[Federal Register Volume 66, Number 149 (Thursday, August 2, 2001)]
[Notices]
[Pages 40222-40228]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19352]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-847]


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

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 Korea 
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: Barbara Wojcik-Betancourt or Sophie 
Castro, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-0629 or (202) 482-0588, 
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 the regulations at 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, and we 
received comments on our proposed matching criteria on February 8, 
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 Korea are materially injuring the United States industry (see ITC 
Investigation No. 701-TA-913-918 (Publication No. 3395)).
    On February 12, 2001, we selected the four largest producers/
exporters of SSB from Korea as the mandatory respondents in this 
proceeding. For further discussion, see Memorandum from The Team to 
Richard W. Moreland, Deputy Assistant Secretary for Import 
Administration, entitled ``Respondent Selection'', dated February 12, 
2001. We subsequently issued the antidumping questionnaires to Dongbang 
Industrial Co., Ltd. (``Dongbang''), Changwon Specialty Steel 
(``Changwon''), Duferco Steel SA (``Duferco''), and Posco Steel Service 
and Sales (``POSTEEL'') on February 20, 2001.
    On February 15, 2001, SeAH Steel Corp. (``SeAH'') appeared on the 
record of this investigation as a voluntary respondent. On April 23, 
2001, SeAH was advised that the Department could not change its status 
from a voluntary to a mandatory respondent. (See Memoranda to the File 
dated February 27, 2001, and April 30, 2001, for further discussion.)
    In February and March, 2001, the petitioners \1\ in this case 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''). 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, Office Directors, 
dated April 3, 2001).
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    \1\ The petitioners in this case (i.e., Carpenter Technology 
Corp., Crucible Speciality Metals, Electralloy Corp., Empire 
Specialty Steel Inc., Slater Steels Corp., and the United 
Steelworkers of America)
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    On March 13, 2001, Duferco, a trading company in Switzerland, 
requested that it be relieved from its requirement to respond to 
Sections B, C, and D of the antidumping questionnaire because the 
producer of the subject merchandise that Duferco sold to the United 
States during the POI, indicated that it intended to report all the 
relevant sales and cost data in its response to the antidumping 
questionnaire because it knew at the time of sale to Duferco that the 
subject merchandise would be exported to the United States. On April 
12, 2001, the Department informed Duferco that it was not required to 
respond to Sections B, C, and D of the antidumping questionnaire. The 
Department also advised Duferco that pursuant to section 776(a) of the 
Tariff Act of 1930, as amended, if the information provided by Duferco 
or Duferco's supplier is not complete or cannot be verified as provided 
in section 782(i) of the Act, the Department may have to resort to the 
use of facts available. (See Memorandum from Barbara Wojcik-Betancourt 
to The File, dated April 12, 2001, for further details.)
    During the period March through June 2001, the Department received 
responses to Sections A, B, C, and D of

[[Page 40223]]

it's original and supplemental questionnaires from Changwon \2\ and 
Dongbang. Within the same time period Duferco submitted its responses 
to Section A of the Department's original and supplemental 
questionnaires.
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    \2\ Due to Changwon's affiliation with POSTEEL, a trading 
company in Korea, Changwon provided consolidated responses, 
including the sales of subject merchandise made by POSTEEL during 
the POI.
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    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)).
    On July 10 and 11, 2001, the petitioners submitted comments with 
respect to Dongbang's and Changwon's Sections A-D original and 
supplemental questionnaire responses.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on May 23, 2001, Changwon 
and Dongbang 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), because (1) our preliminary 
determination is affirmative, (2) Changwon and Dongbang 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 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 a Memorandum to Susan Kuhbach 
and Louis Apple from The Stainless Steel Bar Team, dated July 26, 2001, 
entitled ``Scope Exclusion Requests,'' and a 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.

Fair Value Comparisons

    To determine whether sales of SSB from Korea 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

[[Page 40224]]

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 general type of finish, the Department's 
questionnaire recognizes two types: hot-finished and cold-finished. 
Changwon reported a third type of finishing category (i.e., forged) 
that was not listed in the Department's questionnaire. According to the 
respondent, because one of the inputs used for the production of SSB 
(i.e., ingots), undergoes an extra processing procedure, specifically, 
the ingots are re-heated and then forged to a target size using 
forging-press machines, the general finish classification of the SSB 
products that are produced using the forged processing should be 
separated from the hot and cold categories specified in the 
questionnaire. We reviewed the information on the record and have 
preliminarily decided not to distinguish between hot-rolling and hot-
forging because there is no evidence that these processes yield 
different properties that result in different physical characteristics 
of the subject merchandise.
    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 respondents, where possible.
    With respect to ``Round-Class II'' products sold by Dongbang during 
the POI, in its original questionnaire response, Dongbang classified 
these products separately from round products in its reported shape 
code. In its June 11, 2001 supplemental questionnaire response, 
Dongbang reported Round-Class II products as a different grade rather 
than a separate shape, without providing the Department with a 
sufficient explanation as to why Class II products should be recognized 
as a different grade. Although Dongbang explained that Class II 
products undergo a more lengthy and more costly production process than 
non-Class II products, and provided the mechanical requirements of a 
Class II product as detailed in the ASTM specifications, the respondent 
did not show how a Class II product would constitute a separate grade 
with respect to chemical composition. Therefore, we have not taken into 
account the additional coding for Class II products in our preliminary 
determination and will review this issue further for the final 
determination.
    On July 10 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.
    With respect to home market sales of non-prime SSB made by Changwon 
and Dongbang during the POI, in accordance with our past practice, we 
excluded these sales from our preliminary analysis based on the limited 
quantity of such sales in the home market and the fact that no such 
sales were made to the United States during the POI. (See, e.g., Final 
Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled 
Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat 
Products, Certain Corrosion-Resistant Carbon Steel Flat Products, and 
Certain Cut-to-Length Carbon Steel Plate from Korea, 58 FR 37176, 37180 
( July 9, 1993)).

Export Price and Constructed Export Price

Changwon

    Changwon reported all U.S. sales as EP sales. During the POI, 
Changwon sold subject merchandise to unaffiliated U.S. customers prior 
to importation through affiliated (i.e., POSTEEL) and unaffiliated 
trading companies in Korea.
    With respect to sales made through Changwon's affiliated Korean 
trading company POSTEEL and through POSTEEL's affiliated U.S. trading 
company, POSAM, prior to importation, Changwon claims that these sales 
are properly classified as EP sales because Changwon is not directly 
affiliated with the U.S. trading company, POSAM. Furthermore, Changwon 
claims that the U.S. trading company acts only as a sales-document 
processor and communication link to facilitate Changwon's U.S. sales to 
unaffiliated customers.
    We preliminarily determine that sales made through POSTEEL's U.S. 
affiliate and reported by Changown as EP sales are properly classified 
as CEP sales. Having reviewed the evidence on the record of this 
investigation regarding respondent's reported EP sales, we conclude 
that sales between the foreign producer (i.e., Changwon) and the U.S. 
customer were made ``in the United States'' by POSTEEL's U.S. affiliate 
on behalf of Changwon within the meaning of section 772(b) of the Act, 
and, thus, should be treated as CEP transactions (see AK Steel Corp., 
et al. v. United States, 226 F.3d 1361, 1374 (Fed. Cir 2000) (``AK 
Steel'')). Specifically, although Changwon initially reaches the 
agreement with the U.S. customer on the estimated overall volume and 
pricing of merchandise through POSTEEL and its U.S. affiliate, the 
final documents are executed by POSTEEL's U.S. affiliate. See 
respondent's March 20, 2001 section A response at A14-18. The 
description provided by Changwon regarding the sales process for its 
alleged EP sales indicates that, for these sales, the merchandise was 
sold (or agreed to be sold ) in the United States. Therefore, we have 
preliminary decided to treat Changwon's reported EP sales through 
POSTEEL and POSAM as CEP sales. See Polyvinyl Alcohol from Japan: 
Preliminary Results of Antidumping Duty Administrative Review, 66 FR 
11140 (February 22, 2001), (where the Department preliminarily 
determined that, pursuant to AK Steel, sales through a U.S. affiliate 
were made ``in the United States'' and were therefore classifiable as 
CEP transactions).
    We calculated CEP, in accordance with subsection 772(b) of the Act, 
for those sales to the first unaffiliated purchaser that took place in 
the United States prior to importation by a seller affiliated with the 
producer or exporter as discussed above. We based CEP on the packed FOB 
or delivered prices to unaffiliated purchasers in the United States. We 
added duty drawback in accordance with section 772(c)(1)(B) of the Act. 
We 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, and U.S. inland freight expenses (freight 
from port to warehouse and freight from warehouse to the customer). 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. We 
also made an adjustment for profit in accordance with section 772(d)(3) 
of the Act. (See Calculation Memorandum dated July 26, 2001.)
    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 purchasers in 
the home market for exportation to

[[Page 40225]]

the United States market. We based EP on the packed delivered price to 
unaffiliated purchasers in the home market for exportation to the 
United States. We 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, and U.S. inland 
freight expenses (freight from port to warehouse and freight from 
warehouse to the customer). We added duty drawback in accordance with 
section 772(c)(1)(B) of the Act. (See Calculation Memorandum dated July 
26, 2001.)

Dongbang

    For all of Dongbang's reported sales, 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 in the home market for 
exportation to the United States market, based on the facts of record. 
We based EP on the packed delivered price to unaffiliated purchasers in 
the United States and home market. We added duty drawback in accordance 
with section 772(c)(1)(B) of the Act. We made deductions for movement 
expenses in accordance with section 772(c)(2)(A) of the Act; these 
included, where appropriate, domestic inland freight, Korean brokerage 
and handling charges (including wharfage charges, terminal handling 
charges, inspection fees, document fees, CFS charges, container taxes 
and customs clearance fees), ocean freight and marine insurance. (See 
Calculation Memorandum dated July 26, 2001.)

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)(B) 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 each respondent.

B. 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, 66 FR at 7620-7621).
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 Changwon and Dongbang, except where noted below:
    Changwon. Changwon submitted a cost database reflecting its 
production costs based on six size ranges. The Department's 
questionnaire recognizes three size categories (see antidumping 
questionnaire on page B-9). However, Changwon reported additional size 
categories (i.e., six in total) that take into account general finish 
(i.e., hot-working by either rolling or forging) and final finish 
(i.e., smooth-turning, rough-turning or lathing). In its questionnaire 
response, Changwon stated that the reason it submitted six categories 
is because it differentiates costs in its normal books based on size at 
a level of detail greater than the three size categories as identified 
by the Department's antidumping questionnaire. Based on the 
respondent's representation, we have accepted the reported production 
costs based on the size ranges identified by the respondent.
    We revised Changwon's fiscal year 2000 G&A expense rate calculation 
to exclude foreign exchange gains which were already reflected in the 
interest expense rate calculation. We used the revised interest expense 
rate which was submitted based on Changwon's consolidated parent 
company's 2000 financial statements. The COP file reflected the rate 
based on the 1999 financial statements. See Memorandum from Heidi 
Norris to Neal Halper, Director Office of Accounting, dated July 26, 
2001, Re: Cost Adjustments.
    Dongbang. Dongbang submitted two different cost databases 
reflecting its production costs based on five or three size ranges. 
Given that Dongbang does not recognize size groupings in its books and 
records, we have used the COP database that reports costs based on the 
three size groups defined in the Department's questionnaire.
    We revised Dongbang's reported direct materials costs to reflect 
market prices in accordance with section 773(f)(3) of the Act. The 
record evidence shows that market price exceeds both the transfer price 
of the direct materials purchased from the affiliated supplier and the 
affiliated supplier's COP. Accordingly, we have increased Dongbang's 
reported direct material costs to reflect the difference between the 
market price and the transfer price or COP. See Memorandum from LaVonne 
Jackson to Neal Halper, Director Office of Accounting, dated July 26, 
2001, Re: Cost Adjustments.
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 and direct and indirect selling expenses. 
In determining whether to disregard home market sales made at prices 
less than their COP, we examined, in accordance with sections 
773(b)(1)(A) and (B) of the Act, 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) of the Act, 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

[[Page 40226]]

would not permit recovery of all costs within a reasonable period of 
time, in accordance with section 773(b)(1)(B) of the Act.
    Changwon. We found that, for certain specific products, more than 
20 percent of Changwon'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) 
of the Act.
    Dongbang. We found that, for certain specific products, more than 
20 percent of Dongbang'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) 
of the Act.

E. 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 in the 
comparison market at the same level of trade (``LOT'') as the EP or CEP 
transaction. 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''),\3\ 
including selling functions,\4\ class of customer (``customer 
category''), and the level of selling expenses for each type of sale.
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    \3\ 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.
    \4\ 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\5\), 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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    \5\ Where NV is based on constructed value (``CV''), we 
determined 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 LOT 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.
    Changwon. Changwon made home market sales to two types of customer 
categories: direct sales to unaffiliated distributors and end-users 
(see Changwon's March 20, 2001 section A questionnaire response at 12). 
We examined the chain of distribution and the selling activities 
associated with home market sales to each customer category, and 
determined that there was little difference in the relevant selling 
functions provided by Changwon. Specifically, Changwon does not provide 
technical advice, after-sale warehousing, advertising, or quality 
assurance for any of its home market customers. Furthermore, Changwon's 
home market sales of SSB were made through direct shipments from its 
factory to its customers. Changwon typically sells on a freight paid 
basis to its home market customers so Changwon does incur a high degree 
of sales activity related to arranging for transportation directly to 
the customer. Changwon did not indicate that there are any differences 
with respect to freight and delivery or inventory maintenance between 
these customer categories (see Changwon's May 4, 2001 Section A 
Supplemental Questionnaire Response at 21). Similarly, the sales 
support activity and marketing support provided by Changwon are limited 
to activities associated with the basic sales process and do not seem 
to vary by customer category. Based on our overall analysis, we found 
that the two home market categories constituted one LOT.
    In the U.S. market, Changwon made both EP and CEP sales. See 
``Export Price and Constructed Export Price'' section above regarding 
the Department's re-classification of Changwon's sales made through 
U.S. affiliate. Changwon's EP sales were made through one channel of 
distribution and to one category of customer, i.e., they were made 
directly from Changwon to unaffiliated Korean trading companies, which, 
in turn, re-sold the merchandise to end-users in the United States (see 
Changwon's March 20, 2001 section A questionnaire response at 12). 
Therefore, we found that Changwon's EP sales constitute one LOT.
    Changwon's CEP sales were also made through one channel of 
distribution and to one category of customer, i.e., they were made from 
Changwon's U.S. affiliated trading company POSTEEL, and its affiliated 
U.S. importer POSAM. Therefore, we found that Changwon's CEP sales 
constitute one LOT. We compared the chain of distribution and selling 
activities associated with the CEP and EP sales and found that they 
were the same. Specifically, Changwon provides primarily freight 
services. It does not provide technical advice, after-sale warehousing, 
advertising, or quality assurance for any of its U.S. sales. Further, 
all Changwon's U.S. sales of SSB were made through direct shipments 
from its factory to its customers. Thus, Changwon's CEP LOT is the same 
as the EP LOT.
    We then compared the chain of distribution and selling activities 
associated with the home market LOT with that of the EP/CEP LOT and 
found that the chain of distribution and selling activities associated 
with EP/CEP LOT were the same as those associated with

[[Page 40227]]

the home market LOT. Specifically, we observed that Changwon, does not 
provide technical advice, after-sale warehousing, advertising, or 
quality assurance in selling to its U.S. or home market customers. 
Furthemore, for both levels of trade there is a high degree of selling 
activity related to freight and delivery and inventory maintenance, 
while there is a low (or non-existent) level of selling activity 
associated with sales support, advertising, technical services, post-
sale warehousing, and quality assurance. Consequently, we are matching 
EP and CEP sales to sales at the same LOT in the home market. In as 
much as we consider Changwon's EP and CEP sales to be at the same LOT 
as that of the home market, Changwon does not qualify for a LOT 
adjustment or CEP offset adjustment pursuant to section 773(a)(7)(A) or 
(B) of the Act, respectively.
    Dongbang. In its questionnaire responses, Dongbang reported that it 
performs similar selling activities and provides identical selling 
services for both home market and U.S. sales, regardless of whether the 
sale is to an end-user, distributor or unaffiliated trading company 
(see Dongbang's May 4, 2001 section A supplemental questionnaire 
response at 22).
    In the home market, Dongbang reported two customer categories 
(i.e., end-users and distributors) and one channel of distribution 
(i.e., direct shipment from its factory to unaffiliated customers). In 
determining whether separate levels of trade actually exist in the home 
market, we examined whether the sales made by Dongbang involved 
different marketing stages based on the channel of distribution, 
customer categories and selling functions. Based on Dongbang's 
submitted data, the selling activities and services associated with 
home market sales reported by Dongbang to its two types of customer 
categories are identical (see March 20, 2000 section A questionnaire 
response at 12 and Exhibit A-4). Therefore, we found that Dongbang's 
home market sales constitute one LOT.
    In the U.S. market, Dongbang reported it sold to one category of 
customer (i.e., trading companies) through two channels of distribution 
(i.e., Dongbang's sales were made directly from Dongbang to 
unaffiliated Korean and U.S. trading companies, which, in turn, re-sold 
the merchandise to end-users in the United States) (see Dongbang's 
March 20, 2001 section A questionnaire response at 11). Based on 
Dongbang's submitted data, the selling activities and services 
associated with U.S. market sales reported by Dongbang through its two 
channels of distribution are identical. Therefore, we found that 
Dongbang's U.S. market sales constitute one LOT.
    We also examined Dongbang's submitted data to determine whether the 
U.S. sales were made at the same LOT as that found in the home market. 
Specifically, Dongbang primarily provides freight services. It does not 
provide technical advice, after-sale warehousing, advertising, or 
quality assurance for any of its U.S. or home market sales. Further, 
all Dongbang's U.S. and home market sales of SSB were made through 
direct shipments from its factory to its customers. Therefore, no LOT 
adjustment is warranted.

F. Calculation of Normal Value Based on Comparison Market Prices

    Changwon. We calculated NV based on delivered prices, where 
applicable, to unaffiliated customers in the home market. We made 
deductions for inland freight under section 773(a)(6)(B)(ii) of the 
Act. We made adjustments to normal value, 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 and 19 CFR 351.410 for differences in 
circumstances of sale for imputed credit expenses and warranty 
expenses. We also deducted home market packing costs and added U.S. 
packing costs in accordance with sections 773(a)(6)(A) and (B) of the 
Act.
    Dongbang. We calculated NV based on delivered prices, where 
applicable, to unaffiliated customers in the home market. We made 
deductions for inland freight under section 773(a)(6)(B)(ii) of the 
Act. 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 and 19 CFR 351.410 for differences in circumstances of sale for 
imputed credit expenses.
    Dongbang paid commissions to unaffiliated sales intermediaries on 
some U.S. sales of subject merchandise but did not pay commissions on 
its home market sales. Therefore, in accordance with 19 CFR 351.410(e), 
we offset the commission incurred in the U.S. market, with indirect 
selling expenses incurred in the home market to the extent of the 
lesser of the commission or the indirect selling expenses. As indirect 
selling expenses, we used both Dongbang's reported home market 
inventory carrying costs and indirect selling expenses. We also 
deducted home market packing costs and added U.S. packing costs in 
accordance with sections 773(a)(6)(A) and (B) of the Act.

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 certified by the Federal Reserve Bank.

Verification

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

Suspension of Liquidation

    In accordance with section 733(d)(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 EP or CEP, 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
------------------------------------------------------------------------
Dongbang Industrial Co., Ltd...............................         7.30
Changwon Specialty Steel Co................................        10.05
All Others.................................................         9.40
------------------------------------------------------------------------

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

[[Page 40228]]

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. 01-19352 Filed 8-1-01; 8:45 am]
BILLING CODE 3510-DS-P