Certain Corrosion-Resistant Carbon Steel Flat Products from the Republic of Korea: Notice of Preliminary Results of Antidumping Duty Administrative Review, 53370-53377 [E6-15004]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 71, Number 175 (Monday, September 11, 2006)]
[Notices]
[Pages 53370-53377]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-15004]


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DEPARTMENT OF COMMERCE

International Trade Administration

(A-580-816)


Certain Corrosion-Resistant Carbon Steel Flat Products from the 
Republic of Korea: Notice of Preliminary Results of Antidumping Duty 
Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to requests from petitioners\1\, the Department of 
Commerce (the Department) is conducting the twelfth administrative 
review of the antidumping order on corrosion-resistant carbon steel 
flat products (CORE) from Korea. This review covers four manufacturers 
and exporters (collectively, the respondents) of the subject 
merchandise: Dongbu Steel Co., Ltd., (Dongbu); Hyundai HYSCO (HYSCO); 
Pohang Iron & Steel Company, Ltd. and Pohang Coated Steel Co., Ltd. 
(POCOS), (collectively, the POSCO Group); and Union Steel Manufacturing 
Co., Ltd. (Union). The

[[Page 53371]]

period of review (POR) is August 1, 2004, through July 31, 2005. We 
preliminarily determine that during the POR, Dongbu, the POSCO Group, 
and Union made sales of subject merchandise at less than normal value 
(NV). However, we preliminarily determine that HYSCO did not make sales 
of subject merchandise at less than NV (i.e., sales were made at 
``zero'' or de minimis dumping margins). 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 HYSCO's 
appropriate entries at an antidumping liability of zero percent of the 
entered value and instruct CBP to assess Dongbu, the POSCO Group, and 
Union at the rates referenced in the ``Preliminary Results of the 
Review'' section of this notice.
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    \1\ Petitioners are the United States Steel Corporation and 
Nucor Corporation. Mittal Steel USA ISG, Inc. (Mittal Steel USA) is 
a domestic interested party.

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EFFECTIVE DATE: September 11, 2006.

FOR FURTHER INFORMATION CONTACT: Jolanta Lawska (Union), Preeti Tolani 
(Dongbu), Victoria Cho (the POSCO Group), and Joy Zhang (HYSCO), AD/CVD 
Operations, Office 3, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
8362, (202) 482-0395, (202) 482-5075, and (202) 482-1168, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On August 19, 1993, the Department published the antidumping order 
on CORE from Korea. See Antidumping Duty Orders on Certain Cold-Rolled 
Carbon Steel Flat Products and Certain Corrosion-Resistant Carbon Steel 
Flat Products from Korea, 58 FR 44159 (August 19, 1993) (Orders on 
Certain Steel from Korea). On September 20, 2005, we published in the 
Federal Register the Notice of Opportunity to Request Administrative 
Review of Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation, 70 FR 44085 (August 1, 2005). On August 31, 
2005, respondents and petitioners requested a review of Dongbu, HYSCO, 
the POSCO Group, and Union. The Department initiated this review on 
September 28, 2005. See Initiation of Antidumping and Countervailing 
Duty Administrative Reviews and Request for Revocation in Part, 70 FR 
56631 (September 28, 2005).
    During the most recently completed segments of the proceeding in 
which Dongbu, HYSCO, the POSCO Group, and Union participated, the 
Department disregarded sales below the cost of production (COP) that 
failed the cost test.\2\ Therefore, pursuant to section 
773(b)(2)(A)(ii) of the Tariff Act of 1930, as amended (the Act), we 
had reasonable grounds to believe or suspect that sales by these 
companies of the foreign like product under consideration for the 
determination of NV in this review were made at prices below the COP. 
We instructed Dongbu, HYSCO,\3\ the POSCO Group, and Union to respond 
to sections A-D of the initial questionnaire,\4\ which we issued on 
September 28, 2005.
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    \2\ Certain Corrosion-Resistant Carbon Steel Flat Products from 
the Republic of Korea: Notice of Preliminary Results and Partial 
Rescission of Antidumping Duty Administrative Review, 70 FR 53153, 
53154 (September 7, 2005) (Preliminary Results of the 11\th\ Review 
of CORE from Korea); Notice of Final Results of the Eleventh 
Administrative Review of the Antidumping Duty Order on Certain 
Corrosion-Resistant Carbon Steel Flat Products from the Republic of 
Korea, 71 FR 7513 (February 13, 2006) and accompanying Issues and 
Decisions Memorandum and Notice of Amended Final Results of the 
Eleventh Administrative Review of the Antidumping Duty Order on 
Certain Corrosion-Resistant Carbon Steel Flat Products from the 
Republic of Korea, 71 FR 13962 (March 20, 2006).
    \3\ The Department aligned the 10\th\ administrative review with 
a new shipper review of HYSCO. See Certain Corrosion-Resistant 
Carbon Steel Flat Products from the Republic of Korea: Notice of 
Preliminary Results of Antidumping Duty Administrative Review and 
Antidumping Duty New Shipper Review, 69 FR 54101 (September 7, 2004) 
and Notice of Final Results of the Tenth Administrative Review and 
New Shipper Review of the Antidumping Duty Order of Certain 
Corrosion Resistant Carbon Steel Flat Products from the Republic of 
Korea, 70 FR 12443 (March 14, 2005).
    \4\ Section A: Organization, Accounting Practices, Markets and 
Merchandise
     Section B: Comparison Market Sales
     Section C: Sales to the United States
     Section D: Cost of Production and Constructed Value
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    On April 18, 2006, the Department published a notice extending the 
time period for issuing the preliminary results of the twelfth 
administrative review from May 3, 2006, to August 11, 2006. See 
Corrosion Resistant Carbon Steel Flat Products From Korea: Extension of 
Time Limits for the Preliminary Results of Antidumping Duty 
Administrative Review, 71 FR 19872 (April 18, 2006).
    On July 28, August 1, August 2, and August 17, 2006, the 
petitioners submitted comments with respect to HYSCO, Union, the POSCO 
Group and Dongbu. On July 28, 2006, U.S. Steel submitted comments with 
respect to HYSCO. On August 2, 2006, Mittal Steel USA, submitted 
comments regarding HYSCO. On July 28, and August 17, 2006, Mittal Steel 
USA submitted comments with respect to Union. On August 1, 2006, Mittal 
Steel USA and U.S. Steel both submitted comments with respect to the 
POSCO Group. On August 3, 2006, Mittal Steel USA submitted comments 
with respect to Dongbu. See company-specific Calculation Memoranda for 
full details.
    On August 16, 2006, the Department published a notice extending the 
time period for issuing the preliminary results of the twelfth 
administrative review from August 11, 2006, to August 31, 2006. See 
Corrosion Resistant Carbon Steel Flat Products From Korea: Extension of 
Time Limits for the Preliminary Results of Antidumping Duty 
Administrative Review, 71 FR 47170 (August 16, 2006).

Dongbu

    On November 18, 2005, Dongbu submitted its section A response to 
the initial questionnaire. On December 2, 2005, Dongbu submitted its 
sections B-D response to the initial questionnaire. On June 1, 2006, 
Dongbu submitted its supplemental questionnaire response to the 
Department's April 27, 2006, questionnaire for sections A through D. On 
July 25, 2006, Dongbu submitted its second supplemental questionnaire 
response to the Department's July 13, 2006, questionnaire for section 
D.

Union

    On November 18, 2005, Union submitted its section A response to the 
initial questionnaire. On December 2, 2005, Union submitted its 
sections B-D response to the initial questionnaire. On May 26, 2006, 
Union submitted its supplemental questionnaire response to the 
Department's April 24, 2006, questionnaire for sections A through D. On 
June 23, 2006, Union submitted its second supplemental questionnaire 
response to the Department's June 9, 2006, questionnaire for sections 
A-D. On July 14, 2006, Union submitted its third supplemental 
questionnaire response to the Department's July 7, 2006, questionnaire 
for sections A through D. On August 2, 2006, Union submitted its fourth 
supplemental questionnaire response to the Department's July 12, 2006, 
questionnaire for sections A though D. On August 2, 2006, Union 
submitted its fifth supplemental questionnaire response to the 
Department's July 25, 2006, questionnaire for sections A through D. On 
August 16, 2006, Union submitted its sixth supplemental questionnaire 
response to the Department's August 4, 2006, questionnaire for sections 
A through D.

The POSCO Group

    On December 2, 2005, the POSCO Group submitted its sections A 
through D response to the initial questionnaire. On May 23, 2006, the 
POSCO Group submitted its supplemental

[[Page 53372]]

questionnaire response to the Department's April 18, 2006, 
questionnaire for sections A through D. On July 21, 2006, the POSCO 
Group submitted its second supplemental questionnaire response to the 
Department's July 7, 2006, questionnaire for sections B and C.

HYSCO

    On December 2, 2005, HYSCO submitted its sections A through D 
response to the Department's initial questionnaire. On May 15, 2006, 
HYSCO submitted its supplemental questionnaire response to the 
Department's April 10, 2006, questionnaire for sections A through D. On 
July 19, 2006, HYSCO submitted a second supplemental questionnaire 
response to the Department's June 30, 2006, questionnaire for sections 
A through D.

Requests for Revision to the Model Match Criteria

    On November 2, 2005, Mittal Steel USA, a domestic interested party, 
submitted information to the record regarding the Department's model 
match methodology on CORE from Korea. This submission also included a 
request that the Department modify its model match criteria and collect 
additional and detailed CORE product information from the respondents 
in this proceeding. Mittal Steel USA's November 2, 2005, submission 
included a copy of a May 28, 2004, study that it had submitted in the 
tenth (2002-03) administrative review of this proceeding. Mittal Steel 
USA's November 2, 2005, submission also included copies of the 
deficiency comments it submitted with respect to Union, Dongbu, HYSCO, 
and the POSCO Group in the eleventh (2003-2004) administrative review 
of this proceeding.\5\ These submissions included Mittal Steel USA's 
previous requests that the Department change its model match 
methodology and collect additional CORE product characteristics on both 
a case-wide and a company-specific basis.
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    \5\ See Mittal Steel USA's November 2, 2005, submission at 
proprietary attachments 2, 3, 4, and 5 for its June 9, 20, 21, and 
July 19, 2005, deficiency comments regarding Union, Dongbu, HYSCO, 
and the POSCO Group, respectively, in the eleventh administrative 
review of this proceeding.
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    On December 1, 2005, the POSCO Group presented its model match 
submission (``POSCO model match submission'') discussing its specific 
arguments regarding its sales and production of laminated CORE 
products. In its model match submission, the POSCO Group requests that 
the Department modify the model match criteria for coated and painted 
CORE products. It also states that the Department has long held that 
model match criteria should reflect ``meaningful'' physical and 
commercial differences between products through the examination of the 
physical differences and the relative impact these differences have on 
the cost and price of the subject merchandise. Thus, the POSCO Group 
argues that the Department should revise the CTYPE field to 
differentiate certain specialty painted and laminated CORE products 
from other coated/painted CORE products.
    In their December 5, 2005, Section B responses, Dongbu, the POSCO 
Group and Union discuss the various CORE products sold in their home 
markets. Dongbu explains that laminated products should be separately 
coded because the product commands a significantly higher price than 
pre-painted products, the cost of producing the laminated products is 
significantly higher, laminated CORE production occurs on markedly 
different coating machines, and the uses of the laminated products 
differ from the uses of other pre-painted products (including 
polyvinylidene fluoride CORE (``PVDF'')). Dongbu argues that the TOTCOM 
(i.e., total cost of manufacturing) for its laminated CORE products is 
higher than its PVDF CORE products and, therefore, warrants a separate 
code. The POSCO Group explains that certain specialty coated/painted 
and laminated CORE products should be separately coded because the 
products command a significantly higher price than regular polyester 
pre-painted CORE products, the cost of producing the specialty coated/
painted and laminated CORE products is significantly higher, specialty 
coated/painted and laminated CORE product production occurs on markedly 
different coating machines, and the uses of the specialty coated/
painted and laminated CORE products differ from the uses of other 
regular polyester pre-painted CORE products. The POSCO Group explains 
that the specifics of its arguments can be found in its December 1, 
2005, model match submission. Union states that its laminated steel is 
a corrosion-resistant steel with a polyethylene telephthalate (``PET'') 
film that is thermally sealed onto primer-coated CORE. Union also 
states that its affiliate, Union Coating Co., Ltd. (``UNICO''), 
produces laminated steel that has a colored PVC (``polyvinyl 
chloride'') film that is attached to the CORE substrate using an 
adhesive. Union goes on to state that laminating of its CORE products 
increases its production costs and sales price.
    In its December 7, 2005, submission in response to the POSCO 
Group's model match submission and to Union's report of laminated sales 
of CORE, Mittal Steel USA argues that the Department should not 
consider any ad hoc modifications to the model match methodology 
employed in this proceeding and reiterates its argument that the 
Department should heed its repeated requests to collect additional 
information on all the products, in toto, from all the respondents in 
this administrative review. Mittal Steel USA further argues that the 
facts in the POSCO Group's request offers support to Mittal Steel USA's 
argument that the Department's current model match methodology might be 
fundamentally flawed. Mittal Steel USA states that if the POSCO Group 
believes the method is inaccurate with respect to certain CORE 
products, then this is a powerful suggestion that the current model 
match methodology is potentially inaccurate with respect to all the 
CORE products in this administrative review as well. Accordingly, 
Mittal Steel USA believes that it would be unfair for the Department to 
accommodate the POSCO Group's request, while ignoring Mittal Steel 
USA's, thereby allowing a one-way adjustment to the model match 
criteria simply because a respondent is able to provide detailed data 
with respect to its arguments. Mittal Steel USA argues further that a 
one-way adjustment would be arbitrary, prejudicial, and an abuse of the 
Department's discretion.
    Finally, on January 18, 2006, the United States Steel Corporation 
(``U.S. Steel''), submitted additional factual information to the 
record. U.S. Steel's January 18, 2006, submission lacked any narrative 
explanation or description of the eight attachments it submitted to the 
record. Presumably, these exhibits are deemed, by U.S. Steel, relevant 
to this topic in this segment of this proceeding.
    The Department has determined not to alter the model match criteria 
in this segment of the proceeding. While a number of arguments have 
been made by some of the interested parties in this segment of this 
proceeding, none have provided sufficient evidence to compel the 
Department to change its long-standing practice of applying its current 
model matching criteria in this segment of this proceeding. For further 
discussion of this issue, see the August 31, 2006, memorandum from 
James Terpstra, Program Manager, AD/CVD Operations, Office 3, to 
Melissa G. Skinner, Director, AD/CVD Operations,

[[Page 53373]]

Office 3, of which the public version is available in the Central 
Records Unit (CRU), Room B-099 of the main Department building.

Period of Review

    The POR covered by this review is August 1, 2004, through July 31, 
2005.

Scope of the Order

    This order covers 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 Harmonized Tariff Schedule of the United States 
(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, 7217.90.5090. Included in the 
order are flat-rolled products of non-rectangular cross-section where 
such cross-section is achieved subsequent to the rolling process 
including products which have been beveled or rounded at the edges 
(i.e., products which have been ``worked after rolling''). Excluded 
from this order are flat-rolled steel products either plated or coated 
with tin, lead, chromium, chromium oxides, both tin and lead (``terne 
plate''), 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 this 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 this 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.
    These HTSUS item numbers are provided for convenience and customs 
purposes. The written descriptions remain dispositive.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
CORE products produced by the respondents, covered by the scope of the 
order, and sold in the home market during the POR to be foreign like 
products for the purpose of determining appropriate product comparisons 
to CORE sold in the United States.
    Where there were no sales in the ordinary course of trade 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 listed in Appendix V of the 
Department's antidumping questionnaire. In making the product 
comparisons, we matched foreign like products based on the Appendix V 
physical characteristics reported by each respondent. Where sales were 
made in the home market on a different weight basis from the U.S. 
market (theoretical versus actual weight), we converted all quantities 
to the same weight basis, using the conversion factors supplied by the 
respondent, before making our fair-value comparisons.

Normal Value Comparisons

    To determine whether sales of CORE by the respondents to the United 
States were made at less than NV, we compared the Export Price (EP) or 
Constructed Export Price (CEP) to the NV, as described in the ``Export 
Price/Constructed Export Price'' and ``Normal Value'' sections of this 
notice. In accordance with section 777A(d)(2) of the Act, we calculated 
monthly weighted-average prices for NV and compared these to individual 
U.S. transactions.

Export Price/Constructed Export Price

    We calculated the price of U.S. sales based on CEP, in accordance 
with section 772(b) of the Act, which defines the term ``constructed 
export price'' as ``the price at which the subject merchandise is first 
sold (or agreed to be sold) in the United States before or after the 
date of importation by or for the account of the producer or exporter 
of such merchandise or by a seller affiliated with the producer or 
exporter, to a purchaser not affiliated with the producer or exporter, 
as adjusted under subsections (c) and (d) of this section.'' In 
contrast, section 772(a) of the Act defines ``export price'' as ``the 
price at which the subject merchandise is first sold (or agreed to be 
sold) before the date of importation by the producer or exporter of 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, as adjusted under subsection (c) of 
this section.''
    In determining whether to classify U.S. sales as either EP or CEP 
sales, the Department must examine the totality of the circumstances 
surrounding the U.S. sales process, and assess where the reviewed sales 
or agreements of sale were made for purposes of section 772(b) of the 
Act. In the instant case, the record establishes that the sales were 
made in the United States after importation. Dongbu's, the POSCO 
Group's, Union's, and HYSCO's affiliates in the United States (1) took 
title to the subject merchandise and (2) invoiced and received payment 
from the unaffiliated U.S. customers for their sales of the subject 
merchandise to those U.S. customers. Thus, the Department has 
determined that these U.S. sales should be classified as CEP 
transactions under section 772(b) of the Act.
    For Dongbu, the POSCO Group, Union, and HYSCO, we calculated CEP 
based on packed prices to unaffiliated customers in the United States. 
Where appropriate, we made deductions from the starting price for 
foreign inland freight, foreign inland insurance, foreign brokerage and 
handling, international freight, marine insurance, U.S. warehousing 
expenses, U.S. wharfage, U.S. inland freight, U.S. brokerage and 
handling, loading expenses, other U.S. transportation expenses, U.S. 
customs duties, commissions, credit expenses, letter of credit 
expenses, warranty expenses, other direct selling expenses, inventory 
carrying costs incurred in the United States, and other indirect 
selling expenses in the country of manufacture and the United States 
associated with economic activity in the United States. Pursuant to 
section 772(d)(3) of the Act, we made an adjustment for CEP profit. 
Where appropriate, we added interest revenue to the gross unit price.
    In order to ensure that we have accounted for all appropriate U.S.

[[Page 53374]]

interest expenses (i.e. both imputed and actual) without double-
counting, we have utilized the following interest expense methodology. 
As in a previous review, in the U.S. indirect selling expenses, we have 
included net financial expenses incurred by the respondent's U.S. 
affiliates; however, we added U.S. interest expenses only after 
deducting U.S. imputed credit expenses and U.S. inventory carrying 
costs, so as to eliminate the possibility of double-counting U.S. 
interest expenses.\6\
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    \6\ See Notice of the Final Results of Antidumping 
Administrative Reviews: Cold-Rolled (CR) and Corrosion-Resistant 
(CORE) Carbon Steel Flat Products from Korea, 67 FR 11976 (March 11, 
2002) and accompanying Issues and Decision Memorandum at Comment 1, 
on file in the CRU.
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    Consistent with the Department's normal practice, we added the 
reported duty drawback to the gross unit price. We did so in accordance 
with the Department's long-standing test, which requires: (1) That the 
import duty and rebate be directly linked to, and dependent upon, one 
another; and (2) that the company claiming the adjustment demonstrate 
that there were sufficient imports of imported raw materials to account 
for the duty drawback received on the exports of the manufactured 
product. See Preliminary Results of the 11\th\ Review of CORE from 
Korea, 70 FR at 53156.

HYSCO's Sales of Subject Merchandise that were Further Manufactured and 
Sold as Non-Subject Merchandise in the United States

    In its Section A questionnaire response and on November 9, 2005, 
HYSCO requested that the Department exclude certain sales of subject 
merchandise that were further manufactured by its wholly-owned U.S. 
subsidiary, HYSCO America Company (``HAC''), and sold as non-subject 
merchandise in the United States during the POR, citing ``the extreme 
difficulty in calculating CEP for these sales through HAC.''\7\ The 
Department issued several supplemental questionnaires to HYSCO 
regarding these sales. See the Department's supplemental 
questionnaires, dated November 23, 2005, January 4, January 24, and 
April 10, 2006.
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    \7\ See HYSCO's December 5, 2005, Section A questionnaire 
response at 3.
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    In considering the appropriate treatment for these sales, we 
considered the different transactions involved. In the first 
transaction, HYSCO sold subject merchandise to an unrelated trading 
company in the United States; in the second transaction, the unrelated 
U.S. trading company resold the subject merchandise to HAC, HYSCO's 
wholly owned U.S. subsidiary; finally, HAC further processed the 
subject merchandise into non-subject merchandise which it then sold in 
the United States. With respect to the last transaction, we granted 
HYSCO's request to not report its further manufactured sales and 
further manufacturing costs of HAC because such transactions represent 
a comparatively small portion of its total sales and the value added 
before the sale to the first unaffiliated buyer substantially exceeded 
the value of the subject merchandise. Instead, we have included the 
first transaction in our calculations. It is a sale of subject 
merchandise by HYSCO to an unaffiliated purchaser in the United States, 
in accordance with section 772 of the Act. In addition, although the 
subject merchandise is subsequently resold to HYSCO's wholly-owned 
subsidiary, we preliminarily find HYSCO's initial sale of subject 
merchandise to the unrelated U.S. trading company was not 
unrepresentative or distortive. See FAG U.K. Ltd. v. United States, 945 
F. Supp. 260, 265 (CIT 1996).

Normal Value

    Based on a comparison of the aggregate quantity of home market and 
U.S. sales, we determined that the quantity of the foreign like product 
sold in the exporting country was sufficient to permit a proper 
comparison with the sales of the subject merchandise to the United 
States, pursuant to section 773(a) of the Act. Therefore, in accordance 
with section 773(a)(1)(B)(i) of the Act, we based NV on the price at 
which the foreign like product was first sold for consumption in the 
home market, in the usual commercial quantities and in the ordinary 
course of trade.
    Where appropriate, we deducted rebates, discounts, inland freight 
(offset, where applicable, by freight revenue), inland insurance, and 
packing. Additionally, we made adjustments to NV, where appropriate, 
for credit expenses, warranty expenses, post-sale warehousing, and 
differences in weight basis. We also made adjustments, where 
appropriate, for home market indirect selling expenses and inventory 
carrying costs to offset U.S. commissions.
    We also increased NV by U.S. packing costs in accordance with 
section 773(a)(6)(A) of the Act. We made adjustments to NV for 
differences in cost attributable to differences in physical 
characteristics of the merchandise, pursuant to section 
773(a)(6)(C)(ii) of the Act.
    For purposes of calculating the NV, section 771(16) of the Act 
defines ``foreign like product'' as merchandise which is either (1) 
identical or (2) similar to the merchandise sold in the United States. 
When there are no identical products sold in the home market, the 
products which are most similar to the product sold in the United 
States are identified. For the non-identical or most similar products 
which are identified based on the Department's product matching 
criteria, an adjustment is made to the home market sales price to 
account for the actual physical differences between the products sold 
in the United States and the home market or third country market. See 
19 CFR 351.411 and section 773(a)(6)(C)(ii) of the Act.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, we determined 
NV based on sales in the comparison market at the same level of trade 
(LOT) as the CEP sales, to the extent practicable. When there were no 
sales at the same LOT, we compared U.S. sales to comparison market 
sales at a different LOT.
    Pursuant to 19 CFR 351.412, to determine whether CEP sales and NV 
sales were at different LOTs, we examine stages in the marketing 
process and selling functions along the chain of distribution between 
the producer and the unaffiliated (or arm's-length) customers. If the 
comparison market sales are at a different LOT and the differences 
affect price comparability, as manifested in a pattern of consistent 
price differences between sales at different LOTs in the country in 
which NV is determined, we will make an LOT adjustment under section 
773(a)(7)(A) of the Act. For CEP sales, if the NV LOT is at a more 
advanced stage of distribution than the CEP LOT and the data available 
do not provide an appropriate basis to determine an LOT adjustment, we 
will grant a CEP offset, as provided in section 773(a)(7)(B) of the 
Act. See Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 
FR 61731, 61732-33 (November 19, 1997).
    We did not make an LOT adjustment under 19 CFR 351.412(e) because, 
as there was only one home market LOT for each respondent, we were 
unable to identify a pattern of consistent price differences 
attributable to differences in LOTs (see 19 CFR 351.412(d)). Under 19 
CFR 351.412(f), we are preliminarily granting a CEP offset for Dongbu, 
HYSCO, the POSCO group, and Union

[[Page 53375]]

because the NV for these companies are at a more advanced LOT than 
their U.S. CEP sales.
    For a detailed description of our LOT methodology and a summary of 
company-specific LOT findings for these preliminary results, see the 
August 31, 2006, Calculation Memorandum for Dongbu Steel Co., Ltd.; 
Calculation Memorandum for Hyundai HYSCO; Calculation Memorandum for 
Pohang Iron & Steel Company, Ltd. (POSCO) and Pohang Coated Steel Co., 
Ltd. (POCOS) - (collectively, the POSCO Group); and Calculation 
Memorandum for Union Steel Manufacturing Co., Ltd., of which the public 
versions are on file in the CRU.

Cost of Production

A. Calculation of COP

    We are investigating COP for Dongbu, HYSCO, the POSCO group, and 
Union because during the most recently completed segments of the 
proceeding in which Dongbu, HYSCO, the POSCO Group, and Union 
participated, the Department found and disregarded sales that failed 
the cost test. We calculated a company-specific COP for Dongbu, HYSCO, 
the POSCO Group, and Union based on the sum of each respondent's cost 
of materials and fabrication for the foreign like product, plus amounts 
for home-market selling expenses, selling, general and administrative 
expenses (SG&A), and packing costs in accordance with section 773(b)(3) 
of the Act. We relied on Dongbu's, the POSCO Group's, Union's and 
HYSCO's information as submitted.

B. Major Input Rule

    1. Major Input Rule: HYSCO
    Pursuant to section 773(f)(3) of the Act and 19 CFR 351.407(b), the 
Department may value major inputs purchased from affiliated suppliers 
at the higher of the transfer price, the market price, or the 
affiliate's COP. HYSCO reported purchases of raw material input 
accounting for a significant portion of its total material cost from an 
affiliated supplier. We requested that HYSCO supply its affiliate 
supplier's COP information for the major material input. In HYSCO's 
letter dated July 19, 2006, HYSCO indicated that, despite its repeated 
requests, its affiliated supplier has refused to provide the COP 
information. Where an interested party or any other person withholds 
necessary information that has been requested, the application of facts 
available is appropriate in reaching a determination, in accordance 
with section 776(a) of the Act. Under section 776(b) of the Act, we may 
use an inference adverse to the interests of an interested party that 
has failed to cooperate by not acting to the best of its ability to 
comply with a request for information. In determining whether a 
respondent has acted to the best of its ability in seeking the COP 
information from its affiliate, the Department usually examines the 
nature of the affiliation, in addition to other facts. See Certain Cut-
to-Length Carbon Steel Plate from Brazil: Final Results of Antidumping 
Duty Administrative Review, 63 FR 12744, 1275l (March 16, 1998) (Plate 
from Brazil). Given the nature of the affiliation, we determine that 
HYSCO made reasonable attempts to obtain the requested COP information 
from its affiliate. See the August 31, 2006 Calculation Memorandum for 
Hyundai HYSCO, where the Department discusses HYSCO's specific attempts 
to obtain this cost data. Therefore, we are not applying an adverse 
inference in selecting from the facts available.
    In prior cases, we have turned to other COP information on the 
record, if available, as non-adverse ``gap-filling'' facts available. 
However, the record contains no other information about the affiliated 
supplier's COP. In prior cases, when there is no such COP data on the 
record and no indication that the affiliated supplier's COP is higher 
than the transfer or market price, we have used the higher of the 
transfer price or the market price as facts available. See Plate from 
Brazil at 12751; Notice of Final Determination of Sales at Less Than 
Fair Value: Certain Polyester Staple Fiber from the Republic of Korea, 
65 FR 16880 (March 30, 2000), and accompanying Issues and Decision 
Memorandum at Comment 6. As facts available for the major input, we are 
using the market prices that HYSCO reported for its purchases of the 
major input from unaffiliated suppliers. See the August 31, 2006, 
Calculation Memorandum for Hyundai HYSCO, on file in the CRU.
    2. Major Input Rule: Union
    The Department reviewed Union's reported cost of materials for the 
preliminary results of this review. We found that the transfer price 
that Union paid to its affiliate for a raw material input was higher 
than either Union's market price or its affiliated supplier's COP. 
Thus, Union's COP was correctly based on Union's transfer price. 
Therefore, we made no adjustments to the reported cost of input 
materials from Union's suppliers. See the August 8, 2006, Calculation 
Memorandum for Union Manufacturing Inc. at 4.

D. Test of Home-Market Prices

    In determining whether to disregard home market sales made at 
prices below the COP, as required under sections 773(b)(1)(A) and (B) 
of the Act, we compared the weighted-average COP figures to home market 
sales of the foreign like product and we examined whether (1) within an 
extended period of time, such sales were made in substantial 
quantities, and (2) such sales were made at prices which permitted the 
recovery of all costs within a reasonable period of time. On a product-
specific basis, we compared the COP to the home market prices (not 
including VAT), less any applicable movement charges, discounts, and 
rebates.

E. Results of COP Test

    Pursuant to section 773(b)(1) of the Act, we may disregard below 
COP sales in the determination of NV if these sales have been made 
within an extended period of time in substantial quantities and were 
not at prices which permit recovery of all costs within a reasonable 
period of time. Where 20 percent or more of a respondent's sales of a 
given product during the POR were at prices less than the COP for at 
least six months of the POR, we determined that sales of that model 
were made in ``substantial quantities'' within an extended period of 
time, in accordance with sections 773(b)(2)(B) and (C) of the Act. 
Where prices of a respondent's sales of a given product were below the 
per-unit COP at the time of sale and below the weighted-average per-
unit costs for the POR, we determined that sales were not 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. In such 
cases, we disregarded the below-cost sales in accordance with section 
773(b)(1) of the Act.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's sales of a given product 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.''
    We tested and identified below-cost home market sales for Dongbu, 
Union, the POSCO Group, and HYSCO. We disregarded individual below-cost 
sales of a given product and used the remaining sales as the basis for 
determining NV, in accordance with section 773(b)(1) of the Act. See 
the August 31, 2006, Calculation Memorandum for Dongbu Steel Co., Ltd.; 
Calculation Memorandum for

[[Page 53376]]

Hyundai HYSCO; Calculation Memorandum for Pohang Iron & Steel Company, 
Ltd. (POSCO) and Pohang Coated Steel Co., Ltd. (POCOS) - (collectively, 
the POSCO Group); and Calculation Memorandum for Union Steel 
Manufacturing Co., Ltd.

Arm's-Length Sales

    The POSCO Group reported sales of the foreign like product to an 
affiliated reseller/service center. Dongbu and HYSCO also reported that 
they made sales in the home market to affiliated parties. The 
Department calculates NV based on a sale to an affiliated party only if 
it is satisfied that the price to the affiliated party is comparable to 
the price at which sales are made to parties not affiliated with the 
producer or exporter, i.e., sales at arm's length. See 19 CFR 
351.403(c).
    To test whether these sales were made at arm's length, we compared 
the starting prices of sales to affiliated and unaffiliated customers 
net of all movement charges, direct selling expenses, discounts and 
packing. In accordance with the Department's current 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 considered the sales to be at arm's-length prices. See Notice 
of Preliminary Results and Partial Rescission of Antidumping Duty 
Administrative: Ninth Administrative Review of the Antidumping Duty 
Order on Certain Pasta from Italy, 71 FR 45017, 45020 (August 8, 2006); 
19 CFR 351.403(c). Conversely, where we found sales to the affiliated 
party that did not pass the arm's-length test, all sales to that 
affiliated party have been excluded from the NV calculation. See 
Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course 
of Trade, 67 69186, 69187 (November 15, 2002).

Currency Conversion

    For purposes of these preliminary results, we made currency 
conversions in accordance with section 773A(a) of the Act, based on the 
official exchange rates published by the Federal Reserve Bank.

Preliminary Results of the Review

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

------------------------------------------------------------------------
                                                       Weighted-Average
                Producer/Manufacturer                       Margin
------------------------------------------------------------------------
Dongbu..............................................        1.97[percnt]
HYSCO...............................................    0.03[percnt] (de
                                                                minimis)
The POSCO Group.....................................    0.48[percnt] (de
                                                                minimis)
Union...............................................        1.69[percnt]
------------------------------------------------------------------------

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties of this 
proceeding in accordance with 19 CFR 351.224(b). Interested parties may 
submit case and rebuttal briefs in accordance with 19 CFR 351.309. The 
Department will announce the due date of the case briefs at a later 
date. Rebuttal briefs must be limited to issues raised in the case 
briefs. Parties who submit arguments are requested to submit with the 
argument (1) a statement of the issue, and (2) a brief summary of the 
argument. Further, parties submitting written comments are requested to 
provide the Department with an additional copy of the public version of 
any such comments on a diskette. An interested party may request a 
hearing within 30 days of publication of these preliminary results. See 
19 CFR 351.310(c). Any hearing, if requested, ordinarily will be held 
two days after the due date of the rebuttal briefs. The Department will 
issue the final results of this administrative review, which will 
include the results of its analysis of issues raised in any such 
comments, or at a hearing, if requested, within 120 days of publication 
of these preliminary results.

Assessment Rate

    Upon completion of this administrative review, the Department shall 
determine, and U.S. Customs and Border Protection (CBP) shall assess, 
antidumping duties on all appropriate entries. Within 15 days of 
publication of the final results of this administrative review, if any 
importer-specific ad valorem rates calculated in the final results are 
above de minimis (i.e., at or above 0.5 percent), the Department will 
issue appraisement instructions directly to CBP to assess antidumping 
duties on appropriate entries. The total customs value is based on the 
entered value reported for each importer for all U.S. entries of 
subject merchandise purchased during the POR for consumption in the 
United States.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. See Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003). This 
clarification will apply to entries of subject merchandise during the 
POR produced by the companies included in these preliminary results for 
which the reviewed companies did not know their merchandise 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 intermediate company or companies involved in the 
transaction.

Cash Deposit Requirements

    To calculate the cash deposit rate for each producer and/or 
exporter included in this administrative review, we divided the total 
dumping margins for each company by the total net value for that 
company's sales during the review period.
    The following deposit rates will be effective upon publication of 
the final results of this administrative review for all shipments of 
CORE for Korea entered, or withdrawn from warehouse, for consumption on 
or after the publication date, as provided by section 751(a)(2)(C) of 
the Act: (1) The cash deposit rates for the companies listed above will 
be the rates established in the final results of this review, except if 
the rate is less than 0.5 percent and, therefore, de minimis, the cash 
deposit will be zero; (2) for previously reviewed or investigated 
companies not listed above, the cash deposit rate will continue to be 
the company-specific rate published for the most recent final results 
in which that manufacturer or exporter participated; (3) if the 
exporter is not a firm covered in these reviews, a prior review, or the 
original less-than-fair-value investigation, but the manufacturer is, 
the cash deposit rate will be the rate established for the most recent 
final results for the manufacturer of the merchandise; and (4) if 
neither the exporter nor the manufacturer is a firm covered in these or 
any previous review conducted by the Department, the cash deposit rate 
will be 17.70 percent, the ``All Others'' rate established in the 
underlying investigation. See Orders on Certain Steel from Korea. These 
cash deposit requirements, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.

Notification to Importers

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

[[Page 53377]]

antidumping duties occurred and the subsequent assessment of double 
antidumping duties.
    This administrative review is 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 Secretaryfor Import Administration.
[FR Doc. E6-15004 Filed 9-8-06; 8:45 am]
BILLING CODE 3510-DS-S