Silicomanganese From the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-828]

Silicomanganese From the People's Republic of China: Preliminary

Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

SUMMARY: The Department of Commerce (``the Department'') is conducting

the first administrative review of the antidumping duty order on

silicomanganese from the People's Republic of China (``PRC'') in

response to requests by the respondents, Guangxi Bayi Ferroalloy Works

(``Bayi''), and Sichuan Emei Ferroalloy Import and Export Co., Ltd

(``Emei''). The period of review (``POR'') is December 1, 1997 through

November 30, 1998.

We have preliminarily determined that U.S. sales of subject

merchandise by Bayi and Emei have been made below normal value

(``NV''). Since both Bayi and Emei submitted full responses to the

antidumping questionnaires and it has been established that they are

sufficiently independent, they are entitled to separate rates. 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 from Bayi and Emei.

Interested parties are invited to comment on these preliminary

results.

EFFECTIVE DATE: November 8, 1999.

FOR FURTHER INFORMATION CONTACT: Timothy Finn or Paige Rivas, AD/CVD

Enforcement Group II, Office IV, Import Administration, International

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

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

482-0065 or (202) 482-0651 respectively.

APPLICABLE STATUTE AND REGULATIONS: Unless otherwise indicated, all

citations to the Tariff Act of 1930, as amended (``the Act''), are

references to the provisions as of January 1, 1995, the effective date

of the amendments made to the Act by the Uruguay Round Agreements Act.

In addition, unless otherwise indicated, all citations to the

Department's regulations are to the regulations at 19 CFR part 351

(1998).

SUPPLEMENTARY INFORMATION:

Background

The Department received a request for administrative review from

Bayi and Emei on December 17, 1998. We published a notice of initiation

of this review on January 25, 1999 (64 FR 3682).

On January 29, 1999, we issued antidumping questionnaires to Bayi

and Emei. The Department received responses from both Bayi and Emei to

Section A on March 5, 1999 and Sections C and D on March 22, 1999.

We issued supplemental questionnaires to Bayi and Emei on April 12,

1999. The responses to these supplemental questionnaires were received

on May 5, 1999. On July 12, 1999, the Department issued additional

supplemental questionnaires to Bayi and Emei. The responses to the

second supplemental questionnaires were received on August 2, 1999.

Under section 751(a)(3)(A) of the Act, the Department may extend

the deadline for issuing a preliminary determination in an

administrative review if it determines that it is not practicable to

complete the preliminary review within the statutory time limit of 245

days. On August 25, 1999, the Department published a notice of

extension of the time limit for the preliminary results in this case to

November 1, 1999 (64 FR 46350).

On October 12, 1999, Bayi and Emei and petitioner, Eramet Marietta

Inc. (``Eramet''), submitted publicly available information and

comments for consideration in valuing the factors of production used in

our NV calculations.

Scope of Review

The merchandise covered by this order is silicomanganese.

Silicomanganese, which is sometimes called ferrosilicon manganese, is a

ferroalloy composed principally of manganese, silicon, and iron, and

normally containing much smaller proportions of minor elements, such as

carbon, phosphorous and sulfur. Silicomanganese generally contains by

weight not less than 4 percent iron, more than 30 percent manganese,

more than 8 percent silicon and not more than 3 percent phosphorous.

All compositions, forms and sizes of silicomanganese are included

within the scope of this investigation, including silicomanganese slag,

fines and briquettes. Silicomanganese is used primarily in steel

production as a source of both silicon and manganese. This

investigation covers all silicomanganese, regardless of its tariff

classification. Most silicomanganese is currently classifiable under

subheading 7202.30.0000 of the Harmonized Tariff Schedule of the United

States (``HTS''). Some silicomanganese may also currently be

classifiable under HTS subheading 7202.99.5040. Although the

[[Page 60785]]

HTS subheadings are provided for convenience and customs purposes, our

written description of the scope is dispositive.

Separate Rates

It is the Department's policy to assign all exporters of the

merchandise subject to review in non-market economy (``NME'') countries

a single rate, unless an exporter can demonstrate an absence of

government control, both in law and in fact, with respect to exports.

To establish whether an exporter is sufficiently independent of

government control to be entitled to a separate rate, the Department

analyzes the exporter in light of the criteria 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 in 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). 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 an 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. Evidence relevant to a de facto absence of government

control with respect to exports is based on four factors concerning

whether the respondent: (1) Sets its own export prices independent from

the government and other exporters; (2) can retain the proceeds from

its export sales; (3) has the authority to negotiate and sign

contracts; and (4) has autonomy from the government regarding the

selection of management. See Silicon Carbide, 59 FR at 22587; see also

Sparklers, 56 FR at 20589.

In prior cases, the Department has analyzed the laws which the

respondents have submitted in this record and found that they

established an absence of de jure control. See Notice of Preliminary

Determination of Sales at Less Than Fair Value and Postponement of

Final Determination; Certain Partial-Extension Steel Drawer Slides With

Rollers From the People's Republic of China, 60 FR 29572, 29573 (June

5, 1995); see also Notice of Final Determination of Sales at Less Than

Fair Value: Furfuryl Alcohol From the People's Republic of China, 60 FR

22544 (May 8, 1995). We have no new information in this proceeding

which would cause us to reconsider this determination.

Evidence relevant to a de facto absence of government control with

respect to exports is based on whether the respondent: (1) Sets its own

export prices independent from the government and other exporters; (2)

can retain the proceeds from its export sales; (3) has the authority to

negotiate and sign contracts; and (4) has autonomy from the government

regarding the selection of management. See Silicon Carbide, 59 FR at

22587; see also, Sparklers, 56 FR at 20589. In the instant review, each

respondent has asserted the following: (1) It establishes its own

export prices; (2) it negotiates contracts, without guidance from any

governmental entities or organizations; (3) it makes its own personnel

decisions and, according to respondents, there is no information on the

record suggesting central government control over selection of

management; and (4) it retains the proceeds of its export sales, uses

profits according to its business needs and has the authority to sell

its assets and to obtain loans. In addition, respondents' questionnaire

responses indicate that company-specific pricing during the POR does

not suggest coordination among exporters. This information supports a

preliminary finding that there is a de facto absence of governmental

control of export functions.

Consequently, we preliminarily determine that both of the

respondents have met the criteria for the application of separate

rates.

Export Price

We calculated export price (``EP'') in accordance with section

772(a) of the Act, because the subject merchandise was sold directly to

the first unaffiliated purchaser in the United States prior to

importation and constructed export price (``CEP'') methodology was not

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

based on packed, CIF U.S. port, or FOB PRC port, prices to unaffiliated

purchasers in the United States, as appropriate. We also deducted from

the starting price, where appropriate, an amount for foreign inland

freight and foreign brokerage and handling. As these movement services

were provided by NME suppliers, we valued them using Indian rates. See

``Normal Value'' section below for further discussion.

Normal Value

1. Non-Market Economy Status

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

determine the NV using a factors-of-production methodology if: (1) The

merchandise is exported from an NME country; and (2) the information

does not permit the calculation of NV using home-market prices, third-

country prices, or constructed value under section 773(a) of the Act.

The Department has treated the PRC as an NME country in all

previous antidumping cases. In accordance with section 771(18)(C)(i) of

the Act, any determination that a foreign country is an NME country

shall remain in effect until revoked by the administering authority.

None of the parties to this proceeding has contested such treatment in

this review. Therefore, we treated the PRC as an NME country for

purposes of this review. Furthermore, available information does not

permit the calculation of NV using home market prices, third country

prices, or constructed value under section 773(a) of the Act. As a

result, we calculated NV by valuing the factors of production in a

comparable market economy country which is a significant producer of

comparable merchandise.

2. Surrogate Country

Section 773(c)(4) of the Act and 19 CFR 351.408 direct us to select

a surrogate country that is economically comparable to the PRC. On the

basis of per capita gross domestic product (``GDP''), the growth rate

in per capita GDP, and the national distribution of labor, we find that

India is a comparable economy to the PRC. See Memorandum from Director,

Office of Policy, to Office Director, AD/CVD Group II, Office IV, dated

June 24, 1999.

Section 773(c)(4) of the Act also requires that, to the extent

possible, the Department use a surrogate country that is a significant

producer of merchandise comparable to Silicomanganese. For purposes of

the LTFV investigation, we found that India was a significant producer

of comparable merchandise. See Preliminary Results Factors of

Production Memorandum from the Team to the File, dated October 20, 1999

(Factors Memorandum). Accordingly, absent evidence to the contrary we

continue to find India is a significant producer of silicomanganese

based on information submitted by the respondents in their October 1999

submission. Therefore, we have continued to use India as the surrogate

country and have used publicly available information relating to India,

unless otherwise noted, to value the various factors of production used

in our calculations.

[[Page 60786]]

3. Factors of Production

For purposes of calculating NV, we valued PRC factors of production

in accordance with section 773(c)(1) of the Act. Factors of production

include, but are not limited to: hours of labor employed; quantities of

raw materials required; amounts of energy and other utilities consumed;

and representative capital cost, including depreciation. In examining

surrogate values, we selected, where possible, publicly available

published information on imports of materials into the surrogate

country within the POR or most contemporaneous with the POR. Where

possible, we calculated the average of these import prices exclusive of

taxes for use as the surrogate value. For a more detailed explanation

of the methodology used in calculating various surrogate values, see

the Factors Memorandum. In accordance with this methodology, we valued

the raw materials and inputs as follows:

Respondents have stated that they import manganese ore and purchase

domestically produced manganese ore. Imported manganese ore was

purchased from a market economy supplier and paid for in a market

economy currency. Therefore, we used the market economy price paid to

the supplier in accordance with section 351.408(c)(1) of the

Department's regulations. For domestic manganese ore with a reported 30

percent purity and manganese rich slag, we used a price quote from an

Indian supplier from 1997 for the lowest available grade of manganese

ore because 30 percent purity and slag are regarded as low grade

manganese.

For dolomite, we relied on 1997 Indian import prices for limestone,

a comparable material contained in the September and November issues of

Indian Import Statistics.

To value coke, we relied on India import prices contained in the

September and November 1997, as well as the March 1998, issues of

Indian Import Statistics.

For certain minor miscellaneous materials (e.g., silicon ore) we

were unable to find usable factor values. For purposes of the

preliminary results we have not assigned a value for these factors of

production. We will continue to search for appropriate factor values

for use in the final results and will provide notice and opportunity to

comment on such values. See Factors Memorandum.

For those values not contemporaneous with the POR, we adjusted for

inflation using the wholesale price indices (``WPI'') published by the

International Monetary Fund (``IMF''). We made further adjustments to

account for freight costs between the suppliers and Bayi's and Emei's

manufacturing facilities.

In accordance with our practice, we added to CIF import values from

India a surrogate freight cost using the shorter of the reported

distances from either the closest PRC port to the factory, or from the

domestic supplier to the factory. See Final Determination of Sales at

Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From the

People's Republic of China, 62 FR 61977 (November 20, 1997).

We valued labor based on a regression-based wage rate, in

accordance with 19 CFR 351.408(c)(3).

For electricity, we relied upon public information from the 1995

edition of IEA Energy Prices and Taxes to obtain an average of prices

for electricity provided to all industries in India. We adjusted the

values to reflect inflation up to the POR using the WPI published by

the IMF.

For the reported packing materials (i.e., woven plastic bags), we

relied upon Indian import data in the April 1997 through March 1998

issues of Indian Import Statistics. We adjusted the values to reflect

inflation up to the POR using the WPI published by the IMF.

Additionally, we adjusted these values to account for freight costs

incurred between the suppliers and Bayi and Emei.

For foreign inland freight, we used the August 1998 truck and rail

rates from Rahul Roadlines, an Indian inland freight supplier.

For foreign brokerage and handling, we used the average of the

rates reported in the public questionnaire response in the Antidumping

Duty Investigation. See Certain Stainless Steel Wire Rod from India;

Preliminary Results of Antidumping Duty Administrative and New Shipper

Review, 63 FR 48184 (September 9, 1998); See also Factors Memorandum.

We adjusted the values to reflect inflation up to the POR using the WPI

published by the IMF.

For factory overhead (``FOH''), selling, general, and

administrative expenses (``SG&A''), and profit, we used information

reported for 1992-1993 in the Reserve Bank of India Bulletin. From this

information, we were able to calculate factory overhead as a percentage

of direct material, labor, and energy expenses; SG&A as a percentage of

the total cost of manufacturing; and profit as a percentage of the sum

of the total cost of manufacturing and SG&A.

Interested Party Comments on Factor Valuation

In their October 16, 1999, factor value submissions, interested

parties also provided comment on how certain factor inputs should be

valued. For electricity, Bayi and Emei argued that Indian electricity

rates are aberrationally high and should be rejected in favor of

Indonesian electricity rates. Bayi and Emei argue that Indian

electricity rates are controlled by the state, which sets artificially

high rates for industrial users in order to subsidize low rates for

residential users. As evidence of the aberrational nature of Indian

industrial rates, Bayi and Emei present the ratio of residential to

industrial rates for India, China, the United States and other

countries. They argue that this ratio, 0.34 for India compared with

1.66 for Brazil and 1.69 for the United States, among others,

demonstrates the aberrationally high nature of Indian rates. Bayi and

Emei also submitted press reports showing the deleterious effect of

increases in electricity rates on Indian silicomanganese producers.

We are not persuaded by Bayi and Emei's submission that Indian

rates should be rejected in favor of Indonesian rates. We have used

Indian electricity rates consistently for many PRC cases, including

products for which electricity is a major input, see e.g., Manganese

Metal. The fact that the state controls electricity rates is not a

basis to reject Indian rates as some degree of state control is common

in many countries. In addition, a comparison of the ratio of industrial

to residential rates between India and other countries is not

necessarily meaningful for purposes of selecting sources for factor

valuation. Each country has a unique mix of sources of electrical

supply (e.g., Hydroelectric, Nuclear, Industrial Self-Generated) as

well as a unique mix of users (e.g., residential, agricultural).

Moreover, electricity is not generally a traded good. Thus, cross-

country comparisons are inappropriate for purposes of factor valuation.

Furthermore, unless the record convincingly demonstrates that factor

values are unreliable, the Department generally prefers to stay within

the same country for factor valuation wherever possible because it

leads to more consistent results than picking and choosing factor

values from different countries. Accordingly, we continue to value

electricity based on Indian data.

For manganese rich slag, Eramet argued that we should consider it a

by-product rather than a co-product. Bayi and Emei both produce

ferromanganese (in addition to silicomanganese); this

[[Page 60787]]

production process generates manganese rich slag as a subsidiary

product. Eramet provided invoices from a market-economy producer and a

U.S producer showing that manganese rich slag has a significant market

value. However, relative to the market value of ferromanganese, it

should be considered a by-product and valued in accordance with GAAP.

Eramet proposes valuing manganese rich slag by adjusting the price of

manganese ore by a ratio to account for differences in manganese

content. Eramet calculates this ratio using the above referenced

invoices. Bayi and Emei argue that manganese rich slag is a waste

product with no commercial value, and as such, no factor input value

should be used for it in the NV calculations.

We preliminarily disagree with both parties on this point.

Manganese rich slag, used in conjunction with manganese ore, is clearly

a major input into the production process of silicomanganese and we

have valued it using Indian values. Moreover, the above-mentioned ratio

is not a reliable basis for adjusting Indian Import values of manganese

ore. See Factor Memorandum.

Preliminary Results of the Review

We preliminarily determine that the following margins exists for

the period December 1, 1997 through November 30, 1998:

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

Margin

Manufacturer/exporter (percent)

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

Guangxi Bayi Ferroalloy Works........................... 57.71

Sichuan Emei Ferroalloy Import and Export Co., Ltd...... 67.97

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

Interested parties may request a hearing within 30 days of

publication of this notice. See 19 CFR 351.310(c). Any hearing, if

requested, will be held 44 days after the date of the publication of

this notice or the first workday thereafter. Interested parties may

submit case briefs within 30 days of publication. Rebuttal briefs,

limited to issues raised in the case briefs, may be filed no later than

35 days after the date of publication. Parties who submit case briefs

or rebuttal briefs in this proceeding are requested to submit with each

argument (1) a statement of the issue and (2) a brief summary of the

argument. Parties are also encouraged to provide a summary of the

arguments not to exceed five pages and a table of statutes,

regulations, and cases cited.

The Department will subsequently issue the final results of this

administrative review, including the results of its analysis of issues

raised in any such written briefs or at a hearing, not later than 120

days after the date of publication of this notice.

Upon issuance of the final results, the Department will determine,

and Customs shall assess, antidumping duties on all appropriate entries

for assessment purposes. Pursuant to 19 CFR 351.212(b)(1), where we

analyze and use a company's response, we intend to calculate an

importer-specific duty assessment rate by dividing the total amount of

dumping margins calculated for sales to each importer by the total

number of units of those same sales sold to that importer. The unit

dollar amount will be assessed uniformly against each unit of

merchandise of that specific importer's entries during the POR.

Furthermore, the following deposit requirements will be effective

upon publication of the final results of this antidumping duty

administrative review for all shipments of the subject merchandise

entered, or withdrawn from warehouse, for consumption on or after the

publication date, as provided by section 751(a)(1) of the Act: (1) For

Bayi and Emei, which both have separate rates, the cash deposit rate

will be 57.71 percent and 67.97 percent, respectively; (2) for any

previously reviewed PRC and non-PRC exporter with a separate rate, the

cash deposit rate will be the company- and product-specific rate

established for the most recent period; (3) the cash deposit rate for

non-PRC exporters of subject merchandise from the PRC will be the rate

applicable to the PRC supplier of that exporter; and (4) the cash

deposit rate for all other PRC exporters will continue to be 150.00

percent, the PRC-wide rate established in the LTFV investigation. These

requirements, when imposed, shall remain in effect until publication of

the final results of the next administrative review.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 351.402(f) 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 is issued and published in accordance

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

Dated: November 1, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-29203 Filed 11-5-99; 8:45 am]

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