[Federal Register Volume 68, Number 152 (Thursday, August 7, 2003)]
[Notices]
[Pages 47043-47049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20181]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-822]


Stainless Steel Sheet and Strip in Coils from Mexico; Preliminary 
Results of Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

-----------------------------------------------------------------------

SUMMARY: In response to a request from respondents ThyssenKrupp Mexinox 
S.A. de C.V. (Mexinox S.A.) and Mexinox USA, Inc. (Mexinox USA) 
(collectively, Mexinox), the Department of Commerce (the Department) is 
conducting an administrative review of the antidumping duty order on 
stainless steel sheet and strip in coils (S4 in coils) from Mexico (A-
201-822). This review covers imports of subject merchandise from 
Mexinox S.A. during the period July 1, 2001 to June 30, 2002.
    We preliminarily determine that sales of S4 in coils from Mexico 
have been made below the normal value (NV). If these preliminary 
results are adopted in our final results of administrative review, we 
will instruct the U.S. Bureau of Customs and Border Protection 
(Customs) to assess antidumping duties based on the difference between 
the constructed export price (CEP) and NV. Interested parties are 
invited to comment on these preliminary results. Parties who submit 
argument in these proceedings are requested to submit with the 
argument: (1) A statement of the issues, (2) a brief summary of the 
argument, and (3) a table of authorities.

EFFECTIVE DATE: August 7, 2003.

FOR FURTHER INFORMATION CONTACT: Deborah Scott or Robert James, AD/CVD 
Enforcement, Group III, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230, telephone : (202) 482-
2657 or (202) 482-0649, respectively.

SUPPLEMENTARY INFORMATION: 

Background

    On July 27, 1999, the Department published in the Federal Register 
the Notice of Amended Final Determination of Sales at Less Than Fair 
Value and Antidumping Duty Order on stainless steel sheet and strip in 
coils from Mexico (64 FR 40560). On July 1, 2002, the Department 
published the Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation; Opportunity To Request Administrative Review, 
of, inter alia, stainless steel sheet and strip in coils from Mexico 
for the period July 1, 2001 through June 30, 2002 (67 FR 44172).
    In accordance with 19 CFR 351.213(b)(1), Mexinox requested that we 
conduct an administrative review. On August 27, 2002, we published in 
the Federal Register a notice of initiation of this antidumping duty 
administrative review covering the period July 1, 2001 through June 30, 
2002. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Requests for Revocation in Part, 67 FR 55000 
(August 27, 2002).

[[Page 47044]]

    On September 5, 2002, the Department issued an antidumping duty 
questionnaire to Mexinox. Mexinox submitted its response to section A 
of the questionnaire on October 10, 2002 and its response to sections B 
through E of the questionnaire on November 5, 2002. On January 16, 
2003, the Department issued a supplemental questionnaire for sections D 
and E, to which Mexinox responded on February 14, 2003. The Department 
issued a second supplemental questionnaire for sections D and E on 
February 20, 2003, and Mexinox filed its response to that supplemental 
questionnaire on March 4, 2003. On February 19, 2003, the Department 
issued a supplemental questionnaire for sections A and B and on March 
3, 2003 issued a supplemental questionnaire for section C. Mexinox 
responded to both of these supplemental questionnaires on April 1, 
2003. Finally, the Department issued a second supplemental 
questionnaire for sections A through C on April 15, 2003; Mexinox 
submitted its response on April 23, 2003.
    Because it was not practicable to complete this review within the 
normal time frame, on February 11, 2003, we published in the Federal 
Register our notice of the extension of time limits for this review (68 
FR 6892). This extension established the deadline for these preliminary 
results as July 31, 2003.

Scope of the Review

    For purposes of this order, 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 classified in the 
Harmonized Tariff Schedule of the United States (HTS) at subheadings: 
7219.13.00.31, 7219.13.00.51, 7219.13.00.71, 7219.13.00.81, 
7219.14.00.30, 7219.14.00.65, 7219.14.00.90, 7219.32.00.05, 
7219.32.00.20, 7219.32.00.25, 7219.32.00.35, 7219.32.00.36, 
7219.32.00.38, 7219.32.00.42, 7219.32.00.44, 7219.33.00.05, 
7219.33.00.20, 7219.33.00.25, 7219.33.00.35, 7219.33.00.36, 
7219.33.00.38, 7219.33.00.42, 7219.33.00.44, 7219.34.00.05, 
7219.34.00.20, 7219.34.00.25, 7219.34.00.30, 7219.34.00.35, 
7219.35.00.05, 7219.35.00.15, 7219.35.00.30, 7219.35.00.35, 
7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60, 
7219.90.00.80, 7220.12.10.00, 7220.12.50.00, 7220.20.10.10, 
7220.20.10.15, 7220.20.10.60, 7220.20.10.80, 7220.20.60.05, 
7220.20.60.10, 7220.20.60.15, 7220.20.60.60, 7220.20.60.80, 
7220.20.70.05, 7220.20.70.10, 7220.20.70.15, 7220.20.70.60, 
7220.20.70.80, 7220.20.80.00, 7220.20.90.30, 7220.20.90.60, 
7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and 7220.90.00.80. 
Although the HTS subheadings are provided for convenience and Customs 
purposes, the Department's written description of the merchandise under 
review is dispositive.
    Excluded from the scope of this order are the following: (1) Sheet 
and strip that is not annealed or otherwise heat treated and pickled or 
otherwise descaled; (2) sheet and strip that is cut to length; (3) 
plate (i.e., flat-rolled stainless steel products of a thickness of 
4.75 mm or more); (4) flat wire (i.e., cold-rolled sections, with a 
prepared edge, rectangular in shape, of a width of not more than 9.5 
mm); and (5) razor blade steel. Razor blade steel is a flat-rolled 
product of stainless steel, not further worked than cold-rolled (cold-
reduced), in coils, of a width of not more than 23 mm and a thickness 
of 0.266 mm or less, containing, by weight, 12.5 to 14.5 percent 
chromium, and certified at the time of entry to be used in the 
manufacture of razor blades. See Chapter 72 of the HTSUS, ``Additional 
U.S. Note'' 1(d).
    In response to comments by interested parties, the Department has 
determined that certain specialty stainless steel products are also 
excluded from the scope of this order. These excluded products are 
described below.
    Flapper valve steel 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 for compressors.
    Also excluded is a product referred to as suspension foil, a 
specialty steel product used in the manufacture of suspension 
assemblies for computer disk drives. Suspension foil is described as 
302/304 grade or 202 grade stainless steel of a thickness between 14 
and 127 microns, with a thickness tolerance of plus-or-minus 2.01 
microns, and surface glossiness of 200 to 700 percent Gs. Suspension 
foil must be supplied in coil widths of not more than 407 mm, and with 
a mass of 225 kg or less. Roll marks may only be visible on one side, 
with no scratches of measurable depth. The material must exhibit 
residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm 
over 685 mm length.
    Certain stainless steel foil for automotive catalytic converters is 
also excluded from the scope of this order. This stainless steel strip 
in coils is a specialty foil with a thickness of between 20 and 110 
microns used to produce a metallic substrate with a honeycomb structure 
for use in automotive catalytic converters. The steel contains, by 
weight, carbon of no more than 0.030 percent, silicon of no more than 
1.0 percent, manganese of no more than 1.0 percent, chromium of between 
19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of 
no more than 0.045 percent, sulfur of no more than 0.03 percent, 
lanthanum of between 0.002 and 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.''\1\
---------------------------------------------------------------------------

    \1\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company.
---------------------------------------------------------------------------

    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

[[Page 47045]]

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.''\2\
---------------------------------------------------------------------------

    \2\ ``Gilphy 36'' is a trademark of Imphy, S.A.
---------------------------------------------------------------------------

    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.''\3\
---------------------------------------------------------------------------

    \3\ ``Durphynox 17'' is a trademark of Imphy, S.A.
---------------------------------------------------------------------------

    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).\4\ This steel is similar to ASTM grade 440F, 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 square micron. 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.''\5\
---------------------------------------------------------------------------

    \4\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \5\ ``GIN4 Mo,'' ``GIN5'' and ``GIN6'' are the proprietary 
grades of Hitachi Metals America, Ltd.
---------------------------------------------------------------------------

Verification

    As provided in section 782(i) of the Tariff Act of 1930, as amended 
(the Tariff Act), we verified information provided by Mexinox using 
standard verification procedures such as the examination of relevant 
sales and financial records, on-site inspection of the manufacturer's 
facilities, and selection of original documentation containing relevant 
information. Our verification results are outlined in the public and 
proprietary versions of the cost and sales verification reports, which 
are on file in the Central Records Unit of the Department in room B-099 
of the main Commerce building.

Sales Made Through Affiliated Resellers

A. U.S. Market

    Mexinox USA, a wholly-owned subsidiary of Mexinox S.A., sold 
subject merchandise in the United States. During the POR, Mexinox USA 
made sales of subject merchandise to an affiliated company, Ken-Mac 
Metals, Inc. (Ken-Mac), who in turn resold the subject merchandise to 
unaffiliated customers in the United States. See Mexinox's October 10, 
2002 questionnaire response at A-11. Thus, in addition to Mexinox USA's 
sales to unaffiliated customers, we have included in our preliminary 
margin calculation resales of Mexinox subject merchandise made through 
Ken-Mac.

B. Home Market

    Mexinox Trading, S.A. de C.V. (Mexinox Trading), a wholly-owned 
subsidiary of Mexinox S.A., sells both subject and non-subject 
merchandise in the home market. Mexinox reported that sales through 
Mexinox Trading represented less than five percent of Mexinox's total 
sales of subject merchandise in the home market. See, e.g., Mexinox's 
October 10, 2002 questionnaire response at A-4 and its April 1, 2003 
supplemental questionnaire response at Attachment B-21. Because Mexinox 
Trading's sales of subject merchandise were less than five percent of 
home market subject merchandise sales, and because these sales passed 
the Department's arm's-length test, pursuant to section 351.403(d) of 
the Department's regulations, we permitted Mexinox to report its sales 
to Mexinox Trading rather than require it to report downstream sales by 
Mexinox Trading to the first unaffiliated customer. This treatment is 
consistent with that employed in past administrative reviews of 
stainless steel sheet and strip in coils from Mexico. See, e.g., 
Stainless Steel Sheet and Strip in Coils from Mexico; Final Results of 
Antidumping Duty Administrative Review, 68 FR 6889 (February 11, 2003), 
as amended, Notice of Amended Final Results of Antidumping Duty 
Administrative Review: Stainless Steel Sheet and Strip in Coils from 
Mexico, 68 FR 13686 (March 20, 2003).

Fair Value Comparisons

    To determine whether sales of S4 in coils from Mexico to the United 
States were made at less than fair value, we compared the CEP to the 
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 Tariff Act, we compared individual CEPs to monthly 
weighted-average NVs.

Transactions Reviewed

    For its home market and U.S. sales, Mexinox reported the date of 
invoice as the date of sale, in keeping with the Department's stated 
preference for using the invoice date as the date of sale (19 CFR 
351.401(i)). Mexinox stated the invoice date represented the date when 
the essential terms of sales, i.e., price and quantity, are 
definitively set, and that up to the time of shipment and invoicing, 
these terms were subject to change. See, e.g., Mexinox's October 10, 
2002 questionnaire response at A-34 and A-39. In our February 19, 2003 
supplemental questionnaire, we requested that Mexinox provide 
additional information concerning the nature and frequency of price and 
quantity changes occurring between the date of order and date of 
invoice. In response, Mexinox provided analyses

[[Page 47046]]

for its U.S. and home market sales showing how often changes in price 
and quantity occurred between order date and invoice date. See 
Mexinox's April 1, 2003 supplemental questionnaire response at 
Attachment A-21 and Mexinox's April 23, 2003 supplemental questionnaire 
response at Attachment A-28. Based on our analysis of the information 
submitted by Mexinox, we have preliminarily determined the date of 
invoice is the appropriate date of sale because record evidence 
indicates that in a number of instances the price and quantity changed 
between the date of the order acceptance and the date of invoice. 
Therefore, we find Mexinox's claim that price and quantity terms are 
subject to negotiation until the date of invoice is substantiated.

Product Comparisons

    In accordance with section 771(16) of the Tariff Act, we considered 
all products produced by Mexinox S.A. covered by the description in the 
``Scope of the Review'' section, above, and sold in the home market 
during the POR, to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We 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): (1) Grade; (2) cold/hot rolled; (3) gauge; (4) surface 
finish; (5) metallic coating; (6) non-metallic coating; (7) width; (8) 
temper; and (9) edge trim. Where there were no sales of identical 
merchandise in the home market to compare to U.S. sales, we compared 
U.S. sales to the next most similar foreign like product on the basis 
of the characteristics and reporting instructions listed in the 
Department's questionnaire.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Tariff 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 of the comparison 
sales in the home market or, when NV is based on CV, that of the sales 
from which we derive selling, general, and administrative (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 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Tariff Act. Finally, for CEP sales, if the NV level 
is more remote from the factory than the CEP level and there is no 
basis for determining whether the differences in the levels between NV 
and CEP sales affect price comparability, we adjust NV under section 
773(a)(7)(B) of the Tariff Act (i.e., the CEP offset provision).
    In the Department's September 5, 2002 questionnaire, we asked 
Mexinox to identify the specific differences and similarities in 
selling functions and support services between all phases of marketing 
in the home market and the United States. Mexinox identified two 
channels of distribution in the home market: (1) direct shipments 
(i.e., products produced to order) and (2) sales through inventory. 
See, e.g., Mexinox's October 10, 2002 questionnaire response at A-21 to 
A-22. Within both channels of distribution, Mexinox S.A. made sales to 
both retailers and end users. For both channels of distribution, 
Mexinox S.A. performed similar selling functions such as pre-sale 
technical assistance, inventory maintenance, freight and delivery 
arrangements, and after-sales warranty services. See, e.g., Id. at 
Attachment A-4-C. Because channels of distribution do not qualify as 
separate LOTs when the selling functions performed are sufficiently 
similar, we determined one LOT exists for Mexinox's home market sales. 
See, e.g., Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan: 
Final Results and Final Rescission in Part of Antidumping Duty 
Administrative Review, 67 FR 78417 (December 24, 2002).
    For the U.S. market, Mexinox reported one LOT, the CEP LOT. Sales 
made through this LOT consisted of merchandise produced to order that 
was sold directly to unaffiliated U.S. customers (``direct 
shipments''), sales made from the stock of finished goods held at the 
Mexican factory in San Luis Potosi to unaffiliated U.S. customers 
(``SLP stock sales''), and sales made through Mexinox USA's inventory. 
See, e.g., Mexinox's October 10, 2002 questionnaire response at A-22. 
When we compared CEP sales (after deductions made pursuant to section 
772(d) of the Tariff Act) to home market sales, we determined there 
were fewer customer sales contacts, technical services, inventory 
maintenance, and warranty services performed for CEP sales. See, e.g., 
Id. at A-31 and Attachments A-4-B and A-4-C. In addition, the 
differences in selling functions performed for home market and CEP 
transactions indicate home market sales involved a more advanced stage 
of distribution than CEP sales. See, e.g., Id. at A-25 to A-27. In the 
home market, Mexinox S.A. provides marketing further down the chain of 
distribution by providing certain downstream selling functions that are 
normally performed by service centers in the U.S. market (e.g., 
technical advice, credit and collection, etc.). See Id.
    Based on our analysis of the selling functions performed for the 
CEP LOT and the home market LOT, we determined that the CEP and the 
starting price of home market sales represent different stages in the 
marketing process, and are thus at different LOTs. Therefore, when we 
compared CEP sales to home market sales, we examined whether a level-
of-trade adjustment may be appropriate. In this case, Mexinox sold at 
one LOT in the home market; thus, there is no basis upon which to 
determine whether there is a pattern of consistent price differences 
between levels of trade. Further, we do not have the information which 
would allow us to examine pricing patterns of Mexinox's sales of other 
similar products, and there are no other respondents or other record 
evidence on which such an analysis could be based.
    Because the data available do not provide an appropriate basis for 
making a LOT adjustment and the level of trade of home market sales is 
at a more advanced stage than the level of trade of the CEP sales, a 
CEP offset is appropriate in accordance with section 773(a)(7)(B) of 
the Tariff Act, as claimed by Mexinox. We based the amount of the CEP 
offset on the amount of home market indirect selling expenses, and 
limited the deduction for home market indirect selling expenses to the 
amount of indirect selling expenses deducted from CEP in accordance 
with section 772(d)(1)(D) of the Tariff Act. We applied the CEP offset 
to NV, whether based on home market prices or CV.
    In addition to the three U.S. channels of distribution discussed 
above (direct sales, SLP stock sales, and sales through Mexinox USA), 
Mexinox reported U.S. sales through one other channel of distribution: 
CEP sales through its affiliated reseller Ken-Mac. For purposes of this 
preliminary determination, we treated this channel of distribution as 
equivalent to the level of trade of other CEP sales.

[[Page 47047]]

Constructed Export Price

    We calculated CEP in accordance with section 772(b) of the Tariff 
Act for those sales to the first unaffiliated purchaser that took place 
after importation into the United States. We based CEP on packed prices 
to unaffiliated purchasers in the United States. We made adjustments 
for billing adjustments, discounts and rebates, and commissions, where 
applicable. We also made deductions for movement expenses in accordance 
with section 772(c)(2)(A) of the Tariff Act; these included, where 
appropriate: foreign inland freight, foreign brokerage and handling, 
inland insurance, U.S. customs duties, U.S. inland freight, U.S. 
brokerage, U.S. warehousing expenses. As further directed by section 
772(d)(1) of the Tariff Act, we deducted those selling expenses 
associated with economic activities occurring in the United States, 
including direct selling expenses (i.e., credit costs, warranty 
expenses, and another expense not subject to public disclosure), 
inventory carrying costs, and other indirect selling expenses. We also 
made an adjustment for profit in accordance with section 772(d)(3) of 
the Tariff Act, and added duty drawback to the starting price in 
accordance with section 772(c)(1)(B) of the Tariff Act. For those sales 
in which the material was sent to an unaffiliated U.S. processor to be 
further processed, we made an adjustment based on the transaction-
specific further-processing amounts reported by Mexinox. In addition, 
the U.S. affiliated reseller Ken-Mac performed some further 
manufacturing of some of Mexinox's U.S. sales. For these sales, we 
deducted the cost of further processing in accordance with 772(d)(2) of 
the Tariff Act. In calculating the cost of further manufacturing for 
Ken-Mac, we relied upon the further manufacturing information provided 
by Mexinox.

Normal Value

A. Selection of Comparison Market

    To determine whether there is a 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 five percent of the aggregate volume of U.S. sales), we 
compared the respondent's volume of home market sales of the foreign 
like product to the volume of U.S. sales of the subject merchandise, in 
accordance with section 773(a)(1)(B) of the Tariff Act. Because the 
respondent'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 the home market was 
viable. See, e.g., Mexinox's April 1, 2003 supplemental questionnaire 
response at Attachment A-1 (quantity and value chart).

B. Affiliated-Party Transactions and Arm's-Length Test

    Sales to affiliated customers in the home market not made at arm's-
length prices are excluded from our analysis because we consider them 
to be outside the ordinary course of trade. See 19 CFR 351.102(b). To 
test whether sales were made at arm's-length prices, we compared on a 
model-specific basis the starting prices of sales to affiliated and 
unaffiliated customers minus all movement charges, direct selling 
expenses, and packing. Where, for the tested models of subject 
merchandise, prices to the affiliated party were on average 99.5 
percent or more of the price to the unaffiliated parties, we determined 
sales made to the affiliated party were at arm's length. See 19 CFR 
351.403(c).\6\ In instances where no price ratio could be calculated 
for an affiliated customer because identical merchandise was not sold 
to unaffiliated customers, we were unable to determine whether these 
sales were made at arm's-length prices and, therefore, excluded them 
from our margin calculation. See, e.g., Notice of Preliminary 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination: Emulsion Styrene-Butadiene Rubber from Brazil, 63 
FR 59509 (Nov. 8, 1998), citing Final Determination of Sales at Less 
Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products from 
Argentina, 58 FR 37062 (July 9, 1993). Where the exclusion of such 
sales eliminated all sales of the most appropriate comparison product, 
we made a comparison to the next most similar model. For these 
preliminary results, we found that none of Mexinox's affiliated home 
market customers failed our arm's-length test.
---------------------------------------------------------------------------

    \6\ Because this review was initiated before November 23, 2002, 
the 99.5 percent test applies to this review. See Antidumping 
Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 
67 FR 69186, 69197 (November 15, 2002).
---------------------------------------------------------------------------

C. Cost of Production Analysis

    Because we disregarded sales of certain products made at prices 
below the cost of production (COP) in the most recently completed 
review of S4 in coils from Mexico (see Stainless Steel Sheet and Strip 
in Coils from Mexico; Final Results of Antidumping Duty Administrative 
Review, 67 FR 6490 (February 12, 2002), as amended, Notice of Amended 
Final Results of Antidumping Duty Administrative Review: Stainless 
Steel Sheet and Strip in Coils from Mexico, 67 FR 15542 (April 2, 
2002)), we have reasonable grounds to believe or suspect that sales of 
the foreign like product under consideration for the determination of 
NV in this review for Mexinox may have been made at prices below the 
COP, as provided by section 773(b)(2)(A)(ii) of the Tariff Act. 
Therefore, pursuant to section 773(b)(1) of the Tariff Act, we 
initiated a COP investigation of sales by Mexinox.
    To calculate COP, in accordance with section 773(f)(3) of the 
Tariff Act, we revised Mexinox's reported raw material costs to reflect 
certain adjustments to the COP and transfer price. See the Department's 
``Cost of Production and Constructed Value Adjustments for the 
Preliminary Results'' (COP Analysis Memorandum) dated July 31, 2003 for 
more information regarding these adjustments. We also recalculated 
Mexinox's general and administrative (G&A) and interest expenses as 
described in the COP Analysis Memorandum. We added the revised material 
costs to the respondent's reported cost of fabrication for the foreign 
like product, plus amounts for SG&A and packing costs, in accordance 
with section 773(b)(3) of the Tariff Act. We then computed weighted-
average COPs during the POR, and compared the weighted-average COP 
figures to home market sales prices of the foreign like product as 
required under section 773(b) of the Tariff Act, to determine whether 
these sales had been made at prices below COP. On a product-specific 
basis, we compared the COP to the home market prices net of billing 
adjustments, discounts and rebates, and any applicable movement 
charges.
    In determining whether to disregard home market sales made at 
prices below the COP, we examined, in accordance with sections 
773(b)(1)(A) and (B) of the Tariff Act: (1) whether, within an extended 
period of time, such sales were made in substantial quantities; and (2) 
whether such sales were made at prices which permitted the recovery of 
all costs within a reasonable period of time in the normal course of 
trade. Where less than 20 percent of the respondent's home market sales 
of a given model (i.e., CONNUM) were at prices below the COP, we did 
not disregard any below-cost sales of that model because we determined 
that the below-cost sales were not made within an extended period of 
time and in ``substantial quantities.'' Where 20 percent or more of the 
respondent's home market sales of a given model were at prices less 
than COP, we

[[Page 47048]]

disregarded the below-cost sales because: (1) They were made within an 
extended period of time in ``substantial quantities,'' in accordance 
with sections 773(b)(2)(B) and (C) of the Tariff Act, and (2) based on 
our comparison of prices to the weighted-average COPs for the POR, they 
were at prices which would not permit the recovery of all costs within 
a reasonable period of time, in accordance with section 773(b)(2)(D) of 
the Tariff Act.
    Our cost test for Mexinox revealed that for home market sales of 
certain models, less than twenty percent of the sales of those models 
were at prices below the COP. We therefore retained all such sales in 
our analysis and used them as the basis for determining NV. Our cost 
test also indicated that for certain models, more than 20 percent of 
the home market sales of those models were sold at prices below COP 
within an extended period of time and were at prices which would not 
permit the recovery of all costs within a reasonable period of time. 
Thus, in accordance with section 773(b)(1) of the Tariff Act, we 
excluded these below-cost sales from our analysis and used the 
remaining above-cost sales as the basis for determining NV.

D. Constructed Value

    In accordance with section 773(e) of the Tariff Act, we calculated 
CV based on the sum of the respondent's cost of materials (revised to 
reflect certain adjustments to the COP and transfer price--see the 
Department's COP Analysis Memorandum dated July 31, 2003), fabrication, 
SG&A expenses, profit, and U.S. packing costs. In accordance with 
section 773(e)(2)(A) of the Tariff Act, we based SG&A expenses and 
profit on the amounts incurred and realized by the respondent in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade, for consumption in the foreign country. 
We deducted from CV the weighted-average home market direct selling 
expenses incurred on sales made in the ordinary course of trade.

E. Price-to-Price Comparisons

    We calculated NV based on prices to unaffiliated customers or 
prices to affiliated customers we determined to be at arm's length. We 
made adjustments for billing adjustments, discounts, and rebates, where 
appropriate. We made deductions, where appropriate, for foreign inland 
freight, insurance, handling, and warehousing, pursuant to section 
773(a)(6)(B) of the Tariff Act. In addition, we made adjustments for 
differences in cost attributable to differences in physical 
characteristics of the merchandise (i.e., difmer) pursuant to section 
773(a)(6)(C)(ii) of the Tariff Act and 19 CFR 351.411, as well as for 
differences in circumstances of sale (COS) in accordance with section 
773(a)(6)(C)(iii) of the Tariff Act and 19 CFR 351.410. We made COS 
adjustments for imputed credit expenses and warranty expenses. As noted 
in the ``Level of Trade'' section of this notice, we also made an 
adjustment for the CEP offset in accordance with section 773(a)(7)(B) 
of the Tariff Act. Finally, we deducted home market packing costs and 
added U.S. packing costs in accordance with sections 773(a)(6)(A) and 
(B) of the Tariff Act.

F. Price-to-CV Comparisons

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

Currency Conversion

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

Preliminary Results of Review

    As a result of our review we preliminarily determine the following 
weighted-average dumping margin exists for the period July 1, 2001 
through June 30, 2002:

------------------------------------------------------------------------
                                              Weighted  Average  Margin
           Manufacturer/Exporter                    (percentage)
------------------------------------------------------------------------
ThyssenKrupp Mexinox S.A. de C.V.           7.43
------------------------------------------------------------------------

    The Department will disclose calculations performed within five 
days of the date of publication of this notice in accordance with 19 
CFR 351.224(b). An interested party may request a hearing within thirty 
days of publication. See CFR 351.310(c). Any hearing, if requested, 
will be held 37 days after the date of publication, or the first 
business day thereafter, unless the Department alters the date per 19 
CFR 351.310(d). Interested parties may submit case briefs or written 
comments no later than 30 days after the date of publication of these 
preliminary results of review. Rebuttal briefs and rebuttals to written 
comments, limited to issues raised in the case briefs and comments, may 
be filed no later than 35 days after the date of publication of this 
notice. Parties who submit argument in these proceedings 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, we 
would appreciate it if parties submitting case briefs, rebuttal briefs, 
and written comments would provide the Department with an additional 
copy of the public version of any such argument on diskette. The 
Department will issue final results of this administrative review, 
including the results of our analysis of the issues in any such case 
briefs, rebuttal briefs, and written comments or at a hearing, within 
120 days of publication of these preliminary results.
    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. In accordance with 19 
CFR 351.212(b)(1), we will calculate importer-specific ad valorem 
assessment rates for the merchandise based on the ratio of the total 
amount of antidumping duties calculated for the examined sales made 
during the POR to the total customs value of the sales used to 
calculate those duties. This rate will be assessed uniformly on all 
entries of that particular importer made during the POR. The Department 
will issue appropriate appraisement instructions directly to Customs 
upon completion of the review.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of S4 in coils from Mexico entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Tariff Act:
    (1) The cash deposit rate for Mexinox will be the rate established 
in the final results of review;
    (2) If the exporter is not a firm covered in this review or the 
LTFV investigation, but the manufacturer is, the cash deposit rate will 
be the rate established for the most recent period for the manufacturer 
of the merchandise; and
    (3) 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 be the ``all others'' rate from the investigation 
(30.85 percent; see Notice of Amended Final Determination of Sales at 
Less Than Fair Value and

[[Page 47049]]

Antidumping Duty Order; Stainless Steel Sheet and Strip in Coils from 
Mexico, 64 FR 40560, 40562 (July 27, 1999)).
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 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.
    We are issuing and publishing this notice in accordance with 
sections 751(a)(1) and 777(i)(1) of the Tariff Act.

    Dated: July 31, 2003.
Joseph A. Spetrini,
Acting Assistant Secretary for Grant Aldonas, Under Secretary.
[FR Doc. 03-20181 Filed 8-6-03; 8:45 am]
BILLING CODE 3510-DS-P