[Federal Register Volume 66, Number 144 (Thursday, July 26, 2001)]
[Notices]
[Pages 39009-39013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18666]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-871 and A-588-858]


Notice of Initiation of Antidumping Duty Investigations: Certain 
Blast Furnace Coke Products From the People's Republic of China and 
Japan

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

ACTION: Initiation of antidumping duty investigations.

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EFFECTIVE DATE: July 26, 2001.

FOR FURTHER INFORMATION CONTACT: Alex Villanueva (China) and Julio 
Fernandez (Japan) at (202) 482-6412 and (202) 482-0190, respectively, 
or Donna Kinsella at (202) 482-0194; Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230.

Initiation of Investigations

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, as amended 
(``the Act''), by the Uruguay Round Agreements Act (``URAA''). In 
addition, unless otherwise indicated, all citations to the Department's 
regulations are references to the provisions codified at 19 CFR Part 
351 (2000).

The Petition

    On June 29, 2001, the Department of Commerce (the Department) 
received a petition filed in proper form by the following parties: 
Shenango Incorporated, Koppers Industries, Inc., DTE Energy Services 
Inc., Acme Steel Company, and United Steelworkers of America, AFL-CIO 
(collectively, the petitioners). The Department received information 
supplementing the petition, on July 6, 2001, July 9, 2001, July 11, 
2001, July 17, 2001, July 18, 2001, and July 19, 2001. On July 19, 
2001, we received a challenge to industry support for these petitions 
from Defurco SA. See the Import Administration AD Investigation 
Checklist, July 19, 2001 (``Initiation Checklist'') (public version on 
file in the Central Records Unit of the Department of Commerce, Room B-
099) at Attachment I-3.
    In accordance with section 732(b) of the Act, the petitioners 
allege that imports of certain blast furnace coke from the People's 
Republic of China (``PRC'') and Japan are being, or are likely to be, 
sold in the United States at less than fair value within the meaning of 
section 731 of the Act, and that such imports are materially injuring, 
or are threatening to materially injure, an industry in the United 
States.
    The Department finds that the petitioners filed this petition on 
behalf of the domestic industry because they are interested parties as 
defined in sections 771(9)(C) and 771(9)(D) of the Act and have 
demonstrated sufficient industry support with respect to each of the 
antidumping investigations that they are requesting the Department to 
initiate (see the Determination of Industry Support for the Petition 
section below).

Scope of Investigations

    The scope of these investigations covers blast furnace coke made 
from coal or mostly coal, and other carbon materials, with a majority 
of individual pieces less than 100 MM (4 inches) of a kind capable of 
being used in blast furnace operations, whether or not mixed with coke 
breeze. Blast furnace

[[Page 39010]]

coke is generally \1\ classified under Harmonized Tariff Schedule 
United States (``HTSUS'') subheading 2704.00.0025. The tariff 
classification is provided for descriptive purposes; the scope of the 
investigation, not the tariff classification of the import, is 
dispositive.

Determination of Industry Support for the Petition

    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who produce the domestic 
like product. The United States International Trade Commission 
(``ITC''), which is responsible for determining whether ``the domestic 
industry'' has been injured, must also determine what constitutes a 
domestic like product \1\ in order to define the industry. While both 
the Department and the ITC must apply the same statutory definition 
regarding domestic like product (see section 771(10) of the Act), they 
do so for different purposes and pursuant to their separate and 
distinct authority. In addition, the Department's determination is 
subject to limitations of time and information. Although this may 
result in different definitions of the like product, such differences 
do not render the decision of either agency contrary to the law.\2\
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    \1\ In response to the July 6, 2001, deficiency questionnaire, 
petitioners agreed to change ``may be classified'' to ``are 
generally classified.''
    \2\ See Algoma Steel Corp. Ltd., v. United States, 688 f. Supp. 
639, 642-44 (CIT 1988); High Information Content flat Panel Displays 
and Display Glass Therefore from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition. 56 FR 
32376, 32380-81 (July 16, 1991).
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    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    In this petition, petitioners do not offer a definition of domestic 
like product distinct from the scope of the investigation. Thus, based 
on our analysis of the information presented to the Department by 
petitioners, and the information obtained and received independently by 
the Department, we have determined that there is a single domestic like 
product, which is defined in the Scope of Investigations section above, 
and have analyzed industry support in terms of this domestic like 
product.
    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) at least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. Information contained in the petition 
demonstrates that the domestic producers or workers who support the 
petition account for at least 25 percent of total production of the 
domestic like product. We have received no opposition from domestic 
producers or workers. As a result, we find that the domestic producers 
or workers who support the petition also account for more than 50 
percent of the production of the domestic like product produced by that 
portion of the industry expressing support for the petition. See 
Initiation Checklist at Attachment II. Thus, the requirements of 
section 732(c)(4)(A)(i)(ii) are met.
    Accordingly, the Department determines that the petition was filed 
on behalf of the domestic industry within the meaning of section 
732(b)(1) of the Act. See Initiation Checklist.

Export Price and Normal Value

    Where the petitioners obtained data from foreign market research, 
we contacted the researcher to establish its credentials and to confirm 
the validity of the information provided. See Memorandum to the File 
from Julio A. Fernandez through Donna Kinsella, Telephone Conversation 
with Foreign Market Researcher for Antidumping Petition Regarding 
Imports of Blast Furnace Coke from Japan, July 20, 2001 (Market 
Research for Japan). Should the need arise to use any of this 
information as facts available under section 776 of the Act in our 
preliminary or final determinations, we may re-examine the information 
and revise the margin calculations, if appropriate.
    The following are descriptions of the allegations of sales at less 
than fair value upon which the Department has based its decision to 
initiate these investigations. The sources of data for the deductions 
and adjustments relating to home market price, U.S. price, constructed 
value (CV) and factors of production (FOP) are detailed in the 
Initiation Checklist.
    The anticipated period of investigation (POI) for Japan, a market 
economy country is April 1, 2000, through March 31, 2001, while the 
anticipated POI for the PRC, a non-market economy (NME) country is 
October 1, 2000, through March 31, 2001.
    Regarding an investigation involving a NME, the Department 
presumes, based on the extent of central government control in a NME, 
that a single dumping margin, should there be one, is appropriate for 
all NME exporters in the given country. See, e.g., Final Determination 
of Sales at Less Than Fair Value: Silicon Carbide from the PRC, 59 FR 
22585 (May 2, 1994). In the course of these investigations, all parties 
will have the opportunity to provide relevant information related to 
the issue of the PRC's status and the granting of separate rates to 
individual exporters.

China

Export Price

    To calculate export price (``EP''), petitioners screened U.S. 
Census import data, and selected from this data certain imports which 
they believed were of blast furnace coke to arrive at an estimate for 
imports of such coke for the period April 2000 through March 2001, 
falling under the Harmonized Tariff Schedules (``HTSUS'') 
classification 2704.00.\3\ The selected data was broken down by import 
quantity, customs value, and CIF value. See Petition at 14.
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    \3\ Petitioners indicate this data was obtained from the 
American Coal and Coke Chemicals Institute.
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    For purposes of initiation, the Department has decided to rely 
instead on average unit values during the POI as reported under HTSUS 
2704.00.0025. The Department believes that this HTS number represents a 
clean category under which all imports of subject coke must enter. The 
possibility of a misclassification by the U.S. Customs Service is not 
sufficient to warrant the methodology utilized by petitioners as 
described above. In particular, the Department does not believe that 
port and volume-specific import data is representative of U.S. prices 
of subject merchandise. As a result, as indicated above, we have relied 
on AUVs to calculate EP.
    We obtained from the ITC's Dataweb, U.S. import values for HTS 
2704.00.0025. We used the free

[[Page 39011]]

alongside ship (``FAS'') customs values as the F.O.B. price of 
merchandise. For purposes of initiation, we have found this to be an 
appropriate estimate. We deducted estimated foreign inland freight 
costs from the customs value to arrive at an estimated ex-factory price 
for use in the comparison of EP and normal values for China.
    Petitioners used the selected Customs Values as the free on board 
(``F.O.B.'') price of the merchandise, packaged and ready for delivery 
at the foreign port. To approximate ex-factory prices, petitioners 
deducted foreign inland freight from the selected Customs Value. See 
Petition at 14. Petitioners calculated average foreign inland freight 
charges using estimated atlas distances and Indian freight rates as a 
surrogate value.

Normal Value

    The petitioners assert that the PRC is an NME country and no 
determination to the contrary has yet been made by the Department. In 
previous investigations, the Department has determined that the PRC is 
an NME. See Steel Concrete Reinforcing Bars from the People's Republic 
of China; Notice of Final Determination of Sales at Less Than Fair 
Value (``Re-Bars from China''), 66 FR 33522 (June 22, 2001), and 
Foundry Coke Products from the People's Republic of China; Notice of 
Preliminary Determination of Sales at Less Than Fair Value (``Foundry 
Coke from China''), 66 FR 13885 (March 8, 2001). In accordance with 
section 771(18)(C)(i) of the Act, the presumption of NME status remains 
in effect until revoked by the Department. The presumption of NME 
status for the PRC has not been revoked by the Department and, 
therefore, remains in effect for purposes of the initiation of this 
investigation.
    Petitioners stated that the current domestic coke industry in China 
consists of both an integrated (recovery process) and an independent 
sector (beehive oven process) of blast furnace coke. Consequently, 
petitioners calculated a margin for the recovery process and for the 
beehive oven process. For NV for the recovery process, the petitioners 
based the factors of production (FOP), as defined by section 773(c)(3) 
of the Act, on the consumption rates of two U.S. blast furnace coke 
producers utilizing the mechanical (recovery) oven production process. 
The petitioners assert that information regarding Chinese producers' 
recovery oven consumption rates is not available, and that the U.S. 
producer employs a production process which is similar to the 
production processes employed by producers of blast furnace coke in the 
PRC. Thus, the petitioners have assumed, for purposes of the petition, 
that producers in the PRC use similar inputs in similar quantities as 
the U.S. producer and have adjusted these inputs for known differences.
    For the beehive oven production process, petitioners based the 
blast furnace coke FOP on two publicly available sources. The first 
source is the ITC Section 332 Report. See Foundry Coke: A Review of the 
Industries in the United States and China, (``332 Report'') Inv. No. 
332-407, ITC Pub. 3323 (July 2000). The second source is the Chinese 
Coke 1999 Directory (``Directory''), published by the TEX Report.
    Based on the information provided by the petitioners, we believe 
that the petitioners' FOP methodology represents information reasonably 
available to the petitioners and is appropriate for purposes of 
initiating this investigation.
    Pursuant to section 773(c) of the Act, the petitioners assert that 
India is the most appropriate surrogate country for the PRC, claiming 
that India is: (1) A market economy; (2) a significant producer of 
comparable merchandise; and (3) at a level of economic development 
comparable to the PRC in terms of per capita gross national product 
(``GNP''). Based on the information provided by the petitioners, we 
believe that the petitioners' use of India as a surrogate country is 
appropriate for purposes of initiating this investigation.
    In accordance with section 773(c)(4) of the Act, petitioners valued 
FOP, where possible, on reasonably available, public surrogate data 
from India. Materials, with the exception of ammonium sulphate, were 
valued based on Indian import values, as published in the 1998 and 1999 
Monthly Statistics of Foreign Trade of India, and inflated based on the 
Indian Wholesale Price Index. Surrogate value data from India for 
ammonium sulphate was not available. Instead, petitioners used a value 
from Chemical Weekly, an Indian chemical industry publication. Labor 
was valued using the regression-based wage rate for the PRC provided by 
the Department, in accordance with 19 CFR 351.408(c)(3). Electricity 
was valued using Energy Prices and Taxes, First Quarter 2001, published 
by, the Organization for Economic Cooperation and Development 
(``OECD'') International Energy Agency.
    For overhead, depreciation, selling, general, and administrative 
(``SG&A'') expenses, and profit, the petitioners applied rates derived 
from the financial statements of Gujarat NRE Coke, Ltd., an Indian coke 
producer.
    Based on the information provided by the petitioners, we believe 
that the surrogate values represent information reasonably available to 
the petitioners and are acceptable for purposes of initiating this 
investigation.
    Based on comparisons of EP to CV, the estimated dumping margins 
range from 132.2 to 207.2 percent. See Initiation Checklist at 11.

Japan

Export Price

    To calculate EP, petitioners screened U.S. Census import data, and 
selected from this data certain imports which they believed were of 
blast furnace coke to arrive at an estimate for imports of such coke 
for the period April 2000 through March 2001, falling under the 
Harmonized Tariff Schedules (``HTSUS'') classification 2704.00.\4\ The 
selected data was broken down by import quantity, customs value, and 
CIF value. See Petition at 14.
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    \4\ Petitioners indicate this data was obtained from the 
American Coal and Coke Chemicals Institute.
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    For purposes of initiation, the Department has decided to rely 
instead on average unit values during the POI as reported under HTSUS 
2704.00.0025. The Department believes that this HTS number represents a 
clean category under which all imports of subject coke must enter. The 
possibility of a misclassification by the U.S. Customs Service is not 
sufficient to warrant the methodology utilized by petitioners as 
described above. In particular, the Department does not believe that 
port and volume-specific import data is representative of U.S. prices 
of subject merchandise. As a result, as indicated above, we have relied 
on AUVs to calculate EP.
    We obtained from the ITC's Dataweb, U.S. import values for HTS 
2704.00.0025. We used the free alongside ship (``FAS'') customs values 
as the F.O.B. price of merchandise. For purposes of initiation, we have 
found this to be an appropriate estimate. We deducted estimated foreign 
inland freight costs from the customs value to arrive at an estimated 
ex-factory price for use in the comparison of EP and normal values for 
Japan.
    Petitioners used the selected Customs Values as the FOB price of 
the merchandise, packaged and ready for delivery at the foreign port. 
To approximate ex-factory prices, petitioners deducted foreign inland 
freight from the selected Customs Value. See Petition at 14. 
Petitioners conservatively calculated average foreign inland freight 
charges using

[[Page 39012]]

estimated atlas distances and Indian freight rates as a surrogate 
value.

Normal Value

    Petitioners submitted price information regarding five Japanese 
domestic sales of blast furnace coke, obtained through foreign market 
research. In a telephone conversation with the foreign market 
researcher, the researcher indicated that two of the five home market 
transactions involved affiliated parties. See Market Research for 
Japan. We are excluding these two sales in our determination of NV 
because we can not determine, for purposes of initiation, whether these 
transactions are at ``arms-length.'' See Statement of Administrative 
Action at 827 and 19 CFR 351.403(c) of the Department's regulations.
    With respect to NV, petitioners assert that sales of the subject 
merchandise in the Japanese home market are below the cost of 
production within the meaning of section 773(b) of the Act.\5\ See 
Petition Exhibits 7 and 53. Petitioners therefore provided constructed 
value (``CV'') pursuant to section 773(c) of the Act. Petitioners 
provided information demonstrating reasonable grounds to believe or 
suspect that sales of blast furnace coke in the home market were made 
at prices below the fully absorbed COP, within the meaning of section 
773(b) of the Act, and requested that the Department conduct a country-
wide sales-below-cost investigation. As noted above, petitioners 
obtained information regarding home market sales prices from a foreign 
market research company. This information demonstrates sales below COP 
based on petitioners' calculation as described below.
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    \5\ In their July 11, 2001 submission, petitioners make a formal 
below cost of production allegation with respect to Japanese sales 
of subject merchandise in the home market, and also assert that 
exports of blast furnace coke to third countries are sold at less 
than the cost of production. See July 11, 2001 submission, at 1-2.
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    In accordance with section 773(b)(3) of the Act, the petitioner 
calculated the COP for the subject merchandise based on the sum of the 
cost of manufacturing (``COM'') and SG&A. To arrive at CV, petitioners 
averaged the consumption rates of two U.S. producers of subject 
merchandise, and adjusted for known differences based on information 
available regarding Japanese production processes and costs, and 
conservatively assumed that all Japanese coke oven gas is sold to third 
party consumers. With respect to the domestic price for coke oven gas 
in Japan, petitioners submitted information obtained from foreign 
market research, which included sales of coke oven gas between 
affiliated parties. For purposes of this initiation, we have excluded 
such sales from our calculation of the domestic price for coke oven gas 
in accordance with Department practice regarding affiliated 
transactions.
    Petitioners calculated direct labor costs using the cost and 
processing times for the two U.S. producers, adjusted for known 
differences. Specifically, the petitioners obtained public statistical 
information from the Japan Iron and Steel Federation (``JISF'') (see 
Petition Exhibit 36) to adjust the U.S. producer's direct labor costs 
to the equivalent Japanese cost. The 1999 average monthly earnings of a 
Japanese worker in iron and steel industries (fringe benefits included) 
was divided by the average monthly hours worked. The consumer price 
index was used to adjust the 1999 wage rate for the POI.
    Petitioners obtained public statistics from Energy Prices & Taxes 
to adjust the U.S. producers' electricity, natural gas, and steam costs 
to equivalent Japanese costs. Petitioners conservatively estimated the 
Japanese price for water to be approximately $1 per 1,000 gallons.
    Petitioners used two U.S. producers' variable and fixed factory 
overhead costs to estimate these costs as borne by Japanese producers. 
Petitioner based SG&A and profit expenses on the information contained 
in the financial statements of six integrated Japanese steel producers 
with coke producing facilities. The SG&A ratio was calculated using the 
ratio of SG&A expenses to costs of sales. Profit was calculated using 
the ratio of income before taxes to the total of cost of sales and SG&A 
expenses. Petitioners used an average of the financial expenses of two 
U.S. producers' as reported in financial statements to estimate this 
expense as incurred by Japanese producers.
    Based on the comparison of the prices of the foreign like product 
in the home market to the calculated COP of the product, we find 
reasonable grounds to believe or suspect that sales of the foreign like 
product were made below the COP within the meaning of section 
773(b)(2)(A)(I) of the Act. Accordingly, the Department is initiating a 
country-wide cost investigation. Pursuant to section 773(a)(4), 773(b), 
and 773(e) of the Act, petitioners based normal value for sales in 
Japan on CV because sales of the subject merchandise in the home market 
were found to be below the cost of production. Therefore, based on 
these facts, for this initiation, we are accepting CV as the 
appropriate basis for normal value. Petitioners calculated CV using the 
same COM and SG&A expense figures used to calculate Japanese home 
market costs. Consistent with section 773(e)(2) of the Act, the 
petitioners also added an amount for profit to arrive at CV.
    Based on the data provided by the petitioners, there is reason to 
believe imports of blast furnace coke from Japan are being, or are 
likely to be, sold at less than normal value.
    Based on comparisons of NV to EP, the estimated dumping margin is 
71.66 percent.

Fair Value Comparisons

    Based on the data provided by the petitioners, there is reason to 
believe that imports of certain blast furnace coke from the PRC and 
Japan are being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

    The petitioners allege that the U.S. industry producing the 
domestic like product is being materially injured, or is threatened 
with material injury, by reason of the individual and cumulated imports 
of the subject merchandise sold at less than NV. Individually, the 
volume of imports from China and Japan, using the latest available 
data, exceeded the statutory threshold of seven percent for a 
negligibility exclusion. Therefore, when cumulated, the volumes for 
these two countries also exceed the threshold. See section 
771(24)(A)(ii) of the Act. Petitioners contend that the industry's 
injured condition is evidenced in the declining trends in operating 
profits, decreased U.S. market share, and price suppression and 
depression. The allegations of injury and causation are supported by 
relevant evidence including U.S. Customs import data, domestic 
consumption, and pricing information. We have assessed the allegations 
and supporting evidence regarding material injury and causation, and 
have determined that these allegations are properly supported by 
accurate and adequate evidence and meet the statutory requirements for 
initiation. See Initiation Checklist.

Initiation of Antidumping Investigations

    Based on our examination of the petition on certain blast furnace 
coke, and the petitioners' responses to our supplemental questionnaires 
clarifying the petition, we have found that the petition meets the 
requirements of section 732 of the Act. See Initiation Checklist. 
Therefore, we are initiating antidumping duty investigations to 
determine whether imports of certain blast furnace coke from the PRC 
and Japan are being, or are likely to be, sold in the United States at 
less than fair

[[Page 39013]]

value. Unless this deadline is extended, we will make our preliminary 
determinations no later than 140 days after the date of this 
initiation.

Distribution of Copies of the Petitions

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of the petition has been provided to the representatives 
of the governments of the PRC and Japan. We will attempt to provide a 
copy of the public version of the petition to each exporter named in 
the petition, as appropriate.

International Trade Commission Notification

    We have notified the ITC of our initiations, as required by section 
732(d) of the Act.

Preliminary Determinations by the ITC

    The ITC will determine, no later than August 7, 2001, whether there 
is a reasonable indication that imports of certain blast furnace coke 
products from the PRC and Japan are causing material injury, or 
threatening to cause material injury, to a U.S. industry. A negative 
ITC determination for any country will result in the investigation 
being terminated with respect to that country; otherwise, these 
investigations will proceed according to statutory and regulatory time 
limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: July 19, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-18666 Filed 7-25-01; 8:45 am]
BILLING CODE 3510-DS-P