Notice of Preliminary Determination of Sales at Less Than Fair Value: Stainless Steel Plate in Coils From Belgium

DEPARTMENT OF COMMERCE

INTERNATIONAL TRADE ADMINISTRATION

[A-423-808]

Notice of Preliminary Determination of Sales at Less Than Fair

Value: Stainless Steel Plate in Coils From Belgium

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: November 4, 1998.

FOR FURTHER INFORMATION CONTACT: Steve Bezirganian or Abdelali

Elouaradia, Import Administration, International Trade Administration,

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

Washington, D.C. 20230; telephone: (202) 482-0162 or (202) 482-2243,

respectively.

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (``the Act''), are references to the provisions

effective January 1, 1995, the effective date of the amendments made to

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

unless otherwise indicated, all citations to the Department of Commerce

(``Department'') regulations are to the regulations at 19 CFR Part 351,

62 FR 27296 (APRIL 1, 1998).

Preliminary Determination

We preliminarily determine that Stainless Steel Plates in Coils

(``SSPC'') from Belgium are being, or are likely to be, sold in the

United States at less than fair value (``LTFV''), as provided in

section 733 of the Act. The estimated margins of sales at LTFV are

shown in the ``Suspension of Liquidation'' section of this notice.

Case History

On April 20, 1998, the Department initiated antidumping duty

investigations of imports of stainless steel plate in coils from

Belgium, Canada, Italy, South Africa, South Korea, and Taiwan (Notice

of Initiation of Antidumping Investigations: Stainless Steel Plate in

Coils From Belgium, Canada, Italy, South Africa, South Korea and Taiwan

(63 FR 20580 (April 27, 1998)). Since the initiation of this

investigation the following events have occurred.

The Department set aside a period for all interested parties to

raise issues regarding product coverage. On May 8, 1998, Armco, Inc.,

J&L Specialty Steel, Inc., Lukens, Inc., North American Stainless, the

United Steelworkers of America, AFL-CIO/CLC , the Butler Armco

Independent Union and the Zanesville Armco Independent Organization,

Inc. (``petitioners'') submitted comments to the Department stating

that, while they believed the scope of the investigations was accurate,

they wished to clarify certain issues concerning product coverage.

During May 1998, the Department requested information from the U.S.

Embassy in Belgium to identify producers/exporters of the subject

merchandise. During May 1998, the Department also requested and

received comments from petitioners and potential respondents regarding

the model matching criteria. Petitioners and ALZ, N.V. (``ALZ'')

submitted comments on our proposed model matching criteria on May 21,

1998.

On May 15, 1998, the United States International Trade Commission

(``ITC'') notified the Department of its affirmative preliminary injury

determination in this case.

On May 27, 1998, the Department issued an antidumping duty

questionnaire to ALZ, Fabrique de Fer, and Cockeril Sambre Group. In

June 24, 1998, the Department received response

[[Page 59533]]

to Section A of the questionnaire from ALZ. In addition, on June 16 and

26, 1998, the Department received letters from Fabrique de Fer, and

Cockeril Sambre Group stating that the companies did not sell the

subject merchandise to the United States during the period of

investigation (``POI''). We received ALZ's responses to Sections B, C

and D of the questionnaire on July 27, 1998. Petitioners filed comments

on ALZ's questionnaire responses in July, August, and September 1998.

We issued supplemental questionnaires for Sections A, B, C and D to ALZ

in July, August, and September, 1998, and received responses to these

questionnaires in August, September and October 1998.

On July 28, 1998, pursuant to section 733(c)(1)(A) of the Act, the

petitioners made a timely request to postpone the preliminary

determination for thirty days. The Department determined that this

investigation is extraordinarily complicated and that additional time

is necessary beyond the thirty days requested by petitioners for the

Department to make its preliminary determination. On August 14, 1998,

we postponed the preliminary determination until no later than October

27, 1998. (See Notice of Postponement of Preliminary Antidumping Duty

Investigations of Stainless Steel Plate in Coils: from Belgium, Canada,

Italy, South Africa , South Korea and Taiwan, 63 FR 44840, August 21,

1998). On August 20, 1998, petitioners amended the antidumping duty

petitions to include Allegheny Ludlum Corporation as an additional

petitioner. On October 19 and 20, 1998, petitioners submitted comments

on ALZ's claim for a CEP adjustment, and on issues for consideration in

this preliminary determination for ALZ. The Department did not address

these comments because they came in too late.

Postponement of Final Determination and Extension of Provisional

Measures

Pursuant to section 735(a)(2) of the Act, on October 19, 1998, ALZ

requested that, in the event of an affirmative preliminary

determination in this investigation, the Department postpone its final

determination until not later than 135 days after the date of the

publication of an affirmative preliminary determination in the Federal

Register. On October 20, 1998, ALZ amended its request to include a

request to extend the provisional measures to not more than six months.

In accordance with 19 CFR 351.210(b), because (1) our preliminary

determination is affirmative, (2) ALZ accounts for a significant

proportion of exports of the subject merchandise, and (3) no compelling

reasons for denial exist, we are granting the respondent's request and

are postponing the final determination until no later than 135 days

after the publication of this notice in the Federal Register.

Suspension of liquidation will be extended accordingly.

Scope of Investigation

For purposes of these investigations, the product covered is

certain stainless steel plate 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 plate products are flat-rolled products, 254 mm or over in

width and 4.75 mm or more in thickness, in coils, and annealed or

otherwise heat treated and pickled or otherwise descaled. The subject

plate may also be further processed (e.g., cold-rolled, polished, etc.)

provided that it maintains the specified dimensions of plate following

such processing. Excluded from the scope of this investigation are the

following: (1) plate not in coils, (2) plate that is not annealed or

otherwise heat treated and pickled or otherwise descaled, (3) sheet and

strip, and (4) flat bars.

The merchandise subject to this investigation is currently

classifiable in the Harmonized Tariff Schedule of the United States

(HTS) at subheadings: 7219.11.00.30, 7219.11.00.60, 7219.12.00.05,

7219.12.00.20, 7219.12.00.25, 7219.12.00.50, 7219.12.00.55,

7219.12.00.65, 7219.12.00.70, 7219.12.00.80, 7219.31.00.10,

7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60,

7219.90.00.80, 7220.11.00.00, 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, 7220.90.00.10,

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.

Period of Investigation

The POI is January 1, 1997, through December 31, 1997.

Product Comparisons

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

products produced by ALZ covered by the description in the Scope of

Investigation section, above, and sold in Belgium during the POI, to be

foreign like products for purposes of determining appropriate product

comparisons to U.S. sales. Where there were no sales of identical

merchandise in the home market to compare to U.S. sales, we compared

U.S. sales to the next most similar foreign like product on the basis

of the characteristics listed in the antidumping duty questionnaire and

the May 27, 1998, reporting instructions.

Fair Value Comparisons

To determine whether sales of SSPC from Belgium to the United

States were made at LTFV, we compared constructed export price

(``CEP'') to the Normal Value (``NV''), as described in the

``Constructed Export Price'' and ``Normal Value'' sections of this

notice, below. In accordance with section 777A(d)(1)(A)(i) of the Act,

we calculated weighted-average CEPs for comparison to weighted-average

NVs or CVs.

Level of Trade

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

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

the same level of trade (``LOT'') as the 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 (``SG&A'') expenses and

profit. 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 level of trade

than CEP, we examined 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 a 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).

[[Page 59534]]

In this case, ALZ requested that the Department adjust NV to

account for different LOTs in the home market and the U.S. market. The

information on the record does not reveal meaningful differences

between selling functions performed in the two markets, and thus no

differences in home market and U.S. LOTs. Therefore, we preliminary do

not grant a CEP offset for those sales by ALZ in Belgium which are

compared with CEP sales in the United States (See Memorandum to Steven

Presing from Steve Bezirganian and Abdelali Elouaradia, dated October

27, 1998).

Constructed Export Price

We calculated CEP in accordance with section 772(b) of the Act

because sales to the first unaffiliated purchaser took place after

importation into the United States.

We based CEP on the packed ex-warehouse or delivered prices to

unaffiliated purchasers in the United States. We made deductions for

billing adjustments (i.e. adjustments for freight and adjustments for

customer claims), where applicable. We also made deductions for the

following movement expenses, where appropriate, in accordance with

section 772(c)(2)(A) of the Act: foreign inland freight, foreign inland

insurance (including marine insurance), international freight

(including foreign brokerage), U.S. inland freight from port to

warehouse, U.S. inland insurance, U.S. brokerage and handling, U.S.

warehouse expenses, U.S. inland freight from warehouse to unaffiliated

customer and U.S. Customs duties. In accordance with section 772(d)(1)

of the Act, we deducted selling expenses associated with economic

activities occurring in the United States, including direct selling

expenses (credit costs), inventory carrying costs, and other indirect

selling expenses. We also deducted the profit allocated to these

expenses, and further manufacturing costs in accordance with sections

772(d)(3) and 772(f) of the Act.

ALZ did not report in its U.S. sales database a small quantity of

TrefilArbed re-sales of cut plate that the original U.S. customer had

processed from SSPC purchased from TrefilArbed. In these few instances,

TrefilArbed had agreed to accept the cut plate from the original U.S.

customer, even though this customer had processed the SSPC into cut

plate, a product not subject to this investigation. We preliminarily

determine that these re-sales are of an insignificant quantity and

value, and are not representative of the overall sales of subject

merchandise. (See Memorandum to Joseph A. Spetrini from Roland

MacDonald, dated October 22, 1998).

Normal Value

After testing home market viability, as discussed below, we

calculated NV as noted in the ``Price-to-CV Comparisons'' and ``Price-

to-Price Comparisons'' sections of this notice.

1. Home Market Viability

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

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

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

is equal to or greater than five percent of the aggregate volume of

U.S. sales), we compared the respondent's volume of home market sales

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

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

Because ALZ's aggregate volume of home market sales of the foreign like

product was greater than five percent of its aggregate volume of U.S.

sales for the subject merchandise, we determined that the home market

was viable. Therefore, we have based NV on home market sales.

2. Cost of Production Analysis

Based on a cost allegation filed by the petitioners, the Department

found reasonable grounds to believe or suspect that sales by ALZ in its

home market were made at prices below the costs of production (COP),

pursuant to section 773(b)(1). As a result, the Department has

initiated an investigation to determine whether the respondent made

home market sales during the POI at prices below their respective COPs,

within the meaning of section 773(b) of the Act.

A. Calculation of COP

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

weighted-average COP based on the sum of ALZ's cost of materials and

fabrication for the foreign like product, plus amounts for general

expenses and packing costs. We relied on the COP data submitted by ALZ

in its supplemental cost questionnaire response, except as discussed

below, where the submitted costs were not appropriately quantified or

valued.

1. We increased ALZ's reported cost of hot rolling services

purchased from affiliated parties to reflect the difference between

transfer prices and market prices, since the transfer prices were below

market prices.

2. We revised ALZ's general and administrative (G&A) expenses to

exclude an offset for net exchange gains. We also included exchange

gains and losses related to purchases and accounts payable, consistent

with our general practice in the calculation of G&A expenses.

3. We recalculated ALZ's financial expense ratio using their parent

company's, ARBED Group, consolidated financial statements.

B. Test of Home Market Prices

We compared the weighted-average COP for ALZ, adjusted where

appropriate (see above), to home market sales of the foreign like

product, as required under section 773(b) of the Act, in order to

determine whether these sales had been made at prices below the COP. In

determining whether to disregard home market sales made at prices below

the COP, we examined whether such sales were made (1) within an

extended period of time and in substantial quantities, and (2) at

prices which permitted the recovery of all costs within a reasonable

period of time in the normal course of trade, in accordance with

section 773(b)(1)(A) and (B) of the Act. On a product-specific basis,

we compared the COP to home market prices, less any applicable billing

adjustments (i.e. invoice correction and alloy surcharge), movement

charges, discounts, and direct and indirect selling expenses.

C. Results of the COP Test

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

percent of ALZ's sales of a given product were at prices less than the

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

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

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

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

that such sales have been made in ``substantial quantities'' within an

extended period of time, in accordance with section 773(b)(2)(B) of the

Act. In such cases, we also determined that such sales were not made at

prices which would permit recovery of all costs within a reasonable

period of time, in accordance with section 773(b)(2)(D) of the Act.

Therefore, we disregarded the below-cost sales. Where all sales of a

specific product were at prices below the COP, we disregarded all sales

of that product.

D. Calculation of CV

In accordance with section 773(e)(1) of the Act, we calculated CV

based on the sum of ALZ's cost of materials, fabrication, G&A, U.S.

packing costs, direct and indirect selling expenses, interest expenses

and profit. As noted above, we made adjustments to ALZ's reported cost

of hot rolling services and G&A. In accordance with section

[[Page 59535]]

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

amounts incurred and realized by ALZ in connection with the production

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

for consumption in the foreign country. For selling expenses, we used

the actual weighted-average home market direct and indirect selling

expenses.

Price-to-Price Comparisons

For those product comparisons for which there were sales at prices

above the COP, we based NV on prices to home market customers. We made

adjustments, where appropriate, for physical differences in the

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

We calculated NV based on prices to unaffiliated home market

customers. We made deductions for billing adjustments (i.e. adjustment

for transportation, when customer picks up the merchandise, invoice

correction and alloy surcharge), early payment discounts, inland

freight, and inland insurance. In addition, we made circumstance-of-

sale adjustments or deductions for credit, where appropriate. In

accordance with section 773(a)(6), we deducted home market packing

costs and added U.S. packing costs.

Price-to-CV Comparisons

For price-to-CV comparisons, we made adjustments to CV in

accordance with section 773(a)(8) of the Act. We deducted from CV the

amount of indirect selling expenses capped by the amount of the U.S.

commissions.

Currency Conversion

We made currency conversions into U.S. dollars based on the

exchange rates in effect on the dates of the U.S. sales as certified by

the Federal Reserve Bank, in accordance with section 773A of the Act.

Verification

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

information relied upon in making our final determination.

Suspension of Liquidation

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

Customs Service to suspend liquidation of all imports of subject

merchandise that are entered, or withdrawn from warehouse, for

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

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

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

amount by which the NV exceeds the CEP, as indicated in the chart

below. These suspension-of-liquidation instructions will remain in

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

as follows:

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

Weighted-

average

Exporter/Manufacturer margin

percentage

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

ALZ, N.V................................................... 3.44

All Others................................................. 3.44

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

ITC Notification

In accordance with section 733(f) of the Act, we have notified the

ITC of our determination. If our final determination is affirmative,

the ITC will determine before the later of 120 days after the date of

this preliminary determination, or 45 days after our final

determination, whether these imports are materially injuring, or

threaten material injury to, the U.S. industry.

Public Comment

Case briefs or other written comments may be submitted to the

Assistant Secretary for Import Administration no later than fifty days

after the date of publication of this notice, and rebuttal briefs,

limited to issues raised in case briefs, no later than fifty-five days

after publication of this notice. A list of authorities used and an

executive summary of issues should accompany any briefs submitted to

the Department. Such summary should be limited to five pages total,

including footnotes. In accordance with section 774 of the Act, we will

hold a public hearing, if requested, to afford interested parties an

opportunity to comment on arguments raised in case or rebuttal briefs.

Tentatively, the hearing will be held fifty-seven days after

publication of this notice, time and room to be determined, at the U.S.

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

Washington, D.C. 20230. Parties should confirm by telephone the time,

date, and place of the hearing 48 hours before the scheduled time.

Interested parties who wish to request a hearing, or to participate

if one is requested, must submit a written request to the Assistant

Secretary for Import Administration, U.S. Department of Commerce, Room

1870, within 30 days of the publication of this notice. Requests should

contain: (1) the party's name, address, and telephone number; (2) the

number of participants; and (3) a list of the issues to be discussed.

Oral presentations will be limited to issues raised in the briefs. If

this investigation proceeds normally, we will make our final

determination no later than one hundred and thirty-five days after

publication of this notice.

This determination is issued and published in accordance with

sections 733(d) and 777(i)(1) of the Act.

Dated: October 27, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-29546 Filed 11-3-98; 8:45 am]

BILLING CODE 3510-DS-P