[Federal Register Volume 67, Number 90 (Thursday, May 9, 2002)]
[Notices]
[Pages 31235-31241]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-11192]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-872]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Certain Cold-Rolled Carbon Steel Flat Products From the People's 
Republic of China

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

ACTION: Notice of preliminary determination in the less-than-fair-value 
investigation of certain cold-rolled carbon steel flat products from 
the People's Republic of China.

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SUMMARY: The Department of Commerce (``the Department'') has 
preliminarily determined that imports of certain cold-rolled carbon 
steel flat products (``cold-rolled steel'') from the People's Republic 
of China (``PRC'') are being, or are likely to be, sold in the United 
States at less than fair value (``LTFV'').

EFFECTIVE DATE: May 9, 2002.

FOR FURTHER INFORMATION CONTACT: Carrie Blozy at 202-482-0165 or 
Stephen Shin at 202-482-0413, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 1401 Constitution 
Avenue, NW., Washington, DC 20230.

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. In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
regulations codified at 19 CFR Part 351 (2001).

Background

    On October 18, 2001, the Department initiated antidumping duty 
investigations to determine whether imports of cold-rolled steel from 
Argentina, Australia, Belgium, Brazil, France, Germany, India, Japan, 
Korea, the Netherlands, New Zealand, the People's Republic of China, 
Russia, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and 
Venezuela are being, or are likely to be, sold in the United States at 
LTFV. See Notice of Initiation of Antidumping Duty Investigations: 
Certain Cold-Rolled Carbon Steel Flat Products From Argentina, 
Australia, Belgium, Brazil, France, Germany, India, Japan, Korea, the 
Netherlands, New Zealand, the People's Republic of China, the Russian 
Federation, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and 
Venezuela, 66 FR 54198 (October 26, 2001) (``Initiation Notice''). The 
petitioners in the concurrent antidumping duty investigations are 
Bethlehem Steel Corporation, National Steel Corporation, Nucor 
Corporation, Steel Dynamics, Inc., United States Steel LLC, WCI Steel, 
Inc., and Weirton Steel Corporation. LTV Steel Company, Inc. is no 
longer an active petitioner in these investigations.\1\
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    \1\ Effective January 1, 2002, the party previously known as 
``United States LLC'' changed its name to ``United States Steel 
Corporation.''
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    On November 19, 2001, the International Trade Commission (``ITC'') 
published its determination that there is a reasonable indication that 
an industry in the United States is materially injured or threatened 
with material injury by reason of imports of cold-rolled steel from all 
of these countries. See Certain Cold-Rolled Carbon Steel Products From 
Argentina, Australia, Belgium, Brazil, China, France, Germany, India, 
Japan, Korea, the Netherlands, New Zealand, Russia, South Africa, 
Spain, Sweden, Taiwan, Thailand, Turkey, and Venezuela, 66 FR 57985 
(November 19, 2001).
    On October 26, 2001, the Department sent letters requesting the 
quantity and value of shipments of subject merchandise exported to the 
United States during the period January 1, 2001, through June 30, 2001, 
to the Embassy of the People's Republic of China, Sichuan Chuaton 
Changcheng Special Steel Group Co. Ltd., Laiwu Steel Group Ltd., Wuhan 
Iron and Steel Group Co., Benxi Iron and Steel Co., Shanghai Baosteel 
Group Corp. (``Baosteel''), and Shanghai Pudong Iron and Steel Group 
Co., Ltd. On November 8, 2001, Baosteel submitted quantity and value 
information. We received no other responses to this request.
    On November 23, 2001, Pangang Group International Economic & 
Trading Corp. (``Pangang'') submitted a letter which requested that it 
be treated as a respondent in this investigation. On

[[Page 31236]]

November 27, 2001, the Department issued its antidumping questionnaire 
to the Government of the PRC and issued courtesy copies to the six 
exporters/producers identified in the petition and to Pangang. The 
Department only received a response to its questionnaire from Pangang. 
On December 18, 2001, Baosteel submitted a letter to the Department 
which stated that it was not going to participate in the instant 
investigation.
    On February 22, 2002, the Department postponed the preliminary 
determination in this investigation to April 26, 2002. See Postponement 
of Preliminary Determinations of Antidumping Duty Investigations; 
Certain Cold-Rolled Carbon Steel Flat Products from Argentina, et al., 
67 FR 8227 (February 26, 2002).

Scope of Investigation

    For purposes of this investigation, the products covered are 
certain cold-rolled (cold-reduced) flat-rolled carbon-quality steel 
products. For a full description of the scope of this investigation, as 
well as a complete discussion of all scope exclusion requests submitted 
in the context of the on-going cold-rolled steel investigations, please 
see the ``Scope Appendix'' attached to the Notice of Preliminary 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Carbon Steel Flat Products from Argentina, published concurrently with 
this preliminary determination.

Period of Investigation

    The period of investigation (``POI'') for this investigation 
corresponds to the two most recent fiscal quarters prior to the filing 
of the petition, i.e., January 1, 2001 through June 30, 2001.

Critical Circumstances

    On November 29, 2001, and December 7, 2001, four of the petitioners 
in the investigation (Nucor Corporation, Steel Dynamics Inc., WCI Steel 
Inc., and Weirton Steel Company) submitted an allegation of critical 
circumstances with respect to imports of cold-rolled steel from the PRC 
and requested an expedited decision in the matter. On April 10, 2002, 
the Department issued its preliminary affirmative determination that 
critical circumstances exist with respect to imports of cold-rolled 
steel from the PRC. See Memorandum to Faryar Shirzad from Joseph A. 
Spetrini: Preliminary Affirmative Determinations of Critical 
Circumstances (April 10, 2002); and Notice of Preliminary 
Determinations of Critical Circumstances: Certain Cold-Rolled Carbon 
Steel Flat Products From Australia, the People's Republic of China, 
India, the Republic of Korea, the Netherlands, and the Russian 
Federation, 67 FR 19157 (April 18, 2002) (``Critical Circumstances 
Notice'').

Nonmarket Economy Country Status

    The Department has treated the PRC as a nonmarket economy (``NME'') 
country in all past antidumping investigations. See, e.g., Notice of 
Final Determination of Sales at Less Than Fair Value: Bulk Aspirin From 
the People's Republic of China, 65 FR 33805 (May 25, 2000); Notice of 
Final Determination of Sales at Less Than Fair Value: Certain Non-
Frozen Apple Juice Concentrate from the People's Republic of China, 65 
FR 19873 (April 13, 2000); Notice of Final Determination of Sales at 
Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products 
from the People's Republic of China, 66 FR 49632 (September 28, 2001) 
(``Hot-Rolled Steel from the PRC''). This NME designation remains in 
effect until it is revoked by the Department. See section 771(18)(C) of 
the Act. No party has sought revocation of the NME status in this 
investigation. Therefore, in accordance with section 771(18)(C) of the 
Act, we will continue to treat the PRC as a NME country.
    When the Department is investigating imports from a NME, section 
773(c)(1) of the Act directs us to base the normal value (``NV'') on 
the NME producer's factors of production, valued in a comparable market 
economy that is a significant producer of comparable merchandise. The 
sources of individual factor prices are discussed under the ``Normal 
Value'' section, below. Furthermore, no interested party has requested 
that we treat the cold-rolled steel industry in the PRC as a market-
oriented industry and no information has been provided that would lead 
to such a determination. Therefore, preliminarily we have continued to 
treat the PRC as a NME.

Separate Rates

    In a NME proceeding, the Department presumes that all companies 
within the country are subject to governmental control, and assigns 
separate rates only if the respondent demonstrates the absence of both 
de jure and de facto governmental control over export activities. See 
Notice of Final Determination of Sales at Less Than Fair Value: 
Bicycles From the People's Republic of China, 61 FR 19026, 19027 (April 
30, 1996). Pangang has provided the requested company-specific 
separate-rates information and has indicated that there is no element 
of government ownership or control. Based on Pangang's claim, we 
considered whether it is eligible for a separate rate.
    The Department's separate-rate test is unconcerned, in general, 
with macroeconomic/ border-type controls (e.g., export licenses, 
quotas, and minimum export prices), particularly if these controls are 
imposed to prevent dumping. The test focuses, rather, on controls over 
the investment, pricing, and output decision-making process at the 
individual firm level. See Certain Cut-to-Length Carbon Steel Plate 
from Ukraine: Final Determination of Sales at Less than Fair Value, 62 
FR 61754, 61757 (November 19, 1997); Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, from the People's Republic of China: 
Final Results of Antidumping Duty Administrative Review, 62 FR 61276, 
61279 (November 17, 1997); and Honey from the People's Republic of 
China: Preliminary Determination of Sales at Less than Fair Value, 60 
FR 14725, 14726 (March 20, 1995).
    To establish whether a firm is sufficiently independent from 
government control to be entitled to a separate rate, the Department 
analyzes each exporting entity under a test arising out of the Final 
Determination of Sales at Less Than Fair Value: Sparklers from the 
People's Republic of China, 56 FR 20588 (May 6, 1991), as modified by 
Final Determination of Sales at Less Than Fair Value: Silicon Carbide 
from the People's Republic of China, 59 FR 22585 (May 2, 1994) 
(``Silicon Carbide''). Under the separate-rates criteria, the 
Department assigns separate rates in NME cases only if the NME 
respondents can demonstrate the absence of both de jure and de facto 
governmental control over export activities. See Silicon Carbide and 
Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol 
from the People's Republic of China, 60 FR 22545 (May 8, 1998).

1. Absence of De Jure Control

    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) An absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) any other 
formal measures by the government decentralizing control of companies.
    Pangang has placed on the record a number of documents to 
demonstrate the absence of de jure control, including the ``Company Law 
of the People's Republic of China.'' In prior cases, the Department has 
analyzed this law and

[[Page 31237]]

found that it establishes an absence of de jure control. See, e.g., 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Partial-Extension Steel Drawer Slides with Rollers from the People's 
Republic of China, 60 FR 54472, 54474 (October 24, 1995). We have no 
information in this proceeding which would cause us to reconsider this 
determination.

2. Absence of De Facto Control

    The Department typically considers four factors in evaluating 
whether each respondent is subject to de facto governmental control of 
its export functions: (1) Whether the export prices are set by, or 
subject to, the approval of a governmental authority; (2) whether the 
respondent has authority to negotiate and sign contracts, and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of its management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses.
    As stated in previous cases, there is some evidence that certain 
enactments of the central government of the PRC have not been 
implemented uniformly among different sectors and/or jurisdictions in 
the PRC. See Silicon Carbide. Therefore, the Department has determined 
that an analysis of de facto control is critical in determining whether 
respondents are, in fact, subject to a degree of governmental control 
which would preclude the Department from assigning separate rates.
    Pangang asserted the following: (1) There is no government 
participation in setting export prices; (2) its managers have authority 
to bind sales contracts; (3) it does not have to notify any government 
authorities of its management selection, and (4) there are no 
restrictions on the use of its export revenue and it is responsible for 
financing it own losses. Additionally, Pangang's questionnaire response 
does not suggest that pricing is coordinated among exporters. 
Furthermore, our analysis of Pangang's questionnaire response reveals 
no other information indicating government control. Therefore, based on 
the information provided, we preliminarily determine that there is an 
absence of de facto governmental control of Pangang's export functions. 
Consequently, we preliminarily determine that the respondent has met 
the criteria for the application of a separate rate.

The PRC-Wide Rate

    In NME cases, it is the Department's policy to assume that all 
exporters located in the NME comprise a single exporter under common 
control, the ``NME entity.'' This presumption can be rebutted. The 
Department assigns a single NME rate to the NME entity unless an 
exporter can demonstrate eligibility for a separate rate. All exporters 
were given the opportunity to respond to the Department's 
questionnaire. As explained above, we received a timely Section A 
response from Pangang. Our review of U.S. import statistics, however, 
reveals that Pangang did not account for all imports of subject 
merchandise into the United States from the PRC. One producer/exporter 
of the subject merchandise, Baosteel, reported quantity and value 
information, but later submitted a letter to the Department announcing 
its intent not to participate in the investigation. We received no 
responses from other exporters to whom we sent requests for 
information. For this reason, we preliminarily determine that the 
majority of PRC exporters of cold-rolled steel failed to respond to our 
questionnaire. Consequently, we are applying adverse facts available 
(see below) to determine the single antidumping rate--the PRC-wide 
rate--applicable to all other exporters in the PRC based on our 
presumption that those respondents who failed to demonstrate 
entitlement to a separate rate constitute a single enterprise under 
common control by the PRC government. See, e.g., Final Determination of 
Sales at Less Than Fair Value: Synthetic Indigo from the People's 
Republic of China, 65 FR 25706, 25707 (May 3, 2000). The PRC-wide rate 
applies to all entries of subject merchandise except for entries from 
Pangang.

Use of Facts Otherwise Available

    Section 776(a)(2) of the Act provides that, if an interested party 
withholds information that has been requested by the Department, fails 
to provide such information in a timely manner or in the form or manner 
requested, significantly impedes a proceeding under the antidumping 
statute, or provides information which cannot be verified, the 
Department shall use, subject to sections 782(d) and (e) of the Act, 
facts otherwise available in reaching the applicable determination. As 
explained above, the majority of exporters of the subject merchandise 
failed to respond to the Department's request for information. The 
failure of theses exporters to respond also significantly impede this 
proceeding. Pursuant to section 776(a) of the Act, in reaching our 
preliminary determination, we have used total facts available for the 
PRC-wide rate because these entities did not respond.
    In addition, section 776(b) of the Act provides that, if the 
Department finds that an interested party ``has failed to cooperate by 
not acting to the best of its ability to comply with a request for 
information,'' the Department may use information that is adverse to 
the interests of that party as facts otherwise available. Adverse 
inferences are appropriate ``to ensure that the party does not obtain a 
more favorable result by failing to cooperate than if it had cooperated 
fully.'' See Statement of Administrative Action (``SAA'') accompanying 
the URAA, H.R. Doc. No. 316, 103d Cong., 2d Session at 870 (1994). 
Furthermore, ``affirmative evidence of bad faith on the part of the 
respondent is not required before the Department may make an adverse 
inference.'' See Antidumping Duties; Countervailing Duties; Final Rule, 
62 FR 27296, 27340 (May 19, 1997). The complete failure of these 
exporters to respond to the Department's requests for information 
constitutes a failure to cooperate to the best of their ability. In 
regard to Baosteel, though the company initially provided quantity and 
value information, the company subsequently indicated in a December 18, 
2001 letter to the Department that it would not participate in the 
investigation. This conduct constitutes a failure of Baosteel to 
cooperate to the best of its ability. Therefore, pursuant to section 
776(b) of the Act, the Department preliminarily finds that, in 
selecting from among the facts available, an adverse inference is 
appropriate.
    An adverse inference may include reliance on information derived 
from the petition, the final determination in the investigation, any 
previous review, or any other information placed on the record. See 
section 776(b) of the Act. However, section 776(c) provides that, when 
the Department relies on secondary information rather than on 
information obtained in the course of an investigation or review, the 
Department shall, to the extent practicable, corroborate that 
information from independent sources that are reasonably at its 
disposal. The SAA states that the independent sources may include 
published price lists, official import statistics and customs data, and 
information obtained from interested parties during the particular 
investigation or review. See SAA at 870. The SAA clarifies that 
``corroborate'' means that the Department will satisfy

[[Page 31238]]

itself that the secondary information to be used has probative value. 
Id. As noted in Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, from Japan, and Tapered Roller Bearings, Four Inches or 
Less in Outside Diameter, and Components Thereof, from Japan; 
Preliminary Results of Antidumping Duty Administrative Reviews and 
Partial Termination of Administrative Reviews, 61 FR 57391, 57392 
(November 6, 1996), to corroborate secondary information, the 
Department will, to the extent practicable, examine the reliability and 
relevance of the information used.
    For our preliminary determination, as adverse facts available, we 
have used the highest rate calculated for a respondent, i.e., the rate 
calculated for Pangang. In an investigation, if the Department chooses 
as facts available a calculated dumping margin of another respondent, 
the Department will consider information reasonably at its disposal as 
to whether there are circumstances that would indicate that using that 
rate is appropriate. Where circumstances indicate that the selected 
margin may not be appropriate, the Department will attempt to find a 
more appropriate basis for facts available. See, e.g., Fresh Cut 
Flowers from Mexico; Final Results of Antidumping Duty Administrative 
Review, 61 FR 6812, 6814 (February 22, 1996) (the Department 
disregarded the highest margin as adverse best information available 
because the margin was based on another company's uncharacteristic 
business expense resulting in an unusually high margin). In this 
investigation, there is no indication that Pangang's calculated margin 
is inappropriate to use as adverse facts available.
    Accordingly, for the preliminary determination, the PRC-wide rate 
is 129.85 percent. Because this is a preliminary margin, the Department 
will consider all margins on the record at the time of the final 
determination for the purpose of determining the most appropriate final 
PRC-wide margin.

Fair Value Comparisons

    To determine whether sales of cold-rolled steel to the United 
States by Pangang were made at less than fair value, we compared export 
price (``EP'') to NV, as described in the ``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. We 
calculated weighted-average NVs.

Export Price

    In accordance with section 772(a) of the Act, we used EP because 
the subject merchandise was sold directly to unaffiliated purchasers 
outside of the United States, with the knowledge that the final 
destination of the subject merchandise was the United States. Pangang 
claimed that sales to the United States went through either of two 
channels of trade. In the first channel, Pangang sold directly to the 
unaffiliated U.S. importer. In the second channel, Pangang sold through 
another unaffiliated party to the U.S. importer. Pangang claims that in 
the second channel, the U.S. importer pays the other party, who then 
pays Pangang. For both channels of trade, we used the price of 
Pangang's first sale to an unaffiliated party in, or for exportation 
to, the United States. In accordance with section 777A(d)(1)(A)(i) of 
the Act, we compared POI-wide weighted-average EPs to the NVs. We 
calculated EP based on prices to unaffiliated purchasers in the United 
States. We made deductions, where appropriate, for foreign inland 
freight and brokerage and handling. Because certain domestic charges, 
such as those for foreign inland freight and brokerage and handling, 
were provided by NME companies, we valued those charges based on 
surrogate rates from India. See the Factors-of-Production Valuation 
Memorandum to Edward Yang through James Doyle from Carrie Blozy and 
Stephen Shin, dated April 26, 2002 (``FOP Memorandum'').

Normal Value

1. Surrogate Country

    When the Department is investigating imports from a NME country, 
section 773(c)(1) of the Act directs it to base NV, in most 
circumstances, on the NME producer's factors of production, valued in a 
surrogate market-economy country or countries considered to be 
appropriate by the Department. In accordance with section 773(c)(4) of 
the Act, the Department, in valuing the factors of production, shall 
utilize, to the extent possible, the prices or costs of factors of 
production in one or more market-economy countries that are at a level 
of economic development comparable to the NME country and are 
significant producers of comparable merchandise. The sources of the 
surrogate factor values are discussed under the NV section below.
    The Department has determined that India, Pakistan, Indonesia, Sri 
Lanka and the Philippines are countries comparable to the PRC in terms 
of economic development. See Memorandum from Jeffrey May to James 
Doyle, dated December 12, 2001. Customarily, we select an appropriate 
surrogate based on the availability and reliability of data from these 
countries. For PRC cases, the primary surrogate has often been India if 
it is a significant producer of comparable merchandise. In this case, 
we have found that India is a significant producer of comparable 
merchandise. We used India as the primary surrogate country and, 
accordingly, we have calculated NV using Indian prices to value the PRC 
producer's factors of production, when available and appropriate. We 
have obtained and relied upon publicly available information wherever 
possible. See FOP Memorandum. In accordance with 19 CFR 
351.301(c)(3)(i), for the final determination in this antidumping 
investigation, interested parties may submit publicly available 
information to value the factors of production within 40 days after the 
date of publication of this preliminary determination.

2. Factors of Production

    Section 773(c)(1) of the Act provides that the Department shall 
determine the NV using a factors-of-production methodology if: (1) The 
merchandise is exported from a NME country; and (2) the information 
does not permit the calculation of NV using home-market prices, third-
country prices, or constructed value under section 773(a) of the Act. 
Factors of production include: (1) Hours of labor required; (2) 
quantities of raw materials employed; (3) amounts of energy and other 
utilities consumed; and (4) representative capital costs. See 773(c) of 
the Act. We used factors of production, reported by Pangang, for 
materials, energy, labor, by-products, and packing. We valued all the 
input factors using publicly available published information, as 
discussed in the ``Surrogate Country'' and ``Factor Valuations'' 
sections of this notice. In accordance with 19 CFR 351.408(c)(1), when 
a producer sources an input from a market economy and pays for it in 
market-economy currency, the Department employs the actual price paid 
for the input to calculate the factors-based NV. See also Lasko Metal 
Products v. United States, 437 F.3d 1442, 1445-1446 (Fed. Cir. 1994) 
(``Lasko''). Therefore, when Pangang had market-economy inputs and paid 
for these inputs in a market-economy currency, we used the actual 
prices paid for those inputs in our calculations.

3. Factor Valuations

    In accordance with section 773(c) of the Act, we calculated NV 
based on factors of production reported by

[[Page 31239]]

Pangang for the POI. To calculate NV, the reported per-unit factor 
quantities were multiplied by publicly available Indian surrogate 
values (except as noted below). In selecting the surrogate values, we 
considered the quality, specificity, and contemporaneity of the data. 
As appropriate, we adjusted imported input prices by including freight 
costs to make them delivered prices. For a detailed description of all 
surrogate values used for the respondent, see FOP Memorandum.
    We added to Indian import surrogate values a surrogate freight cost 
using the shorter of (a) the reported distance from the domestic 
supplier to the factory, or (b) the distance from the nearest seaport 
to the factory. This adjustment is in accordance with the decision in 
Sigma Corporation v. United States, 117 F. 3d 1401, 1407-08 (Fed. Cir. 
1997).
    For those Indian Rupee values not contemporaneous with the POI, we 
adjusted for inflation using wholesale price indices published in the 
International Monetary Fund's International Financial Statistics for 
India. For those U.S. dollar-denominated values not contemporaneous 
with the POI, we adjusted for inflation using producer price indices 
published in the International Monetary Fund's International Financial 
Statistics for the United States.
    Although surrogate-value data based on Monthly Trade Statistics of 
Foreign Trade of India--Volume II--Imports (``Indian Import 
Statistics'') were provided by Pangang, we relied on more 
contemporaneous Indian Import Statistics (time period: April 2000 
through March 2001), where available. Except as noted below, we valued 
raw-material inputs using the weighted-average unit import values 
derived from the Indian Import Statistics. When Indian Import 
Statistics from a contemporaneous period were not available, we used 
Indian Import Statistics from an earlier period.
    Pangang reported that it self-produced all of its own electricity 
as well as the industrial gases argon, nitrogen and oxygen, which are 
used in the manufacture of the subject merchandise. In the antidumping 
investigation of hot-rolled carbon steel flat products from the PRC, 
the Department valued certain self-produced energy components 
(electricity, argon, oxygen, and nitrogen) through surrogate valuation 
as a finished product, rather than valuing the inputs consumed in 
generating each individual energy component. This was based on the fact 
that the financial statement of the sole surrogate company indicated 
that the surrogate company purchased a large portion of the inputs in 
question and did not appear to self-produce any of the inputs. 
Therefore, the valuation of the inputs consumed in generating each 
individual energy component would lead to mathematically incorrect 
results. See Hot-Rolled Steel from the PRC and accompanying Issues and 
Decision Memorandum at Comment 2. The Department has followed the 
approach established in Hot-Rolled Steel from the PRC regarding the 
valuation of certain self-produced energy inputs.
    In its April 10, 2002, submission, Pangang argued that each of the 
inputs used for producing electricity, argon, nitrogen, and oxygen must 
be valued separately to reflect the actual production process of the 
subject merchandise. Pangang maintained that valuation of the finished 
self-produced input will significantly overstate the cost of producing 
the input as many of the inputs into the self-produced input are by-
products or surplus inputs. Finally, Pangang argued that the reasons 
for using surrogate valuation to value electricity, argon, nitrogen, 
and oxygen in Hot-Rolled Steel from the PRC and structural steel beams 
from the PRC (see Notice of Preliminary Determination of Sales at Less 
Than Fair Value and Postponement of Final Determination: Structural 
Steel Beams From The People's Republic of China, 66 FR 67197, 67201 
(December 28, 2001) (``Structural Steel Beams from the PRC'')) do not 
apply in the present case. Pangang stated that because its power 
facilities were established decades ago, Pangang has not experienced 
large capital costs associated with its energy production during the 
POI. Pangang also asserted that to reject the use of its factors of 
production would amount to facts available.
    In this case, as explained below, to value overhead, selling 
general and administrative (``SG&A''), interest, and profit, we are 
relying on the 2000-2001 financial statements of Steel Authority of 
India Limited (``SAIL'') and TATA Steel (``TATA''), both of whom are 
Indian integrated steel producers of cold-rolled steel. The financial 
statements of both companies do not indicate that either self-produce 
argon, nitrogen, and oxygen. However, they do indicate that during the 
2000-2001 financial year SAIL and TATA self-produced approximately 60 
and 54 percent, respectively, of the electricity they consumed. See 
SAIL's financial statements at page 53 (Form A), which is attached to 
the FOP memorandum at Exhibit 7, and TATA's financial statements at 
page 14 (Form A), which is attached to petitioners' April 9, 2002, 
submission at Exhibit 2. For purposes of the preliminary determination 
we are continuing to follow our practice in Hot-Rolled Steel from the 
PRC and Structural Steel Beams from the PRC, and are valuing self-
produced electricity, argon, nitrogen, and oxygen as finished-products, 
rather than valuing factor inputs going into the production of these 
inputs. Although the record evidence indicates that SAIL and TATA self-
produced 60 and 54 percent, respectively, of their electricity, we find 
that potential distortion exists as Pangang self-produces all of its 
electricity as well as its argon, nitrogen, and oxygen. As we explained 
in Structural Steel Beams from the PRC, ``the respondent's methodology 
would add needless complications to our calculation of NV and lead to 
potentially erroneous results.''
    As the basis for valuing electricity, we have relied on the 1997 
data published in the International Energy Agency's publication, Energy 
Prices and Taxes, Third Quarter, 2000, and adjusted the amount for 
inflation. As the basis for valuing argon, nitrogen, and oxygen, we 
have relied on October 1996 price information from Bhoruka Gases 
Limited, an Indian manufacturer of industrial gases, and adjusted the 
amount for inflation.
    Pangang reported that it purchased iron ore fines and lumps from 
market-economy suppliers during the POI. The Department used the 
weighted-average price reported by Pangang.
    We valued all inputs for packing using the average-unit values 
derived from the Indian Import Statistics.
    We used Indian transport information to value transport for raw 
materials. For all instances in which respondent reported delivery by 
truck, to calculate domestic inland freight (truck), we used a price 
quote obtained by the Department from an Indian trucking company for 
transporting materials between Mumbai and Coimbatore (1265 kilometers). 
We converted the Indian Rupee value to U.S. dollars and adjusted for 
inflation through the POI. Similarly, for domestic inland freight 
(rail), we used a freight rate as quoted from Indian Railway Conference 
Association price lists.
    To value factory overhead, SG&A expenses, interest, and profit, we 
used financial ratios based on 2000-2001 financial information from two 
Indian integrated steel producers of cold-rolled steel, SAIL and TATA. 
In their March 26, 2001, surrogate value submission, Pangang argued 
that the Department should determine overhead, SG&A, and profit based 
on data from the Reserve Bank of India, which represents

[[Page 31240]]

financial data from 947 private limited companies from the Indian 
metals and chemical industries. Pangang claimed that the Department 
should rely on the Reserve Bank data because the financial statistics 
of a single company will not approximate the experience of Pangang in 
this case as Pangang is a member of the fully integrated group of 
companies, which not only produces the subject merchandise, but also 
produces and sells a range of other chemical and steel products and 
provides services. In their April 9, 2002, surrogate value submission, 
petitioners argued that the Department should rely on the most 
contemporaneous information available for TATA. In the investigation of 
cut-to-length carbon steel plate from the PRC, the Department 
determined not to use data from the Reserve Bank of India, explaining, 
``it is the Department's preference to base SG&A and profit ratios on 
data from actual producers of subject merchandise in the surrogate 
country.'' See Final Determination of Sales at Less Than Fair Value: 
Certain Cut-to-Length Carbon Steel Plate from the People's Republic of 
China, 62 FR 61964, 61969, 61970 (November 20, 1997). In their April 
18, 2002 submission, the respondent argued that because TATA undertook 
significant capital investments during the fiscal 2000-2001 year, 
TATA's financial ratios are not indicative of Pangang's experience. 
Therefore, Pangang argued that the Department should disregard TATA's 
financial data.
    In addition to the two potential surrogates the parties placed on 
the record (i.e., TATA and the Reserve Bank of Indian data), the 
Department located another surrogate, SAIL , and placed its financial 
information on the record as well. Thus, we have on the record of the 
investigation financial statements of two Indian producers of cold-
rolled steel (i.e., SAIL and TATA). Moreover, like Pangang, both SAIL 
and TATA are integrated steel producers that are members of a group of 
companies which produce products in addition to producing the subject 
merchandise. See FOP Memorandum for a copy of the 2000-2001 financial 
information for the companies included within the SAIL and TATA Steel 
Groups. Because the Department prefers to base financial ratios on 
multiple producers from a contemporaneous period, the Department has 
calculated a simple average of the financial ratios of SAIL and TATA. 
See Brake Rotors From the People's Republic of China: Preliminary 
Results of Third New Shipper Review and Preliminary Results and Partial 
Rescission of Second Antidumping Duty Administrative Review, 64 FR 
73007, 73011 (December 29, 1999). As in Hot-Rolled Steel from the PRC, 
we used information from TATA from profit. See the Hot-Rolled Factors-
of-Production Valuation Memorandum to Edward Yang through James Doyle 
from Carrie Blozy, Catherine Bertrand and Doreen Chen, dated September 
28, 2001.
    For labor, consistent with 19 CFR 351.408(c)(3), we used the PRC 
regression-based wage rate at the Import Administration's home page, 
Import Library, Expected Wages of Selected NME Countries, revised in 
September 2001 (see http://ia.ita.doc.gov/wages). The source of the 
wage rate data on the Import Administration's web site is the 2000 Year 
Book of Labour Statistics, International Labor Organization (Geneva: 
2000), Chapter 5B: Wages in Manufacturing.
    For the by-products, steel slag and iron slag, we used U.S. 
domestic prices as surrogate values. In previous cases, the Department 
has determined not to value slag based on Indian Import Statistics 
because we found that the Indian import values were unusually high 
compared to the price of the subject merchandise. See, e.g., Notice of 
Preliminary Determination of Sales at Less Than Fair Value: Certain 
Hot-Rolled Carbon Steel Flat Products From the People's Republic of 
China, 66 FR 22183, 22191 (May 3, 2001) (``Hot-Rolled from the PRC 
Prelim''); Hot-Rolled Steel from the PRC; and Structural Steel Beams 
from the PRC. Consistent with these prior determinations, for purposes 
of the preliminary determination, the Department is valuing steel slag 
and iron slag based on values for slag from the U.S. Geological Survey 
Minerals, Commodities Summaries from 1998. We adjusted the value for 
inflation using the U.S. producer price index.
    To value the by-products coke oven gas and steam, we: (1) Noted the 
BTU equivalent of coke oven gas or steam; (2) obtained a ratio of coke 
oven gas or steam to the BTU equivalent of natural gas; and (3) 
multiplied this ratio by the surrogate value of natural gas, which was 
taken from the 1999 financial report of EOG Resources, Inc. This 
natural gas value was also used in the investigation of hot-rolled 
steel from the PRC. See Hot Rolled Steel from the PRC Prelim.
    We are not granting offsets for the recoveries of hot-rolled steel 
products and cold-rolled steel products for purposes of the preliminary 
determination. In its March 12, 2002, supplemental questionnaire 
response, Pangang explained that inferior steel products, which include 
hot-rolled and cold-rolled products, ``are those steels in good steel 
quality but which sizes do not meet client needs.'' We find that 
inferior hot-rolled and cold-rolled steel products represent sales of 
non-prime or secondary finished product and hence cannot be classified 
as by-products as they are more properly considered home market sales 
of hot-rolled and cold-rolled steel.

Final Critical Circumstances Determination

    We will make a final determination concerning critical 
circumstances for the PRC when we make our final determination 
regarding sales at LTFV in this investigation, which, unless postponed, 
will be no later than 75 days after the publication of this notice in 
the Federal Register.

Suspension of Liquidation

    Because of our preliminary affirmative critical circumstances 
finding, we are directing Customs to suspend liquidation of all entries 
of cold-rolled steel from the PRC entered, or withdrawn from warehouse, 
for consumption on or after 90 days prior to the date on which this 
notice is published in the Federal Register. See Critical Circumstances 
Notice. We are instructing Customs to require a cash deposit or the 
posting of a bond equal to the estimated preliminary dumping margin, as 
indicated in the chart below. These instructions suspending liquidation 
will remain in effect until further notice.
    We determine that the following percentage weighted-average margins 
exist for the POI:

               Cold-Rolled Flat Carbon Steel Flat Products
------------------------------------------------------------------------
                                                              Weighted-
                                                               average
               Producer/Manufacturer/Exporter                   margin
                                                              (percent)
------------------------------------------------------------------------
Pangang....................................................       129.85
PRC-Wide Rate..............................................       129.85
------------------------------------------------------------------------

    The PRC-wide rate applies to all entries of the subject merchandise 
except for entries from exporters/manufacturers that are identified 
individually above.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our preliminary determination. If our final determination is 
affirmative, the ITC will determine before the later of 120 days after 
the date of this preliminary determination or 45 days after our final 
determination whether imports of cold-rolled steel from the PRC are 
materially

[[Page 31241]]

injuring, or threaten material injury to, the U.S. industry.

Public Comment

    Case briefs or other written comments must be submitted to the 
Assistant Secretary for Import Administration no later than 50 days 
after the date of publication of this notice, and rebuttal briefs no 
later than 55 days after the date of publication of this notice. 
Rebuttal briefs must be limited to the issues raised in the case 
briefs. A list of authorities used and an executive summary of issues 
should accompany any briefs submitted to the Department. Such summary 
should be limited to five pages total, including footnotes. In 
accordance with section 774 of the Act, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs. Tentatively, the hearing 
will be held fifty-seven days after publication of this notice, at the 
U.S. Department of Commerce, 1401 Constitution Avenue, NW., Washington, 
DC 20230, at a time and location to be determined. Parties should 
confirm by telephone the date, time, and location of the hearing 48 
hours before the scheduled date.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the date of publication of this notice. 
Requests should contain: (1) The party's name, address, and telephone 
number; (2) the number of participants; and (3) a list of the issues to 
be discussed. At the hearing, oral presentations will be limited to 
issues raised in the briefs. See 19 CFR 351.310(c). We will make our 
final determination, unless postponed, no later than 75 days after this 
preliminary determination.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act.

    Dated: April 26, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-11192 Filed 5-8-02; 8:45 am]
BILLING CODE 3510-DS-P