Stainless Steel Wire Rod From Sweden: Preliminary Results of Antidumping Duty Administrative Review, 59082-59088 [E6-16518]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 71, Number 194 (Friday, October 6, 2006)]
[Notices]
[Pages 59082-59088]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-16518]


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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-401-806]


Stainless Steel Wire Rod From Sweden: Preliminary Results of 
Antidumping Duty Administrative Review

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

SUMMARY: In response to a timely request by the petitioners,\1\ the 
Department of Commerce (``the Department'') is conducting an 
administrative review of the antidumping duty order on stainless steel 
wire rod (``SSWR'') from Sweden with respect to Fagersta Stainless AB 
(``FSAB''). The period of review (``POR'') is September 1, 2004, 
through August 31, 2005.
---------------------------------------------------------------------------

    \1\ The petitioners include the following companies: Carpenter 
Technology Corporation, Dunkirk Specialty Steel, LLC Clearon 
Corporation and Occidental Chemical Corporation.
---------------------------------------------------------------------------

    We preliminarily determine that sales have been made below normal 
value (``NV''). Interested parties are invited to comment on the 
preliminary results. If the preliminary results are adopted in our 
final results of administrative review, we will instruct U.S. Customs 
and Border Protection (``CBP'') to assess antidumping duties on all 
appropriate entries.

EFFECTIVE DATE: October 6, 2006.

FOR FURTHER INFORMATION CONTACT: Brian C. Smith, AD/CVD Operations, 
Office 2, Import Administration-Room B-099, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
1766.

SUPPLEMENTARY INFORMATION: 

Background

    On September 15, 1998, the Department published in the Federal 
Register an antidumping duty order on SSWR from Sweden. See Notice of 
Antidumping Duty Order: Stainless Steel Wire Rod from Sweden, 63 FR 
49329 (``SSWR Order''). On September 30, 2005, the petitioners 
submitted a letter timely requesting that the Department conduct an 
administrative review of the sales of SSWR made by FSAB, pursuant to 
section 751 of the Tariff Act of 1930, as amended (``the Act''). The 
Department published a notice of initiation of an administrative review 
with respect to FSAB. See Initiation of Antidumping and Countervailing 
Duty Reviews, 70 FR 61601 (October 25, 2005). On November 7, 2005, we 
issued an antidumping duty questionnaire to FSAB. FSAB submitted its 
section A questionnaire response in December 2005 and responses to the 
remaining sections of the questionnaire in January 2006. We also issued 
to FSAB a section A supplemental questionnaire in January 2006 and a 
sections B and C supplemental questionnaire in February 2006. We 
received FSAB's timely responses to these supplemental questionnaires 
in March and April 2006, respectively.
    On April 13, 2006, we issued a decision memorandum which outlined 
the Department's basis for collapsing FSAB with its affiliates, AB 
Sandvik Materials Technology (``SMT'') and Kanthal AB (``Kanthal''), 
and treating them as a single entity in this review. See April 13, 
2006, Memorandum from the Team to The File, entitled, Stainless Steel 
Wire Rod from Sweden: Whether to Collapse FSAB, SMT, and Kanthal. Also, 
on April 13, 2006, we issued to FSAB a supplemental sections D and E 
questionnaire to which it submitted its response on May 11, 2006.
    On April 26, 2006, we extended the time limit for the preliminary 
results in this review until August 1, 2006. See Stainless Steel Wire 
Rod from Sweden: Notice of Extension of Time Limit for 2004-2055 
Administrative Review, 71 FR 25813 (May 2, 2006).
    On May 19, 2006, we issued to FSAB a second sections B and C 
supplemental questionnaire for which it submitted its response on June 
19, 2006.
    On June 8, we issued to FSAB a sections D and E second supplemental 
questionnaire to which it submitted its response on July 6, 2006.
    On June 19 and 22, 2006, we met with counsel for FSAB and the 
petitioners, respectively, at their requests, to discuss FSAB's 
proposal that the Department include an additional criterion (i.e., 
electro-slag refining (``ESR'')) to the current model-matching criteria 
used in this administrative review (see June 21, 2006, Memorandum to 
the File, entitled, Ex-Parte Meeting with FSAB; and June 28, 2006, 
Memorandum to the File, entitled, Ex-Parte Meeting with Counsel for the 
Petitioners).
    As a result of the above-mentioned meetings, we issued letters to 
FSAB and the petitioners on July 10, 2006, in which we invited them to 
comment further on this matter. On July 12, 2006, we met with a Swedish 
Embassy official, at the Swedish Embassy's request, to discuss the ESR 
matter (see July 13, 2006, Memorandum to the File, entitled, Ex-Parte 
Meeting with Swedish Embassy Official). In response to the Department's 
July 10, 2006, letters, both parties submitted comments on July 17, 
2006. On July 24, 2006, only FSAB submitted rebuttal comments on this 
matter.
    In order to fully consider the parties' comments on the ESR matter, 
we fully extended the time limit for the preliminary results in this 
review until October 2, 2006. See Stainless Steel Wire Rod from Sweden: 
Notice of Extension of Time Limit for 2004-2055 Administrative Review, 
71 FR 40698 (July 18, 2006).
    On July 28, 2006, we issued to FSAB a third sections D and E 
supplemental questionnaire to which it submitted its response on August 
18, 2006.

Scope of the Order

    For purposes of this order, SSWR comprises products that are hot-
rolled or hot-rolled annealed and/or pickled and/or descaled rounds, 
squares, octagons, hexagons or other shapes, in coils, that may also be 
coated with a lubricant containing copper, lime or oxalate. SSWR is 
made of alloy steels containing, by weight, 1.2 percent or less of 
carbon and 10.5 percent or more of chromium, with or without other 
elements. These products are manufactured only by hot-rolling or hot-
rolling annealing, and/or pickling and/or descaling, are normally sold 
in coiled

[[Page 59083]]

form, and are of solid cross-section. The majority of SSWR sold in the 
United States is round in cross-sectional shape, annealed and pickled, 
and later cold-finished into stainless steel wire or small-diameter 
bar. The most common size for such products is 5.5 millimeters or 0.217 
inches in diameter, which represents the smallest size that normally is 
produced on a rolling mill and is the size that most wire-drawing 
machines are set up to draw. The range of SSWR sizes normally sold in 
the United States is between 0.20 inches and 1.312 inches in diameter.
    Certain stainless steel grades are excluded from the scope of the 
order. SF20T and K-M35FL are excluded. The following proprietary grades 
of Kanthal AB are also excluded: Kanthal A-1, Kanthal AF, Kanthal A, 
Kanthal D, Kanthal DT, Alkrothal 14, Alkrothal 720, and Nikrothal 40. 
The chemical makeup for the excluded grades is as follows:

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
                                                      SF20T
----------------------------------------------------------------------------------------------------------------
Carbon...............................  0.05 max...............  Chromium...............  19.00/21.00.
Manganese............................  2.00 max...............  Molybdenum.............  1.50/2.50.
Phosphorous..........................  0.05 max...............  Lead...................  added (0.10/0.30).
Sulfur...............................  0.15 max...............  Tellurium..............  added (0.03 min).
Silicon..............................  1.00 max...............
----------------------------------------------------------------------------------------------------------------
                                                     K-M35FL
----------------------------------------------------------------------------------------------------------------
Carbon...............................  0.015 max..............  Nickel.................  0.30 max.
Silicon..............................  0.70/1.00..............  Chromium...............  12.50/14.00.
Manganese............................  0.40 max...............  Lead...................  0.10/0.30.
Phosphorous..........................  0.04 max...............  Aluminum...............  0.20/0.35.
Sulfur...............................  0.03 max...............
----------------------------------------------------------------------------------------------------------------
                                                   Kanthal A-1
----------------------------------------------------------------------------------------------------------------
Carbon...............................  0.08 max...............  Aluminum...............  5.30 min, 6.30 max.
Silicon..............................  0.70 max...............  Iron...................  balance.
Manganese............................  0.40 max...............  Chromium...............  20.50 min, 23.50 max.
----------------------------------------------------------------------------------------------------------------
                                                   Kanthal AF
----------------------------------------------------------------------------------------------------------------
Carbon...............................  0.08 max...............  Aluminum...............  4.80 min, 5.80 max.
Silicon..............................  0.70 max...............  Iron...................  balance.
Manganese............................  0.40 max...............
Chromium.............................  20.50 min, 23.50 max...
----------------------------------------------------------------------------------------------------------------
                                                    Kanthal A
----------------------------------------------------------------------------------------------------------------
Carbon...............................  0.08 max...............  Aluminum...............  4.80 min, 5.80 max.
Silicon..............................  0.70 max...............  Iron...................  balance.
Manganese............................  0.50 max...............
Chromium.............................  20.50 min, 23.50 max...
----------------------------------------------------------------------------------------------------------------
                                                    Kanthal D
----------------------------------------------------------------------------------------------------------------
Carbon...............................  0.08 max...............  Aluminum...............  4.30 min, 5.30 max.
Silicon..............................  0.70 max...............  Iron...................  balance.
Manganese............................  0.50 max...............
Chromium.............................  20.50 min, 23.50 max...
----------------------------------------------------------------------------------------------------------------
                                                   Kanthal DT
----------------------------------------------------------------------------------------------------------------
Carbon...............................  0.08 max...............  Aluminum...............  4.60 min, 5.60 max.
Silicon..............................  0.70 max...............  Iron...................  balance.
Manganese............................  0.50 max...............
Chromium.............................  20.50 min, 23.50 max...
----------------------------------------------------------------------------------------------------------------
                                                  Alkrothal 14
----------------------------------------------------------------------------------------------------------------
Carbon...............................  0.08 max...............  Aluminum...............  3.80 min, 4.80 max.
Silicon..............................  0.70 max...............  Iron...................  balance.
Manganese............................  0.50 max...............
Chromium.............................  14.00 min, 16.00 max...
----------------------------------------------------------------------------------------------------------------
                                                  Alkrothal 720
----------------------------------------------------------------------------------------------------------------
Carbon...............................  0.08 max...............  Aluminum...............  3.50 min, 4.50 max.
Silicon..............................  0.70 max...............  Iron...................  balance.
Manganese............................  0.70 max...............
Chromium.............................  12.00 min, 14.00 max...
----------------------------------------------------------------------------------------------------------------

[[Page 59084]]

 
                                                  Nikrothal 40
----------------------------------------------------------------------------------------------------------------
Carbon...............................  0.10 max...............  Nickel.................  34.00 min, 37.00 max.
Silicon..............................  1.60 min, 2.50 max.....  Iron...................  balance.
Manganese............................  1.00 max...............
Chromium.............................  18.00 min, 21.00 max...
----------------------------------------------------------------------------------------------------------------

    The subject merchandise is currently classifiable under subheadings 
7221.00.0005, 7221.00.0015, 7221.00.0030, 7221.00.0045, and 
7221.00.0075 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). Although the HTSUS subheadings are provided for 
convenience and customs purposes, the written description of the scope 
of this order is dispositive.

Fair Value Comparisons

    To determine whether sales of SSWR by FSAB to the United States 
were made at less than NV, we compared constructed export price 
(``CEP'') to the NV, as described in the ``Constructed Export Price'' 
and ``Normal Value'' sections of this notice.
    Pursuant to section 777A(d)(2) of the Act, we compared the CEPs of 
individual U.S. transactions to the weighted-average NV of the foreign 
like product where there were sales made in the ordinary course of 
trade, as discussed in the ``Cost of Production Analysis'' section 
below.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by FSAB covered by the description in the ``Scope of 
the Order'' section, above, to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. Pursuant to 
19 CFR 351.414(e)(2)(ii), we compared U.S. sales to sales made in the 
home market within the contemporaneous window period, which extends 
from three months prior to the month of the U.S. sale until two months 
after the sale. Where there were no sales of identical merchandise in 
the comparison market made in the ordinary course of trade to compare 
to U.S. sales, we compared U.S. sales to sales of the most similar 
foreign like product made in the ordinary course of trade. In making 
the product comparisons, we matched foreign like products based on the 
physical characteristics reported by FSAB in the following hierarchical 
order: grade, diameter, further processing, and coating.

Electro-Slag Refining

    In its January 11, 2006, section B questionnaire response 
(``section B response''), FSAB requested that the Department include an 
additional characteristic, ESR,\2\ in the above-noted model-matching 
criteria and also consider it as one of the most significant physical 
characteristics in the product matching hierarchy. In support of its 
request, FSAB provided data in its questionnaire responses \3\ to 
demonstrate that ESR, one of two remelting methods \4\ used by FSAB, is 
a separate processing stage in the production of billets, which are 
used in the production of certain subject SSWR products. FSAB states 
that ESR removes certain inclusions, or impurities, from the steel 
(e.g., aluminum nitride), making it stronger and less prone to breaking 
under stress. Through subsequent supplemental questionnaires issued to 
FSAB on its ESR process, we requested that FSAB provide more 
information on the ESR method of remelting, as well as VAR remelting. 
As mentioned in the ``Background'' section of this notice, we also met 
with FSAB representatives on June 19, 2006, to discuss the ESR matter. 
In addition, we provided the parties in this review the opportunity to 
comment on this matter.
---------------------------------------------------------------------------

    \2\ FSAB subsequently stated in its July 17, 2006, submission 
that its request to include ESR in the matching criteria also 
included other forms of remelting, as well.
    \3\ See January 11, 2006, section B Response at pages B-2 
through B-6, Exhibit B-1, and Exhibit B-2; January 18, 2006, section 
C Response at page C-3; April 4, 2006, Supplemental Questionnaire 
Response at pages 9 through 19, and Exhibits S-6 through S-12; and 
June 19, 2006, Supplemental Response at pages 1-2.
    \4\ Remelting may be done using different methods, such as ESR 
and vacuum arc refining (``VAR'').
---------------------------------------------------------------------------

    As support for its request that remelting be added to the model-
matching criteria, FSAB claims that ESR and VAR remelting impart 
important physical characteristics, as evidenced by the fact that it 
uses both remelting methods to produce many of its SSWR grades.\5\ FSAB 
also emphasizes that ESR has a significant impact on the price and 
production costs of certain SSWR grades which, if not taken into 
account, results in inaccurate product comparisons. As such, FSAB 
argues that the addition of ESR to the model-matching criteria will 
result in more reasonable price-to-price comparisons. Also, FSAB 
asserts that although remelting was never considered in the less-than-
fair-value (``LFTV'') segment of the proceeding, it should be 
considered in this review. Finally, FSAB notes that the Department has 
recognized ESR remelting as a significant product matching criterion in 
proceedings concerning stainless steel bar (``SSB''), another stainless 
steel product.
---------------------------------------------------------------------------

    \5\ Although FSAB's main focus is with ESR, FSAB subsequently 
clarified in its July 17, 2006, submission that it also views VAR in 
the same manner. However, because VAR, unlike ESR, has not been 
argued extensively by FSAB, we have for the most part limited our 
discussion of remelting to ESR.
---------------------------------------------------------------------------

    The petitioner maintains that the Department should not alter the 
existing model-matching criteria because, while remelting has been used 
in SSWR production since before the Department conducted the LTFV 
segment of this proceeding, the Department has never used it as a 
matching criterion in this proceeding. The petitioner asserts that, 
unlike in SSB production, ESR is only required in limited situations 
(e.g., aeronautical use) and is not commonly used in the SSWR industry. 
Moreover, the petitioner argues that if the Department were to consider 
including remelting (i.e., both ESR and VAR) in the matching criteria, 
the Department would also need to consider other additional production 
steps or special operations (e.g., double annealing, shaving) as 
matching criteria.
    When identical merchandise is not available in the home market for 
comparison to merchandise sold to the United States, the Department 
will compare ``similar'' merchandise based upon the physical 
characteristics of the merchandise being compared. See section 
771(16)(B) of the Act. The statute also instructs the Department to 
compare merchandise that is produced in the same country and by the 
same person as the subject merchandise; like that subject merchandise 
in component material or materials and in the purposes for which used; 
and approximately equal in commercial value to the subject merchandise. 
Section 771(16)(C) of the Act instructs that, where no matches can be 
found under section 771(16)(B) of the Act, three criteria must be met 
to consider a product similar to the U.S. model: (1) The comparison-
market model must be produced in the same country and by the same 
person and of the same general class or kind as the merchandise which 
is the subject of the investigation; (2) the

[[Page 59085]]

comparison-market model must be like that merchandise in the purposes 
for which used; and (3) the comparison-market model must be found to be 
reasonably comparable to the U.S. model by the Department.
    When the Department has an established model-matching methodology 
in a proceeding, it may alter its established methodology if there is a 
reasonable basis for doing so. See NTN Bearing Corp. v. United States, 
295 F. 3rd 1263, 1269 (CIT 2002). With respect to changes to its model-
matching methodology, the Department has applied a ``compelling 
reasons'' standard, which is fully consistent, if not more rigorous, 
than the principles applied by the courts in reviewing the Department's 
determination to alter or change its practice. See Ball Bearings and 
Parts Thereof From France, Germany, Italy, Japan, Singapore, and the 
United Kingdom: Final Results of Antidumping Duty Administrative 
Review, 70 FR 54711 (September 16, 2005), and accompanying Issues and 
Decision Memorandum at Comment 2 (``Ball Bearings''). Compelling 
reasons that warrant a change to the model-matching methodology may 
include, for example, greater accuracy in comparing foreign like 
product to the single most similar U.S. model, in accordance with 
section 771(16)(B) of the Act, or a greater number of reasonable price-
to-price comparisons in accordance with section 773(a)(1) of the Act.
    According to the information contained in FSAB's questionnaire 
responses, FSAB used ESR remelting for the production of only one 
select grade of SSWR sold in the home market during the POR, while the 
same grade, produced without ESR remelting, was sold in the U.S. market 
during the POR. As such, the ESR remelting issue pertains to only one 
grade used in the price-to-price comparisons. Moreover, FSAB made just 
one sale of this single grade in the home market during the POR. 
Finally, FSAB's data also indicate that FSAB had no sales of SSWR in 
either market for which any other form of remelting, such as VAR, was 
used in the production process.
    The data contained in FSAB's questionnaire responses indicate that 
remelting (i.e., ESR and VAR) appears to impart certain physical 
characteristics (e.g., fewer impurities, increased tolerance) to the 
billets used to produce subject merchandise compared to billets for 
which remelting was not used. In addition, there appear to be certain 
price and cost differences associated with ESR remelting with respect 
to the production of FSAB's one affected grade. However, FSAB has not 
demonstrated that the addition of ESR to the model-matching criteria 
would result in greater accuracy in comparing the foreign like product 
to the single most similar U.S. model. In particular, the physical 
differences associated with remelting appear to be minor, specifically 
with respect to the chemical composition of the steel grade itself. In 
addition, price and cost differences associated with a different 
production process do not necessarily warrant an alteration of the 
model-matching criteria. The important question is whether the 
different production process has a significant impact on the physical 
characteristics of the subject merchandise. In this case, again, we 
find that the impact is minor. Further, because the physical 
differences resulting from ESR remelting are associated with just a 
single sale of one particular grade in the home market, we 
preliminarily find that altering our model-matching criteria by adding 
ESR remelting as a matching criterion would not have a significant 
impact on the number of reasonable price-to-price comparisons.
    FSAB further argues that the Department should use remelting as a 
model matching criterion in this review because it is used for matching 
purposes in a proceeding involving another stainless steel product 
(i.e., SSB). However, we note that in other proceedings involving 
stainless steel products, the Department has not used remelting as a 
model-matching criterion.\6\ Moreover, in SSB, the Department 
determined that remelting was an appropriate product matching criterion 
based on the case-specific information on the record of that proceeding 
(see September 29, 2006, memorandum to the file, which includes 
discussion of remelting in the SSB proceeding).
---------------------------------------------------------------------------

    \6\ Other cases involving stainless steel products for which 
remelting is not a model-matching characteristic include the 
following: stainless steel butt-weld pipe fittings (e.g., A-475-
828), stainless steel sheet and strip and coils (e.g., A-583-831), 
and stainless steel plate in coils (e.g., A-583-830).
---------------------------------------------------------------------------

    After considering the information provided by FSAB and the 
determination in Ball Bearings, we believe that record evidence does 
not provide a reasonable basis for changing the model-matching criteria 
as suggested by FSAB. Therefore, the Department has preliminarily 
determined to not modify the model-matching criteria used in this 
review.

Constructed Export Price

    We calculated CEP in accordance with section 772(b) of the Act 
because the subject merchandise was either sold for the account of FSAB 
by its subsidiary, FSI, in the United States to unaffiliated 
purchasers, or subsequently further manufactured into non-subject 
merchandise by its affiliate, SMT U.S., in the United States and then 
resold to its unaffiliated customers.
    We based CEP on the packed prices to unaffiliated purchasers in the 
United States. We identified the correct starting price by adjusting 
for alloy surcharges, freight revenue, and billing adjustments 
associated with the sale, and by making deductions for early payment 
discounts and volume rebates, where applicable, as required by section 
772 of the Act. We also made deductions for movement expenses in 
accordance with section 772(c)(2)(A) of the Act. These expenses 
included, where appropriate, foreign inland freight (including freight 
from the plant to the port of exportation), brokerage and handling, 
ocean freight, marine insurance, U.S. inland freight expenses 
(including freight from the U.S. port to the U.S. customer or warehouse 
and freight from the warehouse to the unaffiliated customer), U.S. 
customs fees (including harbor maintenance fees and merchandise 
processing fees), and warehousing expenses. In accordance with section 
772(d)(1) of the Act, we deducted those selling expenses associated 
with economic activities occurring in the United States, including 
direct selling expenses (credit expenses, warranty expenses, 
advertising expenses, and repacking expenses) and indirect selling 
expenses (including inventory carrying costs) incurred in the country 
of exportation and the United States. We also deducted an amount for 
further-manufacturing costs, where applicable, in accordance with 
section 772(d)(2) of the Act, and made an adjustment for profit in 
accordance with section 772(d)(3) of the Act. To calculate the cost of 
further manufacturing, we relied on SMT U.S.'s reported cost of further 
manufacturing materials, labor, and overhead, plus amounts for further 
manufacturing and financial expenses. We adjusted FSAB's reported 
general and administrative expenses (``G&A'') for further manufacturing 
by including material costs in the denominator of the further 
manufacturer's G&A expense rate calculation. We applied the G&A expense 
rate to the sum of SMT U.S.'s COM and FSAB's COP for that merchandise. 
For further details regarding this adjustment, please see the 
Memorandum from Michael Harrison, Senior Accountant, to Neal M. Halper, 
Director of Accounting, ``Cost of Production and Constructed Value 
Calculation Adjustments for the

[[Page 59086]]

Preliminary Results--Fagersta Stainless AB'' (``COP/CV Memo'') dated 
September 29, 2006.

Normal Value

A. Home Market Viability

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared the volume of home market sales of the foreign like product 
to the volume of U.S. sales of the subject merchandise, in accordance 
with section 773(a)(1)(B) of the Act.
    Because FSAB's aggregate volume of home market sales of the foreign 
like product was greater than five percent of its aggregate volume of 
U.S. sales of the subject merchandise, we determined that its home 
market was viable.

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

    During the POR, FSAB sold the foreign like product to an affiliated 
customer. To test whether these sales were made at arm's-length prices, 
we compared, on a product-specific basis, the starting prices of sales 
to affiliated and unaffiliated customers, net of all discounts and 
rebates, movement charges, direct selling expenses, and packing 
expenses. Pursuant to 19 CFR 351.403(c) and in accordance with the 
Department's practice, where the price to the affiliated party was, on 
average, within a range of 98 to 102 percent of the price of the same 
or comparable merchandise sold to unaffiliated parties, we determined 
that sales made to the affiliated party were at arm's length. See 
Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course 
of Trade, 67 FR 69186, 69187 (November 15, 2002) (establishing that the 
overall ratio calculated for an affiliate must be between 98 percent 
and 102 percent in order for sales to be considered in the ordinary 
course of trade and used in the NV calculation). Sales to the 
affiliated customer in the home market that were not made at arm's-
length prices were excluded from our analysis because we considered 
these sales to be outside the ordinary course of trade. See 19 CFR 
351.102(b).

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 level of trade (``LOT'') as the export price (``EP'') or CEP. 
Sales are made at different LOTs if they are made at different 
marketing stages (or their equivalent). See 19 CFR 351.412(c)(2). 
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) (Plate from 
South Africa). 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), including selling functions, class of customer (customer 
category), and the level of selling expenses for each type of sale.
    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying LOTs 
for EP and comparison market sales (i.e., NV based on either home 
market or third country prices),\7\ we consider the starting prices 
before any adjustments. For CEP sales, we consider only the selling 
activities reflected in the price after the deduction of expenses and 
profit under section 772(d) of the Act. See Micron Technology, Inc. v. 
United States, 243 F. 3d 1301, 1314 (Fed. Cir. 2001).
---------------------------------------------------------------------------

    \1\ Where NV is based on constructed value (``CV''), we 
determine the NV LOT based on the LOT of the sales from which we 
derive selling expenses, G & A expenses, and profit for CV, where 
possible.
---------------------------------------------------------------------------

    When the Department is unable to match U.S. 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 at a different LOT 
in the comparison market, where available data make it practicable, we 
make an LOT adjustment under 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 there is no basis for determining whether the 
difference in LOTs between NV and CEP affects price comparability 
(i.e., no LOT adjustment was practicable), the Department shall grant a 
CEP offset, as provided in section 773(a)(7)(B) of the Act. See Plate 
from South Africa, 62 FR at 61732. We obtained information from FSAB 
regarding the marketing stages involved in making the reported foreign 
market and U.S. sales, including a description of the selling 
activities performed for each channel of distribution.
    FSAB only sold SSWR to end-users in the home market, but sold to 
both end-users and distributors in the U.S. market. FSAB reported that 
it made CEP sales in the U.S. market through the following two channels 
of distribution: (1) Sales of FSAB-produced SSWR to its U.S. affiliate 
FSI (``U.S. Channel 1''), and (2) sales of FSAB-produced SSWR to its 
U.S. affiliate SMT U.S. (which further manufactured the SSWR into wire 
products for sale to its unaffiliated U.S. customers) (``U.S. Channel 
2''). We compared the selling activities performed in each channel, and 
found that the same selling functions (i.e., sales process/marketing 
support and freight/delivery) were performed at the same relative level 
of intensity in both channels of distribution. With regard to the other 
two selling functions considered in this analysis (i.e., warehousing/
inventory and quality assurance/warranty service), we find that the 
differences are insignificant between U.S. Channel 1 and U.S. Channel 
2. As a result, both U.S. channels, on balance, are at the same LOT. 
Accordingly, we find that all CEP sales constitute one LOT. For further 
discussion on this matter, see September 29, 2006, Memorandum to the 
File, entitled, Preliminary Results Level of Trade Analysis for FSAB 
(``LOT Memo'').
    With respect to the home market, FSAB reported one channel of 
distribution (i.e., factory direct sales) through which it sold SSWR to 
both affiliated and unaffiliated end-user customers. According to FSAB, 
its direct sales to both affiliated and unaffiliated home market 
customers constitute one distinct LOT in the home market.
    In determining whether separate LOTs exist in the home market, we 
compared the selling functions performed across all channels of 
distribution. After our analysis of the information submitted for the 
record of this review, we find that all home market sales were made at 
the same LOT. See LOT Memo.
    Finally, we compared the CEP LOT to the home market LOT and found 
that the selling functions performed for home market sales are either 
performed at the same degree of intensity (or only vary slightly) as 
the selling functions performed for U.S. sales. Specifically, we find 
that three of the four selling functions (i.e., freight/delivery, 
warehousing/inventory, and quality assurance/warranty service) are 
performed by FSAB at the same level of intensity in both the U.S. and 
home markets. With respect to the remaining selling function (i.e., 
sales process/marketing support), we find that there is only a slight 
difference in the level of intensity between the home and U.S. market. 
Therefore, we find that the NV LOT and single U.S. LOT are at the same 
LOT.

[[Page 59087]]

    As home market and U.S. sales were made at the same LOT, we have 
matched CEP sales to home market sales at the same LOT.

Cost of Production Analysis

    In the LTFV investigation, the most recently completed segment of 
this proceeding as of November 7, 2005, the date the questionnaire was 
issued in this review, we found that FSAB had made sales below the cost 
of production. See Notice of Preliminary Determination of Sales at Less 
Than Fair Value and Postponement of Final Determination: Stainless 
Steel Wire Rod From Sweden, 63 FR 10841, 10846 (March 5, 1998); 
affirmed in Notice of Final Determination of Sales at Less Than Fair 
Value: Stainless Steel Wire Rod from Sweden, 63 FR 40449, 40452 (July 
29, 1998) (``SSWR from Sweden LTFV Final''). Thus, in accordance with 
section 773(b)(2)(A)(ii) of the Act, there are reasonable grounds to 
believe or suspect that FSAB made sales in the home market at prices 
below the cost of producing the merchandise in the current review 
period. Accordingly, we instructed FSAB to respond to the section D 
(Cost of Production) questionnaire.

A. Calculation of Cost of Production

    In accordance with section 773(b)(3) of the Act, we calculated 
FSAB's cost of production (``COP'') based on the sum of FSAB's costs of 
materials and conversion for the foreign like product, plus amounts for 
G&A expenses and interest expenses (see ``Test of Home Market Sales 
Prices'' section below for treatment of home market selling expenses). 
The Department relied on the COP data submitted by FSAB in its August 
18, 2006, supplemental section D questionnaire response, except in the 
following instances noted below.
    In accordance with section 773(f)(3) of the Act, the Department 
adjusted FSAB's transfer price of billets purchased from its affiliate, 
Outokumpu. For further details regarding this adjustment, please see 
the COP/CV Memo.

B. Test of Home Market Sales Prices

    On a product-specific basis, we compared the adjusted weighted-
average COP to the home market sales of the foreign like product, as 
required under section 773(b) of the Act, in order to determine whether 
the sale prices were below the COP. For purposes of this comparison, we 
used COP exclusive of selling and packing expenses. The prices 
(inclusive of alloy surcharges, freight revenue, service charge 
revenue, processing charge revenue and billing adjustments, where 
appropriate) were exclusive of any applicable movement charges, 
rebates, discounts, and direct and indirect selling expenses and 
packing expenses, revised where appropriate, as discussed below under 
the ``Price-to-Price Comparisons'' section. In determining whether to 
disregard home market sales made at prices less than their COP, we 
examined, in accordance with sections 773(b)(1)(A) and (B) of the Act, 
whether such sales were made: (1) Within an extended period of time, 
(2) in substantial quantities, and (3) at prices which did not permit 
the recovery of all costs within a reasonable period of time.

C. Results of the COP Test

    In determining whether to disregard home market sales made at 
prices below the COP, we examined, in accordance with sections 
773(b)(1)(A) and (B) or the Act: (1) Whether, within an extended period 
of time, such sales were made in substantial quantities; and (2) 
whether such sales were made at prices which permitted the recovery of 
all costs within a reasonable period of time in the normal course of 
trade. Where less than 20 percent of the respondent's home market sales 
of a given product are at prices less than the COP, we do not disregard 
any below-cost sales of that product because we determine that in such 
instances the below-cost sales were not made within an extended period 
of time and in ``substantial quantities.'' Where 20 percent or more of 
a respondent's sales of a given product are at prices less than the 
COP, we disregard the below-cost sales because: (1) They were made 
within an extended period of time in ``substantial quantities,'' in 
accordance with sections 773(b)(2)(B) and (C) of the Act, and (2) based 
on our comparison of prices to the weighted-average COPs for the POR, 
they were at prices which would not permit the recovery of all costs 
within a reasonable period of time, in accordance with section 
773(b)(2)(D) of the Act.
    We found that, for certain specific products, more than 20 percent 
of FSAB's home market sales were at prices less than the COP and, in 
addition, such sales did not provide for the recovery of costs within a 
reasonable period of time. We therefore excluded these sales and used 
the remaining sales as the basis for determining NV, in accordance with 
section 773(b)(1) of the Act.

Price-to-Price Comparisons

    As discussed in the ``Normal Value'' section above, we calculated 
NV based on delivered prices (inclusive of alloy surcharges) to 
unaffiliated customers or prices to affiliated customers that were 
determined to be at arm's length. We made adjustments, where 
appropriate, to the starting price for billing adjustments, discounts, 
and rebates. We made deductions, where appropriate, from the starting 
price for inland freight (from the plant to the customer) and inland 
insurance, under section 773(a)(6)(B)(ii) of the Act. We also made 
deductions from the starting price for credit, warranty, and other 
direct selling expenses, under section 773 of the Act.
    We made adjustments for differences in costs attributable to 
differences in the physical characteristics of the merchandise in 
accordance with section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. 
We also deducted home market packing costs and added U.S. packing 
costs, in accordance with section 773(a)(6)(A) and (B) of the Act.

Calculation of Constructed Value

    We calculated CV in accordance with section 773(e) of the Act, 
which states that CV shall be based on the sum of the respondent's cost 
of materials and fabrication for the subject merchandise, plus amounts 
for SG&A expenses, profit and U.S. packing costs. We relied on the 
submitted CV information except for the adjustments described above 
under ``Calculation of Cost of Production.''

Price-to-Constructed Value Comparisons

    We based NV on CV for comparison to certain U.S. sales, in 
accordance with section 773(a)(4) of the Act. For comparisons to FSAB's 
CEP sales, we made circumstance-of-sale adjustments by deducting from 
CV the weighted-average home market direct selling expenses, in 
accordance with section 773(a)(8) of the Act and 19 CFR 351.410.

Currency Conversion

    We made currency conversions in accordance with section 773A of the 
Act based on the exchange rates in effect on the dates of the U.S. 
sales as certified by the Federal Reserve Bank.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
weighted-average dumping margin for the period September 1, 2004, 
through August 31, 2005, is as follows:

------------------------------------------------------------------------
                                                                Percent
                    Manufacturer/exporter                        margin
------------------------------------------------------------------------
Fagersta Stainless AB (which also includes AB Sandvik              30.18
 Materials Technology and Kanthal AB)........................
------------------------------------------------------------------------


[[Page 59088]]

    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the publication date of this 
notice. See 19 CFR 351.224(b). Any interested party may request a 
hearing within 30 days of publication. See 19 CFR 351.310(c). If 
requested, a hearing will be scheduled after determination of the 
briefing schedule.
    Interested parties who wish to request a hearing or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, Room B-099, within 30 days of the 
date of publication of this notice. Requests should contain: (1) The 
party's name, address and telephone number; (2) the number of 
participants; and (3) a list of issues to be discussed. See 19 CFR 
351.310(c).
    Issues raised in the hearing will be limited to those raised in the 
respective case briefs. Case briefs from interested parties and 
rebuttal briefs, limited to the issues raised in the respective case 
briefs, may be submitted in accordance with a schedule to be 
determined. Parties who submit case briefs or rebuttal briefs in this 
proceeding are requested to submit with each argument (1) a statement 
of the issue and (2) a brief summary of the argument. Parties are also 
encouraged to provide a summary of the arguments not to exceed five 
pages and a table of statutes, regulations, and cases cited.
    The Department will issue the final results of this administrative 
review, including the results of its analysis of issues raised in any 
written briefs, not later than 120 days after the date of publication 
of this notice, pursuant to section 751(a)(3)(A) of the Act.

Assessment Rates

    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003 (68 FR 23954). This clarification will apply to entries of 
subject merchandise during the POR produced by the company included in 
these preliminary results of review for which the reviewed company did 
not know its 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(ies) 
involved in the transaction. For a full discussion of this 
clarification, see Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).
    The Department shall determine, and CBP shall assess, antidumping 
duties on all appropriate entries, in accordance with 19 CFR 351.212. 
The Department will issue appropriate appraisement instructions for the 
company subject to this review directly to CBP within 15 days of 
publication of the final results of this review.
    For assessment purposes, we calculated importer-specific ad valorem 
duty assessment rates based on the ratio of the total amount of dumping 
margins calculated for the examined sales to the total entered value of 
those same sales. However, for subject merchandise produced by FSAB but 
imported on behalf of its U.S. affiliate, SMT U.S., we do not have the 
actual entered value because FSAB was unable to obtain the entered 
value data for their reported sales from the importer of record. 
Therefore, for those entries of subject merchandise imported by SMT 
U.S., we intend to calculate the importer-specific assessment rate by 
aggregating the dumping margins calculated for all of the U.S. sales 
examined and dividing that amount by the total quantity of the sales 
examined.
    We will instruct CBP to assess antidumping duties on all 
appropriate entries covered by this review if any importer-specific 
assessment rate calculated in the final results of this review is above 
de minimis (i.e., at or above 0.50 percent). See 19 CFR 351.106(c)(1). 
The final results of this review shall be the basis for the assessment 
of antidumping duties on entries of merchandise covered by the final 
results of this review and for future deposits of estimated duties, 
where applicable.

Cash Deposit Requirements

    The following cash deposit requirements will be effective for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for the reviewed 
company will be that established in the final results of this review, 
except if the rate is less than 0.50 percent, and therefore, de minimis 
within the meaning of 19 CFR 351.106(c)(1), in which case the cash 
deposit rate will be zero; (2) for previously reviewed or investigated 
companies not listed above, the cash deposit rate will continue to be 
the company-specific rate published for the most recent period; (3) if 
the exporter is not a firm covered in this review, a prior review, or 
the original LTFV investigation, but the manufacturer is, the cash 
deposit rate will be the rate established for the most recent period 
for the manufacturer of the merchandise; and (4) the cash deposit rate 
for all other manufacturers or exporters will continue to be 5.71 
percent, the ``All Others'' rate made effective by the LTFV 
investigation. See SSWR Order. These requirements, when imposed, shall 
remain in effect until publication of the final results of the next 
administrative review.

Notification to Importers

    This notice also 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 antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.221.

    Dated: September 29, 2006.
Stephen J. Claeys,
Acting Assistant Secretary for Import Administration.
[FR Doc. E6-16518 Filed 10-5-06; 8:45 am]
BILLING CODE 3510-DS-P