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Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Cold-Rolled Carbon Steel Flat Products From New Zealand

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Import Administration, International Trade Administration, Department of Commerce.


May 9, 2002.

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Salim Bhabhrawala or Tracy Levstik, AD/CVD Enforcement Office V, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-1784 or (202) 482-2815, respectively.

The Applicable Statute and Regulations

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 (the Department) regulations refer to the regulations codified at 19 CFR Part 351 (April 2001).

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Preliminary Determination

We preliminarily determine that certain cold-rolled carbon steel flat products (cold-rolled steel) from New Zealand are being sold, or are likely to be sold, in the United States at less than fair value, as provided in section 733 of the Act. The estimated margin of sales at LTFV is shown in the Suspension of Liquidation section of this notice.

Case History

This investigation was initiated on October 18, 2001. [1] See Notice of Initiation of Antidumping Duty Investigations: Certain Cold-Rolled Carbon Steel Flat Products From Argentina, Australia, Belgium, Brazil, China, France, Germany, India, Japan, Korea, Netherlands, New Zealand, Russia, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and Venezuela, 66 FR 54198 (October 26, 2001) (Initiation Notice). Since the initiation of this investigation, the following events have occurred.

On October 31, 2001, we solicited comments from interested parties regarding the criteria to be used for model-matching purposes, and we received comments on our proposed matching criteria on November 8, 2001. On November 8, 2001, we received model match comments from petitioners and respondents. On November 26, 2001, we informed NZS of our revised model match criteria.

On November 13, 2001, the United States International Trade Commission (ITC) preliminarily determined that there is a reasonable indication that an industry in the United States is being materially injured or threatened with material injury by reason of imports from Argentina, Australia, Belgium, Brazil, China, France, Germany, India, Japan, Korea, the Netherlands, New Zealand, Russia, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and Venezuela of certain cold-rolled steel products. See Certain Cold-Rolled Steel Products From Argentina, Australia, Belgium, Brazil, China, France, Germany, India, Japan, Korea, the Netherlands, New Zealand, Russia, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and Venezuela, 66 FR 57985 (November 19, 2001).

The Department issued an antidumping questionnaire to BHP New Zealand Steel Limited (NZS) on November 19, 2001. [2] During the period December 2001 through March 2002, the Department received responses to the Department's original and supplemental questionnaires.

On February 7, 2002, pursuant to 19 CFR 351.205(e), the petitioners made a timely request to postpone the Start Printed Page 31232preliminary determination. On February 22, 2002, the Department published a Federal Register notice postponing the deadline for the preliminary determination until no later than April 26, 2002. (See Postponement of Preliminary Determinations of Antidumping Duty Investigations: Certain Cold-Rolled Carbon Steel Flat Products from Argentina (A-357-816), Australia (A-602-804), Belgium (A-423-811), Brazil (A-351-834), the People's Republic of China (A-570-872), France (A-427-822), Germany (A-428-834), India (A-533-826), Japan (A-588-859), Korea (A-580-848), the Netherlands (A-421-810), New Zealand (A-614-803), Russia (A-821-815), South Africa (A-791-814), Spain (A-469-812), Sweden (A-401-807), Taiwan (A-583-839), Thailand (A-549-819), Turkey (A-489-810) and Venezuela (A-307-822), 67 FR 8277 (February 22, 2002)).

On March 25, 2002, the petitioners requested that the Department initiate a sales-below-cost investigation of NZS. We did so on April 19, 2002.

Period of Investigation

The period of investigation (POI) is July 1, 2000, through June 30, 2001. This period corresponds to the four most recent fiscal quarters prior to the month of the filing of the petition (i.e., September 2001).

Postponement of Final Determination and Extension of Provisional Measures

Section 735(a)(2) of the Act provides that a final determination may be postponed until not later than 135 days after the date of the publication of the preliminary determination if, in the event of an affirmative preliminary determination, a request for such postponement is made by exporters who account for a significant proportion of exports of the subject merchandise. Section 351.210(e)(2) of the Department's regulations requires that exporters requesting postponement of the final determination must also request an extension of the provisional measures referred to in section 733(d) of the Act from a four-month period until not more than six months. We received a request to postpone the final determination from the respondent, NZS, on April 24, 2002. In its request, NZS consented to the extension of provisional measures to no longer than six months.

Since this preliminary determination is affirmative, the request for postponement is made by an exporter that accounts for a significant proportion of exports of the subject merchandise, and there is no compelling reason to deny the respondent's request, we have extended the deadline for issuance of the final determination until the 135th day after the date of publication of this preliminary determination in the Federal Register and have extended provisional measures to no longer than six months.

Scope of the Investigation

For purposes of this investigation, the products covered are certain cold-rolled (cold-reduced) flat-rolled carbon-quality steel products. For a full description of the scope of this investigation, as well as a complete discussion of all scope exclusion requests submitted in the context of the on-going cold-rolled steel investigations, please see the “Scope Appendix” attached to the Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products from Argentina, published concurrently with this preliminary determination.

Selection of Respondents

Section 777A(c)(1) of the Act directs the Department to calculate individual dumping margins for each known exporter and producer of the subject merchandise. Where it is not practicable to examine all known producer/exporters of subject merchandise, section 777A(c)(2) of the Act permits us to investigate either: (1) A sample of exporters, producers, or types of products that is statistically valid, based on the information available at the time of selection, or (2) exporters and producers accounting for the largest volume of the subject merchandise that can reasonably be examined. Using company-specific export data for the POI, which we obtained from a variety of sources under the Harmonized Tariff Schedules of the United States (HTSUS) numbers that correspond to the subject merchandise, we found that there was one producer/exporter, NZS, who may have exported cold-rolled steel to the United States during the POI. Therefore, we designated NZS as the only mandatory respondent and sent it the Department's antidumping questionnaire.

Use of Facts Available

In accordance with section 776(a) of the Act, we have preliminarily applied partial adverse facts available to NZS for purposes of determining normal value (NV). Given that NZS failed to report the downstream sales for an affiliated reseller as we requested in our original section A questionnaire and supplemental section A questionnaire, we have preliminarily determined that NZS did not act to the best of its ability. Therefore, we have applied partial adverse facts available for sales made by the affiliated reseller, pursuant to section 776(b) of the Act. Due to the proprietary nature of the documentation supporting this issue, for further discussion, see the Memorandum to Faryar Shirzad from Bernard Carreau Re: Use of Facts Available for NZS for the Preliminary Determination in the 2000-2001 Antidumping Duty Investigation of Certain Cold-Rolled Carbon Steel Flat Products from New Zealand, dated April 26, 2002.

As adverse facts available, for each model sold to the affiliated reseller, we have used the highest home-market price of a product NZS sold to unaffiliated customers for the same model during the period of investigation to represent the downstream sales prices made to unaffiliated customers in the home market. (See Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom; Preliminary Results of Antidumping Duty Administrative Reviews, Partial Recession of Administrative Reviews, and Notice of Intent To Revoke Orders in Part, 66 FR 8931 (February 5, 2001)).

The facts available methodology used in this preliminary determination assumes that the products sold to the reseller are an appropriate surrogate for those sold by the reseller to the first unaffiliated customer. We note, however, that it appears that the affiliated reseller may engage in further processing of the cold-rolled products it purchases from NZS. Specifically, NZS has stated that the affiliated reseller “further processes the cold rolled coil it purchases by slitting and/or cutting the coils into sheets.” [3] We will continue to evaluate the information available, and, as appropriate, we may reconsider our facts available methodology and selection for the final determination.

Fair Value Comparisons

To determine whether sales of cold-rolled steel from New Zealand by NZS to the United States were made at LTFV, we compared the constructed export price (CEP) to the normal value (NV), as described in the 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 CEPs to weighted-average NVs. Start Printed Page 31233

Product Comparisons

In accordance with section 771(16) of the Act, we considered all products produced and sold by NZS 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 made in the home market, where appropriate. 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 foreign 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 respondent in the following order of importance: hardening and tempering; painted; carbon level; quality; yield strength; minimum thickness; thickness tolerance; width; edge finish; form; temper rolling; leveling; annealing; and surface finish.

Constructed Export Price

In accordance with section 772(b) of the Act, we 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. In this case, we calculated CEP based on the packed prices charged to the first unaffiliated customer in the United States. We found that all of NZS’ U.S. sales are CEP sales because the merchandise was sold through NZS’ U.S. affiliate, BHP Steel Americas Inc. (BHPSA) in the United States, within the meaning of section 772(b) of the Act. These sales are properly classified as CEP sales because they were made after the date of importation.We made deductions from the starting price, where appropriate, in accordance with section 772(c)(2)(A) of the Act. These deductions included foreign inland freight, international freight, marine insurance, U.S. brokerage and handling and U.S. customs duties (including harbor maintenance fees and merchandise processing fees). In addition, in accordance with section 772(d)(1) of the Act, we deducted from the starting price those selling expenses that were incurred in selling the subject merchandise in the United States, specifically, indirect selling expenses (including inventory carrying costs), credit expense and warranty expense.

For those U.S. sales for which NZS did not report a date of payment, we have used the signature date of the preliminary determination (i.e., April 26, 2002) in the calculation of imputed credit expenses. In addition, we used NZS’ revised weighted average interest rate, which correctly used the Federal Reserve's weighted-average data for commercial and industrial loans of one-month's to one-year's duration, to calculate credit expense in the U.S. market.[4] For further discussion, see the Memorandum to the File from Tracy Levstik and Salim Bhabhrawala Re: Calculations Performed for NZS for the Preliminary Determination in the 2000-2001 Antidumping Duty Investigation of Certain Cold-Rolled Carbon Steel Flat Products from New Zealand, dated April 26, 2002. 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 NZS’ financial statements pursuant to 19 CFR 351.402(d)(2) of the Act.

Normal Value

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. 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. Arm's-Length Test

Sales to affiliated customers for consumption in the home market which were determined not to be at arm's length were excluded from our analysis. To test whether these sales were made at arm's length, we compared the prices of sales of comparison products to affiliated and unaffiliated customers, net of all movement charges, direct selling expenses, discounts, rebates and packing. Pursuant to 19 CFR 351.403(c) and in accordance with our practice, where the prices to the affiliated party were on average less than 99.5 percent of the prices to unaffiliated parties, we determined that the sales made to the affiliated party were not at arm's length. See e.g., Notice of Final Results and Partial Rescission of the Antidumping Duty Administrative Review: Roller Chain, Other Than Bicycle, From Japan, 62 FR at 60472, 60478 (November 10, 1997), and Antidumping Duties; Countervailing Duties: Final Rule (“Antidumping Duties”), 62 FR at 27295, 27355-56 (May 19, 1997). See 19 CFR 351.403; Antidumping Duties, 62 FR at 27355-56. None of NZS’ sales to its affiliated reseller passed the arm's-length test.

C. Cost of Production Analysis

On March 25, 2002, the petitioners made a timely sales below cost allegation against NZS. Based on the allegation and in accordance with section 773(b)(2)(A)(i) of the Act, we found reasonable grounds to believe or suspect that sales of cold-rolled steel from New Zealand were made at prices below the COP. See the Memorandum to Gary Taverman from the Team Re: The Petitioners' Allegation of Sales Below the Cost of Production for BHP New Zealand Steel Limited (NZS), dated April 19, 2002. As a result, the Department is conducting an investigation to determine whether NZS made sales in the home market at prices below the COP during the POI within the meaning of section 773(b) of the Act. On April 19, 2002, we instructed NZS to complete a section D questionnaire. Given the proximity of the preliminary determination, we did not receive NZS’ section D response in time to analyze it for the preliminary determination, but will do so for the final determination.

D. Calculation of Normal Value Based on Comparison Market Prices

We calculated NV based on packed prices to unaffiliated customers or prices to affiliated customers that we determined to be at arm's-length in New Zealand. We adjusted, where applicable, the starting price for discounts and rebates. We made deductions for movement expenses, including inland freight (plant to distribution warehouse and plant/warehouse to customer) and warehousing under section 773(a)(6)(B)(ii) of the Act. In addition, where applicable, we made adjustments for differences in circumstances of sale (COS) pursuant to section 773(a)(6)(C)(iii) of the Act. No other adjustments to NV were claimed or allowed. Start Printed Page 31234

E. Level of Trade/Constructed Export Price Offset

In accordance with section 773(a)(1)(B)(i) of the Act, to the extent practicable, we calculate NV based on sales in the comparison market at the same level of trade (LOT) as the U.S. transaction. Sales are made at different LOTs if they are made at different marketing stages (or their equivalent). See 19 CFR 351.412(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) (Steel Plate from South Africa). To determine whether the comparison market 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 the selling functions, class of customer (customer category), and the level of selling expenses for each type of sale.

The NV LOT is that of the starting-price sales in the comparison market, or when NV is based on CV, that of the sales from which we derive selling, general and administrative (SG&A) expenses and profit. For EP sales, the U.S. LOT is also the level of the starting-price sale, which is usually from exporter to importer. For CEP transactions, it is the level of the constructed sale from the exporter to the importer. If the comparison-market sales are at a different LOT 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 a LOT adjustment under section 773(a)(7)(A) of the Act. For CEP sales, if the NV level is more remote from the factory than the CEP level 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 Steel Plate from South Africa.

In implementing these principles in this investigation, we obtained information from NZS about the marketing stages involved in the reported U.S. and home market sales, including a description of the selling activities performed by the respondent for each channel of distribution. Generally, if the reported LOTs are the same, the functions and activities of the seller should be similar. Conversely, if a party reports LOTs that are different for different categories of sales, the functions and activities may be dissimilar.

NZS reported two channels of distribution in the home market, with two customer categories (i.e., distributors and original equipment manufacturers (OEMs)). The first home market channel of distribution, coded in its submissions as channel 2, included sales made by NZS to unaffiliated home market distributors and OEMs. The second home market channel of distribution, coded in its submissions as channel 3, included sales made by NZS to an affiliated reseller (until October 23, 2000) and to unaffiliated home market OEMs. According to NZS, “there is no difference between channels 2 and 3 * * * (NZS) created channel 3 for the response to show affiliated sales * * * separately.” [5] We compared these two channels of distribution and determined that sales to the two customer categories in both channels were the same in all respects except regarding the determination of sales prices. NZS maintains supply agreements with distributors and uses a set price list and volume rebate structure whereas for its OEM customers, NZS negotiates price and rebates on a sale-specific basis. Due to the fact that these channels are the same with respect to all other selling activities, that is, forecasting and planning services, account management and sales support, product development and marketing support, order processing, managing customer complaints and technical support, and freight, warehousing and delivery services, we preliminarily determine that home market sales in these two channels of distribution constitute a single LOT.

In the U.S. market, all of NZS’ sales are CEP sales. NZS reported that its CEP sales are through one channel of distribution (coded in its submissions as channel 1), that is, they are BHPSA's sales to unaffiliated U.S. customers. The selling activities performed for the channel include forecasting and planning sales (performed by NZS and BHPSA), account management and sales support (performed by NZS and BHPSA), order processing between NZS and BHPSA (performed by NZS and BHPSA), order processing between BHPSA and unaffiliated customers (performed by BHPSA), and managing customer complaints (NZS and BHPSA). We therefore preliminarily conclude that NZS had only one LOT for its CEP sales.

In determining whether separate levels of trade actually existed between CEP sales and home market sales, we examined the chains of distribution, customer categories, and selling functions related to these sales reported in the home market and the United States. In determining LOTs 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. After making CEP deductions from the end user price, we noted that the only difference was related to product development and marketing support services offered only in the home market and not for CEP sales. See section 773(a)(7)(A) of the Act. On this basis, it appears that the LOT of NZS’ home market sales do not involve significantly different selling functions than the LOT of the CEP sales, and that the distinctions do not constitute a difference in LOT between sales in the two markets. Therefore, we preliminarily determine that no LOT adjustment or CEP offset is warranted.

Currency Conversion

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 the U.S. sales as obtained from the Federal Reserve Bank (the Department's preferred source for exchange rates).


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) of the Act, we are directing the U.S. Customs Service to suspend liquidation of all entries of certain cold-rolled carbon steel flat products from New Zealand, that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. We are also instructing 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 below. These instructions suspending liquidation will remain in effect until further notice.

Exporter/producerWeighted-average margin percentage
BHP New Zealand Steel Limited (NZS)7.10
All Others7.10
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We will disclose the calculations used in our analysis to parties in this proceeding in accordance with 19 CFR 351.224(b).

ITC Notification

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 section 735(b)(3) of the Act, the ITC will determine within 75 days after our final determination whether these imports are materially injuring, or threaten material injury to, the U.S. industry.

Public Comment

All parties will be notified of the specific schedule for submission of case and rebuttal briefs. In general, case briefs for this investigation must be submitted to the Department no later than one week after the issuance of the verification report. Rebuttal briefs must be filed within five days after the deadline date for submission of 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. Public versions of all comments and rebuttals should be provided to the Department and made available on diskette.

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 specify the number of participants and provide a list of the issues to be discussed. Oral presentations will be limited to issues raised in the briefs.

We will issue our final determination no later than 135 days after the date of publication of this notice in the Federal Register.

This determination is issued and published pursuant to sections 733(f) and 777(i) of the Act.

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Dated: April 26, 2002.

Faryar Shirzad,

Assistant Secretary for Import Administration.

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1.  The petitioners in this investigation are Bethlehem Steel Corporation, LTV Steel Company, Inc., National Steel Corporation, Nucor Corporation, Steel Dynamics, Inc., United States Steel Corporation, WCI Steel, Inc., and Weirton Steel Corporation, (collectively, the petitioners).

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2.  Section A of the questionnaire requests general information concerning a company's corporate structure and business practices, the merchandise under investigation that it sells, and the manner in which it sells that merchandise in all of its markets. Section B requests a complete listing of all home market sales, or, if the home market is not viable, of sales in the most appropriate third-country market. Section C requests a complete listing of U.S. sales. Section D requests information on the cost of production of the foreign like product and the constructed value of the merchandise under investigation.

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3.  See NZS' section A submission of December 10, 2001, at page A-19.

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4.  See NZS' submission of April 12, 2002, at page 12.

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5.  See NZS' supplemental A response of January 31, 2002 at page 27.

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[FR Doc. 02-11191 Filed 5-8-02; 8:45 am]