# 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

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## Record

- **Collection:** Federal Register
- **Document type:** Uncategorized Document
- **Published:** November 7, 1994

## Text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-27437. Public record. Not legal advice.