Certain Stainless Steel Wire Rods From France: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-427-811]

Certain Stainless Steel Wire Rods From France: Preliminary

Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

[[Page 3705]]

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review.

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SUMMARY: In response to a request by Imphy S.A. and Ugine-Savoie

(respondents), the Department of Commerce (the Department) is

conducting an administrative review of the antidumping duty order on

certain stainless steel wire rods from France. This review covers the

above manufacturers/exporters of the subject merchandise to the United

States. The period of review (POR) is January 1, 1996 through December

31, 1996.

We preliminarily determine that respondents sold subject

merchandise at less than normal value (NV) during the POR. If these

preliminary results are adopted in our final results of this

administrative review, we will instruct U.S. Customs to assess

antidumping duties based on the difference between the export price

(``EP'') or constructed export price (``CEP'') and the NV.

We invite interested parties to comment on these preliminary

results. Parties who submit arguments in this proceeding should also

submit with the argument (1) A statement of the issue, and (2) a brief

(no longer than five pages, including footnotes) summary of the

argument.

EFFECTIVE DATE: January 26, 1998.

FOR FURTHER INFORMATION CONTACT: Robert Bolling or Stephen Jacques, AD/

CVD Enforcement Group III, Office 9, Import Administration,

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

Street and Constitution Avenue, NW., Washington, DC 20230; telephone:

(202) 482-3434 or (202) 482-1391, 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 Round Agreements Act (URAA). In addition, unless

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

to 19 CFR part 353 (1997).

Background

On December 29, 1993, the Department published in the Federal

Register (58 FR 68865) the final affirmative antidumping duty

determination on certain stainless steel wire rods from France, and

published an amended final determination and antidumping duty order on

January 28, 1994. On January 14, 1997, the Department published the

Opportunity to Request an Administrative Review of this order for the

period January 1, 1996-December 31, 1996 (62 FR 1874). The Department

received a request for an administrative review from Imphy, S.A.

(``Imphy'') and Ugine-Savoie (``Ugine''), affiliated producers/

exporters of the subject merchandise, on January 29, 1997. We published

a notice of initiation of the review on March 3, 1997 (62 FR 9413).

The Department is now conducting this review in accordance with

section 751 of the Act. The review covers sales of certain stainless

steel wire rods by Imphy, Ugine, and their affiliated companies,

Metalimphy Alloys Corp. (``MAC''), and Techalloy Company, Inc.

(``Techalloy'').

Scope of the Review

The products covered by this administrative review are certain

stainless steel wire rod (SSWR) products which are hot-rolled or hot-

rolled annealed, and/or pickled rounds, squares, octagons, hexagons, or

other shapes, in coils. SSWR are made of alloy steels containing, by

weight, 1.2 percent or less of carbon and 10.5 percent or more of

chromium, with or without other elements. These products are only

manufactured by hot-rolling, are normally sold in coiled form, and are

of solid cross section. The majority of SSWR sold in the United States

is round in cross-sectional shape, annealed, and pickled. The most

common size is 5.5 millimeters in diameter.

The SSWR subject to this review is currently classifiable under

subheadings 7221.00.0005, 7221.00.0015, 7221.00.0020, 7221.00.0030,

7221.00.0040, 7221.00.0045, 7221.00.0060, 7221.00.0075, and

7221.00.0080 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 of the order

is dispositive.

Product Comparisons

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

products produced by the respondents, covered by the description in the

Scope of the Review section, above, and sold in the home market during

the POR, 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 most similar foreign like product

on the basis of the characteristics listed in Appendix III of the

Department's March 24, 1997 antidumping questionnaire. In making the

product comparisons, we matched foreign like products based on the

physical characteristics reported by the respondents.

Fair Value Comparisons

To determine whether sales of subject merchandise to the United

States were made at less than fair value, we compared the EP or CEP to

the NV, as described in the ``Export Price and Constructed Export

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

with section 777A(d)(2), we calculated monthly weighted-average prices

for NV and compared these to individual U.S. transactions.

Export Price and Constructed Export Price

We used EP, in accordance with subsections 772 (a) and (c) of the

Act, where the subject merchandise was sold directly or indirectly to

the first unaffiliated purchaser in the United States prior to

importation because CEP was not otherwise warranted based on the facts

of record. In addition, we used CEP in accordance with subsections 772

(b), (c) and (d) of the Act, for those sales to the first unaffiliated

purchaser that took place after importation into the United States.

We made adjustments as follows:

We calculated EP based on packed prices to unaffiliated customers

in the United States. Where appropriate, we made deductions from the

starting price for discounts, foreign inland freight, foreign brokerage

and handling, international freight, U.S. inland freight, U.S.

brokerage and handling, marine insurance and U.S. Customs duties. We

also adjusted the starting price for billing adjustments to the invoice

price.

We calculated CEP based on packed prices to unaffiliated customers.

Where appropriate, we made deductions for early payment discounts,

credit expenses, warranty expenses, other direct selling expenses and

commissions. We deducted those indirect selling expenses, including

inventory carrying costs and product liability premiums, that related

to commercial activity in the United States. We also made deductions

for foreign brokerage and handling, foreign inland freight,

international freight, U.S. inland freight, U.S. brokerage and

handling, marine insurance, U.S. repacking expenses and U.S. Customs

duties. We also adjusted the starting price for billing adjustments to

the invoice price and for interest revenue. Finally, we made an

adjustment for CEP profit in accordance with section 772(d)(3) of the

Act.

[[Page 3706]]

The Department has recalculated credit expenses for those sales

with missing payment dates. For sales with missing payment dates, the

Department set the date of payment to the projected final results date.

Further Manufacturing

For products that were further manufactured after importation, we

adjusted for all costs of further manufacturing in the United States,

and the proportional amount of profit allocated to such costs. In

accordance with section 772(f) of the Act, we computed profit based on

total revenues realized on sales in both the U.S. and home markets,

less all expenses associated with those sales. We then allocated profit

to expenses incurred with respect to U.S. economic activity (including

further manufacturing costs), based on the ratio of total U.S. expenses

to total expenses for both the U.S. and home market.

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,

we compared respondents' 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) of the Act. Since respondents'

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.

Therefore, we have based NV on home market sales.

Where appropriate, we deducted discounts, credit expenses, warranty

expenses, inland freight and inland insurance. We also adjusted the

starting price for billing adjustments to the invoice price and

interest revenue. We did not adjust the starting price for commissions

in the home market (please see the Concurrence Memorandum for a

discussion of this issue).

For reasons discussed below in the ``Level of Trade'' section, we

allowed a CEP offset for comparisons made at different levels of trade.

To calculate the CEP offset, we deducted the home market indirect

selling expenses from normal value, on home market sales which were

compared to U.S. CEP sales. We limited the home market indirect selling

expense deduction by the amount of the indirect selling expenses

deducted in calculating the CEP under section 772(d)(1)(D) of the Act.

We made adjustments, where appropriate, for physical differences in

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

In addition, in accordance with section 773(a)(6) (A) and (B), we

deducted home market packing costs and added U.S. packing costs.

We also made adjustments, where applicable, for home market

indirect selling expenses to offset U.S. commissions in EP and CEP

comparisons.

The Department has recalculated credit expenses for those home

market sales with missing payment and shipment dates. For sales with

missing payment dates, the Department calculated payment date based on

the average time period between invoice date and shipment date for

those sales where both invoice date and shipment date appeared in the

database. For sales with missing shipment dates, the Department

calculated shipment date based on the average time period between

invoice date and shipment date for those sales where both invoice date

and shipment date appeared in the database.

Price to CV Comparisons

When we based NV on CV, we calculated CV in the manner described

below. See ``Cost of Production Analysis'' section. Where we compared

CV to EP, we deducted from CV the weighted-average home market direct

selling expenses and added the U.S. direct selling expenses.

Cost of Production Analysis

We had reasonable grounds to believe or suspect that sales of the

foreign like product under consideration for the determination of NV in

this review may have been made at prices below the COP because the

Department disregarded sales below the cost of production (COP) in the

second administrative review (see Final Results of Antidumping Duty

Administrative Review: Certain Stainless Steel Wire Rods from France,

62 FR 7206 (February 18, 1997)). Therefore, pursuant to section

773(b)(1) of the Act, we initiated a COP investigation of sales by

respondents in the home market.

In accordance with section 773(b)(3) of the Act, we calculated the

COP based on the sum of the costs of materials and fabrication employed

in producing the foreign like product plus selling, general and

administrative (SG&A) expenses and all costs and expenses incidental to

placing the foreign like product in condition packed ready for

shipment. In our COP analysis, we used the home market sales and COP

information provided by respondents in their questionnaire responses.

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

were made at prices below COP within an extended period of time in

substantial quantities and whether such prices permit recovery of all

costs within a reasonable period of time. We compared model-specific

COPs to the reported home market prices less any applicable movement

charges, discounts, and rebates.

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

percent of respondents' sales of a given product were at prices less

than COP, we did not disregard any below-cost sales of that product

because the below-cost sales were not made in substantial quantities

within an extended period of time. Where 20 percent or more of

respondents' sales of a given product during the POR were at prices

less than the COP, we disregarded the below-cost sales because they (1)

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 (2)

based on comparisons of prices to weighted-average COPs for the POR,

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

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

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

these preliminary results.

In accordance with section 773(a)(4) of the Act, we used CV as the

basis for NV when there were no usable sales of the foreign like

product in the comparison market. We calculated CV in accordance with

section 773(e) of the Act. We included the cost of materials and

fabrication, SG&A expenses, and profit. In accordance with section

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

amounts incurred and realized by the respondents 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 weighted-average home market selling expenses.

Arm's-Length Sales

Sales to affiliated customers in the home market not made at arm's

length were excluded from our analysis. To test whether these sales

were made at arm's length, we compared the starting prices of sales to

affiliated and unaffiliated customers net of all movement charges,

direct selling expenses, discounts and packing. Where prices to the

related party were on average 99.5 percent or

[[Page 3707]]

more of the price to the unrelated party, we determined that sales made

to the related party were at arm's-length. Where no related customer

ratio could be constructed because identical merchandise was not sold

to unrelated customers, we were unable to determine that these sales

were made at arm's length and, therefore, excluded them from our

analysis. See Final Determination of Sales at Less Than Fair Value:

Certain Cold-Rolled Carbon Steel Flat Products from Argentina, (58 FR

37062, 37077 (July 9, 1993)). Where the exclusion of such sales

eliminated all sales of the most appropriate comparison product, we

made comparison to the next most similar model.

Currency Conversion

For purposes of the preliminary results, we made currency

conversions based on the official exchange rates in effect on the dates

of the U.S. sales as certified by the Federal Reserve Bank of New York.

Section 773A(a) of the Act directs the Department to use a daily

exchange rate in order to convert foreign currencies into U.S. dollars,

unless the daily rate involves a ``fluctuation.'' For these preliminary

results of review, we have determined that a fluctuation exists when

the daily exchange rate differs from a benchmark by 2.25 percent. The

benchmark is defined as the rolling average of rates for the past 40

business days. Therefore, when we determine a fluctuation exists, we

substitute the benchmark for the daily rate. (For a detailed

explanation, see Policy Bulletin 96-1: Currency Conversions, 61 FR

9434, March 8, 1996).

Level of Trade (``LOT'')

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

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

the same level of trade (``LOT'') as the EP or CEP transaction. 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 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. Finally, for CEP sales, if the NV level is

more remote from the factory than the CEP level and there is no basis

for determining whether the difference in the levels between NV and CEP

affects price comparability, we adjust NV under section 773(a)(7)(B) of

the Act (the CEP offset provision). See Notice of Final Determination

of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel

Plate from South Africa, 62 FR 61731 (November 19, 1997).

In implementing these principles in this review, we obtained

information about the selling activities of the producers/exporters

associated with each phase of marketing or the equivalent. We asked

respondents to identify the specific differences and similarities in

selling functions and/or support services between all phases of

marketing in the home market and the United States.

In reviewing the selling functions reported by the respondents, we

examined all types of selling functions and activities reported in

respondents' questionnaire response on LOT. In analyzing whether

separate LOT existed in this review, we found that no single selling

function was sufficient to warrant a separate LOT in the home market

(see Antidumping Duties; Countervailing Duties; Proposed Rule,

(Proposed Regulations), 61 FR 7308, 7348).

In determining whether separate levels of trade existed in or

between the U.S. and home market, the Department considered the LOT

claims of respondents. To test the claimed LOT, we analyzed, inter

alia, the selling activities associated with the phases of marketing

respondents reported. For the home market, respondents reported one

LOT, sales to end-users. Also, respondents stated that they make their

home market sales through two channels of distribution: (1) Indirect

sales through Ugine-Service and its local field offices; and (2) direct

sales made through the commercial departments of Imphy and Ugine-

Savoie. We examined record evidence from this review and have

determined that there is only one LOT in the home market, regardless of

channel of distribution.

For the U.S. market, respondents reported two LOTs: (1) Sales to

end-users through MAC (EP sales); and (2) sales to distributors, e.g.,

MAC, Techalloy (CEP sales). The Department examined the selling

functions performed for both LOT. We found that the selling functions

were sufficiently different in customer sales contacts (i.e., visiting

customers/potential customers, receiving orders, promotion of new

products and following-up on unpaid invoices), technical services,

computer systems and administrative functions to warrant two levels of

trade in the United States.

In order to determine whether separate LOT actually existed between

the U.S. and home markets, we reviewed the selling activities

associated with each channel of distribution. When we compared EP sales

to home market sales, we determined that sales were made at the same

LOT (i.e., to end-users) in both markets. However, for CEP sales, we

determined that fewer and different selling functions were performed

for CEP sales to MAC and Techalloy than for home market sales to end-

users. We also found that the selling functions were sufficiently

different in customer sales contacts, technical services, inventory

maintenance, computer systems and administrative functions to warrant

treating CEP sales and home market sales to end-users as different LOT.

In addition, we found that the home market sales involved a more

advanced stage of distribution (to end-users) as compared to

respondents' CEP sales in the United States (distributor).

To the extent practicable, we compared normal value at the same LOT

as the U.S. sale. In this review, there were no sales of the foreign

like product in the home market at the same LOT as that of the CEP

sales. Because we compared CEP sales to home market sales at a

different LOT, we examined whether a level of trade adjustment may be

appropriate. In this case, respondents only sold at one LOT in the home

market; therefore, there is no basis upon which respondents can

demonstrate a pattern of consistent price differences between LOTs with

respect to the foreign like product. Further, we do not have

information which would allow us to examine pricing patterns based on

respondents' sales of other products and there are no other respondents

or other record information on which such an analysis could be based.

Because the data available do not provide an appropriate basis for

making a LOT adjustment, but the LOT in the home market is at a more

advanced stage of distribution than the LOT of the CEP sale, a CEP

offset is appropriate. Respondents claimed a CEP offset for

[[Page 3708]]

those U.S. CEP and CEP/Further Manufactured (CEP/FM) sales compared to

sales in France through Ugine Service. We included a CEP offset for all

sales in France which are compared with CEP and CEP/FM sales in the

United States since the comparison of home market sales to CEP sales is

at a different level of trade. We applied the CEP offset to normal

value or constructed value, as appropriate.

Preliminary Results of Review

As a result of our review, we preliminarily determine the weighted-

average dumping margins (in percent) for the period January 1, 1996,

through December 31, 1996, to be as follows:

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

Margin

Manufacturer/exporter (percent)

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Imphy/Ugine-Savoie......................................... 10.51

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Parties to the proceeding may request disclosure within five days

of the date of publication of this notice. 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 business day thereafter. Case briefs and/or other written

comments from interested parties may be submitted not later than 30

days after the date of publication. Rebuttal briefs and rebuttals to

written comments, limited to issues raised in those comments, may be

filed not later than 37 days after the date of publication of this

notice. The Department will publish the final results of this

administrative review, including its analysis of issues raised in any

written comments or at a hearing, not later than 120 days after the

date of publication of this notice.

The Department shall determine, and the U.S. Customs Service shall

assess, antidumping duties on all appropriate entries. We have

calculated importer-specific ad valorem duty assessment rates based on

the ratio of the total amount of dumping margins calculated for the

examined sales made during the POR to the total customs value of the

sales used to calculate those duties. These rates will be assessed

uniformly on all entries of each particular importer made during the

POR. (This is equivalent to dividing the total amount of antidumping

duties, which are calculated by taking the difference between statutory

NV and statutory EP or CEP, by the total statutory EP or CEP value of

the sales compared, and adjusting the result by the average difference

between EP or CEP and customs value for all merchandise examined during

the POR).

Furthermore, the following deposit requirements will be effective

for all shipments of the subject merchandise 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 rate for the reviewed

companies will be the rate established in the final results of this

review (except that no deposit will be required for firms with zero or

de minimis margins, i.e., margins less than 0.5 percent); (2) for

previously reviewed or investigated companies not listed above, the

cash deposit rate 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 review, a prior 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) the cash deposit rate for all other

manufacturers or exporters will continue to be 24.51 percent, the ``All

Others'' rate made effective by the LTFV investigation. These deposit

requirements, when imposed, shall remain in effect until publication of

the final results of the next administrative reviews.

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.

These administrative reviews and notice are in accordance with

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

353.22(c)(5).

Dated: January 16, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-1806 Filed 1-23-98; 8:45 am]

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