Certain Cut-to-Length Carbon-Quality Steel Plate Products From the Republic of Korea: Preliminary Results and Rescission in Part of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Preliminary Results of Antidumping Duty Administrative Review.

SUMMARY:

In response to requests from U.S. producers of the subject merchandise, the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain cut-to-length carbon-quality steel plate products (steel plate) from the Republic of Korea (Korea). The review covers one manufacturer/exporter of subject merchandise during the period of review (POR), February 1, 2002, through January 31, 2003. Based upon our analysis, the Department has preliminarily determined that a dumping margin exists for the manufacturer/exporter covered by this review. If these preliminary results are adopted in our final results of administrative review, we will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties as appropriate. Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

November 6, 2003.

FOR FURTHER INFORMATION CONTACT:

Jeff Pedersen or Drew Jackson, AD/CVD Enforcement, Office IV, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-2769 or (202) 482-4406, respectively.

SUPPLEMENTARY INFORMATION:

Background

On February 10, 2000, the Department published in the Federal Register the antidumping duty order on steel plate from Korea. See Notice of Amendment of Final Determinations of Sales at Less Than Fair Value and Antidumping Duty Orders: Certain Cut-To-Length Carbon-Quality Steel Plate Products From France, India, Indonesia, Italy, Japan and the Republic of Korea, 65 FR 6585 (February 10, 2000) (Amended Final Determination and Order). On February 3, 2003, the Department published a notice of “Opportunity to Request Administrative Review” of the antidumping duty order on steel plate from Korea. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 68 FR 5272 (February 3, 2003). On February 27, 2003, Nucor Corporation, a domestic producer, requested an administrative review of Dongkuk Steel Mill Co., Ltd. (DSM), Korea Iron & Steel Co., Ltd. (KISCO), Pohang Iron & Steel Co., Ltd. (Pohang) and Union Steel Manufacturing Co., Ltd. (Union) for the POR February 1, 2002, through January 31, 2003. Also, on February 27, 2003, IPSCO Steel, one of the petitioning firms in the steel plate investigations, requested an administrative review of DSM this review. On March 18, 2003, the Department initiated an administrative review of DSM, KISCO, and Union. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 68 FR 14394 (March 25, 2003). The Department did not initiate an administrative review of Pohang because Pohang is excluded from the antidumping order on steel plate from Korea. See Amended Final Determination and Order.

On April 10, 2003, the Department issued antidumping questionnaires to DSM, KISCO and Union. The Department received a letter from KISCO on June 6, 2003, in which it stated that it had shut down its steel plate mill in early 1998 and, thus, had no shipments of subject merchandise during the POR. In March and April 2003, Union reported that it did not produce the subject merchandise and had no shipments of subject merchandise during the POR. DSM responded to the Department's questionnaire responses in May and June 2003. The Department issued supplemental questionnaires to DSM in May, June, July, August, and September of 2003, and received responses from DSM in June, July, August, and September of 2003.

Scope of the Review

The products covered by the antidumping duty order are certain hot-rolled carbon-quality steel: (1) Universal mill plates (i.e., flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 mm but not exceeding 1250 mm, and of a nominal or actual thickness of not less than 4 mm, which are cut-to-length (not in coils) and without patterns in relief), of iron or non-alloy-quality steel; and (2) flat-rolled products, hot-rolled, of a nominal or actual thickness of 4.75 mm or more and of a width which exceeds 150 mm and measures at least twice the thickness, and which are cut-to-length (not in coils). Steel products to be included in the scope of the order are of rectangular, square, circular or other shape and of rectangular or non-rectangular cross-section where such non-rectangular cross-section is achieved subsequent to the rolling process (i.e., products which have been “worked after rolling”)—for example, products which have been beveled or rounded at the edges. Steel products that meet the noted physical characteristics that are painted, varnished or coated with plastic or other non-metallic substances are included within this scope. Also, specifically included in the scope of the order are high strength, low alloy (HSLA) steels. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. Steel products to be included in this scope, regardless of Harmonized Tariff Schedule of the United States (HTSUS) definitions, are products in which: (1) Iron predominates, by weight, over each of the other contained elements, (2) the carbon content is two percent or less, by weight, and (3) none of the elements listed below is equal to or exceeds the quantity, by weight, respectively indicated: 1.80 percent of manganese, or 1.50 percent of silicon, or 1.00 percent of copper, or 0.50 percent of aluminum, or 1.25 percent of chromium, or 0.30 percent of cobalt, or 0.40 percent of lead, or 1.25 percent of nickel, or 0.30 percent of tungsten, or 0.10 percent of molybdenum, or 0.10 percent of niobium, or 0.41 percent of titanium, or 0.15 percent of vanadium, or 0.15 percent zirconium. All products that meet the written physical description, and in which the chemistry quantities do not equal or exceed any one of the levels listed above, are within the scope of the order unless otherwise specifically excluded. The following products are specifically excluded from the order: (1) Products clad, plated, or coated with metal, whether or not painted, varnished or coated with plastic or other non-metallic substances; (2) SAE grades (formerly AISI grades) of series 2300 and above; (3) products made to ASTM A710 and A736 or their proprietary equivalents; (4) abrasion-resistant steels (i.e., USS AR 400, USS AR 500); (5) products made to ASTM A202, A225, A514 grade S, A517 grade S, or their proprietary equivalents; (6) ball bearing steels; (7) tool steels; and (8) silicon manganese steel or silicon electric steel. The merchandise subject to the order is classified in the HTSUS under subheadings: 7208.40.3030, 7208.40.3060, 7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 7211.14.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.40.3050, 7225.40.7000, 7225.50.6000, 7225.99.0090, 7226.91.5000, 7226.91.7000, 7226.91.8000, 7226.99.0000. Although the HTSUS subheadings are provided for convenience and CBP purposes, the written description of the merchandise covered by the order is dispositive.

Period of Review

The POR is February 1, 2002 through January 31, 2003.

Preliminary Partial Rescission of Review

We are preliminarily rescinding this review, in part, with respect to KISCO and Union because they reported that they made no shipments of subject merchandise during the POR. The Department reviewed CBP data, which supports the claims that these companies did not export subject merchandise during the POR.

Duty Absorption

Section 751(a)(4) of the Tariff Act of 1930, as amended (the Act), provides for the Department, if requested, to determine during an administrative review initiated two or four years after the publication of the order, whether antidumping duties have been absorbed by a foreign producer or exporter, if the subject merchandise is sold in the United States through an affiliated importer. Nucor Corporation requested that the Department make a duty absorption determination with respect to each respondent. Because the instant review was not initiated two or four years after publication of the order, the Department will not make a duty absorption determination in this review.

Affiliation

During the POR, DSM sold subject merchandise to Dongkuk Industries Co., Ltd. (DKI), a Korean trading company, which, in turn, resold the merchandise to Dongkuk International, Inc. (DKA), a U.S. importer that is affiliated with DSM. The Department has preliminarily determined that DSM and DKI are under the common control of a family grouping. According to section 771(33)(F) of the Act, “{t}wo or more persons directly or indirectly controlling, controlled by, or under common control with, any person” shall be considered to be affiliated. Thus we have preliminarily found DSM and DKI to be affiliated parties. For a complete discussion of this issue see the memorandum from the Team to Thomas F. Futtner, Acting Office Director, concerning Affiliation Analysis for Dongkuk Steel Mill Company, Ltd., dated concurrently with this notice.

Section 201 Duties

The Department notes that merchandise subject to this review is subject to duties imposed under section 201 of the Act (section 201 duties). Because the Department has not previously addressed the appropriateness of deducting section 201 duties from export price and constructed export price (CEP), on September 9, 2003, the Department published a request for public comments on this issue (68 FR 53104). All comments were due on October 9, 2003. Rebuttal comments are due by November 7, 2003. See 68 FR 60079 (October 21, 2003). Since the Department has not made a determination on this issue at this time, for purposes of these preliminary results, no adjustment has been made.

Normal Value Comparisons

To determine whether the respondent's sales of steel plate from Korea to the United States were made at less than normal value (NV), we compared the CEP to the NV, as described in the “Constructed Export Price” and “Normal Value” sections of this notice, below. We first attempted to compare contemporaneous U.S. and comparison-market sales of products that are identical with respect to the following characteristics: paint, quality, grade, heat treatment, thickness, width, patterns in relief and descaling. Where we were unable to compare sales of identical merchandise, we compared U.S. sales to contemporaneous comparison-market sales of the most similar merchandise based on the above characteristics, which are listed in order of importance for matching purposes.

Constructed Export Price

In calculating U.S. price, the Department used CEP, as defined in section 772(b) of the Act, because the merchandise was sold, after importation, by DSM's U.S. affiliate, DKA, to unaffiliated purchasers in the United States. We calculated CEP based on delivered prices to unaffiliated customers in the United States. We made deductions from the starting price, where appropriate, for foreign and U.S. brokerage and handling, foreign and U.S. inland freight, international freight, marine insurance, U.S. duties, and direct and indirect selling expenses to the extent that they are associated with economic activity in the United States in accordance with sections 772(c)(2)(A) and 772(d)(1)(B) and (D) of the Act. The direct selling expenses included credit expenses. We added duty drawback received on imported materials pursuant to section 772(c)(1)(B) of the Act. In accordance with section 772(d)(3) of the Act, we made a deduction for CEP profit. Finally, pursuant to section 772(c)(1)(C) of the Act, we increased U.S. price by the amount of the export subsidy found in the countervailing duty investigation on steel plate from Korea. See Final Affirmative Countervailing Duty Determination: Certain Cut-to-Length Carbon-Quality Steel Plate From the Republic of Korea, 64 FR 73176 (December 29, 1999).

Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent practicable, we determined NV based on sales in the comparison-market at the same level of trade (LOT) as the CEP sales. The NV LOT is that of the starting-price sales in the comparison-market. For CEP sales, the U.S. LOT is the level of the constructed sale from the exporter to the importer. The Department adjusts the CEP, pursuant to section 772(d) of the Act, prior to performing its LOT analysis, as articulated by the Department's regulations at section 351.412(c)(1)(ii). See Micron Technology, Inc. v. United States, 243 F.3rd 1301, 1315 (Fed. Cir. 2001).

To determine whether NV sales are at a different LOT than the CEP sales, we examined stages in the marketing process and selling activities along the chain of distribution between the producer and the unaffiliated customer. If the comparison-market sales are at a different LOT than that of the U.S. sale, and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison-market sales at the LOT of the export transaction, we make an LOT adjustment under section 773(a)(7)(A) of the Act. For CEP sales, if the NV LOT is more remote from the factory than the CEP LOT and there is no basis for determining whether the difference in the levels between NV and CEP affects price comparability, we adjust NV under section 773(a)(7)(B) of the Act (the CEP offset provision). See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).

In determining whether separate LOTs exist, we obtained information from DSM about the marketing stages for the reported U.S. and comparison-market sales, including a description of the selling activities performed by DSM for each channel of distribution. In identifying LOTs for CEP sales, we considered the selling functions reflected in the starting price, as adjusted under section 772(d) of the Act. See section 351.412(c)(1)(ii) of the Department's regulations. We expect that, if claimed LOTs are the same, the selling functions and activities of the seller at each level should be similar. Conversely, if a party claims that LOTs are different for different groups of sales, the selling functions and activities of the seller for each group of sales should be dissimilar.

In its questionnaire responses, DSM reported that it sold the foreign like product through one channel of distribution in the comparison-market and subject merchandise through several channels of distribution in the United States. We found that DSM engaged in similar selling activities for almost all sales in the comparison-market, and thus, we have preliminarily determined that there is one LOT in the comparison-market. Moreover, we found that the sales activities performed in the U.S. channels of distribution are substantially similar and, thus there is one LOT in the U.S. market. Further, we compared the single LOT in the comparison-market to the single LOT in the U.S. market, and have preliminarily determined that they are substantially similar. Thus, we have determined that the LOTs in the comparison and U.S. markets are the same LOT. Because the LOT is the same in both markets, we have denied DSM's request for a CEP offset, and not considered an LOT adjustment. See memorandum to the File from the Team concerning Level of Trade Analysis: Dongkuk Steel Mill Co., Ltd., dated concurrently with this notice.

Normal Value

After testing home market viability and whether home market sales failed the cost test, we calculated NV as noted in subsection 5, “Calculation of NV,” below.

1. Home Market Viability

In order to determine whether there is a sufficient volume of sales in the home market to serve as a viable basis for calculating NV (i.e., whether the aggregate volume of home market sales of the foreign like product is equal to or greater than five percent of the aggregate volume of U.S. sales), we compared the respondent's volume of home market sales of the foreign like product to the volume of its U.S. sales of subject merchandise, in accordance with section 773(a)(1) of the Act. Because the respondent's aggregate volume of home market sales of the foreign like product is greater than five percent of its aggregate volume of U.S. sales of subject merchandise, we determined that the home market is viable for the respondent, and have used the home market as the comparison-market.

2. Ordinary Course of Trade—Overrun Sales

DSM reported home market sales of “overrun” merchandise (i.e., sales of a greater quantity of steel plate than the customer ordered due to overproduction). Section 773(a)(1)(B) of the Act provides that NV shall be based on the price at which the foreign like product is first sold, inter alia, in the ordinary course of trade. Section 771(15) of the Act defines ordinary course of trade as the conditions and practices which, for a reasonable time prior to the exportation of the subject merchandise, have been normal in the trade under consideration with respect to merchandise of the same class or kind. In past cases, the Department has examined a number of factors to determine whether “overrun” sales are in the ordinary course of trade. These factors include: (1) Whether the merchandise is “off-quality” or produced according to unusual specifications; (2) the comparative volume of sales and number of buyers in the home market; (3) the average quantity of an overrun sale compared to the average quantity of a commercial sale; and (4) price and profit differentials in the home market. Based on our analysis of these factors and the terms of sale, we found all overrun sales to be outside the ordinary course of trade. See memorandum to the File from the Team concerning Overrun Sales Analysis: Dongkuk Steel Mill Co., Ltd., dated concurrently with this notice.

3. Affiliated-Party Transactions and Arm's-Length Test

DSM reported no home market sales to affiliates.

4. Cost of Production Analysis

In the investigation of steel plate from Korea, the Department disregarded DSM's sales that were found to have failed the cost test. See Preliminary Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon-Quality Steel Plate Products From the Republic of Korea, 64 FR 41224 (July 29, 1999); Amended Final Determination and Order (no change from the preliminary results). Accordingly, the Department, pursuant to section 773(b) of the Act, initiated a cost of production (COP) investigation of the respondent for purposes of this administrative review. We conducted the COP analysis as described below.

A. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated the weighted-average COP, by model, for the POR, based on the sum of materials and fabrication costs, general and administrative (G&A) expenses, and packing costs.

B. Test of Home Market Sales Prices

As required under section 773(b) of the Act, we compared the weighted-average COPs to the home market sales of the foreign like product, in order 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. On a product-specific basis, we compared the COP to home market prices, less any applicable movement charges and direct and indirect selling expenses.

C. Results of the COP Test

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of DSM's sales of a given product were made at prices below the COP, we did not disregard any below-cost sales of that product because the below-cost sales were not made in “substantial quantities.” Where 20 percent or more of DSM's sales of a given product were made at prices below the COP, we determined that such sales were made in substantial quantities within an extended period of time (i.e., a period of one year). Further, because we compared prices to POR-average costs, we determined that the below-cost prices would not permit recovery of all costs within a reasonable time period, and thus, we disregarded the below-cost sales in accordance with sections 773(b)(1) and (2) of the Act.

We found that for certain products, DSM made home market sales at prices below the COP within an extended period of time in substantial quantities. Further, we found that these sales prices did not permit the recovery of costs within a reasonable period of time. We therefore excluded these sales from our analysis in accordance with section 773(b)(1) of the Act.

5. Calculation of NV

We determined price-based NVs for DSM as follows: We calculated NV based on packed, delivered and ex-factory prices to home market customers. Where appropriate, we increased the starting price for interest and duty drawback revenue received from customers. We made deductions from the starting price for foreign inland freight, where appropriate, pursuant to sections 773(a)(6)(B)(ii) of the Act. Pursuant to section 773(a)(6)(C)(iii) of the Act and § 351.410(c) of the Department's regulations, we made circumstance-of-sale adjustments to the starting price, where appropriate, for differences in credit, warranty, and bank expenses.

We deducted home market packing costs from, and added U.S. packing costs to, the starting price, in accordance with section 773(a)(6)(A) and (B) of the Act. Where appropriate, we made adjustments to NV to account for differences in the physical characteristics of the merchandise sold in the U.S. and home market, in accordance with section 773(a)(6)(C)(ii) of the Act and § 351.411 of the Department's regulations.

Currency Conversion

Pursuant to section 773A(a) of the Act, we made currency conversions into U.S. dollars based on the exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank.

Preliminary Results of Review

As a result of this review, we preliminarily determine that the following weighted-average margin exists for the period February 1, 2002, through January 31, 2003:

We will disclose the calculations used in our analysis to parties to this proceeding within five days of the publication date of this notice. See § 351.224(b) of the Department's regulations. Any interested party may request a hearing within 30 days of the publication date of this notice. See § 351.310(c) of the Department's regulations. If requested, a hearing will be held 44 days after the date of publication of this notice, or the first workday thereafter. Interested parties may submit case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than 7 days after the deadline for filing case briefs. Interested parties are invited to comment on the preliminary results. Parties who submit arguments are requested to submit with each argument: (1) A statement of the issue, (2) a brief summary of the argument and (3) a table of authorities. Further, we would appreciate it if parties submitting written comments would provide the Department with a copy of the public version of any such comments on a diskette. The Department will issue the final results of this administrative review, which will include the results of its analysis of issues raised in any written comments, within 120 days from the publication date of this notice.

Assessment Rate

Upon completion of this administrative review, the Department will determine, and CBP shall assess, antidumping duties on all appropriate entries. In accordance with § 351.212(b)(1) of the Department's regulations, we have calculated an importer-specific assessment rate for merchandise subject to this review. Where the importer-specific assessment rate is above de minimis, we will instruct the CBP to assess the importer-specific rate uniformly on all entries made during the POR. The Department will issue appropriate assessment instructions directly to CBP within 15 days of publication of the final results of review. If these preliminary results are adopted in the final results of review, we will direct CBP to assess the resulting assessment rates against the entered customs values for the subject merchandise on each of the importers' entries during the review period.

Cash Deposit Requirements

The following cash deposit requirements will be effective upon publication of these final results for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of these final results of administrative review, as provided by section 751(a)(1) of the Act: (1) The cash deposit rate for the reviewed company will be the rate listed above (except that if the rate is de minimis, i.e., less than 0.5 percent, a cash deposit rate of zero will be required); (2) for previously investigated or reviewed companies not listed above, 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 original 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 merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be the “all others” rate of 0.98 percent, which is the “all others” rate established in the LTFV investigation, adjusted for the export subsidy rate in the countervailing duty investigation. See Amended Final Determination and Order. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Interested Parties

This notice also serves as a preliminary reminder to importers of their responsibility under § 351.402(f)(2) of the Department's regulations 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 the antidumping duties occurred and the subsequent assessment of double antidumping duties.

This administrative review and this notice are in accordance with sections 751(a)(1) and 777(i)(1) of the Act.