[Federal Register Volume 62, Number 190 (Wednesday, October 1, 1997)]
[Notices]
[Pages 51572-51577]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-26040]
[[Page 51571]]
_______________________________________________________________________
Part IX
Department of Commerce
_______________________________________________________________________
International Trade Administration
_______________________________________________________________________
Notice of Preliminary Determination of Sales at Less Than Fair Value
and Postponement of Final Determination: Steel Wire Rod From Canada;
Steel Wire Rod From Germany; Steel Wire Rod From Trinidad and Tobago;
Steel Wire Rod From Venezuela; Notices
Federal Register / Vol. 62, No. 190 / Wednesday, October 1, 1997 /
Notices
[[Page 51572]]
DEPARTMENT OF COMMERCE
International Trade Administration
[A-122-826]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Steel Wire Rod From
Canada
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: October 1, 1997.
FOR FURTHER INFORMATION CONTACT: Lisette Lach (202/482-6412); Cindy
Sonmez (202/482-0961); or Dorothy Woster (202/482-3362) for Stelco,
Inc. and Sidbec-Dosco (Ispat), Inc.; Alexander Braier (202/482-3818);
Abdelali Elouaradia (202/482-2243); or Sharon Harris (202/482-0190) for
Ivaco, Inc. Import Administration, International Trade Administration,
U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230.
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act), are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreements Act (``URAA''). In addition, unless
otherwise indicated, all citations to the Department's regulations are
references to the provisions codified at 19 CFR Part 353 (April 1997).
Although the Department's new regulations, codified at 19 CFR 351 (62
FR 27296, May 19, 1997), do not govern this investigation, citations to
those regulations are provided, where appropriate, as a statement of
current departmental practice.
Preliminary Determination
We preliminarily determine that steel wire rod (``SWR'') from
Canada is being, or is likely to be, sold in the United States at less
than fair value (``LTFV''), as provided in section 733 of the Act. The
estimated margins are shown in the ``Suspension of Liquidation''
section of this notice.
Case History
Since the initiation of this investigation on March 18, 1997 (see
Notice of Initiation of Antidumping Duty Investigations: Steel Wire Rod
from Canada, Germany, Trinidad and Tobago, and Venezuela, 62 FR 13854
(March 24, 1997), (``Notice of Initiation''), the following events have
occurred:
On April 14, 1997, the United States International Trade Commission
(``ITC'') notified the Department of Commerce (``the Department'') of
its affirmative preliminary injury determination in this case.
On April 21, 1997, the Department issued the antidumping duty
questionnaire to counsel for the following producers/exporters of SWR:
Stelco, Inc. (``Stelco''); Sidbec-Dosco (Ispat) Inc. (``SDI''); and
Ivaco, Inc. (``Ivaco'') (collectively ``respondents''). The
questionnaire is divided into four sections: Section A requests general
information concerning a company's corporate structure and business
practices, the merchandise under investigation that it sells, and the
sales of the merchandise in all of its markets. Sections B and C
request home market sales listings and U.S. sales listings,
respectively. Section D requests information on the cost of production
(``COP'') of the foreign like product and the constructed value
(``CV'') of the subject merchandise. Section E requests information on
further manufactured merchandise.
During April and May 1997, the Department received interested party
comments regarding modifications to the product characteristic
reporting requirements. On May 22, 1997, the Department issued revised
product characteristic reporting instructions.
Respondents submitted their questionnaire responses in May and June
1997. The Department issued supplemental requests for information in
June, July, August, and September 1997, and received the supplemental
responses to these requests in July, August and September 1997.
Petitioners in this investigation (Connecticut Steel Group, Co-Steel
Raritan, GS Industries, Inc., Keystone Steel & Wire Co., North Star
Steel Texas, Inc., and Northwestern Steel & Wire Co.) filed comments on
respondents' questionnaire responses in June, July, August, and
September 1997.
On July 3, 1997, petitioners made a timely request that the
Department postpone the preliminary determination in this investigation
and the companion investigations of SWR from Canada, Trinidad and
Tobago, and Venezuela to September 24, 1997. We did so on July 14,
1997, in accordance with section 733(c)(1) of the Act (see Notice of
Postponement of Preliminary Antidumping Duty Determinations: Steel Wire
Rod from Canada, Germany, Trinidad and Tobago, and Venezuela, 62 FR
38257 (July 17, 1997)).
On July 18, 1997, the Department granted requests received from all
three respondents to exclude certain categories of ``outlier'' sales
that represented an insignificant portion of each company's home market
and U.S. sales (see Memoranda from Roland L. MacDonald to Joseph A.
Spetrini, dated July 18, 1997).
Postponement of Final Determination and Extension of Provisional
Measures
On September 15, 1997, Ivaco requested that, pursuant to section
735(a)(2)(A) of the Act, in the event of an affirmative preliminary
determination in this investigation, the Department postpone its final
determination, until not later than 135 days after the date of
publication of the affirmative preliminary in the Federal Register. In
accordance with section 735 (a)(2)(A) of the Act and 19 CFR 353.2(b),
inasmuch as our preliminary determination is affirmative, Ivaco
accounts for a significant proportion of exports of the subject
merchandise, and we have not identified any compelling reasons for
denying this request, we are granting Ivaco's request and postponing
the final determination. Suspension of liquidation will be extended
accordingly. See Final Determination of Sales at Less Than Fair Value:
Certain Pasta From Italy, 61 FR 30326 (June 14, 1996).
Scope of Investigation
The products covered by this investigation are certain hot-rolled
carbon steel and alloy steel products, in coils, of approximately round
cross section, between 5.00 mm (0.20 inch) and 19.0 mm (0.75 inch),
inclusive, in solid cross-sectional diameter. Specifically excluded are
steel products possessing the above noted physical characteristics and
meeting the Harmonized Tariff Schedule of the United States (``HTSUS'')
definitions for (a) stainless steel, (b) tool steel, (c) high nickel
steel, (d) ball bearing steel, (e) free machining steel that contains
by weight 0.03 percent or more of lead, 0.05 percent or more of
bismuth, 0.08 percent or more of sulfur, more than 0.4 percent of
phosphorus, more than 0.05 percent of selenium, and/or more than 0.01
percent of tellurium, or (f) concrete reinforcing bars and rods.
The following products are also excluded from the scope of this
investigation:
Coiled products 5.50 mm or less in true diameter with an average
partial decarburization per coil of no more than 70 microns in depth,
no inclusions greater than 20 microns, containing by weight the
following: carbon greater than or equal to 0.68 percent; aluminum less
than or equal to 0.005 percent; phosphorous plus sulfur less than or
equal to 0.040 percent; maximum
[[Page 51573]]
combined copper, nickel and chromium content of 0.13 percent; and
nitrogen less than or equal to 0.006 percent. This product is commonly
referred to as ``Tire Cord Wire Rod.''
Coiled products 7.9 to 18 mm in diameter, with a partial
decarburization of 75 microns or less in depth and seams no more than
75 microns in depth, containing 0.48 to 0.73 percent carbon by weight.
This product is commonly referred to as ``Valve Spring Quality Wire
Rod.''
The products under investigation are currently classifiable under
subheadings 7213.91.3000, 7213.91.4500, 7213.91.6000, 7213.99.0030,
7213.99.0090, 7227.20.0000, and 7227.90.6050 of the HTSUS. Although the
HTSUS subheadings are provided for convenience and customs purposes,
our written description of the scope of this investigation is
dispositive.
North American Wire Products Corporation (``NAW''), an importer of
the subject merchandise from Germany, has requested that the Department
exclude SWR used to manufacture pipe wrapping wire from the scope of
the antidumping and countervailing duty investigations. Petitioners
have not agreed to this scope exclusion. For purposes of the
preliminary determination, we have not excluded SWR for manufacturing
pipe wrapping wire from the scope.
On June 2, 1997, Ivaco requested that the Department exclude from
its antidumping analysis U.S. and home market sales of processed rod
(subject merchandise) produced from non-Canadian sourced ``green'' rod
which falls within the physical description of merchandise subject to
the proceeding. We examined the nature of the processing, which
consisted of heat treating and cleaning/coating, to determine whether
the green rod was substantially transformed so as to qualify as
Canadian-origin merchandise within the scope of this investigation.
Under the Department's ``substantial transformation'' practice, the
nature of the processing must result in an article different in
character and use to render the merchandise a product of the country in
which it was processed. See Notice of Final Determination of Sales at
Less Than Fair Value: Certain Carbon Steel Butt-Weld Pipe Fittings From
India, 60 FR 10545, 10546 (Feb. 27, 1995); Notice of Final
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled
Carbon Steel Flat Products From Argentina (Appendix 1), 58 FR 37062,
37066 (July 9, 1993).
Ivaco's response indicates that Sivaco performed two processing
steps on its purchases of green SWR during the POI: cleaning/coating
and heat treatment. The cleaning/coating step first removes scale from
the SWR, while the coating aids in subsequent wire drawing and cold
drawing. The heat treatment modifies the SWR microstructure in order to
produce desired mechanical and metallurgical properties.
Neither of these two steps significantly change the physical or
chemical properties of the product, nor do they change the intended
uses. Further, the dimensional characteristics are similarly unchanged.
The types of processing Sivaco performed does not move the product out
of the scope or create a product of a new class or kind. Instead, this
processing would at most change the classification of a given rod
within individual model match characteristics. In sum, the nature of
these processing steps do not substantially transform the subject
merchandise. We note that our finding is consistent with the Customs'
practice of treating such processing as less than substantial
transformation. Therefore, we find that processed rod produced from
non-Canadian green SWR is outside the scope of this investigation.
Thus, these sales have been excluded from our analysis.
Period of Investigation
The period of investigation (``POI'') is January 1, 1996 through
December 31, 1996.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced by the respondents, covered by the description in the
Scope of Investigation section above, and sold in the home market
during the POI, to be foreign like products for purposes of determining
appropriate product comparisons to U.S. sales. Where there were no
sales of identical merchandise in the home market to compare to U.S.
sales, we compared U.S. sales to the next most similar foreign like
product on the basis of the characteristics listed in the antidumping
duty questionnaire and the May 22, 1997, reporting instructions.
For Stelco, the Department noted that, in the product
characteristic field deoxidation practice, silicon-killed titanium
grain refined steel had been classified under the category ``other''
rather than ``silicon-killed.'' However, the category ``silicon-
killed'' was intended to include all silicon-killed steels other than
silicon-killed vanadium or niobium grain refined steels. Silicon-killed
titanium grain refined steel is not included among these specific
exceptions; hence, the Department has reclassified all silicon-killed
titanium grain refined transactions as ``silicon-killed'' under
deoxidation practice.
On April 4, 1997, as the Department was in the process of preparing
its antidumping duty questionnaire, the Department requested comments
on the product characteristics to be included in the questionnaire. On
April 18, 1997, Ivaco requested the Department to establish a separate
class or kind of subject merchandise for cold heading quality (``CHQ'')
wire rod. On April 21, 1997, the Department issued the antidumping duty
questionnaire, which specified the physical characteristics to be used
in matching sales of subject merchandise. In response to comments made
by interested parties regarding the appropriate product
characteristics, on May 13, 1997, the Department requested comments
from all interested parties regarding modification to the product
characteristic reporting requirements. On May 22, 1997, the Department
issued the revised product characteristic reporting instructions, which
included the deoxidation variable. We preliminarily find that the
respondents' diversified analysis does not provide a sufficient basis
for finding a separate class or kind of merchandise for CHQ. However,
we have accounted for product differences in the revised product
characteristics.
Consistent with our practice, we compared prime merchandise sold in
the United States to prime merchandise sold in the home market, and
secondary merchandise to secondary merchandise. See e.g., Final Results
of Antidumping Duty Administrative Review: Cold-rolled Carbon Steel
Flat Products from the Netherlands, 61 FR 48465 (September 13, 1996).
Fair Value Comparisons
To determine whether sales of SWR by the Canadian respondents to
the United States were made at less than fair value, we compared the
Export Price (``EP'') or Constructed Export Price (``CEP'') to the
Normal Value (``NV''), as described in the ``Export Price/Constructed
Export Price'' and ``Normal Value'' sections of this notice below. In
accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI-
wide weighted-average EPs and CEPs to weighted-average NVs.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade (``LOT'') as the EP or CEP transaction. The NV
LOT is that of
[[Page 51574]]
the starting-price sales in the comparison market or, when NV is based
on constructed value (``CV''), that of the sales from which we derive
selling, general and administrative (``SG&A'') expenses and profit. For
EP, the U.S. LOT is also the level of the starting-price sale, which is
usually from exporter to importer. For CEP, it is the level of the
constructed sale from the exporter to the importer.
To determine whether NV sales are at a different LOT than EP or
CEP, we examine stages in the marketing process and selling functions
along the chain of distribution between the producer and the
unaffiliated customer. If the comparison-market sales are at a
different LOT, and the difference affects price comparability, as
manifested in a pattern of consistent price differences between the
sales on which NV is based and comparison-market sales at the LOT of
the export transaction, we make an LOT adjustment under section
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is
more remote from the factory than the CEP level and there is no basis
for determining whether the difference in the levels between NV and CEP
affects price comparability, we adjust NV under section 773(a)(7)(B) of
the Act (the CEP offset provision). See Certain Welded Carbon Steel
Standard Pipes and Tubes From India: Preliminary Results of New Shipper
Antidumping Duty Administrative Review, 62 FR 23760, 23761 (May 1,
1997).
Stelco
In this investigation, we calculated NV based on the same LOT.
Stelco did not claim a LOT adjustment. To examine whether such an
adjustment was necessary, we requested and examined Stelco's
distribution system, including classes of customers, selling functions,
and selling expenses. Stelco's home market sales are made through two
channels of distribution: (1) Direct sales from Stelco to unaffiliated
customers, and (2) direct sales by Stelwire, Stelco's wholly-owned
processor, to unaffiliated customers. Sales at both channels are made
to the same category of customer, (e.g., original equipment
manufacturers (OEMs)). We next reviewed where sales are made in the
chain of distribution. Sales by Stelco are made directly from the
factory, whereas sales by Stelwire are not--Stelwire first purchases
rod from Stelco, then resells the rod to unaffiliated customers. Sales
by a reseller represent an additional stage in the marketing process,
since the reseller is an intermediary between the factory and the
customer. Thus, sales by the two entities appear to be made at
different stages in the chain of distribution. However, we found no
evidence that the entities perform different selling activities (e.g.,
inventory services, technical services, credit extension, and warranty
services), or incur different selling expenses at these different
marketing stages. We therefore conclude that Stelco's home market sales
were made at one LOT.
Stelco reported EP sales in the U.S. market. We conducted an
identical analysis as described above and found that all sales were
made at the same stage in the chain of distribution, i.e., direct to
unaffiliated customers, with no distinction in selling functions
provided, or selling expenses incurred, among U.S. sales. On this basis
we conclude that Stelco's sales in the U.S. are made at one LOT.
Finally, we found no differences among the LOTs in the U.S. and home
market. Stelco provided the same or similar services with respect to
U.S. transactions and home market transactions. Overall, based on this
analysis, we conclude that there is no difference among the LOT in the
U.S. and home markets. As we are able to calculate NV based on the same
LOT as a U.S. sale, no LOT adjustment is warranted.
SDI
In this investigation, we calculated NV based on the same LOT. SDI
did not claim a LOT adjustment. To examine whether such an adjustment
was necessary, we requested and examined information on SDI's
distribution system, including classes of customers, selling functions,
and selling expenses. We noted that SDI had only one channel of
distribution (wire drawers and parts manufacturers) in the home market
and two channels of distribution in the U.S. market: EP sales (wire
drawers and parts manufacturers) and CEP sales (further manufactured
products). We also noted that SDI had two classes of customers (i.e.,
wire drawers and parts manufacturers) in the home market and U.S.
market. Furthermore, SDI's selling functions were the same for both
classes of customers in the home market and U.S. markets (for CEP
sales, we examined these functions after deducting U.S. selling
expenses and associated profit). Finally, we also noted that SDI
performed all selling functions or services during the POI, regardless
of channel of distribution, and the related expenses were reported to
the Department as indirect selling expenses. These functions and
services include (1) negotiating terms/developing/maintaining customer
base, (2) preparing merchandise for shipment, (3) maintaining records,
(4) collecting bills, (5) providing technical assistance and services
(provided to a greater degree to wire drawers rather than parts
manufacturers in both the United States and Canada), and (6) after-sale
service, and they are the same for the home market and U.S. market
(including EP and CEP sales). Therefore, it appears that all sales made
by SDI in both the home and U.S. markets were made at one LOT. As such,
no LOT adjustment is warranted for SDI.
Ivaco
We also examined the stages in the marketing process and selling
functions along the chain of distribution between Ivaco and its
customers. Based on this examination, we preliminarily determine that
Ivaco sold merchandise at two LOTs in the home market during the POI.
One level of trade is for sales made by Ivaco's wire rod manufacturing
facility, Ivaco Rolling Mills (``IRM''); the second level of trade is
for sales made by Ivaco's wire rod processing and drawing facilities,
Sivaco Ontario and Sivaco Quebec. From our analysis of the marketing
process for these sales, we determined that sales by Sivaco Ontario and
Sivaco Quebec are at a more remote marketing stage than that for sales
by IRM. See Memorandum from Alexander Braier to Roland MacDonald, dated
September 24, 1997, which is on file in Import Administration's Central
Records Unit, Room B-099, U.S. Department of Commerce, 14th &
Constitution Avenue, N.W., Washington, D.C. We also found significant
distinctions between the selling activities and associated expenses
between these sales at each marketing stage. Based on these
differences, we concluded that two LOTs exist in the home market, an
IRM LOT and a Sivaco LOT.
Ivaco reported both EP and CEP sales in the U.S. market, claiming
that the same two LOTs exist in the U.S. as in the home market. We
examined the chains of distribution in the U.S., which were the same as
those reported for the home market. We also examined the selling
functions with respect to these sales (for CEP sales, we examined these
functions after deducting U.S. selling expenses and associated profit).
Based on this analysis, we concluded that there are two LOTs in the
U.S. market and that these LOTs are the same as those found in the home
market. Because the LOTs in the United States are identical to those in
the home market, the preceding analysis with respect to the home market
LOTs applies equally to the U.S. market. Therefore, the preceding
analysis
[[Page 51575]]
applies to the U.S. market in total. See Memorandum from Alexander
Braier to Roland L. MacDonald, dated September 24, 1997.
To the extent possible, we have compared U.S. and home market sales
at the same LOT without making a LOT adjustment. When we were unable to
find sales of the foreign like product in the home market at the same
LOT as the U.S. sale, we examined whether a LOT adjustment was
appropriate. The Department makes this adjustment when it is
demonstrated that a difference in LOT effects price comparability. To
make this determination, we compared the weighted-average of Ivaco's NV
prices of sales made in the ordinary course of trade at the two LOTs
for models sold at both levels. Because the weighted-average prices
were higher at one of the LOTs for a preponderance of the models and
higher for a preponderance (by quantity) of total sales on the
quantities of each model sold, we considered this to demonstrate a
pattern of consistent price differences. See Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof From France, et
al.; Final Results of Antidumping Duty Administrative Reviews, 62 FR
2081, 2106 (January 15, 1997). Thus, we made an adjustment to NV for
the differences in LOT when appropriate. To calculate the LOT
adjustment, we applied the percentage differential between the
weighted-average home market starting price at one LOT and the
weighted-average home market starting price at the next LOT. Because we
were able to quantify the LOT adjustment, in accordance with section
773(a)(7)(B) of the Act, no CEP offset is applicable to relevant NV-CEP
comparisons. For a detailed discussion of Ivaco's LOT analysis, see
Memorandum from Alexander Braier to Roland MacDonald, dated September
24, 1997.
Export Price/Constructed Export Price
For Stelco, SDI, and Ivaco, we used the Department's EP
methodology, in accordance with section 772(a) of the Act, where the
subject merchandise was sold to the first unaffiliated purchaser in the
United States prior to importation because CEP methodology was not
otherwise warranted based on the facts on the record. For SDI and
Ivaco, we used the Department's CEP methodology, in accordance with
sections 772(b) of the Act, where the subject merchandise was sold to
unaffiliated purchasers after importation into the United States.
We made company-specific adjustments as follows:
1. Stelco
In accordance with section 772(c) of the Act, we calculated EP
based on packed, delivered prices to the first unaffiliated customer in
the United States. We made deductions from the starting price (gross
unit price), where appropriate, for rebates, pre-sale warehousing,
Canadian inland freight from plant to distribution warehouse, inland
freight from plant/warehouse to point of delivery in the United States,
U.S. brokerage and handling, and U.S. customs duties.
2. SDI
We calculated EP based on packed, delivered prices to the first
unaffiliated customer in the United States. We made deductions from the
starting price (gross unit price), where appropriate, for rebates,
Canadian inland freight from warehouse to port of exit, U.S. inland
freight from warehouse to unaffiliated customers, U.S. inland freight
from port to warehouse, U.S. brokerage and handling, and U.S. customs
duties.
We calculated CEP based on packed, delivered prices to the first
unaffiliated customer in the United States. We made the same deductions
from the starting price as described above. In accordance with sections
772(d)(1) and (2) of the Act, we also made deductions, where
appropriate, for direct selling expenses, including credit and warranty
expenses, indirect selling expenses, including Canadian and U.S.
inventory carrying costs, further manufacturing costs, and CEP profit,
in accordance with section 772(d)(3) of the Act.
3. Ivaco
We calculated EP based on packed, delivered prices to the first
unaffiliated customer in the United States. In some instances,
customers took delivery of the merchandise at the factory. We made
additions to the starting price (gross unit price), where appropriate,
for freight revenue (reimbursement for freight charges paid by Ivaco)
and debit-note price adjustments (adjustments made by Ivaco for billing
errors), and deductions, where appropriate, for discounts, rebates,
inland freight from IRM to Sivaco Ontario or Sivaco Quebec, inland from
IRM to Sivaco New York, inland freight from IRM to unaffiliated U.S.
customers, inland freight from IRM to unaffiliated U.S. processors,
inland freight from Sivaco Ontario to unaffiliated customers, inland
freight from Sivaco Ontario, Sivaco Quebec, or Sivaco New York to their
unaffiliated U.S. customers, U.S. customs duties, U.S. brokerage and
handling, and credit price adjustments.
We calculated CEP based on packed, delivered prices to the first
unaffiliated customer in the United States. In some instances,
customers took delivery of the merchandise at the factory. We made the
same adjustments to the starting price as described above. In
accordance with sections 772(d)(1) and (2) of the Act, we also made
deductions, where appropriate, for direct and indirect selling
expenses, commissions, further manufacturing costs, and CEP profit, in
accordance with 773(d)(3) of the Act.
Normal Value
In order to determine whether there is a sufficient volume of sales
in the home market to serve as a viable basis for calculating NV (i.e.,
the aggregate volume of home market sales of the foreign like product
is greater than five percent of the aggregate volume of U.S. sales), we
compared each respondent's volume of home market sales of the foreign
like product to the volume of U.S. sales of the subject merchandise, in
accordance with section 773(a)(1)(C) of the Act. Since each
respondent's aggregate volume of home market sales of the foreign like
product was greater than five percent of its aggregate volume of U.S.
sales for the subject merchandise, we determined that the home market
was viable for each respondent. Therefore, we have based NV on home
market sales.
We based NV on the price at which the foreign like product was
first sold for consumption in Canada, in the usual commercial
quantities, in the ordinary course of trade in accordance with section
773(a)(1)(B)(i) of the Act. To the extent practicable, we based NV on
sales at the same level of trade as the EP or CEP sales. If NV was
calculated at a different level of trade, when appropriate, we made an
adjustment in accordance with section 773(a)(7) of the Act. This
adjustment is discussed further in the Level of Trade section above.
Because Stelco, SDI, and Ivaco reported home market sales to
affiliated parties during the POI, we tested these sales to ensure that
the affiliated party sales were at ``arm's length.'' To conduct this
test, we compared the gross unit prices of sales to affiliated and
unaffiliated customers net of all movement charges, direct selling
expenses (credit and warranty expenses), rebates, and packing. Where
the price to the affiliated party was on average 99.5 percent or more
of the price to the unaffiliated party, we determined that the sale
made to the affiliated party was at arm's length. Based on the results
of this test, we
[[Page 51576]]
excluded from the calculation of each respondent's NV all sales made to
an affiliated party that failed the ``arm's length'' test.
Cost of Production Analysis
Pursuant to an allegation made by petitioners, we initiated a cost
of production investigation in our notice of initiation. See Notice of
Initiation, 62 FR 13854 (March 24, 1997). Before making any fair value
comparisons, we conducted the COP analysis described below.
a. Calculation of COP
We calculated the COP based on the sum of the respondent's cost of
materials and fabrication for the foreign like product, plus amounts
for home market general expenses and packing costs in accordance with
section 773(b)(3) of the Act. We adjusted the company's reported COP as
follows:
1. Stelco: We adjusted Stelco's reported COP to allocate ingot
teeming costs only to the products manufactured from billets produced
at the facility for which these costs were incurred. We recalculated
Stelco's general and administrative amounts to exclude off-sets to
research and development and capital tax expenses. See Memorandum to
Chris Marsh from Beverly Lyons, dated September 17, 1997.
2. Ivaco: We recalculated Ivaco's general and administrative
amounts based on the expenses incurred by IRM, Sivaco Ontario, and
Sivaco Quebec. We adjusted the cost of billets to account for Atlantic
Steel's selling, general and administrative costs. We recalculated
further manufacturing general and administrative amounts to reflect
Sivaco New York's expenses rather than IRM's expenses. See Memorandum
to Chris Marsh from Art Stein, dated September 18, 1997.
b. Test of Home Market Prices
We used each respondent's submitted POI weighted-average COPs, as
adjusted (see above). We compared the weighted-average COP figures to
home market sales of the foreign like product as required under section
773(b) of the Act. In determining whether to disregard home market
sales made at prices below the COP, we examined whether (1) within an
extended period of time, such sales were made in substantial
quantities, and (2) such sales were made at prices which permitted the
recovery of all costs within a reasonable period of time. On a product-
specific basis, we compared the COP to the home market prices, less any
applicable movement charges, rebates, discounts, packing, and direct
and indirect selling expenses.
c. Results of COP Test
Pursuant to section 773(b)(2)(C), where less than 20 percent of the
respondent's sales of a given product were at prices less than the COP,
we did not disregard any below-cost sales of that product because we
determined that the below-cost sales were not made in ``substantial
quantities.'' Where 20 percent or more of the respondent's sales of a
given product during the POI were at prices less than the COP, we
determined such sales to have been made in ``substantial quantities''
within an extended period of time in accordance with section
773(b)(2)(B) of the Act. In such cases, we also determined that such
sales were not made at prices which would permit recovery of all costs
within a reasonable period of time, in accordance with section
773(b)(2)(D) of the Act. Therefore, we disregarded the below-cost
sales. Where all sales of a specific product were at prices below the
COP, we disregarded all sales of that product, and calculated NV based
on CV, in accordance with section 773(a)(4) of the Act.
d. Calculation of CV
In accordance with section 773(e) of the Act, we calculated CV
based on the sum of the respondent's cost of materials, fabrication,
G&A, U.S. packing costs, direct and indirect selling expenses, interest
expenses, and profit. As noted above, we adjusted Stelco's COP for
ingot teeming costs and recalculated general and administrative expense
amounts. We also adjusted Ivaco's cost of billets, and general and
administrative expense amounts.
In accordance with section 773(e)(2)(A) of the Act, we based SG&A
and profit on the amounts incurred and realized by the respondent in
connection with the production and sale of the foreign like product in
the ordinary course of trade, for consumption in the foreign country.
For selling expenses, we used the actual monthly weighted-average home
market direct and indirect selling expenses.
e. Adjustments to Prices
1. Stelco: We calculated NV based on packed, delivered prices to
unaffiliated customers and prices to affiliated customers where the
sales were made at arm's length. We made deductions from the starting
price (gross unit price), where appropriate, for rebates, inland
freight from plant to distribution warehouse, inland freight from
plant/warehouse to customers, pre-sale warehouse expense, and packing,
in accordance with section 773(a)(6) of the Act. Pursuant to section
773(a)(6)(C)(iii) of the Act and 19 CFR 353.56(a)(2), we made
circumstance-of-sale adjustments, where appropriate, by deducting home
market direct selling expenses (i.e., warranty, credit and technical
service expenses) and adding U.S. direct selling expenses (i.e.,
warranty, credit and technical service expenses).
Because Stelco paid commissions on U.S. sales, in calculating NV
for the respondents, we deducted the lesser of either (1) the weighted-
average amount of commission paid on a U.S. sale for a particular
product, or (2) the weighted-average amount of indirect selling
expenses paid on the home market sales for a particular product. See
351.410(e), 62 FR 27414 (May 19, 1997).
For matches of similar merchandise, we made adjustments, where
appropriate, for physical differences in the merchandise in accordance
with section 773(a)(6)(C)(ii) of the Act.
2. SDI: We calculated NV based on packed, delivered prices to
unaffiliated customers and prices to affiliated customers where sales
were made at arm's length. We made deductions from the starting price
(gross unit price), where appropriate, for rebates, inland freight from
plant/warehouse to customer, packing, and warranty and credit expenses,
in accordance with section 773(a)(6) of the Act. Pursuant to section
773(a)(6)(C)(iii) of the Act and 19 CFR 353.56(a)(2), we made
circumstance-of-sale adjustments, where appropriate, by deducting home
market direct selling expenses (i.e., warranty and credit expenses) and
adding U.S. direct selling expenses (i.e., warranty and credit
expenses). For matches of similar merchandise, we made adjustments,
where appropriate, for physical differences in the merchandise in
accordance with section 773(a)(6)(C)(ii) of the Act.
3. Ivaco: We calculated NV based on packed, delivered prices to
unaffiliated customers and prices to affiliated customers where sales
were made at arm's length. We made deductions from the starting price
(gross unit price), where appropriate, for discounts, rebates, post-
sale price adjustments, foreign inland freight, warranty expense, and
the direct portion of technical service expenses, in accordance with
section 773(a)(6) of the Act. Pursuant to section 773(a)(6)(C)(iii) of
the Act and 19 CFR 353.56(a)(2), we made circumstance-of-sale
adjustments, where appropriate, for warranty and credit expenses. If NV
was calculated at a different level of trade than EP, we made an
adjustment in accordance with section 773(a)(7) of the Act, as
discussed in the Level of Trade section above.
[[Page 51577]]
If NV was calculated at a different level of trade than CEP, we
made an adjustment in accordance with section 773(a)(7) of the Act, as
discussed in the Level of Trade section above.
Because Ivaco paid commissions on U.S. sales, in calculating NV for
the respondent, we deducted the lesser of either (1) the weighted-
average amount of commission paid on a U.S. sale for a particular
product, or (2) the weighted-average amount of indirect selling
expenses paid on the home market sales for a particular product. See
351.410(e), 62 FR 27414 (May 19, 1997). For matches of similar
merchandise, we made adjustments, where appropriate, for physical
differences in the merchandise in accordance with section
773(a)(6)(C)(ii) of the Act.
Currency Conversions
We made currency conversions into U.S. dollars in accordance with
section 773(A) of the Act based on the official exchange rates in
effect on the dates of the U.S. sales as certified by the Federal
Reserve Bank.
Verification
As provided in section 782(i) of the Act, we will verify all
information determined to be acceptable for use in making our final
determination.
Suspension of Liquidation
In accordance with section 733(d) of the Act, we are directing the
Customs Service to suspend liquidation of all imports of subject
merchandise that are entered, or withdrawn from warehouse, for
consumption on or after the date of publication of this notice in the
Federal Register. We will instruct the Customs Service to require a
cash deposit or the posting of a bond equal to the weighted-average
amount by which the NV exceeds the export price, as indicated in the
chart below. These suspension of liquidation instructions will remain
in effect until further notice. The weighted-average dumping margins
are as follows:
------------------------------------------------------------------------
Weighted-
Exporter/manufacturer average margin
percentage
------------------------------------------------------------------------
Stelco, Inc............................................. 2.43
Sidbec-Dosco (Ispat), Inc............................... 11.76
Ivaco, Inc.............................................. 7.49
All Others Rate......................................... 7.79
------------------------------------------------------------------------
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine, before the later of 120 days after the date of
this preliminary determination or 45 days after our final
determination, whether these imports are materially injuring, or
threatening material injury to, the U.S. industry.
Public Comment
Case briefs or other written comments in at least six copies must
be submitted to the Assistant Secretary for Import Administration no
later than December 16, 1997, and rebuttal briefs, no later than
December 30, 1997. A list of authorities used and an executive summary
of issues should accompany any briefs submitted to the Department. Such
summary should be limited to five pages total, including footnotes. In
accordance with section 774 of the Act, we will hold a public hearing,
if requested, to afford interested parties an opportunity to comment on
arguments raised in case or rebuttal briefs. Tentatively, the hearing
will be held on January 6, 1998, at the U.S. Department of Commerce,
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
1870, 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. Oral presentations will be limited to issues raised in the
briefs. We will make our final determination not later than 135 days
after the publication of this notice in the Federal Register.
This determination is published pursuant to sections 733(f) and
777(i) of the Act.
Dated: September 24, 1997.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 97-26040 Filed 9-30-97; 8:45 am]
BILLING CODE 3510-DS-P