[Federal Register Volume 63, Number 132 (Friday, July 10, 1998)] [Notices] [Pages 37320-37328] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 98-18343] ----------------------------------------------------------------------- DEPARTMENT OF COMMERCE International Trade Administration [A-122-822, A-122-823] Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate From Canada: Preliminary Results of Antidumping Duty Administrative Reviews and Intent To Revoke in-Part AGENCY: Import Administration, International Trade Administration, U.S. Department of Commerce. ACTION: Notice of preliminary results of the antidumping duty administrative review of certain corrosion-resistant carbon steel flat products and certain cut-to-length carbon steel plate from Canada. ----------------------------------------------------------------------- SUMMARY: In response to requests from interested parties, the Department of Commerce (the Department) is conducting administrative reviews of the antidumping duty orders on certain corrosion-resistant carbon steel flat products and certain cut-to-length carbon steel plate from Canada. These reviews cover six manufacturers/exporters of the subject merchandise to the United States (three manufacturers/exporters of corrosion resistant steel and four manufacturers/exporters of cut- to-length steel plate), and the period August 1, 1996 through July 31, 1997. We have preliminarily determined that sales have been made below normal value (``NV'') by various companies subject to these reviews. If these preliminary results are adopted in our final results of these administrative reviews, we will instruct the U.S. Customs Service to assess antidumping duties based on the difference between the export price (``EP'') or constructed export price (``CEP'') and the NV. EFFECTIVE DATE: July 10, 1998. FOR FURTHER INFORMATION CONTACT: Lyn Baranowski (Dofasco Inc. and Sorevco Inc. (collectively, ``Dofasco'')), Eric Scheier (Continuous Colour Coat (``CCC'')), Lesley Stagliano (Algoma Steel, Inc. (``Algoma'')), Gideon Katz (Gerdau MRM Steel (``MRM'') and A.J. Forsyth and Co., Ltd. (``Forsyth'')), N. Gerard Zapiain (Stelco, Inc. (``Stelco'')), or Maureen Flannery, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC 20230; telephone: (202) 482-4733. SUPPLEMENTARY INFORMATION: The Applicable Statute Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (the Act), are 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 to 19 CFR part 351 (62 FR 27379, May 19, 1997). Background On August 19, 1993, the Department published in the Federal Register (58 FR 44162) the antidumping duty orders on certain corrosion-resistant carbon steel flat products and certain cut-to- length carbon steel plate from Canada. On August 12, 1997, Forsyth requested a review of its exports of cut-to-length steel plate. On August 13, 1997, CCC requested a review of its exports of corrosion- resistant steel. On August 28, 1997, Algoma requested a review of its exports of cut-to-length steel plate and that the Department revoke the order on cut-to-length steel plate with regard to Algoma. On August 29, 1997, the following companies also requested reviews for their exports of corrosion-resistant carbon steel flat products: Dofasco (corrosion- resistant steel), Stelco (corrosion-resistant steel and cut-to-length steel plate), and MRM (cut-to-length steel plate). On August 29, 1997, Bethlehem Steel Corporation, U.S. Steel Group (a Unit of USX Corporation), Inland Steel Industries Inc., AK Steel Corporation, LTV Steel Co., Inc., and National Steel Corporation, petitioners, requested reviews of CCC, Dofasco, and Stelco on corrosion-resistant carbon steel flat products. On September 8, 1997, Stelco submitted an addendum to its August 29, 1997 submission, requesting that the Department revoke the orders on corrosion-resistant steel and carbon steel plate with regard to Stelco, pursuant to Section 351.222(b) of the Department's regulations. On September 25, 1997, in accordance with Section 751 of the Act, we published a notice of initiation of administrative reviews of these orders for the period August 1, 1996 through July 31, 1997 (62 FR 50292). Under section 751(a)(3)(A) of the Act, the Department may extend the deadline for completion of an administrative review if it determines that it is not practicable to complete the review within the statutory time limit of 365 days. On March 19, 1998, the Department published a notice of extension of the time limit for the preliminary results in the review to July 3, 1998. See Corrosion-Resistant Carbon Steel Flat Products and Cut-to-Length Carbon Steel Plate: Extension of Time Limits for Preliminary Results of Antidumping Administrative Review, 63 FR 13990. The Department is conducting these reviews in accordance with section 751(a) of the Act. Scope of Reviews The products covered by these administrative reviews constitute two separate ``classes or kinds'' of merchandise: (1) certain corrosion- resistant steel and (2) certain cut-to-length plate. The first class or kind, certain corrosion-resistant steel, includes flat-rolled carbon steel products of rectangular shape, either clad, plated, or coated with corrosion-resistant metals such as zinc, aluminum, or zinc-, [[Page 37321]] aluminum-, nickel-or iron-based alloys, whether or not corrugated or painted, varnished or coated with plastics or other nonmetallic substances in addition to the metallic coating, in coils (whether or not in successively superimposed layers) and of a width of 0.5 inch or greater, or in straight lengths which, if of a thickness less than 4.75 millimeters, are of a width of 0.5 inch or greater and which measures at least 10 times the thickness or if of a thickness of 4.75 millimeters or more are of a width which exceeds 150 millimeters and measures at least twice the thickness, as currently classifiable in the Harmonized Tariff Schedule (HTS) under item numbers 7210.30.0030, 7210.30.0060, 7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000, 7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530, 7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, and 7217.90.5090. Included are flat-rolled products of non-rectangular cross-section where such cross-section is achieved subsequent to the rolling process (i.e., products which have been worked after rolling)-- for example, products which have been beveled or rounded at the edges. Excluded are flat-rolled steel products either plated or coated with tin, lead, chromium, chromium oxides, both tin and lead (``terne plate''), or both chromium and chromium oxides (``tin-free steel''), whether or not painted, varnished or coated with plastics or other nonmetallic substances in addition to the metallic coating. Also excluded are clad products in straight lengths of 0.1875 inch or more in composite thickness and of a width which exceeds 150 millimeters and measures at least twice the thickness. Also excluded are certain clad stainless flat-rolled products, which are three-layered corrosion- resistant carbon steel flat-rolled products less than 4.75 millimeters in composite thickness that consist of a carbon steel flat-rolled product clad on both sides with stainless steel in a 20%-60%-20% ratio. The HTS item numbers are provided for convenience and Customs purposes. The written description remains dispositive of the scope of this review. The second class or kind, certain cut-to-length plate, includes hot-rolled carbon steel universal mill plates (i.e., flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 millimeters but not exceeding 1,250 millimeters and of a thickness of not less than 4 millimeters, not in coils and without patterns in relief), of rectangular shape, neither clad, plated nor coated with metal, whether or not painted, varnished, or coated with plastics or other nonmetallic substances; and certain hot-rolled carbon steel flat-rolled products in straight lengths, of rectangular shape, hot-rolled, neither clad, plated, nor coated with metal, whether or not painted, varnished, or coated with plastics or other nonmetallic substances, 4.75 millimeters or more in thickness and of a width which exceeds 150 millimeters and measures at least twice the thickness, as currently classifiable in the HTS under item numbers 7208.40.3030, 7208.40.3060, 7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, and 7212.50.0000. Included are flat-rolled products of non-rectangular cross-section where such cross-section is achieved subsequent to the rolling process (i.e., products which have been worked after rolling)-- for example, products which have been beveled or rounded at the edges. Excluded is grade X-70 plate. The HTS item numbers are provided for convenience and Customs purposes. The written description remains dispositive of the scope of this review. Verification As provided in section 782(i) of the Act, we verified information provided by Algoma (cost and sales), Dofasco (sales), and Stelco (sales, cost and further manufacturing) using standard verification procedures, including on-site inspection of the manufacturer's facilities and the examination of relevant sales and financial records. Our verification results are outlined in the public versions of the verification reports. Product Comparisons In accordance with section 771(16) of the Act, we considered all products produced by the respondent, covered by the description in the Scope of the Review section, above, and sold in the home market during the period of review (POR), 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 most similar foreign like product on the basis of the characteristics listed in Appendix V of the Department's September 19, 1997 antidumping questionnaire. Fair Value Comparisons To determine whether sales of subject merchandise to the United States were made at less than fair value, we compared the EP or CEP to the NV, as described in the ``United States Price'' and ``Normal Value'' sections of this notice. In accordance with section 777A(d)(2) of the Act, we calculated monthly weighted-average prices for NV and compared these to individual U.S. transaction prices. Interested Party Comments On June 22, 1998, the petitioner submitted comments regarding Stelco and CCC. On June 23, 1998, Forsyth submitted comments. Because of the lateness of these submissions, we are not able to consider them for these preliminary results, but will consider them for the final results. Intent To Revoke On August 28, 1997, Algoma submitted a request, in accordance with 19 CFR 351.222(b), that the Department revoke the order covering cut- to-length carbon steel plate from Canada with respect to its sales of this merchandise. On August 29, 1997, Stelco submitted a request that the Department revoke the orders covering cut-to-length carbon steel plate and corrosion-resistant steel from Canada with respect to its sales of this merchandise. In accordance with 19 CFR 351.222(b)(2)(iii), these requests were accompanied by certifications from Algoma and Stelco that they had not sold the subject merchandise at less than NV for a three-year period, including this review period, and would not do so in the future. Algoma and Stelco also agreed to its immediate reinstatement in the relevant antidumping order, as long as any firm is subject to the order, if the Department concludes under 19 CFR 351.216 that, subsequent to revocation, it sold the subject merchandise at less than NV. The Department conducted verifications of Algoma's and of Stelco's responses for this period of review. In the two prior reviews of this order, we determined that Algoma and Stelco sold cut-to-length carbon steel plate from Canada at not less than NV or at de [[Page 37322]] minimis margins. We preliminarily determine that both Algoma and Stelco sold cut-to-length carbon steel plate at not less than NV during this review period. Based on Algoma's and on Stelco's three consecutive years of zero or de minimis margins and the absence of evidence to the contrary, we preliminarily determine that it is not likely that either Algoma or Stelco will in the future sell cut-to-length carbon steel plate at less than NV. Therefore, if these preliminary findings are affirmed in our final results, we intend to revoke the order on cut-to- length carbon steel plate from Canada with respect to Algoma and to Stelco. In the last two administrative reviews, we determined that Stelco sold corrosion-resistant steel at less than fair value. See Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to- Length Carbon Steel Plate From Canada: Final Results of Antidumping Duty Administrative Reviews, 62 FR 12725 (March 16, 1998) and Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to- Length Carbon Steel Plate From Canada: Final Results of Antidumping Duty Administrative Reviews, 62 FR 18448 (April 15, 1997). Although the final results of the second and third reviews are subject to litigation, that litigation is not yet complete. Additionally, as discussed below, we have preliminarily determined that Stelco sold corrosion-resistant steel at less-than-fair-value (LTFV) during the period covered by this review. Consequently, we preliminarily determine that because Stelco does not have three consecutive years of zero or de minimis margins on corrosion-resistant steel, Stelco is not eligible for revocation of the order on corrosion-resistant steel under 19 CFR 351.222(b). United States Price For calculation of the price to the United States, we used EP when the subject merchandise was sold directly or indirectly to the first unaffiliated purchaser in the United States prior to importation and constructed export price (CEP) was not otherwise warranted, based on facts on the record. We used CEP for certain sales by Stelco. See the subsection of ``United States Price'' titled ``Stelco.'' Algoma The Department calculated EP for Algoma based on packed, prepaid or delivered prices to customers in the United States. We made adjustments to the starting price, net of billing adjustments, for movement expenses (foreign and U.S. movement, brokerage and handling, and U.S. Customs duties), in accordance with section 772(c)(2) of the Act. We used Algoma's date of invoice as the date of sale for both U.S. sales and home market sales, where applicable, in accordance with 19 CFR 351.401(i), and the Department's standard practice. See, e.g., Porcelain-on-Steel Cookware from Mexico; Preliminary Results of Antidumping Duty Administrative Review, 62 FR 4723, 4725 (January 31, 1997). For further discussion of this issue, see Memorandum to the File: Analysis Memorandum for the Preliminary Results of Review for Algoma, July 2, 1998. CCC The Department calculated EP for CCC based on packed, prepaid or delivered prices to customers in the United States. We made deductions to the starting price, net of discounts and price adjustments, for movement expenses (foreign and U.S. movement, brokerage and handling, and U.S. Customs duties), in accordance with section 772(c)(2). Although the record does not contain pre-sale agreements for certain payments which CCC reported as ``credit notes,'' based on CCC's information we have determined to treat these payments as price adjustments which should be excluded from the starting price. See Memorandum to the File: Analysis Memorandum for the Preliminary Results of Review for CCC, July 2, 1998. Dofasco For purposes of these reviews, we treated Dofasco, Inc. and Sorevco, Inc. as one respondent, as we have done in prior segments of the proceeding. See, e.g., Certain Corrosion-Resistant Carbon Steel Flat Products from Canada: Final Determination of Sales at Less than Fair Value, 58 FR 37099 (1993), and Final Results of Antidumping Duty Administrative Review: Certain Corrosion-Resistant Carbon Steel Flat Products from Canada, 63 FR 12725 (March 16, 1998). The Department calculated EP for Dofasco based on packed prices to customers in the United States. We made deductions to the starting price, net of discounts and rebates, for movement expenses (foreign and U.S. movement, U.S. Customs duty and brokerage, and post-sale warehousing) in accordance with section 772(c)(2). As discussed in prior reviews, certain Dofasco sales have undergone minor further processing in the United States as a condition of sale to the customer. See Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate From Canada: Final Results of Antidumping Duty Administrative Reviews, 62 FR 18461, (April 15, 1997). In order to determine the value of subject merchandise at the time of exportation of such merchandise to the United States, the Department has deducted the price charged to Dofasco for this minor further processing from gross unit price to determine U.S. price. It is the Department's current practice normally to use the invoice date as the date of sale; we may, however, use a date other than the invoice date if we are satisfied that a different date better reflects the date on which the exporter or producer establishes the material terms of sale. See 19 CFR 351.401(i) (62 FR at 27411). The questionnaire we sent to the respondents on September 19, 1998 instructed them to report the date of invoice as the date of sale; it also stated, however, for EP sales, that ``(t)he date of sale cannot occur after the date of shipment.'' In this review, Dofasco's date of shipment in many instances preceded the date of invoice, and therefore we cannot use the date of invoice as the new regulations prescribe. Accordingly, as allowed by the exception set forth in section 351.401(i) of the regulations, we used the dates of sale described below. These sale dates reflect the dates on which the exporter or producer established the material terms of sale. We used the date of order acknowledgment as date of sale, as reported by Dofasco, Inc., for all Dofasco, Inc. sales in both the U.S. market and the home market, except for sales made pursuant to long-term contracts. For Dofasco, Inc.'s sales made pursuant to long-term contracts, we used date of the contract as date of sale. We used the date of order confirmation as the date of sale, as reported by Sorevco, Inc., for all Sorevco, Inc. sales in the U.S. and the home market, except that when Sorevco shipped more merchandise than the customer originally ordered, and such overages were in excess of accepted industry tolerances. Lacking any evidence of the precise date after the date of order confirmation on which the quantity was changed, we used date of shipment as date of sale for the excess merchandise. MRM The Department calculated EP for MRM based on packed, prepaid or delivered prices to customers in the United States. We made deductions to the starting price for movement expenses (foreign and U.S. movement, [[Page 37323]] brokerage and handling, and U.S. Customs duties) pursuant to section 772(c)(2) of the Act. We used MRM's date of invoice as the date of sale for its U.S. sales in accordance with the Department's standard practice. Stelco Corrosion-resistant steel: We calculated EP or CEP, as appropriate, based on the packed price to unaffiliated purchasers in, or for exportation to, the United States. We made deductions to the starting price for movement expenses, including foreign and U.S. freight, brokerage and handling, and U.S. Customs duties, in accordance with section 772(c)(2) of the Act. In accordance with sections 772(d)(1) and (2) of the Act, for CEP sales, we also deducted credit expenses, technical service expenses, indirect selling expenses, inventory carrying costs, U.S. inland freight incurred by Stelco USA (``SUSA''), and further manufacturing costs incurred by SUSA. Finally, we made an adjustment for an amount of profit allocated to these expenses, when incurred in connection with economic activity in the United States, in accordance with section 772(d)(3) of the Act. We used Stelco's date of invoice as the date of sale for both EP and CEP corrosion-resistant sales in accordance with the Department's standard practice. Plate: We calculated EP based on the packed price to unaffiliated purchasers in, or for exportation to, the United States. There were no CEP sales of plate. We made deductions for movement expenses, including foreign and U.S. movement, brokerage and handling, and U.S. Customs duty, in accordance with section 772(c)(2) of the Act. We used Stelco's date of invoice as the date of sale for EP plate sales in accordance with the Department's standard practice. Normal Value The Department determines the viability of the home market as the comparison market by comparing the aggregate quantity of home market and U.S. sales. We found that each company's quantity of sales in its home market exceeded five percent of its sales to the United States for the relevant class or kind of merchandise. Moreover, there is no evidence on the record supporting a particular market situation in the exporting country that would not permit a proper comparison of home market and U.S. prices. We, therefore, have determined that each company's home market sales are viable for purposes of comparison with sales of the subject merchandise to the United States, pursuant to section 773(a)(1)(C) of the Act. Therefore, in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on the price at which the foreign like product was first sold for consumption in the home market, in the usual commercial quantities and in the ordinary course of trade, at the same level of trade as the EP sale. In accordance with section 773(a)(4) of the Act, we used CV as the basis for NV when there were no above-cost contemporaneous sales of identical or similar merchandise in the comparison market. We calculated CV in accordance with section 773(e) of the Act. We included the cost of materials and fabrication, SG&A expenses, and profit. In accordance with section 773(e)(2)(A) of the Act, we based SG&A expenses 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 weighted-average home market selling expenses. We used sales to affiliated customers only where we determined such sales were made at arm's-length prices, i.e., at prices comparable to prices at which the firm sold identical merchandise to unaffiliated customers. For both classes or kinds of merchandise under review and for all respondents with the exception of Forsyth, the Department disregarded sales below the cost of production (``COP'') in the last completed review as of the date of the issuance of the antidumping questionnaire (see Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate from Canada: Final Results of Antidumping Duty Administrative Reviews, 62 FR 18448 (April 15, 1997)). We therefore had reasonable grounds to believe or suspect, pursuant to section 773(b)(2)(A)(ii) of the Act, that sales of the foreign like product under consideration for the determination of NV in this review may have been made at prices below the COP. Pursuant to section 773(b)(1) of the Act, we initiated COP investigations of sales by all respondents, except Forsyth, in the home market. We compared sales of the foreign like product in the home market with the model-specific cost of production figure for the POR (``COP''). In accordance with section 773(b)(3) of the Act, we calculated the COP based on the sum of the costs of materials and fabrication employed in producing the foreign like product plus selling, general and administrative (SG&A) expenses and all costs and expenses incidental to placing the foreign like product in condition packed and ready for shipment. In our COP analysis, we used home market sales and COP information provided by each respondent in its questionnaire responses. After calculating COP, we tested whether home market sales of subject merchandise were made at prices below COP and, if so, whether the below-cost sales were made within an extended period of time in substantial quantities and at prices that did not permit recovery of all costs within a reasonable period of time. Because each individual price was compared against the POR-long average COP, any sales that were below cost were also not at prices which permitted cost recovery within a reasonable period of time. We compared model-specific COPs to the reported home market prices less any applicable movement charges, discounts, and rebates. Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of a respondent's sales of a given model were at prices less than COP, we did not disregard any below-cost sales of that model because the below-cost sales were not made in substantial quantities within an extended period of time. Where 20 percent or more of a respondent's sales of a given model during the POR were at prices less than the weighted-average COPs for the POR, we disregarded the below- cost sales because they were made within an extended period of time in substantial quantities in accordance with sections 773(b)(2) (B) and (C) of the Act, and were at prices which would not permit recovery of all costs within a reasonable period of time in accordance with section 773(b)(2)(D) of the Act. Based on this test, we disregarded below-cost sales with respect to all companies and classes or kinds of merchandise. In accordance with section 773(a)(1)(B)(i) of the Act, where possible, we based NV on sales at the same level of trade (``LOT'') as the U.S. price. See the Level of Trade Section below. The Department determined in the final results of the last administrative review (Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate From Canada: Final Results of Antidumping Duty Administrative Reviews, 62 FR 12725, March 9, 1998) that it would be inappropriate to resort directly to constructed value (CV), in lieu of foreign market sales, as the basis for NV if the Department finds foreign market [[Page 37324]] sales of merchandise identical or most similar to that sold in the United States to be outside the ``ordinary course of trade.'' Therefore, we will match a given U.S. sale to foreign market sales of the next most similar model when all sales of the most comparable model are below cost. The Department will use CV as the basis for NV only when there are no above-cost sales that are otherwise suitable for comparison. Therefore, in this proceeding, when making comparisons in accordance with section 771(16) of the Act, we considered all products sold in the home market as described in the ``Scope of Review'' section of this notice, above, that were in the ordinary course of trade for purposes of determining appropriate product comparisons to U.S. sales. Where there were no sales of identical merchandise in the home market made in the ordinary course of trade to compare to U.S. sales, we compared U.S. sales to sales of the most similar foreign like product made in the ordinary course of trade, based on the characteristics listed in Sections B and C of our antidumping questionnaire. This methodology is pursuant to the ruling of the Court of Appeals for the Federal Circuit in CEMEX v. United States, 1998 WL 3626 (Fed Cir. 1998), and has been implemented to the extent that the data on the record permitted. Where appropriate, we made adjustments to NV for differences in circumstances of sale (COS), in accordance with section 773(a)(6) and (8) of the Act and 19 CFR 351.410. For comparisons to EP, we made COS adjustments by deducting home market direct selling expenses and adding U.S. direct selling expenses. We also made adjustments, where applicable for home market indirect selling expenses to offset U.S. commissions in EP pursuant to 19 CFR section 351.410(b). For comparisons to CEP, we made COS adjustments by deducting home market direct selling expenses pursuant to section 772(d) of the Act. Algoma For those models for which there was a sufficient quantity of sales at prices above COP, we based NV on home market prices to unaffiliated purchasers (Algoma made no home market sales to affiliated parties), in accordance with 19 CFR 351.403. Home market prices were based on the packed, ex-factory or delivered prices to unaffiliated purchasers in the home market. We calculated the starting price net of discounts, rebates, and post-sale adjustments, where applicable. We made adjustments, where applicable, for packing and movement expenses in accordance with sections 773(a)(6) (A) and (B) of the Act. We also made adjustments for differences in cost attributable to differences in physical characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) of the Act and for differences in COS in accordance with 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. For comparison to EP, we made COS adjustments by deducting home market direct selling expenses (credit and warranty expenses) and adding U.S. direct selling expenses (credit and warranty expenses). When comparisons were made to EP sales on which commissions were paid, but no commissions were paid on the foreign market sales, we made adjustments for home market indirect selling expenses to offset these U.S. commissions pursuant to 19 CFR section 351.410(e). MRM For those models for which there was a sufficient quantity of sales at prices above COP, we based NV on home market prices to unaffiliated purchasers (MRM made no home market sales to affiliated parties), in accordance with 19 FR 351.403. Home market prices were based on the packed, ex-factory or delivered prices to unaffiliated purchasers in the home market. We used a starting price net of rebates, where applicable. We made adjustments, where applicable, for movement expenses in accordance with sections 773(a)(6) (A) and (B) of the Act. For comparison to EP, we made COS adjustments by deducting home market direct selling expenses (credit expenses) and adding U.S. direct selling expenses (credit expense). When comparisons were made to EP sales on which commissions were paid, but no commissions were paid on the foreign market sales, we made adjustments for home market indirect selling expenses to offset these U.S. commissions pursuant to 19 CFR section 351.410(e). CCC For those models for which there was a sufficient quantity of sales at prices above COP, we based NV on home market prices to unaffiliated parties, in accordance with 19 CFR 351.403. Home market starting prices were based on the packed, ex-factory or delivered prices to unaffiliated purchasers in the home market, net of discounts and price adjustments, where applicable. Although the record does not contain pre-sale agreements for certain payments which CCC reported as ``credit notes,'' based on CCC's information we have determined to treat these payments as price adjustments which should be excluded from the starting price. We made adjustments, where applicable, for packing and movement expenses in accordance with sections 773(a)(6) (A) and (B) of the Act. We also made adjustments for differences in cost attributable to differences in physical characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) of the Act and for COS differences in accordance with 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. For comparison to EP, we made COS adjustments by deducting home market direct selling expenses (credit) and adding U.S. direct selling expenses (credit). When comparisons were made where commissions were paid on EP sales, but no commissions were paid on the foreign market sales, we made adjustments for home market indirect selling expenses to offset U.S. commissions pursuant to 19 CFR section 351.410(e). Dofasco For those models for which there was a sufficient quantity of sales at prices above COP, we based NV on home market prices to affiliated parties (when made at prices determined to be arm's-length) or unaffiliated parties, in accordance with 19 CFR 351.403. Home market starting prices were based on the packed, ex-factory or delivered prices to affiliated or unaffiliated purchasers in the home market, net of discounts and rebates, where applicable. We made adjustments, where applicable, for packing and movement expenses in accordance with sections 773(a)(6) (A) and (B) of the Act. We also made adjustments for differences in cost attributable to differences in physical characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) of the Act and for COS differences in accordance with 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. For comparison to EP, we made COS adjustments by deducting home market direct selling expenses (credit, royalties and warranty expenses) and adding U.S. direct selling expenses (credit, royalties and warranty expenses). When comparisons were made where commissions were paid on EP sales, but no commissions were made on foreign market sales, we made adjustments for home market indirect selling expenses to offset U.S. commissions pursuant to 19 CFR 351.410(e). We denied Dofasco's requested start-up adjustment to its costs, as we determined that Dofasco did not meet the statutory criteria for granting an adjustment. Under section 773(f)(1)(C)(ii) of the Act, Commerce may make an adjustment for start-up [[Page 37325]] costs only if the following two conditions are satisfied: (1) A company is using new production facilities or producing a new product that requires substantial additional investment, and (2) production levels are limited by technical factors associated with the initial phase of commercial production. The Statement of Administrative Action (``SAA'') to the URAA states that ``any determination of the appropriate startup period involves a fact-intensive inquiry.'' This includes a consideration of ``factors unrelated to startup operations that may have affected the volume of production processed, such as demand, seasonality, or business cycles.'' The SAA further states that the ``start-up [period] will be considered to end at the time the level of commercial production characteristic of the merchandise, producer, or industry concerned is achieved. The attainment of peak production levels will not be the standard for identifying the end of the start-up period, because the start-up period may end well before a company achieves optimum capacity utilization.'' SAA at 836. Moreover, ``[t]o determine when a company reaches commercial production levels, Commerce will consider first the actual production experience of the merchandise in question. Production levels will be based on units processed.'' SAA at 836 (166). In the instant case, we agree with Dofasco that the construction of the new Electric Arc Furnace (EAF) facility constitutes a new production facility. In order to determine the duration of the initial phase of commercial production, we examined Dofasco's reported production starts at the EAF. Our determination of an appropriate startup period was based, in large part, on a review of scrap starts at the new facility during the POR, which represents the best measure of the facility's ability to produce at commercial production levels. We concluded that the number of scrap starts during the first two months (September and October 1996) did not meet commercial production levels characteristic of the producer, but that commercial production levels were reached by November 1996. However, we have determined that the reported technical factors which Dofasco claims limited production during this two-month period are insufficient to constitute what the Department believes to be technical factors. The kind of chronic production problems experienced by Dofasco do not constitute ``technical factors'' which are unique to a startup operation. As such, we have not granted Dofasco a startup adjustment for the POR. For further details, see Memorandum to the File: Analysis Memorandum for the Preliminary Results of Review for Dofasco, July 2, 1998. Stelco For those models for which there was a sufficient quantity of sales at prices above COP, we based NV on home market prices to affiliated (when made at prices determined to be arms-length) or unaffiliated parties, in accordance with 19 CFR 351.403. Home market starting prices were based on the packed, ex-factory or delivered prices to affiliated or unaffiliated purchasers in the home market net of discounts and rebates. We made adjustments, where applicable, for packing and movement expenses, in accordance with sections 773(a)(6) (A) and (B) of the Act. We also made adjustments for differences in cost attributable to differences in physical characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) of the Act and for COS differences in accordance with 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. Corrosion resistant steel: We adjusted home market prices for interest revenue on certain sales. For comparison to EP, we made COS adjustments by deducting home market direct selling expenses (credit, warranties, advertising and technical services) and adding U.S. direct selling expenses (credit, advertising, warranties and technical services). For comparison to CEP, we made COS adjustments by deducting home market direct selling expenses pursuant to section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. Plate: For comparison to EP, we made COS adjustments by deducting home market direct selling expenses (credit, warranties, advertising, commissions, and technical services) and adding U.S. direct selling expenses (credit, warranties, advertising and technical services). We offset home market commissions by the amount of indirect selling expenses incurred on the U.S. sale, up to the amount of the home market commission. Level of Trade (``LOT'') 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 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 Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997). In the present review, only Dofasco, Forsyth, and CCC claimed that more than one LOT existed; none of the respondents requested a LOT adjustment. To evaluate LOTs, we examined information regarding the distribution systems in both the U.S. and Canadian markets, including the selling functions, classes of customer, and selling expenses for each respondent. Forsyth's claim of LOT differences is discussed below in the Facts Available section. Algoma In both the home market and the United States, Algoma reported one LOT and one distribution system with two classes of customers: end- users and steel service centers. We analyzed the selling functions and activities performed for both classes of customers in both markets. We preliminarily determine that Algoma's selling functions and activities are substantially similar for both classes of customers for sales of subject merchandise and, therefore, that there is one level of trade in both markets. For a further discussion of the Department's LOT analysis with respect to Algoma, see Memorandum to the File: Analysis Memorandum for the Preliminary Results of Review for Algoma, July 2, 1998. [[Page 37326]] CCC CCC reported three different LOTs in the home market based on class of customer: OEMs, steel service centers, and scrap merchants. However, we examined the reported selling functions and found that CCC provides the same selling functions to its home market customers regardless of channel of distribution. We preliminarily determine that the selling functions between the reported LOTs are sufficiently similar to consider them as one LOT in the comparison market. CCC stated that it sells to two LOTs in the United States: OEMs and steel service centers. Again, we examined the selling functions at both claimed levels, and found they were the same. Therefore, we preliminarily determine that the selling functions between the reported LOTs are sufficiently similar to consider them as one LOT in the United States market. Finally, we compared the selling functions performed at the home market LOT and the LOT in the United States and found them substantially similar. For a further discussion of the Department's LOT analysis with respect to CCC, see Memorandum to the File: Analysis Memorandum for the Preliminary Results of Review for CCC, July 2, 1998. Dofasco Dofasco reported three LOTs in the home market. Dofasco defined its LOT categories by customer category: service center, automotive, and construction and converters/manufacturers (``construction''). We examined the selling functions performed at each claimed level and found that there was a significant difference in selling functions offered to these three categories. Of the seventeen reported selling functions, Dofasco performed only three of the same or similar selling functions at both the automotive and service center sales levels. Dofasco reported fourteen selling functions which were different between these two levels. Moreover, Dofasco has established a separate sales division for its automotive sales. Additionally, sales to automotive customers are sales to end users, while sales to service centers are sales to resellers. In sum, these sales were made at different stages of marketing. Therefore, we preliminarily conclude that the automotive and service center classes of customer constitute separate levels of trade. Although both automotive and construction customers are OEMs, we note that both quantitatively and qualitatively, the selling functions offered to automotive customers involve significantly greater resources and thus represent a distinct stage of marketing. Specifically, of the seventeen reported selling functions, Dofasco performed only seven of the same or similar selling functions to both automotive and construction customers. Dofasco's functions for these two channels differed with respect to ten other activities. Therefore, given these differences, we preliminarily conclude that automotive and construction constitute separate levels of trade. There were numerous differences in selling functions between construction and service center sales channels. Of the seventeen reported selling functions, Dofasco performed only eight of the same or similar selling functions at both levels. We found that these differences suggested distinct stages of marketing. Therefore, we preliminarily conclude that construction and service centers constitute different LOTs. Overall, we determine that the selling functions for the automotive, service center, and construction customer categories are substantially dissimilar to one another and that these sales are made at different stages of marketing. Therefore, we preliminarily determine that the automotive, service center, and construction customer categories should be treated as three LOTs in the comparison market. Respondents reported the same three LOTs in the U.S. market: automotive, service center, and construction. We preliminarily determine that the results of our analysis of U.S. LOTs are identical to those of the comparison market. In addition, there were only insignificant differences in selling functions at each LOT between the comparison market and the U.S. market. Therefore, we found that the three U.S. LOTs corresponded to the three comparison market LOTs. The Department did not find that there existed a pattern of consistent price differences between the three levels of trade. Therefore, we did not make LOT adjustments when comparing sales at different LOTs. For a further discussion of the Department's LOT analysis with respect to Dofasco, see Memorandum to the File: Analysis Memorandum for the Preliminary Results of Review for Dofasco, July 2, 1998. MRM In both the home market and the United States, MRM reported one LOT and one distribution system with two classes of customers in the home market, distributors and OEMs, and one class of customer, OEMs, in the U.S. market. We analyzed the selling functions and activities performed for each class of customer in each market. We found that MRM's selling functions and activities were substantially similar for both classes of customers for sales of subject merchandise and, therefore, constitute one level of trade in the home market. Finally, we compared the selling functions performed at the home market LOT and the LOT in the United States and found them substantially similar. Thus, no adjustment was appropriate. Stelco Stelco identified one level of trade and two channels of distribution (to end-users or to resellers) in the home market for each class or kind of merchandise. We examined the selling functions performed in each channel and found that Stelco provided many of the same or similar selling functions in each, including inventory maintenance, after sales service, technical advice, and freight and delivery arrangements. We found few differences between selling functions for transactions made through the two channels of trade. Overall, we determine that the selling functions between the two sales channels are sufficiently similar to consider them one LOT in the home market for sales of both corrosion-resistant products and plate products. In the United States, Stelco Inc. sold both products through the two channels of distribution listed above. For EP sales, we determine that the results of our analysis of the U.S. LOT is identical to that of the home market: the selling functions performed for sales to the United States are sufficiently similar to consider them one LOT for both corrosion-resistant products and plate products. Additionally, we consider this LOT to be the same as that identified in the home market. Therefore, no adjustment is appropriate. For CEP sales of corrosion-resistant steel made by SUSA, we compared the selling activities associated with the sale to the affiliated reseller to those associated with the home market sales and found them to be dissimilar. For example, the level of trade of the CEP sales involved no after sales services, or technical advice. Therefore, we considered the home market sales to be at a different level of trade and at a more advanced stage of distribution than the CEP sales. Because the sole home market level of trade was different from the level of trade of the CEP, we could not match to sales at the same level of trade in the home market nor could we determine a level-of- trade adjustment based on Stelco's home market sales of merchandise under review. [[Page 37327]] Furthermore, we have no other information that provides an appropriate basis for determining a level-of-trade adjustment. Accordingly, for Stelco, we determined NV at the sole home market level of trade and made a CEP offset adjustment in accordance with section 773(a)(7)(B) of the Act. For a further discussion of the Department's LOT analysis with respect to Stelco, see Memorandum to the File: Analysis Memorandum for the Preliminary Results of Review for Stelco, July 2, 1998. Facts Available Forsyth has stated that it sells subject merchandise in the home market at three distinct LOTs and at only one LOT in the U.S. market. Forsyth did not report a significant portion of its home market sales because it claims that these home market sales are made at a different LOT than the U.S. sales made during the POR, that there are sufficient contemporaneous sales of identical merchandise at the same LOT, and that, therefore, the Department will not be using these sales in its calculation of NV. The Department, however, clearly warned Forsyth that if it did not report all of its home market sales made during the period of review, we may be required to base our findings on the facts available. Forsyth has not provided adequate information to justify its LOT claim. More specifically, Forsyth has not shown there to be a significant difference in selling functions between its coil division, which sells in both the home market and in the U.S. market, and its distribution and distribution & processing divisions, which sell only in the home market. In fact, there was substantial overlap among the selling functions performed by these three divisions. Moreover, many of the alleged ``selling functions'' which Forsyth identified and claimed differed among the three divisions were not selling functions at all, but rather manufacturing processes. Section 773(a)(7)(A) clearly establishes that relevant differences between levels of trade must be supported by differences in selling functions. See also, SAA at 829-830 and 19 C.F.R. Sec. 351.412. The statute accounts for other differences between sales through other adjustments; thus, for example, differing manufacturing processes may be accounted for under the adjustment for physical differences in the merchandise being compared under section 773(a)(6)(C)(ii). It would contravene the purposes inherent in the adjustment provisions of section 773 if the Department were to subsume the differences for which such specific adjustments are made within a broader definition of level of trade differences. Finally, the SAA specifically warns the Department against finding differences in the level of trade that are more appropriately attributable to differences in the nature of the products. SAA at 830. Consequently, we conclude that, because the record does not reveal significant differences in the selling functions performed by Forsyth's three home market divisions, all of Forsyth's HM sales were made at a single level of trade. Therefore, we require detailed information on all of Forsyth's home market sales in order to accurately calculate NV. Since Forsyth did not report all of its home market sales made during the POR, we preliminarily determine that, in accordance with section 776(a) of the Act, the use of facts available is appropriate for Forsyth. Where a respondent has failed to cooperate to the best of its ability, section 776(b) of the Act authorizes the Department to use facts available that are adverse to the interests of that respondent, which may include information derived from the petition, the final determination, a previous administrative review, or other information placed on the record. Forsyth did not respond to our repeated requests for information about all of its home market sales; rather it presented arguments as to why it should not have to provide that information. Therefore, we conclude that Forsyth has failed to cooperate to the best of its ability. As adverse facts available, we are using the highest dumping margin calculated in any segment of this proceeding, 68.70 percent. This rate was calculated for Stelco, Inc. in the LTFV determination of certain cut-to-length carbon steel plate from Canada (58 FR 37121, July 9, 1993). Preliminary Results of Reviews As a result of our reviews, we preliminarily determine the weighted-average dumping margins for the period August 1, 1996 through July 31, 1997 to be as follows: ---------------------------------------------------------------------------------------------------------------- Margin Manufacturer/Exporter Time period (percent) ---------------------------------------------------------------------------------------------------------------- Algoma (plate)................................ 08/01/96-07/31/97.................................. 1 0.28 Stelco (plate)................................ 08/01/96-07/31/97.................................. 0.00 Stelco (corrosion-resistant).................. 08/01/96-07/31/97.................................. 2.69 MRM (plate)................................... 08/01/96-07/31/97.................................. 0.00 CCC (corrosion-resistant)..................... 08/01/96-07/31/97.................................. 2.06 Dofasco (corrosion-resistant)................. 08/01/96-07/31/97.................................. 0.54 Forsyth (plate)............................... 08/01/96-07/31/97.................................. 68.70 ---------------------------------------------------------------------------------------------------------------- 1 De minimis. Parties to the proceeding may request disclosure within five days of the date of publication of this notice. Any interested party may request a hearing within 30 days of publication. Any hearing, if requested, will be held 37 days after the date of publication or the first business day thereafter. Case briefs from interested parties may be submitted not later than 30 days after the date of publication. Rebuttal briefs, limited to issues raised in those briefs, may be filed not later than 35 days after the date of publication of this notice. The Department will publish the final results of this administrative review, including its analysis of issues raised in the case and rebuttal briefs, not later than 120 days after the date of publication of this notice. Upon issuance of the final results of review, the Department shall determine, and the U.S. Customs Service shall assess, antidumping duties on all appropriate entries. Because the inability to link sales with specific entries prevents calculation of duties on an entry-by- entry basis, we will calculate an importer-specific ad valorem duty assessment rate for each class or kind of merchandise based on the ratio of the total amount of antidumping duties calculated for the examined sales made during the POR to the total customs value of the sales used to calculate those duties. This rate will be assessed uniformly on all entries of that particular importer for that class or [[Page 37328]] kind of merchandise made during the POR. If the revocation is made final for Algoma and Stelco, it will apply to all unliquidated entries of this merchandise produced by Algoma and Stelco, exported to the United States and entered, or withdrawn from warehouse, for consumption, on or after August 31, 1997, which is the effective date of the revocation from the order for Algoma and Stelco. Furthermore, the following deposit requirements will be effective for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a) of the Act: (1) The cash deposit rate for each reviewed company will be that established in the final results of review (except that a deposit of zero will be required for firms with zero or de minimis margins, i.e., margins less than 0.5 percent); (2) for exporters not covered in this review, but covered in the LTFV investigation or previous review, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a previous review, or the original LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; (4) the cash deposit rate for all other manufacturers or exporters will continue to be the ``all others'' rates established in the LTFV investigations, which were 18.71 percent for corrosion-resistant steel products and 61.88 percent for plate (see Amended Final Determination, 60 FR 49582 (September 26, 1995)). These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative reviews. This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties. These administrative reviews and notices are published in accordance with 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 351.213 and 19 CFR 351.221(b)(4). Dated: July 2, 1998. Joseph A. Spetrini, Acting Assistant Secretary for Import Administration. [FR Doc. 98-18343 Filed 7-9-98; 8:45 am] BILLING CODE 3510-DS-P