 40, January 2006.
283. Note that the Emerging Steel Market Monthly table which reports on Brazilian Flat Products indicates that intra company steel sales are not included in their figures which could explain discrepancies between their domestic sales market figures and the figures provided by the Brazilian producers as hot-rolled is at times sold to related affiliates for downstream use.
284. Exhibit 46: Metal Bulletin Online: "Rising costs slow Arcelor Brasil expansion projects." November 29, 2005.
285. Exhibit 46: Metal Bulletin Online: "Lifting of US duty on CST's HR coil could speed expansion plans," November 2, 2005.
286. Exhibit 161: Brazilian producers Case Brief, paragraph 22.
287. Exhibits 94, 96, 98 and 100: ERQ Responses to Appendices 1 and 2.
288. Exhibits 94, 96, 98 and 100: ERQ Responses to Appendix 1.
289. Exhibits 94, 96, 98, 100: Appendices 1 and 2.
290. Exhibits 96 and 98: USIMINAS and COSIPA ERQ Responses to B20, pages 30 and 28.
291. Exhibits 96 and 98: USIMINAS and COSIPA ERQ Responses to B19, pages 30 and 28.
292. Exhibit 100: CSN ERQ Response to Question B18, pages 40 and 41.
293. Exhibit 126: Emerging Steel Markets Monthly Report; Issue 40, January 2006, page 7.
294. Exhibit 141: Dofasco Supplemental Exhibits, page 91.
295. Exhibit 94: CST ERQ Response to Question B20, page 28. Company uses an apparent [2.2] factor on GNP to figure growth in flat-rolled steel.
296. Exhibit 126: Metal Bulletin Research. Emerging Steel Markets Monthly Report, January 2006 Issue 40, page 6.
297. Exhibit 100: CSN ERQ Response, Attachment 6, "CSN Report to US Securities Exchange Commission," page 6.
298. Exhibits 94, 96, 98 and 100: ERQ Responses to Appendix 3.
299. Exhibit 173: Brazilian Producers Reply Submissions, page 4, paragraph 20.
300. Exhibit 100: CSN ERQ Response to Appendix 3.
301. Exhibit 98: USIMINAS ERQ Response to Appendix 3.
302. Exhibit 94: CST ERQ Response to Appendix 3.
303. Exhibit 98: USIMINAS ERQ Response to Question A13, page 20.
304. Exhibit 148: Algoma Supplemental Exhibits, Attachment A5, pages 94 and 95.
305. Exhibit 25: International Iron and Steel Institute, Steel Statistical Yearbook 2005, page 51.
306. Exhibit 141: Dofasco Supplemental Exhibits, pages 133.
307. Exhibit 141: Dofasco Supplemental Exhibits, pages 132.
308. Exhibit 141: Dofasco Supplemental Exhibits, pages 144.
309. Exhibit 141: Dofasco Supplemental Exhibits, pages 146.
310. Exhibit 148: Algoma Supplemental Exhibits, Attachment A5, page 95.
311. Exhibit 22: Emerging Steel Markets Monthly Report, October 2005, page 7.
312. Exhibit 44: "Kremikovtzi targets sharp increase in output by 2007."
313. Exhibit 22: Emerging Steel Markets Monthly Report, October 2005, page 7.
314. Exhibit 44: Steel Business Briefing, "Kremikovtzi considers CR mill as part of expansion," October 5, 2005.
315. Exhibit 44: "Kremikovtzi targets sharp increase in output by 2007."
316. 'Production imperatives' to maintain utilization rates in light of the high fixed costs associated with steelmaking is a common remark concerning the industry.
317. Exhibit 141: Dofasco Supplemental Exhibits, page 133.
318. Russia, Ukraine, Kazakhstan, 'Other CIS' countries
319. Japan, South Korea, Chinese Taipei, 'ASEAN' countries and China
320. Exhibit 141: Dofasco Supplemental Exhibits, pages 135 and 137.
321. Exhibit 44: Steel Business Briefing, "Kremikovtzi considers CR mill as part of expansion," October 5, 2005.
322. Exhibit 45: IMF Report on GDP
323. Exhibit 44: Metal Bulletin, "Out of Chaos," March 29, 2004, pages 10-12.
324. Exhibit 44: Steel Business Briefing, "Kremikovtzi considers CR mill as part of expansion."
325. Exhibit 100: CSN Response to ERQ, Attachment 16, CRU Monitor Report for November 2005, page 6.
326. CITT Inquiry No. NQ-2003-002, January 9, 2004.
327. Mexico also initiated measures against Bulgaria for Cold-Rolled sheet in June 2004 but the last update to the WTO was too early to report what the final determination was.
328. Exhibit 1: CCRA Statement of Reasons, July 18, 2001, page 27.
329. Exhibit 1: CCRA Statement of Reasons, final determination, July 18, 2001.
330. Exhibit 108: Mittal Steel Skopje ERQ Response to Appendix 2.
331. MSS' downstream production includes: cold-rolled, galvanized and pre-painted steel sheet.
332. Exhibit 141: Dofasco Supplemental Exhibits page 144.
333. Exhibit 108: Mittal Steel Skopje ERQ Response to Exhibit A9.
334. Exhibit 108: Mittal Steel Skopje ERQ Response to Appendix 1.
335. Exhibit 141: Dofasco Supplemental Exhibit, page 144.
336. Exhibit 141: Dofasco Supplemental Exhibit, page 144.
337. Exhibit 45: International Monetary Fund, World Economic Outlook Database, September 2005.
338. Exhibit 108: Mittal Steel Skopje ERQ Response to Appendix 3.
339. Exhibit 108: Mittal Steel Skopje ERQ Response to Appendix 3.
340. Exhibit 108: Mittal Steel Skopje ERQ Response to Appendix 4.
341. Exhibit 108: Mittal Steel Skopje ERQ Response to Appendix 4.
342. Exhibit 108: Mittal Steel Skopje ERQ Response to Appendix 3.
343. Exhibit 108: Mittal Steel Skopje ERQ Response, Attached Exhibit A4(a). Mittal Steel Corporate Structure.
344. Exhibit 88: Mittal Canada ERQ Response, page 1 and 2.
345. Exhibit 1: Statement of Reasons, July 18, 2001, page 27.
346. Exhibit 106: Ilyich ERQ Response to Appendix 1, 2 and 3.
347. Exhibit 158: Dofasco case arguments, paragraphs 99-101; Exhibit 144: Ipsco case arguments, paragraph 26.
348. Exhibit 141: Dofasco Supplemental Exhibits, pages 134 and 135.
349. Exhibit 141: Dofasco Supplemental Exhibits, page 144.
350. Exhibit 42: Metal Bulletin Online, "IUD aims to switch Alchevsk to strip production," August 26, 2005.
351. Exhibit 22: Emerging Steel Markets Monthly, September 2005, page 6.
352. Exhibit 42: Metal Bulletin Online, "IUD aims to switch Alchevsk to strip production," August 26, 2005.
353. Exhibit 42: Metal Bulletin Online, "Mittal Steel looks at switch to flat products at Krivorozhstal," October 24, 2005.
354. Exhibit 148: Algoma Supplemental Submission, Attachment 2. Morgan Stanley Report, December 14, 2005, page 12.
355. Exhibit 141: Dofasco Supplemental Exhibits, pages 141.
356. This takes into account the fact that an overseas exporter will typically have to discount off the prevailing price to get a sale and absorb somewhere around 15-20 percent for freight and delivery charges.
357. Exhibit 168: Ilyich Reply Submission, page 5, paragraph 19.
358. World Trade Organization Semi Annual Notifications.
359. Exhibit 141: Dofasco Supplemental Exhibits, page 77.
360. Exhibit 43: www.business.dp.ua/: "Mexico Imposes Duties On Steel From Ukraine," September 27, 2005.
361. Exhibit 42: Metal Bulletin Online: "Ukraine signs 2005-06 export quota agreement with EU," August 16, 2005.
362. Exhibit 141: Dofasco Supplemental Exhibits, pages 75 and 76.
363. Exhibit 141: Dofasco Supplemental Exhibits, page 76.
364. Exhibit 157: Ilyich Case Brief, paragraph 17, page 9.
365. Exhbiit 106: Ilyich ERQ Response to Appendix 3.
366. Exhibit 104: USSS ERQ Response to Question B11, page 22.
367. Exhibit 104: USSS ERQ Response to Question B1, page 20.
368. Exhibit 141: Dofasco Supplemental Exhibit, page 144. Also Exhibit 148: Algoma Supplemental Exhibits, Attachment A5, page 127.
369. Exhibit 104: USSS ERQ Response to Question B10, page 23.
370. Primary problems with the appendices concern Appendix 2 where the total goods available for sale is inconsistent with the total quantity sold and resulting inventory. In 2004, for example, more product is sold than was available for sale.
371. Exhibit 104: Attachment to USSS ERQ Response as Exhibit 18: "Business Plan 2005," page 1.
372. Exhibit 104: Attachment to USSS ERQ Response as Exhibit 19: "Business Plan 2006," page 1.
373. Exhibit 104: USSS ERQ Response to Question B13(b), page 25.
374. Exhibit 44: Metal Bulletin Online: "Out of Chaos,"March 29, 2004, page 10.
375. Exhibit 104: Attachment to USSS ERQ Response as Exhibit 17: "Exports By Country," pages 1 and 2.
376. Exhibit 104: USSS ERQ Response to Appendix 2
377. Exhibit 104: USSS ERQ Response to Question B17, page 27.
378. Exhibit 104: USSS ERQ Response to Appendix 3.
379. Exhibit 104: USSS ERQ Response to Appendix 3-2.
380. Exhibit 104: USSS ERQ Response to Question A2(b), page 12.
381. Exhibit 104: USSS ERQ Response to Appendices 3 and 4.
382. Exhibit 104: USSS ERQ Response to Appendices 3 and 4.
383. Exhibit 20: CITT Administrative Record. USSS Response to CITT Notice of Expiry.
384. Exhibit 45: International Monetary Fund, World Economic Outlook Database, September 2005.
385. Exhibit 15: Import Statistics
386. Exhibit 1: Statement of Reasons, July 18, 2001, page 27.
387. Exhibit 104: USSS ERQ Response to Question B30, page 32.
388. Exhibit 104: Attachment to USSS ERQ Response as Exhibit 17, "Exports By Country."
389. Exhibit 104: USSS ERQ Response to Appendix 1.
390. CITT Order: Expiry Review No. RR-2003-004 on Certain Cold-Rolled Steel Sheet, paragraph 78.
391. Exhibit 25: IISI, World Steel in Figures 2005 and Steel Statistical Yearbook 2005.
392. Exhibit 144: Ipsco Case Brief, page 7.
393. Exhibit 102: Mittal Steel SA's ERQ Response, Attached Exhibit 21, pages 6 to 8.
394. Exhibit 131: CBSA's enforcement data for the period of review.
395. Exhibit 102: Mittal Steel SA's ERQ Response to Appendix 1.
396. Exhibit 159: Dofasco case brief, page 41.
397. Exhibit 102: Mittal Steel SA's ERQ Response to Appendix 1.
398. Exhibit 102: Mittal Steel SA's ERQ response to Appendix 2.
399. Exhibit 102: Mittal Steel SA's ERQ Response to Appendix 2.
400. Exhibit 102: Mittal Steel SA's ERQ Response, page 21.
401. Exhibit 102: Mittal Steel SA's ERQ response to Appendix 3, Table 1 Saldanha.
402. Exhibit 102: Mittal Steel SA's ERQ response to Appendix 3, Table 1.
403. Exhibit 102: Mittal Steel SA's ERQ response, page 28.
404. Exhibit 155: Algoma case brief, pages 43-44.
405. Exhibit 102: Mittal Steel SA's ERQ response, page 16.
406. Exhibit 155: Algoma Case Brief, pages 44-46.
407. Exhibit 155: Algoma Case Brief, pages 47-48.
408. Exhibit 1: CCRA final determination Statement of Reasons, page 24, July 18, 2001.
409. Exhibit 1: CCRA final determination Statement of Reasons, page 24, July 18, 2001
410. Exhibit 3: CCRA Customs Notice 625.
411. Exhibit 3: Customs Notice, March 23, 2003.
412. Responses are listed as Exhibits 51 and 52 for Essar, 53 and 54 for Jindal and 55 for the Government of India.
413. Exhibits 52 and 54: Essar and Jindal's responses to the CBSA's RFI as part of the review of the amounts of subsidy concluded on June 29, 2005.
414. Exhibits 51 and 53: Essar and Jindal's responses to the CBSA's RFI as part of the review of the amounts of subsidy concluded on June 29, 2005.
415. Exhibit 3: Customs Notice, March 23, 2003.
416. Exhibit 1: CCRA final determination Statement of Reasons, page 40, July 18, 2001.
417. Exhibits 51 and 53: Essar and Jindal's responses to the CBSA's RFI as part of the review of the amounts of subsidy concluded on June 29, 2005.
418. Exhibit 83: GOI Response to the CBSA ERQ.
419. Exhibit 145: The Hindu, "Target Plus scheme will be revamped: Kamal Nath," January 14, 2006.
420. Exhibits 51 and 53: Essar and Jindal's responses to the CBSA's RFI as part of the review of the amounts of subsidy concluded on June 29, 2005.
421. Exhibit 83: GOI Response to the CBSA ERQ.
422. Exhibit 58: India's Foreign Trade Policy (2004-2009).
423. Exhibit 1: CCRA final determination Statement of Reasons, page 37, July 18, 2001.
424. Exhibits 51 and 53: Essar and Jindal's responses to the CBSA's RFI as part of the review of the amounts of subsidy concluded on June 29, 2005.
425. Exhibit 83: GOI Response to the CBSA ERQ.
426. Exhibit 70: India's Foreign Trade Policy (2004-2009), Chapter 5.
427. Exhibits 51 and 53: Essar and Jindal's responses to the CBSA's RFI as part of the review of the amounts of subsidy concluded on June 29, 2005.
428. Exhibits 52 and 54: Essar and Jindal's responses to the CBSA's RFI as part of the review of the amounts of subsidy concluded on June 29, 2005.
429. Exhibit 83: GOI Response to the CBSA ERQ.
430. Exhibit 64: Reserve Bank of India, "Rupee Export Credit Interest Rates,"November 2, 2005.
431. Exhibit 55: Response of the Government of India to the CBSA's RFI; June 29, 2005.
432. Exhibit 69: Government of India Ministry of Revenue Income Tax Department: "Deductions and Exemptions" (compiled in 2001; still active).
433. Exhibit 58: "India's Foreign Trade Policy (2004-2009); Chapter 5.
434. Exhibit 145: The Hindu, "Target Plus scheme will be revamped: Kamal Nath," January 14, 2006.
435. Exhibit 58: "India's Foreign Trade Policy" (2004-2009); Chapter 3
436. Exhibit 64: Reserve Bank of India, "Rupee Export Credit Interest Rates," November 2, 2005.
437. Exhibit 83: GOI Response to the CBSA ERQ.
438. World Trade Organisation website : www.wto.org/english/tratop_e/scm_e/scm_e.htm