[Federal Register Volume 66, Number 153 (Wednesday, August 8, 2001)]
[Notices]
[Pages 41517-41523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19781]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-475-824]


Stainless Steel Sheet and Strip in Coils From Italy: Preliminary 
Results of Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review of stainless steel sheet and strip in coils from 
Italy

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SUMMARY: The Department of Commerce (``the Department'') is conducting 
an administrative review of the antidumping duty order on stainless 
steel sheet and strip in coils from Italy

[[Page 41518]]

in response to a request from respondent, Acciai Speciali Terni, S.p.A. 
(``AST''). This review covers imports of subject merchandise from AST. 
The period of review (``POR'') is January 4, 1999 through June 30, 
2000.
    Our preliminary results of review indicate that respondent AST has 
sold subject merchandise at less than normal value during the POR. If 
these preliminary results are adopted in our final results of this 
administrative review, we will instruct the U.S. Customs Service to 
assess antidumping duties on suspended entries for AST.
    We invite interested parties to comment on these preliminary 
results. Parties who submit arguments in this segment of the proceeding 
should also submit with each argument (1) a statement of the issue and 
(2) a brief summary of the argument.

EFFECTIVE DATE: August 8, 2001.

FOR FURTHER INFORMATION CONTACT: Carrie Blozy, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 
482-0165.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

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

Background

    On July 20, 2000, the Department published in the Federal Register 
a notice of ``Opportunity to Request Administrative Review'' of the 
antidumping duty order on SSSS from Italy. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 65 FR 45035 (July 20, 
2000). On July 31, 2000, AST, a producer and exporter of subject 
merchandise during the period of review (``POR''), requested that the 
Department conduct an administrative review of the antidumping duty 
order. In September 2000, the Department initiated an administrative 
review of the antidumping duty order on SSSS from Italy with regard to 
AST. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Requests for Revocation in Part, 65 FR 58733 
(October 2, 2000). On September 7, 2000, the Department issued its 
antidumping duty questionnaire.
    On September 21, 2000, AST submitted a letter which requested 
certain exclusions to the data required by the Department's antidumping 
questionnaire. Also, on September 21, 2000, in a separate letter, AST 
submitted a request that the Department not require it to report 
downstream home market sales by its Italian affiliates. On September 
22, 2000, AST requested that it not be required to submit transaction-
specific data with respect to U.S. re-sales by Thyssen Copper & Brass 
Sales, Inc. (``CBS''), an affiliated downstream service center 
reseller. On October 24, 2000, petitioners filed a letter requesting 
that the Department deny AST's requested reporting exemptions. On 
October 25, 2000, the Department informed AST that, based on their 
representations, we were not requiring AST to report downstream sales 
data and were permitting AST to report cost data for finished products. 
However, we informed AST that we were denying their other exclusion 
requests.
    On October 10, 2000, the Department received AST's response to 
Section A of the questionnaire. On November 6, 2000, we received AST's 
response to the remainder of the questionnaire. On December 22, 2001, 
the Department issued a supplemental questionnaire for Sections A, B, 
and C, and received AST's response on January 29, 2001. On February 21, 
2001, the Department issued AST a supplemental questionnaire on Section 
D, and received AST's responses on March 22, 2001, and May 10, 2001. On 
March 28, 2001, and April 30, 2001, the Department issued Section E 
supplemental questionnaires for Ken-Mac Metals, Inc. (``Ken-Mac''), The 
Stainless Place (``TSP''), and TCT Stainless Steel (``TCT''). AST 
submitted its supplemental response for Ken-Mac on April 16, 2001 and 
their supplemental responses for TSP and TCT on May 25, 2001. The 
Department issued a second supplemental questionnaire for Sections A, 
B, and C on May 3, 2001, and received AST's response on May 29, 2001.
    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for completion of an administrative review if it 
determines that it is not practicable to complete the review within the 
statutory time limit. On January 2, 2001, the Department extended the 
time limit for the preliminary results in this review by 90 days. See 
Notice of Extension of the Time Limit for Preliminary Results of 
Antidumping Duty Administrative Review: Stainless Steel Sheet and Strip 
in Coils From Italy, 66 FR 1310 (January 8, 2001). On May 9, 2001, the 
Department fully extended the time limit for the preliminary results in 
this review. See Notice of Extension of the Time Limit for Preliminary 
Results of Antidumping Duty Administrative Review: Stainless Steel 
Sheet and Strip in Coils From Italy, 66 FR 27066 (May 16, 2001).
    The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Verification

    As provided in section 782(i) of the Act, we verified further 
manufacturing cost information, cost and sales information provided by 
AST, from May 9, 2001 through May 11, 2001, June 4, 2001, to June 8, 
2001, and June 11, 2001, to June 14, 2001, respectively, using standard 
verification procedures, including an examination of relevant sales, 
cost, and financial records, and selection of original documentation 
containing relevant information. Our verification results are outlined 
in the public version of the verification report and are on file in the 
Central Records Unit (``CRU'') located in room B-099 of the main 
Department of Commerce Building, 14th Street and Constitution Avenue, 
NW., Washington, DC.

Period of Review

    The POR is January 4, 1999 through June 30, 2000.

Scope of the Review

    For purposes of this review, the products covered are certain 
stainless steel sheet and strip in coils (``SSSS''). Stainless steel is 
an alloy steel containing, by weight, 1.2 percent or less of carbon and 
10.5 percent or more of chromium, with or without other elements. The 
subject sheet and strip is a flat-rolled product in coils that is 
greater than 9.5 mm in width and less than 4.75 mm in thickness, and 
that is annealed or otherwise heat treated and pickled or otherwise 
descaled. The subject sheet and strip may also be further processed 
(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that 
it maintains the specific dimensions of sheet and strip following such 
processing.
    The merchandise subject to this review is currently classifiable in 
the Harmonized Tariff Schedule of the United States (``HTS'') at 
subheadings: 7219.13.0031, 7219.13.0051, 7219.13.0071, 7219.1300.81\1\,

[[Page 41519]]

7219.14.0030, 7219.14.0065, 7219.14.0090, 7219.32.0005, 7219.32.0020, 
7219.32.0025, 7219.32.0035, 7219.32.0036, 7219.32.0038, 7219.32.0042, 
7219.32.0044, 7219.33.0005, 7219.33.0020, 7219.33.0025, 7219.33.0035, 
7219.33.0036, 7219.33.0038, 7219.33.0042, 7219.33.0044, 7219.34.0005, 
7219.34.0020, 7219.34.0025, 7219.34.0030, 7219.34.0035, 7219.35.0005, 
7219.35.0015, 7219.35.0030, 7219.35.0035, 7219.90.0010, 7219.90.0020, 
7219.90.0025, 7219.90.0060, 7219.90.0080, 7220.12.1000, 7220.12.5000, 
7220.20.1010, 7220.20.1015, 7220.20.1060, 7220.20.1080, 7220.20.6005, 
7220.20.6010, 7220.20.6015, 7220.20.6060, 7220.20.6080, 7220.20.7005, 
7220.20.7010, 7220.20.7015, 7220.20.7060, 7220.20.7080, 7220.20.8000, 
7220.20.9030, 7220.20.9060, 7220.90.0010, 7220.90.0015, 7220.90.0060, 
and 7220.90.0080. Although the HTS subheadings are provided for 
convenience and Customs purposes, the Department's written description 
of the merchandise under review is dispositive.
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    \1\ Due to changes to the HTS numbers in 2001, 7219.13.0030, 
7219.13.0050, 7219.13.0070, and 7219.13.0080 are now 7219.13.0031, 
7219.13.0051, 7219.13.0071, and 7219.13.0081, respectively.
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    Excluded from the scope of this review are the following: (1) Sheet 
and strip that is not annealed or otherwise heat treated and pickled or 
otherwise descaled, (2) sheet and strip that is cut to length, (3) 
plate (i.e., flat-rolled stainless steel products of a thickness of 
4.75 mm or more), (4) flat wire (i.e., cold-rolled sections, with a 
prepared edge, rectangular in shape, of a width of not more than 9.5 
mm), and (5) razor blade steel. Razor blade steel is a flat-rolled 
product of stainless steel, not further worked than cold-rolled (cold-
reduced), in coils, of a width of not more than 23 mm and a thickness 
of 0.266 mm or less, containing, by weight, 12.5 to 14.5 percent 
chromium, and certified at the time of entry to be used in the 
manufacture of razor blades. See Chapter 72 of the HTS, ``Additional 
U.S. Note'' 1(d).
    Flapper valve steel is also excluded from the scope of this review. 
This product is defined as stainless steel strip in coils containing, 
by weight, between 0.37 and 0.43 percent carbon, between 1.15 and 1.35 
percent molybdenum, and between 0.20 and 0.80 percent manganese. This 
steel also contains, by weight, phosphorus of 0.025 percent or less, 
silicon of between 0.20 and 0.50 percent, and sulfur of 0.020 percent 
or less. The product is manufactured by means of vacuum arc remelting, 
with inclusion controls for sulphide of no more than 0.04 percent and 
for oxide of no more than 0.05 percent. Flapper valve steel has a 
tensile strength of between 210 and 300 ksi, yield strength of between 
170 and 270 ksi, plus or minus 8 ksi, and a hardness (Hv) of between 
460 and 590. Flapper valve steel is most commonly used to produce 
specialty flapper valves in compressors.
    Also excluded is a product referred to as suspension foil, a 
specialty steel product used in the manufacture of suspension 
assemblies for computer disk drives. Suspension foil is described as 
302/304 grade or 202 grade stainless steel of a thickness between 14 
and 127 microns, with a thickness tolerance of plus-or-minus 2.01 
microns, and surface glossiness of 200 to 700 percent Gs. Suspension 
foil must be supplied in coil widths of not more than 407 mm, and with 
a mass of 225 kg or less. Roll marks may only be visible on one side, 
with no scratches of measurable depth. The material must exhibit 
residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm 
over 685 mm length.
    Certain stainless steel foil for automotive catalytic converters is 
also excluded from the scope of this review. This stainless steel strip 
in coils is a specialty foil with a thickness of between 20 and 110 
microns used to produce a metallic substrate with a honeycomb structure 
for use in automotive catalytic converters. The steel contains, by 
weight, carbon of no more than 0.030 percent, silicon of no more than 
1.0 percent, manganese of no more than 1.0 percent, chromium of between 
19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of 
no more than 0.045 percent, sulfur of no more than 0.03 percent, 
lanthanum of less than 0.002 or greater than 0.05 percent, and total 
rare earth elements of more than 0.06 percent, with the balance iron.
    Permanent magnet iron-chromium-cobalt alloy stainless strip is also 
excluded from the scope of this order. This ductile stainless steel 
strip contains, by weight, 26 to 30 percent chromium, and 7 to 10 
percent cobalt, with the remainder of iron, in widths 228.6 mm or less, 
and a thickness between 0.127 and 1.270 mm. It exhibits magnetic 
remanence between 9,000 and 12,000 gauss, and a coercivity of between 
50 and 300 oersteds. This product is most commonly used in electronic 
sensors and is currently available under proprietary trade names such 
as ``Arnokrome III.'' \2\
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    \2\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company..
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    Certain electrical resistance alloy steel is also excluded from the 
scope of this review. This product is defined as a non-magnetic 
stainless steel manufactured to American Society of Testing and 
Materials (``ASTM'') specification B344 and containing, by weight, 36 
percent nickel, 18 percent chromium, and 46 percent iron, and is most 
notable for its resistance to high temperature corrosion. It has a 
melting point of 1390 degrees Celsius and displays a creep rupture 
limit of 4 kilograms per square millimeter at 1000 degrees Celsius. 
This steel is most commonly used in the production of heating ribbons 
for circuit breakers and industrial furnaces, and in rheostats for 
railway locomotives. The product is currently available under 
proprietary trade names such as ``Gilphy 36.'' \3\
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    \3\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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    Certain martensitic precipitation-hardenable stainless steel is 
also excluded from the scope of this order. This high-strength, ductile 
stainless steel product is designated under the Unified Numbering 
System (``UNS'') as S45500-grade steel, and contains, by weight, 11 to 
13 percent chromium, and 7 to 10 percent nickel. Carbon, manganese, 
silicon and molybdenum each comprise, by weight, 0.05 percent or less, 
with phosphorus and sulfur each comprising, by weight, 0.03 percent or 
less. This steel has copper, niobium, and titanium added to achieve 
aging, and will exhibit yield strengths as high as 1700 Mpa and 
ultimate tensile strengths as high as 1750 Mpa after aging, with 
elongation percentages of 3 percent or less in 50 mm. It is generally 
provided in thicknesses between 0.635 and 0.787 mm, and in widths of 
25.4 mm. This product is most commonly used in the manufacture of 
television tubes and is currently available under proprietary trade 
names such as ``Durphynox 17.'' \4\
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    \4\ ``Durphynox 17'' is a trademark of Imphy, S.A.
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    Also excluded are three specialty stainless steels typically used 
in certain industrial blades and surgical and medical instruments. 
These include stainless steel strip in coils used in the production of 
textile cutting tools (e.g., carpet knives).\5\ This steel is similar 
to AISI grade 420 but containing, by weight, 0.5 to 0.7 percent of 
molybdenum. The steel also contains, by weight, carbon of between 1.0 
and 1.1 percent, sulfur of 0.020 percent or

[[Page 41520]]

less, and includes between 0.20 and 0.30 percent copper and between 
0.20 and 0.50 percent cobalt. This steel is sold under proprietary 
names such as ``GIN4 Mo.'' \6\ The second excluded stainless steel 
strip in coils is similar to AISI 420-J2 and contains, by weight, 
carbon of between 0.62 and 0.70 percent, silicon of between 0.20 and 
0.50 percent, manganese of between 0.45 and 0.80 percent, phosphorus of 
no more than 0.025 percent and sulfur of no more than 0.020 percent. 
This steel has a carbide density on average of 100 carbide particles 
per 100 square microns. An example of this product is ``GIN5'' \7\ 
steel. The third specialty steel has a chemical composition similar to 
AISI 420 F, with carbon of between 0.37 and 0.43 percent, molybdenum of 
between 1.15 and 1.35 percent, but lower manganese of between 0.20 and 
0.80 percent, phosphorus of no more than 0.025 percent, silicon of 
between 0.20 and 0.50 percent, and sulfur of no more than 0.020 
percent. This product is supplied with a hardness of more than Hv 500 
guaranteed after customer processing, and is supplied as, for example, 
``GIN6.'' \8\
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    \5\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \6\ ``GIN4 Mo''is the proprietary grade of Hitachi Metals 
America, Ltd.
    \7\ ``GIN5'' is the proprietary grade of Hitachi Metals America, 
Ltd.
    \8\ ``GIN6'' is the proprietary grade of Hitachi Metals America, 
Ltd.
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Normal Value Comparisons

    To determine whether AST's sales of subject merchandise from Italy 
to the United States were made at less than fair value, we compared the 
constructed export price (``CEP'') to the normal value (``NV''), as 
described in the ``Constructed Export Price'' and ``Normal Value'' 
sections of this notice, below. In accordance with section 777A(d)(2) 
of the Act, we calculated monthly weighted-average prices for NV and 
compared these to individual CEP transactions. We made corrections to 
reported home market sales and cost data based on the Department's 
findings at verification, as appropriate. See Analysis Memorandum for 
AST for the Period January 4, 1999, through June 30, 2000, dated July 
31, 2001.

Transactions Reviewed

A. Home Market Viability

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared the respondent's volume of home market sales of the foreign 
like product to the volume of its U.S. sales of the subject 
merchandise. Pursuant to sections 773(a)(1)(B) and (C) of the Act, 
because AST'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 sales in the home 
market provide a viable basis for calculating NV.

B. Arm's Length Test

    During the POR AST sold SSSS in the home market to affiliated 
customers (resellers and end-users). 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 billing adjustments, rebates, movement charges, direct selling 
expenses, and home market 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); Antidumping Duties; Countervailing 
Duties; Final Rule, 62 FR 27296, 27355 (May 19, 1997).

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products covered by the Scope of the Review section above, which were 
produced and sold by AST in the home market during the POR, to be 
foreign like products for purposes of determining appropriate 
comparisons to U.S. sales. Where there were no sales of identical 
merchandise in the home market to compare to U.S. sales, we compared 
U.S. sales to the next most similar foreign like product on the basis 
of the characteristics and reporting instructions listed in the 
Department's questionnaire.

Constructed Export Price

    In accordance with section 772(a) of the Act, export price (``EP'') 
is the price at which the subject merchandise is first sold (or agreed 
to be sold) before the date of importation by the producer or exporter 
of the subject merchandise outside of the United States to an 
unaffiliated purchaser in the United States or to an unaffiliated 
purchaser for exportation to the United States, as adjusted under 
subsection (c). In accordance with section 772(b) of the Act, CEP is 
the price at which the subject merchandise is first sold (or agreed to 
be sold) in the United States before or after the date of importation 
by or for the account of the producer or exporter of such merchandise 
or by a seller affiliated with the producer or exporter, to a purchaser 
not affiliated with the producer or exporter, as adjusted under 
subsections (c) and (d).
    For purposes of this review, AST classified its U.S. sales through 
channel one as EP sales and sales through channels two and three as CEP 
sales. However, based on the information on the record, we 
preliminarily find that all of AST's U.S. sales are appropriately 
classified as CEP sales.
    Channel two sales are made from the inventory of Acciai Speciali 
Terni USA (``AST USA''), AST's affiliated U.S. based reseller. Channel 
three sales involve subject merchandise that is sold by AST to an 
affiliated U.S. reseller (i.e., Ken-Mac, TSP, and TCT), who may or may 
not further manufacture the merchandise before reselling it to an 
unaffiliated customer. Therefore, because sales in channels two and 
three are sold from inventory of AST's affiliated U.S. resellers, it is 
appropriate to classify these sales as CEP sales. With respect to 
channel one sales, AST reported that these U.S. sales are shipped 
directly from the factory in Italy to the U.S. customer. AST USA serves 
as the principal point of contact for the U.S. customer. For these 
sales U.S. customers place their orders with AST USA, which then places 
the order with AST. Upon confirmation from AST, AST USA issues the 
invoice to the customer. AST USA is solely responsible for collecting 
payment from the U.S. customer. Because the contracts on which AST U.S. 
channel one sales were based were between AST USA and its unaffiliated 
U.S. customers and AST USA invoiced and received payment from the 
unaffiliated U.S. customer, the Department preliminarily determines 
that AST's channel one U.S. sales were made ``in the United States'' 
within the meaning of section 772(b) of the Act, and, thus, should be 
treated as CEP transactions. This is consistent with AK Steel Corp. v. 
United States, 226 F.3d 1361, 1374 (Fed. Cir. 2000).
    We calculated CEP, in accordance with section 772(b) of the Act, 
based on the packed, CIF or FOB prices to the first unaffiliated 
customer in the United States. We made adjustments to the starting 
price for billing adjustments, where applicable. In addition, we made 
adjustments to the starting price by adding alloy surcharges, skid 
charges, and freight equalization charges, where appropriate. We also 
made deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act; these included, where appropriate, foreign 
inland freight, foreign inland insurance, foreign brokerage and 
handling, marine insurance, international freight, U.S. customs

[[Page 41521]]

duties, U.S. inland freight, U.S. warehousing expenses, and brokerage 
and handling. 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, warranty expenses and technical selling expenses), 
inventory carrying costs, and indirect selling expenses. For products 
that were further manufactured after importation, we adjusted for all 
costs of further manufacturing in the United States in accordance with 
section 772(d)(2) of the Act. These costs consisted of the costs of the 
materials, packing, fabrication, and general expenses associated with 
further manufacturing in the United States. Pursuant to section 
772(d)(3) of the Act, we also reduced the CEP by the amount of profit 
allocated to the expenses deducted under section 772(d)(1) and (2).

Normal Value

    After testing home market viability and whether home market sales 
were at below-cost prices, we calculated NV as noted in the ``Price-to-
Price Comparisons.''

Cost of Production (``COP'') Analysis

    Because the Department determined that AST made sales in the home 
market at prices below the cost of producing the subject merchandise in 
the investigation and therefore excluded such sales from normal value 
(see Notice of Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Sheet and Strip in Coils from Italy, 65 FR 15446 (June 
8, 1999)), the Department determined that there are reasonable grounds 
to believe or suspect that AST made sales in the home market at prices 
below the cost of producing the merchandise in this review. See section 
773(b)(2)(A)(ii) of the Act. As a result, the Department initiated a 
cost of production inquiry in this case on September 7, 2000, to 
determine whether AST made home market sales during the POR at prices 
below their respective COPs within the meaning of section 773(b) of the 
Act.
    We conducted the COP analysis as described below.

A. Calculation of COP

    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of AST's cost of materials and fabrication for the 
foreign like product, plus amounts for home market selling, general and 
administrative expenses (``SG&A''), including interest expenses, and 
packing costs. AST requested that the Department use quarterly cost 
data when performing the sales-below-cost test because of the extended 
time period of the review (18 months) and because of alleged 
significant fluctuations in the price of raw materials (e.g., nickel) 
during the POR. In support of its argument, AST submitted a chart 
showing the daily market price of nickel during the POR. Although the 
chart evidences that the price of nickel steadily increased for much of 
the POR, we cannot conclude based on fluctuations in the price of 
nickel alone that use of a single POR cost, which includes costs for 
other raw materials such as scrap, processing costs, and G&A expenses, 
would yield an inappropriate comparison. Therefore, the Department 
preliminarily determines that it is appropriate to calculate a single-
weighted average cost for the POR. We used full-POR COP information 
provided by AST in its questionnaire responses, with the following 
exceptions:
    1. At verification, we found that AST improperly applied the 
general and administrative (``G&A'') expense ratio to total cost of 
manufacture. See Memorandum to the File: First Administrative Review of 
Stainless Steel Sheet and Strip in Coils from Italy--Cost and Sales 
Verification Report for Acciai Speciali Terni S.p.A. (``Cost 
Verification Report''), July 31, 2001. We recalculated G&A expenses by 
applying the G&A expense ratio to total variable cost of manufacture.
    2. At verification we found that AST did not include foreign 
exchange rate losses in its calculation of G&A expenses for fiscal year 
1999/2000. See Cost Verification Report. Therefore, we have 
recalculated the POR average G&A expense ratio.
    3. During verification AST explained that they did not intend to 
claim an interest income offset to interest expenses for fiscal year 
1999/2000 despite having included the offset in their reported interest 
expenses. See Cost Verification Report. Therefore, we have recalculated 
interest expenses for the preliminary results.
    4. During verification, we found that AST made a clerical error in 
its calculation of the fixed overhead expense ratio. See Cost 
Verification Report. We have recalculated fixed overhead expenses for 
the preliminary results.

B. Test of Home Market Prices

    We compared the weighted-average COP from January 1, 1999, through 
June 30, 2000 (``cost reporting period'') for AST, adjusted where 
appropriate (see above), to its home market sales of the foreign like 
product as required under section 773(b) of the Act. In determining 
whether to disregard home market sales made at prices less than the 
COP, we examined whether: (1) within an extended period of time, such 
sales were made in substantial quantities; and (2) such sales were made 
at prices which permitted the recovery of all costs within a reasonable 
period of time.

C. Results of the COP Test

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's sales of a given product within an extended 
period of time are at prices less than the COP, we do not disregard any 
below-cost sales of that product because the below-cost sales are not 
made in ``substantial quantities.'' Where 20 percent or more of a 
respondent's sales of a given product during the extended period are at 
prices less than the COP, we determine such sales to have been made in 
``substantial quantities.'' See section 773(b)(2)(C)(i) of the Act. The 
extended period of time for this analysis is the POR. See section 
773(b)(2)(B) of the Act. Because each individual price was compared 
against the weighted average COP for the cost reporting period, any 
sales that were below cost were also at prices which did not permit 
cost recovery within a reasonable period of time. See section 
773(b)(2)(D). We compared the COP for subject merchandise to the 
reported home market prices less any applicable movement charges. Based 
on this test, we disregarded below-cost sales. Where all sales of a 
specific product were at prices below the COP, we disregarded all sales 
of that product.

Price-to-Price Comparisons

    We based NV on the home market delivered prices to unaffiliated 
customers or prices to affiliated customers that we determined to be at 
arm's-length. We made adjustments, where appropriate, for physical 
differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act. We made adjustments for billing 
adjustments, rebates, and alloy surcharges, where appropriate. We made 
adjustments for foreign inland freight in accordance with section 
773(a)(6)(B) of the Act. We made circumstance-of-sale adjustments for 
credit, warranty expense, interest revenue, and insurance revenue, 
where appropriate. In accordance with section 773(a)(6), we deducted 
home market packing costs and added U.S. packing costs.

[[Page 41522]]

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (``LOT'') as the EP or CEP transaction. The NV 
LOT is that of the starting-price sales in the comparison market or, 
when NV is based on CV, that of the sales from which we derive SG&A 
expenses and profit. For EP, the LOT is also the level of the starting-
price sale, which is usually from the exporter to the importer. For 
CEP, it is the level of the constructed sale from the exporter to the 
affiliated importer. See 19 CFR 351.412(c)(1).
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. Substantial differences in selling activities 
are a necessary, but not sufficient condition for determining that 
there is a difference in the stage of marketing. 19 CFR 351.412(c)(2). 
If the comparison market sales are at a different LOT, and the 
difference affects price comparability, as manifested in a pattern of 
consistent price differences between the sales on which NV is based and 
comparison-market sales at the LOT of the export transaction, we make a 
LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP 
sales, if the NV level is more remote from the factory than the CEP 
level and there is no basis for determining whether the differences in 
the levels between NV and CEP sales affect price comparability, we 
adjust NV under section 773(A)(7)(B) of the Act (the CEP offset 
provision). See Notice of Final Determination of Sales at Less Than 
Fair Value: Certain Carbon Steel Plate from South Africa, 62 FR 61731 
(November 19, 1997).
    In the present review, AST requested a CEP offset. (As noted above, 
we have preliminarily determined that all of AST's U.S. sales are CEP 
sales.) To determine whether a CEP offset was necessary, in accordance 
with the principles discussed above, we examined information regarding 
the distribution systems in both the United States and Italian markets, 
including the selling functions, classes of customer, and selling 
expenses.
    In the home market, AST reported one level of trade. AST sold 
through two channels of distribution in the home market: (1) directly 
from its mill to unaffiliated end-users/speciality end-users, white 
goods manufacturers and affiliated and unaffiliated service centers; 
and (2) from its warehouse to industrial end-users, speciality end-
users, and service centers/distributors. AST claimed two levels of 
trade in its U.S. market. AST sold through three channels of 
distribution in the U.S. market: (1) Directly from its mill through AST 
USA to unaffiliated end-users and distributors/service centers; (2) 
from the inventory of AST USA; and (3) from the mill through AST USA to 
its affiliated U.S. further manufacturers/reseller, which then sell to 
unaffiliated customers.
    For sales in home market channel one, AST performed all sales-
related activities, including arranging for freight and delivery; pre-
sale and continuous technical assistance; trial lots; warranty 
services; price negotiation; sales calls and visits; after-sales 
service; and extending credit. The same selling functions were 
performed in home market channel two; however, unlike direct factory 
sales, these sales carry no guarantee or warranty. Also, AST, rather 
than the customer, typically initiates sales of these products by 
distributing a list of available products to potential customers. 
Because these selling functions are similar for both sales channels, we 
preliminarily determine that there is one LOT in the home market.
    We reviewed the selling functions and services performed by AST in 
the U.S. market, as represented by AST in its responses. AST indicated 
that the selling functions performed by AST for CEP sales, regardless 
of channel of distribution, include the following: processing AST USA 
inquiries and purchase orders; invoicing AST USA; extending credit to 
AST USA; freight and delivery arrangements from AST's plant to the U.S. 
port (including the cost of transporting the goods to the European 
port, port handling, and ocean freight), and warranty services. 
Although AST characterizes its involvement in the CEP sales as low, for 
back-to-back U.S. sales shipped directly from AST's factory to the 
unaffiliated customer (i.e., U.S. channel one), AST is more involved in 
the sales process (e.g., collaborating with AST USA to determine the 
price) and provides a higher degree of freight and delivering 
arrangements (i.e., low volume shipments to multiple customers located 
throughout the United States).
    In addition to the above selling functions, based on information 
provided by AST, we find that AST made sales visits and provided pre-
sale and technical assistance. Although AST indicated in its response 
that it did not make sales calls and visits for its CEP sales, AST did 
report that AST representatives occasionally visit the United States 
and meet with AST USA officials. See AST's January 29, 2001 
questionnaire response at SA-10. With respect to technical assistance, 
in both its U.S. and home market sales database AST reported as 
indirect selling expenses the costs associated with operating AST's 
Technical Services Department, which provides pre-sale and technical 
assistance. Therefore, it appears that AST offers pre-sale technical 
assistance for its CEP sales.
    AST performs identical selling functions across all three U.S. 
channels of distribution and at the same degree with the exception of 
more intensive price negotiations and freight and delivery services for 
U.S. back-to-back sales. We find that the differences in the degree of 
selling functions performed to be relatively minor. Therefore, we 
preliminarily determine that there is one LOT in the U.S. market.
    AST performed many of the same selling functions for both its CEP 
sales (i.e., sales to AST USA) and home market sales such as processing 
customer orders; price negotiation (U.S. channel one and both home 
market channels); extending credit; freight and delivery arrangements; 
warranty services; and pre-sale technical assistance. In the home 
market AST performed the additional selling functions of offering 
prototypes and trial lots and price negotiation. Also, AST maintained 
that it performed some of the selling functions at a higher degree 
(i.e., services such as warranty, extending credit, sales visits, 
freight and delivery arrangements).
    Proprietary information submitted by AST indicates that selling 
activities associated with price negotiations and the provision of 
prototypes and trial lots by AST in the home market were not 
substantial. See Analysis Memorandum. Price negotiations are a subpart 
of the overall sales process, the expenses for which are captured in 
indirect selling expenses. The data submitted by AST indicate that 
AST's indirect selling expenses are comparable in both markets. 
Similarly, the data on the record indicate that the degree of 
difference in certain selling functions performed was not substantial. 
According to AST, all sales of prime merchandise carry a warranty 
regardless of market and it is AST which approves the claim and 
provides the reimbursement for the claim. Moreover, AST reported 
warranty claims in both the home and U.S. markets. Also, although AST 
extends credit to multiple customers in the home market, it also 
extends credit for CEP sales. The comparability of AST's indirect 
selling

[[Page 41523]]

expenses in each market also does not support a finding that other 
selling activities related to the sales process (e.g., sales visits, 
freight and delivery arrangements) are performed at a substantially 
higher degree in the home market than the U.S. market. Therefore, we 
find that AST's claims of additional and more advanced selling 
functions for home market sales in comparison to CEP sales are either 
unsubstantiated or insufficient to support a finding of different LOTs. 
See 19 CFR 412(c)(2). Accordingly, we preliminarily determine that 
sales in the home market and in the U.S. market were made at the same 
LOT and have not make a LOT adjustment or CEP offset.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following weighted-average dumping margin exists for the period January 
4, 1999 through June 30, 2000:

------------------------------------------------------------------------
                                                                Margin
               Manufacturer/exporter/reseller                 (percent)
------------------------------------------------------------------------
AST........................................................         0.67
------------------------------------------------------------------------

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties to this 
proceeding in accordance with 19 CFR 351.224(b). An interested party 
may request a hearing within 30 days of publication of these 
preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, 
will be held 37 days after the date of publication, or the first 
working day thereafter. Interested parties may submit case briefs and/
or written comments no later than 30 days after the date of publication 
of these preliminary results of review. Rebuttal briefs and rebuttals 
to written comments, limited to issues raised in such briefs or 
comments, may be filed no later than 35 days after the date of 
publication. The Department will issue the final results of this 
administrative review, which will include the results of its analysis 
of issues raised in any such comments, within 120 days of publication 
of these preliminary results.

Assessment

    Upon issuance of the final results of this review, the Department 
shall determine, and the U.S. Customs Service shall assess, antidumping 
duties on all appropriate entries. In accordance with 19 CFR 
351.212(b), we have calculated exporter/importer-specific assessment 
rates. We divided the total dumping margins for the reviewed sales by 
the total entered value of those reviewed sales for each importer. We 
will direct the U.S. Customs Service to assess the resulting percentage 
margin against the entered customs values for the subject merchandise 
on each of that importer's entries under the relevant order during the 
review period. Upon completion of this review, the Department will 
issue appraisement instructions directly to the Customs Service.

Cash Deposit

    The following cash deposit requirements will be effective upon 
publication of these final results for all shipments of the subject 
merchandise entered, or withdrawn from warehouse, for consumption on or 
after the publication date of these final results of administrative 
review, as provided by section 751(a)(1) of the Act: (1) The cash 
deposit rate for the reviewed company will be the rate listed above 
(except that if the rate for a particular product is de minimis, i.e., 
less than 0.5 percent, a cash deposit rate of zero will be required for 
that company); (2) for previously investigated companies not listed 
above, the cash deposit rate will continue to be the company-specific 
rate published for the most recent period; (3) if the exporter is not a 
firm covered in this review, a prior review, or the original less than 
fair value (``LTFV'') investigation, but the manufacturer is, the cash 
deposit rate will be the rate established for the most recent period 
for the manufacturer of the merchandise; and (4) the cash deposit rate 
for all other manufacturers or exporters will continue to be the ``all 
others'' rate of 11.23 percent, which is the all others rate 
established in the LTFV investigation. These deposit requirements, when 
imposed, shall remain in effect until publication of the final results 
of the next administrative review.

Notification to Interested Parties

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f)(2) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of the antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (``APOs'') of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 351.305, that continues to govern 
business proprietary information in this segment of the proceeding. 
Timely written notification of the return/destruction of APO materials 
or conversion to judicial protective order is hereby requested. Failure 
to comply with the regulations and the terms of an APO is a 
sanctionable violation.
    This determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: July 31, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-19781 Filed 8-7-01; 8:45 am]
BILLING CODE 3510-DS-P