[Federal Register Volume 67, Number 69 (Wednesday, April 10, 2002)]
[Notices]
[Pages 17389-17396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-8705]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-840]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Carbon and Certain Alloy 
Steel Wire Rod from Canada

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

EFFECTIVE DATE: April 10, 2002.

FOR FURTHER INFORMATION CONTACT: Constance Handley or Edward Easton at 
(202) 482-0631 or (202) 482-3003, respectively; AD/CVD Enforcement 
Group II Office 5, Import Administration, Room 1870, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulation

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to Department of Commerce (Department) 
regulations refer to the regulations codified at 19 CFR part 351 
(2001).

Preliminary Determination

    We preliminarily determine that carbon and certain alloy steel wire 
rod (steel wire rod) from Canada is being sold, or is likely to be 
sold, in the United States at less than fair value (LTFV), as provided 
in section 733 of the Act. The estimated margins of sales at LTFV are 
shown in the Suspension of Liquidation section of this notice.

Case History

    This investigation was initiated on September 24, 2001.\1\ See 
Initiation of Antidumping Duty Investigations: Carbon and Certain Alloy 
Steel Wire Rod from Brazil, Canada, Egypt, Germany, Indonesia, Mexico, 
Moldova, South Africa, Trinidad and Tobago, Ukraine, and Venezuela, 66 
FR 50164 (October 2, 2001) (Initiation Notice). Since the initiation of 
the investigation, the following events have occurred:
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    \1\ The petitioners in this investigation are Co-Steel Raritan, 
Inc., GS Industries, Inc., Keystone Consolidated Industries, Inc., 
and North Star Steel Texas, Inc.
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    On October 12, 2001, the United States International Trade 
Commission

[[Page 17390]]

(ITC) preliminarily determined that there is a reasonable indication 
that the domestic industry producing steel wire rod is materially 
injured by reason of imports from Brazil, Canada, Germany, Indonesia, 
Mexico, Moldova, Trinidad and Tobago, and Ukraine of carbon and certain 
alloy steel wire rod.\2\ See Determinations and Views of the 
Commission, USITC Publication No. 3456, October 2001.
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    \2\ With respect to imports from Egypt, South Africa, and 
Venezuela, the ITC determined that imports from these countries 
during the period of investigation (POI) were negligible and, 
therefore, these investigations were terminated.
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    The Department issued a letter on October 16, 2001, to interested 
parties in all of the concurrent steel wire rod antidumping 
investigations, providing an opportunity to comment on the Department's 
proposed model match characteristics and its hierarchy of 
characteristics. The petitioners submitted comments on October 24, 
2001. The Department also received comments on model matching from 
respondents Hysla S.A. de C.V. (Mexico), Ivaco, Inc. (Ivaco) (Canada), 
and Ispat Sidbec Inc. (ISI) (Canada). These comments were taken into 
consideration by the Department in developing the model matching 
characteristics and hierarchy for all of the steel wire rod antidumping 
investigations.
    On January 17, 2002, the petitioners requested a 30-day 
postponement of the preliminary determinations in this investigation. 
On January 28, 2002, the Department published a Federal Register notice 
postponing the deadline for the preliminary determinations until March 
13, 2002. See Notice of Postponement of Preliminary Antidumping Duty 
Determinations: Carbon and Certain Alloy Wire Rod from Brazil, Canada, 
Indonesia, Germany, Mexico, Moldova, Trinidad and Tobago, and Ukraine, 
67 FR 3877 (January 28, 2002). On March 4, 2002, the petitioners 
requested an additional 20-day postponement of the preliminary 
determinations in this investigation. On March 7, 2002, the Department 
published a Federal Register notice postponing the deadline for the 
preliminary determinations until April 2, 2002. Notice of Postponement 
of Preliminary Antidumping Duty Determinations: Carbon and Certain 
Alloy Steel Wire Rod From Brazil, Canada, Germany, Indonesia, Mexico, 
Moldova, Trinidad and Tobago, and Ukraine, 67 FR 11674 (March 15, 
2002).

Postponement of Final Determination and Extension of Provisional 
Measures

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise. Section 351.210(e)(2) of the 
Department's regulations requires that exporters requesting 
postponement of the final determination must also request an extension 
of the provisional measures referred to in section 733(d) of the Act 
from a four-month period until not more than six months. We received a 
request to postpone the final determination from the petitioners, ISI 
and Ivaco. In their requests, ISI and Ivaco consented to the extension 
of provisional measures to no longer than six months. Since this 
preliminary determination is affirmative, the requests for postponement 
are made by exporters that account for a significant proportion of 
exports of the subject merchandise, and there is no compelling reason 
to deny the respondents' requests, we have extended the deadline for 
issuance of the final determination until the 135th day after the date 
of publication of this preliminary determination in the Federal 
Register and have extended provisional measures to no longer than six 
months.

Period of Investigation (POI)

    The POI is July 1, 2000, through June 30, 2001. This period 
corresponds to the four most recent fiscal quarters prior to the month 
of the filing of the petition (i.e., August 2001).

Scope of Investigation

    The merchandise covered by these investigations is certain hot-
rolled products of carbon steel and alloy steel, in coils, of 
approximately round cross section, 5.00 mm or more, but less than 19.00 
mm, in solid cross-sectional diameter.
    Specifically excluded are steel products possessing the above-noted 
physical characteristics and meeting the Harmonized Tariff Schedule of 
the United States (HTSUS) definitions for (a) stainless steel; (b) tool 
steel; (c) high nickel steel; (d) ball bearing steel; and (e) concrete 
reinforcing bars and rods. Also excluded are (f) free machining steel 
products (i.e., products that contain by weight one or more of the 
following elements: 0.03 percent or more of lead, 0.05 percent or more 
of bismuth, 0.08 percent or more of sulfur, more than 0.04 percent of 
phosphorus, more than 0.05 percent of selenium, or more than 0.01 
percent of tellurium).
    Also excluded from the scope are 1080 grade tire cord quality wire 
rod and 1080 grade tire bead quality wire rod. This grade 1080 tire 
cord quality rod is defined as: (i) grade 1080 tire cord quality wire 
rod measuring 5.0 mm or more but not more than 6.0 mm in cross-
sectional diameter; (ii) with an average partial decarburization of no 
more than 70 microns in depth (maximum individual 200 microns); (iii) 
having no inclusions greater than 20 microns; (iv) having a carbon 
segregation per heat average of 3.0 or better using European Method NFA 
04-114; (v) having a surface quality with no surface defects of a 
length greater than 0.15 mm; (vi) capable of being drawn to a diameter 
of 0.30 mm or less with 3 or fewer breaks per ton, and (vii) containing 
by weight the following elements in the proportions shown: (1) 0.78 
percent or more of carbon, (2) less than 0.01 percent of aluminum, (3) 
0.040 percent or less, in the aggregate, of phosphorus and sulfur, (4) 
0.006 percent or less of nitrogen, and (5) not more than 0.15 percent, 
in the aggregate, of copper, nickel and chromium.
    This grade 1080 tire bead quality rod is defined as: (i) grade 1080 
tire bead quality wire rod measuring 5.5 mm or more but not more than 
7.0 mm in cross-sectional diameter; (ii) with an average partial 
decarburization of no more than 70 microns in depth (maximum individual 
200 microns); (iii) having no inclusions greater than 20 microns; (iv) 
having a carbon segregation per heat average of 3.0 or better using 
European Method NFA 04-114; (v) having a surface quality with no 
surface defects of a length greater than 0.2 mm; (vi) capable of being 
drawn to a diameter of 0.78 mm or larger with 0.5 or fewer breaks per 
ton; and (vii) containing by weight the following elements in the 
proportions shown: (1) 0.78 percent or more of carbon, (2) less than 
0.01 percent of soluble aluminum, (3) 0.040 percent or less, in the 
aggregate, of phosphorus and sulfur, (4) 0.008 percent or less of 
nitrogen, and (5) either not more than 0.15 percent, in the aggregate, 
of copper, nickel and chromium (if chromium is not specified), or not 
more than 0.10 percent in the aggregate of copper and nickel and a 
chromium content of 0.24 to 0.30 percent (if chromium is specified).
    The designation of the products as ``tire cord quality'' or ``tire 
bead quality'' indicates the acceptability of the product for use in 
the production of tire

[[Page 17391]]

cord, tire bead, or wire for use in other rubber reinforcement 
applications such as hose wire. These quality designations are presumed 
to indicate that these products are being used in tire cord, tire bead, 
and other rubber reinforcement applications, and such merchandise 
intended for the tire cord, tire bead, or other rubber reinforcement 
applications is not included in the scope. However, should petitioners 
or other interested parties provide a reasonable basis to believe or 
suspect that there exists a pattern of importation of such products for 
other than those applications, end-use certification for the 
importation of such products may be required. Under such circumstances, 
only the importers of record would normally be required to certify the 
end use of the imported merchandise.
    All products meeting the physical description of subject 
merchandise that are not specifically excluded are included in this 
scope.
    The products under investigation are currently classifiable under 
subheadings 7213.91.3010, 7213.91.3090, 7213.91.4510, 7213.91.4590, 
7213.91.6010, 7213.91.6090, 7213.99.0031, 7213.99.0038, 7213.99.0090, 
7227.20.0010, 7227.20.0020, 7227.20.0090, 7227.20.0095, 7227.90.6051, 
7227.90.6053, 7227.90.6058, and 7227.90.6059 of the HTSUS. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
the written description of the scope of this proceeding is dispositive.
    See Carbon and Certain Alloy Steel Wire Rod: Requests for exclusion 
of various tire cord quality wire rod and tire bead quality wire rod 
products from the scope of antidumping duty (Brazil, Canada, Egypt, 
Germany, Indonesia, Mexico, Moldova, South Africa, Trinidad and Tobago, 
Ukraine, and Venezuela) and countervailing duty (Brazil, Canada, 
Germany, Trinidad and Tobago, and Turkey) investigations.

Selection of Respondents

    Section 777A(c)(1) of the Act directs the Department to calculate 
individual dumping margins for each known exporter and producer of the 
subject merchandise. Where it is not practicable to examine all known 
producer/exporters of subject merchandise, section 777A(c)(2) of the 
Act permits us to investigate either 1) a sample of exporters, 
producers, or types of products that is statistically valid, based on 
the information available at the time of selection, or 2) exporters and 
producers accounting for the largest volume of the subject merchandise 
that can reasonably be examined. In the petition, the petitioners 
identified three producers of steel wire rod in Canada. Due to the 
limited resources available to the Department, we initially determined 
that we could investigate only the largest exporter, Ivaco. See 
Respondent Selection Memorandum, dated November 9, 2001. The second and 
third largest Canadian exporter/producers, ISI and Stelco Inc. 
(Stelco), volunteered to submit questionnaire responses.
    On November 9, 2001, the Department issued the complete antidumping 
questionnaire to Ivaco.\3\ In a letter to the Assistant Secretary of 
Import Administration, dated November 21, 2001, the Canadian Embassy 
requested that the Department also select ISI and Stelco as regular 
respondents and calculate a company-specific rate for each company. On 
December 26, 2001,the Department determined that it had the resources 
to investigate these additional companies and notified ISI and Stelco 
that they would be treated as mandatory respondents.
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    \3\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under investigation that it sells, and the manner in 
which it sells that merchandise in all of its markets. Section B 
requests a complete listing of all home market sales or, if the home 
market is not viable, of sales in the most appropriate third-country 
market (this section is not applicable to respondents in non-market 
economy (NME) cases). Section C requests a complete listing of U.S. 
sales. Section D requests information on the cost of production 
(COP) of the foreign like product and the constructed value (CV) of 
the merchandise under investigation. Section E requests information 
on further manufacturing.
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    The responses to section A of the antidumping questionnaire were 
submitted to the Department in November, 2001. Responses to sections D 
through E of questionnaire were submitted in December, 2001. Responses 
to the Department's supplementary questionnaires were submitted in 
February and March, 2002.

Collapsing Corporate Affiliates

    The Department's regulations provide that we will ''... treat two 
or more affiliated parties as a single entity where those producers 
have production facilities for similar or identical products ... and 
{the Department} concludes that there is a significant potential for 
the manipulation of price or production.'' See 19 CFR 351.401(f). This 
provision applies to the corporate affiliates of both Ivaco and 
Stelco.\4\
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    \4\ See Memorandum from Gary Taverman to Bernard Carreau, 
Canadian Carbon and Certain Alloy Steel Wire Rod: Collapsing of 
Ivaco Inc. with Ivaco Rolling Mills and Stelco Inc. with Stelwire 
Ltd., April 2, 2002 (Collapsing Memorandum).
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Ivaco

    The management of the production and sales operations of Ivaco and 
Ivaco Rolling Mills (IRM) are closely intertwined.\5\ In addition to 
producing finished rod for its own account from green rod purchased 
from IRM (IRM), Ivaco provides tolling services which allow IRM to 
``produce'' finished rod for IRM's account. In effect, Ivaco and IRM 
rely on the same facilities to both produce both steel wire rod and 
further manufactured products. The respective production facilities do 
not require substantial retooling to restructure the companies' 
manufacturing priorities. Furthermore, the production and sales 
operations of these companies have the potential to manipulate prices 
and production within the meaning of section 351.401(f), therefore, and 
we have collapsed these affiliates into a single entity. As a result, 
we have not considered sales from IRM to divisions of Ivaco in 
calculating the margin. See Collapsing Memorandum.
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    \5\ Ivaco owns 99.999 percent of its subsidiary, Ivaco Rolling 
Mills.
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Stelco

    The management of the production and sales operations of Stelco and 
Stelwire, Ltd. (Stelwire) are also closely intertwined. Stelco and 
Stelwire are both producers of the subject steel wire rod merchandise, 
using the same facilities to produce identical or similar products. 
Furthermore, the production and sales operations of Stelco and Stelwire 
have the potential to manipulate prices and production within the 
meaning of section 351.401(f), therefore, we have collapsed these 
affiliates into a single entity for the purpose of this investigation. 
See Collapsing Memorandum.

Product Comparisons

    In accordance with section 771(16) of the Act, all products 
produced by the respondents covered by the description in the Scope of 
Investigation section, above, and sold in Canada during the POI, are 
considered to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We have relied on eight 
criteria to match U.S. sales of subject merchandise to comparison-
market sales of the foreign like product or constructed value (CV): 
grade range, carbon content range, surface quality, deoxidation, 
maximum total residual content, heat treatment, diameter range, and 
coating. These characteristics have been weighted by the Department, 
where appropriate. Where there were no sales of identical merchandise 
in the

[[Page 17392]]

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 listed above.

Fair Value Comparisons

    To determine whether sales of steel wire rod from Canada were made 
in the United States at less than fair value, we compared the export 
price (EP) and the constructed export price (CEP) to the normal value 
(NV), as described in the Export Price and Constructed Export Price and 
Normal Value sections of this notice. In accordance with section 
777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs and 
CEPs. We compared these to weighted-average home market prices or CVs, 
as appropriate, in Canada.

Export Price and Constructed Export Price

    For the price to the United States, we used, as appropriate, EP or 
CEP, as defined in sections 772(a) and 772(b) of the Act, respectively. 
Section 772(a) of the Act defines EP as the price at which the subject 
merchandise is first sold before the date of importation by the 
producer or exporter 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 722(c) 
of the Act.
    Section 772(b) of the Act defines CEP as the price at which the 
subject merchandise is first 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 772(c) and (d) of the Act.
    For all respondents, we calculated EP and CEP, as appropriate, 
based on the packed prices charged to the first unaffiliated customer 
in the United States. We found that all the respondents made EP sales 
during the POI. These sales are properly classified as EP sales because 
they were made outside the United States by the exporter or producer to 
unaffiliated customers in the United States prior to the date of 
importation.
    We also found that each respondent made CEP sales during the POI. 
These sales are properly classified as CEP sales because they were made 
after the date of importation.
    In accordance with section 772(c)(2) of the Act, we made deductions 
from the starting price for movement expenses and export taxes and 
duties, where appropriate. Section 772(d)(1) of the Act provides for 
additional adjustments to calculate CEP. Accordingly, where 
appropriate, we deducted direct and indirect selling expenses related 
to commercial activity in the United States. Pursuant to section 
772(d)(3) of the Act, where applicable, we made an adjustment for CEP 
profit.

A. ISI

    As stated above, during the POI, ISI made both EP and CEP sales. We 
calculated an EP for sales where the merchandise was sold directly by 
ISI to the first unaffiliated purchaser in the United States prior to 
importation, and CEP was not otherwise warranted based on the facts on 
the record. We calculated a CEP for sales made by ISI's affiliated U.S. 
further processor after the importation of the subject merchandise into 
the United States. For both EP and CEP transactions, we made deductions 
from the starting price for movement expenses in accordance with 
section 772(c)(2)(A) of the Act. These included inland freight, 
warehousing expenses and brokerage fees.
    For CEP sales, in accordance with section 772(d)(1) of the Act, we 
deducted from the starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including direct expenses (credit expenses and warranty expenses), the 
cost of further manufacturing, and indirect selling expenses incurred 
by the affiliated further processor in the United States. We also 
deducted from CEP an amount for profit, in accordance with section 
772(d)(3) of the Act.

B. Stelco

    During the POI, Stelco made both EP and CEP sales. We calculated an 
EP for sales where the merchandise was sold directly by Stelco to the 
first unaffiliated purchaser in the United States prior to importation, 
and CEP was not otherwise warranted based on the facts on the record. 
We calculated a CEP for sales made by Stelco's affiliated U.S. further 
processor after the importation of the subject merchandise into the 
United States. For EP and CEP transactions, we made deductions from the 
starting price for billing adjustments and movement expenses in 
accordance with section 772(c)(2)(A) of the Act. Movement expenses 
included inland freight, warehousing expenses, and brokerage fees.
    For CEP sales, in accordance with section 772(c)(2)(A), we deducted 
movement expenses, including inland freight, warehousing expenses, and 
brokerage fees. In accordance with section 772(d)(1) of the Act, we 
deducted from the starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including direct expenses (credit expenses, advertising expenses, 
warranty expenses and technical services); indirect selling expenses 
incurred by an affiliated further processor in the United States; and 
further manufacturing costs. We also deducted from CEP an amount for 
profit, in accordance with section 772(d)(3) of the Act.

C. Ivaco

    During the POI, Ivaco made both EP and CEP sales. We calculated an 
EP for sales where the merchandise was sold directly by Ivaco to the 
first unaffiliated purchaser in the United States prior to importation, 
and CEP was not otherwise warranted based on the facts on the record. 
We calculated a CEP for sales made by IRM and by Ivaco's two affiliated 
U.S. further processors after the importation of the subject 
merchandise into the United States. For EP sales, we made additions to 
the starting price (gross unit price), where appropriate, for freight 
revenue (reimbursement for freight charges paid by Ivaco) and for 
billing errors (debit-note price adjustments made by Ivaco), and 
deductions, where appropriate, for billing adjustments (including 
credit-note price adjustments made by Ivaco), early payment discounts 
and rebates, and movement expenses in accordance with section 
772(c)(2)(A) of the Act. Movement expenses included inland freight, 
warehousing expenses, brokerage fees, U.S. customs duty, and U.S. 
merchandise processing fees.
    For CEP sales, we made the same adjustments to the starting price 
as for the EP transactions described above. In accordance with sections 
772(d) of the Act, we also made deductions, where appropriate, for 
direct and indirect selling expenses, further manufacturing costs, and 
CEP profit. Included in the indirect selling expenses we deducted are 
those expenses Ivaco and IRM incurred in Canada which were associated 
with economic activities in the United States; i.e., expenses incurred 
arranging transportation to unaffiliated U.S. customers, evaluating 
orders from such customers, and issuing invoices for CEP sales, and so 
forth. The preamble to Antidumping Duties; Countervailing Duties; Final 
Rule, 62 FR 27296, at 27351 (May 19, 1997), states that the Department 
will deduct all CEP expenses related to the first sale to the first 
unaffiliated U.S. customer ''... even if, for example, the foreign 
parent of the affiliated U.S. importer pays those expenses.'' See, 
also, the Statement of

[[Page 17393]]

Administrative Action (SAA) accompanying the URAA, H.R. Doc. 103-316, 
Vol. I (1994), at 823. The U.S. Court of International Trade has upheld 
such deductions. See Mitsubishi Heavy Industry Ltd. v. United States, 
54 F. Supp. 2d 1183 (Ct. Int'l Trade 1999).

Normal Value

A. Selection of Comparison Markets
    Section 773(a)(1) of the Act directs that NV be based on the price 
at which the foreign like product is sold in the home market, provided 
that the merchandise is sold in sufficient quantities (or value, if 
quantity is inappropriate), that the time of the sales reasonably 
corresponds to the time of the sale used to determine EP or CEP, and 
that there is no particular market situation that prevents a proper 
comparison with the EP or CEP. The statute contemplates that quantities 
(or value) will normally be considered insufficient if they are less 
than five percent of the aggregate quantity (or value) of sales of the 
subject merchandise to the United States.
    We found that ISI, Ispat and Stelco each had a viable home market 
for steel wire rod. As such, the respondents submitted home market 
sales data for purposes of the calculation of NV.
    In deriving NV, we made adjustments as detailed in the Calculation 
of Normal Value Based on Home Market Prices and Calculation of Normal 
Value Based on Constructed Value sections below.
B. Cost of Production Analysis
    Based on allegations contained in the petition, and in accordance 
with section 773(b)(2)(A)(i) of the Act, we found reasonable grounds to 
believe or suspect that steel wire rod sales were made in Canada at 
prices below the cost of production (COP). See Initiation Notice, 66 FR 
at 50166. As a result, the Department has conducted an investigation to 
determine whether ISI, Ivaco and Stelco made home market sales at 
prices below their respective COPs during the POI within the meaning of 
section 773(b) of the Act. We conducted the COP analysis described 
below.
1. Calculation of Cost of Production
    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted-average COP based on the sum of the cost of materials and 
fabrication for the foreign like product, plus amounts for the home 
market general and administrative (G&A) expenses, including interest 
expenses, selling expenses, and packing expenses. We relied on the COP 
data submitted by ISI and Ivaco in their cost questionnaire responses.
    For Stelco and Stelwire, we relied on the cost of production 
information submitted by the respondents in their questionnaire 
responses, except for the following adjustments:
    a. We adjusted the reported cost of manufacture (COM) to reflect 
the highest of transfer price, market price and affiliated suppliers' 
COP for the inputs purchased from affiliated suppliers;
    b. We calculated separate G&A rates (excluding interest expenses) 
for Stelco and Stelwire. We based Stelco and Stelwire's G&A rates on 
their fiscal year ended December 31, 2000, unconsolidated financial 
statements respectively. We then calculated a single G&A rate for 
Stelco and Stelwire by weight-averaging the two companies' 
individually-calculated G&A rates based on their reported shipment 
quantities;
    c. We calculated Stelco's further manufacturing G&A expense rate 
based on the Stelco USA unconsolidated financial statements. We used 
the further processing cost component included in the cost of sales as 
a denominator to calculate the rate; and
    d. We used the reported consolidated interest expense rate to 
calculate the total further manufacturing costs. See Cost Calculation 
Memorandum from Sheikh Hannan and Taija A. Slaughter to Neal Halper, 
Director Office of Accounting, dated April 2, 2002.
2. Test of Home Market Sales Prices
    We compared the adjusted weighted-average COP for each respondent 
to the respective respondent's home- market sales prices of the foreign 
like product, as required under section 773(b) of the Act, to determine 
whether these sales had been made at prices below the COP within an 
extended period of time (i.e., a period of one year) in substantial 
quantities and whether such prices were sufficient to permit the 
recovery of all costs within a reasonable period of time.
    On a model-specific basis, we compared the revised COP to the home 
market prices, less any applicable movement charges, discounts, 
rebates, and direct and indirect selling expenses (which were also 
deducted from COP).
3. 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 were at prices less 
than the COP, we did not disregard any below-cost sales of that product 
because we determined that the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of a respondent's 
sales of a given product during the POI were at prices less than the 
COP, we determined such sales to have been made in ``substantial 
quantities'' within an extended period of time in accordance with 
section 773(b)(2)(B) of the Act. In such cases, because we compared 
prices to POI average costs, pursuant to section 773(b)(2)(D) of the 
Act, we also determined that such sales were not made at prices that 
would permit recovery of all costs within a reasonable period of time. 
Therefore, we disregarded comparison market sales for ISI, Ivaco and 
Stelco that failed the cost test
C. Calculation of Normal Value Based on Home Market Prices
    We determined price-based NVs for the respondent companies as 
follows. For each respondent, we made adjustments for any differences 
in packing and deducted home market movement expenses pursuant to 
sections 773(a)(6)(A) and 773(a)(6)(B)(ii) of the Act. In addition, 
where applicable in comparison to EP transactions, we made adjustments 
for differences in circumstances of sale (COS) pursuant to section 
773(a)(6)(C)(iii) of the Act.
    The company-specific COS adjustments are described below.
1. ISI
    We made COS adjustments for ISI's EP transactions by deducting 
direct selling expenses incurred for home market sales (credit expenses 
and warranty expenses) and adding U.S. direct selling expenses (credit 
expenses and warranty expenses). For matches of similar merchandise, we 
made adjustments, where appropriate, for physical differences in the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.
2. Stelco
    We made COS adjustments for Stelco's EP transactions by deducting 
direct selling expenses incurred for home market sales (credit 
expenses, advertising expenses, warranty expenses and technical 
services) and adding U.S. direct selling expenses (credit expenses, 
advertising expenses, warranty expenses and technical services). For 
matches of similar merchandise, we made adjustments, where appropriate, 
for physical differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act.
3. Ivaco
    We made COS adjustments for Ivaco's EP transactions by deducting 
direct selling expenses incurred for home market sales (credit expenses 
and

[[Page 17394]]

warranty expenses) and adding U.S. direct selling expenses (credit 
expenses and warranty expenses). For matches of similar merchandise, we 
made adjustments, where appropriate, for physical differences in the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.
    Because Ivaco paid commissions on its EP sales, in calculating NV, 
we deducted the lesser of either (1) the weighted-average amount of 
commission paid on a U.S. sale for a particular product, or (2) the 
weighted-average amount of indirect selling expenses paid on the home 
market sales for a particular product. See preamble at 19 CFR 
351.410(e), 62 FR at 27414 (May 19, 1997).
D. Arm's-Length Sales
    The respondents each reported sales of the foreign like product to 
an affiliated customer. To test whether these sales to affiliated 
customers were made at arm's length, where possible, we compared the 
prices of sales to affiliated and unaffiliated customers, net of all 
movement charges, direct selling expenses, and packing. Where the price 
to the affiliated party was, on average, 99.5 percent or more of the 
price to unaffiliated parties, we determined that sales made to the 
affiliated party were at arm's length. See Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27355 (May 19, 1997) 
(preamble to the Department's regulations). Consistent with section 
351.403(c) of the Department's regulations, we excluded from our 
analysis those sales where the price to the affiliated parties was less 
than 99.5 percent of the price to the unaffiliated parties.
E. Calculation of Normal Value Based on Constructed Value
    Section 773(a)(4) of the Act provides that, where NV cannot be 
based on comparison-market sales, NV may be based on CV. Accordingly, 
for those models of steel wire rod for which we could not determine the 
NV based on comparison-market sales, either because there were no sales 
of a comparable product or all sales of the comparison products failed 
the COP test, we based NV on CV.
    Section 773(e)(1) of the Act provides that CV shall be based on the 
sum of the cost of materials and fabrication for the imported 
merchandise plus amounts for selling, general, and administrative 
expenses (SG&A), profit, and U.S. packing expenses. We calculated the 
cost of materials and fabrication based on the methodology described in 
the COP section of this notice. We based SG&A and profit on the actual 
amounts incurred and realized by the respondents in connection with the 
production and sale of the foreign like product in the ordinary course 
of trade, for consumption in the comparison market, in accordance with 
section 773(e)(2)(A) of the Act. In addition, we used U.S. packing 
costs as described in the Export Price section of this notice, above.
    We made adjustments to CV for differences in COS in accordance with 
section 773(a)(8) of the Act and 19 CFR 351.410. These involved the 
deduction of direct selling expenses incurred on home market sales 
from, and the addition of U.S. direct selling expenses to, CV.
    Company-specific adjustments are described below.
1. Stelco
    For CEP and EP comparisons, we deducted direct selling expenses 
incurred for home market sales (credit expenses, advertising expenses, 
warranty expenses and technical services). For EP sales, we added U.S. 
direct selling expenses (credit expenses, advertising expenses, 
warranty expenses and technical services) to the NV.
2. Ivaco
    For CEP and EP comparisons, we deducted direct selling expenses 
incurred for home market sales (credit expenses and warranty expenses). 
For EP sales we added U.S. direct selling expenses (credit expenses and 
warranty expenses) to the NV.
    Because Ivaco paid commissions on its EP sales, in calculating NV, 
we deducted the lesser of either (1) the weighted-average amount of 
commission paid on a U.S. sale for a particular product, or (2) the 
weighted-average amount of indirect selling expenses paid on the home 
market sales for a particular product. See preamble at 19 CFR 
351.410(e), 62 FR at 27414 (May 19, 1997).
F. Level of Trade/Constructed Export Price Offset
    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 as the EP or CEP transaction. The NV level of 
trade 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 sales, the U.S. level of trade is also the 
level of the starting-price sale, which is usually from exporter to 
importer. For CEP transactions, it is the level of the constructed sale 
from the exporter to the importer.
    To determine whether NV sales are at a different level of trade 
than EP or CEP transactions, 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 level of trade 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 level of trade of the export transaction, we make a 
level-of-trade adjustment under section 773(a)(7)(A) of the Act. 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 difference in 
the levels between NV and CEP affects 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 
Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731, 61733, 
61746 (November 19, 1997).
    In implementing these principles in this investigation, we obtained 
information from ISI, Ivaco and Stelco about the marketing stages 
involved in the reported U.S. and home market sales, including a 
description of the selling activities performed by the respondents for 
each channel of distribution. In identifying levels of trade for EP and 
home market sales we considered the selling functions reflected in the 
starting price before any adjustments. For CEP sales, we considered 
only the selling activities reflected in the price after the deduction 
of expenses pursuant to section 772(d) of the Act.
    In conducting our level-of-trade analysis for each respondent, we 
examined the specific types of customers, the channels of distribution, 
and the selling practices of the respondent. Generally, if the reported 
levels of trade are the same, the functions and activities of the 
seller should be similar. Conversely, if a party reports levels of 
trade that are different for different categories of sales, the 
functions and activities may be dissimilar. We found that, for ISI and 
Stelco, the pattern was very similar; Ivaco, however, was characterized 
by a different pattern. We found the following.

[[Page 17395]]

1. ISI
    EP sales to the United States and sales in Canada were made to re-
drawers and to parts manufacturers. For all these sales, the selling 
functions that ISI performed for its different customers and channels 
of distribution were very similar for both types of customers in each 
market. Although ISI reported that wire drawers required more of its 
metallurgical services and product development consulting than parts 
manufacturers do, both types of customers required these services in 
the home market and the U.S. market. Therefore, we found the EP and 
home market levels of trade to be the same and made no level-of-trade 
adjustment.
    With regard to the U.S. sales of further manufactured products, 
which were all CEP sales, we considered only the selling activities 
reflected in the price after the deduction of expenses and profit 
covered in section 772(d) of the Act. After we deducted the expenses 
and profit covered in section 772(d), the NV level of trade was more 
remote from ISI than that of its U.S. sales of further manufactured 
products, as adjusted. In addition, there is only one level of trade in 
the home market and we have no other appropriate information on which 
to determine if there is a pattern of consistent price differences 
between the sales on which NV is based and comparison market sales at 
the level of trade of the export transactions. As a result, we are 
granting a CEP offset pursuant to section 773(a)(7)(B) of the Act.
2. Stelco
    For all its home market and EP sales, the selling functions Stelco 
performed for its different customer categories and channels of 
distribution were virtually identical. Therefore, we found the EP and 
home market levels of trade to be the same and made no level-of-trade 
adjustment.
    With regard to CEP sales, we considered only the selling activities 
reflected in the price after the deduction of expenses and profit 
covered in section 772(d) of the Act. After we deducted the expenses 
and profit covered in section 772(d), the NV level of trade was more 
remote from Stelco than that of its U.S. sales of further manufactured 
products, as adjusted. In addition, there is only one level of trade in 
the home market and we have no other appropriate information on which 
to determine if there is a pattern of consistent price differences 
between the sales on which NV is based and comparison market sales at 
the level of trade of the export transactions. As a result, we are 
granting a CEP offset pursuant to section 773(a)(7)(B) of the Act.
3. Ivaco
    Ivaco reported two channels of distribution in the home market. The 
channels of distribution are: 1) direct sales by IRM and 2) direct 
sales by Sivaco. To determine whether separate levels of trade exist in 
the home market, we examined the stages in the marketing process and 
selling functions along the chain of distribution between Ivaco and its 
customers. Based on this examination, we preliminarily determine that 
Ivaco sold merchandise at two levels of trade in the home market during 
the POI. One level of trade is for sales made by Ivaco's steel wire rod 
manufacturing facility, IRM; the second level of trade is for sales 
made by Sivaco, Ivaco's customer service center, which is also a steel 
wire rod processing and drawing facility. From our analysis of the 
marketing process for these sales, we determined that sales by Sivaco 
are at a more remote marketing stage than that for sales by IRM. Sales 
by Sivaco have different, more complex, distribution patterns, 
involving substantially greater selling activities. Based on these 
differences, we concluded that two levels of trade exist in the home 
market, an IRM level of trade (``level one'') and a Sivaco level of 
trade (``level two'').
    The Department analyzed Ivaco's selling functions in the home 
market, including inventory maintenance services, delivery services, 
handling services, freight services, sales administration services, bid 
assistance, technical services, and extension of credit.\6\ With regard 
to inventory maintenance, Sivaco offers more extensive inventory 
services than IRM. Sivaco maintains a significant general inventory, 
which results in a significantly longer inventory turnover rate for 
Sivaco, and additional services. This allows Sivaco to offer its 
customers just-in-time (JIT) delivery services. Thereby, Sivaco assumes 
the inventory services that would normally be performed by the 
customer. IRM does not provide these additional services. As stated by 
the Department in Pipe and Tube from Turkey, `` inventory maintenance 
is a principal selling function'' and `` the additional 
responsibilities of maintaining merchandise in inventory also gives 
rise to related selling functions that are performed.''\7\
---------------------------------------------------------------------------

    \6\ Due to its proprietary nature, credit risk was analyzed in 
Ivaco 's Calculation Memo, March 28, 2002.
    \7\ See Certain Welded carbon steel Pipe and Tube From Turkey, 
63 Fed. Reg. 35, 190 (1998).
---------------------------------------------------------------------------

    Specifically, Sivaco ships more often than IRM due to the fact that 
Sivaco offers its customers JIT inventory, while IRM produces and ships 
rod based on a quarterly rolling schedule. In addition, Sivaco provides 
more handling and freight services than IRM in that it offers smaller, 
more frequent shipments with more varied freight services. For example, 
IRM sells rod in either full truck load or rail car quantities, while 
Sivaco will arrange shipment for less than truck-load quantities. With 
regard to sales administration services, Sivaco has a smaller average 
shipment size than IRM, resulting in a higher proportional sales 
administrative service cost than IRM. Furthermore, Sivaco offers the 
following services to its customers, which IRM does not; 1) bid 
assistance to customers, 2) assistance with product specification and 
material/ processing review, and 3) a wider range of technical 
assistance, including helping customers solve usage problems and choose 
the best type of rod for their applications and machinery.
    In the U.S. market, Ivaco reported two EP channels of distribution. 
The channels of distribution are: 1) direct sales by IRM to U.S. 
customers and 2) direct sales by Sivaco to U.S. customers. To determine 
whether separate levels of trade exist for EP sales to the U.S. 
market,we examined the selling functions, the chain of distribution, 
and the customer categories reported in the United States.
    Specifically, we have found that direct sales by IRM to U.S. 
customers involve all the same selling functions as IRM's sales in the 
home market. Further, direct sales by Sivaco in the U.S. include all 
the same selling functions and are made at the same level of trade as 
those found in the home market. Sales by Ivaco's steel wire rod 
manufacturing facility, IRM, are made at level of trade one, the same 
as IRM's home market sales. EP sales by Sivaco are made at the second 
level of trade. Because the levels of trade in the United States for EP 
sales are identical to those in the home market, the preceding analysis 
with respect to the home market levels of trade applies equally to the 
U.S. market.
    To the extent possible, we have compared U.S. EP transactions and 
home market sales at the same level of trade without making a level-of-
trade adjustment. When we were unable to find sales of the foreign like 
product in

[[Page 17396]]

the home market at the same level of trade as the U.S. sale, we 
examined whether a level-of-trade adjustment was appropriate. When we 
compare U.S. sales to home market sales at a different level of trade, 
we make a level-of-trade adjustment if the difference in levels of 
trade affects price comparability. We determine any effect on price 
comparability by examining sales at different levels of trade in a 
single market, the home market. Any price effect must be manifested in 
a pattern of consistent price differences between home market sales 
used for comparison and sales at the equivalent level of trade of the 
export transaction. To quantify the price differences, we calculate the 
difference in the average of the net prices of the same models sold at 
different levels of trade. Net prices are used because any difference 
will be due to differences in level of trade rather than other factors. 
We use the average difference in net prices to adjust NV when NV is 
based on a level of trade different from that of the export sale. If 
there is no pattern of consistent price differences, the difference in 
levels of trade does not have a price effect and, therefore, no 
adjustment is necessary.
    In addition, Ivaco has two CEP channels of distribution which 
constitute a single level of trade: 1) sales of goods manufactured by 
IRM that are not further manufactured before being sold to unaffiliated 
customers from inventory locations in the United States and 2) sales by 
IRM of products further manufactured in the United States by affiliated 
companies. For CEP sales, we examined the relevant functions after 
deducting the costs of further manufacturing, U.S. selling expenses and 
associated profit, as well as indirect selling expenses incurred in 
Canada associated with commercial activities incurred in the United 
States. As a result, there are no selling activities associated with 
Ivaco's CEP sales in either channel of distribution when effecting the 
level of trade comparison with home market sales. Therefore, we 
preliminarily find that the CEP level of trade is not comparable to 
either level of trade in the home market. We were unable to quantify 
the level of trade adjustment, in accordance with section 773(a)(7)(B) 
of the Act; therefore, we matched, where possible, to the closest home 
market level of trade, level of trade one, and granted a CEP offset 
pursuant to section 773(a)(7)(B) of the Act.

Currency Conversions

    We made currency conversions into U.S. dollars in accordance with 
section 773A of the Act based on exchange rates in effect on the dates 
of the U.S. sale, as obtained from the Federal Reserve Bank (the 
Department's preferred source for exchange rates).

Verification

    In accordance with section 782(i) of the Act, we intend to verify 
all information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
Customs Service to suspend liquidation of certain entries of carbon and 
certain alloy steel wire rod from Canada, that are entered, or 
withdrawn from warehouse, for consumption on or after the date of 
publication of this notice in the Federal Register. We are also 
instructing the Customs Service to require a cash deposit or the 
posting of a bond equal to the weighted-average amount by which the NV 
exceeds the EP or CEP, as indicated in the chart below. These 
instructions suspending liquidation will remain in effect until further 
notice. Because the estimated weighted-average dumping margin for 
Stelco is de minimis, we are not directing the Customs service to 
suspend the liquidation of entries for this company.
    The weighted-average dumping margins are provided below:

------------------------------------------------------------------------
                                                                 Margin
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
ISI..........................................................      4.21
Ivaco........................................................      7.36
Stelco.......................................................     1.32*
All Others...................................................      6.43
------------------------------------------------------------------------

    * De minimis - excluded from the calculation of the ``All Others'' 
rate.

Disclosure

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties of the 
proceeding in this investigation in accordance with 19 CFR 351.224(b).
    International Trade Commission Notification
    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final antidumping determination is 
affirmative, the ITC will determine whether the imports covered by that 
determination are materially injuring, or threaten material injury to, 
the U.S. industry. The deadline for that ITC determination would be the 
later of 120 days after the date of this preliminary determination or 
45 days after the date of our final determination.

Public Comment

    Case briefs for this investigation must be submitted no later than 
one week after the issuance of the verification reports. Rebuttal 
briefs must be filed within five days after the deadline for submission 
of case briefs. A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes. Further, we would appreciate it if parties 
submitting written comments would provide the Department with an 
additional copy of the public version of any such comments on diskette.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by any interested party. If a request for a 
hearing is made in an investigation, the hearing will tentatively be 
held two days after the deadline for submission of the rebuttal briefs, 
at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, NW, Washington, DC 20230. In the event that the Department 
receives requests for hearings from parties to more than one steel wire 
rod case, the Department may schedule a single hearing to encompass all 
those cases. Parties should confirm by telephone the time, date, and 
place of the hearing 48 hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request within 30 days of 
the publication of this notice. Requests should specify the number of 
participants and provide a list of the issues to be discussed. Oral 
presentations will be limited to issues raised in the briefs.
    We will issue our final determination no later than 135 days after 
the date of publication of this notice in the Federal Register. This 
determination is issued and published pursuant to sections 733(f) and 
777(i)(1) of the Act.

    Dated: April 2, 2002
Faryar Shizad,
Assistant Secretary for Import Administration.
[FR Doc. 02-8705 Filed 4-9-02; 8:45 am]
BILLING CODE 3510-DS-S