Certain Corrosion-Resistant Carbon Steel Flat Products from Canada: Preliminary Results of Antidumping Duty Administrative Review, 53363-53370 [E6-14912]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 71, Number 175 (Monday, September 11, 2006)]
[Notices]
[Pages 53363-53370]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-14912]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

(A-122-822)


Certain Corrosion-Resistant Carbon Steel Flat Products from 
Canada: Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, U.S. 
Department of Commerce.
SUMMARY: In response to timely requests, the U.S. Department of 
Commerce (the Department) is conducting an administrative review of the 
antidumping duty order on certain corrosion-resistant carbon steel flat 
products (CORE) from Canada for the period of review (POR) August 1, 
2004

[[Page 53364]]

through July 31, 2005. The review covers two respondents, Dofasco Inc. 
and Sorevco and Company, Ltd. (collectively Dofasco), and Stelco Inc. 
(Stelco).
    The Department preliminarily determines that Dofasco and Stelco 
made sales to the United States at less than normal value (NV). If 
these preliminary results are adopted in the final results of this 
administrative review, we will instruct U.S. Customs and Border 
Protection (CBP) to assess antidumping duties on entries of Dofasco and 
Stelco's merchandise during the period of review. The preliminary 
results are listed below in the section titled ``Preliminary Results of 
Review.''

EFFECTIVE DATE: September 11, 2006

FOR FURTHER INFORMATION CONTACT: Joshua Reitze or Douglas Kirby, AD/CVD 
Operations, Office 6, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14\th\ & Constitution 
Avenue, NW, Washington, DC 20230; telephone: 202-482-0666 and 202-482-
3782, respectively.

SUPPLEMENTARY INFORMATION:

Background

    The Department published the antidumping duty order on CORE from 
Canada on August 19, 1993. See Antidumping Duty Orders: Certain 
Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-
Length Carbon Steel Plate From Canada , 58 FR 44162 (August 19, 1993), 
as amended by Amended Final Determinations of Sales at Less Than Fair 
Value and Antidumping Orders: Certain Corrosion-Resistant Carbon Steel 
Flat Products and Certain Cut-To-Length Carbon Steel Plate From Canada, 
60 FR 49582 (September 26, 1995) (Amended Final and Order). On August 
1, 2005, the Department published in the Federal Register a notice of 
``Opportunity to Request Administrative Review'' of the antidumping 
duty order on CORE from Canada. See Antidumping or Countervailing Duty 
Order, Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 70 FR 44085 (August 1, 2005). On August 31, 
2005, the Department received a properly filed, timely request for an 
administrative review of Dofasco and Stelco from the United States 
Steel Corporation (USSC) (a petitioner in the original investigation), 
as well as from Dofasco, a producer/exporter of CORE from Canada. On 
September 28, 2005, the Department initiated a review of Dofasco and 
Stelco. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Request for Revocation in Part, 70 FR 56631 
(September 28, 2005). On December 20, 2005, Dofasco withdrew its 
request for an administrative review for the current period of review; 
however, since petitioner had requested a review of Dofasco and Stelco, 
the Department is not rescinding the administrative review.
    On October 26, 2005, the Department issued sections A through E of 
the questionnaire to Dofasco.\1\ Dofasco submitted its section A 
response on December 22, 2005, and submitted its sections B through D 
response on January 17, 2006. The Department issued a section A through 
C supplemental questionnaire on April 28, 2006. On May 17, 2006, the 
Department issued its section D supplemental questionnaire. Dofasco 
submitted its sections A through C supplemental questionnaire response 
on May 25, 2006, and Dofasco submitted its section D supplemental 
response on June 14, 2006. On July 21, 2006, the Department issued a 
second supplemental questionnaire to Dofasco. On August 3, 2006, 
Dofasco submitted its response to the Department's second supplemental 
questionnaire.
---------------------------------------------------------------------------

    \1\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under investigation 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 investigation. Section E requests information on 
further manufacturing.
---------------------------------------------------------------------------

    On October 26, 2005, the Department issued sections A through E of 
the questionnaire to Stelco. Stelco submitted its section A 
questionnaire response on December 5, 2005, and its sections B through 
D response on December 20, 2005. On April 27, 2006, the Department 
issued its sections A through C supplemental questionnaire to Stelco. 
On May 18, 2006, the Department issued a section D supplemental 
questionnaire to Stelco. On May 11, 2006, Stelco submitted its response 
to the Department's sections A through C supplemental questionnaire. On 
June 1, 2006, Stelco submitted its response to the Department's section 
D supplemental questionnaire. On July 21, 2006, the Department issued a 
second supplemental questionnaire to Stelco. On July 28, 2006, Stelco 
submitted its response to the Department's second supplemental 
questionnaire.
    On April 4, 2006, the Department extended the deadline for the 
preliminary results of this antidumping duty administrative review from 
May 3, 2006 to August 31, 2006. See Corrosion-Resistant Carbon Steel 
Flat Products from Canada: Notice of Extension of Time Limit for 
Preliminary Results of Antidumping Duty Administrative Review, 71 FR 
16761 (April 4, 2006).

Scope Of The Order

    The product covered by the order is certain corrosion-resistant 
steel, and includes flat-rolled carbon steel products, of rectangular 
shape, either clad, plated, or coated with corrosion-resistant metals 
such as zinc, aluminum, or zinc-, aluminum-, nickel- or iron-based 
alloys, whether or not corrugated or painted, varnished or coated with 
plastics or other nonmetallic substances in addition to the metallic 
coating, in coils (whether or not in successively superimposed layers) 
and of a width of 0.5 inch or greater, or in straight lengths which, if 
of a thickness less than 4.75 millimeters, are of a width of 0.5 inch 
or greater and which measures at least 10 times the thickness or if of 
a thickness of 4.75 millimeters or more are of a width which exceeds 
150 millimeters and measures at least twice the thickness, as currently 
classifiable in the U.S. Harmonized Tariff Schedule (HTSUS) under item 
numbers 7210.30.0030, 7210.30.0060, 7210.41.0000, 7210.49.0030, 
7210.49.0090, 7210.61.0000, 7210.69.0000, 7210.70.6030, 7210.70.6060, 
7210.70.6090, 7210.90.1000, 7210.90.6000, 7210.90.9000, 7212.20.0000, 
7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000, 7212.40.1000, 
7212.40.5000, 7212.50.0000, 7212.60.0000, 7215.90.1000, 7215.90.3000, 
7215.90.5000, 7217.20.1500, 7217.30.1530, 7217.30.1560, 7217.90.1000, 
7217.90.5030, 7217.90.5060, and 7217.90.5090. Although the HTSUS 
subheadings are provided for convenience and customs' purposes, the 
Department's written description of the merchandise under the order is 
dispositive.
    Included in the order are corrosion-resistant flat-rolled products 
of non-rectangular cross-section where such cross-section is achieved 
subsequent to the rolling process (i.e., products which have been 
``worked after rolling'') - for example, products which have been 
beveled or rounded at the edges. Excluded from the order are flat-
rolled steel products either plated or coated with tin, lead, chromium, 
chromium oxides, both tin and lead (``terne plate''),

[[Page 53365]]

or both chromium and chromium oxides (``tin-free steel''), whether or 
not painted, varnished or coated with plastics or other nonmetallic 
substances in addition to the metallic coating. Also excluded from the 
order are clad products in straight lengths of 0.1875 inch or more in 
composite thickness and of a width which exceeds 150 millimeters and 
measures at least twice the thickness. Also excluded from the order are 
certain clad stainless flat-rolled products, which are three-layered 
corrosion-resistant carbon steel flat-rolled products less than 4.75 
millimeters in composite thickness that consist of a carbon steel flat-
rolled product clad on both sides with stainless steel in a 20[percnt]-
60[percnt]-20[percnt] ratio.

Analysis

Affiliation and Collapsing

    For these preliminary results, we have collapsed Dofasco, Sorevco, 
and Do Sol Galva Ltd. (DSG) and treated them as a single respondent, as 
we have done in prior segments of the proceeding. See Final 
Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled 
Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat 
Products, Certain Corrosion-Resistant Carbon Steel Flat Products, and 
Certain Cut-to-Length Carbon Steel Plate From Canada, 58 FR 37099, 
37107 (July 9, 1993), for our analysis regarding collapsing Dofasco and 
Sorevco. There have been no changes to the pertinent facts such as, for 
example, ownership structure, that warrant reconsideration of our 
decisions to collapse these companies. As noted on page A-9 of 
Dofasco's Section A questionnaire response dated December 22, 2005, 
Sorevco still operates as a 50-50 joint venture between Dofasco and 
Ispat Sidbec.
    DSG is a galvanizing line operated as a limited partnership between 
Dofasco and Arcelor. As in the prior review; 1) DSG remains a 
partnership between Dofasco (80 percent ownership interest), and the 
European steel producer Arcelor (20 percent ownership interest); 2) 
Dofasco continues to operate DSG, which is located at the Dofasco 
Hamilton plant, and to treat this line as its number five galvanizing 
line; and 3) all of the DSG production workers are still employed by 
Dofasco. See pages A-6 and A-9 of Dofasco's Section A questionnaire 
response dated December 22, 2005. For all intents and purposes, DSG is 
effectively another production line run on Dofasco's property. See 
Certain Certain Corrosion-Resistant Carbon Steel Flat Products from 
Canada: Preliminary Results of Antidumping Duty Administrative Review, 
69 FR 55138, 55139 (September 13, 2004) (Preliminary Results of 10\th\ 
Review) (unchanged in Certain Corrosion-Resistant Carbon Steel Flat 
Products From Canada: Final Results of Antidumping Duty Administrative 
Review, 70 FR 13458 (March 21, 2005) (Final Results of 10\th\ Review)), 
for our analysis regarding collapsing DSG.
    Consistent with past segments of this proceeding, in these 
preliminary results, we have not collapsed Dofasco and its toll 
producer DJ Galvanizing Ltd. Partnership (DJG) (formerly DNN 
Galvanizing Ltd. Partnership (DNN)). See e.g , Certain Corrosion-
Resistant Carbon Steel Flat Products from Canada: Preliminary Results 
of Antidumping Duty Administrative Review, 70 FR 53621, 53622 
(September 9, 2005) (Preliminary Results of 11\th\ Review), unchanged 
in the Certain Corrosion-Resistant Carbon Steel Flat Products from 
Canada: Final Results of Antidumping Duty Administrative Review, 71 FR 
13582 (March 16, 2006) (Final Results of 11\th\ Review). There have 
been no material changes in the business relationship between Dofasco 
and DJG during this POR to warrant reconsideration of this finding. 
Therefore, for CORE that is processed by DJG before it is exported to 
the United States, we will, for assessment and cash deposit purposes, 
instruct CBP to: 1) apply Dofasco's rate on merchandise supplied by 
Dofasco, Sorevco, or DSG; 2) apply the company-specific rate on 
merchandise supplied by other previously reviewed companies; and 3) 
apply the ``all others'' rate for merchandise supplied by companies 
which have not been reviewed in the past.

Product Comparisons

    In accordance with section 771(16)(A) of the Act, we considered all 
products produced by respondents that are covered by the description in 
the ``Scope of the Order'' section, above, and that were sold in the 
home market during the POR, to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. In 
accordance with sections 771(16)(B) and (C) of the Act, where there 
were no sales of identical merchandise in the home market to compare to 
U.S. sales, we compared U.S. sales to the most similar foreign like 
product on the basis of the characteristics listed in Appendix V of the 
Department's October 26, 2005 antidumping questionnaire.

Date of Sale

    Based on our analysis of the questionnaire responses, we are using 
the same dates of sale that we have used in the past proceedings. See, 
e.g., Final Results of 11\th\ Review. Neither Dofasco nor Stelco 
reported any changes in their sales processes that would warrant 
changing their reported dates of sale.
    For a complete discussion of our date of sale analysis for Dofasco 
and Stelco, see Memorandum from Douglas Kirby (AD/CVD Financial 
Analyst) through Thomas Gilgunn (Program Manager) to the File; Certain 
Corrosion-Resistant Carbon Steel Flat Products from Canada: Analysis of 
Dofasco Inc. (Dofasco) and Sorevco for the Preliminary Results, (August 
31, 2006) (Dofasco Preliminary Analysis Memorandum), and Memorandum to 
the File, from Joshua Reitze through Thomas Gilgunn (Program Manager) 
re: Analysis of Stelco for the Preliminary Results, dated August 31, 
2006 (Stelco Preliminary Analysis Memorandum), on file in the Central 
Record Unit, room B-099 of the main Department of Commerce building 
(CRU).

Normal Value Comparisons

    To determine whether sales of subject merchandise to the United 
States were made at less than NV, we compared the export price (EP) or 
the constructed export price (CEP) to NV, as described in the ``U.S. 
Price,'' and ``Normal Value'' sections of this notice in accordance 
with section 777A(d)(2) of the Act.

U.S. Price

    In accordance with Section 772(a) of the Act, we used EP when the 
subject merchandise was first sold (or agreed to be sold) before the 
date of importation by the producer or exporter of the subject 
merchandise outside of the United States to an unaffiliated purchaser 
in the United States or to an unaffiliated purchaser for exportation to 
the United States, and CEP was not otherwise warranted by the facts on 
the record. Also, as discussed below, we conclude that certain Dofasco 
sales are EP, and that all of Stelco's sales are EP.
    In accordance with Section 772(b) of the Act, we used CEP when the 
subject merchandise was 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.

Dofasco

    Dofasco reported four channels of distribution to the United 
States. See Dofasco's December 22, 2005 section A questionnaire 
response at A-18 through A-19. We have classified Dofasco's

[[Page 53366]]

Channel 1 (direct shipments) and 4 (direct shipments through commission 
agents) sales as EP sales. As in prior reviews, we find that Dofasco 
makes these sales directly to the unaffiliated customer in the United 
States without the involvement of any affiliated party in the United 
States (Channel 1) or makes the sale directly to an unaffiliated 
purchaser for exportation to the United States (Channel 4). 
Accordingly, we are treating Channel 1 and 4 sales as EP sales for 
Dofasco. See, e.g.,Final Results of 11\th\ Review.
    All of Dofasco's sales in the United States through its affiliate, 
Dofasco USA (DUSA), were reported as channel 2 (shipped directly to the 
U.S. customer) or channel 3 (shipped indirectly to the U.S. customer) 
sales. Dofasco reported its U.S. sales through DUSA to be CEP sales 
because they were made for the account of Dofasco by DUSA. See 
Dofasco's December 22, 2005 section A questionnaire response at A-18 
through A-19. Therefore, consistent with our determination in prior 
reviews, we are classifying Dofasco's channels 2 and 3 sales as CEP 
sales. See Certain Corrosion-Resistant Carbon Steel Flat Products from 
Canada: Final Results of Antidumping Duty Administrative Review, 69 FR 
2566 (January 16, 2004) (Final Results of 9\th\ Review) and 
accompanying Issues and Decision Memorandum at Comment 1, and Final 
Results of 10\th\ Review at Comment 5.

Stelco

    We have classified all of Stelco's U.S. sales as EP sales. As in 
prior reviews, we find that Stelco makes these sales directly to the 
unaffiliated customer in the United States without the involvement of 
any affiliated party in the United States (Channel 1). See Preliminary 
Results of 11\th\ Review, unchanged in the Final Results of 11\th\ 
Review. Accordingly, we are treating these respective sales as EP sales 
for Stelco.

Calculation Of Export Price And Constructed Export Price

    Dofasco's EP: The Department calculated Dofasco's starting price as 
its gross unit price to its unaffiliated U.S. customers, making 
adjustments where necessary for billing adjustments and early payment 
discounts pursuant to section 772(a) of the Act. Where applicable, the 
Department also made deductions for movement expenses (foreign inland 
freight, domestic brokerage, and international freight) pursuant to 
section 772(c) of the Act.
    Dofasco's CEP: The Department calculated Dofasco's starting price 
as its gross unit price to its unaffiliated U.S. customers, making 
adjustments where necessary for billing adjustments and early payment 
discounts, pursuant to section 772(c)(1) of the Act. Where applicable, 
the Department made deductions for movement expenses (foreign inland 
freight, international freight, U.S. movement, U.S. customs duty and 
brokerage, and post-sale warehousing) in accordance with section 
772(c)(2) of the Act and section 351.401(e) of the Department's 
regulations. In accordance with sections 772(d)(1) and (2) of the Act, 
we also deducted, where applicable, U.S. direct selling expenses, 
including warranty, credit expenses, U.S. commissions, and U.S. 
indirect selling expenses and U.S. inventory carrying costs incurred in 
the United States and Canada associated with economic activities in the 
United States. We also deducted CEP profit in accordance with section 
772(d)(3) of the Act.
    As in prior reviews, certain Dofasco sales have undergone minor 
further processing in the United States as a condition of sale. The 
Department has deducted the price charged to Dofasco by the 
unaffiliated contractor for this minor further processing from gross 
unit price to determine U.S. price, consistent with section 772(d)(2) 
of the Act. See Certain Corrosion Resistant Carbon Steel Flat Products 
From Canada: Preliminary Results of Antidumping Duty Administrative 
Review, 68 FR 53105, 53106 (September 9, 2003), unchanged in Final 
Results of 9\th\ Review, 69 FR 2566, and accompanying Issues and 
Decision Memorandum at Comment 4.
    Stelco's EP: The Department calculated Stelco's starting price as 
its gross unit price to its unaffiliated U.S. customers, taking into 
account, where necessary, billing adjustments and early payment 
discounts, pursuant to section 772(a) of the Act. Where applicable, the 
Department made deductions from the starting price for movement 
expenses (foreign inland freight, domestic brokerage, and international 
freight) pursuant to section 772(c) of the Act.

Normal Value

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 each respondent's home market sales of the 
foreign like product to the volume of U.S. sales of subject 
merchandise. See section 773(a)(1) of the Act. Based on this 
comparison, we determined for both Dofasco and Stelco that the quantity 
of sales in their home market exceeded five percent of their sales of 
CORE to the United States. See section 351.404(b) of the Department's 
regulations. Therefore, in accordance with section 773(a)(1)(B)(i) of 
the Act, we have based NV on the price at which the foreign like 
product was first sold for consumption in the home market, in the usual 
commercial quantities, in the ordinary course of trade, and, to the 
extent practicable, at the same level of trade (LOT) as the EP or CEP. 
See `` Level of Trade'' section below.

Affiliated Party Transactions and Arm's-Length Test

    We used sales to affiliated customers in the home market only where 
we determined such sales were made at arm's-length prices (i.e., at 
prices comparable to the prices at which the respondent sold identical 
merchandise to unaffiliated customers). See section 351.403(c) of the 
Department's regulations. 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 movement charges, 
direct selling expenses, discounts and rebates, and packing. See id. In 
accordance with the Department's practice, if the prices charged to an 
affiliated party were, on average, between 98 and 102 percent of the 
prices charged to unaffiliated parties for merchandise identical or 
most similar to that sold to the affiliated party, we consider the 
sales to be at arm's-length prices. See section 351.403(c) of the 
Department's regulations; Antidumping Proceedings: Affiliated Party 
Sales in the Ordinary Course of Trade, 67 FR 69186 (November 15, 2002). 
Where the affiliated party transactions did not pass the arm's-length 
test, all sales to that affiliated party have been excluded from the NV 
calculation. Because the aggregate volume of the sales to these 
affiliates is less than 5 percent of total home market sales, we did 
not request downstream sales. See section 351.403(d) of the 
Department's regulations.

Price to Price Comparisons

    For those product comparisons for which there were HM sales of like 
product in the ordinary course of trade, we based NV on home market 
prices to affiliated (when made at prices determined to be arms-length) 
or unaffiliated parties, in accordance with section 773(a)(1)(A) and 
(B) of the Act. We made adjustments for differences in

[[Page 53367]]

cost attributable to differences in physical characteristics of the 
merchandise, pursuant to section 773(a)(6)(C)(ii) of the Act, and for 
differences in direct selling expenses, in accordance with 
773(a)(6)(C)(iii) of the Act and section 351.410 of the Department's 
regulations. We relied on our model match criteria in order to match 
U.S. sales of subject merchandise to comparison sales of the foreign 
like product based on the reported physical characteristics of the 
subject merchandise. Where there were no sales of identical merchandise 
in the home market to compare to U.S. sales, we compared U.S. sales to 
the next most similar foreign like product on the basis of the 
characteristics and reporting instructions listed in the Department's 
questionnaire. See section 771(16) of the Act.
    Dofasco: When comparing Dofasco's Canadian sales to its EP sales, 
the Department calculated Dofasco's starting price as its gross unit 
price, taking into account, where necessary, billing adjustments and 
early payment discounts, pursuant to section 773(a)(1)(A) of the Act. 
In accordance with section 351.401(c) of the Department's regulations, 
we added other revenue (e.g., inland freight revenue), where 
applicable. Pursuant to section 773(a)(6)(B)(ii) of the Act, we made 
deductions for movement expenses (e.g., inland freight and 
warehousing), when appropriate. In accordance with sections 
773(a)(6)(A) and (B) of the Act, we deducted home market packing and 
added U.S. packing costs. In accordance with section 773(a)(6)(C)(iii) 
of the Act and section 351.410(c-d) of the Department's regulations, we 
deducted home market direct selling expenses (e.g., credit, warranty, 
and royalty) and added U.S. direct selling expenses. Pursuant to 
section 351.410(e) of the Department's regulations, we offset any 
commissions paid on EP sales to the United States by deducting home 
market indirect selling expenses up to U.S. commissions. In comparing 
Dofasco's EP sales to Canadian sales made at a different LOT, where we 
found a pattern of price difference, we made an LOT adjustment to NV in 
accordance with section 773(a)(7)(A) of the Act. See ``Level of Trade'' 
below. We made further adjustments for differences in costs 
attributable to differences in physical characteristics of merchandise 
in accordance with section 773(a)(6)(C)(ii) of the Act.
    When comparing Dofasco's Canadian sales to its CEP sales, the 
Department calculated Dofasco's starting price as its gross unit price, 
taking into account, where necessary, billing adjustments and early 
payment discounts, pursuant to section 773(a)(1)(A) of the Act. In 
accordance with section 351.401(c) of the Department's regulations, we 
added other revenue (e.g., inland freight revenue), where applicable. 
Pursuant to section 773(a)(6)(B)(ii) of the Act, we made deductions for 
movement expenses (e.g., inland freight and warehousing), when 
appropriate. In accordance with sections 773(a)(6)(A) and (B) of the 
Act, we deducted home market packing and added U.S. packing costs. In 
accordance with section 773(a)(6)(C)(iii) of the Act and section 
351.410(c-d) of the Department's regulations, we deducted home market 
direct selling expenses, including warranty and credit expenses. Since 
we were able to find a pattern of price difference in each instance 
where we compared Dofasco's CEP sales to Canadian sales made at a 
different LOT, we made an LOT adjustment to NV in accordance with 
section 773(a)(7)(A) of the Act. We made further adjustments for 
differences in costs attributable to differences in physical 
characteristics of merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act.
    Stelco: The Department calculated Stelco's starting price as its 
gross unit price, taking into account, where necessary, billing 
adjustments and early payment discounts, pursuant to section 
773(a)(1)(A) of the Act. In accordance with section 351.401(c) of the 
Department's regulations, we added other revenue (e.g., inland freight 
revenue), where applicable. Pursuant to section 773(a)(6)(B)(ii) of the 
Act, we made deductions for movement expenses (e.g., inland freight and 
warehousing), when appropriate. In accordance with sections 
773(a)(6)(A) and (B) of the Act, we deducted home market packing and 
added U.S. packing costs. In accordance with section 773(a)(6)(C)(iii) 
of the Act and section 351.410(c-d) of the Department's regulations, we 
deducted home market direct selling expenses (e.g., credit, warranty, 
technical services, and advertising) and added U.S. direct selling 
expenses. We made further adjustments for differences in costs 
attributable to differences in physical characteristics of merchandise 
in accordance with section 773(a)(6)(C)(ii) of the Act.

Cost Of Production Analysis

    The Department disregarded certain Dofasco and Stelco sales that 
failed the cost test in the most recently completed review. See 
Preliminary Results of 11\th\ Review and Final Results of 11\th\ 
Review. We, therefore, have reasonable grounds to believe or suspect, 
pursuant to section 773(b)(2)(A)(ii) of the Act, that sales of the 
foreign like product under consideration for the determination of NV in 
this review may have been made at prices below the cost of production 
(COP). Thus, pursuant to section 773(b)(1) of the Act, we examined 
whether Dofasco's and Stelco's sales in the home market were made at 
prices below the COP.
    We compared sales of the foreign like product in the home market 
with model-specific COP figures in the POR. In accordance with section 
773(b)(3) of the Act, we calculated COP based on the sum of the costs 
of materials and fabrication employed in producing the foreign like 
product, plus selling, general and administrative (SG&A) expenses, and 
financial expenses and packing. In our sales-below-cost analysis, we 
used home market sales and COP information provided by Dofasco and 
Stelco in their questionnaire responses. See Dofasco's January 17, 2006 
section D Questionnaire Response; see also Stelco's December 19, 2005 
section D Questionnaire Response.
    We compared the weighted-average COPs to home market sales 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. In determining whether to disregard home market sales made at 
prices below the COP, we examined whether such sales were made (1) 
within an extended period of time in substantial quantities, and (2) at 
prices which permitted the recovery of all costs within a reasonable 
period of time in the normal course of trade, in accordance with 
sections 773(b)(1)(A) and (B) of the Act.\2\ On a product-specific 
basis, we compared the COP to home market prices, less any movement 
charges, discounts and rebates, and direct and indirect selling 
expenses. See Treatment of Adjustments and Selling Expenses in 
Calculating the Cost of Production (``COP'') and Constructed Value 
(``CV'') Import Policy Bulletin (March 25, 1994).
---------------------------------------------------------------------------

    \2\ Section 773(b)(2)(ii)(B-C) of the Act defines extended 
period of time as a period that is normally 1 year, but not less 
than 6 months, and substantial quantities as sales made at prices 
below the cost of production that have been made in substantial 
quantities if (i) the volume of such sales represents 20 percent or 
more of the volume of sales under consideration for the 
determination of normal value, or (ii) the weighted average per unit 
price of the sales under consideration for the determination of 
normal value is less than the weighted average per unit cost of 
production for such sales.
---------------------------------------------------------------------------

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's sales of a given model

[[Page 53368]]

were at prices less than the COP, we did not disregard any below-cost 
sales of that model because the below-cost sales were not made in 
substantial quantities within an extended period of time. Where 20 
percent or more of a respondent's sales of a given model were at prices 
less than the COP, we disregarded the below-cost sales because they 
were made in substantial quantities within an extended period of time, 
in accordance with sections 773(b)(2)(B) and (C) of the Act. Because we 
compared prices to average costs in the POR, we also determined that 
the below-cost prices did not permit the recovery of costs within a 
reasonable period of time, in accordance with section 773(b)(1)(B) of 
the Act.
    In certain instances, we found that more than 20 percent of 
Dofasco's and Stelcos' home market sales of a given model(s) during the 
POR were at prices below the COP, and, in addition, 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 therefore excluded the below cost sales and 
used the remaining sales, if any, as the basis for determining NV, in 
accordance with section 773(b)(1) of the Act.

Constructed Value

    In accordance with section 773(a)(4) of the Act, we used 
constructed value (CV) as the basis for NV when we could not determine 
NV because there were no above-cost contemporaneous sales of identical 
or similar merchandise in the comparison market. We calculated CV in 
accordance with section 773(e) of the Act, including the cost of 
materials and fabrication, SG&A expenses, and profit. In accordance 
with section 773(e)(2)(A) of the Act, we based SG&A expenses and profit 
on the 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 home market. Where NV 
is based on CV, we determine the NV LOT based on the LOT of the sales 
from which we derive selling expenses, SG&A expenses, and profit for 
CV, where possible.
    Dofasco: We used CV as the basis for NV for sales in which there 
were no usable contemporaneous sales of the foreign like product in the 
comparison market, in accordance with section 773(a)(4) of the Act. We 
calculated CV in accordance with section 773(e) of the Act. We added 
reported materials, labor, and factory overhead costs to derive the 
cost of manufacture (COM), in accordance with section 773(e)(1) of the 
Act. We then added interest expenses, SG&A expenses, profit, and U.S. 
packing expenses to derive the CV (and added U.S. credit for comparison 
to EP), in accordance with sections 773(e)(2) and (3) of the Act. We 
calculated profit based on the total value of sales and total COP 
reported by Dofasco in its questionnaire response, in accordance with 
section 773(e)(2)(A) of the Act. Finally, we deducted comparison market 
credit expenses from CV (and added U.S. credit) to calculate the 
foreign unit price in dollars (FUPDOL), pursuant to section 
773(e)(2)(B) of the Act. Since Dofasco did not report its selling 
expenses, G&A expenses, and profit that we used for CV on an LOT basis, 
we were unable to identify a CV LOT.

Level Of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same LOT as the EP or CEP. Sales are made at different LOTs if they are 
made at different marketing stages (or their equivalent). See section 
351.412(c)(2) of the Department's regulations. Substantial differences 
in selling activities are a necessary, but not sufficient, condition 
for determining that there is a difference in the stages of marketing. 
Id.; see also 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 (November 19, 1997) (South African Plate Final). In 
order to determine whether the comparison sales were at different 
stages in the marketing process than the U.S. sales, we reviewed the 
distribution system in each market (i.e., the chain of 
distribution),\3\ including selling functions,\4\ class of customer 
(customer category), and the level of selling expenses for each type of 
sale.
---------------------------------------------------------------------------

    \3\ The marketing process in the United States and in the 
comparison markets begins with the producer and extends to the sale 
to the final user or consumer. The chain of distribution between the 
two may have many or few links, and the respondents' sales occur 
somewhere along this chain. In performing this evaluation, we 
considered the narrative responses of each respondent to properly 
determine where in the chain of distribution the sale occurs.
    \4\ Selling functions associated with a particular chain of 
distribution help us to evaluate the level(s) of trade in a 
particular market. For purposes of this preliminary determination, 
we have organized the common selling functions into four major 
categories: sales process and marketing support, technical service, 
freight and delivery, and inventory maintenance.
---------------------------------------------------------------------------

    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying 
levels of trade for EP and comparison market sales (i.e., NV based on 
either home market or third country prices), we consider the starting 
prices before any adjustments. In accordance with section 773(a)(1)(B) 
of the Act, to the extent practicable, we determined NV based on sales 
made in the comparison market at the same LOT as the CEP sales. The NV 
LOT is based on the starting price of the sales in the comparison 
market. In Micron Technology, Inc. v. United States, 243 F.3d 1301, 
1315 (Fed. Cir. 2001) (``Micron Technology''), the Court of Appeals for 
the Federal Circuit held that the statute unambiguously requires 
Commerce to remove the selling activities set forth in section 772(d) 
of the Act from the CEP starting price prior to performing its LOT 
analysis. As such, for CEP sales, the U.S. LOT is based on the starting 
price of the sales, as adjusted under section 772(d) of the Act. 
Consistent with Micron Technology, the Department will adjust the U.S. 
LOT of Dofasco's CEP sales, pursuant to section 772(d) of the Act, 
prior to performing the LOT analysis, as articulated by section 351.412 
of the Department's regulations.
    When the Department is unable to match U.S. sales to sales of the 
foreign like product in the comparison market at the same LOT as the EP 
or CEP, the Department may compare the U.S. sale to sales at a 
different LOT in the comparison market. In comparing EP or CEP sales to 
Canadian sales made at a different LOT, and where we found patterns of 
price differences, we made an LOT adjustment to NV in accordance with 
section 773(a)(7)(A) of the Act. Finally, for CEP sales only, if the NV 
LOT is more remote from the factory than the CEP LOT and we are unable 
to make a level of trade adjustment, the Department shall grant a CEP 
offset, as provided in section 773(a)(7)(B) of the Act. See South 
African Plate Final, 62 FR at 61732-33.

Dofasco LOT Analysis

    We obtained information from Dofasco regarding the marketing stages 
involved in making the reported home market and U.S. sales, including a 
description of the selling activities performed by the respondents for 
each channel of distribution. See Dofasco's December 22, 2005 section A 
Questionnaire Response. In the current review, as in the previous 
review, Dofasco claimed that sales in both the home market and the U.S. 
market were made at different LOTs. See Dofasco's December 22, 2005 
section A Questionnaire Response at A26 to 28. In the previous review, 
we concluded that Dofasco did sell at different LOTs. See Memorandum 
from Douglas Kirby (AD/CVD Case Analyst) through Sean Carey

[[Page 53369]]

(Acting Program Manager) to the File; Certain Corrosion-Resistant 
Carbon Steel Flat Products from Canada: Analysis of Dofasco Inc. 
(Dofasco) and Sorevco for the Final Results, (March 16, 2006) (Dofasco 
Final Analysis Memorandum 11\th\ Review), on file in the CRU.
    We examined the selling activities associated with sales reported 
by Dofasco to three distinct channels of distribution (automotive, 
construction, and service centers) in the home market. See Dofasco 
Preliminary Analysis Memorandum. We find that home market sales to the 
construction and service center customer categories were similar with 
respect to selling and marketing, technical service, freight services, 
and inventory. Therefore, we find that these customer categories 
constituted a distinct level of trade (LOTH2). We find that home market 
sales to automotive customer category differed significantly from LOTH2 
sales with respect to sales process, freight services, and technical 
service, and therefore, constitute a distinct level of trade (LOTH1). 
Thus, based upon our analysis of the home market, we find that LOTH1 
and LOTH2 constitute two different levels of trade in the home market.
    Dofasco reported EP sales through two channels of distribution: 
Channel 1 including sales to automotive, service centers, and 
construction, and Channel 4 sales to construction. See Dofasco's 
December 22, 2005 section A Questionnaire Response at A-19 and A-20. We 
examined the selling activities associated with sales to construction 
and service center categories through these channels and found them to 
be similar with respect to selling and marketing, technical service, 
freight, and inventory. Therefore, we find that these two channels of 
distribution to these customer categories constituted a distinct level 
of trade (LOTU2). We find that sales to the automotive customer 
category differed significantly from LOTU2 sales with respect to 
selling and marketing and technical service, but were similar with 
respect to freight and inventory. Since the sales and marketing and 
technical service functions comprise significant selling activities, we 
find that these factors are determinative in finding that sales to this 
automotive customer category constitute a separate level of trade 
(LOTU1). Thus, based upon our analysis of Dofasco's EP sales, we find 
that sales to automotive (LOTU1) and sales to construction/
manufacturers and service centers (LOTU2) constitute two different 
levels of trade.
    Dofasco reported two channels of distribution related to its CEP 
sales to automotive customers through Dofasco USA. Pursuant to Micron 
Technology, we excluded any sales activities undertaken by DUSA and 
only considered the selling activities provided by Dofasco in our LOT 
analysis. Dofasco reported that these two CEP channels of distribution 
had the same selling functions and thus constitute a single level of 
trade. We analyzed the selling functions in both CEP channels and found 
that Dofasco's CEP sales constituted a single level of trade (LOTU3).
    We then compared the two EP levels of trade (LOTU1 and LOTU2) and 
one CEP level of trade (LOTU3) to the two home market LOTs. We found 
that LOTU2 differed considerably from LOTH1 with respect to selling and 
marketing, technical service and freight. However, LOTU2 was similar to 
LOTH2 with respect to selling and marketing, technical service, 
freight, and inventory. We also found that LOTU1 differed considerably 
from LOTH2 with respect to technical service. However, LOTU1 was 
similar to LOTH1 with respect to selling and marketing, technical 
service, freight, and inventory. We also found that LOTU3 differed 
considerably from LOTH2 with respect to technical service and freight. 
However, LOTU3 was similar to LOTH1 with respect to selling and 
marketing, technical service, freight, and inventory. Consequently, we 
are matching LOTU2 sales to sales at the same level of trade in the 
home market (LOTH2), and LOTU1 and LOTU3 sales to sales at the same 
level of trade in the home market (LOTH1). Where we could not match 
products at the same LOT, and there was a pattern of consistent price 
differences between different LOTs, we made an LOT adjustment. See 
section 773(a)(7)(A) of the Act; see also Dofasco Preliminary Analysis 
Memorandum.

Stelco LOT Analysis

    Stelco stated in its response that it was not claiming an LOT 
adjustment. However, Stelco did provide information regarding its 
selling functions, which we analyzed. See Stelco's May 11, 2006 section 
A Questionnaire Response at A-6. In the home market, Stelco reported 
two channels of distribution (end-users and service centers).
    We examined Stelco's chain of distribution and the selling 
activities in the home market. See Stelco Preliminary Analysis 
Memorandum, on file in the CRU. We found that Stelco's home market 
sales to end-users and service centers differed slightly with respect 
to freight services, but were similar for sales processes, inventory 
maintenance, and technical services. Therefore, we find that these 
customer categories constitute a single level of trade in the home 
market (LOTH1).
    Stelco reported only EP sales through one channel of distribution 
to a single customer category in the United States, end-users. See 
Stelco's May 11, 2006 supplemental sections A, B, and C Questionnaire 
Response at A-5. Therefore, we have determined that Stelco has only a 
single LOT in the United States (LOTU2). Since there is only one 
Canadian LOT and that differs from the single U.S. LOT, we cannot 
quantify an LOT adjustment.

Currency Conversion

    For purposes of the preliminary results, in accordance with section 
773A of the Act, we made currency conversions based on the official 
exchange rates in effect on the dates of the U.S. sales as certified by 
the Federal Reserve Bank of New York.

Preliminary Results Of Review

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

------------------------------------------------------------------------
                  Manufacturer/Exporter                       Margin
------------------------------------------------------------------------
Dofasco Inc., Sorevco Inc., Do Sol Galva Ltd............   4.78 [percnt]
Stelco Inc..............................................   1.45 [percnt]
------------------------------------------------------------------------

Cash Deposit Requirements

    If the preliminary results are adopted in the final results of 
review, the following deposit requirements will be effective upon 
completion of the final results of this administrative review for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication of the final 
results of this administrative review, as provided in section 751(a)(1) 
of the Act: 1) the cash deposit rate for Dofasco, Sorevco, and DSG will 
be that established in the final results of this review for Dofasco 
(and entities collapsed with Dofasco); 2) the cash deposit rate for 
Stelco will be that established in the final results of this review; 3) 
for previously reviewed or investigated companies not covered in this 
review, the cash deposit rate will continue to be the company-specific 
rate published for the most recent period; 4) 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

[[Page 53370]]

established for the most recent period for the manufacturer of the 
subject merchandise; and 5) if neither the exporter nor the 
manufacturer is a firm covered in this or any previous proceeding 
conducted by the Department, the cash deposit rate will continue to be 
the ``all others'' rate established in the LTFV investigation, which is 
18.71 percent. See Amended Final and Order. For shipments processed by 
DJG we will, 1) apply Dofasco's rate on merchandise supplied by Dofasco 
or DSG; 2) apply the company-specific rate on merchandise supplied by 
other previously reviewed companies; and, 3) apply the ``all others'' 
rate for merchandise supplied by companies which have not been reviewed 
in the past. These cash deposit requirements, when imposed, shall 
remain in effect until publication of the final results of the next 
administrative review.

Duty Assessment

    Upon publication of the final results of this review, the 
Department shall determine, and CBP shall assess, antidumping duties on 
all appropriate entries. Pursuant to section 351.212(b)(1) of the 
Department's regulations, the Department calculates an assessment rate 
for each importer of the subject merchandise for each respondent. 
Stelco and Dofasco have reported entered values for all of their 
respective sales of subject merchandise to the United States during the 
POR. We have compared the entered values reported by Stelco and Dofasco 
with the entered values that they reported to CBP on their customs 
entries and preliminarily find that Stelco and Dofasco's reported 
entered values are reliable. See Stelco's Preliminary Analysis 
Memorandum and Dofascos's Preliminary Analysis Memorandum. Therefore, 
in accordance with section 351.212(b)(1) of the Department's 
regulations, we will calculate importer-specific ad valorem assessment 
rates on the basis of the ratio of the total amount of antidumping 
duties calculated for the examined sales and the total entered value of 
the examined sales. These rates will be assessed uniformly on all 
entries the respective importers made during the POR if these 
preliminary results are adopted in the final results of review. The 
Department will issue appropriate assessment instructions directly to 
CBP within 41 days of the final results of this review. See section 
356.8(a) of the Department's regulations.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. See Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003) (Assessment 
Policy Notice). This clarification will apply to entries of subject 
merchandise during the period of review produced by companies included 
in these final results of reviews for which the reviewed companies did 
not know that the merchandise it sold to the intermediary (e.g., a 
reseller, trading company, or exporter) was destined for the United 
States. In such instances, we will instruct CBP to liquidate unreviewed 
entries at the all-others rate if there is no rate for the intermediary 
involved in the transaction. See Assessment Policy Notice for a full 
discussion of this clarification.

Public Comment

    Pursuant to section 351.224(b) of the Department's regulations, the 
Department will disclose to any party to the proceeding the 
calculations performed in connection with these preliminary results, 
within five days after the date of publication of this notice. Pursuant 
to section 351.309(c)(ii) of the Department's regulations, interested 
parties may submit case briefs in response to these preliminary results 
no later than 30 days after the date of publication of this notice. 
Rebuttal briefs, limited to issues raised in case briefs, may be filed 
no later than 5 days after the time limit for filing case briefs in 
accordance with section 351.309(d)(1) of the Department's regulations. 
Parties who submit arguments in this proceeding 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 in accordance with section 
351.309(d)(2) of the Department's regulations. Further, the Department 
requests that parties submitting briefs provide the Department with an 
additional copy of the public version of any such comments on a 
computer diskette. Case and rebuttal briefs must be served on 
interested parties in accordance with section 351.303(f) of the 
Department's regulations.
    Any interested party may request a hearing within 30 days of 
publication of this notice in accordance with section 351.310(c) of the 
Department's regulations. Any hearing, if requested, will normally be 
held two days after the date for submission of rebuttal briefs in 
accordance with section 351.310(d)(1) of the Department's regulations. 
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 written comments or at a hearing, within 120 days after the 
publication of this notice, unless extended. See section 751(a)(3)(A) 
of the Act; section 351.213(h) of the Department's regulations.

Notification To Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 351.402(f) of the Department's regulations 
to file a certificate regarding the reimbursement of antidumping duties 
prior to liquidation of the relevant entries during this review period. 
Failure to comply with this requirement could result in the Secretary's 
presumption that reimbursement of antidumping duties occurred and the 
subsequent assessment of double antidumping duties.
    The preliminary results of this administrative review and this 
notice are issued and published in accordance with sections 751(a)(1) 
and 777(i)(1) of the Act.

    Dated: August 31, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-14912 Filed 9-8-06; 8:45 am]
BILLING CODE 3510-DS-S