Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Steel Wire Rod From Venezuela

DEPARTMENT OF COMMERCE

International Trade Administration

[A-307-813]

Notice of Preliminary Determination of Sales at Less Than Fair

Value and Postponement of Final Determination: Steel Wire Rod From

Venezuela

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: October 1, 1997.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Daniel Manzoni,

Import Administration, International Trade Administration, U.S.

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

Washington, D.C. 20230; telephone: (202) 482-4136 or (202) 482-1121,

respectively.

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 Round Agreements Act (``URAA''). In addition,

unless otherwise indicated, all citations to the Department's

regulations are references to the provisions codified at 19 CFR part

353 (April, 1997). Although the Department's new regulations, codified

at 19 CFR 351 (62 FR 27296, May 19, 1997), do not govern this

investigation, citations to those regulations are provided, where

appropriate, to explain current Departmental practice.

Preliminary Determination

We preliminarily determine that steel wire rod (``SWR'') from

Venezuela is being, or is likely to be, sold in the United States at

less than fair value (``LTFV''), as provided in section 733 of the Act.

The estimated margins are shown in the ``Suspension of Liquidation''

section of this notice.

Case History

Since the initiation of this investigation on March 18, 1997 (see

Notice of Initiation of Antidumping Duty Investigations: Steel Wire Rod

from Canada, Germany, Trinidad and Tobago, and Venezuela, 62 FR 13854,

(March 24, 1997), (``Notice of Initiation''), the following events have

occurred:

On April 14, 1997, the United States International Trade Commission

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

its affirmative preliminary injury determination in this case.

On April 21, 1997, the Department issued the antidumping duty

questionnaire to CVG Siderurgica Del Orinoco C.A. (``Sidor''), the sole

exporter of the subject merchandise from Venezuela. The questionnaire

is divided into four sections: Section A requests general information

concerning Sidor's company corporate structure and business practices,

the merchandise under investigation that it sells, and the sales of the

merchandise in all of its markets. Sections B and C request home market

sales listings and U.S. sales listings, respectively. Section D

requests information on the cost of production (``COP'') of the foreign

like product and the constructed value (``CV'') of the subject

merchandise.

During April and May 1997, the Department received interested party

comments regarding modifications to the product characteristic

reporting requirements. On May 22, 1997, the Department issued revised

product characteristic reporting instructions.

Sidor submitted its questionnaire responses in May and June, 1997.

The Department issued supplemental requests for information in June,

July, and August, 1997, and received the supplemental responses to

these requests in July, August, and September, 1997. Petitioners in

this investigation (Connecticut Steel Group, Co-Steel Raritan, GS

Industries, Inc., Keystone Steel & Wire Co., North Star Steel Texas,

Inc., and Northwestern Steel & Wire Co.) filed comments on Sidor's

questionnaire responses in May, June, July, August, and September,

1997.

On July 3, 1997, petitioners made a timely request that the

Department postpone the preliminary determination in this investigation

and the companion investigations of SWR from Canada, Trinidad and

Tobago, and Germany to September 24, 1997. We did so on July 14, 1997,

in accordance with section 733(c)(1) of the Act (see Notice of

Postponement of Preliminary Determinations: Steel Wire Rod from Canada,

Germany, Trinidad and Tobago, and Venezuela (62 FR 38257, July 17, 1997

)).

Postponement of Final Determination and Extension of Provisional

Measures

Pursuant to section 735(a)(2)(A) of the Act and section

353.20(b)(1) of the Department's interim regulations, on September 10,

1997, Sidor requested that, in the event of an affirmative preliminary

determination in this investigation, the Department postpone its final

determination until not later than 135 days after the publication of

this notice in the Federal Register. In accordance with section

735(a)(2)(A) of the Act, because our preliminary determination is

affirmative, the respondent accounting for all of the exports of the

subject merchandise has requested postponement, and no compelling

reasons for denial exist, we are postponing the final determination.

Suspension of liquidation will be extended accordingly (see Preliminary

Determination of Sales at Less than Fair Value and Postponement of

Final Determinations: Open-End Spun Rayon Singles Yarn From Austria, 62

FR 14399, 14400 (March 26, 1997); see also Final Determination of Sales

at Less Than Fair Value: Certain Pasta from Italy, 61 FR 30326 (June

14, 1996)).

Scope of Investigation

The products covered by this investigation are certain hot-rolled

carbon steel and alloy steel products, in coils, of approximately round

cross section, between 5.00 mm (0.20 inch) and 19.0 mm (0.75 inch),

inclusive, in solid cross-sectional diameter. Specifically excluded are

steel products possessing the above noted physical characteristics and

meeting the Harmonized Tariff Schedule of the United States (HTSUS)

definitions for (a) stainless steel; (b) tool steel; (c) high nickel

steel; (d) ball bearing steel; (e) free machining steel that contains

by weight 0.03 percent or more of lead, 0.05 percent or more of

bismuth, 0.08 percent or more of sulfur, more than 0.4

[[Page 51585]]

percent of phosphorus, more than 0.05 percent of selenium, and/or more

than 0.01 percent of tellurium; or (f) concrete reinforcing bars and

rods.

The following products are also excluded from the scope of this

investigation:

Coiled products 5.50 mm or less in true diameter with an average

partial decarburization per coil of no more than 70 microns in depth,

no inclusions greater than 20 microns, containing by weight the

following: carbon greater than or equal to 0.68 percent; aluminum less

than or equal to 0.005 percent; phosphorous plus sulfur less than or

equal to 0.040 percent; maximum combined copper, nickel and chromium

content of 0.13 percent; and nitrogen less than or equal to 0.006

percent. This product is commonly referred to as ``Tire Cord Wire

Rod.''

Coiled products 7.9 to 18 mm in diameter, with a partial

decarburization of 75 microns or less in depth and seams no more than

75 microns in depth; containing 0.48 to 0.73 percent carbon by weight.

This product is commonly referred to as ``Valve Spring Quality Wire

Rod.''

The products under investigation are currently classifiable under

subheadings 7213.91.3000, 7213.91.4500, 7213.91.6000, 7213.99.0030,

7213.99.0090, 7227.20.0000, and 7227.90.6050 of the HTSUS. Although the

HTSUS subheadings are provided for convenience and customs purposes,

our written description of the scope of this investigation is

dispositive.

North American Wire Products Corporation (NAW), an importer of the

subject merchandise from Germany, has requested that the Department

exclude steel wire rod used to manufacture pipe wrapping wire from the

scope of the antidumping and countervailing duty investigations.

Petitioners have not agreed to this scope exclusion. For purposes of

the preliminary determination, we have not excluded steel wire rod for

manufacturing pipe wrapping wire from the scope. However, we will

consider this issue further in our final determination.

Period of Investigation

The period of investigation (``POI'') is January 1, 1996, through

December 31, 1996.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all

products produced by Sidor, covered by the description in the Scope of

Investigation section, above, and sold in the home market during the

POI, to be foreign-like products for purposes of determining

appropriate product comparisons to U.S. sales. Where there were no

sales of identical merchandise in the home market to compare to U.S.

sales, we compared U.S. sales to the next most similar foreign-like

product on the basis of the characteristics listed in the antidumping

duty questionnaire and the May 22, 1997, reporting instructions.

Consistent with our practice (see, e.g., Final Results of Antidumping

Duty Administrative Review: Cold-rolled Carbon Steel Flat Products from

the Netherlands, 61 FR 48465, (September 13, 1996)), we compared prime

merchandise sold in the United States to prime merchandise sold in the

home market, and secondary merchandise to secondary merchandise.

Fair Value Comparisons

To determine whether sales of steel wire rod by Sidor to the United

States were made at less than fair value, we compared the Export Price

(``EP) to the normal value (``NV''), as described in the ``Export

Price'' and ``Normal Value'' sections of this notice below. In

accordance with section 777A(d)(1)(A)(i), we calculated weighted-

average EPs for comparison to weighted-average NVs.

Venezuela experienced significant inflation during the POI, as

measured by the consumer price index published by the Central Bank of

Venezuela. Accordingly, to avoid the distortions caused by the effects

of inflation on prices, we calculated EPs and NVs on a monthly average

basis, rather than on a POI average basis.

Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent

practicable, we determine NV based on sales in the comparison market at

the same level of trade (``LOT'') as the EP or constructed export price

(``CEP''). The NV LOT is that of the starting-price sales in the

comparison market or, when NV is based on constructed value (``CV''),

that of the sales from which we derive selling, general and

administrative (``SG&A'') expenses and profit. For EP, the U.S. LOT is

also the level of the starting-price sale, which is usually from

exporter to importer. For CEP, it is the level of the constructed sale

from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP (or

CEP), we examine stages in the marketing process and selling functions

along the chain of distribution between the producer and the

unaffiliated customer. If the comparison-market sales are at a

different LOT, and the difference affects price comparability, as

manifested in a pattern of consistent price differences between the

sales on which NV is based and comparison-market sales at the LOT of

the export transaction, we make an LOT adjustment under section

773(a)(7)(A) of the Act. See Certain Welded Carbon Steel Standard Pipes

and Tubes From India: Preliminary Results of New Shipper Antidumping

Duty Administrative Review, 62 FR 23760, 23761 (May 1, 1997).

Sidor did not claim a LOT adjustment. To evaluate whether such an

adjustment was necessary, we examined Sidor's distribution system,

including selling functions, classes of customers, and selling

expenses. Sidor sold to only one class of customer in each market. We

found that selling functions, which included sales administration,

billing, warranties, and in some cases arranging freight services, are

sufficiently similar in the U.S. and the home market to consider them

as constituting the same level of trade in the two markets.

Accordingly, all comparisons are at the same level of trade and an

adjustment pursuant to section 773(a)(7)(A) is not warranted.

Export Price

We based our starting price on EP, in accordance with subsections

772(a) and (c) of the Act, because the subject merchandise was sold

directly to the first unaffiliated purchaser in the United States prior

to importation and CEP was not otherwise warranted based on the facts

on the record.

We calculated EP based on packed, FOB factory prices to the first

unaffiliated customer in the United States. We made no deductions from

the gross unit price.

Normal Value

In order to determine whether there is a sufficient volume of sales

in the home market to serve as a viable basis for calculating NV (i.e.,

the aggregate volume of home market sales of the foreign like product

is greater than five percent of the aggregate volume of U.S. sales), we

compared Sidor's volume of home market sales of the foreign like

product to the volume of U.S. sales of the subject merchandise, in

accordance with section 773(a)(1)(C) of the Act. Since Sidor's

aggregate volume of home market sales of the foreign like product was

greater than five percent of its aggregate volume of U.S. sales for the

subject merchandise, we determined that the home market was viable for

Sidor. Therefore, we have based NV on home market sales provided they

were not disregarded pursuant to the cost test under section 773(b) of

the Act.

[[Page 51586]]

Cost of Production Analysis

Pursuant to an allegation made by the petitioners, we initiated a

cost of production investigation in our Notice of Initiation (62 FR

13854 March 24, 1997). Before making any fair value comparisons, we

conducted the COP analysis described below.

A. Calculation of COP

We calculated the COP based on the sum of respondent's cost of

materials and fabrication for the foreign like product, plus amounts

for home market general expenses and packing costs in accordance with

section 773(b)(3) of the Act. We recalculated Sidor's interest expense,

as discussed in the September 16, 1997, Memorandum to Chris Marsh,

Director, Office of Accounting, from Paul McEnrue. As noted above, we

determined that the Venezuelan economy experienced significant

inflation during the POI. Therefore, in order to avoid the distortive

effect of inflation on our comparison of costs and prices, we requested

that Sidor submit monthly COP figures based on the current production

costs incurred during each month of the POI. We indexed Sidor's monthly

COP amounts, adjusted as discussed above, in order to compute an annual

weighted-average COP for the POI.

B. Test of Home Market Prices

We used Sidor's submitted POI weighted-average COPs, as adjusted

(see above). We compared the weighted-average COP figures to home

market sales of the foreign like product as required under section

773(b) of the Act. In determining whether to disregard home-market

sales made at prices below the COP, we examined whether (1) within an

extended period of time, such sales were made in substantial

quantities, and (2) such sales were made at prices which permitted the

recovery of all costs within a reasonable period of time. On a product-

specific basis, we compared the inflation-adjusted COP to the home

market prices, less any applicable movement charges, and direct and

indirect selling expenses.

C. Results of COP Test

Pursuant to section 773(b)(2)(C), where less than 20 percent of

Sidor's sales of a given product were at prices less than the COP, we

did not disregard any below-cost sales of that product because we

determined that the below-cost sales were not made in ``substantial

quantities.'' Where 20 percent or more of a respondent's sales of a

given product during the POI were at prices less than the COP, we

determined such sales to have been made in ``substantial quantities''

within an extended period of time in accordance with section

773(b)(2)(B) of the Act. Where we determined that such sales were also

not made at prices which would permit recovery of all costs within a

reasonable period of time and, in accordance with section 773(b)(2)(D)

of the Act, we disregarded the below-cost sales. Where all comparison

sales of a specific product were at prices below the COP, we

disregarded all such sales of that product, and calculated NV based on

CV.

D. Calculation of CV

In accordance with section 773(e) of the Act, we calculated CV

based on the sum of the respondent's cost of materials, fabrication,

SG&A, U.S. packing costs, interest expenses and profit. As noted above,

we recalculated Sidor's interest expenses. In accordance with section

773(e)(2)(A) of the Act, we based SG&A and profit on the amounts

incurred and realized by the respondent in connection with the

production and sale of the foreign like product in the ordinary course

of trade, for consumption in the foreign country. For selling expenses,

we used the actual weighted-average home market direct and indirect

selling expenses (as indexed for inflation).

Comparison of the U.S. Price to NV

We compared U.S. prices to home market prices or to CV, as

appropriate. We made adjustments for inland freight, interest revenue,

and late payment fees. In addition, we made circumstance-of-sale

adjustments for credit, warranties, and bank fees, where appropriate.

We re-allocated home market and U.S. warranty expenses on a value basis

rather than the quantity basis Sidor reported. Where we compared CV to

EPs, we deducted from CV the home market direct selling expenses and

added the weighted-average U.S. direct selling expenses.

We also made adjustments, where appropriate, for physical

differences in the merchandise in accordance with section

773(a)(6)(C)(ii) of the Act.

Currency Conversions

The Department's normal source for exchange rates--the Federal

Reserve Bank--does not provide certified exchange rates for Venezuela.

Therefore, we converted Venezuelan bolivares into U.S. dollars as

follows: For the period from January 1, 1996, through April 21, 1996,

we used the official exchange rate from the Central Bank of Venezuela

because the Dow Jones Business Information Services rates (an alternate

source often relied upon by the Department) reflected the implicit

(parallel) exchange rate in Venezuela for Brady bonds (i.e., foreign

currency--denominated government bonds trading on the secondary

market). After April 21, 1996, Venezuela had a unified, market exchange

rate that applied to all trade transactions. Therefore, for the period

after April 21, 1996, we used the Dow Jones rates.

Verification

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

information used in making our final determination.

Suspension of Liquidation

In accordance with section 733(d) of the Act, we are directing the

Customs Service to suspend liquidation of all imports of subject

merchandise that are entered, or withdrawn from warehouse, for

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

Federal Register. We will instruct the Customs Service to require a

cash deposit or the posting of a bond equal to the weighted-average

amount by which the NV exceeds the export price, as indicated in the

chart below. These suspension of liquidation instructions will remain

in effect until further notice. The weighted-average dumping margins

are as follows:

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

Weighted-

Exporter/manufacturer average margin

percentage

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

CVG Siderurgica Del Orinoco C.A. (``Sidor'')............ 51.21

All Others.............................................. 51.21

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

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 before the later of 120 days after the date of

this preliminary determination or 45 days after our final determination

whether these imports are materially injuring, or threaten material

injury to, the U.S. industry.

Public Comment

Case briefs or other written comments in at least six copies must

be submitted to the Assistant Secretary for Import Administration no

later than January 5, 1998, and rebuttal briefs, no later than January

12, 1998. A list of authorities used and an executive summary of issues

should accompany any briefs submitted to the Department. Such summary

should be limited to five pages total, including footnotes. In

accordance with section 774 of the Act, we will hold a public hearing,

if requested, to

[[Page 51587]]

afford interested parties an opportunity to comment on arguments raised

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

January 14, at 2:00 p.m. in Room 1412 at the U.S. Department of

Commerce, 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

1870, 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. Oral presentations will be limited to issues raised in the

briefs. If this investigation proceeds normally, we will make our final

determination by 135 days after the publication of this notice in the

Federal Register.

This determination is published pursuant to sections 733(f) and

777(i) of the Act.

Dated: September 24, 1997.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 97-26043 Filed 9-30-97; 8:45 am]

BILLING CODE 3510-DS-P