Notice of Preliminary Results of Antidumping Duty Administrative Review: Carbon and Certain Alloy Steel Wire Rod from Canada, 41681-41687 [E5-3869]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 70, Number 138 (Wednesday, July 20, 2005)]
[NOTIC]
[Pages 41681-41687]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-3869]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-840]


Notice of Preliminary Results of Antidumping Duty Administrative 
Review: Carbon and Certain Alloy Steel Wire Rod from Canada

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on Carbon and 
Certain Alloy Steel Wire Rod from Canada for the period October 1, 
2003, to September 30, 2004 (the POR). We preliminarily determine that 
sales of subject merchandise by Ivaco Inc. and Ivaco Rolling Mills 
(IRM) (collectively, ``Ivaco'') and Ispat Sidbec, Inc. (Ispat) (now 
known as Mittal Canada Inc. (Mittal)\1\) have been made below normal 
value (NV). If these preliminary results are adopted in our final 
results, we will instruct U.S. Customs and Border Protection (CBP) to 
assess antidumping duties on appropriate entries. Interested parties 
are invited to comment on these preliminary results. We will issue the 
final results no later than 120 days from the publication of this 
notice.
---------------------------------------------------------------------------

    \1\ On June 24, 2005, we determined that Mittal was the 
successor-in-interest to Ispat Sidbec, Inc. See Final Results of 
Changed Circumstances Antidumping Duty Administrative Review: Carbon 
and Certain Steel Alloy Wire rod from Canada, (not yet scheduled for 
FR publication).

---------------------------------------------------------------------------
EFFECTIVE DATE: July 20, 2005.

FOR FURTHER INFORMATION CONTACT: Daniel O'Brien or Ashleigh Batton, at 
(202) 482-1376 or (202) 482-6309, respectively; AD/CVD Operations, 
Office 1, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street & Constitution Avenue, NW, 
Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

    On October 1, 2004, the Department issued a 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, 69 FR 58889 (October 1, 
2004). On October 29, 2004, in accordance with 19 CFR 351.213(b), Ivaco 
and Ispat requested an administrative review. On October 29, 2004, also 
in accordance with 19 CFR 351.213(b), the petitioners\2\ requested an 
administrative review of Ivaco and Ispat. On November 19, 2004, the 
Department published the notice of initiation of this antidumping duty 
administrative review, covering the POR. See Initiation of Antidumping 
and Countervailing Duty Administrative Reviews, 69 FR 67701 (November 
19, 2004).
---------------------------------------------------------------------------

    \2\ The petitioners in this case are ISG Georgetown, Inc., 
Gerdau Ameristeel US, Inc., Keystone Consolidated Industries, Inc., 
and North Star Steel Texas, Inc.
---------------------------------------------------------------------------

    On November 30, 2004, the Department issued its antidumping 
questionnaire to Ivaco and Ispat, specifying that the responses to 
Section A, and Sections B-E would be due on December 21, 2004, and 
January 6, 2005, respectively.\3\ We received timely

[[Page 41682]]

responses to Sections A-E of the initial antidumping questionnaire and 
associated supplemental questionnaires.
---------------------------------------------------------------------------

    \3\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under review 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 
(this section is not applicable to respondents in non-market economy 
cases). 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 review. 
Section E requests information on further manufacturing.
---------------------------------------------------------------------------

    On June 20, 2005, and June 23, 2005, the petitioners and Ivaco 
respectively submitted comments for consideration in the preliminary 
results of this review. Due to the statutory deadline governing this 
review, we were unable to consider these comments for the preliminary 
results. They may, however, be considered for the final results of this 
review.

Scope of the Order

    The merchandise subject to this order is certain hot-rolled 
products of carbon steel and alloy steel, in coils, of approximately 
round cross section, 5.00 mm or more, but less than 19.00 mm, in solid 
cross-sectional diameter.
    Specifically excluded are steel products possessing the above-noted 
physical characteristics and meeting the Harmonized Tariff Schedule of 
the United States (HTSUS) definitions for (a) stainless steel; (b) tool 
steel; (c) high nickel steel; (d) ball bearing steel; and (e) concrete 
reinforcing bars and rods. Also excluded are (f) free machining steel 
products (i.e., products that contain by weight one or more of the 
following elements: 0.03 percent or more of lead, 0.05 percent or more 
of bismuth, 0.08 percent or more of sulfur, more than 0.04 percent of 
phosphorus, more than 0.05 percent of selenium, or more than 0.01 
percent of tellurium).
    Also excluded from the scope are 1080 grade tire cord quality wire 
rod and 1080 grade tire bead quality wire rod. This grade 1080 tire 
cord quality rod is defined as: (i) grade 1080 tire cord quality wire 
rod measuring 5.0 mm or more but not more than 6.0 mm in cross-
sectional diameter; (ii) with an average partial decarburization of no 
more than 70 microns in depth (maximum individual 200 microns); (iii) 
having no non-deformable inclusions greater than 20 microns and no 
deformable inclusions greater than 35 microns; (iv) having a carbon 
segregation per heat average of 3.0 or better using European Method NFA 
04-114; (v) having a surface quality with no surface defects of a 
length greater than 0.15 mm; (vi) capable of being drawn to a diameter 
of 0.30 mm or less with 3 or fewer breaks per ton, and (vii) containing 
by weight the following elements in the proportions shown: (1) 0.78 
percent or more of carbon, (2) less than 0.01 percent of aluminum, (3) 
0.040 percent or less, in the aggregate, of phosphorus and sulfur, (4) 
0.006 percent or less of nitrogen, and (5) not more than 0.15 percent, 
in the aggregate, of copper, nickel and chromium.
    This grade 1080 tire bead quality rod is defined as: (i) grade 1080 
tire bead quality wire rod measuring 5.5 mm or more but not more than 
7.0 mm in cross-sectional diameter; (ii) with an average partial 
decarburization of no more than 70 microns in depth (maximum individual 
200 microns); (iii) having no non-deformable inclusions greater than 20 
microns and no deformable inclusions greater than 35 microns; (iv) 
having a carbon segregation per heat average of 3.0 or better using 
European Method NFA 04-114; (v) having a surface quality with no 
surface defects of a length greater than 0.2 mm; (vi) capable of being 
drawn to a diameter of 0.78 mm or larger with 0.5 or fewer breaks per 
ton; and (vii) containing by weight the following elements in the 
proportions shown: (1) 0.78 percent or more of carbon, (2) less than 
0.01 percent of soluble aluminum, (3) 0.040 percent or less, in the 
aggregate, of phosphorus and sulfur, (4) 0.008 percent or less of 
nitrogen, and (5) either not more than 0.15 percent, in the aggregate, 
of copper, nickel and chromium (if chromium is not specified), or not 
more than 0.10 percent in the aggregate of copper and nickel and a 
chromium content of 0.24 to 0.30 percent (if chromium is specified).
    For purposes of the grade 1080 tire cord quality wire rod and the 
grade 1080 tire bead quality wire rod, an inclusion will be considered 
to be deformable if its ratio of length (measured along the axis - that 
is, the direction of rolling - of the rod) over thickness (measured on 
the same inclusion in a direction perpendicular to the axis of the rod) 
is equal to or greater than three. The size of an inclusion for 
purposes of the 20 microns and 35 microns limitations is the 
measurement of the largest dimension observed on a longitudinal section 
measured in a direction perpendicular to the axis of the rod. This 
measurement methodology applies only to inclusions on certain grade 
1080 tire cord quality wire rod and certain grade 1080 tire bead 
quality wire rod that are entered, or withdrawn from warehouse, for 
consumption on or after July 24, 2003.\4\
---------------------------------------------------------------------------

    \4\ See Carbon and Certain Alloy Steel Wire Rod from Brazil, 
Canada, Indonesia, Mexico, Moldova, Trinidad and Tobago, and 
Ukraine: Final Results of Changed Circumstances Review, 68 FR 64079 
(November 12, 2003).
---------------------------------------------------------------------------

    The designation of the products as ``tire cord quality'' or ``tire 
bead quality'' indicates the acceptability of the product for use in 
the production of tire cord, tire bead, or wire for use in other rubber 
reinforcement applications such as hose wire. These quality 
designations are presumed to indicate that these products are being 
used in tire cord, tire bead, and other rubber reinforcement 
applications, and such merchandise intended for the tire cord, tire 
bead, or other rubber reinforcement applications is not included in the 
scope. However, should petitioners or other interested parties provide 
a reasonable basis to believe or suspect that there exists a pattern of 
importation of such products for other than those applications, end-use 
certification for the importation of such products may be required. 
Under such circumstances, only the importers of record would normally 
be required to certify the end use of the imported merchandise.
    All products meeting the physical description of subject 
merchandise that are not specifically excluded are included in this 
scope.
    The products subject to this order are currently classifiable under 
subheadings 7213.91.3010, 7213.91.3090, 7213.91.4510, 7213.91.4590, 
7213.91.6010, 7213.91.6090, 7213.99.0031, 7213.99.0038, 7213.99.0090, 
7227.20.0010, 7227.20.0020, 7227.20.0090, 7227.20.0095, 7227.90.6051, 
7227.90.6053, 7227.90.6058, and 7227.90.6059 of the HTSUS. Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
the written description of the scope of this proceeding is 
dispositive.\5\
---------------------------------------------------------------------------

    \5\ Effective January 1, 2005, CBP reclassified certain HTSUS 
numbers related to the subject merchandise. See https://
hotdocs.usitc.gov/tariff_chapters_current/toc.html.
---------------------------------------------------------------------------

Export Price and Constructed Export Price

    For the price to the United States, we used, as appropriate, export 
price (EP) or constructed export price (CEP), as defined in sections 
772(a) and 772(b) of the Tariff Act of 1930, as amended (the Act), 
respectively. Section 772(a) of the Act defines EP as the price at 
which the subject merchandise is first sold before the date of 
importation by the producer or exporter 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 
Section 772(c) of the Act.
    Section 772(b) of the Act defines CEP as the price at which the 
subject

[[Page 41683]]

merchandise is first 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) of the Act.
    We made the following company specific adjustments:

(A) Ivaco

    Ivaco made both EP and CEP transactions. We calculated an EP for 
sales where the merchandise was sold directly by Ivaco to the first 
unaffiliated purchaser in the United States prior to importation, and 
CEP was not otherwise warranted based on the facts on the record. We 
calculated a CEP for sales made by IRM to the U.S. customer from 
unaffiliated processors or distribution warehouses after importation 
into the United States.
    For EP sales, we made additions to the starting price (gross unit 
price), where appropriate, for freight revenue (reimbursement for 
freight charges paid by Ivaco) and for billing errors (debit-note price 
adjustments made by Ivaco), and deductions, where appropriate, for 
billing adjustments (including credit-note price adjustments made by 
Ivaco), early payment discounts and rebates, and movement expenses in 
accordance with section 772(c)(2)(A) of the Act. Movement expenses 
included inland freight, warehousing expenses, brokerage fees, U.S. 
customs duty, and U.S. merchandise processing fees.
    For CEP sales, we made the same adjustments to the starting price 
as for the EP transactions described above. However, in its submitted 
U.S. sales database, Ivaco reported the total freight from IRM to the 
U.S. unaffiliated processor as a movement expense. Therefore, 
consistent with the Section E of the Department's Questionnaire, the 
portion of freight from the border to the U.S. unaffiliated processor 
and freight from one unaffiliated processor to another unaffiliated 
processor was allocated to further manufacturing. In accordance with 
section 772(d)(1) of the Act, for CEP sales, we deducted from the 
starting price those selling expenses that were incurred in selling the 
subject merchandise in the United States, including direct selling 
expenses (e.g., credit expenses), imputed inventory carrying costs, and 
further manufacturing. Finally, in accordance with section 772(d)(3) of 
the Act, we deducted an amount of profit allocated to the expenses 
deducted under sections 772(d)(1) and (2) of the Act. See Memorandum 
from David Neubacher and Daniel O'Brien, International Trade Compliance 
Analysts, to Constance Handley, Program Manager, Re: Analysis 
Memorandum for Ivaco, Inc., dated July 5, 2005 (Ivaco Analysis 
Memorandum).

(B) Ispat

    Ispat had both EP and CEP transactions. We calculated an EP for 
sales where the merchandise was sold directly by Ispat to the first 
unaffiliated purchaser in the United States prior to importation, and 
CEP was not otherwise warranted based on the facts on the record. We 
calculated a CEP for sales made by Ispat to the U.S. customer from 
unaffiliated processors or distribution warehouses after importation 
into the United States. We note that Ispat reported certain further 
processed sales as EP transactions. For the preliminary results, we 
have treated these sales as CEP because the sale (i.e., date of sale/
invoice) occurred after the importation into the United States.
    For EP sales, we made additions to the starting price (gross unit 
price), where appropriate, for billing adjustments, and deductions, 
where appropriate, for billing adjustments, early payment discounts, 
rebates, and movement expenses in accordance with section 772(c)(2)(A) 
of the Act. Movement expenses included inland freight, brokerage fees, 
U.S. customs duty, and U.S. merchandise processing fees.
    For CEP sales, we made the same adjustments to the starting price 
as for the EP transactions described above. However, in its submitted 
U.S. sales database, Ivaco reported the total freight from Ispat to the 
U.S. unaffiliated processor as a movement expense. Therefore, 
consistent with Section E of the Department's Questionnaire, the 
portion of freight from the border to the U.S. unaffiliated processor 
was allocated to further manufacturing. In accordance with section 
772(d)(1) of the Act, for CEP sales, we deducted from the starting 
price those selling expenses that were incurred in selling the subject 
merchandise in the United States, including direct selling expenses 
(e.g., credit expenses), imputed inventory carrying costs, and further 
manufacturing. Finally, in accordance with section 772(d)(3) of the 
Act, we deducted an amount of profit allocated to the expenses deducted 
under sections 772(d)(1) and (2) of the Act. See Memorandum from Daniel 
O'Brien and Ashleigh Batton, International Trade Compliance Analysts, 
to Constance Handley, Program Manager, Re: Analysis Memorandum for 
Ispat Sidbec Inc., dated July 5, 2005 (Ispat Analysis Memorandum).

Normal Value

A. Selection of Comparison Markets

    Section 773(a)(1) of the Act directs that NV be based on the price 
at which the foreign like product is sold in the home market, provided 
that the merchandise is sold in sufficient quantities (or value, if 
quantity is inappropriate) and that there is not a particular market 
situation that prevents a proper comparison with sales to the United 
States. The statute contemplates that quantities (or value) will 
normally be considered insufficient if they are less than five percent 
of the aggregate quantity (or value) of sales of the subject 
merchandise to the United States.
    We found that Ivaco and Ispat had a viable home market for steel 
wire rod. As such, both companies submitted home market sales data for 
purposes of the calculation of NV. In deriving NV, we made adjustments 
as detailed in the Calculation of Normal Value Based on Comparison 
Market Prices section below.

B. Cost of Production Analysis

    Because we disregarded below-cost sales in the most recently 
completed segment of the proceeding for each company, we have 
reasonable grounds to believe or suspect that home market sales of the 
foreign like product by the respondents were made at prices below the 
cost of production (COP) during the POR.\6\ Therefore, pursuant to 
section 773(b)(2)(A)(ii) of the Act, we initiated a COP investigation 
of sales made by Ivaco and Ispat.
---------------------------------------------------------------------------

    \6\ See Notice of Final Determination of Sales at Less Than Fair 
Value: Carbon and Certain Alloy Steel Wire Rod from Canada, 67 FR 
55782 (August 30, 2002). See also, Notice of Final Results of 
Antidumping Duty Administrative Review: Carbon and Certain Alloy 
Steel Wire Rod from Canada, 69 FR 68309 (November 24, 2004).
---------------------------------------------------------------------------

1. Calculation of Cost of Production

    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted-average COP, by model, based on the sum of materials, 
fabrication, and general and administrative (G&A) expenses. We relied 
on Ivaco's and Ispat's submitted COP data except for the following 
adjustments.

(A) Ivaco

    1) In its Section B and C questionnaire responses, Ivaco included 
an additional matching criterion for coating. Ivaco did not request the 
new matching criterion in the previous or current review and has not 
provided supporting evidence

[[Page 41684]]

on its significance. Therefore, for the preliminary results, we 
adjusted Ivaco's submitted control number (CONNUM) for the coating 
field to reflect the coating characteristics as described in Sections B 
and C of the Department's questionnaire. See Ivaco Analysis Memo.

(B) Ispat

    1) In its February 11, 2005, submission, Ispat expressed interest 
in obtaining a split cost-reporting period (October 2003 through 
December 2003 and January 2004 through September 2004) to account for 
the increase in the prices of certain raw materials (i.e., iron ore and 
various alloys used in the production of wire rod) during the POR. 
According to Ispat, the cost of certain inputs rose substantially 
during the POR.
    Our normal practice for a respondent in a country that is not 
experiencing high inflation is to calculate a single weighted-average 
cost for the entire POR except in unusual cases where this preferred 
method would not yield an appropriate comparison in the margin 
calculation. See Notice of Preliminary Results of Antidumping Duty 
Administrative Review and Intent to Revoke Order: Brass Sheet and Strip 
from the Netherlands, 64 FR 48760 (September 8, 1999) citing Final 
Determination of Sales at Less Than Fair Value: Stainless Steel Sheet 
and Strip in Coils from the Republic of Korea; 64 FR 30664, 30676 (June 
8, 1999) (concluding that weighted-average costs for two periods were 
permissible where major declines in currency valuations distorted the 
margin calculations); Final Determination of Sales at Less than Fair 
Value: Static Random Access Memory Semiconductors from Taiwan, 63 FR 
8909, 8925 (February 23, 1998) (calculating quarterly weighted-average 
costs due to a significant and consistent price and cost decline in the 
market); Final Determination of Sales at Less than Fair Value: Dynamic 
Random Access Memory Semiconductors of One Megabit and Above from the 
Republic of Korea; 58 FR 15467, 15476 (March 23, 1993) (determining 
that the Department may use quarterly weighted-average costs where 
there exists a consistent downward trend in both U.S. and home market 
prices during the period); Final Determination of Sales at Less than 
Fair Value: Erasable Programable Read Only Memories from Japan; 51 FR 
39680, 39682 (October 30, 1986) (finding that significant changes in 
the COP during a short period of time due to technological advancements 
and changes in production process justified the use of quarterly 
weighted-average costs).
    We have reviewed the information on the record. Ispat has not 
demonstrated that the raw material price increases were significant 
and/or consistent and would distort the margin calculation. Therefore, 
we followed our normal practice of calculating a single weighted-
average cost for the POR.
    2) We adjusted Ispat's G&A expenses to reflect a full calendar 
year, instead of the 12-month POR, as submitted. As a result, G&A 
expenses for these preliminary results are based on Ispat's 2003 
financial data. We also adjusted Ispat's interest expense ratio, to 
reflect a full calendar year, using the submitted 2004 financial 
statements of Mittal. We used the information of the parent company, 
Mittal, because we did not have sufficient data from Ispat to 
recalculate its interest expense. We intend to request more information 
for a more accurate calculation for the final results.
    3) We have identified certain sales to a specific customer which 
may be mis-categorized as home market sales. For these preliminary 
results, we have left the sales as home market sales, however, pending 
further investigation, we may re-categorize these sales for the final.
    See Ispat Analysis Memorandum.

2. Test of Comparison Market Sales Prices

    We compared the weighted-average COPs for the respondents to their 
home market sales prices of the foreign like product, as required under 
section 773(b) of the Act, to determine whether these sales had been 
made at prices below the COP within an extended period of time (i.e., a 
period of one year) in substantial quantities and whether such prices 
were sufficient to permit the recovery of all costs within a reasonable 
period of time. On a model-specific basis, we compared the COP to the 
home market prices, less any applicable movement charges, discounts, 
rebates, and direct and indirect selling expenses.

3. Results of the COP Test

    We disregard below-cost sales where (1) 20 percent or more of a 
respondent's sales of a given product during the POR were made at 
prices below the COP and were made within an extended period of time in 
substantial quantities in accordance with sections 773(b)(2)(B) and (C) 
of the Act, and (2) based on comparisons of price to weighted-average 
COPs for the POR, we determined that the below-cost sales of the 
product were at prices which would not permit recovery of all costs 
within a reasonable time period, in accordance with section 
773(b)(2)(D) of the Act. We found that both Ivaco and Ispat made sales 
below cost and we disregarded such sales where appropriate.

C. Calculation of Normal Value Based on Comparison-Market Prices

    We determined price-based NVs for the respondent companies as 
follows. For each respondent, we made adjustments for any differences 
in packing and deducted home market movement expenses pursuant to 
sections 773(a)(6)(A) and 773(a)(6)(B)(ii) of the Act. In addition, 
where applicable in comparison to EP transactions, we made adjustments 
for differences in circumstances of sale (COS) pursuant to section 
773(a)(6)(C)(iii) of the Act.
    The company-specific adjustments are described below.

(A) Ivaco

    We determined NV for Ivaco as follows. We made adjustments for any 
differences in packing and deducted home market movement expenses 
pursuant to sections 773(a)(6)(A) and 773(a)(6)(B)(ii) of the Act. In 
addition, we made adjustments for differences in COS pursuant to 
section 773(a)(6)(C)(iii) of the Act.
    We made COS adjustments for Ivaco's EP transactions by deducting 
direct selling expenses incurred for home market sales (credit expenses 
and warranty expenses) and adding U.S. direct selling expenses (credit 
expenses and warranty expenses). For matches of similar merchandise, we 
made adjustments, where appropriate, for physical differences in the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.

(B) Ispat

    We determined NV for Ispat as follows. We made adjustments for any 
differences in packing and deducted home market movement expenses 
pursuant to sections 773(a)(6)(A) and 773(a)(6)(B)(ii) of the Act. In 
addition, we made adjustments for differences in COS pursuant to 
section 773(a)(6)(C)(iii) of the Act.
    We made COS adjustments for Ispat's EP transactions by deducting 
direct selling expenses incurred for home market sales (credit expenses 
and warranty expenses) and adding U.S.

[[Page 41685]]

direct selling expenses (credit expenses and warranty expenses). For 
matches of similar merchandise, we made adjustments, where appropriate, 
for physical differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act.

D. Arm's-Length Sales

    The respondents each reported sales of the foreign like product to 
affiliated customers. To test whether these sales to affiliated 
customers were made at arm's length, where possible, we compared the 
prices of sales to affiliated and unaffiliated customers, net of all 
movement charges, direct selling expenses, and packing. Where the price 
to that affiliated party was, on average, within a range of 98 to 102 
percent of the price of the same or comparable merchandise sold to the 
unaffiliated parties at the same level of trade, we determined that the 
sales made to the affiliated party were at arm's length. See 
Modification Concerning Affiliated Party Sales in the Comparison 
Market, 67 FR 69186 (November 15, 2002). For both Ivaco and Ispat, 
sales to affiliated parties were determined not to be at arm's length. 
Therefore, we disregarded these sales in our comparison to U.S. sales.

E. Calculation of Normal Value Based on Constructed Value

    Section 773(a)(4) of the Act provides that, where NV cannot be 
based on comparison-market sales, NV may be based on constructed value 
(CV). Accordingly, for those models of steel wire rod for which we 
could not determine the NV based on comparison-market sales, either 
because there were no sales of a comparable product or all sales of the 
comparison products failed the COP test, we based NV on CV.
    Section 773(e)(1) of the Act provides that CV shall be based on the 
sum of the cost of materials and fabrication for the imported 
merchandise plus amounts for selling, general, and administrative 
expenses (SG&A), profit, and U.S. packing expenses. We calculated the 
cost of materials and fabrication based on the methodology described in 
the COP section of this notice. We based SG&A and profit on the actual 
amounts incurred and realized by the respondent in connection with the 
production and sale of the foreign like product in the ordinary course 
of trade, for consumption in the comparison market, in accordance with 
section 773(e)(2)(A) of the Act.
    We made adjustments to CV for differences in COS in accordance with 
section 773(a)(8) of the Act and 19 CFR 351.410. For CEP and EP 
comparisons, we deducted direct selling expenses incurred for home 
market sales (credit expenses and warranty expenses). For EP sales we 
added U.S. direct selling expenses (credit expenses and warranty 
expenses) to the NV.

F. Level of Trade/Constructed Export Price Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade as the EP transaction. The NV level of trade is 
that of the starting-price sale in the comparison market. For EP sales, 
the U.S. level of trade is also the level of the starting-price sale, 
which is usually from exporter to importer.
    To determine whether NV sales are at a different level of trade 
than EP transactions, 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 level of trade 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 level of trade of the export transaction, we make a 
level-of-trade adjustment under section 773(a)(7)(A) of the Act.
    We made the following company-specific adjustments:

(A) Ivaco

    Ivaco reported two channels of distribution in the home market. The 
channels of distribution are: (1) direct sales by IRM and (2) direct 
sales by Sivaco Ontario. To determine whether separate levels of trade 
exist in the home market, we examined the stages in the marketing 
process and selling functions along the chains of distribution between 
Ivaco and its customers. Based on this examination, we preliminarily 
determine that Ivaco sold merchandise at two levels of trade in the 
home market during the POR. One level of trade is for sales made by 
Ivaco's steel wire rod manufacturing facility, IRM; the second level of 
trade is for sales made by Sivaco Ontario, Ivaco's customer service 
center, which is a steel wire rod processing and drawing facility. From 
our analysis of the marketing process for these sales, we determined 
that sales by Sivaco Ontario are at a more advanced stage than that for 
sales by IRM. Sales by Sivaco Ontario have different, more complex, 
distribution patterns, involving substantially greater selling 
activities.
    The Department also analyzed Ivaco's selling functions in the home 
market, including inventory maintenance services, delivery services, 
handling services, freight services, sales administration services, bid 
assistance, technical services, and extension of credit. With regard to 
inventory maintenance, Sivaco Ontario offers more extensive inventory 
services than IRM. Sivaco Ontario maintains a significant general 
inventory, which results in a significantly longer inventory turnover 
rate for Sivaco Ontario. Thereby, Sivaco Ontario assumes the inventory 
services that would normally be performed by the customer. IRM does not 
provide these additional services. As stated by the Department in Pipe 
and Tube from Turkey, ``inventory maintenance is a principal selling 
function'' and ``the additional responsibilities of maintaining 
merchandise in inventory also give rise to related selling functions 
that are performed.''\7\
---------------------------------------------------------------------------

    \7\ See Notice of Final Results and Partial Rescission of 
Antidumping Duty Administrative Review: Certain Welded Carbon Steel 
Pipe and Tube From Turkey, 63 FR 35190, 35193 (June 29, 1998) (Pipe 
and Tube from Turkey).
---------------------------------------------------------------------------

    Due to its inventory services, Sivaco Ontario ships more often than 
IRM and also offers its customers just-in-time (JIT) delivery services, 
while IRM produces and ships rod based on a quarterly rolling schedule. 
In addition, Sivaco Ontario provides more handling and freight services 
than IRM in that it offers smaller, more frequent shipments with more 
varied freight services. For example, IRM sells rod in either full 
truck load or rail car quantities, while Sivaco Ontario will arrange 
shipment for less than truck-load quantities. IRM is able to produce 
significant quantities of wire rod on a rolling basis that are demanded 
by large volume companies, which is reflected in its delivery and 
freight services as well as the limited customer services provided. 
Sivaco Ontario, however, offers customers wire rod and wire products 
based on inventory already in stock, which enables the company to offer 
a short lead time in providing different quantities and a variety of 
processed wire rod products to its customers.
    With regard to sales administration services, Sivaco Ontario has a 
smaller average shipment size than IRM, resulting in a higher 
proportional sales administrative service cost than IRM. In addition to 
its short-lead-time delivery capabilities, Sivaco Ontario also offers 
variable customer service options. These additional factors allow 
Sivaco Ontario to establish customer relations with companies that 
require smaller volumes

[[Page 41686]]

of merchandise, inventory flexibility and have limited end use or 
processing schedules for the purchased product. Furthermore, Sivaco 
Ontario offers the following services to its customers, which IRM does 
not; (1) bid assistance to customers, (2) assistance with product 
specification and material processing review, and (3) a wider range of 
technical assistance, including helping customers solve usage problems 
and choose the best type of rod for their applications and 
machinery.\8\
---------------------------------------------------------------------------

    \8\ See Submission from Ivaco to the Department, Re: Section A 
Response (January 11, 2005) at pages A-39 - A-40.
---------------------------------------------------------------------------

    The above differences between IRM and Sivaco Ontario in their 
marketing process and selling functions allow Ivaco to develop customer 
relationships on two distinct levels. Based on these differences, we 
concluded that two levels of trade exist in the home market, an IRM 
level of trade (level one) and a Sivaco Ontario level of trade (level 
two). Although IRM and Sivaco Ontario may have certain customers in 
common, the Department does not find the number of common customers to 
be significant or any reason to believe that these companies decided 
from which company to order based on the different services provided.
    In the U.S. market, Ivaco reported two EP channels of distribution. 
The channels of distribution are: (1) direct sales by IRM to U.S. 
customers and (2) direct sales by Sivaco Ontario to U.S. customers. To 
determine whether separate levels of trade exist for EP sales to the 
U.S. market, we examined the selling functions, the chain of 
distribution, and the customer categories reported in the United 
States.
    Specifically, we have found that direct sales by IRM to U.S. 
customers involve all the same selling functions as IRM's sales in the 
home market. Further, direct sales by Sivaco Ontario in the United 
States include all the same selling functions as those found for its 
home market sales. Finally, the customer categories submitted by Ivaco 
for IRM and Sivaco Ontario in the U.S. market match the similar 
customer categories reported for the home market.
    Based on this, we preliminarily determine that sales by Ivaco's 
steel wire rod manufacturing facility, IRM, in the United States, are 
made at level of trade one, the same as IRM's home market sales. EP 
sales by Sivaco Ontario are made at the second level of trade.
    To the extent possible, we have compared U.S. EP transactions and 
home market sales at the same level of trade without making a level-of-
trade adjustment. When we were unable to find sales of the foreign like 
product in the home market at the same level of trade as the U.S. sale, 
we examined whether a level-of-trade adjustment was appropriate. When 
we compare U.S. sales to home market sales at a different level of 
trade, we make a level-of-trade adjustment if the difference in levels 
of trade affects price comparability. See section 773(a)(7)(A) of the 
Act. We determine any effect on price comparability by examining sales 
at different levels of trade in the country in which normal value is 
determined, in this case the home market. See Id. Any price effect must 
be manifested in a pattern of consistent price differences between home 
market sales used for comparison and sales at the equivalent level of 
trade of the export transaction. To quantify the price differences, we 
calculate the difference in the average of the net prices of the same 
models sold at different levels of trade. Net prices are used because 
any difference will be due to differences in level of trade rather than 
other factors. We use the average difference in net prices to adjust NV 
when NV is based on a level of trade different from that of the export 
sale. If there is no pattern of consistent price differences, the 
difference in levels of trade does not have a price effect and, 
therefore, no adjustment is necessary.
    For EP sales, we found that there were consistent price differences 
between models sold at different levels of trade. Therefore, we made a 
level-of-trade adjustment for EP sales for which we were not able to 
find sales of the foreign like product in the home market at the same 
level of trade as the U.S. sale.
    In addition, Ivaco has two CEP channels of distribution: (1) sales 
of goods manufactured by IRM through an unaffiliated U.S. processor 
and/or warehoused in inventory locations in the United States and (2) 
sales of goods manufactured by IRM through locations in the United 
States. For CEP sales, we examined the relevant functions after 
deducting the costs of further manufacturing and U.S. selling expenses 
and associated profit. As a result, there are virtually no selling 
activities associated with Ivaco's CEP sales in either channel of 
distribution. Therefore, we preliminarily find a single level of trade 
with respect to Ivaco's CEP sales, and, moreover, that the CEP level of 
trade is not comparable to either level of trade in the home market. As 
the available data does not provide an appropriate basis for making a 
level of trade adjustment, we matched where possible, to the closest 
home market level of trade, level one, and granted a CEP offset 
pursuant to 773(a)(7)(B) of the Act. This offset is equal to the amount 
of indirect expenses incurred in the home market not exceeding the 
amount of the deductions made from the U.S. price in accordance with 
section 772(d)(1)(D) of the Act.

(B) Ispat

    Ispat's EP sales to the United States and sales in Canada were made 
through two channels of distribution to two types of customers, re-
drawers and parts manufacturers. For all these sales, the selling 
functions that Ispat performed for its different customers and channels 
of distribution were very similar for both types of customers in each 
market. In the home and U.S. markets, Ispat provides sales support, 
technical advice, after-sales services, warranty services, and freight 
and delivery arrangements. During the POR, Ispat provided warehousing 
services in the home market and customs brokerage arrangements for the 
U.S. market. As there is no distinction in selling functions or 
services to customers based on channel or type of customer, we find a 
single level of trade in the home market that is the same as the EP 
level of trade. Therefore, we have made no level-of-trade adjustment.
    With regard to the U.S. sales of further manufactured products, 
which were all CEP sales, we considered only the selling activities 
reflected in the price after the deduction of expenses and profit 
covered in section 772(d) of the Act. Ispat does not perform any 
selling functions for these products. All selling functions for the 
U.S. market are performed by its U.S. affiliate, Ispat North America. 
As a result, there are virtually no selling activities associated with 
Ispat's CEP sales. Therefore, we preliminarily find that there is a 
single CEP level of trade, and that CEP level of trade is not 
comparable to the level of trade in the home market. As the available 
data does not provide an appropriate basis for making an LOT 
adjustment, we have made a CEP offset to Ispat's normal value in 
accordance with 773(a)(7)(B) of the Act. This offset is equal to the 
amount of indirect expenses incurred in the home market not exceeding 
the amount of the deductions made from the U.S. price in accordance 
with 772(d)(1)(D) of the Act.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A of the Act, based on exchange rates in effect on the date 
of the U.S. sale, as certified by the Federal Reserve Bank.

[[Page 41687]]

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following weighted-average margins exist for the period October 1, 
2003, through September 30, 2004:

------------------------------------------------------------------------
                                                      Weighted-Average
                     Producer                        Margin (Percentage)
------------------------------------------------------------------------
Ivaco.............................................                  2.96
Ispat/Mittal......................................                  6.27
------------------------------------------------------------------------

    In accordance with 19 CFR 351.224(b), the Department will disclose 
calculations performed within 5 days of publication of this notice. An 
interested party may request a hearing within 30 days of publication of 
these preliminary results. See 19 CFR 351.310(c). Any hearing, if 
requested, will be held 44 days after the date of publication, or the 
first working day thereafter. Interested parties may submit case briefs 
and/or written comments no later than 30 days after the date of 
publication of these preliminary results. Rebuttal briefs and rebuttals 
to written comments, limited to issues raised in such briefs or 
comments, may be filed no later than 37 days after the date of 
publication. Parties who submit arguments are requested to submit with 
the argument (1) a statement of the issue, (2) a brief summary of the 
argument, and (3) a table of authorities. Further, the parties 
submitting written comments should provide the Department with an 
additional copy of the public version of any such comments on diskette. 
The Department will issue the final results of this administrative 
review, which will include the results of its analysis of issues raised 
in any such comments, within 120 days of publication of these 
preliminary results.

Assessment

    Upon completion of this administrative review, pursuant to 19 CFR 
351.212(b), the Department will calculate an assessment rate on all 
appropriate entries. We will calculate importer-specific duty 
assessment rates on the basis of the ratio of the total amount of 
antidumping duties calculated for the examined sales to the total 
volume of the examined sales for that importer. Where the assessment 
rate is above de minimis, we will instruct CBP to assess duties on all 
entries of subject merchandise by that importer.

Cash Deposit Requirements

    The following deposit rates will be effective upon publication of 
the final results of this administrative review for all shipments of 
steel wire rod from Canada entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided by section 
751(a)(1) of the Act: (1) the cash deposit rates for Ivaco and Ispat 
will be the rates established in the final results of this review, 
except if a rate is less than 0.5 percent, and therefore de minimis, 
the cash deposit will be zero; (2) for previously reviewed or 
investigated companies 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, a 
prior 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 8.11 percent, the ``All Others'' rate established in the 
LTFV investigation. These cash deposit 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) to file a certificate regarding 
the reimbursement of antidumping duties prior to liquidation of the 
relevant entities 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 determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: July 5, 2005.
Barbara E. Tillman,
Acting Assistant Secretary for Import Administration.
[FR Doc. E5-3869 Filed 7-19-05; 8:45 am]
BILLING CODE: 3510-DS-S