Stainless Steel Sheet and Strip in Coils from the Republic of Korea; Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review, 18074-18081 [E6-5202]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 71, Number 68 (Monday, April 10, 2006)]
[Notices]
[Pages 18074-18081]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-5202]


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DEPARTMENT OF COMMERCE

International Trade Administration

(A-580-834)


Stainless Steel Sheet and Strip in Coils from the Republic of 
Korea; Preliminary Results and Partial Rescission of Antidumping Duty 
Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to a request by Allegheny Ludlum Corporation, AK 
Steel Corporation, North American Stainless, United Auto Workers Local 
3303, Zanesville Armco Independent Organization, Inc., and the United 
Steelworkers (collectively ``the petitioners''), the Department of 
Commerce (the Department) is conducting an administrative review of the 
antidumping duty order on stainless steel sheet and strip in coils 
(SSSSC) from the Republic of Korea (Korea). This review covers five 
producers/exporters of the subject merchandise to the United States. 
This is the sixth period of review (POR), covering July 1, 2004, 
through June 30, 2005.
    We have preliminarily determined that the sole company 
participating in this review, DaiYang Metal Co., Ltd. (DMC), has made 
sales below normal value (NV). In addition, we preliminarily determine 
that adverse facts available (AFA) should be applied to the remaining 
four companies (Boorim Corporation (Boorim), Dae Kyung Corporation (Dae 
Kyung), Dine Trading Co., Ltd. (Dine), and Dosko Co., Ltd. (Dosko)) for 
the POR because they declined to participate in this administrative 
review. If these preliminary results are adopted in the final results 
of this review, we will instruct U.S. Customs and Border Protection 
(CBP) to assess antidumping duties on all appropriate entries.
    In addition, we have preliminarily determined to rescind the review 
with respect to the following companies because these companies had no 
shipments of subject merchandise during the POR: BNG Steel Co. (BNG), 
Hyundai Corporation (Hyundai), NIC International Co., Ltd. (NIC), 
Pohang Iron and Steel Co., Ltd. (POSCO), Samkyung Corporation 
(Samkyung), Sammi Corporation (Sammi), Samwon Precision Metals Co., 
Ltd. (Samwon), and Sun Woo Tech Company (Sun Woo).
    We invite interested parties to comment on these preliminary 
results. Parties who wish to submit comments in this proceeding are 
requested to submit with each argument: (1) a statement of the issue; 
and (2) a brief summary of the argument.

EFFECTIVE DATE: April 10, 2006.

FOR FURTHER INFORMATION CONTACT: Irina Itkin or Brianne Riker, AD/CVD 
Operations, Office 2, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC, 20230; telephone (202) 482-
0656 or (202) 482-0629, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 1, 2005, the Department published in the Federal Register a 
notice of ``Opportunity To Request Administrative Review'' of the 
antidumping duty order on SSSSC from Korea (70 FR 38099).
    In accordance with 19 CFR 351.213(b)(1), on July 29, 2005, the 
Department received a request from the petitioners to conduct an 
administrative review for the following 13 producers/exporters of 
SSSSC: BNG, Boorim, Dae Kyung, Dine, DMC, Dosko, Hyundai, NIC, POSCO, 
Samkyung, Sammi, Samwon, and Sun Woo.
    In August 2005, the Department initiated an administrative review 
and issued questionnaires to each of these companies. See Initiation of 
Antidumping and Countervailing Duty Administrative Reviews and Requests 
for Revocation in Part, 70 FR 51009 (Aug. 29, 2005).
    In August, September, and October 2005, the following companies 
informed the Department that they had no shipments or entries of 
subject merchandise during the POR: BNG, Hyundai, NIC, POSCO, 
Samkyoung, Sammi, Samwon, and Sun Woo. We reviewed CBP data and 
confirmed that there were no entries of subject merchandise from any of 
these companies. See ``Partial Rescission of Review,'' below, for 
further discussion. Consequently, in accordance with 19 CFR 
351.213(d)(3) and consistent with our practice, we are preliminarily 
rescinding our review for BNG, Hyundai, NIC, POSCO, Samkyoung, Sammi, 
Samwon, and Sun Woo. However, we note that Boorim, Dae Kyung, Dine, and 
Dokso did not respond to the Department's questionnaire. For further 
discussion, see the ``Application of Facts Available'' section, below.
    In October 2005, we received a response to sections A through C of 
the questionnaire (i.e., the sections regarding sales to the home 
market and the United States) and section D of the questionnaire (i.e., 
the section regarding cost of production (COP) and constructed value 
(CV)) from DMC.
    In December 2005 and January 2006, we issued supplemental 
questionnaires to DMC. We received responses to these questionnaires in 
February 2006. In March 2006, we issued an additional supplemental 
questionnaire to DMC; we received DMC's response to this questionnaire 
on March 15, 2006.

Scope of the Order

    The products covered are certain stainless steel sheet and strip in 
coils. Stainless steel is an alloy steel containing, by weight, 1.2 
percent or less of carbon and 10.5 percent or more of chromium, with or 
without other elements. The subject sheet and strip is a flat-rolled 
product in coils that is greater than 9.5 millimeters in width and less 
than 4.75 millimeters in thickness, and that is annealed or otherwise 
heat treated and pickled or otherwise descaled. The subject sheet and 
strip may also be further processed (e.g., cold-rolled, polished, 
aluminized, coated, etc.) provided that it maintains the specific 
dimensions of sheet and strip following such processing.
    The merchandise subject to this order is classified in the 
Harmonized Tariff Schedule of the United States (HTSUS) at subheadings: 
7219.13.0031, 7219.13.0051, 7219.13.0071,

[[Page 18075]]

7219.1300.81,\1\ 7219.14.0030, 7219.14.0065, 7219.14.0090, 
7219.32.0005, 7219.32.0020, 7219.32.0025, 7219.32.0035, 7219.32.0036, 
7219.32.0038, 7219.32.0042, 7219.32.0044, 7219.33.0005, 7219.33.0020, 
7219.33.0025, 7219.33.0035, 7219.33.0036, 7219.33.0038, 7219.33.0042, 
7219.33.0044, 7219.34.0005, 7219.34.0020, 7219.34.0025, 7219.34.0030, 
7219.34.0035, 7219.35.0005, 7219.35.0015, 7219.35.0030, 7219.35.0035, 
7219.90.0010, 7219.90.0020, 7219.90.0025, 7219.90.0060, 7219.90.0080, 
7220.12.1000, 7220.12.5000, 7220.20.1010, 7220.20.1015, 7220.20.1060, 
7220.20.1080, 7220.20.6005, 7220.20.6010, 7220.20.6015, 7220.20.6060, 
7220.20.6080, 7220.20.7005, 7220.20.7010, 7220.20.7015, 7220.20.7060, 
7220.20.7080, 7220.20.8000, 7220.20.9030, 7220.20.9060, 7220.90.0010, 
7220.90.0015, 7220.90.0060, and 7220.90.0080. Although the HTSUS 
subheadings are provided for convenience and customs purposes, the 
Department's written description of the merchandise under review is 
dispositive.
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    \1\ Due to changes to the HTSUS numbers in 2001, 7219.13.0030, 
7219.13.0050, 7219.13.0070, and 7219.13.0080 are now 7219.13.0031, 
7219.13.0051, 7219.13.0071, and 7219.13.0081, respectively.
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    Excluded from the scope of this order are the following: 1) sheet 
and strip that is not annealed or otherwise heat treated and pickled or 
otherwise descaled; 2) sheet and strip that is cut to length; 3) plate 
(i.e., flat-rolled stainless steel products of a thickness of 4.75 
millimeters or more); 4) flat wire (i.e., cold-rolled sections, with a 
prepared edge, rectangular in shape, of a width of not more than 9.5 
millimeters); and 5) razor blade steel. Razor blade steel is a flat-
rolled product of stainless steel, not further worked than cold-rolled 
(cold- reduced), in coils, of a width of not more than 23 millimeters 
and a thickness of 0.266 millimeters or less, containing, by weight, 
12.5 to 14.5 percent chromium, and certified at the time of entry to be 
used in the manufacture of razor blades. See Chapter 72 of the HTSUS, 
``Additional U.S. Note'' 1(d).
    In response to comments by interested parties, the Department has 
determined that certain specialty stainless steel products are also 
excluded from the scope of this order. These excluded products are 
described below.
    Flapper valve steel is also excluded from the scope. Flapper valve 
steel is defined as stainless steel strip in coils containing, by 
weight, between 0.37 and 0.43 percent carbon, between 1.15 and 1.35 
percent molybdenum, and between 0.20 and 0.80 percent manganese. This 
steel also contains, by weight, phosphorus of 0.025 percent or less, 
silicon of between 0.20 and 0.50 percent, and sulfur of 0.020 percent 
or less. The product is manufactured by means of vacuum arc remelting, 
with inclusion controls for sulphide of no more than 0.04 percent and 
for oxide of no more than 0.05 percent. Flapper valve steel has a 
tensile strength of between 210 and 300 ksi, yield strength of between 
170 and 270 ksi, 8 ksi, and a hardness (Hv) of between 460 and 590. 
Flapper valve steel is most commonly used to produce specialty flapper 
valves in compressors.
    Also excluded is a product referred to as suspension foil, a 
specialty steel product that is used in the manufacture of suspension 
assemblies for computer disk drives. Suspension foil is described as 
302/304 grade or 202 grade stainless steel of a thickness between 14 
and 127 microns, with a thickness tolerance of 2.01 microns, and 
surface glossiness of 200 to 700 percent Gs. Suspension foil must be 
supplied in coil widths of not more than 407 millimeters, and with a 
mass of 225 kilograms or less. Roll marks may only be visible on one 
side, with no scratches of measurable depth. The material must exhibit 
residual stresses of two millimeter depth. The material must exhibit 
residual stresses of two millimeters maximum deflection, and flatness 
of 1.6 millimeters over 685 millimeters length.
    Certain stainless steel foil for automotive catalytic converters is 
also excluded from the scope of this order. This stainless steel strip 
in coils is a specialty foil with a thickness of between 20 and 110 
microns used to produce a metallic substrate with a honeycomb structure 
for use in automotive catalytic converters. The steel contains, by 
weight, carbon of no more than 0.030 percent, silicon of no more than 
one percent, manganese of no more than one percent, chromium of between 
19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of 
no more than 0.045 percent, sulfur of no more than 0.03 percent, 
lanthanum of less than 0.002 or greater than 0.05 percent, and total 
rare earth elements of more than 0.06 percent, with the balance iron.
    Permanent magnet iron-chromium-cobalt alloy stainless strip is also 
excluded from the scope of this order. This ductile stainless steel 
strip contains, by weight, 26 to 30 percent chromium, and seven to 10 
percent cobalt, with the remainder of iron, in widths 228.6 millimeters 
or less, and a thickness between 0.127 and 1.270 millimeters. It 
exhibits magnetic remanence between 9,000 and 12,000 gauss, and a 
coercivity of between 50 and 300 oersteds. This product is most 
commonly used in electronic sensors and is currently available under 
proprietary trade names such as ``Arnokrome III.''\2\
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    \2\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company.
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    Certain electrical resistance alloy steel is also excluded from the 
scope of this order. This product is defined as a non-magnetic 
stainless steel manufactured to American Society of Testing and 
Materials specification B344 and containing, by weight, 36 percent 
nickel, 18 percent chromium, and 46 percent iron, and is most notable 
for its resistance to high temperature corrosion. It has a melting 
point of 1,390 degrees Celsius and displays a creep rupture limit of 
four kilograms per square millimeter at 1,000 degrees Celsius. This 
steel is most commonly used in the production of heating ribbons for 
circuit breakers and industrial furnaces, and in rheostats for railway 
locomotives. The product is currently available under proprietary trade 
names such as ``Gilphy 36.''\3\
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    \3\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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    Certain martensitic precipitation-hardenable stainless steel is 
also excluded from the scope of this order. This high-strength, ductile 
stainless steel product is designated under the Unified Numbering 
System as S45500-grade steel, and contains, by weight, 11 to 13 percent 
chromium, and seven to 10 percent nickel. Carbon, manganese, silicon 
and molybdenum each comprise, by weight, 0.05 percent or less, with 
phosphorus and sulfur each comprising, by weight, 0.03 percent or less. 
This steel has copper, niobium, and titanium added to achieve aging, 
and will exhibit yield strengths as high as 1,700 Mpa and ultimate 
tensile strengths as high as 1,750 Mpa after aging, with elongation 
percentages of 3 percent or less in 50 millimeters. It is generally 
provided in thicknesses between 0.635 and 0.787 millimeters, and in 
widths of 25.4 millimeters. This product is most commonly used in the 
manufacture of television tubes and is currently available under 
proprietary trade names such as ``Durphynox 17.''\4\
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    \4\ ``Durphynox 17'' is a trademark of Imphy, S.A.
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    Finally, three specialty stainless steels typically used in certain 
industrial blades and surgical and medical

[[Page 18076]]

instruments are also excluded from the scope of this order. These 
include stainless steel strip in coils used in the production of 
textile cutting tools (e.g., carpet knives).\5\ This steel is similar 
to AISI grade 420 but containing, by weight, 0.5 to 0.7 percent of 
molybdenum. The steel also contains, by weight, carbon of between 1.0 
and 1.1 percent, sulfur of 0.020 percent or less, and includes between 
0.20 and 0.30 percent copper and between 0.20 and 0.50 percent cobalt. 
This steel is sold under proprietary names such as ``GIN4 Mo.'' The 
second excluded stainless steel strip in coils is similar to AISI 420-
J2 and contains, by weight, carbon of between 0.62 and 0.70 percent, 
silicon of between 0.20 and 0.50 percent, manganese of between 0.45 and 
0.80 percent, phosphorus of no more than 0.025 percent, and sulfur of 
no more than 0.020 percent. This steel has a carbide density on average 
of 100 carbide particles per 100 square microns. An example of this 
product is ``GIN5'' steel. The third specialty steel has a chemical 
composition similar to AISI 420 F, with carbon of between 0.37 and 0.43 
percent, molybdenum of between 1.15 and 1.35 percent, but lower 
manganese of between 0.20 and 0.80 percent, phosphorus of no more than 
0.025 percent, silicon of between 0.20 and 0.50 percent, and sulfur of 
no more than 0.020 percent. This product is supplied with a hardness of 
more than Hv 500 guaranteed after customer processing, and is supplied 
as, for example, ``GIN6.''\6\
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    \5\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \6\ ``GIN4 Mo,'' ``GIN5,'' and ``GIN6'' are the proprietary 
grades of Hitachi Metals America, Ltd.
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Period of Review

    The POR is July 1, 2004, through June 30, 2005.

Partial Rescission of Review

    As noted above, BNG, Hyundai, NIC, POSCO, Samkyoung, Sammi, Samwon, 
and Sun Woo informed the Department that they had no shipments of 
subject merchandise to the United States during the POR. We have 
confirmed this with CBP. See the November 9, 2005, memorandum to the 
file from Brianne Riker, entitled ``Placing U.S. Customs and Border 
Protection Data on the Record of the 2004 - 2005 Antidumping Duty 
Administrative Review of Stainless Steel Sheet and Strip in Coils from 
the Republic of Korea.'' Therefore, in accordance with 19 CFR 
351.213(d)(3) and consistent with the Department's practice, we are 
preliminarily rescinding our review with respect to these companies. 
See, e.g., Certain Steel Concrete Reinforcing Bars From Turkey; Final 
Results, Rescission of Antidumping Duty Administrative Review in Part, 
and Determination To Revoke in Part, 70 FR 67665, 67666 (Nov. 8, 2005); 
Certain Steel Concrete Reinforcing Bars From Turkey; Final Results, 
Rescission of Antidumping Duty Administrative Review in Part, and 
Determination Not To Revoke in Part, 69 FR 64731, 64732 (Nov. 8, 2004); 
and Certain Steel Concrete Reinforcing Bars From Turkey; Final Results, 
Rescission of Antidumping Duty Administrative Review in Part, and 
Determination Not To Revoke in Part, 68 FR 53127, 53128 (Sept. 9, 
2003).

Application of Facts Available

    Section 776(a) of the Tariff Act of 1930, as amended (the Act), 
provides that the Department will apply ``facts otherwise available'' 
if, inter alia, necessary information is not available on the record or 
an interested party: 1) Withholds information that has been requested 
by the Department; 2) fails to provide such information within the 
deadlines established, or in the form or manner requested by the 
Department, subject to subsections (c)(1) and (e) of section 782 of the 
Act; 3) significantly impedes a proceeding; or 4) provides such 
information, but the information cannot be verified.
    As discussed in the ``Background'' section, above, on August 19, 
2005, the Department requested that Boorim, Dae Kyung, Dine, and Dosko 
respond to the Department's antidumping duty questionnaire. The 
deadline to file a response was September 27, 2005. The Department did 
not receive a response from Boorim, Dae Kyung, Dine, or Dosko. On 
November 4, 2005, the Department placed a memorandum on the record with 
information regarding delivery confirmation of the questionnaires to 
each company. See the November 4, 2005, memorandum to the file from 
Brianne Riker entitled, ``Placing Information on the Record of the 
2004-2005 Antidumping Duty Administrative Review of Stainless Steel 
Sheet and Strip in Coils from Korea.'' Thus, pursuant to sections 
776(a)(2)(A) and (C) of the Act, because these companies did not 
respond to the Department's questionnaire, the Department preliminarily 
finds that the use of total facts available is appropriate.

Adverse Facts Available

    According to section 776(b) of the Act, if the Department finds 
that an interested party fails to cooperate by not acting to the best 
of its ability to comply with requests for information, the Department 
may use an inference that is adverse to the interests of that party in 
selecting from the facts otherwise available. See, e.g., Notice of 
Final Results of Antidumping Duty Administrative Review: Stainless 
Steel Bar from India, 70 FR 54023, 54025-26 (Sept. 13, 2005); see also 
Notice of Final Determination of Sales at Less Than Fair Value and 
Final Negative Critical Circumstances: Carbon and Certain Alloy Steel 
Wire Rod from Brazil, 67 FR 55792, 55794-96 (Aug. 30, 2002). Adverse 
inferences are appropriate ``to ensure that the party does not obtain a 
more favorable result by failing to cooperate than if it had cooperated 
fully.'' See Statement of Administrative Action accompanying the 
Uruguay Round Agreements Act, H.R. Rep. No. 103-316, Vol. 1, at 870 
(1994) (SAA). Furthermore, ``affirmative evidence of bad faith on the 
part of a respondent is not required before the Department may make an 
adverse inference.'' See Antidumping Duties; Countervailing Duties; 
Final Rule, 62 FR 27296, 27340 (May 19, 1997), and Nippon Steel Corp. 
v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003) (Nippon). We 
preliminarily find that Boorim, Dae Kyung, Dine, and Dosko did not act 
to the best of their abilities in this proceeding, within the meaning 
of section 776(b) of the Act, because they failed to respond to the 
Department's questionnaire. Therefore, an adverse inference is 
warranted in selecting facts otherwise available. See Nippon, 337 F.3d 
at 1382-83.
    Section 776(b) of the Act provides that the Department may use as 
AFA, information derived from: 1) The petition; 2) the final 
determination in the investigation; 3) any previous review; or 4) any 
other information placed on the record.
    The Department's practice, when selecting an AFA rate from among 
the possible sources of information, has been to ensure that the margin 
is sufficiently adverse ``as to effectuate the statutory purposes of 
the adverse facts available rule to induce respondents to provide the 
Department with complete and accurate information in a timely manner.'' 
See, e.g., Notice of Final Determination of Sales at Less Than Fair 
Value: Static Random Access Memory Semiconductors from Taiwan, 63 FR 
8909, 8932 (Feb. 23, 1998). Additionally, the Department's practice has 
been to assign the highest margin determined for any party in the less-
than-fair-value (LTFV) investigation or in any administrative review of 
a specific order to respondents who have failed to cooperate with the 
Department.

[[Page 18077]]

See, e.g., Heavy Forged Hand Tools, Finished or Unfinished, With or 
Without Handles, from the People's Republic of China: Final Results of 
Antidumping Duty Administrative Reviews and Final Rescission and 
Partial Rescission of Antidumping Duty Administrative Reviews, 70 FR 
54897, 54898 (Sept. 19, 2005).
    In order to ensure that the margin is sufficiently adverse so as to 
induce cooperation, we have preliminarily assigned a rate of 58.79 
percent, which was the rate alleged in the petition, as adjusted at the 
initiation of the LTFV investigation. This rate was assigned in a 
previous segment of this proceeding and is the highest rate determined 
for any respondent in any segment of this proceeding. See Notice of 
Amendment of Final Determinations of Sales at Less Than Fair Value: 
Stainless Steel Plate in Coils from the Republic of Korea; and 
Stainless Steel Sheet and Strip in Coils from the Republic of Korea, 66 
FR 45279 (Aug. 28, 2001) (Amended LTFV Final Determination). The 
Department finds that this rate is sufficiently high as to effectuate 
the purpose of the facts available rule (i.e., we find that this rate 
is high enough to encourage participation in future segments of this 
proceeding in accordance with section 776(b) of the Act).
    Information from prior segments of the proceeding constitutes 
secondary information and section 776(c) of the Act provides that the 
Department shall, to the extent practicable, corroborate that secondary 
information from independent sources reasonably at its disposal. The 
Department's regulations provide that ``corroborate'' means that the 
Department will satisfy itself that the secondary information to be 
used has probative value. See 19 CFR 351.308(d) and SAA at 870. To the 
extent practicable, the Department will examine the reliability and 
relevance of the information to be used. Unlike other types of 
information, such as input costs or selling expenses, there are no 
independent sources from which the Department can derive dumping 
margins. The only source for dumping margins is administrative 
determinations. In the LTFV investigation in this proceeding, the 
Department found that the petition rate was reliable. See Notice of 
Preliminary Determination of Sales at Less Than Fair Value: Stainless 
Steel Sheet and Strip in Coils from South Korea, 64 FR 137, 146 (Jan. 
4, 1999), upheld in the Amended LTFV Final Determination.
    With respect to the relevance aspect of corroboration, however, the 
Department will consider information reasonably at its disposal as to 
whether there are circumstances that would render a margin 
inappropriate. Where circumstances indicate that the selected margin is 
not appropriate as AFA, the Department may disregard the margin and 
determine an appropriate margin. See, e.g., Fresh Cut Flowers from 
Mexico; Final Results of Antidumping Duty Administrative Review, 61 FR 
6812, 6814 (Feb. 22, 1996) (where the Department disregarded the 
highest margin as AFA because the margin was based on another company's 
uncharacteristic business expense resulting in an unusually high 
margin). Therefore, we examined whether any information on the record 
would discredit the selected rate as reasonable facts available. To do 
so, we conducted research in an attempt to find data that might help 
inform the Department's corroboration analysis. We did not find any 
information that would discredit the selected AFA rate. See the April 
3, 2006, memorandum to the file from Brianne Riker entitled,
    ``Research for Corroboration for the Preliminary Results in the 
2004 - 2005 Antidumping Duty Administrative Review of Stainless Steel 
Sheet and Strip in Coils from the Republic of Korea.'' We did observe, 
however, that the AFA margin selected fell within the range of 
transaction-specific margins calculated for DMC. Since we did not find 
evidence indicating that the margin used as facts available in this 
proceeding is not appropriate, we have determined that the 58.79 
percent margin calculated in the LTFV investigation is appropriate as 
AFA and are assigning this rate to Boorim, Dae Kyung, Dine, and Dosko. 
This is consistent with section 776(b) of the Act which states that 
adverse inferences may include reliance on information derived from the 
petition.

Comparisons to Normal Value

    To determine whether DMC's sales of subject merchandise from Korea 
to the United States were made at less than NV, we compared the 
constructed export price (CEP) to the NV, as described in the 
``Constructed Export Price'' and ``Normal Value'' sections of this 
notice, below. In accordance with section 777A(d)(1)(A)(i) of the Act, 
we calculated monthly weighted-average prices for NV and compared these 
to individual CEP transactions.

Product Comparisons

    In accordance with section 771(16) of the Act, we first attempted 
to compare products produced by the same company and sold in the U.S. 
and home markets that were identical with respect to the following 
characteristics: grade, hot- or cold-rolled, gauge, surface finish, 
metallic coating, non-metallic coating, width, temper, and edge. Where 
there were no home market sales of foreign like product that were 
identical in these respects to the merchandise sold in the United 
States, we compared U.S. products with the most similar merchandise 
sold in the home market based on the characteristics listed above, in 
that order of priority.

Constructed Export Price

    In accordance with section 772(b) of the Act, CEP is the price at 
which 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. DMC reported that it made all sales of 
subject merchandise to the United States through its wholly owned 
subsidiary in the United States, Ocean Metal Corporation (OMC). 
Consequently, it classified all of its U.S. sales as CEP sales. We 
based our calculations on CEP, in accordance with sections 772(b)-(d) 
of the Act.
    We calculated CEP based on packed prices to unaffiliated purchasers 
in the United States. We made deductions for movement expenses in 
accordance with section 772(c)(2)(A) of the Act; these included, where 
appropriate, foreign inland freight from the plant to the port of 
export, foreign brokerage and handling, international freight, marine 
insurance, U.S. inland freight from the port to the warehouse, U.S. 
inland freight from the warehouse to the unaffiliated customer, and 
U.S. brokerage and handling. In accordance with section 772(d)(1) of 
the Act, we deducted those selling expenses associated with economic 
activities occurring in the United States, including direct selling 
expenses (i.e., imputed credit, commissions, banking expenses, and 
domestic banking fees) and indirect selling expenses, including 
inventory carrying costs and other indirect selling expenses. In 
addition, we increased CEP by an amount equal to the countervailing 
duty (CVD) rate attributed to export subsidies in the most recently 
completed segment of the CVD proceeding in which DMC participated 
(i.e., the investigation), in accordance with section 772(c)(1)(C) of 
the Act.
    Pursuant to section 772(d)(3) of the Act, we further reduced the 
starting price by an amount for profit to arrive at CEP. In accordance 
with section 772(f) of the Act, we calculated the CEP

[[Page 18078]]

profit rate using the expenses incurred by DMC and its U.S. affiliate 
on their sales of the subject merchandise in the United States and the 
profit associated with those sales. We recalculated indirect selling 
expenses incurred in Korea for U.S. sales by deducting certain expenses 
which DMC incurred only for home market sales. We allocated the 
remaining expenses over total worldwide sales because we find that DMC 
incurred these expenses to support its general selling activities 
without regard to a particular market. For further details regarding 
these adjustments, see the April 3, 2006, memorandum to the file from 
Brianne Riker entitled, ``Calculations Performed for DaiYang Metal Co., 
Ltd. for the Preliminary Results in the 2004-2005 Antidumping Duty 
Administrative Review on Stainless Steel Sheet and Strip in Coils from 
the Republic of Korea'' (``DMC Prelim Calc Memo'').

Normal Value

A. Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
the aggregate volume of home market sales of the foreign like product 
is five percent or more of the aggregate volume of U.S. sales), we 
compared the volume of DMC's home market sales of the foreign like 
product to the volume of U.S. sales of subject merchandise, in 
accordance with section 773(a)(1)(C) of the Act. Based on this 
comparison, we determined that DMC had a viable home market during the 
POR. Consequently, we based NV on home market sales.

B. Affiliated Party Transactions and Arm's-Length Test

    DMC made sales of SSSSC to affiliated parties in the home market 
during the POR. Consequently, we tested these sales to ensure that they 
were made at ``arm's-length'' prices, in accordance with 19 CFR 
351.403(c). To test whether the sales to affiliates were made at arm's-
length prices, we compared the unit prices of sales to affiliated and 
unaffiliated customers net of all discounts, movement charges, direct 
selling expenses, and packing expenses. 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 (LOT), we determined 
that the sales made to the affiliated party were at arm's length. See 
Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course 
of Trade, 67 FR 69186, 69187 (Nov. 15, 2002).

C. Cost of Production Analysis

    Pursuant to section 773(b)(2)(A)(ii) of the Act, there were 
reasonable grounds to believe or suspect that DMC had made home market 
sales at prices below its COP in this review because the Department had 
disregarded sales that failed the cost test for DMC in the most 
recently completed segment of this proceeding in which DMC participated 
(i.e., the 2000-2001 administrative review). See Stainless Steel Sheet 
and Strip in Coils from the Republic of Korea; Final Results and 
Partial Rescission of Antidumping Duty Administrative Review, 68 FR 
6713, 6715 (Feb. 10, 2003). As a result, the Department initiated an 
investigation to determine whether DMC had made home market sales 
during the POR at prices below its COP.

1. Calculation of Cost of Production

    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of DMC's cost of materials and fabrication for the 
foreign like product, plus amounts for general and administrative (G&A) 
expenses and interest expenses. See the ``Test of Home Market Sales 
Prices'' section below for treatment of home market selling expenses.
    We relied on the COP data submitted by DMC in its questionnaire 
response, except for the following instances where the information was 
not appropriately quantified or valued:
    1. We disallowed the gain on equity method and miscellaneous gain 
as offsets to the G&A expense rate calculation.
    2. We made an adjustment to the reported G&A expense rate to 
exclude packing expenses and include scrap by-product revenue offsets 
in the denominator of this calculation.
    3. We made an adjustment to the reported interest expense rate 
calculation to: 1) disallow the interest income deduction; and 2) 
exclude packing expenses and include scrap by-product revenue offsets 
in the denominator of this calculation.
    For further details regarding these adjustments, see the April 3, 
2006, memorandum from Michael Harrison, Senior Accountant, to Neal M. 
Halper, Director of Accounting, entitled, ``Cost of Production and 
Constructed Value Calculation Adjustments for the Preliminary Results - 
DaiYang Metal Co. Ltd.''
    We have requested additional information from DMC related to the 
offsets claimed for its G&A and interest calculations. We intend to 
consider this information for purposes of our final results. In 
addition, we note that in a submission dated March 20, 2006, the 
petitioners requested that the Department collect certain data on DMC's 
purchases from its suppliers of hot-rolled coil in order to examine 
DMC's relationships with its suppliers. However, the petitioners 
provided no evidence in this submission that suggests that DMC has 
reported its data inappropriately. As a result, we have not pursued 
this matter further.

2. Test of Home Market Sales Prices

    We compared the weighted-average COP figures to home market prices 
of the foreign like product, as required under section 773(b) of the 
Act, in order to determine whether these sales had been made at prices 
below the COP. On a product-specific basis, we compared the COP to home 
market prices, less any applicable discounts, movement charges, selling 
expenses, and packing expenses.
    In determining whether to disregard home market sales made at 
prices below the COP, we examined whether such sales were made: 1) in 
substantial quantities within an extended period of time; and 2) at 
prices which permitted the recovery of all costs within a reasonable 
period of time. See sections 773(b)(2)(B)-(D) of the Act.

3. Results of the COP Test

    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 
percent of a respondent's sales of a given product were at prices less 
than 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 were at prices below the COP, we found that 
sales of that model were made in ``substantial quantities'' within an 
extended period of time (as defined in section 773(b)(2)(B) of the 
Act), in accordance with section 773(b)(2)(C)(i) of the Act. In such 
cases, we also determined that such sales were not made at prices which 
would permit recovery of all costs within a reasonable period of time, 
in accordance with section 773(b)(2)(D) of the Act. Therefore, for 
purposes of this administrative review, we disregarded these below-cost 
sales for DMC and used the remaining sales as the basis for determining 
NV, in accordance with section 773(b)(1) of the Act.

[[Page 18079]]

D. Level of Trade

    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 LOT as the export price (EP) or CEP. Pursuant to 19 CFR 
351.412(c)(1), the NV LOT is that of the starting-price sales in the 
comparison market or, when NV is based on CV, that of the sales from 
which we derive selling, general, and administrative expenses and 
profit. For EP, the U.S. LOT is also the LOT of the starting-price 
sale, which is usually from exporter to importer. For CEP, it is the 
LOT of the constructed sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. See 19 CFR 351.412(c)(2). 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 773(a)(7)(A) of the Act. Finally, for CEP 
sales, if the NV LOT is more remote from the factory than the CEP LOT 
and there is no basis for determining whether the difference in LOTs 
between NV and CEP affects price comparability, we adjust NV under 
section 773(a)(7)(B) of the Act (the CEP-offset provision). 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, 61732-33 
(Nov. 19, 1997).
    In implementing these principles in this administrative review, we 
obtained information from DMC regarding the marketing stages for its 
reported U.S. and home market sales, including a description of the 
selling activities performed by DMC for each channel of distribution. 
In identifying LOTs for CEP, we considered only the selling activities 
reflected in the price after the deduction of expenses and profit under 
section 772(d) of the Act. See Micron Technology Inc. v. United States, 
243 F.3d 1301, 1314-1315 (Fed. Cir. 2001). Generally, if the reported 
LOTs are the same in the home and U.S. markets, the functions and 
activities of the seller should be similar. Conversely, if a party 
reports LOTs that are different for different categories of sales, the 
functions and activities should be dissimilar.
    In both the U.S. and home markets, DMC reported one LOT. DMC stated 
that it sold through two channels of distribution in the home market: 
1) directly to affiliated and unaffiliated manufacturers; and 2) 
directly to unaffiliated distributors/end users. In the U.S. market, 
DMC made sales through its U.S. affiliate/subsidiary, OMC, which re-
sold the merchandise to unaffiliated U.S. customers. DMC stated that 
its home market sales are not made at the same LOT as its U.S. sales.
    For home market sales, DMC reported the following selling 
activities: sales forecasting, strategic/economic planning, personnel 
training/exchange, engineering service, sales promotion, procurement/
sourcing service, inventory maintenance, order input/processing, 
providing direct sales personnel, sales/marketing support, and market 
research. Because DMC's selling activities did not vary by channels of 
distribution, we preliminarily determine that there is one LOT in the 
home market.
    Regarding its sales to OMC, DMC reported that it performed the 
following selling activities: sales forecasting, strategic/economic 
forecasting, engineering service, order input/processing, providing 
direct sales personnel, and providing freight and delivery services. 
Further, we find that, based on DMC's narrative descriptions of its 
selling practices and functions, DMC performed personnel training/
exchange, procurement and sourcing services, and inventory maintenance 
for its sales to OMC.\7\ Because all sales in the United States are 
made through a single distribution channel, we preliminarily determine 
that there is one LOT in the U.S. market.
---------------------------------------------------------------------------

    \7\ DMC states that procurement and sourcing services include 
purchasing materials, labor, and other cost items for production. We 
find that because these services relate to the production of all of 
DMC's merchandise, this function is performed for sales that DMC 
makes to OMC. Further, DMC states that personnel training and 
exchanges include providing internal and external training 
opportunities for employees to enhance their sales skills. 
Therefore, we also find that this selling activity is performed for 
DMC's sales to OMC because DMC's sales personnel make export sales 
as well as domestic sales. Finally, regarding inventory maintenance, 
DMC stated in the narrative portion of the October 27, 2005, Section 
A response and the March 15, 2006, supplemental response that when 
OMC places an order with DMC, DMC personnel check the inventory to 
determine whether the product is in stock. Therefore, we find that 
DMC performs inventory maintenance for sales to OMC.
---------------------------------------------------------------------------

    These selling activities can be generally grouped into four core 
selling function categories for analysis: 1) Sales and marketing; 2) 
freight and delivery; 3) inventory maintenance and warehousing; and 4) 
warranty and technical support. Based on these core selling functions, 
we find that DMC performed sales and marketing and inventory 
maintenance and warehousing services in both markets, including sales 
forecasting, strategic/economic planning, personnel training/exchange, 
procurement and sourcing services, engineering services, order input/
processing, provision of direct sales personnel, and inventory 
maintenance. Additionally, for its sales to OMC, we find that DMC 
performed freight and delivery services. Finally, we find that warranty 
and technical support services are not performed in either market.
    DMC also provided information to indicate whether each reported 
selling activity was performed to a low, medium, or high degree. DMC 
indicated that the selling activities that were performed in the home 
market only (i.e., sales promotion, sales/marketing support, and market 
research) were all performed to a low degree. Furthermore, DMC 
indicated that the only activity performed for sales to OMC and not for 
domestic sales, freight and delivery services (including inland freight 
and domestic brokerage and handling), was performed to a high degree.
    We evaluated the core selling function categories in the U.S. and 
home market LOTs and found them to be similar with respect to sales and 
marketing, inventory maintenance, and warranty and technical support. 
Although freight services were provided for U.S. sales to OMC and not 
home market sales, we did not find this to be a material selling 
function distinction significant enough to warrant a separate LOT. 
Therefore, after analyzing the selling functions performed in each 
market, we find that the distinctions in selling functions are not 
material and thus, that the home market and U.S. LOTs are the same. 
Accordingly, we determine that no LOT adjustment is warranted or 
possible for DMC. Regarding the CEP-offset provision, as described 
above, it is appropriate only if the NV LOT is more remote from the 
factory than the CEP LOT and there is no basis for determining whether 
the difference in LOTs between NV and CEP affects price comparability. 
Because we find that no difference in LOTs exists, we do not find that 
a CEP offset is warranted for DMC.

E. Calculation of Normal Value

    Regarding home market date of sale, DMC reported the tax invoice 
date. Because this date occurred after the date of shipment in certain 
cases, we followed our normal practice of using the earlier of the sale 
invoice date or date of shipment as the date of sale for all home 
market sales. See Allied Tube

[[Page 18080]]

and Conduit Corp. v. United States, 127 F.Supp.2d 207 (CIT 2000); 
Allied Tube and Conduit Corp. v. United States, 132 F.Supp.2d 1087 (CIT 
2001); see also Honey from Argentina: Preliminary Results of 
Antidumping Duty Administrative Review, 69 FR 621, 622 (Jan. 6, 2004), 
unchanged in Honey from Argentina: Final Results of Antidumping Duty 
Administrative Review, 69 FR 30283 (May 27, 2004); Notice of Final 
Determination of Sales at Less Than Fair Value: Stainless Steel Sheet 
and Strip in Coils From Japan, 64 FR 30574, 30587 (June 8, 1999); and 
Notice of Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Plate in Coils From Belgium, 64 FR 15476, 15481-82 
(Mar. 31, 1999).
    For those product comparisons for which there were sales at prices 
above the COP, we based NV on the home market prices to unaffiliated 
customers and those affiliated customers which passed the arm's-length 
test. Where appropriate, we made adjustments to NV to account for 
differences in physical characteristics of the merchandise, in 
accordance with section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. 
We based this adjustment on the difference in the variable costs of 
manufacturing for the foreign like product and subject merchandise. See 
19 CFR 351.411(b).
    Furthermore, we made deductions from the reported gross unit price 
for discounts, where applicable. Pursuant to section 773(a)(6)(c)(iii) 
of the Act, we also made deductions from the starting price for home 
market credit expenses, where applicable. We disallowed credit expenses 
for certain home market customers for which DMC reported a credit 
period well in excess of a year, especially in light of the fact that 
DMC reported early payment discounts for certain of these customers. We 
have solicited additional information regarding these credit periods 
and will consider it for the final results. For further details, see 
the ``DMC Prelim Calc Memo.'' In accordance with 19 CFR 351.410(e), 
where applicable, we offset any commission paid on a U.S. sale by 
reducing the NV by the amount of home market indirect selling expenses, 
up to the amount of the U.S. commission. We recalculated home market 
indirect selling expenses by: 1) assigning to the home market certain 
expenses which DMC had incorrectly allocated to all markets; and 2) 
allocating the remaining expenses over total worldwide sales, because 
we find that DMC incurred these expenses to support its general selling 
activities without regard to a particular market. For further details 
regarding these adjustments, see the ``DMC Prelim Calc Memo.'' In 
addition, we deducted home market packing costs and added U.S. packing 
costs, in accordance with section 773(a)(6) of the Act.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act and 19 CFR 351.415 based on the exchange 
rates in effect on the dates of the U.S. sales as certified by the 
Federal Reserve Bank.

Preliminary Results of the Review

    We preliminarily determine that the following margins exist for the 
period July 1, 2004, through June 30, 2005:

------------------------------------------------------------------------
           Manufacturer/Producer/Exporter              Margin Percentage
------------------------------------------------------------------------
Boorim Corporation..................................               58.79
Dae Kyung Corporation...............................               58.79
DaiYang Metal Co., Ltd..............................                2.95
Dine Trading Co., Ltd...............................               58.79
Dosko Co., Ltd......................................               58.79
------------------------------------------------------------------------

Public Comment

    The Department will disclose to parties the calculations performed 
in connection with these preliminary results within five days of the 
date of publication of this notice. Interested parties may request a 
hearing within 30 days of publication. Any hearing, if requested, will 
be held two days after the date rebuttal briefs are filed. Pursuant to 
19 CFR 351.309, interested parties may submit cases briefs not later 
than 30 days after the date of publication of this notice. Rebuttal 
briefs, limited to issues raised in the case briefs, may be filed not 
later than 37 days after the date of publication of this notice. The 
Department will issue the final results of the administrative review, 
including the results of its analysis of issues raised in any such 
written comments, within 120 days of publication of these preliminary 
results.

Assessment

    Pursuant to section 351.212(b) of the Department's regulations, the 
Department calculates an assessment rate for each importer or customer 
of the subject merchandise. The Department will issue appropriate 
assessment instructions directly to CBP within 15 days of publication 
of the final results of this review. Upon issuance of the final results 
of this administrative review, if any importer- or customer-specific 
assessment rates calculated in the final results are above de minimis 
(i.e., at or above 0.5 percent), see 19 CFR 351.106(c), the Department 
will instruct CBP to assess antidumping duties on appropriate entries 
by applying the assessment rate to the entered value of the 
merchandise.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003 (68 FR 23954). This clarification will apply to entries of 
subject merchandise during the POR produced by companies included in 
these preliminary results of review for which the reviewed companies 
did not know their merchandise was destined for the United States, as 
well as any companies for which we are rescinding the review based on 
claims of no shipments. In such instances, 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. For a 
full discussion of this clarification, see Antidumping and 
Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 
FR 23954 (May 6, 2003).

Cash Deposit Requirements

    The following deposit requirements will be effective upon 
completion of the final results of this administrative review for all 
shipments of SSSSC from Korea 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 company will be the rate 
established in the final results of this administrative review (except 
no cash deposit will be required if its weighted-average margin is de 
minimis, i.e., less than 0.5 percent); 2) for merchandise exported by 
manufacturers or exporters not covered in this review but covered in 
the original LTFV investigation or a previous review, the cash deposit 
rate will continue to be the most recent rate published in the final 
determination or final results for which the manufacturer or exporter 
received an individual rate; 3) if the exporter is not a firm covered 
in this review, the previous review, or the original 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, the cash deposit rate will be 2.49 
percent, the ``all others'' rate established in the LTFV investigation.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f)(2) to file a certificate

[[Page 18081]]

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 these preliminary results of review 
in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: April 3, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-5202 Filed 4-7-06; 8:45 am]
Billing Code: 3510-DS-P