Import Administration, International Trade Administration, Department of Commerce.
Notice of preliminary determination of sales at less than fair value.
We preliminarily determine that structural steel beams from South Africa are being, or are likely to be, sold in the United States at less than fair value, as provided in section 733(b) of the Tariff Act of 1930, as amended.
Interested parties are invited to comment on this preliminary determination. Because we are postponing the final determination, we will make our final determination not later than 135 days after the date of publication of this preliminary determination in the Federal Register.
December 28, 2001.Start Further Info
FOR FURTHER INFORMATION CONTACT:
J. David Dirstine, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-4033.End Further Info End Preamble Start Supplemental Information
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (“the Act”), are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act. In addition, unless otherwise indicated, all citations to the Department of Commerce (“Department's”) regulations are to the regulations at 19 CFR part 351 (April 2001).
Since the initiation of this investigation (Initiation of Antidumping Duty Investigations: Structural Steel Beams From the People's Republic of China, Germany, Italy, Luxembourg, Russia, South Africa, Spain, and Taiwan, 66 FR 33048 (June 20, 2001)) (“Initiation Notice”), the following events have occurred.
On July 9, 2001, the United States International Trade Commission (“ITC”) preliminarily determined that there is a reasonable indication that imports of structural steel beams from South Africa are materially injuring the United States industry (see Certain Structural Steel Beams From the People's Republic of China, Germany, Italy, Luxembourg, Russia, South Africa, Spain, and Taiwan (66 FR 37050 (July 16, 2001)).
On July 20, 2001, we selected the largest producer/exporter of structural steel beams from South Africa as a mandatory respondent in this proceeding. For further discussion, see Memorandum to Laurie Parkhill, Director Office 3, from The Team Re: Respondent Selection dated July 20, 2001. We subsequently issued the antidumping questionnaire to Highveld Steel and Vanadium Corporation, Ltd. (“Highveld”), on July 20, 2001.
During the period August through November 2001, the Department received responses to sections A, B, C, and D of the Department's original and supplemental questionnaires from Highveld.
On September 25, 2001, pursuant to 19 CFR 351.205(e), the petitioners made a timely request to postpone the preliminary determination. We granted this request on October 2, 2001, and postponed the preliminary determination until no later than November 30, 2001. (See Notice of Postponement of Preliminary Determinations of Sales at Less Than Fair Value: Structural Steel Beams from the People's Republic of China, Germany, Italy, Luxembourg, Russia, South Africa, Spain and Taiwan, 66 FR 51639 (October 10, 2001).) On October 30, 2001, the petitioners made another timely request to postpone the preliminary determination for an additional 19 days. We granted this request on October 31, 2001, and postponed the preliminary determination until no later than December 19, 2001. (See Notice of Postponement of Preliminary Antidumping Duty Determinations: Structural Steel Beams from the People's Republic of China, Germany, Italy, Luxembourg, Russia, South Africa, Spain and Taiwan (66 FR 56078 (November 6, 2001).)
On October 3, 2001, the petitioners requested that the Department initiate a sales-below-cost investigation with respect to Highveld. We initiated such an investigation on October 29, 2001. (See Memorandum to Richard W. Moreland from Laurie Parkhill Re: Initiation of Cost Investigation, dated October 29, 2001, for further details.)
Postponement of Final Determination and Extension of Provisional Measures
Pursuant to section 735(a)(2) of the Act, on December 14, 2001, Highveld requested that, in the event of an affirmative preliminary determination in this investigation, the Department postpone its final determination until not later than 135 days after the date of the publication of the preliminary determination in the Federal Register and extend the provisional measures to not more than six months. In accordance with 19 CFR 351.210(b)(2)(ii), because (1) Our preliminary determination is affirmative, (2) Highveld accounts for a significant proportion of exports of the subject merchandise, and (3) no compelling reasons for denial exist, we are granting the respondent's request and are postponing the final determination until no later than 135 days after the publication of this notice in the Federal Register. Suspension of liquidation will be extended accordingly.
Scope of Investigation
The scope of this investigation covers doubly-symmetric shapes, whether hot-or cold-rolled, drawn, extruded, formed Start Printed Page 67214or finished, having at least one dimension of at least 80 mm (3.2 inches or more), whether of carbon or alloy (other than stainless) steel, and whether or not drilled, punched, notched, painted, coated, or clad. These structural steel beams include, but are not limited to, wide-flange beams (“W'shapes), bearing piles (“HP” shapes), standard beams (“S” or “I” shapes), and M-shapes. All the products that meet the physical and metallurgical descriptions provided above are within the scope of this investigation unless otherwise excluded. The following products are outside and/or specifically excluded from the scope of this investigation: (1) Structural steel beams greater than 400 pounds per linear foot, (2) structural steel beams that have a web or section height (also known as depth) over 40 inches, and (3) structural steel beams that have additional weldments, connectors, or attachments to I-sections, H-sections, or pilings; however, if the only additional weldment, connector or attachment on the beam is a shipping brace attached to maintain stability during transportation, the beam is not removed from the scope definition by reason of such additional weldment, connector, or attachment.
The merchandise subject to this investigation is classified in the Harmonized Tariff Schedule of the United States (“HTSUS”) at subheadings 7216.32.0000, 7216.33.0030, 7216.33.0060, 7216.33.0090, 7216.50.0000, 7216.61.0000, 7216.69.0000, 7216.91.0000, 7216.99.0000, 7228.70.3040, and 7228.70.6000. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise under investigation is dispositive.
In accordance with the preamble to our regulations (see Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May 19, 1997)), we set aside a period of time for parties to raise issues regarding product coverage and encouraged all parties to submit comments within 20 calendar days of publication of the Initiation Notice (see 66 FR 33048-33049). Interested parties submitted such comments by July 10, 2001. Additional comments were subsequently submitted by interested parties.
Pursuant to the Department's solicitation of scope comments in the Initiation Notice, interested parties in this and the concurrent structural steel beams investigations request that the following products be excluded from the scope of the investigations: (1) Beams of grade A913/65 and (2) forklift mast profiles.
With respect to the scope-exclusion requests for the A913/65 beam and forklift mast profiles, the interested parties rely upon 19 CFR 351.225(k)(2) and reason that, in general, these products differ from the structural steel beams covered by the scope of the investigations in terms of physical characteristics, ultimate uses, purchaser expectations, channels of trade, manner of advertising and display and/or price. They also argue that these products are not produced by the petitioners.
In considering whether these products should be included within the scope of the investigations, we analyzed the arguments submitted by all of the interested parties in the context of the criteria enumerated in the court decision Diversified Products Corp. v. United States, 572 F. Supp. 883, 889 (CIT 1983) (“Diversified”). For these analyses, we relied upon the petition, the submissions by all interested parties, the International Trade Commission's (“ITC”) preliminary determination, and other information.
After considering the respondent's comments and the petitioners' objections to the exclusion requests regarding the A913/65 beam, we find that the description of this grade of structural steel beam is dispositive such that further consideration of the criteria provided in their submissions is unnecessary. Furthermore, the description of the merchandise contained in the relevant submissions pertaining to this grade of beam does not preclude this product from being within the scope of the investigations. Accordingly, we preliminarily determine that the A913/65 beam does not constitute a separate class or kind of merchandise and, therefore, falls within the scope as defined in the petition.
With respect to forklift mast profiles, having considered the comments we received from the interested parties and the criteria enumerated in Diversified, we find that the profiles in question, being doubly-symmetric and having an I-shape, fall within the scope of the investigations. These profiles also meet the other criteria included in the scope language contained in the petition. While the description by the interested party requesting the exclusion indicates some differences, such as in price, between forklift mast profiles and structural steel beams, these differences are not sufficient to recognize forklift mast profiles as a separate class or kind of merchandise. However, given these differences between forklift mast profiles and structural steel beams, we preliminarily determine that forklift mast profiles should be separately identified for model-matching purposes.
We also received a scope-exclusion request by an interested party for fabricated steel beams. This request was subsequently withdrawn pursuant to an agreement with the petitioners to clarify the scope language by adding that “ * * * beams that have additional weldments, connectors or attachments to I-sections, H-sections, or pilings are outside the scope definition.” However, “ * * * if the only additional weldment, connector or attachment on the beam is a shipping brace attached to maintain stability during transportation, the beam is not removed from the scope definition by reason of such additional weldment, connector or attachment.” Accordingly, we modified the scope definition to account for this clarification. See the “Scope” section above.
We have addressed these scope-exclusion requests in detail in a Memorandum to Louis Apple and Laurie Parkhill, Directors, AD/CVD Enforcement Group I, Offices 2 and 3, respectively, from The Structural Steel Beams Teams Re: Scope Exclusion Requests, dated December 19, 2001.
Period of Investigation
The period of investigation (“POI”) is April 1, 2000, through March 31, 2001.
Fair Value Comparisons
To determine whether sales of structural steel beams from South Africa to the United States were made at less than fair value (“LTFV”), we compared the export price (“EP”) or constructed export price (“CEP”) to the normal value (“NV”), as described in the “Export Price,” “Constructed Export Price” and “Normal Value” sections of this notice, below. In accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI weighted-average EPs and CEPs to weighted-average NVs.
In accordance with section 771(16) of the Act, we considered all products produced and sold by the Highveld in the home market during the POI that fit the description in the “Scope of Investigation” section of this notice to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. We compared U.S. sales to sales of identical merchandise made in the home market. Where there were no sales of identical merchandise in the home market made in the ordinary course of trade to compare to U.S. sales, we compared U.S. sales to sales of the most similar Start Printed Page 67215foreign like product made in the ordinary course of trade. In making the product comparisons, we matched foreign like products based on the physical characteristics reported by the respondents in the following order of importance: form; shape/size (section depth); strength/grade; and coating.
With respect to home-market sales of non-prime merchandise made by Highveld during the POI, in accordance with our past practice, we excluded these sales from our preliminary analysis based on the limited quantity of such sales in the home market and the fact that no such sales were made to the United States during the POI. (See, e.g., Final Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-Length Carbon Steel Plate from Korea, 58 FR 37176, 37180 (July 9, 1993).)
In accordance with section 772(a) of the Act, we calculated EP for those sales where the merchandise was sold to the first unaffiliated purchaser in the United States prior to importation by the exporter or producer outside the United States, or to an unaffiliated purchaser for exportation to the United States, based on the facts of record. We based EP on the packed delivered price to unaffiliated purchasers in the United States. We made deductions, where appropriate, for inland freight expense from plant/warehouse to port of exit in accordance with section 772(c)(2)(A) of the Act. See Antidumping Duty Investigation on Structural Steel Beams from South Africa—Preliminary Determination Analysis Memorandum for Highveld Steel and Vanadium Corporation, Ltd., from J. David Dirstine to File, dated December 19, 2001 (Preliminary Analysis Memorandum).
Constructed Export Price
In accordance with section 772(b) of the Act, we calculated CEP for those sales where the merchandise was sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter, or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter.
We based CEP on the packed FOB or CIF prices to unaffiliated purchasers in the United States. We made adjustments for price-billing errors. We also made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Act; these included, where appropriate, domestic inland freight (i.e., inland freight expense from plant/warehouse to port of exit), ocean freight, marine insurance, U.S. brokerage and handling, U.S. customs duties, U.S. wharfage fees, U.S. survey fees, U.S. truck loading fees, U.S. inland freight expenses (i.e., freight from port to warehouse), and warehousing expenses. In accordance with section 772(d)(1) of the Act and 19 CFR 351.402(b), we deducted those selling expenses associated with economic activities occurring in the United States, including direct selling expenses (e.g., imputed credit costs) and indirect selling expenses (e.g., inventory carrying costs).
Pursuant to section 772(d)(3) of the Act, we further reduced the starting price by an amount for profit to arrive at CEP. In accordance with section 772(f) of the Act, we calculated the CEP profit rate using the expenses incurred by Highveld and its affiliate on their sales of the subject merchandise in the United States and the foreign like product in the home market and the profit associated with those sales. See Preliminary Analysis Memorandum.
A. 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., 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 U.S. sales of the subject merchandise, in accordance with section 773(a)(1)(C) of the Act and 19 CFR 351.405(b)(2). Because the respondent's aggregate volume of home-market sales of the foreign like product was greater than five percent of its aggregate volume of U.S. sales for the subject merchandise, we determined that the home market was viable for the respondent.
B. Cost-of-Production Analysis
Based on our analysis of a sales-below-cost allegation submitted by the petitioners on October 3, 2001, we found that there were reasonable grounds to believe or suspect that sales of structural steel beams in the home market were made at prices below their cost of production (“COP”). Accordingly, pursuant to section 773(b) of the Act, we initiated an investigation of sales-below-cost for Highveld to determine whether sales were made at prices below their respective COP (see Initiation Notice, 66 FR at 33048, 33051, and Memorandum to Richard W. Moreland from Laurie Parkhill Re: Initiation of Cost Investigation, dated October 29, 2001, for further details).
1. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated COP based on the sum of the cost of materials and fabrication for the foreign like product, plus an amount for general and administrative expenses (“G&A”), and interest expenses (see “Test of Home Market Sales Prices” section below for treatment of home-market selling expenses). We relied on the COP data submitted by Highveld and its parent company, Anglo American plc., except as noted below.
B. We revised Highveld's G&A rate calculation to exclude freight out and packing expenses from the denominator (cost of sales) of the calculation.
C. We revised Highveld's interest expense rate calculations to exclude freight out, packing expenses, interest expenses and G&A expenses from the denominator (cost of sales) of the calculation.
D. We excluded the vanadium slag offset (“VSLAG”) from the total cost of manufacture of each CONNUM.
See Memorandum from Laurens van Houten to Neal Halper, Director, Office of Accounting, dated December 19, 2001, Re: Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Determination (“Cost Calculation Memorandum”).
2. Test of Home Market-Sales Prices
On a product-specific basis, we compared the adjusted weighted-average COP to the home-market sales of the foreign like product, as required under section 773(b) of the Act, in order to determine whether the sale prices were below the COP. The prices were exclusive of any applicable billing adjustments, movement charges, rebates, discounts, direct and indirect selling expenses, and packing expenses. In determining whether to disregard home-market sales made at prices less than their COP, we examined, in accordance with sections 773(b)(1)(A) and 773(b)(2)(C) of the Act, whether such sales were made (1) within an extended period of time, (2) in substantial quantities, and (3) at prices which permitted the recovery of all costs within a reasonable period of time.
3. Results of the COP Test
Pursuant to sections 773(b)(1)(A) and 773(b)(2)(C) of the Act, where less than Start Printed Page 6721620 percent of the respondent's sales of a given product during the POI are at prices less than the COP, we do not disregard any below-cost sales of that product because we determine that in such instances the below-cost sales were not made in “substantial quantities.” Where 20 percent or more of a respondent's sales of a given product during the POI are at prices less than the COP, we determine that the below-cost sales represent “substantial quantities” within an extended period of time, in accordance with sections 773(b)(1)(A) and 773(b)(2)(B) and (C) of the Act. In such cases, we also determine whether such sales were made at prices which would not permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(1)(B) of the Act.
We found that, for certain specific products, more than 20 percent of Highveld's home-market sales were at prices less than the COP and, in addition, such sales did not provide for the recovery of costs within a reasonable period of time. We therefore excluded these sales and used the remaining sales, if any, as the basis for determining NV, in accordance with section 773(b)(1) of the Act.
C. Level of Trade
Section 773(a)(1)(B)(i) of the Act states that, to the extent practicable, the Department will calculate NV based on sales at the same level of trade (“LOT”) as the EP or CEP. Sales are made at different LOTs if they are made at different marketing stages (or their equivalent). See 19 CFR 412(c)(2). Substantial differences in selling activities are a necessary, but not sufficient, condition for determining that there is a difference in the stages of marketing. Id.; see also 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 (November 19, 1997). In order to determine whether the comparison sales were at different stages in the marketing process than the U.S. sales, we reviewed the distribution system in each market (i.e., the “chain of distribution”), including selling functions, class of customer (“customer category”), and the level of selling expenses for each type of sale.
Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying levels of trade for EP and comparison-market sales (i.e., NV based on either home-market or third-country prices), we consider the starting prices before any adjustments. For CEP sales, we consider only the selling activities reflected in the price after the deduction of expenses and profit under section 772(d) of the Act. See Micron Technology, Inc. v. United States, Court Nos. 00-1058, -1060 (Fed. Cir. March 7, 2001).
When the Department is unable to find sales of the foreign like product in the comparison market at the same LOT as the EP or CEP, the Department may compare the U.S. sale to sales at a different LOT in the comparison market. In comparing EP or CEP sales at a different LOT in the comparison market, where available data make it practicable, we make a LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP sales only, if a NV level of trade is more remote from the factory than the CEP level of trade and there is no basis for determining whether the difference in LOTs between NV and CEP affected price comparability (i.e., no LOT adjustment was practicable), the Department shall 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 (November 19, 1997).
We obtained information from Highveld regarding the marketing stages involved in making the reported home-market and U.S. sales, including a description of the selling activities performed by the respondent for each channel of distribution. Highveld's LOT findings are summarized below.
Highveld reported two channels of distribution in the home market. The selling activities associated with all sales were similar (e.g., freight and delivery arrangements, plannings and rollings, and after-sales service) and, based on our analysis of the selling activities, we considered the two channels of distribution to constitute one LOT. Highveld reported two channels of distribution in the U.S. market, one represented by its EP sales and one represented by its CEP sales. Because the selling activities associated with the home-market LOT were similar to those associated with EP sales (e.g., freight and delivery arrangements, plannings and rollings, and aftersale service), we made no LOT adjustment for EP sales. For CEP sales, after making deductions pursuant to section 772(d) of the Act, we found that the selling functions performed by Highveld at the CEP level (e.g., aftersale service and technical advice) were sufficiently different from the selling functions performed at the home-market LOT (e.g., planning of rollings, market research, advertising, and freight and delivery arrangements) to consider the home-market LOT to be different and at a more advanced stage of distribution than the CEP LOT. Because the sole home-market LOT was different from the CEP LOT, we could not match to sales at the same LOT in the home market, nor could we determine a LOT adjustment based on Highveld's home-market sales of merchandise under investigation. Furthermore, we have no other information that provides an appropriate basis for determining a LOT adjustment. Accordingly, for Highveld's CEP sales we determined normal value at the sole home-market LOT and made a CEP-offset adjustment to NV in accordance with section 773(a)(7)(B) of the Act.
D. Calculation of Normal Value Based on Comparison-Market Prices
We calculated NV based on delivered prices to unaffiliated customers. We made deductions, where appropriate, from the starting price for rebates. We also made deductions for movement expenses (i.e., inland freight expense from plant/warehouse to customer) under section 773(a)(6)(B)(ii) of the Act. In addition, we made adjustments under section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410 for differences in circumstances of sale for imputed credit expenses.
We also deducted home-market packing costs and added U.S. packing costs in accordance with section 773(a)(6)(A) and (B) of the Act. Finally, for comparisons to CEP sales, we made a CEP offset pursuant to section 773(a)(7)(B) of the Act and 19 CFR 351.412(f). We calculated the CEP offset as the lesser of the indirect selling expenses on the comparison-market sales or the indirect selling expenses deducted from the starting price in calculating CEP.
We made currency conversions into U.S. dollars in accordance with section 773A(a) of the Act based on the exchange rates in effect on the dates of Start Printed Page 67217the U.S. sales as certified by the Federal Reserve Bank.
As provided in section 782(i) of the Act, we will verify all information relied upon in making our final determination.
Suspension of Liquidation
In accordance with section 733(d)(2) of the Act, we are directing the Customs Service to suspend liquidation of all imports of subject merchandise that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. We will instruct the Customs Service to require a cash deposit or the posting of a bond equal to the weighted-average amount by which the NV exceeds the CEP, as indicated in the chart below. These suspension-of-liquidation instructions will remain in effect until further notice. The weighted-average dumping margins are as follows:
|Exporter/manufacturer||Weighted-Average margin percentage|
|1 As Highveld was the only respondent that we used in our calculations, we used Highveld's margin as the all-others rate.|
In accordance with section 733(f) of the Act, we have notified the ITC of our determination. If our final determination is affirmative, pursuant to 735(b)(2) 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.
We will disclose the calculations used in our analysis to parties in this proceeding in accordance with 19 CFR 351.224(b).
Case briefs for this investigation must be submitted to the Department no later than seven days after the date of the final verification report issued in this proceeding. Rebuttal briefs must be filed five days from the deadline date for case briefs. A list of authorities used, a table of contents, and an executive summary of issues should accompany any briefs submitted to the Department. Executive summaries should be limited to five pages total, including footnotes. Section 774 of the Act provides that the Department will hold a public hearing to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs, provided that such a hearing is requested by an interested party. If a request for a hearing is made in this investigation, the hearing will tentatively be held two days after the rebuttal brief deadline date at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. Parties should confirm by telephone the time, date, and place of the hearing 48 hours before the scheduled time.
Interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, within 30 days of the publication of this notice. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of the issues to be discussed. Oral presentations will be limited to issues raised in the briefs.
We will make our final determination by no later than 135 days after the publication of this notice in the Federal Register.
This determination is published pursuant to sections 733(f) and 777(i) of the Act.Start Signature
Dated: December 19, 2001.
Bernard T. Carreau,
Acting Assistant Secretary for Import Administration.
1. The marketing process in the United States and comparison markets begins with the producer and extends to the sale to the final user or consumer. The chain of distribution between the two may have many or few links, and the respondent's sales occur somewhere along this chain. In performing this evaluation, we considered the narrative responses of the respondent to properly determine where in the chain of distribution the sale appears to occur.Back to Citation
2. Selling functions associated with a particular chain of distribution help us to evaluate the level(s) of trade in a particular market. For purposes of this preliminary determination, we have organized the common structural steel beams selling functions into four major categories: sales process and marketing support, freight and delivery, inventory and warehousing, and quality assurance/warranty services.Back to Citation
[FR Doc. 01-31988 Filed 12-27-01; 8:45 am]
BILLING CODE 3510-DS-P