Federal Register, Volume 64 Issue 217 (Wednesday, November 10, 1999)

[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:

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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