[Federal Register Volume 64, Number 145 (Thursday, July 29, 1999)]
[Notices]
[Pages 41218-41224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19304]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-588-847]


Preliminary Determination of Sales at Less Than Fair Value: 
Certain Cut-to-Length Carbon-Quality Steel Plate Products From Japan

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

EFFECTIVE DATE: July 29, 1999.

FOR FURTHER INFORMATION CONTACT: Mark Manning or Wendy J. Frankel, 
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-
3936 or (202) 482-5849, respectively.

The Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references 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

[[Page 41219]]

plate products (``CTL plate'') from Japan are being, or are likely to 
be, sold in the United States at less than fair value (``LTFV''), as 
provided in section 733 of the 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 Yugoslav Republic of Macedonia (64 FR 12959, March 
16, 1999)) (``Initiation Notice''), the following events have occurred:
    In their petition, the petitioners 1 identified Kawasaki 
Steel Corporation (``Kawasaki''), Kobe Steel, Ltd. (``Kobe''), Nippon 
Steel Corporation (``Nippon''), NKK Corporation (``NKK''), and Sumitomo 
Metal Industries, Ltd. (``Sumitomo'') as possible exporters of CTL 
plate from Japan. Though we requested on March 12, 1999, data on all 
producers and exporters of the subject merchandise during the period of 
investigation (``POI'') from the U.S. embassy in Tokyo, the U.S. 
embassy was unable to provide us with any additional information on 
producers or exporters of the subject merchandise to the United States. 
Based on information contained in the petition, the Department issued 
antidumping questionnaires to Kawasaki, Kobe, Nippon, NKK, and Sumitomo 
on March 17, 1999. 2
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    \1\ The petitioners are Bethlehem Steel Corporation, Gulf States 
Steel, Inc., IPSCO Steel Inc., Tuscaloosa Steel Corporation, 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 and business practices, 
the merchandise under investigation that it sells, and the sales of 
that merchandise in all markets. Sections 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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    In April 1999, the United States International Trade Commission 
(``ITC'') issued an affirmative preliminary injury determination in 
this case (see ITC Investigation No. 731-TA-815-822). Also, the 
Department received a response to all applicable sections of the 
questionnaire from Kawasaki and responses to question 1.a.1. of Section 
A from Kobe, NKK, and Sumitomo. On April 12, 1999, Nippon submitted a 
letter stating that it would not be responding to the Department's 
antidumping questionnaire. On April 26, 1999, Sumitomo submitted a 
letter to the Department stating that it would not be providing any 
further questionnaire responses with respect to this antidumping 
investigation. Kobe and NKK did not respond further to the Department's 
requests for information.
    On April 26, 1999, the Department published its preliminary 
determination of critical circumstances for certain cut-to-length 
carbon-quality steel plate from Japan. In that determination, we 
preliminarily found that there is a reasonable basis to believe or 
suspect that critical circumstances exist for imports of CTL plate from 
Japan. See Preliminary Determination of Critical Circumstances: Certain 
Cut-To-Length Carbon-Quality Steel Plate From Japan (April 26, 1999), 
64 FR 2025.
    On April 26, 1999, Kawasaki requested that it be allowed to exclude 
certain home market sales made during the period of investigation 
(``POI''), of merchandise produced at Kawasaki's universal mill at 
Mizushima and its hot-strip mill at Chiba, from its home market sales 
listing. Kawasaki further requested that it be excused from reporting 
the costs associated with producing this same merchandise.
    Kawasaki stated that these sales constitute an insignificant amount 
of its total home market sales, that subject merchandise produced at 
these two mills was not sold in the United States, and that no 
merchandise identical to that produced at these mills was sold in the 
United States. Kawasaki stated that it would be very difficult and 
burdensome to report the costs associated with the production of 
subject merchandise at these facilities, especially in light of the 
fact that the relevant sales represent such an insignificant portion of 
sales during the POI. On May 14, 1999, the Department denied Kawasaki's 
request with respect to the sales of subject merchandise produced at 
the universal mill at Mizushima and the hot-strip mill at Chiba, and 
instructed Kawasaki to include these sales in its home market sales 
listing. However, on June 15, 1999, the Department granted Kawasaki's 
request not to report costs of producing merchandise associated with 
these two facilities. In granting this request, the Department notified 
Kawasaki that the Department reserves the right to request additional 
information concerning these costs and that in the event that we find 
that there is a need to use the cost data, we may rely on the facts 
available, as required by section 776 of the Act, including, if 
appropriate, adverse inferences.
    We issued supplemental questionnaires for Sections A, B, C and D to 
Kawasaki in May 1999 and received responses to these questionnaires 
along with revised home market and U.S. sales listings in June 1999. In 
June 1999, Kawasaki submitted clarifications to its responses and the 
petitioners submitted comments for the Department's consideration in 
the preliminary determination. In July 1999, Kawasaki submitted 
additional clarifications to its responses. Also, the petitioners 
submitted further comments for the Department's consideration in the 
preliminary determination.

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.''
    Moreover, 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 abilities to comply with a request for 
information. Kobe, Nippon, NKK, and Sumitomo all declined to respond to 
the Department's antidumping questionnaire. Because these respondents 
have withheld requested information, we must use facts available, in 
accordance with section 776(a) of the Act. We have also determined that 
these respondents have not cooperated to the best of their abilities. 
Therefore, pursuant to 776(b) of the Act, we used an adverse inference 
in selecting a margin from the facts available. As facts available, the 
Department has applied a margin rate of 59.12 percent, the highest 
alleged margin in the petition.
    Section 776(c) of the Act provides that where the Department 
selects from among the facts otherwise available and relies on 
``secondary information,'' such as the petition, the Department shall, 
to the extent practicable, corroborate that information from 
independent sources reasonably at the Department's disposal. The 
Statement of Administrative Action

[[Page 41220]]

accompanying the URAA, H.R. Doc. No. 316, 103d Cong., 2d Sess. (1994) 
(hereinafter, the ``SAA'') states that ``corroborate'' means to 
determine that the information used has probative value. See SAA at 
870.
    In this proceeding, we considered the petition information the most 
appropriate record information to use to establish the dumping margins 
for these uncooperative respondents. In accordance with section 776(c) 
of the Act, we sought to corroborate the data contained in the 
petition. We reviewed the adequacy and accuracy of the information in 
the petition during our pre-initiation analysis of the petition, to the 
extent appropriate information was available for this purpose (e.g., 
import statistics and foreign market research reports). See Initiation 
Notice.
    For purposes of the preliminary determination, we attempted to 
corroborate the information in the petition. We reexamined the export 
price and CV data which formed the basis for the highest margin in the 
petition in light of information obtained during the investigation and, 
to the extent practicable, found that it has probative value (see the 
July 19, 1999, memorandum to the file regarding Corroboration of the 
Petition Data, on file in the Central Records Unit (CRU) of the Main 
Commerce Department building).

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 not exceeding 1250 mm, and of a nominal or 
actual thickness of not less than 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 copper, 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 percent 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; (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, 7208.53.0000, 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, 7212.50.0000, 7225.40.3050, 
7225.40.7000, 7225.50.6000, 7225.99.0090, 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 rebuttal 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

[[Page 41221]]

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 product). 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 preliminarily 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 Japan to the United 
States were made at less than fair value, we compared the export price 
(``EP'') or constructed export price (``CEP'') to the Normal Value 
(``NV''), as described in the ``Export Price and Constructed 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 and CEPs for comparison to weighted-average NVs.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by Kawasaki covered by the description in the ``Scope 
of Investigation'' section, above, and sold in Japan 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, nominal thickness, nominal width, patterns in relief, and 
descaling.
    Because Kawasaki had no sales of 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, e.g., 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 selling, general and administrative (``SG&A'') expenses 
and profit. With respect to U.S. price or EP transactions, the LOT is 
also the level of the starting-price sale, which is usually from the 
exporter to the importer. For CEP, the LOT 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 examined 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 a 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).
    Kawasaki reported two customer categories (i.e., trading companies 
and original equipment manufacturers) and what it claimed were three 
channels of distribution (i.e., sales to unaffiliated trading 
companies, direct sales to original equipment manufacturers, and sales 
to an affiliated trading company, Kawasho Corporation (``Kawasho 
Japan'')) for its home market sales. Kawasaki reported EP and CEP sales 
in the U.S. market. For EP sales, Kawasaki reported one customer 
category and one channel of distribution (i.e., direct sales to 
unaffiliated Japanese trading companies, for sale to the U.S. market). 
Kawasaki claimed in its response that its EP sales were made at the 
same LOT as home market sales to unaffiliated trading companies. For 
this reason, Kawasaki has not asked for a LOT adjustment to NV for 
comparison to its EP sales. For CEP sales, Kawasaki reported one 
customer category and one channel of distribution (i.e., Kawasaki sales 
through Kawasho International (``KI''), which is the U.S. affiliate of 
Kawasho Japan, Kawasaki's affiliated trading company that sells in the 
home market and, for U.S. sales purposes, to KI). Kawasaki stated that 
there is no LOT in the home market that is comparable to the CEP LOT in 
the United States. Kawasaki claims that when comparing the selling 
activities of Kawasaki's affiliated trading company, Kawasho Japan, for 
home market sales (channel three) and for CEP sales, Kawasho provides a 
higher level of selling services in home market than for CEP sales. 
Kawasaki asserts that because Kawasho performs greater selling 
activities in the home market, Kawasho incurs higher selling expenses 
for home market sales. In addition, Kawasaki argues that the home 
market LOTs are more remote (further from production) than the CEP LOT. 
Kawasaki stated that since there is no comparable LOT in the home 
market, it could not demonstrate a pattern of consistent differences in 
price due to sales at different LOTs in the home market and therefore 
did not claim a LOT adjustment. Kawasaki has requested a CEP offset 
instead.
    In determining whether separate LOTs actually existed in the home 
market and U.S. market, we examined whether Kawasaki's sales involved 
different marketing stages (or their

[[Page 41222]]

equivalent) based on the channel of distribution, customer categories 
and selling functions.
    For sales in the home market we found that Kawasaki performed 
essentially the same selling activities for each of the three channels 
of distribution. These include: technical advice, warranty service, 
advertising, marketing services, freight and delivery, warehousing, 
inputting a specification control number, sales processing, rebate 
administration, and demand forecasting. Based on our analysis of these 
factors, we found that Kawasaki's home market sales comprise a single 
LOT.
    In analyzing Kawasaki's selling activities for its EP sales, we 
noted that the sales involved basically the same selling functions 
associated with the home market LOT described above. These selling 
activities include technical advice, warranty service, advertising, 
marketing services, inputting a specification control number, sales 
processing, rebate administration, and demand forecasting. Therefore, 
based upon this information, we have determined that the LOT for all EP 
sales is the same as that in the home market.
    Kawasaki failed to provide any factual support for its argument 
that the LOT of its home market sales is more remote than the LOT of 
its CEP sales. Our analysis indicates that the selling functions 
performed at the CEP level are essentially the same as those performed 
in the home market. Specifically, after having excluded selling 
functions of its U.S. affiliate from our analysis, in accordance with 
sections 772(d) and 773(a)(7)(A) of the Act, we determined that 
Kawasaki and/or Kawasho Japan performed the following selling 
activities for its CEP sales: technical advice, warranty service, 
advertising, marketing services, freight and delivery, inputting a 
specification control number, sales processing, and demand forecasting. 
Therefore, based upon this analysis, we determine that Kawasaki's CEP 
and home market sales are made at the same LOT.
    Accordingly, because we find the U.S. sales and home market sales 
to be at the same LOT, no LOT adjustment under section 773(a)(7)(A) and 
no CEP offset pursuant to 773(a)(7)(B) of the Act are warranted.

Export Price and Constructed Export Price

    Kawasaki reported as EP transactions sales of subject merchandise 
sold to unaffiliated U.S. customers prior to importation through 
multiple unaffiliated Japanese trading companies. Kawasaki reported as 
CEP transactions sales of subject merchandise to an affiliated trading 
company, Kawasho Japan, which resold the merchandise to KI (Kawasho 
Japan's U.S. affiliate), which then resold the subject merchandise to 
unaffiliated customers in the United States.
    We calculated EP, in accordance with section 772(a) of the Act, for 
those sales where 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 packed FOB stowed and trimmed or FAS price to unaffiliated 
purchasers in the United States, as appropriate. We made deductions to 
the starting price for rebates, where applicable. We also made 
deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act; these included, where appropriate, foreign 
inland freight, foreign brokerage and handling charges, and foreign 
insurance.
    We calculated CEP, in accordance with subsection 772(b) of the Act, 
for those sales to the first unaffiliated purchaser that took place 
after importation into the United States. We based CEP on the packed 
ex-dock, duty paid, U.S. port prices to unaffiliated purchasers in the 
United States. We made deductions from the starting price for movement 
expenses in accordance with section 772(c)(2)(A) of the Act; these 
included, where appropriate, foreign inland freight, foreign brokerage 
and handling, foreign insurance, ocean freight, marine insurance, and 
U.S. customs duties. In accordance with section 772(d)(1) of the Act, 
we deducted those selling expenses associated with economic activities 
occurring in the United States, including direct selling expenses 
(credit costs, technical service costs and advertising expenses) and 
indirect selling expenses (including inventory carrying costs). We also 
made an adjustment for profit in accordance with section 772(d)(3) of 
the Act.

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'' section 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 Kawasaki'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 Kawasaki's aggregate volume of home market sales of the foreign 
like product was greater than five percent of its aggregate volume of 
U.S. sales for the subject merchandise, we determined that the home 
market was viable for Kawasaki.
2. Affiliated-Party Transactions and Arm's-Length Test
    Kawasaki is affiliated with two home market trading companies--
Kawasho Japan and a second trading company, which we will refer to as 
company X. Kawasaki stated in its questionnaire responses that company 
X, who purchases both Kawasaki-produced subject merchandise and subject 
merchandise produced by other manufacturers, is unable to link its 
sales of subject merchandise to unaffiliated home market customers with 
its purchases of Kawasaki-produced subject merchandise. For this 
reason, Kawasaki states that it is unable to report the downstream sale 
from company X to the first unaffiliated home market customer. 
Therefore, Kawasaki has reported only its sales to company X.
    Kawasaki also stated that Kawasho sells subject merchandise to 
several affiliated processors and resellers in the home market. 
According to Kawasaki, these affiliated processors and resellers 
purchase both Kawasaki-produced subject merchandise and subject 
merchandise produced by other manufacturers. Kawasaki states that it 
cannot report the downstream sales by these affiliates because these 
companies do not link the original subject merchandise produced with 
the product sold. For this reason, Kawasaki has reported only sales 
from Kawasho to the affiliated processors and resellers.
    Because Kawasaki is affiliated with company X and Kawasho's 
affiliated processors and resellers, we applied the arm's-length test 
to sales from Kawasaki to company X, and to sales made by Kawasho to 
its affiliated processors and resellers, by comparing them to sales of 
identical merchandise from Kawasaki 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 which were not made at arm's-length prices were 
excluded from our analysis because we considered them to be

[[Page 41223]]

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 starting prices of sales to 
affiliated and unaffiliated customers net of all movement charges, 
rebates, direct selling expenses, and home market packing. We added 
interest revenue and billing adjustments to the gross unit price in the 
amounts reported by Kawasaki. 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 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 Kawasaki and the other named 
respondents had 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 Kawasaki had 
sold CTL plate in the home market at prices at less than the COP. 
Accordingly, we initiated a COP investigation with respect to each 
respondent to determine whether sales were made at prices less than the 
COP pursuant to section 773(b) of the Act (see Initiation Notice at 64 
FR 12959, 12963).
    We conducted the COP analysis described below.

A. Calculation of COP

    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of Kawasaki's cost of materials and fabrication for 
the foreign like product, direct and indirect selling expenses, plus an 
amount for home market SG&A, interest expenses, and packing costs.
    Kawasaki produced a small quantity of subject merchandise at its 
universal mill at Mizushima and its hot-strip mill at Chiba. According 
to Kawasaki, both of these mills primarily produce non-subject 
merchandise. For this reason, Kawasaki claimed that it would be 
burdensome to calculate actual production costs for the subject 
merchandise originating at these mills. After examining this issue, we 
granted Kawasaki's request not to report the actual costs from both 
mills, but required Kawasaki to report the standard costs for subject 
merchandise produced at these mills. We made the following adjustments 
to respondents' reported costs:
    1. For certain models of merchandise produced at both the hot-strip 
mill at Mizushima and the hot-strip mill at Chiba, we calculated 
CONNUM-specific weighted-average total costs of manufacture (TOTCOM) 
using the quantities produced at the respective mills and the actual 
TOTCOMs from the Mizushima hot-strip facility and the standard costs 
from the hot-strip mill at Chiba.
    2. For certain CONNUMs of merchandise produced only at the 
universal mill at Mizushima, and for additional other models of 
merchandise produced only at the hot-strip mill at Chiba, we used as 
the TOTCOM the standard costs for each product, as reported by 
Kawasaki.
    3. The Department requested in the antidumping questionnaire that 
Kawasaki provide CONNUM-specific variable cost of manufacturing 
(``VCOMH'') data for home market sales. For certain home market sales, 
Kawasaki failed to provide this information. Therefore, we applied the 
CONNUM-specific variable cost of manufacturing data that Kawasaki 
reported in its cost of production database as the VCOMH for these 
sales in Kawasaki's home market sales database.
    4. Kawasaki failed to provide cost information for a small number 
of home market sales. Our analysis of these sales indicates that none 
are of a specification that would be considered identical or similar to 
any specification sold in the U.S. market during the POI. For this 
reason, none of these sales are eligible to be matched to a U.S. sale. 
Consequently, we have not included them in our analysis.

B. Test of Home Market Sales Prices

    We compared the weighted-average COP figures to home market sales 
of the foreign like product as required under section 773(b) of the 
Act, in order to determine whether these sales had been made at prices 
below COP. In determining whether to disregard home market sales made 
at prices less than 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 and rebates.

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 less than the COP, 
we did not disregard any below-cost sales of that product because we 
determined that the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of 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, because we compared prices to 
weighted-average COPs for the POI, 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, more than 20 
percent of Kawasaki's home market sales within an extended period of 
time were at prices less than 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 the remaining above-cost 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 or prices to affiliated customers that we determined to be at 
arm's-length prices, where appropriate. We added to the starting price 
the amount Kawasaki reported for interest revenue and billing 
adjustments. We made deductions, where appropriate, from the starting 
price for rebates, inland freight, warehousing, and inland freight 
insurance. We made adjustments for differences in the merchandise in 
accordance with section 773(a)(6)(C)(ii) of the Act. In its 
questionnaire responses, Kawasaki reported a certain fee it regularly 
incurs as a rebate. We reclassified this fee as a direct expense 
because the amount Kawasaki reported

[[Page 41224]]

under this category is for the fees Kawasaki paid to a service provider 
rather than a rebate Kawasaki paid to its customers. We made 
adjustments under section 773(a)(6)(C)(iii) of the Act for differences 
in circumstances of sale for imputed credit expenses, advertising, 
warranty expenses, technical service expenses, and the above-referenced 
fee. Finally, we deducted home market packing costs and added U.S. 
packing costs in accordance with section 773(a)(6)(A) and (B) of the 
Act.

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 determine 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 a 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 8, 1996).) Such an adjustment period is 
required only when a foreign currency is appreciating against the U.S. 
dollar. The use of an adjustment period was not warranted in this case 
because the yen 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 April 1999, the Department made an early determination of 
critical circumstances with respect to imports of subject merchandise 
from Japan. See Preliminary Determination of Critical Circumstances: 
Certain Cut-To-Length Carbon-Quality Steel Plate From Japan (April 26, 
1999), 64 FR 2025. Thus, in accordance with section 733(e)(2) of the 
Act, the Department will direct the U.S. Customs Service to suspend 
liquidation of all entries of CTL plate from Japan, that are entered, 
or withdrawn from warehouse, for consumption on or after 90 days prior 
to the date of publication in the Federal Register of our preliminary 
determination of sales at LTFV.
    We will instruct the Customs Service to require a cash deposit or 
the posting of a bond equal to the weighted-average amount by which the 
NV exceeds the EP or CEP, 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
------------------------------------------------------------------------
Kawasaki Steel Corporation..............................           11.70
Kobe Steel, Ltd.........................................           59.12
Nippon Steel Corporation................................           59.12
NKK Corporation.........................................           59.12
Sumitomo Metal Industries, Ltd..........................           59.12
All Others..............................................           11.70
------------------------------------------------------------------------

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 an executive summary of issues 
should accompany any briefs submitted to the Department. Such summary 
should be limited to five pages total, including footnotes. In 
accordance with section 774 of the Act, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs. Tentatively, the hearing 
will be held on September 13, 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. 99-19304 Filed 7-28-99; 8:45 am]
BILLING CODE 3510-DS-P