Statement of reasons—Preliminary determinations: Cast Iron Soil Pipe (CISP 2025 IN)

Definition

[17] For the purpose of these investigations, subject goods are defined as:

Additional product information^{Footnote 32}

[18] CISP is a non-malleable cast iron pipe produced in a variety of sizes and used as a component for sanitary and storm drain, waste, and vent piping. CISP may be called “soil pipe”, “drainage pipe” or simply “pipe” and is used in residential, commercial, and industrial construction, as well as public buildings such as schools and hospitals. Additionally, CISP may be used for storm drainage from roofs, yards, areaways, and courts.

[19] CISP is classified as either hub and spigot pipe or hubless pipe. CISP is generally distinguished from other types of non-malleable cast iron pipe by the manner in which it is connected to cast iron soil pipe fittings. Hub and spigot pipe has hubs into which the spigot (plain end) of another pipe or of a fitting is inserted. The joint is sealed with a compression gasket or molten lead and oakum. Hubless pipe is manufactured without a hub and is joined to a fitting or another pipe using a hubless coupling that fits over the ends of the pipe and fitting or the ends of the pipes and is tightened to seal the joint.

[20] In Canada, CISP is governed by Canadian Standards Association (CSA) specification B70, while in the United States, CISP is governed by Cast Iron Soil Pipe Institute (CISPI) 301 as well as American Society for Testing and Materials (ASTM) A888 and A74 standards.

[21] There are four types of cast iron: (1) gray cast iron (i.e.: CISP, non-malleable cast iron); (2) white cast iron; (3) ductile cast iron; and (4) malleable cast iron. Gray iron contains interconnected graphite flakes which form during solidification of the iron. Non-malleable cast iron does not include ductile iron, white cast iron, or malleable iron, which are all different products sold for different uses at different price points. Ductile cast iron (also referred to as ductile iron) contains graphite that occurs as spheroids owing to the addition of a small amount of magnesium to the molten iron and malleable cast iron contains graphite which occurs as irregularly shaped nodules as a result of heat treatment after the castings are formed. The form in which the graphite occurs in the cast iron determines a range of properties in the cast iron. Ductile cast iron is typically used for pressurized water transmission and is sold at higher prices compared to gray cast iron due to higher costs of production. Notably, it can be downward substitutable in applications that require gray cast iron or CISP, although the opposite is not possible as gray cast iron is non-malleable. White cast iron derives its name from its silvery or white appearance. White cast iron has a brittle and hard cementite microcrystalline structure.

Production process^{Footnote 33}

[22] CISP is manufactured by melting scrap iron (or pig iron and/or iron ore) and alloys in a cupola furnace and casting the metal into the desired shapes.^{Footnote 34} The first step in producing CISP is to screen all scrap metal for radiation and to remove any contaminated materials. The scrap metal is then transferred to a storage area until it is time to melt the metal in the cupola furnace. In a vertically erected, cylindrical cupola furnace, an initial layer of coke is ignited and then the scrap and alloys, coke, and limestone (which helps remove coke ash and other impurities), are loaded in alternating layers. Alloys added to the melt include ferrosilicon and ferromanganese, among others, although alloys only account for around 1 to 2 percent of the total volume of metal. Tuyeres (nozzles) inject combustion air or blast air heated up to 600 degrees Fahrenheit into the furnace. As the initial inputs are reduced, additional scrap, coke, and limestone are added to the furnace, resulting in a melting process that is usually continuous. The molten metal is discharged through a tap hole near the bottom of the furnace and is stored in a holding furnace.

[23] The molten metal from the cupola furnace is cast into CISP in spinners using centrifugal casting. In the centrifugal pipe casting process, molten metal transported from the cupola furnace is added to a metal mold. The ends of the mold are then sealed. The mold is rotated on a horizontal axis to create a centrifugal force while the molten metal is added to the mold. The centrifugal force causes the molten metal to spread uniformly onto the mold’s inner surface to the desired dimensions of the pipe. The molten iron is allowed to cool inside the rotating mold until the iron solidifies, at which point the pipe is removed from the mold and moved to the foundry’s cleaning and finishing department.

[24] Cleaning the CISP after it is removed from the molds involves removing burrs and sharp edges on the ends of the pipe. After the CISP is cleaned, it is inspected and tested before it receives any finishing it might need. For example, CISP may be finished with an asphaltic coating, applied by dipping the pipe into a bath of coating material.

Classification of imports

[25] The subject goods are normally imported under the following tariff classification numbers:

1. 7303.00.00.10
2. 7303.00.00.90

[26] The listing of tariff classification numbers is for convenience of reference only. The tariff classification numbers include non-subject goods. Also, subject goods may fall under tariff classification numbers that are not listed. Refer to the product definition for authoritative details regarding the subject goods.

Like goods and class of goods^{Footnote 35}

[27] Subsection 2(1) of SIMA defines “like goods” in relation to any other goods as “…(a) goods that are identical in all respects to the other goods, or (b) in the absence of any such goods…, goods the uses and other characteristics of which closely resemble those of the other goods.” In considering the issue of like goods, the Canadian International Trade Tribunal (CITT) typically looks at a number of factors, including the physical characteristics of the goods, their market characteristics, and whether the domestic goods fulfill the same customer needs as the subject goods.

[28] With respect to the domestically produced CISP, the complainant stated that they are capable of producing goods that are either identical to or directly competitive with the CISP products included in the scope of the complaint. The complaint submits that domestically produced CISP and CISP imported from China have the same general inputs and methods of manufacturing, the same market characteristics and fulfill the same customer needs.

[29] For the purposes of this analysis, like goods consist of domestically produced CISP described in the product definition.

[30] After considering questions of use, physical characteristics and all other relevant factors, the CBSA is of the opinion that subject goods and like goods constitute only one class of goods.

[31] In its preliminary injury inquiry for these investigations, the CITT further reviewed the matter of like goods and classes of goods. On September 29, 2025, the CITT issued its preliminary inquiry statement of reasons, indicating that:

Domestic producers

[32] Besides the complainant, there are no other known producers of CISP in Canada.

Normal value

[45] Normal values are generally estimated based on the domestic selling prices of like goods in the country of export, in accordance with the methodology of section 15 of SIMA, or on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, plus a reasonable amount for profits, in accordance with the methodology of paragraph 19(b) of SIMA.

Export price

[46] The export price of goods sold to importers in Canada is generally estimated in accordance with the methodology of section 24 of SIMA based on the lesser of the adjusted exporter’s sale price for the goods or the adjusted importer’s purchase price. These prices are adjusted where necessary by deducting the costs, charges, expenses, duties and taxes resulting from the exportation of the goods as provided for in subparagraphs 24(a)(i) to 24(a)(iii) of SIMA.

[47] Where there are sales between associated persons and/or a compensatory arrangement exists, the export price is estimated based on the importer’s resale price of the imported goods in Canada to unrelated purchasers, less deductions for all costs incurred in preparing, shipping and exporting the goods to Canada that are additional to those incurred on the sales of like goods for use in the country of export, all costs included in the resale price that are incurred in reselling the goods (including duties and taxes) or associated with the assembly of the goods in Canada and an amount representative of the average industry profit in Canada as provided for in paragraphs 25(1)(c) and 25(1)(d) of SIMA.

Margin of dumping

[48] The estimated margin of dumping by exporter is equal to the amount by which the total estimated normal value exceeds the total estimated export price of the goods, expressed as a percentage of the total estimated export price. All subject goods imported into Canada during the POI are included in the estimation of the margins of dumping of the goods. Where the total estimated normal value of the goods does not exceed the total estimated export price of the goods, the margin of dumping is zero.

Background of section 20 inquiry

[49] Section 20 is a provision of SIMA that may be applied to determine the normal value of goods in a dumping investigation where certain conditions prevail in the domestic market of the exporting country. In the case of a prescribed country under paragraph 20(1)(a) of SIMA, it is applied where, in the opinion of the CBSA, the government of that country substantially determines domestic prices and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market.^{Footnote 39}

[50] The provisions of Section 20 are applied on a sector basis rather than on the country as a whole. The sector reviewed will normally only include the industry producing and exporting the goods under investigation.

[51] The complainant alleges that the conditions described in Section 20 of SIMA prevail in the iron pipe sector in China. That is, the complainant alleges that this sector does not operate under competitive market conditions and consequently, domestic prices of CISP established in China would not be reliable for determining normal values.

[52] The CBSA would like to draw parallels between iron, more particularly cast iron, and steel. Iron is a naturally occurring metallic element, whereas steel is an alloy of concentrated iron, containing additional elements such as manganese, nickel, chromium, etc., with a minute amount of carbon. Carbon content ranges from 2% to 4% in cast iron and from 0.15% to 2% in steel.^{Footnote 40}

[53] The CBSA is of the view that iron and steel are related in the metallurgy realm; they both have the same roots but are engineered differently. Therefore, information available for steel products, with regard to the existence section 20 conditions, may apply to iron products.

[54] Based on the CBSA research^{Footnote 41} and for the purposes of this investigation, the iron pipe sector encompasses metallic pipes manufactured from ferrous materials or iron-containing alloys, with iron predominating by weight over each of the other contained elements, including, among others, cast iron pipes, carbon steel pipes, alloy steel pipes and stainless steel pipes. Cast iron pipes include CISP (grey cast iron), white cast iron, ductile cast iron, malleable cast iron and others. As such, for the purposes of the Section 20 inquiry, the iron pipe sector in China is the sector under review.

[55] In the event that the CBSA forms the opinion that domestic prices of CISP in China is substantially determined by the government, and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be if they were determined in a competitive market, the normal values of the goods under investigation will be determined, pursuant to paragraph 20(1)(c) of SIMA, where such information is available, on the basis of the domestic selling prices or the aggregate of the cost of production, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits of like goods sold by producers in any country designated by the CBSA and adjusted for price comparability; or, pursuant to paragraph 20(1)(d) of SIMA, where such information is available, on the basis of the selling price in Canada of like goods produced and imported from any country designated by the CBSA and adjusted for price comparability.

Analysis of section 20 conditions

Government control analysis

[56] This section will present the CBSA’s analysis of the extent the Government of China exerts control over the iron pipe sector in China, by examining the following:

• Government ownership and control over the domestic iron and steel industry
• Government control over the domestic price of iron
• Government subsidization of the domestic CISP industry
• Government intervention to provide low-priced input for CISP production

Government ownership and control over the domestic iron and steel industry

[57] The State-owned Assets Supervision and Administration Commission (SASAC) is a powerful agency under China’s State Council. The Party Committee of SASAC performs the responsibilities mandated by the Central Committee of the Chinese Communist Party.

[58] It acts as the investor on behalf of the state, supervising the preservation and growth of state-owned assets; appoints and removes top executives of SOEs, evaluates their performance, and administers rewards or sanctions; guides restructuring and modernization of SOEs, including improving corporate governance and aligning with market-oriented practices; ensures SOEs comply with national laws, regulations, and workplace safety standards; manages the budgeting and financial planning related to state-owned capital operations; drafts laws and regulations concerning state asset management and supervises local asset management efforts.^{Footnote 42}

[59] According to the World Trade Organization November 19, 2024, Trade Policy Review report of China, the number of SOEs in both the industrial and construction sectors increased over the review period. While SOEs can act as instruments for implementing government policies, supporting national industrial goals, and maintaining state control over critical sectors, the authorities state that China's SOEs consistently base their actions on commercial considerations and engage in business activities according to market-oriented principles and the rule-of-law.^{Footnote 43}

[60] State ownership of companies in China coexists with diverse private ownership forms, ranging from wholly SOEs to mixed-ownership structures. The authorities consider that the state-owned economy is the leading force of the national economy, and the non-public economy is an important component of the socialist market economy.^{Footnote 44}

[61] According to the Chinese authorities, in 2023, the crude steel output of private steel enterprises accounted for about 60% of the national total, while the state-owned enterprises accounted for around 40%, and the top 10 steel enterprises accounted for 41% of the national crude steel output. The industry has several large state-owned groups that are owned via shareholdings by local authorities, provincial governments, and the Central Government.^{Footnote 45}

[62] The table below updates the figures for the top 10 steel enterprises’ percentage of the national steel output for 2024, which amounts to 43.7%, an increase of 2.7% from the previous year. The top 6 SOEs represent 30.6% of the total steel production in 2024, which is considerable. Steel SOEs are big and organized, hence their influence over the market, whereas private steel enterprises are small and scattered.

[63] Through its research, the CBSA has identified key SOEs in the iron pipe sector in addition to key players in the cast iron pipe subsector.^{Footnote 47} The following table summarizes the results.

[64] The CBSA has also noticed that some of the identified key players in the cast iron subsector are privately owned companies namely: Jiangsu Yongyi Pipe Co., Ltd., HengTong Casting Co., Ltd., and Shanxi Ductile Iron Pipes Co., Ltd. To sum up, out of the eight key cast iron pipe companies identified five were subsidiaries of SOEs.

[65] Additionally, the majority of the SOEs and key cast iron companies identified are members of the China Iron and Steel Association (CISA) members, which adds another layer of control since the association is guided by the Chinese Communist Party’s lines, rules and policies.^{Footnote 53}

[66] It is worthy of note that exporters that responded to the RFI are privately owned companies, none of which are subsidiaries of an SOE, a key player or a CISA member. However, it is difficult to determine whether SOE-owned cast iron pipe companies dominate this subsector due to unavailable public statistical data.

[67] In sum, China’s Central Government maintains firm control over the domestic iron pipe sector through a dual approach of state ownership oversight and industry self-regulation. The SASAC acts as the government’s equity representative, appointing leadership, approving mergers, and restructuring major iron and steel, including pipe, producers to form national champions.

[68] Meanwhile, CISA serves as the industry’s coordinating body, uniting domestic iron and steel output under a single non-profit umbrella. CISA not only aggregates production data and advocates policy positions, but also negotiates on behalf of Chinese iron and steel enterprises in international forums.

[69] Together, SASAC’s capital-allocation mechanisms and CISA’s market-coordination functions ensure that China’s iron pipe industry remains both strategically directed and competitively positioned. This governance model tightly integrates state priorities such as infrastructure development, environmental targets, and national security with the sector’s commercial imperatives, enabling swift policy implementation and collective industry responses.

Government control over the domestic price of iron

[70] Iron and steel prices are shaped by shifts in supply, demand, and production costs. From the 2023–2024 “Work Plan for Stabilizing Growth in the Steel Industry”, the most impactful measures fall into three categories: supply-side, demand-side, and market-policy environment.

[71] On the supply-side measures: upgrading blast furnaces with advanced emission controls raises their capital and operating costs, which pushes up mill price quotes when compliance fees or carbon levies are passed on; strict swap rules and the retirement of small, outdated mills remove cheap steel supply, tightening overall capacity and underpinning domestic prices; incentives for scrap-based electric-arc furnace (EAF) projects boost flexible, market-responsive output. This shifts volume from coal-based routes and introduces more volatility due to scrap price swings; and fast-tracking new mines and overseas partnerships secures ore availability, smoothing raw-material shortages and capping sudden steel price spikes.

[72] On the demand-side measures: driving public-building retrofits, bridges, tunnels, and modular projects boosts demand for specialized profiles and lifts premiums on higher-grade steel; channeling steel into 5G towers, data centers, rural revitalization, renewables, and smart-tech programs expands tonnage demand and pushes up broad steel quotes; and reclassifying high-tech steels and steering volumes toward global tenders tightens domestic supply, nudging local prices higher.

[73] On the market-policy environment measures: merging mid-tier players into super-large groups boosts market concentration, strengthens pricing power, and curbs undercutting; R&D super-deductions, energy-saving credits, green-finance channels, and insurance subsidies lower financing and operating costs, easing either prices or fueling reinvestments; exempting green/EAF projects from dual-control energy and resource caps unlocks preferential access to power and materials, creating cost advantages and price differentiation; and enhanced project tracking and regular pricing analyses enable swift quote adjustments, preventing abrupt price collapses or runaway spikes.

[74] Additionally, the 14th Five-Year Plan (FYP)^{Footnote 54} introduces a capacity replacement policy across steel and other raw‐materials sectors. It orders the retirement of outdated steelmaking capacity before any new projects can proceed and sets energy‐intensity and emissions-reduction targets. By proactively controlling capacity additions and retirements, central or provincial governments directly shape supply growth trajectories, and thus price dynamics, in the domestic iron and steel markets.^{Footnote 55}

[75] The Government of China interference is evidenced in the following: In August 2025, local authorities in Tangshan, the country’s top steel‐making hub, were ordered to impose temporary shutdowns of blast furnaces and steel mills ahead of a military parade in Beijing. By curbing supply on a predetermined schedule, this directive helped underpin onshore iron ore and steel prices despite weak global markets.^{Footnote 56}

[76] China’s National Development and Reform Commission (NDRC) and allied ministries released a plan in May 2024 mandating continued limits on annual crude steel output for environmental and anti‐overcapacity reasons. This plan explicitly targets steel output, reinforcing China’s ability to restrain domestic steel volumes and bolstering prices.^{Footnote 57}

[77] In 2023, the CISA highlighted government-backed development of the West Anshan iron-ore project to produce 10 million mt annually. This state-led project aims to mitigate reliance on seaborne ore and smooth out price swings by boosting domestic supply of iron ore concentrate, a principal input into pig iron and steelmaking.^{Footnote 58}

[78] Beyond volume controls, the National Development and Reform Commission (NDRC) routinely publishes “benchmark” price ranges for bulk commodities (including iron ore) and conveys price-stabilization targets to provincial price bureaus. These non-binding but closely watched “guidance prices” serve as reference levels for state-owned mills and traders, effectively anchoring onshore trading at or near government-recommended price bands.^{Footnote 59}

[79] In sum, the Government of China has at its disposal all the tools in its arsenal to control the price of iron/steel products, including pipes, in the way it desires. The combination of supply rationalization, demand stimulation, and policy incentives is poised to support a firmer iron/steel-price environment with moderate volatility. Cost pressures from green upgrades will push base prices upward, while structural consolidation and predictable demand will curb wild price swings. Continuous monitoring of key indicators will be essential to anticipate turning points in the market and the consequent Government of China action.

Government subsidization of the domestic CISP industry

[80] In the past, the CBSA has found that the Government of China subsidized the iron pipe sector and that the amounts of subsidy were not insignificant. This is evidenced in the carbon steel welded pipe, large diameter carbon and alloy steel line pipe, carbon and alloy steel line pipe, oil country tubular goods, steel piling pipe, seamless carbon or alloy steel oil and gas well casing and seamless casing previous investigations and re-investigations.

[81] Such subsidies contribute to the existence of section 20 conditions in different iron pipe subsectors in which Chinese domestic selling price of iron pipes were found to be distorted and therefore support the initiation of a section 20 inquiry in the CISP investigation.

[82] At the preliminary stage of the investigation, the CBSA has received no information from the Government of China regarding subsidies provided to producers of goods in the iron pipe sector, including CISP.

Government intervention to provide low-priced input for CISP production

[83] China’s central and local governments have intervened to furnish the iron pipe sector with below-market‐price inputs encompassing energy, raw materials, and finance, among others, thereby undercutting market costs and distorting both domestic and global competition. Below are some pieces of evidence:

Influence over iron ore and other material input prices

[84] Regulatory measures: China’s National Development and Reform Commission and State Administration for Market Regulation have imposed direct rules to curb speculative hoarding and stabilize prices by: shortening free-storage periods for traders, raising the cost of excessive port‐side inventories; guiding port operators to force inventories back to reasonable levels and regularly monitor price swings; and cracking down on false information, price gouging and other anti-competitive practices through targeted investigations and enforcement actions.^{Footnote 60}

[85] Additionally, the China Iron and Steel Association set up a dedicated working group, including giants Baowu, Ansteel and Shougang, to investigate sudden price surges, discipline non-standard trading and maintain normal market competition.^{Footnote 61}

[86] Market consolidation: China engineered a state-run behemoth to centralize iron ore purchasing and tame wild price swings. In 2022, China Mineral Resources Group (CMRG) was created under direct government oversight to act as a single powerful buyer. Within three years, CMRG became China’s largest importer, negotiating with global miners like BHP and Rio Tinto on behalf of over half the country’s steel mills. Its vast port stockpiles, estimated at around 20 million tonnes, function as a national reserve, released or built in counter-cyclical fashion to smooth futures volatility.^{Footnote 62}

[87] Subsidies and financial support: beyond direct regulation and consolidation, the Government of China has deployed fiscal and credit measures that indirectly prop up iron ore demand and prices. It has offered targeted credit support to steel producers, including subsidized loans and lower reserve requirements for banks to boost mill financing; issued infrastructure bonds and approved large-scale public works (hydropower, transport, urban renewal), driving sustained steel, and thus iron ore, consumption; and cut mortgage rates and eased home-purchase rules to shore up the property sector, a key end-market for steel and iron ore inputs.^{Footnote 63}

[88] In sum, by combining tighter regulation, a consolidated purchasing entity and generous financial incentives, the central government wields direct levers over both supply dynamics and demand drivers, shaping domestic iron ore prices to smooth volatility and support broader economic policy goals.

Influence over energy inputs

[89] China’s blended approach of tariff ceilings, administrative dispatch, and coal‐price interventions ripples through power markets, investments, and environmental objectives. While smoothing short-term electricity bills, these measures introduce distortions that affect generation mix, fiscal balance, and the country’s decarbonization roadmap.

[90] Benchmark pricing and off-market power deals: China’s provinces routinely set a “coal benchmark electricity price,” which is a government-mandated floor and ceiling that selected coal-fired plants can charge regardless of market conditions. These plants operate under “out-of-market” dispatch commitments, meaning grid operators order them to run to ensure baseload supply, even when market prices on day-ahead or spot markets fall well below their generation costs.^{Footnote 64}

[91] State-imposed caps on coal-fired electricity: in October 2021, the National Development and Reform Commission issued a notice raising the allowable ceiling on coal-fired power prices to 20% above the benchmark (up from 10%). This cap is fixed throughout the year and does not automatically adjust for sharp fluctuations in coal prices. High-energy-consumption sectors are entirely exempt from the cap, and many provinces swiftly saw average coal-power tariffs hit that upper limit, reflecting deliberate state intervention in price formation.^{Footnote 65}

[92] Government influence over coal prices and supply: following the 2021 power crunch, the Central Government approved a wave of mine expansions, particularly in Inner Mongolia and Shaanxi, and fast-tracked new coal projects to stabilize prices and guarantee fuel availability. The government also formalized strategic coal reserves at national and provincial levels, mirroring oil stockpile schemes, and adjusted import policies (e.g., resuming Australian coal purchases). These moves directly shaped domestic coal prices and curtailed disorderly spikes on commodity exchanges.^{Footnote 66}

[93] Administrative dispatch reinforcing price controls: beyond formal caps, grid dispatch remains heavily administrated; during low-demand periods, provincial grid operators often continue to import coal-generated power under pre-planned, off-market contracts. This practice sidelines cheaper renewables, locks in high coal usage, and reflects the state’s grip over both supply scheduling and the ultimate price paid by end users.

[94] In sum, China’s regulatory framework for coal-fired electricity, through tariff ceilings, administrative dispatch, and direct coal-price interventions, has successfully dampened short-term volatility and guaranteed baseload security. However, it also embeds hidden subsidies, skews market signals, and sidelines renewables, forcing provincial governments and state grids to shoulder fiscal strains. In the absence of transparent price formation, investment in low-carbon technologies remains uncertain, and the country’s ambitious decarbonization targets risk being delayed.

Influence over export taxes

[95] China’s recent overhaul of import duties and export taxes on steelmaking materials marks a pivotal effort to recalibrate both domestic production costs and global trade flows. By slashing import duties to zero on scrap, pig iron, billets and iron ore while imposing new export levies on high-purity pig iron, ferrosilicon and ferrochrome, the Central Government seeks to lower on-shore input expenses, curb outbound shipments of key feedstocks, and discourage exports of higher-value finished products.

[96] Impact on domestic steel prices: by cutting import duties to zero on scrap, pig iron, billet and iron ore, China substantially lowered the cost of key raw materials for its steelmakers. Domestic mills can now source cheaper inputs, reducing overall production costs and, in theory, exerting downward pressure on onshore steel prices.^{Footnote 67}

[97] At the same time, eliminating the 13% VAT rebate on exports discouraged outbound shipments of higher-value steel products. With more material retained for the domestic market, supply expanded and further restrained local prices, despite record-high billet and hot-rolled coil levels in early 2021, thanks to prior tightness in capacity and surging energy costs.^{Footnote 68}

[98] Impact on international steel prices: export tax hikes on high-purity pig iron (15%), ferrosilicon (25%) and ferrochrome (20%) curbed Chinese exports of these semi-finished inputs. As China is a major global supplier, reduced overseas availability lifted prices abroad, especially for high-value alloys used in specialty steels.

[99] Meanwhile, the removal of export rebates on finished products like hot-rolled coil and rebar made Chinese steel less competitive on world markets. Buyers facing higher landed costs began sourcing from other regions, which fed into firmer international steel prices, particularly in Southeast Asia and Europe where demand was rebounding in 2021.^{Footnote 69}

[100] In sum, China’s elimination of import duties has meaningfully reduced raw material costs for local mills, expanding domestic supply and tempering onshore iron and steel prices. Simultaneously, the removal of export VAT rebates on finished products and the introduction of export taxes on specialty inputs have restrained Chinese shipments abroad, tightening global availability and underpinning higher international prices for alloys and premium steels. Together, these measures illustrate China’s strategic balancing act: supporting domestic industry amid environmental and capacity-control goals, while subtly influencing global steel competitiveness.

Influence over labour costs in China

[101] Restricted unionization: in China, independent labour unions are illegal and only the All-China Federation of Trade Unions (ACFTU) is permitted to operate. The ACFTU is controlled by the state and the Chinese Communist Party, limiting its ability to represent workers’ interests or engage in genuine collective bargaining. As a result, enterprises, including iron and steel mills, set wages and working conditions unilaterally, suppressing upward pressure on labour costs.^{Footnote 70}

[102] Hukou system: the household registration (hukou) system ties access to social welfare, healthcare, education, and housing to a worker’s place of origin. Rural migrants in steel-producing regions lack urban hukou, which forces them into low-paid, precarious jobs without public benefits. This segmented labour pool is highly dependent on wages alone, weakening bargaining power and keeping overall labour costs in the sector low.^{Footnote 71}

[103] Non-compliance with international labour standards: although China’s 1994 Labour Law and 2009 Labour Contract Law codify standards on minimum wage, overtime pay, written contracts, and safe working hours, enforcement is notoriously weak. Local officials prioritize GDP growth and political stability over workers’ rights, often failing to inspect steel plants or penalize violations. Employers routinely delay or underpay wages and disregard overtime limits with little fear of sanction.^{Footnote 72}

[104] Surplus labour and state-owned enterprise structure: many large state-owned iron and steel enterprises maintain staffing levels well above efficient labour requirements. Since these SOEs can rely on government bailouts, debt-to-equity swaps, and ongoing financial support, there is little incentive to rationalize headcounts. The resulting surplus labour depresses wages across the industry, as mills can keep offering below-market rates without losing their workforce.^{Footnote 73}

[105] State subsidies and financial interventions: central and local governments deploy a range of subsidies, cheap credit from state banks, tax breaks, land grants, and direct equity infusions, to shore up steel producers. State-directed mergers and relocations under five-year plan targets preserve uncompetitive capacity, enabling firms to avoid market-driven wage increases. For example, Tianjin Steel Pipe Group benefited from tens of billions of RMB in debt relief and new loans when absorbed into CITIC Special Steel.^{Footnote 74}

[106] In sum, by restricting genuine union representation, segmenting the labour force through hukou, under-enforcing labour laws, sustaining surplus SOE employment, and funneling subsidies, China’s central and local governments effectively cap labour costs in the iron and steel industry. These mechanisms combine to shield firms from market pressures that would otherwise drive up wages and reduce overcapacity, perpetuating a cycle of low-cost production with significant social and economic ramifications.

Iron and steel industry excess capacity remains persistent

[107] China’s iron and steel industry has expanded rapidly over the past two decades, driven by massive infrastructure spending and urbanization. This surge in capacity has outpaced domestic demand, leading to persistently low utilization rates across mills. The iron pipe sector, in particular, illustrates this imbalance as production capacity exceeds market needs.

[108] This has materialized in a slowdown in construction and infrastructure projects, which has eroded the iron-pipe sector’s natural pull, leaving producers with more capacity than buyers.^{Footnote 75} As domestic orders dwindle, mills have flooded overseas markets with discounted pipe volumes, sustaining output but transferring excess supply onto global buyers at thin margins.

[109] Additionally, numerous small- and medium-sized pipe makers operate independently, many with single lines. This fragmentation inhibits scale economies and forces marginal players to keep running below optimal utilization just to cover fixed costs. On the financing policy front, cheap credit and governments emphasis on GDP growth encouraged mills to expand or replace capacity rather than retire outdated facilities, locking in oversupply. Furthermore, the reluctance to retire legacy assets have slowed the permanent shutdown of inefficient blast furnaces and aging pipe-making lines, to preserve social-stability and local employment priorities.^{Footnote 76}

[110] In sum, excess capacity in China’s iron and steel industry, and especially the iron pipe segment, stems from a combination of policy incentives, fragmented production, and slowing downstream demand. The oversupply will eventually depress global prices, trigger trade disputes, and squeeze margins domestically and abroad.

Summary of government control analysis

[111] The iron pipe sector is steered through a tightly coordinated state-market partnership in which SASAC and CISA align capital allocation, executive appointments, capacity planning, and international engagement with China’s strategic goals. The government’s toolkit spans supply-side mandates such as shuttering inefficient capacity, centralizing ore purchases via CMRG, enforcing speculative-hoarding curbs and energy-price ceilings and demand-side stimulus, including infrastructure bonds, subsidized credit and preferential tax treatment.

[112] It clamps down on labour costs through the hukou system and a single, state-run, union and reshapes trade flows by zeroing import duties on key feedstocks while slapping export levies on high-value alloys. Environmental mandates and green-technology upgrades have lifted the industry’s cost floor even as regulatory price bands, reserve releases and off-market dispatch commitments dampen volatility. These interlocking measures have succeeded in securing ample, low-cost inputs and anchoring domestic iron and steel prices, but they have also fueled chronic overcapacity, distorted global markets and maintained pressure on wages.

[113] In conclusion, the CBSA research confirms the complainant’s allegations that the panoply of intervention measures used by the Government of China has indirectly impacted domestic CISP prices, such that they may not be substantially the same as they would be if they were determined in a competitive market.

Price analysis

[114] The CBSA was unable to find representative pricing data for CISP sold in China from any publicly available sources.

[115] In its price analysis, the CBSA relied on the responses from four producers that provided domestic sales databases, namely Dingxiang County Yutai Forging and Casting Co., Ltd.,^{Footnote 77} Shanxi Golden Autumn Foundry Co., Ltd.,^{Footnote 78} Wuan City Yongtia Foundry Industry Co., Ltd.^{Footnote 79} and Shanxi Xuanshi Industrial Group Co., Ltd.^{Footnote 80}

[116] The CBSA has also relied on the responses from two surrogate producers in the United States namely Charlotte Pipe and Foundry Company^{Footnote 81} and Tyler Pipe.^{Footnote 82} The CBSA compared the Chinese domestic CISP weighted average net selling prices with prices in the United States, where information was available to do so. The results showed that prices of CISP sold domestically in China during the POI were lower than prices in the United States.

[117] The CBSA then analyzed the prices of two major key inputs in the production of CISP i.e., pig iron/iron ore and steel scrap. Pig iron prices were lower in China than in Europe and the United States, whereas steel scrap prices were higher in China than in the United States during the POI.

[118] During the final phase of the investigations, the CBSA will continue its analysis into whether CISP prices in China are substantially different than those in competitive markets.

Preliminary results of the section 20 inquiry of China

[119] Despite the influence of global demand shifts, raw material costs, and supply-chain dynamics on China’s iron pipe market, government intervention remains a pivotal price driver. Central authorities wield macroeconomic tools such as fiscal stimulus, and large-scale infrastructure spending, while provincial and municipal bodies deploy microeconomic measures like production quotas, environmental mandates, and targeted subsidies. These layered interventions often outweigh purely market-driven forces, creating price adjustments that reflect policy goals as much as economic fundamentals. In sum, although broad economic factors set the stage, it is the strategic decisions of central and local governments that ultimately steer iron pipe pricing in China.

[120] For the purposes of the preliminary determination of dumping, the CBSA has formed the opinion that domestic prices in the iron pipe sector in China are substantially determined by the Government of China and that domestic prices are not substantially the same as they would be in a competitive market.

[121] During the final phase of the dumping investigation, the CBSA will continue the Section 20 inquiry and collect and analyze relevant information.

Cooperative exporters

[122] As part of the Section 20 inquiry, the CBSA identified the United States, France and India as reasonable surrogate countries for China as they produce comparable goods, have globally competitive producers, and operate under market conditions. Surrogate RFIs were sent to 12 potential producers and exporters of CISP in the United States, France and India. The CBSA received two responses to the surrogate producer RFI from producers of CISP in the United States, namely: Charlotte Pipe and Foundry Company^{Footnote 83} and Tyler Pipe^{Footnote 84}.

[123] As part of the Section 20 inquiry, the RFIs sent to importers requested information on re-sales in Canada of CISP imported from sources other than China. The CBSA received seven responses to the Importer RFI; however, the importers did not provide information concerning the purchase and/or resale of like goods from non-named countries.

[124] For the exporters that submitted substantially complete responses to the dumping RFI and were determined to be the exporter for SIMA purposes, normal values were estimated, following a methodology similar to that of subparagraph 20(1)(c)(i) of SIMA, based on domestic selling price information provided by surrogate producers in the United States.

[125] The following table summarizes the cooperative exporters’ determination of margins of dumping.

[126] During the POI, all of the subject goods exported to Canada by the cooperative exporters were sold to unrelated importers. Export prices were estimated using the methodology of section 24 of SIMA, as described in the Export price section.

All other exporters

[127] In establishing the methodology for estimating the normal values and export prices for all other exporters, the CBSA considered all of the information on the administrative record, including the complaint filed by the domestic industry, the CBSA’s estimates at the initiation of the investigation, information submitted by parties that responded to the dumping RFI and surrogate producer RFI, and CBSA customs entry documentation.

[128] The CBSA decided that the normal values estimated for all other exporters of subject goods from China would be estimated based on information from the exporters in China that provided substantially complete RFI responses for purposes of the preliminary determination. The CBSA finds this information to be more relevant and reflective of the trading practices of exporters in China than the information provided in the complaint or estimated at initiation.

[129] Based on the facts available, for all other exporters that did not provide a substantially complete response to the dumping RFI, normal values of subject goods originating in or exported from China were estimated based on the highest amount by which an estimated normal value exceeded the estimated export price (expressed as a percentage of the export price), on an individual transaction basis for the cooperative exporters during the POI. This methodology relies on information related to goods that originated in China (for the export price) and the United States (for the normal value) and in general, provides an incentive for exporters to participate by ensuring that exporters that have provided the necessary information requested in a dumping investigation will have a more favourable outcome than those that have not participated. The transactions were examined to ensure that no anomalies were considered, such as very low volumes and values, effects of seasonality, or other business factors. No such anomalies were identified.

[130] The CBSA considered that the information submitted on the CBSA customs entry documentation was the best information on which to estimate the export price of the goods as it reflects actual import data.

[131] Using the above methodology, for the preliminary determination, the estimated margin of dumping for all other exporters of subject goods is 312.4%, expressed as a percentage of the export price.

Summary of preliminary results: Dumping

[132] A summary of the preliminary results of the dumping investigation respecting all subject goods shipped to Canada during the POI are as follows:

Negligibility

[133] Under section 35 of SIMA, the CBSA is required to terminate an investigation prior to the preliminary determination if the volume of goods of a country is negligible.

[134] Pursuant to subsection 2(1) of SIMA, the volume of goods of a country is considered negligible if it accounts for less than 3% of the total volume of all goods of the same description that are released into Canada from all countries.

[135] The table above confirms that the volume of imports from China is above 3% of the total volume of goods released into Canada. Based on the definition above, the volume of imports from China are not negligible.

Insignificance

[136] If, in making a preliminary determination, the CBSA determines that the margin of dumping of the goods of an exporter is insignificant pursuant to section 38 of SIMA, the investigation will continue in respect of those goods but provisional anti-dumping duties will not be imposed on goods of the same description imported during the provisional period. Pursuant to subsection 2(1) of SIMA, a margin of dumping of less than 2% of the export price of the goods is defined as insignificant.

[137] For all exporters in China the estimated margin of dumping, expressed as a percentage of the export price, is above 2% and is, therefore, not insignificant. In respect of these goods, provisional anti-dumping duties will be imposed on goods of the same description imported during the provisional period.

Government of China

[146] The Government of China did not provide a response to the government subsidy RFI. The lack of response from the Government of China limited the CBSA’s ability to examine and verify the information required to assess financial contribution, benefit and specificity, and therefore prevented it from estimating the amount of subsidy in the prescribed manner. It also limited the CBSA’s ability to verify whether producers, or other suppliers of goods and services, are public bodies.

[147] At the initiation of the subsidy investigation, the CBSA requested information on 29 subsidy programs that could potentially confer benefits to producers/exporters of CISP in China. For the full list of programs, refer to the subsidy RFI.

[148] The CBSA will continue to analyze the information on the administrative record during the final phase of the investigation. The CBSA may also consider any other potential subsidy programs that have not yet been identified.

All exporters: China

[149] The CBSA received responses to the exporter subsidy RFI from four producers of CISP located in China and four trading companies. However, as noted above, the Government of China did not provide a response to the government subsidy RFI.

[150] The Government of China’s lack of response prevents the CBSA from being able to calculate exporter-specific subsidy rates. In absence of the required information, the CBSA must rely on the best information available to estimate the amount of subsidy.

[151] In establishing the methodology for estimating the amount of subsidy for all exporters from China, the CBSA considered all of the information on the administrative record, including RFI submissions, the complaint filed by the domestic industry, and the CBSA’s estimates at the initiation of the investigation. Due to the absence of a sufficient response from the Government of China, for all exporters the amount of subsidy for subject goods originating in or exported from China was determined using the methodology applied at the initiation of the subsidy investigation, incorporating updated export volume and value information from exporters that provided substantially complete responses to the dumping RFI in sufficient time to be considered for the preliminary determination.

[152] Using the above methodology, for the preliminary determination, the estimated amount of subsidy for all exporters in China is 16.8% expressed as a percentage of the export price.

Summary of preliminary results: Subsidy

[153] A summary of the preliminary results of the subsidy investigation respecting all subject goods shipped to Canada during the POI follows:

Negligibility

[154] Under section 35 of SIMA, the CBSA is required to terminate an investigation prior to the preliminary determination if the volume of goods of a country is negligible. Pursuant to subsection 2(1) of SIMA, a volume of goods of a country is considered negligible if it accounts for less than 3% of the total volume of all goods of the same description that are released into Canada from all countries.

[155] The table above confirms that the volume of imports from China is above 3% of the total volume of goods released into Canada. Based on the definition above, the volume of imports from China is not negligible.

Insignificance

[156] If, in making a preliminary determination, the CBSA determines that the amount of subsidy of the goods of an exporter is insignificant pursuant to section 38 of SIMA, the investigation will continue in respect of those goods but provisional countervailing duties will not be imposed on goods of the same description imported during the provisional period. Pursuant to subsection 2(1) of SIMA, an amount of subsidy of less than 1% of the export price of the goods is defined as insignificant.

[157] For all exporters, the estimated amount of subsidy, expressed as a percentage of the export price, is above 1% and is, therefore, not insignificant. In respect of these goods, provisional countervailing duties will be imposed on goods of the same description imported during the provisional period.

The Canada Border Services Agency

[163] The CBSA will continue its investigations of the dumping and subsidizing of CISP and will make final decisions by January 7, 2026.

[164] If the margin of dumping or amount of subsidy of any exporter are found to be insignificant, the CBSA will terminate the investigation in respect of goods of that exporter and any provisional duties paid or security posted will be refunded to importers, as appropriate. If the CBSA is satisfied that the goods were dumped and/or subsidized, final determinations will be made.

The Canadian International Trade Tribunal

[165] The CITT has begun its inquiry into the question of injury to the Canadian industry. The CITT is expected to issue its finding by February 6, 2026.

[166] If the CITT finds that the dumping has not caused injury, retardation or is not threatening to cause injury, the proceedings will be terminated and all provisional anti-dumping duty collected or security posted will be refunded.

[167] If the CITT makes a finding that the dumping has caused injury, retardation or is threatening to cause injury, anti-dumping duty in an amount equal to the margin of dumping will be levied, collected and paid on imports of CISP that are of the same description as goods described in the CITT’s finding.

[168] If the CITT finds that the subsidizing has not caused injury, retardation or is not threatening to cause injury, the proceedings will be terminated and all provisional countervailing duty collected or security posted will be refunded.

[169] If the CITT makes a finding that the subsidizing has caused injury, retardation or is threatening to cause injury, countervailing duty in the amount equal to the amount of subsidy on the imported goods will be levied, collected and paid on imports of CISP that are of the same description as goods described in the CITT’s finding.

[170] For purposes of the preliminary determinations of dumping or subsidizing, the CBSA has responsibility for determining whether the actual and potential volume of goods is negligible. After preliminary determinations of dumping or subsidizing, the CITT assumes this responsibility. In accordance with subsection 42(4.1) of SIMA, the CITT is required to terminate its inquiry in respect of any goods if the CITT determines that the volume of dumped or subsidized goods from a country is negligible.