5. Likelihood of Recurrence of Dumping and Material
370. Paragraph 3 of Article 11 of the Agreement states that "…any definitive anti- dumping duty shall be terminated…unless the authorities determine… that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury…" In essence this is the central question to any review carried out on existing anti-dumping duties.
371. The Investigating Team, having regard to the Act, Agreement and associated jurisprudence, interprets 'likely' as being more probable than not within the foreseeable future.
372. The Investigating Team requested all parties to the investigation to comment on the likelihood of the continuation or recurrence of dumping causing material injury. The information received in response to the Investigating Team's request was less than optimal. No substantive responses were provided, leaving the information presented by Winstone in its application for a review the most detailed submission on the matter. Most parties that made submissions following the Interim Report did discuss the issue of likelihood to some extent but the submissions in this area still could not be described as substantial.
373. The factors that the Investigating Team has considered in assessing the likelihood of the recurrence of dumping and corresponding material injury are set out below. The Investigating Team has concluded in this respect:
- There is a likelihood of a recurrence of dumping by BPB in the foreseeable future having cognisance of its large excess capacity levels. Given the past pricing behaviours of BML in the New Zealand market this dumping is likely to be a cause of material injury to Winstone; and
- A recurrence of dumping by SGI/SCT is not likely in the foreseeable future. This finding incorporates additional information presented following the Interim Report regarding capacity. Key factors in reaching this decision are the [text deleted due to confidentiality] to New Zealand and the recent pricing behaviours and conduct of Elephant in the New Zealand market, which indicate that material injury to the domestic industry from that source is not likely.
5.1 Dumping
374. The duties that currently apply to imports of plasterboard from Thailand are imposed via a reference price mechanism meaning goods that are imported at, or above, the specified normal value equivalents (equivalent to the price in Thailand), or a price which is non-injurious to the New Zealand industry, are not liable for any anti-dumping duty.
375. The methods (and corresponding amounts) used to currently apply anti-dumping duties on plasterboard from Thailand are listed below.
376. For exports by SGI/SCT to Elephant the duty is the lower of a NIFOB of NZDxxxx per square metre, or a normal value (value for duty equivalent) NVE THBxxxx.
377. For all exports by BPB the duty is a NVE of THBxxxx per square metre.
378. For exports by SGI/SCT to importers, other than Elephant, and by any other exporters from Thailand (other than BPB) the anti-dumping duty is currently set by way of a NVE of THBxxxx.
379. A consequence of imposing anti-dumping duties via a reference price mechanism is that exporters often price above this level and no anti-dumping duties are collected. However, the Ministry does not view the non-collection of anti-dumping duties as an indication that dumping will not necessarily recur or continue when reference price mechanisms are used to impose duties.
380. Winstone stated that the historical behaviour of both the importers and the exporters in relation to the pricing of exports to New Zealand indicated that dumping was likely to recur in the future if anti-dumping duties were removed.
381. In assessing the likelihood of dumped exports to New Zealand the Investigating Team has considered Thai exports to other markets, the capacity of the manufacturers involved in this review, the Thai domestic market situation and current and likely future exports to New Zealand.
382. In response to the Interim Report BPB stated that it was "surprised that there can be considered any notion of dumping when the price differential is so enormous". BPB referred to dumping being "in the simplest of cases, one identifies dumping by comparing prices in two markets" it then referred to the price of standard plasterboard in Thailand being around a third of the price in New Zealand.
383. The Investigating Team notes that dumping is price discrimination by manufacturers to purchasers dependent upon whether they are domestic or export customers. As required by the Act and the Agreement there are many requirements that are listed in ensuring that a fair comparison is made. The Investigating Team is satisfied that it has adhered to and upheld the requirements of both the Act and the Agreement in calculating dumping margins in the present review. Additionally a "simple" comparison of the price paid by an end user in Thailand and that paid by an end user in New Zealand is not an accepted method of determining a dumping margin.
Exports to Other Markets
384. Exports from Thailand to third countries without anti-dumping duties applying can be useful in estimating the price at which exports to New Zealand would occur in the absence of anti-dumping duties.
385. Winstone's application provided analysis of Thai plasterboard exports to Thailand's top ten export markets, by volume, for 2004 (calendar year) from data extracted from official Thai statistics. From this Winstone calculated an average ex-factory price, using estimated amounts for the listed adjustments made to the base export prices by the Ministry in the 2002 reassessment. The figures provided captured a range of plasterboard wider than that covered by the anti-dumping duties currently in place and included higher value performance plasterboards, as is the case with the equivalent data available in New Zealand, because both types of plasterboard are covered by the same tariff item and statistical key.
386. The application surmised that as the majority of exports would be comprised of standard plasterboard of the type covered by the anti-dumping duties, it was appropriate to consider the figures representative. Information collected in the review indicates that this is a reasonable assumption, in the absence of more detailed information, as [text deleted due to confidentiality] indicated that standard plasterboard [text deleted due to confidentiality] for a greater proportion of their business than performance or technical boards do.
387. The prices to other export markets calculated by Winstone were between 46 and 61 percent lower than the export price to New Zealand and the average export price to the top ten Thai export markets was 53 percent lower than the export price to New Zealand. Of the countries listed New Zealand had the highest calculated export price.
388. Countries in the top ten were (listed in order of highest volume of exports to least): Vietnam; United Arab Emirates; Singapore; Taiwan Province of China, Malaysia, Philippines, Brunei Darussalam, Hong Kong, New Zealand and India. All of these had a lower calculated FOB than that derived for exports to New Zealand.
389. New Zealand was ninth by volume of the top ten export markets listed. The two closest other export markets, in terms of volume, were Hong Kong and India. The volume of plasterboard sold to Hong Kong represented 103 percent of that sold to New Zealand, with an average price that was 39 percent of the average export price to New Zealand. Volumes sold to India represented 88 percent of those exported to New Zealand, with an average price equalling 45 percent of the price of exports to New Zealand.
390. One factor that would impact the comparability of the prices to these export markets is the proportion of total exports that is occupied by performance boards and the percentage occupied by standard board. [text deleted due to confidentiality] to this review have stated that the New Zealand market is [text deleted due to confidentiality] performance boards, [text deleted due to confidentiality] the amount of standard sold [text deleted due to confidentiality] exceeds the amount of performance boards sold. Winstone has estimated that the New Zealand market is xxxx percent standard plasterboard and xxxx percent performance plasterboards. The Thai manufacturers have also stated that the Thai domestic market still strongly favours standard plasterboard over the performance boards. Given the pricing structure that has been adopted for plasterboard, that is, performance boards are generally more expensive than standard boards, the ratio of volumes between the two boards will affect the average FOB price that Winstone has calculated. The exports from [text deleted due to confidentiality] are an exception to this general rule with its performance board prices being [text deleted due to confidentiality] its standard plasterboard.
391. Export prices to Australia, often the most comparable market to New Zealand, were not included in the analysis of export prices in the application, although they were included in the raw data provided. SGI/SCT also exports to Australia to a company called Elephant Plasterboard Australia Limited, which has related shareholding with the New Zealand importer Elephant.
392. The volume of exports from Thailand to Australia was the eleventh highest of all the Thai export markets. Exports to Australia had an average price of THB6.54 per square metre. The volume exported to Australia was 16 percent lower than that to New Zealand with an average price only 18 percent lower than that to New Zealand.
393. Using the Organisation for Economic Co-operation and Development (OECD) ranking of the economies listed as the top ten export markets for Thailand, the Investigating Team has assessed the suitability of these economies for comparison.
394. The Investigating Team considers the economy of the domestic market into which the exports enter is one of the factors that impacts the exports prices. Both BPB and SGI/SCT indicated that in establishing export prices they consider the state of the domestic market and what price it considers the market can bear.
395. Vietnam, Malaysia, Philippines, and India all represent lower income categories than New Zealand, substantively higher population bases and (with the exception of Vietnam) much larger informal economies. Taiwan has a much larger population base and Hong Kong a much larger gross national income per capita.
396. Of the ten listed countries Singapore is probably the most comparable to New Zealand, with the United Arab Emirates being the next most similar economy. Both of these countries have population similar size to New Zealand, similar levels of development and Singapore has a similar sized informal economy. The United Arab Emirates was ranked second and Singapore third of the top ten export markets by volume.
397. The volume of plasterboard sold to Singapore represented 448 percent of the volume sold to New Zealand, with an average price that was 44 percent of that to New Zealand. Volumes sold to the United Arab Emirates represented 562 percent of the volume exported to New Zealand, with an average price equalling 53 percent of the price of exports to New Zealand.
398. Vietnam was identified by both BPB and SGI/SCT as a high volume export market, with xxxx to xxxx percent annual growth and is currently Thailand's largest export market.
399. The Investigating Team also considers the prices of sales to these other export markets have the ability to "adjust" to changes in the market more than exports to New Zealand subject to anti-dumping duties do. Therefore, given the decrease in the normal values in Thailand a lower export price may reflect an ability of the export price to follow market forces in the absence of anti-dumping duties.
Exports to Other Markets Conclusion
400. There is no question that New Zealand had the highest calculated export price of the ten countries listed and that it currently offers good returns to the Thai manufacturers. However, of the countries presented for analysis by Winstone the two most comparable export markets, in terms of the domestic economies of those countries, were purchasing volumes at least 4.4 times greater than New Zealand. This makes any substantive comparison of the export prices, which are approximately half the level of those to New Zealand, difficult- beyond stating that a drop in export price, of a substantive degree, could be expected in the absence of duties.
401. Using the imports from the next closest country in price (of the top ten markets), India, would mean a 55 percent reduction in price for exports to New Zealand. However, for the reasons given above, the Investigating Team does not believe this is the most comparable market. The Investigating Team considers that the exports to Australia the most appropriate comparison, in terms of indicative pricing levels in the absence of anti-dumping duties. If exports to New Zealand were to drop to the price of current Thai exports to Australia, this would result in an 18 percent reduction of the current average export price.
402. The evidence presented on constructed export prices to countries other than New Zealand indicates that the Thai exporters appear to be achieving a premium price on their sales to New Zealand. This can be directly attributed to the anti-dumping duties, which being set via reference price mechanisms, effectively set a minimum import price. In the absence of these duties it is foreseeable that dumping could recur, but if prices reduced to those of exports to Australia (an 18 percent reduction in price), based upon current export price and normal value calculations, this would not result in dumping in all instances.
403. In response to statements in paragraph 402 in the Interim Report, Winstone commented that assuming in the absence of duties that prices would reduce to those for exports to Australia does not take into account the different regulatory framework in Australia. The Investigating Team asked Winstone to state what it considered the differences in regulatory frameworks between Australia and New Zealand were that would affect manufacture, pricing, use, or sale of plasterboard.
404. Winstone responded that the higher prices in Australia, relative to Thailand's other export markets, likely reflects "the constraint imposed by the prospect of anti-dumping duties and the approach of the Australian authorities to dumped imports." The Investigating Team does not consider that the reasoning submitted by Winstone amounts to a differing regulatory environment between Australia and New Zealand, nor does it consider that it renders the Australian price higher than the one that the New Zealand price would likely settle at, in the absence of any anti-dumping duties.
405. Winstone also noted that while it may be appropriate to take into account prices to Australia, the prices of exports to other countries provided should not be ignored.
Capacity
406. The capacity utilisation rate of a foreign manufacturer is important in anti-dumping, as the likelihood of dumping, especially of commodity or low value-added products, such as plasterboard, is increased when there is a low variable cost per unit of manufacture and the increase in units manufactured helps lower the fixed costs per unit. As the variable input costs into a square metre of plasterboard are relatively low it is more cost efficient for a manufacturer to increase plant throughput and spread the fixed overheads across a greater amount of plasterboard. This enables a manufacturer to achieve greater economies of scale and charge a lower price per square metre. It also means that sales volume rather than price is the key factor in driving production volumes.
407. Winstone stated that as BPB and SGI are both part of large multi-national groups they have the ability to rapidly increase the volume of exports at any time given their size and the resources available to them. Winstone submitted as part of its application a report from NZTE on the current state of the Thai domestic market for plasterboard.
408. The NZTE report provided evidence of a 25 percent increase in capacity by BPB, the largest Thai plasterboard manufacturer. BPB now has a total capacity of approximately 1.45 times the size of the Thai domestic market for plasterboard, at 80 million square metres per annum. The report estimates that BPB has approximately 40 percent, approximately 28 million square metres, of the Thai domestic market, which leaves its excess capacity at around 52 million square metres per annum.
409. BPB confirmed to the Investigating Team that the introduction of a second rolling line at its factory in late 2005 has provided it with a large amount of excess capacity. BPB stated its capacity expansion was designed to help meet future Thai domestic demand, although it confirmed that it will seek to export this excess capacity in the short to mid term.
410. BML stated that BPB is the largest plasterboard manufacturer in the world and has substantial excess capacity and it would be pointless to argue otherwise.
411. The NZTE report stated that SGI had also increased its capacity. However, SGI/SCT stated to the Investigating Team that it does not have excess capacity with its output closely matching its total capacity of xxxx million square metres per annum utilising a xxxx hour a day xxxx days per week shift structure. This capacity level does not include the capacity of SGI's related companies, as they do not export to New Zealand. SGI stated that beyond [text deleted due to confidentiality] it is not planning to [text deleted due to confidentiality] its capacity.
412. SGI believes that it currently has enough capacity to serve the Thai market and stated that if it invests in extra capacity in the future, it is likely to be intended to serve its [text deleted due to confidentiality] and may be [text deleted due to confidentiality], rather than [text deleted due to confidentiality].
413. The Investigating Team notes that the expansion in capacity attributed to SGI in the NZTE report appears to be across the three plasterboard manufacturing companies that are owned by Lafarge and the Siam Cement group, including the plant based in Songkhla, rather than just the Saraburi plant that exports to Elephant.
414. Winstone also provided articles from The Nation, a Thai news source, which described the Thai market as being in a situation of excess capacity. The marketing manager for SGI was quoted in one of the articles as not being concerned about excess output because of its ability to export surplus product. However, the supporting news article specifically stated that exports would be to "the Middle East, India and Vietnam". This supports statements made to the Investigating Team by SGI/SCT.
415. Winstone submits that any excess capacity used to produce product destined for export from Thailand will in the first instance be directed towards New Zealand given the higher export prices that are achieved relative to other Thai export markets. However, Winstone has also relied on the anti-dumping duties to explain the high prices in New Zealand and submits that if the duties were removed a corresponding drop in excess price would occur. This would then reduce the attractiveness of the New Zealand market.
416. The Investigating Team notes that New Zealand is currently a high return market for the Thai manufacturers, due to the high domestic prices. However, New Zealand will never have the ability to absorb any significant portion of the board produced from the excess capacity held by BPB due to the size of our market, at approximately xxxx million square metres per annum. Therefore it is likely that, to the extent possible (although there is variation between the exporters), Thai exporters would seek to maintain prices to New Zealand and increase market share but not at the expense of price.
417. Winstone provided substantial comment in response to the Interim Report on the capacity that is available to SGI, which it stated should lead the Investigating Team to change its interim conclusion that SGI is unable to increase capacity. In support of this Winstone submitted two Thai news articles, one from the Bangkok Post of 17 February 2006 and the other from The Nation of 16 February 2006. BPB also provided the article from the Bangkok Post with its submission to the Interim Report. The content of both of these articles is supported by a news item that was posted on 20 February 2006 on SGI's website .
418. Winstone submitted that SGI constitutes one company with three plants throughout Thailand and that SGI is able to source plasterboard from any of the three plants. Winstone referred to statements by SGI's Managing Director that it had increased its capacity by 23 million square metres through the reopening of its Navanakorn plant as reported in the news articles provided.
419. The Investigating Team was aware of, and referred to, in the SGI verification report, the existence of the Songkhla factory to which the news articles attributed a capacity of 22 million square metres. SGI had made statements that the Saraburi and Songkhla factories were separate legal entities. This is supported by the naming of the entities. SGI told the Investigating Team that sales to Elephant were sourced solely from the Saraburi plant, to which the news articles attributed a capacity of 55 million square metres. Beyond this no detailed information on capacity was provided to the Investigating Team by SGI. The Investigating Team notes that at the time of the 1997 reassessment plasterboard exported to Elephant was manufactured at the Navanakorn plant and the Saraburi plant was relatively new at that time. Evidence in the 1997 reassessment was that the Songkhla plant was also involved in exports, especially to Malaysia, to whose border it is closely located.
420. The Investigating Team was not aware at the time of compiling the Interim Report of the planned re-opening of the Navanakorn factory with an additional 23 million square metres capacity. SGI states on its website that the expansion in demand through the reintroduction of the Navanakorn capacity was in response to demand growth in both export and domestic markets. The article also identified that 40 percent of SGI's total production capacity is exported and the remaining 60 percent sold in Thailand. It also states that currently 25 percent of total sales are comprised of other gypsum products and 75 percent are due to sales of plasterboard.
421. The Investigating Team accepts SGI's statement that exports to Elephant are sourced solely from the Saraburi plant but that the Thai domestic market is serviced by the two (and soon to become or recently reintroduced third plant). In this scenario it is possible that SGI would be able to transfer domestic production from the Saraburi plant in order to ensure that there is enough capacity to service exports to Elephant. At this point the SGI Saraburi plant is the only manufacturing company in its group involved in the export of plasterboard to New Zealand.
422. Winstone referred to the statement by SGI's Managing Director that domestic demand was expected to grow by 5 to 7 percent in 2006, while export markets were expected to grow from 44 million up to 56 million square metres and up to 60 million square metres in the future. This growth expectation is down from recent growth rates of around 15 to 20 percent.
423. Winstone pointed out that the Bangkok Post article indicated that exports would become a focus for SGI, increasing from 30 million to 40 million square metres in 2006 being a thirty percent increase. However, SGI was also reported as stating that its exports would not exceed 50 million square metres per annum due to increased transportation costs and the increase in the number of manufacturing plants in other countries.
424. Winstone submitted that the information shows that SGI has the ability to increase its production and that it intends to direct much of this capacity to its export markets, particularly given the downturn in the Thai domestic market.
425. Winstone stated that any incremental increase in production is at the marginal cost of labour and materials as all overheads have already been incurred. Winstone then stated that the premium price is supplemented by the additional margin derived from the marginal cost of production and therefore SGI can increase its volume to New Zealand, drop its price and make a greater overall return than it would in any other market. The Investigating Team notes that while overhead costs such as depreciation and other capital cost recoveries may not necessarily be incurred with the re-opening of an existing plant, there are other overhead costs that would still be incurred such as management expenses and non-direct inputs. Additionally the Bangkok Post article indicated that a further investment of 2 million baht was required to reopen the Navanakorn plant. The same article also indicated that SGI believed the reintroduction of this capacity would serve demand for the next four years.
426. BPB submitted that SGI has sales volumes of around xxxx million square metres greater than BPB in the Thai domestic market. From this BPB calculates that SCT will have more than xxxx million square metres of export capacity than BPB, based on a BPB capacity of xxxx million square metres and a combined SGI capacity of 100 million square metres.
427. BPB pointed to the statements made in the Bangkok Post article that SGI intends to increase its exports to 40 million square metres in 2006 and increase this further to 50 million square metres thereafter. BPB stated that the target export levels indicated by SGI are "materially higher" than BPB's own expectations.
Capacity Conclusion
428. BPB has recently introduced very large amounts of excess capacity that it is intending to export. It has specifically identified that it will seek to export excess capacity in the short to mid term. While, as noted above, New Zealand would not be able to absorb any significant proportion of this excess capacity, given the returns BPB currently enjoys on sales to New Zealand because of the existence of anti-dumping duties, it is likely that some of this excess capacity would be exported to New Zealand.
429. While the Interim Report concluded that SGI appears to be operating at full capacity this did not take into consideration the re-introduction of the Navanakorn plant, with a reported capacity of 23 million square metres, which has or is about to start production.
430. The Investigating Team considers that it is unarguable that SGI has huge capacity but there is less information about the extent to which this capacity is utilised, although it appears likely that some level of excess capacity exists, that relative to the New Zealand market, would not be insubstantial. Of importance here is the intent of SGI around its exports to New Zealand in regard to both price and volume, which are discussed later in this report. There are several factors that have led the Investigating Team to maintain the conclusion reached in the Interim Report in regard to SGI's capacity:
- Domestically product is unlikely to be transferred between the regions served by the Songkhla and Saraburi plants, or the plants themselves, due to the distance between them, as one is located in Bangkok and the other in Southern Thailand. Evidence presented to the Investigating Team was that this transportation would be at a prohibitive cost. The Investigating Team understands that each of the companies within the wider SGI group manage their own exports and sell in distinct geographical parts of the Thai domestic market. It is likely that the Navanakorn plant will share the same geographical domestic market as the Saraburi plant.
- The evidence that has been presented regarding the re-introduction of the Navanakorn plant indicates that there is not substantial excess capacity at the Saraburi and Songkhla plants at present. If the capacity utilisation rates for these two plants were low, it would not make commercial sense to introduce further capacity, which has an associated (small) set up cost.
431. It is clear that both of the Thai manufacturers have capacity well in excess of the Thai market and the New Zealand market also, with SGI's Saraburi plant reputed to be the largest plasterboard manufacturing site in Asia. It is clear from the levels of exports shown in the Thai export statistics and statements from both manufacturers that exports form a substantial part of their respective businesses. Both SGI and Elephant have stated that they wish to maintain their current prices to New Zealand. Both of these companies believe that the ability of the 'Elephant' brand to increase its volume of sales in the New Zealand market is seriously constrained by the strength of the GIB® brand in the New Zealand market and as a consequence wish instead to maintain the prices that they current enjoy.
Thai Domestic Market
Growth
432. The Thai domestic market is relevant in assessing the likelihood of future dumping for two reasons. First is that price in Thailand sets the base normal values, against which export prices are compared to establish any dumping margins. Second, the state of the Thai market has an effect on the extent to which any excess capacity will be exported or consumed by domestic demand growth.
433. The Thai domestic market was estimated at approximately 55 million square metres per annum in 2004, with BPB estimating a further 15 percent growth in 2005 and at least xxxx percent in 2006. Therefore, the Thai domestic market is now somewhere in the region of [text deleted due to confidentiality] million square metres per annum.
434. Winstone submitted in its application that the current and medium term demand for plasterboard in Thailand is not strong. This is in contrast with statements made by both BPB and SGI that recent growth had been in excess of 20 percent and while they both expected this to decline, they still considered strong growth, in excess of xxxx percent, to continue.
435. SGI stated it expects that the market will expand along with the programme of government infrastructure investment expansion particularly in the greater Bangkok region and improving tourism services. SGI stated that the planning and tendering of these large infrastructure projects is well underway and construction is expected to begin in 2007. BPB also made reference to these large government infrastructure projects that it thought would continue to fuel demand in the construction industry.
436. Both manufacturers stated that another source of this growth is that Thailand is beginning to use more plasterboard instead of alternate building products for walls, as historically plasterboard has only been widely used in ceilings. SGI also stated that more technical plasterboards are being sold but that these amounts are [text deleted due to confidentiality].
437. SGI has stated that Thai domestic demand will ease to 5 to 10 percent per annum in 2006 due to declining demand from the residential sector of the market that accounts for over 70 percent of the total market, which has been affected by rising energy costs and interest rates.
Prices
438. The Investigating Team has found that the normal values are lower in Thailand than those established at the time of the last review and reassessment in 2002. This has been effected by increasing the amounts of discounts and rebates that have been awarded. The level of these discounts and rebates was [text deleted due to confidentiality] to the range identified in Winstone's application of xxxx to xxxx percent of the base price. The application stated that the prices of plasterboard in Thailand are "…highly volatile, characterised by price instability due to plasterboard from Indonesia, China and Malaysia being sold into Thailand at very low prices."
439. Statements made by a Thai plasterboard distributor in the NZTE report attributed the depressed prices in the Thai domestic market to the [then] [text deleted due to confidentiality] Thailand. Although statements from other distributors attributed the price decrease to the imported product coming into Thailand, particularly from China, with one distributor stating [text deleted due to confidentiality] and that Chinese imports had xxxxpercent of the Thai domestic market.
440. In addition, Elephant stated that it believes that the [text deleted due to confidentiality] in Thailand will [text deleted due to confidentiality] due to the influence of [text deleted due to confidentiality] in the Thai domestic market and the level of excess capacity that already exists in Thailand.
441. SGI/SCT and BPB both stated there is not much competition from imported plasterboard in the Thai domestic market, with only small quantities being imported from time to time, predominately from China. Both manufacturers believed that [text deleted due to confidentiality] and as a consequence [text deleted due to confidentiality]. The Chinese plasterboard was described as being cheaper than the Thai produced product. SGI admitted that the Chinese imports had temporarily affected domestic prices, although not during the period of review and that prices had improved.
442. The information collected during the period of review did not indicate that discounts [text deleted due to confidentiality] period of review. However, information from BPB and SGI indicated that the force behind the price decreases in the Thai domestic market is [text deleted due to confidentiality] rather than competition from imports.
443. However, from the information provided to the Investigating Team it appears that both of the Thai manufacturers have been [text deleted due to confidentiality] and given the extent of the level of excess capacity that BPB now has there could be expected to be an increase in the level of competition between the two manufacturers as well. Winstone submitted that the effect of the imports into Thailand would be short lived and that the discount levels ranging from xxxx to xxxxpercent would reduce back to historical levels.
444. The Thai manufacturers indicated that the discount levels [text deleted due to confidentiality] and noted that it is common within the Asian region (and elsewhere) for manufacturers to maintain list prices and manage net prices via a variety of discount and rebate measures. [text deleted due to confidentiality] and the [text deleted due to confidentiality] is an [text deleted due to confidentiality].
445. The Investigating Team did not discover anything during the review that supported the statement in Winstone's application that BPB and SGI [text deleted due to confidentiality] in Thailand.
446. In response to the Interim Report Winstone provided evidence, which it stated illustrated that normal values in Thailand were set to increase by 5 percent effective March 1 2006. This was supported a quote in The Nation article that stated SGI would attempt to increase its prices by at least 5 percent in 2006 to recover increased energy costs and also by an email from a distributor [text deleted due to confidentiality] that was provided to Winstone indicating both BPB and SGI were increasing their prices by 5 percent.
447. Winstone also stated the fact that the Thai Baht has appreciated 3.3 percent against the New Zealand Dollar in the last month also meant that normal values would increase. Given that the Investigating Team understands that both of the Thai exporters source most of their inputs domestically, the Investigating Team does not consider that this exchange rate movement will mean that normal values will increase. What will occur, however, is any export prices in New Zealand dollars will constitute a lower value when converted to Thai baht and export prices will decrease, altering the subsequent dumping margin.
448. In response to the Interim Report BPB commented that normal values are "materially lower than in the last review" and did not provide any comment on any price increases.
Conclusion on Thai Domestic Market
449. Both of the Thai manufacturers are forecasting a continued increase in demand, albeit at slower levels than in the recent past. This is accompanied by a strong demand in its neighbouring export markets.
450. From the information gathered during the course of the review there was no evidence of [text deleted due to confidentiality] discount levels that were attributed to imports from Thailand. In fact both manufacturers claimed that the Chinese imports had not affected domestic prices in Thailand.
451. Winstone submitted that a price increase in Thailand had occurred effective 1 March 2006 and the evidence did support some increase being possible. However, the Investigating Team considers that this will be an increase in the list prices rather than the net prices, although admittedly a flow through to an increase in net prices will be hoped for. Given the extensive level of discounting that occurs in the Thai domestic market, the Investigating Team does not believe that a reported increase of 5 percent would necessarily result in an increase in the normal values.
452. When taking into account the domestic market capacity and competition between the manufacturers, the extent of current discount levels and the strength of the evidence supporting (a very recent) stated price increase the Investigating Team considers that there is little likelihood of normal values increasing substantially from the levels established in this review. This is a matter that could be considered in more detail in the reassessment following this review but any increase in a normal value, without a corresponding increase in the export price, will result in an increased dumping margin.
Future Exports
453. The Investigating Team asked both manufacturers to comment on their intentions in regard to exports to New Zealand over the next five years.
SGI/SCT
454. SGI/SCT responded, as a primary [text deleted due to confidentiality] market [text deleted due to confidentiality] price [text deleted due to confidentiality].
455. SGI/SCT still considers standard plasterboard its priority in terms of its total plasterboard exports to New Zealand. It does not believe it is [text deleted due to confidentiality] and stated that it does not [text deleted due to confidentiality] in the volume of [text deleted due to confidentiality].
456. In setting prices for exports to New Zealand SGI/SCT considers [text deleted due to confidentiality], but stated that the selling price [text deleted due to confidentiality] the New Zealand market. SGI/SCT stated that it considers that [text deleted due to confidentiality] sold in New Zealand for prices lower than that its own [text deleted due to confidentiality], with higher levels of [text deleted due to confidentiality]. [text deleted due to confidentiality] SGI/SCT stated that it sells standard plasterboard to Elephant at [text deleted due to confidentiality], [text deleted due to confidentiality] anti-dumping duty [text deleted due to confidentiality]. However, [text deleted due to confidentiality] Elephant [text deleted due to confidentiality] to maintain its prices at, or above, those of Winstone. Therefore, the pricing of its exports is not dependent upon the existence, or lack of, anti-dumping duties.
457. SGI/SCT commented that it intends to continue [text deleted due to confidentiality] its New Zealand sales to be impacted over the next [text deleted due to confidentiality]. SGI/SCT stated that, given [text deleted due to confidentiality] in the New Zealand market. SGI/SCT indicated that the [text deleted due to confidentiality] prices.
458. The Investigating Team questioned SGI/SCT as to how it would respond to [text deleted due to confidentiality] to New Zealand and a [text deleted due to confidentiality] in the New Zealand market.
459. SGI/SCT considers that [text deleted due to confidentiality] is its main competitor in the New Zealand market. SGI/SCT considers that [text deleted due to confidentiality] in the New Zealand market, because of [text deleted due to confidentiality] market participant. SGI/SCT stated its intention is to [text deleted due to confidentiality] price and will [text deleted due to confidentiality].
460. SGI/SCT stated that the determination and existence of any likelihood of recurrence of material injury to Winstone is dependant upon [text deleted due to confidentiality] New Zealand. SGI/SCT stated that it is critical to remember, that while [text deleted due to confidentiality], New Zealand remains [text deleted due to confidentiality] prices in the market and the [text deleted due to confidentiality] markets [text deleted due to confidentiality] it.
461. SGI/SCT stated that if it [text deleted due to confidentiality] Elephant that the prices in the New Zealand market had reduced it would [text deleted due to confidentiality]. Further stating that it would respond to any price moves by Winstone [text deleted due to confidentiality] Winstone's price. However, it stated that it wanted to [text deleted due to confidentiality] both SGI/SCT and Elephant [text deleted due to confidentiality] its prices.
462. The Investigating Team asked SGI/SCT to comment on its likely export prices to New Zealand if anti-dumping duties were removed and how similar these would be to the prices that it exports to Elephant Plasterboard Australia Limited. SGI/SCT stated there is a difference between the normal building practices between and number of manufacturers in the New Zealand and Australia markets and due to this there would be no convergence of prices in these two markets even if the anti-dumping duties were removed.
463. The Investigating Team notes that there are three manufacturers in the Australian market, as opposed to a single manufacturer in New Zealand and that this is likely to account for a major part of the price differential between the two markets. This is due to the fact that in New Zealand most of the imported standard plasterboard comes from Thailand and therefore the majority of competition that is faced by Winstone is from prices of goods that were imported from a source that could possibly be subject to anti-dumping duty. This is accompanied with a lack of substantial levels of imports from any other sources and only one New Zealand manufacturer.
BPB
464. When asked to comment on its export intentions to New Zealand BPB stated that any market where it can increase price and/or volume, or preferably both, would be a growth market for it.
465. However, BPB stated that it did could not foresee any development that would result in a significant increase in the volumes that it currently exports to New Zealand. BPB even went further to state that due to the differing width of product exported to New Zealand (and Australia), that product bound for New Zealand is more difficult to manufacture.
466. In assessing the likelihood of recurrence of dumping and injury BPB pointed out that the Investigating Team should consider that the normal values in Thailand have decreased and that it does not believe that Winstone are currently suffering any injury. The Investigating Team has considered both of these points above.
467. BPB stated that if the anti-dumping duties were removed it would respond to the reactions of the other major participants in the New Zealand market.
468. BPB noted that if duties are removed then it will benefit the New Zealand consumer and stated that while the profit made by Winstone may drop slightly it will not decrease sharply given it is the incumbent market leader and the strength of the GIB® brand in the New Zealand market.
469. BPB said that it believed Winstone was currently operating at full capacity with large margins and that any removal of any duty would cause prices and therefore profits, to drop to more normal levels. BPB classify New Zealand as a sophisticated and mature market and believes, given this, that BPB could at most gain xxxx to xxxx percent market share with lower prices if duties were removed but it would not be able to gain more than that with price due to the strength of the New Zealand manufacturer. BPB drew a parallel with the Chinese imports into Thailand. Chinese imports entered Thailand at a very low price and quickly gained 4 to 5 percent of the Thai market for plasterboard, which has since reduced. There were some concerns about the quality but the price was significantly lower (approximately 5 to 10 percent below that of the Thai manufacturers). BPB characterise the Thai domestic market as being the opposite of the New Zealand market, unsophisticated and young. BPB stated that if low prices cannot achieve strong market penetration in a growing and unsophisticated market then it cannot see that low prices would be a real market share threat in New Zealand.
470. BPB stated that the method by which local plasterboard manufacturers retain the large proportions of the market, as seen throughout the Asia-Pacific region, is by using specification at the designer/builder/client level to drive demand for the locally produced and familiarly branded product.
471. BPB stated that it is exporting more performance boards to New Zealand than it has previously and stated that this increase is a direct result of an increase in specification demand.
472. In response to the Interim Report BPB made a submission regarding future exports to New Zealand stating that "whatever the result of your investigation, we have not intention of exporting material volumes to New Zealand or taking any action to reduce prices." The Investigating Team notes the import data shows a decrease in the FOB price of BPB's exports of standard plasterboard to BML, which have dropped from NZDxxxx to approximately NZDxxxx from [text deleted due to confidentiality] 2005. This represents a price decrease of approximately xxxx percent The Investigating Team has assessed the statements made by BPB in response to the Interim Report in view of this price decrease and previous statements made by BPB to the Investigating Team.
Conclusion on Future Exports
473. SGI/SCT stated that it will [text deleted due to confidentiality] New Zealand [text deleted due to confidentiality]. BPB stated that it will attempt to increase its volumes to New Zealand and is [text deleted due to confidentiality] its current prices.
474. SGI has stated that they want to protect the premium prices they receive in the New Zealand market and increasing the sales volume to any great extent would force prices lower in order to achieve sales. This contrasts with statements made by BPB that it will seek to increase sales to New Zealand and is prepared to decrease prices to do so. Although, in response to the Interim Report BPB changed its position and stated that it had no intention of "taking any action to reduce prices". The Investigating Team is not satisfied that this is necessarily the case.
475. The Investigating Team considers that it is likely both of the manufacturers will attempt to increase their exports to New Zealand and BPB will decrease its export price if necessary to achieve this.
Current Pricing to New Zealand
476. Assessing the current magnitude of the margin of dumping and current prices can assist in helping to assess what the future price may be.
SGI/SCT
477. From the information provided by Elephant and SGI/SCT the Investigating Team has calculated dumping margins for exports to Elephant ranging from -xxxxpercent to xxxx percent, that is, no dumping at a substantive level is occurring by SGI/SCT.
BPB
478. From the information provided by BML, BPB and SGI/SCT the Investigating Team has calculated dumping margins for exports to BML ranging from -xxxx percent to -xxxx percent, that is, no dumping is occurring by BPB.
Conclusion on Current Prices
479. BPB has been found to be exporting at un-dumped prices over the period of review but this was based on constructed normal values and export prices. SGI/SCT was found to have made exports at prices that were not, or only very marginally, dumped.
480. Given the existence of reference price duties currently in place the Investigating Team does not consider that the current prices can be meaningfully used as a base point for forecast prices. Most of the current export prices are sufficiently above the reference prices that a reduction in the export price level may still not result in the goods being dumped.
5.2 Injury
481. Injury is primarily driven by two forms of competition, prices and sales volume. The effects that are felt on these two fronts then flows into the economic and financial indicators of an industry's health.
482. Winstone's application addressed the likelihood of material injury recurring if the current anti-dumping duties were removed. Winstone stated that if current anti-dumping duties cease it will lead to: increased import volumes, price undercutting and depression, declines in output, sales, market share, profits, returns on investment, utilisation of production capacity and adverse effects upon cash flow, inventory, employment and growth.
483. The Investigating Team has assessed each of the injury factors below, some of which Winstone provided some information on, and others it did not. To the extent that it is relevant the Investigating Team has considered the approach which Winstone consider is relevant in assessing material injury (or the likelihood thereof) that is the position that it would be in "but for the dumped goods". However, the Investigating Team notes both that the "but for" test is more useful in assessing current injury than the likelihood of future injury. In addition the "but for" test is an assessment of the position that Winstone would be in if no dumped imports from Thailand had been imported. This is very distinct from the position that Winstone would be in if no imports from Thailand had occurred and the "but for" test is applicable only to the portion of goods that are dumped.
484. The Investigating Team asked Winstone to provide a picture of what the likely impacts would be if the duties were removed. As a general response Winstone responded that the effect if duties were removed would be the same as what it experienced in the period immediately preceding the initial imposition of the duties, over seventeen years ago. Beyond some general EBIT and price figures from Winstone, the information presented on the likely scenario was not substantial and related to only a few key changes to its current forecast position.
485. The Investigating Team is unable to accept that the position that Winstone was in seventeen years ago can be automatically held to be the likely outcome in the event that the anti-dumping duties are removed for several reasons. The nature of the New Zealand (and global) economy and in particular the competition that Winstone's has experienced from the Thai imports has changed drastically over the past decade. In turn this has impacted on the type of business that Winstone operates. Winstone was not the innovative market focused, customer responsive organisation that it is today when it first faced competition from dumped imports. Key initiatives such as the Home Solutions branding, call centres, delivery times and product range extensions, have all been introduced since the Thai imports first entered the market. It should be noted that some of these services are replicated by the importers, however, Winstone's market focus is vastly different to that of the late 1980's and correspondingly its response to and effect from any dumped imports must be considered in this context.
486. In response to the Interim Report BPB stated given that Winstone is the sole New Zealand manufacturer, has a very high market share (estimated by BPB as being in excess of 95 percent), has high capacity utilisation and probably enjoys the world's highest plasterboard prices that "it is difficult to see any likely threat of material injury" to Winstone.
487. The Investigating Team is aware of the extent of the market share that Winstone holds and the prices that it achieves and has taken this into account in assessing the likelihood of recurrence of material injury to Winstone caused by the dumping.
Import Volumes
488. Import volumes and the pattern that these figures can take can be helpful in forecasting what the level of imports would be in the absence of anti-dumping duties. A pattern of static import levels with anti-dumping duties in place may signal that in the absence of anti-dumping duties these import levels would increase drastically. Increasing imports can show that the duties are partially ineffective and need to be reassessed or that there is growth in the New Zealand domestic market, or that even at non-dumped prices the imported goods are competitive in the New Zealand market. Decreasing volumes can indicate that the duties are too high and prohibiting importation of goods that would have been imported if duties had been set a non-injurious level, or that the duties are effective and have deterred dumped imports that cannot compete in the New Zealand market at a non-dumped price, or that the New Zealand domestic market is declining.
489. Winstone stated that import volumes into New Zealand have increased over the past seventeen years despite the existence of anti-dumping duties and for the year ended June 2005 imports from Thailand accounted for xxxx percent of the total imports. Winstone also submitted the volume of imports of plasterboard have increased despite the presence of anti-dumping duties for the past seventeen years, and that the Investigating Team should interpret this as an indication that in the absence of any anti-dumping duty, import levels would increase further.
490. The Investigating Team notes that the growth of the volume of Thai imports has occurred within a growing market. As shown in Table 4.5 over the period 2001 to 2005, the volume of imports of standard plasterboard from Thailand grew by xxxx percent. However, over the same period the total New Zealand market grew by xxxx percent.
491. The Investigating Team considers that the extent to which the imports of all types of plasterboard, including performance boards, has increased must be considered in light of the New Zealand market growth. It is clear that the level of growth in the exports is [text deleted due to confidentiality], relative to the growth in the overall market. However, given the comments made by all parties to this investigation on the growing competition from [text deleted due to confidentiality], alongside Winstone's statement that it is not currently being injured by imports of dumped standard plasterboard, the Investigating Team considers that this increased level of competition of imports from Thailand is either largely related to the change in the ratio of total imports occupied by performance board or accepted by Winstone as un-dumped and therefore fair competition. This does not [text deleted due to confidentiality] the recent increase.
492. Winstone also made reference to the size and resources available to the Thai manufacturers indicating that both manufacturers have the ability to scale import volumes rapidly. The Investigating Team notes that, while the extent of the exporting manufacturers resources gives them the ability to scale exports quickly, there needs to be a corresponding ability on the import side, by the importers to be able to deal with the volumes in terms of handling, sales, purchases and the corresponding impacts upon their costs that these changes would have.
493. Winstone stated that the ability of the New Zealand importers of Thai plasterboard to deal with increased volumes is evidenced by the volumes of plasterboard that they have previously imported, combined with comments made by the importers of the desire to obtain a certain market share and an apparent willingness to sell at lower prices. The Investigating Team believes that there are two relevant factors in assessing the ability of the New Zealand importers to accept increased volumes into the New Zealand market over a reasonably short period of time.
494. First is the strength of Winstone as the incumbent market leader. The Winstone's GIB® brand has a strong foothold in the New Zealand market and with its Living Solutions and performance plasterboard approach has been successful in maturing the market towards the higher value-added plasterboards. While over a longer period of time it is undoubtedly possible to diminish brand strength through the availability of lower priced products, especially for a commodity product, the Investigating Team believes that the value of the GIB® brand and its success within the New Zealand market is such that it would be very difficult for importers to significantly increase their market penetration in the short to medium term.
495. Second is the ability of the market to absorb these volumes, which need to be successfully distributed by the importers. The construction market, and the wider economy, is forecast to decline and some consider that the decline has already begun. In a declining market all market participants will struggle to maintain current sales levels, let alone be successful in growing them. This, however, does not preclude the possibility of importers increasing market share through lower prices in a declining market. Therefore, whether import volumes can increase is dependent on the predisposition of the market towards the packages offered by the Thai importers, as opposed to that offered by Winstone. The importers may, in the absence of anti-dumping duties, be able to offer a lower price but the extent to which the market would require this to be lower than Winstone's is unclear. The value that customers place on the GIB® brand and Winstone's support is already displayed by the purchases of performance plasterboards and overall market share that Winstone has retained. Evidence was presented by Winstone that it is [text deleted due to confidentiality] from Thailand and that on certain occasions, on a [text deleted due to confidentiality], this has [text deleted due to confidentiality] for that type of performance board. At the same time the level of Winstone's sales of performance plasterboards has continued [text deleted due to confidentiality].
496. Winstone also has in place distributor agreements that it stated are usually for [text deleted due to confidentiality], with some [text deleted due to confidentiality] agreement in the [text deleted due to confidentiality]. The Investigating Team is unsure as to what percentage of Winstone's sales are subject to these agreements but understands it is a large portion. To some degree, the market is restricted to the level of imported product it can purchase for the duration of the distributor agreements with Winstone, which require exclusive stocking of GIB® branded plasterboard.
497. Given the small percentage of total imports found to be dumped, only xxxx percent of total imports of subject goods from Thailand, the Thai import volumes that Winstone would face "but for" the dumped imports is very similar to the total currently entering the market.
Conclusion on Import Volumes
498. The Investigating Team considers that in a growing market it is likely that the import volumes of standard plasterboard from Thailand will continue to grow. If the market declines, as it is forecast to do (or has already begun to) the level of these imports is unpredictable but may be unlikely to increase. In assessing the impact of an increased volume the Investigating Team considers that the effect of price in the New Zealand market will determine the volumes imported.
Importer's Intentions
499. The extent to which import volumes are expected to increase and pricing levels change is dependent on the intentions of the importers for their sales of plasterboard within the New Zealand market and how these sit with the intentions of the Thai manufacturers and the state of the New Zealand market for plasterboard.
500. Winstone submitted that there is proven access to the New Zealand market for the Thai exporters through the long-standing relationships they have with the importers and that the importers now have established distribution networks in place.
501. The Investigating Team considers that both importers have now been operating businesses involved in the importation of plasterboard for some time and have established relationships and networks within the New Zealand market. Elephant has traditionally been the more established of the two importers having now developed strong relationships with the merchants and a solid distribution network. BML has traditionally been the smaller and less sophisticated competitor of the two importers. This appears to be changing with several interested parties submitting to the Ministry evidence of the increasingly sophisticated BPB brand marketing that BML is using in the New Zealand market.
502. The Investigating Team did not receive a substantial amount of information from either of the importers but their stated intentions for the New Zealand market are covered below.
Elephant
503. Winstone submitted to the Investigating Team statements made by Elephant that it cannot sell below Winstone's prices, which Winstone interpreted as references to the anti-dumping duties and stated that these showed a change in pricing policy in the absence of any anti-dumping duties would be inevitable. Elephant also provided the Investigating Team with these statements and stated that they demonstrated that Elephant is not attempting to undercut Winstone's prices.
504. Elephant indicated that it expects to import [text deleted due to confidentiality] plasterboard [text deleted due to confidentiality] regardless of whether or not anti-dumping duties apply, as it has [text deleted due to confidentiality] product. Furthermore Elephant indicated to the Investigating Team that the level of stock it holds indicates that it serves an existing customer base rather than has large stock piles of product that it is waiting to unleash upon the New Zealand market.
505. When asked to comment on what the effect on its selling prices would be if the anti-dumping duties were removed Elephant stated that there would be no difference in its selling prices. Elephant did state that the removal of anti-dumping duties could result in [text deleted due to confidentiality] price from SGI/SCT, hence increasing Elephant's [text deleted due to confidentiality]. Elephant emphatically and repeatedly stated that it would not [text deleted due to confidentiality] a [text deleted due to confidentiality] Winstone, as it believes that Winstone has both cost advantages, with the ability to manufacture more cheaply than Elephant can import, and size advantages with its financial strength and large share of the market.
506. Elephant stated that even if the anti-dumping duties were removed this would not change Elephant's pricing behaviour for one key reason. Mr Van Hest, the principal of Elephant and it predecessors, has been involved in the importation of plasterboard from Thailand, with the corresponding anti-dumping duties that have applied, for the past seventeen years. Elephant stated that this experience gave it the assurance that despite any alleged short-term gains that may be made in market share by lowering its prices would be short lived, as a new anti-dumping action would rapidly be taken by Winstone. Elephant stated that it believes the [text deleted due to confidentiality] by Winstone given the level of Winstone's market share and the level of resource that it invests into supporting its GIB® products in the marketplace.
507. Elephant believes that Winstone is likely to be injured by imports from other sources, namely the increase in levels of plasterboard that are being imported from China and to a lesser extent Australia rather than any un-dumped imports that may be entering from Thailand.
508. In response to the Interim Report Elephant requested that the Investigating Team clarify its findings at paragraph 545 that the pricing behaviours of Elephant will not be a cause of injury to Winstone "independently of [any recurrence of dumping]". The Investigating Team is unable to conclude that Elephant's future pricing behaviours will not be a cause of material injury to Winstone if dumping were to occur, but has concluded that it does not see this as likely.
BML
509. BML submitted that when anti-dumping duties are imposed exporters increase their prices to that level to capture the increased rate of profit in the country of export rather than the importers paying an anti-dumping duty. BML believes the effect of anti-dumping duties is to transfer the profit capture from New Zealand importers to the foreign manufacturers impacting prices to the disadvantage of the New Zealand consumer and benefits only the foreign exporters and Winstone, which BML noted is largely foreign owned.
510. The Investigating Team notes that increasing prices to avoid the imposition of anti-dumping duties is only possible in situations where the anti-dumping duty is set by way of a reference price mechanism when duty is not payable if the goods are at, or over, a certain level that is deemed to be dumped or non-injurious. This contrasts with the imposition of other forms of duty such as a specific or percentage duty where a duty of the corresponding value must be paid despite the price level of the imports.
511. BML stated that a consequence of exporters increasing their prices, in order to respond to the anti-dumping duty is that exports to New Zealand are more attractive to them.
512. BML stated that it has dealt with the duties by focusing its sales on the commercial market that is more likely to use performance plasterboards, which are not subject to anti-dumping duties. The Investigating Team notes that evidence was provided by Winstone that it is facing strong competition from BML in this portion of the market.
513. BML submitted that it prices its board relative to Winstone's prices to achieve the market penetration it seeks. BML also stated that it has no interest in undercutting Winstone's price further; indicating that it considers it is already selling plasterboard at a price below that of Winstone. BML specifically stated that if duties were removed it would expect a reduced purchase price from BPB but would not reduce the prices of its standard plasterboard, instead would enjoy a larger profit margin.
514. BML stated that the existence and level of an anti-dumping duty will not affect its pricing as room for response to movement in costs after FOB is already built into its pricing and anti-dumping duties would be dealt with the same way. BML further stated that it has a share of the New Zealand market that it intends to achieve regardless of whether or not there are any anti-dumping duties in place.
Price Effects
515. Winstone stated in its application that ".., commercial logic would indicate that any removal of the anti-dumping remedy would almost immediately result in the Thai producers reducing export prices to New Zealand".
516. Winstone provided evidence on the price effects it believes would occur in the absence of anti-dumping duties and in some cases related this to the data provided on exports of plasterboard from Thailand to countries other than New Zealand and in other cases to data on its own financial performance.
517. Winstone's application submitted that the extent to which Thai exports of plasterboard to countries other than New Zealand, are lower than the export prices to New Zealand, as outlined from paragraph 384, indicated that there was significant scope for imports to undercut the prices of New Zealand manufactured plasterboard. Similar statements were made in regard to the likelihood of price depression. Winstone submitted that this indicated the level of any undercutting would be substantial.
518. Winstone surmised that given the data on exports to other countries that a reduction in the importer's selling prices of NZDxxxx per square metre would occur and that this would be a minimum of NZDxxxx and in order to compete with dumped imports it would [text deleted due to confidentiality] and [text deleted due to confidentiality]. Figures provided indicated that a [text deleted due to confidentiality] of its plasterboard would result in a loss of NZD[text deleted due to confidentiality] per year. The application also provided a scenario where, [text deleted due to confidentiality] plasterboard, Winstone's [text deleted due to confidentiality], which would result in the [text deleted due to confidentiality] NZD[text deleted due to confidentiality].
519. While there may be a decrease in the export price of the goods to New Zealand this will not necessarily correspond to lower prices in the New Zealand market. Importers could chose, in the event of a decrease in their purchase price, to continue to sell at current prices and make an increased margin on sales, as submitted by BML. If the importer's purchase prices were to decrease and they chose to pass this onto their customers there would be a point at which it would be better to maintain prices at a certain market share than to decrease prices further.
520. [text deleted due to confidentiality] the New Zealand construction market had begun to cool but [text deleted due to confidentiality] also described the situation as one of [text deleted due to confidentiality] rather than [text deleted due to confidentiality] demand. A [text deleted due to confidentiality] market situation would likely create different pricing behaviours from all market participants than may occur in a [text deleted due to confidentiality] market.
521. Elephant has iterated that it does not seek to undercut Winstone's plasterboard prices. It currently also sells its performance plasterboards, to which anti-dumping duties do not apply, at prices above the equivalent Winstone products ([text deleted due to confidentiality]).
522. The Investigating Team notes that the level of evidence that it has before it to enable it to assess price undercutting is limited and that there may well be some price undercutting already occurring by BML, given statements that BML has made.
Other Price Effects
523. Winstone did not comment on any other price effects, beyond those already stated above. It is worth noting that the expected impacts given above are expressed in terms of Winstone's standard plasterboard sales. Winstone also stated that as the price of performance boards are [text deleted due to confidentiality] that it would [text deleted due to confidentiality] price of the performance boards, which was estimated as leading to a further reduction in EBIT of NZD[text deleted due to confidentiality].
Output and Sales
524. Winstone stated that is would seek to [text deleted due to confidentiality] and accordingly [text deleted due to confidentiality] in its plants. There are [text deleted due to confidentiality] injury effects on output or sales volumes.
Market Share
525. Winstone stated in response to dumped goods it would [text deleted due to confidentiality] to limit any [text deleted due to confidentiality] percent of the [text deleted due to confidentiality]. Winstone forecast that this would be [text deleted due to confidentiality] as it responds [text deleted due to confidentiality] from the importers.
Profits and Return on Investments
526. Winstone stated that profits would decrease by at least NZD[text deleted due to confidentiality] if the anti-dumping duties were removed in respect of all exports from Thailand. This would have a corresponding effect on its return on investments, although the investment figures provided are for the Winstone's entire operations and therefore the exact magnitude of this impact is not measurable.
Productivity and Employment and Wages
527. Winstone stated that it will seek to [text deleted due to confidentiality] years. Winstone reiterated that the volume of imports from Thailand have not been of a sufficient level to effect its productivity and does not believe that [text deleted due to confidentiality].
Utilisation of Production Capacity
528. Given that Winstone has stated it would respond to any dumped imports by [text deleted due to confidentiality] of production capacity would occur.
Cash Flow and Inventories
529. The comments on cash flow in paragraph 345 and inventories in paragraph 347 apply equally to the assessment of any likelihood of recurrence of material injury in this area.
Growth and Ability to Raise Capital and Investments
530. Given Winstone's statements that [text deleted due to confidentiality] its plants and that it [text deleted due to confidentiality] no injury effect can be forecast here.
531. Winstone has stated that its current growth strategy is [text deleted due to confidentiality] and this when combined with the strategy it anticipates it would employ to deal with a recurrence of dumped imports from Thailand, the Investigating Team concludes that growth would not be affected by dumped imports of standard plasterboard.
5.3 Conclusion
532. In assessing the likelihood of any recurrence of dumping causing material injury no analysis can ever be future proof, or provide a guarantee of what will or will not happen and is at best an educated assessment of what is likely to occur in the future, having regard to what has occurred in the past. The lack of perfect information or impossibility of accurately predicting the future does not predicate any favour in terms of the decision that should be made, that is, duties should not be continued merely because the future is uncertain. Rather each review must turn its mind to each of the relevant factors that are considered in assessing both dumping and material injury, or threat thereof, in a new investigation and come to a conclusion based on the evidence presented.
Dumping
533. Normal values have decreased, there is strong domestic demand that is forecast to continue, albeit at slower rates, in the Thai domestic market and while there is some evidence that list prices may have recently increased in Thailand there is no evidence of the substantial discounts that are offered in the market abating.
534. The average export prices to New Zealand are at least 18 percent higher than exports to other countries from Thailand to which it was compared. The suitability of these countries, apart from Australia, as a source of comparison is questionable given the nature of these economies. In addition the New Zealand export prices were effectively set in light of the anti-dumping duties being in place and the prices to these other countries have been able to move dynamically in response to changing market drivers.
535. BPB has large excess capacity that it is intending to export and due to the high export prices to New Zealand it is likely that some of this excess capacity would be exported to New Zealand. BPB stated that it will attempt to increase its volumes to New Zealand and is less concerned about maintaining its current prices. Although the Investigating Team notes that BPB's prices to BML for [text deleted due to confidentiality] its standard plasterboard, which makes decreasing prices of the standard plasterboard unlikely without a [text deleted due to confidentiality].
536. In response to the Interim Report BPB stated that the Investigating Team's conclusion on the likelihood of future dumping "seems extraordinary that despite findings of no dumping and no injury you plan to reassess duties on the future expectation that there is a likelihood of dumping recurring for exports by BPB." The Investigating Team notes that the matter to be considered in a review is whether dumping causing material injury would be likely to continue or recur in the future if duties were removed. Therefore the fact that no dumping is currently occurring does not mean that no dumping would occur if duties were removed.
537. The Investigating Team did not establish any positive dumping margins for BPB during the course of the review but has taken into account several factors; including prices to other export markets, current capacity utilisation, prices to New Zealand, statements made during the review and commentary on export intentions in determining it is likely that BPB will export to New Zealand at dumped prices in the absence of any anti-dumping duty. Additionally the prices of its performance plasterboards, when compared to the prices of standard plasterboard to New Zealand indicates that it is likely these two sets of prices are bundled and this matter will be addressed in the reassessment following this review.
538. SGI/SCT has stated that it will attempt to continue growing its market share in New Zealand but will [text deleted due to confidentiality] price to achieve this. It appears, contrary to the conclusion reached in the Interim Report, that exports would not be constrained by capacity. This is the result of additional information on capacity but no corresponding information was supplied in relation to utilisation. The Investigating Team does not believe that it is likely that SGI/SCT will export to New Zealand at dumped prices in the future to a level that would cause material injury to Winstone and in doing so has taken into account the [text deleted due to confidentiality] in the New Zealand market.
539. Winstone requested in response to the Interim Report that the Investigating Team reconsider the imposition of duties in relation to exports by SGI to Elephant, given the additional information that it provided in relation to capacity. The Investigating Team has considered this information above. The re-introduction of the Navanakorn plant is additional capacity but the Investigating Team has no information on current utilisation rates and is not convinced that, given the extent of weight it has given to capacity in reaching its conclusion in respect of exports to Elephant, that an alternate conclusion should apply.
Injury
540. The level of imports from Thailand have increased significantly since anti-dumping duties were first imposed and [text deleted due to confidentiality]. The sheer size and resources available to the exporting manufacturers indicates, subject to any capacity constraints, that they have the ability to rapidly export increased volumes of plasterboard to New Zealand. The Investigating Team believes that this potential for rapid growth of Thai product in the New Zealand market is seriously constrained both by the strength of Winstone, as incumbent market leader and to a lesser extent the resources of the importers.
541. The price at which the importers would sell plasterboard in the absence of anti-dumping duties has been evaluated against the prices that they currently sell at and the behaviours around the pricing of the imported performance plasterboards, which are currently not subject to anti-dumping duties.
542. Elephant has a stated pricing policy, for goods that are currently subject to duties, as well as other performance plasterboard, of maintaining its prices above those of Winstone. The Investigating Team considers that Elephant is likely to seek to maintain this policy if anti-dumping duties were removed.
543. BML currently undercuts Winstone on the price of performance plasterboards and also made comments indicating that it may also undercut Winstone on standard plasterboard. BML submitted that if the anti-dumping duties were removed that it would not lower its prices but instead enjoy an increased margin from those sales. Given its current pricing strategy for the performance plasterboards, which are not subject to anti-dumping duties, the Investigating Team considers that BML would decrease the price of its standard plasterboard if anti-dumping duties were removed.
544. A decrease in the price of BML's standard plasterboard would likely cause Winstone's prices to be depressed and undercut by these imports, therefore, depending on the extent and success of any such price reductions, leading to a likelihood of recurrence of material injury to Winstone.
545. The Investigating Team has concluded in respect of a likelihood of the recurrence of dumping and corresponding material injury:
- There is a likelihood of a recurrence of dumping by BPB in the foreseeable future having cognisance of its large excess capacity levels. Given the past pricing behaviours of BML in the New Zealand market this dumping is likely to be a cause of material injury to Winstone; and
- A recurrence of dumping by SGI/SCT is not likely in the foreseeable future having considered its current exports, including the pricing of performance boards to New Zealand. The pricing behaviours and conduct of Elephant in the New Zealand market to date indicate that material injury to the domestic industry is not likely to result from exports by SGI/SCT.
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