Statement of reasons—Expiry review determination: Seamless Casing (SC 2023 ER)

Decision

Ottawa, March 1, 2024

On February 15, 2024, pursuant to paragraph 76.03(7)(a) of the Special Import Measures Act, the Canada Border Services Agency determined that the expiry of the order made by the Canadian International Trade Tribunal on November 28, 2018, in Expiry Review No. RR-2017-006, continuing its order made on March 11, 2013, in Expiry Review No. RR-2012-002, continuing its finding made on March 10, 2008, in Inquiry No. NQ-2007-001:

• is likely to result in the continuation or resumption of dumping of certain seamless casing originating in or exported from China; and
• is likely to result in the continuation or resumption of subsidizing of certain seamless casing originating in or exported from China

Executive summary

[1] On September 18, 2023, the Canadian International Trade Tribunal (CITT), pursuant to subsection 76.03(1) of the Special Import Measures Act (SIMA), initiated an expiry review of its order made on November 28, 2018, in Expiry Review RR-2017-006; continuing its order made on March 11, 2013, in expiry review RR-2012-002; continuing, without amendment, its finding made on March 10, 2008, in inquiry NQ-2007-001, concerning the dumping and subsidizing of certain seamless casing originating in or exported from China.

[2] As a result of the CITT’s notice of the expiry review, on September 19, 2023, the Canada Border Services Agency (CBSA) initiated an expiry review investigation to determine, pursuant to paragraph 76.03(7)(a) of SIMA, whether the expiry of the order is likely to result in the continuation or resumption of dumping and/or subsidizing of the subject goods to Canada.

[3] The CBSA received responses to its Canadian Producer Expiry Review Questionnaire (ERQ) from Evraz Inc. NA Canada (Evraz)^{Footnote 1}, Tenaris Canada (Tenaris)^{Footnote 2} and Welded Tube of Canada (Welded Tube).^{Footnote 3} These companies may also collectively be referred to as “the Canadian producers” in this Statement of Reasons. The submissions made by the Canadian producers included information supporting their position that continued or resumed dumping and subsidizing of certain seamless casing from China is likely if the CITT’s order is rescinded.

[4] The CBSA received a response to the Exporter ERQ from Shengli Oilfield Shengji Petroleum Equipment Co., Ltd. (Shengli Oilfield).^{Footnote 4} The exporter did not directly express an opinion on the likelihood of continued or resumed dumping and subsidizing of subject goods from China in their ERQ response.

[5] The CBSA received responses to the Importer ERQ from Concourse Petroleum Inc. (Concourse Petroleum),^{Footnote 5} Imex Canada, Inc. (Imex)^{Footnote 6} and Cantak Corporation (Cantak).^{Footnote 7} None of the importers directly expressed an opinion that continued or resumed dumping and subsidizing of subject goods from China is likely if the CITT’s order is rescinded.

[6] The CBSA did not receive a response to the Foreign Government ERQ from the Government of China (GOC).

[7] In addition to responding to the ERQ, counsel for Evraz and Welded Tube,^{Footnote 8} and counsel for Tenaris,^{Footnote 9} submitted supplementary information prior to the closing of the record as well as case briefs.^{Footnote 10} The case briefs submitted by the Canadian producers included information supporting their position that continued or resumed dumping and subsidizing of certain seamless casing from China is likely if the CITT’s order is rescinded.

[8] One interested party, Cantak, submitted a reply submission.^{Footnote 11}

[9] Analysis of information on the administrative record in respect of: the significant excess production and high export dependency for Chinese oil country tubular goods (OCTG) exporters/producers; the inability to sell seamless casing in Canada at non-dumped prices; the continued interest for Chinese exporters in the Canadian market; the continuing trade measures on steel imports in the United States; and anti dumping measures in place in Canada and in other jurisdictions on steel tubular goods from China, indicates a likelihood of continued or resumed dumping into Canada of certain seamless casing originating in or exported from China should the CITT’s order be rescinded.

[10] In addition, analysis of information on the administrative record in respect of the continued availability of subsidy programs for seamless casing exporters in China and the countervailing measures against Chinese steel tubular products in Canada and the United States, indicates a likelihood of continued or resumed subsidizing of certain seamless casing originating in or exported from China should the CITT’s order be rescinded.

[11] For the forgoing reasons, the CBSA, having considered the relevant information on the record, determined on February 15, 2024, under paragraph 76.03(7)(a) of SIMA that:

• the expiry of the order in respect of certain seamless casing originating in or exported from China is likely to result in the continuation or resumption of dumping of the goods; and
• the expiry of the order in respect of certain seamless casing originating in or exported from China is likely to result in the continuation or resumption of subsidizing of the goods

Background

[12] On August 13, 2007, following a complaint filed by Tenaris Algoma Tubes Inc. of Calgary, Alberta, the CBSA initiated investigations respecting the dumping and subsidizing of certain seamless casing originating in or exported from China.

[13] On February 7, 2008, the CBSA made final determinations of dumping and subsidizing in respect of the subject goods from China^{Footnote 12} and, on March 10, 2008, a threat of injury finding was issued by the CITT.^{Footnote 13}

[14] On November 7, 2011, the CBSA concluded a re-investigation to update the amounts of subsidy of certain seamless casing and certain OCTG originating in or exported from China.^{Footnote 14}

[15] On June 27, 2012, the CITT initiated an expiry review of its finding, and on October 25, 2012, the CBSA determined, pursuant to paragraph 76.03(7)(a) of SIMA, that the expiry of the finding was likely to result in the continuation or resumption of dumping and subsidizing of the goods from China. On March 11, 2013, the CITT issued an order continuing the finding.^{Footnote 15}

[16] On December 14, 2015, the CBSA concluded a re-investigation to update the normal values, export prices and amounts of subsidy of certain seamless casing, certain OCTG and certain pup joints originating in or exported from China.^{Footnote 16}

[17] On January 19, 2018, the CITT initiated an expiry review of its order and on June 21, 2018, the CBSA determined, pursuant to subsection 76.03(7)(a) of SIMA, that the expiry of the order was likely to result in the continuation or resumption of dumping and subsidizing of the goods from China. On November 28, 2018, the CITT issued an order continuing its order.^{Footnote 17}

[18] On May 25, 2020, the CBSA concluded a re-investigation to update the normal values and export prices of certain seamless casing and certain OCTG originating in or exported from China.^{Footnote 18}

[19] On March 17, 2023, the CBSA concluded a re-investigation to update the normal values and export prices of certain seamless casing and certain OCTG originating in or exported from China.^{Footnote 19}

[20] On September 18, 2023, the CITT initiated an expiry review of its order^{Footnote 20} and on September 19, 2023, the CBSA commenced an expiry review investigation to determine whether, pursuant to subsection 76.03(7)(a) of SIMA, the expiry of the order is likely to result in continued or resumed dumping and/or subsidizing of the goods from China.^{Footnote 21}

Product definition

[21] The goods subject to the order under review are defined as:

Classification of imports

[29] Since January 1, 2022, the subject goods are normally classified under the following tariff classification numbers:

• 7304.29.00.12
• 7304.29.00.13
• 7304.29.00.14
• 7304.29.00.15
• 7304.29.00.16
• 7304.29.00.17
• 7304.29.00.19
• 7304.29.00.22
• 7304.29.00.23
• 7304.29.00.24
• 7304.29.00.25
• 7304.29.00.26
• 7304.29.00.27
• 7304.29.00.29

[30] Prior to 2022, the subject goods were normally classified under the following tariff classification numbers:

• 7304.29.00.11
• 7304.29.00.19
• 7304.29.00.21
• 7304.29.00.29

[31] This listing of tariff classification numbers is for convenience of reference only. Refer to the product definition for authoritative details regarding the subject goods.

Period of review

[32] The period of review (POR) for the CBSA’s expiry review investigation is from January 1, 2020 to June 30, 2023.

Canadian industry

[33] In the CITT’s original Inquiry (NQ-2007-001) and its subsequent expiry reviews (RR-2012-002, RR-2017-006), the CITT found that ERW casing constituted like goods to seamless casing and both seamless and ERW casing were considered a single class of goods. Consequently, producers of ERW casing were part of the Canadian industry.^{Footnote 22}

[34] The Canadian industry for seamless and ERW casing is comprised of three companies: Evraz, Tenaris and Welded Tube.

[35] Evraz produces ERW casing in three locations namely Calgary, Red Deer and Camrose, Alberta. In addition, Evraz produces other tubular products, including tubing and line pipe.^{Footnote 23}

[36] Tenaris affiliates, including Algoma Tubes Inc., Tenaris Global Service (Canada) Inc. and Hydril Canadian Company LP (collectively referred to as “Tenaris Canada”)^{Footnote 24} are involved in the production and sales of both seamless and ERW OCTG. Algoma Tubes Inc. is the only Canadian producer of seamless casing, in diameters ranging from 4.5 to 9.625 inches.^{Footnote 25} Tenaris Globe Services (Canada) Inc. is a distributor of domestically-produced and imported seamless casing.

[37] Another facility, Prudential, which produced ERW OCTG, closed in 2020 and is no longer an operating entity.^{Footnote 26}

[38] Welded Tube of Concord, Ontario produces ERW casing in outside diameters ranging from 4.5 inches to 9.625 inches. Welded Tube has a threading and heat-treatment facility in Welland, Ontario and a threading facility in Port Colborne, Ontario.^{Footnote 27}

Canadian market

[39] The Canadian production and the apparent Canadian market for seamless casing cannot be disclosed as the total value and volume of Canadian production of seamless casing during the POR was based on confidential information filed by the sole Canadian seamless casing producer (i.e., Tenaris). The imports of seamless casing from China and all other countries are presented in Table 1 and Table 2 below.

Enforcement data

[42] As shown in Table 3 below, the total amount of anti-dumping and countervailing duties assessed on imports of subject goods from China during the POR was over $28.8 million.

Parties to the proceedings

[43] On September 19, 2023, a notice concerning the CBSA’s initiation of the expiry review investigation was sent to Canadian producers and potential importers and exporters of seamless casing, as well as to the GOC. All of these parties were also sent an ERQ.

[44] The ERQs requested information relevant to the CBSA’s consideration of the expiry review factors, as listed in subsection 37.2(1) of the Special Import Measures Regulations (SIMR).

[45] Three Canadian producers: Evraz, Tenaris and Welded Tube participated in the expiry review investigation and provided ERQ responses. Three importers, Cantak, Concourse Petroleum and Imex, and one exporter, Shengli Oilfield also participated in the expiry review investigation and provided ERQ responses.

[46] Case briefs were received from counsel on behalf of Evraz, Tenaris and Welded Tube. Counsel for Cantak filed a reply submission.

[47] The GOC did not provide a response to the CBSA’s ERQ nor did it submit a case brief or reply submission.

Information considered by the CBSA

Administrative record

[48] The information considered by the CBSA for purposes of this expiry review investigation is contained in the administrative record. The administrative record includes the information on the CBSA’s exhibit listing, which is comprised of the CITT’s administrative record relating to the initiation of the expiry review, the CBSA’s exhibits and information submitted by interested parties, including information which the interested parties feel is relevant to the decision as to whether dumping and subsidizing are likely to continue or resume absent the CITT order. This information may consist of expert analysts’ reports, excerpts from trade magazines and newspapers, orders and findings issued by authorities of Canada or of a country other than Canada, documents from international trade organizations such as the World Trade Organization and responses to the ERQs submitted by Canadian producers, exporters and importers.

[49] For purposes of an expiry review investigation, the CBSA sets a date after which no new information submitted by interested parties will be placed on the administrative record or considered as part of the CBSA’s investigation. This is referred to as the “closing of the record date” and is set to allow participants time to prepare their case briefs and reply submissions based on the information that is on the administrative record as of the closing of the record date. For this investigation, the administrative record closed on November 8, 2023.

Position of the parties: Dumping

Consideration and analysis: Dumping

[104] In making a determination under paragraph 76.03(7)(a) of SIMA whether the expiry of the order is likely to result in the continuation or resumption of dumping of the goods, the CBSA may consider factors identified in subsection 37.2(1) of the SIMR, as well as any other factors relevant in the circumstances. A copy of subsection 37.2(1) of the SIMR is found in Appendix C.

[105] Before presenting the specific analysis with respect to China concerning the likelihood of continued or resumed dumping in absence of the CITT’s order, there are certain issues that relate to the goods on a broader scale which are addressed as follows:

• capital intensive nature of steel production
• substitutability of OCTG
• steel market developments and trends; and
• OCTG developments

Capital intensive nature of steel production

[106] A primary characteristic of seamless casing, as is the case across steel products, is the capital-intensive nature of its production. Steel mills are capital intensive with high fixed costs. In order to recover the fixed costs, steel mills must run at high levels of production capacity. When home market demand drops, producers will search out foreign markets to maintain capacity utilization to ensure that these fixed costs are recovered.

[107] This is often referred to as the “economics of steel production.” This characteristic is particularly important when there are conditions of overcapacity, as a producer may find it more feasible to sell excess production in foreign markets at depressed prices rather than reduce production, as long as the producer’s variable costs are covered.

Substitutability of OCTG

[108] The significant number of anti-dumping measures involving steel products, both in Canada and other jurisdictions, can be related, in large part, to the very nature of the products and the industry.

[109] The factors that relate to the nature of the product include the substitutability of OCTG made to API 5CT specification, as well as the capital intensive nature of steel production. The combined effects of these characteristics can have a significant impact on pricing.

[110] Generally speaking, seamless casing produced to the API 5CT specification or equivalent proprietary standard by a producer in a given country is physically interchangeable with seamless casing produced to the same specification in any other country. As such, the goods compete amongst themselves regardless of origin and share the same channels of distribution and the same potential customers. This characteristic means that seamless casing must compete in a market that is extremely price sensitive, where price is one of the primary factors affecting purchasing decisions from customers. Furthermore, because of this high degree of price sensitivity, prices in a given market may tend to converge over time towards the lowest available price offerings.

[111] Given the substitutability and the commodity nature of OCTG, when anti-dumping measures are put in place for OCTG from a particular country, other sources of OCTG emerge. This is evident from the number of measures in Canada, both historically and currently, with respect to OCTG.

Steel market developments and trends

[112] According to information on the record, both global steel making and actual capacity remained relatively leveled over the POR.

[113] According to World Steel Association (WSA), the world production of crude steel was 1.88 billion MTs in 2020, climbed to 1.96 billion MTs in 2021 and regressed to 1.89 billion MTs in 2022, with a near identical forecast for 2023.^{Footnote 79}

[114] According to the Organisation for Economic Co-operation and Development (OECD), global steelmaking capacity reported slight increases year over year during the POR. In 2020, the OECD reported this figure at 2.42 billion MTs, 2.43 billion MTs in 2021 and 2.44 billion MTs in 2022, with a projected forecast of 2.5 billion MTs in 2023.^{Footnote 80}

[115] Respecting China, its crude steelmaking capacity was also relatively stable throughout the POR, reaching 1.15 billion MTs in each year of the POR, with an estimated capacity of 1.18 billion MTs in 2023.^{Footnote 81}

[116] China is the largest steel producing country in the world.^{Footnote 82} Information on the record indicates that China’s crude steel production climbed over 1 billion MTs in both 2020 and 2021.^{Footnote 83}

[117] China is also the number one steel exporting country in the world. In respect of seamless OCTG specifically, China reportedly exported more than three times the next closest country.^{Footnote 84}

OCTG developments

[118] The oil and gas industry is heavily impacted by global oil prices. As a result of the global COVID-19 pandemic, commodity prices, including oil crashed in Q1-2020. The West Texas Intermediate (WTI) and Western Canadian Select (WCS) prices, benchmarks in oil pricing, fell to under US$20 a barrel in early Q2-2020. The world price rose steadily from that point, with the WTI reaching over US$115 a barrel in Q2-2022, before settling closer to US$80 a barrel by the end of the POR.^{Footnote 85}

[119] Looking beyond the POR, BMO’s commodity analysts expect oil prices to increase slightly and stabilize in 2024:

[120] The demand for OCTG is driven by drilling activity, which is reflected in part, in the number of active rigs used. Evraz stated that “the market for OCTG moves in tandem with oil and gas exploration and production, which is closely tied to the number of operating rigs at any given time.”^{Footnote 87}

[121] The data in Table 4 below was reported by oil industry tracker, Baker Hughes, for the POR.

[122] The demand for OCTG is driven by drilling activity, which is in turn is driven by oil prices. Canada is one of the largest OCTG markets in the world. Global OCTG consumption, including both welded and seamless products, increased from 10.9 million MTs in 2020 to 13.5 million MTs in 2021 and to 15.2 million MTs in 2022. Table 5 below summarizes specifically the global seamless OCTG demand from 2020 to 2023 and the year-over-year percentage changes for the period:

[123] According to Table 5, the largest jump, given the state of the world economy in 2020, came in 2021, where global demand grew 21% but has since leveled off by the end of the POR. In respect to the consumption of OCTG (seamless and welded) in the Canadian market, Rystad estimated the consumption at roughly 650,000 MTs for 2022, with a forecasted consumption in 2023 of about 700,000 MTs.^{Footnote 90}

[124] Following the same trend as the global oil prices during the POR, OCTG spot market prices, reported by industry tracker Pipe Logix, soared in 2022 before declining steadily at the beginning of 2023. Average OCTG prices reported in Pipe Logix reached a high in September 2022 but declined by over 38% by September 2023.^{Footnote 91}

Likelihood of continued or resumed dumping

[125] Guided by the aforementioned factors and having considered the information on the administrative record, the following list represents a summary of the CBSA’s analysis conducted in this expiry review investigation with respect to dumping:

• Excess production and high export dependency for Chinese OCTG exporters/producers
• Inability to sell seamless casing in Canada at non-dumped prices
• Continued interest for Chinese seamless casing exporters in the Canadian market
• Trade measures on steel imports in the United States and likely diversion of Chinese OCTG into Canada; and
• Anti-dumping measures in place in Canada and in other jurisdictions concerning steel tubular goods from China, including OCTG and seamless pipe demonstrate a pattern of dumping

[126] As mentioned earlier in this Statement of Reasons, the CBSA received ERQ responses from three Canadian producers (Evraz , Tenaris and Welded Tube), three importers (Imex, Concourse Petroleum and Cantak) and one exporter (Shengli Oilfield). In addition to ERQ responses, the Canadian producers also submitted case briefs. Cantak also provided a reply submission.

[127] The CBSA relied on information submitted by these parties, as well as other information on the administrative record for purposes of this expiry review investigation.

[128] While the CBSA acknowledges the abundance and scope of information submitted for the record, its consideration and analysis of the information was careful to separate reliable facts from mere allegation and conjecture,^{Footnote 92} so as to ensure a well-reasoned and supported analysis.

Excess production and high export dependency for Chinese OCTG exporters/producers

[129] The information on the record demonstrates that China is dependant on export markets to absorb substantial amounts of its OCTG production. It is the actual production, however, rather than the aggregate theoretical capacity, which is the primary threat for dumped exports of subject goods.

[130] Chinese seamless OCTG producer Tianjin Pipe Company (TPCO), for example, has a reported capacity for seamless pipes of 3 million MTs and is the largest OCTG producer in China.

[131] Notwithstanding the exceptional year for OCTG consumption in many world markets in 2022, including both Canada and the United States, TPCO used only 27% of its stated capacity to produce seamless OCTG.^{Footnote 93} Furthermore, although the North American and other world markets surged in demand for seamless OCTG in 2022, China’s overall apparent consumption of seamless OCTG dropped by 23% in 2022 from 2021, which would put pressure on more exports.

[132] Information on the record estimated China’s seamless OCTG exports nearly doubled in 2022 from 2021 to 1.735 million MTs and continued the upwards trend to 1.34 million MTs in H1-2023.^{Footnote 94} As such, the growth in exports has been substantial.

[133] Information on the record estimated Chinese seamless OCTG domestic consumption at roughly 2.8 million MTs in 2022, with production of over 5 million MTs.^{Footnote 95} As such, the information on the record clearly supports the argument that China is significantly leveraged towards exports. The near doubling of China’s seamless OCTG exports in 2022 from 2021 can be directly tied to China’s decrease in apparent consumption which fell substantially in 2022, demonstrating how quickly China can pivot towards export markets when domestic demand wanes.^{Footnote 96}

[134] The evidence on the record clearly demonstrates that China has consistently high levels of seamless OCTG production, including seamless casing and will continue to feel pressure to export subject goods to maintain production levels amidst declining domestic consumption. China’s export orientation during the POR also demonstrates that Canada is a likely destination target for those exports. As a result, should the CITT order be rescinded, the Chinese excess production and the resulting export dependence may increase the likelihood of continued or resumed dumping.

Inability to sell seamless casing in Canada at non-dumped prices

[135] As seen in Table 2 of this Statement of Reasons, import volumes of subject goods increased significantly from 2,201 MTs in 2020 to 13,490 MTs in 2021 to 143,028 MTs in 2022. Table 3 earlier in this Statement of Reasons revealed that nearly $28 million in SIMA duties were collected for 2022, by far the largest in the POR. As such, a substantial increase in the volume of imports of subject goods was accompanied by a substantial increase in SIMA duty assessments. 2022 also represented the highest ratio of SIMA duties collected to value of subject exports at roughly 10%, compared to the roughly 1% in 2020 and 2021, demonstrating the magnitude of dumping that occurred.^{Footnote 97}

[136] Imports regressed in the first six-months of 2023, following the re-investigation which concluded on March 17, 2023. Over the course of the entire POR, China accounted for 30.8% of all imports of seamless casing.

[137] Table 6 below summarizes imports of seamless casing from China and other countries from 2020 to H1-2023:

[138] Table 7 below further presents the CBSA’s analysis of unit selling prices of seamless casing from China and other countries during the POR:

[139] The data presented in the table above clearly demonstrates that the unit-selling prices of seamless casing from China were consistently below the selling prices offered by exporters from other countries to Canada during the entire POR. Particularly, in 2022, Chinese exporters sold subject goods to Canada at prices which were approximately 23% below the prices offered by exporters from other countries.^{Footnote 100}

[140] It is noted that since export price captures only one element of the dumping calculation, the manner in which the normal value is calculated is necessary to ascertain if any actual dumping is calculable.

[141] Nonetheless, as noted earlier, nearly $28 million in SIMA duties were assessed on imports of subject goods from China during 2022 alone. This is the most compelling evidence that demonstrates Chinese exporters of subject goods were unable to compete in the Canadian market at non-dumped prices. As a result, should the CITT order be rescinded, the inability of the Chinese exporters to sell seamless casing in Canada at non-dumped prices may increase the likelihood of continued or resumed dumping.

Continued interest for Chinese seamless casing exporters in the Canadian market

[142] Since the CITT finding was put in place in 2008, Chinese exporters of seamless casing have demonstrated continued interest in the Canadian market. Since the last expiry review, at least ten Chinese exporters have participated in each of the three normal value re-investigations concerning OCTG from China, which concluded in 2020, 2022 and 2023, respectively. As noted earlier in this report, Shengli Oilfield also participated in this expiry review investigation, through a response to the ERQ. The recurring participation by Chinese producers of seamless casing in these processes suggests a continued interest in the Canadian market.

[143] Moreover, the magnitude of the volume of Chinese seamless casing exports in the latter part of the POR demonstrates that China maintains a significant interest in the Canadian market. An analysis of the record also indicates that China’s interest in the market is aided by a growing demand for seamless casing in Canada,^{Footnote 101} the demand for imports in Canada to supplement domestic supply and the attraction of higher prices in Canada in comparison to other non-US export markets.^{Footnote 102}

[144] According to data provided by Tenaris, the volume of seamless OCTG exported to Canada from China in 2022 was considerably more than the previous four years combined.^{Footnote 103}

[145] In response to the surge in exports from China, Tenaris stated:

[146] Information on the record indicates that demand for OCTG in Canada in 2022, including imports of Chinese OCTG specifically, was particularly strong and this helped drive the import surge. According to Table 2 of this Statement of Reasons, imports from China increased more than ten-fold in 2022 from 2021 to 143,028 MTs.^{Footnote 105}

[147] Other indicators support the view that the demand for OCTG in Canada began a significant upswing in 2022. Other metrics, such as the rig count in Canada in Table 4 reveals a similar increase at 34% over the same period.

[148] Looking at the earlier part of the POR, a further symmetry appears to exist between the growth in the Canadian market for seamless casing and the increase in rig counts. From 2020 to 2021, the apparent Canadian market for seamless casing grew 42%.^{Footnote 106} Similarly, the growth in in Canadian rig counts was 46% as per Table 4.

[149] Information on the protected record indicated that most of the Canadian demand for seamless casing from China is heat-treated.

[150] Regarding the availability of material, importer Concourse Petroleum remarked:

[151] The Canadian producers had alleged that:

[152] With a Canadian market that grew substantially in 2022, the protected record for this expiry review revealed that imports were needed to satisfy the demand. As such, distributors in Canada resorted to imports to which Chinese exporters responded quickly, demonstrating their continued interest in the Canadian market.

[153] The premium price available in Canada for seamless casing in comparison to other non-US markets is another clear incentive which would have attracted Chinese seamless casing to Canada during the POR, given that the US market is effectively closed to them.

[154] The projected strength of the Canadian market moving forward into 2024 and beyond, detailed earlier in this Statement of Reasons, should serve to maintain price advantages over other markets and to help maintain the Chinese interest in the Canadian seamless casing market.

[155] The analysis of the record demonstrates that China’s interest in the Canadian seamless casing market is driven largely by a growing demand for seamless casing, the need for imports to supplement domestic supply and the attraction of higher prices in Canada in comparison to other non-US export markets. As a result, should the CITT order be rescinded, the continued interest for Chinese seamless casing exporters in the Canadian market may increase the likelihood of continued or resumed dumping.

Tariff measures on steel imports in the United States and likely diversion of Chinese OCTG into Canada

[156] Since 2018, the United States has imposed a 25% tariff under section 232 of the US Trade Expansion Act of 1962 and currently has a 7.5% tariff under section 301 of the Trade Act of 1974 on imports of steel from China and other countries. The products covered include a wide range of steel goods including seamless casing and other OCTG.^{Footnote 109}

[157] The information on the record indicates that although it is by far the largest exporter of (and the United States the largest consumer of) seamless OCTG in the world,^{Footnote 110} China exports only small quantities of seamless OCTG to the United States. The United States is not even in China’s top ten export destinations for seamless OCTG based on average tonnage over the last six years.^{Footnote 111}

[158] By contrast, China’s overall exports of seamless OCTG in 2022 were over 1.76 million MTs.^{Footnote 112} The scope of Chinese exports of seamless OCTG represented roughly 37% of the world volume of exports in 2022.^{Footnote 113}

[159] As a consequence, the evidence strongly suggests that these measures are contributing to prevent Chinese OCTG from entering the US market, leaving Canada vulnerable to absorb the enormous volume of seamless OCTG China has traditionally exported.

[160] Due to the geographic proximity of the United States and Canada and the importance of the oil and gas industry in Canada, the imposition of a combined 32.5% tariff on steel imports into the United States from China only exacerbates the effects of anti-dumping and countervailing measures in the United States and is likely to continue to cause certain volumes of seamless casing that would otherwise be exported to the United States, to be diverted to Canada.

[161] As a result, should the CITT order be rescinded, the trade measures on steel imports in the United States may increase the likelihood of diversion of Chinese OCTG into Canada and the likelihood of continued or resumed dumping.

Anti-dumping measures in place in Canada and in other jurisdictions concerning steel tubular goods from China, including OCTG and seamless pipe demonstrate a pattern of dumping

[162] In addition to the seamless casing measures, the CBSA currently has six anti-dumping measures in place against steel tubular products originating in or exported from China : Oil Country Tubular Goods 1, Pup Joints, Line Pipe, Large Line Pipe, Carbon Steel Welded Pipe and Piling Pipe.^{Footnote 114}

[163] In addition to these measures in Canada, information on the administrative record indicates that there are numerous anti-dumping measures in place in other jurisdictions against steel tubular products from China, including seamless OCTG. Table 8 below summarizes those anti-dumping measures:

[164] The above-mentioned measures in Canada and the many anti-dumping measures in other jurisdictions against Chinese steel tubular products clearly demonstrates that Chinese exporters have a propensity to dump steel tubular products into Canada and other export markets. In absence of the CITT’s order, this pattern of behavior contributes to the likelihood of continued or resumed dumping by Chinese seamless OCTG exporters.

Determination regarding likelihood of continued or resumed dumping

[165] Based on the information on the administrative record demonstrating that Chinese exporters/producers of seamless casing have: significant excess production and high export dependency; the inability to sell seamless casing in Canada at non dumped prices; a continued interest in the Canadian market; continuing trade measures on steel imports in the United States; and anti-dumping measures in place in Canada and in other jurisdictions on steel tubular goods, the CBSA has determined that the expiry of the order is likely to result in the continuation or resumption of dumping into Canada of certain seamless casing originating in or exported from China.

Position of the parties: Subsidizing

Consideration and analysis: Subsidizing

[174] In making a determination under paragraph 76.03(7)(a) of SIMA as to whether the expiry of the order in respect of goods from China is likely to result in the continuation or resumption of subsidizing of these goods, the CBSA may consider factors identified in subsection 37.2(1) of the SIMR, as well as any other factors relevant in the circumstances. A copy of subsection 37.2(1) of the SIMR is found in Appendix C.

[175] Guided by the aforementioned factors and having considered the information on the administrative record, the following list represents a summary of the CBSA’s analysis conducted in this expiry review investigation with respect to subsidizing:

• the continued availability of subsidy programs for OCTG exporters in China; and
• the countervailing measures against Chinese steel tubular products in Canada and the United States

The continued availability of subsidy programs for OCTG exporters in China

[176] At the time of the CBSA’s original subsidy investigation in 2008, the CBSA identified 31 subsidy programs and found that 10 of the 31 identified programs had conferred benefits to the cooperative exporters.

[177] The CBSA found that 100% of the goods exported from China were subsidized. The weighted average amount of subsidy, expressed as a percentage of the export price, was equal to 19%. The amounts of subsidy found for the cooperative exporters ranged from 160 to 790 Renminbi (RMB) per MT. For all other exporters, the amount of subsidy was determined under Ministerial Specification pursuant to subsection 30.4(2) of SIMA. The amount of subsidy found for non-cooperative exporters was equal to 3,381 RMB/MT.^{Footnote 121}

[178] Detailed descriptions of the programs and explanations as to why they were regarded as countervailable subsidies are contained in the CBSA’s Statement of Reasons issued at the final determination.^{Footnote 122}

[179] In the 2011 re-investigation, the CBSA identified 59 potentially actionable subsidy programs.^{Footnote 123} During the course of the re-investigation, fifteen Chinese exporters participated and received updated amounts of subsidy, and the amounts of subsidy found for the cooperative exporters ranged from 24.25 to 252.51 RMB/MT.^{Footnote 124}

[180] In the 2015 re-investigation, the CBSA identified a total of 113 potentially actionable subsidy programs. Twelve Chinese OCTG exporters participated and received updated amounts of subsidy. The amounts of subsidy found for the cooperative exporters ranged from 2.2 to 1,066.56 RMB/MT.^{Footnote 125}

[181] Since the 2015 re-investigation, the CBSA has also concluded several normal value reviews, which included the determination of amounts of subsidy for Chinese exporters of seamless casing. The most recent determinations are summarized as follows:

[182] On October 11, 2022, the CBSA concluded a normal value review to update normal values, export prices and amounts of subsidy applicable to seamless casing exported from China by JingJiang Special Steel Co., Ltd. (JJSS).^{Footnote 126} The amount of subsidy determined for JJSS was 136.68 RMB/MT.

[183] On April 11, 2023, the CBSA concluded a normal value review to update normal values, export prices and amounts of subsidy applicable to seamless casing exported from China by Dalipal Pipe Company (Dalipal).^{Footnote 127} The amount of subsidy determined for Dalipal was 21.31 RMB/MT.^{Footnote 128}

[184] Although the GOC did not cooperate with the CBSA in recent subsidy proceedings, the GOC has made recent notifications to the World Trade Organization (WTO) of its subsidy programs, including one in July of 2023. The extensive list of subsidies disclosed by the GOC included 69 subsidies at the central government level of various forms, with a particular focus on preferential tax treatments, including one for preferential tax treatment for oil and natural gas production enterprises.^{Footnote 129}

[185] Consequently, the record is clear that since the final determination of the original investigation and throughout the period of review, the GOC has made subsidy programs available to producers/exporters of seamless casing in China. As a result, should the CITT order be rescinded, the continued availability of subsidy programs for OCTG exporters in China, may increase the likelihood of continued or resumed subsidizing.

The countervailing measures against Chinese steel tubular products in Canada and in the United States

[186] In addition to the seamless casing measures, the CBSA currently has six countervailing measures in place against steel tubular products originating in or exported from China: Oil Country Tubular Goods, Pup Joints, Line Pipe, Large Line Pipe, Carbon Steel Welded Pipe and Piling Pipe.^{Footnote 130}

[187] Information on the administrative record also indicates that the United States has seven countervailing measures against steel tubular products from China. The products that are subject to the United States countervailing measures include: Oil Country Tubular Goods, Large Diameter Welded Pipe, Circular Welded Austenitic Stainless Pressure Pipe, Circular Welded Carbon Quality Steel Line Pipe, Circular Welded Carbon Quality Steel Pipe, Light-Walled Rectangular Pipe and Tube, and Certain Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe.^{Footnote 131}

[188] The existence of thirteen countervailing measures in place in Canada and in the United States concerning OCTG and steel tubular products from China indicates that Chinese exporters/producers of steel tubular products receive countervailable benefits from the GOC and the GOC has placed a great deal of importance on its steel tube and pipe industry and subsidized it accordingly. The consistent subsidizing of OCTG throughout the POR and back to the original investigation support the position that the GOC will likely continue to subsidize its domestic seamless casing producers in the future. As a result, should the CITT order be rescinded, the countervailing measures against Chinese steel tubular products in Canada and the United States, may increase the likelihood of continued or resumed subsidizing.

Determination regarding likelihood of continued or resumed subsidizing

[189] Based on the information on the administrative record in respect of the continued availability of subsidy programs for OCTG exporters in China and the countervailing measures against Chinese steel tubular products in Canada and the United States, the CBSA has determined that the expiry of the order is likely to result in the continuation or resumption of subsidizing of certain seamless casing originating in or exported from China.

Conclusion

[190] For the purpose of making a determination in this expiry review investigation, the CBSA conducted its analysis within the scope of the factors found under subsection 37.2(1) of the SIMR. Based on the foregoing consideration of pertinent factors and analysis of information on the record, on February 15, 2024, pursuant to paragraph 76.03(7)(a) of SIMA, the CBSA determined that the expiry of the order made by the CITT on November 28, 2018 in Expiry Review No. RR-2017-006:

1. in respect of certain seamless casing originating in or exported from China is likely to result in the continuation or resumption of dumping of the goods; and
2. in respect of certain seamless casing originating in or exported from China is likely to result in the continuation or resumption of subsidizing of the goods

Future action

[191] On February 16, 2024, the CITT commenced its inquiry to determine whether the expiry of the order with respect to the dumping and subsidizing of the goods from China is likely to result in injury. The CITT’s Expiry Review schedule indicates that it will make its decision by July 24, 2024.

[192] If the CITT determines that the expiry of the order with respect to the goods is likely to result in injury, the order will be continued in respect of those goods, with or without amendment. If this is the case, the CBSA will continue to levy anti-dumping and/or countervailing duties on dumped and/or subsidized importations of the subject goods.

[193] If the CITT determines that the expiry of the order with respect to the goods is not likely to result in injury, the order will be rescinded in respect of those goods. Anti-dumping and/or countervailing duties would then no longer be levied on importations of the subject goods, and any anti-dumping and/or countervailing duties paid in respect of goods that were released after the date that the order was scheduled to expire will be returned to the importer.

Contact us

[194] For further information, please contact the officer listed below:

• Telephone:
• Andrew Manera: 343-553-1868

Email: simaregistry-depotlmsi@cbsa-asfc.gc.ca