Initiation of Antidumping Duty Investigations: Stainless Steel Sheet and Strip in Coils From France, Germany, Italy, Japan, Mexico, South Korea, Taiwan, and the United Kingdom

DEPARTMENT OF COMMERCE

International Trade Administration

[A-427-814, A-428-825, A-475-824, A-588-845, A-201-822, A-580-834, A-

583-831, A-412-818]

Initiation of Antidumping Duty Investigations: Stainless Steel

Sheet and Strip in Coils From France, Germany, Italy, Japan, Mexico,

South Korea, Taiwan, and the United Kingdom

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: July 13, 1998.

FOR FURTHER INFORMATION CONTACT: Abdelali Elouaradia (France), at (202)

482-2243; Robert James (Germany), at (202) 482-5222; Rick Johnson

(Italy, Republic of Korea, and Taiwan) at (202) 482-3818; Dorothy

Woster (Japan), at (202) 482-3362; Tom Killiam (Mexico), at (202) 482-

2704; Nancy Decker (United Kingdom), at (202) 482-0196, Import

Administration, International Trade Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue, NW, Washington, DC

20230.

Initiation of Investigations

The Applicable Statute and Regulations

Unless otherwise indicated, 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 (URAA). In addition, unless otherwise

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

to the provisions codified at 19 CFR Part 351 (62 FR 27296, May 19,

1997).

The Petition

On June 10, 1998, the Department of Commerce (``the Department'')

received petitions filed in proper form by Allegheny Ludlum

Corporation, Armco, Inc.,1 J&L Specialty Steel,

Inc.,2 Washington Steel Division of Bethlehem Steel

Corporation (formerly Lukens, Inc.), the United Steelworkers of

America, AFL-CIO/CLC, the Butler Armco Independent Union 3

and the Zanesville Armco Independent Organization, Inc.4

(petitioners). The Department received supplemental information to the

petitions on June 15, 16, 17, 19 and 24, 1998.

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\1\ Armco, Inc. is not a petitioner in the Mexico case.

\2\ J& L Specialty Steel, Inc. is not a petitioner in the France

case.

\3\ Butler Armco Independent Union is not a petitioner in the

Mexico case.

\4\ Zanesville Armco Independent Organization, Inc. is not a

petitioner in the Mexico case.

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In accordance with section 732(b) of the Act, petitioners allege

that imports of stainless steel sheet and strip in coils (SSSS) from

France, Germany, Italy, Japan, Mexico, the Republic of Korea, Taiwan,

and the United Kingdom are being, or are likely to be, sold in the

United States at less than fair value within the meaning of section 731

of the Act, and that such imports are materially injuring an industry

in the United States.

The Department finds that petitioners filed these petitions on

behalf of the domestic industry because they are interested parties as

defined in section 771(9) (C) and (D) of the Act and they have

demonstrated sufficient industry support with respect to each of the

antidumping investigations they are requesting the Department to

initiate (see Discussion below).

Scope of Investigations

For purposes of these investigations, the products covered are

certain stainless steel sheet and strip in coils. Stainless steel is an

alloy steel containing, by weight, 1.2 percent or less of carbon and

10.5 percent or more of chromium, with or without other elements. The

subject sheet and strip is a flat-rolled product in coils that is

greater than 9.5 mm in width and less than 4.75 mm in thickness, and

that is annealed or otherwise heat treated and pickled or otherwise

descaled. The subject sheet and strip may also be further processed

(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that

it maintains the specific dimensions of sheet and strip following such

processing.

The merchandise subject to this investigation is classified in the

Harmonized Tariff Schedule of the United States (``HTSUS'') at

subheadings: 7219.13.00.30, 7219.13.00.50, 7219.13.00.70,

7219.13.00.80, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90,

7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35,

7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44,

7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35,

7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44,

7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30,

7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30,

7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25,

7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00,

[[Page 37522]]

7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80,

7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60,

7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15,

7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30,

7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and

7220.90.00.80. Although the HTS subheadings are provided for

convenience and Customs purposes, the written description of the

merchandise under investigation is dispositive.

Excluded from the scope of this petition are the following: (1)

sheet and strip that is not annealed or otherwise heat treated and

pickled or otherwise descaled, (2) sheet and strip that is cut to

length, (3) plate (i.e., flat-rolled stainless steel products of a

thickness of 4.75 mm or more), (4) flat wire, and (5) razor blade

steel. Razor blade steel is a flat-rolled product of stainless steel,

not further worked than cold-rolled (cold-reduced), in coils, of a

width of 9.5 to 23 mm and a thickness of 0.266 mm or less, containing

by weight 12.5 to 14.5 percent chromium, and certified at the time of

entry to be used in the manufacture of razor blades. See Chapter 72 of

the HTSUS, ``Additional U.S. and Note'' 1(d).

During our review of the petitions, we discussed scope with

petitioners to insure that the scope in the petitions accurately

reflect the product for which they are seeking relief. Moreover, as

discussed in the preamble to the new regulations (62 FR 27323), we are

setting aside a period for parties to raise issues regarding product

coverage. The Department encourages all parties to submit such comments

by July 20, 1998. Comments should be addressed to Import

Administration's Central Records Unit at Room 1870, U.S. Department of

Commerce, 14th Street and Constitution Avenue, NW, Washington, DC

20230. The period of scope consultations is intended to provide the

Department with ample opportunity to consider all comments and consult

with parties prior to the issuance of our preliminary determinations.

Determination of Industry Support for the Petition

Section 732(b)(1) of the Act requires that a petition be filed on

behalf of the domestic industry. Section 732(c)(4)(A) of the Act

provides that a petition meets this requirement if the domestic

producers or workers who support the petition account for: (1) At least

25 percent of the total production of the domestic like product; and

(2) more than 50 percent of the production of the domestic like product

produced by that portion of the industry expressing support for, or

opposition to, the petition.

Section 771(4)(A) of the Act defines the ``industry'' as the

producers of a domestic like product. Thus, to determine whether the

petition has the requisite industry support, the statute directs the

Department to look to producers and workers who account for production

of the domestic like product. The International Trade Commission (ITC),

which is responsible for determining whether ``the domestic industry''

has been injured, must also determine what constitutes a domestic like

product in order to define the industry. While both the Department and

the ITC must apply the same statutory definition regarding the domestic

like product (section 771(10) of the Act), they do so for different

purposes and pursuant to separate and distinct authority. In addition,

the Department's determination is subject to limitations of time and

information. Although this may result in different definitions of the

like product, such differences do not render the decision of either

agency contrary to the law.5

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\5\ See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp.

639, 642-44 (CIT 1988); High Information Content Flat Panel Displays

and Display Glass Therefore from Japan: Final Determination;

Rescission of Investigation and Partial Dismissal of Petition, 56 FR

32376, 32380-81 (July 16, 1991).

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Section 771(10) of the Act defines the domestic like product as ``a

product that is like, or in the absence of like, most similar in

characteristics and uses with, the article subject to an investigation

under this title.'' Thus, the reference point from which the domestic

like product analysis begins is ``the article subject to an

investigation,'' i.e., the class or kind of merchandise to be

investigated, which normally will be the scope as defined in the

petition.

The domestic like product referred to in the petitions is the

single domestic like product defined in the ``Scope of Investigation''

section, above. The Department has no basis on the record to find

petitioners' definition of the domestic like product to be inaccurate.

The Department, therefore, has adopted the domestic like product

definition set forth in the petitions. In this case the Department has

determined that the petitions and supplemental information contained

adequate evidence of sufficient industry support, and, therefore,

polling is unnecessary (See Attachment to the Initiation Checklist, Re:

Industry Support, June 30, 1998). For France, Germany, Italy, Japan,

Mexico, South Korea, Taiwan, and the United Kingdom, petitioners

established industry support representing over 50 percent of total

production of the domestic like product.

Additionally, no member of the domestic industry pursuant to

section 771(9)(C) (D) or (E) has expressed opposition on the record to

the petition. Therefore, to the best of the Department's knowledge, the

producers who support the petitions account for 100 percent of the

production of the domestic like product produced by the portion of the

industry expressing an opinion regarding the petitions. Accordingly,

the Department determines that these petitions are filed on behalf of

the domestic industry within the meaning of section 732(b)(1) of the

Act.

Nippon Steel Corp. Japan (NSC) submitted a letter claiming that

petitioners do not manufacture suspension foil, and thus, do not have

standing to file an antidumping petition against such product. However,

there is no requirement that petitioners manufacture all merchandise

within the like product designation, only that they are producers of

the like product. See Notice of Final Determination of Sales at Less

Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products from

Argentina, 58 FR 37062 (1993). Because petitioners produce the domestic

like product they are interested parties within the meaning of sections

771(9)(C) (D) and (E). Therefore, in accordance with section 732(b)(1),

they have standing to file the petition. Based on the foregoing, the

Department determines that these petitions are filed on behalf of the

domestic industry within the meaning of section 732(b)(1) of the Act.

Export Price and Normal Value

The following are descriptions of the allegations of sales at less

than fair value upon which our decisions to initiate these

investigations are based. Should the need arise to use any of this

information in our preliminary or final determinations for purposes of

facts available under section 776 of the Act, we may re-examine the

information and revise the margin calculations, if appropriate.

France

Petitioners identified Ugine, a division of Usinor, S.A. (Usinor),

and Imphy, S.A. as possible exporters of SSSS from France. Petitioners

further stated that Usinor accounts for nearly all of the production in

France. Petitioners based export price (EP) for Usinor on prices at

which the merchandise was

[[Page 37523]]

first sold to unaffiliated purchasers in the United States in December

1997. See petitioners' affidavit at Exhibit 6. Because the terms of

Usinor's U.S. sales were delivered to the U.S. customer, petitioners

calculated a net U.S. price by subtracting estimated costs for shipment

from Usinor's factory in France to the port of export. See Declaration

of (Foreign Market Researcher) Regarding Sales and Production Cost in

France of Stainless Steel Sheet and Strip in Coils, Exhibit 1 of

petitioners' June 15, 1998 submission. In addition, petitioners

subtracted ocean freight and insurance based on official U.S. import

statistics, and estimated costs for U.S. import duties and fees based

on the 1997 HTSUS schedule. Petitioners also subtracted amounts for

U.S. merchandise processing fees and U.S. harbor maintenance fees (19

CFR 24.23 and 24.24, respectively). Finally, petitioners obtained net

U.S. prices by subtracting U.S. inland freight costs (for a discussion

of the freight cost estimate, see petitioners' affidavit at Exhibit

23), and credit expenses.

With respect to normal value (NV), based on foreign market

research, petitioners determined that the volume of French home market

sales was sufficient to form a basis for NV, pursuant to section

773(a)(1)(B)(i) of the Act. Petitioners obtained from foreign market

research gross unit prices for products offered for sale during the

second and third quarter of 1997 and first quarter of 1998, to

customers in France which are either identical or similar to those sold

to the United States. Petitioners adjusted these prices by subtracting

estimated average delivery costs and credit expenses, and by adding an

amount for alloy surcharge. See Declaration of (Foreign Market

Researcher) Regarding Sales and Production Cost in France of Stainless

Steel Sheet and Strip in Coils, Exhibit 1 of petitioners' June 15, 1998

submission. These net home market prices were then converted to U.S.

dollar prices using the official exchange rate in effect for the month

of the comparison U.S. sale.

Petitioners provided information demonstrating reasonable grounds

to believe or suspect that certain of the home market sales of SSSS

provided in the petition were made at prices below the cost of

production (COP), within the meaning of section 773(b) of the Act, and

requested that the Department conduct a country-wide sales below cost

investigation. Pursuant to section 773(b)(3) of the Act, COP consists

of the cost of manufacturing (``COM''), selling, general, and

administrative expenses (``SG&A''), and packing costs. To calculate

COP, petitioners relied on foreign market research and their own

production experience, adjusted for known differences between costs

incurred to produce SSSS in the United States and in the foreign

market. We relied on the cost data contained in the petition except in

the following instances: (1) rather than rely on the foreign market

research for raw material consumption rates, we recalculated raw

material costs using the submitted average domestic industry material

costs in the petition adjusted for known differences in raw material

input prices between the U.S. and France based on market research (in

this regard, we consider it more appropriate to rely on actual raw

material usage rates from a producer of the merchandise rather than

hypothetical rates derived from foreign market research); (2) we

recalculated fixed overhead using Usinor's 1996 audited financial

statements; and (3) we recalculated SG&A and financial expenses using

Usinor's 1997 consolidated financial statements.

Based on our analysis, certain of the home market sales reported in

the petition were shown to be made at prices below the cost of

production (see Initiation of Cost Investigations). For these sales,

petitioners based NV on the constructed value (``CV'') of the

merchandise, pursuant to sections 773(a)(4) and 773(e) of the Act.

Pursuant to section 773(e) of the Act, CV consists of the COM, SG&A

expenses, packing costs and profit of the merchandise. To calculate the

COM, SG&A expenses, and packing costs for CV, petitioners followed the

same methodology used to determine COP. Accordingly, we relied on this

methodology after adjusting certain cost elements as noted above.

Petitioners derived profit for CV based on amounts reported in Usinor's

1997 financial statements.

The estimated dumping margins, based on a comparison between

Usinor's U.S. prices and adjusted CV, range from 23.74 to 24.76

percent. Based on a comparison of EP to home market prices, petitioners

calculated dumping margins range from 10.02 to 39.20 percent.

Germany

Petitioners identified Krupp Thyssen Nirosta GmbH (Krupp) as a

possible exporter of SSSS from Germany. Petitioners further identified

Krupp as the only substantial producer of subject merchandise in

Germany. Petitioners based EP for Krupp on prices at which the

merchandise was first sold to unaffiliated purchasers in the United

States (sales were made in the second and third quarters of 1997, and

the second quarter of 1998). See petitioners' affidavit, submitted as

petition Exhibit 21. The terms of Krupp's sales were either delivered

or FOB duty-paid U.S. port. Therefore, petitioners calculated FOB

prices for these U.S. sales by subtracting amounts for U.S. inland

freight, international freight and marine insurance based on official

U.S. import statistics, U.S. import duties based on the 1997 HTSUS

schedule, and foreign inland freight estimated based on foreign market

research (see Declaration of (Foreign Market Researcher) Regarding

Sales and Production Cost in Germany of Stainless Steel Sheet and Strip

in Coils, Exhibit 2 of petitioners' June 15, 1998 submission).

Petitioners also subtracted amounts for U.S. merchandise processing

fees and U.S. harbor maintenance fees (19 CFR, sections 24.23 and

24.24, respectively). Finally, petitioners obtained net U.S. prices by

subtracting credit expenses and adding alloy surcharges to applicable

sales from petitioners' affidavit (see petition at Exhibit 21, and

submission dated June 17, 1998, Exhibit E).

With respect to NV, based on foreign market research, petitioners

determined that the volume of German home market sales was sufficient

to form a basis for NV, pursuant to section 773(a)(1)(B)(i) of the Act.

Petitioners obtained from foreign market research gross unit prices for

products offered for sale (sales were made in the second and third

quarters of 1997) to customers in Germany which are either identical or

similar to those sold to the United States. Petitioners adjusted these

prices by subtracting amounts for foreign inland freight (see

Declaration of {Foreign Market Researcher} Regarding Sales and

Production Cost in Germany of Stainless Steel Sheet and Strip in Coils,

Exhibit 2 of petitioners' June 15, 1998 submission) and imputed credit

expenses (based on ``International Financial Statistics'' of the

International Monetary Fund, April 1998) and added an alloy surcharge

(See petitioners' affidavit, submitted as petition Exhibit 21) for

applicable sales. These net home market prices were then converted to

U.S. dollar prices using the official exchange rate in effect for the

month of the comparison U.S. sale.

Petitioners provided information demonstrating reasonable grounds

to believe or suspect that the certain of the home market sales of SSSS

provided in the petition were made at prices below the COP, within the

meaning of section 773(b) of the Act, and requested that the Department

conduct a country-wide sales-below-cost investigation. Pursuant to

section 773(b)(3) of the Act, COP consists of the COM, SG&A, and

[[Page 37524]]

packing costs. To calculate COP, petitioners relied on foreign market

research and their own production experience, adjusted for known

differences between costs incurred to produce SSSS in the United States

and in the foreign market. We relied on the cost data contained in the

petition except in the following instances: (1) rather than rely on the

foreign market research for raw material consumption rates, we

recalculated raw materials costs using the submitted average domestic

industry material costs in the petition adjusted for known differences

in raw material input prices between the U.S. and Germany based on

market research (in this regard, we consider it more appropriate to

rely on actual raw material usage rates from a producer of the

merchandise rather than hypothetical rates derived from foreign market

research); and (2) we recalculated fixed overhead using Krupp's 1997

audited financial statements.

Based on our analysis, certain of the home market sales reported in

the petition were shown to be made at prices below the cost of

production (see Initiation of Cost Investigations). For these sales,

petitioners based NV on the CV of the merchandise, pursuant to sections

773(a)(4) and 773(e) of the Act. Pursuant to section 773(e) of the Act,

CV consists of the COM, SG&A expenses, packing costs and profit of the

merchandise. To calculate the COM, SG&A, and packing costs for CV,

petitioners followed the same methodology used to determine COP.

Accordingly, we relied on this methodology after adjusting certain cost

elements as noted above. Petitioners derived profit for Krupp based on

amounts reported in Krupp's 1997 financial statements.

The estimated dumping margins, based on a comparison between

Krupp's U.S. price and the adjusted CV, range from 32.67 to 41.98

percent. Based on a comparison of EP to home market price, petitioners

calculated dumping margins ranging from 11.81 to 17.46 percent.

Italy

Petitioners identified Arinox Srl (Arinox) and Acciai Speciali

Terni SpA (AST) as possible exporters and producers of SSSS from Italy.

Petitioners relied on price information for AST, which, according to

petitioners, accounts for 99 percent of exports of SSSS exported to the

United States from Italy. Petitioners based EP on U.S. sales prices

obtained by petitioners for sales to an unaffiliated purchaser from

June through October 1997. See petitioners' affidavit, submitted as

petition Exhibit 20. Petitioners calculated a net U.S. price by

subtracting amounts for foreign inland freight (see Declaration of

{Foreign Market Researcher} Regarding Sales and Production Cost in

Italy of Stainless Steel Sheet and Strip in Coils, Exhibit 3 of

petitioners' June 15, 1998 submission), U.S. inland freight (see

petitioners' affidavit, submitted as petition Exhibit 20),

international freight and insurance based on average import charges

reported in the official U.S. import statistics for 1997 for HTSUS

categories 7219 and 7220, U.S. merchandise processing fees and U.S.

harbor maintenance fees (19 CFR 24.23 and 24.24, respectively), and

estimated costs for U.S. import duties based on 1997 and 1998 HTSUS

schedules. Imputed credit was also deducted from export price for the

price-to-price comparison, using the lending rate as published in

``International Financial Statistics'' of the International Monetary

Fund, April 1998. Petitioners added an alloy surcharge for certain U.S.

sales (see petitioners' affidavit submitted as Attachment 1 of

Stainless Steel Sheet and Strip in Coils from Italy, June 19, 1998).

With respect to NV, based on foreign market research, petitioners

determined that the volume of Italian home market sales was sufficient

to form a basis for NV, pursuant to section 773(a)(1)(B)(i) of the Act.

Petitioners obtained from foreign market research gross unit prices for

products offered for sale in the second, third and fourth quarters of

1997 to customers in Italy which are either identical or similar to

those sold to the United States. Petitioners adjusted these prices by

subtracting inland freight (see Declaration of {Foreign Market

Researcher} Regarding Sales and Production Cost in Italy of Stainless

Steel Sheet and Strip in Coils, Exhibit 1 of petitioners' June 15, 1998

submission), and imputed credit expenses based on ``International

Financial Statistics'' of the International Monetary Fund, April 1998.

Petitioners added an alloy surcharge for certain home market sales (see

petitioners' affidavit submitted as Attachment 1 of Stainless Steel

Sheet and Strip in Coils from Italy, June 19, 1998). Petitioners did

not adjust for packing costs because petitioners claim that data for

packing for U.S. sales is not available. These net home market prices

were then converted to U.S. dollar prices using the official exchange

rate in effect for the month of the comparison U.S. sale.

Petitioners provided information demonstrating reasonable grounds

to believe or suspect that certain of the home market sales of SSSS

provided in the petition were made at prices below COP, within the

meaning of section 773(b) of the Act, and requested that the Department

conduct a country-wide sales-below-cost investigation. Pursuant to

section 773(b)(3) of the Act, COP consists of the COM, SG&A expenses,

and packing costs. To calculate COP, petitioners relied on foreign

market research and their own production experience, adjusted for known

differences between costs incurred to produce SSSS in the United States

and in the foreign market. We relied on the cost data contained in the

petition except in the following instance. We did not rely on the

foreign market research for raw material consumption rates. Instead, we

recalculated raw materials costs in the petition using the submitted

average domestic industry material costs adjusted for known differences

in raw material input prices between the U.S. and Italy based on market

research (in this regard, we consider it more appropriate to rely on

actual raw material usage rates from a producer of the merchandise

rather than hypothetical rates derived from foreign market research).

Based on our analysis, certain of the home market sales reported in

the petition were shown to be made at prices below the cost of

production (see Initiation of Cost Investigations). For these sales,

petitioners based NV on the CV of the merchandise, pursuant to sections

773(a)(4) and 773(b) of the Act. Pursuant to section 773(e) of the Act,

CV consists of the COM, SG&A expenses, packing costs and profit for the

merchandise. To calculate the COM, SG&A expenses, and packing costs for

CV, petitioners followed the same methodology used to determine COP.

Accordingly, we relied on this methodology after adjusting certain cost

elements as noted above. Petitioners derived profit AST based on

amounts reported in AST's financial statements.

The estimated dumping margins, based on a comparison between AST's

U.S. price and the adjusted CV, range from 0.15 to 35.54 percent. Based

on a comparison of EP to home market price, petitioners calculate

dumping margins ranging from 6.02 to 18.77 percent.

Japan

Petitioners identified Kawasaki Steel Corp., Nippon Steel

Corporation, Nisshin Steel Co. Ltd., Nippon Yakin Kogyo, Nippon Metal

Industries, and Sumitomo Metal Industries as possible exporters of SSSS

from Japan. Petitioners further identified Nisshin, Kawasaki, and

Nippon Steel as the three largest producers of subject merchandise in

Japan. Petitioners based

[[Page 37525]]

EP on U.S. sales prices from Sumitomo Metal Industries and Marubeni of

America, a Japanese trading company that sells on behalf of Japanese

producers in the United States, to unaffiliated trading companies in

the United States in the fourth quarter of 1997 and the first quarter

of 1998. See petitioners' affidavit, submitted as Exhibit 3 of

Stainless Steel Sheet and Strip in Coils from France and Japan, June 9,

1998. Because the terms of the U.S. sales were delivered to the U.S.

customer, petitioners calculated a net U.S. price by subtracting

estimated costs for shipment from the Japanese factory to the port of

export based on foreign market research. See Declaration of {Foreign

Market Researcher} Regarding Sales in Japan of Stainless Steel Sheet

and Strip in Coils, Exhibit 4 of petitioners' June 15, 1998 submission.

In addition, petitioners subtracted ocean freight and insurance based

on official U.S. import statistics, and estimated costs for U.S. import

duties and fees based on the 1997 and 1998 HTSUS schedules. Petitioners

also subtracted amounts for the U.S. merchandise processing fees and

U.S. harbor maintenance fees (19 CFR 24.23 and 24.24, respectively).

Finally, petitioners obtained net U.S. prices by subtracting costs

incurred to transport the merchandise from the U.S. port to the

customer's location in the United States (see petitioners' affidavit

submitted as petition Exhibit 11), and credit expenses.

With respect to NV, based on foreign market research, petitioners

determined that volume of Japan home market sales from Kawasaki Steel

Corp., Nippon Steel Corporation, and Nisshin Steel Co. Ltd. was

sufficient to form a basis for NV, pursuant to section 773(a)(1)(B)(i)

of the Act. See Declaration of {Foreign Market Researcher} Regarding

Sales in Japan of Stainless Steel Sheet and Strip in Coils, Exhibit 4

of petitioners' June 15, 1998 submission. Petitioners obtained gross

unit prices from foreign market research for the products offered for

sale in the fourth quarter of 1997 and the first quarter of 1998 to

customers in Japan which are identical to those sold to the United

States. Petitioners adjusted these prices by subtracting estimated

average delivery costs and credit expenses based on foreign market

research. See Declaration of {Foreign Market Researcher} Regarding

Sales in Japan of Stainless Steel Sheet and Strip in Coils, Exhibit 4

of petitioners' June 15, 1998 submission. These net home market prices

were then converted to U.S. dollar prices using the official exchange

rate in effect for the month of the comparison U.S. sale.

The estimated dumping margins in the petition, based on a

comparison of EP to home market prices, range from 19.9 to 57.87

percent.

Mexico

Petitioners identified Mexinox, S.A. de C.V. (Mexinox) as the

exporter of subject merchandise from Mexico. Petitioners further

identified Mexinox as the sole producer of subject merchandise in

Mexico.

Petitioners based EP on prices obtained from foreign market

researchers for sales by Mexinox of grades 304 and 430 stainless steel

in coils to the United States between the third quarter of 1997 and the

first quarter of 1998. See petitioners' affidavit, submitted as

petition Exhibit 13. One sale had an alloy surcharge.

For the delivered sales, petitioners subtracted estimated U.S.

inland freight charges, based on the experience of one petitioner. For

all the U.S. sales, petitioners subtracted amounts for international

freight and insurance, based on ``import charges'' in IM146 import

statistics. Petitioners subtracted amounts for U.S. import duties based

on the 1997 import duty rate of 6 percent of dutiable value, or the

1998 rate of 5 percent, as appropriate. Petitioners also subtracted

amounts for U.S. merchandise processing fees of 0.19 percent of

dutiable value (19 CFR section 24.23). Petitioners did not adjust for

the U.S. harbor maintenance fee on the assumption that the exported

product would have been shipped overland. Petitioners did not adjust

for U.S. handling or packing costs, though these charges were included

in the quoted U.S. prices, and did not adjust for imputed credit

expenses.

With regard to NV, based on foreign market research, petitioners

determined that the volume of Mexican home market sales was sufficient

to form a basis for NV, pursuant to section 773(a)(1)(B)(i) of the Act.

See Declaration of {Foreign Market Researcher}, Exhibit 5 of

petitioners' June 15, 1998 submission. Petitioners obtained from

foreign market research gross unit prices for products offered for sale

in the first quarter of 1998 to customers in Mexico which are either

identical or similar to those sold in the United States. Petitioners

did not subtract credit expenses or make any adjustments to price,

other than converting the unit of measure from metric tons to pounds.

These net home market prices were then converted to U.S. dollar prices

using the official exchange rate in effect for the month of the

comparison U.S. sale.

Petitioners provided information demonstrating reasonable grounds

to believe or suspect that certain of the home market sales of SSSS

provided in the petition were made at prices below COP, within the

meaning of section 773(b) of the Act, and requested that the Department

conduct a country-wide sales-below-cost investigation. Pursuant to

section 773(b)(3) of the Act, COP consists of the COM, SG&A, and

packing costs. To calculate COP, petitioners relied on their own

production experience, adjusted for known differences between costs

incurred to produce SSSS in the United States and the foreign market.

For certain costs, petitioners used the financial statement information

from Hylsamex, a Mexican steel producer, because they were unable to

obtain Mexinox's financial statements. For raw material costs,

petitioners used their own operating experience as the only information

reasonably available. Petitioner's calculated SG&A, and financial

expenses from Hylsamex's 1997 consolidated financial statements.

Based on our analysis, certain of the home market sales reported in

the petition were shown to be made at prices below the cost of

production (see Initiation of Cost Investigations). For these sales,

petitioners based NV on the CV of the merchandise, pursuant to sections

773(a)(4) and 773(e) of the Act. Pursuant to section 773(e) of the Act,

CV consists of the COM, SG&A expenses, packing costs and profit of the

merchandise. To calculate the COM, SG&A expenses, and packing costs for

CV, petitioners followed the same methodology used to determine COP.

Accordingly, we relied on the methodology presented in the June 24,

1998 submission. Petitioners derived profit based on amounts reported

in Hylsamex's 1997 consolidated financial statements.

The estimated dumping margins in the petition (as amended), based

on a comparison between Mexinox's U.S. prices and CV, range from 30.09

to 41.17 percent. Based on a comparison of EP to home market prices,

petitioners' calculated dumping margins range from 37.58 to 51.95

percent.

Republic of Korea

Petitioners identified Pohang Iron and Steel Company (POSCO), Sammi

Steel Company (Sammi), and Inchon Iron and Steel Company (Inchon) as

producers and possible exporters of SSSS from the Republic of Korea.

Petitioners based EP on price quotations obtained by petitioning

companies for sales to

[[Page 37526]]

unaffiliated U.S. purchasers of SSSS manufactured by POSCO. See

petitioners' affidavit, submitted as petition Exhibit 24. The quoted

prices were for delivered, duty paid SSSS sold during the third quarter

of 1997. Petitioners calculated a net U.S. price by subtracting from

the reported U.S. price shipment costs from POSCO's factory in Korea to

the port of export estimated from foreign market research (see

Declaration of {Foreign Market Researcher} Regarding Sales in Korea of

Stainless Steel Sheet and Strip in Coils, Exhibit 6 of petitioners'

June 15, 1998 submission), costs for ocean freight and insurance based

on the average import charges reported in official U.S. import

statistics for Korea, import duties based on the 1997 HTSUS schedule,

merchandise processing and harbor maintenance fees (19 CFR 24.23 and

24.24, respectively) and domestic inland freight (see petitioners'

affidavit, submitted as petition Exhibit 27).

With regard to NV, based on foreign market research, petitioners

determined that the volume of South Korean home market sales in 1997

was sufficient to form a basis for NV, pursuant to section 773(a)(1)(B)

(ii)(II) of the Act. See Declaration of {Foreign Market Researcher}

Regarding Sales in Korea of Stainless Steel Sheet and Strip in Coils,

Exhibit 6 of petitioners' June 15, 1998 submission. Petitioners

obtained from foreign market research gross unit prices for SSSS

manufactured by POSCO and offered for sale to customers in the Republic

of Korea which are either identical or similar to those sold to the

United States. Petitioners adjusted these prices by subtracting

estimated average delivery costs based on foreign market research. See

Declaration of {Foreign Market Researcher} Regarding Sales in Korea of

Stainless Steel Sheet and Strip in Coils, Exhibit 6 of petitioners'

June 15, 1998 submission. These net home market prices were then

converted to U.S. dollar prices using the official exchange rate in

effect for the month of the comparison U.S. sale.

Petitioners provided information demonstrating reasonable grounds

to believe or suspect that certain of the home market sales of SSSS

provided in the petition were made at prices below COP, within the

meaning of section 773(b) of the Act, and requested that the Department

conduct a country-wide sales-below-cost investigation. Pursuant to

section 773(b)(3) of the Act, COP consists of the COM, SG&A expenses,

and packing costs. To calculate COP, petitioners relied on foreign

market research and their own production experience, adjusted for known

differences between costs incurred to produce SSSS in the United States

and in the foreign market. We relied on the cost data contained in the

petition except in the following instances: (1) rather than rely on the

foreign market research for raw material consumption rates, we

recalculated raw materials costs in the petition using the submitted

average domestic industry material costs adjusted for known differences

in raw material input prices between the U.S. and Korea based on market

research (in this regard, we consider it more appropriate to rely on

actual raw material usage rates from a producer of the merchandise

rather than hypothetical rates derived from foreign market research);

and (2) we revised the SG&A and net financing expenses based on POSCO's

1997 audited financial statements.

Based on our analysis, certain of the home market sales reported in

the petition were shown to be made at prices below the cost of

production (see Initiation of Cost Investigations). For these sales,

petitioners based NV on the CV of the merchandise, pursuant to sections

773(a)(4) and 773. (e) of the Act. Pursuant to section 773(e) of the

Act, CV consists of the COM, SG&A expenses, packing costs and profit of

the merchandise. To calculate the COM, SG&A expenses, and packing costs

for CV, petitioners followed the same methodology to determine COP.

Accordingly, we relied on this methodology after adjusting certain cost

elements as noted above. Petitioners derived profit for POSCO based on

amounts reported in POSCO's 1997 financial statements.

Based on comparisons of EP to adjusted CV, estimated margins range

from 18.40 to 58.79 percent. Based on a comparison of EP to home market

price, estimated dumping margins range from 5.58 to 13.05 percent.

Taiwan

Petitioners identified Tang Eng Iron Works, Co., Ltd. (Tang Eng),

Tung Mung Development Co. Ltd. (Tung Mung), and Yieh United Steel Corp.

(Yieh United) as exporters and producers of SSSS from Taiwan.

Petitioners based EP on price quotations made to unaffiliated U.S.

purchasers prior to the date of importation. See petitioners'

affidavit, submitted as petition Exhibit 22. The quoted prices were for

delivered and duty paid SSSS produced by Tung Mung, Yieh United and

Tang Eng during the third and fourth quarter of 1997 and the first

quarter of 1998. Petitioners calculated net U.S. price by subtracting

amounts for U.S. inland freight (see petitioners' affidavit, submitted

as petition Exhibit 22), international freight and marine insurance

based on the average import charges reported in the official U.S.

import statistics for stainless steel products under the 1997 HTSUS

categories 7219 and 7220, U.S. import duties based on the 1997 HTSUS

schedule, and foreign inland freight (see Declaration of {Foreign

Market Researcher} Regarding Sales in Taiwan of Stainless Steel Sheet

and Strip in Coils, Exhibit 7 of petitioners' June 15, 1998

submission). Petitioners also subtracted amounts for U.S. merchandise

processing fees and U.S. harbor maintenance fees (19 CFR 24.23 and

24.24, respectively). Petitioners calculated imputed credit expenses

for these U.S. sales by using 30 days as the term of payment (see

petitioners' affidavit, submitted as petition Exhibit 22) and the

average lending rate of 8.25 percent for the period April 1997 through

March 1998, as published in ``International Financial Statistics'' of

the International Monetary Fund, April 1998. Finally, petitioners did

not adjust for differences in U.S. and home market packing expenses

because those data were not available for U.S. sales.

With respect to NV, based on foreign market research, petitioners

determined that the volume of Taiwanese home market sales was

sufficient to form a basis for NV, pursuant to section 773(a)(1)(B)(i)

of the Act. See Declaration of {Foreign Market Researcher} Regarding

Sales in Taiwan of Stainless Steel Sheet and Strip in Coils, Exhibit 7

of petitioners' June 15, 1998 submission. Petitioners obtained from

foreign market research gross unit prices for sales of SSSS by Tung

Mung, Yieh United, and Tang Eng which are either identical or similar

to those sold to the United States. To arrive at each net home market

price for price-to-price comparison purposes, petitioners adjusted the

gross prices by subtracting amounts for foreign inland freight (see

Declaration of {Foreign Market Researcher} Regarding Sales in Taiwan of

Stainless Steel Sheet and Strip in Coils, Exhibit 7 of petitioners'

June 15, 1998 submission) and imputed credit expenses. Finally,

petitioners converted the home market prices from New Taiwan dollars to

U.S. dollars based on the exchange rate published by the Federal

Reserve Bank of New York for the month in which each sale took place.

Petitioners provided information demonstrating reasonable grounds

to believe or suspect that certain of the home market sales of SSSS

provided in the petition were made at prices below COP, within the

meaning of section 773(b) of the Act, and requested that the

[[Page 37527]]

Department conduct a country-wide sales-below-cost investigation.

Pursuant to section 773(b)(3) of the Act, COP consists of COM, SG&A,

and packing costs. To calculate COP, petitioners relied on foreign

market research and their own production experience, adjusted for known

differences between costs incurred to produce SSSS in the United States

and in the foreign market. We relied on the cost data contained in the

petition except in the following instances: (1) rather than rely on the

foreign market research for raw material consumption rates for Tang Eng

and Yieh United, we recalculated raw materials costs in the petition

using the submitted average domestic industry material costs adjusted

for known differences in raw material input prices between the U.S. and

Taiwan based on market research for Tang Eng and Yieh United (in this

regard, we consider it more appropriate to rely on actual raw material

usage rates from a producer of the merchandise rather than hypothetical

usage rates derived from foreign market research); and (2) we have not

relied on the costs for Tang Mung because petitioners failed to address

market price differences between the U.S. and Taiwan for the type of

raw material used by Tang Mung. For amounts where there was no company

specific information we used the average of the amounts for companies

where there was information available.

Based on our analysis, certain of the home market sales reported in

the petition were shown to be made at prices below the cost of

production (see Initiation of Cost Investigations). For these sales,

petitioners based NV on the CV of the merchandise, pursuant to sections

773(a)(4) and 773(e) of the Act. Pursuant to section 773(e) of the Act,

CV consists of the COM, SG&A expenses, packing costs and profit. To

calculate the COM, SG&A expenses, and packing costs for CV, petitioners

followed the same methodology used to determine COP. Accordingly, we

relied on this methodology after adjusting certain cost elements as

noted above. We derived profit for Tang Eng and Yieh United using the

company-specific financial statements where the financial statements

showed a profit, otherwise we used the average profit from the other

companies showing a profit on their financial statements.

Based on comparisons of EP to adjusted CV, estimated margins range

from 12.74 to 55.01 percent. The estimated dumping margins in the

petition, based on a comparison between U.S. prices and home market

price, range from 8.23 to 77.08 percent.

United Kingdom

Petitioners identified two United Kingdom producers and exporters

of SSSS: Avesta Sheffield Ltd. (AS) and Lee Steel Strip Ltd. (Lee).

Petitioners noted that, to the best of their knowledge, AS accounted

for 90 percent of the exports of subject merchandise from the United

Kingdom. Petitioners based EP for AS on U.S. sales to unaffiliated U.S.

purchasers in the third and fourth quarter of 1997. See petitioners'

affidavit, submitted as petition Exhibit 15. Because the terms of AS's

U.S. sales were delivered to the U.S. customer, petitioners calculated

the net U.S. price by adding alloy surcharges (see petitioners'

affidavit, submitted as petition Exhibit 15) and subtracting estimated

costs of shipment from AS's factory in the United Kingdom to the port

of export (see Declaration of Foreign Market Researcher Regarding Sales

in the United Kingdom of Stainless Steel Sheet and Strip in Coils,

Exhibit 8 of petitioners' June 15, 1998 submission). Petitioners also

subtracted ocean freight and insurance based on official U.S. import

statistics, U.S. import duties based on the 1997 HTSUS schedule, and

U.S. merchandise processing fees and U.S. harbor maintenance fees (19

CFR, sections 24.23 and 24.24, respectively). Finally, petitioners

calculated net U.S. price for AS by subtracting costs incurred to

transport the stainless steel sheet and strip from the U.S. port to the

customer's location in the United States (see petitioners' affidavit,

submitted as petition Exhibit 18).

With respect to NV, based on information available to them,

petitioners determined that volume in the United Kingdom in 1997 is

sufficient to form a basis for normal value, pursuant to Section

773(a)(1) of the Act. Petitioners obtained from foreign market research

gross unit prices for AS for representative grades, thicknesses,

finishes, and widths of subject merchandise. Petitioners adjusted these

prices by adding an amount for alloy surcharge and subtracting amounts

for foreign inland freight and imputed home market credit expenses. See

Declaration of Foreign Market Researcher Regarding Sales in the United

Kingdom of Stainless Steel Sheet and Strip in Coils, Exhibit 8 of

petitioners' June 15, 1998 submission. Imputed U.S. credit was added to

the net home market price for the price-to-price comparisons. These net

home market prices were then converted to U.S. dollar prices using the

official exchange rate in effect for the month of the comparison U.S.

sale.

Petitioners provided information demonstrating reasonable grounds

to believe or suspect that certain of the home market sales of SSSS

provided in the petition were made at prices below COP, within the

meaning of section 773(b) of the Act, and requested that the Department

conduct a country-wide sales-below-cost investigation. Pursuant to

section 773(b)(3) of the Act, COP consists of the COM, SG&A expenses,

and packing costs. To calculate COP, petitioners relied on foreign

market research and their own production experience, adjusted for known

differences between costs incurred to produce SSSS in the United States

and in the foreign market. We relied on the cost data contained in the

petition except in the following instances: (1) we did not rely on the

foreign market research for raw material consumption rates. Instead, we

recalculated raw materials costs in the petition using the submitted

average domestic industry material costs adjusted for known differences

in raw material input prices between the U.S. and the United Kingdom

based on market research. In this regard, we consider it more

appropriate to rely on actual raw material usage rates from a producer

of the merchandise rather than hypothetical rates derived from foreign

market research; (2) we revised the SG&A expense using British Steel's

1997 audited financial statements; (3) we revised net financing

expenses to include an offset for short term interest income.

Based on an analysis, certain of the home market sales reflected in

the petition were shown to be made at prices below the cost of

production (see Initiation of Cost Investigations). For these sales,

petitioners based NV on the CV of the merchandise, pursuant to sections

773(a)(4) and 773(e) of the Act. Pursuant to section 773(e) of the Act,

CV consists of the COM, SG&A, packing costs, and profit of the

merchandise. To calculate COM, SG&A, and packing costs for CV,

petitioners followed the same methodology used to determine COP.

Accordingly, we relied on this methodology after adjusting certain cost

elements as noted above. Petitioners derived profit based on amounts

reported in British Steel's 1997 financial statements.

Based on comparisons of EP to adjusted CV, estimated margins range

from 5.42 to 14.76 percent. Based on a comparison of EP to home market

prices, estimated dumping margins range from 9.99 to 29.37 percent.

[[Page 37528]]

Initiation of Cost Investigations

Pursuant to section 773(b) of the Act, petitioners provided

information demonstrating reasonable grounds to believe or suspect that

sales in the home markets of France, Germany, Italy, Mexico, South

Korea, Taiwan, and the United Kingdom were made at prices below the

fully allocated COP and, accordingly, requested that the Department

conduct a country-wide sales-below-COP investigation in connection with

the requested antidumping investigations in each of these countries.

The Statement of Administrative Action (SAA), submitted to the Congress

in connection with the interpretation and application of the Uruguay

Round Agreements, states that an allegation of sales below COP need not

be specific to individual exporters or producers. SAA, H.R. Doc. No.

316, 103d Cong., 2d Sess., at 833 (1994). The SAA, at 833, states that

``Commerce will consider allegations of below-cost sales in the

aggregate for a foreign country, just as Commerce currently considers

allegations of sales at less than fair value on a country-wide basis

for purposes of initiating an antidumping investigation.''

Further, the SAA provides that ``new section 773(b)(2)(A) retains

the current requirement that Commerce have `reasonable grounds to

believe or suspect' that below cost sales have occurred before

initiating such an investigation. `Reasonable grounds' * * * exist when

an interested party provides specific factual information on costs and

prices, observed or constructed, indicating that sales in the foreign

market in question are at below-cost prices.'' Id. Based upon the

comparison of the adjusted prices from the petition of the

representative foreign like products in their respective home markets

to their costs of production, we find the existence of ``reasonable

grounds to believe or suspect'' that sales of these foreign like

products in each of the listed countries were made below their

respective COPs within the meaning of section 773(b)(2)(A)(i) of the

Act. Accordingly, the Department is initiating the requested country-

wide cost investigations (see country-specific sections above).

Fair Value Comparisons

Based on the data provided by petitioners, there is reason to

believe that imports of SSSS from France, Germany, Italy, Japan,

Mexico, the Republic of Korea, Taiwan, and the United Kingdom are

being, or are likely to be, sold at less than fair value.

Allegations and Evidence of Material Injury and Causation

The petitions allege that the U.S. industry producing the domestic

like product is being materially injured, and is threatened with

material injury, by reason of the individual and cumulated imports of

the subject merchandise sold at less than NV. Petitioners explained

that the industry's injured condition is evident in the declining

trends in net operating profits, net sales volumes, profit to sales

ratios, and capacity utilization. The allegations of injury and

causation are supported by relevant evidence including U.S. Customs

import data, lost sales, and pricing information. The Department

assessed the allegations and supporting evidence regarding material

injury and causation and determined that these allegations are

supported by accurate and adequate evidence and meet the statutory

requirements for initiation (see Attachments to Initiation Checklist,

Re: Material Injury, June 30, 1998).

Initiation of Antidumping Investigations

Based upon our examination of the petitions on SSSS, as well as our

discussion with the authors of the foreign market research reports

(See, memoranda to the file, dated June 30, 1998), we have found that

the petitions meet the requirements of section 732 of the Act.

Therefore, we are initiating antidumping duty investigations to

determine whether imports of SSSS from France, Germany, Italy, Japan,

Mexico, the Republic of Korea, Taiwan, and the United Kingdom are

being, or are likely to be, sold in the United States at less than fair

value. Unless this deadline is extended, we will make our preliminary

determinations by November 17, 1998.

Distribution of Copies of the Petitions

In accordance with section 732(b)(3)(A) of the Act, a copy of the

public version of each petition has been provided to the

representatives of France, Germany, Italy, Japan, Mexico, the Republic

of Korea, Taiwan, and the United Kingdom. We will attempt to provide a

copy of the public version of each petition to each exporter named in

the petition (as appropriate).

International Trade Commission Notification

We have notified the ITC of our initiations, as required by section

732(d) of the Act.

Preliminary Determinations by the ITC

The ITC will determine by July 27, 1998, whether there is a

reasonable indication that imports of SSSS from France, Germany, Italy,

Japan, Mexico, the Republic of Korea, Taiwan, and the United Kingdom

are causing material injury, or threatening to cause material injury,

to a U.S. industry. A negative ITC determination for any country will

result in the investigations being terminated with respect to that

country; otherwise, these investigations will proceed according to

statutory and regulatory time limits.

This notice is published pursuant to section 777 (i) of the Act.

Dated: June 30, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-18602 Filed 7-10-98; 8:45 am]

BILLING CODE 3510-DS-P