Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Silicomanganese From Ukraine

DEPARTMENT OF COMMERCE

[A-823-805]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Silicomanganese From

Ukraine

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: June 17, 1994.

FOR FURTHER INFORMATION CONTACT: Stephen Alley or Donna Berg, Office of

Antidumping Investigations, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue NW, Washington, D.C. 20230; telephone: (202) 482-

5288 or (202) 482-0114, respectively.

Preliminary Determination

We preliminarily determine that silicomanganese from Ukraine is

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

value (LTFV), as provided in section 733 of the Tariff Act of 1930, as

amended (the Act). The estimated margin is shown in the ``Suspension of

Liquidation'' section of this notice.

Case History

Since the initiation of this investigation on December 2, 1993, (58

FR 64553, December 8, 1993), the following events have occurred:

On December 27, 1993, the U.S. International Trade Commission (ITC)

notified us of its preliminary determination that there is a reasonable

indication that an industry in the United States is materially injured,

or threatened with material injury, by reason of imports of

silicomanganese from Ukraine that are alleged to be sold at less than

fair value.

On January 11, 1994, the Department of Commerce (the Department)

sent to the Embassy of Ukraine the antidumping questionnaire. (The

antidumping questionnaire was divided into three sections. Section A

requesting general information on each company, section C requesting

information on, and a listing of, U.S. sales made during the period of

investigation (POI), and section D requesting information on the

production process, including specific amounts of each input used in

manufacturing silicomanganese.) We requested that the Embassy of

Ukraine forward the questionnaire to all Ukrainian exporters and

producers of silicomanganese and ensure that complete questionnaire

responses were submitted on their behalf.

During the week of January 31, 1994, representatives of the

Department met with officials in Ukraine to provide further explanation

regarding the antidumping questionnaire and to answer outstanding

technical and procedural questions.

The two Ukrainian producers/exporters, Nikopol Ferroalloys Plant

(Nikopol) and Zaporozhye Ferroalloys Plant (Zaporozhye) submitted

responses to section A of the questionnaire on February 18, 1994, and

section C of the questionnaire on March 14, 1994. Responses to section

D of the questionnaire were submitted by Zaporozhye and Nikopol on

March 31, 1994, and April 8, 1994, respectively. Petitioners submitted

deficiency comments on April 22, 1994. The Department requested

clarifications regarding the responses from both respondents on May 6,

1994, and additionally from Nikopol on May 13, 1994. Both respondents

submitted these clarifications on May 26, 1994.

On March 2, 1994, the Department determined that this investigation

was extraordinarily complicated due to the dramatic changes occurring

in the Ukrainian economy and, in accordance with section

733(c)(1)(B)(i)(II) of the Tariff Act of 1930, extended the preliminary

determination until June 10, 1994.

On March 15, 1994, the Department requested comments concerning

appropriate surrogate countries for Ukraine from all interested

parties. Only petitioners submitted comments.

Because this investigation involves a non-market economy (NME), on

May 4, 1994, the Department sent Nikopol and Zaporozhye supplemental

questionnaires to elicit information necessary to determine whether

either company merits a separate antidumping rate. To date, neither

respondent has submitted a response.

On May 20, 1994, petitioners alleged that critical circumstances

exist with respect to imports of silicomanganese from Ukraine. Pursuant

to the Department's request, respondents submitted shipment data on

June 1, 1994.

Petitioners provided surrogate value information on May 27, 1994,

and on May 31, 1994, submitted comments to be considered for the

preliminary determination.

Postponement of Final Determination

In accordance with 19 CFR 353.20(b), Nikopol and Zaporozhye, which

together account for all exports of the merchandise covered in this

proceeding, have requested that, in the event of an affirmative

determination, the Department postpone the final determination until

135 days after the date of publication of the preliminary

determination. Because we find no compelling reason to deny the

request, we are postponing the date of the final determination until

not later than 135 days after the date of publication of this notice.

Scope of Investigation

The merchandise covered by this investigation is silicomanganese.

Silicomanganese, which is sometimes called ferrosilicon manganese, is a

ferroalloy composed principally of manganese, silicon, and iron, and

normally containing much smaller proportions of minor elements, such as

carbon, phosphorous and sulfur. Silicomanganese generally contains by

weight not less than 4% iron, more than 30% manganese, more than 8%

silicon and not more than 3% phosphorous. All compositions, forms and

sizes of silicomanganese are included within the scope of these

investigations, including silicomanganese slag, fines and briquettes.

Silicomanganese is used primarily in steel production as a source of

both silicon and manganese. These investigations cover all

silicomanganese, regardless of its tariff classification. Most

silicomanganese is currently classifiable under subheading 7202.30.0000

of the Harmonized Tariff Schedule of the United States (HTSUS). Some

silicomanganese may also be classifiable under HTSUS subheading

7202.99.5040. Although the HTSUS subheading is provided for convenience

and customs purposes, our written description of the scope is

dispositive.

Period of Investigation

The period of investigation (POI) is June 1, 1993, through November

30, 1993.

Surrogate Country

In past antidumping investigations, the Department has considered

Ukraine to be a NME country. Ukraine has not contested this

designation, and we are continuing to consider it a NME country.

Therefore, in accordance with section 773(c) of the Act, the Department

has based foreign market value on factors of production, and has valued

the factors of production using surrogate values from market economy

countries that are at a level of economic development comparable to

that of Ukraine, and that are significant producers of comparable

merchandise.

Due to dramatic and ongoing changes in Ukraine's economy, we were

not able to identify a single preferred surrogate country for Ukraine.

Therefore, we have ranked groups of surrogates into three tiers: Egypt,

Colombia, Morocco, and Peru, which we determined were most similar to

Ukraine in per capita GNP and population size, were assigned to tier

one; Ecuador, Guatemala, Bolivia, the Dominican Republic, and Indonesia

were placed in tier two; and finally, the Philippines and El Salvador

were included in tier three. (See Memorandum from Dave Mueller,

Director, Office of Policy, to Gary Taverman, dated May 2, 1994 on file

in Room B-099 of the Main Commerce Department building.) It should be

noted that although the tiers are ranked hierarchically, the surrogate

countries are not hierarchically ranked within each tier.

We considered surrogate values for the factors of production from

first-tier countries as most desirable and surrogate values from

second-tier countries the next most desirable. Values from third-tier

countries were used only as a last resort when factor-price data were

not available from countries in the first two tiers.

In some instances, we were able to obtain surrogate values for a

particular factor of production from only one country. Where surrogate

values were available from more than one country within a tier, we

averaged the pricing data for all of the countries. We then used the

average price for that tier to value the factor of production. For

purposes of this preliminary determination, we determined that this was

the most objective method given that there was no basis for

distinguishing countries included within the same tier.

When we were not able to value factors of production using

published, publicly-available information from any surrogate country,

we relied on information provided by U.S. embassies and consulates in

the surrogate countries.

Fair Value Comparisons

To determine whether sales of silicomanganese from Ukraine to the

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

States price (USP) to the foreign market value (FMV), as specified in

the ``United States Price'' and ``Foreign Market Value'' sections of

this notice.

United States Price

In accordance with section 772(b) of the Act, we based USP for

Zaporozhye on purchase price because all sales were made to unrelated

parties prior to importation into the United States. For Nikopol, we

have based USP on exporter's sales price (ESP), under section 772(c) of

the Act.

We calculated purchase price for Zaporozhye based on prices to an

unrelated purchaser in the United States. We made deductions, where

appropriate, for foreign inland freight and loading expense (which were

both valued in a surrogate country), to adjust the prices to an ex-

factory basis.

We calculated ESP for Nikopol based on prices at which the

merchandise was sold on various terms to unrelated purchasers in the

United States. We made deductions, where appropriate, for foreign

inland freight and loading expense (which were both valued in a

surrogate country), marine insurance, ocean freight, U.S. customs duty,

U.S. customs brokerage and U.S. inland freight, to adjust the prices to

an ex-factory basis.

In calculating U.S. price for Nikopol, we excluded one sale of

silicomanganese fines because this sale was atypical of Nikopol's U.S.

sales and represented an insignificant amount of Nikopol's total U.S.

sales during the POI.

Foreign Market Value

We calculated FMV based on factors of production reported by

Zaporozhye and Nikopol. The factors used to produce silicomanganese

include materials, labor, and energy. To calculate FMV, the reported

factors of production were valued using prices obtained in surrogate

countries.

In the case of material inputs, we also used surrogate

transportation rates to value the transportation of inputs from their

sources to the silicomanganese factories.

To value manganese ore, we used an average of CIF import values

from two first-tier surrogate countries: Colombia and Egypt. The source

of both values was United Nations Trade Statistics for 1992.

We were unable to find published, publicly-available information

for manganese sinter, and we received no relevant information from the

U.S. diplomatic posts. Therefore, for the preliminary determination, we

have valued this product using manganese ore prices.

To value quartzite, we relied on a publicly-available Moroccan

import value contained in United Nations statistics. To value coke, the

most current publicly-available source was a Colombian value for 1992

exports reported on an FOB basis in statistics published by the United

Nations.

To value electricity, we used publicly-available information from

Colombia contained in the Departamento Nacional de Planeacion's Junta

Nacional de Tarifas de Servicios Publicos (June 1993). We selected this

source because it provided an electricity rate for industrial use

during the POI.

To value natural gas, we relied on an average of two published,

publicly-available values for our first-tier surrogate countries,

Colombia and Morocco. The Colombian value was reported on a FOB

Colombian port basis and was obtained from U.S. import statistics for

1993. The Moroccan value was the average price at which natural gas was

imported into that country in 1992. The source of this value was the

1992 International Trade Statistics Yearbook, Volume 1, 1993. Before

averaging these values, we converted the Moroccan value into a price

per cubic meter.

To value production labor, we used published, publicly-available

values for Egypt from the 1993 Year Book of Labour Statistics, 52nd

edition. We used the most recent statistics available, values from

1987, which we inflated to the POI using statistics published by The

Economist Intelligence Unit: Egypt Country Profile 1993/94.

For selling, general and administrative expenses (SG&A), and

profit, we found no publicly-available, published information. In

addition, we were unable to use information provided by the U.S.

Embassy in Egypt for SG&A and profit because we were unable to

determine the cost bases upon which the Egyptian percentages were

calculated. Therefore, we relied on the statutory minimums of ten

percent for SG&A and eight percent for profit (see section 773(e)(1)(B)

of the Act).

For factory overhead, we also found no publicly-available,

published information. In addition, we were unable to use the

information provided by the U.S. Embassy in Egypt for factory overhead

because we were unable to determine the cost basis upon which the

overhead percentage was calculated. Furthermore, the statute does not

provide any minimum percentage for factory overhead. Therefore, we

relied upon information from the second-tier surrogate country of

Bolivia provided by the U.S. Embassy in Bolivia. This information was

used during the recent antidumping investigation of Refined Antimony

Trioxide (See Final Determination of Sales at Less Than Fair Value:

Refined Antimony Trioxide From the People's Republic of China, 57 FR

6801, February 28, 1992.) The information is in a cable in the public

file for this case (see La Paz Cable 14178, September 23, 1991). Except

as noted below, where necessary, we adjusted the above surrogate

country prices for inflation to the POI using the wholesale price

indices published for each of the surrogate countries by the

International Monetary Fund (IMF). In the case of Peru, we used the

consumer price index of the IMF because the IMF does not publish a

wholesale price index for that country. In the case of Egypt, for which

the IMF publishes neither wholesale nor consumer price indices, we

adjusted for inflation, where necessary, using statistics published by

The Economist Intelligence Unit: Egypt Country Profile 1993/94.

Verification

As provided in section 776(b) of the Act, we will verify the

accuracy of all information used in making our final determination.

Critical Circumstances

Petitioners alleged that critical circumstances exist with respect

to imports of silicomanganese from Ukraine. Pursuant to section

733(e)(1) of the Act and 19 CFR 353.16 (1993), we requested shipment

information from Zaporozhye and Nikopol and attempted to analyze that

information using the Department's standard methodology. To find

critical circumstances, we must determine whether there is a reasonable

basis to believe or suspect that 1) there is a history of dumping in

the United States or elsewhere of the same class or kind of subject

merchandise, or the importer knew or should have known that the

producer or reseller was selling the subject merchandise at less than

its foreign market value; and 2) there have been massive imports of the

subject merchandise over a relatively short period.

We have not found a history of dumping of Ukrainian silicomanganese

in the United States or elsewhere. According to Department practice,

however, we will impute knowledge of dumping to importers of subject

merchandise when the dumping margin exceeds 25 percent in purchase

price situations. In this case, the estimated dumping margin for

silicomanganese imports from Ukraine is 123.02 percent, a rate which

exceeds our benchmark for imputing knowledge of dumping. Therefore, we

have preliminarily found that importers should be imputed knowledge of

dumping of the subject merchandise.

Pursuant to 19 CFR 353.16(f)(2), the Department considers imports

of subject merchandise to be massive if there has been an increase of

15 percent or more over a relatively short period of time. We also

consider, when possible, the respondent's share of import penetration

of the domestic market in making this determination. In this case,

evidence indicates that Ukrainian U.S. market penetration has

increased.

To determine whether imports increased, we have examined the volume

of imports by comparing volumes for the five months subsequent to the

filing of the petition (November 1993 through March 1994) to the five

months prior to the filing of the petition (June 1993 through October

1993). Although Zaporozhye has provided adequate information to perform

an analysis of whether imports have increased, Nikopol has not done so.

Specifically, the shipment information provided by Nikopol was

inconsistent with its sales data. (See the concurrence memorandum,

dated June 10, 1994.) Given that neither company has established its

eligibility for separate dumping margins, the data concerning critical

circumstances must be considered in a consolidated manner. Accordingly,

given the lack of adequate information, we preliminarily determined

that there have been massive imports of silicomanganese from the

Ukraine.

Based on the foregoing, the Department preliminarily finds that

critical circumstances exist in this case.

Suspension of Liquidation

In accordance with section 733(d)(1) of the Act, we are directing

the Customs Service to suspend liquidation of all entries of

silicomanganese from Ukraine that are entered, or withdrawn from

warehouse, for consumption on or after 90 days prior to the date of

publication of this notice in the Federal Register. The Customs Service

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

estimated amount by which the FMV exceeds the USP as shown below. These

suspension of liquidation instructions will remain in effect until

further notice.

The weighted-average dumping margin is as follows:

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

Weighted-

average

Manufacturer/producer/exporter margin

percentage

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

All exports................................................. 123.02

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

ITC Notification

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

ITC of our determination. If our final determination is affirmative,

the ITC will determine before the later of 120 days after the date of

this preliminary determination or 45 days after our final determination

whether these imports are materially injuring, or threaten material

injury to, the U.S. industry.

Public Comment

In accordance with 19 CFR 353.38, case briefs or other written

comments in at least ten copies must be submitted to the Assistant

Secretary for Import Administration no later than September 23, 1994,

and rebuttal briefs no later than September 28, 1994. In accordance

with 19 CFR 353.38(b), 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, the hearing will be held on

September 30, 1994, at 2 p.m. at the U.S. Department of Commerce, Room

3708, 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

B-099, within ten 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. In accordance with 19 CFR 353.38(b), oral presentations will

be limited to issues raised in the briefs. We will make our final

determination not later than 135 days from the date of publication of

this notice.

This determination is published pursuant to section 733(f) of the

Act and 19 CFR 353.15(a)(4).

Dated: June 10, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-14851 Filed 6-16-94; 8:45 am]

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