Initiation of Antidumping Duty Investigations: Pure and Alloy Magnesium From the People's Republic of China, the Russian Federation, and Ukraine

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-832, A-570-833, A-821-805, A-821-806, A-823-806, A-823-807]

Initiation of Antidumping Duty Investigations: Pure and Alloy

Magnesium From the People's Republic of China, the Russian Federation,

and Ukraine

AGENCY: Import Administration, International Trade Administration,

Commerce.

EFFECTIVE DATE: April 26, 1994.

FOR FURTHER INFORMATION CONTACT:

Ellen Grebasch or Erik Warga, Office of Antidumping Investigations,

Import Administration, International Trade Administration, U.S.

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

Washington, DC 20230; telephone (202) 482-3773 or 482-0922.

Initiation of Investigations

The Petitions

On March 31, 1994, we received petitions filed in proper form by

Magnesium Corporation of America (``Magcorp''), the International Union

of Operating Engineers, Local 564, and the United Steelworkers of

America, Local 8319 (collectively, the ``petitioners''). The

petitioners submitted additional information supporting their

allegations on April 7 and 14, 1994. In accordance with 19 CFR 353.12,

the petitioners allege that imports of pure and alloy magnesium from

the People's Republic of China (``PRC''), the Russian Federation, and

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

less than fair value within the meaning of section 731 of the Tariff

Act of 1930, as amended (the Act), and that such imports are materially

injuring, or threatening material injury to, a U.S. industry.

The petitioners stated that they have standing to file the petition

because they are interested parties, as defined under sections

771(9)(C) and 771(9)(D) of the Act, and the petition is filed on behalf

of the U.S. industry producing the product subject to this

investigation. If any interested party, as described under paragraphs

(C), (D), (E), or (F) of section 771(9) of the Act, wishes to register

support for, or opposition to, this petition, it should file a written

notification with the Assistant Secretary for Import Administration.

Scope of Investigations

For purposes of these initiations we are considering the products

covered by these petitions to be two classes or kinds of merchandise,

i.e., pure magnesium and alloy magnesium. See, Concurrence Memo which

is on file in the Central Records Unit, room B-099 of the Main Commerce

Building. Petitioners contend that primary magnesium constitutes a

single class or kind of merchandise under the Act. Petitioners argue

that although the Department divided magnesium products into two

classes or kinds (pure and alloy) in the final determination of Pure

and Alloy Magnesium from Canada (July 13, 1992, 57 FR 30939), the

imported merchandise in these investigations is different from that in

the Canadian investigation. We invite interested parties to comment on

this issue by May 13, 1994.

A. Pure Magnesium

The products covered by these investigations are imports of pure

primary magnesium regardless of chemistry, form or size, unless

expressly excluded from the scope of these investigations. Primary

magnesium is a metal or alloy containing by weight primarily the

element magnesium and produced by decomposing raw materials into

magnesium metal.

Pure primary magnesium encompasses all products that contain at

least 99.95% primary magnesium, by weight (generally referred to as

``ultra-pure'' magnesium), as well as products containing less than

99.95% but not less than 99.8% primary magnesium, by weight (generally

referred to as ``pure'' magnesium). Products that have the

aforementioned primary magnesium content, but that do not conform to

ASTM Specifications or other industry or customer-specific

specifications, are included in the scope of these investigations.

Pure primary magnesium is cast and sold in various physical forms

and sizes, including ingots, slabs, rounds, billets and other shapes.

Excluded from the scope of these investigations are primary

magnesium anodes, granular primary magnesium (including turnings and

powder), and secondary magnesium.

Granular magnesium, turnings, and powder are classifiable under

Harmonized Tariff Schedule of the United States (HTSUS) subheading

8104.30.00. Magnesium granules and turnings (also referred to as chips)

are produced by grinding and/or crushing primary magnesium and thus

have the same chemistry as primary magnesium. Although not susceptible

to precise measurement because of their irregular shapes, turnings or

chips are typically produced in course shapes and have maximum length

of less than 1 inch. Although sometimes produced in larger sizes,

granules are more regularly shaped than turnings or chips, and have a

typical size of 2mm in diameter or smaller.

Powders are also produced from grinding and/or crushing primary

magnesium and have the same chemistry as primary magnesium, but are

even smaller than granules or turnings. Powders are defined by the

Section Notes to Section XV, the section of the HTSUS in which

subheading 8104.30.00 appears, as products of which 90 percent or more

by weight will pass through a sieve having a mesh aperture of 1mm. (See

HTSUS, Section XV, Base Metals and Articles of Base Metals, Note 6(b).)

Accordingly, the exclusion of magnesium turnings, granules and powder

from the scope include products having a maximum physical dimension

(i.e., length or diameter) of 1 inch or less.

The products subject to these investigations are classifiable under

subheadings 8104.11.00 and 8104.20.00 of the HTSUS. Although the HTSUS

subheadings are provided for convenience and customs purposes, our

written description of the scope is dispositive.

B. Alloy Magnesium

The products covered by these investigations are imports of alloy

primary magnesium regardless of chemistry, form or size, unless

expressly excluded from the scope of these investigations. Primary

magnesium is a metal or alloy containing by weight primarily the

element magnesium and produced by decomposing raw materials into

magnesium metal.

These investigations cover alloy primary magnesium products which

contain 50% or greater, but less than 99.8%, primary magnesium, by

weight. Products with the aforementioned primary magnesium content that

do not conform to ASTM Specifications or other industry or customer-

specific specifications are included in the scope of this

investigation. In addition to primary magnesium, ``alloy'' magnesium

generally contains one or more of the following items in amounts less

than the primary magnesium itself: (1) Other elements deliberately

added to the primary magnesium; (2) magnesium scrap or secondary

magnesium; (3) oxidized magnesium; and (4) other elements present as

impurities.

Alloy primary magnesium is cast and sold in various physical forms

and sizes, including ingots, slabs, rounds, billets and other shapes.

Excluded from the scope of these investigations are primary

magnesium anodes, granular primary magnesium (including turnings and

powder), and secondary magnesium.

Granular magnesium, turnings, and powder are classifiable under

Harmonized Tariff Schedule of the United States (HTSUS) subheading

8104.30.00. Magnesium granules and turnings (also referred to as chips)

are produced by grinding and/or crushing primary magnesium and thus

have the same chemistry as primary magnesium. Although not susceptible

to precise measurement because of their irregular shapes, turnings or

chips are typically produced in coarse shapes and have maximum length

of less than 1 inch. Although sometimes produced in larger sizes,

granules are more regularly shaped then turnings or chips, and have a

typical size of 2mm in diameter or smaller.

Powders are also produced from grinding and/or crushing primary

magnesium and have the same chemistry as primary magnesium, but are

even smaller than granules or turnings. Powders are defined by the

Section Notes to Section XV, the section of the HTSUS in which

subheading 8104.30.00 appears, as products of which 90 percent or more

by weight will pass through a sieve having a mesh aperture of 1mm. (See

HTSUS, Section XV, Base Metals and Articles of Base Metals, Note 6(b).)

Accordingly, the exclusion of magnesium turnings, granules and powder

from the scope include products having a maximum physical dimension

(i.e., length or diameter) of 1 inch or less.

The products subject to these investigations are classifiable under

subheadings 8104.19.00 and 8104.20.00 of the HTSUS. Although the HTSUS

subheadings are provided for convenience and customs purposes, our

written description of the scope is dispositive.

United States Price and Foreign Market Value

A. Non-Market Economy Determination

The PRC, the Russian Federation, and Ukraine have all been

determined to be non-market economy (NME) countries within the meaning

of sections 771(18)(A) and (C) of the Act in previous investigations

and the presumption of NME status continues for the initiation of these

investigations. See, e.g., Final Determination of Sales at Less Than

Fair Value: Certain Compact Ductile Iron Waterworks Fittings and

Accessories Thereof from the PRC, 58 FR 37908 (July 14, 1993); Final

Determination of Sales at Less Than Fair Value: Ferrosilicon from the

Russian Federation, 58 FR 29192 (May 19, 1993); Preliminary

Determinations of Sales at Less Than Fair Value: Ferrosilicon from

Kazakhstan, the Russian Federation, and Ukraine, 57 FR 61876 (December

29, 1992).

In accordance with section 773(c) of the Act, foreign market value

(FMV) in NME cases is based on NME producers' factors of production,

valued in a market economy country. Absent evidence that a particular

NME country government determines which of its factories shall produce

for export to the United States, we intend, for purposes of this

investigation, to base FMV only on those factories that produced pure

and/or alloy magnesium sold to the United States during the period of

investigations (POI).

In the course of these investigations, parties will have the

opportunity to address these NME determinations and provide relevant

information and argument on these issues. In addition, parties will

have the opportunity in these investigations to submit comments on

whether FMV should be based on prices or costs in the respective NME.

B. Pure Magnesium

For the PRC, the Russian Federation, and Ukraine, petitioners based

United States price (USP) on 1993 country-specific Customs unit values

for entries of pure primary magnesium.

For all three countries, petitioners contend that the FMV of

imports subject to these investigations must be determined in

accordance with section 773(c) of the Act, which concerns NME countries

(see ``Non-Market Economy Determination'' section of the notice,

above). Accordingly, petitioners calculated FMV on the basis of the

valuation of the factors of production. The factors of production used

by petitioners were based on Magcorp's experience with a production

process similar to that used in the PRC, the Russian Federation, and

Ukraine.

Petitioners' FMV consisted of the sum of materials, labor, energy,

overhead, general expenses, profit, and packing. To value the factors

of production, petitioners relied where possible on publicly available

information from an appropriate surrogate country. Where such

information was unavailable, petitioners resorted to publicly available

information from the United States and proprietary information based on

their own experience. For one production factor, petitioners also

relied on an export price from the PRC.

For purposes of these initiations, we have accepted, pursuant to

section 773(c)(4) of the Act, petitioners' view that India (for the

PRC) and Brazil (for the Russian Federation and Ukraine) are

appropriate surrogate countries. We have disregarded factor values

based on prices in the United States because (1) petitioners have

failed to follow the Department's established hierarchy with respect to

factor valuation, and (2) petitioners provide no basis for determining

that United States values are representative of the appropriate

surrogate country values. In addition, we have disregarded the factor

value based on an export price in the PRC since the PRC is an NME and

cannot be an appropriate surrogate to value factors of production.

Pursuant to section 773(c)(1) of the Act, petitioners added to the

labor and material costs the percentage for overhead based on their own

experience and the statutory minima of ten percent for general expenses

and eight percent for profit, as well as an amount for packing (which,

because it was based on U.S. values, was disallowed).

C. Alloy Magnesium

For the PRC, the Russian Federation, and Ukraine, petitioners based

USP on 1993 country-specific Customs unit values for entries of alloy

primary magnesium. For each country, petitioners calculated FMV for

alloy primary magnesium using the same factors of production as were

used for pure primary magnesium. Petitioners contend that the pure

primary magnesium must be manufactured and then mixed with an alloy to

create alloy primary magnesium, and that this process involves

additional cost. Therefore, the use of the pure primary magnesium

factor values to determine an alloy primary magnesium FMV produces a

conservative estimate. See, e.g., Final Affirmative Determination;

Rescission of Investigation and Partial Dismissal of Petition: Pure and

Alloy Magnesium from Canada, 57 FR 30939 (July 13, 1992).

Fair Value Comparisons

A. Pure Magnesium

Based on a comparison of USP and FMV, petitioners' alleged dumping

margins, as corrected by the Department for methodological errors and/

or unsupported data, are as follows:

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

Country Revised range

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

PRC................................ 75.67% to 92.01%.

Russian Federation................. 43.37% to 64.12%.

Ukraine............................ 40.15% to 53.99%.

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

B. Alloy Magnesium

Based on a comparison of USP and FMV, petitioners' alleged dumping

margins, as corrected by the Department for methodological errors and/

or unsupported data, are as follows:

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

Country Revised range

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

PRC................................ 46.14% to 47.44%.

Russian Federation................. 48.49% to 107.89%.

Ukraine............................ 21.10%.

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

Initiations of Investigations

We have examined the petitions on pure and alloy magnesium and have

found that they meet the requirements of section 732(b) of the Act.

Therefore, we are initiating antidumping duty investigations to

determine whether imports of pure and alloy magnesium from the PRC, the

Russian Federation, and Ukraine are being, or are likely to be, sold in

the United States at less than fair value.

ITC Notification

Section 732(d) of the Act requires us to notify the International

Trade Commission (ITC) of these actions, and we have done so.

Preliminary Determination by the ITC

The ITC will determine by May 16, 1994, whether there is a

reasonable indication that imports of pure and alloy magnesium from the

PRC, the Russian Federation, and Ukraine are materially injuring, or

threaten material injury to, a U.S. industry. Any ITC determination

which is negative will result in the respective investigation being

terminated; otherwise, these investigations will proceed according to

statutory and regulatory time limits.

This notice is published pursuant to section 732(c)(2) of the Act

and 19 CFR 353.13(b).

Dated: April 20, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-10067 Filed 4-25-94; 8:45 am]

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