[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]]

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Part IX





Department of Commerce





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International Trade Administration



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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

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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