Notice of Preliminary Determinations of Sales at Less Than Fair Value; Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products from Turkey

Federal RegisterJan 7, 2000

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DEPARTMENT OF COMMERCE

International Trade Administration

[A-489-808]

Notice of Preliminary Determinations of Sales at Less Than Fair

Value; Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products

from Turkey

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: January 7, 2000.

FOR FURTHER INFORMATION CONTACT: Charles Ranado, Stephanie Arthur or

Robert James at (202) 482-3518, (202) 482-6312 or (202) 482-5222,

respectively; Antidumping and Countervailing Duty Enforcement Group

III, Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, NW,

Washington, DC 20230.

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Tariff Act)

by the Uruguay Round Agreements Act (URAA). In addition, unless

otherwise indicated, all citations to Department of Commerce

(Department) regulations refer to the regulations codified at 19 CFR

part 351 (April 1, 1999).

Preliminary Determinations

We preliminarily determine that cold-rolled flat-rolled carbon-

quality steel products (cold-rolled steel products) from Turkey are

being sold, or are likely to be sold, in the United States at less than

fair value (LTFV), as provided in section 733 of the Tariff Act. The

estimated margins of sales at LTFV are shown in the ``Suspension of

Liquidation'' section of this notice.

Case History

On June 21, 1999, the Department initiated antidumping duty

investigations of imports of cold-rolled steel products from Argentina,

Brazil, the People's Republic of China, Indonesia, Japan, the Russian

Federation, Slovakia, South Africa, Taiwan, Thailand, Turkey, and

Venezuela. See Initiation of Antidumping Duty Investigations: Certain

Cold-Rolled Flat-Rolled Carbon-Quality Steel Products from Argentina,

Brazil, the People's Republic of China, Indonesia, Japan, the Russian

Federation, Slovakia, South Africa, Taiwan, Thailand, Turkey, and

Venezuela, 164 FR 34194 (June 25, 1999) (Initiation Notice). Since the

initiation of the investigations, the following events have occurred:

The Department set aside a period for all interested parties to

raise issues regarding product coverage. From July through October

1999, the Department received responses from a number of parties

including importers, respondents, consumers, and petitioners

1, aimed at clarifying the scope of the investigation. See

Memorandum to Joseph A. Spetrini, November 1, 1999 (Scope Memorandum)

for a list of all persons submitting comments and a discussion of all

scope comments. There are several scope exclusion requests for products

which are currently covered by the scope of this investigation that are

still under consideration by the Department. These items are considered

to be within the scope for this preliminary determination; however,

these requests will be reconsidered for the final determination. See

Scope Memorandum.

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\1\ Petitioners in this case are Bethlehem Steel Corporation,

Gulf States Steel, Inc., Ispat Inland Inc., LTV Steel Company Inc.,

National Steel Company, Steel Dynamics, Inc., U.S. Steel Group, a

unit of USX Corporation, Weirton Steel Corporation, United

Steelworkers of America, and Independent Steelworkers Union

(collectively, petitioners).

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On June 22, 1999, the Department requested information from the

U.S. Embassy in Turkey to identify producers/exporters of the subject

merchandise. On June 21, 1999, the Department also requested comments

from petitioners, two potential respondents, Eregli Demir ve Celik

Fabrikalari T.A.S''. (Erdemir) and Borcelik Celik Sanayii ve Ticaret

A.S. (Borcelik), and the Embassy of Turkey in Washington regarding the

criteria to be used for model matching purposes. On July 26, 1999,

Borcelik submitted comments on our proposed model-matching criteria.

Petitioners filed additional model match comments on June 28, 1999.

On July 16, 1999, the United States International Trade Commission

(the Commission) notified the Department of its affirmative preliminary

injury determination in this case.

The Department issued antidumping questionnaires to Erdemir and

Borcelik on June 22, 1999 (Section A) and July 9, 1999 (Sections B

through D). The questionnaire is divided into five parts; we requested

that Erdemir and Borcelik respond to Section A (general information,

corporate structure, sales practices, and merchandise produced),

Section B (home market or third-country sales), Section C (U.S. sales),

and Section D (cost of production/constructed value for high inflation

economies). In addition, we required respondents to respond to

additional questions based on our determination that the Turkish

economy underwent high inflation during the POI.2

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\2\ Based on our analysis of Turkey's consumer price and

wholesale price indices, we determined that the Turkish economy was

experiencing high inflation during the POI (see 1999 issues of the

International Monetary Fund's International Financial Statistics).

``High inflation'' is a term used to refer to a high rate of

increase in price levels. Investigations and reviews involving

exports from countries with highly inflationary economies require

special methodologies for comparing prices and calculating CV and

COP. Generally, a 25 percent inflation rate has been used as a guide

for assessing the impact of inflation on AD investigations and

reviews (see Policy Bulletin No. 94.5, entitled ``Differences in

Merchandise Calculations in Hyperinflationary Economies,'' dated

March 25, 1994).

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[[Page 1128]]

Respondents submitted their initial responses to Section A of the

Department's questionnaire on July 13, 1999. We received Borcelik's

sections B through D response on August 31, 1999. Erdemir submitted

it's response to sections B through D on September 3, 1999. Petitioners

filed comments on respondents' questionnaire responses on July 27,

1999, and September 13, 1999. We issued the following supplemental

questionnaires to respondents: (i) Section A on August 24, 1999, and

(ii) sections B through D on September 16, 1999. Erdemir and Borcelik

responded to our section A supplemental questionnaire on September 10,

1999. Erdemir responded to sections B through D of our supplemental

questionnaire on October 7, 1999; Borcelik responded on October 14,

1999. Petitioners filed additional comments on respondents'

supplemental responses between September 21 and October 22, 1999. On

October 19, 1999, we issued a second supplemental to Erdemir providing

it with an additional opportunity to submit appropriate information on

product-specific costs. Erdemir responded to this request on November

3, 1999. Further, we issued a second supplemental to Borcelik on

October 26, 1999, to which it responded on November 5, 1999.

Period of Investigation

The period of investigation (POI) is April 1, 1998 through March

31, 1999.

Scope of Investigations

For purposes of this investigation, the products covered are

certain cold-rolled (cold-reduced) flat-rolled carbon-quality steel

products, neither clad, plated, nor coated with metal, but whether or

not annealed, painted, varnished, or coated with plastics or other non-

metallic substances, both in coils, 0.5 inch wide or wider, (whether or

not in successively superimposed layers and/or otherwise coiled, such

as spirally oscillated coils), and also in straight lengths, which, if

less than 4.75 mm in thickness having a width that is 0.5 inch or

greater and that measures at least 10 times the thickness; or, if of a

thickness of 4.75 mm or more, having a width exceeding 150 mm and

measuring at least twice the thickness. The products described above

may be rectangular, square, circular or other shape and include

products of either rectangular or non-rectangular cross-section where

such cross-section is achieved subsequent to the rolling process (i.e.,

products which have been ``worked after rolling'')--for example,

products which have been beveled or rounded at the edges.

Specifically included in this scope are vacuum degassed, fully

stabilized (commonly referred to as interstitial-free (``IF'')) steels,

high strength low alloy (``HSLA'') steels, and motor lamination steels.

IF steels are recognized as low carbon steels with micro-alloying

levels of elements such as titanium and/or niobium added to stabilize

carbon and nitrogen elements. HSLA steels are recognized as steels with

micro-alloying levels of elements such as chromium, copper, niobium,

titanium, vanadium, and molybdenum. Motor lamination steels contain

micro-alloying levels of elements such as silicon and aluminum.

Steel products included in the scope of this investigation,

regardless of definitions in the Harmonized Tariff Schedules of the

United States (``HTSUS''), are products in which: (1) Iron

predominates, by weight, over each of the other contained elements; (2)

the carbon content is 2 percent or less, by weight, and; (3) none of

the elements listed below exceeds the quantity, by weight, respectively

indicated:

1.80 percent of manganese, or

2.25 percent of silicon, or

1.00 percent of copper, or

0.50 percent of aluminum, or

1.25 percent of chromium, or

0.30 percent of cobalt, or

0.40 percent of lead, or

1.25 percent of nickel, or

0.30 percent of tungsten, or

0.10 percent of molybdenum, or

0.10 percent of niobium (also called columbium), or

0.15 percent of vanadium, or

0.15 percent of zirconium.

All products that meet the written physical description, and in

which the chemistry quantities do not exceed any one of the noted

element levels listed above, are within the scope of this investigation

unless specifically excluded. The following products, by way of

example, are outside and/or specifically excluded from the scope of

this investigation:

SAE grades (formerly also called AISI grades) above 2300;

Ball bearing steels, as defined in the HTSUS;

Tool steels, as defined in the HTSUS;

Silico-manganese steel, as defined in the HTSUS;

Silicon-electrical steels, as defined in the HTSUS, that are

grain-oriented;

Silicon-electrical steels, as defined in the HTSUS, that are

not grain-oriented and that have a silicon level exceeding 2.25

percent;

All products (proprietary or otherwise) based on an alloy ASTM

specification (sample specifications: ASTM A506, A507);

Silicon-electrical steels, as defined in the HTSUS, that are

not grain-oriented and that have a silicon level less than 2.25

percent, and (a) fully-processed, with a core loss of less than 0.14

watts/pound per mil (.001 inches), or (b) semi-processed, with core

loss of less than 0.085 watts/pound per mil (.001 inches);

Certain shadow mask steel, which is aluminum killed cold-

rolled steel coil that is open coil annealed, has an ultra-flat,

isotropic surface, and which meets the following characteristics:

Thickness: 0.001 to 0.010 inches

Width: 15 to 32 inches

Chemical Composition

------------------------------------------------------------------------

Element................................................ C

Weight %............................................... Certain flapper valve steel, which is hardened and tempered,

surface polished, and which meets the following characteristics:

Thickness: 1.0 mm

Width: 152.4 mm

Chemical Composition

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Element........................... C Si Mn P S

[[Page 1129]]

Weight %.......................... 0.90-1.05 0.15-0.35 0.30-0.50 0.03 0.006

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Mechanical Properties

------------------------------------------------------------------------

Tensile Strength....................... 162 Kgf/mm \2\

Hardness............................... 475 Vickers

hardness number

------------------------------------------------------------------------

Physical Properties

------------------------------------------------------------------------

Flatness...............................

0.04%

Oxide Inclusion.........................................

0.05%

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Compressive Stress: 10 to 40 Kgf/mm \2\

Surface Roughness

------------------------------------------------------------------------

Roughness

Thickness (mm) (m)

------------------------------------------------------------------------

t 0.209..................................... Rz

0.5

0.209 0.310............................. Rz

0.6

0.310 0.440............................. Rz

0.7

0.440 0.560............................. Rz

0.8

0.560

1.0

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Certain ultra thin gauge steel strip, which meets the

following characteristics:

Thickness: 0.100 mm +/-7%

Width: 100 to 600 mm

Chemical Composition

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Element........................ C Mn P S Al Fe

Weight %....................... 0.07 0.2-0.5 0.05 0.05 0.07 Balance

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Mechanical Properties

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Hardness............................... Full Hard (Hv 180 minimum)

Total Elongation....................... 0.3 micron

Camber (in 2.0 m)...................... 0.5 mm

Edge Burr.............................. Certain silicon steel, which meets the following

characteristics:

Thickness: 0.024 inches +/-.0015 inches

Width: 33 to 45.5 inches

Chemical Composition

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Element........................ C Mn P S Si Al

Min. Weight %.................. 0.65

Max. Weight %.................. 0.004 0.4 0.09 0.009 0.4

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[[Page 1130]]

Mechanical Properties

------------------------------------------------------------------------

Hardness............................... B 60-75 (AIM 65)

------------------------------------------------------------------------

Physical Properties

------------------------------------------------------------------------

Finish................................. Smooth (30-60 microinches).

Gamma Crown (in 5 inches).............. 0.0005 inches, start measuring

\1/4\ inch from slit edge

Flatness............................... 20 I-UNIT max.

Coating................................ C3A-.08A max. (A2 coating

acceptable)

Camber (in any 10 feet) \1/16\ inch....

Coil Size I.D.......................... 20 inches

------------------------------------------------------------------------

Magnetic Properties

------------------------------------------------------------------------

Core Loss (1.5T/60 Hz)................. 3.8 Watts/Pound max.

NAAS

Permeability (1.5T/60 Hz).............. 1700 gauss/oersted typical

NAAS 1500 minimum

------------------------------------------------------------------------

Certain aperture mask steel, which has an ultra-flat surface flatness

and which meets the following characteristics:

Thickness: 0.025 to 0.245 mm

Width: 381-1000 mm

Chemical Composition

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Element............................. C....................... N...................... Al

Weight %............................ Certain tin mill black plate, annealed and temper-rolled,

continuously cast, which meets the following characteristics:

Chemical Composition

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Element...................... C Mn P S Si Al As Cu B N

Min. Weight %................ 0.02 0.20 0.03 0.003

Max. Weight %................ 0.06 0.40 0.02 0.023 0.03 0.08 0.02 0.08 .......... 0.008

(Aiming (Aiming (Aiming

0.018 0.05) 0.005)

Max.)

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Non-metallic Inclusions: Examination with the S.E.M. shall not

reveal individual oxides > 1 micron (0.000039 inches) and inclusion

groups or clusters shall not exceed 5 microns (0.000197 inches) in

length.

Surface Treatment as follows:

The surface finish shall be free of defects (digs, scratches, pits,

gouges, slivers, etc.) and suitable for nickel plating.

Surface Finish

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Roughness, RA Microinches (Micrometers)

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Aim Min. Max.

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Extra Bright........................ 5 (0.1) 0 (0) 7 (0.2)

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Certain full hard tin mill black plate, continuously cast,

which meets the following characteristics:

Chemical Composition

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Element...................... C Mn P S Si Al As Cu B N

Min. Weight %................ 0.02 0.20 0.03 0.003

Max. Weight %................ 0.06 0.40 0.02 0.023 0.03 0.08 0.02 0.08 0.008 (Aiming

(Aiming (Aiming 0.005).

0.018 0.05)

Max.)

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Non-metallic Inclusions: Examination with the S.E.M. shall not

reveal individual oxides > 1 micron (0.000039 inches) and inclusion

groups or clusters shall not exceed 5 microns (0.000197 inches) in

length.

Surface Treatment as follows:

The surface finish shall be free of defects (digs, scratches, pits,

gouges, slivers, etc.) and suitable for nickel plating.

[[Page 1131]]

Surface Finish

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Roughness, RA Microinches (Micrometers)

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Aim Min. Max.

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Stone Finish........................ 16 (0.4) 8 (0.2) 24 (0.6)

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Certain ``blued steel'' coil (also know as ``steamed blue

steel'' or ``blue oxide'') with a thickness and size of 0.38 mm x 940

mm x coil, and with a bright finish;

Certain cold-rolled steel sheet, which meets the following

characteristics:

Thickness (nominal): 0.019 inches

Width: 35 to 60 inches

Chemical Composition

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Element............................. C O B

Max. Weight %....................... 0.004

Min. Weight %....................... 0.010 0.012

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Certain band saw steel, which meets the following

characteristics:

Thickness: 1.31 mm

Width: 80 mm

Chemical Composition

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Element........................ C Si Mn P S Cr Ni

Weight %....................... 1.2 to 1.3 0.15 to 0.35 0.20 to 0.35 0.03 0.007 0.3 to 0.5 0.25

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Other properties:

Carbide: fully spheroidized having > 80% of carbides, which are

0.003 mm and uniformly dispersed

Surface finish: bright finish free from pits, scratches, rust,

cracks, or seams

Smooth edges

Edge camber (in each 300 mm of length): 7 mm arc height

Cross bow (per inch of width): 0.015 mm max.

The merchandise subject to this investigation is typically

classified in the HTSUS at subheadings: 7209.15.0000, 7209.16.0030,

7209.16.0060, 7209.16.0090, 7209.17.0030, 7209.17.0060, 7209.17.0090,

7209.18.1530, 7209.18.1560, 7209.18.2550, 7209.18.6000, 7209.25.0000,

7209.26.0000, 7209.27.0000, 7209.28.0000, 7209.90.0000, 7210.70.3000,

7210.90.9000, 7211.23.1500, 7211.23.2000, 7211.23.3000, 7211.23.4500,

7211.23.6030, 7211.23.6060, 7211.23.6085, 7211.29.2030, 7211.29.2090,

7211.29.4500, 7211.29.6030, 7211.29.6080, 7211.90.0000, 7212.40.1000,

7212.40.5000, 7212.50.0000, 7225.19.0000, 7225.50.6000, 7225.50.7000,

7225.50.8010, 7225.50.8085, 7225.99.0090, 7226.19.1000, 7226.19.9000,

7226.92.5000, 7226.92.7050, 7226.92.8050, and 7226.99.0000.

Although the HTSUS subheadings are provided for convenience and

U.S. Customs Service (``U.S. Customs'') purposes, the written

description of the merchandise under investigation is dispositive.

Facts Available

Section 776(a)(2) of the Tariff Act provides that ``if an

interested party or any other person (A) withholds information that has

been requested by the administering authority; (B) fails to provide

such information by the deadlines for the submission of the information

or in the form and manner requested, subject to subsections (c)(1) and

(e) of section 782; (C) significantly impedes a proceeding under this

title; or (D) provides such information but the information cannot be

verified as provided in section 782(i), the administering authority and

the Commission shall, subject to section 782(d), use the facts

otherwise available in reaching the applicable determination under this

title.''

In this case Erdemir failed, in its original and supplemental

responses, to provide unique product costs which account for the

differences in physical characteristics as defined by the Department.

Erdemir assigned the same costs to all products within a cold-rolled

family group. That methodology does not provide product-specific cost

of production (COP) information, nor does it provide the Department

with information to calculate a difference in merchandise (DIFMER)

adjustment to account for differences in physical characteristics when

comparing sales of similar merchandise. Additionally, Erdemir created

these cold-rolled families using its matching characteristics that,

while based on the company's records, do not correspond to the

characteristics identified by the Department. See ``Product

Comparison'' section below. Without accurate data for these items, we

cannot perform a reliable cost test; we cannot make appropriate

selections of sales for price-to-price comparisons; nor can we

determine accurate constructed values for use as normal value. We

issued Erdemir several supplemental questionnaires requesting that it

correct these errors, but it failed to do so. Accordingly, Erdemir's

failure to provide the requested data renders its response unusable for

this preliminary determination. Therefore, in light of Erdemir's

failure to provide requested information necessary to calculate dumping

margins in this case, in accordance with section 776(a) of the Tariff

Act, we are forced to resort to total facts available for this

preliminary determination.

Section 776(b) of the Tariff Act provides that, if the Department

finds that an interested party ``has failed to cooperate by not acting

to the best of its ability to comply with a request for information,''

the Department may use information that is adverse to the interests of

the party as facts otherwise available. Adverse inferences are

appropriate ``to ensure that the party does not obtain a more favorable

result by failing to cooperate than if it had cooperated fully.'' See

Statement of Administrative Action (SAA) accompanying the URAA, H.R.

Doc. No. 316, 103d Cong., 2d Session at 870 (1994). Furthermore, ``an

affirmative finding of bad faith on the part of the

[[Page 1132]]

respondent is not required before the Department may make an adverse

inference.'' Antidumping Duties; Countervailing Duties; Final Rule, 62

FR 27296, 27340 (May 19, 1997), (Final Rule).

In this case we have determined that Erdemir has not acted to the

best of its ability in responding to the Department's request for

product-specific cost information that takes into account physical

differences in the products. In our supplemental questionnaires we

repeatedly instructed Erdemir to rely not only on its existing

financial and cost accounting records, but on any other information

which would allow it to calculate a reasonable allocation of its costs.

It is standard procedure for the Department to request product-specific

cost data and we routinely receive such information from respondents,

as we did from the other respondent, Borcelik, in this case. In the

Department's experience companies have information which allows them to

calculate a reasonable estimate of the costs to make a given product.

Even if a company does not identify product-specific costs in its

normal financial and cost accounting records, it should be able to make

some reasonable allocation of its costs among distinct products through

the use of other product and production information.

Under section 782(c) of the Tariff Act, a respondent has a

responsibility not only to notify the Department if it is unable to

provide requested information, but also to provide a ``full explanation

and suggested alternative forms.'' In response to our requests for

product-specific cost data Erdemir only repeated the statement that its

accounting records did not permit it to report product-specific costs.

Cooperation in an antidumping investigation requires more than a simple

statement that a respondent cannot provide certain information from its

previously prepared accounting records; the burden to establish that it

has acted to the best of its ability rests upon the respondent. As

noted above, to meet that burden a respondent must explain what steps

it has taken to comply with the information request, and propose

alternative methodologies for getting the necessary information. See

also Allied-Signal Aerospace v. United States, 996 F.2d 1185, 1192

(Fed. Cir. 1993). Erdemir has failed to do either. Moreover, we find

that Erdemir's claim that it is unable to provide this information is

inconsistent with Erdemir's other statements and information on the

record of this case. For example, Erdemir closely tracks actual

production for yield purposes and for purposes of identifying

particular coils for warehouse identification as is evidenced by the

yield information maintained by the company and the identifying tags

affixed to each finished product. Erdemir also has budgets,

manufacturing standards, and engineering standards for specific

products listed in the company's product brochure. Erdemir must develop

production plans involving the identification of certain products as

produced from certain raw materials on certain production lines using

specific engineering standards. Further, to maintain ISO certification,

Erdemir must maintain contemporaneous records of production and

processes to insure the quality of the products it produces. While

Erdemir's financial accounting records do not contain the information

requested on separate product costs, the company could have developed a

reasonable allocation methodology to allocate costs to products on a

control number (CONNUM)-specific basis using the company's normal cost

accounting records as a starting point to calculate CONNUM-specific

costs. The Department repeatedly requested that Erdemir look beyond its

financial and cost accounting records and select from a variety of

available data using, for example, engineering standards, direct labor

hours, machine hours, budgeting systems, production line reports,

production time, or other production records for allocating costs to

products on a CONNUM-specific basis.

Given Erdemir's repeated failure throughout the investigation to

provide product-specific cost data that takes into account physical

differences in the product or to provide any meaningful explanation of

why such data could not be provided, we preliminarily determine that

Erdemir did not cooperate to the best of its ability. Accordingly, we

have used an adverse inference in selecting the facts available to

determine Erdemir's margin.

In addition, Borcelik failed, in its original and supplemental

response, to provide COP data for major inputs purchased from an

affiliated party. Therefore, in accordance with section 776(a) of the

Tariff Act, we have preliminarily determined to use facts available in

computing the affiliate's COP for purposes of the major input rule. As

facts available we used the cost of major inputs from the petition. See

``Cost of Production'' section below.

Section 776(c) of the Tariff Act provides that where the Department

selects from among the facts otherwise available and relies on

``secondary information,'' such as the petition, the Department shall,

to the extent practicable, corroborate that information from

independent sources reasonably at the Department's disposal. The SAA

states that ``corroborate'' means to determine that the information

used has probative value. See SAA at 870. In this proceeding we

considered the petition as the most appropriate information on the

record to form the basis for a dumping calculation for Erdemir and for

the cost of a major input for Borcelik. In accordance with section

776(c) of the Tariff Act, we sought to corroborate the data contained

in the petition. We reviewed the adequacy and accuracy of the

information in the petition during our pre-initiation analysis of the

petition, to the extent appropriate information was available for this

purpose (e.g., import statistics, cost data and foreign market research

reports). See Initiation Notice at 34202. For purposes of the

preliminary determination, we attempted to further corroborate the

information in the petition. We re-examined the export price, home

market price, and CV data provided for the margin calculations in the

petition in light of information obtained during the investigation and,

to the extent practicable, found that it has probative value (see

Memorandum to the File, ``Facts Available Rate and Corroboration of

Secondary Information,'' dated December 8, 1999). As adverse facts

available, we have preliminarily assigned Erdemir the rate of 32.91

percent, the highest calculated margin in the petition. This rate is

subject to further comments by interested parties and therefore may be

changed for the final determination.

Product Comparisons

We relied on fourteen criteria to match U.S. sales of subject

merchandise to comparison-market sales of the foreign like product:

hardening and tempering, paint, carbon level, quality, yield strength,

minimum thickness, thickness tolerance, width, edge finish, form,

temper rolling, leveling, annealing, and surface finish. A detailed

description of the matching criteria, as well as our matching

methodology is contained in the Borcelik's Preliminary Determination

Memorandum, dated December 8, 1999 (Preliminary Determination

Memorandum).

Fair Value Comparisons

To determine whether sales of cold-rolled steel products from

Turkey were made in the United States at less than fair value, we

compared the export price (EP) to the normal value (NV), as described

in the ``Export Price'' and

[[Page 1133]]

``Normal Value'' sections of this notice. In accordance with section

777A(d)(1)(A)(i) of the Tariff Act, we calculated weighted-average EPs

for comparison to weighted-average NVs. Turkey experienced significant

inflation during the POI, as measured by the Wholesale Price Index,

published in the June 1999 issue of International Financial Statistics.

Accordingly, to avoid distortions caused by the effects of significant

inflation on prices, we calculated EPs and NVs on a monthly average

basis, rather than on a POI average basis. We then compared weighted-

average EPs to weighted-average NVs for the same month.

Transactions Investigated

For home market and U.S. sales Borcelik reported the date of

invoice as the date of sale, in keeping with the Department's stated

preference for using the invoice date as the date of sale. Borcelik

stated that the invoice date best reflects the date on which the

material terms of sale are established and that price or quantity or

both can change between contract date and invoice date. However,

petitioners have alleged that the sales documentation indicates that

the contract date appears to be the date when the material terms of

sale are set for all of Borcelik's sales of cold-rolled steel. Given

the nature of marketing these types of made-to-order products, the

Department requested that Borcelik provide additional information

concerning the nature and frequency of price and quantity changes

occurring between the contract date and date of invoice. We also

requested that Borcelik report change order date for all home market

and United States sales and to ensure that all sales with change order

or invoice dates within the POI are reported.

Borcelik claims that invoice date is the appropriate date of sale

for both U.S. and home market sales, stating that this is the first

date in which terms of sale are set. However, petitioners believe that

all terms of sale are determined at the time of the sales contract and

therefore claim that this date is the more appropriate date to use.

Because there is evidence on the record suggesting that the terms of

sale may change between the contract date and the issuance of the

invoice, the Department is preliminarily using the invoice date as the

date of sale for both home market and U.S. sales. We intend to fully

examine this issue at verification, and we will incorporate our

findings, as appropriate, in our analysis for the final determination.

If we determine that change order is the appropriate date of sale, we

may resort to facts available for the final determination to the extent

that this information has not been reported.

Level of Trade

In accordance with section 773(a)(1)(B)(i) of the Tariff Act, to

the extent practicable, we determine NV based on sales in the

comparison market at the same level of trade (LOT) as the EP or CEP

transaction. The NV LOT is that of the starting price sales in the

comparison market or, when NV is based on CV, that of the sales from

which we derive selling, general and administrative (SG&A) expenses and

profit. For EP the US LOT is also the level of the starting price sale,

which is usually from the exporter to the importer. For CEP it is the

level of the constructed sale from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP or CEP

sales, we examine stages in the marketing process and selling functions

along the chain of distribution between the producer and the

unaffiliated customer. If the comparison market sales are at a

different LOT, and the difference affects price comparability, as

manifested in a pattern of consistent price differences between the

sales on which NV is based and comparison market sales at the LOT of

the export transaction, we make a LOT adjustment under section

773(a)(7)(A) of the Tariff Act. Finally, for CEP sales, if the NV level

is more remote from the factory than the CEP level and there is no

basis for determining whether the differences in the levels between NV

and CEP affects price comparability, we adjust NV under section

773(A)(7)(B) of the Tariff Act (the CEP offset provision). (See, e.g.,

Certain Carbon Steel Plate from South Africa, Final Determination of

Sales at Less Than Fair Value, 62 FR 61731 (November 19, 1997)).

In implementing these principles in this investigation, we obtained

information from Borcelik about the marketing stages involved in its

reported U.S. and home market sales, including a description of the

selling activities performed by Borcelik for each channel of

distribution. In identifying levels of trade for EP and home market

sales we considered the selling functions reflected in the starting

price before any adjustments.

Borcelik reported numerous customer categories and one channel of

distribution (i.e., sales to affiliated and unaffiliated end-users) for

its home market sales. Borcelik only reported EP sales in the U.S.

market. For EP sales Borcelik reported one customer category (i.e.,

trading companies) and one channel of distribution (i.e., sales through

Boruan Dagitim to trading companies). Borcelik did not claim that its

sales to home market customers are at a different LOT than its sales to

U.S. customers and, therefore, did not claim a LOT adjustment.

In determining whether separate LOTs actually existed in the home

market, we examined whether Borcelik's sales involved different

marketing stages (or their equivalent) based on the channel of

distribution, customer categories and selling functions. As noted

above, Borcelik's sales to its unaffiliated and affiliated customers

were made through the same channel of distribution, albeit to different

categories of customer, with no differences in selling functions. Based

on these factors we find that Borcelik's home market sales comprise a

single LOT.

In comparing the LOT of Borcelik's EP sales with that of its home

market sales, we noted that its EP sales generally involved the same

selling functions associated with the home market LOT described above.

Therefore, based upon this information, we have preliminarily

determined that the LOT for all EP sales is the same as that in the

home market. Accordingly, because we find the U.S. sales and home

market sales to be at the same LOT, no LOT adjustment under section

773(a)(7)(A) of the Tariff Act is warranted.

For a detailed level-of-trade analysis with respect to Borcelik,

see Preliminary Determination Analysis Memorandum, dated December 8,

1999.

Export Price

We calculated EP in accordance with section 772(a) of the Tariff

Act because the merchandise was sold to the first unaffiliated

purchaser in the United States prior to importation and CEP methodology

was not otherwise warranted, based on the facts of record. We based EP

on the packed FOB (or for certain Borcelik sales, C&F) price to

unaffiliated purchasers in the United States. We made deductions for

movement expenses in accordance with section 772(c)(2)(A) of the Tariff

Act; these included, where appropriate, foreign inland freight, foreign

brokerage and handling charges, and international freight. We also

increased the starting price by the amount of duty drawback because the

company satisfied our two-pronged test.3

---------------------------------------------------------------------------

\3\ Section 772(c)(1)(B) of the Tariff Act provides for an

upward adjustment to U.S. price for duty drawback on import duties

which have been rebated (or which have not been collected) by reason

of the exportation of the subject merchandise to the United States.

The Department applies a two-pronged test to determine whether a

respondent has fulfilled the statutory requirements for a duty

drawback adjustment. See Steel Wire Rope from the Republic of Korea;

Final Results of Antidumping Duty Administrative Review, 61 FR

55965, 55968 (October 30, 1996). In accordance with this test, the

Department grants a duty drawback adjustment if it finds that: (1)

import duties and rebates are directly linked to and are dependent

upon one another, and (2) the company claiming the adjustment can

demonstrate that there are sufficient imports of raw materials to

account for the duty drawback received on exports of the

manufactured products.

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[[Page 1134]]

Affiliated-Party Transactions and Arm's-Length Test

Borcelik's sales to affiliated customers in the home market not

made at arm's-length prices (if any) were excluded from our analysis

because we considered them to be outside the ordinary course of trade.

See 19 CFR 351.102. To test whether these sales were made at arm's-

length prices, we compared on a model-specific basis the starting

prices of sales to affiliated and unaffiliated customers net of all

movement charges, direct selling expenses, and packing. Where, for the

tested models of subject merchandise, prices to the affiliated party

were on average 99.5 percent or more of the price to the unaffiliated

parties, we determined that sales made to the affiliated party were at

arm's length. See 19 CFR 351.403(c). In instances where no price ratio

could be calculated for an affiliated customer because identical

merchandise was not sold to unaffiliated customers, we were unable to

determine that these sales were made at arm's-length prices and,

therefore, excluded them from our LTFV analysis. See Final

Determination of Sales at Less Than Fair Value: Certain Cold-Rolled

Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 (July 9,

1993) and Notice of Preliminary Determination of Sales at Less Than

Fair Value and Postponement of Final Determination; Emulsion Styrene-

Butadiene Rubber from Brazil, 63 FR 59509, 59512 (November 4,

1998).4 Where the exclusion of such sales eliminated all

sales of the most appropriate comparison product, we made a comparison

to the next most similar model.

---------------------------------------------------------------------------

\4\ As stated in 19 CFR 351.403(d), ``the Secretary normally

will not calculate normal value based on a sale by an affiliated

party if sales of the foreign like product by an exporter or

producer to affiliated parties account for less than five percent of

the total value.'' We examined Borcelik's affiliated party sales and

determined that they represented less than five percent of its total

sales of subject merchandise. Therefore, we did not request that

Borcelik report sales by its affiliates (i.e., downstream sales).

See Borcelik Analysis Memorandum, December 8, 1999.

---------------------------------------------------------------------------

Normal Value

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

(i.e., the aggregate volume of home market sales of the foreign like

product was equal to or greater than five percent of the aggregate

volume of U.S. sales), we compared Borcelik's volume of home market

sales of the foreign like product to the volume of U.S. sales of the

subject merchandise, in accordance with section 773(a)(1)(C) of the

Tariff Act. As Borcelik'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 the

home market was viable. Therefore, we have based NV on home market

sales in the usual commercial quantities and in the ordinary course of

trade.

Cost of Production Analysis

Based on allegations contained in the petition, and in accordance

with section 773(b)(2)(A)(i) of the Tariff Act, we found reasonable

grounds to believe or suspect that sales of cold-rolled steel products

produced in Turkey were made at prices below the COP. As a result, the

Department has initiated investigations to determine whether Borcelik

made home market sales during the POI at prices below its respective

COP, within the meaning of section 773(b) of the Tariff Act. We

conducted the COP analysis described below (see Initiation Notice).

A. Calculation of COP

In accordance with section 773(b)(3) of the Tariff Act, we

calculated COP based on the sum of Borcelik's cost of materials and

fabrication for the foreign like product, plus an amount for home

market selling, general and administrative, interest expenses, and

packing costs. As noted above, we determined that the Turkish economy

experienced significant inflation during the POI. Therefore, in order

to avoid the distortive effect of inflation on our comparison of costs

and prices, we computed indexed monthly costs based on the weighted

average of all monthly costs as indexed for inflation over the POI

(see, e.g., Certain Steel Concrete Reinforcing Bar from Turkey, 64 FR

49150, 49153 (September 10, 1999)).

We used the information from Borcelik's Section D questionnaire

responses to calculate COP. We used Borcelik's monthly COP amounts,

adjusted as discussed below, and the Wholesale Price Index from the

IMF's International Financial Statistics to compute monthly weighted-

average COPs for the POI. We made the following adjustments to

Borcelik's reported costs:

1. Pursuant to section 773(f)(3) of the Tariff Act and section

351.407 of the Department's regulations, we reviewed affiliated-party

transactions and where appropriate used the higher of transfer price,

COP or market price for all major inputs from affiliated parties.

Because the affiliate's COP was not provided by Borcelik, we used as

facts available the costs provided for manufacturing hot rolled coil as

contained in the original petition dated June 2, 1999.

2. Pursuant to section 773(f)(2) of the Tariff Act, we reviewed

affiliated transactions and, where appropriate, used the transfer or

market price for minor inputs of raw materials purchased from

affiliated parties.

3. We adjusted the general and administrative (G&A) expense rate to

exclude shipping rebates related to exports of finished goods and to

include bonuses for management personnel.

4. We recalculated Borcelik's cost of production to include foreign

exchange losses on imported coils.

See Preliminary Determination Cost Calculation Memorandum for

Borcelik, dated December 28, 1999.

B. Test of Home-Market Sales Prices

We compared the adjusted weighted-average COP for Borcelik to the

home market sales of the foreign like product, as required under

section 773(b) of the Tariff Act, in order to determine whether these

sales had been made at prices below the COP within an extended period

of time (i.e., a period of one year) in substantial quantities and

whether such prices were sufficient to permit the recovery of all costs

within a reasonable period of time. In accordance with section

773(b)(2)(C)(i) of the Tariff Act, we determined that sales made below

the COP were made in substantial quantities if the volume of such sales

represented 20 percent or more of the volume of sales under

consideration for the determination of normal value.

On a model-specific basis, we compared the revised COP to the home

market prices, less any applicable movement charges and other direct

and indirect selling expenses.

C. Results of the COP Test

Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than

20 percent of a respondent's sales of a given product were at prices

less than the COP, we did not disregard any below-cost sales of that

product because we determined

[[Page 1135]]

that the below-cost sales were not made in ``substantial quantities.''

Where 20 percent or more of a respondent's sales of a given product

during the POI were at prices less than the COP, we determined such

sales to have been made in ``substantial quantities'' within an

extended period of time in accordance with section 773(b)(2)(B) or the

Tariff Act. In such cases, because we compared prices to (indexed) POI-

average costs, we also determined that such sales were not made at

prices which would permit recovery of all costs within a reasonable

period of time, in accordance with section 773(b)(2)(D) of the Tariff

Act. Therefore, we disregarded the below-cost sales.

We found that for certain models of cold-rolled steel products,

more than 20 percent of the home-market sales by Borcelik were made

within an extended period of time at prices less than the COP. Further,

the prices did not provide for the recovery of costs within a

reasonable period of time. We therefore disregarded these below-cost

sales and used the remaining sales as the basis for determining NV, in

accordance with section 773(b)(1) of the Tariff Act. For those U.S.

sales of cold-rolled steel products for which there were no comparable

home-market sales in the ordinary course of trade, we compared EP to CV

in accordance with section 773(a)(4) of the Tariff Act. See Price-to-CV

Comparisons, below.

D. Calculation of Constructed Value

In accordance with section 773(e)(1) of the Tariff Act, we

calculated CV based on the sum of Borcelik's cost of materials,

fabrication, SG&A, interest, and U.S. packing costs. We made

adjustments similar to those described above for COP. In accordance

with sections 773(e)(2)(A) of the Tariff Act, we based SG&A and profit

on the amounts incurred and realized by the respondent in connection

with the production and sale of the foreign like product in the

ordinary course of trade for consumption in the foreign country. For

selling expenses we used the weighted-average home market selling

expenses.

Price-to-Price Comparisons

We calculated NV based on the FOB or delivered prices to

unaffiliated customers. We made deductions, where appropriate, from the

starting price for billing adjustments, inland freight, inland

insurance. We made adjustments for differences in the merchandise in

accordance with section 773(a)(6)(C)(ii) of the Tariff Act. In

addition, we made adjustments under section 773(a)(6)(C)(iii) of the

Tariff Act for differences in circumstances of sale for imputed credit

expenses, and warranties. Finally, we deducted home market packing

costs and added U.S. packing costs in accordance with section

773(a)(6)(A) and (B) of the Tariff Act.

Price-to-CV Comparisons

For price-to-CV comparisons, we made adjustments to CV in

accordance with section 773(a)(8) of the Tariff Act. We deducted from

CV the weighted-average home market direct selling expenses and added

the weighted-average U.S. product-specific direct selling expenses in

accordance with section 773(a)(6)(C)(iii) of the Tariff Act.

Currency Conversions

Because this proceeding involves a high-inflation economy, we

limited our comparison of U.S. and home market sales to those occurring

in the same month (as described above) and only used daily exchange

rates. See Certain Porcelain on Steel Cookware from Mexico: Final

Results of Antidumping Duty Administrative Review, 62 FR 42496, 42503-

03 (August 7, 1997) and Notice of Final Determination of Sales at Less

Than Fair Value: Certain Pasta from Turkey, 61 FR 30309 (June 14,

1996).

The Department's preferred source for daily exchange rates is the

Federal Reserve Bank. However, the Federal Reserve Bank does not track

or publish exchange rates for the Turkish lira. Therefore, we made

currency conversions based on the daily exchange rates from the Dow

Jones Service, as published in the Wall Street Journal.

Verification

In accordance with section 782(i) of the Tariff Act, we intend to

verify all information relied upon in making our final determinations.

Suspensions of Liquidation

In accordance with section 733(d) of the Tariff Act, we are

directing the Customs Service to suspend liquidation of all entries of

cold-rolled steel products from Turkey that are entered, or withdrawn

from warehouse, for consumption on or after the date of publication of

this notice in the Federal Register. We will instruct the Customs

Service to require a cash deposit or the posting of a bond equal to the

weighted-average amount by which the NV exceeds the EP, as indicated in

the chart below. These suspension-of-liquidation instructions will

remain in effect until further notice. The weighted-average dumping

margins are as follows:

------------------------------------------------------------------------

Weighted-

average

Exporter/manufacturer margin

percentage

------------------------------------------------------------------------

Erdemir.................................................... 32.91

Borcelik................................................... 8.81

All others................................................. 8.81

------------------------------------------------------------------------

ITC Notification

In accordance with section 733(f) of the Tariff Act, we have

notified the ITC of our determination. If our final antidumping

determinations are affirmative, the ITC will determine whether these

imports are materially injuring, or threaten material injury to, the

U.S. industry. The deadline for that ITC determination would be the

later of 120 days after the date of this preliminary determination or

45 days after the date of our final determinations.

Public Comment

Case briefs or other written comments in at least ten copies must

be submitted to the Assistant Secretary for Import Administration no

later than fifty days after the date of publication of this notice, and

rebuttal briefs, limited to issues raised in case briefs, no later than

fifty-five days after the date of publication of this preliminary

determination. A list of authorities used and an executive summary of

issues should accompany any briefs submitted to the Department. Such

summary should be limited to five pages total, including footnotes. In

accordance with section 774 of the Tariff Act, we will hold a public

hearing, if requested, to afford interested parties an opportunity to

comment on arguments raised in case or rebuttal briefs. Tentatively,

any hearing will be held fifty-seven days after publication of this

notice, time and room to be determined, at the U.S. Department of

Commerce, 14th Street and Constitution Avenue, NW, Washington, DC

20230. Parties should confirm by telephone the time, date, and place of

the hearing 48 hours before the scheduled time.

Interested parties who wish to request a hearing, or to participate

if one is requested, must submit a written request to the Assistant

Secretary for Import Administration, U.S. Department of Commerce, Room

1870, within 30 days of the publication of this notice. Requests should

contain: (1) The party's name, address, and telephone number; (2) the

number of participants; and (3) a list of the issues to be discussed.

Oral presentations will be limited to issues raised in the briefs. We

intend to make our final determination no later than 75

[[Page 1136]]

days after the date of this preliminary determination.

This determination is published pursuant to sections 733(d) and

777(i)(1) of the Tariff Act.

Dated: December 28, 1999.

Holly Kuga,

Acting Assistant Secretary for Import Administration.

[FR Doc. 00-301 Filed 1-6-00; 8:45 am]

BILLING CODE 3510-DS-P

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.