Ferrovanadium and Nitrided Vanadium From the Russian Federation: Notice of Preliminary Results and Partial Recission of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-821-807]

Ferrovanadium and Nitrided Vanadium From the Russian Federation:

Notice of Preliminary Results and Partial Recission of Antidumping Duty

Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results and Partial Recission of

Antidumping Duty Administrative Review.

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SUMMARY: In response to a request from Shieldalloy Metallurgical

Corporation (Shieldalloy), the petitioner, the Department of Commerce

(the Department) is conducting an administrative review of the

antidumping duty order on ferrovanadium and nitrided vanadium from the

Russian Federation (Russia). This notice of preliminary results covers

the period January 4, 1995, through June 30, 1996. The Department is

now rescinding this review in part with respect to one exporter,

Odermet, Ltd., who had no shipments of the subject merchandise during

the period of review. For the second exporter, Galt Alloys, Inc.(Galt),

the review indicates the existence of dumping margins during this

period for sales of merchandise from one producer.

We have preliminarily determined that sales have been made below

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 export price (EP) 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: August 7, 1997.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Mary Jenkins,

AD/CVD Enforcement II, Office 5, 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) 482-1756, respectively.

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 regulations as codified at 19 CFR part 353 (April 1, 1997).

Background

The Department published an antidumping duty order on

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ferrovanadium and nitrided vanadium from the Russian Federation on July

10, 1995 (60 FR 35550).

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

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

period on July 8, 1996 (61 FR 35712). On July 17, 1996, Shieldalloy

requested that the Department conduct an administrative review of the

antidumping duty order on ferrovanadium and nitrided vanadium from

Russia for exporters Galt and Odermet, Ltd. We published a notice of

initiation of the review on August 15, 1996 (61 FR 42416).

In a letter dated September 9, 1996, Odermet, Ltd., stated that it

made no shipments of the subject merchandise during the review period.

In response to our query, Customs provided no indication that Odermet

had shipped the merchandise during the review period.

Under section 751(a)(3)(A) of the Act, the Department may extend

the deadline for the preliminary results of an administrative review if

it determines that it is not practicable to complete the review within

the statutory time limit of 245 days. On April 7, 1997, the Department

extended the time limit for the preliminary results in this case (see

Ferrovanadium and Nitrided Vanadium from the Russian Federation; Notice

of Extension of Time Limit for Antidumping Duty Administrative Time

Limit for Antidumping Duty Administrative Review, 62 FR 16542, April 7,

1997). The Department is conducting this administrative review in

accordance with section 751 of the Act.

Recission

We have determined that during the period of review (POR), Odermet

did not export the subject merchandise to the United States. Therefore,

we rescind this review with respect to Odermet.

Scope of the Review

The products covered by this administrative review are

ferrovanadium and nitrided vanadium, regardless of grade, chemistry,

form or size, unless expressly excluded from the scope of this order.

Ferrovanadium includes alloys containing ferrovanadium as the

predominant element by weight (i.e., more weight than any other

element, except iron in some instances) and at least 4 percent by

weight of iron. Nitrided vanadium includes compounds containing

vanadium as the predominant element, by weight, and at least 5 percent,

by weight, of nitrogen. Excluded from the scope of this order are

vanadium additives other than ferrovanadium and nitrided vanadium, such

as vanadium-aluminum master alloys, vanadium chemicals, vanadium waste

and scrap, vanadium-bearing raw materials, such as slag, boiler

residues, fly ash, and vanadium oxides.

The products subject to this order are currently classifiable under

subheadings 2850.00.20, 7202.92.00, 7202.99.5040, 8112.40.3000, and

8112.40.6000 of the Harmonized Tariff Schedule of the United States

(HTSUS). Although the HTSUS subheadings are provided for convenience

and customs purposes, our written description of the scope is

dispositive.

The POR is January 4, 1995, through June 30, 1996, covering one

exporter, Galt.

Fair Value Comparisons

Galt, a U.S. company, reported that it purchased merchandise

produced by two producers--SC-Vanadium Tulachermet (Tulachermet) and

Chusovoy Metallurgical Works (Chusovoy)--and re-sold the merchandise to

customers in the United States and other countries via a warehouse in

Europe. Galt reported that neither producer is affiliated with Galt and

at the time of each producer's sale to Galt, neither producer knew the

ultimate destination of the merchandise. Thus, for purposes of the fair

value comparison, Galt's sales to its first unaffiliated U.S. customer

form the basis of export price.

However, these producers knew at the time of the sale that the

merchandise was destined for exportation. Further, the subject

merchandise was merely transhipped through the intermediate country.

Therefore, in accordance with section 773(a)(3), normal value is

determined in the country of origin using the factors of production

methodology, as discussed below.

Both Tulachermet and Chusovoy responded to the Department's initial

antidumping questionnaire, but Chusovoy did not respond to the

Department's supplemental questionnaire. Tulachermet has continued to

cooperate with the Department's requests for information.

Under section 776(a)(2) (A) and (B) of the Act, the Department

shall use facts otherwise available in making its determinations if an

interested party withholds or fails to provide information at the time

and in the manner requested. In this instance, the NV information

necessary to calculate antidumping duties for Galt's sales of Chusovoy-

produced merchandise is not on the record because Chusovoy failed to

provide requested information by the established deadline. The limited

information that Chusovoy submitted is so incomplete that it cannot

serve as a reliable basis for reaching the applicable determination in

this review. As a result, pursuant to sections 776(a) and 782(e) of the

Act, the Department must resort to facts available.

Section 776(b) of the Act permits the Department to use an adverse

inference in selecting from facts available if the Department finds

that an interested party has not cooperated to the best of its ability

in responding to a request for information. By failing to respond,

Chusovoy has not cooperated to the best of its ability. Therefore, we

find it appropriate to apply adverse facts available with regard to

Galt's sales of Chusovoy-produced merchandise. At the same time, both

Galt and its second Russian supplier, Tulachermet, fully cooperated

with the Department. Thus, under section 776(b) of the Act, an adverse

inference is not warranted with respect to sales of Tulachermet's

merchandise.

The information submitted by Galt and Tulachermet meets the

requirements of section 782(e) of the Act:

(1) The information is timely;

(2) The information is verifiable;

(3) The information is not so incomplete that it cannot serve as a

reliable basis for our determination;

(4) These parties have acted to the best of their abilities in

providing the requested information; and

(5) The information can be used without undue difficulties.

Accordingly, we have relied upon the information submitted by Galt and

Tulachermet.

Consistent with our current practice, we have calculated a single

rate applicable to the exporter, Galt. This rate reflects the use of

adverse facts available for Galt's sales of Chusovoy merchandise as

well as calculated margins for Galt's sales of Tulachermet merchandise

(see, e.g., Final Determination of Sales at Less Than Fair Value: Pure

Magnesium From Ukraine, 60 FR 16433, March 30, 1995). However, we will

continue to examine whether, given the facts of this case, applying

separate ``combination rates'' (i.e., rates for each specific exporter/

producer combination) would be more appropriate. Therefore, we invite

comments from interested parties on this issue.

Selection of Adverse Facts Available Rate for Sales of Chusovoy-

Produced Merchandise

Section 776(b) authorizes the Department to use as adverse facts

[[Page 42494]]

available information derived from the petition, a final determination

from a segment of the proceeding, or other information placed on the

record. Because information from the petition and prior segments of the

proceeding constitute secondary information, the Department must, to

the extent practicable, corroborate that secondary information from

independent sources reasonably at its disposal, as stated in section

776(c) of the Act.

In light of Chusovoy's failure to respond, we have determined that

the information in the petition is the most appropriate facts

available. To corroborate that information, we reviewed the data

submitted and the assumptions petitioners made in calculating estimated

dumping margins in the petition. As discussed in detail in

``Corroboration of FA Rates,'' Memorandum to Jeffrey P. Bialos,

Principal Deputy Secretary for Import Administration, from the

Ferrovanadium Team, dated July 31, 1997 (Corroboration Memo), we

compared the petition's bases for U.S. price (now export price),

factors of production, and surrogate values to independent data from

the period of investigation. See also Preliminary Results of

Antidumping Duty Administrative Review and Partial Termination of

Administrative Review: Fresh Garlic from the People's Republic of China

(61 FR 68229, 68230, December 27, 1996), Preliminary Results and

Partial Rescission of Antidumping Duty Administrative Review: Certain

Cased Pencils From the People's Republic of China (62 FR 1734, 1735,

January 13, 1997), and Preliminary Results of Antidumping Duty

Administrative Review Certain Carbon Steel Butt-Weld Pipe Fittings From

Thailand (62 FR 16541, 16542, April 7, 1997).

Based on our analysis, we determined that the elements of the

petition calculation are reliable and, with one adjustment, have

probative value. During the LTFV investigation, we determined that the

principal raw material used by respondents to produce the subject

merchandise, vanadium slag, was of significantly lower quality than the

material upon which the petitioner estimated its surrogate value (see

also discussion below under ``Normal Value''). Therefore, we have

adjusted the valuation of the vanadium slag factor in the petition to

reflect this difference in quality. With this adjustment, the

corroborated rate derived from the petition is 88.63% .

Accordingly, for Galt's sales of Chusovoy-produced merchandise, we

have applied the recalculated petition rate of 88.63 percent.

Galt's Export Price and Constructed Export Price

As Galt is located in a market-economy country and is not

affiliated with a Russian producer or exporter, we are calculating a

separate rate for this reseller (see Bicycles From the PRC; Final

Determination of Sales at Less Than Fair Value, 61 FR 19026, 19027

(April 30, 1996)). During the POR, Galt took possession of the Russia-

produced merchandise outside of the United States and then sold the

merchandise to unaffiliated customers in the United States.

For Galt's sales of subject merchandise produced by Tulachermet,

when the merchandise was sold directly to the first unaffiliated

purchaser in the United States prior to importation and when

constructed export price (CEP) methodology was not otherwise indicated,

we calculated the export price (EP) of the subject merchandise sold to

the United States in accordance with section 772(a) of the Act. Where

Galt's sales to the first unaffiliated purchaser took place after

importation into the United States, we based the price in the United

States on CEP, in accordance with section 772(b) of the Act.

We calculated EP based on the price to unrelated purchasers in the

United States. We made deductions, where appropriate, for the following

movement expenses incurred in market economy currencies and provided by

market economy suppliers: foreign brokerage and handling, ocean

freight, marine insurance, U.S. brokerage and handling, U.S. inland

freight, and U.S. duty charges. We valued inland freight expenses

incurred in bringing the subject merchandise from the Russian plant to

the reseller's warehouse using surrogate data based on South African

freight costs. We selected South Africa as the surrogate country for

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

this notice.

For CEP sales, we made additional deductions for Galt's direct and

indirect selling expenses, including inventory carrying costs, incurred

with regard to economic activities in the United States, as well as

repacking, warehousing, and credit expenses, pursuant to section

772(d)(1) of the Act. Galt reported its indirect selling expenses on a

fixed, per-unit basis. We have recalculated these expenses as a

percentage of sales value, based on information in Galt's questionnaire

response, consistent with the manner in which the Department normally

calculates indirect selling expenses. We deducted an amount for CEP

profit by applying Galt's profit rate to the sum of selling expenses

incurred in the United States, in accordance with section 772(f) of the

Act.

No other adjustments to EP or CEP sales were claimed or allowed.

Surrogate Country Selection

As noted above, NV is determined in Russia, the country of origin,

in accordance with section 773(a)(3) of the Act. Because the Department

considers Russia an NME country and the producers of the merchandise

exported by Galt are located in Russia, we are not able to determine NV

on the basis of these producers' costs and prices. Section 773(c)(1) of

the Act provides that the Department shall determine the NV 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 NV under section 773(a)

of the Act. Therefore, we have applied surrogate values to factors of

production to determine NV.

We determined that South Africa is comparable to the Russian

Federation in terms of per capita gross national product and the

national distribution of labor (See ``Ferrovanadium and Nitrided

Vanadium from Russia: Nonmarket Economy Status and Surrogate Country

Selection,'' Memorandum to David Binder from David Mueller, October 29,

1996). In addition, South Africa is a significant producer of

ferrovanadium. Therefore, we chose South Africa as an appropriate

surrogate on the basis of the above criteria and have used publicly

available information relating to South Africa wherever possible to

value the various factors of production.

Normal Value

To determine the NV for Galt sales of merchandise produced by

Tulachermet, we valued the factors of production as discussed in the

Valuation Memorandum dated July 28, 1997, on file in the Central

Records Unit. The values used are summarized below:

We valued most raw materials and packing materials based

on South African domestic prices in South Africa's Mineral Industry

1995/96 (SAMI 95/96) and unit prices, reported net of taxes, based on

South African import data from Southern African Customs Union Trade

Statistics (SACU Trade Statistics).

For vanadium slag, we valued a portion of Tulachermet's consumption

at the market economy price Tulachermet paid for South African slag

consumed during the POR. The balance

[[Page 42495]]

of Tulachermet's POR slag consumption was Russian-sourced slag, which

contained a substantially lower concentration of vanadium pentoxide. We

were unable to find any surrogate value data for vanadium slag of this

quality. As facts available, we used Tulachermet's purchase price for

South African slag as the surrogate value and adjusted it downward to

account for the difference in vanadium pentoxide content, using the

same adjustment made in the LTFV investigation.

As discussed in the Valuation Memorandum, the Department received

information in this proceeding that the 90% vanadium pentoxide prices

used in the LTFV adjustment methodology were based on Russian material

prices. According to information obtained from an industry publication,

Metal Bulletin, it is not possible to determine prices of 90% vanadium

pentoxide from market economy counties during that period. In the

absence of any other means to adjust the slag value, we are applying

the LTFV methodology for the preliminary results as facts available. In

doing so, we recognize that the 90% vanadium pentoxide prices used to

establish the adjustment ratio represent merchandise from a non-market

economy. However, it is the only information on the record with which

to make the adjustment. As such, the resulting relationship between 90%

vanadium pentoxide, produced from low-grade slag equivalent to Nizhni-

Tagil slag, and 98% vanadium pentoxide, produced from high-grade South

African slag, is the best available means to account for the

substantial disparity between the material to be valued and the

material from which the surrogate value is derived.

We were also unable to obtain surrogate values for vanadium

trioxide and pre-alloyed vanadium. As facts available, we valued these

materials based on South African vanadium pentoxide and ferrovanadium

prices, respectively, adjusted for differences in vanadium content.

For sulfuric acid, we used the average, tax-exclusive, price

reported by a South African vanadium producer.

Finally, we were unable to identify any comparable surrogate value

for the chemical input boron anhydride. The quantity of this material

used to produce ferrovanadium is a very small amount. For the

preliminary results, we have calculated NV without surrogate material

costs for this factor.

To value truck and rail freight, we used the South African

rail rate used in the LTFV investigation. We adjusted this rate for

inflation, using a wholesale price index published by the International

Monetary Fund. We relied on this rate for both truck and rail

transportation of input materials and for foreign inland freight

because we were unable to find any other suitable surrogate freight

value.

Tulachermet did not report the distance from its supplier of two

packing materials. As facts available, we have used the farthest

distance reported by Tulachermet for any supplier in calculating the

surrogate freight costs for these materials.

For electricity, we used the average POR rate for

industrial users as published by the South African state utility

company, ESKOM. For natural gas, we used the South African POR price

provided to us by ESKOM.

For labor, we used the skilled and unskilled wage rates

for the South African metallurgical industry reported to us by a South

African producer of vanadium.

For factory overhead, selling, general, and administrative

(SG&A) expenses and profit, we calculated ratios from the 1995 Annual

Report of the South African ferrovanadium manufacturer Highveld Steel

and Vanadium Co., Ltd.

Preliminary Results

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

following weighted-average dumping margin exists:

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

Margin

Exporter Period (percent)

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

Galt Alloys, Inc........................ 1/4/95-7/31/96 34.73

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

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 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. The Department shall determine, and Customs shall assess,

antidumping duties on all appropriate entries. Individual differences

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

Department will issue appraisement instructions directly to Customs.

Further, the following deposit requirements will be effective upon

completion of the final results of this administrative review for all

shipments of ferrovanadium and nitrided vanadium from the Russian

Federation entered, or withdrawn from warehouse, for consumption on or

after the publication date of the final results of this administrative

review, as provided by section 751(a)(1) of the Act: (1) The cash

deposit rates for Galt will be the producer-specific 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 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, the cash deposit rate will continue to be the Russia-

wide rate of 108.00 percent; 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 administrative review,

will also be the Russia-wide rate. 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)) and published in

accordance with section 777(i).

[[Page 42496]]

Dated: July 31, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-20734 Filed 8-6-97; 8:45 am]

BILLING CODE 3510-DS-P