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Hot Rolled Coil Steel
Continuation Investigation #400
26 March 2017
CSC Taiwan ADC Exporter Briefing
Public File
2
Briefing Contents
1. The Taiwan Iron & Steel Industry
2. China Steel Corp. (“CSC”)
3. HRC Steel – Calendar Year Mill Capacities
4. HRC Steel – Exports to Australia
5. HRC – CSC Normal Value Adjustments (ITR 188)
6. HRC Steel – Data Matching (Product Control Numbers)
7. HRC Steel – Cost to Manufacture
8. CSC Exporter Questionnaire Response
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1. The Taiwan Iron & Steel Industry
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1. The Taiwan Iron & Steel Industry
– Key points on the Taiwanese market:
Taiwan is the world‟s 12th largest steel exporter
In CY15, Taiwan exported 11.1 million metric tonnes of steel, a decrease from 12 million tonnes in CY14
Taiwan‟s steel exports represented ~2% of all steel exported globally in CY15
The sector has experienced 13% steel export growth since 2009
Taiwan‟s top three steel producers are:
1. China Steel Corp;
2. Dragon Steel Corp; and
3. Tung Ho Steel Enterprise Corp.
Between CY14 and CY15, Taiwan‟s steel exports decreased to its major exports markets (Indonesia
down 38%; Australia down 19%; the US down 16%; and China down 14%)
37 trade remedies are currently in effect across 10 countries (plus the EU) involving steel mill imports
from Taiwan
5
1. The Taiwan Iron & Steel Industry
– Taiwan steel exports 2015:
Taiwan exports steel to more than 170 countries and territories. The below 6 represent the top export markets,
accounting for 57% of Taiwan‟s total steel exports in CY15:
6
1. The Taiwan Iron & Steel Industry
– Taiwan exports: Volume / Value / Product:
Flat steel products accounted for the largest share of Taiwan steel exports in CY15, at 76% (or 8.4 million metric
tonnes):
7
1. The Taiwan Iron & Steel Industry
– Steel sector Trade Remedies:
8
1. The Taiwan Iron & Steel Industry
– Steel sector Global Safeguards:
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2. China Steel Corp. Taiwan –
Key Points
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2. China Steel Corp. - Background
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2. China Steel Corp. – Group Structure
12
2. China Steel Corp. – Overview
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2. China Steel Corp. – Revenue
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2. China Steel Corp. – Revenue
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2. China Steel Corp. – Revenue (incl. DSC)
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2. China Steel Corp. – Key Points
– Key points:
2016 CSC Total Group Revenue $293,043 (NT$ million) - $12.47 Billion AUD*;
Steel Products Revenue $234,612 (NT$ million) - $9.98 Billion AUD*;
HRC accounts for 21% of Steel Revenue;
Export Revenue – 31%;
2016 CSC Sales Tonnes 11.14 million
i. HRC accounts for 24% of volume;
ii. Total export accounts for 30.8% of total volume at 3.43 million tons;
iii. Export to Australia falls within the “Other Countries” group of 21.7% - 745kt
*Based on Dec16 FX rate 23.52
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3. Calender Year Mill Capacities
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3. Calender Year Mill Capacities
Product Company 2012 2013 2014 2015 2016 2017 2018 2019 2020
HR China Steel Corporation 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03 8.03
HR Chung Hung Steel 2.40 2.40 2.40 2.40 2.40 2.40 2.40 2.40 2.40
HR Dragon Steel 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00
HR Shang Chen Steel 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
Total 15.43 15.43 15.43 15.43 15.43 15.43 15.43 15.43 15.43
CR China Steel Corporation 4.90 4.90 4.90 4.90 4.90 4.90 4.90 4.90 4.90
CR Chung Hung Steel 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45
CR Jenn An 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
CR Kao Hsing Chang 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50 0.50
CR Ornatube 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64 0.64
CR Sheng Yu Steel Co 0.79 0.79 0.79 0.79 0.79 0.79 0.79 0.79 0.79
CR Ton Yi Industrial 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
CR Yieh Phui 1.02 1.02 1.02 1.02 1.02 1.02 1.02 1.02 1.02
Total 10.30 10.30 10.30 10.30 10.30 10.30 10.30 10.30 10.30
HDG China Steel Corporation 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50
HDG Jenn An 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
HDG Lishan Iron & Steel 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04
HDG Ornatube 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30
HDG Shang Shing 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20
HDG Sheng Yu Steel Co 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45 0.45
HDG Ta Fu Steel Industrial 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15
HDG Yi Sen 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30
HDG Yieh Phui 0.12 0.12 0.12 0.12 0.12 0.12 0.12 0.12 0.12
Total 4.06 4.06 4.06 4.06 4.06 4.06 4.06 4.06 4.06
EG China Steel Corporation 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20
EG Hong Yun 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06
Total 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26 0.26
Total Steel Products 30.05 30.05 30.05 30.05 30.05 30.05 30.05 30.05 30.05
Source: CRU
Taiwan rated capacities of hot strip rolling, cold rolling and galvanising plants, 2012-2020 (Mt/y)
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4. HRC – CY16 Exports to Australia
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4. HRC – CY16 Exports to Australia
Country Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Grand Total
Taiwan 1,288 634 1,528 1,624 928 1,589 2,058 1,996 928 3,102 4,448 1,111 21,233
China (excluding SARs and Taiwan) 1,203 412 2,463 4,960 2,342 1,977 1,524 759 803 1,423 2,053 847 20,766
No Country Details 2,192 1,101 1,235 1,940 578 1,028 5,426 4,888 265 1,411 41 8 20,113
New Zealand 508 902 729 1,513 739 1,338 889 1,040 273 365 413 258 8,967
Japan 1,020 531 1,369 2,606 293 461 243 242 41 67 162 53 7,087
Korea, Republic of 1,199 548 639 688 121 215 425 383 524 1,556 109 137 6,544
Belgium 255 73 1,264 438 158 543 0 473 1 604 3,810
India 51 170 0 48 49 73 176 391 67 36 12 1,073
Indonesia 186 173 19 34 148 133 10 53 4 1 761
Turkey 34 17 32 58 22 20 2 12 58 12 267
United Kingdom 15 5 4 122 6 1 3 155
Singapore 45 22 67
Sweden 13 49 61
Germany 0 0 0 7 12 20 11 3 52
United States of America 1 0 15 1 17
Grand Total 7,981 4,583 9,255 13,336 5,543 7,027 11,380 9,636 3,771 8,079 7,938 2,442 90,973
Tariff Code Description Thickness CY16
7211140040 Flat rolled products of iron or non-alloy steel, of a width of less than 600mm, not clad, plated or coated Other, of a thickness of 4.75mm or more 7,067
7208270034 Other, in coils, not further worked than hot rolled, pickled Of a thickness of less than 3mm 3,708
7208530042 Other, not in coils, not further worked than hot-rolled Of a thickness of 3mm or more but less than 4.75mm 3,195
7225300017 Flat rolled products of other alloy steel, of a width of 600mm or more Other, not further worked than hot-rolled, in coils 1,946
7208540043 Other, not in coils, not further worked than hot-rolled Of a thickness of less than 3mm 1,675
7208390038 Other, in coils, not further worked than hot rolled Of a thickness of less than 3mm 1,158
7211190041 Flat rolled products of iron or non-alloy steel, of a width of less than 600mm, not clad, plated or coated Other 763
7208370036 Other, in coils, not further worked than hot rolled Of a thickness of 4.75mm or more but not exceeding 10mm 723
7208380037 Other, in coils, not further worked than hot rolled Of a thickness of 3mm or more but less than 4.75mm 396
7208250032 Other, in coils, not further worked than hot rolled, pickled Of a thickness of 4.75mm or more 370
7208260033 Other, in coils, not further worked than hot rolled, pickled Of a thickness 3mm or more but less than 4.75mm 222
7208360035 Other, in coils, not further worked than hot rolled Of a thickness exceeding 10mm 10
Grand Total 21,233
Source: ABS Monthly Import Statistics
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5. HRC – CSC Normal Value Adjustments
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5. HRC – Normal Value Adjustments
HRC Investigation ITR 188
– CSC‟s normal value were established per s269TAC(1), with adjustments made under s269TAC(8) and
s269TAC(9) to ensure correct comparison.
– The following adjustments were made to CSC‟s normal value:
Inland freight;
Credit terms;
Domestic sales expenses;
Terminal handling charges and loading fees;
Sales related expenses:
– Customs brokerage;
– Harbour service fees;
– Trade promotion; and
– Survey fees
China Steel Global Trading (“CSGT”) service fees;
Bank charges;
Timing (as required); and
Specification (as required).
– BlueScope would expect similar adjustments to apply to CSC in this Continuation Review.
23
6. HRC – Product Control Numbers
24
6. HRC – Product Control Numbers
– BlueScope has proposed a Product Control Number (“PCN”) coding system to permit the ready identification
of key attributes associated with hot rolled coil steel grades/models produced by Taiwanese manufacturers /
exporters.
– The PCN Coding System permits the ready identification of hot rolled coil steel products taking account of:
Prime/non-prime;
Patterns in Relief;
Grade designation (as per applicable standards);
Thickness (Base Metal Thickness);
Width
Surface Condition; and
Form (coil or sheet).
– Activity: PCN walk-through (refer attached)
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7. HRC – Cost to Make
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8. HRC – Cost to Make
Per Process / Operation
HA 250
1.90mm to
4.75mm
HA 250
1.45mm to
1.59mm
HA 250
1.60mm to
1.69mm
HA 250
1.70mm to
1.89mm
HA 300
1.90mm to
4.75mm
HA 350
1.90mm to
3.20mm
HA 350
3.21mm to
4.75mm
HW350
Hot Metal 349$ 349$ 349$ 349$ 349$ 349$ 349$ 349$
Scrap 67$ 67$ 67$ 67$ 67$ 67$ 67$ 67$
Basic Oxygen Steelmaking 36$ 36$ 36$ 36$ 36$ 36$ 36$ 87$
Alloy 11$ 7$ 7$ 11$ 16$ 16$ 34$ 76$
Slab Making Process 35$ 30$ 30$ 35$ 34$ 36$ 37$ 45$
Slab Handling 9$ 9$ 9$ 9$ 9$ 9$ 9$ 9$
Hot Rolling and Processing 61$ 78$ 76$ 75$ 65$ 66$ 67$ 101$
Despatch 14$ 14$ 14$ 14$ 14$ 14$ 14$ 14$
582$ 590$ 588$ 595$ 589$ 592$ 613$ 749$
P&L Category
HA 250
1.90mm to
4.75mm
HA 250
1.45mm to
1.59mm
HA 250
1.60mm to
1.69mm
HA 250
1.70mm to
1.89mm
HA 300
1.90mm to
4.75mm
HA 350
1.90mm to
3.20mm
HA 350
3.21mm to
4.75mm
HW350
Materials 351$ 348$ 335$ 339$ 356$ 356$ 374$ 462$
Total Wages 29$ 29$ 29$ 30$ 29$ 29$ 30$ 26$
Utilities 34$ 40$ 40$ 39$ 35$ 34$ 32$ 51$
Consumables 15$ 16$ 16$ 16$ 15$ 15$ 15$ 16$
Repair & Maintenance 27$ 27$ 27$ 27$ 27$ 27$ 28$ 23$
General Expenses 34$ 34$ 34$ 34$ 34$ 34$ 33$ 33$
Services 22$ 22$ 22$ 22$ 22$ 22$ 22$ 22$
Overheads 26$ 29$ 41$ 42$ 27$ 27$ 28$ 41$
Depreciation 28$ 28$ 28$ 28$ 28$ 28$ 29$ 28$
Yield 17$ 18$ 17$ 18$ 16$ 19$ 22$ 47$
582$ 590$ 588$ 595$ 589$ 592$ 613$ 749$
Hot Metal Cost equates to approx 60% of HRC production costs.
Average Pickling costs $29 per tonne.
Average Sheeting costs $36 per tonne.
Taiwan Imports HRC Grades
27
8. EQR – China Steel Corp.
28
8. EQR – China Steel Corp.
29
Further comments:
• CSC is an integrated steel maker. For this inquiry, the transfer price of the hot rolled steel is an important cost verification step in the CSC verification
– Does CSC transfer at fully-absorbed cost, and are all costs correctly included (i.e. product costs, service costs, auxiliary costs in the transfer price? It is noted that CSC uses an average-costing process for products transferred into another cost centre” (implications if transfer price is based on market pricing and not full cost absorption).
• CSC sells domestically to traders who purchase for resale and to end-users. Export sales are via CSGT, a 99.9 per cent subsidiary. Does CSC „sell‟ HRC to CSGT prior to export sale? What is appropriate sale (i.e. to end-users and/or traders on domestic market for fair comparison?
• CSC has a number of internal divisions supporting steel-making including Engineering, IT, Finance, Corporate, etc. The Commission should identify how the costs of these centres are treated and included in the CTM&S the like goods;
• CSC states that its “almost wholly-owned” subsidiary export company CSGT purchases some hot rolled products and out-sources cutting and slitting processes to produce hot-rolled sheets and hot-rolled strips
– These further value-added sales have been incorporated in CSC‟s list of export sales to Australia;
– The Commission must identify outsourced costs and include in full cost-recovery analysis;
• CSC pays a service fee to CSGT for identifying sales on export markets – an upward adjustment to CSC‟s normal value for the service fee that is incurred on export sales, but not on domestic sales;
• CSC states that “packing is nearly the same for domestic sales as for Australian sales”. This indicates that the Commission must require CSC to breakdown the packing costs between domestic and export sales;
• It is noted that CSC claims it does not incur warranty expenses on export sales, yet does on domestic sales. BlueScope urges the Commission to question CSC in relation to this apparent anomaly (i.e. lop-sided approach) between the domestic and export markets;
