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Initiation of Antidumping Duty Investigation: Superalloy Degassed Chromium From Japan

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Import Administration, International Trade Administration, Department of Commerce.


Effective Dates: March 30, 2005.

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Susan Lehman or Minoo Hatten, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-0180 or (202) 482-1690, respectively.

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The Petition

On March 4, 2005, the Department of Commerce (the Department) received a petition on imports of superalloy degassed chromium from Japan filed in proper form by Eramet Marietta Inc. and Paper, Allied-Industrial, Chemical and Energy Workers International Union (the petitioners). On March 10, 2005, the Department issued a supplemental questionnaire requesting additional information and clarification of certain areas of the petition. The Department also requested additional information in March 16, 2005, and March 17, 2005, telephone calls with counsel to the petitioners. See Memoranda from Meredith Wood through Norbert O. Start Printed Page 16221Gannon to the File dated March 16, 2005, and March 17, 2005. The petitioners filed supplements to the petition on March 7, 2005, March 14, 2005, March 18, 2005, and March 22, 2005.

In accordance with section 732(b) of the Tariff Act of 1930, as amended (the Act), the petitioners allege that imports of superalloy degassed chromium are being, or are likely to be, sold in the United States at less than fair value within the meaning of section 731 of the Act and that such imports are materially injuring and threaten to injure an industry in the United States.

The Department finds that the petitioners filed this petition on behalf of the domestic industry because they are interested parties as defined in section 771(9)(c) of the Act and the petitioners have demonstrated sufficient industry support with respect to the investigation that the petitioners are requesting the Department to initiate (see “Determination of Industry Support for the Petition” below).

Scope of Investigation

The product covered by this investigation is all forms, sizes, and grades of superalloy degassed chromium from Japan. Superalloy degassed chromium is a high-purity form of chrome metal that generally contains at least 99.5 percent, but less than 99.95 percent, chromium. Superalloy degassed chromium contains very low levels of certain gaseous elements and other impurities (typically no more than 0.005 percent nitrogen, 0.005 percent sulphur, 0.05 percent oxygen, 0.01 percent aluminum, 0.05 percent silicon, and 0.35 percent iron). Superalloy degassed chromium is generally sold in briquetted form, as “pellets” or “compacts,” which typically are 11/2 inches × 1 inch × 1 inch or smaller in size and have a smooth surface. Superalloy degassed chromium is currently classifiable under subheading 8112.21.00 of the Harmonized Tariff Schedule of the United States (HTSUS). This investigation covers all chromium meeting the above specifications for superalloy degassed chromium regardless of tariff classification.

Certain higher-purity and lower-purity chromium products are excluded from the scope of this investigation. Specifically, the investigation does not cover electronics-grade chromium, which contains a higher percentage of chromium (typically not less than 99.95 percent), a much lower level of iron (less than 0.05 percent), and lower levels of other impurities than superalloy degassed chromium. The investigation also does not cover “vacuum melt grade” (VMG) chromium, which normally contains at least 99.4 percent chromium and contains a higher level of one or more impurities (nitrogen, sulphur, oxygen, aluminum and/or silicon) than specified above for superalloy degassed chromium.

Although the HTSUS subheading is provided for convenience and customs purposes, the written description of the scope of this investigation is dispositive.

During our review of the petition, we discussed the scope with the petitioners to ensure that it is an accurate reflection of the products for which the domestic industry is seeking relief. Moreover, as discussed in the preamble to the regulations (Antidumping Duties, Countervailing Duties, Final Rule, 62 FR 27296, 27323, May 19, 1997), we are setting aside a period for interested parties to raise issues regarding product coverage. The Department encourages all interested parties to submit such comments within 20 calendar days of publication of this notice. Comments should be addressed to Import Administration's Central Records Unit at Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. The period of scope consultations is intended to provide the Department with ample opportunity to consider all comments and consult with parties prior to the issuance of the preliminary determination.

Determination of Industry Support for the Petition

Section 732(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 732(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for (1) at least 25 percent of the total production of the domestic like product and (2) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition.

Section 771(4)(A) of the Act defines the “industry” as the producers as a whole of a domestic like product. Thus, to determine whether the petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The International Trade Commission (ITC) is responsible for determining whether “the domestic industry” has been injured and must also determine what constitutes a domestic like product in order to define the industry. While the Department and the ITC must apply the same statutory definition regarding the domestic like product, they do so for different purposes and pursuant to separate and distinct authority. See section 771(10) of the Act. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the domestic like product, such differences do not render the decision of either agency contrary to law.[1]

Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this subtitle.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation,” i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition.

With regard to the definition of domestic like product, the petitioners do not offer a definition of domestic like product distinct from the scope of the investigation. Based on our analysis of the information presented by the petitioners, we have determined that there is a single domestic like product, superalloy degassed chromium, which is defined in the “Scope of Investigation” section above, and we have analyzed industry support in terms of the domestic like product.

We received no opposition to this petition. The petitioners account for 100 percent of the total production of the domestic like product, and the requirements of section 732(c)(4)(A)(i) are met. Accordingly, the Department determines that the petition was filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act. See Attachment I of the March 24, 2005, Initiation Checklist (Initiation Checklist) on file in the Central Records Unit, Room B-099 of the Department of Commerce.

Period of Investigation

The anticipated period of investigation is January 1, 2004, through December 31, 2004.

U.S. Price and Normal Value

The following is a description of the allegation of sales at less than fair value upon which the Department based its decision to initiate this investigation. The sources of data for the deductions and adjustments relating to U.S. price and normal value are discussed in greater detail in the Initiation Checklist. Start Printed Page 16222Should the need arise to use any of this information as facts available under section 776 of the Act, we may reexamine the information and revise the margin calculation, if appropriate.

The petition identified one producer of superalloy degassed chromium in Japan. See March 4, 2005, petition at page 24. Although the petitioners provide estimates of U.S. price based on U.S. import data (from the U.S. Bureau of the Census) and Japanese export data (see petition at pages 25-28 and Exhibit 7B), we have relied on a price quote provided by the petitioners (see petition at pages 28-29 and Exhibits 7B and 7D(i) and supplement to the petition dated March 14, 2005, at page 5 and Attachment 4). This price quote is for superalloy degassed chromium from Japan sold to a large customer in the United States during 2004. It is for the subject merchandise which is comparable to the merchandise in the home-market price quote provided by the petitioners and in the constructed value (CV) the petitioners calculated (see supplement to the petition dated March 18, 2005, at pages 1-3).

The petitioners deducted an amount for U.S. customs duty and freight and five percent for selling expenses in the United States from the price quote on which we relied. We examined the information provided regarding U.S. price and have determined that it represents information reasonably available to the petitioners and have reviewed it for adequacy and accuracy. See Initiation Checklist.

To calculate normal value, the petitioners obtained information regarding the price at which the Japanese producer identified in the petition is believed to have sold superalloy degassed chromium to an end-user in Japan in 2004. The price obtained was inclusive of delivery charges and exclusive of taxes. We reviewed the normal-value information the petitioners provided and have determined that it represents information reasonably available to the petitioners. We have also reviewed it for adequacy and accuracy. See Initiation Checklist.

The petitioners also compared the home-market price to Eramet's cost of production (COP), adjusted for known cost differences between Japan and the United States, to support a sales-below-cost allegation. The Statement of Administrative Action (SAA) accompanying the Uruguay Round Agreements Act states that an allegation of sales below COP need not be specific to individual exporters or producers. See SAA, H.R. Doc. No. 103-316 at 833 (1994). The SAA states that “Commerce will consider allegations of below-cost sales in the aggregate for a foreign country, just as Commerce currently considers allegations of sales at less than fair value on a country-wide basis for purposes of initiating an antidumping investigation.” Id.

Further, the SAA provides that the “new section 773(b)(2)(A) retains the current requirement that Commerce have ‘reasonable grounds to believe or suspect' that below cost sales have occurred before initiating such an investigation. ‘Reasonable grounds’ * * * exist when an interested party provides specific factual information on costs and prices, observed or constructed, indicating that sales in the foreign market in question are at below-cost prices.” Id.

Pursuant to section 773(b)(3) of the Act, COP consists of the cost of manufacture (COM) and selling, general, and administrative (SG&A) expenses (including financial expenses). The petitioners calculated COP based on Eramet's own experience as a U.S. producer during 2004 and its knowledge of the particular production processes used by the Japanese producer, adjusted for known differences between costs incurred to manufacture superalloy degassed chromium in the United States and in Japan. The publicly available data the petitioners used were contemporaneous with the prospective POI. See Initiation Checklist.

Based upon a comparison of the home-market price of the foreign like product to the calculated COP of the product, we find reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department is initiating a country-wide cost investigation.

Pursuant to sections 773(a)(4) and 773(e) of the Act, the petitioners calculated normal value based on CV. Consistent with section 773(e)(2)(B)(iii) of the Act, the petitioners included in CV an amount for profit. For profit, the petitioners relied upon amounts reported in the 2004 consolidated financial statements of JFE Material Co., Ltd., the potential respondent's parent company.

We reviewed the CV information the petitioners provided and have determined that it represents information reasonably available to the petitioners.

Fair-Value Comparison

Based on a comparison of a U.S. price quote to adjusted CV, the dumping margin is 129.32 percent for superalloy degassed chromium from Japan. Therefore, based on the data provided by the petitioners, there is reason to believe that imports of superalloy degassed chromium are being, or are likely to be, sold in the United States at less than fair value.

Allegations and Evidence of Material Injury and Causation

The petitioners allege that the U.S. industry producing the domestic like product is being materially injured and is threatened with material injury by reason of the imports of the subject merchandise sold at less than normal value. The petitioners contend that the industry's injured condition is evidenced by reduced market share, lost sales, reduced production, capacity, and capacity utilization rates, decreased U.S. shipments and inventories, decline in prices, lost revenue, reduced employment, decrease in capital expenditures, decreased investment in research and development, and decline in financial performance.

These allegations are supported by relevant evidence including import data, lost sales, and pricing information. We assessed the allegations and supporting evidence regarding material injury, threat of material injury, and causation and we have determined that these allegations are supported by accurate and adequate evidence and meet the statutory requirements for initiation. See Initiation Checklist.

Initiation of Antidumping Investigation

Based upon the examination of the petition on superalloy degassed chromium from Japan and other information reasonably available to the Department, the Department finds that the petition meets the requirements of section 732 of the Act. Therefore, we are initiating an antidumping duty investigation to determine whether imports of superalloy degassed chromium from Japan are being, or are likely to be, sold in the United States at less than fair value. Unless postponed, we will make our preliminary determination no later than 140 days after the date of this initiation.

Distribution of Copies of the Petition

In accordance with section 732(b)(3)(A) of the Act, a copy of the public version of the petition has been provided to the representatives of the government of Japan. We will attempt to provide a copy of the public version of the petition to the producer named in the petition. Start Printed Page 16223

International Trade Commission Notification

We have notified the ITC of our initiation, as required by section 732(d) of the Act.

Preliminary Determination by the International Trade Commission

The ITC will preliminarily determine, no later than April 18, 2005, whether there is a reasonable indication that imports of superalloy degassed chromium are causing material injury, or threatening to cause material injury, to a U.S. industry. A negative ITC determination will result in the investigation being terminated; otherwise, this investigation will proceed according to statutory and regulatory time limits.

This notice is issued and published pursuant to section 777(i) of the Act.

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Dated: March 24, 2005.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

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1.  See USEC, Inc. v. United States, 132 F. Supp. 2d 1, 8 (CIT 2001), citing Algoma Steel Corp. v. United States, 688 F. Supp. 639, 642-44 (CIT 1988).

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[FR Doc. E5-1399 Filed 3-29-05; 8:45 am]