Notice of Preliminary Determinations of Sales at Less Than Fair Value and Postponement of Final Determinations: Pure Magnesium and Alloy Magnesium From the People's Republic of China

DEPARTMENT OF COMMERCE

[A-570-832 and A-570-833]

Notice of Preliminary Determinations of Sales at Less Than Fair

Value and Postponement of Final Determinations: Pure Magnesium and

Alloy Magnesium From the People's Republic of China

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: November 7, 1994.

FOR FURTHER INFORMATION CONTACT:

David J. Goldberger or Louis Apple, 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-

4136 or (202) 482-1769, respectively.

PRELIMINARY DETERMINATIONS: We preliminarily determine that imports of

pure magnesium and alloy magnesium from the People's Republic of China

(PRC) are being, 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 of 1930, as amended (the Act). The estimated margins are shown in

the ``Suspension of Liquidation'' section of this notice.

Case History

Since the initiation of these investigations on April 20, 1994, (59

FR 21748, April 26, 1994), the following events have occurred.

On May 16, 1994, the U.S. International Trade Commission (ITC)

notified the Department of Commerce (``the Department'') of its

preliminary determination that there is a reasonable indication that

industries in the United States are materially injured by reason of

imports of pure and alloy magnesium from the PRC that are alleged to be

sold at less than fair value.

On June 13, 1994, the Department sent the antidumping questionnaire

to the PRC's Ministry of Foreign Trade and Economic Cooperation

(MOFTEC), the China Chamber of Commerce of Metals, Minerals and

Chemical Products, and seven PRC companies. (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 pure or alloy magnesium). We requested MOFTEC's

assistance in forwarding the questionnaire to all exporters and

producers of pure magnesium and alloy magnesium and submitting complete

questionnaire responses on their behalf.

On August 8, 1994, the Department postponed its preliminary

determinations in these antidumping duty investigations until October

27, 1994 (59 FR 42200, August 17, 1994).

On August 10, 1994, the Department provided interested parties with

the opportunity to submit published, publicly-available information for

the Department to consider when valuing the factor inputs. Petitioners

and respondents submitted information on September 7, 1994.

In August and September 1994, we received responses to the

questionnaire from Min He Magnesium Smelter (Min He), a producer and

exporter of the subject merchandise.

On September 1, 1994, the Government of the PRC advised us that Min

He was the only exporter of the subject merchandise during the period

of investigation (October 1, 1993, through March 31, 1994). As Min He's

Section A response indicated that it made no sales of alloy magnesium

during this period, on September 2, 1994, we requested all PRC

exporters, through counsel, to provide information concerning sales of

all magnesium for the 12 months prior to the six-month period of

investigation (POI) in order to reconcile the small number of reported

sales with the much larger number of magnesium entries from the PRC

reported by U.S. Customs. The PRC exporters replied to this request on

September 9, 1994, identifying several sales of pure magnesium and

alloy magnesium between April and September 1993. These sales were made

by Xiamen Xing Xia Company Ltd. (Xing Xia) and Xiamen Jinda

International Trade Associated Corp. (Jinda). Accordingly, on September

16, 1994, the Department expanded the POI to encompass the twelve-month

period April 1, 1993, through March 31, 1994, and requested

supplemental questionnaire responses for that period.

On October 5, 1994, counsel for the PRC companies advised us that

the information in its September 9, 1994, letter was in error and that

all additional magnesium sales were made prior to the twelve-month POI.

The exporters noted in the letter that their sales of alloy magnesium

were pursuant to sales contracts for pure magnesium, but were

classified as alloy magnesium by U.S. Customs upon their entry into the

United States. On October 13, 1994, we again expanded the POI for alloy

magnesium to a nineteen-month period of September 1, 1992, to March 31,

1994, in order to cover the most recent sales of magnesium entered into

the United States as alloy magnesium. On the same date, we advised the

PRC companies to provide questionnaire responses for alloy magnesium

based on this POI. During October 1994, we received a supplemental

questionnaire response from Min He, and a questionnaire response from

Xing Xia, as well as a statement from Jinda that it did not make any

sales during the POI.

Postponement of Final Determinations

Pursuant to section 735(a)(2)(A) of the Act, on October 19, 1994,

the PRC exporters which account for all of the exports of the subject

merchandise in each investigation requested that, in the event of

affirmative preliminary determinations in these proceedings, the

Department postpone the final determinations to 135 days after the date

of publication of the affirmative preliminary determinations.

Therefore, we are postponing the final determinations until the 135th

day after the publication of this notice in the Federal Register.

Scope of Investigations

A. Pure Magnesium

The product covered by this investigation is pure primary magnesium

regardless of chemistry, form or size, unless expressly excluded from

the scope of this investigation. 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 this investigation.

Excluded from the scope of this investigation 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 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 product subject to this investigation is currently 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 product covered by this investigation is alloy primary

magnesium regardless of chemistry, form or size, unless expressly

excluded from the scope of this investigation. Primary magnesium is a

metal or alloy containing by weight primarily the element magnesium and

produced by decomposing raw materials into magnesium metal.

This investigation covers 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 this investigation are primary magnesium

anodes, granular primary magnesium (including turnings and powder), and

secondary magnesium.

Granular magnesium, turnings, and powder are currently classifiable

under 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 a 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 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 product subject to this investigation is currently 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.

Period of Investigation

The period of investigation is April 1, 1993, through March 31,

1994 for pure magnesium, and September 1, 1992, through March 31, 1994,

for alloy magnesium.

Nonmarket Economy Country Status

The PRC has been treated as a nonmarket economy country (NME) in

all past antidumping investigations (see, e.g., Final Determination of

Sales at Less than Fair Value: Sebacic Acid from the PRC, 59 FR 28053,

May 31, 1994). No information has been provided in this proceeding that

would lead us to overturn this designation. Therefore, in accordance

with section 771(18)(c) of the Act, we have treated the PRC as an NME

for purposes of these investigations.

Surrogate Country

In accordance with section 773(c)(4) of the Act, we must, to the

extent possible, value the factors of production in one or more market

economy countries that (1) are at a level of economic development

comparable to that of the non-market economy country, and (2) are

significant producers of comparable merchandise. Accordingly, we

considered potential surrogates that produce comparable merchandise.

Although the material inputs used to produce magnesium and aluminum are

different, according to both U.S. Bureau of Mines and Department of

Commerce experts, both (1) are light metals in terms of molecular

weight; (2) are electricity-intensive products; (3) are produced using

an electrolytic process, and (4) share some common end uses (e.g., dye

casting). Therefore, in these investigations, we have determined that

aluminum constitutes comparable merchandise in the context of surrogate

selection.

The Department has determined that India and Indonesia are the

countries most comparable to the PRC in terms of being significant

producers of comparable merchandise (aluminum) and of overall economic

development. (See October 21, 1994, Memorandum from the Office of

Policy to the File.) However, our research indicates that electricity

rates in India are relatively high as compared to other countries which

produce electricity-intensive products. Because high industrial

electricity rates normally are inconsistent with significant production

of electricity-intensive products such as aluminum, we do not believe

that India is an appropriate surrogate country for valuing the factors

of production for these products.

Accordingly, we have based foreign market value (FMV) on the values

of the appropriate factors of production in Indonesia. We have obtained

and relied upon published, publicly available information, wherever

possible.

Fair Value Comparisons

In cases involving the PRC, the Department assigns a single rate to

all PRC exporters unless a company establishes that it is entitled to a

separate rate (see, for example, Final Determination of Sales at Less

Than Fair Value: Silicon Carbide from the PRC (59 FR 22585, May 2,

1994)). In these investigations, we have assigned a single rate to all

PRC exporters in each investigation.

To determine whether sales of pure magnesium and alloy magnesium

from the PRC to the United States were made at less than fair value, we

compared the United States price (USP) to the FMV, as specified in the

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

notice.

United States Price

For both pure magnesium and alloy magnesium, we based USP on

purchase price, in accordance with section 772(b) of the Act, because

the subject merchandise was sold directly by the Chinese exporter to

unrelated parties in the United States prior to importation into the

United States.

We calculated purchase price based on packed, FOB foreign-port

prices to unrelated purchasers in the United States. We made deductions

for foreign inland freight, loading, and port handling expenses, valued

in a surrogate country. To value freight, we used Indonesian freight

rates from a 1991 cable from the U.S. Embassy in Jakarta (see,

Preliminary Determination of Sales at Less Than Fair Value: Certain

Carbon Steel Butt-Weld Pipe Fittings from the PRC 56 FR 66831, December

26, 1991). We were unable to obtain loading and port handling expenses

valued in Indonesia. For purposes of the preliminary determinations, we

valued these expenses based on Indian port charges quoted by an

international shipping company.

Foreign Market Value

In accordance with section 773(c) of the Act, we calculated FMV for

both pure magnesium and alloy magnesium based on factors of production

reported by the factory in the PRC which produced the subject

merchandise. The factors used to produce pure magnesium and alloy

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

reported factor quantities were multiplied by the appropriate surrogate

values from Indonesia for the different inputs. In determining which

surrogate value to use for valuing each factor of production, we used,

where possible, publicly available, published information.

We used surrogate transportation rates to value inland freight

between the source of the production factor and the magnesium

factories, and between factories and exporters/ports. Where the

producer failed to provide the information on transportation distances

for a raw material input, we applied the average of the distances

reported for other raw materials.

To value raw materials, we used public information from United

Nations Trade Commodity Statistics and Indonesia Foreign Trade

Statistics.

To value electricity, we used public information on Indonesia from

the Electric Utilities Data Book for the Asian and Pacific Region

(January 1993) published by the Asian Development Bank. As the data

dated from 1990, we adjusted the electricity values to the appropriate

POI using wholesale price indices published in International Financial

Statistics (IFS) by the International Monetary Fund. Min He did not

report the consumption factor for water and coal. For purposes of these

determinations, we estimated these factors based on the ratio of non-

electricity energy inputs to the total of material, labor, and energy

inputs stated in the petition.

To value hourly labor rates in Indonesia, we used data obtained

from the U.S. Department of Labor, Bureau of Labor Statistics on hourly

compensation costs in Indonesia's manufacturing sector for 1986, and

adjusted the labor rates to the appropriate POI using consumer price

indices published in the IFS by the International Monetary Fund, and

adjusted for inflation in the same manner identified for electricity.

We were unable to obtain an appropriate factory overhead percentage

based on Indonesian experience. Accordingly, for purposes of these

determinations, we calculated factory overhead based on information in

the petition concerning the experience of a U.S. magnesium producer.

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

statutory minimum of ten percent of material, labor, energy, and

factory overhead because we could not obtain information based on

Indonesian industry experience. For profit we used the statutory

minimum of eight percent of materials, labor, factory overhead, and

SG&A expenses because we could not obtain information on Indonesian

industry experience. We added packing based on the surrogate values

obtained for the raw materials and labor in Indonesia.

Verification

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

information determined to be acceptable for use in making our final

determinations.

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 pure

magnesium and alloy magnesium from the PRC, that are entered, or

withdrawn from warehouse for consumption on the date of this notice for

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 amounts by which the FMV exceeds the USP, as shown below.

These suspension of liquidation instructions will remain in effect

until further notice.

The dumping margins are as follows:

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

Margin

Manufacturer/producer/exporter percent

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

A. Pure Magnesium

All manufactureres/producers/exporters........................ 108.26

B. Alloy Magnesium

All manufacturers/producers/exporters......................... 79.38

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

ITC Notification

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

ITC of our determinations. If one or both of our final determinations

is affirmative, the ITC will determine before the later of 120 days

after the date of these preliminary determinations or 45 days after our

final determinations 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 January 26, 1995, and

rebuttal briefs, no later than February 2, 1995. In accordance with 19

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

interested parties an opportunity to comment on arguments raised in

case or rebuttal briefs. Tentatively, the hearing will be held at 10:00

a.m. on February 6, 1994, at the U.S. Department of Commerce, Room

1412, 14th Street and Constitution Avenue, N.W., 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, 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. If these investigations

proceed normally, we will make our final determinations by the 135th

day after the date of publication of these determinations in the

Federal Register.

These determinations are published putsuant to section 733(f) of

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

Dated: October 27, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-27437 Filed 11-4-94; 8:45 am]

BILLING CODE 3510-DS-M