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

[Federal Register Volume 64, Number 217 (Wednesday, November 10, 1999)]
[Notices]
[Pages 61261-61270]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29461]

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DEPARTMENT OF COMMERCE

International Trade Administration
[A-821-810]

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

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

EFFECTIVE DATE: November 10, 1999.

FOR FURTHER INFORMATION CONTACT: Michael Panfeld (Severstal), Maria
Dybczak (NISCO), or Rick Johnson, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0172, (202) 482-5811, and (202) 482-3818, respectively.

The Applicable Statute

Unless otherwise indicated, all citations to the 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 the Department's
regulations are to the regulations at 19 CFR part 351 (1998).

Preliminary Determination

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

Case History

This investigation was initiated on June 21, 1999. See Initiation
of

[[Page 61262]]

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). Since the initiation of this investigation 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, 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 requested comments from
petitioners and respondents regarding the criteria to be used for model
matching purposes. Petitioners, as well as numerous respondents in many
of the concurrent cold-rolled steel investigations, submitted comments
on proposed model matching criteria on June 28, 1999.
On June 22, 1999, the Department issued Section A of its
antidumping questionnaire to the Embassy of the Russian Federation, as
well as courtesy copies to the following possible producers/exporters
of subject merchandise: AmurSteel, Novo Lipetsk Met Kombinat
(``NISCO''), Magnitogorskiy Kalibrovochniy Zavod (``MKZ''),
Magnitogorskiy Metallurgischeskiy Kombinat (``MMK''), Mechel,
Novosibprokat Joint-Stock Co., JSC Severstal (``Severstal''), St.
Petersburg Steel Rolling Mill, and Volgograd Steel Works (``Red
October'').
On July 1 and July 13, 1999, we received section A questionnaire
responses from Severstal and NISCO. On July 2, 1999, MMK submitted a
letter stating that it would not participate in the Department's
investigation. On July 9, 1999, the Department issued sections C and D
of its antidumping questionnaire to Severstal and NISCO, the only
Russian producers to fully respond to the Department's section A
questionnaire.
On July 16, 1999, the United States International Trade Commission
(``the ITC'') made a preliminary finding of threat of material injury
with respect to subject imports from the Russian Federation.
On July 20, 1999, the Department received a fax from MKZ stating
that it could not produce and did not export subject merchandise into
the United States. On July 28, 1999, the Department issued a letter to
both NISCO and the Ministry of Trade of the Russian Federation
requesting that the company resubmit its July 1 and 19, 1999 responses
to section A of the questionnaire in a manner conforming to the
Department's instructions. On July 29, 1999, in response to NISCO's
request, we issued an additional letter detailing those interested
parties to whom NISCO was required to serve. On July 30, 1999, in
response to a fax from NISCO, we issued a third letter instructing the
company with regard to re-submission of its response to section A of
the questionnaire. NISCO resubmitted its questionnaire response to
section A on August 9, 1999. In addition, on August 11, 1999, NISCO
submitted a statement requesting and explaining why certain information
should be treated as business proprietary information.
Petitioners filed comments on Severstal's and NISCO's section A
questionnaire responses on August 3, 11, 12 and 19, 1999. We issued
supplemental questionnaires for section A to Severstal and NISCO on
August 24, 1999, and received NISCO's and Severstal's responses on
September 13 and 14, 1999, respectively. On August 30, 1999, we
received responses to sections C and D of the questionnaire from
Severstal and NISCO. Petitioners filed comments on Severstal's and
NISCO's section C and D questionnaire responses on September 7, 8, 9
and 10, 1999. We issued supplemental questionnaires for sections C and
D to NISCO and Severstal on September 10, 1999, and received responses
to these supplemental questionnaires on September 29 and October 4,
1999, respectively. We received additional comments from petitioners on
NISCO's section C and D supplemental questionnaire responses on October
8, 1999. On October 11, 1999, NISCO provided updated usage factor
information. Although this information has been filed too close to the
date of our preliminary determination to allow the Department to fully
review this additional submission, we will consider this information
for the final determination. On October 12, 1999, we issued an
additional supplemental questionnaire to both Severstal and NISCO. On
October 27, 1999, NISCO submitted its response to the additional
supplemental questionnaire. On the same date, petitioners submitted
comments on NISCO's submission. Because NISCO's supplemental was
submitted too close to the date of this determination, the Department
will not consider NISCO's response for the purposes of this preliminary
determination; however, the Department will consider, if appropriate,
NISCO's supplemental submission for the final determination.

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)

[[Page 61263]]

iron predominates, by weight, over each 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 61264]]

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
--------------------------------------------------------------------------------------------------------------------------------------------------------
1
--------------------------------------------------------------------------------------------------------------------------------------------------------
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
Width: 381-1000 mm

Chemical Composition
------------------------------------------------------------------------

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

[[Page 61265]]

Certain tin mill black plate, annealed and temper-rolled,
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 -- (Aiming 0.005)
Max.)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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.

[[Page 61266]]

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.

Period of Investigation

The period of investigation (POI) is October 1, 1998 through March
31, 1999.

Facts Available

Section 776(a) of the Act provides that, if an interested party
withholds information that has been requested by the Department, fails
to provide such information in a timely manner or in the form or manner
requested, significantly impedes a proceeding under the antidumping
statute, or provides information which cannot be verified, the
Department shall use, subject to sections 782(d) and (e) of the Act,
facts otherwise available in reaching the applicable determination.
Pursuant to section 782(e), the Department shall not decline to
consider submitted information if all of the following requirements are
met: (1) The information is submitted by the established deadline; (2)
the information can be verified; (3) the information is not so
incomplete that it cannot serve as a reliable basis for reaching the
applicable determination; (4) the interested party has demonstrated
that it acted to the best of its ability; and (5) the information can
be used without undue difficulties.

NISCO

Section 776(a)(2)(B) of the Act requires the Department to use
facts available when a party does not provide the Department with
information by the established deadline or in the form and manner
requested by the Department.
Based on NISCO's responses to section D of the Department's
questionnaire, we preliminarily find that the company did not report
model-specific usage factors consistent with the Department's matching
criteria in the original and supplemental questionnaires. NISCO
explained that its accounting system, based on product codes, prevented
the company from reporting usage factors on the model-specific basis
required by the Department. Because the evidence on the record
indicates that NISCO's product codes have no relation to separately
identifiable models based on the Department's matching criteria, the
Department would only be able to use NISCO's usage factors if NISCO had
provided sufficient narrative explanation and/or supporting
documentation which would allow the Department to adjust the
information on the record. However, NISCO failed to provide any
narrative explanation or supporting documentation with regard to the
methodology used in calculating the reported usage factors in time for
the Department to evaluate it for this preliminary determination.
Without information regarding how these usage factors were calculated,
we were unable to determine how to adjust the reported usage factors to
conform to the Department's requirement that reported usage factors
which reflect unique, model-specific factors of production. Therefore,
we find that the application of facts available for NISCO's dumping
margin is appropriate for the preliminary determination because: (1)
NISCO has not reported model-specific usage factors, resulting in usage
factors which are not accurate reflections of the models to which they
relate; and (2) NISCO has failed to provide information regarding its
methodology for calculating and reporting its usage factors. As a
result, the normal values calculated from NISCO's reported usage
factors cannot serve as a reliable basis for reaching a preliminary
determination (see section 782(e)(3) of the Act) and we have instead
relied on facts available for the purpose of assigning a dumping margin
to NISCO for this preliminary determination.
Section 776(b) of the Act provides that adverse inferences may be
used when a party has failed to cooperate by not acting to the best of
its ability to comply with the Department's requests for information.
See also Statement of Administrative Action accompanying the URAA, H.R.
Rep. No. 316, Vol. 1, 103d Cong., 2d Sess. 870 (1994)(SAA). As noted in
the case history, NISCO, a pro se company, has submitted responses to
the questionnaires issued by the Department, including detailed
responses to sections A (general information) and C (U.S. sales
information), and has sought guidance from the Department relating to
various aspects of this investigation (see ``Case History'' section
above). In addition, as we noted above, NISCO has stated for the record
that the company's accounting system does not record production
expenses based on the Department's model-match criteria, but instead
records factors of production on a much broader basis. Therefore, we
preliminarily find that the evidence on the record at this time is not
sufficient to conclude that NISCO has failed to cooperate by not acting
to the best of its ability to comply with the Department's requests for
information and, therefore, the application of adverse facts available
under section 776(b) of the Act is not warranted.
Because there is a single calculated margin obtained in the course
of this investigation, that of respondent Severstal, we have assigned
Severstal's rate of 177.59 percent to NISCO as the facts available
rate. We note that, due to our reliance on a calculated margin as facts
available for NISCO, the corroboration requirement of section 776(c) of
the Act does not apply.

Severstal

We have applied partial facts available with regard to two factors
of production reported by Severstal. First, Severstal did not provide a
detailed listing of usage rates for the factor of production it termed
``recycled materials.'' Because Severstal did not report specific usage
factors for each of its ``recycled materials,'' the Department is
unable to value these materials precisely. Thus, for purposes of this
preliminary determination, we have valued recycled materials using
steel scrap because scrap is the most prevalent item in Severstal's
description of recycled materials (see, Exhibit D-16 of Severstal's
October 4, 1999 submission).
Additionally, in its supplemental questionnaire response, Severstal
reported for the first time ``additional materials'' as an input, but
provided no narrative description of this input and did not identify
the unit of measure in which this input has been reported. In order to
value these ``additional

[[Page 61267]]

materials,'' as facts available, we have calculated and applied a
weighted-average of the values for all other reported inputs which are
added at the same stage of the production process as these ``additional
materials,'' and made an adjustment for units of measure. For a further
discussion of issues involving additional and recycled materials, see
the ``Factor Valuations'' section, below.
For these two factors, we have applied a non-adverse assumption in
calculating a surrogate value because, at this time, it does not appear
that Severstal did not act to the best of its ability in responding to
the Department's questionnaire. Severstal has developed an alternative
methodology for reporting its factors of production in this
investigation compared to the methodology it employed in previous
antidumping investigations (i.e, the hot-rolled and cut-to-length plate
investigations). Severstal has described this process as very time-
consuming during meetings with the Department regarding the development
of this new methodology. On this basis, we preliminarily find that the
statutory requirements for making adverse inferences do not apply with
regard to Severstal's reporting of these factors of production.

The Russia-Wide Rate

U.S. import statistics indicate that the total quantity and value
of U.S. imports of certain cold-rolled steel from the Russian
Federation is greater than the total quantity and value of cold-rolled
steel reported by all Russian companies that submitted responses. Given
this discrepancy, we conclude that not all exporters of Russian cold-
rolled steel responded to our questionnaire. Moreover, on July 2, 1999,
MMK submitted a letter to the Department, via fax, stating that it
would not participate in the initiated antidumping investigation on
cold-rolled steel. See Memorandum to the File: Re: Certain Cold-Rolled
Flat-Rolled Carbon Quality Steel Products from the Russian Federation:
Response of Magnitogorsk Iron & Steel Works, dated July 6, 1999.
Accordingly, we are applying a single antidumping duty deposit rate--
the Russia-wide rate--to all exporters in the Russian Federation, other
than those specifically identified below under ``Suspension of
Liquidation,'' based on our presumption that those respondents who
failed to respond constitute a single enterprise and are under common
control by the Russian Federation government. See, e.g., Final
Determination of Sales at Less Than Fair Value: Bicycles from the
People's Republic of China, 61 FR 19026 (April 30, 1996).
This Russia-wide antidumping rate is based on the facts available.
Section 776(a)(2) of the Act provides that ``if an interested party or
any other person (A) withholds information that has been requested by
the administering authority; (B) fails to provide such information by
the deadlines for the submission of the information or in the form and
manner requested, subject to subsections (c)(1) and (e) of section 782;
(C) significantly impedes a proceeding under this title; or (D)
provides such information but the information cannot be verified as
provided in section 782(i), the administering authority shall, subject
to section 782(d), use the facts otherwise available in reaching the
applicable determination under this title.''
In addition, section 776(b) of the Act provides that, if the
Department finds that an interested party ``has failed to cooperate by
not acting to the best of its ability to comply with a request for
information,'' the Department may use information that is adverse to
the interests of that party as the facts otherwise available.
As discussed above, all Russian exporters that do not qualify for a
separate rate are treated as a single enterprise. Because some
exporters of the single enterprise failed to respond to the
Department's requests for information, that single enterprise is
considered to be uncooperative. In such situations, the Department
generally selects as total adverse facts available the higher of the
highest margin from the petition or the highest rate calculated for a
respondent in the proceeding. In the present case, there is only one
calculated margin (which is the highest margin on the record).
Therefore, although the single enterprise is deserving of the
assignment of a margin based on an adverse inference, we find that the
current information on the record does not provide a sufficient basis
for drawing an adverse inference. Accordingly, the Department has based
the Russia-wide rate on the only calculated margin, which is the
highest margin in the investigation, and, therefore, for the
preliminary determination, the Russia-wide rate is 177.59 percent. For
the final determination, the Department will consider all margins on
the record at that time for the purpose of determining the most
appropriate margin based on adverse facts available.

Date of Sale

For its U.S. sales, Severstal reported the date of order
specification as the date of sale. As stated in 19 CFR 351.401(i), the
Department will use as the date of sale that date which best reflects
the date on which the exporter or producer establishes the material
terms of sale. Severstal has stated that the material terms of sale,
namely price, quantity and product characteristics, are set on the
order specification date and, therefore, it is the most appropriate
date to use as date of sale. The Department is using the date of sale
for U.S. sales as reported by respondent Severstal for this preliminary
determination. We intend to examine fully this issue at verification,
and we will incorporate our findings, as appropriate, in our analysis
for the final determination.

Nonmarket Economy Country Status

The Department has treated the Russian Federation as a nonmarket
economy (``NME'') country in all past antidumping investigations and
administrative reviews (see, e.g., Notice of Final Determination of
Sales at Less Than Fair Value: Hot-Rolled Flat-Rolled Carbon-Quality
Steel Products from the Russian Federation, 64 FR 38626 (July 19,
1999); Titanium Sponge from the Russian Federation: Final Results of
Antidumping Administrative Review, 64 FR 1599 (January 11, 1999);
Notice of Final Determination of Sales at Less Than Fair Value: Certain
Cut-to-Length Carbon Steel Plate from the Russian Federation, 62 FR
61787 (November 19, 1997); Notice of Final Determination of Sale at
Less Than Fair Value: Pure Magnesium and Alloy Magnesium from the
Russian Federation, 60 FR 16440 (March 30, 1995). A designation as an
NME remains in effect until it is revoked by the Department (see
section 771(18)(C) of the Act). The Department is continuing to treat
the Russian Federation as an NME for this preliminary determination.
The respondents have not sought revocation of NME status in this
investigation.

Surrogate Country

When the Department is investigating imports from an NME, section
773(c) of the Act provides for the Department to base normal value
(``NV'') on the NME producers' factors of production, valued in a
surrogate market economy country or countries considered appropriate by
the Department. In accordance with section 773(c)(4), the Department,
in valuing the factors of production, utilizes, to the extent possible,
the prices or costs of factors of production in one or more market
economy countries that are comparable in terms of economic development
to the NME country and are significant producers of comparable
merchandise. The sources

[[Page 61268]]

of individual factor values are discussed in the NV section below.
The Department has determined that Tunisia, Colombia, Poland,
Venezuela, South Africa, and Turkey are countries comparable to the
Russian Federation in terms of overall economic development. See
Memorandum to Rick Johnson, Program Manager, from Jeff May, Director,
Office of Policy; Re: Certain Cold-Rolled Flat-Rolled Carbon-Quality
Steel Products from the Russian Federation: Nonmarket Economy Status
and Surrogate Country Selection (``Policy Memorandum''), dated June 24,
1999. Additionally, the Department has determined that Turkey, Poland,
South Africa, and Venezuela are significant producers of cold-rolled
steel products. See Memorandum to the File; Re: Selection of a
Surrogate Country, dated November 1, 1999. As noted in the Policy
Memorandum, in the event that more than one country satisfies both
statutory requirements, the Department should narrow the field to a
single country on the basis of data availability and quality. See also
Notice of Final Determination of Sales at Less Than Fair Value: Hot-
Rolled Flat-Rolled Carbon-Quality Steel Products from the Russian
Federation, 64 FR 38626 (July 19, 1999); Notice of Final Determination
of Sales at Less Than Fair Value: Certain Cased Pencils from the
Peoples Republic of China, 59 FR 55625 (November 8, 1994). Based on the
information on the record, we have preliminarily determined that Turkey
is an appropriate surrogate because it is at a comparable level of
economic development and is a significant producer of comparable
merchandise. Furthermore, there is a wide array of publicly available
information for Turkey. Accordingly, we have calculated NV using
Turkish prices to value Severstal's factors of production, when
available and appropriate. We have obtained and relied upon public
information wherever possible. For a further discussion of the
Department's selection of Turkey as the primary surrogate, see
Memorandum to the File; Re: Selection of a Surrogate Country, dated
November 1, 1999.
In accordance with section 351.301(c)(3)(i) of the Department's
regulations, for a final determination in an antidumping investigation,
interested parties may submit publicly available information to value
factors of production within 40 days after the date of publication of
this preliminary determination.

Separate Rates

The Department presumes that a single dumping margin is appropriate
for all exporters in an NME country. See Final Determination of Sales
at Less Than Fair Value: Silicon Carbide from the People's Republic of
China, 59 FR 22585 (May 2, 1994) (``Silicon Carbide''). The Department
may, however, consider requests for a separate rate from individual
exporters. Severstal and NISCO have each requested a separate, company-
specific rate. To establish whether a firm is sufficiently independent
from government control to be entitled to a separate rate, the
Department analyzes each exporting entity under a test arising out of
the Final Determination of Sales at Less Than Fair Value: Sparklers
from the People's Republic of China, 56 FR 20588 (May 6, 1991) and
amplified in Silicon Carbide. Under the separate rates criteria, the
Department assigns separate rates in NME cases only if a respondent can
demonstrate the absence of both de jure and de facto government control
over export activities. For a complete analysis of separate rates, see
Memorandum to Edward C. Yang, Re: Separate Rates for Exporters that
Submitted Questionnaire Responses (``Separate Rates Memo''), dated
November 1, 1999.

1. Absence of De Jure Control

The Department considers the following de jure criteria in
determining whether an individual company may be granted a separate
rate: (1) An absence of restrictive stipulations associated with an
individual exporter's business and export licenses; (2) any legislative
enactments decentralizing control of companies; and (3) any other
formal measures by the government decentralizing control of companies.
Respondents have placed on the administrative record a number of
documents to demonstrate absence of de jure control. These documents
include laws, regulations, and provisions enacted by the central
government of the Russian Federation, describing the deregulation of
Russian enterprises as well as the deregulation of the Russian export
trade, except for a list of products that may be subject to central
government export constraints. Respondents claim that the subject
merchandise is not on this list. This information provides a sufficient
basis for a preliminary finding that there is an absence of de jure
government control. See Separate Rates Memo, dated November 1, 1999.

2. Absence of De Facto Control

The Department typically considers four factors in evaluating
whether each respondent is subject to de facto governmental control of
its export functions: (1) whether the export prices (``EP'') are set by
or subject to the approval of a governmental authority; (2) whether the
respondent has authority to negotiate and sign contracts and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding disposition of profits or
financing of losses. Both responding companies have reported that they
are publicly-owned. In no case is there aggregate government ownership
greater than 25 percent.
Severstal has stated that its prices are negotiated with its
customers and are not subject to review by or guidance from any
government organization. Additionally, Severstal notes that the
independence of private parties, such as Severstal, to negotiate prices
is guaranteed by Russian legislation (Article 424 of the Civil Code).
There is no evidence on the record to suggest that there is any
government involvement in the determination of sales prices.
Severstal stated that it can retain all export earnings, and that
there are no restrictions on the use of the company's export revenues,
other than certain currency controls (see below), and that Severstal
alone decides how profits will be utilized. Severstal further reports
that its Board of Directors is elected by the general meeting of the
shareholders, which also elects the general director of the company.
Severstal also stated that it does not need to notify the government of
the identity of its management.
Regarding currency controls, Severstal and NISCO explained that
under Russian law, prior to March 15, 1999, they were required to
convert fifty percent of their foreign currency earnings into rubles at
the market-denominated exchange rate in effect on the date of exchange.
See Instruction of the Russian Federation Central Bank No. 7, ``On the
Procedure for the Mandatory Sale by Enterprises, Conglomerates, and
Organizations of a Portion of the Foreign Exchange Revenue through
Authorized Banks and on the Execution of Transactions in the Russian
Federation Exchange Market'' (June 29, 1992); Partial Alteration of
Procedure Governing Mandatory Sale of Part of ``Foreign Currency
Earning and Collection of Export Duties, Russian Federation President's
Edict No. 629 (June 14, 1992); and Law of the Russian Federation No.
3615-1 of October 9, 1992 on Hard Currency Regulation and Control,
included in Exhibit A-11 of

[[Page 61269]]

Severstal's July 20, 1999 section A response. In addition, we note that
Russian Federation Presidential Decree dated March 15, 1999 ``On
Changes in Mandatory Sale of Part of Currency Revenue'' modified the
conversion percentage to 75 percent. There is no evidence of any
further restrictions on the use of Severstal's and/or NISCO's proceeds.
With regard to NISCO, there is no evidence on the record to suggest
that there is any government involvement in the determination of sales
prices. As the information concerning NISCO's sales process is
proprietary, for a further discussion of this issue, see Separate Rates
Memo (proprietary version).
In addition, NISCO stated that there are no restrictions on the
usage of export revenues, except for the certain currency controls
discussed above. Also, NISCO explained that it calculates its export
profits as the difference between the sales proceeds and the total
costs of the products sold. NISCO also stated that its Board of
Directors decides how the profits will be used and that there is no
government involvement in these decisions. NISCO further reports that
the chairman of the board of directors is elected from among the board
by vote of the board members, the members of the Board are elected by
vote at the annual shareholders' meeting for a term of one year, and
the director general is also elected by vote at the annual
shareholders' meeting for a term of one year. NISCO stated that it is
not required to notify any governmental authorities of the identity of
its managers.
In addition, respondents' questionnaire responses indicate that
company-specific pricing during the POI does not suggest coordination
among exporters. This information supports a preliminary finding that
there is an absence of de facto governmental control of the export
functions of these companies. Consequently, we preliminarily determine
that Severstal and NISCO meet the criteria for application of separate
rates. For a further discussion of this issue, see Separate Rates Memo.

Fair Value Comparisons

To determine whether cold-rolled steel products from the Russian
Federation sold to the United States by Severstal 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.

Export Price

For Severstal, we preliminarily calculated EP in accordance with
section 772(a) of the Act, because the subject merchandise was sold to
the first unaffiliated purchaser in the United States prior to
importation and constructed export price (``CEP'') methodology was not
otherwise indicated. We will examine the EP/CEP designation further at
verification. In accordance with section 777A(d)(1)(A)(i) of the Act,
we compared POI-wide weighted-average EPs to the NV based on factors of
production.
We calculated EP based on either packed FOB prices or FCA prices to
unaffiliated trading companies. When appropriate, for FOB sales, we
made deductions from the starting price for brokerage and handling.
These services were assigned a surrogate value based on public
information from Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel
Products from Turkey. See Memorandum to Edward C. Yang; Re: Factor
Valuation for Severstal (``Factor Valuation Memo''), dated November 1,
1999. We also made adjustments for foreign inland freight, which was
valued using Polish transportation rates, since public information on
Turkish values was unavailable. Because the mode of transportation
reported by Severstal is proprietary, for a further discussion, see
Factor Valuation Memo (proprietary version).

Normal Value

Section 773(c)(1) of the Act provides that the Department shall
determine the NV using a factors-of-production methodology if: (1) The
merchandise is exported from an NME country; and (2) the information
does not permit the calculation of NV using home-market prices, third-
country prices, or constructed value under section 773(a) of the Act.
Factors of production include: (1) Hours of labor required; (2)
quantities of raw materials employed; (3) amounts of energy and other
utilities consumed; and (4) representative capital costs, including
depreciation. We calculated NV based on factors of production reported
by Severstal with the following exceptions: industrial steam, water,
and packing materials. For further discussions of these exceptions, see
Factor Valuation Memo, and Memorandum to the File, Re: Margin
Calculation for the Preliminary Determination for JSC Severstal
(Severstal), dated November 1, 1999. We valued all the input factors
using publicly available published information as discussed in the
``Surrogate Country'' and ``Factor Valuations'' sections of this
notice.

Factor Valuations

The selection of the surrogate values was based on the quality and
contemporaneity of the data. When possible, we valued material inputs
on the basis of tax-exclusive domestic prices in the surrogate country.
When we were not able to rely on domestic prices, we used import prices
to value factors. As appropriate, we adjusted import prices to make
them delivered prices. For those values not contemporaneous with the
POI, we adjusted for inflation using producer or wholesale price
indices, as appropriate, published in the International Monetary Fund's
International Financial Statistics.
To value coal, iron ore concentrate, iron ore pellets, limestone,
ferroalloys, scrap, kerosene, coal tar, and solid by-products, we used
public information published by the United Nations Trade Commodity
Statistics for 1997 (``UNTCS''). Severstal did not provide information
regarding iron content for iron ore pellets. For the preliminary
determination, we have valued iron ore pellets based on the 1997 UNTCS
Turkish value for HTS 260112, which represents iron ore pellets with a
low iron content. We have based our valuation on evidence from The
Making, Shaping and Treating of Steel that indicates low iron content
iron ore pellets are used in blast furnaces. See Factor Valuation Memo,
Attachment 5. We have inquired as to iron content in a supplemental
questionnaire and intend to fully review actual iron ore content at
verification. Charge by-products were valued at the same rate as coal.
We have valued certain of the energy inputs and non-solid by-
products at their natural gas equivalents (natural gas, oxygen, blast
furnace gas, coke oven gas, nitrogen, residual fuel oil, argon, and
benzoil) based on public information from ``Energy Prices and Taxes:
1st Quarter 1999,'' published by the International Energy Agency, OECD.
For electricity, we based the dollar per kWh on the average of 4th
quarter 1998 and 1st quarter 1999 prices. These prices were taken from
Table 20 (``Electricity Prices for Households in U.S. Dollars/kWh'') of
Energy Prices and Taxes: First Quarter 1999, International Energy
Agency, OECD.
Because we were unable to obtain publicly available Turkish values,
we used Polish transport information to value transport for raw
materials. Since the mode of transportation reported by Severstal is
proprietary, for a full discussion of this issue, see Factor Valuation
Memo (proprietary version).

[[Page 61270]]

For labor, we used the Russian regression-based wage rate at Import
Administration's homepage, Import Library, Expected Wages of Selected
NME Countries, revised in May 1999. Because of the variability of wage
rates in countries with similar per capita gross domestic products,
section 351.408(c)(3) of the Department's regulations provides for the
use of a regression-based wage rate. The source of this wage rate data
on the Import Administration's homepage is found in the 1998 Year Book
of Labour Statistics, International Labour Office (``ILO''), (Geneva:
1998), Chapter 5: Wages in Manufacturing.
To value overhead, general expenses and profit, we used public
information reported in the 1998 financial statements of Eregli Demir
ve Celik Fabrikalari TAS (``Erdemir''), a Turkish steel producer. We
adjusted Erdemir's depreciation expenses for the effects of high
inflation, and we reduced its financial expenses for estimated short-
term interest income and we excluded estimated long-term foreign
exchange losses. We carried through the financial expense changes to
the profit rate calculations. For a further discussion of this issue,
see Attachment 5 of the Factor Valuation Memo.
As stated above in the ``Facts Available'' section of this notice,
there were several factors of production for which we did not have
complete information. With regard to ``recycled materials,'' we have
valued recycled materials using steel scrap because in Severstal's
description of recycled materials, scrap is the most prevalent item
(see, Exhibit D-16 of Severstal's October, 4, 1999 submission). For
``additional materials,'' we have calculated and applied a weighted-
average of the values for all other reported inputs which are added at
the same stage of the production process as these ``additional
materials.'' In addition, we made the assumption, based on information
contained in Exhibit D-4 of Severstal's October 4, 1999 supplemental
response, that this factor was reported on a unit of measure other than
a metric ton basis. We have made an adjustment to the unit of measure
accordingly. See Analysis Memo: Severstal, dated November 1, 1999.
Finally, Severstal reported a large number of different types of
packing materials. However, because the record does not contain
surrogate values for these materials, and because we have not been able
to otherwise locate surrogate values for these materials, we have used
the ratio of packing materials to total cost of production based on
public information from Certain Cold-Rolled Flat-Rolled Carbon-Quality
Steel Products From Turkey. For a further discussion, see Factor
Valuation Memo (proprietary version).

Verification

As provided in 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) of the Act, we are directing the
U.S. Customs Service to suspend liquidation of all imports of subject
merchandise that are entered, or withdrawn from warehouse, for
consumption on or after the date of publication of this notice in the
Federal Register. We will instruct the 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 below. These
suspension-of-liquidation instructions will remain in effect until
further notice. The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
Weighted-
average
Exporter/manufacturer margin
(percent)
------------------------------------------------------------------------
JSC Severstal.............................................. 177.59
Novolipetsk Iron & Steel Corp.............................. 177.59
Russia-Wide................................................ 177.59
------------------------------------------------------------------------

International Trade Commission Notification

In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination or 45 days after our final determination
whether imports of cold-rolled steel from the Russian Federation are
materially injuring, or threatening material injury to, the U.S.
industry.

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, N.W., Washington, D.C.
20230, at a time and location to be determined. Parties should confirm
by telephone the date, time, and location of the hearing two days
before the scheduled date.
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).
If this investigation proceeds normally, we will make our final
determination no later than January 15, 2000.
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. 99-29461 Filed 11-9-99; 8:45 am]
BILLING CODE 3510-DS-P