2010-2987. Stainless Steel Sheet and Strip in Coils From Mexico; Final Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On August 7, 2009, the Department of Commerce (the Department) published the preliminary results of the administrative review of the antidumping duty order on stainless steel sheet and strip (S4) in coils from Mexico. See Stainless Steel Sheet and Strip in Coils From Mexico; Preliminary Results of Antidumping Duty Administrative Review and Intent Not To Revoke Order in Part, 74 FR 39622 (August 7, 2009) (Preliminary Results). This review covers sales of subject merchandise made by ThyssenKrupp Mexinox S.A. de C.V. (Mexinox) for the period July 1, 2007, to June 30, 2008. Based on our analysis of the comments received, we have made changes to the margin calculation; therefore, the final results differ from the preliminary results. The final weighted-average dumping margin for the reviewed firm is listed below in the section entitled “Final Results of Review.”

DATES:

Effective Date: February 10, 2010.

FOR FURTHER INFORMATION CONTACT:

Patrick Edwards, Brian Davis, or Angelica Mendoza, AD/CVD Operations, Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone], and [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On August 7, 2009, the Department published in the Federal Register the preliminary results of the administrative review of the antidumping duty order on S4 in coils from Mexico for the period July 1, 2007, to June 30, 2008. See Preliminary Results. In response to the Department's invitation to comment on the preliminary results of this review, Mexinox submitted a request for a public hearing and a case brief on September 4, 2009, and September 15, 2009, respectively. See Letter from respondent titled “Stainless Steel Sheet and Strip in Coils from Mexico—Request for Hearing,” dated September 4, 2009; see also Case Brief from respondent titled “Stainless Steel Sheet and Strip in Coils from Mexico—Case Brief,” dated September 15, 2009. Allegheny Ludlum Corporation, AK Steel Corporation, and North American Stainless (collectively referred to as petitioner), submitted their rebuttal brief on September 24, 2009. See Letter from petitioner, titled “Stainless Steel Sheet and Strip in Coils from Mexico—Petitioner's Rebuttal Brief,” dated September 24, 2009. A public hearing was held on October 2, 2009. See Transcript of “In the Matter of: The Administrative Review of the Antidumping Duty Order on Stainless Steel Sheet and Strip in Coils from Mexico” dated October 9, 2009. On December 9, 2009, the Department published in the Federal Register our notice extending the time limit for this review until February 3, 2010. See Stainless Steel Sheet and Strip in Coils from Mexico: Extension of Time Limit for Final Results of Antidumping Duty Administrative Review, 74 FR 65100 (December 9, 2009).

Period of Review

The period of review (POR) is July 1, 2007, to June 30, 2008.

Scope of the Order

For purposes of the order, the products covered are certain stainless steel sheet and strip in coils. Stainless steel is alloy steel containing, by weight, 1.2 percent or less of carbon and 10.5 percent or more of chromium, with or without other elements. The subject sheet and strip is a flat-rolled product in coils that is greater than 9.5 mm in width and less than 4.75 mm in thickness, and that is annealed or otherwise heat treated and pickled or otherwise descaled. The subject sheet and strip may also be further processed (e.g., cold-rolled, polished, aluminized, coated, etc.) provided that it maintains the specific dimensions of sheet and strip following such processing.

The merchandise subject to this order is currently classifiable in the Harmonized Tariff Schedule of the United States (HTSUS) at subheadings: 7219.13.00.31, 7219.13.00.51, 7219.13.00.71, 7219.13.00.81, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90, 7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35, 7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44, 7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35, 7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44, 7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30, 7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30, 7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00, 7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80, 7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60, 7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15, 7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30, 7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and 7220.90.00.80. Although the HTSUS subheadings are provided for convenience and customs purposes, the Department's written description of the merchandise subject to the order is dispositive.

Excluded from the scope of the order are the following: (1) Sheet and strip that is not annealed or otherwise heat treated and pickled or otherwise descaled; (2) sheet and strip that is cut to length; (3) plate (i.e., flat-rolled stainless steel products of a thickness of 4.75 mm or more); (4) flat wire (i.e., cold-rolled sections, with a prepared edge, rectangular in shape, of a width of not more than 9.5 mm); and (5) razor blade steel. Razor blade steel is a flat-rolled product of stainless steel, not further worked than cold-rolled (cold-reduced), in coils, of a width of not more than 23 mm and a thickness of 0.266 mm or less, containing, by weight, 12.5 to 14.5 percent chromium, and certified at the time of entry to be used in the manufacture of razor blades. See Chapter 72 of the 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 the order. These excluded products are described below.

Flapper valve steel is defined as stainless steel strip in coils containing, by weight, between 0.37 and 0.43 percent carbon, between 1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent manganese. This steel also contains, by weight, phosphorus of 0.025 percent or less, silicon of between 0.20 and 0.50 percent, and sulfur of 0.020 percent or less. The product is manufactured by means of vacuum arc remelting, with inclusion controls for sulphide of no more than 0.04 percent and for oxide of no more than 0.05 percent. Flapper valve steel has a tensile strength of between 210 and 300 ksi, yield strength of between 170 and 270 ksi, plus or minus 8 ksi, and a hardness (Hv) of between 460 and 590. Flapper valve steel is most commonly used to produce specialty flapper valves for compressors.

Also excluded is a product referred to as suspension foil, a specialty steel product used in the manufacture of suspension assemblies for computer disk drives. Suspension foil is described as 302/304 grade or 202 grade stainless steel of a thickness between 14 and 127 microns, with a thickness tolerance of plus-or-minus 2.01 microns, and surface glossiness of 200 to 700 percent Gs. Suspension foil must be supplied in coil widths of not more than 407 mm, and with a mass of 225 kg or less. Roll marks may only be visible on one side, with no scratches of measurable depth. The material must exhibit residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm over 685 mm length.

Certain stainless steel foil for automotive catalytic converters is also excluded from the scope of the order. This stainless steel strip in coils is a specialty foil with a thickness of between 20 and 110 microns used to produce a metallic substrate with a honeycomb structure for use in automotive catalytic converters. The steel contains, by weight, carbon of no more than 0.030 percent, silicon of no more than 1.0 percent, manganese of no more than 1.0 percent, chromium of between 19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of no more than 0.045 percent, sulfur of no more than 0.03 percent, lanthanum of between 0.002 and 0.05 percent, and total rare earth elements of more than 0.06 percent, with the balance iron.

Permanent magnet iron-chromium-cobalt alloy stainless strip is also excluded from the scope of the order. This ductile stainless steel strip contains, by weight, 26 to 30 percent chromium, and 7 to 10 percent cobalt, with the remainder of iron, in widths 228.6 mm or less, and a thickness between 0.127 and 1.270 mm. It exhibits magnetic remanence between 9,000 and 12,000 gauss, and a coercivity of between 50 and 300 oersteds. This product is most commonly used in electronic sensors and is currently available under proprietary trade names such as “Arnokrome III.” ^[1]

Certain electrical resistance alloy steel is also excluded from the scope of the order. This product is defined as a non-magnetic stainless steel manufactured to American Society of Testing and Materials (ASTM) specification B344 and containing, by weight, 36 percent nickel, 18 percent chromium, and 46 percent iron, and is most notable for its resistance to high temperature corrosion. It has a melting point of 1390 degrees Celsius and displays a creep rupture limit of 4 kilograms per square millimeter at 1000 degrees Celsius. This steel is most commonly used in the production of heating ribbons for circuit breakers and industrial furnaces, and in rheostats for railway locomotives. The product is currently available under proprietary trade names such as “Gilphy 36.” ^[2]

Certain martensitic precipitation-hardenable stainless steel is also excluded from the scope of the order. This high-strength, ductile stainless steel product is designated under the Unified Numbering System (UNS) as S45500-grade steel, and contains, by weight, 11 to 13 percent chromium, and 7 to 10 percent nickel. Carbon, manganese, silicon and molybdenum each comprise, by weight, 0.05 percent or less, with phosphorus and sulfur each comprising, by weight, 0.03 percent or less. This steel has copper, niobium, and titanium added to achieve aging, and will exhibit yield strengths as high as 1700 Mpa and ultimate tensile strengths as high as 1750 Mpa after aging, with elongation percentages of 3 percent or less in 50 mm. It is generally provided in thicknesses between 0.635 and 0.787 mm, and in widths of 25.4 mm. This product is most commonly used in the manufacture of television tubes and is currently available under proprietary trade names such as “Durphynox 17.” ^[3]

Finally, three specialty stainless steels typically used in certain industrial blades and surgical and medical instruments are also excluded from the scope of the order. These include stainless steel strip in coils used in the production of textile cutting tools (e.g., carpet knives).^[4] 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.” ^[5]

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by interested parties in this administrative review are addressed in the Issues and Decision Memorandum, “Issues and Decision Memorandum for the Final Results of the Antidumping Duty Administrative Review of Stainless Steel Sheet and Strip in Coils from Mexico” (Issues and Decision Memorandum), from John M. Andersen, Acting Deputy Assistant Secretary for Import Administration, to Ronald K. Lorentzen, Deputy Assistant Secretary for Import Administration, dated December 7, 2009, which are hereby adopted by this notice. A list of all issues, which parties have raised and to which we have responded, in the Issues and Decision Memorandum is attached to this notice as an appendix. Parties can find a complete discussion of all issues raised in this review and the corresponding recommendations in this public memorandum, which is on file in the Central Records Unit in room 1117 of the main Commerce building. In addition, a complete version of the Issues and Decision Memorandum can be accessed directly via the Internet at www.ia.ita.doc.gov/​fm/​index.html. The paper copy and electronic version of the Issues and Decision Memorandum are identical in content.

Changes Since the Preliminary Results

For purposes of the preliminary results, we accepted Mexinox's reporting of the handling expenses incurred by Mexinox Trading (Mexinox's home market affiliate) and imputed credit expenses based on reported payment dates. However, in order to be consistent with past administrative reviews of this case, we placed respondent on notice that we intended to request additional information after the issuance of the preliminary results regarding (1) the reported handling expenses, and (2) the actual date of payment for these sales, and address these issues in our final results. See Preliminary Results at 39630; see also Memorandum to the File, “Analysis of Data Submitted by ThyssenKrupp Mexinox S.A. de C.V. for the Preliminary Results of the Antidumping Duty Administrative Review of Stainless Steel Sheet and Strip in Coils from Mexico (A-201-822),” from Patrick Edwards and Brian Davis, Case Analysts, through Angelica Mendoza, Program Manager, dated July 31, 2009, at page 18.

Accordingly, on August 24, 2009, we requested Mexinox report, with regard to handling expenses, (1) a worksheet showing the total warehousing and distribution expenses (separated by warehouse) for all sales handled by Mexinox Trading during the POR, and (2) the total value of the sales on which these expenses were incurred. See Mexinox's September 8, 2009, response to the Department's August 24, 2009, supplemental questionnaire (SSSQR) at pages 2-4 and attachment B-36. Therefore, we have recalculated the handling expenses incurred by Mexinox Trading and applied the revised ratio to those home market sales for which Mexinox reported a handling expense. See Memorandum to the File, “Analysis of Data Submitted by ThyssenKrupp Mexinox S.A. de C.V. for the Final Results of the Antidumping Duty Administrative Review of Stainless Steel Sheet and Strip in Coils from Mexico (A-201-822)” (Final Analysis Memorandum), from Brian Davis and Patrick Edwards, Case Analysts, through Angelica Mendoza, Program Manager, dated February 3, 2010, at pages 10 through 12.

Also on August 24, 2009, we requested that Mexinox (1) clarify whether or not it was able to calculate per-unit credit expenses based on the actual number of days between the date of shipment to the customer and the date of payment and, if so, (2) report the transaction-specific payment dates for each customer as well as imputed credit expenses based on those transaction specific dates. See Mexinox's September 8, 2009, response to the Department's August 24, 2009, supplemental questionnaire (SSSQR) at pages 4-8 and accompanying database revisions. Therefore, we have recalculated the handling expenses incurred by Mexinox Trading and applied the revised ratio to those home market sales for which Mexinox reported a handling expense.

We calculated imputed credit expenses based on the short-term borrowing rate associated with the currency of each home market sale transaction and using transaction-specific payment dates (as reported by Mexinox in its SSSQR at pages 4-7 and corresponding home market sales database) rather than customer-specific weighted average ones (as originally reported by Mexinox in its response to section B of the Department's antidumping duty questionnaire at page B-21 and attachment B-14). See Final Analysis Memorandum at 9 through 10; see also Issues and Decision Memorandum at Comment 5 for a further discussion of imputed credit expenses.

Our methodology for calculating handling charges and imputed credit expenses is consistent with past administrative reviews of this case. See, e.g., Stainless Steel Sheet and Strip in Coils From Mexico; Preliminary Results of Antidumping Duty Administrative Review, 73 FR 45708 (August 6, 2008) at 45715 (unchanged in Stainless Steel Sheet and Strip in Coils from Mexico; Final Results of Antidumping Duty Administrative Review, 74 FR 6365 (February 9, 2009)), and accompanying Issues and Decision Memorandum at Comment 1 (for imputed credit expenses); see also Stainless Steel Sheet and Strip in Coils from Mexico; Preliminary Results of Antidumping Duty Administrative Review, 72 FR 43600 (August 6, 2007) at 43605 (unchanged in Stainless Steel Sheet and Strip in Coils from Mexico; Final Results of Antidumping Duty Administrative Review, 73 FR 7710 (February 11, 2008), and Stainless Steel Sheet and Strip in Coils from Mexico: Amended Final Results of Antidumping Duty Administrative Review, 73 FR 14215 (March 17, 2008)); see also Stainless Steel Sheet and Strip in Coils from Mexico; Preliminary Results of Antidumping Duty Administrative Review, 71 FR 35618 (June 21, 2006) at 35623 (unchanged in Stainless Steel Sheet and Strip in Coils From Mexico; Final Results of Antidumping Duty Administrative Review, 71 FR 76978 (December 22, 2006)).

Furthermore, based on our analysis of the comments received, we have made the following changes to the margin calculation:

• We have converted U.S. inventory carrying costs (INVCARU) to a hundred weight (CWT) basis.
• We included Ken-Mac Metals ^[6] sales that were further processed in the margin calculation.

• We excluded non-subject sales, made by Ken-Mac Metals, from the margin calculation.
• We applied a corrected net interest expense ratio to further processing costs reported by Ken-Mac Metals.
• We included fuel surcharges imposed by Ken-Mac Metals in the net U.S. price calculation.
• We calculated a single importer-specific assessment rate for Mexinox USA, Inc.
• We adjusted the assessment rate for the entered value of merchandise sold outside the United States.
• We recalculated Mexinox's imputed credit expenses to reflect transaction-specific payment dates (PAYDTACTH) as noted above.
• We have recalculated the handling expenses incurred by Mexinox's home market affiliate, Mexinox Trading, and applied the revised ratio to those home market sales for which Mexinox reported a handling expense, as discussed above.

These changes are discussed in the relevant sections of the Issues and Decision Memorandum and Final Analysis Memorandum.

Final Results of Review

We determine the following weighted-average percentage margin exists for the period July 1, 2007 to June 30, 2008:

Manufacturer/exporter	Weighted average margin (percentage)
ThyssenKrupp Mexinox S.A. de C.V	4.48

Assessment

The Department will determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries, pursuant to section 751(a)(1) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.212(b). The Department calculated an assessment rate for each importer of the subject merchandise covered by the review. Upon issuance of the final results of this review, for any importer-specific assessment rates calculated in the final results that are above de minimis ( i.e., at or above 0.50 percent), we will issue appraisement instructions directly to CBP to assess antidumping duties on appropriate entries by applying the per-unit dollar amount against each unit of merchandise on each of that importer's entries during the review period. See 19 CFR 351.212(b)(1). Pursuant to 19 CFR 356.8(a), the Department intends to issue assessment instructions to CBP 41 days after the date of publication of these 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). This clarification will apply to entries of subject merchandise during the POR produced by Mexinox for which Mexinox did not know the merchandise was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the 30.69 percent all-others rate if there is no company-specific rate for an intermediary involved in the transaction.

Cash Deposit Requirements

The following cash deposit requirements will be effective upon publication of these final results for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of these final results of administrative review, consistent with section 751(a)(1) of the Act: (1) The cash deposit rate for the reviewed company will be the rate listed above; (2) if the exporter is not a firm covered in this review, but was covered in a previous review or the original less-than-fair-value (LTFV) investigation, 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 original LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be 30.69 percent, the all-others rate established in the LTFV investigation. See Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order; Stainless Steel Sheet and Strip in Coils From Mexico, 64 FR 40560 (July 27, 1999). These deposit requirements, when imposed, shall remain in effect until further notice.

Notifications to Interested Parties

This notice also serves as a final 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 Department's presumption that reimbursement of the antidumping duties occurred and the subsequent assessment of doubled antidumping duties.

This notice also serves as a reminder to parties subject to administrative protective orders (APOs) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305, which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

This notice is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: February 3, 2010.

Ronald K. Lorentzen,

Deputy Assistant Secretary for Import Administration.

Appendix

List of Issues in Issues and Decision Memorandum

General Issues

Comment 1: Clerical Errors.

Comment 2: Offsetting for U.S. Sales that Exceed Normal Value.

Sales Issues

Comment 3: Date of Sale.

Comment 4: U.S. Indirect Selling Expenses.

Adjustments to Normal Value

Comment 5: Calculation of Credit Expenses.

Cost of Production

Comment 6: Whether to Apply an Alternative Cost Averaging Methodology.

Comment 7: General and Administrative Expense Ratio (Employee Profit Sharing).

Comment 8: General and Administrative Expense Ratio (Gains on Sale of Warehouse).

Comment 9: Financial Expenses.

Footnotes

1.  “Arnokrome III” is a trademark of the Arnold Engineering Company.

2.  “Gilphy 36” is a trademark of Imphy, S.A.

3.  “Durphynox 17” is a trademark of Imphy, S.A.

4.  This list of uses is illustrative and provided for descriptive purposes only.

5.  “GIN4 Mo,” “GIN5” and “GIN6” are the proprietary grades of Hitachi Metals America, Ltd.

6.  Ken-Mac Metals is an affiliated service center headquartered in Cleveland, Ohio, whose primary business is the resale and further-processing of aluminum, stainless steel, and other metals. See Mexinox's October 7, 2008, response to the Department's section A antidumping duty questionnaire at 15-18 for additional information regarding Ken-Mac's operations.