REPORT No. 505...Ltd (Feng Hsin)) and the Kingdom of Thailand (Thailand) to Australia is justified....

PUBLIC RECORD

CUSTOMS ACT 1901 - PART XVB

REPORT No. 505

CONTINUATION INQUIRY INTO ANTI-DUMPING MEASURES APPLYING TO CERTAIN

HOT ROLLED STRUCTURAL STEEL SECTIONS

EXPORTED TO AUSTRALIA FROM

JAPAN, THE REPUBLIC OF KOREA, TAIWAN (EXCEPT FOR EXPORTS BY FENG HSIN STEEL CO LTD) AND THE

KINGDOM OF THAILAND

11 October 2019

PUBLIC RECORD

Continuation Inquiry 505 — HRS from Japan, Korea, Taiwan and Thailand

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CONTENTS

CONTENTS .................................................................................................................................................................. I

ABBREVIATIONS ....................................................................................................................................................... III

1 SUMMARY ....................................................................................................................................................... 1

1.1 INTRODUCTION ........................................................................................................................................................ 1 1.2 LEGISLATIVE FRAMEWORK .......................................................................................................................................... 1 1.3 THE STATEMENT OF ESSENTIAL FACTS ........................................................................................................................... 2 1.4 THE PUBLIC RECORD ................................................................................................................................................. 2 1.5 SUBMISSIONS RECEIVED FROM INTERESTED PARTIES ........................................................................................................ 2 1.6 FINAL REPORT ......................................................................................................................................................... 3 1.7 FINDINGS ............................................................................................................................................................... 3 1.8 THE COMMISSIONER’S RECOMMENDATIONS ................................................................................................................. 3

2 BACKGROUND .................................................................................................................................................. 5

2.1 APPLICATION AND INITIATION ..................................................................................................................................... 5 2.2 SUBMISSION RECEIVED REGARDING THE APPLICATION ...................................................................................................... 6 2.3 HISTORY OF THE EXISTING ANTI-DUMPING MEASURES...................................................................................................... 6 2.4 REVIEW 499 ........................................................................................................................................................... 8 2.5 NOTIFICATION AND PARTICIPATION IN THE INQUIRY ........................................................................................................ 9 2.6 DUMPING MARGINS ................................................................................................................................................. 9

3 THE GOODS, LIKE GOODS AND THE AUSTRALIAN INDUSTRY .......................................................................... 11

3.1 LEGISLATIVE FRAMEWORK ........................................................................................................................................ 11 3.2 THE GOODS SUBJECT TO THE ANTI-DUMPING MEASURES ................................................................................................ 11 3.3 TARIFF CLASSIFICATION ........................................................................................................................................... 11 3.4 OTHER INFORMATION – AUSTRALIAN STEEL STANDARD ................................................................................................. 12 3.5 THE AUSTRALIAN INDUSTRY ..................................................................................................................................... 12 3.6 LIKE GOODS .......................................................................................................................................................... 12

4 THE AUSTRALIAN MARKET ............................................................................................................................. 14

4.1 SUPPLY OF THE AUSTRALIAN HRS MARKET .................................................................................................................. 14 4.2 SUBSTITUTABLE PRODUCTS ...................................................................................................................................... 14 4.3 IMPORTERS ........................................................................................................................................................... 14 4.4 EXPORTERS TO AUSTRALIA ....................................................................................................................................... 14 4.5 MARKET SIZE......................................................................................................................................................... 15 4.6 DEMAND IN THE AUSTRALIAN HRS MARKET ................................................................................................................ 15 4.7 IMPORT PARITY PRICING .......................................................................................................................................... 16

5 ECONOMIC CONDITION OF THE AUSTRALIAN INDUSTRY ............................................................................... 18

5.1 APPROACH TO ANALYSIS .......................................................................................................................................... 18 5.2 FINDINGS IN THE ORIGINAL INVESTIGATION.................................................................................................................. 18 5.3 THE COMMISSION’S ANALYSIS – CONTINUATION INQUIRY 505 ....................................................................................... 18 5.4 CONCLUSION ........................................................................................................................................................ 26

6 VARIABLE FACTORS ........................................................................................................................................ 27

7 LIKELIHOOD THAT DUMPING WILL CONTINUE OR RECUR .............................................................................. 28

7.1 AUSTRALIAN INDUSTRY’S CLAIMS .............................................................................................................................. 28 7.2 LIKELIHOOD OF CONTINUATION OR RECURRENCE OF DUMPING ........................................................................................ 32 7.3 SUMMARY ............................................................................................................................................................ 39

8 LIKELIHOOD THAT MATERIAL INJURY WILL CONTINUE OR RECUR? ................................................................ 40

8.1 AUSTRALIAN INDUSTRY’S CLAIMS .............................................................................................................................. 40 8.2 THE COMMISSION’S ANALYSIS .................................................................................................................................. 40

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8.3 SUMMARY ............................................................................................................................................................ 46

9 SUBMISSIONS – DUMPING AND MATERIAL INJURY ....................................................................................... 47

9.1 SUBMISSIONS FROM HYUNDAI .................................................................................................................................. 47 9.2 SUBMISSIONS FROM LIBERTY STEEL IN RESPONSE TO HYUNDAI ........................................................................................ 49 9.3 THE COMMISSION’S ANALYSIS .................................................................................................................................. 50 9.4 SUBMISSIONS BY LIBERTY STEEL IN RESPECT OF SYS ...................................................................................................... 53 9.5 SUBMISSIONS BY SYS.............................................................................................................................................. 54 9.6 SUBMISSIONS ON MATERIAL INJURY BY DRAGON STEEL .................................................................................................. 57 9.7 SUBMISSION FROM LIBERTY STEEL IN RESPONSE TO TUNG HO......................................................................................... 61 9.8 SUBMISSION FROM TUNG HO IN RESPONSE TO LIBERTY STEEL......................................................................................... 61

10 SUMMARY AND CONCLUSION ....................................................................................................................... 62

10.1 SUMMARY ............................................................................................................................................................ 62 10.2 CONCLUSION ........................................................................................................................................................ 62

11 RECOMMENDATIONS ..................................................................................................................................... 64

12 LIST OF APPENDICES ....................................................................................................................................... 65

NON-CONFIDENTIAL APPENDIX 1 - VARIABLE FACTORS ESTABLISHED IN REVIEW 499 ............................................ 66

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ABBREVIATIONS

the 2016 Steel and Aluminium Report

Analysis of Steel and Aluminium Markets Report to the Commissioner of the Anti-Dumping Commission

the 2017 Steel Manufacturing and Fabricating Markets report

Analysis of Australia’s Steel Manufacturing and Fabricating Markets Report to the Commissioner of the Anti-Dumping Commission November 2017

ABF Australian Border Force

ACCC Australian Competition and Consumer Commission

the Act the Customs Act 1901

ADN Anti-Dumping Notice

Ai Group Australian Industry Group

the applicant OneSteel Manufacturing Pty Ltd trading as Liberty Steel

ASEAN Association of Southeast Asian Nations

BOS basic oxygen steelmaking

China the People’s Republic of China

the Commission the Anti-Dumping Commission

the Commissioner the Commissioner of the Anti-Dumping Commission

CTMS cost to make and sell

Dragon Steel Dragon Steel Corporation

the Dumping Duty Act the Customs Tariff (Anti-Dumping) Act 1975

EAF electric arc furnace

EPR electronic public record

Feng Hsin Feng Hsin Steel Co Ltd

FOB free on board

FIS free in store

FY financial year, being the period from 1 July to 30 June

the goods the goods the subject of the application

GUC goods under consideration

IPP import parity pricing

Hyundai Hyundai Steel Co., Ltd

HRS hot rolled structural steel sections

IDD interim dumping duty

Korea the Republic of Korea

Liberty Steel OneSteel Manufacturing Pty Ltd trading as Liberty Steel

the Minister the Minister for Industry, Science and Technology

MPa Megapascals

NIP non-injurious price

OECD Organisation for Economic Co-operation and Development

OneSteel OneSteel Manufacturing Pty Ltd

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OneSteel Trading OneSteel Trading Pty Ltd

the then Parliamentary Secretary

the then Parliamentary Secretary to the Minister for Industry

REP 223 Anti-Dumping Commission Report No. 223

REP 499 Final report for Review of Measures 499

ROI return on investment

SEF 505 statement of essential facts for Continuation Inquiry 505

Steelforce Steelforce Holdings Pty Ltd

SYS Siam Yamato Steel Co Ltd

Thailand the Kingdom of Thailand

TS Steel TS Steel Co Ltd

Tung Ho Tung Ho Steel Enterprise Corporation

USA United States of America

USP unsuppressed selling price

WTO World Trade Organization

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1 SUMMARY

1.1 Introduction

This report sets out the facts on which the Commissioner of the Anti-Dumping Commission (the Commissioner and the Commission respectively) bases recommendations to the Minister for Industry, Science and Technology (the Minister) on whether the continuation of anti-dumping measures, in the form of a dumping duty notice, that apply to exports of hot rolled structural steel sections (HRS or ‘the goods’) from Japan, the Republic of Korea (Korea), Taiwan (except for exports by Feng Hsin Steel Co Ltd (Feng Hsin)) and the Kingdom of Thailand (Thailand) to Australia is justified.

The anti-dumping measures are due to expire on 20 November 2019 (the specified expiry day). This inquiry considers whether the continuation of the anti-dumping measures, as amended by Review 499, beyond the specified expiry day, is justified.

This inquiry is being conducted in response to an application lodged by OneSteel Manufacturing Pty Ltd trading as Liberty Steel (Liberty Steel).1

1.2 Legislative framework

Division 6A of Part XVB of the Customs Act 1901 (the Act) 2 sets out, among other things, the procedures to be followed by the Commissioner in dealing with an application for the continuation of anti-dumping measures.

Section 269ZHE(1) requires that the Commissioner must, within 110 days after the publication of the notice or such longer period as allowed, place on the public record a statement of the essential facts (SEF) which the Commissioner proposes to base his recommendations to the Minister concerning the continuation of the measures. Section 269ZHE(2) requires that in doing so, the Commissioner must have regard to the application and any submissions received within 37 days of the initiation of the inquiry, and may have regard to any other matters that he considers relevant.

Under subsection 269ZHE(3), the Commissioner is not obliged to have regard to any submissions relating generally to the inquiry that are received by the Commissioner after the end of the 37 day period referred to in subsection 269ZHE(2) if to do so would, in the Commissioner’s opinion, prevent the timely placement of the SEF on the public record.3

Under subsection 269ZHF(4), the Commissioner is not obliged to have regard to any submissions made in response to the SEF that are received by the Commissioner after the end of the 20 day period after publication of the SEF and referred to in subsection

1 On 29 July 2019, Liberty Steel was re-named. Since that date it is known as OneSteel Manufacturing Pty Ltd trading as Infrabuild Steel. In this report, it is referred to as Liberty Steel, the trading name recorded by the company on its application. 2 All legislative references are to the Customs Act 1901, unless otherwise specified. 3 Under 269ZHE(3), the Commissioner did not have regard to two submissions that were received by the Commissioner after the end of the 37 day period referred to in subsection 269ZHE(2) because to do so would, in the Commissioner’s opinion, prevent the timely placement of the SEF on the public record. These submissions were: a submission from Staughtons Trade Advisory Group Pty Ltd on behalf of Siam Yamato Steel received on 7 August 2019; and a submission from J. Bracic and Associates on behalf of Dragon Steel Corporation received on 9 August 2019. The Commissioner has had regard to these submissions in preparing this report. These submissions are on the public record.

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269ZHF(3) if to do so would, in the Commissioner’s opinion, prevent the timely preparation of the report to the Minister.

Subsection 269ZHF(1) requires that the Commissioner must, after the conduct of this inquiry, give the Minister a report which recommends that the relevant notice:

remain unaltered;

cease to apply to a particular exporter or to a particular kind of goods;

have effect in relation to a particular exporter or to exporters generally as if different variable factors had been ascertained; or

expire on the specified expiry day.

Under subsection 269ZHF(2), the Commissioner must not recommend that the Minister take steps to secure the continuation of the anti-dumping measures unless the Commissioner is satisfied that the expiration of the anti-dumping measures would lead, or would be likely to lead, to a continuation of, or a recurrence of, the dumping and the material injury that the anti-dumping measures are intended to prevent.

1.3 The statement of essential facts

The Commissioner published Statement of Essential Facts No. 505 (SEF 505) on 12 August 2019. The SEF set out the essential facts on which the Commissioner proposed to base his final recommendations to the Minister based on the information before him at that time. Interested parties were invited to lodge written submissions in response to SEF 505 by no later than 2 September 2019.4

1.4 The public record

The public record contains non-confidential submissions from interested parties, non-confidential versions of the Commission’s verification reports and other publicly available documents.

1.5 Submissions received from interested parties

The Commission received several submissions in response to SEF 505 which are available on the public record.

Under section 269ZHF(4), the Commissioner is not obliged to have regard to any submissions made in response to the SEF that were received after 2 September 2019 if to do so would, in the Commissioner’s opinion, prevent the timely preparation of the report to the Minister. The Commissioner has not had regard to a submission received on 8 October 2019 from Staughtons Trade Advisory Group Pty Ltd on behalf of ThyssenKrupp Materials Trading Australia and to a submission received on 9 October 2019 from Liberty Steel because to do so would, in the Commissioner’s opinion, prevent the timely preparation of this report to the Minister. These submissions are on the public record.5

4 The due date of 1 September 2019 fell on a Sunday. The effective date was Monday 2 September 2019. 5 Item 57 and item 58 respectively on the public record refer.

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1.6 Final report

The Commissioner’s final report and recommendations must be provided to the Minister within 155 days after the publication of a notice under section 269ZHD(4) or such longer period as the Minister allows.

Extensions of time for the provision of the Commissioner’s final report and recommendations to the Minister have been granted under subsection 269ZHI(3). The Commissioner’s recommendations are due to be made in a report to be provided to the Minister on or before 14 October 2019.

Refer to section 2.1 of this report for further details.

1.7 Findings

Based on the Commission’s analysis of the available evidence, the Commissioner is satisfied that if the anti-dumping measures expire, it is likely that:

dumping of HRS will continue by;

o all exporters from Japan;

o all exporters from Korea;

o Dragon Steel and uncooperative exporters from Taiwan; and

o all exporters from Thailand

and

dumping of HRS by TS Steel Co Ltd (TS Steel) of Taiwan will recur.

The Commissioner is not satisfied that if the anti-dumping measures expire, it is likely that dumping of HRS by Tung Ho Steel Enterprise Corporation (Tung Ho) of Taiwan will recur.

Based on the Commission’s analysis of the available evidence, the Commissioner is satisfied that the expiration of the anti-dumping measures on exports of HRS to Australia from Japan, Korea, Taiwan (except for Feng Hsin and Tung Ho) and Thailand would be likely to lead to a continuation of the material injury that the anti-dumping measures are intended to prevent.

1.8 The Commissioner’s recommendations 6

The Commissioner recommends to the Minister that:

in accordance with subsection 269ZHG(1)(b), DECLARE that the Minister has decided to secure the continuation of the anti-dumping measures relating to HRS exported to Australia from Japan, Korea, Taiwan (except for Feng Hsin and Tung Ho) and Thailand; and

in accordance with subsection 269ZHG(1)(a), DECLARE that the Minister has decided not to secure the continuation of the anti-dumping measures currently applying to HRS exported to Australia from Taiwan by Tung Ho.

6 For the purposes of this continuation inquiry, the Commissioner has had regard to other matters considered relevant to the inquiry, including the variable factors established in Review 499. In respect of Review 499, the Commissioner recommended to the Minister that the dumping duty notice be altered in respect of HRS exported to Australia from Japan, Korea, Taiwan (except for Feng Hsin) and Thailand. Refer to REP 499 which is on the public record.

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The Commissioner recommends that the Minister, in accordance with subsection 269ZHG(4)(a)(ii), DETERMINE that the dumping duty notice continues in force after 20 November 2019, but that after that day the notice ceases to apply to Tung Ho.

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2 BACKGROUND

2.1 Application and initiation

On 23 November 2018, and in accordance with subsection 269ZHB(1), the Commissioner published a notice 7 on the Commission’s website inviting the following persons to apply for the continuation of the anti-dumping measures:

the person whose application under section 269TB resulted in the anti-dumping measures (subsection 269ZHB(1)(b)(i)); or

persons representing the whole or a portion of the Australian industry producing like goods to the goods covered by the anti-dumping measures (subsection 269ZHB(1)(b)(ii)).

On 21 January 2019, an application for the continuation of the anti-dumping measures was received from Liberty Steel. A non-confidential version of the application is available on the Commission’s public record.

Following consideration of the application, the Commissioner decided not to reject the application and initiated Continuation Inquiry 505. Notification of the initiation of the inquiry was made in Anti-Dumping Notice (ADN) No. 2019/21 which was published on the Commission’s website on 11 February 2019. ADN No. 2019/21 indicated that the Commissioner will examine the period from 1 January 2018 to 31 December 2018 (the inquiry period) to determine whether the anti-dumping measures should:

i. remain unaltered; or ii. cease to apply to a particular exporter or to a particular kind of goods; or iii. have effect in relation to a particular exporter or to exporters generally, as if

different variable factors had been ascertained; or iv. expire on the specified expiry day.

The Commissioner indicated in ADN No. 2019/21 that a SEF will be placed on the public record by 23 April 2019 and that a recommendation to the Minister will be made in a report on or before 7 June 2019.

On 15 April 2019, the timeframe for publishing the SEF and final report was extended under subsection 269ZHI(3) to allow time to analyse submissions and matters in relation to injury effects and causation, as well as the likelihood that dumping will continue or recur. Notification of this extension was made in ADN No. 2019/55 8 which indicated that the SEF would be published no later than 11 July 2019 and that the Commissioner’s recommendations will be made in a final report due to be provided to the Minister on or before 30 August 2019.

On 8 July 2019, the timeframe for publishing the SEF and final report was extended under subsection 269ZHI(3) to allow time to consider submissions from interested parties in respect of material injury claims made by the applicant. Notification of this extension was made in ADN No. 2019/87 9 which indicated that the SEF would be published no later

7 ADN No. 2019/173 refers. 8 Item 7 on the public record refers. 9 Item 22 on the public record refers.

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than 12 August 2019 and that the Commissioner’s recommendations will be made in a report due to be provided to the Minister on or before 1 October 2019.

On 11 September 2019, the timeframe for providing the final report to the Minister was extended under subsection 269ZHI(3) to allow time to consider submissions made in response to the SEF from interested parties. Notification of this extension was made in ADN No. 2019/117 10 which indicated that the Commissioner’s recommendations will be made in a report due to be provided to the Minister on or before 14 October 2019.

Further details are available on the Commission’s website.

2.2 Submission received regarding the application

2.2.1 Siam Yamato Steel Co Ltd submission of 4 April 2019

On 4 April 2019, Siam Yamato Steel Co Ltd (SYS) submitted that the continuation of measures is not justified and that the application should have been rejected.11

The Commission’s assessment

The submission was received after the Commissioner published a notice under subsection 269ZHD(4) indicating that this inquiry had already been initiated. ADN No. 2019/21 provides the reasons why the Commissioner did not reject the application. For those reasons, the Commissioner remains of the view that the application should not have been rejected.

2.3 History of the existing anti-dumping measures

2.3.1 Original investigation

On 24 October 2013, a dumping investigation into HRS exported to Australia from Japan, Korea, Taiwan and Thailand was initiated following an application lodged by OneSteel,12 a manufacturer of HRS in Australia. The investigation period was 1 October 2012 to 30 September 2013.

In that investigation, as outlined in Anti-Dumping Commission Report No. 223 (REP 223),13 it was found that:

the goods exported to Australia from Japan, Korea, Taiwan and Thailand were dumped, with margins ranging from 2.20 per cent to 19.48 per cent;

10 Item 47 on the public record refers. 11 Item 6 on the public record refers. 12 At that time, Liberty Steel was trading as OneSteel. In 2018, OneSteel began referring to itself as OneSteel Manufacturing Pty Ltd trading as Liberty Steel. As stated in Footnote 1 of this report, on 29 July 2019 Liberty Steel was re-named but in this report it is referred to as Liberty Steel, the trading name recorded by the company in its application.

In 2017, OneSteel was acquired by the Liberty House Steel Group and became part of its Liberty Steel Division. The Liberty House Steel Group is an international metals and industrial group, specialising in commodities, metals recycling, and the manufacture of steel, aluminium and engineering products which has its headquarters in London. It is part of the GFG Alliance is an international grouping of businesses, founded by the British Gupta family. 13 Item 96 on the public record for Investigation 223 refers.

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the dumped exports caused material injury to the Australian industry producing like goods; and

continued dumping may cause further material injury to the Australian industry.

The findings and recommendations in REP 223 were provided to the then Parliamentary Secretary to the Minister for Industry (the then Parliamentary Secretary), recommending the publication of a dumping duty notice in respect of the goods. Notice of the then Parliamentary Secretary’s decision to accept the recommendations in REP 223 was published in The Australian newspaper and the Commonwealth of Australia Gazette. Interested parties were also advised of this outcome in ADN No. 2014/127 on 20 November 2014.14

During the conduct of Investigation 223 and after becoming satisfied that during the investigation period Feng Hsin did not dump HRS, the Commissioner terminated the investigation insofar as it related to that exporter on 31 October 2014. As such, Feng Hsin is exempt from anti-dumping measures. Termination of Investigation No. 223 sets out the reasons for this termination and is available on the public record for Investigation 223.

On 7 August 2015, following a review by the Anti-Dumping Review Panel of the decision to impose dumping duties, the dumping duty notice was varied so that the effective rate of duty for HRS exported to Australia by SYS was altered from 18.28 per cent to 18.00 per cent with effect from 20 November 2014.

2.3.2 Previous reviews of measures

Review 345 - exports of the goods from Taiwan by Tung Ho

On 21 March 2016, Tung Ho lodged an application for a review of the dumping duty notice applying to HRS exported to Australia from Taiwan claiming that the variable factors relevant to the taking of the anti-dumping measures had changed.

The review period was 1 January 2015 to 31 December 2015.

In Anti-Dumping Commission Report No. 345, the Commissioner found that Tung Ho was not dumping and recommended that the dumping duty notice have effect in relation to Tung Ho as if different variable factors relevant to the determination of duty had been ascertained.

The then Parliamentary Secretary’s decision to alter the notice as it applied to Tung Ho was published on the Commission’s website on 19 October 2016. The effect of the review was that the measures applying to exports from Tung Ho were altered from a dumping margin of 2.2 per cent (ad valorem duty method) to a floor price.

Review 346 - exports of the goods from Thailand by SYS

On 23 March 2016, SYS lodged an application for a review of the dumping duty notice applying to HRS exported to Australia from Thailand insofar as it affected SYS. The review period was 1 January 2015 to 31 December 2015.

In Anti-Dumping Commission Report No. 346, the Commissioner found that SYS was not dumping and recommended that the dumping duty notice have effect in relation to SYS as if different variable factors relevant to the determination of duty had been ascertained.

14 Item 98 on the public record for Investigation 223 refers.

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The then Parliamentary Secretary’s decision to alter the notice as it applied to SYS was published on the Commission’s website on 19 October 2016. The effect of the review was that the measures applying to exports from SYS were altered from a dumping margin of 18.0 per cent (ad valorem duty method) to a floor price.

Accelerated review 359 - exports from Taiwan by Dragon Steel Corporation

On 9 June 2016, Dragon Steel Corporation (Dragon Steel) lodged an application for an accelerated review of the dumping duty notice applying to certain HRS exported to Australia from Taiwan insofar as it affected Dragon Steel. The review period was 1 April 2015 to 31 March 2016.

Anti-Dumping Commission Report No. 359 recommended that the dumping duty notice have effect in relation to Dragon Steel as if the then Parliamentary Secretary had fixed specific different variable factors relevant to the determination of duty.

The then Parliamentary Secretary’s decision to alter the notice as it applied to Dragon Steel was published on the Commission’s website on 18 October 2016. The effect of the accelerated review was that measures applying to exports from Dragon Steel were altered from a dumping margin of 7.9 per cent (ad valorem duty method) to a floor price.

Review 465 - exports of the goods from Korea

On 27 February 2018, Liberty Steel 15 lodged an application requesting a review of the anti-dumping measures as they apply to all exporters of HRS to Australia from Korea. The review period for Review 465 was 1 January 2017 to 31 December 2017.

Anti-Dumping Commission Report No. 465 recommended that the dumping duty notice have effect in relation to:

Hyundai Steel Co., Ltd (Hyundai); and

uncooperative and all other exporters from Korea

as if different variable factors relevant to the determination of duty had been ascertained.

The Minister’s decision to alter the notice was published on the Commission’s web site on 18 December 2018. The effect of the review was that:

measures applying to exports from Hyundai were altered from 2.52 per cent (ad valorem duty method) to 9.9 per cent (combination fixed and variable duty method); and

measures applying to uncooperative exporters from Korea were altered from 3.24 per cent (ad valorem duty method) to 13.9 per cent (combination fixed and variable duty method) .

2.4 Review 499

On 21 November 2018, an application was lodged by Liberty Steel requesting a review of the anti-dumping measures as they apply to all exporters of HRS to Australia from Japan, Korea, Taiwan (except for exports by Feng Hsin) and Thailand.

The Commissioner decided not to reject the application. Notification of Review 499 was made in ADN No. 2019/02 which was published on the Commission’s website on 3 January 2019.

15 In that application, OneSteel Manufacturing Pty Ltd indicated that it was trading as Liberty OneSteel.

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2.5 Notification and participation in the inquiry

On 11 February 2019, ADN No.2019/21 advised of the initiation of this continuation inquiry. The Commissioner established an inquiry period of 1 January 2018 to 31 December 2018.

ADN No. 2019/21 noted that the applicant, the countries from which the goods are under review, the respective importers and exporters of HRS and the period being examined in Review 499 are identical to those in this continuation inquiry.

For the purposes of this continuation inquiry, the Commissioner has had regard to other matters considered relevant to the inquiry, including the variable factors established in Review 499, to assess whether dumping has occurred during the inquiry period, and whether dumping is likely to continue or recur if the anti-dumping measures were to expire. Details of the variable factors established in Review 499 are at Non-Confidential Appendix 1.

2.5.1 Australian industry

Liberty Steel, the sole manufacturer of HRS in Australia, provided sales and cost to make and sell (CTMS) data to the Commission. The Commission visited Liberty Steel’s manufacturing plant on 19 to 21 March 2019 and its offices on 26 to 27 March 2019 to verify the information and data. The report in relation to these visits is available on the public record.16

2.5.2 Importers and exporters

The Commission performed a search of the Australian Border Force (ABF) import database and identified exporters and importers of HRS from Japan, Korea, Taiwan and Thailand during the inquiry period. All these exporters and importers were notified of the details of this inquiry and were invited to provide submissions.

As the Commissioner’s intention at the time of the initiation of this inquiry was to have regard to the variable factors established in Review 499 to assess whether dumping has occurred during the inquiry period, questionnaires were not required from exporters or importers.

Subsection 269T(1) provides that for an inquiry under Division 6A in relation to the publication of a dumping duty notice, an exporter is a ‘cooperative exporter’ where the exporter’s exports were examined as part of the inquiry and the exporter was not an ‘uncooperative’ exporter in relation to the inquiry.

The exporter and importer verification reports are available on the public records on Commission’s website for both this inquiry and for Review 499.

2.6 Dumping margins

The dumping margins that were found in the original investigation, or altered as the result of a subsequent review as described in section 2.3.2, and the respective forms of anti-dumping measures that applied at the time this continuation inquiry was initiated are provided in Table 1.

16 Item 8 of the public record refers.

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Country Manufacturer/ exporter Dumping margin

Duty Method

Method to establish

dumping margin

Japan

JFE Bars and Shapes Corporation

12.2% Ad valorem

Weighted average export prices were

compared with corresponding

normal values over the inquiiry period

in terms of s. 269TACB(2)(a) of the Customs Act

1901.

Uncooperative Exporters 12.2% Ad valorem

Korea

Hyundai Steel Company 9.9% Combination of fixed and variable duty method

Uncooperative Exporters 13.9% Combination of fixed and variable duty method

Taiwan

Dragon Steel Corporation N/A Floor price

TS Steel Co Ltd 4.7% Ad valorem

Tung Ho Steel Enterprise Corporation

N/A Floor price


Thailand Siam Yamato Steel Co Ltd N/A Floor price


Table 1 — HRS current dumping margins

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3 THE GOODS, LIKE GOODS AND THE AUSTRALIAN INDUSTRY

3.1 Legislative framework

The Commissioner must be satisfied that ‘like’ goods to the goods the subject of the anti-dumping measures are produced in Australia.

In making this assessment, the Commissioner must first determine that the goods produced by the Australian industry are ‘like’ to the imported goods. Subsection 269T(1) defines like goods as:

… goods that are identical in all respects to the goods under consideration or that, although not alike in all respects to the goods under consideration, have characteristics closely resembling those of the goods under consideration.

Subsection 269T(2) specifies that for goods to be regarded as being produced in Australia, they must be wholly or partly manufactured in Australia. In accordance with subsection 269T(3), at least one substantial process in the manufacture of those goods must be carried out in Australia for goods to be considered as partly manufactured in Australia.

3.2 The goods subject to the anti-dumping measures

The goods to which the current anti-dumping measures apply (the goods) are:

Hot rolled structural steel sections in the following shapes and sizes, whether or not containing alloys:

universal beams (I sections), of a height greater than 130 mm and less than 650 mm;

universal columns and universal bearing piles (H sections), of a height greater than 130 mm and less than 650 mm;

channels (U sections and C sections) of a height greater than 130 mm and less than 400 mm; and

equal and unequal angles (L sections), with a combined leg length of greater than 200 mm.

Sections and/or shapes in the dimensions described above, that have minimal processing, such as cutting, drilling or painting do not exclude the goods from coverage of the investigation.

The measures do not apply to the following goods:

hot rolled ‘T’ shaped sections, sheet pile sections and hot rolled merchant bar shaped sections, such as rounds, squares, flats, hexagons, sleepers and rails; and

sections manufactured from welded plate (e.g. welded beams and welded columns).

3.3 Tariff classification

Goods identified as hot rolled non-alloy steel sections (meeting the specified shapes and sizes set out above) are generally classified to the tariff subheading in Schedule 3 of the Customs Tariff Act 1995:

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7216.31.00 statistical code 30 (channels — U and C sections);

7216.32.00 statistical code 31(universal beams — I sections);

7216.33.00 statistical code 32 (universal column and universal bearing piles — H sections); and

7216.40.00 statistical code 33 (equal and unequal angles — L sections).

Goods identified as hot rolled alloy steel sections (meeting the specified shapes and sizes set out above) are generally classified to tariff subheading 7228.70.00 (statistical codes 11 and 12) in schedule 3 of the Customs Tariff Act 1995.

3.4 Other information – Australian steel standard

Imported HRS generally meets the requirements of Australian standard AS/NZA3679.1.

Liberty Steel’s standard HRS range is manufactured to 300 megapascals (MPa) yield strength as required by the Australian standard and is branded as 300PLUS. Liberty Steel confirmed that its entire range is manufactured to meet or exceed the Australian standard.

Liberty Steel also manufactures HRS product to ‘Grade 350’, which has a minimum yield strength of 350 MPa. Liberty Steel only manufactures ‘Grade 350’ on a custom order basis.

3.5 The Australian industry

Liberty Steel’s HRS manufacturing facilities are the fully integrated Whyalla Steelworks located in South Australia that includes the HRS rolling mill.

The Commission has visited Liberty Steel and has found that HRS is wholly produced in Australia at the Whyalla Steelworks. All HRS that is made by the Australian industry is produced at the Whyalla Steelworks.

HRS is manufactured at the Whyalla Steelworks by heating semi-finished steel in the form of blooms and rolling it to shape and size in a rolling mill. The Whyalla Steel works produces semi-finished steel that is used in Liberty Steel’s various rolling facilities, including in Whyalla.

The Whyalla Steelworks produces steel using a basic oxygen steelmaking (BOS) system in which liquid steel is cast into blooms, billets, or slabs. Billet is a semi-finished steel product that is used as feed for rod and bar products (not subject to this inquiry). Slab is a semi-finished steel product that is produced for export (not subject to this inquiry).

The Commissioner is satisfied that there is an Australian industry producing like goods to the imported HRS and that this industry comprises that part of Liberty Steel that produces like goods at the Whyalla Steelworks.

3.6 Like goods

Subsection 269T(1) defines like goods as:

…goods that are identical in all respects to the goods under consideration or that, although not alike in all respects to the goods under consideration, have characteristics closely resembling those of the goods under consideration.

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The Commission has conducted a verification visit to Liberty Steel 17 and has found that the HRS manufactured in Australia are like goods on the following grounds:

Physical likeness: the primary physical characteristics of the goods and locally manufactured goods have similar shape, dimensions, appearance, weight and are produced to meet the same Australian standard;

Commercial likeness: the goods manufactured in Australia and the imported goods are commercially alike, directly competitive and are sold to common customers in the Australian market;

Functional likeness: both the goods manufactured in Australia and the imported goods are functionally alike as they have the same range of end uses; and

Production likeness: the goods manufactured in Australia are manufactured in a similar manner to the imported goods.

The findings on physical, commercial, functional and production likeness outlined above lead to the conclusion that the goods manufactured in Australia have characteristics closely resembling the goods the subject of the measures, and are therefore like goods. 18

17 Item 8 of the public record refers. 18 This is consistent with the Commission’s findings in Investigation 223. Item 96 on the public record for Investigation 223 refers.

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4 THE AUSTRALIAN MARKET

4.1 Supply of the Australian HRS market

At the industry verification visit, Liberty Steel indicated that the Australian HRS market is predominantly supplied by distributors and that one of these distributors is Liberty Metalcentre, which is a related entity of Liberty Steel.

The distributors source products from the Australian industry or from overseas suppliers. Liberty Steel generally competes at the level of trade supplying distributors. Sales of HRS by distributors are to end users.

4.2 Substitutable products

At the industry verification visit, Liberty Steel indicated that the main alternative products to HRS are reinforced concrete along with imported fabricated steel components which are substitutable in some construction and engineering applications such as in high rise buildings.

4.3 Importers

The Commission has analysed ABF data and has found the 10 largest importers of HRS accounted for the vast majority of HRS imports from Japan, Korea, Taiwan and Thailand during the inquiry period. The Commission has found that eight of the top 10 importers of HRS in 2018 have been in the group of top 10 importers of HRS since 2010. Further, in 2018, all of those importers sourced HRS from countries and exporters subject to measures.

The Commission notes that in the inquiry period, Liberty Steel, through a combination of imports of its own accord or through other parties, was one of the major importers of HRS. These imports were of one type of section and were from Korea and Taiwan. The volume of imports by Liberty Steel was substantially higher in the year prior to the inquiry period. From 2011 to 2016, Liberty Steel’s import volumes of HRS were non-material relative to the total volume of HRS imports in the same period.

The Commissioner does not consider that the importation of the goods by Liberty Steel precludes it from also being the Australian industry producing HRS, or affects the Commission’s finding that Liberty Steel is the Australian industry producing like goods.

The Commission has received a number of submissions in respect of Liberty Steel’s importations of HRS and the purported implications of these importations on the Commission’s assessment of the Australian industry and the material injury experienced by the Australian industry. These submissions are discussed in detail in section 9 of this report.

4.4 Exporters to Australia

The Commission has analysed ABF data and has found that the 10 largest exporters of HRS to Australia accounted for the vast majority of HRS exports from the countries subject to measures during the inquiry period. The Commission has found that in 2018, the three largest exporters of HRS to Australia, Hyundai, Tung Ho and SYS, accounted for the largest proportion of HRS exports to Australia. The analysis also indicates that they have been the three largest exporters of HRS to Australia since 2010.

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4.5 Market size

The Commission has collated verified information submitted by Liberty Steel, importers and exporters, as well as ABF import data to estimate the size of the Australian HRS market. The Commission notes that at its full capacity, the Australian industry is not able to fully supply the entire Australian HRS market.

Figure 1 indicates the size of the entire Australian HRS market has fluctuated since 2010. In 2018, the HRS market was slightly larger than it was in 2010. The Commission also notes that since the implementation of the measures in 2014, there has been a general increase in the size of the whole Australian market.

Australian HRS Market (tonnes)

Figure 1 – Australian HRS Market Size

4.6 Demand in the Australian HRS market

The level of activity in the market segments in which end users operate drives demand in the Australian HRS market. The end users of HRS transform finished steel into fabricated products for a variety of end-uses.

In the Commission’s report, Analysis of Australia’s Steel Manufacturing and Fabricating Markets Report to the Commissioner of the Anti-Dumping Commission November 2017 (the 2017 Steel Manufacturing and Fabricating Markets Report), the Commission reported that the Australian steel fabrication industry is very diverse and primarily consists of small enterprises. It also reported that in 2013/14:

In Australia, about 88 per cent of steel fabricated products are purchased by three industries. These are:

• construction (50.3 per cent) • manufacturing (20.5 per cent)

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• mining (17.2 per cent).19

In the Commission’s Analysis of Steel and Aluminium Markets Report to the Commissioner of the Anti-Dumping Commission (the 2016 Steel and Aluminium Report),20 it was reported that most steel products are purchased by the construction, manufacturing and mining industries.

The Commission notes that the Australian Industry Group (Ai Group) in its November 2018 Construction Outlook 21 states that:

Turnover from all major construction work is forecast to further moderate in 2019-20 (+3.8%), mainly reflecting the negative influence of a sharp fall in multi-apartment building work (-17.6%).

However, engineering construction will lift to a higher level, with expected growth of 8.0%. The downturn in resources-related engineering construction is expected to have largely run its course in 2019-20 with the decline in construction on oil and gas processing projects to moderate markedly (-2.0%) over the year. In addition, a slight recovery in mining-related construction is forecast to emerge (+2.3%) as investment in new mine capacity lifts in response to improving commodity prices and a turnaround in exploration activity.

The expansion in non-mining infrastructure (+8.9%) is expected to ease somewhat over the year. This mainly reflects a slower growth contribution from other civil projects (+21.7%) while telecommunications is expected to decline by 13.7% as NBN spending winds down. Turnover derived from utilities construction is expected to hold at relatively unchanged levels on the back of support from investment in new pipeline infrastructure for gas supply, wind and solar projects, electrical sub-station upgrades and the construction of water treatment facilities.

Commercial construction is projected to continue to expand in 2019-20, albeit at a slower pace of 6.3%. Private sector building activity is expected to rise by 6.3% while investment in education and health building projects is set to underpin a 5.6% growth outlook for public sector building activity.

The Commission considers that this indicates that high levels of demand in the Australian HRS market will continue to be present from 2019 to 2020. The Commission also considers it is likely that some of this demand will continue to be met by importers.

4.7 Import parity pricing

In the original investigation (223), the Commission found that OneSteel sets its prices by applying an import parity pricing (IPP) process in which it negotiates prices with reference to offers made in the HRS market for imported goods.

In its application for the continuation of measures, Liberty Steel stated that it continues to apply the IPP process and that pricing in the Australian market is driven by prices of HRS exported from Japan, Korea, Taiwan and Thailand. Liberty Steel also stated that known import offers in the market are used as a tool by customers to negotiate lower prices from Liberty Steel.

19 This report is available on the Commission’s web site. 20 This report is available on the Commission’s web site. 21 This report is available at https://aib.org.au/wp-content/uploads/2018/12/Construction-Outlook-ACA.pdf.

https://aib.org.au/wp-content/uploads/2018/12/Construction-Outlook-ACA.pdf

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At the industry verification visit, the Commission was presented with evidence that indicated Liberty Steel continues to apply the IPP process and that the processes of price setting and negotiation as described in REP 223 and in Liberty Steel’s application remain in place. This evidence included the provision of Liberty Steel’s IPP model which is used to negotiate and set prices and that incorporates prices of imported HRS, copies of correspondence with customers as well as discussions with relevant sales personnel at Liberty Steel.

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5 ECONOMIC CONDITION OF THE AUSTRALIAN INDUSTRY

5.1 Approach to analysis

This chapter considers the economic condition of the Australian industry from 1 January 2010 to 31 December 2018. This period has been examined to analyse trends before and after the imposition of the anti-dumping measures.

The analysis detailed in this chapter is based on verified information submitted by Liberty Steel, importers, exporters, import data from the ABF and submissions by interested parties. This analysis has also been conducted with regard to qualitative information related to market structure, practices and trends that has been provided by interested parties or obtained by the Commission.

As explained at section 4.3 of this report, Liberty Steel has imported HRS either directly or via intermediaries. The Commission has focussed its analysis on data pertaining to Liberty Steel’s production of HRS and excluded data on its importations of HRS, such that an assessment of the economic conditions is made in respect of the Australian industry as a producer of HRS.

5.2 Findings in the original investigation

The investigation period for the original investigation was 1 October 2012 to 30 September 2013.

In the original investigation, the Commission found that dumping of HRS exported to Australia from Japan, Korea, Taiwan and Thailand had caused material injury to the Australian industry in the forms of:

price depression;

price suppression;

reduced profits and profitability; and

reduced revenues.

In the original investigation, the Commission did not accept the proposition that price pressures arising from price undercutting and the IPP process will necessarily result in a loss of sales volume. The Commission stated that there may be a range of market-based factors other than price which result in market share being maintained. For example, in section 9.9.5 of REP 223, the Commission highlighted exclusivity arrangements as a factor which limited Liberty Steel’s ability to increase its volume.

In the original investigation, the Commission had insufficient information to conclude that reduced capacity utilisation and reduced employment suffered by Liberty Steel had contributed to injury caused by dumping. The Commission also considered that it was inconclusive whether the other injury factors claimed by Liberty Steel in Appendix A7 to its application were caused by dumping, or caused by other factors.

5.3 The Commission’s analysis – Continuation Inquiry 505

5.3.1 Price depression and price suppression

Price depression occurs when a company, for some reason, lowers its prices. Price suppression occurs when price increases, which otherwise would have occurred, have

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been prevented. An indicator of price suppression may be the margin between revenues and costs.

Figure 2 shows Liberty Steel’s unit revenue and unit CTMS for HRS.

Unit Revenue and Unit Cost to Make and Sell (AUD)

Figure 2 – Liberty Steel HRS Unit Revenue and CTMS

After anti-dumping measures were imposed, Liberty Steel’s HRS prices fell but recovered to new high levels by 2018. As such, it is not possible to definitively conclude that Liberty Steel has experienced price depression in that time. However, Liberty Steel has been unable to achieve prices sufficiently high to cover the increasing CTMS of HRS. The Commission considers that Liberty Steel has experienced injury in the form of price suppression in the period since 2010.

5.3.2 Sales volume

Figure 3 shows Liberty Steel’s total sales volumes for HRS in the Australian market.

Sales Volume (tonnes)

Figure 3 – Liberty Steel HRS Sales Volume

Liberty Steel’s sales volumes of HRS has fluctuated over the analysis period. From 2010 to 2014, volumes were relatively consistent with a noticeable decline in the period leading

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to the imposition of measures. From 2015 to 2016, sales volumes recovered temporarily, but not to the levels achieved from 2010 to 2014, with variability observed thereafter.

The Commission considers that Liberty Steel has experienced injury in the form of reduced sales volume since 2010.

5.3.3 Sales revenue

Figure 4 shows Liberty Steel’s net sales revenue for HRS in the Australian market.

Net Sales Revenue (A$)

Figure 4 – Liberty Steel HRS Net Sales Revenue

When anti-dumping measures were imposed in November 2014, net sales revenue was in decline. Since 2015, sales revenue recovered somewhat, but not to levels achieved from 2011 to 2014. The Commission considers that Liberty Steel has experienced injury in the form of reduced sales revenue in the period since 2011.

5.3.4 Profit and profitability

Figure 5 indicates that Liberty Steel’s total profit from sales of HRS has been negative since 2010.

Total Profit (A$)

Figure 5 – Liberty Steel HRS Profit

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Figure 6 shows Liberty Steel’s unit profit and unit profitability for HRS has been negative since 2010.

Unit Profit (A$) and Unit Profitability

Figure 6 – Liberty Steel Unit profit and profitability (Unit Gain or Loss/Price)

Since 2014, the year when anti-dumping measures were imposed, Liberty Steel’s unit profit and profitability of HRS sold in Australia declined. In 2018, profit and profitability recovered somewhat, but only to similar levels of losses incurred before anti-dumping measures were imposed. Liberty Steel has not achieved positive results on profit and profitability in the entire period since 2010. The Commission considers that Liberty Steel has experienced injury in the forms of reduced profits and profitability in the period since 2014.

5.3.5 Market share

Figure 7 has been derived from verified data received from Liberty Steel and unverified data from the ABF import database. It indicates that Liberty Steel’s market share by volume increased from 2010 to 2013 and then decreased each year until 2017. It achieved a small recovery in 2018, but not to the levels achieved before 2017.

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Australian HRS Market Shares by Volume (tonnes) 22

Figure 7 – Australian HRS Market Shares by Volume

Figure 7 also indicates that the market share of exports from:

Japan has been relatively low for the whole of the analysis period;

Korea has increased since 2010;

Taiwan has increased since 2010 with steady growth since measures were imposed;

Thailand has fallen since 2010, with significant falls in 2014 and 2015 when measures were put in place, but started to recover in 2018; and

countries or exporters not subject to measures has not fluctuated greatly since 2010.

Further, Korea’s increase in export volumes coincided with decreases in the Australian industry’s market share until 2018 and Korea represents the largest market share of the countries subject to measures.

The Commission considers that Liberty Steel has experienced injury in the form of reduced market share in the period since 2013.

22 In Figure 7, Liberty Steel’s market share includes its sales of HRS that it had imported directly or through other parties. Its imports are not included in the market share of exports from Taiwan and Korea. In respect of those two countries, exports to Liberty Steel in the inquiry period were of material volumes, but Liberty Steel was not the largest customer of exporters from these countries. From 2011 to 2016, Liberty Steel’s imports of HRS were of non-material volumes relative to the total volume of HRS imports in the same period

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5.3.6 Other economic factors

In Appendix A7 to its application, Liberty Steel provided information in relation to other injury factors on a financial year (FY) basis (which captures the period from 1 July to 30 June) for the period from 1 July 2009 to 30 June 2018.

Capacity utilisation

Figure 8 indicates that Liberty Steel’s capacity utilisation, based on its highest HRS production level which was in FY14, has trended downwards since FY10.

The Commission considers that Liberty Steel has experienced injury in the form of reduced capacity utilisation in the period since FY 2014.

Capacity Utilisation

Figure 8 – Liberty Steel HRS Production Capacity Utilisation

Capital investment

Figure 9 indicates that Liberty Steel’s level of capital investment in the production of HRS has remained relatively constant from FY10 to FY16, apart from FY11 when the blast furnace was upgraded.

The Commission notes that various public announcements have been made in respect of planned investment in the Whyalla Steelworks. These announcements relate to investment that will take place in coming years.

The Commission’s analysis has not identified any capital investment that was made in the inquiry period and that related to these announcements. The announcements relate to a range of activities and not only to HRS production.

The Commission considers that Liberty Steel has not experienced injury in the form of reduced capital investment.

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Capital Investment (A$)

Figure 9– Liberty Steel Capital Investment in HRS Production (A$)

Return on investment

Figure 10 shows Liberty Steel’s return on investment (ROI) in the production of HRS.

Return on Investment (%)

Figure 10 – Liberty Steel Return on Investment in HRS Production

Liberty Steel’s ROI in the production of HRS declined from FY10 to FY16. From FY16 to FY18, ROI recovered to FY10 levels. ROI has been negative for the entire period since FY10, except for FY13 when a marginal positive result was achieved.

The Commission considers that Liberty Steel has experienced injury in the form of negative ROI in the period since FY 2013.

Employment

Figure 11 shows Liberty Steel’s staff levels related to the production of HRS.

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Employment

Figure 11 – Liberty Steel employee numbers in HRS Production

Liberty Steel’s staff levels have declined since FY10. Liberty Steel has indicated to the Commission that the period of voluntary administration of OneSteel led to the retrenchment of experienced staff. New staff were recruited as part of the company restructure. The Commission considers that Liberty Steel has experienced injury in the form of reduced employment in the period since FY 2011.

Wages

Figure 12 shows Liberty Steel’s average wage to employees producing HRS has increased overall since FY10, but has fallen since FY14. It also indicates that the wages of HRS employees have remained below the wages of employees who are involved in other production.

Average Wages

Figure 12– Liberty Steel Employees Average Wages (A$ per hour)

The Commission considers that Liberty Steel has experienced injury in the form of reduced wages for employees in the period since FY 2015.

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Productivity

Figure 13 shows Liberty Steel’s productivity, measured as tonnes of like goods produced per person hour, increased from FY10 to FY14, but has since declined to a level similar to that in FY10.

Productivity

Figure 13 – Liberty Steel HRS Productivity (tonnes per hour)

The Commission considers that Liberty Steel has experienced injury in the form of reduced productivity in period since FY 2014.

5.4 Conclusion

The Commission has found that in the inquiry period Liberty Steel has experienced injury in the forms of price suppression and reduced:

sales volume;

sales revenue;

profit and profitability;

market share;

capacity utilisation;

return on investment;

employment levels;

wages for employees; and

productivity.

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6 VARIABLE FACTORS

For the purposes of this continuation inquiry, the Commissioner has had regard to other matters considered relevant to the inquiry, including the variable factors established in Review 499, to assess whether dumping has occurred during the inquiry period, and whether dumping is likely to continue or recur if the anti-dumping measures were to expire.

Review 499 found that certain exports of HRS to Australia were at dumped prices in the review period, 1 January 2018 to 31 December 2018, which is the same as the inquiry period for this inquiry. The dumping margins determined in Review 499 are provided in Table 2.

Country Manufacturer/ exporter Dumping margin Duty Method

Method to establish

dumping margin

Japan All Exporters 12.2%

Combination fixed and variable duty method

Weighted average export prices were

compared with corresponding normal values

over the inquiry period in terms of s. 269TACB(2)(a)

of the Customs Act 1901.

Korea

Hyundai Steel Company 4.7%


Uncooperative Exporters 7.9%


Taiwan

Dragon Steel Corporation 9.0% Combination fixed and variable duty method

TS Steel Co Ltd -1.6% Floor price

Tung Ho Steel Enterprise Corporation

-1.6% Floor price



Thailand

Siam Yamato Steel Co Ltd 5.0%




Table 2 — Review 499 HRS dumping margins

Details in respect of the Commission’s determination of variable factors as a result of Review 499 are at Non-Confidential Appendix 1 to this report.

Review 499 also states that the non-injurious price (NIP) should continue to be set equal to the normal value. As such, the NIP for each exporter has changed but is not operative, and therefore does not affect the effective rates of duty set out in Table 2.

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7 LIKELIHOOD THAT DUMPING WILL CONTINUE OR RECUR

7.1 Australian industry’s claims

In its application, Liberty Steel claims that dumping will continue or recur because exporters from Japan, Korea, Taiwan and Thailand have:

been affected by global overcapacity and trade distortions from several steel trade defence actions abroad;

maintained their distribution channels to Australia and have continued to export the goods under consideration to Australia; and

continued to export the goods to Australia at dumped prices.

7.1.1 Overcapacity in the global steel industry 23

In its application, Liberty Steel referred to the Commission’s 2016 Steel and Aluminium Report which found that ongoing excess capacity, particularly in Asia, is a significant challenge for the global steel industry.

The Commission notes that the Organisation for Economic Co-operation and Development (OECD) has reported that global steelmaking capacity was expected to increase in 2018 for the first time since 2015.24

The OECD has also reported that global steelmaking capacity could increase by 2.3 per cent (52 million tonnes) between 2018 and 2020.25 In the same report, the OECD states that there are 39 million tonnes of capacity additions in the planning stages for possible start-up in the same period. Much of this additional, or proposed, production capacity is expected to be developed in the Middle East and in India.

The U.S. Department of Commerce has reported in its September 2018 Global Steel Report that global steelmaking capacity utilisation has declined in most years between 2005 and 2015, but began increasing thereafter and reached 75 per cent in 2017.26

Japan

The OECD has reported that there are no capacity investments underway in Japan.27 The OECD states in the same report that closures of some steelmaking facilities may result in higher capacity utilisation at other plants.

23 Note that general discussion here, and in material referred to on production capacity in steel markets, may be in reference to the production of crude steel in general. That is, it may also include discussion on the production of steel such as flat products that are not the subject of this inquiry. However, the Commission understands that long products, a major part of which is HRS, are a significant proportion of all steel that is made and, as such, considers that any verifiable or reliable discussion of steelmaking capacity in general is relevant to this inquiry. 24 See Recent Developments in Steelmaking Capacity (Reference DSTI/SC(2018)2/FINAL), OECD. This report is available on the OECD web site. 25 Office of the Chief Economist, Department of Industry, Innovation and Science, 2017, page 19. 26 See Global Steel Report, September 2018, U.S. Department of Commerce – International Trade Administration. 27 See Recent Developments in Steelmaking Capacity (Reference DSTI/SC(2018)2/FINAL), OECD. This report is available on the OECD web site.

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The Commission is not aware of plans to increase capacity of HRS production in Japan.

Korea

The OECD has reported that there are no capacity investments underway in Korea.28

The Commission has found at the verification visit that Hyundai has the capacity to increase its production of HRS. The Commission understands that 100 per cent capacity utilisation is based on a hypothetical name plate capacity of existing plant and on assumptions such as non-stop operation without closures to conduct maintenance. However, the Commission considers it noteworthy that the reserve capacity of Hyundai is nevertheless large relative to the production capacity of Liberty Steel and relative to the entire Australian HRS market.

The Commission is not aware of plans to increase capacity of HRS production in Korea.

Taiwan

The Commission has found that Tung Ho has limited capacity to increase HRS production. The Commission is not aware of plans to increase capacity of HRS production in Taiwan.

Thailand

The Commission understands that the Iron and Steel Institute of Thailand has stated that production and consumption of long steel products in Thailand fell in 2017.29 In that year, Thai steel producers experienced low levels of steel capacity utilisation.

The Commission has found that SYS has limited capacity to increase HRS production. The Commission is not aware of plans to increase capacity of HRS production in Thailand.

China

Exporters of HRS from the People’s Republic of China (China) are not the subject of this inquiry. However, as China is the world’s largest steel exporter and producer (producing approximately half of the world’s crude steel in 2018), excess capacity in China is a major factor in the analysis of world steel markets.30 The Commission considers that excess capacity in China encourages Chinese manufacturers to seek export markets for their products.

In respect of manufacturers that are under consideration in this inquiry, the Commission considers that they will continue to face competition in several markets from Chinese manufacturers and that it is in their interests to continue to export HRS to Australia. This is consistent with the Commission’s 2017 Steel Manufacturing and Fabricating Markets report where it was stated:

The adverse impacts of continuing global steel excess capacity included the potential, identified by the OECD, that ‘excess capacity in one region can displace

28 See Recent Developments in Steelmaking Capacity (Reference DSTI/SC(2018)2/FINAL), OECD. This report is available on the OECD web site. 29 See Thailand Steel Industry 2017 and Outlook 2018, Iron and Steel Institute of Thailand. This report was presented at the South East Asia Iron and Steel Institute 2018 Conference and Exhibition. 30 For example, see Steel Market Developments – Q4 2018 (Reference DSTI/SC(2018)8/FINAL), OECD. On page 29, the OECD indicates that in 2017, world crude steel production was 1,687,277 million tonnes, of which China produced 846,947 million tonnes. This report is available on the OECD web site.

http://seaisi.org/file/CR%20Thailand%20Country%20Report-Thailad-May%202018(EN)-SEAISI-08062018-11.pdf

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production in other regions, thus harming producers in those markets’, including through ‘unfair trade practices such as dumping’.

The Commission understands that while there has been Government of China mandated closures of illegal induction furnaces and outdated factories, there is other activity that has limited the intended reductions in capacity. For example, production in remaining mills increased up to 5.6 per cent in the year to October 2017. Steel mills in southern China are also expected to offset the reduced production in northern mills between November 2017 and March 2018.31 This indicates that any reductions in excess capacity may be less effective due to increased capacity at more efficient mills and in alternate geographic locations.

Conclusions on overcapacity

The Commission has found that, apart from Hyundai, there is little excess capacity for exporters of HRS that were verified in this continuation inquiry. However, the Commission has found that exports of HRS to Australia have been at dumped prices from exporters from all the countries subject to this continuation inquiry. However, in respect of Hyundai, its size is large relative to the Australian industry. The Commission considers that this size differential is of such a magnitude that a small increase in Hyundai’s HRS production would be sufficient to generate volumes that, if exported to Australia at dumped prices, could potentially have a major impact on market conditions in Australia. The Commission considers that this would be so even if Liberty Steel succeeded in its efforts to increase its HRS production capacity utilisation.

Excess steelmaking capacity in China is apparent. Diversion of HRS trade to any of the countries subject to this inquiry would likely result in the need for HRS producers in those countries to expand their export trade to other countries, including Australia. The Commission notes that exports of HRS to Australia from China have been at relatively low levels since 2010.

The Commission considers that the potential excess capacity in Korea is likely to result in increased export volumes should the measures expire. (This is discussed further in section 9.3.4 of this report.) The Commission does not consider the excess capacity in other countries subject to measures to be significant.

7.1.2 Distortions in steel markets 32

In its application, Liberty Steel stated:

Overcapacity in world steel markets has triggered an unprecedented number of global trade defence mechanisms including the United States’ (US) Section 232 tariffs, the European Union’s (EU) steel safeguard and Turkey’s steel safeguard actions. These actions are affecting export markets for all countries including those the subject of this application. It is expected that displaced export volumes will increasingly focus on open markets, making Australia an attractive destination for

31 Office of the Chief Economist, Department of Industry, Innovation and Science, Resources and Energy Quarterly December 2017, page 19. 32 Note that general discussion here and in material referred to on distortions in steel markets may be in reference to the production of crude steel in general. That is, it may also include discussion on the distortions in markets of products such as flat products that are not the subject of this inquiry. However, the Commission understands that long products, a major part of which is HRS, are a significant proportion of all steel that is made and, as such, any verifiable or reliable discussion of distortions in steel markets is relevant to this inquiry.

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excess capacity of HRS, particularly in the absence of continued effective measures.

In its 2016 Steel and Aluminium report, the Commission noted that in recent years there has been growth in the imposition of trade measures on steel by countries in several regions including North America, Asia and the European Union.

The Commission notes in this inquiry that there are also trade measures in various countries that have been implemented in retaliation to the 25 per cent tariff on steel imposed by the United States of America (USA) on 8 March 2018 under Presidential Proclamation.

The Commission has analysed the World Trade Organization (WTO) database and has found that as at 31 December 2018, the only anti-dumping measures in place against exports of HRS from Japan, Korea, Taiwan and Thailand were those that have been imposed by Australia.

In the Commissioner’s Note: The Potential For Trade Diversion In Steel and Aluminium, and Subsequent Impacts,33 the Commissioner noted that the Commission had engaged an external consultant, Cadence Economics, to conduct economic modelling on the likely trade diversion and subsequent impacts tariffs of 25 per cent for steel and 10 per cent for aluminium for all countries except Canada and Mexico, imposed by the USA and scheduled to come into effect on 22 March 2018. In it, the Commissioner stated:

Cadence’s modelling suggests that the overall impact on the level of imports of steel and aluminium are essentially immaterial. The analysis also showed minimal economy-wide impacts.

The Commissioner also stated:

There is no evidence before me that the economy-wide impacts as a result of the US tariffs will be significant. However, limitations on time and data meant that the analysis was not conducted at product level, where impacts could be somewhat different.

…

I consciously did not include existing or potential retaliatory measures in this analysis. It would go beyond my remit to examine practices not directly relating to dumping and subsidisation. Further, it would be difficult to craft a static retaliation scenario to model in the current dynamic circumstances.

The Commission considers that on the basis of the evidence available, it is not able to definitively conclude what impact that the measures imposed by the USA on steel, or of any consequent retaliatory measures, have had on the Australian HRS market. The Commission considers that it is likely that any changes in levels of imports of HRS are mainly attributable to conditions and market drivers that are specific to the Australian HRS market.

7.1.3 Maintenance of distribution links

The Commission has analysed ABF import data and has found that eight of the top 10 importers of HRS in 2018 have been in the group of top 10 importers of HRS since 2010. The Commission also found that in 2018, those importers sourced HRS from countries

33 This note is available on the Commission’s web site.

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and exporters subject to anti-dumping measures. The Commission has also found that in 2018, three exporters of HRS to Australia, Hyundai (Korea), SYS (Thailand) and Tung Ho (Taiwan), together accounted for the largest proportion of HRS exports to Australia by far. These companies have also been the largest exporters of HRS to Australia since 2010.

The Commission considers that the above findings indicate that exporters from Japan, Korea, Taiwan and Thailand have maintained distribution links in Australia.

7.2 Likelihood of continuation or recurrence of dumping

The Commission’s approach has been to examine the claims made and evidence applying to each exporting country subject to this inquiry.

7.2.1 Japan

Australian industry’s claims

In its application, Liberty Steel stated that exports of HRS from Japan increased significantly during the original investigation and have decreased since measures were imposed. Liberty Steel stated that this demonstrates that:

… exporters from Japan have been prepared to export at dumped prices when there are no measures applicable as happened during the course of the original investigation to secure volumes in the Australian market.

Liberty Steel stated that current export levels may be explained by an unwillingness of Japanese exporters to lower their prices to absorb the dumping margin.

The Commission’s analysis

Figure 14 indicates that exports of HRS to Australia from Japan increased in 2014 and have decreased since measures were imposed in November 2014. The goods exported from Japan are attributable to a small number of producers. Figure 14 also indicates that exports of HRS to Australia from Japan increased in 2017 to a level higher than in 2014. However, in 2018, exports of HRS to Australia fell significantly.

HRS Exports from Japan (tonnes)

Figure 14–HRS Exports from Japan

No exporters of HRS from Japan have cooperated with this inquiry or with Review 499. As such, the Commission is not able to establish the precise reasons for the reduction in export volumes in 2018. In Review 499, the Commission has found that the goods were exported from Japan at dumped prices and has calculated a dumping margin of 12.2 per cent for all exporters of HRS from Japan.

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Despite the small volume of exports of HRS to Australia from Japan relative to the other three countries subject to measures, the pattern of trade indicates that exporters from Japan have maintained distribution links in Australia. The Commission considers that it is reasonable to expect that exporters of HRS to Australia from Japan will aim to maintain their levels of export sales volumes. The Commission considers that it is likely that the expiration of anti-dumping measures would improve the competitiveness of HRS exported to Australia from Japan and that this would encourage importers to acquire HRS from Japan at dumped prices and in greater volumes.

In these circumstances, the Commission considers that it is likely that exports of HRS at dumped prices by all exporters from Japan would continue if the measures expire.

7.2.2 Korea


In its application, Liberty Steel stated that exports of HRS from Korea increased after the original investigation and that this was likely due to the relatively low rate of IDD and to the ad valorem basis on which it was imposed. Liberty Steel expressed the view that the low dumping margin enabled exporters to absorb the dumping margin by decreasing export prices. Liberty Steel added that the outcomes of Review 465 confirmed that the increased exports were at dumped prices and that this indicates that exporters of HRS from Korea are prepared to export at dumped prices if measures are ineffective or discontinued. Liberty Steel also stated that a further increase in exports of HRS from Korea after 2016 was significant and coincided with increased demand in the Australian market.


Figure 15 shows exports of HRS to Australia from Korea since 2010. Figure 15 indicates that exports of HRS to Australia from Korea have increased since measures were imposed in November 2014. The Commission has analysed ABF import data and has found that most exports of HRS to Australia from Korea are by Hyundai.

HRS Exports from Korea (tonnes)

Figure 15 -HRS Exports from Korea

Exports of HRS to Australia from Korea continued to increase after measures were first imposed in November 2014, but fell in 2018. The outcome of Review 465 was that the notice was altered in respect of Hyundai in November 2018. The form of measures was

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also altered. In Review 499, the Commission has found that the dumping margin for Hyundai is 4.7 per cent.

The Commission has found that Hyundai has continued to export HRS to Australia at dumped prices and that it has maintained its distribution links in Australia.

The Commission has also found that Hyundai has the capacity to increase production of HRS to an extent that would be material if exported and sold in the Australian HRS market. The Commission also considers that it is reasonable to expect that exporters of HRS to Australia from Korea will aim to maintain their levels of export sales volumes. The Commission considers that it is likely that the expiration of anti-dumping measures would improve the competitiveness of HRS exported to Australia from Korea and that this would encourage importers to acquire HRS from Korea at dumped prices and in greater volumes.

In these circumstances, the Commission considers that it is likely that exports of HRS at dumped prices by all exporters from Korea would continue if the measures expire.

7.2.3 Taiwan


In its application, Liberty Steel stated that exports of HRS from Taiwan remained relatively stable after the original investigation. Liberty Steel also stated that Review 345:

coincided with a period of low international prices and low export volumes to Australia;

found no dumping by Tung Ho; and

resulted in an alteration of the form of measures from ad valorem to a floor price for Tung Ho which rendered the measures ineffective and allowed Tung Ho to increase export volumes when international prices increased.

Liberty Steel has stated that this indicates that exporters of HRS from Taiwan are prepared to export HRS at dumped prices if measures are ineffective or discontinued.


Figure 16 shows exports of HRS to Australia from Taiwan since 2010. Figure 16 indicates that exports of HRS to Australia from Taiwan have increased since measures were imposed in November 2014. The Commission has analysed ABF import data and has found that most exports of HRS to Australia from Taiwan are by Tung Ho.

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HRS Exports to Australia from Taiwan (tonnes)

Figure 16 - HRS Exports from Taiwan

Exports of HRS to Australia from Taiwan fell in the year after measures were first imposed in 2014 and have increased every year thereafter. Since the notice was altered in respect of Tung Ho in October 2016, its exports continued to increase at a relatively significant rate.

Tung Ho

Submissions on the continuation of measures in respect of Tung Ho

In its submission of 2 September 2019,34 Tung Ho stated:

the Commissioner cannot be satisfied that the expiration of measures in relation to Tung Ho would likely lead to a continuation or recurrence of the dumping and material injury that the measures are intended to prevent. The Commissioner should recommend the notice cease to apply in relation to Tung Ho;

strong demand for HRS in Australia makes it an attractive destination for exporters because the Australian industry cannot supply the entire Australian HRS market. Tung Ho would be in a position to charge a higher competitive price to Australia;

the original measure for Tung Ho should not lead to an assessment of likely recurrence of dumping. Subsequent refunds resulting from six duty assessments and the findings of Review No 345 and Review No 499 should be taken into account;

during the period from May 2014 to December 2018, Tung Ho has been verified by the Commission of not selling goods at dumped prices for 48 months; and

that its pricing is based on CTMS plus profit and if there has been price undercutting, this has been with un-dumped goods, demonstrating that Tung Ho is a more efficient producer.

In its submission of 10 September 2019 35 in response to Tung Ho’s submission of 2 September 2019, Liberty Steel stated its support of the Commission’s analysis as described in the SEF.

34 Item 39 on the public record refers. 35 Item 44 on the public record refers.

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In its submission of 13 September 2019 36 in response to Liberty Steel’s submission of 10 September 2019, Tung Ho made several references to matters described in the SEF.

Tung Ho also provided a confidential chart demonstrating quarterly free on board (FOB) export volumes and average HRS prices for quarters ended from 30 June 2014 to 30 June 2019, extracted from verified sales by the Commission in reviews and duty assessments. Tung Ho states the chart does not demonstrate strong negative correlation between price and export quantity, but the opposite, as the highest volume of sales have been when the average price has been near peak levels during the period.

The Commission’s assessment

The Commission acknowledges that strong demand for HRS in Australia makes it an attractive destination for exporters and that the Australian industry cannot supply the entire Australian HRS market.

The Commission considers that decisions are made by HRS exporters in the context of excess steel production capacity in China and that its analysis of this matter, while not specific to HRS, is relevant to the consideration of whether dumping will continue or recur.

In Review 345, the Commission did not find that Tung Ho had exported at dumped prices over the review period. As a result, the measures in respect of Tung Ho changed to a floor price. The Commission does not consider the change in the form of measures to a floor price rendered the measures ineffective because duty is payable on exports from Tung Ho when the export price is below the ascertained floor price. Where Tung Ho’s export price is above the floor price, anti-dumping measures do not apply.

In Review 499, the Commission has found a dumping margin for Tung Ho of negative 1.6 per cent.

The Commission does not consider that Tung Ho provides sufficient information to support its statement that the chart it provided demonstrates that the highest volume of sales have been when the average price has been near peak levels during the period. However, since the publication of the SEF, the Commission has conducted further detailed analysis of Tung Ho’s verified export sales data for the inquiry period on monthly and quarterly bases. The Commission has re-assessed the correlation between Tung Ho’s export price and export quantity and has found that the relationship between the two variables during the inquiry period was incorrectly stated in the SEF as strong. The correct finding is that where Tung Ho’s export prices decrease, Tung Ho’s export volumes do not necessarily increase. Further details are provided at Confidential Appendix 1.

The Commission has also found that Tung Ho’s export prices and normal values have both increased over the inquiry period with a high degree of positive correlation. That is, changes in Tung Ho’s normal values correspond with changes in its export prices. The Commission has found no dumping by Tung Ho over the inquiry period as a whole. The Commission notes that increases in Tung Ho’s export prices are consistent with its finding that the Australian HRS market is rising. The Commission considers that this indicates that it is not likely that Tung Ho’s export prices will decrease by an amount sufficient to bring them below the floor price that was found in Review 499. As such, it is unlikely that the proposed floor price will have an impact on pricing decisions made by Tung Ho.

36 Item 48 on the public record refers.

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The Commission considers that the nature of HRS and its differentiation on the basis of price is such that the Australian HRS market can be described as a price sensitive one with a high degree of price elasticity. The Commission considers that export and domestic selling prices are established on the basis of a number of factors including market conditions and competition, as well as on CTMS plus profit. The Commission considers that if Tung Ho reduces its prices relative to other exporters, and does so in a rising market, the margin between Tung Ho’s export price and the proposed floor price is sufficiently large that it is not likely that it will export HRS at prices below the proposed floor price. Further, and as Tung Ho has submitted on 2 September 2019, Review 345, Review 499 and six duty assessments indicate that Tung Ho has not exported HRS to Australia at dumped prices for a significant period of time.

In these circumstances, the Commission considers that it is not likely that exports of HRS at dumped prices by Tung Ho would recur if the measures expire.

TS Steel

In the original investigation, the Commission found a dumping margin for TS Steel of 4.68 per cent. In Review 499, the Commission has found a dumping margin for TS Steel of negative 1.6 per cent.

The Commission has conducted further detailed analysis of TS Steel’s verified export sales data and has found that the correlation between TS Steel’s export price and export quantity is strong. That is, where export prices decrease, TS Steel’s export volumes increase. The Commission has also found that TS Steel’s export prices remained stable and did not correlate with increases in normal values over the inquiry period.

The Commission considers that it is reasonable to expect TS Steel to aim to maintain its pattern of growth in export volumes. The Commission considers that in order to do so in a price sensitive market such as the Australian HRS market, TS Steel would be required to reduce or maintain its export prices at levels that maintain its competitiveness relative to other imports. The Commission has found in Review 499 that over the review period there is a small differential between TS Steel’s export price and normal value. As such, a small reduction in export prices relative to TS Steel’s domestic prices would result in dumping.

In these circumstances, and with respect to the evidence that TS Steel has previously been found to export HRS to Australia at dumped prices, the Commission considers that it is likely that exports of HRS at dumped prices by TS Steel would recur if the measures expire.

Dragon Steel and other exporters

In respect of Dragon Steel and uncooperative exporters, the Commission has found in Review 499 the dumping margins to be 9.0 per cent and 12.3 per cent respectively. The Commission also considers that it is reasonable to expect that Dragon Steel and uncooperative exporters will aim to maintain their levels of export sales volumes. As exports from Taiwan have increased since measures were imposed, and are currently occurring at dumped prices in respect of Dragon Steel and uncooperative exporters, the Commission considers that it is likely that the expiration of anti-dumping measures would improve the competitiveness of HRS exported to Australia from Taiwan and that this would encourage importers to acquire HRS from Taiwan at dumped prices and in greater volumes.

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In these circumstances, the Commission considers that it is likely that exports of HRS at dumped prices by Dragon Steel and other exporters from Taiwan would continue if the measures expire.

7.2.4 Thailand


In its application, Liberty Steel stated that exports of HRS from Thailand fell when the original investigation was initiated and continued to decrease after measures were imposed. Liberty Steel also stated that Review 346:

coincided with a period of low international prices and low export volumes to Australia;

found no dumping by SYS; and

resulted in an alteration of the form of measures from ad valorem to a floor price for SYS which rendered the measures ineffective and allowed SYS to increase export volumes when international prices increased.

Liberty Steel stated that this indicates that exporters of HRS from Thailand are prepared to export HRS at dumped prices if measures are ineffective or discontinued.


Figure 17 shows exports of HRS to Australia from Thailand since 2010. Figure 17 indicates that exports of HRS to Australia from Thailand declined considerably after measures were imposed in November 2014. It also indicates that exports of HRS to Australia from Thailand increased significantly in 2018.

HRS Exports from Thailand (tonnes)

Figure 17 - HRS Exports from Thailand

The imposition of measures in the form of a floor price after Review 346 in October 2016 reflects the finding that SYS was not dumping. Dumping duties would be payable by SYS if it exported HRS at a price lower than the ascertained floor price. The Commission does not consider that this renders the anti-dumping measures to be ineffective.

In Review 499, the Commission has found that the dumping margin for SYS is 5.0 per cent.

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The Commission considers that it is reasonable to expect that SYS and uncooperative exporters will aim to maintain their levels of export sales volumes. As exports from Thailand have continued since measures were imposed, and have to be found to be at dumped prices, the Commission considers that it is likely that the expiration of anti-dumping measures would improve the competitiveness of HRS exported to Australia from Thailand and that this would encourage importers to acquire HRS from Thailand at dumped prices and in greater volumes.

In these circumstances, the Commission considers that it is likely that exports of HRS at dumped prices by SYS and other exporters from Thailand would continue if the measures expire.

7.3 Summary

The Commission has found that:

in Review 499, exports of HRS to Australia from Japan, Korea, Taiwan (except for Feng Hsin, which is not subject to measures, Tung Ho and TS Steel) and Thailand during the inquiry period were at dumped prices with dumping margins ranging from 4.7 per cent to 12.3 per cent;

exports of HRS to Australia have continued to occur at high volumes from Korea and Taiwan;

exporters of HRS to Australia from Japan, Korea, Taiwan and Thailand have maintained distribution networks in Australia; and

excess production capacity of HRS manufacturers in China is likely to continue to place pressure on steel producers worldwide to continue to seek other markets, including Australia.

Based on the Commission’s analysis of the available evidence, the Commissioner is satisfied that if the anti-dumping measures expire, it is likely that dumping of HRS from Japan, Korea, Taiwan (except for Feng Hsin and Tung Ho) and Thailand will continue and that dumping of HRS by TS Steel from Taiwan will recur.

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8 LIKELIHOOD THAT MATERIAL INJURY WILL CONTINUE OR RECUR?

8.1 Australian industry’s claims

Liberty Steel has indicated that pricing in the Australian market is driven by prices of HRS exported from Japan, Korea, Taiwan and Thailand and that import HRS price offers in the market are used by customers to negotiate with Liberty Steel to achieve lower prices.

Liberty Steel claims that if anti-dumping measures expire, it is likely that importers and exporters of HRS from Japan, Korea, Taiwan and Thailand will lower prices in order to increase volumes and that this will result in a recurrence or continuation of material injury in the form of reduced:

revenue;

profits and profitability;

market share;



wages for employees;

productivity; and

employment levels.

8.2 The Commission’s analysis

At section 5.3.1 of this report, the Commission found that the Australian industry has experienced injury in the form of price suppression.

In the original investigation, the Commission found that Liberty Steel sets its prices by applying an IPP process in which it must negotiate prices with reference to offers made in the HRS market for imported goods. It was found that competition from importers of HRS exported to Australia from the subject countries at dumped prices required Liberty Steel to match those prices. This resulted in Liberty Steel achieving lower prices than it might have otherwise and consequently experiencing injury.

In this inquiry, Liberty Steel maintains that there is a high level of transparency and sensitivity related to prices in the Australian HRS market. The Commission understands that the nature of the HRS market is that products of the same specification from different sources are interchangeable. Consequently, price is the primary consideration of purchasing decisions and the Australian HRS market is characterised by a high degree of price elasticity.

In this inquiry, the Commission has found that Liberty Steel continues to apply the IPP model and that the IPP is:

used to set prices on an individual customer basis;

set with reference to monthly price offers by importers in the Australian HRS market; and

used by customers in negotiations with Liberty Steel.

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Liberty Steel has indicated to the Commission that prices it offers to its customers are based on an import parity price plus a premium that is justified by providing local supply and customer service. The Commission has found that the premium varies between customers and is openly negotiated. The Commission found in the original investigation that competition with imported HRS resulted in Liberty Steel achieving lower prices than it otherwise would have. These price reductions brought Liberty Steel’s prices down to a level closer to those of imported HRS, but still higher than those imported prices due to the domestic price premium.

8.2.1 Approach to analysis

The Commission has analysed export volume and pricing patterns, including price undercutting, for the countries subject to measures to determine if injury is likely to recur or continue.

Price undercutting occurs when imported goods are sold at prices below those of Australian manufactured like goods. The Commission has compared the Australian industry’s prices in the inquiry period to sales by importers of HRS. The analysis was based on verified sales data from Liberty Steel as well as on available information from importers. The analysis was conducted in respect of prices made to Australian customers at the distributor level and on Free In Store (FIS) delivery terms.

The Commission notes that Liberty Steel must compete with importers of HRS on the basis of price. As such, it must reduce its prices in order to compete with those of importers. In Liberty Steel’s case, it refers to this process as the IPP. In its price undercutting analysis, the Commission has compared the prices that Liberty Steel has achieved with those of competing importers. This means that the Commission’s price undercutting analysis captures the domestic price premium that Liberty Steel achieves over import prices for being able to provide local customer service. The Commission has found in section 5.3.1 of this report that the prices Liberty Steel has achieved have been suppressed. As such, the analysis below does not necessarily indicate the full extent of price injury.

The Commission notes that Liberty Steel imported HRS during the inquiry period from Korea and Taiwan either directly or through traders. In its price undercutting analysis, the Commission has excluded Liberty Steel’s sales of imported HRS as well as sales made to Liberty Steel by importers. Therefore, the analysis is in respect of Liberty Steel’s manufactured HRS.

8.2.2 Japan

Volume

The Commission has indicated at section 7.2.1 of this report that although export volumes of HRS from Japan have declined since the imposition of measures in November 2014, exporters from Japan have maintained distribution links in Australia.

Price

The Commission did not find evidence of price undercutting at the distributor level and for all products aggregated when comparing the quarterly weighted average Australian industry selling prices to that of HRS imported from Japan.

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The Commission has analysed sales of HRS imported from Japan to customers that are common to Liberty Steel and has found several instances of price undercutting in the range of 0.4 per cent to 1.5 per cent.

Conclusion

The Commission considers that export of HRS from Japan at dumped prices during the inquiry period have caused Liberty Steel to experience price suppression. The Commission also considers that:

the maintenance of distribution links by Japanese exporters;

price undercutting observed in respect of HRS imported from Japan;

the high degree of price elasticity in the Australian HRS market; and

the import price competition to which Liberty Steel is subject

would likely result in Liberty Steel achieving reduced selling prices should the measures on exporters of HRS from Japan expire. Consequently, price suppression and the resulting impact on revenue and profits is likely to continue if measures on HRS exported to Australia from Japan expire.

8.2.3 Korea

Volume

The Commission has found at section 7.2.2 of this report that exports of HRS to Australia from Korea have increased since the imposition of measures in November 2014 and exporters from Korea have maintained distribution links in Australia. Further, the magnitude of Hyundai’s spare production capacity is material compared to the size of the Australian HRS market.

Price

Figure 18 compares at the distributor level, and for all products aggregated, Liberty Steel’s quarterly weighted average FIS Australian selling price to HRS imported from Korea (manufactured by Hyundai) on the same terms. In its analysis, the Commission referenced data in respect of two importers.

Price comparison – Australian industry and Korean imports

Figure 18 - Comparison of Australian selling prices between Australian industry and imports from Korea

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The Commission has found price undercutting during the inquiry period between 2 per cent and 7 per cent.

Conclusion

The Commission considers that exports of HRS from Korea at dumped prices during the inquiry period have caused Liberty Steel to experience price suppression.

The Commission also considers that:

the maintenance of distribution links by Korean exporters;

Hyundai’s excess production capacity;

the price undercutting observed in respect of HRS imported from Korea;



would likely result in Liberty Steel achieving reduced selling prices should the measures on exporters of HRS from Korea expire. Consequently, price suppression and the resulting impact on revenue and profits are likely to continue if measures on HRS exported to Australia from Korea expire.

8.2.4 Taiwan

Volume

The Commission has found at section 7.2.3 of this report that export volumes of HRS from Taiwan have increased since 2015 and exporters from Taiwan have maintained distribution links in Australia.

Price

Figure 19 compares the quarterly weighted average FIS Australian HRS selling prices achieved by Liberty Steel to HRS imported from Taiwan (manufactured by Dragon Steel and Tung Ho) at the distributor level for all products aggregated.

Price comparison – Australian industry and Taiwanese imports

Figure 19 - Comparison of Australian selling prices between Australian industry and imports from Taiwan

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In respect of Dragon Steel, the Commission has found price undercutting during the inquiry period between 0.63 per cent and 5 per cent.

The Commission also found:

instances of price undercutting when the analysis was replicated on a common customer basis; and

instances of price undercutting when the analysis was replicated by HRS model (incorporating the characteristics of grade, shape and minimum yield strength).

In respect of Tung Ho, the Commission has found price undercutting during the inquiry period between 1.6 per cent and 5.7 per cent.

The Commission also found consistent price undercutting when the analysis was replicated on a common customer basis.

Conclusion

The Commission considers that exports of HRS from Taiwan at dumped prices during the inquiry period have caused Liberty Steel to experience price suppression.


the increasing volumes of HRS exported from Taiwan;

the price undercutting observed in respect of HRS imported from Taiwan by Dragon Steel;



would likely result in Liberty Steel achieving reduced selling prices should the measures on exporters of HRS from Taiwan expire. Consequently, price suppression and the resulting impact on revenue and profits is likely to continue if measures on HRS exported to Australia from Taiwan expire.

Tung Ho

The Commission has found that Tung Ho did not export HRS from Taiwan at dumped prices over the inquiry period.

For the reasons described at section 7.2.3.3 of the report, the Commission is unable to attribute injury caused by dumping to Tung Ho.

The Commission has not found dumping by Tung Ho to be the cause of the injury experienced by Liberty because for a significant period of time, exports by Tung Ho have not been at dumped prices. As such, the Commission does not consider that the expiration of measures on Tung Ho would be likely to lead to a continuation of the material injury that the anti-dumping measures are intended to prevent.

TS Steel

The Commission has found that TS Steel did not export HRS from Taiwan at dumped prices over the inquiry period. However, as described at section 7.2.3 of this report, the Commission considers that if the measures expire, dumping by TS Steel is likely to recur. The Commission also considers that:

the increasing volumes of HRS from Taiwan;

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would likely result in Liberty Steel achieving reduced selling prices should the anti-dumping measures on TS Steel expire. Consequently, price suppression and the resulting impact on revenue and profits is likely to continue if the measures on HRS exported to Australia from Taiwan by TS Steel expire.

8.2.5 Thailand

Volume

The Commission has found at section 7.2.4 of this report that exports of HRS from Thailand declined considerably after measures were imposed in November 2014 but increased significantly in 2018.

Price

Figure 20 compares at the distributor level and for all products aggregated, the quarterly weighted average FIS Australian HRS selling prices achieved by Liberty Steel to HRS imported from Thailand (manufactured by SYS) on the same terms.

Price comparison – Australian industry and Thai imports

Figure 20 - Comparison of Australian selling prices between Australian industry and imports from Thailand

The Commission has found price undercutting during the inquiry period between 6 per cent and 7 per cent.

The Commission also found:

consistent price undercutting when the analysis was replicated on a common customer basis; and

consistent price undercutting when the analysis was replicated by HRS model (incorporating the characteristics of grade, shape and minimum yield strength).

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Conclusion

The Commission considers that exports of HRS from Thailand at dumped prices during the inquiry period have caused Liberty Steel to experience price suppression.


the maintenance of distribution links by Thai exporters;

the price undercutting observed in respect of HRS imported from Thailand;



would likely result in Liberty Steel achieving reduced selling prices should the measures on exporters of HRS from Thailand expire. Consequently, price suppression and the resulting impact on revenue and profits is likely to continue if anti-dumping measures on HRS exported to Australia from Thailand expire.

8.3 Summary

The Commission has found that exporters of HRS to Australia from Japan, Korea, Taiwan (except for Feng Hsin, Tung Ho and TS Steel) and Thailand have continued to export HRS to Australia at dumped prices.

The Commission considers that should the measures expire:

dumping by TS Steel is likely to recur; and

dumping by Tung Ho is not likely to recur.

The Commissioner considers that in the context of:

increasing price suppression experienced by Liberty Steel from 2016 to 2018;

sustained unprofitability of Liberty Steel’s HRS sales since 2010;

reduction of Liberty Steel’s share of the Australian HRS market since 2016; and

reduced capacity utilisation, employment and employee wages experienced by Liberty Steel;

such injury is likely to continue if the measures expire.

The Commission has calculated an un-dumped quarterly selling price into the Australian market for the largest customer of the largest exporter found to be dumping during the inquiry period and compared this to Liberty Steel’s prices to estimate the additional revenue that Liberty Steel could have achieved in the absence of dumping. The Commissioner is satisfied that the injury experienced by the Australian industry during the inquiry period is material and would continue in the absence of the anti-dumping measures.

Based on the Commission’s analysis of the available evidence, the Commissioner is satisfied that, except in regard to Tung Ho, if the anti-dumping measures expire, it is likely that dumping will continue or recur and cause a continuation of the material injury that the anti-dumping measures are intended to prevent.

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9 SUBMISSIONS – DUMPING AND MATERIAL INJURY

The Commission has received submissions from interested parties in respect of the likelihood that dumping and material injury will continue or recur should the measures be removed.

9.1 Submissions from Hyundai

The Commission has received several submissions from Hyundai 37 as well as correspondence from the Republic of Korea Ministry of Trade, Industry and Energy on 4 June 2019 38 in respect of the matters below.

The views expressed in Hyundai’s submissions were reiterated in a meeting held with the Commission on 17 September 2019.39

9.1.1 Changes to the Australian industry

SEF 505 neglects to consider changes to the Australian industry in relation to HRS since the original investigation, which Hyundai is of the view calls into question the legal foundation of the continuation inquiry.

The Commission must examine changes in the applicant’s ownership structure since the original investigation and how this may affect analysis of the performance of the Australian industry.

In respect of the identification of the Australian industry, Liberty Steel is a significant importer of the goods and exerts considerable influence on the pricing of HRS through its market dominance. Hyundai referred to its submission of 21 May 2019 where it claimed that Liberty Steel resorts to the anti-dumping system with prices that it has actively created to demand the imposition and continuation of measures. Hyundai submitted that in these circumstances it is not appropriate for a producer that is also an importer to be considered the domestic industry and requested that the Commission consider the application of the discretion under Article 4.1 of the Anti-Dumping Agreement whereby Liberty Steel may be excluded from the Australian industry.

Should the Commission consider the Liberty Steel Group to be the Australian industry, the scope of the inquiry should be adapted to consider all operations of the affiliated Liberty Steel Group relevant to the goods under consideration (GUC).

SEF 505 does not give adequate consideration to the applicant’s intra-group based distribution model as it sells to Liberty Metalcentre which is part of OneSteel Trading Pty Ltd (OneSteel Trading). The fact that OneSteel Trading was able to supply the GUC at a significant gross margin raises questions about the manufacturing entity’s claim of the inability to sell the goods at a profitable price as it faces no competition for the intra-group supplies made to its affiliated distributors. Further, Hyundai further submitted that the contrast between the gross loss incurred by OneSteel and the gross profit achieved by OneSteel Trading suggests the creation of artificial losses and distorted costs.

37 Items 11, 18, 25, 40, and 54 on the public record refer. 38 Item 14 on the public record refers. 39 Item 50 on the public record refers.

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The Australian industry has undergone major changes since the original investigation and has received government financial assistance suggesting a systemic and broad level recovery.

The acquisition of Steelforce Holdings Pty Ltd (Steelforce) by the GFG Alliance indicates that the Australian industry has evolved to a very different state to the one that the anti-dumping measures are in place to protect and, as such, it is appropriate to allow the anti-dumping measures to expire because they are no longer necessary or warranted.

The SEF fails to take into account the level of Hyundai Steel’s exports to Australia during the review period that were made to the applicant and Steelforce entities who now make up the Australian industry. Hyundai is of the view that the Australian industry has substantively changed and its financial conditions have improved since the original investigation and imposition of anti-dumping measures.

9.1.2 Like goods sold by BlueScope Steel

BlueScope Steel Limited (BlueScope) makes like or substitutable products and, as such, may also be an Australian manufacturer of like goods.

9.1.3 Production of rail by Liberty Steel and imports of HRS

Liberty Steel has focussed its production on highly priced and profitable steel products that are more efficient to manufacture under existing contracts.

In SEF 505 the Commission has not taken into account the economic benefit created by the rail projects and that its findings that Liberty Steel’s increased production of rail did not negatively affect HRS production conflicts with its own recognition that rail production does constrain the HRS production and that the applicant decided to import large volumes of HRS.

9.1.4 Hyundai export volume and production capacity

Hyundai’s intention is to continue to supply the goods to the Australian market where it meets market demand not filled by Liberty Steel. There is no incentive for it to sharply or suddenly increase export volumes to Australia.

The Commission has misunderstood Hyundai’s production capacity and there is no evidence to indicate that it has increased its capacity utilisation above optimal levels or is likely to do so.

9.1.5 Injury analysis

It is not appropriate for the Commission to base its findings on injury on a comparison of the applicant’s position in 2010 owing to changes in the market and industry. The injury analysis portrays the systemic and longstanding financial impairment of the former Australian industry and continued loss making with the operation of dumping measures suggests factors other than dumping as the cause of injury.

The injury assessment in SEF 505 indicates that Liberty Steel achieved its lowest capacity utilisation, highest costs in recent history, increased sales volumes compared to 2015 and 2017, as well as its highest sales revenue since 2015. Hyundai submitted that these findings are incompatible with each other and can be

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explained by the applicant’s decision to supply more profitable rail projects and to rely on imported products to maintain market share.

9.1.6 Lesser duty rule

The Australian industry’s economic conditions are affected by factors unrelated to dumping and that dumping duty must not be excessive and unnecessary. As such, the lesser duty rule should apply.

9.2 Submissions from Liberty Steel in response to Hyundai

In its submissions of 6 August 2019,40 2 September 2019,41 19 September 2019,42 and 25 September 2019,43 Liberty Steel submitted the following.

OneSteel Manufacturing Pty Ltd was the applicant of the original investigation in its capacity as the sole member of the Australian industry and remains the applicant for the continuation inquiry as the sole member of the Australian industry.

Liberty Steel is a price-taker and its sales to related customers are subject to the same market forces as its unrelated customers.

While Hyundai is correct in its assertions that certain mills and facilities are no longer part of Liberty Primary Steel, there is no suggestion that in assessing the economic conditions of the Australian industry, that the Commission has assessed anything but assets, expenses and revenue relevant to the like goods.

Hyundai has conflated Liberty Primary and the acquisition of Steelforce by the InfraBuild group of companies. The Steelforce business has a different Australian ultimate holding company to the Australian industry member and the two businesses operate entirely separately in the Australian market in respect of the goods. Liberty Steel considers that the acquisition will increase competition between itself and its related Australian customer.

In respect of claims made by Hyundai that BlueScope produces a similar product, Hyundai conflates supply with production. Further, the relevance of welded steel beams and columns as cited by Hyundai is unclear to Liberty Steel.

The increase in monthly rail production since January 2018 has not come at the expense of the production of like goods, which increased in the latter part of 2018.

Liberty Steel projected an increase in the sale of the goods in FY 2020 and in the following fiscal years. Its addition of another work shift was not done with the objective of growing the rail products market.

Assertions of Liberty Steel being a significant importer of the goods are misleading and there is no evidence to support the view that it is expected to run at near capacity in the foreseeable future.

Its decision to import the goods preceded its decision to restore an additional work shift, and was not with the objective of growing the rail products market.

40 Item 31 on the public record refers. 41 Item 36 on the public record refers. 42 Item 49 on the public record refers. 43 Item 53 on the public record refers.

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It imported one model of the goods and Hyundai has attempted to conflate such imports and Australian industry’s recent modest success in securing rail product orders.

Safeguard measures in respect of steel exported from Korea from the United States and European Union are significantly affecting Korea’s capacity utilisation and Liberty Steel considers Hyundai’s rejection that it has an overcapacity issue is not supported by relevant data.

Tightening market access conditions are resulting in reduced capacity utilisation for South Korean steel producers.

In its submission of 4 October 2019,44 Liberty Steel stated the following.

It disagrees with Hyundai’s submissions regarding the acquisition of Steelforce and how this will impact on the Australian market.

The Commission must assess price injury in relation to Liberty Steel and not on projections on price and competition made on downstream on-sales as a consequence of the Steelforce acquisition.

Hyundai’s allegations on profit shifting via related party transactions are without grounds.

Rail products are entirely different products to HRS and do not fit in the goods description.

The Commission notes that this submission was received close to the due date for providing this report to the Minister. In accordance with section 269ZHF(4), the Commissioner is not obliged to have regard to any submission received more than twenty days after the publication of the statement of essential facts if to do so would prevent the timely preparation of the report to the Minister. The Commission has had regard to this submission. The issues raised in this submission have been addressed in section 9.3 of this report.

9.3 The Commission’s analysis

9.3.1 Changes to the Australian industry

The ownership structure of Liberty Steel and the changes from the original investigation were examined during the Australian industry visit. The goods are manufactured in Whyalla, South Australia by a division, Liberty Primary Steel, which forms part of the legal entity OneSteel Manufacturing Pty Ltd, the applicant in Investigation 223. The Commission’s analysis of whether the injury that the anti-dumping measures are intended to prevent is in respect of the Australian industry which, as in the original investigation, is located at Liberty Steel’s Whyalla plant.

The Commission considers that Liberty Steel’s importation of HRS does not preclude it from also being considered to be the Australian industry producing HRS. In respect of Hyundai’s submission that the discretion under Article 4.1 of the Anti-Dumping Agreement be exercised, the Commissioner considers that it is not appropriate to exclude Liberty Steel as a producer from the domestic industry because of its HRS purchases from Hyundai. The Commission has not included imports by Liberty Steel in its analysis of


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injury to the Australian industry. The Commission has found in this inquiry that Liberty Steel is the sole domestic producer of HRS.

The Commissioner is satisfied that the application was made by the person whose application under section 269TB resulted in the imposition of measures. The Commissioner is also satisfied that the application was made by the person representing the whole Australian industry producing like goods to those covered by the anti-dumping measures.

With reference to Hyundai’s statement that SEF 505 does not give adequate consideration to the applicant’s intra-group based distribution model, the Commission does not consider it necessary to modify the scope of its analysis to include the economic condition of steel distributors in general, or of any particular distributor, because the activities of distributors are confined to on-selling HRS. They do not manufacture or produce HRS and are therefore not considered to be part of the Australian HRS industry for the purposes of this inquiry even though they are part of the broader HRS market. The Commission considers that its analysis of the performance of Liberty Steel and its production of HRS is an appropriate and correct analysis of the performance of the Australian industry.

In its verification of the IPP model, the Commission found that prices of all HRS sales by Liberty Steel are affected by imported HRS, including those in respect of its sales to its related party, Liberty Metalcentre. This is further corroborated by the Commission’s finding that there was no distinct differences in Liberty Steel’s selling prices to Liberty Metalcentre and other distributors during the inquiry period. The Commission does not agree with Hyundai’s submission that the inability of Liberty Steel to supply the goods at a profitable margin may be the result of the absence of competition from its intra-group supplies.

Hyundai has submitted that Liberty Steel’s costs of production may be distorted by related party transactions. The Commission has verified that where Liberty Steel had purchased raw materials and other production inputs from a related party during the inquiry period, the costing process appropriately made reference to global commodity and external benchmark prices.

The Commission acknowledges that Liberty Steel has received benefits for its Whyalla operations from government assistance as well as from private investment. However, the Commission considers that this does not necessarily suggest that injury related to the production and sale of HRS in particular is no longer experienced by Liberty Steel. The Commission understands that government assistance was related to the Arrium business (the parent company of OneSteel at the time) as a whole and considers the voluntary administration of Arrium may be a further indicator that the Australian industry has suffered injury. The Commission’s analysis in Chapter 5 of this report has demonstrated that the Australian industry producing HRS has continued to experience injury.

The Commission notes that the acquisition of Steelforce by the GFG Alliance occurred in mid 2019 which is after the inquiry period. The Commission’s analysis is focussed upon how the possible expiry of anti-dumping measures relates to the industry producing HRS. The acquisition of Steelforce relates to the level of trade of distributors, not to the level of producers such as Liberty Steel’s Whyalla operation. As such, Steelforce’s activities will be as a distributor selling HRS in the market, not at the level of a producer of HRS. The Commission acknowledges that the acquisition of Steelforce may result in changes in the Australian HRS market. However, the Commission does not consider the acquisition

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changes the structure of the Australian industry that produces HRS. The Commission has not obtained any evidence to indicate how Liberty Steel’s acquisition of Steelforce may impact on the Australian HRS market. The Commission understands that production by Steelforce does not include the production of HRS.

The Commission has found that in the confidential versions of its submissions, Hyundai overstates the proportion of its sales to the Australian industry in the inquiry period by including sales to another party that was not related to Liberty Steel at that time.

9.3.2 Like goods sold by BlueScope Steel

Hyundai’s submission regarding BlueScope refers to the production of welded beams and columns, framing sections and structural steel. BlueScope does not produce HRS and the goods description for this inquiry specifically excludes certain products manufactured by BlueScope such as sections manufactured from welded plate such as welded beams and columns. Further, the Commission’s public record provides details of several cases in respect of BlueScope that have been conducted by the Commission. None of these cases have found that BlueScope produces HRS as described in this review.

9.3.3 Production of rail by Liberty Steel and importations of HRS

The Commission does not consider that Liberty Steel’s production scheduling and current contractual arrangements in respect of the sale of rail indicate that it has shifted its focus away from HRS. The Commission is satisfied that certain production constraints in respect of HRS were of a short-term nature and that obtaining government contracts is standard business practice for any business that supplies the required products.

In the confidential version of its submission of 6 August 2019, Liberty Steel provided information that demonstrates that the increased production of rail in 2018 had not negatively affected its production of HRS in 2018 in comparison to the prior years of 2016 and 2017. This is corroborated by the Commission’s analysis of Liberty Steel’s patterns of rail production, the correlation between HRS and rail production as well as patterns of importations of the goods by Liberty Steel from 2017 to 2018. The Commission does not consider that the need to meet domestic demand by importing one model of HRS of itself demonstrates that no material injury caused by dumping was experienced by the Australian industry. The Commission also found that the increased sales volume of rail did not have a considerable impact on Liberty Steel’s production and sale of HRS.

In respect of submissions that the profitability of highly priced rail products under government contracts has led to improvements in the economic condition of the Australian industry, the Commission considers that it is the economic condition of the Australian industry producing HRS that is of relevance to this inquiry, and not the performance of Liberty Steel in respect of products such as rail that are outside of scope of this inquiry.

9.3.4 Hyundai export volume and production capacity

The Commission notes that Hyundai has stated that it does not intend to increase export volumes of HRS to Australia. However, Hyundai has not provided evidence in support of this claim. The Commission considers that any decisions or actions that may be taken by Hyundai in the future will be dependent on factors and circumstances that may be present at such a time.

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The Commission acknowledged in the SEF, and in section 7.1.1.2 of this report, that it understands that 100 per cent capacity utilisation is based on hypothetical name plate capacity. The Commission maintains its view that the magnitude of Hyundai’s capacity compared to that of Liberty Steel is sufficiently large that a relatively small change in Hyundai’s production scheduling could result in an increase in capacity utilisation by Hyundai that would be material relative to Liberty Steel’s production levels and relative to the size of the Australian HRS market.

9.3.5 Period of injury analysis

The Commission included data from 2010 in its analysis of injury in order to provide context such as the difference in the economic condition of the Australian industry before and after measures were imposed. In its analysis of respective injury factors, the Commission has been clear which time frames its findings related to.

The Commission’s injury assessment on indicators such as unprofitability and price suppression was focussed on Liberty Steel as a producer of HRS. The Commission does not consider that the outcomes of its injury analysis are necessarily indicative of the applicant’s decision to produce more profitable rail projects.

The Commission removed sales of Liberty Steel’s sales of imported HRS and rail from its analysis and considers that this approach ensures it does not attribute the economic performance of the industry producing HRS to imported HRS or rail.

The Commission does not consider that Liberty Steel’s sustained unprofitability since the imposition of measures necessarily indicates that dumping is not the cause of the injury it has experienced. The Commission has found that Liberty Steel is required to compete with HRS that the Commission has found to be exported to Australia at dumped prices during the inquiry period and, as a result, has continued to experience injury.

9.3.6 Lesser duty rule

The Commission determined in the original investigation that the cost plus profit approach was not suitable in the determination of the unsuppressed selling price (USP) because a correlation between the profit rate proposed by the applicant and HRS sales could not be established. The Commission considers this to be the case in respect of this inquiry as well. In Review 499, the Commission did not find there to be a suitable method of determining the USP and the Commissioner proposed that the NIP for all exporters should be a price equal to the respective normal value. As such, the Minister is not required to have regard to the lesser duty rule as the NIP is not less than the normal value.

9.4 Submissions by Liberty Steel in respect of SYS

In its submissions of 25 July 2019 45 and 10 September 2019,46 Liberty Steel stated the following.

In its injury assessment, the Commission should consider the cumulative effects of dumped imports from Japan, Korea, Taiwan and Thailand.


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SYS’s submission of 4 April 2019 suggests that Liberty Steel is a monopolist in its pricing behaviour in the HRS market conflicts with:

o the Commission’s previous findings that Liberty Steel adopts the IPP process; and

o that since the imposition of measures, import volumes and market shares have continued to increase.

It is a price taker, a view which is supported by the Australian Competition and Consumer Commission (ACCC) decision not to oppose Liberty Steel’s acquisition of Steelforce:

ACCC’s review focused on the wholesale supply and distribution of three types of long steel ………..structurals ……

……..We decided not to oppose it because we considered that imported products and rival distributors will continue to provide strong competition.

There is no evidence to support the claim that continued measures on HRS would restrict the supply of the goods to Australia. SYS and other exporters have continued to dump throughout the period the measures have been in effect. This is a clear indication that this behaviour will continue if measures are removed.

9.5 Submissions by SYS

In its submission of 7 August 2019,47 SYS stated the following.

During the inquiry period, SYS was subject to a floor price and every transaction for the Australian market complied with the floor price. Should the Commission maintain its methodology from previous investigations, negligible dumping would be found in respect of SYS.

Liberty Steel’s acquisition of Steelforce and the need for it to import the goods contributes to its market position.

It questions the validity of the injury from price and volume effects from dumped imports as claimed by the applicant.

It is of the view that Liberty Steel is clearly responsible for its own domestic pricing and that the applicant’s imports at prices it apparently agreed with the exporter suggests it may have contributed to any apparent injury it claims was caused by other so termed injurious imports.

The Commission met with representatives of SYS on 27 August 2019 48 where SYS expressed the view that the price undercutting found by the Commission was inconsistent with its understanding of the price of Thai imports in the Australian market. SYS questioned if time lags, import lead times, the IPP model and Liberty Steel’s domestic price premium had been assimilated in the Commission’s analysis as these variables may influence the finding on price undercutting.

In its submission of 2 September 2019,49 SYS stated the following.

47 Item 32 on the public record refers. 48 Item 35 on the public record refers. 49 Item 38 on the public record refers.

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Liberty Steel’s profitability issues have been long term and have not improved or reversed since the imposition of measures and, as such, the causes for Liberty Steel’s performance must be other than the so termed ‘dumped’ imports.

Liberty Steel’s self-imposed need to adopt an IPP plus a domestic pricing premium sales model for the GUC is the only apparent factor in it ‘suffering’ price undercutting, price suppression etc.

Liberty Steel’s own import pricing actually determined the import prices that allegedly undercut its own sales of locally produced GUC.

It requests the Commission to review the basis and methodology in respect of its finding that SYS’s imports undercut the applicant’s prices in the Australian market by 6 to 7 per cent.

Should the Commission maintain the view that the measures should continue beyond November 2019, the Commission should consider recommending to the Minister that the measures be imposed with reference to the non-injurious FOB Australian dollar price based on non-dumped export prices of the two Taiwan exporters found to have negative dumping margins.

9.5.1 The Commission’s assessment

The Commission notes that the requirements for assessing the cumulative effects of injury are described in section 269TAE(2A) (which is in Division 1 of the Act) which applies to investigations. The Full Court of the Federal Court has noted that “[s]ection 269TAE(1) and (2) … confine the application of s 269TAE to ss 269TG and 269TJ and ss 269TH and 269TK respectively.”

The Full Court tentatively expressed a view that the application of s 269TAE(2A) “… to the task being undertaken when discharging the functions conferred by ss 269ZHF and 269ZHG is thus not immediately self-evident.” 50 In this inquiry, the Commission did not consider the combined effects of dumped imports from all exporters and countries subject to this inquiry.

As explained at section 9.3.1 of this report, while the Commission acknowledges that Liberty Steel’s acquisition of Steelforce may change the Australian market, this relates to the level of trade of distributors and not the Australian industry producing the goods.

The Commission does not consider the duration of Liberty Steel’s unprofitability and its continuing unprofitability since the imposition of measures necessarily indicates that dumping has not caused injury to Liberty Steel. The Commission has found that Liberty Steel is required to compete with the prices of imported HRS and that exports to Australia from Thailand were dumped prices during the inquiry period. Consequently, the Australian industry has continued to experience injury.

The Commission has found at section 4.8 of this report that Liberty Steel continues to apply the IPP process whereby it negotiates prices with reference to offers made in the HRS market for imported goods. Liberty Steel is the sole manufacturer of HRS in Australia. However, competition with importers of HRS is such that the Commission does not consider Liberty Steel to hold a monopoly position in the Australian HRS market.

50 Minister of State for Home Affairs v Siam Polyethylene Company Ltd [2010] FCAFC 86 at [105-106], per Graham and Flick JJ.

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The IPP process is a mechanism through which Liberty Steel sets and negotiates its prices in the context of competition from imported HRS. Liberty Steel applies the IPP process in a reactionary manner in response to competition from other importers. It does so on an individual sale and customer by customer basis. The Commission has stated that a cause of injury suffered by Liberty Steel is competition from HRS that is imported at dumped prices. The Commission does not consider the IPP mechanism per se to be the cause of material injury to the Australian industry. The Commission does not consider that the Australian industry used the IPP to undercut its own prices. The Commission has found that HRS prices in the Australian market are established in the context of competition and does not consider that Liberty Steel is clearly responsible for its domestic pricing.

The Commission has verified the statement in Liberty Steel’s submission of 2 September 2019 51 that it had only imported one model of HRS during the review period. The Commission does not consider that imports of HRS by Liberty Steel, either directly or through other parties, necessarily impacted on its prices of HRS or in negotiations with its customers. Such negotiations mostly occur in respect of steel sections and sizes that Liberty Steel did not import. In respect of steel sections that Liberty Steel did import, its price negotiations were conducted in the context of competition from other importers.

SYS had claimed that prices to Australian customers are determined at the time of the placement of an order and that the lead time on FIS delivery of the imports can be in excess of three months and, as a consequence, the undercutting found may not be accurate. The Commission observed that in respect of imports from SYS, the time between order and invoicing of the Australian customer is around three months and sometimes more. As Liberty Steel negotiates on the basis of known import offers under the IPP model, SYS stated that this potentially also contributes to timing factors. The Commission has found price undercutting in respect of SYS imports is still present when such timing differences are taken into account.

SYS submitted that the Commission had not properly factored the impact of the domestic price premium on the extent of undercutting found in respect of SYS imports. The Commission considers that Liberty Steel must compete with importers of HRS on the basis of price. The Commission has found that Liberty Steel sets its prices to be comparable to those of importers plus a domestic price premium. The level of price undercutting that has been found by the Commission captures the domestic price premium achieved by Liberty Steel, but may understate the extent of price injury.

The Commission’s analysis of injury factors such as price suppression and consequent impacts on profitability and profit are not wholly reliant on any findings the Commission has made in respect of price undercutting.

The Commission notes that in Review 499, the Commission has calculated a dumping margin of 5.0 per cent for SYS. The Commission has ascertained that SYS was dumping HRS in the inquiry period and, as such, does not consider it appropriate to apply variable factors determined for other exporters with negative dumping margins in the imposition of measures in respect of SYS.


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9.6 Submissions on material injury by Dragon Steel

In its submissions of 9 August 2019 52 and 2 September 2019,53 Dragon Steel stated the following.

The decision to import the goods from Korea and Taiwan is linked to capacity constraints at Liberty Steel’s Whyalla plant and caused by contracted rail projects from 2016. The diversion to rail products is reflected in Liberty Steel’s capacity utilisation.

The IPP model cannot be accepted by the Commission where it is a significant purchaser and seller of imported HRS.

The Commission must distinguish and isolate the effects of Liberty’s decision to divert capacity away from HRS and injury must not be attributed to imported goods.

It is critical that the material injury assessment confirm whether the combined import purchases by Liberty Steel, either direct or indirect, places it within the category of the largest importers in the Australian market as this has a bearing on the Commission’s causal link analysis and the potential significance of other non-injurious factors. Dragon Steel is of the understanding that it is the Commission’s normal practice to confirm the treatment of imports for the purposes of assessing injury.

The Commission appears not to have taken into account other factors that influence the IPP model such as Liberty Steel’s own imports of HRS. Dragon Steel noted that in circumstances where Liberty Steel’s purchase price of imported HRS was lower than other prevailing import prices, then it is reasonable to conclude that Liberty Steel’s overall pricing is self-inflicted.

The Commission’s preliminary conclusions on price suppression are flawed as it compares the unit CTMS of self-produced HRS with revenue of all HRS sold. The Commission should establish whether the CTMS covers for both self-produced and imported HRS.

It is unclear of the delivery terms which were relied upon in comparing the cost and revenue data. Should these be freight inclusive, it is requested that the Commission undertake an analysis at the ex-works point to remove the impact of higher freight charges that are expected to be incurred by Liberty Steel given its location in Whyalla.

It is critical that the Commission accurately establish the volumes of Liberty’s import purchases relative to other purchases when assessing volume effects. Dragon Steel understands that Liberty purchased significantly more tonnes than Dragon Steel’s exports.

Dragon Steel has limited production capacity and its exports of HRS to Australia accounted for a negligible portion of the estimated Australian market size. A majority of Taiwanese exports being at un-dumped prices during the inquiry period such that the dumped goods represented a negligible volume of the total Australian market. Dragon Steel submitted that in these circumstances, it is unreasonable to


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consider that exports from Taiwan caused material injury during the inquiry period or that material injury will recur.

The Commission has not provided adequate information in respect of the price undercutting methodology it adopted to demonstrate that prices have been appropriately compared. It is unclear to Dragon Steel how location, level of trade, delivery terms, timing differences and credit terms were addressed and adjusted to ensure proper comparison.

The Commission’s analysis indicates that Dragon Steel’s imports undercut Liberty Steel’s prices, but those prices were at or above the non-dumped prices for Tung Ho’s imports. As Tung Ho’s prices must be considered non-injurious given the negative dumping margin, it stands to reason that that Dragon Steel’s prices must also be non-injurious as they are sold at or above non-injurious price levels.

The Commission should provide context to its undercutting analysis by indicating the degree of undercutting relative to Liberty Steel’s own purchases of HRS. In the event that Liberty Steel’s imports were at prices lower than Dragon Steel’s comparable prices, Liberty Steel would have contributed to its own injury and these import prices must be treated as non-injurious. To the extent that its import prices are above Liberty Steel’s own non-injurious import prices, it again provides evidence that Dragon Steels exports are non-injurious.

The prospective assessment of material injury must be foreseeable and imminent. Dragon Steel considers a six month period to be appropriate in view of the commodity nature of the goods. In the absence of credible evidence that Liberty will expand capacity at is Whyalla plant, the Commission must conclude that the recurrence of material injury in the foreseeable future is not likely.

In its submission of 20 September 2019,54 Liberty Steel stated the following.

Dragon Steel’s interpretation of the Commission’s price analysis in SEF 505 is incorrect as selling prices of imported goods by Liberty Steel were not included in the sales revenue analysis and the cost of imported goods were not included in its CTMS.

Inclusion by the Commission of the profit earned on the sales of imported HRS would breach the basic principle of domestic injury analysis.

Dragon Steel’s suggestion that the Commission conclude that Tung Ho’s prices are non-injurious prices in view of the negative dumping, and that Dragon Steel’s prices must also be non-injurious as they are sold at or above non-injurious price levels, would assume that in the absence of dumping in the Australian market, Tung Ho’s export price would have been no higher than at present. However, the findings of SEF 505 indicate otherwise.


The Commission considers the increased production of rail did not negatively affect Liberty Steel’s production of HRS in 2018. The Commission understands that Liberty Steel’s capacity constraints were of a short term nature and does not consider that the decision to produce rail caused injury experienced by Liberty Steel.


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The Commission acknowledges that Liberty Steel had imported more than insignificant volumes of HRS over the inquiry period and in the preceding year. However, the Commission has found that most of Liberty Steel’s sales of HRS during the inquiry period were of its own production. The Commission’s injury assessment has been in respect of Liberty Steel as a producer of HRS. The Commission does not consider that Liberty Steel’s HRS purchases have caused it to suffer injury.

The Commission does not consider that being both a purchaser and seller of imported HRS invalidates the operation of the IPP. The Commission understands that the IPP is applied on a case by case basis whereby Liberty Steel considers market price offers provided by customers or prospective customers and sets its prices accordingly. The Commission considers that the IPP model per se is not the cause of the injury experienced by Australian industry.

In analysing Liberty Steel’s CTMS for manufactured HRS with sales revenue, the Commission notes that:

revenue attributable to the imported goods has not been included;

the cost of imported of HRS has not been included in the CTMS; and

delivery expenses had been treated in a manner that allowed for the appropriate comparison of sales and CTMS data.

The Commission considers that this approach appropriately assesses injury experienced by the Australian industry producing HRS. The Commission has found that Liberty Steel’s import volumes of HRS relative to both its production and sales volumes were small in the inquiry period. Further, in isolating cost and revenue data to that of HRS produced by Liberty Steel, the Commission does not consider that its findings in respect of Liberty Steel’s profitability have been distorted as submitted by Dragon Steel.

Price undercutting analysis had been undertaken by comparing Australian selling prices by importers and Liberty Steel to distributors at FIS terms.

As indicated in section 8.2.4.2 of this report, the Commission has removed sales of HRS by Liberty Steel sourced from Taiwan from its analysis. The Commission has conducted further price undercutting analysis and has compared the Australian selling prices of Liberty Steel’s HRS from its own production produced to that of the HRS it imported from Taiwan and to HRS exported by Dragon Steel. The results of this analysis are at Figure 21.

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Price comparison – Australian industry (manufactured and Taiwanese imports) and Dragon Steel imports

Figure 21 - Comparison of Australian selling prices between Australian industry (manufactured and imports from Taiwan) and imports manufactured by Dragon Steel

Figure 21 indicates that the selling prices of HRS imported from Taiwan by Liberty Steel were greater than the prices of HRS that it had produced itself. It also indicates that the prices of HRS exported by Dragon Steel were consistently lower than those of Liberty Steel’s imports during the inquiry period. The Commission does not agree with Dragon Steel’s submission that its export prices are non-injurious given the price undercutting observed in respect of Australian industry’s manufactured HRS and that its Australian selling prices were consistently lower than those of Liberty Steel’s imported goods.

Dragon Steel submitted that Tung Ho’s prices must be considered non-injurious given the negative dumping margin and that Dragon Steel’s prices must also be non-injurious because they are sold at or above non-injurious price levels. The Commission acknowledges that exports of HRS that are not dumped cannot cause injury that is attributable to dumping. The Commission is unable to attribute injury caused by dumping to Tung Ho.

However, HRS exported by Dragon Steel was dumped. As such, the Commission must consider whether those dumped exports would be likely to lead to a continuation of the material injury that the anti-dumping measures are intended to prevent.

Notwithstanding the comparatively low export volumes of the goods by Dragon Steel during the inquiry period, the Commission considers that the dumping and price undercutting by Dragon Steel, and the pattern of increasing export volumes of HRS from Taiwan since the imposition of measures, indicate that the expiration of measures is likely to encourage importers to acquire HRS at dumped prices and in greater volumes.

Dragon Steel submitted that the Commission is required to examine whether it is likely that Liberty Steel will continue to experience HRS production constraints and import the goods to substitute its reduced production volume in its assessment of whether the threat of material injury is foreseeable and imminent (within a six month period as proposed by Dragon Steel). The Commission considers that the reduction in imports by Liberty Steel from 2017 to 2018 demonstrates that the production constraint issues have ceased. Further, the Commissioner considers should the measures expire in respect of HRS

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exported from Taiwan, the material injury that the measures were intended to prevent would continue or recur, given that the Commission has found sustained injury in several forms. The Commission does not consider that defining an arbitrary time period of six months to test the likelihood of whether injury will recur to be appropriate.

9.7 Submission from Liberty Steel in response to Tung Ho

In its submission of 23 September 2019,55 Liberty Steel submitted that:

it disagrees with Tung Ho’ submission of 2 September 2019 in which Tung Ho stated that the Commission had provided a lack of evidence related to excess global steel capacity and trade distortion;

Tung Ho has excess capacity to produce HRS; and

Tung Ho maintains a relationship with its Australian customer that allows it to cooperate in a manner that allows that customer to secure refunds from duty assessments.

9.8 Submission from Tung Ho in response to Liberty Steel

In its submission of 2 October 2019,56 Tung Ho submitted that it disagrees with Liberty Steel’s submission of 23 September 2019 because it provides no factual evidence regarding the likelihood of dumping recurring and the material injury that the anti-dumping measures were intended to prevent.


In respect of Tung Ho’s production capacity, the Commission’ analysis was conducted on the basis of information it verified at its visit to the company and considers this to be reliable.

The Commission has not found evidence to indicate that Tung Ho maintains a relationship with its Australian customer that allows it to cooperate in a manner whereby pricing is restrained for the purpose of securing refunds from duty assessments.

Further discussion relevant to Tung Ho has been provided in section 7.2.3.3 of this report.


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10 SUMMARY AND CONCLUSION

10.1 Summary

The Commission has found that:

exports of HRS to Australia from Japan, Korea, Taiwan (except for Feng Hsin, Tung Ho and TS Steel) and Thailand were at dumped prices during the inquiry period with dumping margins found in Review 499 ranging from 4.7 per cent to 12.3 per cent;

exports of HRS to Australia have continued to occur at high volumes, especially from Korea and Taiwan;

strong demand for HRS in Australia makes it an attractive destination for exporters;

exporters of HRS to Australia from Japan, Korea, Taiwan and Thailand have maintained distribution networks in Australia;

at full capacity, the Australian industry cannot supply the entire Australian HRS market, and therefore exports of HRS to Australia from Japan, Korea, Taiwan and Thailand are likely to continue; and

excess production capacity of HRS producers in China is expected to continue to place pressure on steel producers worldwide to continue to seek other markets including Australia.

The Commission has found that the IPP is a process used by Liberty Steel to set its prices. The Commission’s analysis of the IPP process and market prices achieved by Liberty Steel and its competitors confirms that Liberty Steel’s prices are mainly influenced by price competition from importers. The Commission has found that in the inquiry period, the largest proportion of imported HRS that has been sold in the Australian HRS market has been at dumped prices. The Commission has found that Liberty Steel’s HRS prices have been undercut by sales of imported HRS at dumped prices. This has caused Liberty Steel to achieve lower prices and sales volume than it may have otherwise. In turn, this has resulted in Liberty Steel experiencing price suppression and injury in the forms of reduced:

revenue;

profits and profitability;

market share;



wages for employees;

productivity; and

employment levels.

10.2 Conclusion

Based on the Commission’s analysis of the available evidence, the Commissioner is satisfied that if the anti-dumping measures expire, it is likely that dumping of HRS from

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Japan, Korea, Taiwan (except for Feng Hsin and Tung Ho) and Thailand will continue and that dumping of HRS by TS Steel from Taiwan will recur.

Based on the Commission’s analysis of the available evidence, the Commissioner is satisfied that the expiration of anti-dumping measures on exports of HRS to Australia from Japan, Korea, Taiwan (except for Feng Hsin and Tung Ho) and Thailand would be likely to lead to a continuation of the material injury that the anti-dumping measures are intended to prevent.

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11 RECOMMENDATIONS

On the basis of the reasons contained in this report, and in accordance with subsection 269ZHF(2), the Commissioner is satisfied that the expiration of the anti-dumping measures applicable to HRS exported to Australia from Japan, Korea, Taiwan (except for Feng Hsin and Tung Ho) and Thailand would be likely to lead to a continuation or a recurrence of the dumping and a continuation of the material injury that the anti-dumping measures are intended to prevent.

The Commissioner recommends that the Minister:

in accordance with subsection 269ZHG(1)(b), DECLARE that the Minister has decided to secure the continuation of the anti-dumping measures relating to HRS exported to Australia from Japan, Korea, Taiwan (except for Feng Hsin and Tung Ho) and Thailand; and

in accordance with subsection 269ZHG(1)(a), DECLARE that the Minister has decided not to secure the continuation of the anti-dumping measures currently applying to HRS exported to Australia from Taiwan by Tung Ho.

The Commissioner recommends that the Minister, in accordance with subsection 269ZHG(4)(a)(ii), DETERMINE that the dumping duty notice continues in force after 20 November 2019, but that after that day the notice ceases to apply to Tung Ho.

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12 LIST OF APPENDICES

Non-Confidential Appendix 1 Variable factors established in Review 499

Confidential Appendix 1 Tung Ho Analysis

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NON-CONFIDENTIAL APPENDIX 1 - VARIABLE FACTORS ESTABLISHED IN REVIEW 499

Japan

Uncooperative and all other exporters

The Commissioner has determined that all exporters from Japan are uncooperative exporters. Section 269TACAB(1) sets out the provisions for calculating export prices and normal values for uncooperative exporters

Export price

The Act specifies that for uncooperative exporters, export prices are to be calculated under section 269TAB(3). The Commission has therefore established an export price under section 269TAB(3) having regard to all relevant information.

The Commission considers that the most reliable and relevant information it possesses in relation to exports of the goods from Japan over the review period is the import data in the ABF import database. This contains detailed importation data from import declarations made by importers to the ABF. Therefore, the Commission has calculated the export price based on the weighted average Free on Board (FOB) export price declared by importers of the goods over the review period from Japan from the ABF import database.

Normal value

The Act specifies that for uncooperative exporters, normal values are to be calculated under section 269TAC(6). The Commission has therefore established the normal value under section 269TAC(6) having regard to all relevant information.

The Commission considers that the most reliable and relevant information it possesses in relation to the normal value of the goods in Japan over the review period is the verified normal value information from the original investigation (Investigation 223). Therefore, the Commission has calculated the normal value based on the normal value of all other exporters from REP 223 and has made an adjustment for the movement in export prices between the original investigation period and the current review period.

Dumping margin

The dumping margin for all exporters from Japan was established in accordance with section 269TACB(2)(a) by comparing the weighted average export price and weighted average normal value.

The dumping margin for all exporters of HRS from Japan is 12.2 per cent.

Korea

Hyundai

Export price

Consideration of section 269TAB(2B)

The Commission determined that it is not appropriate to determine Hyundai’s export price under section 269TAB(2B) after considering the factors in section 269TAB(2A)(b).

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The Commission compared volumes of goods exported to Australia by Hyundai in the original investigation period with exports in the review period and found that export volumes have increased.

The Commission considered patterns of trade of like goods exported by other exporters and found that the volume of Hyundai’s exports were much larger than other exporters.

The Commission is not aware of any factors affecting patterns of trade for like goods that were not within the control of the exporter.

The exporter

For all Australian export sales during the review period, the Commission is satisfied that Hyundai was the exporter of the goods.

The importer

The Commission considers that:

for sales made directly to Australian customers, the Australian customers were the beneficial owners of the goods at the time of importation and therefore the importers of the goods;

in respect of a small portion of sales made during the review period by Hyundai to an Australian customer on duty paid terms, the Australian customer was the beneficial owner of the goods at the time of importation and therefore the importer of the goods; and

for sales made through foreign traders, the Australian customers were the beneficial owners of the goods at the time of importation, and were therefore the importers of the goods.

Export price – assessment

In respect of sales made directly to the Australian customer and to the Australian customer on duty paid terms, the export price has been determined under 269TAB(1)(a) as the price paid by the importer to the exporter less transport and other costs arising after exportation.

In respect of Australian sales made through foreign traders, the goods have not been purchased by the importer from the exporter and therefore sections 269TAB(1)(a) and 269TAB(1)(b) do not apply. The export price for these sales was determined under section 269TAB(1)(c) having regard to all the circumstances of the exportation, being the price paid or payable for the goods by the intermediaries less (as appropriate) transport and other post exportation costs.

Normal value

Normal values were established in accordance with section 269TAC(1) using Hyundai’s domestic sales for like goods sold in the OCOT in arms length transactions.

Table 3 provides a summary of the adjustments that, in accordance with section 269TAC(8), are necessary to ensure a fair comparison of normal values with export prices.

Adjustment Type Deduction/addition

Domestic credit expenses Deduction

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Domestic inland transport Deduction

Export inland transport Addition

Export handling & other costs Addition

Table 1 – Hyundai adjustments to normal value

Dumping margin

The Commission compared the quarterly weighted average of export prices with the quarterly weighted average of corresponding normal values over the review period in accordance with section 269TACB(2)(a).

The dumping margin for Hyundai is 4.7 per cent. This has been revised from the dumping margin indicated in the SEF for the reasons explained in section 5.5.1.6 of this report.


Export price

Export prices for uncooperative and all other exporters from Korea were determined having regard to all relevant information under section 269TAB(3) as prescribed by section 269TACAB(1). Specifically, the Commission had regard to Hyundai’s export price, being the price paid by the importer to the exporter less transport and other costs arising after exportation.

Normal value

Normal values for uncooperative and all other exporters from Korea were determined having regard to all relevant information under section 269TAC(6), as prescribed in section 269TACAB(1). Specifically, the Commission had regard to Hyundai’s normal value with all favourable adjustments under section 269TAC(8) removed.

Dumping margin

The dumping margin for uncooperative and all other exporters from Korea was established in accordance with section 269TACB(2)(a), by comparing the weighted average export price established under section 269TAB(3) with the weighted average normal value established under section 269TAC(6).

The dumping margin for uncooperative and all other exporters from Korea is 7.9 per cent.

Taiwan

Tung Ho Steel

Export price


The Commission determined that it is not appropriate to determine Tung Ho’s export price under section 269TAB(2B) after considering the factors in subsection 269TAB(2A)(b).

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The Commission compared volumes of goods exported to Australia by Tung Ho in the original investigation period with exports in the review period and found that export volumes have increased.

The Commission considered patterns of trade of like goods exported by other exporters and found that the volume of Tung Ho’s exports were much larger than most other exporters.


The exporter

For all Australian export sales during the period, the Commission is satisfied that Tung Ho was the exporter of the goods.

The importer

The Commission considers that for all Australian exports by Tung Ho during the review period, its Australian customers were the beneficial owners of the goods at the time of importation and therefore the importers of the goods.


In respect of the Australian sales of the goods by Tung Ho, the export price has been determined under subsection 269TAB(1)(a) as the price paid by the importer to the exporter less transport and other costs arising after exportation.

Normal value

For one Australian export model, normal value was established in accordance with section 269TAC(1) using Tung Ho’s domestic sales for like goods sold in the OCOT in arm’s length transactions.

With regard to three 57 Australian export models, there were insufficient volumes of domestic sales made in the OCOT. The normal value for these three models was established under subsection 269TAC(2)(c) based on:

the cost to make the exported model based on the company’s records in accordance with section 43(2) of the Customs (International Obligations) Regulation 2015 (the Regulation);

domestic SG&A expenses that would be incurred on the assumption that the exported goods are sold on the domestic market based on the company’s records in accordance with section 44(2) of the Regulation; and

an amount for profit based on the production and sale of like goods by Tung Ho on the domestic market in the OCOT in accordance with section 45(2) of the Regulation.

57 SEF 499 had incorrectly stated that with regard to four Australian export models there were insufficient volumes of domestic sales made in the OCOT.

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Table 2 provides a summary of the adjustments where:

normal value was ascertained in accordance with section 269TAC(1) and were made pursuant to section 269TAC(8); and

normal value was ascertained in accordance with subsection 269TAC(2)(c) and were made pursuant to section 269TAC(9).


Domestic packaging Deduction


Export packing Addition


Export customs brokers fees Addition

Export bank charges and letter of credit fees Addition

Export inspection Addition

Export trade promotion service fees Addition

Export pier through fees Addition

Export port service charges Addition

Export bill of lading fee Addition

Export handling fee Addition

Table 2 – Tung Ho adjustments to normal value

Dumping margin

The dumping margin has been assessed by comparing quarterly weighted average Australian export prices to the corresponding quarterly weighted average normal values for the review period in accordance with subsection 269TACB(2)(a).

The dumping margin for Tung Ho is negative 1.6 per cent.

TS Steel

Export price


The Commission determined that it is not appropriate to determine TS Steel’s export price under section 269TAB(2B) after considering the factors in section 269TAB(2A)(b).

The Commission has found a pattern of trade in which TS Steel’s exports of HRS remained consistent for a period since the original investigation and increased substantially during the review period (to volumes greater than those in the original investigation period). The Commission considers that in these circumstances, section 269TAB(2B) does not apply.


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The exporter

For all Australian export sales during the review period, the Commission is satisfied that TS Steel was the exporter of the goods.

The importer

The Commission considers that:

a) for sales made direct to Australian customers, the Australian customers were the beneficial owners of the goods at the time of importation and were therefore the importers of the goods; and

for sales made during the review period to Australian customers through intermediaries, the Australian customers were the beneficial owners of the goods at the time of importation and were therefore the importers of the goods.


In respect of sales made direct to the Australian customer, the export price has been determined under 269TAB(1)(a) as the price paid by the importer to the exporter less transport and other costs arising after exportation.

In respect of Australian sales made through intermediaries, the goods have not been purchased by the importer from the exporter and therefore sections 269TAB(1)(a) and 269TAB(1)(b) do not apply. The export price for these sales was determined under section 269TAB(1)(c) having regard to all the circumstances of the exportation, being the price paid or payable for the goods by the intermediaries less (as appropriate) transport and other post exportation costs.

Normal value

As described in TS Steel’s verification report, normal values were initially established in accordance with section 269TAC(1) using TS Steel’s domestic invoice prices for like goods sold in the OCOT in arms length transactions.

Following the receipt of revised data and a review of the preliminary normal value calculation, the Commission found that for the Australian export model there were insufficient volumes of sales made in the OCOT of an equivalent domestic model.

The normal value was established under section 269TAC(2)(c) based on:

a) the cost to make the exported model based on the company’s records in accordance with section 43(2) of the Regulation;

b) domestic SG&A expenses that would be incurred on the assumption that the exported goods are sold on the domestic market based on the company’s records in accordance with section 44(2) of the Regulation; and

c) an amount for profit based on the production and sale of like goods by TS Steel on the domestic market in the OCOT in accordance with section 45(2) of the Regulation.

Table 3 provides a summary of the adjustments that, in accordance with section 269TAC(9), are necessary to ensure fair comparison of normal values with export prices:


Domestic credit expenses Deduction

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Export packaging Addition


Export handling & other costs Addition

Table 3 – TS Steel adjustments to normal value

Dumping margin

The dumping margin has been assessed by comparing the weighted average Australian export prices to the corresponding quarterly weighted average normal values for the review period in accordance with subsection 269TACB(2)(a).

The dumping margin is negative 1.6 per cent.

Dragon Steel

Export price


The Commission determined that it is not appropriate to determine Dragon Steel’s export price under section 269TAB(2B) after considering the factors in subsection 269TAB(2A)(b).

An export price for HRS exported to Australia by Dragon Steel was ascertained in Accelerated Review 359 in 2016. The Commission has found in this review that it commenced HRS exports to Australia during the review period consistent with a significant increase in overall imports from Taiwan in 2018. The Commission considers that section 269TAB(2B) does not apply.

The exporter

For all Australian export sales during the period, the Commission is satisfied that Dragon Steel was the exporter of the goods.

The importer

The Commission considers that for all Australian exports by Dragon Steel during the review period, its Australian customers were the beneficial owners of the goods at the time of importation and therefore the importers of the goods.


In respect of the Australian sales of the goods by Dragon Steel, the export price has been determined under section 269TAB(1)(a) as the price paid by the importer to the exporter less transport and other costs arising after exportation.

Normal value

Normal values were established in accordance with section 269TAC(1) using Dragon Steel’s domestic invoice prices for like goods sold in the OCOT in arms length transactions.

Table 4 provides a summary of the adjustments that, in accordance with section 269TAC(8), are necessary to ensure fair comparison of normal values with export prices.

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Domestic rebates Deduction

Domestic packaging Deduction


Export packaging Addition


Export handling and other Addition

Export commission Addition

Export bank charges Addition

Table 4 – Dragon Steel adjustments to normal value

Dumping margin


The dumping margin for Dragon Steel is 9.0 per cent.


Export price

Export prices for uncooperative and all other exporters from Taiwan were determined having regard to all relevant information under section 269TAB(3) as prescribed in section 269TACAB(1). The Commission used the lowest export price from the cooperative exporters.

Normal value

Normal values for uncooperative and all other exporters from Taiwan were determined having regard to all relevant information under section 269TAC(6) as prescribed in section 269TACAB(1). The Commission used the highest normal value from the cooperative exporters.

Dumping margin

The dumping margin for uncooperative and all other exporters from Taiwan was established in accordance with subsection 269TACB(2)(a) by comparing the weighted average export price established under section 269TAB(3) with the weighted average normal value established under section 269TAC(6).

The dumping margin for uncooperative and all other exporters from Taiwan is 12.3 per cent.

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Thailand

Siam Yamato Steel

Export price


The Commission determined that it is not appropriate to determine SYS’s export price under section 269TAB(2B) after considering the factors in subsection 269TAB(2A)(b).

The Commission has found a pattern of trade in which SYS’s exports of HRS have increased substantially during the review period.

In the review period, SYS was one of the largest exporters of HRS to Australia. The Commission is not aware of any factors affecting patterns of trade for like goods that were not within the control of the exporter. The Commission considers that in these circumstances, section 269TAB(2B) does not apply.

The exporter

For all Australian export sales during the period, the Commission is satisfied that SYS was the exporter of the goods.

The importer

The Commission considers that for all Australian exports by SYS during the review period, its Australian customers were the beneficial owners of the goods at the time of importation and therefore the importers of the goods.


In respect of the Australian sales of the goods by SYS, the export price has been determined under subsection 269TAB(1)(a) as the price paid by the importer to the exporter less transport and other costs arising after exportation.

Normal value

Normal values were established in accordance with section 269TAC(1) using SYS’s domestic sales for like goods sold in the OCOT in arms length transactions.

Table 5 provides a summary of the adjustments that, in accordance with section 269TAC(8), are necessary to ensure fair comparison of normal values with export prices.


Domestic credit terms Deduction


Domestic handling Deduction

Domestic commission Deduction

Domestic bank charges Deduction


Export handling charges Addition

Export bank charges Addition

Export credit terms Addition

Table 5 – SYS adjustments to normal value

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Dumping margin


The dumping margin for SYS is 5.0 per cent.


Export Price

Export prices for uncooperative and all other exporters from Thailand were determined having regard to all relevant information under section 269TAB(3), as prescribed by section 269TACAB(1). Specifically, the Commission had regard to SYS’s export price, being the price paid by the importer to the exporter less transport and other costs arising after exportation.

Normal Value

Normal values for uncooperative and all other exporters from Thailand were determined having regard to all relevant information under section 269TAC(6) as prescribed in section 269TACAB(1). Specifically, the Commission had regard to SYS’s normal value with all favourable adjustments under section 269TAC(8) removed.

Dumping margin

The dumping margin for uncooperative and all other exporters from Thailand was established in accordance with subsection 269TACB(2)(a) by comparing the weighted average export price established under section 269TAB(3) with the weighted average normal value established under section 269TAC(6).

The dumping margin for uncooperative and all other exporters from Thailand is 7.7 per cent.

REPORT No. 505...Ltd (Feng Hsin)) and the Kingdom of Thailand (Thailand) to Australia is justified....

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