[Federal Register Volume 66, Number 153 (Wednesday, August 8, 2001)]
[Notices]
[Pages 41543-41549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19909]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-588-845]


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

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

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

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SUMMARY: In response to a request from a respondent in the original 
investigation, Kawasaki Steel Corporation (``Kawasaki''), the 
Department of Commerce (``Department'') is conducting an administrative 
review of the antidumping duty order on stainless steel sheet and strip 
in coils (``SSSS'') from Japan. This review covers imports of subject 
merchandise from Kawasaki. The period of review is January 4, 1999 
through June 30, 2000.
    The Department preliminarily determines that SSSS from Japan has 
been sold in the United States at less than normal value during the 
period of review. 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 equal to the difference 
between export price and normal value.
    Interested parties are invited to comment on these preliminary 
results. See ``Preliminary Results of the Review'' section, infra.

EFFECTIVE DATE: August 8, 2001.

FOR FURTHER INFORMATION CONTACT: Juanita H. Chen or James C. Doyle, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 1401 Constitution Avenue, N.W., Washington, DC 
20230; telephone: 202-482-0409 or 202-482-0159, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (``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). See Antidumping 
Duties; Countervailing Duties; Final rule, 62 FR 27295 (May 19, 1997).

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 Japan. 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, Kawasaki, a producer and exporter of subject 
merchandise during the period of review (``POR''), requested that the 
Department conduct an administrative review of the

[[Page 41544]]

antidumping duty order. On September 6, 2000, the Department initiated 
an administrative review of the antidumping duty order on SSSS from 
Japan with regards to Kawasaki. See Initiation of Antidumping and 
Countervailing Duty Administrative Reviews and Requests for Revocation 
in Part, 65 FR 53980, 53981 (September 6, 2000). On September 8, 2000, 
the Department issued its antidumping duty questionnaire.
    On September 20, 2001, Kawasaki submitted a request that the 
Department permit it to limit its reporting: (1) of home market sales 
to merchandise identical to or similar to the subject merchandise sold 
in the U.S. market through the first three product-matching 
characteristics (grade, hot/cold rolled, and gauge), or to only prime 
merchandise, and (2) of costs to Kawasaki's fiscal year 1999 (April 
1999 through March 2000), or to Kawasaki's fiscal year 1999 plus the 
second semester of its fiscal year 1998 (October 1998 through March 
2000). On September 28, 2001, petitioners filed an objection to 
Kawasaki's request, arguing that a complete database is necessary for 
the Department to properly compare home market and U.S. sales, that 
Kawasaki should not be allowed to select the home market sales it 
submits, and that the Department's established practice is to require a 
respondent to submit costs that coincide with the POR. On October 4, 
2000, Kawasaki submitted a response to petitioners' objection, 
asserting that it is not selecting the home market sales, but rather 
seeking to limit reporting sales under the Department's own matching 
criteria at the most basic level, and that it is not able to report its 
costs based on the POR. On October 13, 2000, the Department granted 
Kawasaki's request to limit its reporting of home market sales to all 
identical and similar home market sales of subject merchandise 
according to the first three matching criteria, and denied Kawasaki's 
request to report costs for a period different from the POR. On October 
19, 2000, petitioners filed a submission again arguing that Kawasaki 
should be required to submit its complete home market sales database. 
On October 26, 2000 Kawasaki responded to petitioners' submission, 
arguing that the Department properly allowed limited home market sales 
reporting.
    On September 29, 2000, the Department received Kawasaki's Section A 
response to the questionnaire. On November 3, 2000, Kawasaki filed its 
Section B and C responses to the questionnaire. On November 13, 2000, 
Kawasaki filed its Section D response. On November 20, 2001, the 
Department issued a Section D supplemental questionnaire. On December 
11, 2000, Kawasaki filed its Section D supplemental response. On 
December 18, 2000, Kawasaki filed revised home market and cost files. 
On February 9, 2001, the Department issued a Section A supplemental 
questionnaire. On February 23, 2001, Kawasaki filed its Section A 
supplemental response. On March 2, 2001, the Department issued a 
Sections B-C supplemental questionnaire. On March 30, 2001, Kawasaki 
filed its Sections B-supplemental response. On June 15, 2001, the 
Department issued a Sections A-D second supplemental questionnaire. On 
July 2 and 6, 2001, Kawasaki filed its Sections A-D second supplemental 
response.
    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 May 29, 2001, the Department extended the time 
limit for the preliminary results in this review to July 31, 2001. See 
Notice of Extension of Time Limit for the Preliminary Results of the 
Antidumping Duty Administrative Review: Stainless Steel Sheet and Strip 
in Coils From Japan, 66 FR 29086 (May 29, 2001).
    The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Period of Review

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

Scope of the Review

    Upon completion of four changed circumstances reviews pursuant to 
section 751(b) of the Act and section 351.216 of the Department's 
regulations, we have excluded certain products from the scope of the 
order. These four excluded products are identified in the scope, infra.
    For purposes of this review, the products covered are certain 
stainless steel sheet and strip in coils. 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 order is currently classifiable in 
the Harmonized Tariff Schedule of the United States (``HTS'') at 
subheadings: 7219130031, 7219130051, 7219130071, 7219130081,\1\ 
7219140030, 7219140065, 7219140090, 7219320005, 7219320020, 7219320025, 
7219320035, 7219320036, 7219320038, 7219320042, 7219320044, 7219330005, 
7219330020, 7219330025, 7219330035, 7219330036, 7219330038, 7219330042, 
7219330044, 7219340005, 7219340020, 7219340025, 7219340030, 7219340035, 
7219350005, 7219350015, 7219350030, 7219350035, 7219900010, 7219900020, 
7219900025, 7219900060, 7219900080, 7220121000, 7220125000, 7220201010, 
7220201015, 7220201060, 7220201080, 7220206005, 7220206010, 7220206015, 
7220206060, 7220206080, 7220207005, 7220207010, 7220207015, 7220207060, 
7220207080, 7220208000, 7220209030, 7220209060, 7220900010, 7220900015, 
7220900060, and 7220900080. 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, 7219130030, 
7219130050, 7219130070, and 7219130080 are now 7219130031, 
7219130051, 7219130071, and 7219130081, respectively.
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    Excluded from the scope of this order 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 the order. 
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

[[Page 41545]]

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 order. 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 order. 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 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.'' 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'' 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.'' \6\
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    \5\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \6\ ``GIN4 Mo,'' ``GIN5'' and ``GIN6'' are the proprietary 
grades of Hitachi Metals America, Ltd.
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    Also excluded are stainless steel welding electrode strips that are 
manufactured in accordance with American Welding Society (``AWS'') 
specification ANSI/AWS A5.9-93. See Stainless Steel Sheet and Strip in 
Coils from Japan: Final Results of Changed Circumstance Antidumping 
Duty Review, and Determination to Revoke Order in Part, 65 FR 17856 
(April 5, 2000). The products are 0.5 mm in thickness, 60 mm in width, 
and in coils of approximately 60 pounds each. The products are limited 
to the following AWS grade classifications: ER308L, ER 309L, ER 316L 
and ER347, and a modified ER 309L or 309LCb which meets the following 
chemical composition limits (by weight):

Carbon--0.03% maximum
Chromium--20.0-22.0%
Nickel--10.0-12.0%
Molybdenum--0.75% maximum
Manganese--1.0-2.5%
Silicon--0.65% maximum
Phosphorus--0.03% maximum
Sulphur--0.03% maximum
Copper--0.75% maximum
Columbium--8 times the carbon level minimum--1.0% maximum

    Also excluded are certain stainless steel used for razor blades, 
medical surgical blades, and industrial blades, and sold under 
proprietary names such as DSRIK7, DSRIK8, and DSRIK9. See Stainless 
Steel Sheet and Strip in Coils

[[Page 41546]]

from Japan: Final Results of Changed Circumstance Antidumping Duty 
Review, and Determination to Revoke Order in Part, 65 FR 54841 
(September 11, 2000). This stainless steel strip in coils is a 
specialty product with a thickness of 0.15 mm to 1.000 mm, or 0.006 
inches to 0.040 inches, and a width of 6 mm to 50 mm, or 0.250 inches 
to 2.000 inches. The edge of the product is slit, and the finish is 
bright. The steel contains the following chemical composition by 
weight: Carbon 0.65% to 1.00%, Silicon 1.00% maximum, Manganese 1.00% 
maximum, Phosphorus 0.35% maximum, Sulfur 0.25% maximum, Nickel 0.35% 
maximum, Chromium 0.15% maximum, Molybdenum 0.30% maximum.
    Also excluded are certain stainless steel lithographic sheet. See 
Stainless Steel Sheet and Strip in Coils from Japan: Final Results of 
Changed Circumstance Antidumping Duty Review, and Determination to 
Revoke Order in Part, 65 FR 64423 (October 27, 2000). This sheet is 
made of 304-grade stainless steel and must satisfy each of the 
following fifteen specifications. The sheet must have: (1) An ultimate 
tensile strength of minimum 75 KSI; (2) a yield strength of minimum 30 
KSI; (3) a minimum elongation of 40 percent; (4) a coil weight of 4000-
6000 lbs.; (5) a width tolerance of -0/+0.0625 inch; and (6) a gauge 
tolerance of 0.001 inch. With regard to flatness, (7) the 
wave height and wave length dimensions must correspond to both edge 
wave and center buckle conditions; (8) the maximum wave height shall 
not exceed 0.75 percent of the wave length or 3 mm (0.118 inch), 
whichever is less; and (9) the wave length shall not be less than 100 
mm (3.937 inch). With regard to the surface, (10) the surface roughness 
must be RMS (RA) 4-8; (11) the surface must be degreased and no oil 
will be applied during the slitting operation; (12) the surface finish 
shall be free from all visual cosmetic surface variations or stains in 
spot or streak form that affect the performance of the material; (13) 
no annealing border is acceptable; (14) the surface finish shall be 
free from all defects in raised or depression nature (e.g., scratches, 
gouges, pimples, dimples, etc.) exceeding 15 microns in size and with 
regard to dimensions; and (15) the thickness will be 
.0145.001 and the widths will be either 38", 38.25", or 
43.5" and the thickness for 39" material will be .0118 .001 
inches.
    Also excluded is nickel clad stainless steel sheet and strip in 
coils from Japan. See Stainless Steel Sheet and Strip in Coils from 
Japan: Final Results of Changed Circumstance Antidumping Duty Review, 
and Determination to Revoke Order in Part, 65 FR 77578 (December 12, 
2000). This nickel clad stainless steel sheet must satisfy each of the 
following specifications. The sheet must: (1) have a maximum coil 
weight of 1000 pounds; (2) with a coil interior diameter of 458 mm to 
540 mm; (3) with a thickness of .33 mm and a width of 699.4 mm; (4) 
fabricated in three layers with a middle layer of grade 316L or UNS 
531603 sheet and strip sandwiched between the two layers of nickel 
cladding, using a roll bonding process to apply the nickel coating to 
each side of the stainless steel, each nickel coating being not less 
than 99 percent nickel and a minimum .038 mm in thickness. The 
resultant nickel clad stainless steel sheet and strip also must meet 
the following additional chemical composition requirement (by weight): 
The first layer weight is 14%, specification Ni201 or N02201, Carbon 
0.009, Sulfur 0.001, Nickel 99.97, Molybdenum 0.001, Iron 0.01, Copper 
0.001 for a combined total of 99.992. The second layer weight is 72%, 
specification 316L or UNS 513603, Carbon 0.02, Silicon 0.87, Manganese 
1.07, Phosphorus 0.033, Sulfur 0.001, Nickel 12.08, Chromium 17.81, 
Molybdenum 2.26, Iron 65.856 for a combined total of 100. The third 
layer is 14%, specification Ni201 or N02201, Carbon 0.01, Sulfur 0.001, 
Nickel 99.97, Molybdenum 0.001, Iron 0.01, Copper 0.001 for a combined 
total of 99.993. The weight average weight is 100%. The following is 
the weighted average: Carbon 0.01706, silicon 0.6264, Manganese 0.7704, 
Phosphorus 0.02376, Sulfur 0.001, Nickel 36.6892, Chromium 12.8232, 
Molybdenum 1.62748, Iron 47.41912, and Copper is 0.00028. The above-
described material is sold as grade 316L and manufactured in accordance 
with UNS specification 531603. This material is classified at 
subheading 7219.90.00.20 of the Harmonized Tariff Schedule of the 
United States.

Normal Value Comparisons

    To determine whether sales of subject merchandise from Japan to the 
United States were made at less than fair value (``LTFV''), we compared 
the export price (``EP'') to the normal value (``NV''), as described in 
the ``Export Price'' and ``Normal Value'' sections of this notice, 
supra. In accordance with section 777A(d)(2) of the Act, we calculated 
monthly weighted-average prices for NV and compared these to individual 
EP transactions.
    In its questionnaire response, Kawasaki reported that Kawasho 
Corporation (``Kawasho'') is an affiliated reseller that made sales of 
subject merchandise during the POR. While Kawasaki made sales in both 
the U.S. and home markets during the POR, Kawasho did not make sales in 
the U.S. during the POR. Kawasaki did not report its home market sales 
to Kawasho, but rather its sales through Kawasho, except for certain 
sales. In general, for its home market sales, Kawasaki reported that 
its sales to unaffiliated parties include Kawasaki's sales to 
unaffiliated customers, and Kawasaki's sales through affiliated 
reseller Kawasho to unaffiliated customers. Kawasaki's home market 
sales to affiliated parties include sales to end users, and sales to 
resellers. Kawasaki explained that the exceptions to this reporting 
were that: (1) It could not report the sales of another affiliated 
reseller to end users, as that reseller could not trace its final sales 
to purchasers of Kawasaki subject merchandise, and thus Kawasaki 
reported its sales to that affiliated reseller instead; (2) it could 
not report a portion of downstream sales made by affiliated processors 
and resellers that purchase subject merchandise from Kawasho, as these 
parties do not trace back to the original product, so Kawasaki reported 
its sales to Kawasho instead; and (3) it could not report most 
downstream sales of Kawasho's ``buy-back'' transactions, where Kawasho 
sells to affiliates who process the material and sell it back to 
Kawasho, as all but one affiliated processor do not trace back to the 
original product, and therefore Kawasho reported its sales to the 
processors instead. We have used Kawasaki's reported sales for purposes 
of these preliminary results.

Transactions Reviewed

    We compared the aggregate volume of Kawasaki's home market sales of 
the foreign like product and U.S. sales of the subject merchandise to 
determine whether the volume of the foreign like product Kawasaki sold 
in Japan was sufficient, pursuant to section 773(a)(1) of the Act, to 
form a basis for NV. Because Kawasaki's volume of home market sales of 
the foreign like product was greater than five percent of its U.S. 
sales of subject merchandise, in accordance with section 
773(a)(1)(B)(i) of the Act, we have based the determination of NV upon 
Kawasaki's home market sales of the foreign like product. Thus, we 
based NV on the prices at which the foreign like product was first sold 
for consumption in Japan (or as far as Kawasaki could trace the 
downstream sale in Japan, see ``Normal Value Comparisons'' section, 
supra), in

[[Page 41547]]

the usual commercial quantities, in the ordinary course of trade.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products covered by the ``Scope of the Review'' section, supra, which 
were produced and sold by Kawasaki in the home market during the POR, 
to be foreign like products for the purpose 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.

Export Price/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. In accordance with 
section 772(b) of the Act, constructed export price (``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. For purposes of this 
review, Kawasaki has classified its sales as EP sales. Kawasaki 
identified one channel of distribution (sales to unaffiliated Japanese 
trading companies in Japan) for its U.S. sales during the POR. Kawasaki 
stated that ``(b)ecause the date of sale, i.e., the invoice date, for 
these sales took place before the date of importation into the United 
States, Kawasaki has coded such sales as EP sales in the U.S. sales 
file.'' See Kawasaki's November 3, 2000 Section C response (``Section C 
response''), at C-12. Based on the information on the record, we 
preliminarily determine that such sales were EP sales. We calculated EP 
in accordance with section 772(a) of the Tariff Act of 1930, as amended 
(``Act''). We based EP on packed prices to unaffiliated Japanese 
trading companies for export to the United States. We made deductions 
for foreign inland freight, foreign brokerage and handling, foreign 
inland insurance, rebates, and credit expenses in accordance with 
section 772(c) of the Act.
    Kawasaki also reported that its mills are located in free trade 
zones (``FTZ''), and that it pays no duty on imported alloys used in 
producing subject merchandise for U.S. sales. Since the FTZ does not 
constitute the customs area of Japan, duties were not imposed on the 
imports into the FTZ unless and until they were withdrawn for 
consumption and entered into the customs territory of Japan. Therefore, 
the duties attributable to raw materials imported into the FTZ and re-
exported to the United States constitute uncollected duties within the 
meaning of section 772(c)(1)(B) of the Act. See Certain Welded 
Stainless Steel Pipe from Taiwan: Final Results of Administrative 
Review, 63 FR 38382 (July 16, 1998). Kawasaki provided a worksheet 
establishing a linkage between the imported alloys and the subject 
merchandise. See Kawasaki's March 30, 2001 Supplemental Section B and C 
response, at Exhibit 15. In addition, Kawasaki stated that it imported 
sufficient amounts of the elements under bond that were then consumed 
in the production of subject merchandise. Accordingly, for these 
preliminary results, we also made an upward adjustment to the U.S. 
price for duty drawback pursuant to section 772(c)(1)(B) of the Act.

Normal Value

    After testing home market viability, as discussed in the 
``Transactions Reviewed'' section, supra, and whether home market sales 
were at below-cost prices, in the ``Cost of Production Analysis,'' 
infra, we calculated NV as noted in the ``Price-to-Price Comparisons'' 
and ``Price-to-Constructed Value (``CV'') Comparisons'' sections of 
this notice.

1. Cost of Production Analysis

    Because the Department disregarded certain Kawasaki sales made in 
the home market at prices below the cost of producing the subject 
merchandise in the most recently completed segment of this proceeding 
(i.e., the original 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 Japan, 
64 FR 30574 (June 8, 1999)), the Department determined that there are 
reasonable grounds to believe or suspect that Kawasaki made sales in 
the home market at prices below the cost of producing the merchandise 
in this review. See section 773(b)(2)(A)(i) 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 Kawasaki's cost of materials and fabrication for 
the foreign like product, plus amounts for home market selling, general 
and administrative expenses (``SG&A''), interest expenses, and packing 
costs. We used home market sales and COP information provided by 
Kawasaki in its questionnaire responses.
B. Test of Home Market Prices
    We compared the weighted-average COP for the POR to Kawasaki's 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 such sales: 
(1) Were made within an extended period of time in substantial 
quantities; and (2) were not 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 Kawasaki's sales of a given product were at prices less than 
the COP, we did not disregard any below-cost sales of that product 
because the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of Kawasaki's sales of a given 
product were at prices less than the COP, we determined such sales to 
have been made in ``substantial quantities.'' 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.
D. Calculation of CV
    In accordance with section 773(e)(1) of the Act, CV is calculated 
based on the sum of the respondent's cost of materials, fabrication and 
other processing expenses. Calculation of the COP included in the 
calculation of CV is as noted in the ``Calculation of COP'' section of 
this notice, supra. In accordance with section 773(e)(2)(A) of

[[Page 41548]]

the Act, SG&A and profit is based on the amounts incurred and realized 
by the respondent in connection with the production and sale of the 
foreign like product in the ordinary course of trade, for consumption 
in the foreign country.

Price-to-Price Comparisons

    For those product comparisons for which there were sales at prices 
above the COP, we based NV on the home market prices to unaffiliated 
purchasers and those affiliated customer sales which passed the arm's 
length test. We made adjustments, where appropriate, for differences in 
the merchandise in accordance with section 773(a)(6)(C) of the Act. We 
made adjustments, where applicable, for movement expenses (i.e., inland 
freight, warehousing expense, and inland insurance) in accordance with 
section 773(a)(6)(B) of the Act. We made circumstance-of-sale 
adjustments or deductions for credit, interest revenue, warranty 
expense, technical service expense, and repacking, where appropriate. 
In accordance with section 773(a)(6), we deducted home market packing 
costs and added U.S. packing costs.

Price-to-CV Comparisons

    In accordance with section 773(a)(4) of the Act, we base NV on CV 
if we are unable to find suitable home market sales of the foreign like 
product. We did not base NV on CV for Kawasaki for these preliminary 
results of review.

Arm's Length Test

    If any sales to affiliated customers in the home market were not 
made at arm's length prices, we excluded them from our analysis because 
we consider them to be outside the ordinary course of trade. To test 
whether 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 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 arms'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 analysis. See Notice of 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 
product.

Date of Sale

    Kawasaki reported the original invoice date/shipment date as the 
date of sale, for both the home market and the U.S. market. Section 
351.401(i) of the Department's regulations states that the Department 
will normally use the date of invoice, as recorded in the exporter's or 
producer's records kept in the ordinary course of business, as the date 
of sale. The preamble to these regulations provides an explanation of 
this policy, as well as examples of when the Department may choose to 
base the date of sale on a date other than the date of invoice. See 
Antidumping Duties; Countervailing Duties; Final rule, 62 FR 27295, 
27348-49 (May 19, 1997). We note that we used Kawasaki's original 
invoice date/shipment date as the date of sale in the original 
investigation. For this review, in accordance with 19 CFR 351.401(i), 
where appropriate, we based date of sale on the original invoice date/
shipment date.

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 transaction. As noted in 
the ``Export Price/Constructed Export Price'' section, supra, we 
preliminarily determine that Kawasaki's U.S. sales were EP sales. 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 (as noted in the ``Price-to-CV Comparisons'' 
section, supra, we did not base NV on CV for these preliminary 
results). For EP sales, the LOT is also the level of the starting-price 
sale, which is usually from the exporter to the unaffiliated U.S. 
customer.
    To determine whether NV sales are at a different LOT than EP sales, 
we examine stages in the marketing process and selling functions along 
the chain of distribution between the producer and the unaffiliated 
customer. 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 an LOT adjustment under section 773(a)(7)(A) of the Act.
    In the present review, Kawasaki stated that EP sales to 
unaffiliated trading companies are made at the same level of trade as 
the home market sales to unaffiliated trading companies. However, 
Kawasaki requested a LOT adjustment if the Department compares U.S. 
sales to home market sales occurring at a different level of trade. To 
determine whether an adjustment was necessary, in accordance with the 
principles discussed above, we examined information regarding the 
distribution systems and selling functions in both the United States 
and Japanese markets.
    Kawasaki reported two levels of trade in the home market and one 
level of trade in the U.S. market. Kawasaki reported three channels of 
distribution in the home market: (1) Kawasaki sales to unaffiliated 
trading companies; (2) Kawasaki direct sales to end users; and (3) 
Kawasho's resales of Kawasaki-produced SSSS. Kawasaki reported one 
channel of distribution in the U.S. market: Kawasaki sales to 
unaffiliated trading companies.
    For Kawasaki sales to unaffiliated trading companies in the home 
market, Kawasaki reported that it: maintains no inventory, provides 
technical advice, services warranty claims (with partial responsibility 
by the trading companies), advertises and markets its products for 
sale, primarily arranges warehousing, inputs data to the specification 
control system, arranges freight and delivery, handles sales processing 
(including invoicing and payment collection), administers rebates, and 
handles little demand forecasting. For Kawasaki direct sales to end 
users in the home market, Kawasaki reported that due to the nature of 
the sale, it was not as involved in day to day negotiations and 
customer contacts, or daily sales functions and services. For Kawasho's 
sales in the home market, Kawasaki reported that Kawasaki maintains no 
inventory (although Kawasho sometimes maintains inventory), provides 
technical advice, services warranty claims (with partial responsibility 
by Kawasho), advertises and markets its products for sale (as does 
Kawasho), arranges warehousing (although Kawasho primarily arranges 
warehousing), maintains and revises the specification control system 
(Kawasho inputs data to the specification control system), arranges 
freight and delivery (as does Kawasho), does not handle sales 
processing (Kawasho is responsible for sales processing), administers 
rebates, and handles little demand forecasting (Kawasho is responsible 
for demand forecasting). Based on our review of the selling

[[Page 41549]]

functions offered in the three channels of distribution in the home 
market, there do not appear to be substantial differences in the 
selling activities aside from a differentiation in degree to which 
these services are provided in Kawasaki direct sales to end users in 
the home market. Because these selling functions are substantially 
similar for the three sales channels in the home market, we 
preliminarily determine that there is one LOT in the home market.
    For Kawasaki sales to unaffiliated trading companies for the U.S. 
market, Kawasaki reported similar selling functions as for the home 
market. Specifically, Kawasaki stated that it: maintains no inventory, 
provides technical advice, services warranty claims (with partial 
responsibility by the trading companies), advertises and markets its 
products for sale, did not incur warehousing (as the customer picked up 
the merchandise at Kawasaki's works), inputs data to the specification 
control system, did not arrange freight and delivery (the trading 
companies were responsible for freight and delivery), handles sales 
processing (including invoicing and payment collection), administers 
rebates, and handles little demand forecasting.
    Based on our analysis of the selling functions performed for sales 
in the home market and EP sales for the U.S. market, we preliminarily 
determine that, despite some slight differences in minor selling 
functions (i.e., warehousing, freight and delivery) performed by 
Kawasaki on the U.S. sales, there is not a significant difference in 
the selling functions performed in the home market and U.S. market, and 
that these sales are made at the same LOT. Accordingly, we have not 
made a LOT adjustment.

Currency Conversion

    We made currency conversions into U.S. dollars based on the 
exchange rates in effect on the dates of the U.S. sales as certified by 
the Federal Reserve Bank, in accordance with section 773A(a) of the 
Act.

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:

 
------------------------------------------------------------------------
                                                              Weighted-
               Producer/Manufacturer/Exporter                  Average
                                                                Margin
------------------------------------------------------------------------
Kawasaki Steel Corporation.................................        1.94%
------------------------------------------------------------------------

    In accordance with 19 CFR 351.224(b), the Department will disclose 
to parties to this proceeding the calculations performed in connection 
with these preliminary results within five days of the date of 
publication of this notice.
    Pursuant to 19 CFR 351.309, interested parties may submit written 
comments on these preliminary results. Case briefs must be submitted no 
later than 30 days after the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, must be submitted no later than five days after the time limit 
for filing case briefs. Parties submitting arguments in this proceeding 
are requested to submit with the argument: (1) A statement of the 
issue, and (2) a brief summary of the argument. Case and rebuttal 
briefs must be served on interested parties in accordance with 19 CFR 
351.303(f). Also, within 30 days of the date of publication of this 
notice, an interested party may request a public hearing on arguments 
to be raised in the case and rebuttal briefs. See 19 CFR 351.310(c). 
Unless the Secretary specifies otherwise, the hearing, if requested, 
will be held two days after the date for submission of rebuttal briefs, 
or the first working day thereafter. The Department will issue the 
final results of this administrative review, including the results of 
its analysis of issues raised in any case or rebuttal brief, within 120 
days of publication of these preliminary results.

Assessment

    The Department shall determine, and the U.S. Customs Service 
(``Customs'') 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 Customs 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.

Cash Deposit

    The following cash deposit requirements will be effective upon 
publication of the final results of this administrative review for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
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 established in the final results of this 
administrative review (except that no deposit will be required if the 
rate is zero or de minimis, i.e., less than 0.5 percent); (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 or the original 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) if neither the 
exporter nor the manufacturer is a firm covered in this review or the 
original LTFV investigation, the cash deposit rate will continue to be 
the ``all others'' rate of 37.13 percent 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 antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective order (``APO'') of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 C.F.R. 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 administrative review is issued and published in accordance 
with section 751(a)(1) of the Act, 19 CFR 351.213 and 19 CFR 
351.221(b)(4).

    Dated: July 31, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-19909 Filed 8-7-01; 8:45 am]
BILLING CODE 3510-DS-P