Titanium Sponge from the Republic of Kazakhstan: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-834-803]

Titanium Sponge from the Republic of Kazakhstan: Preliminary

Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review.

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SUMMARY: In response to requests from Ust-Kamenogorsk Titanium and

Magnesium Plant, Specialty Metals Company, and Oremet Titanium Inc.,

the Department of Commerce is conducting an administrative review of

the antidumping finding on titanium sponge from the Republic of

Kazakhstan. This notice of preliminary results covers the period August

1, 1996 through July 31, 1997. This review covers one manufacturer/

exporter, Ust-Kamenogorsk Titanium and Magnesium Plant, and one trading

company, Specialty Metals Company.

We have preliminarily determined that no dumping margins apply

during this review period. If these preliminary results are adopted in

our final results of administrative review, we will instruct the U.S.

Customs Service to liquidate entries during the period of review (POR)

without regard to dumping duties. Interested parties are invited to

comment on these preliminary results. Parties who submit arguments in

this proceeding are requested to submit with the argument: (1) a

statement of the issue; and (2) a brief summary of the argument.

EFFECTIVE DATE: September 8, 1998.

FOR FURTHER INFORMATION CONTACT: Wendy Frankel or Mark Manning, Office

of AD/CVD Enforcement, Office 4, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-

5849 and 482-3936, 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. In addition, unless otherwise

indicated, all citations to the Department of Commerce's regulations

refer to the regulations codified at 19 CFR part 351, 62 FR 27296 (May

19, 1997).

Background

The Department of Commerce (the Department) published an

antidumping finding on titanium sponge from the Union of Soviet

Socialist Republics (U.S.S.R.) on August 28, 1968 (33 FR 12138). In

December 1991, the U.S.S.R. divided into fifteen independent states. To

conform to these changes, the Department changed the original

antidumping finding into fifteen findings applicable to each of the

former republics of the U.S.S.R. (57 FR 36070, August 12, 1992).

On August 29, 1997, Ust-Kamenogorsk Titanium and Magnesium Plant

(UKTMP), Specialty Metals Company (SMC), and Oremet Titanium Inc.

(Oremet) requested that the Department conduct an administrative review

of the antidumping finding on titanium sponge from the Republic of

Kazakhstan (Kazakhstan) for one manufacturer/exporter, UKTMP, and one

trading company, SMC, covering the period August 1, 1996 through July

31, 1997. The Department published a notice of initiation of the review

on September 25, 1997 (62 FR 50292). Due to the complexity of the legal

and methodological issues presented by this review, the Department

postponed the date of the preliminary results of review by sixty days

on February 10, 1998 (63 FR 6721). The Department published a second

sixty day postponement of the preliminary results of review on April

16, 1998 (63 FR 18885). The Department is conducting this

administrative review in accordance with section 751 of the Act.

On August 13, 1998, the International Trade Commission (ITC)

published in the Federal Register its determination that revocation of

the findings covering titanium sponge imports from Kazakhstan, the

Russian Federation (Russia), and Ukraine and the antidumping duty order

covering imports of titanium sponge from Japan is not likely to lead to

continuation or recurrence of material injury to an industry in the

United States. Due to this determination the Department has revoked the

findings covering titanium sponge imports from Kazakhstan, Russia, and

Ukraine and the antidumping duty order covering titanium sponge imports

from Japan. This revocation is effective as of August 13, 1998, the

date of publication in the Federal Register of the ITC's

determinations. See Notice of Revocation of Antidumping Findings and

Antidumping Duty Order and Termination of Five-Tear (``Sunset'')

Reviews: Titanium Sponge from Kazakhstan, Russia, Ukraine, and Japan,

(63 FR 46215, August 31, 1998).

Scope of the Review

The product covered by this administrative review is titanium

sponge from Kazakhstan. Titanium sponge is chiefly used for aerospace

vehicles, specifically, in construction of compressor blades and

wheels, stator blades, rotors, and other parts in aircraft gas turbine

engines. Imports of titanium sponge are currently classifiable under

the harmonized tariff schedule (HTS) subheading 8108.10.50.10. The HTS

subheading is provided for convenience and U.S. Customs purposes. Our

written description of the scope of this proceeding is dispositive.

United States Price (USP)

UKTMP and SMC

SMC is located in a market-economy country. Since SMC owns 65

percent of UKTMP and manages the operations of UKTMP under a long-term

management contract, we are considering both companies to constitute

one entity and are calculating one rate that will apply to both SMC and

UKTMP.

In calculating the USP for SMC, we used export price, as defined in

section 772(a) of the Act. For date of sale, we used the sales invoice

date because this is the date when the price and quantity are set. We

excluded those sales made to the United States which the respondents

identified as having entered the United States under temporary

importation bond (TIB). At this time, because merchandise entered under

a TIB is not entered for consumption, such merchandise is not subject

to the antidumping finding. See Titanium Metals Corp. v. The United

States, 901 F. Supp 362 (CIT 1995). Respondents provided information

regarding TIB entries, and we are currently confirming this information

through Customs and National Census Bureau data.

We calculated export price based on the price to unaffiliated

purchasers in the United States. We made deductions, where appropriate,

for ocean freight, insurance, brokerage and handling, and inland

freight. SMC did not claim any other adjustments to USP, nor were any

other adjustments allowed.

Surrogate Country Selection

Section 773(c)(1) of the Act provides that the Department shall

determine normal value on the basis of the value

[[Page 47479]]

of the factors of production if (1) the subject merchandise is exported

from a non-market economy (NME) country, and (2) the available

information does not permit the calculation of normal value under

section 773(a) of the Act. Section 771(18)(C) of the Act states that

``any determination that a foreign country is a nonmarket economy

country shall remain in effect until revoked by the administering

authority.'' Because NME status has not been revoked for Kazakhstan in

any previous proceedings, we are considering Kazakhstan to be a NME

country for purposes of this review. Therefore, because UKTMP is

located in Kazakhstan, we have applied surrogate values to the factors

of production to determine normal value.

We calculated normal value based on factors of production provided

by UKTMP, in accordance with section 773(c)(1) of the Act and section

351.408 of the Department's regulations. We determined that Indonesia

is comparable to Kazakhstan in terms of per capita gross national

product (GNP), the growth rate in per capita GNP, and the national

distribution of labor. In addition, Indonesia is a significant producer

of comparable merchandise. Therefore, in accordance with section

773(c)(4) of the Act, we selected Indonesia as a comparable surrogate

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

information relating to Indonesia to value the various factors of

production, except as indicated below. See the Memorandum from Jeff

May, Acting Director, Office of Policy, to Holly A. Kuga, Senior

Director, Office of AD/CVD Enforcement, October 20, 1997, and the

Memorandum from Jeff May, Acting Director, Office of Policy, to Holly

A. Kuga, Senior Director, Office of AD/CVD Enforcement, June 15, 1998.

Normal Value

To determine normal value, in accordance with section 773(c)(3) of

the Act, we valued the factors of production as follows (for further

discussion, see the Analysis Memorandum for the Preliminary Results of

Administrative Review, dated August 31, 1998):

Except as noted below, we valued raw materials using

Indonesian import data from the Commodity Trade Statistics Section,

United Nations Statistics Division, (UN import statistics) for the

calendar year 1996. We adjusted certain factor values to reflect the

actual purity used in the production of the subject merchandise. Since

UKTMP purchased titanium slag from both market and non-market economy

suppliers, consistent with the Department's practice, we valued this

input with the market economy price, regardless of the supplier. The

most recent Indonesian import statistics that we were able to find for

chlorine and hydrochloric acid were Indonesia's 1993 import statistics,

as reported in the United Nation's publication, Commodity Trade

Statistics, 1993. Since the UN statistics are reported in U.S. dollars,

we did not adjust for the effects of inflation. We were unable to find

information from Indonesia or from any of the other potential surrogate

countries in order to value carnallite and spent electrolyte. For

carnallite, we used the Indian price for dolomite, a commodity similar

to carnallite, that was reported in the antidumping duty investigation

of magnesium from Russia (see Notice of Final Determination of Sales at

Less Than Fair Value: Pure Magnesium and Alloy Magnesium From the

Russian Federation 60 FR 16440, 16449 (March 30, 1995)) (Magnesium From

Russia) and used to value carnallite concentrate in Titanium Sponge

From the Russian Federation; Notice of Final Results of Antidumping

Duty Administrative Review 62 FR 48601 (September 16, 1997) (also see

Titanium Sponge From the Russian Federation; Preliminary Results of

Antidumping Duty Administrative Review 62 FR 25920, 25922, (May 12,

1997). In order to value spent electrolyte, we used the surrogate value

for potassium chloride because spent electrolyte is 75 percent

potassium chloride.

Pursuant to section 351.408(c)(3) of the Department's

regulations, we valued direct labor by using the regression-based wage

rate for Kazakhstan as posted on the Import Administration Internet web

site.

For electricity, we used the ``extra large industry user''

rate from Indonesia's electricity tariff schedule that UKTMP would have

received had it been an electricity consumer in Indonesia during the

period of review (POR). This decision was based on finding that UKTMP's

level of electricity usage during the POR was similar to the profile of

``large industrial user'' in Magnesium From Russia (page 16446). To

confirm that UKTMP would have received this rate, we divided the

average number of kilowatt hours used during each month of the POR by

the number of hours in a month, which demonstrated that UKTMP's

kilowatt use was higher than the minimum necessary to receive the

``extra large industrial user'' rate in effect in Indonesia. Since the

Indonesia rate was for 1994, and expressed in rupiahs, we adjusted this

rate in order to account for the effects of inflation.

We were unable to obtain recent publicly available

information for Indonesian truck and railway rates. Therefore, we used

the truck and railway rates as reported by the U.S. Embassy in Jakarta,

Indonesia and transmitted to the Department in September 1991 via cable

(Jakarta 12078). This information was obtained for the antidumping duty

investigation of Certain Butt-Weld Pipe Fittings from the PRC. Since

these 1991 rates were reported in rupiahs per metric ton per kilometer,

we inflated them to take into account the effects of inflation.

In regard to packing materials, we used the 1996 UN import

statistics from Indonesia that were provided by the petitioner for

polyethylene film and argon. We valued sheet steel by using Indonesia's

1994 import statistics, as reported in the United Nation's publication,

Commodity Trade Statistics, 1994. Since the UN data is reported in U.S.

dollars, we did not adjust for the effects of inflation. We valued

labor used in packing with the above-referenced regression-based labor

rate for Kazakhstan.

For factory overhead, selling, general and administrative

(SG&A) expense, and profit, we used information from the calendar 1996

income statement of a Philippine producer of various aluminum products.

The Philippines, although not the primary surrogate country in this

review, is one of the countries that the Department has identified as a

comparable market economy country and a potential surrogate for

Kazakhstan.

Currency Conversion

We made currency conversions in accordance with section 773A(a) of

the Act, based on rates certified by the Federal Reserve Bank and Dow

Jones Business Information Services.

Preliminary Results

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

following weighted-average dumping margins exist:

[[Page 47480]]

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Margin

Manufacturer/exporter Period (percent)

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Specialty Metals Company/Ust-Kamenogorsk

Titanium and Magnesium Plant (one

entity)................................ 8/1/96-7/31/97 0.00

Kazakhstan-wide rate.................... 8/1/96--7/31/97 83.96

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Parties to this proceeding may request disclosure of our

preliminary results of review within five days of publication of this

notice and any interested party may request a hearing within 30 days of

publication. Any hearing, if requested, will be held 44 days after the

date of publication, or the first working day thereafter. Interested

parties may submit case briefs and/or written comments no later than 30

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

written comments, limited to issues raised in such briefs or comments,

may be filed no later than 35 days after the date of publication. The

Department will publish a notice of the final results of the

administrative review, which will include the results of its analysis

of issues raised in any such written comments or at the hearing, within

120 days from the publication of the preliminary results.

The final results of this review shall be the basis for the

assessment of antidumping duties on entries of merchandise covered by

the determination. The Department shall determine, and Customs shall

assess, antidumping duties on all appropriate entries. Individual

differences between export price and normal value may vary from the

percentages stated above. The Department will issue appraisement

instructions directly to Customs.

This notice serves as a preliminary reminder to importers of their

responsibility under section 351.402(f) of the Department's regulations

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)(1)). This notice is

published in accordance with section 777(i) of the Act.

Dated: August 31, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-24071 Filed 9-4-98; 8:45 am]

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