OCTG4 2021 IN: Oil country tubular goods
Statement of Reasons—final determination

Complainants

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

Algoma Tubes Inc.
Prudential Steel ULC
Tenaris Global Services (Canada) Inc.
Hydril Canadian Company LP
(The above companies are collectively referred to as “Tenaris Canada”)
400-530 8th Ave SW
Calgary AB  T2P 3S8

Tenaris Canada

[15] Tenaris Canada manufactures OCTG in Canada at its Algoma Tubes Inc. (Algoma) facility located in Sault Ste. Marie, Ontario using the seamless process. Algoma produces seamless casing in outside diameters ranging from 4.5 to 9.875 inches for both American Petroleum Institute (API) and proprietary grades. Algoma has been producing OCTG for over 30 years.^{Footnote 3}

[16] All OCTG produced by Algoma are green tubes before they are finished. While Algoma has its own threading, coupling and heat-treating capabilities, some Algoma product is threaded with an OCTG premium connection at the Hydril Canadian Company LP (Hydril) facility in Alberta.^{Footnote 4}

[17] Up until summer of 2020, Prudential Steel ULC (Prudential) had been producing electric resistance welding (ERW) OCTG casing and tubing at its Calgary, Alberta facility in diameters ranging from 2.375 inches to 11.75 inches, primarily in grades H40, J55 and also in proprietary higher strength grades. The mill had threading, coupling and testing facilities but did not heat-treat goods.^{Footnote 5} Higher strength proprietary grades like PS80, are produced using skelp with the required chemistry. Prudential produced API and proprietary premium connections, but some product was threaded with an OCTG premium connection at the Hydril facility in Alberta.^{Footnote 6}

[18] Tenaris Canada is currently relocating its ERW production capability that was formerly at the Prudential facility, to be housed at the Algoma facility.^{Footnote 7} The Prudential facility ceased production in July 2020. This transition is expected to be completed near the end of 2021.^{Footnote 8}

[19] Hydril produces specialized premium connections for OCTG casing and tubing. Tenaris Global Services (TGS) provides management, sales and marketing support to the production facilities of Algoma.^{Footnote 9}

Other Canadian producers

EVRAZ Inc. NA Canada (Evraz)
P.O. Box 1670
100 Armour Rd
Regina SK  S0G 5K0

Welded Tube of Canada Corporation (WTC)
111 Rayette Rd
Concord ON  L4K 2E9

[20] Evraz, WTC and the Complainant account for all known domestic production.

Trade unions^{Footnote 10}

[21] Tenaris Canada identified the United Steelworkers (USW) as a known trade union association representing persons employed in OCTG production in Canada. Tenaris Canada’s relevant union locals are Local Union 7226 for Prudential and Local Union 9548 for Algoma. Evraz’s relevant USW union locals are Local Union 5890 (Regina) and Local Union 6673 (Calgary).

Importers

[22] The CBSA identified one importer of the subject goods from CBSA import documentation and from information submitted in the complaint. The importer was sent the CBSA’s Importer request for information (RFI)^{Footnote 11} in respect of imports of OCTG from Austria, and it provided a response to the Importer RFI.^{Footnote 12}

Exporters

[23] The CBSA identified two potential exporters from CBSA import documentation and from information submitted in the complaint. Both parties were sent the CBSA’s Dumping RFI.^{Footnote 13}

[24] Voestalpine Tubulars GmbH & Co KG (“VAT”) of Austria, provided a response to the CBSA’s Dumping RFI.^{Footnote 14}

[25] One related input supplier to VAT, Voestalpine Stahl Donawitz GmbH (VASD),^{Footnote 15} also provided information related to the costing of a significant factor input provided to VAT for their production of OCTG.

Product definition^{Footnote 16}

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

Additional product information^{Footnote 17}

[27] For greater certainty, the term “green tube” refers to unfinished casing, tubing, or other tubular products (including upgradable OCTG that may or may not already be tested, inspected, and/or certified) originating in or exported from Austria and imported for use in the production or finishing of OCTG meeting final specifications, including grade and connections, required for use downhole. Green tubes, as they are commonly referred to in the OCTG industry, are intermediate or in process tubing and casing which require additional processing, such as threading, heat treatment and testing, before they can be used as fully finished oil and gas well casing or tubing in end-use applications.

[28] For greater clarity, the product definition does not include green tubes originating in or exported from Austria which are upgraded in the manner described above in an intermediate country prior to being exported to Canada for purposes of this dumping investigation. The CBSA considers these high-strength tubing and casing to originate in the intermediate country for purposes of the investigation.

[29] Pup joints are essentially short lengths of OCTG used for spacing in a drill string, and these are excluded where their length is 12 feet or below (with a three-inch tolerance), as defined in the API 5CT specification.

[30] Furthermore, accessory products used in conjunction with downhole OCTG tubing and casing strings such as cross-over joints, marker joints, elbows etc. are not covered by the product definition, nor are further manufactured products which use OCTG as inputs to their production such as vacuum insulated tubing (VIT). Coiled tubing is also not part of the product definition.

Product characteristics and uses^{Footnote 18}

[31] Casing is used to prevent the walls of the bored hole from collapsing, both during drilling and after the well has been completed. Tubing is used to convey fluids up and down the well. This most commonly means carrying oil and gas to the surface, and may also involve conveying steam down the well, such as in Steam Assisted Gravity Drainage (SAGD) or Cyclic Steam Stimulation (CSS) applications.

[32] Subject OCTG may be manufactured by the seamless or welded process. Typical casing and tubing end finishes include plain end, beveled, external upset ends, threaded, or threaded and coupled (including proprietary premium or semi-premium connections).

[33] OCTG must be able to withstand outside pressure and internal yield pressures within the well. In addition, OCTG must have sufficient joint strength to hold the weight of the pipe string and must be equipped with threads sufficiently tight to contain the well pressure where lengths are joined. Threading may be performed by the manufacturer or a third-party threading operation. Various factors limit the total amount of open hole that can be drilled at any one time, and it may be necessary to set more than one string of OCTG concentrically for certain portions of the well depth.

[34] Subject OCTG are supplied to meet at a minimum API specification 5CT. OCTG from Austria is supplied in all grades including and not limited to, H40, J55, K55, N80, L80, L80 HC, L80 LT, L80 SS, C90, C95, C110, P110, P110 HC, P110 LT, T95, T95 HC, and Q125, or proprietary grades manufactured as substitutes for, or enhancements to, these specifications. The grade numbers define the minimum yield strength required of the grade in thousands of pounds per square inch (ksi).

[35] The most common grades of low-strength casing and tubing are J55, K55 and H40. Heat-treated grades (e.g. L80, P110 and T95) are more sophisticated grades of pipe and are used in deeper wells and more severe environments, such as low-temperature service, sour service and heavy oil recovery.

[36] Heat-treated grades are more sophisticated higher strength grades of pipes used in horizontal applications, deeper wells, and more severe environments such as low temperature services, sour service, heavy oil recovery, etc. These grades are made beginning with the use of a specific chemistry in the steel (either in billet for the seamless process or the steel coil in the ERW process) and are further-processed with heat treatment to attain certain combinations of mechanical properties and/or resistance to corrosion and environmental cracking.

[37] For example, maximum strength (N80, P110, Q125), high-strength with lower ductility (normally proprietary enhancements of API grades), or high-strength combined with resistance to corrosion and environmental cracking (L80, C90, C95, C110, T95 and proprietary enhancements).

[38] Semi-premium and premium connections similarly enhance the function of an OCTG string by providing additional performance and/or sealing characteristics which may be required in more demanding applications.

Production process^{Footnote 19}

[39] OCTG casing and tubing are made on the same production equipment. Production may be by either the seamless or the electric resistance welded (ERW) process.

[40] Tenaris Canada employs the seamless production process at its Algoma manufacturing operations, starting with its purchasing of steel bars (also known as billets) which are imported from sister companies. The steel bar is cut into a billet and then loaded into the rotary furnace to be heated and readied for the Hot Rolling Mill (HRM). Once the HRM has transformed the billet into a tube it enters into a reheat furnace. The stretch reduction/sizing mill produces the final dimensions.

[41] Depending on the desired grade, the next process may involve heat-treatment. Finishing operations include Non-Destructive Testing (NDT), electromagnetic inspection (EMI) testing, hydrotesting, thread inspection, coupling, varnishing and stenciling.

[42] Tenaris Canada had until recently employed the ERW production process. From 1966 until July 2020, Tenaris Canada produced ERW steel pipes at its Prudential facility, located in Calgary.

[43] ERW OCTG is produced by slitting flat hot-rolled steel in coil form of a predetermined thickness (skelp) to the proper width required to produce the desired diameter of pipe. The skelp is then sent through a series of forming rolls that bend it into a tubular shape. As the edges of the skelp come together under pressure in the final forming rolls, an electric current is passed between them. The resistance to the current heats the edges of the skelp to the welding temperature, and the weld is formed as the two edges are pressed together.

[44] Steel tubes are formed by either the seamless or the ERW methods and are then cut-to-length. Depending on the API specifications required, OCTG may also be heat-treated at this point. The product is then sent to the finishing line where it is tested (NDT, EMI and hydrotesting), beveled and threaded on both ends. Tubing may undergo a separate process of upsetting and normalizing prior to threading. Finally, a coupling and coupling protector are applied to one end of the OCTG and a thread protector is applied to the other end before it is ready for shipment. Finishing operations also include cooling, straightening, inspection, testing, coating, and/or bundling.

Classification of imports

[45] Prior to January 1, 2022, imports into Canada of the subject goods were normally classified under the following tariff classification numbers:

• 7304.29.00.11
• 7304.29.00.19
• 7304.29.00.21
• 7304.29.00.29
• 7304.29.00.31
• 7304.29.00.39
• 7304.29.00.41
• 7304.29.00.49
• 7304.29.00.51
• 7304.29.00.59
• 7304.29.00.61
• 7304.29.00.69
• 7304.29.00.71
• 7304.29.00.79
• 7306.29.00.11
• 7306.29.00.19
• 7306.29.00.21
• 7306.29.00.31
• 7306.29.00.29
• 7306.29.00.39
• 7306.29.00.61
• 7306.29.00.69

[46] Beginning January 1, 2022, under the revised customs tariff schedule, subject goods are normally classified under the following tariff classification numbers:

• 7304.29.00.12
• 7304.29.00.13
• 7304.29.00.14
• 7304.29.00.15
• 7304.29.00.16
• 7304.29.00.17
• 7304.29.00.19
• 7304.29.00.22
• 7304.29.00.23
• 7304.29.00.24
• 7304.29.00.25
• 7304.29.00.26
• 7304.29.00.27
• 7304.29.00.29
• 7304.29.00.32
• 7304.29.00.33
• 7304.29.00.34
• 7304.29.00.35
• 7304.29.00.36
• 7304.29.00.37
• 7304.29.00.39
• 7304.29.00.42
• 7304.29.00.43
• 7304.29.00.44
• 7304.29.00.45
• 7304.29.00.46
• 7304.29.00.47
• 7304.29.00.49
• 7304.29.00.52
• 7304.29.00.53
• 7304.29.00.54
• 7304.29.00.55
• 7304.29.00.56
• 7304.29.00.57
• 7304.29.00.59
• 7304.29.00.62
• 7304.29.00.63
• 7304.29.00.64
• 7304.29.00.65
• 7304.29.00.66
• 7304.29.00.67
• 7304.29.00.69
• 7304.29.00.72
• 7304.29.00.73
• 7304.29.00.74
• 7304.29.00.75
• 7304.29.00.76
• 7304.29.00.77
• 7304.29.00.79
• 7306.29.00.12
• 7306.29.00.13
• 7306.29.00.14
• 7306.29.00.15
• 7306.29.00.16
• 7306.29.00.17
• 7306.29.00.19
• 7306.29.00.22
• 7306.29.00.23
• 7306.29.00.24
• 7306.29.00.25
• 7306.29.00.26
• 7306.29.00.27
• 7306.29.00.29
• 7306.29.00.32
• 7306.29.00.33
• 7306.29.00.34
• 7306.29.00.35
• 7306.29.00.36
• 7306.29.00.37
• 7306.29.00.39
• 7306.29.00.42
• 7306.29.00.43
• 7306.29.00.44
• 7306.29.00.45
• 7306.29.00.46
• 7306.29.00.47
• 7306.29.00.49
• 7306.29.00.52
• 7306.29.00.53
• 7306.29.00.54
• 7306.29.00.55
• 7306.29.00.56
• 7306.29.00.57
• 7306.29.00.59
• 7306.29.00.62
• 7306.29.00.63
• 7306.29.00.64
• 7306.29.00.65
• 7306.29.00.66
• 7306.29.00.67
• 7306.29.00.69
• 7306.29.00.72
• 7306.29.00.73
• 7306.29.00.74
• 7306.29.00.75
• 7306.29.00.76
• 7306.29.00.77
• 7306.29.00.79

[47] The listing of tariff classification numbers is for convenience of reference only. The tariff classification numbers may 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

[65] Normal values are generally determined based on the domestic selling prices of like goods in the country of export, in accordance with section 15 of SIMA, or based on either the methodology of paragraph 19(a) 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 paragraph 19(b) of SIMA.

[66] Where, in the opinion of the CBSA, sufficient information has not been furnished or is not available, normal values are determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA.

Export price

[67] The export price of goods sold to importers in Canada is generally determined in accordance with 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.

[68] Where, in the opinion of the CBSA, sufficient information has not been furnished or is not available, export prices are determined pursuant to a ministerial specification under subsection 29(1) of SIMA.

Margin of dumping

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

Results of the dumping investigation

Voestalpine Tubulars GmbH & Co KG

[70] Voestalpine Tubulars GmbH & Co KG (VAT) was incorporated in 1978 and is a subsidiary of Voestalpine AG, a public company listed on the Vienna Stock Exchange. VAT is a producer and exporter of subject goods located in Kindberg, Austria, which first exported subject goods to Canada approximately 30 years ago. VAT produces seamless tubular products with an outside diameter up to 193.7 mm (7 5/8 inches).

[71] Subject goods exported by VAT represent all subject goods shipped to Canada during the POI. All subject goods exported by VAT were to an arm’s length importer.

[72] VAT provided substantially complete responses to the CBSA’s RFIs. Supplemental RFIs (SRFIs) were sent to VAT to gather additional information and seek clarification regarding their original response. Responses were received and found to be substantially complete.

[73] Voestalpine Stahl Donawitz GmbH (VASD),^{Footnote 23} a related input supplier to VAT, also provided information related to their sales and costing of a significant factor input provided to VAT for their production of OCTG in its RFI and SRFI responses. These responses were also found to be substantially complete.

[74] VAT’s information was verified by way of by way of video teleconferencing and verification questionnaires, both conducted in November 2021.

[75] During the POI, VAT did not have sufficient sales of like goods in the domestic market that met the conditions of sections 15 and 16 of SIMA. Due to insufficient information to determine a reasonable amount for profits under paragraph 11(1)(b) of the SIMR, normal values could also not be determined pursuant to paragraph 19(b) of SIMA. Due to the lack of information to enable the determination of normal values as provided in sections 15 to 23 of SIMA, normal values were determined pursuant to a Ministerial Specification under subsection 29(1), using a paragraph 19(b) methodology, 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.

[76] The cost of production was determined in accordance with paragraph 11(1)(a) of the SIMR, based on VAT’s cost data associated with the subject goods shipped to Canada. The amount for profits was determined based on the financial information from the latest profitable fiscal year reported by VAT.

[77] Export prices for the subject goods were determined 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.

[78] For the final determination, the total normal value compared to the total export price resulted in a margin of dumping of 34.6% for VAT, expressed as a percentage of the export price.

All other exporters

[79] As previously noted, VAT accounts for all of the subject goods exported from Austria during the POI. In the event that the CITT renders a finding of injury and goods from a new exporter are released from customs in the future, anti-dumping duty will be assessed by advancing the export price of the goods by 129.2% pursuant to a ministerial specification under subsection 29(1) of SIMA.

[80] In establishing the methodology for determining normal values and export prices for other potential exporters, the CBSA considered 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 the exporter of OCTG from Austria.

[81] The CBSA decided that the normal values determined for the exporter whose submission was substantially complete for the final determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for determining normal values for all other potential exporters, since it reflects the exporter’s actual trading practices during the POI.

[82] The CBSA examined the difference between the normal value and the export price determined for each individual transaction of VAT for the POI, and considered that the highest amount by which the normal value exceeded the export price found on an individual transaction (expressed as a percentage of the export price), was an appropriate basis for determining normal values.

[83] 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. No such anomalies were identified. This methodology relies on information related to goods that originated in Austria 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] The CBSA considers that the information submitted on the CBSA customs entry documentation is the best information on which to determine the export price of the goods as it reflects actual import data.

[85] Using the above methodology, should subject goods be exported from Austria by an exporter other than VAT, the margin of dumping would be 129.2%, expressed as a percentage of the export price.

Summary of results—dumping

A summary of the results of the dumping investigation respecting all subject goods released into Canada during the POI is as follows (also available in Appendix 1):

[87] Under paragraph 41(1)(a) of SIMA, the CBSA is required to terminate an investigation in respect of any goods of an exporter if it is satisfied that the goods have not been dumped or the margin of dumping of the goods of that exporter is insignificant, meaning a margin of dumping that is less than 2% of the export price of the goods.

[88] All of the goods under investigation have been dumped and the margins of dumping determined for the goods are greater than the threshold of 2% and are therefore not considered insignificant. As a result, pursuant to paragraph 41(1)(b) of SIMA, the CBSA made a final determination of dumping respecting certain OCTG originating in or exported from Austria.

[89] A summary of the results of the dumping investigation respecting the subject goods released into Canada during the POI are presented in Appendix 1.