RB3 2020 IN: Certain concrete reinforcing bar
Statement of Reasons - Initiation of an investigation

Definition

[21] For the purpose of this investigation, subject goods are defined as:^{Footnote 9}

Additional product information^{Footnote 10}

[22] For greater clarity, the rebar considered to be subject goods includes all hot-rolled deformed bar, rolled from billet steel, rail steel, axle steel, low alloy-steel and other alloy steel that does not comply with the definition of stainless steel.

[23] Uncoated rebar, sometimes referred to as black rebar, is generally used for projects in non-corrosive environments where anti-corrosion coatings are not required. On the other hand, anti-corrosion coated rebar is used in concrete projects that are subjected to corrosive environments, such as road salt. Examples of anti-corrosion coated rebar are epoxy or hot-dip galvanized rebar. The subject goods include uncoated rebar and rebar that has a coating or finish applied.

[24] Fabricated rebar products are generally engineered using Computer Automated Design programs and are made to the customer’s unique project requirements. The fabricated rebar products are normally finished with either a protective or corrosion resistant coating. Rebar that is simply cut-to-length is not considered to be a fabricated rebar product excluded from the definition of subject goods.

[25] Rebar is produced in Canada in accordance with the National Standard of Canada CAN/CSA-G30.18-09(R2019) - Carbon Steel Bars for Concrete Reinforcement,^{Footnote 11} (the “National Standard”) published by the CSA Group and approved by the Standards Council of Canada.

[26] The following are the most common bar designation numbers for the subject goods in Canada, with the corresponding diameter in millimeters in brackets: 10 (11.3), 15 (16.0), 20 (19.5), 25 (25.2), 30 (29.9), 35 (35.7). Rebar sizes are commonly referred to as the bar designation number combined with the letter “M”. For example, 10M rebar is rebar with a bar designation number of 10 and a diameter of 11.3 millimeters. Other diameters may also be demanded, and other measurement systems employed. For example, Imperial measure #7 bar (approximately 22 millimeters) is a common designation used in the mine roofing industry.

[27] The National Standard identifies two grades of rebar, namely regular or “R” and weldable or “W”. R grades are intended for general applications while W grades are used where welding, bending or ductility is of special concern. Welded rebar was a premium product for the domestic industry, reflecting the higher cost of alloy steel; however, since all imports have been weldable product, Canadian production has shifted to weldable as a standard product. Weldable rebar is substitutable for regular rebar in all applications, though the reverse does not hold.

[28] The National Standard also identifies yield strength levels of 300, 400, 500 and 600. This number refers to the minimum yield strength and is measured in megapascal (“MPa”). The grade and yield strength of rebar is identified by combining yield strength number with grade. Regular rebar with a yield strength of 400 MPa is 400R and 400W is weldable rebar with a yield strength of 400 MPa. Yield strength is measured with an extensometer in accordance with the requirements of section 9 of the National Standard.

[29] The standard lengths for rebar are 6 metres (20 feet), 12 metres (40 feet) and 18 metres (60 feet); although rebar can be cut and sold in other lengths as specified by customers or sold in coils.

Production process^{Footnote 12}

[30] Deformed steel concrete reinforcing bar can be produced in an integrated steel production facility or using ferrous scrap metal as the principal raw material. Scrap metal is melted in an electric arc furnace and is further processed in a ladle arc-refining unit. The molten steel is then continuously cast into rectangular billets of steel that are cut-to-length. An integrated facility would also produce billets from molten steel. The billets are then rolled into various sizes of rebar which are cut to various lengths depending on the customers’ requirements.

[31] Deformed rebar is rolled with deformations on the bar which provides gripping power so that concrete adheres to the bar and provides reinforcing value. The deformations must conform to requirements set out in national standards.

Product use^{Footnote 13}

[32] Rebar is used in a number of applications, the most common of which is construction. Rebar is most commonly used to reinforce concrete and masonry structures. It enhances the compressional and tensional strength of concrete and helps prevent the concrete from cracking during curing or following changes in temperature. Rebar is also known as “reinforcing steel bar”.

Classification of imports

[33] Imports into Canada of the subject goods are normally classified under the tariff classification numbers: 7213.10.00.00 and 7214.20.00.00.

[34] In some instances, imports of subject goods may also be classified under the following tariff classification numbers: 7215.90.00.90 and 7227.90.00.90.

[35] 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.

Period of investigation

[36] The complainants submit that an appropriate period of investigation (POI) for the CBSA to investigate the alleged dumping of subject goods is from June 1, 2019 to June 30, 2020.^{Footnote 14} It is during this POI that the complainants allege they have been materially injured by the presence of dumped goods in the Canadian market.

[37] The CBSA typically selects a POI that covers a twelve-month period that ends within three months of the date of initiation of an investigation. However, the 13-month period coincides with the alleged injurious surge in imports of subject goods into Canada following the lifting of provisional safeguard measures by the CITT. This 13-month period also ends within three months of the date of initiation of an investigation. As such, the CBSA is satisfied that this is an appropriate POI for the dumping investigation.

Like goods and single class of goods

[38] Subsection 2(1) of SIMA defines “like goods” in relation to any other goods as “... (a) goods that are identical in all respects to the other goods, or (b) in the absence of any [such] goods..., goods the uses and other characteristics of which closely resemble those of the other goods”. In considering the issue of like goods, the CITT typically looks at a number of factors, including the physical characteristics of the goods, their market characteristics and whether the domestic goods fulfill the same customer needs as the subject goods.

[39] In its past inquiries involving rebar, the CITT determined that domestically produced rebar constituted like goods to the goods at issue. In making both the Rebar 1 and Rebar 2 findings, the CITT determined that domestically produced rebar were like goods to the goods at issue in those inquires.^{Footnote 15} The complainants maintain that there has been no change of circumstances with respect to the criteria identified by the CITT in the previous proceedings.

[40] The CBSA is satisfied that the like goods and subject goods are commodity products that compete with one another in the Canadian market place, and are fully interchangeable. After considering questions of use, physical characteristics and all other relevant factors, the CBSA is of the opinion that domestically produced rebar are like goods to the subject goods and constitute only one class of goods.

The Canadian market

[44] The complainants estimated the domestic market by supplementing their own internal sales information with the information provided by the other two producers, MANA and IRM and from publicly available import data obtained from the CBSA for the period of 2016 to March 2020. The import data for April 2020 to May 2020 was from Statistics Canada and for June 2020, from Global Affairs Canada (GAC) import permit data.^{Footnote 18}

[45] The CBSA conducted its own independent review of imports of rebar from the CBSA’s (Facility Information Retrieval Management (FIRM)) database as per the tariff classification numbers under which the subject goods are imported from the named countries. In addition, B3 customs entry supporting documentation was requested from the Trade Compliance Division of the CBSA. The review of customs entry documentation resulted in substantial changes to the import statistics.

[46] The CBSA’s import data support the complainants’ claims that imports of subject goods into Canada from the named countries have been increasing and are not negligible.

[47] Detailed information regarding the sales from domestic production by each producer and the volume of imports of subject goods cannot be divulged for confidentiality reasons. The CBSA, however, has prepared the following tables to show the estimated import share of subject goods in Canada as well as the Canadian market as a whole.

[48] The CBSA will continue to gather and analyze information on the volume of imports during the POI of June 1, 2019 to June 30, 2020 as part of the preliminary phase of the dumping investigation and will refine these estimates.

Normal value

Complainants’ estimates of normal value

[53] For purposes of estimating a margin of dumping, the complainants had limited information on the actual selling prices of the like goods to unrelated purchasers in each of the named countries. The complainants were only able to provide some steel industry publications’ reported domestic selling prices for rebar in Egypt. The complainants were unable to obtain published domestic selling prices of rebar in any of the other named countries. The complainants therefore estimated normal values and dumping margins in accordance with section 15 of SIMA for Egypt only. The complainants also estimated normal values in accordance with section 19 of SIMA for all of the named countries.

Section 15 methodology

[54] The complainants provided home market rebar pricing for Egypt from Fastmarkets MB (Metal Bulletin).^{Footnote 19} The complainants estimated section 15 normal values for Egypt by using Metal Bulletin monthly pricing. Monthly Metal Bulletin pricing was averaged across quarters and converted to Canadian dollars using Bank of Canada exchange rates. The dumping calculations, pursuant to section 15, compared the offer/selling price in Canada from Statistics Canada import data to the home market price estimated from Metal Bulletin. The complainants assumed that the export price would have been agreed to approximately two months prior to the arrival in Canada. Accordingly, they compared the home market price from one quarter before the export price.

Section 19 methodology

[55] The complainants estimated normal values based on section 19 of SIMA for all of the named countries. Egypt was included in the section 19 normal value estimates to provide a more comprehensive estimate of the margin of dumping for this country. The complainants based these estimates on the aggregate of their own costs of production, general, selling and administrative expenses (“GS&A”), financial expenses, and an amount for profits.

[56] Section 19 normal values were determined for all named countries on the basis of the complainants’ own costs of production, adjusted to reflect differences in the labour and profit components with respect to each subject country. The complainants used quarterly cost data from the period January 2019 to March 2020, lagged one quarter from the arrival of the imports.^{Footnote 20} The complainants note that imported rebar is typically produced to order and then shipped to Canada, and as a result, there is a lag of three months between when a purchase is made and when it arrives in Canada.^{Footnote 21} It is important to match the appropriate cost to the export sale because of the variations in the price of scrap metal, the main input in the production of rebar, over the POI.

[57] For raw materials, the complainants used scrap and billet pricing published by Metal Bulletin.^{Footnote 22} Since Metal Bulletin does not track both scrap and billet pricing for every market, the complainants used the type of pricing (scrap or billet) that was available.

[58] For the cost of labour, the complainants used their own labour costs of the four main Canadian rebar producers (AMLPC, AltaSteel, Gerdau and MANA)^{Footnote 23}, adjusted based on the subject country government labour data reported by TradingEconomics.com or by the International Labour Organization (ILO) where no data was available from TradingEconomics.com.

[59] Overhead costs were based on the complainants’ factory overhead costs, with an adjustment applied to the portion of overhead relating to indirect labour. The adjustment was made by applying the subject country labour adjustment to the Canadian producers’ indirect labour costs that are attributable to the cost of overhead for the production of like goods.

[60] The complainants’ estimated section 19 normal values included adding GS&A expenses, financial expenses, and an amount for profit. These amounts were determined based on publicly available financial information for a representative producer from each subject country, where available. If no rebar producer’s public financial statements were available for the subject country, then either the financial statements of another steel producer in the subject country or a third-country rebar producer’s financial statements were used. The information and amounts by country are explained below.

[61] For Algeria, the complainants were unable to find publically available information for a producer in Algeria. Instead, the complainants estimated the GS&A, financial expenses, and an amount for profit for Algeria based upon publicly reported profitability and cost information for the Italian steel producer Danieli & C Officine Meccaniche S.p.A. (Danieli).^{Footnote 24} Danieli is an Italian rebar producer making its finances a reasonable proxy to calculate expense and profit for the Algerian rebar industry due to its geographic proximity.

[62] For Egypt, the GS&A and financial expenses were estimated based on the publicly reported profitability and cost information for the Egyptian rebar producer Ezz Steel Company for January to September 2019.^{Footnote 25} However, Ezz Steel Company reported a negative net income for this period. As such, the complainants used the reported net income for the Italian steel producer Danieli to estimate an amount for profit for Egypt.

[63] For Indonesia, the GS&A and financial expenses were estimated based on the publicly reported profitability and cost information for the Indonesian rebar producer PT Gunung Raja Paksi Tbk for 2019.^{Footnote 26} However, PT Gunung Raja Paksi Tbk reported a negative net income for this period. As such, the complainants used the reported 2019 net income before tax for an Indonesian pipe producer Steel Pipe Industry of Indonesia Tbk PT to estimate an amount for profit for Indonesia.

[64] For Italy, the GS&A, financial expenses, and an amount for profit were estimated based on the publicly reported profitability and cost information for the Italian rebar producer Danieli.

[65] For Malaysia, the GS&A and financial expenses were estimated based on the publicly reported profitability and cost information for the Malaysian rebar producer Malaysia Steel Works (KL) BHD for 2019.^{Footnote 27} However, Malaysia Steel Works (KL) BHD reported a negative net income for this period. As such, the complainants used the reported 2019 net income before tax for an Indonesian pipe producer Steel Pipe Industry of Indonesia Tbk PT to estimate an amount for profit for Malaysia.

[66] For Singapore, the complainants were unable to find publically available financial information for a rebar producer in Singapore. Instead, the complainants estimated the GS&A and financial expenses based on the publicly reported profitability and cost information for the Indonesian rebar producer PT Gunung Raja Paksi Tbk for 2019.^{Footnote 28} The complainants also used the reported 2019 net income before tax for an Indonesian pipe producer Steel Pipe Industry of Indonesia Tbk PT to estimate an amount for profit for Singapore.

[67] For Vietnam, the GS&A, financial expenses, and an amount for profit were estimated based on the publicly reported profitability and cost information for the Vietnamese rebar producer Hoa Phat for the January 2019 to March 2020 period.^{Footnote 29}

Section 20 allegations

[68] Section 20 is a provision of SIMA that may be applied to determine the normal value of goods in a dumping investigation where certain conditions prevail in the domestic market of the exporting country. In the case of a prescribed country under paragraph 20(1)(a) of SIMA, it is applied where, in the opinion of the CBSA, the government of that country substantially determines domestic prices and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market.

[69] The provisions of section 20 are applied on a sector basis rather than on the country as a whole. The sector reviewed will normally only include the industry producing and exporting the goods under investigation.

[70] A section 20 inquiry refers to the process whereby the CBSA collects information from various sources in order to form an opinion as to whether the conditions described under subsection 20(1) of SIMA exist with respect to the sector under investigation. Before initiating an inquiry under section 20, the CBSA must first analyze the information submitted in the complaint and the evidence it has gathered independently to determine if it is sufficient to warrant the initiation of an inquiry.

[71] The complainants alleged that the conditions described in section 20 of SIMA prevail in regards to the rebar sector in Vietnam. That is, the complainants alleged that this industry sector in Vietnam does not operate under competitive market conditions and consequently, prices of rebar established in the Vietnamese domestic market are not reliable for determining normal values.^{Footnote 30}

[72] The CBSA reviewed the information submitted in the complaint and conducted research regarding the Government of Vietnam’s macroeconomic policies and measures in relation to the rebar sector in Vietnam. Based on its own analysis of the information included with the complaint to support these allegations, the CBSA does not believe that there is sufficient evidence to support a Section 20 inquiry into the allegations that the measures taken by the Government of Vietnam substantially determine prices in the rebar sector and that the prices are substantially different than they would be in a competitive market.^{Footnote 31}

CBSA’s estimate of normal value

[73] The CBSA estimated section 19 methodology normal values for all of the named countries. Based on the information available to the complainants, the CBSA found the section 19 normal value estimates to be reasonable and representative.

[74] The CBSA notes that the specificity of the complainant’s estimated normal values is limited. The complainants provided one single normal value for rebar for each quarter during the POI. This normal value does not account for other characteristics, such as rebar tensile/yield strength, or product dimensions. However, this normal value was calculated based on the costs associated with the complainants’ production of all rebar during the POI. As such, this single normal value reflects a mix of various rebar products. Based on the CBSA experience in conducting the Rebar 1 and Rebar 2 investigations, there may be some differences in the cost and/or price of the various models of subject rebar. However, for purposes of initiation, the CBSA finds that it is reasonable to assume that the subject goods shipped to Canada during POI would reflect a product mix similar to the complainants’ production for that period. As such, the CBSA finds that the normal value calculated for each quarter may reasonably represent the subject goods shipped to Canada during that period, with some adjustments explained below.

[75] The CBSA found the raw material input information was also reasonable for purposes of initiation. The CBSA also accepted the adjustments for labour rates made by the complainants for the named countries to be reasonable for purposes of initiation and consistent with approaches used by the CBSA in recent investigations. The CBSA therefore used the same raw material input amounts and labour adjustment rates as the complainants when estimating section 19 normal values.

[76] Regarding the GS&A expense amount that was estimated by the complainants, the CBSA found the amount estimated for Algeria to be higher than would be reasonably expected to be incurred by rebar producers in that country. The CBSA notes that the complaint used a GS&A amount of 4.4% for Egypt based on information from an Egyptian rebar producer. The CBSA does not find it reasonable to apply significantly higher GS&A amounts to rebar producers operating in comparative markets (39.3% for Algeria versus 4.4% for Egypt). The CBSA therefore used 4.4% for GS&A and the financial expenses amount of 9.6% that the complainants provided for Egypt when estimating section 19 normal values for the purposes of this analysis. The CBSA accepted all other GS&A and financial expenses estimated as reasonable for the purposes of estimating normal values for initiation.

[77] For the amounts for profit, the complainants’ selection of producers used as the source for the amounts for profit for Indonesia, Italy, and Vietnam fall within the scope of the hierarchy of profits found in paragraph 11(1)(b) of the Special Import Measures Regulations. The amount of profit for Algeria, Egypt, Malaysia and Singapore, was based on the overall profit information from the closest geographic subject country for which information was available. Based on a lack of any other information in the complaint or publically available, the CBSA finds these estimates to be reasonable for the purposes of estimating normal values for initiation.

Export price

[78] 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.

[79] The complainants’ estimated export prices were taken from Statistics Canada import data for the tariff classification numbers 7213.10.00.00 and 7214.20.00.00 for the period of June 1, 2019 to May 31, 2020 and from GAC permit data for June 1 to 30, 2020 for all named countries except Algeria and Vietnam. The complainants estimated an average export price for each subject country based on the weighted average declared value for duty per metric tonne (MT) for each quarter of the POI.

[80] The CBSA estimated export prices for each named country based on the value for duty as declared on the customs entry documentation and reported in FIRM for each individual shipment imported into Canada during the POI.

[81] The CBSA reviewed customs entry documentation for the subject goods imported into Canada for individual transactions. These accounted for 52% of all imports from the named countries during the POI, based on volume. The CBSA adjusted the FIRM data to correct any errors respecting quantity, value and origin based on the documents submitted by importers and customs brokers.

Estimated margins of dumping

[82] The CBSA estimated the margin of dumping for the named countries by comparing the total estimated normal values with the total weighted average estimated export prices. Based on this analysis, it is estimated that the subject goods imported into Canada from each of the named countries were dumped. The estimated margin of dumping for each country is listed in the table below.

Lost sales and price depression

[88] The complaint alleges that imports of subject goods from the named countries have caused price depression in the Canadian market and gained market share by leveraging low prices in order to gain market acceptance, which has forced the complainants to lower their prices, resulting in lost revenue and reduced profitability.^{Footnote 35}

[89] The complainants provided evidence of instances where they lost sales or were forced to discount their pricing in order to compete with imports of subject goods.^{Footnote 36}

[90] Based on the information provided in the complaint, the CBSA agrees with the complainants and finds that the allegation of price depression and lost sales with respect to the named countries is supported and sufficiently linked to the allegedly dumped imports of the subject goods.

Price undercutting^{Footnote 37}

[91] The complainants state that the allegedly dumped goods have captured market share at the expense of the domestic industry by undercutting the prices of the domestic producers. Even with the expense of shipping rebar long distances, rebar from the named countries is still priced below the prices offered by the Canadian producers.

[92] To support this allegation, the complainants provided account specific examples of price undercutting by subject goods well below that of the complainants. Additionally, based on the import data estimates provided by the complainants, it is evident that the prices for rebar from the named countries (with the exception of Algeria and Vietnam), have been significantly lower than Canadian domestic pricing since 2018. However, the complaint stated that based on their commercial intelligence and Statistics Canada data by province of clearance, the price for Algeria and Vietnam are also well-below that of the domestic industry.^{Footnote 38}

[93] Based on the above, and the CBSA’s analysis of the information contained in the complaint, the CBSA finds the claim of price undercutting to be supported and sufficiently linked to the allegedly dumped goods.

Price suppression and erosion

[94] The complainants submitted that they have suffered price suppression and price erosion in 2019 and 2020 as the volume of subject imports increased.^{Footnote 39} The complainants submitted that their average unit value of rebar has decreased from Q2 2019 to Q2 2020. These depressive effects on domestic prices have resulted in a lower gross margin.^{Footnote 40}

[95] The average selling price of subject goods in Canada from Q2 2019 to Q2 2020 remains well below that of the domestic industry. As shown in the complaint, the net sales value per MT of the domestic industry has decreased quarter after quarter, as imports from named countries have increased substantially from Q2 2019.^{Footnote 41}

[96] Overall, the complainants’ financial performance is in decline and their gross margin has decreased significantly from Q2 2019. The CBSA therefore concludes that the complainants’ financial losses can be reasonably attributed to the price suppression and price erosion resulting from allegedly dumped goods from the named countries.

Lost market share

[97] The complainants state that named countries have increased their market share since 2017 by offering rebar at low prices that are injurious to the domestic industry.^{Footnote 42}

[98] The complainants’ estimates of the Canadian market for 2017 to H1 2020 demonstrate that the subject goods market share increased from 9% in 2017 to 21% in 2019. It increased further in H1 2020 to 31%. The complainants also noted that the subject goods took market share away from other imports, mostly Tukey, as importers source switched. Additionally, the United States has lost some market share which is attributed to their traditionally higher-priced exports.^{Footnote 43}

[99] The complaint states that the quarterly trend shows the direct impact of the allegedly dumped goods from the named countries. The quarterly trend demonstrates that sales by the domestic industry in the domestic market have decreased since Q2 2019 to Q2 2020 whereas the sales from subject goods imports in the domestic market have increased or remained high since Q1 2019 to Q2 2020.^{Footnote 44}

[100] The CBSA’s analysis of the Canadian market demonstrates a decrease in the market share of the domestic industry from 2019 to H1 2020. In contrast, the named countries collectively increased their share from 2017 to 2019 and further gained market share during H1 2020.

[101] Based on the CBSA’s analysis of information contained in the complaint, as well as the CBSA’s estimates and analysis of imports, the CBSA finds the complainants’ claims of loss of market share to be reasonable and well supported. As such, the CBSA is of the opinion that this injury factor is sufficiently supported and linked to the volume of imports of allegedly dumped goods.

Impacted financial results

[102] The complainants allege that the injurious impact of the dumped goods is demonstrated by the financial results of the complainants. To support this allegation, the complainants have provided financial results for 2017 through to H1 2020.

[103] The CBSA has reviewed this information and found that there is an upward trend on an annual basis from 2017 to 2019 with respect to the net income of the domestic industry. However, it is important to note that when the information is reviewed on a quarterly basis there is a downward trend from Q1 2019 through Q2 2020.^{Footnote 45}

[104] Although the net income of the domestic industry increased from 2017 to 2019, the CBSA notes that the trend of decreasing revenue and profitability during the POI appears to support the allegation of financial injury. The CBSA finds that the information in the complaint has sufficiently linked the allegedly dumped goods to the complainants’ impacted financial results.

Reduced production and capacity utilization

[105] The complainants argue that the alleged dumping of rebar from the named countries has led to an underutilization of production capacity. Data was provided by the complainants, consolidating the production and capacity information.

[106] The CBSA has analyzed the information provided and notes that the production decreased from 2018 to H1 2020. Additionally, the complainants’ utilization rate decreased from 2018 to 2019 and again in H1 2020.^{Footnote 46}

[107] Based on the information provided in the complaint, the CBSA finds that there is a reasonable link between the allegedly dumped goods from the named countries and the complainants’ underutilization of production capacity.

Investments

[108] AMLPC submits that the continued imports from the named countries would at a minimum delay AMLPC’s ability to pursue capital investment and have a severe impact on their competitiveness.^{Footnote 47}

[109] 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 complainants have suffered injury in this regard. As such, the CBSA instead reviewed this information as a factor of a threat of injury posed by subject goods from the named countries and finds that there is a reasonable link.

CBSA's conclusion - injury

[110] Overall, based on the evidence provided in the complaint, and supplementary data available to the CBSA through its own research and customs documentation, the CBSA finds that the evidence discloses a reasonable indication that the dumping of the subject goods from the named countries has caused injury to the domestic rebar industry in Canada. The nature of the injury is well documented with respect to lost sales and price depression, price undercutting, price suppression and erosion, lost market share, reduced profits, reduced production and capacity utilization.

International market conditions

[112] The complaint notes that the COVID-19 pandemic will affect the international and domestic markets for Canada and the named countries. The International Monetary Fund (IMF) reported that the pandemic has pushed the world into a recession, stating that the pandemic has had a greater negative impact on H1 2020 than anticipated and a more gradual recovery is now projected.^{Footnote 48}

[113] The complainants state that there are three other major global developments currently affecting the market for rebar, each of which increases the threat of injury posed by the subject goods to the domestic industry. First, the global steel and rebar demand outlook is weak. Second, the global rebar prices are in a decline, and third, there is overcapacity in the market for steel, which includes rebar.

[114] The complainants provided supporting information which includes market assessments by MetalBulletin’s Fastmarkets,^{Footnote 49} WorldSteel Association,^{Footnote 50} CRU International Ltd,^{Footnote 51} G20 Global Forum,^{Footnote 52} OECD Steel Committee,^{Footnote 53} and South East Asia Iron and Steel Institute.^{Footnote 54}

[115] The CBSA agrees that the evidence shows that the international economic outlook is generally weak and the market and demand for rebar is weak and pressured by massive global overcapacity in the steel industry combined with global rebar prices in decline.

Weakening steel market and economy in Europe

[116] The complainants also submit that the weakening steel market in Europe, resembles the state of Europe’s economy as a whole. Due to this, they’ve submitted that European countries and countries that traditionally export to Europe will seek other markets which directly impacts Italian rebar producers.^{Footnote 55}

[117] The European Commission’s forecast is that the EU GDP and Eurozone GDP are expected to contract by over 8% in 2020.^{Footnote 56} Additionally, due to the containment measures in response to the pandemic, the EU’s economy has entered into a recession,^{Footnote 57} and new orders for EU steelmakers contracted by approximately 75%.^{Footnote 58}

[118] The complaint also states that the EU’s steel market is struggling amidst increased imports.^{Footnote 59} With imports of long steel products as a percentage of market share rising to a 5-year high of 14% in Q3 2019.^{Footnote 60} As per CRU, Europe’s steel industry has reduced or idled its capacity to bring it in line with demand and the pandemic constraints. The complaint states that this will put increased pressure on rebar prices and when business operations are restored, after the pandemic, imports and increased capacity will continue to pose a risk for the EU steel producers.^{Footnote 61}

[119] CRU reports that rebar demand in the EU grew in 2017 before contracting in 2018 and 2019. Demand is expected to recover slightly in 2020 with further growth projected in 2021. However, consumption levels will not return to at or above 2017 levels until 2022.^{Footnote 62}

[120] The complainants submit that Italian rebar producers will need to rely on other export markets, such as Canada, to mitigate the decline in demand and increase in imports in Europe.^{Footnote 63} The CBSA’s analysis of the information in the complaint revealed market conditions in Europe which the CBSA recognizes may encourage rebar producers to target certain export markets, including Canada.

Weak steel market and economy in South East Asia

[121] The complainants submit that steel production in the ASEAN-6 countries (Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam) increased 15.1% from 2017 to 2018, however long product capacity utilization was only 49.8% in 2018. Additionally, the South East Asia Iron and Steel Institute (SEAISI) reports that consumption remains flat while production increases, and there is overcapacity in the industry. In comparison from H1 2018, in H1 2019 long steel production was up by 9.3% and exports increased by 26.2%.^{Footnote 64} The complainants submit that due to this over-production and China’s dominance in their market, exportation is likely to continue.^{Footnote 65}

[122] CRU forecasts that the demand for rebar in Asia is set to decline in 2020 before increasing in 2021 and 2022. Excess production will also grow in 2021 and 2022 to 1 million MT and 1.3 million MT respectively from 0.2 million MT in 2020.^{Footnote 66}

[123] The IMF has estimated that due to COVID-19, Indonesia, Malaysia, the Philippines, Thailand and Vietnam’s economic growth will contract by 2.0% in 2020 before seeing a growth of 6.2% in 2021. They have also reported that in the broader Asia region, growth will stall at 0% in 2020, which is the worst growth performance in 60 years.^{Footnote 67}

[124] The complainants submit that this over production of steel will be exported from the named countries in South East Asia and that this steel will continue to be exported to countries such as Canada.^{Footnote 68} The CBSA’s analysis of the information in the complaint revealed market conditions in South East Asia which the CBSA recognizes may encourage rebar producers to target certain export markets, including Canada.

Weak steel market and economy in Africa

[125] The complaint stated that even prior to the pandemic, Africa’s growth was constrained due to fiscal consolidation.^{Footnote 69} According to the IMF, Northern African economies including Algeria and Egypt, will contract 3.3% in 2020 before growing 4.2% in 2021.^{Footnote 70}

[126] CRU projects that the excess capacity for rebar production will decrease from 2020 to 2022. However, it will still remain above 5.8 million MT, with utilization rates remaining below 71%.^{Footnote 71}

[127] The complainants submit that industrial production will be most affected this year from the pandemic, as Africa presents low idled steel capacity and low levels of capacity lost by reduced operations compared to other regions.^{Footnote 72}

[128] The CBSA agrees that the evidence shows that current market conditions in Africa are likely to lead rebar producers to turn to export markets, thereby threatening injury to the Canadian domestic industry.

Subject country market conditions

[129] The complainants state that rebar producers in each of the named countries have either increased or possess significant excess capacity. Named countries continue to demonstrate overproduction and the propensity to export, combined with bleak economic outlooks due to the COVID-19 pandemic. In linking the capacity of the producers of subject goods to their likeliness to export to Canada, the complaint discusses domestic demand in the named sources, imports from other countries, as well as steel exports to other markets, including Canada, and the economic outlook for the named countries.^{Footnote 73}

[130] The CBSA agrees that the evidence shows that current market conditions in the named countries are likely to lead rebar producers to turn to export markets, thereby threatening injury to the Canadian domestic industry.

Anti-dumping measures by Canada and other countries in respect of goods of the same description or in respect of similar goods

[131] The complainants provided a list of findings by Canada against Indonesia, Italy and Vietnam as well as an anti-dumping investigation against Malaysia as evidence that certain producers have a propensity to dump to Canada.^{Footnote 74}

[132] In respect of trade remedies by other countries, Australia, Malaysia, Morocco, the United States and Vietnam have trade remedies or decisions pending on various steel products, including rebar, against the named countries; Indonesia, Italy and Singapore. The complainants maintain that the presence of these trade remedies further increases the likelihood that these producers would export significant volumes of dumped rebar into Canada in the absence of a finding.^{Footnote 75}

[133] The CBSA agrees that the named countries above appear to have a propensity to dump steel exports, including rebar.

Domestic market conditions

[134] Referencing RBC Economics and TD Bank, the complainants state that due to the pandemic, a recession is now forecasted for Canada’s economy, and that dramatically lower oil prices had already softened the outlook even before the pandemic. Output in the oil and gas sector is forecasted to be 20% below pre-crisis levels at the end of 2021. However, they have also noted that there are also positive indicators the economy is set to rebound in 2021.^{Footnote 76}

[135] CRU forecasts that rebar demand in Canada is set to decline in 2020 as well as in 2021 and then plateau in 2022. Due to slowing demand, the complainants submit that there will be additional downward pressure on prices at the expense of domestic producers. Additionally, since Canada’s rebar prices are usually higher relative to other regions, the complaint states that this would attract exporters to the Canadian market.^{Footnote 77} Given this combination of factors, the CBSA believes that pricing pressures on the Canadian domestic industry will continue in the near future.

Product shifting

[136] The complainants state that the potential for product shifting also exists as rebar in lengths can be produced on the same equipment as MBQ and SBQ. Likewise, rebar in coils can be produced on the same equipment as wire rod. The complainants further argue that this potential for product shifting was noted by the CITT in Rebar 2. Additionally, they’ve stated that given the numerous findings in place on other steel products, the potential for product shifting exists from the named countries if a finding is not imposed.^{Footnote 78}

[137] The CBSA notes that the product shifting noted above could significantly increase the production capacity of the named countries with respect to rebar. The CBSA further recognizes that this, in turn, could lead to increased volumes of subject goods being offered in the Canadian market.

Commodity nature of rebar

[138] The complainants also submit that price is a primary factor in the purchase decision since rebar is a commodity product. Combined with the capital intensity of the rebar producers, they have the incentive to maintain production volumes to protect their capital investment. The complaint states that as demand globally is weak, production is imperative in the near to medium term as producers will compete for low volumes in the Canadian market.^{Footnote 79} Based on the evidence provided, the CBSA concurs with this assessment.

Increase in volume

[139] The complainants state that the volume of rebar imports from the named countries increased from 4,306 MT in 2016, to 99,125 MT in 2017, 143,183 MT in 2018 and then 282,123 MT in 2019. In H1 2020, imports from the named countries totalled 185,417 MT, which is more than three times the amount in H1 2019.^{Footnote 80} The complainants submit that the significant rate of increase of dumped subject goods indicates a likelihood of substantially increased imports if a finding is not put in place.^{Footnote 81}

[140] Given the evidence provided by the complainants and the evidence available to the CBSA, the CBSA agrees that the volumes of subject goods will likely continue to increase.

Prices that are likely to have a significant depressing or suppressing effect

[141] The complaint alleges that the ongoing aggressive low pricing of the subject goods from the named countries will result in the domestic industry continuing to face severe price depression and suppression, lost revenue, market share and investments and will need to make employment cuts.^{Footnote 82}

[142] Based on an analysis of the information provided in the complaint, the CBSA recognizes that the high volume of imports from the named countries at allegedly dumped prices may have a further depressive effect on the price of like goods causing further injury to the complainants.

CBSA's conclusion - threat of injury

[143] The complaint contains reasonable evidence regarding the threat of injury to the rebar industry in Canada. The information in the complaint indicates that weak rebar demand, global excess capacity, economic conditions in Europe, Asia and Africa, named countries market conditions, ongoing trade measures, the Canadian industry, product shifting, the commodity nature of the subject goods, as well as the increase in volume and decrease in prices, as described above, are collectively posing a threat to the Canadian industry.