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Notice

Certain Hot-Rolled Flat-Rolled Carbon Quality Steel Products from Brazil: Preliminary Results of Antidumping Duty Administrative Review and Extension of Time Limit for the Final Results

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AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to requests by interested parties, the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain hot-rolled flat-rolled carbon quality steel products (hot-rolled steel) from Brazil. The review covers Usinas Siderurgicas de Minas Gerais (USIMINAS) and its subsidiary Companhia Siderurgica Paulista (COSIPA) (hereafter referred to as USIMINAS/COSIPA). The period of review (POR) is March 1, 2008, through February 28, 2009.

We preliminarily determine that the sale of hot-rolled steel from Brazil has been made below normal value (NV) by USIMINAS/COSIPA during the POR. If these preliminary results are adopted in our final results of administrative review, we will issue appropriate assessment instructions to U.S. Customs and Border Protection (CBP). Interested parties are invited to comment on these preliminary results. See “Preliminary Results of Review,” below. The Department intends to issue the final results no later than 180 days from the date of publication of this notice, pursuant to section 751(a)(3)(A) of the Tariff Act of 1930, as amended (the Act). See “Extension of the Time Limits for the Final Results” below.

DATES:

Effective Date: April 14, 2010.

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FOR FURTHER INFORMATION CONTACT:

Patrick Edwards or Dena Crossland, AD/CVD Operations, Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Room 7850, Washington, DC 20230; telephone: (202) 482-8029 or (202) 482-3362, respectively.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

Background

On March 12, 2002, the Department published the antidumping duty order on hot-rolled steel from Brazil. See Antidumping Duty Order: Certain Hot-Rolled Flat-Rolled Carbon Quality Steel Products from Brazil, 67 FR 11093 (March 12, 2002) (Antidumping Order). Start Printed Page 19370On March 2, 2009, the Department published in the Federal Register its notice of opportunity to request an administrative review of this order. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review, 74 FR 9077 (March 2, 2009). In response, on March 31, 2009, USIMINAS/COSIPA requested that the Department conduct an administrative review of their sales of subject merchandise for the period March 1, 2008, through February 28, 2009.

On April 27, 2009, the Department initiated an administrative review of USIMINAS/COSIPA. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 74 FR 5821 (April 27, 2009) (Initiation Notice).

On April 28, 2009, United States Steel Corporation (petitioner) submitted a letter of appearance. On April 30, 2009, and May 1, 2009, respectively, domestic interested parties Nucor Corporation and ArcelorMittal USA Inc. also submitted letters of appearance.

On May 8, 2009, the Department issued sections A, B, and C of the antidumping questionnaire to respondents USIMINAS/COSIPA. On June 9, 2009, USIMINAS/COSIPA filed their response to section A of the Department's questionnaire (AQR), and on June 29, 2009, USIMINAS/COSIPA filed their responses to sections B and C of the Department's questionnaire (BCQR).

On June 17, 2009, the Department issued section D (Cost of Production/Constructed Value) of the Department's antidumping duty questionnaire to respondents, to which USIMINAS/COSIPA responded on July 30, 2009 (DQR).

On August 18, 2009, petitioner submitted factual information regarding USIMINAS/COSIPA for the Department to consider prior to issuing supplemental questionnaires to respondents.

On September 1, 2009, the Department issued its first sections A through C supplemental questionnaire to USIMINAS/COSIPA, and on September 11, 2009, the Department issued its first section D supplemental questionnaire to USIMINAS/COSIPA. On September 23, 2009, USIMINAS/COSIPA responded to the Department's first sections A through C supplemental questionnaire (SQR), and on October 7, 2009, USIMINAS/COSIPA responded to the Department's first section D supplemental questionnaire (DSQR).[1]

On November 18, 2009, the Department issued its second sections A through C supplemental questionnaire to USIMINAS/COSIPA, to which USIMINAS/COSIPA responded on December 17, 2009 (SSQR).

On December 1, 2009, the Department fully extended the deadline for the preliminary results of this review from December 1, 2009, to March 31, 2010. See Certain Hot-Rolled Flat-Rolled Carbon Quality Steel Products From Brazil; Notice of Extension of Time Limits for Preliminary Results of Antidumping Duty Administrative Review, 74 FR 62744 (December 1, 2009).

On December 18, 2009, the Department issued a second section D supplemental questionnaire, to which USIMINAS/COSIPA responded on January 7, 2010 (DSSQR).

On January 4, 2010, the Department issued its third sections A through C supplemental questionnaire, to which USIMINAS/COSIPA responded on January 13, 2010 (TSQR).

Tolling of Deadlines

As explained in the memorandum from the Deputy Assistant Secretary (DAS) for Import Administration, the Department exercised its discretion to toll deadlines for the duration of the closure of the Federal Government from February 5, through February 12, 2010. Thus, all deadlines in this segment of the proceeding were extended by seven days. See Memorandum to the Record from Ronald Lorentzen, DAS for Import Administration, regarding “Tolling of Administrative Deadlines As a Result of the Government Closure During the Recent Snowstorm,” dated February 12, 2010. Therefore, the deadline for the preliminary results of this review became April 7, 2010.

Period of Review

The POR covered by this review is March 1, 2008, through February 28, 2009.

Scope of the Order

For purposes of this order, the products covered are certain hot-rolled flat-rolled carbon-quality steel products of a rectangular shape, of a width of 0.5 inch or greater, neither clad, plated, nor coated with metal and whether or not painted, varnished, or coated with plastics or other non-metallic substances, in coils (whether or not in successively superimposed layers) regardless of thickness, and in straight lengths, of a thickness less than 4.75 mm and of a width measuring at least 10 times the thickness. Universal mill plate (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 thickness of not less than 4 mm, not in coils and without patterns in relief) of a thickness not less than 4.0 mm is not included within the scope of this order.

Specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, and the substrate for motor lamination steels. IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum.

Steel products to be included in the scope of this order, 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 2 percent or less, by weight; and (3) none of the elements listed below 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

0.012 percent of boron, 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 of zirconium.

All products that meet the physical and chemical description provided above are within the scope of this order unless otherwise excluded. The following products, by way of example, are outside and/or specifically excluded from the scope of this order:

  • Alloy hot-rolled steel products in which at least one of the chemical elements exceeds those listed above Start Printed Page 19371(including, e.g., ASTM specifications A543, A387, A514, A517, and A506).
  • SAE/AISI grades of series 2300 and higher.
  • Ball bearing steels, as defined in the HTSUS.
  • Tool steels, as defined in the HTSUS.
  • Silico-manganese (as defined in the HTSUS) or silicon electrical steel with a silicon level exceeding 1.50 percent.
  • ASTM specifications A710 and A736.
  • USS Abrasion-resistant steels (USS AR 400, USS AR 500).
  • Hot-rolled steel coil which meets the following chemical, physical and mechanical specifications:
C CuMn NiPSSiCr
0.10-0.14% 0.20-0.40%0.90% Max 0.20% Max.0.025% Max0.005% Max0.30-0.50%0.50-.70%
Width = 44.80 inches maximum; Thickness = 0.063-0.198 inches; Yield Strength = 50,000 ksi minimum; Tensile Strength = 70,000-88,000 psi.
  • Hot-rolled steel coil which meets the following chemical, physical and mechanical specifications:
C CuMn NiP MoSSiCr
0.10-0.16% 0.25% Max0.70-0.90% 0.20% Max0.025% Max 0.21% Max0.006% Max0.30-0.50%0.50-0.70%
Width = 44.80 inches maximum; Thickness = 0.350 inches maximum; Yield Strength = 80,000 ksi minimum; Tensile Strength = 105,000 psi Aim.
  • Hot-rolled steel coil which meets the following chemical, physical and mechanical specifications:
C CuMn NiP V(wt.)S CbSiCr
0.10-0.14% 0.20-0.40%1.30-1.80% 0.20% Max0.025% Max 0.10 Max0.005% Max 0.08% Max.0.30-0.50%0.50-0.70%
Width = 44.80 inches maximum; Thickness = 0.350 inches maximum; Yield Strength = 80,000 ksi minimum; Tensile Strength = 105,000 psi Aim.
  • Hot-rolled steel coil which meets the following chemical, physical and mechanical specifications:
C CuMn NiP NbS CaSi AlCr
0.15% Max1.40% Max0.025% Max0.010% Max0.50% Max1.00% Max
0.50% Max0.20% Max0.005% MinTreated0.01-0.07%.
Width = 39.37 inches; Thickness = 0.181 inches maximum; Yield Strength = 70,000 psi minimum for thicknesses ≤ 0.148 inches and 65,000 psi minimum for thicknesses > 0.148 inches; Tensile Strength = 80,000 psi minimum.
  • Hot-rolled dual phase steel, phase-hardened, primarily with a ferritic-martensitic microstructure, contains 0.9 percent up to and including 1.5 percent silicon by weight, further characterized by either (i) tensile strength between 540 N/mm2 and 640 N/mm2 and an elongation percentage 26 percent for thicknesses of 2 mm and above, or (ii) a tensile strength between 590 N/mm2 and 690 N/mm2 and an elongation percentage 25 percent for thicknesses of 2 mm and above.
  • Hot-rolled bearing quality steel, SAE grade 1050, in coils, with an inclusion rating of 1.0 maximum per ASTM E 45, Method A, with excellent surface quality and chemistry restrictions as follows:
  • 0.012 percent maximum phosphorus, 0.015 percent maximum sulfur, and 0.20 percent maximum residuals including 0.15 percent maximum chromium.

—Grade ASTM A570-50 hot-rolled steel sheet in coils or cut lengths, width of 74 inches (nominal, within ASTM tolerances), thickness of 11 gauge (0.119 inch nominal), mill edge and skin passed, with a minimum copper content of 0.20%.

The merchandise subject to this order is classified in the HTSUS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 7208.40.60.30, 7208.40.60.60, Start Printed Page 193727208.53.00.00, 7208.54.00.00, 7208.90.00.00, 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 7211.19.75.60, 7211.19.75.90, 7212.40.10.00, 7212.40.50.00, 7212.50.00.00. Certain hot-rolled flat-rolled carbon-quality steel covered by this order, including: vacuum degassed, fully stabilized; high strength low alloy; and the substrate for motor lamination steel may also enter under the following tariff numbers: 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 7226.91.70.00, 7226.91.80.00, and 7226.99.01.80.

Although the HTSUS subheadings are provided for convenience and Customs purposes, the written description of the merchandise under this order is dispositive.

Verification

As provided in section 782(i) of the Act, and 19 CFR 351.222(f)(2)(ii), we conducted cost and sales verifications of the questionnaire responses of USIMINAS/COSIPA on March 1-5, 2010, and March 8-12, 2010, respectively. We used standard verification procedures for each verification. The Department's cost and sales verification results will be outlined in forthcoming memoranda. Due to subsequent rescheduling of the verifications caused by the inclement weather, as noted in the “Tolling of Deadlines” section above, the verifications were conducted late in this proceeding and, as such, there was insufficient time to issue the verification reports prior to these preliminary results. Upon their issuance after these preliminary results, interested parties may comment on these memoranda in their case briefs, see “Disclosure and Public Comment” section below.

Affiliated Respondents

Under section 771(33)(E) of the Act, if one party owns, directly or indirectly, five percent or more of the other, such parties are considered to be affiliated for purposes of the antidumping law. Furthermore, it is the Department's practice to collapse affiliated producers for purposes of calculating a margin when they have production facilities for similar or identical products that would not require substantial retooling in order to restructure manufacturing priorities and the facts demonstrate that there is significant potential for manipulation of pricing or production. In the final determination of the investigation of hot-rolled steel from Brazil, the Department determined that USIMINAS and COSIPA were affiliated parties, and collapsed these entities. See Notice of Final Determination of Sales at Less Than Fair Value; Certain Hot-Rolled Flat-Rolled Carbon-Quality Steel Products From Brazil, 64 FR 38756, 38759 (July 19, 1999).

In response to our questions concerning this issue, USIMINAS/COSIPA have indicated that during the POR, COSIPA was wholly owned by USIMINAS, and post-POR COSIPA was legally dissolved and absorbed into USIMINAS. Moreover, USIMINAS/COSIPA have indicated that the Department should follow its prior determination on this issue. We preliminarily determine that there are no new facts on the record to indicate that the parties are unaffiliated, nor that the Department's basis for collapsing these entities has changed. Therefore, we have preliminarily determined to collapse these entities for purposes of this review. For a more detailed discussion of our collapsing analysis, see Memorandum to the File, through Angelica Mendoza, Program Manager, from Patrick Edwards and Dena Crossland, Analysts, titled “Analysis of Data Submitted by Usinas Siderurgicas de Minas Gerais and Companhia Siderurgica Paulista for the Preliminary Results of the Antidumping Duty Administrative Review of Hot-Rolled Flat-Rolled Carbon-Quality Steel Products From Brazil (A-351-828),” dated April 7, 2010 (Preliminary Analysis Memo).

Fair Value Comparisons

To determine whether sales of subject merchandise were made in the United States at less than fair value, we compared the export price (EP) to the NV, as described in the “Export Price” and “Normal Value” sections of this notice. In accordance with section 777A(d)(2) of the Act, we compared the EP of sales within the POR to the monthly weighted-average normal value of the foreign like product where there were sales made in the ordinary course of trade, as discussed in the “Cost of Production” section below.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all sales of hot-rolled steel covered by the description in the “Scope of the Order” section of this notice, supra, which were sold in the comparison market (i.e., Brazil) during the POR to be the foreign like product for the purpose of determining appropriate product comparisons to hot-rolled steel sold in the United States. For our discussion of home market viability, see the “Normal Value” section of this notice, infra. We matched products based on the physical characteristics reported by USIMINAS/COSIPA in response to the Department's antidumping questionnaire. The Department has relied on eleven characteristics to match the U.S. sales of the subject merchandise to comparison market sales of the foreign like product according to product hierarchy: paint, quality, carbon content, yield strength, thickness, width, form, tempering, pickling, edge trim, and whether or not with patterns in relief. The Department compared prime merchandise to prime merchandise, consistent with our practice. Since there were sales of identical merchandise in the comparison market in the same month as the date of the U.S. sale, we did not have to compare the U.S. sale to the next most similar foreign like product on the basis of the characteristics and reporting instructions listed in the Department's antidumping questionnaire.

Level of Trade

In accordance with section 773(a)(1)(B)(i) of the Act, to the extent practicable, we determine NV based on sales in the comparison market at the same level of trade (LOT) as EP or the constructed export price (CEP). The NV LOT is based on the starting price of the sales in the comparison market or, when NV is based on CV, that of the sales from which we derive selling, general and administrative expenses and profit. See also 19 CFR 351.412(c)(1)(iii). For CEP, it is the level of the constructed sale from the exporter to an affiliated importer after the deductions required under section 772(d) of the Act. See 19 CFR 351.412(c)(1)(ii). For EP, it is the starting price, which is usually from exporter to importer. See 19 CFR 351.412(c)(1)(i). In this review, USIMINAS/COSIPA claimed its sale to the United States was an EP sale.

To determine whether NV sales are at a different LOT than EP, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. 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 an LOT adjustment under section Start Printed Page 19373773(a)(7)(A) of the Act and 19 CFR 351.412. See, e.g., 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 USIMINAS/COSIPA regarding the marketing stages involved in making their reported comparison market and U.S. sales to unaffiliated customers. USIMINAS/COSIPA provided a description of all selling activities performed, along with a table comparing the LOTs among each channel of distribution and customer category for both markets. See SQR at Exhibit S-10.

For the U.S. market, USIMINAS/COSIPA reported one LOT, with one channel of distribution, for its EP sale. See AQR at A-16. USIMINAS/COSIPA stated that the U.S. sale was made to an unaffiliated trading company. Id. at A-19. Based on our analysis of USIMINAS/COSIPA's selling functions for its sale to the United States, we determine that there was one LOT, i.e., the EP LOT (LOTU1), for its U.S. sale.

For the comparison market, USIMINAS/COSIPA reported two LOTs, comprised of two channels of distribution: (1) Direct mill sales to unaffiliated and affiliated distributors and OEM customers, and (2) indirect sales made through affiliated resellers to unaffiliated customers (i.e., the downstream sales channel). USIMINAS/COSIPA further reported that the downstream sales through its affiliated resellers were made at a distinct LOT, resulting in two LOTs in the comparison market. We reviewed the level at which USIMINAS/COSIPA performed each of the claimed selling functions with respect to each claimed channel of distribution. For USIMINAS/COSIPA's sales made through the downstream sales channel, we consider the relevant functions to be the selling functions of both the producer and the reseller (i.e., the cumulative selling functions along the chain of distribution). Based on our analysis, we determined USIMINAS/COSIPA's comparison market sales were made at two distinct LOTs: mill direct sales from USIMINAS/COSIPA to distributors and OEM customers (LOTH1), and the downstream sales channel from USIMINAS/COSIPA through their affiliated resellers to unaffiliated customers (LOTH2). For further discussion, see the “Level of Trade” section in the Preliminary Analysis Memo.

As USIMINAS/COSIPA's U.S. sales were made at one LOT (LOTU1), we conducted an analysis of whether LOTU1 was comparable to that of LOTH1 and/or LOTH2. USIMINAS/COSIPA stated that the U.S. sale was made at the same LOT as its comparison market direct mill sales (LOTH1). Based on our analysis of record evidence, we find that the U.S. sale is at the same LOT as USIMINAS/COSIPA's comparison market direct mill sales (i.e., LOTH1). We further preliminarily find that the degree of selling activities provided by USIMINAS/COSIPA and their affiliated resellers in the comparison market when selling to unaffiliated customers are at a more advanced and frequent degree than those services provided by USIMINAS/COSIPA in LOTH1. For further discussion, see the “Level of Trade” section in the Preliminary Analysis Memo. Therefore, we matched the EP sale to sales at the same LOT in the comparison market, which is LOTH1, and did not make a LOT adjustment. See section 773(a)(7)(A) of the Act. A complete and detailed explanation of our level of trade analysis can be found in the “Level of Trade” section of the Preliminary Analysis Memo.

Date of Sale

19 CFR 351.401(i) states that the Department normally will use the date of invoice, as recorded in the exporter's or producer's records kept in the ordinary course of business, as the date of sale, but may use a date other than the date of invoice if it better reflects the date on which the material terms of sale are established. The Department has a long-standing practice of finding that, where shipment date precedes invoice date, shipment date better reflects the date on which the material terms of sale are established. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value and Negative Final Determination of Critical Circumstances: Certain Frozen and Canned Warmwater Shrimp From Thailand, 69 FR 76918 (December 23, 2004), and accompanying Issues and Decision Memorandum at Comment 10.

With respect to USIMINAS/COSIPA's U.S. sale, USIMINAS/COSIPA reported the amended contract date as the date of sale for its U.S. sale. See AQR at A-31 and BCQR at C-15. For purposes of this review, we examined whether invoice date or another date better represents the date on which the material terms of sale were established. The Department examined sales documentation, including contracts and invoices, provided by USIMINAS/COSIPA for its U.S. sales and found that the material terms of sale were set on the amended contract date and did not change from the amended contract to the invoice. Therefore, we preliminarily determine that amended contract date is the appropriate date of sale for the U.S. sales in this administrative review because it better represents the date upon which the material terms were established. See Preliminary Analysis Memo for a further discussion of this issue.

With respect to USIMINAS/COSIPA's comparison market sales, shipment date occurs on the same date as the nota fiscal (or invoice) date. Furthermore, based on record evidence, all material terms of sale are subject to change up until the date of the nota fiscal. See BCQR at U-20 and C-20; see also, AQR at 30-31 and exhibit A-7. Therefore, for USIMINAS/COSIPA's comparison market sales, we have preliminarily used the nota fiscal date as the date of sale. See Preliminary Analysis Memo for a further discussion of this issue.

Export Price

Section 772(a) of the Act defines EP as “the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States, as adjusted under subsection (c).” Section 772(b) of the Act defines CEP as “the price at which the subject merchandise is first 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 of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter,” as adjusted under sections 772(c) and (d). USIMINAS/COSIPA have classified their U.S. sale as an EP sale because it was made before the date of importation directly to an unaffiliated purchaser in the U.S. market. For purposes of these preliminary results, we accepted this classification and calculated EP in accordance with section 772(a) of the Act because the merchandise was sold prior to importation by the exporter or producer outside the United States to the first unaffiliated purchaser in the United States and because CEP was not otherwise warranted. See AQR at A-32 and Exhibit A-6. We calculated EP based on cost-plus-freight (CFR), packed and delivered prices charged to the first unaffiliated U.S. customer. We used the amended contract date as the date of sale.[2] We made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Act, Start Printed Page 19374including foreign inland freight from the plant to the port of exportation, brokerage and handling expenses incurred in the comparison market, and international freight.

Normal Value

A. Home Market Viability

To determine whether there was a sufficient volume of sales of hot-rolled steel in the home market to serve as a viable basis for calculating normal value, we compared the volume of respondents' home market sales of the foreign like product to the volume of their U.S. sales of the subject merchandise in accordance with section 773(a) of the Act. Pursuant to section 773(a)(1)(B) of the Act, because respondents' aggregate volume of home market sales of the foreign like product was greater than five percent of its aggregate volume of their U.S. sales of the subject merchandise, we have preliminarily determined that the home market was viable for comparison purposes.

B. Arm's-Length Test

USIMINAS/COSIPA reported that they made sales in the comparison market to affiliated and unaffiliated customers. Those affiliated customers included affiliated resellers as well as affiliated OEM customers who consumed the subject merchandise. Because the volume of these affiliated party sales were greater than five percent of USIMINAS/COSIPA's home market sales, USIMINAS/COSIPA also reported the downstream sales from their affiliated resellers to the first unaffiliated customers, which we used in our analysis and calculation of normal value.

Where prices to an affiliated party are, on average, within a range of 98 to 102 percent of the price of the same or comparable merchandise sold to unaffiliated parties at the same LOT, we determine that the sales made to the affiliated party are at arm's-length and we use these sales in our analysis. See Antidumping Proceedings—Affiliated Party Sales in the Ordinary Course of Trade, 67 FR 69186, 69187 (November 15, 2002). Where sales made to affiliated customers in the comparison market are not made at arm's-length, we exclude them from our analysis. See 19 CFR 351.403(c). To test whether these sales were made at arm's-length, we compared the starting prices of sales to affiliated and unaffiliated customers net of all billing adjustments, taxes, movement charges, imputed credit, direct selling expenses, and packing expenses. Here, we determined that there were sales to affiliated OEM customers that were not made at arm's-length. See Preliminary Analysis Memo for a further discussion of this issue.

C. Cost of Production Analysis

In previous segments of this proceeding, the Department disregarded sales made by USIMINAS/COSIPA that were found to be below their cost of production (COP). See Notice of Preliminary Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-Rolled Carbon-Quality Steel Products From Brazil, 64 FR 8299 (February 19, 1999); see also Certain Hot-Rolled Flat-Rolled Carbon Quality Steel Products From Brazil: Preliminary Results of Antidumping Duty Administrative Review of the Suspension Agreement, 66 FR 41500 (August 8, 2001). Therefore, pursuant to section 773(b)(2)(A)(ii) of the Act, there were reasonable grounds to believe or suspect that respondents made sales of the foreign like product in the comparison market at prices below the COP within the meaning of section 773(b) of the Act, as below cost sales made by USIMINAS were disregarded in the most recently completed review. Accordingly, on June 17, 2009, the Department requested that USIMINAS/COSIPA respond to Section D (Cost of Production/Constructed Value) of the Department's antidumping duty questionnaire.

We calculated the COP on a product-specific basis, based on the sum of the respondents' costs of materials and fabrication for the foreign like product plus amounts for general and administrative (G&A) expenses, interest expenses, and the costs of all expenses incidental to preparing the foreign like product for shipment in accordance with section 773(b)(3) of the Act. After analyzing USIMINAS and COSIPA's record evidence, we found that USIMINAS and COSIPA did not experience significant changes in the total cost of manufacturing (COM) during the POR to warrant a departure from our standard annual costing approach. Therefore, we calculated USIMINAS/COSIPA's COP using an annual weighted-average cost for the POR rather than using an alternative cost methodology.

We relied on the COP information provided by USIMINAS/COSIPA except for the following adjustments:

1. We recalculated the cost of COSIPA's control number (CONNUM) sold in the U.S. market to include world-wide production.

2. We recalculated USIMINAS/COSIPA's G&A expenses by dividing the G&A expenses by their respective cost of goods sold. In addition, we adjusted USIMINAS' G&A expense ratio to exclude revenues and expenses related to the sale of investments.

3. We adjusted the consolidated financial expense ratio of USIMINAS/COSIPA to disallow the interest income from long-term deposits.

For further details regarding these adjustments, see Memorandum to Neal M. Halper, Director, Office of Accounting, through Michael P. Martin, Lead Accountant, from Laurens van Houten, Senior Accountant, titled “Cost of Production and Constructed Value Adjustments for the Preliminary Results—Usinas Siderurgicas de Minas Gerais (USIMINAS) and Companhia Siderurgica Paulista (COSIPA),” dated April 7, 2010, which is on file in the Central Records Unit (CRU) in room 1117 of the main Commerce Department building.

On a product-specific basis, we compared the adjusted weighted-average COP figures for the POR to the comparison market sales of the foreign like product, as required under section 773(b) of the Act, to determine whether these sales were made at prices below the COP. The prices were exclusive of any applicable movement charges, packing expenses, warranties, and indirect selling expenses. In determining whether to disregard comparison market sales made at prices below their COP and in accordance with sections 773(b)(2)(B), (C), and (D) of the Act, we examined whether such sales were made within an extended period of time in substantial quantities and at prices which permitted the recovery of all costs within a reasonable period of time.

We found that, for certain products, more than 20 percent of respondents' comparison market sales were at prices below the COP and these below-cost sales were made within an extended period of time in substantial quantities. In addition, these sales were made at prices that did not permit the recovery of costs within a reasonable period of time. Therefore, we disregarded these sales and used the remaining sales of the same product as the basis for determining normal value in accordance with section 773(b)(1) of the Act.

D. Price-to-Price Comparisons

We based NV on comparison market prices to unaffiliated parties that passed the cost tests. We adjusted gross unit price for billing adjustments and taxes. We made adjustments, where applicable, for inland freight, warehousing, and inland insurance, in accordance with section 773(a)(6)(B) of the Act. Where appropriate, we made circumstance-of-sale adjustments for Start Printed Page 19375imputed credit, warranties, interest revenue, and commissions pursuant to section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. Finally, we deducted home market packing costs and added U.S. packing costs in accordance with sections 773(a)(6)(A) and (B) of the Act. For more information, see Preliminary Analysis Memo. Next, we matched the U.S. sales to NV sales.

Currency Conversions

The Department's preferred source for daily exchange rates is the Federal Reserve Bank. See Preliminary Results of Antidumping Duty Administrative Review: Stainless Steel Sheet and Strip in Coils from France, 68 FR 47049, 47055 (August 7, 2003), unchanged in Notice of Final Results of Antidumping Duty Administrative Review: Stainless Steel Sheet and Strip in Coils From France, 68 FR 69379 (December 12, 2003). However, the Federal Reserve Bank does not track or publish exchange rates for the Brazilian Real. Therefore, pursuant to section 773A of the Act, we made currency conversions from Brazilian reais to U.S. dollars based on the daily exchange rates from Factiva, a Dow Jones & Reuters Retrieval Service. Factiva publishes exchange rates for Monday through Friday only. We used the rate of exchange on the most recent Friday for conversion dates involving Saturday through Sunday where necessary.

Preliminary Results of Review

As a result of our review, we preliminarily determine the following weighted-average dumping margin exists for the period March 1, 2008, through February 28, 2009:

Manufacturer/ExporterWeighted-Average Margin (percent)
Usinas Siderurgicas de Minas Gerais (USIMINAS)/Companhia Siderurgica Paulista (COSIPA)4.93

Disclosure and Public Comments

The Department will disclose calculations performed within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b). As stated in the “Verification” section above, the Department will release the cost and sales verification memoranda to parties for comment after the publication of these preliminary results in the Federal Register. Therefore, interested parties may submit case briefs to the Department no later than seven days after the date of the issuance of the last verification report in this proceeding. See 19 CFR 351.309(c)(1)(ii). Rebuttal briefs, the content of which is limited to the issues raised in the case briefs, must be filed within five days from the deadline date for the submission of case briefs. See 19 CFR 351.309(d)(1) and (2). Parties who submit arguments in these proceedings are requested to submit with the argument: (1) A statement of the issues, (2) a brief summary of the argument, and (3) a table of authorities. Executive summaries should be limited to five pages total, including footnotes. Further, parties submitting case briefs, rebuttal briefs, and written comments should provide the Department with an additional copy of the public version of any such argument on diskette.

In accordance with section 774 of the Act, the Department will hold a public hearing, if requested, 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 review, 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, at a time and in a room to be determined. Parties should confirm by telephone, the date, time, and location of the hearing 48 hours before the scheduled date. Interested parties who wish to request a hearing, or to participate in a hearing 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.

See 19 CFR 351.310(c). At the hearing, oral presentations will be limited to issues raised in the briefs.

Extension of the Time Limit for the Final Results

Section 751(a)(3)(A) of the Act requires that the Department issue the final results of an administrative review within 120 days after the date on which the preliminary results are published. If it is not practicable to complete the review within that time period, section 751(a)(3)(A) of the Act allows the Department to extend the deadline for the final results to a maximum of 180 days after the date on which the preliminary results are published.

In this proceeding, the Department requires additional time to complete the final results of this administrative review. As noted above, because the Department had to reschedule its sales verification due to inclement weather and the late scheduling of the cost verification, the verification reports will not be issued until after these preliminary results. Upon issuance of the verification reports, it may be necessary for the Department to request revised sales and cost databases pursuant to the findings during the cost and/or sales verifications. In order to ensure that interested parties have sufficient time to analyze the reports and comment on these preliminary results, as well as any new information that may be received after these preliminary results, it is not practicable to complete this administrative review within the original time limit. Consequently, the Department is extending the time limit for completion of the final results of this review by 60 days, in accordance with section 751(a)(3)(A) of the Act. The final results are now due no later 180 days after the publication date of these preliminary results.

Assessment

The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), because entered values were reported for all sales examined, we calculated importer-specific, ad valorem assessment rates for these preliminary results of review. We divided the total dumping margins for the reviewed sales by the total entered value of those reviewed sales for each reported importer. We will instruct CBP to assess the importer-specific rate uniformly, as appropriate, on all entries of subject merchandise made by the relevant importer during the POR. See 19 CFR 351.212(b). Where the duty assessment rates are above de minimis, we will instruct CBP to assess duties on all entries of subject merchandise by that importer in accordance with the requirements set forth in 19 CFR 351.106(c)(2). The Department intends to issue importer-specific assessment instructions to CBP 15 days after the date of publication of the final results of this review.

The Department clarified its “automatic assessment” regulation on May 6, 2003. See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003). This clarification will apply to entries of subject merchandise during the period of review produced by companies included in these final results of review for which the reviewed companies did not know their merchandise was destined for the United States. In such Start Printed Page 19376instances, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction.

Cash Deposit Requirements

The following cash deposit requirements will be effective upon completion of the final results of this administrative review for all shipments of hot-rolled steel from Brazil entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(1) of the Act: (1) The cash deposit rate for the companies covered by this review (i.e., USIMINAS/COSIPA) will be the rate established in the final results of review; (2) for any previously-reviewed or investigated company 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 or the 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) if neither the exporter nor the manufacturer is a firm covered in this or any previous review conducted by the Department, the cash deposit rate will be 42.12 percent, the all-others rate established in the LTFV investigation. See Antidumping Duty Order, 67 FR at 11094. These cash deposit requirements, when imposed, shall remain in effect until further notice.

Notification to Importers

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) 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 antidumping duties occurred and the subsequent assessment of double antidumping duties.

We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Start Signature

Dated: April 7, 2010.

Ronald K. Lorentzen,

Deputy Assistant Secretary for Import Administration.

End Signature End Supplemental Information

Footnotes

1.  On October 9, 2009, USIMINAS/COSIPA submitted an English translation of the audited financial statements for one of their affiliated comparison market customers, Dufer, S.A. USIMINAS/COSIPA inadvertently omitted this translation from their October 7, 2009, section D supplemental questionnaire response.

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2.  See Preliminary Analysis Memo for a further discussion of this issue.

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[FR Doc. 2010-8558 Filed 4-13-10; 8:45 am]

BILLING CODE 3510-DS-P