Notice of conclusion of a re-investigation: Oil country tubular goods and seamless casing (OS 2022 RI)

Period of investigation

The period of investigation (POI) and the profitability analysis period (PAP) for the re-investigation were from January 1, 2022 to August 31, 2022.

Re-investigation process

At the initiation of the re-investigation, the CBSA sent a request for information (RFI) to importers, exporters, producers and vendors to solicit information on the costs and selling prices of subject goods and like goods. The CBSA also sent Surrogate Producer RFI to producers in surrogate countries including Brazil, Chinese Taipei, India, Indonesia, Japan, South Korea, Thailand, Turkey and the United States (US). The information was requested for purposes of updating the normal values and export prices for subject goods imported into Canada. Desk audits were conducted for the responding exporters and surrogate producers.

During the course of the re-investigation, 17 Chinese exporters/producers and two surrogate vendors located in the US provided substantially complete responses to the RFIs and supplemental RFIs. Specific normal values and export prices for future shipments of certain OCTG and Seamless Casing have been determined for the 17 Chinese exporters/producers.

As part of the re-investigation, case briefs and reply submissions were provided by counsel representing Canadian producers, as well as responding exporters and importers. Details of the representations are provided in Appendix 1. Details pertaining to the information submitted by the exporters in response to the RFIs as well as the results of the CBSA’s re-investigation are provided below.

Normal values

As noted in the Notice of initiation of this re-investigation, on May 25, 2020, the CBSA reaffirmed its opinion that the conditions of section 20 of SIMA exist in China with respect to the OCTG sector. For a prescribed country under section 20 of SIMA, the section is applicable where, in the opinion of the CBSA, domestic prices are substantially determined by the government and there is sufficient reason to believe that they are not substantially the same as they would be if they were determined in a competitive market.

At the initiation of the re-investigation, interested parties were invited to provide comments and representations to the CBSA regarding the application of section 20 of SIMA. The CBSA considered relevant information on the record and maintains its position that the conditions of section 20 of SIMA continues to exist in China with respect to the OCTG sector for purposes of this re-investigation.

Where the conditions of section 20 of SIMA exist, the CBSA normally determines normal values using the selling price, or the total cost and profit, of like goods sold by producers or vendors in a surrogate country pursuant to paragraph 20(1)(c) of SIMA. Alternately, normal values may be determined under paragraph 20(1)(d) of SIMA, on a deductive basis starting with an examination of the prices of imported goods sold in Canada, from a surrogate country.

Based on the information on the administrative record, the CBSA designated the US as a surrogate country when considering the similarities between the US and Chinese petroleum markets and industries. The US and China are both major world consumers of OCTG and both have major oil production and refinery capacities and the CBSA received substantially complete responses from two surrogate vendors in the US. This issue is addressed further in Appendix 1.

For exporters that provided substantially complete responses for purposes of this re-investigation, where sufficient information was available, some normal values were determined based on the profitable domestic sales of like goods of vendors in the surrogate country in accordance with subparagraph 20(1)(c)(i) of SIMA, or on the aggregate of the cost of production of the like goods, a reasonable amount for administrative, selling and all other costs, plus a reasonable amount for profits in accordance with subparagraph 20(1)(c)(ii) of SIMA. Normal values could not be determined in accordance with paragraph 20(1)(d) of SIMA as the CBSA had insufficient information on re sales in Canada of like goods imported from countries other than China.

Where, in the opinion of the CBSA, sufficient information was not furnished or was not available to determine normal values under paragraph 20(1)(c) of SIMA as described above, normal values were determined pursuant to ministerial specifications in accordance with subsection 29(1) of SIMA, based on a combination of the surrogate data provided by the US vendors and published pricing data available through the trade publication Pipe Logix.

Pipe Logix is a trade publication based in the US which reports spot market prices for OCTG. The CBSA finds Pipe Logix to be a reliable source of pricing information; this is consistent with previous investigations involving tubular products in the oil and gas sector.

As Pipe Logix reports on spot market prices to end-users and typical terms of sale to importers in Canada would reflect contract pricing to distributors, a downward adjustment is required. A comparison of the OCTG products sold by the two vendors in the US with the same products in Pipe Logix revealed that the Pipe Logix prices were higher. As such, a downward adjustment of to Pipe Logix prices was applied to account for the difference.

An RFI was also sent to all known producers of insulated tubing (IT) and vacuum insulated tubing (VIT) in the surrogate countries at the initiation of the re-investigation; however, none of the identified surrogate producers provided a response. As such, sufficient information was not available to determine IT/VIT normal values under section 20 of SIMA. As a result, normal values were determined pursuant to a ministerial specification, in accordance with subsection 29(1) of SIMA.

Since both inner and outer pipes used to make IT/VIT are OCTG, the values of inner and outer pipes were determined based on the normal values determined for OCTG as described above. To reflect additional costs incurred for converting two pipes into an IT/VIT, a reasonable conversion cost was determined based on information provided by interested parties which is available on the administrative record. The ministerial specification provides the authority to establish the normal values for IT/VIT based on the simple average of the normal values determined for both pipes with an upward adjustment on the basis of the conversion cost.

The CBSA determined specific normal values for future shipments of subject goods for the following producers/exporters, effective on or after March 17, 2023:

Producers/exporters that have been provided with specific normal values

• Bohai Equipment Liaohe Thermal Recovery Machinery
• Changbao Group: Jiangsu Changbao Steel Tubulars Corporation, Jiangsu Changbao Steel Tube Co., Ltd., Jiangsu Changbao Precision Steel Tube Co., Ltd. (Changbao)
• Dalipal Pipe Company (Dalipal)
• Golden Ring Industrial Limited-Liability Company Liaohe Oilfield Panjin (Golden Ring)
• Huludao City Steel Pipe Industrial Co., Ltd. and Huludao Steel Pipe Technology Industrial Co., Ltd. (Huludao)
• Jiangsu Chengde Steel Tube Co., Ltd.
• Jingjiang Special Steel Co., Ltd. (Jingjiang Special Steel)
• Petrotex Oil & Gas Equipment Limited
• Shandong Continental Petroleum Equipment Co., Ltd. (Shandong Continental)
• Shandong Meshine Thermal Tech Co., Ltd. (Shandong Meshine)
• Shandong Molong Petroleum Machinery Co., Ltd.
• Shandong Yonglijinggong Petroleum Equipment Co., Ltd.
• Shengli Oilfield Shengji Petroleum Equipment Co., Ltd.
• TianJin TianGang Special Petroleum Pipe Manufacture Co., Ltd.
• Tianjin Pipe Corp, Tianjin Pipe Steel Trading Co., Ltd, and Tianjin Pipe Int'l Economic & Trading Corporation
• Vallourec Tianda (Anhui) Co., Ltd. (Vallourec Tianda)
• Zibo Freet Thermal Tech Co., Ltd.

For all other exporters of subject goods from China, normal values for future shipments, shall be determined at the rates listed in the table below, expressed as a percentage of the export price, in accordance with the ministerial specifications pursuant to section 29 of SIMA.

Normal values previously in place expire on March 17, 2023.

Exporter responsibility

Please note that exporters with normal values are required to promptly inform the CBSA in writing of changes to domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods. All parties are cautioned that where there are increases in domestic prices, and/or costs as noted above, the export price for sales to Canada should be increased accordingly to ensure that any sale made to Canada is not only above the normal value but at or above selling prices and full costs and profit of the goods in the exporter’s domestic market. Where exporters do not properly notify the CBSA of any such changes, do not adjust export prices accordingly, or do not provide the information required to make any necessary adjustments to normal values and export prices, retroactive assessments of anti-dumping or countervailing duties may be warranted.

Importer responsibility

Importers are reminded that it is their responsibility to calculate and declare their anti-dumping and countervailing duty liability. If importers are using the services of a customs broker to clear importations, the brokerage firm should be advised that the goods are subject to anti-dumping and countervailing measures and be provided with sufficient information necessary to clear the shipments. To determine their liability for anti-dumping and countervailing duty, importers should contact the exporters to obtain the applicable normal values and amounts of subsidy. For further information on this matter, refer to Memorandum D14-1-2, Disclosure of normal values, export prices, and amounts of subsidy established under the Special Import Measures Act to importers.

The Customs Act applies, with any modifications that the circumstances require, with respect to the accounting and payment of anti-dumping and countervailing duties. As such, failure to pay the duties within the prescribed time will result in the application of the interest provisions of the Act.

Should the importer disagree with the determination made on any importation of goods, a request for re-determination may be filed. For more information on how to file a request for re determination, please refer to the Guide for appealing a duty assessment.

Contact us

• Telephone:
• Andrew Manera: 343-553-1868
• Andy Fei: 343-553-1866

Email: SIMA_Disclosure_and_Registry_Unit@cbsa-asfc.gc.ca

Appendix 1: Representations

Representations were received from counsel representing the Canadian producers and the responding exporters and importers during the course of the re-investigations.

Following the closing of the record on February 2, 2023, case briefs were received from counsel representing the following parties: Evraz,^{Footnote 1} Tenaris,^{Footnote 2} the United Steelworkers,^{Footnote 3} Exceed,^{Footnote 4} the Huludao Group,^{Footnote 5} Jingjiang Special Steel,^{Footnote 6} the Jiangsu Changbao Group,^{Footnote 7} Vallourec Tianda,^{Footnote 8} and Shandong Continental/Shandong Meshine.^{Footnote 9}

The CBSA received reply submissions from counsel on behalf of Evraz,^{Footnote 10} Tenaris,^{Footnote 11} Western Alliance Tubulars (WAT),^{Footnote 12} the Jiangsu Changbao Group,^{Footnote 13} Cantak,^{Footnote 14} Exceed/Golden Ring,^{Footnote 15} Vallourec Tianda,^{Footnote 16} Continental Steel Corporation (CSTL)/Shandong Continental/Shandong Meshine^{Footnote 17} and Dalipal.^{Footnote 18}

Certain details provided in case briefs and reply submissions were designated as confidential by the submitting counsel. This has restricted the ability of the CBSA to discuss all issues raised in these submissions.

The material issues raised by the parties are summarized as follows and the CBSA has provided responses to representations below.

Selection of a surrogate country

Case briefs

Counsel for the Canadian producers submitted that the US is the most appropriate surrogate country to China because of similar levels of economic development, similar domestic OCTG demand, and similar OCTG market developments. In addition, both countries are also major OCTG exporters to Canada. It was argued that OCTG2 countries (i.e Chinese Taipei, India, Indonesia, South Korea, Thailand, Turkey and Vietnam) would not make appropriate surrogates due to their market size, demand, and level of development.

Counsel for the United Steelworkers (USW) iterated arguments similar to the Canadian producers and submitted that the proper section 20 surrogate is the US due to the similarities between the US and Chinese OCTG markets. They also stated that the presence of US tariffs on imports of Chinese OCTG have led to a market that is undistorted by low-priced Chinese steel.

Counsel for Jiangsu Changbao Group (Changbao) submitted that world OCTG pricing has not increased significantly in accordance with data from Rystad (an independent research and business intelligence company), that Pipe Logix data is not usable unless the CBSA can satisfy the condition in section 20 to adjust those prices in light of the fact they are spot market prices, that US market prices are subject to economic influences unique to the United States, rendering them inadequate as a comparison with exports to Canada, and that the US market is an inappropriate surrogate given the level of economic development in comparison to China.

Counsel for Changbao argued that “imported OCTG competes head on with the domestic produced OCTG. As such, the domestic market prices are inflated by the Section 232 tariff.” Counsel for Changbao provided analysis showing a high disparity in OCTG price movements between Asia and the US.

Counsel for Exceed, CSTL, Shandong Continental, and Shandong Meshine submitted that Pipe Logix and North American prices are not representative of global prices; that the high increases in OCTG prices referred to by the CBSA at the re-investigation initiation were not global or universal increases of the same magnitude; and that demand in the US drove spot prices higher due to shortages in the market and supply chain disruptions. Furthermore, price increases in the US was compounded by the Section 232 tariffs.

Reply submissions

Counsel for the Canadian producers argued that OCTG2 surrogate markets are flawed because of the significant price distortion caused by the presence of Chinese OCTG and OCTG inputs as well as indicated that the CBSA has no actual surrogate responses from the OCTG2 countries for the POI and the only reasonable approach is to rely on actual period of investigation (POI) data, such as that filed by US producers.

Counsel for the Canadian producers further indicated that Rystad and Fastmarket Metal Bulletin data for Japan, Dubai (Jebel Ali Port), Brazil, Argentina and Norway (North Sea Port) is not helpful to the CBSA for three reasons: it is based on export (and not domestic) prices, it is from countries that have no or very small domestic OCTG markets, and/or it is pricing of high chromium alloy OCTG which are non-subject goods.

Counsel for Changbao submitted that the CBSA has previously departed from reliance on the US as a surrogate country for determining the normal values for OCTG as evidenced by the latest OCTG1 and Seamless Casing Ministerial specifications; that the surrogate country selected should be at the same level of economic development as China; and that the US and China are not at the same level of economic development. Counsel also stated that the market size or demand is not valid criteria to be used in selecting a surrogate country.

Counsel for Exceed, Cantak, CSTL, Shandong Continental, and Shandong Meshine submitted that the US is not a reasonable or appropriate surrogate country for establishing normal values for Chinese OCTG as China and the US are not at similar levels of economic development. Furthermore, surrogate countries should not be subject to distorting influences, such as price controls or other restrictions on imports.

CBSA response

SIMA does not provide guidance on the selection of a surrogate country, however, section 20 of SIMA gives the President of the CBSA the authority to designate “any country,” other than Canada and the country for which the conditions of section 20 exist in the opinion of the President, as a surrogate country. At the initiation of the re-investigation, the CBSA sent an RFI to over 50 potential producers and vendors of like goods covering nine countries. Surrogate countries are selected based on the CBSA's knowledge of the OCTG sector and analysis of the availability of like goods in competitive markets with multiple producers.

During the course of the re-investigation, the CBSA only received substantially compete RFI responses from two surrogate vendors located in the US. An analysis of the US and Chinese petroleum markets indicates that the two markets have vast similarities; for example, the US and China are both major consumers of OCTG and have major oil production and refinery capacities. In addition, the CBSA has designated the US as a surrogate country in previous proceedings including OCTG, Seamless Casing and Line Pipe. As such, the CBSA determined that the US is an appropriate selection of surrogate country operating under competitive market conditions.

Methodology for determining normal values

Case briefs

Counsel for the Canadian producers submitted normal values should be determined based on paragraph 20(1)(c) using two US producers data on the record, alternatively, Pipe Logix data, which provides pricing info for 33 benchmark products based on distributor selling prices on an FOB Houston Texas basis, should be used. Counsel for the Canadian producers further submitted that the surrogate normal values issued on September 6, 2022 as a result of the previous OCTG 2022 RI should not be used to issue updated NVs and should not be relied upon as a basis to make adjustments for updated normal values because they were ineffective and significantly outdated.

Counsel for Changbao advocated the use of the normal values issued on September 6, 2022 as a result of the OCTG 2022 RI as the basis for the normal values issued for this re-investigation. Counsel further indicated that if the September 6, 2022 normal values are to be adjusted, the adjustment should be based on Rystad price increases in China or the other Asian countries.

Counsel for Huludao and Jingjiang Special Steel submitted that the CBSA should continue to determine the normal values using pricing and costing data from producers in OCTG2 surrogate countries.

Counsel for Exceed argued that there is a near absence of evidence on the record of this re-investigation that can be used to establish IT/VIT normal values, and WAT’s data is of little use due to the very low volume of production during the POI.

Reply submissions

Counsel for the Canadian producers submitted that when using Pipe Logix to determine normal values pursuant to a Ministerial Specification under section 29 of the SIMA, the CBSA can make the necessary adjustments under SIMA and Special Import Measures Regulations (SIMR). Counsel for the Canadian producers submitted that the CBSA should continue to use its past practice of determining the trade level adjustment based on data from Canadian vendors of subject goods.

Counsel for the Canadian producers also argued that the CBSA should not rely on the normal values previously determined for OCTG2 countries as those normal values are outdated and have proven to be ineffective.

Counsel for Changbao argued that using Pipe Logix pricing to determine surrogate values is not appropriate because Pipe Logix prices are not actual selling prices and are subject to economic events unique to the US. Counsel for Changbao submitted that world market conditions did not change substantially from 2021 to 2022 and that the CBSA should continue to rely on most recent normal values it released on September 6, 2022. Counsel for Changbao suggested that the CBSA can rely on Rystad as the index to inflate the normal values released on September 6, 2022.

CBSA response

As explained in the “Normal values” section of this Notice of Conclusion, normal values were determined in accordance with paragraph 20(1)(c) of SIMA on the basis of domestic sales of like goods or on the cost plus basis in a surrogate country (i.e. the US). Where sufficient information was not furnished or was not available to determine normal values under paragraph 20(1)(c) of SIMA, normal values were determined pursuant to ministerial specifications in accordance with subsection 29(1) of SIMA on the basis of a combination of the surrogate data provided by the US vendors and published pricing data available through the trade publication Pipe Logix. Pipe Logix prices required a downward adjustment to reflect comparability with the US surrogate data.

Given that no information was provided by producers located in other surrogate countries, including the OCTG2 countries on which the September 6, 2022 normal values were based, the CBSA could only determine section 20 normal values based on the available and verified information provided by the two surrogate vendors located in the US.

Retroactive duty assessment

Case briefs

Counsel for the Canadian producers submitted that retroactive duty should be applied to Chinese goods imported during the POI and post-POI until the notice of conclusion. Counsel argued that Chinese exporters were aware of price increases in the US and in global markets, Chinese exporters failed to increase export prices since the OS 2019 RI and failed to notify the CBSA of the significant increases. Counsel contended that using US surrogate data, the record indicates that Chinese exporters dumped at significant margins during the POI, and continued to sell at dumped prices the period following the POI.

Counsel for the USW submitted that retroactive duties should be assessed against the subject goods if deemed appropriate.

Counsel for Changbao submitted that there is no information on the administrative record that shows or supports the position that there were the dramatic changes of OCTG market conditions in China in 2022. Counsel for Changbao indicated that market intelligence report, Rystad, reported that changes in product selling prices were stable or insignificant.

Reply submissions

Counsel for the Canadian producers further contended that retroactive assessments of duties are warranted when there were significant changes in the market conditions such as price and cost increases, and an exporter fails to price-up in step or fails to inform the CBSA of such price/cost changes. Counsel asserted that evidence on the administrative record, including the Rystad and Fastmarket Metal Bulletin data, show that there was significant increases in OCTG prices and costs around the world, including in China, between 2021 and 2022.

Counsel for Changbao opposed Tenaris’ arguments for retroactive assessment of SIMA duties as their arguments focused incorrectly on the alleged increase of imports over the 2021/2022 period and on importation of subject goods from China since the initiation of this re-investigation. Counsel for Changbao indicated that the orders for importation highlighted after the initiation of re-investigation were placed many months prior. Counsel for Changbao submitted that there is no evidence on record that show that there have been substantial OCTG price increases in China. Based on the selling prices published by Rystad or Fast Market Tracker, those regional markets, except US, remain almost stable with small changes from 2021 to 2022.

Counsel for Exceed, CSTL, Shangdong Continental and Shandong Meshine submitted that retroactive duty assessments are not warranted as there were no cost increases that should cause the exporters to notify CBSA of cost increases.

Counsel for Cantak submitted that retroactive duty assessments are not warranted because Chinese exporters did not and could not have access to the costs in surrogate countries where normal values were calculated and how these might have changed. Counsel for Cantak also indicated that there is evidence on the administrative record of declining hot-rolled coil and billet prices in China.

CBSA response

Upon completion of the re-investigation, the CBSA will be conducting an analysis of subject imports from exporters of certain OCTG and seamless casing during the POI, to determine whether retroactive assessments are warranted.