[Federal Register Volume 67, Number 152 (Wednesday, August 7, 2002)]
[Notices]
[Pages 51210-51216]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19990]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-427-814]


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

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

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

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SUMMARY: In response to requests from Ugine S.A. (``Ugine''), and 
Allegheny Ludlum, AK Steel Corporation (formerly Armco, Inc.), North 
American Stainless, Butler-Armco Independent Union, Zanesville Armco 
Independent Organization Inc., and the United Steelworkers of America, 
AFL-CIO/CLC, collectively, (``the Petitioners''), the U.S. Department 
of Commerce (``Department'') is conducting an administrative review of 
the antidumping duty order on stainless steel sheet and strip 
(``SSSS'') from France for the period July 1, 2000 through June 30, 
2001. The Department preliminarily determines that a dumping margin 
exists for Ugine's sales of SSSS in the United States. If these 
preliminary results are adopted in our final results of this 
administrative review, we will instruct the U.S. Customs Service to 
assess antidumping duties on entries of Ugine's merchandise during the 
period of review. The preliminary results are listed in the section 
titled ``Preliminary Results of Review,'' infra.

EFFECTIVE DATE: August 7, 2002.

FOR FURTHER INFORMATION CONTACT: Alex Villanueva, Enforcement Group 
III, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 1401 Constitution Avenue, NW., Washington, DC 
20230; telephone: 202-482-3208.

Applicable Statute and Regulations

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

Background

    On July 27, 1999, the Department published in the Federal Register 
the amended final determination and antidumping duty order on SSSS from 
France. See Notice of Amended Final Determination of Sales at Less Than 
Fair Value and Antidumping Duty Order; Stainless Steel Sheet and Strip 
in Coils from France, 64 FR 40562 (July 27, 1999) (``Antidumping Duty 
Order''). On March 19, 2002, the Department published in the Federal 
Register the amended final results of the first antidumping duty 
administrative review of SSSS from France. See Notice of Amended Final 
Results of Antidumping Duty Administrative Review: Stainless Steel 
Sheet and Strip in Coils from France, 67 FR 12522 (March 19, 2002). On 
July 2, 2001, the Department published in the Federal Register a notice 
of ``Opportunity to Request Administrative Review'' of the antidumping 
duty order on stainless steel sheet and strip in coils from France for 
the period July 1, 2000, through June 30, 2001. See Notice of 
Opportunity to Request Administrative Review of Antidumping Duty or 
Countervailing Duty Order, Finding, or Suspended Investigation 66 FR 
34910 (July 2, 2001).
    On July 31, 2001, Ugine, a French producer and exporter of subject 
merchandise, and the Petitioners requested that the Department conduct 
a review of sales or entries of merchandise subject to the Department's 
antidumping duty order on SSSS from France. On October 1, 2001, in 
accordance with section 751(a) of the Act, the Department published in 
the Federal Register a notice of initiation of this antidumping duty 
administrative review for the period July 1, 2000 through June 30, 
2001. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Requests for Revocation in Part, 66 FR 49924 
(October 1, 2001).
    On November 16, 2001, Ugine reported that it made sales of subject 
merchandise to the United States during

[[Page 51211]]

the period of review in its response to Section A of the Department's 
questionnaire. On December 21, 2001, Ugine submitted its responses to 
Sections B, C, D, and E of the Department's questionnaire. On January 
29, 2002, the Department issued a supplemental questionnaire for 
Sections A, B, C, D, and E of Ugine's questionnaire responses. On 
February 19, 2002, the Department published an extension of time limit 
for the preliminary results of the antidumping duty administrative 
review. See Extension of Time Limit for the Preliminary Results of the 
Antidumping Duty Administrative Review of Stainless Steel Sheet and 
Strip in Coil from France, 67 FR 7357 (February 19, 2002). On February 
26, 2002, Ugine submitted its response to the Department's Sections B, 
C, D, and E supplemental questionnaire. On March 12, 2002, the 
Department issued a supplemental questionnaire regarding affiliates 
customers in the home market. On March 19, 2002, Ugine submitted its 
response to this questionnaire. On March 25, 2002, the Department 
issued another supplemental questionnaire regarding the affiliated 
customers in the home market. On April 3, 2002, Ugine submitted its 
response to the second supplemental questionnaire regarding affiliated 
customers in the home market. On April 30, 2002, the Department issued 
a second supplemental questionnaire for Sections A, B, C, D, and E of 
Ugine's questionnaire responses. On May 13, 2002, Ugine submited its 
response to the second supplemental questionnaire for Sections A, B, C, 
D, and E. On May 31, 2002, the Department issued a supplemental 
questionnaire to Ugine regarding the reporting of certain affiliated 
customers' downstream sales. Their response was due by COB June 7, 
2002; however, Ugine did not submit a response.

Verification

    As provided in section 782(i)(3) of the Act, we verified the 
information submitted by Ugine for use in our preliminary results. We 
used standard verification procedures, including examination of 
relevant accounting and production records and original source 
documents provided by Ugine. We verified Ugine's U.S. subsidiary, Hague 
Steel Corp. (``Hague''), from May 20, 2002 through May 24, 2002. 
Additionally, we verified sales and cost information provided by Ugine 
from June 10, 2002 through June 21, 2002. Our verification results are 
outlined in the public version of the verification report and are on 
file in the Central Records Unit (``CRU'') located in room B-099 of the 
main Department of Commerce Building, 14th Street and Constitution 
Avenue, NW., Washington, DC. See Memorandum from Alex Villanueva and 
Jonathan Herzog, Case Analysts through James C. Doyle, Program Manager, 
to the File: Verification Report of the Second Administrative Review of 
Stainless Steel Sheet and Strip from France--United States Sales and 
Cost Verification Report of Hague Steel Corporation (``U.S. 
Verification Report''), dated July 31, 2002, and Memorandum from Alex 
Villanueva, Case Analyst through James C. Doyle, Program Manager, to 
the File: Verification Report of the Second Administrative Review of 
Stainless Steel Sheet and Strip from France--Home Market Sales and Cost 
Verification Report of Ugine, S.A., (``Home Market Verification 
Report''), dated July 31, 2002.

Period of Review

    The period of review (``POR'') is July 1, 2000 through June 30, 
2001.

Scope of Review

    For purposes of this administrative review, the products covered 
are certain stainless steel sheet and strip in coils. Stainless steel 
is an alloy steel containing, by weight, 1.2 percent or less of carbon 
and 10.5 percent or more of chromium, with or without other elements. 
The subject sheet and strip is a flat-rolled product in coils that is 
greater than 9.5 mm in width and less than 4.75 mm in thickness, and 
that is annealed or otherwise heat treated and pickled or otherwise 
descaled. The subject sheet and strip may also be further processed 
(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that 
it maintains the specific dimensions of sheet and strip following such 
processing.
    The merchandise subject to this order is currently classifiable in 
the Harmonized Tariff Schedule of the United States (``HTS'') at 
subheadings: 7219.13.0031, 7219.13.0051, 7219.13.0071, 7219.1300.81,\1\ 
7219.14.0030, 7219.14.0065, 7219.14.0090, 7219.32.0005, 7219.32.0020, 
7219.32.0025, 7219.32.0035, 7219.32.0036, 7219.32.0038, 7219.32.0042, 
7219.32.0044, 7219.33.0005, 7219.33.0020, 7219.33.0025, 7219.33.0035, 
7219.33.0036, 7219.33.0038, 7219.33.0042, 7219.33.0044, 7219.34.0005, 
7219.34.0020, 7219.34.0025, 7219.34.0030, 7219.34.0035, 7219.35.0005, 
7219.35.0015, 7219.35.0030, 7219.35.0035, 7219.90.0010, 7219.90.0020, 
7219.90.0025, 7219.90.0060, 7219.90.0080, 7220.12.1000, 7220.12.5000, 
7220.20.1010, 7220.20.1015, 7220.20.1060, 7220.20.1080, 7220.20.6005, 
7220.20.6010, 7220.20.6015, 7220.20.6060, 7220.20.6080, 7220.20.7005, 
7220.20.7010, 7220.20.7015, 7220.20.7060, 7220.20.7080, 7220.20.8000, 
7220.20.9030, 7220.20.9060, 7220.90.0010, 7220.90.0015, 7220.90.0060, 
and 7220.90.0080. Although the HTS subheadings are provided for 
convenience and Customs purposes, the Department's written description 
of the merchandise under review is dispositive.
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    \1\ Due to changes to the HTS numbers in 2001, 7219.13.0030, 
7219.13.0050, 7219.13.0070, and 7219.13.0080 are now 7219.13.0031, 
7219.13.0051, 7219.13.0071, and 7219.13.0081, respectively.
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    Excluded from the review of this order are the following: (1) Sheet 
and strip that is not annealed or otherwise heat treated and pickled or 
otherwise descaled, (2) sheet and strip that is cut to length, (3) 
plate (i.e., flat-rolled stainless steel products of a thickness of 
4.75 mm or more), (4) flat wire (i.e., cold-rolled sections, with a 
prepared edge, rectangular in shape, of a width of not more than 9.5 
mm), and (5) razor blade steel. Razor blade steel is a flat-rolled 
product of stainless steel, not further worked than cold-rolled (cold-
reduced), in coils, of a width of not more than 23 mm and a thickness 
of 0.266 mm or less, containing, by weight, 12.5 to 14.5 percent 
chromium, and certified at the time of entry to be used in the 
manufacture of razor blades. See Chapter 72 of the HTS, ``Additional 
U.S. Note'' 1(d).
    Flapper valve steel is also excluded from the scope of the order. 
This product is defined as stainless steel strip in coils containing, 
by weight, between 0.37 and 0.43 percent carbon, between 1.15 and 1.35 
percent molybdenum, and between 0.20 and 0.80 percent manganese. This 
steel also contains, by weight, phosphorus of 0.025 percent or less, 
silicon of between 0.20 and 0.50 percent, and sulfur of 0.020 percent 
or less. The product is manufactured by means of vacuum arc remelting, 
with inclusion controls for sulphide of no more than 0.04 percent and 
for oxide of no more than 0.05 percent. Flapper valve steel has a 
tensile strength of between 210 and 300 ksi, yield strength of between 
170 and 270 ksi, plus or minus 8 ksi, and a hardness (Hv) of between 
460 and 590. Flapper valve steel is most commonly used to produce 
specialty flapper valves in compressors.
    Also excluded is a product referred to as suspension foil, a 
specialty steel

[[Page 51212]]

product used in the manufacture of suspension assemblies for computer 
disk drives. Suspension foil is described as 302/304 grade or 202 grade 
stainless steel of a thickness between 14 and 127 microns, with a 
thickness tolerance of plus-or-minus 2.01 microns, and surface 
glossiness of 200 to 700 percent Gs. Suspension foil must be supplied 
in coil widths of not more than 407 mm, and with a mass of 225 kg or 
less. Roll marks may only be visible on one side, with no scratches of 
measurable depth. The material must exhibit residual stresses of 2 mm 
maximum deflection, and flatness of 1.6 mm over 685 mm length.
    Certain stainless steel foil for automotive catalytic converters is 
also excluded from the scope of this order. This stainless steel strip 
in coils is a specialty foil with a thickness of between 20 and 110 
microns used to produce a metallic substrate with a honeycomb structure 
for use in automotive catalytic converters. The steel contains, by 
weight, carbon of no more than 0.030 percent, silicon of no more than 
1.0 percent, manganese of no more than 1.0 percent, chromium of between 
19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of 
no more than 0.045 percent, sulfur of no more than 0.03 percent, 
lanthanum of less than 0.002 or greater than 0.05 percent, and total 
rare earth elements of more than 0.06 percent, with the balance iron.
    Permanent magnet iron-chromium-cobalt alloy stainless strip is also 
excluded from the scope of this order. This ductile stainless steel 
strip contains, by weight, 26 to 30 percent chromium, and 7 to 10 
percent cobalt, with the remainder of iron, in widths 228.6 mm or less, 
and a thickness between 0.127 and 1.270 mm. It exhibits magnetic 
remanence between 9,000 and 12,000 gauss, and a coercivity of between 
50 and 300 oersteds. This product is most commonly used in electronic 
sensors and is currently available under proprietary trade names such 
as ``Arnokrome III.'' \2\
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    \2\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company.
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    Certain electrical resistance alloy steel is also excluded from the 
scope of this order. This product is defined as a non-magnetic 
stainless steel manufactured to American Society of Testing and 
Materials (ASTM) specification B344 and containing, by weight, 36 
percent nickel, 18 percent chromium, and 46 percent iron, and is most 
notable for its resistance to high temperature corrosion. It has a 
melting point of 1390 degrees Celsius and displays a creep rupture 
limit of 4 kilograms per square millimeter at 1000 degrees Celsius. 
This steel is most commonly used in the production of heating ribbons 
for circuit breakers and industrial furnaces, and in rheostats for 
railway locomotives. The product is currently available under 
proprietary trade names such as ``Gilphy 36.'' \3\
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    \3\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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    Certain martensitic precipitation-hardenable stainless steel is 
also excluded from the scope of this order. This high-strength, ductile 
stainless steel product is designated under the Unified Numbering 
System (UNS) as S45500-grade steel, and contains, by weight, 11 to 13 
percent chromium, and 7 to 10 percent nickel. Carbon, manganese, 
silicon and molybdenum each comprise, by weight, 0.05 percent or less, 
with phosphorus and sulfur each comprising, by weight, 0.03 percent or 
less. This steel has copper, niobium, and titanium added to achieve 
aging, and will exhibit yield strengths as high as 1700 Mpa and 
ultimate tensile strengths as high as 1750 Mpa after aging, with 
elongation percentages of 3 percent or less in 50 mm. It is generally 
provided in thicknesses between 0.635 and 0.787 mm, and in widths of 
25.4 mm. This product is most commonly used in the manufacture of 
television tubes and is currently available under proprietary trade 
names such as ``Durphynox 17.'' \4\
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    \4\ ''Durphynox 17'' is a trademark of Imphy, S.A.
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    Finally, three specialty stainless steels typically used in certain 
industrial blades and surgical and medical instruments are also 
excluded from the scope of this order. These include stainless steel 
strip in coils used in the production of textile cutting tools (e.g., 
carpet knives). \5\ This steel is similar to AISI grade 420 but 
containing, by weight, 0.5 to 0.7 percent of molybdenum. The steel also 
contains, by weight, carbon of between 1.0 and 1.1 percent, sulfur of 
0.020 percent or less, and includes between 0.20 and 0.30 percent 
copper and between 0.20 and 0.50 percent cobalt. This steel is sold 
under proprietary names such as ``GIN4 Mo.'' The second excluded 
stainless steel strip in coils is similar to AISI 420-J2 and contains, 
by weight, carbon of between 0.62 and 0.70 percent, silicon of between 
0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent, 
phosphorus of no more than 0.025 percent and sulfur of no more than 
0.020 percent. This steel has a carbide density on average of 100 
carbide particles per 100 square microns. An example of this product is 
``GIN5'' steel. The third specialty steel has a chemical composition 
similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent, 
molybdenum of between 1.15 and 1.35 percent, but lower manganese of 
between 0.20 and 0.80 percent, phosphorus of no more than 0.025 
percent, silicon of between 0.20 and 0.50 percent, and sulfur of no 
more than 0.020 percent. This product is supplied with a hardness of 
more than Hv 500 guaranteed after customer processing, and is supplied 
as, for example, ``GIN6.'' \6\
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    \5\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \6\ ``GIN4 Mo,'' ``GIN5'' and ``GIN6'' are the proprietary 
grades of Hitachi Metals America, Ltd.
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Normal Value Comparisons

    To determine whether Ugine's sales of subject merchandise from 
France to the United States were made at less than fair value, we 
compared the constructed export price (``CEP'') to the normal value 
(``NV''), as described in the ``Constructed Export Price'' and ``Normal 
Value'' sections of this notice, below. In accordance with section 
777A(d)(2) of the Act, we calculated monthly weighted-average prices 
for NV and compared these to individual CEP transactions.

Transactions Reviewed

A. Home Market Viability

    In accordance with section 773(a)(1)(C) of the Act, to determine 
whether there was sufficient volume of sales in the home market to 
serve as a viable basis for calculating NV (i.e., the aggregate volume 
of home market sales of the foreign like product is greater than or 
equal to five percent of the aggregate volume of U.S. sales), we 
compared Ugine's volume of home market sales of the foreign like 
product to the volume of U.S. sales of the subject merchandise. 
Pursuant to sections 773(a)(1)(B) and (C) of the Act, because Ugine's 
aggregate volume of home market sales of the foreign like product was 
greater than five percent of its aggregate volume of U.S. sales for the 
subject merchandise, we determined that the home market was viable.

B. Arm's Length Test

    Ugine reported that it made sales in the home market to affiliated 
end users and resellers during the POR. Sales to affiliated customers 
in the home market not made at arm's length were excluded from our 
analysis. To test whether these sales were made at arm's length, we 
compared the starting prices of sales to affiliated and unaffiliated 
customers net of all movement charges, direct selling expenses, 
discounts and packing. Where prices to the affiliated party were on

[[Page 51213]]

average 99.5 percent or more of the price to the unrelated party, we 
determined that sales made to the related party were at arm's length. 
Where no affiliated customer ratio could be calculated because 
identical merchandise was not sold to unaffiliated customers, we were 
unable to determine that these sales were made at arm's length and, 
therefore, excluded them from our analysis. See, e.g., Notice of 
Preliminary Results of Antidumping Duty Administrative Review: 
Stainless Steel Plate in Coils from Italy, 67 FR 39677, 39679 (June 10, 
2002). Where the exclusion of such sales eliminated all sales of the 
most appropriate comparison product, we made comparisons to the next 
most similar model. In our home market NV calculation, we have included 
Ugine's sales to certain of its affiliated customers because these 
entities passed the Department's arm's length test criteria. 
Conversely, certain other affiliated customers did not pass the arm's 
length test and have therefore been excluded from our home market NV 
calculation. For a further discussion of home market sales made by 
Ugine to one affiliated reseller who failed the arm's length test, 
please see the ``Facts Available'' section below.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
SSSS products produced by Ugine, covered by the description in the 
``Scope of Review'' section of this notice, supra, and sold in the home 
market during the POR to be foreign like products for the purpose of 
determining appropriate product comparisons to SSSS products sold in 
the United States. We have relied on nine characteristics to match U.S. 
sales of subject merchandise to comparison sales of the foreign like 
product (listed in order of preference): grade, hot/cold rolled, gauge, 
finish, metallic coating, non-metallic coating, width, tempered/tensile 
strength, and edge trim.

Constructed Export Price

    In accordance with section 772(a) of the Act, export price (``EP'') 
is the price at which the subject merchandise is first sold (or agreed 
to be sold) before the date of importation by the producer or exporter 
of the subject merchandise outside of the United States to an 
unaffiliated purchaser in the United States or to an unaffiliated 
purchaser for exportation to the United States. In accordance with 
section 772(b) of the Act, CEP is the price at which the subject 
merchandise is first sold (or agreed to be sold) in the United States 
before or after the date of importation by or for the account of the 
producer or exporter of such merchandise or by a seller affiliated with 
the producer or exporter, to a purchaser not affiliated with the 
producer or exporter.
    For purposes of this review, Ugine classified all of its reported 
sales of SSSS as CEP sales. During the review period Ugine made sales 
to the United States through its two U.S. based affiliates, Usinor 
Stainless USA and Hague, which then resold the merchandise to 
unaffiliated customers. According to Ugine, Usinor Stainless USA serves 
as a national ``super-distributor'' for Ugine in the U.S. market. Hague 
is an affiliated customer in the United States which further 
manufactured the SSSS before selling to unaffiliated customers. 
Therefore, because Ugine's U.S. sales were made by Usinor Stainless USA 
and Hague after the subject merchandise was imported into the United 
States, it is appropriate to classify these sales as CEP sales.
    We calculated the CEP in accordance with section 772(b) of the Act. 
We based CEP on the packed ex-warehouse or delivered prices to 
unaffiliated purchasers in the United States. We also made deductions 
for the following movement expenses, where appropriate, in accordance 
with section 772(c)(2)(A) of the Act: inland freight from plant to 
distribution warehouse, international freight, marine insurance, U.S. 
inland freight from port to warehouse, U.S. inland freight from 
warehouse/plant to the unaffiliated customer, U.S. warehouse expenses, 
other U.S. transportation expense, and U.S. Customs duties. In 
accordance with section 772(d)(1) of the Act, we deducted selling 
expenses associated with economic activities occurring in the United 
States, including direct selling expenses, inventory carrying costs, 
discounts, credit, warranty expenses, commissions and other indirect 
selling expenses.
    For products that were further manufactured after importation, we 
adjusted for all costs of further manufacturing in the United States in 
accordance with section 772(d)(2) of the Act. We deducted the profit 
allocated to expenses deducted under section 772(d)(1) and (d)(2) in 
accordance with sections 772(d)(3) and 772(f) of the Act. In accordance 
with section 772(f) of the Act, we computed profit based on total 
revenues realized on sales in both the U.S. and home markets, less all 
expenses associated with those sales. We then allocated profit to 
expenses incurred with respect to U.S. economic activity (including 
further manufacturing costs), based on the ratio of total U.S. expenses 
to total expenses for both the U.S. and home market. We also adjusted 
the starting price for billing adjustments.

Normal Value

    After testing home market viability and whether home market sales 
were at below-cost prices, we calculated NV as noted in the ``Price-to-
Constructed Value (``CV'') Comparison'' and ``Price-to-Price 
Comparisons'' section of this notice.

Cost of Production Analysis

    Because we disregarded sales below the cost of production in the 
first antidumping duty administrative review of SSSS from France, the 
two recently completed segment of these proceedings, we have reasonable 
grounds to believe or suspect that sales by Ugine in its home market 
were made at prices below the cost of production (``COP''), pursuant to 
section 773(b)(1) of the Act. See Notice of Final Determination of 
Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in Coils 
from France, 64 FR 308204 (June 8, 1999) (``LTFV Final'') and Notice of 
Final Results of Antidumping Duty Administrative Review: Stainless 
Steel Sheet and Strip in Coils from France, 67 FR 6493 (February 12, 
2002). Therefore, pursuant to section 773 (b)(1) of the Act, we 
conducted a COP analysis of home market sales by Ugine as described 
below.

A. Calculation of COP

    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted-average COP based on the sum of Ugine's cost of materials and 
fabrication for the foreign like product, plus amounts for selling, 
general and administrative expenses (``SG&A''), including interest 
expenses, and packing costs. We relied on the COP data submitted by 
Ugine in its original and supplemental cost questionnaire responses. 
For these preliminary results, we did not make any adjustments to 
Ugine's submitted costs.

B. Test of Home Market Prices

    We compared the weighted-average COP for Ugine to home market sales 
of the foreign like product, as required under section 773(b) of the 
Act, in order to determine whether these sales had been made at prices 
below the COP. In determining whether to disregard home market sales 
made at prices below the COP, we examined whether such sales were made 
(1) within an extended period of time in substantial quantities,

[[Page 51214]]

and (2) at prices which permitted the recovery of all costs within a 
reasonable period of time in the normal course of trade, in accordance 
with section 773(b)(1)(A) and (B) of the Act. On a product-specific 
basis, we compared the COP to home market prices, less any applicable 
billing adjustments, movement charges, discounts, and direct and 
indirect selling expenses.

C. Results of the COP Test

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of Ugine'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 Ugine's sales 
of a given product during the POR were at prices less than the COP, we 
determined that such sales 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 use POR average 
costs, we also determined that such sales were not made at prices which 
would permit recovery of all costs within a reasonable period of time, 
in accordance with section 773(b)(2)(D) of the Act. Therefore, we 
disregarded the below-cost sales.

D. Calculation of Constructed Value

    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of Ugine's cost of materials, fabrication, SG&A 
(including interest expenses), U.S. packing costs, and profit. In 
accordance with section 773(e)(2)(A) of the Act, we based SG&A and 
profit on the amounts incurred and realized by Ugine in connection with 
the production and sale of the foreign like product in the ordinary 
course of trade, for consumption in the foreign country. For selling 
expenses, we used the actual weighted-average home market direct and 
indirect selling expenses.

Price-to-CV Comparisons

    In accordance with section 773(a)(4) of the Act, we based NV on CV 
if we were unable to find a home market match of identical or similar 
merchandise. Where appropriate, we made adjustments to CV in accordance 
with section 773(a)(8) of the Act. We deducted from CV the weighted-
average home market direct selling expenses.

Price-to-Price Comparisons

    For those product comparisons for which there were sales at prices 
above the COP, we based NV on prices to home market customers or prices 
to affiliated customers that were determined to be at arm's length. 
Where appropriate, we deducted discounts, rebates, credit expenses, 
warranty expenses, inland freight, inland insurance, and warehousing 
expense. We also adjusted the starting price for billing adjustments. 
We also made adjustments, where applicable, for home market indirect 
selling expenses to offset U.S. commissions in CEP comparisons.
    We made adjustments, where appropriate, for physical differences in 
the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. 
Additionally, in accordance with section 773(a)(6), we deducted home 
market packing costs and added U.S. packing costs. In accordance with 
the Department's practice, where all contemporaneous matches to a U.S. 
sale observation resulted in difference-in-merchandise adjustments 
exceeding 20 percent of the cost of manufacturing (``COM'') of the U.S. 
product, we based NV constructed value.
    For reasons discussed below in the ``Level of Trade'' section 
below, we allowed a CEP offset for comparisons made at different levels 
of trade. To calculate the CEP offset, we deducted the home market 
indirect selling expenses from NV for home market sales that were 
compared to U.S. CEP sales. We limited the home market indirect selling 
expense deduction by the amount of the indirect selling expenses 
deducted in calculating the CEP as required under section 772(d)(1)(D) 
of the Act.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (``LOT'') as the CEP transaction. The NV LOT is 
that of the starting-price sales in the comparison market, or when NV 
is based on CV, that of the sales from which we derive SG&A expenses 
and profit. For CEP, it is the level of the constructed sale from the 
exporter to the importer.
    To determine whether NV sales are at a different LOT than CEP, we 
examine stages in the marketing process and selling functions along the 
chain of distribution between the producer and the unaffiliated 
customer. If the comparison market sales are at a different LOT, and 
the difference affects price comparability as manifested in a pattern 
of consistent price differences between the sales on which NV is based 
and comparison market sales at the LOT of the export transaction, we 
make a LOT adjustment under section 773(a)(7)(A) of the Act. Finally, 
for CEP sales, if the NV level is more remote from the factory than the 
CEP level and there is no basis for determining whether the difference 
in 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, 
e.g., Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 
61731, 61732 (November 19, 1997).
    In reviewing the selling functions reported by the respondent, we 
examined all types of selling functions and activities reported in the 
respondent's questionnaire responses on LOT and during verification. In 
analyzing whether separate LOTs existed in this review, we found that 
no single selling function was sufficient to warrant a separate LOT in 
the home market. See Antidumping Duties; Countervailing Duties, Final 
Rule, 62 FR 27296, 27371 (May 19, 1997). However, based on a comparison 
of all selling functions performed for sales through affiliated parties 
to all selling functions performed for unaffiliated customers, we have 
preliminarily determined that Ugine sold merchandise at two LOTs in the 
home market during the POR. One LOT involved sales made through two 
channels: sales by Ugine directly to unaffiliated service centers or 
end users (Channel 1) and sales made by Ugine with the assistance of 
Ugine France Service in its capacity as sales agent, to unaffiliated 
end users (Channel 2). Additionally, the second LOT involved sales to 
affiliated parties made through two additional channels: sales from 
Ugine to its affiliate, IUP, for subsequent resales by IUP to 
unaffiliated end users and service centers (Channel 3) and sales from 
Ugine to its affiliate, IUP, for resale, with the assistance of Ugine 
France Service in its capacity as sales agent, to unaffiliated end 
users (Channel 4). From our analysis of the marketing process for these 
sales, we have determined that there are significant distinctions in 
selling activities between Ugine's sales to its affiliate in Channels 3 
and 4 and its direct sales through Channels 1 or 2. See Memorandum from 
Alex Villanueva, Case Analyst to the File through James C, Doyle, 
Program Manager, Second Antidumping Duty Administrative Review of 
Stainless Steel Sheet and Strip from France: Level of Trade Analysis, 
dated July 31, 2002 (``LOT Memorandum''), on file in Import 
Administration's Central Records Unit, Room B-099, U.S. Department of 
Commerce, 14th &

[[Page 51215]]

Constitution Avenue, NW., Washington, DC. Based on these differences, 
we preliminarily concluded that two LOTs existed in the home market 
during the POR.
    In order to determine the LOTs of the U.S. market, we reviewed the 
selling activities associated with each reported channel of 
distribution. Ugine only reported CEP sales in the U.S. market. Because 
all of Ugine's CEP sales in the U.S. market were made through Usinor 
Stainless USA and Hague, we found that there was one LOT in the U.S. 
market. For these CEP sales, we determined that fewer and different 
selling functions were performed for CEP sales to Usinor Stainless USA 
than for sales at either of the home market LOTs. In addition, we found 
that sales at both home market LOTs were at a more advanced stage of 
distribution compared to the CEP sales. See LOT Memorandum at 10.
    We examined whether a LOT adjustment was appropriate. The 
Department makes this adjustment when it is demonstrated that a 
difference in LOTs affects price comparability. However, where the 
available data do not provide an appropriate basis upon which to 
determine a LOT adjustment, and where the NV is established at a LOT 
that is at a more advanced stage of distribution than the LOT of the 
CEP transactions, we adjust NV under section 773(a)(7)(B) of the Act 
(the CEP offset provision). We were unable to quantify the LOT 
adjustment in accordance with section 773(a)(7)(A) of the Act, as we 
found that neither of the LOTs in the home market matched the LOT of 
the CEP transactions. Because of this, we did not calculate a LOT 
adjustment. Instead, a CEP offset was applied to the NV-CEP 
comparisons. See LOT Memo at 8. In the most recent administrative 
review of this order, where a similar fact pattern existed, we also 
granted a CEP offset. See Notice of Final Results of Antidumping Duty 
Administrative Review: Stainless Steel Sheet and Strip in Coils from 
France and accompanying Issues and Decision Memorandum 67 FR 6493 
(February 12, 2002) at Comment 8.

Facts Available

    We preliminarily determine that the use of facts available is 
appropriate for two elements of Ugine's dumping margin calculation. 
Section 776(a)(2) of the Act provides that if an interested party: (A) 
Withholds information that has been requested by the Department; (B) 
fails to provide such information in a timely manner or in the form or 
manner requested, subject to subsections 782(c)(1) and (e) of the Act; 
(C) significantly impedes a determination under the antidumping 
statute; or (D) provides such information but the information cannot be 
verified, the Department shall, subject to subsection 782(d) of the 
Act, use facts otherwise available in reaching the applicable 
determination.
    In this case, at the verification of Ugine's sales information from 
June 10, 2002 through June 21, 2002, Ugine presented as a minor 
correction a very small number of previously unreported home market 
sales. The information Ugine supplied and accepted by the Department 
included the total sales value and the total weight in kilograms. See 
Home Market Verification Report at 3.
    We have preliminarily determined that the use of neutral facts 
available, in accordance with section 776(a) of the Act, is warranted 
for these unreported home market sales. This unreported home market 
sales information should have been reported in the respondent's 
questionnaire responses. By failing to report these sales until the 
beginning of verification, the respondent prevented the Department from 
gathering and verifying further information necessary to its analysis. 
However, during verification, we noted that the total volume of 
unreported sales constituted less than one percent of total home market 
sales. Furthermore, Ugine volunteered the unreported sales information 
prior to the beginning of verification and the Department did not 
discover additional unreported sales or otherwise find that the 
respondent was uncooperative. Therefore, for these reasons, we are 
applying neutral facts available to the unreported sales information. 
As facts available, the Department has not considered these unreported 
home market sales in its dumping analysis.
    Additionally, consistent with section 776(a)(2)(A) and (C) of the 
Act, we preliminarily determine that use of partial adverse facts 
available is warranted for home market sales made to an affiliated 
reseller who failed the arm's length test. On January 29, 2002, the 
Department sent Ugine a supplemental questionnaire requesting the 
downstream sales for all known affiliated customers and resellers who 
purchased the subject merchandise in the home market during the POR. On 
February 6, 2002, Ugine submited a letter arguing that if the 
Department applies one of the criteria outlined in the letter, resales 
by affiliated customers need not be reported. One of these criteria 
specifically stated that if the customers passed the arm's length test, 
then there was no need to report those customers' downstream sales. On 
February 26, 2002, Ugine submitted its Sections B-E supplemental 
questionnaire response, but did not include downstream sales for any 
affiliated customers. On May 31, 2002, the Department requested 
downstream sales for a smaller number of affiliated resellers, which 
included the affiliated customer who failed the arm's length test. To 
date, Ugine has not provided the downstream sales for any customer, 
including that affiliated customer. Therefore, consistent with section 
776(a)(2)(A) and (C) of the Act, Ugine withheld information that had 
been requested by the Department, failed to provide such information in 
a timely manner, and significantly impeded the determination under the 
antidumping statute, justifying the use facts otherwise available in 
reaching the applicable determination. In addition, section 776(b) of 
the Act provides that, if the Department finds that an interested party 
``has failed to cooperate 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 available otherwise 
available. In this case, Ugine failed to provide its downstream sales 
made by affiliated resellers as requested in the Department's February 
26, 2002, and May 31, 2002, letters to Ugine.
    In selecting from facts otherwise available, for these preliminary 
results, for those sales to the affiliated reseller that failed the 
arm's length test, for which Ugine did not provide downstream sales, 
the Department used the highest gross unit price of an identical model 
purchased by another affiliated customer. For that customer's sales of 
models that were not sold to other affiliated customers, we applied the 
highest gross unit price for those models with a match. The Department 
applied similar facts available in a recent investigation. See Notice 
of Preliminary Determination of Sales at Less Than Fair Value: Certain 
Cold-Rolled Carbon Steel Flat Products from France, 67 FR 31204 (May 9, 
2002).

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions in accordance with section 773A of the Act, based on the 
official exchange rates in effect on the dates of the U.S. sales as 
certified by the Federal Reserve Bank of New York. Section 773A(a) of 
the Act directs the Department to use the daily exchange rate in effect 
on the date of sale in order to convert foreign currencies into U.S. 
dollars, unless the daily rate involves a ``fluctuation.'' In 
accordance with the Department's

[[Page 51216]]

practice, we have determined as a general matter that a fluctuation 
exists when the daily exchange rate differs from a benchmark by 2.25 
percent. See, e.g., Certain Stainless Steel Wire Rods from France; 
Preliminary Results of Antidumping Duty Administrative Review, 61 FR 
8915, 8918 (March 6, 1998), and Policy Bulletin 96-1: Currency 
Conversions, 61 FR 9434 (March 8, 1996). The benchmark is defined as 
the rolling average of rates for the past 40 business days. When we 
determine a fluctuation exists, we substitute the benchmark for the 
daily rate.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following weighted-average dumping margin exists:

          Stainless Steel Sheet and Strip in Coils From France
------------------------------------------------------------------------
                                                              Weighted-
                                                               average
               Producer/manufacturer/exporter                margin  (in
                                                               percent)
------------------------------------------------------------------------
Ugine......................................................         1.64
------------------------------------------------------------------------

    Pursuant to 19 CFR 351.224, the Department will disclose to any 
party to the proceeding, within ten days of publication of this notice, 
the calculations performed. Any interested party may request a hearing 
within 30 days of publication. Any hearing, if requested, will be held 
37 days after the date of publication, or the first working day 
thereafter. Interested parties may submit case briefs and/or written 
comments no later than 30 days after the date of publication. Rebuttal 
briefs and rebuttals to written comments, limited to issues raised in 
such briefs or comments, may be filed no later than 35 days after the 
date of publication. Parties who submit arguments are requested to 
submit with the argument: (1) A statement of the issue, (2) A brief 
summary of the argument and (3) a table of authorities. Further, the 
Department requests that parties submitting written comments provide 
the Department with an additional copy of the public version of any 
such comments on a computer diskette. The Department will publish the 
final results of this administrative review, which will include the 
results of its analysis of issues raised in any such written comments 
or at a hearing, within 120 days after the publication of this notice.

Assessment

    Upon issuance of the final results of review, the Department shall 
determine, and Customs shall assess, antidumping duties on all 
appropriate entries. The Department will issue appraisement 
instructions directly to Customs. The final results of this review 
shall be the basis for the assessment of antidumping duties on entries 
of merchandise covered by the results and for future deposits of 
estimated duties. For duty assessment purposes, we calculated an 
importer-specific assessment rate by dividing the total dumping margins 
calculated for the U.S. sales to the importer by the total entered 
value of these sales. This rate will be used for the assessment of 
antidumping duties on all entries of the subject merchandise by that 
importer during the POR.

Cash Deposits

    The following deposit requirements will be effective upon 
completion of the final results of this administrative review for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication of the final 
results of this administrative review, as provided in section 751(a)(1) 
of the Act: (1) The cash deposit rate for Ugine will be that 
established in the final results of this review; (2) for previously 
reviewed or investigated companies not covered in this review, the cash 
deposit rate will continue to be the company-specific rate published 
for the most recent period; (3) if the exporter is not a firm covered 
in this review, a prior review, or the original LTFV investigation, but 
the manufacturer is, the cash deposit rate will be the rate established 
in the most recent period for the manufacturer of the merchandise; and 
(4) if neither the exporter nor the manufacturer is a firm covered in 
this or any previous review conducted by the Department, the cash 
deposit rate will continue to be the ``all other'' rate established in 
the LTFV investigation, which was 9.38 percent. See Antidumping Duty 
Order, at 40565.

Notification to Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under regulation 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice is published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: July 31, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-19990 Filed 8-6-02; 8:45 am]
BILLING CODE 3510-DS-P