E7-17703. Stainless Steel Wire Rod from Sweden: Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to a timely request by the petitioners,¹ the Department of Commerce (“the Department”) is conducting an administrative review of the antidumping duty order on stainless steel wire rod (“SSWR”) from Sweden with respect to Fagersta Stainless AB (“FSAB”). The period of review (“POR”) is September 1, 2005, through August 31, 2006.

We preliminarily determine that sales have been made below normal value (“NV”). Interested parties are invited to comment on the preliminary results. If the preliminary results are adopted 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.

EFFECTIVE DATE:

September 7, 2007.

FOR FURTHER INFORMATION CONTACT:

Brian C. Smith or Gemal Brangman, 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 September 15, 1998, the Department published in the Federal Register an antidumping duty order on SSWR from Sweden. See Notice of Antidumping Duty Order: Stainless Steel Wire Rod from Sweden, 63 FR 49329 (“SSWR Order”). On September 1, 2006, the Department published in the Federal Register a notice of “Opportunity to Request Administrative Review” of the antidumping duty order on SSWR from Sweden covering the period September 1, 2005, through August 31, 2006. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 71 FR 52061 (September 1, 2006). On September 28, 2006, the petitioners submitted a letter timely requesting that the Department conduct an administrative review of the sales of SSWR made by FSAB, pursuant to section 751 of the Tariff Act of 1930, as amended (“the Act”). On October 2, 2006, FSAB also requested that the Department conduct an administrative review of its sales. ^[2] Based on the petitioners' and FSAB's requests for an administrative review of FSAB's sales, on October 19, 2006, we issued an antidumping duty questionnaire³ to FSAB in advance of our initiation of the administrative review. The Department published a notice of initiation of an administrative review with respect to FSAB on October 31, 2006. See Initiation of Antidumping and Countervailing Duty Reviews, 71 FR 63752 (October 31, 2006).

FSAB submitted its response to Section A of the Department's questionnaire on November 27, 2006, Sections B, D, and E of the questionnaire on December 22, 2006, and Section C of the questionnaire on January 5, 2007. We issued to FSAB a Sections A through C supplemental questionnaire on January 26, 2006. FSAB submitted a timely response to this supplemental questionnaire on March 9, 2007.

On March 22, 2007, we issued a decision memorandum which outlined the Department's basis for collapsing FSAB with its affiliates, AB Sandvik Materials Technology (“SMT”) and Kanthal AB (“Kanthal”), and treating them as a single entity in this review. See March 22, 2007, Memorandum from the Team to The File, entitled, “Stainless Steel Wire Rod from Sweden: Whether to Collapse FSAB, SMT, and Kanthal.”

We issued to FSAB a Sections D and E supplemental questionnaire on March 27, 2007. FSAB submitted timely responses to this supplemental questionnaire on May 1 and 8, 2007, respectively.

On April 24, 2007, we issued to FSAB a second Sections A and C supplemental questionnaire to which it submitted a timely response on May 15, 2007.

On May 21, 2007, we partially extended the time limit for the preliminary results in this review until August 31, 2007. See Stainless Steel Wire Rod from Sweden: Notice of Extension of Time Limit for 2005-2006 Administrative Review, 72 FR 29485 (May 29, 2007).

On July 10, 2007, we issued to FSAB a second Section E supplemental questionnaire to which it submitted a timely response on July 17, 2007.

In response to the Department's request, FSAB submitted on August 22, 2007, cost of production (“COP”) information for three products sold in the United States during the POR which it inadvertently did not include in its May 8, 2007, supplemental questionnaire response (see also August 22, 2007, Memorandum to The File, entitled, “Telephone Conversation with Consultant for Fagersta Stainless AB (“Fagersta”)”).

On August 24, 2007, we issued FSAB a supplemental questionnaire based on our analysis of its August 22, 2007, submission. For purposes of the preliminary results, we have relied on the data provided by FSAB in the August 22, 2007, submission. However, we will examine the information submitted by FSAB in response to the August 24, 2007, questionnaire for the final results of this review.

Scope of the Order

For purposes of this order, 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 in diameter.

Certain stainless steel grades are excluded from the scope of the order. SF20T and K-M35FL are excluded. The following proprietary grades of Kanthal AB are also excluded: Kanthal A-1, Kanthal AF, Kanthal A, Kanthal D, Kanthal DT, Alkrothal 14, Alkrothal 720, and Nikrothal 40. 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
Kanthal A-1
Carbon	0.08 max
Aluminum	5.30 min, 6.30 max
Silicon	0.70 max
Iron	balance
Manganese	0.40 max
Chromium	20.50 min, 23.50 max
Kanthal AF
Carbon	0.08 max
Aluminum	4.80 min, 5.80 max
Silicon	0.70 max
Iron	balance
Manganese	0.40 max
Chromium	20.50 min, 23.50 max
Kanthal A
Carbon	0.08 max
Aluminum	4.80 min, 5.80 max
Silicon	0.70 max
Iron	balance
Manganese	0.50 max
Chromium	20.50 min, 23.50 max
Kanthal D
Carbon	0.08 max
Aluminum	4.30 min, 5.30 max
Silicon	0.70 max
Iron	balance
Manganese	0.50 max
Chromium	20.50 min, 23.50 max
Kanthal DT
Carbon	0.08 max
Aluminum	4.60 min, 5.60 max
Silicon	0.70 max
Iron	balance
Manganese	0.50 max
Chromium	20.50 min, 23.50 max
Alkrothal 14
Carbon	0.08 max
Aluminum	3.80 min, 4.80 max
Silicon	0.70 max
Iron	balance
Manganese	0.50 max
Chromium	14.00 min, 16.00 max
Alkrothal 720
Carbon	0.08 max
Aluminum	3.50 min, 4.50 max
Silicon	0.70 max
Iron	balance
Manganese	0.70 max
Chromium	12.00 min, 14.00 max
Nikrothal 40
Carbon	0.10 max
Nickel	34.00 min, 37.00 max
Silicon	1.60 min, 2.50 max
Iron	balance
Manganese	1.00 max
Chromium	18.00 min, 21.00 max

The subject merchandise is 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 order is dispositive.

Fair Value Comparisons

To determine whether sales of SSWR by FSAB to the United States were made at less than NV, we compared constructed export price (“CEP”) to the NV, as described in the “Constructed Export Price” and “Normal Value” sections of this notice.

Pursuant to section 777A(d)(2) of the Act, we compared the CEP of individual U.S. transactions to the weighted-average NV of the foreign like product where there were sales made in the ordinary course of trade, as discussed in the “Cost of Production Analysis” section below.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all products produced by FSAB covered by the description in the “Scope of the Order” section, above, to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. Pursuant to 19 CFR 351.414(e)(2)(ii), we compared U.S. sales to sales made in the home market within the contemporaneous window period, which extends from three months prior to the month of the U.S. sale until two months after the sale. Where there were no sales of identical merchandise in the comparison 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. In making the product comparisons, we matched foreign like products based on the physical characteristics reported by FSAB in the following hierarchical order: grade, diameter, further processing, and coating.

Electro-Slag Remelting

In its December 22, 2006, response to Section B of the questionnaire (“Section B response”), FSAB requested, as it did in the prior administrative review, that the Department include an additional characteristic, electro-slag remelting (“ESR”),^[4] in the above-noted product-matching criteria and also consider it as one of the most significant physical characteristics in the product matching hierarchy. Specifically, FSAB claims that (1) the physical differences associated with remelting are significant, as the ESR process reduces the number of inclusions in the steel enabling the steel to withstand stress better and to have a higher fatigue resistance; (2) the model-matching criteria used in the stainless steel bar (“SSB”) proceedings, which include remelting, are relevant to the model-matching criteria in this review because SSB is an immediate downstream product of SSWR; and (3) significant price and costs differences exist between ESR-treated and non-ESR-treated SSWR and, therefore, the exclusion of ESR from the model-matching criteria has a dramatic effect on the dumping margin. In support of its request to include ESR in the SSWR product-comparison criteria, FSAB provided the same technical information in its questionnaire responses⁵ in this administrative review as it had provided in the prior administrative review. Like in the prior review, we preliminarily find an insufficient basis in this review upon which to include ESR as a model-matching criterion for the reasons explained in detail below.

In accordance with the Department's practice, when identical merchandise is not available in the home market for comparison to merchandise sold to the United States, the Department will compare “similar” merchandise based upon the physical characteristics of the merchandise being compared. See section 771(16)(B) of the Act. The statute also instructs the Department to compare merchandise that is produced in the same country and by the same person as the subject merchandise; like that subject merchandise in component material or materials and in the purposes for which used; and approximately equal in commercial value to the subject merchandise. See section 771(16)(B) of the Act. Section 771(16)(C) of the Act instructs that, where no matches can be found under section 771(16)(B) of the Act, three criteria must be met to consider a product similar to the U.S. model: (1) the comparison-market model must be produced in the same country and by the same person and of the same general class or kind as the merchandise which is the subject of the investigation; (2) the comparison-market model must be like that merchandise in the purposes for which used; and (3) the comparison-market model must be found to be reasonably comparable to the U.S. model by the Department.

When the Department has an established model-matching methodology in a proceeding, it may alter its established methodology if there is a reasonable basis for doing so. See NTN Bearing Corp. v. United States, 295 F. 3d. 1263, 1269 (CIT 2002). With respect to changes to its model-matching methodology, the Department has applied a “compelling reasons” standard, which is fully consistent, if not more rigorous, than the principles applied by the courts in reviewing the Department's determination to alter or change its practice. See Ball Bearings and Parts Thereof From France, Germany, Italy, Japan, Singapore, and the United Kingdom: Final Results of Antidumping Duty Administrative Review, 70 FR 54711 (September 16, 2005), and accompanying Issues and Decision Memorandum at Comment 2. Compelling reasons that warrant a change to the model-matching methodology may include, for example, greater accuracy in comparing foreign like product to the single most similar U.S. model, in accordance with section 771(16)(B) of the Act, or a greater number of reasonable price-to-price comparisons in accordance with section 773(a)(1) of the Act.

As in the prior review, we preliminarily find no compelling reason in this review to change the current model-matching criteria as requested by FSAB. In this review, FSAB used ESR to produce one AISI-equivalent SSWR grade⁶ that it sold to one customer in the home market during the POR. Although FSAB reported sales to the United States and home market of the same SSWR grade, FSAB did not perform ESR on that same SSWR grade sold in the U.S. market. Although FSAB did report more than one sale of this SSWR grade to a single home market customer during the POR, the fact remains that the single ESR-treated AISI-equivalent SSWR grade is insignificant when compared to the large number of non-ESR-treated AISI-equivalent SSWR grades FSAB sold in both the home and U.S. markets during the POR. Moreover, FSAB's use of ESR (and remelting in general) on products subject to this review is limited to home market sales of one AISI-equivalent SSWR grade, which are insignificant in terms of the total quantity of the AISI-equivalent SSWR grades FSAB sold to the U.S. and home markets during the POR.

Moreover, we do not find that there is greater accuracy with respect to comparing the foreign like product to the most similar U.S. model if we include ESR as a model-matching criterion. Specifically, the Department's current product-matching criteria use all of FSAB's home market sales of the ESR-treated and non-ESR-treated grade at issue (i.e., FSAB's internal grade 20) when comparing those sales of that grade to the identical grade sold in the U.S. market. In accordance with the instructions contained in the Department's questionnaire, FSAB's reported costs for each SSWR grade include both non-ESR and ESR-related production costs. FSAB's proposal to treat ESR as a separate model-matching criterion would effectively remove the home market sales of ESR-treated SSWR from the margin calculation analysis. Specifically, adding ESR to the model-matching criteria would result in separate control numbers for the ESR-treated and non-ESR-treated merchandise at issue, as well as separate production costs and prices for the merchandise. Consequently, by excluding the ESR-treated SSWR home market sales from our analysis, the home market price and production costs of the SSWR grade at issue are artificially lowered when compared to sales of the same grade in the U.S. market. Therefore, including ESR as a model-matching criterion will not result in greater accuracy with respect to product comparisons involving the SSWR grade at issue. In addition, given the fact that the use of ESR is limited to the production of one AISI-equivalent grade in this review, inclusion of ESR as a model-matching characteristic will not result in greater accuracy with respect to comparing the remaining foreign like product (i.e., all other SSWR grades sold in the home market during the POR) to the single most similar U.S. model, in accordance with section 771(16)(B) of the Act.

Furthermore, we find no basis to include remelting in the model-matching criteria because its use in the production of SSWR is limited. We note that other stainless steel products such as stainless steel plate and stainless steel sheet and strip in coils, like SSWR, do undergo, to a limited extent, some form of remelting.^[7] However, the model-matching criteria applicable to those other stainless steel products do not include remelting.^[8] In contrast, the model-matching criteria for SSB include remelting forms such as ESR because remelting is an integral part of the production of a wide range of SSB and is used extensively by that industry.^[9] See Stainless Steel Wire Rod from Sweden: Final Results of Antidumping Duty Administrative Review, 72 FR 17834 (April 10, 2007), and accompanying Issues and Decision Memorandum at Comment 1 (“2004-2005 SSWR Final Results”). In addition, we note that even though SSWR is used to produce SSB, we find that to the extent that SSWR is used to produce SSB, its use in the production of SSB is limited to the smaller diameters of SSB.¹⁰ As such, we find no basis to conclude that SSB requires the use of remelted SSWR or that remelted SSWR is used primarily to produce SSB; and thus we find no merit to FSAB's claim that the model-matching criteria used in the SSB proceedings, which include remelting, are relevant to the model-matching criteria applicable to SSWR.

Furthermore, we find that the use of other production processes or steps (i.e., not just remelting) to make SSWR can have an impact on costs and can also affect the quality (both internally and externally) of the final SSWR product, including the level of inclusions, and therefore, the resulting quality of the final SSWR product is not necessarily unique to the remelting process. Moreover, we find that these additional production steps appear to be dependent on a particular customer's request, as in the case of FSAB's use of ESR to produce one SSWR grade sold in the home market during the POR. Therefore, we find that such use appears to be limited and, therefore, is the exception rather than the norm when producing SSWR. In prior reviews, the Department has stated that changing the model-matching criteria may be warranted if an interested party can show that a specific standard exists that is not captured in the model-matching criteria but which is industry-wide, commercially accepted and recognizes material physical characteristics of various types for the particular product at issue.¹¹ In this review, it is clear based on the limited application of ESR, in particular, and remelting, in general, to SSWR that FSAB has not met this test.

As pointed out earlier, ESR is but one form of remelting. As such, even though FSAB may have only started using the ESR process to produce the one grade at issue after the Department completed the LTFV segment of this proceeding, we find that other forms of remelting, such as VAR, have been used to produce SSWR before the initiation of the LFTV segment of this proceeding.^[12] In fact, both ESR and VAR are similar in terms of their intended purposes and uses. For example, ESR and VAR are both used to make a cleaner steel (i.e., a steel with fewer, smaller, and more evenly distributed and/or segregated inclusions). However, the use of one remelting form may be preferred over the other depending on the type of final end use of the SSWR.^[13] Therefore, we do not consider remelting (in one form or another) to be a new technological development affecting the SSWR industry, as it has been in existence for decades.¹⁴

We recognize that FSAB may have incurred additional costs when it used ESR to remelt one AISI-equivalent SSWR grade of merchandise sold in the home market during the POR. We also recognize that a producer which remelts grades of steel used to produce any stainless steel product may incur additional costs, and those costs will be greater when compared to the costs incurred to produce the same grades without remelting. However, in this case, the single AISI-equivalent SSWR grade for which FSAB used ESR represents only one in a broad range of other SSWR grades sold by FSAB in the U.S. and home markets during the POR. Moreover, based on FSAB's own data and our findings in the 2004-2005 SSWR Final Results, it does not appear that the use of remelting is a common practice in the SSWR industry. Therefore, the cost differences identified by FSAB with respect to the single remelted AISI-equivalent grade relative to the numerous other non-remelted grades sold during the POR, coupled with the fact that ESR remelting is a production step not common to producing SSWR, do not warrant the inclusion of ESR as an additional model-matching criterion as suggested by FSAB in this review.

Constructed Export Price

We calculated CEP in accordance with section 772(b) of the Act because the subject merchandise was either sold for the account of FSAB by its subsidiary, Fagersta Stainless, Inc. (“FSI”), in the United States to unaffiliated purchasers, or subsequently further manufactured into non-subject merchandise by its affiliate, Sandvik Materials Technology U.S. (“SMT U.S.”), in the United States and then resold to its unaffiliated customers.

We based CEP on the packed prices to unaffiliated purchasers in the United States. We identified the correct starting price by adjusting for alloy surcharges and billing adjustments associated with the sale, and by making deductions for early payment discounts and volume rebates, where applicable, as required by section 772 of the Act. We also made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Act. These expenses included, where appropriate, foreign inland freight (including freight from the plant to the port of exportation), U.S. brokerage and handling, ocean freight, marine insurance, U.S. inland freight expenses (including freight from the U.S. port to the U.S. customer or warehouse, and freight from the warehouse to the U.S. customer) offset by freight revenue, U.S. customs fees (including harbor maintenance fees and merchandise processing fees), and 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 expenses, warranty expenses, and repacking expenses) and indirect selling expenses (including inventory carrying costs) incurred in the country of exportation and the United States. 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. To calculate the cost of further manufacturing, we relied on SMT U.S.'s reported cost of further-manufacturing materials, labor, and overhead, plus amounts for further- manufacturing general and administrative (“G&A”) expenses, and financial expenses. For further details regarding the further-manufacturing cost calculation, see the Memorandum from LaVonne Clark, Senior Accountant, to Neal M. Halper, Director of Accounting, “Cost of Production and Constructed Value Calculation for the Preliminary Results - Fagersta Stainless AB” (“COP/CV Memo”) dated August 31, 2007.

Normal Value

A. Home Market Viability

In order to determine whether there was a sufficient volume of sales in the home market to serve as a viable basis for calculating NV, we compared the 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)(B) of the Act.

Because FSAB'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 of the subject merchandise, we determined that its home market was viable.

B. Affiliated-Party Transactions and Arm's-Length Test

During a portion of the POR, FSAB sold the foreign like product to an affiliated customer. To test whether these sales were made at arm's-length prices, we compared, on a product-specific basis, the starting prices of sales to affiliated and unaffiliated customers, net of all discounts and rebates, movement charges, direct selling expenses, and packing expenses. Pursuant to 19 CFR 351.403(c) and in accordance with the Department's practice, where the price to the affiliated party was, on average, within a range of 98 to 102 percent of the price of the same or comparable merchandise sold to unaffiliated parties, we determined that sales made to the affiliated party were at arm's length. See Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67 FR 69186, 69187 (November 15, 2002) (establishing that the overall ratio calculated for an affiliate must be between 98 percent and 102 percent in order for sales to be considered in the ordinary course of trade and used in the NV calculation). Sales to the affiliated customer in the home market that were not made at arm's-length prices were excluded from our analysis because we considered these sales to be outside the ordinary course of trade. See 19 CFR 351.102(b).

Level of Trade

Section 773(a)(1)(B)(i) of the Act states that, to the extent practicable, the Department will calculate NV based on sales at the same level of trade (“LOT”) as the export price (“EP”) or CEP. Sales are made at different LOTs if they are made at different marketing stages (or their equivalent). See 19 CFR 351.412(c)(2). Substantial differences in selling activities are a necessary, but not sufficient, condition for determining that there is a difference in the stages of marketing. Id.; see also Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 FR 61731, 61732 (November 19, 1997) (Plate from South Africa). In order to determine whether the comparison sales were at different stages in the marketing process than the U.S. sales, we reviewed the distribution system in each market (i.e., the chain of distribution), including selling functions, class of customer (customer category), and the level of selling expenses for each type of sale.

Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying LOTs for EP and comparison market sales (i.e., NV based on either home market or third country prices),¹⁵ we consider the starting prices before any adjustments. For CEP sales, we consider only the selling activities reflected in the price after the deduction of expenses and profit under section 772(d) of the Act. See Micron Technology, Inc. v. United States, 243 F. 3d 1301, 1314 (Fed. Cir. 2001).

When the Department is unable to match U.S. sales of the foreign like product in the comparison market at the same LOT as the EP or CEP, the Department may compare the U.S. sale to sales at a different LOT in the comparison market. In comparing EP or CEP sales at a different LOT in the comparison market, where available data make it practicable, we make an LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP sales only, if the NV LOT is more remote from the factory than the CEP LOT and there is no basis for determining whether the difference in LOTs between NV and CEP affects price comparability (i.e., no LOT adjustment was practicable), the Department shall grant a CEP offset, as provided in section 773(a)(7)(B) of the Act. See Plate from South Africa, 62 FR at 61732.

We obtained information from FSAB regarding the marketing stages involved in making the reported foreign market and U.S. sales, including a description of the selling activities performed for each channel of distribution. Our LOT findings are summarized below.

FSAB sold SSWR only to end-users in the home market, but sold to both end-users and distributors in the U.S. market. FSAB reported that it made CEP sales in the U.S. market through the following two channels of distribution: (1) sales of FSAB-produced SSWR to its U.S. affiliate FSI (“U.S. Channel 1”), and (2) sales of FSAB-produced SSWR to its U.S. affiliate SMT U.S. (which further manufactured the SSWR into wire products for sale to its unaffiliated U.S. customers) (“U.S. Channel 2”). We compared the selling activities performed in each channel, and found that certain selling functions (i.e., sales process/marketing support and freight/delivery) were performed at the same relative level of intensity in both channels of distribution. With regard to the other selling functions considered in this analysis (i.e., warehousing/inventory and quality assurance/warranty service), we found that either the difference in the selling function between U.S. Channel 1 and U.S. Channel 2 is insignificant or the selling function was not performed at all in either channel during the POR. As a result, both U.S. channels, on balance, are at the same LOT. Accordingly, we find that all CEP sales constitute one LOT. For further discussion, see August 31, 2007, Memorandum to the File, entitled, “Level of Trade Analysis for the Preliminary Results - FSAB” (“LOT Memo”).

With respect to the home market, FSAB reported one channel of distribution (i.e., factory direct sales) through which it sold SSWR to both affiliated and unaffiliated end-user customers. According to FSAB, its direct sales to both affiliated and unaffiliated home market customers constitute one distinct LOT in the home market. In determining whether separate LOTs exist in the home market, we compared the selling functions performed by FSAB for its home market sales to both affiliated and unaffiliated customers. Based on our analysis of the information submitted for the record of this review, we find that all home market sales were made at the same LOT. See LOT Memo.

Finally, we compared the CEP LOT to the home market LOT and found that the selling functions performed for home market sales are either performed at the same degree of intensity as, or vary only slightly from, the selling functions performed for U.S. sales. Specifically, we found that two of the four selling functions (i.e., freight/delivery and warehousing/inventory) are performed by FSAB at the same level of intensity in both the U.S. and home markets. With respect to the remaining two selling functions (i.e., sales process/marketing support and quality assurance/warranty service), we found that there are only slight differences in the level of intensity between the home and U.S. markets which are not a sufficient basis to determine separate LOTs between the two markets. Therefore, we find that the NV LOT and single U.S. LOT are at the same LOT. Accordingly, we matched CEP sales to home market sales at the same LOT and have not made a CEP offset.

Cost of Production Analysis

In the LTFV investigation, the most recently completed segment of this proceeding as of October 31, 2006, the date this review was initiated, we found that FSAB had made sales below the cost of production (“COP”). See Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Stainless Steel Wire Rod From Sweden, 63 FR 10841, 10846 (March 5, 1998); affirmed in Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Wire Rod from Sweden, 63 FR 40449, 40452 (July 29, 1998) (“SSWR from Sweden LTFV Final”). Thus, in accordance with section 773(b)(2)(A)(ii) of the Act, there are reasonable grounds to believe or suspect that FSAB made sales in the home market at prices below the cost of producing the merchandise in the current review period. Accordingly, we instructed FSAB to respond to Section D (Cost of Production) of the Department's questionnaire.

A. Calculation of Cost of Production

In accordance with section 773(b)(3) of the Act, we calculated FSAB's COP based on the sum of FSAB's costs of materials and conversion for the foreign like product, plus amounts for G&A expenses and interest expenses (see “Test of Home Market Sales Prices” section below for treatment of home market selling expenses). The Department relied on the COP data submitted by FSAB in its supplemental Section D questionnaire responses.

B. Test of Home Market Sales Prices

On a product-specific basis, we compared the weighted-average COP to the home market sales of the foreign like product, as required under section 773(b) of the Act, in order to determine whether the sale prices were below the COP. For purposes of this comparison, we used COP exclusive of selling and packing expenses. The prices (inclusive of alloy surcharges and billing adjustments, where appropriate) were exclusive of any applicable movement charges, rebates, discounts, direct and indirect selling expenses and packing expenses.

C. Results of the COP Test

In determining whether to disregard home market sales made at prices below the COP, we examined, in accordance with sections 773(b)(1)(A) and (B) or the Act: (1) whether, within an extended period of time, such sales were made in substantial quantities; and (2) whether such sales were made at prices which permitted the recovery of all costs within a reasonable period of time in the normal course of trade. Where less than 20 percent of the respondent's home market sales of a given product are at prices less than the COP, we do not disregard any below-cost sales of that product because we determine that in such instances the below-cost sales were not made within an extended period of time and in “substantial quantities.” Where 20 percent or more of a respondent's sales of a given product are at prices less than the COP, we disregard the below-cost sales because: (1) they were made within an extended period of time in “substantial quantities,” in accordance with sections 773(b)(2)(B) and (C) of the Act, and (2) based on our comparison of prices to the weighted-average COPs for the POR, they were at prices which would not permit the recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act.

We found that, for certain specific products, more than 20 percent of FSAB's home market sales were at prices less than the COP and, in addition, such sales did not provide for the recovery of costs within a reasonable period of time. We therefore excluded these sales and used the remaining sales as the basis for determining NV, in accordance with section 773(b)(1) of the Act.

Price-to-Price Comparisons

We calculated NV based on delivered prices (inclusive of alloy surcharges) to unaffiliated customers or prices to affiliated customers that were determined to be at arm's length. We made adjustments, where appropriate, to the starting price for billing adjustments, discounts, and rebates. We made deductions, where appropriate, from the starting price for inland freight (from the plant to the customer) and inland insurance, under section 773(a)(6)(B)(ii) of the Act. We also made deductions from the starting price for credit, warranty, and other direct selling expenses, under section 773 of the Act.

We made adjustments for differences in costs attributable to differences in the physical characteristics of the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. We also deducted home market packing costs and added U.S. packing costs, in accordance with sections 773(a)(6)(A) and (B) of the Act.

Calculation of Constructed Value

We calculated CV in accordance with section 773(e) of the Act, which states that CV shall be based on the sum of the respondent's cost of materials and fabrication for the subject merchandise, plus amounts for selling, general and administrative (“SG&A”) expenses, profit and U.S. packing costs. We relied on the submitted CV information.

Price-to-Constructed Value Comparisons

We based NV on CV for comparison to certain U.S. sales, in accordance with section 773(a)(4) of the Act. For comparisons to FSAB's CEP sales, we made circumstance-of-sale adjustments by deducting from CV the weighted-average home market direct selling expenses, in accordance with section 773(a)(8) of the Act and 19 CFR 351.410.

Currency Conversion

We made currency conversions in accordance with section 773A of the Act based on the exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank.

Preliminary Results of Review

As a result of this review, we preliminarily determine that the weighted-average dumping margin for the period September 1, 2005, through August 31, 2006, is as follows:

Manufacturer/Exporter	Percent Margin
Fagersta Stainless AB/AB Sandvik Materials Technology/Kanthal AB	40.24

Disclosure and Public Hearing

The Department will disclose to the parties the calculations performed in connection with these preliminary results within five days of the publication date of this notice. See 19 CFR 351.224(b). Interested parties may submit case briefs not later than 30 days after the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than 35 days after the date of publication 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; (2) a brief summary of the argument; and (3) a table of authorities. 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. 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

Upon completion of the administrative review, 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 15 days after publication of the final results of this review.

For assessment purposes, we will calculate importer-specific ad valorem duty assessment rates based on the ratio of the total amount of dumping margins calculated for the examined sales to the total entered value of those same sales. However, for subject merchandise produced by FSAB but imported by its U.S. affiliate, SMT U.S., we do not have the actual entered value. Therefore, for those entries of subject merchandise imported by SMT U.S., we will calculate the importer-specific assessment rate by aggregating the dumping margins calculated for all of the U.S. sales examined and dividing that amount by the total quantity of the sales examined. To determine whether the duty assessment rates are de minimis, in accordance with the requirement set forth in 19 CFR 351.106(c)(2), we will calculate importer-specific ad valorem ratios based on the estimated entered value.

We will instruct CBP to assess antidumping duties on all appropriate entries covered by this review if any importer-specific assessment rate calculated in the final results of this review is above de minimis (i.e., at or above 0.50 percent). See 19 CFR 351.106(c)(1). 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.

The Department clarified its “automatic assessment” regulation on May 6, 2003. See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003) (“Assessment Policy Notice”). This clarification will apply to entries of subject merchandise during the POR produced by the company included in these preliminary results of review for which the reviewed company did not know the merchandise it sold to the intermediary (e.g., a reseller, trading company, or exporter) was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the “All Others” rate if there is no rate for the intermediary involved in the transaction. See Assessment Policy Notice for a full discussion of this clarification.

Cash Deposit Requirements

Pursuant to the Implementation of the Findings of the WTO Panel in US--Zeroing (EC): Notice of Determinations Under Section 129 of the Uruguay Round Agreements Act and Revocations and Partial Revocations of Certain Antidumping Duty Orders, 72 FR 25261, 25263 (May 4, 2007), effective April 23, 2007, we have revoked the antidumping duty order on SSWR from Sweden and accordingly have instructed CBP to discontinue collection of cash deposits of antidumping duties on entries of the subject merchandise.

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: August 31, 2007.

David M. Spooner,

Assistant Secretary for Import Administration.

Footnotes

1.  The petitioners include the following companies: Carpenter Technology Corporation and Charter Speciality Steel.

2.  FSAB later withdrew its request for an administrative review on January 29, 2007.

3.  Section A of the questionnaire requests general information concerning a company's corporate structure and business practices, the merchandise under review that it sells, and the manner in which it sells that merchandise in all of its markets. Section B requests a complete listing of all home market sales, or, if the home market is not viable, of sales in the most appropriate third-country market (this Section is not applicable to respondents in non-market economy cases). Section C requests a complete listing of U.S. sales. Section D requests information on the cost of production of the foreign like product and the constructed value of the merchandise under review. Section E requests information on further manufacturing.

4.  ESR is one form of remelting. Another form of remelting is vacuum arc remelting (“VAR”).

5.  See Exhibit 1 of the Section B Response.

6.  The Department's antidumping duty questionnaire instructed FSAB to assign codes to its SSWR grades sold during the POR based on the specifications established for AISI-recognized grades. See antidumping duty questionnaire at page B-6 and C-5.

7.  See, e.g., Final Results of Expedited Sunset Review: Stainless Steel Plate from Sweden, 63 FR 67658 (December 8, 1998), which notes that the Department issued a July 11, 1995, scope ruling with respect to a stainless steel plate product named Stavax ESR; Stainless Steel Sheet and Strip in Coils From Taiwan: Preliminary Results and Rescission in Part of Antidumping Duty Administrative Review, 71 FR 45521, 45523 (August 9, 2006) (“SSSS from Taiwan”); Stainless Steel Sheet and Strip in Coils From Germany: Notice of Preliminary Results of Antidumping Duty Administrative Review, 71 FR 45024, 45025 (August 8, 2006) (“SSSS from Germany”); Stainless Steel Sheet and Strip in Coils From Mexico: Preliminary Results of Antidumping Duty Administrative Review, 71 FR 35618, 35619 (June 21, 2006) (“SSSS from Mexico”).

8.  See, e.g., SSSS from Taiwan, 71 FR at 45527; SSSS from Germany, 71 FR at 45027; SSSS from Mexico, 71 FR at 35620.

9.  Moreover, when the Department sought comment on its proposed model-matching criteria in the less-than-fair-value (“LTFV”) segment of the SSB proceedings, the vast majority of interested parties, not just the petitioners, participating in the SSB proceedings all agreed that remelting was a significant characteristic in SSB production and therefore should be included in the model-matching criteria. See August 31, 2007, Memorandum to The File entitled, “Public Documentation Placed on the Record” (which includes discussion of remelting in the SSB proceedings).

10.  See also 2004-2005 SSWR Final Results at Comment 1.

11.  See, e.g., Certain Corrosion-Resistant Carbon Steel Flat Products from Canada: Final Results of Antidumping Duty Administrative Review, 70 FR 13458 (March 21, 2005), and accompanying Issues and Decision Memorandum at Comment 1; Notice of Final Results of Twelfth Administrative Review of the Antidumping Duty Order on Certain Corrosion-Resistant Carbon Steel Flat Products from the Republic of Korea, 72 FR 13086 (March 12, 2007), and accompanying Issues and Decision Memorandum at Comment 1.

12.  See 2004-2005 SSWR Final Results at Comment 1.

13.  See FSAB's Section B Response at Exhibit 1.

14.  See FSAB's Section B response at Exhibit 1.

15.  Where NV is based on constructed value (“CV”), we determine the NV LOT based on the LOT of the sales from which we derive selling expenses, G&A expenses, and profit for CV, where possible.