Statement of reasons—Preliminary determination: Wire Rod (WR 2024 IN)

Complainant

[11] The name and address of the complainant is as follows:

Ivaco Rolling Mills 2004 LP
P.O. Box 322,
L'Orignal, Ontario  K0B 1K0

[12] Ivaco is the largest Canadian producer of wire rod, with operations located in L’Orignal, Ontario. Ivaco was established in 1971, and in 2004 was acquired by Heico Holdings Inc. Ivaco operates an electric arc furnace to melt scrap metal and to produce steel billets, which Ivaco then uses in the production of wire rod.^{Footnote 1}

Other producers

[13] The complainant identified one additional producer of wire rod in Canada.^{Footnote 2}

ArcelorMittal Long Products Canada G.P. (ArcelorMittal)
4000, Routes des Aciéries
Contrecoeur, Quebec  J0L 1C0

[14] The complaint identified Ivaco and ArcelorMittal as the only two producers of wire rod in Canada. The CBSA did its own supplementary research, but could not identify any other producers in Canada.

Trade union

[15] The complainant identified the United Steelworkers Locals 7940, 8794, and 9740 as the union of which Ivaco employees are members. The complainant identified Unifor as the trade union for members employed at Sivaco. Sivaco is not a producer of wire rod but is related to Ivaco. The complainant identified Syndicat Des Metallos Local 6586 as the trade union with members employed at ArcelorMittal.^{Footnote 3}

Exporters

[16] The CBSA identified 135 potential exporters and/or producers of the subject goods from CBSA import documentation and from information submitted in the complaint. All of the potential exporters were asked to respond to the CBSA’s Dumping Request for Information (RFI). Exporters and producers of subject goods in China were asked to respond to the CBSA’s section 20 RFI. One group of companies from China, one group of companies from Vietnam, and one company from Egypt provided responses to the CBSA’s Dumping RFI that were found to be substantially complete for purposes of the preliminary determination. The group of companies from China also responded to the section 20 RFI.^{Footnote 4} One additional company in Vietnam provided a response to the Dumping RFI, however this response was found to be deficient for purposes of the preliminary determination.

Importers

[17] The CBSA identified 27 potential importers of the subject goods from CBSA import documentation and from information submitted in the complaint. All of the potential importers were asked to respond to the CBSA’s Importer RFI. Three importers provided a response to the importer RFI.^{Footnote 5}

Government

[18] Upon initiation of the investigation, the GOC was sent the CBSA’s Government section 20 RFI. The GOC did not provide a response to the RFI.

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

[20] On April 11, 2024, the Government of Egypt provided representations with respect to the evidence considered for the purposes of the initiation of the investigation.^{Footnote 6}

Definition

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

Additional product information^{Footnote 7}

[22] Wire rod is a semi-finished hot-rolled steel product of approximately circular^{Footnote 8} cross section (i.e., not exactly round) that typically is produced in nominal fractional diameters of up to 1 inch (25.5 mm), with an out of roundness (OOR) tolerance of ±0.025 inches (0.60 mm), and a standard size tolerance of ± 1/64 (±0.016) inches (±0.40 mm). Wire rod is sold in nominal diameters because it may not be (nor is it expected to be, under ASTM specifications) exactly round. Nominal diameters are typically incremented by 1/64 (0.016) inches (0.40 mm).

[23] Wire rod is used as an input product for further manufacturing. Specifically, wire rod is commonly drawn through a hole in a die through cold-forming, which results in a virtually round product, namely, wire. Unlike wire rod (which is approximately circular), wire can also be drawn into several different cross-sectional shapes including square, rectangle, and hexagon among others.

[24] Wire rod is sold in wound coils for ease of use as an input in downstream production. One of the key features of wire rod is its continuous form such that, if one end is fed into a machine, the balance of the material will feed continuously – a feature common to all long products.

[25] The North American market for wire rod is governed by applicable ASTM wire rod specifications including ASTM A-510 and ASTM A-1040 for end use suitability. ASTM A-510 is the standard specification for general requirements for wire rods and coarse round wire made of carbon and alloy, whereas ASTM A-1040 sets out standard grades for carbon, low-alloy, and alloy steels. Together, these ASTM specifications provide clarity on physical characteristics (i.e., surface quality, coating, dimensions) and chemical characteristics (i.e., grade, residual content etc.). Ivaco manufactures or is capable of manufacturing wire rod to all ASTM A-510 and ASTM A-1040 specifications and grades.

[26] There are five notable product characteristics that distinguish various types of wire rod: (1) surface quality; (2) steel grade; (3) residual chemical composition; (4) diameter, and (5) whether the rod is “green” (i.e., not further processed after coming off the hot-rolling line) or “processed” (i.e., further processed after hot-rolling, e.g., by acid-washing/pickling the rod to remove impurities such as rust or scale, and by coating the rod with suitable lubrication for ready-use in wire drawing).

[27] First, with respect to surface quality, this differs based on detectable defects on the surface of the rod, which are called surface defect depths or seam depths. Whereas ASTM A-510 requires only that wire rod is to be free of “detrimental surface imperfections, tangles, and sharp kinks,” customers accept surface defect depths only up to a given maximums, based on the ultimate end use of wire rod. Ivaco therefore provides product warranties for maximum acceptable surface defect depths according to rod quality designations.

[28] The Ivaco warranty for Cold Heading Quality, High Carbon Quality, Welding Quality, Industrial Quality and Mesh Quality is measured as a percent of surface defect depth. Ivaco does not sell wire rod that has a surface defect depth exceeding a certain percent of the diameter. As the acceptable depth of defects decreases, cost of production increases given more stringent requirements for the input raw material (i.e., higher quality scrap must be used), additional testing and quality control work required, and reduced prime yields.

[29] Second, steel grade is controlled as early as in the production process of raw materials (i.e., billets). Billets produced to customer specifications often conform to certain chemical characteristics that meet ASTM specifications. Table 2 of ASTM A-1040 outlines standardized chemical compositions that different grades of wire rod must conform to, which in turn require input billets to conform to the same chemical compositions. It is common, however, for customers to specify their own steel chemical composition in their own specifications for their own end use. Ivaco produces wire rod to meet customer grade and chemistry specifications.

[30] Third, customers may also ask wire rod producers to confirm the residual chemical components of the steel. Although wire rod may be produced to an ASTM grade, steel with given target levels of residual chemical components not otherwise specified by an ASTM grade will ordinarily attract higher pricing in the market. The minimum and maximum residual components defined by the customer may include copper, nickel, chromium, molybdenum, tin, vanadium, and nitrogen, depending on the customer. The degree of inclusion of each element varies among different types/grades of wire rod. The cost of production of wire rod increases, all other things being equal, the higher the level of control over residual chemical components is.

[31] Fourth, wire rod size/diameter will be specified by the customer based on end use. Ivaco can produce wire rod in diameters up to 1 inch (25.5 mm), with an OOR tolerance of ±0.025 inch (0.60 mm) and a size tolerance of ±1/64 inches (i.e., ±0.016 inches or ±0.40 mm). Wire rod is normally sold in size increments of 1/64 inches (i.e., 0.016 inches or 0.40 mm). Typically, at the outer ranges of diameters (i.e., the smallest and largest diameters), costs of production increases.

[32] Finally, wire rod is produced and sold as either green rod or processed rod. Green rod is the default end product in wire rod production after it passes through its final hot-rolling process. Green rod normally is covered with an oxide iron scale that results from the hot-rolling process. The scale must be removed through further processing before the rod is put to its intended end use. Most wire rod is processed (i.e., the oxide iron layer is removed through acid-pickling or mechanical descaling, and, if applicable, an annealing cycle, and a lubricant or polymer added) before it is put to its intended end use in the manufacture of wire or other products. When processed, the oxide layer is removed, then the rod may go into an annealing cycle to modify its mechanical properties, and then rod may be coated with zinc, phosphate, lime, borax, lube, or polymer. Some customers have their own processing equipment and thus purchase green rod. Others do not have some equipment, and thus purchase rod that has already been processed. Given that these processing steps are additional and subsequent to the hot-rolling of the wire rod, the cost of production of processed rod by definition is higher than the cost of production of green rod.

[33] Wire rod sold in North America is generally marketed by quality according to the ultimate end use. There are five main quality designations for wire rod based on suitability for intended end use: (1) industrial quality (low carbon); (2) mesh quality (low carbon); (3) welding quality; (4) high carbon quality; and (5) cold heading quality. The first two quality designations for wire rod typically have a carbon content less than 0.25 percent. Wire rod of higher quality (e.g., cold heading quality) is typically downward substitutable for wire rod of lower quality (e.g., industrial quality). Multiple factors contribute to the substitutability of one type of wire rod for another including the overall chemistry, size variation, OOR, allowable surface discontinuities, and steel cleanliness. However, in many cases, higher quality low- and medium- carbon wire rod can be downward substitutable for lower quality wire rod. Indeed, for example, it is possible to produce cold heading quality wire rod with a carbon content of below 0.25 percent, which would make it suitable for use in an industrial quality application requiring a similar carbon content.

[34] In terms of the quality designations, industrial quality (IQ) rod connotes suitability for end use in the production of cold drawn products with non-critical applications, e.g.: spring wire, shaped wire, general purpose springs, nails and other simple fasteners, chains, bailing wire, display racks, warehouse shelving, animal cages, fencing products, and concrete snap ties (used to form concrete walls).

[35] Mesh quality LC rod connotes suitability for end use in the production of products primarily used in the construction industry, e.g.: concrete wire mesh, as well as deformed wire (i.e., wire products that have deformations similar to rebar). Both IQ and mesh quality LC may also be grouped together as IQ in industry or sales discussions.

[36] Welding quality rod connotes more carefully controlled steel chemistry and steel mechanical properties targeting end use in the production of welding wire. Specifically, welding quality rod is produced to be drawn into wire to form stick electrodes or to be drawn into wire to form spools (for continuous feed applications) of either solid welding wire or flux-cored welding wire such as that used in, e.g., automated/robotic automotive assembly lines or the production of submerged arc welded steel pipe products (e.g., large diameter line pipe, etc.). The chemistry of welding quality rod is important to ensure that the weld material fuses with the surrounding parent metal being joined, and that it has post-solidification mechanical properties that are compatible with the parent metal.

[37] High carbon (HC) quality rod connotes carbon content exceeding 0.45 percent up to and including 1.03 percent (i.e., ASTM grade 1095). Further, HC quality rod also connotes suitability for drawing into wire but, at the same time, connotes rod that has sufficient strength to serve in more demanding end products such as springs, music wire, and stranded cables. More demanding billet casting and tighter-controlled cooling parameters impart a more consistent microstructure throughout the drawn wire.

[38] Finally, cold heading quality (CHQ) rod connotes suitability for end use in production processes involving the cold heading (forming) of products, including fasteners, spark plugs, and other engineered products with tight dimensional tolerances such as in the automotive, shipbuilding, and aerospace sectors. All other things being equal, the superior quality demanded for CHQ wire rod makes it downward substitutable for use in applications requiring IQ wire rod.

Production process^{Footnote 9}

[39] Notwithstanding the wide variety of end uses of wire rod, all wire rod products share a basic manufacturing process that consists of steelmaking, casting, hot-rolling, coiling, and cooling.

[40] The first step in wire rod production process is steelmaking or production of raw materials (i.e., blooms or billets by melting steel scrap). In North America and other parts of the world, raw steel is produced by one of two processes: the integrated steelmaking process, which employs blast furnaces and basic oxygen furnaces, or the non-integrated steelmaking process, which utilizes electric arc furnaces (EAF). For its part, Ivaco uses an EAF to make steel billets from multiple metal scrap types. To create specific chemical properties, items may be added to the EAF, which reaches temperatures as high as 3,050 degrees Celsius. Once the expected chemical composition is met, the molten steel is poured from the EAF into a ladle and is then moved to the ladle metallurgy furnace. At the ladle metallurgy furnace stage of the process, the steel chemistry is further refined, as needed, with the addition of other elements such as alloys.

[41] When the precise chemistry and temperature are obtained, the ladle is transferred by crane to the continuous casting operation (i.e., caster). At Ivaco, the steel is poured from the ladle into the tundish, which is a distributor used to deliver molten metal. There are various methods of casting steel; with the production process being chosen based on the required quality and the grade sensitivity to oxygen contact. Each strand of molten steel is slowly drawn downward through a curved arrangement of support rolls as a water-cooling spray system helps solidify the steel, forming the shape of the billets. After emerging horizontally from the discharge end of the caster, the billets are straightened through a set of rolls and cut to length using oxygen torches. At this point, each billet is already assigned to a specific customer and is awaiting conversion into wire rod. Once made, billets are transferred for cooling and storage in the indoor billet yard. When needed for production, billets are picked up by overhead crane and delivered to a charging table where a final check is done to ensure full order traceability.

[42] Upon final check, billets are transferred to Ivaco’s hot-rolling process. This production method is called “hot-rolling” because the steel billet is first reheated in a reheat furnace before it passes through a number of rolling stands, generally referred to as “roughing,” “intermediate,” and “finishing” passes. The rolling stands form and compress the hot billet in a vertical and horizontal manner, thus turning a relatively shorter billet with a roughly square or rectangular cross-section with a larger width, into a relatively longer rod product with a roughly circular cross-section, with a smaller diameter.

[43] After the hot-rolling stage of production, the resulting wire rod must be cooled. This is generally accomplished by air cooling. After cooling, the coils are inspected. By the time a given coil reaches the end of the production line, it has been trimmed, shaped, tested, compacted, weighed, and tagged in accordance with the industry standards (i.e., applicable ASTM specifications).

[44] Chemical composition, scrap steel mix, and alloying elements, along with rolling passes on specific rolling stands and cooling speeds, all determine the specific quality of wire rod produced. That being said, the manufacturing equipment, handling equipment, direct labour, and production facilities remain the same for all wire rod products.

Classification of imports

[45] The allegedly dumped goods are normally imported under the following tariff classification numbers:

1. 7213.91.00.42
2. 7213.91.00.43
3. 7213.91.00.49
4. 7213.91.00.50
5. 7213.91.00.60
6. 7213.91.00.70
7. 7213.99.00.11
8. 7213.99.00.12
9. 7213.99.00.31
10. 7213.99.00.32
11. 7213.99.00.51
12. 7213.99.00.52
13. 7227.20.00.20
14. 7227.20.00.90
15. 7227.90.00.60
16. 7227.90.00.70
17. 7227.90.00.81
18. 7227.90.00.82
19. 7227.90.00.83

[46] 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

[68] 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.

[69] In the case of a prescribed country such as China, if, 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, the normal values are generally estimated on the basis of section 20 of SIMA using either the selling prices or costs of like goods in a “surrogate” country.

Export price

[70] 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.

[71] 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

[72] 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.

Background of the section 20 inquiry

[73] 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.^{Footnote 15}

[74] 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.

[75] The CBSA initiates dumping investigations on the presumption that section 20 is not applicable to the sector under investigation unless there is information that suggests otherwise.

[76] 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.

[77] The complaint alleged that the conditions described in section 20 of SIMA prevail in the wire rod industry sectors in China and Vietnam. That is, the complainant alleges that these industry sectors in China and Vietnam do not operate under competitive market conditions and consequently, prices of wire rod established in the domestic markets in China and Vietnam, would not be reliable for determining normal values.^{Footnote 16}

[78] The complainant provided a variety of evidence in Annex A of the complaint to support the claim that the GOC and GOV substantially determine domestic prices of wire rod in their respective countries and that the prices are substantially different than they would be in a competitive market. Specifically, the complainant cited specific policies implemented by the GOC and GOV and provided evidence of state ownership and subsidization in the steel industry and wire rod sector.

[79] For the purposes of this section 20 inquiry, the sector under review is the long products steel sector, which includes wire rod and other similar long steel products.

[80] At the initiation of the investigation, the CBSA had reviewed the information provided in the complaint and conducted its own research. Based on this information, the CBSA found that there was insufficient evidence to support an inquiry into the allegations that the measures taken by the GOV substantially influenced prices in the wire rod sector in Vietnam. As such, the CBSA did not initiate a section 20 inquiry as part of the initiation of the investigation.

[81] At the same time, with respect to the section 20 allegations concerning the wire rod sector in China, the CBSA found that there was reasonable evidence to support an inquiry into the allegations that the measures taken by the GOC substantially influence prices of wire rod in China, and that the prices are substantially different than they would be in a competitive market.

[82] Consequently, on March 8, 2024, the CBSA included in its investigation, a section 20 inquiry in order to determine whether the conditions set forth in paragraph 20(1)(a) of SIMA prevail in the wire rod sector in China.

[83] As part of this section 20 inquiry, the CBSA sent section 20 RFIs to all potential producers and exporters of wire rod in China, as well as to the GOC, requesting detailed information related to the wire rod sector in China.

[84] In cases where conditions of section 20 exist, pursuant to paragraph 20(1)(c), the normal value can be determined based on profitable selling prices or full costs of production and an amount for profit on goods sold domestically in a surrogate country, to which the conditions described in section 20 of SIMA are not applicable.

[85] Given that the complaint contains allegations of dumping concerning countries for which the CBSA has not initiated a section 20 inquiry (Egypt and Vietnam), and given the difficulties in collecting sufficient information from surrogate countries not included in the complaint, the CBSA finds it reasonable to select Egypt and Vietnam as appropriate surrogate countries at this stage.

[86] In the event that the CBSA does not receive sufficient information from producers and exporters of subject goods in Egypt or Vietnam for the purposes of determining normal values pursuant to section 20, the CBSA may identify other surrogate countries at a later date.

[87] Importers will be requested to provide information on sales of like goods produced in the surrogate countries, in the event that normal values must be determined under paragraph 20(1)(d) of SIMA.

[88] In the event that the CBSA forms an opinion that domestic prices of wire rod in China are substantially determined by the government, and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be if they were determined in a competitive market, the normal values of the goods under investigation will be determined, pursuant to paragraph 20(1)(c) of SIMA, where such information is available, on the basis of the domestic selling prices or the aggregate of the cost of production, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits of like goods sold by producers in any country designated by the CBSA and adjusted for price comparability; or, pursuant to paragraph 20(1)(d) of SIMA, where such information is available, on the basis of the selling price in Canada of like goods produced and imported from any country designated by the CBSA and adjusted for price comparability.

Summary of Chinese exporter responses

[89] The CBSA received a group response to the Dumping RFI from the Shagang group. This group includes two producers, Zhangjiagang Rongsheng Special Steel Co., Ltd. and Jiangsu Shagang Steel Co., Ltd, one party deemed to be the exporter for the purposes of the preliminary determination, Jiangsu Shagang International Trade Co., Ltd., and three companies determined to be related vendors of the subject goods, Jiangsu Shagang Group Co., Ltd, Shagang International (Singapore) Pte. Ltd., and Shagang South-Asia (Hong Kong) Trading Co., Limited, (collectively, “Shagang Group”). These companies also provided responses to the CBSA’s section 20 RFI.

Government of China response

[90] An RFI was sent to the GOC requesting information for the purposes of the section 20 inquiry. No response was received from the GOC as of the date of the preliminary determination of dumping.

Surrogate country responses

[91] The CBSA determined that based on information on the record and publicly available data, Egypt and Vietnam are appropriate surrogate countries due to them having large producers that compete globally and are competing under fair market conditions in their domestic market. As such, the CBSA did not send surrogate country RFI’s to producers and exporters located in any other countries.

Responses from importers with sales in Canada of wire rod from other countries

[92] As part of the section 20 inquiry, RFIs sent to importers requested information on resales in Canada of wire rod imported from countries other than China. The CBSA received responses to the importer RFI from three importers.^{Footnote 17} None of the importers provided information on re-sales in Canada of like goods from non-subject countries.

Analysis of section 20 conditions

Government control analysis

[93] This section will present the CBSA analysis of how the GOC exerts control over the long products steel sector, including wire rod, by examining:

• Steel industry sectors in China
• 14th Five-Year National Plan on National Economic and Social Development
• 13th Five-Year National Plan on National Economic and Social Development
• Made In China 2025
• The GOC maintains a significant degree of ownership and control over the domestic steel industry
• The GOC provides direct subsidies to the domestic wire rod industry and
• The GOC influence on inputs

Steel industry sectors in China

[94] The CBSA has issued recent opinions, in respect of the following steel industry sectors, that domestic prices are substantially influenced by the GOC and that they are not substantially the same as they would be if they were determined in a competitive market. Recent and relevant sectors that are discussed in this sectors are as follows:

• flat-rolled steel sector [cold-rolled steel (2018)^{Footnote 18}]
• long products steel sector [certain concrete reinforcing bar (2014)^{Footnote 19} and certain galvanized steel wire (2013)^{Footnote 20}]

[95] The domestic selling prices of the above cited steel product industry sectors have been found by the CBSA to not be the same as they would be if they were determined under competitive market conditions. Billet is the main input in wire rod, in the long products steel sector. Also, the key input material for cold-rolled steel sheet is usually hot-rolled steel sheet, which uses semi-finished casting products, such as a billet^{Footnote 21} or slab^{Footnote 22}.

[96] The CBSA has previously determined that government control of inputs, including billet was one of the main reasons that section 20 conditions existed in the long products steel sector. In 2013 and 2014, the CBSA determined that the GOC substantially determined prices in the domestic long product steel sector and that these were not substantially the same as they would be in a competitive market.

[97] The substantial amount of information on the record from previous investigations in similar steel sectors supported the initiation of a section 20 inquiry into the long product steel sector in China in the wire rod investigation.

[98] On the level of overall administrative control, the direction of the Chinese economy is governed by a complex system of industrial planning which affects all economic activities within the country. The totality of these plans cover a comprehensive and complex matrix of sectors and crosscutting policies and is present in all levels of government. The policies and plans discussed below exemplify how individual sectors such as the long product steel sector and its related projects are being singled out as priorities in line with the government priorities and specific development goals are attributed to industrial progress and growth of export markets.

14th Five-Year Plan for National Economic and Social Development

[99] In 2021, the GOC adopted its 14th Five-Year Plan for National Economic and Social Development and Long Range Objectives for 2035 (14th Five-Year Plan) for the period of 2021-2025, which covers the period of investigation, and includes long-range objectives up to the year 2035. The objectives outlined in the 14th Five-Year Plan continue some of the themes expressed in the 13th Five-Year Plan and 12th Five-Year Plan, including the strengthening of state-owned enterprises (SOE) control and optimizing of steel production.

[100] The 14th Five-Year Plan calls for greater involvement of SOEs in the development of the Chinese economy, stating:

[101] The 14th Five-Year Plan discusses how the GOC plans on controlling how capital is allocated in a range of industries, stating:

[102] The GOC is heavily invested in all sectors of its economy and influences these markets in order to “effectively prevent the loss of state-owned assets”. In order to do this, the GOC intervenes in a variety of ways across each sector of the domestic economy.

[103] The 14th Five-Year Plan explains the GOC’s plan to develop private enterprises. The GOC hopes to improve the rights and interests of private companies in China that often compete with SOEs in their domestic industry. Of significance, the GOC “will further relax market restrictions for private enterprises and break down various barriers in areas such as soliciting bids and tendering” and “will provide equal treatment to the credit rating and bond issuance of private enterprises, and reduce overall financing costs”.^{Footnote 26} The goals listed in this section of the plan emphasize that the private companies in China struggle to compete against massive state-owned enterprises without the support and influence of the GOC. The presence of state owned enterprises affects private companies who then rely on support from the GOC in order to compete in their domestic industry.

[104] Overall, the 14th Five-Year Plan shows that the GOC has specific goals for steel producers and that the GOC is heavily involved in the long products steel sector. This plan discusses the abundance of SOEs present in these industries. The necessary propping up of private enterprises is an example of how government plans influence sectors where state owned enterprises are present, like the long product steel sector. The oversight provided in this report suggest that domestic prices are likely to be substantially influenced based on GOC policies, rather than market forces, and ultimately support the preliminary determination of section 20 conditions existing in the Chinese long product steel sector.

13th Five-Year Plan on National Economic and Social Development

[105] The GOC adopted its 13th Five-Year Plan on National Economic and Social Development (13th Five-Year Plan)^{Footnote 27} on March 15, 2016. The 13th Five-Year Plan outlines China’s goals, principles and targets for its development for the period of 2016-2020. The objectives outlined in the 13th Five-Year Plan continue the theme expressed in the 12th Five-Year Plan, which has many of the same themes as 13th and 14th versions. This includes the strengthening of SOEs and control over the economy within the steel industry.

[106] The 13th Five-Year Plan, which recognizes the staggering impact of over-capacity on the industrial system, calls for reduction in supply in saturated sectors by merging, upgrading, and restructuring underperforming companies; reworking government subsidies that promote unprofitable manufacturing; and, ultimately, bankruptcy and liquidation of unprofitable companies.^{Footnote 28}

[107] The Five-Year Plan also urges steel companies and others with declining domestic demand to find international markets. However, sending capacity to foreign markets will offer temporary relief for the struggling domestic industries, but will reduce the urgency to lower production capacity or reform company operations.^{Footnote 29}

[108] The 13th Five-Year Plan calls for greater involvement of SOEs in the development of the Chinese economy. Specifically, Chapter 11 of the plan states:

[109] In 2016, China’s two largest steelmakers, Baosteel Group and Wuhan Iron and Steel Group, merged into the world's second-largest steelmaker. Baowu Steel Group is now the largest steelmaker in the world.

[110] The GOC also expressly reiterated its intention to proactively interfere with market dynamics, in an effort to quickly resolve various inefficiencies:

[111] Given the overcapacity in the Chinese steel industry causing excess supply, the above statement supports GOC intentions to further consolidate the steel industry through mergers and restructuring and that the GOC views SOEs as having an important role to play in the economy. The oversight provided in this plan suggest that domestic prices are likely to be substantially influenced based on GOC policies, rather than market forces, and ultimately support the preliminary determination of section 20 conditions existing in the Chinese long product steel sector.

Made in China 2025

[112] In 2015, the GOC initiated Made in China 2025 (MIC 2025), a strategic plan to reduce China’s dependence on foreign technology and promote Chinese technological manufacturers in the global marketplace through setting explicit targets, government subsidies, and the mobilization of SOEs.

[113] Although the MIC 2025 does call for reform to SOEs, curbing overcapacity, and encouraging market forces to be the main driver of the economy, the overall plan signals an increase in the current state-led approach where it influences the market in so many ways. MIC 2025 constitutes a broader strategy to use state resources to alter and create comparative advantages in the ten targeted sectors on a global scale.^{Footnote 32}

[114] MIC 2025 appears to reaffirm the government’s central role in economic planning. It also establishes an inter-ministerial leading small group, headed by Vice Premier Ma Kai, to ensure coordination and implementation.^{Footnote 33}

[115] MIC 2025 illustrates the state’s intent to leverage China’s legal and regulatory systems to favor domestic Chinese companies over foreign ones in targeted sectors. It also indicates that MIC 2025 targeted industries will likely receive hundreds of billions of RMB in government support over the coming years that could substantially distort domestic and global markets.^{Footnote 34}

[116] The United States Chamber of Commerce report on the MIC 2025 policy states that “MIC 2025 raises significant concerns not only for China’s domestic economy but its economic partners. MIC 2025 aims to leverage the power of the state to alter competitive dynamics in global markets in industries core to economic competitiveness. By targeting and channeling capital to specific technologies and industries, MIC 2025 risks precipitating market inefficiencies and sparking overcapacity globally.”^{Footnote 35}

[117] Given the summary of this report, MIC 2025 suggests that GOC policies substantially influence the prices of steel in the domestic industry in question in China and support the preliminary determination of section 20 conditions existing in the Chinese long product steel sector.

The GOC maintains a significant degree of ownership and control over the domestic steel industry

[118] According to the most recent trade policy review report of China by the World Trade Organization, in China’s economy, state ownership of companies is important and coexists with diverse forms of private ownership. State participation varies from wholly owned SOEs and majority state ownership to the State acting as another shareholder. The state encourages the development of a mixed-ownership economy, which involves cross-ownership holdings and an integration between state-owned, private and other types of capital. Authorities indicated that the number of state-owned industrial enterprises increased slightly in years leading up to the most recent policy review report.^{Footnote 36} The trade policy review report suggests that “SOEs in China often benefit from credits extended by state banks or other forms of financing, capital injections, and are given preferential access to inputs”.^{Footnote 37}

[119] The CBSA has noted in prior dumping cases that the presence and size of SOEs contribute a significant amount of price distortion to the domestic long product steel sector in China. In the 2014 concrete reinforcing bar investigation, the CBSA found evidence supporting the claim that the GOC substantially determines domestic prices of rebar through SOEs. Information on the record for that proceeding indicated that in 2010, eight of the top ten steel companies in China were state-owned and that they accounted for 45% of the total Chinese steel production. The CBSA concluded that the GOC exerts control over the Chinese steel industry through these SOEs at the conclusion of the investigation.^{Footnote 38}

[120] The complaint provided statistics of the total production of the global top steel producers in 2021. The CBSA found updated information from 2022 by the World Steel Association (WSA). The information shown in the table below shows that the significant role SOEs play in the steel industry in China is still present to this day. In particular, China Baowu Steel Group, Ansteel Group, HBIS Group, and Shougang Group are four of the nine largest steel producers in the world and are all SOEs.^{Footnote 39}

[121] The CBSA acknowledges that the extent of state-ownership and control in the long products steel sector is not publically available. Notwithstanding this information, the presence of state-owned and state-controlled enterprises that produce wire rod in the long products steel sector would necessitate that private companies supplying wire rod would have to compete with these state-owned and stated-controlled enterprises operating under non-market conditions. As a result, the domestic selling prices of wire rod in China may not be substantially the same as they would be if they were determined in a competitive market. Ultimately, the significant presence of SOEs in the steel industry support the preliminary determination of section 20 conditions existing in the long product steel sector in China.

The GOC provides direct subsidies to the domestic wire rod industry

[122] The complainant argues that the GOC provides direct financial support to the domestic wire rod industry. The complainant cites public reporting requirements accumulated in an article from Global Trade Alert showing that 383 million USD worth of direct subsidies from the GOC were provided to steel producers between 2021 and 2022.^{Footnote 41}

[123] The CBSA has found that in the past the GOC heavily subsidizes the steel industry in China and that these subsidies distort the domestic selling price of steel in China, which contribute to the preliminary determination of section 20 conditions existing in the long product steel sector in China.

Government influence over inputs

[124] The complaint submits that the Chinese domestic price of wire rod is influenced by the GOC because the GOC influences the prices of inputs in a number of ways to keep costs low and provide a competitive advantage for Chinese wire rod producers.

[125] The GOC maintains export controls on raw materials for long products (i.e., steel scrap, steel billets, iron ore, etc.). These GOC measures limit or prevent the export of the raw materials resulting in an increasing supply in the Chinese domestic market causing downward pressure on domestic prices.

[126] In 2021, amid concerns over tax evasion, the GOC eliminated the VAT rebate for export that was available to exporters of certain steel goods including wire rod. At the same time, in May of 2021, the GOC eliminated import duties on scrap and billet, allowing for an even greater supply of cheaper billet in China.^{Footnote 42}

[127] Furthermore, the GOC actively pursues strategies to lower the price of iron ore, a key input in the manufacture of steel, to assist the Chinese steel industry and by extension, to indirectly determine the price of domestically produced wire rod. It has demonstrated that it will not hesitate to take measures to control prices, as is evident from the National Development and Reform Commission’s (NDRC) March 2023 warning that it would again look at measures to curb unreasonable iron ore prices and its call to trading firms to avoid hoarding and inflating prices.^{Footnote 43}

Summary of government control analysis

[128] The CBSA has previously ruled that the GOC’s measures, policies and vested interest in the long product industry substantially determine the prices of long steel products in the domestic industry and that these prices are substantially different than if they were determined in a competitive market. In its early analysis the CBSA considered this as supporting evidence that section 20 conditions exist in the long products sector in China.

[129] The 14th Five-Year plan, the 13th Five-Year plan, and the Made-in-China 2025 policy support the position that section 20 conditions exist in the long products steel sector in China. These plans shows that the GOC has specific goals for steel producers which are heavily involved in the long products steel sector and with the abundance of SOEs present in these industries, decisions are likely to be made based on GOC policies, rather than market forces. Based on the information on the record to date, the scope of the GOC’s macro-economic policies and measures provide a compelling factual basis that the GOC is influencing the Chinese steel industry, which encompasses the long products steel sector which includes wire rod. The use of such policies, combined with the GOC’s ownership in the steel industry can dramatically change the demand and supply balance in the domestic market and could materially alter the domestic prices of steel products such as wire rod.

[130] In addition to the industrial policies and plans, the GOC has significant ownership in the long products steel sector in China. The complainant and CBSA research list many of the largest steel producers in the world being SOEs and producing wire rod. In summary, the presence of state-owned and state-controlled enterprises that produce wire rod in the long products steel sector would necessitate that private companies supplying wire rod would have to compete with these state-owned and stated-controlled enterprises operating under non-market conditions. As a result, the domestic selling prices of wire rod in China may not be substantially the same as they would be if they were determined in a competitive market.

[131] The CBSA has found that in the past the GOC heavily subsidizes the steel industry in China and that these subsidies distort the domestic selling price of steel in China, which contribute to the section 20 conditions.

[132] Finally, the complainant and CBSA research showing that GOC intervention in providing low priced inputs for the production of wire rod support the argument that section 20 conditions exist in the long products steel sector in China.

[133] In conclusion, the cumulative impact of these GOC actions, measures and control clearly indicate that prices of wire rod in China are being indirectly determined by the GOC such that they may not be substantially the same as they would be if they were determined in a competitive market.

Chinese domestic price analysis

[134] The complainant provides a comparison of wire rod prices in China to prices in markets that are determined by market conditions. It demonstrates that prices of wire rod in China are significantly lower than in other countries suggesting the GOC’s involvement in the long products sector is affecting prices of wire rod. Wire rod prices in China were lower than domestic pricing in other markets by 11-31% in various periods.

[135] The CBSA was able to obtain 2023 information from Fastmarkets which collects and analyzes ex-mills prices of long steel products in China, USA and other regions.^{Footnote 44} Based on this information, the CBSA concluded that FOB mill prices of wire rod in China were generally lower than those in Europe, Turkey and Latin America, which is consistent with the analysis provided in the complaint.^{Footnote 45}

[136] Price information contained in the domestic sales database of Chinese exporters were compared with similar products sold by producers in Egypt and Vietnam. The comparison showed that wire rod prices are noticeably lower than prices in the above mentioned countries.

[137] The information found by the CBSA supports the conclusion that the domestic prices of wire rod in China are not substantially the same as they would be if they were determined in a competitive market. For the purposes of a preliminary determination, the price analysis of Chinese wire rod supports the determination that section 20 conditions exist in the long product steel sector of China.

Preliminary results of the section 20 inquiry

[138] Based on the analysis as presented above, the scope of the GOC’s macro-economic policies and initiatives provide a compelling factual basis that the GOC is likely influencing the Chinese long product steel sector. The CBSA believes that there is sufficient evidence to support section 20 conditions existing in the long product steel sector and that measures taken by the GOC substantially influence prices in the long products steel sector and that prices of wire rod in China are substantially different than they would be in a competitive market.

[139] For the purposes of the preliminary determination of dumping, the CBSA is of the opinion that domestic prices in the long product steel sector in China are substantially determined by the GOC and that domestic prices are not substantially the same as they would be in a competitive market.

[140] During the final phase of the dumping investigation, the CBSA will continue the section 20 inquiry and further verify and analyze relevant information. The CBSA may reaffirm its opinion that the conditions of section 20 of SIMA exist in the long product steel sector including wire rod , or conclude that the determination of normal values may be made using domestic selling prices and costs in China.

China

Normal values

[141] Normal values pursuant to paragraph 20(1)(c) or 20(1)(d) of SIMA are normally based on the domestic selling price or cost of production of the goods plus a reasonable amount for administrative, selling and all other costs, plus a reasonable amount for profits of the like goods sold by producers in any country designated by the CBSA and adjusted for price comparability; or on the basis of the selling price in Canada of like goods imported from any country designated by the CBSA and adjusted for price comparability. However, at this time no such information is available to the CBSA.

[142] Accordingly, the CBSA has used an alternate method to estimate normal values for purposes of the preliminary determination on the basis of the best information available. This alternate method is considered to be a representative and a reasonable approach and is based on the information provided by exporters/producers in countries subject to this investigation for which the conditions of section 20 have not been found to exist.

[143] The CBSA used information contained in the RFI responses provided by Hoa Phat Dung Quat Steel Joint Stock Company, Hoa Phat Hai Duong Steel Joint Stock Company and Suez Steel as surrogate information for the purposes of estimating normal values, where information was available to do so. The CBSA finds Egypt and Vietnam to be appropriate surrogate countries as they have significant domestic production of wire rod and similar levels of development as China. The information on the record suggests that prices and costs of wire rod in Egypt and Vietnam are determined in competitive markets, allowing them to be considered as a reliable and fair source for purposes of the preliminary determination. Further, as a limited number of exporters/producers in each surrogate country provided sufficient information in response to the CBSA’s Dumping RFI, the use of two surrogate countries reduces concerns with respect to confidentiality.

[144] The CBSA estimated normal values for wire rod based on the information available on the record. Specifically, the CBSA estimated a per/metric tonne (MT) normal value for each 60-day period during the POI for exporters from China, calculated as the weighted average per/MT value of all normal values estimated for producers/exporters from Egypt and Vietnam for each respective 60-day period of the POI.

[145] As described above, for the purposes of the preliminary determination, the normal values were estimated using a constructed normal value based on the combined information of the exporters/producers in Egypt and Vietnam. The CBSA will endeavor to collect additional information during the final phase of the dumping investigation in order to permit the calculation of normal values based on the surrogate country methodologies described in section 20 of SIMA.

Jiangsu Shagang Group Co., Ltd.

[146] Jiangsu Shagang Group Co., Ltd. is the parent company of three vendors, Jiangsu Shagang International Trade Co., Shagang South-Asia (Hong Kong) Trading Co. and Shagang International (Singapore) Pte. Ltd.; in addition to two manufacturers, Jiangsu Shagang Steel Co. and Zhangjiagang Rongsheng Special Steel Co.

[147] The subject goods are produced by the two manufacturers and exported by Jiangsu Shagang International (Shagang International). For purposes of the preliminary determination, the CBSA considers Shagang International to be the exporter of the subject goods.

[148] All of the subject goods shipped to Canada by Shagang International were produced at the two manufacturers’ facilities located in Jinfeng Town, Zhangjiagang City, Jiangsu province, China. Shagang International represents 75.1% of the volume of subject goods exported to Canada from China during the POI. Shagang International, as well as the other related traders and producers, provided complete responses to the Dumping RFI. In addition, the group provided responses to the CBSA’s section 20 RFI on behalf of the two manufacturers.

[149] For the purposes of obtaining information necessary to estimate normal values following the methodology of subparagraph 20(1)(c) of SIMA, the CBSA relied on information from producers/exporters located in Vietnam and Egypt, that participated in the current investigation.

[150] During the POI, all of the subject goods exported to Canada by Shagang International were sold to unrelated importers. 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.

[151] The total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 50.9% for Shagang International, expressed as a percentage of the export price.

All other exporters: China

[152] In establishing the methodology for estimating the normal values and export prices for all other exporters from China, the CBSA considered all of the information on the administrative record, including the complaint filed by the domestic industry, the CBSA’s estimates at the initiation of the investigation, information submitted by parties who responded to the Dumping RFI, and CBSA customs entry documentation.

[153] The CBSA decided that the normal values and export prices estimated for the exporter from China whose submission was complete for purposes of the preliminary determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for estimating normal values for all other exporters of subject goods from China since it is more relevant and reflects the trading practices of a Chinese exporter of subject goods during the POI.

[154] The CBSA examined the difference between the estimated normal value and the estimated export price for each individual transaction, and considered that the highest amount for the exporter (expressed as a percentage of the export price), was an appropriate basis for estimating normal values. This methodology relies on information related to goods that originated in China and in general, provides an incentive for exporters to participate by ensuring that exporters who have provided the necessary information requested in a dumping investigation will always have a more favourable outcome than those who have not participated.

[155] As a result, based on the facts available, for all other exporters that did not provide a response to the Dumping RFI, normal values of subject goods originating in or exported from China were estimated based on the highest amount by which an estimated normal value exceeded the estimated export price, on an individual transaction for the cooperative exporter 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. No such anomalies were identified.

[156] The CBSA considered that the information submitted on the CBSA customs entry documentation was the best information on which to estimate the export price of the goods as it reflects actual import data.

[157] Using the above methodologies, for the preliminary determination, the estimated margin of dumping for all other exporters in China is 71.1%, expressed as a percentage of the export price.

Egypt

Suez Steel Co., Ltd.

[158] Suez Steel Co., Ltd. (Suez Steel) is an Egyptian producer and exporter of the subject goods. Suez Steel has one production facility in Suez, Egypt. All of the subject goods shipped to Canada by Suez Steel were produced at its production facility in Suez.

[159] Suez Steel represents 91.2% of the volume of subject goods exported to Canada from Egypt during the POI. Suez Steel provided a complete response to the Dumping RFI.

[160] Suez Steel’s response to the Dumping RFI included a database of domestic sales of wire rod during the PAP. However, Suez Steel’s domestic sales of wire rod did not meet the conditions of section 15 of SIMA and, as such, these sales could not be used for the purposes of estimating normal values. The CBSA estimated normal values using the methodology of paragraph 19(b) of SIMA, based on the aggregate of cost of production, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits. The cost of production was estimated pursuant to paragraph 11(1)(a) of SIMR, based on the costs associated with the production of the subject goods. The amount for administrative, selling, and all other costs, was estimated based on subparagraph 11(1)(c)(ii), based on those costs incurred that were reasonably attributable to the production and sale of the goods. The amount for profit was estimated in accordance with subparagraph 11(1)(b)(ii) of the SIMR, based on Suez Steel’s sales of wire rod in their domestic market, during the POI, of the same general category as the subject goods sold to Canada.

[161] During the POI, all of the subject goods exported to Canada by Suez Steel were sold to unrelated importers. 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.

[162] The total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 49.7% for Suez Steel, expressed as a percentage of the export price.

All other exporters: Egypt

[163] In establishing the methodology for estimating the normal values and export prices for all other exporters from Egypt, the CBSA considered all of the information on the administrative record, including the complaint filed by the domestic industry, the CBSA’s estimates at the initiation of the investigation, information submitted by parties who responded to the Dumping RFI, and CBSA customs entry documentation.

[164] The CBSA decided that the normal values and export prices estimated for the exporter from Egypt whose submission was complete for purposes of the preliminary determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for estimating normal values for all other exporters of subject goods from Egypt since it is more relevant and reflects the trading practices of an Egyptian exporter of subject goods during the POI.

[165] The CBSA examined the difference between the estimated normal value and the estimated export price for each individual transaction, and considered that the highest amount for the exporter (expressed as a percentage of the export price), was an appropriate basis for estimating normal values. This methodology relies on information related to goods that originated in Egypt and in general, provides an incentive for exporters to participate by ensuring that exporters who have provided the necessary information requested in a dumping investigation will always have a more favourable outcome than those who have not participated.

[166] As a result, based on the facts available, for all other exporters that did not provide a response to the Dumping RFI, normal values of subject goods originating in or exported from Egypt were estimated based on the highest amount by which an estimated normal value exceeded the estimated export price, on an individual transaction for the cooperative exporter 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. No such anomalies were identified.

[167] The CBSA considered that the information submitted on the CBSA customs entry documentation was the best information on which to estimate the export price of the goods as it reflects actual import data.

[168] Using the above methodologies, for the preliminary determination, the estimated margin of dumping for all other exporters in Egypt is 99.8%, expressed as a percentage of the export price.

Vietnam

Formosa Ha Tinh Steel Corporation (Formosa)

[169] Formosa is a producer of wire rod and was established in 2008. Formosa has one production facility that produces wire rod, located in Ha Tinh province, Vietnam. Formosa did not export subject goods to Canada during the POI, however, is requesting that the CBSA issue normal values for future shipments, in the event of an injury finding by the CITT.

[170] The Dumping RFI response submitted by Formosa was determined to be incomplete. The CBSA sent a Deficiency letter to Formosa, summarizing the deficiencies in the response, and asking supplemental questions to gather additional information.

[171] In the event that Formosa provides a substantially complete response to the RFI, the CBSA will endeavor to consider the company’s information to issue normal values for future use, in the event of a CITT finding, provided there is sufficient time to examine and verify the information. Additionally, should complete information be provided, the response may also be considered for purposes of Section 20 surrogate country normal value calculations.

Hoa Phat Dung Quat Steel Joint Stock Company (Hoa Phat Dung Quat)

[172] Hoa Phat Dung Quat is a producer and exporter of the subject goods. Hoa Phat Dung Quat has one production facility in Vietnam. All of the subject goods shipped to Canada by Hoa Phat Dung Quat were produced at this production facility.

[173] Hoa Phat Dung Quat represents 98.4% of the volume of subject goods exported to Canada from Vietnam during the POI. Hoa Phat Dung Quat provided a complete response to the Dumping RFI.

[174] Hoa Phat Dung Quat purchased significant factor inputs from a number of related input suppliers. These related suppliers provided responses to the relevant sections of the Dumping RFI.

[175] Hoa Phat Dung Quat’s response to the Dumping RFI included a database of domestic sales of wire rod during the PAP. However, Hoa Phat Dung Quat’s domestic sales of wire rod did not meet the conditions of section 15 of SIMA and, as such, these sales could not be used for the purposes of estimating normal values.

[176] The CBSA estimated normal values using the methodology of paragraph 19(b) of SIMA, based on the aggregate of cost of production, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits. The cost of production was estimated pursuant to paragraph 11(1)(a) of SIMR, based on the costs incurred by Hoa Phat Dung Quat associated with the production of the subject goods. The amount for administrative, selling, and all other costs, was estimated based on subparagraph 11(1)(c)(ii), based on those costs incurred by Hoa Phat Dung Quat that are reasonably attributable to the production and sale of the goods. The amount for profit was estimated in accordance with subparagraph 11(1)(b)(iv) of the SIMR, based on sales of wire rod in the domestic market by producers, other than the exporter, during the PAP, of the same general category as the subject goods sold to Canada.

[177] During the POI, all of the subject goods exported to Canada by Hoa Phat Dung Quat were sold to unrelated importers. 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.

[178] The total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 18.3% for Hoa Phat Dung Quat, expressed as a percentage of the export price.

Hoa Phat Hai Duong Steel Joint Stock Company (Hoa Phat Hai Duong)

[179] Hoa Phat Hai Duong is a producer and exporter of the subject goods. Hoa Phat Hai Duong has one production facility in Vietnam. All of the subject goods shipped to Canada by Hoa Phat Hai Duong were produced at this production facility.

[180] Hoa Phat Hai Duong represents 1.6% of the volume of subject goods exported to Canada from Vietnam during the POI. Hoa Phat Hai Duong provided a complete response to the Dumping RFI.

[181] Hoa Phat Hai Duong purchased significant factor inputs from a number of related input suppliers. These related suppliers provided responses to the relevant sections of the Dumping RFI.

[182] Hoa Phat Hai Duong’s response to the Dumping RFI included a database of domestic sales of wire rod during the PAP. However, Hoa Phat Hai Duong’s domestic sales of wire rod did not meet the conditions of section 15 of SIMA and, as such, these sales could not be used for the purposes of estimating normal values.

[183] The CBSA estimated normal values using the methodology of paragraph 19(b) of SIMA, based on the aggregate of cost of production, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits. The cost of production was estimated pursuant to paragraph 11(1)(a) of SIMR, based on the costs incurred by Hoa Phat Hai Duong associated with the production of the subject goods. The amount for administrative, selling, and all other costs, was estimated based on subparagraph 11(1)(c)(ii), based on those costs incurred by Hoa Phat Hai Duong that are reasonably attributable to the production and sale of the goods. The amount for profit was estimated in accordance with subparagraph 11(1)(b)(iv) of the SIMR, based on sales of wire rod in the domestic market by producers, other than the exporter, during the PAP, of the same general category as the subject goods sold to Canada.

[184] During the POI, all of the subject goods exported to Canada by Hoa Phat Hai Duong were sold to unrelated importers. 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.

[185] The total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 6.1% for Hoa Phat Hai Duong, expressed as a percentage of the export price.

All other exporters: Vietnam

[186] In establishing the methodology for estimating the normal values and export prices for all other exporters from Vietnam, the CBSA considered all of the information on the administrative record, including the complaint filed by the domestic industry, the CBSA’s estimates at the initiation of the investigation, information submitted by parties who responded to the Dumping RFI, and CBSA customs entry documentation.

[187] The CBSA decided that the normal values and export prices estimated for the exporters from Vietnam whose submission was complete for purposes of the preliminary determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for estimating normal values for all other exporters of subject goods from Vietnam since it is more relevant and reflects the trading practices of a Vietnamese exporter of subject goods during the POI.

[188] The CBSA examined the difference between the estimated normal value and the estimated export price for each individual transaction, and considered that the highest amount for the exporter (expressed as a percentage of the export price), was an appropriate basis for estimating normal values. This methodology relies on information related to goods that originated in Vietnam and in general, provides an incentive for exporters to participate by ensuring that exporters who have provided the necessary information requested in a dumping investigation will always have a more favourable outcome than those who have not participated.

[189] As a result, based on the facts available, for all other exporters that did not provide a response to the Dumping RFI, normal values of subject goods originating in or exported from Vietnam were estimated based on the highest amount by which an estimated normal value exceeded the estimated export price, on an individual transaction for the cooperative exporter 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. No such anomalies were identified.

[190] The CBSA considered that the information submitted on the CBSA customs entry documentation was the best information on which to estimate the export price of the goods as it reflects actual import data.

[191] Using the above methodologies, for the preliminary determination, the estimated margin of dumping for all other exporters in Vietnam is 38.9%, expressed as a percentage of the export price.

Summary of preliminary results

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

Conditions to be fulfilled in making a preliminary determination of dumping

Negligibility

[193] Under section 35 of SIMA, the CBSA is required to terminate an investigation prior to the preliminary determination if the volume of goods of a country is negligible.

[194] 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 all goods of the same description that are released into Canada from all countries.

[195] The table above confirms that the volume of imports from each of the named sources are above 3% of the total volume of goods released into Canada. Based on the definition above, the volume of imports from these sources are therefore not negligible.

Insignificance

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

[197] 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. For all exporters, the estimated margin of dumping, expressed as a percentage of the export price, is above 2% and is, therefore, not insignificant. In respect of these goods, provisional anti dumping duties will be imposed on goods of the same description imported during the provisional period.

[198] A summary of the estimated margin of dumping and provisional duties by exporter is presented in Appendix 1.

The Canada Border Services Agency

[203] The CBSA will continue its investigation of the dumping and will make a final decision by September 4, 2024.

[204] If the margins of dumping of any exporter are found to be insignificant, the CBSA will terminate the investigation in respect of goods of that exporter and any provisional duties 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

[205] The CITT has begun its inquiry into the question of injury to the Canadian industry. The CITT is expected to issue its finding by October 4, 2024.

[206] 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.

[207] 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 wire rod that are of the same description as goods described in the CITT’s finding.

[208] 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.