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Final Determination

OTTAWA, September 25, 1997

4258-102
AD/1139

STATEMENT OF REASONS

FINAL DETERMINATION OF DUMPING OF CERTAIN HOT-ROLLED CARBON STEEL PLATEORIGINATING IN OR EXPORTED FROM MEXICO, THE PEOPLE'S REPUBLIC OF CHINA, THE REPUBLIC OF SOUTH AFRICA, AND THE RUSSIAN FEDERATION

DECISION

Pursuant to paragraph 41(1)(a) of the Special Import Measures Act, the Deputy Minister of National Revenue has, on this date, made a final determination of dumping respecting certain hot-rolled carbon steel plate originating in or exported from Mexico, the People's Republic of China, the Republic of South Africa, and the Russian Federation.

This Statement of Reasons is also available in French.
Cet énoncé des motifs est également disponible en français.

STATEMENT OF REASONS

SUMMARY

On February 13, 1997, the Deputy Minister of National Revenue (Deputy Minister) initiated an investigation respecting the alleged injurious dumping of certain hot-rolled carbon steel plate originating in or exported from Mexico, the People's Republic of China, the Republic of Poland, the Republic of South Africa, and the Russian Federation.

The investigation was initiated in response to a complaint filed by Stelco Inc. (Stelco) of Hamilton, Ontario.

On June 27, 1997, the Deputy Minister terminated the investigation with respect to the subject goods from the Republic of Poland and made a preliminary determination of dumping with respect to the subject goods from the remaining four countries.

The investigation continued after the preliminary determination and the Deputy Minister is now satisfied that the subject goods have been dumped, that the margins of dumping are not insignificant, and that the actual volumes of dumped goods are not negligible. Accordingly, the Deputy Minister has made a final determination of dumping in accordance with paragraph 41(1)(a) of the Special Import Measures Act (SIMA).

INTERESTED PARTIES

Complainant

The complainant's address is:

Stelco Inc.

24th Floor, Stelco Tower

100 King Street West

Hamilton, ON L8N 3T1

Exporters and Importers

The names and addresses of the exporters and importers are listed in Appendices 1 and 2, respectively.

BACKGROUND

On December 27, 1996, Stelco filed a complaint concerning the alleged injurious dumping of certain hot-rolled carbon steel plate originating in or exported from Mexico, the People's Republic of China (China), the Republic of Poland (Poland), the Republic of South Africa (South Africa), and the Russian Federation (Russia).

The Department initiated the dumping investigation on February 13, 1997, and, on May 7, 1997, the Deputy Minister extended the time period for the preliminary investigation from 90 days to 135 days.

On June 27, 1997, the Deputy Minister caused the dumping investigation to be terminated with respect to certain hot-rolled carbon steel plate originating in or exported from Poland as the actual and potential volumes of dumped goods were negligible.

On the same day, the Deputy Minister made a preliminary determination that certain hot-rolled carbon steel plate originating in or exported from Mexico, China, South Africa, and Russia had been dumped and that there was evidence which disclosed a reasonable indication that the dumping had caused injury to the Canadian industry.

PRODUCT INFORMATION

For the purpose of this investigation, certain hot-rolled carbon steel plate is defined as follows:

Hot-rolled carbon steel plate and high strength low alloy plate not further manufactured than hot-rolled, heat-treated or not, in cut lengths, in widths from 24 inches (+/- 610 mm) to 152 inches (+/-3,860 mm) inclusive, and thicknesses from 0.187 inches (+/- 4.75 mm) to 4.0 inches (+/- 101.6 mm) inclusive, originating in or exported from Mexico, the People's Republic of China, the Republic of South Africa, and the Russian Federation, but excluding

• plate for use in the manufacture of pipe and tube (also known as skelp);
• plate in coil form;
• plate having a rolled, raised figure at regular intervals on the surface (also known as floor plate);
• plate produced to ASTM specifications A515 and A516M/A516 Grade 70, in thicknesses greater than 3.125 inches (+/- 79.3 mm).

Product Information

For greater clarification, subject hot-rolled carbon steel plate includes:

• plate shipped as secondary or "non-prime" material;
• plate certified to chemistry composition and known as carbon .33;
• alloy steel plate made to specifications CSA G40.21, grades 50A, 50AT, 60A, 60AT, 70A, 70AT, and to ASTM A242M/A242 and A588M/A588.

The definition of subject goods does not include product known as profile slabs.

Appendix 3 contains additional product information.

CLASSIFICATION OF IMPORTS

The Harmonized System (H.S.) provides 14 specific classification numbers under which subject hot-rolled carbon steel plate (hereinafter referred to as carbon steel plate) may be classified:

7208.51.10.00     7208.52.10.00

7208.51.90.10     7208.52.90.10

7208.51.90.91     7208.52.90.91

7208.51.90.92     7208.52.90.92

7208.51.90.93     7208.52.90.93

7208.51.90.94     7208.52.90.94

7208.51.90.95     7208.52.90.95

CANADIAN INDUSTRY

The complainant, Stelco, has the support of the other Canadian producers of subject plate, namely, Algoma Steel Inc. of Sault Ste. Marie, Ontario, and Ipsco Inc. of Regina, Saskatchewan.

There have been no changes in the structure of the Canadian industry since the Department initiated its investigation.

Dofasco Inc. and Sidbec-Dosco Inc. produce carbon steel plate only in coil form which is not subject to this investigation.

CANADIAN MARKET

Statistics showing the apparent Canadian consumption for the years 1991 to 1996 as well as the first four months of 1997 are included in Appendix 4.

As can be seen in Appendix 4, from 1992 to 1996, the Canadian market for the subject goods has increased by 68 per cent, from 442,264 metric tons (M.T.) in 1992 to 741,254 M.T. in 1996. Information for the first four months of 1997 suggest that on an annualized basis, the market has increased by 16 per cent over 1996.

In early 1994, there was a significant shift in the source of imported product to the four countries subject to this final determination. The portion of the Canadian market held by the named countries increased from 0.1 per cent in 1993 to 13.9 per cent in the first four months of 1997.

Information on the Canadian market and market shares was outlined in more detail in the Statement of Reasons issued at the preliminary determination on June 27, 1997.

RESULTS OF THE INVESTIGATION

The dumping investigation covered shipments of the subject goods to Canada during the period of investigation from January 1 to December 31, 1996.

For purposes of determining normal values, like goods were considered to be those goods that are identical in all respects to the subject goods exported to Canada. In the absence of identical goods, like goods were considered to be goods with uses and characteristics which closely resemble those of the goods exported to Canada. Closely resembling goods were considered to be goods with similar grade/specification and the same heat treatment as the goods exported to Canada.

In this section, the margins of dumping are expressed as a percentage of normal value.

1. Mexico

Altos Hornos de Mexico (AHMSA) was the only Mexican company to have exported subject goods to Canada during the period of investigation. AHMSA provided the Department with a complete submission and verification meetings were subsequently held at the firm's premises in Monclova, Mexico.

The subject goods produced by AHMSA were sold to Canada through a related company based in the United States called GANAHMSA Inc. Shipments of the subject goods all originated from the producer's Monclova plant and were made to one unrelated importer in Canada.

Subsequent to the preliminary determination, AHMSA made representations regarding certain domestic sales. These sales had not been considered by the Department in determining normal values as it appeared they had not been made in the ordinary course of trade. AHMSA explained that all of its domestic sales to the distributor trade level are made in the ordinary course of trade.

The Department indicated that it would be prepared to reconsider the status of these sales should AHMSA provide additional information regarding this matter. As no additional information was received from AHMSA prior to the final determination, the Department did not include these sales in making this final decision.

(a) Normal Value

AHMSA had sales of like goods in its domestic market during the period of investigation. These products were sold to distributors, customers considered to be at the same trade level as the importer in Canada.

Where there were profitable sales of like goods to more than one domestic customer, normal values were determined using section 15 of the SIMA, based on the weighted average selling price of like goods sold in Mexico to customers who were at the same trade level and purchased in similar quantities as the importer in Canada.

Where there were insufficient acceptable sales of like goods, normal values were determined using paragraph 19(b) of the SIMA based on the aggregate of the cost of production and a reasonable amount for selling, administrative, all other costs, and profit.

(b) Export Price

As goods were sold to an unrelated importer in Canada, export prices were determined pursuant to section 24 of the SIMA based on the exporter's selling price less all costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

(c) Margin of Dumping

For purposes of the final determination, 100 per cent of the goods of Mexican origin exported to Canada during the period of investigation were reviewed and all were found to be dumped by a weighted average margin of 26.2 per cent. The margins ranged from 7.9 per cent to 48.3 per cent.

2. The Republic of South Africa

Highveld Steel and Vanadium Corporation Limited (Highveld) was the only South African company to have exported subject goods to Canada during the period of investigation. Highveld provided the Department with a complete submission and verification meetings were subsequently held at the firm's premises in Witbank, South Africa.

The subject goods produced by Highveld were sold to Canada through an unrelated trading company called Oreport (Pty) Ltd. This company also provided a complete submission to the Department.

Shipments of the subject goods all originated from Highveld's Witbank plant and were made to one unrelated importer in Canada.

Following the preliminary determination, no additional information was requested from Highveld.

a) Normal Value

Highveld had sales of like goods in its domestic market during the period of investigation. These products were sold to distributors, customers considered to be at the same trade level as the importerin Canada.

For all subject goods exported to Canada, there were sufficient sales of like goods to allow the Department to determine normal values pursuant to section 15 of the SIMA based on the weighted average selling price of like goods sold in South Africa to customers who were at the same trade level and purchased in similar quantities as the importer in Canada.

An adjustment under section 6 of the Special Import Measures Regulations (SIMR) was made for discounts and rebates given on domestic sales of like goods. An adjustment for freight expenses incurred by Highveld and included in the selling price was allowed under section 7 of the SIMR. An adjustment under section 10 of the SIMR was also made to account for a local tax paid by Highveld that is only applicable on domestic sales of like goods.

b) Export Price

As goods were sold to an unrelated importer in Canada, export prices were determined pursuant to section 24 of the SIMA based on the lesser of the exporter's sale price adjusted for freight, port handling and export packing charges and the importer's purchase price adjusted for all freight, port handling and export packing charges.

c) Margin of Dumping

For purposes of the final determination, 100 per cent of the goods of South African origin exported to Canada during the period of investigation were reviewed and all were found to be dumped by a weighted average margin of 18.1 per cent. The margins ranged from 8.5 per cent to 32.3 per cent.

3. The Russian Federation

The Department has historically designated Russia as a state-controlled economy with the result that normal values for imports from Russia have generally been determined on the basis of sales of like goods in a third or surrogate country.

Since 1991, Russia has undertaken a number of measures to reform its economic structure to a market economy. The Request for Information sent to the Government of Russia at the time of initiation was designed to determine whether sufficient progress had been made to warrant consideration as a market economy, particularly in the steel industry.

The Government of Russia did not provide a complete response to the Department's Request for Information. However, Russian officials advised the Department that the Russian economy was no longer controlled by the state, and requested recognition as a market economy.

In support of their position, they provided a brief statement of the current state of economic reforms, copies of various laws implemented between 1991 and 1995, and documents submitted in support of their request for accession to the World Trade Organization (WTO). Additional information respecting the WTO accession was submitted late in the preliminary investigation phase.

Following the preliminary determination, the Department further analyzed the information that had been provided late in the preliminary determination phase. This information indicated that Russia was in the process of transforming their economy to a free-market, but it was not evident that this had in fact been achieved.

No additional information was provided by the Government of Russia following the preliminary determination. While some additional information was received from JSC Severstal, a Russian exporter of subject goods, the data could not be used as information remained outstanding from the vendors of the goods and the Russian Government.

a) Normal Value

As a response from the Government of Russia to the Department's Request for Information has not been received and on site verification has yet to take place, the Deputy Minister cannot form an opinion as to whether the steel industry in Russia continues to be state-controlled for purposes of the SIMA. Therefore, normal values cannot be established under section 20 of the SIMA.

Where the regular provisions of the legislation cannot be used, the law provides the Minister with the authority to determine values by means of a ministerial specification.

In this particular case, as the economy of Russia has historically been considered to be state-controlled, normal values will continue to be established on the basis of the surrogate country methodology until such time as it can be determined whether Russia truly has become a free market economy. The ministerial specification allows us to proceed in this manner for purposes of the final determination.

Therefore, normal values for the subject goods of Russian origin were established by ministerial specification on the basis of the average normal value found for like goods in three surrogate countries.

Information obtained from an exporter in Spain during the most recent plate investigation, as well as information from the South African and Mexican exporters in this case, was used to determine normal values for Russia. The information from the previous investigation is considered to be timely.

b) Export Price

Export price was determined pursuant to section 24 of the SIMA on the basis of actual import data that was available to the Department.

c) Margin of Dumping

A small portion of the Russian goods came to Canada through the United States and some of those shipments were not reviewed for the final phase of the investigation. As a result, 98 per cent of the goods of Russian origin exported to Canada during the period of investigation were reviewed for the final determination, all of which were found to be dumped by a weighted average margin of 25.2 per cent. The margins ranged from 19.0 per cent to 48.3 per cent.

4. The People's Republic of China

The Department has historically designated China as a state-controlled economy with the result that normal values for imports from China have generally been determined on the basis of sales of like goods in a third or surrogate country.

At the time of initiation, the Department forwarded a Request for Information to the Chinese Government and exporters in an effort to determine whether the steel industry in China should still be considered to be state-controlled. In response, the Department received submissions from the Government as well as two exporters - Shanghai Pudong Iron & Steel (Group) Co. Ltd. and Angang Group International Corporation.

In reviewing these submissions, the Department identified additional information requirements and supplementary Requests for Information were issued.

The Government of China responded to the Department's supplementary Request for Information just prior to the preliminary determination. Based on a review of the submission, additional information and clarifications were required. Accordingly, shortly after the preliminary determination, another supplementary Request for Information was sent out.

No response was received from the Chinese Government or the two exporters regarding the Department's latest Requests for Information.

a) Normal Value

As responses to the Department's latest Requests for Information have not been received and on-site verification has yet to take place, the Deputy Minister cannot form an opinion as to whether the steel industry in China continues to be state-controlled under the provisions of the SIMA.

As with Russia, the economy of China has historically been considered to be state-controlled. Accordingly, normal values for the subject goods of Chinese origin were also established by ministerial specification on the basis of the average normal value found for like goods in three surrogate countries

Information obtained from an exporter in Spain during the most recent plate investigation, as well as information from the South African and Mexican exporters in this case, was used to determine normal values for China.

b) Export Price

Export price was determined pursuant to section 24 of the SIMA on the basis of actual import data that was available to the Department.

c) Margin of Dumping

A small portion of the Chinese goods came to Canada through the United States and some of those shipments were not reviewed for the final phase of the investigation. In addition, 1359 M.T. that were shipped directly from China were found not to be subject goods

Ninety-nine per cent of the subject goods of Chinese origin exported to Canada during the period of investigation were reviewed for the final determination, all of which were found to be dumped by a weighted average margin of 27.3 per cent. The margins ranged from 20.4 per cent to 48.3 per cent.

DECISION

The investigation revealed that the margins of dumping on the subject goods are not insignificant and that the actual volume of dumped goods is not negligible. Accordingly, on this date, pursuant to paragraph 41(1)(a) of SIMA, a final determination of dumping was made with respect to certain hot-rolled carbon steel plate originating in or exported from Mexico, the People's Republic of China, the Republic of South Africa, and the Russian Federation.

FUTURE ACTION

The Canadian International Trade Tribunal's inquiry concerning the question of injury to production in Canada is continuing and the Tribunal will issue its finding by October 27, 1997.

Subject goods imported during the provisional period will continue to be assessed provisional duty as determined at the time of the preliminary determination. This provisional period began on the date of the preliminary determination, June 27, 1997, and will end on the date the Tribunal issues its finding.

If the Tribunal finds that the dumped goods have not caused injury and do not threaten to cause injury, all proceedings relating to this investigation will be terminated. In such a case, all provisional duty paid or security posted by importers will be returned and future importations will not be subject to anti-dumping duty.

If the Tribunal finds that the dumped goods have caused injury, the Department will finalize the anti-dumping duty payable on subject goods released from Customs' possession during the provisional period pursuant to section 55 of the SIMA. If the provisional duty paid is in excess of the final amount of anti-dumping duty payable, the excess duty paid will be refunded.

Importations released from Customs' possession after the date of the Tribunal's finding will be subject to anti-dumping duty equal to the margin of dumping, which is the amount by which the normal value exceeds the export price. If anti-dumping duty is payable, such duty is hereby demanded pursuant to section 11 of SIMA.

If the Tribunal finds that the dumped goods threaten to cause injury, all provisional duty paid or security posted by importers will be returned. However, importations released from Customs' possession after the date of the Tribunal's finding will be subject to anti-dumping duty equal to the margin of dumping. If anti-dumping duty is payable, such duty is hereby demanded pursuant to section 11 of SIMA.

Specific normal values for the subject goods have been provided to the exporters for the final determination. These values will come into effect the day after the Tribunal's injury finding. Where specific normal values have not been issued, anti-dumping duty at a rate of 93.4 per cent of the export price will be payable on importations of the subject goods.

PUBLICATION

Notice of this final determination is being published in the Canada Gazette pursuant to paragraph 41(3)(a) of SIMA.

INFORMATION

A copy of this document has been provided to persons directly interested in these proceedings. For further information, please contact the following Revenue Canada officers by fax at (613) 941-2612 or by telephone at:

Richard Killeen (613) 954-7236
Michel Leclair (613) 954-7232

or at the following address:

Department of National Revenue

Anti-dumping and Countervailing Directorate

191 Laurier Avenue West

Ottawa, ON K1A 0L5

R.A. Séguin

Interim Director General
Anti-dumping and Countervailing Directorate

OTTAWA, September 25, 1997

4258-102
AD/1139

APPENDIX 1

LIST OF EXPORTERS

CHINA

Angang Group International Trade Corporation

322 Nanzhongua Road

Anshan Liaoning

China 114002

Chongqing Iron and Steel Co.

Lizilin, Dadukou District

Chongqing City

Sichuan Province

(Southwest China)

China 630081

Jinan Iron and Steel General Works

21 Gongye North Road

Jinan City

Shandong Province

China

Kunming Iron and Steel Corp (Kisco)

Kunming City

Anning County

Yunnan Province

(Southwest China)

China 650302

Shanghai Pudong Iron & Steel

(Group) Co. Ltd.

300 Shangnan Road

Pudong, Shanghai

China 200126

Shaoguan Iron and Steel Group Co

Maba, Quijang

Guangdong Province

China 512123

Tiayuan Iron and Steel Co

2 Jiancaoping

Taiyuan City

Shanxi Province

(North China)

China 030003

Tianjin Plate Mill

4 Biandiansuo Road

Erhaoqiao, Hedong District

Tianjin City

(North China)

China 300180

MEXICO

AHMSA - Altos Hornos de Mexico

Prolongacion Juárez s/n

Coloria La Loma

Monclova, Coahuila

Mexico C.P. 25770

RUSSIA

AmurSteel

1 Zavodskaya Street

Komsomolsk-na-Amure

Khabarovsky Region

Russia 681005

Ashinskiy Met Zavod (Asha Iron

and Steel Works

9 Mir Street, Asha

Chelyabinsk Region, Urais

Russia 456000

Chusovskoy Iron and Steel Works

13 Trudovaya Street, Chusovoy

618260 Perm Region, Urais

Russia

JSC Severstal

30 Mira Street

Cherepovets

Vologoda Region

Russia 162600

Kuznetskiy Met Kombinat (Kuznetsk

Steel Works)

Probeda Square

Novokuznetsk

Kemerov Region

Russia 654000

Mechel

14 2nd Paveletskaya Street

Cheliabinsk

Russia 454047

Nizhny Tagil Iron and Steel Works

Nizhniy Tagil

Ekaterinburg Region, Urais

Russia 622025

Taganrog Iron and Steel Works

1 Zavodskaya Street

Taganrog

Rostov Region

Russia 347928

Volgograd Steel Works (Red October)

102 Lenin Avenue

Volgograd

Russia 400060

SOUTH AFRICA

Highveld Steel and Vanadium Corp Ltd.

P.O. Box 111

Witbank 1035

Republic of South Africa

UNITED STATES OF AMERICA

(exporters involved in indirect shipment of subject goods)

Rudolph Robinson Steel

301 Callowhill St.

Philadelphia, PA

USA 19123

Copco Steel Co.

17199 N. Laurel Park Drive

Suite 300

Livonia, MI

USA 48152

APPENDIX 2

LIST OF IMPORTERS

Dollard Steel Company

6600 Décarie Blvd

Suite 310

Dollard, Quebec

H3X 2K4

Ferrostaal Metals Ltd

1 King St. West

Suite 1202

Hamilton, ON

L8P 1A4

Ferrostaal Metals Ltd.

9912 Lougheed Highway

Burnaby, BC

V3J 1N3

Preussag Handel Canada Corp.

300-1450 Creekside Drive

Vancouver, BC

V6J 5B3

Southwestern Manufacturing Inc.

11555 Country Road, Unit 42

Tecumseh, Ontario

N2N 2M1

Standard Iron & Steel

P.O. Box 328

Webb City, MO

64870-0328

Steel Hawk Plate

596 Wentworth St. E.

Oshawa, ON

L1H 3V9

Wirth Limited

1 Westmount Square

Suite 200

Montreal, Quebec

H3Z 2P9

APPENDIX 3

ADDITIONAL PRODUCT INFORMATION

The types of carbon steel plate typically made in Canada include plate meeting CSA specification G40.21 or equivalent specifications in various grades, as well as plate made to ASTM specifications A283M/A283, A36M/A36, A572M/A572, A588M/A588, A242M/A242, A515M/A515, and A516M/A516 or equivalent specifications in various grades.

Subject hot-rolled carbon steel plate made to the above specifications can be used in a number of applications, the most common being in the production of rail cars, oil and gas storage tanks, heavy construction machinery, agricultural equipment, bridges, industrial buildings, high rise office towers, automobiles and truck parts, and shipbuilding, ship repairs, and pressure vessels.

Steel plates are made by hot-rolling from either semi-finished slabs or directly from ingots into rectangular shapes or coils.

While details may vary from mill to mill, the process by which carbon steel plate is produced is essentially the same for all producers and entails the following processes: heating the slabs/ingot, descaling, rolling, leveling, cutting to size, inspecting and testing.

Subsequently, the plate may be heat-treated which may include annealing, normalizing, stress relieving, quenching, tempering or combinations of these treatments.

APPENDIX 4

APPARENT CANADIAN CONSUMPTION OF CARBON STEEL PLATE (metric tonnes)

Item	1991	1992	1993	1994	1995	1996	4 mos. 1997
Domestice Shipments *	293,148	340,044	380,959	477,118	578,575	597,185	221,092
Imports Named Countries **
China	0	0	0	13,135	32,937	14,217	18,925
Mexico	678	0	439	17,486	17,349	28,920	7,978
Russia	0	0	0	12,460	17,700	12,450	11,359
South Africa	0	0	0	19,118	7,450	9,842	1,932
Total	678	0	439	62,199	75,436	65,429	40,194
Other Imports
Poland  **	17	0	0	8,115	2,083	2,949	0
All other countries  ***	174,317	102,220	96,789	114,993	88,011	75,691	26,225
Total Imports	175,012	102,220	97,228	185,307	165,530	144,069	66,419
Apparent Consumption	468,160	442,264	478,187	662,425	744,105	741,254	287,511

*  Source: Information provided by Canadian plate producers.

**  Source: Statistics Canada catalogues CAT 41-001 and CAT 65-007 for Jan. 1991 to Dec. 1995. Information available to Customs for Jan. 1996 to Apr. 1997

***  Source: Statistics Canada catalogues CAT 41-001 and CAT 65-007 for Jan. 1991 to Aug. 1996. Information available to Customs for Sep. 1996 to Apr. 1997.