[Federal Register Volume 64, Number 217 (Wednesday, November 10, 1999)]
[Notices]
[Pages 61249-61261]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29460]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-351-830]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products 
From Brazil

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

EFFECTIVE DATE: November 10, 1999.

FOR FURTHER INFORMATION CONTACT: Phyllis Hall (Companhia Siderurgica 
Nacional or CSN), Mark Ludwikowski or Martin Odenyo (Usinas 
Siderurgicas de Minas Gerais and Companhia Siderurgica Paulista or 
USIMINAS/COSIPA), Nancy Decker, or Robert M. James, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W. Washington, DC 
20230; telephone: (202) 482-1398, (202) 482-2704, (202) 482-5254, (202) 
482-0196 and (202) 482-5222, respectively.

The Applicable Statute

    Unless otherwise indicated, all citations to Tariff Act of 1930, as 
amended (the Act) are references to the provisions effective January 1, 
1995, the effective date of the amendments made to the Act by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to Department of Commerce (Department) 
regulations refer to the regulations codified at 19 CFR Part 351 (April 
1999).

Preliminary Determination

    We preliminarily determine that cold-rolled flat-rolled carbon-
quality steel products (cold-rolled steel products) from Brazil are 
being sold, 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.

[[Page 61250]]

Case History

    The Department initiated this investigation on June 21, 1999. See 
Initiation of Antidumping Duty Investigations: Certain Cold-Rolled 
Flat-Rolled Carbon-Quality Steel Products from Argentina, Brazil, the 
People's Republic of China, Indonesia, Japan, the Russian Federation, 
Slovakia, South Africa, Taiwan, Thailand, Turkey, and Venezuela, 64 FR 
34194 (June 25, 1999) (Initiation Notice). Since the initiation of the 
investigations, the following events have occurred:
    The Department set aside a period for all interested parties to 
raise issues regarding product coverage. From July through October 
1999, the Department received responses from a number of parties 
including importers, respondents, consumers, and petitioners, aimed at 
clarifying the scope of the investigation. See Memorandum to Joseph A. 
Spetrini, dated November 1, 1999 (Scope Memorandum) for a list of all 
persons submitting comments and a discussion of all scope comments. 
There are several scope exclusion requests for products which are 
currently covered by the scope of this investigation that are still 
under consideration by the Department. These items are considered to be 
within the scope for this preliminary determination; however, these 
requests will be reconsidered for the final determination. See Scope 
Memorandum.
    On June 21, 1999, the Department invited interested parties to 
submit comments regarding the criteria to be used for model matching 
purposes. On June 28 1999, petitioners (Bethlehem Steel Corporation, 
Gulf States Steel, Inc., Ispat Inland Steel, LTV Steel Company, Inc., 
National Steel Corporation, Steel Dynamics, Inc., U.S. Steel Group, a 
unit of USX Corporation, Weirton Steel Corporation, the Independent 
Steel Workers Union, and the United Steelworkers of America) and 
respondents (CSN, USIMINAS, and COSIPA) submitted comments on our 
proposed model matching criteria.
    On June 22, 1999, the Department issued Section A antidumping 
questionnaires to Cia Acos Especiais Itabira, Mangels Industria e 
Comercio Ltda., Armco do Brazil S.A., CSN, USIMINAS, and COSIPA. On 
July 9, 1999, the Department issued Sections B-E of the antidumping 
questionnaires to CSN, USIMINAS, and COSIPA.
    On July 1, 1999, Brasmetal Waelzholz, S.A. submitted a letter 
identifying itself as a producer/exporter of the subject merchandise 
and asked to be considered as a respondent in this investigation. On 
July 9, 1999 the Department decided to limit the examination of 
producers/exporters of subject merchandise, and not to investigate 
voluntary respondents unless mandatory respondents should fail to 
cooperate in the investigation. The Department selected CSN, USIMINAS, 
and COSIPA as mandatory respondents. Consequently, Brasmetal was not 
selected as a mandatory respondent in this investigation. See 
Memorandum to Joseph A. Spetrini, dated July 9, 1999.
    On July 19, 1999, the United States International Trade Commission 
(ITC) notified the Department that it preliminarily determined that 
there is a reasonable indication that an industry in the United States 
is materially injured by the reason of imports of the subject 
merchandise from Brazil.
    On July 20, 1999, the Department received the Section A 
questionnaire responses from CSN, USIMINAS, and COSIPA. Petitioners 
filed comments on CSN's, USIMINAS' and COSIPA's Section A questionnaire 
responses on August 3, 1999. The Department issued supplemental 
questionnaires for Section A to CSN, USIMINAS, and COSIPA on August 24, 
1999.
    On August 30 and September 7, 1999, the Department received 
responses to Sections B, C, and D of the questionnaire from CSN, 
USIMINAS, and COSIPA. On October 12, 1999, the Department issued a 
decision memorandum collapsing USIMINAS and COSIPA for purposes of this 
investigation pursuant to section 351.401(f) of the Department's 
regulations. See Affiliated Respondents section below. Petitioners 
filed comments on CSN's and USIMINAS/COSIPA's Section B-D questionnaire 
responses on September 7 and September 8, 1999. The Department issued 
supplemental questionnaires for Sections B, C, and D to CSN and 
USIMINAS/COSIPA on September 10, 1999. The Department received 
responses to the Section A supplemental questionnaires on September 14, 
1999, and responses to the Sections B-D supplemental questionnaires on 
October 4, 1999.
    On July 12 and July 26, 1999, USIMINAS and COSIPA requested that 
they not be required to report home market sales of non-rectangular 
shapes of steel, otherwise known as non-rectangular blanks, and that 
they not be required to report home market sales through three 
affiliated resellers. On August 27, 1999, the Department excused 
USIMINAS and COSIPA from reporting home market sales of non-rectangular 
blanks, subject to verification. However, the Department will examine 
at verification whether non-rectangular blanks are sufficiently similar 
to U.S. sales to warrant model match comparisons. We also determined 
that the respondents should report home market sales by the affiliated 
resellers. See Memorandum to Joseph A. Spetrini, dated August 27, 1999.

Period of Investigation

    The period of the investigation (POI) is April 1, 1998, through 
March 31, 1999. This period corresponds to each respondent's four most 
recent fiscal quarters prior to the month of the filing of the petition 
(i.e., June 1999).

Scope of Investigation

    For purposes of this investigation, the products covered are 
certain cold-rolled (cold-reduced) flat-rolled carbon-quality steel 
products, neither clad, plated, nor coated with metal, but whether or 
not annealed, painted, varnished, or coated with plastics or other non-
metallic substances, both in coils, 0.5 inch wide or wider, (whether or 
not in successively superimposed layers and/or otherwise coiled, such 
as spirally oscillated coils), and also in straight lengths, which, if 
less than 4.75 mm in thickness having a width that is 0.5 inch or 
greater and that measures at least 10 times the thickness; or, if of a 
thickness of 4.75 mm or more, having a width exceeding 150 mm and 
measuring at least twice the thickness. The products described above 
may be rectangular, square, circular or other shape and include 
products of either rectangular or 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.
    Specifically included in this scope are vacuum degassed, fully 
stabilized (commonly referred to as interstitial-free (``IF'')) steels, 
high strength low alloy (``HSLA'') steels, and motor lamination steels. 
IF steels are recognized as low carbon steels with micro-alloying 
levels of elements such as titanium and/or niobium added to stabilize 
carbon and nitrogen elements. HSLA steels are recognized as steels with 
micro-alloying levels of elements such as chromium, copper, niobium, 
titanium, vanadium, and molybdenum. Motor lamination steels contain 
micro-alloying levels of elements such as silicon and aluminum.
    Steel products included in the scope of this investigation, 
regardless of definitions in the Harmonized Tariff Schedules of the 
United States (``HTSUS''), are products in which: (1) iron 
predominates, by weight, over each

[[Page 61251]]

of the other contained elements; (2) the carbon content is 2 percent or 
less, by weight, and; (3) none of the elements listed below exceeds the 
quantity, by weight, respectively indicated:
    1.80 percent of manganese, or
    2.25 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 (also called columbium), or
    0.15 percent of vanadium, or
    0.15 percent of zirconium.
    All products that meet the written physical description, and in 
which the chemistry quantities do not exceed any one of the noted 
element levels listed above, are within the scope of this investigation 
unless specifically excluded. The following products, by way of 
example, are outside and/or specifically excluded from the scope of 
this investigation:

 SAE grades (formerly also called AISI grades) above 2300;
 Ball bearing steels, as defined in the HTSUS;
 Tool steels, as defined in the HTSUS;
 Silico-manganese steel, as defined in the HTSUS;
 Silicon-electrical steels, as defined in the HTSUS, that are 
grain-oriented;
 Silicon-electrical steels, as defined in the HTSUS, that are 
not grain-oriented and that have a silicon level exceeding 2.25 
percent;
 All products (proprietary or otherwise) based on an alloy ASTM 
specification (sample specifications: ASTM A506, A507);
 Silicon-electrical steels, as defined in the HTSUS, that are 
not grain-oriented and that have a silicon level less than 2.25 
percent, and
    (a) fully-processed, with a core loss of less than 0.14 watts/pound 
per mil (.001 inches), or
    (b) semi-processed, with core loss of less than 0.085 watts/pound 
per mil (.001 inches);
 Certain shadow mask steel, which is aluminum killed cold-
rolled steel coil that is open coil annealed, has an ultra-flat, 
isotropic surface, and which meets the following characteristics:
    Thickness: 0.001 to 0.010 inches
    Width: 15 to 32 inches

                          Chemical Composition
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Element.................................................               C
Weight %................................................        < 0.002%
------------------------------------------------------------------------

 Certain flapper valve steel, which is hardened and tempered, 
surface polished, and which meets the following characteristics:
    Thickness: 1.0 mm
    Width: 152.4 mm

                                                                  Chemical Composition
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Element...........................  C                       Si                      Mn                      P                      S
Weight %..........................  0.90-1.05               0.15-0.35               0.30-0.50               0.03        0.006
--------------------------------------------------------------------------------------------------------------------------------------------------------


                          Mechanical Properties
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Tensile Strength.............................  162 Kgf/mm \2\
Hardness.....................................  475 Vickers
                                                hardness number
------------------------------------------------------------------------


                           Physical Properties
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Flatness...............................  < 0.2% of nominal strip width
------------------------------------------------------------------------

Microstructure:
    Completely free from decarburization. Carbides are spheroidal and 
fine within 1% to 4% (area percentage) and are undissolved in the 
uniform tempered martensite.

                         Non-metallic Inclusion
------------------------------------------------------------------------
                                                      Area percentage
------------------------------------------------------------------------
Sulfide Inclusion...............................  0.04
Oxide Inclusion.................................  0.05
------------------------------------------------------------------------

Compressive Stress: 10 to 40 Kgf/mm \2\

                            Surface Roughness
------------------------------------------------------------------------
                 Thickness (mm)                   Roughness (m)
------------------------------------------------------------------------
t  0.209.............................  Rz  0.5
0.209 < t  0.310.....................  Rz  0.6
0.310 < t  0.440.....................  Rz  0.7
0.440 < t  0.560.....................  Rz  0.8

[[Page 61252]]

 
0.560 < t.......................................  Rz  1.0
------------------------------------------------------------------------

 Certain ultra thin gauge steel strip, which meets the 
following characteristics:
    Thickness:  0.100 mm +/-7%
    Width: 100 to 600 mm

                                                                  Chemical Composition
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Element........................  C                    Mn                  P                   S                   Al                  Fe
Weight %.......................   0.07     0.2-0.5              0.05     0.05     0.07    Balance
--------------------------------------------------------------------------------------------------------------------------------------------------------


                          Mechanical Properties
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Hardness...............................  Full Hard (Hv 180 minimum)
Total Elongation.......................  < 3%
Tensile Strength.......................  600 to 850 N/mm \2\
------------------------------------------------------------------------


                           Physical Properties
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Surface Finish.........................   0.3 micron
Camber (in 2.0 m)......................  < 3.0 mm
Flatness (in 2.0 m)....................   0.5 mm
Edge Burr..............................  < 0.01 mm greater than
                                          thickness
Coil Set (in 1.0 m)....................  < 75.0 mm
------------------------------------------------------------------------

 Certain silicon steel, which meets the following 
characteristics:
    Thickness: 0.024 inches +/-.0015 inches
    Width: 33 to 45.5 inches

                                                                  Chemical Composition
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Element........................  C                    Mn                  P                   S                   Si                  Al
Min. Weight %..................  ...................  ..................  ..................  ..................  0.65                ..................
Max. Weight %..................  0.004                0.4                 0.09                0.009               ..................  0.4
--------------------------------------------------------------------------------------------------------------------------------------------------------


                          Mechanical Properties
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Hardness...............................  B 60-75 (AIM 65)
------------------------------------------------------------------------


                           Physical Properties
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Finish.................................  Smooth (30-60 microinches)
Gamma Crown (in 5 inches)..............  0.0005 inches, start measuring
                                          \1/4\ inch from slit edge
Flatness...............................  20 I-UNIT max.
Coating................................  C3A-.08A max. (A2 coating
                                          acceptable)
Camber (in any 10 feet)................  \1/16\ inch
Coil Size I.D..........................  20 inches
------------------------------------------------------------------------


                           Magnetic Properties
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Core Loss (1.5T/60 Hz) NAAS............  3.8 Watts/Pound max.
Permeability (1.5T/60 Hz) NAAS.........  1700 gauss/oersted typical
                                         1500 minimum
------------------------------------------------------------------------

 Certain aperture mask steel, which has an ultra-flat surface 
flatness and which meets the following characteristics:
    Thickness: 0.025 to 0.245 mm

[[Page 61253]]

    Width: 381-1000 mm

                                                                  Chemical Composition
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Element..............................  C                                           N                                           Al
Weight %.............................  < 0.01                                      0.004 to 0.007                              < 0.007
--------------------------------------------------------------------------------------------------------------------------------------------------------

 Certain tin mill black plate, annealed and temper-rolled, 
continuously cast, which meets the following characteristics:

                                                                                      Chemical Composition
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Element........................  C              Mn             P              S                    Si            Al                  As            Cu            B             N
Min. Weight %..................  0.02           0.20           .............  ...................  ............  0.03                ............  ............  ............  0.003
Max. Weight %..................  0.06           0.40           0.02           0.023 (Aiming 0.018  0.03          0.08 (Aiming 0.05)  0.02          0.08          ............  0.008 (Aiming
                                                                               Max.)                                                                                            0.005)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Non-metallic Inclusions: Examination with the S.E.M. shall not 
reveal individual oxides > 1 micron (0.000039 inches) and inclusion 
groups or clusters shall not exceed 5 microns (0.000197 inches) in 
length.
Surface Treatment as follows:
    The surface finish shall be free of defects (digs, scratches, pits, 
gouges, slivers, etc.) and suitable for nickel plating.

                             Surface Finish
------------------------------------------------------------------------
                                 Roughness, RA Microinches (Micrometers)
                               -----------------------------------------
                                     Aim          Min.          Max.
------------------------------------------------------------------------
Extra Bright..................  5 (0.1)       0 (0)         7 (0.2)
------------------------------------------------------------------------

  Certain full hard tin mill black plate, continuously cast, 
which meets the following characteristics:

                                                                                      Chemical Composition
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Element........................  C              Mn             P              S                    Si            Al                  As            Cu            B             N
Min. Weight %..................  0.02           0.20           .............  ...................  ............  0.03                ............  ............  ............  0.003
Max. Weight %..................  0.06           0.40           0.02           0.023 (Aiming 0.018  0.03          0.08 (Aiming 0.05)  0.02          0.08          ............  0.008 (Aiming
                                                                               Max.)                                                                                            0.005)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Non-metallic Inclusions: Examination with the S.E.M. shall not 
reveal individual oxides > 1 micron (0.000039 inches) and inclusion 
groups or clusters shall not exceed 5 microns (0.000197 inches) in 
length.
Surface Treatment as follows
    The surface finish shall be free of defects (digs, scratches, pits, 
gouges, slivers, etc.) and suitable for nickel plating.

                             Surface Finish
------------------------------------------------------------------------
                                 Roughness, RA Microinches (Micrometers)
                               -----------------------------------------
                                     Aim          Min.          Max.
------------------------------------------------------------------------
Stone Finish..................  16 (0.4)      8 (0.2)       24 (0.6)
------------------------------------------------------------------------

 Certain ``blued steel'' coil (also know as ``steamed blue 
steel'' or ``blue oxide'') with a thickness and size of 0.38 mm  x  940 
mm  x  coil, and with a bright finish;
 Certain cold-rolled steel sheet, which meets the following 
characteristics:
    Thickness (nominal):  0.019 inches
    Width: 35 to 60 inches

                                              Chemical Composition
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Element.............................  C                         O                        B
Max. Weight %.......................  0.004                     .......................  .......................
Min. Weight %.......................  ........................  0.010                    0.012
----------------------------------------------------------------------------------------------------------------

 Certain band saw steel, which meets the following 
characteristics:
    Thickness:  1.31 mm
    Width:  80 mm

                                                                                      Chemical Composition
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Element..........................  C                      Si                     Mn                     P                      S                      Cr                    Ni
Weight %.........................  1.2 to 1.3             0.15 to 0.35           0.20 to 0.35            0.03        0.007      0.3 to 0.5             0.25
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 61254]]

Other properties:
    Carbide: fully spheroidized having > 80% of carbides, which are 
 0.003 mm and uniformly dispersed
    Surface finish: bright finish free from pits, scratches, rust, 
cracks, or seams
    Smooth edges
    Edge camber (in each 300 mm of length):  7 mm arc height
    Cross bow (per inch of width): 0.015 mm max.
    The merchandise subject to this investigation is typically 
classified in the HTSUS at subheadings: 7209.15.0000, 7209.16.0030, 
7209.16.0060, 7209.16.0090, 7209.17.0030, 7209.17.0060, 7209.17.0090, 
7209.18.1530, 7209.18.1560, 7209.18.2550, 7209.18.6000. 7209.25.0000, 
7209.26.0000, 7209.27.0000, 7209.28.0000, 7209.90.0000, 7210.70.3000, 
7210.90.9000, 7211.23.1500, 7211.23.2000, 7211.23.3000, 7211.23.4500, 
7211.23.6030, 7211.23.6060, 7211.23.6085, 7211.29.2030, 7211.29.2090, 
7211.29.4500, 7211.29.6030, 7211.29.6080, 7211.90.0000, 7212.40.1000, 
7212.40.5000, 7212.50.0000, 7225.19.0000, 7225.50.6000, 7225.50.7000, 
7225.50.8010, 7225.50.8085, 7225.99.0090, 7226.19.1000, 7226.19.9000, 
7226.92.5000, 7226.92.7050, 7226.92.8050, and 7226.99.0000.
    Although the HTSUS subheadings are provided for convenience and 
U.S. Customs Service (``U.S. Customs'') purposes, the written 
description of the merchandise under investigation is dispositive.

Selection of Respondents

    Section 777A(c)(1) of the Act directs the Department to calculate 
individual dumping margins for each known exporter and producer of the 
subject merchandise. However, section 777A(c)(2) of the Act gives the 
Department discretion, when faced with a large number of exporters/
producers, to limit its examination to a reasonable number of such 
companies if it is not practicable to examine all companies. Where it 
is not practicable to examine all known producers/exporters of subject 
merchandise, this provision permits the Department to investigate 
either: (1) a sample of exporters, producers, or types of products that 
is statistically valid based on the information available at the time 
of selection, or (2) exporters and producers accounting for the largest 
volume of the subject merchandise that can be reasonably examined.
    After consideration of the complexities expected to arise in these 
proceedings and the resources available to the Department, we 
determined that it was not practicable in this investigation to examine 
all known producers/exporters of subject merchandise. We selected CSN, 
USIMINAS, and COSIPA as mandatory respondents because these are the 
three largest producers and they account for the vast majority of U.S. 
imports. Further, we determined not to investigate voluntary 
respondents, including Brasmetal Waelzholz, unless mandatory 
respondents fail to cooperate. See Memorandum to Joseph A. Spetrini on 
respondent selection dated July 9, 1999.

Product Comparisons

    In accordance with section 771(16) of the Act, all products 
produced by respondents covered by the description in the Scope of 
Investigation section above and sold in Brazil during the POI are 
considered 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, the Department compared U.S. sales to the next most similar 
foreign like product on the basis of the characteristics listed in the 
antidumping questionnaire and reporting instructions.

Affiliated Respondents

    Under section 771(33)(E) of the Act, if one party owns, directly or 
indirectly, five percent or more of the other, they shall be considered 
to be affiliated. Since USIMINAS owns 49.79% of COSIPA, the Department 
determined that USIMINAS and COSIPA are affiliated. See Memorandum to 
Joseph A. Spetrini, dated October 12, 1999.
    Furthermore, it is the Department's practice to collapse affiliated 
producers for purposes of calculating a margin when the affiliated 
producers have production facilities for similar or identical products 
that would not require substantial retooling in order to restructure 
manufacturing priorities and when the facts demonstrate that there is 
significant potential for manipulation of pricing or production. In 
accordance with section 351.401(f) of the Department's regulations, the 
Department concluded that both companies are fully integrated producers 
currently offering a similar range of products, including cold-rolled 
steel products, and that their facilities would not require substantial 
retooling to restructure manufacturing priorities. Furthermore, in 
light of USIMINAS' high level of ownership of COSIPA, common directors, 
and the fact that COSIPA is consolidated on USIMINAS' financial 
statements, there is a significant possibility of price or production 
manipulation between the two companies. For these reasons, the 
Department collapsed USIMINAS and COSIPA into one entity for the 
purpose of this investigation. See Id.
    While it also appears that there may be links between the collapsed 
entity, USIMINAS/COSIPA, and CSN, there is insufficient information on 
the record at this time to consider all three companies to be 
affiliated or to collapse CSN with USIMINAS/COSIPA. Therefore, we 
preliminarily do not find CSN to be affiliated with USIMINAS/COSIPA, 
and we preliminarily are not collapsing CSN with USIMINAS/COSIPA.
    The Department notes that affiliation and collapsing are very 
complex and difficult issues. Therefore, the Department invites parties 
to submit information and comment on these issues to ensure that our 
decision is based on a complete and thorough record. The Department 
intends to examine these issues carefully for the final determination 
of this investigation. Any new information that parties wish to provide 
the Department must be submitted no later than November 8, 1999. All 
information or arguments parties provide will be fully analyzed in 
making our final determination.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine normal value (NV) based on sales in the 
comparison market at the same level of trade (LOT) as the export price 
(EP) or constructed export price (CEP) transaction. The NV LOT is that 
of the starting price of 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 LOT is also the level of the starting price

[[Page 61255]]

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 a LOT adjustment under section 
773(a)(7)(A) of the Act. 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).

CSN

    In the home market CSN made sales to service centers/distributors 
and end-users. The company claims two levels of trade with respect to 
these sales: (1) CSN ``direct'' sales to unaffiliated end-user 
customers; and, (2) sales through Industrial Nacional de Acos Laminados 
S.A. (INAL) (an affiliated service center/distributor) and sales 
further processed under a tolling arrangement with an unaffiliated 
company (toller), before going to unaffiliated customers. CSN reported 
``no channels of distribution'' in the home market in its original 
August 30, 1999, Section B questionnaire response because it claims no 
distinction in the channels of distribution. CSN did, however, report a 
code identifying the type of sale (i.e., CSN direct sales, INAL sales, 
etc.). In the U.S. market CSN reported sales to two types of customers: 
trading companies and distributors. CSN reported ``no channels of 
distribution'' in the U.S. market since it claims that they have no 
impact on pricing.
    Although somewhat unclear, it appears that CSN is actually claiming 
that in the home market it has two channels of distribution involving 
different marketing stages (direct sales and affiliated distributor 
sales). In the United States CSN appears to be claiming only a single 
level of trade.
    In determining whether separate LOTs actually existed in the home 
market, we first examined whether CSN's sales involved different 
selling functions along the chain of distribution between CSN and its 
unaffiliated customers. CSN stated that it sells some products 
directly, and other products through INAL or as merchandise further 
processed by an unaffiliated toller. CSN claims that INAL and the 
toller perform additional services beyond those performed on direct 
sales. Taking into account whether or not sales are made through 
intermediate parties, it appears that CSN's direct sales may be at a 
different stage of marketing than its other sales, because these sales 
were sold directly from the mill to the unaffiliated customer, whereas 
sales through the other channel involved an affiliated intermediary or 
tolling by an unaffiliated party before going to an unaffiliated 
customer. This would indicate that CSN has two home market LOTs.
    However, in further analyzing CSN's home market levels of trade, we 
reviewed available information on the record about the company's 
selling functions pertaining to each of these channels of distribution. 
In its initial response, dated July 20, 1999, CSN claimed that it 
provided warranties, technical assistance, returns, and freight. From 
the written description, we determine that warranties and returns cover 
the same selling functions. In a supplemental response, CSN identified 
six different selling functions: freight/delivery arrangement, further 
processing into smaller lots, custom-made products, ``end-user 
information'', inventory maintenance, and just-in-time delivery (see 
page 24 of CSN's October 4, 1999, response to the Department's 
supplemental for Section B). CSN has not provided narrative information 
on ``end-user information.'' Therefore we are not considering this as a 
selling function. In addition, further processing into smaller lots and 
custom made products do not appear to be traditional selling functions 
relevant to the Department's LOT analysis but, rather, are production 
costs. Also, we decided to combine two selling functions, inventory 
maintenance and just-in-time delivery (which together we refer to as 
``warehousing''), because we found that they were not sufficiently 
different to warrant being treated as unique selling functions. 
Although these two responses are somewhat inconsistent, we conclude 
that CSN performed four selling functions in its home market: freight, 
warehousing, warranty, and technical assistance.
    Next, we examined whether these selling functions are provided 
consistently across both channels of distribution in the home market, 
finding that warehousing is rarely performed on CSN direct sales while 
it is performed to some extent on INAL/toller sales. The other selling 
functions are provided equally across both channels of distribution.
    In conclusion, while CSN claimed two different levels of trade 
based on differences in selling functions in connection with each LOT, 
we find that the actual differences in selling function are relatively 
minor. Therefore, we preliminarily determine that only one LOT exists 
for CSN in the home market.
    In determining the LOT in the U.S. market, we examined the selling 
functions performed by CSN for its U.S. sales which, as discussed 
elsewhere, were all made on an EP basis. CSN reported the following 
selling activities and services for direct sales in the home market, as 
well as EP sales in the U.S. market: warranties, returns, and freight. 
As noted above, we interpret warranties and returns to constitute the 
same selling function. Thus, we conclude that CSN has two U.S. selling 
functions: warranty and freight.
    In analyzing the differences between stages of marketing (or their 
equivalent) and selling functions along the chain of distribution 
between CSN and its unaffiliated customers, we have concluded that all 
of CSN's U.S. sales are at one stage of marketing because they are all 
direct EP sales from CSN to unaffiliated importers in the United 
States, involving the same reselling functions. CSN noted that it did 
not claim different channels of distribution since they have no impact 
on pricing. CSN sells to two types of customers in the U.S. market: 
trading companies and distributors.
    We next compared EP sales to home market sales to determine whether 
they were made at the same LOT. To perform this analysis, we compared 
the selling functions offered by CSN on its EP sales to the functions 
performed on its home market sales. As noted, CSN has four home market 
selling functions (warranty, freight, technical assistance, and 
warehousing) and two U.S. selling functions (warranty and freight). 
However, CSN reported that its home market warehousing to many 
customers was only performed rarely or to a limited degree. We find 
that limited warehousing and technical assistance do not constitute a 
significant difference between the services provided to home market and 
U.S. customers. The information on record indicates that, for both EP 
and home market transactions, CSN performed similar selling functions. 
Consequently, the Department preliminarily determines

[[Page 61256]]

that there is only one LOT in the home market and that it is at the 
same level as the single LOT in the U.S. market. Therefore, no LOT 
adjustment was necessary.

USIMINAS/COSIPA

    In the home market USIMINAS/COSIPA made sales to end-users, 
affiliated distributors, and unaffiliated distributors. USIMINAS/COSIPA 
claims seven ``channels of distribution'' with respect to home market 
sales: (1) mill to OEMs; (2) mill to affiliated distributor; (3) mill 
to unaffiliated distributor; (4) affiliated distributor to affiliated 
distributor; (5) affiliated distributor to OEM; (6) affiliated 
distributor to non-affiliated distributor; and (7) affiliated 
distributor to retailer.
    USIMINAS/COSIPA claims that there is a significant difference 
between prices charged to end-users and prices charged to distributors. 
USIMINAS/COSIPA further claims that prices charged to distributors and 
to end-users differ significantly from prices charged by affiliated 
distributors to their downstream customers.
    Although the record is somewhat unclear, we have analyzed USIMINAS/
COSIPA's arguments with respect to its home market LOT. The seven 
``channels'' which USIMINAS/COSIPA identifies apparently are only 
single steps in the channels of distribution to unaffiliated 
purchasers. The actual channels appear to be the following: (1) mill to 
OEM; (2) mill to unaffiliated distributor (or affiliated distributor at 
arm's length prices); (3) mill through affiliated distributor to OEM; 
(4) mill through affiliated distributor to unaffiliated distributor; 
and (5) mill through affiliated distributor to retailer. In examining 
these channels, there appear to be two potential home market LOT: (1) 
direct sales from the mill to unaffiliated parties (``mill direct 
sales''); and (2) sales through affiliated distributors to unaffiliated 
parties (``downstream sales'').
    In determining whether separate levels of trade actually existed in 
the home market, the Department first examined available information on 
the record about the company's selling functions for each channel of 
distribution. USIMINAS/COSIPA indicated that the selling functions 
performed by the affiliated distributors on downstream sales are much 
more significant than those performed by USIMINAS/COSIPA itself in the 
first three home market channels of distribution (i.e., mill direct 
sales). The following are the selling functions provided for downstream 
sales: inventory maintenance, after sales service/warranties (to a 
small degree), special warehousing, technical advice (to a small 
degree), freight and delivery arrangement (to a great degree), and 
special processing (cutting to customer's desired length). USIMINAS and 
COSIPA perform the following services on mill direct sales: after sales 
service/warranties (to a small degree), technical advice (to a small 
degree), and freight and delivery arrangement (to a small degree). Of 
these selling functions, special processing does not appear to be a 
traditional selling function relevant to the Department's LOT analysis 
but, rather, is a production cost. In addition, we decided to combine 
two selling functions, inventory maintenance and special warehousing 
(which, together, we refer to as ``warehousing''), because we found 
that they were not sufficiently different to warrant being treated as 
unique selling functions. Based on this information, we determined that 
the selling functions of the affiliates for downstream sales were 
significantly different than those for mill direct sales, and 
therefore, we have determined that downstream sales by affiliates were 
made at a different LOT than other HM sales.
    While USIMINAS/COSIPA mill direct sales to end-users (whether or 
not further processed) and mill direct sales to unaffiliated 
distributors involve different channels of distribution, these sales do 
not involve significant differences in selling functions. Therefore, we 
do not consider these channels to represent different levels of trade. 
Thus, we preliminarily determine that downstream sales and mill direct 
sales represent two different home market LOTs.
    In the U.S. market USIMINAS/COSIPA claim that all sales were made 
at one level of trade, through one channel of distribution. USIMINAS/
COSIPA state that all U.S. sales were made to unaffiliated trading 
companies. USIMINAS/COSIPA state that these sales are made at the same 
level of trade as USIMINAS/COSIPA's mill direct home market sales to 
unaffiliated distributors. However, as noted above, the Department 
finds the selling functions of all home market mill direct sales 
(whether to unaffiliated distributors or to OEMs) to be quite similar 
to each other, thus constituting a single LOT. The Department 
additionally finds the selling functions for mill direct sales to be 
similar to U.S. sales. The only selling functions associated with U.S. 
sales are after sales service/warranties and freight and delivery 
arrangements, which are also provided to home market mill direct 
customers. The only other selling function offered for home market mill 
direct sales is a limited amount of technical advice. Both home market 
mill direct sales and U.S. sales involve sales to large customers, 
including service centers/distributors that resell steel. (U.S. sales 
are only made to resellers.) Therefore, based on our analysis of 
selling functions, the Department finds U.S. sales to be at the same 
LOT as home market mill direct sales. Therefore, U.S. sales were only 
compared to home market mill direct sales, and no LOT adjustment was 
necessary.

Fair Value Comparisons

    To determine whether sales of cold-rolled steel products from 
Brazil were made at less than fair value, we compared the EP to the 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.

Transactions Investigated

    As stated in 19 CFR 351.401(i), the Department will use invoice 
date as the date of sale unless another date reflects the date on which 
the exporter or producer establishes the material terms of sale. Both 
CSN and USIMINAS/COSIPA reported the date of the nota fiscal (i.e., the 
date the product leaves the factory) as the date of sale.
    CSN maintains that it uses the date of the nota fiscal for home 
market sales in its accounting records because this is the date on 
which material terms of sale are finalized. Moreover, CSN notes that it 
adds estimated freight and insurance expenses to each invoice, which 
are not confirmed in writing until the date of the nota fiscal. For its 
U.S. sales, CSN reported the date of the nota fiscal to be consistent 
with the Final Determination of Sales at Less than Fair Value: Certain 
Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Brazil, 64 FR 
38756 (July 19, 1999) (Hot Rolled Steel). CSN notes, however, that it 
disagrees with the determination in Hot Rolled Steel that the 
appropriate date of sale for CSN's U.S. sales is the ex-factory 
shipment date (i.e., nota fiscal date). CSN argues that the date of 
commercial invoice (i.e., the invoice issued on the date of shipment 
from the port) should be the date of sale.
    USIMINAS and COSIPA maintain that for their home market sales, the 
nota fiscal is the date on which the material terms of sale are first 
finalized. The nota fiscal is also used by both companies' accounting 
systems to register home market sales. For their U.S. sales,

[[Page 61257]]

USIMINAS and COSIPA both reported the date of the nota fiscal to be 
consistent with Hot Rolled Steel. USIMINAS notes, however, that it 
disagrees with the use of this date as there can be changes in 
quantities or prices to the ultimate customer after the nota fiscal 
date and that the commercial invoice date (i.e., the invoice issued on 
the date of shipment from the port) should be the date of sale. 
USIMINAS claims that the commercial invoice is the date to which all 
U.S. sales are tied in its accounting system. COSIPA indicated that the 
nota fiscal and the commercial invoice for U.S. sales are issued on the 
same date.
    For this preliminary determination, we are using the dates reported 
by respondents as the date of sale. Thus, for both home market and U.S. 
sales we are using the nota fiscal date as the date of sale. We intend 
to fully examine date of sale during verification and will incorporate 
our findings, as appropriate, in our analysis for the final 
determination.

Export Price

    We based our calculations on EP, in accordance with section 772 of 
the Act, because the subject merchandise was sold by the producer or 
exporter directly to the first unaffiliated purchaser in the United 
States prior to importation. Furthermore, we calculated EP based on 
packed prices charged to the first unaffiliated customers in the United 
States. We made company-specific adjustments as follows:

CSN

    We made deductions from the starting price, where appropriate, for 
the following movement expenses, in accordance with section 
772(c)(2)(A) of the Act: discounts, foreign inland freight, 
international freight, and foreign brokerage and handling expenses.
    In addition, for sales for which payment has not been received, we 
recalculated credit expenses using the due date of the respondent's 
supplemental submission (October 1, 1999), rather than the date of the 
first response (August 30, 1999). Because it is CSN's stated practice 
to charge late payment fees, we imputed home market interest revenue 
for sales on which payment has not yet been received. For U.S. sales, 
we have reclassified as discounts, certain payments to a customer of 
CSN, which CSN had reported as commissions. A discount is a reduction 
in price to a customer, while a commission is a form of payment for 
services. Therefore, the issue is whether there was one transaction 
between CSN and the ultimate customer in which the trading company 
acted as a sales agent for a commission, or whether there were two 
transactions, one in which the trading company bought from CSN and 
received a discount on the price for that initial sale and subsequently 
resold the merchandise to the ultimate purchaser. See Certain Cold-
Rolled Carbon Steel Flat Products from Germany; Final Results of 
Antidumping Duty Review, 60 FR 65264, 65277-8 (December 19, 1995); 
Certain Carbon Steel Products from Austria; Final Determination of 
Sales at LTFV, 50 FR 33365 (August 19, 1985). We preliminarily 
determined that the latter situation exists in the present case.

USIMINAS/COSIPA

    The Department made deductions from the starting price, where 
appropriate, for the following movement expenses, in accordance with 
section 772(c)(2)(A) of the Act: foreign inland freight, international 
freight, and foreign brokerage and handling expenses.

Normal Value

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
the aggregate volume of home market sales of the foreign like product 
is equal to or greater than five percent of the aggregate volume of 
U.S. sales), we compared respondent's volume of home market sales of 
the foreign like product to the volume of U.S. sales of the subject 
merchandise, in accordance with section 773(a)(1)(C) of the Act. Since 
each of the respondent's aggregate volume of home market sales of the 
foreign like product was greater than five percent of its aggregate 
volume of U.S. sales for the subject merchandise, we determined that 
the home market was viable for all respondents. Therefore, we have 
based NV on home market sales in the usual commercial quantities and in 
the ordinary course of trade.

Arm's Length Test

CSN
    CSN sold merchandise to an affiliated reseller (INAL). CSN reported 
sales by INAL to unaffiliated companies, and CSN did not sell to any 
other affiliated companies. Therefore, we did not need to perform the 
arm's length test.
USIMINAS/COSIPA
    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 unaffiliated parties, we 
determined that sales made to the affiliated party were at arm's 
length. See 19 CFR 351.403(c). 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., Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 (July 9, 
1993). Where the exclusion of such sales eliminated all sales of the 
most appropriate comparison product, we made a comparison to the next 
most similar product.

Cost of Production (COP) Analysis

    Based on the cost allegation submitted by petitioners in the 
original petition, the Department found reasonable grounds to believe 
or suspect that respondents had made sales in the home market at prices 
below the cost of producing the merchandise, in accordance with section 
773(b)(2)(A)(i) of the Act. As a result, the Department initiated an 
investigation to determine whether respondents made home market sales 
during the POI at prices below their respective COPs within the meaning 
of section 773(b) of the Act. See Initiation Notice. The Department 
conducted the COP analysis described below.
A. Calculation of COP
    In accordance with section 773(b)(3) of the Act, the Department 
calculated COP for cold-rolled steel products based on the sum of the 
cost of materials and fabrication for the foreign like product, plus 
amounts for home market SG&A, interest expenses, and packing costs. The 
Department relied on the COP data submitted by each respondent in its 
cost questionnaire response except, as discussed below, in specific 
instances where the submitted costs were not appropriately quantified 
or valued.
CSN
    The Department relied on CSN's COP and CV data submitted on October 
4, 1999, except in the following instances: (1) We revised its general 
and

[[Page 61258]]

administrative (G&A) expense rate calculation to include non-operating 
expenses and to exclude all monetary correction items except those 
expenses related to accounts payable, and (2) we revised its financial 
expense ratio to include monetary corrections for financing losses and 
to exclude an offset for interest income from financial operations. See 
Cost Calculation Memorandum, dated November 1, 1999.
USIMINAS/COSIPA
    The Department relied on USIMINAS/COSIPA's COP and CV data 
submitted on October 4, 1999, except in the following instances: (1) We 
revised its submitted G&A expense ratio to exclude packing expenses 
from the cost of goods sold used as the denominator in the calculation 
of the ratio; (2) we revised its submitted financial expense ratio to 
include expenses for export financing and foreign exchange losses 
related to export financing and exclude an offset for foreign exchange 
gains related to accounts receivable; and (3) for COSIPA we adjusted 
the transfer price for iron ore obtained from an affiliated supplier in 
accordance with the ``major input'' rule. See Cost Calculation 
Memoranda, November 1, 1999.
B. Test of Home Market Prices
    The Department compared the weighted-average COP for each 
respondent, adjusted where appropriate (see above), to home market 
sales prices of the foreign like product as required under section 
773(b) of the Act. In determining whether to disregard home market 
sales made at prices less than the COP, the Department 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, the Department compared the COP to home 
market prices, less any applicable movement charges, taxes, billing 
adjustment, and discounts and rebates.
C. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of respondent's sales of a given product were at prices less 
than the COP, the Department 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, the Department determined such sales to have been 
made in ``substantial quantities,'' in accordance with 773(b)(2)(C)(i) 
of the Act, within an extended period of time, in accordance with 
section 773(b)(2)(B) of the Act. In such cases, because the Department 
compared prices to weighted-average COPs for the POI , the Department 
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, the 
Department disregarded the below-cost sales.

Price-to-Price Comparisons

    We performed price-to-price comparisons where there were sales of 
comparable merchandise in the home market that did not fail the cost 
test. We made adjustments, where appropriate, for physical differences 
in the merchandise in accordance with section 773(a)(6)(C)(ii) of the 
Act, as well as for differences in circumstances of sale (COS) in 
accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410 
of the Department's regulations. In accordance with section 773(a)(6) 
of the Act, we deducted home market packing costs and added U.S. 
packing costs.
    Under section 777A(d)(1)(A) of the Act, we have broad authority to 
use a number of methodologies in calculating the average prices used to 
determine whether sales at less than fair value exist. More 
specifically, under section 351.414(d)(3) of the Department's 
regulations, the Department may use averaging periods shorter than the 
POI when normal value, export price, or constructed export price varies 
significantly over the POI. In this case, NV (in dollars) after January 
12, 1999, varied significantly from NV earlier in the POI, due 
primarily to a significant change in the underlying dollar value of the 
real, evidenced by the precipitous and large drop that began in January 
1999. As noted in the currency conversion section below, in late 
January and early February 1999 the real lost over 40 percent of its 
value. Consequently, it is appropriate to use two averaging periods to 
avoid the possibility of a distortion in the dumping calculation. This 
methodology is consistent with our policy adopted in Stainless Steel 
Plate in Coils from Korea, 64 FR 15444, 15452 (March 31, 1999) and 
Stainless Steel Sheet and Strip from Korea, 64 FR 30664, 30676 (June 8, 
1999) (Stainless Sheet from Korea). Therefore, for all respondents, we 
have used two averaging periods for this preliminary determination, the 
beginning of the POI through January 12, 1999, and January 13, 1999, 
through the end of the POI.

Brazilian Taxes

    Consistent with past practice, we adjusted NV for the full amount 
of IPI and ICMS taxes collected on the subject merchandise because 
these are VAT taxes that have a basis for deduction according to 
section 773(a)(6)(B)(iii) of the Act. We did not deduct the Brazilian 
PIS and COFINS taxes as suggested by respondents in calculating NV. 
Since these taxes are levied on total revenues, the taxes are not 
imposed directly on the product or its components. Accordingly, there 
is no basis to deduct them in the calculation of NV under section 
773(a)(6)(B)(iii) of the Act. See Final Results of Antidumping Duty 
Administrative Review: Certain Cut-To-Length Carbon Steel Plate from 
Brazil, 63 FR 12744, 12746 (March 16, 1998); and Notice of Final 
Determination of Sales at Less than Fair Value: Certain Hot-Rolled 
Flat-Rolled Carbon Quality Steel from Brazil, 64 FR 38756, 38765 (July 
19, 1999).
CSN
    For CSN, we based NV on prices of home market sales that passed the 
cost test. We made adjustments for billing adjustments and certain 
taxes as discussed above. We made deductions, where appropriate, for 
foreign inland freight (net of taxes) pursuant to section 773(a)(6)(B) 
of the Act. We made COS adjustments for differences in credit, interest 
revenue, warranty expenses, and bank charges, where appropriate. We 
also made adjustments for home market inventory carrying costs and 
other indirect selling expenses, where appropriate, to offset 
differences between home market and U.S. commissions.
    Under section 776(a) of the Act, if information is not available on 
the record, the Department may use the facts available. Section 776(b) 
of the Act provides that adverse inferences may be used in selecting 
from among the facts available when an interested party has failed to 
cooperate by not acting to the best of its ability to comply with the 
Department's requests for information. See also, Statement of 
Administrative Action (SAA) accompanying the URAA, H.R. Rep. No. 316, 
103d Cong., 2d Sess. 870 (1994). We found that the reported amount of 
CSN's U.S. commission payments did not match the amount of commissions 
it described in its narrative response; CSN described its commissions 
as a fixed percentage of the price, but the amount reported often 
differed from that percentage. In our September 10, 1999 supplemental 
questionnaire, we asked CSN to explain the commission calculations. In 
its

[[Page 61259]]

October 4, 1999 supplemental, CSN allegedly corrected the commissions 
in its database. However, analysis of the database submitted on October 
4, 1999, reveals that the reported commissions still do not follow the 
reported methodology. Consequently, we are unable to determine whether 
the reported commission amounts are incorrect, or whether the 
methodology as described is incorrect. Further, as this problem has 
been pointed out to CSN, and CSN failed to correct the discrepancy, we 
conclude that CSN has not cooperated to the best of its ability with 
respect to this issue. Therefore, for purposes of this preliminary 
determination, as adverse facts available, if the reported U.S. 
commission is greater than the stated methodology, we are using the 
reported U.S. commission amount. However, when the reported amount is 
less than or equal to the stated methodology, we are adjusting the U.S. 
commission to the stated methodology.
    An affiliated reseller of CSN reported its downstream sales made in 
the home market and the related COM. However, the reported COM has not 
been segregated between variable and fixed costs. Consequently, using 
the cost data as reported, we are unable to calculate an adjustment for 
the physical differences in merchandise. Therefore, as facts available, 
wherever CSN and the reseller sold identical products we replaced the 
reseller's variable COM (VCOM) with CSN's VCOM. In those instances 
where the reseller sold unique products we calculated a weighted-
average percentage of the variable cost to the total COM for CSN. Then, 
we applied the result to the total COM reported by the affiliated 
reseller to attain the reseller's VCOM. We used this calculated VCOM to 
determine the adjustment to normal value related to the physical 
differences in merchandise.
USIMINAS/COSIPA
    For USIMINAS/COSIPA we based NV on prices of home market sales that 
passed the cost test. We made deductions for billing adjustments, 
discounts, taxes, and rebates. We made deductions, where appropriate, 
for inland freight and inland insurance, pursuant to section 
773(a)(6)(B) of the Act. We note that the deduction for inland freight 
should be net of VAT taxes. However, while we have requested this 
information, we did not receive it in time for this preliminary 
determination. Consequently, we have estimated an amount for VAT paid 
on inland freight and deducted the estimated VAT from the reported 
amounts. We made COS adjustments for imputed credit expense, interest 
revenue, and warranties.
    For home market sales on which payment has not been received, 
USIMINAS/COSIPA stated that they used October 1, 1999, as a surrogate 
payment date. However, analysis of the database indicates that COSIPA 
used the date of the first submission. Section 776(b) of the Act 
provides that the Department may use the facts available when necessary 
information is not on the record. Therefore, in accordance with section 
776(a) we must use facts available as facts available, we recalculated 
credit expenses for COSIPA for sales for which payment has not been 
received using the due date of the respondents supplemental submission 
(October 1, 1999), rather than the date of the first submission. 
Because it is standard practice for the respondents to charge late 
payment fees, we imputed home market interest revenue for COSIPA for 
sales on which payment has not been received.
    Also, we have recalculated home market credit expenses so that 
credit expenses for all sales are based on prices net of taxes and 
billing adjustments.
    USIMINAS made home market sales based on both actual and 
theoretical weight. U.S. sales were all made on actual weight. For 
USIMINAS'' home market sales made based on theoretical weight, USIMINAS 
did not provide a conversion factor to adjust the applicable weight, 
prices, and adjustments for these sales to an actual weight basis, for 
proper comparison to other home market sales and to U.S. sales. As 
facts available, we have applied a theoretical to actual weight cold-
rolled steel conversion factor from the public file of Certain Cold-
Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea; 
Fifth Administrative Review. A copy of this factor was submitted on the 
record of the instant case by petitioners on October 8, 1999. For all 
home market theoretical weight sales, we multiplied the reported 
quantity by this factor and divided the reported prices and adjustments 
by this factor. We will review this topic at verification, and for 
purposes of the final determination, we will look at any information 
that may make this conversion more accurate.
    Affiliated resellers of USMINAS/COSIPA reported their downstream 
sales made in the home market and the related COM. However, the 
reported COM has not been segregated between variable and fixed costs. 
Consequently, using the cost data as reported, we are unable to 
calculate an adjustment for the physical differences in merchandise. 
Therefore, as facts available, wherever USIMINAS/COSIPA and the 
reseller sold identical products we replaced the resellers' VCOM with 
USIMINAS/COSIPA's VCOM. In those instances where the resellers sold 
unique products we calculated a weighted-average percentage of the 
variable cost to the total COM for USIMINAS/COSIPA. Then we applied the 
result to the total COM reported by the affiliated resellers to attain 
the resellers variable COM. We used the revised VCOMs to determine the 
adjustment to normal value related to the physical differences in 
merchandise.

Currency Conversions

    We made currency conversions in accordance with section 773A of the 
Act. Section 773A(a) of the Act directs the Department to use a daily 
exchange rate to convert foreign currencies into U.S. dollars unless 
the daily rate involves a fluctuation. The Department considers a 
``fluctuation'' to exist when the daily exchange rate differs from the 
benchmark rate by 2.25 percent or more. 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 generally substitute the 
benchmark rate for the daily rate, in accordance with established 
practice. (An exception to this rule is described below.) 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 occurs 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.
    Our preliminary analysis of dollar-real exchange rates show that 
the real declined rapidly in early 1999, losing over 40 percent of its 
value in January 1999, when the Brazilian government ended its exchange 
rate restrictions. The decline was, in both speed and magnitude, many 
times more severe than any change in the dollar-real exchange rate 
during recent years, and it did not rebound significantly in a short 
time. As such, we preliminarily determine that the decline in the real 
during January 1999 was of such magnitude that the dollar-real exchange 
rate cannot reasonably be viewed as having simply fluctuated at that 
time, i.e., as having experienced only a

[[Page 61260]]

momentary drop in value relative to the normal benchmark. We 
preliminarily find that there was a large, precipitous drop in the 
value of the real in relation to the U.S. dollar in January 1999.
    We recognize that, following a large and precipitous decline in the 
value of a currency, a period may exist wherein it is unclear whether 
further declines are a continuation of the large and precipitous 
decline or merely fluctuations. Under the circumstances of this case, 
such uncertainty may have existed following the large, precipitous drop 
in January 1999. Thus, we devised a methodology for identifying the 
point following a precipitous drop at which it is reasonable to presume 
that rates were merely fluctuating. Beginning on January 13, 1999, we 
used only actual daily rates until the daily rates were not more than 
2.25 percent below the average of the 20 previous daily rates for five 
consecutive days. At that point, we determined that the pattern of 
daily rates no longer reasonably precluded the possibility that they 
were merely ``fluctuating.'' (Using a 20-day average for this purpose 
provides a reasonable indication that it is no longer necessary to 
refrain from using the normal methodology, while avoiding the use of 
daily rates exclusively for an excessive period of time.) Accordingly, 
from the first of these five days, we resumed classifying daily rates 
as ``fluctuating'' or ``normal'' in accordance with our standard 
practice, except that we began with a 20-day benchmark and on each 
succeeding day added a daily rate to the average until the normal 40-
day average was restored as the benchmark. See Notice of Final Results 
of Antidumping Duty Administrative Review: Certain Welded Carbon Steel 
Pipes and Tubes from Thailand, 64 FR 56759, 56763, October 21, 1999.
    Applying this methodology in the instant case, we used daily rates 
from January 13, 1999 through March 4, 1999. We then resumed the use of 
our normal methodology through the end of the period of investigation 
(March 31, 1999), starting with a benchmark based on the average of the 
20 reported daily rates on March 5, 1999.

Critical Circumstances

    On June 10, 1999, petitioners alleged that there is a reasonable 
basis to believe or suspect that critical circumstances exist with 
respect to imports of cold-rolled steel from Brazil. In accordance with 
19 CFR 351.206(c)(2)(i), since this allegation was filed at least 20 
days prior to the preliminary determination, the Department must issue 
its preliminary critical circumstances determination no later than the 
preliminary determination.
    Section 733(e)(1) of the Act provides that the Department will 
determine that critical circumstances exist if there is a reasonable 
basis to believe or suspect that: (A)(i) there is a history of dumping 
and material injury by reason of dumped imports in the United States or 
elsewhere of the subject merchandise, or (ii) the person by whom, or 
for whose account, the merchandise was imported knew or should have 
known that the exporter was selling the subject merchandise at less 
than its fair value and that there was likely to be material injury by 
reason of such sales, and (B) there have been massive imports of the 
subject merchandise over a relatively short period. Moreover, in 
determining whether there is a reasonable basis to believe or suspect 
that an importer knew or should have known that there was likely to be 
material injury by reason of dumped imports, the Department may look to 
the preliminary injury determination of the ITC.

History of Dumping or Importer Knowledge

    To determine whether there is a history of dumping of the subject 
merchandise, the Department normally considers evidence of an existing 
antidumping duty order in the United States or elsewhere to be 
sufficient. The Department found that Mexico has in force an 
antidumping duty order on cold-rolled steel from Brazil, and therefore 
determined that there is a history of dumping and material injury by 
reason of dumped imports of the subject merchandise. Since we have 
found a history of dumping causing material injury with respect to 
Brazil, there is no need to examine importer knowledge.

Massive Imports

    In determining whether there are ``massive imports'' over a 
``relatively short time period,'' the Department ordinarily basis its 
analysis on import data for at least three months preceding (the ``base 
period'') and following (the ``comparison period'') the filing of the 
petition. Pursuant to 19 CFR 351.206(h)(2), unless the imports in the 
comparison period have increased by at least 15 percent during the base 
period, we will not consider the imports to have been ``massive''. In 
addition, the regulations allow for the adjustment of the base and 
comparison periods where the availability of the data and the 
commercial realities of the marketplace so dictate. Additionally, as 
stated in the Department's regulations, at section 351.206(i), if the 
Secretary finds that importers, exporters, or producers had reason to 
believe, at some time prior to the beginning of the proceeding, that a 
proceeding was likely, then the Secretary may consider a time period of 
not less than three months from that earlier time.
    In this case petitioners argue that importers, exporters or 
producers of Brazilian cold-rolled steel had reason to believe that an 
antidumping proceeding was likely before the filing of the petition. 
The Department examined whether conditions in the industry and 
published reports and statements provide a basis for inferring 
knowledge that a proceeding was likely. We considered other sources of 
information including press reports in late 1998 regarding rising 
imports and the likelihood of antidumping action against imports of 
cold-rolled steel. We find that such press reports, particularly in 
October and November 1998, are sufficient to establish that by the 
beginning of November 1998, importers, exporters, or producers knew or 
should have known that a proceeding was likely concerning cold-rolled 
products from Brazil. See Preliminary Analysis Memoranda, dated 
November 1, 1999 (Preliminary Analysis Memoranda). Accordingly, we 
examined the increase in import volumes from January--October 1998 as 
compared to November 1998-August 1999, the maximum period for which we 
had reliable data in this case, and found that company-specific export 
shipment data shows an increase of more than 100 percent in exports 
from USIMINAS/COSIPA and a decrease in exports from CSN. See 
Preliminary Analysis Memoranda. Therefore, pursuant to section 733(e) 
of the Act and section 351.206(h) of the Department's regulations, we 
preliminarily determine that there have been massive imports of cold-
rolled steel from USIMINAS/COSIPA over a relatively short period of 
time.
    We have also analyzed the issue of critical circumstances for 
companies in the ``all others'' category. Our conclusions regarding the 
history of dumping with respect to any such companies are identical to 
our conclusions on this issue for the individually examined 
respondents. Similarly, we conclude, for the reasons stated above, that 
such importers knew or should have known that a proceeding was likely 
as of November 1999. With regard to the issue of massive imports, in 
accordance with our current practice (See Notice of Final Determination 
of Sales at Less Than Fair Value: Hot-Rolled Flat-Rolled Carbon-Quality 
Steel Products from Japan, 64 FR 24329, 24335 (May 6, 1999)), we first

[[Page 61261]]

considered the import data of the mandatory respondents. In this case, 
we found massive imports for one respondent, based on an increase in 
imports of more than 100 percent, but not massive imports for the 
other. We also considered whether U.S. customs data would permit the 
Department to analyze imports of subject merchandise. However, that 
data includes products not subject to this investigation. Therefore, it 
is not appropriate to base our critical circumstances determination on 
that data. (See Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Sheet and Strip in Coils From Germany, 64 FR 30710, 
30728 (June 8, 1999)). Under these circumstances, while we normally do 
not consider the relative volumes of imports from respondents, we 
considered that the respondent with massive imports accounts for a 
larger volume of imports than the respondent that did not have the 
massive imports. Based on these facts, we find that there were massive 
imports from the uninvestigated companies. Thus we preliminarily find 
critical circumstances with respect to companies in the ``all others'' 
category.
    Accordingly, we preliminary determine that critical circumstances 
exist for USIMINAS/COSIPA and for companies in the ``all others 
category'' but not for CSN.

Verification

    In accordance with section 782(i) of the Act, we will verify all 
information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
the U.S. Customs Service to suspend liquidation of all entries of cold-
rolled steel products from Brazil that are entered, or withdrawn from 
warehouse, for consumption: (1) For CSN, on or after the date of 
publication of this notice in the Federal Register; and (2) for 
USIMINAS/COSIPA and all others, on or after the date 90 days prior to 
the date of publication of this notice in the Federal Register. We will 
instruct the U.S. 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, as indicated in the chart below. These instructions 
suspending liquidation will remain in effect until further notice. The 
weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                             Weighted-
                  Exporter manufacturer                   average margin
                                                           (in percent)
------------------------------------------------------------------------
CSN.....................................................           51.24
USIMINAS/COSIPA.........................................           40.65
All Others..............................................           42.97
------------------------------------------------------------------------

International Trade Commission Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final antidumping determinations are 
affirmative, the ITC will determine whether these imports are 
materially injuring, or threatening material injury to, the U.S. 
industry. The deadline for that ITC determination is the later of 120 
days after the date of this preliminary determination or 45 days after 
the date of our final determination.

Public Comment

    Case briefs or other written comments may be submitted to the 
Assistant Secretary for Import Administration no later than fifty days 
after the date of publication of this notice, and rebuttal briefs, 
limited to issues raised in case briefs, no later than fifty-five days 
after the date of publication of this preliminary determination. A list 
of authorities used and an executive summary of issues should accompany 
any briefs submitted to the Department. This 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, any hearing will be held fifty-
seven days after publication of this notice at the U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230, at a time and location to be determined. Parties should confirm 
by telephone the date, time, and location 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 date of 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. At the hearing, each party may make an affirmative 
presentation only on issues raised in that party's case brief, and may 
make rebuttal presentations only on arguments included in that party's 
rebuttal brief. See 19 CFR 351.310(c). We intend to make our final 
determination no later than 75 days after the date of issuance of this 
notice.
    This determination is issued and published in accordance with 
sections 733(d) and 777(i)(1) of the Act.

    Dated: November 1, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-29460 Filed 11-9-99; 8:45 am]
BILLING CODE 3510-DS-P