Inquiry No. NQ-2018-002 Cold-rolled Steel

Finding issued Friday, December 21, 2018 Reasons issued Monday, January 7, 2019

 

TABLE OF CONTENTS

FINDING  i

STATEMENT OF REASONS  1

INTRODUCTION  1

BACKGROUND  1

RESULTS OF THE CBSA’S INVESTIGATIONS  2

PRODUCT  2

Product definition  2

Product information  3

LEGAL FRAMEWORK  5

LIKE GOODS AND CLASSES OF GOODS  5

DOMESTIC INDUSTRY  6

CUMULATION  7

Margin of dumping and amount of subsidy  7

Volume of imports  7

Conditions of competition  9

CROSS-CUMULATION  13

INJURY ANALYSIS  13

Import volume of dumped and subsidized goods  14

Price effects of dumped and subsidized goods  15

Resultant impact on the domestic industry  20

Materiality  23

Other factors  24

CONCLUSION  27

 

IN THE MATTER OF an inquiry, pursuant to section 42 of the Special Import Measures Act, respecting:

COLD-ROLLED STEEL

FINDING

The Canadian International Trade Tribunal, pursuant to the provisions of section 42 of the Special Import Measures Act, has conducted an inquiry to determine whether the dumping and subsidizing of cold‑reduced flat-rolled sheet products of carbon steel (alloy and non-alloy), in coils or cut lengths, in thicknesses up to 0.142 inches (3.61mm) and widths up to 73 inches (1854mm) inclusive, originating in or exported from the People’s Republic of China, the Republic of Korea, and the Socialist Republic of Vietnam, and excluding: a) organic coated (including pre-paint and laminate) and metallic coated steel; b) steel products for use in the manufacture of passenger automobiles, buses, trucks, ambulances or hearses or chassis therefor, or parts thereof, or accessories or parts thereof; c) steel products for use in the manufacture of aeronautic products; d) perforated steel; e) stainless steel; f) silicon-electrical steel; and g) tool steel, have caused injury or are threatening to cause injury to the domestic industry.

Further to the Canadian International Trade Tribunal’s inquiry, and following the issuance by the President of the Canada Border Services Agency of a final determination dated October 31, 2018, that the above-mentioned goods have been dumped and subsidized, the Canadian International Trade Tribunal hereby finds, pursuant to subsection 43(1) of the Special Import Measures Act, that the dumping and subsidizing of the above-mentioned goods originating in or exported from the People’s Republic of China, the Republic of Korea and the Socialist Republic of Vietnam have caused injury to the domestic industry.

The statement of reasons will be issued within 15 days.

 

Place of Hearing:	Ottawa, Ontario
Dates of Hearing:	November 19, 20 and 21, 2018
Tribunal Panel:	Jean Bédard, Presiding Member
	Randolph W. Heggart, Member
	Caterina Ardito-Toffolo, Member
Support Staff:	Laura Little, Lead Counsel
	Helen Byon, Counsel
	Gayatri Shankarraman, Lead Analyst
	Mylène Lanthier, Analyst
	Grant MacDougall, Analyst
	Jonas Welisch, Analyst
	Marie-Josée Monette, Data Services Advisor

PARTICIPANTS:

Domestic Producers	Counsel/Representatives
ArcelorMittal Dofasco G.P.	Paul Conlin Drew Tyler Anne-Marie Oatway Shannon McSheffrey Carly Haynes Jeremy D’Souza Lydia Blois
Essar Steel Algoma Inc. Stelco Inc.	Benjamin P. Bedard Linden Dales David Plotkin Manon Carpentier
Importers/Exporters/Others	Counsel/Representatives
POSCO	Cyndee Todgham Cherniak Heather Innes

WITNESSES:

Steve Eljuga Director Controlling ArcelorMittal Dofasco G.P.	Andrew Connor Vice-President – Commercial ArcelorMittal Dofasco G.P.
Henry Wegiel Director, Government and Trade Relations ArcelorMittal Dofasco G.P.	William Butler General Manager – Sales Development ArcelorMittal Dofasco G.P.
Rob Lachapelle Director – Corporate Steel Purchasing Taylor Steel Inc.	Greg Tombari Sales Manager – Central Canada Essar Steel Algoma Inc.
Laura Devoni Manager – Trade & Economics Essar Steel Algoma Inc.	Robert W. Dionisi Chief Commercial Officer Essar Steel Algoma Inc.
Terry Antolovich Manager, Financial Analysis Stelco Inc.	Trevor Harris Vice-President – Corporate Affairs Stelco Inc.
Gregory J. Anderson Vice-President – Commercial Stelco Inc.	Steve Dunstall Corporate Vice-President, Carbon Purchasing Samuel, Son & Co., Limited
Beric Sykes Senior Vice-President Nova Steel Inc.

Please address all communications to:

The Registrar
Secretariat to the Canadian International Trade Tribunal
333 Laurier Avenue West
15th Floor
Ottawa, Ontario  K1A 0G7

Telephone: 613-993-3595
Fax: 613-990-2439
E-mail: citt-tcce@tribunal.gc.ca

 

STATEMENT OF REASONS

INTRODUCTION

[1]  The mandate of the Canadian International Trade Tribunal in this inquiry [1] is to determine whether the dumping and subsidizing of cold-reduced flat-rolled sheet products of carbon steel (CRS) originating in or exported from the People’s Republic of China (China), the Republic of Korea (Korea) and the Socialist Republic of Vietnam (Vietnam) (individually, in groupings or collectively referred to as the subject goods) have caused injury or are threatening to cause injury to the domestic industry.

[2]  The Tribunal has determined, for the reasons that follow, that the dumping and subsidizing of the subject goods have caused injury to the domestic industry.

BACKGROUND

[3]  This inquiry stems from a complaint filed with the Canada Border Services Agency (CBSA) on April 5, 2018, by ArcelorMittal Dofasco G.P. (AMD) and the subsequent decision by the CBSA on May 25, 2018, to initiate investigations into the alleged injurious dumping and subsidizing.

[4]  The CBSA’s investigations triggered the initiation of a preliminary injury inquiry by the Tribunal on May 28, 2018. The Tribunal issued its preliminary determination on July 24, 2018, that the evidence disclosed a reasonable indication that the dumping and subsidizing of the subject goods had caused or were threatening to cause injury to the domestic industry.

[5]  On August 23, 2018, the CBSA made a preliminary determination of dumping and subsidizing, resulting in the imposition of provisional anti-dumping and countervailing duties on the subject goods. On August 24, 2018, the Tribunal commenced this inquiry. [2]

[6]  The Tribunal collected information from domestic producers, importers, purchasers and foreign producers of CRS. The Tribunal’s period of inquiry (POI) was from January 1, 2015, to June 30, 2018, and included two interim periods: January 1, 2017, to June 30, 2017 (interim 2017), and January 1, 2018, to June 30, 2018 (interim 2018).

[7]  The Tribunal received submissions from AMD and two other domestic producers of CRS—Essar Steel Algoma Inc. (ESA) and Stelco Inc. (Stelco)—arguing that the subject goods have caused injury or are threatening to cause injury to the domestic industry.

[8]  The Tribunal received submissions from POSCO, a Korean producer of CRS, opposing a finding of injury or threat of injury in respect of the subject goods originating in or exported from Korea only.

[9]  The Tribunal held a hearing in Ottawa, Ontario, on November 19, 20 and 21, 2018. It included public and in camera sessions. The Tribunal heard testimony from witnesses of the supporting parties and witnesses from three purchasers of CRS: Taylor Steel Inc. (Taylor Steel), Nova Steel Inc. (Nova Steel) and Samuel, Son & Co., Limited (Samuel). [3]

RESULTS OF THE CBSA’S INVESTIGATIONS

[10]  The CBSA’s period of investigation (the CBSA’s POI) for both its dumping and subsidizing investigations covered April 1, 2017, to March 31, 2018. On October 31, 2018, the CBSA made final determinations of dumping and subsidizing, as follows: [4]

Country of Origin or Export	Margin of Dumping Expressed as a Percentage of Export Price	Amount of Subsidy Expressed as a Percentage of Export Price
China All Exporters	91.9%	11.6%
Korea All Exporters	53.0%	11.3%
Vietnam All Exporters	99.2%	6.5%

PRODUCT

Product definition

[11]  The subject goods are defined as follows:

Cold-reduced flat-rolled sheet products of carbon steel (alloy and non-alloy), in coils or cut lengths, in thicknesses up to 0.142 inches (3.61mm) and widths up to 73 inches (1854mm) inclusive, originating in or exported from the People’s Republic of China, the Republic of Korea, and the Socialist Republic of Vietnam, and excluding:

a)  organic coated (including pre-paint and laminate) and metallic coated steel;

b)  steel products for use in the manufacture of passenger automobiles, buses, trucks, ambulances or hearses or chassis therefor, or parts thereof, or accessories or parts thereof;

c)  steel products for use in the manufacture of aeronautic products;

d)  perforated steel;

e)  stainless steel;

f)  silicon-electrical steel; and

g)  tool steel.

Product information

[12]  The CBSA provided the following product information: [5]

[29] For greater certainty, where the nominal and actual measurements vary, a product is considered to be subject goods if either the actual or nominal measurement (being plus or minus allowable tolerances in the applicable standards), meets the definition set forth above.

[30] The product definition covers both annealed and “full-hard” (unannealed) CRS as well as rectangular and non-rectangular cross-section products.

[31] The maximum widths and thicknesses that apply to non-rectangular CRS are the same as those that apply to rectangular CRS, i.e., thicknesses up to 0.142 inches (3.61 mm) and widths up to 73 inches (1854 mm) inclusive.

[32] The product definition includes carbon steel, whether alloyed or non-alloyed. Alloying elements may include boron, titanium, manganese, silicon, copper, aluminum chromium, cobalt, lead, nickel, tungsten, molybdenum, niobium, vanadium, and zirconium.

[33] The product definition includes cold-rolled steels generally described as interstitial free (IF) steels, high-strength-low-alloy (HSLA) steels, motor lamination steels and advanced high-strength steels (AHSS). IF steel is a common term for a low carbon steel with low levels of elements like titanium or niobium. HSLA steels contain low levels of elements like copper, titanium, chromium, niobiun, vanadium and/or molybdenum. Motor lamination steels contain low levels of elements like silicon and aluminium, but are commercially and metallurgically distinct from silicon-electrical steel. AHSS is a term used to describe steel with high tensile strength.

[34] CRS includes “black plate”, which is an industry term used to describe light gauge, low carbon, cold-reduced steel intended for use in the production of tin mill products or for use in its untinned state. It is supplied either dry or oiled. CRS for use in the production of tin mill products is included in the product definition (as it is black plate), but the finished product, tin plate, is excluded from the product definition.

[35] CRS is manufactured to meet certain Canadian Standards Association (CSA) and/or ASTM specifications, or equivalent specifications. ASTM specifications for cold-rolled steel meeting the product definition include, but are not limited to A568/A568A, A606/A606M, A424, A1008/A1008M, A726, A625/A625M, and A650/A650M. CRS that does not meet a specification is generally referred to as “non-prime” or “seconds”. Both prime and non-prime CRS for non-automotive uses are included in the product definition.

[36] The product definition excludes CRS with organic and metallic coatings. Coating methods include spraying, laminating, plating and hot-dip treatments.

[37] The product definition excludes cold-rolled steel for use in automobiles and automobile parts, hereafter referred to as “automotive”. Automotive producers include Original Equipment Manufacturers (OEMs) and part producers.

[38] The product definition excludes perforated cold-rolled steel. Perforated steel is steel sheet that has a pattern of punched or stamped holes throughout the length and width of the steel sheet.

[39] The product definition excludes stainless cold-rolled steel. The Customs Tariff currently defines stainless steel as steel containing no more than 1.2% carbon and 10.5% or more of chromium by weight. This is the same definition that will apply to the subject goods definition. Stainless steel may also include other alloying elements. Stainless steel is commercially and metallurgically distinct from carbon steel, including alloyed carbon steel. Alloyed carbon steel (or alloy carbon steel) is included in the product definition.

[40] The product definition excludes silicon-electrical steel. Silicon-electrical steels include both grain-oriented electrical steel (commonly known as GOES) and non-oriented electrical steel (NOES). At present, the notes to Chapter 72 of Canada’s Customs Tariff schedule defines silicon-electrical steel as:

Alloy steels containing by weight at least 0.6% but not more than 6% of silicon and not more than 0.08% of carbon. They may also contain by weight not more than 1% of aluminum but no other element in a proportion that would give the steel the characteristics of another alloy steel.

[41] The above definition of silicon-electrical steel will apply to the subject goods definition.

[42] The product definition excludes tool steel. Tool steel is a variety of steel with distinct characteristics, such as hardness, that make it suitable for hand tools and dies. Tool steel will meet CSA or ATSM [sic] standards, such as ASTM 681 or ASTM 686. The Custom Tariff has specific tariff classification numbers for cold-rolled tool steel, such as such as 7225.50.00.11 and 7225.50.00.21.

[43] More specifically, tool steel is defined as steel which contains the fol1owing combinations of elements in the quantity by weight respectively indicated: (i) more than 1.2 percent carbon and more than 10.5 percent chromium; or (ii) not less than 0.3 percent carbon and 1.25 percent or more but less than 10.5 percent chromium; or (iii) not less than 0.85 percent carbon and 1 percent to 1.8 percent, inclusive, manganese; or (iv) 0.9 percent to 1.2 percent, inclusive, chromium and 0.9 percent to 1.4 percent, inclusive, molybdenum; or (v) not less than 0.5 percent carbon and not less than 3.5 percent molybdenum; or (vi) not less than 0.5 percent carbon and not less than 5.5 percent tungsten.

[44] CRS falling within the product definition is commonly used in the production and manufacture of other goods, including household appliances, drums, tubing, furniture and strapping.

LEGAL FRAMEWORK

[13]  The Tribunal is required, pursuant to subsection 42(1) of SIMA, to inquire as to whether the dumping and subsidizing of the subject goods have caused injury or retardation [6] or are threatening to cause injury, with “injury” being defined, in subsection 2(1), as “. . . material injury to a domestic industry”. In this regard, “domestic industry” is defined in subsection 2(1) by reference to the domestic production of “like goods”.

[14]  Accordingly, the Tribunal must first determine what constitutes “like goods”. Once that determination has been made, the Tribunal must determine what constitutes the “domestic industry” for purposes of its injury analysis.

[15]  Given that the CBSA has determined that the subject goods have been dumped and subsidized, the Tribunal must also determine whether it is appropriate to make an assessment of the cumulative effect of the dumping and subsidizing of the subject goods (i.e. whether it will cross-cumulate the effect) in this inquiry.

[16]  In addition, since the subject goods originate in or are exported from more than one country, the Tribunal must determine whether the conditions are met for a cumulative assessment of the effect on the domestic industry of the dumping and subsidizing of the subject goods from all the subject countries (i.e. whether it will conduct a single injury analysis or a separate analysis for one or more of the subject countries).

[17]  In conducting its analysis, the Tribunal will also examine other factors that might have had an impact on the domestic industry to ensure that any injury or threat of injury caused by such factors is not attributed to the effects of the dumping and subsidizing.

LIKE GOODS AND CLASSES OF GOODS

[18]  In order for the Tribunal to determine whether the dumping and subsidizing of the subject goods have caused or are threatening to cause injury to the domestic producers of like goods, it must determine which domestically produced goods, if any, constitute like goods in relation to the subject goods. The Tribunal must also assess whether there is, within the subject goods and the like goods, more than one class of goods. [7]

[19]  Subsection 2(1) of SIMA defines “like goods”, in relation to any other goods, as follows:

(a) goods that are identical in all respects to the other goods, or

(b) in the absence of any goods described in paragraph (a), goods the uses and other characteristics of which closely resemble those of the other goods.

[20]  In deciding the issue of like goods when goods are not identical in all respects to the other goods, the Tribunal typically considers a number of factors, including the physical characteristics of the goods (such as composition and appearance) and their market characteristics (such as substitutability, pricing, distribution channels, end uses and whether the goods fulfill the same customer needs). [8] In addressing the issue of classes of goods, the Tribunal typically examines whether goods potentially included in separate classes of goods constitute “like goods” in relation to each other. If those goods are “like goods” in relation to each other, they will be regarded as comprising a single class of goods. [9]

[21]  In its preliminary injury inquiry, the Tribunal found that domestically produced CRS of the same description as the subject goods constitutes like goods in relation to the subject goods. It also found that there was one class of goods. [10]

[22]  The Tribunal did not receive any submissions challenging its preliminary findings. As such, the Tribunal sees no reason to depart from them given the undisputed evidence that the physical characteristics of domestically produced CRS resemble those of the subject goods. In addition, as discussed further below in relation to the cumulation analysis, the evidence shows that the subject goods and domestically produced CRS are substitutable, generally competing against one another in the Canadian market, and have the same end uses and similar distribution channels.

[23]  The Tribunal therefore finds that domestically produced CRS constitutes like goods in relation to the subject goods and will conduct its injury analysis on the basis of one class of goods.

DOMESTIC INDUSTRY

[24]  Subsection 2(1) of SIMA defines “domestic industry” as follows:

. . . the domestic producers as a whole of the like goods or those domestic producers whose collective production of the like goods constitutes a major proportion of the total domestic production of the like goods except that, where a domestic producer is related to an exporter or importer of dumped or subsidized goods, or is an importer of such goods, “domestic industry” may be interpreted as meaning the rest of those domestic producers.

[25]  The Tribunal must therefore determine whether there has been injury, or whether there is a threat of injury, to the domestic producers as a whole or those domestic producers whose production represents a major proportion of the total production of like goods. [11]

[26]  AMD, ESA and Stelco submitted that they are the only domestic producers of CRS and, therefore, should be considered the “domestic industry” for the purposes of the injury analysis.

[27]  In light of the above, the Tribunal finds that AMD, ESA and Stelco constitute the domestic industry.

CUMULATION

[28]  Subsection 42(3) of SIMA directs the Tribunal to make an assessment of the cumulative effect of the dumping and subsidizing of the subject goods if it is satisfied that the margin of dumping or the amount of subsidy in relation to the goods from each of those countries is not insignificant, the volumes of dumped and subsidized goods from each subject country is not negligible, and cumulation is appropriate, taking into account conditions of competition between the goods of each country or between them and the like goods. Additionally, subsection 42(4.1) of SIMA directs that, if the volume of dumped or subsidized subject goods from a country is negligible, the Tribunal must terminate its inquiry in respect of those goods.

[29]  AMD, ESA and Stelco submitted that it is appropriate to conduct a cumulative injury analysis in this case. However, POSCO submitted that the subject imports from Korea should not be assessed on a cumulative basis with the subject imports from the other subject countries.

[30]  For the reasons that follow, the Tribunal is satisfied that it is appropriate to undertake an assessment of the cumulative effect of the dumping and subsidizing of all of the subject goods, including those from Korea.

Margin of dumping and amount of subsidy

[31]  Pursuant to subsection 2(1) of SIMA, a margin of dumping and an amount of subsidy that is, respectively, less than two percent and less than one percent of the export price of the goods are “insignificant”. The CBSA’s final determinations for the margin of dumping and the amount of subsidy for each of the subject countries are, as described above, not insignificant.

Volume of imports

[32]  Subsection 2(1) of SIMA defines “negligible”, in relevant part, [12] to mean a volume of subject goods from each of the subject countries that is less than three percent of the total volume of imports of subject and non-subject goods that meet the product definition as the subject goods and that are released into Canada from all countries. [13]

[33]  The Tribunal’s negligibility assessment is typically based on import activity during the CBSA’s POI. However, in this case, POSCO has requested that the Tribunal not rely on the CBSA’s data on import volumes during its POI, but rather to focus its analysis on the import volumes for the second half of 2017 and the first half of 2018, arguing that this is generally more in line with the period that is the focus of the domestic industry’s injury arguments. [14] The suggested period would therefore include the three months following the end of the CBSA’s POI, which covered April 1, 2017, to March 31, 2018. POSCO also requested that the Tribunal remove, for the purposes of its negligibility analysis, non-subject goods (i.e. automotive CRS) and temporary imports of subject goods (i.e. imports that were processed in Canada and re-exported) that were allegedly included in the CBSA’s data.

[34]  POSCO argued that temporary imports should be excluded from the Tribunal’s calculation of import volumes on the basis that, in respect of the goods, the term “release” as defined in subsection 2(1) of SIMA should be interpreted to mean “released for consumption or use in Canada” such that re-exported goods would not be considered to have been released. [15] The domestic producers contended that POSCO’s interpretation is inconsistent with the legislative framework. [16] First, it cannot be reconciled with the point in time at which anti-dumping and countervailing duties may be levied under SIMA. [17] Second, CRS products imported from the subject countries, even if later re-exported, compete with domestically produced like goods. [18]

[35]  The Tribunal is of the view that the issue with respect to temporary imports is moot given that there is no evidence that any subject goods identified in the Investigation Report were re-exported during the POI. [19]

[36]  Further, POSCO’s claim that the CBSA’s import volumes included certain non-subject goods is unsubstantiated by the evidence. [20]

[37]  The Tribunal sees no reason to depart from its usual approach of relying on volume data collected for the CBSA’s POI in assessing negligibility. As the Tribunal has stated previously, this approach allows for a comparison of the volume of subject goods of a country to the total volume of subject and non-subject imports of all countries, during a period for which the dumping and subsidizing has occurred. [21] It is also consistent with Canada’s notification to the WTO Committee on Anti-Dumping Practices, which indicated that its normal practice would be to carry out the negligibility assessment by reference to the CBSA’s POI. [22] The Tribunal may consider whether the use of a period other than the CBSA’s POI is warranted. [23] However, the Tribunal is not satisfied that the circumstances of this inquiry warrant reference to a different time frame. There is no reason to deviate from the Tribunal’s normal practice of assessing negligibility on the basis of the CBSA’s POI, and the period suggested by POSCO does not line up with either of the alternative methodologies that could be used to assess negligibility. [24]

[38]  The volumes of imports of subject goods from China, Korea and Vietnam were above negligible thresholds during the CBSA’s POI. [25] Accordingly, the Tribunal finds that the first part of the test set out in subsection 42(3) of SIMA has been met.

Conditions of competition

[39]  With respect to the second part of the test set out in subsection 42(3) of SIMA, the Tribunal must be satisfied that the subject goods compete with each other and/or with the domestically produced like goods. Historically, the Tribunal has held that relevant factors relating to the conditions of competition can include interchangeability, quality, pricing, distribution channels, modes of transportation, timing of arrivals, and geographic dispersion. [26] As the Tribunal has previously stated, it recognizes that there may be other factors that it can consider in deciding whether the exports of a particular country should be cumulated, and that no single factor may be determinative. [27]

[40]  As a preliminary matter, the Tribunal will first address POSCO’s arguments with respect to the manner in which conditions of competition should be assessed under subsection 42(3) of SIMA. POSCO has argued that, in order to be consistent with Article 3.3 of the World Trade Organization (WTO) Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, [28] the Tribunal must not limit its assessment of the conditions of competition to the domestic market. [29] According to POSCO, conditions of competition should be assessed “between the [subject] goods as they come to Canada to be imported”. [30] To support its position that Korean imports should be decumulated, POSCO submitted that the conditions of competition between the subject countries are different given that Korea is a market economy (noting that the provisions of section 20 of SIMA were applied in the CBSA’s dumping and subsidizing investigations with respect to China and Vietnam only), [31] has a binding free trade agreement with Canada, and is exempt from the U.S. Section 232 tariffs on steel products. [32]

[41]  In the Tribunal’s view, consistent with Article 3.3 of the Anti-dumping Agreement, subparagraph 42(3)(b)(i) of SIMA is concerned with the conditions of competition between subject goods that are imported into Canada. [33] Insofar as POSCO has failed to illustrate how the aforementioned factors affect the conditions of competition between the subject goods imported into Canada, and as explained further below, the Tribunal is of the view that such factors are not relevant to the analysis under paragraph 42(3)(b) in this inquiry. [34]

[42]  The Tribunal is not persuaded that the application of the framework pursuant to section 20 of SIMA to some, but not all, subject countries implies that the general market conditions in the subject country should be considered in the cumulation analysis, absent evidence that they have impacted conditions of competition between the imported subject goods (or the imported subject goods and domestically produced like goods) in Canada. Similarly, the Tribunal is not persuaded of the relevance of a free trade agreement between Canada and an exporting country, and any implementing regulations domestically, absent evidence that they have impacted the conditions of competition between the subject goods imported into Canada.

[43]  With respect to POSCO’s arguments concerning Section 232 measures, the Tribunal finds that the imposition of quotas instead of tariffs with respect to Korean steel exports to the U.S. did not change the conditions of competition between the subject goods. Section 232 measures were additional to, but did not replace, existing U.S. antidumping and countervailing duties on CRS products from China and Korea. [35] Further, Korean exports of steel to the U.S. market are limited as a result of the new quota. [36] In the Tribunal’s view, Korean products are therefore not isolated from the concerns of the domestic industry regarding import competition from the subject goods. [37]

[44]  Turning to the factors that the Tribunal generally considers in relation to the conditions of competition, the Tribunal is of the view that they do not support the decumulation of subject goods from Korea in the injury analysis.

[45]  Several domestic producers and purchasers of CRS indicated that the subject goods from each of the subject countries are interchangeable with each other and with domestically produced like goods, and that they are generally comparable with respect to product quality, meeting technical specifications and range of product line. [38]

[46]  POSCO argued that factors other than price influence purchasing decisions of CRS products and that this was reflected in responses to the Tribunal’s questionnaires. [39] Witnesses for the domestic producers also stated that customers may accept to pay higher prices for domestic products because of the risks and longer lead times associated with importing (this is reflected in the domestic price premium). [40] However, the Tribunal finds that the evidence indicates that CRS is a commodity product which generally competes on the basis of price. [41] This is evident from the domestic producers’ specific examples of offers and confirmed sales of lower-priced subject goods. [42] Further, the Tribunal is persuaded by the testimony of purchasers of CRS, confirming the importance of price in a marketplace where service and product quality standards are met. [43]

[47]  The Tribunal finds that there are similar channels of distribution for CRS from each subject country, both to Canada and, as between the subject goods and domestically produced like goods, within Canada; this is consistent with the evidence on the record. [44] In terms of the manner in which the subject goods from each of the subject countries come into Canada, they are generally offered to Canadian purchasers through traders/brokers, [45] through the same entry points [46] and arrive by vessel. [47] POSCO has argued differences in distribution channels based on the fact that there are different traders selling CRS for each of the subject countries. [48] However, the fact that traders are different or that the goods may arrive in Canada on different vessels depending on their origin would, in the Tribunal’s view, be consistent with the fact that the subject goods are competing for sales in the Canadian market. [49] Moreover, the evidence confirms that subject goods from each of the subject countries were offered to Canadian purchasers. [50]

[48]  POSCO also argued that there are differences in the channels of distribution on the basis of the particular trade levels to which Korean CRS was sold in the domestic market, noting that almost all of the imports from Korea were sold to distributors/service centres as opposed to end-users. [51] The Tribunal finds that this view is unsupported given the evidence of direct competition between the subject goods and like goods in the domestic market for sales to both distributors/service centres and end-users. [52] Some distributors/service centre witnesses indicated having received offers of Korean CRS during the POI. [53] The Tribunal also heard evidence of a new phenomenon whereby offshore traders are selling subject goods directly to end-users, bypassing the service centres. [54]

[49]  Lastly, the Tribunal finds that the data confirms that subject goods from Korea were imported into Canada in each year of the POI, as were subject goods from China. [55] Although volumes of Korean CRS imports were much lower than those from China throughout the POI, and declined in 2016 while imports from China increased, [56] the Tribunal does not find that such variances are sufficient to demonstrate differences in the conditions of competition between the subject goods. Although Vietnamese CRS was not imported in each year of the POI, this in and of itself does not warrant decumulation. The subject goods from Vietnam were imported concurrently with the subject goods from Korea and China in 2017. [57] Furthermore, and most significantly in the Tribunal’s view, subject goods from each subject country were sold in the Canadian market during the same periods as each other and the like goods, particularly in 2017 and interim 2018. [58]

[50]  In sum, the Tribunal is satisfied that the conditions of competition between the subject goods themselves and between the subject goods and domestically produced like goods are similar, and that they do not warrant the decumulation of subject goods from Korea in the injury analysis. The Tribunal will proceed to assess injury based on the cumulative effects of the dumped and subsidized subject goods from each of Korea, China and Vietnam.

CROSS-CUMULATION

[51]  This inquiry involves subject goods from three countries (China, Korea and Vietnam) that are both dumped and subsidized. There are no legislative provisions that directly address the issue of cross‑cumulation of the effects of both dumping and subsidizing. However, as noted in previous cases, [59] the effects of dumping and subsidizing of the same goods from a particular country are manifested in a single set of injurious price effects, and it is not possible to isolate the effects caused by the dumping from the effects caused by the subsidizing. In reality, the effects are so closely intertwined as to render it impossible to allocate discrete portions to the dumping and the subsidizing respectively. In terms of the treatment of the dumped goods from each of the subject countries versus the subsidized goods from each of those sources, as these practices concern the same goods, the Tribunal finds that it is not necessary or practicable to disentangle their effects. [60]

[52]  Therefore, the Tribunal will make a cumulative assessment of the effects of the dumping and subsidizing of the subject goods.

INJURY ANALYSIS

[53]  Subsection 37.1(1) of the Special Import Measures Regulations [61] prescribes that, in determining whether the dumping and subsidizing have caused material injury to the domestic industry, the Tribunal is to consider the volume of the dumped and subsidized goods, their effect on the price of like goods in the domestic market, and their resulting impact on the state of the domestic industry. Subsection 37.1(3) also directs the Tribunal to consider whether a causal relationship exists between the dumping and subsidizing of the goods and the injury on the basis of the factors listed in subsection 37.1(1), and whether any factors other than the dumping and subsidizing of the goods have caused injury.

[54]  POSCO submitted that there was no injury caused by the subject goods from Korea and, given that its arguments in this regard were based on a decumulated injury analysis, it made no comment on the injury analysis in relation to the subject goods from China and Vietnam. In light of the Tribunal’s decision to assess the cumulative effect of the dumping and subsidizing of the subject goods from all three countries, POSCO’s arguments on injury were only relevant insofar as Korean subject goods were concerned. The Tribunal received no opposing arguments in respect of the injurious effects of Chinese or Vietnamese subject goods discussed below.

Import volume of dumped and subsidized goods

[55]  Paragraph 37.1(1)(a) of the Regulations directs the Tribunal to consider the volume of the dumped and subsidized goods and, in particular, whether there has been a significant increase in the volume, either in absolute terms or relative to the production or consumption of the like goods.

[56]  The absolute volume of imports of the subject goods increased by 38 percent from 2015 to 2016 and a further 22 percent from 2016 to 2017. [62] Likewise, relative to domestic consumption, the import volume of the subject goods increased by 15 percentage points in 2016 and by 21 percentage points in 2017. [63] Relative to domestic production, they increased more modestly, by five percentage points in 2016 and by four percentage points in 2017. [64] Overall, however, these rates of increase are significant.

[57]  In interim 2018 relative to interim 2017, the absolute volume decreased by 65 percent [65] and the volume relative to domestic consumption decreased by 38 percentage points. Relative to domestic production, it decreased by 17 percentage points. [66] However, the evidence indicates that this occurred due to word of these proceedings spreading and suppliers turning to other sources to reduce their potential liability to SIMA duties.

[58]  The domestic producers argued that a major contributing factor of the increasing volumes of subject goods entering the domestic market was the U.S. imposition of trade remedy measures on Chinese and Korean CRS imports in 2016, [67] which caused a diversion of subject goods from those sources into the Canadian market in 2016 and 2017. Mr. Wegiel of AMD indicated that the 2016 U.S. duties “effectively blocked Chinese CRS from the U.S. market”. [68] The Tribunal finds that such diversion played a role in the increasing volumes of subject goods imported into Canada, as per the testimony of several witnesses for the domestic producers and purchasers of CRS. [69]

[59]  Therefore, the Tribunal finds that there has been a significant increase in the absolute and relative volume of imports of the subject goods.

Price effects of dumped and subsidized goods

[60]  Paragraph 37.1(1)(b) of the Regulations directs the Tribunal to consider the effects of the dumped and subsidized goods on the price of like goods and, in particular, whether the dumped and subsidized goods have significantly undercut or depressed the price of like goods, or suppressed the price of like goods by preventing the price increases for those like goods that would otherwise likely have occurred. In this regard, the Tribunal distinguishes the price effects of the dumped or subsidized goods from any price effects that have resulted from other factors affecting prices.

[61]  As indicated above, pricing information was collected from domestic producers and importers, including total sales in the domestic apparent market, sales by trade level (distributor and end-user), sales to common accounts and sales of three benchmark products. [70] The data on average selling prices includes annealed CRS and full-hard (unannealed) CRS, as well as CRS products of different grades, thickness, etc. In addition, domestic sales from domestic production included relatively small volumes of downgraded CRS (or “seconds”). [71]

[62]  The Tribunal’s analysis of price effects considered the average prices, the prices of benchmark products, and transaction- and account-specific allegations. In terms of average prices, POSCO argued that the range of product sizes, grades and specifications covered by the product definition prevents a meaningful analysis of price effects. The Tribunal is satisfied that it is appropriate to consider average prices as part of its price effects analysis. This is not uncommon in cases involving steel commodity products. In the present case, when assessing the level of price undercutting shown in the average price data, the Tribunal took into account the fact that lower-value CRS, such as seconds or full hard (unannealed) CRS, represents a small share of total domestic sales of like goods and, therefore, did not have a significant impact on average prices. [72]

[63]  In terms of the benchmark products, quarterly data was collected for three categories of annealed and temper rolled CRS: commercial quality (Benchmark Product No. 1), [73] drawing steel (Benchmark Product No. 2) [74] and structural steel (Benchmark Product No. 3). [75] During the POI, domestic sales of Benchmark Product No. 1 like goods and subject goods represented, respectively, a substantial share of total sales from domestic production and total sales of imports, whereas the lack of data for Benchmark Products No. 2 and 3 did not allow for a meaningful comparison between the subject goods and like goods. [76] Therefore, the Tribunal finds that that Benchmark Product No. 1 provided a good proxy for the overall market, especially in terms of the pricing of annealed CRS.

[64]  As indicated above, price is an important determining factor in purchasing decisions of CRS. In general, sales of both subject goods and like goods in the domestic market involve the negotiation of a base price by product type, which tends to be based on spot prices. [77] Purchases are also made under term contracts, which tend to vary in duration, fixed versus adjustable prices and other conditions. [78] Although the domestic producers may offer multiple products to customers in a single quote, the pricing of each product is negotiated separately; in other words, they do not offer discounts for bundled or tied sales. [79] Additional charges may be applied for “extras” (for which price lists are used), such as particular widths and thicknesses, strength, processing, testing and surface requirements. [80] There is also a domestic price premium for like goods that ranges between $40/MT to $70/MT. [81]

[65]  Mr. Butler of AMD described the base price as the “price for commercial grade CRS (generally quoted on a ‘FOB mill’ basis)” and he explained that “extras” may add $20/MT to $60/MT (or more) to AMD’s base price. [82] Base prices are periodically revised (twice a month, on average, at AMD) on the basis of market intelligence in relation to factors such as market supply and demand, raw material costs, imports, exchange rates, and movements in price indices, such as CRU and American Metal Market. [83]

[66]  POSCO argued that there were significant and frequent fluctuations in CRS pricing in the domestic market during the POI, such that it would not be useful for the Tribunal to compare the selling prices of the subject goods and like goods on an annual basis (as they are presented in the Investigation Report). POSCO further submitted that pricing comparisons are made difficult by the timing of orders and the variety of forms that a transaction may take, such as spot transactions and term contracts.

[67]  The evidence shows, however, that there is general knowledge of CRS prices and price trends in the domestic market, even though price lists are not used for base prices and transactions may take different forms. The witnesses for domestic producers and service centres alike indicated that their selling practices involve regular sales calls and price negotiations with customers (who will tell the domestic producers if they are competitive on price with import offers received), and the use of market intelligence to gauge the prices of competing subject goods. [84] As stated by Mr. Dunstall of Samuel, “there is a market price for cold‑rolled”. [85] Accordingly, the Tribunal considers pricing of CRS in the domestic market to be reasonably transparent. Furthermore, the Tribunal is satisfied that the U.S. Midwest spot price index for CRS, as reported by CRU (hereinafter referred to as the “U.S. Midwest price”), generally provides a useful indicator of pricing trends in the domestic market, notwithstanding the increased spread between the U.S. Midwest and domestic price of CRS since 2016, as discussed further below. 

[68]  It is within this context of CRS pricing practices in the domestic market that the Tribunal will now assess whether the subject goods undercut the price of like goods and caused price depression and price suppression, as argued by the domestic producers.

Price undercutting

[69]  The consolidated data on average selling prices indicates that the selling prices of the like goods were undercut by the subject goods throughout the POI, including interim 2018. [86] The degree of price undercutting was significant.

[70]  This occurred at each trade level. The average pricing data for sales to distributors show significant price undercutting in every period of the POI. [87] Significant price undercutting also took place in the end‑user segment in 2016, 2017 and interim 2018. [88]

[71]  Where points of comparison among sales to common accounts were available, 14 out of 16 instances indicated that the prices of subject goods undercut the prices of like goods. [89]

[72]  The Benchmark Product No. 1 data shows significant price undercutting in every quarter from the third quarter of 2016 to the second quarter of 2018. [90]

[73]  In addition, the domestic producers have provided several specific examples of price undercutting that resulted in lost sales to subject goods. [91] They also provided market intelligence showing subject goods offered and sold into the domestic market at prices below the domestic producers’ prices for like goods in the same period. [92] At the hearing, several witnesses testified that the average selling prices of subject goods were, generally, between $150/MT and $200/MT below the average selling prices of like goods during the POI. [93] This means that the price undercutting was significant even when taking the domestic price premium into account.

[74]  Therefore, the Tribunal finds that subject goods have significantly undercut the price of like goods.

Price depression

[75]  The average selling price of like goods increased by three percent between 2015 and 2016, and by a further 20 percent in 2017. [94] However, when comparing the first half of 2017, i.e. interim 2017, to the second half of 2017, there was a modest decrease in the domestic selling prices of like goods. [95] There was also a marginal decrease in the selling price of like goods in interim 2018 relative to interim 2017. [96]

[76]  Between 2015 and 2017, the average selling price of like goods to distributors and end-users both increased by 23 percent. [97] Similar to the total average selling prices, there was a decrease in the selling prices of like goods to distributors from the first half to the second half of 2017, and in interim 2018 relative to interim 2017. [98] Conversely, the selling prices of like goods to end-users increased both in the second half of 2017 and interim 2018, as compared to interim 2017. [99]

[77]  Overall, the data on common accounts show fluctuations in domestic selling prices of like goods during the POI with a considerable price decrease in the second half of 2017 before signs of recovery in interim 2018. [100]

[78]  AMD and ESA provided several account-specific examples where they faced competition from subject goods and, as a result, had to reduce their prices in order to win the sale. [101] Several of those instances occurred in the second half of 2017. This supports the depression of average selling prices during the same period, which the Tribunal considers to be significant.

[79]  Therefore, the subject goods have significantly depressed the price of like goods.

Price suppression

[80]  To determine whether the selling prices of the subject goods have suppressed the selling prices of like goods, the Tribunal typically compares the domestic industry’s average unit cost of goods sold (COGS) or cost of goods manufactured (COGM) with its average unit selling values in the domestic market. The Tribunal may also consider other indicators of price suppression given that this term is described, in subparagraph 37.1(1)(a)(iii) of the Regulations, as the prevention (by subject goods) of price increases for the like goods “that would otherwise likely have occurred”. [102]

[81]  The domestic producers submitted that the subject goods caused price suppression on the basis of a cost-price squeeze that occurred from the third quarter of 2017 and into the first half of 2018.

[82]  The consolidated domestic industry’s unit COGM ($/MT) decreased from 2015 to 2016 and increased in 2017; that increase was exceeded by the increase in the domestic selling prices of like goods for full year 2017. However, when comparing the first half of 2017, i.e. interim 2017, to the second half of 2017, the domestic selling prices of like goods decreased and unit COGM increased. In interim 2018, there was a further increase in unit COGM (to its highest point of the entire POI), which exceeded the modest increase in domestic selling prices of like goods compared to the second half of 2017. In interim 2018, domestic prices of like goods were marginally lower than in interim 2017, despite the increase in COGM. [103]

[83]  The evidence shows that the increases in COGM were driven by increases in direct material costs, [104] as well as factory overhead. [105] The domestic industry’s consolidated unit COGS ($/MT) followed a similar trend. On this basis, the Tribunal finds that the increases in the domestic selling prices of like goods were significantly suppressed in the face of rising costs of production and sales in the second half of 2017 and interim 2018.

[84]  The U.S. Midwest price trend during the POI provides a further indication of price increases that would have otherwise likely occurred for like goods sold in the domestic market but for the subject goods. The Canadian market price and the U.S. Midwest price have historically tracked each other within $40/MT to $50/MT (converted into Canadian dollars). [106] Although the U.S. Midwest price includes automotive and non-automotive CRS, the evidence shows that it generally reflects non-automotive CRS prices. [107] However, this pattern was disrupted following the imposition of U.S. trade remedy measures on dumped and subsidized Chinese and Korean CRS in mid-2016, which effectively closed the U.S. market to those imports. In 2016 and 2017, the Canadian market price did not keep pace with the increases in the U.S. Midwest price, resulting in a growing spread of approximately $100/MT to $150/MT. [108]

[85]  The domestic producers made a comparison of the U.S. Midwest price to both AMD’s average selling prices of like goods during the POI [109] (as the largest producer in the domestic industry) and to the domestic industry’s average selling prices during the POI. [110] Both datasets indicated that, in 2015, the average selling prices of like goods in comparison to the U.S. Midwest price had a price differential of less than three percent. That price gap increased noticeably in mid-2016, following the imposition of the U.S. trade measures. Although the average domestic selling prices of like goods continued to increase and follow similar price fluctuations (with the exception of the third quarter of 2016) as the U.S. Midwest price during 2016 and 2017, there was indeed a much higher price differential in those periods than in 2015. In the interim 2018 period, there was a further increase in the price differential between the U.S. Midwest price and the average domestic selling prices of like goods. On the whole, the Tribunal finds that the evidence of a dislocation between the domestic selling prices of like goods and the U.S. Midwest price indicates that the increasing import volumes of dumped and subsidized goods (including those diverted from the U.S. market from mid-2016 onwards) prevented price increases for the like goods that would otherwise likely have occurred.

[86]  The evidence of price suppression is also supported by a MEPS International Steel Review. It shows that, in 2018, there was a greater spread between domestic and U.S. market pricing for CRS as compared to (1) the price spreads on other flat-rolled steel products for which there were no U.S. anti-dumping or countervailing measures, and (2) the price spreads on products which have existing findings in place in both Canada and the U.S., such as hot-rolled plate. [111] The domestic-U.S. price differential for CRS, shown in the MEPS data, is in line with the spread between the domestic industry’s average domestic selling prices and its average export sales unit values in interim 2018. [112]

[87]  Therefore, the subject goods have significantly suppressed the price of like goods.

Resultant impact on the domestic industry

[88]  Paragraph 37.1(1)(c) of the Regulations requires the Tribunal to consider the resulting impact of the dumped and subsidized goods on the state of the domestic industry and, in particular, all relevant economic factors and indices that have a bearing on the state of the domestic industry. [113] These impacts are to be distinguished from the impact of other factors also having a bearing on the domestic industry. [114] Paragraph 37.1(3)(a) of the Regulations requires the Tribunal to consider whether a causal relationship exists between the dumping or subsidizing of the goods and the injury, retardation or threat of injury, on the basis of the volume, the price effect, and the impact on the domestic industry of the dumped or subsidized goods.

[89]  There were a number of indicators with respect to the performance of the domestic industry that appeared positive or stable for much of the POI. The consolidated financial performance indicators improved from 2015 to 2017. The domestic industry increased total investments as a whole [115] and at the individual firm level. [116] There is no indication that the domestic industry’s ability to attract investment was negatively affected during the POI, and in the case of at least one domestic producer (Stelco) it has received new investment. [117] Moreover, the domestic industry has not experienced significant negative effects with respect to its cash flow, growth, inventory, productivity, capacity utilization, number of employees, hours worked, or wages. [118]

[90]  However, the increasing volumes of subject goods at significantly dumped and subsidized prices [119] that undercut prices of like goods have adversely affected the domestic industry in terms of sales and market share. As discussed above, the diversion of dumped and subsidized Chinese and Korean CRS from the U.S. market into Canada, beginning in mid-2016 and continuing through 2017, was shown to have contributed to the increasing volumes of subject goods and their price effects on like goods, which were no longer tracking the U.S. Midwest price for CRS.

[91]  Despite an overall contraction in the total market of four percent, [120] the sales volumes of the subject goods increased substantially in 2016 and 2017 (by 38 percent and 20 percent, respectively). [121] This is consistent with the increasing import volumes of the subject goods discussed above. Meanwhile, sales of domestically produced like goods decreased throughout this period, especially in 2017. This loss seems largely attributable to the subject goods as the import volume of CRS from non-subject countries was also decreasing during this period. Over the same three-year period, the subject goods accounted for a growing share of total imports, which increased despite a decline in the share of non-subject imports. [122] The absolute volume of subject goods decreased in interim 2018 relative to interim 2017 (by 65 percent), as did the volume of non-subject and total imports (by 39 percent and 58 percent, respectively). [123]

[92]  AMD and ESA provided specific allegations of sales lost to the subject goods, [124] which illustrate the realization of injurious effects in the marketplace, particularly in 2016 and 2017. [125] The causal relationship was further established where the domestic producers linked their lost sales and their commercial intelligence regarding offers of low-priced subject goods made in the Canadian market during the POI, to the information provided by foreign producers and importers in response to the Tribunal’s questionnaires. [126] The trends reversed in interim 2018 due to, as described by several of the witnesses, knowledge in the marketplace of this trade case and the new trade remedies arising in the U.S. with respect to steel imports. [127]

[93]  The subject goods have also affected domestic output. Total production of like goods by domestic producers was steady, with a three percent increase in 2016 followed by a one percent decrease in 2017. There was a one percent gain in total production in the first half of 2018. However, a strong export performance masked the impact of the subject goods on overall production levels. Production for export sales steadily increased over the POI, with a 44 percent increase in 2016 and further 22 percent rise in 2017. Production for domestic sales fell by six percent in 2016 and by an additional 13 percent in 2017. [128]

[94]  The impact of the subject goods on prices, output, sales and market share hurt the domestic industry’s consolidated financial performance towards the end of the POI. The consolidated financial results of the domestic industry for domestic sales and export sales indicate significant improvements from 2015 to 2017, at both the gross margin and net income levels. [129] These improvements at the net income level can be seen notwithstanding higher financial expenses for ESA, associated with its restructuring proceedings under the Canadian Creditors Arrangement Act. [130]

[95]  The primary driver of these improving results for the domestic industry at the beginning of the POI (i.e. in 2015 and 2016) was the increase in the total and unit net sales value, due to rising selling prices and decreasing total production costs. [131] In terms of domestic sales, however, the Tribunal finds that these results were constrained by the increasing sales volumes of subject goods at dumped and subsidized prices. Then, in 2017, the negative effects of the subject goods on domestic sales of like goods became fully apparent. [132] Specifically, the consolidated financial domestic producers’ performance data for domestic sales, and in particular unit net sales value and unit COGM, indicate that the domestic industry reached a point, in the second half of 2017, where it was unable to increase its domestic selling prices in step with rising production costs. [133] The financial results for domestic sales for the second half of 2017 were also impacted by the sales volume of subject goods in the same period, which was much higher than in the first half of 2017 and on par with the full-year sales volume in 2015. [134]

[96]  While there is some indication that the domestic industry’s consolidated financial performance indicators for domestic sales began to stabilize in interim 2018, [135] the Tribunal is satisfied that this can be explained by the decrease in the sales volume of subject goods due to, as mentioned above, knowledge in the Canadian market with respect to this trade case.

Materiality

[97]  The Tribunal will now determine whether the effects of imports of the subject goods noted above are “material”, as contemplated in the definition of “injury” under section 2 of SIMA. SIMA does not define the term “material”. However, both the extent of injury during the relevant time frame and the timing and duration of the injury are relevant considerations in determining whether any injury caused by the subject goods is “material”. [136]

[98]  In this case, the domestic industry experienced injury in 2016 and 2017, in the form of declining production and sales volumes of domestically produced like goods and loss of market share, which restricted the domestic industry from realizing increases in profitability that would have otherwise been available. The negative impact of the significant volumes of subject goods on the domestic industry’s financial performance is clearly evident during the second half of 2017, when the selling price of like goods decreased in the face of rising production costs. These price suppressive effects continued in interim 2018, during which period the domestic industry’s financial performance was given some relief from the imposition of provisional duties and the cooling of imports due to advance knowledge of these proceedings in the domestic market.

[99]  Although the duration of the injury represents only a portion of the POI, the Tribunal finds that this does not detract from the materiality of the injury suffered by the domestic industry, which was indeed material in a manner consistent with some of its previous findings. [137] In particular, the injury was most prevalent in the second half of 2017, which falls within the CBSA’s POI, when large volumes of significantly dumped and subsidized imports were entering the domestic market. [138]

[100]  Therefore, the Tribunal finds that the dumping and subsidizing of the subject goods have caused material injury to the domestic industry.

Other factors

[101]  The Tribunal has taken into account the effects of factors other than the subject goods as raised by POSCO.

Domestic industry’s export sales

[102]  POSCO submitted that the domestic industry prioritized its export sales at the expense of its domestic sales, contributing to inadequate available supplies for domestic customers. The evidence confirms that a large share of domestic production of like goods was exported by the domestic industry, and these figures increased during the POI. [139] The domestic industry also experienced healthier financial performance indicators for export sales as compared to domestic sales. [140] As discussed above, however, the Tribunal is satisfied that the domestic industry had sufficient disposable capacity for increased production of like goods, had they been able to compete for more sales at non-dumped and non-subsidized prices.

[103]  In the Tribunal’s view, facing lost market share in Canada, it was reasonable for the domestic industry to rely to some extent on exports to maintain levels of production and capacity utilization rates, [141] and insofar that this occurred during the POI, it does not amount to a cause of injury. During the POI, CRU prices increased at a faster rate, and remained higher, than domestic prices from mid-2016 through early 2018. To the extent that domestic producers secured export sales based on those higher values in the U.S. market, the financial performance indicators would reflect same. The Tribunal also heard testimony from domestic producers which confirmed their commitment to servicing domestic customers even while participating in the U.S. market. [142] Considering the foregoing, the Tribunal does not find that the effect of the domestic industry’s export performance was a cause of the injury to its domestic production and sales of like goods. [143]

Ability to satisfy domestic market demand

[104]  POSCO alleged that the domestic industry was unable to satisfy domestic market demand for CRS. However, the Tribunal finds that this allegation was not supported by the evidence. [144] Mr. Dunstall of Samuel confirmed that while there was a reduction of CRS supply in Canada prior to January 1, 2015, [145] at no time during the POI were the domestic mills unable to meet an urgent order. [146] AMD also commented that AMD USA may supply CRS directly to a Canadian customer in cases where the product is outside of AMD’s “dimensional capability” or when AMD requires spot emergency purchases to meet contract obligations. [147] Instances of non-subject U.S. imports by AMD to address short-term delivery issues during the POI were limited. [148]

[105]  With respect to ESA, POSCO argued that due to its limited production process for surface critical or very high-end use goods, ESA could not meet the quality requirements of its customers or supply the range of products requested by customers. During the hearing, the witnesses for ESA explained that their limitations in producing surface critical products did not generally impact their ability to sell to service centres. [149] The Tribunal is satisfied that ESA did not have issues meeting market demand for its own product line.

[106]  There were no raw material shortages that would affect the domestic industry’s ability to supply the market; the impacts of the short supply of iron ore in 2015 impacted only plate production, not CRS. [150] The domestic industry also did not put any customers on allocation during the POI. [151]

[107]  In addition, as discussed above, the Tribunal is satisfied that the domestic industry had unused production capacity throughout the POI. Furthermore, the impact on domestic production and sales volumes of planned maintenance and upgrades of production equipment at ESA and Stelco, respectively, appears to have been negligible. [152]

[108]  Considering the foregoing, the Tribunal finds no indication that the domestic industry faced production issues which hindered its ability to satisfy market demand such that it was necessary for customers to seek supplies from the subject countries.

Intra-industry competition and competition against service centres

[109]  POSCO alleged that any injury suffered by the domestic producers was due to competition with each other or between distributors/service centres. 

[110]  During the hearing, the domestic producers confirmed that intra-industry competition exists, but that it did not impact financial performance negatively as they compete against each other at “fair” market prices. [153] Testimony from domestic producers and purchasers confirmed that competition for sales between the domestic producers would be in the range of $10/MT to $20/MT as compared to selling prices of subject goods that are $150/MT or $200/MT below selling prices of like goods. [154]

[111]  In regard to competition between the domestic producers and service centres, based on testimony provided during the hearing, competition with service centres for end-user sales appears to have been minimal. According to testimony on behalf of AMD and the purchaser Nova Steel, the end-user trade level is carved out in a manner that there would be little overlap between the sales of domestic producers to end-users and those of the service centres. [155] For instance, end-users interested in coils of steel would look to domestic mills whereas service centres would cater to businesses that require further processing of the steel, e.g. cutting the coils into smaller sizes for smaller applications. Moreover, ESA described its sales to end-users as being limited to customers which are pipe and tube producers (i.e. “light manufacturing applications”) and, as a result, it is not generally in competition with service centres for those sales. [156]

[112]  Based on the above considerations, the Tribunal finds that intra-industry competition and competition with service centres is not a cause of injury for the domestic industry as there is fair competition between the domestic producers, and competition with service centre customers is rare.

U.S. Section 232 measures

[113]  POSCO submitted that the imposition of U.S. Section 232 measures in 2018 was a factor that negatively affected the domestic industry. The Tribunal notes that, as discussed above, there have been trade remedy measures in place in the U.S. since 2016 with respect to subject goods from Korea and China. POSCO did not demonstrate how the U.S. Section 232 measures changed anything to the market conditions in the United States for the subject goods from those two countries and how it could have negatively affected the domestic industry in this case. For the reasons above, the Tribunal does not find that those factors either did not contribute or, at the very least, did not negate the injury experienced by the domestic industry during the POI.

CONCLUSION

[114]  The Tribunal finds that the dumping and subsidizing of the subject goods have caused injury to the domestic industry. Accordingly, the Tribunal need not consider the question of whether the subject goods are threatening to cause injury.