[Federal Register Volume 70, Number 151 (Monday, August 8, 2005)]
[Notices]
[Pages 45675-45682]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4254]


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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.
SUMMARY: In response to requests from respondent ThyssenKrupp Mexinox 
S.A. de C.V. (Mexinox S.A.) and Mexinox USA, Inc. (Mexinox USA) 
(collectively, Mexinox) and petitioners,\1\ 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. This administrative review covers imports of 
subject

[[Page 45676]]

merchandise from Mexinox S.A. during the period July 1, 2003, to June 
30, 2004.
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    \1\ Petitioners are Allegheny Ludlum Corporation, North American 
Stainless, United Auto Workers Local 3303, Zanesville Armco 
Independent Organization, Inc. and the United Steelworkers of 
America, AFL-CIO/CLC.
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    We preliminarily determine that sales of S4 in coils from Mexico 
have been made below normal value (NV). If these 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 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 8, 2005.

FOR FURTHER INFORMATION CONTACT: Angela Strom, Maryanne Burke or Robert 
James, AD/CVD Operations, Office 7, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230, telephone: 
(202) 482-2704, (202) 482-5604 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; Stainless Steel Sheet and Strip in 
Coils from Mexico (64 FR 40560). On July 1, 2004, the Department 
published the Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation; Opportunity To Request Administrative Review, 
of, inter alia, S4 in coils from Mexico for the period July 1, 2003, 
through June 30, 2004. 69 FR 39903.
    In accordance with 19 CFR 351.213(b)(1), Mexinox and petitioners 
requested that we conduct an administrative review. On August 30, 2004, 
we published in the Federal Register a notice of initiation of this 
antidumping duty administrative review covering the period July 1, 2003 
through June 30, 2004. Initiation of Antidumping and Countervailing 
Duty Administrative Reviews and Requests for Revocation in Part, 69 FR 
52857 (August 30, 2004).
    On September 8, 2004, the Department issued an antidumping duty 
questionnaire to Mexinox. Mexinox submitted its response to section A 
of the questionnaire on October 8, 2004, and its response to sections B 
through E of the questionnaire on November 10, 2004. On January 28, 
2005, the Department issued its first supplemental questionnaire for 
sections A, B, and C, to which Mexinox responded on March 7, 2005. On 
April 14, 2005, the Department issued a second supplemental 
questionnaire for sections A through C, as well as for section E 
pertaining to an affiliated U.S. reseller, Ken-Mac Metals, Inc. (Ken-
Mac). Mexinox responded to sections A-C of this supplemental 
questionnaire on May 16, 2005, and filed its response to section E on 
May 23, 2005. The Department also issued a supplemental questionnaire 
for section D on April 18, 2005; Mexinox submitted its response to this 
questionnaire on May 16, 2005. On May 25, 2005, the Department issued a 
second supplemental questionnaire for section D and Mexinox filed its 
response to this on June 8, 2005. Finally, on July 6, 2005, the 
Department issued a third supplemental questionnaire for sections A 
through C, to which Mexinox responded on July 14, 2005.
    Because it was not practicable to complete this review within the 
normal time frame, on March 8, 2005, we published in the Federal 
Register our notice of the extension of time limits for this review. 
Stainless Steel Sheet and Strip in Coils from Mexico; Extension of Time 
Limit for Preliminary Results of Antidumping Duty Administrative 
Review, 70 FR 11194 (March 8, 2005). This extension established the 
deadline for these preliminary results as July 31, 2005.

Period of Review

    The period of review (POR) is July 1, 2003, through June 30, 2004.

Scope of the Order

    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 currently classifiable 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 this order 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

[[Page 45677]]

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.''\2\
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    \2\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company.
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    Certain electrical resistance alloy steel is also excluded from the 
scope of this order. This product is defined as a non-magnetic 
stainless steel manufactured to American Society of Testing and 
Materials (ASTM) specification B344 and containing, by weight, 36 
percent nickel, 18 percent chromium, and 46 percent iron, and is most 
notable for its resistance to high temperature corrosion. It has a 
melting point of 1390 degrees Celsius and displays a creep rupture 
limit of 4 kilograms per square millimeter at 1000 degrees Celsius. 
This steel is most commonly used in the production of heating ribbons 
for circuit breakers and industrial furnaces, and in rheostats for 
railway locomotives. The product is currently available under 
proprietary trade names such as ``Gilphy 36.''\3\
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    \3\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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    Certain martensitic precipitation-hardenable stainless steel is 
also excluded from the scope of this order. This high-strength, ductile 
stainless steel product is designated under the Unified Numbering 
System (UNS) as S45500-grade steel, and contains, by weight, 11 to 13 
percent chromium, and 7 to 10 percent nickel. Carbon, manganese, 
silicon and molybdenum each comprise, by weight, 0.05 percent or less, 
with phosphorus and sulfur each comprising, by weight, 0.03 percent or 
less. This steel has copper, niobium, and titanium added to achieve 
aging, and will exhibit yield strengths as high as 1700 Mpa and 
ultimate tensile strengths as high as 1750 Mpa after aging, with 
elongation percentages of 3 percent or less in 50 mm. It is generally 
provided in thicknesses between 0.635 and 0.787 mm, and in widths of 
25.4 mm. This product is most commonly used in the manufacture of 
television tubes and is currently available under proprietary trade 
names such as ``Durphynox 17.''\4\
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    \4\ ``Durphynox 17'' is a trademark of Imphy, S.A.
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    Finally, three specialty stainless steels typically used in certain 
industrial blades and surgical and medical instruments are also 
excluded from the scope of this order. These include stainless steel 
strip in coils used in the production of textile cutting tools (e.g., 
carpet knives).\5\ This steel is similar to 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 0.025percent, 
silicon of between 0.20 and 0.50 percent, and sulfur of no more than 
0.020 percent. This product is supplied with a hardness of more than Hv 
500 guaranteed after customer processing, and is supplied as, for 
example, ``GIN6.''\6\
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    \5\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \6\ ``GIN4 Mo,'' ``GIN5'' and ``GIN6'' are the proprietary 
grades of Hitachi Metals America, Ltd.
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Sales Made Through Affiliated Resellers

A. U.S. Market
    Mexinox USA, a wholly-owned subsidiary of Mexinox S.A., which is a 
subsidiary of ThyssenKrupp AG, the lead holding company for steel 
operations in the ThyssenKrupp Group, sold subject merchandise in the 
United States during the POR to unaffiliated customers. Mexinox USA 
also made sales of subject merchandise to affiliated company, Ken-Mac, 
located in the United States. Ken-Mac is an operating division of 
ThyssenKrupp Materials Inc., a subsidiary of ThyssenKrupp USA Inc. 
(TKUSA), which is the primary holding company for ThyssenKrupp AG in 
the U.S. market. Ken-Mac further manufactured and/or resold the subject 
merchandise to unaffiliated customers in the United States. See 
Mexinox's October 8, 2004, questionnaire response at A-10, A-18 and A-
37 through A-38. For purposes of this review, we have included both 
Mexinox USA's and Ken-Mac's sales of subject merchandise to 
unaffiliated customers in the United States in our sales analysis.
B. Home Market
    Mexinox Trading, S.A. de C.V. (Mexinox Trading), a wholly-owned 
subsidiary of Mexinox S.A., resells the foreign like product as well as 
other

[[Page 45678]]

merchandise in the home market. Mexinox reported its sales to Mexinox 
Trading during the POR. These sales represented a small portion of 
Mexinox's total sales of the foreign like product in the home market 
and were less than five percent of home market sales. See, e.g., 
Mexinox's October 8, 2004, questionnaire response at A-3 to A-4 and its 
May 23, 2005, supplemental questionnaire response at Attachment A-28 
(quantity and value chart). Because Mexinox Trading's sales of the 
foreign like product were less than five percent of home market sales 
of the foreign like product, in accordance with 19 CFR 351.403(d), we 
did not require Mexinox to report downstream sales by Mexinox Trading 
to its first unaffiliated customers. This treatment is also consistent 
with that employed in past administrative reviews of S4 in coils from 
Mexico. See, e.g., Stainless Steel Sheet and Strip in Coils from 
Mexico; Final Results of Antidumping Duty Administrative Review, 70 FR 
3677 (January 26, 2005) (S4 in Coils from Mexico 2002-2003 Final 
Results).

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 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 of 1930, as amended (the 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. This is consistent with the Department's 
stated preference for using the invoice date as the date of sale, 
unless a date other than the date of invoice better reflects the date 
on which the exporter or producer establishes the material terms of 
sale. See 19 CFR 351.401(i). Mexinox indicated the invoice date 
represented the date when the material terms of sales (i.e., price and 
quantity) are definitively set, and that up to the date of shipment and 
invoicing, these terms were subject to change. See, e.g., Mexinox's 
October 8, 2004, questionnaire response at A-35 and A-41. Mexinox 
stated that sale orders may include provisional prices and customers 
may adjust the quantity of an order up to the date of shipment. See 
March 7, 2005, supplemental questionnaire response at 12. We have 
preliminarily determined the date of invoice is the appropriate date of 
sale because evidence on the record indicates that final prices are not 
fixed until the material is sought to be released for shipment and 
invoicing. See Mexinox's October 8, 2004, questionnaire response at A-
35.

Product Comparisons

    In accordance with section 771(16) of the Act we considered all 
products produced by Mexinox S.A. covered by the description in the 
``Scope of the Order'' 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 
priority): (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 September 8, 2004, questionnaire.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we base NV on sales made in the comparison market at the 
same level of trade (LOT) as the export transaction. There is one LOT 
in the comparison market, the NV LOT, which is defined as the starting 
price of the comparison sales in the home market or, when NV is based 
on constructed value (CV), we use the sales from which selling, 
general, and administrative (SG&A) expenses and profit are derived. 
With respect to CEP transactions in the U.S. market, the CEP LOT is 
defined as the level of the constructed sale from the exporter to the 
importer. See 773(a)(7)(A) of the Act.
    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. See 19 CFR 351.412(c)(2). 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 an LOT 
adjustment under section 773(a)(7)(A) of the Act. For CEP sales, if the 
NV level is more remote from the factory than the CEP level and there 
is no basis for determining whether the difference in the levels 
between NV and CEP affects price comparability, we adjust NV under 
section 773(a)(7)(B) of the Act (the CEP offset provision). See, e.g., 
Final Determination of Sales at Less Than Fair Value: Greenhouse 
Tomatoes From Canada, 67 FR 8781 (February 26, 2002); 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 (November 
19, 1997) and Certain Hot-Rolled Flat-Rolled Carbon Quality Steel 
Products from Brazil; Preliminary Results of Antidumping Duty 
Administrative Review, 70 FR 17406 (April 6, 2005). For CEP sales, we 
consider only the selling activities reflected in the price after the 
deduction of expenses and CEP profit under section 772(d) of the Act. 
See Micron Technology Inc. v. United States, 243 F.3d 1301, 1314-1315 
(Fed. Cir. 2001). We expect that, if the claimed LOTs are the same, the 
functions and activities of the seller should be similar. Conversely, 
if a party claims that the LOTs are different for different groups of 
sales, the functions and activities of the seller should be dissimilar. 
See Porcelain-on-Steel Cookware from Mexico: Final Results of 
Administrative Review, 65 FR 30068 (May 10, 2000).
    We obtained information from Mexinox regarding the marketing stages 
involved in making the reported foreign market and U.S. sales. Mexinox 
provided a description of all selling activities performed, along with 
a flowchart and tables comparing the levels of trade and degrees of 
intensity among each channel of distribution and type in both markets. 
See Mexinox's October 8, 2004, questionnaire response at A-30 through 
A-35 and Attachments A-4-A through A-4-C. Mexinox sold S4 in coils to 
end-users and retailers/distributors in the home market and to end-
users and distributors/service centers in the U.S.
    With respect to the home market, Mexinox identified two channels of 
distribution described as follows: 1) direct shipments (i.e., products 
produced to order) and 2) sales from inventory. See Mexinox's October 
8, 2004, questionnaire response at A-22 through A-23. We compared the 
selling functions performed across all home market channels of 
distribution. In certain activities such as pre-sale technical 
assistance, process customer orders, sample analysis, prototypes and 
trial lots, freight and delivery, price negotiation/customer 
communications, sales calls and visits and warranty services, the level 
of intensity for direct

[[Page 45679]]

shipments and sales through inventory were identical, while only a few 
functions such as inventory maintenance and just-in-time performance 
differed. Within its two channels of distribution, Mexinox S.A. made 
sales to both affiliated and unaffiliated distributors/retailers and 
end-users, all requiring smaller volume transactions, technical 
assistance, frequent sales calls and visits and other similar selling 
services. See October 8, 2004, at A-25 and Attachments A-4-B and A-4-C. 
While we find slight differences in the level of intensity of these 
selling activities performed for direct shipments and sales through 
inventory to both end-users and retailers, these differences are minor 
and do not establish distinct, multiple levels of trade in Mexico. 
Based on our analysis of all of Mexinox's home market selling 
functions, we find that all home market sales were made at the same 
LOT, the NV LOT.
    With respect to the U.S. market, Mexinox indicated that it made CEP 
sales through its U.S. affiliate, Mexinox USA, through the following 
four channels of distribution: 1) direct shipments to unaffiliated 
customers; 2) stock sales from the San Luis Potosi (SLP) factory; 3) 
sales to unaffiliated customers through Mexinox USA's inventory/
warehouses; and 4) sales through Ken-Mac. Ken-Mac is an affiliated 
service center located in the United States which purchases S4 in coils 
produced by Mexinox and Ken-Mac then resells (after, in some instances, 
further manufacturing the merchandise) to unaffiliated U.S. customers. 
We compared the selling activities performed in each channel and found 
the same selling functions (e.g., price negotiation/customer 
communications, sales calls, warranty services and freight/delivery 
arrangements) were performed at the same relative level of intensity in 
all channels of distribution. See October 8, 2004, questionnaire 
response at Attachment A 4-C. Accordingly, we find all CEP sales 
constitute one LOT, the CEP LOT, in the U.S. market.
    We then compared the CEP LOT to the NV LOT. The CEP LOT is based on 
the selling activities associated with the transaction between Mexinox 
and its affiliated importer, Mexinox USA; whereas the NV LOT is based 
on the selling activities associated with the transactions with 
unaffiliated customers in the home market. From our analysis, we 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 Mexinox's selling activities, we find there are 
more functions performed in the home market which are not a part of CEP 
transactions (e.g., technical assistance, sample analysis, prototypes 
and trial lots, price negotiation/customer communications, inventory 
maintenance, just-in-time deliveries, sales calls and visits, and 
warranty services). For selling activities performed in both markets 
(e.g., process customer orders, freight and delivery), we find that 
Mexinox performed each of these at a higher level of intensity in the 
home market than in the U.S. market. We note that CEP sales from 
Mexinox to Mexinox USA generally occur at the beginning of the 
distribution chain and more closely resemble that of an ex-factory 
sale. In contrast, all sales in the home market occur closer to the end 
of the distribution chain and involve smaller individual transaction 
volumes, which require more selling functions to be performed. See 
Mexinox's October 8, 2004, questionnaire response at A-30 through A-35 
and Attachments A-4-A through A-4-C. See also Mexinox's July 14, 2005, 
supplemental questionnaire response at 3 to 6. From the evidence on the 
record, we conclude that the NV LOT is at a more advanced stage than 
the CEP LOT.
    Since we found that the home market and U.S. sales were made at 
different LOTs, we examined whether an LOT adjustment or a CEP offset 
may be appropriate in this review. 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 on 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. See 19 CFR 351.412(d)(1)(ii). 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, and because the NV 
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.

Constructed Export Price

    In accordance with section 772(b) of the Act, CEP is the price at 
which the subject merchandise is first sold (or agreed to be sold) in 
the United States before or after the date of importation by or for the 
account of the producer or exporter of such merchandise, or by a seller 
affiliated with the producer or exporter, to a purchaser not affiliated 
with the producer or exporter. Mexinox properly classified all of its 
U.S. sales of subject merchandise as CEP transactions because such 
sales were made in the United States by Mexinox's affiliate, Mexinox 
USA, to unaffiliated purchasers. 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 Act. These expenses included, where 
appropriate: foreign inland freight, foreign brokerage and handling, 
inland insurance, ocean freight (for sales to Puerto Rico), U.S. 
customs duties, U.S. inland freight, U.S. brokerage, and U.S. 
warehousing expenses. As directed by 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 
(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 Act. We used the adjustments as reported 
by Mexinox, except we recalculated the U.S. indirect selling expense 
ratio. See Analysis of Data Submitted by ThyssenKrupp Mexinox S.A. de 
C.V. for the Preliminary Results of the Antidumping Duty Administrative 
Review of S4 in Coils from Mexico (Preliminary Analysis Memorandum) 
from Angela Strom and Maryanne Burke to the File dated August 1, 2005.
    For 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 section 
772(d)(2) of the Act. In calculating the cost of further manufacturing 
for Ken-Mac, we relied upon Ken-Mac's reported cost of further 
manufacturing materials, labor and overhead, plus amounts for further 
manufacturing general and administrative expenses (G&A), as reported in 
the May 23, 2005, supplemental questionnaire response and incorporated 
the revised financial expense ratio (INTEX). See the

[[Page 45680]]

Department's Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Results - ThyssenKrupp Mexinox S.A. de 
C.V. (Cost Calculation Memorandum) from Laurens Van Houten to the File 
and Preliminary Analysis Memorandum, both dated August 1, 2005.

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 Mexinox's volume of home market sales of the foreign like 
product to the volume of its U.S. sales of the subject merchandise, in 
accordance with section 773(a)(1)(B) of the Act. Because Mexinox'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 May 23, 2005, supplemental questionnaire response at 
Attachment A-28.
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). 
Consistent with 19 CFR 351.403(c) and (d) and agency practice, ``the 
Department may calculate NV based on sales to affiliates if satisfied 
that the transactions were made at arm's length.'' See China Steel 
Corp. v. United States, 264 F. Supp. 2d 1339, 1365 (CIT 2003). To test 
whether the sales to affiliates were made at arm's-length prices, we 
compared on a model-specific basis the starting prices of sales to 
affiliated and unaffiliated customers net of all direct selling 
expenses, discounts and rebates, movement charges, and packing. Where 
prices to the affiliated party were, on average, within a range of 98 
to 102 percent of the price of identical or comparable merchandise to 
the unaffiliated parties, 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 Trade, 67 FR 69186, 
69194 (November 15, 2002). We found that one affiliated home market 
customer failed the arm's length test and, in accordance with the 
Department's practice, we excluded these sales from our analysis. See 
section 773(f)(2) of the Act.
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, e.g., Stainless Steel Sheet and 
Strip in Coils from Mexico; Final Results of Antidumping Duty 
Administrative Review, 69 FR 6259 (February 10, 2004) (S4 in Coils from 
Mexico 2001-2002 Final Results), we had 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 Act. Pursuant to section 773(b)(1) of the Act, we initiated a 
COP investigation of sales by Mexinox.
    We recalculated Mexinox's G&A and INTEX as described in the Cost 
Calculation Memorandum and Preliminary Analysis Memorandum. We added 
material and fabrication costs for the foreign like product, plus 
amounts for SG&A and packing costs, in accordance with section 
773(b)(3) of the 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 Act, to determine whether these sales had been made at prices below 
the 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 Act, whether, within an extended period of 
time, such sales were made in substantial quantities; and 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 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 the COP, we 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 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 Act.
    Our cost test for Mexinox revealed that, for home market sales of 
certain models, less than 20 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 the 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 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 Act, we calculated CV 
based on the sum of Mexinox's material and fabrication costs, SG&A 
expenses, profit, and U.S. packing costs. We calculated the COP 
component of CV as described above in the ``Cost of Production 
Analysis'' section of this notice. In accordance with section 
773(e)(2)(A) of the 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.
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, rebates and 
interest revenue, where appropriate. We made deductions, where 
appropriate, for foreign inland freight, insurance, handling, and 
warehousing, pursuant to section 773(a)(6)(B) of the Act. In addition, 
we made adjustments for differences in cost attributable to differences 
in physical characteristics of the merchandise pursuant to section 
773(a)(6)(C)(ii) of the 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 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

[[Page 45681]]

adjustment for the CEP offset in accordance with section 773(a)(7)(B) 
of the 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 Act.
    We used Mexinox's adjustments and deductions as reported, except 
for certain handling expenses and imputed credit expenses. We have 
recalculated the handling expenses incurred by home market affiliate, 
Mexinox Trading, and applied the revised ratio to those home market 
sales whereby Mexinox reported a handling expense. We based imputed 
credit expense on the short-term borrowing rate associated with the 
currency of each home market sale transaction at issue. See Preliminary 
Analysis Memorandum. Both methodologies are consistent with past 
administrative reviews of this case. See e.g., S4 in Coils from Mexico 
2002-2003 Final Results.
F. Price-to-CV Comparisons
    In accordance with section 773(a)(4) of the Act, we based NV on CV 
if we were unable to find a home market match of such or similar 
merchandise. Where appropriate, we made adjustments to CV in accordance 
with section 773(a)(8) of the Act.

Facts Available

    In accordance with section 776(a)(1) of the Act, for these 
preliminary results we find it necessary to use partial facts available 
in those instances where the respondent did not provide certain 
information necessary to conduct our analysis.
    In our September 8, 2004, questionnaire at G-6, we requested that 
Mexinox provide sales and cost data for all affiliates involved with 
the production or sale of the merchandise under review during the POR 
in both home and U.S. markets. In its October 8, 2004, questionnaire 
response at A-2, Mexinox indicated that its affiliated reseller, Ken-
Mac, sold subject merchandise in the United States during the POR. In 
its November 10, 2004, submission at KMC-2, Mexinox provided data 
related to Ken-Mac's resales of subject merchandise to unaffiliated 
customers in the United States, although Mexinox notified the 
Department that a small subset of sale transactions could not be traced 
to an original stock item or supplier. In its supplemental 
questionnaire response dated May 23, 2005, at 2, Mexinox reported those 
sale transactions (unattributed sales) where the origin of the original 
stock item could not be determined.
    Because of the unknown origin of a certain number of Ken-Mac 
resales, Mexinox has not provided all the information necessary to 
complete our analysis. Pursuant to section 776(a)(1) of the Act, it is 
appropriate to use the facts otherwise available in calculating a 
margin on Ken-Mac's unattributed sales. Section 776(a)(1) of the Act 
provides that the Department will, subject to section 782(d) of the 
Act, use the facts otherwise available in reaching a determination if 
``necessary information is not available on the record.'' For these 
preliminary results, we have calculated a margin on Ken-Mac's 
unattributed sales by applying the overall margin calculated on 
Mexinox's other U.S. sales of subject merchandise to the weighted-
average price of Ken-Mac's unattributed sales. This methodology is 
consistent with that employed in past administrative reviews of S4 in 
coils from Mexico. See, e.g., S4 in Coils from Mexico 2002-2003 Final 
Results.
    Prior to applying the overall margin calculated on other sales/
resales of subject merchandise to Ken-Mac's unattributed sales, we 
calculated the portion of the unattributed sales quantity that could be 
reasonably allocated to subject stainless steel merchandise purchased 
from Mexinox. We based our allocation on the relative percentage (by 
volume) of subject stainless steel merchandise that Ken-Mac had 
purchased from Mexinox as compared to the total stainless steel 
merchandise it had purchased from all vendors. See Mexinox's May 23, 
2005, supplemental questionnaire response at Attachment KMC-14. The 
Department finds that Mexinox, to the best of its ability, complied 
with the Department's request for information; thus, we have not used 
an adverse inference, as provided under section 776(b) of the Act, to 
calculate a margin on Ken-Mac's unattributed sales.

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 
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, 2003 
through June 30, 2004:

------------------------------------------------------------------------
                                                              Weighted
                                                               Average
                  Manufacturer / Exporter                      Margin
                                                            (percentage)
------------------------------------------------------------------------
ThyssenKrupp Mexinox S.A. de C.V..........................         3.01
------------------------------------------------------------------------

    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 of these preliminary results. See 19 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 no later than 30 days after the date of 
publication of these preliminary results of review. Rebuttal briefs 
limited to issues raised in the case briefs, 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, parties submitting 
case briefs and/or rebuttal briefs are requested to 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 argument or at a hearing, within 120 days of 
publication of these preliminary results.
    Upon completion of this administrative review, the Department shall 
determine, and CBP 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. The total customs value is 
based on the entered value reported by Mexinox, for all U.S. entries of 
subject merchandise initially purchased for consumption to the United 
States made during the POR. See Preliminary Analysis Memorandum. In 
accordance with 19 CFR 356.8(a), the Department will issue appropriate 
assessment instructions directly to CBP on or after 41 days following 
the publication of the final results of review.

[[Page 45682]]

    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 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 
less-than-fair-value (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, or the LTFV investigation 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 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 Act.

    Dated: August 1, 2005.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. E5-4254 Filed 8-5-05; 8:45 am]
BILLING CODE 3510-DS-S