[Federal Register Volume 65, Number 5 (Friday, January 7, 2000)]
[Notices]
[Pages 1127-1136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-301]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-489-808]
Notice of Preliminary Determinations of Sales at Less Than Fair
Value; Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products
from Turkey
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: January 7, 2000.
FOR FURTHER INFORMATION CONTACT: Charles Ranado, Stephanie Arthur or
Robert James at (202) 482-3518, (202) 482-6312 or (202) 482-5222,
respectively; Antidumping and Countervailing Duty Enforcement Group
III, Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW,
Washington, DC 20230.
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Tariff 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 1, 1999).
Preliminary Determinations
We preliminarily determine that cold-rolled flat-rolled carbon-
quality steel products (cold-rolled steel products) from Turkey 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 Tariff Act. The
estimated margins of sales at LTFV are shown in the ``Suspension of
Liquidation'' section of this notice.
Case History
On June 21, 1999, the Department initiated antidumping duty
investigations of imports of cold-rolled steel products from Argentina,
Brazil, the People's Republic of China, Indonesia, Japan, the Russian
Federation, Slovakia, South Africa, Taiwan, Thailand, Turkey, and
Venezuela. 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, 164 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
1, 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.
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\1\ Petitioners in this case are Bethlehem Steel Corporation,
Gulf States Steel, Inc., Ispat Inland Inc., LTV Steel Company Inc.,
National Steel Company, Steel Dynamics, Inc., U.S. Steel Group, a
unit of USX Corporation, Weirton Steel Corporation, United
Steelworkers of America, and Independent Steelworkers Union
(collectively, petitioners).
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On June 22, 1999, the Department requested information from the
U.S. Embassy in Turkey to identify producers/exporters of the subject
merchandise. On June 21, 1999, the Department also requested comments
from petitioners, two potential respondents, Eregli Demir ve Celik
Fabrikalari T.A.S''. (Erdemir) and Borcelik Celik Sanayii ve Ticaret
A.S. (Borcelik), and the Embassy of Turkey in Washington regarding the
criteria to be used for model matching purposes. On July 26, 1999,
Borcelik submitted comments on our proposed model-matching criteria.
Petitioners filed additional model match comments on June 28, 1999.
On July 16, 1999, the United States International Trade Commission
(the Commission) notified the Department of its affirmative preliminary
injury determination in this case.
The Department issued antidumping questionnaires to Erdemir and
Borcelik on June 22, 1999 (Section A) and July 9, 1999 (Sections B
through D). The questionnaire is divided into five parts; we requested
that Erdemir and Borcelik respond to Section A (general information,
corporate structure, sales practices, and merchandise produced),
Section B (home market or third-country sales), Section C (U.S. sales),
and Section D (cost of production/constructed value for high inflation
economies). In addition, we required respondents to respond to
additional questions based on our determination that the Turkish
economy underwent high inflation during the POI.2
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\2\ Based on our analysis of Turkey's consumer price and
wholesale price indices, we determined that the Turkish economy was
experiencing high inflation during the POI (see 1999 issues of the
International Monetary Fund's International Financial Statistics).
``High inflation'' is a term used to refer to a high rate of
increase in price levels. Investigations and reviews involving
exports from countries with highly inflationary economies require
special methodologies for comparing prices and calculating CV and
COP. Generally, a 25 percent inflation rate has been used as a guide
for assessing the impact of inflation on AD investigations and
reviews (see Policy Bulletin No. 94.5, entitled ``Differences in
Merchandise Calculations in Hyperinflationary Economies,'' dated
March 25, 1994).
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[[Page 1128]]
Respondents submitted their initial responses to Section A of the
Department's questionnaire on July 13, 1999. We received Borcelik's
sections B through D response on August 31, 1999. Erdemir submitted
it's response to sections B through D on September 3, 1999. Petitioners
filed comments on respondents' questionnaire responses on July 27,
1999, and September 13, 1999. We issued the following supplemental
questionnaires to respondents: (i) Section A on August 24, 1999, and
(ii) sections B through D on September 16, 1999. Erdemir and Borcelik
responded to our section A supplemental questionnaire on September 10,
1999. Erdemir responded to sections B through D of our supplemental
questionnaire on October 7, 1999; Borcelik responded on October 14,
1999. Petitioners filed additional comments on respondents'
supplemental responses between September 21 and October 22, 1999. On
October 19, 1999, we issued a second supplemental to Erdemir providing
it with an additional opportunity to submit appropriate information on
product-specific costs. Erdemir responded to this request on November
3, 1999. Further, we issued a second supplemental to Borcelik on
October 26, 1999, to which it responded on November 5, 1999.
Period of Investigation
The period of investigation (POI) is April 1, 1998 through March
31, 1999.
Scope of Investigations
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 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%
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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
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Element........................... C Si Mn P S
[[Page 1129]]
Weight %.......................... 0.90-1.05 0.15-0.35 0.30-0.50 0.03 0.006
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Mechanical Properties
------------------------------------------------------------------------
------------------------------------------------------------------------
Tensile Strength....................... 162 Kgf/mm \2\
Hardness............................... 475 Vickers
hardness number
------------------------------------------------------------------------
Physical Properties
------------------------------------------------------------------------
------------------------------------------------------------------------
Flatness............................... < 0.2% of nominal strip width
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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
------------------------------------------------------------------------
Roughness
Thickness (mm) (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
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
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Element........................ C Mn P S Al Fe
Weight %....................... 0.07 0.2-0.5 0.05 0.05 0.07 Balance
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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
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Element........................ C Mn P S Si Al
Min. Weight %.................. 0.65
Max. Weight %.................. 0.004 0.4 0.09 0.009 0.4
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[[Page 1130]]
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)................. 3.8 Watts/Pound max.
NAAS
Permeability (1.5T/60 Hz).............. 1700 gauss/oersted typical
NAAS 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
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Element............................. C....................... N...................... Al
Weight %............................ < 0.01.................. 0.004 to 0.007......... < 0.007
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Certain tin mill black plate, annealed and temper-rolled,
continuously cast, which meets the following characteristics:
Chemical Composition
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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 0.03 0.08 0.02 0.08 .......... 0.008
(Aiming (Aiming (Aiming
0.018 0.05) 0.005)
Max.)
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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
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Roughness, RA Microinches (Micrometers)
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Aim Min. Max.
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Extra Bright........................ 5 (0.1) 0 (0) 7 (0.2)
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Certain full hard tin mill black plate, continuously cast,
which meets the following characteristics:
Chemical Composition
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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 0.03 0.08 0.02 0.08 0.008 (Aiming
(Aiming (Aiming 0.005).
0.018 0.05)
Max.)
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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.
[[Page 1131]]
Surface Finish
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Roughness, RA Microinches (Micrometers)
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Aim Min. Max.
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Stone Finish........................ 16 (0.4) 8 (0.2) 24 (0.6)
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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
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----------------------------------------------------------------------------------------------------------------
Element............................. C O B
Max. Weight %....................... 0.004
Min. Weight %....................... 0.010 0.012
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Certain band saw steel, which meets the following
characteristics:
Thickness: 1.31 mm
Width: 80 mm
Chemical Composition
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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
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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.
Facts Available
Section 776(a)(2) of the Tariff 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 and
the Commission shall, subject to section 782(d), use the facts
otherwise available in reaching the applicable determination under this
title.''
In this case Erdemir failed, in its original and supplemental
responses, to provide unique product costs which account for the
differences in physical characteristics as defined by the Department.
Erdemir assigned the same costs to all products within a cold-rolled
family group. That methodology does not provide product-specific cost
of production (COP) information, nor does it provide the Department
with information to calculate a difference in merchandise (DIFMER)
adjustment to account for differences in physical characteristics when
comparing sales of similar merchandise. Additionally, Erdemir created
these cold-rolled families using its matching characteristics that,
while based on the company's records, do not correspond to the
characteristics identified by the Department. See ``Product
Comparison'' section below. Without accurate data for these items, we
cannot perform a reliable cost test; we cannot make appropriate
selections of sales for price-to-price comparisons; nor can we
determine accurate constructed values for use as normal value. We
issued Erdemir several supplemental questionnaires requesting that it
correct these errors, but it failed to do so. Accordingly, Erdemir's
failure to provide the requested data renders its response unusable for
this preliminary determination. Therefore, in light of Erdemir's
failure to provide requested information necessary to calculate dumping
margins in this case, in accordance with section 776(a) of the Tariff
Act, we are forced to resort to total facts available for this
preliminary determination.
Section 776(b) of the Tariff 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
the party as facts otherwise available. Adverse inferences are
appropriate ``to ensure that the party does not obtain a more favorable
result by failing to cooperate than if it had cooperated fully.'' See
Statement of Administrative Action (SAA) accompanying the URAA, H.R.
Doc. No. 316, 103d Cong., 2d Session at 870 (1994). Furthermore, ``an
affirmative finding of bad faith on the part of the
[[Page 1132]]
respondent is not required before the Department may make an adverse
inference.'' Antidumping Duties; Countervailing Duties; Final Rule, 62
FR 27296, 27340 (May 19, 1997), (Final Rule).
In this case we have determined that Erdemir has not acted to the
best of its ability in responding to the Department's request for
product-specific cost information that takes into account physical
differences in the products. In our supplemental questionnaires we
repeatedly instructed Erdemir to rely not only on its existing
financial and cost accounting records, but on any other information
which would allow it to calculate a reasonable allocation of its costs.
It is standard procedure for the Department to request product-specific
cost data and we routinely receive such information from respondents,
as we did from the other respondent, Borcelik, in this case. In the
Department's experience companies have information which allows them to
calculate a reasonable estimate of the costs to make a given product.
Even if a company does not identify product-specific costs in its
normal financial and cost accounting records, it should be able to make
some reasonable allocation of its costs among distinct products through
the use of other product and production information.
Under section 782(c) of the Tariff Act, a respondent has a
responsibility not only to notify the Department if it is unable to
provide requested information, but also to provide a ``full explanation
and suggested alternative forms.'' In response to our requests for
product-specific cost data Erdemir only repeated the statement that its
accounting records did not permit it to report product-specific costs.
Cooperation in an antidumping investigation requires more than a simple
statement that a respondent cannot provide certain information from its
previously prepared accounting records; the burden to establish that it
has acted to the best of its ability rests upon the respondent. As
noted above, to meet that burden a respondent must explain what steps
it has taken to comply with the information request, and propose
alternative methodologies for getting the necessary information. See
also Allied-Signal Aerospace v. United States, 996 F.2d 1185, 1192
(Fed. Cir. 1993). Erdemir has failed to do either. Moreover, we find
that Erdemir's claim that it is unable to provide this information is
inconsistent with Erdemir's other statements and information on the
record of this case. For example, Erdemir closely tracks actual
production for yield purposes and for purposes of identifying
particular coils for warehouse identification as is evidenced by the
yield information maintained by the company and the identifying tags
affixed to each finished product. Erdemir also has budgets,
manufacturing standards, and engineering standards for specific
products listed in the company's product brochure. Erdemir must develop
production plans involving the identification of certain products as
produced from certain raw materials on certain production lines using
specific engineering standards. Further, to maintain ISO certification,
Erdemir must maintain contemporaneous records of production and
processes to insure the quality of the products it produces. While
Erdemir's financial accounting records do not contain the information
requested on separate product costs, the company could have developed a
reasonable allocation methodology to allocate costs to products on a
control number (CONNUM)-specific basis using the company's normal cost
accounting records as a starting point to calculate CONNUM-specific
costs. The Department repeatedly requested that Erdemir look beyond its
financial and cost accounting records and select from a variety of
available data using, for example, engineering standards, direct labor
hours, machine hours, budgeting systems, production line reports,
production time, or other production records for allocating costs to
products on a CONNUM-specific basis.
Given Erdemir's repeated failure throughout the investigation to
provide product-specific cost data that takes into account physical
differences in the product or to provide any meaningful explanation of
why such data could not be provided, we preliminarily determine that
Erdemir did not cooperate to the best of its ability. Accordingly, we
have used an adverse inference in selecting the facts available to
determine Erdemir's margin.
In addition, Borcelik failed, in its original and supplemental
response, to provide COP data for major inputs purchased from an
affiliated party. Therefore, in accordance with section 776(a) of the
Tariff Act, we have preliminarily determined to use facts available in
computing the affiliate's COP for purposes of the major input rule. As
facts available we used the cost of major inputs from the petition. See
``Cost of Production'' section below.
Section 776(c) of the Tariff Act provides that where the Department
selects from among the facts otherwise available and relies on
``secondary information,'' such as the petition, the Department shall,
to the extent practicable, corroborate that information from
independent sources reasonably at the Department's disposal. The SAA
states that ``corroborate'' means to determine that the information
used has probative value. See SAA at 870. In this proceeding we
considered the petition as the most appropriate information on the
record to form the basis for a dumping calculation for Erdemir and for
the cost of a major input for Borcelik. In accordance with section
776(c) of the Tariff Act, we sought to corroborate the data contained
in the petition. We reviewed the adequacy and accuracy of the
information in the petition during our pre-initiation analysis of the
petition, to the extent appropriate information was available for this
purpose (e.g., import statistics, cost data and foreign market research
reports). See Initiation Notice at 34202. For purposes of the
preliminary determination, we attempted to further corroborate the
information in the petition. We re-examined the export price, home
market price, and CV data provided for the margin calculations in the
petition in light of information obtained during the investigation and,
to the extent practicable, found that it has probative value (see
Memorandum to the File, ``Facts Available Rate and Corroboration of
Secondary Information,'' dated December 8, 1999). As adverse facts
available, we have preliminarily assigned Erdemir the rate of 32.91
percent, the highest calculated margin in the petition. This rate is
subject to further comments by interested parties and therefore may be
changed for the final determination.
Product Comparisons
We relied on fourteen criteria to match U.S. sales of subject
merchandise to comparison-market sales of the foreign like product:
hardening and tempering, paint, carbon level, quality, yield strength,
minimum thickness, thickness tolerance, width, edge finish, form,
temper rolling, leveling, annealing, and surface finish. A detailed
description of the matching criteria, as well as our matching
methodology is contained in the Borcelik's Preliminary Determination
Memorandum, dated December 8, 1999 (Preliminary Determination
Memorandum).
Fair Value Comparisons
To determine whether sales of cold-rolled steel products from
Turkey were made in the United States at less than fair value, we
compared the export price (EP) to the normal value (NV), as described
in the ``Export Price'' and
[[Page 1133]]
``Normal Value'' sections of this notice. In accordance with section
777A(d)(1)(A)(i) of the Tariff Act, we calculated weighted-average EPs
for comparison to weighted-average NVs. Turkey experienced significant
inflation during the POI, as measured by the Wholesale Price Index,
published in the June 1999 issue of International Financial Statistics.
Accordingly, to avoid distortions caused by the effects of significant
inflation on prices, we calculated EPs and NVs on a monthly average
basis, rather than on a POI average basis. We then compared weighted-
average EPs to weighted-average NVs for the same month.
Transactions Investigated
For home market and U.S. sales Borcelik reported the date of
invoice as the date of sale, in keeping with the Department's stated
preference for using the invoice date as the date of sale. Borcelik
stated that the invoice date best reflects the date on which the
material terms of sale are established and that price or quantity or
both can change between contract date and invoice date. However,
petitioners have alleged that the sales documentation indicates that
the contract date appears to be the date when the material terms of
sale are set for all of Borcelik's sales of cold-rolled steel. Given
the nature of marketing these types of made-to-order products, the
Department requested that Borcelik provide additional information
concerning the nature and frequency of price and quantity changes
occurring between the contract date and date of invoice. We also
requested that Borcelik report change order date for all home market
and United States sales and to ensure that all sales with change order
or invoice dates within the POI are reported.
Borcelik claims that invoice date is the appropriate date of sale
for both U.S. and home market sales, stating that this is the first
date in which terms of sale are set. However, petitioners believe that
all terms of sale are determined at the time of the sales contract and
therefore claim that this date is the more appropriate date to use.
Because there is evidence on the record suggesting that the terms of
sale may change between the contract date and the issuance of the
invoice, the Department is preliminarily using the invoice date as the
date of sale for both home market and U.S. sales. We intend to fully
examine this issue at verification, and we will incorporate our
findings, as appropriate, in our analysis for the final determination.
If we determine that change order is the appropriate date of sale, we
may resort to facts available for the final determination to the extent
that this information has not been reported.
Level of Trade
In accordance with section 773(a)(1)(B)(i) of the Tariff Act, to
the extent practicable, we determine NV based on sales in the
comparison market at the same level of trade (LOT) as the EP or CEP
transaction. The NV LOT is that of the starting price sales in the
comparison market or, when NV is based on CV, that of the sales from
which we derive selling, general and administrative (SG&A) expenses and
profit. For EP the US LOT is also the level of the starting price sale,
which is usually from the exporter to the 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
sales, 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 Tariff Act. Finally, for CEP sales, if the NV level
is more remote from the factory than the CEP level and there is no
basis for determining whether the differences in the levels between NV
and CEP affects price comparability, we adjust NV under section
773(A)(7)(B) of the Tariff Act (the CEP offset provision). (See, e.g.,
Certain Carbon Steel Plate from South Africa, Final Determination of
Sales at Less Than Fair Value, 62 FR 61731 (November 19, 1997)).
In implementing these principles in this investigation, we obtained
information from Borcelik about the marketing stages involved in its
reported U.S. and home market sales, including a description of the
selling activities performed by Borcelik for each channel of
distribution. In identifying levels of trade for EP and home market
sales we considered the selling functions reflected in the starting
price before any adjustments.
Borcelik reported numerous customer categories and one channel of
distribution (i.e., sales to affiliated and unaffiliated end-users) for
its home market sales. Borcelik only reported EP sales in the U.S.
market. For EP sales Borcelik reported one customer category (i.e.,
trading companies) and one channel of distribution (i.e., sales through
Boruan Dagitim to trading companies). Borcelik did not claim that its
sales to home market customers are at a different LOT than its sales to
U.S. customers and, therefore, did not claim a LOT adjustment.
In determining whether separate LOTs actually existed in the home
market, we examined whether Borcelik's sales involved different
marketing stages (or their equivalent) based on the channel of
distribution, customer categories and selling functions. As noted
above, Borcelik's sales to its unaffiliated and affiliated customers
were made through the same channel of distribution, albeit to different
categories of customer, with no differences in selling functions. Based
on these factors we find that Borcelik's home market sales comprise a
single LOT.
In comparing the LOT of Borcelik's EP sales with that of its home
market sales, we noted that its EP sales generally involved the same
selling functions associated with the home market LOT described above.
Therefore, based upon this information, we have preliminarily
determined that the LOT for all EP sales is the same as that in the
home market. Accordingly, because we find the U.S. sales and home
market sales to be at the same LOT, no LOT adjustment under section
773(a)(7)(A) of the Tariff Act is warranted.
For a detailed level-of-trade analysis with respect to Borcelik,
see Preliminary Determination Analysis Memorandum, dated December 8,
1999.
Export Price
We calculated EP in accordance with section 772(a) of the Tariff
Act because the merchandise was sold to the first unaffiliated
purchaser in the United States prior to importation and CEP methodology
was not otherwise warranted, based on the facts of record. We based EP
on the packed FOB (or for certain Borcelik sales, C&F) price to
unaffiliated purchasers in the United States. We made deductions for
movement expenses in accordance with section 772(c)(2)(A) of the Tariff
Act; these included, where appropriate, foreign inland freight, foreign
brokerage and handling charges, and international freight. We also
increased the starting price by the amount of duty drawback because the
company satisfied our two-pronged test.3
---------------------------------------------------------------------------
\3\ Section 772(c)(1)(B) of the Tariff Act provides for an
upward adjustment to U.S. price for duty drawback on import duties
which have been rebated (or which have not been collected) by reason
of the exportation of the subject merchandise to the United States.
The Department applies a two-pronged test to determine whether a
respondent has fulfilled the statutory requirements for a duty
drawback adjustment. See Steel Wire Rope from the Republic of Korea;
Final Results of Antidumping Duty Administrative Review, 61 FR
55965, 55968 (October 30, 1996). In accordance with this test, the
Department grants a duty drawback adjustment if it finds that: (1)
import duties and rebates are directly linked to and are dependent
upon one another, and (2) the company claiming the adjustment can
demonstrate that there are sufficient imports of raw materials to
account for the duty drawback received on exports of the
manufactured products.
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[[Page 1134]]
Affiliated-Party Transactions and Arm's-Length Test
Borcelik's 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 starting
prices of sales to affiliated and unaffiliated customers net of all
movement charges, direct selling expenses, and packing. Where, for the
tested models of subject merchandise, prices to the affiliated party
were on average 99.5 percent or more of the price to the unaffiliated
parties, we determined that sales made to the affiliated party were at
arm's length. See 19 CFR 351.403(c). In instances where no price ratio
could be calculated 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 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) and Notice of Preliminary Determination of Sales at Less Than
Fair Value and Postponement of Final Determination; Emulsion Styrene-
Butadiene Rubber from Brazil, 63 FR 59509, 59512 (November 4,
1998).4 Where the exclusion of such sales eliminated all
sales of the most appropriate comparison product, we made a comparison
to the next most similar model.
---------------------------------------------------------------------------
\4\ As stated in 19 CFR 351.403(d), ``the Secretary normally
will not calculate normal value based on a sale by an affiliated
party if sales of the foreign like product by an exporter or
producer to affiliated parties account for less than five percent of
the total value.'' We examined Borcelik's affiliated party sales and
determined that they represented less than five percent of its total
sales of subject merchandise. Therefore, we did not request that
Borcelik report sales by its affiliates (i.e., downstream sales).
See Borcelik Analysis Memorandum, December 8, 1999.
---------------------------------------------------------------------------
Normal Value
Home Market Viability
In order to determine whether there was 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 was equal to or greater than five percent of the aggregate
volume of U.S. sales), we compared Borcelik'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
Tariff Act. As Borcelik'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 of the subject merchandise, we determined that the
home market was viable. Therefore, we have based NV on home market
sales in the usual commercial quantities and in the ordinary course of
trade.
Cost of Production Analysis
Based on allegations contained in the petition, and in accordance
with section 773(b)(2)(A)(i) of the Tariff Act, we found reasonable
grounds to believe or suspect that sales of cold-rolled steel products
produced in Turkey were made at prices below the COP. As a result, the
Department has initiated investigations to determine whether Borcelik
made home market sales during the POI at prices below its respective
COP, within the meaning of section 773(b) of the Tariff Act. We
conducted the COP analysis described below (see Initiation Notice).
A. Calculation of COP
In accordance with section 773(b)(3) of the Tariff Act, we
calculated COP based on the sum of Borcelik's cost of materials and
fabrication for the foreign like product, plus an amount for home
market selling, general and administrative, interest expenses, and
packing costs. As noted above, we determined that the Turkish economy
experienced significant inflation during the POI. Therefore, in order
to avoid the distortive effect of inflation on our comparison of costs
and prices, we computed indexed monthly costs based on the weighted
average of all monthly costs as indexed for inflation over the POI
(see, e.g., Certain Steel Concrete Reinforcing Bar from Turkey, 64 FR
49150, 49153 (September 10, 1999)).
We used the information from Borcelik's Section D questionnaire
responses to calculate COP. We used Borcelik's monthly COP amounts,
adjusted as discussed below, and the Wholesale Price Index from the
IMF's International Financial Statistics to compute monthly weighted-
average COPs for the POI. We made the following adjustments to
Borcelik's reported costs:
1. Pursuant to section 773(f)(3) of the Tariff Act and section
351.407 of the Department's regulations, we reviewed affiliated-party
transactions and where appropriate used the higher of transfer price,
COP or market price for all major inputs from affiliated parties.
Because the affiliate's COP was not provided by Borcelik, we used as
facts available the costs provided for manufacturing hot rolled coil as
contained in the original petition dated June 2, 1999.
2. Pursuant to section 773(f)(2) of the Tariff Act, we reviewed
affiliated transactions and, where appropriate, used the transfer or
market price for minor inputs of raw materials purchased from
affiliated parties.
3. We adjusted the general and administrative (G&A) expense rate to
exclude shipping rebates related to exports of finished goods and to
include bonuses for management personnel.
4. We recalculated Borcelik's cost of production to include foreign
exchange losses on imported coils.
See Preliminary Determination Cost Calculation Memorandum for
Borcelik, dated December 28, 1999.
B. Test of Home-Market Sales Prices
We compared the adjusted weighted-average COP for Borcelik to the
home market sales of the foreign like product, as required under
section 773(b) of the Tariff Act, in order to determine whether these
sales had been made at prices below the COP within an extended period
of time (i.e., a period of one year) in substantial quantities and
whether such prices were sufficient to permit the recovery of all costs
within a reasonable period of time. In accordance with section
773(b)(2)(C)(i) of the Tariff Act, we determined that sales made below
the COP were made in substantial quantities if the volume of such sales
represented 20 percent or more of the volume of sales under
consideration for the determination of normal value.
On a model-specific basis, we compared the revised COP to the home
market prices, less any applicable movement charges and other direct
and indirect selling expenses.
C. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than
20 percent of a respondent's sales of a given product were at prices
less than the COP, we did not disregard any below-cost sales of that
product because we determined
[[Page 1135]]
that the below-cost sales were not made in ``substantial quantities.''
Where 20 percent or more of a respondent's sales of a given product
during the POI were at prices less than the COP, we determined such
sales to have been made in ``substantial quantities'' within an
extended period of time in accordance with section 773(b)(2)(B) or the
Tariff Act. In such cases, because we compared prices to (indexed) POI-
average costs, we also determined that such sales were not made at
prices which would permit recovery of all costs within a reasonable
period of time, in accordance with section 773(b)(2)(D) of the Tariff
Act. Therefore, we disregarded the below-cost sales.
We found that for certain models of cold-rolled steel products,
more than 20 percent of the home-market sales by Borcelik were made
within an extended period of time at prices less than the COP. Further,
the prices did not provide for the recovery of costs within a
reasonable period of time. We therefore disregarded these below-cost
sales and used the remaining sales as the basis for determining NV, in
accordance with section 773(b)(1) of the Tariff Act. For those U.S.
sales of cold-rolled steel products for which there were no comparable
home-market sales in the ordinary course of trade, we compared EP to CV
in accordance with section 773(a)(4) of the Tariff Act. See Price-to-CV
Comparisons, below.
D. Calculation of Constructed Value
In accordance with section 773(e)(1) of the Tariff Act, we
calculated CV based on the sum of Borcelik's cost of materials,
fabrication, SG&A, interest, and U.S. packing costs. We made
adjustments similar to those described above for COP. In accordance
with sections 773(e)(2)(A) of the Tariff Act, we based SG&A and profit
on the amounts incurred and realized by the respondent in connection
with the production and sale of the foreign like product in the
ordinary course of trade for consumption in the foreign country. For
selling expenses we used the weighted-average home market selling
expenses.
Price-to-Price Comparisons
We calculated NV based on the FOB or delivered prices to
unaffiliated customers. We made deductions, where appropriate, from the
starting price for billing adjustments, inland freight, inland
insurance. We made adjustments for differences in the merchandise in
accordance with section 773(a)(6)(C)(ii) of the Tariff Act. In
addition, we made adjustments under section 773(a)(6)(C)(iii) of the
Tariff Act for differences in circumstances of sale for imputed credit
expenses, and warranties. Finally, we deducted home market packing
costs and added U.S. packing costs in accordance with section
773(a)(6)(A) and (B) of the Tariff Act.
Price-to-CV Comparisons
For price-to-CV comparisons, we made adjustments to CV in
accordance with section 773(a)(8) of the Tariff Act. We deducted from
CV the weighted-average home market direct selling expenses and added
the weighted-average U.S. product-specific direct selling expenses in
accordance with section 773(a)(6)(C)(iii) of the Tariff Act.
Currency Conversions
Because this proceeding involves a high-inflation economy, we
limited our comparison of U.S. and home market sales to those occurring
in the same month (as described above) and only used daily exchange
rates. See Certain Porcelain on Steel Cookware from Mexico: Final
Results of Antidumping Duty Administrative Review, 62 FR 42496, 42503-
03 (August 7, 1997) and Notice of Final Determination of Sales at Less
Than Fair Value: Certain Pasta from Turkey, 61 FR 30309 (June 14,
1996).
The Department's preferred source for daily exchange rates is the
Federal Reserve Bank. However, the Federal Reserve Bank does not track
or publish exchange rates for the Turkish lira. Therefore, we made
currency conversions based on the daily exchange rates from the Dow
Jones Service, as published in the Wall Street Journal.
Verification
In accordance with section 782(i) of the Tariff Act, we intend to
verify all information relied upon in making our final determinations.
Suspensions of Liquidation
In accordance with section 733(d) of the Tariff Act, we are
directing the Customs Service to suspend liquidation of all entries of
cold-rolled steel products from Turkey that are entered, or withdrawn
from warehouse, for consumption on or after the date of publication of
this notice in the Federal Register. We will instruct the Customs
Service to require a cash deposit or the posting of a bond equal to the
weighted-average amount by which the NV exceeds the EP, as indicated in
the chart below. These suspension-of-liquidation instructions will
remain in effect until further notice. The weighted-average dumping
margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Exporter/manufacturer margin
percentage
------------------------------------------------------------------------
Erdemir.................................................... 32.91
Borcelik................................................... 8.81
All others................................................. 8.81
------------------------------------------------------------------------
ITC Notification
In accordance with section 733(f) of the Tariff 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 threaten material injury to, the
U.S. industry. The deadline for that ITC determination would be the
later of 120 days after the date of this preliminary determination or
45 days after the date of our final determinations.
Public Comment
Case briefs or other written comments in at least ten copies must
be submitted to the Assistant Secretary for Import Administration no
later than 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. Such
summary should be limited to five pages total, including footnotes. In
accordance with section 774 of the Tariff 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, time and room to be determined, at the U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC
20230. Parties should confirm by telephone the time, date, and place of
the hearing 48 hours before the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, within 30 days of the publication of this notice. Requests should
contain: (1) The party's name, address, and telephone number; (2) the
number of participants; and (3) a list of the issues to be discussed.
Oral presentations will be limited to issues raised in the briefs. We
intend to make our final determination no later than 75
[[Page 1136]]
days after the date of this preliminary determination.
This determination is published pursuant to sections 733(d) and
777(i)(1) of the Tariff Act.
Dated: December 28, 1999.
Holly Kuga,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-301 Filed 1-6-00; 8:45 am]
BILLING CODE 3510-DS-P