HP 2020 IN: Heavy plate
Statement of reasons: Preliminary determination

Complainant

[13] Algoma is a primary iron and steel producer located in Sault Ste. Marie, Ontario, and began producing steel in 1902.

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

Algoma Steel Inc.
105 West Street
Sault Ste. Marie, ON  P6A 7B4

[15] The other manufacturers of like goods in Canada are: Janco Steel Ltd. (Janco), SSAB Central Inc. (SSAB), Samuel, Son & Co., Ltd. (Samuel), Tidy Steel-Fab Ltd. (Tidy), and Varsteel Ltd. (Varsteel).^{Footnote 1} The complaint contained letters of support from Janco and SSAB.^{Footnote 2} Contact information for these manufacturers is as follows:

Trade union

[16] The complainant identified one trade union that represents persons employed in the production of heavy plate in Canada^{Footnote 3}:

United Steel Workers
234 Eglinton Avenue East, 8th floor
Toronto, Ontario  M4P 1K7

Importers

[17] At the initiation of the investigation, the CBSA identified 34 potential importers of the subject goods based on both information provided by the complainant and CBSA import entry documentation. The CBSA sent an Importer RFI to all potential importers of the goods. The CBSA received 15 responses to the Importer RFI.

Exporters

[18] At the initiation of the investigation, the CBSA identified 36 potential exporters/producers of the subject goods from information provided by the complainant and CBSA import entry documentation. All of the potential exporters were sent the CBSA's Dumping RFI.

[19] Eight companies provided substantially complete responses to the CBSA's Dumping RFI, including one from Chinese Taipei, one from Germany, one from Malaysia, four from South Korea and one from Turkey. These submissions and results have been summarized in the Preliminary Results of the Dumping Investigation section, found below.

Governments

[20] For the purposes of this investigation, Government of Turkey (GOT), 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.

[21] At the initiation of the investigation, the CBSA sent an RFI to the GOT to request information with respect to the CBSA's examination of whether a Particular Market Situation (PMS) exists in the heavy plate market in Turkey. The GOT provided a response to the RFI.

Definition^{Footnote 4}

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

Additional product information^{Footnote 5}

[23] Plate is produced to specific grades and standardizations. These grades and standardizations are used for specific end-uses. Common standardizations include American Society for Mechanical Engineers (ASME), and American Society for Testing and Materials (ASTM). For example, ASTM/ASME A36, A283, A573 or A709 may be used for structural plate, which is used in a variety of construction applications. Plate meeting A515 and A516M/A516, grade 70 is used for the construction of pressure vessels, which hold gasses or liquids at high pressure.

[24] Pressure vessel quality (PVQ) plate may be vacuum degassed to achieve desired characteristics, in particular low sulfur, low carbon, low gaseous levels (H2, N2, 02), improved cleanliness and improved ferro alloy recovery. Such characteristics may be used in sour service applications and applications requiring hydrogen-induced cracking (HIC) resistance low temperature fracture toughness.

[25] Some of these gauges and specifications, as well as specific lengths and widths, command a price premium.

Production process^{Footnote 6}

[26] While details may vary from mill to mill, the process by which carbon steel plate is produced is essentially the same for all producers world-wide and entails:

• heating slabs before rolling
• descaling
• rolling
• levelling
• cutting to size
• inspection and testing
• shipping

[27] At Algoma, slabs are charged into re-heating furnaces and are progressively brought forward and heated to approximately 2370°F (1300°C) before being discharged then descaled by high pressure water sprays. The first reduction of slab thickness occurs in the breakdown mill where the slab is reduced in gauge depending on the final plate thickness required.

[28] Heavier plate (i.e. 3/8 inches and thicker) goes directly to the 166" plate mill where it is reduced to its final thickness, levelled and then sent to the plate finishing area where it is sized, sides are trimmed, cut to length (either sheared or flame cut), tested and shipped.

[29] For lighter plate, the 166" plate mill acts as a breakdown mill, and the extended slab proceeds to the 106" wide strip mill where it is reduced to its final thickness through this 6-stand operation and then coiled. The coils are sent to the #1 finishing line where they are uncoiled, levelled, cut-to-length, tested, bundled and shipped.

[30] Separately, certain service centres operate cut-to-length lines which cut plate from coil.

Product use^{Footnote 7}

[31] The subject goods and the like goods are used in a number of applications, the most common of which are the production of rail cars, oil and gas storage tanks, heavy machinery, agricultural equipment, bridges, industrial buildings, high-rise office towers, ships and barges, and pressure vessels.

Classification of imports

[32] Subject goods are normally classified under the following tariff classification numbers:

• 7208.51.00.10
• 7208.51.00.93
• 7208.51.00.94
• 7208.51.00.95
• 7208.52.00.10
• 7208.52.00.93
• 7208.52.00.96

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

Normal value

[53] Normal values are generally estimated based on the domestic selling prices of like goods in the country of export, in accordance with the methodology of section 15 of SIMA, or on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, plus a reasonable amount for profits, in accordance with the methodology of paragraph 19(b) of SIMA.

Export price

[54] The export price of goods sold to importers in Canada is generally estimated in accordance with the methodology of section 24 of SIMA based on the lesser of the adjusted exporter's sale price for the goods or the adjusted importer's purchase price. These prices are adjusted where necessary by deducting the costs, charges, expenses, duties and taxes resulting from the exportation of the goods as provided for in subparagraphs 24(a)(i) to 24(a)(iii) of SIMA.

[55] Where there are sales between associated persons and/or a compensatory arrangement exists, the export price is estimated based on the importer's resale price of the imported goods in Canada to unrelated purchasers, less deductions for all costs incurred in preparing, shipping and exporting the goods to Canada that are additional to those incurred on the sales of like goods for use in the country of export, all costs included in the resale price that are incurred in reselling the goods (including duties and taxes) or associated with the assembly of the goods in Canada and an amount representative of the average industry profit in Canada as provided for in paragraphs 25(1)(c) and 25(1)(d) of SIMA.

Margin of dumping

[56] The estimated margin of dumping by exporter is equal to the amount by which the total estimated normal value exceeds the total estimated export price of the goods, expressed as a percentage of the total estimated export price. All subject goods imported into Canada during the POI are included in the estimation of the margins of dumping of the goods. Where the total estimated normal value of the goods does not exceed the total estimated export price of the goods, the margin of dumping is zero.

[57] Further information regarding each exporter is detailed below.

Chinese Taipei

[60] The CBSA received a substantially complete response to the Dumping RFI from one exporter in Chinese Taipei, China Steel Corporation.^{Footnote 11}

China Steel Corporation

[61] China Steel Corporation (CSC) is a manufacturer and exporter of subject goods located in Chinese Taipei. CSC is a publicly traded manufacturer of various steel products. The company has one production facility located in Kaohsiung. All of the subject goods shipped to Canada were produced at this facility. The company headquarters is also located in Kaohsiung.

[62] CSC provided a substantially complete response to the CBSA's Dumping RFI, including a database of domestic sales of heavy plate during the PAP. Where there were sufficient profitable sales of like goods, normal values were estimated in accordance with the methodology of section 15 of SIMA, using the exporter's domestic prices of heavy plate in Chinese Taipei market.

[63] Where there were insufficient profitable domestic sales of like goods, or where there were no domestic sales of like goods, normal values were estimated using the methodology of paragraph 19(b) of SIMA, based on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs and a reasonable amount for profits.

[64] The cost of production was estimated in accordance with paragraph 11(1)(a) of the Special Import Measures Regulations (SIMR), based on CSC's unverified cost data associated with the subject goods shipped to Canada. The amount for profits was estimated in accordance with subparagraph 11(1)(b)(ii) of the SIMR, based on CSC's sales of heavy plate in their domestic market, during the profitability analysis period (PAP), of the same general category as the subject goods sold to Canada.

[65] For subject goods exported to Canada by CSC during the POI, export prices were estimated using the methodology of section 24 of SIMA, based on the lesser of the exporter's selling price and the importer's purchase price, adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

[66] For the preliminary determination, the total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 9.4% for CSC, expressed as a percentage of the export price. The CBSA will continue to collect and verify information from CSC during the final phase of the investigation.

All other exporters: Chinese Taipei

[67] For exporters of subject goods originating in or exported from Chinese Taipei that did not provide a response to the Dumping RFI or did not furnish sufficient information, the margin of dumping was estimated on the basis of facts available.

[68] In establishing the methodology for estimating the margin of dumping , the CBSA analyzed all the information on the administrative record, including the complaint filed by the domestic industry, the CBSA's estimates at the initiation of the investigation and information submitted by exporters of heavy plate from the named sources.

[69] The CBSA decided that the normal values estimated for the exporters whose submissions were substantially complete for the preliminary determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for estimating the margin of dumping since it reflects exporters' actual trading practices during the POI. The CBSA first considered whether the information from the exporter of heavy plate from Chinese Taipei, CSC, who provided substantially complete information was appropriate to use as the basis for estimating the margin of dumping for all other exporters in Chinese Taipei.

[70] The CBSA examined the difference between the estimated normal value and the estimated export price for each individual transaction of CSC, and considered that the highest amount (expressed as a percentage of the export price) was an appropriate basis for estimating the margin of dumping. This methodology relies on information related to goods that originated in Chinese Taipei and limits the advantage that an exporter may gain from not providing necessary information requested in a dumping investigation as compared to an exporter that did provide the necessary information.

[71] As a result, based on the facts available, for exporters that did not provide a response or provided an incomplete response to the Dumping RFI, the margin of dumping of subject goods originating in or exported from Chinese Taipei was estimated based on the highest amount by which an estimated normal value exceeded the estimated export price, on an individual transaction for CSC during the POI. The transactions were examined to ensure that no anomalies were considered, such as very low volume and value, effects of seasonality or other business factors.

[72] Using the above methodologies, for the preliminary determination, the estimated margin of dumping for all other exporters in Chinese Taipei is 97.0%, expressed as a percentage of the export price.

Germany

[73] The CBSA received a substantially complete response to the Dumping RFI from one exporter in Germany, Aktien-Gesellschaft der Dillinger Hüttenwerke.^{Footnote 12}

Aktien-Gesellschaft der Dillinger Hüttenwerke

[74] Aktien-Gesellschaft der Dillinger Hüttenwerke (Dillinger) is a manufacturer and exporter of subject goods located in Germany. Dillinger is a privately owned manufacturer of heavy plate products. The company has one production facility located in Dillingen, Germany. All of the subject goods shipped to Canada were produced at this facility. The company headquarters is also located in Dillingen.

[75] Dillinger provided a substantially complete response to the CBSA's Dumping RFI, including a database of domestic sales of heavy plate during the PAP. Where there were sufficient profitable sales of like goods, normal values were estimated in accordance with the methodology of section 15 of SIMA, using the exporter's domestic prices of heavy plate in the German market.

[76] Where there were insufficient profitable domestic sales of like goods, or where there were no domestic sales of like goods, normal values were estimated using the methodology of paragraph 19(b) of SIMA, based on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs and a reasonable amount for profits.

[77] The cost of production was estimated in accordance with paragraph 11(1)(a) of the SIMR, based on Dillinger's unverified cost data associated with the subject goods shipped to Canada. The amount for profits was estimated in accordance with subparagraph 11(1)(b)(ii) of the SIMR, based on Dillinger's sales of heavy plate in their domestic market, during the PAP, of the same general category as the subject goods sold to Canada.

[78] For subject goods exported to Canada by Dillinger during the POI, export prices were estimated using the methodology of section 24 of SIMA, based on the lesser of the exporter's selling price and the importer's purchase price, adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

[79] For the preliminary determination, the total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 4.8% for Dillinger, expressed as a percentage of the export price. The CBSA will continue to collect and verify information from Dillinger during the final phase of the investigation.

All other exporters: Germany

[80] For exporters of subject goods originating in or exported Germany that did not provide a response to the Dumping RFI or did not furnish sufficient information, the margin of dumping was estimated on the basis of facts available.

[81] In establishing the methodology for estimating the margin of dumping, the CBSA analyzed all the information on the administrative record, including the complaint filed by the domestic industry, the CBSA's estimates at the initiation of the investigation and information submitted by exporters of heavy plate from the named sources.

[82] The CBSA decided that the normal values estimated for the exporters whose submissions were substantially complete for the preliminary determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for estimating the margin of dumping since it reflects exporters' actual trading practices during the POI. The CBSA first considered whether the information from the exporter of heavy plate from Germany, Dillinger, who provided substantially complete information was appropriate to use as the basis for estimating the margin of dumping for all other exporters in Germany.

[83] The CBSA examined the difference between the estimated normal value and the estimated export price for each individual transaction of Dillinger, and considered that the highest amount (expressed as a percentage of the export price) was an appropriate basis for estimating the margin of dumping. This methodology relies on information related to goods that originated in Germany and limits the advantage that an exporter may gain from not providing necessary information requested in a dumping investigation as compared to an exporter that did provide the necessary information.

[84] As a result, based on the facts available, for exporters that did not provide a response or provided an incomplete response to the Dumping RFI, the margin of dumping of subject goods originating in or exported from Germany was estimated based on the highest amount by which an estimated normal value exceeded the estimated export price, on an individual transaction for Dillinger during the POI. The transactions were examined to ensure that no anomalies were considered, such as very low volume and value, effects of seasonality or other business factors.

[85] Using the above methodologies, for the preliminary determination, the estimated margin of dumping for all other exporters in Germany is 63.8%, expressed as a percentage of the export price.

Turkey

[86] The CBSA received a substantially complete response to the Dumping RFI from one exporter in Turkey, Eregli Demir Ve Celik Fabrikalari T.A.S..^{Footnote 13} In addition, the GOT provided a response to the PMS RFI.^{Footnote 14}

Particular market situation

[87] Paragraph 16(2)(c) is a provision of SIMA that may be applied when the President is of the opinion that domestic sales of like goods in the country of export do not permit a proper comparison with the sales of the goods to the importer in Canada because a PMS prevails.

[88] Pursuant to subsection 16(2.1), the President may form the opinion that PMS can exist in respect of any goods of a particular exporter or of a particular country.

[89] In such cases, the CBSA would not estimate normal values using the methodology of section 15 of SIMA, which relies on domestic prices. Accordingly, and where such information is available, the CBSA would look to use one of the methodologies of section 19 to determine normal values.

[90] Where the methodology of paragraph 19(b) has been applied and the President is of the opinion that a PMS also distorts the cost of inputs that are material in the production of the goods, the President will use information in accordance with subsection 11.2(2) of SIMR, that best represents the actual cost of the input to permit a proper comparison.

[91] The CBSA is investigating allegations that a PMS exists with respect to Turkey's heavy plate market. A PMS may be found to exist where factors such as government regulations, significant macroeconomic volatility, distorted input costs or any other circumstances in which normal market conditions or patterns of supply and demand do not prevail have had a significant impact on the domestic sales of like goods in the country of export. The complainant made the allegation that a PMS may exist in Turkey's plate market due to the combined effect of a multitude of factors.

[92] At the initiation of the investigation, the CBSA considered evidence supplied in the complaint and from its own research to be sufficient to examine whether a PMS exists in Turkey. Consequently, the CBSA sent RFIs pertaining to PMS to the GOT and producers and exporters of heavy plate in Turkey.

[93] A substantially complete response to the PMS RFI was received from the GOT during the preliminary phase of the investigation. A substantially complete response to the dumping RFI containing PMS questions was also received from Erdemir, the only discrete heavy plate producer in Turkey.

[94] The CBSA has considered the evidence and comments provided by the complainant, the responding exporter and the GOT, as well as all of the other information on the administrative record. For the purposes of the preliminary determination, the CBSA has not formed the opinion that a particular market situation exists in the heavy plate market in Turkey that affects the domestic sales such that they do not permit a proper comparison with the sales to the importers in Canada.

[95] In the final phase of the investigation, the CBSA will continue to review and analyze the information available and will seek to gather additional information necessary in order to form an opinion as to whether a PMS, pursuant to paragraph 16(2)(c) of SIMA, exists with respect to the heavy plate market in Turkey.

Eregli Demir Ve Celik Fabrikalari T.A.S.

[96] Erdemir, a publicly-traded joint stock corporation, is the main company of the OYAK Mining Metallurgy group. It was established in 1960 and commenced operation in 1965. As a fully integrated steel manufacturer, Erdemir consists of 7 subsidiaries including Erdemir steel works and Isdemir steel work.

[97] Erdemir provided a substantially complete response to the dumping RFI, including a database of domestic sales of heavy plate. However, there were insufficient profitable sales of goods that were identical or similar to the subject goods exported to Canada. As such, it was not possible to estimate normal values based on the methodology of section 15 of SIMA, using domestic sales of like goods.

[98] Normal values were estimated based on a methodology similar to the methodology described in paragraph 19(b) of SIMA, as the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits. The cost of production was estimated in accordance with paragraph 11(1)(a) of the SIMR, based on Erdemir's cost data associated with the subject goods shipped to Canada. The amount for profits was estimated based on sales of goods of the same general category in Chinese Taipei and Germany as the subject goods sold to Canada. This resulted in an overall profit of 14.7% of the full cost of production for the PAP.

[99] For subject goods exported to Canada by Erdemir during the POI, export prices were estimated in accordance with section 24 of SIMA, based on the lesser of the exporter's selling price and the importer's purchase price, adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

[100] The total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 2.9% for Erdemir, expressed as a percentage of the export price based on unverified sales and cost data submitted by the exporter.

All other exporters: Turkey

[101] For exporters of subject goods originating in or exported from Turkey that did not provide a response to the Dumping RFI, the margin of dumping was estimated on the basis of facts available.

[102] In establishing the methodology for estimating the margin of dumping, the CBSA analyzed all the information on the administrative record, including the complaint filed by the domestic industry, the CBSA's estimates at the initiation of the investigation and information submitted by exporters of heavy plate from the named sources.

[103] The CBSA decided that the normal values estimated for the exporters whose submissions were substantially complete for the preliminary determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for estimating the margin of dumping for all other exporters since it reflects exporters' actual trading practices during the POI. The CBSA first considered whether the information from the exporter of heavy plate from Erdemir, who provided substantially complete information was appropriate to use as the basis for estimating the margin of dumping for all other exporters in Turkey.

[104] The CBSA examined the difference between the estimated normal value and the estimated export price for each individual transaction of Erdemir, and considered that the highest amount (expressed as a percentage of the export price) was an appropriate basis for estimating the margin of dumping for all other exporters. This methodology relies on information related to goods that originated in Turkey and limits the advantage that an exporter may gain from not providing necessary information requested in a dumping investigation as compared to an exporter that did provide the necessary information.

[105] As a result, based on the facts available, for exporters that did not provide a response to the Dumping RFI, the margin of dumping was estimated based on the highest amount by which an estimated normal value exceeded the estimated export price, on an individual transaction for Erdemir during the POI. The transactions were examined to ensure that no anomalies were considered, such as very low volume and value, effects of seasonality or other business factors.

[106] Using the above methodologies, for the preliminary determination, the estimated margin of dumping for all other exporters in Turkey is 25.8%, expressed as a percentage of the export price.

Summary of preliminary results

[107] A summary of the preliminary results of the dumping investigation respecting all subject goods released into Canada during the POI are as follows:

[108] Under section 35 of SIMA, if at any time before making a preliminary determination the CBSA is satisfied that the actual and potential volume of goods of a country is negligible, the CBSA is required to terminate the investigation with respect to goods of that country.

[109] Pursuant to subsection 2(1) of SIMA, the volume of goods of a country is considered negligible if it accounts for less than 3% of the total volume of goods that are released into Canada from all countries that are of the same description as the goods.

[110] As noted previously in the Termination of the Dumping Investigation with respect to Heavy Plate from Malaysia and South Korea section, the goods from Malaysia and South Korea are considered negligible, and as a result, the CBSA terminated the dumping investigation with respect to certain heavy plate originating in or exported from Malaysia and South Korea on October 9, 2020, pursuant to paragraph 35(2)(a) of SIMA.

[111] On the other hand, the volumes of subject goods from Chinese Taipei, Germany and Turkey are each above 3% of the total volume of goods released into Canada from all sources. Based on the definition above, the volumes of subject goods from these sources are therefore not negligible.

[112] If, in making a preliminary determination, the CBSA determines that the margin of dumping of the goods of a particular exporter is insignificant pursuant to section 38 of SIMA, the investigation will continue in respect of those goods but provisional duties will not be imposed on goods of the same description imported during the provisional period.

[113] Pursuant to subsection 2(1) of SIMA, a margin of dumping of less than 2% of the export price of the goods is defined as insignificant. The margins of dumping, estimated for exporters in Chinese Taipei, Germany and Turkey, are greater than the threshold of 2% and are therefore not considered insignificant.

[114] A summary of the estimated margins of dumping and provisional duties by exporter are presented in Appendix 1.

The Canada Border Services Agency

[121] The CBSA will continue its investigation and will make a final decision by January 7, 2021.

[122] If the margins of dumping are found to be insignificant, the CBSA will terminate the investigation in respect of those goods and any provisional duty paid or security posted will be refunded to importers, as appropriate. If the CBSA is satisfied that the goods were dumped, a final determination will be made.

The Canadian International Trade Tribunal

[123] The CITT has begun its inquiry into the question of injury to the Canadian industry. The CITT is expected to issue its finding by February 5, 2021.

[124] If the CITT finds that the dumping has not caused injury, retardation or is not threatening to cause injury, the proceedings will be terminated and all provisional anti-dumping duty collected or security posted will be refunded.

[125] If the CITT makes a finding that the dumping has caused injury, retardation or is threatening to cause injury, anti-dumping duty in an amount equal to the margin of dumping will be levied, collected and paid on imports of heavy plate that are of the same description as goods described in the CITT's finding.

[126] For purposes of the preliminary determination of dumping, the CBSA has responsibility for determining whether the actual and potential volume of goods is negligible. After a preliminary determination of dumping, the CITT assumes this responsibility. In accordance with subsection 42(4.1) of SIMA, the CITT is required to terminate its inquiry in respect of any goods if the CITT determines that the volume of dumped goods from a country is negligible.