[Federal Register Volume 64, Number 145 (Thursday, July 29, 1999)]
[Notices]
[Pages 41213-41218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19303]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-475-826]


Preliminary Determinations of Sales at Less Than Fair Value: 
Certain Cut-To-Length Carbon-Quality Steel Plate Products From Italy

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

EFFECTIVE DATE: July 29, 1999.

FOR FURTHER INFORMATION CONTACT: Howard Smith or Maisha Cryor, Office 
4, Group II, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-5193 or (202) 482-5841, 
respectively.

The Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
reference to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (``the Act'') by 
the Uruguay Round Agreements Act (``URAA''). In addition, unless 
otherwise indicated, all references are made to the Department's 
regulations at 19 CFR Part 351 (1998).

Preliminary Determination

    We preliminarily determine that certain cut-to-length carbon-
quality steel plate products (``CTL plate'') from Italy are being, or 
are likely to be, sold the United States at less than fair value 
(``LTFV''), as provided in section 733 of the Act. The estimated 
margins of sales at LTFV are shown in the ``Suspension of Liquidation'' 
section of this notice.

Case History

    Since the initiation of this investigation (Notice of Initiation of 
Antidumping Investigations: Certain Cut-To-Length Carbon-Quality Steel 
Plate from Czech Republic, France, India, Italy, Japan, Republic of 
Korea, and Former Yogoslav Republic of Macedona, 64 FR 12959 (March 16, 
1999) (``Initiation Notce), the following events have occurred:
    In their petition, the petitioners \1\ identified Ferriera 
Siderscal SpA (``FS''), ILVA SpA (``ILVA''), Palini & Bertoli SpA 
(``P&B''), and Siderurgica Villalvernia SpA (``SV''), as possible 
exporters of CTL plate from Italy. On March 15, 1999, we requested data 
on all producers and exporters of the subject merchandise during the 
period of investigation (``POI'') from the U.S. embassy in Rome. The 
U.S. embassy informed us that only ILVA and P&B are manufacturers and 
exporters to the United States of carbon steel plate. Based on this 
information, and information contained in the petition, the Department 
issued antidumping questionnaires to ILVA and P&B in March 1999. 
According to the U.S.

[[Page 41214]]

embassy, SV closed its mill in 1995 and FS is only a manufacturer of 
cold finished bars and hot-rolled billets and bars. However, based upon 
information contained in the petition, the Department also issued 
antidumping questionnaires to FS and SV in March 1999.\2\
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    \1\ The petitioners are Bethlehem Steel Corporation, Gulf States 
Steel, Inc., PPSCO Steel Inc., the United Steelworkers of America, 
and the U.S. Steel Group (a unit of USX Corporation).
    \2\ Section A of the questionnaire requested general information 
concerning the company's corporate structure, business practices, 
and sales and production of the merchandise under investigation. 
Section B and C of the questionnaire requested home market sales 
listings and U.S. sales listings. Section D of the questionnaire 
requested information regarding the cost of production of the 
foreign like product and the constructed value of the merchandise 
under investigation. Section E of the questionnaire requested 
information regarding the cost of further manufacture or assembly 
performed in the United States.
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    On March 26, 1999, ILVA requested that it be excused from reporting 
certain home market sales of foreign like product. Specifically, ILVA 
sought to be excused from reporting all home market sales of CTL plate 
produced from plate-in-coil as well as affiliated resellers' sales of 
quarto plate (universal mill plate). Because ILVA only sold quarto 
plate in the United States, it maintained that it should not be 
required to report home market sales of CTL plate produced from coil 
since the Department would not compare such sales to ILVA's U.S. sales 
for purposes of calculating a dumping margin. Furthermore, ILVA claimed 
that its affiliated resellers' sales of quarto plate constituted an 
insignificant percentage of its total home market sales of foreign like 
product and, thus, it should be excused from reporting these downstream 
sales. On May 3, 1999, the Department denied ILVA's requests with one 
exception. Based on ILVA's relationship with one affiliated reseller, 
the nature of which is proprietary, the Department allowed ILVA to 
report sales of foreign like product to the reseller, rather than sales 
by the reseller.
    On May 17, 1999, ILVA further requested that it be excused from 
reporting home market sales of certain products that are commercially 
identified as bar products. However, the Department found these 
products to be within the scope of the current CTL investigations and, 
thus, required ILVA to report all of its home market sales of such 
products. For further information regarding this issue, see the ``Scope 
Comments'' x section of this notice.
    In April 1999, the United States International Trade Commission 
(``ITC'') issued an affirmative preliminary injury determination in 
this case (see Investigation No. 731-TA-815-822). In April and May 
1999, The Department received a response to all applicable sections of 
the questionnaire from ILVA and P&B. On March 28, 1999, and May 3, 
1999, respectively, SV and FS submitted letters to the Department 
stating that they did not produce the merchandise under investigation, 
nor did they export such merchandise to the United States. In letter 
dated May 14, 1999, the Department informed FS and SV that their claims 
are subject to verification and that if the Department finds that they 
should have responded to the antidumping questionnaire, the Department 
would rely on facts available in making its determination with respect 
to FS and/or SV.
    We issued supplemental questionnaires for Sections A, B, C and D to 
ILVA and P&B in May and June 1999 and received responses to these 
questionnaires along with revised home market and U.S. sales listings 
in June 1999.
    In June and July 1999, the petitioners submitted comments for the 
Department's consideration in its preliminary determination. Also, in 
July 1999, ILVA submitted sales and cost listings containing additional 
information requested by the Department.

Partial Facts Available

    Section 776(a)(2) of the Act provides that ``if an interested party 
or any other person--(A) withholds information that has been requested 
by the administering authority; (B) fails to provide such information 
by the deadlines for the submission of the information or in the form 
and manner requested, subject to subsections (c)(1) and (e) of section 
782; (C) significantly impedes a proceeding under this title; or (D) 
provides such information but the information cannot be verified as 
provided in section 782(i), the administering authority shall, subject 
to section 782(d), use the facts otherwise available in reaching the 
applicable determination under this title.''
    Section 776(b) of the Act provides that adverse inferences may be 
used when a party has failed to cooperate by not acting to the best of 
its ability to comply with a request for information.
    The Department resorted to the use of facts available in adjusting 
the reported cost of certain affiliated supplier inputs under the 
``transactions-disregarded'' and the ``major input rule'' of section 
773(f)(2) & (3) of the Act. For a detailed discussion of this topic see 
the ``Cost of Production Analysis--Calculation of COP'' section of this 
notice.

Scope of Investigation

    The products covered by the scope of this investigation are certain 
hot-rolled carbon-quality steel: (1) Universal mill plates (i.e., flat-
rolled products rolled on four faces or in a closed box pass, of a 
width exceeding 150 mm but no exceeding 1250 mm, and of a nominal or 
actual thickness of not less then 4 mm, which are cut-to-length (not in 
coils) and without patterns in relief), of iron or non-alloy-quality 
steel; and (2) flat-rolled products, hot-rolled, of a nominal or actual 
thickness of 4.75 mm or more and of a width which exceeds 150 mm and 
measures at least twice the thickness, and which are cut-to-length (not 
in coils). Steel products to be included in this scope are of 
rectangular, square, circular or other shape and of rectangular or non-
rectangular cross-section where such non-rectangular 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. Steel products that meet the noted 
physical characteristics that are painted, varnished or coated with 
plastic or other non-metallic substances are included within this 
scope. Also, specifically included in this scope are high strength, low 
alloy (HSLA) steels. HSLA steels are recognized as steels with micro-
alloying levels of elements such as chromium, copper, niobium, 
titanium, vanadium, and molybdenum. Steel products to be included in 
this scope, regardless of Harmonized Tariff Schedule of the United 
States (HTSUS) definitions, are products in which: (1) Iron 
predominates, by weight, over each of the other contained elements, (2) 
the carbon content is two percent or less, by weight, and (3) none of 
the elements listed below is equal to or exceeds the quantity, by 
weight, respectively indicated: 1.80 percent of manganese, or 1.50 
percent of silicon, or 1.00 percent of cooper, or 0.50 percent of 
aluminum, or 1.25 percent of chromium, or 0.30 percent of cobalt, or 
0.40 percent of lead, or 1.25 percent of nickel, or 0.30 percent of 
tungsten, or 0.10 percent of molybdenum, or 0.10 percent of niobium, or 
0.41 percent of titanium, or 0.15 of vanadium, or 0.15 percent 
zirconium. All products that meet the written physical description, and 
in which the chemistry quantities do not equal or exceed any one of the 
levels listed above, are within the scope of these investigations 
unless otherwise specifically excluded. The following products are 
specifically excluded from these investigations: (1) Products clad, 
plated, or coated with metal, whether or not painted, varnished or 
coated with plastic or other non-metallic substances;

[[Page 41215]]

(2) SAE grades (formerly AISI grades) of series 2300 and above; (3) 
products made to ASTM A710 and A736 or their proprietary equivalents; 
(4) abrasion-resistant steels (i.e., USS AR 400, USS AR 500); (5) 
products made to ASTM A202, A225, A514 grade S, A517 grade S. or their 
proprietary equivalents; (6) ball bearing steels; (7) tool steels; and 
(8) silicon manganese steel or silicon electric steel.
    The merchandise subject to these investigations is classified in 
the HTSUS under subheadings: 7208.40.3030, 7208.40.3060, 7208.51.0030, 
7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.000, 7208.90.000, 
7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045, 
7211.90.000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.40.3050, 
7225.40.7000, 7225.50.6000, 7225.90.0090, 7226.91.5000, 7226.91.7000, 
7226.91.8000, 7226.99.0000.
    Although the HTSUS subheadings are provided for convenience and 
Customs purposes, the written description of the merchandise under 
investigation is dispositive.

Scope Comments

    As stated in our notice of initiation, we set aside a period for 
parties to raise issues regarding product coverage. In particular, we 
sought comments on the specific levels of alloying elements set out in 
the description above, the clarity of grades and specifications 
excluded from the scope, and the physical and chemical description of 
the product coverage. On March 29, 1999, Usinor, a respondent in the 
French antidumping and countervailing duty investigations and Dongkuk 
Steel Mill Co., Ltd. and Pohang Iron and Steel Co., Ltd., respondents 
in the Korean antidumping and countervailing duty investigations 
(collectively ``the Korean respondents''), filed comments regarding the 
scope of the investigations on CTL plate and the Department's model 
matching criteria. On April 14, 1999, the petitioners filed comments 
regarding Usinor's and the Korean respondents' comments regarding model 
matching. In addition, on May 17, 1999, ILVA SpA (``ILVA''), a 
respondent in the Italian antidumping and countervailing duty 
investigations, requested guidance on whether certain products are 
within the scope of these investigations.
    Usinor requested that the Department modify the scope to exclude: 
(1) plate that is cut to non-rectangular shapes or that has a total 
final weight of less than 200 kilograms; and (2) steel that is 4'' or 
thicker and which is certified for use in high-pressure, nuclear or 
other technical applications; and (3) floor plate (i.e. plate with 
``patterns in relief'') made from hot-rolled coil. Further, Usinor 
requested that the Department provide clarification of scope coverage 
with respect to what it argues are over-inclusive HTSUS subheadings 
included in the scope language.
    The Department has not modified the scope of these investigations 
because the current language reflects the product coverage requested by 
the petitioners, and Usinor's products meet the product description. 
With respect to Usinor's clarification request, we do not agree that 
the scope language requires further elucidation with respect to product 
coverage under the HTSUS. As indicated in the scope section of every 
Department antidumping and countervailing duty proceeding, the HTSUS 
subheadings are provided for convenience and Customs purposes only; the 
written description of the merchandise under investigation or review is 
dispositive.
    The Korean respondents requested confirmation whether the maximum 
alloy percentages listed in the scope language are definitive with 
respect to covered HSLA steels.
    At this time, no party has presented any evidence to suggest that 
these maximum alloy percentages are inappropriate. Therefore, we have 
not adjusted the scope language. As in all proceedings, questions as to 
whether or not a specific product is covered by the scope and, hence, 
must be reported, should be timely raised with Department officials.
    ILVA requested guidance on whether certain merchandise produced 
from billets is within the scope of the current CTL plate 
investigations. According to ILVA, the billets are converted into wide 
flats and bar products (a type of long products). ILVA notes that one 
of the long products, when rolled, has a thickness range that falls 
within the scope of these investigations. However, according to ILVA, 
the greatest possible width of these long products would only slightly 
overlap the narrowest category of width covered by the scope of the 
investigations. Finally, ILVA states that these products have different 
production processes and properties than merchandise covered by the 
scope of the investigations, and therefore are not covered by the scope 
of the investigations.
    As ILVA itself acknowledges, the particular products in question 
appear to fall within the parameters of the scope and, therefore, we 
are preliminary treating them as covered merchandise for purposes of 
these investigations.

Period of Investigation

    The POI is January 1, 1998, through December 31, 1998.

Fair Value Comparisons

    To determine whether sales of CTL plate from Italy to the United 
States were made at less than fair value, we compared the export price 
(``EP'') to the Normal value (``NV''), as described, in the ``Export 
Price and ``Normal Value'' sections of this notice below. In accordance 
with section 777A(d)(1)(A)(i) of the Act, we calculated weighted-
average EPs for comparison to weighted-average NVs.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by ILVA and P&B covered by the description in the 
``Scope of Investigation'' section, above and sold in Italy during the 
POI, to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We compared U.S. sales 
to sales made in the home market, where appropriate. 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. In making the product comparisons, we matched 
foreign like products based on the physical characteristics reported by 
the respondents in the following order of importance (which are 
identified in Appendix V of the questionnaire: painting, quality, grade 
specification, heat treatment, normal thickness, nominal width, 
patterns in relief, and descaling.
    In addition, we compared U.S. sales of prime merchandise only with 
home market sales of prime merchandise. Because neither ILVA nor P&B 
sold non-prime merchandise in the United States during the POI, we did 
not use home market sales of non-prime merchandise in our product 
comparisons, (see Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Wire Rod from Sweden, 63 FR 40449, 40450 (July 29, 
1998) (``SSWR'')).

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 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

[[Page 41216]]

selling, general and administrative (``SG&A'') expenses and profit. 
With respect to U.S. price and EP transactions, the LOT is also the 
level of the starting-price sale, which is usually from the exporter to 
the importer.
    To determine whether NV sales are at a different LOT than EP 
transactions, 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.
    P&B reported home market sales to three customer categories through 
one channel of distribution. For its U.S. sales, P&B reported EP sales 
to one customer category through one channel of distribution. ILVA 
reported home market sales to two customer categories through four 
channels of distribution. For its U.S. sales, ILVA reported EP sales to 
two customer categories through one channel of distribution. In their 
responses, neither ILVA nor P&B claimed that their sales to home market 
customers were made at a different LOT than their sales to U.S. 
customers. Therefore, neither company claimed a LOT adjustment.
    In determining whether separate LOTs actually existed in the home 
market and U.S. market for each respondent, we examined whether the 
respondent's sales involved different marketing stages (or their 
equivalent) based on the channel of distribution, customer categories 
and selling functions. Based on an analysis of the selling functions 
performed in the home market channel of distribution, we find that each 
respondent's home market sales comprise a single LOT. In analyzing each 
company's selling activities for EP sales, we noted that the sales 
involved basically the same selling functions as those associated with 
the home market LOT described above. Therefore, based upon this 
conclusion, we have determined that the LOT for each respondent's EP 
sales is the same as that of its home market sales. See the July 19, 
1999, memoranda to the file regarding Palini and Bertoli (P&B): Level 
of Trade Analysis, and Ilva SpA (ILVA): Level of Trade Analysis.

Export Price

    ILVA and P&B reported as EP transactions their sales of subject 
merchandise sold to unaffiliated U.S. customers prior to importation.
    We calculated EP, in accordance with section 772(a) of the Act, 
because the merchandise was sold to the first unaffiliated purchaser in 
the United States prior to importation and CEP methodology was not 
otherwise warranted, based on the facts of record. We based EP on the 
price to unaffiliated purchasers in the United States. We made 
deductions to the starting price for billing adjustments and, in 
accordance with section 772(c)(2)(A) of the Act, movement expenses. 
Movement expenses included, where appropriate, foreign inland freight, 
foreign brokerage and handling charges, ocean freight, and marine 
insurance.

Normal Value

    After testing (1) home market viability, (2) whether sales to 
affiliates were at arm's-length prices, and (3) whether home market 
sales were at below-cost prices, we calculated NV as noted in the 
``Price-to-Price Comparisons'' and ``Price-to-CV Comparisons'' sections 
of this notice.
1. Home Market Viability
    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 equal to or greater than five percent of the aggregate volume of 
U.S. sales), we compared the 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. 
Because each respondent's aggregate volume of home market sales of the 
foreign like product was greater than five percent of its respective 
aggregate volume of U.S. sales for the subject merchandise, we 
determined that the home market was viable for each respondent.
2. Affiliated-Party Transactions and Arm's-Length Test
    Both respondents reported home market sales to affiliated parties. 
Therefore, we have applied the arm's-length test to these sales by 
comparing them to sales of identical merchandise from the respondent to 
its unaffiliated home market customers. If these affiliated-party sales 
satisfied the arm's-length test, we used them in our analysis. Sales to 
affiliated customers in the home market not made at arm's-length prices 
(if any) were excluded from our analysis because we considered them to 
be outside the ordinary course of trade. See 19 CFR 351.102.
    To test whether these sales were made at arm's-length prices, we 
compared on a model-specific basis the prices of sales to affiliated 
and unaffiliated customers net of all movement charges, direct selling 
expenses, and packing. Where, for the tested models of subject 
merchandise, prices to the affiliated party were on average 99.5 
percent or more of the price to the unaffiliated parties, we determined 
that sales made to the affiliated party were at arm's length. See 19 
CFR 351.403(c) and 62 FR at 27355, Preamble--Department's Final 
Antidumping Regulations (May 19, 1997). In instances where no price 
ratio could be constructed for an affiliated customer because identical 
merchandise was not sold to unaffiliated customers, we were unable to 
determine that these sales were made at arm's-length prices and, 
therefore, excluded them from our LTFV analysis (see, e.g., SSWR at 63 
FR 40451). Where the exclusion of such sales eliminated all sales of 
the most appropriate comparison product, we made a comparison to the 
next most similar model.
3. Cost of Production Analysis
    In their petition, the petitioners submitted an allegation pursuant 
to section 773(b) of the Act that ILVA and P&B made sales in the home 
market at less than the cost of production (``COP''). Our analysis of 
the allegation indicated that there were reasonable grounds to believe 
or suspect that each Italian exporter sold CTL plate in the home market 
at prices less than the COP. Accordingly, we initiated COP 
investigations with respect to the two Italian exporters to determine 
whether sales were made at prices below the COP pursuant to section 
773(b) of the Act (see Initiation Notice at 64 FR 12959, 12963).
    We conducted the COP analysis as described below.

A. Calculation of COP

    In accordance with section 773(b)(3) of the Act, for each 
respondent we calculated COP based on the sum of the respondent's 
materials and fabrication cost for the foreign like product, plus an 
amount for home market SG&A, interest expenses, and packing costs.
    Except for the following adjustments to ILVA's costs reported by 
the respondents' to calculate COP:
    1. During the POI, ILVA produced slabs which it sold to its wholly 
owned subsidiary, ILVA Lamiere e Tubi S.p.A. (ILT). ILT rolled the 
slabs into quarto plate to ILVA. During the POI, ILT only sold quarto 
plate to ILVA, which resold

[[Page 41217]]

the plate to affiliated and unaffiliated customers in the U.S. and home 
markets. For cost reporting purposes, ILVA treated itself and ILT as 
one company and thus reported ILT's rolling cost as part of the COP. 
Because ILVA ``collapsed'' itself with ILT it did not value the inputs 
that it purchased from ILT in accordance with section 773(f)(2) of the 
Act or use the major input rule of section 773(f)(3) of the Act. 
Section 351.401(f) of the Department's regulations stipulates that the 
Department will treat two or more affiliated producers as a single 
entity where, among other things, the department concludes there is a 
significant potential for the manipulation of price or production in 
order to evade antidumping duties. However, in the instant situation, 
based upon the information on the record, the details of which are 
proprietary, the Department has preliminary determined that it is not 
appropriate to collapse ILVA and ILT because there is not a significant 
potential for the manipulation of price or production in order to evade 
antidumping duties. See ILVA Collapsing Memorandum (July 19, 1999). 
Because the Department has not collapsed ILVA and ILT, and the rolling 
performed by ILT is a major input to the production of plate sold by 
ILVA, the major input role should be applied to value the input that 
ILVA obtained from ILT (see Notice of Final Results and Partial 
Recission of Antidumping Duty Administrative Review: Certain Pasta From 
Italy, 64 FR 6615, 6621 (February 10, 1999)). The major input rule of 
section 773(f)(3) of the Act provides that the Department may value 
inputs obtained from affiliated parties at the highest of the transfer 
price, market price, or the affiliated supplier's costs. The 
petitioners' maintain that the major input rule should be used to value 
the slabs that ILT purchased from ILVA. However, the Department has 
treated ILVA as the producer and viewed ILT as an affiliate who 
provides services to the producer. Thus, the Department used the major 
input rule to value the rolling services provided by ILT, but found no 
basis to apply it in valuing the slabs produced by ILVA. In the absence 
of a market price or a transfer price for rolling slabs, for this 
preliminary determination, the Department has constructed a transfer 
price by increasing the reported rolling costs for quarto plate by 
ILT's general and administrative (G&A) expenses and profit.
    2. ILVA included ILT's G&A expenses in its reported G&A expense 
because it treated ILVA and ILT as one entity for cost reporting 
purposes. Because the Department has treated ILVA and ILT as separate 
entities, the Department reduced ILVA's reported G&A expense by the 
amount of ILT's G&A expenses included therein.
    3. The Department excluded extraordinary gains and losses from 
ILVA's reported G&A expenses because ILVA failed to adequately explain 
how these expenses were related to its operations.
    4. ILVA uses iron pellets to produce the merchandise under 
investigation. During the POI, ILVA purchased iron pellets from two 
suppliers, one of which ILVA identified as an affiliated party. In 
order to satisfy the requirements of section 773(f)(2) of the Act 
(transactions between affiliated parties disregarded), ILVA compared 
the price that it paid to purchase iron pellets from the affiliated 
party to the price that it paid to purchase iron pellets from the 
``unaffiliated'' supplier. However, the record shows that ILVA and the 
``unaffiliated'' supplier jointly own and control the affiliated 
supplier. Therefore, in accordance with section 771(33)(F) of the Act, 
the Department has preliminary determined that ILVA and the supplier 
which ILVA identified as an unaffiliated party (i.e., the joint venture 
partner) are in fact affiliated, pursuant to section 771(33)(F). 
Furthermore, the iron pellets ILVA purchased from its joint venture 
partner were in fact produced by ILA's affiliated supplier. Thus, for 
all these transactions, ILVA purchased iron pellets, either directly or 
indirectly, from its affiliated supplier. Therefore, we have 
preliminarily determined to disregard these sales, unless ILVA can show 
that such sales reflect market value as required under section 
773(f)(2). In the absence of such evidence, for the preliminary 
determination, the Department has adjusted the cost of iron pellets 
included in the reported costs using the information available as to 
what the price of iron pellets would have been if the iron pellets had 
been purchased from parties who are not affiliated with ILVA, in 
accordance with section 773(f)(2). For this preliminary determination, 
as facts available for this information, we used the weighted-average 
Italian import values of iron ore as provided by the petitioners in 
their July 8, 1999 submission.
    5. The Department reduced ILVA's reported costs for models sold in 
the United States by the cost of foreign transportation and port 
loading expenses for U.S. sales, which were reclassified as movement 
expenses.

B. Test of Home Market Sales Prices

    We compared the weighted-average COP figures to home market sale 
prices of the foreign like product, as required under section 773(b) of 
the Act, in order to determine whether these sales had been made at 
prices below the COP. 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, and direct and 
indirect selling expenses.

C. Results of the COP Test

    Pursuant to section 773(b)(2)(C), where less than 20 percent of 
respondent's sales of a given product were at prices below 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 a 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.
    We found that, for certain grades of CTL plate, 20 percent of more 
of ILVA's and P&B home market sales within an extended period of time 
were at prices below the COP. Further, the prices did not provide for 
the recovery of costs within a reasonable period of time. We therefore 
excluded these sales and used for remaining sales as the basis for 
determining NV if such sales existed, in accordance with section 
773(b)(1) of the Act.

Price-to-Price Comparisons

    We calculated NV based on delivered prices to unaffiliated 
customers to prices to affiliated customers that we determined to be at 
arm's length prices. We made adjustments, where appropriate, from the 
starting price for discounts and rebates, billing adjustments, inland 
freight, shipping revenue, freight insurance, and

[[Page 41218]]

warehousing expenses. We made adjustments for differences in the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. In 
addition, we made adjustments under section 773(a)(6)(C)(iii) of the 
Act for differences in circumstances of sale involving imputed credit 
expenses (less interest revenue) warranties and commissions, where 
appropriate. We also made adjustments for indirect selling expenses 
incurred on comparison market or U.S. sales where commissions were 
granted on sales in one market but not in the other (the commission 
offset), pursuant to 19 CFR 351.410(e). Finally, we deducted home 
market packing costs and added U.S. packing costs in accordance with 
sections 773(a)(6)(A) and (B) of the Act. In both its narrative 
response to the Department's questionnaire and in its home market sales 
listing, P&B described the terms of certain home market sales as F.O.B. 
plant. However, P&B reported freight expenses for these sales in its 
home market sales database. For home market sales transactions where 
this discrepancy occurs, we did not reduce P&B's home market sales 
price by the reported freight expense.

Currency Conversion

    We made currency conversions into U.S. dollars based on the 
exchange rates in effect on the dates of the U.S. sales as certified by 
the Federal Reserve Bank.
    Section 773A(a) of the Act directs the Department to use a daily 
exchange rate in order to convert foreign currencies into U.S. dollars 
unless the daily rate involves a fluctuation. It is the Department's 
practice to find that a fluctuation exists when the daily exchange rate 
differs from the benchmark rate by 2.25 percent. The benchmark is 
defined as the moving average of rates for the past 40 business days. 
When we determined a fluctuation to have existed, we substitute the 
benchmark rate for the daily rate, in accordance with established 
practice. Further, section 773A(b) of the Act directs the Department to 
allow 60-day adjustment period when a currency has undergone a 
sustained movement. A sustained movement has occurred when the weekly 
average of actual daily rates exceeds the weekly average of benchmark 
rates by more than five percent for eight consecutive weeks. (For an 
explanation of this method, see Policy Bulletin 96-1: Currency 
Conversions 61 FR 9434 (March 9, 1996).) The use of an adjustment 
period was not warranted in this case because of lira did not undergo a 
sustained movement.

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 
Customers 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 EP, 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
------------------------------------------------------------------------
ILVA SpA................................................            3.67
Palini & Bertoli SpA....................................            6.35
All Others..............................................            5.78
------------------------------------------------------------------------

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 threaten material 
injury to, the U.S. industry.

Public Comment

    Case briefs or other written comments in at least ten copies must 
be submitted to the Assistant Secretary for Import Administration no 
later than August 25, 1999, and rebuttal briefs no later than September 
1, 1999. A list of authorities used and 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 September 10, 1999, time and room to be determined, at 
the U.S. Department of Commerce, 14th Street and Constitution Avenue, 
NW, Washington, DC 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 30 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. If 
this investigation proceeds normally, we will make our final 
determination by no later than 75 days after the date of this 
preliminary determination.
    This determination is issued and published pursuant to sections 
733(d) and 777(i)(1) of the Act.

    Dated: July 19, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-19303 Filed 7-28-99; 8:45 am]
BILLING CODE 3510-DS-M