E5-1655. Stainless Steel Sheet and Strip in Coils From Japan: Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce

.

SUMMARY:

In response to timely requests by the petitioners,^[1] the Department of Commerce is conducting an administrative review of the antidumping duty order on stainless steel sheet and strip in coils from Japan with respect to one company. The period of review is July 1, 2003, through June 30, 2004. We preliminarily determine that, because the respondent did not participate in this review, it is appropriate to base its rate on adverse facts available.

Interested parties are invited to comment on these preliminary results. If these preliminary results are adapted 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.

DATES:

Effective Date: April 11, 2005.

FOR FURTHER INFORMATION CONTACT:

Sophie Castro or P. Lee Smith, AD/CVD Operations, Office 2, Import Administration, Room B-099, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On June 8, 1999, the Department published in the Federal Register an amended final determination and antidumping duty order on stainless steel sheet and strip in coils from Japan (64 FR 30573).

In response to a timely request by the petitioners, the Department published a notice of initiation of an administrative review with respect to the following company: Kawasaki Steel Corporation (KSC) and its alleged successor-in-interest JFE Steel Corporation (JFE) (69 FR 52857, August 30, 2004). The period of review (POR) is July 1, 2003, through June 30, 2004.

On September 8, 2004, the Department issued an antidumping duty questionnaire to KSC, which included questions addressing whether JFE is KSC's successor-in-interest. The response to the questionnaire was due on October 15, 2004, and subsequently extended to October 20, 2004. On September 16, 2004, counsel filed a notice of appearance indicating that it was representing JFE, and noting that KSC had changed its name to JFE prior to the POR. Moreover, in that letter, counsel pointed out that if the Department required notification of appearance on behalf of KSC based on the Department's initiation of the review with respect to both JFE and KSC, then the Department should consider the notice of appearance on behalf of JFE to serve as such notification for KSC (see, Letter to the Secretary of Commerce from KSC/JFE, dated September 16, 2004). On October 20, 2004, KSC/JFE's counsel contacted the Department to state that KSC/JFE would not be submitting a response to the Department's antidumping questionnaire. KSC/JFE's counsel did not give any indication as to why KSC/JFE would not be submitting a response. See Memorandum from P. Lee Smith to the File, dated October 15, 2004, and Memorandum from Sophie Castro and P. Lee Smith to the File, dated October 20, 2004, regarding phone conversations with counsel for KSC/JFE.

Scope of the Order

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

The merchandise subject to this order is currently classifiable in the Harmonized Tariff Schedule of the United States (HTS) 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 HTS subheadings are provided for convenience and customs purposes, the Department's written description of the merchandise under review is dispositive.

Excluded from the scope of this 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 HTS, “Additional U.S. Note” 1(d).

Flapper valve steel is also excluded from the scope of the order. This product 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 of between 460 and 590. Flapper valve steel is most commonly used to produce specialty flapper valves in compressors.

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

Certain stainless steel foil for automotive catalytic converters is also excluded from the scope of this 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 less than 0.002 or greater than 0.05 percent, and total rare earth elements of more than 0.06 percent, with the balance iron.

Permanent magnet iron-chromium-cobalt alloy stainless strip is also excluded from the scope of this 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.” ^[2]

Certain electrical resistance alloy steel is also excluded from the scope of this 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.” ^[3]

Certain martensitic precipitation-hardenable stainless steel is also excluded from the scope of this 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.” ^[4]

Finally, three specialty stainless steels typically used in certain industrial blades and surgical and medical instruments are also excluded from the scope of this order. These include stainless steel strip in coils used in the production of textile cutting tools (e.g., carpet knives).^[5] This steel is similar to AISI grade 420 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 100 square microns. 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.” ^[6]

Use of Facts Available

As noted above in the “Background” section, KSC/JFE did not submit a response to the Department's antidumping questionnaire. Because of KSC/JFE's refusal to cooperate in this review, we determine that the application of facts available is appropriate, pursuant to section 776(a)(2) of the Tariff Act of 1930 (the Act).

Section 776(a)(2) of the Act provides that “if an interested party or any other person (A) withholds information that has been requested by the administering authority; (B) fails to provide such information by the deadlines for the submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 782; (C) significantly impedes a proceeding under this title; or (D) provides such information but the information cannot be verified as provided in section 782(i), the administering authority shall, subject to section 782(d), use the facts otherwise available in reaching the applicable determination under this title.”

Because this company refused to participate in this administrative review, we find that, in accordance with sections 776(a)(2)(A), (B), and (C) of the Act, the use of total facts available is appropriate (see, e.g., Stainless Steel Sheet and Strip in Coils from Taiwan: Final Results and Partial Rescission of Antidumping Duty Administrative Review, 69 FR 5960, 5963 (February 9, 2004) (for a more detailed discussion, see Stainless Steel Sheet and Strip in Coils from Taiwan: Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review, 68 FR 46582 (August 6, 2003)).

Section 776(b) of the Act provides that, if the Department finds that an interested party “has failed to cooperate by not acting to the best of its ability to comply with a request for information,” the Department may use information that is adverse to the interests of the party as facts otherwise available. Adverse inferences are appropriate “to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” See Statement of Administrative Action (SAA) accompanying the URAA, H.R. Doc. No. 103-316, at 870 (1994). Furthermore, “an affirmative finding of bad faith on the part of the respondent is not required before the Department may make an adverse inference.” See Antidumping Duties; Countervailing Duties: Final Rule, 62 FR 27296, 27340 (May 19, 1997).

Section 776(b) of the Act authorizes the Department to use as adverse facts available information derived from the petition, the final determination from the less-than-fair-value (LTFV) investigation, a previous administrative review, or any other information placed on the record. Under section 782(c) of the Act, a respondent has a responsibility not only to notify the Department if it is unable to provide requested information, but also to provide a “full explanation and suggested alternative forms.” KSC/JFE did not respond to the Department's request for information, nor did it provide any explanation for this action, thereby failing to comply with this provision of the statute. Therefore, we determine that KSC/JFE failed to cooperate to the best of its ability, making the use of an adverse inference appropriate.

The Department's practice when selecting an adverse rate from among the possible sources of information is to ensure that the margin is sufficiently adverse “as to effectuate the purpose of the facts available rule to induce respondents to provide the Department with complete and accurate information in a timely manner.” See Final Determination of Sales at Less than Fair Value: Static Random Access Memory Semiconductors from Taiwan, 63 FR 8909, 8932 (February 23, 1998). In this proceeding, consistent with Department practice (see, e.g., Preliminary Results of Antidumping Duty Administrative Review Stainless Steel Bar from the United Kingdom, 69 FR 905, 905-06 (January 7, 2004)), we have preliminarily assigned to exports of the subject merchandise produced by KSC/JFE the rate of 57.87 percent, which is based on the highest margin alleged in the petition for any Japanese producer.

Section 776(c) of the Act provides that where the Department selects from among the facts otherwise available and relies on “secondary information,” the Department shall, to the extent practicable, corroborate that information from independent sources reasonably at the Department's disposal. Secondary information is described in the SAA as “[i]nformation derived from the petition that gave rise to the investigation or review, the final determination concerning the subject merchandise, or any previous review under section 751 concerning the subject merchandise.” See SAA at 870 and 19 CFR 351.308(c)(1). The SAA states that “corroborate” means to determine that the information used has probative value. Id. To corroborate secondary information, the Department will, to the extent practicable, examine the reliability and relevance of the information to be used. See 19 CFR 351.308(d).

As explained below, the Department has, to the extent practicable, corroborated the information used as adverse facts available because information from a petition is considered secondary information. See 19 CFR 351.308(c)-(d). We reviewed the adequacy and accuracy of the information in the petition during our pre-initiation analysis of the petition, to the extent appropriate information was available for this purpose (e.g., import statistics, call reports, and data from business contacts). Further, during the investigation segment of the proceeding, the Department determined that the adverse facts available petition rate has probative value by comparing this rate to actual sales made by KSC during the period of investigation, the only respondent whose information the Department was able to verify and use for margin calculation purposes. In the investigation segment, after comparing the information in the petition to KSC's verified sales data, we found that the petition data was reliable for use as adverse facts available. See Corroboration Memorandum Detailing Application of Total Adverse Facts Available from James Doyle, Program Manager, to Roland MacDonald, Director Office VII, dated May 19, 1999, placed on the record of this review on January 4, 2005.

We preliminarily determine that the margin of 57.87 percent, selected as adverse facts available, is relevant, reliable, and therefore has probative value based on the corroborative procedures conducted in the investigation segment. Furthermore, no record evidence or argument has been submitted since that time that would cause the Department to call into question the accuracy of the data in the petition. Moreover, since KSC/JFE failed to cooperate, no additional information has been presented in the current review that would call into question the reliability or relevance of the margin, or the calculation on which it was based. Accordingly, we determine that this rate is an appropriate rate to be applied in this review to exports of the subject merchandise produced by KSC/JFE as facts otherwise available.

Preliminary Results of Review

As a result of this review, we preliminarily determine that the weighted-average dumping margin for the period July 1, 2003, through June 30, 2004, is as follows:

Manufacturer/exporter:	Percent margin
Kawasaki Steel Corporation/JFE Steel Corporation.7	57.87
7 See “Assessment Rates and Cash Deposit Requirements” below.

Any interested party may request a hearing within 30 days of publication. See 19 CFR 351.310(c). 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, Room B-099, within 30 days of the date of 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 issues to be discussed. See 19 CFR 351.310(c).

Issues raised in the hearing will be limited to those raised in the respective case briefs. Case briefs from interested parties must be submitted within 30 days of the issuance of this notice and rebuttal briefs, limited to the issues raised in the respective case briefs, must be submitted within 35 days of the issuance of this notice. Parties who submit case briefs or rebuttal briefs in this proceeding are requested to submit with each argument (1) a statement of the issue and (2) a brief summary of the argument. Parties are also encouraged to provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited.

The Department will issue the final results of this administrative review, including the results of its analysis of issues raised in any written briefs, not later than 120 days after the date of publication of this notice, pursuant to section 751(a)(3)(A) of the Act.

Assessment Rates and Cash Deposit Requirements ^[8]

The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries, in accordance with 19 CFR 351.212. The Department will issue appropriate appraisement instructions for the company subject to this review directly to CBP within 15 days of publication of the final results of this review. The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the final results of this review and for future deposits of estimated duties, where applicable.

The following cash deposit requirements will be effective for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(1) of the Act: (1) The cash deposit rate for the reviewed company will be that established in the final results of this review, except if the rate is less than 0.50 percent, and therefore, de minimis within the meaning of 19 CFR 351.106(c)(1), in which case the cash deposit rate will be zero; (2) for previously reviewed or investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent 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 40.18 percent, the “All Others” rate made effective by the LTFV investigation. See Notice of Amendment of Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Stainless Steel Sheet and Strip in Coils from Japan, 64 FR 40565 (July 27, 1999). These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

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 Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

This administrative review and notice are published in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.221.

Dated: April 4, 2005.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

Footnotes

1.  The petitioners are Allegheny Ludlum, North American Stainless, Local 3303 United Auto Worker, United Steelworkers of America, AFL-CIO/CLC, and Zanesville Armco Independent Organization.

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

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

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

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

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

8.  While the Department initiated this administrative review with respect to merchandise manufactured or exported by KSC as well as its alleged successor-in-interest, JFE, due to KSC/JFE's non-response to the Department's questionnaire, the Department did not have the opportunity to conduct a successor-in-interest analysis in order to confirm whether, for antidumping purposes, JFE is the successor-in-interest to KSC with respect to the subject merchandise. Therefore, consistent with our decision to apply adverse facts available to KSC/JFE for its failure to respond to the Department's request for information and, because both the petitioners and respondents have consistently referred to KSC as JFE (see Respondent counsel's Notice of Appearance, dated September 16, 2004, and Petitioner's Request for Review, dated July 30, 2004), the Department will issue instructions to CBP to collect cash deposits and assess antidumping duties on merchandise manufactured by KSC or by its alleged successor-in-interest JFE at the same rate in order to capture all entries of the subject merchandise by either KSC or JFE. Should an administrative review of KSC or JFE be requested and initiated in the future, we intend to conduct a successor-in-interest analysis at that time.