Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Stainless Steel Bar from Spain

DEPARTMENT OF COMMERCE

[A-469-805]

Preliminary Determination of Sales at Less Than Fair Value and

Postponement of Final Determination: Stainless Steel Bar from Spain

Agency: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: August 4, 1994.

FOR FURTHER INFORMATION CONTACT: Mary Jenkins or Kate Johnson, Office

of Antidumping Investigations, Import Administration, U.S. Department

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

20230; telephone (202) 482-1756 or 482-4929, respectively.

Preliminary Determination

The Department of Commerce (the Department) preliminarily

determines that stainless steel bar (SSB) from Spain is being, or is

likely to be, sold in the United States at less than fair value, as

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

amended. The estimated margins are shown in the ``Suspension of

Liquidation'' section of this notice.

Scope of Investigation

The merchandise covered by this investigation is SSB. For purposes

of this investigation, the term ``stainless steel bar'' means articles

of stainless steel in straight lengths that have been either hot-

rolled, forged, turned, cold-drawn, cold-rolled or otherwise cold-

finished, or ground, having a uniform solid cross section along their

whole length in the shape of circles, segments of circles, ovals,

rectangles (including squares), triangles, hexagons, octagons or other

convex polygons. SSB includes cold-finished SSBs that are turned or

ground in straight lengths, whether produced from hot-rolled bar or

from straightened and cut rod or wire, and reinforcing bars that have

indentations, ribs, grooves, or other deformations produced during the

rolling process.

Except as specified above, the term does not include stainless

steel semi-finished products, cut length flat-rolled products (i.e.,

cut length rolled products which if less than 4.75 mm in thickness have

a width measuring at least 10 times the thickness, or if 4.75 mm or

more in thickness having a width which exceeds 150 mm and measures at

least twice the thickness), wire (i.e., cold-formed products in coils,

of any uniform solid cross section along their whole length, which do

not conform to the definition of flat-rolled products), and angles,

shapes and sections.

The SSB subject to this investigation is currently classifiable

under subheadings 7222.10.0005, 7222.10.0050, 7222.20.0005,

7222.20.0045, 7222.20.0075 and 7222.30.0000 of the Harmonized Tariff

Schedule of the United States (HTSUS). Although the HTSUS subheading is

provided for convenience and customs purposes, our written description

of the scope of this investigation is dispositive.

Period of Investigation

The (POI) is July 1, 1993, to December 31, 1993.

Case History

Since the notice of initiation on January 19, 1994 (59 FR 3844,

January 26, 1994), the following events have occurred.

On February 14, 1994, the International Trade Commission (ITC)

issued an affirmative preliminary injury determination (USITC

Publication 2734, February 1994).

On February 25, 1994, we named Roldan, S.A. (Roldan) and Acenor,

S.A. (Acenor) as respondents in this investigation and on February 28,

1994, issued antidumping questionnaires to both companies. These

companies represent 100 percent of U.S. imports of subject merchandise

from Spain during the POI. We presented the questionnaire to Roldan at

its facility in Madrid, Spain on March 7, 1994, and to Acenor at its

facility in Bilbao, Spain on March 10, 1994.

We received Roldan's response to Section A of the Department's

questionnaire on March 28, 1994. We received Roldan's responses to

Sections B and C of the Department's questionnaire on April 21, 1994.

We received Acenor's responses to Sections A, B, and C of the

Department's questionnaire on May 18, 1994.

On March 25, 1994, we received comments on the issue of class or

kind of merchandise from interested parties, per the Department's

invitation of such comments in its notice of initiation. On April 13,

1994, we received rebuttal comments on this issue. On May 11, 1994, we

determined that SSB constitutes one class or kind of merchandise. (See

May 11, 1994, Decision Memorandum to Barbara Stafford from The Team Re:

Class or Kind of Merchandise.)

On May 27, 1994, the Department rescinded the COP investigations

against Roldan and Acenor that were initiated on January 19, 1994,

because the Department had reason to believe that petitioners did not

base their cost allegations on information reasonably available to

them. (See May 27, 1994, Decision Memorandum to Barbara Stafford from

David L. Binder Re: Rescinding the COP investigations for Acenor and

Roldan.) On June 13, 1994, the Department re-initiated COP

investigations against Roldan and Acenor based on the allegations

submitted by petitioners on May 9, 1994, and May 24, 1994, pursuant to

section 19 CFR 353.51(a) (1994). (See June 13, 1994, Decision

Memorandum to Barbara R. Stafford from Richard Moreland Re:

Petitioners' Allegations of Sales Below the Cost of Production for

Roldan and Acenor.) We received Roldan's and Acenor's responses, to

Section D of the Department's questionnaire on June 23, and June 27,

1994, respectively.

On April 26, 1994, the Department received a request from

petitioners to postpone the preliminary determination until July 28,

1994. On May 16, 1994, we published in the Federal Register (59 FR

25447), a notice announcing the postponement of the preliminary

determination until not later than July 28, 1994, in accordance with

sections 19 CFR 353.15 (c) and (d).

On July 13, 1994, the Department issued to each respondent a

supplementary questionnaire regarding Section D of the Department's

original questionnaire. The due dates for Acenor's and Roldan's

supplementary responses have been extended until August 3 and August 4,

1994, respectively. Consequently, this information will be received too

late for purposes of the preliminary determination, but will be

analyzed, verified, and considered for the final determination.

On July 26, 1994, pursuant to 19 CFR 353.20(b), respondents

requested that the Department postpone the final determination until

135 days after the date of publication of the Department's preliminary

determination, if that determination is affirmative.

Such or Similar Comparisons

We have determined that all the products covered by this

investigation constitute a single category of such or similar

merchandise. We made fair value comparisons on this basis. In

accordance with the Department's standard methodology, we first

compared identical merchandise. Where there were no sales of identical

merchandise in the home market to compare to U.S. sales, we made

similar merchandise comparisons on the basis of the criteria defined in

Appendix V to the antidumping questionnaire, on file in Room B-099 of

the main building of the Department of Commerce.

We altered the order of the SSB grades specified within the grade

criterion of Appendix V to account for certain other SSB grades which

Roldan sold during the POI, but which were not taken into account in

Appendix V.

We also reversed the order of the size and shape criteria in

Appendix V. In our original questionnaire issued on February 28, 1994,

the fifth and sixth matching criteria were shape and size,

respectively. However, based on the advice of our in-house technical

expert, we reversed the order of these two criteria. Subsequently,

Acciaierie Valbruna (Valbruna), a respondent in the concurrent

antidumping investigation of SSB from Italy, requested that the

Department reconsider the reversal of these criteria in Appendix V.

Specifically, it argued that the distinguishing factor of SSBs as

compared to all other stainless steel products is that they can be

supplied in a variety of shapes and that the COP and price of SSBs are

influenced significantly more by shape than size. In light of the

arguments raised by Valbruna, we reversed the hierarchy of these

criteria to reflect the order in our original Appendix V. Although the

issue was not raised by any interested party in the instant

investigation, we reversed the order of these criteria to ensure

consistent treatment of respondents in performing product comparisons

across all concurrent SSB investigations.

Related Party Sales

On April 21, 1994, Roldan reported sales made to both related and

unrelated distributors, and unrelated end users in the home market. We

compared related party prices to unrelated party prices using the test

set forth in Appendix II to Final Determination of Sales at Less than

Fair Value; Certain Cold-rolled Carbon Steel Flat Products from

Argentina, 58 FR 37062 (July 9, 1994), and determined that the sales

made to related parties were not at arm's length. We subsequently

requested that Roldan and Acenor report all sales made by their related

parties to the first unrelated customer in the home market. These

sales, reported on June 29, and July 1, for Acenor and Roldan,

respectively, were submitted too late to be properly analyzed for use

in the preliminary determination.

On June 13, 1994, Roldan submitted a revised home market sales

listing including Roldan's sales to both related and unrelated parties.

However, for the preliminary determination we did not use portions of

the revised sales listing containing related party sales because we

found certain discrepancies between the related party sales data

contained in respondent's original and revised responses. However, we

intend to clarify these discrepancies prior to verification and

consider respondent's revised related party sales listing for the final

determination based on verification findings. Therefore, for purposes

of the preliminary determination, we only used the portion of Roldan's

sales listing pertaining to sales made directly to unrelated parties in

our analysis.

For Acenor, we compared prices to a related party with prices to

unrelated parties using the test referenced above and determined that

the sales made to the related party were not at arm's length.

Accordingly, we used only sales made directly to unrelated parties

reported in Acenor's June 29, 1994, sales listing.

Fair Value Comparisons

To determine whether sales of SSB from Spain 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. In accordance with 19 CFR 353.58, we made comparisons at the

same level of trade, where possible.

United States Price

For both Roldan and Acenor, we based USP on purchase price (PP), in

accordance with section 772(b) of the Act, because the subject

merchandise was sold to unrelated purchasers in the United States

before importation and exporter's sales price methodology was not

otherwise indicated.

We made an adjustment to USP for the value-added tax (VAT) paid on

the comparison sales in Spain, in accordance with our practice,

pursuant to the Court of International Trade (CIT) decision in Federal-

Mogul Corp. and The Torrington Co. v. United States, Slip Op. 93-194

(CIT, October 7, 1993). (See Final Determination of Sales at Less than

Fair Value: Calcium Aluminate Cement, Cement Clinker and Flux from

France, 59 FR 14136, March 25, 1994).

We re-calculated the VAT for both Roldan and Acenor because the

methodology they employed in reporting the VAT was not clearly defined.

The VAT will be examined at verification and re-analyzed for the final

determination.

Roldan

We calculated PP based on CIF delivered prices to unrelated

customers in the United States. We made deductions, where appropriate,

for foreign brokerage and handling, foreign inland freight, ocean

freight, marine insurance, U.S. brokerage and handling (including

insurance), U.S. inland freight and U.S. import duties.

We made no adjustment for freight charge differentials claimed by

Roldan because of the lack of data on the record concerning the nature

of the adjustment claimed. We intend to obtain further information and

to verify the reported data. We will revisit this issue in our final

determination based on verification findings.

Acenor

We calculated PP based on ex-factory packed prices to unrelated

customers. Accordingly, we made no adjustments to these reported

prices.

Foreign Market Value

In order to determine whether there were sufficient sales of SSB in

the home market to serve as a viable basis for calculating FMV, we

compared the volume of home market sales of SSB to the volume of third

country sales of SSB in accordance with section 773(a)(1)(B) of the

Act. Based on this comparison, we determined that both respondents had

viable home markets with respect to sales of SSB during the POI.

Cost of Production

Petitioners alleged that Roldan and Acenor were selling in the home

market at prices below COP in the petition filed in this investigation.

The Department initiated COP investigations for both respondents on

January, 19, 1994. However, as stated above, the Department rescinded

the original COP investigations. After reviewing petitioners' revised

allegations, we re-initiated COP investigations. We requested that

respondents reply to Section D of our antidumping questionnaires issued

on February 28, 1994. Roldan and Acenor submitted their responses to

Section D of our questionnaire on June 23, and June 27, 1994,

respectively. On July 13, 1994, the Department sent Roldan and Acenor a

Section D deficiency questionnaire.

In order to determine whether home market prices were below COP

within the meaning of section 773(b) of the Act, we calculated COP

based on the sum of the respondents' cost of materials, fabrication,

general expenses and home market packing costs. We compared individual

home market prices with the COPs. We tested the home market prices on a

product-specific basis using Roldan's sales to unrelated customers from

the database received on June 13, 1994, and Acenor's sales to unrelated

customers from the database received on June 29, 1994. We compared

model-specific COP to reported prices that were net of movement

charges.

Following our standard practice, where we found over 90 percent of

a respondent's sales of a given product were at prices above the COP,

we did not disregard any below-cost sales because we determined that

the respondent's below-cost sales were not made in substantial

quantities. If between ten and 90 percent of a respondent's sales of a

given product were at prices above the COP, we discarded only the

below-cost sales if made over an extended period of time. Where we

found that more than 90 percent of a respondent's sales of a given

product were at prices below the COP and were sold over an extended

period of time, we disregarded all sales for that model and calculated

FMV based on constructed value (CV), in accordance with section 773(b)

of the Act.

If sales below cost occurred in three or more months of the POI,

they are considered to be made over an extended period of time. For

sales made in less than three months of the POI, the extended period of

time is the number of months in which the sales occur. (See, 19 U.S.C.

1677b(b)(1)).

Roldan and Acenor provided no indication that the disregarded sales

were at prices that would permit recovery of all costs within a

reasonable period of time and in the normal course of trade. (See, 19

U.S.C. 1677b(b)(2)).

Constructed Value (CV)

We calculated CV based on the sum of the cost of materials,

fabrication, general expenses, U.S. packing costs and profit. In

accordance with section 773(e)(1)(B)(i) and (ii) of the Act we: (1)

Included the greater of respondents' reported general expenses or the

statutory minimum of ten percent of the COM, as appropriate and; (2)

for profit, we used the statutory minimum of eight percent of the sum

of COM and general expenses.

Roldan

For purposes of calculating FMV, we used the sales from Roldan to

its unrelated customers and CV, as described above.

For price-to-price comparisons, we calculated FMV based on

delivered prices, inclusive of packing to unrelated customers in the

home market.

In light of the Court of Appeals for the Federal Circuit's decision

in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement V.

United States, 13 F.3d 398 (Fed. Cir., 1994), the Department no longer

can deduct home market movement charges from FMV pursuant to its

inherent power to fill in gaps in the antidumping statute. Instead, we

adjust for those expenses under the circumstance-of-sale provision of

19 CFR 353.56(a) and the exporter's sales price offset provision of 19

CFR 353.56(b)(2), as appropriate. Accordingly, in the present case, we

deducted post-sale home market movement charges from the FMV under the

circumstance-of-sale provision of 19 CFR 353.56(a). This adjustment

included home market inland freight (including inland insurance).

For both price-to-price comparisons and comparisons to CV, we made

circumstance-of-sale adjustments, where appropriate, for differences in

credit expenses, pursuant to 19 CFR 353.56(a)(2). We re-calculated home

market and U.S. credit expenses because Roldan reported an average

interest rate for a seven-month period, rather than the six-month POI.

In addition, for those sales with missing shipment dates and payment

dates, we calculated credit expenses based on the average payment

period for the respondent's sales reported with shipment and payment

dates.

We did not make a circumstance-of-sale adjustment for commissions

claimed by Roldan that were paid to its parent company for export sales

services performed by the parent company's commercial department. We

also did not adjust for commissions paid by Roldan to the U.S.

subsidiary of its parent company for marketing Roldan's products in the

United States. We consider these payments to be intra-company transfers

not tied directly to sales of the subject merchandise. Furthermore, we

have no appropriate benchmark against which to test whether the

commission arrangements between Roldan and its related party

commissionaires are at arm's length. (See Final Determination of Sales

at Less than Fair Value; Coated Groundwood Paper from Belgium, Finland,

France, Germany and the United Kingdom, 56 FR 56359, November 4, 1992.)

We also deducted home market packing and added U.S. packing costs,

in accordance with section 773(a)(1) of the Act.

For price-to-price comparisons only, we also made adjustments,

where appropriate, for differences in the physical characteristics of

the merchandise in accordance with section 773(a)(4)(C) of the Act. We

adjusted for VAT in accordance with our practice. (See the ``United

States Price'' section of this notice, above.)

We made no adjustment for freight charge differentials claimed by

Roldan because of the lack of data on the record concerning the nature

of the adjustment claimed. We intend to obtain further information and

to verify the reported data. We will revisit this issue in our final

determination based on verification findings.

Acenor

For purposes of calculating FMV, we used the sales from Acenor to

its unrelated customers and CV, as described above.

For price-to-price comparisons, we calculated FMV based on packed,

ex-factory and delivered prices, where applicable. We made an

adjustment for home market inland freight (including inland insurance),

where applicable, under the circumstance-of-sale provision of 19 CFR

353.56(a), as described above.

For price-to-price comparisons and comparisons to CV, we made

circumstance-of-sale adjustments, where appropriate, for differences in

credit expenses, pursuant to 19 CFR 353.56(a)(2). We re-calculated home

market and U.S. credit expenses because Acenor reported its U.S.

imputed credit expense in pesetas and its calculation overstated this

expense because of an error in decimal placement. In addition, for

those sales with missing shipment dates and payment dates, we

calculated credit expenses based on the average payment period for the

respondent's sales reported with shipment and payment dates.

We also deducted home market packing and added U.S. packing costs,

in accordance with section 773(a)(1) of the Act.

For price-to-price comparisons only, we also made adjustments,

where appropriate, for differences in the physical characteristics of

the merchandise, in accordance with section 773(a)(4)(C) of the Act. We

adjusted for VAT in accordance with our practice. (See the ``United

States Price'' section of this notice, above.)

Currency Conversion

We made currency conversions based on the official exchange rates

in effect on the dates of the U.S. sales as certified by the Federal

Reserve Bank of New York. See 19 CFR 353.60(a).

Verification

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

information used in making our final determination.

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 SSB from

Spain, as defined in the ``Scope of Investigation'' section of this

notice, that are entered, or withdrawn from warehouse, for consumption

on or after the date of publication of this notice in the Federal

Register. The Customs Service shall require a cash deposit or the

posting of a bond equal to the estimated preliminary dumping margins,

as shown below. The suspension of liquidation will remain in effect

until further notice. The weighted-average dumping margins are as

follows:

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

Margin

Manufacturer/producer/exporter percent

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

Roldan, S.A.................................................... 25.21

Acenor, S.A.................................................... 8.96

All Others..................................................... 17.89

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

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 whether imports of the subject merchandise are

materially injuring, or threaten material injury to, the U.S. industry,

before the later of 120 days after the date of the preliminary

determination or 45 days after our final determination.

Postponement of Final Determination

Pursuant to section 735(a)(2)(A) of the Act, on July 26, 1994,

respondents accounting for all exports to the United States during the

POI requested that, in the event of an affirmative preliminary

determination in this investigation, the Department postpone its final

determination until 135 days after the date of publication of an

affirmative preliminary determination. Pursuant to 19 CFR 353.20(b),

because our preliminary determination is affirmative, and no compelling

reasons for denial exist, we are postponing the date of the final

determination until the 135th day after the date of publication of this

notice in the Federal Register.

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 November 9, 1994, and

rebuttal briefs no later than November 16, 1994. In accordance with 19

CFR 353.38(b), we will hold a public hearing, if requested, to give

interested parties an opportunity to comment on arguments raised in

case or rebuttal briefs. Tentatively, the hearing will be held on

November 18, 1994, at 2:00 p.m. at the U.S. Department of Commerce,

Room 1414, 14th Street and Constitution Avenue, NW., Washington, D.C.

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 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 in the Federal Register. Request 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 presentation will be limited

to issues raised in the briefs.

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

Act (19 U.S.C. 1673b(f)) and 19 CFR 353.15(a)(4).

Dated: July 28, 1994.

Barbara R. Stafford,

Acting Assistant Secretary for Investigations.

[FR Doc. 94-19071 Filed 8-3-94; 8:45 am]

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