[Federal Register: May 5, 2008 (Volume 73, Number 87)]
[Notices]
[Page 24541-24547]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05my08-440]
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DEPARTMENT OF COMMERCE
International Trade Administration
(A-821-819)
Magnesium Metal from the Russian Federation: Preliminary Results
of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: In response to timely requests, the Department of Commerce
(the Department) is conducting an administrative review of the
antidumping duty order on magnesium metal from the Russian Federation
for the period of review (POR) April 1, 2006, through March 31, 2007.
The review covers two respondents, PSC VSMPO-AVISMA Corporation
(AVISMA) and Solikamsk Magnesium Works (SMW).
The Department preliminarily determines that AVISMA and SMW made
sales to the United States at less than normal value. If these
preliminary results are adopted in the final results of this
administrative review, we will instruct U.S. Customs and Border
Protection (CBP) to assess antidumping duties on entries of AVISMA's
and SMW's merchandise during the POR. The preliminary results are
listed below in the section titled ``Preliminary Results of Review.''
EFFECTIVE DATE: May 5, 2008.
FOR FURTHER INFORMATION CONTACT: Dmitry Vladimirov or Minoo Hatten, AD/
CVD Operations, Office 5, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0665 or (202) 482-1690, respectively.
SUPPLEMENTARY INFORMATION:
Background
The Department published the antidumping duty order on magnesium
metal from the Russian Federation on April 15, 2005. See Notice of
Antidumping Duty Order: Magnesium Metal from the Russian Federation, 70
FR 19930 (April 15, 2005) (Antidumping Duty Order). On April 2, 2007,
the Department published in the Federal Register a notice of
opportunity to request an administrative review of the antidumping duty
order on magnesium metal from the Russian Federation. See Antidumping
or Countervailing Duty Order, Finding, or Suspended Investigation;
Opportunity to Request Administrative Review, 72 FR 15650 (April 2,
2007). On April 30, 2007, AVISMA, a Russian Federation producer of the
subject merchandise, requested that the Department conduct an
administrative review. On April 30, 2007, U.S. Magnesium Corporation
LLC, the petitioner in this proceeding, also requested that the
Department conduct an administrative review with respect to AVISMA and
SMW, another Russian Federation producer of the subject merchandise. On
May 30, 2007, the Department published a notice of initiation of an
administrative review of the antidumping duty order on magnesium metal
from the Russian Federation for the period April 1, 2006, through March
31, 2007. See Initiation of Antidumping and Countervailing Duty
Administrative Reviews and Request for Revocation in Part, 72 FR 29968
(May 30, 2007).
On December 18, 2007, the Department extended the deadline for the
preliminary results of this antidumping duty administrative review from
December 31, 2007, to April 29, 2008. See Notice of Extension of Time
Limit for Preliminary Results of Antidumping Duty Administrative
Review: Magnesium Metal From the Russian Federation, 72 FR 71620
(December 18, 2007).
Scope of the Order
The merchandise covered by the order is magnesium metal (also
referred to as magnesium), which includes primary and secondary pure
and alloy magnesium metal, regardless of chemistry, raw material
source, form, shape, or size. Magnesium is a metal or alloy containing
by weight primarily the element magnesium. Primary magnesium is
produced by decomposing raw materials into magnesium metal. Secondary
magnesium is produced by recycling magnesium-based scrap into magnesium
metal. The magnesium covered by the order includes blends of primary
and secondary magnesium.
The subject merchandise includes the following pure and alloy
magnesium metal products made from primary and/or secondary magnesium,
including, without limitation, magnesium cast into ingots, slabs,
rounds, billets, and other shapes, and magnesium ground, chipped,
crushed, or machined into raspings, granules, turnings, chips, powder,
briquettes, and other shapes: (1) products that contain at least 99.95
percent magnesium, by weight (generally referred to as ``ultra-pure''
magnesium); (2) products that contain less than 99.95 percent but not
less than 99.8 percent magnesium, by weight (generally referred to as
``pure'' magnesium); and (3) chemical combinations of magnesium and
other material(s) in which the magnesium content is 50 percent or
greater, but less that 99.8 percent, by weight, whether or not
conforming to an ``ASTM Specification for Magnesium Alloy''.
The scope of the order excludes: (1) magnesium that is in liquid or
molten form; and (2) mixtures containing 90 percent or less magnesium
in granular or powder form by weight and one or more of certain non-
magnesium granular materials to make magnesium-based reagent mixtures,
including lime, calcium metal, calcium silicon, calcium carbide,
calcium carbonate, carbon, slag coagulants, fluorspar, nephaline
syenite, feldspar, alumina (Al203), calcium aluminate, soda ash,
hydrocarbons, graphite, coke, silicon, rare earth metals/mischmetal,
cryolite, silica/fly
[[Page 24542]]
ash, magnesium oxide, periclase, ferroalloys, dolomite lime, and
colemanite.\1\
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\1\ This second exclusion for magnesium-based reagent mixtures
is based on the exclusion for reagent mixtures in the 2000-2001
investigations of magnesium from China, Israel, and Russia. See
Notice of Final Determination of Sales at Less Than Fair Value: Pure
Magnesium in Granular Form From the People's Republic of China, 66
FR 49345 (September 27, 2001); Notice of Final Determination of
Sales at Less Than Fair Value: Pure Magnesium From Israel, 66 FR
49349 (September 27, 2001); Notice of Final Determination of Sales
at Not Less Than Fair Value: Pure Magnesium From the Russian
Federation, 66 FR 49347 (September 27, 2001). These mixtures are not
magnesium alloys, because they are not chemically combined in liquid
form and cast into the same ingot.
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The merchandise subject to the order is currently classifiable
under items 8104.11.00, 8104.19.00, 8104.30.00, and 8104.90.00 of the
Harmonized Tariff Schedule of the United States (HTSUS). Although the
HTSUS item numbers are provided for convenience and customs purposes,
the written description of the merchandise covered by the order is
dispositive.
On November 9, 2006, in response to U.S. Magnesium Corporation
LLC's request for scope rulings, the Department issued final scope
rulings in which it determined that the processing of pure magnesium
ingots imported from Russia by Timminco, a Canadian company, into pure
magnesium extrusion billets constitutes substantial transformation.
Therefore, such alloy magnesium extrusion billets produced and exported
by Timminco are a product of Canada and thus are not within the scope
of the order. See November 9, 2006, Memorandum for Stephen J. Claeys,
Deputy Assistant Secretary for Import Administration, from Barbara E.
Tillman, Director, Office 6, and Wendy Frankel, Director, Office 8,
China/NME Group, AD/CVD Operations: Pure Magnesium from the People's
Republic of China (A-570-832), Magnesium Metal from the People's
Republic of China (A-570-896), and Magnesium Metal from Russia (A-821-
819): Final Ruling in the Scope Inquiry on Russian and Chinese
Magnesium Processed in Canada.
Use of Facts Otherwise Available
For the reasons discussed below, we determine that the use of
adverse facts available (AFA) is appropriate for the preliminary
results of this review with respect to SMW.
A. Use of Facts Available
Section 776(a)(2) of the Tariff Act of 1930, as amended (the Act),
provides that, if an interested party withholds information requested
by the administering authority, fails to provide such information by
the deadlines for submission of the information and in the form or
manner requested, subject to subsections (c)(1) and (e) of section 782,
significantly impedes a proceeding under this title, or provides such
information but the information cannot be verified as provided in
section 782(i), the administering authority shall use, subject to
section 782(d) of the Act, facts otherwise available in reaching the
applicable determination. Section 782(d) of the Act provides that, if
the administering authority determines that a response to a request for
information does not comply with the request, the administering
authority shall promptly inform the responding party and provide an
opportunity to remedy the deficient submission. Section 782(e) of the
Act states further that the Department shall not decline to consider
submitted information if all of the following requirements are met: (1)
the information is submitted by the established deadline; (2) the
information can be verified; (3) the information is not so incomplete
that it cannot serve as a reliable basis for reaching the applicable
determination; (4) the interested party has demonstrated that it acted
to the best of its ability; (5) the information can be used without
undue difficulties.
On July 11, 2007, SMW notified the Department that it would not
participate in this administrative review. As such, SMW failed to
respond to our questionnaire, thereby withholding, among other things,
home-market and U.S. sales information necessary for reaching the
applicable results. Such information is imperative to calculate an
antidumping margin for the preliminary results of the review. Because
SMW failed to provide the information requested and thus significantly
impeded the proceeding, we find that we must base its margin on facts
otherwise available pursuant to sections 776(a)(2)(A), (B), and (C) of
the Act. Further, sections 782(d) and (e) of the Act are inapplicable
because SMW decided not to provide the Department with any information.
B. Application of Adverse Inferences for Facts Available
In applying the facts otherwise available, section 776(b) of the
Act provides that, if the administering authority finds that an
interested party has failed to cooperate by not acting to the best of
its ability to comply with a request for information from the
administering authority, in reaching the applicable determination under
this title the administering authority may use an inference adverse to
the interests of that party in selecting from among the facts otherwise
available.
Adverse inferences are appropriate ``to ensure that the party does
not obtain a more favorable result by failing to cooperate than if it
had cooperated fully.'' See Statement of Administrative Action
accompanying the Uruguay Round Agreements Act, H.R. Doc. No. 103-316,
vol.1 (1994) at 870 (SAA). Further, ``affirmative evidence of bad faith
on the part of a respondent is not required before the Department may
make an adverse inference.'' See Antidumping Duties; Countervailing
Duties, 62 FR 27296, 27340 (May 19, 1997). Because SMW has not provided
any information in response to our questionnaire and has notified us
that it would not participate in this review, we find that SMW has not
acted to the best of its ability in providing us with relevant
information which is under its control. This constitutes a failure on
the part of SMW to cooperate to the best of its ability to comply with
a request for information by the Department within the meaning of
section 776(b) of the Act. Based on the above, the Department has
preliminarily determined that, in selecting from among the facts
otherwise available, an adverse inference is warranted. See, e.g.,
Notice of Final Determination of Sales at Less than Fair Value:
Circular Seamless Stainless Steel Hollow Products from Japan, 65 FR
42985, 42986 (July 12, 2000) (the Department applied total AFA where
the respondent failed to respond to the antidumping questionnaire).
C. Selection and Corroboration of Information Used as Facts Available
Section 776(b) of the Act provides that the Department may use as
AFA information derived from the petition, the final determination in
the investigation, any previous review, or any other information placed
on the record. When selecting an AFA rate from among the possible
sources of information, the Department's practice has been to ensure
that the margin is sufficiently adverse to induce respondents to
provide the Department with complete and accurate information in a
timely manner. See, e.g., Certain Steel Concrete Reinforcing Bars from
Turkey; Final Results and Rescission of Antidumping Duty Administrative
Review in Part, 71 FR 65082, 65084 (November 7, 2006). In selecting an
appropriate AFA rate for SMW, the Department considered the following
rates from the proceeding: 1) the rates alleged in the petition which
range from 54.40 to 68.94 and 86.54 to 101.24 percent (when taking into
account
[[Page 24543]]
adjustments for electricity; see Notice of Initiation of Antidumping
Duty Investigations: Magnesium Metal From the People's Republic of
China and the Russian Federation, 69 FR 15293 (March 25, 2004)); 2) the
rates we calculated for the final determination of the investigation
which ranged from 18.65 to 21.71 percent (see Antidumping Duty Order);
and 3) the rates we calculated in the first administrative review (the
most recently completed review), 0.41 and 3.77 percent (see Magnesium
Metal from the Russian Federation: Final Results of Antidumping Duty
Administrative Review, 72 FR 51791 (September 11, 2007)).
Section 776(c) of the Act provides that the Department shall
corroborate, to the extent practicable, secondary information used for
facts available by reviewing independent sources reasonably at its
disposal. With respect to the rates alleged in the petition,
information from prior segments of the proceeding constitutes secondary
information. See SAA at 870 and Final Results of Antidumping Duty
Administrative Reviews, Rescission of Administrative Reviews in Part,
and Determination to Revoke Order in Part: Antifriction Bearings and
Parts Thereof From France, Germany, Italy, Japan, Singapore, and the
United Kingdom, 69 FR 55574, 55577 (September 15, 2004) (AFBs 14). The
word ``corroborate'' means that the Department will satisfy itself that
the secondary information to be used has probative value. Id.; see also
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished,
from Japan, and Tapered Roller Bearings Four Inches or Less in Outside
Diameter, and Components Thereof, from Japan: Preliminary Results of
Antidumping Duty Administrative Reviews and Partial Termination of
Administrative Reviews, 61 FR 57391, 57392 (November 6, 1996). To
corroborate secondary information, the Department will examine, to the
extent practicable, the reliability and relevance of the information
used.
Because SMW did not submit information we requested in this review
we do not have such information to consider in determining whether the
petition rates are relevant to SMW. To determine whether the petition
rates are reliable and relevant in this administrative review, we
compared the transaction-specific margins of AVISMA for the POR to the
petition rates and found that the petition rates were not relevant for
use in this administrative review and, therefore, do not have probative
value for use as AFA.
In addition, we find that the weighted-average rates we calculated
for respondents in the previous, as well as in the instant review, are
not sufficiently high as to effectuate the purpose of the facts-
available rule (i.e., we do not find that any of these rates are high
enough to encourage participation in future segments of this proceeding
in accordance with section 776(b) of the Act). Therefore, as facts
available with an adverse inference, we have selected the rate of 21.71
percent for SMW, the weighted-average margin the Department calculated
for JSC AVISMA Magnesium-Titanium Works (a predecessor to PSC VSMPO-
AVISMA Corporation) in the original investigation (see Antidumping Duty
Order); it is the highest rate the Department has calculated in any
segment of the proceeding. We consider the 21.71 percent rate to be
sufficiently high so as to encourage participation in future segments
of this proceeding.
With respect to corroboration of other rates from the proceeding,
unlike other types of information such as input costs or selling
expenses, there are no independent sources for calculated dumping
margins. The only source for margins is administrative determinations.
Thus, with respect to an administrative review, if the Department
chooses as facts available a calculated dumping margin from a prior
segment of the proceeding, there is no practical manner to test the
margin's reliability further and the Department considers the rate
reliable. See AFBs 14 at 55577.
With respect to the relevance aspect of corroboration the
Department will consider information reasonably at its disposal as to
whether there are circumstances that would render a margin not
relevant. Where circumstances indicate that the selected margin is not
appropriate as AFA, the Department will disregard the margin and
determine an appropriate margin. See Fresh Cut Flowers from Mexico;
Final Results of Antidumping Duty Administrative Review, 61 FR 6812,
6814 (February 22, 1996), where the Department disregarded the highest
dumping margin as best information available because the margin was
based on another company's uncharacteristic business expense resulting
in an unusually high margin.
We examined individual transactions made by AVISMA in the current
review and the margins on those transactions in order to determine
whether the rate of 21.71 percent was probative. We found a number of
sales with dumping margins above the rate of 21.71 percent. Further, to
support our corroboration, because SMW did not provide us with any
information in this review, we examined individual transactions made by
SMW during the immediately preceding (2005-06) administrative review
period and the margins we determined for that review on those
transactions in order to determine whether the rate of 21.71 percent
was probative. See Preliminary Results of Antidumping Duty
Administrative Review: Stainless Steel Wire Rod from the Republic of
Korea, 72 FR 32074, 32076 (June 11, 2007) (unchanged in Final Results
of Antidumping Duty Administrative Review: Stainless Steel Wire Rod
from the Republic of Korea, 72 FR 46035 (August 16, 2007)). We found a
number of sales by SMW during the 2005-06 period with dumping margins
above the rate of 21.71 percent. Thus, the AFA rate is relevant as
applied to SMW for this review because it falls within the range of
AVISMA's transaction-specific margins in the current review period and
SMW's own transaction-specific margins in the prior review period. See
Ta Chen Stainless Steel Pipe, Inc. vs. United States, 298 F.3d 1330,
1340 (CAFC 2002) (``Because Commerce selected a dumping margin within
the range of Ta Chen's actual sales data, we cannot conclude that
Commerce overreached reality'.'') We have detailed the corroboration of
the AFA rate in the memorandum from the analyst to Laurie Parkhill
entitled ``The Use of Facts Available and Corroboration of Secondary
Information for Solikamsk Magnesium Works in the 2006/2007
Administrative Review of the Antidumping Duty Order on Magnesium Metal
from the Russian Federation,'' dated April 29, 2008. Therefore, we find
this rate to be both reliable and relevant. As such, the Department
finds this rate to be corroborated to the extent practicable consistent
with section 776(c) of Act.
Date of Sale
AVISMA reported invoice date as the date of sale for all sales in
both markets, consistent with our conclusions in earlier segments of
the proceeding regarding both spot sales and sales made according to
short and long-term agreements. See Magnesium Metal from the Russian
Federation: Notice of Final Determination of Sales at Less Than Fair
Value, 70 FR 9041 (February 24, 2005), and accompanying Issues and
Decision Memorandum at Comment 14. After analyzing AVISMA's response
and the sample sales documents it provided, we preliminarily determine
that invoice date is the appropriate date of sale for all U.S. and
home-market sales subject to analysis in this review.
[[Page 24544]]
Constructed Export Price
AVISMA identified all of its sales to the United States as
constructed export-price (CEP) sales because the U.S. sales were made
for the account of AVISMA by AVISMA's U.S. affiliate, VSMPO-Tirus,
U.S., Inc. (Tirus US), to unaffiliated purchasers in the United States.
AVISMA and Tirus US are affiliated because Tirus US is a wholly owned
subsidiary of AVISMA. See section 771(33)(E) of the Act. U.S. sales to
the first unaffiliated party were made in the United States by the U.S.
affiliate, thus satisfying the legal requirements for CEP sales. See
section 772(b) of the Act.
We calculated CEP based on the packed, C.I.F price to unaffiliated
purchasers in the United States. In accordance with section 772(c)(2)
of the Act, for AVISMA's CEP sales we made deductions from price for
movement expenses and discounts, where appropriate. More specifically,
we deducted early-payment discounts, expenses for Russian railway
freight from plant to port, freight insurance, Russian brokerage,
handling, and port charges, international freight and marine insurance,
U.S. customs duties, U.S. brokerage, handling, and port charges, U.S.
warehousing, and U.S. inland freight.
In accordance with section 772(d)(1) of the Act we deducted direct
selling expenses and indirect selling expenses related to commercial
activity in the United States. See also SAA at 823-824. Pursuant to
sections 772(d)(3) and 772(f) of the Act, we made an adjustment for CEP
profit allocated to expenses deducted under section 772(d)(1) of the
Act. In accordance with section 772(f) of the Act, we computed profit
based on the total revenues realized on sales in both the U.S. and home
markets, less all expenses associated with those sales. We then
allocated profit to expenses incurred with respect to U.S. economic
activity based on the ratio of total U.S. expenses to total expenses
for both the U.S. and home markets. See the memorandum to the file
entitled ``Administrative Review of the Antidumping Duty Order on
Magnesium Metal from the Russian Federation - Preliminary Results
Analysis Memorandum for PSC VSMPO-AVISMA Corporation'' (April 29, 2008)
(AVISMA Analysis Memorandum).
Normal Value
Based on a comparison of the aggregate quantity of home-market and
U.S. sales and absent any information that a particular market
situation in the exporting country did not permit a proper comparison,
we determined that the quantity of foreign like product sold by AVISMA
in the exporting country was sufficient to permit a proper comparison
with the sales of the subject merchandise to the United States,
pursuant to section 773(a) of the Act. AVISMA's quantity of sales in
its home market was greater than five percent of its sales to the U.S.
market. Therefore, in accordance with section 773(a)(1)(B)(i) of the
Act, we considered basing normal value on the prices at which the
foreign like product was first sold for consumption in the exporting
country in the usual commercial quantities and in the ordinary course
of trade and, to the extent practicable, at the same level of trade as
the CEP sales.
In accordance with section 771(16)(A) of the Act, we considered all
products produced by AVISMA that are covered by the description in the
``Scope of the Order'' section, above, and that were sold in the home
market during the POR to be foreign like products for purposes of
determining appropriate product comparisons to U.S. sales. In
accordance with sections 771(16)(B) and (C) of the Act, where there
were no sales of identical merchandise in the home market to compare to
U.S. sales, we considered comparing U.S. sales to the most similar
foreign like product on the basis of the product characteristics we
determined to be the most appropriate for purposes of product matching.
Cost-of-Production Analysis
We disregarded below-cost sales in accordance with section 773(b)
of the Act in the last completed review with respect to AVISMA. See
Magnesium Metal from the Russian Federation: Preliminary Results of
Antidumping Duty Administrative Review, 72 FR 25740, 25743 (May 7,
2007) (unchanged in Magnesium Metal from the Russian Federation: Final
Results of Antidumping Duty Administrative Review, 72 FR 51791
(September 11, 2007)). Therefore, we have reasonable grounds to believe
or suspect that sales of the foreign like product under consideration
for the determination of normal value in this review may have been made
at prices below the cost of production (COP) as provided by section
773(b)(2)(A)(ii) of the Act. Therefore, pursuant to section 773(b)(1)
of the Act, we conducted a COP investigation of sales by AVISMA in the
home market.
In accordance with section 773(b)(3) of the Act, we calculated a
weighted-average COP based on the sum of the cost of materials and
fabrication for the foreign like product, plus amounts for home-market
selling, G&A expenses, interest expense, and packing expenses.
In the original investigation and in the first administrative
review, AVISMA's cost-reporting methodology was based on its normal
books and records which treated magnesium metal as the main product and
chlorine gas as a by-product of the manufacturing process. On January
1, 2007, during the current POR, AVISMA changed its normal books and
records to treat magnesium as the by-product of its titanium operations
(chlorine is consumed in titanium production). Raw magnesium and
chlorine gas are produced jointly during the third major processing
step, the electrolysis stage (i.e., the split-off point), during which
both products become identifiable physically. In its cost responses,
AVISMA claims that its acquisition by VSMPO, a titanium producer, has
shifted its operational focus to the production of titanium sponge.
Accordingly, it contends, the company determined that the production of
chlorine gas, which is a significant and a critical input in the
production of titanium sponge, is the main goal of production while
magnesium production is now treated as a secondary product. As such,
AVISMA claims, it has reduced its magnesium production to the minimum
levels needed to support the titanium- sponge production based on its
new operational focus. AVISMA claims that the reduction in magnesium
production is apparent through its reduction or cessation of its
practice of burning off excess chlorine gas.
In its original cost response AVISMA included only the costs from
the further-processing steps (i.e., only the costs incurred after the
split-off point and none of the joint costs of the electrolysis and
prior stages) in its COP database.
In its supplemental cost responses AVISMA provided alternative cost
calculations in which it treated raw magnesium and chlorine gas as co-
products. Under this approach, AVISMA calculated the value of chlorine
at the split-off point by starting with sale prices of titanium sponge
and then deducting the post-split-off titanium-processing costs; AVISMA
calculated the value of raw magnesium at the split-off point using the
starting sale prices of magnesium metal and then deducted the post-
split-off costs of the magnesium-metal processing. AVISMA then
allocated the joint costs under the net-realizable-value (NRV)
methodology.
We requested that AVISMA provide another set of cost calculations
based on a co-product methodology which relies
[[Page 24545]]
on the sales or market values of the joint products, i.e., magnesium
and chlorine gas (for the one-year period prior to the original period
of investigation) instead of the sales values of the downstream
products (i.e., titanium sponge). AVISMA provided the requested cost
data based on a co-product methodology of allocating joint costs in
which it determined the value of chlorine gas (with certain
adjustments) at the split-off point using the current market prices of
liquid chlorine and the value of raw magnesium at the split-off point
using the sales prices for magnesium products for the period predating
the period of original investigation. AVISMA allocated joint costs
based on the relationship between the NRV of raw magnesium and the NRV
of chlorine gas.
We analyzed the data on the record to determine whether to judge
the joint products appropriately as co-products or byproducts. In doing
so, we conservatively considered the lowest per-metric-ton value of
chlorine gas during the POR; for raw magnesium we considered the
average per-metric-ton value for the period prior to the period of
investigation (i.e., prior to a period in which dumping was alleged).
We evaluated the significance of each product at the split-off point
and found that chlorine gas represented a significant percentage of the
total value of all products at the split-off point. Consequently, based
on our review of the combination of factors (the takeover of AVISMA by
VSMPO, the cessation of the burning off of excess chlorine gas, and our
examination of the relative values of the joint products in question),
we have preliminarily determined that it is appropriate to treat
chlorine gas and raw magnesium as co-products for purposes of
allocating the common costs of these joint products for the entire
cost- reporting period.
We have relied on AVISMA's cost database based on the co-product
methodology of allocating joint costs for the preliminary results. We
made certain adjustments to AVISMA's cost data - we revised the value
of chlorine gas to reflect the company's purchases of liquid chlorine
less freight costs and further-processing costs\2\ and we increased the
total pool of joint costs to be allocated to the co-products to include
the costs associated with the disposal of excess chlorine gas.\3\ For
more details, see Memorandum to Neal M. Halper, Director, Office of
Accounting, through Michael P. Martin, Lead Accountant, from Heidi K.
Schriefer, Senior Accountant, entitled ``Cost of Production and
Constructed Value Calculation Adjustments for the Preliminary Results -
PSC VSMPO-AVISMA Corporation and VSMPO - Tirus US Inc,'' dated April
29, 2008.
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\2\ AVISMA added the cost of evaporating liquid chlorine to the
sales value of liquid chlorine in order to arrive at the estimated
value of chlorine gas. In the absence of a cost value associated
with liquefying chlorine gas, as a proxy, we subtracted the
evaporation costs from the sales value of liquid chlorine to
estimate the NRV of chlorine gas at the split-off point.
\3\ AVISMA burned off excess chlorine gas for part of the POR.
By November 2006, AVISMA was no longer producing excess chlorine
gas.
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After calculating the COP and in accordance with section 773(b)(1)
of the Act, we tested whether home-market sales of the foreign like
product 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 a
respondent's sales of a given product were at prices less than the COP,
we do 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 a respondent's
sales of a given product were at prices less than the COP, we disregard
the below-cost sales because they were made in substantial quantities
within an extended period of time pursuant to sections 773(b)(2)(B) and
(C) of the Act and because, based on comparisons of prices to weighted-
average COPs for the period of review, such sales were at prices which
would not permit recovery of all costs within a reasonable period of
time in accordance with section 773(b)(2)(D) of the Act. Based on this
test, we disregarded all of AVISMA's home-market sales of magnesium
metal because all such sales failed the cost test. See AVISMA Analysis
Memorandum.
Constructed Value
Section 773(a)(4) of the Act provides that, where normal value
cannot be based on comparison-market sales, normal value may be based
on constructed value. Accordingly, because all home-market sales of
magnesium metal failed the sales-below-cost test, we based normal value
on constructed value.
Section 773(e) of the Act provides that constructed value shall be
based on the sum of the cost of materials and fabrication for the
imported merchandise, plus amounts for selling, general and
administrative expenses (G&A), interest expense, profit, and U.S.
packing costs. We calculated the cost of materials and fabrication
based on the methodology described in the ``Cost- of-Production
Analysis'' section above.
Because we disregarded all home-market sales as below-cost sales
there are no sales made in the ordinary course of trade that we can use
to calculate selling expenses and profit for constructed value pursuant
to section 773(e)(2)(A) of the Act for AVISMA. In cases where actual
data are not available to use in the calculation of selling expenses
and profit, section 773(e)(2)(B)(i) of the Act provides the alternative
of calculating such expenses using ``actual amounts incurred and
realized by the specific exporter or producer in connection with the
production and sale of merchandise that is in the same general category
of products as the subject merchandise.'' This option is not available
to us for these preliminary results because the record information,
such as the financial information AVISMA submitted in this review, is
not sufficiently detailed to permit a calculation of selling expenses
and profit specific to subject merchandise or specific to a category of
products in the same category as the subject merchandise.
Another alternative at section 773(e)(2)(B)(ii) of the Act suggests
calculating the amounts in question using ``the weighted average of the
actual amounts incurred and realized by exporters or producers that are
subject to the investigation or review (other than the exporter or
producer described in clause (i)) `` This alternative is not applicable
in this review because AVISMA is the single cooperating respondent in
this review and there are no other participating exporters/producers in
this review.
Another statutory alternative of calculating the amounts in
question provided at section 773(e)(2)(B)(iii) of the Act suggests
``any other reasonable method `` Therefore, pursuant to section
773(e)(2)(B)(iii) of the Act, we have calculated an estimate of direct
and indirect selling expenses and profit for AVISMA in this review
using the selling expenses and profit we calculated for AVISMA in the
2005-06 administrative review. See AVISMA Analysis Memorandum.
When appropriate, we made adjustments to constructed value in
accordance with section 773(a)(8) of the Act, 19 CFR 351.410, and 19
CFR 351.412 for circumstance-of-sale differences and level-of-trade
[[Page 24546]]
differences. We made circumstance-of-sale adjustments by deducting
home-market direct selling expenses from constructed value. Because we
calculated constructed value at a level of trade different from the CEP
level trade, we made a CEP-offset adjustment in accordance with
sections 773(a)(7)(B) and 773(a)(8) of the Act. See ``Level of Trade''
section below.
Level Of Trade
In the U.S. market, AVISMA made CEP sales. In the case of CEP
sales, we identified the level of trade based on the price after the
deduction of expenses and profit under section 772(d) of the Act.
Although the starting price for CEP sales was based on sales made by
the affiliated reseller to unaffiliated customers through two channels
of distribution, sales to end-users and distributors, AVISMA reported
similar selling activities associated with all sales to the affiliated
reseller (i.e., at the CEP level of trade).
AVISMA reported one channel of distribution in the home market,
sales to end-users. We found that this channel of distribution
constitutes a single level of trade in the home market. When normal
value is based on constructed value, the level of trade is that of the
sales from which we derive selling, G&A, and profit figures.
To determine whether home-market sales were made at a different
level of trade than U.S. sales, we examined stages in the marketing
process and selling functions along the chain of distribution between
the producer and the unaffiliated customer. We found that there were
significant differences between the selling activities associated with
the CEP level of trade and those associated with the home-market level
of trade and, thus, we found the CEP level of trade to be different
from the home-market level of trade. Further, we found the CEP level of
trade to be at a less advanced stage of distribution than the home-
market level of trade.
Because AVISMA reported no home-market levels of trade that were
equivalent to the CEP level of trade and because we determined that the
CEP level of trade was at a less advanced stage than the home-market
level of trade, we were unable to determine a level-of-trade adjustment
based on the respondent's home-market sales of the foreign like
product. Furthermore, we have no other information that provides an
appropriate basis for determining a level-of-trade adjustment. For
AVISMA's CEP sales, we made a CEP-offset adjustment in accordance with
sections 773(a)(7)(B) and 773(a)(8) of the Act. The CEP-offset
adjustment to constructed value was subject to the offset cap,
calculated as the sum of home-market indirect selling expenses up to
the amount of U.S. indirect selling expenses deducted from CEP (or, if
there were no home-market commissions, the sum of U.S. indirect selling
expenses and U.S. commissions). For a description of our level-of-trade
analysis for these preliminary results, see AVISMA Analysis Memorandum.
Currency Conversion
For purposes of the preliminary results and in accordance with
section 773A of the Act, we made currency conversions based on the
official exchange rates in effect on the dates of the U.S. sales as
certified by the Federal Reserve Bank of New York. See also 19 CFR
351.415.
Preliminary Results of Review
As a result of this review, we preliminarily find that the
following weighted-average
dumping margins exist:
------------------------------------------------------------------------
Manufacturer/Exporter Margin (percent)
------------------------------------------------------------------------
PSC VSMPO-AVISMA Corporation........................ 17.68
Solikamsk Magnesium Works........................... 21.71
------------------------------------------------------------------------
Disclosure and Public Comment
Pursuant to 19 CFR 351.224(b), the Department will disclose to any
party to the proceeding the calculations performed in connection with
these preliminary results within five days after the date of
publication of this notice. Pursuant to 19 CFR 351.309, interested
parties may submit written comments in response to these preliminary
results. Case briefs are due within 30 days after the date of
publication of this notice. Rebuttal briefs, limited to arguments
raised in case briefs, may be submitted no later than five days after
the time limit for filing case briefs. Parties who submit arguments in
this proceeding are requested to submit with the argument a statement
of the issues, a brief summary of the argument, and a table of
authorities. Case and rebuttal briefs must be served on interested
parties in accordance with 19 CFR 351.303(f).
Also, pursuant to 19 CFR 351.310(c), within 30 days of the date of
publication of this notice, interested parties may request a public
hearing on arguments to be raised in the case and rebuttal briefs. If
requested, the hearing will be held two days after the date for
submission of rebuttal briefs. Parties will be notified of the time and
location. The Department will publish the final results of this
administrative review, including the results of its analysis of issues
raised in any case brief, rebuttal brief, or hearing no later than 120
days after publication of these preliminary results.
Assessment Rates
The Department shall determine, and U.S. Customs and Border
Protection (CBP) shall assess, antidumping duties on all appropriate
entries. In accordance with 19 CFR 351.212(b)(1), we have calculated an
importer-specific assessment rate for AVISMA reflecting these
preliminary results of review. We divided the total dumping margins for
the reviewed sales by the total entered value of those reviewed sales
for the importer. We will instruct CBP to assess the importer-specific
rate uniformly on all entries of subject merchandise made by the
relevant importer during the POR. See 19 CFR 351.212(b). The Department
will issue instructions to CBP 15 days after the publication of the
final results of review.
The Department clarified its ``automatic assessment'' regulation on
May 6, 2003. See Antidumping and Countervailing Duty Proceedings:
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003) (Assessment
of Antidumping Duties). This clarification will apply to entries of
subject merchandise during the POR produced by AVISMA for which AVISMA
did not know its merchandise was destined for the United States. In
such instances, we will instruct CBP to liquidate unreviewed entries of
AVISMA-produced merchandise at the all-others rate if there is no rate
for the intermediate company(ies) involved in the transaction. For a
full discussion of this clarification, see Assessment of Antidumping
Duties.
Because we are relying on total AFA to establish SMW's dumping
margin, we preliminarily determine to instruct CBP to apply a dumping
margin of 21.71 percent to all entries of subject merchandise during
the POR that were produced and/or exported by SMW.
Cash-Deposit Requirements
If these preliminary results are adopted in the final results of
review, the following deposit requirements will be effective upon
completion of the final results of this administrative review for all
shipments of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication of the final
results of this administrative review, as provided in section 751(a)(1)
of the Act: 1) the cash-deposit rate for the reviewed firms will be
those established in the
[[Page 24547]]
final results of this review; 2) for previously reviewed or
investigated companies not covered in this review, the cash-deposit
rate 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
review, a prior review, or the less-than-fair-value (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 subject merchandise; and 4) if neither the exporter nor the
manufacturer is a firm covered in this or any previous segment of the
proceeding, the cash-deposit rate will continue to be the all-others
rate established in the LTFV investigation, which is 21.01 percent. See
Antidumping Duty Order. These cash-deposit requirements, when imposed,
shall remain in effect until further notice.
Notification to Importers
This notice serves as a preliminary reminder to importers of their
responsibility under
19 CFR 351.402(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.
The preliminary results of this administrative review and this
notice are issued and
published in accordance with sections 751(a)(1) and 777(i)(1) of
the Act.
Dated: April 29, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E8-9889 Filed 5-2-08; 8:45 am]
BILLING CODE 3510-DS-S