[Federal Register Volume 66, Number 86 (Thursday, May 3, 2001)]
[Notices]
[Pages 22183-22194]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10853]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-865]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Certain Hot-Rolled Carbon Steel Flat Products From the People's 
Republic of China

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

EFFECTIVE DATE: May 3, 2001.

FOR FURTHER INFORMATION CONTACT: Catherine Bertrand, Carrie Blozy, or 
Doreen Chen, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-3207, (202) 482-0165, and 
(202) 482-0193, respectively.

[[Page 22184]]

The Applicable Statute and Regulations

    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 codified at 19 CFR Part 351 (2000).

Preliminary Determination

    We preliminarily determine that certain hot-rolled carbon steel 
flat products from the People's Republic of China (``PRC'') 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 December 4, 2000. See Notice of 
Initiation of Antidumping Duty Investigations: Certain Hot-Rolled 
Carbon Steel Flat Products From Argentina, India, Indonesia, 
Kazakhstan, the Netherlands, the People's Republic of China, Romania, 
South Africa, Taiwan, Thailand, and Ukraine, 65 FR 77568 (December 12, 
2000). The Department set aside a period for all interested parties to 
raise issues regarding product coverage. See Notice of Initiation, at 
77569. We received comments regarding product coverage as follows: from 
Duracell Global Business Management Group on December 11, 2000; from 
Energizer on December 15, 2000; from Bouffard Metal Goods Inc. and 
Truelove & MacLean, Inc. on December 18, 2000; from the Corus Group 
plc., which includes Corus Steel USA (CSUSA) and Corus Staal BV (Corus 
Staal), and Thomas Steel Strip on December 26, 2000; and from Rayovac 
Corporation on March 12, 2001. Since the initiation of this 
investigation the following events have occurred.
    On December 20, 2000, the Department of Commerce (``the 
Department'') requested information from the U.S. Embassy in the PRC to 
identify producers/exporters of the subject merchandise and received a 
response in January 2001.
    On December 22, 2000, the Department issued a letter to interested 
parties in all of the concurrent certain hot-rolled carbon steel flat 
products antidumping investigations, providing an opportunity to 
comment on the Department's proposed model matching characteristics and 
hierarchy. Comments were submitted by: petitioners (January 5, 2001); 
Corus Staal BV and Corus Steel USA Inc., collectively referred to as 
Corus, respondent in the Netherlands investigation (January 3, 2001); 
Iscor Limited, respondent in the South Africa investigation (January 3, 
2001); and Zaporizhstal, respondent in the Ukraine investigation 
(January 3, 2001). Petitioners agreed with the Department's proposed 
characteristics and hierarchy of characteristics. Corus suggested 
adding a product characteristic to distinguish prime merchandise from 
non-prime merchandise. Neither Iscor nor Zaporizhstal proposed any 
changes to either the list of product characteristics proposed by the 
Department or the hierarchy of those product characteristics but, 
rather, provided information relating to its own products that was not 
relevant in the context of determining what information to include in 
the Department's questionnaires. For purposes of the questionnaires 
subsequently issued by the Department to the respondents, no changes 
were made to the product characteristics or the hierarchy of those 
characteristics from those originally proposed by the Department in its 
December 22, 2000 letter. With respect to Corus' request, the 
additional product characteristic suggested by Corus, to distinguish 
prime merchandise from non-prime merchandise, is unnecessary. The 
Department already asks respondents to distinguish prime from non-prime 
merchandise in field number 2.2 ``Prime vs. Secondary Merchandise.'' 
See the Department's Antidumping Duty Questionnaire, at C-5 (January 4, 
2001).
    On December 29, 2000, the United States International Trade 
Commission (``ITC'') issued its affirmative preliminary determination 
that there is a reasonable indication that an industry in the United 
States is materially injured by reason of imports of the subject 
merchandise from the PRC, which was published on January 4, 2001. See 
Hot-Rolled Steel Products from Argentina, China, India, Indonesia, 
Kazakhstan, Netherlands, Romania, South Africa, Taiwan, Thailand, and 
Ukraine, 66 FR 805 (January 4, 2001) (``ITC Preliminary 
Determination'').
    On January 4, 2001, the Department issued its antidumping 
questionnaire to the Chinese Ministry of Foreign Trade & Economic 
Cooperation with a letter requesting that it forward the questionnaire 
to all Chinese exporters of certain hot-rolled carbon steel flat 
products who had shipments during the period of investigation 
(``POI''). We also sent courtesy copies of the antidumping 
questionnaire to the following possible producers/exporters of subject 
merchandise named in the petition: Anshan Iron & Steel (Group) Co., 
Anyang Iron and Steel Group, Shanghai Baosteel Group Corp., Benxi Iron 
and Steel Group Co., Laiwu Iron and Steel Group, and Wuhan Iron and 
Steel Group Co.
    On January 25 and 26, 2001, the following Chinese producers/
exporters of certain hot-rolled carbon steel flat products submitted 
information on the quantity and value of their shipments of subject 
merchandise to the United States during the POI: Angang Group 
International Trade Corporation, New Iron & Steel Co., Ltd., and Angang 
Group Hong Kong Co., Ltd. (collectively ``Angang''), Shanghai Baosteel 
Group Corporation, Baoshan Iron and Steel Co., Ltd., and Baosteel Group 
International Trade Corporation (collectively ``Baosteel Group''), 
Benxi Iron & Steel Group International Economic & Trade Co., Ltd., 
Bengang Steel Plates Co., Ltd., and Benxi Iron & Steel Group Co., Ltd. 
(collectively ``Benxi''), Pangang Group International Economic & 
Trading Corporation and Panzhihua Iron & Steel (Group) Company 
(collectively ``Panzhihua''), Wuhan Iron & Steel (Group) Corporation 
and International Economic and Trading Corp. Wugang Group (collectively 
``WISCO''), and Shanghai Yi Chang Steel Strip Co., Ltd. (``Yi Chang'').
    On February 6, 2001, we selected Angang, Baosteel Group, Benxi, and 
Yi Chang as the mandatory respondents (see ``Selection of Respondents'' 
below). We received complete Section A responses from Angang, Baosteel 
Group, Benxi, Panzhihua, WISCO, and Yi Chang on February 8, 2001.
    On February 16, 2001, the Department issued a supplemental 
questionnaire to Yi Chang concerning the relationship between Baosteel 
Group and Yi Chang. Also, on February 16, 2001, the Department issued a 
letter to Baosteel Group concerning the submission of Section D 
questionnaire responses for certain wholly-owned firms of Baosteel 
Group, which during some or all of the POI produced merchandise meeting 
the physical description of the merchandise described in Appendix III 
to the Department's January 4, 2001 antidumping questionnaire (see 
``Baosteel Group-Wholly Owned Suppliers of Hot-Rolled Carbon Steel Flat 
Products,'' below, for further discussion of this issue). On February 
22, 2001, the Department issued section A supplemental questionnaires 
to Angang, Benxi, Baosteel Group, and Yi

[[Page 22185]]

Chang and received responses on March 8, 2001. On February 26, 2001, 
respondents submitted their responses to sections C and D to the 
Department's antidumping questionnaire. On February 28, 2001, the 
Department issued a letter to Yi Chang requesting that Yi Chang 
identify all unique products or models produced by Yi Chang during the 
POI that meet the physical description of the merchandise described in 
Appendix III to the Departments' January 4, 2001 antidumping 
questionnaire. Yi Chang submitted this information on March 7, 2001. On 
March 12, 2001, the Department issued supplemental questionnaires to 
Angang, Benxi, Baosteel Group, and Yi Chang and received responses to 
these questionnaires on April 2, 2001. On March 12, 2001, Baosteel 
Group submitted section D questionnaire responses for certain wholly-
owned firms of the Baosteel Group, which during part or all of the POI 
produced merchandise meeting the physical description of the 
merchandise described in Appendix III to the Department's January 4, 
2001 antidumping questionnaire. On March 27, 2001, the Department 
issued a supplemental section D questionnaire to Baosteel Group, 
following its March 12, 2001 section D response, and received a 
response on April 10, 2001. Petitioners filed comments on respondents' 
submissions in March 2001.
    On January 31, 2001, we requested publicly-available information 
for valuing the factors of production and comments on surrogate country 
selection. On February 14, 2001, we received comments from petitioners 
on the appropriate surrogate country. On March 23, 2001, Baosteel Group 
submitted information concerning surrogate values to be used for 
valuing the factors of production. On March 26 and March 30, 2001, 
petitioners and respondents Angang and Benxi, respectively, submitted 
information concerning surrogate values for use in valuing the factors 
of production. On April 5 and 6, petitioners and respondents Baosteel 
Group and Yi Chang, respectively, submitted rebuttal comments on 
surrogate values.

Period of Investigation

    The POI is April 1, 2000 through September 30, 2000. This period 
corresponds to the two most recent fiscal quarters prior to the month 
of the filing of the petition (November 13, 2000). 19 CFR 
351.204(b)(1).

Scope of Investigation

    For purposes of this investigation, the products covered are 
certain hot-rolled carbon steel flat products of a rectangular shape, 
of a width of 0.5 inch or greater, neither clad, plated, nor coated 
with metal and whether or not painted, varnished, or coated with 
plastics or other non-metallic substances, in coils (whether or not in 
successively superimposed layers), regardless of thickness, and in 
straight lengths of a thickness of less than 4.75 mm and of a width 
measuring at least 10 times the thickness. Universal mill plate (i.e., 
flat-rolled products rolled on four faces or in a closed box pass, of a 
width exceeding 150 mm, but not exceeding 1250 mm, and of a thickness 
of not less than 4.0 mm, not in coils and without patterns in relief) 
of a thickness not less than 4.0 mm is not included within the scope of 
this investigation.
    Specifically included within the scope of this investigation are 
vacuum degassed, fully stabilized (commonly referred to as 
interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, 
and the substrate for motor lamination steels. IF steels are recognized 
as low carbon steels with micro-alloying levels of elements such as 
titanium or niobium (also commonly referred to as columbium), or both, 
added to stabilize carbon and nitrogen elements. HSLA steels are 
recognized as steels with micro-alloying levels of elements such as 
chromium, copper, niobium, vanadium, and molybdenum. The substrate for 
motor lamination steels contains micro-alloying levels of elements such 
as silicon and aluminum.
    Steel products to be included in the scope of this investigation, 
regardless of definitions in the Harmonized Tariff Schedule of the 
United States (HTSUS), are products in which: (i) Iron predominates, by 
weight, over each of the other contained elements; (ii) the carbon 
content is 2 percent or less, by weight; and (iii) 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, or
0.15 percent of vanadium, or
0.15 percent of zirconium.

    All products that meet the physical and chemical description 
provided above are within the scope of this investigation unless 
otherwise excluded. The following products, by way of example, are 
outside or specifically excluded from the scope of this investigation:
     Alloy hot-rolled steel products in which at least one of 
the chemical elements exceeds those listed above (including, e.g., 
American Society for Testing and Materials (ASTM) specifications A543, 
A387, A514, A517, A506).
     Society of Automotive Engineers (SAE)/American Iron & 
Steel Institute (AISI) grades of series 2300 and higher.
     Ball bearing steels, as defined in the HTSUS.
     Tool steels, as defined in the HTSUS.
     Silico-manganese (as defined in the HTSUS) or silicon 
electrical steel with a silicon level exceeding 2.25 percent.
     ASTM specifications A710 and A736.
     USS abrasion-resistant steels (USS AR 400, USS AR 500).
     All products (proprietary or otherwise) based on an alloy 
ASTM specification (sample specifications: ASTM A506, A507).
     Non-rectangular shapes, not in coils, which are the result 
of having been processed by cutting or stamping and which have assumed 
the character of articles or products classified outside chapter 72 of 
the HTSUS.

    The merchandise subject to this investigation is classified in the 
HTSUS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 
7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 
7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 
7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 
7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 
7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 
7208.90.00.00, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 
7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 
7211.19.75.60, and 7211.19.75.90. Certain hot-rolled carbon steel flat 
products covered by this investigation, including: vacuum degassed 
fully stabilized; high strength low alloy; and the substrate for motor 
lamination steel may also enter under the following tariff numbers: 
7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 
7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 
7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00,

[[Page 22186]]

7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Subject merchandise 
may also enter under 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 
7212.40.10.00, 7212.40.50.00, and 7212.50.00.00. Although the HTSUS 
subheadings are provided for convenience and U.S. Customs purposes, the 
written description of the merchandise under investigation is 
dispositive.

Selection of Respondents

    Section 777A(c)(1) of the Act directs the Department to calculate 
individual dumping margins for each known exporter and producer of the 
subject merchandise. However, section 777A(c)(2) of the Act gives the 
Department discretion, when faced with a large number of exporters/
producers, to limit its examination to a reasonable number of such 
companies if it is not practicable to examine all companies. Where it 
is not practicable to examine all known producers/exporters of subject 
merchandise, this provision permits the Department to investigate 
either: (1) a sample of exporters, producers, or types of products that 
is statistically valid based on the information available at the time 
of selection; or (2) exporters and producers accounting for the largest 
volume of the subject merchandise that can reasonably be examined. 
After consideration of the complexities expected to arise in this 
proceeding and the resources available to the Department, we determined 
that it was not practicable in this investigation to examine the six 
known producers/exporters of subject merchandise. Instead, we found 
that, given our resources, we would be able to investigate four Chinese 
producers/exporters. Angang, Baosteel Group, Benxi, and Yi Chang 
accounted for almost all exports of the subject merchandise from the 
PRC during the POI, as reported by the six producers/exporters at the 
time we made our respondent selection, and we selected them as 
mandatory respondents. See Memorandum from Edward Yang to Joseph A. 
Spetrini Re: Selection of Respondents, February 6, 2001.

Yi Chang--Country of Origin

    In its original section A questionnaire response, dated February 8, 
2001, Yi Chang stated that ``it produced and sold the subject 
merchandise directly and did not purchase from an unaffiliated 
supplier.'' However, subsequent responses from Yi Chang on February 26, 
2001, March 8, 2001, and April 2, 2001, made clear the following facts: 
first, ``during the POI, Yi Chang was engaged only in the pickling of 
subject merchandise''--it therefore did not melt steel and as a result, 
purchased hot-rolled carbon steel coils as the input for its pickling 
process; second, Yi Chang purchased its hot-rolled carbon steel coils 
from Chinese and third country suppliers; and third, ``all of the 
subject merchandise exported to the United States during the POI was 
produced from imported hot-rolled coils.'' Finally, in response to a 
supplemental question from the Department concerning the country of 
origin markings on the hot-rolled carbon steel flat products sold by Yi 
Chang to the United States, Yi Chang stated that because it added value 
to the finished product after pickling the hot-rolled coils, Yi Chang 
declared the product as originating in China. See Yi Chang April 2, 
2001 supplemental response at page 10.
    In determining whether substantial transformation has occurred for 
the purposes of establishing the country of origin for Yi Chang's hot-
rolled carbon steel flat products exported to the United States in this 
dumping investigation, we examine whether the degree of processing or 
manufacturing in the PRC resulted in a new and distinct or different 
article from the hot-rolled steel coils imported from third country 
market economy suppliers. See Notice of Final Determination of Sales at 
Less Than Fair Value: Certain Carbon Steel Butt-Weld Pipe Fittings from 
India (``Butt-Weld Pipe Fittings from India''), 60 FR 10545, 10546 
(February 27, 1995) and Notice of Final Determination of Sales at Less 
Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel 
Products From Taiwan (``Cold-Rolled Steel from Taiwan''), 65 FR 34658 
(May 31, 2000). The Department has also stated in prior determinations 
that it is not bound by the country-of-origin and substantial 
transformation determinations made by other agencies of the U.S. 
government. See, e.g., Notice of Final Determination of Sales at Less 
Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products from 
Argentina, 58 FR 37062, 37065 (July 9, 1993). Rather, our determination 
is made on the basis of reviewing the totality of the circumstances 
presented to the Department solely for the purpose of the antidumping 
proceeding. When an input from country A is further processed in 
country B, without any change in the class or kind of merchandise 
taking place, the Department normally will consider the product 
exported to the United States as originating in country A. See, e.g., 
Butt-Weld Pipe Fittings from India and Cold-Rolled Steel from Taiwan. 
In this case, the manufacturing process undertaken by Yi Chang in the 
PRC did not result in a change in the class or kind of merchandise 
between the third country hot-rolled steel coils and Yi Chang's pickled 
hot-rolled steel coils. In addition, although Yi Chang does perform 
some processing on the imported hot-rolled coils (i.e., trimming and 
pickling), that further processing does not result in a substantial 
transformation within the context of this antidumping investigation. 
The data on the record indicate that the degree of transformation in 
this case is less than that found in cases in which the product was 
deemed to have been transformed sufficiently to change the origin of 
the item. Consequently, for the preliminary determination, we have 
denied Yi Chang's claims that the country of origin of the merchandise 
sold by Yi Chang is properly the PRC. Because none of the hot-rolled 
carbon steel flat products sold by Yi Chang in the United States during 
the POI was of Chinese origin, we preliminarily find that Yi Chang is 
not eligible for an antidumping duty margin calculation in this 
investigation of hot-rolled carbon steel flat products from the PRC. 
Also, we note that we are not addressing the issue of Yi Chang's 
relationship with the Baosteel Group, as Yi Chang did not produce any 
merchandise which was the same as that exported to the United States by 
the Baosteel Group.

Baosteel Group--Wholly Owned Suppliers of Hot-Rolled Carbon Steel Flat 
Products

    In its questionnaire responses Baosteel Group explained that the 
subject merchandise it sold to the United States was exported by 
Baosteel Group International Trade Corporation (``Baosteel 
International''), a part of the Baosteel Group, and was produced by 
Baoshan Iron and Steel Co., Ltd. (``Baoshan Co., Ltd.''), also a part 
of the Baosteel Group, and Baosteel Group itself. For Baosteel Group's 
ownership percentages in these companies, see Analysis for the 
Preliminary Determination of Certain Hot-Rolled Carbon Steel Flat 
Products from the People's Republic of China: Shanghai Baosteel Group 
Corporation (``Baosteel Group''), (``Baosteel Group Analysis 
Memorandum''), dated April 23, 2001. Additionally, in its section A 
questionnaire response Baosteel Group identified three other wholly-
owned Baosteel Group steel companies that produced hot-rolled steel 
products within the scope of this investigation during the POI, but 
stated that they did not export these products to the United States. 
Because the name of these firms is proprietary, we are referring to 
these

[[Page 22187]]

companies as Firm A, Firm B, and Firm C. On February 16, 2001, the 
Department issued a letter to Baosteel Group requesting it to ``ensure 
that when providing your Section D information, you submit full Section 
D information for all wholly-owned facilities of the Baosteel Group, 
which during some or all of the POI produced merchandise meeting the 
physical description of the merchandise described in Appendix III to 
the Department's January 4, 2001 antidumping questionnaire to 
Baosteel.'' Although objecting to this request, Baosteel Group 
nevertheless submitted section D responses for Firm A and Firm B on 
March 12, 2001, and supplemental responses on April 10, 2001. (In its 
March 12, 2001 response, Baosteel Group stated that Firm C did not 
produce or sell any merchandise that meets the physical description of 
the merchandise described in Appendix III to the Department's 
questionnaire.)
     The Department requested this information primarily because the 
questionnaire responses for Baosteel Group have been filed on behalf of 
Shanghai Baosteel Group Corporation, Baoshan Co., Ltd., and Baosteel 
International. As noted above, both Baoshan Co., Ltd., which produces 
the subject merchandise sold to the United States, and Baosteel 
International, the trading company which sells the subject merchandise 
to the United States, are part of the Shanghai Baosteel Group 
Corporation. Moreover, both Firm A and Firm B are wholly-owned 
subsidiaries of the Shanghai Baosteel Group Corporation. For purposes 
of its separate rate analysis, the Department considers these companies 
to be one entity. Because it is the Shanghai Baosteel Group Corporation 
as a whole to which the Department has preliminarily granted a separate 
rate (see ``Separate Rates,'' below), which will apply to each of its 
constituent entities, the Shanghai Baosteel Group Corporation is the 
respondent. Consequently, in order to accurately calculate the 
Corporation's normal value for any given model of subject merchandise, 
the Department necessarily requires for every model or product type 
reported by Shanghai Baosteel Group Corporation in the U.S. market 
sales listing, one weighted-average set of factors of production data 
based on POI-specific factors of production data for all members of the 
single entity Shanghai Baosteel Group Corporation. Therefore, for the 
preliminary determination, for all models of subject merchandise sold 
by Shanghai Baosteel Group Corporation during the POI we have 
calculated a single weighted-average normal value based on the factors 
of production for all of the firms (Baoshan Co., Ltd./Baosteel Group, 
Firm A and Firm B) that produced these models during the POI.

Nonmarket Economy Country Status

    The Department has treated the PRC as a non-market economy 
(``NME'') country in all past antidumping investigations (see, e.g., 
Notice of Final Determination of Sales at Less Than Fair Value: Bulk 
Aspirin From the People's Republic of China, 65 FR 33805 (May 25, 
2000), and Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Non-Frozen Apple Juice Concentrate from the People's 
Republic of China, 65 FR 19873 (April 13, 2000) (Apple Juice)). A 
designation as an NME remains in effect until it is revoked by the 
Department (see section 771(18)(C) of the Act). The respondents in this 
investigation have not requested a revocation of the PRC's NME status. 
We have, therefore, preliminarily determined to continue to treat the 
PRC as an NME country. When the Department is investigating imports 
from an NME, section 773(c)(1) of the Act directs us to base the normal 
value (``NV'') on the NME producer's factors of production, valued in a 
comparable market economy that is a significant producer of comparable 
merchandise. The sources of individual factor prices are discussed 
under the ``Normal Value'' section, below.
    Furthermore, no interested party has requested that the hot-rolled 
carbon steel flat products industry in the PRC be treated as a market-
oriented industry and no information has been provided that would lead 
to such a determination. Therefore, we have not treated the hot-rolled 
carbon steel flat products industry in the PRC as a market-oriented 
industry in this investigation.

Separate Rates

    In proceedings involving NME countries, the Department begins with 
a rebuttable presumption that all companies within the country are 
subject to government control and thus should be assessed a single 
antidumping duty deposit rate. It is the Department's policy to assign 
all exporters of merchandise subject to investigation in an NME country 
this single rate, unless an exporter can demonstrate that it is 
sufficiently independent so as to be entitled to a separate rate. The 
six companies that have submitted section A responses have provided the 
requested company-specific separate rates information and have stated 
that, for each company, there is no element of government ownership or 
control. All six companies have requested a separate company-specific 
rate.\1\
---------------------------------------------------------------------------

    \1\ As noted above, Yi Chang is not eligible for a separate rate 
because it made no exports of the subject merchandise to the United 
States during the POI.
---------------------------------------------------------------------------

    Angang reported that it is owned by all the people and that Angang 
and its affiliates have no corporate relationship with any level of the 
PRC government. Angang stated that Angang Group International Trade 
Corporation has complete independence with respect to its export 
activities.
    Baosteel Group reported that Baosteel Group is a company owned by 
all the people. Baosteel Group claimed that Baosteel Group, Baoshan 
Iron and Steel Co., Ltd., and Baosteel International Trade Corporation 
operate independently from the national, provincial and local 
governments with respect to all significant export activities.
    Benxi reported that it is owned by all the people. Benxi stated 
that all exports of the subject merchandise were produced by Bengang 
Steel, of which Benxi Group has majority ownership. Benxi claimed that 
Benxi Trading and its affiliates have no corporate relationship with 
any level of the PRC government.
    Panzhihua reported that Pangang Group International Economic & 
Trading Corporation (``Pangang International'') and its parent company, 
Panzhihua Iron & Steel (Group) Company (Panzhihua Group), are owned by 
all the people. Panzhihua claimed that Pangang International, Panzhihua 
Group, and Panzhihua Steel operate independently from the national, 
provincial and local governments with respect to all significant export 
activities.
    WISCO reported that International Economic and Trading Corp. Wugang 
Group (``IETC''), and its parent company and supplier, Wuhan Iron & 
Steel (Group) Corporation, are owned by all the people. WISCO claimed 
that Wuhan Iron & Steel (Group) Corporation and IETC operate 
independently from the national, provincial and local governments with 
respect to all significant export activities.
    Based on these claims, we considered whether each respondent is 
eligible for a separate rate. The Department's separate rate test to 
determine whether the exporters are independent from government control 
is not concerned, in general, with macroeconomic/border-type controls, 
e.g., export licenses, quotas, and minimum export prices, particularly 
if these controls are imposed to prevent dumping. The test

[[Page 22188]]

focuses, rather, on controls over the investment, pricing, and output 
decision-making process at the individual firm level. See, e.g., 
Certain Cut-to-Length Carbon Steel Plate from Ukraine: Final 
Determination of Sales at Less than Fair Value, 62 FR 61754, 61757 
(November 19, 1997); Tapered Roller Bearings and Parts Thereof, 
Finished and Unfinished, from the People's Republic of China: Final 
Results of Antidumping Duty Administrative Review, 62 FR 61276, 61279 
(November 17, 1997); and Honey from the People's Republic of China: 
Preliminary Determination of Sales at Less than Fair Value, 60 FR 
14725, 14726 (March 20, 1995).
    To establish whether a firm is sufficiently independent from 
government control of its export activities to be entitled to a 
separate rate, the Department analyzes each entity exporting the 
subject merchandise 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 the 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''). Under the separate rates criteria, the Department assigns 
separate rates in NME cases only if respondents can demonstrate the 
absence of both de jure and de facto governmental control over export 
activities.
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. 
The respondents have placed on the record a number of documents to 
demonstrate absence of de jure control, including the ``Foreign Trade 
Law of the People's Republic of China'' and the ``Company Law of the 
People's Republic of China.'' In prior cases, the Department has 
analyzed these laws and found that they establish an absence of de jure 
control. See, e.g., Notice of Final Determination of Sales at Less Than 
Fair Value: Certain Partial-Extension Steel Drawer Slides with Rollers 
from the People's Republic of China, 60 FR 54472, 54474 (October 24, 
1995). We have no information in this proceeding which would cause us 
to reconsider this determination.
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 are set by or are 
subject to the approval of a governmental agency; (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. As stated in previous cases, there is some 
evidence that certain enactments of the PRC central government have not 
been implemented uniformly among different sectors and/or jurisdictions 
in the PRC. See Silicon Carbide. Therefore, the Department has 
determined that an analysis of de facto control is critical in 
determining whether respondents are, in fact, subject to a degree of 
governmental control which would preclude the Department from assigning 
separate rates.
    The respondents asserted the following: (1) They establish their 
own export prices; (2) they negotiate contracts without guidance from 
any governmental entities or organizations; (3) they make their own 
personnel decisions; and (4) they retain the proceeds of their export 
sales, using profits according to their business needs. Additionally, 
none of the respondents' questionnaire responses suggest pricing is 
coordinated among exporters. Furthermore, our analysis of the 
respondents' questionnaire responses reveals no other information 
indicating government control. As stated in the Silicon Carbide, 59 FR 
at 22587, ownership of the company by a state-owned enterprise does not 
require the application of a single rate. Based on the information 
provided, we preliminary determine that there is an absence of de facto 
governmental control of the respondents' export functions. 
Consequently, we preliminarily determine that Angang, Baosteel Group, 
Benxi, Panzhihua, and WISCO have met the criteria for the application 
of a separate rate.

The People's Republic of China-Wide Rate

    All exporters were given the opportunity to respond to the 
Department's questionnaire. As explained above, we received timely 
Section A responses from Angang, Baosteel Group, Benxi, Panzhihua, 
WISCO, and Yi Chang.\2\ Our review of U.S. import statistics from the 
PRC, however, reveals that Angang, Baosteel Group, Benxi, Panzhihua, 
and WISCO did not account for all imports of subject merchandise into 
the United States from the PRC, even after adjusting for the 
merchandise Yi Chang said it had entered as being of Chinese origin. 
For this reason, we preliminarily determine that some PRC exporters of 
certain hot-rolled carbon steel flat products failed to respond to our 
questionnaire. Consequently, we are applying a single antidumping 
rate--the China-wide rate--to all other exporters in the PRC based on 
our presumption that those respondents who failed to demonstrate 
entitlement to a separate rate constitute a single enterprise under 
common control by the Chinese government. See, e.g., Final 
Determination of Sales at Less Than Fair Value: Synthetic Indigo from 
the People's Republic of China, 65 FR 25706, 25707 (May 3, 2000) 
(``Synthetic Indigo''). The China-wide rate applies to all entries of 
subject merchandise except for entries from Angang, Baosteel Group, 
Benxi, Panzhihua, and WISCO.
---------------------------------------------------------------------------

    \2\ As explained above, for the preliminary determination we 
have found that Yi Chang did not have any exports of the subject 
merchandise to the United States during the POI.
---------------------------------------------------------------------------

Use of Facts Otherwise 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) of the Act, the Department shall not decline 
to consider submitted information if that information is necessary to 
the determination but does not meet all of the requirements established 
by the Department provided that 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)

[[Page 22189]]

the information can be used without undue difficulties.
    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. 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 facts otherwise 
available.
A. China Wide Rate
    In the case of the single Chinese enterprise, as explained above, 
some exporters of the single enterprise failed to respond to the 
Department's request for information. Pursuant to section 776(a) of the 
Act, in reaching our preliminary determination, we have used total 
facts available for the China-wide rate because certain entities did 
not respond. Also, because some exporters of the single enterprise 
failed to respond to the Department's requests for information, the 
Department has found that the single enterprise failed to cooperate to 
the best of its ability. Therefore, pursuant to section 776(b) of the 
Act, the Department preliminarily finds that, in selecting from among 
the facts available, an adverse inference is appropriate. For our 
preliminary determination, as adverse facts available, we have used the 
highest rate calculated for a respondent, i.e., the rate calculated for 
Benxi. In an investigation, if the Department chooses as facts 
available a calculated dumping margin of another respondent, the 
Department will consider information reasonably at its disposal as to 
whether there are circumstances that would indicate that using that 
rate is appropriate. Where circumstances indicate that the selected 
margin may not be appropriate, the Department will attempt to find a 
more appropriate basis for facts available. See, e.g., Fresh Cut 
Flowers from Mexico; Final Results of Antidumping Duty Administrative 
Review, 61 FR 6812, 6814 (February 22, 1996) (where the Department 
disregarded the highest margin as adverse best information available 
because the margin was based on another company's uncharacteristic 
business expense resulting in an unusually high margin). In this 
investigation, there is no indication that the highest calculated 
margin is inappropriate to use as adverse facts available.
    Accordingly, for the preliminary determination, the China-wide rate 
is 67.44 percent. Because this is a preliminary margin, the Department 
will consider all margins on the record at the time of the final 
determination for the purpose of determining the most appropriate final 
China-wide margin.
B. Angang and Benxi
    Angang and Benxi failed to report freight information for all of 
their reported inputs. This information was requested twice by the 
Department, first in the original questionnaire dated January 4, 2001, 
and again in a supplemental questionnaire dated March 12, 2001. Because 
Angang and Benxi failed to provide this information, the Department, in 
accordance with section 776(a) of the Act, is basing its freight 
expense calculation on the facts otherwise available. This information 
is important because the Department needs it to calculate the freight 
expense component of the cost of Angang's and Benxi's factors of 
production. Because we find that Angang and Benxi failed to cooperate 
by not acting to the best of their ability to comply with our request 
that they provide the freight expense data, we are making, pursuant to 
section 776(b) of the Act, an adverse inference in selecting from the 
facts otherwise available. Therefore, as facts available, we applied 
the highest freight expense calculated for each respondent's inputs to 
those inputs for which freight information was not reported.
C. Baosteel Group, Firm A of Baosteel Group, and Firm B of Baosteel 
Group
    Respondent Baosteel Group reported that it sold 63 unique models of 
hot-rolled products to the United States during the POI; however, 
Baosteel Group calculated unique factors of production costs for only 
seven product categories. Similarly, Firm A and Firm B of the Baosteel 
Group also did not report unique factors of production for every model 
of hot-rolled steel sold to the United States during the POI by 
Baosteel Group. In our supplemental questionnaires to Baosteel Group, 
Firm A of the Baosteel Group, and Firm B of the Baosteel Group, we 
requested that they revise their response to calculate a unique set of 
FOP data for each control number produced and sold in the United States 
market, taking into account the physical characteristics that 
distinguish each product. In their April 2, 2001 response and April 10, 
2001 response, Baosteel Group and Firm A of Baosteel Group, 
respectively, maintained that because they produce a relatively narrow 
size range of hot-rolled products and do not keep the record of the 
processing time for different size of products for the cost accounting 
purpose, they are not able to allocate their cost among the products 
based upon the physical characteristics, such as width and thickness. 
In its April 2, 2001 response, Firm B of the Baosteel Group claimed 
that as it produced generally low-alloy hot-rolled products with a 
small range of carbon content, the yield rate of raw materials at the 
rolling process does not vary according to different slab and hot-
rolled sheet. Furthermore, Firm B maintained that the cost of hot-
rolled coils is only separately recorded and assigned to major 
categories of products at the rolling process (e.g., hot-rolled strips, 
checkered steel sheet, medium and small size thick hot-rolled coils).
    In their April 13, 2001 response, petitioners argued that because 
Baosteel Group failed to submit factors of production data which 
account for differences in cost related to products of varying 
thicknesses, the Department should apply adverse facts available. 
However, based on the claims of Baosteel Group and the data it 
submitted, we preliminarily determine that respondents assigned factor 
usages to products to the level of specificity permitted by their cost 
accounting systems. As Baosteel Group appears to have responded to the 
best of its ability, it is not appropriate to draw an adverse inference 
in applying facts available as advocated by petitioners in their April 
12, 2001 submission. Additionally, although the reported factors of 
production were not on a model-specific basis, there is no data on the 
record to suggest that the reported factor amounts did not accurately 
reflect the factor amounts associated with all subject merchandise. 
Finally, we are unable to adjust the reported factors of production due 
to the broad basis on which the costs were accumulated and the lack of 
information on the record on how to appropriately adjust these costs. 
Consequently, we have determined to use their data for the preliminary 
determination. We intend to fully examine this issue at verification 
and for the final determination.

Surrogate Country

    When the Department is investigating imports from an NME country, 
section 773(c)(1) of the Act directs it to base NV, in most 
circumstances, on the NME producer's factors of production, valued in a 
surrogate market economy country or countries considered to be 
appropriate by the Department. In accordance with section 773(c)(4) of 
the Act, the Department, in valuing the factors of production, shall 
utilize, to

[[Page 22190]]

the extent possible, the prices or costs of factors of production in 
one or more market economy countries that are at a level of economic 
development comparable to the NME country and are significant producers 
of comparable merchandise. The sources of the surrogate factor values 
are discussed under the NV section below.
    The Department has determined that India, Pakistan, Indonesia, Sri 
Lanka and the Phillippines are countries comparable to the PRC in terms 
of economic development. See Memorandum from Jeffrey May to Edward 
Yang: Antidumping Duty Investigation on Certain Hot-Rolled Carbon Steel 
Flat Products from the People's Republic of China, dated January 11, 
2001. Customarily, we select an appropriate surrogate based on the 
availability and reliability of data from these countries. For PRC 
cases, the primary surrogate has often been India if it is a 
significant producer of comparable merchandise. In this case, we have 
found that India is a significant producer of comparable merchandise.
    We used India as the primary surrogate country and, accordingly, we 
have calculated NV using Indian prices to value the PRC producers' 
factors of production, when available and appropriate. See Surrogate 
Country Selection Memorandum to The File from Catherine Bertrand, Case 
Analyst, dated April 23, 2001, (``Surrogate Country Memorandum''). We 
have obtained and relied upon publicly available information wherever 
possible. See Factor Valuation Memorandum to The File from Case 
Analysts, dated April 23, 2001 (``Factor Valuation Memorandum'').
    In accordance with section 351.301(c)(3)(i) of the Department's 
regulations, for the 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.

Fair Value Comparisons

    To determine whether sales of certain hot-rolled carbon steel flat 
products to the United States by Angang, Benxi, and Baosteel Group were 
made at less than fair value, we compared export price (``EP'') or 
constructed export price (``CEP''), as appropriate, to NV, as described 
in the ``Export Price and Constructed Export Price'' and ``Normal 
Value'' sections of this notice. In accordance with section 
777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs or 
CEPs.

Export Price and Constructed Export Price

    In accordance with section 772(a) of the Act, for respondents 
Angang and Benxi we used EP because the subject merchandise was sold 
directly to unaffiliated customers in the United States prior to 
importation and because CEP was not otherwise indicated. As explained 
below, for Baosteel Group we used CEP. In accordance with section 
777A(d)(1)(A)(i) of the Act, we compared POI-wide weighted-average EPs 
or CEPs to the NVs.
    We calculated EP based on prices to unaffiliated purchasers in the 
United States. For Angang we made deductions, where appropriate, for 
foreign inland freight, insurance, and ocean freight. Because certain 
domestic charges, such as those for foreign inland freight, insurance, 
and ocean freight, were provided by NME companies, we valued those 
charges based on surrogate rates from India. See Factor Valuation 
Memorandum. For Benxi, we made deductions, where appropriate, for 
foreign inland freight and brokerage and handling. Because these 
factors were provided by NME companies, we based them on surrogate 
rates from India. See Factor Valuation Memorandum.
    Baosteel Group classified all of its sales of the subject 
merchandise in the United States as EP sales in its questionnaire 
response. All of Baosteel Group's U.S. sales of subject merchandise 
were made prior to importation through Baosteel America Inc. 
(``Baosteel America''), a U.S. based affiliated reseller.
    We examined the facts surrounding the U.S. sales process. The 
initial point of contact for all customer inquiries is Baosteel Group 
International Trade Corporation (``Baosteel International''), the 
trading company owned by Baosteel Group and exporter of all of Baosteel 
Group's sales of the subject merchandise. Subsequent contacts with the 
customer may go through Baosteel America since due to the time 
difference between the United States and the PRC, Baosteel America 
serves as a more convenient communication link to Baosteel 
International. According to Baosteel Group, Baosteel International and 
the U.S. customer negotiate the prices, quantities and other sales 
terms directly, or through Baosteel America as a corresponding 
intermediary. After settling sales quantity, price, time of shipment 
and other terms of contract, Baosteel International will instruct 
Baosteel America to sign a contract with the designated U.S. customer. 
Because the terms of sale for all U.S. sales of subject merchandise are 
FOB Shanghai, neither Baosteel International nor Baosteel America 
incurs any movement expenses. Baosteel Group explained that three 
invoices are issued for each U.S. sales transaction. The first invoice 
is issued by Baoshan Co., Ltd. to Baosteel International after the 
goods are shipped out. The second invoice is issued by Baosteel 
International to Baosteel America upon shipment to the port. The third 
invoice is issued by Baosteel America to the unaffiliated U.S. customer 
after receiving the invoice from Baosteel International. Baosteel Group 
maintains that title does not transfer to Baosteel America and the 
goods do not enter Baosteel America's inventory. The U.S. customer pays 
Baosteel America, which then makes payment to Baosteel International. 
Baosteel International pays Baoshan Co., Ltd. after receiving payment 
from Baosteel America. The U.S. customer may request technical service 
or make warranty claims through Baosteel America, although according to 
Baosteel Group, Baosteel International must authorize approval for all 
claims. See Section A Questionnaire Response (February 8, 2001), 
Sections C and D Questionnaire Response (February 26, 2001) Section A 
Supplemental Questionnaire Response (March 8, 2001), and Supplemental 
Section A, C, and D Questionnaire Response (April 2, 2001).
    Because the contracts on which Baosteel Group's U.S. sales were 
based were between Baosteel America and its unaffiliated U.S. customers 
and Baosteel America invoiced and received payment from the 
unaffiliated U.S. customer, the Department preliminarily determines 
that Baosteel Group's U.S. sales were made ``in the United States'' 
within the meaning of section 772(b) of the Act, and, thus, should be 
treated as CEP transactions. This is consistent with AK Steel Corp. v. 
United States, 226 F.3d 1361, 1374 (Fed. Cir. 2000).
    We calculated weighted-average CEPs for Baosteel Group's U.S. sales 
made in the United States through its U.S. affiliate. We based CEP on 
FOB Shanghai prices to unaffiliated purchasers in the United States. We 
made deductions, where appropriate, for foreign inland freight from the 
plant to the port of exportation and brokerage and handling in 
accordance with section 772(c)(2)(A) of the Act. Because these factors 
were provided by NME companies, we based them on surrogate rates from 
India. To calculate inland freight, we multiplied the reported distance 
from the plant to the port of exit by a surrogate rail rate from India. 
In accordance with section 772(d)(1) of the Act, we deducted from CEP 
direct

[[Page 22191]]

and indirect selling expenses (i.e., credit and indirect selling 
expenses) that were associated with Baosteel America's economic 
activities occurring in the United States. See Baosteel Group Analysis 
Memorandum.

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. We used 
factors of production, reported by respondents, for materials, energy, 
labor, by-products, and packing. We valued all the input factors using 
publicly available published information as discussed in the 
``Surrogate Country'' and ``Factor Valuations'' sections of this 
notice.
    In accordance with 19 CFR 351.408(c)(1), where a producer sources 
an input from a market economy and pays for it in market economy 
currency, the Department employs the actual price paid for the input to 
calculate the factors-based NV. See also Lasko Metal Products v. United 
States, 437 F.3d 1442, 1445-1446 (Fed. Cir. 1994) (``Lasko''). 
Respondents Baosteel Group, Angang and Benxi reported that some of 
their inputs were sourced from market economies and paid for in market 
economy currency. See ``Factor Valuation'' section below.
    Each of the respondents reported ``self-produced'' factors among 
its factors of production for energy inputs, including such factors as 
electricity, oxygen, nitrogen, and argon. We preliminarily determined 
to value electricity, oxygen, argon, and nitrogen through use of 
surrogate valuation, rather than based on surrogate valuation of the 
factors going into the production of those inputs.

Factor Valuations

    In accordance with section 773(c) of the Act, we calculated NV 
based on factors of production reported by respondents for the POI. To 
calculate NV, the reported per-unit factor quantities were multiplied 
by publicly available Indian surrogate values (except as noted below). 
In selecting the surrogate values, we considered the quality, 
specificity, and contemporaneity of the data. As appropriate, we 
adjusted input prices by including freight costs to make them delivered 
prices. For a detailed description of all surrogate values used for 
respondents, see Factor Valuation Memorandum.
    Citing Department case precedent, respondent Baosteel Group argued 
in its March 23, 2001 surrogate value submission that the Department 
should make deductions to domestic prices to ensure that they are 
exclusive of India's Central Sales Tax or any state sales tax. 
Consistent with Sebacic Acid from the People's Republic of China, Final 
Results of Antidumping Duty Administrative Review, 62 Fed. Reg. 65678 
(December 15, 1997), where there was substantial evidence that a 
surrogate value based on a domestic price was tax-inclusive, we 
deducted sales taxes from the surrogate value. Specifically, the 
surrogate value for sulphuric acid was based on data from Indian 
Chemical Weekly, which was recently used in the antidumping 
investigation of bulk aspirin from the People's Republic of China. See 
Memorandum to Susan Kuhbach, Factor of Production Valuation for the 
Final Determination; Final Determination of the Antidumping Duty 
Investigation of Bulk Aspirin from the People's Republic of China 
(``Bulk Aspirin'') (May 17, 2000). This memorandum was added to the 
record as an attachment to Memorandum to the File, Hot-Rolled Carbon 
Steel Products from the People's Republic of China (April 17, 2001). In 
the Bulk Aspirin factor valuation memorandum, we calculated a lower, 
tax-exclusive surrogate value for sulphuric acid. Consistent with Bulk 
Aspirin, we have also calculated a tax-exclusive surrogate value for 
sulphuric acid in this case.
    We added to Indian import surrogate values a surrogate freight cost 
using the shorter of the reported distance from the domestic supplier 
to the factory or the distance from the nearest seaport to the factory. 
This adjustment is in accordance with the Court of Appeals for the 
Federal Circuit's decision in Sigma Corp. v. United States, 117 F.3d 
1401 (Fed. Cir. 1997). For those Indian Rupee values not 
contemporaneous with the POI, we adjusted for inflation using wholesale 
price indices published in the International Monetary Fund's 
International Financial Statistics. For those United States dollar 
denominated values (e.g., for slag, electricity) not contemporaneous 
with the POI, we adjusted for inflation using producer price indices 
published in the International Monetary Fund's International Financial 
Statistics.
    Except as noted below, we valued raw material inputs using the 
weighted-average unit import values derived from the Monthly Trade 
Statistics of Foreign Trade of India--Volume II--Imports (``Indian 
Import Statistics'') for the time period corresponding to the POI. 
Where POI-specific Indian Import Statistics data were not available, we 
used Indian Import Statistics data from an earlier period (i.e., April 
1, 1998 through March 31, 1999 or April 1, 1999 through March 31, 2000. 
Also, we valued sulfuric acid using Indian Chemical Weekly data from 
October 1998 though March 1999. We adjusted the value for inflation 
using wholesale price indices published in the International Monetary 
Fund's International Financial Statistics and excluded taxes.
    We rejected the following values submitted by respondents and/or 
petitioners as aberrational. We rejected the POI-specific surrogate 
value for iron ore pellets (HTS 26011201) provided by respondent 
Baosteel Group because the value of $0.29 per MT was aberrational when 
compared with data from the same source from an earlier period, the 
value for iron ore available from the Department's Index of Factor 
Values for the People's Republic of China located at http://www.ia.ita.doc.gov/factorv/prc/material.html, and the market prices 
paid by Baosteel Group and Angang. Instead, we valued iron ore pellets 
using the identical HTS number, but for an earlier period (April 1, 
1998 through March 31, 1999). We valued ferro-silicon based on HTS 
number 72022100 (``silicon containing greater than 55% of silicon'') 
rather than respondent Baosteel Group's proposed ferro-silicon value 
(HTS 72022900 (other ferro-silicon) based on the fact that respondent 
Baosteel Group's data indicated that the specification of the ferro-
silicon purchased by Baosteel Group was of the higher silicon content 
material. We note that respondents Benxi and Angang also proposed 
valuing ferro-silicon based on Indian Import Statistics data for ferro-
silicon containing more than 55 percent silicon, albeit for an earlier 
period. Also, the Department determined that the surrogate value for 
slag submitted by both respondents and petitioners was unreliable. 
According to New Steel, February 1997, pages 24 and 44, slag has a 
relatively low value compared to the price of steel. Because the Indian 
values for slag were unusually high compared to the price of the 
subject merchandise, the Department has preliminarily used values for 
slag from the U.S. Geological Survey Minerals, Commodities Summaries 
from 1998. See Factor

[[Page 22192]]

Valuation Memorandum. We valued ammonium sulphate, which was reported 
as a by-product for respondent Angang, based on Indian Chemical Weekly 
and we excluded taxes. The Indian surrogate value proposed by 
respondents Angang and Benxi represented a sale of only one metric ton. 
Finally, as the surrogate values for oxygen, nitrogen, and argon 
appeared aberrational compared with valuation data used for these 
factors in the Final Determination of Sales at Less Than Fair Value: 
Certain Cut-to-Length Carbon Steel Plate from the People's Republic of 
China (CTL Plate), 62 FR 61964, (November 20, 1997) we relied on 
October 1996 price information from Bhoruka Gases Limited, an Indian 
manufacturer of Industrial Gases for surrogate values for oxygen, 
nitrogen, and argon gases. This information was adjusted for inflation 
using data from the International Monetary Fund's International 
Financial Statistics.
    As explained above, respondents Baosteel Group and Angang sourced 
certain raw material inputs from market economy suppliers and paid for 
them in market economy currencies. Specifically, Baosteel Group, Firm B 
of the Baosteel Group, and Angang sourced iron ore from market economy 
suppliers. Respondent Baosteel Group reported that four types of iron 
ore were purchased from market economy suppliers, namely, iron ore 
powder, lump iron ore powder, titanium iron ore and pellet iron powder. 
The evidence provided by Baosteel Group indicated that its market 
economy purchases of iron ore were significant. See Exhibits 4 and 9 of 
Baosteel Group's February 26, 2001 submission. The Department has 
determined to use the FOB Baosteel Group prices as reported, in 
accordance with 19 CFR 351.408(c)(1). However, for that portion of the 
iron ore powder, lump iron ore powder, and pellet iron powder shipments 
which were unloaded at an intermediary port, we have added an Indian 
surrogate river transport freight expense, given that the data 
indicates that the prices reported did not account for these additional 
expenses. Also, Baosteel Group reported that for certain of the 
imported iron ore imports, the marine insurance was provided by a non-
market economy supplier. Where Baosteel Group reported that the marine 
insurance was provided by an NME supplier, we valued marine insurance 
from an Indian company (see below). We then added the freight and 
shipment expenses as well as a marine insurance expense to a weighted-
average FOB Baosteel Group price to account for materials delivered at 
an intermediary port. Finally, we weight-averaged the total value of 
the iron ore delivered directly to Baosteel Group (which included 
freight and marine insurance expenses) with the total value of the iron 
ore unloaded at an intermediately port to derive a final market-based 
iron ore price per category of iron ore reported.
    Firm B of the Baosteel Group reported that two types of iron ore 
were purchased from market economy suppliers, namely, iron ore powder 
and iron ore lumps. The evidence provided by Firm B of Baosteel Group 
indicated that its market economy purchases of iron ore were 
significant. See March 12, 2001 submission of Firm B of Baosteel Group 
at D-7. The Department has determined to use the FOB Firm B prices as 
reported, in accordance with 19 CFR 351.408(c)(1). We added to 
weighted-average price for each input the weighted-average reported 
amount for freight.
    As explained in the preamble to 19 CFR 351.408(c)(1), where the 
quantity of the input purchase was insignificant, we do not rely on the 
price paid by an NME producer to a market economy supplier. See 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27366 (May 17, 1997). Benxi's reported information demonstrates that 
the quantity of one of its inputs which it sourced from market economy 
suppliers was so small as to be insignificant when compared to the 
quantity of the same input it sourced from PRC suppliers. See Factor 
Valuation Memorandum for the precise volumes. Therefore, as the amount 
of this reported market economy input is insignificant, we did not use 
the price paid by Benxi for this input and instead used Indian Import 
Statistics data, as adjusted for inflation.
    To value electricity, we used 1997 data reported as the average 
Indian domestic prices within the category ``Electricity for 
Industry,'' published in the International Energy Agency's publication, 
Energy Prices and Taxes, Fourth Quarter, 1999, as adjusted for 
inflation.
    Angang purchased iron ore fines and lump iron ore from market 
economy suppliers during the POI, one of which was an affiliated joint 
venture. We compared the prices paid to the affiliated supplier with 
the prices paid to unaffiliated suppliers (both to Angang and Baosteel) 
and found that price from the affiliated supplier was within the same 
range as those from the unaffiliated suppliers. After having conducted 
this test, we calculated a weighted average of the affiliated and 
unaffiliated purchases to arrive at the price for iron ore fines, 
because Angang had purchases from both types of market economy 
suppliers for this input.
    Respondents reported the following packing inputs: Paper, steel 
strip, steel clip, steel wires, plastic board, plastic washers, inner 
and outer paperboard, steel cushions, and steel buckles. We used Indian 
Import Statistics data for the POI and for the period April 1, 1998 
through March 31, 1999. See Factor Valuation Memorandum.
    We used Indian transport information to value transport for raw 
materials. For all instances in which respondents reported delivery by 
truck, to calculate domestic inland freight (truck), we used a price 
quote from an Indian trucking company for transporting materials 
between Mumbai and Surat (263 kilometers), which was provided in 
Exhibit 32 to Baosteel Group's March 23, 2001 surrogate value 
submission. We converted the Indian Rupee value to U.S. dollars and 
adjusted for inflation through the POI. Similarly, for domestic inland 
freight (rail), we used freight rates as quoted from Indian Railway 
Conference Association price lists, which was provided in Exhibit Z to 
the November 22, 2000, amendment to petition in this case. We used the 
rate for distances between 741-750 kilometers (the lowest distance 
reported on the schedule) since all of the respondents are located less 
than 500 kilometers from the port of exit. We converted the Indian 
Rupee value to U.S. dollars and adjusted for inflation through the POI.
    To value inland insurance, we used the Department's recently 
revised Index of Factor Values for Use in Antidumping Duty 
Investigations Involving Products from the PRC (available on the 
Department's website.) We converted the Indian Rupee value to U.S. 
dollars and adjusted for inflation through the POI. To value marine 
insurance and brokerage and handling we used a publicly summarized 
version of the average value for marine insurance expenses and 
brokerage and handling expenses reported in Certain Stainless Steel 
Wire Rod from India; Final Results of Antidumping Duty Administrative 
and New Shipper Reviews, 64 FR 856 (January 6, 1999).
    To value river transport, we used the surrogate value for river 
freight used in the Preliminary Determination of Sales at Less Than 
Fair Value and Postponement of Final Determination: Certain Cold-Rolled 
Flat-Rolled Carbon Quality Steel Products From The People's Republic of 
China (``Cold-Rolled Steel from the PRC''), 65 FR 1117 (January 7, 
2000). No party submitted a surrogate value for ocean freight.

[[Page 22193]]

Therefore, to value ocean freight, we used the same methodology as in 
CTL Plate and the initiation of this case. We calculated the total 
cost, insurance, freight (CIF) value for imports of subject merchandise 
into the United States during the POI, subtracted the insurance and 
freight exclusive total Free Alongside (FAS) value, and divided the 
remainder by the total volume of POI importations of subject 
merchandise to arrive at a per unit value. See Factor Valuation 
Memorandum.
    Respondents identified a number of by-products which they claimed 
are recovered in the production process and/or sold. However, for 
certain of the claimed by-products the responses are unclear as to how 
the various inputs are re-entered into the production process. 
Therefore, the Department has only offset the respondents' cost of 
production by the amount of a reported by-product (or a portion 
thereof) where respondents' responses indicated that it was sold and/or 
where the record evidence clearly demonstrates that the by-product was 
re-entered into the production process. We intend to examine this issue 
more closely at verification for all respondents. See Factor Valuation 
Memorandum for a complete discussion of by-product credits given and 
the surrogate values used.
    To value factory overhead, and selling, general and administrative 
expenses (``SG&A''), we calculated simple average rates based on 
financial information from two Indian integrated steel producers, SAIL 
and Tata. For profit, we used information from Tata. Although 
respondents requested that we use financial information from another 
Indian steel producer, that steel producer is a mini-mill, and its 
financial information would be less comparable to that of the 
respondents, as the respondents operate integrated steel production 
facilities. (For a further discussion of the surrogate values for 
overhead, SG&A and profit, see Factor Valuation Memorandum.)
    For labor, consistent with section 351.408(c)(3) of the 
Department's regulations, we used the PRC regression-based wage rate at 
Import Administration's home page, Import Library, Expected Wages of 
Selected NME Countries, revised in May 2000 (see http://ia.ita.doc.gov/wages). The source of the wage rate data on the Import Administration's 
Web site is the 1999 Year Book of Labour Statistics, International 
Labor Office (Geneva: 1999), Chapter 5B: Wages in Manufacturing.

Verification

    As provided in section 782(i)(1) of the Act, we intend to verify 
all company information relied upon in making our final determination.

Rate for Producers/Exporters That Responded Only to Separate Rates 
Questionnaire

    For those PRC producers/exporters that responded to our separate 
rates questionnaire but did not respond to the full antidumping 
questionnaire because they were not selected to respond (i.e., 
Panzhihua and WISCO), we have calculated a weighted-average margin 
based on the rates calculated for those producers/exporters that were 
selected to respond. See, e.g., Notice of Final Determination of Sales 
at Less Than Fair Value: Freshwater Crawfish Tail Meat From the 
People's Republic of China, 62 FR 41347, 41350 (August 1, 1997).

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 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 or CEP, as indicated below. These suspension-of-
liquidation instructions will remain in effect until further notice. 
The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                             Weighted-
                  Exporter/manufacturer                       average
                                                          percent margin
------------------------------------------------------------------------
Angang Group International Trade Corporation............           64.77
Shanghai Baosteel Group Corporation.....................           40.74
Benxi Iron & Steel Group Co., Ltd.......................           67.44
Panzhihua Iron & Steel (Group) Company..................           44.47
Wuhan Iron & Steel Group Corporation....................           44.47
China-Wide..............................................           67.44
------------------------------------------------------------------------

International Trade Commission Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination of sales at LTFV. 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 the domestic industry in the United States 
is materially injured, or threatened with material injury, by reason of 
imports, or sales (or the likelihood of sales) for importation, of the 
subject merchandise.

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. See 19 
CFR 351.309(c)(1)(i); 19 CFR 351.309(d)(1). A list of authorities used 
and an executive summary of issues should accompany any briefs 
submitted to the Department. This summary should be limited to five 
pages total, including footnotes. In accordance with section 774 of the 
Act, we will hold a public hearing, if requested, to afford interested 
parties an opportunity to comment on arguments raised in case or 
rebuttal briefs. Tentatively, any hearing will be held fifty-seven days 
after publication of this notice at the U.S. Department of Commerce, 
14th Street and Constitution Avenue, NW., Washington, DC 20230, at a 
time and location to be determined. Parties should confirm by telephone 
the date, time, and location of the hearing 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. See 19 CFR 351.310(c). 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 75 days after the date of the preliminary 
determination.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act. Effective January 20, 2001, 
Bernard T. Carreau is fulfilling the duties of the Assistant Secretary 
for Import Administration.


[[Page 22194]]


    Dated: April 23, 2001.
Bernard T. Carreau,
Deputy Assistant Secretary, Import Administration.
[FR Doc. 01-10853 Filed 5-2-01; 8:45 am]
BILLING CODE 3510-DS-P