Titanium Sponge From the Russian Federation: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-821-803]

Titanium Sponge From the Russian Federation: Preliminary Results

of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review.

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SUMMARY: In response to requests from Berezniki Titanium-Magnesium

Works (AVISMA), RMI Titanium Company (RMI, a U.S. importer of titanium

sponge), Interlink Metals and Chemicals, Inc. (Interlink), and Titanium

Metals Corporation (TIMET, a petitioner), the Department of Commerce

(the Department) is conducting an administrative review of the

antidumping duty order on titanium sponge from the Russian Federation

(Russia). This notice of preliminary results covers the period August

1, 1994 through July 31, 1995. This review covers one manufacturer/

exporter, AVISMA, and two trading companies, Interlink and Cometals,

Inc. (Cometals). The review indicates the existence of dumping margins

during this period.

We have preliminarily determined that sales have been made below

the normal value (NV). If these preliminary results are adopted in our

final results of administrative review, we will instruct the U.S.

Customs Service (Customs) to assess antidumping duties equal to the

difference between the United States price (USP) and the NV. Interested

parties are invited to comment on these preliminary results. Parties

who submit argument in this proceeding are requested to submit with the

argument: (1) a statement of the issue; and (2) a brief summary of the

argument.

EFFECTIVE DATE: July 29, 1996.

FOR FURTHER INFORMATION CONTACT:

Amy S. Wei or Zev Primor, Office of AD/CVD Enforcement, Office 4,

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone (202) 482-5253.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended, (the Act) are references to the provisions effective

January 1, 1995, the effective date of the amendments made to the Act

by the Uruguay Rounds Agreements Act (URAA). In addition, unless

otherwise indicated, all citations to the Department's regulations are

to the current regulations, as amended by the interim regulations

published in the Federal Register on May 11, 1995 (60 FR 25130).

Background

The Department published an antidumping finding on titanium sponge

from the Union of Soviet Socialist Republics (U.S.S.R.) on August 28,

1968 (33 FR 12138). In December 1991, the U.S.S.R. divided into fifteen

independent states. To conform to these changes, the Department changed

the original antidumping finding into fifteen findings applicable to

the each of the former republics of the U.S.S.R. (57 FR 36070, August

12, 1992).

The Department published a notice of ``Opportunity To Request an

Administrative Review'' of the antidumping duty finding for this review

period on August 1, 1995 (60 FR 39150). On August 28, 1995, AVISMA,

RMI, and Interlink requested that the Department conduct an

administrative review of the antidumping finding on titanium sponge

from Russia for one manufacturer/exporter, AVISMA, and one trading

company, Interlink, covering the period August 1, 1994 through July 31,

1995. On August 31, 1995, TIMET requested that the Department conduct

the same administrative review for AVISMA and another trading company,

Cometals. We initiated the review on September 15, 1995 (60 FR 47930)

and on October 12, 1995 (60 FR 53164) (Cometals was inadvertently

omitted in the previous initiation notice).

The Department extended the time limit for the deadline for the

preliminary results of review because it was not practicable to

complete this review within the time limit mandated by Section

751(a)(3)(A) of the Act. See Titanium Sponge From the Russian

Federation; Antidumping Duty Administrative Review; Time Limits, 61 FR

20795 (May 8, 1996).

The Department is now conducting this administrative review in

accordance with section 751 of the Act.

Scope of the Review

The product covered by this administrative review is titanium

sponge from Russia. Titanium sponge is chiefly used for aerospace

vehicles, specifically, in construction of compressor blades and

wheels, stator blades, rotors, and other parts in aircraft gas turbine

engines. Imports of titanium sponge are currently classifiable under

the harmonized tariff schedule (HTS) subheading 8108.10.50.10. The HTS

subheading is provided for convenience and U.S. Customs purposes. Our

written description of the scope of this proceeding is dispositive.

The period of review (POR) is August 1, 1994 through July 31, 1995,

covering one manufacturer/exporter, AVISMA, and two trading companies,

Interlink and Cometals.

Verification

As provided in section 782(i) of the Act, we verified the

information provided by the respondents by using standard verification

procedures, including on-site inspection of the manufacturer's

facilities, examination of relevant sales and financial records, and

selection of original documentation containing relevant information.

Our verification results are outlined in the public versions of the

verification reports, which are on file in the public file of the

Central Records Unit (Room B-099 in the Department of Commerce).

United States Price (USP)

AVISMA

In its questionnaire response, AVISMA stated that, prior to May

1995, it was not informed at the time of sale of the ultimate

destination of merchandise that was sold by its resellers. For this

reason, prior to May 1995, AVISMA is not considered to have shipped to

the United States.

[[Page 39438]]

We determined that AVISMA's sales after May 1995 entered the United

States under temporary importation bonds (TIBs). This entry information

was provided to the Department by respondents and confirmed by the U.S.

Customs Service (Customs). At this time, because merchandise entered

under a TIB is not entered for consumption, such merchandise entered

under TIB is not subject to the antidumping duty finding. See Titanium

Metals Corp. v. The United States, Slip Op. 95-153, August 30, 1995.

Therefore, we preliminarily determine that AVISMA did not export

for consumption any subject merchandise to the United States during the

POR. If these preliminary results are adopted in our final results of

review, AVISMA will continue to be subject to the current Russia-wide

cash deposit rate of 83.96 percent, which is the rate established in

the final results of the most recent administrative review of titanium

sponge from Russia (61 FR 9676, March 11, 1996).

Interlink and Cometals

Because Interlink and Cometals are located in market-economy

countries, we are calculating a separate rate for each reseller. In

calculating USP for Interlink and Cometals, we used export price, as

defined in section 772(a) of the Act. We excluded those sales made to

the United States which entered the United States under TIBs.

Petitioner and respondents provided information regarding TIB entries,

and we are able to confirm this information regarding TIB entries, and

we were able to confirm this information with Customs.

We calculated export price based on the price to unrelated

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

for rebates, ocean freight, warehouse expenses, insurance, brokerage

and handling, inland freight, and U.S. duty charges. We made minor

changes to U.S. expenses reported at verification. We valued inland

freight, brokerage, ocean freight, and marine insurance expenses

incurred in bringing the subject merchandise from the Russian plant to

the resellers' warehouses using surrogate data based on Brazilian

freight costs, where appropriate. See Notice of Preliminary Results of

the Antidumping Duty Administrative Review of Chrome-Plated Lug Nuts

from the People's Republic of China, August 16, 1995, 60 FR 42504,

42506. We selected Brazil as the surrogate country for the reasons

explained in the ``Surrogate Country Selection'' section of this

notice.

No other adjustments to USP were claimed or allowed.

Surrogate Country Selection

For all companies located in non-market economy (NME) countries,

section 773(c)(1) of the Act provides that the Department shall

determine the normal value on the basis of the value of the factors of

production if (1) the subject merchandise is exported from an NME

country, and (2) the available information does not permit the

calculation of normal value under section 773(a) of the Act. Because

the Department considers Russia an NME country and AVISMA is located in

Russia, we are not able to determine normal value on the basis of

AVISMA's costs and prices. Therefore, we have applied surrogate values

to the factors of production to determine normal value.

We calculated normal value based on factors of production provided

by AVISMA, in accordance with sections 773(a)(3) and 773(c) of the Act

and 19 CFR 353.52 of the Department's regulations. We determined that

Brazil is comparable to the Russian Federation in terms of per capita

gross national product (GNP), the growth rate in per capita GNP, and

the national distribution of labor. In addition, Brazil is a

significant producer of comparable merchandise. therefore, we chose

Brazil as the most comparable surrogate on the basis of the above

criteria and have used publicly available information relating to

Brazil to value the various factors of production. See Memorandum to

Wendy J. Frankel from David Mueller, Titanium Sponge from Russia:

Nonmarket Economy Status and Surrogate Country Selection, November 7,

1995.

Normal Value

To determine the normal value, we valued the factors of production

as follows (for further discussion, see the analysis memorandum for

these preliminary results, on file in the Central Records Unit):

To value raw materials, we used Brazilian import data from

the United Nations Trade Commodity Statistics (UN Trade Statistics) for

January through December 1994. We did not need to convert raw material

factor values because they were reported in U.S. dollars. We adjusted

certain factors' values to reflect the actual purity used in the

production of the subject merchandise. For those raw materials for

which we were unable to obtain publicly available information from

Brazil, we used data provided for use in the final determination of

sales at less than fair value (LTFV) for pure magnesium and alloy

magnesium from the Russian Federation (magnesium from Russia) and in

the respondents' December 4, 1995 submission.

To value truck and railcar freight, we used the rates

reported for use in the final determination of sales at LTFV for

magnesium from Russia. We multiplied these rates by the distances from

the supplier to the plant, as reported by AVISMA. Because these rates

were reported in Brazilian currency, we adjusted the rates to reflect

inflation through the POR using the wholesale price indices (WPI)

published by the International Monetary Fund (IMF).

For energy, natural gas was valued using information from

the UN Trade Statistics. For electricity, we used the ``large industry

user'' rate from Brazil's electricity tariff schedule that AVISMA would

have received had it been an electricity consumer in Brazil during the

POR. This decision was based on finding that AVISMA's level of

electricity usage during the POR was similar to the profile of ``large

industrial user'' in the final determination of sales at LTFV for

magnesium from Russia. To confirm that AVISMA would have received this

rate, we divided the total number of kilowatt hours used during the POR

for titanium sponge production by the number of hours in the POR, which

demonstrated that AVISMA's kilowatt use was higher than the minimum

necessary to receive the ``large industrial user'' rate in effect in

Brazil during the POR.

Although petitioner has alleged the existence of government

subsidies in Brazil to reduce electricity rates for ferroalloy

production (See Letter to Susan G. Esserman from DeKieffer, Dibble &

Horgan, TIMET's Response to Submission of Wilmer, Cutler & Pickering

Regarding Surrogate Country Selection, December 4, 1995), we have not

found any past final affirmative determinations regarding electricity

subsidization in Brazil. In fact, in a final negative determination of

silicon metal from Brazil, the Department found no evidence of

preferential electricity rates. See Final Negative Countervailing Duty

Determination: Silicon Metal from Brazil (56 FR 26988, June 12, 1991)

at 26990.

For direct labor, we were unable to find any recent

publicly available information on Brazilian labor rates. Therefore, we

used the unskilled and skilled labor rates reported by the Foreign

Commercial Service office in Belo Horizonte, Brazil and from the Bureau

of International Labor Affairs of the U.S. Department of Labor. These

labor rates were used in the final determination of sales at LTFV for

magnesium from Russia. See Calculation Memorandum: Final

[[Page 39439]]

Antidumping Duty Determination, Pure Magnesium and Alloy Magnesium from

the Russian Federation, March 22, 1995, at 2. Because the skilled labor

rate was reported in Brazilian currency, we adjusted the rate to

reflect inflation through the POR using the WPI published by the IMF.

For factory overhead, we used expense ratios based on

elements of constructed-value data reported in the antidumping duty

administrative review of silicon metal from Brazil, covering the period

July 1, 1994 through June 31, 1995. In order to calculate expense

ratios for selling, general, and administrative (SG&A) expenses and

profit, we calculated simple averages of the SG&A and profit ratios

taken from the 1994 financial statements in the above-named review.

For packing materials, we used information provided in the

UN Trade Statistics from Brazil from January through December 1994. We

included surrogate freight costs for the delivery of packing materials

to the plant reported for use in the final determination of sales at

LTFV for magnesium from Russia. We valued packing labor using the same

labor rates as used in direct labor above.

Currency Conversion

We made currency conversions in accordance with section 773A(a) of

the Act. Currency conversions were made at rates certified by the

Federal Reserve Bank and Dow Jones Business Information Services.

Preliminary Results

As a result of this review, we preliminarily determine that the

following weighted-average dumping margins exist:

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Margin

Manufacturer/exporter Period (percent)

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Interlink Metals and Chemicals, Inc..... 8/1/94-7/31/95 0.00

Cometals, Inc........................... 8/1/94-7/31/95 89.92

Russia-wide rate........................ 8/1/94-7/31/95 83.96

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Parties to this proceeding may request disclosure within five days of

publication of this notice and any interested party may request a

hearing within 10 days of publication. Any hearing, if requested, will

be held 44 days after the date of publication, or the first working day

thereafter. Interested parties may submit case briefs and/or written

comments no later than 30 days after the date of publication. Rebuttal

briefs and rebuttals to written comments, limited to issues raised in

such briefs or comments, may be filed no later than 37 days after the

date of publication. The Department will publish a notice of the final

results of the administrative review, which will include the results of

its analysis of issues raised in any such written comments or at the

hearing, within 120 days from the issuance of these preliminary

results.

The Department shall determine, and Customs shall assess,

antidumping duties on all appropriate entries. Individual differences

between USP and NV may vary from the percentages stated above. The

Department will issue appraisement instructions directly to Customs.

The final results of this review shall be the basis for the assessment

of antidumping dumping duties on entries of merchandise covered by the

determination and for future deposits of estimated duties.

Furthermore, the following deposit requirements will be effective

upon completion of the final results of this administrative review for

all shipments of titanium sponge from the Russian Federation entered,

or withdrawn from warehouse, for consumption on or after the

publication date of the final results of these administrative reviews,

as provided by section 751(a)(1) of the Act: (1) the cash deposit rates

for AVISMA, Interlink, and Cometals will be the rates established in

the final results of this administrative review; (2) for merchandise

exported by manufacturers or exporters not covered in this review but

covered in the original LTFV investigation or a previous review and

have a separate rate, the cash deposit rate will continue to be the

most recent rate published in the final determination or final results

for which the manufacturer or exporter received a company-specific

rate; (3) for Russian manufacturers or exporters not covered in the

LTFV investigation or in this or prior administrative reviews, the cash

deposit rate will continue to be the Russia-wide rate; and (4) the cash

deposit rate for non-Russian exporters of subject merchandise from

Russia who were not covered in the LTFV investigation or in this or

prior administrative reviews will be the rate applicable to the Russian

supplier of that exporter. These deposit rates, when imposed, shall

remain in effect until publication of the final results of the next

administrative review.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 353.26(b) to file a certificate regarding

the reimbursement of antidumping duties prior to liquidation of the

relevant entries during these review periods. Failure to comply with

this requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).

Dated: July 22, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-19212 Filed 7-26-96; 8:45 am]

BILLING CODE 3510-DS-M