[Federal Register Volume 70, Number 151 (Monday, August 8, 2005)]
[Notices]
[Pages 45682-45689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4260]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-825]


Stainless Steel Sheet and Strip in Coils From Germany; Notice of 
Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to a request from Allegheny Ludlum, North American 
Stainless, Local 3303 United Auto Workers, United Steelworkers of 
America, AFL-CIO/CLC, and Zanesville Armco Independent Organization 
(collectively, petitioners), 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) from 
Germany. The review covers exports of the subject merchandise to the 
United States of the collapsed parties, ThyssenKrupp Nirosta GmbH 
(ThyssenKrupp Nirosta), ThyssenKrupp VDM GmbH (TKVDM), and ThyssenKrupp 
Nirosta Prazisionsband GmbH (TKNP) (collectively, TKN). The period of 
review (POR) is July 1, 2003, through June 30, 2004.
    We preliminarily find that TKN made sales at less than normal value 
during the POR. If these preliminary results are adopted in our final 
results of this review, we will instruct U.S. Customs and Border 
Protection (Customs) to assess antidumping duties based on the 
difference between the United States Price (USP) and normal value (NV). 
Interested parties are invited to comment on these preliminary results. 
Parties who submit arguments in this proceeding are requested to submit 
with the arguments: (1) a statement of the issues, (2) a brief summary 
of the arguments (no longer than five pages, including footnotes) and 
(3) a table of authorities.

EFFECTIVE DATE: August 8, 2005.

FOR FURTHER INFORMATION CONTACT: Deborah Scott, Tyler Weinhold, 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) 482-2657, (202) 482-1121 or (202) 482-0649, respectively.

SUPPLEMENTARY INFORMATION:

Background

    The Department published an antidumping duty order on S4 from 
Germany on July 27, 1999. Notice of Amended Final Determination of 
Sales at Less than Fair Value and Antidumping Duty Order; Stainless 
Steel Sheet and Strip in Coils from Germany, 64 FR 40557 (July 27, 
1999) (Antidumping Duty Order). On July 1, 2004, the Department 
published the ``Notice of Opportunity to Request Administrative 
Review'' of S4 from Germany for the period July 1, 2003, through June 
30, 2004. Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation; Opportunity To Request Administrative Review, 
69 FR 39903 (July 1, 2004).
    On July 30, 2004, petitioners requested an administrative review of 
TKN's sales for the period July 1, 2003, through June 30, 2004. On 
August 30, 2004, we published in the Federal Register a notice of 
initiation of this antidumping duty administrative review. 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 TKN. TKN submitted its response to section A of the 
questionnaire on September 29, 2004, and its response to sections B 
through D of the questionnaire on November 9, 2004.\1\ On March 3, 
2005, the Department issued a supplemental questionnaire requesting 
that TKN provide downstream sales data for certain affiliated parties 
in the home market. On March 7, 2005, TKN filed a letter asking that it 
be required to report downstream sales information for only two of the 
affiliated parties identified in the Department's March 3, 2005, 
letter, ThyssenKrupp Schulte GmbH (TS) and EBOR Edelstahl GmbH (EBOR). 
The Department granted TKN's request and on March 28, 2005, TKN 
submitted home market sales information for TS and EBOR. On April 14, 
2005, the Department issued a supplemental questionnaire for sections 
A, B, and C,

[[Page 45683]]

to which TKN responded on May 13, 2005.\2\ On May 5, 2005, the 
Department issued a supplemental questionnaire for section D. TKN 
responded to this supplemental questionnaire on June 2, 2005. On June 
23, 2005, TKN made an additional filing to its May 13, 2005, 
supplemental questionnaire response in which it provided information it 
had not been able to gather before May 13. We sent a final supplemental 
questionnaire to TKN on June 28, 2005, to which TKN responded on July 
11, 2005.
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    \1\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under review that it sells, and the manner in which 
it sells that merchandise in all of its markets. Section B requests 
a complete listing of all home market sales, or, if the home market 
is not viable, of sales in the most appropriate third-country market 
(this section is not applicable to respondents in non-market economy 
cases). Section C requests a complete listing of U.S. sales. Section 
D requests information on the cost of production of the foreign like 
product and the constructed value of the merchandise under review. 
Section E requests information on further manufacturing.
    \2\ Included in this supplemental questionnaire were questions 
regarding TKN's March 28, 2005, response regarding TS and EBOR.
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    Because it was not practicable to complete this review within the 
normal time frame, on March 28, 2005, we published in the Federal 
Register our notice of the extension of time limits for this review. 
Stainless Steel Sheet and Strips in Coils from Germany: Extension of 
Time Limit for Preliminary Results of Antidumping Duty Administrative 
Review, 70 FR 15616 (March 28, 2005). This extension established the 
deadline for these preliminary results as August 1, 2005.

Scope of the Order

    The products covered by this order are certain stainless steel 
sheet and strip in coils. Stainless steel is an alloy steel containing, 
by weight, 1.2 percent or less of carbon and 10.5 percent or more of 
chromium, with or without other elements. The subject sheet and strip 
is a flat-rolled product in coils that is greater than 9.5 mm in width 
and less than 4.75 mm in thickness, and that is annealed or otherwise 
heat treated and pickled or otherwise descaled. The subject sheet and 
strip may also be further processed (e.g., cold-rolled, polished, 
aluminized, coated, etc.) provided that it maintains the specific 
dimensions of sheet and strip following such processing. The 
merchandise subject to this order is currently classifiable in the 
Harmonized Tariff Schedule of the United States (HTS) at subheadings: 
7219.13.0031, 7219.13.0051, 7219.13.0071, 7219.1300.81\3\, 
7219.14.0030, 7219.14.0065, 7219.14.0090, 7219.32.0005, 7219.32.0020, 
7219.32.0025, 7219.32.0035, 7219.32.0036, 7219.32.0038, 7219.32.0042, 
7219.32.0044, 7219.33.0005, 7219.33.0020, 7219.33.0025, 7219.33.0035, 
7219.33.0036, 7219.33.0038, 7219.33.0042, 7219.33.0044, 7219.34.0005, 
7219.34.0020, 7219.34.0025, 7219.34.0030, 7219.34.0035, 7219.35.0005, 
7219.35.0015, 7219.35.0030, 7219.35.0035, 7219.90.0010, 7219.90.0020, 
7219.90.0025, 7219.90.0060, 7219.90.0080, 7220.12.1000, 7220.12.5000, 
7220.20.1010, 7220.20.1015, 7220.20.1060, 7220.20.1080, 7220.20.6005, 
7220.20.6010, 7220.20.6015, 7220.20.6060, 7220.20.6080, 7220.20.7005, 
7220.20.7010, 7220.20.7015, 7220.20.7060, 7220.20.7080, 7220.20.8000, 
7220.20.9030, 7220.20.9060, 7220.90.0010, 7220.90.0015, 7220.90.0060, 
and 7220.90.0080. Although the HTS subheadings are provided for 
convenience and customs purposes, the Department's written description 
of the merchandise under this order is dispositive.
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    \3\ Due to changes to the HTS numbers in 2001, 7219.13.0030, 
7219.13.0050, 7219.13.0070, and 7219.13.0080 are now 7219.13.0031, 
7219.13.0051, 7219.13.0071, and 7219.13.0081, respectively.
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    Excluded from the scope of the order are the following: (1) Sheet 
and strip that is not annealed or otherwise heat treated and pickled or 
otherwise descaled, (2) sheet and strip that is cut to length, (3) 
plate (i.e., flat-rolled stainless steel products of a thickness of 
4.75 mm or more), (4) flat wire (i.e., cold-rolled sections, with a 
prepared edge, rectangular in shape, of a width of not more than 9.5 
mm), and (5) razor blade steel. Razor blade steel is a flat-rolled 
product of stainless steel, not further worked than cold-rolled (cold- 
reduced), in coils, of a width of not more than 23 mm and a thickness 
of 0.266 mm or less, containing, by weight, 12.5 to 14.5 percent 
chromium, and certified at the time of entry to be used in the 
manufacture of razor blades. See chapter 72 of the HTS, ``Additional 
U.S. Note'' 1(d).
    Flapper valve steel is also excluded from the scope of the order. 
This product is defined as stainless steel strip in coils containing, 
by weight, between 0.37 and 0.43 percent carbon, between 1.15 and 1.35 
percent molybdenum, and between 0.20 and 0.80 percent manganese. This 
steel also contains, by weight, phosphorus of 0.025 percent or less, 
silicon of between 0.20 and 0.50 percent, and sulfur of 0.020 percent 
or less. The product is manufactured by means of vacuum arc remelting, 
with inclusion controls for sulphide of no more than 0.04 percent and 
for oxide of no more than 0.05 percent. Flapper valve steel has a 
tensile strength of between 210 and 300 ksi, yield strength of between 
170 and 270 ksi, plus or minus 8 ksi, and a hardness (Hv) of between 
460 and 590. Flapper valve steel is most commonly used to produce 
specialty flapper valves in compressors.
    Also excluded is a product referred to as suspension foil, a 
specialty steel product used in the manufacture of suspension 
assemblies for computer disk drives. Suspension foil is described as 
302/304 grade or 202 grade stainless steel of a thickness between 14 
and 127 microns, with a thickness tolerance of plus-or-minus 2.01 
microns, and surface glossiness of 200 to 700 percent Gs. Suspension 
foil must be supplied in coil widths of not more than 407 mm, and with 
a mass of 225 kg or less. Roll marks may only be visible on one side, 
with no scratches of measurable depth. The material must exhibit 
residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm 
over 685 mm length.
    Certain stainless steel foil for automotive catalytic converters is 
also excluded from the scope of this order. This stainless steel strip 
in coils is a specialty foil with a thickness of between 20 and 110 
microns used to produce a metallic substrate with a honeycomb structure 
for use in automotive catalytic converters. The steel contains, by 
weight, carbon of no more than 0.030 percent, silicon of no more than 
1.0 percent, manganese of no more than 1.0 percent, chromium of between 
19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of 
no more than 0.045 percent, sulfur of no more than 0.03 percent, 
lanthanum of less than 0.002 or greater than 0.05 percent, and total 
rare earth elements of more than 0.06 percent, with the balance iron.
    Permanent magnet iron-chromium-cobalt alloy stainless strip is also 
excluded from the scope of this order. This ductile stainless steel 
strip contains, by weight, 26 to 30 percent chromium, and 7 to 10 
percent cobalt, with the remainder of iron, in widths 228.6 mm or less, 
and a thickness between 0.127 and 1.270 mm. It exhibits magnetic 
remanence between 9,000 and 12,000 gauss, and a coercivity of between 
50 and 300 oersteds. This product is most commonly used in electronic 
sensors and is currently available under proprietary trade names such 
as ``Arnokrome III.''\4\
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    \4\ ``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

[[Page 45684]]

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.''\5\
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    \5\ ``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.''\6\
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    \6\ ``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).\7\ This steel is similar to AISI grade 420 but 
containing, by weight, 0.5 to 0.7 percent of molybdenum. The steel also 
contains, by weight, carbon of between 1.0 and 1.1 percent, sulfur of 
0.020 percent or less, and includes between 0.20 and 0.30 percent 
copper and between 0.20 and 0.50 percent cobalt. This steel is sold 
under proprietary names such as ``GIN4 Mo.'' The second excluded 
stainless steel strip in coils is similar to AISI 420-J2 and contains, 
by weight, carbon of between 0.62 and 0.70 percent, silicon of between 
0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent, 
phosphorus of no more than 0.025 percent and sulfur of no more than 
0.020 percent. This steel has a carbide density on average of 100 
carbide particles per 100 square microns. An example of this product is 
``GIN5'' steel. The third specialty steel has a chemical composition 
similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent, 
molybdenum of between 1.15 and 1.35 percent, but lower manganese of 
between 0.20 and 0.80 percent, phosphorus of no more than 0.025 
percent, silicon of between 0.20 and 0.50 percent, and sulfur of no 
more than 0.020 percent. This product is supplied with a hardness of 
more than Hv 500 guaranteed after customer processing, and is supplied 
as, for example, ``GIN6.''\8\
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    \7\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \8\ ``GIN4 Mo,'' ``GIN5'' and ``GIN6'' are the proprietary 
grades of Hitachi Metals America, Ltd.
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Affiliation/Collapsing

    Section 351.401(f)(1) of the Department's regulations provides that 
certain persons found to be affiliated in accordance with Section 
771(33) of the Tariff Act of 1930, as amended (the Tariff Act), may be 
treated as a single entity (collapsed), if certain circumstances exist. 
In previous administrative reviews of stainless steel sheet and strip 
in coils from Germany, the Department treated TKN and TKVDM as a single 
entity (i.e., collapsed them) because the two companies were 
affiliated, would not need to engage in major retooling to shift 
production of S4 from one company to the other and were capable, 
through their sales and production operations, of manipulating prices 
or affecting production decisions. Stainless Steel Sheet and Strip in 
Coils From Germany; Notice of Final Results of Antidumping Duty 
Administrative Review, 68 FR 6716 (February 10, 2003) (2000-2001 Final 
Results), Memorandum to Faryar Shirzad, Assistant Secretary for Import 
Administration, ``Issues and Decision Memorandum for the Administrative 
Review of Stainless Steel Sheet and Strip in Coils from Germany: July 
1, 2000, through June 30, 2001,'' dated February 10, 2003, at comment 
1, and Stainless Steel Sheet and Strip in Coils From Germany; Notice of 
Preliminary Results of Antidumping Duty Administrative Review, 67 FR 
51199 (August 7, 2002); Stainless Steel Sheet and Strip in Coils From 
Germany; Notice of Final Results of Antidumping Duty Administrative 
Review, 69 FR 6262 (February 10, 2004) (2001-2002 Final Results) and 
Stainless Steel Sheet and Strip in Coils From Germany; Notice of Final 
Results of Antidumping Duty Administrative Review, 69 FR 75930 
(December 20, 2004) (2002-2003 Final Results).
    As in prior administrative reviews, the record establishes that 
both TKN and TKVDM are affiliated based on their common control by 
ThyssenKrupp Stainlesss GmbH (TKS), another entity within the 
ThyssenKrupp group of companies. Section 771(33)(F) of the Tariff Act, 
provides that two or more persons directly or indirectly controlling, 
controlled by, or under common control of another entity are 
affiliated. A ``person'' may be an individual, corporation, or group. 
Further, as provided by 771(33) of the Tariff Act, ``a person shall be 
considered to control another person if the person is legally or 
operationally in a position to exercise restraint or direction over the 
other person.'' The Department has analyzed the information on the 
record of this administrative review regarding the affiliation of TKN 
and TKVDM and has determined preliminarily that TKN and TKVDM should be 
considered affiliated under section 771(33)(F) of the Tariff Act. For a 
detailed discussion, see the Memorandum to Barbara E. Tillman, Acting 
Deputy Assistant Secretary for AD/CVD Operations, ``Antidumping Duty 
Administrative Review of Stainless Steel Sheet and Strip in Coils from 
Germany: Affiliation Issue regarding ThyssenKrupp Nirosta GmbH, 
ThyssenKrupp Nirosta Pr[auml]zisionsband GmbH and ThyssenKrupp VDM 
GmbH,'' dated July 21, 2005 (Collapsing Memorandum).
    Moreover, the Department has determined preliminarily that TKN and 
TKVDM should be treated as a single entity or ``collapsed'' for the 
purpose of calculating an antidumping duty margin. As explained in the 
Collapsing Memorandum, TKN and TKVDM have production facilities to 
produce similar or identical merchandise without substantial retooling 
and should be treated as a single entity in accordance with 19 CFR 
351.401(f)(1). Additionally, in determining whether there is a 
significant potential for manipulation of price or production, as 
contemplated by 19 CFR 351.401(f)(2), the Department considers the 
totality of the circumstances of the situation and may place more 
reliance on some factors than others. The totality of the circumstances 
here shows there is a significant potential for the manipulation of 
price or production.
    Because the Department relied on both proprietary and non-
proprietary information in making its preliminary finding, a more 
detailed description of the circumstances that led to the Department's 
finding is not possible here. A more complete discussion of these 
circumstances and the

[[Page 45685]]

Department's decision can be found in the Collapsing Memorandum.
    In sum, applying the criteria set forth in the Collapsing 
Memorandum, we find that: (1) TKN and TKVDM are affiliated under 
section 771(33)(F) of the Tariff Act; (2) a shift in production would 
not require substantial retooling of the facilities of either company; 
and (3) there is a significant potential for price and production 
manipulation due to the significant degree of common ownership, 
interlocking board members, and the intertwined nature of operations 
between the two companies. Therefore, the Department preliminarily 
finds that TKN and TKVDM are affiliated and should be treated as a 
single entity or ``collapsed'' for the purpose of calculating an 
antidumping duty margin for this administrative review.
    In addition to TKN and TKVDM, we also preliminarily find that TKN 
and TKNP should be treated as a single entity or ``collapsed'' for the 
purpose of this administrative review. During the POR, on October 1, 
2003, TKN's Dahlerbr[uuml]ck Works were incorporated into a separate 
legal entity called TKNP. TKNP is wholly-owned by TKN. See TKN's 
September 29, 2004, questionnaire response at A-7, footnote 2 and at A-
8. Section 771(33)(E) of the Tariff Act provides any person directly or 
indirectly owning, controlling, or holding with power to vote, five 
percent or more of the voting stock or shares of any organization is 
affiliated with the entity it owns or controls. Section 771(33)(G) 
provides that any entity controlled by another entity is affiliated 
with the controlling entity. In this case, because TKN controls TKNP 
through its 100 percent ownership of TKNP, we have preliminarily found 
that the two entities are affiliated within the meaning of section 
771(E) and (G) of the Tariff Act.
    As noted above, prior to October 1, 2003, TKNP's operations were 
conducted as an integral part of TKN. See id. There is no evidence on 
the record that TKNP uses substantially different production processes 
now that it is incorporated as a separate legal entity. Although TKNP 
does not cast its own stainless steel sheet, it purchases hot-rolled, 
annealed, and pickled (HRAP) or cold-rolled stainless steel sheet in 
coils from TKN and produces stainless steel sheet and strip in width 
and thickness ranges that span much of the width and thickness ranges 
that TKN can produce. See the Collapsing Memorandum. Thus, TKN and TKNP 
have production facilities to produce similar or identical merchandise 
that would not require substantial retooling and should be treated as a 
single entity in keeping with 19 CFR 351.401(f)(1). In addition, as 
discussed in detail in the Collapsing Memorandum, the information on 
the record demonstrates there is a significant potential for the 
manipulation of price or production within the meaning of 19 CFR 
351.401(f)(2). Specifically, TKN's whole ownership of TKNP and the 
intertwined nature of the two companies' operations are indicative of a 
significant potential for the manipulation of price or production. In 
summary, we find that: (1) TKN and TKNP are affiliated within the 
meaning of section 771(33)(E) and (G) of the Tariff Act; (2) a shift in 
production would not require substantial retooling of the facilities of 
either company; and (3) there is a significant potential for price and 
production manipulation due to the level of common ownership and the 
intertwined nature of operations between the two companies. As a 
result, the Department preliminarily finds that TKN and TKNP are also 
affiliated and also should be treated as a single entity or 
``collapsed'' for the purpose of calculating an antidumping duty margin 
for this administrative review.

Use of Partial Facts Available Regarding Downstream Sales by an 
Affiliated Home Market Reseller

    As part of its normal business practice, TKN sells all of its 
merchandise with physical defects to its affiliate, Nirosta Service 
Center (NSC). See TKN's July 11, 2005, supplemental questionnaire 
response at 1. NSC may process this material or it may sell the 
material in its original condition. Merchandise that is not processed 
by NSC is sold in the same condition in which it was received into 
inventory. See TKN's November 9, 2004, questionnaire response at B-5 
and TKN's May 13, 2005, supplemental questionnaire response at B-2.
    In its April 14, 2005, supplemental questionnaire, the Department 
asked TKN to explain any circumstances wherein TKN re-classifies prime 
merchandise as non-prime merchandise based on time in inventory. In its 
May 13, 2005, supplemental questionnaire response, TKN replied that it 
generally re-classifies merchandise that has been in inventory for more 
than 12 months as non-prime. See TKN's May 13, 2005, supplemental 
questionnaire response at B-3.
    TKN used NSC's invoicing system as the basis for its sales listing. 
In its May 13, 2005, supplemental questionnaire response at B-2, TKN 
indicated that NSC maintains information in its inventory system on 
whether merchandise was considered prime or non-prime by TKN as well as 
information on physical defects. However, TKN indicated that NSC does 
not maintain this information in its invoicing system and that NSC's 
invoicing and inventory systems cannot be linked. TKN indicated that 
NSC's invoicing system does differentiate between merchandise 
reprocessed by NSC and merchandise sold in the original condition in 
which it was received in inventory. Therefore, since TKN used NSC's 
invoicing system as the basis for its sales listing, and since NSC's 
invoicing system does not differentiate between prime and non-prime 
merchandise, TKN has reported in its sales listing sales of merchandise 
reprocessed by NSC as prime and sales sold directly from NSC's 
inventory as non-prime. See id. at B-2.
    In its second supplemental questionnaire dated June 28, 2005, the 
Department asked TKN to revise its database such that only merchandise 
with physical defects was reported as non-prime. TKN replied in its 
July 11, 2005, supplemental questionnaire response that while 
information on whether merchandise was classified as prime or non-prime 
and on the types of defects was recorded in NSC's inventory system, 
there was no way to link electronically the inventory system to the 
invoicing system. See TKN's July 11, 2005, supplemental questionnaire 
response at question 2. TKN also stated it did not have sufficient time 
to manually compile the required information from its invoices within 
the time granted to respond to the Department's supplemental 
questionnaire. See id.
    Because TKN did not identify as prime merchandise sales of 
merchandise that was reclassified as non-prime based on time in 
inventory, TKN has not provided all of the information necessary to 
complete our analysis. Section 776(a)(1) of the Tariff Act provides 
that the Department will, subject to section 782(d) of the Tariff Act, 
use the facts otherwise available in reaching a determination if 
``necessary information is not available on the record.'' Therefore, in 
accordance with section 776(a)(1) of the Tariff Act, for these 
preliminary results we find it necessary to use partial facts available 
with regard to TKN's home market sales of non-prime material made 
through NSC. For these preliminary results, we have classified all of 
NSC's sales of non-prime merchandise as sales of prime merchandise for 
the purpose of conducting the margin calculation. The Department finds 
that TKN complied, to the best of its ability, with the Department's 
request for information.

[[Page 45686]]

Therefore, we have not used an adverse inference, as provided under 
section 776(b) of the Tariff Act, in classifying NSC's sales.

Fair Value Comparisons

    To determine whether sales of S4 in the United States were made at 
less than fair value, we compared U.S. price to normal value (NV), as 
described in the ``Constructed Export Price'' and ``Normal Value'' 
sections of this notice. In accordance with section 777A(d)(2) of the 
Tariff Act, we calculated monthly weighted-average NVs and compared 
these to individual U.S. transactions. Because TKN made no ``export 
price'' transactions during the POR, we used only Constructed Export 
Price (CEP) sales in our comparisons.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by TKN 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 preference): 1) grade; 2) 
cold/hot rolled; 3) gauge; 4) surface finish; 5) metallic coating; 6) 
non-metallic coating; 7) width; 8) temper; and 9) edge trim. Where 
there were no sales of identical merchandise in the home market to 
compare to U.S. sales, we compared U.S. sales to the next most similar 
foreign like product on the basis of the product characteristics and 
reporting instructions listed in the Department's September 8, 2004, 
questionnaire. Where there were no sales of identical or similar 
merchandise in the home market suitable for comparison to U.S. sales, 
we compared these U.S. sales to constructed value (CV), pursuant to 
section 773(a)(4) of the Tariff Act.

Constructed Export Price (CEP)

    In accordance with section 772(b) of the Tariff 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, as adjusted under 
subsections (c) and (d). In accordance with subsection 772(b) of the 
Tariff Act, we used CEP for all of TKN's U.S. sales because it sold 
merchandise to affiliated companies in the United States,\9\ which in 
turn sold subject merchandise to unaffiliated U.S. customers. TKN 
reported that sales made through its affiliated importers, ThyssenKrupp 
Nirosta North America, Inc. (TKNNA), TK Specialty Steels Canada 
(TKSSC), and ThyssenKrupp VDM USA, Inc. (TKVDMUSA), consisted of two 
channels of distribution, back-to-back sales and inventory sales. See 
ThyssenKrupp Nirosta's November 9, 2004, questionnaire response at C-17 
and TKVDM's November 9, 2004, questionnaire response at C-16. We have 
preliminarily found that TKN's U.S. sales are properly classified as 
CEP sales because these sales occurred in the United States and were 
made through TKN's U.S. affiliates to unaffiliated U.S. customers.
---------------------------------------------------------------------------

    \9\ One of the affiliated companies through which TKN sold 
subject merchandise to unaffiliated U.S. customers was TK Specialty 
Steels Canada.
---------------------------------------------------------------------------

    We based CEP on the packed, delivered, duty paid or FOB warehouse 
prices to unaffiliated purchasers in the United States. We made 
adjustments for price or billing errors and early payment discounts, 
where applicable. We also made deductions for movement expenses in 
accordance with section 772(c)(2)(A) of the Tariff Act; these included, 
where appropriate, foreign inland freight, foreign brokerage and 
handling, international freight, marine insurance, war risk insurance, 
U.S. customs duties, U.S. brokerage, U.S. inland freight, and U.S. 
warehousing expenses. In accordance with section 772(d)(1) of the 
Tariff Act, we deducted those selling expenses associated with economic 
activities occurring in the United States, including direct selling 
expenses (credit costs, warranty expenses, and commissions), inventory 
carrying costs, and indirect selling expenses. We also made an 
adjustment for profit in accordance with section 772(d)(3) of the 
Tariff Act. Finally, for those sales in which 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 TKN.

Normal Value

A. Selection of Comparison Market
    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 
(i.e., the aggregate volume of home market sales of the foreign like 
product was equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared the respondent's volume of home 
market sales of the foreign like product to the volume of U.S. sales of 
the subject merchandise, in accordance with section 773(a)(1) of the 
Tariff Act. As TKN'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 of the subject merchandise, we determined the home 
market was viable. Therefore, we have based NV on home market sales in 
the usual commercial quantities and in the ordinary course of trade.
B. Affiliated-Party Transactions and Arm's-Length Test
    Sales to affiliated customers in the home market not made at arm's-
length prices (if any) were excluded from our analysis because we 
considered them to be outside the ordinary course of trade. If sales 
were not made at arm's-length, then the Department used the sale from 
the affiliated party to the first unaffiliated party. See 19 CFR 
351.102. To test whether 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 early payment 
discounts, movement charges, direct selling expenses, and packing. 
Where, for the tested models of subject merchandise, prices to the 
affiliated party were, on average, between 98 and 102 percent of the 
price of identical or comparable merchandise to the unaffiliated 
parties, we determined that sales made to the affiliated party were at 
arm's length. See 19 CFR 351.403(c). In instances where no price ratio 
could be calculated for an affiliated customer because identical 
merchandise was not sold to unaffiliated customers, we were unable to 
determine whether these sales were made at arm's-length prices and, 
therefore, excluded them from our analysis.
C. Cost of Production Analysis
    In the segment of this proceeding most recently completed at of the 
time of our initiation of this review, the Department disregarded 
certain sales made by TKN in the home market because these sales were 
made at less than their cost of production (COP). Stainless Steel Sheet 
and Strip in Coils from Germany; Notice of Final Results of Antidumping 
Duty Administrative Review, 69 FR 6262 (February 10, 2004) and 
Stainless Steel Sheet and Strip in Coils from Germany; Notice of 
Preliminary Results of Antidumping Duty Administrative Review, 69 FR 
47039, 47041 (August 7, 2003). Thus, in accordance with section 
773(b)(2)(A)(ii) of the Tariff Act, there are reasonable

[[Page 45687]]

grounds to believe or suspect that sales of the foreign like product in 
the home market were made at prices below their COP in the current 
review period. Accordingly, pursuant to section 773(b)(1) of the Tariff 
Act, we initiated a cost investigation to determine whether sales made 
during the POR were at prices below their respective COP.
D. Calculation of Cost of Production
    In accordance with section 773(b)(3) of the Tariff Act, we 
calculated COP based on the sum of the cost of materials and 
fabrication for the foreign like product, plus an amount for home 
market selling, general and administrative (SG&A) expenses, interest 
expenses, and packing costs. We relied on the COP data submitted by 
TKN, except for the changes noted below.
    In accordance with section 773(f)(2) of the Tariff Act, where TKN's 
reported transfer prices for purchases of nickel from an affiliated 
party were not at arm's-length, we increased these prices to reflect 
the prevailing market prices. See memorandum to Neal Halper, ``Cost of 
Production and Constructed Value Adjustments for the Preliminary 
Results,'' dated August 1, 2005 (COP/CV Adjustment memorandum). We also 
revised the interest expense ratio for TKN, TKVDM, and TKNP to exclude 
the short-term interest income related to accounts receivable and to 
include the net miscellaneous financial expense. See id. Finally, we 
revised TKVDM's general and administrative (G & A) expense rate to 
include other operating incomes and expenses. See id.
E. Test of Home Market Prices
    We compared the weighted-average COP of TKN's home market sales to 
home market sales prices (net of billing adjustments, early payment 
discounts, and any applicable movement charges) of the foreign like 
product as required under section 773(b) of the Tariff Act in order to 
determine whether these sales had been made at prices below the COP. In 
determining whether to disregard home market sales made at prices below 
the COP, we examined, in accordance with sections 773(b)(1)(A) and (B) 
of the Tariff Act, whether such sales were made in substantial 
quantities within an extended period of time, and whether such sales 
were made at prices which would permit recovery of all costs within a 
reasonable period of time.
F. Results of the Cost Test
    Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than 
20 percent of TKN's sales of a given model were at prices less than the 
COP, we did not disregard any below-cost sales of that model because 
these below-cost sales were not made in substantial quantities. Where 
20 percent or more of TKN's home market sales of a given model were at 
prices less than the COP, we disregarded the below-cost sales because 
such sales were made: (1) in substantial quantities within the POR 
(i.e., within an extended period of time) in accordance with section 
773(b)(2)(B) of the Tariff Act, and (2) at prices which would not 
permit recovery of all costs within a reasonable period of time, in 
accordance with section 773(b)(2)(D) of the Tariff Act (i.e., the sales 
were made at prices below the weighted-average per-unit COP for the 
POR). We used the remaining sales as the basis for determining NV, if 
such sales existed, in accordance with section 773(b)(1) of the Tariff 
Act.
G. Price-to-Price Comparisons
    We calculated NV based on prices to unaffiliated customers or 
prices to affiliated customers that we determined to be at arm's 
length. We made adjustments for billing adjustments, early payment 
discounts, and rebates, where appropriate. We made deductions, where 
appropriate, for foreign inland freight and warehousing, pursuant to 
section 773(a)(6)(B) of the Tariff Act. In addition, when comparing 
sales of similar merchandise, we made adjustments for differences in 
cost attributable to differences in physical characteristics of the 
merchandise (i.e., difmer) pursuant to section 773(a)(6)(C)(ii) of the 
Tariff Act and 19 CFR 351.411. We also made adjustments for differences 
in circumstances of sale (COS) in accordance with section 
773(a)(6)(C)(iii) of the Tariff Act and 19 CFR 351.410. We made COS 
adjustments for commissions, imputed credit expenses and warranty 
expenses; we offset imputed credit expenses by interest revenue. We 
also made an adjustment, where appropriate, for the CEP offset in 
accordance with section 773(a)(7)(B) of the Tariff Act. See ``Level of 
Trade and CEP Offset'' section below. In accordance with 19 CFR 
351.410(e), we made an adjustment (i.e., the commission offset) to 
account for commissions paid in one market but not the other. Finally, 
we deducted home market packing costs and added U.S. packing costs in 
accordance with sections 773(a)(6)(A) and (B) of the Tariff Act.
H. Constructed Value
    In accordance with section 773(a)(4) of the Tariff Act, we based NV 
on CV if we were unable to find a contemporaneous comparison market 
match of such or similar merchandise for the U.S. sale. Section 773(e) 
of the Tariff Act provides that CV shall be based on the sum of the 
cost of materials and fabrication employed in making the subject 
merchandise, SG&A expenses, profit, and U.S. packing costs. We 
calculated the cost of materials and fabrication for TKN based on the 
methodology described in the COP section of this notice. In accordance 
with section 773(e)(2)(A) of the Tariff Act, we based SG&A expenses and 
profit on the amounts incurred and realized by the respondent in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade, for consumption in the foreign country.

Level of Trade and CEP Offset

    In accordance with section 773(a)(1)(B)(i) of the Tariff Act, to 
the extent practicable, we determine NV based on sales in the 
comparison market at the same level of trade (LOT) as the CEP 
transaction. The NV LOT is based on the starting price sales in the 
comparison market or, when NV is based on CV, that of the sales from 
which we derive SG&A expenses and profit. For CEP, it is the level of 
the constructed sale from the exporter to the affiliated importer after 
the deductions required under section 772(d) of the Tariff 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. If the comparison market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Tariff Act. If the NV level is more remote from the 
factory than the CEP level and there is no basis for determining 
whether the differences in the levels between NV and CEP affect price 
comparability, we adjust NV under section 773(a)(7)(B) of the Tariff 
Act (the CEP offset provision). See, e.g., Certain Carbon Steel Plate 
from South Africa, Final Determination of Sales at Less Than Fair 
Value, 62 FR 61731, 61733 (November 19, 1997).
    In implementing these principles in this review, we asked TKN to 
identify the specific differences and similarities in selling functions 
and support services between all phases of marketing in the home market 
and the United States.

[[Page 45688]]

TKN reported home market sales made through four channels of 
distribution: (1) mill direct sales, (2) mill inventory sales, (3) 
service center inventory sales, and (4) service center processed sales. 
See TKN's November 9, 2004, questionnaire response at B-21, TKVDM's 
November 9, 2004, questionnaire response at B-21, and the March 28, 
2005, supplemental questionnaire response for TS and EBOR at B-17. For 
all channels, TKN performs similar selling functions such as 
negotiating prices with customers, setting credit terms and collecting 
payment, arranging freight to the customer, conducting sales calls and 
visits, and processing customer orders. See, e.g., TKN's September 29, 
2004, questionnaire response at Exhibit 3. The remaining selling 
activities did not differ significantly by channel of distribution. 
Because channels of distribution do not qualify as separate levels of 
trade when the selling functions performed for each customer class or 
channel are sufficiently similar, we determined that one level of trade 
exists for TKN's home market sales. See, e.g., Certain Stainless Steel 
Butt-Weld Pipe Fittings from Taiwan: Final Results and Final Rescission 
in Part of Antidumping Duty Administrative Review, 67 FR 78417 
(December 24, 2002).
    In the U.S. market, TKN made sales of subject merchandise through 
TKNNA, TKSSC, and TKVDMUSA. As stated above, TKN reported that sales 
made through these affiliated importers consisted of two channels of 
distribution, back-to-back sales and inventory sales. See ThyssenKrupp 
Nirosta's November 9, 2004, questionnaire response at C-17 and TKVDM's 
November 9, 2004, questionnaire response at C-16. All U.S. sales were 
CEP transactions and TKN performed the same selling functions in its 
sale to the affiliated importer in each instance. See, e.g., TKN's 
September 29, 2004, questionnaire response at Exhibit 3. Therefore, the 
U.S. market has one LOT.
    When we compared CEP sales (after deductions made pursuant to 
section 772(d) of the Tariff Act) to home market sales, we determined 
that for CEP sales TKN performed fewer customer sales contacts, 
technical services, delivery services, and warranty services. In 
addition, the differences in selling functions performed for home 
market and CEP transactions indicate that home market sales involved a 
more advanced stage of distribution than CEP sales. In the home market 
TKN provides marketing further down the chain of distribution by 
providing certain downstream selling functions that are normally 
performed by the affiliated resellers in the U.S. market (e.g., 
technical advice, sales calls and visits, etc.).
    Based on our analysis, we determined that CEP and the starting 
price of home market sales represent different stages in the marketing 
process, and are thus at different LOTs. Therefore, when we compared 
CEP sales to HM sales, we examined whether a LOT adjustment may be 
appropriate. In this case TKN sold at one LOT in the home market; 
therefore, there is no basis upon which to determine whether there is a 
pattern of consistent price differences between LOTs. Further, we do 
not have the information which would allow us to examine pricing 
patterns of TKN's sales of other similar products, and there is no 
other record evidence upon which such an analysis could be based.
    Because the data available do not provide an appropriate basis for 
making a LOT adjustment and the LOT of TKN's home market sales is at a 
more advanced stage than the LOT of CEP sales, a CEP offset is 
appropriate in accordance with section 773(a)(7)(B) of the Tariff Act, 
as claimed by TKN. We based the amount of the CEP offset on home market 
indirect selling expenses, and limited the deduction for home market 
indirect selling expenses to the amount of indirect selling expenses 
deducted from CEP in accordance with section 772(d)(1)(D) of the Tariff 
Act. We applied the CEP offset to NV, whether based on home market 
prices or CV.

Currency Conversions

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

Preliminary Results of Review

    As a result of our review, we preliminarily find the following 
weighted-average dumping margin exists for the period July 1, 2003, 
through June 30, 2004:

------------------------------------------------------------------------
                                                       Weighted Average
               Manufacturer / Exporter                      Margin
                                                         (percentage)
------------------------------------------------------------------------
TKN.................................................                8.10
------------------------------------------------------------------------

    The Department will disclose calculations performed within five 
days of the date of publication of this notice in accordance with 19 
CFR 351.224(b). An interested party may request a hearing within thirty 
days of publication. See 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 pursuant 
to 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 written comments should 
provide the Department with an additional copy of the public version of 
any such comments on diskette. The Department will issue final results 
of this administrative review, including the results of our analysis of 
the issues in any such written comments or at a hearing, within 120 
days of publication of these preliminary results.
    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. Upon completion of this 
administrative review, pursuant to 19 CFR 351.212(b), the Department 
will calculate an assessment rate on all appropriate entries. TKN has 
reported entered values for its sales of subject merchandise to the 
U.S. during the POR. Therefore, in accordance with 19 CFR 
351.212(b)(1), we will calculate importer-specific duty assessment 
rates on the basis of the ratio of the total amount of antidumping 
duties calculated for the examined sales to the total entered value of 
the examined sales of that importer. These rates will be assessed 
uniformly on all entries the respective importers made during the POR 
if these preliminary results are adopted in the final results of 
review. Where the assessment rate is above de minimis, we will instruct 
Customs to assess duties on all entries of subject merchandise by that 
importer. The Department will issue appropriate appraisement 
instructions directly to Customs within fifteen days of publication of 
the final results of review.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of S4 from Germany entered, or withdrawn from warehouse, 
for consumption on or after the publication date of the final results 
of this administrative review, as provided by section 751(a)(1) of the 
Tariff Act:

[[Page 45689]]

    1) The cash deposit rate for TKN 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 conducted by the Department, the cash 
deposit rate will be the ``all others'' rate of 13.48 percent from the 
LTFV investigation. Notice of Amended Final Determination of 
Antidumping Duty Investigation: Stainless Steel Sheet and Strip in 
Coils from Germany, 67 FR 15178 (March 29, 2002).
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    We are issuing and publishing this notice in accordance with 
sections 751(a)(1) and 777(i)(1) of the Tariff Act.

    Dated: August 1, 2005.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. E5-4260 Filed 8-5-05; 8:45 am]
BILLING CODE 3510-DS-S