Certain Cold-Rolled Steel Flat Products From Japan: Affirmative Preliminary Determination of Sales at Less Than Fair Value and Preliminary Affirmative Determination of Critical Circumstances

AGENCY:

Enforcement and Compliance, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (the “Department”) preliminarily determines that certain cold-rolled steel flat products (“cold-rolled steel”) from Japan are being, or are likely to be, sold in the United States at less than fair value (“LTFV”), as provided in section 733(b) of the Tariff Act of 1930, as amended (“the Act”). The period of investigation (“POI”) is July 1, 2014 through June 30, 2015. JFE Steel Corporation (“JFE”) and Nippon Steel & Sumitomo Metal Corporation (“NSSMC”) are the mandatory respondents in this investigation. The estimated weighted average dumping margins of sales at LTFV are shown in the “Preliminary Determination” section of this notice. Interested parties are invited to comment on this preliminary determination.

DATES:

Effective March 7, 2016.

FOR FURTHER INFORMATION CONTACT:

Trisha Tran, AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-4852.

SUPPLEMENTARY INFORMATION:

Background

The Department published the notice of initiation of this investigation on August 24, 2015. For a complete description of the events that followed the initiation of this investigation, see the Preliminary Decision Memorandum that is dated concurrently with this determination and is hereby adopted by this notice. A list of topics included in the Preliminary Decision Memorandum is included as Appendix II to this notice. The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (“ACCESS”). ACCESS is available to registered users at https://access.trade.gov,, and to all parties in the Central Records Unit, Room B8024 of the main Department of Commerce building. In addition, a complete version of the Preliminary Decision Memorandum can be found at http://enforcement.trade.gov/frn/. The signed Preliminary Decision Memorandum and the electronic version of the Preliminary Decision Memorandum are identical in content.

On November 30, 2015, the Department published notice of the 50-day postponement for the preliminary determination in this investigation, in accordance with section 733(c)(1)(B) of the Act and 19 CFR 351.205(f)(1). In addition, the Department has exercised its discretion to toll all administrative deadlines due to the recent closure of the Federal Government because of Snowstorm “Jonas”. Thus, all of the deadlines in this segment of the proceeding have been extended by four business days. The revised deadline for the preliminary determination is now February 29, 2016.

Scope of the Investigation

The products covered by this investigation are certain cold-rolled (cold-reduced), flat-rolled steel products, whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. For a full description of the scope of this investigation, see the “Scope of the Investigation,” in Appendix I.

Scope Comments

In accordance with the preamble to the Department's regulations, the Initiation Notice set aside a period of time for parties to raise issues regarding product coverage (i.e., “scope”). Certain interested parties commented on the scope of the investigation, as it appeared in the Initiation Notice, as well as on additional language proposed by the Department. For a summary of the product coverage comments and rebuttal responses submitted to the record, and an accompanying discussion and analysis of all comments timely received, see the Preliminary Scope Decision Memorandum. In this investigation, the Department is preliminarily modifying the scope language as it appeared in the Initiation Notice.

Methodology

The Department is conducting this investigation in accordance with section 731 of the Act. Pursuant to section 776(a) of the Act, the Department preliminarily relied upon facts otherwise available to assign estimated weighted-average dumping margins to the mandatory respondents, JFE and NSSMC, because JFE and NSSMC each informed the Department that they would not respond to the Department's AD questionnaire and, therefore, would not participate in this investigation as mandatory respondents. Therefore, the Department is preliminarily applying adverse facts available to JFE and NSSMC, in accordance with section 776(b) of Act. See Preliminary Decision Memorandum for a complete explanation of the methodology and analysis underlying our preliminary application of adverse facts available.

After JFE and NSSMC informed the Department that they would not participate in this investigation as mandatory respondents, we selected Hitachi Metals Limited (“Hitachi”) as a voluntary respondent on December 10, 2015. On February 22, 2016, Petitioners provided a revised scope clarifying Petitioners' intent with regard to the scope of the investigation to exclude ultra-tempered automotive steel from the scope of the investigation and to limit application of this scope exclusion only to this cold-rolled steel from Japan investigation, which we have accepted for this preliminary determination. Because all of Hitachi's reported home market sales, U.S. sales, and production costs were comprised entirely of ultra-tempered automotive steel strip that meets the specification of the ultra-tempered steel scope exclusion, Hitachi does not have any sales during the POI to investigate and calculate a margin.¹² See Preliminary Scope Decision Memoranda for a complete discussion.

Preliminary Affirmative Determination of Critical Circumstances

On October 30, 2015, Petitioners filed timely critical circumstances allegations, pursuant to section 733(e)(1) of the Act and 19 CFR 351.206(c)(1), alleging that critical circumstances exist with respect to imports of the merchandise under consideration from Japan. In accordance with 19 CFR 351.206(c)(2)(i), when a critical circumstances allegation is submitted more than 20 days before the scheduled date of the preliminary determination, the Department will issue a preliminary finding whether there is a reasonable basis to believe or suspect that critical circumstances exist no later than the date of the preliminary determination. Based on our analyses, in accordance with section 733(e) of the Act and 19 CFR 351.206, we preliminarily find that critical circumstances exist for each of the mandatory respondents in the investigation. That is, with respect to these companies, we preliminarily determine that (1) importers of merchandise knew or should have known that the exporter was selling the merchandise under consideration at LTFV and that there was likely to be material injury in accordance with section 733(e)(1)(A) of the Act; and (2) imports of subject merchandise have been massive over a relatively short period in accordance with section 733(e)(1)(B) of the Act. With respect to all other producers and exporters subject to the investigation concerning cold-rolled steel from Japan, we preliminarily do not find that critical circumstances exist. For a full description of the methodology and results of our critical circumstances analysis, see the Preliminary Decision Memorandum.

All-Others Rate

Section 735(c)(5)(A) of the Act provides that the estimated “all-others” rate shall be an amount equal to the weighted-average of the estimated weighted-average dumping margins established for exporters and producers individually investigated, excluding any rates that are zero, de minimis, or determined entirely under section 776 of the Act. We cannot apply the methodology described in section 735(c)(5)(A) of the Act to calculate the “all-others” rate, as all of the margins in this preliminary determination were calculated under section 776 of the Act. In cases where no weighted-average dumping margins besides zero, de minimis, or those determined entirely under section 776 of the Act have been established for individually estimated entities, in accordance with section 735(c)(5)(B) of the Act, the Department averages the margins calculated by the Petitioners in the Petition and applies the result to “all-other” entities not individually examined. In this case, however, Petitioners calculated only one margin in the Petition. Therefore, we assigned as the “all-others” rate the only margin in the Petition, which is 71.35 percent.

Preliminary Determination

The Department preliminarily determines that the following weighted-average dumping margins exist:

In addition, the Department preliminarily determines that voluntary respondent Hitachi Metals Limited has no sales of subject merchandise during to POI to examine.

Suspension of Liquidation

In accordance with section 733(d)(2) of the Act, we will direct U.S. Customs and Border Protection (“CBP”) to suspend liquidation of all entries of cold-rolled steel from Japan, as described in the scope of the investigation, that is entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register.

Section 733(e)(2) of the Act provides that, given an affirmative determination of critical circumstances, any suspension of liquidation shall apply to unliquidated entries of merchandise entered, or withdrawn from warehouse, for consumption on or after the later of (a) the date which is 90 days before the date on which the suspension of liquidation was first ordered, or (b) the date on which notice of initiation of the investigation was published. Because we have preliminarily found that critical circumstances exist with regard to imports exported by the mandatory respondents JFE and NSSMC, we will instruct CBP to suspend liquidation of all entries of cold-rolled steel from Japan, as described in the scope of the investigation, from the mandatory respondents that are entered, or withdrawn from warehouse, for consumption on or after the date that is 90 days prior to the date on which suspension of liquidation is first ordered (e.g., the date of publication of this notice). At such time, we will also instruct CBP, pursuant to section 733 (d)(1)(B) of the Act and 19 CFR 351.205(d), to require a cash deposit equal to the margins indicated in the chart above. The suspension of liquidation will remain in effect until further notice.

Disclosure and Public Comment

We will disclose the calculations that we performed in this investigation to interested parties in this proceeding within five days after the date of public announcement of the preliminary determination in accordance with 19 CFR 351.224(b). Interested parties are invited to comment on this preliminary determination. Interested parties may submit case briefs to the Department no later than 30 days after the publication of this preliminary determination. Rebuttal briefs, the content of which is limited to the issues raised in the case briefs, must be filed within five days of the deadline date for the submission of case briefs. Pursuant to 19 CFR 351.309(c)(2) and (d)(2), parties who submit case briefs or rebuttal briefs in this proceeding are encouraged to submit with each argument: (1) A statement of the issue; (2) a brief summary of the argument; and (3) a table of authorities. All documents must be filed electronically using ACCESS.

Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing must submit a written request for a hearing to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce. An electronically-filed request for a hearing must be received successfully in its entirety by ACCESS by 5:00 p.m. Eastern Time, within 30 days after the date of publication of this notice. Hearing requests should contain the party's name, address, and telephone number, the number of participants, and a list of the issues to be discussed. If a request for a hearing is made, the Department intends to hold the hearing at the U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230, at a time and date to be determined. Parties should confirm by telephone the date, time, and location of the hearing two days before the scheduled date.

Verification

Because none of the mandatory respondents in this investigation provided information requested by the Department and the Department preliminarily determines each of the mandatory respondents to have been uncooperative, verification will not be conducted.

International Trade Commission (“ITC”) Notification

In accordance with section 733(f) of the Act, we are notifying the ITC of our affirmative preliminary determination of sales at LTFV. If our final determination is affirmative, the ITC will determine before the later of 120 days after the date of this preliminary determination or 45 days after our final determination whether these imports are materially injuring, or threaten material injury to, the U.S. industry.

This determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act and 19 CFR 351.205(c).

Appendix I—Scope of the Investigation

The products covered by this investigation are certain cold-rolled (cold reduced), flat-rolled steel products, whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered include coils that have a width or other lateral measurement (“width”) of 12.7 mm or greater, regardless of form of coil (e.g., in successively superimposed layers, spirally oscillating, etc.). The products covered also include products not in coils (e.g., in straight lengths) of a thickness less than 4.75 mm and a width that is 12.7 mm or greater and that measures at least 10 times the thickness. The products covered also include products not in coils (e.g ., in straight lengths) of a thickness of 4.75 mm or more and a width exceeding 150 mm and measuring at least twice the thickness. The products described above may be rectangular, square, circular, or other shape and include products of either rectangular or non-rectangular cross section where such cross-section is achieved subsequent to the rolling process, i.e., products which have been “worked after rolling” (e.g., products which have been beveled or rounded at the edges). For purposes of the width and thickness requirements referenced above:

(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above, and

(2) where the width and thickness vary for a specific product (e.g ., the thickness of certain products with non-rectangular cross-section, the width of certain products with non-rectangular shape, etc.), the measurement at its greatest width or thickness applies.

Steel products included in the scope of these investigations are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:

• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten (also called wolfram), or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium (also called columbium), or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium

Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.

For example, specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, motor lamination steels, Advanced High Strength Steels (AHSS), and Ultra High Strength Steels (UHSS). IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. Motor lamination steels contain micro-alloying levels of elements such as silicon and aluminum. AHSS and UHSS are considered high tensile strength and high elongation steels, although AI-ISS and UHSS are covered whether or not they are high tensile strength or high elongation steels.

Subject merchandise includes cold-rolled steel that has been further processed in a third country, including but not limited to annealing, tempering, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the cold-rolled steel.

All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of this investigation unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of this investigation:

• Ball bearing steels;

• Tool steels;

• Silico-manganese steel

• Grain-oriented electrical steels (“GOES”) as defined in the final determination of the U.S. Department of Commerce in Grain-Oriented Electrical Steel From Germany, Japan, and Poland.

• Non-Oriented Electrical Steels (“NOES”), as defined in the antidumping orders issued by the U.S. Department of Commerce in Non-Oriented Electrical Steel From the People's Republic of China, Germany, Japan, the Republic of Korea, Sweden, and Taiwan.

Also excluded from the scope of this investigation is ultra-tempered automotive steel, which is hardened, tempered, surface polished, and meets the following specifications:

• Thickness: less than or equal to 1.0 mm;
• Width: less than or equal to 330 mm;
• Chemical composition:

• Physical properties:

• Microstructure: Completely free from decarburization. Carbides are spheroidal and fine within 1% to 4% (area percentage) and are undissolved in the uniform tempered martensite;
• Surface roughness: less than or equal to 0.80 μm Rz;
• Non-metallic inclusion:

Sulfide inclusion less than or equal to 0.04% (area percentage)

Oxide inclusion less than or equal to 0.05% (area percentage); and

The mill test certificate must demonstrate that the steel is proprietary grade “PK” and specify the following:

The exact tensile strength, which must be greater than or equal to 1600 N/mm²;

The exact hardness, which must be greater than or equal to 465 Vickers hardness number;

The exact elongation, which must be between 2.5% and 9.5%; and

Certified as having residual compressive stress within a range of 100 to 400 N/mm².

The products subject to this investigation are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7209.15.0000, 7209.16.0030, 7209.16.0060, 7209.16.0070, 7209.16.0091, 7209.17.0030, 7209.17.0060, 7209.17.0070, 7209.17.0091, 7209.18.1530, 7209.18.1560, 7209.18.2510, 7209.18.2520, 7209.18.2580, 7209.18.6020, 7209.18.6090, 7209.25.0000, 7209.26.0000, 7209.27.0000, 7209.28.0000, 7209.90.0000, 7210.70.3000, 7211.23.1500, 7211.23.2000, 7211.23.3000, 7211.23.4500, 7211.23.6030, 7211.23.6060, 7211.23.6090, 7211.29.2030, 7211.29.2090, 7211.29.4500, 7211.29.6030, 7211.29.6080, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7225.50.6000, 7225.50.8080, 7225.99.0090, 7226.92.5000, 7226.92.7050, and 7226.92.8050. The products subject to the investigation may also enter under the following HTSUS numbers: 7210.90.9000, 7212.50.0000, 7215.10.0010, 7215.10.0080, 7215.50.0016, 7215.50.0018, 7215.50.0020, 7215.50.0061, 7215.50.0063, 7215.50.0065, 7215.50.0090, 7215.90.5000, 7217.10.1000, 7217.10.2000, 7217.10.3000, 7217.10.7000, 7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090, 7225.19.0000, 7226.19.1000, 7226.19.9000, 7226.99.0180, 7228.50.5015, 7228.50.5040, 7228.50.5070, 7228.60.8000, and 7229.90.1000.

The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the investigation is dispositive.

Appendix II—List of Topics Discussed in the Preliminary Decision Memorandum

I. Summary

II. Background

III. Period of Investigation

IV. Scope of the Investigation

V. Respondent Selection

VI. Application of Facts Available and All-Others Rate

VII. Preliminary Determination of Critical Circumstances

VIII. Verification

IX. Conclusion