[Federal Register Volume 69, Number 215 (Monday, November 8, 2004)]
[Notices]
[Pages 64716-64721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3073]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-351-832]


Notice of Preliminary Results of Antidumping Duty Administrative 
Review: Carbon and Certain Alloy Steel Wire Rod From Brazil

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on carbon and 
certain alloy steel wire rod (steel wire rod) from Brazil. We 
preliminarily determine that sales of subject merchandise by Companhia 
Sider[uacute]rgica Belgo Mineira, Belgo Mineira 
Participa[ccedil][atilde]o Ind[uacute]stria e Com[eacute]rcio S.A. and 
BMP Sider[uacute]rgica S.A. (collectively, Belgo), have been made below 
normal value (NV). If these preliminary results are adopted in our 
final results, we will instruct U.S. Customs and Border Protection 
(CBP) to assess antidumping duties on appropriate entries based on the 
difference between the export price (EP) and the NV.
    Interested parties are invited to comment on these preliminary 
results. We will issue the final results no later than 120 days from 
the publication of this notice.

EFFECTIVE DATE: November 8, 2004.

FOR FURTHER INFORMATION CONTACT: Jesse Cortes or Constance Handley, at 
(202) 482-3986 or (202) 482-0631, respectively, AD/CVD Operations, 
Office 1, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street & Constitution Avenue, NW., 
Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

    On October 29, 2002, the Department published an antidumping duty 
order on steel wire rod from Brazil. See Notice of Antidumping Duty 
Orders: Carbon and Certain Alloy Steel Wire Rod from Brazil, Indonesia, 
Mexico, Moldova, Trinidad and Tobago, and Ukraine, 67 FR 65945 (October 
29, 2002).
    On October 1, 2003, the Department issued a notice of opportunity 
to request the first administrative review of this order. See 
Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity to Request Administrative Review, 68 FR 
56618 (October 1, 2003). On October 31, 2003, in accordance with 19 CFR 
351.213(b), Belgo requested an administrative review and a deferral of 
initiation for one year. The petitioners \1\ submitted an opposition to 
Belgo's deferral request on November 14, 2003. On November 18, 2003, 
the Department denied Belgo's deferral request and published the notice 
of initiation of this antidumping duty administrative review, covering 
the period April 15, 2002, through September 30, 2003 (the POR). See, 
respectively, Memorandum to Gary Taverman from Constance Handley, 
``Request for Deferral of Initiation: First Antidumping Duty 
Administrative Review of Carbon and Certain Alloy Steel Wire Rod From 
Brazil,'' dated November 18, 2003, which is on file in the Central 
Records Unit (CRU) in Room B-099 of the main Commerce building; and, 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews, 68 FR 66799 (November 28, 2003).
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    \1\ The petitioners in this investigation are Co-Steel Raritan, 
Inc., GS Industries, Inc., Keystone Consolidated Industries, Inc., 
and North Star Steel Texas, Inc.
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    On December 9, 2003, the Department issued its antidumping 
questionnaire to Belgo, specifying that the responses to Section A and 
Sections B-E would be due on December 30, 2003, and January 15, 2004, 
respectively.\2\ Belgo requested, and the Department granted, various 
extensions of time to respond to the different sections of the 
questionnaire. We received timely responses, as extended, to Sections 
A-D of the initial antidumping questionnaire and associated 
supplemental questionnaires. Additionally, Belgo requested, and the 
Department denied, an exemption from reporting certain home market 
sales and costs of production. In the investigation, we initiated a COP 
inquiry; however, Belgo withdrew from the proceeding before the final 
determination. For that reason, the Department used adverse facts 
available (AFA) in calculating the margin for Belgo. Consequently, we 
find that there are reasonable grounds to believe or suspect that Belgo 
made sales below cost in this review.
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    \2\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under review that it sells, and the manner in which 
it sells that merchandise in all of its markets. Section B requests 
a complete listing of all home market sales, or, if the home market 
is not viable, of sales in the most appropriate third-country market 
(this section is not applicable to respondents in non-market economy 
cases). Section C requests a complete listing of U.S. sales. Section 
D requests information on the cost of production (COP) of the 
foreign like product and the constructed value of the merchandise 
under review. Section E requests information on further 
manufacturing.
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    In its January 13, 2004, Section A questionnaire response, Belgo 
indicated that it and a certain U.S. entity may be related under the 
Department's affiliation rules. Following the submission of comments by 
parties, and based on an initial review of the U.S. sales record 
submitted by Belgo, the Department determined that Belgo and the U.S. 
entity were affiliated within the meaning of section 771(33)(F) of the 
Tariff Act of 1930, as amended effective January 1, 1995 (the Act) by 
the Uruguay Round Agreements Act, and requested that Belgo submit data 
regarding the affiliated U.S. entity's downstream sales to the first 
unaffiliated U.S. customer. See Memorandum to Susan Kuhbach from 
Constance Handley, ``Antidumping Duty Review of Carbon and Certain 
Alloy Steel Wire Rod from Brazil: Affiliation,'' dated July 13, 2004, 
which is on file in the CRU. On July 26, 2004, Belgo requested an 
exemption from reporting the affiliated U.S. entity's downstream sales 
and related further-processing costs pursuant to the ``special rule'' 
for value added under section 772(e) of the Act and 19 CFR 351.402(c). 
On July 30, 2004, the petitioners submitted an opposition to the 
special rule request. Following

[[Page 64717]]

further comment from the parties, the Department rejected Belgo's 
special rule request and requested Belgo's U.S. affiliate to respond to 
Section E. See Memorandum to Susan Kuhbach from Jesse Cortes, 
``Antidumping Duty Review of Carbon and Certain Alloy Steel Wire Rod 
from Brazil: Special Rule to Exempt Reporting of Sales of Further 
Manufactured Products,'' dated September 9, 2004, which is on file in 
the CRU. On September 20, 2004, Belgo's U.S. affiliate requested an 
extension of time to respond to the Section E questionnaire through 
October 8, 2004, which the Department granted on September 21, 2004. 
However, on October 8, 2004, Belgo's U.S. affiliate informed the 
Department that it was declining to provide the requested response.

Use of Facts Available

    Pursuant to section 782(e) of the Act, the Department shall not 
decline to consider submitted information if all of the following 
requirements are met: (1) The information is submitted by the 
established deadline; (2) the information can be verified; (3) the 
information is not so incomplete that it cannot serve as a reliable 
basis for reaching the applicable determination; (4) the interested 
party has demonstrated that it acted to the best of its ability; and 
(5) the information can be used without undue difficulties. Section 
776(a)(2) of the Act provides that, if an interested party (A) 
withholds information requested by the Department, (B) fails to provide 
such information by the deadline, or in the form or manner requested, 
(C) significantly impedes a proceeding, or (D) provides information 
that 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. In selecting from among the facts otherwise 
available, section 776(b) of the Act authorizes the Department to use 
an adverse inference if the Department finds that an interested party 
failed to cooperate by not acting to the best of its ability to comply 
with the request for information. See, e.g., Certain Welded Carbon 
Steel Pipes and Tubes from Thailand: Final Results of Antidumping Duty 
Administrative Review, 62 FR 53808, 53819-20 (October 16, 1997); Notice 
of Final Determination of Sales at Less Than Fair Value: Certain Cold-
Rolled Carbon Steel Flat Products from Sweden, 67 FR 47522, 47523 (July 
19, 2002).
    As noted above, Belgo's U.S. affiliate has refused to provide a 
response to the Department's Section E questionnaire. Belgo was 
notified by the Department in all of our correspondence, concerning the 
due dates for submitting data, that failure to submit the requested 
information by the date specified may result in use of the facts 
available, as required by section 776(c) of the Act and section 351.308 
of the Department's regulations. See letters from the Department to 
Belgo and Belgo's U.S. affiliate dated September 10 and September 21, 
2004, which are on file in the CRU. Consequently, pursuant to section 
776(b) of the Act, for those sales made by Belgo to its U.S. affiliate, 
we are applying an AFA rate equal to the highest non-aberrational 
margin calculated for these preliminary results on Belgo's sales to 
unaffiliated U.S. customers. See, e.g., Final Determination of Sales at 
Less Than Fair Value; Stainless Steel Sheet and Strip in Coils from 
Italy, 64 FR 30750 (June 8, 1999). See, also, Memorandum from Constance 
Handley to the File, ``Analysis Memorandum for Companhia 
Sider[uacute]rgica Belgo Mineira, Belgo Mineira 
Participa[ccedil][atilde]o Ind[uacute]stria e Com[eacute]rcio S.A. and 
BMP Sider[uacute]rgica S.A.,'' dated November 1, 2004, which is on file 
in the CRU.
    We are also using AFA for certain sales in the home market made 
pursuant to consignment arrangements which had not been reported in the 
database. See Memorandum to Susan Kuhbach from Carol Henninger, 
``Verification of the Sales Response of Companhia Sider[uacute]rgica 
Belgo Mineira, Belgo Mineira Particip[ccedil][atilde]o Ind[uacute]stria 
e Com[eacute]rcio S.A. and BMP Sider[uacute]rgica S.A. in the 
Antidumping Duty Review of Carbon and Certain Alloy Steel Wire Rod from 
Brazil,'' dated October 1, 2004 (Sales Verification Report), at 14, 
which is on file in the CRU. Additionally, we are using AFA for the 
cost of coke, a major input supplied to Belgo by an affiliated supplier 
in Spain; at verification, company officials could not support the 
Spanish affiliate's COP of coke during the POR. See Memorandum to Neal 
Harper from J. Laurens van Houten, ``Cost of Production and Constructed 
Value Verification: Antidumping Duty Review of Carbon and Certain Alloy 
Steel Wire Rod from Brazil,'' dated November 1, 2004 (Cost Verification 
Report), which is on file in the CRU. Because the COP reported by the 
Spanish affiliate is higher than either the market or transfer price 
reported by Belgo, and higher than any market-economy prices the 
Department has found,\3\ we have determined that, although the cost is 
unverified, it is appropriate for use as AFA.
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    \3\ See Memorandum to Neal Harper from Laurens van Houten, 
``Cost of Production and Constructed Value Calculation Adjustments 
for the Preliminary Results--Companhia Siderurgica Belgo-Mineira, 
Belgo-Mineira Participacao, Industria E Comercio S.A. and BMP 
Siderurgica S.A.,'' dated November 1, 2004 (Cost Calculation Memo), 
which is on file in the CRU.
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    Since we are using as AFA in this review calculated margins and 
cost information submitted by the respondent, no corroboration is 
necessary.

Scope Issues

    On March 29, 2004, Belgo requested a scope inquiry with regard to 
the exclusion of grade 1080 tire cord quality wire rod and tire bead 
quality wire rod (1080 TCBQWR). We have preliminarily found that 1080 
TCBQWR with inclusions greater than 20 microns in any direction, 
entered, or withdrawn from warehouse, for consumption prior to July 24, 
2003, is included in the scope of the order. See Memorandum to Jeffrey 
May from Jesse Cortes, ``Carbon and Certain Alloy Steel Wire Rod from 
Brazil: Preliminary Scope Ruling on Grade 1080 Tire Cord Quality Wire 
Rod and Tire Bead Quality Wire Rod,'' dated October 27, 2004 
(Preliminary Scope Ruling), which is on file in the CRU.

Scope of the Antidumping Duty Order

    Effective July 24, 2003, in accordance with the Department's Notice 
of Final Result of Changed Circumstances Review of the Antidumping Duty 
and Countervailing Duty Orders, and Intent to Revoke Orders in Part, 68 
FR 64079 (November 12, 2003), the scope of this order was amended. See, 
also, Preliminary Scope Ruling. Therefore, for purposes of this review, 
there were separate scopes in effect. These scopes are set forth below. 
Belgo had no entries of subject merchandise after the effective date of 
the scope revision.

Scope of Order from October 29, 2002, Through July 23, 2003

    The merchandise subject to this order is certain hot-rolled 
products of carbon steel and alloy steel, in coils, of approximately 
round cross section, 5.00 mm or more, but less than 19.00 mm, in solid 
cross-sectional diameter.
    Specifically excluded are steel products possessing the above-noted 
physical characteristics and meeting the Harmonized Tariff Schedule of 
the United States (HTSUS) definitions for (a) stainless steel; (b) tool 
steel; (c) high nickel steel; (d) ball bearing steel; and (e) concrete 
reinforcing bars and rods. Also excluded are (f) free machining steel 
products (i.e., products that contain by weight one or more of the 
following elements: 0.03 percent or

[[Page 64718]]

more of lead, 0.05 percent or more of bismuth, 0.08 percent or more of 
sulfur, more than 0.04 percent of phosphorus, more than 0.05 percent of 
selenium, or more than 0.01 percent of tellurium).
    Also excluded from the scope are 1080 grade tire cord quality wire 
rod and 1080 grade tire bead quality wire rod. This grade 1080 tire 
cord quality rod is defined as: (i) Grade 1080 tire cord quality wire 
rod measuring 5.0 mm or more but not more than 6.0 mm in cross-
sectional diameter; (ii) with an average partial decarburization of no 
more than 70 microns in depth (maximum individual 200 microns); (iii) 
having no inclusions greater than 20 microns; (iv) having a carbon 
segregation per heat average of 3.0 or better using European Method NFA 
04-114; (v) having a surface quality with no surface defects of a 
length greater than 0.15 mm; (vi) capable of being drawn to a diameter 
of 0.30 mm or less with 3 or fewer breaks per ton, and (vii) containing 
by weight the following elements in the proportions shown: (1) 0.78 
percent or more of carbon, (2) less than 0.01 percent of aluminum, (3) 
0.040 percent or less, in the aggregate, of phosphorus and sulfur, (4) 
0.006 percent or less of nitrogen, and (5) not more than 0.15 percent, 
in the aggregate, of copper, nickel and chromium.
    This grade 1080 tire bead quality rod is defined as: (i) Grade 1080 
tire bead quality wire rod measuring 5.5 mm or more but not more than 
7.0 mm in cross-sectional diameter; (ii) with an average partial 
decarburization of no more than 70 microns in depth (maximum individual 
200 microns); (iii) having no inclusions greater than 20 microns; (iv) 
having a carbon segregation per heat average of 3.0 or better using 
European Method NFA 04-114; (v) having a surface quality with no 
surface defects of a length greater than 0.2 mm; (vi) capable of being 
drawn to a diameter of 0.78 mm or larger with 0.5 or fewer breaks per 
ton; and (vii) containing by weight the following elements in the 
proportions shown: (1) 0.78 percent or more of carbon, (2) less than 
0.01 percent of soluble aluminum, (3) 0.040 percent or less, in the 
aggregate, of phosphorus and sulfur, (4) 0.008 percent or less of 
nitrogen, and (5) either not more than 0.15 percent, in the aggregate, 
of copper, nickel and chromium (if chromium is not specified), or not 
more than 0.10 percent in the aggregate of copper and nickel and a 
chromium content of 0.24 to 0.30 percent (if chromium is specified).
    The designation of the products as ``tire cord quality'' or ``tire 
bead quality'' indicates the acceptability of the product for use in 
the production of tire cord, tire bead, or wire for use in other rubber 
reinforcement applications such as hose wire. These quality 
designations are presumed to indicate that these products are being 
used in tire cord, tire bead, and other rubber reinforcement 
applications, and such merchandise intended for the tire cord, tire 
bead, or other rubber reinforcement applications is not included in the 
scope. However, should petitioners or other interested parties provide 
a reasonable basis to believe or suspect that there exists a pattern of 
importation of such products for other than those applications, end-use 
certification for the importation of such products may be required. 
Under such circumstances, only the importers of record would normally 
be required to certify the end use of the imported merchandise.
    All products meeting the physical description of subject 
merchandise that are not specifically excluded are included in this 
scope.
    The products under review are currently classifiable under 
subheadings 7213.91.3010, 7213.91.3090, 7213.91.4510, 7213.91.4590, 
7213.91.6010, 7213.91.6090, 7213.99.0031, 7213.99.0038, 7213.99.0090, 
7227.20.0010, 7227.20.0020, 7227.20.0090, 7227.20.0095, 7227.90.6051, 
7227.90.6053, 7227.90.6058, and 7227.90.6059 of the HTSUS. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
the written description of the scope of this proceeding is dispositive.

Scope of Order From July 24, 2003, Through the POR

    The merchandise subject to this order is certain hot-rolled 
products of carbon steel and alloy steel, in coils, of approximately 
round cross section, 5.00 mm or more, but less than 19.00 mm, in solid 
cross-sectional diameter.
    Specifically excluded are steel products possessing the above-noted 
physical characteristics and meeting the HTSUS definitions for (a) 
stainless steel; (b) tool steel; (c) high nickel steel; (d) ball 
bearing steel; and (e) concrete reinforcing bars and rods. Also 
excluded are (f) free machining steel products (i.e., products that 
contain by weight one or more of the following elements: 0.03 percent 
or more of lead, 0.05 percent or more of bismuth, 0.08 percent or more 
of sulfur, more than 0.04 percent of phosphorus, more than 0.05 percent 
of selenium, or more than 0.01 percent of tellurium).
    Also excluded from the scope are 1080 grade tire cord quality wire 
rod and 1080 grade tire bead quality wire rod. This grade 1080 tire 
cord quality rod is defined as: (i) Grade 1080 tire cord quality wire 
rod measuring 5.0 mm or more but not more than 6.0 mm in cross-
sectional diameter; (ii) with an average partial decarburization of no 
more than 70 microns in depth (maximum individual 200 microns); (iii) 
having no non-deformable inclusions greater than 20 microns and no 
deformable inclusions greater than 35 microns; (iv) having a carbon 
segregation per heat average of 3.0 or better using European Method NFA 
04-114; (v) having a surface quality with no surface defects of a 
length greater than 0.15 mm; (vi) capable of being drawn to a diameter 
of 0.30 mm or less with 3 or fewer breaks per ton, and (vii) containing 
by weight the following elements in the proportions shown: (1) 0.78 
percent or more of carbon, (2) less than 0.01 percent of aluminum, (3) 
0.040 percent or less, in the aggregate, of phosphorus and sulfur, (4) 
0.006 percent or less of nitrogen, and (5) not more than 0.15 percent, 
in the aggregate, of copper, nickel and chromium.
    This grade 1080 tire bead quality rod is defined as: (i) Grade 1080 
tire bead quality wire rod measuring 5.5 mm or more but not more than 
7.0 mm in cross-sectional diameter; (ii) with an average partial 
decarburization of no more than 70 microns in depth (maximum individual 
200 microns); (iii) having no non-deformable inclusions greater than 20 
microns and no deformable inclusions greater than 35 microns; (iv) 
having a carbon segregation per heat average of 3.0 or better using 
European Method NFA 04-114; (v) having a surface quality with no 
surface defects of a length greater than 0.2 mm; (vi) capable of being 
drawn to a diameter of 0.78 mm or larger with 0.5 or fewer breaks per 
ton; and (vii) containing by weight the following elements in the 
proportions shown: (1) 0.78 percent or more of carbon, (2) less than 
0.01 percent of soluble aluminum, (3) 0.040 percent or less, in the 
aggregate, of phosphorus and sulfur, (4) 0.008 percent or less of 
nitrogen, and (5) either not more than 0.15 percent, in the aggregate, 
of copper, nickel and chromium (if chromium is not specified), or not 
more than 0.10 percent in the aggregate of copper and nickel and a 
chromium content of 0.24 to 0.30 percent (if chromium is specified).
    For purposes of the grade 1080 tire cord quality wire rod and the 
grade 1080 tire bead quality wire rod, an inclusion will be considered 
to be deformable if its ratio of length (measured along the axis--that 
is, the direction of rolling--of the rod) over thickness (measured on 
the same inclusion in a direction perpendicular

[[Page 64719]]

to the axis of the rod) is equal to or greater than three. The size of 
an inclusion for purposes of the 20 microns and 35 microns limitations 
is the measurement of the largest dimension observed on a longitudinal 
section measured in a direction perpendicular to the axis of the rod. 
This measurement methodology applies only to inclusions on certain 
grade 1080 tire cord quality wire rod and certain grade 1080 tire bead 
quality wire rod that are entered, or withdrawn from warehouse, for 
consumption on or after July 24, 2003.
    The designation of the products as ``tire cord quality'' or ``tire 
bead quality'' indicates the acceptability of the product for use in 
the production of tire cord, tire bead, or wire for use in other rubber 
reinforcement applications such as hose wire. These quality 
designations are presumed to indicate that these products are being 
used in tire cord, tire bead, and other rubber reinforcement 
applications, and such merchandise intended for the tire cord, tire 
bead, or other rubber reinforcement applications is not included in the 
scope. However, should petitioners or other interested parties provide 
a reasonable basis to believe or suspect that there exists a pattern of 
importation of such products for other than those applications, end-use 
certification for the importation of such products may be required. 
Under such circumstances, only the importers of record would normally 
be required to certify the end use of the imported merchandise.
    All products meeting the physical description of subject 
merchandise that are not specifically excluded are included in this 
scope.
    The products under review are currently classifiable under 
subheadings 7213.91.3010, 7213.91.3090, 7213.91.4510, 7213.91.4590, 
7213.91.6010, 7213.91.6090, 7213.99.0031, 7213.99.0038, 7213.99.0090, 
7227.20.0010, 7227.20.0020, 7227.20.0090, 7227.20.0095, 7227.90.6051, 
7227.90.6053, 7227.90.6058, and 7227.90.6059 of the HTSUS. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
the written description of the scope of this proceeding is 
dispositive.\4\
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    \4\ Effective January 1, 2004, CBP reclassified certain HTSUS 
numbers related to the subject merchandise. See http://hotdocs.usitc.gov/tariff_chapters_current/toc.html.
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Verification

    As provided in section 782(i) of the Act, in August and September 
2004, we verified information provided by Belgo using standard 
verification procedures, including on-site inspection of the 
manufacturer's facilities, examination of relevant sales, cost and 
financial records, and selection of original documentation containing 
relevant information. The Department reported its findings from the 
sales and cost verification on October 1 and November 1, 2004. See 
Sales Verification Report and Cost Verification Report, which are on 
file in the CRU.

Fair Value Comparisons

    To determine whether sales of steel wire rod from Brazil were made 
in the United States at less than fair value, we compared EP to NV, as 
described in the ``Export Price'' and ``Normal Value'' sections of this 
notice. Pursuant to section 777A(d)(2) of the Act, we compared the EPs 
of individual U.S. transactions to the weighted-average NV of the 
foreign like product where there were sales made in the ordinary course 
of trade, as discussed in the ``Cost of Production Analysis'' section 
below.

Product Comparisons

    In accordance with section 771(16) of the Act, all products 
produced by the respondent covered by the description in the ``Scope of 
Order'' section, above, and sold in Brazil during the POR, are 
considered to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. In accordance with 
section 773(a)(1)(C)(ii) of the Act, in order to determine whether 
there was a sufficient volume of sales in the home market to serve as a 
viable basis for calculating NV, we compared the respondent's volume of 
home market sales of the foreign like product to the volume of its U.S. 
sales of the subject merchandise. For further details, see the ``Normal 
Value'' section, below.
    We compared U.S. sales to sales made in the home market within the 
contemporaneous window period, which extends from three months prior to 
the POR until two months after the POR. In making the product 
comparisons, consistent with our preliminary determination in the 
original investigation, we have relied on eight criteria to match U.S. 
sales of subject merchandise to comparison-market sales of the foreign 
like product: grade, carbon content, surface quality, deoxidization, 
residual content, heat treatment, diameter, and coating. See Notice of 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Carbon and Certain Alloy Steel 
Wire Rod from Brazil, 67 FR 18165 (April 15, 2002). These 
characteristics have been weighted by the Department where appropriate.

Export Price

    During the POR, Belgo made U.S. sales on an EP basis only.\5\ 
Section 772(a) of the Act defines EP as the price at which the subject 
merchandise is first sold before the date of importation by the 
producer or exporter outside of the United States to an unaffiliated 
purchaser in the United States or to an unaffiliated purchaser for 
exportation to the United States, as adjusted under subsection 772(c) 
of the Act.
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    \5\ Belgo reported sales to a U.S. affiliate, but we did not 
calculate margins for those sales.
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    We made deductions to the starting price (gross unit price), where 
appropriate, for movement expenses and rebates to customers, and added 
duty drawback in accordance with section 772(c)(2)(A) of the Act. 
Movement expenses included inland freight, warehousing expenses, 
brokerage and handling fees, international freight, marine insurance, 
U.S. port expenses, extra discharge expenses, U.S. customs duty, sample 
fees, demurrage expenses, detention expenses, dead freight expenses, 
dispatch expenses and bunker surcharges.

Normal Value

A. Home Market Viability

    Section 773(a)(1) of the Act directs that NV be based on the price 
at which the foreign like product is sold in the home market, provided 
that the merchandise is sold in sufficient quantities (or value, if 
quantity is inappropriate) and that there is no particular market 
situation that prevents a proper comparison with the EP. The statute 
contemplates that quantities (or value) will normally be considered 
insufficient if they are less than five percent of the aggregate 
quantity (or value) of sales of the subject merchandise to the United 
States.
    We found that Belgo had a viable home market for steel wire rod. As 
such, Belgo submitted home market sales data for purposes of the 
calculation of NV. In deriving NV, we made adjustments as detailed in 
the ``Calculation of Normal Value Based on Home Market Prices'' section 
below.

B. Arm's-Length Test

    Belgo reported sales of the foreign like product to affiliated 
customers. To test whether these sales to affiliated customers were 
made at arm's length, where possible, we compared the prices of sales 
to affiliated and unaffiliated customers, net of all movement charges,

[[Page 64720]]

direct selling expenses, and packing. To test whether the sales to 
affiliates were made at arm's-length prices, we compared the unit 
prices of sales to affiliated and unaffiliated customers net of all 
movement charges, direct selling expenses, and packing expenses. Where 
the price to that affiliated party was, on average, within a range of 
98 to 102 percent of the price of the same or comparable merchandise 
sold to the unaffiliated parties at the same level of trade, we 
determined that the sales made to the affiliated party were at arm's 
length. See Antidumping Proceedings: Affiliated Party Sales in the 
Ordinary Course of Business, 67 FR 69186 (November 15, 2002). As 
explained in the ``Level of Trade'' section of this notice, we were not 
able to run the arm's-length test because Belgo's sales to its 
affiliated customers were found to be at a different level of trade 
than its sales to its unaffiliated customers.

C. Cost of Production Analysis

    Because we used AFA in calculating Belgo's margin in the 
investigation, and a COP inquiry had been initiated, we had reasonable 
grounds to believe or suspect that home market sales of the foreign 
like product by Belgo were made at prices below the COP during the POR. 
Therefore, pursuant to section 773(b)(2)(A)(ii) of the Act, we 
initiated a COP investigation of sales made by Belgo.
1. Calculation of Cost of Production
    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted-average COP, by model, based on the sum of materials, 
fabrication, and general and administrative (G&A) expenses. We relied 
on Belgo's submitted COP, except for the following adjustments:
    (a) For the raw material coke, we used the COP of Belgo's Spanish 
affiliate and,
    (b) We revised Belgo's G&A and financial expenses ratios. See Cost 
Calculation Memo.
2. Test of Comparison Market Sales Prices
    We compared the weighted-average COPs for Belgo to its home market 
sales prices of the foreign like product, as required under section 
773(b) of the Act, to determine whether these sales had been made at 
prices below the COP within an extended period of time (i.e., a period 
of one year) in substantial quantities and whether such prices were 
sufficient to permit the recovery of all costs within a reasonable 
period of time.
    On a model-specific basis, we compared the COP to the home market 
prices, less any applicable movement charges, discounts, rebates, and 
direct and indirect selling expenses.
3. Results of the COP Test
    We disregard below-cost sales where (1) 20 percent or more of a 
respondent's sales of a given product during the POR were made at 
prices below the COP and thus were made within an extended period of 
time in substantial quantities in accordance with sections 773(b)(2)(B) 
and (C) of the Act, and (2) based on comparisons of price to weighted-
average COPs for the POR, we determined that the below-cost sales of 
the product were at prices which would not permit recovery of all costs 
within a reasonable time period, in accordance with section 
773(b)(2)(D) of the Act. We found that Belgo made sales below cost and 
we disregarded such sales where appropriate.

D. Calculation of Normal Value Based on Home Market Prices

    We determined NV for Belgo as follows. We made adjustments for any 
differences in packing and deducted home market movement expenses 
pursuant to sections 773(a)(6)(A) and 773(a)(6)(B)(ii) of the Act. We 
also deducted taxes imposed directly on home market sales pursuant to 
section 773(a)(6)(B)(iii) of the Act.
    In addition, we made adjustments for differences in circumstances 
of sale (COS) pursuant to section 773(a)(6)(C)(iii) of the Act. 
Specifically, we deducted direct selling expenses incurred for home 
market sales (credit expenses net of interest revenue) and added U.S. 
direct selling expenses (credit expenses). For matches of similar 
merchandise, we made adjustments, where appropriate, for physical 
differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act.
    Because Belgo paid commissions on its EP sales, in calculating NV, 
we deducted the lesser of either (1) the weighted-average amount of 
commission paid on a U.S. sale for a particular product, or (2) the 
weighted-average amount of indirect selling expenses paid on the home 
market sales for a particular product. See 19 CFR 351.410(e).

E. Level of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (LOT) as the EP. Sales are made at different LOTs 
if they are made at different marketing stages (or their equivalent). 
See 19 CFR 351.412(c)(2). Substantial differences in selling activities 
are a necessary, but not sufficient, condition for determining that 
there is a difference in the stages of marketing. Id.; see also 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 order to determine whether the comparison sales 
were at different stages in the marketing process than the U.S. sales, 
we reviewed the distribution system in each market (i.e., the ``chain 
of distribution''),\6\ including selling functions,\7\ class of 
customer (customer category), and the level of selling expenses for 
each type of sale.
---------------------------------------------------------------------------

    \6\ The marketing process in the United States and comparison 
markets begins with the producer and extends to the sale to the 
final user or customer. The chain of distribution between the two 
may have many or few links, and the respondents' sales occur 
somewhere along this chain. In performing this evaluation, we 
considered the narrative responses of each respondent to properly 
determine where in the chain of distribution the sale appears to 
occur.
    \7\ Selling functions associated with a particular chain of 
distribution help us to evaluate the LOTs in a particular market. 
For purposes of these preliminary results, we have organized the 
common selling functions into four major categories: sales process 
and marketing support, freight and delivery, inventory and 
warehousing, and quality assurance/warranty services. Other selling 
functions unique to specific companies were considered, as 
appropriate.
---------------------------------------------------------------------------

    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying LOTs 
for EP and comparison market sales (i.e., NV based on either home 
market or third country prices), we consider the starting prices before 
any adjustments. See Micron Technology, Inc. v. United States, et al., 
243 F. 3d 1301, 1314-1315 (Fed. Cir. 2001) (affirming this 
methodology).
    When the Department is unable to match U.S. sales to sales of the 
foreign like product in the comparison market at the same LOT as the 
EP, the Department may compare the U.S. sale to sales at a different 
LOT in the comparison market. In comparing EP sales at a different LOT 
in the comparison market, where available data show that the difference 
in LOT affects price comparability, we make an LOT adjustment under 
section 773(a)(7)(A) of the Act.
    Belgo reported all of its sales were to end users in both the home 
market and in the United States. Belgo reported a single channel of 
distribution in the United States.
    In Brazil, Belgo reported three channels of distribution, direct 
sales to unaffiliated customers, sales through warehouses to 
unaffiliated customers and direct sales to affiliated customers. Belgo 
claims that its home market sales to affiliates are made at a different 
LOT than its home market sales to unaffiliated customers.

[[Page 64721]]

    We examined the information reported by the respondent regarding 
its marketing process for making the reported home market and U.S. 
sales, including the type and level of selling activities performed and 
customer categories. Specifically, we considered the extent to which 
sales process, freight services, warehouse/inventory maintenance, and 
warranty services varied with respect to the different customer 
categories (i.e., distributors and end users) within each market and 
across the markets.
    Based on our analyses, we found two LOTs in the home market, 
because Belgo performed all selling activities to a lesser degree for 
its sales to its affiliates in the home market than for U.S. sales to 
unaffiliated purchasers. We found a single LOT in the United States, 
which was comparable to the LOT of Belgo's sales to its unaffiliated 
customers in the home market. We note that, with no sales to 
unaffiliated parties at the same LOT, it was impossible for any of 
Belgo's home market sales to affiliates to pass the arm's-length test. 
Therefore, all comparisons to home market sales were made at the same 
LOT and no adjustment was necessary.

Currency Conversion

    The Department's preferred source for daily exchange rates is the 
Federal Reserve Bank. However, the Federal Reserve Bank does not track 
or publish exchange rates for the Brazilian Real. Therefore, we made 
currency conversions based on the daily exchange rates from Factiva, a 
Dow Jones & Reuters Retrieval Service.

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that the 
following weighted-average margin exists for the period April 15, 2002, 
through September 30, 2003:

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Exporter/manufacturer                        margin
                                                              percentage
------------------------------------------------------------------------
Companhia Sider[uacute]rgica Belgo Mineira, Belgo Mineira         98.69%
 Participa[ccedil][atilde]o Industria e Comercio S.A. and
 BMP Side[uacute]rgica S.A.................................
------------------------------------------------------------------------

Disclosure

    The Department will disclose calculations performed in accordance 
with 19 CFR 351.224(b).

Public Comment

    Interested parties are invited to comment on the preliminary 
results. Interested parties may submit case briefs within 30 days of 
the date of publication of this notice. Rebuttal briefs, which must be 
limited to issues raised in the case briefs, may be filed not later 
than 35 days after the date of publication of this notice. The 
Department will issue the final results of this administrative review, 
which will include the results of its analysis of issues raised in any 
such comments, within 120 days of publication of the preliminary 
results.
    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. Interested 
parties who wish to request a hearing, or to participate in a hearing 
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). If a request for a 
hearing is made, we will tentatively hold the hearing two days after 
the deadline for submission of rebuttal briefs at the U.S. Department 
of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230, at a time and in a room to be determined. Parties should confirm 
by telephone the date, time, and location of the hearing 48 hours 
before the scheduled date.

Assessment Rates

    Pursuant to 19 CFR 351.212(b), the Department calculates an 
assessment rate for each importer or customer of the subject 
merchandise. The Department will issue appropriate assessment 
instructions directly to CBP within 15 days of publication of the final 
results of this review. Upon issuance of the final results of this 
administrative review, if any importer-or customer-specific assessment 
rates calculated in the final results are above de minimis (i.e., at or 
above 0.5 percent), the Department will instruct CBP to assess 
antidumping duties on appropriate entries by applying the assessment 
rate to the entered quantity of the merchandise. For assessment 
purposes, we calculated importer-or customer-specific assessment rates 
for the subject merchandise by aggregating the dumping duties due for 
all U.S. sales to each importer or customer and dividing the amount by 
the total entered quantity of the sales to that importer or customer.

Cash Deposit Requirements

    The following deposit requirements will be effective upon 
completion of the final results of this administrative review for all 
shipments of steel wire rod from Brazil entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided by section 751(a)(1) of the Act: (1) The cash deposit rate for 
the reviewed company will be the rate established in the final results 
of this administrative review (except no cash deposit will be required 
if its weighted-average margin is de minimis, i.e., less than 0.5 
percent); (2) for merchandise exported by manufacturers or exporters 
not covered in this review but covered in the original less-than-fair-
value investigation, the cash deposit rate will continue to be the rate 
published in the final determination if the manufacturer or exporter 
received an individual rate; (3) if the exporter is not a firm covered 
in this review or the original investigation, but the manufacturer is, 
the cash deposit rate will be the rate established for the most recent 
period for the manufacturer of the merchandise; and (4) if neither the 
exporter nor the manufacturer is a firm covered in this review or the 
original investigation, the cash deposit rate will be 74.45 percent, 
the ``all others'' rate established in the Notice of Final 
Determination of Sales at Less Than Fair Value and Final Negative 
Critical Circumstances: Carbon and Certain Alloy Steel Wire Rod from 
Brazil, 67 FR 55792 (August 30, 2002).

Notification to Importers

    This notice 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 entities 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 determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: November 1, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. E4-3073 Filed 11-5-04; 8:45 am]
BILLING CODE 3510-DS-P