[Federal Register Volume 64, Number 1 (Monday, January 4, 1999)]
[Notices]
[Pages 108-116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-34463]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-845]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Stainless Steel Sheet
and Strip in Coils From Japan
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: January 4, 1999.
FOR FURTHER INFORMATION CONTACT: Letitia Kress, Cindy Sonmez or Karla
Whalen, Import Administration,
[[Page 109]]
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230;
telephone: (202) 482-6412, (202) 482-3362 or (202) 482-1391,
respectively.
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (``the Act''), are references to the provisions
effective January 1, 1995, the effective date of the amendments made to
the Act by the Uruguay Round Agreements Act (``URAA''). In addition,
unless otherwise indicated, all citations to the Department of Commerce
(``Department'') regulations are to the regulations at 19 CFR Part 351,
62 FR 27296 (May 19, 1997).
Preliminary Determination
We preliminarily determine that Stainless Steel Sheet and Strip in
Coils (``SSS&S'') from Japan is being, or is likely to be, sold in the
United States at less than fair value (``LTFV''), as provided in
section 733 of the Act. The estimated margins of sales at LTFV are
shown in the ``Suspension of Liquidation'' section of this notice. For
Nippon Steel Corporation (``NSC''), the Department used the sales data
submitted on December 2, 1998 and the cost of production and
constructed value data submitted on November 19, 1998. For Kawasaki
Steel Corporation (``Kawasaki'') the Department used the response
submitted on November 30, 1998.
Case History
On July 13, 1998, the Department initiated antidumping duty
investigations of imports of stainless steel sheet and strip in coils
from France, Germany, Italy, Japan, Mexico, South Korea, Taiwan and the
United Kingdom (see Initiation of Antidumping Investigations: Stainless
Steel Sheet and Strip in Coils From France, Germany, Italy, Japan,
Mexico, South Korea, Taiwan and the United Kingdom, 63 FR 37521 (July
13, 1998)). Since the initiation of this investigation the following
events have occurred.
The Department set aside a period for all interested parties to
raise issues regarding product coverage in a letter to interested
parties on July 21, 1998. On July 27, 1998, Allegheny Ludlum
Corporation, Armco, Inc.,1 J&L Specialty Steel,
Inc.,2 Washington Steel Division of Bethlehem Steel
Corporation (formerly Lukens, Inc.), the United Steelworkers of
America, AFL-CIO/CLC, the Butler Armco Independent Union 3
and the Zanesville Armco Independent Organization, Inc. 4
(``petitioners'') submitted comments to the Department stating that
they generally agree with the Department's product characteristics and
model match criteria. However, petitioners noted that the reporting of
products' actual alloy content, within certain ranges, must be
incorporated from the outset into the product characteristics that
comprise the product matching hierarchy that create the control numbers
(``CONNUMs'').
---------------------------------------------------------------------------
\1\ Armco, Inc. is not petitioner in the Mexico case.
\2\ J&L Specialty Steel, Inc, is not a petitioner in the France
case.
\3\ Butler Armco Independent Union is not a petitioner in the
Mexico case.
\4\ Zanesville Armco Independent Organization, Inc. is not a
petitioner in the Mexico case.
---------------------------------------------------------------------------
On July 17, 1998, NSC submitted comments claiming that petitioners
do not manufacture suspension foil and thus do not have standing to
file a petition against this product. Also on July 17, 1998, NSC
submitted a statement regarding petitioners agreement to exclude
suspension foil from the scope of the investigation. Also on July 20,
1998, Hutchinson Technology submitted comments regarding the definition
of suspension foil. On July 20, 1998, Hitachi Metals America, Ltd.
submitted comments concerning razor blade steel, flapper valve steel,
and surgical/medical categories of stainless steel sheet and strip and
that all of its products are outside of the scope of the investigation.
On July 27, 1998, respondent NSC submitted comments stating that
the criteria should be reordered and clarified and that the
``additional information'' concerning chemical content is burdensome
and unnecessary. On July 29, 1998, Hitachi Metals America, Ltd.
submitted comments regarding an exclusion for flapper valve steel. On
July 27, 1998, respondent Kawasaki Steel Corporation stated that it
agrees with NSC's July 27, 1998 comments. On July 29, 1998 petitioners
submitted a letter regarding the scope.
On July 24, 1998, the International Trade Commission (``ITC'')
notified the Department of its affirmative preliminary determination in
this case.
On August 3, 1998, the Department issued antidumping duty
questionnaires to Kawasaki, NSC, and Hitachi Metals America,
Ltd.5 On August 4, 1998, the Department issued antidumping
duty questionnaires to Nisshin Steel Co., Ltd. (``Nisshin''), Nippon
Yakin Kogyo (``Nippon Yakin''), Nippon Metal Industries (``Nippon
Metal''), and Sumitomo Metal Industries (``Sumitomo''). On September
21, 1998, the Department selected NSC, Kawasaki, Nippon Metal, Nippon
Yakin, and Nisshin (collectively ``respondents'') as mandatory
respondents. See Decision Memorandum from Division Directors, Office
VII, to Joseph Spetrini, regarding Selection of Respondents, September
21, 1998.
---------------------------------------------------------------------------
\5\ Counsel for Hitachi Metals America, Ltd. forwarded the
questionnaire to Hitachi Metals, Ltd. in Japan.
---------------------------------------------------------------------------
On August 28, October 19 and 27, and November 2, 1998, in letters
to the Department, NSC requested that it not be required to report
downstream sales in Japan because relevant resales: (1) Involve sales
to affiliated resellers which are at arm's length; (2) are all at a
different level of trade from United States sales; (3) for the most
part are not likely to match U.S. sales; and (4) would entail undue
burden. On September 8 and November 25, 1998, petitioners rebutted
NSC's requested exemption from reporting certain home market sales.
On September 9, 1998, the Department received responses to Section
A of the questionnaire from Kawasaki, NSC, and Sumitomo. On October 5
and 7, 1998, petitioners filed comments to the Section A responses for
Kawasaki and NSC, respectively. On September 29, 1998, the Department
received Kawasaki and NSC's responses to Sections B and C of the
questionnaire. On October 15, 1998, petitioners filed comments on
Kawasaki and NSC's Section B and C questionnaire responses. On October
20 and 21, 1998, the Department issued supplemental questionnaires on
Sections A, B, and C to NSC and Kawasaki, respectively.
On October 6, 1998, pursuant to section 733(c)(1)(A) of the Act,
the petitioners made a timely request to postpone the preliminary
determination for thirty days. The Department determined that this
investigation is extraordinarily complicated and that the additional
time is necessary for the Department to make its preliminary
determination. On October 16, 1998, we postponed the preliminary
determination until no later than December 17, 1998. See Stainless
Steel Sheet and Strip from Italy, France, Germany, Mexico, Japan, the
Republic of Korea, the United Kingdom and Taiwan; Notice of
Postponement of Preliminary Determinations for Antidumping Duty
Investigations, 63 FR 56909, (October 23, 1998).
On October 8 and 13, 1998, petitioners timely requested that the
Department initiate a cost investigation against Kawasaki and NSC,
respectively. Based on an adequate sales below cost of production
allegation, the Department initiated a cost of
[[Page 110]]
production investigation against Kawasaki and NSC on October 28, 1998.
See Memorandum from William Jones and Taija Slaugher to Roland
MacDonald regarding Allegations of Sales Below the Cost of Production
for Kawasaki Steel Corporation and Nippon Steel Corporation dated
October 28, 1998. On November 19, 1998, Kawasaki and NSC submitted
their Section D responses.
On October 28, 1998, NSC submitted a request that it not be
required to report sales based on order confirmation date as was
requested in the supplemental questionnaire that the Department issued
on October 20, 1998. On November 18, 1998, Kawasaki requested a waiver
from the Department's request to submit a new database using order
confirmation date.
On October 30, 1998, petitioners timely alleged that critical
circumstances exist with respect to imports of stainless steel sheet
and strip in coils from Japan. On November 19, 1998, Kawasaki submitted
shipment information in regards to this allegation. On December 4,
1998, NSC submitted shipment information in regards to this allegation.
On December 2, 1998, NSC submitted the order confirmation date for
the sales it previously reported in its Section B and C responses as
well as downstream sales. On December 3, 1998, petitioners submitted
comments on appropriate product comparisons. On December 7, 1998,
Kawasaki submitted its sales made to unaffiliated parties based on
order confirmation date. On December 4 and 8, 1998, petitioners
submitted comments regarding preliminary determination guidance for
Kawasaki and NSC, respectively. On December 11, 1998, NSC submitted a
rebuttal to petitioners' December 8, 1988 preliminary determination
comments. On December 11, 1998, NSC submitted additional order
confirmation reporting. On December 9, 1998, Kawasaki submitted a
rebuttal to petitioners' December 4th preliminary determination
comments.
Scope of the Investigation
For purposes of this investigation, the products covered are
certain stainless steel sheet and strip in coils. Stainless steel is an
alloy steel containing, by weight, 1.2 percent or less of carbon and
10.5 percent or more of chromium, with or without other elements. The
subject sheet and strip is a flat-rolled product in coils that is
greater than 9.5 mm in width and less than 4.75 mm in thickness, and
that is annealed or otherwise heat treated and pickled or otherwise
descaled. The subject sheet and strip may also be further processed
(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that
it maintains the specific dimensions of sheet and strip following such
processing.
The merchandise subject to this investigation is classified in the
Harmonized Tariff Schedule of the United States (``HTSUS'') at
subheadings: 7219.13.00.30, 7219.13.00.50, 7219.13.00.70,
7219.13.00.80, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90,
7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35,
7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44,
7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35,
7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44,
7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30,
7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30,
7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25,
7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00,
7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80,
7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60,
7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15,
7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30,
7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and
7220.90.00.80. Although the HTS subheadings are provided for
convenience and Customs purposes, the Department's written description
of the merchandise under investigation is dispositive.
Excluded from the scope of this investigation are the following:
(1) Sheet and strip that is not annealed or otherwise heat treated and
pickled or otherwise descaled; (2) sheet and strip that is cut to
length; (3) plate (i.e., flat-rolled stainless steel products of a
thickness of 4.75 mm or more); (4) flat wire (i.e., cold-rolled
sections, with a prepared edge, rectangular in shape, of a width of not
more than 9.5 mm); and (5) razor blade steel. Razor blade steel is a
flat rolled product of stainless steel, not further worked than cold-
rolled (cold-reduced), in coils, of a width of not more than 23 mm and
a thickness of 0.266 mm or less, containing, by weight, 12.5 to 14.5
percent chromium, and certified at the time of entry to be used in the
manufacture of razor blades. See Chapter 72 of the HTSUS, ``Additional
U.S. Note'' 1(d).
In response to comments by interested parties the Department has
determined that certain specialty stainless steel products are also
excluded from the scope of this investigation. These excluded products
are described below.
Flapper valve steel is defined as stainless steel strip in coils
containing, by weight, between 0.37 and 0.43 percent carbon, between
1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent
manganese. This steel also contains, by weight, phosphorus of 0.025
percent or less, silicon of between 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 investigation. This stainless
steel strip in coils is a specialty foil with a thickness of between 20
and 110 microns used to produce a metallic substrate with a honeycomb
structure for use in automotive catalytic converters. The steel
contains, by weight, carbon of no more than 0.030 percent, silicon of
no more than 1.0 percent, manganese of no more than 1.0 percent,
chromium of between 19 and 22 percent, aluminum of no less than 5.0
percent, phosphorus of no more than 0.045 percent, sulfur of no more
than 0.03 percent, lanthanum of between 0.002 and 0.05 percent, and
total rare earth elements of more than 0.06 percent, with the balance
iron.
Permanent magnet iron-chromium-cobalt alloy stainless strip is also
excluded from the scope of this investigation. This ductile stainless
steel
[[Page 111]]
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
``Arnokrome.'' 6
---------------------------------------------------------------------------
\6\ ``Arnokrome III'' is a trademark of the Arnold Engineering
Company.
---------------------------------------------------------------------------
Certain electrical resistance alloy steel is also excluded from the
scope of this investigation. This product is defined as a non-magnetic
stainless steel manufactured to American Society of Testing and
Materials (``ASTM'') specification B344 and containing, by weight, 36
percent nickel, 18 percent chromium, and 46 percent iron, and is most
notable for its resistance to high temperature corrosion. It has a
melting point of 1390 degrees Celsius and displays a creep rupture
limit of 4 kilograms per square millimeter at 1000 degrees Celsius.
This steel is most commonly used in the production of heating ribbons
for circuit breakers and industrial furnaces, and in rheostats for
railway locomotives. The product is currently available under
proprietary trade names such as ``Gilphy 36.''7
---------------------------------------------------------------------------
\7\ ``Gilphy 36'' is a trademark of Imphy, S.A.
---------------------------------------------------------------------------
Certain martensitic precipitation-hardenable stainless steel is
also excluded from the scope of this investigation. 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.''8
---------------------------------------------------------------------------
\8\ ``Durphynox 17'' is a trademark of Imphy, S.A.
---------------------------------------------------------------------------
Finally, three specialty stainless steels typically used in certain
industrial blades and surgical and medical instruments are also
excluded from the scope of this investigation. These include stainless
steel strip in coils used in the production of textile cutting tools
(e.g., carpet knives).9 This steel is similar to ASTM grade
440F, but containing, by weight, 0.5 to 0.7 percent of molybdenum. The
steel also contains, by weight, carbon of between 1.0 and 1.1 percent,
sulfur of 0.020 percent or less, and includes between 0.20 and 0.30
percent copper and between 0.20 and 0.50 percent cobalt. This steel is
sold under proprietary names such as ``GIN4 Mo.'' The second excluded
stainless steel strip in coils is similar to AISI 420-J2 and contains,
by weight, carbon of between 0.62 and 0.70 percent, silicon of between
0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent,
phosphorus of no more than 0.025 percent and sulfur of no more than
0.020 percent. This steel has a carbide density on average of 100
carbide particles per square micron. An example of this product is
``GIN5'' steel. The third specialty steel has a chemical composition
similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent,
molybdenum of between 1.15 and 1.35 percent, but lower manganese of
between 0.20 and 0.80 percent, phosphorus of no more than 0.025
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''.10
---------------------------------------------------------------------------
\9\ This list of uses is illustrative and provided for
descriptive purposes only.
\10\ ``GIN4 Mo'', ``GIN5'' and ``GIN6'' are the proprietary
grades of Hitachi Metals America, Ltd.
---------------------------------------------------------------------------
Period of Investigation
The Period of Investigation (``POI'') is April 1, 1997 through
March 31, 1998.
Postponement of Final Determination and Extension of Provisional
Measures
Pursuant to section 735(a)(2) of the Act, on November 19 and 25,
1998, Kawasaki and NSC respectively, requested that, in the event of an
affirmative preliminary determination in this investigation, the
Department postpone its final determination until not later than 135
days after the date of the publication of an affirmative preliminary
determination in the Federal Register. On December 15, 1998, NSC and
Kawasaki amended their requests to include a request to extend the
provisional measures to not more than six months. In accordance with 19
CFR 351.210(b), because (1) our preliminary determination is
affirmative, (2) NSC and Kawasaki account for a significant proportion
of exports of the subject merchandise, and (3) no compelling reasons
for denial exist, we are granting the respondents' requests and are
postponing the final determination until no later than 135 days after
the publication of this notice in the Federal Register. Suspension of
liquidation will be extended accordingly.
Preliminary Determination of Critical Circumstances
On October 30, 1998, petitioners alleged that there is a reasonable
basis to believe or suspect that critical circumstances exist with
respect to the subject merchandise. Petitioners based their allegation
on a comparison of import data from April-June and July-September,
1998, arguing comparison of these periods due to a one-month shipping
time lag. In accordance with 19 CFR 351.206(c)(2), since this
allegation was filed earlier than the deadline for the Department's
preliminary determination, we must issue our preliminary critical
circumstances determinations not later than the preliminary
determination. See Policy Bulletin 98/4 regarding Timing of Issuance of
Critical Circumstances Determinations, 63 FR 55364, (October 15, 1998).
Section 733(e)(1) of the Act provides that if a petitioner alleges
critical circumstances, the Department will determine whether there is
a reasonable basis to believe or suspect that: (A)(i) there is a
history of dumping and material injury by reason of dumped imports in
the United States or elsewhere of the subject merchandise; or (ii) the
person by whom, or for whose account, the merchandise was imported knew
or should have known that the exporter was selling the subject
merchandise at less than fair value and that there was likely to be
material injury by reason of such sales; and (B) there have been
massive imports of the subject merchandise over a relatively short
period.
The statute and the Statement of Administrative Action (``SAA'')
which accompanies the Uruguay Round Agreements Act are silent as to how
we are to make a finding that there was knowledge that there was likely
to be material injury. Therefore, Congress has left the method of
implementing this provision to the Department's discretion.
In determining whether there is a reasonable basis to believe or
suspect that an importer knew or should have known that the exporter
was selling the product at less than fair value, the Department
normally considers margins
[[Page 112]]
of 15 percent or more sufficient to impute knowledge of dumping for
constructed export price (``CEP'') sales, and margins of 25 percent or
more for export price (``EP'') sales. See, e.g., Preliminary Critical
Circumstances Determination: Honey from the People's Republic of China,
60 FR 29824 (June 6, 1995). Since the company specific margin for EP
sales in our preliminary determination for stainless steel sheet and
strip in coils are greater than 25 percent for Kawasaki, we have
imputed importer knowledge of dumping for Kawasaki. Since the company
specific margins for EP sales in our preliminary determination for
stainless steel sheet and strip in coils are less than 25 percent for
NSC, we have not imputed knowledge of dumping based on this margin.
There is no evidence on the record regarding history of dumping by NSC.
Therefore, NSC does not meet the first prong of the analysis.
In determining whether there is a reasonable basis to believe or
suspect that an importer knew or should have known that there was
likely to be material injury by reason of dumped imports, the
Department normally will look to the preliminary injury determination
of the ITC. If, as in this case, the ITC finds a reasonable indication
of present material injury to the relevant U.S. industry, the
Department will determine that a reasonable basis exists to impute
importer knowledge that there was likely to be material injury by
reason of dumped imports during the critical circumstance period--the
90-day period beginning with the initiation of the investigation. See
19 CFR 351.206. Therefore, the Department finds it is reasonable to
impute importer knowledge of injury by reason of dumped imports in this
case.
Since Kawasaki has met the first prong of the critical
circumstances allegation, we must examine whether or not it had massive
imports. To determine whether imports were massive over a relatively
short time period, the Department typically compares the import volume
of the subject merchandise for the three months immediately preceding
and following the filing of the petition. See 19 CFR 351.206(i).
Pursuant to 19 CFR 351.206(h)(2), the Department will consider an
increase of 15 percent or more in the imports of the subject
merchandise over the relevant period to be massive. On November 19,
1998, Kawasaki submitted shipment information which shows that its
imports decreased during the comparison period (July-September, 1998)
from the level of the preceding three months. Therefore, we do not find
that critical circumstances exist for Kawasaki, since it did not have
massive imports, or for NSC, since it does not have a history of
dumping or a margin high enough to impute knowledge.
In addition, for companies which did not respond to the
Department's questionnaire, we are imputing knowledge based on the
facts available rate assigned, which is the highest petition rate.
Therefore, we determine, based on facts available, that there were
massive imports of stainless steel sheet and strip in coils by
companies that did not respond to the Department's questionnaire.
Therefore, we preliminarily determine that critical circumstances exist
with regard to these companies. Regarding all other exporters, because
we find that critical circumstances exist for three out of five
investigated companies, we also determine that critical circumstances
exist for all other exporters.
Product Comparisons
In accordance with section 771(16) of the Act, all products
produced by the respondents covered by the description in the Scope of
Investigation section above, and sold in Japan during the POI, are
considered to be foreign like products for purposes of determining
appropriate product comparisons to U.S. sales. We have relied on nine
characteristics to match U.S. sales of subject merchandise to
comparison market sales of the foreign like product (listed in order of
significance): grade; hot/cold rolled; gauge; finish; metallic coating;
non-metallic coating; width; temper/tensile strength; and, edge trim.
These characteristics have been weighted by the Department where
appropriate. Where there were no sales of identical merchandise in the
home market to compare to U.S. sales, we compared U.S. sales to the
next most similar foreign like product on the basis of the
characteristics listed in the antidumping duty questionnaire and
reporting instructions.
Date of Sale
For its home market and U.S. sales, NSC and Kawasaki reported the
date of invoice (shipment date) as the date of sale, in keeping with
the Department's stated preference for using the invoice date as the
date of sale. Both respondents stated that the invoice date best
reflects the date on which the material terms of sale are established
and that price and/or quantity can and do change between order date and
invoice date. However, petitioners have alleged that the sales
documentation indicates that the order date appears to be the date when
the material terms of sale are set for the majority of these
respondents' sales of SSSS. Given the relevance of petitioners'
comments and the nature of marketing these types of made-to-order
products, we determined that petitioners' claims have some merit.
Consequently, on October 20 and 21, 1998, the Department requested that
NSC and Kawasaki, respectively, provide additional information
concerning the nature and frequency of price and quantity changes
occurring between the date of order and date of invoice. We also asked
NSC and Kawasaki to report the order date for all home market and U.S.
sales, and to ensure that all sales with order or invoice dates within
the POI are reported. On October 28 and November 18, 1998, NSC and
Kawasaki reiterated that invoice date is the appropriate date of sale
and requested that they not have to report sales based on order
confirmation date. On December 21, 1998, NSC reported the order date
for sales reported in its section B and C responses. NSC supplemented
this filing on December 11, 1998 reporting sales with final order date
within the POI, and invoice dates within the POI. On December 7, 1998,
Kawasaki submitted its response to the Department's request for order
confirmation date reporting.
The Department is preliminarily using the invoice date as the date
of sale for both home market and U.S. sales. We intend to fully examine
this issue at verification, and we will incorporate our findings, as
appropriate, in our analysis for the final determination. If we
determine that the order confirmation date is the appropriate date of
sale, we may resort to facts available for the final determination to
the extent that this information has not been reported.
Fair Value Comparisons
To determine whether sales of SSS&S from Japan to the United States
were made at LTFV, we compared EP to the normal value (``NV''), as
described in the ``Export Price'' and ``Normal Value'' sections of this
notice, below. In accordance with section 772(a) and (c), we calculated
EP for all of Kawasaki and NSC's sales, since the subject merchandise
was sold to the first unaffiliated purchaser in the United States prior
to importation, and CEP was not otherwise warranted based on the facts
on the record.
Export Price
We calculated EP based on the packed delivered price to
unaffiliated purchasers in the United States. For Kawasaki, we made
deductions from the starting price (gross unit price), where
[[Page 113]]
appropriate, for foreign inland freight, insurance, rebates and
brokerage and handling, and we added duty drawback. For NSC, we made
deductions from the starting price (gross unit price), where
appropriate, for foreign inland freight, inland insurance, discounts
and rebates, credit, and warranty expenses.
Normal Value
After testing home market viability, as discussed below, we
calculated NV as noted in the ``Price-to-CV Comparisons'' and ``Price-
to-Price Comparisons'' sections of this notice.
1. Home Market Viability
In order to determine whether there is a sufficient volume of sales
in the home market to serve as a viable basis for calculating NV (i.e.,
the aggregate volume of home market sales of the foreign like product
is equal to or greater than five percent of the aggregate volume of
U.S. sales), we compared each 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)(B) of the Act. Since
each respondent'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 that the home
market provides a viable basis for calculating NV. Therefore, we have
based NV on home market sales.
2. Cost of Production Analysis
Based on a cost allegation filed by the petitioners, the Department
found reasonable grounds to believe or suspect that sales by Kawasaki
and NSC in the home market were made at prices below the costs of
production (``COP''), pursuant to section 773(b)(1) of the Act. As a
result, the Department initiated an investigation to determine whether
Kawasaki or NSC made home market sales during the POI at prices below
their respective COPs, within the meaning of section 773(b) of the Act.
We conducted the COP analysis described below.
A. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated COP
based on the sum of Kawasaki's and NSC's respective costs for materials
and fabrication for the foreign like product, plus amounts for selling,
general and administrative expenses, interest expenses, research and
development, and packing costs. We relied on the COP data submitted by
Kawasaki and NSC, except as discussed below, where Kawasaki submitted
costs were not sufficiently reported, quantified or valued.
1. Kawasaki did not report costs for some CONNUMs that were sold in
the home market. In these instances, we assigned the highest reported
costs to those CONNUMs.
2. Kawasaki reported no costs for secondary merchandise. Therefore,
we have assigned the highest reported costs to those products.
3. In any instances where Kawasaki reported more than one cost for
the same CONNUM, we calculated a single weighted-average cost for each
CONNUM using the reported production quantities.
4. We revised Kawasaki's general and administrative (``G&A'')
expenses to include losses related to the disposal of tangible fixed
assets and expenses related to retirement payments and pension costs
see Cost of Production and Constructed Value Calculation Adjustments
for the Preliminary Determination from William Jones and Taija
Slaughter to Neal Halper, dated December 17, 1998.
B. Test of Home Market Prices
We compared the weighted-average COP for each respondent, adjusted
where appropriate (see above), to home market sales of the foreign like
product, as required under section 773(b) of the 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 whether such sales were made (1) within an
extended period of time in substantial quantities, and (2) at prices
which permitted the recovery of all costs within a reasonable period of
time in the normal course of trade, in accordance with sections
773(b)(1)(A) and (B) of the Act. On a product-specific basis, we
compared the COP to home market prices, less any applicable movement
charges, discounts and rebates, other selling expenses, and home market
packing.
C. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of the respondent's sales of a given product were at prices
less than the COP, we did not disregard any below-cost sales of that
product because we determined that the below-cost sales were not made
in substantial quantities. Where 20 percent or more of a respondent's
sales of a given product during the POI were at prices less than the
COP, we determined that such sales have been made in substantial
quantities within an extended period of time, in accordance with
section 773(b)(2)(B) of the Act. Because we compared prices to POI
average costs, we also determined that such sales were not made at
prices which would permit recovery of all costs within a reasonable
period of time, in accordance with section 773(b)(2)(D) of the Act.
Therefore, we disregarded the below-cost sales.
D. Calculation of CV
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of each respondent's cost of materials, fabrication,
G&A expenses, U.S. packing costs, direct and indirect selling expenses,
interest expenses, research and development expenses, and profit. We
made adjustments to Kawasaki's reported costs as indicated above in the
COP section. In accordance with section 773(e)(2)(A) of the Act, we
based selling, general, and administrative expenses and profit on the
amounts incurred and realized by each 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. For selling expenses,
we used the actual weighted-average home market direct and indirect
selling expenses.
Price-to-Price Comparisons
For those product comparisons for which there were sales at prices
above the COP, we based NV on prices to home market customers. We made
adjustments, where appropriate, for physical differences in the
merchandise in accordance with section 773(a)(6)(C) of the Act. In
accordance with Section 773(a)(6), we deducted home market packing
costs and added U.S. packing costs.
Kawasaki
We based home market prices on the packed, delivered prices to
affiliated and unaffiliated purchasers in the home market. We made
adjustments, where applicable, in accordance with section 773(a)(6) of
the Act. Where applicable, we made adjustments for rebates and movement
expenses. To adjust for differences in circumstances of sale between
the home market and the United States, we reduced home market prices by
the amounts of direct selling expenses (i.e., warranty and credit
expenses) and added U.S. credit expenses. In order to adjust for
differences in packing between the two markets, we deducted HM packing
costs and added U.S. packing costs.
NSC
We calculated NV based on prices to unaffiliated home market
customers. We
[[Page 114]]
made deductions for direct selling expenses, discounts and rebates,
inland freight charges, insurance, warehousing, and packing expenses,
where appropriate. In accordance with section 773(a)(6), we deducted
home market packing costs and added U.S. packing costs. Lastly, in our
NV calculations, we did not use NSC's reported downstream sales because
the sales by NSC to its first affiliated reseller passed the arm's-
length test (see section on Arm's Length Test).
Price-to-CV Comparisons
In accordance with section 773(a)(4) of the Tariff Act, we based NV
on CV if we were unable to find a home market match of identical or
similar merchandise. We calculated CV based on each respondent's cost
of materials, fabrication, G&A expenses, U.S. packing, direct and
indirect expenses, interest expense, research and development expenses
employed in producing the subject merchandise as well as profit. In
accordance with section 773(a)(2)(A) of the Tariff Act, we based SG&A
expense 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 Japan.
For selling expenses, we used the weighted-average home market selling
expenses. Where appropriate, we made adjustments to CV in accordance
with section 773(a)(8) of the Tariff Act. For comparisons to EP, we
made COS adjustments by deducting home market direct selling expenses
and adding U.S. direct selling expenses.
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. See 19 CFR
351.102. To test whether these sales 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. Where, for the tested models of
subject merchandise, prices to the affiliated party were on average
99.5 percent or more of the price 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 constructed for an affiliated customer because identical merchandise
was not sold to unaffiliated customers, we were unable to determine
that these sales were made at arm's length prices and, therefore,
excluded them from our LTFV analysis. See Notice of Final Determination
of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat
Products from Argentina, 58 FR 37062, 37077 (July 9, 1993). Where the
exclusion of such sales eliminated all sales of the most appropriate
comparison product, we made a comparison to the next most similar
product.
Level of Trade
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 NV
LOT is that of the starting-price sales in the comparison market or,
when NV is based on constructed value (``CV''), that of the sales from
which we derive selling, general and administrative (``SG&A'') expenses
and profit. For EP, the U.S. LOT is also the level of the starting-
price sale, which is usually from exporter to importer. For CEP, it is
the level of the constructed sale from the exporter to the importer. To
determine whether NV sales are at a different LOT than EP or CEP, 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 an LOT adjustment under section 773(a)(7)(A) of the Act. Finally,
for CEP sales, if the NV level is more remote from the factory than the
CEP level and there is no basis for determining whether the difference
in the levels between NV and CEP affects price comparability, we adjust
NV under section 773(a)(7)(B) of the Act (the CEP offset provision).
See Notice of Final Determination of Sales at Less Than Fair Value:
Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731
(November 19, 1997).
Kawasaki
In its questionnaire responses, Kawasaki stated that it sold
subject merchandise through a total of five channels of trade during
the period of investigation, four in the home market and one in the
United States. Kawasaki's U.S. sales were all made to unaffiliated
trading companies. Its four home market channels were sales from
Kawasaki to end users, sales from Kawasaki to unaffiliated trading
companies, sales from Kawasaki to affiliated trading companies and then
to affiliated customers (which used the subject merchandise to
manufacture products outside the scope of the proceeding), and finally,
sales from Kawasaki to affiliated trading companies and then to
unaffiliated customers. Thus, Kawasaki sold subject merchandise to two
types of customers: trading companies, whether affiliated or not, and
unaffiliated end users. These sales represent two different points in
the chain of distribution between the producer and the final end user,
as in one instance (sales to trading companies), the subject
merchandise passes through the intermediary parties, while in the other
case, sales are made without any intervening parties at all. As a
result, these sales to different points in the distribution chain could
represent different levels of trade in the home market.
The Department then examined whether any differences existed with
respect to the selling functions Kawasaki performed in making sales to
these two types of customers. Regardless of the type of customer, all
of Kawasaki's home market sales were manufactured to order and the
merchandise was shipped directly from the factory to the end user. The
packing processes were also identical for all sales, and the reported
selling expenses were comparable for all sales. There is no evidence on
the record to suggest that Kawasaki had formal policies for providing
special payment terms, such as discounts, to different types of
customers. Regarding the selling functions with respect to the sales to
end users, Kawasaki conducted price negotiations, communications with
the customers, payment collection activity, and warranty activity, in
addition to maintaining a long-term cooperative relationship designed
to assist the customers' utilization of Kawasaki's products. None of
these qualitatively different functions were performed regarding the
sales to trading companies. Based on the different points in the chain
of distribution and the differences in selling functions, the
Department has preliminarily determined that two levels of trade exist
for Kawasaki's sales in the home market.
Regarding U.S. sales, the Department found that no evidence existed
to differentiate the selling functions between sales made to trading
companies for sale to the United States and sales made to trading
companies for sale in the home market. Therefore, the Department
preliminarily considers sales made through trading companies,
[[Page 115]]
whether to the United States or the home market, to be at the same
level of trade.
The Department then checked to determine whether a pattern of
consistent price differences existed between these two levels of trade.
The Department found that no consistent significant pattern existed and
therefore did not adjust NV if U.S. sales were compared to home market
sales made at a different LOT.
NSC
In the home market NSC sold to unaffiliated and affiliated trading
companies and to end users. In the U.S. market, NSC sold only to
unaffiliated trading companies. NSC claims that there is no difference
in the selling expenses between channels. Although the sales in the
home market represent different points in the chain of distribution
between the producer and the final end-user which could represent
different levels of trade, NSC provided essentially the same level of
marketing assistance and selling functions to all three types of
customers. For its U.S. sales, NSC reported sales to unaffiliated
resellers as its only method of distribution.
When comparing NSC's sales at its EP LOT to its home market LOT, we
found that NSC provided essentially the same level of strategic or
economic planning, market research, engineering services, or post-sale
warehousing at both the EP or home market LOT. All packing expenses and
freight arrangements were similar (in the activities performed) in both
markets. NSC provided similar degrees of after-sales and technical
support at both the EP and home market LOT. Based upon our examination
of the information on the record, we agree with NSC that it had one
LOT.
We have not, therefore, made a LOT adjustment because all price
comparisons are at the same LOT and an adjustment pursuant to section
773(a)(7)(A) of the Tariff Act is not appropriate.
Facts Available
Section 776(a)(2) of the Act provides that, if an interested party:
(A) withholds information that has been requested by the Department;
(B) fails to provide such information in a timely manner or in the form
or manner requested; (C) significantly impedes a proceeding under the
antidumping statute; or (D) provides such information but the
information cannot be verified, as provided in section 782(i), the
Department shall, subject to subsections 782(d), use facts otherwise
available in reaching the applicable determination. Because Nisshin,
Nippon Yakin, and Nippon Metal failed to respond to the Department's
questionnaire, and because that failure is not overcome by the
application of section 782, we must use facts otherwise available to
calculate the dumping margins for each company.
Section 776(b) of the Act provides that adverse inferences may be
used against a party that has failed to cooperate by not acting to the
best of its ability to comply with the Department's requests for
information. See also Statement of Administrative Action accompanying
the URAA, H.R. Rep. No. 316, 103d Cong., 2d Sess. 870 (1994). The non-
responsive companies' decisions not to reply to the Department's
antidumping questionnaire demonstrates that they have failed to act to
the best of their ability to comply with a request for information
under section 776 of the Act. Thus, the Department has determined that,
in selecting among the facts otherwise available, an adverse inference
is warranted.
Consistent with Department practice, as adverse facts available,
the Department is assigning to Nisshin, Nippon Yakin, and Nippon Metal
the higher of: (1) the highest margin stated in the petition; or (2)
the highest margin calculated for any respondent in this investigation.
Section 776(b) states that an adverse inference may include
reliance on information derived from the petition or any other
information placed on the record. See also SAA at 829-831. Section
776(c) provides that, when the Department relies on secondary
information (e.g., the petition) as the facts otherwise available, it
must, to the extent practicable, corroborate that information from
independent sources that are reasonably at its disposal. We reviewed
the adequacy and accuracy of the information in the petition during our
pre-initiation analysis of the petition, to the extent appropriate
information was available for this purpose (e.g., import statistics,
call reports, and data from business contacts). In this case, the
highest margin alleged in the petition for any Japanese producer is
57.87 percent (see Import Administration AD Investigation Initiation
Checklist, dated June 30, 1998 for a discussion of the margin
calculations in the petition).
The Department was provided with no other useful information by the
respondents or other interested parties, and is aware of no other
independent sources of information, that would enable it to further
corroborate the remaining components of the margin calculation in the
petition.
Currency Conversion
We made currency conversions into U.S. dollars based on the
exchange rates in effect on the dates of the U.S. sales as certified by
the Federal Reserve Bank, in accordance with section 773(A) of the Act.
Verification
As provided in section 782(i) of the Act, we will verify all
information relied upon in making our final determination.
Suspension of Liquidation
In accordance with section 733(d)(2) of the Act, we are directing
the Customs Service to suspend liquidation of all imports of subject
merchandise that are entered, or withdrawn from warehouse, for
consumption on or after the date of publication of this notice in the
Federal Register. For all companies except Kawasaki and NSC, we are
directing the Customs Service to suspend liquidation of all imports of
subject merchandise that are entered or withdrawn from warehouse, for
consumption on or after the date 90 days prior to the date of
publication of this notice in the Federal Register. See section
733(e)(2). We will instruct the Customs Service to require a cash
deposit or the posting of a bond equal to the weighted-average amount
by which the NV exceeds the EP, as indicated in the chart below. These
suspension of liquidation instructions will remain in effect until
further notice. The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Exporter/manufacturer margin
percentage
------------------------------------------------------------------------
Kawasaki Steel Corporation................................ 48.41
Nippon Steel Corporation.................................. 24.94
Nisshin Steel Co., Ltd.................................... 57.87
Nippon Yakin Kogyo........................................ 57.87
Nippon Metal Industries................................... 57.87
All Others................................................ 35.61
------------------------------------------------------------------------
Pursuant to section 735(c)(5)(A) of the Act, the Department has
excluded any zero and de minimis margins and any margins determined
entirely under section 776 of the Act, from the calculation of the
``All Others Rate.''
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination, or 45 days after our final
determination, whether these imports are materially injuring, or
threaten material injury to, the U.S. industry.
[[Page 116]]
Public Comment
Case briefs or other written comments may be submitted to the
Assistant Secretary for Import Administration no later than fifty days
after the date of publication of this notice, and rebuttal briefs,
limited to issues raised in case briefs, no later than fifty-five days
after publication of this notice. A list of authorities used and an
executive summary of issues should accompany any briefs submitted to
the Department. Such summary should be limited to five pages total,
including footnotes. In accordance with section 774 of the Act, we will
hold a public hearing, if requested, to afford interested parties an
opportunity to comment on arguments raised in case or rebuttal briefs.
Tentatively, the hearing will be held fifty-seven days after
publication of this notice, time and room to be determined, at the U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230. Parties should confirm by telephone the time,
date, and place of the hearing 48 hours before the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, within 30 days of the publication of this notice. Requests should
contain: (1) The party's name, address, and telephone number; (2) the
number of participants; and (3) a list of the issues to be discussed.
Oral presentations will be limited to issues raised in the briefs. If
this investigation proceeds normally, we will make our final
determination no later than 135 days after publication of this notice.
This determination is issued and published in accordance with
sections 733(d) and 777(i)(1) of the Act.
Dated: December 17, 1998.
Richard Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-34463 Filed 12-31-98; 8:45 am]
BILLING CODE 3510-DS-P
