[Federal Register Volume 70, Number 65 (Wednesday, April 6, 2005)]
[Notices]
[Pages 17411-17417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1577]


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DEPARTMENT OF COMMERCE

International Trade Administration

A-427-820


Stainless Steel Bar from France: Preliminary Results of 
Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to a timely request by the petitioners,\1\ the 
Department of Commerce (the Department) is conducting an administrative 
review of the antidumping duty order on stainless steel bar (SSB) from 
France with respect to UGITECH S.A. (UGITECH). The period of review is 
March 1, 2003, through February 29, 2004.
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    \1\ The petitioners include the following companies: Carpenter 
Technology Corporation; Crucible Specialty Metals Division, Crucible 
Materials Corporation; and Electroalloy Corporation, a Division of 
G.O. Carlson, Inc.
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    We preliminarily determine that sales have been made below normal 
value. Interested parties are invited to comment on the preliminary 
results. If the preliminary results are adopted in our final results of 
administrative review, we will instruct U.S. Customs and Border 
Protection (CBP) to assess antidumping duties on all appropriate 
entries.
    In addition, the Department has received information sufficient to 
warrant a successor-in-interest analysis in this administrative review. 
Based on this information, we preliminarily determine that UGITECH S.A. 
is the successor-in-interest to Ugine-Savoie Imphy S.A. (Ugine-Savoie) 
for purposes of determining antidumping duty liability. Interested 
parties are invited to comment on the preliminary results.

EFFECTIVE DATE:  April 6, 2005.

FOR FURTHER INFORMATION CONTACT: Terre Keaton or David J. Goldberger, 
AD/CVD Operations, Office 2, Import Administration-Room B099, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230; telephone: 
(202) 482-1280 or (202) 482-4136, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On March 7, 2002, the Department published in the Federal Register 
an antidumping duty order on SSB from France. See 67 FR 10385. On March 
31, 2004, the petitioners submitted a letter timely requesting that the 
Department conduct an administrative review of the sales of SSB made by 
Ugine-Savoie. Also in this letter, the petitioners claimed that Ugine-
Savoie had recently gone through a change in corporate structure and 
that the corporate entity is now known as UGITECH. The Department 
published a notice of initiation of an administrative review with 
respect to UGITECH, formerly known as Ugine-Savoie. See 69 FR 23170, 
(April 28, 2004).
    On May 6, 2004, we issued a antidumping duty questionnaire to 
UGITECH which included successor-in-interest questions. Responses to 
the original questionnaire were received in July 2004. We issued a 
supplemental questionnaire in October 2004, and received responses in 
October and November 2004 and January 2005.
    On November 5, 2004, we extended the time limit for the preliminary 
results in this review until March 30, 2005. See Stainless Steel Bar 
from France: Notice of Extension of Time Limit for Preliminary Results 
in Antidumping Duty Administrative Review, 69 FR 64563.

[[Page 17412]]

    In November 2004, we conducted a verification of certain portions 
of UGITECH's questionnaire responses, in accordance with 19 CFR 
351.307. The results of this verification are described in the 
Memorandum to the File dated January 13, 2005, from Terre Keaton
    and David J. Goldberger, International Trade Compliance Analysts, 
through Irene Darzenta Tzafolias, Program Manager, entitled: Sales 
Verification in Ugine, France of UGITECH S.A. (UGITECH Verification 
Report).
    In January 2005, as instructed by the Department, UGITECH submitted 
revised sales data pursuant to verification findings and revised cost 
data pursuant to cost supplemental questionnaires. In February 2005, 
the petitioner and the respondent submitted comments for purposes of 
the preliminary results. On March 15, 2005, we issued UGITECH a 
supplemental questionnaire concerning certain cost of production (COP) 
issues. We received UGITECH's response on March 23, 2005.

Scope of the Order

    For purposes of this order, the term ``stainless steel bar'' 
includes articles of stainless steel in straight lengths that have been 
either hot-rolled, forged, turned, cold-drawn, cold-rolled or otherwise 
cold-finished, or ground, having a uniform solid cross section along 
their whole length in the shape of circles, segments of circles, ovals, 
rectangles (including squares), triangles, hexagons, octagons, or other 
convex polygons. Stainless steel bar includes cold-finished stainless 
steel bars that are turned or ground in straight lengths, whether 
produced from hot-rolled bar or from straightened and cut rod or wire, 
and reinforcing bars that have indentations, ribs, grooves, or other 
deformations produced during the rolling process.
    Except as specified above, the term does not include stainless 
steel semi-finished products, cut length flat-rolled products (i.e., 
cut length rolled products which if less than 4.75 mm in thickness have 
a width measuring at least 10 times the thickness, or if 4.75 mm or 
more in thickness having a width which exceeds 150 mm and measures at 
least twice the thickness), products that have been cut from stainless 
steel sheet, strip or plate, wire (i.e., cold-formed products in coils, 
of any uniform solid cross section along their whole length, which do 
not conform to the definition of flat-rolled products), and angles, 
shapes and sections.
    The stainless steel bar subject to this order is currently 
classifiable under subheadings 7222.11.00.05, 7222.11.00.50, 
7222.19.00.05, 7222.19.00.50, 7222.20.00.05, 7222.20.00.45, 
7222.20.00.75, and 7222.30.00.00 of the Harmonized Tariff Schedule of 
the United States (HTSUS). Although the HTSUS subheadings are provided 
for convenience and customs purposes, the written description of the 
scope of this order is dispositive.

Successor-In-Interest Analysis

    In its July 2, 2004, section A response (hereafter section A 
response), UGITECH reported that on November 28, 2003, the shareholders 
of Ugine-Savoie voted to change the company's name to UGITECH S.A. 
UGITECH claimed that Ugine-Savoie and UGITECH remain the same legal 
entity and there was no change in ownership associated with the change 
in name. According to the section A response, prior to the name change, 
Ugine-Savoie Imphy dissolved one of its wholly-owned French 
subsidiaries (i.e., Ugine-Savoie France S.A.) and integrated that 
company's operations as an internal department within Ugine-Savoie 
Imphy. Similarly, shortly after the name change, UGITECH dissolved 
another wholly-owned French subsidiary (i.e., Sprint Metal S.A.) and 
integrated its operations as a internal department within UGITECH. Also 
at that time, the former chief executive officer of Sprint Metal was 
made vice president of sales at UGITECH. Other than the name change and 
the incorporation of the two former subsidiaries into the company, 
UGITECH operations and facilities remain essentially unchanged.
    Thus, in accordance with section 751(b) of the Act, the Department 
is conducting a successor-in-interest analysis to determine whether 
UGITECH is the successor-in-interest to Ugine-Savoie Imphy S.A. for 
purposes of determining antidumping liability with respect to the 
subject merchandise. In making such a successor-in-interest 
determination, the Department examines several factors including, but 
not limited to, changes in: (1) management; (2) production facilities; 
(3) supplier relationships; and (4) customer base. See, e.g., 
Polychloroprene Rubber from Japan: Final Results of Changed 
Circumstances Review, 67 FR 58 (January 2, 2002) (Polychloroprene 
Rubber from Japan), and Brass Sheet and Strip from Canada; Final 
Results of Antidumping Duty Administrative Review, 57 FR 20460 (May 13, 
1992) (Canadian Brass). While no individual factor or combination of 
these factors will necessarily provide a dispositive indication, the 
Department will generally consider the new company to be the successor 
to the previous company if its resulting operation is not materially 
dissimilar to that of its predecessor. See, e.g., Polychloroprene 
Rubber from Japan, Industrial Phosphoric Acid from Israel: Final 
Results of Changed Circumstances Review, 59 FR 6944 (February 14, 
1994), Canadian Brass, and Fresh and Chilled Atlantic Salmon from 
Norway: Initiation and Preliminary Results of Changed Circumstances 
Antidumping Duty Administrative Review, 63 FR 50880 (September 23, 
1998). Thus, if the evidence demonstrates that, with respect to the 
production and sale of the subject merchandise, the new company 
operates as the same business entity as the former company, the 
Department will accord the new company the same antidumping duty 
treatment as its predecessor.
    We preliminarily determine that UGITECH is the successor-in-
interest to Ugine-Savoie. UGITECH submitted documentation supporting 
its claims that its name change resulted in no significant changes in 
either production facilities, supplier relationships, customer base, or 
management. This documentation consisted of: (1) a copy of the board 
meeting minutes for the name change; (2) a copy of the article of 
incorporation for UGITECH; (3) copies of the official registration of 
Ugine-Savoie (before the name change) and UGITECH (after the name 
change); and (4) copies of the statements of dissolution for Ugine-
Savoie France S.A. and Sprint Metal S.A. These documents, which the 
Department examined thoroughly at verification, demonstrate that 
UGITECH operates as the same business entity as Ugine-Savoie. Because 
UGITECH has presented evidence to establish a prima facie case of its 
successorship status, we preliminarily find that UGITECH should receive 
the same antidumping duty treatment with respect to SSB as the former 
Ugine-Savoie.

Fair Value Comparisons

    To determine whether sales of SSB by UGITECH to the United States 
were made at less than normal value (NV), we compared constructed 
export price (CEP) to the NV, as described in the ``Constructed Export 
Price'' and ``Normal Value'' sections of this notice.
    Pursuant to section 777A(d)(2) of the Act, we compared the CEPs 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.

[[Page 17413]]

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by UGITECH covered by the description in the ``Scope 
of the Order'' section, above, to be foreign like products for purposes 
of determining appropriate product comparisons to U.S. sales. 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 month of the U.S. sale until two months after the sale. Where there 
were no sales of identical merchandise in the comparison market made in 
the ordinary course of trade to compare to U.S. sales, we compared U.S. 
sales to sales of the most similar foreign like product made in the 
ordinary course of trade. In making the product comparisons, we matched 
foreign like products based on the physical characteristics reported by 
UGITECH in the following order: general type of finish; grade; 
remelting process; type of final finishing operation; shape; and size 
range.
    For the preliminary results, we have reclassified UGITECH's 
separate grade codes 0760 and 0780 as a single grade code because the 
information on the record indicates that these grades are essentially 
identical (they have exactly the same specifications for nickel, 
chromium, molybdenum, sulphur and carbon components).
    UGITECH identified its sales of reinforcing bar under the final 
finishing product characteristic (FFINISHH/U) but did not identify it 
under the shape product characteristic (SHAPEH/U). We have 
preliminarily determined that this type of bar should be identified 
under the SHAPEH/U variable, as such SSB normally features 
indentations, ribs, grooves, or other deformations produced during the 
rolling process. Accordingly, we have identified the reinforcing SSB 
under the SHAPEH/U variable. In addition, based on the information 
provided by UGITECH in its March 14, 2005, letter, we reclassified the 
FFINISHH/U product characteristics for reinforcing bar.
    In addition, UGITECH reported sales of hot-rolled bar that was 
peeled or descaled, and added a FFINISHH/U code for this characteristic 
at the end of the FFINISHH/U hierarchy. Based on our analysis of 
UGITECH's production flow chart at Appendix SA-1 of the October 28, 
2004, supplemental questionnaire response, we believe that it is more 
appropriate to place the peeled or descaled characteristic between 
``shot blasted'' and ``rough-turned,'' rather than after ``centerless 
ground,'' as reported by UGITECH. Consequently, we have revised 
UGITECH's coding of the final finishing characteristic in order to 
provide more appropriate model matches.

Constructed Export Price

    We calculated CEP in accordance with section 772(b) of the Act 
because the subject merchandise was sold for the account of UGITECH by 
its subsidiary Ugine Stainless & Alloy, Inc. (US&A) in the United 
States to unaffiliated purchasers. In addition, UGITECH reported sales 
of SSB which were further processed by US&A in the United States. For 
the subject merchandise further processed in the United States, we used 
the starting price of the subject merchandise and deducted the costs of 
the further processing to determine CEP for such merchandise, in 
accordance with section 772(d)(2) of the Act. To calculate the cost of 
further manufacturing, we relied on UGITECH's reported cost of further 
manufacturing materials, labor, and overhead, plus amounts for further 
manufacturing general and administrative expenses (G&A) and financial 
expenses, as reported in the January 14, 2005, supplemental section E 
questionnaire response.
    We based CEP on the packed prices to unaffiliated purchasers in the 
United States. We identified the correct starting price, by adjusting 
for alloy surcharges, freight revenue, other revenue and billing 
adjustments associated with the sale, and by making deductions for 
discounts, where applicable. We also made deductions for movement 
expenses in accordance with section 772(c)(2)(A) of the Act. These 
expenses included, where appropriate, foreign inland freight (including 
freight from the plant/warehouse to the port of exportation), brokerage 
and handling, ocean freight, marine insurance, U.S. inland freight 
expenses (including freight from the U.S. port to the warehouse, 
freight between warehouses, and freight from the warehouse to the 
unaffiliated customer), and U.S. customs duties and fees (including 
harbor maintenance fees and merchandise processing fees). In accordance 
with section 772(d)(1) of the Act, we deducted those selling expenses 
associated with economic activities occurring in the United States, 
including direct selling expenses (commissions, credit expenses, 
warranty expenses, other direct selling expenses and repacking 
expenses) and indirect selling expenses (indirect selling expenses and 
inventory carrying costs) incurred in the country of exportation and 
the United States. For the sales where the payment date was not 
reported, we set the payment date equal to the preliminary results date 
(i.e., March 30, 2005). Where US&A reported a shipment date that 
preceded the invoice date, we set the sale date equal to the shipment 
date. We also deducted an amount for further-manufacturing costs, where 
applicable, in accordance with section 772(d)(2) of the Act, and made 
an adjustment for profit in accordance with section 772(d)(3) of the 
Act.
    In Appendix SA-2 of the November 22, 2004, supplemental 
questionnaire response, UGITECH reported that the terms of its sales 
agreement with a certain U.S. customer involved the transfer of 
specific equipment from UGITECH to the customers. While it may be 
appropriate to consider the cost of this equipment to be a direct 
selling expense attributable to all sales covered by the agreement, the 
per-unit amount for such an expense, according to UGITECH's February 
23, 2005, letter at page 8, is well under 0.33 percent ad valorem, the 
Department's threshold under 19 CFR 351.413 for insignificant 
adjustments. Therefore, we have disregarded any adjustment for this 
selling expense in accordance with section 777A(a)(2) of the Act and 19 
CFR 351.413.

Normal Value

A. Home Market Viability

    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 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)(C) of the Act.
    Because UGITECH'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 
its home market was viable.

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

    During the POR, UGITECH sold the foreign like product to affiliated 
customers. To test whether these sales were made at arm's-length 
prices, we compared, on a product-specific basis, the starting prices 
of sales to affiliated and unaffiliated customers, net of all discounts 
and rebates, movement charges, direct selling expenses (including 
commissions), and packing expenses. Where the price to the affiliated 
party was, on average, within a range of 98 to 102 percent of the price

[[Page 17414]]

of the same or comparable merchandise sold to unaffiliated parties, we 
determined that sales made to the affiliated party were at arm's-
length. See 19 CFR 351.403(c). Sales to affiliated customers in the 
home market that were not made at arm's-length prices were excluded 
from our analysis because we considered these sales to be outside the 
ordinary course of trade. See 19 CFR 351.102(b).

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 or CEP. 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) (Plate from South Africa). 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''), including selling functions, class of customer 
(``customer category''), and the level of selling expenses for each 
type of sale.
    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying 
levels of trade for EP and comparison market sales (i.e., NV based on 
either home market or third country prices\2\), we consider the 
starting prices before any adjustments. For CEP sales, we consider only 
the selling activities reflected in the price after the deduction of 
expenses and profit under section 772(d) of the Act. See Micron 
Technology, Inc. v. United States, 243 F. 3d 1301, 1314-1315 (Fed. Cir. 
2001).
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    \2\ Where NV is based on constructed value (CV), we determine 
the NV LOT based on the LOT of the sales from which we derive 
selling expenses, G&A expenses, and profit for CV, where possible.
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    When the Department is unable to match U.S. sales of the foreign 
like product in the comparison market at the same LOT as the EP or CEP, 
the Department may compare the U.S. sale to sales at a different LOT in 
the comparison market. In comparing EP or CEP sales at a different LOT 
in the comparison market, where available data make it practicable, we 
make an LOT adjustment under section 773(a)(7)(A) of the Act. Finally, 
for CEP sales only, if the NV LOT is more remote from the factory than 
the CEP LOT and there is no basis for determining whether the 
difference in LOTs between NV and CEP affects price comparability 
(i.e., no LOT adjustment was practicable), the Department shall grant a 
CEP offset, as provided in section 773(a)(7)(B) of the Act. See Plate 
from South Africa at 61731. We obtained information from UGITECH 
regarding the marketing stages involved in making the reported foreign 
market and U.S. sales, including a description of the selling 
activities performed for each channel of distribution.
    UGITECH sold SSB to end-users and distributors in both the U.S. and 
home markets. UGITECH claims that it made CEP sales in the U.S. market 
(through its U.S. affiliate, US&A) through the following two channels 
of distribution: 1) sales of UGITECH-produced SSB purchased from 
UGITECH, and 2) sales of UGITECH-produced SSB purchased from Trafilerie 
Bedini, S.r.l (Bedini)\3\. We compared the selling activities performed 
in each channel, and found that the same selling functions (e.g., 
production planning, warranty, technical service, and freight & 
delivery) were performed at the same relative level of intensity in 
both channels of distribution. Accordingly, we find that all CEP sales 
constitute one LOT.
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    \3\ Bedini is an affiliated Italian company which purchases SSB 
from UGITECH, further processes it and then resells the SSB to the 
United States.
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    With respect to the home market, UGITECH claimed five channels of 
distribution (channels 3 through 7) described as follows: 3) factory 
direct sales; 4) ex-inventory sales of standard SSB; 5) ex-inventory 
sales of SSB for special applications; 6) sales of ex-inventory French-
origin standard SSB purchased from Bedini; and 7) sales of ex-inventory 
French-origin SSB for special applications purchased from Bedini. 
According to UGITECH, the direct sales (channel 3), the ex-inventory 
standard SSB sales (channels 4 and 6), and the ex-inventory SSB with 
special application sales (channels 5 and 7) constitute three distinct 
levels of trade in the home market.
    In determining whether separate LOTs exist in the home market, we 
compared the selling functions performed across all channels of 
distribution. We found that, except for inventory maintenance, all 
selling functions were performed across all channels of distribution 
with only slight variances in the levels of intensity for a few sales 
activities listed within certain selling functions. We note that the 
selling functions (e.g., strategy planning and marketing, customer 
sales contact, production/planning/order evaluation, advertising, 
warranty, technical service, computer systems and freight and delivery) 
were all generally performed at varying levels of intensity for both 
the direct ex-works sales and the inventory sales. In certain 
activities such as strategy planning and marketing, customer sales 
contact and production/planning/order evaluation, the level of 
intensity for direct ex-works sales and the inventory sales was 
identical. Based on this analysis, we find that, although the level of 
intensity varies within a few of the selling activities performed for 
UGITECH's direct ex-works and inventory sales, these variances are not 
so significant to constitute distinct LOTs.
    With respect to inventory maintenance, we find that there is a 
significant difference in the level of intensity reported for the three 
activities (i.e., light general warehouse services, further 
manufacturing/special services and pre-sale warehousing) being 
performed under this selling function by the inventory sales channels. 
However, we note that, although UGITECH has classified light general 
warehouse services (e.g., cutting and grinding), further manufacturing 
and special services performed on SSB for special applications as 
selling activities, we do not consider these activities to be selling 
functions and thus they are not relevant to the LOT analysis. See 
Notice of Preliminary Determination of Sales at Less Than Fair Value: 
Stainless Steel Bar From France, 66 FR 40201 (August 2, 2001); 
continued in Notice of Final Determination of Sales at Less Than Fair 
Value: Stainless Steel Bar From France, 67 FR 3143 (January 23, 2002) 
(See Stainless Steel Bar From France). In addition, we find that the 
pre-sale warehousing selling activity which UGITECH defined as ``the 
holding of merchandise after production and before sale and shipment'' 
is not a sufficient basis in and of itself to distinguish separate LOTs 
between direct ex-works and inventory sales. Therefore, based on the 
analysis above, taken as a whole, we find that all home market sales 
were made at the same LOT.
    Finally, we compared the CEP LOT to the home market LOT and found 
that the selling functions performed for home market customers are 
either performed at a higher degree of intensity or are greater in 
number than the selling functions performed for the U.S. customer. For 
example, in comparing the selling activities noted under the various 
selling functions reported (e.g.,

[[Page 17415]]

strategy planning/marketing and customer sales contact), UGITECH 
performed each of these selling activities at a higher level of 
intensity in the home market than in the U.S. market. Similarly, we 
noted that the advertising selling function was performed at the 
highest level of intensity in the home market, whereas, in the U.S. 
market it was not performed at all. Therefore, we conclude that 
UGITECH's home market sales are at a more advanced LOT than its U.S. 
sales.
    As home market and U.S. sales were made at different LOTs, we could 
not match CEP sales to home market sales at the same LOT. Moreover, as 
we found only one LOT in the home market, it was not possible to make 
an LOT adjustment to home market sales because such an adjustment is 
dependent upon our ability to identify a pattern of consistent price 
differences between the home market sales on which NV is based and home 
market sales at the LOT of the export transaction. Furthermore, we have 
no other information that provides an appropriate basis for determining 
an LOT adjustment. Because the data available do not form an 
appropriate basis for making an LOT adjustment, but the home market LOT 
is at a more advanced stage of distribution than the CEP LOT, we have 
made a CEP offset to NV in accordance with section 773(a)(7)(B) of the 
Act. The CEP offset is calculated as the lesser of: (1) the indirect 
selling expenses on home market sales, or (2) the indirect selling 
expenses deducted from the starting price in calculating CEP.

Cost of Production Analysis

    In the less-than-fair-value (LTFV) investigation, the Department 
disregarded certain sales made by UGITECH that failed the cost test 
(see Stainless Steel Bar From France at 3143). Thus, in accordance with 
section 773(b)(2)(A)(ii) of the Act, there are reasonable grounds to 
believe or suspect that UGITECH made sales in the home market at prices 
below the cost of producing the merchandise in the current review 
period. Accordingly, we initiated a COP investigation covering 
UGITECH's home market sales.

A. Calculation of Cost of Production

    In accordance with section 773(b)(3) of the Act, we calculated 
UGITECH's COP and constructed value (CV) based on the sum of UGITECH's 
costs of materials and conversion for the foreign like product, plus 
amounts for G&A expenses and interest expenses (see ``Test of Home 
Market Sales Prices'' section below for treatment of home market 
selling expenses). The Department relied on the COP data submitted by 
UGITECH in its most recent supplemental section D questionnaire 
response, dated January 14, 2005, for the COP calculation, except in 
the following instances:
1. For the preliminary results, we relied on UGITECH's weighted-average 
costs during the POR. UGITECH argued that the standard methodology of 
weight-averaging costs over a single cost-reporting period is 
distortive in this instance. UGITECH reported weighted-average direct 
materials costs in six separate cost reporting periods, arguing that 
the prices of certain raw material alloys fluctuated significantly 
during the POR. We preliminarily determine that weighted-average costs 
over the POR are not distortive.
2. UGITECH reported its G&A expense ratio on a division-specific basis 
by allocating company-wide G&A expenses to the Ugine and Imphy 
divisions, rather than on a company-wide basis. We have divided 
UGITECH's total company-wide G&A expenses by the company's total cost 
of goods sold (COGS), which we adjusted for packing expenses, freight-
out expenses, and custom taxes, to derive a company-wide G&A expense 
ratio.
3. In fiscal year 2003, UGITECH accrued restructuring costs related to 
a multi-year restructuring plan which is expected to be completed in 
2007. Although UGITECH's home-country GAAP require the company to 
accrue the total estimated costs during the year in which the costs are 
probable and reasonably estimable, UGITECH reported that the accrued 
costs relate to activities which occurred or are expected to occur in 
five separate fiscal years (2003 through 2007). Therefore, we estimated 
the current portion of the restructuring costs as one-fifth of the 
total accrued amount.
4. UGITECH recognized expenses related to R&D costs during fiscal year 
2003, including an amount for amortization expense of capitalized R&D 
expenditures and an amount of direct R&D expenses. Prior to fiscal year 
2003, UGITECH did not capitalize any R&D expenditures. During fiscal 
year 2003, UGITECH changed its accounting methodology, and began to 
capitalize certain R&D expenditures, amortizing them over a period of 
five years. Thus, the R&D amortization expense represents one-fifth of 
the capitalized R&D expenditures which were incurred during 2003. We 
adjusted UGITECH's reported R&D costs to reflect the accounting method 
used historically by the company. As such, we added the entire amount 
of 2003 capitalized R&D costs to UGITECH's G&A expenses.
5. In accordance with its home country GAAP, UGITECH incurred and 
recognized a loss for the impairment of fixed assets during fiscal year 
2003. Impairment is the condition that exists when the carrying amount 
of a long-lived asset or asset group exceeds its fair value and the 
excess carrying amount is unrecoverable. (See UGITECH's January 14, 
2005 supplemental section D response at 8). However, UGITECH excluded 
the loss from the company's reported G&A expenses for purposes of this 
administrative review. Because the impairment loss relates to the 
general operations of the company during the 2003 fiscal year, we 
included UGITECH's recognized impairment in the company-wide G&A 
expenses.
6. For the purpose of calculating the financial expense ratio, because 
UGITECH's parent, Arcelor, does not report COGS, UGITECH estimated 
Arcelor's COGS by calculating UGITECH's division-specific COGS-to-
operating costs and applying that ratio to Arcelor's total operating 
costs, deriving an estimate of Arcelor's COGS. Rather than attempting 
to estimate Arcelor's unreported COGS, we recalculated the financial 
expense ratio based on Arcelor's actual total operating expenses. 
Arcelor's total operating expenses include Arcelor's COGS and G&A 
expenses. Therefore, we applied the resulting financial expense ratio 
to UGITECH's per-unit COM and G&A expenses to derive the total per-unit 
COP of subject merchandise.
7. To calculate the short-term interest income offset to UGITECH's 
financial expense ratio, UGITECH estimated the short-term interest 
income recognized by Arcelor by analyzing the experience of Arcelor's 
two largest subsidiaries. UGITECH included income from mutual fund 
investments in the total short-term interest income of the two largest 
subsidiaries. We revised UGITECH's calculations to exclude the mutual 
fund income from the calculation of the short-term interest income 
offset. We also added ``Charges linked to securitization programmes'' 
to Arcelor's total financial expenses for purposes of calculating 
UGITECH's financial expense ratio. This expense was recognized in 
Arcelor's audited financial statement as a financial expense, but was 
excluded from the calculations in UGITECH's responses.
    Our revisions to UGITECH's COP data are discussed in the Memorandum 
from Joseph Welton, Accountant, to Neal Halper, Director, entitled Cost 
of Production and Constructed Value Calculation Adjustments for the

[[Page 17416]]

Preliminary Determination - UGITECH, S.A., dated March 30, 2005.

B. Test of Home Market Sales Prices

    On a product-specific basis, we compared the adjusted weighted-
average COP to the home market sales of the foreign like product, as 
required under section 773(b) of the Act, in order to determine whether 
the sale prices were below the COP. For purposes of this comparison, we 
used COP exclusive of selling and packing expenses. The prices 
(inclusive of interest revenue, where appropriate) were exclusive of 
any applicable movement charges, rebates, discounts, and direct and 
indirect selling expenses and packing expenses, revised where 
appropriate, as discussed below under ``Price-to-Price Comparisons.'' 
In determining whether to disregard home market sales made at prices 
less than their COP, we examined, in accordance with sections 
773(b)(1)(A) and (B) of the Act, whether such sales were made: (1) 
within an extended period of time, (2) in substantial quantities, and 
(3) at prices which did not permit the recovery of all costs within a 
reasonable period of time.

C. Results of the COP Test

    Pursuant to section 773(b)(1) of the Act, where less than 20 
percent of the respondent's sales of a given product are at prices less 
than the COP, we do not disregard any below-cost sales of that product, 
because we determine that in such instances the below-cost sales were 
not made in ``substantial quantities.'' Where 20 percent or more of a 
respondent's sales of a given product are at prices less than the COP, 
we determine the below-cost sales represent ``substantial quantities'' 
within an extended period of time, in accordance with section 
773(b)(1)(A) of the Act. In such cases, we also determine whether such 
sales were made at prices which would not permit recovery of all costs 
within a reasonable period of time, in accordance with section 
773(b)(1)(B) of the Act.
    We found that, for certain specific products, more than 20 percent 
of UGITECH's home market sales were at prices less than the COP and, in 
addition, such sales did not provide for the recovery of costs within a 
reasonable period of time. We therefore excluded these sales and used 
the remaining sales as the basis for determining NV, in accordance with 
section 773(b)(1) of the Act.

Price-to-Price Comparisons

    We calculated NV based on delivered prices to unaffiliated 
customers or prices to affiliated customers that were determined to be 
at arm's length. We made adjustments, where appropriate, to the 
starting price for billing corrections, early payment discounts and 
rebates. We made deductions, where appropriate, from the starting price 
for inland freight (from the plant to the warehouse or plant to the 
customer), warehousing expenses, and inland insurance, under section 
773(a)(6)(B)(ii) of the Act.
    For the sales where the payment date was not reported, we set the 
payment date equal to the preliminary results date (i.e., March 30, 
2005). Where UGITECH reported a shipment date that preceded the invoice 
date, we set the sale date equal to the shipment date.
    We made adjustments for differences in costs attributable to 
differences in the physical characteristics of the merchandise in 
accordance with section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. 
In addition, we made adjustments under section 773(a)(6)(C)(iii) of the 
Act and 19 CFR 351.410 for differences in circumstances of sale for 
imputed credit expenses and warranty expenses.
    We also deducted home market packing costs and added U.S. packing 
costs, in accordance with section 773(a)(6)(A) and (B) of the Act. 
Finally, as discussed above under the Level of Trade section, we made a 
CEP offset pursuant to section 773(a)(7)(B) of the Act and 19 CFR 
351.412(f). We calculated the CEP offset as the lesser of the indirect 
selling expenses on the comparison-market sales or the indirect selling 
expenses deducted from the starting price in calculating CEP.

Currency Conversion

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

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
weighted-average dumping margin for the period March 1, 2003, through 
February 29, 2004, is as follows:

------------------------------------------------------------------------
                Manufacturer/Exporter                   Percent Margin
------------------------------------------------------------------------
UGITECH S.A. (Successor-in-interest to Ugine-Savoie                17.71
 Imphy S.A.)........................................
------------------------------------------------------------------------

    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the publication date of this 
notice. See 19 CFR 351.224(b). Any interested party may request a 
hearing within 30 days of publication. See 19 CFR 351.310(c). If 
requested, a hearing will be scheduled after determination of the 
briefing schedule.
    Interested parties who wish to request a hearing or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, Room B-099, 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 issues to be discussed. See 19 CFR 
351.310(c).
    Issues raised in the hearing will be limited to those raised in the 
respective case briefs. Case briefs from interested parties and 
rebuttal briefs, limited to the issues raised in the respective case 
briefs, may be submitted in accordance with a schedule to be 
determined. Parties who submit case briefs or rebuttal briefs in this 
proceeding are requested to submit with each argument (1) a statement 
of the issue and (2) a brief summary of the argument. Parties are also 
encouraged to provide a summary of the arguments not to exceed five 
pages and a table of statutes, regulations, and cases cited.
    The Department will issue the final results of this administrative 
review, including the results of its analysis of issues raised in any 
written briefs, not later than 120 days after the date of publication 
of this notice, pursuant to section 751(a)(3)(A) of the Act.

Assessment Rates

    The Department shall determine, and CBP shall assess, antidumping 
duties on all appropriate entries, in accordance with 19 CFR 351.212. 
The Department will issue appropriate appraisement instructions for the 
companies subject to this review directly to CBP within 15 days of 
publication of the final results of this review.
    For assessment purposes, we calculated importer- or customer-
specific ad valorem duty assessment rates based on the ratio of the 
total amount of dumping margins calculated for the examined sales to 
the total entered value of those same sales.
    We will instruct CBP to assess antidumping duties on all 
appropriate entries covered by this review if any importer- or 
customer-specific assessment rate calculated in the final results of 
this review is above de minimis (i.e., at or above 0.50 percent). See 
19 CFR 351.106(c)(1). The final results of this review shall be the 
basis for the assessment of antidumping duties on entries of 
merchandise covered by the final results of this

[[Page 17417]]

review and for future deposits of estimated duties, where applicable.

Cash Deposit Requirements

    The following cash deposit requirements will be effective for all 
shipments of the subject merchandise 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 Act: (1) the cash deposit rate for the reviewed 
company will be that established in the final results of this review, 
except if the rate is less than 0.50 percent, and therefore, de minimis 
within the meaning of 19 CFR 351.106(c)(1), in which case the cash 
deposit rate will be zero; (2) for previously reviewed or investigated 
companies not listed above, 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 for the most recent period 
for the manufacturer of the merchandise; and (4) the cash deposit rate 
for all other manufacturers or exporters will continue to be 3.90 
percent, the ``All Others'' rate made effective by the LTFV 
investigation (see Notice of Antidumping Duty Order: Stainless Steel 
Bar From France, 67 FR 10385 (March 7, 2002)). These requirements, when 
imposed, shall remain in effect until publication of the final results 
of the next administrative review.

Notification to Importers

    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.
    This administrative review and notice are published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.221.

    Dated: March 30, 2005.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. E5-1577 Filed 4-5-05; 8:45 am]
BILLING CODE 3510-DS-S