[Federal Register Volume 63, Number 43 (Thursday, March 5, 1998)]
[Notices]
[Pages 10841-10847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5600]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-401-806]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Stainless Steel Wire Rod
From Sweden
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: March 5, 1998.
FOR FURTHER INFORMATION CONTACT: Sunkyu Kim or Brian Smith, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC
20230; telephone: (202) 482-2613 or (202) 482-1766, 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's
regulations are to the regulations at 19 CFR part 351, 62 FR 27296 (May
19, 1997).
Preliminary Determination
We preliminarily determine that stainless steel wire rod (``SSWR'')
from Sweden 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.
Case History
Since the initiation of this investigation (Notice of Initiation of
Antidumping Investigations: Stainless Steel Wire Rod from Germany,
Italy, Japan, Korea, Spain, Sweden, and Taiwan (62 FR 45224, August 26,
1997)), the following events have occurred:
In August 1997, the Department obtained information from the U.S.
Embassy in Sweden identifying Fagersta Stainless AB (``Fagersta'') as
the only potential producer and/or exporter of the subject merchandise
to the United States. Based on this information, the Department issued
the antidumping questionnaire to Fagersta in September 1997. Section A
of the questionnaire requests general information concerning the
company's corporate structure and business practices, the merchandise
under investigation that it sells, and the sales of that merchandise in
all markets. Sections B and C of the questionnaire request home market
sales listings and U.S. sales listings. Section D of the questionnaire
requests information regarding the cost of production of the foreign
like product and the constructed value of the merchandise under
investigation. Section E of the questionnaire requests information
regarding the cost of further manufacture or assembly performed in the
United States.
Also in September 1997, the United States International Trade
Commission (``ITC'') issued an affirmative preliminary injury
determination in this case (see ITC Investigation No. 731-TA-770).
In October 1997, the Department received a response to Section A of
the
[[Page 10842]]
questionnaire from Fagersta. On October 14, 1997, Fagersta requested
that the Department modify the reporting period for a U.S. affiliate.
The Department granted this request on October 16, 1997. Fagersta
(hereinafter ``the respondent'') submitted its response to sections B,
C, and E of the questionnaire in November 1997.
On October 10, 1997, the petitioners in this case (i.e., AL Tech
Specialty Steel Corp., Carpenter Technology Corp., Republic Engineered
Steels, Talley Metals Technology, Incl, and United Steelworkers of
America) requested that the Department revise its questionnaire to
obtain information on the actual nickel, chromium, and molybdenum
content for each sale of the SSWR made during the period of
investigation. On October 17, 1997, the respondent requested that the
Department deny the petitioners' request. The Department, upon
consideration of the comments from all parties on this matter, issued a
memorandum on December 18, 1997, indicating its decision to make no
changes in the model-matching criteria specified in the September 19,
1997, questionnaire (see Memorandum from Team to Holly Kuga, Office
Director, dated December 18, 1997).
On October 20, 1997, Fagersta requested that it be allowed to
exclude from its sales listing U.S. sales of certain wire products
further manufactured from subject merchandise. On November 6, 1997, the
Department denied this request and required Fagersta to report these
sales of further-manufactured products in its response. On November 7,
1997, Fagersta requested that it be allowed to exclude certain other
sales made in the United States. Fagersta stated that these sales
constitute an insignificant amount of its total U.S. sales made during
the period of investigation and that they are unrepresentative of
Fagersta's normal sales. We granted Fagersta's request on November 12,
1997.
On November 25, 1997, the petitioners submitted a timely allegation
pursuant to section 773(b) of the Act that Fagersta had made sales in
the home market at less than the cost of production (``COP''). Our
analysis of the allegation indicated that there were reasonable grounds
to believe or suspect that Fagersta sold SSWR in the home market at
prices at less than the COP. Accordingly, we initiated a COP
investigation with respect to Fagersta pursuant to section 773(b) of
the Act (see Memorandum from Team to Louis Apple, Office Director,
dated December 16, 1997).
On December 11, 1997, pursuant to section 733(c)(1)(A) of the Act,
the petitioners made a timely request to postpone the preliminary
determination. We granted this request and, on December 16, 1997, we
postponed the preliminary determination until no later than February
25, 1998 (62 FR 66849, December 22, 1997).
We received Fagersta's response to Section D of the questionnaire
in January 1998. We issued supplemental questionnaires for Sections A,
B, C and E to Fagersta in January 1998 and received responses to these
questionnaires along with a revised U.S. sales listing in February
1998. Fagersta also submitted additional clarifications to its
responses in February 1998.
Postponement of Final Determination and Extension of Provisional
Measures
Pursuant to section 735(a)(2) of the Act, on February 9, 1998,
Fagersta 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 February 12, 1998, Fagersta amended its request 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) Fagersta accounts for a
significant proportion of exports of the subject merchandise, and (3)
no compelling reasons for denial exist, we are granting the
respondent's request 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.
Scope of Investigation
For purposes of this investigation, SSWR comprises products that
are hot-rolled or hot-rolled annealed and/or pickled and/or descaled
rounds, squares, octagons, hexagons or other shapes, in coils, that may
also be coated with a lubricant containing copper, lime or oxalate.
SSWR is made of alloy steels containing, by weight, 1.2 percent or less
of carbon and 10.5 percent or more of chromium, with or without other
elements. These products are manufactured only by hot-rolling or hot-
rolling, annealing, and/or pickling and/or descaling, are normally sold
in coiled form, and are of solid cross-section. The majority of SSWR
sold in the United States is round in cross-sectional shape, annealed
and pickled, and later cold-finished into stainless steel wire or
small-diameter bar.
The most common size for such products is 5.5 millimeters or 0.217
inches in diameter, which represents the smallest size that normally is
produced on a rolling mill and is the size that most wire-drawing
machines are set up to draw. The range of SSWR sizes normally sold in
the United States is between 0.20 inches and 1.312 inches diameter. Two
stainless steel grades, SF20T and K-M35FL, are excluded from the scope
of the investigation. The chemical makeup for the excluded grades is as
follows:
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
SF20T
----------------------------------------------------------------------------------------------------------------
Carbon............................ 0.05 max............. Chromium............. 19.00/21.00.
Manganese......................... 2.00 max............. Molybdenum........... 1.50/2.50.
Phosphorous....................... 0.05 max............. Lead................. added (0.10/0.30).
Sulfur............................ 0.15 max............. Tellurium............ added (0.03 min).
Silicon........................... 1.00 max
----------------------------------------------------------------------------------------------------------------
K-M35FL
----------------------------------------------------------------------------------------------------------------
Carbon............................ 0.015 max............ Nickel............... 0.30 max.
Silicon........................... 0.70/1.00............ Chromium............. 12.50/14.00.
Manganese......................... 0.40 max............. Lead................. 0.10/0.30.
Phosphorous....................... 0.04 max............. Aluminum............. 0.20/0.35.
Sulfur............................ 0.03 max
----------------------------------------------------------------------------------------------------------------
[[Page 10843]]
The products under investigation are currently classifiable under
subheadings 7221.00.0005, 7221.00.0015, 7221.00.0030, 7221.00.0045, and
7221.00.0075 of the Harmonized Tariff Schedule of the United States
(``HTSUS''). Although the HTSUS subheadings are provided for
convenience and customs purposes, the written description of the scope
of this investigation is dispositive.
Period of Investigation
The period of investigation (``POI'') is July 1, 1996, through June
30, 1997.
Fair Value Comparisons
To determine whether sales of SSWR from Sweden to the United States
were made at less than fair value, we compared the export price
(``EP'') or constructed export price (``CEP'') to the Normal Value
(``NV''), as described in the ``Export Price and Constructed Export
Price'' and ``Normal Value'' sections of this notice, below. In
accordance with section 777A(d)(1)(A)(i) of the Act, we calculated
weighted-average EPs and CEPs for comparison to weighted-average NVs.
On January 8, 1998, the Court of Appeals for the Federal Circuit
issued a decision in CEMEX v. United States, 1998 WL 3626 (Fed Cir.).
In that case, based on the pre-URAA version of the Act, the Court
discussed the appropriateness of using constructed value (CV) as the
basis for foreign market value when the Department finds home market
sales to be outside the ``ordinary course of trade.'' This issue was
not raised by any party in this proceeding. However, the URAA amended
the definition of sales outside the ``ordinary course of trade'' to
include sales below cost. See Section 771(15) of the Act. Consequently,
the Department has reconsidered its practice in accordance with this
court decision and has determined that it would be inappropriate to
resort directly to CV, in lieu of foreign market sales, as the basis
for NV if the Department finds foreign market sales of merchandise
identical or most similar to that sold in the United States to be
outside the ``ordinary course of trade.'' Instead, the Department will
use sales of similar merchandise, if such sales exist. The Department
will use CV as the basis for NV only when there are no above-cost sales
that are otherwise suitable for comparison. Therefore, in this
proceeding, when making comparisons in accordance with section 771(16)
of the Act, we considered all products sold in the home market as
described in the ``Scope of Investigation'' section of this notice,
above, that were in the ordinary course of trade for purposes of
determining appropriate product comparisons to U.S. sales. Where there
were no sales of identical merchandise in the home market made in the
ordinary course of trade to compare to U.S. sales, we compared U.S.
sales to sales of the most similar foreign like product made in the
ordinary course of trade, based on the characteristics listed in
Sections B and C of our antidumping questionnaire. We have implemented
the Court's decision in this case, to the extent that the data on the
record permitted.
In instances where the respondent has reported a non-AISI grade (or
an internal grade code) for a product that falls within a single AISI
category, we have used the actual AISI grade rather than the non-AISI
grades reported by respondents for purposes of our analysis. However,
in instances where the chemical content ranges of reported non-AISI (or
an internal grade code) grades are outside the parameters of an AISI
grade, we have preliminarily used the grade code reported by the
respondent for analysis purposes. We intend to examine this issue
further for the final determination.
With respect to home market sales of non-prime merchandise made by
Fagersta during the POI, we excluded these sales from our preliminary
analysis based on the limited quantity of such sales in the home market
and the fact that no such sales were made to the United States during
the POI, in accordance with our past practice (see, e.g., Final
Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled
Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat
Products, Certain Corrosion-Resistant Carbon Steel Flat Products, and
Certain Cut-to-Length Carbon Steel Plate from Korea (58 FR 37176,
37180, July 9, 1993)).
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 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 level of trade
than EP or CEP, we examined 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).
Fagersta reported one customer category (i.e., ``wire drawers'')
and one channel of distribution (i.e., direct sales from mill to end
users) for its home market sales. In its response, Fagersta claims that
its sales to the unaffiliated customers are at a different LOT than its
sales to the affiliated customers because Fagersta provides
significantly different selling services to its affiliated customers
than what it provides to its unaffiliated customers. Specifically,
Fagersta identified the following selling services it provides to its
unaffiliated customers: (1) General promotion and marketing services;
(2) freight and delivery; (3) post-sale warranty services; and (4) pre-
sale technical services. For sales to its affiliated customers,
Fagersta listed the following services: (1) Priority production and
delivery or just-in-time processing; (2) high level of technical
cooperation; (3) network data exchange; (4) prices set annually; (5)
warranty service; (6) billet rebates; and (7) freight and delivery.
Fagersta claims that, because it offers significantly different
services to its affiliated customers, in comparison to its services to
unaffiliated customers, Fagersta charges its affiliated customers
higher prices. Therefore, Fagersta claimed an LOT adjustment on this
basis.
In determining whether separate levels of trade actually existed in
the home market, we examined whether Fagersta's sales involved
different marketing stages (or their equivalent) based on the channel
of distribution, customer categories and selling functions. As noted
above, Fagersta's sales to its unaffiliated and affiliated
[[Page 10844]]
customers were made through the same channel of distribution and to the
same category of customer. With respect to selling activities, we note
that, in some instances, the activities Fagersta characterized as
selling functions (e.g., billet rebates and annual price setting) are
not distinct selling functions which we consider to be relevant to our
LOT analysis. Furthermore, based on our analysis, we note that, while
there are some differences in selling activities between Fagersta's
sales to affiliated customers and unaffiliated customers (e.g., just-
in-time processing services), we do not find that such differences are
sufficient to establish a difference in marketing stage (or its
equivalent). As discussed in the Department's regulations, substantial
differences in selling activities are a necessary, but not sufficient,
condition for determining that there is a difference in the stage of
marketing. See 19 CFR 351.412. See also Notice of Final Results:
Antidumping Duty Administrative Review of Antifriction Bearings from
France et al., 62 FR 2081, 2105 (January 15, 1997). Based on this
analysis, we find that Fagersta's home market sales comprise a single
level of trade.
Fagersta reported both EP and CEP sales in the U.S. market. For EP
sales, Fagersta reported one channel of distribution (i.e., direct
sales from the mill to unaffiliated end users). In analyzing Fagersta's
selling activities for its EP sales, we noted that the sales involved
basically the same selling functions associated with the home market
level of trade described above. Therefore, based upon this information,
we have determined that the level of trade for all EP sales is the same
as that in the home market.
The CEP sales were based on sales made by Fagersta to Sandvik Steel
Company (``SSUS''), one of Fagersta's U.S. affiliates, which then sold
the merchandise to unaffiliated purchasers in the United States. Based
on our analysis, we find that the selling functions performed at the
CEP level are essentially the same as those performed in the home
market. Specifically, after making deductions pursuant to section
772(d) of the Act, we determined that there were three selling
activities performed by Fagersta associated with its sales to SSUS: (1)
Freight and delivery; (2) post-sale warranty services; and (3) pre-sale
technical services, which are the same functions we found in the home
market. Therefore, we determine that Fagersta's CEP sales and its home
market sales are made at the same level of trade. Accordingly, because
we find the U.S. sales and home market sales to be at the same level of
trade, no level-of-trade adjustment under section 773(a)(7)(A) of the
Act is warranted.
Export Price and Constructed Export Price
Fagersta reported as EP transactions its sales of subject
merchandise sold to unaffiliated U.S. customers prior to importation
through two affiliated companies in the United States (Avesta Sheffield
Inc. (``ASI'') and SSUS). Fagersta reported as CEP transactions its
sales of subject merchandise sold to SSUS for its own account. SSUS
then resold the subject merchandise to unaffiliated customers or
further manufactured the wire rod into wire products which are outside
the scope of this investigation.
With respect to sales made through ASI and SSUS prior to
importation, Fagersta claims that these sales are properly classified
as EP sales because ASI and SSUS act only as sales-document processors
and communication links to facilitate Fagersta's U.S. sales to
unaffiliated customers. Specifically, Fagersta states the following:
(1) neither ASI nor SSUS takes physical possession of the merchandise;
(2) the merchandise is shipped directly from Fagersta to the customer;
(3) neither ASI nor SSUS has independent authority to establish prices;
(4) the essential terms of sales are set and approved by Fagersta in
Sweden; and (5) all relevant sales activities are performed by Fagersta
in Sweden before exportation. Therefore, according to Fagersta, ASI and
SSUS are mere conduits of sales information for Fagersta's direct mill
sales to unaffiliated U.S. customers.
We examine several factors to determine whether sales made prior to
importation through an affiliated sales agent to an unaffiliated
customer in the United States are EP sales, such as (1) whether the
merchandise was shipped directly from the manufacturer to the
unaffiliated U.S. customer; (2) whether the sales follow customary
commercial channels between the parties involved; and (3) whether the
function of the U.S. selling agent is limited to that of a ``processor
of sales-related documentation'' and a ``communication link'' with the
unrelated U.S. buyer. Where the factors indicate that the activities of
the U.S. affiliate are ancillary to the sale (e.g., arranging
transportation or customs clearance), we treat the transactions as EP
sales. Where the U.S. affiliate is substantially involved in the sales
process (e.g., negotiating prices), we treat the transactions as CEP
sales.
Based on our review of the selling activities of Fagersta's U.S.
affiliates, we preliminarily determine that EP is appropriate for
Fagersta's sales to the United States through ASI and SSUS. The
customary commercial channel between Fagersta and its unaffiliated
customers is that Fagersta ships the EP merchandise directly to the
unaffiliated U.S. customers without having the merchandise enter into
the inventory of the U.S. affiliates and that the U.S. affiliates'
activities are limited to that of a ``processor of sales-related
documentation'' and a ``communication link'' with the unaffiliated U.S.
buyers. Accordingly, for purposes of the preliminary determination, we
are treating the sales in question as EP transactions. We will examine
this issue further at verification.
We calculated EP, in accordance with section 772(a) of the Act, for
those sales where the merchandise was sold to the first unaffiliated
purchaser in the United States prior to importation and CEP methodology
was not otherwise warranted, based on the facts of record. We based EP
on the packed delivered price to unaffiliated purchasers in the United
States. We added to the starting price any alloy surcharges and, where
appropriate, made adjustments for price-billing errors and freight
revenue. We made deductions for early payment discounts and rebates,
where applicable. We also made deductions for movement expenses in
accordance with section 772(c)(2)(A) of the Act; these included, where
appropriate, ocean freight, marine insurance, U.S. brokerage and
handling, U.S. customs duties (including harbor maintenance fees and
merchandise processing fees), U.S. inland insurance, and U.S. inland
freight expenses (freight from port to warehouse and freight from
warehouse to the customer).
We calculated CEP, in accordance with subsections 772(b) of the
Act, for those sales to the first unaffiliated purchaser that took
place after importation into the United States. In addition, Fagersta
reported sales of wire and wire products (non-subject merchandise)
which were further manufactured from wire rod (subject merchandise) by
one of its affiliates in the United States. In deciding whether to base
CEP on the sales of subject merchandise that are further manufactured,
the Department determines whether the value added is likely to exceed
substantially the value of the subject merchandise in accordance with
section 772(e) of the Act. Section 772(e) of the Act provides
alternatives to backing out the value added after importation, when
doing so
[[Page 10845]]
would cause an undue burden on the Department. See Statement of
Administrative Action, H.R. Doc. No. 316, Vol. 1, 103d Cong., 2d. Sess.
(1994), 825-826. Normally, when the estimated value-added amount
exceeds 65% of the value of the merchandise sold to unaffiliated
purchasers, the CEP for such merchandise will be established by an
alternative methodology in accordance with section 772(e) of the Act.
See 19 CFR 351.402(c)(2). In this case, we determine that section
772(e) of the Act does not apply because the value added in the United
States by the affiliated person is not likely to exceed substantially
the value of the subject merchandise. Therefore, for subject
merchandise further manufactured in the United States, we used the
starting price of the subject merchandise and deducted the costs of
further manufacturing to determine CEP for such merchandise, in
accordance with section 772(d)(2) of the Act.
We based CEP on the packed FOB or delivered prices to unaffiliated
purchasers in the United States. We added to the starting price any
alloy surcharges and, where appropriate, made adjustments for price-
billing errors and freight revenue. We made deductions for early
payment discounts and rebates, where applicable. We also made
deductions for movement expenses in accordance with section
772(c)(2)(A) of the Act; these included, where appropriate, ocean
freight, marine insurance, U.S. brokerage and handling, U.S. customs
duties (including harbor maintenance fees and merchandise processing
fees), U.S. inland insurance, U.S. inland freight expenses (freight
from port to warehouse and freight from warehouse to the customer), and
post-sale warehousing expenses. In accordance with section 772(d)(1) of
the Act, we deducted those selling expenses associated with economic
activities occurring in the United States, including direct selling
expenses (credit costs and warranty expenses), inventory carrying
costs, U.S. repacking expenses, and indirect selling expenses. We also
deducted an amount for further-manufacturing costs, where applicable,
in accordance with section 772(d)(2) of the Act and made an adjustment
for profit in accordance with section 772(d)(3) of the Act.
Normal Value
After testing (1) home market viability; (2) whether sales to
affiliates were at arm's-length prices and (3) whether home market
sales were at below-cost prices, we calculated NV as noted in the
``Price to Price Comparisons'' and ``Price to CV 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 the respondent's volume of home market sales
of the foreign like product to the volume of U.S. sales of the subject
merchandise, in accordance with section 773(a)(1)(C) of the Act.
Because the 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 for the subject merchandise, we determined that
the home market was viable for the respondent.
2. Affiliated-Party Transactions and Arm's-Length Test
Fagersta, in its response, claimed that we should not include in
our analysis Fagersta's sales of wire rod to its affiliated customers
in the home market. According to Fagersta, due to the close
relationship between Fagersta and its affiliates based on their common
ownership and interdependence in the production of wire rod and wire
products, Fagersta's transactions with these affiliated companies
should be treated as internal transfers. Fagersta cited to the Certain
Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From
Korea: Final Results of the Antidumping Duty Administrative Reviews, 62
FR 18404 (April 15, 1997) (``Carbon Steel Flat Products From Korea'')
in support of its claim. This case upon which Fagersta relied is
inapposite. The issue in Carbon Steel Flat Products from Korea was
whether to ``collapse'' affiliated producers/exporters for margin-
calculation purposes. We do not use that type of analysis to determine
whether transactions between affiliated parties are an appropriate
basis for determining NV. The Department's standard practice with
respect to the use of home market sales to affiliated parties for NV is
to determine whether such sales are at arm's-length prices. Therefore,
in accordance with that practice, we performed an arm's-length test on
Fagersta's sales to affiliates as follows.
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) and 62 FR at 27355. 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 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 model.
3. Cost of Production Analysis
As stated in the ``Case History'' section of the notice, based on a
timely allegation filed by the petitioners, the Department initiated a
COP investigation of Fagersta to determine whether sales were made at
prices less than the COP.
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 Fagersta's cost of materials and fabrication for
the foreign like product, plus an amount for home market SG&A, interest
expenses, and packing costs. We used the information from Fagersta's
January 26, 1998, questionnaire response to calculate COP.
Fagersta purchased a major input (i.e., steel billets) for SSWR
from affiliated parties. In accordance with section 773(f)(3) of the
Act, we used the higher of the transfer price or cost of production to
value the billets in our analysis. No information on the market value
of billets was available. We excluded from billet costs the net foreign
exchange gain that had been charged to material acquisitions because
Fagersta did not describe in its response how it derived the amount of
the gain and how the gain was related to purchases of materials used to
produce the subject merchandise. See
[[Page 10846]]
Memorandum to Chris Marsh from Art Stein, dated February 25, 1998.
B. Test of Home Market Sales Prices
We compared the weighted-average COP for Fagersta, adjusted where
appropriate, to home market sales of the foreign like product as
required under section 773(b) of the Act. In determining whether to
disregard home market sales made at prices less than the COP, we
examined whether (1) within an extended period of time, such sales were
made in substantial quantities, and (2) such sales were made at prices
which permitted the recovery of all costs within a reasonable period of
time. On a product-specific basis, we compared the COP to the home
market prices, less any applicable movement charges, rebates,
discounts, and direct and indirect selling expenses.
C. Results of the COP Test
Pursuant to section 773(b)(2)(C), where less than 20 percent of
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 such sales to have been made in ``substantial quantities''
within an extended period of time in accordance with section
773(b)(2)(B) of the Act. In such cases, 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. Where all sales of a specific product were at prices below the
COP, we disregarded all sales of that product.
We found that, for certain grades of SSWR, more than 20 percent of
Fagersta's home market sales within an extended period of time were at
prices less than COP. Further, the prices did not provide for the
recovery of costs within a reasonable period of time. We therefore
excluded these sales and used the remaining above-cost sales as the
basis for determining NV if such sales existed, in accordance with
section 773(b)(1). For those U.S. sales of SSWR for which there were no
comparable (above-cost) home market sales in the ordinary course of
trade, we compared export prices or constructed export prices to CV in
accordance with section 773(a)(4) of the Act.
D. Calculation of CV
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of Fagersta's cost of materials, fabrication, SG&A,
interest, and U.S. packing costs. As noted above in the ``Calculation
of COP'' section of the notice, for CV we adjusted billet costs to
exclude the net foreign exchange gain that had been charged to
materials acquisitions. In accordance with sections 773(e)(2)(A) of the
Act, we based SG&A and profit on the amounts incurred and realized by
the respondent in connection with the production and sale of the
foreign like product in the ordinary course of trade for consumption in
the foreign country. For selling expenses, we used the weighted-average
home market selling expenses.
Price-to-Price Comparisons
We calculated NV based on delivered prices to unaffiliated
customers or prices to affiliated customers that we determined to be at
arm's-length prices. We made deductions, where appropriate, from the
starting price for discounts, rebates, inland freight, and ``billing
error'' rebates. We made adjustments for differences in the merchandise
in accordance with section 773(a)(6)(C)(ii) of the Act. In addition, we
made adjustments under section 773(a)(6)(C)(iii) of the Act for
differences in circumstances of sale for imputed credit expenses and
warranties. Finally, we deducted home market packing costs and added
U.S. packing costs in accordance with section 773(a)(6)(A) and (B) of
the Act.
Price-to-CV Comparisons
For price-to-CV comparisons, we made adjustments to CV in
accordance with section 773(a)(8) of the Act. Where we compared CV to
EP, we deducted from CV the weighted-average home market direct selling
expenses and added the weighted-average U.S. product-specific direct
selling expenses in accordance with section 773(a)(6)(C)(iii) of the
Act. Where we compared CV to CEP, we deducted from CV the weighted-
average home market direct selling expenses.
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.
Section 773A(a) of the Act directs the Department to use a daily
exchange rate in order to convert foreign currencies into U.S. dollars
unless the daily rate involves a fluctuation. It is the Department's
practice to find that a fluctuation exists when the daily exchange rate
differs from the benchmark rate by 2.25 percent. The benchmark is
defined as the moving average of rates for the past 40 business days.
When we determine a fluctuation to have existed, we substitute the
benchmark rate for the daily rate, in accordance with established
practice. Further, section 773A(b) of the Act directs the Department to
allow a 60-day adjustment period when a currency has undergone a
sustained movement. A sustained movement has occurred when the weekly
average of actual daily rates exceeds the weekly average of benchmark
rates by more than five percent for eight consecutive weeks. (For an
explanation of this method, see Policy Bulletin 96-1: Currency
Conversions (61 FR 9434, March 8, 1996).) Such an adjustment period is
required only when a foreign currency is appreciating against the U.S.
dollar. The use of an adjustment period was not warranted in this case
because the Swedish Krona did not undergo a sustained movement.
Verification
As provided in section 782(i) of the Act, we will verify all
information determined to be acceptable for use in making our final
determination.
Suspension of Liquidation
In accordance with section 733(d) 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. 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 export price, 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
------------------------------------------------------------------------
Fagersta Stainless AB..................................... 6.51
All Others................................................ 6.51
------------------------------------------------------------------------
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
[[Page 10847]]
are materially injuring, or threaten material injury to, the U.S.
industry.
Public Comment
Case briefs or other written comments in at least ten copies must
be submitted to the Assistant Secretary for Import Administration no
later than June 1, 1998, and rebuttal briefs no later than June 8,
1998. 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 on June 12, 1998, time and room to be determined, at the
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW,
Washington, DC 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 by no later than 135 days after the publication of this
notice in the Federal Register.
This determination is published pursuant to section 777(i) of the
Act.
Dated: February 25, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-5600 Filed 3-4-98; 8:45 am]
BILLING CODE 3510-DS-P
