[Federal Register Volume 74, Number 234 (Tuesday, December 8, 2009)]
[Notices]
[Pages 64670-64677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-29237]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-809]


Circular Welded Non-Alloy Steel Pipe from the Republic of Korea: 
Preliminary Results and Rescission in Part of the Antidumping Duty 
Administrative Review

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

SUMMARY: In response to requests from interested parties, the 
Department of Commerce (``the Department'') is conducting an 
administrative review of the antidumping duty order on circular welded 
non-alloy steel pipe (``CWP'') from the Republic of Korea (``Korea''). 
The period of review (``POR'') is November 1, 2007, through October 31, 
2008. This review covers multiple exporters/producers, one of which is 
being individually reviewed as a mandatory respondent. We preliminarily 
determine the mandatory respondent made sales of the subject 
merchandise at prices below normal value (``NV''). We have assigned the 
remaining respondents the margin calculated for the mandatory 
respondent. If these preliminary results are adopted in our final 
results, we will instruct U.S. Customs and Border Protection (``CBP'') 
to assess antidumping duties on all appropriate entries. Interested 
parties are invited to comment on these preliminary results.

DATES: Effective Date: December 8, 2009.

FOR FURTHER INFORMATION CONTACT: Alexander Montoro or Nancy Decker, AD/
CVD Operations, Office 1, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington DC 20230; telephone (202) 482-0238 
or (202) 482-0196, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On November 2, 1992, the Department published an antidumping duty 
order on CWP from Korea. See Notice of Antidumping Duty Orders: Certain 
Circular Welded Non-Alloy Steel Pipe from Brazil, the Republic of Korea 
(Korea), Mexico, and Venezuela, and Amendment to Final Determination of 
Sales at Less Than Fair Value: Certain Circular Welded Non-Alloy Steel 
Pipe from Korea, 57 FR 49453 (November 2, 1992) (``CWP Order''). On 
November 28, 2008, Nexteel Co., Ltd. (``Nexteel'') and A-JU-Besteel 
Co., Ltd. (``A-JU-Besteel'') timely requested an administrative review 
of the antidumping duty order on CWP from Korea for the period November 
1, 2007, through October 31, 2008. On December 1, 2008, Wheatland Tube 
Company (``Wheatland'') and United States Steel Corporation (``U.S. 
Steel''), manufacturers of the domestic like product, also timely 
requested a review. Wheatland requested the Department conduct an 
administrative review of the following producers and/or exporters of 
the subject merchandise: SeAH Steel Corporation (``SeAH''); Hyundai 
HYSCO; Husteel Co., Ltd. (``Husteel''); Daewoo International 
Corporation (``Daewoo''); Miju Steel Making Co. (``Miju''); Samsun 
Steel Co., Ltd. (``Samsun''); Kukje Steel Co., Ltd. (``Kukje''); 
Nexteel; MSteel Co., Ltd.; Kumkang Industrial Co., Ltd. (``Kumkang''); 
Histeel Co., Ltd.; Hyundai Corporation; Dongbu Steel Co., Ltd.; Dong-A-
Steel Co., Ltd. (``Dong-A''); Korea Iron & Steel Co., Ltd.; Union Pipe 
Manufacturing Co., Ltd. (``Union Pipe''); Union Steel Co., Ltd; Tianjin 
Huanbohai Import & Export Co. (``Huanbohai''); Huludao Steel Pipe 
Industrial Co., Ltd.; Huludao City Steel Pipe; Benxi Northern Steel 
Pipes Co. (``Benxi Northern''); and Tianjin Shuangjie Steel Pipe Co. 
(``Shuangjie''). U.S. Steel requested the Department conduct an 
administrative review of the following producers of subject 
merchandise: Husteel; Hyundai HYSCO; Nexteel; Samsun; and SeAH. On 
December 24, 2008, the Department published a notice of initiation of 
an administrative review of the antidumping duty order on CWP from 
Korea. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Request for Revocation in Part, 73 FR 79055 
(December 24, 2008) (``Initiation Notice'').
    On January 13, 2009, Wheatland and U.S. Steel withdrew their 
requests for a review of Husteel. On March 23, 2009, Wheatland withdrew 
its request for the following companies: Daewoo; Miju; Samsun; Kukje; 
MSteel Co., Ltd.; Histeel Co., Ltd.; Hyundai Corporation; Dong-A; Union 
Pipe; Huanbohai; Huludao Steel Pipe Industrial Co., Ltd.; Huludao City 
Steel Pipe; Benxi Northern; and Shuangjie. On March 24, 2009, U.S. 
Steel withdrew its request for a review of Samsun. The Department 
published a notice of partial rescission for the companies mentioned 
above on April 14, 2009. See Circular Welded Non-Alloy Steel Pipe from 
the Republic of Korea: Partial Rescission of Antidumping Duty 
Administrative Review, 74 FR 17158 (April 14, 2009).
    In our initiation notice, we indicated that we would select 
mandatory respondents for review based upon CBP data, and that we would 
limit the respondents selected for individual review in accordance with 
section 777A(c)(2) of the Tariff Act of 1930, as amended (``the Act''). 
See Initiation Notice, 73 FR at 79055. In January 2009, we received 
comments on the issue of respondent selection from Nexteel and 
Wheatland.
    On February 11, 2009, after considering the resources available to 
the Department, we determined that it was not practicable to examine 
all producers/exporters of subject merchandise for which a review was 
requested. As a result, we selected the two largest producers/exporters 
of CWP from Korea during the POR for individual review in this segment 
of this proceeding, pursuant to section 777A(c)(2)(B) of the Act. These 
mandatory respondents were SeAH and Kumkang. See Memorandum from Joseph 
Shuler, International Trade Compliance Analyst, to John M. Andersen, 
Acting Deputy Assistant Secretary for Antidumping and Countervailing 
Duty Operations, ``Selection of Respondents for the Antidumping Duty 
Review of Circular Welded Non-Alloy Steel Pipe from the Republic of 
Korea,'' dated February 11, 2009.
    On January 23, 2009, Wheatland submitted a request for a duty 
absorption determination for a number of producers or exporters subject 
to this review, including SeAH. The Court of Appeals for the Federal 
Circuit found that the Department lacks authority to conduct two-and 
four-year duty absorption inquiries for transitional orders (orders in 
effect before January 1, 1995). See FAG Italia S.p.A. v. United States, 
291 F.3d 806, 819 (Fed. Cir. 2002). Since the order for this case is 
from 1992, we have not conducted a duty absorption inquiry in this 
proceeding.
    On February 12, 2009, we issued the antidumping questionnaire to 
SeAH and Kumkang. We received section A responses from SeAH and Kumkang 
on March 5, 2009, and March 20, 2009, respectively. We received the 
sections B, C and D response from SeAH on April 7, 2009, and we 
received the

[[Page 64671]]

sections B and C response from Kumkang on April 14, 2009.
    On April 29, 2009, Wheatland and U.S. Steel separately alleged that 
Kumkang made comparison home market sales of CWP at prices below the 
cost of production (``COP'') during the POR. We requested additional 
information from Wheatland, which we received on May 21, 2009. On June 
11, 2009, the Department initiated an investigation to determine 
whether Kumkang's sales of CWP were made at prices below the COP during 
the POR. See Memorandum from The Team to Susan Kuhbach, Director, 
Office 1, AD/CVD Enforcement, ``The Petitioner's Allegation of Sales 
Below the Cost of Production for Kumkang Industrial Co., Ltd.,'' dated 
June 11, 2009. As a result, on June 12, 2009, the Department requested 
Kumkang respond to section D of the questionnaire. We received a 
response from Kumkang on July 24, 2009.
    On July 31, 2009, Wheatland withdrew its request for a review of 
Kumkang. Wheatland is the only party to have requested a review of 
Kumkang. Pursuant to 19 CFR 351.213(d)(l), the Department will rescind 
an administrative review, in whole or in part, if the party that 
requested a review withdraws the request within 90 days of the date of 
publication of the notice of initiation of the requested review. 
Although Wheatland withdrew its request for Kumkang after the 90-day 
period, the Department did not dedicate extensive time and resources to 
this review, only having issued a supplemental questionnaire to 
Kumkang. The Department published a notice of partial rescission for 
Kumkang on August 24, 2009. See Circular Welded Non-Alloy Steel Pipe 
From the Republic of Korea: Partial Rescission of Antidumping Duty 
Administrative Review, 74 FR 42649 (August 24, 2009).
    On September 21, 2009, we issued a supplemental questionnaire for 
sections A, B and C to SeAH and received a response to our supplemental 
for section A on October 15, 2009 (``Supplemental A Response''), and a 
response to our supplemental on sections B and C on October 20, 2009. 
We sent supplemental questionnaires for section D to SeAH on May 27, 
July 30, and September 14, 2009, and received responses on June 24, 
August 26, and October 9, 2009.
    On July 22, 2009, the Department published in the Federal Register 
an extension of the time limit for the completion of the preliminary 
results of this review until no later than November 30, 2009, in 
accordance with section 751(a)(3)(A) of the Act, and 19 CFR 
351.213(h)(2). See Circular Welded Non-Alloy Steel Pipe from the 
Republic of Korea: Extension of Time Limit for Preliminary Results of 
the Antidumping Duty Administrative Review, 74 FR 36164 (July 22, 
2009).

Partial Rescission

    On January 23, 2009, Hyundai HYSCO submitted a letter to the 
Department certifying that the company made no shipments or entries for 
consumption in the United States of the subject merchandise during the 
POR.
    In response to the Department's query to CBP, CBP data showed POR 
entries for consumption of subject merchandise from Hyundai HYSCO may 
have entered U.S. customs territory during the POR. See Memorandum to 
the File from Joseph Shuler, ``Customs Documentation in the Antidumping 
Duty Administrative Review of Circular Welded Non-Alloy Steel Pipe from 
the Republic of Korea,'' dated September 8, 2009.
    On September 8, 2009, the Department asked Hyundai HYSCO to explain 
the apparent discrepancy between Hyundai HYSCO's claim that it did not 
export or sell any subject merchandise to the United States during the 
POR and the CBP information. Hyundai HYSCO responded on September 22, 
2009, re-affirming that it did not export or sell subject merchandise 
to the United States during the POR, and that it did not know or have 
reason to know that such merchandise would be exported to the United 
States during the POR.
    The Department has concluded that there is no evidence on the 
record that, at the time of sale, Hyundai HYSCO had knowledge that 
these entries were destined for the United States, nor is there 
evidence that Hyundai HYSCO had knowledge that any of these entries of 
subject merchandise entered the United States during the POR. See 
Memorandum to the File, from Joseph Shuler, International Trade 
Compliance Analyst, through Nancy Decker, Program Manager, AD/CVD 
Operations Office 1, ``Intent to Rescind the Antidumping Duty 
Administrative Review on Circular Welded Non-Alloy Steel Pipe from the 
Republic of Korea with respect to Hyundai HYSCO,'' dated November 12, 
2009 (``Intent to Rescind Memo''). On November 12, 2009, the Department 
notified interested parties of its intent to rescind this 
administrative review and provided interested parties until November 
23, 2009, to submit comments on the Intent to Rescind Memo. No 
interested party submitted any comments. Accordingly, we are rescinding 
this review with respect to Hyundai HYSCO.

Scope of the Order

    The merchandise subject to this review is circular welded non-alloy 
steel pipe and tube, of circular cross-section, not more than 406.4mm 
(16 inches) in outside diameter, regardless of wall thickness, surface 
finish (black, galvanized, or painted), or end finish (plain end, 
beveled end, threaded, or threaded and coupled). These pipes and tubes 
are generally known as standard pipes and tubes and are intended for 
the low-pressure conveyance of water, steam, natural gas, air, and 
other liquids and gases in plumbing and heating systems, air-
conditioning units, automatic sprinkler systems, and other related 
uses. Standard pipe may also be used for light load-bearing 
applications, such as for fence tubing, and as structural pipe tubing 
used for framing and as support members for reconstruction or load-
bearing purposes in the construction, shipbuilding, trucking, farm 
equipment, and other related industries. Unfinished conduit pipe is 
also included in this review.
    All carbon-steel pipes and tubes within the physical description 
outlined above are included within the scope of this review except line 
pipe, oil-country tubular goods, boiler tubing, mechanical tubing, pipe 
and tube hollows for redraws, finished scaffolding, and finished 
conduit. In accordance with the Department's Final Negative 
Determination of Scope Inquiry on Certain Circular Welded Non-Alloy 
Steel Pipe and Tube From Brazil, the Republic of Korea, Mexico, and 
Venezuela, 61 FR 11608 (March 21, 1996), pipe certified to the API 5L 
line-pipe specification and pipe certified to both the API 5L line-pipe 
specifications and the less-stringent ASTM A-53 standard-pipe 
specifications, which falls within the physical parameters as outlined 
above, and entered as line pipe of a kind used for oil and gas 
pipelines is outside of the scope of the antidumping duty order.
    Imports of these products are currently classifiable under the 
following Harmonized Tariff Schedule (``HTS'') subheadings: 
7306.30.10.00, 7306.30.50.25, 7306.30.50.32, 7306.30.50.40, 
7306.30.50.55, 7306.30.50.85, and 7306.30.50.90. Although the HTS 
subheadings are provided for convenience and customs purposes, our 
written description of the scope of this proceeding is dispositive.

Application of Facts Available

    Section 776(a)(1) and (2) of the Act provides that the Department 
shall

[[Page 64672]]

apply ``facts otherwise available'' if, inter alia, necessary 
information is not on the record or an interested party or any other 
person (A) withholds information that has been requested, (B) fails to 
provide information within the deadlines established, or in the form 
and manner requested by the Department, subject to subsections (c)(1) 
and (e) of section 782 of the Act, (C) significantly impedes a 
proceeding, or (D) provides information that cannot be verified as 
provided by section 782(i) of the Act. Section 782(c)(1) of the Act 
provides that if an interested party, promptly after receiving a 
request from the Department for information, notifies the Department 
that such party is unable to submit the information requested in the 
requested form and manner, together with a full explanation and 
suggested alternative form in which such party is able to submit the 
information, the Department may modify the requirements to avoid 
imposing an unreasonable burden on that party. Section 782(e) of the 
Act states that the Department shall not decline to consider 
information deemed ``deficient'' if: (1) the information is submitted 
by the established deadline; (2) the information can be verified; (3) 
the information is not so incomplete that it cannot serve as a reliable 
basis for reaching the applicable determination; (4) the interested 
party has demonstrated that it acted to the best of its ability; and 
(5) the information can be used without undue difficulties.
    In section D, part IV of the February 12, 2009, questionnaire, the 
Department requested that SeAH provide one computer data file reporting 
the costs incurred to produce the merchandise sold in the U.S. market 
or the comparison market. On October 27, 2009, SeAH submitted its 
response to the Department's section D supplemental questionnaire, in 
which the Department requested SeAH report costs on a quarterly basis. 
The Department subsequently has discovered that there are 23 control 
numbers (``CONNUMs'') for which no costs has been reported in the 
latest COP database submitted by SeAH. Costs for these CONNUMs had 
previously been reported (on a POR basis) in the original COP database 
SeAH submitted on April 7, 2009.
    Because SeAH failed to report the quarterly cost data for certain 
CONNUMs, the Department has preliminary determined to apply facts 
available for these COPs, pursuant to section 776(a)(2)(A) and (B) of 
the Act. As partial facts available, the Department will use the cost 
of the next most similar CONNUM as a surrogate for the missing COP 
information. The Department will issue a supplemental questionnaire to 
SeAH seeking the COP data for these CONNUMs after the issuance of the 
preliminary results.

Date of Sale

    The Department normally will use the date of invoice, as recorded 
in the producer's or exporter's records kept in the ordinary course of 
business, as the date of sale, but may use a date other than the 
invoice date if the Department is satisfied that a different date 
better reflects the date on which the material terms of sale are 
established. See 19 CFR 351.401(i).
    For its home market sales, SeAH has reported the date the billing 
document is created in its accounting system as the date of sale. This 
is the date when the final price and quantity are set and is, in most 
cases, the same as the date of the shipping invoice.
    For its U.S. sales, SeAH reported the date of shipment from Korea 
as the date of sale because all U.S. sales are produced to order and 
the quantity ordered is subject to change between order and shipment. 
In addition, the shipment date from Korea always precedes the date of 
the invoice to the unaffiliated U.S. customer because SeAH's U.S. 
affiliate, Pusan Pipe America Inc. (``PPA''), does not invoice the 
unaffiliated U.S. customer until shortly after the subject merchandise 
enters into the United States. Because quantity is not finalized until 
shipment and the shipment date always precedes the invoice date to the 
U.S. customer, we are relying on the date of shipment from Korea as the 
U.S. date of sale.

Comparisons to Normal Value

    To determine whether SeAH's sales of CWP from Korea to the United 
States were made at less than normal value (``NV''), we compared 
constructed export price (``CEP'') to NV, as described in the 
``Constructed Export Price'' and ``Normal Value'' sections of this 
notice below.
    Pursuant to section 777A(d)(2) of the Act, we compared the CEP of 
individual U.S. transactions to monthly weighted-average NVs of the 
foreign-like product, where there were sales made in the ordinary 
course of trade, as discussed in the ``Cost of Production Analysis'' 
section below.
    We are using a quarterly costing approach, as described in the 
``Normal Value'' section below and, therefore, we have not made price-
to-price comparisons outside of a quarter to lessen the distortive 
effect of comparing non-contemporaneous sales prices during a period of 
significantly changing costs.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by SeAH that are covered by the description contained 
in the ``Scope of the Order'' section above and were sold in the home 
market during the POR to be the foreign like product for purposes of 
determining appropriate product comparisons to U.S. sales.
    We have relied on five criteria to match U.S. sales of subject 
merchandise to comparison market sales of the foreign like product: 1) 
grade; 2) actual pipe size in millimeters; 3) wall thickness; 4) 
surface finish; and 5) end-finish. Where there were no sales of 
identical merchandise in the comparison market made in the ordinary 
course of trade to compare to U.S. sales, we compared U.S. sales to the 
next most similar foreign like product on the basis of the 
characteristics listed above.

Level of Trade/Constructed Export Price Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (``LOT'') as the EP or CEP transaction. The LOT 
in the comparison market is the LOT of the starting-price sales or, 
when NV is based on CV, the LOT of the sales from which we derive 
selling, general and administrative (``SG&A'') expenses and profit. For 
CEP, the LOT is that of the constructed sale from the exporter to the 
affiliated importer. See 19 CFR 351.412(c)(ii). See also Micron 
Technology, Inc. v. United States, 243 F.3d 1301, 1314 (Fed. Cir. 
2001).
    Where it is not possible to make comparisons at the same LOT, the 
statute permits the Department to account for the different levels. See 
Section 773(a)(7)(A) of the Act. Specifically, if the comparison market 
sales are made at multiple LOTs, and the difference in LOTs 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, the Department makes 
an upward or downward LOT adjustment in accordance with section 
773(a)(7)(A) of the Act. See Notice of Preliminary Determination of 
Sales at Less Than Fair Value: Light-Walled Rectangular Pipe and Tube 
From Mexico, 73 FR 5515, 5522 (January 30, 2008) (``LWR Pipe from 
Mexico''). Alternatively, for

[[Page 64673]]

CEP sales, if the NV LOT is at a more advanced stage of distribution 
than the LOT of the CEP, but the data available do not provide an 
appropriate basis to determine a LOT adjustment, we reduce NV by the 
amount of indirect selling expenses incurred in the foreign comparison 
market on sales of the foreign like product, but by no more than the 
amount of the indirect selling expenses incurred for CEP sales. See 
section 773(a)(7)(B) of the Act (the CEP offset provision) and LWR Pipe 
from Mexico, 73 FR at 5522.
    To determine whether sales are made at different LOTs, we examine 
stages in the marketing process and selling functions along the chain 
of distribution between the producer and the unaffiliated customer. 
See, e.g., Notice of Preliminary Determination of Sales at Not Less 
Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip from 
Thailand, 73 FR 24565 (May 5, 2008); and LWR Pipe from Mexico, 
unchanged in Notice of Final Determination of Sales at Less Than Fair 
Value: Light-Walled Rectangular Pipe and Tube from Mexico, 73 FR 35649 
(June 24, 2008). In particular, we analyze whether different selling 
activities are performed, and whether any price differences (other than 
those for which other allowances are made under the Act) are shown to 
be wholly or partly due to a difference in LOT between the CEP and NV. 
In analyzing differences in selling functions, we determine whether the 
LOTs identified by the respondent are meaningful. See Antidumping 
Duties; Countervailing Duties, Final Rule, 62 FR 27296, 27371 (May 19, 
1997). If the claimed LOTs are the same, we expect that the functions 
and activities of the seller should be similar. Conversely, if a party 
claims that 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 Antidumping 
Duty Administrative Review, 65 FR 30068 (May 10, 2000) and accompanying 
Issues and Decision Memorandum at Comment 6.
    SeAH reported two channels of distribution in the comparison 
market, Korea): 1) direct sales to unaffiliated end-users and 
distributors; and 2) sales to affiliated companies. In the U.S. market, 
SeAH reported one LOT and one channel of distribution for the CEP sales 
made through its affiliated company in the United States, PPA. SeAH 
stated that its U.S. sales were made at a different, less advanced LOT 
than its comparison market sales. SeAH is not seeking a LOT adjustment, 
however, because it had no comparison market sales that were at the 
same LOT as the U.S. CEP sales. Instead, it claims that a CEP offset is 
warranted. See SeAH's section B questionnaire response at 18.
    In evaluating SeAH's claim, we examined its activities in each 
channel of distribution relating to four different types of selling 
functions: sales process and marketing support, freight and delivery, 
inventory maintenance and warehousing, and warranty and technical 
services. Based on our analysis, we preliminarily determine that SeAH's 
selling activities in the comparison market did not vary significantly 
by channel of distribution. See SeAH's Supplemental A Response at 
Exhibit A-42. Therefore, we preliminary determine that SeAH sold at one 
LOT in the comparison market. We further determine preliminarily that 
SeAH sold at one LOT in the U.S. market.
    We then compared the selling functions performed by SeAH for its 
U.S. sales to the selling functions performed for the single LOT in the 
comparison market. Record evidence indicates that SeAH undertakes 
significant activities in the comparison market related to the sales 
process and marketing support, as well as warehousing, that it does not 
undertake for its U.S. CEP sales. See Memorandum from Alexander 
Montoro, International Trade Compliance Analyst, to The File, Re: 
Preliminary Results Calculation Memorandum, dated November 30, 2009 
(``Analysis Memo'') and SeAH's Supplemental A Response at Exhibit A-42. 
These differences in selling functions performed for comparison market 
and CEP transactions indicate that SeAH's comparison market sales are 
made at a more advanced stage of distribution than its CEP sales. 
Consequently, we preliminarily determine that SeAH's comparison market 
and CEP sales are at different LOTs.
    As discussed above, the Department will make a LOT adjustment in 
these circumstances when the information exists to do so. In this case, 
because SeAH sold at one LOT in the comparison market, 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 
that would allow us to examine the price patterns of SeAH's sales of 
other similar products, and there is no other record evidence upon 
which a LOT adjustment could be based. Therefore, we have not made a 
LOT adjustment.
    Instead, in accordance with section 773(a)(7)(B) of the Act, we 
preliminarily determine that a CEP offset is appropriate to reflect 
that SeAH's comparison market sales are at a more advanced stage than 
the LOT of SeAH's CEP sales. We based the amount of the CEP offset on 
comparison market indirect selling expenses and limited the deduction 
to the amount of the indirect selling expenses deducted from CEP under 
section 772(d)(1)(D) of the Act. We applied the CEP offset to the NV-
CEP comparisons. For a detailed discussion, see Analysis Memo.

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.
    For purposes of this review, SeAH classified all of its export 
sales of CWP to the United States as CEP sales. During the POR, SeAH 
made sales in the United States through its U.S. affiliate, PPA, which 
then resold the merchandise to unaffiliated customers in the United 
States. The Department calculated CEP based on the packed, delivered 
prices to unaffiliated purchasers in the United States, net of early 
payment discounts and other discounts. We adjusted these prices for 
movement expenses, including foreign inland freight, international 
freight, marine insurance, foreign and U.S. brokerage and handling, and 
U.S. customs duties, in accordance with section 772(c)(2)(A) of the 
Act.
    In accordance with section 772(d)(1) of the Act, we deducted from 
the starting price those selling expenses that were incurred in selling 
the subject merchandise in the United States, including imputed credit 
expenses, warranty expenses, inventory carrying costs, and indirect 
selling expenses. We also made an adjustment for profit in accordance 
with section 772(d)(3) of the Act. We used the expenses reported by 
SeAH in connection with its U.S. sales. See Analysis Memo.

Normal Value

A. Cost Averaging Methodology

    The Department's normal practice is to calculate an annual 
weighted-average cost for the entire POR. See, e.g., Certain Pasta From 
Italy: Final Results of Antidumping Duty Administrative Review, 65 FR 
77852 (December 13, 2000), and accompanying Issues and Decision 
Memorandum at Comment 18,

[[Page 64674]]

and Notice of Final Results of Antidumping Duty Administrative Review: 
Carbon and Certain Alloy Steel Wire Rod from Canada, 71 FR 3822 
(January 24, 2006), and accompanying Issues and Decision Memorandum at 
Comment 5 (explaining the Department's practice of computing a single 
weighted-average cost for the entire period). However, the Department 
recognizes that possible distortions may result if our normal annual 
average cost method is used during a period of significant cost 
changes. In determining whether to deviate from our normal methodology 
of calculating an annual weighted average cost, the Department 
evaluates the case-specific record evidence based on two primary 
considerations: (1) the change in the cost of manufacturing (``COM'') 
recognized by the respondent during the POR must be deemed significant; 
and (2) the record evidence must indicate that sales during the shorter 
averaging periods could be reasonably linked with the COP or CV during 
the same shorter averaging periods. See Stainless Steel Plate in Coils 
From Belgium: Final Results of Antidumping Duty Administrative Review, 
73 FR 75398, 75399 (December 11, 2008) (``SSPC from Belgium Final 
Results'') and accompanying Issues and Decision Memorandum at Comment 
4; see also Stainless Steel Sheet and Strip in Coils from Mexico; Final 
Results of Antidumping Duty Administrative Review, 74 FR 6365 (February 
9, 2009) (``SSSC from Mexico Final Results'') and accompanying Issues 
and Decision Memorandum at Comment 5.

1. Significance of Cost Changes

    In prior cases, the Department established 25 percent as the 
threshold (the difference between the high and low quarterly COM 
divided by the low quarterly COM) for determining that the changes in 
COM are significant enough to warrant a departure from our standard 
annual costing approach. See SSPC from Belgium Final Results and 
accompanying Issues and Decision Memorandum at Comment 4; see also 
Stainless Steel Sheet and Strip in Coils From Mexico; Preliminary 
Results of Antidumping Duty Administrative Review, 73 FR 45708, 45709-
45710 (August 6, 2008) (``SSSC from Mexico Preliminary Results''), 
unchanged in SSSC from Mexico Final Results and accompanying Issues and 
Decision Memorandum at Comment 5. In the instant case, record evidence 
shows that SeAH experienced significant changes (i.e., changes that 
exceeded 25 percent) between the high and low quarterly COM during the 
POR and that the change in COM is primarily attributable to the price 
volatility for carbon steel hot-rolled coils. See ``Cost of Production 
and Constructed Value Calculation Adjustments for the Preliminary 
Results - SeAH Steel Corporation,'' from Ji Young Oh, Senior 
Accountant, to Neal M. Halper, Director, Office of Accounting, dated 
November 30, 2009 (``Cost Calculation Memorandum''). As a result, we 
have determined for the preliminary results that the changes in COM for 
SeAH are significant enough to warrant a departure from our standard 
annual costing approach.

2. Linkage Between Cost and Sales Information

    As explained above, the Department preliminarily found cost changes 
to be significant in this administrative review; thus the Department 
has evaluated whether there is evidence of linkage between the cost 
changes and the sales prices during the POR. The Department's 
definition of linkage does not require direct traceability between 
specific sales and their specific production cost, but rather relies on 
whether there are elements that would indicate a reasonable correlation 
between the underlying costs and the final sales prices charged by the 
company. See SSSC from Mexico Final Results and accompanying Issues and 
Decision Memorandum at Comment 5; see also SSPC from Belgium Final 
Results and accompanying Issues and Decision Memorandum at Comment 4. 
These correlative elements may be measured and defined in a number of 
ways depending on the associated industry, and the overall production 
and sales processes.
    Unlike the situation in SSPC from Belgium Final Results where the 
respondents employed an alloy surcharge mechanism, SeAH has no alloy 
surcharge mechanism in place. Therefore, in the instant case, we 
requested that SeAH submit sales and cost summary information for the 
five most frequently sold CONNUMs in the home and U.S. markets during 
the POR so that we could evaluate the correlation between changing 
direct material costs and final sale prices. See SeAH's October 27, 
2009 submission at Attachment 56. For purposes of this broad analysis, 
we computed for these sample CONNUMs weight-averaged sale prices, by 
quarter, based on the reported sales for both U.S. and the home 
markets, and compared them to the COM by quarter. See Cost Calculation 
Memorandum. As can be seen from the Cost Calculation Memorandum, the 
quarterly average price and cost changes appear to be reasonably 
correlated. We performed the same linkage analysis in Certain Welded 
Stainless Steel Pipes From the Republic of Korea: Final Results of 
Antidumping Duty Administrative Review, 74 FR 31242 (June 30, 2009) and 
accompanying Issues and Decision Memorandum at Comment 1.
    In summary, the facts of this case show a significant change in COM 
during the POR and that there is a reasonable linkage between costs and 
sales during the shorter cost periods. Accordingly, we have 
preliminarily determined that a quarterly costing approach would lead 
to more appropriate comparisons in our antidumping duty calculations 
for CWP. Therefore, for the preliminary results, we used indexed annual 
average direct material costs and annual weighted-average conversion 
costs to each quarter in the POR for inclusion in the COP and CV 
calculations for CWP.

B. Selection of Comparison Market

    To determine whether there was a sufficient volume of sales in the 
comparison market, Korea, to serve as a viable basis for calculating 
NV, we compared SeAH'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 the aggregate 
volume of SeAH's 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 determine that the home market was viable for 
comparison purposes.

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

    SeAH reported sales of the foreign like product to affiliated and 
unaffiliated customers in the comparison market. The Department 
calculates NV based on a sale to an affiliated party only if it is 
satisfied that the price to the affiliated party is comparable to the 
price at which sales are made to parties not affiliated with the 
producer or exporter, i.e., sales at ``arm's length.'' See 19 CFR 
351.403(c). 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 
movement charges, direct selling expenses, and packing. In accordance 
with the Department's current practice, if the prices charged to an 
affiliated party were, on average, between 98 and 102 percent of the 
prices charged to unaffiliated parties for merchandise

[[Page 64675]]

identical or most similar to that sold to the affiliated party, we 
considered the sales to be at arm's-length prices and included such 
sales in the calculation of NV. See 19 CFR 351.403(c). Conversely, 
where sales to the affiliated party did not pass the arm's-length test, 
all sales to that affiliated party were excluded from the NV 
calculation. See Antidumping Proceedings: Affiliated Party Sales in the 
Ordinary Course of Trade, 67 FR 69186, 69194 (November 15, 2002).

D. Cost of Production Analysis

    We found that SeAH made sales below the COP in the most recently 
completed segment of this proceeding in which SeAH was examined, and 
such sales were disregarded. Thus, in accordance with section 
773(b)(2)(A)(ii) of the Act, there are reasonable grounds to believe or 
suspect that SeAH made sales of the subject merchandise in its 
comparison market at prices below the COP in the current review period. 
Pursuant to section 773(b)(1) of the Act, we initiated a COP 
investigation of sales by SeAH.

1. Calculation of Cost of Production

    In accordance with section 773(b)(3) of the Act, we calculated 
SeAH's COP based on the sum of its costs of materials and conversion 
for the foreign like product, plus an amount for home market SG&A 
expenses, interest expenses, and packing costs. See the ``Test of 
Comparison Market Sales Prices'' section below for the treatment of 
comparison market selling expenses. We relied on home market sales and 
COP information provided by SeAH in its questionnaire responses, except 
where noted below:
    a. During the POR, SeAH purchased carbon steel hot-rolled coil 
inputs from a home market affiliated company, Pohang Iron and Steel 
Company (``POSCO''). Carbon steel hot-rolled coil is considered a major 
input to the production of CWP. Section 773(f)(3) of the Act (the major 
input rule) states:

    If in the case of a transaction between affiliated persons 
involving the production by one of such persons of a major input to the 
merchandise, the administering authority has reasonable grounds to 
believe or suspect that an amount represented as the value of such 
input is less than the cost of production of such input, then the 
administering authority may determine the value of the major input on 
the basis of the information available regarding such cost of 
production, if such cost is greater than the amount that would be 
determined for such input under paragraph (2).

Paragraph 2 of section 773(f) of the Act (transactions disregarded) 
states:

    A transaction directly or indirectly between affiliated persons may 
be disregarded if, in the case of any element of value required to be 
considered, the amount representing that element does not fairly 
reflect the amount usually reflected in sales of merchandise under 
consideration in the market under consideration. If a transaction is 
disregarded under the preceding sentence and no other transactions are 
available for consideration, the determination of the amount shall be 
based on the information available as to what the amount would have 
been if the transaction had occurred between persons who are not 
affiliated.

In accordance with the major input rule, and as stated in the SSCC from 
Mexico Preliminary Results, 73 FR at 45714, unchanged in SSSC from 
Mexico Final Results, it is the Department's normal practice to use all 
three elements of the major input rule (i.e., transfer price, COP and 
market price) where available. In accordance with section 773(f)(3) of 
the Act (the major input rule), we evaluated transactions between SeAH 
and its affiliate using the transfer price, COP and market price of 
carbon steel hot-rolled coil. For the preliminary results, we adjusted 
SeAH's reported costs to reflect the highest of these three values for 
SeAH's purchases of hot-rolled coil from POSCO. Because we have 
determined that shorter cost periods are appropriate for the COP 
analysis, we have applied the major input rule analysis and calculated 
the related adjustments on a quarterly basis.
    b. We revised SeAH's general and administrative (``G&A'') expenses 
to include inventory valuation losses.
    c. We excluded the long-term interest income generated from 
retirement and severance deposits from the calculation of interest 
expense ratio.
    d. We adjusted the cost of goods sold denominator used in the G&A 
expense ratio to reflect our major input and inventory valuation loss 
adjustments. We also adjusted the cost of goods sold denominator used 
in the financial expense ratio to reflect our major input adjustment.
    See Cost Calculation Memorandum.

2. Test of Comparison Market Sales Prices

    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. As 
noted in section 773(b)(2)(D) of the Act, prices are considered to 
provide for recovery of costs if such prices are above the weighted 
average per-unit COP for the period of investigation or review.
    As discussed above, we have relied on a quarterly costing approach 
in this review. Similar to that used by the Department in cases of 
high-inflation (see, e.g., Notice of Final Determination of Sales at 
Less Than Fair Value: Certain Cut-to-Length Carbon-Quality Steel Plate 
Products from Indonesia, 64 FR 73164 (December 29, 1999) and 
accompanying Issues and Decision Memorandum at Comment 1, this 
methodology restates the quarterly costs on a year-end equivalent 
basis, calculates an annual weighted-average cost for the POR and then 
restates it to each respective quarter. We find that this alternative 
cost calculation method meets the requirements of section 773(b)(2)(D) 
of the Act.

3. Results of the COP Test

    Where less than 20 percent of the respondent's home market sales of 
a given model were made 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 made 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 SeAH revealed that, for home market sales of 
certain models, less than 20 percent of the sales of those models were 
made at prices below the COP. Therefore, we retained all such sales in 
our analysis and included them in determining NV. Our cost test also 
indicated that for home market sales of other models, more than 20 
percent 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

[[Page 64676]]

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 to determine NV.

E. Constructed Value

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of SeAH'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.

F. Calculation of Normal Value Based on Comparison Market Prices

    We calculated NV based on packed prices to unaffiliated customers 
in Korea. We adjusted the starting price by deducting for foreign 
inland freight, pursuant to section 773(a)(6)(B)(ii) of the Act. We 
made adjustments for differences in packing, in accordance with 
sections 773(a)(6)(A) and 773(a)(6)(B)(i) of the Act, and in 
circumstances of sale (for imputed credit expenses), under section 
773(a)(6)(c)(iii) of the Act and 19 CFR 315.410.
    When comparing U.S. sales with comparison market sales of similar, 
but not identical, merchandise, we also made adjustments for physical 
differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. We based this 
adjustment on the difference in the variable cost of manufacturing for 
the foreign like product and subject merchandise. See 19 CFR 
351.411(b).

G. Price-to CV Comparison

    Where we were unable to find a home market match of such or similar 
merchandise, in accordance with section 773(a)(4) of the Act, we based 
NV on CV. Where appropriate, we made adjustments to CV in accordance 
with section 773(a)(8) of the Act.

Currency Conversion

    Pursuant to 19 CFR 351.415 and section 773A of the Act, we made 
currency conversions based on the exchange rates in effect on the date 
of the U.S. sale, as certified by the Federal Reserve Bank. See Import 
Administration website at: http://ia.ita.doc.gov/exchange/index.html.

Preliminary Results of the Review

    We preliminarily determine that a weighted-average dumping margin 
exists for the respondent for the period November 1, 2007, through 
October 31, 2008. Respondents other than mandatory respondents normally 
receive the weighted-average of the margins calculated for those 
companies selected for individual review (i.e., mandatory respondents), 
excluding de minimis margins or margins based entirely on adverse facts 
available. In this case, respondents other than SeAH received SeAH's 
calculated margin as SeAH is the only remaining mandatory respondent.

------------------------------------------------------------------------
                                                            Weighted-
                 Manufacturer/exporter                    average margin
-------------------------------------------------------------percent----
SeAH Steel Corporation.................................           4.42
Dongbu Steel Co., Ltd..................................           4.42
Korea Iron & Steel Co., Ltd............................           4.42
Union Steel Co., Ltd...................................           4.42
Nexteel Co., Ltd.......................................           4.42
A-JU Besteel Co., Ltd..................................           4.42
------------------------------------------------------------------------

Public Comment

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties to this 
proceeding in accordance with 19 CFR 351.224(b). We plan on conducting 
verification of sales and cost data after these preliminary results. As 
a result, case briefs for this review will be due no later than one 
week after the issuance of the last verification report. Rebuttal 
briefs will be due five days after the deadline for submission of case 
briefs, pursuant to 19 CFR 351.309(d)(1). Any requests for a hearing 
must be filed at the time case briefs are due. A hearing, if requested, 
will be held two days after the rebuttal briefs are due. Issues raised 
in the hearing will be limited to those raised in the case briefs. 
Parties submitting arguments in this proceeding 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, in accordance with 19 CFR 
351.309(d)(2). Further, parties submitting case and/or rebuttal briefs 
are requested to provide the Department with an additional electronic 
copy of the public version of any such comments on a computer diskette. 
Case and rebuttal briefs must be served on interested parties in 
accordance with 19 CFR 351.303(f).
    The Department will issue the final results of this administrative 
review, which will include the results of its analysis of issues raised 
in any such comments, or at a hearing, if requested, within 120 days of 
publication of these preliminary results, unless extended. See section 
751(a)(3)(A) of the Act, and 19 CFR 351.213(h).

Assessment Rates

    Upon completion of the 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). The Department will 
issue appropriate appraisement instructions for the companies subject 
to this review directly to CBP 15 days after the date of publication of 
the final results of this review.
    For SeAH, we will calculate importer-specific ad valorem duty 
assessment rates based on the ratio of the total amount of antidumping 
duties calculated for the examined sales to the total entered value of 
the sales, as reported by SeAH. See 19 CFR 351.212(b)(1).
    For the companies which were not selected for individual review, we 
will use SeAH's cash deposit rate as the assessment rate.
    We will instruct CBP to assess antidumping duties on all 
appropriate entries covered by this review. Pursuant to 19 CFR 
351.106(c)(2), we will instruct CBP to liquidate without regard to 
antidumping duties any entries for which the assessment rate is de 
minimis.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. See Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003) 
(``Assessment Policy Notice''). This clarification will apply to 
entries of subject merchandise during the POR produced by companies 
included in these final results of review for which the reviewed 
companies did not know that the merchandise they sold to the 
intermediary (e.g., a reseller, trading company, or exporter) was 
destined for the United States. In such instances, we will instruct CBP 
to liquidate unreviewed entries at the all-others rate if there is no 
rate for the intermediary involved in the transaction. See Assessment 
Policy Notice for a full discussion of this clarification.
    For Hyundai HYSCO, for which this administrative review is 
rescinded, the Department will issue appropriate assessment 
instructions to CBP 15 days after the publication of this notice. We 
will instruct CBP to liquidate as entered any entries of subject 
merchandise produced by Hyundai HYSCO.

[[Page 64677]]

Cash Deposit Requirements

    The following deposit rates will be effective upon publication of 
the final results of this administrative review for all shipments of 
CWP from Korea entered, or withdrawn from warehouse, for consumption on 
or after the publication date, as provided by section 751(a)(2)(C) of 
the Act: (1) The cash deposit rates for the companies listed above will 
be the rates established in the final results of this review, except if 
the rate is less than 0.5 percent and, therefore, de minimis, the cash 
deposit will be zero; (2) for previously reviewed or investigated 
companies not listed above, the cash deposit rate will continue to be 
the company-specific rate published for the most recent final results 
in which that manufacturer or exporter participated; (3) if the 
exporter is not a firm covered in this review, a prior review, or the 
original less-than-fair-value (``LTFV'') investigation, but the 
manufacturer is, the cash deposit rate will be the rate established for 
the most recent final results for the manufacturer of the merchandise; 
and (4) 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 4.80 percent, the ``all others'' rate established 
in the LTFV investigation. See CWP Order. These cash deposit 
requirements, when imposed, shall remain in effect until further 
notice.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f)(2) 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.
    These preliminary results of review are issued and published in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: November 30, 2009.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. E9-29237 Filed 12-7-09; 8:45 am]
BILLING CODE 3510-DS-S