Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From the United Kingdom; Preliminary Results of Antidumping Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-412-810]

Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From

the United Kingdom; Preliminary Results of Antidumping Administrative

Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review; Certain Hot-Rolled Lead and Bismuth Carbon Steel

Products from the United Kingdom.

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SUMMARY: The Department of Commerce (the Department) is conducting an

administrative review of the antidumping duty order on certain hot-

rolled lead and bismuth carbon steel products from the United Kingdom

in response to requests by respondents, British Steel Engineering

Steels Limited (BSES) and Glynwed Metal Processing Ltd. (Glynwed), and

petitioner, Inland Steel Bar Company. This review covers the period

March 1, 1996 through February 28, 1997.

We have preliminarily determined that sales have been made below

normal value (NV). Interested parties are invited to comment on these

preliminary results. Parties who submit comments are requested to

submit with each comment (1) a statement of the issue and (2) a brief

summary of the comment.

EFFECTIVE DATE: December 9, 1998.

FOR FURTHER INFORMATION CONTACT: G. Leon McNeill, Gideon Katz or

Maureen Flannery, AD/CVD Enforcement, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W., Washington D.C. 20230; telephone

(202) 482-4733.

Applicable Statute and Regulations

Unless otherwise stated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act) by the

Uruguay Round Agreements Act. In addition, unless otherwise stated, all

citations to the Department's regulations are references to the

regulations as codified at 19 CFR Part 353 (1996).

SUPPLEMENTAL INFORMATION:

Background

The Department published in the Federal Register the antidumping

duty order on certain hot-rolled lead and bismuth carbon steel products

from the United Kingdom on March 22, 1993 (58 FR 15324). On March 7,

1997 we published in the Federal Register (62 FR 10521) a notice of

opportunity to request an administrative review of the antidumping duty

order on certain hot-rolled lead and bismuth carbon steel products from

the United Kingdom covering the period March 1, 1996 through February

28, 1997.

In accordance with 19 CFR 353.22(a)(1), BSES and Glywed requested

that we conduct an administrative review of their sales, and the

petitioner, Inland Steel Bar Company, requested that we conduct an

administrative review of BSES's sales. We published a notice of

initiation of this antidumping duty administrative review on April 24,

1997 (62 FR 19988). The Department is conducting this administrative

review in accordance with section 751 of the Act.

Scope of the Review

The products covered by this review are hot-rolled bars and rods of

nonalloy or other alloy steel, whether or not descaled, containing by

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

in coils or cut lengths, and in numerous shapes and sizes. Excluded

from the scope of this review are other alloy steels (as defined by the

Harmonized Tariff Schedule of the United States (HTSUS) Chapter 72,

note 1(f)), except steels classified as other alloy steels by reason of

containing by weight 0.4 percent or more of lead, or 0.1 percent or

more of bismuth, tellurium, or selenium. Also excluded are semi-

finished steels and flat-rolled products. Most of the products covered

in this review are provided for under subheadings 7213.20.00 and

7214.30.00.00 of the HTSUS. Small quantities of these products may also

enter the United States under the following HTSUS subheadings:

7213.31.30.00, 60.00; 7213.39.00.30, 00.60, 00.90; 7214.40.00.10,

00.30, 00.50; 7214.50.00.10, 00.30, 00.50; 7214.60.00.10, 00.30, 00.50;

and 7228.30.80.00. HTSUS subheadings are provided for convenience and

Customs purposes. The written description of the scope of this order

remains dispositive.

This review covers two manufacturers/exporters, BSES and Glynwed,

and the period March 1, 1996 through February 28, 1997.

Verification

As provided in section 782(1) of the Act, we verified information

provided by BSES using standard verification procedures, including on-

site inspection of the manufacturer's facilities, the examination of

relevant sales and financial records, and selection of original

documentation containing relevant information. Our verification results

are outlined in public versions of the verification reports.

United States Price

We based United States price on export price (EP), as defined in

section 772(a) of the Act, because the merchandise was sold directly by

the exporter to unaffiliated U.S. purchasers prior to the date of

importation and constructed export price was not indicated by other

facts of record.

BSES

The Department calculated EP for BSES based on packed, delivered

prices to customers in the United States. We made deductions, where

applicable, for foreign inland freight, FOB charges in the United

Kingdom, ocean freight, marine insurance, U.S. Customs duties,

brokerage and handling charges, merchandising processing fees, and U.S.

inland freight charges, in accordance with 19 CFR 353.41(d). We also

made an adjustment for invoice corrections (billing adjustments) made

after shipment.

BSES's sales in the United Kingdom and the United States were made

in quantities of less than 25 metric tons and 25 metric tons or more.

As in all prior segments of the proceeding, where possible we matched

U.S. sales to U.K. sales within the same quantity group: 25 tons or

more, or less than 25 tons. (See,

[[Page 64804]]

e.g., Final Determination of Sales at Less Than Fair Value; Certain

Hot-Rolled Lead and Bismuth Carbon Steel Products from the United

Kingdom, 58 FR 6207, January 27, 1993; and Final Results of Antidumping

Duty Administrative Review; Certain Hot-Rolled Lead and Bismuth Carbon

Steel Products from the United Kingdom, 62 FR 18744, April 17, 1997.

Glynwed

The Department calculated EP for Glynwed based on packed, delivered

prices to customers in the United States. We made deductions, where

applicable, for international freight (including foreign inland

freight, U.S. inland freight, ocean freight, and vessel loading and

handling charges), marine insurance, U.S. Customs duties, brokerage and

handling charges, in accordance with 19 CFR 353.41(d). We also made an

adjustment for invoice corrections (billing adjustments) made after

shipment.

Normal Value

In order to determine whether there was a sufficient volume of

sales in the home market to serve as a viable basis for calculating NV,

the Department compared each company's volume of home market sales of

the foreign like product to its volume of U.S. sales of the subject

merchandise, in accordance with section 773(a)(1)(B) of the Act.

Because each company'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 of the subject merchandise, we determined that the

home market provides a viable basis for calculating NV.

Many of BSES's and Glynwed's home market sales were made to

affiliated original equipment manufacturers (OEMs). It is the

Department's practice, in situations where home market sales are made

to affiliated parties, to determine whether sales to affiliated parties

might be appropriate to use as the basis of NV by comparing prices of

those sales to prices of sales to unaffiliated parties, on a model-by-

model basis. See Final Results of Antidumping Duty Administrative

Reviews, Partial Termination of Administrative Reviews, and Revocation

in Part of Antidumping Duty Orders; Antifriction Bearings (Other Than

Tapered Roller Bearings) and Parts Thereof from France, et al. 60 FR

10900, February 28, 1995. (See Preliminary Results, 59 FR 9463,

February 28, 1994, for discussion.) Because both BSES and Glynwed made

home market sales to affiliated OEMs during the period of review (POR),

we tested these OEM sales to ensure that, on average, the affiliated-

party sales were made at arm's length. To conduct this test, for each

company, we compared the gross unit prices of sales to affiliated and

unaffiliated customers net of all movement charges, direct selling

expenses, invoice corrections, rebates, and packing. As a result of our

arm's-length test, we disregarded each company's sales to the

affiliated OEM customers in the home market where the prices charged to

these affiliated customers were less than 99.5 percent of the prices

charged to unaffiliated customers. See Final Results of Antidumping

Duty Administrative Review; Certain Welded Carbon Steel Pipes and Tubes

from Thailand, 62 FR 53817, October 16, 1997. We did not require

respondents to provide downstream sales by the affiliated OEM customers

because these customers further manufactured the subject merchandise

into merchandise not covered by the order. Both BSES and Glynwed also

sold through affiliated resellers to unaffiliated customers and

reported these unaffiliated-customer transactions. We used these

unaffiliated transactions in our determination of NV.

Leaded Rod Sales

BSES did not report its home market sales of leaded rod produced by

Scunthorpe Rod Mill (SRM) and Templeborough Rod Mill (TRM), affiliated

parties of BSES, claiming that such merchandise would not match to its

sales of leaded bar to the United States. (Neither BSES nor its

affiliates sold leaded rod to the United States during the POR.) BSES

provided a list of all SRM's and TRM's leaded rod products, including

their product characteristics and product identification control

numbers. In addition, BSES provided a sales file that identified every

leaded rod product that SRM and TRM produced or sold during the POR.

Upon examination of this information, we preliminarily determine that

the leaded rod produced by SRM and TRM was neither identical to nor

most similar to BSES's sales of leaded bar to the United States during

the POR.

Residuals

BSES's product identification number (CONNUM) contains a residual

code as one of the physical characteristics in the model matching

criteria. Residuals result from impurities in the scrap used for the

production of leaded bar. Petitioner claims that, with the inclusion of

the residual code, the model match is too narrowly defined, thereby

significantly reducing the number of matches possible between U.S. and

home market sales. During verification, we found that customers specify

the residual level on purchase orders as part of the description of

chemical composition. Therefore, we preliminarily determine that

residuals are an essential part of the product, and have continued to

use residuals, as we have done in prior reviews, as a physical product

characteristic for purpose of model matching. See, e.g., Final Results

of Antidumping Duty Administrative Review; Certain Hot-Rolled Lead and

Bismuth Carbon Steel Products from the United Kingdom, 62 FR 18744,

April 17, 1997.

Dimensional Ranges

Petitioner argues that respondent should have reported dimensional

ranges rather than specific dimensions, claiming that small differences

in dimensions will have no effect on cost or commercial value.

The Department found at verification that customers request certain

specific dimensions for the home market products and the U.S. products,

and BSES produces to those exact dimensional specifications. In

addition, we have no information on the record indicating what, if any,

dimensional ranges might be more appropriate than specific dimensions

for matching purposes. Therefore, the Department is continuing to use

specific dimension as one of the physical characteristics for matching

purposes for these preliminary results.

Home Market Rebates

During the POR, BSES offered rebates to its customers in the home

market.

Petitioner argues that the Department should require BSES to tie

rebates to individual transactions and calculate each individual rebate

over only those sales benefitting from the rebate rather than over all

sales made by the purchaser. During verification, we found that BSES

has reported rebates that were specific to individual transactions.

Therefore, for these preliminary results, the Department has adjusted

home market prices for rebates as reported.

General and Administrative Expenses

Petitioner contends that BSES's reported general and administrative

(G&A) expenses appear to be low.

During verification, we examined G&A expenses and found that all

such expenses were reported in total.

Cost of Production Analysis

Pursuant to section 773(b) of the Act, for this POR, we initiated

an

[[Page 64805]]

investigation of sales at less than cost of production (COP) of BSES.

We did this because in the administrative review of BSES for the most

recent period (as of the time our decision to initiate a COP

investigation was made) we disregarded from our calculations BSES's

home market sales found to be below the COP. See Final Results of

Antidumping Duty Administrative Review; Certain Hot-Rolled Lead and

Bismuth Carbon Steel Products from the United Kingdom, 62 FR 18744,

April 17, 1997. Therefore, in accordance with section 773(b)(2)(A)(ii)

of the Act, the Department had reasonable grounds to believe or suspect

that sales at less than the cost of production may have occurred during

this review period.

Glynwed was not covered in a prior review or the original

investigation of sales at less than fair value (LTFV), and the

Department did not receive a sales below cost allegation for Glynwed.

Therefore, the COP analysis is only applicable to BSES.

Before making any NV comparisons for BSES, we conducted the COP

analysis described below.

A. Calculation of COP

We calculated the COP based on the sum of BSES's cost of materials

and fabrication employed in producing the foreign like product, plus

amounts for home market selling, general, and administrative expenses

(SG&A) and packing costs in accordance with section 773(b)(3) of the

Act. We relied on the home market sales and COP information provided by

BSES in its questionnaire responses. As we deducted selling expenses

from home market prices, we also deducted selling expenses from

calculated COPs.

B. Test of Home Market Prices

After calculating COP, we tested whether home market sales of lead

and bismuth steel were made at prices below COP within an extended

period of time in substantial quantities, and whether such prices

permitted recovery of all costs within a reasonable period of time. We

compared the model-specific COP to the reported home market prices less

any applicable movement charges, rebates, and direct and indirect

selling expenses.

C. Results of COP Test

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

respondent's sales of a specific model were at prices less than 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

specific model during the POR were at prices less than the COP, we

disregarded the below-cost sales because we determined that the below-

cost sales were made within an extended period of time in ``substantial

quantities'' in accordance with sections 773(b)(2)(B) and (C) of the

Act, and because, based on our comparisons of prices to weighted-

average COPs for the POR, we determined that the below-cost sales of

the product were at prices which would not permit recovery of all costs

within a reasonable period of time, as defined in section 773(b)(2)(D)

of the Act. Based on this test, we disregarded certain below-cost sales

made by BSES.

Price-to-Price Comparisons

Pursuant to section 777A(d)(2), we compared the EPs of individual

transactions to the monthly weighted-average price of sales of the

foreign like product where there were sales at prices above COP, as

discussed above. We based NV on packed, delivered prices to

unaffiliated purchasers in the home market, and to affiliated

purchasers in the home market to the extent that prices were at arm's-

length. We made adjustments, where applicable, in accordance with

section 773(a)(6) of the Act. Where applicable, we made adjustments to

home market price for invoice corrections, rebates, and inland freight.

We also made a circumstance-of-sale adjustment for differences in

credit insurance and product liability insurance expenses pursuant to

section 773(a)(6)(C)(iii) of the Act. Because home market credit

insurance expenses and product liability insurance expenses are

incurred on a sale-by-sale basis and directly related to sales, we have

treated these expenses as direct selling expenses in both the home

market and the U.S. market. Accordingly, we made the circumstance-of-

sale adjustments by adding the amounts of U.S. credit insurance and

product liability insurance for each U.S. sale to the NV, and

subtracting the home market amounts from NV. We also added U.S.

commissions for each U.S. sale to the NV. In order to adjust for

differences in packing between the two markets, we increased home

market price by U.S. packing costs and reduced it by home market

packing costs. Prices were reported net of value added taxes (VAT) and,

therefore, no deduction for VAT was necessary. We made adjustments,

where appropriate, for physical differences in merchandise, in

accordance with section 773(a)(6)(C)(ii) of the Act.

Constructed Value

We only used constructed value with respect to BSES. In accordance

with section 773(e) of the Act, we calculated CV based on the sum of

BSES's cost of materials and fabrication employed in producing the

subject merchandise, SG&A and profit incurred and realized in

connection with production and sale of the foreign like product, and

U.S. packing costs. We used the costs of materials, fabrication, and

general and administrative expenses as reported in the CV portion of

BSES's questionnaire response. We used the U.S. packing costs as

reported in the U.S. sales portion of BSES's questionnaire response. In

accordance with section 773(e)(2)(A), we based SG&A and profit on the

amounts incurred and realized by BSES in connection with the production

and sale of the foreign like product in the ordinary course of trade,

for consumption in the foreign country. We based selling expenses and

profit on the information reported in the home market sales portion of

BSES's questionnaire response. For selling expenses, we used the

average per-unit home market selling expenses of home market sales of

the foreign like product, exclusive of sales disregarded under the cost

test, weighted by the total quantity sold for these sales. For actual

profit, we first calculated the difference between the home market

sales value and home market COP, for all home market sales of the

foreign like product in the ordinary course of trade, and divided the

sum of these differences by the total home market COP for these sales.

We then multiplied this percentage by the COP for each U.S. model to

derive an actual profit.

Commission Offset

Because there are commissions on U.S. sales and not on home market

sales for both BSES and Glynwed, we made an adjustment for indirect

selling expenses in the home market to offset the U.S. commissions, in

accordance with 19 CFR 353.56(b)(1).

We based the commission offset amount on the amount of the home

market indirect selling expenses. We limited the home market indirect

selling expense deduction by the amount of the commissions incurred on

sales to the United States.

Preliminary Results of the Review

As a result of our comparison of EP and NV, we preliminarily

determine that the following weighted-average dumping margins exist:

[[Page 64806]]

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

Margin

Manufacturer/exporter Period (percent)

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

British Steel Engineering Steels Limited

(BSES) (formerly United Engineering

Steels Limited)........................ 3/1/96-2/28/97 11.90

Glynwed Metal Processing Ltd. (Glynwed). 3/1/96-2/28/97 7.69

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

Parties to the proceeding may request disclosure within 5 business

days of the date of publication of this notice. Any interested party

may request a hearing within 10 days of publication. Pursuant to 19 CFR

353.38, any hearing, if requested, will be held 44 days after the

publication of this notice, or the first workday thereafter. Interested

parties may submit case briefs within 30 days of the date of

publication of this notice. Rebuttal briefs, which must be limited to

issues raised in the case briefs, may be filed not later than 37 days

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

final results of this administrative review, which will include the

results of its analysis of issues raised in any such comments, not

later than 120 days after the date of publication of this notice.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between EP and NV may vary from the percentages stated

above. Upon completion of this review, the Department will issue

appraisement instructions directly to the Customs Service.

Furthermore, the following deposit rates will be effective upon

publication of the final results of this administrative review for all

shipments of certain hot-rolled lead and bismuth carbon steel products

from the United Kingdom entered, or withdrawn from warehouse, for

consumption on or after the publication date, as provided for by

section 751(a)(2)(c) of the Act: (1) the cash deposit rate for the

reviewed company will be the rate established in the final results of

this 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, the cash deposit will continue to

be the company-specific rate published for the most recent period; (3)

if the exporter is not a firm covered in this or a previous review, or

the original LTFV investigation, but the manufacturer is, the cash

deposit rate will be the rate established for the most recent period

for the manufacturer of the merchandise; and (4) for all other

producers and/or exporters of this merchandise, the cash deposit rate

shall be 25.82 percent, the ``all others'' rate established in the LTFV

investigation (58 FR 6207, January 27, 1993).

These deposit rates, when imposed, shall remain in effect until

publication of the final results of the next administrative review.

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 353.26 to file a certificate

regarding the reimbursement of antidumping duties prior to liquidation

of the relevant entries during this review period. 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)) and 19 CFR 353.22.

Dated: December 1, 1997.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 97-32213 Filed 12-8-97; 8:45 am]

BILLING CODE 3510-DS-P