Antidumping: Ferrosilicon from— Brazil,

[Federal Register: December 8, 1998 (Volume 63, Number 235)]

[Notices]

[Page 67650-67654]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr08de98-37]

DEPARTMENT OF COMMERCE

International Trade Administration

[A-351-820]

Ferrosilicon From Brazil: Notice of Partial Rescission and Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, Department of Commerce.

ACTION: Notice of partial rescission and preliminary results of antidumping duty administrative review.

SUMMARY: In response to timely requests for administrative review for the period March 1, 1997 through February 28, 1998, the Department of Commerce is conducting an administrative review of the antidumping duty order on ferrosilicon from Brazil. We preliminarily determined that during the period of review, one of the two manufacturers/exporters that are under review sold ferrosilicon to customers in the United States at less than normal value. If the preliminary results are adopted in our final results of this administrative review, we will instruct the U.S. Customs Service to assess antidumping duties on all appropriate entries.

Interested parties are invited to comment on the preliminary results of this review. Parties who submit comments on issues in this proceeding should submit with each comment (1) a statement of the issue; and (2) a brief summary of their comment.

EFFECTIVE DATE: December 8, 1998.

FOR FURTHER INFORMATION CONTACT: Alexander Amdur, Howard Smith, or Wendy Frankel, AD/CVD Enforcement Group II, Office IV, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 482-5346, (202) 482-5193, or (202) 482-5849, respectively.

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations refer to the regulations codified at 19 CFR Part 351 (April 1998).

[[Page 67651]]

SUPPLEMENTARY INFORMATION:

Background

On March 11, 1998, the Department of Commerce (the Department) published in the Federal Register a notice of opportunity to request an administrative review of the antidumping duty order on ferrosilicon from Brazil covering the period March 1, 1997, through February 28, 1998. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 63 FR 1868 (March 11, 1998); see also Antidumping Duty Order: Ferrosilicon From Brazil, 59 FR 11769 (March 14, 1994). Pursuant to the notice of opportunity to request an administrative review and 19 CFR 351.213(b) of the Department's regulations, in March 1998, Companhia de Ferro Ligas da Bahia (Ferbasa) and Companhia Brasileira Carbureto de Calcio (CBCC) requested that the Department conduct an administrative review of their respective shipments of ferrosilicon to the United States. Additionally, in March 1998, AIMCOR and SKW Metals & Alloys, Inc., (collectively petitioners), domestic interested parties under 19 CFR 351.102(b) of the Department's regulations, requested that the Department conduct an administrative review of Companhia Ferroligas Minas Gerais-Minasligas (Minasligas) as well as the aforementioned companies. In response to these requests, the Department initiated an antidumping duty administrative review of Ferbasa, CBCC, and Minasligas (collectively respondents). See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 63 FR 20378 (April 24, 1998).

The Department issued an antidumping duty questionnaire to the respondents in May 1998 and received responses thereto in June and July 1998. In June 1998, the Department granted Ferbasa's request that it be allowed to limit its reporting period for sales in the comparison market to the period that is contemporaneous with its U.S. sale, namely, May 1, 1997 through October 31, 1997. In a letter granting this request, the Department also instructed Ferbasa to report its cost figures for ferrosilicon for this limited period. Additionally, based on U.S. Custom's documents obtained by the Department, we determined, and CBCC confirmed, that CBCC did not have any entries of ferrosilicon for consumption in the U.S. customs territory during the period of review (POR). Therefore, we are rescinding this review with respect to CBCC. The Department issued supplemental questionnaires to the remaining respondents in September, October, and November 1998 and received responses thereto in these same three months.

The Department is conducting this antidumping duty administrative review in accordance with section 751 of the Act.

Duty Absorption

On May 20, 1998, petitioners requested that the Department determine, with respect to Minasligas, whether antidumping duties had been absorbed during the POR. On May 28, 1998, Minasligas requested that the Department reject petitioners' request for a determination regarding duty absorption because Minasligas did not sell the subject merchandise to the United States through an affiliated importer during the POR.

Section 751(a)(4) of the Act provides that the Department, if requested, shall determine during an administrative review initiated two or four years after the publication of the order, whether antidumping duties have been absorbed by a foreign producer or exporter subject to the order, if the subject merchandise is sold in the United States through an importer who is affiliated with such foreign producer or exporter. For transition orders as defined in section 751(c)(6)(C) of the Act, i.e., orders in effect as of January 1, 1995, section 351.213(j)(2) of the Department's regulations provides that the Department will make a duty-absorption determination, if requested, in any administrative review initiated in 1996 or 1998. Because the order on ferrosilicon from Brazil has been in effect since 1994, it is a transition order in accordance with section 751(c)(6)(C) of the Act. The instant review of Minasligas was initiated in 1998. However, during the POR, Minasligas did not sell the subject merchandise to the United States through importers that are affiliated within the meaning of section 751(a)(4) of the Act and, therefore, we did not make a duty absorption determination in this segment of the proceeding.

Scope of the Review

The merchandise subject to this review is ferrosilicon, a ferro alloy generally containing, by weight, not less than four percent iron, more than eight percent but not more than 96 percent silicon, not more than 10 percent chromium, not more than 30 percent manganese, not more than three percent phosphorous, less than 2.75 percent magnesium, and not more than 10 percent calcium or any other element. Ferrosilicon is a ferro alloy produced by combining silicon and iron through smelting in a submerged-arc furnace. Ferrosilicon is used primarily as an alloying agent in the production of steel and cast iron. It is also used in the steel industry as a deoxidizer and a reducing agent, and by cast iron producers as an inoculant.

Ferrosilicon is differentiated by size and by grade. The sizes express the maximum and minimum dimensions of the lumps of ferrosilicon found in a given shipment. Ferrosilicon grades are defined by the percentages by weight of contained silicon and other minor elements. Ferrosilicon is most commonly sold to the iron and steel industries in standard grades of 75 percent and 50 percent ferrosilicon. Calcium silicon, ferrocalcium silicon, and magnesium ferrosilicon are specifically excluded from the scope of this review. Calcium silicon is an alloy containing, by weight, not more than five percent iron, 60 to 65 percent silicon, and 28 to 32 percent calcium. Ferrocalcium silicon is a ferro alloy containing, by weight, not less than four percent iron, 60 to 65 percent silicon, and more than 10 percent calcium. Magnesium ferrosilicon is a ferro alloy containing, by weight, not less than four percent iron, not more than 55 percent silicon, and not less than 2.75 percent magnesium. Ferrosilicon is currently classifiable under the following subheadings of the Harmonized Tariff Schedule of the United States (HTSUS): 7202.21.1000, 7202.21.5000, 7202.21.7500, 7202.21.9000, 7202.29.0010, and 7202.29.0050. The HTSUS subheadings are provided for convenience and customs purposes. Our written description of the scope of this review is dispositive.

Ferrosilicon in the form of slag is included within the scope of this order if it meets, in general, the chemical content definition stated above and is capable of being used as ferrosilicon. Parties that believe their importations of ferrosilicon slag do not meet these definitions should contact the Department and request a scope determination.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all products within the scope of this review that were produced by the respondents, and sold in the ordinary course of trade in the comparison market during the POR, to be foreign like products for purposes of determining the appropriate product comparisons to U.S. sales.

[[Page 67652]]

Fair Value Comparisons

To determine whether the respondents' sales of ferrosilicon to customers in the United States were made at less than fair value, we compared export price (EP) to normal value (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 calculated monthly weighted-average prices for NV and compared these to the prices of individual U.S. transactions.

Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent practicable, we determined NV based on sales in the comparison market at the same level of trade (LOT) as the EP transaction. The NV LOT is that of the starting-price sales in the comparison market or, when NV is based on constructed value (CV), that of the sales from which we derive selling, general and administrative (SG&A) expenses and profit. For EP, the U.S. LOT is also the level of the starting-price sale, which in this review, is from the exporter to the U.S. importer.

Neither respondent claimed a LOT adjustment. Nevertheless, in order to determine whether the respondents' NV sales are at a different LOT than their EP sales, we examined stages in the marketing process and selling functions along the chain of distribution between the respondent producers and the unaffiliated customers. 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. 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).

During the POR, Ferbasa sold ferrosilicon to an unaffiliated trading company in the U.S. market and to unaffiliated resellers and end users in the comparison market, while Minasligas sold ferrosilicon to unaffiliated trading companies and end users in the U.S. market and unaffiliated end users in the comparison market. We found that the selling functions associated with each respondent's U.S. and comparison markets sales of ferrosilicon are generally the same. For example, Ferbasa negotiated the sales terms, prepared ferrosilicon for shipment, and maintained sales records in both the U.S. and comparison market. Minasligas negotiated the sales terms and arranged for delivery, either to the customer's location, in the case of certain sales in the comparison market, or to the Brazilian port, in the case of sales to U.S. customers. We noted, however, that Ferbasa sold ferrosilicon from inventory in the comparison market, while it manufactured ferrosilicon to order for the U.S. market. In addition, Ferbasa incurred commission, freight, and brokerage and handling expenses in connection with sales of ferrosilicon to the U.S. market, while it did not incur these expenses on sales of ferrosilicon in the comparison market. With regard to Minasligas, the company incurred expenses at the port in connection with sales of ferrosilicon to the U.S. market, but it did not incur such expenses on sales of ferrosilicon in the comparison market. These differences primarily involve differences in handling and transporting ferrosilicon to customers, not differences in selling functions. Although Ferbasa maintained inventory only for its comparison market customers, this simply involved storing piles of ferrosilicon in open stalls at the factory. We concluded that this is not a significant selling function given the low level of service that is required to maintain inventory in such a fashion and, thus, we did not consider Ferbasa's maintenance of inventory to be a significant difference in selling activities. In the absence of differences in other selling activities such as the sales order process, advertising, warranty service, technical support, or the maintenance of distribution warehouses, we found that the differences noted above do not constitute substantial differences indicating that either respondent's sales in the U.S. and comparison markets occurred at different marketing stages. Therefore, we determined that a single level of trade exists in each market for both respondents and, moreover, all U.S. and comparison market sales were made at the same level of trade for each respondent. Consequently, we did not make a level of trade adjustment in calculating NV for either respondent.

Export Price

We calculated EP in accordance with sections 772(a) and (c) of the Act because the respondents sold the subject merchandise directly to the first unaffiliated purchasers in the United States prior to importation and constructed export price was not otherwise warranted based on the facts on the record. Specifically, we calculated EP based on the packed prices to unaffiliated customers in the United States from which we made deductions, where appropriate, for foreign inland freight and insurance, brokerage and handling, port warehousing, weighing and clerical expenses.

For Minasligas, we based EP on the U.S. dollar-denominated prices that Minasligas negotiated with its U.S. customers and listed on commercial invoices for its U.S. sales, rather than the Reais- denominated prices that Minasligas reported on the sales tape. For further information, see the Memorandum from Alexander Amdur to the File on Minasligas: Calculations for the Preliminary Results of the 1997-1998 Administrative Review of Ferrosilicon from Brazil (Minasligas Calculation Memorandum) dated December 1, 1998 on file in the Central Records Unit (CRU) located in room B-099 of the main Department of Commerce Building.

For Ferbasa, we based EP on the U.S. dollar-denominated price that Ferbasa reported for its U.S. transaction on the sales tape. We accepted the reported price notwithstanding the petitioners' allegation of November 5, 1998, that the price may not have been the result of a bona fide arm's-length transaction. We have reviewed the information contained in the administrative record and concluded that the evidence does not demonstrate that the transaction in question was not bona fide. Therefore, for the preliminary results, we have based Ferbasa's EP on the price reported in the sales tape. For further information, see the Concurrence Memorandum From Howard Smith to Holly Kuga regarding this issue, dated December 1, 1998, on file in the CRU located in room B-099 of the main Department of Commerce Building.

Normal Value

In accordance with section 773(a)(1)(C)(ii) of the Act, we determined that the home market for each respondent serves as a viable basis for calculating NV because the aggregate volume of each respondent's home market sales of the foreign like product was greater than five percent of the aggregate volume of its U.S. sales of the subject merchandise. Therefore, in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on the price at which the foreign like product was first sold for consumption in the exporting country in the usual commercial quantities and in the ordinary course of trade and, to the extent practicable, at the same level of trade as the EP. In accordance with section 773(a)(6) of the Act, we adjusted NV, where applicable,

[[Page 67653]]

by adding U.S. packing costs and subtracting home market packing costs, ICMS and IPI tax expenses, and freight expenses. Moreover, in accordance with section 773(a)(6) of the Act, we adjusted NV for differences in the circumstances of sale by adding late payment charges, where applicable, and U.S. credit expenses, and by subtracting home market credit expenses.

For Minasligas, we recalculated the amount of the U.S. credit expense that was used as an adjustment to NV by making the following changes. First, we used, as the date of payment, the date Minasligas' bank received payment from Minasligas' U.S. customers for each U.S. sale, rather than the date the bank advanced Minasligas money on the sale through Advance Exchange Contracts (ACCs). Second, we used the actual average interest rate of the ACCs that Minasligas used to finance its U.S. sales during the POR, rather than the average monthly Brazilian Taxa referencial de juros (TR) rate for the POR reported by Minasligas in its response. The Department's questionnaire instructs respondents to calculate U.S. credit expense using the interest rate paid on short-term U.S. dollar borrowings. Although Minasligas claimed that it had no short-term U.S. dollar borrowings during the POR, we determined that the advances obtained from the ACCs were short-term U.S. dollar borrowings.

In its response, Minasligas calculated home market credit expense using a gross unit price net of one month's credit expense, regardless of the credit period applicable to the sale. Because the Department's practice is to calculate credit expense based on gross unit price without any adjustments, we recalculated Minasligas's home market credit expense using the unadjusted gross unit price. Furthermore, we recalculated the home market credit expense using the average monthly TR rate for the POR reported by Minasligas in the narrative portion of its response, rather than the interest rate that Minasligas inadvertently used to calculate credit expense on its sales tape. For further information, See Minasligas Calculation Memorandum.

For Ferbasa, we adjusted NV by adding U.S. commissions and subtracting home market indirect selling expenses up to the amount of the U.S. commission, in accordance with 19 CFR 351.410(e). We did not reduce NV by the reported home market packing expense because we determined that Ferbasa reported packing revenue, rather than packing expense, in its home market sales tape. In addition, although Ferbasa revised its reported cost of manufacturing, it failed to revise its home market inventory carrying cost which was based on manufacturing costs. Therefore, we recalculated home market inventory carrying cost using the revised cost of manufacturing figure reported by Ferbasa in its November 10, 1998, supplemental response. I. Cost of Production (COP) Analysis

Because we disregarded sales below the COP for Ferbasa and Minasligas in the last completed segments of the proceeding (See Ferrosilicon from Brazil; Notice of Final Results of Antidumping Duty Administrative Review, 63 FR 28355 (May 22, 1998) with respect to Ferbasa, and 62 FR 43504 (August 14, 1997) with respect to Minasligas), we had reasonable grounds to believe or suspect that sales of the foreign product under consideration for the determination of NV in this review may have been made at prices below the COP, as provided by section 773(b)(2)(A)(ii) of the Act. Therefore, pursuant to section 773(b)(1) of the Act, we initiated investigations to determine whether the respondents sold ferrosilicon in the home market during the POR at prices that were less than their COP.

  1. Calculation of COP. In accordance with section 773(b)(3) of the Act, we calculated each respondent's COP based on the sum of the cost of materials and fabrication employed in producing the foreign like product, plus amounts for SG&A, financing expenses and, for Minasligas, packing costs. We did not include packing costs in COP for Ferbasa because the company failed to report this cost separately. We adjusted Ferbasa's reported costs by (1) adjusting general and administrative expenses by other operating income and non-operating expenses related to the general operations of the company, and (2) increasing financing expense by monetary correction losses. For further information, see the Ferbasa Preliminary Results Calculation Memorandum dated December 1, 1998, on file in the CRU located in room B-099 of the main Department of Commerce Building. We adjusted Minasligas' reported costs by using, as the fixed overhead cost for all grades of ferrosilicon, the one cost that Minasligas originally reported for all grades of ferrosilicon, rather than the separate fixed overhead costs that Minasligas subsequently allocated to the standard and refined grades of ferrosilicon. We recalculated the indirect selling expenses using a value-based, rather than quantity-based, allocation methodology. For further information, see Minasligas Calculation Memorandum.

  2. Test of Home Market Prices. In order to determine whether the respondents made home market sales during the POR at prices below the COP on a product-specific basis, we compared the weighted-average COP (net of selling and, where applicable, packing expenses and adjusted as noted above) to home market prices less ICMS and IPI tax expenses, direct and indirect selling expenses and, where applicable, home market packing expenses. In addition, where applicable, we added interest revenue to home market prices before comparing them to the COP. We excluded ICMS and IPI tax expenses from the home market prices used in our sales-below-cost analysis because the COP did not contain these expenses.

In determining whether to disregard home market sales made at prices below the COP, we examined whether such sales were made (1) within an extended period of time in substantial quantities, and (2) at prices which permitted the recovery of all costs within a reasonable period of time, in accordance with section 773(b)(1) of the Act.

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of a respondent's sales of a given product during the POR were at prices below the COP, we did not disregard any below-cost sales of that product because we determined that 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 POR were at prices less than the COP, we determined that such sales were made in ``substantial quantities'' within an extended period of time and not at prices which would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(C) & (D) of the Act. Therefore, we disregarded the below-cost sales.

In the instant review, we found that for certain ferrosilicon products, more than 20 percent of Ferbasa's and Minasligas' home market sales were sold at prices less than the COP within an extended period of time, and that the prices did not provide for the recovery of costs within a reasonable period of time. Therefore, in accordance with section 773(b)(1) of the Act, we disregarded the below-cost sales and used the remaining above-cost sales as the basis for determining NV.

Currency Conversion

Pursuant to section 773(A)(a) of the Act, for purposes of the preliminary results, we converted foreign currencies into U.S. dollars using the official exchange rates in effect on the date of the U.S. sales. These official exchange

[[Page 67654]]

rates are based on the daily rates identified by the Dow Jones Business Information Services. Section 773(A)(a) of the Act directs the Department to use a daily exchange rate to convert foreign currencies into U.S. dollars unless the daily rate involves a ``fluctuation.'' It is our practice to find that a fluctuation exists when the daily exchange rate differs from a benchmark rate by 2.25 percent. See Preliminary Results of Antidumping Duty Administrative Review: Certain Welded Carbon Steel Pipe and Tube from Turkey (61 FR 35188, 35192) (July 5, 1996). The benchmark rate is defined as the moving average of the rates for the past 40 business days. Where we determined that the daily rates applicable to this review fluctuated, as defined above, we converted foreign currencies into U.S. dollars using the benchmark exchange rate.

Preliminary Results of The Review

As a result of this review, we preliminarily determine that the following weighted-average dumping margins exist:

Weighted- average Manufacturer/exporter

margin (percent)

Companhia Ferroligas Minas Gerais-Minasligas (Minasligas)..

10.16 Companhia de Ferro Ligas da Bahia (Ferbasa)................

0.00

Pursuant to 19 CFR 351.224(b), the Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results within 5 days of the date of publication of this notice. Any interested party may request a hearing within 30 days of the date of publication of this notice. Parties who submit arguments in this proceeding are requested to submit with each argument: (1) a statement of the issue and (2) a brief summary of the argument. All case briefs must be submitted within 30 days of the date of publication of this notice. Rebuttal briefs, which are limited to issues raised in the case briefs, may be filednot later than 37 days after the date of publication of this notice. A hearing, if requested, will be held 44 days after the publication of this notice or the first business day thereafter. The Department will publish a notice of the final results of this administrative review, which will include the results of its analysis of issues raised in any written comments or at the hearing, within 120 days from the publication of these preliminary results.

The Department shall determine, and the U.S. Customs Service (Customs) shall assess, antidumping duties on all appropriate entries. Upon completion of this review, the Department will issue appraisement instructions directly to Customs. The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the determination and for future deposits of estimated duties. For duty assessment purposes, for each importer we will divide the total applicable dumping margin (calculated as the difference between NV and EP) by the total number of metric tons sold. We will direct Customs to assess the resulting per-metric ton dollar amount against each metric ton of subject merchandise entered by the importer during the POR. Furthermore, the following deposit requirements will be effective upon completion of the final results of this administrative review for all shipments of ferrosilicon 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 reviewed companies (Ferbasa and Minasligas) will be the rate established in the final results of this administrative review, except if the rate is less than 0.5 percent, ad valorem and, therefore, de minimis, the cash deposit rate will be zero; (2) for merchandise exported by manufacturers or exporters not covered in this review but covered in the original less than fair value (LTFV) investigation or a previous review, the cash deposit rate will continue to be the company-specific rate published in the most recent period; (3) if the exporter is not a firm covered in this review, a previous review, or the original 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 reviews or the original LTFV investigation, the cash deposit rate will be 35.95 percent, the ``All Others'' rate established in the original LTFV investigation (59 FR 11769, March 14, 1994). These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) of the Department's regulations to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

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

Dated: December 1, 1998. Robert S. LaRussa, Assistant Secretary for Import Administration.

[FR Doc. 98-32542Filed12-7-98; 8:45 am]

BILLING CODE 3510-DS-P

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT