CAFC Upholds Decision Not to Attribute Steel Input Provider's Subsidies to Rebar Exporter

Initially in the review, Commerce attributed Nur's subsidies to Kaptan, though the Court of International Trade remanded this finding for further explanation. On remand, the agency decided not to attribute Nur's subsidies to the respondent, finding that Nur isn't Kaptan's cross-owned input supplier. CIT upheld Commerce's finding that Nur's steel scrap wasn't necessarily "primarily dedicated" to Kaptan's rebar production, and the agency's consideration of Nur's business activities (see 2311270059).

The petitioner, the Rebar Trade Action Coalition, appealed the case and asked the Federal Circuit to reinstate Commerce's original decision. Linn, writing for the court, first held that CIT's decision remanding the review "is properly reviewed" under the "more deferential abuse of discretion standard" and not under the "substantial evidence standard." The court held that CIT didn't abuse its discretion in asking for further explanation, since the trade court identified that Commerce didn't address two factors "that had previously been recognized as important to the primarily dedicated inquiry." Those factors were whether the input was "merely a link in the chain of production of the downstream product" and "the byproduct nature of the input."

The Federal Circuit then turned to its review of Commerce's decision itself.

First, Linn reviewed the coalition's claim that the scrap provided by Nur is a "mere link in the production chain of Kaptan’s rebar," and the agency's finding to the contrary isn't supported, since "Commerce did not identify the other industries that use unprocessed scrap." In response, Kaptan and the U.S. said the petitioner "improperly frames the question Commerce was tasked with answering," since the agency didn't have to identify industries other than steelmaking that use scrap to show the input was a "common input." Instead, the agency only needed to assess "the range of steel products that steel scrap could be used to produce."

Linn agreed with Kaptan and the government, noting that Commerce found that the respondent "uses steel scrap to produce a variety of articles in addition to subject rebar, including non-subject rebar, other bars, and angle profiles." The claim that all products made from melting steel scrap fall within the "steelmaking industry" merely reflects the petitioner's "disagreement with Commerce’s framing of the relevant industries and the determination of when one industry ends and another begins," the opinion said. “This is ultimately a factual matter best left to Commerce’s expertise,” the judge held.

The court added that Commerce sufficiently explained the "unprocessed nature of Nur's scrap." The agency said the "extent to which an input is generated or processed for downstream products is relevant when determining whether the input is a mere link in the production chain" and, thus, the more an input is prepared for downstream production, the "stronger the inference" that the input is "primarily dedicated to that production." Since Commerce noted Nur's scrap was unprocessed, the agency "reasonably concluded" it wasn't a "mere link in the production chain" and instead a common input, the court said.

The petitioner also argued that an input used to make a "limited group of downstream goods to which the input bears a close physical relationship" is "primarily dedicated" to those goods within the meaning of Commerce's CVD regulations, adding that steel scrap has such a close physical relationship to rebar. Linn rejected this claim on the basis that the agency's regulations indicate that the "physical relationship between the input and downstream products is a relevant but not the sole consideration in the primarily dedicated analysis."

Linn then turned to Commerce's consideration of Nur's primary business activity, which is shipbuilding. The agency said this activity wasn't "dedicated almost exclusively to the production of a higher value-added product" and thus indicates Nur's input production wasn't primarily dedicated to the production of rebar.

The petitioner said Commerce put too much weight on this factor, since the agency's regulations don't include the term "business activity" and, instead, emphasize that the "salient issue is whether the input is, by its nature, usable only in producing a narrow subset of goods and/or is a primary input into such goods."

The court said that while the phrase "business activities" doesn't appear in the regulations, the regulations do require the agency "to cross-attribute subsidies when 'production of the input product is primarily dedicated to production of the downstream product.'" This mandate notes that the "production process yielding the input product is also relevant and important" to this determination. In addition, "consideration of the input supplier’s activities leading up to the input supplier’s provision of the input" is in line with the regulations' "stated goal of discerning subsidies intended to benefit downstream products from those that are not so designed," the court held.

From this reading of Commerce's regulations, Linn said there was "no error" in the agency's consideration of Nur's shipbuilding activities. "Absent a suggestion in the regulation or the Preamble confirming that certain factors ought to be afforded particular weight, the determination of how much weight to afford each factor in the primarily dedicated analysis is a fact-driven inquiry best left to Commerce’s expertise," the court held.

Andy Schutz, counsel for Kaptan, said in an email that the "decision has not only resolved this case in favor of Kaptan, resulting in a zero percent CVD rate for this period of review, but it has helped shed light on the more general issue of when an affiliated input supplier’s subsidies can be attributed to the respondent. This has always been a complicated issue, and we are hopeful that Commerce’s new holistic approach, blessed by the Court today, will make things easier in future CVD cases."

(Kaptan Demir Celik Endustrisi ve Ticaret v. United States, Fed. Cir. # 24-1431, dated 11/17/25; Judges: Raymond Chen, Richard Linn and Todd Hughes; Attorneys: Andrew Schutz of Grunfeld Desiderio for plaintiff-appellee Kaptan Demir Celik Endustrisi ve Ticaret; Sosun Bae for defendant-appellee U.S. government; Maureen Thorson of Wiley Rein for defendants-appellants led by the Rebar Trade Action Coalition; Jessica DiPietro of ArentFox Schiff for plaintiffs-appellees Colakoglu Dis Ticaret and Colakoglu Metalurji)