[Federal Register Volume 75, Number 177 (Tuesday, September 14, 2010)]
[Notices]
[Pages 55769-55776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-22887]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-816]
Certain Corrosion-Resistant Carbon Steel Flat Products From the
Republic of Korea: Notice of Preliminary Results of the Sixteenth
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 the sixteenth administrative review of
the antidumping order on corrosion-resistant carbon steel flat products
(CORE) from the Republic of Korea (Korea).\1\ This review covers eight
manufacturers and/or exporters (collectively, the respondents) of the
subject merchandise: LG Chem., Ltd. (LG Chem); Haewon MSC Co. Ltd.
(Haewon); Dongbu Steel Co., Ltd.,
[[Page 55770]]
(Dongbu); Hyundai HYSCO (HYSCO); Pohang Iron & Steel Co., Ltd. (POSCO)
and Pohang Coated Steel Co., Ltd. (POCOS) (collectively, POSCO);
Dongkuk Industries Co., Ltd. (Dongkuk); LG Hausys, Ltd. (Hausys); and
Union Steel Manufacturing Co., Ltd. (Union). The period of review (POR)
is August 1, 2008, through July 31, 2009. We preliminarily determine
that Union and Dongbu made sales of subject merchandise at less than
normal value (NV). We preliminarily determine that HYSCO and POSCO have
not made sales below NV.
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\1\ See Initiation of Antidumping and Countervailing Duty
Administrative Reviews and Request for Revocation in Part, 74 FR
48224, 48225 (September 22, 2009) (Initiation Notice).
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In addition, based on the preliminary results for the respondents
selected for individual review, we have preliminarily determined a
margin for those companies that were not selected for individual
review. 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 all appropriate
entries of subject merchandise during the POR.
DATES: Effective Date: September 14, 2010.
FOR FURTHER INFORMATION CONTACT: Jolanta Lawska (HYSCO), Victoria Cho
(POSCO), Dennis McClure (Union) or Christopher Hargett (Dongbu), AD/CVD
Operations, Office 3, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
8362, (202) 482-5075, (202) 482-5973, and (202) 482-4161, respectively.
SUPPLEMENTARY INFORMATION:
Background
On August 19, 1993, the Department published the antidumping order
on CORE from Korea. See Antidumping Duty Orders on Certain Cold-Rolled
Carbon Steel Flat Products and Certain Corrosion-Resistant Carbon Steel
Flat Products from Korea, 58 FR 44159 (August 19, 1993) (Orders on
Certain Steel from Korea). On August 3, 2009, we published in the
Federal Register the Antidumping or Countervailing Duty Order, Finding,
or Suspended Investigation; Opportunity to Request Administrative
Review, 74 FR 38397 (August 3, 2009). On August 31, 2009, respondents
and petitioners \2\ requested a review of Dongbu, HYSCO, POSCO, Union,
Dongkuk, Haewon, Hausys, and LG Chem. The Department initiated a review
of each of the companies for which a review was requested. See
Initiation Notice, 74 FR at 48225.
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\2\ Petitioners are the United States Steel Corporation (U.S.
Steel), Nucor Corporation (Nucor), and Mittal Steel USA ISG, Inc.
(Mittal Steel USA).
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On December 7, 2008, the Department selected Dongbu, POSCO, HYSCO
and Union as mandatory respondents in this review. See Memorandum from
Dennis McClure, International Trade Compliance Analyst, through James
Terpstra, Program Manager, to Melissa Skinner, Director, Office 3,
entitled ``2008-2009 Antidumping Duty Administrative Review of
Corrosion-Resistant Carbon Steel Flat Products from the Republic of
Korea: Selection of Respondents for Individual Review,'' dated December
7, 2009. The Department indicated that it would calculate a weighted-
average of the mandatory respondents' margins to apply to those
companies not selected for individual examination.
During the most recently completed segments of the proceeding in
which HYSCO, Dongbu, POSCO and Union participated,\3\ the Department
disregarded sales below the cost of production (COP) for each of these
companies. Therefore, pursuant to section 773(b)(2)(A)(ii) of the
Tariff Act of 1930, as amended (the Act), we had reasonable grounds to
believe or suspect that sales by these companies of the foreign like
product under consideration for the determination of NV in this review
were made at prices below the COP. We instructed HYSCO, Dongbu, POSCO
and Union to respond to sections A through E of the initial
questionnaire,\4\ which we issued on December 7, 2009.
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\3\ See Certain Corrosion-Resistant Carbon Steel Flat Products
from the Republic of Korea: Notice of Final Results of the Fifteenth
Administrative Review, 75 FR 13490 (March 22, 2010) (CORE 15 Final
Results); Certain Corrosion-Resistant Carbon Steel Flat Products
from the Republic of Korea: Notice of Final Results of the
Fourteenth Administrative Review and Partial Rescission, 74 FR 11082
(March 16, 2009) (CORE 14 Final Results).
\4\ Section A: Organization, Accounting Practices, Markets and
Merchandise; Section B: Comparison Market Sales; Section C: Sales to
the United States; Section D: Cost of Production and Constructed
Value; Section E: Further Manufacturing.
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As explained in the memorandum from the Deputy Assistant Secretary
for Import Administration, the Department has exercised its discretion
to toll deadlines for the duration of the closure of the Federal
Government from February 5, through February 12, 2010. Thus, all
deadlines in this segment of the proceeding have been extended by seven
days. See Memorandum to the Record from Ronald Lorentzen, DAS for
Import Administration, regarding ``Tolling of Administrative Deadlines
As a Result of the Government Closure During the Recent Snowstorms,''
dated February 12, 2010. As a result of this tolling, the revised
deadline for the preliminary results of this review became May 10,
2010.
On May 10, 2010, the Department published a notice extending the
time period for issuing the preliminary results of the sixteenth
administrative review to September 7, 2010.\5\
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\5\ See Corrosion-Resistant Carbon Steel Flat Products From the
Republic of Korea: Extension of Time Limits for the Preliminary
Results of Antidumping Duty Administrative Review, 75 FR 25841 (May
10, 2010).
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HYSCO
On January 27, 2010, HYSCO submitted its section A response to the
Department's initial questionnaire. On February 12, 2010, HYSCO
submitted its sections B through D response to the Department's initial
questionnaire. HYSCO submitted its response to the Department's
supplemental questionnaires for sections A through C on June 23, 2010,
and August 11, 2010. HYSCO submitted its response to the Department's
supplemental questionnaires for section D on June 23, 2010, June 25,
2010, August 4, 2010, August 11, 2010, August 18, 2010, and August 23,
2010.
Union
On January 21, 2010, Union submitted its section A response to the
initial questionnaire. On February 4, 2010, Union submitted its
response to sections B and C and D of the Department's questionnaire.
On May 28, 2010, and July 15, 2010, Union submitted its responses to
the Department's supplemental questionnaires for sections A through C.
On June 7, 2010, Union submitted its response to the Department's
supplemental questionnaire for section D regarding the purchase of
major inputs from POSCO. On June 11, 2010, Union submitted its response
to the Department's supplemental questionnaire for sections A and D. On
July 20, 2010, Union submitted its response to an additional
supplemental questionnaire for section D. On August 18, 2010, Union
submitted a response to an additional supplemental questionnaire for
section D.
POSCO
On January 20, 2010, POSCO submitted its sections A through D
response to the Department's initial questionnaire. On June 14, 2010,
POSCO submitted its response to the Department's first supplemental
questionnaire for sections A through D. On August 10, 2010, POSCO
submitted its response to the Department's second
[[Page 55771]]
supplemental questionnaire for section D. On August 25, 2010, POSCO
submitted a voluntary correction to exhibit 25 of its June 14, 2010,
first supplemental section D response.
Dongbu
On January 13, 2010, and February 3, 2010, Dongbu submitted its
section A and sections B through D responses to the Department's
initial questionnaire. Dongbu submitted its response to the
Department's supplemental questionnaires for sections A through D on
May 18, 2010, and July 16, 2009, and August 3, 2010. Dongbu submitted a
reconciliation of its home market and U.S. sales databases on August
17, 2010.
Period of Review
The POR covered by this review is August 1, 2008, through July 31,
2009.
Scope of the Order
This order covers flat-rolled carbon steel products, of rectangular
shape, either clad, plated, or coated with corrosion-resistant metals
such as zinc, aluminum, or zinc-, aluminum-, nickel- or iron-based
alloys, whether or not corrugated or painted, varnished or coated with
plastics or other nonmetallic substances in addition to the metallic
coating, in coils (whether or not in successively superimposed layers)
and of a width of 0.5 inch or greater, or in straight lengths which, if
of a thickness less than 4.75 millimeters, are of a width of 0.5 inch
or greater and which measures at least 10 times the thickness or if of
a thickness of 4.75 millimeters or more are of a width which exceeds
150 millimeters and measures at least twice the thickness, as currently
classifiable in the Harmonized Tariff Schedule of the United States
(HTSUS) under item numbers 7210.30.0030, 7210.30.0060, 7210.41.0000,
7210.49.0030, 7210.49.0090, 7210.49.0091, 7210.49.0095, 7210.61.0000,
7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000,
7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090,
7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000,
7212.60.0000, 7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500,
7217.30.1530, 7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060,
and 7217.90.5090. Included in the order are flat-rolled products of
non-rectangular cross-section where such cross-section is achieved
subsequent to the rolling process including products which have been
beveled or rounded at the edges (i.e., products which have been
``worked after rolling''). Excluded from this order are flat-rolled
steel products either plated or coated with tin, lead, chromium,
chromium oxides, both tin and lead (``terne plate''), or both chromium
and chromium oxides (``tin-free steel''), whether or not painted,
varnished or coated with plastics or other nonmetallic substances in
addition to the metallic coating. Also excluded from this order are
clad products in straight lengths of 0.1875 inch or more in composite
thickness and of a width which exceeds 150 millimeters and measures at
least twice the thickness. Also excluded from this order are certain
clad stainless flat-rolled products, which are three-layered corrosion-
resistant carbon steel flat-rolled products less than 4.75 millimeters
in composite thickness that consist of a carbon steel flat-rolled
product clad on both sides with stainless steel in a 20%-60%-20% ratio.
These HTSUS item numbers are provided for convenience and customs
purposes. The written descriptions remain dispositive.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
CORE products produced by the respondents, covered by the scope of the
order, and sold in the home market during the POR to be foreign like
products for the purpose of determining appropriate product comparisons
to CORE sold in the United States.
Where there were no sales in the ordinary course of trade of
identical merchandise in the home market to compare to U.S. sales, we
compared U.S. sales to the next most similar foreign like product on
the basis of the characteristics listed in Appendix V of the
Department's antidumping questionnaire. In making the product
comparisons, we matched foreign like products based on the Appendix V
physical characteristics reported by each respondent.
Normal Value Comparisons
To determine whether sales of CORE by the respondents to the United
States were made at less than NV, we compared the Export Price (EP) or
Constructed Export Price (CEP) to the NV, as described in the ``Export
Price/Constructed Export Price'' and ``Normal Value'' sections of this
notice. In accordance with section 777A(d)(2) of the Act, we calculated
monthly weighted-average prices for NV and compared these to individual
U.S. transactions. Regarding HYSCO, Union and Dongbu, because we are
using quarterly costs, we have not made price-to-price comparisons
outside of a quarter to lessen the potential distortion to sales prices
which result from significantly changing costs.\6\
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\6\ See Memorandum from Jolanta Lawska through James Terpstra,
Program Manager Office 3, to the File, entitled ``Preliminary
Results in the 16th Administrative Review on Corrosion-Resistant
Carbon Steel Flat Products from Korea: Calculation Memorandum for
Hyundai HYSCO,'' dated September 7, 2010 (HYSCO Calc Memo);
Memorandum from Victoria Cho through James Terpstra, Program Manager
Office 3, to the File, entitled ``Preliminary Results in the 16th
Administrative Review on Corrosion-Resistant Carbon Steel Flat
Products from Korea: Calculation Memorandum for Calculation
Memorandum for Pohang Iron & Steel Company, Ltd. (POSCO) and Pohang
Coated Steel Co., Ltd. (POCOS) (collectively, the POSCO Group),''
dated September 7, 2010 (POSCO Calc Memo); Memorandum from Dennis
McClure through James Terpstra, Program Manager Office 3, to the
File, entitled ``Preliminary Results in the 16th Administrative
Review on Corrosion-Resistant Carbon Steel Flat Products from Korea:
Calculation Memorandum for Union Steel Manufacturing Inc.,'' dated
September 7, 2010 (Union Calc Memo); and Memorandum from Christopher
Hargett through James Terpstra, Program Manager Office 3, to the
File, entitled ``Preliminary Results in the 16th Administrative
Review on Corrosion-Resistant Carbon Steel Flat Products from Korea:
Calculation Memorandum for Dongbu Steel,'' dated September 7, 2010
(Dongbu Calc Memo) (collectively ``Calculation Memos for the 16th
Review''), the public versions of which are on file in the Central
Record Unit, Room 7046, of the main Department building.
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Export Price/Constructed Export Price
For the price to the United States, we used, as appropriate, EP or
CEP, in accordance with sections 772(a) and (b) of the Act. We
calculated EP when the merchandise was sold by the producer or exporter
outside of the United States directly to the first unaffiliated
purchaser in the United States prior to importation and when CEP was
not otherwise warranted based on the facts on the record. We calculated
CEP for those sales where a person in the United States, affiliated
with the foreign exporter or acting for the account of the exporter,
made the sale to the first unaffiliated purchaser in the United States
of the subject merchandise. We based EP and CEP on the packed prices
and the applicable delivery terms to the first unaffiliated customer
in, or for exportation to, the United States.
In accordance with section 772(a) of the Act, we calculated EP for
a number of Union's U.S. sales because these sales were made before the
date of importation and were sales directly to unaffiliated customers
in the United States, and because CEP methodology was not otherwise
indicated. We made deductions for movement expenses in accordance with
section 772(c)(2)(A) of the Act, which included, where
[[Page 55772]]
appropriate, foreign inland freight to the port, foreign brokerage,
international freight, marine insurance, U.S. inland freight from the
port to warehouse, U.S. warehouse expenses, U.S. inland freight from
the warehouse to the unaffiliated customer, U.S. brokerage and handling
expenses, and U.S. customs duty.
In accordance with section 772(b) of the Act, we calculated CEP
where the record established that sales made by HYSCO, POSCO, Dongbu,
and Union were made in the United States after importation. HYSCO's,
POSCO's, Dongbu's and Union's respective affiliates in the United
States (1) took title to the subject merchandise and (2) invoiced and
received payment from the unaffiliated U.S. customers for their sales
of the subject merchandise to those U.S. customers. Thus, where
appropriate, the Department determined that these U.S. sales should be
classified as CEP transactions under section 772(b) of the Act. Where
appropriate, we made deductions from the starting price for foreign
inland freight to the port, foreign brokerage, international freight,
marine insurance, U.S. inland freight from the port to warehouse, U.S.
warehouse expenses, U.S. inland freight from the warehouse to the
unaffiliated customer, U.S. brokerage and handling expenses, U.S.
customs duty, credit expenses, warranty expenses, commissions,
inventory carrying costs incurred in the United States, and other
indirect selling expenses in the United States associated with economic
activity in the United States. See sections 772(c)(2)(A) and 772(d)(1)
of the Act. Pursuant to section 772(d)(3) of the Act, we made an
adjustment for CEP profit. Where appropriate, we added interest revenue
to the gross unit price.
HYSCO's Entries of Subject Merchandise That Were Further Manufactured
and Sold as Non-Subject Merchandise in the United States
In its section A questionnaire response, HYSCO requested that the
Department excuse it from reporting information for certain POR sales
of subject merchandise imported by its wholly owned U.S. subsidiary,
HYSCO America Company (HAC), that were further manufactured after
importation and sold as non-subject merchandise in the United States,
claiming that determining CEP for sales through HAC would be
unreasonably burdensome.
Section 772(e) of the Act provides that when the value added in the
United States by an affiliated party is likely to exceed substantially
the value of the subject merchandise, the Department shall use one of
the following prices to determine CEP if there is a sufficient quantity
of sales to provide a reasonable basis of comparison and the use of
such sales is appropriate: (1) The price of identical subject
merchandise sold by the exporter or producer to an unaffiliated person;
or (2) the price of other subject merchandise sold by the exporter or
producer to an unaffiliated person.
The record evidence shows that the value added by the affiliated
party to the subject merchandise after importation in the United States
was significantly greater than the 65 percent threshold we use in
determining whether the value added in the United States by an
affiliated party substantially exceeds the value of the subject
merchandise. See 19 CFR 351.402(c)(2). We then considered whether there
were sales of identical subject merchandise or other subject
merchandise sold in sufficient quantities by the exporter or producer
to an unaffiliated person that could provide a reasonable basis of
comparison. In addition to the sales to HAC that were further
manufactured, HYSCO also had CEP sales of similar, but not identical,
subject merchandise to unaffiliated customers in the United States in
back-to-back transactions through another HYSCO affiliate in the United
States, Hyundai HYSCO USA (HHU).
The appropriate methodology for determining the CEP for sales whose
value has been substantially increased through U.S. further
manufacturing generally must be made on a case-by-case basis. In this
instance, we find that there is a reasonable quantity of sales of
subject merchandise to an unaffiliated person for comparison purposes.
See HYSCO Calc Memo. Furthermore, there is no other reasonable
methodology for determining CEP for HAC's CEP sales. Therefore, we
relied on HYSCO's other sales of similar merchandise to unaffiliated
parties in the United States as the basis for calculating CEP for
HYSCO's sales through HAC, which is consistent with the four previous
administrative reviews of CORE from Korea.\7\
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\7\ See, e.g., Certain Corrosion-Resistant Carbon Steel Flat
Products from the Republic of Korea: Notice of Preliminary Results
of the Antidumping Duty Administrative Review, 74 FR 46110, 46112
(September 8, 2009) (unchanged in CORE 15 Final Results); Certain
Corrosion-Resistant Carbon Steel Flat Products From the Republic of
Korea: Notice of Preliminary Results of the Antidumping Duty
Administrative Review, 73 FR 52267, 52270 (September 9, 2008)
(unchanged in CORE 14 Final Results).
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Normal Value
Based on a comparison of the aggregate quantity of home market and
U.S. sales, we determined that the quantity of the foreign like product
sold 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)(1) of the Act. 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 for consumption
in the home market, in the usual commercial quantities and in the
ordinary course of trade. We increased NV by U.S. packing costs in
accordance with section 773(a)(6)(A) of the Act.
Where appropriate, we deducted inland freight from the plant to
distribution warehouse, warehouse expense, inland freight from the
plant/warehouse to customer, and packing, pursuant to section
773(a)(6)(B) of the Act. Additionally, we made adjustments to NV, where
appropriate, for credit and warranty expenses, in accordance with
section 773(a)(6)(C)(iii) of the Act. Where appropriate, we added
interest revenue and applied billing adjustments to the gross unit
price.
We also made adjustments for Union, in accordance with 19 CFR
351.410(e), for indirect selling expenses incurred in the home market
or the United States where commissions were granted on sales in one
market but not in the other. Specifically, where commissions are
incurred in one market, but not in the other, we will limit the amount
of such allowance to the amount of either the selling expenses incurred
in the one market or the commissions allowed in the other market,
whichever is less. See 19 CFR 351.401(e).
For purposes of calculating NV, section 771(16) of the Act defines
``foreign like product'' as merchandise which is either (1) identical
or (2) similar to the merchandise sold in the United States. When no
identical products are sold in the home market, the products which are
most similar to the product sold in the United States are identified.
For the non-identical or most similar products which are identified
based on the Department's product matching criteria, an adjustment is
made to the NV for differences in cost attributable to differences in
the actual physical differences between the products sold in the United
States and the home market. See 19 CFR 351.411 and section
773(a)(6)(C)(ii) of the Act.
Cost of Production
As stated above, in the most recently completed segments of the
proceeding in which HYSCO, POSCO, Dongbu and Union participated, the
Department found and disregarded sales that failed the cost test for
each of these
[[Page 55773]]
companies. Therefore, for this review, the Department has reasonable
grounds to believe or suspect that sales of the foreign like products
under consideration for the determination of NV may have been made at
prices below the COP as provided by section 773(b)(2)(A)(ii) of the
Act. Pursuant to section 773(b)(1) of the Act, the Department conducted
a COP investigation of sales in the home market by HYSCO, POSCO, Dongbu
and Union.
A. Cost Reporting Period
The Department's normal practice is to calculate an annual
weighted-average cost for the POR. See, e.g., Certain Pasta From Italy:
Final Results of Antidumping Duty Administrative Review, 65 FR 77852
(December 13, 2000), and accompanying Issues and Decision Memorandum at
Comment 18, and Notice of Final Results of Antidumping Duty
Administrative Review: Carbon and Certain Alloy Steel Wire Rod from
Canada, 71 FR 3822 (January 24, 2006), and accompanying Issues and
Decision Memorandum at Comment 5 (explaining the Department's practice
of computing a single weighted-average cost for the entire period).
However, the Department recognizes that possible distortions may result
if we use our normal annual-average cost method during a period of
significant cost changes. In determining whether to deviate from our
normal methodology of calculating an annual weighted-average cost, the
Department evaluates the case-specific record evidence using two
primary factors: (1) The change in the cost of manufacturing (COM)
recognized by the respondent during the POR must be deemed significant;
(2) the record evidence must indicate that sale prices during the
shorter averaging periods could be reasonably linked with the COP or
constructed value (CV) during the same shorter averaging periods. See
Stainless Steel Sheet and Strip in Coils From Mexico: Final Results of
Antidumping Duty Administrative Review, 75 FR 6627 (February 10, 2010)
(SSSS from Mexico), and accompanying Issues and Decision Memorandum at
Comment 6 and Stainless Steel Plate in Coils From Belgium: Final
Results of Antidumping Duty Administrative Review, 73 FR 75398
(December 11, 2008) (SSPC from Belgium), and accompanying Issues and
Decision Memorandum at Comment 4.
1. Significance of Cost Changes
In prior cases, we established 25 percent as the threshold (between
the high- and low-quarter COM) for determining that the changes in COM
are significant enough to warrant a departure from our standard annual-
cost approach. See SSPC from Belgium at Comment 4. In the instant case,
record evidence shows that Union, Dongbu, and HYSCO experienced
significant changes (i.e., changes that exceeded 25 percent) between
the high and low quarterly COM during the POR for the selected products
(i.e., CONNUMs) with the highest sales volumes. This change in COM is
primarily attributable to the price volatility for substrate inputs
used in the manufacture of CORE. Substrate is the major input consumed
in the production of CORE. We found that prices for substrate changed
significantly throughout the POR and, as a result, directly affected
the cost of the material inputs consumed by Union, Dongbu, and
HYSCO.\8\
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\8\ See Memorandum from Kristen Case to Neal M. Halper, Director
of Office of Accounting, entitled ``Cost of Production and
Constructed Value Calculation Adjustments for the Preliminary
Results--Union Steel Co., Ltd.,'', dated September 7, 2010 (``Union
Cost Calculation Memo''); Memorandum from Laurens Van Houten to Neal
M. Halper, Director of Office of Accounting, entitled ``Cost of
Production and Constructed Value Calculation Adjustments for the
Preliminary Results--Dongbu Steel,'' dated September 7, 2010
(``Dongbu Cost Calculation Memo''); and Memorandum from Ji Young Oh
to Neal M. Halper, Director of Office of Accounting, entitled ``Cost
of Production and Constructed Value Calculation Adjustments for the
Preliminary Results--Hyundai HYSCO'' (HYSCO Cost Calculation Memo),
dated September 7, 2010, the public versions of which are on file in
the Central Record Unit, Room 7046, of the main Department building.
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2. Linkage Between Cost and Sale Price Information
Consistent with past precedent, because we found the changes in
costs to be significant, we evaluated whether there is evidence of a
linkage between the cost changes and the sales prices during the POR.
See, e.g., SSSS from Mexico at Comment 6, and SSPC from Belgium at
Comment 4. The Department's definition of ``linkage'' does not require
direct traceability between specific sales and their specific
production costs, but rather relies on whether there are elements that
would indicate a reasonable correlation between the underlying costs
and the final sales prices levied by the company. See SSPC from Belgium
at Comment 4. These correlative elements may be measured and defined in
a number of ways depending on the associated industry and the overall
production and sales processes. To determine whether a reasonable
correlation existed between the sales prices and their underlying costs
during the POR for each respondent, we compared weighted-average
quarterly prices to the corresponding quarterly COM for the five
CONNUMs with the highest volume of sales in each of the comparison
market and the United States market. Our comparison reveals that sale
prices and costs for each of the sample CONNUMs generally trended in
the same direction and indicated that there is linkage between changing
costs and sale prices during the POR. The inventory records for HYSCO,
Union and Dongbu demonstrate that the raw material and finished goods
inventory are relatively low, indicating a minimal time lag between
material purchase, production and sale dates. See Union, HYSCO and
Dongbu Cost Calculation Memos. After reviewing this information and
determining that there is a trend of sale prices and costs for the
majority of the POR, we preliminarily determine that there is linkage
between HYSCO, Union and Doungbu's changing costs and sales prices
during the POR. See, e.g., SSSS from Mexico at Comment 6 and SSPC from
Belgium at Comment 4.
Because we have found significant cost changes in COM as well as
reasonable linkage between costs and sales prices, we have
preliminarily determined that the use of quarterly cost leads to more
appropriate comparisons in our antidumping duty calculation for HYSCO,
Union and Dongbu.
B. Calculation of Cost of Production
Before making any comparisons to NV, we conducted a quarterly COP
analysis of HYSCO, Union and Dongbu's sales pursuant to section
773(b)(3) of the Act to determine whether HYSCO, Union and Dongbu's
comparison market sales were made at prices below the COP. For these
preliminary results, the Department used the quarterly cost database
submitted on August 18, 2010, for HYSCO, the quarterly cost database
submitted on August 18, 2010, for Union, and the quarterly COP database
submitted on August 3, 2010, for Dongbu.
For POSCO, we conducted an annual COP analysis pursuant to section
773(b)(1)(A) and (B) of the Act to determine whether POSCO's comparison
market sales were made at prices below the COP. We calculated the COP
based on the sum of the cost of materials and fabrication for the
foreign like product, plus amounts for SG&A expenses and packing, in
accordance with section 773(b)(3) of the Act.
Except as noted below, the Department relied on the COP data
submitted by HYSCO, POSCO, Union and Dongbu and their supplemental
section D questionnaire responses for the COP calculation. Union
provided
[[Page 55774]]
information in its questionnaire responses showing that it purchased
substrate from affiliated parties. We consider substrate to be a major
input and therefore have applied the major-input rule to value such
purchases. Accordingly, pursuant to section 773(f)(3) of the Act and 19
CFR 351.407(b), we adjusted Union's substrate costs. Additionally, for
the purposes of calculating Union's general and administrative (G&A)
expense ratio, we excluded an item of non-operating income. See Union
Cost Calculation Memo at 3.
For POSCO we excluded the gains related to the disposition and
valuation of trading securities from the calculation of the G&A expense
ratio because these gains are related to the company's investment
activities. See Memorandum from Sheikh M. Hannan, Senior Accountant to
Neal M. Halper, Director, Office of Accounting, entitled ``Cost of
Production and Constructed Value Calculation Adjustments for the
Preliminary Results--POSCO,'' dated September 7, 2010 (``POSCO Cost
Calculation Memo'').
HYSCO provided information in its questionnaire responses showing
that it purchased substrate from affiliated parties. We consider
substrate to be a major input and therefore have applied the major-
input rule to value such purchases. Accordingly, pursuant to section
773(f)(3) of the Act and 19 CFR 351.407(b), we adjusted HYSCO's
substrate costs. Additionally, we adjusted the cost of goods sold
denominator used in the G&A expense ratio and financial expense ratios
to reflect the major input adjustment. See HYSCO Cost Calculation Memo.
Application of Facts Available
Section 776(a) of the Act provides that the Department shall apply
``facts otherwise available'' if (1) necessary information is not on
the record, or (2) an interested party or any other person (A)
Withholds information that has been requested, (B) fails to provide
information within the deadlines established, or in the form and manner
requested by the Department, subject to subsections (c)(1) and (e) of
section 782 of the Act, (C) significantly impedes a proceeding, or (D)
provides information that cannot be verified as provided by section
782(i) of the Act.
In the current review, multiple CONNUMs in HYSCO's submitted cost
file contained negative values for certain cost fields. The Department
requested on two different occasions that HYSCO provide an explanation
for these negative values. See the Department's Section D supplemental
questionnaire, dated May 19, 2010, and July 21, 2010, respectively.
However, HYSCO's responses to date have not provided an adequate
explanation of how negative POR production costs could be incurred to
produce products. See HYSCO's section D supplemental questionnaire
responses, dated June 23, 2010, and August 4, 2010, respectively.
Accordingly, the Department determines that it lacks the information
necessary to calculate accurate production costs for certain CONNUMs in
these preliminary results. Therefore, we determine that application of
partial facts available is warranted pursuant to sections 776(a)(1) and
(2)(A) of the Act and have used the weighted-average value for each of
those cost fields. See HYSCO Cost Calculation Memo. The Department
intends to seek further explanation from HYSCO for the negative values
in its cost file and will analyze any new data in the final results.
Furthermore, HYSCO did not provide hot-rolled coil cost for CONNUMs
sold, but not produced, during the POR. For CONNUMs sold but not
produced during the POR, we selected as partial facts available
pursuant to sections 776(a)(1) and (2)(A) of the Act the next similar
CONNUM, in accordance with the product characteristics as defined in
the Department's questionnaire, to use as the surrogate to compute the
costs for these CONNUMs. See HYSCO Cost Calculation Memo.
C. Test of Comparison Market Sales Prices
As required under section 773(b)(2) of the Act, we compared the
quarterly or POR, as appropriate, weighted-average COP to the per-unit
price of the comparison market sales of the foreign like product to
determine whether these sales had been made at prices below the COP
within an extended period of time in substantial quantities, and
whether such prices were sufficient to permit the recovery of all costs
within a reasonable period of time. We determined the net comparison
market prices for the below cost test by subtracting from the gross
unit price any applicable movement charges, discounts, rebates, direct
and indirect selling expenses (also subtracted from the COP), and
packing expenses.
D. Results of the COP Test
Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20
percent of sales of a given product were at prices less than the COP,
we did not disregard any below-cost sales of that product because we
determined that the below-cost sales were not made in ``substantial
quantities.'' Where 20 percent or more of the respondent's home market
sales of a given model were at prices less than the COP, we disregarded
the below-cost sales because: (1) They were made within an extended
period of time in ``substantial quantities,'' in accordance with
sections 773(b)(2)(B) and (C) of the Act; and (2) based on our
comparison of prices to the indexed POR or POR, as appropriate,
weighted-average COPs, they were at prices which would not permit the
recovery of all costs within a reasonable period of time, in accordance
with section 773(b)(2)(D) of the Act.
Therefore, for HYSCO, POSCO, Union and Dongbu, we disregarded
below-cost sales of a given product of 20 percent or more and used the
remaining sales as the basis for determining NV, in accordance with
section 773(b)(1) of the Act. See HYSCO, POSCO, Union and Dongbu Cost
Calculation Memos.
Calculation of NV Based on Comparison Market Prices
For those comparison products for which there were sales at prices
above the COP for HYSCO, POSCO, Union and Dongbu, we based NV on home
market prices. In these preliminary results, we were able to match all
U.S. sales to contemporaneous sales, made in the ordinary course of
trade, of either an identical or a similar foreign like product, based
on the matching characteristics identified in Appendix V of the
original questionnaire. We calculated NV based on free on board (FOB)
mill or delivered prices to unaffiliated customers, or prices to
affiliated customers which were determined to be at arm's length (see
discussion below regarding these arm's-length sales). We made
deductions, where appropriate, from the starting price for billing
adjustments, discounts, rebates, and inland freight. Additionally, we
added interest revenue. In accordance with section 773(a)(6) of the
Act, we deducted home market packing costs and added U.S. packing
costs. See Calculation Memos for the 16th Review.
In accordance with section 773(a)(6)(C)(iii) of the Act, we
adjusted for differences in the circumstances of sale. These
circumstances included differences in imputed credit expenses and other
direct selling expenses, such as the expense related to bank charges
and factoring. Id. We also made adjustments, where appropriate, for
physical differences in the merchandise in accordance with section
773(a)(6)(C)(ii) of the Act.
[[Page 55775]]
Arm's-Length Sales
Dongbu, Union, HYSCO and POSCO also reported that they made sales
in the home market to affiliated parties. The Department calculates NV
based on a sale to an affiliated party only if it is satisfied that the
price to the affiliated party is comparable to the price at which sales
are made to parties not affiliated with the producer or exporter, i.e.,
sales at arm's length. See 19 CFR 351.403(c).
To test whether these sales were made at arm's length, we compared
the reported home market prices of sales to affiliated and unaffiliated
customers with applied billing adjustments, including interest revenue
and net of all movement charges, direct selling expenses, discounts,
rebates, and packing. In accordance with the Department's current
practice, if the prices charged to an affiliated party were, on
average, between 98 and 102 percent of the prices charged to
unaffiliated parties for merchandise identical or most similar to that
sold to the affiliated party, we considered the sales to be at arm's-
length prices. See Notice of Preliminary Results and Partial Rescission
of Antidumping Duty Administrative: Ninth Administrative Review of the
Antidumping Duty Order on Certain Pasta from Italy, 71 FR 45017, 45020
(August 8, 2006) (unchanged in Notice of Final Results of the Ninth
Administrative Review of the Antidumping Duty Order on Certain Pasta
from Italy, 72 FR 7011 (February 14, 2007)); 19 CFR 351.403(c).
Conversely, where we found that the sales to an affiliated party did
not pass the arm's-length test, then all sales to that affiliated party
have been excluded from the NV calculation. See Antidumping
Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67
FR 69186, 69187 (November 15, 2002); see also Calculation Memos for the
16th Review.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, we determined
NV based on sales in the comparison market at the same level of trade
(LOT) as the EP or CEP sales, to the extent possible. When there were
no sales at the same LOT, we compared U.S. sales to comparison market
sales at a different LOT.
Pursuant to 19 CFR 351.412, to determine whether EP or CEP sales
and NV sales were at different LOTs, we examined stages in the
marketing process and selling functions along the chain of distribution
between the producer and the unaffiliated (or arm's-length) customers.
If the comparison market sales are at a different LOT and the
differences affect price comparability, as manifested in a pattern of
consistent price differences between sales at different LOTs in the
country in which NV is determined, we will make an LOT adjustment under
section 773(a)(7)(A) of the Act. For CEP sales, if the NV LOT is at a
more advanced stage of distribution than the CEP LOT and the data
available do not provide an appropriate basis to determine an LOT
adjustment, we will grant a CEP offset, as provided in section
773(a)(7)(B) 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, 61732-33 (November 19, 1997).
We did not make an LOT adjustment under 19 CFR 351.412(e) because,
there was only one home market LOT for each respondent and we were
unable to identify a pattern of consistent price differences
attributable to differences in LOTs. See 19 CFR 351.412(d). Under
section 773(a)(7)(B) of the Act and 19 CFR 351.412(f), we are
preliminarily granting a CEP offset for HYSCO, POSCO, Dongbu, and Union
because the NV sales for each company are at a more advanced LOT than
the LOT for the U.S. CEP sales.
For a detailed description of our LOT methodology and a summary of
company-specific LOT findings for these preliminary results, see
Calculation Memos for the 16th Review.
Currency Conversion
For purposes of these preliminary results, we made currency
conversions in accordance with section 773A(a) of the Act, based on the
official exchange rates published by the Federal Reserve Bank.
Preliminary Results of the Review
As a result of this review, we preliminarily find that the
following weighted-average dumping margins exist:
------------------------------------------------------------------------
Percent
Manufacturer/exporter margin
------------------------------------------------------------------------
HYSCO........................................................ *.22
POSCO........................................................ *.04
Union........................................................ 2.27
Dongbu....................................................... 3.89
Review-Specific Average Rate applicable to the following 3.08
companies:\9\ LG Chem, Haewon, Hausys, and Dongkuk..........
------------------------------------------------------------------------
*(De minimis).
Public Comment
The Department will disclose calculations performed within five
days of the date of publication of this notice to the parties to this
proceeding in accordance with 19 CFR 351.224(b). Interested parties may
submit case briefs no later than 30 days after the date of publication
of these preliminary results of review. See 19 CFR 351.309(c)(ii).
Rebuttal briefs are limited to issues raised in the case briefs and may
be filed no later than five days after the time limit for filing the
case briefs. See 19 CFR 351.309(d). Parties submitting arguments in
this proceeding are requested to submit with the argument: (1) A
statement of the issue, (2) a brief summary of the argument, and (3) a
table of authorities, in accordance with 19 CFR 351.309(d)(2). Further,
parties submitting case and/or rebuttal briefs are requested to provide
the Department with an additional electronic copy of the public version
of any such comments on a computer diskette. Case and rebuttal briefs
must be served on interested parties in accordance with 19 CFR
351.303(f).
---------------------------------------------------------------------------
\9\ This rate is based on the margins calculated for those
companies that were selected for individual review, excluding de
minimis margins or margins based entirely on adverse facts
available.
---------------------------------------------------------------------------
An interested party may request a hearing within 30 days of
publication of these preliminary results. See 19 CFR 351.310(c). Any
hearing, if requested, ordinarily will be held two days after the due
date of the rebuttal briefs in accordance with 19 CFR 351.310(d)(1).
The Department will issue the 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, if requested, within 120 days of
publication of these preliminary results, unless extended. See section
751(a)(3)(A) of the Act and 19 CFR 351.213(h).
Assessment Rate
Upon completion of the final results of this administrative review,
the Department shall determine, and CBP shall assess, antidumping
duties on all appropriate entries. Pursuant to 19 CFR 351.212(b)(1),
the Department will calculate importer-specific assessment rates for
each respondent based on the ratio of the total amount of antidumping
duties calculated for the examined sales to the total entered value of
those sales. Where the respondent did not report the entered value for
U.S. sales, we have calculated importer-specific assessment rates for
the merchandise in question by aggregating the dumping margins
calculated for all U.S. sales to each
[[Page 55776]]
importer and dividing this amount by the total quantity of those sales.
To determine whether the duty assessment rates were de minimis, in
accordance with the requirement set forth in 19 CFR 351.106(c)(2), we
calculated importer-specific ad valorem rates based on the estimated
entered value. Where the assessment rate is above de minimis, we will
instruct CBP to assess duties on all entries of subject merchandise by
that importer. Pursuant to 19 CFR 351.106(c)(2), we will instruct CBP
to liquidate without regard to antidumping duties any entries for which
the assessment rate is de minimis (i.e., less than 0.50 percent). The
Department intends to issue assessment instructions directly to CBP 15
days after publication of the final results of this 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). This
clarification will apply to entries of subject merchandise during the
POR produced by the respondents subject to this review for which the
reviewed companies did not know that the merchandise which it sold to
an intermediary (e.g. a reseller, trading company, or exporter) was
destined for the United States. In such instances, we will instruct CBP
to liquidate unreviewed entries at the all-others rate if there is no
rate for the intermediary involved in the transaction. For a full
discussion of this clarification, see id.
Cash Deposit Requirements
The following deposit rates will be effective upon publication of
the final results of this administrative review for all shipments of
CORE from Korea entered, or withdrawn from warehouse, for consumption
on or after the publication date, as provided by section 751(a)(2)(C)
of the Act: (1) The cash deposit rates for the companies listed above
will be the rates established in the final results of this review,
except if the rate is less than 0.5 percent and, therefore, de minimis,
the cash deposit will be zero; (2) for previously reviewed or
investigated companies not listed above, the cash deposit rate will
continue to be the company-specific rate published for the most recent
final results in which that manufacturer or exporter participated; (3)
if the exporter is not a firm covered in this review, a prior review,
or the original less-than-fair-value (LTFV) investigation, but the
manufacturer is, the cash deposit rate will be the rate established for
the most recent final results for the manufacturer of the merchandise;
and (4) if neither the exporter nor the manufacturer is a firm covered
in this or any previous review conducted by the Department, the cash
deposit rate will be 17.70 percent, the all-others rate established in
the LTFV. See Orders on Certain Steel from Korea. 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.
These preliminary results of review are issued and published in
accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Dated: September 7, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-22887 Filed 9-13-10; 8:45 am]
BILLING CODE 3510-DS-P