Preliminary Determinations of Sales at Less Than Fair Value: Certain Cut-To-Length Carbon-Quality Steel Plate Products From Italy

DEPARTMENT OF COMMERCE

International Trade Administration

[A-475-826]

Preliminary Determinations of Sales at Less Than Fair Value:

Certain Cut-To-Length Carbon-Quality Steel Plate Products From Italy

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: July 29, 1999.

FOR FURTHER INFORMATION CONTACT: Howard Smith or Maisha Cryor, Office

4, Group II, Import Administration, International Trade Administration,

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

Washington, DC 20230; telephone: (202) 482-5193 or (202) 482-5841,

respectively.

The Applicable Statute

Unless otherwise indicated, all citations to the statute are

reference 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 references are made to the Department's

regulations at 19 CFR Part 351 (1998).

Preliminary Determination

We preliminarily determine that certain cut-to-length carbon-

quality steel plate products (``CTL plate'') from Italy are being, or

are likely to be, sold 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

Since the initiation of this investigation (Notice of Initiation of

Antidumping Investigations: Certain Cut-To-Length Carbon-Quality Steel

Plate from Czech Republic, France, India, Italy, Japan, Republic of

Korea, and Former Yogoslav Republic of Macedona, 64 FR 12959 (March 16,

1999) (``Initiation Notce), the following events have occurred:

In their petition, the petitioners \1\ identified Ferriera

Siderscal SpA (``FS''), ILVA SpA (``ILVA''), Palini & Bertoli SpA

(``P&B''), and Siderurgica Villalvernia SpA (``SV''), as possible

exporters of CTL plate from Italy. On March 15, 1999, we requested data

on all producers and exporters of the subject merchandise during the

period of investigation (``POI'') from the U.S. embassy in Rome. The

U.S. embassy informed us that only ILVA and P&B are manufacturers and

exporters to the United States of carbon steel plate. Based on this

information, and information contained in the petition, the Department

issued antidumping questionnaires to ILVA and P&B in March 1999.

According to the U.S.

[[Page 41214]]

embassy, SV closed its mill in 1995 and FS is only a manufacturer of

cold finished bars and hot-rolled billets and bars. However, based upon

information contained in the petition, the Department also issued

antidumping questionnaires to FS and SV in March 1999.\2\

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

\1\ The petitioners are Bethlehem Steel Corporation, Gulf States

Steel, Inc., PPSCO Steel Inc., the United Steelworkers of America,

and the U.S. Steel Group (a unit of USX Corporation).

\2\ Section A of the questionnaire requested general information

concerning the company's corporate structure, business practices,

and sales and production of the merchandise under investigation.

Section B and C of the questionnaire requested home market sales

listings and U.S. sales listings. Section D of the questionnaire

requested information regarding the cost of production of the

foreign like product and the constructed value of the merchandise

under investigation. Section E of the questionnaire requested

information regarding the cost of further manufacture or assembly

performed in the United States.

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

On March 26, 1999, ILVA requested that it be excused from reporting

certain home market sales of foreign like product. Specifically, ILVA

sought to be excused from reporting all home market sales of CTL plate

produced from plate-in-coil as well as affiliated resellers' sales of

quarto plate (universal mill plate). Because ILVA only sold quarto

plate in the United States, it maintained that it should not be

required to report home market sales of CTL plate produced from coil

since the Department would not compare such sales to ILVA's U.S. sales

for purposes of calculating a dumping margin. Furthermore, ILVA claimed

that its affiliated resellers' sales of quarto plate constituted an

insignificant percentage of its total home market sales of foreign like

product and, thus, it should be excused from reporting these downstream

sales. On May 3, 1999, the Department denied ILVA's requests with one

exception. Based on ILVA's relationship with one affiliated reseller,

the nature of which is proprietary, the Department allowed ILVA to

report sales of foreign like product to the reseller, rather than sales

by the reseller.

On May 17, 1999, ILVA further requested that it be excused from

reporting home market sales of certain products that are commercially

identified as bar products. However, the Department found these

products to be within the scope of the current CTL investigations and,

thus, required ILVA to report all of its home market sales of such

products. For further information regarding this issue, see the ``Scope

Comments'' x section of this notice.

In April 1999, the United States International Trade Commission

(``ITC'') issued an affirmative preliminary injury determination in

this case (see Investigation No. 731-TA-815-822). In April and May

1999, The Department received a response to all applicable sections of

the questionnaire from ILVA and P&B. On March 28, 1999, and May 3,

1999, respectively, SV and FS submitted letters to the Department

stating that they did not produce the merchandise under investigation,

nor did they export such merchandise to the United States. In letter

dated May 14, 1999, the Department informed FS and SV that their claims

are subject to verification and that if the Department finds that they

should have responded to the antidumping questionnaire, the Department

would rely on facts available in making its determination with respect

to FS and/or SV.

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

ILVA and P&B in May and June 1999 and received responses to these

questionnaires along with revised home market and U.S. sales listings

in June 1999.

In June and July 1999, the petitioners submitted comments for the

Department's consideration in its preliminary determination. Also, in

July 1999, ILVA submitted sales and cost listings containing additional

information requested by the Department.

Partial Facts Available

Section 776(a)(2) of the Act provides that ``if an interested party

or any other person--(A) withholds information that has been requested

by the administering authority; (B) fails to provide such information

by the deadlines for the submission of the information or in the form

and manner requested, subject to subsections (c)(1) and (e) of section

782; (C) significantly impedes a proceeding under this title; or (D)

provides such information but the information cannot be verified as

provided in section 782(i), the administering authority shall, subject

to section 782(d), use the facts otherwise available in reaching the

applicable determination under this title.''

Section 776(b) of the Act provides that adverse inferences may be

used when a party has failed to cooperate by not acting to the best of

its ability to comply with a request for information.

The Department resorted to the use of facts available in adjusting

the reported cost of certain affiliated supplier inputs under the

``transactions-disregarded'' and the ``major input rule'' of section

773(f)(2) & (3) of the Act. For a detailed discussion of this topic see

the ``Cost of Production Analysis--Calculation of COP'' section of this

notice.

Scope of Investigation

The products covered by the scope of this investigation are certain

hot-rolled carbon-quality steel: (1) Universal mill plates (i.e., flat-

rolled products rolled on four faces or in a closed box pass, of a

width exceeding 150 mm but no exceeding 1250 mm, and of a nominal or

actual thickness of not less then 4 mm, which are cut-to-length (not in

coils) and without patterns in relief), of iron or non-alloy-quality

steel; and (2) flat-rolled products, hot-rolled, of a nominal or actual

thickness of 4.75 mm or more and of a width which exceeds 150 mm and

measures at least twice the thickness, and which are cut-to-length (not

in coils). Steel products to be included in this scope are of

rectangular, square, circular or other shape and of rectangular or non-

rectangular cross-section where such non-rectangular cross-section is

achieved subsequent to the rolling process (i.e., products which have

been ``worked after rolling'')--for example, products which have been

beveled or rounded at the edges. Steel products that meet the noted

physical characteristics that are painted, varnished or coated with

plastic or other non-metallic substances are included within this

scope. Also, specifically included in this scope are high strength, low

alloy (HSLA) steels. HSLA steels are recognized as steels with micro-

alloying levels of elements such as chromium, copper, niobium,

titanium, vanadium, and molybdenum. Steel products to be included in

this scope, regardless of Harmonized Tariff Schedule of the United

States (HTSUS) definitions, are products in which: (1) Iron

predominates, by weight, over each of the other contained elements, (2)

the carbon content is two percent or less, by weight, and (3) none of

the elements listed below is equal to or exceeds the quantity, by

weight, respectively indicated: 1.80 percent of manganese, or 1.50

percent of silicon, or 1.00 percent of cooper, or 0.50 percent of

aluminum, or 1.25 percent of chromium, or 0.30 percent of cobalt, or

0.40 percent of lead, or 1.25 percent of nickel, or 0.30 percent of

tungsten, or 0.10 percent of molybdenum, or 0.10 percent of niobium, or

0.41 percent of titanium, or 0.15 of vanadium, or 0.15 percent

zirconium. All products that meet the written physical description, and

in which the chemistry quantities do not equal or exceed any one of the

levels listed above, are within the scope of these investigations

unless otherwise specifically excluded. The following products are

specifically excluded from these investigations: (1) Products clad,

plated, or coated with metal, whether or not painted, varnished or

coated with plastic or other non-metallic substances;

[[Page 41215]]

(2) SAE grades (formerly AISI grades) of series 2300 and above; (3)

products made to ASTM A710 and A736 or their proprietary equivalents;

(4) abrasion-resistant steels (i.e., USS AR 400, USS AR 500); (5)

products made to ASTM A202, A225, A514 grade S, A517 grade S. or their

proprietary equivalents; (6) ball bearing steels; (7) tool steels; and

(8) silicon manganese steel or silicon electric steel.

The merchandise subject to these investigations is classified in

the HTSUS under subheadings: 7208.40.3030, 7208.40.3060, 7208.51.0030,

7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.000, 7208.90.000,

7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045,

7211.90.000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.40.3050,

7225.40.7000, 7225.50.6000, 7225.90.0090, 7226.91.5000, 7226.91.7000,

7226.91.8000, 7226.99.0000.

Although the HTSUS subheadings are provided for convenience and

Customs purposes, the written description of the merchandise under

investigation is dispositive.

Scope Comments

As stated in our notice of initiation, we set aside a period for

parties to raise issues regarding product coverage. In particular, we

sought comments on the specific levels of alloying elements set out in

the description above, the clarity of grades and specifications

excluded from the scope, and the physical and chemical description of

the product coverage. On March 29, 1999, Usinor, a respondent in the

French antidumping and countervailing duty investigations and Dongkuk

Steel Mill Co., Ltd. and Pohang Iron and Steel Co., Ltd., respondents

in the Korean antidumping and countervailing duty investigations

(collectively ``the Korean respondents''), filed comments regarding the

scope of the investigations on CTL plate and the Department's model

matching criteria. On April 14, 1999, the petitioners filed comments

regarding Usinor's and the Korean respondents' comments regarding model

matching. In addition, on May 17, 1999, ILVA SpA (``ILVA''), a

respondent in the Italian antidumping and countervailing duty

investigations, requested guidance on whether certain products are

within the scope of these investigations.

Usinor requested that the Department modify the scope to exclude:

(1) plate that is cut to non-rectangular shapes or that has a total

final weight of less than 200 kilograms; and (2) steel that is 4'' or

thicker and which is certified for use in high-pressure, nuclear or

other technical applications; and (3) floor plate (i.e. plate with

``patterns in relief'') made from hot-rolled coil. Further, Usinor

requested that the Department provide clarification of scope coverage

with respect to what it argues are over-inclusive HTSUS subheadings

included in the scope language.

The Department has not modified the scope of these investigations

because the current language reflects the product coverage requested by

the petitioners, and Usinor's products meet the product description.

With respect to Usinor's clarification request, we do not agree that

the scope language requires further elucidation with respect to product

coverage under the HTSUS. As indicated in the scope section of every

Department antidumping and countervailing duty proceeding, the HTSUS

subheadings are provided for convenience and Customs purposes only; the

written description of the merchandise under investigation or review is

dispositive.

The Korean respondents requested confirmation whether the maximum

alloy percentages listed in the scope language are definitive with

respect to covered HSLA steels.

At this time, no party has presented any evidence to suggest that

these maximum alloy percentages are inappropriate. Therefore, we have

not adjusted the scope language. As in all proceedings, questions as to

whether or not a specific product is covered by the scope and, hence,

must be reported, should be timely raised with Department officials.

ILVA requested guidance on whether certain merchandise produced

from billets is within the scope of the current CTL plate

investigations. According to ILVA, the billets are converted into wide

flats and bar products (a type of long products). ILVA notes that one

of the long products, when rolled, has a thickness range that falls

within the scope of these investigations. However, according to ILVA,

the greatest possible width of these long products would only slightly

overlap the narrowest category of width covered by the scope of the

investigations. Finally, ILVA states that these products have different

production processes and properties than merchandise covered by the

scope of the investigations, and therefore are not covered by the scope

of the investigations.

As ILVA itself acknowledges, the particular products in question

appear to fall within the parameters of the scope and, therefore, we

are preliminary treating them as covered merchandise for purposes of

these investigations.

Period of Investigation

The POI is January 1, 1998, through December 31, 1998.

Fair Value Comparisons

To determine whether sales of CTL plate from Italy to the United

States were made at less than fair value, we compared the export price

(``EP'') to the Normal value (``NV''), as described, in the ``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 EPs for comparison to weighted-average NVs.

Product Comparisons

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

products produced by ILVA and P&B covered by the description in the

``Scope of Investigation'' section, above and sold in Italy during the

POI, to be foreign like products for purposes of determining

appropriate product comparisons to U.S. sales. We compared U.S. sales

to sales made in the home market, where appropriate. Where there were

no sales of identical merchandise in the home market made in the

ordinary course of trade to compare to U.S. sales, we compared U.S.

sales to sales of the most similar foreign like product made in the

ordinary course of trade. In making the product comparisons, we matched

foreign like products based on the physical characteristics reported by

the respondents in the following order of importance (which are

identified in Appendix V of the questionnaire: painting, quality, grade

specification, heat treatment, normal thickness, nominal width,

patterns in relief, and descaling.

In addition, we compared U.S. sales of prime merchandise only with

home market sales of prime merchandise. Because neither ILVA nor P&B

sold non-prime merchandise in the United States during the POI, we did

not use home market sales of non-prime merchandise in our product

comparisons, (see Final Determination of Sales at Less Than Fair Value:

Stainless Steel Wire Rod from Sweden, 63 FR 40449, 40450 (July 29,

1998) (``SSWR'')).

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 EP or CEP transaction. The NV

LOT is that of the starting-price sales in the comparison market or,

when NV is based on constructed value (``CV''), that of the sales from

which we derive

[[Page 41216]]

selling, general and administrative (``SG&A'') expenses and profit.

With respect to U.S. price and EP transactions, the LOT is also the

level of the starting-price sale, which is usually from the exporter to

the importer.

To determine whether NV sales are at a different LOT than EP

transactions, we examine stages in the marketing process and selling

functions along the chain of distribution between the producer and the

unaffiliated customer. If the comparison-market sales are at a

different LOT and the difference affects price comparability, as

manifested in a pattern of consistent price differences between the

sales on which NV is based and comparison-market sales at the LOT of

the export transaction, we make an LOT adjustment under section

773(a)(7)(A) of the Act.

P&B reported home market sales to three customer categories through

one channel of distribution. For its U.S. sales, P&B reported EP sales

to one customer category through one channel of distribution. ILVA

reported home market sales to two customer categories through four

channels of distribution. For its U.S. sales, ILVA reported EP sales to

two customer categories through one channel of distribution. In their

responses, neither ILVA nor P&B claimed that their sales to home market

customers were made at a different LOT than their sales to U.S.

customers. Therefore, neither company claimed a LOT adjustment.

In determining whether separate LOTs actually existed in the home

market and U.S. market for each respondent, we examined whether the

respondent's sales involved different marketing stages (or their

equivalent) based on the channel of distribution, customer categories

and selling functions. Based on an analysis of the selling functions

performed in the home market channel of distribution, we find that each

respondent's home market sales comprise a single LOT. In analyzing each

company's selling activities for EP sales, we noted that the sales

involved basically the same selling functions as those associated with

the home market LOT described above. Therefore, based upon this

conclusion, we have determined that the LOT for each respondent's EP

sales is the same as that of its home market sales. See the July 19,

1999, memoranda to the file regarding Palini and Bertoli (P&B): Level

of Trade Analysis, and Ilva SpA (ILVA): Level of Trade Analysis.

Export Price

ILVA and P&B reported as EP transactions their sales of subject

merchandise sold to unaffiliated U.S. customers prior to importation.

We calculated EP, in accordance with section 772(a) of the Act,

because the merchandise was sold to the first unaffiliated purchaser in

the United States prior to importation and CEP methodology was not

otherwise warranted, based on the facts of record. We based EP on the

price to unaffiliated purchasers in the United States. We made

deductions to the starting price for billing adjustments and, in

accordance with section 772(c)(2)(A) of the Act, movement expenses.

Movement expenses included, where appropriate, foreign inland freight,

foreign brokerage and handling charges, ocean freight, and marine

insurance.

Normal Value

After testing (1) home market viability, (2) whether sales to

affiliates were at arm's-length prices, and (3) whether home market

sales were at below-cost prices, we calculated NV as noted in the

``Price-to-Price Comparisons'' and ``Price-to-CV 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 each respondent's aggregate volume of home market sales of the

foreign like product was greater than five percent of its respective

aggregate volume of U.S. sales for the subject merchandise, we

determined that the home market was viable for each respondent.

2. Affiliated-Party Transactions and Arm's-Length Test

Both respondents reported home market sales to affiliated parties.

Therefore, we have applied the arm's-length test to these sales by

comparing them to sales of identical merchandise from the respondent to

its unaffiliated home market customers. If these affiliated-party sales

satisfied the arm's-length test, we used them in our analysis. Sales to

affiliated customers in the home market not made at arm's-length prices

(if any) were excluded from our analysis because we considered them to

be outside the ordinary course of trade. See 19 CFR 351.102.

To test whether these sales were made at arm's-length prices, we

compared on a model-specific basis the prices of sales to affiliated

and unaffiliated customers net of all movement charges, direct selling

expenses, and packing. Where, for the tested models of subject

merchandise, prices to the affiliated party were on average 99.5

percent or more of the price to the unaffiliated parties, we determined

that sales made to the affiliated party were at arm's length. See 19

CFR 351.403(c) and 62 FR at 27355, Preamble--Department's Final

Antidumping Regulations (May 19, 1997). In instances where no price

ratio could be constructed for an affiliated customer because identical

merchandise was not sold to unaffiliated customers, we were unable to

determine that these sales were made at arm's-length prices and,

therefore, excluded them from our LTFV analysis (see, e.g., SSWR at 63

FR 40451). Where the exclusion of such sales eliminated all sales of

the most appropriate comparison product, we made a comparison to the

next most similar model.

3. Cost of Production Analysis

In their petition, the petitioners submitted an allegation pursuant

to section 773(b) of the Act that ILVA and P&B made sales in the home

market at less than the cost of production (``COP''). Our analysis of

the allegation indicated that there were reasonable grounds to believe

or suspect that each Italian exporter sold CTL plate in the home market

at prices less than the COP. Accordingly, we initiated COP

investigations with respect to the two Italian exporters to determine

whether sales were made at prices below the COP pursuant to section

773(b) of the Act (see Initiation Notice at 64 FR 12959, 12963).

We conducted the COP analysis as described below.

A. Calculation of COP

In accordance with section 773(b)(3) of the Act, for each

respondent we calculated COP based on the sum of the respondent's

materials and fabrication cost for the foreign like product, plus an

amount for home market SG&A, interest expenses, and packing costs.

Except for the following adjustments to ILVA's costs reported by

the respondents' to calculate COP:

1. During the POI, ILVA produced slabs which it sold to its wholly

owned subsidiary, ILVA Lamiere e Tubi S.p.A. (ILT). ILT rolled the

slabs into quarto plate to ILVA. During the POI, ILT only sold quarto

plate to ILVA, which resold

[[Page 41217]]

the plate to affiliated and unaffiliated customers in the U.S. and home

markets. For cost reporting purposes, ILVA treated itself and ILT as

one company and thus reported ILT's rolling cost as part of the COP.

Because ILVA ``collapsed'' itself with ILT it did not value the inputs

that it purchased from ILT in accordance with section 773(f)(2) of the

Act or use the major input rule of section 773(f)(3) of the Act.

Section 351.401(f) of the Department's regulations stipulates that the

Department will treat two or more affiliated producers as a single

entity where, among other things, the department concludes there is a

significant potential for the manipulation of price or production in

order to evade antidumping duties. However, in the instant situation,

based upon the information on the record, the details of which are

proprietary, the Department has preliminary determined that it is not

appropriate to collapse ILVA and ILT because there is not a significant

potential for the manipulation of price or production in order to evade

antidumping duties. See ILVA Collapsing Memorandum (July 19, 1999).

Because the Department has not collapsed ILVA and ILT, and the rolling

performed by ILT is a major input to the production of plate sold by

ILVA, the major input role should be applied to value the input that

ILVA obtained from ILT (see Notice of Final Results and Partial

Recission of Antidumping Duty Administrative Review: Certain Pasta From

Italy, 64 FR 6615, 6621 (February 10, 1999)). The major input rule of

section 773(f)(3) of the Act provides that the Department may value

inputs obtained from affiliated parties at the highest of the transfer

price, market price, or the affiliated supplier's costs. The

petitioners' maintain that the major input rule should be used to value

the slabs that ILT purchased from ILVA. However, the Department has

treated ILVA as the producer and viewed ILT as an affiliate who

provides services to the producer. Thus, the Department used the major

input rule to value the rolling services provided by ILT, but found no

basis to apply it in valuing the slabs produced by ILVA. In the absence

of a market price or a transfer price for rolling slabs, for this

preliminary determination, the Department has constructed a transfer

price by increasing the reported rolling costs for quarto plate by

ILT's general and administrative (G&A) expenses and profit.

2. ILVA included ILT's G&A expenses in its reported G&A expense

because it treated ILVA and ILT as one entity for cost reporting

purposes. Because the Department has treated ILVA and ILT as separate

entities, the Department reduced ILVA's reported G&A expense by the

amount of ILT's G&A expenses included therein.

3. The Department excluded extraordinary gains and losses from

ILVA's reported G&A expenses because ILVA failed to adequately explain

how these expenses were related to its operations.

4. ILVA uses iron pellets to produce the merchandise under

investigation. During the POI, ILVA purchased iron pellets from two

suppliers, one of which ILVA identified as an affiliated party. In

order to satisfy the requirements of section 773(f)(2) of the Act

(transactions between affiliated parties disregarded), ILVA compared

the price that it paid to purchase iron pellets from the affiliated

party to the price that it paid to purchase iron pellets from the

``unaffiliated'' supplier. However, the record shows that ILVA and the

``unaffiliated'' supplier jointly own and control the affiliated

supplier. Therefore, in accordance with section 771(33)(F) of the Act,

the Department has preliminary determined that ILVA and the supplier

which ILVA identified as an unaffiliated party (i.e., the joint venture

partner) are in fact affiliated, pursuant to section 771(33)(F).

Furthermore, the iron pellets ILVA purchased from its joint venture

partner were in fact produced by ILA's affiliated supplier. Thus, for

all these transactions, ILVA purchased iron pellets, either directly or

indirectly, from its affiliated supplier. Therefore, we have

preliminarily determined to disregard these sales, unless ILVA can show

that such sales reflect market value as required under section

773(f)(2). In the absence of such evidence, for the preliminary

determination, the Department has adjusted the cost of iron pellets

included in the reported costs using the information available as to

what the price of iron pellets would have been if the iron pellets had

been purchased from parties who are not affiliated with ILVA, in

accordance with section 773(f)(2). For this preliminary determination,

as facts available for this information, we used the weighted-average

Italian import values of iron ore as provided by the petitioners in

their July 8, 1999 submission.

5. The Department reduced ILVA's reported costs for models sold in

the United States by the cost of foreign transportation and port

loading expenses for U.S. sales, which were reclassified as movement

expenses.

B. Test of Home Market Sales Prices

We compared the weighted-average COP figures to home market sale

prices 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 (1) within an

extended period of time, such sales were made in substantial

quantities, and (2) such sales were made at prices which permitted the

recovery of all costs within a reasonable period of time. On a product-

specific basis, we compared the COP to the home market prices, less any

applicable movement charges, rebates, discounts, and direct and

indirect selling expenses.

C. Results of the COP Test

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

respondent's sales of a given product were at prices below 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 a respondent's sales of a

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

determined such sales to 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.

We found that, for certain grades of CTL plate, 20 percent of more

of ILVA's and P&B home market sales within an extended period of time

were at prices below the COP. Further, the prices did not provide for

the recovery of costs within a reasonable period of time. We therefore

excluded these sales and used for remaining sales as the basis for

determining NV if such sales existed, in accordance with section

773(b)(1) of the Act.

Price-to-Price Comparisons

We calculated NV based on delivered prices to unaffiliated

customers to prices to affiliated customers that we determined to be at

arm's length prices. We made adjustments, where appropriate, from the

starting price for discounts and rebates, billing adjustments, inland

freight, shipping revenue, freight insurance, and

[[Page 41218]]

warehousing expenses. We made adjustments for differences in the

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

addition, we made adjustments under section 773(a)(6)(C)(iii) of the

Act for differences in circumstances of sale involving imputed credit

expenses (less interest revenue) warranties and commissions, where

appropriate. We also made adjustments for indirect selling expenses

incurred on comparison market or U.S. sales where commissions were

granted on sales in one market but not in the other (the commission

offset), pursuant to 19 CFR 351.410(e). Finally, we deducted home

market packing costs and added U.S. packing costs in accordance with

sections 773(a)(6)(A) and (B) of the Act. In both its narrative

response to the Department's questionnaire and in its home market sales

listing, P&B described the terms of certain home market sales as F.O.B.

plant. However, P&B reported freight expenses for these sales in its

home market sales database. For home market sales transactions where

this discrepancy occurs, we did not reduce P&B's home market sales

price by the reported freight expense.

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.

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

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

unless the daily rate involves a fluctuation. It is the Department's

practice to find that a fluctuation exists when the daily exchange rate

differs from the benchmark rate by 2.25 percent. The benchmark is

defined as the moving average of rates for the past 40 business days.

When we determined a fluctuation to have existed, we substitute the

benchmark rate for the daily rate, in accordance with established

practice. Further, section 773A(b) of the Act directs the Department to

allow 60-day adjustment period when a currency has undergone a

sustained movement. A sustained movement has occurred when the weekly

average of actual daily rates exceeds the weekly average of benchmark

rates by more than five percent for eight consecutive weeks. (For an

explanation of this method, see Policy Bulletin 96-1: Currency

Conversions 61 FR 9434 (March 9, 1996).) The use of an adjustment

period was not warranted in this case because of lira did not undergo a

sustained movement.

Verification

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

information determined to be acceptable for use in making our final

determination.

Suspension of Liquidation

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

Customers 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 EP, 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-

Exporter/manufacturer average margin

percentage

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

ILVA SpA................................................ 3.67

Palini & Bertoli SpA.................................... 6.35

All Others.............................................. 5.78

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

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 in at least ten copies must

be submitted to the Assistant Secretary for Import Administration no

later than August 25, 1999, and rebuttal briefs no later than September

1, 1999. A list of authorities used and 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 on September 10, 1999, time and room to be determined, at

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

NW, Washington, DC 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 by no later than 75 days after the date of this

preliminary determination.

This determination is issued and published pursuant to sections

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

Dated: July 19, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-19303 Filed 7-28-99; 8:45 am]

BILLING CODE 3510-DS-M