Statement of Reasons—Preliminary determinations: Forged Grinding Media (FGM 2026 IN)

Product definition^{Footnote 1}

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

Additional product information^{Footnote 2}

[21] The product definition above includes references to nominal sizes in both Metric and Imperial measurements as is the common practice when referring to grinding media dimensions. Sizes in the above definition are nominal as it is a common standard in the industry to accept up to 5% tolerance from nominal to actual diameter.

[22] For the purposes of the product definition, the term “spherical” includes any shape that is generally spherical in nature regardless of variations in measured diameters from different points.

[23] Subject goods also include stamped steel grinding balls and green balls. Stamped steel grinding balls are manufactured by stamping or pressing steel rods or bars into shape, often followed by heat treatment, and are generally less dense and durable than forged steel grinding balls. Stamped steel grinding balls are typically used in lighter-duty or fine grinding applications. Green balls are steel balls that have been forged or stamped or pressed into shape but require additional heat treatment to become finished forged or stamped steel grinding balls. The heat treatment alters the metallurgical properties of the green balls and is necessary to make them suitable for use in grinding mills. Without the heat treatment, green balls generally exhibit poor impact-resistant, poor grinding efficiency, are not suitable for use in grinding operations and are, therefore, generally considered an unfinished or semi-finished product.

[24] Subject goods do not include steel cast grinding media (CGM).^{Footnote 3} CGM are made through a casting process typically followed by heat treatment to enhance their hardness and wear resistance. The process typically involves melting a high carbon, high-chromium alloy, pouring it into molds, and then subjecting the resulting balls to heat treatment.

Product use^{Footnote 4}

[25] Steel FGM balls and other grinding media are used in the copper, gold, iron ore and other mining industries to break-up ore extracted from the ground to help liberate the constituent minerals. Grinding media are also used in the production of cement.

[26] A ball mill is a type of grinding mill that is widely used in the mining industry for the extraction of ores and minerals. These mills are designed to grind and crush ore materials, releasing valuable minerals and metals. Ball mills rotate around a horizontal axis, partially filled with the material to be grounded and the grinding medium, with or without the addition of water (i.e., wet or dry mill conditions). The internal cascading effect caused by the rotation of the material to be grounded with the grinding media causes the material to be reduced to a powder or slurry. Ball mills are designed to operate continuously, fed at one end with the material to be grounded and the grinding media, and discharging the ground material at the other end.

[27] In the mining industry, dry grinding mills are primarily used when the downstream preparation process requires dry material, or in order to save water resources in dry environments. However, wet grinding is generally the norm in the Canadian mining industry. In fact, both types of mills depend on grinding media to perform the comminution process (i.e. the process of reducing the size of the ore). Small, medium, and Semi-Autogenous Grinding (“SAG”) balls are used in ball mills. The type, size, and hardness of the grinding balls vary depending on the ore and desired throughput.

Production process^{Footnote 5}

[28] FGM production involves heating high-quality steel bars or billets, hammering or pressing them into spherical shapes to align grain structure for strength, followed by controlled cooling, and precise heat treatment (quenching & tempering) to achieve specific hardness, creating tough, wear-resistant balls ideal for milling.

[29] Steel billets or steel bars, often with specific alloying elements for performance, or high-carbon steel bars, ranging from 0.8%-1.0% carbon, are used in the production of FGM. The steel billets or bars are heated to high temperatures (around 1150°C) in furnaces or induction coils to make them malleable. Hot billets or bars are fed into heavy forging machinery. They are repeatedly struck by a hammer or pressed under immense force to deform them into rough ball shapes. This process refines the grain structure, eliminating internal voids and aligning the metal’s flow for superior strength and toughness. The forged balls are gradually cooled in controlled air or water baths to prevent thermal stress cracks. A critical stage is where balls are quenched (rapidly cooled) and then tempered (heated to a lower temperature, e.g., 200-400°C) to achieve the target hardness (like 55-65 on the Rockwell Hardness C scale) and wear resistance without making them brittle. Balls are inspected for size, composition, and hardness using spectrometers and other sensors, ensuring they meet strict standards for performance in mills.

[30] According to the complainant, there are many types of high-carbon alloy steel bars used as raw materials in producing FGM, which can feature different dimensions (length and diameter), alloy, impurities (residual elements), reduction ratios etc. Most often, steel bars are made from billets that are in turn produced from scrap and alloys (in an electric arc furnace) or from iron ore pellets and alloys (in a basic oxygen furnace). The bars undergo special heat treatment and processing, the objective of which is to obtain optimum wear and impact resistance. Chemical elements (alloy), different residual elements (clean steel), segregation, reduction ratio are all key elements to creating a higher value product. Depending on the physical characteristics of the steel bar used to produce FGM, some may be considered as merchant bar quality ("MBQ”) while others, especially those used in the production of SAG balls, are considered as special bar quality (“SBQ”).

Classification of imports

[31] The subject goods are normally imported under the following tariff classification number:

7326.11.00.00

[32] However, this tariff classification number also includes non-subject goods, and subject goods may also fall under additional tariff classification numbers.

Like goods and class of goods^{Footnote 6}

[33] 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 goods described in paragraph (a), goods the uses and other characteristics of which closely resemble those of the other goods”. In considering the issue of like goods, the 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.

[34] In addressing the issue of classes of goods, the CITT typically examines whether goods potentially included in separate classes of goods constitute “like goods” in relation to each other. If those goods are “like goods” in relation to each other, they will be regarded as comprising a single class of goods. In determining the like goods and whether there is more than one class of goods, the CITT “typically considers a number of factors, including the physical characteristics of the goods (such as composition and appearance) and their market characteristics (such as substitutability, pricing, distribution channels, end uses and whether the goods fulfill the same customer needs).”^{Footnote 7}

[35] The complainant argued that subject goods and the “like goods” produced by Moly-Cop in Canada form a single class of goods. Further, subject goods and Canadian-made like goods produced by Moly-Cop Canada are virtually identical in their physical characteristics, dimensions, specifications, metallurgy and uses. Subject goods are sold to the same Canadian customers who purchase like goods from Moly-Cop Canada. The complainant submits that the FGM produced in Canada by the complainant are like goods to the subject goods.

[36] The complainant also maintained that CGM are not like goods to FGM within the meaning of paragraph 2(1)(b) of SIMA, an issue that has already been adjudicated by the CITT in certain grinding media from India.^{Footnote 8}

[37] In its preliminary injury inquiry for these investigations, the CITT further reviewed the matter of like goods and classes of goods. On March 26, 2026, the CITT issued its preliminary inquiry Reasons, indicating that it accepted at the preliminary injury inquiry stage that CGM and FGM are not like goods, and that it would conduct its analysis at this preliminary injury inquiry stage on the basis that the definition of like goods is co-extensive with the definition of the subject goods, and these like goods form a single class of goods.^{Footnote 9}

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 may be 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 an 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 10}

[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 alleged that the conditions described in section 20 of SIMA prevail in the FGM sector in China. That is, the complainant alleged that the prices in China’s FGM sector are substantially determined by the Government of China and are different than what they would be in a competitive market, and are therefore not reliable for the purposes of determining normal values.

[52] In particular, the complainant alleged that the prices of FGM are substantially determined by the Government of China indirectly, due to its substantial controls over the steel billets or steel bar industry, the main input in FGM production accounting for approximately 75-80% of its cost of production.^{Footnote 11} The complainant also pointed out that in multiple previous investigations involving Chinese steel products, the CBSA has made findings that there is sufficient evidence that the conditions listed in section 20 of SIMA exist, including in three cases initiated in 2025 alone.^{Footnote 12}

[53] In support of its section 20 allegations, the complainant provided evidence of a high level of state ownership and control in the steel industry in general and in the long-product steel sector in particular, that these sectors were significantly influenced by government policies, directives and other policy documents, and that they were heavily subsidized. The complainant maintained that the CBSA has already made a significant number of positive Section 20 findings with respect to the Government of China’s influence over the steel industry in China and its impact on domestic prices in China. The complainant alleges that the Government of China influence and control over the Chinese steel industry (including steel bar/billet and FGM production) results in domestic FGM prices that are artificially low, and that as such, they are not the same as they would be in a competitive market.^{Footnote 13} The complaint included FGM and steel bar pricing analysis to demonstrate the extent of the price differences between China and benchmark countries as evidence of the government influence on prices in China.^{Footnote 14}

[54] At the initiation of the investigation, the CBSA had reviewed the information provided in the complaint and conducted its own research.^{Footnote 15} Based on this information, the CBSA believed that there was reasonable evidence to support an inquiry into the allegations that the measures taken by the Government of China substantially influence prices in the FGM sector in China.

[55] Consequently, on January 9, 2026, the CBSA included in its dumping investigation, a section 20 inquiry in order to determine whether the conditions set forth in paragraph 20(1)(a) of SIMA prevail in the long-product steel sector (i.e. steel bar and steel billet) and the downstream FGM market, considered to be the sector under review.

[56] As part of this section 20 inquiry, the CBSA sent section 20 RFIs to all potential producers and exporters of FGM in China, as well as to the Government of China, requesting detailed information related to the long-product steel sector (i.e. steel bar and steel billet) and the downstream FGM market, in China.

[57] In the event that the CBSA forms the opinion that domestic prices of FGM in China are 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.

[58] For the purposes of obtaining information necessary to calculate normal values pursuant to subparagraph 20(1)(c) of SIMA, the CBSA requested information from producers in surrogate countries. As such, the CBSA has selected a number of Latin American countries, namely Brazil, Chile, Mexico and Peru, because they have domestic production of FGM and a domestic market (i.e. a sizable mining industry) and to the best of the CBSA’s knowledge, are competing under fair market conditions and has sent questionnaires to known producers of FGM in these countries.

Analysis of section 20 conditions

Previous Section 20 inquiries

[59] The CBSA has found that the conditions of section 20 of SIMA exist in multiple previous investigations involving Chinese steel products. For example, since 2015, the CBSA has determined that the conditions of section 20 of SIMA existed in the following twelve investigations involving steel products or products made principally of steel.

[60] These investigations are:

• Cast Iron Soil Pipe – 2025
• Steel Strapping – 2025
• Carbon and Alloy Steel Wire – 2025
• Wire Rod – 2024
• Wind Towers – 2023
• Container Chassis – 2021
• Corrosion-Resistant Steel Sheet – 2018
• Cold-rolled Steel – 2018
• Sucker Rods – 2018
• Fabricated Industrial Steel Components – 2016
• Large Diameter Carbon and Alloy Steel Line Pipe – 2016
• Carbon and Alloy Steel Line Pipe – 2015

[61] For the most part, these previous section 20 opinions relate to the same or substantially the same sector as the subject goods and as such, the conclusions reached in these inquiries are generally quite relevant to FGM. As mentioned earlier, the primary input material for FGM is merchant steel bar, which is part of the long-product steel sector, and accounts for approximately 80% of the cost of production and sale of FGM, according to the complainant, and based on the costing data supplied by Chinese producers in response to the dumping RFI.

[62] In the past two years, the CBSA has twice concluded that the conditions of section 20 existed specifically in the long-product steel sector in China. The most recent case, Certain Carbon and Alloy Steel Wire (SW 2025 IN), concluded on December 3, 2025.^{Footnote 16} In that case, the CBSA found that the Government of China’s steel plans and directives, the government’s level of ownership and control of steel manufacturers, the substantial market-distorting subsidies to the steel industry, and other government influence on the cost of production of steel, together resulted in the Government of China substantially determining the price of steel and long-product steel in the domestic industry and that these prices are not substantially the same as if they were determined in a competitive market.^{Footnote 17} The CBSA had reached the same conclusion in Wire Rod (WR 2024 IN), which concluded on September 4, 2024, with respect to the long-product steel sector.^{Footnote 18}

Relevant period for the inquiry

[63] The period of investigation (POI) for the dumping investigation of FGM is October 1, 2024 to September 30, 2025. The CBSA is investigating whether the conditions of section 20 were in effect during this period in the Chinese long-product steel sector and in the downstream FGM market.

[64] While the conclusion made on the basis of the analysis presented in this analysis relate to market conditions that existed during the POI, these conditions are the result of state interventions that have been taking place over a period of time that long precedes the POI. For this reason, a proper understanding of the current situation requires reviewing industrial policies and state intervention that occurred over a much longer period of time.

Market overview for the steel sector, including long-products

[65] The steel sector in China – including long-products such as billet and merchant steel bar, but also rebar, wire rod, and structural steel – is characterized by massive producers, which are dominantly state-owned, and by chronic excess production capacity and supply.

[66] The steel industry is highly fragmented with well over 200 firms and 360 mills across China,^{Footnote 19} producing over 1 billion tons of steel, about 53% of global production.^{Footnote 20} Despite the very large number of firms, the top ten largest producers account for about 44% of total production, and approximately 70% of that volume is produced by state-owned enterprises (SOEs), as shown in the data in Table 1 below. In addition to these six massive SOEs, there are several other sizable state owned producers as well, such as Liuzhou Steel, Rizhao Steel Holding Group Co., Ltd, CITIC Pacific, Baotou Steel (Baogang Group), Jinan Iron and Steel Group Co., Anyang Iron and Steel Co., Ltd., Nanjing Steel (NISCO), and Shaanxi Iron and Steel Group Co., Ltd.; each of which produce over 10 million tonnes of steel annually.^{Footnote 21} Overall, it is estimated that SOEs account for very close to half of the total steel production in China.^{Footnote 22} The level of state-ownership and control over the industry is further addressed below.

[67] It is reported that the capacity utilization rate in the steel industry in 2024 was about 78.5%, which would suggest total theoretical production capacity of approximately 1,280 million metric tonne (MT).^{Footnote 24} As the statistical data above suggests, China produced an excess of 108.4 million MT over its consumption and has the capacity^{Footnote 25} to produce more.

[68] Despite a reported decline in production in 2025, the Organisation for Economic Co-operation and Development (OECD) expects substantial increases in steelmaking capacity globally (165 million MT) between 2025-2027, led especially by China, despite strong contraction in demand in China and low prices.^{Footnote 26} As stated by the OECD, the divergence between capacity and demand has led to significant market imbalances, which are putting downward pressure on steel prices and the industry’s profitability.^{Footnote 27} Further, demand for steel has been declining and is expected to continue to decline in the foreseeable future, further exacerbating the excess of capacity and the downward pricing trend, and is expected to continue to drive up the volume of exports from China.^{Footnote 28} The Chinese government is also aiming for growth in the industry per its 2025–2026 Steel Industry Growth Plan.^{Footnote 29}

[69] In its 2025 Interim Report,^{Footnote 30} AnSteel described the Chinese market for the first half of the year by pointing to a crude steel output decrease of 3% year-on-year but a total steel output increase of 4.6% year-on-year. Ansteel also referred to a 5.6% year on-year decrease of the nationwide apparent consumption of crude steel, contributing to an increasing excess steel supply over demand of about 63 million tonnes over the six month period. Ansteel also indicated that steel prices generally followed a fluctuating downward trend. The company stated that according to the China Steel Price Index released by the China Iron and Steel Association, the long products price index averaged 95.73 points, representing year-on year decline of 13.53%.

Apparent causes of the extent of overcapacity in the Chinese steel industry

[70] As discussed below, the extent of the production overcapacity and oversupply in the steel industry in China is largely attributed to the fact that the industry structure is developed mostly through government support and interventions than by market forces and fair competition.^{Footnote 31}

[71] After surging from 150 million tonnes in 2001 to 512 million tonnes in 2008,^{Footnote 32} a 241% increase, steel production in China increased by an additional 59% between 2008 and 2014, from 512 million tonnes to 813 million tonnes, while production capacity increased 77%, from 644 million tonnes to 1,140 million tonnes. During the 2008-2014 period, overcapacity increased from 132 million tonnes to 327 million tonnes, and utilization rate decreased from 80% to 71%.^{Footnote 33} As mentioned earlier, in 2024, production stood at 1,005.1 million tonnes and capacity at about 1,280 million tonnes, with an overcapacity of 384 million tonnes over domestic consumption. Despite a reported decline in production in 2025, the OECD expects substantial increases in steelmaking capacity in China, despite strong contraction in domestic demand and low prices.^{Footnote 34}

[72] The following graphic provide a good visual impression of the rate of the growth in steel production in China in the past quarter-century:

[73] While market forces played a role in the growth of the industry, especially prior to 2008, the massive capacity is said to exist largely thanks to “supportive industrial policies spanning decades whose sole aim was to help this strategic industry flourish.”^{Footnote 36} In particular, after the 2008 financial crisis, the Chinese government provided a massive fiscal stimulus package including unprecedented large lending programs.

[74] It is said that the government-encouraged lending surge resulted mainly in the expansion of Chinese SOE production capacity, where there was no real additional demand.^{Footnote 37} In explaining the root of the overcapacity issue in China, the European Union Chamber of Commerce in China wrote that “The Chinese stimulus package poured credit into increasingly questionable projects and increased direct and indirect subsidies to investment and manufacturing. While these policies boosted the economy in the short term, in the medium term they have further distorted markets and complicated China’s economic transition.”^{Footnote 38}

[75] They also stated that “Instead of being subjected to strict market discipline, SOEs are often tasked with fulfilling broader political goals, such as pursuing market share, maintaining and expanding employment in their jurisdictions, as well as developing the capabilities and capacity to deliver for local investment projects.”^{Footnote 39} Capacity, production and market share goals are indeed used as the primary benchmarks to assess the performance of these state-controlled corporations. SOEs reinvest their retained earnings to gain market share and to make their companies bigger. Such political governance of the steel industry will be further addressed later in this analysis.

[76] Local governments tend to encourage investments that maximize their fiscal incomes regardless of the overall market situation, and as mentioned, they encourage investments that will maintain employment in their own jurisdictions. This leads to additional state credit subsidies and implicit lending guarantees for investments. Local government protectionism has also been singled out as a reason for the industry fragmentation and lack of concentration. Local governments also turn a blind-eye on violation of national environmental, health and safety standard, the equivalent of providing a local subsidy, giving those firms a distinctive cost advantage and keeps companies in business that may otherwise be closed.^{Footnote 40}

[77] A “zombie company” in the Chinese steel industry is defined as “a facility that cannot cover its full costs of production — including capital maintenance, environmental compliance, and a market rate of return — without some form of government support. It is not merely loss-making in a cyclical downturn; it is structurally unviable at any realistic point in the market cycle.”^{Footnote 41} A 2016 study reports that the steel industry in China had a proportion of zombie companies of 51.4%.^{Footnote 42} Evidently, the use of local subsidies to keep non-performing state-owned producers in business has been a significant problem in China, and a significant factor in the overcapacity problem and inefficient allocation of resources.^{Footnote 43Footnote 44}

[78] As stated by the United States International Trade Commission, “Chinese excess capacity has been facilitated by Chinese government (national and provincial) involvement in its steel industry though grants, preferential loans, debt-to-equity swaps, and tax refunds as well as various forms of indirect support to Chinese SOEs. A leading factor leading to overcapacity has been easy credit extension, via government guarantees or though state-owned banks.”^{Footnote 45}

[79] Government interventions, and particularly the provision of subsidies, including access to cheap financing, have been singled out as the reason for the state of the steel industry. As such, one must recognize the significant influence of non-market factors on overcapacity and capacity utilization.

Steel plans, directives and other policy documents

[80] As the CBSA has found in multiple previous investigations involving Chinese steel products (see “Previous Section 20 Inquiries” section above), the Government of China exerts very strong influence over its steel industry by way of direct intervention to meet national economic and environmental goals, heavy state ownership and massive subsidies.

[81] In this section, the CBSA addresses the Government of China’s key priorities and strategic goals with respect to the steel industry, along with an overview of key policy documents. The CBSA also addresses government intervention in the industry over an expanded period of time in order to provide context for the state of the industry during the POI.

[82] In China, five-year plans, often referred to as “guidelines”, are a series of social and economic development initiatives issued by the Communist Party of China (CPC). As described by Heilmann and Melton:

[83] As discussed below, Chinese five-year plans create non-market conditions in the steel industry by setting state-mandated production, capacity, and emission targets rather than relying on demand. These plans facilitate state-driven mergers, enforce capacity swaps, centralize raw material sourcing, and subsidize new and green technologies. These directives often distort market forces, as steel firms are pressured to meet government targets and employment goals rather than maximize profitability. This has led to consistent overproduction, with excess steel being exported, which has provoked widespread protectionist measures worldwide.

[84] The guidelines and priorities set out in the 13th Five Year Plan (2016–2020), the 14th Five Year Plan (2021-2025) and the current 15th Five Year Plan (2026-2030) – whose formulation began midway through the 14th plan – along with the numerous specific plans connected to them, would have had the most impact on the environment characterizing the government’s influence over the long-product steel industry in China during the POI.

[85] Another plan of particular significance to the steel industry is the Made in China 2025^{Footnote 47} policy document released in 2015, which was drafted by the Ministry of Industry and Information Technology (MIIT), as an initiative to comprehensively upgrade Chinese industry into a leader in high-tech manufacturing, and aims both to increase the competitiveness and global market share of the Chinese manufacturing industry and to reduce China’s dependence on foreign manufactured goods.^{Footnote 48} Its goals included making Chinese companies more competitive across the board, emphasizing on innovation-driven manufacturing, achieving green development, raising domestic content of core components and material to 70% by 2025 (i.e. increasing self-sufficiency), upgrading industry to be more efficient and integrated, having Chinese firms move up the value-added chain in production and innovation networks, and achieving much greater international brand recognition. The plan saw a significant role for the state in providing an overall framework, utilizing financial and fiscal tools, and supporting the creation of manufacturing innovation centers.

[86] As the OECD puts it with respect to such plans, “In broad terms, industrial interventions are designed to affect the allocation of resources among economic activities (across or within sectors) to achieve a different outcome from what otherwise would have occurred”; particularly with a broad role for SOEs.^{Footnote 49} It is also reported how these enumerative planning documents act in conjunction with various types of guidance catalogues in which the Chinese government lists specific items it encourages, discourages, restricts, or prohibits for investment or other market activity.^{Footnote 50}

[87] Government influence over SOE decision-making is a powerful tool for the implementation of state industrial policies. Indeed, through various laws and other measures, the Chinese government has formalized the participation of SOEs in industrial policymaking. In fact, by law, their investments must conform to state industrial policies. Further, as will be discussed below, the political governance of the state-owned steel producers is such as to ensure compliance with these directives.

[88] For some time, the Chinese steel industry has been characterized as being extremely fragmented, plagued with substantial overcapacity, and using outdated, energy-intensive, and highly polluting production methods—specifically small-scale blast furnaces and basic oxygen furnaces (BOF). These issues created problems in terms of the environment, profitability, trade irritants and in properly meeting higher-end requirements of a modern economy.

[89] As such, with respect to the steel industry’s historical context leading to the current market environment, the most relevant guidelines and priorities set out in these latest plans include the aims to i) curb overcapacity via capacity replacement, ii) promote industrial consolidation, iii) deleverage the industry iv) mandate carbon reductions, v) upgrade technologies and vi) promote self-sufficiency. As will be discussed below, despite the intention to manage the oversupply and increase the profitability of the industry, the actions taken to achieve those goals have resulted in the perpetuation of the high-supply-low-cost environment, leading to depressed price in the long-products sector.

[90] While these six policy goals are largely interconnected as an integral part of China’s supply-side structural reform, the CBSA is addressing each of them individually below:

i) Curbing overcapacity via capacity replacement

[91] The Chinese Government’s goals with respect to dealing with overcapacity is more complex than simply forcing the closure of existing mills or restricting investments in new capacity. The government’s goal is predicated on closing or restricting plants using outdated, obsolete and polluting production technologies – which were focused on low-end products – and replacing this old capacity with new capacity, using more modern, efficient and environmentally-friendly technologies that are geared toward the production of higher-ended steel products. Capacity replacement also aims at relocating existing capacity into concentrated industry clusters like coastal industrial parks.^{Footnote 51} Strategies also involved consolidating the industry, developing downstream use, and export management.

[92] In particular, capacity replacement policies are meant to enhance capacity utilization through four pathways: “equipment optimization and upgrade”, “enterprise mergers and restructuring”, “technology innovation-driven”, and “environmental protection regulations”.^{Footnote 52} It is reported that rather than reducing the total steel industry overcapacity, the replacement policy often leads to the state support of “uncompetitive existing capacity and expansion of new capacity through state-directed mergers, relocations, and facility upgrades, all backed with generous financial and other support.”^{Footnote 53}

[93] Such government measures, over the past dozen years, include:

• Notice of the Ministry of Industry and Information Technology on Printing and Distributing the Implementation Measures for Capacity Replacement in Some Industries with Serious Overcapacity – April 2015^{Footnote 54}
• Guidance for the Iron and Steel Industry to Reduce Excess Capacity and Resolve Difficulties for Future Development - 2016^{Footnote 55}
• Iron and Steel Industry Adjustment and Upgrade Plan (2016–2020) - 2016^{Footnote 56}
• 13th Five-Year Plan (2016-2020) - 2016^{Footnote 57}
• Guiding Opinions on Promoting Mergers, Reorganizations, and Handling Zombie Enterprises in the Steel Industry – 2016
• Implementation Measures for Capacity Replacement in the Steel Industry - 2017^{Footnote 58}
• Guidelines on Promoting High-Quality Development of the Steel Industry (draft for comments) – 2020^{Footnote 59}
• 2021 version of Implementation Measures for Capacity Replacement in the Steel Industry – May 2021^{Footnote 60}
• 14th Five-Year Plan (2021–2025) - 2021
• Notice of the General Office of the Ministry of Industry and Information Technology on Suspending Steel Capacity Replacement Work – August 2024^{Footnote 61}
• Steel Industry Growth Stabilisation Work Plan (2025-2026)^{Footnote 62}
• 15th Five-Year Plan (2026-2030) – December 2025^{Footnote 63}

[94] Again, it seems that the steel industry structure is being developed mostly through government support and interventions rather than by market forces. Further, it seems that while capacity reduction should, in theory, assist in stabilizing the market and raise prices to healthy levels, the reality is that overcapacity has not been resolved as substantial government support and intervention is again reportedly distorting the industry. The governments intervention is shifting production from inefficient, older, or polluting facilities to modern, higher-efficiency plants, often resulting in a net increase in effective production capacity. Much of the “forced” investments are benefiting from government support. As such, rather than resulting in less supply and higher prices, the government intervention is still leading to oversupply, intense competition and lower production costs, and hence lower prices for steel. This is particularly relevant with respect to higher grades of steel, such as those required to produce FGM, as the government is encouraging its producers to produce more of higher grades.

ii) Promoting industrial consolidation

[95] Industrial consolidation is one of the strategies used by the Chinese government to meet its capacity replacement, technological upgrading and environmental policies in the context of its supply-side structural reform. Consolidation occurred mainly by way of mergers and acquisitions. Government-led consolidation of the industry has also been used to create “vertically and horizontally integrated mega-firms to reduce the intensity of “vicious competition” among domestic firms, while positioning the industry to dominate in global markets”.^{Footnote 64} It is also said that consolidation policies are used with “parallel policies focused on relieving the industry of unsustainable debt burdens accumulated in the years following the global financial crisis.^{Footnote 65} The section below on deleveraging expands on this matter. While consolidation should in theory reduce competition and relieve the downward pressure on prices, in practice, it has: resulted in the prevention of market exits, or in the maintenance of capacity that should have been closed; allowed larger groups to use such capacity as part of replacement ratio in order to support expansion; and allowed the dilution of high debt of weaker companies, providing them the ability to borrow more and increase capacity. By continuing to prioritize high-volume output and market share over short-term profitability, the government-led consolidations are leading to chronic oversupply and driving down prices of steel products, including long-products.

[96] As mentioned in the section above, in 2016, the Chinese government committed to increase the share of the ten largest manufacturers in the total volume of domestic steel production to 60% by 2025, in its Guiding Opinions on Promoting Mergers, Reorganizations, and Handling Zombie Enterprises in the Steel Industry, a goal that was re-iterated in the Guiding Opinions on Promoting High-Quality Development of the Steel Industry (2021-2025) and the 14th Five-Year Plan (2021–2025) to solidify the stated government intention for the top five steel companies to control 40% of the market and the top 10 to manage 60% by 2025. While this target was not met - in 2024, the top 10 companies account for closer to 44% of production - the government has continued to push for further consolidation, shifting the target date for the top 10 to reach 60% concentration closer to 2030, according to the recently released Work Plan for Stabilizing Growth in the Steel Industry (2025-2026) and the 15th Five-Year Plan (2026-2030).

[97] Other relevant policies with respect to consolidation of the steel industry include the Steel Industry Adjustment and Upgrading Plan (2016-2020), MIIT (2016), the 2016 Opinion of the State Council Regarding Resolving Excess Capacity in the Steel Industry and Realizing Development Through Difficulty,^{Footnote 66} the 14th Five-Year Plan for Development of Raw Materials Industries (2021), the Guiding Opinion Regarding Promoting High Quality Development in the Steel Industry (2022) and the Work Plan for Stable Growth in the Steel Industry (2023).^{Footnote 67} The objectives stated in these plans are largely interrelated with the those of the capacity replacement policies, and also directs financial institution to actively support restructuring through mergers and acquisition, as well as the resolution of bad debt burdens. Again, the question of deleveraging is further addressed below.

[98] As discussed earlier, more than half of the steel industry in China was estimated as consisting of zombie companies - companies that cannot cover their full costs of production without some form of government assistance. The Chinese government (including – or mostly – local governments), maintained these companies artificially with government aid rather than allowing market-driven exits, contributing to the excess capacity, particularly of obsolete capacity, as they tend to operate older equipment with high fixed costs and poor energy efficiency, contributing to the persistent overcapacity that depresses profit margins across the entire sector.^{Footnote 68}

[99] One of the government strategies to deal with the zombie companies and their capacity issue has been to consolidate them with larger groups of SOEs through merger and acquisitions. While removing their obsolete capacity is in itself a positive move, one issue is that rather than a net exit, the consolidated group is now able to use the closure (if closure occurs) as part of a capacity replacement ratio. In other words, in terms of total capacity, the removal of capacity may be short lived, until newer, more efficient and technologically-improved capacity becomes operational. Not to mention that such new capacity may have been made possible due to generous government assistance, perpetuating the cycle of government intervention. Further, it was reported that the “navigator enterprises” designated to lead consolidation efforts may be exempted from the otherwise state prohibition on new projects, without elimination of an equal or greater amount of existing capacity.^{Footnote 69}

[100] In 2016, a group of major Chinese ministries and regulators^{Footnote 70} issued joint guidelines to address creditor and debtor issues in the steel industry. For example, the 2016 Opinion of the State Council Regarding Resolving Excess Capacity in the Steel Industry and Realizing Development Through Difficulty and Several Opinion Of Three Ministries Regarding Financial Creditor And Debtor Issues Related To Resolving Excess Capacity In The Steel And Coal Industries directed financial institutions to actively support restructuring through mergers and acquisition and the resolution of bad debt burdens.^{Footnote 71} In particular, they were reportedly instructed to support debt restructuring through interest rate reductions, maturity extensions and debt-to-equity swaps.^{Footnote 72} Although banks were directed not to support zombie companies, many of them were bailed out by acquisition. In other words, rather than forcing their exit though bankruptcy and liquidation, their mergers with larger companies eliminated such restrictions, resulting in potentially maintaining capacity that would have otherwise been eliminated, or continuing to finance them.

[101] Further, as mentioned, the government’s industry consolidation efforts also focuses on reducing the geographic dispersion of the industry.^{Footnote 73} While the stated objective is to reduce overcapacity and environmental burdens, selected large “national champions” are given significant financial support for facility upgrades and expansions as part of the relocation process.^{Footnote 74} One report discusses the example of steel billet producer Dalipal Holdings Ltd, which received direct compensation far in excess of their actual relocation costs, in addition to significant financial support for expansion and upgrades to relocated facilities, while being able to double its steel billet capacity, and being able to implement significant technological upgrades related to facility automation and emissions reduction.^{Footnote 75} The company in fact recognized a gain equivalent to about CAD $25 million on the relocation as income, in addition to less direct benefits related to its financing costs.^{Footnote 76} The paper also details specialized financing platforms established to provide financial support to enterprises meeting the government criteria.

iii) Deleveraging

[102] After the financial crisis of 2008, the Chinese government (central and local) implemented economic stimulus policies, which are said to have led to increased leverage ratio in the steel industry to the point of becoming a concerning problem, as steel producers – particularly SOEs – pursued investment opportunities without considering the soundness of the manufacturing industry from a market-oriented perspective.^{Footnote 77} For instance, as mentioned above, it has been estimated in 2016 that more than half of the steel industry^{Footnote 78} consisted of zombie companies. Since the launch of the “supply-side structural reform” in 2015, deleveraging has been another priority, intertwined with those of the replacement capacity policies. For example, it was reported that the financing of the Chinese steel industry’s decarbonization alone may require more than US$3 trillion in investments between 2022 and 2050;^{Footnote 79} investments that can hardly be done by an industry that is characterized by overcapacity and which is over-leveraged already.^{Footnote 80}

[103] Thus, the government introduce a debt-for-equity scheme in 2016, a government-led bailout mechanism where non-performing bank loans were converted into equity stakes and offloaded to Asset Management Companies or Special Purpose Vehicle (SPV). The measures were to exclude zombie companies from the scheme, however there are several reports that show this was not the case.^{Footnote 81} Furthermore, it is also widely reported that the pricing mechanism for the debt-to-equity swaps did not reflect market value, as the equity interest were valued at face value of the loans, rather than at the deep discount that market would dictate for non-performing loans.^{Footnote 82} As banks were directed by the government to participate in the scheme, the overvalued swaps account to significant subsidies. The OECD also refers to the use of complex and opaque financial instruments by the Chinese government which tend to mask government subsidies.^{Footnote 83}

[104] For the purposes of the deleveraging, the government instructed banks to create SPVs which would hold the swapped non-performing loans, allowing both the steel firms and the banks to keep the loans off balance sheet. The OECD also reports that the debt-to-equity deals were done above market price, as the non-performing loans were not discounted.^{Footnote 84} State-owned funds were also put in place to participate in the schemes and purchase equity, such as the China Structural Reform Fund, the China State-owned Capital Venture Investment Fund, etc.^{Footnote 85}

[105] In the end, the debt bailout has allowed the steel producers to borrow more in order to finance more capacity expansion and maintained enterprises running rather than forcing market-driven closures. The bailout also significantly reduced the cost of operation for a good part of the industry. The capacity expansion, the maintenance of capacity that should have been forced to close, and the lowered costs of production and sale are contributing to the low domestic prices of steel in China, including low domestic prices of long-products.

[106] Some relevant policy documents include:

• Guidelines on Market-Oriented Debt-to-Equity Swaps at Banks (Guo Fa [2016 No.54] ([2016]54)
• Guiding Opinion on Deepening Reform of State-owned Enterprises, Article 17 (CCP Central Committee and State Council, Guo Fa [2015] No. 22, issued August 24, 2015)
• Notice on Issuing the Provisions on Accounting Management for Activities Relating to Three cuts, One Reduction, and One Strengthening (MOF, Cai Hui [2016] No. 17, issued September 22, 2016)
• Opinion on Supporting the Shedding of Excess Industrial Capacity in the Steel and Coal Industry to Achieve Development out of Difficulty (PBOC, CBRC, CSRC, CIRC, Yin Fa [2016] No. 118, issued April 17, 2016)
• Several Opinions on Financial Debt and Debt Obligations Problems Relating to Shedding Excess Capacity in the Steel and Coal Industries (CBRC NDRC, MIIT, Yin Jian Fa [2016] No. 51, issued December 1, 2016)

iv) Mandating carbon reductions

[107] The iron and steel industry is one of the most energy-intensive sectors globally, contributing over 7% of total greenhouse gas emissions and over 11% of global carbon dioxide emissions, largely due to the use of coal in traditional BOF production.^{Footnote 86} The steel industry is said to be the second-largest source of the country’s carbon emissions, accounting for 15% of China’s carbon dioxide emissions, primarily due to its reliance on traditional blast furnace production methods because this process relies on coal and coke as the reducing agent and source of heat.^{Footnote 87} About 90% of China’s current production still uses BOF production,^{Footnote 88} as opposed to about 30% in North-America. The EAF method of steel production, on the other hand, uses scrap steel as opposed to using iron ore as a ferrous resource, the later being significantly more energy-intensive. The EAF method can reduce carbon emissions by up to 70% per ton of steel produced.^{Footnote 89}

[108] In light of the high environmental impact of the industry, and the connected high social and economic cost, China has ben mandating strict carbon reductions in its steel industry. China’s dual carbon goals, announced in 2020, commit the nation to peaking carbon dioxide emissions before 2030 and achieving carbon neutrality by 2060, and more detailed multi-dimensional policies followed.^{Footnote 90}

[109] Relevant policy documents include:

• the 14th Five-Year Plan on Circular Economy (2021-2025)
• Proposals for Formulating the 14th Five-Year Plan (2021–2025) for National Economic and Social Development and the Long-Range Objectives through the Year 2035 (Oct. 2020)^{Footnote 91}
• Action Plan for Carbon Dioxide Peaking before 2030 (Oct 2021)^{Footnote 92}
• Several Opinions on Strict Energy Efficiency Constraints to Promote Energy Conservation and Carbon Reduction in Key Areas^{Footnote 93} (Oct. 2021)
• the Working Guidance for Carbon Dioxide Peaking and Carbon Neutrality in Full and Faithful Implementation of the New Development Philosophy (Dec. 2021)
• the Guiding Opinions on Promoting the High-Quality Development of the Steel Industry (Jan. 2022)
• Industrial Sector Carbon Peak Implementation Plan (2022)
• Special Action Plan for Energy Conservation and Carbon Reduction in the Steel Industry (2024-2025)
• Action Plan to Promote Large-scale Equipment Updates (2024)
• 2024-2025 Energy Conservation and Carbon Reduction Action Plan
• Special Action Plan for Energy Conservation and Carbon Reduction in the Steel Industry (2024)
• Action Plan to Promote Large-scale Equipment Updates and Trade-ins for Consumer Good (2024)^{Footnote 94}
• Action plan to promote equipment updates and trade-ins for consumer goods through standards (2024)^{Footnote 95}
• Action Plan for Special Management Measures for Central Budget Investment in Energy Conservation and Carbon Reduction (2024)^{Footnote 96}
• List of Green and Low Carbon Advanced Technology Demonstration Projects (First Batch) (2024)^{Footnote 97}

[110] Key strategies include transitioning to EAFs, increasing scrap usage, and strengthening capacity regulation and strict output management.^{Footnote 98} These strategies, also including regional strategies, form an integral part of the capacity replacement policy and form part of the government-led restructuring of the steel industry. The listed policy documents also provides measures for government funding of industrial upgrades.

[111] It is reported that the financing of the Chinese steel industry’s decarbonization may require more than US$3 trillion between 2022 and 2050.^{Footnote 99} Much of such investments is supported by the government, which provides tax breaks, preferential loans and capital expenditure subsidies. It is reported that the generous government support for the green transition, especially to SOEs, has often led to disguised distorting subsidies and increased production capacities. Government subsidies leading to additional capacity and more efficient production again contribute to price pressure in the steel industry. Further, the increased efficiencies of the new plants are also contributing to increasing or maintaining overcapacity, and pressuring prices. More discussion on subsidization is included below.

v) Upgrading technologies

[112] As mentioned, China’s replacement policy include focuses on promoting equipment optimization and upgrading, whether to meet its decarbonization goals or to restructure the industry towards higher quality goods. Relevant policies have mainly been listed in sections above. For example, the Action Plan to Promote Large-scale Equipment Updates and Trade-ins (2024–2025) identifies the steel industry as a key industry for upgrading (e.g. replacing outdated blast furnace with more energy-efficient technologies such as EAF plants or hydrogen metallurgy). The 2025–2026 Steel Industry Steady Operation and Structural Upgrading Work Plan is said to focus on controlling capacity by phasing out inefficient facilities, and supporting "high-end, intelligent, and green" transformations.

[113] Again, policies and directives also provide measures for government funding of industrial upgrades and provide directives for financial institutions to support government priorities. For example, on April 7, 2024, the People’s Bank of China announced a 500 billion RMB ($69.1B) relending program to support technological innovation, digital upgrades (AI, smart manufacturing), and energy-saving renovations.^{Footnote 100}

[114] In 2025, Chinese authorities released a work plan to support the steady operation and structural upgrading of its steel industry, the Steel Industry Steady Growth Work Plan (2025–2026). Per the workplan, technological innovation in the steel industry should be enhanced to boost high-end product supply, upgrade the quality of bulk materials, and stabilize the supply of raw and fuel materials, the work plan states, while it notes that effective investment in the steel industry should be expanded to accelerate technological upgrades, digital transformation and green transition.^{Footnote 101} The Action Plan to Promote Large-scale Equipment Updates and Trade-ins for Consumer Good (2024),^{Footnote 102} calls for a 25-percent increase in capital investments in equipment by 2027, focused across five dimensions: energy saving and low carbon; ultra-low emissions; production safety; digital transformation; and intensified smartification.^{Footnote 103}

[115] The government-led and financed upgrades are improving operational efficiency, decreasing raw material costs, including increasing the use of lower-cost scrap steel, and intensifying competition. While intended to produce higher-quality, greener steel, the efficiency gains from these technological investments currently allow Chinese producers to keep prices for long-products competitive or lower, especially when such improvement was made possible by government subsidies.

vi) Promoting self-sufficiency

[116] As mentioned above, the Made in China 2025 Policy aimed at raising domestic content of core components and material to 70% by 2025 (i.e. increasing self-sufficiency). Per the Steel Industry Steady Growth Work Plan (2025–2026), securing steelmaking raw materials is also emphasized. The plan calls for accelerating China’s domestic iron ore and coal development, supporting long-term supply contracts, and expanding scrap recycling through integrated collection and processing hubs.^{Footnote 104} Its policies aim at achieving a domestic self-sufficiency rate of over 45% for iron metals, reach an annual domestic scrap steel resource volume of 300 million tons, and establish 1–2 overseas equity iron mines with global influence and market competitiveness, with overseas equity iron mines accounting for over 20% of imported ore.^{Footnote 105}

[117] The government’s intervention and influence over steel input is contributing in keeping domestic steel prices artificially low by influencing their costs, as discussed below in the Government influence over steel input section.

Level of government ownership and control over SOEs

[118] In China, SOEs are categorized into three categories according to their functions.^{Footnote 106} The first category consist of commercial SOEs in competitive industries whose objective function is maximizing profits. The second category include commercial SOEs in strategic industries with the aim of safeguarding national security and the national economy; maximizing the social welfare is their first priority, then maximizing profit is secondary. The third category involve SOEs in utility industries providing public goods and services, with the main objective to maximize social welfare contribution.

[119] As codified in the 2015 “Guiding Opinion on Functional Definition and Classification of State-Owned Enterprise”, SOEs are treated differently in terms of their political governance depending on which category they belong to.

[120] This political governance is said to be achieved through the four pillars of i) state-ownership, ii) the Party cadre management system, iii) the Party’s participation in corporate decision-making and iv) intra-Party supervision.^{Footnote 107} These are further discussed below.

[121] The steel industry is managed as a commercially oriented sector with high strategic importance. It is considered as a “pillar industry” of the Chinese economy.^{Footnote 108} As such, it fits in the second category with tight political governance, where the state must maintain relatively strong control and where the SOEs and their cadre must prioritize the relevant industrial policies.^{Footnote 109} These cadre will also be evaluated on the basis of their service of national strategy, subject to specialized state supervision.

Corporate and political governance of SOEs operating in the steel industry

[122] While corporate governance in China derives rules from China’s Company Law,^{Footnote 110} for SOEs there is an added political governance that addresses the special objectives of SOEs embedded into their governance structure; which is a CPC-dominated system characterized by Party leadership, through which economic, social and political objectives are set and the means of obtaining these objectives and the associated monitoring mechanisms are determined. Although China’s SOEs are organized in corporate form with all or most of the attribute of corporate governance, they are controlled mainly by the CPC though political governance.”^{Footnote 111}

i) State-ownership

[123] In 2005, Beijing designated the steel sector as a pillar industry for the Chinese economy.^{Footnote 112} Given the importance that the government places on the steel industry as the foundation of the national economy,^{Footnote 113} the Government of China owns a significant share of the crude steel industry, including several of the top long-products steel producers. As mentioned above, SOEs account for 70% of the production of the top 10 steel producers, accounting for about 31% of total crude steel production in China. Overall, it has been estimated that SOEs account for about half of the total steel production in China.^{Footnote 114} Hence, SOEs have a strong influence over the whole industry. As stated by the U.S. Department of Commerce in its analysis of China’s status as a non-market economy, “Excessive government ownership or control of the means of production undermines the functioning of a market economy. If economic actors cannot make market-based decisions based on supply and demand, then prices and costs become distorted, and non-market conditions prevail.”

[124] For instance, China Baowu Group and AnSteel Group are directly owned by China’s State-owned Assets Supervision and Administration Commission of the State Council (SASAC), a special administration of the State Council of the People’s Republic of China, while HBIS Group is wholly-owned by the Hebei provincial government and Hunan Steel Group is primarily controlled by the Hunan Provincial SASAC. The Shandong Steel Group is now controlled by the China Baowu Group, and thus by the central SASAC, with the Shandong provincial government holding a minority share through the provincial SASAC. The Shougang Group, on the other hand, is controlled by the Beijing municipal SASAC.

[125] Per the description on its official website, SASAC is an ad-hoc ministerial-level organization directly subordinate to the State Council. The Party Committee of SASAC performs the responsibilities mandated by the Central Committee of the Chinese Communist Party.^{Footnote 115}

[126] SASAC’s key roles and responsibilities include state-owned asset oversight and management, executive appointments and evaluation, reform and restructuring, and strategic alignment.^{Footnote 116} While the SASAC of the State Council controls central SOEs, there are also SASAC at the provincial and local levels.

[127] Guided by the Ministry of Commerce, SASAC is also in charge of the China Group Companies Association, which represents several of the steel SOEs listed above, acting as a bridge between corporations and the government to promote research, training, and cross-border operations, liaison to report corporate concerns to the State Council and provides advisory services on economic policy. Its board of directors is composed of senior government officials and top SOE managers. The China Group Companies Association is one of several institutional bridges between the SOEs and the government.

ii) The Party cadre management system

[128] With respect to corporate governance, SASAC appoints, removes and evaluates top executives of the central SOEs and manages leadership appointment in conjunction with the Central Organization Department of the CPC.^{Footnote 117} Governance is thus carried out within two parallel structures, including a party-based structure that shadows the corporate hierarchy, especially as to high-level managerial appointments.^{Footnote 118} The SASAC will generally appoint senior managers which are Party members.^{Footnote 119} This is indeed the case with the state-owned steel companies, as will be discussed below. By holding both economic and political roles, their career advancement is tied to fulfilling both business targets and political obligations, aligned with the Party’s mission. The performance evaluation system will include strategic indicators tied to the Government’s goals.^{Footnote 120} As a scholar puts it “The Chinese Communist Party is the real hand in the glove of state ownership in China. As the single-ruling party, it controls all the important institutions in politics, business, media, academia, and every sphere of public life in China. The chief control mechanism is the Party’s sophisticated but opaque personnel management over key positions in important institutions, including SOEs.”^{Footnote 121} In its assessment of China as a non-market economy, the United States Department of Commerce has also determined that the CPC’s ability to appoint key personal in enterprises and participate in corporate decision-making through Party Committees in those enterprises consisted of an important channel for government influence over firm decision making.^{Footnote 122} In fact, the Department of Commerce saw the CPC as having the ultimate power over such appointments, and that such ability resulted in significant influence over the SOE’s decision-making and compliance with government directives an objectives.

[129] SASAC also drives the reform and strategic reorganization of SOEs, approving mergers and acquisitions. This role has particularly had a high impact on the steel industry, given the government priorities for the industry discussed above.

[130] SASAC also has the role to ensure that SOEs align with national development strategies. For example, SOEs must submit their development strategies and five-year plans to SASAC for examination and approval, ensuring they align with national goals, such as those in the government Five-Year Plans. Senior managers can also be directed to localize supply chains. As mentioned above, by controlling the appointment of the SOE’s executives, SASAC and the CPC are able to ensure that top management include Party members who are as much concerned with political obligations than meeting business targets.

iii) The Party’s participation in corporate decision-making

[131] Central SOEs have included Party building in their articles of association. As such, Party Committees with their supervision role, form an important part of the governance structure, and Party building is an important priority.^{Footnote 123} The role of such Party Committees within SOEs is codified in the Constitution of the Chinese Communist Party.^{Footnote 124} Further, the requirement of SOEs to amend their corporate charters to incorporate requirements for Party-building work stems from the 2015 “Guiding Opinions on Deepening the SOE Reform.”^{Footnote 125Footnote 126}

[132] It is said that each SOE’s Local Party Committee is mandated to discuss and has veto power over major corporate decisions before the proposed decisions are discussed by the board of directors (the ex-ante procedure) and that Party Committee members also serve as directors and supervisors and participate in decision-making.^{Footnote 127} The role of the Local Party Committees in SOE decision-making is understood to have been first codified in the Notice of the CCCPC on Further Strengthening and Improving the Party Building Work of State-Owned Enterprises, and this role was expanded in the 2010 Opinions on Further Encouraging State Owned Enterprises to Implement the ‘Three Critical and One Important’ Collective Decision-Making Policy (hereafter, the TCOI Policy).^{Footnote 128}

[133] Under the TCOI Policy, decisions that have major impact on the company’s strategic direction or structural changes, are regarded as “Critical and Important” decisions, and are to be made collectively with the inclusion of the Party Committee. Specifically, the “Three Critical” decisions refer to important corporate, personnel appointment, and project decisions, while the “One Important” decision refers to decisions relating to significant oversized capital expenditure.^{Footnote 129} The critical corporate decisions feature direct involvement in the fulfillment of external goals, such as national security and stability, as well as the Party’s presence within the SOEs. The second critical decision relates to the appointment of government officials, while the critical project decisions regards major decisions regarding corporate expansion, bankruptcy, restructuring, mergers and acquisition, asset adjustments, property rights transfers, external investments, profit redistribution, and institutional restructuring. The One Important decisions regards monetary decisions that are not within the company’s total annual budget authorized by the company or SASAC.^{Footnote 130} TCOI decisions are to be made collectively though the corporate decision-making bodies, that include Party Committee and the Board of directors and management team. The role of the Party Committee is deemed important in imposing political objectives on the SOEs, particularly for strategically important firms such as the large state-owned steel producers.

iv) Intra-Party supervision

[134] To complete the political governance is a system of monitoring mechanism done with the installation of Discipline Inspection Committees within the state sector. Their main function include safeguarding the Party’s rules, inspecting the implementation of the Party’s policies, monitoring the exercise of power by leading cadres and preventing corruption.^{Footnote 131}

[135] Complementing the discussion above, the Government of China’s influence or control over these six massive steel SOE’s strategic direction, corporate governance, and top-level personnel decisions, is briefly discussed below.

China Baowu Steel Group

[136] China Baowu Steel Group Corporation (Baowu), which was formed by the government-driven merger of Baosteel Group and Wuhan Iron and Steel in 2016,^{Footnote 132} is the largest global steel producer, accounting for about 13% of Chinese crude steel production and about 7% or global production.^{Footnote 133} The company is under the direct administration of China’s central government, supervised by SASAC.^{Footnote 134}

[137] According to Fitch Ratings, one of the “Big Three” credit rating agencies (along with S&P and Moody’s) that assesses the creditworthiness of borrowers, including corporations, governments, and financial institutions, the government decision-making and oversight over Baowu is assessed as strong due to the company’s high strategic importance to the state.^{Footnote 135} Fitch Ratings considers that the central government “…exerts control over the company’s board and senior management, and has strong influence over the group’s key operation, strategies and investment decisions.”^{Footnote 136} In light of the strong government support, Fitch Ratings equalized Baowu’s credit ratings with those of the Chinese sovereign (A+/Negative). Other credit rating agencies also list as rationale for Baowu’s strong credit rating the continued strong track record of government support, due to its aims to serve the national strategy to enhance industrial competitiveness and upgrade the industrial structure in China’s steel-producing sector.^{Footnote 137}

[138] China Baowu Steel Group is indeed considered of paramount strategic, economic, and industrial importance to the government of China, seen as an engine of national industrial strategy and consolidation, as economic pillar, a key partner for the green transition and decarbonization, a tool for resource security and geopolitical influence, as well as for economic and social stability.^{Footnote 138}

[139] With respect to corporate governance, Baowu’s website lists as member of Baowu’s Board of Directors, its Chairman Hu Wangming as a Secretary of the Communist Party of China (CPC), its Director Hou Angui, as President and Deputy Secretary of the CPC and Director Wang Xuxiang as Deputy Secretary of the CPC, along with three outside directors.^{Footnote 139} Its management team is also fully composed of CPC members.^{Footnote 140}

AnSteel Group (Angang Group)

[140] Ansteel Group is the second largest steel producer in China, and third in the world.^{Footnote 141} Per the company’s website description, it originated from the merger and reorganization of Anshan Iron and Steel Group Corporation and Pangang Group Co.^{Footnote 142}

[141] In terms of its corporate governance, according to Ansteel website, all of its senior management team are also CPC members (e.g. Secretary of CPC, Vice secretary of CPC, Standing committee members of CPC, Secretary of committee for discipline inspection, etc).^{Footnote 143}

[142] Ansteel’s Sustainability Report^{Footnote 144} as well as its latest interim financial report^{Footnote 145} provide ample details as to the importance of Party committees within Ansteel and its commitment to follow party guidance. For example, the 2023 Sustainability Report states that “We take the guidance of General Secretary Xi Jinping’ s important remarks and instructions as the fundamental principles for planning various tasks. By holding the Standing Committee meetings of Party Committee and special meetings, we detail implementation plan for each task and ensure thorough and effective implementation of all tasks with a conscientious working attitude.”^{Footnote 146} It also says “Party organizations at all levels of Ansteel resolutely shoulder the political responsibility of managing and governing the Party.”^{Footnote 147} Its 2025 Interim Report discusses the leading role of Party building and its political leadership and enforcement of Party governance.^{Footnote 148}

HBIS Group Co. Ltd. (Hesteel Group)

[143] HBIS Group is the third largest steel producer in China, and is owned by the government of the Heibei province, via the Heibei SASAC. The group was founded in 2008 by a decree of the Hebei provincial government, merging Tangshan Iron and Steel Group and Handan Iron and Steel Group to consolidate the sector.^{Footnote 149}

[144] Fitch rating reports state’s that the HBIS groups ratings are derived from the assessment of the creditworthiness of the Hebei province on the basis of strong precedent of support and high likelihood of continued support by the Heibei government, such as: consistent annual subsidies and tax refunds, asset injections to boost iron-ore reserves and raw material self-sufficiency, designated funds for HBIS to upgrade and improve its operations and to assist in its strategic transition, and strong incentive for support due to its status with the government as economically and strategically important to the region.^{Footnote 150} It states that the Hebei government has singled out the steel industry as one of the key development areas in its development plan.^{Footnote 151} According to Fitch rating, “HBIS operates as a platform to consolidate, manage and invest in state-owned assets related to the steel industry”, with substantial support received, and strong government oversight and decision-making.^{Footnote 152}

[145] As per the company’s website, HBIS governance is also substantially tied to the CPC^{Footnote 153}

Shougang Group

[146] The Shougang Group, controlled by the central SASAC, is the sixth largest steel producer in China.

[147] According to Fitch rating, the Beijing SASAC maintains a high level of control over the company’s management appointments, strategy and operations, supported by Shougang's key role in driving the economic development of west Beijing, which is highly strategic to the city's development under its five-year plan.^{Footnote 154} According to the rating agency, Shougang has a strong support precedent and strong likelihood of continued support, having consistently received capital injections and subsidies from the government to support its transition to a diversified public-service provider. Tailored policies support Shougang’s projects and offer debt pressure relief. For example, the Beijing Finance Bureau has provided a total of CNY15 billion to help the company set up Beijing Shougang Fund Co., Ltd. to support Shougang’s transition and project development. Fitch rating also assessed Beijing municipality’s decision-making and oversight of Shougang as very strong as its key projects are strategically significant to the government, and Shougang’s preservation of the government’s policy role as “Strong”.

[148] Similarly to the other steel SOEs, Shougang’s Board of Director and senior management is strongly tied to the CPC.^{Footnote 155}

Hunan Iron & Steel Group

[149] Hunan Iron & Steel Group, formerly known as Hunan Valin Iron & Steel Group Co., Ltd, is another massive state-owned producer, jointly established by the three major iron and steel enterprises in Hunan Province at the end of 1997: Xiangtan Iron and Steel, Lianyuan Iron and Steel, and Hengyuan Iron and Steel. Hunan Iron & Steel Group is primarily controlled by the Hunan Provincial SASAC.

[150] As stated in Valin Steel 2024 Sustainability report, Valin Steel (the principal producer forming part of the Hunan Steel Group) has consistently prioritized Party-building leadership and firmly shouldered political responsibilities.^{Footnote 156} The company’s top management is also member of CPC.^{Footnote 157}

Shandong Steel Group (now part of Baowu)

[151] Shandong Steel Group is the sixth SOE forming part of the top-ten steel producers in China. Shandong Steel Group was consolidated with Baowu (the largest steel producer discussed above) in December 2023. Baowu, which is controlled by the central government SASAC, holds a 49% stake in the company, while the Shandong SASAC also holds a 49% stake (via state-owned Shandong Huiji Xinsheng Investment Co., Ltd.). As stated on its website, Shandong Iron and Steel Group earnestly fulfills the political, social, and economic responsibilities of state-owned enterprises, and comprehensively strengthens Party building and leadership.^{Footnote 158}

Evidence of subsidization of the long-product steel sector

[152] There is evidence of significant subsidizing of the Chinese steel industry, including the long-product steel sector. Of particularly interest are past trends in government support that led to or supported the over-capacity that continued to characterize the industry during the POI, as well as the continuing subsidization, particularly pertaining to the capacity replacement policies. Also of particular interest is the use of below-market-borrowing as a key instrument to support steel firms; as well as direct grants, equity infusions, debt-for-equity swaps, tax subsidies, subsidized energy, etc. The support distorts competition by providing aid to facilities that might otherwise be closed, and incentives for investment that might otherwise be commercially unjustified.^{Footnote 159} Evidence also points to a correlation between the subsidizing of the steel industry and overcapacity, and its depressing effect on steel prices in China, including on long-products. This issue is indeed referred to as “non-market excess capacity”.^{Footnote 160}

[153] OECD studies affirm that Chinese steel producers receive significant subsidies, significantly more so (at 5 to 10 times the level) than producers located in other countries, and which are disproportionately directed towards firms with higher government ownership, larger size and greater indebtedness.^{Footnote 161} The OECD estimate that steel subsidies – at least those that can be more easily measured or estimated – have generally hovered between 2% and 3% of firm revenue, on average, with significant increases in times of crisis (e.g. such as during the 2008 financial crisis and the 2015-2016 steel crisis), where they increased as high as 7% of revenue, on average.^{Footnote 162} The OECD also indicated that such rates of subsidization is likely underestimated because the methodology does not capture some measures such as equity infusion and debt-for-equity swaps, which are difficult to estimate due to lack of transparency and methodological difficulties.^{Footnote 163}

[154] The OECD also found that the Chinese government’s ambition to create "National Champions" favors SOEs, granting them greater access to credit, technology, and markets, leading to a distorted playing field.^{Footnote 164} The OECD study has also clearly linked the level of subsidy with capacity expansion as well as with the maintenance of capacity especially in times of crises, describing the issue as a “subsidy-driven excess capacity.”^{Footnote 165} As stated by the OECD, such pervasive subsidization leads to capacity expansion that could not occur under market conditions, or keeps loss-making steel producers in the market, encouraging them to maintain their steel production levels. Subsidies distorts markets by generating excess capacity and fueling oversupply of steel, driving prices down. Further, for several reasons, such as the long lifespan of steel plants, excess capacity generated by these policies have negative effects that linger on for decades.^{Footnote 166}

[155] The record contains evidence^{Footnote 167} that government policies – particularly its subsidies – played a strong role in: creating and exacerbating excess capacity in the steel sector, starting with the support of zombie companies which, as mentioned earlier, were estimated as accounting for more than half of the industry 10 years ago; to the government-led expansion (i.e. especially their scale-orientation^{Footnote 168}) and financing of state-owned enterprises in the industry; to the government’s capacity replacement policies and related support.

Government influence over steel inputs

[156] Another way that the Government of China keeps domestic steel prices artificially low is by influencing the cost of its inputs. In addition to the substantial level of government ownership withing the steel industry, there is also a strong level of government ownership and involvement further upstream, such as in iron ore mining, procurement, and logistics, metallurgical coal mining, ferrous scrap processing and other raw materials.

[157] Iron Ore for instance represent the largest single cost in steelmaking for integrated producers (i.e. most steel producers in China), typically about 35-40% of cost of production.^{Footnote 169}

[158] In 2022, the Government of China established the China Mineral Resources Group (CMRG) as a centrally-owned SOE to act as a unified buyer for about 20 of the largest Chinese steelmakers.^{Footnote 170} The CMRG was created to increase Beijing’s control over raw material procurement. It now reportedly coordinates more than 85% of iron ore purchases for China’s steel industry. It can also act as a national reserve, which is released when the country’s steel industry is experiencing difficulties or accumulated at low prices.^{Footnote 171} It is also said that the CMRG is also aiming to develop domestic iron ore resources, and oversee development of mines overseas, such as the Simandou mine in Guinea,^{Footnote 172} reportedly the world’s largest, highest-grade untapped iron ore deposit, which recently began operations.^{Footnote 173} The Government of China is said to have financed billions into its development, including funding for a 600 km heavy-haul railway and for the acquisition.^{Footnote 174}

[159] The massive state-owned steel producers discussed above are also involved further upstream in iron ore. For example, Baowu, the largest steel producer in China, is part of the consortium with ownership into the Simandou iron ore mine. Ansteel is a major player that owns and operates large-scale iron ore mines, including the Xi’anshan mine being developed in Liaoning.^{Footnote 175} HBIS Group is heavily involved upstream, controlling significant domestic iron ore mines like the Sijiaying North Mine. Other key assets include the Zhongguan Mine in Hebei, while partnering on international projects like Peru’s Pampa de Pongo and Canada’s Kami project.

[160] For steel produced via the EAF production method, a method that the State is pushing the industry to convert more of its production to, steel scrap represent an important proportion of cost – as much as 70%.^{Footnote 176} Even in BOF production, scrap represent 5-10% of cost. In order to secure its supply for domestic steel producers and keep the cost of scrap steel down, the Government of China has maintained a high 40% export tax rate on steel scrap products for several years.^{Footnote 177} Since 2026, the export of scrap, along with billet and other steel products, are also subject to quotas.^{Footnote 178} Restrictions on the export of products increases the domestic supply with a suppressive effect on prices.

[161] Metallurgical coal / coke is also an important steel cost component, for integrated steel producers, representing 20-25% of their cost of production (as mentioned, 90% of steel production in China is made in BOF plants).^{Footnote 179} Just like steel, China is the largest coal producer. The conditions of the coal industry are very similar to those of the steel industry, characterized by chronic “subsidy-driven overcapacity”, support of zombie enterprises and heavy government involvement.^{Footnote 180} Again, non-market conditions help maintained low-costs for another important input for the Chinese steel industry.

[162] Electricity account for 4-6% of cost in BOF plants, or about 12-18% in EAF plants.^{Footnote 181} The record also contains evidence that steel producers benefit from subsidized electricity. Similarly, natural gas is also allegedly affected by government influence.

[163] Furthermore, while not a material input, the provision of capital at below-market cost also significantly lowers the cost of borrowing, keeping investments in productive input down, and contributing to increases in production capacity.^{Footnote 182}

Impact of government control over the long-product steel sector

[164] The CBSA believes that this preliminary analysis strongly supports that a combination of subsidies and Chinese policies leading to overcapacity created a “high-supply/low-cost” environment in the Chinese steel industry, an environment that creates systemic deflationary pressure on domestic goods. The CBSA’s analysis also supports that the overcapacity condition mainly consist of subsidy-driven overcapacity, a result of the Government of China’s chronic interventions, control and support of the industry.

[165] While other factors contribute to the low-cost or low-price environment, such as the scale and vertical integration of the producers, the fragmentation of the industry and intense competition, and its rapid automation and technological shift, even such factors are often linked to the government intervention and support. Generally speaking, the prices of steel billet and steel bar in the Chinese domestic market are mainly suppressed by the substantial subsidizing of the steel industry, especially SOEs, and due to the chronic “subsidy-driven excess capacity” in the industry. The subsidizing of the industry, including with respect to steel inputs, are keeping production and operating costs artificially low. It also leads to excess capacity and to an unhealthy competitive conditions for the industry, further driving prices artificially lower.

[166] The following section will further demonstrate the extent of the deflationary pressure on domestic steel bar.

Pricing analysis: Merchant bar prices

[167] The CBSA amalgamated the merchant steel bar purchasing data from all Chinese respondents and determined monthly weighted average purchase prices for all merchant bar purchased for the production of FGM.^{Footnote 183} The weighted average monthly prices were converted in USD using the average monthly currency exchange rate, for comparison purposes.

[168] The CBSA also determined a weighted average monthly prices in USD for merchant steel bar purchases reported by Moly-cop Chile and Moly-cop Mexico, for FGM production. The CBSA determined weighted average monthly prices for all merchant bar purchases reported by Moly-cop Chile and Moly-cop Mexico, and determined that overall, merchant bars for FGM production were purchased by the Chilean and Mexican FGM producers at prices that were 36.2% higher than the prices paid domestically by the Chinese producers. It is noted, however, that this comparison includes an amount of purchases of merchant steel bar of Chinese origin. When limiting the comparison to merchant bar of domestic origin only, the price difference increases to 67%.

[169] Similarly, a review of benchmark prices for merchant steel bar for China, Asia, Germany and USA Midwest, as published by CRU, a world-renowned price reporting agency that tracks, analyses and reports on global steel prices, trends and more, suggest that domestic merchant bar prices in China were, on average, 13% lower than the price for Asia (a benchmark that is inclusive of China), 39% lower than German prices and 60% lower than American prices.^{Footnote 184}

[170] The CBSA believes that the evidence on the record suggests that this significant price differential can be largely attributed to government intervention in the Chinese steel market, including the direct effect of the subsidizing of the industry on the industry’s cost structure, as well as the indirect effect of the subsidizing on overcapacity, with its resulting pressure on prices.

FGM market

[171] While detailed data on the FGM market is rather scarce, according to one market report, global production of FGM is estimated at 5.6 million MT in 2025, valued at USD 3.715 billion.^{Footnote 185} According to another market report,^{Footnote 186} China accounts for roughly 14% of the global market, on the basis of value.^{Footnote 187} On the basis of these estimates, the CBSA estimated production of FGM at minimum to be 785,260 MT,^{Footnote 188} and perhaps as high as 1 million MT.^{Footnote 189}

[172] The FGM industry in China is very fragmented, reflecting the overall steel industry. Based on a google search for the production capacity of FGM for 34 specific known FGM producers, a list that is not all exhaustive, the CBSA came up with a total estimated production capacity of several million MT in China (see Appendix 1 of the Section 20 Report for the Preliminary Determination). It is difficult to estimate the exact capacity for FGM as the stated capacity may include cast grinding media and other types of grinding media, or the capacity of some producers may be double-counted if the capacity of a subsidiary is counted as part of the capacity of its parent company. Nevertheless, the estimate is indicative of significant overcapacity. The five respondents alone have capacities in excess of 1.3 million MT.

[173] The political governance in the FGM sector specifically is unlikely to be comparable to that of the upstream long-products steel industry. The level of government ownership is more limited, estimated at about 8% of the sector^{Footnote 190}. While 92% of the producers are privately-owned, there is no evidence of direct government involvement in their corporate governance and decision-making. Nor does the record contain evidence of government policies, directive and guidance aimed specifically at the FGM sector, though there may be policies aimed at developing downstream use for steel goods in general. With respect to the preliminary results of the subsidy investigation, the CBSA estimated that FGM producers are subsidized by an amount that is not insignificant.

[174] Furthermore, since it is estimated that the majority of FGM producers are related to integrated steel producers (the proportion for the respondents is 60% on the basis of the number of companies and 75% on the basis of capacity), the government intervention in the steel industry extends to the FGM producers via the corporate structure as well.

[175] More importantly, the policies aimed at the steel sector have an substantial indirect impact on FGM producers. The significant government-induced overcapacity and oversupply in the steel sector, along with its significant subsidization of steel producers, including long-product producers, are resulting in substantially depressed domestic prices for merchant bar, an input that represent 80% of the cost of production and sale of FGM. As discussed above, Chinese FGM producers are able to acquire their principle input at a weighted average price that is 36% to 67% lower than the price paid by FGM producers in Chile and Mexico, the potential surrogate countries.

[176] Further, overcapacity in steel production, which evidence suggest is government-induced, creates a spillover effect leading to overcapacity in downstream steel products such as FGM, as overcapacity is converted into downstream products. For instance, as downstream steel products such as steel billet and steel bar are produced in quantities that far surpass domestic demand, and as trade actions are affecting potential export destination for the surpluses, the excess production is directed towards downstream products such as FGM in order to find new markets and bypass existing trade measures. As mentioned above, the CBSA estimated FGM overcapacity of several million MT.

[177] Considering the level of the substantial depression in the cost of its principle input material, and the level of production overcapacity for FGM, a depressed domestic price for FGM is to be expected. The following quantitative analysis will demonstrate the extent of the price differential.

Pricing analysis for FGM

[178] A comparison of the weighted average domestic prices of FGM reported by the Chinese respondents with those reported by the Mexican and Chilean potential surrogates producers reveals a substantial difference in prices. Using the data reported in Appendix 3 of the dumping RFI from all Chinese respondents, the CBSA determined monthly weighted average prices per ball sized, which were compared to the weighted average prices per ball sized in the same month, as reported by Moly-cop Chile and Moly-cop Mexico. The analysis revealed that domestic prices in China are 51% lower than the domestic prices in these countries.

[179] The CBSA believes that the evidence included on the record support that such price differential can be largely attributed to the government of China’s substantial intervention in the steel industry, including the long-product sector.

[180] Furthermore, since FGM producers reported negotiating prices of FGM with reference to published steel and raw material index prices, or by taking into consideration their cost of production, the prices of steel bar has a direct impact on the setting of the prices of FGM, whether in China or elsewhere. As such, depressed prices of steel bar will have a direct impact on the prices for FGM.

Conclusions regarding the evidence on the level of government impact on FGM prices

[181] The CBSA’s analysis during the preliminary phase of the investigation suggests that the conditions described in paragraph 20(1)(a) of SIMA are applicable to the sector under investigation. The CBSA’s analysis confirm that the Government of China substantially determines domestic prices of FGM mainly indirectly due to its chronic and significant interventions in the steel industry, including the long product sector (i.e. steel billet and steel bar) which result in significant suppression of the cost of the main input in FGM production.

[182] Further, a comparative analysis of the domestic prices reported by the Chinese respondents, and those reported by FGM producers in Chile and Mexico revealed that Chinese domestic prices are approximately half of FGM prices in the potential surrogates’ markets. As such, the CBSA believes that its analysis provides sufficient reasons to believe that the Chinese domestic prices of FGM are not substantially the same as they would be if they were determined in a competitive market.

Preliminary results of the section 20 inquiry

[183] For the purposes of the preliminary determination of dumping, the CBSA has formed the opinion that domestic prices in the FGM 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.

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

Cooperative exporters

Normal values

[185] Normal values determined pursuant to paragraph 20(1)(c) or 20(1)(d) of SIMA are normally based on the domestic selling price or cost of production of the goods plus a reasonable amount for administrative, selling, and all other costs, and a reasonable amount for profits of the like goods sold by producers in any country designated by the CBSA and adjusted for price comparability; or on the basis of the selling price in Canada of like goods imported from any country designated by the CBSA and adjusted for price comparability.

[186] As mentioned above, the CBSA requested information from potential surrogates in Brazil, Chile, Mexico and Peru, and received a response from a producer in each of Chile and Mexico.; Moly-Cop Chile, S.A and Moly-Cop Mexico, S.A. de C.V., respectively. These producers are related to the complainant, Moly-Cop Canada. The CBSA finds that Chile and Mexico are appropriate potential options for surrogate countries because they have domestic production of FGM and a domestic market (i.e. a sizable mining industry) and to the best of the CBSA’s knowledge, are competing under fair market conditions.

[187] As a result, the normal values for China were estimated following the methodology of Section 20 of SIMA, based on information provided by the two producers from Chile and Mexico.

[188] Normal values, per 60-day period and per ball size, for the cooperative exporters were estimated for the POI based on the profitable domestic selling prices of FGM by the surrogate producers in Chile and Mexico, using the methodology of subparagraph 20(1)(c)(i) of SIMA, or, where there were not sufficient profitable domestic sales, the CBSA estimated the normal values on the basis of the aggregate of the cost of production of like goods, a reasonable amount for administrative, selling, and all other costs, and a reasonable amount for profits, using the methodology of subparagraph 20(1)(c)(ii) of SIMA. The amount for profit was estimated on the basis of the domestic sales of like goods by the surrogates during the same 60-day period of the POI. In order to preserve the confidentiality of the data from the surrogate, the CBSA averaged the normal values determined in both Chile and Mexico.

[189] The CBSA will endeavor to collect additional information during the final phase of the dumping investigation in order to permit the calculation of normal values based on the surrogate country methodologies described in Section 20 of SIMA. This will include assessing whether the selling prices should be adjusted in the prescribed manner and circumstances to reflect the differences in terms and conditions of sale, in taxation and other differences relating to price comparability between the goods sold to the importer in Canada and the like goods sold by the surrogate producers in Chile and Mexico.

Changshu Feifan Metalwork Co., Ltd.

[190] Changshu Feifan Metalwork Co., Ltd. (Changshu Feifan) is a producer and exporter, located in China, that sells subject goods to Canada. Changshu Feifan has one production facility located in Changshu, China. All of the subject goods shipped to Canada were produced at its production facility in Changshu, and the company also maintains its headquarter at the same location.

[191] Changshu Feifan’s exports of subject goods represent 0.9% of the volume of subject goods exported to Canada from China and 0.7% of FGM from all countries during the POI. Changshu Feifan provided substantially complete information to the dumping RFI and to the Section 20 RFI.

[192] Changshu Feifan’s response to the dumping RFI included a database of domestic sales and costs of production of FGM during the POI. However, for the purposes of the preliminary determination, the CBSA has formed the opinion that domestic prices in the FGM 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. Therefore, the normal values were estimated using 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 Chile and in Mexico, similar to the methodology described in Section 20 of SIMA.

[193] During the POI, all of the subject goods exported to Canada by Changshu Feifan were sold to an unrelated importer. As such, the export prices were estimated in accordance with section 24 of SIMA, based on the lesser of the exporter’s selling price or the importer’s purchase price, both adjusted by deducting the costs, charges and expenses incurred in preparing the goods for shipment to Canada and resulting from the exportation and shipment of the goods.

[194] The total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 51.6% for Changshu Feifan, expressed as a percentage of the export price.

Changshu Longte Grinding Ball Co., Ltd.

[195] Changshu Longte Grinding Ball Co., Ltd. (Changshu Longte) is a producer and exporter, located in China, that sells subject goods to Canada. Changshu Longte’s production facility in China is located in Changshu. All of the subject goods shipped to Canada were produced at its production facility in Changshu, and the company also maintains its headquarters at the same location.

[196] Changshu Longte exports of subject goods represent 82.2% of the volume of subject goods exported to Canada from China and 67.5% of subject goods from all countries during the POI. Changshu Longte provided a substantially complete response to the dumping RFI and to the Section 20 RFI. In addition to Changshu Longte’s response, responses were received from one of its related input suppliers, who provided a substantially complete response. Additional information was requested from two related parties (one manufacturer and one trader), and will be analyzed in the final phase of the investigation.

[197] Changshu Longte’s response to the dumping RFI included a database of domestic sales and costs of production of FGM during the POI. However, for the purposes of the preliminary determination, the CBSA has formed the opinion that domestic prices in the FGM 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. Therefore, the normal values were estimated using the domestic selling prices or the costing data from the surrogate producers in Chile and Mexico, similar to the methodology described in Section 20 of SIMA.

[198] During the POI, all of the subject goods exported to Canada by Changshu Longte were sold to a related importer. Due to the relationship between the parties involved in the export sales, a reliability test was performed by comparing the export prices estimated in accordance with section 24 of SIMA, to the export prices estimated in accordance with paragraph 25(1)(c) of SIMA. For the purposes of the latter, the amount for profit was determined in accordance with paragraph 22(b) of the Special Import Measures Regulations (SIMR), based on sales of goods of the same general category in Canada by vendors at substantially the same trade level as the importer. Further to the reliability test, the export prices estimated under section 24 were found to be reliable for the purposes of SIMA. As such, export prices for Changshu Longte were estimated in accordance with section 24 of SIMA, based on the lesser of the adjusted exporter’s selling price or the adjusted importer’s purchase price.

[199] The total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 54.9% for Changshu Longte, expressed as a percentage of the export price.

Jiangyin Xingcheng Magotteaux Steel Balls Co., Ltd.

[200] Jiangyin Xingcheng Magotteaux Steel Balls Co., Ltd. (Xingcheng Magotteaux) is a producer and exporter, located in China, that sold subject goods to Canada. Xingcheng Magotteaux has one production facility located in Jiangyin City, China, where it also maintains its headquarters. All subject goods shipped to Canada were produced at this facility.

[201] Xingcheng Magotteaux’s exports of subject goods represent 0.5% of the volume of subject goods exported to Canada from China and 0.4% of subject goods from all countries during the POI. Xingcheng Magotteaux provided a substantially complete response to the dumping RFI and to the Section 20 RFI. Responses to the RFI were also received from four of its related input suppliers, all of which provided substantially complete responses.

[202] Xingcheng Magotteaux’s response to the dumping RFI included a database of domestic sales and costs of production of FGM during the POI. However, for the purposes of the preliminary determination, the CBSA has formed the opinion that domestic prices in the FGM 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. Therefore, the normal values were estimated using the domestic selling prices or the costing data from the surrogate producers in Chile and Mexico, similar to the methodology described in Section 20 of SIMA.

[203] During the POI, all of the subject goods exported to Canada by Xingcheng Magotteaux were sold to a related importer. Due to the relationship between the parties involved in the export sales, a reliability test was performed by comparing the export prices estimated in accordance with section 24 of SIMA, to the export prices estimated in accordance with paragraph 25(1)(c) of SIMA. For the purposes of the latter, the amount for profit was determined in accordance with paragraph 22(b) of the SIMR, based on sales of goods of the same general category in Canada by vendors at substantially the same trade level as the importer. The test revealed that all of the export prices estimated under section 25 of SIMA were equal to or greater than the export price estimated under section 24. As such, export prices estimated under section 24 were found to be reliable. As a result of the reliability test, export prices for Xingcheng Magotteaux were estimated in accordance with section 24 of SIMA, based on the lesser of the adjusted exporter’s selling price or the adjusted importer’s purchase price.

[204] The total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 43.6% for XingchengMagotteaux, expressed as a percentage of the export price.

Oriental Casting and Forging Co., Ltd.

[205] Oriental Casting and Forging Co., Ltd (Oriental Casting) is a producer and exporter of subject goods located in China. Oriental Casting has one production facility in Zhangqiu, Shandong, China. All of the subject goods shipped to Canada were produced at its production facility in Zhangqiu. Its company headquarters is maintained at the same location.

[206] Oriental Casting’s exports of subject goods represent 2.7% of the volume of subject goods exported to Canada from China and 2.2% of subject goods from all countries during the POI. Oriental Casting provided substantially complete responses to the dumping RFI and to the Section 20 RFI and to subsequent Dumping SRFIs.

[207] Oriental Casting’s response to the dumping RFI included a database of domestic sales and costs of production of FGM during the POI. However, for the purposes of the preliminary determination, the CBSA has formed the opinion that domestic prices in the FGM 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. Therefore, the normal values were estimated using the domestic selling prices or the costing data from the surrogate producers in Chile and Mexico, similar to the methodology described in Section 20 of SIMA.

[208] As the importer was unrelated to Oriental Casting, the export prices were estimated in accordance with Section 24 of SIMA, based on the lesser of the adjusted exporter’s selling price and the adjusted importer’s purchase price.

[209] The total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 62.9% for Oriental Casting, expressed as a percentage of the export price.

Tangshan ZWell Equipment Manufacturing Co., Ltd.

[210] Tangshan ZWell Equipment Manufacturing Co., Ltd. (Tangshan ZWell) is a producer and exporter, located in China, that sells subject goods to Canada. Tangshan ZWell has one production facility located in Hebei Province, China. All of the subject goods shipped to Canada were produced at its production facility in Hebei, and the company also maintains its headquarter at the same location.

[211] Tangshan ZWell’s exports of subject goods represent 7.0% of the volume of subject goods exported to Canada from China and 5.8% of FGM from all countries during the POI. Tangshan ZWell provided substantially complete information to the dumping RFI and to the Section 20 RFI.

[212] Tangshan ZWell’s response to the dumping RFI included a database of domestic sales and costs of production of FGM during the POI. However, for the purposes of the preliminary determination, the CBSA has formed the opinion that domestic prices in the FGM 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. Therefore, the normal values were estimated using the domestic selling prices or the costing data from the surrogate producers in Chile and Mexico, similar to the methodology described in Section 20 of SIMA.

[213] During the POI, all of the subject goods exported to Canada by Tangshan ZWell were sold to an unrelated importer. As such, the export prices were estimated in accordance with section 24 of SIMA, based on the lesser of the adjusted exporter’s selling price and the adjusted importer’s purchase price.

[214] The total estimated normal value compared to the total estimated export price results in an estimated margin of dumping of 76.2% for Tangshan ZWell, expressed as a percentage of the export price.

All other exporters

[215] In establishing the methodology for estimating the normal values and export prices for all other exporters from China, 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 who responded to the dumping RFI, and CBSA customs entry documentation.

[216] The CBSA decided that the normal values estimated for all other potential exporters of subject goods from China would be estimated based on information from anexporter in China that provided a substantially complete RFI response 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.

[217] Based on the facts available, for potential exporters that did not provide a 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 an cooperative exporter during the POI. 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 anomaly was identified.

[218] The CBSA also 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.

[219] Using the above methodologies, for the preliminary determination, the estimated margin of dumping for all other exporters in China is 105.3%, expressed as a percentage of the export price.

Summary of preliminary results: Dumping

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

Negligibility

[221] 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.

[222] 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.

[223] 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

[224] 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.

[225] 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's response

[234] The Government of China provided a response to the Government Subsidy RFI. For the purposes of the preliminary determination, the CBSA is treating the Government of China’s response as partially complete. For programs where complete information was provided by the Government of China, the CBSA used this information in its determination of specificity. For programs where the Government of China’s response was incomplete or contradictory, the CBSA relied on the best information available.

[235] At the initiation of the subsidy investigation, the CBSA requested information on 37 potential subsidy programs that could potentially confer benefits to producers/exporters of FGM in China. During the preliminary phase of the investigation, the CBSA removed two potential subsidy programs and also found an additional eight potential subsidy programs that were reported by the producers/exporters. In total, for the preliminary determination, the CBSA found 43 potential subsidy programs that could potentially confer benefits to producers/exporters of FGM in China. These subsidy programs will be further examined during the final phase of the investigation.

Changshu Feifan Metalwork Co., Ltd.

[236] Changshu Feifan provided a response to the Subsidy RFI. Based on an analysis of the information available on the administrative record, Changshu Feifan was found to have received countervailing benefits from seven subsidy programs which were considered to be specific and therefore actionable:

1. Program 1: Grants Related to Foreign Trade Development Fund
2. Program 7: Subsidies Related to Company/Enterprise Development and Innovation
3. Program 8: Grants for Relocating Production Facilities
4. Program 12: Grants Related to Employment, Training and Recruitment
5. Program 21: Corporate Income Tax Reduction for New and High Technology Enterprises (“NHTE”)
6. Program 22: Tax Policies related to Research and Investment
7. Program 24: Reduction in Land Use Tax or Rental Fees

[237] For purposes of the preliminary determination, the estimated amount of subsidy for Changshu Feifan is 1.9%, expressed as a percentage of the export price.

Changshu Longte Grinding Ball Co., Ltd.

[238] Changshu Longte provided a response to the Subsidy RFI. Responses were also received from one of its related input supplier. Changshu Longte was found to have received countervailing benefits from subsidy programs which were considered to be specific and therefore actionable. In addition, multiple subsidy programs were found to have conferred benefits to Changshu Longte through pass-through from its related input suppliers in connection with the purchase of major raw materials. The CBSA attributed the subsidies received by the related suppliers to the goods exported to Canada because of the relationship between the parties and concluded that a subsidy pass-through test is not required. Consequently, any actionable subsidies received by the related suppliers that are attributable to the goods under investigation and exported to Canada were aggregated with those directly received by the exporter.

[239] Based on an analysis of the information available on the administrative record, Changshu Longte was found to have received countervailing benefits from 13 subsidy programs which were considered to be specific and therefore actionable:

1. Program 5: Performance Award Grants
2. Program 6: Environmental Protection, Energy Conservation and Emission Reduction Grants
3. Program 7: Subsidies Related to Company/Enterprise Development and Innovation
4. Program 10: Patent Assistance/Award
5. Program 12: Grants Related to Employment, Training and Recruitment
6. Program 13: Grants Related to Science and Technology
7. Program 14: Grants Related to Social Security
8. Program 15: Grants to Provide Business Support
9. Program 16: Grants related to Financial/Loan Interest
10. Program 21: Corporate Income Tax Reduction for New and High Technology Enterprises (“NHTE”)
11. Program 22: Tax Policies related to Research and Investment
12. New Program 1: Subsidies Related to Rural Demonstration Site
13. New Program 2: Grants Related to Parties and Other Organizations

[240] For purposes of the preliminary determination, the estimated amount of subsidy for Changshu Longte is 2.1%, expressed as a percentage of the export price.

Jiangyin Xingcheng Magotteaux Steel Balls Co., Ltd.

[241] Xingcheng Magotteaux provided a response to the Subsidy RFI. Responses were also received from four of its related input suppliers. Xingcheng Magotteaux was found to have received countervailing benefits from subsidy programs which were considered to be specific and therefore actionable. In addition, multiple subsidy programs were found to have conferred benefits to Xingcheng Magotteaux through pass-through from its related input suppliers in connection with the purchase of major raw materials. The CBSA attributed the subsidies received by the related suppliers to the goods exported to Canada because of the relationship between the parties and concluded that a subsidy pass-through test is not required. Consequently, any actionable subsidies received by the related suppliers that are attributable to the goods under investigation and exported to Canada were aggregated with those directly received by the exporter.

[242] Based on an analysis of the information available on the administrative record, Xingcheng Magotteaux was found to have received countervailing benefits from 21 subsidy programs which were considered to be specific and therefore actionable:

1. Program 2: Grants related to Export Development, Performance and Assistance
2. Program 3: Grants related to Research and Development
3. Program 4: Grants related to Trademarks and Branding
4. Program 5: Performance Award Grants
5. Program 6: Environmental Protection, Energy Conservation and Emission Reduction Grants
6. Program 7: Subsidies Related to Company/Enterprise Development and Innovation
7. Program 10: Patent Assistance/Award
8. Program 11: Special Economic Zones (SEZs) and Other Designated Areas Incentives
9. Program 12: Grants Related to Employment, Training and Recruitment
10. Program 13: Grants Related to Science and Technology
11. Program 14: Grants Related to Social Security
12. Program 15: Grants to Provide Business Support
13. Program 19: Insurance Grants
14. Program 21: Corporate Income Tax Reduction for New and High Technology Enterprises (“NHTE”)
15. Program 23: Corporate Income Tax Reduction for Micro and Small Enterprises
16. Program 32: Provision of Land by Government
17. Program 34: Loans from State-Owned Banks (General Loans from State-Owned Banks)
18. New Program 4: Tax Handling Fee Refund
19. New Program 6: Invoice Incentives
20. New Program 7: Rental Subsidies
21. New Program 8: Special Project Bond

[243] For purposes of the preliminary determination, the estimated amount of subsidy for Xingcheng Magotteaux is 0.4%, expressed as a percentage of the export price.

Oriental Casting and Forging Co., Ltd.

[244] Oriental Casting provided a deficient response to the CBSA’s Subsidy RFI. A deficiency letter was sent to the exporter; however, a complete response to the Subsidy RFI was not received by the CBSA in sufficient time to be considered for the preliminary determination.

[245] As such, for purposes of the preliminary determination, Oriental Casting will receive the estimated amount of subsidy for all other potential exporters in China as explained in a proceeding section.

Tangshan ZWell Equipment Manufacturing Co., Ltd.

[246] Tangshan ZWell provided a response to the Subsidy RFI. Responses were also received from one of its related input supplier. Tangshan ZWell was found to have received countervailing benefits from subsidy programs which were considered to be specific and therefore actionable. In addition, multiple subsidy programs were found to have conferred benefits to Tangshan ZWell through pass-through from its related input supplier in connection with the purchase of major raw materials. The CBSA attributed the subsidies received by the related suppliers to the goods exported to Canada because of the relationship between the parties and concluded that a subsidy pass-through test is not required. Consequently, any actionable subsidies received by the related suppliers that are attributable to the goods under investigation and exported to Canada were aggregated with those directly received by the exporter.

[247] Based on an analysis of the information available on the administrative record, Tangshan ZWwas found to have received countervailing benefits from nine subsidy programs which were considered to be specific and therefore actionable:

1. Program 3: Grants related to Research and Development
2. Program 5: Performance Award Grants
3. Program 6: Environmental Protection, Energy Conservation and Emission Reduction Grants
4. Program 12: Grants Related to Employment, Training and Recruitment
5. Program 13: Grants Related to Science and Technology
6. Program 19: Insurance Grants
7. Program 21: Corporate Income Tax Reduction for New and High Technology Enterprises (“NHTE”)
8. Program 22: Tax Policies related to Research and Investment
9. New Program 3: Energy Subsidies

[248] For purposes of the preliminary determination, the estimated amount of subsidy for Tangshan ZWell is 0.1%, expressed as a percentage of the export price.

All other exporters: China

[249] For all other potential exporters of subject goods from China, the CBSA estimated an amount of subsidy on the basis of the following methodology:

1. the highest amount of subsidy for each of the 29 programs, as found at the preliminary determination, for the exporter located in China for which the CBSA has sufficient information to estimate an amount of subsidy, plus
2. the highest amount of subsidy for the 29 programs listed in (1), applied to each of the remaining 14 potentially actionable subsidy programs for which sufficient information is not available or has not been provided at the preliminary determination

[250] In establishing the methodology for estimating the amount of subsidy for all other potential exporters from China, the CBSA considered the information on the administrative record, including the complaint filed by the domestic industry, the CBSA’s estimates at initiation, and information submitted by the exporter and the Government of China.

[251] This methodology may result in the application of a less favourable rate, such that non-cooperative parties do not receive an advantage over those that cooperated during the investigation.

[252] Using this methodology, for the purposes of the preliminary determination, the estimated amount of subsidy for all other potential exporters in China is 20.0%, expressed as a percentage of the export price.

Summary of preliminary results: Subsidy

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

Negligibility

[254] 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.

[255] 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.

[256] 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

[257] If, in making a preliminary determination, the CBSA determines that the amount of subsidy of the goods of an exporter is insignificant, the investigation will continue in respect of those goods but provisional countervailing duty will not be imposed on goods of the same description imported during the provisional period, pursuant to subsections 8(1.3) and 38(1.1) of SIMA.

[258] Pursuant to subsection 2(1) of SIMA, an amount of subsidy less than 1% of the export price of the goods is defined as insignificant. The estimated amount of subsidy of FGM exported by Jiangyin Xingcheng Magotteaux Steel Balls Co., Ltd. and for Tangshan ZWell Equipment Manufacturing Co., Ltd. is below 1% and is, therefore, insignificant. Provisional countervailing duty will not be imposed on goods produced and exported by Jiangyin Xingcheng Magotteaux Steel Balls Co., Ltd. and Tangshan ZWell Equipment Manufacturing Co., Ltd. during the provisional period.

[259] For all other 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

[265] The CBSA will continue its investigations of the dumping and subsidizing of FGM and will make final decisions by August 24, 2026.

[266] 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

[267] The CITT has begun its inquiry into the question of injury to the Canadian industry. The CITT is expected to issue its finding by September 22, 2026.

[268] 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.

[269] 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 FGM that are of the same description as goods described in the CITT’s finding.

[270] 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.

[271] 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 FGM that are of the same description as goods described in the CITT’s finding.

[272] 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.