E6-10379. Stainless Steel Sheet and Strip in Coils From the Republic of Korea: Initiation of Countervailing Duty Changed Circumstances Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to a March 22, 2006, request by Hyundai Steel Company (Hyundai), claiming to be the successor-in-interest to INI Steel Company (INI), the Department of Commerce (the Department) is initiating a changed circumstances review of the countervailing duty (CVD) order on stainless steel sheet and strip in coils (SSSSC) from the Republic of Korea (Korea). Hyundai claims that INI changed its corporate name to Hyundai effective March 10, 2006. Therefore, Hyundai maintains it is entitled to INI's cash deposit rate for the CVD order on SSSSC from Korea. Interested parties are invited to comment on this notice of initiation.

EFFECTIVE DATE:

June 30, 2006.

FOR FURTHER INFORMATION CONTACT:

Darla Brown or Preeti Tolani, AD/CVD Operations, Office 3, Import Administration, International Trade Administration, U.S. Department of Commerce, Room 4014, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On August 6, 1999, the Department published in the Federal Register the CVD order on SSSSC from Korea. See Amendment to Final Determination: Stainless Steel Sheet and Strip in Coils From the Republic of Korea; and Notice of Countervailing Duty Orders: Stainless Steel Sheet and Strip in Coils From France, Italy, and the Republic of South Korea, 64 FR 42923 (August 6, 1999). The Department has completed three administrative reviews of this CVD order ^[1] and is currently conducting a fourth review.^[2] In September 2001 and June 2002, respectively, the Department initiated and issued the preliminary results of a changed circumstances review to determine whether INI was entitled to Inchon's cash deposit rate.^[3] In the Second Review the Department determined to assign Inchon's cash deposit rate to INI, thereby eliminating the need to complete the changed circumstances review.^[4] The Department has also published notice of continuation of this order upon completion of the first five-year (sunset) review.^[5]

On March 22, 2006, Hyundai requested that the Department confirm that Hyundai is entitled to INI's cash deposit rate for the CVD order. Simultaneously, Hyundai requested a changed circumstances review of the antidumping duty (AD) order on SSSSC from Korea for the purpose of determining whether Hyundai is the successor-in-interest to INI and is entitled to INI's exclusion from the AD order. On April 11, 20, and 27, 2006, Hyundai submitted additional information in response to three requests from the Department for additional information. In response to Hyundai's request regarding the AD order, on May 12, 2006, the Department initiated a changed circumstances review and preliminarily determined that Hyundai is the successor-in-interest to INI and merchandise from Hyundai should be excluded from the AD order.^[6]

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 classified in the Harmonized Tariff Schedule of the United States (HTSUS) at subheadings: 7219.13.0031, 7219.13.0051, 7219.13.0071, 7219.1300.81^[7] , 7219.14.0030, 7219.14.0065, 7219.14.0090, 7219.32.0005, 7219.32.0020, 7219.32.0025, 7219.32.0035, 7219.32.0036, 7219.32.0038, 7219.32.0042, 7219.32.0044, 7219.33.0005, 7219.33.0020, 7219.33.0025, 7219.33.0035, 7219.33.0036, 7219.33.0038, 7219.33.0042, 7219.33.0044, 7219.34.0005, 7219.34.0020, 7219.34.0025, 7219.34.0030, 7219.34.0035, 7219.35.0005, 7219.35.0015, 7219.35.0030, 7219.35.0035, 7219.90.0010, 7219.90.0020, 7219.90.0025, 7219.90.0060, 7219.90.0080, 7220.12.1000, 7220.12.5000, 7220.20.1010, 7220.20.1015, 7220.20.1060, 7220.20.1080, 7220.20.6005, 7220.20.6010, 7220.20.6015, 7220.20.6060, 7220.20.6080, 7220.20.7005, 7220.20.7010, 7220.20.7015, 7220.20.7060, 7220.20.7080, 7220.20.8000, 7220.20.9030, 7220.20.9060, 7220.90.0010, 7220.90.0015, 7220.90.0060, and 7220.90.0080. Although the HTSUS subheadings are provided for convenience and customs purposes, the Department's written description of the merchandise subject to this order 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 HTSUS, “Additional U.S. Note” 1(d).

The Department has determined that certain additional specialty stainless steel products are also excluded from the scope of this order. These excluded products are described below.

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

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

Certain stainless steel foil for automotive catalytic converters is also excluded from the scope of this 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.”^[8]

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.”^[9]

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.”^[10]

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).^[11] 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”.

Initiation of Changed Circumstances Reviews

Section 751(b)(1) of the Tariff Act of 1930, as amended (the Act), requires a changed circumstances review to be conducted upon receipt of a request containing information concerning changed circumstances sufficient to warrant a review. The Department has recognized that a corporate name change constitutes changed circumstances sufficient to warrant a review. See AD Changed Circumstances Preliminary Results.

In the context of changed circumstances reviews of an AD order based on a name change or a change in the company's ownership or structure, the Department relies on its “successor-in-interest” analysis to determine whether the successor remains essentially the same entity as the predecessor so that it is appropriate to impose the existing AD cash deposit rate of the predecessor on the successor. However, the successor-in-interest test for AD purposes may not fully address whether it is appropriate to apply the CVD cash deposit rate of a previously examined company to its claimed successor. As a result, the Department's preliminary results in the AD changed circumstances review that Hyundai is the successor-in-interest to INI may not be instructive with respect to the CVD order.

However, as noted above, the Department has recognized that INI's corporate name change to Hyundai constitutes changed circumstances sufficient to warrant a review. We also note that there is no concurrent administrative review of INI in which this name change could be examined. Therefore, in accordance with section 751(b) of the Act and 19 CFR 351.216 and 351.221, based on information concerning changed circumstances sufficient to warrant a review, as described above, we are initiating this changed circumstances administrative review of the CVD order.

Public Comment

Interested parties are invited to comment on the initiation of this changed circumstances review. Parties who submit argument in this proceeding are requested to submit with the argument (1) a statement of the issue, and (2) a brief summary of the argument. All written comments may be submitted by interested parties not later than 14 days after the date of publication of this notice in accordance with 19 CFR 351.303.

The Department will publish in the Federal Register a notice of preliminary results of changed circumstances review, in accordance with 19 CFR 351.221(c)(3), which will set forth the factual and legal conclusions upon which our preliminary results are based, and a description of any action proposed based on those results.

This notice is in accordance with section 751(b)(1) of the Act and 19 CFR 351.216 and 351.221.

Dated: June 15, 2006.

David M. Spooner,

Assistant Secretary for Import Administration.

Footnotes

1.  See Final Results and Partial Rescission of Countervailing Duty Administrative Review: Stainless Steel Sheet and Strip in Coils from the Republic of Korea, 67 FR 1964 (January 15, 2002), as amended, Stainless Steel Sheet and Strip in Coils from Korea: Amended Final Results of Countervailing Duty Administrative Review, 67 FR 8229 (February 22 2002); Final Results and Partial Rescission of Countervailing Duty Administrative Review: Stainless Steel Sheet and Strip in Coils from the Republic of Korea, 68 FR 13267 (March 19, 2003), and accompanying Issues and Decision Memorandum (Second Review); and Final Results of Countervailing Duty Administrative Review: Stainless Steel Sheet and Strip in Coils from the Republic of Korea, 69 FR 2113 (January 14, 2004), as amended, Amended Final Results of Countervailing Duty Administrative Review: Stainless Steel Sheet and Strip in Coils from Korea, 69 FR 7419 (February 17, 2004).

2.  See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 70 FR 56631 (September 28, 2005) (initiation of review of Dai Yang Metal Co., Ltd.).

3.  See Stainless Steel Sheet and Strip in Coils from the Republic of Korea; Notice of Initiation of Changed Circumstances Countervailing Duty Administrative Review, 66 FR 49639 (September 28, 2001), and Stainless Steel Sheet and Strip in Coils from the Republic of Korea; Notice of Preliminary Results of Changed Circumstances Countervailing Duty Administrative Review, 67 FR 38257 (June 3, 2002).

4.  See Second Review Decision Memorandum at section “C: Name Changes.”

5.  See Continuation of Antidumping Duty Orders on Stainless Steel Sheet and Strip in Coils from Germany, Italy, Japan, the Republic of Korea, Mexico, and Taiwan, and Countervailing Duty Orders on Stainless Steel Sheet and Strip in Coils from Italy and the Republic of Korea, 70 FR 44886 (August 4, 2005).

6.  See Notice of Initiation and Preliminary Results of Changed Circumstances Antidumping Duty Review: Stainless Steel Sheet and Strip in Coils from the Republic of Korea, 71 FR 27680 (May 12, 2006) (AD Changed Circumstances Preliminary Results).

7.  Due to changes to the HTSUS numbers in 2001, 7219.13.0030, 7219.13.0050, 7219.13.0070, and 7219.13.0080 are now 7219.13.0031, 7219.13.0051, 7219.13.0071, and 7219.13.0081, respectively.

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

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

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

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