Titanium Sponge From the Republic of Kazakhstan; Notice of Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-834-803]

Titanium Sponge From the Republic of Kazakhstan; Notice of

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 a request from Titanium Metals Corporation, the

Department of Commerce (the Department) is conducting an administrative

review of the antidumping finding on titanium sponge from the Republic

of Kazakhstan (Kazakhstan). This notice of preliminary results covers

the period August 1, 1997 through July 31, 1998. This review covers one

manufacturer/exporter and one trading company.

We preliminarily determine that no sales were made below normal

value during this review period. If this preliminary result is 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 this preliminary result. 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, 1999.

FOR FURTHER INFORMATION CONTACT: Mark Manning, Office of AD/CVD

Enforcement, Office 4, Group II, Import Administration, International

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

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

3936.

Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930, as amended (the

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

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

to 19 CFR Part 351 (1998).

Background

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 28, 1998, Titanium Metals Company (Timet) requested that

the Department conduct an administrative review of the antidumping

finding on titanium sponge from Kazakhstan for one manufacturer/

exporter, Ust-Kamenorgorsk Titanium and Magnesium Plant (UKTMP), and

one trading company, Specialty Metals Corporation (SMC), covering the

period August 1, 1997 through July 31, 1998. The Department published a

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

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 on May 10, 1999 (64 FR 25024). 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

finding covering titanium sponge imports from Kazakhstan. 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-Year (``Sunset'') Reviews: Titanium Sponge from

Kazakhstan, Russia, Ukraine, and Japan, 63 FR 46215 (August 31, 1998).

Scope of 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)

[[Page 48794]]

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.

Separate Rates Determination

To establish whether a company operating in a nonmarket economy

(NME) is sufficiently independent to be entitled to a separate rate,

the Department analyzes each exporting entity under the test

established in the Final Determination of Sales at Less Than Fair

Value: Sparklers from the People's Republic of China, 56 FR 20588 (May

6, 1991) (Sparklers), as amplified by the Final Determination of Sales

at Less Than Fair Value: Silicon Carbide from the People's Republic of

China, 59 FR 22585 (May 2, 1994) (Silicon Carbide). Under this policy,

exporters in NMEs are entitled to separate, company-specific margins

when they can demonstrate an absence of government control, both in law

and in fact, with respect to export activities. Evidence supporting,

though not requiring, a finding of de jure absence of government

control over export activities includes: (1) An absence of restrictive

stipulations associated with the individual exporter's business and

export licenses; (2) any legislative enactments decentralizing control

of companies; and, (3) any other formal measures by the government

decentralizing control of companies. De facto absence of government

control over exports is based on four factors: (1) Whether each

exporter sets its own export prices independently of the government and

without the approval of a government authority; (2) whether each

exporter retains the proceeds from its sales and makes independent

decisions regarding the disposition of profits or financing of losses;

(3) whether each exporter has the authority to negotiate and sign

contracts and other agreements; and, (4) whether each exporter has

autonomy from the government regarding the selection of management. See

Silicon Carbide, 59 FR at 22587 and Sparklers, 56 FR at 20589.

In the final results of the 1996-1997 review of titanium sponge

from Kazakhstan, the Department granted a separate rate to UKTMP and

SMC. See Titanium Sponge From the Republic of Kazakhstan: Final Results

of Antidumping Duty Administrative Review (64 FR 1598, January 11,

1999). While UKTMP and SMC received a separate rate in the previous

segment of this proceeding, it is the Department's policy that separate

rates questionnaire responses must be evaluated each time a respondent

makes a separate rate claim, regardless of any separate rate the

respondent received in the past. See Manganese Metal from the People's

Republic of China, Final Results and Partial Recission of Antidumping

Duty Administrative Review, 63 Fed. Reg. 12441 (March 13, 1998). In the

instant review, UKTMP and SMC submitted a complete response to the

separate rates section of the Department's questionnaire. The evidence

submitted in this review by UKTMP and SMC, which is consistent with the

Department's findings in the previous review, is sufficient to

demonstrate independence from the government entity. We therefore

preliminarily determine that UKTMP and SMC continue to be entitled to a

separate rate.

Export Price

In accordance with section 772(a) of the Act, the Department

calculated an export price (EP) on sales to the United States, because

use of constructed export price was not warranted. 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. United States, 901 F. Supp 362 (CIT 1995).

We calculated export price based on the price to unaffiliated

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

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

handling. SMC did not claim any other adjustments to EP, nor were any

other adjustments allowed.

Surrogate Country Selection

For companies located in NME countries, section 773(c)(1) of the

Act provides that the Department shall determine normal value (NV)

using a factors of production methodology if (1) the subject

merchandise is exported from an NME country, and (2) available

information does not permit the calculation of NV using home-market

prices, third-country prices, or constructed value, in accordance with

Section 773(a) of the Act. Section 351.408 of the Department's

regulations sets forth the Department's methodology for calculating the

NV of merchandise from NME countries.

The Department has treated Kazakhstan as an NME country in every

past case involving this country. Since none of the parties to these

proceedings contested such treatment in this review, we calculated NV

for the instant review in accordance with section 773(c) of the Act and

section 351.408 of the Department's regulations.

In accordance with section 773(c)(3) of the Act, the factors of

production (FOP) utilized in producing titanium sponge include, but are

not limited to--(A) hours of labor required, (B) quantities of raw

materials employed, (C) amounts of energy and other utilities consumed,

and (D) representative capital cost, including depreciation. In

accordance with section 773(c)(4) of the Act, the Department valued the

FOP, to the extent possible, using the cost of the FOP in a market

economy that is--(A) at a level of economic development comparable to

Kazakhstan, and (B) a significant producer of comparable merchandise.

We determined that Egypt is comparable to Kazakhstan in terms of per

capita gross national product, the growth rate in per capita income,

and the national distribution of labor. Furthermore, Egypt is a

significant producer of aluminum, a product comparable to titanium

sponge. For a further discussion of the Department's selection of Egypt

as the surrogate country, see Memorandum to the File, ``1997-1998

Administrative Review of the Antidumping Finding on Titanium Sponge

from Kazakhstan; Selection of a Surrogate Country,'' dated June 24,

1999, which is on file in the Central Records Unit, Room B099 of the

Main Commerce building (CRU--Public File).

Normal Value

In accordance with section 773(c)(1) of the Act, for purposes of

calculating normal value (NV), we valued Kazakhstan's FOP based on data

for the POR. Surrogate values that were in effect during periods other

than the POR were inflated or deflated, as appropriate, to account for

price changes between the effective period and the POR. We calculated

the inflation or deflation adjustments for all factor values, except

labor, using the wholesale price indices for Egypt and Indonesia, where

appropriate, that were reported in the IMF's publication, International

Financial Statistics. We valued Kazakhstan's FOP as follows (for

further discussion of our preliminary analysis, see Analysis Memorandum

for the Preliminary Results of Administrative Review, dated August 31,

1999, which is on file in the CRU--Public File.):

Except as noted below, we valued raw materials using

Egyptian import data from the Commodity Trade Statistics Section,

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

calendar year 1997. We

[[Page 48795]]

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 using the market

economy price, regardless of the supplier. The most recent Egyptian

import statistics that we were able to find for pitch coke and chlorine

were Egypt's 1994 and 1996 UN import statistics, respectively. Since

the UN statistics are reported in U.S. dollars, we did not adjust these

values for the effects of inflation. We were unable to find information

from Egypt in order to value carnallite and spent electrolyte. For

carnallite, we used the 1995 Egyptian UN import statistics for

dolomite, a commodity similar to carnallite, as the surrogate value. In

order to value spent electrolyte, we used the surrogate value for

potassium chloride because spent electrolyte is 75 percent potassium

chloride. The surrogate value for potassium chloride was obtained from

Egypt's 1997 UN import statistics.

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

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

for Kazakhstan as posted on the Import Administration Internet web

site.

Although the respondents placed on the record an Egyptian

electricity rate for large industrial consumers, they did not provide

any source documentation to substantiate this rate. Therefore, we

valued electricity in the instant review with the Indonesian surrogate

value for electricity used in the 1996-1997 administrative review of

this finding. In that review, 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

POR. Since this rate is from 1994, and is expressed in Indonesian

rupiahs, we adjusted this rate in order to account for the effects of

inflation.

We were unable to obtain a surrogate value from Egypt for

steam. Since steam was not valued as a factor of production in the

1996-1997 administrative review of this finding, we have used the

surrogate for electricity, as discussed above, to value this energy

input.

UKTMP states that it incurred handling and reloading

charges for merchandise transited through the port in St. Petersburg,

Russia. We were unable to find a surrogate value from Egypt for

handling and reloading charges. Since these expenses were incurred in

Russia, we valued them, consistent with the 1996-1997 review of

titanium sponge from Kazakhstan, with the surrogate value used in the

1996-1997 administrative review of the antidumping finding on titanium

sponge from the Russian Federation (titanium sponge from Russia). In

that review, we determined that Venezuela was an appropriate surrogate

country for Russia. However, since we were unable to locate a

Venezuelan surrogate value for handling charges, we valued these

charges with the surrogate value from the 1995-1996 administrative

review of titanium sponge from Russia. In the 1995-1996 review, we

valued these charges using the brokerage and handling charges reported

in the public record of the antidumping administrative review of

silicon metal from Brazil. Therefore, in the instant review, we valued

the handling and reloading charges incurred by UKTMP in Russia with the

weighted-average brokerage and handling expenses reported in the public

record of the 1997-1998 administrative review of the antidumping duty

order on silicon metal from Brazil.

We valued truck and rail transportation in Kazakhstan

using Egyptian truck and rail surrogate values obtained by the

respondents. With respect to truck transportation, the respondents

provided a schedule of trucking fees covering transport of cargo

between various cities throughout Egypt. We used the price per

kilometer per metric ton rate from the Ramadan City-to-Cairo fee

because the distance between these two cities most closely matches the

distance cargo traveled by truck in Kazakhstan. In regard to rail

transportation, the respondents provided a schedule of rail fees

covering transport of cargo between various cities throughout Egypt. We

used the price per kilometer per metric ton rate from the city-to-city

fees that most closely matched the distances cargo traveled by rail in

Kazakhstan.

UKTMP shipped its sales of titanium sponge to the United

States via rail through Russia. We valued this transportation with the

surrogate value for rail transportation used in the 1996-1997

administrative review of titanium sponge from Russia, which is the most

recently completed review of that finding. In that review, we valued

transportation via the Russian rail lines using the Venezuelan

Bolivares price per metric ton per kilometer quoted by the national

Venezuelan railroad system administrator. Since the correspondence

containing the price quote was issued during the instant review's POR,

we did not adjust this rate to account for the effects of price

changes.

In regard to packing materials, we used the 1997 UN import

statistics from Egypt that were provided by the respondent for

polyethylene film, argon, and sheet steel. 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.

The respondents placed on the record the financial

statements from three Egyptian aluminum companies. One of the three

companies is a primary aluminum producer while the other two are

aluminum products producers. Since primary aluminum producers use a

production process that is closer to the process used to produce

titanium sponge than producers of aluminum products, we normally prefer

to use the financial statements from primary aluminum producers in our

calculation of factory overhead, selling, general and administrative

(SG&A) expense, and profit. However, the financial statements from the

Egyptian primary aluminum producer did not contain enough detail to be

used in our calculations. Similarly, the financial statements from one

of the two aluminum products producers lacked sufficient detail to be

used in our calculations. Therefore, we calculated the ratios used in

our valuation of overhead, SG&A, and profit with the 1998 financial

statements from Arab Aluminum Co., an Egyptian producer of aluminum

products.

Currency Conversion

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

the Act, based on exchange rates certified by the Federal Reserve Bank

and Dow Jones Business Information Services.

Preliminary Results of the Review

SMC owns 65 percent of UKTMP and manages the operations of UKTMP

under a long-term management contract. Due to SMC's equity ownership in

UKTMP, we considered SMC and UKTMP to be affiliated for the purpose of

the antidumping statute and regulations. During the POR, UKTMP sold

titanium sponge to SMC who then resold the merchandise to unaffiliated

purchasers in the United States. Because this was the only channel of

distribution for sales to the United States, we calculated one rate

that will apply to both SMC and UKTMP. As a result of our review, we

preliminarily determine that the following margin exists for the period

August 1, 1997 through July 31, 1998:

[[Page 48796]]

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

Margin

Manufacturer/Exporter Period (percent)

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

Specialty Metals Company/Ust- 8/1/97-7/31/98 00.00

Kamenogorsk Titanium and Magnesium

Plant

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Within 5 days of the date of publication of this notice, in

accordance with 19 CFR 351.224, the Department will disclose its

calculations. Any interested party may request a hearing within 30 days

of publication of this notice in accordance with 19 CFR 351.310(c). Any

hearing, if requested, will be held 37 days after the publication of

this notice, or the first workday thereafter. Interested parties may

submit written comments (case briefs) within 30 days of the date of

publication of this notice in accordance with 19 CFR 351.309(c)(2).

Rebuttal comments (rebuttal briefs), which must be limited to issues

raised in the case briefs, may be filed not later than 35 days after

the date of publication. The Department will publish a notice of the

final results of this administrative review, which will include the

results of its analysis of issues raised by the parties, within 120

days of publication of this preliminary result.

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

assessment of antidumping duties on entries of merchandise covered by

this review.

Duty Assessment Rates

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Pursuant to 19

CFR 351.212(b)(1), we have calculated an importer-specific ad valorem

duty assessment rate based on the ratio of the total amount of the

dumping margins calculated for the examined sales to the total entered

value of those same sales. In order to estimate the entered value, we

subtracted international movement expenses from the gross sales value.

This rate will be assessed uniformly on all entries of that specific

importer made during the POR. In accordance with 19 CFR 351.106 (c)(2),

we will instruct the Customs Service to liquidate without regard to

antidumping duties any entries for which the assessment rate is de

minimis, i.e., less than 0.5 percent. The Department will issue

appraisement instructions directly to the Customs Service.

Cash Deposit Requirements

Pursuant to the ITC's determination that revocation of the finding

covering titanium sponge imports from Kazakhstan is not likely to lead

to continuation or recurrence of material injury to an industry in the

United States, the Department revoked this finding on August 31, 1998,

with an effective date of August 13, 1998. Since the revocation is

currently in effect, current and future imports of titanium sponge from

Kazakhstan shall be entered into the United States without regard to

antidumping duties. Therefore, we will instruct Customs not to suspend

future entries and to liquidate all future entries of this product,

from Kazakhstan, without regard to antidumping duties.

Notification of Interested Parties

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 is in accordance with

sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1) and

1677f(i)(1) ).

Dated: August 31, 1999.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-23328 Filed 9-7-99; 8:45 am]

BILLING CODE 3510-DS-P