INVESTIGATION INTO THE ALLEGED DUMPING OF STEEL

INVESTIGATION INTO THE ALLEGED DUMPING OF STEEL REINFORCING BAR EXPORTED FROM

THE REPUBLIC OF KOREA, MALAYSIA, SINGAPORE, SPAIN, TAIWAN, THAILAND AND THE REPUBLIC OF

TURKEY

EXPORTER VISIT REPORT

NATSTEEL HOLDINGS PTE. LTD

This report and the views or recommendations contained therein will be reviewed by the case management team and may not reflect the final position of the Anti-Dumping Commission

March 2015

PUBLIC RECORD VERSION

1 CONTENTS

1 CONTENTS................................................................................................................................ 2 2 BACKGROUND .......................................................................................................................... 4

2.1 Background to the current investigation .............................................................................. 4 2.2 Purpose of visit................................................................................................................... 4 2.3 Meeting dates and attendees.............................................................................................. 5 2.4 Meeting and preliminary issues .......................................................................................... 5

3 COMPANY INFORMATION ........................................................................................................ 7

3.1 Company background ........................................................................................................ 7 3.2 Commercial operations ....................................................................................................... 8 3.3 Accounting ......................................................................................................................... 8

4 THE GOODS AND THE LIKE GOODS ..................................................................................... 10

4.1 The goods ........................................................................................................................ 10 4.2 Tariff classifications .......................................................................................................... 10 4.3 Like goods ....................................................................................................................... 10 4.4 Model-matching ................................................................................................................ 11

5 VERIFICATION OF SALES TO AUDITED FINANCIAL STATEMENTS ..................................... 12

5.1 Export sales ..................................................................................................................... 12 5.2 Domestic Sales ................................................................................................................ 12 5.3 The Commission’s assessment ........................................................................................ 12

6 SALES TO AUSTRALIA ........................................................................................................... 13

6.1 Distribution channels ........................................................................................................ 13 6.2 Sale Process .................................................................................................................... 13 6.3 Verification of export sales to source documents .............................................................. 14 6.4 The exporter ..................................................................................................................... 15 6.5 The importer ..................................................................................................................... 15 6.6 Arms length ...................................................................................................................... 15 6.7 Export price – preliminary assessment ............................................................................. 16

7 COST TO MAKE & SELL .......................................................................................................... 17

7.1 Introduction ...................................................................................................................... 17 7.2 Cost of production ............................................................................................................ 17 7.3 Selling, general and administrative (SG&A) expenses ...................................................... 21 7.4 Cost to make and sell – summary ..................................................................................... 22

8 DOMESTIC SALES .................................................................................................................. 23

8.1 Market .............................................................................................................................. 23 8.2 Transfers to associated companies .................................................................................. 23 8.3 Domestic sales process .................................................................................................... 24 8.4 Verification of domestic sales to source documents .......................................................... 25 8.5 Arms length ...................................................................................................................... 26 8.6 Ordinary course of trade ................................................................................................... 26 8.7 Volume and suitability of sales .......................................................................................... 27 8.8 Sales by other sellers ....................................................................................................... 27 8.9 Domestic sales – summary ............................................................................................... 27

9 THIRD COUNTRY SALES ........................................................................................................ 28

10 ADJUSTMENTS ....................................................................................................................... 29

10.1 Costs associated with export sales ................................................................................... 29 10.2 Costs associated with domestic sales ............................................................................... 30

Steel reinforcing bar NatSteel visit report Page 2

PUBLIC RECORD VERSION 11 NORMAL VALUE ..................................................................................................................... 31 12 DUMPING MARGIN – PRELIMINARY ASSESSMENT ............................................................. 33

13 LIST OF APPENDICES AND ATTACHMENTS ......................................................................... 34



2 BACKGROUND

2.1 Background to the current investigation

On 8 August 2014, OneSteel Manufacturing Pty Ltd (OneSteel) lodged an application requesting that the then Parliamentary Secretary to the Minister for Industry (the Parliamentary Secretary) publish a dumping duty notice in respect of steel reinforcing bar (rebar) exported to Australia from the Republic of Korea (Korea), Malaysia, Singapore, Spain, Taiwan, Thailand and the Republic of Turkey (Turkey). A full description of the goods under consideration is included in section 4 of this report.

On 7 October 2014, the Commissioner of the Anti-Dumping Commission decided not to reject the application and initiated an investigation into the alleged dumping of rebar from the nominated countries. Public notification of initiation of the investigation was made in The Australian newspaper on 17 October 2014. Anti-Dumping Notice (ADN) No. 2014/100 provides further details of the investigation and is available on the Commission’s website at www.adcommission.gov.au.

OneSteel alleges that the Australian industry has suffered material injury caused by rebar being exported to Australia from the nominated countries at dumped prices. It alleges that the Australian industry has been injured through:

• loss of sales volumes; • loss of market share; • price suppression; and • reduced profits and profitability. The application identified NatSteel Holdings Pte. Ltd (NatSteel) as an exporter of rebar from Singapore. A search of the then Customs and Border Protection’s (ACBPS) import database indicated that NatSteel exported rebar from Singapore to Australia during the investigation period. The Commission wrote to NatSteel advising it of the initiation of the investigation, requesting co-operation with the investigation and providing copies of an exporter questionnaire for it to complete. NatSteel completed the exporter questionnaire. The exporter questionnaire response (REQ) was supported by confidential appendices and attachments, including confidential spreadsheets containing sales and cost data requested in the exporter questionnaire.

2.2 Purpose of visit

The purpose of the visit was to verify information submitted by NatSteel in its REQ. A non-confidential version of the REQ was placed on the public record. We used verified information gathered at the visit to make preliminary assessments of:

• like goods; • who is the exporter and who is the importer; • export prices; • normal values; and • dumping margins.


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


2.3 Meeting dates and attendees

Verification meetings were held at the offices of NatSteel in Singapore.

The following people were present at various stages of the meeting:

NatSteel

Mr Vivek Karma Mr Chua Hock Cheng Mr Melvin Choo Teow Lim Mr Sanjib Nanda Ms Lim Siew Har Mr Gerardo Rublica Ms Kueh Leng Leng Ms Ong Sin Hong Ms Xia Yun Yun Mr Ronald de Graaf Mr Daniel Moulis Mr Alistair Bridges

President and Chief Executive Officer Vice President Operations (MBM) (Metallics Conversion) Chief Marketing Officer, Regional Downstream Development Chief Financial Officer SVP, Finance AVP, Finance Manager, Sales VP Finance Principal Analyst Information Manager, International Trade Principal, Moulis Legal Senior Lawyer, Moulis Legal

Anti-Dumping Commission

Ms Candy Caballero Mr Chris Vincent

Director, Operations 3 Assistant Director, Operations 1

At the start of the verification visit, NatSteel identified a number of minor amendments in the Income Statement provided to the Commission in the REQ. Details are at confidential attachment GEN 1.

2.4 Meeting and preliminary issues

We advised NatSteel of the following.

• The investigation period is 1 July 2013 to 30 June 2014. • The Commission will examine the Australian market from July 2010 for the

purpose of analysing the condition of the Australian industry. • On 13 March 2015, ADN No. 2015/33 advised that the Commissioner had

made a preliminary affirmative determination and securities will apply to future imports of rebar.

• On 4 February 2015, ADN No. 2015/13 advised that the Parliamentary Secretary granted an extension to the due date for the statement of essential facts (SEF). On 24 March 2015, ADN No. 2015/39 advised that a further extension was granted and the revised due date is 1 July 2015, unless the Parliamentary Secretary grants a further extension under s. 269ZHI1.

• The SEF will set out the material findings of fact on which the Commission intends to base its recommendations to the Parliamentary Secretary. The

1 A reference to a division, section or subsection in this report is a reference to a provision of the Customs Act 1901, unless otherwise specified.


PUBLIC RECORD VERSION SEF will invite interested parties to respond, within 20 days, to the issues raised.

• Submissions received in response to the SEF will be considered when compiling the report and recommendations to the Parliamentary Secretary.

• The Commission’s report to the Parliamentary Secretary is now due no later than 17 August 2015.

• The Parliamentary Secretary’s decision is due within 30 days from the date of receipt of the final report.

We advised NatSteel that following our visit we would prepare For Official Use Only and Public Record versions of our visit report. We would provide the company with a draft of our report to review its factual accuracy and to identify those parts of the report it considered confidential. We further advised that, following consultation about confidentiality, we would prepare a non-confidential version of the report for the public record.



3 COMPANY INFORMATION

3.1 Company background

NatSteel’s headquarters are in Singapore; it was incorporated in 1961 as National Iron and Steel Mills. The Singapore plant is the only local steel mill and has integrated upstream and downstream operations, where steel is manufactured through recycling scrap, and fabricated according to customers’ needs.

NatSteel purchases ferrous scrap steel from [CONFIDENTIAL INFORMATION DELETED – scrap steel supplier and details of operation]. [CONFIDENTIAL INFORMATION DELETED – entity] purchases ferrous scrap primarily from [CONFIDENTIAL INFORMATION DELETED – markets] and processes raw and oversized scrap into sizes suitable for use by the NatSteel meltshop. [CONFIDENTIAL INFORMATION DELETED – details of purchase price for ferrous scrap steel].

Since its incorporation, NatSteel has evolved from selling straight bars to mainly prefabricated products in Singapore, with downstream prefabricated products currently accounting for [CONFIDENTIAL INFORMATION DELETED – number] of the total domestic sales. NatSteel has expanded its fabrication business to Malaysia, China and Hong Kong.

The NatSteel Group has an annual steel production capacity of over [CONFIDENTIAL INFORMATION DELETED – number] tonnes and has over [CONFIDENTIAL INFORMATION DELETED – number] employees.

NatSteel is a wholly owned subsidiary of Tata Steel Global Holdings Pte. Ltd. The Tata Steel Group has an annual crude steel capacity of over [CONFIDENTIAL INFORMATION DELETED – number] tonnes with operations in the UK, Netherlands, Thailand and China.

NatSteel describes itself as an investment holdings and operational company. It operates the Singapore production and fabrication business, but is also holding company for the NatSteel Group. [CONFIDENTIAL INFORMATION DELETED – additional activities undertaken by NatSteel, which are not related to GUC or the investigation]. It stated that these activities are not associated with the production and sale of rebar.

During the investigation period, NatSteel exported rebar to [CONFIDENTIAL INFORMATION DELETED – number] Australian companies, [CONFIDENTIAL INFORMATION DELETED – identity of Australian customers]. [CONFIDENTIAL INFORMATION DELETED – relationship with Australian customers]

On the domestic market, NatSteel explained it conducted internal transfers to its fabrication business. It also sold the goods under consideration to [CONFIDENTIAL INFORMATION DELETED – entity]. At the visit, the Commission understood that NatSteel’s sales of the goods to [CONFIDENTIAL INFORMATION DELETED – entity] were exported and were for overseas consumption. The Commission will reassess these sales to the extent that they are shown to be for domestic consumption.



3.2 Commercial operations

3.2.1 General NatSteel is a manufacturer, distributor and fabricator, manufacturing certain steel products for the building and construction industry, including upstream steel reinforcement products such bar and coil and a wide variety of downstream building products.

NatSteel produces the following diameters that it considers are the goods under consideration:

• rebar straights (mm) – [CONFIDENTIAL INFORMATION DELETED – product mix]; and

• rebar in coil (mm) – [CONFIDENTIAL INFORMATION DELETED – product mix].

NatSteel stated that these products are produced to standard AS/NZ 4671 and are certified to meet the standards required by the Australasian Certification Authority for Reinforcing and Structural Steels (ACRS).

NatSteel sells other products that it considers are not the goods under consideration:

• cold reduced wire in cut lengths coils; • reinforcing welded wire mesh; • trench mesh; and • cut and bent bars. 3.2.2 Summary of rebar production process In the meltshop, scrap steel is melted and refined. NatSteel uses a finger shaft electric arc furnace to carry out its daily scrap melting process. The molten steel is then refined at the ladle furnace and is cast into billets at the continuous casting machine.

Billets are sent to the rolling mill, where they are rolled into the finished product.

[CONFIDENTIAL INFORMATION DELETED – details of production process] 3.2.3 Production capacities and actual rates of production NatSteel has a production capacity of [CONFIDENTIAL INFORMATION DELETED – number] tonnes. However, [CONFIDENTIAL INFORMATION DELETED –discussion of production capacity during the period of investigation].

[CONFIDENTIAL INFORMATION DELETED – discussion of influences on production capacity during the period of investigation]

3.3 Accounting

NatSteel’s financial year is from April to March.


PUBLIC RECORD VERSION NatSteel uses [CONFIDENTIAL INFORMATION DELETED – system] to maintain its accounts and stated its accounting system operates in accordance with the Singapore Financial Reporting Standard. NatSteel’s audited financial statements are based on its [CONFIDENTIAL INFORMATION DELETED – system] system. Cost accounting information is reconciled to the cost of goods sold in the audited financial statements as follows:

• opening stock; • plus cost of import; • plus cost of production net of scrap returns and by-product; • stock count adjustment; and • closing inventory. Under the company’s cost accounting system, standard costs used during the month are actualised at month end closing. Any variances that arise between standard costs and actual costs are allocated proportionately to:

• closing inventory; • inventory issued for sales; and • inventory issued for downstream production. NatSteel does not maintain separate profit centres. Cost centres are grouped into [CONFIDENTIAL INFORMATION DELETED – number] categories:

[CONFIDENTIAL INFORMATION DELETED – cost centre categories] The accounts at NatSteel and its subsidiaries are audited. NatSteel’s independent auditor provided the following audit opinion in the audit report for the 2014 financial statements:

In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at March 31, 2014 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the year ended on that date.



4 THE GOODS AND THE LIKE GOODS

4.1 The goods

OneSteel described the goods as:

Hot-rolled deformed steel reinforcing bar whether or not in coil form, commonly identified as rebar or debar, in various diameters up to and including 50 millimetres, containing indentations, ribs, grooves or other deformations produced during the rolling process.

The goods covered by this application include all steel reinforcing bar meeting the above description of the goods regardless of the particular grade or alloy content or coating.

Goods excluded from this application are plain round bar, stainless steel and reinforcing mesh.

4.2 Tariff classifications

The ACBPS’ Trade Branch advised that the goods under consideration were classified to the following tariff sub-headings in Schedule 3 of the Customs Tariff Act 1995:

• 7213.10.00 (statistical code 42); • 7214.20.00 (statistical code 47); • 7227.90.90 (statistical code 01); and • 7228.30.90 (statistical code 49. Rebar imported from Spain under these tariff subheadings is subject to a general rate of duty of 5%, while rebar imported from all other countries is subject to a “free” rate of duty.

4.3 Like goods

In its REQ, NatSteel provided details on the goods it exported and what it considered were like goods sold on the domestic market.

During the verification visit, NatSteel informed the Commission about the following:

• All the rebar that it manufactures are made to the AS/NZS4671:2001 standard;

• In Singapore, the prevailing standard is the SS2:1999 (Specification for Steel for the reinforcement of concrete). A copy of the SS2 standard was provided to the visit team. NatSteel produces rebar products, generically called [CONFIDENTIAL INFORMATION DELETED – internal designation] that meets the SS2;

• NatSteel considers that the AS/NZS4671:2001 standard is a higher standard than the SS2 when it comes to, for example, yield stress. The SS2’s yield stress is a maximum of 500N/mm2, while the AS/NZS4671:2001 requires a minimum of 500N/mm2;


PUBLIC RECORD VERSION • For production and commercial reasons, NatSteel has decided to

manufacture all rebar according to the AS/NZS4671:2001; • NatSteel applies the same production process, including the same inputs

such as billet, for rebar products sold to Australia and in the domestic market. It produces the same rib pattern for its straights and coil; and

• With regards to the measure of weldability, NatSteel produces rebar that has [CONFIDENTIAL INFORMATION DELETED – carbon equivalent].

While verifying NatSteel’s domestic sales, the Commission verified mill test certificates for rebar sold in the domestic market. These certificates showed that rebar products sold in NatSteel’s domestic market met the requirements of AS/NZS4671:2001.

Based on information before the Commission, the Commission considers that all rebar products sold by NatSteel are like goods for the purposes of this investigation.

4.4 Model-matching

In its REQ, NatSteel provided the Commission with a table setting out the rebar products that are most comparable to the goods under consideration. NatSteel informed the Commission that all rebar sold in the domestic market, like the goods exported to Australia, were made to a 500 grade. The Commission determined that NatSteel’s proposed model-matching was reasonable as it was based on shapes and diameter.



5 VERIFICATION OF SALES TO AUDITED FINANCIAL STATEMENTS

During the verification visit, NatSteel provided the Commission with an updated Sales Summary and Turnover spreadsheet to clarify the breakdown of the turnover of the GUC during the investigation period.

5.1 Export sales

NatSteel informed the Commission that the export sales figure to Australia in its Sales Summary and Turnover spreadsheet included: [CONFIDENTIAL INFORMATION DELETED – products that were not the GUC or that were not exported]. After these other sales figures were taken into account and excluded from the total turnover of the goods under consideration, the Commission was able to verify the volume and value figures of its export sales to Australia in the line-by-line listing of all its Australian sales in the Australian Sales spreadsheet submitted in the REQ.

5.2 Domestic Sales

Similarly, NatSteel’s updated Sales Summary and Turnover spreadsheet clarified the volume and value figures relating to rebar sold in the domestic market. Taking the further information into consideration, the Commission was able to verify the stated volume and value figures to NatSteel’s Domestic Sales spreadsheet.

5.3 The Commission’s assessment

The Commission was then able to reconcile NatSteel’s total value turnover of the sector comprising of the goods under consideration and its fabricated products to its Trial Balance for the period of investigation. This total value turnover of the sector also reconciled with NatSteel’s Income Statement for the period of investigation.

Due to the fact that NatSteel had not yet prepared its annual financial statements at the time of the visit, NatSteel provided data relating to its most recently completed financial year (FY2014 from April 2013 to March 2014). This set of data was provided in tandem with data relating to the period of investigation. NatSteel provided its turnover volume and value figures for FY2014 to enable the Commission to verify these figures with its Trial Balance and then to its audited financial statements for FY2014. The Commission verified the company turnover figures all the way through to NatSteel’s 2014 audited financial statements.

The Commission is, therefore, satisfied that the domestic and export sales data provided by NatSteel is complete and accurate.

Documents reconciling sales to the financial statements are at confidential attachment REC 1.



6 SALES TO AUSTRALIA

6.1 Distribution channels

During the period of investigation, NatSteel sold to [CONFIDENTIAL INFORMATION DELETED – number] customers, [CONFIDENTIAL INFORMATION DELETED – entities]. [CONFIDENTIAL INFORMATION DELETED – discussion of relationship between entities], NatSteel informed the Commission that it did not have any agency or distributor agreements during the investigation period and no commission was paid in relation to export sales to Australia. NatSteel informed the Commission that it had no exclusive agreements or minimum purchase agreements with the Australian importers.

During the period of investigation, its sales to [CONFIDENTIAL INFORMATION DELETED – customers] accounted for approximately [CONFIDENTIAL INFORMATION DELETED – number] of its sales of rebar and the remaining share to [CONFIDENTIAL INFORMATION DELETED – customers].

6.2 Sale Process

6.2.1 Pricing and negotiations NatSteel informed the Commission that the selling process begins with pricing negotiations when NatSteel presents its [CONFIDENTIAL INFORMATION DELETED – price offers] to its Australian customers. NatSteel explained that its [CONFIDENTIAL INFORMATION DELETED – price offer] is based on its internal pricing guide that takes into consideration the following:

[CONFIDENTIAL INFORMATION DELETED – factors taken into consideration when negotiating prices]

NatSteel informed the Commission that considerations relating to [CONFIDENTIAL INFORMATION DELETED – pricing considerations] were encapsulated in the [CONFIDENTIAL INFORMATION DELETED – data source].

Evidence was provided to the Commission of email negotiations in June 2014 relating to market conditions for rebar that illustrates NatSteel’s use of its internal pricing guide for exports to Australia. It was explained to the visit team that once the parties agreed on the prevailing prices for rebar products for [CONFIDENTIAL INFORMATION DELETED – period], all orders for that [CONFIDENTIAL INFORMATION DELETED – period] followed the agreed [CONFIDENTIAL INFORMATION DELETED – prices]. Delivery terms were on a [CONFIDENTIAL INFORMATION DELETED – delivery terms] basis. A separate invoice was drawn up for each shipment and payment was made to that invoice. Supporting documentation relating to NatSteel’s pricing and negotiations is at confidential attachment EXP 1.

The Commission reconciled NatSteel’s sales to its Australian customers with ACBPS’s import data base and found some minor variances. During the verification, it was explained to the Commission that these variances related to rebar [CONFIDENTIAL INFORMATION DELETED – explanation for variances]. For the


PUBLIC RECORD VERSION purposes of calculating the export price, these transactions have been excluded as NatSteel was not the exporter of the goods. The definition of an ‘exporter’ is further discussion in section 6.7 in this report below.

6.2.2 Discounts, rebates and allowance NatSteel stated that it does not offer any discounts or pay any rebates to its Australian customers. The Commission did not find any evidence that NatSteel offered discounts or rebates.

6.2.3 Date of sale NatSteel recorded the date of sale as the date of the sales invoice which was prepared on the date of the export declaration. NatSteel had not claimed that a date other than the date of invoice better reflects the date of sale.

6.2.4 Export credit The payment term indicated in the invoices and Export Sales spreadsheet was [CONFIDENTIAL INFORMATION DELETED – payment terms]. On closer inspection, the visit team observed that actual payment dates were [CONFIDENTIAL INFORMATION DELETED – different] than the [CONFIDENTIAL INFORMATION DELETED – payment terms] noted on the invoice. On this basis, the visit team calculated an export credit amount, as set out in confidential appendix 1.

6.3 Verification of export sales to source documents

NatSteel provided a line-by-line listing of all its export sales to Australia during the investigation period and copies of export transactions for two shipments in its REQ.

To facilitate downwards verification of NatSteel’s export sales to source documentation, prior to the visit the Commission requested that NatSteel provide supporting documents for a further twelve selected invoice numbers. NatSteel provided the following documents for each of these selected shipments:

• purchase order; • commercial invoice; • packing list; • bill of lading; • certificate of origin; • mill certificates; • cargo clearance permit; • documents supporting ocean freight, inland transport, container stuffing and

other charges, including reconciliation from supplier invoices to the export sales spreadsheet; and

• any other costs related to export sales. For the selected transactions, the Commission was able to reconcile each item from the Australian Sales Spreadsheet to the source documents, including actual weight, shipping terms, net invoice value, ocean freight, marine insurance and packing and handling.


PUBLIC RECORD VERSION NatSteel informed the Commission that “other costs” in its Australian Sales spreadsheet relate to charges incurred due to its certification from the Australian Certification Authority for Reinforcing Steel (ACRS). NatSteel explained that ACRS visits the NatSteel’s mill and audits its systems and processes in manufacturing rebar on an annual basis. [CONFIDENTIAL INFORMATION DELETED – details of ACRS audit process and allocation of costs]. A copy of supporting documentation relating to NatSteel’s ACRS certification is at confidential attachment EXP 2

The Commission considers that the export sales data provided by NatSteel is accurate.

A bundle of supporting documentation for the selected shipments is at confidential attachment EXP 3.

6.4 The exporter

The Commission considers NatSteel was the exporter of the goods. NatSteel:

• manufactured the goods to the specific order of its Australian customers; • was listed as the supplier on the bill of lading; • invoiced the Australian customer for the goods; • arranged and paid the inland freight; • was the principal in the transaction located in the country of export from

where the goods were shipped; and • sent the goods for export to Australia and was aware of the identity of the

purchaser of the goods. 6.5 The importer

The Commission considers that [CONFIDENTIAL INFORMATION DELETED – Australian customers] were the importers of the goods. They were individually:

• named as the buyers on the sales contracts; • named on the commercial invoices; and • named on the packing lists and mill test certificates. On the evidence collected and verified at the visit with NatSteel and other available information, including that verified with NatSteel the Commission considers that [CONFIDENTIAL INFORMATION DELETED – Australian customers] were the beneficial owner of the goods at the time of importation and were therefore the importers.

6.6 Arms length

In respect of NatSteel’s sales of rebar to its [CONFIDENTIAL INFORMATION DELETED – Australian customers], related parties during the period of investigation, the Commission found no evidence that during the period of investigation:


PUBLIC RECORD VERSION • there was any consideration payable for or in respect of the goods other than

their price; • the price was influenced by a commercial or other relationship between the

buyer, or an associate of the buyer, and the seller, or an associate of the seller; or

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

The Commission therefore considers all of NatSteel’s export sales to Australia during the investigation period were arms-length transactions.

6.7 Export price – preliminary assessment

For export sales to Australia by NatSteel, the Commission considers:

• that the goods have been exported to Australia otherwise than by the importer;

• that the goods have been purchased by the importer from the exporter; and • the purchases of the goods were arm’s length transactions. Therefore, the Commission considers that export prices can be established under section 269TAB(1)(a) using the invoiced price less any part of the price that represents a charge in respect of transport of the goods or in respect of any other matter arising after exportation.

Export prices have been calculated on a monthly basis on a unit value per tonne in SGD, fob, cash.

NatSteel’s export sales listing and a summary of export prices are at confidential appendix 1.



7 COST TO MAKE & SELL

7.1 Introduction

Prior to the verification visit, NatSteel provided the Commission with a detailed breakdown of its Cost to Make and Sell spreadsheet, detailing its costs of production and conversion for each particular diameter of straights or coils for every month of the period of investigation. For the purposes of the verification visit, the Commission interrogated selected items in NatSteel’s Cost to Make and Sell spreadsheet.

Production Cost Centres

NatSteel informed the Commission how its cost accounting system worked, beginning with Product Cost Centres. For the production of rebar, the Commission considered the following Product Cost Centres [CONFIDENTIAL INFORMATION DELETED – cost centres].

The Commission also considered other cost centres relating to Production Support, Shared Support and other cost centres relating to administration, distribution and outward transport.

Imported goods [CONFIDENTIAL INFORMATION DELETED]

[CONFIDENTIAL INFORMATION DELETED – information concerning imports of goods].

7.2 Cost of production

7.2.1 Reconciliation to financial statements Export quantity

In verifying NatSteel’s CTMS spreadsheet, the Commission selected the quantity of [CONFIDENTIAL INFORMATION DELETED – type] straights rebar exported to Australia in November 2013. In response, NatSteel showed the details (including [CONFIDENTIAL INFORMATION DELETED – number] material codes) behind the export quantity in its [CONFIDENTIAL INFORMATION DELETED – system] accounting system. While the Commission observed a [CONFIDENTIAL INFORMATION DELETED – number] tonne discrepancy in its accounting system, NatSteel provided a reasonable explanation for this relatively minor discrepancy.

Cost to make

The Commission further verified NatSteel’s CTMS for [CONFIDENTIAL INFORMATION DELETED – type] straight rebar from November 2013 by verifying the CTMS amount upwards. The Commission compared the amount shown in the spreadsheet as against the total actual cost in [CONFIDENTIAL INFORMATION DELETED – system]. NatSteel’s system showed the standard costing, which is then updated at the end of every month for actual costing. The Commission observed the cost per tonne amount in the Material Price Analysis on [CONFIDENTIAL


PUBLIC RECORD VERSION INFORMATION DELETED – system], which is consistent with the cost per tonne amount in the CTMS spreadsheet.

The Commission observed a slight variance in the cost to make amount, as shown in the CTMS spreadsheet and [CONFIDENTIAL INFORMATION DELETED – system]. NatSteel explained that this was due to [CONFIDENTIAL INFORMATION DELETED – reason for variance].

The Commission was able to verify upwards the particular export quantity to NatSteel’s Trial Balance for the 2014 financial year. The Commission verified the Trial Balance from SAP to the company’s retained earnings in the Audited Financial Statement.

Supporting documentation relating to the upwards verification of NatSteel’s CTMS is at confidential attachment COSTS 1.

7.2.2 Verification to source documents Prior to the verification visit, NatSteel provided the Commission with a detailed spreadsheet providing a breakdown of its cost of production. This spreadsheet indicated the detailed costs breakdown for NatSteel’s meltshop and bar mill, including conversion costs and listing of its major consumables. The spreadsheet also noted various plant shutdowns due to the scheduled upgrades.

The Commission selected the following items for downwards verification and focused on transactions occurring in November 2013:

• scrap; • electricity; • ferro alloys; • refractories and relining; • fuel for the meltshop; • depreciation; and • sale of by-products Scrap

NatSteel provided a submission relating to the relationship of [CONFIDENTIAL INFORMATION DELETED – entity] and NatSteel. [CONFIDENTIAL INFORMATION DELETED – explanation of relationship between NatSteel and entity]. NatSteel explained that [CONFIDENTIAL INFORMATION DELETED – entity] “collects scrap and processes it (sorting and cutting) for the purposes of inter-company transfer to NatSteel for the production of steel billets”. Its submission explained that [CONFIDENTIAL INFORMATION DELETED – discussion of NatSteel scrap costs]. A copy of [CONFIDENTIAL INFORMATION DELETED – entity’s] audited financial accounts (year ended 31 March 2014) was provided to the Commission and demonstrated the overall profitability of [CONFIDENTIAL INFORMATION DELETED – entity].

NatSteel also provided the Commission with its material price analysis from [CONFIDENTIAL INFORMATION DELETED – system] that verified to its CTMS.


PUBLIC RECORD VERSION The Commission sighted invoices for purchases of heavy steel scrap that matched its [CONFIDENTIAL INFORMATION DELETED – system] account. Proof of payment was also provided to the Commission.

A bundle of supporting documentation relating to the verification of NatSteel’s scrap costs is at confidential attachment COSTS 2.

Electricity

By way of background, NatSteel explained its electricity arrangement (including placements of meters) in its meltshop.

NatSteel provided the Commission with a copy of its electricity retail agreement with its supplier. It also provided a copy of an invoice from its electricity supplier. NatSteel provided a detailed spreadsheet to the Commission explaining its internal accrual system and its subsequent billing, appearing as adjustments. A copy of its monthly meter readings for November 2013 was also provided to the Commission. The Commission verified the applicable electricity rates (peak and off-peak hours) paid by NatSteel. The Commission verified that almost [CONFIDENTIAL INFORMATION DELETED – number] of its electricity consumption was charged to its [CONFIDENTIAL INFORMATION DELETED – cost centre]. The Commission verified the allocation of electricity for rebar in NatSteel’s bar mill against the total amount recorded for its bar mill, which included the production of rebar and wire rod.

A bundle of supporting documentation relating to the visit team’s verification of NatSteel’s electricity costs is at confidential attachment COSTS 3.

Ferro Alloys

The Commission verified NatSteel’s costs relating to alloys used in the ladle furnace. NatSteel explained that it tracks consumables, such as alloys by issuing a requisition from its meltshop which is then posted to the production centre’s inventory records. NatSteel provided samples of purchase of its alloys ([CONFIDENTIAL INFORMATION DELETED – specific alloys]) to the Commission.

A bundle of supporting documentation relating to the visit team’s verification of NatSteel’s ferro alloy costs is at confidential attachment COSTS 4.

Refractories and relining

The Commission verified NatSteel’s costs relating to its refractories and materials used for the relining of the furnace in the meltshop. NatSteel showed its entries in its [CONFIDENTIAL INFORMATION DELETED – system] system for its meltshop cost centre. The figures were consistent with the EAF costs breakdown spreadsheet provided to the Commission.

NatSteel also provided copies of invoices relating to NatSteel’s purchases of precast tundish well for its arc furnace and its dolomite bricks for its ladle furnace. The Commission verified these figures to NatSteel’s relevant cost centres in SAP.

A bundle of supporting documentation relating to the visit team’s verification of NatSteel’s refractories and relining costs is at confidential attachment COSTS 5.


PUBLIC RECORD VERSION Fuel for the meltshop

NatSteel provided a submission relating to its [CONFIDENTIAL INFORMATION DELETED – fuel] usage in the production of billets. It provided the Commission with its costs entries in [CONFIDENTIAL INFORMATION DELETED – system] for fuel consumption in the meltshop. NatSteel explained that [CONFIDENTIAL INFORMATION DELETED – reasons for use of type of fuel]. The Commission verified NatSteel’s supplier invoice and proof of payment and its fuel usage to the relevant EAF cost centre. The Commission verified that stated costs were allocated to the correct cost centre.

Supporting documentation relating to the visit team’s verification of NatSteel’s fuel costs is at confidential attachment COSTS 6.

Depreciation

NatSteel provided the Commission with its fixed assets register. The Commission examined its SAP entries and confirmed how assets were depreciated.

Supporting documentation relating to the visit team’s verification of NatSteel’s depreciation costs is at confidential attachment COSTS 7.

Input credits

The Commission verified sales of [CONFIDENTIAL INFORMATION DELETED – by-product] generated by NatSteel back to [CONFIDENTIAL INFORMATION DELETED – entity] appearing as “Other inputs credit” in its CTMS. NatSteel explained how [CONFIDENTIAL INFORMATION DELETED – entity] issues credit notes to NatSteel for its purchase of [CONFIDENTIAL INFORMATION DELETED – by-product] from NatSteel. Credits provided by [CONFIDENTIAL INFORMATION DELETED – entity] are based on [CONFIDENTIAL INFORMATION DELETED – basis for credits]. The Commission verified these credit notes from [CONFIDENTIAL INFORMATION DELETED – system] to its input credit allocations in its CTMS. The Commission also verified how the sales of by-products are allocated to NatSteel’s products, such as wire rod and rebar.

Supporting documentation relating to the visit team’s verification of NatSteel’s input credits is at confidential attachment COSTS 8.

Abnormal and extraordinary gains and losses

NatSteel provided a submission explaining its abnormal and extraordinary gains and losses. The submission set out the four entries falling under this category. NatSteel described each entry and how they are unrelated to the production or sales of the goods under consideration.

The Commission verified these entries and accepted that these were unrelated to the production or sales of the goods under consideration.

Supporting documentation relating to the visit team’s verification of NatSteel’s abnormal and extraordinary gains and losses is at confidential attachment COSTS 9.


PUBLIC RECORD VERSION 7.2.3 Normalisation adjustment NatSteel’s submissions

[CONFIDENTIAL INFORMATION DELETED – details of NatSteel’s claim and supporting evidence]

The Commission’s assessment

The Commission has considered NatSteel’s submissions relating to its normalisation adjustment claim. The Commission considers that based on information provided by NatSteel, it appears that by [CONFIDENTIAL INFORMATION DELETED – month], NatSteel’s systems have stabilised. The Commission considers that the drop in production levels after [CONFIDENTIAL INFORMATION DELETED – month] were attributable to factors, other than the upgrade and related start-up issues.

In the circumstances, the Commission considers that NatSteel has provided sufficient evidence in support of a normalisation adjustment claim for the period from [CONFIDENTIAL INFORMATION DELETED – period]. Accordingly, the visit team applied a normalisation adjustment to the following:

[CONFIDENTIAL INFORMATION DELETED – basis for adjustment].

Supporting documentation relating to the visit team’s verification of NatSteel’s claim for normalisation adjustment is at confidential attachment COSTS 10. The visit team’s calculation of the amended CTMS with the normalisation adjustment is at confidential appendix 1.

7.3 Selling, general and administrative (SG&A) expenses

NatSteel provided itemised selling and administration expenses for the year. NatSteel explained the basis of its allocation of its SG&A. It submitted that:

• Corporate centre costs with regional roles are [CONFIDENTIAL INFORMATION DELETED – basis for allocation].

• Direct costs for downstream and domestic sales are [CONFIDENTIAL INFORMATION DELETED – basis for allocation].

• Costs of the Sales and Marketing Department solely for domestic sales [CONFIDENTIAL INFORMATION DELETED – basis for allocation].

• Common costs are allocated [CONFIDENTIAL INFORMATION DELETED – basis of allocation]:

During the verification visit, the Commission examined NatSteel’s allocation of administrative expenses, including its corporate centre costs to its subsidiaries on a turnover basis, IT expenses and payment of commission relating to finished goods in domestic sales. The Commissioned also verified NatSteel’s selling and distribution and other operating income for the investigation period.

The Commission reconciled figures set out in its detailed SG&A calculations spreadsheet to its CTMS and to its audited financial statements.


PUBLIC RECORD VERSION Documentation relating to the visit team’s verification of NatSteel’s SG&A is at confidential attachment COSTS 11.

7.4 Cost to make and sell – summary

We are satisfied that sufficient information was available and verified to substantiate the CTMS data submitted by NatSteel. We consider the CTMS data is suitable for:

• determining a rate of profit for domestic sales; and • determining constructed normal values. The revised Australian CTMS with a normalisation adjustment is at confidential appendix 2.



8 DOMESTIC SALES

8.1 Market

NatSteel sells rebar to four kinds of customers on the domestic market: end users, fabricators, traders and resellers. Typically:

• end users – require the rebar to be delivered on site at construction projects; • traders – require goods to be delivered tor traders’ clients; • resellers – goods are delivered to the reseller’s warehouse or store; and • fabricators – provide cutting and bending to the rebar. Generally, NatSteel’s market share of the rebar market in Singapore is around [CONFIDENTIAL INFORMATION DELETED – number]. NatSteel sees its main competitors in the rebar market as a Singaporean importer which imports rebar from Turkey and other countries, an importer with affiliations with a Malaysian exporter and a smaller importer. The Commission was also informed that there are no duties imposed on imported rebar in Singapore.

NatSteel said that there are no restrictions on pricing in the market, however it explained that the BCA plays an important role in price monitoring of rebar, particularly in large development and construction projects involving government funding. It was explained to the Commission that the BCA requires all sellers of rebar to report and submit sales prices to the BCA on a monthly basis. The BCA then indexes the prices and publishes on its website a monthly indexed price for rebar. NatSteel informed the Commission that the BCA index serves as a price index for most of its clients, especially those that are government-related projects. It was explained to the visit team that the BCA plays an important role in price monitoring of rebar.

Transfers to associated companies

During the period of investigation, NatSteel transferred rebar products to its downstream fabrication business, Business Solutions. These transfers amounted to [CONFIDENTIAL INFORMATION DELETED – number] of the value of all NatSteel rebar domestic transactions, including sales to unrelated parties. For the purposes of this verification, these transactions have not been included in the normal value calculations as they were not considered to be sales in the ordinary course of trade.

NatSteel also informed the Commission that it sold a relatively small amount of rebar to its subsidiary, NatSteel Trade International Pte Ltd, who then on sold the rebar to overseas customers. For the purposes of this verification, these transactions have not been included in the normal value calculations as they were not intended for domestic sales.



8.2 Domestic sales process

8.2.1 Pricing and negotiations NatSteel advised that it was not related to any of its customers to which it sold rebar. It does not have any agency or distribution agreements in relation to its domestic sales.

NatSteel provided a description of its sales process in its REQ, and provided additional detail at the verification visit:

NatSteel does not publish a set pricing or price list, instead internal management establishes a general pricing guide based on a number of factors:

[CONFIDENTIAL INFORMATION DELETED – pricing considerations] This internal pricing guide provides a framework to NatSteel’s sales staff in negotiating sales prices and contracts.

8.2.2 Types of sales NatSteel informed the Commission that there are generally [CONFIDENTIAL INFORMATION DELETED – number] types of sales in its domestic rebar business:

[CONFIDENTIAL INFORMATION DELETED – explanation for different types of domestic sales]

8.2.3 Terms of sale [CONFIDENTIAL INFORMATION DELETED – terms of sale].

Apart from a relatively small amount of sales sold on an actual weight basis, NatSteel informed the Commission that it is generally preferred by its domestic customers that rebar are sold on a theoretical weight basis. The Commission verified the terms of domestic sales in its analysis of NatSteel’s domestic sales spreadsheet and of supporting documents requested by the Commission.

NatSteel indicated in its REQ that its domestic sales are sold on the following possible payment terms:

[CONFIDENTIAL INFORMATION DELETED – payment terms] On closer examination of the source documents relating to payment terms, the Commission inquired why in some of the sample sales required by the Commission, payment were not made to NatSteel until [CONFIDENTIAL INFORMATION DELETED – period] after payment was due. [CONFIDENTIAL INFORMATION DELETED – details of payment arrangements]. The visit team reviewed [CONFIDENTIAL INFORMATION DELETED – agreement] and verified the [CONFIDENTIAL INFORMATION DELETED – rates] paid by NatSteel. NatSteel explained that it calculated its monthly average charges by dividing its total paid charges by the tonnage for the month. The visit team verified the domestic credit costs described in the Domestic Sales spreadsheet.


PUBLIC RECORD VERSION Supporting documentation relating to the visit team’s verification of NatSteel’s factoring/domestic credit costs is at confidential attachment DOM 1.

8.2.4 Discounts, rebates and allowances NatSteel stated that it does not provide any discounts, rebates or allowances, and the Commission found no evidence of discounts, rebates or allowances during the verification visit.

8.2.5 Date of sale As indicated in the Commission’s Dumping and Subsidy Manual, in establishing the date of sale, the Commission will normally use the date of invoice as it best reflects the material terms of sale. Where a claim is made that an exporter claims a date other than the date of invoice better reflects the date of sale, the Commission will examine the evidence provided. In this case, NatSteel had not provided any submissions requesting that a date other than the date of invoice be considered as the date of sale.

8.3 Verification of domestic sales to source documents

To facilitate downwards verification of NatSteel’s domestic sales to source documents, the Commission requested that NatSteel provide supporting documents for a further twelve selected invoice numbers. NatSteel provided the following documents for each of these selected transactions:

• job advice; • delivery order; • inspection certificate; • tax invoice; • bank statements and other documentation evidencing payment ; • details of and documentation evidencing transport charges; and • details of and documentation evidencing credit notes. Transportation costs

NatSteel listed transportation costs in its sales listing and provided further information regarding its inland transport costs at the verification visit. NatSteel explained that it calculated a monthly weighted average of its local transport costs. This monthly weighted average was applied in its Domestic Sales spreadsheet. The Commission verified the total monthly local transport costs to the entry for local transport costs for the goods in the Trial Balance.

Documentation relating to the transportation costs are at confidential attachment DOM 2.

BCA indexing

Certain transactions selected by the Commission for verification showed credit notes applied by NatSteel. NatSteel explained that certain sales contracts were subject to BCA indexing that required subsequent price adjustments. The Commission verified the BCA price indexing and the formula applied by NatSteel in calculating its credit


PUBLIC RECORD VERSION notes to source documents. A copy of a contract between NatSteel and a domestic purchaser showed that its sales were subject to a credit process due to the [CONFIDENTIAL INFORMATION DELETED – period] lag time in the BCA monthly published price. A copy of this contract is at confidential attachment DOM 3.

The Commission was able to reconcile selected transactions from the Domestic Sales spreadsheet to the relevant source documents. Accordingly, the Commission considers that the domestic sales data provided by NatSteel is accurate.

A bundle of documentation for the selected domestic sales transactions is at confidential attachment DOM 4.

8.4 Arms length

In respect of NatSteel’s domestic sales of rebar, the Commission found no evidence that:

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

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

• the buyer, or an associate of the buyer, will, subsequent to the purchase or sale, directly or indirectly, be reimbursed, be compensated or otherwise receive a benefit for, or in respect of, the whole or any part of the price.

The Commission, therefore, considers NatSteel’s domestic sales during the investigation period were arms length transactions.

8.5 Ordinary course of trade

The Commission will exclude domestic sales of products in circumstances in which the total volume of unprofitable sales is found to be in excess of 20%, and deemed to be unrecoverable within a reasonable period of time2. From the domestic sales data provided, we compared the total invoice price paid for each domestic sale with the fully absorbed CTMS rebar for the corresponding model in the corresponding quarter. This enabled a proportion of profitable sales to be determined for each model.

To test the recoverability of unprofitable sales, we compared the total invoice price paid for each domestic sale with the fully absorbed CTMS rebar for the corresponding model.

For domestic sales of models equivalent to those exported to Australia we found that for each model, more than 20% of sales were not profitable. We have only included sales of profitable and recoverable sales.

2 The Commission’s view is that a reasonable period of time for the purposes of testing recoverability of unprofitable sales is twelve months.


PUBLIC RECORD VERSION Sales may also not be in the ordinary course of trade for other reasons. As set out in section 3.2.3, it was explained to the Commission that during the period of investigation, NatSteel imported rebar to satisfy the domestic market while it was upgrading its furnace and rolling mill. It was also explained that NatSteel’s accounting system assigned identical codes to imported rebar and rebar that was manufactured by NatSteel. As a result, the Commission was unable to determine the cost of goods, that is the cost of production or manufacture of domestic sales, pursuant to Regulation 43(2) of the Customs (International Obligations) Regulation 2015 (Customs Regulation).

8.6 Volume and suitability of sales

For the reasons set out in section 8.6, the Commission did not test the volume and suitability of sales as it was not appropriate to establish normal values under section 269TAC(1).

8.7 Sales by other sellers

There are other sellers of rebar in Singapore, however the Commission does not have information on those sellers’ costs and sales.

8.8 Domestic sales – summary

Based on the information provided by NatSteel and the verification processes conducted on site, we could not be satisfied that domestic sales were sold in the ordinary course of trade, as discussed in section 8.6 above. As a result, we consider that prices paid in respect of domestic sales are not suitable for assessing normal value under s. 269TAC(1). A summary of domestic sales is at confidential appendix 3.



9 THIRD COUNTRY SALES

During the verification, NatSteel noted that it does not propose to make any submission proposing that third country sales ought to be used for normal value purposes. NatSteel did not provide any details to its third country sales in its REQ. It was of the view that sufficient information and data had been provided to the Commission relating to sales and costs.

The Commission considers it has sufficient information to determine a normal value in the ordinary course of trade or on the basis of costs (if required) and did not seek to examine third country sales.



10 ADJUSTMENTS

10.1 Costs associated with export sales

10.1.1 Export inland freight and handling

NatSteel provided transaction-specific details of export inland freight and handling in its Australian sales spreadsheet. We have made a positive adjustment for export inland freight and handling.

10.1.2 Export container stuffing

NatSteel provided transaction specific details of export container stuffing charges in its Australian sales spreadsheet. In its bundle of supporting documentation, it provided documentation supporting these charges at confidential attachment 3. We have made a positive adjustment for export container stuffing charges.

10.1.3 Export certification charges

NatSteel provided paid ACRS accreditation costs in respect of its exports to Australia. We have made a positive adjustment for export certification charges.

10.1.4 Export credit

NatSteel provided the Commission with information relating to its export credit terms. The Commission verified the export credit terms to its export sales documents. We have made a positive adjustment for export credit.

Supporting documentation is at confidential attachment ADJ 1.

10.1.5 Theoretical and actual weight

NatSteel submitted to the Commission that it sells straights to Australian on an [CONFIDENTIAL INFORMATION DELETED – basis]. In contrast, it sells rebar straights in the domestic market on a [CONFIDENTIAL INFORMATION DELETED – basis]. NatSteel, however, reasoned that although there is a perceived [CONFIDENTIAL INFORMATION DELETED – number] weight difference, based on the spreadsheets provided in the REQ, its pricing methodology already takes into consideration the [CONFIDENTIAL INFORMATION DELETED – number] factor when pricing Australian sales. It explained that NatSteel adds [CONFIDENTIAL INFORMATION DELETED – number] to the [CONFIDENTIAL INFORMATION DELETED – market prices] when issuing its [CONFIDENTIAL INFORMATION DELETED – periodical] internal price guidelines for Australian sales. NatSteel argued that no price adjustment was required as the [CONFIDENTIAL INFORMATION DELETED – number] difference is already factored into the export pricing.

The Commission was provided with samples of NatSteel’s internal pricing guides that illustrated the [CONFIDENTIAL INFORMATION DELETED – number] adjustment factor to its [CONFIDENTIAL INFORMATION DELETED – market sales]. In the circumstances, the Commission did not apply an adjustment to the normal value.


PUBLIC RECORD VERSION Supporting documentation is at confidential attachment ADJ 2 and EXP 1.

10.2 Costs associated with domestic sales

10.2.1 Domestic credit

For each domestic transaction, NatSteel provided details of the payment terms. We verified these payment terms and the relevant interest rate in the selected transactions. We have used the stated payment terms and interest rate to make a negative adjustment for domestic credit terms.

10.2.2 Domestic inland freight

The delivery terms for all domestic sales is delivered. We calculated a monthly weighted average for the inland freight charges ranging from about [CONFIDENTIAL INFORMATION DELETED – number] to about [CONFIDENTIAL INFORMATION DELETED – number]. Accordingly, we have made an adjustment for domestic inland freight.

10.2.3 Level of trade

During the verification visit, NatSteel made a submission relating to its level of trade adjustment. NatSteel provided an analysis of its domestic sales data and explained that there are four types of customers in the domestic market. The four types of customers in the domestic market are: end users, fabricators, resellers and traders. In support of its analysis, NatSteel provided graphs showing consistent patterns of price differences based on a model by model basis. The visit team considered NatSteel’s submissions and tested them against the domestic sales spreadsheet. Accordingly, we were satisfied with the basis for the adjustment and have made a level of trade adjustment.

Supporting documentation is at confidential attachment ADJ 3.



11 NORMAL VALUE

As set out in section 8 of this report, NatSteel had imported rebar for sale in the domestic market. During the verification visit, NatSteel explained that imported rebar and its own produced rebar were allocated the same stock numbers. For the purposes of this investigation, NatSteel was unable to differentiate in its recording system which costs related to imported rebar and which costs related to its own production.

In the circumstance, the Commission is unable to rely on domestic sales in establishing normal values as they included sales of imported rebar. Regulation 43 requires that for the purposes of conducting the ordinary course of trade test, an amount must be worked out that is the cost of production or manufacture of like goods in a country of export.

We consider that information gathered and detailed in this report and its attachments can be relied upon to establish constructed normal values for comparison with export prices for rebar exported to Australia during the investigation period under s. 269TAC(2)(c).

The Commission considered Regulation 45 of the Customs Regulation and determined that:

• the Commission was unable to work out the profit amount under Regulation 45(2) because the Commission was unable to conduct the ordinary course of trade test on domestic sales;

• the Commission was unable to work out the profit amount under Regulation 45(3)(a) because the Commission was not able to ascertain which goods were produced by NatSteel. As discussed above, NatSteel assigned identical codes to its manufactured goods with imported rebar products;

• the Commission was unable to work out the profit amount under Regulation 45(3)(b) as it had no information on profit realised by other exporters or producers in the domestic market; and

• the Commission determined a profit amount under Regulation 45(3)(c) by using any other reasonable method and having regard to all relevant information. To this end, the Commission determined NatSteel’s profit based on domestic sales in the ordinary course of trade.

We have made adjustments to the normal values under s. 269TAC(9) to make them fairly comparable with export prices by:

• deducting domestic credit; • deducting domestic inland freight; • deducting level of trade differences; • adding export inland freight and handling; • adding container stuffing; • adding export certification costs; and • adding export credit.


PUBLIC RECORD VERSION Normal value calculations are at confidential appendix 1.



12 DUMPING MARGIN – PRELIMINARY ASSESSMENT

At the verification visit, NatSteel provided a submission proposing a summary of NatSteel’s margin calculation and methodology. The Commission considered this submission against the findings and observations made by the visit team, as set out in the preceding chapters of this report. A copy of NatSteel’s submission is at confidential attachment GEN 2.

In calculating the dumping margin we compared the weighted average export price with the corresponding weighted average normal value. The weighted average product dumping margin is 6.6%. The dumping margin calculation is at confidential appendix 1.



13 LIST OF APPENDICES AND ATTACHMENTS

Confidential appendix 1 Export sales listing and dumping margin calculation

Confidential appendix 2 Revised Australian CTMS with a normalisation adjustment – constructed normal value

Confidential appendix 3 Domestic Sales

Confidential attachment GEN 1 Amended Income Statement

Confidential attachment GEN 2 NatSteel submission - Summary of NatSteel’s margin calculation method/steps

Confidential attachment REC 1 Reconciling of sales to financial statements

Confidential attachment EXP 1 NatSteel’s pricing and negotiations

Confidential attachment EXP 2 Documentation relating to NatSteel’s ACRS certification

Confidential attachment EXP 3 Bundle of supporting documentation for selected shipments

Confidential attachment COSTS 1 Documentation relating to upwards verification of CTMS

Confidential attachment COSTS 2 Bundle of supporting documentation relating to verification of scrap costs

Confidential attachment COSTS 3 Documentation relating to verification of electricity costs

Confidential attachment COSTS 4 Documentation relating to verification of ferro alloy costs

Confidential attachment COSTS 5 Documentation relating to verification of refractories and relining costs

Confidential attachment COSTS 6 Documentation relating to verification of fuel costs

Confidential attachment COSTS 7 Documentation relating to verification of depreciation costs

Confidential attachment COSTS 8 Documentation relating to verification of input credits

Confidential attachment COSTS 9 Documentation relating to verification of abnormal and extraordinary gains and losses

Confidential attachment COSTS 10 Documentation relating to verification of claim for normalisation adjustment

Confidential attachment COSTS 11 Documentation relating to verification of SG&A

Confidential attachment DOM 1 Documentation relating to verification of factoring/domestic credit costs

Confidential attachment DOM 2 Documentation relating to verification of transportation costs

Confidential attachment DOM 3 Contract illustrating BCA indexing arrangement

Confidential attachment DOM 4 Bundle of supporting documentation for selected domestic sales

Confidential attachment ADJ 1 Documentation relating to verification of export credit terms

Confidential attachment ADJ 2 Documentation relating to verification of theoretical and actual weight

Confidential attachment ADJ 3 Documentation relating to verification of level of trade adjustment
