FINAL REPORT NO. 506 · Following analysis of the available evidence and giving due consideration...

PUBLIC RECORD

PUBLIC RECORD

CUSTOMS ACT 1901 - PART XVB

FINAL REPORT

NO. 506

INQUIRY INTO THE CONTINUATION OF ANTI-DUMPING MEASURES APPLYING TO

QUENCHED AND TEMPERED STEEL PLATE

EXPORTED TO AUSTRALIA FROM FINLAND, JAPAN AND SWEDEN

4 September 2019

PUBLIC RECORD

REP 506 – Q&T steel plate – Finland, Japan and Sweden

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CONTENTS

1 SUMMARY AND RECOMMENDATIONS ............................................................................................................ 6

1.1 INTRODUCTION ................................................................................................................................................ 6 1.2 FINDINGS ........................................................................................................................................................ 6 1.3 RECOMMENDATIONS ......................................................................................................................................... 6

2 BACKGROUND.................................................................................................................................................. 7

2.1 THE CURRENT ANTI-DUMPING MEASURES ................................................................................................................ 7 2.2 CONDUCT OF THIS INQUIRY.................................................................................................................................. 8 2.3 NOTIFICATION AND PARTICIPATION IN THE INQUIRY ................................................................................................... 9 2.4 SUBMISSIONS RECEIVED FROM INTERESTED PARTIES ................................................................................................. 10

3 THE GOODS AND LIKE GOODS ........................................................................................................................ 12

3.1 FINDINGS ...................................................................................................................................................... 12 3.2 THE GOODS ................................................................................................................................................... 12 3.3 LIKE GOODS ................................................................................................................................................... 13 3.4 CONCLUSION ................................................................................................................................................. 14

4 THE AUSTRALIAN INDUSTRY .......................................................................................................................... 16

4.1 FINDINGS ...................................................................................................................................................... 16 4.2 AUSTRALIAN INDUSTRY ..................................................................................................................................... 16 4.3 AUSTRALIAN PRODUCTION ................................................................................................................................ 16

5 THE AUSTRALIAN MARKET ............................................................................................................................. 17

5.1 FINDINGS ...................................................................................................................................................... 17 5.2 MARKET SIZE ................................................................................................................................................. 17 5.3 MARKET CHARACTERISTICS ................................................................................................................................ 18

6 ECONOMIC CONDITION OF THE AUSTRALIAN INDUSTRY ............................................................................... 20

6.1 FINDINGS ...................................................................................................................................................... 20 6.2 APPROACH TO ANALYSIS ................................................................................................................................... 20 6.3 FINDINGS IN ORIGINAL INVESTIGATION ................................................................................................................. 20 6.4 VOLUME EFFECTS ............................................................................................................................................ 21 6.5 PRICE EFFECTS ................................................................................................................................................ 22 6.6 PROFITS AND PROFITABILITY .............................................................................................................................. 23 6.7 OTHER ECONOMIC FACTORS .............................................................................................................................. 24

7 REVIEW OF VARIABLE FACTORS ..................................................................................................................... 26

7.1 FINDINGS ...................................................................................................................................................... 26 7.2 EXPORTER QUESTIONNAIRES RECEIVED ................................................................................................................. 26 7.3 JAPAN .......................................................................................................................................................... 28 7.4 SWEDEN ....................................................................................................................................................... 30 7.5 FINLAND ....................................................................................................................................................... 34

8 LIKELIHOOD THAT DUMPING WILL CONTINUE OR RECUR .............................................................................. 36

8.1 FINDINGS ...................................................................................................................................................... 36 8.2 THE COMMISSION’S APPROACH .......................................................................................................................... 36 8.3 AUSTRALIAN INDUSTRY’S CLAIMS ........................................................................................................................ 36 8.4 SUBMISSION ON THE LIKELIHOOD OF DUMPING FROM SWEDEN .................................................................................. 37 8.5 IMPORT VOLUMES ........................................................................................................................................... 37 8.6 THE COMMISSION’S ASSESSMENT OF THE LIKELIHOOD OF DUMPING CONTINUING OR RECURRING ........................................ 40

9 LIKELIHOOD THAT MATERIAL INJURY WILL CONTINUE OR RECUR .................................................................. 41

9.1 FINDINGS ...................................................................................................................................................... 41 9.2 AUSTRALIAN INDUSTRY’S CLAIMS ........................................................................................................................ 41

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9.3 VOLUME EFFECTS ............................................................................................................................................ 42 9.4 PRICE EFFECTS DUE TO IMPORTS FROM SWEDEN ..................................................................................................... 44 9.5 PRICE EFFECTS DUE TO IMPORTS FROM JAPAN ........................................................................................................ 53 9.6 PROFIT INJURY ............................................................................................................................................... 55 9.7 FACTORS OTHER THAN DUMPING ........................................................................................................................ 57 9.8 MATERIALITY OF INJURY ................................................................................................................................... 68 9.9 DOWNSTREAM EFFECT OF MEASURES ................................................................................................................... 69 9.10 THE LIKELIHOOD OF MATERIAL INJURY CONTINUING OR RECURRING .............................................................................. 69

10 NON-INJURIOUS PRICE AND LESSER DUTY RULE ............................................................................................ 71

10.1 FINDINGS ...................................................................................................................................................... 71 10.2 THE LESSER DUTY RULE ..................................................................................................................................... 71 10.3 CALCULATION OF THE NON-INJURIOUS PRICE ......................................................................................................... 71 10.4 SUBMISSIONS ON THE USP AND NIP ................................................................................................................... 71 10.5 THE COMMISSION’S ASSESSMENT ....................................................................................................................... 72 10.6 EFFECTIVE RATE OF DUTY .................................................................................................................................. 74

11 EXEMPTIONS FROM DUTIES ........................................................................................................................... 75

11.1 SUBMISSIONS ON EXEMPTIONS FROM DUTIES ......................................................................................................... 75 11.2 COMMISSION’S CONSIDERATION OF SUBMISSIONS ON EXEMPTIONS FROM DUTIES ........................................................... 76

12 FORMS OF DUTY ............................................................................................................................................ 77

12.1 FINDINGS ...................................................................................................................................................... 77 12.2 CONSIDERATION OF FORM OF MEASURES .............................................................................................................. 77 12.3 EXISTING MEASURES ........................................................................................................................................ 77 12.4 SUBMISSIONS ON THE FORM OF MEASURES ........................................................................................................... 77 12.5 THE COMMISSION’S ASSESSMENT OF THE FORM OF MEASURES ................................................................................... 78

13 RECOMMENDATIONS ..................................................................................................................................... 79

13.1 FINDINGS ...................................................................................................................................................... 79 13.2 RECOMMENDATIONS ....................................................................................................................................... 79

14 APPENDICES AND ATTACHMENTS .................................................................................................................. 82

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ABBREVIATIONS

ABF Australian Border Force

the Act Customs Act 1901

ADA World Trade Organization Anti-Dumping Agreement

ADN Anti-Dumping Notice

Alliance Laser Alliance Laser Pty Ltd

APS APS Adelaide Profile Services Pty Ltd

ASX Australian Stock Exchange

Bisalloy or the applicant Bisalloy Steels Pty Ltd

BRE Bruce Rock Engineering

combination duty method the combination of fixed and variable duty method

the Commission the Anti-Dumping Commission

the Commissioner the Commissioner of the Anti-Dumping Commission

CTM cost to make

CTMS cost to make and sell

DDP Delivered duty paid

the Direction Customs (Extensions of Time and Non-cooperation) Direction 2015

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

EPR electronic public record

EC European Commission

FOB Free on Board

Goldmont Goldmont Engineering Pty Ltd

GGMF G&G Mining Fabrication Pty Ltd

the goods Q&T steel plate – the goods the subject of the application

the Guidelines Guidelines on the Application of Forms of Dumping Duty November 2013

Hercules Hercules Engineering Pty Ltd

IDD interim dumping duty

inquiry period 1 January 2018 to 31 December 2018

JFE JFE Steel Corporation

Jigang Bisalloy Jigang (Shandong) Steel Plate Co., Limited

Kennedy Trailers G.E. & D.A. Kennedy Pty Ltd

Kobe Kobe Steel Limited

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MAL Metso Australia Limited

the Manual Dumping and Subsidy Manual

MCC model control code

the measures the anti-dumping measures currently applicable to exports of Q&T steel plate to Australia from Finland, Japan and Sweden that are due to expire on 5 November 2019

the Minister the Minister for Industry, Science and Technology

NIP non-injurious price

the notice the dumping duty notice published on 5 November 2014

NSSMC Nippon Steel & Sumitomo Metal Corporation

OCOT ordinary course of trade

Q&T steel plate quenched and tempered steel plate

the Regulation Customs (International Obligations) Regulation 2015

REP 234 Anti-Dumping Commission Report No. 234

REQ response to the exporter questionnaire

Ruukki Rautaruukki Oyj

SEF statement of essential facts

SEF 506 statement of essential facts No. 506

SEQTT South East Queensland Tilt Tray Pty Ltd

SG&A selling, general and administrative

SSAB AU SSAB Swedish Steel Pty Ltd

SSAB EMEA SSAB EMEA AB (formerly SSAB Oxelosund AB)

SSAB SSAB EMEA and SSAB AU

STE Shephard Transport Equipment

the subject countries Finland, Japan and Sweden

TCO Tariff Concession Order

TEi TEi Services Pty Ltd

Total Steel Total Steel of Australia Pty Ltd

Toomey AG Laser & GPS Pty Ltd T/A Toomey Earthmovers

Tuff Trailers Tuff Trailers (QLD) Pty Ltd

USP unsuppressed selling price

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1 SUMMARY AND RECOMMENDATIONS

1.1 Introduction

This report concerns an inquiry into whether the Minister for Industry, Science and Technology (the Minister) should decide to continue the anti-dumping measures, in the form of a dumping duty notice (the notice), applying to quenched and tempered (Q&T) steel plate (the goods) exported to Australia from Finland, Japan and Sweden (together, the subject countries).1 The inquiry followed an application made by Bisalloy Steel Pty Ltd (Bisalloy) for the continuation of the measures.2

This report sets out the findings and conclusions on which the Commissioner of the Anti-Dumping Commission (the Commissioner) has based his recommendations to the Minister.

The anti-dumping measures currently applicable to exports of the goods to Australia from Finland, Japan and Sweden are due to expire on 5 November 2019.

1.2 Findings

Following analysis of the available evidence and giving due consideration to submissions made by interested parties in response to SEF 506, the Commissioner is satisfied that the expiration of the anti-dumping measures would lead, or would be likely to lead, to a:

continuation of the dumping of the goods from Japan and Sweden;

recurrence of the dumping of the goods from Finland; and

continuation of the material injury that the measures are intended to prevent.3

1.3 Recommendations

Based on the above findings, the Commissioner recommends that the Minister take steps to secure the continuation of the anti-dumping measures on and after 6 November 2019 in respect of the goods exported from Finland, Japan and Sweden.4

The Commissioner also recommends that the notice have effect in relation to exporters generally as if different variable factors had been ascertained.5

1 See Division 6A of Part XVB of the Customs Act 1901 (Cth) (‘the Act’). 2 Under section 269ZHB(1) of the Act. 3 See section 269ZHF(2) of the Act. 4 Ibid.

5 See section 269ZHF(1)(a)(iii) of the Act.

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2 BACKGROUND

2.1 The current anti-dumping measures

On 8 January 2014, a dumping investigation into Q&T steel plate exported to Australia from Finland, Japan and Sweden was initiated following an application by Bisalloy. The Commissioner, as outlined in Anti-Dumping Commission Report No. 234 (REP 234), found that:

Q&T steel plate from all three countries was exported to Australia at dumped prices.6

There was sufficient evidence to conclude that dumping created a competitive benefit to importers and downward price pressure from imported goods.7

Price depression occurred as the Australian industry was forced to reduce prices in order to compete with imported goods at dumped prices and to maintain its market share.8

It is likely that Bisalloy would be in a position to maintain pricing levels necessary to cover the increase in its cost to make and sell (CTMS) caused by lower market demand without the presence of dumping.9

The size of the market for Q&T steel plate in Australia was sufficient for Bisalloy to operate profitably during the investigation period, but for the presence of dumping.10

The Commissioner also found that a lesser amount of duty is adequate to remove injury to the Australian industry.

Following consideration of REP 234, the then Parliamentary Secretary to the Minister for Industry imposed the current anti-dumping measures on the goods on 5 November 2014.

The anti-dumping measures currently applying to the goods are set out in Table 1. The effective rate of duty reflects application of the lesser duty rule.

Country Exporter Dumping margin

Effective rate of duty

Form of measures

Finland All exporters 21.7% 10.8% Ad valorem

Japan

JFE Steel Corporation

24.6% 24.5% Ad valorem

All other exporters 33.9% 26.1% Ad valorem

Sweden All exporters 34.0% 9.6% Combination of fixed and

variable

Table 1: Current anti-dumping measures applying to Q&T steel plate

6 Chapter 6, page 35 of REP 234. 7 Chapter 8.5.2, page 61 of REP 234. 8 Chapter 8.5.3, page 62 of REP 234. 9 Chapter 8.5.3, page 62 of REP 234. 10 Chapter 8.6, page 63 of REP 234.

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2.2 Conduct of this inquiry

2.2.1 Initiation the Continuation Inquiry

The Commissioner initiated this inquiry on 11 February 2019, following his consideration of an application lodged by Bisalloy seeking continuation of anti-dumping measures relating to the goods exported to Australia from the subject countries. Anti-Dumping Notice (ADN) No. 2019/22 on the electronic public record (EPR)11 sets out the Commissioner’s reasons for initiating this inquiry.

2.2.2 Statement of Essential Facts (SEF)

The Commissioner published Statement of Essential Facts No. 506 (SEF 506) on 3 June 2019.12 SEF 506 sets out the recommendations that the Commissioner proposed to make to the Minister based on the information before him at that time. Interested parties were invited to make submissions in response to the SEF by 24 June 2019.13

2.2.2.1 Submission from EU in response to the SEF

The Commission subsequently granted an extension to the European Commission (EC) to make a submission in response to the SEF until 8 July 2018. In its submission, the EC claimed that the information disclosed in SEF 506 was insufficient to give parties a proper understanding of the analysis and findings.14

The Commission is of the view that the level of information disclosed was sufficient to enable interested parties to assess the substance of that information and make an informed submission in response to SEF 506.15 The Commission is also of the view that the level of information disclosed in SEF 506 was in accordance with its relevant legislative requirements.16

2.2.3 Final report

In formulating this report, the Commissioner had regard to:

the application;

all timely submissions concerning publication of ADN No.2019/22 to which the Commissioner had regard to for the purpose of formulating SEF 506;17

SEF 506;

submissions received following publication of SEF 506 and prior to this report;18

11 The EPR is available on the Commission’s website at www.adcommission.gov.au 12 Section 269ZHE(1) of the Act. 13 Section 269ZHE(2) of the Act. 14 EPR 506, document 050. 15 In this regard, the Commission notes the submission of the EC (EPR 506, document 050 refers) claiming that the information disclosed in SEF 506 was ‘insufficient to allow parties to have a proper understanding of all the elements at stake, and therefore to be in a position to properly exercise their rights of defence.’ The EC further claims that because there was insufficient information in SEF 506, the Commission failed to comply with its obligations under Article 6.2 and 6.5.1 of the ADA. 16 See section 269ZJ of the Act. 17 Chapter 2.4, page 11 of SEF 506. 18 Refer to Chapter 2.6 for further details of the submissions that were considered.

http://www.adcommission.gov.au/

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responses to the Commission’s request for evidence to end users who made submissions;19 and

other matters considered relevant.

The date for the Commissioner to provide this report and his recommendation to the Minister was extended to 4 September 2019 under section 269ZHI.20

2.3 Notification and participation in the inquiry

On 11 February 2019, a notice advising the initiation of this continuation inquiry was published on the Commission website,21 in relation to Q&T steel plate exported to Australia from Finland, Japan and Sweden.

The Commission established an inquiry period of 1 January 2018 to 31 December 2018 for the purposes of determining whether the anti-dumping measures should be continued, and if so, whether the variable factors should be changed.

2.3.1 Australian industry

Bisalloy, the sole manufacturer of Q&T steel plate in Australia, provided domestic sales and CTMS data to the Commission. The Commission visited Bisalloy’s premises on 26 to 28 of February 2019 to verify the information and data provided in its application. The report in relation to this visit is available on the EPR.22

2.3.2 Importers

The Commission examined the Australian Border Force (ABF) import database and identified several entities listed as importers of the goods from the subject countries. The Commission sought cooperation from the three largest listed importers, which accounted for 99 per cent of the import volumes from the subject countries (Confidential Attachment 2.1), through the completion of an importer questionnaire.

SSAB Swedish Steel Pty Ltd (SSAB AU) provided a response to the importer questionnaire. SSAB AU facilitated a significant proportion of the imports into Australia from the subject countries.

The Commission visited SSAB AU on 21 March 2019 to verify information and data provided in its questionnaire response. The report in relation to this visit is available on the EPR.23

2.3.3 Exporters

The Commission identified several exporters of the goods from the subject countries in the ABF import database. The Commission received questionnaire responses from three exporters:

SSAB EMEA AB (SSAB EMEA), Sweden;

19 EPR 506, document 057. 20 ADN No. 2019/90 and ADN No. 2019/102 refer. 21 ADN No. 2019/22 refers. 22 EPR 506, document 013. 23 EPR 506, document 021.

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JFE Steel Corporation (JFE), Japan; and

Nippon Steel & Sumitomo Metal Corporation (NSSMC),24 Japan.

Only SSAB EMEA provided a complete exporter questionnaire response.

The Commission conducted a verification visit to SSAB EMEA from 9 to 12 April 2019 to verify information and data provided in its questionnaire response. The report in relation to this visit is available on the EPR.25

2.4 Submissions received from interested parties

The Commission received the following public submissions from interested parties during the inquiry.26

EPR document Interested party Date published on EPR

003 Total Steel of Australia Pty Ltd (Total Steel) 21 March 2019

005 Metso Australia Limited (MAL) 28 March 2019

006 JFE, Kobe Steel Ltd (Kobe), NSSMC 28 March 2019

014 Rautaruukki Oyj (Ruukki) 11 April 2019

015 JFE, NSSMC 23 April 2019

016 Bisalloy 7 May 2019

017 SSAB EMEA 8 May 2019



023 SSAB EMEA & SSAB AU 28 May 2019

024 SSAB EMEA & SSAB AU 3 June 2019

026 G.E. & D.A. Kennedy Pty Ltd (Kennedy Trailers) 19 June 2019

027 AG Laser & GPS Pty Ltd T/A Toomey Earthmovers (Toomey)

20 June 2019

028 Shephard Transport Equipment (STE) 20 June 2019

029 Hercules Engineering Pty Ltd (Hercules) 20 June 2019

030 Goldmont Engineering Pty Ltd (Goldmont) 24 June 2019

031 Bisalloy 24 June 2019

032 Bisalloy 24 June 2019

033 G&G Mining Fabrication Pty Ltd (GGMF) 24 June 2019

034 ATA Steel 24 June 2019

035 Australian Steel 24 June 2019

036 JFE, Kobe, NSSMC 25 June 2019

037 MAL 25 June 2019

24 Nippon Steel & Sumitomo Metal Corporation changed its name to Nippon Steel Corporation in April 2019. 25 EPR 506, document 022. 26 Section 269ZHE(2).

https://www.industry.gov.au/sites/default/files/adc/public-record/506_-_022_-_verification_report_-_exporter_-_ssab_emea.pdf

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EPR document Interested party Date published on EPR

038 APS Adelaide Profile Services Pty Ltd (APS) 25 June 2019

039 Bruce Rock Engineering (BRE) 25 June 2019



042 Alliance Laser Pty Ltd (Alliance Laser) 1 July 2019

043 Bisalloy 1 July 2019



046 Tuff Trailers (QLD) Pty Ltd (Tuff Trailers) 1 July 2019


048 TEi Services Pty Ltd (TEi) 3 July 2019

050 EC 9 July 2019

052 JFE, Kobe, NSSMC 15 July 2019

053 Total Steel 25 July 2019

054 SSAB 25 July 2019

055 South East Queensland Tilt Tray Pty Ltd (SEQTT) 26 July 2019

056 Bulk Transport Equipment (BTE) 29 July 2019

058 Aries Rail 12 August 2019

059 JFE, Kobe, NSSMC 12 August 2019

060 Bisalloy 15 August 2019

Table 2: Submissions

Non-confidential versions of these submissions are available on the EPR.27

27 Submissions are available on EPR 506.

https://www.industry.gov.au/data-and-publications/anti-dumping-commission-current-cases/506

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3 THE GOODS AND LIKE GOODS

3.1 Findings

The Commissioner considers that locally produced Q&T steel plate have characteristics closely resembling the goods subject to the anti-dumping measures and are therefore like goods.28

3.2 The goods

The goods that are the subject of the anti-dumping measures in this inquiry are:

Flat rolled products of alloyed steel plate commonly referred to as Quenched and Tempered (Q&T) steel plate (although some Q&T grades may not be tempered), not in coils, not further worked than hot rolled, of widths from 600mm up to and including 3,200mm, thickness between 4.5-110mm (inclusive), and length up to and including 14 metres, presented in any surface condition including but not limited to mill finished, shot blasted, primed (painted) or un-primed (unpainted), lacquered, also presented in any edge condition including but not limited to mill edge, sheared or profiled cut (i.e. by Oxy, Plasma, Laser, etc.), with or without any other minor processing (e.g. drilling).

Goods of stainless steel, silicon-electrical steel and high-speed steel, are excluded from the goods covered.

3.2.1 Tariff classification of the goods

The goods are generally, but not exclusively, classified to the following tariff subheadings and statistical codes in Schedule 3 to the Customs Tariff Act 1995:

7225.40.00: 21, 22, 23, 24; and

7225.99.00: 39.

3.2.2 Tariff Concession Orders

There are currently a number of Tariff Concession Orders (TCOs) applying to tariff subheading 7225.40.00 and one TCO applying to tariff subheading 7225.99.00. TCOs exempt specific goods from general customs duty upon importation. Further details of the TCOs can be found on the ABF website.29 The Commission notes that despite the TCOs, there are no exemptions from the anti-dumping measures in place.

3.2.3 Model Control Codes

As announced in ADN No. 2018/128 published on 9 August 2018, the Commission has commenced using a model control code (MCC) structure for model matching when comparing export prices and normal values.

The Commission has undertaken model matching using the MCC structure in order to identify key characteristics to match models of the goods exported to Australia and like goods sold domestically in the country of export.

28 Section 269T(1) of the Act refers. 29 ABF – Tariff Concession Orders: https://www.abf.gov.au/importing-exporting-and-manufacturing/tariff-classification/current-tariff/schedule-3/section-xv/chapter-72.

https://www.abf.gov.au/importing-exporting-and-manufacturing/tariff-classification/current-tariff/schedule-3/section-xv/chapter-72

https://www.abf.gov.au/importing-exporting-and-manufacturing/tariff-classification/current-tariff/schedule-3/section-xv/chapter-72

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The MCC structure for Q&T steel plate is detailed in Table 3. For full details of the MCC, refer to ADN No. 2019/22.

Table 3: Model control code structure for Q&T steel plate

3.3 Like goods

The Commission has considered the application and findings of the original investigation, submissions and publicly available information in its assessment of like goods.

3.3.1 Findings in REP 234

In REP 234 the Commission found that Q&T steel plate produced locally by Bisalloy was like to the goods exported from the subject countries during the original investigation period. In REP 234 the Commission had regard to submissions, differences between Bisalloy and imports of Q&T steel plate in dimensions, production specification, quality, competition and production. The Commission found that Bisalloy produced goods that have characteristics closely resembling the goods and hence were like goods.

3.3.2 Physical likeness

The products have similar physical characteristics in terms of shape, dimensions, appearance, strength, hardness and weight. The products have similar chemical compositions.

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3.3.3 Commercial likeness

The products manufactured by the Australian industry and the imported goods are commercially alike, directly competitive and are sold to common customers in the Australian market.

3.3.4 Functional likeness

Both the goods and the products produced by the Australian industry have the same end uses. They are both functionally substitutable and are capable of performing to the same standards.

3.3.5 Production likeness

The production processes are similar in relation to the quenching and tempering of steel. The goods and the Australian industry’s products are constructed of similar materials and have similar costs to produce.

3.3.6 Submissions on substitutability

Following the publication of SEF 506, the Commission received individual submissions from the following end users claiming that Bisalloy’s Q&T steel plate differs from other Q&T suppliers, in particular goods supplied by SSAB, such that the goods are not substitutable:

Alliance Laser30 Goldmont31 SEQTT32

ATA Steel33 GGMF34 TEi35

BRE36 Hercules37 Tuff Trailers38

The submissions indicated that the quality of Bisalloy’s Q&T steel plate rendered the goods non-substitutable with imports of Q&T steel plate (primarily with respect to SSAB), or that Bisalloy’s Q&T steel plate be considered substitutable only for certain applications.

Bisalloy responded to claims regarding the nature of its Q&T steel plate, reaffirming its position that it supplies quality Q&T steel plate that competes directly with that of imports from Finland, Japan and Sweden.39

The Commission is satisfied that the goods are substitutable based on its like goods assessment in the original investigation and in this final report,40 and having found, based on verified data provided for this inquiry, that Bisalloy and SSAB AU generally have a high

30 EPR 506, document 042. 31 EPR 506, document 030. 32 EPR 506, document 028. 33 EPR 506, document 034. 34 EPR 506, document 033. 35 EPR 506, document 048. 36 EPR 506, document 039. 37 EPR 506, document 029. 38 EPR 506, document 046. 39 EPR 506, document 032. 40 Chapter 3.3.1 of this final report and REP 234 refer.

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degree of common customers who purchase the same models from both companies.41 The Commission notes that most end users who claimed that Bisalloy’s Q&T steel plate was not substitutable did not purchase from Bisalloy during the inquiry period.42

The Commission understands that the products supplied by SSAB and Bisalloy may not be identical and certain customers may have different requirements. However, the Commission is satisfied that Q&T steel plate manufactured by Bisalloy is a like good to the Q&T steel plate supplied by SSAB AU and the products closely resemble those that are supplied by SSAB and are substitutable.

3.4 Conclusion

The Commission considers that there are physical, commercial, functional and production likenesses between the goods and the goods produced by the Australian industry.

The Commission recognises that there may be some degree of technical and quality differences in locally produced and imported Q&T steel plate and that certain customers may have different requirements.

In this continuation inquiry, the Commission is satisfied that the Q&T steel plate produced locally has characteristics which, although not identical, closely resemble those of imported Q&T steel plate, and are therefore like goods.

41 Chapter 9.4.2.4 refers. 42 Chapter 9.4.2.3 refers.

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4 THE AUSTRALIAN INDUSTRY

4.1 Findings

The Commissioner is satisfied that Bisalloy carries out in Australia at least one substantial process, being the quenching and tempering of greenfeed plate steel in the manufacture of like goods.43 The Commissioner is therefore satisfied that there is an Australian industry producing like goods, which consists of Bisalloy.44

4.2 Australian industry

Bisalloy is the only Australian manufacturer of Q&T steel plate with operations in Unanderra, New South Wales.

Bisalloy was identified as the sole manufacturer of Q&T steel plate in the original investigation. The Commission has not found any evidence to suggest that there are other manufacturers of like goods in Australia and no other parties have made submissions claiming the existence of other industry members. The Commission has also conducted further desktop research and remains satisfied that the Australian industry consists of only Bisalloy.

4.3 Australian production

The Commission completed an Australian industry verification visit and undertook a tour of Bisalloy’s manufacturing plant. The visit team observed the production process and was informed of the tests that applied to each product. The Commission considers that Bisalloy undertakes at least one substantial process in the production of Q&T steel plate, being quenching and tempering, of greenfeed plate steel in Australia.45

Bisalloy sells Q&T steel plate through both distributors and directly to end users in Australia.

Since the original investigation, Bisalloy has continued to produce armour, wear and structural grades of Q&T steel plate. These like goods can be applied to structural steel applications (such as cranes, construction columns and beams) and wear resistant steel applications (such as chutes, dump trucks and mining equipment). The armour grades are suitable for the military and defence sectors and can be used in armoured personnel carriers and transport equipment.

43 See sections 269T(2) and 269T(3). 44 Section 269T(4). 45 Chapter 4, REP 234.

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5 THE AUSTRALIAN MARKET

5.1 Findings

The Commission has found, upon analysis of ABF import data that, during the inquiry period the Australian market for the goods was supplied by Bisalloy, imports from the subject countries, and imports from other countries not subject to measures. The Commission found that the market for Q&T steel plate has increased since the imposition of measures, and that the Australian market is directly impacted by the resources and mining sector. Demand for Q&T steel plate had been negatively affected by the decline in mining investment in 2013 and the more recent decrease in world steel prices, with signs of recovery in both factors evident.

5.2 Market size

The Australian market for Q&T steel plate is supplied by the Australian industry and imported goods, primarily from Sweden. The Commission has estimated the size of the Australian market using Bisalloy’s verified sales volumes and import data from the ABF import database. The Commission cleansed the ABF import data, as the goods were imported under tariff classifications that include goods that are not the subject of measures.46 The Commission observes (Figure 1) that the Q&T steel plate market decreased in 2014, but since the imposition of the measures the market has increased overall. The Commission’s market analysis is at Confidential Attachment 2.1.

Figure 1: Estimated Australian market size of Q&T steel plate since 201047

46 The relevant tariff subheadings and statistical codes include goods which are not the goods under consideration. The Commission has cleansed the data, using the best available information, to represent only Q&T steel plate as relevant to this inquiry. 47 Note that China and Other Countries are not subject to measures.

2010 2011 2012 2013 2014 2015 2016 2017 2018

Ton

nes

Australian market for Q&T steel plate

Australian Industry Sweden Japan Finland China Other Countries

Measures imposed 5 November 2014

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5.3 Market characteristics

Q&T steel plate is a specialty steel comprising of wear, structural and armour grades. In terms of volumes, wear grade sales (around 70 per cent) and structural grade sales (around 30 per cent) make up the vast majority of the Australian market.48 Armour only makes up approximately one per cent of the Australian market.

The majority of Q&T steel plate products are sold in the resources sector and can be used in storage bins, dump truck liners and chutes. The Q&T steel plate market and variability of demand in Australia is predominantly driven by the resources and mining sector and, to a lesser degree, the construction, transport and defence sectors.

The Commission had regard to the ‘Resources and Energy Quarterly June 2019’ report from the Department of Industry, Innovation and Science’s Office of the Chief Economist49 in determining the current and future market conditions for Q&T steel plate in Australia.50 The relevant data from the report is shown in Figure 2.

Figure 2: (a) Mining industry capital expenditure51 and (b) bulk commodity prices.52

48 Based on verified sales data submitted to the Commission. 49 Office of the Chief Economist, Department of Industry, Innovation and Science, Resources and Energy Quarterly – June 2019. 50 SEF 506 used the forecasts published in the Resources and Energy Quarterly – March 2019 report. Since publication of SEF 506, the Office of the Chief Economist released its Resources and Energy Quarterly - June 2019 report. The Commission is using the forecasts in the latter publication in this report. 51 Sourced from ABS (2019) Private New Capital Expenditure and Expected Expenditure, 5625, as cited in ‘Resources and Energy Quarterly June 2019’. Chart is in nominal terms. 52 Sourced from Bloomberg (2019) as cited in ‘Resources and Energy Quarterly June 2019’. Prices are in US dollars, and are the international benchmark prices.

a)

b)

https://publications.industry.gov.au/publications/resourcesandenergyquarterlyjune2019/documents/Resources-and-Energy-Quarterly-June-2019.pdf

https://publications.industry.gov.au/publications/resourcesandenergyquarterlyjune2019/documents/Resources-and-Energy-Quarterly-June-2019.pdf

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Figure 2(a) details the mining industry capital investment activity in Australia. It shows the decline in mining capital expenditure from historical highs in 2011-12. In the presence of this decline, Q&T steel plate demand would be expected to be driven by expenditure in the maintenance of existing mine sites. The forecast shown in Figure 2(a) predicts a recovery in mining industry capital expenditure. The Australian Q&T steel plate market would therefore be expected to expand, driven by increases in mining capital expenditure and the maintenance requirements of existing mines.

Figure 2(b) illustrates the commodity prices from 2012 for iron ore. The latest forecasts show a decline in the iron ore prices into 2020, followed by a stabilising of the price. The iron ore price is indicative of the expected trend in greenfeed prices and consequently the resultant price of Q&T steel plate.

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6 ECONOMIC CONDITION OF THE AUSTRALIAN INDUSTRY

6.1 Findings

The Commission has examined the economic condition of the Australian industry producing like goods by using verified data from Bisalloy and data from the ABF import database. The Commission assessed Bisalloy’s sales volume of the goods, market share, price of the goods, profits, profitability, and other economic indicators. The Commission found injury factors relevant to this continuation are the level of profits earned in the industry and price injury in the form of price suppression and price depression.

The Commission notes that the Commissioner is not required, in a continuation inquiry, to have regard to all injury factors set out in section 269TAE(3) in determining whether material injury will continue or recur if the measures expire. However some, or all, of the factors listed in section 269TAE(3) may be relevant to ensure that the conclusions reached are adequately reasoned.

6.2 Approach to analysis

The Commission has examined the Australian market and the economic condition of the Australian industry from 2010 for the purposes of its analysis.

The analysis detailed in this chapter is based on verified financial information submitted by Bisalloy as well as data from the ABF import database.

The data and analysis on which the Commission has relied on to assess the economic position of the Australian industry is at Confidential Attachment 2.1 and Confidential Attachment 6.1.

Consideration of whether the expiration of the anti-dumping measures would lead, or would be likely to lead, to a continuation of, or recurrence of, material injury caused by dumping is discussed in Chapter 9 of this report.

The EC expressed the view that limited information was provided to support the Commission’s conclusions concerning whether injury suffered by the Australian industry was due to dumped goods.53 The Commission considers that its assessment in SEF 506 was appropriate, nevertheless, all relevant factors have been considered in making findings and conclusions in this report (as set out in the remainder of this chapter).

6.3 Findings in original investigation

In REP 234 the Commissioner found that, during the original investigation period,54 the Australian industry experienced material injury from dumped goods from Finland, Japan and Sweden in the form of:

price depression;

price suppression;

reduced profits;

reduced profitability; and

reduced revenues.

53 The EC submits that the Commissioner is required to evaluate all the economic factors listed in Article 3.4 of the ADA. EPR 506, document 050 refers. 54 1 January 2013 to 31 December 2013.

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6.4 Volume effects

6.4.1 Sales volume

Figure 3 below illustrates the Australian industry’s total sales volume for Q&T steel plate from 2014. Sales of Q&T steel plate increased significantly in 2017 and 2018.

Bisalloy stated during the verification visit that its Australian sales consisted of own production as well as imports of finished goods from other countries,55 including one country currently subject to measures (Sweden).

In terms of volumes, the majority of Bisalloy’s sales during the inquiry period were wear and structural grades. Bisalloy advises that the volume of sales of armour grade is lower than other grades due to it being a niche product in the market.

Bisalloy’s 2017 Financial Report outlined the following several factors that may have contributed to the performance difference between 2016 and 2017:

a restructured sales organisation with new sales staff to focus on reclaiming market share from imports in the Australian market;

a focus on engaging with traditional customers as well as seeking new customers which resulted in higher sales volumes in 2017; and

Bisalloy was able to achieve sales in the repairs and maintenance of mining and plant equipment.

Figure 3: Bisalloy domestic sales volume of Q&T steel plate since 2010.

6.4.2 Market size and market share

Figure 4 shows the estimated changes in the market share between Bisalloy and importing countries using data from the ABF import database and Bisalloy’s own sales

55 Imports represent a very small proportion of sales (less than one per cent of production volume in any year) and as such are hardly perceptible in red in Figure 3.

2010 2011 2012 2013 2014 2015 2016 2017 2018

Ton

nes

Bisalloy domestic sales volume

Own production Imports

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data during the period 2010 to 2018 (encompassing the injury period of the original investigation and the current inquiry period).

Since the imposition of the measures, Bisalloy’s market share has overall increased, as have imports from Sweden. It is also observed that exports from Japan have decreased significantly from 2015 and Finland’s exports of the goods ceased completely in 2018. Following the imposition of the measures, export volumes from countries not subject to measures (China and ‘Other countries’ in Figure 4) increased significantly in 2015, before declining in 2016 and remained steady to 2018.56

Figure 4: Estimated Australian market share for Q&T steel plate since 2010 by country.57

6.5 Price effects

Price depression occurs when a company, for some reason, lowers its prices. Price suppression occurs when price increases, which otherwise would have occurred, have been prevented. An indicator of price suppression may be the margin between revenues and costs.

In determining whether price suppression has occurred, the Commission may assess:

whether prices have increased at the same rate as costs over time or within a specified period (e.g. the inquiry period); and/or

whether prices for the Australian industry’s product are lower than prices that may have been achieved in the absence of dumping.

56 The Commission has separated imports from China and imports from ‘Other countries’ for the purpose of assessing post-SEF submissions regarding the impact of Chinese imports on the Australian Q&T steel plate market. Chapter 9.7.6 refers. 57 Note that China and Other Countries are not subject to measures.

0%

25%

50%

75%

100%

2010 2011 2012 2013 2014 2015 2016 2017 2018

Market Share

Bisalloy Sweden Japan Finland China Other Countries

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Since publication of the SEF, the Commission has revised its assessment of Bisalloy’s CTMS trend.58 The resultant comparison of CTMS and revenue is shown in Figure 5.

Figure 5: Bisalloy’s unit CTMS and unit revenue.

Figure 5 shows that Bisalloy’s unit revenue has been trending downward since 2010 and does not appear to have been able to increase its prices in response to changes in unit CTMS since 2013, particularly in 2014, 2016 and 2018 where the rise CTMS was not accompanied by or commensurate with any price increase. Figure 5 also shows that Bisalloy’s unit revenue declined consistently from 2012 until 2018, when there was a slight increase.

The Commission observes that Bisalloy has suffered injury in the form of both price suppression and depression since the anti-dumping measures were imposed in November 2014.

6.6 Profits and profitability

Bisalloy’s profit and profitability for Q&T steel plate between 2010 and 2018 is shown in Figure 6. Since publication of the SEF, the Commission has revised its assessment of Bisalloy’s profit.59 Bisalloy experienced losses in 2013, 2014 and 2016, but achieved an increase in profit and profitability in 2017. Profit and profitability has been poor since 2012. The Commission notes that Bisalloy’s profitability initially improved in 2015 after the imposition of measures, before its decline in 2016 followed by an improvement in 2017. Bisalloy’s sales of Q&T steel plate remained profitable into 2018 but at a reduced level.

58 The Commission found that during the Australian industry visit, Bisalloy calculated a unit CTM as per the Commission’s template. The template asked for the unit CTM to be determined against production quantity. However, since Bisalloy’s CTM is in fact the cost of goods sold, the Commission considers it more appropriate to use sales volumes in its calculation of unit CTMS. 59 Ibid.

2010 2011 2012 2013 2014 2015 2016 2017 2018

$ A

UD

/ T

on

ne

Bisalloy CTMS and revenue

Unit CTMS Unit Revenue

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The Commission considers that the low level of profitability in the inquiry period is injurious.

Figure 6: Bisalloy’s profit (left axis) and profitability (right axis).

6.7 Other economic factors

In relation to other economic factors, in its application Bisalloy did not claim to be injured from dumping in relation to other economic factors. However, the Commission has examined the data provided by Bisalloy in relation to the following factors:

Assets;

Capital investment;

Revenue;

Return on sales;

Capacity utilisation;

Employment;

Productivity;

Stock; and

Wages.

Figure 7 shows the trend for the aforementioned factors between 2014 and 2018, indexed with respect to 2014.

2010 2011 2012 2013 2014 2015 2016 2017 2018

%

$ A

UD

Profit and profitability

Profit/Loss Profitability

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Figure 7: Trends in other economic factors between 2014 and 2018, indexed to 2014.

Bisalloy’s overall position in relation to these factors has improved since 2014. In particular, the Commission notes that capacity utilisation has increased significantly since 2014, wages have increased year on year, in line with increased sales and revenue, return on sales increased significantly in 2017, and employment levels decreased in 2015 and started increasing again from 2016. The Commission does not consider that these economic factors have had an injurious impact on the Australian industry since the imposition of measures.

The Commission notes that at the time of the original investigation, the Commission concluded that there were reasonable grounds to support Bisalloy’s claims of injury with respect to all of the aforementioned economic factors.

-

1.0

2.0

3.0

4.0

5.0

2014 2015 2016 2017 2018

Capacity utilisation

-

1.0

2.0

3.0

4.0

5.0

2014 2015 2016 2017 2018

Productivity

-

1.0

2.0

3.0

4.0

5.0

2014 2015 2016 2017 2018

Stock

-

1.0

2.0

3.0

4.0

5.0

2014 2015 2016 2017 2018

Average unit wage

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7 REVIEW OF VARIABLE FACTORS

7.1 Findings

For the purposes of assessing whether the expiration of the measures would lead, or would be likely to lead, to the continuation or recurrence of dumping, the Commissioner has ascertained all variable factors relevant to the taking of the measures during the inquiry period.

The Commissioner finds that all variable factors relevant to the determination of dumping duties payable under the Customs Tariff (Anti-Dumping) Act 1975 (the Dumping Duty Act) have changed. The Commissioner proposes to recommend to the Minister that the notice have effect in relation to all exporters from Finland, Japan and Sweden as if different variables factors had been ascertained.60

Based on the revised variable factors, the Commission has ascertained the following dumping margins for exports of the goods to Australia during the inquiry period:

Country Exporter Dumping Margin

Finland All exporters 129.7%

Japan All exporters 33.9%

Sweden SSAB EMEA 129.7%

All other exporters 129.7%

Table 4: Dumping margins in inquiry period

7.2 Exporter questionnaires received

7.2.1 Cooperating exporters

At the commencement of the continuation inquiry, the Commission contacted all exporters of the goods identified in the ABF import database and invited them to participate in the inquiry by completing an exporter questionnaire.

SSAB EMEA requested an extension of time to provide a response to the questionnaire and the Commission granted an extension of nine days. SSAB EMEA provided a completed exporter questionnaire by the extended due date.

The Commission undertook a verification visit to SSAB EMEA to verify the information and data provided in its questionnaire response. The verification report in relation to this visit is available on the EPR.61

SSAB EMEA was the only exporter that submitted a fully completed response to the exporter questionnaire and is therefore the only cooperating exporter participating in this inquiry.

7.2.2 Uncooperative and all other exporters

Section 269T(1) provides that an exporter is an uncooperative exporter where the Commissioner is satisfied that the exporter did not give the Commissioner information that the Commissioner considered relevant to the inquiry, within a period the

60 The relevant variable factors are the export price, the normal value and the non-injurious price (NIP). 61 EPR 506, document 022.

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Commissioner considered to be reasonable, or where the Commissioner is satisfied that the exporter significantly impeded the inquiry.

Section 8 of the Customs (Extensions of Time and Non-cooperation) Direction 2015 (the Direction) provides that the Commissioner must determine an exporter to be an uncooperative exporter, on the basis that no relevant information was provided within a reasonable period, if that exporter i. fails within the legislated period to provide a response or to request a longer period to do so; or ii. provides a response within the legislated period that the Commissioner considers did not provide information relevant to the case.

The Commissioner has determined that any exporters that did not provide a sufficiently completed response to the exporter questionnaire are exporters that did not provide information relevant to the case and are therefore uncooperative exporters for the purposes of this inquiry.62

The Commission received a response to the exporter questionnaire from Japanese exporters JFE and NSSMC63 whom the Commissioner considered as uncooperative exporters due to major deficiencies in their responses.64

The Commission invited the identified exporter from Finland, Ruukki,65 to participate in the inquiry but the exporter chose not to submit a response to the exporter questionnaire.66 Therefore, all exporters from Finland are considered to be uncooperative exporters.

7.2.2.1 Submissions on uncooperative exporters

Prior to publication of the SEF, JFE and NSSMC jointly submitted that they disagreed with the determination that they were uncooperative exporters, as each had provided the Commission with responses to the exporter questionnaire.67 After publication of the SEF, JFE and NSSMC jointly submitted that the Commission did not respond to the pre-SEF submission with regard to this matter and repeated its assertion that the data they had provided could have been verified by the Commission.68

In the SEF, the Commission stated that, although the Commission received responses from JFE and NSSMC that contained some relevant information, such as export price information, neither exporter provided information relevant to the determination of normal value, namely domestic sales and cost data, which is information relevant to the case.

Specifically, both JFE and NSSMC failed to complete the following sections of the exporter questionnaire:

D – Domestic Sales;

E – Due Allowance;

F – Third Country Sales; and

G – Cost to make and sell.

62 Section 8(b)(ii) of the Direction. 63 EPR 506, documents 008 and 009. 64 EPR 506, documents 010 and 011. 65 Ruukki is related to the exporter from Sweden, SSAB EMEA. Ruukki was acquired by SSAB AB (SSAB EMEA’s parent company) in 2014 (EPR 506, document 14 refers). 66 EPR 506, document 014. 67 EPR 506, document 015. 68 EPR 506, document 036.

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Therefore, pursuant to section 269T(1) of the Act, the Commissioner is satisfied that JFE and NSSMC are uncooperative exporters.

7.3 Japan

7.3.1 All exporters

As stated above in Chapter 7.2.2, the Commissioner has determined all exporters from Japan to be uncooperative exporters. Section 269TACAB(1) sets out the provisions for calculating export prices and normal values for uncooperative exporters.

7.3.1.1 Export Price

Section 269TACAB(1)(d) specifies that for uncooperative exporters, export prices are to be calculated under section 269TAB(3). The Commission has therefore established an export price pursuant to section 269TAB(3), having regard to all relevant information.

As outlined in Chapter 7.2.2 above, the Commission received responses to the exporter questionnaire from two Japanese exporters of the goods, which included data in relation to export sales. However, given that the responses contained major deficiencies, the Commissioner determined both exporters to be uncooperative exporters.

The Commission considers that, in ascertaining a weighted average export price for the goods exported from Japan during the inquiry period, the ABF import database is preferable to the export data provided by the two exporters, as the Commission is satisfied that the ABF import database contains a complete listing of all imports of the goods from Japan.

In addition, it is considered that data in the ABF import database, which contains detailed importation data from import declarations made by importers to the ABF, is the best available information which the Commission possesses in relation to imports of the goods from Japan over the inquiry period. Therefore, the Commission has calculated the export price based on the weighted average FOB export price declared by importers of the goods from Japan over the inquiry period, from the ABF import database.

Submission on Japan’s export price

JFE, Kobe and NSSMC, in response to the SEF, jointly submitted that the Commission should not have ascertained the export price for Japan under section 269TAB(3) of the Act.69 The joint submission stated that the Commission’s use of section 269TAB(3) was incorrectly associated with the finding that the Japanese exporters were uncooperative, and that the Commission had information from JFE and NSSMC and import data from Total Steel, which would enable it to ascertain the export price using other relevant provisions of the Act (namely sections 269TAB(1)-(2G)).

Further, the joint submission outlined that it was unclear why the Commission didn’t have regard to the information provided by JFE, NSSMC and Total Steel in applying section 269TAB(3).

69 EPR506, document 036.

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The Commission’s approach to Japan’s export price

Section 269TACAB(1)(d) of the Act states that “if the export price of goods for an uncooperative exporter is to be worked out in relation to the investigation, review or inquiry—that export price is to be worked out under section 269TAB(3)”, noting that “inquiry” in this instance refers to a continuation inquiry.70

In considering all relevant information, in accordance with section 269TAB(3), the Commission notes that the Japanese exporters, including JFE and NSSMC, did not provide requested sales information to enable export price to be calculated. While Total Steel did provide some information relevant to its imports from Japan, the Commission opted to use ABF data, as it is considered the best available information that encompasses the data of all Japanese exporters, including JFE and NSSMC.

7.3.1.2 Normal value

Section 269TACAB(1)(e) 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.

As outlined in Chapter 7.2.2 above, the Commission received responses to the exporter questionnaire from Japanese exporters of the goods, however, the responses did not contain data required to enable the Commission to ascertain normal values, namely domestic sales and CTMS data.

The Commission considers that the most reliable and relevant information it possesses in relation to the normal value for the goods exported to Australia from Japan over the inquiry period is the verified normal value information from the original investigation (Investigation 234). Therefore, the Commission has calculated the normal value based on the normal value for “all other exporters” from Japan in REP 234 and has made an adjustment for the movement in export prices between the original investigation period and the current inquiry period.

7.3.1.3 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 with the weighted average normal value.

The dumping margin for all exporters from Japan is 33.9 per cent.

The calculation of variable factors in relation to all exporters from Japan is contained in Confidential Attachment 7.2.

70 Section 269TACAB(1)(c).

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7.4 Sweden

7.4.1 SSAB EMEA AB

7.4.1.1 Export price

The importer

In relation to the goods exported by SSAB EMEA to SSAB AU, the Commission considers that SSAB EMEA is the beneficial owner of the goods at the time of importation and therefore the importer of the goods as:

SSAB EMEA sells to SSAB AU on a delivered duty paid (DDP) basis; and

in accordance with the DDP delivery terms, SSAB EMEA arranges and pays for all the importation charges including customs duty and interim dumping duty.

In relation to the goods exported by SSAB EMEA to other customers, the Commission considers that these unrelated customers are the beneficial owners of the goods at the time of importation and therefore the importer of the goods.

The exporter

The Commission found that SSAB EMEA is the manufacturer of the goods located in the country of export from where the goods were shipped, that gave up responsibility by knowingly placing the goods in the hands of a carrier, courier, forwarding company, or its own vehicle for delivery to Australia. Therefore, the Commission considers that SSAB EMEA is the exporter of the goods.

Arms length – sales to SSAB AU

In respect of SSAB EMEA’s Australian sales of the goods to SSAB AU during the period, the Commission found no evidence that:

there was any consideration payable for, or in respect of, the goods other than their price; or

the buyer, or an associate of the buyer, was directly or indirectly reimbursed, compensated or otherwise receive a benefit for, or in respect of, the whole or any part of the price.71

However, the Commission found evidence that the price was influenced by a commercial or other relationship between the buyer, or an associate of the buyer, and the seller, or an associate of the seller as:

SSAB AU is ultimately wholly owned by SSAB EMEA;

SSAB EMEA was the exclusive supplier of the goods to SSAB AU; and

prices between SSAB EMEA and SSAB AU are determined according to the SSAB group’s internal pricing guidelines.

The Commission therefore considers that export sales to Australia made by SSAB EMEA to SSAB AU during the period were not arms length transactions, pursuant to section 269TAA(1)(b).72

71 See section 269TAA(1)(c). 72 The Commission notes that the finding in this report that the sales to SSAB AU did not take place on an arms length basis relates to the assessment of export prices for anti-dumping purposes under section 269TAB of the Act. It is not an assessment of SSAB EMEA’s transfer pricing policy with respect to compliance with the revenue laws of any jurisdiction.

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Arms length – other customers

In respect of SSAB EMEA’s Australian sales of the goods to other customers during the period, the Commission found no evidence that:

there was any consideration payable for, or in respect of, the goods other than its price; or

the price was influenced by a commercial or other relationship between the buyer, or an associate of the buyer, and the seller, or an associate of the seller; or

the buyer, or an associate of the buyer, was directly or indirectly reimbursed, compensated or otherwise received a benefit for, or in respect of, the whole or any part of the price.73

The Commission therefore considers that export sales to Australia made by SSAB EMEA to customers other than SSAB AU during the period were arms length transactions.

Export price assessment

In respect of Australian sales of the goods by SSAB EMEA to its related party, SSAB AU, the Commission found that the importer has not purchased the goods from the exporter. Therefore, export prices cannot be determined under sections 269TAB(1)(a) or 269TAB(1)(b). The Commission calculated the export price under section 269TAB(1)(c) having regard to all the circumstances of the exportation. Specifically, due to the non-arms length nature of the transactions between SSAB EMEA and SSAB AU, the Commission calculated export prices based on the price at which the goods were sold by SSAB AU and made the following deductions to calculate export prices at the FOB level:

Australian delivery expenses;

Australian warehousing costs;

other selling, general and administrative (SG&A) expenses incurred in Australia;

an amount for importer profit;

importation costs;

interim dumping duties;

customs duty; and

the cost of ocean freight and marine insurance.

In respect of Australian sales of the goods by SSAB EMEA to the unrelated customers, the Commission has found that:

the goods have been exported to Australia otherwise by the importer and have been purchased by the importer from the exporter; and

the purchase of the goods by the importer was an arms length transaction.

Therefore, the Commission has determined the export price for these sales under section 269TAB(1)(a), as the price paid by the importer to the exporter less transport and other costs arising after exportation.


Arms length

In respect of domestic sales of the goods made by SSAB EMEA to its customers (related and unrelated) during the period, the Commission found no evidence that:

73 See section 269TAA(1).

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there was any consideration payable for, or in respect of, the goods other than their price; or

the price was influenced by a commercial or other relationship between the buyer, or an associate of the buyer, and the seller, or an associate of the seller; or

the buyer, or an associate of the buyer, was not directly or indirectly reimbursed, compensated or otherwise received a benefit for, or in respect of, the whole or any part of the price.

The Commission therefore considers that all domestic sales made by SSAB EMEA to domestic customers during the period were arms length transactions.

Ordinary course of trade

Section 269TAAD provides that if like goods are sold in the country of export at a price less than the cost of such goods, and are unrecoverable within a reasonable period, then they are taken not to have been sold in the ordinary course of trade (OCOT).

The Commission compared the revenue (i.e. net sales value) for each domestic sale of like goods to the corresponding quarterly domestic CTMS to test whether those sales were profitable.

Where the volume of unprofitable sales exceeded 20 per cent for a particular model, the Commission tested the recoverability of the unprofitable sales by comparing the revenue for each transaction to the corresponding weighted average CTMS over the inquiry period. Those sales found to be unrecoverable were considered not to be in the OCOT.

The results of the Commission’s testing of the ordinary course of trade are that there were domestic sales of all models in the OCOT.

Suitability of domestic sales

The Commissions finds that there was a sufficient volume of domestic sales made in the OCOT for the models exported to Australia.74 The Commission found that of the 20 models exported to Australia, there were sufficient volumes of domestic sales made in the OCOT for all but four models.

For two of these models, the Commission has used surrogate models, based on the models with the closest physical characteristics under the MCC structure, with sufficient volumes in the OCOT, for determining normal values under section 269TAC(1). In relying on surrogate models, the Commission considered specification adjustments were required to ensure fair comparison between the export model and the surrogate domestic model.

For the remaining two export models, and pursuant to section 269TAC(2)(a)(i),75 the Commission considers there is an absence of sales of like goods in the market of the country of export that would be relevant for the purposes of determining a price under section 269TAC(1). As there was no suitable surrogate, the Commission has constructed the normal value for these two models under section 269TAC(2)(c).

74 A sufficient volume is considered to be greater than five per cent of the total volume of the goods under consideration that are exported to Australia. See section 269TAC(14). 75 Section 269TAC(2)(a)(i) provides that where the normal value of goods exported to Australia cannot be ascertained under section 269TAC(1) because of the absence, or low volume, of sales of like goods in the market of the country of export that would be relevant for the purposes of determining a price under section 269TAC(1), the normal value is to be determined under section 269TAC(2)(c) or 269TAC(2)(d).

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Constructed normal values

In constructing the normal values for the two models referred to above, the Commission has determined these normal values to be the sum of:

the cost to make (CTM) 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 based on the company’s records in accordance with section 44(2) of the Regulation; and

an amount for profit based on data relating to the production and sale of like goods by SSAB EMEA on the domestic market in the OCOT in accordance with section 45(2) of the Regulation.

Adjustments

In calculating normal values under sections 269TAC(1) and 269TAC(2)(c), the Commission considers that certain adjustments, in accordance with sections 269TAC(8) and 269TAC(9) respectively, are necessary to ensure fair comparison of normal values with export prices, as summarised in the table below.

Adjustment Type Deduction/addition

Specification adjustment Added or deducted an amount reflecting the price differences of the certain models where surrogate models were used

Timing adjustment Added or deducted an amount reflecting the price differences between quarters where there were no domestic sales in certain quarters

Domestic credit costs Deduct the cost of domestic credit

Domestic inland transport Deduct the cost of inland transport

Export freight and port handling Added the cost of export freight and handling

Export credit costs Added the cost of export credit

Table 5: Adjustments to SSAB EMEA’s normal values


The dumping margin for SSAB EMEA was established in accordance with section 269TACB(2)(a) by comparing the weighted average of export prices over the whole inquiry period with the weighted average of normal values over the whole of that period.

The dumping margin for SSAB EMEA is 129.7 per cent.

The calculation of export prices and normal values in relation to exports from SSAB EMEA are contained in Confidential Attachment 7.1.

7.4.2 Other exporters from Sweden

Section 269TACAB(1) sets out the provisions for calculating export prices and normal values for uncooperative exporters.

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

As SSAB EMEA is the only manufacturer of the goods exported to Australia from Sweden, the Commission considers that it is appropriate to ascertain the export price for all other exporters in Sweden as equal to SSAB EMEA’s weighted average export price.


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.

As SSAB EMEA is the only manufacturer of the goods exported to Australia from Sweden during the inquiry period, the Commission considers that it is appropriate to ascertain the normal value for all other exporters in Sweden as equal to SSAB EMEA’s weighted average normal value.


The dumping margins for all other exporters from Sweden 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 other exporters from Sweden is 129.7 per cent.

The calculation of variable factors in relation to all other exporters from Sweden is contained in Confidential Attachment 7.1.

7.5 Finland

7.5.1 All exporters

As stated above in Chapter 7.2.2, the Commissioner has determined all exporters from Finland to be uncooperative exporters. Section 269TACAB(1) of the Act sets out the provisions for calculating export prices and normal values for uncooperative exporters.


Section 269TACAB(1)(d) specifies that for uncooperative exporters, export prices are to be calculated under section 269TAB(3). The Commission has therefore established the export price pursuant to section 269TAB(3), having regard to all relevant information.

Given the common ownership and close commercial relationship between SSAB EMEA in Sweden and Ruukki, the only known exporter of the goods from Finland, where both companies operate under the same corporate policies,76 the Commission considers it appropriate to ascertain the export price for all exporters in Finland as equal to SSAB EMEA’s weighted average export price.

76 EPR 506, document 014.

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Section 269TACAB(1)(e) 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.

Given the common ownership and close commercial relationship between SSAB EMEA in Sweden and Ruukki, the only known exporter of the goods from Finland, the Commission considers it appropriate to ascertain the normal value for all exporters in Finland as equal to SSAB EMEA’s weighted average normal value.


The dumping margin for all exporters from Finland 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 from Finland is 129.7 per cent.

The calculation of variable factors in relation to all exporters from Finland is contained in Confidential Attachment 7.1.

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8 LIKELIHOOD THAT DUMPING WILL CONTINUE OR RECUR

8.1 Findings

The Commissioner is satisfied that the expiration of the anti-dumping measures would lead, or would be likely to lead, to a:

continuation of the dumping of the goods from Japan and Sweden; and

recurrence of the dumping of the goods from Finland.77

8.2 The Commission’s approach

The Commission notes that its assessment of the likelihood of certain events occurring and their anticipated effect, as is required in a continuation inquiry, necessarily requires an assessment of a hypothetical situation. This view has been supported by the ADRP, which noted that the Commission must consider what will happen in the future should a certain event, being the expiry of the measures, occur.78 However, the Commissioner’s conclusions and recommendation must be based on facts.

In assessing the likelihood of whether dumping will continue or recur, a number of factors are relevant as outlined in the Dumping and Subsidy Manual (the Manual).79

The Manual states that the inquiry may gather evidence relevant to whether dumping will resume, such as exporters’ margins, the volume of exports before and after the measures were imposed, the effect of the measures, the level of dumping compared with the level of measures, and any change in those measures (e.g. as a result of a review). The Commission notes that there has not been a review of measures for Q&T steel plate since the original investigation in 2013.

The Commission’s view is that the relevance of each factor will vary depending on the nature of the goods being examined and the market into which the goods are being sold. No one factor can necessarily provide decisive guidance. The following analysis therefore examines a range of factors that the Commission considers are relevant to this inquiry.

In this final report, the Commission has also had regard to the application, SEF 506 and submissions made in response to the application and SEF 506 and any other matter that the Commissioner has considered relevant.80

8.3 Australian industry’s claims

In its application,81 Bisalloy claims that:

there is no evidence to indicate that dumping has ceased from Finland, Japan and Sweden;

exports of the goods from Sweden, Finland and Japan have continued despite the imposition of measures, with volumes increasing from 2016 to 2018;

exporters maintained distribution channels and relationships with their Australian entities;

77 In accordance with section 269ZHF(2) of the Act. 78 ADRP Report No. 44. 79 Chapter 35 of the Manual refers. 80 See section 269ZHF(3). 81 EPR 506, document 001.

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export prices do not reflect the higher steel selling prices, despite the recent increases in global prices for steel products;

substantial overcapacity in steel production provides incentive for exporters with ongoing distribution links into the Australian market to capitalise on exports; and

increased exports in 2018 confirm exporters have capacity to supply increased demand in the Australian Q&T steel plate market.

On the basis of the above, the applicant claims that it is reasonable to expect that the expiration of the current measures would lead, or would be likely to lead, to a continuation of, or a recurrence of, dumping.

8.4 Submission on the likelihood of dumping from Sweden

In their pre-SEF submission SSAB EMEA and SSAB AU (together SSAB) acknowledge that, based on their distribution model, a dumping margin will be found according to the technical rules of dumping, however they are not discriminating in their pricing because of the following factors:82

the generated dumping margin arises from the difference between the price to SSAB EMEA’s domestic customers and the price from SSAB EMEA to SSAB AU, whereas, and in line with transfer pricing rules, the price that SSAB AU sells to its customers on the Australian market is higher than the price to SSAB EMEA’s domestic customers; and

prices on the Swedish market are high because customers have confidence in domestic (Swedish) technology and manufacturing outputs, and because the market is accustomed to SSAB’s sales model, which accepts stratification between SSAB’s higher prices and competitors lower prices;

because a dumping margin is expected to be generated, the current case is a question of injury.83

8.5 Import volumes

8.5.1 Submissions on import volumes and distribution links

With regard to imports from Japan, the Commission received the following pre-SEF submissions:

Japanese exporters JFE, Kobe and NSSMC84 stated that: o JFE, Kobe and NSSMC have no physical, marketing, sales or administrative

presence in Australia. Therefore, their methods of distribution do not equate to Bisalloy’s contention that they have maintained distribution channels into Australia;

o JFE, Kobe and NSSMC have neither the intention nor the capacity to increase exports to the Australian market and it does not consider the Australian market as significant;

o An increase in volume of exports from Japan, particularly in 2018, is considered a temporary shift in volume, despite the increased demand in the Australian market, because i) SSAB experienced production difficulties

82 EPR 506, document 017. 83 Also stated in EPR 506, document 023. 84 EPR 506, document 006.

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in 2017 and 2018 wherein Australian customers could have sought orders from Japanese producers in lieu of SSAB over this time, and ii) timing issues associated with a delay in the arrival of some Japanese sourced Q&T steel plate into Australia resulted in more steel arriving in early 2018 instead of late 2017; and

o Bisalloy’s application is misleading when it presents aggregated data showing that Finland, Japan and Sweden comprised 45 per cent of all exports to Australia, when exports from Japan accounted for 5 per cent of total exports into Australia and as such are negligible;

o aggregated import data presented by Bisalloy in its application shows that the market share of all imports has decreased by 9 per cent since 2013, with Bisalloy’s market share increasing year-on-year since 2010.

In post-SEF submissions, JFE, Kobe and NSSMC jointly stated that:85 o the Commission is incorrect with respect to its findings that distribution

channels have been maintained in Australia for exports of the goods from Japan, specifically the submission:

o states that the Commission has tenuously reasoned that exporting goods into Australia, and that the Japanese exporters’ mode of distribution of the goods, equates to maintaining distribution links with a view to continue and supply Q&T steel plate into the Australian market;

o states that there is no evidence to support the Commission’s view regarding the current level of Q&T steel plate volume exported from Japan to Australia;

o reiterates that the low volume from Japan is not due to overcapacity; o reiterates that past increases in Japanese exports is attributable to

production difficulties in Sweden wherein SSAB’s production difficulties in 2017 and 2018 are well-known in the market; and

o import data for the first half of calendar year 2019 shows that Japanese imports are less than 0.5 per cent of Q&T steel plate imports into Australia, less than the legislated de minimus threshold defined in section 269TDA of the Act.86

Total Steel87 stated that: o imports from Japan into Australia are at negligible volumes and de minimis

with respect to imports from JFE to Total Steel and consequently could not be causing injury to the Australian industry;

o it has maintained a distribution channel within the Australian market, but its small volumes into Australia indicate that the company does not have a motivation to increase its market share;

With respect to imports from Finland, Ruukki’s pre-SEF submission88 stated that:

in the foreseeable future, imports of Q&T steel plate are unlikely based on its preferred distribution model;

85 EPR 506, document 036, unless otherwise stated. 86 EPR 506, document 059. 87 EPR 506, document 003. 88 EPR 506, document 014.

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the measures should be left to expire as it had no exports in the inquiry period; and

should the measures be continued, the Commission may be minded to work out an appropriate NIP.

8.5.2 The Commission’s analysis of import volumes and distribution links

The Commission examined the estimated export volumes from countries the subject of measures (see Figure 8 below).89 The Commission finds that following the imposition of measures in 2014, the volume of imports from the subject countries decreased significantly. This appears to coincide with the overall Q&T steel plate market decreasing significantly in 2014 (as shown in Figure 1). Following this contraction, exports from Sweden and other countries increased again in 2016 as the overall Q&T market expanded. Finland and Japan have continued to import non-negligible volumes through to 2018, with volumes showing an upwards trend since 2015. The Commission considers that this data demonstrates that Australia remains an attractive market for Q&T steel plate and that distribution links with exporters in Japan and Finland have continued.

Figure 8: Estimated export volumes to Australia from subject countries.

With regard to imports from Sweden, the Commission notes that volumes of Q&T steel plate overall increased since the imposition of measures, having approximately doubled between 2015 and 2018. In addition, imports of Q&T steel plate from Sweden have made up a significant proportion of the Australian market before and after the imposition of measures.90 The Commission concludes that it is likely that exports from Sweden will continue.

With regard to imports from Japan, the Commission considers that current volumes from Japan are at present relatively low. JFE, Kobe and NSSMC in their joint submission

89 The relevant tariff codes include goods which are not the goods under consideration, therefore, particularly for countries not subject to measures, the Commission has sought to cleanse the data, using the best available information within the ABF data, to represent only Q&T steel plate as relevant to this inquiry. 90 Chapter 6.4.2 refers.

2010 2011 2012 2013 2014 2015 2016 2017 2018

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Export volumes to Australia

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stated that the Commission should consider the de minimus volume threshold defined in section 269TDA of the Act. That provision is not relevant to continuation inquiries, and pertains to investigation inquiries. For a continuation inquiry, the Commission must assess the likelihood of continuing or recurring dumping and injury if the measures expire. This is necessarily an assessment of occurrences in the future. Based on the demonstrated ability for Japanese exporters to enter the Australian market when there is demand (such as occurred when SSAB’s supply was affected by production issues in 2017 and 201891), the Commission considers that should the measures expire the Australian market would likely be more attractive to Japanese exporters. Further, based on the calculation of variable factors, the Commission considers that the imported goods would likely be at dumped prices.92

With regard to imports from Finland, although exports of the goods from Finland ceased in 2018, the Commission notes that distribution links with Ruukki in Finland still exist through its related companies, SSAB EMEA and SSAB AU.93 Therefore, the Commission considers it is likely that these links would likely continue in the foreseeable future.

The Commission’s analysis can be found at Confidential Attachment 2.1.

8.6 The Commission’s assessment of the likelihood of dumping continuing or recurring

The Commission has found that the goods exported from Japan and Sweden during the inquiry period were dumped at significant margins.94

The Commission has also found that although there were no exports from Finland during the inquiry period, the dumping margin for Finland has increased significantly.95 As the only exporter from Finland is a wholly owned entity within the same group as the exporter from Sweden, the Commission considers it is likely that dumped exports from Finland would recur should the measures on Sweden continue and the measures on Finland expire.

Based on the historical and current trading behaviours of the relevant exporters, the Commission is satisfied that dumping has occurred during the inquiry period. In addition, the Commission is satisfied that the expiration of measures would be likely to lead to a continuation of dumping from Japan and Sweden, and a recurrence of dumping from Finland.

91 EPR 506, document 036. 92 Chapter 7.3 refers. 93 Ruukki was acquired by SSAB AB (SSAB EMEA’s parent company) in 2014 (EPR 506, document 14 refers). 94 Chapters 7.3 and 7.4 refers. 95 Chapter 7.3 refers.

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9 LIKELIHOOD THAT MATERIAL INJURY WILL CONTINUE OR RECUR

9.1 Findings

On the basis of the evidence available, the Commissioner is satisfied that the expiration of the measures applying to Q&T steel plate exported to Australia from Japan, Sweden and Finland would lead, or would be likely to lead, to a continuation of, or recurrence of, the material injury that the measures are intended to prevent.96

With regard to imports of Q&T steel plate from Japan, the Commission found that imports from Japan, whilst having a diminished presence in the Australian market since the imposition of measures, are able to readily respond to changes in demand and compete with Bisalloy on price. Based on this, the Commission considers that the expiration of measures against imports from Japan would likely lead to a recurrence of injury that the measures are intended to prevent.

With regard to exports of Q&T steel plate from Sweden, the Commission’s analysis shows that significant imports from Sweden are at dumped prices and compete directly with Bisalloy. As a result, the Commission considers that Bisalloy is suffering injury in the form of price depression, price suppression and reduced profits and profitability.97 Based on this, the Commission considers that the expiration of measures against exports from Sweden would lead to a continuation of injury that the measures are intended to prevent.

With regard to imports of Q&T steel plate from Finland, the Commission considered the close relationship between Ruukki, the only known exporter of the goods from Finland, and SSAB EMEA in Sweden. The Commission finds that exports from Finland would likely resume, and would likely be at similar levels of dumping found for Sweden.98 Therefore, the Commission considers that the expiration of measures would likely lead to a recurrence of injury that the measures are intended to prevent.

The Commission assessed the likelihood of injury from other factors, as raised in submissions from some interested parties. The Commission did not find evidence that factors other than dumping were the cause of material injury to Bisalloy, nor that these factors would cause injury to Bisalloy in the future. The Commission is satisfied that the expiration of the notice would lead, or be likely to lead to a continuation of material injury caused by dumping.

Further, based on a comparison of Bisalloy’s inquiry period revenue and a counterfactual revenue calculated using the unsuppressed selling price, the Commission has determined that injury resulting from dumped imports was material.

9.2 Australian industry’s claims

As part of its application, Bisalloy submitted that, if the dumping measures on Q&T steel plate from Sweden, Japan and Finland were allowed to expire, Bisalloy will suffer further material injury.99 The specific claims include:

96 In accordance with section 269ZHF(2) of the Act. 97 Chapter 6 refers. 98 Chapter 7.3 refers. 99 EPR 506, document 001.

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the Australian market for Q&T steel plate has expanded;

imports from Finland, Japan and Sweden account for a significant portion of the market in Australia in 2018 and were at dumped prices;

export prices to Australia in 2018 were at levels above the ascertained export price;

price effect injury through price suppression (Bisalloy has been prevented from raising selling prices to recover higher production costs);

ongoing injury to the Australian industry in areas of profit and profitability;

price pressures from importers and price undercutting;

the depreciation of the Australian dollar did not reflect a change in export prices;

exporters from Finland and Japan have been able to absorb the duties imposed by not increasing export prices commensurate with rising normal values;

despite steel prices increasing since 2013, Sweden’s floor price was at such a low level that the exporter has exported at prices that reflect the originally determined floor price in 2013;

the current measures are not reflective of contemporary Q&T steel plate prices; and,

exports of the goods from Finland, Japan and Sweden are likely to continue.

9.3 Volume effects

9.3.1 Submissions on the Australian industry’s increased market share

MAL stated100 in a pre-SEF submission that if Bisalloy’s sales have increased, then Bisalloy has been able to compete in the Australian market.

Following publication of the SEF, the EC101 submitted that Bisalloy is not suffering material injury as Bisalloy’s sales have been growing (except in 2016) and its market share has increased, among other indicators, since anti-dumping measures were imposed in 2014.

In a joint post-SEF submission, JFE, Kobe and NSSMC102 stated that:

the Commission did not give sufficient regard to its claim that Bisalloy would be a price setter in the market on account of its increased market share, which removes the likelihood that the expiration of measure would be injurious, particularly with respect to Japanese exporters which represent a tiny fraction of Bisalloy’s sales;

increased sales volumes evidence that the Australian industry has re-established itself in the market, therefore material injury is not likely to recur; and

it defies logic that Bisalloy’s sales volumes have increased markedly and has maintained its market share, whilst the Commission finds dumping duties for Finland, Japan and Sweden.

100 EPR 506, document 005. 101 EPR 506, document 050. 102 EPR 506, document 036.

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In response, Bisalloy submitted103 that there is no evidence provided to suggest that it is a price setter in the Australian market and that Bisalloy competes with import prices, including dumped prices.

In a post-SEF submission SSAB responded to the Commission’s statements in SEF 506 regarding an observed increase in market share since the imposition of measures, stating that Bisalloy has increased its market share and volume between 2017 and 2018, whilst SSAB’s market share has reduced for the last three years.104 It further states, in response to findings in SEF 506 that Swedish and Japanese imports are increasing,105 that a continuation inquiry need not consider whether exporters are doing well or poorly, but whether material injury will recur.

9.3.2 Commission’s assessment of the Australian industry’s market share

In SEF 506, the Commission did not conclude that there was evidence of volume injury. The Commission has found that Bisalloy suffered price injury in the form of price suppression.106

Following the SEF, the Commission analysed whether Bisalloy would be considered a price setter on the Australian market. The Commission observed that although Bisalloy increased its sales volumes and market share since the imposition of measures, Sweden’s market share increased by a greater amount over the same period.107 Additionally, Bisalloy’s prices have decreased over that period.108 The Commission considers that Bisalloy would not likely be the price setter under circumstances in which it has not gained commensurate market share compared to its primary competition, in a growing market where it has not been able to raise prices.

With regard to a comparison of SSAB and Bisalloy’s market share since 2016, when the Q&T plate steel market started to expand,109 the Commission notes that the market share of imports from Sweden have overall decreased over that period.

However, between 2017 and 2018 the market share of Swedish imports decreased by a small margin and Bisalloy’s market share has increased by a similar margin.110 Nonetheless, the Commission finds that imports from Sweden still constitute a significant proportion of the Australian Q&T steel plate market with SSAB as Bisalloy’s major competitor in the market. The Commission is satisfied that, on the basis of price competition during the inquiry period, Swedish imports at dumped prices would likely cause price injury to Bisalloy in the absence of measures.111

103 EPR 506, document 047. 104 EPR 506, document 054. 105 SEF 506, Figure 1 refers. 106 Chapter 6.5 refers. 107 Figures 3 and 4 refers. 108 Figure 5 refers. 109 Figure 1 refers. 110 Figure 4 refers. 111 Chapter 9.4 refers.

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9.4 Price effects due to imports from Sweden

9.4.1 Submissions on price competition with Swedish imports

SSAB’s pre-SEF submission112 stated that it did not cause volume or price injury to Bisalloy because:

Bisalloy has a volume-based strategy, selling to distributers at a lower price point,

and servicing Australian demand for armour plate;

SSAB has been progressively increasing its prices and exhibited a disinclination to

compete with Bisalloy’s lower price and customer base on account of its

premium-based sales strategy;

SSAB no longer operates in the Q&T armour market space that Bisalloy does with

sales to that market being one-off and of de minimis volume;113

even with the inclusion of a distributor margin to account for the differences in

market segments, SSAB’s prices are higher than those of Bisalloy’s.

Bisalloy’s response to SSAB‘s pre-SEF submission114:

there is evidence that SSAB’s exports at dumped prices have caused and will continue to cause material injury to the Australian industry if the measures expire;

the market is price sensitive and transparent;

since SSAB is the largest source of imports of Q&T steel plate, it establishes the competitive benchmark for all suppliers in the market;

with regard to SSAB’s claim that Bisalloy did not increase its prices, Bisalloy states that it had experienced price suppression in 2018 resulting from competition from increasing volumes from Sweden in a price competitive market;

SSAB’s price undercutting has resulted in lost volumes for Bisalloy and as such it is a competitor; and

it disagrees with the assertion that SSAB operates in a different market space and that this view is inconsistent with the views of its customers.

After publication of SEF 506, SSAB submitted that:

the Commission’s analysis in SEF 506 shows SSAB AU’s prices to be higher with respect to 70 per cent of the market, and higher in aggregate over the entire market and that the Commission’s view that showed equivalent pricing is not credible;115

the Commission did not disprove any of SSAB’s comparative pricing examples showing that its prices were higher whereas only one undercutting example provided by Bisalloy was proven;116

112 EPR 506, document 017. 113 Also stated in EPR 506, document 023. 114 EPR 506, document 019. 115 EPR 506, documents 041, 054. 116 EPR 506, document 054.

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clarification is requested regarding the Commission’s calculation of a Swedish delivered price used in its price comparisons in SEF 506117, specifically whether the price reflects SSAB AU’s actual prices, it takes into account any time lag between importation and sale and it includes an amount of SG&A and profit for SSAB AU;118

The Commission’s observations regarding SSAB AU and Bisalloy being major supplier to the Q&T steel plate market and that the two company’s compete on that market does not establish the degree of competition between them;119

SEF 506 stated that common customers of Bisalloy and an exporter not subject to measures would not have an influence on Bisalloy’s selling prices.

SEF 506 also stated that customers common to Bisalloy and SSAB AU would directly influence Bisalloy’s selling prices. The factual difference in the interactions between Bisalloy and exporters not subject to measures, and between Bisalloy and SSAB AU, is unclear.

In response to the publication of the SEF the Commission received submissions from end users APS,120 Australian Steel,121 BRE,122 GGMF,123 Kennedy Trailers,124 STE,125 TEi,126 and Toomey127 who separately submitted that SSAB’s Q&T steel plate commands a higher price in the market compared to Bisalloy. Several of these submissions128 indicated that the price premium is acceptable because SSAB’s product is better quality. Some end users also provided evidence to support claims of SSAB’s premium in the market in response to the Commission’s request for evidence from end users.129

The EC’s130 post-SEF submission stated that, based on the Commission’s price analysis data,131 prices from Sweden are higher than those of Bisalloy in every year of the investigation.

9.4.2 The Commission’s analysis of price competition with Swedish imports

The Commission examined the extent of price competition between Bisalloy and SSAB AU by considering undercutting examples provided by both Bisalloy and SSAB, an

117 SEF 506, Figures 8, 9, 10, 11, and footnote 70 refers. 118 EPR 506, document 054. 119 Ibid. 120 EPR 506, document 038. 121 EPR 506, document 035. 122 EPR 506, document 039. 123 EPR 506, document 033. 124 EPR 506, document 026. 125 EPR 506, document 028. 126 EPR 506, document 048. 127 EPR 506, document 027. 128 EPR 506, documents 026, 027, 028, 035. 129 The Commission’s request for evidence from end users is at EPR 506, document 057. End user responses to the request, and the Commission’s assessment of the evidence provided, are at Confidential Attachment 9.7. 130 EPR 506, document 050. 131 SEF 506, Figure 8.

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analysis of the prices between Bisalloy and SSAB AU based on their verified sales data, and a common customer analysis.

9.4.2.1 Undercutting examples provided by Bisalloy in its application

Bisalloy provided five examples in its application132 of instances where Q&T steel plate was offered by SSAB AU at a lower price.

The Commission reviewed the examples and found that one example referred to goods that were not like goods, and one example did not have sufficient information to enable the Commission to conduct a relevant analysis.

Of the three remaining examples, one did not allow for a direct customer-to-customer comparison since Bisalloy did not make sales to the cited customer. For this example, the Commission resorted to a comparison between sales from SSAB AU to its customer and aggregated sales from Bisalloy for the relevant model.

Upon analysis of the relevant three examples, the Commission finds that two examples evidenced SSAB AU’s price being less than Bisalloy’s and one example evidenced Bisalloy’s price being less than SSAB AU. The magnitude of the price differences observed in these examples ranged from 2 per cent to 27 per cent. The Commission’s analysis is at Confidential Attachment 9.1.

9.4.2.2 Undercutting examples provided by SSAB in its pre-SEF submission

In a submission from SSAB AU133 in support of its contention that it can command a higher price in the market, it provided four examples of instances where SSAB AU’s price for Q&T steel plate was higher than that offered by Bisalloy. The Commission reviewed the examples provided by SSAB AU to evidence its claims and found that SSAB AU relied on its price lists in its comparison to Bisalloy’s prices. The Commission considers that price lists do not represent the price actually achieved in the market, and has instead had regard to SSAB AU’s verified sales data.

Three of the examples referred to a single model. The Commission’s analysis of these examples showed no consistent trend in the price difference between SSAB AU and Bisalloy.

The remaining example comprised four cases having different models and quarters. For this example, the Commission finds that for one of these cases, SSAB AU and Bisalloy’s prices were equivalent. In the remaining three cases, Bisalloy’s price is found to be less than SSAB AU’s price, however the magnitude of the price differential was not as large as claimed in the submission.

The Commission’s analysis is at Confidential Attachment 9.2.

132 EPR 506, document 001. 133 EPR 506, document 017. Though the submission represented the views of SSAB and Ruukki, for the purposes of this analysis the Commission considers SSAB AU as the relevant entity which competes with Bisalloy on the Australian market and consequently is the entity referenced in this analysis.

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9.4.2.3 Price comparison between Bisalloy and SSAB using verified sales data

In addition to the examples of price undercutting put forward by Bisalloy and SSAB AU, the Commission also undertook a price comparison using Bisalloy’s verified sales data, SSAB AU’s verified sales data and ABF import data (Confidential Attachment 9.3 refers).

The Commission compared Bisalloy’s weighted average delivered price to a weighted average delivered price of Q&T steel plate exported from Sweden over the last 5 years so as to analyse the aggregate trend since the imposition of measures.134 This comparison as shown in Figure 9 demonstrates that the year-on-year trend in prices for Q&T steel plate from Sweden and Bisalloy over the last five years at an aggregate level are similar. Swedish imports are overall higher than Bisalloy’s from 2015 by an average of 3 per cent, however the Commission notes that SSAB AU did not raise its prices in the Australian market following the imposition of measures in 2014. The Commission does not consider that this is sufficient in determining whether or not Bisalloy was injured due to SSAB AU.

A more detailed analysis of aggregate and model level price differences over the inquiry period was conducted by the Commission.

Figure 9: Comparison between delivered prices for Bisalloy and imports from Sweden since the imposition of measures.

The Commission compared the quarterly selling prices of Bisalloy and SSAB AU (all on a weighted average basis) for the inquiry period on an aggregate basis and on a model basis. Figure 10 shows a quarterly aggregate price comparison of Bisalloy and SSAB

134 In calculating the Swedish delivered price, the Commission used the ‘line VOTI’ prices from the ABF import database then added the costs for port service charges and delivery and an amount of profit and SG&A to ensure a more accurate comparison. Line value of taxable importation (VOTI) is the sum of: Line CVAL amount + line duty amount + line dumping duty amount + line transport and insurance amount. The Commission notes that, in response to SSAB’s submission regarding this analysis (EPR 506, document 054, the amount added from SSAB AU’s verified data, whilst verified with respect to the inquiry period, was applied to each year for the purposes of this analysis as this is the best available information available to the Commission. After publication of SEF 506, the Commission amended its calculation of the Swedish delivered price for this analysis to use only data verified during this inquiry.

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AU’s verified sales data during the inquiry period. The Commission found that the prices between Bisalloy and SSAB AU are equivalent with an average price difference of less than one per cent.

Figure 10: Aggregate price comparison between Bisalloy and SSAB AU during the inquiry period.

The Commission undertook a series of grade level analyses during the inquiry period.

The Commission compared the aggregate weighted average prices between Bisalloy and SSAB at the grade level (structural and wear). As shown in Figure 11, SSAB AU on aggregate had a higher price for structural grade (by approximately 9 per cent) and Bisalloy had on aggregate a higher price for wear grade (by approximately 4 per cent).The Commission considers that these results demonstrate that, on average and on a grade-level aggregate basis, Bisalloy was undercut by SSAB AU during the inquiry period. Specifically, Bisalloy’s prices are generally undercut with respect to structural grade.

Figure 11: Aggregate price comparison between Bisalloy and SSAB AU for (a) wear grade and (b) structural grade.

Q1 2018 Q2 2018 Q3 2018 Q4 2018

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eAggregate price comparison Bisalloy and SSAB AU during

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Price comparison - wear grade aggregate

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Price comparison - structural grade aggregate

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The comparison of the highest selling model at the two category MCC level in Figure 12 shows a similar result as the aggregate grade level analysis of Figure 11.

Figure 12: Price comparison between Bisalloy and SSAB AU for (a) the highest selling wear grade and (b) the highest selling structural grade, at the two category MCC level.

These comparisons show that Bisalloy is undercut by SSAB AU and SSAB AU is undercut by Bisalloy, as respectively claimed by Bisalloy and SSAB AU.

In addition to the preceding price analysis, which was also contained in SEF 506, a more detailed price analysis was conducted by the Commission for this final report (Confidential Attachment 9.3 refers).

Using verified sales data for the inquiry period, the Commission assessed the degree of undercutting by SSAB AU for each model sold by Bisalloy accommodating for thickness.135 The Commission found that approximately 87 per cent of Bisalloy’s sales volumes would be undercut or be directly competitive with SSAB AU. The Commission found that SSAB AU does command a higher price for some models of wear grade, representing approximately 12 per cent of Bisalloy’s total sales volume. The Commission does not consider these results to be indicative of an overall price premium for SSAB AU’s Q&T steel plate.

Further to Figure 11 and 12, the Commission compared the weighted average prices of Bisalloy’s highest selling structural grade and wear grade models accommodating for thickness. The analysis of Figure 13 shows that Bisalloy and SSAB AU’s highest volume wear grade model at the three category MCC level has an average price difference across the inquiry period of not more than one per cent. For the highest selling structural grades, the analysis shows that Bisalloy is undercut by SSAB AU by an average of 9 per cent over the inquiry period.

135 At the three category MCC level: grade + tensile strength/Brinell hardness + thickness).

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Figure 13: Price comparison between Bisalloy and SSAB AU for (a) the highest selling wear grade and (b) the highest selling structural grade, at the three category MCC level.

The Commission also considered the claims made by end users who made submissions that SSAB commands a price premium for its Q&T steel plate. The end users who made submissions stated that quality is a factor which compels them to pay a price premium. The Commission addresses the issue of quality elsewhere in this report.136

The Commission was able to make a direct price comparison for the one end user who bought goods from both companies. Otherwise, in the absence of evidence from the remaining end users who provided public submissions, the Commission had regard to the verified sales data of SSAB AU and Bisalloy.137 In lieu of a direct price comparison, the Commission compared the price obtained between end users and SSAB AU to Bisalloy’s aggregate prices for the relevant models for each quarter of the inquiry period. The Commission’s analysis is at Confidential Attachment 9.4.

The Commission finds that the model-level price differences in this analysis are equivalent to that found in the price analysis above. That is, Bisalloy is undercut by SSAB AU for some models of Q&T steel plate, particularly structural grade, and for some models of wear grade SSAB AU commands a higher price on the market. The Commission notes that there are models of both wear and structural grade for which SSAB AU and Bisalloy’s prices are equivalent (a difference of one per cent or less on a weighted average basis). The Commission finds no discernible price premium for SSAB’s Q&T steel plate.

Overall, the Commission considers that there is evidence that Swedish imports undercut Bisalloy and that Bisalloy and Swedish imports compete on price. The Commission does not consider there was a price premium for SSAB AU’s Q&T steel plate.

136 Chapter 9.7.1 refers. 137 The Commission notes that two end-users did not purchase any Q&T steel plate from SSAB AU in the inquiry period. One end user purchased only Q&T steel plate that was outside the dimensions specified by the goods description. Ten end users purchased some Q&T steel plate that was outside the dimensions specified by the goods description along with goods that are like goods.

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9.4.2.4 Analysis of direct price competition

The Commission conducted an analysis of common customers to assess the degree of direct competition between Bisalloy and SSAB, the level of price sensitivity in the market and to analyse the claim that Bisalloy and SSAB AU do not compete in the same market space. The Commission used verified sales data for the inquiry period for Bisalloy and SSAB AU (Confidential Attachment 9.5). The analysis presented in this final report is more detailed than the analysis conducted for SEF 506.

The Commission found that there are customers who sourced Q&T steel plate from both Bisalloy and SSAB in 2018. As a proportion of Bisalloy’s sales volumes in 2018, the common customers overall represent almost half of Bisalloy’s sales volume.

The Commission examined direct competition between Bisalloy and SSAB by considering those customers who purchased equivalent models of Q&T steel plate (at the two and three category MCC level). These customers constituted approximately 20 per cent of Bisalloy’s sales volume during the inquiry period.

The Commission finds that for these customers, SSAB undercuts Bisalloy for wear and structural grades (Figure 14). Structural grades were undercut to a greater degree than wear grades. The Commission does not consider these results to be indicative of an overall price premium for SSAB AU’s Q&T steel plate. As such, this analysis does not support SSAB’s claim that it operates in a different market space to Bisalloy.

Figure 14: Comparison between Bisalloy and SSAB prices where there is direct competition for (a) the highest selling wear grade and (b) the highest selling structural grade.

The Commission also examined the monthly purchase trends of customers who bought like models of Q&T steel plate from Bisalloy and SSAB AU. The Commission observed that many customers purchased larger volumes from SSAB AU. On analysis of these customers’ sales, the Commission observed instances where SSAB AU’s price dropped below that of Bisalloy in a given month and the customer purchased from Bisalloy. This analysis indicated that there is a high degree of price sensitivity on the market. The Commission found no evidence of customers purchasing a single grade from one supplier, and another grade from the other supplier.

The analysis also showed that some customer purchases appeared to be invariant to price or to the price difference between Bisalloy and SSAB AU (noting that other Q&T

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plate steel suppliers are in the market, though Bisalloy and SSAB AU are the most prevalent). Some customers appear to purchase exclusively from Bisalloy. Likewise, end users who made submissions have indicated that they would purchase from SSAB exclusively.138 As a result, the Commission considers there are customers who would purchase Q&T steel plate exclusively from a preferred source, irrespective of price. However, this analysis of direct price competition (as supported by the preceding price analysis detailed in this chapter) shows that during the inquiry period a significant proportion of Bisalloy’s sales volume (at least 20 per cent) competed directly in a price sensitive market and SSAB undercut Bisalloy for most of the grades sold.

9.4.2.5 Commission’s conclusion on price competition with Swedish imports

Based on its analysis, the Commission finds that the Q&T market is generally price sensitive; imported Q&T steel plate from Sweden competes directly with Bisalloy and that the price competition is significant.139 The Commission does not consider there is a price premium for SSAB AU’s Q&T steel plate.

As a result of this price competition, the evidence indicates that Bisalloy and SSAB AU compete on the Australian market for Q&T steel plate and that Bisalloy suffered price injury in the form of price depression and price suppression since the imposition of measures due in part to dumped imports principally from Sweden.140 The Commission is thus of the view that it is likely that price injury would continue if the measures expired.

9.4.3 Price increase of Swedish imports

SSAB’s post-SEF submission141 stated that SSAB AU has further increased its prices during the 2019 calendar year, with prices being higher than the unsuppressed selling price (USP) published in SEF 506.142 SSAB provided sales data with its submission to demonstrate price increase above the USP143 in the first half of 2019.

The Commission notes the claim of a price increase commencing in 2019 and the supporting information provided. SSAB AU did not explain why this information was not made available to the Commission during the verification visit to SSAB AU in March 2019.

Based on SSAB’s historical behaviours and the price analysis above, the Commission remains of the view that Bisalloy would continue to experience injury as a result of exports by SSAB in the event that the measures expired.

The Commission notes that the measures collected upon importation are only interim dumping duties and SSAB has the option of applying for an assessment of final dumping duty. SSAB has the further option of applying for a review of the measures at any time.

138 Chapter 9.7.1.3 refers. 139 In ADRP Report No.16, the ADRP stated “the fact that price undercutting did not always occur does not logically mean that what price undercutting is occurring cannot be causing injury and, where the undercutting is significant, causing material injury.” 140 Chapters 5.2 and 7.4 refer. 141 EPR 506, document 041. 142 The USP is a selling price that the Australian industry could reasonably achieve in the absence of dumping. Refer to Chapter 10 for more details. 143 The USP is based on calendar year 2018 (the inquiry period).

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9.4.4 The Commission’s conclusion on price effects due to Swedish imports

The Commission’s analysis of prices has shown that Bisalloy was undercut by SSAB AU during the inquiry period and that the market is price sensitive, with a high degree of competition between Bisalloy and SSAB AU.

The Commission is of the view that Bisalloy faced competition from SSAB such that raising its prices would affect the ability of Bisalloy to maintain its market share. Exports from Sweden are dumped, by a significant margin, and Bisalloy is suffering injury in the form of price depression and price suppression. Consequently, the Commission considers that if the measures expired, Bisalloy would not be able to raise its prices and therefore the price injury it is experiencing would likely continue.

9.5 Price effects due to imports from Japan

9.5.1 Submissions on price effects due to Japanese imports

Prior to the SEF, Total Steel144 submitted that competitive pricing is not indicative of dumping and that its imports are not dumped. Total Steel provided confidential pricing information to evidence that its prices are competitive in the Australian market. It further stated that Bisalloy makes no claims in its application with regard to exports from Japan (including JFE) undercutting Bisalloy, citing instead alleged undercutting behaviour of exports from Sweden and Finland.

A joint submission by Japanese exporters JFE, Kobe and NSSMC145 responded to Bisalloy’s price undercutting claims, stating that Bisalloy’s claim of injury in the form of price suppression has no factual basis, with an analysis provided in the submission to evidence Japanese exporters’ prices during 2018 were higher than the other exporters.

In response to SEF 506, JFE, Kobe and NSSMC146 stated that the Commission did not use positive evidence to make its price suppression findings, and consequently there is no injury due to price effects:

the Commission has inconsistently and selectively made inferences from the same evidence when it relies on the decreasing unit price as evidence of price suppression, but also relies on a small increase in CTMS to evidence its finding regarding the effect of rising energy costs; and

the only evidence used by the Commission to evidence its finding that Bisalloy’s prices have been supressed are that Bisalloy’s CTMS in 2018 was greater than that year’s increase in unit revenue, even though a price increase in 2018, the first since 2010.

Bisalloy responded147 to the joint submission that the Commission did rely on positive evidence to make its findings, namely Bisalloy’s information provided to the Commission.

144 EPR 506, document 003. 145 EPR 506, document 006. 146 EPR 506, document 036. 147 EPR 506, document 047.

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9.5.2 The Commission’s assessment of price effects due to Japanese imports

The Commission has assessed the degree of price competition between Bisalloy and Japanese imports.

The Commission was unable to use sales data from importers of Q&T steel plate from Japan to compare with Bisalloy’s selling prices,148 as the Commission contacted the two major importers of Q&T steel plate from Japan but neither completed the importer questionnaire. While two exporters of Q&T steel plate from Japan provided export sales data as part of their responses to the exporter questionnaire149, the Commission deemed the responses as containing major deficiencies and a verification of the data was not undertaken.

The Commission has relied on ABF import data for comparing imported prices of the goods to Bisalloy’s prices as the Commission considers that data contained in the ABF import database is a more complete and reliable source of information for the purpose of assessing the prices of imported Q&T steel plate from Japan.

Specifically, the Commission has compared Bisalloy’s weighted average delivered price to an imported Japanese weighted average delivered price since 2014 (Confidential Attachment 9.6).150 This comparison showed, in Figure 15 below, that Q&T steel plate prices from Japan are similar to Bisalloy’s prices, particularly between 2016 and 2018.

148 Chapter 7.3.1.1 refers. The Commission notes that it received selling information from Total Steel Australia in a submission, however, the Commission considers that those sales are not comparable to Bisalloy’s sales. 149 Chapter 7.2.2 refers. 150 In calculating the Japanese delivered price, the Commission used the ‘line VOTI’ prices from the ABF import database then added post importation costs to ensure a more accurate comparison. VOTI is the sum of: Line CVAL amount + line duty amount + line dumping duty amount + line transport & insurance amount. An amount of delivery, SG&A and profit was derived by calculating a weighted average of the difference between the 2013 weighted average unit price of the three Japanese importers whose data were verified during the original investigation (Commercial Metals Pty Ltd, Sojitz Australia Limited and Total Steel) and the weighted average 2013 VOTI amount from the ABF import database. This amount was applied to each year analysed. The amount of Japanese delivery, SG&A and profit used in this final report differs from that used in SEF 506. SEF 506 used data obtained provided by Total Steel as relevant to 2018. However, since this data was not verified, the Commission considers that the method used in this final report is more accurate and is the best available information.

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Figure 15: Comparison between delivered prices for Bisalloy and imports from Japan.

The Commission also found that a number of importers of Q&T steel plate from Japan are customers151 of Bisalloy, collectively representing over 40 per cent of Bisalloy’s sales volume of Q&T steel plate in 2018 (Confidential Attachment 9.5), indicating a degree of

direct competition also exists between Japanese exporters and the Australian industry.

The Commission finds that imports from Japan, whilst at present and since 2014 are of a small volume,152 do have a certain degree of competition with Bisalloy during the inquiry period, as determined from a common customer analysis between Bisalloy and Japanese importers. On the basis of its price analysis, the Commission considers that Japanese imports would likely continue to compete with Bisalloy in the future, and price injury from dumped imports would likely continue if the measures expire.

9.6 Profit injury

9.6.1 Profit injury assessment in SEF 506

Prior to the publication of SEF 506 a joint submission153 by Japanese exporters JFE, Kobe and NSSMC stated that Bisalloy is not likely to be vulnerable to injury in the form of reduced profit because:

Bisalloy’s published financial results and associated public statements indicate it has been highly profitable and forecasts continued profitability, with the submission detailing financial indicators to evidence Bisalloy’s profitability and citing Bisalloy’s stated increased share of the Australian market, improved sales mix and strong performance from its co-operative joint venture in China, as being responsible factors;

151 The Commission has included in its analysis related companies of the relevant Japanese importers. 152 Figure 1 refers. 153 EPR 506, document 006.

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Bisalloy’s profits have increased despite upward pressure from energy prices and supply constraints;

Prior to the publication of SEF 506, SSAB EMEA and its related companies154 stated that

Bisalloy’s volumes have tracked upwards in recent years, has an improved financial position and has stated that it has increased its workforce and doubled its production in the 18 months leading to March 2018;

Bisalloy has indicated a shift towards sales of armour grade Q&T in its financial statements and ASX results, and the Commission’s own industry verification report confirms this;

Bisalloy has indicated to the market that its profits and prospects have improved year-on-year and that this improvement is set to be maintained;

Bisalloy’s stake in armour grades of Q&T steel plate, which faces no competition from SSAB or other Q&T steel plate sources, is successful and a growing part of the business, which Bisalloy has indicated an intention to grow and has several established government contracts.

In SEF 506, the Commission considered that Bisalloy’s sales of Q&T steel plate were profitable in 2017 and 2018, however the profit margin had diminished in 2018, with unit revenue only slightly above unit CTMS.

9.6.2 The Commission’s further assessment of profit injury

Following publication of the SEF, a submission from the EC stated that Bisalloy’s profits did not improve with the imposition of measures, with 2015 and 2016 continuing to be unprofitable, indicating that imports from Sweden and Finland were not causing injury in this period.155 A submission from SSAB stated that Bisalloy has had its highest level of profit since 2012 in 2017 and 2018.156 The Commission revised the calculation of unit costs,157 which has resulted in changes to the Commission’s assessment of profit and profitability. Nonetheless, the Commission finds that the general trend is the same as in the SEF, that after measures were imposed Bisalloy’s financial position did not initially improve. The Commission considers that Bisalloy’s decline in profitability after the imposition of measures resulted from Bisalloy not being able to raise its prices158 when it faced increases in its CTMS. The Commission has found that there are several factors have resulted in the increase to Bisalloy’s CTMS, factors that appear transient.159 Bisalloy’s maintenance of its market share since the imposition of measures160 indicates an attempt to retain volume in the face of these market factors. The Commission considers that since SSAB AU did not raise its prices in response to the imposition of measures in 2014,161 Bisalloy’s prices have remained depressed and supressed, which has impacted on its profitability.

154 EPR 506, document 017. 155 EPR 506, document 050. 156 EPR 506, document 054. 157 Footnote 60 of this final report refers. 158 Chapter 6.5 refers. 159 Assessment of the drivers underlying production cost changes in Chapter 9.7.2 refers. 160 Figure 4 refers. 161 Chapter 9.4.2.3 refers.

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9.7 Factors other than dumping

Bisalloy’s application did not indicate any injurious factors other than dumping. However, the Commission received submissions from interested parties concerning other factors that may have caused injury to the Australian industry for Q&T steel plate. The Commission has considered the factors raised by the submissions, as detailed below.

9.7.1 Non-price considerations

9.7.1.1 Submissions on non-price considerations

End users made submissions indicating that their decision to not purchase Q&T steel plate from Bisalloy is influenced by the actual or perceived difference in quality and/or service and not considerations of price, and are an injurious factor to Bisalloy.

Following the publication of SEF 506, the Commission received submissions from the following end users claiming that SSAB AU’s Q&T steel plate is of superior quality Bisalloy’s Q&T steel plate, or that SSAB AU provided superior service to Bisalloy:

Alliance Laser162

APS163

Aries Rail164

ATA Steel165

Australian Steel166

BTE167

Goldmont168

Hercules169

Kennedy Trailers170

MAL171

STE172

SEQTT173

TEi174

Toomey175

Tuff Trailers176

With respect to the quality of Bisalloy’s Q&T steel plate, the submissions exampled inconsistent material properties (flatness, consistent hardness), a lack of corrosion protection, cracking, hard spots affecting machining and drilling, markings on the plate for clear identification of the product, challenges with pressing, bending, rolling and cutting, and weldability. Several of the submissions further contended that Bisalloy sources its raw material input (i.e. greenfeed) from China to the detriment of the quality of Bisalloy’s Q&T steel plate.177

162 EPR 506, document 042. 163 EPR 506, document 038. 164 EPR 506, document 058. 165 EPR 506, document 034. 166 EPR 506, document 035. 167 EPR 506, document 056. 168 EPR 506, document 030. 169 EPR 506, document 029. 170 EPR 506, document 026. 171 EPR 506, documents 005, 018, 037. 172 EPR 506, document 055. 173 EPR 506, document 028. 174 EPR 506, document 048. 175 EPR 506, document 027. 176 EPR 506, document 046. 177 EPR 506, documents 026, 027, 028, 030.

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Bisalloy responded to the claims made by end users. It stated that end user submissions were similar in nature as a consequence of a letter provided by SSAB AU to its customers encouraging them to convey specific messages to the Commission.178

Bisalloy responded179 to end user claims regarding the quality of its Q&T steel pate, stating that:

Its Q&T steel plate are certified to AS/NZS 1365 – Tolerance for flat-rolled steel products;

It can offer coated Q&T steel plate to domestic customers, adding that domestic steel producers typically offer uncoated product as standard, whilst exported products are typically coated to combat sea water and outdoor storage corrosion;

Bisalloy’s core sizes (60 mm thick and below) of structural and wear grades (400 and 450 products) are equivalent or better than imported products with respect to bending cutting and welding, with some products outside this core range having strict fabrication guidelines to avoid issues; and

Every plate is individually tested by NATA certified laboratories with these tests showing that Bisalloy’s Q&T steel plate meets end user requirements and has higher hardness than Bisalloy’s product.

With respect to service, many of the submissions stated that Bisalloy’s service offering was limited and was a consideration in the decision to purchase steel from SSAB AU instead. Issues cited included timeliness of delivery, range or availability of product, minimum order requirements for some types of goods, and customer service. Some end users indicated that to switch suppliers from SSAB would require their products to be redesigned, whilst others indicated that their customers consider SSAB to be a world class brand and therefore an affiliation is advantageous or requested.

Bisalloy responded180 to end user claims regarding its service, stating that:

it supplies quality Q&T steel plate which competes directly with that of imports from Finland, Japan and Sweden;

it targets a lead time of 48 hours for standard sized Q&T steel plate which it can source from inventory held in warehouses across Australia and which hold three to four months’ worth of product;

it targets a lead time of eight weeks for non-standard sizes of Q&T steel plate, with six of these weeks being the lead time for Bisalloy’s Australian greenfeed supplier;

its minimum order quantities are, with exceptions, one plate per grade per thickness for standard sizes, and 25 tonnes for non-standard sizes, except for lengths above 10 meters require minimum economic quantities; and

it works collaboratively with a number of key customers with Bisalloy having local technical experts to assist in product design for bespoke products.

Bisalloy also responded to claims regarding the source of its greenfeed, stating that during the inquiry period, one per cent of its greenfeed was sourced from China, with

178 EPR 506, document 045. 179 EPR 506, document 060. 180 Ibid.

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approximately 89 per cent of its greenfeed being sourced locally from BlueScope Steel, eight per cent from Korea and one per cent from Germany.181

In response to SEF 506, Total Steel submitted that there are non-price considerations made by manufacturers who utilise Q&T steel plate and do not purchase from Bisalloy, with their purchasing decisions also considering quality and thickness.182

9.7.1.2 Commission consideration of the source of greenfeed

No evidence was provided to the Commission to demonstrate instances where the use of greenfeed from China was a consideration in the purchasing decision of end users. Furthermore, no explanation was provided demonstrating why greenfeed sourced from China would be a consideration in end users’ purchasing decisions, or in what way the specifications of such Q&T steel plate would differ.

The Commission does not have any evidence to suggest that this consideration would be of primary importance if the Q&T steel plate otherwise satisfies the end user’s requirements. Nevertheless, the Commission has reviewed Bisalloy’s greenfeed purchases over the inquiry period and finds that those from China constitute less than one per cent of its greenfeed purchases (Confidential Attachment 9.8 refers). Accordingly, the Commission does not consider greenfeed purchased from China to be an injurious factor.

9.7.1.3 Commission’s consideration of non-price considerations

In the absence of evidence from end users or from Australian industry regarding the quality and service of Bisalloy’s Q&T steel plate, the Commission wrote to end users who had made submissions to request evidence.183

The Commission received nine responses (Confidential Attachment 9.7 refers). Five of these contained supporting evidence. The evidence included field tests conducted internally by the end users comparing the performance of Bisalloy and SSAB Q&T steel plate, physical tests and test certificates conducted by independent providers to compare the specification differences between Bisalloy and SSAB Q&T products, emails stating the availability of particular grades of Q&T steel plate from Bisalloy, and price comparisons between SSAB and Bisalloy products.

The Commission analysed the received information. The Commission considers that:

the field test results did not conclusively demonstrate that Bisalloy and SSAB products differed in their quality as the tests compared inequivalent models, the details of the testing method and conditions were not clear, and only results from one sample were provided even where it was evident that there were other samples available;

the physical test results did not conclusively demonstrate that like grades of Bisalloy and SSAB Q&T steel plate could be considered different products, the results were within the accepted range of the specifications of the model tested, and it was unclear how the differences between the physical properties influenced the plates’ end use;

181 EPR 506, document 032. 182 EPR 506, document 053. 183 EPR 506, document 057.

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where the provided invoices could be compared on the basis of model and period (month), the price comparisons did evidence that SSAB’s Q&T steel plate was priced higher than Bisalloy; and

emails purporting to demonstrate that Bisalloy was unable to provide a particular model of Q&T steel plate (i.e. combination of grade, thickness and width/length) did not conclusively demonstrate Bisalloy’s inability to produce the required model, as often the email described what was available in stock at the time of the request, not whether Bisalloy can produce Q&T steel plate to the requisite specifications.

In considering the responses provided, the Commission understands that there are reasons other than price why some end users purchase the goods exclusively from SSAB AU. The Commission therefore accepts that some of SSAB AU’s customers are less sensitive to price than others.

However, the Commission is of the view that a significant portion of the Q&T steel plate market in Australia is sensitive to price. Price sensitivity is evidenced by the Commission’s analysis of direct price competition in the inquiry period.184 That analysis demonstrated that a significant proportion of Bisalloy’s sales volume (at least 20 per cent) competed directly in a price sensitive market and SSAB AU undercut Bisalloy for most of the grades sold. Therefore, the Commission maintains its view that strong price competition between Bisalloy and SSAB AU exists for a significant portion of the market, that this has caused injury to Bisalloy in the form of price suppression and depression during the inquiry period, and that expiration of the measures would likely lead to a continuation of that price injury.

9.7.2 Cost of production

9.7.2.1 Greenfeed costs

SSAB, in post-SEF submissions,185 queried the costs associated with Bisalloy’s greenfeed, and the drivers of the cost increase between 2017 and 2018, specifically:

whether transactions between Bisalloy’s two largest suppliers occur on an arms length basis and on commercial terms:

o BlueScope, as Bisalloy’s only Australian based supplier, is also a customer of finished Q&T steel plate;

o Bisalloy has entered into a cooperative joint venture with its Chinese greenfeed supplier Bisalloy Jigang (Shandong) Steel Plate Co., Limited (Jigang);

for what reason would Bisalloy need to source greenfeed from BlueScope if greenfeed from Jigang is cheaper and can provide a constant supply, and if Bisalloy further benefits from direct access and revenue from the Chinese export market;

whether a change in the supply of greenfeed, such as a higher proportion sourced from Jigang in particular, may have been responsible for Bisalloy’s costs in 2017 being much lower than for 2018;

whether Bisalloy’s purchase cost of greenfeed differs depending on whether it is used for Q&T steel plate for the domestic market or for the export market, and

184 Chapter 9.4.2.4 refers. 185 EPR 506, documents 040, 054.

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whether such dual pricing of greenfeed is followed by any cross subsidy in Bisalloy’s purchase costs;

with reference to data from Market Index, iron ore prices were flat in 2018 and only increased in 2019.

Bisalloy responded to SSAB’s post-SEF submission186 stating that SSAB has relied on false assumptions and made incorrect conclusions without any evidence to supports its statements regarding its commercial and trading arrangements, reiterating that its financial accounts are audited and that the Commission has verified its data.

The Commission assessed the claims made in the submission against verified information gathered during the inquiry.

Regarding the relationship between Bisalloy and its greenfeed suppliers, as stated in the verification report, there was no evidence that Bisalloy’s relationship with its greenfeed suppliers was not arms length.187 The Commission notes that during the inquiry period Bisalloy did not purchase greenfeed from Jigang.

The Commission assessed the factors responsible for the increase in CTMS observed between 2017 and 2018. A detailed analysis of Bisalloy’s verified CTMS data shows that the increase is driven by a raw material price increase. The Commission compared the raw material price to published plate steel prices since the imposition of measures (Confidential Attachment 9.8 refers).188 Plate steel prices increased significantly

between 2017 and 2018 and the commission is satisfied that this factor is responsible for the increase in Bisalloy’s CTMS.

9.7.2.2 Energy costs

Prior to publication of SEF 506, a joint submission from JFE, Kobe and NSSMC189 stated that Bisalloy’s price suppression is a consequence of rising gas and electricity costs.

The Commission responded to the claims of the joint submission in SEF 506 by analysing Bisalloy’s variable overhead costs as a proportion of its CTM for Q&T steel plate since the imposition of measures, using data obtained and verified during the Australian industry visit (Confidential Attachment 9.8 refers). The variable overhead costs constituted primarily gas and electricity costs and as such the Commission considered it a proxy for energy costs.

The Commission found that energy costs are one of Bisalloy’s major costs of production, however raw material and direct labour costs are significantly larger than energy costs as a proportion of its CTM for the goods. The Commission considered that increases in energy costs could not, on account of their small proportion relative to these other costs, cause material injury to Bisalloy. Therefore, whilst the Commission found that the proportion of energy costs to CTM have increased by approximately 25 per cent since the imposition of measures, price suppression injury caused to Bisalloy resulted in Bisalloy’s inability to raise prices (due to dumped imports) commensurate with changes to costs.

186 EPR 506, document 043. 187 EPR 506, document 013. 188 S&P Global Platts, SB01180 - Flat Products / Plate (commercial grades) / China export FOB Shanghai $/t, https://www.steelbb.com/, price converted to AUD using RBA exchange rates. 189 EPR 506, document 006.

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The Commission further noted that Bisalloy’s CTM overall decreased, though marginally, over the period examined, which supports the conclusion that the increase in energy costs has not been injurious to Bisalloy.

JFE, Kobe and NSSMC, in its joint submission in response to the SEF,190 stated that

the Commission’s finding that an increase in energy costs has not been injurious to Bisalloy contradicts Bisalloy’s statements made in its 2018 annual report that indicated upward pressure in energy prices as a major high level business risk with potential for materially impacting the company’s financial outlook;

the marginal decrease in Bisalloy’s CTMS would not support the Commission’s conclusion that energy costs have not been injurious to Bisalloy, instead it could indicate that the rising costs have been mitigated by reducing costs elsewhere in its manufacturing process;

the Commission has inconsistently and selectively made inferences from the same evidence when it relies on the decreasing unit price as evidence of price suppression, but also relies on a small increase in CTMS to evidence its findings regarding the effect of rising energy costs; and

the Commission used an inconsistent analysis period to make it conclusions.

In a post-SEF submission,191 Bisalloy recognised that it has incurred higher energy costs, and higher factory labour costs. In another post-SEF submission Bisalloy responded192 to JFE, Kobe and NSSMC, stating that the comments in Bisalloy’s 2018 annual report relating to energy costs reflect a potential occurrence not an actual occurrence and that the joint submission misinterprets the statement made in the annual report.

The Commission acknowledges that increased energy costs could have been mitigated by other cost saving measures implemented by Bisalloy. The Commission considers that increases to energy costs that are considered injurious would be such that the overall CTM would be driven manifestly higher in any given period, despite any cost saving measures implemented by Bisalloy. Cost saving measures resulting in an overall decrease to CTM, as observed for Bisalloy since measures were imposed, implies that any material increases in energy costs are being successfully mitigated and are therefore not injurious. The Commission does not observe any increases to Bisalloy’s CTM that could be attributed to increases in energy costs. Since the proportion of Bisalloy’s energy costs to CTM are small throughout the period examined, the Commission remains of the view that the observed increases in energy costs have not been injurious to Bisalloy. Further, the Commission does not consider that future injury on account of energy costs is likely.

9.7.2.3 Other cost drivers

The EC193 stated in response to SEF 506 that Bisalloy’s unit cost increase in 2016 and decrease in 2017 are a crucial element of the causality analysis, which the Commission did not adequately explore.

190 EPR 506, document 036. 191 EPR 506, document 031. 192 EPR 506, document 047. 193 EPR 506, document 050.

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The Commission conducted a detailed analysis of the cost drivers responsible for the trend observed in Bisalloy’s CTMS.194 Specifically, the Commission conducted an analysis of Bisalloy’s increased CTMS in 2016 and 2018 as these periods are relevant to the Commission’s findings of price suppression (refer Confidential Attachment 6.1).

The Commission finds that the increase in costs in 2016 was largely driven by an increase in selling costs and the increase in 2018 was driven by an increase in unit raw material costs. The Commission examined the factors responsible for these cost increases and whether they are likely to cause future injury to Bisalloy.

The Commission considers that the increase in Bisalloy’s 2016 selling costs are due to Bisalloy’s lower production and sales volumes in that year. These selling costs are primarily fixed costs, therefore lower sales volumes increased the unit amount for selling costs. Volumes appear to have been affected by the downturn in the mining sector in Australia, and possibly the appointment of administrators to a significant customer of Bisalloy at that time195. The increase of raw material costs in 2018 is in line with an increase in global plate steel prices.196

The factors responsible for the 2016 increase in unit CTMS appear to be transient and are not expected to impact Bisalloy in an expanding market.197 The Commission’s analysis of plate steel prices indicate that they are expected to decrease before stabilising.198 As such, the factors found to have impacted costs since the imposition of measures are not likely to impact the Australian industry in the future.

9.7.3 Commercial interests

In their pre-SEF joint submission,199 Japanese exporters JFE, Kobe and NSSMC stated that one factor why Bisalloy is not likely to be vulnerable to injury was because of its co-operative joint venture in China (Jigang).

SSAB in a post-SEF submission,200 queries the relationship between Bisalloy and Jigang, stating that:

Bisalloy appears to be earning large profits via its cooperative joint venture yet claims to be injured in the Australian market;

Jigang’s profit may be profit that Bisalloy could have earned in Australia but chose not to, for example, Bisalloy has increased funds in the cooperative joint venture that would otherwise have been paid as dividends to its shareholders;

The Commission should consider the degree to which profits which are earnt by Bisalloy are reinvested into its Australian operations and which are invested into Bisalloy’s Chinese interests;

194 Figure 5 refers. 195 Bisalloy Annual Report 2016, page 5, https://www.bisalloy.com.au/site/DefaultSite/filesystem/documents/annual-financial-reports/bis-2016-financial-report.pdf 196 See also Chapter 9.7.2.1. 197 Chapter 5 refers. 198 Figure 2 refers. 199 EPR 506, document 006. 200 EPR 506, document 040.

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Bisalloy could reduce its locally produced supply of Q&T steel plate to the Australian commercial market and replace its supply with imports from Jigang, a substitution which calls into question whether injury to Bisalloy would recur;

should measures continue, Bisalloy would have imposed measures on Finland, Japan and Sweden in an environment where Chinese exports could not be subject to dumping measures because Bisalloy is the only party who can lodge an application.

In response,201 Bisalloy stated that SSAB has relied on false assumptions and made incorrect conclusions without evidence regarding its commercial and trading arrangements. Bisalloy asserts that it is audited annually and that its accounts have been investigated by the Commission during the present inquiry.

Following publication of the SEF, JFE, Kobe and NSSMC in a joint submission202 stated that Bisalloy’s establishment of a joint venture in China is the reason why it has not applied for anti-dumping measures against China.

The Commission has no evidence to support the claims made in these submissions and notes that, on review of the ABF import database (Confidential Attachment 2.1 refers),

Bisalloy has not imported the goods from Jigang since the imposition of measures, nor has Bisalloy sourced greenfeed from Jigang during the inquiry period.

9.7.4 Production capacity

SSAB in a post-SEF submission203 stated that Bisalloy would need to supply Australian manufactured Q&T steel plate to fulfil its future defence contracts, resulting in Bisalloy’s production facility running at high capacity. SSAB stated that this should be considered with respect to any findings of recurrence of injury made by the Commission. SSAB’s pre-SEF submission further indicated that Bisalloy’s supply of Q&T steel plate to government projects would continue indefinitely due to having uncontested participation in future tenders.204

Total Steel205 stated that Bisalloy does not claim it can meet demand arising from the expansion of the Q&T steel market in Australia, therefore an increase in exports to Australia is expected.

Following publication of the SEF, JFE, Kobe and NSSMC in a joint submission206 stated that exports from Japan supplement capacity insufficiency by Bisalloy, and consequently cannot be injurious.

The Commission notes that price injury may still be an injurious factor even if the Australian industry were operating at full capacity. Further, the Commission reviewed capacity utilisation during the Australian industry visit,207 finding that capacity utilisation

201 EPR 506, document 043. 202 EPR 506, document 036. 203 EPR 506, document 040. 204 EPR 506, document 017. 205 EPR 506, document 003. 206 EPR 506, document 036. 207 Figure 7 refers.

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has overall increased from the 2014 calendar year, and Bisalloy was not operating at full capacity as at 2018.

In response to SSAB’s submission concerning an expected increase in demand for armour grade Q&T steel plate due to uncontested participation in Australian defence tenders, the Commission notes that defence procurement in Australia does not preference local suppliers, nor does it mandate the use of local suppliers as specified by the 2019 Defence Policy for Industry Participation.208 As such, the Commission does not consider it a forgone conclusion that Bisalloy will win future tenders.

9.7.5 Market conditions for Q&T steel plate

Prior to publication of the SEF, the Commission noted that several external factors had been cited by submissions209 as having influenced the Australian market for Q&T steel plate, and which could have caused or influenced injury to Bisalloy, such as the downturn and recovery in the mining and resources sectors and a weakened Australian dollar.

The Commission considered the influencing factors to the market in SEF 506 and observed that despite the presence of these factors the Q&T steel plate market has expanded since 2016 after a significant drop,210 and prices during the inquiry period have remained relatively stable.211 The Commission found that the Australian market for Q&T steel plate has improved since 2016 and does not believe that the Australian market conditions have been particularly injurious to Bisalloy.

MAL, in a post-SEF submission,212 indicated that margin erosion, caused by end users demanding lower prices such that sales are at a reduced margin, is another factor that the Commission should consider. MAL provided a comparison in a confidential appendix of the gross margins of Bisalloy, SSAB AU and MAL during the inquiry period, showing Bisalloy having the largest margin, which MAL asserts belies assertions of profit injury.213

The Commission considers that the gross margins determined by MAL are from Bisalloy’s consolidated annual report, whereas the Commission has determined and assessed Bisalloy’s profit injury specifically for the like goods sold on the Australian market.

9.7.6 Imports from countries not subject to measures

Prior to the publication of the SEF, submissions from Total Steel214 and SSAB215 indicated that Bisalloy would face competition from Q&T steel plate from countries not the subject of measures. SSAB stated that a current and future injurious factor for Bisalloy will be competition from commodity level Q&T steel plate into the Australian market from countries not the subject of measures, particularly China and Belgium, which have seen

208 2019 Defence Policy for Industry Participation, http://www.defence.gov.au/SPI/Industry/Industry-Participation.asp. 209 EPR 506, documents 005, 006, 017. 210 Figure 1 refers. 211 Figures 8 and 9 refers. 212 EPR 506, document 037. 213 Bisalloy and SSAB margins were derived from their annual reports 214 EPR 506, document 003. 215 EPR 506, document 017. The submission represented the views of SSAB and Ruukki.

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an increased market share, and from Japan in the event that its dumping measures are not continued.

The Commission examined the volumes of goods exported from countries that were not subject to measures.216 The Commission found that since 2015, there has been an increase in exports from other countries including Belgium, China and the United States. In 2018, China was the next largest exporter of Q&T steel plate behind Sweden (Confidential Attachment 2.1 refers).217

The Commission compared the importers of Q&T steel plate from Belgium, China and the United States and found that there were a small number that were also customers of Bisalloy. Nonetheless, the price competition evidence provided to the Commission showed that imported Q&T steel plate from Sweden is at present the main competitor to Bisalloy and there is no evidence that import prices from countries not subject to measures have any influence on Bisalloy’s selling prices.

Following publication of the SEF, the Commission received further submissions on this issue:

JFE Kobe and NSSMC in a joint submission stated that the Commission’s finding that there is no evidence that import prices from third countries have an influence on Bisalloy’s selling prices is incredulous as the Commission acknowledges that Chinese export volumes into Australia are the largest exporter behind Sweden and are larger than those from Japan.218 The submission reiterates that dumped imports from China would be a major factor to injure Bisalloy;

The EC stated that the Commission failed to properly assess causality by not disclosing the prices of imports from other origins, which hold a significant part of the market (37 per cent, according to Bisalloy’s application);219

SSAB submitted that: o it is wrong for the Commission to conclude that that imports made into

Australia in large volumes from non-Australian industry members would have no influence on prices in the Australian market, and that because these imports are not having an affect now means it would not have an effect in the future;220

o countries which occupy 20-25 per cent of the market have introduced their Q&T steel plate into the market at lower prices to those of SSAB and are not subject to measures;221

o The finding in SEF 506 that third country exports are not causing a direct impact on Bisalloy, but SSAB’s Q&T steel plate is causing a direct impact, is incongruous with the Commission’s finding that Chinese imports have larger volumes and are priced lower than Q&T steel plate from Japan, and Japanese imports are priced lower than Bisalloy.222

216 Chapter 5 refers. 217 Figure 4 refers. 218 EPR 506, document 036. 219 EPR 506, document 050. 220 EPR 506, document 041. 221 EPR 506, document 054. 222 Ibid.

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Total Steel stated that SEF 506 gave very little consideration to the effect of the increased volumes imported into Australia from countries not the subject of measures, and the Commission should undertake an adequate assessment of its effects.223

The Commission acknowledges that imports of Q&T steel plate from countries not the subject of measures could influence the selling prices of all market players, however no evidence has been presented to the Commission to indicate that this has occurred.

The Commission has assessed import volumes from China, and found that they have increased since 2014. However, whilst not immaterial, China does not appear to have been a dominant player in the Australian Q&T steel market. Further, and with reference to analysis contained within Confidential Attachment 2.1, the Commission notes that on

assessment of imports of Q&T steel plate from countries not the subject of measures, SSAB constitutes 37 per cent of these imports since 2014.

Overall, the Commission considers that dumped imports from countries that are subject to measures have been the primary cause of price depression and price suppression to Bisalloy.

9.7.7 Customer base

JFE, Kobe and NSSMC in joint submissions224 stated that Bisalloy is experiencing downward pressure on prices on account of having a customer base in Australia that is restricted to three major customers who account for 59 per cent of its external revenue with downward pressure on prices attributable to Bisalloy’s small customer base.

The Commission’s common customer analysis in this final report demonstrates that Bisalloy and SSAB have a high degree of common customers (almost half of Bisalloy’s volume was attributable to customers common to both Bisalloy and SSAB).225 The Commission considers that the common customer analysis shows that the Q&T steel plate market in Australia is competitive and it is this competition that has a suppressing effect on Bisalloy’s prices.

Nonetheless, the Commission assessed the prices of Bisalloy’s three largest customers during the inquiry period using verified sales data gathered during the course of the inquiry (Confidential Attachment 9.5 refers). The evidence before the Commission does not support the claims made by the Japanese exporters.

9.7.8 Changes to Australian industry’s business practices

Total Steel stated in a post-SEF submission that changes to Bisalloy’s business since the imposition of measures have been an injurious factor.226 The submission stated that practices such as downsizing of its Q&T steel plate production with a greater reliance on imports and a focus on increased stock holding in warehouses around Australia would cause injury to Bisalloy.

223 EPR 506, document 053. 224 EPR 506, documents 006, 036. 225 Chapter 9.4.2.4 refers. 226 EPR 506, document 053.

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In the absence of evidence provided in the submission, the Commission had regard to Bisalloy’s verified data gathered during the inquiry.

The Commission notes that Bisalloy’s imports were found to be intermittent with imported product being less than one percent of production volume in any given year that imports occur.227

Regarding stock holding practices, there is no information available to the Commission which indicates that Bisalloy’s practices regarding warehousing have been injurious, nor that material future injury would result as a consequence.

9.8 Materiality of injury

Having determined that Bisalloy is suffering injury in the form of price depression, price suppression and reduced profits and profitability, which would likely continue if the measures were to expire, the Commission has sought to assess the materiality of that injury.

The Commission had regard to the unsuppressed selling price (USP), which is a selling price that the Australian industry could reasonably achieve in the absence of dumping. The USP was calculated for calendar year 2018 in this inquiry by indexing the USP of the original investigation, which was for calendar year 2012.228

In the original investigation, the Commission considered that calendar year 2012 was an appropriate period to set the USP as it represented a period unaffected by dumping.229 In that period unaffected by dumping, Bisalloy’s market share was approximately the same as that observed for 2018,230 and its total sales volume was larger than that of 2018.231 Therefore, the Commission considers it a reasonable assumption that, since Bisalloy can demonstrably sell volumes of Q&T steel plate at least equivalent to that achieved for 2018 in a period unaffected by dumping, Bisalloy’s volumes of Q&T steel plate would be unchanged if it were selling at the USP.

As such, the Commission has assessed materiality by calculating the difference between the total revenue achieved by Bisalloy in 2018 for the goods (as determined from Bisalloy’s verified sales data), a revenue considered to be affected by dumping, and the revenue Bisalloy could have achieved if its prices were set at the USP for the same volume of sold goods.The Commission also assessed materiality with respect to the volumes and revenue associated with sales of Q&T steel plate determined as being in direct competition with its major competition (SSAB AU). That is, the Commission calculated the difference to Bisalloy’s 2018 revenue if prices were set at the USP for volumes directly competing with SSAB AU.232

The Commission considers that the calculated percentage differences represent a material degree of injury that is greater than that likely to occur in the normal ebb and flow of business.

The Commission’s calculation of materiality are found at Confidential Attachment 9.9.

227 Chapter 6.4 and Figure 3 refers. 228 Chapter 10.3 refers. 229 Chapter 10 of REP 234 refers. 230 Figure 4 refers. 231 Figure 3 refers. 232 Based on the analysis of direct competition with Swedish imports, Chapter 9.4.2.4 refers.

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9.9 Downstream effect of measures

The Commission received submissions from end users expressing concern regarding the impact of the continuation of measures on their business. End users expressed concerns that include loss of sales, loss of jobs and closing down of facilities or business in the event their prices have to rise to absorb an increase in dumping duties on imported Q&T steel plate.

The Commission considers that these issues do not specifically address the legislative test required for the continuation of the measures.

9.10 The likelihood of material injury continuing or recurring

Having established that the expiration of measures would be likely to lead to a continuation or recurrence of dumping from Finland, Japan and Sweden, the Commission has considered whether material injury to the Australian industry is likely to continue or recur because of that dumping from each of the three countries subject to measures.

9.10.1 Exports from Finland and Sweden

The Commission established that exports of the goods from Sweden in particular are of significance in the Australian market and compete directly with like goods produced by the Australian industry.233 The market share of Q&T steel plate supplied by SSAB EMEA from Sweden demonstrates that it is a major market participant in Australia.

In addition, the Q&T steel plate market is price sensitive and the level of price competition between SSAB AU and Bisalloy is intensive. The Commission has found SSAB AU and Bisalloy’s prices are similar, if not equivalent,234 Bisalloy has regard to SSAB AU’s prices when negotiating prices with its customers, as evidenced by the price undercutting examples provided in Bisalloy’s application and the common customers that both Bisalloy and SSAB AU share.235

The Commission notes that prices in the Australian market of the goods exported from Sweden did not increase following the imposition of the measures.236 The Commission has found that the dumping margin for the goods exported from Sweden has increased significantly to 129.7 per cent during the inquiry period237 from 34.0 per cent during the original investigation, upon which the current measures are based. Given the significant price advantage this gives to the goods exported from Sweden and the strong competition between SSAB and the Australian industry, the Commission considers that the lower export prices of the goods from Sweden due to dumping has depressed and suppressed the domestic prices of like goods and thereby reduced the Australian industry’s revenue and profit.

The Commission is therefore satisfied that the expiration of measures on exports of Q&T steel plate from Sweden would be likely to lead to the continuation of material injury in the

233 Chapter 8.4 refers. 234 Pricing analysis in Chapter 9.4.2.3 refers. 235 Price undercutting analysis in Chapter 9.4.2.3 refers. 236 Confidential Attachment 9.3 refers. 237 Chapter 7.5.1.3 refers.

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form of price suppression and reduced profit and profitability experienced by the Australian industry, that the anti-dumping measures are intended to prevent.

Further, given the close relationship between SSAB EMEA in Sweden and Ruukki, the only known exporter of the goods from Finland, the Commission considers that, should the measures on exports from Finland expire, exports from Finland would likely resume at similar levels of dumping found for Sweden.238 Therefore, the Commission is also satisfied that the expiration of the measures on exports of Q&T steel plate from Finland would be likely to lead, to a recurrence of the material injury that the anti-dumping measures are intended to prevent.

9.10.2 Exports from Japan

The Commission established that export volumes of Q&T steel plate from Japan reduced significantly when anti-dumping measures were imposed in 2014.239 It appears that anti-dumping measures have had the intended effect of reducing the injury to the Australian industry caused by imports of Q&T steel plate from Japan at dumped prices.

The fact that the evidence provided by Bisalloy focuses on price competition from Sweden and not Japan is unsurprising given the reduction in import volumes and significance of Q&T steel plate from Japan as a competitor to the Australian industry. Nonetheless, the Commission has found that prices of Q&T steel plate imported from Japan during the inquiry period are competitive and that Bisalloy shares common customers with exporters from Japan.240 The prices of Japanese Q&T steel plate in Australia would likely fall with the expiry of anti-dumping measures, particularly given the significant dumping margins of 33.9 per cent found during the inquiry period.

Given the existing distribution links within the Australian market, imports of Japanese Q&T steel plate would likely increase. This, combined with the likely fall in Japanese Q&T steel plate prices, would likely lead to an increase in the demand for Q&T steel plate from Japan, capturing greater market share and causing the continuation or recurrence of injury to the Australian industry in the form of lost sales volume, lost market share and lost profit. Accordingly, the Commission is satisfied that the expiration of the measures on exports of Q&T steel plate from Japan would be likely to lead, to a recurrence of the material injury that the anti-dumping measures are intended to prevent.

238 Chapter 7.3 refers. 239 Chapters 6.4.2 and 5.2 refers. 240 Pricing analysis in Chapter 7.3.1.1 refers.

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10 NON-INJURIOUS PRICE AND LESSER DUTY RULE

10.1 Findings

The Commission has found that the non-injurious price (NIP) for the goods exported to Australia from Finland, Japan and Sweden is lower than the normal values of the goods from those countries.

Therefore, the Commission finds that it is desirable to apply the lesser duty rule on exports of the goods from Finland, Japan and Sweden.

10.2 The lesser duty rule

Where dumping duties are proposed or in place, the Minister must have regard to the desirability of applying a lesser amount of duty than the full dumping margin if such amount is sufficient to remove the injury caused by the dumping—the ‘lesser duty rule’.241 The lesser amount of duty is determined by reference to the NIP.242

The Minister is not required to have regard to the lesser duty rule in certain circumstances,243 however these circumstances are not applicable to the present inquiry.

10.3 Calculation of the Non-injurious Price

The Commission will generally derive the NIP from an unsuppressed selling price (USP). The USP is a selling price that the Australian industry could reasonably achieve in the absence of dumping. The Commission’s approach to establishing the USP is set out in the Manual and observes the following hierarchy:244

industry selling prices at a time unaffected by dumping;

constructed industry prices – industry CTMS plus profit; or

selling prices of undumped imports.

Having calculated the USP, the Commission then calculates a NIP by deducting relevant costs to obtain a price at the Free on Board point.

10.4 Submissions on the USP and NIP

10.4.1 Bisalloy

Prior to the SEF, Bisalloy submitted245 that selling prices in the Australian market in 2018 were not unaffected by dumping, therefore those prices are not suitable for determining the USP. Rather, Bisalloy proposed that the USP be based on its CTMS in 2018 plus an amount for profit achieved in 2017 only. It argued that 2018 profits were suppressed and profits in the years prior to 2017 were inadequate and did not reflect levels sufficient for re-investment purposes. Although the Commission did not propose this method in the

241 Section 8(5B) of the Dumping Duty Act. 242 The NIP is defined in section 269TACA of the Act. 243 Section 8(5BAA) of the Dumping Duty Act. 244 Chapter 24 of the Manual refers. 245 EPR 506, document 017.

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SEF, in its post-SEF submission Bisalloy affirmed246 the Commission’s proposed method of calculating the USP.

10.4.2 SSAB

Following publication of the SEF, SSAB submitted that:247

Bisalloy adopts a business strategy wherein it protects itself from dumping, as evidenced by Bisalloy’s request to use its very large 2017 profit against its higher costs in 2018;

since China was recognised in SEF 506 by the Commission as being the next largest exporter after Sweden, the USP should be set at the price of these imports; and

notwithstanding the legislative framework of the Commission, it is disagreeable that the Commission should deduct an amount of IDD from the ascertained export price and not the NIP, as without this asymmetry the dumping margin would be much less.248

10.5 The Commission’s assessment

10.5.1 Unsuppressed selling price

In the SEF the Commission proposed a USP based on industry selling prices at a time unaffected by dumping, which is the Commission’s preferred method.249 The Commission has not based the USP on Bisalloy’s 2017 profit levels as originally proposed by Bisalloy and objected to by SSAB.

SSAB alternatively proposed to base the USP on selling prices of imports from China. As stated in the Manual, the USP will normally be based on selling prices of undumped imports in the Australian market where the other two methods are not appropriate. The Commission notes that it has not investigated imports from China and is unable to determine whether they were dumped.

As such, the Commission has taken the USP from the original investigation, which is based on a period unaffected by dumping, and updated the USP by indexing it based on the changes to Bisalloy’s variable costs from the original investigation period to the current inquiry period. The USP published in SEF 506 was $2,085.07 per metric tonne.250

Subsequent to publishing the SEF, the Commission has revised its calculation of the USP,251 which has affected the indexing calculation. The revised USP at free-into-store delivery terms is $2,015.93 per metric tonne.

The USP calculation is contained in Confidential Attachment 10.1.

246 EPR 506, documents 031, 044. 247 EPR 506, documents 041, 054. 248 As cited by SSAB (EPR 506, document 054) effective rate calculations, including a suggested USP, were provided to the Commission by email dated 4 July 2019. 249 Chapter 24 of the Manual refers. 250 Bisalloy gave permission for the Commission to publish the USP in SEF 506. 251 Footnote 60 of this final report refers.

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10.5.2 Non-injurious price

10.5.2.1 Sweden

In calculating an NIP in relation to Sweden, the Commission made deductions from the USP based on verified information from SSAB AU and SSAB EMEA. Specifically, the Commission made the following deductions:

Australian delivery expenses;

Australian warehousing costs;

other SG&A expenses incurred in Australia;

importer profit margin;

importation costs;

customs duty; and

the cost of ocean freight and marine insurance.

SSAB submitted that the amount of IDD should also be deducted from the USP in calculating the NIP.

The USP is the price in the Australian market sufficient to remove the injury caused by dumping. The NIP is merely a reflection of the USP at the FOB level in the country of export. The NIP is calculated by deducting from the USP, the costs of importation and sale of the goods in Australia. The Commission notes that IDD is an interim duty only, paid at the time of importation—the actual dumping duty is determined following importation and can change over time. If the Commission were to deduct the IDD paid by SSAB during the inquiry period, it would remove the effect of any measures by lowering the NIP by the amount of injurious dumping currently occurring. Where an importer considers that it has overpaid IDD, it can apply for a duty assessment and may be entitled to a refund. If, for example, an importer paid the same amount of IDD that was deducted from the USP in calculating the NIP and then received a full refund of that IDD, the USP in the Australian market would not have been achieved.

The NIP calculation for Sweden is contained in Confidential Attachment 10.1.

10.5.2.2 Finland

Given the close relationship between SSAB EMEA in Sweden and Ruukki, the only exporter of the goods from Finland, the Commission considers it appropriate, in calculating the NIP, to make the same deductions from the USP that were made for Sweden.252

The NIP calculation for Finland is contained in Confidential Attachment 10.1.

10.5.2.3 Japan

During the inquiry, the Commission requested from Total Steel, data and source documents in relation to the costs relating to its imports of the goods from Japan during the inquiry period. The Commission considers that this information from Total Steel is relevant and reliable for the purpose of making deductions from the USP to calculate the NIP. In relation to a deduction for importer SG&A, the Commission considers it appropriate to use SSAB AU’s SG&A expense as the best available information representing SG&A costs of an efficient importer of the goods.

252 Chapter 10.5.2.1

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In summary, the Commission made the following deductions in calculating the NIP for Japan:

Australian delivery expense;

other SG&A expenses incurred in Australia;

importation costs; and

ocean freight and marine insurance expenses.

The NIP calculation for Japan is contained in Confidential Attachment 10.1.

10.6 Effective rate of duty

Subsequent to SEF 506, the Commission revised its calculation of the NIP.253 The Commission has compared the revised NIP to the ascertained normal values and found that the NIP is lower than the ascertained normal values of the goods for all three countries. Therefore, the Commission considers that it is desirable to apply the lesser duty rule such that the sum of the ascertained export price and the interim dumping duty payable on the goods does not exceed the NIP. The Commission considers it is desirable to apply the lesser duty rule as this is would be adequate to remove the injurious effect of dumping to the Australia industry.

In calculating the effective rate of duty, the Commission has compared the ascertained export price to the NIP, outlined in table 6 below.

Country Exporter Effective rate of duty

Finland All exporters 58.6%

Japan All exporters 25.8%

Sweden All exporters 58.6%

Table 6: Proposed measures

The calculation of the effective rate of duty is contained in Confidential Attachment 10.2.

253 Footnote 60 and Chapter 9.5 of this final report refers.

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11 EXEMPTIONS FROM DUTIES

11.1 Findings

There is insufficient evidence before the Commission at this time to make a recommendation to the Minister on whether or not to grant certain Q&T steel plate an exemption from the notice under section 8(7) of the Dumping Duty Act.

11.2 Submissions on exemptions from duties

The Commission received submissions from the following end users who indicated that Bisalloy is not able to produce Q&T steel plate to the required specifications:

Alliance Laser254

APS255

ATA Steel256

Goldmont257

GGMF258

Hercules259

MAL260

STE261

SEQTT262

Tuff Trailers263

Aries Rail264

Some end users stated that Bisalloy did not produce Q&T steel plate to particular dimensions, or combination of wear and structure performance. Others did not specify their precise requirements, but were of the view that Bisalloy did not meet their requirements for Q&T steel plate.

Only one end user, MAL, provided evidence in support of an exemption from anti-dumping measures for specific Q&T steel plate products. In a pre-SEF submission, MAL claimed that Bisalloy could not supply Q&T steel plate to its requisite standard of thickness and hardness, which was an indication that the quenching and tempering process used by Bisalloy would not produce the necessary quality of steel plate required.265 MAL requested that certain Q&T steel plate be granted an exemption from anti-dumping measures. Specifically, MAL states that it requires Q&T steel plate having:

a tensile strength of 1,512 MPa equivalent;

a Brinell hardness of at least 542; and

thicknesses of 40 mm, 60 mm, 75 mm and 100 mm.

MAL also submitted that upon ordering Q&T steel plate, Bisalloy informed MAL that Bisalloy did not typically supply Q&T steel plate of 75 mm thickness however, it could

254 EPR 506, document 042. 255 EPR 506, document 038. 256 EPR 506, document 034. 257 EPR 506, document 030. 258 EPR 506, document 033. 259 EPR 506, document 029. 260 EPR 506, documents 005, 018, 037. 261 EPR 506, document 055. 262 EPR 506, document 028. 263 EPR 506, document 046. 264 EPR 506, document 058. 265 EPR 506, document 024.

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provide the requested dimensions if MAL place a forward order having a lead-time of 5-12 weeks from the order date to ensure sufficient stock was available.

In response to the claims made by MAL regarding the availability and quality of its Q&T steel plate, Bisalloy asserts that its plant design and manufacturing operations are flexible such that it can manufacture Q&T steel plate to meet customer requirements, is able to supply the Q&T steel plate as required by MAL, and is currently working with the company towards this goal.266

Following publication of the SEF, MAL made a submission267 that included more detailed evidence, in the form of correspondence and associated technical documents, to support its claim that Bisalloy is not able to readily manufacture Q&T steel plate to its specific requirements and that its requirements are considered important to the production of its end product.

Bisalloy responded268 to end users assertions that it is unable to produce Q&T steel plate of certain dimensions, stating that it can produce:

thicknesses of 4.5-120 mm with 5 mm thicknesses having a maximum width of 2000 mm, and 6 mm thicknesses having a maximum width of 2500 mm;

widths up to 3200 mm; and

lengths up to 14 meters.

11.3 Commission’s consideration of submissions on exemptions from duties

The Minister has discretion to exempt goods from dumping duties where satisfied that the legislative test “that like or directly competitive goods are not offered for sale in Australia to all purchasers on equal terms under like conditions having regard to the custom and usage of trade,”269 has been met.

In the absence of evidence provided by most end users, the Commission is unable to assess whether claims regarding Bisalloy’s inability to produce Q&T steel plate to specific end user requirements would meet the legislative test for exemption.

With regard to MAL, the Commission reviewed the email correspondence and the technical documents it provided in its post-SEF submission and found that MAL may have a basis for seeking an exemption. However, there was insufficient evidence before the Commission to make a recommendation to the Minister on whether or not to grant an exemption. Accordingly, the Commission contacted MAL to outline the option of applying for an exemption. MAL subsequently responded that it did not wish to make an exemption application at this time.

Given the recommendation in this report is to continue the measures, it would be open for interested parties to apply for exemptions in the future.

266 EPR 506, document 018. 267 EPR 506, document 037. 268 ERP 506, document 060. 269 Section 8(7) of the Dumping Duty Act refers.

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12 FORMS OF DUTY

12.1 Findings

The Commission recommends that the Minister continue the dumping duties on Japan in the form of the ad valorem duty method, and on Finland and Sweden in the form of the combination of fixed and variable duty method.

12.2 Consideration of form of measures

Under the legislation dumping duties can take one of four forms:270

fixed duty method (e.g. $X per tonne);

floor price duty method;

combination of fixed and variable duty method (combination duty method); or

ad valorem duty method (i.e. a percentage of the export price).

The various forms of dumping duty all have the purpose of removing the injurious effects of dumping. However, in achieving this purpose, certain forms of duty will better suit particular circumstances more so than others. In considering which form of duty to recommend to the Minister, the Commissioner will have regard to the Guidelines on the Application of Forms of Dumping Duty November 2013 (the Guidelines)271 and relevant factors in the market for the goods.

Relevantly, key considerations for imposing a combination method where there are complex company structures with related parties and where circumvention of measures is likely. On the other hand, an ad valorem duty method has an advantage where there are many models or types, however, has a potential disadvantage in that export prices might be lowered to avoid the effects of this duty.

12.3 Existing measures

The method of interim dumping duties currently applying to the goods exported from Finland and Japan is the ad valorem duty method and to the goods exported from Sweden is the combination duty method.

12.4 Submissions on the form of measures

12.4.1 SSAB

SSAB has reviewed the Guidelines and submitted that a floor price, set at the level of the NIP, is the most appropriate form of measures.272

270 Section 5 of the Customs Tariff (Anti-Dumping) Regulation 2013, in accordance with section 8(5BB) of the Dumping Duty Act, prescribe the methods for working out the amount of interim dumping duty payable on goods the subject of a notice under section 269TG. 271 Available on the Commission website. 272 EPR 506, documents 041, 054.

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12.4.2 Bisalloy

Bisalloy has submitted that the combination duty method is the most appropriate form of measures273 and objects to a floor price as proposed by SSAB.274

12.5 The Commission’s assessment of the form of measures

12.5.1 Japan

The Commission considers that it is appropriate to continue with the ad valorem duty method for the goods exported from Japan, as this form of measures appears to have been effective in relation to exports from Japan.

12.5.2 Sweden

The Commission has considered the Guidelines, submissions from interested parties and factors influencing the Q&T steel plate market in Australia. The Commission considers that it is appropriate to continue with the combination duty method for the goods exported from Sweden.

The Commission has found that prices between SSAB EMEA and SSAB AU are determined according to the SSAB group’s internal pricing guidelines and the sales are not arms length.275 Since SSAB is in a position to set the transfer price for the goods exported to Australia and the selling price in the Australian market, a floor price form of measure would be inadequate in these circumstances.

SSAB has argued that a combination duty, even at the lesser rate of effective duty, is disproportionate and punitive. The Commission notes that in the future, if SSAB EMEA considers that it has overpaid IDD, it would be able to apply for a duty assessment and may be entitled to a refund. SSAB EMEA may also apply for a review of the measures.

The Commission also had consideration for SSAB’s pricing behaviour since the inquiry period and with respect to its stated strategy to offer its Q&T steel plate as a premium price product. The Commission, in recommending the combination duty, is of the view that the variable duty component be a unit price instead of ad valorem, as this would not discourage further price increases.

12.5.3 Finland

The Commission notes the common ownership and close commercial relationship between SSAB EMEA in Sweden and Ruukki in Finland,276 which has arisen since the measures were first imposed. The Commission therefore considers that it is appropriate to amend the form of duty in relation the export sales of the goods from Finland to be the same duty method as imposed on Sweden, which is the combination duty method.

273 EPR 506, document 017. 274 EPR 506, document 044. 275 Chapter 7.4.1 refers. 276 Ruukki was acquired by SSAB AB (SSAB EMEA’s parent company) in 2014 (EPR 506, document 14 refers).

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13 RECOMMENDATIONS

13.1 Findings

In accordance with section 269ZHF(2), the Commissioner is satisfied that the expiration of the anti-dumping measures applicable to Q&T steel plate exported to Australia from Finland, Japan and Sweden would lead, or would be likely to lead, to a continuation of, or a recurrence of, the dumping and material injury that the anti-dumping measures are intended to prevent.

13.2 Recommendations

The Commissioner recommends that the Minister declares:

pursuant to section 269ZHG(1)(b), that she has decided to secure the continuation of the anti-dumping measures relating to Q&T steel plate exported to Australia from Finland, Japan and Sweden with effect from 6 November 2019.

The Commissioner recommends that the Minister be satisfied that:

pursuant to sections 269T(2) and (3), like goods are wholly manufactured in Australia;

pursuant to section 269TAB(3), sufficient information has not been furnished to enable the export price of quenched and tempered steel plate exported to Australia from Finland and Japan to be ascertained under the section 269TAB(1);

pursuant to section 269TAC(6), sufficient information has not been furnished to enable the normal value of Q&T steel plate exported to Australia from Finland and Japan to be ascertained under the preceding sections of section 269TAC;

The Commissioner recommends that the Minister determine that:

the export price

for exports by ‘uncooperative and all other’ exporters from Japan, under section 269TAB(3), having regard to all relevant information, specifically the weighted average export price (at the Free on Board level) as was reported in the ABF import database, as set out in Confidential Attachment 7.2 of this report;

for exports by SSAB EMEA from Sweden:

to unrelated customers, under section 269TAB(1)(a), as the price paid by the importer to the exporter less transport and other costs arising after exportation as set out in Chapter 7 and Confidential Attachment 7.1 of this report;

to SSAB AU, under section 269TAB(1)(c), having regard to all the circumstances of the exportation, as set out in Chapter 7 and Confidential Attachment 7.1 of this report;

for exports by ‘uncooperative and all other’ exports from Sweden under

section 269TAB(3) using SSAB EMEA’s weighted average export price, as set out in the Confidential Attachment 7.1 of this report;

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for exports by ‘uncooperative and all other’ exports from Finland under

section 269TAB(3) using SSAB EMEA’s weighted average export price, as set out in the Confidential Attachment 7.1 of this report;

the normal value

for quenched and tempered steel plate exported from Sweden by SSAB EMEA:

for 16 export models found to have sufficient volumes of domestic sales made in the OCOT, under section 269TAC(1), as the price paid or payable for like goods as set out in Confidential Attachment 7.1 of this report;

for two exports models, one found to have insufficient volumes of domestic sales made in the OCOT, and one found to have an absence of domestic sales, under section 269TAC(1), as the price paid or payable for surrogate models with specification adjustments, as set out in Confidential Attachment 7.1 of this report;

for two export models found to have an absence of domestic sales and no suitable surrogate, under section 269TAC(2)(c), as the cost of production or manufacture of the goods in Sweden, on the assumption the goods had been sold for home consumption in the OCOT in Sweden, plus the SG&A costs and profit associated with such sales, as adjusted in accordance with section 269TAC(9) and as set out in Confidential Attachment 7.1 of this report;

for quenched and tempered steel plate exported from Finland, Japan and Sweden by ‘uncooperative and all other’ exporters, under section 269TAC(6), having regard to all relevant information and in particular:

for quenched and tempered steel plate from Finland and Sweden, by having regard to the normal values established for SSAB EMEA (the cooperating exporter from Sweden), as set out in Confidential Attachment 7.1 of this report;

for quenched and tempered steel plate from Japan, based on the “all other exporters” normal value established in Report 234 (the original investigation) with an adjustment made for the movement in the export prices between the two inquiry periods, as set out in Confidential Attachment 7.2 of this report;

quenched and tempered steel plate exported to Australia by all exporters from Finland, Japan and Sweden are taken to have been dumped over the inquiry period, and the dumping margins for exporters in respect of those goods in that period is the difference between the weighted average of export prices over that period and the weighted average of corresponding normal values over that period as set out in Chapter 7 and in Confidential Appendix 7.1 and 7.2 of this report;

pursuant to subsection 269ZHG(4)(iii), the notice continues in force after 5 November 2019 but that, after that day, the notice has effect, in relation to exporters generally, as if the Minister had fixed different specified variable factors in relation to exporters generally, relevant to the determination of duty, being those variable factors set out in Confidential Attachment 7.1 and 7.2 of this report;

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in accordance with subsection 8(5BB) of the Dumping Duty Act, and the Customs Tariff (Anti-Dumping) Regulation 2013 (the Regulation), that the interim dumping duty is an amount which will be worked out in accordance:

with the combination of fixed and variable duty method pursuant to subsections 5(2) and (3) of the Regulation as applied to all exporters from Finland

with the ad valorem duty method pursuant to subsection 7 of the Regulation as applied to all exporters from Japan, and

with the combination of fixed and variable duty method pursuant to subsections 5(2) and (3) of the Regulation as applied to SSAB EMEA and all other exporters from Sweden.

The Commissioner recommends that the Minister direct that:

pursuant to subsection 269TAC(8), adjustments be made to the normal value for exports of quenched and tempered steel plate exported to Australia from SSAB EMEA (the Swedish exporter), where normal value calculated under subsection 269TAC(1), are necessary to ensure fair comparison of normal values with export prices as outlined in Table 5 of this report.

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14 APPENDICES AND ATTACHMENTS

Confidential Attachment 2.1 Market analysis

Confidential Attachment 6.1 Economic condition of Australian industry

Confidential Attachment 7.1 Variable factors – Finland and Sweden

Confidential Attachment 7.2 Variable factors – Japan

Confidential Attachment 9.1 Analysis of Bisalloy undercutting claims

Confidential Attachment 9.2 Analysis of SSAB undercutting claims

Confidential Attachment 9.3 Undercutting analysis Sweden

Confidential Attachment 9.4 Price analysis of end users who made submissions

Confidential Attachment 9.5 Analysis of direct competition and common customers

Confidential Attachment 9.6 Undercutting analysis Japan

Confidential Attachment 9.7 Analysis of end user responses to the Commission’s request for evidence

Confidential Attachment 9.8 Production costs

Confidential Attachment 9.9 Materiality of injury

Confidential Attachment 10.1 USP and NIP calculations

Confidential Attachment 10.2 Effective rate of duty

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FINAL REPORT NO. 506 · Following analysis of the available evidence and giving due consideration...

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