[Federal Register Volume 66, Number 149 (Thursday, August 2, 2001)]
[Notices]
[Pages 40208-40214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19350]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-830]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Stainless Steel Bar From 
Germany

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

ACTION: Notice of preliminary determination of sales at less than fair 
value.

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SUMMARY: We preliminarily determine that stainless steel bar from 
Germany is being, or is likely to be, sold in the United States at less 
than fair value, as provided in section 733(b) of the Tariff Act of 
1930, as amended.
    Interested parties are invited to comment on this preliminary 
determination. Since we are postponing the final determination, we will 
make our final determination not later than 135 days after the date of 
publication of this preliminary determination in the Federal Register.

EFFECTIVE DATE: August 2, 2001.

FOR FURTHER INFORMATION CONTACT: Craig Matney, Meg Weems or Andrew 
Covington, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-1778, (202) 482-2613, or 
(202) 482-3534, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (``the Act''), are references to the provisions 
effective January 1, 1995, the effective date of the amendments made to 
the Act by the Uruguay Round Agreements Act (``URAA''). In addition, 
unless otherwise indicated, all citations to the Department of Commerce 
(``Department's'') regulations are to 19 CFR part 351 (April 2000).

Background

    Since the initiation of this investigation (Notice of Initiation of 
Antidumping Investigations: Stainless Steel Bar from France, Germany, 
Italy, Korea, Taiwan and the United Kingdom (66 FR 7620, January 24, 
2001) (``Initiation Notice''), as amended by Corrections, Notice of 
Initiation of Antidumping Investigations: Stainless Steel Bar from 
France, Germany, Italy, Korea, Taiwan and the United Kingdom (66 FR 
14986, March 14, 2001)), the following events have occurred:
    On January 26, 2001, we solicited comments from interested parties 
regarding the criteria to be used for model-matching purposes. We 
received comments on our proposed matching criteria on February 8 and 
9, 2001.
    On February 12, 2001, the United States International Trade 
Commission (``ITC'') preliminarily determined that there is a 
reasonable indication that imports of stainless steel bar (``SSB'') 
from Germany are materially injuring the United States industry (see 
ITC Investigation No. 701-TA-913-918 (Publication No. 3395)).
    On February 21, 2001 , we selected the four largest producers/
exporters of SSB from Germany as the mandatory respondents in this 
proceeding. For further discussion, see Memorandum from The Team to 
Richard W. Moreland Re: Respondent Selection dated February 21, 2001. 
We subsequently issued the antidumping questionnaires to Walzwerke 
Einsal GmbH (``Einsal''), Edelstahl Witten-Krefeld GmbH (``EWK''), BGH 
Edelstahl Seigen GmbH and BGH Edelstahl Freital GmbH (``BGH''), and 
Krupp Edelstahlprofile GmbH (``KEP'') on February 21, 2001.
    On February 13, 2001, EWK requested that ``tool steel'' be excluded 
from the scope of this investigation. On February 13, 2001, BGH 
requested that ``special quality oil field equipment steel'' be 
excluded from the scope of this investigation. See ``Scope of 
Investigation'' section of this notice for further discussion.
    In February and March 2001, the petitioners in this case (i.e., 
Carpenter Technology Corp., Crucible Specialty Metals, Electralloy 
Corp., Empire Specialty Steel Inc., Slater Steels Corp., and the United 
Steelworkers of America) made submissions requesting that the 
Department require the respondents to report the actual content of the 
primary chemical components of SSB for each sale of SSB made during the 
period of investigation (``POI''). Also, in February and March 2001, 
the respondents in this and other concurrent SSB investigations 
requested that the Department deny the petitioners' request. The 
Department, upon consideration of the comments from all parties on this 
matter, issued a memorandum on April 3, 2001, indicating its decision 
not to require the respondents to report such information on a 
transaction-specific basis. However, the Department did require that 
respondents report certain additional information concerning SSB grades 
sold to the U.S. and home markets during the POI. (For details, see 
Memorandum from The Stainless Steel Bar Teams to Louis Apple and Susan 
Kuhbach, Directors, Office of AD/CVD Enforcement 1/2, dated April 3, 
2001).
    On March 6, 2001, Einsal requested that it be relieved from the 
requirement to report affiliated party resales because sales of the 
foreign like product to affiliated parties during the POI constituted 
less than five percent of total sales of the foreign like product. On 
April 3, 2001, we granted Einsal's request in accordance with 19 CFR 
351.403(d). (See Memorandum to Richard W. Moreland, dated April 3, 
2001.)

[[Page 40209]]

    On March 21, 2001, BGH requested that it be relieved from the 
requirement to report affiliated party resales because sales of the 
foreign like product to affiliated parties during the POI constituted 
less than five percent of total sales of the foreign like product. On 
April 6, 2001, we granted BGH's request in accordance with 19 CFR 
351.403(d). (See Memorandum to Richard W. Moreland, dated April 6, 
2001.)
    On March 21, 2001, EWK requested that it be relieved from the 
requirement to report affiliated party resales even though sales of the 
foreign like product to affiliated parties during the POI constituted 
more than five percent of total sales of the foreign like product. For 
the reasons stated in a Memorandum to Richard W. Moreland, dated May 
11, 2001, we granted EWK's request.
    On March 22, 2001, KEP requested that it be relieved from the 
requirement to report affiliated party resales even though sales of the 
foreign like product to affiliated parties during the POI constituted 
more than five percent of total sales of the foreign like product. For 
the reasons stated in a Memorandum to Richard W. Moreland, dated June 
21, 2001, we granted KEP's request.
    On April 17, 2001, BGH requested that it be allowed to report its 
cost data on a fiscal-year basis rather than a POI basis. For the 
reasons outlined in the letter dated May 2, 2001, we denied this 
request.
    During the period March through June 2001, the Department received 
responses to Sections A, B, C and D of the Department's original and 
supplemental questionnaires from BGH, Einsal, EWK, and KEP.
    On April 27, 2001, pursuant to 19 CFR 351.205(e), the petitioners 
made a timely request to postpone the preliminary determination. We 
granted this request on May 7, 2001, and postponed the preliminary 
determination until no later than July 26, 2001. (See Notice of 
Postponement of Preliminary Determinations of Sales at Less Than Fair 
Value: Stainless Steel Bar from France, Germany, Italy, Korea, Taiwan 
and the United Kingdom; 66 FR 24114, May 11, 2001).

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2)(A) of the Act, on July 17 and 20, 
2001, BGH and Einsal, and EWK and KEP, respectively, requested that, in 
the event of an affirmative preliminary determination in this 
investigation, the Department postpone its final determination until 
not later than 135 days after the date of the publication of the 
preliminary determination in the Federal Register, and extend the 
provisional measures to not more than six months. In accordance with 19 
CFR 351.210(b)(2)(ii), because (1) our preliminary determination is 
affirmative, (2) BGH, Einsal, EWK, and KEP account for a significant 
proportion of exports of the subject merchandise, and (3) no compelling 
reasons for denial exist, we are granting the respondents' request and 
are postponing the final determination until no later than 135 days 
after the publication of this notice in the Federal Register. 
Suspension of liquidation will be extended accordingly.

Scope of Investigation

    For purposes of this investigation, the term ``stainless steel 
bar'' includes articles of stainless steel in straight lengths that 
have been either hot-rolled, forged, turned, cold-drawn, cold-rolled or 
otherwise cold-finished, or ground, having a uniform solid cross 
section along their whole length in the shape of circles, segments of 
circles, ovals, rectangles (including squares), triangles, hexagons, 
octagons, or other convex polygons. Stainless steel bar includes cold-
finished stainless steel bars that are turned or ground in straight 
lengths, whether produced from hot-rolled bar or from straightened and 
cut rod or wire, and reinforcing bars that have indentations, ribs, 
grooves, or other deformations produced during the rolling process.
    Except as specified above, the term does not include stainless 
steel semi-finished products, cut length flat-rolled products (i.e., 
cut length rolled products which if less than 4.75 mm in thickness have 
a width measuring at least 10 times the thickness, or if 4.75 mm or 
more in thickness having a width which exceeds 150 mm and measures at 
least twice the thickness), products that have been cut from stainless 
steel sheet, strip or plate, wire (i.e., cold-formed products in coils, 
of any uniform solid cross section along their whole length, which do 
not conform to the definition of flat-rolled products), and angles, 
shapes and sections.
    The stainless steel bar subject to this investigation is currently 
classifiable under subheadings 7222.11.00.05, 7222.11.00.50, 
7222.19.00.05, 7222.19.00.50, 7222.20.00.05, 7222.20.00.45, 
7222.20.00.75, and 7222.30.00.00 of the Harmonized Tariff Schedule of 
the United States (``HTSUS''). Although the HTSUS subheadings are 
provided for convenience and customs purposes, the written description 
of the scope of this investigation is dispositive.
    In accordance with our regulations, we set aside a period of time 
for parties to raise issues regarding product coverage and encouraged 
all parties to submit comments within 20 calendar days of publication 
of the Initiation Notice (see 66 FR 7620-7621). The respondents in this 
and the companion SSB investigations filed comments seeking to exclude 
certain products from the scope of these investigations. The specific 
products identified in their exclusion requests are:
     Stainless Steel Tool Steel
     Welding Wire
     Special-Quality Oil Field Equipment Steel (``SQOFES'')
     Special Profile Wire
    We have addressed these requests in the Memorandum to Susan Kuhbach 
and Louis Apple from The Stainless Steel Bar Team, dated July 26, 2001, 
entitled ``Scope Exclusion Requests,'' and the Memorandum to Louis 
Apple from The Stainless Steel Bar Team, dated July 26, 2001, entitled 
``Whether Special Profile Wire Product is Included in the Scope of the 
Investigation.'' Our conclusions are summarized below.
    Regarding stainless steel tool steel, welding wire, and SQOFES, 
after considering the respondents' comments and the petitioners' 
objections to the exclusion requests, we preliminarily determine that 
the scope is not overly broad. Therefore, stainless steel tool steel, 
welding wire, and SQOFES are within the scope of these SSB 
investigations. In addition, we preliminarily determine that SQOFES 
does not constitute a separate class or kind of merchandise from SSB.
    Regarding special profile wire, we have preliminarily determined 
that this product does not fall within the scope as it is written 
because its cross section is in the shape of a concave polygon. 
Therefore, we have not included special profile wire in these 
investigations.
    Finally, we note that in the concurrent countervailing duty 
investigation of stainless steel bar from Italy, the Department 
preliminarily determined that hot-rolled stainless steel bar is within 
the scope of these investigations. (See, Preliminary Affirmative 
Countervailing Duty Determination and Alignment of Final Countervailing 
Duty Determination with Final Antidumping Duty Determination: Stainless 
Steel Bar from Italy, 66 FR 30414, June 6, 2001).

Period of Investigation

    The POI is October 1, 1999, through September 30, 2000.

[[Page 40210]]

Collapsing of Affiliated Parties

    KEP and EWK are affiliated parties within the meaning of section 
771(33)(F) by virtue of their ultimate ownership by a common parent 
company, ThyssenKrupp AG. Section 351.401(f)(1) of the Department's 
regulations explains that the Department will treat affiliated 
producers as a single entity where those producers have production 
facilities for similar or identical products that would not require 
substantial retooling of either facility in order to restructure 
manufacturing priorities and the Department concludes that there is a 
significant potential for the manipulation of price or production.
    KEP and EWK have argued that the two entities should not be 
collapsed because the current overlap in their production capability is 
minimal, there is little overlap in the current boards of directors, 
and the transactions between the two companies are similar to 
transactions with other, non-affiliated bar producers. Furthermore, 
they have argued that the cost to retool either or both of the plants 
to substantially increase one or both of their production ranges would 
be extremely high. Petitioners have argued that the current overlap is 
significant and that the cost of retooling KEP's and/or EWK's 
production facilities to produce a substantially expanded product range 
is not significant in relation to the resources available to 
ThyssenKrupp AG. Additionally, petitioners contend that the overlap in 
the boards of directors, the transactions between the two companies, 
and the potential for increased interactions between the two companies 
at the behest of ThyssenKrupp AG provide a significant potential for 
manipulation of production.
    In conducting this analysis of whether KEP and EWK should be 
treated as a single entity under section 351.401(f) of the regulations, 
we first observe that KEP and EWK are affiliated with each other due to 
the fact that they are both wholly-owned by ThyssenKrupp AG. We also 
observe, as a preliminary matter, that KEP and EWK are producers with 
production facilities for similar products. In this regard, we 
acknowledge that there is limited overlap between the products produced 
by KEP and EWK. However, the level of existing overlap means that, even 
with no retooling, manufacturing priorities could be restructured.
    Given these preliminary findings under section 351.401(f)(1), we 
turn to an analysis of the significant potential for the manipulation 
of price or production under section 351.401(f)(2). In conducting such 
an analysis, the factors the Department may consider include the level 
of common ownership, common managerial employees or board members on 
the respective boards of directors, and whether the operations of the 
companies are intertwined. The companies are wholly-owned by a single 
ultimate parent company and share two members of their respective 
managerial boards of directors, though KEP and EWK claim that the 
managerial board is not involved in the day to day operations of either 
firm. With regard to intertwined operations, KEP and EWK have an 
established relationship in which they sell each other's merchandise 
and purchase certain raw materials from each other and from common 
affiliated suppliers. In addition, by virtue of its complete ownership 
of the two firms, ThyssenKrupp AG potentially could dictate future 
production and pricing decisions and the sharing of sales information, 
facilities or employees.
    Based on this information, we preliminarily determine that within 
the current production overlap there is a potential for manipulation, 
and that the extent of the current overlap is large enough that any 
manipulation could be significant. Therefore, for the preliminary 
determination, we have calculated a single dumping margin for KEP and 
EWK by weight-averaging the two firms' individually-calculated dumping 
margins. For the final determination, we intend to request that KEP and 
EWK report combined sales and cost data.
    We invite comments from parties on this issue for the final 
determination, in particular as to whether the current production 
overlap provides a significant potential for price or production 
manipulation.

Fair Value Comparisons

    To determine whether sales of SSB from Germany to the United States 
were made at less than fair value (``LTFV''), we compared the export 
price (``EP'') or constructed export price (``CEP'') to the Normal 
Value (``NV''), as described in the ``Export Price'' and ``Constructed 
Export Price'' and ``Normal Value'' sections of this notice, below. In 
accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI 
weighted-average EPs and CEPs to NVs.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced and sold by the respondents in the home market during 
the POI that fit the description in the ``Scope of Investigation'' 
section of this notice to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. We compared 
U.S. sales to sales made in the home market, where appropriate. Where 
there were no sales of identical merchandise in the home market made in 
the ordinary course of trade to compare to U.S. sales, we compared U.S. 
sales to sales of the most similar foreign like product made in the 
ordinary course of trade. In making the product comparisons, we matched 
foreign like products based on the physical characteristics reported by 
the respondents in the following order of importance: general type of 
finish; grade; remelting process; type of final finishing operation; 
shape; and size. With respect to grade, we matched products sold in the 
U.S. and home markets on the basis of the three most similar matches 
proposed by the respondent, where possible.
    On July 11 and 13, 2001, the petitioners submitted general comments 
on product-matching issues for the Department's consideration in the 
preliminary determination. These comments were not received in time to 
be fully analyzed for the preliminary determination, but will be 
considered for the final determination.

Export Price

    For all respondents, we calculated EP, in accordance with section 
772(a) of the Act, for those sales where the merchandise was sold to 
the first unaffiliated purchaser in the United States prior to 
importation by the exporter or producer outside the United States, or 
to an unaffiliated purchaser for exportation to the United States, 
based on the facts of record. We based EP on the packed delivered price 
to unaffiliated purchasers in the United States. We identified the 
correct starting price by adding any surcharges, making adjustments for 
any price-billing errors and freight revenue, and making deductions for 
early payment discounts and rebates, where applicable. We also made 
deductions from the starting price for movement expenses in accordance 
with section 772(c)(2)(A) of the Act; these included, where 
appropriate, domestic inland freight, ocean freight, marine insurance, 
U.S. brokerage and handling, U.S. customs duties (including harbor 
maintenance fees and merchandise processing fees), and U.S. inland 
freight.

Constructed Export Price

    For KEP and EWK, we calculated CEP, in accordance with subsection

[[Page 40211]]

772(b) of the Act, for those sales to the first unaffiliated purchaser 
that took place after importation into the United States.
    We based CEP on the packed FOB or delivered prices to unaffiliated 
purchasers in the United States. Where appropriate, we made adjustments 
for price-billing errors and freight revenue, and made deductions for 
early payment discounts and rebates in order to identify the correct 
starting price. We also made deductions for movement expenses in 
accordance with section 772(c)(2)(A) of the Act; these included, where 
appropriate, ocean freight, marine insurance, U.S. brokerage and 
handling, U.S. customs duties (including harbor maintenance fees and 
merchandise processing fees), U.S. inland insurance, U.S. inland 
freight expenses, and warehousing expenses. In accordance with section 
772(d)(1) of the Act, we deducted those selling expenses associated 
with economic activities occurring in the United States, including 
direct selling expenses (credit costs and warranty expenses), inventory 
carrying costs, and indirect selling expenses. Where payment dates were 
unreported, we recalculated the credit expenses using the date of the 
preliminary determination in place of actual date of payment. Lastly, 
we made an adjustment for profit in accordance with section 772(d)(3) 
of the Act.

Normal Value

A. Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
whether the aggregate volume of home market sales of the foreign like 
product is equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared each respondent's volume of home 
market sales of the foreign like product to the volume of U.S. sales of 
the subject merchandise, in accordance with section 773(a)(1)(C) of the 
Act. Because each respondent's aggregate volume of home market sales of 
the foreign like product was greater than five percent of its aggregate 
volume of U.S. sales for the subject merchandise, we determined that 
the home market was viable for all respondents.

B. Affiliated-Party Transactions and Arm's-Length Test

    The Department's standard practice with respect to the use of home 
market sales to affiliated parties for NV is to determine whether such 
sales are at arm's-length prices. Therefore, in accordance with that 
practice, we performed an arm's-length test on each respondent's sales 
to affiliates as follows.
    Sales to affiliated customers in the home market not made at arm's-
length prices (if any) were excluded from our analysis because we 
considered them to be outside the ordinary course of trade. See 19 CFR 
351.102. To test whether these sales were made at arm's-length prices, 
we compared on a model-specific basis the starting prices of sales to 
affiliated and unaffiliated customers net of all movement charges, 
direct selling expenses, and packing. Where, for the tested models of 
subject merchandise, prices to the affiliated party were on average 
99.5 percent or more of the price to the unaffiliated parties, we 
determined that sales made to the affiliated party were at arm's 
length. See 19 CFR 351.403(c). In instances where no price ratio could 
be constructed for an affiliated customer because identical merchandise 
was not sold to unaffiliated customers, we were unable to determine 
that these sales were made at arm's-length prices and, therefore, 
excluded them from our LTFV analysis. See Final Determination of Sales 
at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products 
from Argentina (58 FR 37062, 37077 (July 9, 1993)). Where the exclusion 
of such sales eliminated all sales of the most appropriate comparison 
product, we made a comparison to the next most similar model.

C. Cost of Production Analysis

    Based on our analysis of an allegation contained in the petition, 
we found that there were reasonable grounds to believe or suspect that 
sales of SSB in the home market were made at prices below their cost of 
production (COP). Accordingly, pursuant to section 773(b) of the Act, 
we initiated a country-wide sales-below-cost investigation to determine 
whether sales were made at prices below their respective COP (see 
Initiation Notice at 66 FR 7623).
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of the cost of materials and fabrication for the 
foreign like product, plus an amount for general and administrative 
expenses (G&A), interest expenses, and home market packing costs (see 
``Test of Home Market Sales Prices'' section below for treatment of 
home market selling expenses). We relied on the COP data submitted by 
the respondents, except where noted below:
    EWK. We adjusted EWK's reported cost of manufacture (``COM'') to 
reflect the market price of EWK's steel scrap purchased from an 
affiliate. We also adjusted EWK's reported G&A expense based on its 
financial statements. See July 26, 2001, Cost Adjustment Memorandum for 
EWK, for further information.
    KEP. We adjusted KEP's reported COM to reflect the market price of 
KEP's nickel purchased from an affiliate. See July 26, 2001, Cost 
Adjustment Memorandum for KEP, for further information.
2. Test of Home Market Sales Prices
    On a product-specific basis, we compared the adjusted weighted-
average COP to the home market sales of the foreign like product, as 
required under section 773(b) of the Act, in order to determine whether 
the sale prices were below the COP. The prices were exclusive of any 
applicable movement charges, billing adjustments, discounts, rebates, 
commissions, interest revenue, warranty expenses, other direct and 
indirect selling expenses. In determining whether to disregard home 
market sales made at prices less than their COP, we examined whether 
such sales were made (1) within an extended period of time, (2) in 
substantial quantities, and (3) at prices which did not permit the 
recovery of all costs within a reasonable period of time.
3. Results of the COP Test
    Pursuant to section 773(b)(1), where less than 20 percent of the 
respondent's sales of a given product are at prices less than the COP, 
we do not disregard any below-cost sales of that product, because we 
determine that in such instances the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of a respondent's 
sales of a given product are at prices less than the COP, we disregard 
those sales of that product, because we determine that in such 
instances the below-cost sales represent ``substantial quantities'' 
within an extended period of time, in accordance with section 
773(b)(1)(A) of the Act. In such cases, we also determine whether such 
sales were made at prices which would not permit recovery of all costs 
within a reasonable period of time, in accordance with section 
773(b)(1)(B) of the Act.
    We found that, for certain specific products, more than 20 percent 
of each of the respondent's home market sales were at prices less than 
the COP and, in addition, such sales were made within a reasonable 
period of time and did not provide for the recovery of costs. We 
therefore excluded these sales and used the remaining above-cost sales, 
if any, as the basis for determining NV, in accordance with section 
773(b)(1).

[[Page 40212]]

D. Level of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (``LOT'') as the EP or CEP. Sales are made at 
different LOTs if they are made at different marketing stages (or their 
equivalent). 19 CFR 351.412(c)(2). Substantial differences in selling 
activities are a necessary, but not sufficient, condition for 
determining that there is a difference in the stages of marketing. Id.; 
see also Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 
FR 61731, 61732 (November 19, 1997). In order to determine whether the 
comparison sales were at different stages in the marketing process than 
the U.S. sales, we reviewed the distribution system in each market 
(i.e., the ``chain of distribution''),\1\ including selling 
functions,\2\ class of customer (``customer category''), and the level 
of selling expenses for each type of sale.
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    \1\ The marketing process in the United States and comparison 
markets begins with the producer and extends to the sale to the 
final user or consumer. The chain of distribution between the two 
may have many or few links, and the respondents' sales occur 
somewhere along this chain. In performing this evaluation, we 
considered the narrative responses of each respondent to properly 
determine where in the chain of distribution the sale occurs.
    \2\ Selling functions associated with a particular chain of 
distribution help us to evaluate the level(s) of trade in a 
particular market. For purposes of this preliminary determination, 
we have organized the common SSB selling functions into four major 
categories: sales process and marketing support, freight and 
delivery, inventory and warehousing, and quality assurance/warranty 
services. Other selling functions unique to specific companies were 
considered, as appropriate.
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    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying 
levels of trade for EP and comparison market sales (i.e., NV based on 
either home market or third country prices\3\), we consider the 
starting prices before any adjustments. For CEP sales, we consider only 
the selling activities reflected in the price after the deduction of 
expenses and profit under section 772(d) of the Act. See Micron 
Technology, Inc. v. United States, 243 F. 3d 1301, 1314-1315 (Fed. Cir. 
2001).
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    \3\ Where NV is based on CV, we determine the NV LOT based on 
the LOT of the sales from which we derive selling expenses, G&A and 
profit for CV, where possible.
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    When the Department is unable to match U.S. sales to sales of the 
foreign like product in the comparison market at the same LOT as the EP 
or CEP, the Department may compare the U.S. sale to sales at a 
different LOT in the comparison market. In comparing EP or CEP sales at 
a different LOT in the comparison market, where available data make it 
practicable, we make a LOT adjustment under section 773(a)(7)(A) of the 
Act. Finally, for CEP sales only, if a NV LOT is more remote from the 
factory than the CEP LOT and we are unable to make a level of trade 
adjustment, the Department shall grant a CEP offset, as provided in 
section 773(a)(7)(B) of the Act. See Notice of Final Determination of 
Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate 
from South Africa, 62 FR 61731 (November 19, 1997).
    We obtained information from each respondent regarding the 
marketing stages involved in making the reported home market and U.S. 
sales, including a description of the selling activities performed by 
the respondents for each channel of distribution. Company-specific LOT 
findings are summarized below:
1. BGH
    We examined the chain of distribution and the selling activities 
associated with sales reported by BGH to its four channels of 
distribution in the home market, and where appropriate, to distinct 
customer categories within these channels. We found that distribution 
channels 1 and 2, which related to produce-to-order sales to 
distributors and end-users, were similar with respect to sales process, 
freight services, warehouse/inventory maintenance and warranty service 
and, therefore, constituted a distinct level of trade (LOTH 1). We 
found that distribution channels 3 and 4, which related to warehouse 
inventory sales to distributors and end-users, were similar with 
respect to sales process, freight services, warehouse/inventory 
maintenance and warranty service to constitute a distinct level of 
trade (LOTH 2). However, we found that LOTH 2 differed significantly 
from LOTH 1 with respect to freight service and warehouse/inventory 
maintenance. Based upon our overall analysis in the home market, we 
found that LOTH 1 and LOTH 2 constituted two different levels of trade.
    BGH reported EP sales through two channels of distribution, 
produce-to-order sales to distributors (channel 1) and produce-to-order 
sales to end-users (channel 2). We examined the chain of distribution 
and the selling activities associated with sales through these channels 
and found them to be similar with respect to sales process, freight 
services, warehouse/inventory maintenance and warranty service. 
Therefore, we preliminarily determine that the two channels constitute 
a single level of trade (LOTU 1).
    This EP level of trade differed considerably from LOTH 2 with 
respect to freight services and warehousing/inventory maintenance. 
However, the EP level of trade was similar to LOTH 1 with respect to 
sales process, freight services, warehouse/inventory maintenance and 
warranty service. Consequently, we matched the EP sales to sales at the 
same level of trade in the home market (LOTH 1). Where no matches at 
the same level of trade were possible, and there was a pattern of 
consistent price differences between different levels of trade, we 
matched to sales in LOTH 2 and, where appropriate, we made a level of 
trade adjustment. See section 773(a)(7)(A).
2. Einsal
    Einsal has reported two home market channels of distribution: 
Direct sales and consignment sales. In the home market, Einsal sells to 
master distributors, regional service centers, and end users. Sales to 
all customer categories in both these channels of distribution were 
similar with respect to sales process, freight services, warehouse/
inventory maintenance and warranty service. Accordingly, we 
preliminarily determine that home market sales in these two channels of 
distribution to these three customer categories constitute a single 
level of trade.
    In the U.S. market, Einsal had only EP sales. Einsal reported EP 
sales to master distributors and end users through only one channel of 
distribution, direct sales. Sales to these customer categories through 
this channel of distribution were similar with respect to sales 
process, freight services, warehouse/inventory maintenance and warranty 
service. Accordingly, we preliminarily find that Einsal had only one 
level of trade for its EP sales.
    This EP level of trade was similar to that of the home market with 
respect to sales process, warehouse/inventory maintenance and warranty 
service, and differed only slightly with respect to freight and 
delivery. Consequently, we matched Einsal's U.S. sales to the single 
home market LOT. Thus, it was unnecessary to make any level-of-trade 
adjustment. See Section 773(a)(7)(A) of the Act.
3. EWK
    EWK reported two channels of distribution in the home market: (1) 
Mill direct sales to order (channel 1); and (2) mill sales from stock 
(channel 2). Both of these channels serviced all customer types (i.e., 
affiliated and unaffiliated service centers and end users). We examined 
these channels and found that

[[Page 40213]]

they varied with respect to sales process, freight services, and 
warehousing/inventory maintenance. Based on our overall analysis of the 
home market, we preliminarily find that channel 1 and channel 2 
constitute distinct levels of trade, LOTH 1 and LOTH 2, respectively.
    In the U.S. market, EWK had both EP and CEP sales. EWK reported EP 
sales through only one channel of distribution and to one customer 
category, and therefore had only one level of trade for its EP sales. 
This EP level of trade differed considerably from the home market level 
of trade LOTH 2 with respect to freight services and warehouse/
inventory maintenance. We found that LOTH 1 was similar to the EP level 
of trade with respect to sales process, freight services, warehouse/
inventory maintenance, and warranty service. Consequently, we matched 
EWK's EP sales to sales at the same level of trade in the home market 
(LOTH 1). Where no matches at the same level of trade were possible, 
and there was a pattern of consistent price differences between 
different levels of trade, we matched to sales in LOTH 2 and, where 
appropriate, we made a level of trade adjustment. See section 
773(a)(7)(A).
    EWK's constructed CEP level of trade was its sales to its 
affiliated reseller and since it performed the same selling functions 
for all of these sales, we found that these CEP sales constitute one 
level of trade. This CEP level of trade differed considerably from the 
home market level of trade LOTH 2 with respect to sales process and 
inventory maintenance. We found that LOTH 1 was similar to the CEP LOT 
with respect to sales process, warehouse/inventory maintenance, and 
warranty service and differed only slightly with respect to delivery 
services.
    Because we found the CEP LOT to be similar to home market level of 
trade LOTH 1, where possible, we matched CEP sales to normal value 
based on home market sales in LOTH 1 and made no CEP offset adjustment. 
Where we did not match products at the same level of trade, and there 
was a pattern of consistent prices differences between different levels 
of trade, we made a level of trade adjustment. See section 
773(a)(7)(A). Where we did not match products at the same level of 
trade, and we were unable to make a level of trade adjustment because 
the home market level of trade was at a more advanced stage of 
distribution than the CEP level of trade, we made a CEP offset in 
accordance with section 773(a)(7)(B) of the Act.
4. KEP
    KEP reported two channels of distribution in the home market: (1) 
Mill direct sales to order (channel 1); and (2) mill sales from stock 
(channel 2). KEP sold to service centers and end users through both of 
these distribution channels. We found that channel 1 produce-to-order 
sales to both customer categories were similar with respect to sales 
process, freight services, and warehouse/inventory maintenance, and, 
therefore, constituted a distinct level of trade (LOTH 1). We found 
that distribution channel 2 sales from stock to service centers and end 
users were similar with respect to sales process, freight services, and 
warehouse/inventory maintenance, and varied only slightly with respect 
to warranty service, to constitute a distinct level of trade (LOTH 2). 
However, we found that LOTH 2 differed significantly from LOTH 1 with 
respect to freight services and warehouse/inventory maintenance. Based 
on our overall analysis of the home market, we found that LOTH 1 and 
LOTH 2 constituted two different levels of trade.
    In the U.S. market, KEP had both EP and CEP sales. KEP reported EP 
sales through only one channel of distribution and to one customer 
category, and therefore had only one level of trade for its EP sales. 
This EP level of trade differed considerably from the home market level 
of trade LOTH 2 with respect to freight services, warehouse/inventory 
maintenance, and warranty service. We found that LOTH 1 was similar to 
the EP level of trade with respect to sales process, freight services, 
and warehouse/inventory maintenance, and differed only slightly with 
respect to warranty service. Consequently, we matched KEP's EP sales to 
sales at the same level of trade in the home market (LOTH 1). Where no 
matches at the same level of trade were possible, and there was a 
pattern of consistent price differences between different levels of 
trade, we matched to sales in LOTH 2 and, where appropriate, we made a 
level of trade adjustment. See section 773(a)(7)(A).
    KEP's constructed CEP level of trade was its sales to its 
affiliated reseller and since it performed the same selling functions 
for all of these sales, we found that these CEP sales constitute one 
level of trade. This CEP level of trade differed from the home market 
level of trade LOTH 2 principally with respect to warehouse/inventory 
maintenance and warranty service. We found that LOTH 1 was similar to 
the CEP LOT with respect to delivery services and warehouse/inventory 
maintenance and differed only slightly with respect to sales process.
    Because we found the CEP LOT to be similar to home market level of 
trade LOTH 1, where possible, we matched CEP sales to normal value 
based on home market sales in LOTH 1 and made no CEP offset adjustment. 
Where we did not match products at the same level of trade, and there 
was a pattern of consistent prices differences between different levels 
of trade, we made a level of trade adjustment. See section 
773(a)(7)(A). Where we did not match products at the same level of 
trade, and we were unable to make a level of trade adjustment because 
the home market level of trade was at a more advanced stage of 
distribution than the CEP level of trade, we made a CEP offset in 
accordance with section 773(a)(7)(B) of the Act.
E. Calculation of Normal Value Based on Comparison Market Prices
    We calculated NV based on delivered prices to unaffiliated 
customers or prices to affiliated customers that we determined to be at 
arm's length. We identified the correct starting price by making 
adjustments for surcharges and billing errors, and making deductions 
for discounts and rebates. We also made adjustments for movement 
expenses, including inland freight, inland insurance and warehousing, 
where appropriate, under section 773(a)(6)(B)(ii). We adjusted KEP's 
method of allocating its reported warehousing expenses (see July 26, 
2001 KEP Calculation Memorandum). We made adjustments for differences 
in costs attributable to differences in the physical characteristics of 
the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act 
and 19 CFR 351.411. In addition, we made adjustments under section 
773(a)(6)(C)(iii) of the Act for differences in circumstances of sale 
for imputed credit expenses, interest revenue, warranties, and other 
direct selling expenses, as appropriate. Where payment dates were 
unreported, we recalculated the credit expenses using the date of the 
preliminary determination in place of actual date of payment. We 
recalculated Einsal's credit expenses based on the adjusted starting 
prices (see Einsal Calculation Memorandum dated July 26, 2001 (Einsal 
Calculation Memorandum)). We also made adjustments, in accordance with 
19 CFR 351.410(e), for indirect selling expenses incurred in the 
comparison market or U.S. sales where commissions were granted on sales 
in one market but not in the other (the commission offset). We 
recalculated

[[Page 40214]]

Einsal's indirect selling expenses based on the adjusted starting 
prices (see Einsal Calculation Memorandum). We deducted home market 
packing costs and added U.S. packing costs in accordance with section 
773(a)(6)(A) and (B) of the Act.
    Finally, where appropriate, we made an adjustment for differences 
in LOT under section 773(a)(7)(A) of the Act and 19 CFR 351.412(b)-(e). 
Additionally, for comparisons to CEP sales, where appropriate, we 
deducted from normal value the lesser of comparison-market indirect 
selling expenses and indirect selling expenses deducted from CEP (the 
CEP offset), pursuant to section 773(a)(7)(B) of the Act and 19 CFR 
351.412(f).

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act based on the exchange rates in effect on the 
dates of the U.S. sales as reported by the Dow Jones.\4\ Einsal has 
demonstrated that its currency transactions on forward markets are 
linked to its U.S. dollar-denominated U.S. sales. Therefore, we have 
used the exchange rates specified in the forward sales agreements to 
make currency conversions for these sales, in accordance with section 
773A(a).
---------------------------------------------------------------------------

    \4\ We normally make currency conversions into U.S. dollars in 
accordance with section 773A(a) of the Act based on the exchange 
rates in effect on the dates of the U.S. sales as certified by the 
Federal Reserve Bank. In this case, where home market prices, costs 
and expenses were reported in German marks, we made currency 
conversions based on the exchange rates in effect on the dates of 
the U.S. sales as reported by the Dow Jones because the Federal 
Reserve Bank does not track the mark-to-dollar exchange rate.
---------------------------------------------------------------------------

Verification

    As provided in section 782(i) of the Act, we will verify all 
information relied upon in making our preliminary determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
the Customs Service to suspend liquidation of all imports of subject 
merchandise that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. We will instruct the 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 export price or constructed export 
price, as indicated in the chart below. These suspension-of-liquidation 
instructions will remain in effect until further notice. The weighted-
average dumping margins are as follows:

------------------------------------------------------------------------
                                                               Weighted-
                                                                average
                    Exporter/manufacturer                       margin
                                                              percentage
------------------------------------------------------------------------
BGH.........................................................      18.72
Einsal......................................................       6.48
EWK/KEP.....................................................      21.03
All Others..................................................      17.07
------------------------------------------------------------------------

ITC Notification

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

Disclosure

    We will disclose the calculations used in our analysis to parties 
in this proceeding in accordance with 19 CFR 351.224(b).

Public Comment

    Case briefs for this investigation must be submitted to the 
Department no later than November 7, 2001. Rebuttal briefs must be 
filed by November 15, 2001. A list of authorities used, a table of 
contents, and an executive summary of issues should accompany any 
briefs submitted to the Department. Executive summaries should be 
limited to five pages total, including footnotes. Section 774 of the 
Act provides that the Department will hold a public hearing to afford 
interested parties an opportunity to comment on arguments raised in 
case or rebuttal briefs, provided that such a hearing is requested by 
an interested party. If a request for a hearing is made in this 
investigation, the hearing will tentatively be held on November 19, 
2001 at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, NW., Washington, DC 20230. Parties should confirm by telephone 
the time, date, and place of the hearing 48 hours before the scheduled 
time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs.
    If this investigation proceeds normally, we will make our final 
determination by no later than 135 days after the publication of this 
notice in the Federal Register.
    This determination is published pursuant to sections 733(f) and 
777(i) of the Act.

    Dated: July 26, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-19350 Filed 8-1-01; 8:45 am]
BILLING CODE 3510-DS-P