Certain Cut-to-Length Carbon Steel Plate From Mexico: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-809]

Certain Cut-to-Length Carbon Steel Plate From Mexico: 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 a respondent and the petitioners,

the Department of Commerce (the Department) is conducting an

administrative review of the antidumping duty order on certain cut-to-

length (CTL) carbon steel plate from Mexico. This review covers one

manufacturer/exporter of the subject merchandise. The period of review

(POR) is August 1, 1997 through July 31, 1998. We preliminarily

determine that sales have been made below normal value (NV). If these

preliminary results are adopted in our final results of administrative

review, we will instruct the U.S. Customs Service to assess antidumping

duties on entries of subject merchandise from the manufacturer/exporter

reviewed.

Interested parties are invited to comment on these preliminary

results. Parties who submit argument 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 7, 1999.

FOR FURTHER INFORMATION CONTACT: Thomas Killiam, Michael Heaney, or

Robert James, Enforcement Group III, Office 8, Import Administration,

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

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

(202) 482-3019 (Killiam), (202) 482-4475 (Heaney), (202) 482-5222

(James).

SUPPLEMENTARY INFORMATION:

Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (the Act) are references to the provision effective

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

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

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

to the regulations codified at 19 CFR Part 351 (1998).

Background

The Department published an antidumping duty order on certain CTL

carbon steel plate from Mexico on August 19, 1993 (58 FR 44165). The

Department published a notice of opportunity to request an

administrative review of the antidumping duty order for the 1997-1998

review period on August 11, 1998 (63 FR 42821). On August 31, 1998,

respondent Altos Hornos de Mexico (AHMSA) requested that the Department

conduct an administrative review of the antidumping duty order on

certain CTL carbon steel plate from Mexico. On August 31, 1998, the

petitioners (Bethlehem Steel Corporation, Geneva Steel, Gulf Lakes

Steel, Inc., of Alabama, Inland Steel Industries Inc., Lukens Steel

Company, Sharon Steel Corporation, and U.S. Steel Group (a unit of USX

Corporation)) requested a review of AHMSA. We published a notice of

initiation of the review on September 29, 1998 (63 FR 51893).

Under the Act, the Department may extend the deadline for

completion of administrative reviews if it determines that it is not

practicable to complete the review within the statutory time limit of

365 days. On March 17, 1999, the Department extended the time limit for

the preliminary results in this case. See Certain Cut-to-Length (CTL)

Carbon Steel Plate from Mexico; Antidumping Duty Administrative Review;

Extension of Time Limits, 64 FR 14690 (March 26, 1999).

The Department is conducting this administrative review in

accordance with section 751 of the Act.

Scope of the Review

The products covered in this review include hot-rolled carbon steel

universal mill plates (i.e., flat-rolled products rolled on four faces

or in a closed box pass, of a width exceeding 150 millimeters but not

exceeding 1,250 millimeters and of a thickness of not less than 4

millimeters, not in coil and without patterns in relief), of

rectangular shape, neither clad, plated nor coated with metal, whether

or not painted, varnished, or coated with plastics or other nonmetallic

substances; and certain hot-rolled carbon steel flat-rolled products in

straight lengths, of rectangular shape, hot rolled, neither clad,

plated, nor coated with metal, whether or not painted, varnished, or

coated with plastics or other nonmetallic substances, 4.75 millimeters

or more in thickness and of a width which exceeds 150 millimeters and

measures at least twice the thickness, as currently classifiable in the

Harmonized Tariff Schedule (HTS) under item numbers 7208.31.0000,

7208.32.0000, 7208.33.1000, 7208.33.5000, 7208.41.0000, 7208.42.0000,

7208.43.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.11.0000,

7211.12.0000, 7211.21.0000, 7211.22.0045, 7211.90.0000, 7212.40.1000,

7212.40.5000, and 7212.50.0000. Included in this review are flat-rolled

products of non-rectangular cross-section where such 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. Excluded from this review is grade X-

70 plate.

[[Page 48585]]

These HTS item numbers are provided for convenience and U.S.

Customs purposes. The written descriptions remain dispositive.

The POR is August 1, 1997, through July 31, 1998. This review

covers sales of certain cut-to-length carbon steel plate by AHMSA.

Verification

The Department will consider the results of its verification of

AHMSA's cost of production (COP) and constructed value (CV) submission

prior to issuing the final results of review.

Product Comparisons

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

products produced by the respondent covered by the description in the

``Scope of the Review'' section of this notice (supra), and sold in the

home market during the period of review (POR), to be foreign like

products for purposes of determining appropriate product comparisons to

U.S. sales. In making product comparisons, we matched foreign like

products based on the physical characteristics reported by the

respondent.

Normal Value Comparisons

To determine whether AHMSA made sales of subject merchandise in the

United States at less than normal value, we compared export price (EP)

to normal value (NV), as described below. In accordance with section

777A(d)(2) of the Act, we calculated monthly weighted-average prices

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

Export Price

The Department treated all of AHMSA's sales as EP sales, because

the merchandise was sold directly to unaffiliated U.S. purchasers prior

to the date of importation and constructed export price (CEP)

methodology was not otherwise indicated.

We based EP on the price to unaffiliated purchasers in the United

States. We made deductions for movement expenses, brokerage charges,

bank charges, and inspection fees.

Normal Value

In order to determine whether there were sufficient sales of

subject merchandise in the home market to serve as a viable basis for

calculating NV, we compared AHMSA's volume of home market sales of the

foreign like product to its volume of sales of subject merchandise in

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

AHMSA's aggregate volume of HM sales of the foreign like product was

greater than five percent of its aggregate volume of U.S. sales of the

subject merchandise. Therefore, we based NV on HM sales.

Cost Investigation

In the prior review, we initiated and conducted a sales-below-cost

investigation of AHMSA. Although AHMSA submitted COP data in that

review, we ultimately determined that AHMSA failed to act to the best

of its ability and we therefore based AHMSA's margin on total adverse

facts available. See Certain Cut-to-Length Carbon Steel Plate From

Mexico: Final Results of Antidumping Duty Administrative Review, 64 FR

76 (January 4, 1999). The adverse inference made in the prior review

provides the Department with a basis to infer that AHMSA's comparison

market sales would have failed the cost test such that we would have

disregarded them in our determination of NV in that review. Therefore,

pursuant to section 773(b)(2)(A)(ii) of the Act, we also have

reasonable grounds to believe or suspect that sales by AHMSA of the

foreign like product under consideration for the determination of NV in

this review may have been made at prices below the COP. See January 19,

1999 recommendation memorandum from Richard Weible to Joseph Spetrini,

Automatic Self-Initiation of COP Investigation in 1997-1998

Administrative Review of Cut-to-Length (CTL) Carbon Steel Plate from

Mexico.

We compared sales of the foreign like product in the home market

with the model-specific COP for the POR. In accordance with section

773(b)(3) of the Act, we calculated the COP based on the sum of the

costs of materials and fabrication employed in producing the foreign

like product plus selling, general and administrative expenses and all

costs and expenses incidental to placing the foreign like product in

condition packed and ready for shipment. In our COP analysis we used

home market sales and COP information provided by the respondent in its

questionnaire responses, revised as follows:

Pursuant to sections 773(f)(2) and (3) of the Act and section

351.407(b) of the Department's regulations, we adjusted the reported

iron ore, limestone and scrap costs, to reflect market prices rather

than the prices AHMSA paid to affiliates for these major inputs. We

revised the general and administrative expense ratio to include income

and expense items which AHMSA omitted. We recalculated net interest

expenses to exclude monetary corrections and foreign exchange gains.

These three adjustments to cost and expense ratios are addressed in

Memorandum to: Neal Halper, Acting Director, Office of Accounting, from

Peter Scholl, Senior Accountant, Cost of Production and Constructed

Value Calculation Adjustments for the Preliminary Determination, August

31, 1999.

After calculating COP, we tested whether home market sales of

subject merchandise were made at prices below COP and, if so, whether

the below-cost sales were made within an extended period of time in

substantial quantities and at prices which did not permit recovery of

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

specific COPs to the reported home market prices less any applicable

movement charges, discounts and selling expenses.

The results of our cost test for AHMSA indicated that for certain

home market models less than twenty percent of the sales of the model

were at prices below COP. Pursuant to section 773(b)(2)(C) of the Act,

we therefore determined that the below-cost sales of these models were

not made in substantial quantities and we retained all sales of these

models in our analysis and used them as the basis for determining NV.

Our cost test for AHMSA also indicated that for certain other home

market models twenty percent or more of the home market sales were at

prices below COP. In accordance with section 773(b)(2)(B) and (C) of

the Act, we disregarded the below-cost sales of these models from our

analysis because we determined that they were made over an extended

period of time in substantial quantities. In addition, because each

individual price was compared against the POR-average COP, any sales

that were below cost were also not at prices which permitted cost

recovery within a reasonable period of time, as defined in section

773(b)(2)(D).

To calculate NV we deducted billing adjustments, movement expenses,

cutting fees, early payment discounts, foreign exchange adjustments,

freight cost calculation variance adjustments, and inspection fees. We

made an addition for interest revenue. In accordance with section

773(a)(6) of the Act, we adjusted NV, where appropriate, by deducting

home market packing expenses and adding U.S. packing expenses. We also

adjusted NV for differences in credit expenses and differences in

physical characteristics between the U.S. and home market merchandise.

[[Page 48586]]

Level of Trade

In accordance with section 773(a)(1)(B)(i) 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 CV, that of the sales from which we derive

selling, general and administrative expenses and profit. For EP, the

U.S. LOT is also the level of the starting price sale, which is usually

from the exporter to the importer. For CEP, it is the level of the

constructed sale from the exporter to the importer.

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

sales, 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 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 differences 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 e.g., Notice

of Final Determination of Sales at Less Than Fair Value: Certain Cut-

to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November

19, 1997).)

In implementing these principles in this review, we asked AHMSA to

identify the specific differences and similarities in selling functions

and/or support services between all phases of marketing in the home

market and the United States. AHMSA identified three channels of

distribution in the home market: (1) Direct sales to end-users or

distributors, (2) sales requiring cutting services prior to delivery,

and (3) consignment sales. AHMSA performs similar selling functions for

all three channels. Because the selling functions performed for each

customer class are sufficiently similar, we determined that there

exists one LOT for AHMSA's home market sales.

For the U.S. market AHMSA reported one LOT: EP sales made directly

to its U.S. customers. When we compared EP sales to home market sales,

we determined that sales in both markets were made at the same LOT. For

both EP and home market transactions AHMSA sold directly to the

customer and provided similar levels of order processing, delivery

arrangement, and customer liaison. Based upon the foregoing, we

determined that AHMSA sold at the same LOT in the U.S. market as it did

in the home market, and consequently no LOT adjustment is warranted.

Preliminary Results of the Review

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

following weighted-average margin exists for AHMSA for the period

September 1, 1997, through August 31, 1998:

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Margin

Manufacturer/exporter (percent)

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AHMSA........................................................ 1.77

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The Department will issue disclosure documents within five days of

the date of publication of this notice. Interested parties may also

request a hearing within 30 days of publication. If requested, a

hearing will be held as early as convenient for the parties but

normally not later than 37 days after the date of publication or the

first work day thereafter. Interested parties may submit case briefs

not later than 30 days after the date of publication of this notice.

Rebuttal briefs, which must be limited to issues raised in the case

briefs, may be filed not later than 5 days after the filing of case

briefs. The Department will issue a notice of the final results of this

administrative review, which will include the results of its analysis

of issues raised in any such briefs or at a hearing, within 120 days

from the publication of these preliminary results.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Upon completion

of this review, the Department will issue appraisement instructions

directly to the Customs Service. The final results of this review shall

be the basis for the assessment of antidumping duties on entries of

merchandise covered by this review and for future deposits of estimated

duties. We will instruct the Customs Service to assess antidumping

duties on all appropriate entries covered by this review if any

assessment rate calculated in the final results of this review is above

de minimis (i.e., at or above 0.5 percent) (see 19 CFR 351.106(c)(2)).

For assessment purposes, if applicable, we intend to calculate an

importer-specific assessment rate by aggregating the dumping margins

calculated for all U.S. sales and dividing this amount by the total

quantity sold.

Furthermore, the following deposit rates will be effective upon

publication of the final results of this administrative review for all

shipments of certain CTL carbon steel plate from Mexico entered, or

withdrawn from warehouse, for consumption on or after the publication

date, as provided for by section 751(a)(2)(C) of the Act: (1) The cash

deposit rate for the reviewed company will be the rate established in

the final results of this review; (2) for merchandise exported by

manufacturers or exporters not covered in this review but covered in

the original investigation of sales at less than fair value (LTFV) or a

previous review, the cash deposit will continue to be the company-

specific rate published for the most recent period; (3) if the exporter

is not a firm covered in this or a previous review, or the original

LTFV investigation, but the manufacturer is, the cash deposit rate will

be the rate established for the most recent period for the manufacturer

of the merchandise; and (4) for all other producers and/or exporters of

this merchandise, the cash deposit rate shall be 49.25 percent, the

``all others'' rate established in the LTFV investigation.

These deposit rates, when imposed, shall remain in effect until

publication of the final results of the next administrative review.

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 351.401(f)(2) 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 determination is issued and published in accordance with

sections 751(a)(1) and 777(i)(1) of the Act.

Dated: August 31, 1999.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-23216 Filed 9-3-99; 8:45 am]

BILLING CODE 3510-DS-P