2013-19736. Ferrosilicon From the Russian Federation and Venezuela: Initiation of Antidumping Duty Investigations

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

DATES:

Effective Date: August 14, 2013.

FOR FURTHER INFORMATION CONTACT:

Catherine Bertrand at [phone], AD/CVD Operations, Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Petitions

On July 19, 2013, the Department of Commerce (the “Department”) received antidumping duty (“AD”) petitions concerning imports of ferrosilicon from the Russian Federation (“Russia”) and Venezuela filed in proper form on behalf of Globe Specialty Metals, Inc.; CC Metals and Alloys, LLC; the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union; and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”) (collectively, “Petitioners”).^[1] On July 22, 2013, Petitioners submitted a foreign research report with respect to the Venezuela petition.^[2] On July 24, 2013, the Department issued requests for additional information and clarification of certain aspects of the Petitions. On July 25 and July 26, 2013, Petitioners filed responses with respect to general questions about information in the Petitions (“General Supplement”) as well as company-specific questions (“Supplement to Russia Petition” and “Supplement to Venezuela Petition”). On August 2, 2013, the Department spoke with the foreign market researcher who authored the Foreign Research Report.^[3] On August 5, 2013, Petitioners submitted revised scope language, which is reflected in the “Scope of Investigations” section below.

Petitioners allege, in accordance with section 732(b) of the Tariff Act of 1930, as amended (the “Act”), that imports of ferrosilicon from Russia and Venezuela are being, or are likely to be, sold in the United States at less than fair value, within the meaning of section 731 of the Act, and that such imports are materially injuring, or threatening material injury to, an industry in the United States.

The Department finds that Petitioners filed the Petitions on behalf of the domestic industry, in accordance with section 732(b)(1) of the Act. The Department also finds that Petitioners are interested parties as defined in sections 771(9)(C) and (D) of the Act and that Petitioners have demonstrated sufficient industry support for the AD investigations that Petitioners are requesting that the Department initiate (see “Determination of Industry Support for the Petitions” section below).

Period of Investigation

The period of investigation (“POI”) for these investigations is July 1, 2012, through June 30, 2013.^[4]

Scope of Investigations

The merchandise covered by these investigations is all forms and sizes of ferrosilicon, regardless of grade, including ferrosilicon briquettes. Ferrosilicon is a ferroalloy containing by weight 4 percent or more iron, more than 8 percent but not more than 96 percent silicon, 3 percent or less phosphorus, 30 percent or less manganese, less than 3 percent magnesium, and 10 percent or less any other element. The merchandise covered also includes product described as slag, if the product meets these specifications.

Ferrosilicon is currently classified under U.S. Harmonized Tariff Schedule (“HTSUS”) subheadings 7202.21.1000, 7202.21.5000, 7202.21.7500, 7202.21.9000, 7202.29.0010, and 7202.29.0050. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise is dispositive.

Comments on Scope of Investigations

During our review of the Petitions, we discussed the scope with Petitioners to ensure that it is an accurate reflection of the products for which the domestic industry is seeking relief. Moreover, as discussed in the preamble to the Department's regulations (Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997)), we are setting aside a period for interested parties to raise issues regarding product coverage. The period of scope consultations is intended to provide the Department with ample opportunity to consider all comments and to consult with parties prior to the issuance of the preliminary determinations. The Department encourages all interested parties to submit such comments by close-of-business, August 28, 2013, which is twenty calendar days from the signature date of this notice. All scope comments must be filed on the records of the Russia and Venezuela AD investigations. Comments should be filed electronically using Import Administration's Antidumping and Countervailing Duty Centralized Electronic Service System (“IA ACCESS”). An electronically filed document must be received successfully in its entirety by the Department's electronic records system, IA ACCESS. Documents excepted from the electronic submission requirements must be filed manually (i.e., in paper form) with the APO/Dockets Unit in Room 1870 and stamped with the date and time of receipt by the deadline noted above.

Comments on Product Characteristics for AD Questionnaires

We are requesting comments from interested parties regarding the physical characteristics of ferrosilicon that should be reported in response to the Department's AD questionnaires. This information will be used to identify the key physical characteristics of the subject merchandise in order to more accurately report the costs of production, as well as to develop appropriate product comparison criteria.

Interested parties may provide any information or comments that they believe are relevant to the development of a list identifying key physical characteristics. Specifically, they may provide comments as to the most relevant characteristics for use as (1) general product characteristics and (2) the product comparison criteria. We note that it is not always appropriate to use all product characteristics as product comparison criteria. We base product comparison criteria on meaningful commercial differences among products. In other words, while there may be some physical product characteristics utilized by manufacturers to describe ferrosilicon, it may be that only a select few product characteristics account for commercially meaningful physical characteristics. In addition, interested parties may comment on the order in which the physical characteristics should be used in product matching. Generally, the Department attempts to list the most important physical characteristics first and the least important characteristics last.

In order to consider the suggestions of interested parties in developing and issuing the AD questionnaires, we must receive comments on product characteristics by August 29, 2013. Additionally, rebuttal comments must be received by September 9, 2013. All comments must be filed on the records of the Russia and Venezuela AD investigations. All comments and submissions to the Department must be filed electronically using IA ACCESS, as explained above.

Determination of Industry Support for the Petitions

Section 732(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 732(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (i) at least 25 percent of the total production of the domestic like product; and (ii) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition. Moreover, section 732(c)(4)(D) of the Act provides that, if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the Department shall: (i) poll the industry or rely on other information in order to determine if there is support for the petition, as required by subparagraph (A); or (ii) determine industry support using a statistically valid sampling method to poll the “industry.”

Section 771(4)(A) of the Act defines the “industry” as the producers as a whole of a domestic like product. Thus, to determine whether a petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The International Trade Commission (“ITC”), which is responsible for determining whether “the domestic industry” has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product (see section 771(10) of the Act), they do so for different purposes and pursuant to a separate and distinct authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to law.^[5]

Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation” (i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petitions).

With regard to the domestic like product, Petitioners do not offer a definition of the domestic like product distinct from the scope of the investigations. Based on our analysis of the information submitted on the record, we have determined that ferrosilicon constitutes a single domestic like product and we have analyzed industry support in terms of that domestic like product.^[6]

In determining whether Petitioners have standing under section 732(c)(4)(A) of the Act, we considered the industry support data contained in the Petitions with reference to the domestic like product as defined in the “Scope of Investigations” section above. To establish industry support, Petitioners provided their own production of the domestic like product in 2012.^[7] Petitioners state that they are the only producers of ferrosilicon in the United States; therefore, the Petitions are supported by 100 percent of the U.S. industry.^[8]

Our review of the data provided in the Petitions and other information readily available to the Department indicates that Petitioners have established industry support.^[9] First, the Petitions established support from domestic producers (or workers) accounting for more than 50 percent of the total production of the domestic like product and, as such, the Department is not required to take further action in order to evaluate industry support (e.g., polling).^[10] Second, the domestic producers (or workers) have met the statutory criteria for industry support under section 732(c)(4)(A)(i) of the Act because the domestic producers (or workers) who support the Petitions account for at least 25 percent of the total production of the domestic like product.^[11] Finally, the domestic producers (or workers) have met the statutory criteria for industry support under section 732(c)(4)(A)(ii) of the Act because the domestic producers (or workers) who support the Petitions account for more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the Petitions.^[12] Accordingly, the Department determines that the Petitions were filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act.

The Department finds that Petitioners filed the Petitions on behalf of the domestic industry because they are interested parties as defined in section 771(9)(C) and (D) of the Act and they have demonstrated sufficient industry support with respect to the AD investigations that they are requesting the Department initiate.^[13]

Allegations and Evidence of Material Injury and Causation

Petitioners allege that the U.S. industry producing the domestic like product is being materially injured, or is threatened with material injury, by reason of the imports of the subject merchandise sold at less than normal value (“NV”). In addition, Petitioners allege that subject imports exceed the negligibility threshold provided for under section 771(24)(A) of the Act.^[14]

Petitioners contend that the industry's injured condition is illustrated by reduced market share; increased market penetration; declining production and shipments and reduced capacity utilization; underselling and price depression or suppression; increased inventories; reduced employment, hours worked, and wages paid; lost sales and revenues; and decline in financial performance.^[15] We have assessed the allegations and supporting evidence regarding material injury, threat of material injury, and causation, and we have determined that these allegations are properly supported by adequate evidence and meet the statutory requirements for initiation.^[16]

Allegations of Sales at Less Than Fair Value

The following is a description of the allegations of sales at less than fair value upon which the Department based its decision to initiate these investigations of imports of ferrosilicon from Russia and Venezuela. The sources of data for the deductions and adjustments relating to the U.S. price and NV are also discussed in the country-specific initiation checklists.^[17]

Export Price

Russia

Petitioners calculated export price (“EP”) based on the average unit value (“AUV”) for Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 7202.21.5000, described as “ferrosilicon of iron or steel,” (and identified as “75 percent ferrosilicon”),^[18] during the POI.^[19] Petitioners deducted foreign inland freight from the AUV and converted the unit of measure of the AUV from kilograms of contained silicon to pounds of contained silicon.^[20]

Venezuela

Petitioners based U.S. EP on the AUV for HTSUS subheading 7202.21.5000, described as “ferrosilicon of iron or steel,” during the POI.^[21] Petitioners converted the unit of measure for the AUV from kilograms of contained silicon to pounds of contained silicon.^[22]

Normal Value

Russia

Petitioners provided two home market prices for 75 percent ferrosilicon in Russia. The two home market price NVs were based on prices at which dealers offered to sell 75 percent ferrosilicon produced by CHEMK Industrial Group (“CHEMK”) to Russian purchasers in February 2013.^[23] Petitioners provided affidavits for the two written offers that specified the gross weight, terms of delivery, and whether the price was inclusive of Russian value-added tax (“VAT”). These prices were adjusted to exclude VAT, freight from the factory to the warehouse, and trading company mark-up, where appropriate.^[24] Petitioners converted the adjusted prices to U.S. dollars and the unit of measure from gross metric tons to pounds of contained silicon.^[25]

Sales-Below-Cost Allegation

Petitioners also provided information demonstrating reasonable grounds to believe or suspect that sales of ferrosilicon in the Russian market were made at prices below the cost of production (“COP”) within the meaning of section 773(b) of the Act and requested that the Department conduct sales-below-cost investigation of CHEMK.^[26]

With respect to sales-below-cost allegations in the context of investigations, the Statement of Administrative Action (“SAA”) accompanying the Uruguay Round Agreements Act states that an allegation of sales below COP need not be specific to individual exporters or producers.^[27] The SAA states further that “Commerce will consider allegations of below-cost sales in the aggregate for a foreign country . . . on a country-wide basis for purposes of initiating an antidumping investigation.” ^[28] Consequently, the Department intends to consider Petitioners' allegation on a country-wide basis for purposes of this initiation.

Finally, the SAA provides that section 773(b)(2)(A) of the Act retains the requirement that the Department have “reasonable grounds to believe or suspect that below-cost sales have occurred before initiating such an investigation.” ^[29] “`Reasonable grounds' will exist when an interested party provides specific factual information on costs and prices, observed or constructed, indicating that sales in the foreign market in question are at below-cost prices.” ^[30] As explained in the “Constructed Value” section below, we find reasonable grounds exist that indicate sales in Russia were made at below-cost prices.

Constructed Value

Given the evidence of below-cost sales, Petitioners also relied on constructed value (“CV”) as the basis for NV.^[31] Pursuant to section 773(e) of the Act, CV consists of the cost of manufacture (“COM”), selling, general, and administrative (“SG&A”) expenses, financial expenses, packing expenses, and profit. To calculate the COM for 75 percent ferrosilicon, Petitioners multiplied the quantity of each of the inputs used to manufacture the product, based on the production experience of one of the Petitioners, Global Specialty Metals Inc. (“GSM”), and adjusted for known differences between the Russia and U.S. industries, by the value of those inputs obtained from publicly available Russian market data.^[32]

Petitioners based manufacturing overhead on GSM's overhead costs to produce 75 percent ferrosilicon.^[33] For SG&A, and financial expense rates, Petitioners relied on the financial statements of a Russian producer of identical merchandise.^[34] Petitioners relied on the same financial statements used as the basis for SG&A, and financial expense rates to calculate the profit rate.^[35] Based upon a comparison of the prices of the foreign like product in the home market to the calculated COP of the most comparable product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, consistent with the SAA, the Department is initiating a country-wide cost investigation.

Venezuela

Petitioners provided home market prices accompanied by a market research report for 75 percent ferrosilicon sales from FerroAtlantica de Venezuela, S.A. to a purchaser in Venezuela. As these prices were offered in Venezuelan bolivars on a gross weight, tax-exclusive, ex-factory basis, Petitioners converted the prices to U.S. dollars and the unit of measure from gross kilograms to pounds of contained silicon so that U.S price and NV were compared on the same basis.^[36]

Fair Value Comparisons

Based on the data provided by Petitioners, the Department finds that there is reason to believe that imports of ferrosilicon from Russia and Venezuela are being, or are likely to be, sold in the United States at less than fair value. Based on a comparison of EP and home market prices, and also EP and CV (in accordance with section 773(a) of the Act), the estimated dumping margins for ferrosilicon from Russia range from 21.85 percent to 60.78 percent.^[37] Based on a comparison of EPs and home market prices, in accordance with section 773(a) of the Act, the estimated dumping margins for ferrosilicon from Venezuela range from 20.07 percent to 60.11 percent.^[38]

Initiation of Antidumping Investigations

Based upon the examination of the Petitions on ferrosilicon from Russia and Venezuela, the Department finds that the Petitions meet the requirements of section 732 of the Act. Therefore, we are initiating AD investigations to determine whether imports of ferrosilicon from Russia and Venezuela are being, or are likely to be, sold in the United States at less than fair value. In accordance with section 733(b)(1)(A) of the Act and 19 CFR 351.205(b)(1), unless postponed, we will make our preliminary determinations no later than 140 days after the date of these initiations.

Respondent Selection

Following standard practice in AD investigations involving ME countries, the Department intends to select respondents based on U.S. Customs and Border Protection (“CBP”) data for U.S. imports under the HTSUS numbers listed in the “Scope of Investigations” section above. We intend to release the CBP data under Administrative Protective Order (“APO”) to all parties with access to information protected by APO within five days of publication of this Federal Register notice and make our decision regarding respondent selection within 20 days of publication of this notice. The Department invites comments regarding the CBP data and respondent selection within seven days of publication of this Federal Register notice. Interested parties must submit applications for disclosure under APO in accordance with 19 CFR 351.305. Instructions for filing such applications may be found on the Department's Web site at http://ia.ita.doc.gov/​apo.

Distribution of Copies of the Petitions

In accordance with section 732(b)(3)(A) of the Act and 19 CFR 351.202(f), copies of the public version of the Petitions have been made available to the Governments of Russia and Venezuela via IA ACCESS. To the extent practicable, we will attempt to provide a copy of the public version of the Petitions to each exporter named in the Petitions, as provided under 19 CFR 351.203(c)(2).

ITC Notification

We have notified the ITC of our initiations, as required by section 732(d) of the Act.

Preliminary Determinations by the ITC

The ITC will preliminarily determine, no later than September 3, 2013, whether there is a reasonable indication that imports of ferrosilicon from Russia and Venezuela are materially injuring, or threatening material injury to a U.S. industry. A negative ITC determination with respect to any country will result in the investigation being terminated for that country; otherwise, these investigations will proceed according to statutory and regulatory time limits.^[39]

Submission of Factual Information

On April 10, 2013, the Department published Definition of Factual Information and Time Limits for Submission of Factual Information: Final Rule, 78 FR 21246 (April 10, 2013) (“Final Rule”), which modified two regulations related to AD and countervailing duty (“CVD”) proceedings: the definition of factual information (19 CFR 351.102(b)(21)), and the time limits for the submission of factual information (19 CFR 351.301). As amended, 19 CFR 351.102(b)(21) identifies five categories of factual information, which are summarized as follows: (i) Evidence submitted in response to questionnaires; (ii) evidence submitted in support of allegations; (iii) publicly available information to value factors under 19 CFR 351.408(c) or to measure the adequacy of remuneration under 19 CFR 351.511(a)(2); (iv) evidence placed on the record by the Department; and (v) evidence other than factual information described in (i)-(iv). Any party, when submitting factual information, is now required to specify under which subsection of 19 CFR 351.102(b)(21) the information is being submitted and, if the information is submitted to rebut, clarify, or correct factual information already on the record, to provide an explanation identifying the information already on the record that the factual information seeks to rebut, clarify, or correct. As amended, 19 CFR 351.301 now provides specific time limits based on the type of factual information being submitted. These modifications are effective for all proceeding segments initiated on or after May 10, 2013, and thus are applicable to these investigations. Please review the Final Rule, available at http://ia.ita.doc.gov/​frn/​2013/​1304frn/​2013-08227.txt,, prior to submitting factual information in these investigations.

Notification to Interested Parties

Interested parties must submit applications for disclosure under APO in accordance with 19 CFR 351.305(b). On January 22, 2008, the Department published Antidumping and Countervailing Duty Proceedings: Documents Submission Procedures; APO Procedures, 73 FR 3634 (January 22, 2008). Parties wishing to participate in these investigations should ensure that they meet the requirements of these procedures (e.g., the filing of letters of appearance as discussed at 19 CFR 351.103(d)).

Any party submitting factual information in an AD/CVD proceeding must certify to the accuracy and completeness of that information.^[40] Parties are hereby reminded that revised certification requirements are in effect for company/government officials as well as their representatives in all segments of any AD/CVD proceeding initiated on or after March 14, 2011.^[41] The formats for the revised certifications are provided at the end of the Interim Final Rule and the Supplemental Interim Final Rule. The Department intends to reject factual submissions in any proceeding segments initiated on or after March 14, 2011, if the submitting party does not comply with the revised certification requirements.

This notice is issued and published pursuant to section 777(i) of the Act.

Dated: August 8, 2013.

Paul Piquado,

Assistant Secretary for Import Administration.

Footnotes

1.  See “Petitions for the Imposition of Antidumping Duties on Ferrosilicon from Russia and Venezuela,” filed on July 19, 2013 (“Petitions”).

2.  See Petitioners' Venezuelan Foreign Research Report, dated July 22, 2013 (“Foreign Research Report”).

3.  See Memorandum to the File; re: Telephone Conversation with Foreign Market Researcher, dated concurrently with this notice.

4.  See 19 CFR 351.204(b)(1).

5.  See USEC, Inc. v. United States, 132 F. Supp. 2d 1, 8 (CIT 2001) (citing Algoma Steel Corp., Ltd. v. United States, 688 F. Supp. 639, 644 (CIT 1988), aff'd 865 F.2d 240 (Fed. Cir. 1989)).

6.  For a discussion of the domestic like product analysis in this case, see Antidumping Duty Investigation Initiation Checklist: Ferrosilicon from the Russian Federation (“Russia Initiation Checklist”) at Attachment II, and Antidumping Duty Investigation Initiation Checklist: Ferrosilicon from Venezuela (“Venezuela Initiation Checklist”) at Attachment II. These checklists are dated concurrently with, and are hereby adopted by, this notice and are on file electronically via IA ACCESS. Access to documents filed via IA ACCESS is also available in the Central Records Unit, Room 7046 of the main Department of Commerce building.

7.  See Volume I of Petitions, at 3 and Exhibit I-2.

8.  See id., at 3 and Exhibit I-1.

9.  See Russia Initiation Checklist and Venezuela Initiation Checklist, at Attachment II.

10.  See section 732(c)(4)(D) of the Act; see also Russia Initiation Checklist and Venezuela Initiation Checklist, at Attachment II.

11.  See Russia Initiation Checklist and Venezuela Initiation Checklist, at Attachment II.

12.  See id.

13.  See id.

14.  See Volume I of Petitions, at 33 and Exhibit I-23.

15.  See Volume I of Petitions, at 20-47 and Exhibits I-5, I-6 and I-13 through I-35.

16.  See Russia Initiation Checklist and Venezuela Initiation Checklist, at Attachment III.

17.  See Russia Initiation Checklist and Venezuela Initiation Checklist.

18.  See Volume I of Petitions, at 5, for a description of HTSUS 7202.21.5000.

19.  See Volume II of Petitions, at 2-3 and Exhibit II-2.

20.  See id.

21.  See Volume III of Petitions, at 1-2 and Exhibit II-4.

22.  See id, at 1-2 and Exhibit III-2. As explained by Petitioners, “Ferrosilicon is available in `standard' grades and `specialty' grades. The standard ferrosilicon grades include `regular,' `high purity,' `low aluminum,' and `foundry grade' material. References to `regular grade 75 percent ferrosilicon' or `regular grade 50 percent ferrosilicon' denote products containing the indicated percentages of silicon and recognized maximum percentages of minor elements.” See Volume I of Petitions, at 6. Thus, 75 percent ferrosilicon is a grade of product that contains 75 percent silicon of total elements, as defined within HTSUS 7202.21.5000. The unit-of-measure referencing units per “contained silicon” basis simply means the unit of measure is based on the percentage of silicon out of total elements in the gross weight of the product. The “contained silicon” unit of measure is an industry standard unit of measure, as noted by Petitioners in Volume II of Petitions, at 2 and ns. 4-5.

23.  See Volume II of Petitions, at 3-4.

24.  See id., at 3-4 and Exhibit II-3.

25.  See id.; see also Supplement to Russia Petition, at 3-4.

26.  See id., at 4.

27.  See SAA, H.R. Doc. No. 103-316, at 833 (1994).

28.  See id.

29.  See id.

30.  See id.

31.  See Volume II of Petitions, at 4-6 and Exhibits II-4 and II-5; see also Supplement to Russia Petition, at 4-6 and Exhibits 2 through 4.

32.  See id.

33.  See Volume II of Petitions, at 4.

34.  See id.

35.  See id., at 6.

36.  See Volume III of Petitions, at 3 and Exhibits III-3 and III-4; Foreign Research Report; Supplement to Venezuela Petition, at 2-3; and Venezuela Initiation Checklist.

37.  See Supplement to Russia Petition, at Exhibit 4.

38.  See Volume III of Petitions, at 3 and Exhibits III-3 and III-4; Foreign Research Report; Supplement to Venezuela Petition, at 2-3; and Venezuela Initiation Checklist.

39.  See section 733(a)(1) of the Act.

40.  See section 782(b) of the Act.

41.  See Certification of Factual Information to Import Administration During Antidumping and Countervailing Duty Proceedings: Interim Final Rule, 76 FR 7491 (February 10, 2011) (“Interim Final Rule”) (amending 19 CFR 351.303(g)(1) & (2)), as supplemented by Certification of Factual Information to Import Administration During Antidumping and Countervailing Duty Proceedings: Supplemental Interim Final Rule, 76 FR 54697 (September 2, 2011) (“Supplemental Interim Final Rule”).