Stainless Steel Bar from Japan: Preliminary Results of Antidumping Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-588-833]

Stainless Steel Bar from Japan: Preliminary Results of

Antidumping Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping administrative

review.

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SUMMARY: The Department of Commerce is conducting an administrative

review of the antidumping duty order on stainless steel bar from Japan

in response to a request from a respondent, Aichi Steel Corporation.

This review covers the period February 1, 1998, through January 31,

1999.

We preliminarily determine that sales have been made below normal

value. Interested parties are invited to comment on these preliminary

results. Parties who submit argument are requested to submit with the

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

argument.

EFFECTIVE DATE: November 8, 1999.

FOR FURTHER INFORMATION CONTACT: Minoo Hatten or Robin Gray, Office of

AD/CVD Enforcement, Import Administration, International Trade

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

Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-1690

or (202) 482-4023, respectively.

SUPPLEMENTARY INFORMATION:

The 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 (the Act) by the

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

indicated, all citations to the Department of Commerce's (the

Department's) regulations are to 19 CFR Part 351 (1998).

Background

On February 26, 1999, the Department received a request from Aichi

Steel Corporation (Aichi) to conduct an administrative review of the

antidumping duty order on stainless steel bar (SSB) from Japan. On

March 29, 1999, the Department published a notice of initiation of an

administrative review of Aichi, covering the period February 1, 1998,

through January 31, 1999, in the Federal Register (64 FR 14860).

On March 25, 1999, Aichi requested that it be permitted to limit

the scope of products reported to include home-market sales of only

hot-rolled merchandise, as was permitted in the 97/98 review. On March

30, 1999, we granted Aichi's request, given that Aichi confirmed that

the same facts apply in this review that applied in the 97/98 review.

As was the case in that review, Aichi claims that there are a limited

number of home-market sales of stainless steel bar during the period of

review (POR) to which U.S. sales would match when calculating dumping

margins. See Preliminary Results Analysis Memorandum from case analyst

to file, dated October 19, 1999 (98/99 review), in room B-099 of the

main Department building; see also Preliminary Results Analysis

Memorandum from case analyst to file, dated February 22, 1999 (97/98

review), in room B-099 for additional details.

On April 28, 1999, Al Tech Specialty Steel Corp., Dunkirk, N.Y.,

Carpenter Technology Corp., Reading, PA, Republic Engineered Steels,

Inc., Massillon, OH, Slater Steels Corp., Fort Wayne, IN, Talley Metals

Technology, Inc., Hartsville, SC, and the United Steel Workers of

America, AFL-CIO/CLC, collectively the petitioners in the less-than-

fair value (LTFV) investigation (hereafter petitioners), requested that

the Department determine whether antidumping duties have been absorbed

in the event that the subject merchandise was sold during the POR in

the United States through an importer affiliated with the respondent.

As all of Aichi's sales to the United States during the POR were

through an unaffiliated importer, duty absorption was not an issue.

On May 17, 1999, the petitioners requested that the Department

initiate a sales-below-cost investigation of Aichi's home-market sales.

On June 28, 1999, based on section 773(b)(2)(A)(ii) of the Act, since

we disregarded certain home-market sales below the cost of production

(COP) in the 97/98 review, we initiated a cost investigation for this

review. See Stainless Steel Bar From Japan: Final Results of

Antidumping Administrative Review, 64 FR 36333 (July 6, 1999).

Scope of Review

The merchandise covered by this review is stainless steel bar

(SSB). For purposes of this review, the term ``stainless steel bar''

means articles of stainless steel in straight lengths that have been

either hot-rolled, forged, turned, cold-drawn, cold-rolled or otherwise

cold-finished, or ground, having a uniform solid cross section along

their whole length in the shape of circles, segments of circles, ovals,

rectangles (including squares), triangles, hexagons, octagons or other

convex polygons. SSB includes cold-finished SSBs that are turned or

ground in straight lengths, whether produced from hot-rolled bar or

from straightened and cut rod or wire, and reinforcing bars that have

indentations, ribs, grooves, or other deformations produced during the

rolling process.

Except as specified above, the term does not include stainless

steel semi-finished products, cut-length flat-rolled products (i.e.,

cut-length rolled products which if less than 4.75 mm in thickness have

a width measuring at least 10 times the thickness or if 4.75 mm or more

in thickness having a width which exceeds 150 mm and measures at least

twice the thickness), wire (i.e., cold-formed products in coils, of any

uniform solid cross section along their whole length, which do not

conform to the definition of flat-rolled products), and angles, shapes,

and sections.

The SSB subject to this order is currently classifiable under

subheadings 7222.11.0005, 7222.19.0005, 7222.11.0050, 7222.19.0050,

7222.20.0005, 7222.20.0045, 7222.20.0075, and 7222.30.0000 of the

Harmonized Tariff Schedule of the United States (HTSUS). Although the

HTSUS subheadings are provided for convenience and customs purposes,

our written description of the scope of this order is dispositive.

United States Price

In calculating the price to the United States, we used export price

(EP) as defined in section 772(a) of the Act because the subject

merchandise was sold to an unaffiliated U.S. purchaser in the United

States prior to the date of importation into the United States and the

use of constructed export price was not indicated by the facts of

record.

We calculated EP for U.S. sales based on F.O.B. Japan port prices

to the United States. We made adjustments, where appropriate, for

domestic inland freight, warehousing expenses, and brokerage and

handling in accordance with section 772(c)(2)(A) of the Act. We used

the shipment date as the date of

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sale for the U.S. market because this was the point at which the

material terms of sale were determined. See Preliminary Results

Analysis Memorandum from case analyst to file, dated October 19, 1999,

in room B-099.

Aichi claimed that an upward adjustment to EP was appropriate to

account for a ``duty drawback'' program. As stated in Certain Welded

Carbon Standard Steel Pipes and Tubes from India (62 FR 47632, 47635

(September 10, 1997)), ``we determine whether an adjustment to U.S.

price for a respondent's claimed duty drawback is appropriate when the

respondent can demonstrate that it meets both parts of our two-part

test. There must be: (1) a sufficient link between the import duty and

the rebate, and (2) a sufficient amount of raw materials imported and

used in the production of the final exported product.'' As discussed

below, because the respondent met these criteria, we have made an

adjustment to EP.

Aichi participates in Japan's duty-drawback program through its

operation of a ``hozei area,'' which is similar to a bonded warehouse.

Aichi posts a bond on all materials that enter the warehouse. If Aichi

utilizes the imported materials for the production of merchandise that

is exported, Japanese Customs Authority then releases the bond. If the

imported materials are not used in the production of exported

merchandise, Aichi pays import duties on the materials.

We granted an upward adjustment to EP because Aichi was able to

show both (1) a link between the import duty and the rebate, and (2) a

sufficient amount of raw materials imported and used in the production

of the final exported product.

No other adjustments to EP were claimed.

Normal Value

On March 25, 1999, Aichi requested that the Department limit the

product scope of Aichi's reporting requirements as in Preliminary

Results of Antidumping Duty Administrative Review: Stainless Steel Bar

from Japan, 64 FR 10445 (March 4, 1999).

On March 30, 1999, the Department granted Aichi's request to report

only home-market sales of hot-rolled merchandise given that Aichi's

letter confirmed that the same facts apply in this review that applied

in the last review.

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

in the home market to serve as a basis for calculating normal value

(NV), we compare 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) of the Act. Because the

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

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

subject merchandise, we determined that the home market provides a

viable basis for calculating NV. Therefore, in accordance with section

773(a)(1)(B)(i) of the Act, we based NV on the price at which the

foreign like product was first sold to unaffiliated customers for

consumption in the exporting country, in the usual commercial

quantities and in the ordinary course of trade. We matched EP sales to

sales at the same level of trade in the home market and made no level-

of-trade adjustment. (See Level of Trade below.)

After disregarding appropriate below-cost sales (see Cost-of-

Production Analysis below), pursuant to section 773(b)(1) of the Act,

we compared the EP sales of individual transactions to the monthly

weighted-average price of sales of the most similar foreign like

product. Where possible, we based NV on delivered prices to

unaffiliated purchasers in the home market. Where applicable, we made

adjustments to home-market price for billing adjustments, inland

freight, warehousing expenses, discounts and rebates. Subject

merchandise sold in the United States was compared to home-market

products by applying the following criteria on a hierarchical basis:

general type of finish, grade, remelting, type of final finishing

operation, shape, and size.

Home-market prices were based on delivered prices to affiliated or

unaffiliated purchasers. When applicable, we made adjustments for

differences in packing and for movement expenses in accordance with

sections 773(a)(6)(A) and (B) of the Act. We also made adjustments for

differences in cost attributable to differences in physical

characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii)

of the Act and for differences in circumstances of sale (COS) in

accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR

351.410. To make COS adjustments, we reduced home-market price by an

amount for home-market credit and we increased it by an amount for U.S.

credit expenses.

Level of Trade

As set forth in section 773(a)(1)(B)(i) of the Act and in the

Statement of Administrative Action (SAA) accompanying the Uruguay Round

Agreements Act, at 829-831 (see H.R. Doc. No. 103-316, at 829-831

(1994)), to the extent practicable, the Department calculates NV based

on sales at the same level of trade as the U.S. sales (either EP or

constructed export price). When the Department is unable to find

sale(s) in the comparison market at the same level of trade as the U.S.

sale(s), the Department may compare sales in the U.S. and foreign

markets at different levels of trade. The NV level of trade is that of

the starting-price sales in the home market. When NV is based on

constructed value (CV), the level of trade is that of the sales from

which we derive selling, general and administrative expenses (SG&A) and

profit.

To determine whether home-market sales are at a different level of

trade than U.S. 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 level of trade and the differences affect 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 level of trade of the export transaction, we make a

level-of-trade adjustment under section 773(a)(7)(A) of the Act. See

Notice of Final Determination of Sales at Less Than Fair Value: Certain

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

(November 19, 1997).

In implementing these principles in this review, we examined

information from the respondent regarding the marketing stages involved

in the reported home market and EP sales, including a description of

the selling activities Aichi performed for each channel of

distribution. Aichi reported three channels of distribution in the home

market and claimed five levels of trade for its home-market sales--

consignment sales to trading companies, consignment sales to direct

distributors, non-consignment sales to trading companies, non-

consignment sales to distributors and non-consignment sales to end-

users.

Based on our analysis of information on the record, we determine

that there are no differences with respect to selling functions between

consignment and non-consignment sales. Specifically, there are no

differences between consignment and non-consignment sales with respect

to strategic and economic planning, market research, computer, legal,

accounting, audit, business systems development assistance, personnel

assistance, engineering

[[Page 60790]]

services, research and development technical programs, advertising,

procurement and sourcing, sales calls/assistance and post-sale

warehousing. The distinction between consignment and non-consignment

sales is that, in consignment sales situations, Aichi permits the

customer to take possession of the product without requiring that the

customer pay for the product until the customer sells to its downstream

customer. This distinction, however, does not relate to the nature of

the selling activities provided. See Preliminary Results Analysis

Memorandum from case analyst to file, dated October 19, 1999, in room

B-099. This determination is consistent with the Department's

determination on this issue in the previous administrative review (see

Preliminary Results of Antidumping Duty Administrative Review:

Stainless Steel Bar from Japan, 64 FR 10445 (March 4, 1999)).

Aichi reported sales to three types of customers in the home

market: trading companies, end-users, and distributors. Selling

functions performed with respect to sales to trading companies included

strategic and economic planning, market research, computer, legal and

business-systems development, engineering services and post-sale

warehousing. In addition to these functions, other functions performed

for sales to end-users included R&D technical programs, advertising,

and sales calls/assistance. Distributors also were offered personnel

training and manpower assistance in addition to the services offered to

trading companies and end-users. Based on these differences, we found

that the three types of home-market customers constituted three

different levels of trade.

We found that Aichi made EP sales of various models of merchandise

through unaffiliated trading companies, a channel of distribution

similar to the home-market channel involving sales to trading

companies. As with sales through the trading-company channel of

distribution in the home market, Aichi performed only a few selling

functions when selling merchandise to trading companies that exported

the merchandise to the United States. Thus, we found that the level of

trade for this U.S. channel of distribution was the same as the level

of trade for the home-market trading company channel of distribution.

See Id.

Cost-of-Production Analysis

As stated in the Background section of this notice, the Department

initiated a COP investigation for Aichi to determine whether Aichi made

home-market sales during the POR at prices below their respective COPs

(as defined by section 773(b) of the Act). 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 SG&A expenses and all costs and expenses incidental

to packing the merchandise. In our COP analysis, we used the home-

market sales and COP information Aichi provided in its questionnaire

responses.

After calculating the COP, in accordance with section 773(b)(1) of

the Act, we tested whether home-market sales of SSB were made at prices

below the COP within an extended period of time in substantial

quantities and whether such prices permitted the recovery of all costs

within a reasonable period of time. We compared model-specific COPs to

the reported home-market prices less any applicable movement charges,

discounts, and rebates.

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

percent of Aichi's sales of a given product were at prices below the

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

the below-cost sales were not made in substantial quantities within an

extended period of time. When 20 percent or more of Aichi's sales of a

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

determined that the below-cost sales were made in substantial

quantities within an extended period of time. See sections 773(b)(2)(B)

and (C) of the Act. Additionally, based on comparisons of prices to

weighted-average COPs for the POR, we determined that the sales were at

prices which would not permit recovery of all costs within a reasonable

period of time, as defined by section 773(b)(2)(D) of the Act.

Therefore, we disregarded the below-cost sales.

Constructed Value

In accordance with section 773(a)(4) of the Act, we used

constructed value (CV) as the basis for NV when there were no usable

sales of the foreign like product in the comparison market. We

calculated CV in accordance with section 773(e) of the Act. We included

the cost of materials and fabrication, SG&A expenses, and profit in the

calculation of CV. In accordance with section 773(e)(2)(A) of the Act,

we based SG&A expenses and profit on the amounts incurred and realized

by Aichi in connection with the production and sale of the foreign like

product in the ordinary course of trade for consumption in the home

market.

When appropriate, we make adjustments to CV in accordance with

section 773(a)(8) of the Act and 19 CFR 351.410 for COS differences and

level-of-trade differences. For comparisons to EP, we make COS

adjustments by deducting home market direct selling expenses from and

adding U.S. direct selling expenses to NV.

We calculated CV at the same level of trade as the EP. Therefore we

made no level-of-trade adjustment.

Preliminary Results of Review

As a result of our comparison of EP and NV, we preliminarily

determine a weighted-average dumping margin of 1.72 percent for Aichi

for the period February 1, 1998, through January 31, 1999.

Any interested party may request a hearing within 30 days of

publication of this notice. Any hearing, if requested, will be held 37

days after the date of publication of this notice, or the first workday

thereafter. Issues raised in hearings will be limited to those raised

in the respective case and rebuttal briefs. Interested parties may

submit case briefs within 30 days of 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 35 days after the date of

publication.

Parties who submit argument are requested to submit with the

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

argument. The Department will publish a notice of final results of this

administrative review, which will include the results of its analysis

of issues raised in any such comments or at a hearing.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. In accordance

with 19 CFR 351.212(b)(1), we have calculated an exporter/customer-

specific assessment value for subject merchandise. Upon completion of

this review, the Department will issue appraisement instructions

directly to the Customs Service.

Furthermore, the following deposit rates will be effective upon

publication of the final results of this administrative review for all

shipments of SSB from Japan 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 Aichi

will be the rate established in the final results of this review; (2)

for previously reviewed or investigated companies not listed above, the

cash-deposit rate will continue to be the company-specific rate

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published for the most recent period; (3) if the exporter is not a firm

covered in this 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 61.47 percent, the all-others rate established in

the LTFV investigation (59 FR 66930 (December 28, 1994)).

The deposit rate, 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 351.402(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.

We are issuing and publishing this determination 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. 99-29205 Filed 11-5-99; 8:45 am]

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