E8-30272. Certain Cut-to-Length Carbon-Quality Steel Plate Products From the Republic of Korea: Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to requests by interested parties, the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain cut-to-length carbon-quality steel plate products from the Republic of Korea (Korea). This review covers one producer/exporter of the subject merchandise, Dongkuk Steel Mill Co., Ltd. (DSM). The period of review (POR) is February 1, 2007, through January 31, 2008.

The Department has preliminarily determined that DSM made U.S. sales at prices less than normal value. If these preliminary results are adopted in our final results of administrative review, we will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties on all appropriate entries. Interested parties are invited to comment on these preliminary results of review. We intend to issue the final results of review no later than 120 days from the publication date of this notice.

EFFECTIVE DATE:

December 19, 2008.

FOR FURTHER INFORMATION CONTACT:

Lyn Johnson or Minoo Hatten, AD/CVD Operations, Office 5, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230, telephone: [phone] and [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On February 10, 2000, the Department published in the Federal Register an antidumping duty order on certain cut-to-length carbon-quality steel plate products (steel plate) from the Republic of Korea (Korea). See Notice of Amendment of Final Determinations of Sales at Less Than Fair Value and Antidumping Duty Orders: Certain Cut-To-Length Carbon-Quality Steel Plate Products From France, India, Indonesia, Italy, Japan and the Republic of Korea, 65 FR 6585 (February 10, 2000). On February 4, 2008, the Department published in the Federal Register a notice of “Opportunity to Request Administrative Review” of the order. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review, 73 FR 6477 (February 4, 2008).

In accordance with 19 CFR 351.213(b)(2), on February 29, 2008, DSM requested that the Department conduct an administrative review of its sales and entries of subject merchandise into the United State during the POR. Additionally, on February 29, 2008, and in accordance with 19 CFR 351.213(b)(1), domestic producers and interested parties, Nucor Corporation (Nucor) and ArcelorMittal Steel USA Inc. (ArcelorMittal), requested that the Department conduct a review of DSM. On March 31, 2008, the Department initiated an administrative review of DSM. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, Request for Revocation in Part, and Deferral of Administrative Review, 73 FR 16837 (March 31, 2008). On October 15, 2008, we extended the due date for the preliminary results of review by 45 days to December 15, 2008. See Certain Cut-to-Length Carbon-Quality Steel Plate Products From the Republic of Korea: Extension of Time Limit for Preliminary Results of Antidumping Duty Administrative Review, 73 FR 62477 (October 21, 2008).

The Department is conducting this administrative review in accordance with section 751 of the Tariff Act of 1930, as amended (the Act).

Scope of the Order

The products covered by the antidumping duty order are certain hot-rolled carbon-quality steel: (1) Universal mill plates (i.e., flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 mm but not exceeding 1250 mm, and of a nominal or actual thickness of not less than 4 mm, which are cut-to-length (not in coils) and without patterns in relief), of iron or non-alloy-quality steel; and (2) flat-rolled products, hot-rolled, of a nominal or actual thickness of 4.75 mm or more and of a width which exceeds 150 mm and measures at least twice the thickness, and which are cut-to-length (not in coils). Steel products included in the scope of the order are of rectangular, square, circular, or other shape and of rectangular or non-rectangular cross-section where such non-rectangular cross-section is achieved subsequent to the rolling process (i.e., products which have been “worked after rolling”) - for example, products which have been beveled or rounded at the edges. Steel products that meet the noted physical characteristics that are painted, varnished, or coated with plastic or other non-metallic substances are included within this scope. Also, specifically included in the scope of the order are high strength, low alloy (HSLA) steels. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. Steel products included in this scope, regardless of Harmonized Tariff Schedule of the United States (HTSUS) definitions, are products in which: (1) Iron predominates, by weight, over each of the other contained elements, (2) the carbon content is two percent or less, by weight, and (3) none of the elements listed below is equal to or exceeds the quantity, by weight, respectively indicated: 1.80 percent of manganese, or 1.50 percent of silicon, or 1.00 percent of copper, or 0.50 percent of aluminum, or 1.25 percent of chromium, or 0.30 percent of cobalt, or 0.40 percent of lead, or 1.25 percent of nickel, or 0.30 percent of tungsten, or 0.10 percent of molybdenum, or 0.10 percent of niobium, or 0.41 percent of titanium, or 0.15 percent of vanadium, or 0.15 percent zirconium. All products that meet the written physical description, and in which the chemistry quantities do not equal or exceed any one of the levels listed above, are within the scope of the order unless otherwise specifically excluded. The following products are specifically excluded from the order: (1) Products clad, plated, or coated with metal, whether or not painted, varnished or coated with plastic or other non-metallic substances; (2) SAE grades (formerly AISI grades) of series 2300 and above; (3) products made to ASTM A710 and A736 or their proprietary equivalents; (4) abrasion-resistant steels (i.e., USS AR 400, USS AR 500); (5) products made to ASTM A202, A225, A514 grade S, A517 grade S, or their proprietary equivalents; (6) ball bearing steels; (7) tool steels; and (8) silicon manganese steel or silicon electric steel.

Imports of steel plate are currently classified in the HTSUS under subheadings 7208.40.3030, 7208.40.3060, 7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.40.3050, 7225.40.7000, 7225.50.6000, 7225.99.0090, 7226.91.5000, 7226.91.7000, 7226.91.8000, and 7226.99.0000. The HTSUS subheadings are provided for convenience and customs purposes. The written description of the merchandise covered by the order is dispositive.

Fair-Value Comparison

To determine whether DSM's sales of the subject merchandise from Korea to the United States were at prices below normal value, we compared the constructed export price (CEP) to the normal value as described in the “Constructed Export Price” and “Normal Value” sections of this notice. Therefore, pursuant to section 777A(d)(2) of the Act, we compared the CEP of individual U.S. transactions to the monthly weighted-average normal value of the foreign like product where there were sales made in the ordinary course of trade.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all products covered by the “scope of the order” section above produced and sold by DSM in the comparison market during the POR to be foreign like product for the purposes of determining appropriate product comparisons to U.S. sales of subject merchandise. Specifically, in making our comparisons, we used the following methodology. If an identical comparison-market model was reported, we made comparisons to weighted-average comparison-market prices that were based on all sales which passed the cost-of-production (COP) test of the identical product during the relevant or contemporary month. We calculated the weighted-average comparison-market prices on a level of trade-specific basis. If there were no contemporaneous sales of an identical model, we identified the most similar comparison-market model. To determine the most similar model, we matched the foreign like product based on the physical characteristics reported by the respondent in the following order of importance: quality, specification, heat treatments, thickness, and width.

Constructed Export Price

The Department based the price of DSM's U.S. sales of subject merchandise on CEP, as defined in section 772(b) of the Act, because the merchandise was sold, before importation, by a U.S.-based seller affiliated with the producer to unaffiliated purchasers in the United States. In accordance with section 772(d)(1) of the Act we calculated the CEP by deducting selling expenses associated with economic activities occurring in the United States, which includes direct selling expenses. In accordance with section 772(d)(1) of the Act, we also deducted those indirect selling expenses associated with economic activities occurring in the United States and the profit allocated to expenses deducted under section 772(d)(1) in accordance with sections 772(d)(3) and 772(f) of the Act. In accordance with section 772(f) of the Act, we computed profit based on the total revenues realized on sales in both the U.S. and comparison markets, less all expenses associated with those sales. We then allocated profit to expenses incurred with respect to U.S. economic activity based on the ratio of total U.S. expenses to total expenses for both the U.S. and comparison markets.

Normal Value

A. Affiliation

DSM made home-market sales to a wholly owned subsidiary of Dongkuk Industries Co., Ltd. (DKI). The Department has found DKI to be an affiliated party of DSM in prior reviews and has treated sales to DKI's wholly owned subsidiary as affiliated-party sales. See Certain Cut-to-Length Carbon-Quality Steel Plate Products From the Republic of Korea: Preliminary Results and Rescission in Part of Antidumping Duty Administrative Review, 70 FR 67428, 67429 (November 7, 2005) (2004/05 Prelim), unchanged in Certain Cut-to-Length Carbon-Quality Steel Plate Products From the Republic of Korea: Final Results of Antidumping Duty Administrative Review, 71 FR 13080 (March 14, 2006) (2004/05 Final). See also Certain Cut-to-Length Carbon-Quality Steel Plate Products From the Republic of Korea: Preliminary Results and Rescission in Part of Antidumping Duty Administrative Review, 72 FR 65701, 65703 (November, 2007) (2006/07 Prelim), unchanged in Certain Cut-to-Length Carbon-Quality Steel Plate Products From the Republic of Korea: Final Results and Rescission in Part of Antidumping Duty Administrative Review, 73 FR 15132 (March 21, 2008) (2006/07 Final).

Section 771(33)(F) of the Act states that two or more persons directly or indirectly controlling, controlled by, or under common control with any person shall be considered affiliates. Accordingly, we have determined in this review that DSM and DKI are under common control of a family grouping and, thus, are affiliated. Our decision is supported by the evidence on the record of this review which indicates that the same familial relationships that formed the basis of our determination in 2004/05 Final^[1] and 2006/07 Final^[2] continue today. Further, although DSM identified DKI as an unaffiliated entity in its original questionnaire response, DSM confirmed in its supplemental response that there have not been any changes in the ownership or control of DSM and DKI during the POR that would affect the Department's 2007-2008 analysis of affiliation between the two companies. See DSM's Supplemental Questionnaire Response dated September 9, 2008, at 6. The detailed analysis of this issue contains business-proprietary information and, therefore, is available in a decision memorandum. See Memorandum to Laurie Parkhill concerning Affiliation Analysis for Dongkuk Steel Mill Co., Ltd., dated December 12, 2008. For the reasons stated above and outlined in the decision memorandum, the Department preliminarily continues to find that DSM and DKI are affiliated under section 771(33) of the Act.

B. Home-Market Viability

In accordance with section 773(a)(1)(c) of the Act, in order to determine whether there was a sufficient volume of sales of steel plate in the comparison market to serve as a viable basis for calculating the normal value, we compared the volume of the respondent's home-market sales of the foreign like product to its volume of the U.S. sales of the subject merchandise. DSM's quantity of sales in the home market was greater than five percent of its sales to the U.S. market. Based on this comparison of the aggregate quantities sold in the comparison market (i.e., Korea) and to the United States and absent any information that a particular market situation in the exporting country did not permit a proper comparison, we preliminarily determine that the quantity of the foreign like product sold by the respondent in the exporting country was sufficient to permit a proper comparison with the sales of the subject merchandise to the United States, pursuant to section 773(a)(1) of the Act. Thus, we determine that DSM's home market was viable during the POR. Id. Therefore, in accordance with section 773(a)(1)(B)(i) of the Act, we based normal value for the respondent on the prices at which the foreign like product was first sold for consumption in the exporting country in the usual commercial quantities and in the ordinary course of trade and, to the extent practicable, at the same level of trade as the U.S. sales.

C. Overrun Sales

Section 773(a)(1)(B) of the Act provides that normal value shall be based on the price at which the foreign like product is first sold, inter alia, in the ordinary course of trade. Section 771(15) of the Act defines “ordinary course of trade” as the “conditions and practices which, for a reasonable time prior to the exportation of the subject merchandise, have been normal in the trade under consideration with respect to merchandise of the same class or kind.”

DSM reported home-market sales of “overrun” merchandise (i.e., sales of a greater quantity of steel plate than the customer ordered due to overproduction). In the past, the Department has examined various factors to determine whether “overrun” sales are in the ordinary course of trade. See China Steel Corp. v. United States, 264 F. Supp. 2d. 1339, 1364 (CIT May 14, 2003). See also 2004/05 Prelim, 70 FR 67428, 67430, unchanged in 2004/05 Final, 71 FR 13080. The Department has the discretion to choose how best to analyze the many factors involved in determining whether sales are made within the ordinary course of trade. See Laclede Steel Co. v. United States, 19 CIT 1076, 1078 (CIT August 11, 1995). These factors include, but are not limited to, the following: (1) whether the merchandise is “off-quality” or produced according to unusual specifications; (2) the comparative volume of sales and the number of buyers in the home market; (3) the average quantity of an overrun sale compared to the average quantity of a commercial sale; and (4) price and profit differentials in the home market.

Based on our analysis of these factors and the terms of sale, we preliminarily determine that DSM's overrun sales are outside the ordinary course of trade. Because our analysis makes use of business-proprietary information, the analysis is available in a separate decision memorandum. See Memorandum to Laurie Parkhill concerning Dongkuk Steel Mill Co., Ltd. Sales Outside the Ordinary Course of Trade, dated December 12, 2008.

D. Cost-of-Production Analysis

In the most recently completed administrative review, the Department determined that DSM sold the foreign like product at prices below the cost of producing the merchandise and, as a result, excluded such sales from the calculation of normal value. See 2006/07 Prelim, 72 FR at 65704, unchanged in 2006/07 Final, 73 FR 15132. Therefore, in this review, we have reasonable grounds to believe or suspect that DSM's sales of the foreign like product under consideration for the determination of normal value may have been made at prices below COP as provided by section 773(b)(2)(A)(ii) of the Act and, pursuant to section 773(b)(1) of the Act, we have conducted a COP investigation of DSM's sales in the comparison market.

In accordance with section 773(b)(3) of the Act, we calculated the COP based on the sum of the costs of materials and labor employed in producing the foreign like product, the selling, general, and administrative (SG&A) expenses, and all costs and expenses incidental to packing the merchandise. In our COP analysis, we used the comparison-market sales and COP information provided by DSM in its questionnaire response.

After calculating the COP, in accordance with section 773(b)(1) of the Act, we tested whether comparison-market sales of the foreign like product were made at prices below the COP within an extended period of time in substantial quantities and whether such prices permitted the recovery of all costs within a reasonable period of time. See section 773(b)(2) of the Act. We compared model-specific COPs to the reported comparison-market prices less any applicable movement charges, discounts, and rebates.

Pursuant to section 773(b)(2)(C) of the Act, when less than 20 percent of DSM'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 the below-cost sales were not made in substantial quantities within an extended period of time. When 20 percent or more of DSM's sales of a given product during the POR were at prices less than the COP, we disregarded the below-cost sales because they were made in substantial quantities within an extended period of time pursuant to sections 773(b)(2)(B) and (C) of the Act and because, based on comparisons of prices to weighted- average COPs for the POR, we determined that these sales were at prices which would not permit recovery of all costs within a reasonable period of time in accordance with section 773(b)(2)(D) of the Act. Based on this test, we disregarded below-cost sales.

E. Arm's-Length Test

The Department may calculate normal value 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 exporter or producer, i.e., sales at arm's-length prices. See 19 CFR 351.403(c). For affiliated-party sales, we excluded from our analysis sales to affiliated customers for consumption in the comparison market that we determined not to have been made at arm's-length prices. To test whether these sales were made at arm's-length prices, the Department compared the prices of sales of comparable merchandise to affiliated and unaffiliated customers, net of all rebates, movement charges, direct selling expenses, and packing. Pursuant to 19 CFR 351.403(c) and in accordance with our practice, when the prices charged to an affiliated party were, on average, between 98 and 102 percent of the prices charged to unaffiliated parties for merchandise comparable to that sold to the affiliated party, we determined that the sales to the affiliated party were at arm's-length prices. See Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67 FR 69186 (November 15, 2002) (explaining the Department's practice). We included in our calculations of normal value those sales to affiliated parties that were made at arm's-length prices.

F. Price-to-Price Comparisons

We based normal value on comparison-market sales to unaffiliated purchasers and sales to affiliated customers that passed the arm's-length test. DSM's comparison-market prices were based on the packed, ex-factory, or delivered prices. When applicable, we made adjustments for differences in packing and for movement expenses in accordance with sections 773(a)(6)(A) and (B) of the Act. We also made adjustments for differences in cost attributable to differences in physical characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411 and for differences in circumstances of sale in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. For comparisons to CEP, we made circumstance-of-sale adjustments by deducting comparison-market direct selling expenses from normal value.

Level of Trade

To the extent practicable, we determine normal value for sales at the same level of trade as CEP sales. See section 773(a)(1)(B)(i) of the Act and 19 CFR 351.412. When there are no sales at the same level of trade, we compare CEP sales to comparison-market sales at a different level of trade. The normal-value level of trade is that of the starting-price sales in the comparison market.

To determine whether comparison-market sales are at a different level of trade than DSM's U.S. sales in this review, we examined stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. Based on our analysis, we have preliminarily determined that there is one level of trade in the United States and one level of trade in the home market and that the U.S. level of trade is at a less advanced stage than the home-market level of trade. Therefore, we have compared U.S. sales to home-market sales at different levels of trade.

Because there is only one level of trade in the home market, we were unable to calculate a level-of-trade adjustment based on DSM's home-market sales of the foreign like product and we have no other information that provides an appropriate basis for determining a level-of-trade adjustment. For DSM's CEP sales, to the extent possible, we determined normal value at the same level of trade as the U.S. sale to the unaffiliated customer and made a CEP-offset adjustment in accordance with section 773(a)(7)(B) of the Act. The CEP-offset adjustment to normal value is subject to the so-called offset cap, which is calculated as the sum of home-market indirect selling expenses up to the amount of U.S. indirect selling expenses deducted from CEP.

For a detailed description of our level-of-trade analysis for DSM in these preliminary results, see Preliminary Analysis Memorandum for Dongkuk Steel Mill Company, Ltd., dated December 12, 2008.

Currency Conversion

Pursuant to 19 CFR 351.415, we converted amounts expressed in foreign currencies into U.S. dollar amounts based on the exchange rates in effect on the dates of the relevant U.S. sales, as certified by the Federal Reserve Bank.

Preliminary Results of Review

As a result of this review, we preliminarily determine that the following weighted-average dumping margin exists for the period February 1, 2007, through January 31, 2008:

Manufacturer/Exporter	Margin (percent)
Dongkuk Steel Mill Co., Ltd.	9.27

Disclosure and Public Comment

We will disclose the calculations used in our analysis to parties in this review within five days of the date of publication of this notice. Any interested party may request a hearing within 30 days of the publication of this notice in the Federal Register. If a hearing is requested, the Department will notify interested parties of the hearing schedule.

Interested parties are invited to comment on the preliminary results of this review. The Department will consider case briefs filed by interested parties within 30 days after the date of publication of this notice in the Federal Register. Interested parties may file rebuttal briefs, limited to issues raised in the case briefs. The Department will consider rebuttal briefs filed not later than five days after the time limit for filing case briefs. Parties who submit arguments are requested to submit with each argument a statement of the issue, a brief summary of the argument, and a table of authorities cited. Further, we request that parties submitting written comments provide the Department with a diskette containing an electronic copy of the public version of such comments.

We intend to issue the final results of this administrative review, including the results of our analysis of issues raised in the written comments, within 120 days of publication of these preliminary results in the Federal Register.

Assessment Rates

The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we calculated an importer-specific assessment rate for these preliminary results of review. We divided the total dumping margins for the reviewed sales by the total entered value of those reviewed sales for the importer. We will instruct CBP to assess the importer-specific rate uniformly, as appropriate, on all entries of subject merchandise made by the relevant importer during the POR. See 19 CFR 351.212(b). The Department intends to issue instructions to CBP 15 days after the publication of the final results of review.

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 of Antidumping Duties). This clarification will apply to entries of subject merchandise during the POR produced by DSM for which DSM did not know its merchandise was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries of DSM-produced merchandise at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction. For a full discussion of this clarification, see Assessment of Antidumping Duties.

Cash-Deposit Requirements

The following deposit requirements will be effective upon publication of the notice of final results of administrative review for all shipments of steel plate from Korea entered, or withdrawn from warehouse, for consumption on or after the date of publication, as provided by section 751(a)(2)(C) of the Act: (1) the cash-deposit rate for DSM will be the rate established in the final results of this review; (2) for previously reviewed or investigated companies not listed above, the cash-deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the less-than-fair-value investigation but the manufacturer is, the cash-deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; (4) if neither the exporter nor the manufacturer has its own rate, the cash-deposit rate will be 0.98 percent, the all-others rate established in the LTFV investigation,^[3] adjusted for the export-subsidy rate in the companion countervailing duty investigation.^[4] This deposit requirement, when imposed, shall remain in effect until further notice.

Notification to Importers

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties.

These preliminary results of administrative review are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: December 12, 2008.

Stephen J. Claeys,

Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations.

Footnotes

1.  See Memorandum to Holly Kuga from Malcolm Burke concerning the affiliation analysis for Dongkuk Steel Mill Co., Ltd., dated October 31, 2005.

2.  See Preliminary Analysis Memorandum for Dongkuk Steel Mill Co., Ltd., dated November 15, 2007, at 2.

3.  See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-To-Length Carbon-Quality Steel Plate Products from Korea, 64 FR 73196, 73214 (December 29, 1999). See also Memorandum To The File from Lyn Johnson concerning All-Others Rate, dated December 12, 2008.

4.  See Final Affirmative Countervailing Duty Determination: Certain Cut-to-Length Carbon-Quality Steel Plate From the Republic of Korea, 64 FR 73176, 731818-86 (December 29, 1999), as amended in Notice of Amended Final Determinations: Certain Cut-to-Length Carbon-Quality Steel Plate From India and the Republic of Korea, 65 FR 6587, 6588 (February 10, 2000).