[Federal Register Volume 59, Number 214 (Monday, November 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27437]


[[Page Unknown]]

[Federal Register: November 7, 1994]


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DEPARTMENT OF COMMERCE
[A-570-832 and A-570-833]

 

Notice of Preliminary Determinations of Sales at Less Than Fair 
Value and Postponement of Final Determinations: Pure Magnesium and 
Alloy Magnesium From the People's Republic of China

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: November 7, 1994.

FOR FURTHER INFORMATION CONTACT:
David J. Goldberger or Louis Apple, Office of Antidumping 
Investigations, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-
4136 or (202) 482-1769, respectively.

PRELIMINARY DETERMINATIONS: We preliminarily determine that imports of 
pure magnesium and alloy magnesium from the People's Republic of China 
(PRC) are being, or are likely to be, sold in the United States at less 
than fair value (``LTFV''), as provided in section 733 of the Tariff 
Act of 1930, as amended (the Act). The estimated margins are shown in 
the ``Suspension of Liquidation'' section of this notice.

Case History

    Since the initiation of these investigations on April 20, 1994, (59 
FR 21748, April 26, 1994), the following events have occurred.
    On May 16, 1994, the U.S. International Trade Commission (ITC) 
notified the Department of Commerce (``the Department'') of its 
preliminary determination that there is a reasonable indication that 
industries in the United States are materially injured by reason of 
imports of pure and alloy magnesium from the PRC that are alleged to be 
sold at less than fair value.
    On June 13, 1994, the Department sent the antidumping questionnaire 
to the PRC's Ministry of Foreign Trade and Economic Cooperation 
(MOFTEC), the China Chamber of Commerce of Metals, Minerals and 
Chemical Products, and seven PRC companies. (The antidumping 
questionnaire was divided into three sections: section A requesting 
general information on each company; section C requesting information 
on, and a listing of, U.S. sales made during the period of 
investigation (``POI''); and, section D requesting information on the 
production process, including specific amounts of each input used in 
manufacturing pure or alloy magnesium). We requested MOFTEC's 
assistance in forwarding the questionnaire to all exporters and 
producers of pure magnesium and alloy magnesium and submitting complete 
questionnaire responses on their behalf.
    On August 8, 1994, the Department postponed its preliminary 
determinations in these antidumping duty investigations until October 
27, 1994 (59 FR 42200, August 17, 1994).
    On August 10, 1994, the Department provided interested parties with 
the opportunity to submit published, publicly-available information for 
the Department to consider when valuing the factor inputs. Petitioners 
and respondents submitted information on September 7, 1994.
    In August and September 1994, we received responses to the 
questionnaire from Min He Magnesium Smelter (Min He), a producer and 
exporter of the subject merchandise.
    On September 1, 1994, the Government of the PRC advised us that Min 
He was the only exporter of the subject merchandise during the period 
of investigation (October 1, 1993, through March 31, 1994). As Min He's 
Section A response indicated that it made no sales of alloy magnesium 
during this period, on September 2, 1994, we requested all PRC 
exporters, through counsel, to provide information concerning sales of 
all magnesium for the 12 months prior to the six-month period of 
investigation (POI) in order to reconcile the small number of reported 
sales with the much larger number of magnesium entries from the PRC 
reported by U.S. Customs. The PRC exporters replied to this request on 
September 9, 1994, identifying several sales of pure magnesium and 
alloy magnesium between April and September 1993. These sales were made 
by Xiamen Xing Xia Company Ltd. (Xing Xia) and Xiamen Jinda 
International Trade Associated Corp. (Jinda). Accordingly, on September 
16, 1994, the Department expanded the POI to encompass the twelve-month 
period April 1, 1993, through March 31, 1994, and requested 
supplemental questionnaire responses for that period.
    On October 5, 1994, counsel for the PRC companies advised us that 
the information in its September 9, 1994, letter was in error and that 
all additional magnesium sales were made prior to the twelve-month POI. 
The exporters noted in the letter that their sales of alloy magnesium 
were pursuant to sales contracts for pure magnesium, but were 
classified as alloy magnesium by U.S. Customs upon their entry into the 
United States. On October 13, 1994, we again expanded the POI for alloy 
magnesium to a nineteen-month period of September 1, 1992, to March 31, 
1994, in order to cover the most recent sales of magnesium entered into 
the United States as alloy magnesium. On the same date, we advised the 
PRC companies to provide questionnaire responses for alloy magnesium 
based on this POI. During October 1994, we received a supplemental 
questionnaire response from Min He, and a questionnaire response from 
Xing Xia, as well as a statement from Jinda that it did not make any 
sales during the POI.

Postponement of Final Determinations

    Pursuant to section 735(a)(2)(A) of the Act, on October 19, 1994, 
the PRC exporters which account for all of the exports of the subject 
merchandise in each investigation requested that, in the event of 
affirmative preliminary determinations in these proceedings, the 
Department postpone the final determinations to 135 days after the date 
of publication of the affirmative preliminary determinations. 
Therefore, we are postponing the final determinations until the 135th 
day after the publication of this notice in the Federal Register.

Scope of Investigations

A. Pure Magnesium

    The product covered by this investigation is pure primary magnesium 
regardless of chemistry, form or size, unless expressly excluded from 
the scope of this investigation. Primary magnesium is a metal or alloy 
containing by weight primarily the element magnesium and produced by 
decomposing raw materials into magnesium metal.
    Pure primary magnesium encompasses all products that contain at 
least 99.95% primary magnesium, by weight (generally referred to as 
``ultra-pure'' magnesium), as well as products containing less than 
99.95% but not less than 99.8% primary magnesium, by weight (generally 
referred to as ``pure'' magnesium). Products that have the 
aforementioned primary magnesium content, but that do not conform to 
ASTM specifications or other industry or customer-specific 
specifications, are included in the scope of this investigation.
    Excluded from the scope of this investigation are primary magnesium 
anodes, granular primary magnesium (including turnings and powder), and 
secondary magnesium.
    Granular magnesium, turnings, and powder are classifiable under 
Harmonized Tariff Schedule of the United States (HTSUS) subheading 
8104.30.00. Magnesium granules and turnings (also referred to as chips) 
are produced by grinding and/or crushing primary magnesium and thus 
have the same chemistry as primary magnesium. Although not susceptible 
to precise measurement because of their irregular shapes, turnings or 
chips are typically produced in coarse shapes and have maximum length 
of less than 1 inch. Although sometimes produced in larger sizes, 
granules are more regularly shaped than turnings or chips, and have a 
typical size of 2mm in diameter or smaller.
    Powders are also produced from grinding and/or crushing primary 
magnesium and have the same chemistry as primary magnesium, but are 
even smaller than granules or turnings. Powders are defined by the 
Section Notes to Section XV, the section of the HTSUS in which 
subheading 8104.30.00 appears, as products of which 90 percent or more 
by weight will pass through a sieve having a mesh aperture of 1mm. (See 
HTSUS, Section XV, Base Metals and Articles of Base Metals, Note 6(b).) 
Accordingly, the exclusion of magnesium turnings, granules and powder 
from the scope include products having a maximum physical dimension 
(i.e., length or diameter) of 1 inch or less.
    The product subject to this investigation is currently classifiable 
under subheadings 8104.11.00 and 8104.20.00 of the HTSUS. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
our written description of the scope is dispositive.

B. Alloy Magnesium

    The product covered by this investigation is alloy primary 
magnesium regardless of chemistry, form or size, unless expressly 
excluded from the scope of this investigation. Primary magnesium is a 
metal or alloy containing by weight primarily the element magnesium and 
produced by decomposing raw materials into magnesium metal.
    This investigation covers alloy primary magnesium products which 
contain 50% or greater, but less than 99.8%, primary magnesium, by 
weight. Products with the aforementioned primary magnesium content that 
do not conform to ASTM specifications or other industry or customer-
specific specifications are included in the scope of this 
investigation. In addition to primary magnesium, ``alloy'' magnesium 
generally contains one or more of the following items in amounts less 
than the primary magnesium itself: (1) Other elements deliberately 
added to the primary magnesium; (2) magnesium scrap or secondary 
magnesium; (3) oxidized magnesium; and (4) other elements present as 
impurities.
    Alloy primary magnesium is cast and sold in various physical forms 
and sizes, including ingots, slabs, rounds, billets and other shapes.
    Excluded from the scope of this investigation are primary magnesium 
anodes, granular primary magnesium (including turnings and powder), and 
secondary magnesium.
    Granular magnesium, turnings, and powder are currently classifiable 
under HTSUS subheading 8104.30.00. Magnesium granules and turnings 
(also referred to as chips) are produced by grinding and/or crushing 
primary magnesium and thus have the same chemistry as primary 
magnesium. Although not susceptible to precise measurement because of 
their irregular shapes, turnings or chips are typically produced in 
coarse shapes and have a maximum length of less than 1 inch. Although 
sometimes produced in larger sizes, granules are more regularly shaped 
than turnings or chips, and have a typical size of 2mm in diameter or 
smaller.
    Powders are produced from grinding and/or crushing primary 
magnesium and have the same chemistry as primary magnesium, but are 
even smaller than granules or turnings. Powders are defined by the 
Section Notes to Section XV, the section of the HTSUS in which 
subheading 8104.30.00 appears, as products of which 90 percent or more 
by weight will pass through a sieve having a mesh aperture of 1mm. (See 
HTSUS, Section XV, Base Metals and Articles of Base Metals, Note 6(b).) 
Accordingly, the exclusion of magnesium turnings, granules and powder 
from the scope include products having a maximum physical dimension 
(i.e., length or diameter) of 1 inch or less.
    The product subject to this investigation is currently classifiable 
under subheadings 8104.19.00 and 8104.20.00 of the HTSUS. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
our written description of the scope is dispositive.

Period of Investigation

    The period of investigation is April 1, 1993, through March 31, 
1994 for pure magnesium, and September 1, 1992, through March 31, 1994, 
for alloy magnesium.

Nonmarket Economy Country Status

    The PRC has been treated as a nonmarket economy country (NME) in 
all past antidumping investigations (see, e.g., Final Determination of 
Sales at Less than Fair Value: Sebacic Acid from the PRC, 59 FR 28053, 
May 31, 1994). No information has been provided in this proceeding that 
would lead us to overturn this designation. Therefore, in accordance 
with section 771(18)(c) of the Act, we have treated the PRC as an NME 
for purposes of these investigations.

Surrogate Country

    In accordance with section 773(c)(4) of the Act, we must, to the 
extent possible, value the factors of production in one or more market 
economy countries that (1) are at a level of economic development 
comparable to that of the non-market economy country, and (2) are 
significant producers of comparable merchandise. Accordingly, we 
considered potential surrogates that produce comparable merchandise. 
Although the material inputs used to produce magnesium and aluminum are 
different, according to both U.S. Bureau of Mines and Department of 
Commerce experts, both (1) are light metals in terms of molecular 
weight; (2) are electricity-intensive products; (3) are produced using 
an electrolytic process, and (4) share some common end uses (e.g., dye 
casting). Therefore, in these investigations, we have determined that 
aluminum constitutes comparable merchandise in the context of surrogate 
selection.
    The Department has determined that India and Indonesia are the 
countries most comparable to the PRC in terms of being significant 
producers of comparable merchandise (aluminum) and of overall economic 
development. (See October 21, 1994, Memorandum from the Office of 
Policy to the File.) However, our research indicates that electricity 
rates in India are relatively high as compared to other countries which 
produce electricity-intensive products. Because high industrial 
electricity rates normally are inconsistent with significant production 
of electricity-intensive products such as aluminum, we do not believe 
that India is an appropriate surrogate country for valuing the factors 
of production for these products.
    Accordingly, we have based foreign market value (FMV) on the values 
of the appropriate factors of production in Indonesia. We have obtained 
and relied upon published, publicly available information, wherever 
possible.

Fair Value Comparisons

    In cases involving the PRC, the Department assigns a single rate to 
all PRC exporters unless a company establishes that it is entitled to a 
separate rate (see, for example, Final Determination of Sales at Less 
Than Fair Value: Silicon Carbide from the PRC (59 FR 22585, May 2, 
1994)). In these investigations, we have assigned a single rate to all 
PRC exporters in each investigation.
    To determine whether sales of pure magnesium and alloy magnesium 
from the PRC to the United States were made at less than fair value, we 
compared the United States price (USP) to the FMV, as specified in the 
``United States Price'' and ``Foreign Market Value'' sections of this 
notice.

United States Price

    For both pure magnesium and alloy magnesium, we based USP on 
purchase price, in accordance with section 772(b) of the Act, because 
the subject merchandise was sold directly by the Chinese exporter to 
unrelated parties in the United States prior to importation into the 
United States.
    We calculated purchase price based on packed, FOB foreign-port 
prices to unrelated purchasers in the United States. We made deductions 
for foreign inland freight, loading, and port handling expenses, valued 
in a surrogate country. To value freight, we used Indonesian freight 
rates from a 1991 cable from the U.S. Embassy in Jakarta (see, 
Preliminary Determination of Sales at Less Than Fair Value: Certain 
Carbon Steel Butt-Weld Pipe Fittings from the PRC 56 FR 66831, December 
26, 1991). We were unable to obtain loading and port handling expenses 
valued in Indonesia. For purposes of the preliminary determinations, we 
valued these expenses based on Indian port charges quoted by an 
international shipping company.

Foreign Market Value

    In accordance with section 773(c) of the Act, we calculated FMV for 
both pure magnesium and alloy magnesium based on factors of production 
reported by the factory in the PRC which produced the subject 
merchandise. The factors used to produce pure magnesium and alloy 
magnesium include materials, labor, and energy. To calculate FMV, the 
reported factor quantities were multiplied by the appropriate surrogate 
values from Indonesia for the different inputs. In determining which 
surrogate value to use for valuing each factor of production, we used, 
where possible, publicly available, published information.
    We used surrogate transportation rates to value inland freight 
between the source of the production factor and the magnesium 
factories, and between factories and exporters/ports. Where the 
producer failed to provide the information on transportation distances 
for a raw material input, we applied the average of the distances 
reported for other raw materials.
    To value raw materials, we used public information from United 
Nations Trade Commodity Statistics and Indonesia Foreign Trade 
Statistics.
    To value electricity, we used public information on Indonesia from 
the Electric Utilities Data Book for the Asian and Pacific Region 
(January 1993) published by the Asian Development Bank. As the data 
dated from 1990, we adjusted the electricity values to the appropriate 
POI using wholesale price indices published in International Financial 
Statistics (IFS) by the International Monetary Fund. Min He did not 
report the consumption factor for water and coal. For purposes of these 
determinations, we estimated these factors based on the ratio of non-
electricity energy inputs to the total of material, labor, and energy 
inputs stated in the petition.
    To value hourly labor rates in Indonesia, we used data obtained 
from the U.S. Department of Labor, Bureau of Labor Statistics on hourly 
compensation costs in Indonesia's manufacturing sector for 1986, and 
adjusted the labor rates to the appropriate POI using consumer price 
indices published in the IFS by the International Monetary Fund, and 
adjusted for inflation in the same manner identified for electricity.
    We were unable to obtain an appropriate factory overhead percentage 
based on Indonesian experience. Accordingly, for purposes of these 
determinations, we calculated factory overhead based on information in 
the petition concerning the experience of a U.S. magnesium producer. 
For selling, general and administrative (SG&A) expenses, we used the 
statutory minimum of ten percent of material, labor, energy, and 
factory overhead because we could not obtain information based on 
Indonesian industry experience. For profit we used the statutory 
minimum of eight percent of materials, labor, factory overhead, and 
SG&A expenses because we could not obtain information on Indonesian 
industry experience. We added packing based on the surrogate values 
obtained for the raw materials and labor in Indonesia.

Verification

    As provided in section 776(b) of the Act, we will verify all 
information determined to be acceptable for use in making our final 
determinations.

Suspension of Liquidation

    In accordance with section 733(d)(1) of the Act, we are directing 
the Customs Service to suspend liquidation of all entries of pure 
magnesium and alloy magnesium from the PRC, that are entered, or 
withdrawn from warehouse for consumption on the date of this notice for 
publication of this notice in the Federal Register. The Customs Service 
shall require a cash deposit or posting of a bond equal to the 
estimated amounts by which the FMV exceeds the USP, as shown below. 
These suspension of liquidation instructions will remain in effect 
until further notice.
    The dumping margins are as follows:


------------------------------------------------------------------------
                                                                 Margin 
                Manufacturer/producer/exporter                   percent
------------------------------------------------------------------------
                       A. Pure Magnesium                                
                                                                        
All manufactureres/producers/exporters........................    108.26
                                                                        
                      B. Alloy Magnesium                                
                                                                        
All manufacturers/producers/exporters.........................     79.38
------------------------------------------------------------------------

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determinations. If one or both of our final determinations 
is affirmative, the ITC will determine before the later of 120 days 
after the date of these preliminary determinations or 45 days after our 
final determinations whether these imports are materially injuring, or 
threaten material injury to, the U.S. industry.

Public Comment

    In accordance with 19 CFR 353.38, case briefs or other written 
comments in at least ten copies must be submitted to the Assistant 
Secretary for Import Administration no later than January 26, 1995, and 
rebuttal briefs, no later than February 2, 1995. In accordance with 19 
CFR 353.38(b), we will hold a public hearing, if requested, to affored 
interested parties an opportunity to comment on arguments raised in 
case or rebuttal briefs. Tentatively, the hearing will be held at 10:00 
a.m. on February 6, 1994, at the U.S. Department of Commerce, Room 
1412, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230. Parties should confirm by telephone the time, date, and place of 
the hearing 48 hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
B-099, within ten days of the publication of this notice. Requests 
should contain: (1) The party's name, address, and telephone number; 
(2) the number of participants; and (3) a list of the issues to be 
discussed. In accordance with 19 CFR 353.38(b), oral presentations will 
be limited to issues raised in the briefs. If these investigations 
proceed normally, we will make our final determinations by the 135th 
day after the date of publication of these determinations in the 
Federal Register.
    These determinations are published putsuant to section 733(f) of 
the Act and 19 CFR 353.15(a)(4).

    Dated: October 27, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-27437 Filed 11-4-94; 8:45 am]
BILLING CODE 3510-DS-M