COR 2018 IN
Corrosion-Resistant Steel Sheet
Statement of Reasons

[5] ArcelorMittal Dofasco G.P. was founded as the Dominion Steel Casting Company in 1912 in Hamilton, Ontario. In 2006 Dofasco was acquired by Arcelor S.A. Later that year, Arcelor S.A. merged with Mittal Steel.

[6] ArcelorMittal Dofasco G.P. produces COR at its facility in Hamilton, Ontario. The company is the largest of the three known producers of COR in Canada and accounts for a major proportion of the total domestic production of like goods.

[7] The contact information of the complainant is as follows:

ArcelorMittal Dofasco G.P.
1330 Burlington Street East,
Hamilton, ON  L8N 3J5

[8] The other two known manufacturers of like goods in Canada are:

Stelco Inc
386 Wilcox Street
Hamilton, ON  L8L 8J6

Material Science Corp
1430 Martin Grove Road
Rexdale, ON  M9W 4Y1

[9] The complaint identified two trade unions that represent persons employed in the production of COR in Canada:

United Steel Workers Local 8782
P.O. Box 220
Jarvis, ON  N0J 1J0

United Steel Workers Local 1005
350 Kenilworth Avenue North
Hamilton, ON  L8H 4T3

[10] The CBSA identified 278 potential exporters of the subject goods from CBSA import documentation and from information submitted in the complaint. All of the potential exporters were asked to respond to the CBSA’s Dumping Request for Information (RFI). Potential exporters located in China were also asked to respond to the CBSA’s Section 20 RFI.

[11] The CBSA identified 82 potential importers of the subject goods from CBSA import documentation and from information submitted in the complaint. All of the potential importers were asked to respond to the CBSA’s Importer RFI.

[12] Upon initiation of the investigation, the Government of China was asked to respond to the CBSA’s Government Section 20 RFI.

[13] For the purposes of this investigation, the “Government of China (GOC)” refers to all levels of government (i.e. federal, central, provincial/state, regional, municipal, city, township, village, local, legislative, administrative or judicial, singular, collective, elected or appointed). It also includes any person, agency, enterprise, or institution acting for, on behalf of, or under the authority of, or under the authority of any law passed by, the government of that country or that provincial, state or municipal or other local or regional government.

[14] For the purpose of this investigation, subject goods are defined as:

[15] The product definition includes corrosion-resistant steel sheet where the substrate is coated or plated with a corrosion-resistant material such as zinc, aluminum, and other alloys. The coating may be applied by a variety of processes including hot-dip galvanizing or electro-galvanizing.

[16] The product definition includes corrosion-resistant steel sheet which has been chemically passivated by coating with standard or acrylic chromate and nonchromate solutions.

[17] Passivation refers to a material becoming “passive”, that is, less affected or corroded by the environment of future use. Passivation involves creation of an outer layer of shield material that is applied as a micro-coating, created by chemical reaction with the base material, or allowed to build from spontaneous oxidation in the air. As a technique, passivation is the use of a light coat of a protective material, to create a shell against corrosion. The most common method of passivation for steel products is the application of a standard chromate based or acrylic chromate and non-chromate coatings.

[18] Corrosion-resistant steel sheet is usually produced from cold-rolled carbon steel sheet (“CRS”) and sometimes from hot-rolled carbon steel sheet (“HRS”). However, additions of certain elements, such as titanium, vanadium, niobium or boron, during the steel-making process enable the steel to be classified as alloy steel. Therefore, corrosion-resistant steel produced from either carbon steel or alloy steel is included in the definition of the subject goods.

[19] The subject goods (and like goods produced by the domestic industry) are manufactured to meet certain American Society for Testing and Materials (ASTM), Society of Automotive Engineering (SAE) or equivalent specifications, including, but not limited to:

• ASTM A653/653M
• ASTM A792/A792M
• SAE J403
• SAE J1392
• SAE J2329
• SAE J1562

[20] The product definition excludes corrosion-resistant steel for use in automobiles and automobile parts, hereafter referred to as “automotive”. Automotive end users include original equipment manufacturers (“OEMs”) and auto part producers. Such excluded goods may fall under Customs Tariff item 9959.00.00.

[21] The product definition includes “seconds”. Seconds are goods that do not meet some aspect of the original specification. This could include dimensions, grade, or coating. It could also include a coil that has been damaged. Seconds are sold at a discount. Seconds may meet ASTM, SAE or other specifications or may be re-certified to meet a standard. For example, a coil that is damaged along the edge may be a “second”. However, if the damaged edge is slit and the damage is removed, the coil could be classified as a primary coil produced to the new width. Seconds are graded and sold on a scale of five.

[22] COR is usually produced from CRS and sometimes from HRS. The steel sheet to be coated is commonly referred to as steel substrate. Hot-dip galvanizing and electrogalvanizing are the two processes that can be used to coat the substrate steel sheet with zinc, aluminum, or other alloys. The complainant uses hot-dip galvanizing.

[23] In the hot-dip galvanizing process, the first step is to clean the surfaces to improve the adhesion of the coating. After cleaning, the substrate enters a continuous annealing furnace. The furnace heats the substrate to the temperature necessary to develop the desired metallurgical properties of the final product. The substrate is then placed in a molten coating bath and, as it emerges from the bath, an air, nitrogen or steam wipe is used to control the thickness of the coating. The galvanized steel sheet is then cooled in a cooling tower.

[24] In some cases, the galvanized steel is further processed into galvannealed steel sheet. The first step in galvannealing is to reduce the thickness of the coating. This can be done either by “wipe-coat galvannealing”, in which thick pads are used to wipe the sheet as it emerges from the molten coating bath, or by an air/nitrogen wiping process. The galvanized sheet then passes through a galvannealing furnace, with the heat from the furnace causing the iron from the substrate to combine with the zinc coating to produce a thin zinc-iron alloy. Because of its thinner coating, galvannealed steel sheet is easier to weld and paint than galvanized steel sheet.

[25] In the electro-galvanizing process, charged steel passes through a plating bath and opposite electrical charges cause the zinc solution to coat the steel. Cold-rolled steel coils are batch annealed in multi-stack furnaces or in off-line continuous annealing process, often skin passed on a temper mill, before being electro-galvanized with a thin coating of zinc on a continuous processing line.

[26] Common applications for COR falling within the product definition include, but are not limited to, production of farm buildings, grain bins, culverts, garden sheds, roofing material, siding, floor decks, roof decks, wall studs, drywall corner beads, doors, door frames, ducting (and other heating and cooling applications), flashing, hardware products and appliance components.

[27] The allegedly dumped goods are normally classified under the following tariff classification numbers (tariff numbers):

1. 7210.30.00.00
2. 7210.69.00.10
3. 7212.50.00.14
4. 7210.49.00.10
5. 7210.69.00.20
6. 7225.91.00.00
7. 7210.49.00.20
8. 7212.20.00.00
9. 7225.92.00.00
10. 7210.49.00.30
11. 7212.30.00.00
12. 7226.99.00.10
13. 7210.61.00.00
14. 7212.50.00.00

[28] The listing of tariff numbers is for convenience of reference only. The tariff numbers include non-subject goods. Also, subject goods may fall under tariff numbers that are not listed. Refer to the product definition for authoritative details regarding the subject goods.

[35] Subsection 31(2) of SIMA requires that the following conditions for standing be met in order to initiate an investigation:

1. the complaint is supported by domestic producers whose production represents more than 50% of the total production of like goods by those domestic producers who express either support for or opposition to the complaint; and
2. the production of the domestic producers who support the complaint represents 25% or more of the total production of like goods by the domestic industry.

[36] As the complainant and the supporting producer represent the vast majority of the total production of like goods in Canada, the CBSA is satisfied that the standing requirements pursuant to subsection 31(2) of SIMA have been met.

Complainant’s Estimates

[49] The complainant submitted that it does not have access to specific information on selling prices in the named countries that meets the requirements of section 15 of SIMA. As a result, the complainant was not able to estimate normal values using the methodology of section 15.

[50] The complainant estimated normal values using a constructed cost approach reflecting the methodology under paragraph 19(b) of SIMA. For each quarter of the period from April 1, 2017 to March 31, 2018, the complainant estimated one weighted average normal value for each named country, based on the aggregate of the costs of producing the goods (materials, direct labour and overhead), a reasonable amount for selling, general and administrative (SG&A) costs, financial expenses, and a reasonable amount for profits.

[51] The complainant based the estimates of the costs of producing the goods (materials, direct labour and overhead) on their own costs of production for the periods Q1 2017 through Q4 2017, which were adjusted based on publicly available information respecting the named countries for the same periods. The complainant submitted that it is appropriate to estimate normal values for goods imported during April 1, 2017 to March 31, 2018 using the costing information for the periods Q1 2017 through Q4 2017 due to the lag time between the production and shipment of the goods.

[52] Material costs were estimated based on the complainant’s own material costs. CRS is the primary material used in the production of COR, and its cost was adjusted to reflect the published CRS pricing in each named country. In addition, given that the published prices are generally for more expensive grades of steel, the complainant reduced these prices by $44/MT to reflect the applicable discount for lower grades of steel, based on its pricing policy.^{Footnote 5}

[53] For China and India, the complainant used the price of CRS in each country, as reported by CRU International Limited (CRU). Similarly, for the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) and South Korea, the complainant used the price of CRS in each country as reported by MEPS International Ltd (MEPS).

[54] Labour costs were estimated based on the complainant’s own labour costs and adjusted to reflect cost differences between Canada and the named countries. A downward adjustment was applied to these costs based on productivity adjusted cost-of-labour comparisons, as per information presented in a research article published in the Wall Street Journal.

[55] The wage adjustment factors were as follows:

• China – downward adjustment of 50.6%^{Footnote 6}
• The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei)) – downward adjustment of 71.5%^{Footnote 7}
• India – downward adjustment of 81.3%^{Footnote 8}
• South Korea – downward adjustment of 37.6%^{Footnote 9}

[56] Overhead costs were based on the complainant’s unadjusted factory overhead costs. According to the complainant, no adjustment is necessary since they are an efficient and technologically advanced producer of COR, as are the producers in the named countries.

[57] The complainant estimated the amounts for SG&A and financial expenses, as well as the amounts for profits, based on the publicly available financial statements of large publicly-traded companies which produce COR in the named countries.

[58] For China, the complainant used amounts reported by China Oriental Group Company Ltd in their most recent annual financial statements. Similarly, for the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), India and South Korea, the complainant used amounts reported by Yieh Phui Enterprises Co Ltd, JSW Steel and Hyundai Steel respectively in their most recent annual financial statements. These amounts for SG&A and financial expenses, as well as the amounts for profits, are reported as a percent of the cost of goods manufactured and are provided below.^{Footnote 10}

Item	China	Chinese Taipei	India	South Korea
SG&A	2.6%	6.3%	17.0%	6.5%
Financial Expenses	0.0%	0.6%	15.0%	1.3%
Profit	18.8%	2.8%	12.0%	7.2%

[59] The complainant provided information supporting the initiation of a section 20 inquiry respecting the allegedly dumped goods from China. The complainant submitted that domestic selling prices in China are substantially influenced by government policies and should not be used in the calculation of normal values, since the prices are not reflective of competitive market conditions. As a result, the complainant also estimated normal values for China using the methodology of section 20 based on surrogate country information.^{Footnote 11}

[60] The complainant estimated normal values for COR from China using the aggregate of the estimated cost of production, a reasonable amount for SG&A, and a reasonable amount for profits of the like goods sold by producers in a surrogate country in accordance with the methodology of subparagraph 20(1)(c)(ii) of SIMA. The complainant submitted that South Korea is an appropriate surrogate country, given that producers in that country export substantial volumes of COR and the costs of steel materials used by these producers are based on international market pricing. Accordingly, the normal values that were estimated for the goods from South Korea using the methodology of paragraph 19(b), discussed above, were used to estimate normal values for COR from China.

CBSA’s Estimates:

[61] The CBSA notes that the complainant did not estimate normal values for each specific type of product. Rather, in respect of the goods from each named country, the complainant estimated one normal value for each quarter from April 1, 2017 to March 31, 2018 based, in part, on the average of the cost of production of all like goods they produced during each quarterly period of Q1 2017 through Q4 2017, as adjusted. While the CBSA recognizes that there may be differences in the costs and prices of different types of COR, the CBSA finds that this was a reasonable approach, given that the information available to the complainant is limited.

[62] The CBSA used the same methodology for estimating normal values for goods from the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), India, and South Korea with the following adjustments.

[63] With respect to the costs of the substrate material (i.e. CRS) in the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) and South Korea, the CBSA noted that the complainant referenced incorrect prices from the published MEPS report. The CBSA made necessary adjustments to correct this.

[64] With respect to the amounts for SG&A, financial expenses and profits, the complainant’s estimates were based on the information of a single producer in each of the named countries. In order to obtain more representative estimates, the CBSA revised these amounts by averaging information obtained from the most recent annual financial statements of at least two producers in each named country.

[65] For the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), the CBSA used amounts reported by Yieh Phui Enterprises Co Ltd^{Footnote 12} and China Steel Inc.^{Footnote 13} For India, the CBSA used amounts reported by JSW Steel^{Footnote 14} and Tata Steel^{Footnote 15} and for South Korea, the CBSA used amounts reported by Hyundai Steel^{Footnote 16} and POSCO^{Footnote 17}.

[66] The CBSA also noted that the complainant did not provide any evidence that the lag time between the production and shipment of the goods would be significant enough to justify the use of the costing information for the quarterly periods of Q1 2017 through Q4 2017. As a result, for purposes of estimating normal values pursuant to the methodology of section 19(b), the CBSA used the estimated costing information for each corresponding quarterly period of April 1, 2017 to March 31, 2018 instead.

[67] As discussed above, if there is sufficient reason to believe that conditions described in section 20 of SIMA exist in the sector under investigation, normal values will be determined pursuant to section 20 of SIMA on the basis of the domestic selling price or cost of production plus a reasonable amount for SG&A, plus a reasonable amount for profits of the like goods sold by producers in any country designated by the CBSA and adjusted for price comparability; or on the basis of the selling price in Canada of like goods imported from any country designated by the CBSA and adjusted for price comparability.

[68] As detailed in the “Section 20 Inquiry” section of this Statement of Reasons, the CBSA has information which demonstrates that the prices of COR in China may be significantly affected by government policies in that country and that prices of COR in China may not be substantially the same as they would be if they were determined in a competitive market. As a result, normal values for China were estimated in accordance with the methodology of section 20 of SIMA.

[69] The CBSA agrees with the complainant that South Korea is an appropriate surrogate country for the purposes of estimating normal values, given that the country is in close geographic proximity to China and therefore has similar trading patterns, and is the third largest exporter of COR to Canada, after China and the United States of America (US). As such, the CBSA estimated normal values for China based on the methodology of subparagraph 20(1)(c)(ii) of SIMA using surrogate information for South Korea, i.e. based on the normal values estimated for the goods from South Korea using the methodology of paragraph 19(b) of SIMA.

[70] The export price of goods sold to an importer in Canada is generally determined in accordance with section 24 of SIMA as being an amount equal to the lesser of the exporter’s sale price for the goods and the price at which the importer has purchased or agreed to purchase the goods adjusted by deducting all costs, charges, expenses, and duties and taxes resulting from the exportation of the goods.

[71] The export prices estimated by the complainant were based on publicly available import data obtained from Statistics Canada for the period of April 1, 2017 to March 31, 2018. As the Statistics Canada data includes both subject and non-subject goods, the complainant made a number of adjustments to remove non-subject goods. The complainant estimated an average export price for each named country based on the weighted average declared value for duty of COR imported from April 1, 2017 to March 31, 2018.^{Footnote 18}

[72] The CBSA estimated a weighted average export price for each named country based on the value for duty as declared on the customs entry documentation and reports generated through the Facility for Information Retrieval Management (FIRM) for each individual shipment imported from April 1, 2017 to March 31, 2018. The CBSA reviewed customs entry documentation for COR entering Canada and adjusted the FIRM data to correct any errors respecting the quantity and value for duty and to remove non-subject COR.

[73] For each named country, the CBSA estimated the margin of dumping by comparing the weighted average estimated normal value with the weighted average estimated export price for the period of April 1, 2017 to March 31, 2018. Based on this analysis, it is estimated that COR imported into Canada from each of the named countries was dumped. The estimated margin of dumping for each country are listed in the table below.

Table 2
CBSA’s Estimated Margins of Dumping

Country	Estimated Margins of Dumping (expressed as % Export Price)
China	27.1%
Chinese Taipei	3.5%
India	35.8%
South Korea	21.9%

[89] As noted in the “Canadian Market” section of this Statement of Reasons, detailed information regarding the volume and value of imports of COR and domestic production cannot be divulged for confidentiality reasons.

[90] The confidential information estimated by the CBSA demonstrates that total volume of imports of COR from the named countries increased from 2015 to March 31, 2018. Additionally, the confidential information indicates that there has been a significant increase in the volume of imports of subject goods from China during this period, while the volume of subject imports from the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), India and South Korea decreased.

[91] The complainant provided declarations which detail specific examples of sales that were lost to allegedly dumped goods from China, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) and South Korea.^{Footnote 22} The complainant also provided supporting documentation, including price quotations and internal reports that support the link between the lost sales and the subject goods.

[92] In addition to the examples provided by the complainant, Stelco, the supporting Canadian producer, also provided similar examples.^{Footnote 23}

[93] While the complaint contains a number of account-specific evidence of lost sales due to the allegedly dumped subject goods from China, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) and South Korea, neither the complainant nor Stelco provided specific examples of sales that had been lost to allegedly dumped subject goods from India.

[94] The CBSA finds that lost sales have resulted in a significant overall decrease in the market share of domestically produced COR, and a loss of potential revenue, between 2015 and March 31, 2018.

[95] The complainant submitted that the allegedly dumped goods from the named countries have captured sales by undercutting the prices of the domestic industry. To support this allegation, the complainant provided specific examples of subject goods at prices well below that of the complainant.^{Footnote 24}

[96] The complainant also submitted evidence showing that from 2015 to March 31, 2018, the average prices of subject goods from China, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) and South Korea have been, for the most part, less than those of the complainant.^{Footnote 25} The CBSA found this information to be consistent with its own estimate of the average import prices.

[97] With respect to imports from India, the complainant did not provide any account-specific example of price undercutting. Similarly, the average import price data estimated by the CBSA indicates that the average prices of subject goods from India have been consistently higher than those of the complainant.

[98] The complaint contains documented instances where the complainant was forced to lower prices or lose sales in response to allegedly dumped subject imports. To support this allegation, the complainant provided specific examples of offers of subject goods at prices well below that of the complainant.^{Footnote 26}

[99] Based on the CBSA’s estimates, the average prices of like goods produced in Canada increased year-over-year between 2015 and 2017. Generally, this type of trend would not support an allegation of price depression. However, the complainant submitted that this should be viewed in comparison to spot pricing in the US. Specifically, the complainant stated that the North American COR market is integrated and that pricing in the northeastern US should be similar to that in Central Canada. Further, the complainant submitted that the US Midwest price for COR, as published by CRU, should reflect the spot price of COR in Central Canada, as it is based on current selling prices in the northeastern US.^{Footnote 27}

[100] Based on the information submitted in the complaint, the CBSA agrees with the complainant that the US Midwest price for COR should reflect the spot price of COR in Central Canada. The CBSA notes that as the US Midwest price increased from 2015 to 2017, the complainant’s average domestic price of COR also increased. However, while the complainant’s average selling price did increase during this period, the rate of increase was significantly lower than that of the US Midwest price. This has led to an increasing discrepancy between the complainant’s average selling price and the US Midwest price. The CBSA believes that this is indicative that prices in the Canadian market have not increased as they would have in absence of the allegedly dumped goods from the named countries.

[101] The complainant submitted that the injurious impact of allegedly dumped subject goods from the named countries is demonstrated in negative financial results of the domestic COR industry. To support this allegation, the complainant provided the combined financial statements of the complainant and Stelco for the period of 2014 through the first quarter of 2018.^{Footnote 28}

[102] The CBSA reviewed the financial statements of the complainant and Stelco; specifically, the product income statements for COR^{Footnote 29}. The CBSA notes that the financial results of the complainant and Stelco have improved from 2015 to March 31, 2018.

[103] The CBSA finds that the trend of improving financial results does not support the allegation of financial injury, especially given the fact that the volumes of imports from the named countries increased substantially during the same period. At the same time, however, the CBSA is cognizant that the increasing volumes of subject goods, combined with their low prices, may have limited the potential growth of the domestic industry.

[104] The complainant submitted that the capacity utilization rate of the domestic COR industry has suffered due to the presence of allegedly dumped goods from the named countries. To support this allegation, the complainant provided consolidated domestic industry data outlining the combined production capacity and production quantity of the complainant and Stelco for the period of 2014 through the first quarter of 2018.^{Footnote 30}

[105] The CBSA reviewed this information and found the capacity utilization rate remained nearly constant between 2015 and 2017. Within the period of April 1, 2017 to March 31, 2018, however, there had been more pronounced fluctuations at the quarterly level. Specifically, the utilization rate decreased significantly from Q2 2017 to Q4 2017, before recovering somewhat in Q1 2018.

[106] Given that Q3 2017 and Q4 2017 coincide with the period in which the total market share of the subject goods was the highest since 2015, based on confidential information estimated by the CBSA, the CBSA believes that this is indicative of injury suffered by the domestic COR industry due to the alleged dumping of subject goods from the named countries.

[107] The complainant claimed that competition from unfairly priced imports has led to reductions in industry employment. To support this allegation, the complainant provided its employment data for the period of 2014 through the first quarter of 2018.^{Footnote 31}

[108] The CBSA reviewed this information and found that the complainant’s employment decreased from 2015 to Q1 2018.

[109] The complainant submitted that its ability to attract capital investment from its parent company is being placed at risk, due to the presence of allegedly dumped goods from the named countries. To support this allegation, the complainant provided a specific example regarding notional support from its parent to invest in Canada.^{Footnote 32}

[110] The CBSA finds that the allegation, as described in the complaint, does not appear to be an indicator of injury, as no evidence was provided to suggest that the complainant has suffered injury in this regard. As such, the CBSA instead reviewed this information as a factor to be considered in assessing the threat of injury posed by subject goods from the named countries.

[111] Based on the evidence provided in the complaint, and supplementary data available to the CBSA through its own research and customs documentation, the CBSA is satisfied that the evidence discloses a reasonable indication that the dumping of subject goods from China, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) and South Korea has caused injury in the form of lost sales, price undercutting, price depression, underutilized production capacity, and reduced employment.

[112] With respect to India, the volume of imports from India decreased over the period reviewed and the complainant did not provide specific examples of lost sales, price undercutting or price depression. As such, the CBSA is of opinion that the evidence does not disclose a reasonable indication that the alleged dumping of the subject goods from India has caused injury.

[115] The complainant alleged that there has been a significant rate of increase in the volume of subject goods imported from the named countries. In support of this allegation, the complainant provided import statistics from the named countries for the period of 2014 through 2017.^{Footnote 34}

[116] The complainant acknowledged that while import volumes from China increased significantly from 2014 to 2017, the volumes from the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), India and South Korea declined during the same period, both collectively and individually. The complainant attributed this decline to the rapid rise in imports from China.

[117] The CBSA’s analysis of import data, which is based on the period of 2015 through 2017, shows similar trends and indicates that there has been a significant increase in the total imports of the allegedly dumped goods from the named countries. As noted above, this overall increase is driven by the increase in imports from China.

[118] The complainant submitted that there is a global excess capacity in the steel industry in general and the COR industry in particular. Specifically, the complainant alleged that there is a significant overcapacity for the production of COR in each of the named countries. In support of this allegation, the complainant provided a number of industry reports and publications.^{Footnote 35}

[119] Based on the CBSA’s analysis of the information provided in the complaint, the CBSA finds that producers in each of the named countries have a massive overcapacity for the production of COR, especially in relation to the size of the Canadian market. The CBSA recognizes that even if a small percentage of the excess capacity was used to produce subject goods for the Canadian market, this production could satisfy the entire Canadian market for COR and result in a significant increase in the volume of subject goods from the named countries.

[120] The complainant submitted that the global steel market remains vulnerable and that faced with weak domestic demand and excess production capacity, COR producers in the named countries would increase their exports of subject goods in the next 18 to 24 months. In support of these allegations, the complainant provided industry publications which forecast market demand and production.^{Footnote 36}

[121] With respect to the COR market in Canada, the complainant provided evidence indicating that the manufacturing sector in Canada, which is a significant user of COR, remains vulnerable and that the Canadian market for COR is forecasted to contract in 2019.^{Footnote 37}

[122] Based on the CBSA’s analysis of the information provided in the complaint, the CBSA finds that the international market conditions, as described above, may encourage COR producers in the named countries to increase their exports to certain markets, including Canada. Similarly, the CBSA recognizes that the weak market conditions in Canada may render the Canadian domestic industry particularly vulnerable to a significant increase in import volumes from the named countries.

[123] The complainant submitted that the alleged dumping of subject goods had depressed the price of like goods in Canada. Similarly, the complainant stated that the subject goods from China, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) and South Korea had undercut the price of like goods, resulting in a significant number of lost sales. The complainant also alleged that the trend of aggressive pricing of subject goods from these countries would continue, and that it would have increasingly injurious effects on the Canadian domestic industry. In support of these allegations, the complainant provided account specific information detailing offers of subject goods at prices below that of the complainant.^{Footnote 38}

[124] Based on its own estimate of the average import prices, and the information provided in the complaint, the CBSA finds that subject goods from China, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) and South Korea have entered the Canadian market at low prices for the most part, and had a depressing effect on the price of like goods.

[125] The complainant submitted that subject goods from the named countries are likely to be diverted into the Canadian market, given that there are a number of anti-dumping trade remedy actions that are currently in place against these goods. In support of this allegation, the complainant provided a number of decision documents and reports published by several members of the World Trade Organization (WTO).^{Footnote 39}

[126] Furthermore, the complainant pointed to the recent imposition of a US tariff of 25% on steel imports into the US, which may exacerbate the Canadian domestic industry’s vulnerability to subject goods from the named countries. Similarly, the complainant submitted that the European Union’s recent safeguard investigation on steel products, including COR, could divert a significant volume of subject goods into the Canadian market.^{Footnote 40}

[127] The CBSA acknowledges that the presence of trade remedy actions, as described above, may impact the exports of COR from the named countries. The CBSA further recognizes that these restrictions may have a significant impact on the Canadian market by way of diversion.

[128] The complainant stated that COR is a downstream product of HRS and CRS. While HRS and CRS are standalone goods, they are also primary input materials for a number of different steel products. As such, the complainant submitted that if a trade remedy is imposed on upstream HRS and/or CRS products, either in Canada or another country, the affected foreign producers are likely to shift production and increase the exports of goods that are not subject to the trade remedy, such as COR.^{Footnote 41}

[129] The complainant pointed to a number of anti-dumping trade remedy actions that are currently in place against upstream HRS and CRS products from the named countries, and submitted that affected producers in China, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), India and South Korea would likely shift their production and increase their exports of COR. The complainant also alleged that the high number of trade remedy actions against the named countries demonstrates their propensity to dump and indicates that they have a narrowing list of products and markets for export.^{Footnote 42}

[130] The CBSA acknowledges that the presence of trade remedy actions on upstream HRS and CRS products, as described above, may impact the exports of COR from the named countries. The CBSA also recognizes that these restrictions may have a significant impact on the Canadian market by way of product shifting.

[131] The CBSA is of view that the evidence discloses a reasonable indication that there is a threat of material injury to the COR industry in Canada posed by imports of allegedly dumped subject goods from China, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), India and South Korea.